Sitting of 13 February 1980

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

MESSAGE FROM THE QUEEN
SOLOMON ISLANDS, TUVALU AND KIRIBATI (INDEPENDENCE GIFTS)
The Vice-Chamberlain of the Household reported Her Majesty's Answer to the Address, as follows:
I have received your Address praying that I will give directions that there be presented on behalf of your House a gift of a clock to the national Parliament of Solomon Islands and gifts of gavel sets to the Houses of Assembly of Tuvalu and Kiribati, and assuring me that your House will make good the expenses attending the same.
It gave me great pleasure to learn that your House desires to make such presentations and I will gladly give directions for carrying your proposals into effect.

ORAL ANSWERS TO QUESTIONS
  FOREIGN AND COMMONWEALTH AFFAIRS

    Nuclear Proliferation
    Mr. Viggersasked the Lord Privy Seal if he is satisfied that all possible steps are being taken by Her Majesty's Government to prevent the spread of nuclear armaments to countries which do not currently possess them.
    The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hurd): The Government believe that the non-proliferation treaty is the best defence against nuclear weapons proliferation. As a depository Power, the United Kingdom tries to persuade others to adhere to the treaty, which now has 113 parties. We have fully observed our obligations under the treaty and the Nuclear Suppliers Group arrangements on nuclear exports.
    Mr. Viggers: Is the Minister aware that there will be widespread support for the proposal that the Government's main effort in this vital subject should be through the non-proliferation treaty review conference due this summer? Does he agree that there is a unique opportunity at present, in view of the Russian invasion of Afghanistan and the reappraisal of defence needs in that area, when some countries calling for help have not yet subscribed to the non-proliferation treaty? Does he agree that Pakistan and other nations that seek help at this time, from us and our Allies, should be encouraged to participate in the non-proliferation treaty?
    Mr. Hurd:Yes, Sir. President Zia has said that Pakistan has no intention of acquiring a nuclear weapon or transferring nuclear technology to other countries. The best course, as my hon. Friend says, would be for Pakistan to sign the treaty. It has said that this would have to be accompanied by a signature from India. If there is anything that the Government can do to help forward that process, we shall do so.
    Mr. Dalyell: Are the Government involved in the American $400 million package of aid to Pakistan? What active

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    steps have been taken to help the Nuclear Suppliers Group stop Pakistan from getting nuclear weapons?
    Mr. Hurd: The hon. Gentleman, who follows this matter closely, knows the measures that we have taken. They have been discussed in this House. As regards defence help for Pakistan, we are not involved in that proposal but we are discussing, as has been stated, with our partners and Allies, possible forms of help to that country.
    Mr. Soley: This development on nonproliferation is to be welcomed, but would it not be realistic to accept that many countries, whether we like it or not, will develop nuclear weapons for the same reasons that we and other nations have done so? Is it not time to look again at the overall policy and, perhaps, consider examining regional agreements that might be more effective in stabilising the balance of power elsewhere in the world?
    Mr. Hurd: There is something in that. As the hon. Gentleman knows, some Latin American countries have come together in discussions on those lines. There will be the conference reviewing the progress of the non-proliferation treaty probably towards the end of the summer or early autumn. We intend to take a full part.
    Mr. Shore: Will the Minister say what export licensing orders and arrangements are still in force restricting the supply of components that could be used in the manufacture of nuclear equipment in Pakistan and other countries? Will he say something about the progress being made with the INFCE report, which will have implications for the better policing of nuclear materials throughout the world?
    Mr. Hurd: As the right hon. Gentleman knows, from his last office, these export controls are in being. They are looked at from time to time. We have recently tightened them to take account of the latest developments. The INFCE discussion to which he refers is still in being. I understand that there is a final meeting shortly. It has cleared the ground a good deal and removed some of the misconceptions. We believe that the final documents, when they emerge, will contain useful guidance for the future.

    Secretary of State Vance
    Mr. Chris Pattenasked the Lord Privy Seal when next the Secretary of State for Foreign and Commonwealth Affairs plans to meet Mr. Vance.
    The Lord Privy Seal (Sir Ian Gilmour): My right hon. and noble Friend has no definite plans for a meeting with the American Secretary of State.
    Mr. Patten: When the Secretary of State meets Mr. Vance will he convey to him the congratulations of the Government and of most hon. Members on the stand that he took and the speech that he made at the IOC meeting at Lake Placid? Following the IOC's mostill-judged decision, what do the Government now propose?
    Sir I. Gilmour: I shall certainly see that my right hon. and noble Friend conveys my hon. Friend's congratulations to Mr. Vance. Of course, we are disappointed, as are many people, that the IOC decided as it did. We remain of the view that it would be preferable to remove the summer Games from Moscow, because any other course would appear to condone Soviet aggression in Afghanistan and allow the Soviet Union a propaganda victory—
    Mr. Cryer: Rubbish.
    Sir I. Gilmour: Therefore, the Government will continue to consult the growing number of countries that, happily, share our view on this issue. We shall consider with them the options that are open to us as a result of the IOC decision. An important part of the consultation will naturally be the European Community ministerial meeting to be held in Rome on 19 February. After these consultations, and in the light of a study of all the possibilities, the Government will convey their views to the British Olympic Association, which is due to meet on 4 March
    Mr. Frank Allaun: Will the Lord Privy Seal point out to Mr. Vance the danger to world peace of America sending 1,800 Marines to the Gulf next month, of preparing a 100,000-strong rapid deployment force, and of setting up military bases in Masira, Somalia, Kenya, Diego Garcia and other points further east?
    Sir I. Gilmour: It would be silly for my right hon. and noble Friend to complain in any way about the transport of 1,800 American troops when there are about 70,000 Soviet troops in Afghanistan. That is the danger to world peace, and that is the problem to which the hon. Gentleman should be addressing himself.
    Mr. Bob Dunn: Will my right hon. Friend congratulate the United States Government on granting $10·4 billion to Third world countries for trade and military affairs, and will he arrange to coordinate funds in Western Europe in order to grant moneys to Third world countries and those under pressure, for example for the training of freedom fighters in Afghanistan, Yemen and Ethiopa?
    Sir I. Gilmour: I agree very much with the drift of the first part of my hon. Friend's question, but I do not at all agree with the second part. The Soviet Union is the only country that has interfered internally in Afghanistan, and we want it to remain that way—[Interruption.] I should make clear that we deplore the Soviet action, but we have no intention whatever of following suit.
    Mr. McNally: Does not the Lord Privy Seal agree that the danger of peace is in the lack of a co-ordinate Western response at a time of crisis, and that some of the events of the last few weeks have echoed the lack of unity that was apparent at the time of the Yom Kippur war? Does he agree that political co-operation seems to work only at times of calm, and that the West seems to fall apart every time there is a real crisis? Should not the right hon. Gentleman be talking to Mr. Vance about that?
    Sir I. Gilmour: The hon. Gentleman is taking an unduly pessimistic view. It is not suprising that there should have been initial differences of perception about the dangers of what happened in Afghanistan, and a difference of reaction. There have been definite signs of convergence over the last few weeks, and I am confident that that process will continue.

    Cuba
    Mr. Crouchasked the Lord Privy Seal when he proposes to meet the President of Cuba.
    Mr. Michael Spicerasked the Lord Privy Seal if he will make a statement on the relations of Her Majesty's Government with the Government of Cuba.
    The Minister of State, Foreign and Commonwealth Office (Mr. Nicholas Ridley): My right hon. Friend has no plans to meet the President of the Cuban Council of State. Her Majesty's Government's relations with the Republic of Cuba, which we would like to be more substantial, are constrained because Cuban foreign policy appears to be conducted in concert with the Soviet Union. The Government's current views of some aspects of Soviet foreign policy were clearly stated by my right hon. Friend the Prime Minister on 28 January.
    Mr. Crouch: I thank my hon. Friend for that answer. Does he not think that recent events in Afghanistan have perhaps turned President Castro into a Cinderella among the non-aligned nations? Does he not think that, perhaps, my right hon. Friend the Lord Privy Seal or my right hon. and noble Friend the Foreign Secretary could act in this case as a fairy godmother and take the President of Cuba to another ball on the other side of the curtain?
    Mr. Ridley: It is true that Cuba voted against the United Nations General Assembly resolution condemning interference in Afghanistan. The Cuban media have simply reproduced the Soviet statements and comments on events in Afghanistan without attempting any individual interpretation of them.
    Mr. Spicer: Will my hon. Friend comment on the increasingly widely held belief that the Government of Cuba are cracking up under the weight of their own oppressiveness?
    Mr. Ridley: I was interested to read in today's press that, in a secret speech on 27 December, for which the "Hansard"has only just become available through the auspices of the free press, the President said that 4,000 men had been set aside to weed out offenders and keep them out of the way for as long as necessary. That seems to me to be a sinister sign.
    Mr. Winnick: Is the Minister aware that his concern over Cuba would be more credible if he were not such a close

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    associate and fellow traveller of the Fascist regime in Chile, even to the disgraceful extent of questioning whether Dr. Sheila Cassidy had been tortured by the junta?
    Mr. Ridley: That does not arise on this question, but the hon. Gentleman is well out of date and he should read the papers.
    Mr. Nelson: In the past, when Cuba has had economic crises at home, has that not been an excuse for a diversion in foreign policy, for it to become aggressive and expansionist? Does my hon. Friend feel that that has implications for the Caribbean, and in particular for the remaining dependent territories in that region?
    Mr. Ridley: It must be difficult for the Cubans to sustain the 35,000 or so troops that they have in Africa when economic conditions are deteriorating at home. I would have thought that that would hardly be the time to engage in adventures anywhere in the world.
    Mr. James Johnson: Has the Minister lately taken up the case of Cuban forces in Ethiopia? If so has there been any satisfactory explanation for their presence?
    Mr. Ridley: Representations have been made to the Cuban Ambassador on this matter, but to no effect.

    Cyprus
    Mr. Madelasked the Lord Privy Seal if he is planning any discussions with the Governments of Greece, Turkey and Cyprus in relation to the division of Cyprus; and if he will make a statement.
    Sir Ian Gilmour: The Government maintain close and regular contact over the Cyprus problem with the Governments and parties concerned, and hope to see the intercommunal talks resumed as soon as possible.
    Mr. Madel: As there is already a degree of co-operation between the two communities on such things as the maintenance of electricity and water supplies, will my right hon. Friend press on the United Nations that in order to extend this co-operation, such things as Nicosia airport and other parts of the island could be put under temporary international con-
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    trol to give the two communities further opportunities to work together?
    Sir I. Gilmour: I am well aware that my hon. Friend has recently been to Cyprus and therefore is speaking with considerable experience of the problem. I shall draw what he has said to the attention of those concerned.
    Mr. Newens: If the Lord Privy Seal is so concerned about foreign troops in Afghanistan why does he not take a stronger line about the Turkish troops in Cyprus? They have been there for some years now. Does he not think that if the Government are to be consistent and are not to be accused of employing double sandards, Britain should take a much stronger line on this issue than it has done so far?
    Sir I. Gilmour: We are most anxious to secure a solution to the Cyprus problem. Turkish troops entered Cyprus while the hon. Gentleman's Government were in power. I fail to see the relationship between the presence of Turkish troops in Cyprus and the Russian invasion of Afghanistan.
    Mr. Russell Johnston: Does the Lord Privy Seal agree that the fact that Turkey is seeking to enter the European Economic Community presents this country with an opportunity to exert a constructive influence upon Turkey? Can he also say whether there is anything further to report on those British citizens who lost property during the Turkish invasion?
    Sir I. Gilmour: As the hon. Gentleman knows, linkage of the kind suggested is not always the best way of tackling these problems. He also knows that this Government, and the previous Government, tried to exert influence to achieve a settlement of the communal problem. I have some news of those British subjects mentioned in the second part of the hon. Gentleman's question. The Turkish-Cypriots have now approved 140 exgratia awards to British subjects as recommended by their claims commission and payment of these awards has begun.
    Mr. Jim Spicer: Does my right hon. Friend accept that, as one of the former guarantor Powers, we have some residual responsibility for the affairs of Cyprus? Can he give some assurance that in any

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    discussions that take place we shall give due regard to the rights of the Turkish minority that were so seriously violated during the period from 1963 until the Turkish invasion?
    Sir I. Gilmour: I can assure my hon. Friend that we shall give due regard to the rights both of the Turkish minority and the Greek majority. The one objective of ourselves and Dr. Waldheim of the United Nations is to secure a settlement congenial to both parties.
    Mrs. Dunwoody: If that is the case will the Lord Privy Seal consider having a word with Dr. Waldheim pointing out to him that because the situation is so delicate it would be very helpful if the United Nations appointed someone in Cyprus with experience of the area and its politics?
    Sir I. Gilmour: I do not entirely agree with the hon. Lady's inference that the United Nations' representatives have been inexperienced and have not been helpful. They have been extremely helpful and we shall continue to support them.

    Diego Garcia
    Mr. McNamaraasked the Lord Privy Seal if he will make a statement regarding the present use of Diego Garcia.
    The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Richard Luce): The present use of Diego Garcia as a United States communications and support facility is in accordance with the published exchanges of notes of 1966 and 1976. There is a British liaison team of 25 Royal Navy personnel.
    Mr. McNamara: I thank the hon. Gentleman for that reply. Can he tell the House to what extent United States forces in the island are being built up and what is the extent of existing support facilities there? Can the hon. Gentleman further inform the House whether the Government intend to allow the former inhabitants to return? Is the present offer of further compensation contingent upon acceptance of the fact that they have been evicted from their island?
    Mr. Luce: The size of the United States forces in Diego Garcia is around 1,900. As the hon. Gentleman knows,
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    the two agreements of 1966 and 1976—signed by the then Labour Government—provide for comunications and support facilities for the United States. In recent weeks the United States has asked for an extension of those facilities in order to improve the staging and handling capacity there. These arrangements are within the understandings reached between our two Governments and are perfectly in order. We have agreed to meet the request. As far as the Ilois community is concerned, the issue goes back to 1965 and 1966 when the then Labour Government decided that the inhabitants should be asked to move to Mauritius. In the 1970s the British Government gave compensation of £655,000. With accrued interest, that figure totals almost £1 million. That is compensation, in particular for resettlement of the Ilois community in Mauritius.
    Sir Frederic Bennett: Does the Minister agree that, in the context of recent events in the Indian Ocean, the Gulf and elsewhere, there are strong arguments for increasing the facilities available to the United States in Diego Garcia? Is not such an arrangement all the more relevant in the light of what seem to be unfortunate developments created by Russia's links with the Seychelles to the north?
    Mr. Luce: I entirely agree with my hon. Friend about the threat posed by the Soviet Union. The growing instability of the area fully justifies the request of the United States for these facilities.
    Mr. Rowlands: Is the Minister aware that what we do, or do not do, in Diego Garcia is a sensitive issue? Does not his statement supersede the clear statement made by the Minister of State, Foreign and Commonwealth Office, the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), on 28 November, that no further developments were planned for the island? Is the Minister saying that he now overrides that statement? Can the hon. Gentleman say whether the offer of £1·25 million made to the islanders has been accepted?
    Mr. Luce: I will take the latter point first. I apologise to the hon. Gentleman in that I did not complete my earlier answer. There is an outstanding offer of £1·25 million, which is not for

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    resettlement since that is a separate issue. It is an ex-gratia payment for the removal of those people from the Chagos archipeligo to Mauritius. That offer is outstanding and has not been finalised.
    As far as the provision of additional facilities is concerned, the hon. Gentleman knows that there have been additional serious developments since then. Talks have taken place at official level between the United States and Great Britain and the Americans have asked for additional staging capacity in that area.

    Cairo
    Mr. Greville Jannerasked the Lord Privy Seal if he will pay an official visit to Cairo.
    Mr. Hurd: My right hon. Friend hopes to do so before too long.
    Mr. Janner: While we await the visit of the Foreign Secretary to Egypt, and no doubt to Israel, will the Minister take this opportunity to reaffirm our firm and continued support for the peace process between Egypt and Israel and for its continuation? Will the Minister publicly welcome, in particular, the remarkable normalisation of relations between those old foes signalled this month by the exchange of ambassadors?
    Mr. Hurd: We certainly support the Camp David treaty and the negotiations that have flowed from it. We also welcome the normalisation. We now look forward to something equally important, namely substantial progress in the autonomy talks. We believe that such progress is necessary if the peace process is to be established and continued.
    Mr. Walters: If the Foreign Secretary visits Cairo will he raise with President Sad at the lack of progress on linkage following the Camp David negotiations? Will the Foreign Secretary put forward the possibility of a European initiative, which would suggest a period of international trusteeship for the West Bank and Gaza?
    Mr. Hurd: We have no wish to cut across the current peace efforts, which we support. We are considering with our European partners ways in which we might help the peace process forward.

  USSR
  Mr. Nlichael Brownasked the Lord Privy Seal when next he expects to meet the Foreign Minister of the Union of Soviet Socialist Republics.
  The Minister of State, Foreign and Commonwealth Office (Mr. Peter Blaker): My right hon. Friend has at present no plans to do so.
  Mr. Brown: I wonder, in view of that reply, whether my hon. Friend would consider writing to the Foreign Minister of the Soviet Union drawing to his attention the extraordinarily large numbers of Russian surveillance ships near United Kingdom territorial waters? Will my right hon. Friend ask the Soviet Foreign Minister what those Soviet ships are doing near our waters?
  Mr. Blaker: This is a matter that has caused concern to successive British Governments. I take note of my hon. Friend's suggestion.
  Mr. Stoddart: When the hon. Gentleman meets the Soviet Foreign Minister will he give him an assurance that this country is still committed to detente in Europe, in spite of what has happened in Afghanistan?
  Mr. Blaker: The problem with detente is that the Soviet Union has interpreted it in a way which its natural meaning does not bear. The Soviet Union has claimed the right to commit aggression in parts of the world outside Europe and has claimed the right to continue the ideological struggle against countries of the free world by any means. That is not an interpretation of detente that is acceptable to us.
  Mr. Temple-Morris: When the Minister eventually meets Mr. Gromyko will he be in a position to inform him that Kuwait has such confidence in the West that it no longer feels it necessary to purchase Russian ground-toground missiles?
  Mr. Blaker: I take note of what my hon. Friend says.
  Mr. Spriggs: When the Minister next meets the Soviet Union's Foreign Minister will he ask that gentleman whether

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  he will publish a report about the movements of other foreign Governments in Afghanistan so that we can determine why the Russian Government decided to invade Afghanistan?
  Mr. Blaker: According to information available to me the Soviet Union is the only country which has been interfering in the internal affairs of Afghanistan.

  EUROPEAN COMMUNITY

    Council of Foreign Ministers
    Leightonasked the Lord Privy Seal when next he will meet other EEC Ministers.
    Mr. Strawasked the Lord Privy Seal when next he expects to meet his EEC counterparts.
    Mr. David Knoxasked the Lord Privy Seal when his noble Friend expects to meet his European Economic Community counterparts.
    Mr. Meacherasked the Lord Privy Seal when he next expects to meet his EEC counterparts.
    Sir Ian Gilmour: My right hon. and noble Friend and I will meet our Community colleagues at the next meeting of the Foreign Affairs Council in Brussels on 17 and 18 March.
    Mr. Leighton: Will the Lord Privy Seal confirm that he received no satisfaction on his recent tour of the European capitals and chancelleries in his effort to gain support for the United Kingdom's attempt to reduce its grotesquely excessive contribution to the European budget? Does he agree that in the last couple of days the French have been characteristically unhelpful? Does he accept that, if the Prime Minister is not to be grossly humiliated at the forthcoming summit, Britain will have to take action on its own? Will the Minister comment on the article by the European editor of The Guardian today which suggests that we could legally withhold VAT contributions?
    Sir I. Gilmour: The hon. Member's language is, to use his word, "excessive". I agree that our net contribution to the European budget is, indeed, excessive. I
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    cannot confirm that I received no satisfaction on my recent tour. It was helpful. There was a general desire to see our problem solved. I hope that it will be. It is not for me to comment on articles by the European editor of The Guardian.
    Mr. Straw: I must press the Lord Privy Seal on the report in The Guardian.
    Hon. Members: Question.
    Mr. Speaker: Order. I hope that the Member will ask his question, because time is short.
    Mr. Straw: I am sorry, Mr. Speaker. I was put off my stroke by hon. Members. Is the Minister aware that many of us are deeply concerned by the report in The Guardian and by the Lord Privy Seal's reply? Can he confirm or deny that the Government are considering cutting off VAT payments if we receive no satisfaction in the negotiations?
    Sir I. Gilmour: I cannot comment on the article by the European editor of The Guardian. That is normal practice and it is particularly true on this occasion since I have not read the article.
    Mr. Knox: I appreciate that some progress has been made towards achieving a common position among the Nine on the Soviet invasion of Afghanistan, but does my right hon. Friend expect that further progress will be made at the meeting to reach a unified EEC approach to the problem?
    Sir I. Gilmour: I am sure that that will happen. Further progress was made in Brussels last week at the meeting attended by my hon. Friend. This is not a matter that can be settled overnight. There is an undoubted process of convergence in train.
    Mr. Dalyell: What response will the Government make to the application by Turkey for membership of the Common Market? Is not that worthy of a statement before we go any further?
    Sir I. Gilmour: No, because Turkey has not yet made a formal application. Turkey has made it clear that that will be the ultimate result of the 1963 association agreement. It is far too early to make a statement.
    Mr. Hugh Fraser: Has my right hon. Friend any comments to make on the statements by Mr. Jenkins about the approaching bankruptcy of the EEC?
    Sir I Gilmour: The President of the European Commission pointed out the general economic difficulties facing Europe. I do not think that he said anything new.
    Mr. Shore: Does the Lord Privy Seal agree that the approaching bankruptcy of the EEC will not occur in time to rescue the Government from their public expenditure problems in 1980–81 since the £1,000 million which was to be agreed to be refunded to Britain at Dublin played such a significant part in the Government's plan?
    May I take for granted that the Government will not be in any way deterred from their pursuit of a broad balance by a French Finance Minister reading his brief at the last Council of Finance Ministers? We know that it was negative, but the French frequently are. The Minister must make it plain that the Government are still absolutely determined to achieve the broad balance which they set out to achieve and that they will not—
    Mr. Speaker: Order. I am sorry to interrupt the right hon. Geneltman but he must ask questions. This is not a time for debating.
    Sir I. Gilmour: I can confirm that, so far as is known, there is no question of the 1 per cent. limit being penetrated this year and that it does not have any immediate application to our budget problem. The House is aware of our approach to these matters. My right hon. Friend the Prime Minister said after the Dublin conference that progress had been made—[Interruption.] Well, it had. The inhibitions have been taken off the 1975 mechanism which was negotiated by the Labour Government and which was singularly ineffective. The Commission was invited to make proposals for increasing expenditure in the United Kingdom. It has now done so. After Dublin the Prime Minister said that our objective was a genuine compromise but she pointed out that we had little room for manoeuvre. That is still the position.
    Mr. John Evansasked the Lord Privy Seal when he last met his EEC col-
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    leagues; and what was the outcome of the meeting.
    Sir Ian Gilmour: I last attended a meeting of the Foreign Affairs Council on 15 January. My right hon. and noble Friend went to the most recent meeting of the Council on 5 February. I reported the outcome to the House on 7 February in reply to a question from my hon. Friend the Member for Nelson and Colne (Mr. Lee). I also attended an informal meeting of Community Foreign Ministers on 8 February.
    Mr. Evans: Will the Lord Privy Seal make it clear to his EEC colleagues that the House will not allow the Prime Minister and the Foreign Office to shuffle out of their commitment to reduce the British contribution to the EEC budget by £1 billion?
    Sir I. Gilmour: I have no reason to remind my colleagues of that because they are well aware that neither the Prime Minister nor the Foreign Office are in the habit of shuffling out of anything.
    Mr. Aitken: At all the recent meetings have not the French and the Germans in particular proved much more intransigent than was originally expected about reducing Britain's contribution? Is it not wiser to start reducing expectations in Britain about the possibility of repayments being made?
    Sir I. Gilmour: I do not think that my hon. Friend is right to say that the German and French Governments have been more intransigent than was expected. It will not have escaped his notice that the French economic Minister made some remarks on Monday about the effect of oil on the United Kingdom economy. He has been rather seriously misled on the matter, and we shall seek to correct him.
    Mr. Russell Johnston: When the Lord Privy Seal discussed with his EEC colleagues the concept of broad balance, did he indicate that it should apply to all countries of the Community, including Germany?
    Sir I. Gilmour: The hon. Gentleman will be aware that we began by using the term "broad balance". That was widely misunderstood to mean juste retour on the Continent. As I have

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    indicated already to the House, the position is that we are seeking a genuine compromise.
    Mr. Jay: If the Lord Privy Seal will not cancel VAT payments, will he at least accept my suggestion that, until the French remove the levy on British lamb imports, we should impose an import levy on French cars?
    Sir I. Gilmour: I do not think that the implication of the right hon. Gentleman's suggestion is one that he really wishes to pursue. He is trying to say that illegality should be met with illegality. I do not believe that that is right.
    Mr. Ian Lloyd: When those responsible for either research and development or science and technology meet their colleagues in the EEC to discuss such subjects as the Davignon report on information and technology, who represents the United Kingdom?
    Sir I. Gilmour: That is a very good question. I think that it is the Secretary of State for Trade, but I shall confirm that to my hon. Friend.

    Spain and Portugal
    Mr. R. C. Mitchellasked the Lord Privy Seal when he expects Spain and Portugal to become full members of the EEC.
    Sir Ian Gilmour: The negotiations with Portugal and Spain are proceeding as planned. It is too early to forecast precisely when they might enter the Community, but it is the hope of the Government that this will not be delayed.
    Mr. Mitchell: Does the Lord Privy Seal agree that, before Spain becomes a full member of the EEC, there ought to be a settlement of the dispute between Spain and Gibraltar, and a reopening of the boundary between those two countries?
    Sir I. Gilmour: I have made my view and that of the Government plain to the House. There should be an end to the restrictions as soon as possible, straight away. They should have been ended already. I have also made clear that it is not feasible that, if Spain becomes a member of the Community, there should be two frontiers between two members
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    of the Commity both of which are clsed.
    Mr. Farr: Will my right hon. Friend confirm that in the negotiations careful consideration will be given to the possible effect of the Spanish and Portuguese textile and footwear industries on Britain's home domestic industries which are already suffering from a flood of cheap foreign imports?
    Sir I. Gilmour: I can confirm that. As my hon. Friend knows, there is a provision dealing with this in the Greek accession treaty. The same will occur in the other treaties.
    Mrs. Dunwoody: What is the Lord Privy Seal's calculation of the effect that the accession of Spain and Portugal will have on our own resources system? Will it not be that these agricultural-based countries will speed the decline in the funds of the Common Market? What effect will that have on Britain?
    Sir I. Gilmour: I do not see how they can reduce Common Market funds. They are bound to increase the funds of the Common Market. However, if nothing is done about our budget contribution—the hon. Lady is quite right—it would make our problem even more acute than it is now.

    Council of Foreign Ministers
    Mr. Cryerasked the Lord Privy Seal when next he expects to meet other EEC Ministers.
    Mr. Stoddartasked the Lord Privy Seal when next he intends to meet his EEC counterparts.
    Mr. Squireasked the Lord Privy Seal when he next expects to meet his European counterparts.
    Sir Ian Gilmour: I refer the hon. Gentlemen and my hon. Friend to the reply that I gave earlier to the hon. Member for Newham, North-East (Mr. Leighton).
    Mr. Cryer: If the Lord Privy Seal fails to obtain a broad balance of the payments, and if we are still contributing a net £1 billion plus to the EEC, what action does he propose to take? If the EEC refuses to curtail cheap imports of textiles from America and Romania, what

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    action do the Government propose to take, or do they not care about the loss of textile jobs in Lancashire and Yorkshire?
    Sir I. Gilmour: The hon. Gentleman will know that my right hon. Friend the Secretary of State for Trade told my hon. Friend the Member for Rossendale (Mr. Trippier) on 7 February that the United Kingdom had submitted an application to the Commission for safeguard action. The Commission is due to respond in five working days, which is by 15 February. On 5 February the Council of Ministers accepted that the United Kingdom was facing special difficulties. In spite of the hon. Gentleman's jibe, I do not have to tell the House that the Government are fully aware of the difficulties involved.
    Mr. Stoddart: When the Lord Privy Seal next meets his counterparts, will he inform them of the rising tide of dissatisfaction and antagonism towards the EEC on the part of people in this country who believe that they are being bled white by the Community and are being pushed to the sidelines by the Franco-German axis?
    Sir I. Gilmour: I do not think that that is the right way to approach the problem. We have made it clear that the present position on the budget is totally inequitable. My right hon. and learned Friend the Chancellor of the Exchequer said the other day that our case is open and shut. We shall continue to argue that case to the Community. I am confident that it will accept our argument.
    Mr. Squire: Does my right hon. Friend recognise that there are continuing important issues other than the question of the budget? Will he impress on his colleagues in the EEC the importance of concluding the new co-operation agreement with Yugoslavia, taking into account the ailing health of its President?
    Sir I. Gilmour: I agree entirely with my hon. Friend. He will be aware that the last two Foreign Affairs Councils gave considerable impetus to the matter. It was made clear that it was a matter of the utmost urgency and priority. I hope that negotiations will be concluded soon.
    Mr. Hooley: When the Lord Privy Seal meets the other Foreign Ministers, will he discuss with them the dangerous position
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    that is developing in Southern Lebanon? Will he discuss what initiative should be taken, within the United Nations, to strengthen the United Nations peace-keeping effort in that part of the world, since otherwise we may face an explosive situation?
    Sir I. Gilmour: The hon. Gentleman will be aware that the Nine made a statement on the matter last September. It is a dangerous position, but I cannot guarantee that it will be discussed at the next meeting. I shall certainly bear the hon. Gentleman's remarks in mind.
    Mr. Alan Clark: When my right hon. Friend is negotiating reductions in the United Kingdom contribution to the EEC budget, will he make it clear that he will not be fobbed off by back-to-back grants for Government projects that would, in fact, entail increased public spending in this country to match them?
    Sir I. Gilmour: I am not quite certain what my hon. Friend means by back-to-back grants. He will be aware that the problem has, essentially, two components. The first is the excessive contribution as such, and that will be dealt with largely by what was virtually agreed at Dublin. The second component, and it is by far the greater part of the problem—at least 60 per cent. of it—is that our receipts from the European Community are well below average. They are less than half of the Community average. That is by far the greater part of our problem.
    Mr. Rowlands: Will the Lord Privy Seal reconsider the reply that he has given to my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) about the European response to the position in the Lebanon? He referred to a meeting last September. As another bloody civil war is about to begin in the Lebanon, surely speedier action than he is proposing is required.
    Sir I. Gilmour: I did not think that the hon. Member for Sheffield, Heeley, was proposing speedy action. I said that I could not guarantee that the matter would be discussed at the European Council.

    Community Budget
    Mr. William Hamiltonasked the Lord Privy Seal if he will make a statement on the outcome of his visits to other

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    EEC member Stales in connection with the United Kingdom contribution to the Community budget.
    Sir Ian Gilmour: My tour of European Community capitals was useful. As I informed the House on 31 January I discovered a general desire to get this problem solved. Following talks between my right hon. Friend the Prime Minister and Mr. Cossiga, the Italian Presidency is also taking an active part in finding a solution. We shall be having further talks with our partners in advance of the next European Council.
    Mr. Hamilton: Dos the Lord Privy Seal now take the view that, in retrospect, the Prime Minister was singularly indiscreet in refusing the £350 million that was on offer at Dublin? Will he now say whether it is the considered view of his Department that it is legal or illegal to withhold VAT payments?
    Sir I. Gilmour: I cannot agree in any way that my right hon. Friend the Prime Minister was indiscreet, as the hon. Gentleman describes it, in refusing the £350 million. The hon. Gentleman does not seem to be aware that that sum was on offer only in full settlement of our problem. I am sure that the whole House would agree that £350 million is totally inadequate.
    On the second part of the hon. Gentleman's question, as I said in reply to an earlier question, we are intent on finding a solution. We have not considered properly any measures that might be taken if we did not reach a solution.
    Mr. Moate: Has any preparatory work been undertaken in any Government Department in connection with the possible unilateral withholding of our budgetary contribution?
    Sir I. Gilmour: I cannot answer that question, because I do not know what goes on in other Departments.
    Dr. J. Dickson Mabon: What is the Government's attitude to the Commission's proposal for spending in the United Kingdom? If the Government accept that proposal with few qualifications what additional mechanism does the right hon. Gentleman imagine would help us to get the matter settled?
    Sir I. Gilmour: As the right hon. Gentleman appreciates, we naturally think that the Commission's proposal is a useful step on the road to a solution. It contains a number of ideas for increasing the level of Community spending in this country. We continue to believe that—not in substitution for the Commission's proposal, but in addition to it—a receipts mechanism to control the amount of Community spending in this country in future years is the right approach.
    Several Hon. Members—
    Mr. Speaker: Order. I propose to call one more question from each side and I shall add on the extra time at the end of Question Time.
    Mr. Dykes: Does my right hon. Friend agree that it is essential, as soon as possible, to eliminate the United Kingdom's excessive contribution to the budget? Has he pointed out to other member States that, adjusted to present-day prices, our contribution represents one-tenth of what the previous Labour Government spent on useless, wasteful nationalisation leading to the destruction of key industries such as the steel industry?
    Sir I Gilmour: I agree that this problem should be solved as soon as possible. It is in the interests of all. It is a Community problem, and it is in the Community's interests that it be solved as soon as possible. That is all the more true in view of what is going on in the rest of the world. I have no doubt that my hon. Friend is right in saying that the previous Labour Government committed a lot of wasteful acts of expenditure. The fact is that our projected contribution to the Community budget is grossly excessive.
    Mr. Shore: The House knows that the Lord Privy Seal has been spending a substantial amount of time on political philosophy as well as on his departmental duties in recent weeks. I should like to press him further on the reply that he gave earlier, when he said that he did not know whether any serious thought was being given to possible counter-measures that the British Government might take if we failed to reach a satisfactory solution on the broad balance of the budget. Is he, in effect, saying that no studies are being made inside the Foreign Office? If so, will he start them forthwith?
    Sir I. Gilmour: I said that I could not give an undertaking on what my hon. Friend the Member for Faversham (Mr. Moate) put to me, because I did not know what was going on in other Departments. As the right hon. Gentleman knows, the Foreign Office always takes all possible contingencies into account, and that is what we are doing.

  OVERSEAS DEVELOPMENT

    Aid Policy
    Mr. Brocklebank-Fowlerasked the Lord Privy Seal if he has completed his review of aid policy; and if he will make a statement.
    The Minister for Overseas Development (Mr. Neil Marten): The Government are just completing their review of aid policy and a statement will be made as soon as possible.
    Mr. Brocklebank-Fowler: I am grateful to my hon. Friend for that reply. In completing the further stages of the review, will be bear in mind the vital importance of aid funds in securing contracts overseas for British industry? Can he confirm that funds will be available for that purpose next year, notwithstanding the heavy forward commitments on both multilateral and bilateral aid that he inherited from the previous Labour Govermnment?
    Mr. Marten: Yes; funds will be available. The matter is being taken very seriously in this review.
    Mr. Douglas-Mann: Has the Minister taken account of the Brandt report, to which so much publicity was creditably given in The Times this morning, on the imminent dangers of disaster for the entire world as a consequence of the maldistribution of wealth'? Will he discuss with his Government colleagues the question of seking to convene a summit meeting as recommended in the Brandt report? Will he also recommend to the Leader of the House that we should have a debate on the issue and that it should not be left to disappear in silence as was the Cabinet paper, "Future World Trends", which was published some years ago?
    Mr. Marten: The Brandt report is being given detailed study. I should not
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    came to comment on it yet. I have not read it. It is a massive document. I should have thought that, as my right hon. Friend the Member for Sidcup (Mr. Heath) had a big hand in it, an attempt should be made by the Community to speak with one voice, if it has one.
    Mr. Stokes: Does my hon. Friend agree that trade is often a better long term investment in developing the new world than aid, and that often the best form of aid can be to send out skilled United Kingdom manpower to teach the local people to work and to help themselves?
    Mr. Marten: Yes. Both of those matters are very important in the whole aid programme.
    Dame Judith Hart: In terms of the review of the aid programme, can the hon. Gentleman give a complete assurance that the conclusions of the Brandt report will be taken into full account and that, if the review is already under way, it will begin again in terms of the Brandt report?
    Is the Minister aware that the general thesis of the Brandt report—the interdependence and mutuality of interest between the Third world and industrialised countries to resolve our own as well as their problems—has consistently been advanced for five years by the Labour Party? Whether or not the European Community is able to reach a joint conclusion—a doubt which I share with the Minister—does he accept that we in Britain must have a view?
    Mr. Marten: I certainly accept that we in Britain will have a view, but it will take a considerable time. I do not want to use delaying tactics, but the Brandt report is a big document and it will require profound study before we come to a measured judgment on it.
    Dame Judith Hart: What about the thesis?
    Mr. Marten: The thesis may be simple, but the contents of the document are not simple.

    Rhodesia
    Mr. Maxtonasked the Lord Privy Seal what further aid is planned for Zimbabwe.
    Mr. Neil Marten: If the elected Government seek assistance, we shall play our part and shall encourage the international community to do likewise.
    Mr. Maxton: Is the Minister aware that there will be considerable disappointment in the House that he is unable to make a statement now on the level of assistance that will be required for Zimbabwe? The election is getting very close and the time has come when that country will need a lot of assistance. Is the hon. Gentleman aware that the House would be grateful if he could say now what that level of assistance is and not leave it to the future?
    Mr. Marten: I cannot say what that level of assistance is until the new, independent Government are duly elected. Research has been carried out both by the United Nations and by ourselves. However, until we have had talks with the newly-elected Government, it is impossible to say what precisely they will want and what we would agree to give.
    Mr. Jim Spicer: Will my hon. Friend give an undertaking that, in any discussions within the Council of Ministers, aid to Zimbabwe will be in the forefront of his thinking? Will he impress that fact on the Commissioners who may be influenced in other directions, depending on the Government who come into office in Zimbabwe?
    Mr. Marten: Yes; that will certainly come up in discussions within the Community. I cannot say whether it will be in the forefront, but I take the other point at which my hon. Friend hinted.
    Mr. Leighton: W ill the Minister comment on the fact that we currently subsidise the six richest countries of Western Europe by a sum twice as large—[Hon. Members: "Three times."]—as we give to 127 of the poorest countries in the world?
    Mr. Marten: I am not sure that I agree with the hon. Gentleman's arithmetic, but my comment is that, if it is true, it is an absurd situation.
    Mr. Bowen Wells: Will the Minister authorise the Commonwealth Development Corporation immediately to continue or to resume its activities in Zimbabwe, and will he increase its financial
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    provision to ensure that sufficient capital is available to invest in Zimbabwe?
    Mr. Marten: The question of the financial position and the capital of the corporation has not been finally decided, but every reasonable opportunity that there is for it to invest in Zimbabwe-Rhodesia will be examined.
    Mr. Robert Hughes: If the hon. Gentleman cannot make a statement about general aid to Zimbabwe, will he accept that it is this country's responsibility to see that adequate funds are available to allow refugees to return as soon as possible, bearing in mind that they will not all be back, even after the elections have taken place?
    Mr. Marten: We are doing a great deal on behalf of the refugees who are returning to Zimbabwe-Rhodesia. Earlier this week I saw Mr. Hay of ICRC and discussed that matter with him.
    Mr. Speaker: Order. As I promised, I shall add an extra two minutes to Question Time because of earlier slippage.

    Zambia
    Mr. McElhoneasked the Lord Privy Seal what further aid he is considering for Zambia.
    Mr. Neil Marten: An agreement covering the £10 million project loan referred to in my answer to the hon. Gentleman's question of 16 January was signed by the United Kingdom and Zambian Governments on 24 January. Zambia's need for further aid will be kept under review.
    Mr. McElhone: The Minister and the Leader of the House will be aware that I have already raised the question of the United Nations Security Council's resolution 544, regarding the Government's responsibility to Zambia. He will know, that ever since the bombing of the 10 bridges, the economy of Zambia has been critical. Despite the offer of £10 million in aid to that country, does he not accept that that is insufficient to meet the present needs?
    Mr. Marten: Many would say that £10 million is insufficient, taking into account the overall view of Zambia. However, that was the agreement which

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    was signed by the Zambians. The Government will look at Zambia's need for further aid, particularly in the context of the bridges, as they will for other developing countries in the light of the relevant economic, political and commercial factors and our financial constraints.
    Mr. Budgen: Will my hon. Friend explain why Zambia cannot borrow the money on world markets? Is there not a grave risk that the grant of the aid to Zambia will enhance the temporary power of politicians and others with the power to distribute the aid?
    Mr. Marten: I cannot agree with my hon. Friend. The reason why Zambia cannot borrow on the world markets—as I am sure she would like to do if she could—is that her economy is not strong enough. The aid for development will help to strengthen that economy.
    Mr. Donald Stewart: Is the Minister aware that the Government of Zambia are in default to hundreds of citizens of the United Kingdom in respect of debts either for insurance damages awarded through the courts or failure to meet bonuses on contracts and so on? Would it not be better to settle the debts from British Government funds before handing out the money to the Government of Zambia?
    Mr. Marten: No, I do not agree with that. Zambia has agreed many of the debts and hopes to pay off the remaining balance when her economy recovers.

RHODESIA
Mr. Shore (by private notice)Mr. Shore (by private notice) asked the Lord Privy Seal if he will make a statement on the progress of the election campaign in Rhodesia.
The Lord Privy Seal (Sir Ian Gilmour): The problem of intimidation of voters in the rural areas, the scope of which has now been confirmed to the Governor by the British election supervisors, continues to cause great concern. The Governor has enacted an ordinance enabling him to suspend elections in any area where systematic intimidation makes it impossible for a fair election to be held. He has also listed a number of areas where intimidation is particularly severe. This should warn those of whatever party who seek to deprive others of the right to campaign freely and peacefully of the possible consequences of their actions.
The Government will also be taking positive measures to strengthen supervision of the elections by sending a large number of additional personnel from the United Kingdom to be present in polling stations in rural areas, to ensure that the arrangements for voting are scrupulously fair.
As the House will be aware, there has been a further deplorable attack upon Mr. Mugabe. Investigations are being pursued. The Governor will continue to take firm measures to deal with intimidation, violence and breaches of the ceasefire from whatever quarter. Despite the serious problems that exist, the Government are determined to carry the election through to a successful conclusion and to ensure that it is conducted as fairly and as freely as possible.
Mr. Shore: First, I thank the Lord Privy Seal for that statement. In particular, I welcome the fact that additional British personnel will be in Rhodesia to help supervise the electoral polling day arrangements, as I understand the right hon. Gentleman to say. I also strongly associate myself with his remarks about the second attempt to assassinate Mr. Mugabe. We are all conscious that intimidation, breaches of the ceasefire and assassination attempts are a great danger in the remaining two or three weeks of the Rhodesian elections.

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We accept that the Governor and his small British staff are doing their best in difficult circumstances, but is the Lord Privy Seal aware that in all that they do they have not only to be fair but to be seen to be fair? That is not so easy. Is he also aware of the growing concern that the advice and information that the Governor and his British staff receive from the Rhodesian military and civil authorities is strongly biased? That is a major problem. How can the Government accept the treatment of the former Prime Minister, Mr. Garfield Todd? Surely, control of prosecutions is one of the powers vested in the Governor? Therefore, why does he not arrange for a noble prosequi, instead of allowing the case against Mr. Todd to proceed?
On the question of the powers for disenfranchising electors in the various districts, the question arises, who will give the Governor advice about the areas where intimidation is said to be most intense? What use is being made of the Commonwealth observer team? It is a pretty high-powered group of experienced people who have been sent to assist in precisely this and other tasks. On the question of publicly accepting the Lancaster House agreement and the outcome of the elections—to which we all attach enormous importance—will the Lord Privy Seal extend an invitation to Mr. Ian Smith to join the other party leaders in publicly reaffirming his commitment to the outcome of procedures at Lancaster House, thereby withdrawing his remarks of yesterday about not accepting the election results if they go the way that he dislikes?
Will the Lord Privy Seal make a major new effort to activate the part of the Lancaster House agreement which, in the absence of any third force for securing peace and the ceasefire arrangements, places the major responsibility for dealing with breaches of the ceasefire on the three Army commanders who are directly concerned?
Sir I. Gilmour: The penultimate question of the right hon. Gentleman is a matter for my right hon. and noble Friend the Secretary of State. I shall draw his attention to the remarks and we shall try to find out whether or not Mr. Smith has been properly reported.
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I am grateful to the right hon Gentleman for his earlier remarks. There is no doubt that the Governor and his staff have done a remarkable job—they are still doing so. They have been unfairly traduced in many quarters. I do not accept the right hon. Gentleman's implications that they are acting on biased advice. He will appreciate from my statement that the advice upon which the Governor was acting when he promulgated his ordinance came from the British election supervisors, who are clear about what they have seen going on in the areas that they visited.
Let me tell the right hon. Gentleman and the House that Mr. Garfield Todd called on the Rhodesian Attorney-General yesterday and made a statement that brought to light circumstances that he had not previously disclosed to the police. In the light of that statement, the Rhodesian Attorney-General is considering whether or not the prosecution should proceed.
Mr. Speaker: Order. I remind hon. Members that the main business of the day is covered by a timetable motion. The present matter will take time away from that. There is also a Ten-Minute Bill and there has been an extention of Question Time. Therefore, I propose to limit the number of speakers on this matter to three from either side.
Mr. Biggs-Davison: Since the Mugabe faction has threatened to carry on the war if it loses the election, and since it is presumably in breach of the Lancaster House agreement as a result of violations of the ceasefire, will my right hon. Friend assure the Governor of full support should he find it necessary to ban those who prefer intimidation to democracy?
Sir I. Gilmour: My hon. Friend is absolutely right. There is a serious problem of intimidation. As I have already said, that is why the British election supervisors have given such advice to the Governor. Intimidation is rife throughout the eastern part of the country. It remains impossible for political leaders, including Mr. Nkomo and Bishop Muzorewa, to hold public meetings in those areas.
Mr. Alexander W. Lyon: How can there be a free election in Rhodesia if a

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substantial percentage of voters are refused the possibility of going to the polls? How can such action be seen as free and fair by the rest of the world? Will Mr. Mugabe have to be killed before something is done about the auxiliaries?
Sir I. Gilmour: I can only say that the hon. Gentleman is maintaining his usual form. Unless he knows better, we have no reason to believe that the auxiliaries are guilty of such deplorable attacks on Mr. Mugabe. Of course, we do not want to ban anyone from voting in the election. However, even the hon. Gentleman should be concerned at the intimidation that might make such action necessary.
Mr. Amery: Will my right hon. Friend announce the composition and terms of reference of the delegation from the House that is to be sent to observe the election? Can he further explain why no attempt appears to have been made to notify members of the Boyd Commission? Does my right hon. Friend not agree that it is useful to have someone there who has already seen the process of election?
Sir I. Gilmour: I am not sure whether the composition of the parliamentary delegation has been announced. However, its composition can be communicated to my right hon. Friend. It does not have any terms of reference. It is going to observe the election. One member of the Boyd Commission is already in Rhodesia. I do not know whether the other members wish to go. If they do, we can no doubt draw the Governor's attention to that fact.
Mr. Faulds: Will not the open partisanship of the Governor—noted by the foreign and British press—the possible banning of Mugabe candidates and the declaring invalid of election results in that part of Southern Rhodesia be seen as an attempt by Britain to right the election on behalf of Mr. Smith.
Sir I. Gilmour: That is a fairly disgraceful question. It is quite outrageous to suggest that the Government is partisan. The hon. Gentleman said that this had been noted by the foreign press. The foreign press take up much that is said in this House. People such as the hon.
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Gentleman are largely responsible for what is written abroad.
Mr. Nelson: Does my right hon. Friend agree that we have a responsibility not to undermine the confidence and authority of the Governor when he is carrying out important responsibilities? Does he also agree that there is no alternative to the Government's present information system. To try to move away from that system at short notice would inflame the situation rather than improve the present degree of violation.
Sir I. Gilmour: I agree with my hon. Friend that no one should wish to undermine the confidence of the country or the impartiality of the Governor. I am sure that that view is shared by every responsible hon. Member.
Mr. Russell Johnston: In view of the widespread and worrying nature of the intimidation, is the Lord Privy Seal sure that the Commonwealth monitoring force is of an adequate size? Is there not a genuine argument for increasing it? As the greatest barrier to intimidation is absolute confidence in the secrecy of the ballot, can the right hon. Gentleman assure us that that confidence exists and that the secrecy of the ballot will be protected?
Sir I. Gilmour: The hon. Gentleman will be able to determine the issue on the spot. However, I think that he betrayed a slight misunderstanding of the duties of the monitoring force. However many monitors there are, they will not be able to prevent intimidation. Those who do not speak the language cannot detect guerrillas in a tribal village. Therefore, the problem would not be helped by an increase in the monitoring force. Such an increase would be impractical at this stage.
Mr. Whitehead: On a point of order, Mr. Speaker. I do not wish to delay the House unduly, but there are at least four or five questions on the Order Paper, starting with Question 12, that directly concern the Lord Privy Seal's statement. Surely those questions should have been given some prefernce in the calling of—
Mr. Speaker: Order. It is grossly unfair to suggest that I should call only those who have a question on the Order

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Paper when there is a private notice question. There is much wider interest in the House.

SUB JUDICE RULE (RHODESIAN COURT ACTIONS)
Mr. Maxwell-Hyslop: On a point of order, Mr. Speaker. It would be immensely helpful if you would make a statement as soon as possible about the applicability of the sub judice rule to actions pending before the courts in Rhodesia. The House should know the rules of sub judice as they affect potential litigation within the realm of the United Kingdom. There are special circumstances, because a Cabinet Minister is Governor of Rhodesia. Questions may arise that are subject to the sub judice rule. It would be helpful to know whether we may properly put questions to Ministers. We do not want to put questions that may be out of order.
Perhaps, Mr. Speaker, you will be good enough to give this matter your consideration. Perhaps you will tell the House whether the rules of sub judice that apply to the United Kingdom apply also to questions concerning prosecutions and judicial issues that involve the decision of the Governor of Southern Rhodesia.
Mr. Speaker: I am much obliged to the hon. Gentleman. Neither he nor the House will be surprised to hear that I shall give my answer tomorrow. I shall take time to consider the question.

FOREIGN AND COMMONWEALTH AFFAIRS QUESTIONS
Mr. Farr: On a point of order, Mr. Speaker. Perhaps you can help us on the issue of questions to the Foreign Secretary. There were 34 questions on the Order Paper today. We succeeded in getting through eight of those questions in 25 minutes. There were only 12 EEC questions, for which 20 minutes was allocated. This happens repeatedly. At a time of rapidly growing international activity it would be desirable to readjust the situation so that we all have a chance of getting further than question 8 or 10 when putting questions to the Foreign Secretary.
Sir I. Gilmour: Further to that point of order, Mr. Speaker. You will be aware that the Leader of the House announced changes last week in the order of the Foreign Office questions.
Mr. Speaker: I remind the House that some of the supplementary questions and some of the answers were inordinately long.

TERRORISM
3.49 pm
Mr. Tony Marlow: I beg to move,
That leave be given to bring in a Bill to introduce measures for combating terrorism within the United Kingdom.
The war in Northern Ireland has been going on for over 10 years. That is twice as long as it took to subdue Hitler's Germany. There are almost as many troops and police in the Province as the Russians used in their initial invasion of the whole of Afghanistan.
The Six Counties are still suffering from a campaign of murder and violence, dominated by a hard core of 300 to 400 known thugs and hit men—men whose allegiance to their own self-interest, and to what Labour Members would call Fascism, is far greater than their commitment to Irish republicanism.
Last month, as many hon. Members before me have done, I visited the Province, and the visit left a very strong impression. For all our problems on this side of the mainland, the difference in Northern Ireland is very striking. Any person, as those hon. Members who have been there before me will know, following the road from the hills into Belfast feels that he could be approaching many similar industrial British cities. The difference is soon apparent when one perceives the desolate nature of the first terrace of stone houses with no curtains or glass in the windows but blind spaces, blocked up with breeze-block, their occupants having long since fled to safer areas. The buildings are bricked up to prevent vandalism and terrorist occupation.
As the road descends into the city, the similarities remind one that it could be Manchester or Cardiff. The differences are, therefore, vivid and chilling. Where there were shops, there are now crude car parks. Where there were pubs and warehouses, only fire-blackened and shuttered-off shells remain. The road is fairly wide, not unlike the main road in any of our major cities, with terraced houses on either side—houses but no streets. Where the streets end, there are now 15 ft walls of corrugated iron, built by the local authority to prevent the two communities tearing each other apart. It is as if the two halves of an urban
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precinct were opposing fortresses, glaring across at each other.
Further on, approaching the city centre, one comes to a fortified island in a sea of relative desolation, with 16 constantly manned "frontier" posts, where ordinary people, women and children, are frisked before entry.
In certain areas of the public imagination—and I would say areas of limited imagination—the IRA may stand for the ideal of a united Ireland. The reality is quite different. Years of violence have spawned anarchy. Legal authority has been replaced by a mafia of bullies. The way of power and influence in the Catholic ghettoes has been to join the IRA. That way people take notice. That way a young man can command the fastest cars, the girls and good living. Intimidation and protection rackets flourish. Local people are terrorised by the gun and blackmailed by the folklore of a united Ireland. Each enclave has its godfather whose tactics and legitimacy have more in common with the Gestapo than with the founding fathers of the Irish Republic.
The popular mass movement in the Catholic community in favour of republicanism has subsided. Less than half the Catholic population now want a united Ireland. They, too, are tired of the violence, poverty and serfdom imposed on them by a group of self-appointed gangsters. The IRA has already detached itself from its natural support, maintaining its domination only by the threat of violence and by the moral compulsion exerted by old loyalties.
These are our people and this is our country. For 10 years they have suffered. For 10 years inadequate Governments have not afforded them the protection and law enforcement to which they are entitled. In that time, 2,000 people, mostly innocent, have lost their lives. The intensity of killing is equivalent to 60,000 people being slaughtered on the mainland or 3,000 in a city the size of Birmingham.
In such circumstances, it is impossible to imagine that we should not adopt more realistic measures in suppressing the terror. Surely we should be as resolute in Ulster as we should certainly be on the mainland. Surely the separation of the two parts of the kingdom by water in no way absolves those in power from grasping the nettle that public opinion would

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force them to grasp were it growing on their own doorstep.
I am glad that my right hon. Friend has grasped the political initiative. I am glad that, according to reports, it is meeting with success. I anticipate that, in association with the Irish Republic, we shall grasp the military nettle even more firmly.
This is a vile war, and we should not be squeamish. We should use all the weapons at our disposal. I should like to concentrate on one such weapon, which in the hands of the enemy has been of major effect—publicity and propaganda. Terrorism thrives on publicity. Why do terrorists claim responsibility for their gory crimes of which no one could possibly be proud, unless they think that it is to their benefit to do so? Terrorists surely want to be known about. They want credibility. They want credibility to justify their actions so that they can work on the weak-minded, such as the "Troops Out" movement. Why do they have a political branch? Why do they have Sinn Fein unless they want a political campaign to educate the public?
Why help them to do it? It gives them a kick and boosts their morale when their actions are blazed across the newspapers of the world. Will it not be disheartening, if, after an energetic campaign, they are confronted with blank screens? Do they not want to enlarge their presence by banner headlines throughout the nation about future bombing campaigns? It does not matter whether they take place; they have had the publicity and gained the benefit.
Why set up mock ambushes for gullible enthusiasts from the BBC if no benefit will accrue? Why parade to the cameras and claim with pride the murder of such noble people as Airey Neave unless they felt there was a useful purpose in doing so? Why do we play their games? Why, as is often the case in newspaper coverage, are IRA apologists given space equal to that of the legal authorities? To take an example, I have here an IRA statement that describes the reactions of politicians as sickening and hypocritical. It says that it is their collective activity, in collaboration with the British Forces, which prolongs the war and the misery that it creates. It offers to all bereaved families deepest and heartfelt sympathy.
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That appeared in a major newspaper. Why do we give money to such publications as this through the Arts Council of Great Britain?
Mr. Bob Cryer: On a point of order, Mr. Speaker, I hesitate to interrupt a speech on a Ten-Minute Bill but it is usual for the House to be provided with details of the legislation sequired. The 10 minutes are virtually up, and the hon. Gentleman does not have much time to do that.
Mr. Speaker: Order. There are two minutes left. Some hon. Members take longer than others before telling the House why they should be allowed to have their Ten-Minute Bill, and I was hoping that the hon. Gentleman would get round to it.
Mr. J. D. Concannon: To make propaganda for the IRA.
Mr. Marlow: My suggestion is that it should be an offence for any person knowingly to publish or distribute written material or to broadcast material that is likely to assist any organisation or person engaged in or contemplating acts of terrorism. That would be put forward as a reserve power. It would be brought into use only on an affirmative vote of both Houses of Parliament. In that way, it would be on the shelf and unlikely to be used.
I have no intention or desire to suppress facts. Facts should always be presented but in such a way at least not to help terrorists.
I fully appreciate the problems of definition in such a Bill, but they are not insuperable and no doubt could be dealt with in Committee. The cry of "Censorship" will go up. At present we have libel laws. I am asking for self-censorship and for a law that would be on the shelf. It would be a law that could be used, but I doubt whether it would ever need to be. It would be a law that would reflect the will of the people, outraged as they are by some of things that they have seen on their television screens.
It would be a law passed through the Parliament of this land to change attitudes and counterbalance the other imperatives found in the media—the imperative to get a scoop where possible—
Mr. Speaker: Order. I invite the hon. Gentleman to come to his conclusion in one sentence.
Mr. Marlow: I have been deprived of a little time by a point of order.
Mr. Speaker: That is why I allowed one more sentence.
Mr. Marlow: This is a small but effective measure. If it is passed, it will have its effect without ever being called into use.
4.1 pm
Mr. Douglas Hogg: I shall put my opposition to the Bill very briefly. It has a great many charms, but it has one defect. It contravenes one of the basic canons of British criminal law. It is a general principle of English law that a person should not be convicted of a criminal offence unless that person intended the prohibited act. In other words, there must be a criminal intention and that element is built into English law in order to protect innocent people from unfair conviction.
There are a number of exceptions to that general proposition. There are the exceptions of absolute liability, and strict liability and there are also classes of offence where the court will assume that people intend the consequences of their actions. But these are exceptions to a general proposition that people should not be found guilty of a criminal offence unless they intend the prohibited act.
This House should be very careful not to extend that basic proposition unless there is a clear and compelling reason to do so. I am bound to say that I do
not think that at this time there is any such clear and compelling reason. Judged against these criteria, what we know of my hon. Friend's Bill fails—and we know remarkably little because he did not trouble us with it at any great length. Clause 1 fails because it makes certain acts an offence if they are likely to have certain consequences. There is no requirement that the accused person should contemplate these consequences or that he should have foreseen them. Far less is there a requirement that the accused person should have intended these consequences.
I have been searching for parallels and precedents and I have found a precedent that will probably amuse my hon. Friends. It is contained in the Race Relations Act 1976. The nearest language that I have been able to find—that certain acts are likely to have certain consequences—is in the offence created by the Race Relations Act of incitement to racial discord. I suggest that that is not a statutory proposition which will attract the wholehearted support of many of my hon. Friends.
The point is that in this case the Bill is likely to imperil rather than preserve freedom. On that basis, I am against it.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and Nomination of Select Committees at Commencement of Public Business:—
The House divided: Ayes 53, Noes 158.

Division No. 178]

AYES

[4.4 pm

Aitken, Jonathan

Griffiths, Peter (Portsmouth N)

Proctor, K. Harvey

Alexander, Richard

Hawksiey, Warren

Rees-Davies, W. R.

Aspinwall, Jack

Irvine, Charles (Cheltenham)

Ross, Wm. (Londonderry)

Bell, Sir Ronald

Lawrence, Ivan

Smith, Cyril (Rochdale)

Bevan, David Gilroy

Loveridge, John

Speller, Tony

Blackburn, John

McCusker, H.

Stainton, Keith

Braine, Sir Bernard

Marland, Paul

Stanbrook, Ivor

Brotherton, Michael

Marlow, Tony

Stokes, John

Brown, Michael (Brigg & Sc'thorpe)

Mills, Iain (Meriden)

Thompson, Donald

Budgen, Nick

Moate, Roger

Thorne, Neil (Ilford South)

Cockeram, Eric

Molyneaux, James

Thornton, Malcolm

Colvin, Michael

Montgomery, Fergus

Walker, Bill (Perth & E Perthshire)

Dickens, Geoffrey

Myles, David

Wheeler, John

Dover, Denshore

Needham, Richard

Winterton, Nicholas

Dunn, Robert (Dartford)

Osborn, John

Wolfson, Mark

Farr, John

Page, Rt Hon Sir R. Graham

Fell, Anthony

Pawsey, James

TELLERS FOR THE AYES:

Garel-Jones, Tristan

Porter, George

Mr. D. A. Trippier and

Gorst, John

Powell, Rt Hon J. Enoch (S Down)

Mr. Gerry Neale.

NOES

Adams, Allen

Flannery, Martin

Mulley, Rt Hon Frederick

Adley, Robert

Foot, Rt Hon Michael

Newens, Stanley

Allaun, Frank

Forrester, john

Oakes, Rt Hon Gordon

Anderson, Donald

Foster, Derek

O'Halloran, Michael

Ashton, Joe

Fraser, John (Lambeth, Norwood)

O'Neill, Martin

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

Fraser, Peter (South Angus)

Parry, Robert

Baker, Nicholas (North Dorset)

Freeson, Rt Hon Reginald

Pavitt, Laurie

Barnett, Guy (Greenwich)

Garrett, John (Norwich S)

Penhaligon, David

Beaumont-Dark, Anthony

George, Bruce

Pollock, Alexander

Beith, A. J.

Gilbert, Rt Hon Dr John

Powell, Raymond (Ogmore)

Bennett, Andrew (Stockport N)

Graham, Ted

Price, Christopher (Lewisham West)

Booth, Rt Hon Albert

Grant, George (Morpeth)

Race, Reg

Bottomley, Rt Hon Arthur (M'brough)

Grimond, Rt Hon J.

Radice, Giles

Bray, Dr Jeremy

Hamilton, W. W. (Central Fife)

Rathbone, Tim

Brinton, Tim

Harrison, Rt Hon Walter

Rees, Rt Hon Merlyn (Leeds South)

Brown, Robert C. (Newcastle W)

Hattersiey, Rt Hon Roy

Richardson, Jo

Brown, Ron (Edinburgh, Leith)

Haynes, Frank

Roberts, Ernest (Hackney North)

Buchan, Norman

Hicks, Robert

Robertson, George

Burden, F. A.

Hogg, Hon Douglas (Grantham)

Rooker, J. W.

Callaghan, Jim (Middleton & P)

Home Robertson, John

Ross, Ernest (Dundee West)

Canavan, Dennis

Homewood, William

Ross, Stephen (Isle of Wight)

Cant, R. B.

Hooson, Tom

Rowlands, Ted

Carmichael, Neil

Hughes, Robert (Aberdeen North)

Sandelson, Neville

Carter-Jones, Lewis

Hughes, Roy (Newport)

Shepherd, Richard (Aldridge-Br'hills)

Cartwright, John

Johnson, James (Hull West)

Short, Mrs Renée

Clark, Hon Alan (Plymouth, Sutton)

Jones, Rt Hon Alec (Rhondda)

Silkin, Rt Hon S. C. (Dulwich)

Clark, Dr David (South Shields)

Jones, Dan (Burnley)

Soley, Clive

Cocks, Rt Hon Michael (Bristol S)

Kaufman, Rt Hon Gerald

Steel, Rt Hon David

Cohen, Stanley

Kinnock, Neil

Stewart, Rt Hon Donald (W Isles)

Concannon, Rt Hon J. D.

Lamborn, Harry

Strang, Gavin

Cowans, Harry

Lamond, James

Straw, Jack

Crowther, J. S.

Lewis, Ron (Carlisle)

Summerskill, Hon Dr Shirley

Cryer, Bob

Litherland, Robert

Taylor, Mrs Ann (Bolton West)

Cunningham, George (Islington S)

Lyon, Alexander (York)

Temple-Morris, Peter

Dalyeil, Tam

Mabon, Rt Hon Dr J. Dickson

Thomas, Dafydd (Merioneth)

Davies, lfor (Gower)

McElhone, Frank

Thomas, Dr Roger (Carmarthen)

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

McKay, Allen (Penistone)

Thorne, Stan (Preston South)

Deakins, Eric

McKelvey, William

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

Dean, Joseph (Leeds West)

McMahon, Andrew

Welsh, Michael

Dixon, Donald

McMillan, Tom (Glasgow, Central)

Whitehead, Phillip

Dormand, Jack

McNally, Thomas

Whitlock, William

Dubs, Alfred

Magee, Bryan

Wigley, Dafydd

Duffy, A. E. P.

Marks, Kenneth

Willey, Rt Hon Frederick

Dunn, James A. (Liverpool, Kirkdale)

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

Wilson, Gordon (Dundee East)

Eadie, Alex

Marshall, Dr Edmund (Goole)

Wilson, William (Coventry SE)

Eastham, Ken

Marshall, Jim (Leicester South)

Winnick, David

Edwards, Robert (Wolv SE)

Mason, Rt Hon Roy

Wrigglesworth, Ian

Ellis, Raymond (NE Derbyshire)

Mawhinney, Dr Brian

Wright, Sheila

Ellis, Tom (Wrexham)

Maxton, John

Young, David (Bolton East)

English, Michael

Meacher, Michael

Young, Sir George (Acton)

Evans, loan (Aberdare)

Meyer, Sir Anthony

Ewing, Harry

Mikardo, Ian

TELLERS FOR THE NOES:

Field, Frank

Miller, Dr M. S. (East Kilbride)

Mr. Kevin McNamara and Mr. Russell Kerr.

Fitt Gerard

Morris, Rt Hon Alfred (Wythenshawe)

Question accordingly negatived.

ORDERS OF THE DAY

  EDUCATION (No. 2) BILL
  [2nd ALLOTED DAY]
  As amended (in the Standing Cornmittee), further considered.

  EDUCATION (No. 2) BILL

    Clause 19
    AWARDS FOR FURTHER AND HIGHER EDUCATION
    4.10 pm
    Mr. Andrew F. Bennett: I beg to move amendment No. 80, in page 19, line 21 after 'certain', insert 'other'.
    Mr. Speaker: With this we may take the following amendments: No. 81, in page 19, line 21, leave out from 'courses' to end of line 17.
    No. 82, in Schedule 5, page 41, line 38, at end insert—
    '(e) other such courses as the Secretary of State shall prescribe by regulations'.
    Mr. Bennett: Amendments Nos. 80 and 81 simply pave the way to the amendment of the schedule by amendment No. 82.
    The House should be aware that the system of discretionary grants to students in higher education is chaotic. A farcical situation exists, where students apply to various colleges and are selected on a competitive basis. When some students are awarded a place, they attempt to obtain a grant. Many students fail to get a grant, but often some students who fail to obtain a place manage subsequently to obtain a grant. It often happens that the least attractive students, as far as the colleges are concerned obtain a grant and a place in a college, and sometimes a student who appears to the college to be more worth while fails to get a grant.
    The problem that I should like to highlight is one that has been brought to my attention by the British Association of Social Workers and the directors of social service departments, because it concerns the certificate of qualification in social work, where the problem is particularly
    1546
    acute. There are several ways in which people can gain a qualification in social work, some involving a mandatory award and some involving a discretionary award.
    I ask the Minister to make a modest provision in the Bill so that if and when money is available he can change a discretionary award to a mandatory award. I should prefer the Minister to make that change immediately, but I suspect that if I were to press him his answer would be "Absolutely, No". However, in simply asking him to make the regulations, I hope that he can do something about it as soon as resources are available. I am asking for a very modest measure, which I hope the Minister can accept.
    In Committee the Minister went some way to indicate that he was sympathetic to the problem. I stress that although I emphasised the certificate of qualification in social work I am aware that the problem exists in many other qualifications, particularly for people who have a degree and who then want to obtain a professional qualification. I hope that the Minister can give an assurance that either here or in another place he will accept the amendment.
    Mr. Christopher Price: May I add my support to the amendment of my hon. Friend the Member for Stockport, North (Mr. Bennett)? This is not a party matter, but it is a very serious matter for many students who, in the old days, would have automatically qualified for discretionary awards when a reasonable amount of money was available. Now that money available to local authorities is so limited, it is incumbent upon the Minister to take more seriously the national needs when fixing mandatory awards.
    The Minister will be aware that the Select Committee is currently studying the matter. One conclusion that I have reached is that the pattern of mandatory awards fixes what happens in our higher education institutions more than anything else. I hope that the Minister—whatever the final outcome of these amendments—will be as helpful as possible. I assure him that it is a real problem for qualified manpower, which the nation needs. It is absurd to waste qualified manpower in this way, simply because the Department has not assembled the machinery to add

    1547
    the social work qualifications, and perhaps others, to those awards which qualify as mandatory.
    The Under-Secretary of State for Education and Science (Dr. Rhodes Boyson): I take the point made by the hon. Member for Stockport, North (Mr. Bennett) about the difficulty of mandatory and discretionary awards. There is a need for a clarifying and strengthening measure.
    Similarly, I take the point made by the hon. Member for Lewisham, West (Mr. Price) that where mandatory grants are automatically paid it obviously conditions the courses that are retained and expanded. The whole matter will have to be examined at some stage. I welcome the fact that the Select Committee on education, science and arts is examining the matter. The problem has grown up over the years, and, particularly at a time when local authorities are under pressure due to lack of resources, there is a risk that courses that should exist could be cut back.
    The amendment would empower the Secretary of State to designate any course for a mandatory award at whatever level and whether part-lime or full-time, the only condition being that it would be provided as mentioned in subsection (2) (a), at a university, a college or an institution.
    Clearly, to designate all such courses would be prohibitively expensive at the present time, but presumably the intention is for my right hon. and learned Friend to be selective in regard to the courses that he chooses to designate. I appreciate that. Nevertheless, the amendment would raise the expectations of many groups. Reference has been made, for example, to social workers, particularly in view of the fact that some courses are mandatory and others are discretionary in regard to the awarding of grants. The training procedure for lawyers is expensive, and there have been a good many letters on that question. We have to consider the Open University students. We have to remember all these matters when we are thinking about mandatory and discretionary awards. The problems of part-time students will also have to be examined.
    There is also the question of what is called lifetime or continuing education.
    1548
    This is a non-party matter. The whole question of part-time students and how they are to be financed must be examined. I hope that the Select Committee is looking at this question.
    In view of the present need to restrain rather than expand public expenditure, there is not at the moment any possibility of meeting such claims. Our estimate is that it would cost about £8 million to accept the amendment. Some people might suggest that it is a negligible amount. Perhaps so, but such sums, taken together add up in the end to a considerable amount.
    We are aware of and concerned about this matter. It is being made more acute because of the problems associated with the resources of local authorities. I am aware that some people accept that at present the resources are not available to enable additional courses to be designated for mandatory awards but who nevertheless—I am sure that the two hon. Members who have spoken come within this category—wish to see a reserve power in the Bill, to be used only when resources can be made available.
    I cannot say any more at the moment than I said in Committee. I am aware, as we all are, of the strength of the case on this issue. I listened carefully to the arguments put forward in Committee. I acknowledge, as do other hon. Members, that genuine cases have been put to us. The Government will take due note of the views expressed in Committee and this afternoon. Note will also be taken of the discussion when the Bill is dealt with in another place.
    Mr. Andrew F. Bennett: In view of that assurance from the Minister—it was a fairly small one, but it was something—I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.

    Clause 22
    SCHOOL MEALS: ENGLAND AND WALES
    Mrs. Ann Taylor: I beg to move amendment No. 34, in page 20, line 30, after 'supplement', insert
    'or whose income level is less than a qualifying level to be prescribed by order by the Secretary of State'.
    Mr. Deputy Speaker (Mr. Bernard Weatherill): With this we may take the following amendments:
    No. 35, in page 20, line 30, after 'supplement'. insert
    'or receive rent or rate rebate'.
    No. 36, in page 20, line 30, after 'supplement', insert
    'or whose income would quality them for assistance under any regulations made by the Secretary of State under clauses 17 and 18 of this Act.'.
    No. 38, in page 20, leave out lines 36 and 37 and insert
    'in relation to any pupil whose parents are in receipt of supplementary benefits or family income supplement.'.
    No. 39, in page 20, line 41, at end insert
    'or if they are satisfied that the effect of the charges under this section and section 23(3) would be to cause that pupil's family to be poorer than they would be if their income were reduced to Family Income Supplement or Supplementary Benefit level.'.
    No. 40, in page 20, line 41, at end insert—
    '(3A) The Secretary of State may make regulations specifying a maximum charge for an adequate meal.'.
    No. 53, in Clause 24, page 23, line 16, after 'supplement', insert
    'or receive rent or rate rebate'.
    No. 84, in page 23, line 16, after 'supplement', insert
    'or whose income level is less than a qualifying level to be prescribed by order by the Secretary of State'.
    No. 54, in page 23, line 26, at end insert
    'or if they are satisfied that the effect of the charges under this section and section 25(3) would be to cause that pupil's family to be poorer than they would be if their income were reduced to Family Income Supplement or Supplementary Benefit level.'.
    Mrs. Taylor: We come now to another very important stage in the Bill—that which deals with the provision of school milk and school meals.
    The amendment seeks to ensure that all local authorities shall have to provide free school meals for pupils from poorer families where the family is not on family income supplement or supplementary benefit, those categories being covered by the Bill as it stands. We feel that the Secretary of State should lay down income levels and that local authorities should abide by them in regard to the provision of
    1550
    free school meals. Grouped with the amendment are several other amendments which also deal with the question of entitlement to free school meals.
    The clause that we are seeking to amend does several very important things. Overall, the effect of clause 22 will be to dismantle the school meals system as we know it in this country. The Government will be doing this under the guise of giving new freedom to local authorities, but it will happen nevertheless. The clause is a very serious one because it removes all nutritional standards from school meals provision. The idea is that in future, in regard to the school meals, the policy is to be one of "anything goes". A local authority will be free to provide whatever level of school meals it sees fit to provide. That is in contrast with the present system, under which certain nutritional standards are established by the Secretary of State and local authorities are obliged to abide by them.
    The clause goes even further, in that it also removes the provision and the guarantee that all children from low-income families can get free school meals.
    The clause will lead to a reduction in school meals provision, to higher charges for school meals throughout the country, and to many redundancies among the staff who at present are employed in the school meals service. We believe that the clause and the Bill will have a very serious and detrimental effect not only on the school meals service but also on the educational opportunities of the children.
    When the clause was discussed in Committee, the Minister did not say at any time that he thought that school meals were a bad thing or that they should not be provided. Indeed, the Government are not seeking to cut this form of provision because they think it is wrong to make it. They are cutting it because they want to make savings in the education budget, and have decided that this is a vulnerable area in which local authorities should be free to cut as they wish.
    Local authorities will take advantage of this clause in the Bill as a means of reducing their expenditure. They will also take advantage of it in increasing the price of school meals. The House should be clear about the kinds of prices that

    1551
    we are talking about. The price of school meals has already been increased once this month in anticipation of the passing of the Bill. The Under-Secretary of State will recall the debate that we had on that occasion. He will also recall the statement made by his right hon. and learned Friend, when the price increase was announced, that the increase had been made pending further increases in the price of school meals which will follow very shortly.
    It is important also to remind the House that we now know the kind of level of prices that local authorities are proposing to charge in the very near future. Some authorities, such as Devon and Warwick, have already announced that they intend to go for a 45p charge immediately the Bill goes through. We know that the Government hope that the Bill will be passed in April. Northampton shire has already said that it intends to charge 55p in April. Other authorities have announced similar levels of charges. Some authorities have gone further and said that they intend to introduce a 60p charge from September of this year or from January 1981.
    The increases in prices that we are talking about are not insubstantial; they are significant and very important. The Minister cannot simply shrug the issue to one side and say that the increases do not matter, or say, as he has said in the past, that when we talked about 50p or 60p school meals we were being alarmist and spreading fear and despondency. Our predications have been proved right, for proposals of the sort that we mentioned are now being adopted by many councils in this country. By this time next year the price of school meals in most areas will have more than doubled as a result of the Bill, at a time when the Government are giving no extra help to families in need and are refusing to increase child benefit or give extra family support.
    4.30 pm
    It is against that background that we have tabled our amendment. Our aim is to minimise the effect on those worst hit by the provision. We also wish to emphasise that there should be a national policy introduced and maintained by the Secretary of State, both in terms of the pricing and the nutritional value of school meals.
    Children who receive free school meals in future will not be guaranteed a meal of any particular nutritional value. It is important that we do not shrug off the fact and say that nutritional values do not matter because everyone is well fed these days and children do not need a meal at lunchtime.
    In Committee the Under-Secretary almost fell into the trap of saying that it did not matter what sort of meals were provided. He said that there were good reasons for including nutritional standards in the 1944 Act, but he implied that perhaps it did not matter if nutritional standards were now abolished.
    However, the Under-Secretary also acknowledged that the changes and the abolition of nutritional standards would cause hardship and problems. Indeed, he even acknowledged that the Bill might bring about a little malnutrition among some children, but he shrugged that off and said that it did not really matter because only a few children would be affected. It is important that the hon. Gentleman was at least honest enough to admit that the Bill and the clause will cause problems.
    In Committee many of my hon. Friends pointed out to the Under-Secretary much of the recent evidence about the importance of school meals in children's diets. Has the Minister looked up the articles and surveys, in The Lancet and elsewhere, which prove that school meals are necessary for the children who need a sheet anchor for their nutrition? If the Under-Secretary has not done so, I suggest that he should. He cannot remove all the conditions on the standard of meals to be provided by local authorities and expect that not to have detrimental results.
    If the hon. Gentleman is willing to admit that it may have serious results it is incumbent upon him to look at the matter again. If he will not assure us today that he will reintroduce national nutritional standards, I hope that he will reconsider the matter before the Bill goes to another place and will change his mind.
    If the Bill goes through, it will hit many children and families severely and one of its major impacts will be the increased charges provided for in this clause.
    The clause will hit families who pay for school meals in the ordinary way,

    1553
    and it is important to remember that the majority of families allow and encourage their children to take school meals. More than 75 per cent. of junior children and more than 50 per cent. of secondary pupils take school meals. If the new charges are introduced many family budgets will be badly hit.
    We have only to look at a typical family with two children to see what will happen. When the Bill was introduced in October the price of a school meal was 30p. Within a short time it will have doubled to 60p—an increase of £1·50 per child per week. If we take this clause with the other new charges that the Government hope to introduce, we see that the average family will have to spend on meals and transport more than £5 a week for each child, simply to send him to school and to provide him with a meal.
    Mr. Tony Marlow: The hon. Lady is taking the maximum situation under all the circumstances. There will be alternative provision. Only one-third of the cost of school meals is represented by food; the rest is catering, administration and all the other bits and pieces. If they wish, families will be able to provide a nutritional meal for their children to take to school at less than the existing cost of a school meal.
    Mrs. Taylor: The hon. Member would do well to read the Committee Hansards, because he would see that much evidence was brought before the Committee about the proposed charges that many local authorities have decided to introduce. If the authority charges 60p for a school meal, that will involve a cost of £3 per week per child. I know that the hon. Gentleman has reservations about the new transport charges proposed by the Government—he has tabled an amendment on that matter and perhaps the Government will take notice of it—but if the new charges are introduced the average family will have to pay £5 a week for each child. That is not an exaggeration. Indeed, depending on what happens to transport charges, it may be an underestimate.
    The new charge of £5 a week simply to send a child to school will obviously cause hardship to many families, but
    1554
    some families will suffer even more than those who are paying the current rate for school meals. I refer to the families who are entitled to free school meals because they are low-income families.
    Many such families will face an increase not from the current price of a school meal, but from nothing to 50p or 60p a day for each child. They will suddenly have to find £2·50 or £3 a week for each child. Those families where a parent is working, but not claiming family income supplement or supplementary benefits, will be severely hit by the Government's proposals. They will be forced deeper into the poverty trap. The balance will be tipped in favour of those families being better off not working.
    Over the years we have heard a great deal from Conservative hon. Members about the problems of the poverty trap and how it is wrong that people should be better off on social security than in work. Yet this one measure will ensure that many more families are forced into the poverty trap and made worse off because they are working than they would be if they were on social security.
    There has been some dispute about just how many families and children come into that category. When we first discussed the matter last year, the Secretary of State said that 500,000 children at present entitled to free school meals would lose that right as a result of the clause. In Committee, the Under-Secretary revised that figure. He said that only 300,000 children—I emphasise "only"—would lose their right to free school meals. What he failed to point out then, but has since acknowledged in a letter to my hon. Friend the Member for Bedwellty (Mr. Kinnock), was that the real figure is 450,000, because 150,000 children entitled to free school meals on income grounds do not take them up. Many of us know why. It is because there is a stigma attached to that entitlement. But all of the 450,000, on the Minister's now confirmed figures, will lose that entitlement if the clause goes through as it is.
    Mr. A. J. Beith: The hon. Lady said that the additional 150,000 was accounted for in part by the stigma that often attaches to children being "free school meals children". Will she remind the Minister that

    1555
    under the Bill there will be a double stigma? The Government are to make it really hard for children to have free school meals, even if they are entitled to them. They will have to prove not merely that they are financially entitled to them, but also that they are in need of special provision, because the obligation to provide free school meals applies only where the local authority thinks that such provision is appropriate or necessary for the children.
    Mrs. Taylor: The hon. Gentleman has made a valid observation. It was confirmed by the Minister in Committee in an interesting discussion about what made up a good breakfast and what judgments the local authority should use in determining who should have a free meal.
    It is clear that many children will be at a disadvantage because of the Bill. Many families will be hit by the increased charges. Many thousands of children will be hit because their right to a free school meal will be removed. As the hon. Member for Berwick-upon-Tweed (Mr. Beith) pointed out, those entitled to free school meals in the future will be put at an even greater disadvantage, because there will be a completely new category. Only children on family income supplement or supplementary benefit will be entitled to free school meals. That means singling out those children even more and increasing the stigma that often discourages children who need free school meals from taking advantage of their entitlement.
    What do the Government want to happen as a result of the clause? Does the Minister want to see the break-up of the school meals system, the dismantling of all the present provisions? Does he want to discourage families from allowing their children to have school meals, or does he want to encourage them to pay the economic cost of the meals? If he wants them to pay the economic cost, he must be prepared to provide the income for them to be able to do that.
    If the Government refuse to give more family support through child benefit and similar measures, the Minister should expect all those wage earners who have responsibility for children to make increased wage claims simply to cover the kind of increased charges that the Government are imposing on them. How-
    1556
    ever, I strongly suspect that he and his right hon. and learned Friend will continue to say, as do their right hon. and hon. Friends, that those who make large wage claims to compensate for increased charges are acting irresponsibly. All that the Government are concerned about is cutting public expenditure, not maintaining family support and the education service, which should be their first responsibility.
    4.45 pm
    The clause gives the pretence of local authority freedom. We have heard a great deal about that freedom, both from the Secretary of State and from his hon. Friends. But it is a pretence. It is not real freedom. It is a freedom without cash, a freedom simply to cut the existing services.
    The Government are trying to pass the buck to local authorities. The Secretary of State is the person with responsibility for education services. It is he who should be protecting the services. He and his right hon. and hon. Friends are damaging the education service and education opportunities by dismantling the school meals service.
    Our amendments are intended to try to minimise the damage that will be caused by the clause. I hope that the Under-Secretary will be able to accept some of them, because he has said that he is concerned about the effect of the clause on poor families. If he is concerned about the future of school meals or about the future welfare of the children who will be hit by the clause, he needs to think again about what he and his Government are doing, and to accept some of our amendments to give better safeguards for those children who need help most.
    Mr. Beith: I rise to support the amendment and to speak to a number of the amendments grouped with it—amendments Nos. 36, 38, 39, 40 and 54, all of which are in my name and the name of my hon. Friend the Member for Cardigan (Mr. Howells) or my hon. Friend the Member for Inverness (Mr. Johnston).
    The school meals service has a record to be proud of. It is a service of very high standards, a service that can point to a proven record of improved nutrition. It is one of the few parts of the education service that can be demonstrated to

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    have had a precise improving effect. Therefore, we should be cautious about making drastic changes in it.
    I do not deny that it is desirable to experiment both with the way in which meals are provided and served and with how we cater for those whose income does not allow them to use the system. Therefore, there are two kinds of experiment that I am anxious to encourage. One is in the establishment of better, more flexible income scales for help with school meals than exist under the present, rigid free school meals system. The other is in the provision of more choice of food, perhaps related to the purchase of individual items.
    A great deal has been done on those lines, and a great deal can be done, within the framework of the present law. Some easing of the statutory provision may be necessary, particularly to develop cafeteria systems and to ensure that local authorities generally can operate a proper incomes scale, instead of the present free school meals system.
    However, the provisions of the Bill do neither of those things. They very much worsen poverty trap problems presented by the way in which help is given to those who cannot afford schools meals. They go far beyond what is necessary to enable local authorities to run an efficient and inviting cafeteria system of meals for children within their areas. The Bill does a number of damaging things that these amendments are designed to prevent.
    Mr. Neil Kinnock: Even if these experiments in the provision of cafeteria services are pursued, has the hon. Gentleman been able to find out whether the Government will make extra allocations to enable local education authorities to meet the enormous capital cost of moving their school meals service from the current provision to a new space-age provision? Is he aware that the required equipment is costing West Glam organ county council £16,000 without putting even a slice of bread before any pupil?
    Mr. Beith: The Government have no intention of putting more money into the school meals service. They are trying to take out as much as possible. Any experiments conducted under the present
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    Government's arrangements must be of a limited nature. Any local authority that pours money into expensive new systems is likely to be making a great mistake. There is scope for limited experiments within capital investment already made. Most local authorities have made substantial capital investment in the school meals service in the post-war years. One has only to tour schools in one's constituency to see well-equipped kitchens, maintained to the highest standards of hygiene, that would be envied by any commercial concern and by any public health inspector who know the standards that exist in some commercial restaurants and cafes. We should be loth to waste or disregard what has been achieved.
    Unless the Bill is amended in the ways that have been suggested, much damage will be caused. We shall leave the way open for local authorities to provide no school meals at all, except for a limited number of children. We shall place no limit on the cost of meals. We shall create a terrible poverty trap problem.
    Mr. Kinnock: And unemployment.
    Mr. Beith: The hon. Gentleman mentions a matter with which I had not intended to deal, but it is a fact, particularly in a constituency such as mine, that a great number of people, who are not very well paid, do a very good job within the school meals system and contribute a great deal to the welfare of the school. In Committee, the Under-Secretary of State, the hon. Member for Brent, North (Dr. Boyson) testified that the school meals staff often played as big a part in educational welfare and pastoral work in schools as any of the teaching staff. These people will be put on the scrap-heap as a result of some of the Bill's proposals.
    The Bill would leave the way open for a situation in which there would be no school meals at all for the vast majority of children. Meals would be available only to those of families receiving supplementary benefit and family income supplement. The effect will be severe in certain circumstances. Families with both parents working who have hitherto relied on the school meals system to ensure that their children get a decent mid-day meal will he especially hit. These are often the families that depend on two wages. They are families on low wages.

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    Single parent families will be badly hit. The single mother depends on her child getting a hot meal at mid-day so that when she returns home after a hard day's work she is not obliged to cook a full meal for herself and the child. The Government now seem to be saying, through this and other aspects of the Bill, that single mothers should not worry and that instead of going out to work and trying to pay their own way, it would be better if they received State benefit.
    By accepting State benefit, the Government seem to say, the school meal will be free and the single mother will be better off in every way. If the mother goes out to work there will be no school meal provision for the child as her earnings will be too high. Why should the Government say this to people who want to exist by their own efforts and not depend on State benefits?
    The Secretary of State for Education and Science (Mr. Mark Carlisle): I have listened with care to the hon. Gentleman. Will he give some examples of the areas that have announced that they will abandon all school meals?
    Mr. Beith: The Secretary of State has left local authorities in an extraordinary position. He should not open that issue. Local authorities are told to plan their school meals provision next year on the basis of a Bill that the right hon. and learned Gentleman has not yet got through Parliament. The provisions may, we hope, be changed in this and other respects. Some local authorities have announced terrifying proposals that will put school meals far beyond the reach of families earning any ordinary country working wage. Other authorities may find, not next year, but the following year, that the system can be run only by making the minimum provision for those on supplementary benefit and family income supplement and none for the remainder.
    Mr. Carlisle: The hon. Gentleman says that, in many areas, there would be no provision for school meals under the Bill. Will he justify that by saying in what areas he believes it will happen?
    Mr. Beith: I have said that the Bill leaves the way open for a local authority not to provide any school meals except for those on supplementary benefit and
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    family income supplement. Some authorities, including mine in Northumberland, have said that they do not want to do that. Nor do they want to get rid of free school transport. The Secretary of State, replying to a question from me, has said that authorities that fail to achieve the massive savings for which he asks must find savings in the mainstream of education to make up for indulging in the luxury of providing children with school meals and enabling them to get to school without paying large fees for transport.
    The right hon. and learned Gentleman cannot tell the House that authorities can disregard what he is asking them to do and make all the provisions for which the Opposition are asking and at the same time deny that he intends to penalise those authorities by ensuring that they pay for their savings in the mainstream of education. The right hon. and learned Gentleman is saying to authorities, particularly those in large rural areas and those with large numbers of families just above the family income supplement level, that their general education standard must be lower than those authorities that find it easier to comply with what he asks. The right hon. and learned Gentleman has left authorities in an absurd position.
    If school meals provision is either removed or made prohibitively expensive in large scattered rural areas, a whole series of further problems arise. Children in those areas face an enormously long school day. They leave for school at 7·15 am or 7·30 am and do not return home until 5·15 pm or 5·30 pm. Their journey often means changing buses or waiting at the end of a farm track for a car or bus to pick them up. They often arrive at school cold and wet having waited for transport in cold and adverse weather conditions. They, above all, need a hot meal at school to sustain them.
    These same children have to attend schools in distant towns. Ministers seem unable to appreciate the concern of parents whose children, in the absence of school meals provision or where school meals are too expensive, go out into the town to get something suitable to eat in cafes and restaurants. The right hon. and learned Gentleman should understand that this may be all right in Runcorn. But, in an area where children

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    are attending schools 20 miles from their homes, in a town that they visit only for the purpose of attending school, parents do not want their children wandering around that strange town in the middle of the day looking for cafes, restaurants or, if they can give the impression they are over 18, pubs, to get something to eat. Parents would much prefer an adequate and cheap school meals system for their children.
    More should be done to safeguard the school meals system. One of my amendments tries to ensure that a basic school meal continues to exist at some maximum charge. The Bill provides no limit to the cost of a basic school meal. I have tried to word the amendment in such a way as to leave open to the local authority the chance to offer a variety of foods, perhaps some more expensive, while still recognising what the Government seek to achieve. I refer to amendment No. 40.
    There must be some way in which the Government can set a maximum for provision of a reasonably priced meal. So far, however, that is not the Government's intention. The Government's intention is that there should be no compulsion to provide anything and no maximum cost for what is provided. That could spell disaster for parents in many areas.
    5 pm
    The other main aspect of the Bill with which I wish to deal is its creation of a class of children much smaller than those at present receiving school meals—a class I have called the statutory poor and whom the hon. Member for Birkenhead (Mr. Field), in an evocative phrase, called the people who earn their poverty. His description goes far too wide, and I want to concentrate on the "statutory poor" those who qualify for free school meals under the Bill because they are entitled to family income supplement or supplementary benefit. These children do not merely have to prove that they are within that category. The local authority's obligation to them is to make for them
    "such provision…as appears…to be requisite."
    The authority could therefore say of any child whose parents were not on family income supplement or supplementary
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    benefit" We need do nothing for you because we know perfectly well that your mother gives you a good breakfast in the morning and that you will get a decent tea when you get home." But when they inquire into the case of another child, they find that he is not getting a breakfast and that the mother comes home very late and probably does not provide a meal when the child gets home from school. In such a case the authority knows that it will have to make some provision.
    Any local authority that strictly interpreted the intention of the Bill would find itself investigating the particular circumstances of every individual child. Why else should that phrase be included? Why else does the Bill not simply say that school meals have to be provided for the children of parents on family income supplement or supplementary benefit? Instead the Bill makes a case-by-case provision. The local authority must make
    "such provision…as appears…to be requisite".
    In that way the Bill adopts the old poor law approach whereby the local authority will decide in individual cases whether children are getting enough food at home.
    If the child cannot be shown to need a meal at school the local authority will have no obligation to provide one. If the child can be shown to need a meal, that meal must be free of charge. So the Bill creates two categories of children who must either be given something free or be given nothing. I cannot imagine what the Minister envisages local authorities are supposed to do in operating the clause.
    The parents who are supposed to benefit from such provision as the local authorities must make face a much more fundamental problem. They will be in the most steeply-sided poverty trap that the Government have yet managed to invent. The moment they move above family income supplement level, or begin work after having been on supplementary benefit, they will lose the lot. They will lose free school meals and free school transport, and they will find themselves paying a massive rate of tax—perhaps a marginal rate of 250 per cent. They could be paying £5 on school meals and £5 on school transport per child under

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    some of the schemes that have been suggested by some local authorities.
    In their manifesto the Conservatives said:
    "we shall do all we can to find other ways to simplify the system, restore the incentive to work, reduce the poverty trap".
    The Bill will massively increase the poverty trap. Education Ministers have got away with it so far. They have managed to carry on the discussion on the Bill without their colleagues in other Government Departments, who we hope are still trying to implement that manifesto aim, taking any notice of what they are doing. I can assure Conservative Members that the total effect of these provisions and those in the school transport clause will be to erect a massive poverty trap at a cut-off point that affects a great many families.
    I ask Conservative Members who have rural constituences to think of a farm worker earning between £66 and £70 per week. With two children such a man would be just above the family income supplement level. With three children he would be just within that limit. The moment he earns overtime pay he will lose free school meals and free school transport and he will be clobbered by an extraordinary poverty trap.
    We should remember also the hospital porters and the low paid workers in the hospital service. They are drastically affected the moment they do any overtime. They do not find themselves on a sliding scale by which they lose some benefit. They lose everything and have to pay fully for anything they receive. They pay heavily for the privilege of sending their children to school and of their children receiving a meal when they are at school.
    I cannot understand how Ministers who fought an election on a pledge to make it attractive and worthwhile to work can be prepared to tell us from the Dispatch Box and in the Standing Committee that they are standing by this kind of scheme for no other reason than that they have been unable to think of anything better. That is the only answer we have had so far. It is the only way they can devise of discharging some sort of obligation to those whom they know cannot afford school meals or school transport under the proposals they are making.
    They are saying to hundreds of thousands of families that it pays not to work. They are telling them to stay on State benefit and under no circumstances to get a job. To those with work their message is to stay below the family income supplement level because once they exceed that level they have too much to lose. They are telling these families that they will be better off as beneficiaries of the State than by aiding themselves by their own efforts.
    The curious thing is that the Government have adopted a different approach to the assisted places scheme. They have devised a generous incomes scale for that scheme which would enable people on substantial incomes to obtain at least some benefit. But it is beyond their wit and imagination to devise any such scale which would bring benefits on school meals or school transport to families that are just over the supplementary benefit or family income supplement levels. That must be absurd.
    Most of the amendments—certainly the one on which we shall vote—are attempts to deal with that problem. We have given up the attempt to persuade the Government to abandon their plans on school meals. The amendments deal with a much narrower issue, one upon which we would hope for some support from Conservative Members who are also concerned about the poverty trap. They are being invited tonight to build some safeguards into the Bill to ensure, as amendment No. 39 does, that families are not worse off working than staying out of work.
    Amendment No. 39 proposes to insert the words—
    "or if they are satisfied that the effect of the charges under this section and section 23(3)"—
    that is the school transport clause—
    "would be to cause that pupil's family to be poorer than they would be if their income were reduced to Family Income Supplement or Supplementary Benefit level.'."
    How can Ministers not want to write that minimum into their Bill? How can they want to retain the situation in which people are better off on State benefit thatn they are in work?
    The Goverment's proposals have been badly thought out. There is no evidence that Ministers have listened to the pleas and advice from many quarters, including people who are not unsympathetic to

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    some of the things the Government are trying to do on school transport. There are people in the local authorities who are terrified of having to implement the Government's plans. Why on earth cannot the Government apply some thought to the matter? Is it too late, or are they still prepared to listen?
    Mr. Tim Brinton: The hon. Member for Bolton, West (Mrs. Taylor) and the hon. Member for Berwick-upon-Tweed (Mr. Beith) have justly identified a significant problem in the case of school meals and school transport charges. However, the remedy they suggest is quite insufficient and will only add to the expense and to the bureaucratic problems that local authorities would face. In their speeches we have heard a requiem for the Labour Government's failure to continue to introduce tax credits or negative income tax which is the vital clue to this and many other problems that we face. I accept that that would be complicated and expensive, but until we reach that target we shall always have to face the poverty trap.
    I have no wish to be rude to the hon. Lady, but in the case of school meals she reminded me somewhat of Mary Poppins. On the one hand Mary Poppins nannied us into the fact that we must have a full nutritional value of each school meal laid down by the State, just in case the child did not get the necessary vitamin on a particular day at a particular time. Having dealt with that, Mary Poppins then explained to us that meals were very expensive because of the conditions she had so carefully and exactly laid down.
    We live in a real world, however, where the economy is totally out of kilter. We must urgently adapt the economic folly of the school meals system no matter what our political philosophy. We must prevent the situation where the food content of the meal is 16p or 17p of the 50p total value. That is a matter of urgency, because that is where the waste occurs. We must also remember that many of the pupils qualifying for and receiving free school meals—I know this for a fact—sell their vouchers and go to the chip shop. Forty per cent. of pupils do that in one large school in Kent. They prefer fish and chips and Mars bars.
    The advice of Mary Poppins is not suitable for 1980. It is not good economic
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    advice. I believe that school meal charges will not rocket as dramatically as the hon. Member for Bolton, West has suggested because there is an economic takeoff point where, as has been suggested, parents provide instead of pay.
    Every time school meals charges are raised we shall find that there is a cut-off point where money is not recouped. That is why, in Kent, we are fully aware of the situation and are limiting rises in charges accordingly. Let us have tax credits as soon as we possibly can—
    Mr. Kinnock: If there is a diminution in the marginal propensity to consume as a consequence of the rise in school meal prices how much of a loss is the county of Kent prepared to sustain on each school meal by under-charging for nutritious or even non-nutritious meals? Will the consequence not be that, even with higher charges on that scale, under the freedoms given in the Bill the cost of the school meals service per unit to the providing county will be greater and thus defeat the hon. Gentleman's objective?
    Mr. Brinton: The hon. Member for Bedwellty (Mr. Kinnock) has used many long words. Quite simply, Kent is determined to make the school meals service a fully economic operation with choice of meals and with private enterprise running part of the operation. That system will solve many problems. I cannot support this amendment.
    5.15 pm.
    Mr. Reg Race: I believe that these parts of the Bill are absolutely central to the Government's economic and political philosophy. The clauses on school meals, milk and transport are the meanest, most rotten and most evil pieces of legislation. I believe that thousands of people throughout the country are now in open revolt over these proposals. It is important therefore that the House gives serious consideration to the amendments.
    The hon. Member for Berwick-upon-Tweed (Mr. Beith) properly raised the question of the social usefulness of school meals and the problem of the poverty trap. If one defines the usefulness of school meals in our society and asks why these amendments should be carried into legislation, one must take account of the social usefulness of school meals to the children themselves. At

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    mid-day children should have the opportunity to sit down to a communal meal.
    In talking about the value of school meals we must consider them important because they provide nutritional support for the poorest children. When we consider the cost of the school meals service we must remember that the Government are not acting in a vacuum but in the context of the wider economic problems that they face.
    I challenge the need to cut the school meals service at all, given the fact that Government revenues from North Sea oil will be substantial in the next four years. By 1984 North Sea oil will be bringing in probably more than income tax—something to the tune of £25,000 million a year. Against that background should the Government not be saying that they will spend some of those revenues to support the poorest families and provide a service regarded by many people as essential to the welfare of children?
    The school meals service is important for a child's educational and social development. The proposals in the Bill which the amendments seek to rectify have been put forward against the background of falling consumption—according to a national food survey—of meat, cheese and milk. That consumption was falling during the first years of the last Labour Government. Unfortunately that is as far as the figures go.
    It is absolutely monstrous that the Government should pretend that, somehow, economic circumstances have so changed that we must abolish the school meals service in many parts of the country or allow it to continue only in such an attenuated form that it benefits the smallest proportion of our children.
    The Government argue that the cuts in the school meals service can be achieved by reorganisation and changes in nutritional standards. The Secretary of State is fond of saying that local authorities have been given the power to vary the school meals service in order to provide more choice. That argument is completely at variance with previous advice issued by his own Department and is totally at variance with reality. In 1975 the Department of Education and Science published a report "Catering in
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    Schools". Dealing with infants and younger school pupils, the report said
    "We believe that the school catering service should not normally offer any daily choice of menu to these children. The exercise of even the simplest choice can be a difficult matter for young children…The meal for this group should be the set two-course type, and include a variety of suitable combinations of meat and vegetables and main dishes built around other animal protein foods—fish, eggs or cheese."
    The report went on to describe the problems of choice affecting children in the 9–14 age group. It stated:
    "We recommend that the middle years' age group should be offered a set meal with some choice in each of the two courses provided…We considered whether the older pupils in the age group…should be given the option of an a la carte meal, but we decided against this. These particular pupils are at a critical stage in their physical development, and they have an enhanced need for both energy and nutrients. It is particularly important for them to eat a midday meal which meetts the recommended nutritional standard and an a la carte system would provide no guarantee that they would do so."
    Savings cannot be made by introducing such an a la carte system without cutting the nutritional standards for children under 14 and causing substantial harm to their health. A number of local authorities are engaged in experiments with cafeteria and a la carte systems. Examples are Leicester, Cornwall, Red bridge, Hillingdon, Surrey, Devon, Somerset, Lancashire, Berkshire and North Yorkshire.
    Savings on school meals will be made by introducing a la carte systems, not because the authorities want to extend choice but because they want to cut costs by lowering nutritional standards and by reducing the number of workers. Earlier the Secretary of State asked for examples of local authorities which are taking action to remove the school meals service completely. If a local authority increases the price of a school meal to 60p that is the result of a political decision. Such an authority is saying to its electors "We do not really want to run a school meals service. We want to ration the number of school meals provided by price". If local authorities seriously want to phase out the school meals system in an area, all that they have to do is to raise the prices, because parents will not be able to afford them.
    Mr. Donald Thompson: Will the local authority in whose area the hon.

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    Member for Wood Green (Mr. Race) lives do that?
    Mr. Race: My local authority is Labour-controlled and I hope that it will do nothing of the kind. However, I am sure that many Conservative-controlled authorities will do it because they have said that they will. Many Conservative-controlled authorities will reduce the nutritional standard of school meals. That is wholly deplorable.
    For example, the Lincolnshire county council school working party has agreed to a simplified menu pattern which will cut food costs, by 2·3p per meal, at November 1979 prices, and reduce the food value of the meal by approximately 13 per cent. That is a far cry from the attacks by Tory Members on the high marginal costs of the school meal service. That authority has been given the freedom by the Secretary of State. It is not cutting manpower costs but cutting nutrition by 13 per cent. That is the name of the game for the Tory-controlled local authorities.
    Liverpool plans to save £1 million by using frozen meals prepared by outside contractors. Essex county council plans to cut the cost of food in primary schools by 2p a meal to produce a £700,000 saving. That authority plans to use convenience foods at such a level that staff can be cut by 40 per cent. A number of other authorities are planning similar cuts.
    If we are serious about providing meals for children at school it is no good assuming that local authorities will, under the terms of the Bill, be prepared to provide proper meals of set nutritional values. The whole purpose of the Bill is to remove that obligation from local authorities and to enable them to save money as part of the Government's public expenditure programme.
    The current cost of a school meal is 54p of which only 16·5 is spent on food. The implication is that the rest is wasted or frittered away in administration. That is not so. The rest of the cost goes to pay the wages of the workers who are relatively low paid, although they are paid more than the catering wages council rates. If Tory Members are critical of the amount spent on the meals service simply because the workers are paid
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    slightly more than poverty-line wages, they should say so openly.
    The school meals service is efficient. That is not only my view, it is the view of the local authority employers. When they were examining the prospect of reducing the number of workers in local Government under the last Labour Government they examined the possibility of introducing a bonus scheme in the school meals service. They discovered that the prospect of doing that wasnon-existent because the school meal workers were so efficient that the majority of them were working at above the bonus performance. The authorities did not want to pay out money on a performance level which was already achieved. To say that waste is incurred on a vast scale is the biggest load of garbage that I have heard in the House since I was elected.
    It is clear that a reduction in the school meals provision will affect women at work. The Equal Opportunities Commission has said that such a reduction and attacks on other items such as nurseries will affect working women. The Government have an appalling record for making provision for women. The Government have said that they intend to remove the statutory requirement to supply school meals and milk. They have said that they intend to remove other supportive measures for women in work, such as the return-to-work provisions in the Employment Protection Act. They are also reducing the number of nurseries.
    It is nonsense to say that the Government are providing incentives, as they promised in their election manifesto. Children are being asked to perform better at school while going hungry at lunch time and doing without the protein and calcium now provided to the under-seven-year-olds in school milk. The amendments are necessary. If they are not carried a generation of children will grow up many of whom will be under fed and some of whom will have been deprived of the nutrient of school milk. That will store up many problems for the future.
    5.30 pm
    Mr. Malcolm Thornton: It is not the purpose of the debate to explore the economic position of the country. Nevertheless, the clause is included in the Bill because of the

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    economic position. For the better part of the past decade public expenditure cuts have been the order of the day. Successive Governments have urged local authorities to cut back on their expenditure.
    Unfortunately, because of the statutory overload that has been placed by Government legislation on local authorities, the areas that could be considered to make substantial savings have been narrowed. That has resulted in many of the services, in an overall sense, becoming depressed. Consequently, we have many three-wheeled wagons rolling along the road. We have done many things rather badly because we have been slicing off the top.
    What the Bill attempts to do, in response to the tremendous pressure from local authorities for many years, is to give them greater discretion. It will allow them to consider larger areas of the expenditure that they incur and to use discretion. We hear much in the Chamber—and lip service is paid to it by hon. Members on both sides on occasions—about that essential ingredient of our democratic system, local authority freedom.
    As I said on Second Reading, freedom carries with it its own responsibilities. Local authorities must not be afraid of exercising those responsibilities. By proposing to reduce by about 50 per cent. the amount contained in the rate support grant settlement for the school meals service we are giving to local authorities a greater area of discretion.
    Mr. Kinnock: If freedom carries responsibility, does not responsibility carry freedom? The responsibilities that local authorities bear already and the reduced resources that are to be made available to them render that freedom ineffectual.
    Mr. Thornton: I do not agree with the hon. Gentleman's argument. Local authorities have proper means to consider areas that are of great importance to many people. We have heard many points of view this afternoon about the validity of the argument about the poverty trap. As I said in Committee, hon. Members on both sides share many worries about that problem. However, the validity of that argument does not make invalid the reason for putting the clause in the Bill. Unless we are further to depress overall
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    levels, we must find areas where greater discretion can be applied.
    My hon. Friend the Member for Gravesend (Mr. Brinton) touched on the present inequities that exist within our social security system. That has to be considered in the context of where we are today. The Act was framed in 1944, and when considered against the background of 1980 it is clear that social conditions have changed. It is perfectly fair to say that there are still many in this country who are, by any definition, deprived. But it is equally true to say that the position is not as bad, and that the demands for a public and expensive umbrella in the school meals service are not as great in 1980 as they were in 1944.
    While I accept the points made by the hon. Member for Berwick-upon-Tweed (Mr. Beith) about the poverty trap, so eloquently expressed by the hon. Member for Birkenhead (Mr. Field) in the debate last week, the validity of the clause being in the Bill still exists.
    Mr. Beith: From the point of view advanced by the Conservative Party, is it not the case that it is almost irrespective of whether people are poor? One of the questions that he should be asking is whether they would be better off working. The effect of the Bill is to make sure that that is not the case.
    Mr. Thornton: That may or may not be the case. It is not a point to ne argued in an education debate. I stand by my statement that it is the function of the education service to educate. We have to consider the issue in the context of 1980 and ask "Are we getting value for money that we are putting into education?" We must consider all areas of education expenditure.
    Five per cent. of the total budget for education is spent on the school meals service. It is an expensive service, especially at the top end where it might be top heavy. A cutback to 2· per cent. of that in no way can be construed as abandoning the service. It is merely fixing it at a more realistic level.
    I wish to make two more points. One relates to an issue that concerned all Members in Committee, namely, the stigma upon those in receipt of free school meals. It must be the concern of everyone in the House, and of every

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    responsible LEA councillor, to ensure that whatever scheme is put into force in individual local authorities to provide children with free meals—those whose families are in receipt of family income supplement or supplementary benefit, or fall within the provisions of a later clause in the Bill referring to local authority discretion—is operated in such a manner that the individual child is in no way singled out.
    To continue, regrettably, with the position that has existed in the past is totaly indefensible, and I hope that hon. Members on both sides of the House will support me in saying that.
    Secondly, I should like the House to consider a small point in the drafting of the Bill. I refer to Clause 22(2), which appears to contradict itself. It begins in a mandatory form by stating:
    "A local education authority shall exercise their power under subsection (l)(a) above.".
    it finishes by stating:
    "so as to ensure that such provision is made for him in the middle of the day as appears to the authority to be requisite".
    There appears to be a conflict in the drafting on that point. I should be glad if the Minister would turn his mind to that matter when he replies.
    Mr. Martin Flannery: Hon. Members who served on the Committee were briefed by practically every possible organisation. I wish to make one or two fundamental points, as one who has lived all his teaching life with the school meals service. Clause 22(3)(a) states that a local education authority
    "may make such charges as they think fit for anything provided by them".
    That is the position that the Bill will bring about at a time of developing mass unemployment, strikes, industrial struggles and so on. The hon. Member for Berwick-upon-Tweed (Mr. Beith) was a teacher, and I pay tribute to the way in which he has fought valiantly, both in Committee and in his speech in the House today, against the Bill. He pointed out the contribution to the health and education of our children that has been made by the school meals service. I wish to speak from that viewpoint.
    I remember the dinner woman and the ancillary staff in the kitchens of
    1574
    schools. Teachers and, in my case, a head teacher visited the kitchens every morning and saw how clean they were and how well fed the children were. It meant that teachers were able to teach children that much better.
    There is one sentence in the brief from the National Union of Teachers of which everyone should take account:
    "Large numbers of children now go to school without breakfast, so that they have depended on their school dinner and milk to keep them going through the day. This lack of adequate nourishment would threaten all those children in local authorities which could, as a result of the proposed legislation, choose to discontinue a nutrionally adequate meals service for the majority of children."
    The NUT makes the educational point:
    "Teachers recognise the pre-lunch-time slackening of effort and attention which is due to poor concentration resulting from hunger. How much worse a problem this would become if there was no midday meal provided and children tried to get by on a bag of crisps and a fizzy drink. The teachers' efforts to assist their pupils' learning would be wasted in the afternoons."
    That is the essence of what would occur in education in view of what the Government, in my view unwittingly, are about to perpetrate on our children. Five million children—there used to be more—take school meals, and about 1 million of those have free school meals.
    The heading of the Advisory Centre for Education's brief is:
    "How LEAs will he free to demolish school meals service."
    This is an all-out attack on the school meals service, just as the Bill is a demolition attack on nursery education.
    The ACE states:
    "If the Government's proposals to alter the school meals service go through, education authorities will be able to provide meals of any nutritional standard they like, charge any price, and offer free school meals only when they feel it is 'necessary'."
    Having mentioned the educational point, I want now to refer to those children—in some areas it is as many as five or six out of every 10—who go to school without breakfast. In the 1930s there were centres in every area to which children could go for breakfast. A mug of cocoa and a slice of bread and dripping were provided for many children. A Birmingham school has recently started giving breakfast and it is trying to continue to do so because the headmaster saw the need for this provision.

    1575
    I turn now to a recent experiment in providing free school meals for children. Many more children will soon be in need of free school meals, but, under the provisions of the Bill, fewer children will get them. Therefore, rickets will begin to creep back. That is the reality.
    Recently, the Lancet produced an analysis of the heights of children receiving free school meals compared with those receiving subsidised school meals. The
    "analysis of the heights of 10,000 primary children from 28 areas of England and Scotland showed that children receiving free school meals were significantly shorter than those children in the other two groups after making allowances for differences in father's social class".
    That analysis is saying that these children, before they got the free school meals were already deprived and smaller and were suffering more than other children before applications for free school meals were made.
    I know many proud, honourable working people whom I had to ask to apply for free school meals for their children, but who were too proud to do so. I asked them to apply for free clothing for their children, but they were too proud to do that. Even when it was proved that they had a right to these benefits, many of them still held out and would not apply for them. They would hear on the television and so on about slackers and dodgers, and these honourable people would not avail themselves of their rights. Therefore, as I said in Committee, there is a submerged one-tenth of people who are too proud to apply for and accept these benefits even when they are offered.
    Mr. Ernest Armstrong: Will my hon. Friend also bear in mind that there is geographical discrimination? A recent parliamentary reply pointed out that in the county of Durham 18 per cent. of children having school meals were free mealers compared with 7 per cent. in the county of Surrey.
    Mr. Flannery: That is true. My right hon. Friend was a distinguished head teacher and had to work within the school meals service.
    What the Government are about to do will aim a terrible educational blow at
    1576
    our children. Many children are in need. This legislation will make them even more in need. I am staggered that the Government can talk incessantly about educational standards when the only educational standards that they want to raise are private educational standards. The Bill will limit the educational standards of the vast majority of children, especially the poorest of our children.
    5.45 pm
    Mr. Dennis Canavan: On 26 October last year the Secretary of State for Education and Science held a press conference to introduce this miserable Bill. He is reported to have admitted that of the 1,100,000 pupils receiving free meals, 500,000 will no longer be eligible as a result of this legislation.
    I take it that these figures refer only to England and Wales. But, as we now have the Secretary of State for Scotland here on one of his rare appearances, perhaps he will clarify that point. At any rate, in reply to a question, he told me that in Scotland out of 430,000 pupils receiving school meals, 143,000 were receiving free meals. I should guess that if the proportion is roughly the same as in England and Wales, about 70,000 children in Scotland will no longer qualify for free school meals as a result of this legislation.
    The parents of those children do not receive supplementary benefit or family income supplement. Their children qualify for free school meals because the scale rates of income for free meals, as laid down by the Secretary of State, are more generous than the scale rate of income for supplementary benefit or family income supplement. Therefore, the parents of those children will, in the first instance, face an increase of 35p as a result of the increased approved a fortnight ago. But already I hear that certain local authorities in Scotland and elsewhere are to put prices up far beyond the 35p for the coming financial year. The whole aim of the Bill is to give them discretion to charge what they like. I have heard of some authorities which charge 40p and others 50p and others as much as 60p. The whole thing will escalate in the months and years to come.

    1577
    Those who will be penalised most will be the working poor on low incomes. They will be deprived of the incentive to work by a Government who claim that they were elected on a manifesto that would increase incentives to work. What incentive is there for low income people to work if by so doing, taking into account the social wage, they will have less than they would have if they were not working? This clause will make the so-called poverty trap deeper and wider and more people will fall into it.
    My hon. Friend the Member for Sheffield, Hillsborough (Mr. Flannery) referred to the article in the Lancet. I should like to emphasise one point in that same article:
    "These results suggest that a large proportion of the children who received free school meals were of lower nutritional status."
    It sums up by stating that surveillance indicates
    "that free school meals are going to the right group of children and that withdrawal might well prejudice their future development."
    That is backed by a circular, which we received, from the Advisory Centre for Education referring to another survey by Baker and others reported in the Lancet on 29 September 1979 supporting the previous survey. The circular from the Advisory Centre for Education goes on to say:
    "It is perhaps worth pointing out that both of the above studies were set up and funded by the DHSS Sub-Committee on Nutritional Surveillance…Mrs. Thatcher herself announced in the House of Commons that these studies would be undertaken: the government thus has within its possession information strongly suggesting that the proposed changes in eligibility to free school meals are not a good idea."
    Yet, the Government continue to propose such regressive ideas. As my hon. Friend the Member for Hillsborough pointed out, we should be aware of the possibility of the return of rickets as a result of the lack of nutrition to children, through the deprivation of their rights to school meals and milk.
    Mr. Michael Brown Mr. Michael Brown (Brigg and Scunthorpe) rose—
    Mr. Canavan: I shall not give way to the hon. Gentleman as we are short of
    1578
    time. I do not believe that the hon. Gentleman was present for the early part of the debate.
    I am sorry that the hon. Member for Brent, North (Dr. Boyson) is not here. I have a report of a survey of schoolchildren in the London borough of Brent which shows that a substantial number of children there go to school having had no breakfast. That number consisted of 4 per cent. in the infant classes, 9 per cent. in the junior classes and 21 per cent. in the senior classes. Therefore, the Minister is clobbering not only all our constituents but his own as well. It is no wonder that there has been such universal protest from parents, teachers, teachers unions, teachers associations, family service unions, the Child Poverty Action Group and even from the National Farmers Union about the proposals. The Scottish National Farmers Union sent a circular to hon. Members who had the privilege or otherwise of serving on the Committee. On the subject of clause 24, "School meals in Scotland", the circular stated:
    "Mr. Dennis Canavan has already put forward amendment 85 to substitute 'shall' for 'may' in line 31 on page 22 of the Bill. We would recommend this amendment for your attention."
    Contrary to rumours, I am not sponsored by the Scottish National Farmers Union.
    Mr. Tom Benyon: I wonder if the hon. Gentleman would agree with my suggestion that the responsibility for sending children to school without breakfast should not end up solely on the Government Front Bench, but it should rest in some part with parents.
    Mr. Canavan: In some cases, there may be an element of parental blame. However, part of the historical reason why the school meals service was instituted was that the school, although it should never be seen as a replacement for the home, should be a complement to the home as far as education and other aspects of looking after children are concerned.
    I understand that the Convention of Scottish Local Authorities is opposed to the proposals. It expressed its opposition as long ago as October when the

    1579
    Scottish Office sent out a secret confidential memorandum to it which stated:
    "Under the present regulations education authorities are required to provide meals free of charge for children from low income families. In line with the Government's policy of allowing greater discretion to local authorities, the intention is to let education authorities decide entirely for themselves what provision should be made in future for children from low income families."
    In other words, not only will the number of eligible children be reduced but also the standard of the meals will be reduced. That is completely contrary to a Scottish Education Department recommendation that was published as recently as 1975. Recommendation 16 of the document "Catering in Scottish Schools" stated:
    "The Scottish Education Department should, from time to time, give general guidance to education authorities on the minimum nutritional requirements for nursery and primary school children and should also give such other guidance on nutrition as may be considered necessary".
    Yet, so soon after that publication, the Government are giving local authorities carte blanche about the standards of nutrition of the school meals. Their only justification, if there is one, is that it will save public money. The sum of £220 million is mentioned in the Bill—it is £20 million as far as Scotland is concerned. Yet, the figures in the financial and explanatory memorandum of the Bill—although they are being reconsidered—state that the sum of £55 million is being set aside for the assisted places scheme for fee-paying schools—an extra £5 million for fee-paying schools in Scotland.
    At the same time, it looks as though the Government will reduce the school meals service by half. The Secretary of State for Scotland has said that the school meals budget is about £39·3 million per annum. Perhaps employment will be reduced by half as well. That will involve about 8,500 or 9,000 jobs in Scotland at a time when unemployment there is already over 200,000. This clause will cause a reduction in children's standards of health and education. It will increase the poverty trap and unemployment. If the clause is not withdrawn by the Government, I hope that they will accept some of our amendments. This is one of the most miserable clauses in one of the most miserable pieces of legislation in the history of education in this country.
    The Under-Secretary of State for Education and Science (Mr. Neil Macfarlane): I am sure that the Scottish National Farmers Union will be grateful for the clarification given by the hon. Member for West Stirlingshire (Mr. Canavan).
    In as short a time as possible I shall try to deal with some of the many points that have been raised during this all-too short debate. The hon. Member for Bolton, West (Mrs. Taylor) referred, as usual—indeed we have been over this ground so much over the last 120 hours or so, but I am happy to argue the case again—to the dismantling of the school meals service. I reassure the House that there is no such intention. What depresses me is the fact that so few Opposition Members have faith or confidence in their local representatives. They do not exhibit much confidence in locally elected representatives from their party, local officials or local school governors.
    The hon. Member for Bolton, West also took me to task for the apparent suggestion in Committee that I indicated at some stage that I was less than caring about nutrition and nutritional standards. I should like to verify, for the sake of the debate, that at 6 pm on 30 January 1980 I said:
    "There is a risk that a small number of children may be less well nourished as a result, or by general withdrawal of milk, but that is no argument for continuing the obligation on local education authorities to supply free milk to large numbers of children who do not need it."—[Official Report, Standing Committee D; 30 January 1980; c. 1824.]
    I shall not bore the House by continuing with that quotation. Suffice it to say that, subsequently, Opposition Members have indicated that I said that there would be malnutrition. That is certainly not what I said. I said that some children might be less well nourished. I hope that that clarifies the point.
    The effect of amendment No. 34 will be to empower the Secretary of State to prescribe by order, exercise able by a statutory instrument under clause 34(1), an income level below which parents would be entitled to have such free provision made for their children at school at mid-day as appeared to the authority to be requisite. The intention behind subsections (2) and (3) is that, although any local education authority will have wide discretionary powers under the rest of clause 22 as regards what to

    1581
    provide and charge, there should be a statutory safeguard for children from the poorest families, namely, those receiving supplementary benefit or family income supplement. However, if an authority considered it appropriate to remit charges for other classes of children it would be bound to do to sunder subsection (2)(b). In that event, it might well make use of an income scale similar to the present statutory scale but with different income levels.
    Although I am aware of the arguments put forward in favour of uniform entitlement to free provision in order to preclude inter-local education authority variation, I do not find convincing the arguments that have been put forward this afternoon.
    Mrs. Ann Taylor Mrs. Ann Taylor rose—
    6 pm
    Mr. Macfarlane: I should prefer to finish my speech as time is tight. The circumstances of local education authorities vary, as do the circumstances of the populations and communities that they serve. However, local authorities must be given the maximum scope for making reductions in expenditure. Therefore, the only national prescription of entitlement to free provision should be the national poverty levels. Beyond that, it must be for the local education authorities to determine their expenditure precisely. If they consider that inter-local education authority variation is undesirable, they have the means—through local authority associations—of reaching agreement on a scale that could be used or adapted by all local education authorities.
    Mrs. Taylor: The Minister has made a telling point. He said that the purpose of the clause was to give maximum scope to local authorities to reduce their expenditure. The Government will maintain that pressure. Therefore, local authorities will have no opportunity of using such discretion in any substantial way, because the Government will continue to twist their arms. They therefore will be unable to get the resources.
    Mr. Macfarlane: We shall leave 50 per cent. of the school meals subsidy in the budget for 1980–81. The hon. Lady knows that. It depends upon the view
    1582
    that one takes of local authorities. It depends upon the chief education officer, the chairman of the education committee and, above all, the attitude displayed towards head teachers. Head teachers, form teachers and pastoral heads must know where discretionary powers should be exercised.
    This is relevant to the point raised by my hon. Friend the Member for Liverpool, Garston (Mr. Thornton) and to amendment No. 37. There is no inconsistency between the phrase "shall exercise" in page 20, line 27 of the Bill, and the phrase found in lines 31 and 32,
    "as appears to the authority to be requisite."
    The first requires the local education authority to exercise its power under subsection (1)(a) in respect of those pupils. The second requires them to consider what is requisite in each case, and to provide accordingly. The two are linked by the words "so as to ensure". That phrase relates the exercise of the power to the performance of the duty to the pupil. If hon. Members have a copy of the Bill they will see that clause 22(2) makes that perfectly clear.
    Mr. Kinnock: From the hon. Gentleman's words, it appears that he wants to make the poverty trap official. He has accepted that only nationally recognised poverty levels might require local authorities to make particular provision. If that is the case, why can he not accept amendment No. 39? At least that amendment ensures that someone who is poorer than a person on family income supplement and supplementary benefit will not suffer unduly as a result of the clause.
    Mr. Macfarlane: I shall come to that amendment shortly. However, I acknowledge the hon. Gentleman's point. We discussed the amendment in some detail in Committee. The hon. Member for Berwick-upon-Tweed (Mr. Beith) referred to the poverty trap. He propounded amendments Nos. 38, 39 and 40 which stand in his name, and that of the hon. Member for Cardigan (Mr. Howells). The theme of his speech surprised me. He did not exercise much confidence in local authority representatives. He seemed to think that most metropolitan authorities and county councils were dominated solely by representatives from the last century, who take no interest in the life of the community. That is

    1583
    depressing. I am concerned, because I judge from his remarks that many schools in his constituency will dismantle the meals service immediately. He therefore appears to consider that schools are incapable of acknowledging the problems of the community.
    The hon. Gentleman painted a picture of the problems facing children in rural areas. He referred to the long distances that they have to travel and to the fact that the Bill will have the effect of turning them on to the streets at lunch time. That does not display much confidence in the schools' understanding of the local community. If he thinks that so many schools in his constituency are incapable of understanding the needs of parents and of children, he should talk about those schools so that we can understand his precise problems.
    Mr. Beith: The schools are perfectly capable of understanding such problems. However, the Government are telling them to do this or that. The Government have said that, if the authorities do not make such changes, they will have to make cuts in the mainstream of education. The Secretary of State has admitted that.
    Mr. Macfarlane: The hon. Gentleman surprises me. He does not owe such alarm and despondency to his constituents. I beg him not to send a copy of Hansard to the local papers. If he did so, he would create gloom and despondency. One can only conclude that the hon. Gentleman has not looked closely at the legislation. That is the last thing that the Bill does. He does not owe that behaviour to his constituents.
    I shall speak to amendment No. 39. In doing so, I hope that I shall answer some of the points raised by the hon. Member for Bedwellty (Mr. Kinnock). There must be hon. Members from all parties who are sympathetic with the intentions of the amendment. The poverty and incentive traps provide serious problems for the low-paid. Several hon. Members made that point when referring to the recent speech of the hon. Member for Birkenhead (Mr. Field). I am surprised and disappointed that the hon. Member for Birkenhead is not here, but perhaps there are good reasons for his absence.
    1584
    Some of those who receive supplementary benefit or family income supplement will be worse off if they lose their entitlement as a result of increased income. Others, who do not receive supplementary benefit and family income supplement may be better off if they forgo some income and thereby become entitled to the benefits.
    Nevertheless, the amendment could involve a local education authority in assessing family income according to two sets of rules, namely, those for supplementary benefit and those for family income supplement. The local authority is not familiar with either. The Department of Health and Social Security deals with both of those categories. It is familiar with the current free school meal regulations.
    Under subsection 3(b) a local education authority is required to consider whether it would be appropriate to remit the charge for a class or description of pupil. That is in the Bill. It therefore has power to mitigate the poverty trap problem. Several authorities recognise the importance of doing so. I commend their policies to those that do not have full regard to local circumstances, and the needs and problems of families in their areas. However, to introduce a statutory safeguard would involve statutory regulations, whereas we have to decide that regulations relating to the provision of school meals and milk should be abandoned. That must go some way towards pacifying those Opposition Members who are justifiably concerned.
    Many points have been made during the debate. My hon. Friend the Member for Gravesend (Mr. Brinton) spoke about the disproportionate cost of administering the school meals service. He also spoke of the low proportion that is spent on food. We know from experience that under existing legislation many local authorities have adapted their school meals service. They have adapted the type of storage used. Some authorities have central freezing units and have effective means of distribution. Some authorities may also use local private enterprise. I agree with the hon. Member for Wood Green (Mr. Race), who paid tribute to those who work in the school meals service. I freely and fully acknowledge the enormous contribution that

    1585
    that service makes to the life of schools. [Interruption.] Local education authorities, officers and chairmen of county authorities are responsible people. They know what is needed within the school community and they acknowledge their duties. Hon. Members should not be so disparaging about local government. They have no confidence. I am delighted that I attract such a lot of sedentary fire. However, I do not wish to inflame the situation further. I am always mindful of the words of the righthon. Member for Widnes (Mr. Oakes). He said that a Minister must be a peacemaker. I hope that I shall always fulfil those words.
    Over the past five or six months I have communicated with local authority representatives from Devon, Somerset, Sheffield, Liverpool, Merseyside, the North-East and Northumberland. I have been in touch with many local education authorities and I have discussed their plans with them. In every case I found a mood of confidence and enthusiasm for the clause. [Interruption.] I am sorry if the hon. Member for Bedwellty (Mr. Kinnock) feels that derisive laughter is the order of the day. If he does not know what is going on in his local authority or in his local schools, he should get out and about and quickly find out.
    M. Flannery: The hon. Gentleman mentioned that he went to Sheffield. I was a member of the Sheffield education committee for many years. I shall be delighted if the hon Gentleman can prove that the committee was enthusiastic about the Bill. It has not conveyed that impression to me. On numerous occasions it has expressed the very opposite impression.
    Mr. Macfarlane: The local authorities with which I had discussions expressed approval for the theme behind this clause. They welcome it. The Association of County Councils and the Association of Metropolitan Authorities have expressed approval for the Bill. During the past 10 or 15 years there has been a change in catering on school premises. That aspect of nutrition does not hold good in 1979–80. Opposition Members know that that is the case. The diet and eating habits of children have changed and that is what children want.
    1586
    It is right to let local education authorities have the freedom to adapt to local community needs. We are confident that local education authorities, chief education officers, chairmen of education committees and parent-teacher associations are responsible bodies and that they have the community interest at heart. The clause will not undermine or demolish the principle of the meals service. It is right that my right hon. and learned Friend the Secretary of State has concentrated far more upon the preservation of educational services than on ancillary services. With that in mind, I urge the House to reject the amendments.
    Mr. Harry Ewing: We were anxious to hear the Minister's reply in the hope that he had learned something from the Committee proceedings. However, we heard the same speech in Committee, and our doubtful pleasure in listening to it again tonight demonstrates that the Minister does not have it well rehearsed. We are no more convinced tonight than we were in Committee.
    I have seldom heard such facile arguments as those put forward by Ministers and Government Back Benchers. We have put down amendments about nutritional standards of school meals, and all hon. Members know, no one better that the Secretary of State for Education and Science and the Secretary of State for Scotland, that this clause and the accompanying Scottish clause, clause 24, are concerned purely with saving money. They have nothing to do with nutritional standards and the need to make sure that our children are adequately fed.
    As the hon. Member for Berwick-upon-Tweed (Mr. Beith) says, the clauses are about saving money. The Minister replied to the hon. Gentleman by saying that if local authorities do not make the cuts imposed by the Government in respect of school meals, milk and transport, other educational services will not necessarily have to be cut. That denial is a clear indication that he has no idea of the content of circulars from the Scottish Office.
    I have a report of the meeting between the Convention of Scottish Local Authorities and officials from the Scottish

    1587
    Education Department. I shall not name the officials as they were speaking for the Minister, and he will want to accept full responsibility for what they said. They said:
    "the percentage savings in meals, milk and transport would have to be proportionately greater if the main education service was not to undergo severe cuts".
    It is the cruellest deception for Ministers to seek to present the proposals as a better way of feeding our children at school. [Interruption.]
    The hon. Member for Rochester and Chatham (Mrs. Fenner), who had responsibility for prices in the previous Conservative Government, between 1970 and 1974, was once described by me as the most expensive hen in Great Britain. She will be well advised to sit quietly in her seat tonight.
    This proposal is the cruellest deception on children and parents since education Acts were introduced.
    Last night we saw the beginning of the end of nursery education. Tonight it is the beginning of the end of the school meals service. It is a service entrenched in legislation since 1945. Since then local authorities have been under a duty to provide mid-day meals. Children have been entitled to those meals for 35 years. We are suddenly told, in a blinding flash by the right hon. and learned Gentleman and his colleagues, that these meals are not as good for children as we have been led to believe over the past 35 years. The Government give that service no credit for our children's improved health standards.
    The hon. Member for Gravesend (Mr. Brinton) says that the alternative to reducing expenditure on school meals is a negative income tax system. I can imagine his constituents saying "We do not have negative income tax, Mr. Brinton. What do we do in the meantime?" He will reply "I just go to the House of Commons and tell fairy tales about Mary Poppins". I am sure that his constituents will be impressed.
    6.15 pm
    We have thrown life-line after life-line to the Government, which they have refused to grasp even, I believe, against the will of their Back Benchers. The debate has been significant for its lack
    1588
    of support from the Government Back Benches. However, the number of Government Back Benchers now present is about 10 times what it has been during the debate. I suspect that no Government Back Bencher has the stomach to bulldoze such a proposal through. However, they will do so, and that greatly annoys us.
    I wish to mention mainly the Scottish provision. I referred earlier to a meeting between the Convention of Scottish Local Authorities and officials from the Scottish Education Department. Expenditure on school meals in Scotland is to be cut by 44 per cent. in the coming financial year. Let us assume that there is no drop in the uptake of school meals. Those paying for meals, and not having them free of charge, will have to pay an extra 24½p a day to make good the 44 per cent. that is being filched from Scottish local authorities by the Minister with responsibility for education at the Scottish Office.
    If the normal pattern prevails, and the uptake drops by 25 per cent., the increase for those still taking school meals will be 40p a day. I asked the Minister to quantify the likely increase in October of last year, and he then gave me a figure of 30p a day. That was assuming no drop in the uptake. He said that he could not give a figure, assuming a drop in the uptake. My calculation comes from a good source. We already see signs of substantial increases. Grampian regional council has decided to increase school meal prices, when it is free to do so, to 42p.
    As my hon. Friend the Member for West Stirlingshire (Mr. Canavan) said, we are talking of an increase of from nothing to 42p for children whose families receive neither family income supplement nor supplementary benefit, but are just above that level. The Minister should not authorise his officials to say to the Convention of Scottish Local Authorities that it will be left to authorities to define what a low income family is. What we shall have in Scotland will be 10 different definitions of "low income families".
    We have heard a lot of nonsense today about Labour Members not trusting local councillors. That is the biggest smokescreen that has ever been cast across any

    1589
    proposition by any Government. Of course we trust local councillors. But if we trusted them we would give them the money. The Government claim to trust them but at the same time they tell them that they will not give them money. When the local authorities exercise their discretion and decide to maintain the school meals service in its present form, the Minister from the Scottish Office, aided and abetted by the Secretary of State, holds press conferences to castigate local authorities because they have taken this decision.
    The truth is that local councillors cannot win. On the one hand, the Government say that they have complete freedom and total discretion. On the other hand, they refuse to give them the money. When the local authorities decide to exercise their complete freedom, they are confronted by the Secretary of State for the Environment, who wants to vet all their speeches. Then the Secretary of State for Scotland calls them "rogue elephants".
    We are seeing the beginning of the end of the school meals service. There will be no savings by the Government. Instead, they will incur the wrath of parents and children, and they will have to meet the expenditure incurred as a result of the redundancies. If the school meals service is dismantled, obviously there will be redundancies. The contracts of employment of those who work in the school meals service have not been considered. There will have to be discussions with the trade union movement. No Government should get the idea that they can just alter a contract of employment without discussing that alteration with the trade union involved. There will need to be discussions about the necessary changes in the contract of employment of all those employed in the school meals service.
    No estimates have been made of the offsetting administrative costs. The kind of system that the Minister wants to see introduced, whereby local authorities have all this discretion will not mean what the Government claim it will mean. If the local authority wants to exercise its full discretion it will be able to do so only if the Government allow it to employ more administrative staff in order to operate the rather complex and compli-
    1590
    cated scheme. Local councillors are on a hiding to nothing. They have been placed in an impossible position
    The Convention of Scottish Local Authorities summed it up in a letter to the Minister on 15 October. The letter said:
    "We view with extreme disquiet the Government's intention to achieve through this legislation a substancial saving in public expenditure amounting to a 40 per cent. reduction".
    The local authorities say they are in favour of discretion but they are not in favour of being placed in the position of possibly having to abandon the service. If the Minister wants evidence of local authorities worrying about having to abandon the service, that evidence is contained in this letter. The letter was written after the Convention of Scottish Local Authorities had been advised, first on 2 October and then by letter on 9 October, that the Scottish Office was thinking about introducing these clauses into this Bill.
    There was a meeting on 9 October between officials from the Minister's Department and the Convention of Scottish Local Authorities to discuss one of the most radical changes that has been wrought on the local authorities since 1945. The convention was told that it had to submit its views within six days. That means that 35 years' history was turned upside down in six days by a Government which could not care less about children, old-age pensioners or anyone else.
    Then we had the Bill published, presented to Parliament and read a Second time on 5 November. It is very difficult to avoid the suspicion that the Bill was drafted before the Minister went to the Convention of Scottish Local Authorities. From my experience I would say that it would have been nearly impossible to put together a Bill on 15 October and have it presented to Parliament and read a Second time by 5 November if the convention's views were to be taken seriously. But of course, there was never any intention of taking the convention's submissions seriously. The whole purpose of this exercise is to cut expenditure and save money in order to make more tax concessions to those who do not need them.
    We are getting a little sick of being lectured about the nutritional needs of

    1591
    children by people who never see the inside of a State school except during a meeting at election time. Some of them would not know a school meal if they saw one. This is a disgraceful proposition and I invite my right hon. and hon. Friends to vote it down.
    Mrs. Ann Taylor: I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Amendment proposed: No. 39, in page 20, line 41, at end insert—
    'or if they are satisfied that the effect of the charges under this section and section 23(3) would be to cause that pupil's family to be poorer than they would be if their income were reduced to Family Income Supplement or Supplementary Benefit level.'.—[Mrs. Ann Taylor.]
    Question put, That the amendment be made:—
    The House divided: Ayes 252, Noes 313.

    Division No. 179]

    AYES

    [6.27 pm

    Abse, Leo

    Dunnett, Jack

    Leadbitter, Ted

    Adams, Allen

    Dunwoody, Mrs Gwyneth

    Leighton, Ronald

    Allaun, Frank

    Eadie, Alex

    Lestor, Miss Joan (Eton & Slough)

    Alton, David

    Eastham, Ken

    Lewis, Arthur (Newham North West)

    Anderson, Donald

    Edwards, Robert (Wolv SE)

    Lewis, Ron (Carlisle)

    Archer, Rt Hon Peter

    Ellis, Raymond (NE Derbyshire)

    Litherland, Robert

    Armstrong, Rt Hon Ernest

    Ellis, Tom (Wrexham)

    Lofthouse, Geoffrey

    Ashley, Rt Hon Jack

    English, Michael

    Lyon, Alexander (York)

    Ashton, Joe

    Evans, Ioan (Aberdare)

    Lyons, Edward (Bradford West)

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

    Ewing, Harry

    Mabon, Rt Hon Dr J. Dickson

    Barnett, Guy (Greenwich)

    Fitch, Alan

    McCartney, Hugh

    Barnett, Rt Hon Joel (Heywood)

    Fitt. Gerard

    McDonald, Dr Oonagh

    Beith, A. J.

    Flannery, Martin

    McElhone, Frank

    Benn, Rt Hon Anthony Wedgwood

    Fletcher, Ted (Darlington)

    McKay, Allen (Penistone)

    Bennett, Andrew (Stockport N)

    Foot, Rt Hon Michael

    McKelvey, William

    Bidwell, Sydney

    Forrester, John

    MacKenzie, Rt Hon Gregor

    Booth, Rt Hon Albert

    Foster, Derek

    Maclennan, Robert

    Boothroyd, Miss Betty

    Foulkes, George

    McMahon, Andrew

    Bottomley, Rt Hon Arthur (M'brough)

    Fraser, John (Lambeth, Norwood)

    McMillan, Tom (Glasgow, Central)

    Bradley, Tom

    Freeson, Rt Hon Reginald

    Magee, Bryan

    Bray, Dr Jeremy

    Freud, Clement

    Marks, Kenneth

    Brown, Hugh D. (Provan)

    Garrett, John (Norwich S)

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

    Brown, Robert C. (Newcastle W)

    Garrett, W. E. (Wallsend)

    Marshall, Dr Edmund (Goole)

    Brown, Ronald W. (Hackney S)

    George, Bruce

    Marshall, Jim (Leicester South)

    Brown, Ron (Edinburgh, Leith)

    Gilbert, Rt Hon Dr John

    Martin, Michael (Gl'gow, Sprlngb'rn)

    Buchan, Norman

    Ginsburg, David

    Mason, Rt Hon Roy

    Callaghan, Rt Hon J. (Cardiff SE)

    Golding, John

    Maxton, John

    Callaghan, Jim (Middleton & P)

    Gourlay, Harry

    Maynard, Miss Joan

    Campbell, Ian

    Graham, Ted

    Meacher, Michael

    Campbell-Savours, Dale

    Grant, George (Morpeth)

    Mellish, Rt Hon Robert

    Canavan, Dennis

    Grant, John (Islington C)

    Millan, Rt Hon Bruce

    Cant, R. B.

    Grimond, Rt Hon J.

    Miller, Dr M. S. (East Klbride)

    Carmichael, Neil

    Hamilton, James (Bothwell)

    Mitchell, Austin (Grimsby)

    Carter-Jones, Lewis

    Hamilton, W. W. (Central iie)

    Mitchell, R. C. (Soton, Itchen)

    Cartwright, John

    Harrison, Rt Hon Walter

    Morris, Rt Hon Alfred (Wythenshawe)

    Clark, Dr David (South Shields)

    Hart, Rt Hon Dame Judith

    Morris, Rt Hon Charles (Openshaw)

    Cocks, Rt Hon Michael (Bristol S)

    Hattersley, Rt Hon Roy

    Morris, Rt Hon John (Aberavon)

    Cohen, Stanley

    Kaynes, Frank

    Morton, George

    Coleman, Donald

    Healey, Rt Hon Denis

    Moyle, Rt Hon Roland

    Concannon, Rt Hon J. D.

    Heffer, Eric S.

    Mulley, Rt Hon Frederick

    Conlan, Bernard

    Hogg, Norman (E Dunbartonshire)

    Newens, Stanley

    Cook, Robin F.

    Holland, Stuart (L'beth, Vauxhail)

    Oakes, Rt Hon Gordon

    Cowans, Harry

    Home Robertson, John

    O'Halloran, Michael

    Craigen, J. M. (Glasgow, Maryhill)

    Homewood, William

    O'Neill, Martin

    Crowther, J. S.

    Hooley, Frank

    Orme, Rt Hon Stanley

    Cryer, Bob

    Horam, John

    Owen, Rt Hon Dr David

    Cunlilfe, Lawrence

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

    Palmer, Arthur

    Cunningham, George (Islington S)

    Hughes, Mark (Durham)

    Park, George

    Dalyell, Tam

    Hughes, Robert (Aberdeen North)

    Parker, John

    Davidson, Arthur

    Hughes, Roy (Newport)

    Parry, Robert

    Davies, Rt Hon Denzil (Llanelli)

    Janner, Hon Greville

    Pavitt, Laurie

    Davies, Ifor (Gower)

    Jay, Rt Hon Douglas

    Pendry, Tom

    Davis, Clinton (Hackney Central)

    John, Brynmor

    Penhaligon, David

    Deakins, Eric

    Johnson, James (Hull West)

    Powell, Raymond (Ogmore)

    Dean, Joseph (Leeds West)

    Johnston, Russell (Iverness)

    Prescott, John

    Dempsey, James

    Jones, Rt Hon Alec (Rhondda)

    Price, Christopher (Lewisham West)

    Dewar, Donald

    Jones, Barry (East Flint)

    Race, Reg

    Dixon, Donald

    Jones, Dan (Burnley)

    Radice, Giles

    Dobson, Frank

    Kaufman, Rt Hon Co'ald

    Rees, Rt Hon Merlyn (Leeds South)

    Dormand, Jack

    Kerr, Russell

    Richardson, Jo

    Douglas, Dick

    Kilroy-Silk, Robert

    Roberts, Allan (Bootle)

    Douglas-Mann, Bruce

    Kinnock, Nell

    Roberts, Ernest (Hackney North)

    Dubs, Alfred

    Lambie, David

    Roberts, Gwilym (Cannock)

    Duffy, A. E. P.

    Lamborn, Harry

    Robertson, George

    Dunn, James A. (Liverpool, Kirkdale)

    Lamond, James

    Robinson, Geoffrey (Coventry NW)

    Rodgers, Rt Hon William

    Steel, Rt Hon David

    Weetch, Ken

    Rooker, J. W.

    Stoddart, David

    Wellbeloved, James

    Ross, Ernest (Dundee West)

    Stott, Roger

    Welsh, Michael

    Ross, Stephen (Isle of Wight)

    Strang, Gavin

    White, Frank R. (Bury & Radcliffe)

    Rowlands, Ted

    Straw, Jack

    White, James (Glasgow, Pollok)

    Sandelson, Neville

    Summerskill, Hon Dr Shirley

    Whitehead, Phillip

    Sever, John

    Taylor, Mrs Ann (Bolton West)

    Whitlock, William

    Sheer man, Barry

    Thomas, Dafydd (Merioneth)

    Wigley, Dafydd

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

    Thomas, Jeffrey (Abertillery)

    Willey, Rt Hon Frederick

    Shore, Rt Hon Peter (Step and Pop)

    Thomas, Mike (Newcastle East)

    Wilson, Rt Hon Sir Harold (Huyton)

    Short, Mrs Renée

    Thomas, Dr Roger (Carmarthen)

    Wilson, William (Coventry SE)

    Silkin, Rt Hon John (Deptford)

    Thorne, Stan (Preston South)

    Winnick, David

    Sllkin, Rt Hon S. C. (Dulwich)

    Tilley, John

    Woodall, Alec

    Silverman, Julius

    Tinn, James

    Wrigglesworth, Ian

    Smith, Cyril (Rochdaie)

    Torney, Tom

    Wright, Sheila

    Smith, Rt Hon J. (North Lanarkshire)

    Urwin, Rt Hon Tom

    Young, David (Bolton East)

    Snape, peter

    Varley, Rt Hon Eric G.

    Soley, Clive

    Wainwright, Edwin (Dearne Valley)

    TELLERS FOR THE AYES:

    Spearing, Nigel

    Wainwright, Richard (Colne Valley)

    Mr. John Evans and

    Spriggs, Leslie

    Walker, Rt Hon Harold (Doncaster)

    Mr. Terry Davis.

    Stallard, A. W.

    NOES

    Adley, Robert

    Corrie, John

    Hayhoe, Barney

    Aitken, Jonathan

    Costain, A. P.

    Heath, Rt Hon Edward

    Alexander, Richard

    Cranborne, Viscount

    Heddle, John

    Alison, Michael

    Critchley, Julian

    Henderson, Barry

    Amery, Rt Hon Julian

    Crouch, David

    Haseltine, Rt Hon Michael

    Ancram, Michael

    Dean, Paul (North Somerset)

    Hicks, Robert

    Arnold, Tom

    Dickens, Geoffrey

    Higgins, Rt Hon Terence L.

    Aspinwall, Jack

    Dorrell, Stephen

    Hill, James

    Atkins, Rt Hon H. (Spelthorne)

    Douglas-Hamilton, Lord James

    Hogg, Hon Douglas (Grantham)

    Atkins, Robert (Preston North)

    Dover, Denshore

    Holland, Philip (Carlton)

    Atkinson, David (B'mouth, East)

    du Cann, Rt Hon Edward

    Hooson, Tom

    Baker, Kenneth (St. Marylebone)

    Dunn, Robert (Dartford)

    Hordern, Peter

    Baker, Nicholas (North Dorset)

    Durant, Tony

    Howe, Rt Hon Sir Geoffrey

    Beaumont-Dark, Anthony

    Dykes, Hugh

    Howell, Rt Hon David (Guildford)

    Bell, Sir Ronald

    Eden, Rt Hon Sir John

    Howell, Ralph (North Norfolk)

    Bendall, Vivian

    Edwards, Rt Hon N. (Pembroke)

    Hunt, David (Wirral)

    Benyon, Thomas (Abingdon)

    Eggar, Timothy

    Hunt, John (Ravensbourne)

    Benyon, W. (Buckingham)

    Elliott, Sir William

    Hurd, Hon Douglas

    Best, Keith

    Emery, Peter

    Irvine, Charles (Cheltenham)

    Bevan, David Gilroy

    Fairbairn, Nicholas

    Jenkin, Rt Hon Patrick

    Biffen, Rt Hon John

    Fairgrieve, Russell

    Johnson Smith, Geoffrey

    Biggs-Davison, John

    Faith, Mrs Sheila

    Jopling, Rt Hon Michael

    Blackburn, John

    Farr, John

    Joseph, Rt Hon Sir Keith

    Blaker, Peter

    Fell, Anthony

    Kaberry, Sir Donald

    Body, Richard

    Fenner, Mrs Peggy

    Kimball, Marcus

    Bonsor, Sir Nicholas

    Finsberg, Geoffrey

    King, Rt Hon Tom

    Boscawen, Hon Robert

    Fisher, Sir Nigel

    Kitson, Sir Timothy

    Bottomley, Peter (Woolwich West)

    Fietcher, Alexander (Edinburgh N)

    Knight, Mrs Jill

    Bowden, Andrew

    Fookes, Miss Janet

    Knox, David

    Boyson, Dr Rhodes

    Forman, Nigel

    Lamont, Norman

    Braine, Sir Bernard

    Fowler, Rt Hon Norman

    Lang, Ian

    Bright, Graham

    Fox, Marcus

    Langford-Holt, Sir John

    Brinton, Tim

    Fraser, Rt Hon H. (Stafford & St)

    Latham, Michael

    Brittan, Leon

    Fraser, Peter (South Angus)

    Lawrence, Ivan

    Brocklebank-Fowler, Christopher

    Fry, Peter

    Lee, John

    Brooke, Hon Peter

    Galbraith, Hon T. G. D.

    Lennox-Boyd, Hon Mark

    Brotherton, Michael

    Gardiner George (Reigate)

    Lester, Jim (Beeston)

    Brown, Michael (Brigg & Sc'thorpe)

    Gardner, Edward (South Fylde)

    Lewis, Kenneth (Rutland)

    Browne, John (Winchester)

    Garel-Jones, Tristan

    Lloyd, Ian (Havant & Waterloo)

    Bruce-Gardyne, John

    Gilmour, Rt Hon Sir Ian

    Lloyd, Peter (Fareham)

    Bryan, Sir Paul

    Glyn, Dr Alan

    Loveridge, John

    Buchanan-Smith, Hon Alick

    Goodhart, Philip

    Luce, Richard

    Buck, Antony

    Goodlad, Alastair

    Lyell, Nicholas

    Budgen, Nick

    Gorst, John

    McCrindie, Robert

    Bulmer, Esmond

    Gow, Ian

    McCusker, H.

    Burden, F. A.

    Gower, Sir Raymond

    Macfarlane, Neil

    Butcher, John

    Grant, Anthony (Harrow C)

    MacGregor, John

    Butler, Hon Adam

    Gray, Hamish

    MacKay, John (Argyll)

    Cadbury, Jocelyn

    Greenway, Harry

    McNair-Wilson, Michael (Newbury)

    Carlisle, John (Luton West)

    Griffiths, Eldon (Bury St Edmunds)

    McNair-Wilson, Patrick (New Forest)

    Carlisle, Kenneth (Lincoln)

    Griffiths, Peter (Portsmouth N)

    McQuarrie, Albert

    Carlisle, Rt Hon Mark (Runcorn)

    Grist, Ian

    Made), David

    Chalker, Mrs Lynda

    Grylls, Michael

    Major, John

    Channon, Paul

    Gummer, John Selwyn

    Marland, Paul

    Chapman, Sydney

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

    Marlow, Tony

    Clark, Hon Alan (Plymouth, Sutton)

    Hamilton, Michael (Salisbury)

    Marshall, Michael (Arundel)

    Clark, Sir William (Croydon South)

    Hampson, Dr Keith

    Marten, Neil (Banbury)

    Clarke, Kenneth (Rushcliffe)

    Hannam, John

    Mates, Michael

    Cockeram, Eric

    Haselhurst, Alan

    Mather, Carol

    Colvin, Michael

    Hastings, Stephen

    Maude, Rt Hon Angus

    Cope,John

    Havers, Rt Hon Sir Michael

    Mawby, Ray

    Cormack, Patrick

    Hawksley, Warren

    Mawhinney, Dr Brian

    1594

    1595

    Maxwell-Hyslop, Robin

    Prior, Rt Hon James

    Tapsell, Peter

    Mayhew, Patrick

    Proctor, K. Harvey

    Taylor, Robert (Croydon NW)

    Mellor, David

    Pym, Rt Hon Francis

    Tebbit, Norman

    Meyer, Sir Anthony

    Raison, Timothy

    Temple-Morris, Peter

    Miller, Hal (Bromsgrove & Redditch)

    Rathbone, Tim

    Thatcher, Rt Hon Mrs Margaret

    Mills, Iain (Meriden)

    Rees, Peter (Dover and Deal)

    Thomas, Rt Hon Peter (Hendon S)

    Mills, Peter (West Devon)

    Rees-Davies, W. R.

    Thompson, Donald

    Miscampbell, Norman

    Renton, Tim

    Thorne, Neil (Ilford South)

    Mitchell, David (Basingstoke)

    Rhodes James, Robert

    Thornton, Malcolm

    Moate, Roger

    Ridley, Hon Nicholas

    Townend, John (Bridlington)

    Molyneaux, James

    Ridsdale, Julian

    Townsend, Cyril D. (Bexleyheath)

    Monro, Hector

    Rifkind, Malcolm

    Trippier, David

    Montgomery, Fergus

    Roberts, Wyn (Conway)

    Trotter, Neville

    Moore, John

    Ross, Wm. (Londonderry)

    van Straubenzee, W. R.

    Morris, Michael (Northampton, Sth)

    Rossi, Hugh

    Vaughan, Dr Gerard

    Morrison, Hon Charles (Devizes)

    Rost, Peter

    Viggers, Peter

    Morrison, Hon Peter (City of Chester)

    Royle, Sir Anthony

    Waddington, David

    Mudd, David

    Sainsbury, Hon Timothy

    Wakeham, John

    Murphy, Christopher

    St. John-Stevas, Rt Hon Norman

    Waldegrave, Hon William

    Myles, David

    Scott, Nicholas

    Walker, Rl Hon peter (Worcester)

    Neale, Gerrard

    Shaw, Giles (Pudsey)

    Walker, Bill (Perth & E Perthshire)

    Needham, Richard

    Shelton, William (Streatham)

    Walker-Smith, Rt Hon Sir Derek

    Nelson, Anthony

    Shepherd, Richard (Aldridge-Br'hills)

    Waller, Gary

    Neubert, Michael

    Shersby, Michael

    Walters, Dennis

    Newton, Tony

    Silvester, Fred

    Ward, John

    Nott, Rt Hon John

    Sims, Roger

    Warren, Kenneth

    Onslow, Cranley

    Skeet, T. H. H.

    Watson, John

    Osborn, John

    Smith, Dudley (War. and Leam'ton)

    Wells, John (Maidstone)

    Page, John (Harrow, West)

    Speed, Keith

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

    Page, Rt Hon Sir R. Graham

    Speller, Tony

    Wheeler, John

    Page, Richard (SW Hertfordshire)

    Spence, John

    Whitelaw, Rt Hon William

    Parkinson, Cecil

    Spicer, Jim (West Dorset)

    Whitney, Raymond

    Parris, Matthew

    Spicer, Michael (S Worcestershire)

    Wickenden, Keith

    Patten, Christopher (Bath)

    Sproat, Iain

    Wiggin, Jerry

    Patten, John (Oxford)

    Squire, Robin

    Wilkinson, John

    Patltie, Geoffrey

    Stainton, Keith

    Winterton, Nicholas

    Pawsey, James

    Stanbrook, Ivor

    Wolfson, Mark

    Percival, Sir Ian

    Stanley, John

    Young, Sir George (Acton)

    Peyton, Rt Hon John

    Steen, Anthony

    Younger, Rt Hon George

    Pink, R. Bonner

    Stevens, Martin

    Pollock, Alexander

    Stewart, Ian (Hitchin)

    TELLERS FOR THE NOES:

    Porter, George

    Stewart, John (East Renfrewshire)

    Mr. Spencer Le Marchant and Mr. Anthony Berry.

    Powell, Rt Hon J. Enoch (S Down)

    Stokes, John

    Price, David (Eastleigh)

    Stradling Thomas, J.

    Question accordingly negatived.
    It being after half past Six o'clock, Mr. SPEAKER proceeded, pursuant to the Order [29 January]and the Resolution yesterday, to put forthwith the Question necessary for the disposal of the business to be concluded at half-past Six o'clock.

    Clause 24
    SCHOOL MEALS: SCOTLAND
    Amendment made, No. 55, in page 23, line 38, at end insert—
    '(6) In section 24(1) of the Education (Scotland) Act 1962 (provision by education authority for education of pupils belonging to areas of other authorities) after the word "Act" there shall be inserted the words "or the Education Act 1980".'.—[Mr. Younger.]

    Clause 23
    TRANSPORT: ENGLAND AND WALES
    Sir Nicholas Bonsor: I beg to move amendment No. 139, in page 21, line 14, leave out clause 23.
    Mr. Speaker: With this, we may take the following amendments. No. 42, in page 21, line 41, after' charges', insert:
    ',not exceeding 25 pence per pupil per day'.
    No. 43, in page 21, line 44, after 'applies' insert:
    'provided that such charges do not exceed 20 per cent. of the total cost of their provision'.
    No. 44, in page 22, line 4, at end insert:
    'and shall remit that part of the charge which relates to any journey beyond 2 miles for a junior pupil and 3 miles for a secondary pupil'.
    No. 45, in page 22, line 4, at end insert:
    'and shall remit the whole of the charge for any junior pupil living more than 2 miles and any secondary pupil living more than 3 miles from the school which he attends'.
    No. 132, in page 22, line 4, at end insert:
    (c) where a charge is made on any such service for a child who attends a school which is within walking distance of his home or for any pupil attending a course or class provided in pursuance of a scheme of further education—

    (i) the powers conferred by this subsection shall not be exercised by the

    1597
    authority without the written consent of the traffic commissioners in whose area that service, or any part of it, is operated and, in respect of any service or part of a service operated in Grater London, also of the London Transport Executive; and

    (ii) the traffic commissioners concerned shall not give their written consent unless they are satisfied that there are no other transport facilities which meet the reasonable needs of the children or other pupils referred to in this paragraph.'.

    No. 46, in page 22, line 4, at end insert—
    '(3) The Secretary of State may give directions to a local education authority to waive any school transport charges in respect of any child whose parents can show that their children had been given a guarantee of free school transport by the local education authority as part of plans for the closure, reorganisation or relocation of schools.'.
    No. 48, in page 22, line 4, at end insert—
    '(4) The Secretary of State may by order vary the sum of 25 pence mentioned in subsection 3(c) above, and any such order shall be subject to annulment in pursuance of a resolution of either House of Parliament.'.
    Government amendment No. 134, in page 22, line 4, at end insert—
    '(4) In the case of pupils in attendance at schools, the charges made by a local education authority under subsection (3)(a) above for the provision of transport shall be at a uniform rate, that is to say, a rate not depending on the length of the journey or the school attended, except that there may be rates which differ according to the age of the pupil or according to whether the school is a primary or a secondary school.'.
    Sub-amendment (a), in line 3, after 'rate', insert:
    'which shall not exceed 50 pence per family per week'.
    Sub-amendment (b), in line 5, at end insert:
    'any such rate shall not exceed the maximum cost of direct travel to school by public transport within the appropriate statutory walking distance in that local education authority's area.'.
    No. 140, in page 22, leave out lines 12 to 15.
    No. 92, in page 22, leave out lines 16 and 17 and insert—
    '(b) the income of the parents does not exceed one and a half times the maximum amount at which family income supplement is payable to parents with the same number of dependents'.
    No. 49, in page 22, line 17, after' supplement,' insert:
    'or are in receipt of rent or rate rebate'.
    1598
    No. 127, in page 22, line 17, at end insert:
    'or an income which is less than 40per cent. above the level of either, as determined by the Secretary of State'.
    No. 50, in page 22, line 17, at end insert—
    'or—
    (c) the school is a voluntary school providing denominational education in accordance with parental choice.'.
    No. 51, in page 22, line 17, at end insert—
    'or—
    (c) the school provides instruction through the medium of the Welsh language or bilingual education which is not available at a school within walking distance.
    No. 133, in page 22, leave out lines 18 and 19 and insert—
    '(5A) In this section the expression "walking distance" has the same meaning as in section 39 of the said Act of 1944.'.
    No. 56, in page 24, line 10, clause 25, after 'charges' insert:
    "not exceeding 25 pence per pupil per day'.
    No. 86, in page 24, line 18 at end insert
    'and shall remit that part of the charge which relates to any journey beyond two miles for a primary and three miles for a secondary pupil'.
    No. 87, in page 24, line 18, at end insert
    'and shall remit the whole of the charge for any pupil living more than two miles from the school which he attends'.
    No. 137, in page 24, line 18, at end insert
    ';and
    (c) where a charge is made on any such service for a child who attends a school which is within walking distance of his home or for any pupil attending a course or class provided in pursuance of a scheme of further education—

    (i) the powers conferred by this subsection shall not be exercised by the authority without the written consent of the traffic commissioners for the Scottish Traffic Area; and

    (ii) the traffic commissioners shall not give their written consent unless they are satisfied that there are no other transport facilities which meet the reasonable needs of the children or other pupils referred to in this paragraph.'.

    Government amendment No. 151, in page 24, line 18, at end insert
    '(4) In the case of pupils in attendance at schools, the charges made by an education authority under subsection (3)(a) above for the provision of transport shall be at a uniform

    1599
    rate, that is to say, a rate not depending on the length of the journey or the school attended, except that there may be rates which differ according to the age of the pupil or according to whether the school is a primary or a secondary school.'.
    Sub-amendment (a), in line 5, at end add
    'but such rates shall not exceed 50 pence per pupil per week and the charge shall not apply to more than two children in one family'.
    Sub-amendment (b), in line 5, at end add
    'and such rate shall not exceed the cost of the local charge for a two mile journey in respect of children up to the age of 14 years'.
    Sub-amendment (c), in line 31, after first 'rate' insert
    'which shall not exceed 50 pence per family per week'.
    Amendment No. 58, in page 24, line 18, at end insert—
    '(4) The Secretary of State may by order vary the sum of 25 pence mentioned in subsection 3(a) above, and any such order shall be subject to annulment in pursuance of a resolution of either House of Parliament.'.
    No. 141, in page 24, leave out lines 26 to 29.
    No. 138, in page 24, leave out lines 32 to 34 and insert—
    '(6) In this section the expression "walking distance" has the same meaning as in section 42 of the Education (Scotland) Act 1962.'.
    No. 59, in page 24, line 31, after supplement', insert:
    'or are in receipt of rent or rate rebate'.
    No. 60, in page 24, line 31, at end insert—
    '(c) the school is a voluntary school providing denominational education in accordance with parental choice.'.
    No. 69, in page 31, line 3, clause 34, after 15(6)', insert '23(4) and 25(4)',
    Mr. Roger Moate: On a point of order, Mr. Speaker. If time should permit, would it be possible to seek a separate Division on amendment No. 42?
    Mr. Speaker: I shall have a word with the hon. Gentleman about that a little later.
    Sir N. Bonsor: Hon. Members will be aware that the purpose of clause 23 is to allow local authorities to charge for transport to schools, whereas at the moment they have a statutory obligation to provide such transport free of charge. The
    1600
    purpose of my amendment is to remove the clause from the Bill and to leave the law as it stands, so that the free transport provision will remain as it now is.
    6.45 pm
    The reasons for my doing so are manifold, and they are based on the principle that to change the provision in the way that is suggested would be most ill-conceived and inequitable. I say that it would be ill-conceived because, first, it would put a charge on to people who have no way of avoiding that charge, as it is a charge upon them for fulfilling their statutory duty. They have a duty, which they cannot escape, to send their children to State schools. In many cases, with those who have to travel a long way to school, that duty is already a heavy burden in terms of convenience and of time.
    To add to that burden a further burden of finance would, in my view, be wrong. It is different from those circumstances in which people are having to pay higher charges for many things. Inevitably the economy forces that upon us, and in those cases a choice can be made. But somebody living in a rural village has no choice but to send his child to a school that is in many cases miles away. To put a charge upon that is to discriminate between those who live near a town or in a town and those who live out in the countryside.
    I object to a measure that is entirely divisive in our country, which we are trying to make into one.
    Mr. John Bruce-Gardyne: I have been listening to my hon. Friend's argument with great care. Is he advancing the proposition that the parent has a statutory duty to get his child to school and that it is wrong that he should be faced with a charge in order to fulfil that statutory duty? What about the position of the parent who is, say, 2¾ miles or 2⅞miles from a school who has a similar duty to get his child to school, and who receives no assistance of any kind?
    Sir N. Bonsor: I do not, with respect to my hon. Friend, think that that is a very good point. I am not here to defend the idea that somebody living 2⅞ miles from a school should pay a transport charge or should not. I am saying that it

    1601
    is wrong to make the provision in much broader terms so that people have to pay when they are living far away from the school and have no choice in the matter.
    I consider it to be iniquitous that over the years we should have enticed people into not objecting to the abandonment of their own village schools on the ground that the leaders of the nation, in both major parties, said to them, in effect, "We are removing the village schools from you but we shall take your children to the nearest available State school." Now we are saying to them "We know that you have not got your village schools but we intend to impose a transport charge upon you."
    Many village schools would have been fought for with far greater vigour had it been known by the inhabitants of many villages and market towns that they would have to pay a charge to send their children to another school.
    For those reasons, I consider it to be an ill-conceived idea to make this imposition. It would lead also to the closure of many Roman Catholic schools. [HON. MEMBERS: "Nonsense."] My hon. Friends say "Nonsense", but they can argue that with the Catholics who say so. Those who run these schools and send their children to them are best able to judge the consequences of having to pay a charge to get their children there. I say that it would lead to the closure of Catholic schools. I am not a Catholic, but I have the greatest sympathy with those who wish to see their children properly and fully educated in the school of their own choice.
    I look with some despair at some of our own schooling systems in which the whole concept of religion seems to be part of a humanist theory and has nothing to do with religion. The Bible is treated as a textbook on a par with the writings of Karl Marx. Some hon. Members may think that that is an excellent thing, but I do not. I therefore feel that it is quite wrong that Roman Catholics should find that they can no longer afford to send their children to a Catholic school of their choice, and will have to take them away and send them to a school which may in many cases not have any kind of religious instruction.
    1602
    The principal ground upon which I object to a charge being made is that poor families, living in rural areas and in villages, and working on the land—and very often in industries which are small and cannot afford to pay high wages—are the very people who will be hit the hardest by the measure.
    Mr. Mike Thomas: Is the hon. Gentleman aware, in the context of his argument, that although the provision concerning Catholic schools, under the 1944 Act settlement, is being threatened by the Government's proposal in clause 23, the problem is not confined to rural areas? I can give him figures for the urban area of Newcastle upon Tyne, which is a very small city. They were provided to me by the education authorities. St. Mary's school in Newcastle has half of its pupils on free transport. Under the present proposals the proportion will be less than one-fifth.
    Mr. Speaker: Order. As a large number of hon. Members wish to speak in the debate, I hope that hon. Members will be fair to other hon. Members and make brief interventions.
    Mr. Thomas: I wish only to make the point, Mr. Speaker, that this is an urban as well as a rural problem. Indeed, in other schools in Newcastle the problem is worse than in the one that I have mentioned.
    Sir N. Bonsor: I am grateful to the hon. Gentleman for drawing attention to the point. It is true that the clause does not affect only people in rural areas. The whole idea of making a charge of this nature is widely discriminatory and divisive. I shall therefore ask hon. Members to support the amendment in due course.
    I consider that the proposal is inequitable as a concept and as a law because of the wide variations in local practice that will result from it. It will be possible to find people who are living within 100 or 200 yards of somebody in another area, and who will be paying a vast sum, whereas those in the other area are paying nothing. Where somebody lives out in the country and finds himself faced with a transport charge of £6 or £7 a week or more to send his child to the nearest State school, what does my

    1603
    right hon. and learned Friend suggest that such a person should do? The farm worker—
    Mr. Mark Carlisle: With regard to my hon. Friend's last point about a payment of £6 or £7 a week per child, I ought to point out to him that the county that he and I both represent is proposing a sum of 20p a day.
    Sir N. Bonsor: My right hon. and learned Friend is right, of course, but I did not say "per child". If I did, that is not what I meant; I meant to say £6 or £7 per family.
    Mr. Moate: Did my hon. Friend deduce from the intervention of my right hon. and learned Friend the Secretary of State that he advocates a rate of 20p per day?
    Sir N. Bonsor: I wish that my right hon. and learned Friend would do so. Perhaps he would like to indicate such an intention when he replies to the debate.
    I had hoped that my hon. Friend the Member for Faversham (Mr. Moate) was about to remind me that the original plans of the Kent county council were to charge £3·50 a week for the first child and £2·50 a week for the next. Indeed, it may have been £3·50 for each child. That would produce the £7 per week per family which I mentioned earlier.
    There will be a wide inequity if two children are charged £7 a week to go to school in some areas, 20p per day each in areas such as Cheshire and nothing in counties such as Essex.
    Mr. Patrick Cormack: Is my hon. Friend aware that there is already great disquiet in sonic areas that have different old-age pensioner bus pass schemes, and that the Government's proposals will duplicate that problem?
    Sir N. Bonsor: They will indeed. There is widespread concern about the proposals.
    One of my objections to the clause is that there are no upper safeguards against the irresponsible use of the provisions by local authorities. Had the Government introduced an upper limit that would overcome the difficulty of poor families facing charges that they could not afford,
    1604
    I should be much more inclined to support the clause.
    What explanations are we given of the inequities and the injustice? How are we reassured that the consequences of this measure will be acceptable and fair? I regret that the only answer that I have received is that we must have blind faith that local authorities will act reasonably and properly and that we should pass to them all authority and power in this matter.
    Of course I have faith in my local authority—but not blind faith. The Kent county council was prepared to put in £3·50 as the charge for one child and I do not consider that to be a reasonable way of exercising the powers provided in the clause.
    Mr. Brinton: My hon. Friend has twice mentioned that Kent had "put in" plans to charge £2·50 and £3·50 a week. Those were always proposals and the present plan, which has still to be put through, is for £1·50 and £2·50. It would be helpful if my hon. Friend would use the right figures.
    Sir N. Bonsor: I appreciate my hon. Friend's concern, but my information was that Kent's original plan was for £3·50 per child per week.
    I have looked through the newspapers for reassurance that local authorities would exercise properly the untrammelled authority that the Government propose to give them. I have found some interesting examples of the sheer irresponsibility of local government spending.
    For example, the West Midlands county council proposes to spend £30,000 on a new members' bar. Hon. Members who were in the House when I presented my Private Member's Bill may expect me to show sympathy for that, and indeed I do, but that sympathy is tempered when I see that the county council has also budgeted £19,000 for a new lavatory for the chairman.
    The London borough of Brent has budgeted £38,000 for a new mayoral car, which has all the necessary appurtenances of a mayoral car including a cocktail bar and a colour television. Not satisfied with that, the council immediately spent a further £20,000 to make sure that the car was up to standard. I do not have a bottomless faith in the

    1605
    way in which local authorities spend their money.
    Mr. Nicholas Winterton: Brent is a Labour authority.
    Sir N. Bonsor: Let me give an example from another Labour authority, the London borough of Southwark. It planned to spend a puny £50 million to build a new council building, though, to be fair, it has now scrapped that plan.
    My hon. Friend the Under-Secretary made great play of the fact that we must show faith in local couucils. Of course we must, but we must also have a residual power to make sure that when our faith is not justified we can prevent abuses.
    The second argument against the removal of the clause is "Where else can we find the money that is to be saved?". My right hon. and learned Friend will correct me if I am wrong, but I understand that the sum that we are talking about is £20 million and that it is based on the assumption that many local authorities will charge. However, we have already discovered that many authorities will not charge and I doubt whether £20 million will be brought in—in this extraordinarily unfair way varying from one region to another—when we consider the net benefit gained to the State after deduction of the additional administrative expenses involved in the introduction of this tax.
    I do not believe that it will work. I do not often agree with the right hon. Member for Cardiff, South-East (Mr. Callaghan) but, as he said, £20 million will not make or break the Government—and it will be gained at great hardship. That is why I pull away from the Government's line.
    Some people have to live on the minimum agricultural wage of £58 per week and out of that they have to pay for rent, electricity and gas charges, living expenses and clothes. Those on small, isolated farms already face heavy transport charges. The imposition of an additional burden would be absolutely wrong.
    Mr. Robert Hicks: Does my hon. Friend agree that there is an economic price that the low-income family, in work in rural areas, can afford to pay,
    1606
    and, as far as the Secretary of State is concerned, there will be a political price that they will be prepared to pay?
    Sir N. Bonsor: I am grateful to my hon. Friend and I agree with him. Further cuts could undoubtedly be made within the education system without attacking the transport provision. Of course local government will tell us that it has pared to the bone, but I do not accept that that is so.
    A CBI report on the efficiency of Cheshire county council was, in general, extremely favourable, but it made the grave criticism that the education service was overmanned. The main evidence offered for that statement was that for every 100 people who teach there are 75 providing ancillary services.
    I do not accept that that is the right ratio on which to run our education system. I had hoped that in the light of that report there would have been some self-examination by the county council to see whether changes were needed. Not a bit of it. The letter that the county council wrote when these points were raised was, if anything, self-congratulatory. It said:
    "If the facts of this bald statement"—
    that for every 100 teachers there are 75 ancillary staff—
    "are examined, it will be found that of the 75 in support'70 are actually working in and with the schools and colleges, that is they are at the 'sharp end' of the service, directly helping the teachers and working with students and pupils. They are either clerical, laboratory or workshop assistants or employees of the school meals service."
    There is no question of saying "Yes. We shall look at the ways in which our expenditure is made up." The council is not prepared to examine its own system. There is a self-satisfied acceptance that the criticism is wrong and that the council's expenditure is absolutely right.
    7 pm
    It is the duty of hon. Members to keep some control over local government expenditure, so that we have the right, as we have now, to examine closely the way in which expenditures are made up. I know of one primary school where there are fewer than 50 children and three full-time cooks. I do not accept that no other cuts can be made in our education service. That is true throughout our whole local government system.
    The first reason for my opposition to clause 23 is one of principle. I consider it to be wrong. It is wrong to put a statutory duty on somebody and then, years later, say "I shall charge you for it", when the authority has already taken many actions in the abolition of primary schools and of secondary schools that have been accepted on the basis that free transport is provided.
    It is wrong to impose a charge on people in the rural areas and the urban areas—Catholics in particular in urban areas—where the children have to travel distances because we say so and their families are already poor. Finally, and conclusively, the inequities that would exist, whether my figures for Kent, Essex and Cheshire are right or wrong, would be wide. There would be a big difference between one area and another in the ways in which the provision would have an effect.
    I would not oppose any proposal by my right hon. and learned Friend to charge for school transport, provided that the House imposed a limit, so that we were satisfied that the charge would not be such as to cause the hardship that I have tried to describe. That has not been done. I hope that my right hon. and learned Friend will consider it, perhaps for introduction in another place. Because that has not been done, I ask my right hon. and hon. Friends to support the amendment.
    Mr. Kinnock: Speaking on behalf, not only of the Opposition but of many Conservative right hon. and hon. Members, I congratulate the hon. Member for Northwich—[HON. MEMBERS: "Nantwich".] I apologise to the hon. Member for Northwich (Mr. Goodlad). I congratulate the hon. Member for Nantwich (Sir N. Bonsor) on moving the amendment and speaking to it as he did.
    The amendment is exactly the same as an Opposition amendment that was moved in Committee, when we were able to have a short debate, though I am sure that that amendment was not the source of the hon. Gentleman's inspiration. The importance of the matter has been greatly heightened by the fact that we now have the hon. Gentleman moving the amendment, with the support of his hon. Friends the Members for Northampton, North
    1608
    (Mr. Marlow) and Aldridge-Brown hills (Mr. Shepherd).
    If the Government take the advice of the hon. Member for Nantwich and his hon. Friend the Member for Bodmin (Mr. Hicks), who gave similar advice with equal sagacity last night, they will save themselves a great deal of trouble. Much more important, they will prevent a great deal of difficulty for the people whom we in this House represent. Even now, some of that difficulty is unimaginable in terms of the extra impositions on the family budget and the other problems, educational as well as social and domestic, that the clause will cause.
    We are having a real debate, because there are votes to be gained. People will be listening to the arguments, and Conservative hon. Members will make up their own minds. There are votes to be gained not only here but elsewhere.
    Conservative hon. Members do not adopt a defensive attitude because they fear for their parliamentary lives if they support the amendment. They are moved by the view of the hon. Member for Nantwich that the proposition in clause 23 is ill-conceived, inequitable, discriminatory and divisive. The hon. Gentleman spoke as a true British Member of Parliament He did not want to see great disparities between different parts of the country growing. He recognised that it was the ultimate responsibility of this House and the Government to ensure that people's difficulties did not exceed certain levels of difficulty and that they should not be expected to bear impositions of more than a certain amount. I hope that the hon. Gentleman's attitude and the responsibility that he puts to the House are acknowledged by the Government.
    The Secretary of State insists that he is releasing local government from some of the obligations that it has had since 1944, but his proposal is almost universally deplored. There is opposition from the Standing Conference of Rural Community Councils at one end to the Council of Head Teachers at Voluntary Schools at the other, from the National Association of Health Authorities to the National Farmers Union, and coupled with them the National Union of Agricultural and Allied Workers. The opposition comes from bishops and bus conductors.

    1609
    Even in a Bill that has been as hotly contested as the one before us, which has drawn so much critical comment, it is difficult to find any other part that has so united so many disparate sections of the community—people of religious persuasion, people seeking to represent rural interests, people concerned about the future of education in our great cities, people with a professional interest, people with a parental interest, people with an interest that goes beyond the view expressed in education.
    The Government must recognise the breadth and the depth of the opposition to their proposal. There are good reasons for the breadth and depth of that opposition. The clause will mean a negation of choice, brought about by a Government supposed to espouse choice in education. It means reneging on promises solemnly given by local education authorities seeking to reorganise education provision in their areas since 1944. It will have an effect on parents who permitted their local schools to close, agreeing with the local education authority to send their children to particular schools on the basis that they were completely assured that no extra payment would be imposed on them as a consequence of accepting the local education authority's proposal.
    A further grave possibility, probably the saddest of all, is that the clause is a truant's licence. Most families will face the difficulties and do their best to ensure that their children have the money to go to school, regardless of the cost. They will be in contrast with that minority, regrettable as this fact of life may be, who will use the major financial burdens imposed on them to avoid their responsibility for getting their children to school. Any disincentive added to the disincentives that currently worry us, any addition to the level of truancy, which already concerns hon. Members on both sides of the House, must secure the unreserved hostility of us all.
    The breach of trust and the negation of choice are of particular consequence for those parents who wish to send their children to denominational schools. As I said in Committee, possibly unnecessarily, I have no religious convictions. But it is self-evident to anyone who has
    1610
    libertarian views that those who wish to have freedom to worship and freedom to secure the education of their children within the beliefs that they espouse should have that freedom. It is a time-honoured tradition, won at great cost to the people, throughout the history of this country, and cherished among those who have religious convictions and those who, like me, have none.
    The power that the Government offer in clause 23 imposes a burden and constitutes a significant threat to the effective fulfilment of that denominational choice.
    Mr. Bruce-Gardyne: I am sure that the hon. Gentleman's argument is sincerely put. I was not a Member of the last Parliament. I am not certain about the hon. Gentleman's responsibilities. I do not think that he spoke on, or was responsible for, education in his party in the last Parliament. But he will, perhaps, recall that the previous Government took steps to impose upon local authorities such as Trafford, in part of my constituency, the obligation of comprehensive education, which struck at the root of the existence of Catholic schools—[HON. MEMBERS: "No."] Yes, it did. Is it not mildly hypocritical for Opposition Members to advance the argument that the hon. Gentleman has done?
    Mr. Kinnock: The best answer is for the hon. Gentleman to visit the Catholic Educational Council and ask its views on comprehensive education. In those benighted areas, such as Bolton and one or two in the South-East that still retain 11-plus selection, the only parts of the seconlary sector that are comprehensive are those run as voluntary schools by the Catholic Church. The Catholic Church has an extremely good record of abolishing the inane system of selection at the age of 11. It was not the superimpositions of the 1976 Act that brought that about. It has been a continuing process, regardless of the Government and regardless of the proddings of legislation, for many years past, in the schools of the Catholic Church.
    Mr. Stanley Cohen: Is it not true that, under a Labour Government, an 85 per cent. grant was given to denominational schools—a tremendous advance?
    Mr. Kinnock: My hon. Friend is correct. That was because we not only believe in liberty—as I am sure do hon. Members on the Government side—but we also believe in providing the means for fulfilling that liberty. That is why the assistance was made available. That is why we oppose clause 23 of this Bill.
    Mr. Robert C. Brown: The hon. Member for Knutsford (Mr. Bruce-Gardyne) has hit the nub of the issue without realising it. The Roman Catholic authorities voluntarily negotiated with the local education authority in the city of Newcastle upon Tyne a comprehensive scheme. The local education authority pledged, as part of the new system, that free transport would be maintained for Roman Catholic schools. I have received a letter from the Bishop of Hexham and Newcastle in which he sets out his fears that even an authority such as Newcastle, with the best will in the world, may be forced to charge if the clause is carried.
    Mr. Kinnock: I am grateful to my hon. Friend. I, too, have seen the letter from the bishop and, indeed, letters from one or two other bishops drawing my attention to the possibility of huge impositions being made if parents seek to fulfil their choice on a denominational basis. Because of the wide distribution of details from every diocese in the country of the consequences of making impositions of charges, not only on the family pocket but also on the possible viability of schools in the secondary sector, I shall not exhaust the House by making extensive reference to the effects of charges where no charge has previously been imposed.
    But the House should know that there are whole schools whose existence is threatened if pupils have to meet substantial charges for getting to school. There are some Catholic schools where 80 per cent., 90 per cent., and even 95 per cent. of pupils travelling on buses would have to pay substantial fares if they were to continue attending those schools after the date of which subsidies were withdrawn.
    7.15pm
    If the Secretary of State had followed the suggestion of the hon. Member for Faversham (Mr. Moate) and imposed a
    1612
    reasonable upper limit, the Opposition might have taken a different view of his amendment introducing the idea of a flat rate. In the absence of that, our only realistic course in defending the right of parents to get their children to denominational schools of their religious choice is to join the hon. Gentleman in pursuing this amendment to remove the clause in a Division.
    Mr. W. R. Rees-Davies: There is no reason why all the counties should not adopt a flat rate charge irrespective of distance. It is obvious to anyone meeting together that this should take place. A flat rate would in no sense be harmful to denominational schools or to village as opposed to town.
    Mr. Kinnock: I am grateful to the hon. and learned Gentleman for that intervention. It makes my next point for me. Without the requirement of Government, the possibility of unanimity among all the local education authorities and a uniformity of provision among those authorities, let alone an equity of provision, is extremely remote. That is what unitary Government is for—to seek to lay down conditions and to set upper and lower limits. It is not a derogation of local democracy to do so. It is the fulfilment of responsibility of national government to do so. I only wish that the Secretary of State would listen to the advice that he is getting from his hon. Friends on these matters.
    The loss of trust is taken further by the fact that hundreds of thousands of parents whose children are currently in schools will now have to pay what I have called this new tax on parenthood. They had never expected to do so. The point has been made by hon. Members in interruptions and by the hon. Member for Nantwich that people accepted the idea of putting their children in particular schools on the absolute trust that they would never be required to pay to get those children to school.
    The least that the Minister could do is to say that, wherever people have accepted a change of school, or the closure of a school, on the basis of the acceptance of a free school transport pass, then, by law, the local education authority will be required not to impose a charge and the Government will compensate them. Otherwise a midstream,

    1613
    unheralded, major change in responsibilities is imposed on parents. That must be most unfair and totally unsupportable.
    Mr. Nicholas Winterton: The hon. Gentleman has highlighted a valid point with which I find myself in considerable sympathy. What information has he received from local authorities that have given such commitments that the commitments were open-ended in the sense that free school transport would be available for ever to children and children's children because of the closure of a village school? Or was an assurance given merely for the period during which the children already at that school would remain at school?
    Mr. Kinnock: I do not think that it helps anybody to put upon the matter the kind of legalistic interpretation sought by the hon. Gentleman. I am sure that if parents had been told that at some future date free transport was to be removed, or had been given a direct warning of that possibility, their attitudes to closure would have been dramatically different. I do not think that consideration of a debating point such as that introduced by the hon. Member for Macclesfield (Mr. Winterton) will get us much further in this consideration.
    The attitude of the rural communities is probably best enunciated by the National Farmers Union in its circular of 24 January. With commendable brevity it says
    "The withdrawal of transport services and/or the imposition of charges will lead to parents in rural areas becoming disadvantaged in comparison to their urban counterparts in terms of the range of choices available to them and their children as regards schools, means of transport and the cost of transport."
    I am sure that hon. Members on both sides of the House have seen the circular and I am sure that they know that the NFU is giving a most direct and categoric warning that the consequences of this important change will be very serious for rural communities.
    The kind of costs that will be imposed on parents are now being discussed and presented by local education authorities all over the country. For instance, the removal of subsidies would cost parents in the city of Birmingham £50,000. That is a sum they never had to find before. In Coventry the sum is £70,000, in the
    1614
    city of Oxford £77,000, in Was all £89,000, and in Cardiff £50,000. That is the kind of transfer of wealth—to borrow a phrase from the Labour Party manifesto—that will take place. Instead of the whole community assuming responsibility for assisting parents with the cost of getting their children to school, the imposition will now be made direct upon the parents. That is what characterises the charge as a tax on parenthood.
    Devon county council is expecting to save £26,000. The figure for North Yorkshire is £400,000, for Northants £800,000 and for Northumberland £26,000, and the list goes on. That list indicates the money that will be taken from the pockets of the parents of these children.
    Subsidies are being stopped in Surrey, Hampshire, Cambridge shire, Wiltshire, Redbridge, Avon, Dorset and Doncaster. In Shropshire the charge is expected to be 20p a day or £40 a year per pupil. In Staffordshire it will be 25p a day except for families on supplementary benefit or family income supplement, or for children receiving special education. That amounts to £50 a year. In Hereford and Worcestershire the figure will be £15 per term per child up to a maximum of two—that is £45 a year for one child or £90 a year for two. In East Sussex the charge will be 35p a day for children at secondary and further education, up to a maximum of two, which is £1·75 a week or £70 a year.
    We then come to Kent. I am glad to see that the continual representations and advertisements about the position in Kent appear to be having a desirable effect. Whereas the county was previously planning to charge even more extortionate sums, it is now down to £1·50 a week for primary school children and £2·50 for children at secondary schools. If we could keep talking long enough on the Bill we might reduce the charges to a civilised level. However, it still amounts to £60 a year in respect of primary school children and £100 per year for a secondary school child. As Kent is not placing any poverty limit on these charges, the normal-sized family with two children, one in primary school and one in secondary school, will have to pay £160 a year, an outlay that it did not previously have to face.
    If that is not a disincentive, a broadening of the poverty trap, a tax on

    1615
    parenthood, a derogation of responsibility and a negation of choice I do not know what is. Yet the Secretary of State is prepared to sit in the Department and preside over this kind of occurrence.
    We have heard from him and from the Under-Secretary that it is a choice of transport of classrooms. If the choice were that stark, I am sure that the debate would go a great deal wider than it has gone. But if he wants evidence that his policy is not an alternative to cuts in the classroom, but a precursor to them, and that the most that can be claimed for his policy of cuts is that they absorb some of the initial impact of the classroom cuts, he has only to look at the report of the Educational Publishers Council produced yesterday, showing reductions of up to 25 or 30 per cent. in real terms in the amounts being spent by education authorities on books.
    So the right hon. and learned Gentleman's policy is not a serious alternative, certainly not to the extent of £20 million a year, which is the saving that he is expected to make under clause 23 if it remains in the Bill.
    The question arises of whether a vote for the amendment seeking to remove clause 23 is a vote of no confidence in local government. I say that it is not. It is a vote against the enormous dilemma, the tortuous position into which the right hon. and learned Gentleman is putting local government by his action. I said in Committee that there was no good democratic reason for local or any other form of government not being faced with difficulties and invidious choices. That is what democratic government exists for. But it is totally unsupportable for impositions to be made upon local authorities and then for the national Government to desert their responsibility for providing those authorities with the means of meeting those burdens. The authorities are being faced with a hopelessly invidious choice involving how they make the cuts and who shall suffer as a consequence of them. They are being given freedom without the means of exercising it, and new responsibilites without new powers. That cannot be supported.
    It is not good enough for Ministers to give the replies that they have given. I have two here, but there are many of
    1616
    them. The first is given in a letter to the Transport and General Workers Union—my union—which states that the Government expect that local education authorities
    "will make sensible use of their powers."
    The other is in a letter to my right hon. Friend the Member for Brent, East (Mr. Freeson). It reads:
    "Accordingly, the legislation we have introduced will give LEAs discretion to charge for providing transport, but we have no reason to suppose that LEAs will not continue to give sympathetic consideration to families whose children attend Church schools."
    Of course there is no reason to suppose that. The LEAs will do their level best, but they will be £20 million worse off next year than they were last with the same or even greater responsibilities in some respects. They will certainly have the same responsibilities to meet the desire of parents to exercise their denominational choice. So the Government are taking a very insular attitude and are deserting their responsibilities.
    Let us consider the realities that face the local education authorities. They have enjoyed discretionary powers over many years in many spheres. They have exercised such powers over school uniform allowances, educational maintenance allowances for the 16-plus category, and on the statutory limits for assisting with free school transport. The disparity of treatment of pupils and parents from authority to authority makes us believe that in all these matters the Government should seek to give guidance and direction, and the means of fulfilling obligations. Rather than expanding the area of discretion without providing the means effectively to exercise that discretion on behalf of and to the advantage of the children in the care of those LEAs, the Government should be narrowing the degree of discretion.
    The clause will make it more difficult for the LEAs to reorganise education. It will make administration massively more expensive. It is invidious, insidious and entirely odious, and we shall be glad to support the hon. Member for Nantwich (Sir N. Bonsor) in the Lobby later.
    Mr, Hugh Fraser: I congratulate my hon. Friend the Member for Nantwich (Sir N. Bonsor) on introducing this amendment. I am a

    1617
    rural Roman Catholic and it is on the subject of the rural areas that I make my brief remarks. There is a distinct danger that people who live in the country are now being disadvantaged, whether the problem is one of assistant postmasters, rural bus services, or wages—
    7.30 pm
    Mr. David Crouch: Not racing.
    Mr. Fraser: No, not racing.
    We have a strange phenomenon in the country now. There is a mixture of classes in the villages as country people move out. There are rich whites and poor villagers and those features which were formerly the basis of village life are being pushed out. That fact is demonstrated by remarks by Ministers both of this Administration and of the Labour Administration to the effect that village halls were of no importance.
    Conditions in rural areas could deteriorate. There is the probable rise in the price of oil which would mean that something like 30 per cent. of rural transport over the next few years would vanish. That is why I support my hon. Friend's amendment.
    Roman Catholics and people of other denominations will face problems such as the distances children will have to travel to school. Roman Catholics in this country may be better off than Roman Catholics in the United States who must pay for the whole of their education but English Roman Catholics still put down 15 per cent. more than anyone else for their children's education.
    What is happening to our rural schools? The admirable education authority in Staffordshire is discussing the closure of 33 schools, many of them rural schools. If those schools are closed, it will mean not only that a pledge has been broken but that insult will have been added to injury for those people whose children have lost their school. They will have to pay to transport their children to another school.
    It has been said that we must strike a balance between economics and politics. I regard the two as combined. What is at stake here is a comparatively small sum of money in relation to the damage that
    1618
    will be done. I hope that when the Secretary of State replies he will deal with all the problems described by my hon. Friend who so bravely and properly tabled this amendment. I hope that he will win the confidence of the House which, I regret to say, he does not enjoy at the moment.
    Mr. Armstrong: I intend to stick to educational matters in my speech. There is no doubt that this clause is part of a Bill which sets back the educational clock. Writing in The Guardian yesterday, John Fairhall said:
    "there is still just time for…Conservative MPs to put country before party and save us from the worst effects of the Education Bill…concerned with money raising rather than an educational motivation."
    There is no doubt that any impoverishment of public services affects children. It particularly affects children from families least able to look after themselves. This clause will have that direct effect.
    The Roman Catholic Bishop of Hex-ham and Newcastle has written a considered letter to local Members indicating that between the Tweed and the Tees there are 50,000 secondary schoolchildren in Roman Catholic schools. Of that number 12,000 travel to school free on subsidised transport. He estimates that if the Bill is passed as drafted 10,000 children will have to pay to travel to school. The cost per pupil has been given as £1 a week by the Secretary of State who believes that that is a reasonable figure.
    The bishop reckons that on that estimate the cost to the Catholic community of his part of the Northern region will be £400,000 a year. That is money that families did not previously have to find.
    I spent most of my life in education trying to persuade parents that it was important for their children to stay on at school. We all have colleagues who had to leave school for economic reasons and this clause will be a deterrent to a boy or girl of 16 wishing to stay on at school. They are mature enough to know that the cost of school bus fares will be a terrible burden on the family finances. The incentive to leave school at the statutory age will be all the greater for them. That is another backward step.
    There is now ample evidence—and everyone in the education service agrees

    1619
    —that parental motivation, interest and involvement has a greater influence on the child than does the school. I have always said that the home is a more powerful influence than the school. I do not think it can be denied that there are families, certainly in my constituency, in Catholic communities where 80 per cent. of children travel to school by bus. If this Bill goes through, some of those families will not be able to afford even 20p a day for school bus fares. In The Guardian yesterday, John Fairhall wrote:
    "This Bill is sentencing such families to years of grinding poverty."
    The educational features of the Bill bother me even more than the financial aspects. We need to increase the numbers of people who wish to take the opportunity of full education and any deterrent to that aim must be closely examined by the House, since the Bill will be a deterrent to parents doing the best for their children. The expense for some of those parents will be so great that they will encourage their children to leave school at the earliest opportunity.
    I feel strongly that we think about education in too narrow terms. Education is far more than the achievement of O-levels and A-levels. Parents who choose an education in a denominational school for their children are saying that there are more important things in education. They are saying that other values are as important as academic attainment.
    The Bill will deny the legal right of parents to choose a school for their children. Parents may not be able to afford to send their children to a particular school because they live too far away from it. In the last nine months the divisions in society have increased. Society is more divided than it was a year ago. The Bill creates even greater divisions. I beg the Secretary of State to have second thoughts and to seek to withdraw the clause.
    Mr. William van Straubenzee: So many hon. Members wish to address the House that it behoves us to be brief.
    I start with a proposition which I think will command the support of the House. Of all the provisions with which I, as an ordinary Back Bencher, have to deal, few are more unpopular than the present system of imposing a two-or three-mile
    1620
    limit for charging. Few issues cause deeper resentment. Although that has not been spelt out today, it has been in the debate generally. There is a reaching-back attitude that the present system is perfect and an essential part of the British way of life. That is a curious attitude of mind. I cannot believe that many hon. Members actually want the proposition which was so ably moved by my hon. Friend the Member for Nantwich (Sir N. Bonsor), which would permanently put us back in that position. At the end of his able speech, my hon. Friend made it explicitly clear that he was not against charging. He and the hon. Member for Bedwellty (Mr. Kinnock) want an upper limit but in principle they are not against a charge across the board.
    Reluctantly I must be harsh. The House knows my personal commitment to a particular denominational form of schooling. I stand second to none in my total commitment to that. However, I have to say, reluctantly, that some of the arguments put to me from outside by my friends in the Roman Catholic Church have verged on the unscrupulous. I carefully exempt from that my hon. Friend the Member for Rugby (Mr. Pawsey), who has been the Roman Catholic spokesman on this side of the House. He has fought his corner with courtesy, good humour and vigour—as he has the right to do—and with total fairness throughout.
    I am totally committed to Anglican schools and my hon. Friend the Member for Rugby is committed to Roman Catholic schools. We must remind ourselves that such schools receive 85 per cent. of their capital costs and the whole of their running costs. They have a special position which is totally different from that in the maintained sector. A real moral problem is involved. We should ask whether those figures are becoming so large that we are claiming from our friends in the State rights which morally we can no longer justify. It speaks volumes for the general approaches of the House and the nation that in their tolerance they are prepared to grant the denominations and the Jewish community that special position, in spite of the comparatively small amount of effort financially which they contribute.
    I place it on record that I resent the assertion by some that there is a

    1621
    deliberate act by my right hon. and learned Friend and other Ministers to undermine the 1944 settlement. No good has come from making such assertions. Of course, in Anglican schools at secondary level, as in Roman Catholic schools at secondary level, the catchment area tends to be wide. Of course, there are anxieties in country districts. I have deep roots in a country district and I think that I understand the problem, even though my constituency is no longer as agricultural as it once was.
    7.45 pm
    The fear is that some local authorities will positively discriminate against denominational schools and those attending them and against those who have to travel long distances. The costs of attending a denominational school can be high if one lives 15 miles or 20 miles away from it. It is almost unbelievable that there has been so little mention of another of the amendments in the group which we are discussing—that which provides that any charge should be across the board. That would remove the greater part of the legitimate and well-understood anxiety of those involved in denominational schools or who live in country districts.
    In an age of inflation I cannot believe that we can honestly say that a figure should be written into the Bill. If it is not written into the Bill it would have to be provided for by order. If it is provided for by order it can be changed by order, and we are back where we started. I am convinced that the Secretary of State's strategy is right. For too long expenditure has not been directed at what happens in the classroom. My right hon. and learned Friend's strategy is coupled with a trust in local authorities. I am prepared to go all the way with his strategy.
    Mr. Cohen: Perhaps I misunderstood some of the comments by the hon. Member for Wokingham (Mr. van Strubenzee) but I thought he said that the Catholic Church was unscrupulous. If I am right, I take him to task. Not only the Catholic Church, but the local authorities, the Church of England and all those organisations which are trying to provide a good education service are anxious about the proposition. It was most unfair to use the term unscrupulous.
    1622
    I give credit to the hon. Member for Nantwich (Sir N. Bonsor) for his courage and sincerity. Many of us are concerned—not in a political sense—about the effect of the Bill on the education service.
    I pay tribute to the Under-Secretary of State for the courtesy he showed to a deputation that I brought to London last week to discuss the matter with him. I am sure that an interpretation of our discussions has been passed to the Secretary of State.
    There is a general concern within local authorities and denominational schools about the impact that the imposition of clause 23 could have on the education service. We must recognise that in rural areas it will create a massive problem. I represent Leeds, which is a compact area, but we will face difficulties also.
    I am speaking as a former Under-Secretary of State for Education and Science. One issue that has not arisen in the debate is that, because of the drop in the birth rate, within the next two or three years the school population will drop by about one-third. That will cause great problems for the local authorities and the denominational schools. Instead of children travelling from point A to point B, they will have to travel from point A to point C. We are discussing the present costs to parents, but in three years' time those costs will be increased considerably because they will have to pay for their children to travel to point C instead of to point B.
    The Secretary of State, his Ministers, and those who sit behind him, have to be reminded that on political platforms at local and national level their main argument has been the right of parental choice. If the Bill is passed in its present form the consequence will be that parental choice will no longer exist, except for the wealthiest section of the community. What about the remainder of the community?
    I declare my interest as a Catholic. Although I am speaking mainly on behalf of the Catholic community, I am speaking also on behalf of the Church of England. The Churches feel that they and the children who attend their schools will be adversely affected by the Bill. It would be impossible for me, my wife, or any other Catholic parent in the lower income group to send their children to

    1623
    the school of their denomination. That is vitally important to many people in this country. There is a large section of parents who are anxious that their children should be able to attend the schools of their choice.
    If the Bill passes unamended, it will create grave problems for those parents. I hope that the Government will reflect very seriously before pushing the Bill through unamended.
    Mr. John Butcher: I attended the debate this evening with an open mind. I have listened carefully to the contributions of all hon. Members. I look forward to the contribution of my hon. Friend the Minister, and would like clarification on a number of points when he replies. I wish to place on record my thanks to him and his colleagues for listening to the representations of right hon. and hon. Members on clause 23.
    I was interested in the speech of my hon. Friend the Member for Wokingham (Mr. van Straubenzee), who pointed out the dilemmas faced by those with strong connections with the Roman Catholic Church and by Roman Catholic pupils. There are two ways of considering the argument. It could be argued that the position of Roman Catholics is a privileged one. It would be argued also that the Roman Catholic communities subsidise the places of their pupils to the tune of 15 per cent. per place.
    I have received interesting correspondence from a gentleman named Father Devaney, who lives in Coventry, South-West. In his letter, he told me that there are 219 children in his parish attending the Bishop Ullathorne school. He pointed out the difficulties that families will face if transport charges are introduced at £1 and upwards per head. He said:
    "it is often overlooked what the parish contributes to education; we give—4,800 each year to the general diocesan fund, £438 per capita levy of £2 per child for Ullathorne, and last year we spent £2,000 on painting the junior school of which we received an 85 per cent. grant".
    Roman Catholic and other denominational schools are our friends in the education system. They pay their way. I hope that the Minister will in his reply give some indication of his views on the contribution from denominational schools.
    1624
    I listened equally carefully to the contribution of my hon. Friend the Member for Nantwich (Sir N. Bonsor) and found myself in agreement with much of what he said about the use of resources inside the education service.
    I am grateful to my hon. Friend the Under-Secretary of State for answering a written question on the matter. I am dismayed to find there is plenty of leverage inside the education service for finding cuts of at least £20 million, starting in 1980–81, in addition to those for which we have already asked.
    The figures given to me by my hon. Friend are that in 1978 there were 671,000 non-teaching and administrative staff employed in the service. They were distributed between 201,000 full-time non-teaching and administrative staff, and 470,000 part-time staff. If that is reduced to full-time equivalents, that gives a figure of about 550,000 non-teaching staff in England and Wales. There are 480,000 teachers in England and Wales. That is a ratio of more than 1 to 1.
    If we are to give guidance to local authorities—and the Lord knows that we are giving guidance to them, especially under the clause, on the manner in which charges can be made if they were to use discretion—surely we can say that it is about time that the gravy train in administration in the education departments of local authorities is at least slowed down.
    In Coventry we are facing a reduction of about 210 teachers. There is a disproportionate cut in the number of teachers in the coming year compared with the cut in non-teaching and support staff. I appreciate that we cannot control local authorities, and that we cannot dictate the policies that they must pursue. But we, as the Government, must say to local authorities "Here is guidance on how you cope with a reduction in the resources in the light of falling school rolls. You may cut your non-teaching staff and accelerate the natural wastage programme in line with falling school rolls."
    8 pm
    I must refer to another response from my hon. Friend the Under-Secretary of

    1625
    State in reply to a parliamentary question on 4 February 1980 when he said:
    "The Government's plans as set out in Cmnd.7746, and reflected in the 1980–81 rate support grant settlement, allow for a 3·7 per cent.—or about 18,000—reduction in school teaching staff between 1978–79 and 1980–81…Non-teaching staff…are not separately identified in the annual statistics"—
    I find that incredible. He went on:
    "the Government's plans allow for expenditure per pupil on school's non-teaching costs—including ancillary staff—to be 2 per cent. higher in real terms".—[Official Report, 4th February 1980; Vol. 978, c. 82–3.]
    If we are interested in giving resources to the chalk face, in having a lean and keen education service and in maintaining the pupil-teacher ratio, I feel that the Government should start looking very hard at the management information that they are collecting and how they are using it and say to local authorities "We shall introduce something like a manpower service audit or a national manpower account which will have the power not to dictate, but to check on those local authorities which are efficient. "That, in turn, can turn the spotlight on local authorities and say "Given the same social make-up as city X, you are misusing your resources and your ratepayers are justified in being thoroughly jaundiced about the whole matter."
    I suspect that the DES collect statistics from local authorities in forms which are presentable to local councillors, and are tabulated in massive form, as my research assistant from Princeton university would tell me, and then forgets them. I should like a good cost accountant to be turned loose on our education service.
    As hon. Members may know, Coventry was bombed during the war. The centre was razed to the ground. This is relevant to the debate. It meant that schools and factories had to be built on the periphery of the city. Coventry's citizens had to commute outwards and their children also had to travel out to the edge of the city. Therefore, school transport costs are significant.
    The hon. Member for Bedwellty (Mr. Kinnock) estimated the costs at £70,000. I fear that in trying to save £20 million in this way we are fudging the issue. If we are to honour our election commitment to freedom of choice and if we are to honour the speeches that many
    1626
    of us made about cutting overheads rather than simply attacking the public sector borrowing requirement by increasing incomes, I believe that there is salvation for us on this issue.
    I look forward to hearing my hon. Friend's comments. I still have an open mind on this matter.
    Mr. John Home Robertson: The hon. Member for Coventry, South-West (Mr. Butcher) was right to suggest that, if we must look for savings in education, one of the last areas should be transport costs.
    I pay tribute to the hon. Member for Nantwich (Sir N. Bonsor) for the way in which he moved the amendment. It must have been difficult for him, because no one enjoys differing from his party. However, we have to do that from time to time to represent our constituents properly.
    I am sad to notice that there are no Scottish Conservative Back Benchers representing rural constituencies present in the Chamber. Indeed, not one has appended his name to the amendment. I hope, however, that they will in due course join us in the Lobbies and thereby represent and protect the interests of their constituents.
    The provisions of the Bill will have far-reaching effects on virtually every local education authority area which embraces, even in part, a rural area. The Secretary of State for Scotland—and presumably the Secretary of State for the. Environment—has jumped the gun on this issue. He has taken away from local authorities the money that he anticipates they will he able to save as a result of implementing the provisions of the Bill. He has taken away the money by a reduction in the rate support grant.
    The Secretary of State is right when he says that local authorities will have the freedom to do what they like. They will have freedom to clobber the people that they represent in either of two ways. The Secretary of State has issued them with two boots—a left boot and a right boot. I have one of each operating in my constituency. The left boot is in the Lothian region—a Labour-controlled authority—which has decided not to cut services. In order not to cut services, it has to put up the rates by up to 40 per cent. The

    1627
    Borders regional council at the other end of my constituency is not Labour controlled. It has decided to impose cuts. It has already declared that it intends to impose charges for school transport under these provisions.
    The hon. Member for Nantwich was right to say that it is important not to take these charges in isolation. We must also bear in mind local authorities which have in the past closed village schools and those which are doing so now.
    There are four village schools in my constituency which are at present under the axe: St. Abbs, Whit some, Millburn and Mertoun. If the regional council fulfills the policy on which it has embarked, we shall have only 11 primary schools in the whole tract of the former county of Berwick shire where there are now 25. If the closures go through, besides losing their schools, the people in these communities will have to pay for transport to the next nearest primary school. They will have insult added to injury in that respect.
    I should have declared two interests. First, I am the father of a baby boy who in due course, if the school is still open, will need transport to a village school. Secondly, I am a member of the National Farmers Union for Scotland. I am not a sponsored Member, unlike my hon. Friend, the Member for West Stirling-shire (Mr. Canavan). However, it is worth pointing out some of the comments that the NFU has made to Scottish Members of Parliament. It is to its credit that it sought to represent all people in rural agricultural areas. It states that its basic cause for concern over clause 25 remains.
    The union was accused of exaggerating the potential problem of charges for transport of schoolchildren following the calculations in its previous letter. It states:
    "In the event, our worries have been shown to be perfectly justified. We understand that one English local authority (Kent county council) proposes to introduce from 1 April flat rate charges for school transport."
    We have already heard about this matter. I understand that the authority has now revised the rates downwards. However, I understand that in the current financial year the average cost of transport of pupils within the Highlands regional council area is £145 per head. Taking that into account, it is not diffi-
    1628
    cult to imagine that in due course families in rural areas could he paying up to £185 per head per year.
    I pay tribute to the National Farmers Union for Scotland for representing all people in rural areas and joining the representatives of farm workers on this occasion in this worthwhile campaign.
    Having studied the amendment, I have come to the conclusion that the hon. Member for Nantwich is right that the clause is not amendable. The truth is that no amendment can redeem this clause. The Government's fundamental objective is to make some families, particularly those in rural areas and those whose children attend denominational schools, pay for what has hitherto been provided free by the State.
    Finally, I should like to point out the basic dishonesty—it is not unfair to say that it is dishonesty—of the Secretary of State's amendment No. 151, which refers to flat rate charges being imposed. He knows well that the charges are not flat rate. They will apply only to children who need transport to school. By no means does that cover all children. He also knows that they will apply only in regions where a high proportion of children have to be transported—in other words, in rural areas and places where children are sent to denominational schools.
    It is dishonest to imply that a flat rate will mean equal charges for people within a given area. The clauses are designed to discriminate, as the hon. Member for Nantwich has pointed out, against a large proportion of families in this country. That includes virtually every family in my constituency. I sincerely hope that the House will reject the clause in due course.
    Mr. Peter Fry: I should like to turn to another unsatisfactory aspect of the clause. Bus operators in this country are concerned that the protection under the Education (Miscellaneous Provisions) Act 1953 is removed by the clause. We have already heard about the problems of rural England. A real problem for rural England is the decline of public transport. I do not wish to trespass into the area of a Committee that has been sitting upstairs this week, but, if the clause goes through as it stands, the law which protected many rural bus services will be rendered nugatory. There

    1629
    is a real danger that the present protection for many of these services, which is still recognised in the Transport Bill which is going through the House, will be removed.
    Therefore, I have put down certain amendments, which are conjoined with the amendment of my hon. Friend the Member for Nantwich (Sir N. Bonsor), to draw the attention of my right hon. and learned Friend the Secretary of State to the real danger of a deterioration because bus services will not be protected. At the moment, a local authority can put on a service provided that it obtains the consent of the Traffic Commissioner. In my amendments I ask simply that the protection should continue.
    I should like to say one or two words in support of tonight's main debate. I admit that before Christmas I held roughly the same line as my right hon. and learned Friend the Secretary of State. I am now willing to admit that I was wrong. I should like him to admit that he and the Government have made a mistake in pressing ahead as they have done. The reason why I reached my decision is that I felt, like my right hon. Friend the Member for Stafford and Stone (Mr. Fraser), that the issue had moved away from the simple one of school transport. It concerns the quality of life in rural England.
    The resistance in my constituency to the proposal has been one of the most remarkable upsurges in feeling that I have seen since I have been a member of this House. In one of my villages only eight children use the school bus but virtually everybody—old-age pensioners, farm workers and those with no connection with children using the school bus—has signed a petition. They regard the proposal as a direct threat to the continuing life of their community. We in the Conservative Party will ignore that feeling at our peril. Once we have alienated our bedrock support in those areas, we shall find it difficult to get it back. The people have gradually felt betrayed over the years. The last people that they expected to betray them were those in our party.
    Therefore, with great determination, I shall join my hon. Friend the Member for Nantwich in voting for his amendment. I also advise my right hon. and hon. Friends
    1630
    on the Front Bench that, should that vote fail, I am afraid that I cannot support the Government on Third Reading.
    Mr. Beith: The strong and courageous criticisms that have been made of the clause by Conservative Back Benchers come as no surprise for we tied on the issue in Committee on an amendment which attempted to bring about some change. That amendment was moved by the hon. Member for Rugby (Mr. Pawsey). I venture to suggest that the Government would have been defeated on a subsequent amendment in Committee if it had not been said then that further consideration would be given to the matter and that a new amendment would be brought forward.
    8.15 pm
    However, the new amendment does little or nothing to allay the fears of those who were concerned on all sides of the Committee. It is true that the Government amendment provides that the rate for any one age group shall be uniform and flat but it places no limit on the rate. We have seen the enormous range of possibilities. Therefore, we must come back to the Government and say that this will not do. The most effective vehicle for doing that has been brought forward by the hon. Member for Nantwich (Sir N. Bonsor). In effect, he has dug a hole in the Bill and said that the Government cannot have the Bill as drafted and unamended.
    The effects of the provisions would be to discriminate severely against groups in our society that the Government should not discriminate against. Whatever the intentions of the Government, there is an inherent discrimination in charging those who, for the reasons that I am about to state, have to make use of school transport. Large numbers of people are able to get their children to school for nothing or at minimal cost because they live within a reasonable distance of the school. However, for certain groups of people that is not so.
    Many children in rural areas who live at considerable distances from schools—setting aside the question of school closures and reorganisations to which I shall return—particularly children of farm workers and so on and those in remote settlements, have no choice but to travel

    1631
    long distances to school. Incidentally, long distances apply to every aspect of their lives: whether it is entertainment for teenagers or shopping for housewives, their cost of living is more expensive than those of people living in towns because of the distances they have to travel. Therefore, in practice, they are discriminated against because they have to pay for school transport. Likewise, the proposal discriminates against those who send their children to denominational schools because they believe that to be important. The sense of indignation and shock in the Roman Catholic community is genuine. It is based on the practical fact that in most cases their children have to travel further than the statutory walking distances to school. They have been encouraged to build their schools on the basis of operating a wide catchment area for many years.
    Other groups are affected by the proposal. People in Wales have sought to make provision for education through the medium of the Welsh language. In such cases, local authorities have encouraged the schools to serve a wide catchment area. They, too, will be discriminated against because they will have to pay a price to get the children to the schools.
    Perhaps the keenest sense of grievance is felt by those put into those categories by education decision-making. The hon. Member for Nantwich pointed out that such people would have fought to the death for their village school if they had known that the price of its closure would be not merely to lose the benefits of a school in the community but to have to pay transport charges to attend a school miles away to which they never wanted to send their children. That will go on for generations. Even some people without children fight against village school closures because they have every intention of sending children to the school in subsequent years.
    Many people have been affected by the reorganisation of education. I do not refer simply to the secondary reorganisation of the last few years of comprehensive schools; I refer right back to 1944 and the creation of secondary schools as opposed to the old all-age school in each village. In times past, all the children attended the local school. The expansion of secondary education has taken them further away. People have
    1632
    been critical of that sort of development and they will be the most aggrieved of all at having to pay transport charges.
    The only people who will receive free school transport, if the local authorities behave as the Government wish, are a narrowly defined group—the statutory poor. I shall not deploy at length arguments that I have used on previous issues, but unless people receive family income supplement or supplementary benefit they will suffer under the provisions. That means that a farm worker who is earning enough to raise him just above the family income supplement level will suffer heavily. A person will be better off if he remains out of work, because if he gets a job he will have to pay heavy charges. If someone is asked to work overtime, he should refuse because it will not pay him to do so. If he works overtime he may have to pay school transport charges.
    In every way the Bill is a disincentive to anyone prepared to help himself, and who does not wish to rely on supplementary benefit, or the larger State benefit of family income supplement.
    The Government use two arguments against me. First, they argue that there is an anomaly in the present law. They say that the present law is unsatisfactory, because many people live just within the two-or three-mile limit and they have to pay quite heavy charges for school transport. However, there is nothing in the Bill to help those people. The Bill will merely provide for their discomfort to be shared. Equality of misery is a new Tory policy.
    I pay tribute to my local education authority in Cumberland. It has tried very hard to take up those who live just inside the two- and three-mile limits, by using its discretionary power. It has filled empty places on the school buses. It has tried to help those living on the outer limits. As a result of Government pressure such authorities are increasingly unable to continue such discretionary activities. The Bill does not help those people. Secondly, the Government argue that local authorities do not have to make these charges. In several debates Ministers have said that local authorities are reasonable and that they will not impose such harsh charges. However, with every other breath the Government tell local authorities to levy such charges.

    1633
    How else can the Government's savings be made, in the absence of alternative provisions? The Secretary of State has repeatedly said that authorities that do not make savings by imposing these charges will have to pay the price of cuts in the mainstream of education. Rural authorities and those in which, for historical reasons, many children travel long distances will have to lower their educational standards more than other authorities, if they do not impose the charges. There is no way out.
    The hon. Member for Bodmin (Mr. Hicks) pointed out that the Government would have to pay a political price if they continued down this road. I can think of nothing more favourable to my party. In rural areas we are the main rivals of the Conservative Party. If the Bill is implemented in its harshest form, it can only favour us. However, I do not invite Conservative Members to implement the Bill. Unlike them, I am concerned about those on low wages, because they will suffer the most.
    Conservative Members have a last chance to join us and to use their power to ensure that the provisions do not remain in the Bill. I beg them to do so.
    Sir William Clark: I congratulate my hon. Friend the Member for Nantwich(Sir N. Bonsor) on the brevity of his speech. However, I do not go along with his argument. Conservative Members are always prepared to pay lip service to cutting public expenditure. I remind my colleagues that that was one of our main planks in the manifesto. We pay lip service to the generality of cutting public expenditure. However, when we get to particular instances we begin to argue.
    My hon. Friend the Member for Nantwich will no doubt find a number of supporters. The whole Opposition will support him to a man. However, I remind my hon. Friend that the Opposition to a man—or to a woman—are diametrically opposed to any cut in public expenditure.
    Mr. Kenneth Marks Mr. Kenneth Marks (Manchester, Gorton) rose—
    Sir W. Clark: Perhaps the hon. Gentleman will contain himself for a minute.
    1634
    He may get excited about what I am about to say.
    One must look at the Government's strategy on the PSBR. I subscribe to that strategy. It is essential to get our PSBR down. Every hour of every day we spend just over £1 million more than we have earned. Someone must pay that back. My right hon. and learned Friend's amendment is reasonable, as regards our school transport. The Conservative Party has always been in favour of giving autonomy to local representatives. The Secretary of State has done that.
    Opposition Members may laugh when I mention democracy. They probably have a different understanding of that concept. I do not believe in the democracy of the Labour Party's NEC. However, local authorities should have the right to do as they wish with their money. The Government are merely stating that they can choose whether to charge. Local authorities and local health athuorities sometimes take up an emotive issue, such as that of closing a casualty ward or an old people's home. However, they never tackle administrative over manning. As my hon. Friend the Member for Wokingham (Mr. van Straubenzee) mentioned, because of present anomalies 85 per cent. of parents are already paying the transport costs of their children.
    If we cut public expenditure, we must make local authorities responsible for economising in their administrative staff and so on. However, if the Government of the day succumb to pressure because it is an emotive issue, local authorities will think that they need only kick up a fuss for the Government to give way. As a result, the PSBR will go up.
    There is much hypocritical talk about public expenditure and school transport. My hon. Friends know that Opposition Members are making a political issue out of that, and we should not fall into the trap. We must stick to our strategy. It was agreed in the manifesto. We should not give way simply because it is an emotive issue. We must put the responsibility on local authorities to economise in other sections of their education vote. If they do not, let the local Member of Parliament press them and let local voters see that they are not returned next time.
    Mr. Phillip Whitehead: I shall not congratulate the hon. Member for Croydon, South (Sir W.Clark) on his imitation of the captain of the Titanic.
    Many Conservative Members have put forcefully the essential case. It is a debate that will be decided, as it were, within the family on the Conservative Benches.
    We shall put our point of view, and endorse the statements of the hon. Member for Nantwich (Sir N. Bonsor). He spoke courageously, surrounded as he was by the heavy brigade from Cheshire, who were there to keep him in order—the hon. Member for Macclesfield (Mr. Winterton) and his hon. Friends, who forcibly disagree with the hon. Gentleman. Perhaps they have not taken on board the single point that the hon. Gentleman was making—that the unfairness of the proposals is implicit in everything that the Government are saying and doing. I have great respect for the Secretary of State, and I see him shaking his head. The proposals discriminate against a particular section of parents. The reasons put forward for not opposing the clause entirely ignore that fact.
    It has been suggested that some people now have to pay for transport for a distance of less than three miles, and, because they are miserable, others should also be made miserable. The hon. Member for Wokingham (Mr. van Straubenzee) suggested that those of us who were putting that point of view had fallen for a sucker punch from the Roman Catholic church. I greatly resent that remark.
    8.30 pm
    I am not a Roman Catholic, and I disagree with Roman Catholic pressure groups on many issues, notably that which we have been discussing last week and this. Nevertheless, Roman Catholics have the same right as other parents to put arguments forward if they are unfairly discriminated against.
    My school took its pupils from a catchment area of 90 parishes in Derbyshire, consisting of small villages like the village that I live in—and I see village schools closing down all around me. The major Catholic school in my constituency in the city of Derby takes its pupils from a 20-mile radius. The cost and burden
    1636
    for those parents, at the estimate of £4 or £5 per week per child, will be very great. In common fairness, the House should follow the hon. Member for Nantwich and root clause 23 out of the Bill.
    Mr. Douglas Hogg: I take it that the hon. Gentleman appreciates that the great majority of local authorities are under no obligation to provide transport for the Roman Catholic community? The Roman Catholic school is not necessarily the nearest appropriate school, which is the test under the Act. That being so, why should the hon. Gentleman expect a change of policy?
    Mr. Whitehead: In many cases, including my area, local authorities are providing that transport. Since the 1944 Act, it has come to be expected and welcomed by the Catholic community and by other parents who are able to send their children to the school of their choice, not necessarily the nearest school, as a result of these payments.
    The imposition of these charges will hurt precisely those parents who are least able to afford it. My hon. Friend the Member for Bedwellty (Mr. Kinnock)'quoted from the Minister of State's letter. He could have continued the quotation:
    "We continue to attach great importance to parental preferences for the education of children, but this general principle has to be applied with due regard to what the public purse can afford."
    That was the point made by the hon. Member for Croydon, South. However, the private purse will now determine which children can go to the school of their choice and which cannot. That is what is wrong with the proposals and why they have been so savagely attacked from all sides. I hope that many Conservative Members will join us in the Lobby tonight.
    Mr. J. F. Pawsey: I appreciate that the intention of clause 23 is twofold. First, it is to assist the Government in the overriding need to reduce public spending. Secondly, it is to devolve power to local authorities.
    I am in general agreement with the Government's overall strategy. We were elected on the basic premise that we should reduce public spending and borrowing. It is fair to remember, however, that the saving envisaged under the

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    clause is £20 million out of a total of £120 million, amounting to about 17 per cent. That is not a significant part of the education budget and it is an even smaller part of the national budget. The difficulties caused by effecting such a saving will be out of all proportion to the distress caused.
    The intention of amendments Nos. 42 and 92, and withdrawn amendment No. 91 is basically to protect the large family from the effects of clause 23. I make no apology for my defence of the larger family—very often the larger family is the poorer family. Large families are often derided, but there is nothing funny in having to feed and clothe several children and transport them to school everyday.
    Amendment No. 42 makes 25p the maximum figure, and quite clearly there will be the discretion for local authorities to charge less. Even assuming that 25p is accepted as a reasonable transport charge, it means that a family of three children will still have to pay an additional £3·75 a week over and above every current charge that family is experiencing. That is a new expense, and for the larger family it is an unacceptable and unreasonable expense. Therefore, I hope that focal authorities, when they read the report of this debate in Hansard, will take note of the views that have been expressed and interpret them in an appropriate and civilised manner.
    Mr. Douglas Hogg: Perhaps my hon. Friend can help me on this point. I know that he believes in local democracy, because he has said so repeatedly. If that is the case, why is he not content to leave these issues to the local authorities, which surely will respond immediately to local pressure?
    Mr. Pawsey: Had my hon. Friend allowed me to develop my theme, he would have received a complete answer to his question.
    I have heard it said in this House and elsewhere that child benefit should be used to defray the cost of getting children to school. That is just not equitable. Child benefit was introduced long before this charge was thought of. If we should decide to use child benefit as a method of defraying transport costs, that benefit must be increased. Therefore, where is the point? There is none.
    1638
    Amendments Nos. 42 and 92 do nothing to damage the principle or the fabric of the Bill, but they build in a safeguard for the large rural family. I cannot believe that parents should be penalised simply because of their address and the fact that they live in the country. Once it may have been argued that those living in the country were compensated by lower rates, but successive adjustments to the rate support grant to the detriment of shire counties has altered the balance, and the difference, if any, is now much smaller.
    In supporting the amendments, I do not seek to denigrate local authorities. I have been involved in local government as a councillor for 23 years and I am well aware of the virtues of local authorities. I am convinced that, should we give these new powers to local authorities, they will not suddenly go berserk and seek to impose highly expensive transport charges on parents. But there are exceptions to every rule and already those exceptions are becoming apparent. We have heard a lot about the exceptions in this debate this evening. The hon. Member for Bedwellty (Mr. Kinnock) produced a comprehensive list of them. Other Members have referred to several counties which are being grossly unfair and discriminatory.
    Another argument that has been used to justify clause 23 is the need to remove the anomalies that are inherent in the present system—particularly the two-mile and three-mile limits. It has been said that the limits are disliked by parents. For example, in the same street there may be one child who travels free while there is another who pays. I accept that that is an anomaly. But in my 23 years as a councillor I have found that very few people have complained. That does not mean that they do not dislike it—of course they do—but they accept it because it has existed for so many years.
    I believe that the basic premise on the question of anomalies is wrong. The effect of clause 23 will create, not reduce, anomalies. The county of Warwickshire is proposing a rate of 20p per day per child. Solihull, which until the county was reorganised, was in Warwickshire, is proposing 10p per day. Children in Birmingham, adjacent to Warwickshire, will receive free transport. Oxford shire, which also adjoins Warwickshire, is giving

    1639
    no help to denominational pupils. Leicestershire is deferring any charges for 12 months. In a small geographical area there are five different schemes. If the decision on transport charges is left to the discretion of local authorities, it will result in a great unevenness of transport provisions. We are not reducing the number of anomalies. We are building them into the system. For local authorities, ideas will differ enormously. I do not doubt that individual Members of Parliament will receive representations from constituents. They will protest that in one local authority area transport is free but in another a certain price will be fixed. In the removal of one anomaly we create another. Hon. Members with far greater experience than I have will be aware of the furore which has been created by old-age pensioners protesting about the anomalies in concessionary fares. We have all received demands that a national charge should be levied to remove the anomalies from the system.
    The protest by the elderly will be as nothing compared to the protests that we shall receive from parents. Parents have a statutory duty to get their children to school. For them, that journey is not a pleasure. It is a positive and absolute duty.
    The Minister is clearly anxious to allow local authorities to use discretion. The inference is that we should trust the local authorities because they are supposed to be responsible to the electorate, as are hon. Members. Yet the Minister is careful to undermine that very point. He has put at least one safeguard into the Bill: children and parents in receipt of family income supplements will travel free. We already distrust local authorities to that extent.
    I turn now to the question of denominational schools, particularly Catholic schools. I declare an interest. I am a Catholic. Now I have heard two clear and very conflicting views expressed: first, that the Catholic bishops are not really concerned; secondly, that the fuss that is being created about clause 23 is a Catholic fuss and is merely an example of Catholics maintaining their traditional reputation for awkwardness.
    I quote from a letter from the Bishop of Portsmouth, who is also the chairman
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    of the Catholic Education Council. He writes:
    "Our Catholic school system in many local authority areas is dependent upon the provision of transport to school. Very many of our schools have been sited, built or reorganised on the understanding or agreement that there would be free transport. The bishops of England and Wales are very concerned indeed about the whole question. I am writing on their behalf as well as for the Catholic Education Council to ask for all the help and support you can give us at the Report stage of the Education Bill which could have grave consequences for Catholic education."
    There is nothing ambiguous in that statement. It is a clear cry to this House to defend the principle of denominational education.
    I should like to emphasise my ecumical reputation to be impartial and to quote this time from the Anglican Bishop of Coventry. He says:
    "The dual system in this country is a unique partnership in education between Church and State and this clause puts it into jeopardy. If the Government's proposal to allow greater discretion to local education authorities on school transport results in the withdrawal of subsidies then the aided schools could be very hard hit indeed, particularly in rural areas. This may well mean in many cases the withdrawal of a freedom of parental choice for a voluntary school, which would not only appear to deny the Government's declared intention to widen parental choice, but also deny the opportunity of Church school education which the dual system makes possible. In not a few cases it would mean the closure of schools."
    8.45 pm
    Mr. Christopher Price: Is the hon. Gentleman, having quoted statements from an Anglican bishop and a Catholic bishop, aware that this simply emphasises the fact that when the agreement was made with Lord Butler, just before the 1944 Act, it was not simply about the dual system and about voluntary schools? The free transport element was an integral part of that agreement made with Lord Butler between the two great Churches in this country and the State system.
    Mr. Pawsey: I am obliged to the hon. Gentleman for his intervention. I should like later, with the permission of the House, to touch gently on something that Lord Butler said.
    I turn now to my second point concerning the argument that the whole of the fuss is a Catholic fuss. I believe that it would be a grievous error to identify the uproar so far caused by clause 23 as a purely denominational uproar. It

    1641
    would be an even greater mistake for this House to assume that it is a Catholic uproar. It is true that denominational schools are greatly concerned about the effects of the clause, but all the denominational schools are involved, as I have sought to prove from the two letters from which I have quoted.
    The reason why perhaps the Catholic Church has been the most vocal is simply that it has the most denominational schools and has the largest school population likely to be affected by the clause. It is therefore entirely reasonable that we should have heard the Catholic voice being expressed very loud and clear.
    Catholics rightly maintain that denominational schools have larger catchment areas than most. No one can argue with that. It is also worth while recalling that Catholic parents, as has been said elsewhere in the debate, find 15 per cent. of the cost of those denominational schools. In round figures, that is about £6 million a year.
    The current Catholic school population is about 800,000 children. That is the number attending Catholic aided schools. That is a fairly sizeable minority. Interestingly, the last complete transport survey taken was in 1972. It showed that 21·5 per cent. of all secondary pupils travelled over 3 miles, but that figure rose to 40 per cent. for denominational schools. Again I emphasise the date—1972. Would any hon. Member argue with me that the number of such children has increased enormously since that date?
    The Catholic contribution to education is a sizeable one, and that is over and above the contribution that is currently made by Catholics as individual tax and rate payers. I am well aware—and here I come to the point made by my hon. Friend the Member for Wokingham (Mr. van Straubenzee)—that it is not the intention of the Government, and certainly not the intention of my right hon. and learned Friend or of the Bill, to discriminate against denominational schools. But again I put it to the House that the impact of clause 23, in charging for transport, must be to push families to the nearest school, irrespective of conscience or religious belief. That is not the intention but it will be the effect.
    Government amendment No. 134 provides for a flat rate charge and that any
    1642
    charges made must be uniform, but it does not make it mandatory for local authorities to provide transport in the first place. While I welcome the cart in the amendment, it is a pity that my right hon. and learned Friend the Secretary of State has not put a horse between the shafts.
    Mr. Marks: I was hoping that the hon. Member for Rugby (Mr. Pawsey) had power to talk out the clause. The hon. Member for Croydon, South (Sir W. Clark) referred to Conservative Members campaigning on the theme of cutting public expenditure, but complaining when they got down to detail. It would have been more honest of them if they had campaigned on the detail and told the people what would result from the election of a Conservative Government. Conservative Members have an opportunity tonight to put that right.
    It was significant that the hon. Member for Wokingham (Mr. van Straubenzee), in one of the rare speeches in defence of the Government, talked about the Church as a corporate body, while other hon. Members, including the hon. Members for Nantwich (Sir N. Bonsor) and for Rugby have talked about a group of people whose standard of living would be cut if the clause went through.
    We all have experiences of the anomalies of the three-mile system. We all know about children going to the same bus stop and some getting free transport while others have to pay, but local authorities have always had the power to use their discretion to get rid of those anomalies. It is a criticism of some authorities that they have not used that discretion. We have a minimum standard plus local authority discretion.
    If the Government were simply trying to get rid of the anomalies we would have some sympathy for them, but that is not the purpose of the clause. Its object is to cut Government and local authority expenditure on school transport. Almost every clause in the Bill, with the significant exception of the provisions on public and private schools, is intended to cut public expenditure. I once called a previous Conservative Government's Education (Milk) Act mean, messy and miserable. That description applies equally to this Bill and a number of

    1643
    others going through the House at the moment.
    What will happen if a local authority uses the powers that the Bill is supposed to provide and maintains expenditure on school transport or even increases it, because of the growth of population? It will have the Secretary of State for the Environment breathing down its neck. He will be looking at not only the rate poundage, but at the speeches of councillors.
    The Government intend to save money and to transfer it to someone else. They are not saying that the expenditure should stop or that children should not go to school on buses. Who will pay? It will be large families, mainly on lower incomes and above FIS and supplementary benefit level. They will be asked to make too much of a sacrifice for the Government's policies.
    Those families did not get the income tax cuts that others received. They have had to bear the burden of big increases in mortgages, and the child benefit has been frozen. Families with children at school are having to make unduly large sacrifices.
    The problem with school transport is mainly in the countryside, but my constituency falls within two metropolitan areas—Manchester and Tameside—and the Catholic schools in Tame side, which have gone comprehensive, have free transport provided for 25 per cent. of pupils. It is not just a rural problem, though the rural areas will suffer, just as they will suffer from other Government policies.
    Therefore, the existing system, under which local authorities have duties and powers, is much better, despite its anomalies. I urge the Secretary of State to accept the view of the vast majority of his hon. Friends who have spoken, and to get rid of the clause.
    Mr. Harry Ewing: I have given the Secretary of State an undertaking that I shall sit clown at 9 o'clock. I want to use this brief opportunity to put on record the Scottish position. I take it that the Secretary of State will give an undertaking that the decision of the House on the amendment to delete clause 23, whatever the decision be, will apply equally to clause 25, relating to Scotland.
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    The issue that we are debating split the Committee right down the middle. Although the amendments to delete the clauses were not selected, the Committee divided after the clause stand part debate, and the result was 11–11, with the Chairman giving his casting vote in favour of the Government. Rural communities in Scotland, just as in England, must be preserved. If the provisions of clause 25, which are similar to those of clause 23, are enacted, the rural communities will undoubtedly be seriously affected.
    I congratulate the hon. Member for Nantwich (Sir N. Bonsor) on moving the amendment. I wish that some Scottish Tory Back Benchers had the same courage as the English Tory Back Benchers have shown in tabling the amendments. Not one Scottish Tory has had the courage to table an amendment to clause 25, despite the fact that it will drastically affect every Scottish constituency represented by a Tory.
    I must join issue with the hon. Member for Wokingham (Mr. van Straubenzee). I do not believe that the Catholic Church or the Catholic education authorities would distort the argument in the way that he suggested. In Scotland there is the problem of the Catholic schools, the effect on children travelling to their denominational schools if clause 25 is allowed to remain in the Bill.
    If the Government honestly believe that clauses 23 and 25, the transport clauses, will have no effect on children's ability to attend school, why are they relaxing the provision on acceptable excuses for nonattendance? There is a clear indication that that is being done. I am led to think that the Government accept that if the clauses remain in the Bill more children will be absent from school. There may be some other explanation for what they are doing, but I strongly suspect that it is because the right hon. and learned Gentleman knows the effect that the transport clauses will have, particularly on rural children.
    The Secretary of State, with his eloquence, will no doubt seek to persuade his hon. Friends not to vote for the amendment. My guidance is to the contrary. I advise hon. Members not to accept an undertaking that the Government will seek to do something in another

    1645
    place. The Bill and the amendments are before this House. We have an opportunity to impose our will.
    Although I have agreed to give the Secretary of State half an hour for his speech, I really need give him only two minutes, because it would be sensible for him to say gracefully "We have got it wrong" and agree to withdraw these clauses. Then we could move on to the next amendment.
    9 pm
    Mr. Mark Carlisle: I should like first to deal with the two points raised by the hon. Member for Stirling, Falkirk and Grange mouth (Mr. Ewing). I am grateful to him for sitting down when he did. If there is a vote, it will be on the first of the amendments, applying only to England and Wales. The result of that vote would clearly have ramifications for Scotland.
    I accept the hon. Gentleman's point that it would not be possible in this House to have a vote on the Scottish amendment. But the Government would have to take into account the result of the first vote in deciding their attitude to Scotland. I have not got the answer to the second point that the hon. Gentleman made. It is a technical point. I will make sure that he receives the answer.
    Anyone who has listened to this debate, running to over two-and-a-half hours, will have been impressed by the sincerity and the seriousness of the speeches that have been delivered on both sides of the issue. I have listened with interest and concern not only to the speeches made from the Government Benches but also to the contributions of the hon. Member for Bedwellty (Mr. Kinnock) and his right hon. Friend the Member for Durham, North-West (Mr. Armstrong). These are important amendments and this is an important clause.
    This is a matter, as many of my hon. Friends have indicated, of substantial political sensitivity. The reason for that sensitivity is that this part of the Bill implements the decision of the Government to allow local authorities to charge for school transport. This means, in many cases, that local authorities will be allowed to impose charges when, at the moment, people are receiving a free service. I accept that the imposition of a charge where the service has been free is a matter of sensitivity and of concern.
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    I hope to show the House, particularly my right hon. and hon. Friends, that the proposal to provide freedom for local authorities to charge for transport, with the one limitation covered by the amendment, in my name, imposing a flat-rate basis of charge for children of the same age and the same area, to ensure that there can be no possibility of discrimination against any particular type of school and no discrimination over the different distances children have to travel, are not ill-conceived and inequitable, as my hon. Friend the Member for Nantwich (Sir N. Bonsor) described them, but are necessary, just and fair.
    Mr. F. A. Burden: I understood that my right hon. and learned Friend's original amendment on this subject made a uniform charge right across the board, irrespective of the age of the child, the school the child attended, or the distance travelled. I was concerned when I subsequently read that the amendment now differentiates between schools. If there has been a change, I should like to know the reason.
    Mr. Carlisle: There was a sensible reason. Many of the authorities intending to charge have specifically proposed lower charges for primary schools than for secondary schools. To allow for that, I drafted the amendment in the way it appears. So far as the other amendments we are debating—
    Mr. John Farr: Before my right hon. and learned Friend leaves that narrow point, which is of great interest to many of us on the Government Benches, will he say something about our concern that four out of five children in rural areas need public transport to get to school whereas in the cities the proportion is only one in five? As a result the country-dwelling children will be worst hit.
    Mr. Carlisle: Of course I accept that if charges are imposed where there were none before, the people who inevitably will be affected are those who were not paying before. Of course, I realise that children in rural areas tend to go greater distances to school than children in the towns. But my amendment is an attempt to ensure that in any charging policy the local authorities pursue they shall operate on a basis that does not discriminate against any type of school and is

    1647
    not related to distance. I believe that in that amendment I go substantially towards meeting many of the fears that have been expressed.
    All of the amendments that we are debating tonight attempt in different ways to restrict local education authorities' discretion as to the level of those charges. The amendments in the names of my hon. Friend the Member for Rugby (Mr. Pawsey) and the hon. Member for Bedwellty, seek to impose a figure. The hon. Member for Bedwellty is also seeking to relate the charge to the cost of public transport. The Liberal amendment is designed to limit the provision to certain groups of people. Other amendments attempt to raise the basic limit.
    I hope that I can persuade the House that all these amendments should be resisted, since they seek to impose shackles on the discretion of local authorities to decide ways in which to make their economies.
    Since the whole issue is the correctness or otherwise of the clause I must tell my hon. Friends that the clear reason for it is to enable local education authorities to make savings in public expenditure in this area. We have told the local education authorities that for the year 1980–81 we are looking for a cut of 5 per cent. in proposed expenditure. I do not think that I have to persuade my right hon. and hon. Friends that cuts in public expenditure are essential. I do not think that any of them would doubt, as my hon. Friend the Member for Croydon, South (Sir W. Clark) has said, that we have as a country been living beyond our means. Public expenditure has been increasing at a time when there has been no increase in wealth. The result is well known. It is over-high taxation and a lack of adequate resources in the private sector.
    Faced with that and a request to local authorities to make savings, the Association of County Councils specifically said that if savings of this kind were to be made the authorities should have the freedom in this area and that of school meals. The reason is simple. It is that by today the cost of the subsidy on transport has already risen to £125 million a year. If we are to make savings of the kind I have described it is only reasonable that local authorities should have the opportunity of choosing in which area they
    1648
    wish to make them. It is consistent with the Government's philosophy of giving local authorities the maximum freedom to decide their own policies in accordance with their local circumstances.
    Since local authorities are having to make difficult decisions about where they make savings in other forms of expenditure on education, it is right that if they wish to make them on transport rather than on nursery schools, adult education or something of that kind, they should be free to do so. We have to widen the area of expenditure out of which these savings can be made. I must, therefore, ask my hon. Friends to trust the local education authorities to act responsibly and to decide where the savings should be made.
    Mr. Cormack: My right hon. and learned Friend has ruled out charges for nursery education. Many people welcome that and many people do not. However, if it is right to impose on local authorities a policy for the sale of council houses, surely it is equally right to say that they shall not charge more than a certain sum for transport.
    Mr. Carlisle: We debated that issue yesterday. I have many points to answer and I should like to be allowed to proceed. It was said that only £20 million was involved. That does not appear to be a large saving in the context of a total budget of £8 billion a year for education. But if we start knocking away at different parts of the edifice the whole structure crumbles. If we say that on every individual piece of education expenditure we can save only a small amount we have to look for savings elsewhere. I listened with care to what my hon. Friend the Member for Coventry South-West (Mr. Butcher) said about non-teaching staff. The numbers of non-teaching staff have fallen by 10,000 in the last five years. In the same five years the cost of education administration fell by £40 million, or 10 per cent. I do not believe that there are any easy answers when looking for the savings that are required.
    Mr. Canavan: The right hon. and learned Gentleman should remember that the financial and explanatory memorandum states that the so-called savings on school transport would amount to £22 million. That is less than half of what

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    the Secretary of State proposes to spend on the assisted places scheme. If he is intent on cutting public expenditure, will he scrap completely the assisted places scheme?
    Mr. Carlisle: The hon. Member knows that that is not true.
    I was saying that there are no easy answers in making savings of this kind. I repeat that if local authorities do not make savings in this area savings have to come from elsewhere in their budget. I am desperately anxious to ensure that we can preserve the level of expenditure in the classroom consistent with our election manifesto pledges on education.
    I take up the point made by my hon. Friend the Member for Wokingham (Mr. van Straubenzee). The present situation is illogical. There is no obligation on an authority to provide transport up to the walking distance but beyond that distance to provide it free. No account is taken of the circumstances of the person who on the one side of the dividing line pays the full price, and subsidises the person on the other side of the line who pays less.
    This problem has caused great concern to Governments for many years. In some communities one side of the village pays for transport and the other side does not. However, overall only 10 per cent. of people get free transport and only 20 per cent. get free transport to secondary schools. The hon. Member for Bedwellty quoted suggested charges in the region of £1 to £2 a week. I accept them. My right hon. Friend the Member for Stafford and Stone (Mr. Fraser), referred to a charge of 25p a day for children in Staffordshire. I remind him that the equivalent journey of just under three miles by public transport would cost them 43p a day in Staffordshire.
    Kent originally proposed a charge of 35p and withdrew it. That was because many people in that county were already paying that amount. Essex charges between 12p and 36p a day, East Sussex charges 34p, Wiltshire 28p, Hampshire 30p and Dorset 25p. I earnestly beg my hon. Friends to remember that many people, irrespective of their financial positions, pay similar sums and out of their other pockets they subsidise free transport for others.
    9.15 pm
    Mr. Kinnock: Is the Secretary of State making a threat or a promise? Is he saying that, because some people have to meet those costs, everybody should? Who will be advantaged by that? A manageable system for school meals payments is now changed because of the feeling that the full cost should be met. Is that not likely to happen to transport so that it becomes totally prohibitive?
    Mr. Carlisle: When we are trying to reduce public expenditure, and knowing that people are already paying certain sums, it is not unreasonable for local authorities to consider introducing a modest charge for transport.
    I turn to the question of Roman Catholics. I listened with interest to what was said. The availability of an appropriate school that is nearer than the Catholic school to which a pupil already goes means that much of the present provision is not statutory but discretionary. I fear that if local authorities do not have the opportunity to recoup some of the money which is being spent on free transport they may decide to withdraw the service. That is a greater threat to the Catholic schools than asking for a modest charge to be made. For example, Oxford shire proposes to do that under the present law.
    We are not against denominational schools. I fully recognise their importance but the principle is that those attending denominational schools should be treated in a similar way to others. That is why I propose a flat rate, non-discriminatory charge.
    I shall explain briefly why I am not able to accept any of the amendments. I have explained why I cannot accept that the clause should be deleted. I urge my hon. Friends who wish a figure to be inserted in the Bill to remember that any one figure would not take account of local circumstances. The cost of transport varies enormously in different parts of the country because of various subsidies. A maximum charge would not lead to fairness. Many people in the same area would still have to pay different sums.
    Mr. Burden: The county in which my right hon. and learned Friend lives is charging 23p a day. Kent proposed to charge 35p a day, or £2·50 a week. Would

    1651
    my right hon. and learned Friend be satisfied if his local authority charged the same as Kent?
    Mr. Carlisle: It is inevitable that different figures would be charged in different parts of the country, taking account of local circumstances. I pose the question to hon. Members on both sides of the House: who is best to decide what that charge should be—we in central Government or the local councillors who are sensitive to the local view and are themselves elected representatives? I hope that none of the amendments will be accepted.
    Although I do not wish to see on the face of the Bill any of the amendments that have been proposed, nevertheless the Government and the House should express a view as to what should be general good practice. It should not be allowed, in any way, to discriminate between types of schools or distance.
    Local authorities, in using their powers, should take account of the total effect of their proposals on family budgets. They should take account especially of the size of a family. Many counties are limiting their proposals in that way. They should consider the effect of their proposals on poorer families.
    I have much sympathy with the second amendment proposed by my hon. Friend the Member for Rugby, and with some of the views expressed by the hon. Member for Bedwellty. I hope that local authorities, when considering their schemes, will take into account the problems of the poverty trap, and the possibility of adopting an income scale test of entitlement, as previously existed in the schools meals service and which was a reasonable and fair practice.
    Having considered carefully all the proposals that have been made by local authorities—although some have not made their final decision—I feel that the sort of sums that they are proposing are reasonable and fair in the economic position that we face. Their proposals in limiting the number of children and the types of sums that they have in mind are reasonable. We ought to trust the local education authorities to make the savings in the way that they wish.
    1652
    I say to the hon. Member for Berwick-upon-Tweed (Mr. Beith) that I am getting somewhat sick of the irresponsibility of the Liberals on this matter. They claim to be a party that believes in local Government, yet they do nothing but attack the responsibility of local councillors.
    During the debate on education expenditure last week, they complained about the savings that might be made by closing schools. Yesterday, the hon. Member for Berwick-upon-Tweed called for more money to be spent on nursery school provision. This afternoon, he complained about the savings to be made in the school meals service. This evening, he complained about any savings that might be made in the transport service. Next week, he will be going around the country complaining about the rises in the rates and the taxes—
    Mr. Stephen Ross Mr. Stephen Ross (Isle of Wight) rose—
    Mr. Carlisle: —that he, by his votes, his speeches and his unwillingness to accept that savings in expenditure have to be made, will have been largely responsible for bringing about. Any bandwagon is good enough for the hon. Gentleman, provided he feels that it has a vote in it somewhere.
    Mr. Beith: The Secretary of State is forgetting that I went into the Lobby with him to vote for the increase to 35p for school meals only a fortnight ago. Is he now saying that if all local authorities took his advice and did not impose the charges that we have criticised, they would be able to make the savings that he has referred to in the memorandum to the Bill?
    Mr. Carlisle: In making the savings for which we are looking we have assumed that the savings for the year 1980–81 can be £20 million, which is about 25 per cent. of the expenditure on transport now. I have clearly said, and I repeat, there can be no going back on the savings. Therefore, if local authorities choose not to use their powers here, the savings have to be made elsewhere.
    Mr. Kinnock: Since the right hon. and learned Gentleman is always berating us about our alleged lack of confidence in local education authorities compared with his alleged great confidence in them,

    1653
    why has he found it necessary to table an amendment laying down that flat-rate fares have to be charged?
    Mr. Carlisle: I tabled it because I was requested by many people to do so. I tabled the amendment to meet fears which I believe to be groundless. Other than one Socialist council—Mid Glamorgan—no one was proposing discriminatory charges. However, as that fear existed, I decided to make the amendment.
    Mr. Moate: I understood my right hon. and learned Friend to say that he had examined the many schemes which have so far been submitted and that he thought them reasonable. Is he not therefore saying that the Kent proposal, which for secondary school children is currently £2·50 a week, is reasonable? If so, is not that an open invitation to every education authority in the country to put up rates to that kind of level at some future date?
    Mr. Carlisle: The vast majority of proposals that I have seen appear to be reasonable. It is for local councillors to justify the figures to their own local electorates. It is not for us to impose them.
    I have made it clear that savings in education have to be made. As my hon. Friend the Member for Croydon, South said, if we do not make savings in public expenditure, if we go on living beyond
    our means to the extent that we have done, we shall continue with higher interest rates and mortgages. Those who are being asked to make some contribution towards the expense of getting their children to school must consider in their minds the alternative ways in which the money may otherwise be spent.
    We have given authorities the widest freedom to choose where and in what way they believe it is right to make the savings for which we are asking. As I have said on many occasions from this Dispatch Box, it is far better to protect the classroom than to continue with increasing subsidies in all other areas. Yet I believe that would be the corollory of what some of my hon. Friends have been advocating tonight.
    I heard what was said in this debate, and some of my hon. Friends made similar remarks in the previous debate. I believe that when considering what is a reasonable charge to make, taking account of local transport and the effect on the family, the local councillor is more sensitive and better able to understand and react to the views of people on the savings that we are seeking in this area.
    For those reasons, I ask the House to reject the amendment moved by my hon. Friend the Member of Nantwich.
    Question put, That the amendment be made:—
    The House divided: Ayes 279, Noes 302.

    Division No. 180]

    AYES

    [9.30 pm

    Abse, Leo

    Brown, Ron (Edinburgh, Leith)

    Davies, Ifor (Gower)

    Adams, Allen

    Buchan, Norman

    Davis, Clinton (Hackney Central)

    Allaun, Frank

    Callaghan, Rt Hon J. (Cardiff SE)

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

    Alton, David

    Callaghan, Jim (Middleton & P)

    Deakins, Eric

    Anderson, Donald

    Campbell, Ian

    Dean, Joseph (Leeds West)

    Archer, Rt Hon Peter

    Campbell-Savours, Dale

    Dempsey, James

    Armstrong, Rt Hon Ernest

    Canavan, Dennis

    Dewar, Donald

    Ashley, Rt Hon Jack

    Cant, R. B.

    Dixon, Donald

    Ashton, Joe

    Carmichael, Neil

    Dobson, Frank

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

    Carter-Jones, Lewis

    Dormand, Jack

    Barnett, Guy (Greenwich)

    Cartwright, John

    Douglas, Dick

    Barnett, Rt Hon Joel (Heywood)

    Clark, Dr David (South Shields)

    Douglas-Mann, Bruce

    Belth, A. J.

    Cocks, Rt Hon Michael (Bristol S)

    Dubs, Alfred

    Benn, Rt Hon Anthony Wedgwood

    Concannon, Rt Hon J. D.

    Duffy, A. E. P.

    Bennett, Andrew (Stockport N)

    Conlan, Bernard

    Dunn, James A. (Liverpool, Kirkdale)

    Bevan, David Gilroy

    Cook, Robin F.

    Dunnett, Jack

    Bidwell, Sydney

    Cormack, Patrick

    Dunwoody, Mrs Gwyneth

    Bonsor, Sir Nicholas

    Cowans, Harry

    Eadle, Alex

    Booth, Rt Hon Albert

    Craigen, J. M. (Glasgow, Maryhill)

    Eastham, Ken

    Boothroyd, Miss Betty

    Crowther, J. S.

    Edwards, Robert (Wolv SE)

    Bottomley, Rt Hon Arthur (M'brough)

    Cryer, Bob

    Ellis, Raymond (NE Derbyshire)

    Bradley, Tom

    Cunliffe, Lawrence

    Ellis, Tom (Wrexham)

    Bray, Dr Jeremy

    Cunningham, George (Islington S)

    English, Michael

    Brown, Hugh D. (Provan)

    Dalyell, Tam

    Evans, Ioan (Aberdare)

    Brown, Robert C. (Newcastle W)

    Davidson, Arthur

    Evans, John (Newton)

    Brown, Ronald W. (Hackney S)

    Davies, Rt Hon Denzil (Llanelli)

    Ewing, Harry

    Farr, John

    Lewis, Ron (Carlisle)

    Robinson, Geoffrey (Coventry NW)

    Field, Frank

    Litherland, Robert

    Rodgers, Rt Hon William

    Filch, Alan

    Lofthouse, Geoffrey

    Rooker, J. W.

    Fitt, Gerard

    Lyon, Alexander (York)

    Ross, Ernest (Dundee West)

    Fiannery, Martin

    Lyons, Edward (Bradford West)

    Ross, Stephen (Isle of Wight)

    Fletcher, L. R. (Ilkeston)

    Mabon, Rt Hon Dr J. Dickson

    Ross, Wm. (Londonderry)

    Fletcher, Ted (Darlington)

    McCartney, Hugh

    Rowlands, Ted

    Foot, Rt Hon Michael

    McCusker, H.

    Ryman, John

    Forrester, John

    McDonald, Dr Oonagh

    Sandelson, Neville

    Foster, Derek

    McElhone, Frank

    Sever, John

    Foulkes, George

    McKay, Allen (Penistone)

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

    Fraser, Rt Hon H. (Stafford a St)

    McKelvey, William

    Shepherd, Richard (Aldridge-Br'hills)

    Fraser, John (Lambeth, Norwood)

    MacKenzie, Rt Hon Gregor

    Shore, Rt Hon Peter (Step and Pop)

    Freeson, Rt Hon Reginald

    Maclennan, Robert

    Short, Mrs Renée

    Freud, Clement

    McMahon, Andrew

    Silkin, Rt Hon John (Deptford)

    Fry, Peter

    McMillan, Tom (Glasgow, Central)

    Silkin, Rt Hon S. C. (Dulwich)

    Garrett, John (Norwich S)

    Magee, Bryan

    Silverman, Julius

    Garrett, W. E. (Wallsend)

    Marks, Kenneth

    Smith, Cyril (Rochdale)

    George, Bruce

    Marlow, Tony

    Smith, Rt Hon J. (North Lanarkshire)

    Gilbert, Rt Hon Dr John

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

    Snape, Peter

    Ginsburg, David

    Marshal), Dr Edmund (Goole)

    Soley, Clive

    Golding, John

    Marshall, Jim (Leicester South)

    Spearing, Nigel

    Gourlay, Harry

    Martin, Michael (Gl'gow, Springb'rn)

    Spriggs, Leslie

    Graham, Ted

    Mason, Rt Hon Roy

    Stallard, A. W.

    Grant, George (Morpeth)

    Maxton, John

    Steel, Rt Hon David

    Grant, John (Islington C)

    Maynard, Miss Joan

    Stewart, Rt Hon Donald (W Isles)

    Grimond, Rt Hon J.

    Meacher, Michael

    Stoddart, David

    Hamilton, W. W. (Central Fite)

    Mellish, Rt Hon Robert

    Stott, Roger

    Harrison, Rt Hon Walter

    Mikardo, Ian

    Strang, Gavin

    Hart, Rt Hon Dame Judith

    Millan, Rt Hon Bruce

    Straw, Jack

    Hattersley, Rt Hon Roy

    Miller, Dr M. S. (East Kilbride)

    Summerskill, Hon Dr Shirley

    Haynes, Frank

    Mitchell, Austin (Grimsby)

    Taylor, Mrs Ann (Bolton West)

    Healey, Rt Hon Denis

    Mitchell, R. C. (Soton, Itchen)

    Thomas, Dafydd (Merioneth)

    Heffer, Eric S.

    Moate, Roger

    Thomas, Jeffrey (Abertillery)

    Hicks, Robert

    Molyneaux, James

    Thomas, Mike (Newcastle East)

    Hogg, Norman (E Dunbartonshire)

    Morris, Rt Hon Alfred (Wythenshawe)

    Thomas, Dr Roger (Carmarthen)

    Holland, Stuart (L'beth, Vauxhall)

    Morris, Rt Hon Charles (Openshaw)

    Thorne, Stan (Preston South)

    Home Robertson, John

    Morris, Rt Hon John (Aberavon)

    Tilley, John

    Homewood, William

    Morton, George

    Tinn, James

    Hooley, Frank

    Moyle, Rt Hon Roland

    Torney, Tom

    Hooson, Tom

    Mulley, Rt Hon Frederick

    Urwin, Rt Hon Tom

    Horam, John

    Newens, Stanley

    Varley, Rt Hon Eric G.

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

    Oakes, Rt Hon Gordon

    Wainwright, Edwin (Dearne Valley)

    Howells, Geraint

    Ogden, Eric

    Wainwright, Richard (Colne Valley)

    Huckfield, Les

    O'Halloran, Michael

    Walker, Rt Hon Harold (Doncaster)

    Hudson Davies, Gwilym Ednyfed

    O'Neill, Martin

    Weetch, Ken

    Hughes, Mark (Durham)

    Orme, Rt Hon Stanley

    Wellbeloved, James

    Hughes, Robert (Aberdeen North)

    Owen, Rt Hon Dr David

    Welsh, Michael

    Hughes, Roy (Newport)

    Palmer, Arthur

    White, Frank B. (Bury & Radcliffe)

    Janner, Hon Greville

    Park, George

    White, James (Glasgow, Pollok)

    Jay, Rt Hon Douglas

    Parker, John

    Whitehead, Phillip

    John, Brynmor

    Parry, Robert

    Whitlock, William

    Johnson, James (Hull West)

    Pavitt, Laurie

    Wigley, Dafydd

    Johnston, Russell (Iverness)

    Pawsey, James

    Willey, Rt Hon Frederick

    Jones, Rt Hon Alec (Rhondda)

    Pendry, Tom

    Williams, Rt Hon Alan (Swansea W)

    Jones, Barry (East Flint)

    Penhaligon, David

    Williams, Sir Thomas (Warrington)

    Jones, Dan (Burnley)

    Powell, Rt Hon J. Enoch (S Down)

    Wilson, Gordon (Dundee East)

    Kaufman, Rt Hon Gerald

    Powell, Raymond (Ogmore)

    Wilson, Rt Hon Sir Harold (Huyton)

    Kerr, Russell

    Prescott, John

    Wilson, William (Coventry SE)

    Kilroy-Silk, Robert

    Price, Christopher (Lewisham West)

    Winnick, David

    Kinnock, Neil

    Race, Reg

    Woodall, Alec

    Knox, David

    Radice, Giles

    Wrigglesworth, Ian

    Lambie, David

    Rees, Rt Hon Merlyn (Leeds South)

    Wright, Sheila

    Lamborn, Harry

    Richardson, Jo

    Young, David (Bolton East)

    Lamond, James

    Roberts, Allan (Bootle)

    Leadbitter, Ted

    Roberts, Ernest (Hackney North)

    TELLERS FOR THE AYES:

    Leighton, Ronald

    Roberts, Gwilym (Cannock)

    Mr. Donald Coleman and Mr. James Hamilton.

    Lestor, Miss Joan (Eton & Slough)

    Robertson, George

    Lewis, Arthur (Newham North West)

    NOES

    Adley, Robert

    Bell, Sir Ronald

    Braine, Sir Bernard

    Aitken, Jonathan

    Bendall, Vivian

    Bright, Graham

    Alexander, Richard

    Benyon, Thomas (Abingdon)

    Brinton, Tim

    Alison, Michael

    Benyon, W. (Buckingham)

    Brittan, Leon

    Amery, Rt Hon Julian

    Best, Keith

    Brocklebank-Fowler, Christopher

    Ancram, Michael

    Biffen, Rt Hon John

    Brooke, Hon Peter

    Arnold, Tom

    Biggs-Davi8on, John

    Brotherton, Michael

    Aspinwall, Jack

    Blackburn, John

    Brown, Michael (Brigg & Sc'thorpe)

    Atkins, Rt Hon H. (Spelthorne)

    Blaker, Peter

    Browne, John (Winchester)

    Atkins, Robert (Preston North)

    Body, Richard

    Bruce-Gardyne, John

    Atkinson, David (B'mouth, East)

    Boscawen, Hon Robert

    Bryan, Sir Paul

    Baker, Kenneth (St. Marylebone)

    Bottomley, Peter (Woolwich West)

    Buchanan-Smith, Hon Alick

    Baker, Nicholas (North Dorset)

    Bowden, Andrew

    Buck, Antony

    Beaumont-Dark, Anthony

    Boyson, Dr Rhodes

    Budgen, Nick

    1656

    1657

    Bulmer, Esmond

    Hogg, Hon Douglas (Grantham)

    Pattie, Geoffrey

    Burden, F. A.

    Holland, Philip (Carlton)

    Percival, Sir Ian

    Butcher, John

    Hordern, Peter

    Peyton, Rt Hon John

    Butler, Hon Adam

    Howe, Rt Hon Sir Geoffrey

    Pink, R. Bonner

    Cadbury, Jocelyn

    Howell, Rt Hon David (Guildford)

    Pollock, Alexander

    Carlisle, John (Luton West)

    Howell, Ralph (North Norfolk)

    Porter, George

    Carlisle, Kenneth (Lincoin)

    Hunt, David (Wirral)

    Prentice, Rt Hon Reg

    Carlisle, Rt Hon Mark (Runcorn)

    Hunt, John (Ravensbourne)

    Price, David (Eastleigh)

    Chalker, Mrs Lynda

    Hurd, Hon Douglas

    Prior, Rt Hon James

    Channon, Paul

    Irvine, Charles (Cheltenham)

    Proctor, K. Harvey

    Chapman, Sydney

    Jenkin, Rt Hon Patrick

    Pym, Rt Hon Francis

    Clark, Hon Alan (Plymouth, Sutton)

    Johnson Smith, Geoffrey

    Ralson, Timothy

    Clark, Sir William (Croydon South)

    Jopling, Rt Hon Michael

    Rathbone, Tim

    Clarke, Kenneth (Rushcliffe)

    Joseph, Rt Hon Sir Keith

    Rees, Peter (Dover and Deal)

    Cockeram, Eric

    Kaberry Sir Donald

    Rees-Davies, W. R.

    Colvin, Michael

    Kimball, Marcus

    Renton, Tim

    Cope, John

    King, Rt Hon Tom

    Rhodes James, Robert

    Corrie, John

    Kitson, Sir Timothy

    Rhys Williams, Sir Brandon

    Costain, A. P.

    Knight, Mrs Jill

    Ridley, Hon Nicholas

    Cranborne, Viscount

    Lamont, Norman

    Ridsdale, Julian

    Critchley, Julian

    Lang, Ian

    Rifkind, Malcolm

    Crouch, David

    Langford-Holt, Sir John

    Rippon, Rt Hon Geoffrey

    Dean, Paul (North Somerset)

    Latham, Michael

    Roberts, Wyn (Conway)

    Dickens, Geoffrey

    Lawrence, Ivan

    Rossi, Hugh

    Dorrell, Stephen

    Lawson, Nigel

    Rost, Peter

    Douglas-Hamilton, Lord James

    Lee, John

    Royle, Sir Anthony

    Dover, Denshore

    Lennox-Boyd, Hon Mark

    Sainsbury, Hon Timothy

    du Cann, Rt Hon Edward

    Lester, Jim (Beeston)

    St. John Stevas, Rt Hon Norman

    Dunn, Robert (Dartford)

    Lewis, Kenneth (Rutland)

    Scott, Nicholas

    Durant, Tony

    Lloyd, Ian (Havant & Waterloo)

    Shaw, Giles (Pudsey)

    Dykes, Hugh

    Lloyd, Peter (Fareham)

    Shelton, William (Streatham)

    Eden, Rt Hon Sir John

    Loveridge, John

    Shersby, Michael

    Edwards, Rt Hon N. (Pembroke)

    Luce, Richard

    Silvester, Fred

    Eggar, Timothy

    Lyell, Nicholas

    Sims, Roger

    Elliott Sir William

    McCrindle, Robert

    Skeet, T. H. H.

    Emery, Peter

    Macfarlane, Neil

    Smith, Dudley (War. and Leam'ton)

    Eyre, Reginald

    MacGregor, John

    Speed, Keith

    Fairbairn, Nicholas

    MacKay, John (Argyll)

    Speller, Tony

    Fairgrieve Russell

    McNair-Wilson, Michael (Newbury)

    Spence, John

    Faith Mrs Sheila

    McNair-Wilson, Patrick (New Forest)

    Spicer, Jim (West Dorset)

    Fell, Anthony

    McQuarrie, Albert

    Spicer, Michael (S Worcestershire)

    Fenner, Mrs Peggy

    Madel, David

    Sproat, Iain

    Finsberg, Geoffrey

    Major. John

    Squire, Robin

    Fisher, Sir Nigel

    Marland, Paul

    Stainton, Keith

    Fletcher, Alexander (Edinburgh N)

    Marshall, Michael (Arundel)

    Stanbrook, Ivor

    Fletcher-Cooke, Charles

    Marten, Neil (Banbury)

    Stanley, John

    Fookes, Miss Janet

    Mates, Michael

    Steen, Anthony

    Forman, Nigel

    Mather, Carol

    Stevens, Martin

    Fowler, Rt Hon Norman

    Maude, Rt Hon Angus

    Stewart, Ian (Hitchin)

    Fox, Marcus

    Mawby, Ray

    Stewart, John (East Renfrewshire)

    Fraser, Peter (South Angus)

    Mawhinney, Dr Brian

    Stokes, John

    Galbraith, Hon T. G. D.

    Maxwell-Hyslop, Robin

    Stradllng Thomas, J.

    Gardiner George (Reigate)

    Mayhew, Patrick

    Tapsell, peter

    Gardner, Edward (South Fylde)

    Mellor, David

    Taylor, Robert (Croydon NW)

    Garel-Jones, Tristan

    Meyer, Sir Anthony

    Tebbit, Norman

    Gllmour, Rt Hon Sir Ian

    Miller, Hal (Bromsgrove & Redditch)

    Temple-Morris, peter

    Glyn, Dr Alan

    Mills, Iain (Meriden)

    Thatcher, Rt Hon Mrs Margaret

    Goodhart, Philip

    Mills, Peter (West Devon)

    Thomas, Rt Hon Peter (Hendon S)

    Goodlad, Alastair

    Miscampbeil, Norman

    Thompson, Donald

    Gorst, John

    Mitchell, David (Basingstoke)

    Thome, Neil (Ilford South)

    Gow, Ian

    Monro, Hector

    Thornton, Malcolm

    Gower, Sir Raymond

    Moore, John

    Townend, John (Bridlington)

    Grant, Anthony (Harrow C)

    Morgan, Geraint

    Townsend, Cyril D. (Bexleyheath)

    Gray, Hamish

    Morris, Michael (Northampton, Sth)

    Trippier, David

    Greenway, Harry

    Morrison, Hon Charles (Devizes)

    Trotter, Neville

    Griffiths, Eldon (Bury St Edmunds)

    Morrison, Hon Peter (City of Chester)

    van Straubenzee, W. R.

    Griffiths, Peter (Portsmouth N)

    Mudd, David

    Vaughan, Dr Gerard

    Grist, Ian

    Murphy, Christopher

    Viggers, Peter

    Grylls, Michael

    Myles, David

    Waddlngton, David

    Gummer, John Selwyn

    Neale, Gerard

    Wakeham, John

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

    Needham, Richard

    Waldegrave, Hon William

    Hamilton, Michael (Salisbury)

    Nelson, Anthony

    Walker, Bill (Perth & E Perthshire)

    Hampson, Dr Keith

    Neubert, Michael

    Walkef-Smith, Rt Hon Sir Derek

    Hannam, John

    Newton, Tony

    Waller, Gary

    Haselhurst, Alan

    Normanton, Tom

    Walters, Dennis

    Hastings. Stephen

    Nott, Rt Hon John

    Ward, John

    Havers Rt Hon Sir Michael

    Onslow, Cranley

    Warren, Kenneth

    Hawksley, Warren

    Oppenheim, Rt Hon Mrs Sally

    Watson, John

    Hsyhoe, Barney

    Osborn, John

    Wells, John (Maidstone)

    Heath, Rt Hon Edward

    Page, John (Harrow, West)

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

    Heddle, John

    Page, Richard (SW Hertfordshire)

    Wheeler, John

    Henderson, Barry

    Parkinson, Cecil

    Whitelaw, Rt Hon William

    Heseltine, Rt Hon Michael

    Parris, Matthew

    Whitney, Raymond

    Higgins, Rt Hon Terence L.

    Patten, Christopher (Bath)

    Wickenden, Keith

    Hill, James

    Patten, John (Oxford)

    Wiggin, Jerry

    1658

    1659

    Wilkinson, John

    Young, Sir George (Acton)

    TELLERS FOR THE NOES:

    Winterton, Nicholas

    Younger, Rt Hon George

    Mr. Spencer Le Marchant and Mr. Anthony Berry.

    Wolfson Mark

    Question accordingly negatived.
    Mr. Speaker: Order. I am now required to put the Questions on the three remaining Government amendments up to clause 25, Nos. 134, 151 and 61. Does any hon. Gentleman wish to seek a Division on any of these amendments?

    Clause 23
    TRANSPORT: ENGLAND AND WALES
    Amendment made: No. 134, in page 22, line 4, at end insert—
    '(4) In the case of pupils in attendance at schools, the charges made by a local education authority under subsection (3)(a) above for provision of transport shall be at a uniform rate, that is to say, a rate not depending on the length of the journey or the school attended, except that there may be rates which differ according to the age of the pupil or according to whether the school is a primary or a secondary school.'.—[Mr. Mark Carlisle.]

    Clause 25
    TRANSPORT: SCOTLAND
    Amendments made: No. 151, in page 24, line 18, at end insert—
    '(4) In the case of pupils in attendance at schools, the charges made by an education authority under subsection (3)(a) above for the provision of transport shall be at a uniform rate, that is to say, a rate not depending on the length of the journey or the school attended, except that there may be rates which differ according to the age of the pupil or according to whether the school is a primary or a secondary school.'.
    No. 61, in page 25, leave out line 4 and '"(i)'in line 5 and insert sub-paragraphs—
    "(i) in the case of a child to whom section 50 of this Act applies, no arrangements have been made under that section with regard to the child; or
    (ia) in any other case,'.—[Mr. Younger.]

    Clause 26
    DAY NURSERIES
    Amendment made:No. 62, in page 26, line 26, leave out from first 'section' to end of line 28.—[Mr. Mark Carlisle.]

    Clause 30
    RECOUPMENT BETWEEN LOCAL EDUCATION AUTHORITIES
    9.45 pm
    Amendments made: No. 63, in page 27, line 31, after '(1)' insert subject to subsection (1A) below'.
    No. 64, in page 27, line 39 at end insert—
    '(1A) Subsection (1) above does not apply to any provision for primary education made in respect of a pupil who has not attained the age of five years unless it is made with the consent of the authority from whom recoupment is claimed.'.
    No. 65, in page 28, line 13 at end insert—
    '(3A) The Secretary of State may make regulations requiring or authorising payments of amounts determined by or under the regulations to be made by one authority to another where—

    (a) the authority receiving the payment makes, in such cases or circumstances as may be specified in the regulations, provision for education in respect of a pupil having such connection with the area of the paying authority as may be so specified; and,>

    (b) one of the authorities is a local education authority and the other an education authority in Scotland.'.

    No. 66, in page 28, line 17, leave out 'and references' and insert '(4A) References in subsections (2) and (3) above'.—[Mr. Mark Carlisle.]

    Clause 31
    EDUCATION EXPENDITURE AND RATE SUPPORT GRANT
    Amendment made: No. 67, in page 28, line 36, after 'authority', insert 'or to the area of any education authority in Scotland'.—[Mr. Mark Carlisle.]

    Clause 37
    CITATION, CONSTRUCTION, REPEALS AND EXTENT
    Amendments made: No. 72, in page 32, line 2 after 'particular', insert 'local education authority or'.
    No. 74, in page 32, line 11 after '25', insert '30(3A) and (4)'.—[Mr. Mark Carlisle.]

    Clause 31
    EDUCATION EXPENDITURE AND RATE SUPPORT GRANT
    Mr. Kinnock: I beg to move amendment No. 88, in page 29, line 20, at end insert—

    '(5) The Minister shall not make regulations under section 31 and Schedule 6 to this Act before he has consulted an Advanced Further Education Commission as set out in subsection (6) below.

    (6) An Advanced Further Education Commission shall be set up, consisting of not less than 25 persons whom the Secretary of State shall appoint, after consulting bodies representing local authorities, governing bodies of further education institutions, principals of such institutions, and teachers and students in such institutions.'.

    The last amendment that we debated concerned the small matter of £20 million. Even though that will place a major imposition on parents, the amendment I now move concerns £375 million. As we lost the last amendment by only 23 votes, we can confidently expect to win this one, given its additional importance.
    The great sadness attached to this debate is that, because of the guillotine, we did not have the opportunity to discuss clause 31 in committee. Indeed, the only contribution was a learned one from my hon. Friend the Member for Lewisham, West (Mr. Price), who is one of the four people in the country who understands the mechanism for the capping of the pool. We concluded our Committee sittings when my hon. Friend was on his feet speaking on this matter. It is an issue of considerable importance and I hope that in the course of this short debate the Minister will provide some answers.
    We want to stress the need that is widely felt for accepting this amendment, which requires the establishment of an advanced further education commission in order to deal with finance in the advanced further education sector.
    We hope that the Minister will accept the amendment, because every representative body in advanced further education has endorsed the recommendation of the Oakes committee, which was chaired so ably by my right hon. Friend the Member for Widnes (Mr. Oakes) when he was Minister of State, Department of Education and Science. Not only has the recommendation received endorsement and agreement from that source, it
    1662
    has been supported by all the representative bodies of students, teachers and other workers in the advanced further education sector.
    At the beginning of this year the council of local education authorities met and, in the absence of any kind of undertaking from the Minister that he would set up the AFEC, it decided to form a crypto AFEC of its own to manage what might otherwise be a totally unmanageable area of educational expenditure which will be subject directly to the whim of Governments and to no other influence.
    I know that the Minister has the greatest respect for the judgments of local education authorities and a close interest in advanced further education. Therefore, it is difficult to understand how someone with such a commitment and experience has been so far unable to give an undertaking that the AFEC will be set up. I hope it is not that the ideological commitment of both the Under-Secretary and the Secretary of State is so inflexible that they consider the AFEC to be yet another quango and consequently they plan to avoid the recommendation of the Oakes committee. There must be more profound reasons, and I hope that we shall hear them tonight.
    The Oakes committee intended to promote efficiency and equity in local government finance and in educational provision in the advanced further education sector. The capping system proposed by the Oakes committee was systematic and fair. It met the financial needs of advanced further education. It gratified the interests of local education authorities that do not have institutions of advanced further education within their boundaries and it provided a reasonable procedure for local education authorities that have such institutions in their areas.
    In order to meet those needs, and in order to gratify and to provide for those interests, it was necessary that the national body should be set up. An advanced further education commission—or a similar body with a different title—is a prerequisite of the efficiency and equity which characterised the recommendations of the Oakes report, and which has commanded the support of all bodies of opinion and representation concerned with furtther education. It is necesary because

    1663
    it is the only means of effectively ensuring that we have the proper management, control, co-ordination and opportunity for improvement of provision in the polytechnics and colleges of further and higher education.
    The system adopted by the Government, of appointing a person, however well-intentioned, talented and knowledgeable, to sit in the Department of Education and Science and, by the use of the Civil Service mechanism, perform the task which should be performed—according to the Oakes recommendations—by a national body that is representatative of local authorities and other interests in advanced further education does not provide an adequate substitute.
    In place of the widely supported and gradual means of rationalising and managing the finance of advanced further education, the Government now offer a crude mechanism—the proposal contained in clause 31 of the Bill. It has been outlined by the Under-Secretary of State in public, but, as far as I know, never in Parliament. It is not a system of control or co-ordination. It is a vehicle for cuts—and it is an extremely crude and blunt system of performing those cuts. It involves financial cuts of great severity, so much so that they jeopardise the existence not only of courses, but of some institutions in the advanced further education sector. It would also lead to curriculum cuts. That is a matter of particular sensitivity, especially in the advanced further education sector.
    If the hon. Gentleman and his right hon. and learned Friend the Secretary of State were looking for a sector that would meet the technological and scientific demands of the country, they would be well recommended to look at the advanced further education sector, among other places. However, because of the system they propose, one college of further education—I shall not name it because it will cause undue alarm, but if the hon. Gentleman would like the details in private later, I shall be happy to supply them—will have to meet cuts of 13 per cent. in the amount of money necessary to maintain its current provision. In another college the cuts will be 17 per cent. Kingston polytechnic will have to meet cuts of 10 per cent., Newcastle polytechnic, 10 per cent., Leicester polytechnic, 10 per cent. and Middlesex polytechnic, 9 per cent. The
    1664
    city of Manchester college of higher education—which has the delightful title "Comanche"—will have to meet cuts of 7·5 per cent. These are in relation to total available facilities of £10 million to £12 million. Cuts of that nature are not shavings off a great fat body but they are cuts straight through the flesh and into the bone at the level of 10 per cent.
    Mr. Christopher Price: It is an interesting development in a new era of Select Committees that we are having a debate on the Floor of the House immediately after a Select Committee has taken evidence this morning from the committee of directors of polytechnics. Is my hon. Friend aware that it was made clear that the average 10 per cent. cut was only a basic cut? On top of that cut, the matter of overseas students' fees turns a basic 10 per cent. cut into a cut of 16 per cent., 17 per cent., 18 per cent. or even 19 per cent. in individual institutions.
    Mr. Kinnock: My hon. Friend has done me and the House a service by enabling me to abbreviate my remarks. He has referred to a point that I was about to make. The basic cuts in the very nature of education generally, but specifically in higher education—because of the wide dispersal of courses and the small number of staff in some of those courses—can begin as cuts of 10 per cent. and, because of the multiplier effect, can easily end up as cuts of 15 per cent. or 17 per cent.
    It was proposed that a 6 per cent. cut be made in the case of the universities. The effect of that will be to produce a 10 per cent. cut in the finances available and in the number of courses available to students. The position is exactly the same in the advanced further education sector and, indeed, in the maintained sector.
    Mr. Dan Jones; Will my hon. Friend agree that these cuts—never mind the initial finance—will be more adverse in terms of their engineering and technical potential?
    Mr. Kinnock: My hon. Friends are greatly helping me. I hope that my speech is not that stereotyped and that all they are doing is to endorse the fact that there is a central argument to be made. It is a very simple argument and has

    1665
    been made by the National Association of Teachers in Further and Higher Education and by the other bodies representing polytechnic teachers, by the Association of Scientific, Engineering and Managerial Staffs, by the National Union of Students, and by the Standing Conference of Principals and Directors of Institutions and Colleges of Higher Education, a conference of which body the Under-Secretary of State addressed while I attended it. All those bodies have put forward the straightforward argument that I have been making, although obviously in more detail, and covering the point raised by my hon. Friend the Member for Burnley (Mr. Jones), my hon. Friend the Member for Lewisham, West and everybody else interested in this area.
    The greatest irony of all in regard to the cuts is that it is the institutions that have been most obedient to previous bouts of public expenditure restraint that will suffer most. So crude and so blunt is the Government's proposition in clause 31 that the virtue that these institutions have shown in complying with previous demands for cutbacks in the use of finance demands has meant that they are the ones that will suffer most. In addition to the crudity of the Government's mechanism—I suppose that we dignify what they are doing even by the use of the term mechanism—there is the fact that, as my hon. Friend the Member for Burnley clearly recognised, these are institutions with a very strong vocational orientation and a very strong commitment to technology, to science and to the industrial arts.
    In a country that is daily being reminded of its increasing dependence on imports and of the way in which it lags behind in so many technological and scientific races, for a blow to be dealt at the very base of our means of shortening the distances between ourselves and other industrial nations is lunacy of the most profound nature. It is being committed at a time when we have a Government who earnestly remind us at frequent intervals of the need to encourage the development of our scientific and technological education and training.
    The further bad news, as has already been suggested, is that the effect of the Government's proposals to increase the
    1666
    fees in the advanced further education sector, as in every other higher educational sector, and to charge full cost fees for overseas students, will mean that in addition to the blows resulting from the crude cuts wrought by clause 31, there will be increasingly a dramatic fall in the number of overseas students seeking places in advanced further education in Britain, with the additional and crucial loss of the revenue necessary to keep those institutions viable.
    10 pm
    Taking together the way in which the Government are cutting the commitment of finance to the advanced further education sector and the impact of the reduction of overseas students, because of the full-cost fees strategy, it is clear that the Government are dealing a mortal blow to some courses and institutions and a deep wound to the provision of advanced further education in this country.
    The Council of Local Education Authorities has already offered the Government a way out. It has approved an arrangement under which it would set up what The Times Higher Education Supplement calls a "crypto-Oakes"—a rather indelicate description, but not a bad suggestion for the Under-Secretary to follow.
    We cannot help thinking that nothing of which we warn in the advanced further education sector is occurring by accident. It is not because of the haste with which the Government have approached the question that we are left with these difficulties. It may be because of the way in which the Under-Secretary has expressed himself that our suspicion, which is shared by many others in advanced further education, is well-founded.
    For example, the Under-Secretary has said:
    "We are looking at the rationalisation of all courses in higher education. The universities are doing their study now and this will be done for the maintained sector as well."
    If the hon. Gentleman were speaking as a convinced missionary on behalf of the Oakes proposal, we would recognise that as a benign attitude, as a matter of need and as a way of carefully husbanding the country's resources while seeing that we

    1667
    got the best value for money out of the higher and advanced further education sectors so that the interests of local education authorities, students and staffs in the institutions could be served.
    But we have to conclude that, given the example and the argument of Oakes and the consensus in support of Oakes, any Government who choose to recognise and follow neither must have not a benign, but a malign, reason for coming to that conclusion.
    This is a technical matter which does not arouse strong political passions. Therefore, there would be no purpose in my using hyperbole unless it were justified, but on the basis of what I have heard from the Under-Secretary, at the conference to which I referred and from the odd quotations that drop from his lips, we can come to no conclusion other than that in the absence of an undertaking to accept our amendment or to change their attitude and introduce an amendment meeting the demands raised by our amendment, the Government are not serious about wanting to sustain advanced further education or meeting their obligations to local education authorities.
    I plead with the Under-Secretary to recognise that many of Britain's industrial needs can be met only by the development of the advanced further education sector. There can be no benefit for education, the economy or the opportunities for the young people of this country if the responsibility for setting up an advanced further education body is not met.
    I have received a letter from a lecturer at the Croydon college of technology, who tells me that the college
    "is being forced to make real cuts for 1980–81, of £100,000. This will mean, for example, that something like a 7 per cent. cut will be made on the teaching of A-level science subjects. This is in spite of Carlisle's"—
    an irreverent reference to the Secretary of State—
    "statement that a 'modest expansion' in further education was contemplated."
    Did I hear the Under-Secretary of State say that he expected that from a polytechnic lecturer?
    Dr. Boyson: No. I think that courtesy is a virtue that we should have on both sides of the House. If the writer cannot
    1668
    use the form "Mr. Carlisle" or "the right hon. Mark Carlisle", that may be relevant to the validity of the rest of what he says.
    Mr. Kinnock: I realise that the hour is late, and the hon. Gentleman may be a little tetchy, having lost so many arguments in the past two days.
    Dr. Boyson: We have not lost a vote.
    Mr. Kinnock: I never expected to have to characterise the hon. Gentleman as a parliamentary bully, but those were the words of a parliamentary bully: "We might have lost the argument, but we have not lost a vote." I never expected to hear that from the hon. Gentleman, but it is duly recorded. I shall take special pleasure in sending a copy of the Hansard report of today's proceedings to that Croydon college, so that the staff can read the hon. Gentleman's comments.
    Dr. Boyson: I shall sign it
    Mr. Kinnock: It must be later than we thought. If we were to have to be here until 2 am, as we were this morning, goodness knows what the hon. Gentleman would be getting up to. I know that his interruption is at least partly inspired by the fact that he is desperate to respond to the debate and give an undertaking that the Government will proceed along the course that I have asked.
    I hope that the hon. Gentleman will answer a few other questions. What will be the total amount of the advanced further education pool for the financial year 1980–81? How does this compare with the total for the last financial year for which figures are available? That is probably 1978–79. The figures will not yet be available for the most recent year.
    What is the allocation of the pool to individual local authorities? What were the hon. Gentleman's estimates of the individual local authorities' claims upon the pool?
    If the hon. Gentleman can answer those questions, it will have been a useful debate, but we would much prefer a full and well-deserved reward, not for ourselves but for those engaged in advanced further education, in the form of an assurance about their future, the curriculum that they provide and the future of the students for whom they care.
    Mr. Christopher Price: It is a characteristic of our debates that when we discuss £20 million the Benches are full, the officials' box is full, the whole House is full of heat and yet there are abstentions. We even see strange faces in our lobby. But when we discuss £375 million the Chamber empties and not one functionary decides to serve the Department. I see that two are now arriving. Professor Parkinson and others have commented on this phenomenon that afflicts us in public affairs.
    Owing to a curious arrangement of the guillotine, under which time was very limited for the discussion of the question of transport, we suddenly seem to be able to discuss this subject at our leisure, and it is worth devoting a moment or two to it.
    We now have a system of Select Committees that can examine, in detail, complicated matters that hitherto have flowed through Standing Committee with no scrutiny whatever. I am sorry that when the Government, rightly and properly, introduced Select Committees they did not at the same time introduce the Procedure Committee's recommendation that Standing Committees should be able to spend one, two or three sittings taking evidence from experts before proceeding to line-by-line consideration of a Bill. This subject, called capping the pool, which has nothing to do with what we were discussing last Friday and will be discussing again this Friday, is an esoteric subject—
    Mr. Nigel Spearing: Regarding the Select Committee on procedure, is my hon. Friend aware that the Leader of the House has not ruled out such a procedure but those who observe these matters feel that he may be looking at it after the Bills on which it would be most appropriate have been given Second Readings in this first Session of this new Parliament?
    Mr. Price: My hon. Friend the Member for Bedwellty (Mr. Kinnock) is sending to the staff and students of Croydon college of technology the Hansard report of this debate. I shall send a copy to the Leader of the House. This is a serious parliamentary point. It would have helped the Standing Committee on
    1670
    this Bill if it could have interviewed witnesses about the Bill's technical aspects before proceeding to debate the legislation.
    It is appropriate that we should be holding this debate on Report. When we reached this part of the Bill in Committee, I was discoursing on these matters but, because of the fall of the guillotine, the Under-Secretary of State did not have time to reply. Some words from the hon. Gentleman on Report would be apposite.
    The amendment seeks to insist that before the Under-Secretary makes regulations under the clause he should appoint a representative body of all the interests in the public sector of further and higher education rather than operate bureaucratically through his functionaries in the Department of Education and Science. We want open government, not closed government. It is important that the House should understand the issues.
    Before the general election, there took place nearly 18 months of detailed consultation with every interest in further and higher education—
    Mr. R. B. Cant: On a point of order, Mr. Deputy Speaker. Will you terminate the subcommittee of two Welshmen so that hon. Members can deal adequately with this highly technical subject?
    Mr. Deputy Speaker (Mr. Richard Crawshaw): If the hon. Members wish to speak to each other, they should do so in a whisper.
    Mr. Price: No apology is necessary. Although my surname is well known in Wales, I am the only English Welshman in the House. It was a sub-committee of two. When two Welshmen are gathered together, who can stop them indulging in a sub-committee?
    Mr. Kinnock: We will start a choir, if my hon. Friend wishes.
    Mr. Price: The House should realise the effect of the Government's doctrinaire activities. For nearly 18 months before the general election, on a completely nonparty basis, all the interests involved had entered into difficult negotiations. The interests were difficult to reconcile—the

    1671
    local authorities, further education, metropolitan and county authorities, the people in the polytechnics and the Department itself. Eventually they reached agreement. Not everyone was wholly satisfied, but there was broad agreement with what the Oakes committee, as it was christened, had done. I am not sure of the wisdom of attaching names to these committees. Perhaps it would be better to give them a completely inanimate label—
    Mr. Kinnock: Why not call it the Boyson committee?
    10.15 pm
    Mr. Price: It was named after my right hon. Friend the Member for Widnes (Mr. Oakes). It seemed that whatever the result of the general election that committee would have been set up and been allowed to carry on its work as a sort of counterpart to the University Grants Cornmittee. Those who worked in polytechnics and other higher education institutes could then have known that the distribution of resources to them was carried out by their professional peers and colleagues as happened with the universities and the UGC.
    However, the election saw the victory of the most neurotic and manic Government for some time and their mania was against quangos, particularly quangos with the wrong names attached to them. A ludicrous decision was therefore taken, without consultation, to chop this quango so that the distribution of the £375 million should go unsupervised.
    I am not speaking for the Select Committee of which I am the Chairman and which is examining this matter. I believe personally that the Government will live to regret their decision. An extraordinary situation has arisen. When the Select Committee was appointed, we received a letter from the Secretary of State saying that he was very concerned about this issue. He was not seeking to dictate to us what we should do, since he recognised that we were an independent Committee, but he suggested that we might look at the whole system of applying broad subject guidelines to higher education and consider some sort of mechanism under which those guidelines might be implemented.
    We decided to accept that subject, although we had many other alternatives.
    1672
    Mr. Alan Thompson, the deputy secretary in charge of higher education in the Department, gave evidence to the Committee and he sketched out in rather greater detail—
    Mr. Deputy Speaker: Order. The hon. Gentleman must not go into detail about what has happened in the Select Committee. It has not yet reported, so I hope he will not continue along that line.
    Mr. Price: I take the point, Mr. Deputy Speaker. Although the activities of the Committee, which sat in public, were widely reported in the press and are common knowledge, I shall not take it further.
    We face a problem which must be overcome. Committees sit in public and newspapers report every word of their proceedings, but an antiquated rule prevents us from mentioning on the Floor of the House what happened in the Committee until a report has been placed on the Table.
    Mr. Kinnock: If my hon. Friend feels inhibited by the customs of the House, perhaps he will tell us of the visit he made to the DES to attend a seminar on capping the pool. We could usefully employ our time for the remainder of the debate hearing his instructive views of that experience.
    Mr. Price: I shall not follow my hon. Friend down that road, except to say that if members of the assessment and performance unit had sat in on that seminar I believe that they would have made even more severe strictures than they recently made on mathematics teaching throughout the country.
    I wish to compare the responsible way in which the Secretary of State and the Department have approached this matter with the attitude of the hon. Member for Brent, North (Dr. Boyson) when he spoke to a conference of principals of higher education colleges and institutes just before Christmas. In what was obviously a prepared speech, he made the clear statement that it might be that no mechanism was necessary and the whole matter could be dealt with by the Department.
    The Minister made the point to me in Committee that there was a time difference between the two events. He said

    1673
    that his speech was made at the end of October and that the other event of which I have spoken took place later. Since few people are listening, perhaps the hon. Gentleman can be more frank than other Ministers have been. If there has been a change of heart and the Department is moving towards acceptance of the fact that there will have to be some mechanism of an Oakes committee sort, will the hon. Gentleman tell us about it? That would help everybody in the House, not least those members of the Select Committee who are struggling with these problems and who want to know the Department's present policy.
    I know that policy changes constantly, but I want to know whether the Department has reached a conclusion on this matter. Is it in favour of managing the matter wholely within the Department, or will it set up a broadly representative body to distribute money in the public sector of higher education? It is an important question because the capping of the pool imposes a severe cut on every college in the land.
    I fully understand the reason for cash limits being imposed on further education. The previous situation, which I liken to an .ever-fattening goldfish spin- ning out the water until it takes up all the space in the bowl, could not continue. Cash limits had to be imposed. However, once cash limits are imposed, one consequence is that the money must be distributed in a coherent fashion.
    The capping of the £375 million in the pool has, without any consideration of overseas students' fees or other consequences, involved something like a 10 per cent. cut in further and higher education institutions. There is no real quarrel about that in the institutions. However, following the cuts, we now have a new system of funding the cost of overseas students, about which there has been much discussion.
    Unless an institution recruits the same number of overseas students as it recruited last year, its income will be cut even further. No one knows how much will be involved and nobody can know until later in the year. Some polytechnics will have to find as much as £2½ million by October 1980, or October 1981 at the latest. Enormous savings have to
    1674
    be made, and the Government must give some guidance about where they should be made. Without such guidance there will be complete chaos. Courses which the country needs desperately will be cut and courses which are not needed will continue.
    We were given examples this morning in the Select Committee. The principal of Leicester polytechnic said that his knitwear engineering course could disappear by October 1981. Half of the students on that course come from overseas. There are few courses of that kind in Britain.
    Mr. Cormack: There are two such courses in the country and it appears that one might be in jeopardy. The hon. Member should be accurate when referring to evidence given to a Select Committee.
    Mr. Price: I do not wish to be inaccurate. Knitwear engineering is an example of a type of course, of which there are only two or three, which is in jeopardy. The Government should not simply stand back and watch what happens for two years, but that is exactly what they have decided to do. They are talking in terms of a £375 million capped pool. They say that they will fix the pool on the basis of a Treasury diktat. They do not intend to have consultation about what should be invested in higher education. Instead, someone will pull out a piece of paper from a bran tub. The means by which the figure is arrived at is shrouded in bureaucracy and is not subject to open government.
    The means by which the £375 million is to be distributed in the next two years is the worst of all possibilities. I am no great supporter of the University Grants Committee, but it tries to distribute its money in a coherent manner. It distributes it after consultation with the universities, local authorities and industry. The system has the confidence of the institutions.
    However, the money about which we are talking will be distributed on the basis of a balance between historical expenditure and forecast—on what institutions received last year and what they expect to receive next year. The House should pause and understand the implications. If in 1980 an institution such as that involved in teacher training

    1675
    is winding down, it will be given money that it does not need. The expenditure of other institutions, particularly in the development areas where new courses have been introduced, will be chopped and they will be unable to cope with the need.
    10.30 pm
    The great tradition of further education is that it has been immediately responsive to regional and national needs. If a course is needed, it is provided. If it is unnecessary, it is taken away. There is a degree of flexibility in the secondary education sector that does not exist in the higher education sector.
    If the capped pool is not overseen by some body such as the Oakes committee, the great danger is that public money—the distribution of which is meant to be supervised by the House—would be spent in ways that no one in the House would wish to defend. It would be spent in those ways simply because of the Government's obstinacy in scrapping an agreed procedure for the distribution of that money because they have an obsession about having no more quangos.
    I realise that I have spoken for rather longer than most hon. Members in this part of the debate. It has been reasonable to do so as the House has not been bristling with Members wishing to contribute. I appeal to the Minister to take the matter seriously. We are dealing with an enormous amount of money. We have in embryo form machinery that could be brought into being quickly to distribute the money in a coherent manner. To date, the Under-Secretary of State has said "No, we will do this in closed government, behind closed doors, bureaucratically in the Department of Education."
    Amendment No. 88 simply provides that the Minister must, under clause 31, make a whole range of regulations once the Bill becomes law. Is he intending to make those regulations without the consultation that would be expected in every sphere of the education system? If he were to accept the amendment, he would have a body at his disposal that would enable him to make the regulations very rapidly indeed.
    The Minister may find flaws in the amendment, and he may feel that it is
    1676
    not properly drafted and that it would be better done another way. I would not argue tremendously about that. However, I beg him to say that before the Bill reaches another place he will come forward with coherent arrangements to ensure that this large amount of public money is distributed in such a way that it serves national needs rather than out-of-date historical patterns.
    This is not a party issue. It is an issue on which the House is properly saying "We want to supervise public expenditure, and we are not being allowed to do so because of the obstinacy of the Department of Education." I hope that the Minister, when he replies, will try to reassure the House on some of the questions raised by my hon. Friends and will reassure me on some of the complaints that I have made.
    Mr. Dan Jones: Of all the policy statements that have come from the Government, this must be the most idiotic of the lot. I cannot understand it coming from the Under-Secretary of State. I have known him through the years—although I have not shared the same political views—as a man of tremendous common sense. The hon. Gentleman comes from a part of Lancashire where common sense is the people's greatest asset.
    For the Government to restrict spending on technical education seems almost suicidal folly. Is the Minister aware that for 35 years, despite unemployment rising with almost disturbing regularity, we have always been short of skilled employees? Any economic recovery in an industrial society must depend on that element being stimulated.
    I ask the Minister to pay attention to some practical matters which any Government—Labour or Conservative—would neglect at their peril. The Prime Minister has repeatedly, but wisely, said that this is an interim period and that eventually we shall recover our economic balance and develop the economy. The Minister's colleague, the hon. Member for Sutton and Cheam (Mr. Macfarlane), laughs. I am glad that he can find something to laugh at, because I am damned if I can.
    Mr. Macfarlane: I am agreeing with everything that the hon. Gentleman is saying.
    Mr. Jones: All right, so we agree. But people do not usually show agreement with such a smiling countenance.
    I have had personal experience of the period to which I have referred. This factor has had a remarkably disturbing impact on our economy. Only two years ago we had a great debate in the House about paying skilled men the rate for the job. Indeed, we had strikes during that period because it was not applied.
    If lads are prepared to serve apprenticeships by going to work during the day and going to school in the evening, that must bring its own reward. But where are they to get the finance? The Government are proposing to cut down on this financial help. In the process, they will cut the wherewithal that produces the talent that we shall require more in the future than we have in the past. The Government are proposing to cut the stream of money that will enable this talent to be brought out. I cannot understand their reasoning.
    The Minister is from the education profession. There must be a spirit of fraternity amongst its members. He could expect to believe that fraternity rather than those who are here.
    I speak from a background of practical experience. I ask the Minister to believe that I know what I am talking about in practical, not theoretical, terms. Is it not possible for the Minister to call a meeting of the heads of all the technical colleges in Wales, England and Scotland, and, for that matter, Northern Ireland—it would take only a couple of hours—and ask them, the specialists in this area, to give him the benefit of their experience and beliefs and their promises for the future and be guided by them? He could ignore the Opposition as being prejudiced but seek the views of those who are knowledgeable and know full well what they are talking about.
    If the Government continue to make these inroads into the finance of our technical colleges, the country will pay a very heavy price in future. I beg a teacher—for such the Minister is—to acquaint himself with the views of the teaching profession on this important matter.
    Dr. Boyson: We have had an interesting debate. We all agree with the
    1678
    strong feelings expressed by the hon. Member for Burnley (Mr. Jones). His constituency is very near the valley of Rossendale in which I was born and in which I lived for so long. No hon. Member would disagree with the importance that he placed on technical education. We all wish for its recovery, irrespective of party. We were privileged to hear the hon. Member speaking with such conviction.
    This debate has been more relaxed and has crossed party boundaries. We are concerned with the distribution of money in the maintained sector of advanced further education. In shorthand, we refer to this as capping the pool. The situation is reminiscent of Schleswig-Holstein in the nineteenth century. Of those who understood that complicated situation, one was dead, one had gone and the other had forgotten. Few of those concerned with advanced further education in the maintained sector would disagree that formerly we had no means of limiting the amount of money spent. That is why we had to cap the pool. Colleges could spend and subsequently draw money from the pool.
    Once courses had been established, there was little control on the money spent. As a result there was greater financial than academic drift. We are all grateful for the work that the right hon. Member for Widnes (Mr. Oakes) put into the Oakes committee. Most hon. Members will have read the proceedings of that committee. The capping of the pool may be likened to student union finance. Charges could be fixed without undertaking any responsibility for payment. Colleges established courses and levied the cost of those courses on a nationwide pool. The local authority paid only a minimal sum towards the cost. That system obviously had to end. Therefore, we decided in June that the pool would have to be capped. I shall deal presently with the percentage differences as regards previous expenditure on further education. I shall also deal with the budget for this year and next year.
    Something had to be done about the distribution of money. I am aware of the remarks of the hon. Member for Lewisham, West (Mr. Price) concerning long-term control. However, during

    1679
    debate on the Labour Government's Education Bill of 1979, which fell when the Government fell on 28 March, we opposed the Oakes committee. It was no surprise that we did not put that committee into operation when we came into office. My hon. Friend the Member for Ripon (Dr. Hampson) and I said in Committee that the arrangements were too bureaucratic. The Opposition did not agree. We accepted the need to cap the pool. We said that we would look at the distribution of resources when we would consider whether a national body was needed.
    Mr. Christopher Price: Will the hon. Gentleman explain how a body of professionals and academics can be more bureaucratic than a body of bureaucrats?
    Dr. Boyson: The hon. Gentleman presumes that it will always be a body of bureaucrats. I have not yet mentioned future control. It is not a static situation, and new proposals are evolving.
    As the hon. Member for Bedwellty (Mr. Kinnock) said, £375 million has been put into the pool for this year and distributed. It was a blunt distribution, as we said from the beginning, to enable the machinery to continue functioning. When we met local authorities, we agreed that until we established a more selective method of distributing the pool it should be based this year half on historical costs—what has been spent by polytechnics and colleges of higher education over the past few years—and half on an intelligent estimate of what local authorities needed to fulfil the requirements for the year. It is a mixture of historical costs and the dip that local authorities want. That was the blunt arrangement for this year.
    Mr. Kinnock: In using that rough and ready formula, as the hon. Gentleman called it previously, has he anticipated that some institutions will lose 10 per cent.—an important chunk—of that which is necessary to keep them going? The hon. Gentleman's view was that in the third or fourth year he might consider setting up a national body, but only in an advisory capacity. Is he now prepared, first, to make means available to overcome the problems caused by the major shortfall in resources for particular advanced further education institutions,
    1680
    and, secondly, to change his view of the status that that national body should have in the immediate future?
    10.45 pm
    Dr. Boyson: I shall deal with all those points. If I miss any, I shall be grateful if the hon. Gentleman will raise them again.
    We first have to consider how to distribute the resources next time, not in the long term. The Times Higher Educational Supplement reported on its front page last Friday that discussions are taking place in the Department. An advisory committee has been set up to consider how to distribute on-course resources. The worst thing possible, as the hon. Member for Bedwellty suggested, would be for colleges to spend money on courses that are cheaper to run but which are not necessarily fulfilling needs and to cut back on engineering and science. We need a national course resource estimate, which we do not have at present. It would be useful to know that engineering costs 3x, another course 2x and a classroom course x.
    It is an ad hoc committee, with six members from the Department and 14 from outside, including people from local government and higher education. The purpose is
    "To pursue work on unit costs in AFE and to study the possibility of using a range of cost unit indices in the context of regulating authorities' claims on a limited AFE pool."
    If we are to have a sensible distribution, we must decide on numbers. First, we must know the cost of these courses compared to others. We shall then know how to allocate resources.
    On 8 February a letter went out to local authorities, which has been reported in the press. It says that at present, since the pool is limited, it is vital that no new courses should be started unless they fulfil a vocational need or provide a specific employment opportunity. I expect that the hon. Member for Burnley will agree with that. If new courses can be started within the distribution of the pool as a result of what is being done in individual colleges, that is fair enough. However, if colleges want to do something specifically different which they find that they cannot do on their own, they must come within the category that I have described

    1681
    before they may ask "May we have more money for this?"
    We had a meeting with the local authorities. We said that it was not for regional staff inspectors alone to say how many should be on a course and the criteria that should apply. We said that the courses must also be approved by the local education authorities. That does not mean the tick of an advisory officer. These matters should be considered by the committees of the education authorities so that the authorities may be aware that the courses are being established.
    In many instances that has not happened. On occasions it did not happen during the rapid build-up, which we all welcomed, when the polytechnics were being developed. We are now static. If there is development in one area, another area will have to cut back. That means that it is essential that those who have been elected and who hold responsibility have some say.
    Mr. Dan Jones: Is the Minister satisfied beyond doubt that sufficient funds are available to the technical schools to develop on behalf of their students?
    Dr. Boyson: I do not wish to be pedantic. I presume that the hon. Gentleman is talking about technical colleges.
    Mr. Jones: Yes.
    Dr. Boyson: We are talking about advanced education, which is poolable. The capping of the pool is AFE—advanced further education—as against FE. I have the advanced further education figures. In real terms we are spending slightly more on FE this year than last year. That may bring delight to the Rossendale male voice choir and any equivalent choir in Burnley. In real terms, slightly more will be spent on FE next year than this year. The technical colleges should have the money to do the job.
    During the past few years the colleges have asked for 9 per cent. more than they have spent. The pool was large and everybody went out with his bucket to get as much as possible. However, there were not enough buckets in which to collect all the water. There was 9 per cent. left before it ran away at the end of the year. There is much
    1682
    talk about cuts, but every year the spending was overestimated. If we include all spending on AFE, 9 per cent. less than the sum requested was spent. It is right to remember the degree of under spending in previous years.
    I am informed that in real terms we shall be spending as much on home students during 1980–81 as we spent last year. I am informed that there has been no cut. That does not mean that in the pattern of distribution no college is worse off. If some colleges are worse off, that must mean that some colleges are better off. That which is taken from one side of the balance finds its way to the other side.
    Mr. Pawsey: Hear, hear.
    Dr. Boyson: I am glad that my hon. Friend agrees with me. That is pleasing, even if he did not agree with some of my arguments earlier this evening.
    Mr. Kinnock: The hon. Gentleman seems to be saying that if I have lost weight he is fitter. The balance does not work as he has described. If certain colleges have lost, they will be in jeopardy in the forthcoming year.
    Dr. Boyson: If the hon. Gentleman, with whom I battled for so long in Committee, lost weight, I should not be fitter. I should be sad for him if that affected his health in any way. I say that in all cordiality. I was talking about overall cuts. It may be that I was speaking loosely. However, no one can say that we have cut back on provision for home students.
    What provision is being made for foreign students? We do not know how many foreign students will be enrolled in September. Many statements have been made, some of which are far from the mark. This year 86,000 students are attending colleges of further education and universities. The universities and colleges receive money for only 67,000 of those students, either from the UGC or from the maintained sector. They do not receive any money for 19,000 students. Thus, if there were 19,000 fewer students next year, not a penny less would go to the universities and maintained colleges. That is why the quota system does not work. When the previous Labour Government were in power, they tried to bring control by the quota system. They

    1683
    put the money in, but every year colleges and universities were enrolling more students than they could afford.
    The latest figures show that universities—I do not have the figures for polytechnics—are 12 per cent. down on applications from foreign students. Last year, for every four foreign students who applied for a university place, only one was accepted. The figures do not indicate that there will be a total dearth of foreign students entering our universities this year.
    Mr. Christopher Price: The estimates which many hon. Members have seen indicate that the figure for foreign student applications is more like 30 per cent. or 40 per cent. down in the universities. I agree that it is far too early to give figures for the other sectors.
    Will the Minister answer one point before the guillotine falls? If courses in which half the students are overseas students and the other half are home students are threatened, will the Government do anything to protect those courses if the overseas students disappear, or will they simply let them disappear from the curriculum?
    Dr. Boyson: The hon. Gentleman has quoted the figures of UCCA. They are not my figures. There are 12 per cent. fewer applications from foreign students at this time this year than there were at the same time last year. I do not know what estimates people have in their secret closets, but those are the printed estimates of UCCA.
    We have said time and again that if there is a serious fall in students in some institutions, or in a particular course, we shall look into it. It is no good running around with a fire bucket when there is no fire. It is as well to take a little
    rest so as to be fresh and to be able to run faster when the fire is seen—if there is a fire. If we escape from the fire—
    Mr. Sydney Bidwell Mr. Sydney Bidwell (Ealing, Southall) rose—
    Dr. Boyson: I am sorry, I cannot give way. The hon. Gentleman was not present for the exciting debate, and because of that he will be deprived for the rest of his life.
    The hon. Member for Lewisham, West asked about long-term plans. I said that we had no long-term plans; we were not committed to setting up a national body, and we were not against the proposal. The fact that we asked the Select Committee to examine the matter indicates that we are prepared to listen to the arguments. We shall consider its advice carefully.
    Overall, it is simply a question of planning and capping of the pool. It is also a matter of the money which is spent in the University Grants Committee. We shall have to consider the amount of money which is spent in the maintained sector as against the UGC. Last year an agriculture economics course was closed down at a university, and a polytechnic started it up.
    It is not just a question of long-term planning of polytechnics. We also want long-term planning of the whole of higher education in this country so that it can serve the needs of the individual and of this country. We do not feel that a body of 25 people is adequate or necessary in relation to what we are doing, and I ask my hon. Friends to resist the amendment.
    Question put, That the amendment be made:—
    The House divided: Ayes 244, Noes 308.

    Division No. 181]

    AYES

    [11 pm

    Abse, Leo

    Bidwell, Sydney

    Canavan, Dennis

    Adams, Allen

    Booth, Rt Hon Albert

    Cant, R. B.

    Allaun, Frank

    Boothroyd, Miss Betty

    Carmichael, Neil

    Alton, David

    Bottomley, Rt Hon Arthur (M'brough)

    Carter-Jones, Lewis

    Anderson, Donald

    Bradley, Tom

    Cartwright, John

    Archer, Rt Hon Peter

    Bray, Dr Jeremy

    Clark, Dr David (South Shields)

    Armstrong, Rt Hon Ernest

    Brown, Hugh D. (Provan)

    Cocks, Rt Hon Michael (Bristol S)

    Ashley, Rt Hon Jack

    Brown, Robert C. (Newcastle W)

    Cohen, Stanley

    Ashton, Joe

    Brown, Ronald W. (Hackney S)

    Coleman, Donald

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

    Brown, Ron (Edinburgh, Leith)

    Concannon, Rt Hon J. D.

    Barnett, Guy (Greenwich)

    Buchan, Norman

    Conlan, Bernard

    Barnett, Rt Hon Joel (Heywood)

    Callaghan, Rt Hon J. (Cardiff SE)

    Cook, Robin F.

    Beith, A. J.

    Callaghan, Jim (Mlddleton & P)

    Cowans, Harry

    Benn, Rt Hon Anthony Wedgwood

    Campbell, Ian

    Craigen, J. M. (Glasgow, Maryhill)

    Bennett, Andrew (Stockport N)

    Campbell-Savours, Dale

    Crowther, J. S.

    Cryer, Bob

    Janner, Hon Greville

    Radice, Giles

    Cunliffe, Lawrence

    Jay, Rt Hon Douglas

    Rees, Rt Hon Merlyn (Leeds South)

    Cunningham, George (Islington S)

    John, Brynmor

    Roberts, Allan (Bootle)

    Dalyell, Tam

    Johnston, Russell (Iverness)

    Roberts, Ernest (Hackney North)

    Davidson, Arthur

    Jones, Rt Hon Alec (Rhondda)

    Roberts, Gwilym (Cannock)

    Davies, Rt Hon Denzil (Llanelli)

    Jones, Barry (East Flint)

    Robertson, George

    Davies, Ifor (Gower)

    Jones, Dan (Burnley)

    Robinson, Geoffrey (Coventry NW)

    Davis, Clinton (Hackney Central)

    Kaufman, Rt Hon Gerald

    Rodgers, Rt Hon William

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

    Kerr, Russell

    Rooker, J. W.

    Deakins, Eric

    Kilroy-Silk, Robert

    Ross, Ernest (Dundee West)

    Dempsey, James

    Kinnock, Neil

    Rowlands, Ted

    Dewar, Donald

    Lamble, David

    Ryman, John

    Dixon, Donald

    Lamborn, Harry

    Sandelson, Neville

    Dobson, Frank

    Lamond, James

    Sever, John

    Dormand, Jack

    Leadbitter, Ted

    Sheerman, Barry

    Douglas-Mann, Bruce

    Leighton, Ronald

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

    Dubs, Alfred

    Lestor, Miss Joan (Eton & Slough)

    Shore, Rt Hon Peter (Siep and Pop)

    Duffy, A. E. P.

    Lewis, Arthur (Newham North West)

    Short, Mrs Renée

    Dunn, James A. (Liverpool, Kirkdale)

    Lewis, Ron (Carlisle)

    Sllkin, Rt Hon John (Deptford)

    Dunnett, Jack

    Litherland, Robert

    Silkln, Rt Hon S. C. (Dulwich)

    Dunwoody, Mrs Gwyneth

    Lofthouse, Geoffrey

    Silverman, Julius

    Eadie, Alex

    Lyon, Alexander (York)

    Smith, Cyril (Rochdale)

    Eastham, Ken

    Lyons, Edward (Bradford West)

    Smith, Rt Hon J. (North Lanarkshire)

    Ellis, Raymond (NE Derbyshire)

    McElhone, Frank

    Snape, Peter

    Ellis, Tom (Wrexham)

    McKay, Alien (Penistone)

    Soley, Clive

    English, Michael

    McKelvey, William

    Spearing, Nigel

    Evans, Ioan (Aberdare)

    MacKenzie, Rt Hon Gregor

    Spriggs, Leslie

    Evans, John (Newton)

    Maclennan, Robert

    Steel, Rt Hon David

    Ewing, Harry

    McMahon, Andrew

    Stoddart, David

    Fitch, Alan

    McMillan, Tom (Glasgow, Central)

    Stott, Roger

    Fitt, Gerard

    McNamara, Kevin

    Strang, Gavin

    Flannery, Martin

    Magee, Bryan

    Straw, Jack

    Fletcher, Ted (Darlington)

    Marks, Kenneth

    Summerskill, Hon Dr Shirley

    Foot, Rt Hon Michael

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

    Taylor, Mrs Ann (Bolton West)

    Forrester, John

    Marshall, Dr Edmund (Goole)

    Thomas, Dafydd (Merioneth)

    Foster, Derex

    Marshall, Jim (Leicester South)

    Thomas, Jeffrey (Abertillery)

    Foulkes, George

    Martin, Michael (Gl'gow, Springb'rn)

    Thomas, Mike (Newcastle East)

    Freud, Clement

    Mason, Rt Hon Roy

    Thomas, Dr Roger (Carmarthen)

    Garrelt, John (Norwich S)

    Maxton, John

    Thorne, Stan (Preston South)

    Garrett, W. E. (Wallsend)

    Maynard, Miss Joan

    Tilley, John

    George, Bruce

    Mellish, Rt Hon Robert

    Tinn, James

    Gilbert, Rt Hon Dr John

    Mikardo, Ian

    Torney, Tom

    Ginsburg, David

    Millan, Rt Hon Bruce

    Urwin, Rt Hon Tom

    Golding, John

    Miller, Dr M. S. (East Kilbride)

    Varley, Rt Hon Eric G.

    Gourlay, Harry

    Mitchell, Austin (Grimsby)

    Wainwright, Edwin (Dearne Valley)

    Graham, Ted

    Mitchell, R. C. (Soton, Itchen)

    Wainwright, Richard (Colne Valley)

    Grant, George (Morpeth)

    Morris, Rt Hon Alfred (Wythenshawe)

    Walker, Rt Hon Harold (Doncaster)

    Grant, John (Islington C)

    Morris, Rt Hon Charles (Openshaw)

    Weetch, Ken

    Grimond, Rt Hon J.

    Morris, Rt Hon John (Aberavon)

    Wellbeloved, James

    Hamilton, James (Bothwell)

    Morton, George

    Welsh, Michael

    Hamilton, W. W. (Central Fife)

    Moyle, Rt Hon Roland

    White, Frank R. (Bury & Radcliffe)

    Harrison, Rt Hon Walter

    Mulley, Rt Hon Frederick

    White, James (Glasgow, Pollok)

    Hart, Rt Hon Dame Judith

    Newens, Stanley

    Whitehead, Phillip

    Hattersley, Rt Hon Roy

    Oakes, Rt Hon Gordon

    Whitlock, William

    Haynes, Frank

    Ogden, Eric

    Wigley, Dafydd

    Healey, Rt Hon Denis

    O'Halloran, Michael

    Willey, Rt Hon Frederick

    Heffer, Eric S.

    O'Neill, Martin

    Williams, Rt Hon Alan (Swansea W)

    Hogg, Norman (E Dunbartonshire)

    Owen, Rt Hon Dr David

    Wilson, Rt Hon Sir Harold (Huyton)

    Holland, Stuart (L'beth, Vauxhall)

    Palmer, Arthur

    Wilson, William (Coventry SE)

    Home Robertson, John

    Park, George

    Winnick, David

    Homewood, William

    Parker, John

    Woodall, Alec

    Hooley, Frank

    Parry, Robert

    Wrigglesworth, Ian

    Horam, John

    Pavitt, Laurie

    Wright, Sheila

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

    Penhaligon, David

    Young, David (Bolton East)

    Howells, Geraint

    Powell, Raymond (Ogmore)

    Hughes, Mark (Durham)

    Prescott, John

    TELLERS FOR THE AYES:

    Hughes, Robert (Aberdeen North)

    Price, Christopher (Lewlsham West)

    Mr. Hugh McCartney and Mr. Joseph Dean.

    Hughes, Roy (Newport)

    Race, Reg

    NOES

    Adley, Robert

    Bell, Sir Ronald

    Bowden, Andrew

    Aitken, Jonathan

    Bendall, Vivian

    Boyson, Dr Rhodes

    Alexander, Richard

    Benyon, Thomas (Abingdon)

    Braine, Sir Bernard

    Alison, Michael

    Benyon, W. (Buckingham)

    Bright, Graham

    Amery, Rt Hon Julian

    Berry, Hon Anthony

    Brinton, Tim

    Ancram, Michael

    Best, Keith

    Brittan, Leon

    Arnold, Tom

    Bevan, David Gilroy

    Brocklebank-Fowler, Christopher

    Aspinwall, Jack

    Biffen, Rt Hon John

    Brooke, Hon Peter

    Atkins, Rt Hon H. (Spelthorne)

    Biggs-Davison, John

    Brotherton, Michael

    Atkins, Robert (Preston North)

    Blackburn, John

    Brown, Michael (Brigg & Sc'thorpe)

    Atkinson, David (B'mouth, East)

    Body, Richard

    Browne, John (Winchester)

    Baker, Kenneth (St. Marylebone)

    Bonsor, Sir Nicholas

    Bruce-Gardyne, John

    Baker, Nicholas (North Dorset)

    Boscawen, Hon Robert

    Bryan, Sir Paul

    Beaumont-Dark, Anthony

    Bottomley, Peter (Woolwich West)

    Buchanan-Smith, Hon Alick

    1686

    1687

    Buck, Antony

    Hogg, Hon Douglas (Grantham)

    Page, Richard (SW Hertfordshire)

    Budgen, Nick

    Holland, Philip (Carlton)

    Parkinson, Cecil

    Bulmer, Esmond

    Hooson, Tom

    Parris, Matthew

    Butcher, John

    Hordern, Peter

    Patten, Christopher (Bath)

    Butler, Hon Adam

    Howe, Rt Hon Sir Geoffrey

    Patten, John (Oxford)

    Cadbury, Jocelyn

    Howell, Rt Hon David (Guildford)

    Pattle, Geoffrey

    Carlisle, John (Luton West)

    Howell, Ralph (North Norfolk)

    Pawsey, James

    Carlisle, Kenneth (Lincoln)

    Hunt, David (Wirral)

    Percival, Sir Ian

    Carlisle, Rt Hon Mark (Runcorn)

    Hunt, John (Ravensbourne)

    Peyton, Rt Hon John

    Channon, Paul

    Hurd, Hon Douglas

    Pink, R. Bonner

    Chapman, Sydney

    Irvine, Charles (Cheltenham)

    Pollock, Alexander

    Clark, Hon Alan (Plymouth, Sutton)

    Jenkin, Rt Hon Patrick

    Porter, George

    Clark, Sir William (Croydon South)

    Johnson Smith, Geoffrey

    Powell, Rt Hon J. Enoch (S Down)

    Clarke, Kenneth (Rushcliffe)

    Jopling, Rt Hon Michael

    Price, David (Eastleigh)

    Cockeram, Eric

    Joseph, Rt Hon Sir Keith

    Prior, Rt Hon James

    Colvin, Michael

    Kaberry, Sir Donald

    Proctor, K. Harvey

    Cormack, Patrick

    Kimball, Marcus

    Pym, Rt Hon Francis

    Corrie, John

    King, Rt Hon Tom

    Raison, Timothy

    Costal n, A. P.

    Kitson, Sir Timothy

    Rathbone, Tim

    Cranborne, Viscount

    Knight, Mrs Jill

    Rees, Peter (Dover and Deal)

    Critchley, Julian

    Knox, David

    Rees-Davies, W. R.

    Crouch, David

    Lamont, Norman

    Renton, Tim

    Dean, Paul (North Somerset)

    Lang, Ian

    Rhodes James, Robert

    Dickens, Geoffrey

    Langford-Holt, Sir John

    Rhys Williams, Sir Brandon

    Dorrell, Stephen

    Latham, Michael

    Ridley, Hon Nicholas

    Douglas-Hamilton, Lord James

    Lawrence, Ivan

    Ridsdale, Julian

    Dover, Denshore

    Lee, John

    Rifkind, Malcolm

    du Cann, Rt Hon Edward

    Le Marchant, Spencer

    Roberts, Wyn (Conway)

    Dunn, Robert (Dartford)

    Lennox-Boyd, Hon Mark

    Ross, Wm. (Londonderry)

    Durant, Tony

    Lester, Jim (Beeston)

    Rossi, Hugh

    Dykes, Hugh

    Lewis, Kenneth (Rutland)

    Rost, Peter

    Eden, Rt Hon Sir John

    Lloyd, Ian (Havant & Waterloo)

    Royle, Sir Anthony

    Edwards, Rt Hon N. (Pembroke)

    Lloyd, Peter (Fareham)

    Sainsbury, Hon Timothy

    Eggar, Timothy

    Loveridge, John

    St. John-Stevas, Rt Hon Norman

    Elliott, Sir William

    Luce, Richard

    Scott, Nicholas

    Emery, Peter

    Lyell, Nicholas

    Shaw, Giles (Pudsey)

    Fairbairn, Nicholas

    McCrindle, Robert

    Shelton, William (Streatham)

    Fairgrieve, Russell

    McCusker, H.

    Shepherd, Richard (Aldridge-Br'hills)

    Faith, Mrs Sheila

    Macfarlane, Neil

    Shersby, Michael

    Farr, John

    MacGregor, John

    Silvester, Fred

    Fenner, Mrs Peggy

    MacKay, John (Argyll)

    Sims, Roger

    Finsberg, Geoffrey

    McNair-Wilson, Michael (Newbury)

    Skeet, T. H. H.

    Fisher Sir Nigel

    McNair-Wilson, Patrick (New Forest)

    Smith, Dudley (War. and Leam'ton)

    Fletcher, Alexander (Edinburgh N)

    McQuarrie, Albert

    Speed, Keith Spence, John

    Fletcher-Cooke, Charles

    Madel, David

    Speller, Tony

    Fookes, Miss Janet

    Major, John

    Spence John

    Forman, Nigel

    Marland, Paul

    Spicer, Jim (West Dorset)

    Fowler, Rt Hon Norman

    Fox, Marcus

    Marlow, Tony

    Spicer, Michael (S Worcestershire)

    Fraser, Rt Hon H. (Stafford & St)

    Marshall, Michael (Arundel)

    Sproat, Iain

    Fraser, Peter (South Angus)

    Marten, Neil (Banbury)

    Squire, Robin

    Fry, Peter

    Mates, Michael

    Stainton, Keith

    Gardiner George (Reigate)

    Mather, Carol

    Stanbrook, Ivor

    Gardner, Edward (South Fylde)

    Maude, Rt Hon Angus

    Stanley, John

    Garel-Jones, Tristan

    Mawby, Ray

    Steen, Anthony

    Gilmour, Rt Hon Sir Ian

    Mawhinney, Dr Brian

    Stevens, Martin

    Glyn, Dr Alan

    Maxwell-Hyslop, Robin

    Stewart, Ian (Hitchin)

    Goodhart, Philip

    Mayhew, Patrick

    Stewart, John (East Renfrewshire)

    Goodlad, Alastalr

    Mellor, David

    Stokes, John

    Gorst, John

    Meyer, Sir Anthony

    Stradling Thomas, J.

    Gow, Ian

    Miller, Hal (Bromsgrove & Redditch)

    Tapsell, Peter

    Gower, Sir Raymond

    Mills, Iain (Meriden)

    Taylor, Robert (Croydon NW)

    Grant, Anthony (Harrow C)

    Mills, Peter (West Devon)

    Tebbit, Norman

    Gray, Hamish

    Miscampbell, Norman

    Temple-Morris, peter

    Greenway, Harry

    Mitchell, David (Basingstoke)

    Thatcher, Rt Hon Mrs Margaret

    Griffiths, Eldon (Bury St Edmunds)

    Moate, Roger

    Thompson, Donald

    Griffiths, Peter (Portsmouth N)

    Molyneaux, James

    Thorne, Neil (Ilford South)

    Grist, Ian

    Monro, Hector

    Thornton, Malcolm

    Grylls, Micnael

    Montgomery, Fergus

    Townend, John (Bridlington)

    Gummer John Selwyn

    Moore, John

    Townsend, Cyril D. (Bexleyheath)

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

    Morgan, Geraint

    Trippier, David

    Hamilton, Michael (Salisbury)

    Morris, Michael (Northampton, Sth)

    Trotter, Neville

    Hampson, Dr Keith

    Morrison, Hon Charles (Devizes)

    van Straubenzee, W. R.

    Hannam, John

    Morrison, Hon Peter (City of Chester)

    Vaughan, Dr Gerard

    Haselhurst, Alan

    Mudd, David

    Viggers, Peter

    Hastings, Stephen

    Murphy, Christopher

    Wakeham, John

    Havers, Rt Hon Sir Michael

    Myles, David

    Waldegrave, Hon William

    Hawksley, Warren

    Neale, Gerrard

    Walker, Rt Hon Peier (Worcester)

    Hayhoe, Barney

    Needham, Richard

    Walker, Bill (Perth & E Perthshire)

    Heath, Rt Hon Edward

    Nelson, Anthony

    Waller, Gary

    Heddle, John

    Neubert, Michael

    Walters, Dennis

    Henderson, Barry

    Normanton, Tom

    Ward, John

    Haseltine, Rt Hon Michael

    Onslow, Cranley

    Warren, Kenneth

    Hicks, Robert

    Osborn, John

    Watson, John

    Higgins, Rt Hon Terence L.

    Page, John (Harrow, West)

    Wells, John (Maidstone)

    Hill, James

    Page, Rt Hon Sir R. Graham

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

    1688

    1689

    Wheeler, John

    Wilkinson, John

    Whitelaw, Rt Hon William

    Winterton, Nicholas

    TELLERS FOR THE NOES:

    Whitney, Raymond

    Wolfson, Mark

    Mr. John Cope and Mr. David Waddington.

    Wickenden, Keith

    Young, Sir George (Acton)

    Wiggln, Jerry

    Younger, Rt Hon George

    Question accordingly negatived.
    Mr. Deputy Speaker: I am now required to put the Question on any remaining amendments moved by the Government. I propose to read the numbers of the amendments and if hon. Members require a Division on a particular amendment they should so indicate.

    Clause 32
    DISCRIMINATION BY LOCAL EDUCATION AUTHORITIES
    Amendment made: No. 68, in page 29, line 31, at end add—
    '(3) In Schedule 2 to the said Act of 1975, paragraph 2 shall be omitted and for paragraph 4 there shall be substituted—
    "4. Regulations under section (School and further education regulations) of the Education Act 1980 may provide for the submission to the Secretary of State of an application for the making by him of a transitional exemption order in relation to any school or further education establishment to which that section applies and not falling within paragraph 3 above, and for the making by him of the order.".'—[Mr Mark Carlisle.]

    Clause 34
    ORDERS AND REGULATIONS
    Amendments made: No. 70, in page 31, line 7, leave out 'or supplementary' and insert 'supplementary or transitional'.
    No. 71 in page 31, line 10, after 'than'insert—
    'section (School and further education regulations) (1)(a), (2) or (3) or.—[Mr. Mark Carlisle.]

    Clause 37
    CITATION, CONSTRUCTION, REPEALS AND EXTENT
    Amendments made: No. 72, in page 32, line 2, after 'particular', insert 'local education authority or'.
    No. 73, in page 32, line 11, after '25', insert '(Nursery education: Scotland)'.
    No. 74, in page 32, line 11, after '25', insert '30(3A) and (4)'—[Mr. Mark Carlisle.]

    Schedule 7
    REPEALS
    Amendments made: No. 78, in page 47, line 4, column 3, at beginning insert 'Section 8(2)(b).'.
    No. 79, in page 48, line 39, at end insert—
    '1975 c. 65. The Sex Discrimination Act In Schedule 2, paragraph 2. 1975.'—[Mr. Mark Carlisle.]
    11.12 pm
    Dr. Boyson: I beg to move, That the Bill be now read the Third time.
    It was pleasant, over the last hour, in slow tempo, to discuss the capping of the pool, following the excitements earlier in the evening. I should like to remind hon. Members, especially on the Government side, of some of the matters contained in the Bill and to commend the measure to the House.
    In the early clauses, there is a considerable increase in the right of parents to state a preference for a school. We believe that parents, as far as possible, should have the right of choice of school, whether denominational or non-denominational, mixed or single-sex, and the type of academic and social discipline that exists in them.
    We have put in the Bill the right of a parent to state a preference for a school and the need for schools to issue information on the academic and other sides of the school. People can exercise a choice only if they have the information on which to base that choice. We have also introduced an appeals system under which parents who do not get the school of their choice have the right of appeal to a statutory committee of the local authority, where they can state a case for their son or daughter to go to that school.
    I had hoped that in the last hour we could have discussed the fourth action we have taken on parental choice, but the relevant amendment was not moved. That action was to introduce automatic recoupment between neighbouring authorities so that parents could choose for their children schools in the areas of neighbouring authorities and would not

    1691
    need the permission either of the authority in whose area they lived or the authority in whose area the school was located.
    I commend not just the provisions on higher education and the capping of the pool but the effect of the Bill in providing a considerable extension of the right of parents to state a preference for their children, to go to appeal and to have the information upon which to base their choice of school.
    Several Hon. Members Several Hon. Members rose—
    Mr. Deputy Speaker: Order. Before I call the next hon. Member to speak, I remind the House that in 25 minutes I shall call the Opposition Front Bench spokesman. May we have brief speeches, please?
    11.16 pm
    Mr. Spearing: The Minister concluded by speaking of parents having a right to choose. He was more accurate earlier when he said that the Bill would provide a right to express a preference. There is a world of difference in the grammar and the results of those phrases. I want to draw attention to some aspects of the Bill should it become law which are buried in schedule 7, the repeals schedule. It repeals sections 11, 12 and 13 of the 1944 Act.
    That Act, much of which will remain, was a great deal more than a provider of compulsory primary and secondary education for everyone. It was the compact between Church and State in education in Britain, achieved after many years of squabbling and disagreement. I am sorry to say, however, that the Bill, particularly clauses 1 to 16, will rip apart that basic agreement. The delicate relationship between Church and State, voluntary and statutory, will perhaps be broken by the Bill.
    Clauses 6 and 7 give parents the right to express a preference and to appeal. Clause 30 does not compel local authorities to engage in free trade—that implies a willing buyer and a willing seller—but enables parents to cross county boundaries without requiring the consent of the authorities concerned. Clauses 12 to 16 enable new voluntary schools to be launched with greater ease and make the closing of existing maintained schools easier.
    1692
    The result will be that competition will hot up because the repeal of section 11 means the repeal of the statutory duty of a local education authority to have what was called a development plan. The proposals in the Bill will therefore be without framework. The future provision or planning of education within any LEA area will depend upon the results of appeals or even of court findings upon those appeals. The local authority will not be able to set out a plan under which all the elements—parents, pupils, voluntary schools and governors and the interests of the community—are brought together and considered.
    The Bill will set pupil against pupil, parent against parent, teacher against teacher, Church against State, and LEA against LEA, and will destroy the coherent national character of education, locally administered, which was the sign of the 1944 Act. It will create administrative problems at local authority level and it will create problems for parents who do not get their choice and who do not have the brighter children who will be chosen for the more selective schools and perhaps for the assisted places scheme.
    The temptation will be for the voluntary sector to cream off at every level of the pyramid of prestige from the pukka private school at the top down through the direct grant grammar school to the voluntary maintained and controlled schools and then to the county schools at the bottom. That temptation will be intensified and some schools will have first pick of parents, pupils and teachers.
    The physical wounds inflicted by taking away the power to authorise payment for travel, meals and the provision of nursery schools may be healed. However, much deeper wounds will result from the "Boyson-Carlisle" Act. The Act will rip education apart at the seams—seams that were welded together by Lord Butler in 1944. It will disrupt the delicate tripod of a national service locally administered in partnership with the Churches and the voluntary organisations.
    The Act will be the work of an irresponsible Government who are ignorant about education in the maintained sector. I only hope that the Churches will act more responsibly in the

    1693
    way they use the freedoms that are now given to them.
    In 1943 the White Paper, Cmnd. 6458, produced by a Government elected in 1935 with a majority of 250, said:
    "It is just as important to achieve diversity as it is to ensure equality of educational opportunity. But such diversity must not impair the social unity within the educational system which will open the way to a more closely knit society and give us strength to face the tasks ahead."
    Unfortunately, this Bill will rend asunder what the 1944 Act created. It is not worthy of the House, and any hon. Member who votes for it will be undoing the work of the 1944 Government.
    11.22 pm
    Mr. John Wells: I support the Bill wholeheartedly. I believe that it is important that local authorities should be given greater discretion. I am fortunate that in my constituency we have been able to continue with our very good grammar schools during the difficult years that have just passed.
    I am delighted that the Secretary of State has brought forward a measure that will increase parental choice, and I welcome in particular the new appeals procedure. One of the difficult elements of constituency correspondence has concerned disappointed parents. In the past, all that one could do was to push them aside and hope for the best. I believe that the new appeals procedure will improve matters.
    I have one sad reservation about the Bill, however. I have no objection to clause 23 in principle, but I deplore the way in which my own county council set out to act before it had been given the power so to do. It jumped the gun by taking a public decision about what would be charged for school transport before it had authority to do so.
    I believe that my right hon. and learned Friend's amendment will be helpful to my constituents, but I fundamentally distrust the attitude of Kent county council, not only in respect of the Bill but in many other matters. However, I would incur the displeasure of the Chair if I were to stray towards those issues. The Kent county council has implemented school transport charges, asserting that it can make no other savings in education. Frankly, that is codswallop. I invite my right hon. and learned Friend to come
    1694
    to the Kent education authority headquarters on the coldest day of the year. He should bring his bikini, because the place is so overheated that it is a disgrace.
    The authority asserts that it has saved £600 on administration and that that is all that it can save. It organises special coaching for fencing, sailing, karate and other choice activities. The cost is about £100,000. The authority has managed to save only 20 per cent. in that direction. The Kent county councillors have behaved like ostriches with their heads in the sand. The House is right to trust local authorities, but—
    Mr. Brinton: Will my hon. Friend give way?
    Mr. Wells: I regret that I cannot give way to my hon. Friend the Member for Gravesend (Mr. Brinton). He is, of course, a Kent county councillor. He can defend himself in county hall. If I am allowed to finish my speech quickly, he may be fortunate and catch Mr. Speaker's eye.
    As a result of pressure from some of my Kentish hon. Friends, including my hon. Friend the Member for Gravesend, the Kent county councillor, on Saturday the Kent county council proposed some palliatives. However, they represent the least that can be done. I hope that all hon. Members representing Kent constituencies will continue to put pressure on the county council to honour not only the letter of the law but the spirit of the guidelines which have been set out clearly and well.
    11.27 pm
    Mr. Beith: The Secretary of State criticised Opposition Members for not placing our confidence and trust in the elected local education authorities. We have just heard the hon. Member for Maidstone (Mr. Wells) make a most searching criticism of a Conservative-controlled authority. The Secretary of State must now realise what the Bill means.
    This is a miserable Bill. It is the worst piece of general education legislation that the House has seen in more than 50 years. It contains an extremely damaging provision which will discriminate harshly and unfairly against children who, for good reason, must travel long distances to school. It will discriminate against rural

    1695
    children, Roman Catholic children and those who attend Welsh-speaking schools. The savings that it makes through those provisions and on school meals will result in a substantial injection of funds into the private education sector and the assisted places scheme. That scheme has been greeted with uncertainty by many involved in the private sector. It is seen as a divisive measure.
    The better provisions in the Bill are diminished by various deficiencies. The provision to reform the school governors and managers system is a mere token compared with the Taylor committee recommendations. The clauses dealing with admission and the reduction in the size of schools are hedged with an army of bureaucracy which is so extensive that before the Bill is on the statute book for long Government Members will join us in objecting to the amount of money that it will cost.
    The House will make a great mistake if it gives the Bill a Third Reading. A heavy price will be paid politically. My party will not pay. The Bill will be of benefit to my party because many Conservatives will feel bitterly betrayed by the Bill. I am not looking forward to that with as much enthusiasm as I would wish when I know that the sort of people I represent, those who are on low wages, will suffer most from the Bill's provisions.
    11.30 pm
    Mr. Canavan: I rise briefly to register my final protest against this disgraceful Bill. I said on Second Reading that we would fight the Bill to the bitter end, and it has proved to be a very bitterend indeed. The Secretary of State for Education and Science and the Secretary of State for Scotland—who, as usual, is not present to see the damage he is doing to Scottish schoolchildren—have made few, if any, concessions during the progress of the Bill. They are still hell-bent on depriving children of their legal rights to school meals, milk and transport, thereby hoping to save £252 million.
    The children who will suffer most from the Bill will be those in low income families, those living in rural areas and those attending denominational schools. Yet the Government have the brass neck to talk about parental choice. What they are doing is reducing whatever choice
    1696
    currently exists, especially the rights and opportunities of parents to send their children to denominational schools. That is a right which has existed in England and Wales since 1944 and in Scotland for more than quarter of a century before that. The 1918 Act in Scotland provided a more generous settlement than the church schools received in England and Wales. The Government are attacking the very spirit of the 1944 Act and the very spirit of the Education (Scotland) Act 1918. They are interfering with whatever freedom parents have to send their children to the school of their choice.
    While, on the one hand, they are cutting public expenditure by more than a quarter of a billion pounds, the Government are proposing to increase public expenditure on the other hand to promote their doctrinaire, divisive, nonsensical assisted places scheme for the fee-paying schools. The original figure of £55 million has, I understand, been somewhat reduced.
    I am pleased to see that we now have a Scottish Minister responsible for education present in the shape of the Under-Secretary of State for Scotland, the hon. Member for Edinburgh, North (Mr. Fletcher). Perhaps he will go one stage further than the Secretary of State for Education and Science and abandon completely any proposal to introduce an assisted places scheme in Scotland. There is no educational, moral or financial justification for it. The Government ought to be ashamed of themselves for cutting back on educational expenditure and redistributing what is left not to the children most in need but to a few privileged parents who want to buy extra privilege, real or imaginary, by sending their children to fee-paying schools. As a result, the needy children will be deprived of meals, milk and transport.
    Even some of the Government's supporters have doubts about these proposals. I hope that they will join us in the Lobby tonight to oppose what is one of the most disgusting, prejudiced and reactionary Education Bills since the birth of public education in this country. Any hon. Member who votes for the Third Reading ought to be thoroughly ashamed of himself.
    11.33 pm
    Mr. Andrew F. Bennett: For at least three years there has been a need for a major Education Act. Fourteen months ago the then Labour Government introduced a Bill which was a most disappointing measure. The only distinction of this measure is that it makes the mistakes of that Bill even worse and adds many more of its own.
    Let us examine the clauses. I believe that we shall find that, in years to come, the provision relating to governors will be found to be unsatisfactory. The Bill spends a great deal of time talking about who should be governors and little or no time in talking about their powers, duties and responsibilities. The Bill contains much reference to parental rights, which sounds good but will, in reality, serve only to raise parents' expectations, which will then be dashed.
    There are provisions relating to falling rolls, which are totally negative and offer little positive guidance to authorities. There is a good deal about which schools can be opened, or, more likely, closed, but there is little which gives parents the opportunity genuinely to participiate in decision-making. There is the assisted places scheme, which is educationally indefensible. It is an administrative nightmare and socially unjust. We have clauses dealing with meals, milk and transport. These represent a major attack in particular upon the working poor. Although the Tory Party talks a great deal about the poverty trap and its attempts to remove it, the Bill will make that trap much worse.
    The Bill is a gross insult to higher and further education. The new clause which has been added is a major blow to nursery education. We should do much more than simply attack the Bill. I should like my right hon. Friends to give clear undertakings that they will put the matter right at the first opportunity presented to them. I hope particularly that they will give firm undertakings that the assisted places scheme will be abolished—
    Mr. Flannery: The whole Bill withdrawn—that is what we want.
    Mr. Bennett: —and that there will be such changes in the assisted places, meals, milk and transport provisions as to ensure that we give genuine assistance to
    1698
    people in need, that there will be a major reform of higher education and that we will repair the damage which is being done to nursery education.
    11.36 pm
    Mr. Christopher Price: I shall not detain the House for more than a few seconds.
    I want to re-emphasise the point made by my hon. Friend the Member for Newham, South (Mr. Spearing).The transport, assisted places scheme, nursery education, meals and milk provisions of the Bill are the worst part, to such an extent that they undermine and almost reach the point of destroying the 1944 Act, which was a historic procedure in Britain for imposing notional standards of provision throughout the country. The Government decide to strip all that away for the phoney reason of giving local authorities so-called freedom without the funds to exercise that freedom. The fact that that is phoney is demonstrated by the protests we have had from local authorities right across the country, from Cornwall through Wakefield right up to Northumberland. It is quite clear that the Government's pretension that they are giving local authorities greater freedom and power is complete hypocrisy and utterly bogus and that they will live to regret this day. I believe that they will regret electorally the fact that they have introduced this poisonous Bill.
    11.37 pm
    Mr. Rees-Davies: It is time that somebody on the Conservative side of the House made it plain on Third Reading that the Government are right to take the view that there should be local democracy and that the local man knows best. [AN HON. MEMBER: "Council houses?"] That is a different issue. We shall debate the question of council house sales on another occasion, and on that issue, too, the Government are plainly right.
    I want to deal briefly with the interlocking matters of how the Government achieve a cut in expenditure by local authorities against a very difficult background. We in Kent thought it quite wrong to cut the pupil-teacher ratio. We thought it wrong to make other reductions in expenditure. So there were only two avenues left: one was to deal with school meals; the other was to deal with transport.

    1699
    It transpired that we could not deal with school meals this year. I personally favour an increase not only in school meals, but in mobile canteens and many other modern ways by which we can bring about more cheaply an improvement in the services to children through the provision of school meals. Be that as it may, it cannot be achieved this year. Therefore, we were forced to consider the question of transport charges. As regards those transport charges, it was absolutely essential to ensure, first, that the denominational schools and, secondly, the villages did not suffer.
    To achieve that for Kent and many other counties, now endorsed by the admirable amendment No. 134 moved by the Minister, we decided that it was essential to charge the same rate irrespective of distance, thereby protecting the denominational schools and the villages. It is essential to protect also the interests of large families. In Kent, only the first two children in a family will be charged.
    Kent is to introduce an assisted transport scheme to help reduce transport costs. The scheme will enable people to take their chilren to school and receive back the subsidy. It is a first-class idea. It is essential that Kent should give a lead in that area to ensure that we achieve a cut in the level of expenditure while at the same time retaining control. That has been almost achieved. I believe that the present proposals will be reduced further, and there will be a scheme in which a moderate charge—
    Mr. John Wells Mr. John Wells rose—
    Mr. Rees-Davies: —will be made that will be level for everybody. The advantage that we have in Kent, although not everybody agrees—
    Mr. John Wells: On a point of order, Mr. Deputy Speaker. My hon. and learned Friend keeps saying "we". I want to know who the "we" are. Had he had the courtesy to be in the Chamber when I was making my contribution, he would have found that, if he is including me in his "we", he is very mistaken.
    Mr. Rees-Davies: I was not including my hon. Friend, although I have the greatest respect for his views. Nor was
    1700
    I speaking for Kent as a whole. I am saying that a great number of Kent Members of Parliament, and those who represent the local authority, met together to discuss these matters.
    It is most important that it should be recognised that there is a solid, honest view on this side of the House that the Government are right to leave these matters to local authorities. Every Kent Member of Parliament is a Conservative. The overwhelming majority of those in Kent share my view that we should be able to accept and work out within the boundaries of Kent the future that we believe is right.
    The Government are right in the view that they have expressed, namely, that they believe in local democracy and in trusting local people. That is our stand, and in Kent we shall work towards that aim. In a short time there will be agreement in Kent across the board.
    11.45 pm
    Mr. Kinnock: I can scarcely contain myself awaiting the declaration of independence of the republic of Kent. I had always thought that a Tory split was something to do with personalities. However, I see that it is something to do with one of the South-Eastern counties. Anyway, that is for the Tories to resolve.
    In the meantime, we have to bid farewell, for the moment at least, to this misbegotten Bill. Certain elements, to which attention has been drawn in very able contributions by my hon. Friends—some of whom served on the Committee for the 100-plus hours of its deliberations—will command the continuing enmity of the Opposition and of a large section of the people in education and more widely in the general public. I speak of the divisive and totally unjustifiable attack that is being made on the maintained sector of education through the delusion of the assisted places scheme. I speak, too, of the way in which the Government have made no response to the plea from local authorities for changes in the appeals system.
    There and elsewhere we have seen an insularity that has been only slightly dented by the boldness of a few Tory Back Benchers in securing a minor amendment by the Government on the

    1701
    provision of a flat rate for school transport and accommodation for the eccentricity of the Oxford county council. They showed that they were prepared to break a law, bend a law and then invent a law to bring the brigadiers of Oxford within the law on the provision of nursery education.
    We have had an eventful few months, apart from the fact that we have managed to secure a general dispensation for councillors who are also parents to participate fully in decisions affecting their children's education and welfare in the schools.
    Mr. Mark Carlisle: Quite right.
    Mr. Kinnock: The right hon. and learned Gentleman says "Quite right." I am glad that he agrees with us. I only wish that the response from the Secretary of State for the Environment had been more alacritous. [Interruption.] However, his alacrity is probably retained and restrained entirely to his own self-advancement. If the hon. Gentleman on the Government Back Benches is not used to multi-syllabic words, I trust that he will make good his education, probably in consultation with the Under-Secretary of State, the hon. Member for Brent, North (Dr. Boyson).
    We have just heard from a loyal Tory Back Bencher that the theme and purpose of the Bill are the creation of extra local democracy. What we have is a synthetic form of devolution which commends itself to me much less than the actual form of devolution with which we were confronted last year. There is a great deal of talk about freedom and discretion and trust in judgment at local level. But on the matter of appeals, the assisted places scheme, the membership of governing bodies of schools, recoupment and new regulations affecting many areas of education, participation by the local education authorities is conscientiously and legalistically excluded.
    If anybody thinks that this is a major step forward for local democracy, he should do two things: first, read the Bill, and, secondly, talk to local councillors a year from now when they have been saddled with all the responsibilities of the idiocy of clauses 22, 23, 24 and 25, and much else, and are faced with an angry public who realise that they have
    1702
    been robbed of facilities and rights that they have had since 1944 and, however they voted on 3 May, did not expect to lose in their lifetime or the lifetime of their children.
    The Minister has this general commitment to local democracy. That is something of which I approve and which I applaud and would want to strengthen, and I share that opinion with my right hon. and hon. Friends. It may be that it will be more by accident than design that these disparities of treatment will arise from the application of the Bill.
    Some local education authorities will see the Bill as a challenge. They will try, might and main, to sustain levels of care and of provision by raising additional rates and by changing their policies. The people of Britain have come to expect and enjoy such levels as a right. Other local education authorities, such as Kent, will take full advantage of the Bill. They will desert their responsibilities to the children and students of Britain. As my hon. Friend the Member for Newham, South (Mr. Spearing) pointed out in his able contribution, such disparity will cause enmity.
    Perhaps the Bill's effects are unintentional. However, I am reminded of the words of Plutarch. He said that when boys kill frogs with stones, they laugh. However, the frogs still die. The Secretary of State may have introduced the Bill from the highest motivation. It fulfils the demands of the Tory Party's strongest ideology. I appreciate his directness and honestly. However, he has created a monster without realising the effect that it may have.
    Mr. Flannery Mr. Flannery rose—
    Mr. Kinnock: Our reaction is twofold. First, we shall continue the fight against the cuts, their effects and the doctrine behind them. Secondly, when we return to office we shall reverse much of the Bill. Specifically, we shall reverse the assisted places scheme in the academic year following that in which we are elected. We shall pursue—as we have since 1944—the aim of high national standards of provision and performance. The contest will be decided by the type of country and economy that exists when the Labour Party is returned to power.
    The country will be less capable of producing wealth than at any time since

    1703
    the war as a result of the Government's policies on coal, steel and many other industries. They have depressed business confidence. Money is too expensive for small business men to borrow. The Government have conspired at the industrial rot of Britain. The public sector will be impoverished and robbed by looters who take money in the form of tax bonuses. As a result, we shall have a mandate for radical Socialist change in education and in many other spheres.
    If Conservative Members do not realise the resentment and reaction that such policies cause, they do not understand the politics of Britain or the aspirations of its people. They do not understand that we shall secure freedom and high standards of provision only when Tory doctrine and the misleading nonsense preached by the Government have been replaced with the values, community spirit and the belief in the people that is characterised by the democratic Socialism of the Labour Party.
    11.54 pm
    Mr. Mark Carlisle: Having listened to the last few minutes of the speech of the hon. Member for Bedwellty (Mr. Kinnock), it surprises me that, according to my hon. Friend the Under-Secretary of State, most of the protracted Committee stage was carried out in complete amicability.
    Mr. Canavan: Never.
    Mr. Carlisle: When I hear the intervention of the hon. Member for West Stirlingshire (Mr. Canavan), I become even more surprised.
    Although the Bill had to be guillotined, it had a full and complete Committee stage. It has also had a full debate in the House. The Bill is important, but it is also highly controversial in parts. I shall not go over the arguments about meals and transport. The hon. Gentleman may not accept it, but the Government have accepted that there is a need to reduce expenditure. Regrettably, education cannot be excluded from that decision. I repeat what I said in the debate. Faced with the need to make reductions in expenditure, it is preferable to give wider opportunity to local authorities to make those cuts in school meal and milk subsidies than to cut in the classroom and reduce the pupil-teacher ratio.
    1704
    The hon. Gentleman appears to be defending to this day the frankly indefensible situation of a school meals system built up over 30 years, costing the taxpayer one-eighth of the education budget and yet of which less than 50 per cent. of children in secondary schools take advantage. I believe that substantial savings can be made.
    There are wider concepts in the Bill than merely the parts necessary to enable local authorities to make savings. It is also based on our determination to ensure that parents have a wider involvement in running schools and, for the first time, puts flesh and blood in the provision of the 1944 Act that parents should have a greater say about the school to which their child goes.
    It provides a preference for parents and a duty on local authorities to meet that preference. It does that realistically. It accepts that, in a period of falling rolls, there must be a right for local authorities to plan and that the right of a parent in the end cannot be absolute. It must be subject to the provision of education in the area but, nevertheless, should be as wide as possible in all the circumstances.
    Listening to the speeches from both sides, I am struck by the fact that we believe that the school system is there to provide for the child and to provide the opportunity for parents to educate their children. From many speeches from the Labour Benches, it would appear that the child is merely there to provide for the system of the school.
    I return finally to the other controversial issue—assisted places. The hon. Member for Bedwellty has throughout objected to the proposals, but the restoration of what used to exist through direct grant schools will widen the opportunity for many children in this country. All the provisions for parental choice and parental involvement will help improve the standard of education in the maintained sector.
    I am totally amazed at the suggestion of the hon. Member for Lewisham, West (Mr. Price) that this is an attack on the 1944 Act. It gives wider opportunities for parents to cross local authority boundaries in choosing schools and gives an opportunity to encourage church schools. The combination of the church school and maintained schools has always been a

    1705
    necessary part of the provision of education in this country and will continue to be so under the Act.
    If Labour Members are not prepared to come to grips with the reality of the need to reduce public expenditure, I do not believe that there is any chance that they will have the opportunity to repeal
    any part of the Bill. On the belief that the Bill assists in the provision of education and widens the opportunity of parents and children, I commend it to the House.
    Question put, That the Bill be now read the Third time:—
    The House divided: Ayes 305, Noes 241.

    Division No. 182]

    AYES

    [12 pm

    Adley, Robert

    Douglas-Hamilton, Lord James

    Irvine, Charles (Cheltenham)

    Aitken, Jonathan

    Dover, Denshore

    Jenkin, Rt Hon Patrick

    Alexander, Richard

    du Cann, Rt Hon Edward

    Johnson Smith, Geoffrey

    Alison, Michael

    Dunn, Robert (Dartford)

    Jopling, Rt Hon Michael

    Amery, Rt Hon Julian

    Durant, Tony

    Joseph, Rt Hon Sir Keith

    Ancram, Michael

    Eden, Rt Hon Sir John

    Kaberry, Sir Donald

    Arnold, Tom

    Edwards, Rt Hon N. (Pembroke)

    Kimball, Marcus

    Aspinwall, Jack

    Eggar, Timothy

    King, Rt Hon Tom

    Atkins, Rt Hon H. (Spelthorne)

    Elliott, Sir William

    Kitson, Sir Timothy

    Atkins, Robert (Preston North)

    Emery, Peter

    Knight, Mrs Jill

    Atkinson, David (B'mouth, East)

    Fairbairn, Nicholas

    Lamont, Norman

    Baker, Kenneth (St. Marylebone)

    Fairgrieve, Russell

    Lang, Ian

    Baker, Nicholas (North Dorset)

    Faith, Mrs Sheila

    Langford-Holt, Sir John

    Beaumont-Dark, Anthony

    Farr, John

    Latham, Michael

    Bell, Sir Ronald

    Fenner Mrs Peggy

    Lawrence, Ivan

    Bendall, Vivian

    Finsberg, Geoffrey

    Lee, John

    Benyon, Thomas (Abingdon)

    Fisher, Sir Nigel

    Lennox-Boyd, Hon Mark

    Benyon, W. (Buckingham)

    Fletcher, Alexander (Edinburgh N)

    Lester, Jim (Beeston)

    Best, Keith

    Fletcher-Cooke, Charles

    Lewis, Kenneth (Rutland)

    Bevan, David Gilroy

    Fookes, Miss Janet

    Lloyd, Ian (Havant & Waterloo)

    Biffen, Rt Hon John

    Forman, Nigel

    Lloyd, Peter (Fareham)

    Biggs-Davison, John

    Fowler, Rt Hon Norman

    Loveridge, John

    Blackburn, John

    Fox, Marcus

    Luce, Richard

    Blaker, Peter

    Fraser, Rt Hon H. (Stafford & St)

    Lyell, Nicholas

    Body, Richard

    Fraser, Peter (South Angus)

    McCrindle, Robert

    Bonsor, Sir Nicholas

    Gardiner George (Reigate)

    McCusker, H.

    Boscawen, Hon Robert

    Gardner, Edward (South Fylde)

    Macfarlane, Neil

    Bottomley, Peter (Woolwich West)

    Garel-Jones, Tristan

    MacGregor, John

    Bowden, Andrew

    Gilmour, Rt Hon Sir Ian

    MacKay, John (Argyll)

    Boyson, Dr Rhodes

    Glyn, Dr Alan

    McNair-Wilaon, Michael (Newbury)

    Braine, Sir Bernard

    Goodhart, Philip

    McNair-Wilson, Patrick (New Forest)

    Bright, Graham

    Goodlad, Alastair

    McQuarrie, Albert

    Brinton, Tim

    Gorst, John

    Madel, David

    Brittan, Leon

    Gow, Ian

    Major, John

    Brocklebank-Fowler, Christopher

    Gower, Sir Raymond

    Marland, Paul

    Brooke, Hon Peter

    Grant, Anthony (Harrow C)

    Marlow, Tony

    Brotherton, Michael

    Gray, Hamish

    Marshall, Michael (Arundel)

    Brown, Michael (Brigg & Sc'thorpe)

    Greenway, Harry

    Marten, Neil (Banbury)

    Browne, John (Winchester)

    Griffiths, Eldon (Bury St Edmunds)

    Mates, Michael

    Bruce-Gardyne, John

    Griffiths, Peter (Portsmouth N)

    Mather, Carol

    Bryan, Sir Paul

    Grist, Ian

    Maude, Rt Hon Angus

    Buchanan-Smith, Hon Alick

    Grylls, Michael

    Mawby, Ray

    Buck, Antony

    Gummer, John Selwyn

    Mawhlnney, Dr Brian

    Budgen, Nick

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

    Maxwell-Hyslop, Robin

    Bulmer, Esmond

    Hamilton, Michael (Salisbury)

    Mayhew, Patrick

    Butcher, John

    Hampson, Dr Keith

    Mellor, David

    Butler, Hon Adam

    Hannam, John

    Meyer, Sir Anthony

    Cadbury, Jocelyn

    Haselhurst, Alan

    Miller, Hal (Bromsgrove & Redditch)

    Carlisle, John (Luton West)

    Hastings, Stephen

    Mills, Iain (Meriden)

    Carlisle, Kenneth (Lincoln)

    Havers, Rt Hon Sir Michael

    Mills, Peter (West Devon)

    Carlisle, Rt Hon Mark (Runcorn)

    Hawksley, Warren

    Miscampbell, Norman

    Channon, Paul

    Hayhoe, Barney

    Mitchell, David (Basingstoke)

    Chapman, Sydney

    Heath, Rt Hon Edward

    Moate, Roger

    Clark, Hon Alan (Plymouth, Sutton)

    Heddle, John

    Molyneaux, James

    Clark, Sir William (Croydon South)

    Henderson, Barry

    Monro, Hector

    Clarke, Kenneth (Rushcliffe)

    Haseltlne, Rt Hon Michael

    Montgomery, Fergus

    Cockeram, Eric

    Higgins, Rt Hon Terence L.

    Moore, John

    Colvin, Michael

    Hill, James

    Morgan, Geraint

    Cope, John

    Hogg, Hon Douglas (Grantham)

    Morris, Michael (Northampton, Sth)

    Cormack, Patrick

    Holland, Philip (Carlton)

    Morrison, Hon Charles (Devizes)

    Corrie, John

    Hooson, Tom

    Morrison, Hon Peter (City of Chester)

    Costain, A. P.

    Hordern, Peter

    Mudd, David

    Cranborne, Viscount

    Howe, Rt Hon Sir Geoffrey

    Murphy, Christopher

    Critchley, Julian

    Howell, Rt Hon David (Guildford)

    Myles, David

    Crouch, David

    Howell, Ralph (North Norfolk)

    Neale, Gerrard

    Dean, Paul (North Somerset)

    Hunt, David (Wirral)

    Needham, Richard

    Dickens, Geoffrey

    Hunt, John (Ravensbourne)

    Nelson, Anthony

    Dorrell, Stephen

    Hurd, Hon Douglas

    Neubert, Michael

    Normanton, Tom

    Rost, Peter

    Thorne, Neil (Ilford South)

    Onslow, Cranley

    Royle, Sir Anthony

    Thornton, Malcoim

    Osborn, John

    Sainsbury, Hon Timothy

    Townend, John (Bridlington)

    Page, John (Harrow, West)

    St. John Stevas, Rt Hon Norman

    Townsend, Cyril D. (Bexleyheath)

    Page, Rt Hon Sir R. Graham

    Scott, Nicholas

    Trippier, David

    Page, Richard (SW Hertfordshire)

    Shaw, Giles (Pudsey)

    Trotter, Neville

    Parkinson, Cecil

    Shelton, William (Streatham)

    van Straubenzee, W. R.

    Parris, Matthew

    Shepherd, Richard (Aldridge-Br'hills)

    Vaughan, Dr Gerard

    Patten, Christopher (Bath)

    Shersby, Michael

    Viggers, Peter

    Patten, John (Oxford)

    Silvester, Fred

    Waddington, David

    Pattie, Geoffrey

    Sims, Roger

    Wakeham, John

    Pawsey, James

    Skeet, T. H. H.

    Waldegrave, Hon William

    Percival, Sir Ian

    Smith, Dudley (War. and Leam'ton)

    Walker, Rt Hon Peter (Worcester)

    Peyton, Rt Hon John

    Speed, Keith

    Walker, Bill (Perth & E Perthshire)

    Pink, R. Bonner

    Speller, Tony

    Waller, Gary

    Pollock, Alexander

    Spence, John

    Walters, Dennis

    Porter, George

    Spicer, Jim (West Dorset)

    Ward, John

    Powell, Rt Hon J. Enoch (S Down)

    Spicer, Michael (S Worcestershire)

    Warren, Kenneth

    Price, David (Eastleigh)

    Sproat, Iain

    Watson, John

    Prior, Rt Hon James

    Squire, Robin

    Wells, John (Maidstone)

    Proctor, K. Harvey

    Stainton, Keith

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

    Pym, Rt Hon Francis

    Stanbrook, Ivor

    Wheeler, John

    Raison, Timothy

    Stanley, John

    Whitelaw, Rt Hon William

    Rathbone, Tim

    Steen, Anthony

    Whitney, Raymond

    Rees, Peter (Dover and Deal)

    Stevens, Martin

    Wickenden, Keith

    Rees, Davies, W. R.

    Stewart, Ian (Hitchin)

    Wiggin, Jerry

    Renton, Tim

    Stewart, John (East Renfrewshire)

    Wilkinson, John

    Rhodes James, Robert

    Stokes, John

    Winterton, Nicholas

    Rhys Williams, Sir Brandon

    Stradling Thomas, J.

    Wolfson, Mark

    Ridley, Hon Nicholas

    Tapsell, peter

    Young, Sir George (Acton)

    Ridsdale, Julian

    Taylor, Robert (Croydon NW)

    Younger, Rt Hon George

    Rifkind, Malcolm

    Tebbit, Norman

    Roberts, Wyn (Conway)

    Temple-Morris, peter

    TELLERS FOR THE AYES:

    Ross, Wm. (Londonderry)

    Thatcher, Rt Hon Mrs Margaret

    Mr. Spencer Le Marchant and Mr. Anthony Berry.

    Rossl, Hugh

    Thompson, Donald

    NOES

    Adams, Allen

    Davidson, Arthur

    Hart, Rt Hon Dame Judith

    Allaun, Frank

    Davies, Rt Hon Denzil (Llanelli)

    Hattersley, Rt Hon Roy

    Alton, David

    Davies, Ifor (Gower)

    Haynes, Frank

    Anderson, Donald

    Davis, Clinton (Hackney Central)

    Healey, Rt Hon Denis

    Archer, Rt Hon Peter

    Deakins, Eric

    Heffer, Eric S.

    Armstrong, Rl Hon Ernest

    Dean, Joseph (Leeds West)

    Hogg, Norman (E Dunbartonshire)

    Ashton, Joe

    Dempsey, James

    Holland, Stuart (L'beth, Vauxhall)

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

    Dewar, Donald

    Home Robertson, John

    Barnett, Guy (Greenwich)

    Dixon, Donald

    Homewood, William

    Barnett, Rt Hon Joel (Heywood)

    Dobson, Frank

    Hooley, Frank

    Beith, A. J.

    Dormand, Jack

    Horam, John

    Benn, Rt Hon Anthony Wedgwood

    Douglas, Dick

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

    Bennett, Andrew (Stockport N)

    Douglas-Mann, Bruce

    Howells, Geraint

    Bidwell, Sydney

    Dubs, Alfred

    Hughes, Mark (Durham)

    Booth, Rt Hon Albert

    Duffy, A. E. P.

    Hughes, Robert (Aberdeen North)

    Boothroyd, Miss Betty

    Dunn, James A. (Liverpool, Kirkdale)

    Hughes, Roy (Newport)

    Bottomley, Rt Hon Arthur (M'brough)

    Dunnett, Jack

    Janner, Hon Greville

    Bradley, Tom

    Dunwoody, Mrs Gwyneth

    Jay, Rt Hon Douglas

    Bray, Dr Jeremy

    Eadie, Alex

    John, Brynmor

    Brown, Hugh D. (Provan)

    Eastham, Ken

    Johnston, Russell (Iverness)

    Brown, Robert C. (Newcastle W)

    Ellis, Raymond (NE Derbyshire)

    Jones, Rt Hon Alec (Rhondda)

    Brown, Ronald W. (Hackney S)

    Ellis, Tom (Wrexham)

    Jones, Barry (East Flint)

    Brown, Ron (Edinburgh, Leith)

    English, Michael

    Jones, Dan (Burnley)

    Buchan, Norman

    Evans, Ioan (Aberdare)

    Kaufman, Rt Hon Gerald

    Callaghan, Rt Hon J. (Cardiff SE)

    Evans, John (Newton)

    Kerr, Russell

    Callaghan, Jim (Middleton & P)

    Ewing, Harry

    Kilroy-Silk, Robert

    Campbell, Ian

    Fitch, Alan

    Kinnock, Neil

    Campbell-Savours, Dale

    Flannery, Martin

    Lamble, David

    Canavan, Dennis

    Fletcher, Ted (Darlington)

    Lamborn, Harry

    Cant, R. B.

    Foot, Rt Hon Michael

    Lamond, James

    Carmichael, Neil

    Forrester, John

    Leadbltter, Ted

    Carter-Jones, Lewis

    Foster, Derek

    Leighton, Ronald

    Cartwright, John

    Foulkes, George

    Lestor, Miss Joan (Eton & Slough)

    Clark, Dr David (South Shields)

    Freud, Clement

    Lewis, Arthur (Newham North West)

    Cocks, Rt Hon Michael (Bristol S)

    Garrett, John (Norwich S)

    Lewis, Ron (Carlisle)

    Cohen, Stanley

    Garrett, W. E. (Wallsend)

    Litherland, Robert

    Coleman, Donald

    George, Bruce

    Lofthouse, Geoffrey

    Concannon, Rt Hon J. D.

    Gilbert, Rt Hon Dr John

    Lyon, Alexander (York)

    Contan, Bernard

    Ginsburg, David

    Lyons, Edward (Bradford West)

    Cook, Robin F.

    Gotding, John

    Mabon, Rt Hon Dr J. Dickson

    Cowans, Harry

    Gourlay, Harry

    McCartney, Hugh

    Cralgen, J. M. (Glasgow, Maryhill)

    Graham, Ted

    McDonald, Dr Oonagh

    Crowther, J. S.

    Grant, George (Morpeth)

    McElhone, Frank

    Cryer, Bob

    Grant, John (Islington C)

    McKay, Allen (Penistone)

    Cunliffe, Lawrence

    Hamilton, James (Bothwell)

    McKelvey, William

    Cunningham, George (Islington S)

    Hamilton, W. W. (Central Fife)

    MacKenzie, Rt Hon Gregor

    Dalyell, Tarn

    Harrison, Rt Hon Walter

    Maclennan, Robert

    1708

    1709

    McMahon, Andrew

    Prescott, John

    Summerskill, Hon Dr Shirley

    McMillan, Tom (Glasgow, Central)

    Price, Christopher (Lewisham West)

    Taylor, Mrs Ann (Bolton West)

    Magee, Bryan

    Race, Reg

    Thomas, Dafydd (Merioneth)

    Marks, Kenneth

    Radics, Giles

    Thomas, Jeffrey (Abertillery)

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

    Rees, Rt Hon Merlyn (Leeds South)

    Thomas, Mike (Newcastle East)

    Marshall, Dr Edmund (Goole)

    Roberts, Ernest (Hackney North)

    Thomas, Dr Roger (Carmarthen)

    Marshall, Jim (Leicester South)

    Roberts, Gwilym (Cannock)

    Thorne, Stan (Preston South)

    Martin, Michael (Gl'gow, Springb'rn)

    Robertson, George

    Tilley, John

    Mason, Rt Hon Roy

    Robinson, Geoffrey (Coventry NW)

    Tinn, James

    Maxton, John

    Rodgers, Rt Hon William

    Torney, Tom

    Maynard, Miss Joan

    Rooker, J. W.

    Urwin, Rt Hon Tom

    Meacher, Michael

    Ross, Ernest (Dundee West)

    Varley, Rt Hon Eric G.

    Mellish, Rt Hon Robert

    Rowlands, Ted

    Wainwright, Edwin (Dearne Valley)

    Mikardo, Ian

    Ryman, John

    Walker, Rt Hon Harold (Doncaster)

    Millan, Rt Hon Bruce

    Sandelson, Neville

    Weetch, Ken

    Miller, Dr M. S. (East Kilbride)

    Sever, John

    Wellbeloved, James

    Mitchell, Austin (Grimsby)

    Sheerman, Barry

    Welsh, Michael

    Mitchell, R. C. (Soton, Itchen)

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

    White, Frank R. (Bury & Radcliffe)

    Morris, Rt Hon Alfred (Wythenshawe)

    Shore, Rt Hon Peter (Step and Pop)

    White, James (Glasgow, Pollok)

    Morris, Rt Hon Charles (Openshaw)

    Short, Mrs Renée

    Whitehead, Phillip

    Morris, Rt Hon John (Aberavon)

    Silkin, Rt Hon John (Deptford)

    Whitlock, William

    Moyle, Rt Hon Roland

    Silkin, Rt Hon S. C. (Dulwich)

    Wigley, Dafydd

    Mulley, Rt Hon Frederick

    Silverman, Julius

    Willey, Rt Hon Frederick

    Newens, Stanley

    Smith, Cyril (Rochdale)

    Williams, Rt Hon Alan (Swansea W)

    Oakes, Rt Hon Gordon

    Smith, Rt Hon J. (North Lanarkshire)

    Wilson, Gordon (Dundee East)

    Ogden, Eric

    Snape, peter

    Wilson, Rt Hon Sir Harold (Huyton)

    O'Halloran, Michael

    Soley, Clive

    Wilson, William (Coventry SE)

    O'Neill, Martin

    Spearing, Nigel

    Winnick, David

    Owen, Rt Hon Dr David

    Spriggs, Leslie

    Woodall, Alec

    Palmer, Arthur

    Steel, Rt Hon David

    Wrigglesworth, Ian

    Park, George

    Stewart, Rt Hon Donald (W Isles)

    Young, David (Bolton East)

    Parry, Robert

    Stoddart, David

    Pavltt, Laurie

    Stott, Roger

    TELLERS FOR THE NOES:

    Penhaligon, David

    Strang, Gavin

    Mr. George Morton and Mr. Terry Davis.

    Powell, Raymond (Ogmore)

    Straw, Jack

    Question accordingly agreed to.
    Bill read the Third time and passed.

C. AND T. HARRIS LTD., CALNE
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Le Marchant.]
12.12 am
Mr. Richard Needham: I welcome this opportunity to bring before the House the problems that the people of Caine face at the moment, when 450 of them have been made redundant at the factory of C. and T. Harris.
Perhaps it would help my hon. Friend if for a minute I went into the background of the problem that the bacon pig industry is facing. Much of it results from the period of office of the previous Administration when so much harm was done to the bacon industry by the failure to revalue the green pound and the problems caused by the MCA system.
As long ago as 1977, the industry was facing dire problems because of the losses that it was suffering. One of the directors of the company wrote at that time to my predecessor, Mr. Awdry:
"The grossly unfair distortions caused by the pigmeat—green pound problem effectively subsidise imported bacon and ham into this
1710
country, particularly from Denmark and Holland, by approximately 30 per cent. This has been going on to varying degrees for nearly three years and has so debilitated our entire industry that its future is in grave jeopardy. The plight of the processors was overtaken during the summer of 1976 by a producers' flight from pigs."
Flying pigs!
"The resulting decimation of our pig herd now means that the hard-pressed processors are having to pay substantially more for their pigs whilst their end product is depressed by unfair subsidised competition from Europe."
The problems caused by the actions of the previous Administration have meant that the level of investment has not been maintained. The gross margin on a pig coming in from Denmark over the past four or five years was £356, while on our pigs it was £232.
My hon. Friend the Minister who is to reply may say that perhaps the marketing of some pigmeat products and even the quality were not all that might have been desired, but it is hard to see how the industry could have done that much better when the unfair competition that it had to face as a result of the actions of Labour right hon. and hon. Members did such harm to the industry. With respect to the right hon. Member for Wakefield (Mr. Harrison), perhaps I should not have referred to him in the plural, as he is the only Labour Member in the Chamber.

1711
Our share of the market has dropped from 37·7 per cent. in 1976 to 32·2 per cent. now. The problems caused by the failure to revalue the green pound have made it difficult for the industry to keep up investment and productivity.
I am glad that the present Government have done almost everything to put that right and we no longer have problems with the industry facing unfair competition from Europe and Ireland. However, there are two caveats to that. The high level of inflation, coupled with a strong pound, does not make matters easy, and nor do high interest rates, particularly when the industry has not had the profitability, and, therefore, the reserves, to allow it to replace and renew.
As a result, C. and T. Harris has had to rationalise as much as possible and has had to lay off half the work force of a company that is 200 years old and one of the oldest bacon industries in Europe, with a long and proud history in Calne.
We face two problems. The first is the 450 people who have lost their jobs. I urge the Minister to do what he can to ensure that those people are offered retraining facilities. At present there are 259 people out of work in the town and 237 vacancies. That indicates some mismatch in Caine, and I believe that much of it is caused by the problem of fixing training to meet needs. With another 450 people coming on to the job market, it is important that we find how the mismatch can be put right.
I also ask the Minister to look particularly at the problems of the middle aged and those over 50, who may have worked for a company for many years and who find it difficult to get jobs, particularly in rural areas where there is not a great deal of alternative employment. After last year's redundancies in the town, there are still many people who have not found jobs.
Mr. Tristan Garel-Jones: I have listened with interest to my hon. Friend's tale of how the Labour Party has, in a sense, been the enemy of the British pig industry. I am sure that my hon. Friend's constituents will wish to know that my right hon. Friend the Prime Minister is in the Chamber to hear the important points being put on their behalf by my hon. Friend.
Mr. Needham: I thank my hon. Friend. The people of Caine will be greatly honoured to know that the Prime Minister is here to listen to the problems that they face. Not only is she here today, but she is to honour us with a visit on Friday. We are therefore doubly blessed. It will give a tremendous boost to the people of Caine to know that the Government are taking an interest, and it will also put the town on the map. It is important to encourage people to come to Caine, which can offer so much. In terms of communications, it is only one and-a-half hours from Exeter, Birmingham and London. It will be a great help, even at 70 miles an hour, for the people of Caine to know the interest that the Government are showing.
Reverting to the people who are out of work, I should like to indicate that the problem affects not only those who will find difficulty getting new work. There are also those in the villages who will no longer have transport previously provided by the company to take them to work. This indicates the size of the impact on rural areas when an industry in a town is decimated. I hope that my hon. Friend will be able to announce a study into the problem to ensure the right answer.
We need to create new industry in the area. There is land available that the North Wiltshire district council would like to bring forward. No private developer has yet been found. But it would help if the council could bring forward the infrastructure, not on a speculative basis at the ratepayers' expense but only if people wish to start factories in Caine. There is reason to suppose that this desire exists.
One problem is that local councils also wish to bring forward land in Malmesbury, Crickland and Wootton Bassett and surrounding towns. If resources are switched to Caine, it means that resources, jobs, and industries wanting to go elsewhere will have to wait.
I now turn to the question of the remaining 450 jobs. There is need for the company to rationalise itself and for the work force to get together with management to improve productivity. Equally, the management invested £300,000 in a slaughterhouse last year but closed it three weeks later. There has been a history of decisions that might have been

1713
better made. I hope that that situation is now behind us and that the management and the work force can get the plant going again. The board of FMC has said that, provided the company can break even, it wishes to build a modern, purpose-built plant in Caine capable of matching the best in Europe.
Because of events in the past and because money is not available, it is difficult to find the finance for the plant. I expect that my hon. Friend will be able to give me only a hope and a prayer, but soon, I hope, the climate will have changed and the company will be able to proceed with the new factory.
If we cannot produce sausages and bacon in Wiltshire, it is a sad day for Britain. I trust that this will be the final act of the saga and that we can look forward to a better atmosphere in which to work and compete so that in five or ten years Caine will once again be the booming bacon town of Britain. I hope that my hon. Friend will be able to announce some hopeful, practical and positive Government plans for providing alternative work for those unable to find jobs in the bacon industry.
12.25 am
The Under-Secretary of State for Employment (Mr. Jim Lester): I congratulate my hon. Friend the Member for Chippenham (Mr. Needham) on having the good fortune to secure this Adjournment debate. I also congratulate him on the measure of support that he has generated among his hon. Friends. It is the second best Adjournment debate in which I have spoken, and it is only the second one to which I have had the good fortune to reply.
Of course, the presence of my right hon. Friend the Prime Miniser is a first for an Adjournment debate. The fact that my right hon. Friend is visiting my hon. Friend's constituency this week makes it a double blessing, although I suspect that there may be some relationship between the two events.
I share my hon. Friend's considerable anxiety at the effect that the proposed redundancies at C. and T. Harris will have, not only on those who will lose their jobs but on the general employment situation in the Chippenham area. As my hon. Friend well knows, the FMC Group, to which C. and T. Harris belongs, is not
1714
alone in having to carry out rationalisation. Other bacon and pigmeat produce manufacturers have been under the same pressures. Their problems have largely arisen from the unfairly high level of monetary compensatory amounts paid in the past on imports of bacon and pigmeat products from other EEC countries.
Our industry has, on the one hand, had to pay relatively high prices for top-quality pig carcases and, on the other hand, it has been unable to sell bacon and other pigmeat products in competition with subsidised imports at prices which would give a reasonable return on investment. Low profit levels have led to a lack of investment in modern plant and buildings.
The Government came to power pledged to abolish the heavy burden of negative MCAs within the lifetime of the present Parliament. With three green pound devaluations in eight months, my right hon. Friend the Minister of Agriculture, Fisheries and Food has already achieved what he promised to do in five years. He has negotiated devaluations in the green pound which, with the strengthening of sterling, have led to reductions in the United Kingdom MCAs on bacon and pigmeat to nil. There are no longer highly subsidised imports, and home production now faces fair competition. My right hon. Friend is to be congratulated.
But it has long been recognised that even if MCA reductions could be achieved the industry would still have to face strong competition from, in particular, Danish bacon, which has established a reputation for quality and consistency. Well over a year ago, the sector working group of the Economic Development Committee for Food and Drink Manufacturing reported that
"United Kingdom bacon processors must without delay take positive action to improve the quality, marketing, distribution and promotion of its products if the industry is to maintain its present share of the home market, let alone gain a larger share"
The industry itself recognises that its marketing compares unfavourably with that of its competitors and I understand it is in the process of reviewing its marketing strategy in an attempt to put itself on equal terms. I am afraid that some rationalisation and readjustment in the industry are inevitable; and it is up

1715
to individual companies to decide how to go about that.
I am only too well aware that none of this offers much comfort to those at C. and T. Harris who are about to lose their jobs. It is not for me to underestimate the effects of unemployment and redundancy. To the individuals concerned and to their families, it is a very distressing experience. But I can assure my hon. Friend and those at the firm who face this prospect that my Department and the Manpower Services Commission will do everything we can to find them new jobs or retraining.
The management at C. and T. Harris has said that it is anxious to co-operate fully with us. A mini jobcentre, with vacancy display facilities, has already been set up on the firm's premises. Two of our employment advisers have been working there full time since last Monday and will stay on as long as necessary. I understand that all the employees who are to be made redundant have been told about these arrangements. The Chippenham jobcentre manager and a representative from the unemployment benefit office have been at the firm since yesterday and will remain there for the rest of the week to offer any help they can to the employees concerned.
In addition, the training services division of the Manpower Services Commission is standing by to see what it can do. It is early days yet, of course, and we are still in the process of finding out from the employees concerned what their needs are. Training opportunities advisers will be available, however, to interview redundant workers and to give them guidance on the training opportunities available.
The nearest skill centre is at Swindon, where 128 places are available for 12 courses, two in construction trades and the remainder in engineering skills.
Mr. Needham: My hon. Friend will appreciate that one of the problems we face in the area is that the skillcentres are at Swindon and Chippenham. Swindon is 15 miles away and Chippenham is seven or eight miles away, and it is not easy to get there as a result of the problems we are experiencing with transport. Can my hon. Friend give any indication of how that particular problem can be got round?
Mr. Lester: I can assure my hon. Friend that there are arrangements for taking people to skillcentres. But if there is a particular problem and special circumstances we shall look at them.
Mr. Nigel Spearing: The House will know that everybody has sympathy with the plight of the people of Caine, but does the hon. Gentleman agree that the Prime Minister's visit on Friday will not save the bacon? The only way to save the British bacon market is to get out of the Common Market.
Mr. Lester: What I am sure of is that the Prime Minister's visit to Caine will draw attention to English bacon and, it is hoped, will do the industry some good in marketing.
Places are also provided for Government-sponsored trainees on a variety of courses, mostly secretarial and clerical, at local colleges of further education, including Chippenham technical college. But the TSD has assured me that it will consider laying on special courses for retraining the redundant workers if these are needed.
As for the future employment prospects for the redundant workers, it is difficult to be very precise until we have more details of the people concerned, their skills, the type of jobs they want and the area in which they live. From the information we have so far received, we know that the redundant workers travel to Caine from quite a wide area. This will obviously make it somewhat easier for them to find new jobs. I am told that a large number are skilled or semiskilled, which, again, is an obvious advantage in the current employment situation. And I believe that some will probably want only part-time work.
Following the publicity about the redundancies organised by the Chippenham jobcentre, a number of local food firms have already expressed an interest in taking on redundant workers from C. and T. Harris. About 100 suitable vacancies have been notified within the last 48 hours, and there are currently over 300 other unfilled vacancies which have been notified to our Chippenham office. They are in a wide range of occupations, some in food processing, some in the service industries and others in electrical engineering and construction. Some are for part-time work, others are suitable

1717
for school leavers and young people; and we must remember that the vacancies notified to our offices are probably only about one-third of the total number of vacancies available.
In the longer term, I understand that there is the prospect of at least 350 new jobs in the Chippenham area over the next year or so arising out of new developments and expansions which are known to be taking place. We must not lose sight of the fact that the Chippenham area is in a relatively better position than many areas. The whole of this part of Wiltshire has traditionally had below-average levels of unemployment, and that is the case today.
In saying all this about the job opportunities that are available in the area, I do not want to give the impression that I underestimate the problems facing the redundant workers. Nor do I want to suggest that the future will be all plain sailing for them or for the area in general. I recognise that some of those who are made redundant will find it difficult to get other jobs. But I hope those employees at C. and T. Harris who view the future with anxiety will take heart if I point out that, despite high levels of unemployment, jobs seem to be available, although the opportunities are not as evenly spread as we would like.
It is a fact that most unemployed people are able to find jobs reasonably quickly. I urge the people at C. and T. Harris not to delay in seeking the help of
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the employment service and to be as flexible as they possibly can in the type of jobs they will take and the area in which they are prepared to work.
We live in an age of rapid industrial change, and it is a fact of industrial life that the labour forces of firms and enterprises will vary from year to year as the demand for their goods and services changes. In the process many people will be forced to change jobs. It is no good blinking at this fact. It is worse than useless to attempt to freeze the pattern of employment rigidly by opposing all closures, all restructuring and all redundancies.
My hon. Friend mentioned land in Caine available for new industry. I will draw the attention of the Departments of the Environment and Industry to that fact, because such development is clearly part of our overall philosophy. The Government believe—and I am sure that my hon. Friend will support me on this—that the only way to find a lasting solution to the problems of unemployment is to improve our industrial performance so that our industries are competitive in the trading community. That is the basis for providing more permanent jobs in Caine, Chippenham and elsewhere in the country. This is what the Government's economic policies are all about.
Question put and agreed to.
Adjourned accordingly at twenty-five minutes to One o'clock.

ENERGY
  British Gas Corporation
  British Gas Corporation
  Gas and Electricity Sales
  Gas and Electricity Sales
  Gas Diesel Oil
  Gas Diesel Oil
  Oil Costs
  Oil Costs
  North Sea Oil
  North Sea Oil
  National Coal Board (Interest Payments)
  National Coal Board (Interest Payments)
  British National Oil Corporation
  British National Oil Corporation
  Radio Chemical Centre
  Radio Chemical Centre
  Coal Industry Tripartite Group
  Coal Industry Tripartite Group
HOME DEPARTMENT
  Police (Complaints)
  Police (Complaints)
  Immigration
  Immigration
  Metropolitan Police (Doctors)
  Metropolitan Police (Doctors)
  Crimes of Violence (Newham)
  Crimes of Violence (Newham)
  London Taxi-cabs (Charges)
  London Taxi-cabs (Charges)
  Prison Officers
  Prison Officers
  Prisoners (Food Cost Allowance)
  Prisoners (Food Cost Allowance)
  Urban Development Corporations (Merseyside and London)
  Urban Development Corporations (Merseyside and London)
  Nationality and Citizenship
  Nationality and Citizenship
  Vagrancy
  Vagrancy
  Canterbury Prison
  Canterbury Prison
DEFENCE
  Royal Yacht "Britannia"
  Royal Yacht "Britannia"
  Service Yachts
  Service Yachts
EDUCATION AND SCIENCE
  Overseas Students
  Overseas Students
  Dyslexia
  Dyslexia
  Shop Steward Training
  Shop Steward Training
  Cash Limits
  Cash Limits
TRADE
  Manufactured Imports
  Manufactured Imports
  Limited Companies
  Limited Companies
  Maritime Accidents
  Maritime Accidents
  Textiles
  Textiles
  Export and Shipbuilding Credit Scheme
  Export and Shipbuilding Credit Scheme
OVERSEAS DEVELOPMENT
  Bangladesh
  Bangladesh
  Afghanistan (Refugees)
  Afghanistan (Refugees)
  Malawi
  Malawi
  Zambia
  Zambia
  Overseas Development Administration (Budget)
  Overseas Development Administration (Budget)
  Technical Co-operation Awards
  Technical Co-operation Awards
NORTHERN IRELAND
  Electricity
  Electricity
  European Community Budget
  European Community Budget
  Management Consultants
  Management Consultants
  Constitutional Conference
  Constitutional Conference
EMPLOYMENT
  Skillcentres
  Skillcentres
  Unemployed Persons
  Unemployed Persons
  Steel
  Steel
  Barker and Dobsons, Liverpool
  Barker and Dobsons, Liverpool
  Leicestershire Careers Service
  Leicestershire Careers Service
  TOPS Courses
  TOPS Courses
  Unfair Dismissals (Compensation)
  Unfair Dismissals (Compensation)
  Race Relations Employment Advisory Group
  Race Relations Employment Advisory Group
  Homeworking Advisory Committee
  Homeworking Advisory Committee
  Standing Commission on Pay Comparability
  Standing Commission on Pay Comparability
  Wages Inspectorate
  Wages Inspectorate
  Health and Safety Executive
  Health and Safety Executive
  Royal Liverpool Hospital
  Royal Liverpool Hospital
  Retail Trades Councils
  Retail Trades Councils
  Disabled Persons
  Disabled Persons
  Low Pay
  Low Pay
  Redundancies
  Redundancies
  Textiles
  Textiles
  Network and Actions Campaigns
  Network and Actions Campaigns
INDUSTRY
  Steel Closures
  Steel Closures
  Corby
  Corby
  Manufacturing Industry
  Manufacturing Industry
AGRICULTURE, FISHERIES AND FOOD
  Sugar
  Sugar
  Biotechnology (Spinks Report)
  Biotechnology (Spinks Report)
  Herring
  Herring
  Herbicide 2,4,5-T
  Herbicide 2,4,5-T
  Dog Licences
  Dog Licences
  Deer Antlers
  Deer Antlers
  Vegetables
  Vegetables
  Agricultural Training Board
  Agricultural Training Board
WALES
  Local Government, Planning and Land (No. 2) Bill
  Local Government, Planning and Land (No. 2) Bill
  USSR (OFFICIAL DELEGATES)
  USSR (OFFICIAL DELEGATES)
FOREIGN AND COMMONWEALTH AFFAIRS
  Cyprus
  Cyprus
  Lebanon
  Lebanon
  Rhodesia
  Rhodesia
  Middle East
  Middle East
  South-West Asia
  South-West Asia
  Turkey
  Turkey
  Cuba
  Cuba
  Chile
  Chile
  Pakistan
  Pakistan
  Diego Garcia
  Diego Garcia
  East Timor
  East Timor
  Detente
  Detente
  Albania
  Albania
  Madrid Review Conference
  Madrid Review Conference
  Dumisco Ndabangwa
  Dumisco Ndabangwa
  Straits of Hormuz
  Straits of Hormuz
  Soviet Embassy (Travel Restrictions)
  Soviet Embassy (Travel Restrictions)
  British Embassies (Travel Restrictions)
  British Embassies (Travel Restrictions)
  Commonwealth Relationships
  Commonwealth Relationships
EUROPEAN COMMUNITY
  Community Budget
  Community Budget
  Council of Foreign Ministers
  Council of Foreign Ministers
  Turkey
  Turkey
NATIONAL FINANCE
  Public Sector Borrowing Requirement
  Public Sector Borrowing Requirement
  Private Health Insurance
  Private Health Insurance
  Expenditure
  Expenditure
  Nationalised Industries
  Nationalised Industries
  Imports-Exports
  Imports-Exports
  Taxation (Delayed Payments)
  Taxation (Delayed Payments)
  Average Male Earnings
  Average Male Earnings
  Economic Policies (Assessment)
  Economic Policies (Assessment)
  National Savings Stock Register
  National Savings Stock Register
  Value Added Tax
  Value Added Tax
  Bank Lending
  Bank Lending
  British Steel Corporation(Borrowings)
  British Steel Corporation(Borrowings)
  National Loans Fund (Lending Policy)
  National Loans Fund (Lending Policy)
  Taxes and Duties
  Taxes and Duties
  Income Tax (Personal Allowances)
  Income Tax (Personal Allowances)
  Imports (Country of Origin Documentation)
  Imports (Country of Origin Documentation)
  Coinage
  Coinage
  Northern Ireland (European Community Grant Aid)
  Northern Ireland (European Community Grant Aid)
  Petroleum Prices
  Petroleum Prices
  Public Sector Assets
  Public Sector Assets
  National Savings Stock Register
  National Savings Stock Register
SCOTLAND
  Bickford Lodge Maternity Hospital
  Bickford Lodge Maternity Hospital
  Land Census
  Land Census
  Second Homes
  Second Homes
  Employment Rehabilitation Centre, Dundee
  Employment Rehabilitation Centre, Dundee
  Unemployed Persons
  Unemployed Persons
  Land (Ownership)
  Land (Ownership)
  Mental Health Services
  Mental Health Services
  Rent Allowances and Rebates
  Rent Allowances and Rebates
  Elderly Persons
  Elderly Persons
  Unemployed Persons (Peterhead)
  Unemployed Persons (Peterhead)
  Steel Dispute (Pickets)
  Steel Dispute (Pickets)
  Newsprint Mill (Fort William)
  Newsprint Mill (Fort William)
SOCIAL SERVICES
  Steel Dispute (Supplementary Benefit)
  Steel Dispute (Supplementary Benefit)
  Cash Limits
  Cash Limits
  Rhodesia (Reciprocal Arrangements)
  Rhodesia (Reciprocal Arrangements)
  Drug Therapy
  Drug Therapy
  Residential Homes (Heating)
  Residential Homes (Heating)
  Expenditure
  Expenditure
  Industrial Disputes(Benefits)
  Industrial Disputes(Benefits)
  Breast Cancer
  Breast Cancer
  Depo Provera
  Depo Provera
  Drugs
  Drugs
  Debendox
  Debendox
  Radiographers (Pay)
  Radiographers (Pay)
  Dental Services
  Dental Services
  Elderly Persons (Hypothermia)
  Elderly Persons (Hypothermia)
  National Health Service (Disputes Procedure)
  National Health Service (Disputes Procedure)
  Hospital Building
  Hospital Building
  Royal Liverpool Hospital
  Royal Liverpool Hospital
Retirement Pension
  (Earnings Rule)
  (Earnings Rule)
  Benefits (Fraud and Abuse)
  Benefits (Fraud and Abuse)
  King's College Hospital (Heart Operations)
  King's College Hospital (Heart Operations)
  Tamworth Health Centre
  Tamworth Health Centre
  Local Authority Social Services
  Local Authority Social Services
  Hospital Waiting Lists
  Hospital Waiting Lists
ENVIRONMENT
  Biotechnology (Spinks Report)
  Biotechnology (Spinks Report)
  Lead (Health Hazards)
  Lead (Health Hazards)
  Skelmersdale (Birch Green Site)
  Skelmersdale (Birch Green Site)
  Planning Applications
  Planning Applications
  Merseyside (Disabled Persons)
  Merseyside (Disabled Persons)
  Norman Shaw Buildings
  Norman Shaw Buildings
  Domestic Rates
  Domestic Rates
  Waterways
  Waterways
  Empty Council Property
  Empty Council Property
TRANSPORT
  Motor Cycle Tests
  Motor Cycle Tests
  Driving Tests
  Driving Tests
  A427 (Market Harborough)
  A427 (Market Harborough)
  Capital Transport Expenditure
  Capital Transport Expenditure
  Kelvinhall Vehicle Show
  Kelvinhall Vehicle Show
  Trucks (Axle Weights)
  Trucks (Axle Weights)
  Lorries (Type Approval Regulations)
  Lorries (Type Approval Regulations)
  Vehicle Length Standards
  Vehicle Length Standards
  Disabled Drivers (Orange Badge Scheme)
  Disabled Drivers (Orange Badge Scheme)
  Driving Licences
  Driving Licences
  Vehicle Lighting (Built-up Areas)
  Vehicle Lighting (Built-up Areas)
  Shrewsbury Bypass
  Shrewsbury Bypass
  Roads (Contractors)
  Roads (Contractors)
  Bus Fares
  Bus Fares
  A1 (Heifer law Bank)
  A1 (Heifer law Bank)
  Rubbish Skips
  Rubbish Skips

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

LORD KEITH OF CASTLEACRE
Sir Kenneth Alexander Keith, Knight, having been created Baron Keith of Castleacre, of Swaffham in the County of Norfolk, for life—Was, in his robes, introduced between the Lord Aldington and the Lord Barnetson.

LORD EMSLIE
The Right Honourable George Carlyle Emslie, MBE, Lord Justice-General of Scotland and Lord President of the Court of Session, having been created Baron Emslie, of Potterton in the District of Gordon, for life—Was, in his robes, introduced between the Lord Diplock and the Lord Mackay of Clashfern.
The Viscount Gormanston—Took the Oath.
The Lord O'Neill—Took the Oath.

HELSINKI AGREEMENT ON HUMAN RIGHTS
2.44 p.m.
Lord JANNER: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a statement about the Helsinki Agreement on Human Rights.
Lord TREFGARNE: My Lords, I would draw the attention of the noble Lord to the Government's latest report on Soviet and Eastern European implementation of the Helsinki Final Act,
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including its human rights provisions to which I referred in my reply on 19th December to a Question from my noble friend Lady Elliot of Harwood. The Government of course deeply deplore the continuing deterioration in human rights observance by the Soviet Union in the intervening period, particularly the treatment of Dr. Sakharov and members of the Helsinki monitoring groups.
Lord JANNER: My Lords, while appreciating and offering my thanks to the Government, not only for the reply that has been given now but for their activities for quite a considerable time in this particular direction, has the noble Lord's attention been drawn to the very serious matter which has arisen, I think only yesterday, of the arrest of four psychiatrists who have been protesting against the horrific methods by which psychiatric centres are being used in the USSR? With thanks from ourselves and those who are interested—and I am sure everybody in the House of Lords is—for what the Government have done in these respects, may I ask them to have another look and see what they can do in regard to such cases as, for example, those of Sakharov, to which the noble Lord has referred, and Shcheransky and Nudel?
Lord TREFGARNE: My Lords, the noble Lord first referred to the question of the psychiatrists. I do not have information on that case in front of me. As the noble Lord said, it arose only yesterday. Since the last report, to which I referred in my original Answer, the Soviet authorities appear to have stepped up their oppression of human rights activists of all kinds, and that includes the arrest of two further members of the Moscow Helsinki Monitoring Group; the harsh sentencing of three members of the Ukrainian Group; and further arrests of religious activists. We are, of course, keeping up our pressure in individual cases where it looks as though it will be helpful.
Lord AVEBURY: My Lords, as long as the Soviet Union continues to violate the Helsinki Agreement, and in particular to victimise distinguished scientists such as Sakharov who has been mentioned, Shcheransky, Orlov and Lerner, does the noble Lord not think that at least we should take retaliatory action against them by discouraging scientific contacts

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between ourselves and the Soviet Union which were also provided for under the Helsinki Agreement but which have not enabled our scientists and engineers to be successful in the representations that they have made for the release of their Soviet counterparts? Does he know that there is a meeting arranged in Hamburg next month under the auspices of the British Government, between United Kingdom and Soviet scientists and engineers, and in view of these latest developments would it not be appropriate for that meeting to be cancelled?
Lord TREFGARNE: My Lords, the noble Lord, Lord Avebury, talks of us taking retaliatory action as regards these matters. I do not think that two wrongs make a right. As for Western participation in the forum in Hamburg to which the noble Lord referred: the CSE Scientific Forum, as it is called, is, in fact, nongovernmental. However, the action of the Soviet Government against Dr. Sakharov and other scientists is relevant to the subject matter of the forum, and the Government's repugnance at those actions has, of course, been clearly expressed. We are confident that the Government's attitude will be taken into account by the British scientists in Hamburg and I think that that may prove helpful.
Lord WIGG: My Lords, as the Minister's concern and the Government's concern for human rights is on a universal scale, will he be good enough to tell the House whether the Foreign Secretary raised with General Zia the question of the treatment of Mrs. Bhutto and her daughter? They have long been confined to their house and the servants have been removed. If the Foreign Secretary did not raise that matter with General Zia, why did he not do so?
Lord TREFGARNE: My Lords, the Question on the Order Paper refers to the Helsinki Agreement on Human Rights and, of course, Pakistan is not a participant in the Helsinki Agreement. However, I can, of course, say that we deplore action which acts against the human rights of anybody in the world, wherever he may be.
Lord WIGG: My Lords, would the Minister be good enough to answer my question? Did the Foreign Secretary
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raise this matter with General Zia? If he did not, why not?
Lord TREFGARNE: My Lords, I was trying to be helpful to the noble Lord without being rude. The Question on the Order Paper refers to the Helsinki Agreement. Pakistan is not a signatory to the Helsinki Agreement and the noble Lord's supplementary was therefore not appropriate.
Lord JANNER: My Lords, I hope that the noble Lord will forgive me for putting one more question. Can he tell the House how other civilised signatories to the Helsinki Agreement have reacted to approaches which have been made by our Government? Have our Government been in contact with them telling them of the very important actions that they themselves are taking?
Lord TREFGARNE: My Lords, I cannot answer for other Governments. However, apart from informal contacts, we are now preparing ourselves for the Madrid Review Conference of the Helsinki Final Act, which is due to take place in November later this year.
Lord GORONWY-ROBERTS: My Lords, is the Minister aware that there is pretty well unanimous support for the views expressed in this House this afternoon about the enormities perpetrated by the Soviet Government, especially in the last year or so, against human rights in that country and elsewhere? Nevertheless we would support a thoughtful approach to the question of whether to participate in meetings such as that in Hamburg, especially those which stem from the Belgrade Conference, which will be, with others, reporting to the Madrid Conference later this year. So, while condemnation of Soviet practices must continue unabated with the full support of the House, delicacy about various contacts which may prove useful and helpful to people now in duress in the Soviet Union should also be borne in mind.
Lord TREFGARNE: My Lords, the noble Lord is, of course, entirely right. I think I understood from what he said that the Hamburg forum, to which the noble Lord, Lord Avebury, also referred, will be another useful opportunity to bring

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home to the Soviet people the repugnance of all of us at what they are doing.
Lord BROCKWAY: My Lords, is it not the case that this matter goes far beyond the Soviet Union? Did not the United Nations survey say that there were 80 countries which are now denying human rights, and therefore the picture must be much broader?
Lord TREFGARNE: My Lords, I am sure that the noble Lord is right, but I can only repeat that the Question on the Order Paper relates to the Helsinki Agreement.

CHINA: MILITARY EQUIPMENT SUPPLIES
2.52 p.m.
The Earl of KIMBERLEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will give any further information on the supply by the United Kingdom of defence equipment to China.
Viscount LONG: My Lords, we want to enlarge our trade relations with China, and we are prepared to consider Chinese requests for British military equipment on a case-by-case basis. We are willing in principle to supply some items of equipment, subject to our international obligations. It is not the practice to reveal details of individual sales or potential sales.
The Earl of KIMBERLEY: My Lords, while thanking my noble friend for that Answer, may I ask whether he is not aware that about two years ago there was a debate in your Lordships' Chamber about doing trade with China, and in particular defence equipment? The last Government said that they were prepared to do trade on defence equipment. Even if they require, or would like to have, whether it be aircraft such as the Harrier or other defence equipment, is he also aware that the Chinese do not like losing face by being told, No, they cannot have it? So can he give an assurance that we will go to them and say, "Here
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it is if you want it"? Lastly, will my noble friend not agree that, if we can bolster up China with defence equipment, it will show that the West, including this country, is taking particularly positive action against Soviet world aggression?
Viscount LONG: My Lords, negotiations between British Aerospace and the Chinese for the sale of the Harrier, which my noble friend mentioned, have now been taking place for some months. The next step is to await the outcome of these negotiations. We have no political reservations about the sale of the Harrier to China, and the Chinese know this. The details of any sale are for British Aerospace and the Chinese to sort out between them. I believe that my noble friend referred to the attitude of the Soviet Union to Harrier sales and sales of other defence equipment. We shall not allow other countries to dictate the terms of our relations with China.
Lord SHINWELL: My Lords, do I understand from the noble Viscount's reply to the original Question that, although we supply in some detail to China—and I do not expect him to disclose the details for I understand that is not done—we are not supplying anything like what they have asked for? Can the noble Viscount say whether there are any obstacles in the way of supplying China with the requisite number of weapons for her defence and, perhaps sometime, for coming to the aid of the West in an emergency? Are the obstacles financial or political in character? Can the noble Viscount say whether the Soviet Union has objected to the British Government about the supply of weapons to China?
Viscount LONG: My Lords, perhaps I can take the noble Lord's last question first and say that I cannot answer it. I have no idea whether the Soviet Union has been against the sale of arms or defence equipment to China. It is now some three years since the Chinese came to us for arms and equipment and the situation is now entirely in their court. We have given them the details and demonstrated equipment to them. It is now up to them to come to us and tell us what they want and when they will buy it. At this stage, I do not know whether or not finance is the reason.
Lord DAVIES of LEEK: My Lords, can the noble Viscount tell me how I can clear my mind of the bewildering position in which we now stand? While the acquisitive society denounces Marxism, may I ask whether the noble Viscount has read, as I have, reports of broadcasts from China on the purity of the new Marxist approach in China? Let us be clear what we are playing at. We are dealing with a country which thinks that it has a pure Marxist approach. I know that that is anathema to faces opposite.
Viscount LONG: My Lords, I have a feeling that the noble Lord has gone clean off the Question at the moment. From my brief, I am dealing with the sale of arms for defence purposes to China.
Lord SHINWELL: My Lords, is the noble Viscount aware that the supply of weapons to China would not create any malice in my mind? I should be extremely relieved if I knew that the Chinese Republic was being adequately supplied. Can he answer the question which I venture to put to him and which I think is very important? When he says that the matter is in China's court, does that mean that they are unable to pay for the weapons, that we are charging too much for the weapons, or that we are a little reluctant to supply the weapons? Can we have a clear answer to those questions?
Viscount LONG: My Lords, it is like selling any product to any buyer; if they do not want to buy, no matter what the quality or the price, there is no way that they will buy it. There is an old saying that you can lead a horse to water, but you cannot make it drink.
Lord PARGITER: My Lords, is the noble Viscount aware that China will probably be moving very cautiously, having regard to its previous experience and its dependence on Russia?
Viscount LONG: My Lords, I am most grateful to the noble Lord for that question and I should think that that is their attitude at this stage.

REDUNDANT STEELWORKERS: EEC AID
3.58 p.m.
Baroness VICKERS: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether any action is being taken by the EEC to aid redundant steel workers in the United Kingdom; and whether the EEC has made any suggestions about help with their retraining for other jobs.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard): My Lords, the European Community is already providing aid to redundant steelworkers in three ways. First, the Iron and Steel Employees Readaptation Benefits Scheme which is jointly funded by the ECSC and the Government provides income support benefits, including a training allowance, for up to two and a half years depending on age. Secondly, reconversion loans are available from the ECSC at favourable rates of interest for job creation programmes in steel redundancy areas. Thirdly, retraining costs also attract a contribution from the EEC Social Fund.
Baroness VICKERS: My Lords, I thank my noble friend for that very satisfactory reply. Can he tell me how much money has already been received, and whether any training has taken place?
Viscount TRENCHARD: My Lords, under each of these schemes considerable benefits have been paid. Under the Readaptation Benefits Scheme, for instance, in 1980 so far the Commission has allocated £7·7 million to Shotton workers. Some 100 applications have been successfully submitted since we joined the Community in 1973. In relation to the reconversion loans, we are currently—and have been throughout 1979—receiving some 40 per cent. of the total ECSC budget, and over £100 million worth of loans since the Exchange Risk Cover Scheme was introduced in 1978 have been negotiated. Twenty five million pounds have already been paid. In relation to the training schemes we have

165
currently an application from BSC Industries to the EEC Social Fund for £4 million which the Government have supported.
The Lord Bishop of PETERBOROUGH: My Lords, could the Minister tell the House whether the EEC has made any attempt to offer jobs abroad to the steelworkers in places such as Corby? If they have done so, how many and how effectively have they done it?
Viscount TRENCHARD: My Lords, I do not believe that any Community source has actually offered jobs abroad. Within the Community there is of course freedom of movement of labour today, and a lot of British people are working on the Continent. I have no idea how many redundant steelworkers may have taken their own initiative.

OLD AGE PENSIONS: METHODS OF PAYMENT
3.1 p.m.
Viscount St. DAVIDS: 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 pensioners who have their pensions paid directly to a bank and not collected weekly at a Post Office can be issued with a card stating that they are old age pensioners and are thus entitled to receive other benefits obtainable on production of pension books.
Lord CULLEN of ASHBOURNE: My Lords, the noble Viscount has in mind, I think, those retirement pensioners who are paid periodically by payable orders instead of weekly by order book. There are at present no provisions for paying pensions direct to banks. I am glad to be able to inform the noble Viscount that arrangements already exist to issue to those pensioners, on request, a card confirming their entitlement to a pension. A pensioner who is not paid by order book and wishes to receive a card should apply to the Department of Health and Social Security's Central Pensions Branch at Newcastle-upon-Tyne.
Viscount St. DAVIDS: My Lords, I thank the noble Lord for that helpful reply, for which I am sure I am entitled to address him as my friend. Will my noble friend further take into account the fact that publicity needs to be given to this, as this method of identification is extremely valuable? It enables these pensioners to collect not only free or cheap bus fares, cheap rail fares, but free entrance to a number of exhibitions and also cheap entrance to a number of private and commercially operated entertainments.
Lord CULLEN of ASHBOURNE: My Lords, that is very true. If it would interest the House I shall give an indication of the other things that are available, but they are in different areas and one has to make inquiries locally as to what is available. You can, for instance, obtain concessionary rates on hairdressing; dry cleaning; rail fares; bus fares; holidays (often for specified weeks); theatre and cinema tickets; entry to exhibitions and ancient monuments; bingo halls; adult education; membership of sports and social clubs, and some local authority services.
Lord WELLS-PESTELL: My Lords, may I ask the noble Lord the Minister whether he will take steps to see that when a person qualifies for a retirement pension that person will be told that a card establishing that he or she is a pensioner will be available? I speak with some feeling on this matter because in the part of the country where I live, if one wants to obtain concessionary fares and one has not a pension book, one has to produce in one part of the city a birth certificate. On the rail, if you have not got such a certificate, you have to produce your passport, and there is a different system in different places. Lots of people entitled to these facilities, simply because they are having their pension paid into a bank, do not get them because they cannot establish that they are pensioners.
Lord CULLEN of ASHBOURNE: My Lords, when people first get their pension payment they get a leaflet which is NI.105, and on that leaflet is quite clearly shown that if you require it the Central Pensions Branch will provide, on request, a card confirming that you are entitled to a retirement pension. That is the sort of card that one in fact gets.

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I know there are differences in different areas, but the social security office will undoubtedly help on those occasions.
Lord SEGAL: My Lords, can the noble Lord say what are the objections to payment of the retirement pensions direct into a bank account? If these objections could be overcome, say by quarterly payments, would it not result in a considerable saving in manpower?
Lord CULLEN of ASHBOURNE: My Lords, that is actually being looked at seriously at this moment. I understand that there are certain administrative difficulties about it, but I believe that they may well be overcome.
Lord UNDERHILL: My Lords, would the noble Lord say when the practice of issuing that leaflet was commenced? I became a pensioner last July but I never received a leaflet, and it was two months before I got a pension book.
Lord CULLEN of ASHBOURNE: My Lords, I am sorry but I cannot answer that question.
Viscount AMORY: My Lords, may I ask my noble friend whether he will appreciate what a joy the senior citizens' rail card is to me, but that when I present it I find it a little embarrassing occasionally to be given a child's ticket? It is an unnecessary reminder of the period of my life on which I have entered. I think my noble friend may well tell me that it is outside his immediate responsibility.
Lord CULLEN of ASHBOURNE: Yes, my Lords, but I can well understand how the noble Viscount, who always looks so young, gets a child's ticket.

RHODESIA: PROGRESS OF ELECTION CAMPAIGN
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, on behalf of my noble friend Lord Goronwy-Roberts, I beg to ask Her Majesty's Government a question of which he has given private notice. The Question is as follows:
To ask Her Majesty's Government whether they will make a statement on the progress of the election campaign in Rhodesia.
Lord DENHAM: My Lords, with the leave of the House my noble friend Lord Trefgarne will be answering this Question in the form of a Statement at a convenient moment after 3.30 p.m.

ECONOMIC POLICY
3.8 p.m.
Lord KALDOR Lord KALDOR rose to call attention to the implications of the industrial, financial and monetary policies of Her Majesty's Government for economic growth, the standard of living, the level of employment and the country's potential for self-defence; and to move for Papers. The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. In the last two years we have had a number of debates in this House on Britain's frightening economic situation and prospects. The majority of them have been on the initiative of noble Lords on the opposite side of the House. I found these debates most valuable and illuminating. They have shown that there is a far greater consensus of opinion on the extremely critical situation of the British economy than I expected. There was a fair degree of agreement, also, on the most alarming features of our situation; notably our unsatisfactory performance in relation to our competitors which shows itself in a faster rate of growth of competitive imports—that is, imports which compete with domestic production—than in our exports.
This adverse trend in our export-import balance of manufactures is of very longstanding and was only temporarily reversed by two world wars and by the policies introduced before and after the Second World War. It has much accelerated in the last decade, so that if it had not been for our unexpected good fortune in becoming a major oil producer at the very time of a manifold increase in the price of oil, we should now be in the most catastrophic situation.
The over-valuation of the pound which began in October 1977, and was greatly accelerated after the last election, threatens to telescope into a few years the final collapse of our industries which might otherwise have taken a decade or more. Last year manufacturing imports rose by 16 per cent. in volume while manufactured

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exports rose by only one-tenth of that, or 1.6 per cent. The situation was worse than in the year before, but even in the year before imports rose by 15 per cent. and exports by only 2 1/2 per cent. We still have a surplus of exports over imports, but only just; last year it shrunk to 5 per cent. of our exports, having the year before been 12 per cent., and I expect that 1980 will be the first year in British history when Britain becomes a net importer of manufactured goods. All the figures I have quoted do not reflect the present high value of sterling. As soon as the annual improvement on the oil account ceases to offset the large annual deterioration in the balance of payments, Britain will face bankruptcy, and on present forecasts this can happen fairly soon.
There can be no dispute that the advent of this Government marks a break with the past which is little short of a revolution. This is true, even though the true extent of the change has been masked from public view by the fact that the previous Government in their dying days themselves became victims of the same intellectual miasma which afflicts the present Government, a fact of which the noble Earl, Lord Gowrie, more than once reminded us. What exactly is the nature of this miasma? The money supply, which was virtually an unknown quantity throughout the post-war period, has come to occupy the centre of the stage; it is endowed, in the view of our present Ministers, with an almost mystic importance. For reasons that nobody could explain or even tried to explain, it is assumed to be the main factor responsible for inflation, and this in turn the source of all other evils, and so the Government tell us that until that battle is won it is futile to think about anything else. As the noble Earl put it at the end of a recent debate, when your overriding objective is a negative one, which is to reduce the rate of inflation, it is difficult for your positive, visionary or exciting policies to come to the fore.
The grave danger is that the Government will fail completely in their declared chief objective on account of the naivety of their beliefs and that, in the process of trying, they will greatly aggravate the evils from which we have been suffering
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for many years. You cannot cure inflation without having some idea, based on reason and not on mystical belief, of the causes of inflation, the forces behind it and the mechanism through which it is transmitted. The fact, to which one noble Lord called attention the other day, that you have never had inflation without an increase in the money supply, says nothing about the cause and effect; it is perfectly consistent with the money supply playing a purely passive role by constantly accommodating itself to the rate of inflation determined by other causes. And to anticipate critics, I would add that in a credit money economy, where money largely consists of instant claims on non-existent cash, it is inevitable that the money supply should be accommodating. It cannot be otherwise because the banking system could not survive without it.
Of course, it is true that the Bank of England has a monopoly on the issue of bank-notes; in theory, the Chancellor of the Exchequer could tell the Bank of England that this year so many notes and no more shall be printed, but that is true only in theory. In practice, the supply of bank-notes cannot be fixed in advance any more than the supply of other forms of credit money. This is because the Bank of England, as I am sure noble Lords to occupy the position of governors of that institution who are here today will confirm, also has another function; that of being lender in the last resort. The function of the Rank of England is to keep the banking system afloat, just as the main function of an admiral is to keep the fleet in being. Faced with a conflict, therefore, the Bank must always issue the notes that would prevent our major clearing banks from becoming insolvent.
If that were not so, why did Sir Geoffrey Howe, being such an ardent believer in monetarism, allow M3 to grow from the time he took office at a rate in excess of his own target? And why have a target rate of growth of the money supply at all? Why not have a zero target or even a negative one? Surely, from the Government's point of view, there is everything to be said for getting inflation over as quickly as possible so as to be able to concentrate on all those constructive, visionary and exciting policies about which the noble Earl was talking the other day.
So why all the hesitation? The unfortunate fact is that Ministers talk of British inflation as if it were an isolated phenomenon caused by our national policies, that it is a phenomenon caused by, or due to, excessive spending and not by the rise in costs due to increased world commodity prices, particularly the price of oil, and of the wage increases which are fed by the increase in costs and prices, which in turn boost these increases. In fact, Ministers do not admit that there is such a thing as cost inflation, except in the very special case when it is the result of deliberate action by the Government. Increases in the cost of living caused by a rise in VAT or in the price of public utilities or in the rates of interest, according to the noble Lord, Lord Cockfield, as he told us the other day, have a deflationary not an inflationary effect, despite the fact that they raise prices and hence wages, and thereby induce faster growth in the money supply.
The Government's proclaimed strategy is to cure inflation by reducing the PSBR and to do so primarily by cutting public expenditure and, secondarily, by raising indirect taxes and interest rates. These help to keep the exchange rate of the pound high and thereby contribute to a lessening of cost inflation. But they also cause a demand deflation, in real terms or in terms of wages, owing to lower exports and higher imports as well as the effects of the fiscal measures they have taken to reduce the PSBR, and hence they lead to a fall in output and employment. This in turn necessitates a further round in expenditure cuts, since with lower economic activity and a diminished tax base the PSBR is bound to become larger.
The Government's cure for higher unemployment and falling production is therefore more public expenditure cuts and more taxation to keep the PSBR from rising. One has the strange feeling that one has been through all this nightmarish sequence before. Indeed, speaking personally, this is where I came in as a young man. The situation reminds one of that awful summer of 1931 when the then Chancellor, Philip Snowden, made a desperate attempt to remain on the gold standard, and on receiving the notorious May Report, insisted on a set of savage deflationary measures as a
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cure for the ravages of deflation. Faced with a prospective Budget deficit of £170 million—the term PSBR had not yet been invented—the Chancellor of the Exchequer proposed a 10 per cent. all-round cut in all kinds of pay, from that of judges' and top civil servants', down to that of the naval ratings and the unemployed, coupled with an all-round increase in taxes of all kinds. The attempt wrecked the Labour Government and led to a naval mutiny in Invergordon, which caused a suspension of some of the cuts. The present Government have, very wisely, guarded against such dangers by substantially raising the pay of both the armed forces and the police at the very moment they came into power.
The Labour Government of Ramsay MacDonald broke up because his Ministers were not willing to accept the cuts. But when the party of noble Lords opposite was returned to power in October, with the largest parliamentary majority they had ever had, lo and behold! within a few months the nightmare of cuts was over. The sacred cow—the gold standard—having been sacrificed, the Tories' age-old dream of a general protective tariff (which they first advocated in 1904) extending to all manufactures was introduced, after an emergency Bill, late in 1931 and early 1932, which meant an ad valorem import duty of 33 1/3 per cent. on steel and chemicals, later, in 1935, raised to 50 per cent., and on other manufactures of between 20 and 30 per cent.
Neville Chamberlain became Chancellor and introduced the age of cheap money. He undertook the biggest conversion operation in history, reducing the interest on War Loan from 5 per cent. to 3 1/2 per cent.—which made it possible, for technical reasons that I do not want to explain here, for the long-term interest rates to come down generally; but it could not have been done without it—which is something which the present Government may do well to emulate as a progressive way, a reasonable way, of reducing Government expenditure, and which is so superior to their own miserable method of saving money through prescription charges, school meals, and school bus fares.
The Tory Government of those days were not monetarist; they were not sound money men. They were expansionists. The five years from 1932 to

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1937 ushered in, under the umbrella, first, of the devaluation, and then of the high level of protection, the most rapid economic growth in British history, unequalled ever before or since, wholly based on domestic prosperity. Industrial production rose by nearly 50 per cent. in five years, and in 1937 it exceeded the previous peak of 1929 by one-third. Steel production, which fell from 9 million tons to 5 million tons during the depression years after 1929, had a phenomenal increase to 13½ million tons in 1937—an increase of 160 per cent., or a compound rate of increase of 20 per cent. a year maintained over a five-year period.
Perhaps noble Lords are ignorant of the fact that in 1937 Britain was the only country in the world, with the possible exception of Soviet Russia—one cannot be certain because they did not publish any figures—whose steel production exceeded the pre-depression peak; and it did so by no less than 35 per cent. Germany's steel output, despite Hitler's rearmament, had only just regained its 1929 level, while output of all other steel producers (including that of the United States) was well below the level of 1929.
If we had had the present team of Ministers in 1932, instead of dear old Stanley Baldwin and Neville Chamberlain, the steel industry, with a near 50 per cent. excess capacity in 1931, and large current losses, would have been castrated at the start, and we should never have been able to re-arm and face Hitler in 1939. Indeed, the shipbuilding industry was so emasculated, not on account of Government policy, but on account of the collective action of the shipbuilders, with the result that shipbuilding capacity at the outbreak of World War II was a million tons smaller than it was in 1930. Hence it was grossly inadequate to maintain our carrying capacity during the war, and if it had not been for the American Liberty ships and Lend/Lease, we should have been forced to our knees by the U-boats.
If anyone has any illusions about the competence of the present management of the British Steel Corporation, or indeed about the economic sanity of the present Secretary of State for Industry, he should read the article by Rowthorn and Ward in the latest issue of the Cambridge Journal of Economics, where they make a cost-benefit analysis with devastating implications
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on some of the recent decisions of BSC which followed the principles enunciated by the Secretary of State.
The present Government have a purely schizophrenic attitude to defence. On the one side, they proclaim that our defences are inadequate, that defence spending must increase, and that it must receive priority. On the other hand, they do everything to shrink and to reduce our industries which provide a true basis to our defence potential. It is an awful mistake to think that we can prepare for a war by stockpiling armaments without having the capacity to produce them. The last Israel—Arab war, I understand, used up armaments of all kinds in 14 days —tanks, guns and ammunition—at such a rate that it took the United States four years to replace the stocks which were nearly depleted in that war. So if it ever came to a war, do not believe, my Lords, that our present stock of armaments or our present armament expenditure will save us. We shall be entirely dependent on the capacity to produce while hostilities are going on—just as we were during the First War and the Second War.
The Government, I am quite sure, will not succeed in their principal objective of getting rid of inflation by the methods they now pursue. With a grossly overvalued pound and the net deflationary effects of their fiscal and monetary policies, national output is likely to fall from now on; and in our Cambridge calculations it will fall by as much as 5 per cent. a year. Unemployment may rise to 2 1/2 millions in a year or 18 months from now. The standard of living will fall. But the Government's principal objective—the reduction of the PSBR—will, I think, elude them. They will never be able to cut expenditure fast enough or raise taxes high enough to keep pace with the rise in the budgetary deficit due to the fall in employment and output. But that means that the borrowing requirement will rise, not fall, and according to their theory, money supply and inflation should get worse, not better.
Indeed, I am inclined to agree that inflation will certainly continue apace because" the rise in unemployment and the fall in real wages is bound to increase the militancy of the unions to a degree that is not likely to be offset by the abrasive attitude of the Government. Of course,

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when it comes to an all-out confrontation nobody can be certain of the outcome. It is possible that, unlike Mr. Heath's Government, this Government will succeed in bringing the working classes to their knees.
But everything else (except, perhaps, the strength of the pound) points to the conclusion that inflation is likely to get worse, and not better. The rise in recorded wage settlements is increasing month by month, and if allowance is made for the side provisions, in the form of comparability and cost of living increases, then the true rate of increase in earnings is running around 20 to 25 per cent. a year now. With falling output and falling productivity, this points to a prospective rise in costs and prices of at least that order or more. As the current account deteriorates because of falling exports and rising imports, some day net capital flows will be reversed—they will go out instead of coming in—in spite of high or even higher interest rates, and when that happens inflationary forces will receive a powerful new impetus.
My Lords, I earnestly believe that the present policies of Her Majesty's Government will lead to a progressive deterioration of our situation, as measured by the wellbeing of the average citizen as well as by the capacity of the nation to produce weapons for her own defence. The sooner this is recognised and the sooner the Government are brave enough and manly enough to do the necessary U-turns, the better for our future. My Lords, I beg to move for Papers.
3.32 p.m.
Lord ROCHESTER: My Lords, I am sure that the whole House will be grateful to the noble Lord. Lord Kaldor, for having introduced this Motion. I do not for myself feel that there is need to dwell on the last part of the Motion, for we may all readily agree that if only we could solve our basic economic and industrial problems then the economy would grow, the standard of living and the level of employment would rise, and we should be in a better position to defend ourselves. As to the Government's policies, I suppose that a great many of us, anyway, would agree that inflation remains public enemy number one, and that the Government are
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right, therefore, to make a reduction in the rate of increase in inflation their primary objective. We on these Benches further accept that there is a need to reduce public expenditure, although, as we have made plain more than once already, we wish this could be done in a more discriminating and, in particular, a rather more gradual manner than is at present the case.
Our main criticism of the Government—and here I find myself in some sympathy with the noble Lord, Lord Kaldor—is indeed their seeming reliance, to the exclusion of all else, on controlling the money supply, and the indication that that policy is in practice proving ineffective. Nine months after they took office we seem to be moving rapidly into a deep recession, by no means, admittedly, all of the Government's making. Unemployment continues to rise and job vacancies to fall. Despite the revenue coming from North Sea oil, we look like having a large balance of payments deficit both in 1980 and in 1981. There is a mortgage rate of 15 per cent. and a minimum lending rate of 17 per cent., with no indication of any reduction. Together with an over-valued pound, high interest rates are making our goods increasingly uncompetitive abroad. The other evening I was having dinner with the chairman of a large company which has contributed greatly to our export trade—not, I should perhaps add, the company for which I used to work. He was deeply concerned about the effect that current levels of interest were having on the profitability of manufacturing industry in general and of exporting companies like his own in particular.
To continue the unhappy story, rises in prices and wages continue at levels greatly exceeding the increase, if any, in national productivity. A most damaging steel strike has been going on now for six weeks, and the Government still stand back. We are told that if people insist on increases in pay which a firm or industry cannot afford, market forces will operate, companies will go bankrupt and jobs will disappear. Of course, that is true so far as it goes. The trouble is that in real life the people who suffer are not those who, by then, have carried off the swag, but weak and innocent bystanders, such as pensioners and young people. In the complex, interdependent society in which

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we live, this Government, like any other, will in my view have to intervene in the end. Indeed, in the public sector they already do, as employer or paymaster. I believe that they will soon have to do more, because even if by some objective test of economic theory it were possible for the Government wholly to justify their present policies—and may I say that I have some sympathy with the ultimate objective that they have in view—in a democracy they will still have to persuade a sufficient number of people so to act that those policies actually prove effective.
In politics, my Lords, as in industry, the prime test of leadership is whether you can get people to follow, and I should like now, if I may, to suggest two or three ways in which the Government could, I think, intervene. The first is in the matter of pay determination. I use that term advisedly, rather than "incomes policy", because if I say "incomes policy" everybody gets very excited, some people cheer and other people jeer. Your Lordships seem to be remaining pretty calm, but, then, we are noted for our nobility and wisdom, and many other exceptionally fine attributes. But I continue to believe that there is an urgent need for the Government, employers and trade unions to establish agreed long-term procedures designed to influence the general level of increases in wages and salaries. I am not now advocating some norm to which everybody is expected rigidly to conform, with or without parliamentary endorsement; but I am suggesting that recent events, and particularly the steel strike, have greatly strengthened the case for what the CBI call an economic forum and what the West Germans call concerted action. I do not much care what it is called so long as, from it, the public at large can somehow gain a clearer understanding of what the country can afford by way of increases in pay; and the need is urgent, otherwise it will be too late, even for the wage round after the present one.
Last July, in a Starred Question, I asked Her Majesty's Government whether they aimed to confer with representatives of employers, trade unions and other interested parties under conditions which might enable a better public understanding to be gained of the effect on the national economy of pay increases which were not
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matched by increases in productivity. In replying for the Government, the noble Lord, Lord Cockfield, said that Ministers were giving careful consideration to all the complex issues involved in setting up such discussions, and that they were anxious to ensure that whatever measures were taken were effective and successful. Now, six months later, and in our present parlous economic and industrial situation, I have given notice to the noble Lord that when he comes to reply I should like to know the outcome of the Government's consideration of this matter.
I do not wish to take it further than that today. I am not even going so far as to assert that the right basis for determining relativities is productivity in a particular plant, especially bearing in mind Mr. Samuel Brittan's view that, in a free market, relativity changes so as to be based rather on supply and demand for the particular worker concerned. It is sufficient for my present purpose that for the country as a whole pay increases should not exceed improvements in productivity.
A second area in which I suggest that the Government should intervene is in the contentious field of legislation affecting trade unions, where, following recent events and judgments, I believe that it is essential that an opportunity should now he given to Parliament to make clear what legal immunities trade unions should enjoy when, in the course of a strike, they induce, through secondary action, breaches of contract. Since, if we are going to solve our problems, it seems to me that we should offer support where we can to the Government of the day, I should like to add that for my part I have greatly admired the level-headed way in which the Secretary of State has acted in introducing the Employment Bill in another place, in first consulting with all interested parties and, most recently, in resolutely refusing to rush through Parliament inadequately considered measures simply to bring the present steel strike within their scope.
My Lords, so that in this matter I do not offer any hostages to fortune, may I add that I am committing neither my party nor myself to subscribe to all the clauses of that Bill when, before long, it comes before this House. Indeed, I have already got my eye on one or two clauses in the Bill. Nor do I suggest that, of

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itself, that Bill will improve industrial relations in this country. That is why I hope very much that once the Bill is passed the Government will think very carefully before bringing in further legislation in this field; for it is difficult to see how, in the climate of controversy that would then persist and at a time when, I fear, economic recession will have deepened still further, management and employees would be able to co-operate in improving our industrial performance as we so desperately need to do.
That brings me to my last point. I believe that, above all, the Government need to improve their lines of communication with the rest of us. With every month that passes, it becomes more evident that our problems are very deep-seated and that they interact with each other. The measures needed to solve them become more painful and give rise to greater dissension; and, increasingly, I doubt whether the present Government, any more than the last, will manage to grapple with them singlehanded. They certainly will not do so if they do not carry more people with them than they appear now to be doing. I do not suggest that the Liberal Party on its own would do any better, but at least we are giving a lead in declaring that there is a need for elements in all political parties to come together to tackle our problems—and to judge from the response to the recent Dimbleby Lecture given by Mr. Roy Jenkins, from the opinion poll recently carried out for The Times newspaper and from what I hear from many industrialists and others who are not identified with any particular party, that is also the message that the British people are trying to get across to us. I hope very much that we shall hear it and that we shall act on it in time.

RHODESIA: PROGRESS OF ELECTION CAMPAIGN
3.45 p.m.
Lord TREFGARNE: My Lords, with your Lordships' permission, I will now repeat a Statement being made in another place in answer to a Private Notice Question on Rhodesia. The Statement is as follows:
"The problem of intimidation of voters in the rural areas, the scope of
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which has now been confirmed to the Governor by the British election supervisors, continues to cause great concern. The Governor has enacted an ordinance enabling him to suspend elections in any area where systematic intimidation makes it impossible for a fair election to be held. He has also listed a number of areas where intimidation is particularly severe. This should warn those of whatever party who seek to deprive others of the right to campaign freely and peacefully of the possible consequences of their actions. The Government will also be taking positive measures to strengthen supervision of the elections by sending a large number of additional personnel from the United Kingdom to be present in polling stations in rural areas, to ensure that the arrangements for voting are scrupulously fair.
As the House will be aware there has been a further deplorable attack upon Mr. Mugabe. Investigations are being pursued. The Governor will continue to take firm measures to deal with intimidation, violence and breaches of the cease-fire from whatever quarter. Despite the serious problems which exist, the Government are determined to carry the election through to a successful conclusion and to ensure that it is conducted as fairly and freely as possible."
My Lords, that concludes the Statement.
Lord GORONWY-ROBERTS: My Lords, the House will be grateful to the noble Lord for repeating that important Statement in the House; but is the noble Lord aware that the Statement he has just made confirms the mounting concern in this country and abroad about the deterioration of the situation in Rhodesia? Is he further aware that the action taken under the ordinance which the Governor has enacted, enabling him to suspend elections in any area, may well nullify the result of the election as a whole and give a talking point to the basic enemies of the democratic process to denounce the election and to resume other means of settling the Rhodesia problem? May I suggest strongly that every effort be made to avoid using this particular ordinance?
Moreover, will the Government here and in Rhodesia resist the temptation to

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ascribe responsibility for incidents to any one particular party? All are guilty of infringements of the decisions taken at Lancaster House, of infringements in spirit and in action, not excepting certain elements which are supporting the present Government. The role of the auxiliaries, for instance, has been raised constantly in this House and should be mentioned again. While we denounce the actions of certain parties, we must also make it as clear as possible that all the agencies of government in Rhodesia are not themselves guilty of certain incidents and also are seen to be impartial in regard to all contending parties in the current elections.
Is the noble Lord aware that we welcome the intention to send:
"… a large number of additional personnel from the United Kingdom to be present in polling stations in the rural areas"
to ensure that fairness is observed? But is he also aware that we believe that, even more necessary than that important decision, is that during the next crucial two to three weeks there should be a strengthening of the forces of law and order in Rhodesia from sources regarded by the Rhodesians as a whole as being impartial?
Finally, my Lords, would the noble Lord give the House some reassuring news about the situation of Mr. Garfield Todd—
Several noble Lords: Hear, hear!
Lord GORONWY-ROBERTS:—a former Prime Minister of Rhodesia who commands wide respect among black Africans and not a little among white Africans as well, and whose arrest by the present Government of Rhodesia was more drastic even than the treatment meted out to him by the Smith regime, who, after all, only confined him to his farm?
Lord GLADWYN: My Lords, we, too, should like to thank the noble Lord for repeating this important statement. I think that the whole House will probably join with me in expressing great sympathy for the unfortunate Governor, the noble Lord, Lord Soames, who is in the most difficult of all possible situations at the present time. I imagine that the Government will also agree that one of the greatest difficulties is his relative inability to control the actions of one of the most important
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actors in the drama now unfolding in that unfortunate country; namely, General Walls.
Apart from that, I have two questions that I should like to ask. Will the additional supervisors—who, I imagine, will be civilians—however multiplied, be in a position to prevent terrorist action from intimidating electors? Will their presence diminish such terrorism? Here I think I touch on a point made by the noble Lord, Lord Goronwy-Roberts. Would it not be preferable to increase the monitoring force, comprised I believe of soldiers? If they were reinforced would they not have rather more influence on the terrorists than mere civilian supervisors? I only ask that. I do not know what the answer would be.
Finally, do the Government not agree that the recent public utterances of Mr. Smith threatening, as I understand it, another rebellion if by any chance Mr. Mugabe should get a majority, are wholly deplorable? Do they not also feel that the constant condemnation of Mr. Mugabe should get a majority, are wholly have been on the whole moderate, as a Marxist—whatever that may be—is in itself something which is designed to inflame prejudice and might eventually lead to a resumption of the civil war?
3.52 p.m.
Lord TREFGARNE: My Lords, I am obliged to both noble Lords for what they have said. Taking first the points put by the noble Lord, Lord Goronwy-Roberts, of course we agree that it would be highly preferable if the Governor were not obliged to use the powers which he has taken under the second electoral ordinance. May I in parenthesis say that in accordance with normal procedure we will, as soon as we can, put a copy of that in the Library.
The problem is not one of seeking to control one particular party or another. We are seeking to control the intimidation, and that is why we have decided to send these additional personnel to Rhodesia, as I described in the Statement. The noble Lord, Lord Goronwy-Roberts, asked us to remember that the breaches of the cease-fire were committed by all the parties—or at least a good many of them—and were not just on one side. I have some figures before me: of the

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129 breaches of the cease-fire on which the cease-fire Commission have so far reached a conclusion, no fewer than 87 have been committed by ZANLA forces or forces operating in the ZANLA area of operations. The cease-fire Commission reaches its conclusions with the agreement of the ZANLA member on the Commission, so I think I can say quite firmly that there is no doubt whatever that the proportions that we have described in terms of ceasefire breaches are accurate and accepted by all sides.
The noble Lord, Lord Gladwyn, suggested that it was unhelpful to go on, for example, calling Mr. Mugabe a Marxist. Be that as it may, the fact is that Mr. Mugabe calls himself a Marxist—and, indeed, why not? He is entitled to his views and we respect them. As for the civilian observers, to which I referred just now, they are going, as I have said, to discourage would-be intimidators from their dreadful task at the polling stations in rural areas. They will be very well placed to do that.
We do not think that any useful purpose would be served at this stage by increasing the size of the monitoring force. The monitoring force is there to monitor, and they are doing that entirely successfully and satisfactorily. We would only need to increase the size of the monitoring force if we were to give them some new and additional role. We have no plans to do that.
I am sorry that I omitted to answer the question put to me about Mr. Todd. He called on the Rhodesian Attorney-General yesterday and made a statement which brought to light some circumstances which he had not previously disclosed. The Attorney-General is considering, in the light of this statement whether or not a prosecution should succeed. I understand that Mr. Todd is seeing the Governor later today.
Lord HOME of the HIRSEL: My Lords, I wonder whether my noble friend could help the House with some facts. Is it a fact that there are some 6,000 of Mr. Mugabe's supporters outside the assembly areas and still with arms? If that or something like that number is a fact, is it not a direct contravention of the agreement signed in London? While the
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Governor will undoubtedly not want to use his powers, is it not extremely dangerous to allow a situation of that kind to continue which might wreck the whole prospect of a settlement?
Lord TREFGARNE: My Lords, it is certainly essential that every party to the elections in Rhodesia should observe the provisions of the Lancaster House agreement. I can confirm what my noble friend said about the numbers who are outside the assembly areas and who are still carrying arms.
Lord WIGG: My Lords, would the Minister be good enough to say whether in a deteriorating situation he is satisfied about the security of the monitoring force? If there occurs what is suggested might occur, the Governor would be put in a very difficult position indeed.
My second question is this. Is not this situation which has arisen entirely foreseeable if the Government send out a Governor with responsibility—ultimately complete responsibility—without adequate powers? If they turn their backs on a concept—if I may use the phrase—of that of a jeep and four men in the jeep, and they had the jeep with only three men in it, is not what has happened only to be expected? What worries me is how far the Government have gone drifting on as a result of political bait, and what is bait here is the lives and security of the monitoring force.
Lord TREFGARNE: My Lords, the members of the security force will not be allowed to get into such a situation where they cannot adequately defend themselves.
Lord PITT of HAMPSTEAD: My Lords, was not the Lancaster House agreement one in which the security forces were to return to barracks while the guerrillas went to assembly areas? Does not a great deal of the trouble result from the fact that the security forces were not made to go to barracks? On the contrary, auxiliaries are allowed to roam. Mr. Garfield Todd said in a radio broadcast (it was the day be was arrested) that one of the reasons why he was arrested was because he was pointing out that the only way one can get guerrillas to come to the assembly areas is also to make the auxiliary forces go to barracks.
Lord TREFGARNE: My Lords, all the forces that were in Rhodesia at the time of the signature of the Lancaster House agreement were required to place themselves under the instructions of the Governor, and that applied equally to the auxiliaries. Likewise, the auxiliaries are part of the Rhodesian forces and equally are to observe the cease-fire. They are fully monitored. Any complaints against their activities are investigated and action is taken where necessary. Disciplinary action or action in the courts will result from proven misconduct, and this has already happened in some cases.
Lord PITT of HAMPSTEAD: My Lords, with respect, the Minister has not answered my question. The question I am asking is this. Is not the basic cause of all the trouble the failure to observe the Lancaster House agreement under which the security forces would return to barracks while the guerrillas went to assembly points?
Lord TREFGARNE: No, my Lords. I do not think the noble Lord is right on that. Of course, the security forces did initially return to barracks and, indeed, many of them are still in their barracks. But some of them are used by the Governor for his purposes.
Lord ORAM: My Lords, recalling what the noble Lord, Lord Gladwyn, said about the utterly deplorable speech by Mr. Smith a few days ago, was that speech not utterly contradictory to the spirit of the Lancaster House agreement and ought it not to have called for utter condemnation by the Governor? Should we not have a declaration, either by the Governor or by the noble Lord today, that whatever Mr. Smith thinks about the outcome of the election and what he would do in those circumstances, the British Government will stand by the results of the election?
Lord TREFGARNE: Yes, indeed, my Lords. We have always said that our whole purpose and our whole policy in this matter is towards creating conditions in which a free and fair election can be held; and we certainly hope that everyone will abide by the results of that election. But I think that one should hesitate before condemning electoral rhetoric too firmly. The sort of things said by
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Mr. Smith are indeed regrettable, but a lot of equally bad things have been said by the other side.
Viscount MASSEREENE and FERRARD: My Lords, can my noble friend inform me whether it is true, as I have heard, that Mr. Mugabe was quoted as saying that if he did not win the election he would continue the war?
Lord TREFGARNE: Yes, my Lords. I, too, have seen reports like that. I think that it just confirms what I said earlier.
Lord GORONWY-ROBERTS: My Lords, with respect, and with the permission of the House, may I emphasise one or two points? Will the Minister and Her Majesty's Government, both here and in Rhodesia—they are both Her Majesty's Governments—bear in mind the important distinction between strengthening the civilian technicians who will supervise the actual polling and the electoral arrangements, as they would, presumably, in a by-election in this country, and the need to strengthen what is sometimes called the monitoring force, but which I have chosen to call the forces applying law and order, from sources seen by everybody in Rhodesia to be impartial? I leave it at that.
The second point that I want to emphasise is this. The whole House sympathises deeply with the Governor, the noble Lord, Lord Soames, in the immensity of the task confronting him and accords him considerable admiration for his courage and determination to surmount them. Anything which is said here calling attention to certain aspects of the situation, which as my noble friend Lord Wigg said is certainly deteriorating, is meant to help him as much as possible. In particular, am I right in believing that Mr. Garfield Todd, a man of considerable stature in Rhodesia and in Africa, was, in fact, arrested and treated like a common criminal by a local magistrate and that the Governor intervened to see that more appropriate action was taken in regard to this matter?
Lord TREFGARNE: My Lords, Mr. Todd was alleged to have committed an offence and was subjected to the proper legal processes. I hope that the noble

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Lord will not press me to go further on Mr. Todd than I have done already. But as I said earlier, the Attorney-General is considering, in the light of what Mr. Todd has recently said, whether or not the prosecution should proceed.

ECONOMIC POLICY
4.5 p.m.
Debate resumed.
The MINISTER of STATE, TREASURY (Lord Cockfield): My Lords, I am grateful to the noble Lord, Lord Kaldor, for tabling this Motion. It provides me with the opportunity not simply of defending the Government's policy, but of demonstrating that, however hard and stony the road may be, the Government's policy does offer real hope for the future; and there is no alternative policy which could offer that hope or indeed any hope at all.
I was greatly interested in the noble Lord's speech and I will reply in detail to a number of points he made later in my own remarks. I was, however, particularly interested in the unstinted praise which he bestowed upon the Conservative administration of the 1930s, whose policy ushered in a period of unparalleled prosperity, and I am sure that in the years to come he will need to say the same of the Conservative Administration of the 1980s. The speech of the noble Lord, Lord Rochester, from the Liberal Benches filled me with a sense of nostalgia for times long since past, but not apparently yet forgotten, and to that speech also I will return in due course. But first things first, so I will start with Government policy.
I referred at the beginning to a hard and stony path. Before we can look ahead, we must ask ourselves how we got onto this hard and stony path. In real life —as opposed to the world of Irish humour—one has to start from the place one finds onself in, and the place we found ourselves in in May 1979 was a singularly unpleasant one. I realise that noble Lords opposite find the constant reminder of the misfortunes that they inflicted on their suffering fellow citizens painful and disagreeable. I assure them that their
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fellow citizens found it equally painful and disagreeable. In the five years of Labour Government, prices rose by 112 per cent. and at the peak were rising at a rate of 26·9 per cent. per annum. Unemployment over this period increased from less than 600,000 to more than 1,300,000 on a seasonally adjusted basis. Manufacturing output in 1979 was no better than it had been in 1973.
It is often claimed—and the noble Lord, Lord Kaldor, referred to this again this afternoon—that we have been in a state of relative economic decline for many years. Like so many conventional ideas, this in fact is somewhat of an oversimplification. There was, as the noble Lord himself has said, a period of real growth between the two world wars. During that period, the growth of productivity in the United Kingdom exceeded that of most other industrialised economies to a pronounced extent. In more recent times, the 1950s and the early 1960s were a period of considerable growth, too.
But what is undeniable is that in more recent years, and particularly after 1974, there has been a marked deterioration in the situation. It is perhaps not without significance that most of this period of poor performance was a period of Labour Government, with high taxation, high public expenditure and a high level of public borrowing. It is true that in 1977, following the rescue of the IMF, the Labour Government tried hard to put the economy back on a sound economic basis, but this did not last. By May 1979, prices were accelerating rapidly; inflation measured on a six-month basis had already reached 13 per cent., and the excessive wage settlements which were the legacy of the Labour Party's incomes policy were bound to drive it up much higher. The money supply was increasing at a rate of 13 per cent. per annum, well above the then Government's target range. Most ominously of all, public expenditure had soared with no increase in output to support it. This in turn was reflected in a big increase in the public sector borrowing requirement.
On the basis of the Labour Party's plans, the position this year would have been much worse still. Not only therefore were things bad in May 1979; they were getting worse. When a malady is as deep-seated as this, when a disease has

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spread so far, it cannot be cured in days, or weeks, or months. What one has to do is to start the cure—and that is what we have done—persist with the cure—and that is what we are doing—and ultimately achieve the cure—and that is what we shall do.
I need hardly repeat to your Lordships the evils that flow from inflation: the unfairness and inequality it creates in society; the damage it does to output, investment and employment; and the strife it creates not only in industry but in society as a whole. If therefore we place the battle against inflation in the very forefront of our policies, that is a priority and a judgment which most people today would not dispute. We believe that the absolute precondition of success in defeating inflation lies in a firm monetary and financial policy. Without it, all else fails. This is where there is the great divide between the two sides of the House—between the noble Lord, Lord Kaldor, and myself—and nowhere is this divide more clearly illustrated than in the speech of the noble Lord, Lord Kaldor, to which we have just listened.
The noble Lord has set out his thesis on monetary policy in three successive debates in your Lordships' House. I am going to start with the debate on 7th November. I was unfortunately unable to be present at that debate, and I apologise to the noble Lord in that respect, but as he has repeated his general thesis this afternoon it is necessary for me to reply to it. In his speech in November he compared the rate of growth in the money supply with the rate of inflation in four countries over the period 1973 to 1978 and concluded that there was no relationship between the growth of the money supply and the rate of inflation.
What he said was this, and I quote from col. 882 in Hansard of 7th November—
"Only a person who is totally ignorant of monetary statistics could believe that it was the excessive rate of growth in the money supply which was responsible for Britain's high rate of inflation".
In saying this—and these are very hard words that he used—the noble Lord overlooked a point of very great importance. It is not only necessary to know the statistics; even more important, it is necessary to know how to use them.
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In three important respects the noble Lord fell into serious error. First, he assumed that money supply changes affect prices immediately. That is not so. There is, on the contrary, general agreement that there is a considerable time lag between changes in the growth of money supply and changes in the rate of inflation. There is some dispute as to how long the time lag is, but the noble Lord's right honourable friend, Mr. Denis Healey, claimed that it was considerable. He suggested a period of the order of two years. So, too, has the noble Lord, Lord Bruce of Donington, who also claimed in your Lordships' House that it was considerable. And if these two authorities will not do, the noble Lord, Lord Wigg, who I regret to say has left his place, testified to the same effect. He, after all, is a great statistical expert in the particular field which is his speciality. While, therefore, I cannot offer noble Lords a Roland for an Oliver, at least I can offer them a Healey, a Bruce of Donington and a Wigg for their Kaldor.
The second major error in the noble Lord's thesis was that he ignored other factors relevant to changes in the money supply and changes in prices—for example, changes in output and productivity and changes in the velocity of circulation. These are matters of great importance when one tries to compare, as did the noble Lord, a high output country such as Germany with a low output country such as the United Kingdom. Thirdly, the noble Lord's selection of countries was narrow and unrepresentative of recent international experience. Therefore, we can safely dismiss the noble Lord's excursion into the field of statistics as having little or no relevance to the problems that we are now discussing.
So much for his November thesis. In the debate in your Lordships' House on 5th December the noble Lord unveiled a new interpretation of what he believed to be monetary theory. In this, he seems to have abandoned the closely reasoned if somewhat inaccurate thesis he had commended to your Lordships in November—whether this was because he had by then realised that his earlier thesis would not stand up to detailed or critical analysis or whether, like Old Bill, he felt that he had found a "better'ole". In the December debate what he said was this:

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"The Government or the Central Bank cannot prevent the money supply from going up, whatever they do, if costs and prices are rising".—[Hansard, 5/12/79, col. 789.]
This simply is not true. Both in this country and in the United States, Governments and Central Banks have prevented the money supply from going up by anything like the extent it would have done had these measures not been taken. Nobody who believes in monetary control has ever pretended that if, for example, costs and prices are rising at 15 or 20 per cent. per annum, the growth in the money supply can be cut to nil overnight. It takes time. But there is a world of difference between accepting that a cure takes time and arguing that the cure cannot be achieved at all.
Nor would we claim that the present measures of control are entirely satisfactory. That is why we propose, as my right honourable friend the Chancellor of the Exchequer has already indicated, to issue a consultative document on possible new methods of controlling the money supply. These might make it possible to shorten the period required in order to bring money supply growth to its desired rate. But whatever the control techniques, the right fiscal and interest rate policies will sooner or later bring down the rate of monetary growth, and hence inflation with it. Nobody believes, and certainly we do not believe, that we have found in monetary theory the philosopher's stone which will turn all to gold. What we do say is that control of the money supply provides the best means, and the most reliable means so far discovered, of combating inflation in a free society.
It is the only means we know which reconciles individual choice and individual freedom with stability in prices. It is the only means that both gives people the freedom to take decisions, the freedom to determine their own course of conduct, the freedom to live and to order their own lives, and at the same time imposes on them the responsibility for the decisions they take and for the course of conduct they follow. It provides, in short, both a discipline and a framework within which people both live and act.
If people insist on acting irresponsibly, they will harm themselves. If employers concede excessive wage settlements, they
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do so at the expense of their own profits and at the risk of insolvency. If workers demand and secure excessive wage settlements, they do so at the expense of their own jobs and other people's jobs. The wages of irresponsibility are low profits, insolvency and unemployment. None of this means that we want people to behave irresponsibly. Still less does it mean that we want companies to become insolvent or workers to become unemployed. The more that can be done to educate people to the facts of economic life, the better. In this I am entirely at one with the noble Lord, Lord Rochester. The more we can encourage people not to damage themselves, not to damage their companies, not to damage their fellow workers, so much the better.
In the end the facts are simple and inescapable. The only source of more money which will actually buy more goods and services is higher output, and higher output will only come from increased productivity. If there is no increase in productivity and no growth in output, there is no increase to share out. No amount of collective bargaining can alter this: the brutal truth cannot be negotiated away. Every group of workers who force up their own pay are robbing other workers: every strike, every industrial disruption reduces national output and makes the strikers themselves, their families and the nation as a whole poorer as a result.
I now turn to the remarks of the noble Lord, Lord Rochester. I was greatly intrigued by the way that he re-christened what is now a somewhat elderly infant incomes policy as "pay determination", but whether it really makes any change in the infant itself is much open to question. We entirely understand, of course, the motives which actuate people who advocate incomes policies. Indeed, such policies have a very long and honourable history. The first attempt, of course, was made by Sir Stafford Cripps and had been foreshadowed earlier than that by the 1944 White Paper on full employment policy, which was largely the handiwork of Lord Keynes. I may say that I worked with both of those gentlemen.
Since those dates there have been innumerable attempts to impose incomes policies. Some of them have been very vague, some of them have been exhortation

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by Government, some have been exhortation by trade unions, some have been exhortation by Governments and trade unions, some have been exhortation by Governments against trade unions and some have been statutory policies; but there is a single factor common to all of them, and that is that they have all failed. We believe that this is a path which one ought no longer to be going down.
The noble Lord also referred to what in discussion last summer was described as a national economic forum. Of course we are anxious to encourage discussion in this important area, but we seriously doubt whether there is room for the creation of an additional body. After all, we already have the National Economic Development Council and perhaps on a personal note I may say that I was a founder member of that body in 1962. That already provides a forum in which matters of this kind can be discussed as between the employers, the unions and the Government and there was such a discussion last November, which was greatly encouraged by the Government and which I think the parties participating found particularly useful. We would of course always welcome further discussions of this nature but I must make the point that the other partners in NEDC, with the experience of years of pay policy behind them, are understandably suspicious of the usefulness of such discussions, and therefore this is clearly a field in which, if progress is to be made, it needs to be made slowly.
If we are asking our people to behave responsibly and to adopt the disciplines of economic reality, then the Government must do the same. It was very interesting, in listening to the noble Lord, Lord Kaldor, to hear him say two things. He referred first to the very considerable reductions in Government expenditure which were made in the early 1930s and he then went on to say that the following years were years of unparalleled prosperity, and therefore on the evidence of the noble Lord's own argument there might be some connection between the two. But we believe that, if we are asking other people to accept the discipline of economic reality, the Government must do the same. That is why we place such emphasis on the level of Government expenditure and the level of the public sector borrowing requirement which flows from it. If we try to spend too much we
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either have to increase taxes, with the effects on incentives and output with which we are so familiar, or the public sector borrowing requirement rises. If that happens then the Government have to borrow more and interest rates in turn rise; a rise in interest rate imposes hardship on businesses and individuals alike.
What happens in those circumstances is quite simple. In order to make way for excessive Government expenditure both individuals and businesses have to be squeezed and the instrument which squeezes them is the rate of interest. There is only one way out of such a situation and that is to keep the borrowing requirement down and to reduce Government expenditure in order to enable this to be done. In brief, the Government, like the individual, have to cut their coat according to their cloth.
The argument has been advanced—indeed it was advanced by the noble Lord, Lord Kaldor, in November of last year; it was advanced again by the noble Lord, Lord Bruce of Donington, in the debate on the 28th January and I have no doubt he will advance it again later today—that public expenditure in this country is lower as a proportion of gross domestic product than it is in many other industrial countries. Of course it is. Nobody expects a poor man to maintain as high a standard of living as a rich man. The whole theory of progressive taxation, which I imagine both noble Lords support, is that the rich pay more in proportion than the poor. So then let it be with public expenditure. When we can match the French, the Germans, the Dutch, the Swedes and the Americans and half a dozen other countries in terms of gross national product per head, then and only then will it be relevant to claim that their level of public expenditure sets a standard by reference to which we should be judged. Until then our task is to put our economy right, and one vital thing this requires is to limit the expenditure to a level that we can afford without damage to our economy.
Lord KALDOR: My Lords, if the noble Lord will allow me to make a small correction, what I said in the first debate on 7th November was that public expenditure in the United Kingdom is lower than

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the average of other countries after making correction for differences in their real income per head and GNP in different countries. That is to say, in technical language, we are below the regression line which connects public expenditure as a ratio of GNP and GNP per head.
Lord COCKFIELD: My Lords, I am entirely familiar with precisely what the noble Lord said on that occasion. I am grateful to him for repeating it. He made two statements. The first was exactly the one that I repeated: I read it word for word. It remains precisely true, as I have said, that we are well down in the league of gross national product per head, and on this basis it is quite wrong and unreasonable to expect this country to be able to afford anything like the same level of public expenditure that other much wealthier countries can sustain.
Lord KALDOR: My Lords, I was in agreement with that.
Lord COCKFIELD: My Lords, I am grateful to the noble Lord: we have at any rate found some measure of common agreement.
So far I have been talking of the measures which need to be taken to rid the body politic of the malaise from which it is suffering. But this can only be one side of the story. Cure must be followed by convalescence, convalescence by recovery. Our hope for the future lies in freeing the energies and imagination of the British people. There is no lack of imagination in this country. We can still create new industries to replace the old. What we need are the conditions which will enable us to do so, and the rewards which will spur initiative and enterprise. This is the path along which the Government are now proceeding.
We have made substantial reductions in direct taxation, particularly at the higher entrepreneurial end of the scale, which are designed to spur initiative and enterprise in this way and to encourage the creation of new businesses. Quite apart from our tax policy, the abolition of wage control, price control, exchange control and dividend control have all been directed to freeing the economy from the constraints under which it has suffered and the distortions
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that have been imposed upon it. One can give a long list of other measures taken or planned by the Government and directed to the same end. Thus, companies which in the past have been taken over into the public sector we are returning to the private sector where we reasonably can, or we are increasing private participation in them. We have abolished office development permits and relaxed the operation of industrial development certificates. The efficiency of the planning system is being improved. We are cutting back on red tape and unnecessary form filling, especially as it bears on small firms. We are taking steps to improve the working of the labour market and to curb abuses of monopoly power on the shop floor. The noble Lord, Lord Rochester, has referred with approval to the measures we are taking in this field.
No one could possibly underestimate the magnitude of the problems the British economy faces. These problems are particularly intractable because they are so deepseated. From this point of view it makes no great difference whether the malaise of the British economy dates from 1850, as the noble Lord, Lord Kaldor, has recently claimed, or from some other and more recent date. Any policy to deal with a malaise as deepseated as this must have two aspects. There is the immediate rescue first, and then, secondly, the reconstruction for the future.
The first part of the task, the rescue, is the most difficult, particularly as it involves asking people to accept uncomfortable or even disagreeable things—asking people to change long-established and familiar attitudes and practices, asking them to live within their means and to recognise that if they want to have more they must earn more. But unless we make a success of this part of the task we can have no hope of achieving the second part. This is why, despite the immense difficulties of the present, we will persist in our efforts to overcome the evils of the past, inflation, excessive Government expenditure, excessive taxation and excessive Government intervention. It is in this way, and in this way only, that we can lay a firm foundation for the future.
4.37 p.m.
Lord LEATHERLAND: My Lords, the noble Lord, Lord Cockfield, gave us a

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list of various public bodies and said that they had all failed. I am surprised he did not add the last Tory Government to his list. I agree with much of the learned, historical review given by my noble friend Lord Kaldor, but I am not always with him when he starts to look to the future. He did say, for example, that Britain faces bankruptcy. I do not believe it, and if I did I would not say it in public. Then he talks about zero target or negative target. I hope we shall not go too far in that direction. It would lead to massive unemployment and probably bring the workers of this country to the verge of revolt.
There is one important word that does not find a place in my noble friend's Motion. That word is "exports". It is the key to the future of the British economy. I am glad he found time to mention it briefly in his speech. There was another great man who said, "We must export or die". He was right. We are proud today to have the pound sterling standing high in the estimation of the world. But this can be a mixed blessing. It is a boon when we remember that we have to pay for 50 per cent. of our food from abroad, but it puts up the price of our exports to customers and requires them to find extra francs or extra marks for every £1 worth of our exports they buy. Although our exports are fairly healthy they are sometimes hundreds of millions of pounds a month less than our imports.
Last year our visible trade was over £3,000 million in the red. Once upon a time this kind of deficit did not matter very much: our invisible earnings from financial operations bridged the gap. But last year our invisible earnings fell short of doing this. They were only about £815 million. That left our combined visible and invisible earnings with a debit balance of over £2,400 million. That £815 million from invisible earnings was a big drop from the £2,200 million of the previous year. There were three reasons for that. The first was the increased earnings by foreign oil companies. The second was higher travel expenditure overseas—and please do not think that I am criticising people who go abroad for their holidays—but the fact remains that it takes our money. The third was the increased payments that we have to make to the Common Market organisation.
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To offset those burdens which we cannot very well evade we need to make a big effort to increase our visible exports, the products of all our factories. That should be possible because many of those factories are not working full-time and some are closed for weeks at a time. In addition to increasing our exports we must try to reduce our imports. Our shops and garages are filled with products that have obviously come from abroad. Many of those products can be made just as well in our own factories. So, if we were to buy British we should do ourselves and the country a very good turn. Was it really necessary, for example, to pay other countries over £4,000 million a month last year for their products which we imported? I agree that a good deal of that was for food and materials, but much of it consisted of manufactured articles.
As regards increasing our exports, I do not think that all of our manufacturers are as enterprising as they could be. Some are content with the easy market at home and some, undoubtedly, are models to the world: I am thinking of the General Electric Company and ICI. However, many others do not seem to care. One of the heartrending occurrences in recent history is our loss of the motorcycle industry, in which we were one of the world's leaders. Is the car industry to go the same way?
Naturally, I should like to see British workers earning better wages, but that needs to be linked with better productivity, as has already been suggested this afternoon. I should like to see the Government doing more to encourage agreements that link pay and productivity. It is no use Ministers standing back and merely gazing at industry: they must help managers and workers to increase their efficiency.
Is there anything more that can be done through taxation or State investment to stimulate reorganisation of plant in our factories? I know that something is being done, but is it enough? I think that we want more of the spirit of the GEC and ICI spreading through our industry today. I remember going round a textile mill in a northern town a year or two ago. The manager proudly pointed to a machine and said, "My grandfather used to operate this machine". I am afraid that that is too common a situation that one finds in British factories today.

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It is no use saying that we are in the midst of a world slump and contenting ourselves with doing nothing while that slump lasts. That slump will end some day and revival will come. Why are many industrial shares in the Stock Market rising? They say that the Stock Market usually looks six months ahead. Is it looking forward to a revival in the autumn? I think that there are many signs that such a revival will be with us before Christmas this year. In the meantime, industry needs to examine itself and to see what improvements in efficiency it can bring about. That, in itself, would bring some employment. Waiting until the revival comes means that the Germans and the Japanese will be ahead of us.
The Motion before us talks about this country's defence. I do not want to argue about whether we should make guns or butter—a weightier man than I am said that some time ago. However, defence these days needs to depend as much on machines as it does on men. So, if the Army, Navy and Air Force need more new machines let the engineering industry find employment in making them. If I am accused of arguing in favour of rearmament, I say that we cannot allow ourselves to fall behind other countries.
Therefore, I think that four things are needed. First, more Government inducement to industry to modernise its plant. Secondly, imaginative productivity pay agreements to increase both earnings and productivity. Thirdly, a Government-backed crusade among managers to increase exports. Fourthly, a reduction of the 17 per cent. minimum lending rate which is such a heavy burden on industry today.
4.46 p.m.
Lord HANKEY: My Lords, speaking strictly from these Benches, I wish to support entirely what the Government are doing to carry out a long-term reduction of public expenditure and of the public sector borrowing requirement. It is an extremely difficult job to correct an inflation as persistent and long-standing as we have suffered. The Swedes, for instance, have had the utmost difficulty in making any very great change, since the change of government in 1975. I think that it will probably take five years to get this country back on to a proper
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course, and five more years to take advantage of the greatly increased production which will then result, to enable our people to be on equal terms with all their neighbours in the OECD.
At the conference of 1878 the British representatives were Lord Salisbury and Disraeli. Bismarck said of the British delegation:
"The old gentleman is made of lath and plaster, but the Jew means business".
I hope that the Government will mean business and will continue to mean business and press their policy through to an effective conclusion; otherwise we shall indeed be in trouble. Further, I believe that all the main parties really have a common interest in seeing this country and our work people restored to a proper standard of prosperity such as they thoroughly deserve.
I wish to urge very seriously that a correct monetary policy, such as this Government are following and which I entirely support, while essential to rectify the serious inflationary condition that we have, is definitely not enough, by itself, to get our industrial recovery back on to a progressive and profitable path. The present internal obstacles to any real industrial recovery, quite apart from any external or exogenous factors, are far too great to be solved by monetary policy alone or even by market forces.
One of the first, and I believe most essential, factors needing immediate reform is our very harmful legislation on industrial relations. It is, of course, true that we cannot by just passing laws, make good industrial relations. We cannot legislate people into happy marriages either. But, on the marriage analogy, if the law said that married people could do anything with anybody with total impunity, there would really be chaos and very few happy marriages. Yet, that is what we now have in our industrial relations legislation. The 1974 Act and its amending Acts were drafted for a Government under very left-wing influence. In this House we said that it was a "bully boys' charter" and that it would facilitate the intimidation of the vast numbers of sensible workers who did not want their working week, or their pay packets, to be disrupted. Noble Lords will recollect that the 1974 Bill was passed over the dead body of this House by the use of the

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Parliament Act. Of course, inflation has made everything much worse. Our workers are very reasonably worried and there are innumerable excuses for those who want to cause disruption to make trouble, and that with the aid of the law.
The present state of affairs, which the noble and learned Lord, Lord Denning, tried and failed to correct, is an immense and unreasonable burden on our production, and it can be corrected only by further effective and much more sensible and acceptable legislation. I do hope that it will come forward soon. I am on the side of those who want to see very early and effective action. I believe that the mass of our countrymen are deeply shocked at the delay and do not understand it. There is no chance—I repeat, no chance—of our industrial recovery while we promote chaos with laws such as those we have. I know from long experience overseas that the world will not wait indefinitely for our goods, and industrial disruption not only spoils timekeeping but also undermines quality, good workmanship and efficient management. For some reason it seems to be worst in our export industries.
I miss another essential feature also in present Government proposals, so far as they are known. Surely we should not dish out public money when employees go on strike in breach of their agreements. I am all for good and humane social security payments, but surely we should organise the system so that it does not promote industrial indiscipline and disorder, but instead encourages the observance of collectively concluded agreements. We cannot base an orderly society on collective swindles, which is what we now have.
Like everybody in this House, I am very much concerned about steel. I hope that we shall have spare capacity after the present plant reductions have been carried out—many of them looked all too inevitable. We are obviously moving into a period of growing international tension. I am sure that we have to foresee large demands on our steel industry for rearmament, unless a really miraculous change in the international situation occurs. Clearly, we must have more ships for escort purposes and to protect the long sea routes along which our oil and other vital resources and exports
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come and go. The sea routes are now very exposed. We should have lost both world wars if we had lost sight of this. I am suggesting that there would be very good reasons now for laying on more orders for naval ships, military equipment and aircraft and all that goes with them. I am quite aware that this runs contrary to the policy of reducing public expenditure, but I shall explain why I think it would be worthwhile.
It would greatly assist steel, shipbuildings, vehicles, machine tools, electronics, et cetera. It would raise the morale of those very depressed industries and encourage skilled production teams, which are now in danger of leaving, not to go away. It would also help with unemployment. By lowering unit costs of production it might even help those industries to export more once again. There is no need to feel morally bad about exporting arms. The Russians are arming themselves and their satellites on a vast scale. I do not want to see an arms race any more than does my noble friend Lord Brockway, but we must live in the world as we find it, and in this respect I believe that we could help some of our most disadvantaged industries.
My Lords, please bear in mind that with machine tools and other sophisticated equipment, especially defence equipment of all sorts, we cannot get orders abroad unless we are known to buy and use that equipment at home. This is a very important consideration if we are to keep up technologically and maintain our place in world markets. I know from experience that, when we go to sell these things abroad, foreigners ask, "Does your own Ministry buy it?"
That brings me to the foreign exchange rate of the pound. This is a vital constituent of any export or import price. The noble Lord, Lord Kaldor, gave us some most interesting facts about the economic history of the 1930s. I should like to add a quite significant fact from about 1925, when Mr. Churchill, then Chancellor of the Exchequer, appreciated the pound by about 10 per cent. in order to facilitate the payment of our war debt to America. The result, unfortunately, was to make our exports uncompetitive, with most unfavourable effects on our industry, on unemployment and on the national economy generally. I cannot make a

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scientific calculation, but I believe that the proper value of the pound now probaby ought to be about $1.80 or $1.90, if we take competitive prices as the basis of comparison. However, if that is anywhere near correct, the pound's present appreciation is of the order of 20 per cent., double the dangerous 10 per cent. which did us so much damage in 1925 and subsequent years.
This is an immense barrier for our exports to overcome and must greatly worsen our employment figures and our ability to hold our export markets. It also gives undue encouragement to imports. We see the effects in motor-car and vehicle imports and exports every time we open a newspaper, as well as in unemployment and plant reductions at home.
Of course, the present exchange rates are the result of many factors. The situation has changed a good deal since the 1930s, but probably the most important of these factors statistically nowadays are not trade factors, as they used to be, but capital movements aroused, among other things, by our high rates of interest and, of course, by political considerations. The Government are certainly right to use monetary policy and, if necessary, even high interest rates to correct the rampant inflation from which we have been suffering. But I suggest that we need a yet more sophisticated attitude to inflows of capital. I believe that we very much need the inflow of investment capital which will bring with it industrial and technical know-how for the expansion and modernisation of our industries. There have been very interesting developments with the United States, France, Germany and Japan in this connection.
But, at the risk of shocking many people, I suggest that we do not equally need short-term money, money for portfolio investment, or money rolling in to assist local or other authorities to go on spending beyond their means. I realise, of course, that the Government rely on a good deal of foreign money to go on selling gilts and meeting their public sector borrowing requirement, but I hope that that requirement will reduce in time.
These capital movements, unconnected with production, really contribute nothing to industrial production, and their effect
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in Britain is bound to be inflationary. I wonder whether the Government could not find some sophisticated ideas for controlling or influencing such capital flows in the regulations in force in Germany or Switzerland, or even in Sweden. To sum up this section of my speech, I am sure that we should try to avoid our exchange rate being hoisted to a level where our exports are seriously impaired by movements of capital from abroad which do little or nothing to improve or increase our production.
If a more sensible and productive exchange rate could be achieved and also less industrial disorder in our export industries, I think that there would then be real merit in anchoring the foreign exchange value of the pound to the European Monetary System, in which we already play a considerable part, short, however, of the exchange rate. It would be an immense advantage for our industries in estimating the cost of imports and exports and raw materials. Uncertainty about all this is the bane of a great many boardrooms and managements up and down the land.
I greatly hope these constructive suggestions may be carefully considered. I have tried to stick to only a few current problems on this occasion. But, if we do not get our economy and industry on to a much better line soon, I foresee that this country will eventually be short of both food and raw materials.
In all the fascinating and sophisticated literature on inflation, one basic principle must, I feel, be borne in mind. Inflation is fundamentally due to too much money chasing too few goods. If the measures which are taken to reduce the supply of money, cause or augment a recession and reduce the amount of goods produced, we may very well be little if any better off and we may be landed as well with higher unemployment, costly in human terms and also in money. It is therefore essential, I do urge, that the Government should attend very actively to industrial production and to the supply side of the economy, even allowing for their principles of non-intervention, which I fully understand and support.
In any serious attempt to combat inflation, hardship is unavoidable in my experience at OEEC and OECD, but

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especial care is needed to minimise it and to help industry and agriculture and production generally. I hope that these remarks will be regarded as constructive. We really must stop Britain sliding further down the slippery slope on which the whole of Europe is now precariously balanced. A real recession in the West is what the Soviet Government has waited for for the last 35 years.
5.2 p.m.
Lord RHODES: My Lords, if I had not seen an announcement in the paper at the weekend I would not have been taking part in this debate this afternoon. I saw this in my local paper, the Oldham Chronicle:
"Stone Platt to close Oldham plant: 850 will lose their jobs".
I started work in textiles when I was 12. Eventually I created my own firm which, through the years, kept up with the modest inflation after the war. We have this debate this afternoon under the shadow of strikes which seem to polarise attitudes that were common when I was a boy. Things do not seem to have improved much. It would be a great pity if this debate this afternoon finished up with no more a consensus of opinion than that we should start rearming again. Stone Platt used to attract criticisms from manufacturers because they sold their machines abroad for our competitors to use, so the manufacturers here suffered in consequence. Now even the machinery makers are folding up.
We have come a long way since my early days and the experience I had in the textile trade. During the time I was building up my business the whole world was in recession. Now we have a recession and inflation—a killing combination if ever there was one. I reckon that the 1970s were the worst decade for British industry that I have seen in my long life. It could well be that it was the worst for 200 years. I often think of a remark made to me by a leading Japanese trade unionist a few years ago in Tokyo. He said:
"You led us into the industrial revolution. Who knows, perhaps you will be able to lead us out of it".
What he meant was that we were the first in and that our accumulated experience would solve some of the problems of a modern industrial society.
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The 1970s started hopefully enough. We tried to tackle the traditional lame ducks like steel, shipbuilding, and textiles. We tackled them with vigour, and in many ways we have been God's own children; the Lord's annointed. First, the sea based empire was built with preference for trade, and when that went out we had the invisibles, the services, which for many a year put us in the black on our balance of payments. Now we have North Sea oil, to which I shall refer again in a minute. But the lame ducks are still with us: Rolls-Royce; British Leyland; Alfred Herbert; textiles, and shipbuilding with problems still unsolved. This is where I come to the comments made by the noble Lord, Lord Cockfield, this afternoon about the desirability of an education process proceeding because I want educating too, and I hope that my education will be improved by the answers I get to some of my questions. These questions are being asked of me, living among the people I have lived with for 84 years. They are puzzled. They do not understand what is happening. This needs to be said time and time again.
In a thousand pubs and clubs throughout this kingdom every day of the week these questions are being asked: What has happened to the income from North Sea oil? Which industry has been made more efficient and can stand on its own feet because of this? You remember the glib phrases that we were fed with, that our leaders used of old? North Sea oil would give us a breathing space. It would be the means of investing in new machinery. It would revive the whole basis of British industry. Has it done it? Of course it has not. Where did it go? It went, and still does, on financing the biggest buying bonanza in the history of this country.
At the same time we have the phenomenon of a strong pound not because of industrial efficiency but because of the so-called good fortune of North Sea Oil. It makes foreign goods coming in cheaper. It makes our exports dearer, and puts a lot of our people on the dole. It is a salutary fact that more than two-thirds of any increase in income in this country is spent on imported goods. We are not competitive enough even without the burden of North Sea oil.
There are bright spots, as has been said. Larger companies such as GEC,

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ICI, BP, are better off financially than they were in the 1960s, but in the last year the overall picture is that the increase in the volume of our imports of manufactured products has exceeded the increase in our exports by 600 per cent. According to the last Treasury forecast 1980 will see us with a deficit of £2 billion in the current balance of payments. This is an unsolved problem which is going to drag us by the scruff of the neck into the 1980s. What we all want to know is whether we are going to prevent this newfound so-called prosperity due to North Sea oil from causing more decline in British industry? It is about time that we knew, and about time that we all got round to helping to solve it.
We need an answer to a question I am often asked. Why do we not do like the Americans and have a dual oil pricing system and generate growth in those industries which rely on oil for their stock? Why not do that for a start? The carpet manufacturers of Axminister, Yorkshire, Glasgow, Paisley and all over the country have been asking that question, but they have never been given a proper answer. Alternatively, is the answer to our problem a dramatic increase in productivity? Do we believe in productivity any more? We have a split mind on the subject. We give grants for the purpose of installing new machinery and when we have those machines we do not work them to the best advantage. We pump money into a business to become efficient by these grants and at the other end we pump money in to make them less efficient by SET.
In this country we have some of the finest plants in the world, which are grossly overmanned. I remember Harry Douglas, who used to sit on these Benches, saying 15 years ago that there were 25,000 men too many in the steel industry. This does not mean that I am advocating a callous and ruthless policy towards redundancy. Not a bit of it; indeed, if I were a young man today I would be prepared to go to the barricades rather than be taken over by a silicon chip. We are absolutely bound to find the solution to this problem on a national scale, and everybody must be in it.
There are three courses open to us. One course is that now being taken by
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the Government. The present Government see the solution through an attack on inflation and encouragement towards risk taking on the part of industry. They have reduced income tax, which is an obsession with them. What they do not have is an obsession to get people to work better together. Certainly they have reduced income tax, just as they have cut public expenditure, and they have begun to sell off State-owned industry to the private sector. Undiluted free enterprise is all very well if you occupy the unique position of undisputed workshop of the world, but we do not. British industry is like a sick man and you do not toughen up a sick man by sending him off on an assault course. If you do you kill him off, and it is the same with British industry, especially when British industry has to face up to the formidable competition from Japan, Germany, the United States and France. In any event, all those countries give massive support to their industries. Unfortunately, we in this country stagger from one intervention to non-intervention, arguing about ownership when the important thing is performance. Some of the argument this afternoon has been on that plane.
On the other hand, the interventionists say the Government cannot stand by while industry is rapidly declining and imports are flooding into the country. British industrial decline has been with us a long time, as we heard from the noble Lord, Lord Kaldor, earlier. It persisted when there was little or no inflation and when personal taxation was low. The entrepreneurs were not inspired then, apart from a few like myself. Are they likely to be inspired now when competition is going to be more intense from electronics and silicon chips? "All right", say the interventionalists, "channel funds from North Sea oil into new investment", and they point to the success stories of both Labour and Conservative Governments in backing International Computers, the successful rescue of Ferranti, Fairey Aviation, and a dozen more, together with some failures as well of course.
The third point I wish to make is about import controls, and I do not believe we can avoid them. Indeed, we can be sure that we shall be forced to adopt import control within the lifetime of this Government if they last as long as two years—not the sort of control to featherbed

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the inefficient but to take the steam out of buying sprees the like of which we have never seen before. After making an extensive journey during the last few months which included China and America I cannot see how else we shall be able to generate enough momentum to reduce costs, boost profits and achieve investment to get us into a spiral of expansionist success again.
The danger is that the British disease is so ingrained that all that will happen is demands for more wages and rewards, instead of going all out to put industry back on its feet again. It is an unfortunate feature of our time that the politicians have little time to spare from the nitty-gritty to get down to the long-term considerations. But what we cannot get away from is the fact that if manufactured imports continue to increase at last year's speed, when they shot up by 16 per cent., 10 times faster than our exports increased, it will not be a question of "if", we have import controls, but "when".
The fact that the British do not buy British would not be so serious if we had means of paying for the imports other than North Sea oil, which will run out. It is unlikely to be the service industries because those industries furnish us with the revenue for invisibles, although we have noticed that as oil prices have increased so invisible earnings have declined. I ask the Government to explain why that has been the case. Is it because of the excessive profits to foreign companies that are being channelled out of the Revenue? If not, may I please be told the reason? It is unlikely to be the service industries that fill the gap and, in any event, it is reckoned that the United Kingdom's share of the world markets for services—banking, insurance, tourism and so on—would have to increase by 33 per cent. to make up for every 1 per cent. fall in the share of world trade in manufactured goods, and that is a tall order.
Neither would it be so serious if Britain's disappearing industries were confined to those we should not have been in anyway, or those best left to developing countries, but we are opting out of traditional products—typewriters, cash registers, sewing machines, cars, and durables of all kinds—which other countries are now regarding as growth industries. We had better be
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asking ourselves why this has happened, and it is a waste of time at this juncture to apportion blame. We are all involved in a complex situation which can be traced back over many years.
What stands out a mile is the need for individual identification with the success and future of the firms that men and women work in, and that goes for workers and management. We need a new sense of urgency and pride. When we in Saddleworth were carved out of Yorkshire in '74 we were going to be put into SELNEC, South-east Lancashire/Northeast Cheshire. We had a public meeting to protest, and because I was on the scene I was put in the chair. The young people put down a motion that the best interests of Saddleworth would be served by going into SELNEC. They did it on purpose; it was a provocative motion; and of course it was defeated. After the meeting, going down the steps of the mechanics that we now call the Civic Hall, I saw Joe Cartwright, who used to work for me. I asked, "How did you vote, Joe?" He said, "Agin". He said, "I wouldn't have minded if we had been going in with Oldham, or Manchester, or even with Lancashire. But I'll be damned if I want to go in with a set of initials." He put his finger on something that this country is wanting—and that is to be identified with loyalty, with people able to do their best, in circumstances which will increase not only production, but also morale.
We have great potential, but we waste too much time talking in terms of "them" or "us." It is a great pity that we do not seem to have the ability to weld our people together. It is a pity that we do not have a consensus of political opinion; and I feel that until we do we shall never make much progress in this country.
5.22 p.m.
Viscount AMORY: My Lords, it is a great pleasure to find myself following my old friend and that great Greater Mancunian the noble Lord, Lord Rhodes. We each sit on opposite sides of the House and, it seems, about as far from one another as it is possible to get. I imagine that that is because of the obvious danger of allowing two such powerful forces to operate in close proximity. We simply cannot imagine my old friend ever being taken over by a silicon chip, as he envisaged just now.

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Garrulity is the besetting sin of old age, and the one sound rule for an octogenarian is, Keep out of the way; and ever since I became an octogenarian I have imposed strict discipline upon myself to address your Lordships seldom, and when I do, briefly. So I hope that your Lordships will accept this short intervention with a kindly resignation as a step in the process of phasing out a member of the ancientry, of increasing wisdom, but declining powers.
The noble Lord, Lord Kaldor, has introduced a subject of wide scope and great importance. The noble Lord knows that I agree with him when he postulates the premise that some of our industrial weaknesses have been of long historical standing. The noble Lord throughout his distinguished career has displayed great skill in analysis and selective criticism of past events. My noble friend Lord Cockfield, in his excellent speech this afternoon, has also given us most relevant reminders of our national fortunes under recent Labour Governments.
When it comes to remedies for the future, I find the noble Lord, Lord Kaldor, less positive and less lucid. I seem to remember that in the years when the Treasury had the advantage of his advice, that excellent Department and its Ministers were not invariably successful in their efforts. There is, I believe, a nautical saying about gales:
"Quick come, soon past,
Slow come, long last".
That, I fear, is true of many of our national economic problems.
I should like to put on record a few, perhaps trite, comments on our current problems. First, I shall refer to inflation. So long as money incomes continue to increase faster than productivity and nonproductive expenditure to expand, this evil will continue to plague us. So long as our rate of inflation is higher than that of our international competitors, we shall persist in our poor performance. The cures are strict control of non-productive expenditure and a measure of national self-discipline—particularly the latter. I hope that we shall resist the temptation to accept as inevitable an inflation rate anything like as high as the current rate. It is not inevitable. So, as the noble
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Lord, Lord Rochester, reminded us, inflation must remain the first enemy at the present time.
The prospects for higher employment are not at present encouraging in the short term. Big companies are seeking, and are likely to continue to seek further reductions in manpower as technology grows. The best hopes appear to be in improving the prospects of smaller enterprises. There are, I believe, over 800,000 small businesses in the country. If each could feel confident enough to employ one more employee, that might almost halve the present total of unemployment. I believe that some revision of the quite heavy obligations of the Employment Protection Acts which were not envisaged at the time would be likely to help.
Having said that, I fear that our low relative productivity is likely to continue to be the most pressing and the most intractable of our problems. Here the recent reduction in direct taxation of earnings must be a step in the right direction, judging again from the experience of other countries who have been more successful than we have. The present level of imports of manufactured goods is, I agree, a standing criticism of our failure, for one reason or another, in ingenuity, adaptation, and innovation. That is sad, when one remembers that in the early part of the last century Britain was pre-eminent in those qualities.
Of all our great traditional industries, none, I fear, is in a more precarious state than the textile industry. Like the noble Lord, Lord Rhodes, I am an old textile man. The trouble here is imports from the Far East and, curiously, recently imports from the United States, due to the low cost in the United States of oil, which is the main raw material of synthetic fibres. Some branches of the industry, such as garment manufacture—and the big majority of garments are now imported—are still relatively labour intensive. The redundancies and prospective redundancies in garment manuafcture, and to a substantial extent, in fabric manufacture, too, are, tragically, leading to yawning gaps in employment in our traditional industrial structure. It would seem to me that the best hopes of some mitigation of the current dangers of very heavy textile unemployment, which has become a really urgent matter, may

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be in some EEC combined action, as the main problems are fairly common to the nations of Western Europe.
The currently strong level of sterling has obviously a discouraging influence on exports and an encouraging influence on imports. The present strength is presumably due partly to North Sea oil and partly to our higher interest rates for short-term money, which in our present situation is of very dubious benefit to us. What a pity, my Lords, that some form of differential rates cannot be contrived. I agree with much that the noble Lord, Lord Hankey, said under that heading. Public expenditure and public borrowing are both dangerously high as a proportion of our gross national product, as the last Government, rather late in the day, recognised. Cutting either or both is, as always, extremely difficult when people have become accustomed to the expenditure involved, and usually takes much longer than is estimated. The essentials of the problem, easy to state but difficult to effect, are the selection of the right priorities, the aim being to safeguard the most essential services and to concentrate the necessary economies on the more marginal, the more peripheral and, I think, the less essential expenditure—a sector of public expenditure which has grown enormously over recent years.
Lastly, few things make me so sad as the current state of industrial relations in certain of our larger industries. Twenty or thirty years ago I thought we had as good industrial relations as any country in the world. What has gone wrong? I believe, not basically any intrinsic bitterness: in part, apathy, yes; and in part a constitutional inability to understand the suicidal effect of pursuing old, outworn, traditional habits and attitudes. The right to strike, my Lords, is surely an ultimate right, a weapon of last resort, a safety valve. It has become too often, I think, not that but a threat to be used in any negotiation; a step in the normal process, as it were, of wage negotiation when it is felt that it would be feeble not to use that weapon. Our successors, looking back on our performance, will, I believe, be amazed that for so long we continued to use this lethal, self-destructive and obsolete weapon, apparently unconscious of its suicidal effects.
Lord HALE: My Lords, I am most grateful to the noble Viscount for giving
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way: I very rarely interrupt. He has referred to textiles, and the noble Lord, Lord Rhodes, quoted the words that I read in the Oldham Chronicle this week about the reduction in employment and the laying off of a substantial number of workers at Stone Platt, at Oldham. The noble Viscount will be familiar with the recent erection and opening of Carrington Viyella, which is perhaps the showpiece of the modern world in textile manufacture—a really automated factory which, according to particulars I read, was to be built by Stone Platt. So we get now a process of manufacture which enables one to dispense with three-quarters of the employees or more, and at the same time we find the textile machinery manufacturers who are engaged on that job—
Several noble Lords: Order, order!
Lord TREFGARNE: My Lords, I do not think the noble Lord has his name down on the Order Paper. Perhaps he would like to wait for my noble friend to finish his speech.
Viscount AMORY: My Lords, I think I know exactly what the noble Lord means, and it is a tragedy that several highly automated plants, which were installed in this country some years ago, are most unfortunately now running into sad trouble. That is one of the dangers, I think—the sad developments of today. Referring to our traditional habits and attitudes, which I mentioned, it is I think a little like the practice of bleeding, which for centuries the medical profession relied on with a blind faith in its efficacy. As regards the law, there can be no doubt in the mind of any fair-minded observer, I think, that the immunities properly given to trade unions by law 70 years ago, or much longer in some cases, are wholly out of date today. The trade unions unquestionably need reforms if they are to maintain the respect and support of the public. Unfortunately, over recent decades they have refused, or been unable, to reform themselves; so the law must step in and relate their immunities to justice to the community today. The form of legislation will require the most careful consideration. I wholly support the views of the present Secretary of State for Employment on that matter.
My own strong belief is that we are never going to get wage negotiations on to

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a fair and satisfactory basis until the principle of freely-accepted and binding arbitration in the real sense is once more restored to repute and acceptance—the principle that when two parties cannot agree they agree in advance to accept the decision of a third party independent of them both. That is not easy, my Lords, but in the long run it is absolutely essential. The ancient Greeks understood that principle and practised it. Such a principle requires for its implementation, not the occasional services of a high-powered judge withdrawn from other work but the day-to-day use of a body of arbitrators, trained like a kind of stipendiary magistrate, to adjudicate on matters in which two opposing views are held by ordinary people whose respective interests are involved.
The attitude which must be anathema, I am sure your Lordships will all agree, in any civilised society is the view which, today, one occasionally hears uttered by otherwise apparently sane people. I will quote:
"If we do not get our way we will destroy the industry on which our livelihoods depend and create a shambles".
Such an attitude is the outlook of anarchy and of the madhouse. I hope I live long enough to see this time-honoured principle of real arbitration, which has gone by the board today, brought once again into general use. It is, I believe, the only alternative to the pressing of sectional interests to the point of suicidal damage to the community at large. Changes in the law will not be enough, or effective, by themselves. We urgently need the reflection of new attitudes in more effective consultation through the National Economic Development Council or some other means, and greater participation in decision-making throughout industry by management and employees. Everything which affects the interests of employees is a fit subject for some form of consultation and co-operation.
The present Government believe that the less Government intervenes in the thousands of detailed decisions that must be taken, the better the system is likely to work. The present Government also believe that the current proportion of gross national product absorbed in other than wealth creation must be curtailed.
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While Government intervention in macroeconomic affairs is inevitable in modern conditions, I believe that the Government's aims on both these issues are right and to be commended. The immediate outlook is sombre and cloudy, but the rewards in the future for right and courageous, and unselfish action now will be great indeed.
5.40 p.m.
Lord BOWDEN: My Lords, I wonder if I may change the theme of our discourse for a moment and discuss not so much the problem of curing inflation as the problem of surviving it until we can cure it. I should like to begin, if I may, by commenting briefly on the ambition which was enunciated by the noble Lord, Lord Cockfield, of reducing public expenditure. I believe that great confusion is being caused by failing to distinguish between different types of public expenditure; in particular, I believe it has not been fully considered that there is a great difference between the gross cost of certain items of public expenditure and their net cost.
May I take a particular example of the problem that I have in mind About six months ago a hole about the size of a double-decker bus suddenly appeared in Oxford Road, Manchester. It was discovered that the roadway was held up by a remarkable and unique form of reinforced material. When the cobblestones had been covered with tarmac, the tramlines had been left in; and this combination of tarmac, tramlines and cobblestones showed a remarkable ability to resist the pressures of vehicles. The hole was at the very spot where the band had marked time on Armistice Sunday and the possibility that the whole band might have disappeared down the hole has troubled the lord mayor ever since. I tell your Lordships this because this is the result of neglect over a period of a great many years of the sewers and the water supplies of that great city.
It has often been said that there are never any votes in sewers; but there may be a calamity if a certain amount of work is not done. The net cost of the work of employing civil engineers who are now out of work, of employing machinery which is now rusting away, of using gravel in

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pits that are now deserted, would be very much less to the community than the gross cost of financing the work in the conventional manner—and there would be less risk of catastrophe on the main roads when we are driving over them.
I wonder if any noble Lord who had the advantage of a classical education, who was, as Samuel Johnson said, "A well flogged classic" in his youth, can remind me of the name of the famous Roman general who made a desert and called it Peace. This may be, perhaps, the achievement of this Government of ours if it curtails public expenditure too far, allowing essential services like sewers, roads, water supplies, not to mention hospitals and schools, to be neglected; when the net cost to the community is very much less than the gross cost of public expenditure that the Government are trying to reduce. I believe that the calculation of public expenditure has been over-simplified. The only item that we should have to buy which is not to be found in the ground around Manchester would be the oil to lubricate the machines we need. I plead with the Government that when they consider cutting public expenditure, they compute not the gross but the net cost.
The second point is this. The last time I addressed your Lordships' House was as long ago as last June, when I referred to the extraordinary way in which public accounting and the accounts of private companies deceive almost everybody concerned. This is due to the extraordinary way in which we persist in using historic costs instead of other types of costs in computing balance sheets. The Chancellor of the Exchequer in his last Budget speech said that this matter was of great importance and was being considered urgently. It has been considered urgently for the last 30 years. The Sandilands Committee reported years ago and various other reports have been made since; but there is complete silence from the Government.
For example, the profits of ICI (which is one of the most important and perhaps one of the most conservative of the organisations in this country) can be computed in two ways: the accountants can use the system imposed by the Treasury, the historic costs; or they can use a system recommended by Sir Francis
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Sandilands which allows more appropriately for the effects of inflation. This is what I mean by living with inflation until we can cure it. On one basis, ICI made 19½ per cent. profit and on the other basis 51½ per cent. This is not an inconsiderable difference. It seems to me that if a firm can publish two sets of accounts showing wildly discordant answers, it is not possible to have any fiscal policy of any kind at all.
On what basis can the Government impose taxes? The answer is that they impose taxes on the most profitable way from their point of view—on the 19½ per cent. They insist on taking its capital from the firm in the form of profits, and they insist that the firm should dispose of, in the form of dividends, further large sums of money which have had to come out of its capital. There is nowhere else from which the money can come. We have had a capital levy for many years—there is no other word for it—which is due entirely to the way in which the Government have insisted upon the maintenance of a system of accounting which everyone concedes distorts the truth and imposes a heavy burden upon industry.
I have spoken on this many times, and I was delighted to discover that the Governor of the Bank of England made a very important speech in which he drew attention to this same thing. He said that our system of accounting makes all firms declare unreal and artificially-inflated profits upon which they are taxed and upon which they distribute dividends, and upon which wage settlements are based. Any company which is thought to be making 20 per cent. is bound to be subjected to massive demands from its workforce for increased salaries, which it can well afford. But if you discover that the firm actually makes 5 per cent., then it cannot afford to give way to the large demands that the workmen expect. Last year the then Government imposed a 5 per cent. norm on wages and salaries and Fords were forced to pay 15 per cent. because, on the returns that Fords made, they had declared a large profit. The management tried to persuade the workmen that these profits were unreal; but the workmen said, "Why shouldn't we take them seriously? You do, the stockholders do. Your dividends are based on them and your tax is based on them. Why should we not accept them, too? "

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That was why Ford were forced to concede a 15 per cent. pay rise which broke the Government's 5 per cent. norm and led to the troubles of last winter. Once the private sector got 15 per cent., the public sector had to have it too and the dustmen went on strike. It is my belief that the great piles of rubbish in Leicester Square this time last year were got there primarily as a result of bad accounting which made it inevitable that people would have a grotesquely inflated idea of the available resources which industry could dispose of.
I remind the noble Lord, Lord Cockfield, of a very important observation that was made by the late John Maynard Keynes. He said that in times of inflation Governments confiscate secretly, arbitrarily and unobserved a great part of the wealth of their citizens: and they do so, furthermore, in a manner which not one man in 100 can understand or detect. This I believe to be the greatest single danger as a result which is imposed by inflation on the State. We could live with it ad interim by changing the accounting system. There is one extraordinary exception to this rule, and that is the Post Office. For several years the telecommunications division has declared a total profit of some £300 million or more—£380 million last year—to which people say should be added another £320 million which the Post Office, most fortunately for us all, is able to extract from profits, on the ground that it is necessary to maintain its capital.
This particular item got into the Budget by a curious and most remarkable way: in 1947, when the Post Office was still part of the Government organisation, the then Postmaster General was able to slip in an item of about £1 million for the maintenance of capital. As your Lordships know, accountants are extremely conservative men. Once an item appears on the balance sheet they never remove it. So this £1 million has grown and grown. It is now almost as big as the total declared profit of the Post Office. Sir William Barlow said, when I discussed it with him, "I do not know whether we are just uniquely fortunate, or if what we do should be held to be illegal, or whether everybody else ought to be allowed to do as we do. It is only as a result of this most curious historical fact that the Post
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Office is not obliged to do what the Post Office users would like it to do, to cut its charges dramatically until such time as it too becomes dependent on Treasury handouts, as everybody else is.
The remarkable thing is that the Post Office has been preserved by a most curious historical accident and has never been forced to forego the funds it has needed. But this same policy is not open to ordinary industrial firms whose accounts would be rejected were they to have an item corresponding to the Post Office's £300 million.
These are not trivial matters. It is not trivial to say that the Post Office cuts its profits in half by doing something sensible which is forbidden to the rest of industry. It is not sensible to say that ICI have to declare profits which are about four times as big as they earn and take the money out of their capital. I believe—and I have said this many times in this House—that one of the greatest obstacles to the survival of British industry has been bad accounting in the fundamental sense, not that the accounts are wrong but that they are compiled in the wrong way, and this is the way imposed by the Treasury.
Now I should like to turn to a completely different subject: Where have we an example of a country which, in spite of the current problems of the world, is doing very well? The remarkable thing is that we do not have to go halfway round the world to Japan to find it; we do not have to go across the Atlantic to America to find it. It is in Belgium. In the past 15 years the gross domestic product per man of Belgium has increased faster than that of any other country. Twenty years ago it was about the same as ours, now it is twice as big. Expressed in dollars—and I received these figures from the American Bureau of Statistics, so they are impartial —the average Belgian worker earns about twice as much as an Englishman. He works about six hours per week less than an average English workman and he has about eight days a year more in holidays than the average English workman.
Why has this come about? It is an extraordinary achievement and I think that when Mrs. Thatcher was told about it she asked the Prime Minister of Belgium "What went right?" I think it may have something to do with the way in which the

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managers of industry have been educated in Belgium. They seem to have learned more completely and more successfully than the managers of any other country; they make do with the resources they have because the capital invested per employee in Belgium is not high. It is lower than it is in this country. They have indexed their wages, which is something which our people will not do. They have all sorts of things going against them, like the Flemish/Walloon row, a perennial source of difficulty. They have nevertheless succeeded in improving the productivity of Belgian industry more dramatically than anyone else has done. Their national economy, their national wealth per head, is now better than that of the United States by a considerable amount and is almost as big as that of Germany, and it is growing faster than their's. How have they done it?
It is interesting to compare the amount spent in management education, for example, in the United States and England and several other countries with the corresponding growth in domestic product. It is a most extraordinary coincidence, to put it at nothing worse, that ever since the graduates of the Harvard Business School took over American business its growth rate has slowed down almost to zero. I would not for one moment presume to say that it is because of the effects of the Harvard Business School that this has happened, but I do point out that coincidences of this kind need some form of explanation. To look at the other side, the most successful economies in the world for many years have been those of Japan and Germany. Neither of them had any attempt at management education of the kind sponsored and made famous by the Harvard Business School.
At this moment the president of Harvard is trying to fill three important vacancies. He is trying to find a Dean of Law, a Dean of Medicine and a Dean of the Business School. He said in his last report that he understands quite clearly what sort of a man he needs to be a Dean of Medicine; what sort of man he needs to be a Dean of Law; but he said that he has not the slightest idea of what kind of a man he needs to be the Dean of the Business School because he cannot find out what the Business School is actually doing. I must not under any circumstances
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denigrate the work of the Harvard Business School whose graduates all do so well individually. I am concerned with their effect on the nations over which they now exercise such a control.
In Belgium there is, and has been for some years, a remarkably different type of management education. This was established about 20 years ago, and since I am speaking about it I must mention that it was done by a friend of mine who established a foundation which includes the five universities, the major industrial firms and the banks, the insurance companies, the shipping lines and half a dozen other such organisations. These people each nominated a single manager, a man actively engaged in doing things, deciding things, These men came together and it was so arranged that each of them went into another firm (perhaps of a quite different type) and for a year investigated a problem which worried it. Each man worked for four days a week in the other firm and then they came back and discussed together in groups of half a dozen what their joint problems were.
In the 20 years or so that this system has been going more than 1,000 people have gone through this routine. They have now come to dominate Belgian industry and they have had a major effect on its overall productivity; so much so that the Americans, who were startled, as we all have been, by the extraordinary success of the Belgian economy, have now asked that a group of Americans should collaborate with some of the groups from this foundation to try and study what it is that Belgium is doing so much better than America. Is it merely that they are smaller? They have no resources, their steel plants are gone, their coal has gone and Belgium is only a little country. They have every conceivable thing going against them and on classical economic grounds they should not succeed, but they have.
At this moment, there is a project to set up a joint Belgian—American study group, in which the Belgians and the Americans will try together to find out why it is that the Belgians have been so much more successful in increasing their gross domestic product than the Americans or ourselves have been. This is to be sponsored, I believe, by the University of Columbia, whose head of business studies

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is a director of the Federal Reserve Bank. So what I should like to suggest is this. If the Americans and the Belgians can join forces to find out why it is that Belgium is doing so much better than anybody else, why do we not get into the act? Why do we not nominate someone to join the group and find out what it is that they are doing, that we cannot do?
The great and fundamental difference between this form of study, and any form of study which I have encountered in this country, is that the work is done by men who are practising managers, seconded for a year to go out to do another job in another firm. They are not abstract economists, they are not theoretical mathematicians, but they are men upon whom, traditionally, has rested the heat and burden of the day. They find, when they go into each other's firms, that they can often be enormously helpful in the analysis of a problem which defeated a man who was living with it day to day, and who could not stand back and look at it.
A long time ago, I used to know a man named Kenneth Mees, who was the director of research for the Kodak Research Laboratory of Rochester, New York, in the days when that was the most famous and effective of all the research organisations in the world. He once told me the secret of success in running such an organisation. He said, "The only man who knows whether a piece of work is going well is the chap who is doing it. His immediate supervisor knows something about it, but not as much as the man on the bench. His group leader knows very little and the director of research of the organisation will get the decision wrong every time. In other words, the more remote the decision process becomes from the place where the work gets done, the less effective it is, the less understanding there is and the more likelihood that the ordinary people will reject the arguments with contempt".
I think we ought to learn what we can from our next door neighbours. It may turn out that they have nothing to teach us, but we do not know. But it seems to me that the opportunities for learning something are very great. I beg the Government to do something to make it
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possible for our country to participate in an international study to be made by Belgium and the United States, to find out, initially, why the Belgians are better than the United States and, secondly, perhaps, why they are better than we are.
6.3 p.m.
Lord BOOTHBY: My Lords, my only excuse for addressing your Lordships this afternoon is that for the last 20 years, and particularly for the last 10 of them, I have been right about gold, when every Central Bank, every treasury, and every economist, from Friedman to Galbraith—all experts without exception—have been wrong. I have now been proved right, and I just wanted to get up and point that out, so that it should at least be on the record.
I am sure that we are all very grateful to the noble Lord, Lord Kaldor, for initiating this debate, and also for the excellent and interesting speech which he made. I notice that he kept well clear of gold. But I say that the world recession, at the present time, and the uncontrollable inflation are not primarily due to a shortage of oil or to the oil price. They are due to the mishandling and misuse of gold, which began seriously at Bretton Woods a very long time ago. I said so at the time. The price of monetary gold was fixed at Bretton Woods at a ludicrously low level; in fact, the same price at which President Roosevelt fixed it long before the war broke out.
On top of that, as if that was not enough, they fixed exchanges in a world of chaos—war was still going on, and you cannot fix exchanges until you have some kind of stability in the world—with the result that ever since Bretton Woods we have had inadequate liquid reserves for the development of the free world. We were seen through for a bit by Marshall Aid, and after that we were seen through for a bit by deficit spending, with paper money which we had not earned. But it could not last, and neither Marshall Aid nor the paper money could see us through in the end; and now we are reaping the consequences.
This brings me for a moment to the man who has perhaps been the dominating figure in economics in this century—Keynes. Recently, there was a leading article in The Times, which suggested that

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he had no principles of any kind because he had no standards of any kind. I think this was really directed against King's College, Cambridge, rather than at Keynes himself. But, in fact, he did rebel instinctively against the gold standard and the disciplines which it imposed. But, on the credit side, there is no doubt that he showed to the world the way out of the deflation of the 1930s in a series of brilliant pamphlets and he will go down in history as having done that. The last time I saw him, I said to him "You have shown us the way out of the deflation of the 'thirties. Can you show us the way out of the inflation which is coming in the 'fifties?" He replied "Ah, that is more dangerous. I have seen it at close quarters"—he was referring to Germany after the First World War—"When the time comes, I will show you the way out of that". The time came all too soon, but by then he was dead.
His economic reputation will forever be besmirched by the fact that in 1945 he brought back from the United States a revolting mess of pottage, in the shape of the Bretton Woods Agreement, now in ashes, and the American loan which involved convertibility of sterling into gold within a month, and of course it was washed away in a month. I myself shall always, till the end of my life, be proud of the fact that I moved the rejection of both the Bretton Woods Agreement and the American Loan Agreement in another place, and got quite a lot of Members of all parties to support me.
What, my Lords, did the Americans do? They went on to demonetise gold altogether. Gold was not to be the basis of any currency. Why? It was because they thought it would benefit South Africa and the Soviet Union. That was the reason they gave at the time. I think the real reason was that they wanted to replace gold with the dollar. In any case, South Africa might have benefited; but if it had, I am sure that the progress which is now moving in the right direction, so far as race relations are concerned, would have moved quicker. As for the Soviet Union, I should not have minded in the least if it had increased their liquid reserves. It would not have been a direct threat to us in the military sense, and it would have enabled us to avoid giving mountains of grain and butter to the Soviet Union
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at throw-away prices denied to our own people.
As I have said, the Americans replaced gold with the dollar. There is a sharp difference between gold and the dollar. The whole world believes in gold, and has done for 2,000 years. Not a single soul believes in the dollar. Yet that is what we have now made the basis of credit. So, today, we have no measuring rod of value, which Keynes himself said was essential to the survival of any kind of capitalist system, and we have no viable international monetary system. As a result, as I said, there is a world recession and an uncontrolled, and apparently uncontrollable, inflation.
There is a lot of talk these days about what is called monetarism. I think it is all absolute nonsense. Her Majesty's Government are accused of being in the vice-like grip of monetarists, headed by Professor Friedman. Mr. Wedgwood Benn was at it again on television only last Sunday. The truth is that you cannot have monetarism or a monetary policy without money; and that is what we have not got. We have abolished money; and that is the main trouble which we are suffering from today.
What are the workers now demanding? The pound is no longer real money. It is steadily diminishing daily in value, but the workers are asking for more pounds. I must say that if I were running this country—and I often think what a pity it is for this country that I never did—I would be very tempted to say to the workers, "If that's what you want, take it—and take the consequences", because that is the position we are reaching now. It is better than closing down factories, right, left and centre.
What is the solution? The first Earl of Birkenhead once said:
"Economics is a dismal and it is also a purely empirical science, if indeed it can be called a science at all. Its professors grope more faithfully, but with less certainty, towards the light (or towards the dark) than the titular exponents of any other branch of human learning".
With all due deference to my noble friends Lord Kaldor and Lord Balogh, I had to quote that remark because I do so agree with it. It is, I think, largely true. The immediate answer was, somewhat to my surprise, given by the editor of The Times on 1st February. In a brilliant article on

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1st February Mr. Rees-Mogg said that we should now go back to gold—because at the present price we could go back, with no dire consequences—at a price which would give adequate liquid reserves in order to finance increased industrial production and trade, and at the same time bring inflation under some control and interest rates ultimately down. We could do it, and we should do it, at around the present price.
I am going on rather long, but I do not think I shall be speaking much to your Lordships again. When you pass 80 you have to be stopped either by God or by yourself; and I do not intend to go on indefinitely, with all respect to my noble friend Lord Amory. This brings me back to the Genoa Conference of 1922 which passed a number of currency resolutions. They were drafted by the late Sir Basil Blackett and the late Sir Ralph Hawtrey under the direction of Mr. Lloyd George. In the words of Sir Laming Worthington-Evans, who was there, they constituted a financial code worthy to rank with the legal code of Justinian. That is perhaps a little over the odds, but at the same time I think there is no doubt that they do represent a higher level of economic thinking than has been achieved since, even by Keynes. And they deserve re-reading. I bet the Treasury threw them into the wastepaper basket years and years ago, but if they have not got a copy of the Genoa resolutions I can tell them that Sir Ralph Hawtrey gave me the original typescript draft, corrected. I have it in a drawer, and I should be glad to have a copy made and send it to them.
Before I finish speaking about gold I should like to quote Daniel Webster—and he is worth quoting. He wrote:
"Of all the contrivances created for cheating the labouring classes of mankind, none has been more effective than that which deludes them with paper money".
That, my Lords, is precisely what successive British Governments, Labour and Conservative, have been doing for the last 10 years. They have been doing just that—deluding the working classes, by which I mean white coat workers as well as blue coat workers. They have been cheating them.
The other quotation, which is even
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shorter, comes from Voltaire, whom nobody can say was a stupid man. He said:
"Paper money eventually goes down to its intrinsic value—zero".
For the last 50 years I have been watching, from within Parliament, our governors, especially our financial governors. I had an uncle who was Governor of the Bank of England and a cousin who was a Deputy-Governor of the Bank of England. I knew them in the Treasury. I knew the leading economists. I cannot help feeling that the mess we are in today is to a large extent due to them. I think that on the whole a man called Niemeyer was the worst. Noble Lords will not remember him but he was at the Treasury before the war and unwittingly—not intentionally in any way—he certainly rendered Hitler far greater services during those years than Dr. Schacht.
On the question of gold, before I conclude I should like to say that I do not suppose there is anybody in this House who has a higher regard than have I both for the noble Lord, Lord Kaldor, and for the noble Lord, Lord Balogh. Apart from being extrememly nice, they do occasionally talk extremely good sense. But when it comes to the question of gold, if it is a choice between Blackett and Hawtrey on the one hand and Kaldor and Balogh on the other, my money is on the Union Jack! I think they were right. The noble Lord, Lord Balogh, and the noble Lord, Lord Kaldor, were not the only ones who were wrong. The rest of the economists have all been wrong ever since, and before I die perhaps I shall lead them back to the promised land!
I turn for my last few words—I have detained your Lordships for too long—to defence, which the noble Lord, Lord Kaldor, rightly put into his Motion. We have got to spend a lot of money in the near future on conventional forces. They will cost a lot of money. I will not bring in the question of National Service. I said yesterday that probably we ought to have it. But defence will cost us a lot of money.
When one thinks of defence nowadays, one thinks in terms of Russia. Very few noble Lords have penetrated the holy of holies, the Kremlin itself, in Moscow. I have, more than once—beginning in the 1920s with Radek, who was Lenin's right-hand man when he died, and who was at

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that time head of propaganda and head of intelligence. Although I could say a lot of things about the leaders of Russia in the Kremlin which would not be very favourable and which would not serve any useful purpose at this juncture, I can give this assurance to your Lordships: they are not stupid; they are extremely intelligent, and for the last 30 years we have grossly underrated their intelligence. In many ways their policy—assuming what their aims are, although I do not approve of all their aims—has been amazingly successful. Before the war I advocated an alliance with Russia against Germany. I used to lunch regularly with Maisky. I spoke often about it in another place. I was in close touch with Litvinov. If we had brought it off, it would undoubtedly have prevented the Second World War. As it was, Chamberlain's Government at least gave the impression that far from aligning themselves in any way with Russia they would very much like to see Russia destroyed by Germany. At least, that is the impression that Stalin got, and he altered course accordingly.
Hence, the Ribbontrop-Molotov pact and the Second World War. But look what happened after that. I remember talking in the dining room here with one of the most distinguished Members of this House in our time, the late Field Marshal Viscount Montgomery of Alamein, He was telling me how good Stalin was as a war leader, and how he himelf had directed the battle of Kursk. I said to him, "Was Kursk his greatest victory?" He said, "Oh no, Yalta was his greatest victory". At Yalta he ran rings round Churchill and Roosevelt and collected, quite quietly and without any fuss, half Europe; and we have never been able to dislodge him since.
Since then I am quite sure that I know what they are up to. We think that we can defeat what they are up to by the CIA, and MI5 and MI6—two of the most fatuous organisations which have ever been invented; little men in bowler hats, popping about in trains with forged passports and looking like Alec Guinness. That is not the answer to the Russians, my Lords, I can promise. They have had two objectives and they have achieved them both. Their first objective was to match, and therefore neutralise, the nuclear weapon with the United States.
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They have done it. They do not want to use it and I do not think they ever will use it, unless we use it on them. But the object was to match and therefore neutralise, and then to build up such an overwhelming superiority in conventional forces that they could collar as much of the world as seemed reasonably possible—and they have done pretty well in recent years. In Europe, in Asia, in Africa—they have practically the whole of that, except Kenya, Egypt and South Africa. They even have a bit of the West Indies, in Cuba. That is not bad going. Now they are pretty far into Asia, in Afghanistan. We must not underestimate their intelligence.
The only way to stop this is to increase our conventional forces. I am sure that if they think it is a pushover—and tonight they could easily reach the Rhine in 48 hours and the Channel in two days with their tanks, and with nothing to speak of up against them—they may be very tempted to do it. In fact, they have done it whenever they thought there was no serious risk attached. But if we had conventional forces which were credible, I do not think they would do it. On the other hand, if we rely solely on the nuclear deterrent for our own defence credibility, I think it is frightfully dangerous. So I think we should concentrate on conventional weapons and in order to get enough in time I think we ought to bring compulsory national service back, which would do no harm to our young people, or at least a register, as President Carter has. We are not even doing that. If we had now suddenly to expand our conventional forces to meet an emergency we simply could not do it; we have not got the means.
In conclusion, I should like to say that I think those free Western democracies which are left, if they want to survive, must get on with each other, which at present they do not. We have only to look at Strasbourg and Brussels and the arguments that go on between Washington and Paris. They do not get on with each other at all. I think they must go back to gold or face economic ruin. If they do go back to gold, get on with each other, and increase their conventional forces, we may still save the world from a third disaster.
6.25 p.m.
Lord BALOGH: My Lords, I think we ought to thank the noble Lord, Lord Kaldor, for initiating this debate. I do not think that the topic can be discussed enough because I believe there are a number of important questions to be resolved (if one can resolve them at all). This debate is timely. The chief guru of the faith which in my opinion has caused most of our difficulties is about to descend on England, with the help of the BBC, to mislead as great a part of the population as possible. Yet on second thoughts I find that some of the diagnosis and also of the therapy developed on this side of the Chamber has penetrated even the Cabinet. This is always noticeable outside by the number of leaks and the leaks have multiplied lately. They are professional; they are obviously not coming from No. 10, as sometimes was the case before, and they suggest that the earlier monolithic cause which has been presented with some jokes and some quotations out of context by the noble Lord, Lord Cockfield, is not having all the way.
Let us see what has happened in this country since the end of the war. The first four years were of unparalleled effort to get back to normal, and while most of the European countries and Japan may have been very much more successful afterwards, the immediate wartime powers of the Government enabled this country to steal a march until 1949. It was an unparalleled achievement, especially if one takes into account that because of the Lend-Lease agreement we had lost the whole of our export markets; and it is not true that there was a void abroad into which we could expand because the Americans, both South and North, had built up a very great productive potential during the war and afterwards and (until Marshall Aid) used it ruthlessly.
There was, of course, a snag, and that was inflation. It turned out to be a fatal snag. When the noble Lord, Lord Cockfield, referred to inflation he said that this is much the most terrible scourge. I wish he had also mentioned that there is a very dangerous choice here between unemployment and inflation. I do not think that one can be as quick and as positive in one's statistical statement as the noble Lord, Lord Cockfield; but there is no doubt that inflation is only
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really dangerous if it becomes super-inflation, that is to say when people anticipate further inflation; and it seems to me that unemployment beyond a certain point does as much or more to undermine the fabric of society. I am not saying that one should not pay much attention to inflation, but it would be desperately urgent to find a means by which we can escape both, because now we suffer and the increasing unemployment is altogether too freely disregarded.
The noble Lord, Lord Cockfield, after referring to the terrible problems which are created by inflation, said that incomes policy cannot heal and must break down. Incomes policy introduced as a measure of desperation in a crisis situation, when everybody expects that sooner or later it will be revoked, of course cannot succeed, or rather it succeeds while it is on but it is fatally wounded at the time when the freeze or mitigation of wage demands is over.
The initial political success of the Keynesians was due to the fact that they seemed to be able to achieve spectacular results, stability and growth, implying full employment, with relatively simple reforms. Its practical proposals amounted to an intelligent management of the Budget and of monetary policy. Fine tuning of overall demand was said to be sufficient to create a revolutionary situation. What the new Keynesians refused to do—and in this they were in line with the neoclassicals—was to consider the probable emergence of new problems from the conjunction of full employment with increasing concentration of economic power on both sides of industry. Oligopoly, the market power of a steadily decreasing number of giants, was substituted for the impersonal signals of the market forces emanating from myriad units in the market in the old model of the economic system. Together with bilateral monopoly relationships established in the labour market this was the strongest, if not the sole, impulse to cost inflation. This fed on itself. But the uneven incidence and timing hit the professions and the workforce. The combination of oligopoly in the goods market and the bilateral monopoly situation in the labour market destroyed the conventional economic analysis and rendered the results indeterminate.

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When the noble Lord, Lord Cockfield, in an awestruck voice spoke about the efficiency of the allocative function of the market he talked about an arcadian age in "never never" land where myriads of units competed freely. This has no relevance to our present problems. Moreover, if the Cabinet is really behind Lord Cockfield's strategy against inflation, then we shall be prevented forever (or rather until the next election) from making full use of our potential productive forces, because a disgruntled labour oppressed in the restrictive period will, as soon as expansion begins, make unreasonable demands, as it did last year. The so-called structural unemployment will turn into a long-term catastrophe as shrinkage of production increases fixed costs and cuts productivity. Year in, year out, we shall witness confrontation, such as we saw last year and as we are experiencing now.
Unfortunately, the liberal Keynesian policies did not lead to consideration of further development of Keynes. What happened was a vivification of the long-exploded monetarist school based on the particularly primitive version of the old quantity theory of money. They went back to the economics of the 1920s, trying to balance the Budget, maintain over-valued exchanges and a reluctance to create sufficient liquidity. They wanted to bury Keynes to save their own reputations.
The monetarist interlude stands out as an incomprehensible abberation of intelligent men and women which can be likened only to the Lysenko episode in the USSR; only Lysenko had some potent persuasive arguments in the Gulag Peninsular. Western economists, like Humbert Woolfe's journalists, commited their trahison des clercs unbribed and unfrightened. It is not difficult to see why economists as well as trade unionists and politicians embraced this credo with such enthusiasm.
The inescapable lesson of the pre-Second World War cycles (and post-1972 boom and bust) is that all indirect policy measures whether monetary or fiscal are required to be more savage than is indicated by the objective needs of full employment once the boom has broken. The mechanism "chases", and even random shocks could cause self-perpetuating fluctuations. Who would have predicted that a 17 per cent. interest
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rate would be accompanied by an increased money supply and bulging bank credit, as it was.
Why was the monetarist thesis so popular? Why did it conquer so easily and almost completely? It was because it depersonalised economics. Apart from cutting public expenditure and taxation their motto was, keep the money supply growing at a low steady rate and all will be well. It washed its hands of short-run developments, which are decisive, and their more permanent impact, and concentrated on the "never never" land of long-term adjustment while fiercely issuing quantified advice for the short run. What more comfort could be derived from any doctrine? It absolved everybody of all direct responsibility.
So much double talk has gone on on the part of the monetarist school that it is essential to define exactly what is not meant by monetarism. Monetarism does not mean an acknowledgment that inflation sometimes manifests itself by an increase in the volume of money causing prices to rise. Of course, there is some connection between money and prices, in an economy where transactions are conducted in terms of money and prices are therefore expressed in terms of money. It is, therefore, self-evident that prices and incomes should affect the volume or the velocity of money in circulation and be affected by them. The problem is whether there is a stable reversible relationship overriding all which can be used for strategic purposes, and not merely a necessary but insufficient means to help in regulating prices and incomes.
The choice of the supply of money as the main criterion, and at the same time the chief, if not the only, weapon for economic policy is needed in this system, because it fits in with the claim that the market is perfectly competitive and a self-adjusting one. That is to say, if disturbed, it is impelled to restore its original position. It is a worldwide neoclassical dream economy, unmarred by the existence of giants and dwarfs, or by domination and dominated both nationally and internationally. That may be true, but it is the type of model which is totally unfit to analyse the economy of the modern world and its constituent States and its problems.

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Not the least responsible for the instability of the world economy are the accumulated or desired stocks on both sides; monetary and real. On the former there are money savings, some of which can be instantly or with small time-lag mobilised, others have access to markets where the actual turnover is but a fraction of the potential supply. There are astronomical international balances—lately estimated at 800 billion dollars, lent and re-lent in the so-called Euro-currency market, which is totally unregulated, has no compulsory reserve ratios nor any known rule about the relationship of the liquidity distribution between borrowing and lending. At the slightest disturbance of "confidence" they flee from one centre to another, thus swamping the more stable flows and often becoming destablising and explosive. There is a highly developed producers and consumers credit system which might, through anticipating borrowing and certain fearful sudden repayment, violently change the even flow of saving. If certain kinds of "money" are controlled, substitutes are and have been easily created.
One would have thought from the speech of the noble Lord, Lord Cockfield, that the concept of the money supply looks straightforward and well-documented. It is not. Money has a number of functions. Among them, that of means of exchange and standard of deferred payment move on the same orbit as the total volume of transactions—accent, it should be said ought to be on "total". However, that does not exhaust the uses of money; and it rules out one of the most important of its functions—a store of value. In consequence of that difference in the functions and therefore in the velocity or efficiency of money, the assumption that the velocity of transactions is stable and determined by long-term institutional or traditional factors is untrue. Cross-borrowing by way of sterling deposit certificates, the holding of Treasury bills by the discount market will influence the main definition of M3. Far worse, the main investors, the pension and life insurance funds, can, by holding off the gilt-edged market, blackmail the Treasury, forcing higher rates of interest. It has now happened three times. To choose such an uncertain and manipulable factor as the main, if not sole,
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criterion of monetary policy is total folly. Yet that is exactly what has happened. The difficulties do not end there.
The main "indicator", M3, does not differentiate between the deposits of individuals and business deposits, both of which themselves include convenience and precautionary deposits, and deposits held as liquid—speculative—assets; that is, a shift towards financial institutions other than banks and assets other than deposits. For example, building societies or the issue by banks of bonds would diminish the fetish and allow expansion or vice versa. We have seen that the choice between a multiplicity of the definitions alters, ipso facto, the magnitude of the so-called velocity. Velocity, in fact, as published does not apply to all transactions; that is to say, both the income-expenditure stream or flow and the changes in assets—changes in the ownership of stocks. The further anomaly is that the transaction excludes all non-income transactions—house purchases, other transfers of assets, realisation of paper profits et cetera—although all definitions of money include all relevant assets belonging to the non-personal private sector. It was not shown—and it is very questionable—that the motivations of giant firms can be equated with the life of the national income which accrues mainly to wage and salary earnings. The true velocity of money circulation or transaction is not merely much higher, but also much more unstable than the income velocity and can be an original cause of fluctuations. Changes in stocks, for example, of inert deposits, are not caught. Why a single number indicator should reflect all complicated transactions, including, for example, the speculative excesses of financiers dislocating the system, has not been disclosed.
This means, however, that the ratio of bank balances and currency to the gross national product is a hybrid concept. The denominator covers the whole economic system while the numerator deals exclusively with final—income and outlay—payments. Thus, the resultant ratio is not a measure of the true transaction velocity at all, although it is so recorded even in the British official statistics. The gross national product serves as a proxy for total transactions. It is, therefore, restricted to the income/expenditure streams and disregards all transactions in assets

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no matter how much profit is earned and how investment decisions are affected by the latter. The velocity of circulation might increase or fall violently without the sphere of income-outlay being anywhere nearly as much affected. Therefore, the statistics of the so-called "money supply or stock" must not be used for policy-making, because of the possibility that non-income transactions, which are excluded from the conventional concept, might have a destabilising effect.
The victory of the monetarist school has recreated the circumstances including heavy permanent unemployment and cuts in vital social services which gave rise to the Keynesian revolution. It will do so again unless repressive régimes break the union power and solve by violence the imbalance between economic power and the distribution of national income which now exists. The alternative, stagnation, is also unacceptable. But, if we are to come out of the present threatening impasse, more is required and less opposition would be experienced by a return to a modified Keynes. Rearmament is a tested Keynesian remedy, but it is a dangerous remedy. In the present structure of the economic system the only peaceful way of dealing with the mixture of oligopoly and monopoly is by consensus which I called, some 30 years ago, a new contrat social. It will not be easy. The present power of the labour monopoly is in conflict with the distribution of income. It will take more to achieve it than a temporary wage freeze or exhortations by Ministers. I say to the noble Lords opposite, "Repent, repent, for doom is nigh!"
6.49 p.m.
Viscount HANWORTH: My Lords, I propose tonight to deal with one subject only and that is industrial relations, and it certainly will not take me more than five minutes to do so. It is sometimes said that a week is a long time in politics, and if what one says is topical, even a day may sometimes be so. However, I think that when it comes to considering fundamentals seven years has brought little change in dealing with most of the problems, particularly in the industrial field. I said at about that time that, if certain things happened, the country would become ungovernable and so it has in terms of what people then said. I appealed to the unions to bring themselves from the 19th into the 20th century.
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This problem is with us today, and with Britain's continuing decline it is of even greater importance than it was then.
We all hoped that with persuasion and encouragement the unions would make the necessary changes themselves. It is now apparent that they cannot do so, and I use the phrase "cannot" advisedly rather than the phrase "will not", because I believe that that is more in line with the facts. I do not think that now is the moment to list the defects of our union structure, outlook and, I would say, shibboleths. Unless you are blind or prejudiced, they are only too apparent.
However, I think that Communist infiltration at shop-floor level must be recognised. By Communists I mean those whose first priority is to destroy, not simply to change, our existing capitalist society. Such reds are not under the bed; they are, in fact, at the negotiating table. Why are such men elected by the so-called democratic process? The answer is obvious. Without a national objective that really motivates people—and neither party has provided it—the first consideration must be self-interest. A Communist shop steward can be relied upon not to sit on his backside but to promote what is usually, shortsightedly, thought to be the interests of the union members. The unions, although having enormous power on the national scale, which they exercise without the need for responsibility, cannot begin to control their junior officials. At this level and sometimes higher up, might is right with bully boy tactics.
We should remember that the unions often do not represent the basic thoughts of their members, let alone those of our workforce as a whole, of which about 50 per cent. are either non-unionised or have only been pressurised into joining. I make two suggestions. I know that this is an imperfect world and no organisation is above criticism, but we should look at the situation, for example, in Germany—where we set up the unions—and draw some conclusions as to what we might and ought to do here.
Secondly—and this is the nub of my speech—in my view, the Government must now act resolutely and bring into effect strong and effective legislation. If the opposition to this legislation is such

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that a General Strike seems a real possibility, I suggest that the Government should seek the country's support by means of a referendum.
6.53 p.m.
Lord UNDERHILL: My Lords, I should also like to thank my noble friend Lord Kaldor for his stimulating address and for initiating this debate. He gave what to me, as an ordinary individual, was an intelligent person's guide to economics. I must also congratulate the two noble Lords opposite who have stuck through this debate, because for most of the debate they seem to have been deserted by their flock. Whether that means that they have given up the ghost of trying to work out any solutions, or that they are so cocksure about their policies, I do not know. I must also apologise to the noble Lord, Lord Cockfield, because I may not be here when he replies since I have a very important engagement which I must attend later on.
In a debate of this sort it is interesting to note how economists seem to disagree. There are obviously no immutable laws of economics. Therefore, I shall look at the matter purely from the point of view of the ordinary individual, because at the end of the day it is what the ordinary individual thinks about matters which will be so important to us. It is not my intention to vie with the noble Lord, Lord Cockfield, in apportioning blame between one Government and another, although, frankly, if one wanted to one could give a very interesting account of the state of affairs that the Labour Governments found when they came to power in 1964 and again in 1974. However, that sort of thing will get us nowhere, and therefore I shall leave the matter there.
The Motion moved by my noble friend Lord Kaldor deals with the implications of the Government's policies, both on the economic position and the general social conditions. Therefore, I should like to take a look at the achievements of the Government's policies over the last nine months. The noble Lord, Lord Cockfield, said that there are clearly differences in the House. Those people apparently have ears to the keyholes, because it appears that there are also differences in the Conservative Cabinet, who are
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not quite certain whether the policies which they have been following for nine months are the right ones. Maybe we shall hear more of that as the months go by.
What are the consequences of the Government's policies? I think that they are worthwhile repeating. Some of the points I shall make are not only consequences of but the reasons for Government policies. I must remind your Lordships of the doubling of VAT. It is no good simply ignoring it; VAT has doubled to 17 per cent. That was deliberate Government policy. As has been pointed out in previous debates, it is an extension of indirect taxation which hits ordinary people worse than it does any others.
Of course, we cannot have the doubling of VAT without an increase in prices. Therefore, we have the situation where all the financial pundits are estimating that we shall, in a few months' time, be approaching an inflation rate of 20 per cent. It is no good the Government saying that workers should not put in for increased wage claims. When faced with a 20 per cent. rate of inflation, the ordinary man in the street will ask some questions and will want to know where he is going. We have a record interest rate of 17 per cent. Surely that will affect the borrowing by all producing firms—indeed, by all firms. It is bound to have a considerable effect upon small businesses. That, of course, is a consequence of Government policy.
In previous debates we have referred to the high interest rates leading to the record mortgage interest rate which is now at 15 per cent. It is no good trying to divorce this from the view of the ordinary man in the street when he puts in for his wage claim. If he has to meet anything from £25, £30, £50 and in some cases £80 extra a month on mortgage interest, obviously he will ask some questions as to how he can possibly manage unless he has a substantial wage increase.
There are the massive public sector cuts which we have debated in the House on a number of occasions. I think I was correct when I heard the noble Lord, Lord Cockfield, say that we must get a level without affecting our economic position. Surely we must take into

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consideration whether or not we hit essential services. Services which are not provided by public expenditure are sometimes so essential that they may have to be provided by the people themselves, and that is more costly and a drain on their incomes. Despite denials made by various Ministers opposite from time to time that there has been no cuts in public expenditure to local councils, I repeat what I said in a previous debate: why is it that local authorities up and down the country are at their wits' end to know how to provide essential services within the parameters laid down by the Government? Every day we read in our local and national newspapers about the problems facing local councillors in trying to work this out.
I shall not weary the House by talking about gas charges, rail fares and all the rest. We know about them, and they all affect how the ordinary man will regard the Government's economic and financial policies. One must refer to the freedom which the Government will give local councils to increase charges for school meals, school transport and milk for youngsters. I hope that the noble Lord saw the item which appeared in the Guardian on 7th February. I should like to repeat one or two of the points made in it. According to the report, an Essex farmworker, earning £77 a week for a 54 hour week, led a protest to Downing Street, because he will need an extra £25 a week to meet costs of transport and school meals for his five sons. The report of a lady in Kent says that she and her husband, both at work, bring in jointly £98 a week. If the county council ratifies proposals, it will need an additional £14 a week to meet transport costs to school, and £10 a week for school meals which were previously given free. That is in that particular county. That is going to affect many individuals in their demands and wage claims, or decide them to leave the rural areas and come into the towns, which will not be a good thing for either our social life or our economy.
It has been said by Ministers that we have to make a decision. We either have meals and transport or the content and quality of education. Why does one have to make that choice, particularly if it is going to lead to the sort of cost to which I have referred in these particular reports? It might be useful if the noble Lord, when
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replying, would let us know whether or not there is any truth in the reports that the BBC, because of the cuts, will be cutting the schools educational programmes. If so, that will be the biggest tragedy we have heard regarding the cuts. This will affect the whole standing of our children's education, and yet I gather that the expenditure does not reach £3 million. If that is true, we ought to do something about it.
It has also been said by Ministers in previous debates that there are no real dangers in the £160 million cuts in the Manpower Services Commission. Again I can only go by reports that I have read. It is stated in the MSC draft plan for the next four years that the staff reductions which have been brought about by the cuts will amount to about 3,500, and that this will reduce the effectiveness of the Commission in dealing with retraining and resettlement should unemployment go beyond the 1·65 million mark. I should like to know whether that is what is in the plan, because if so, what we have been told in previous debates, that there will be no effect on retraining and no effect on training for new skills, is countered completely by this report.
I should like to know the answers to a number of questions which I shall put very quickly. I read again that it is forecast that bank profits for last year will go up by 40 per cent. Is this true? If so, have the Government any view about it, because I can assure them that that sort of report sadly affects the ordinary man's view of what is happening. What has happened to the promised incentives that will be provided by the tax cuts which, I think everyone agrees, are mainly for the better off? Have we seen any change in investment in industry because of these tax cuts and what the Government claim to be incentives?
A number of noble Lords have referred to trade unions. What a tragic situation we have come to when not only the steel unions but other unions who want to work out moderate, sane, sensible policies are driven to militancy. We have a situation where we are rapidly approaching confrontation. I think that all noble Lords will agree that we are in danger of being in a complete mess. An understanding between employers, the Government, and the unions is absolutely essential if we are

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to get out of this problem. Frankly, it will be no good just saying, "Use the law". If 10,000 men want to go on strike, they will go on strike. You can imprison their leaders but what are you going to do with the 10,000 men? There will not be enough jails to put them in. There has to be an understanding. It cannot be done by confrontation. When the ordinary worker sees that the Government have allowed the steel position to drift on and on, just leaving it to other people to try to settle it, they will wonder where we are getting to.
There is general agreement that unemployment is the key problem that worries ordinary people. Despite what some noble Lords have said, all the forecasts I have read are dismal for the next two years. I should like to know the plans of the Government to cope with industrial expansion. It appears to me—and I am certain to many other noble Lords—that the Government are spending far too much of their time on dismantling public ownership instead of getting on with the problems of resuscitating our industry, and on their dictatorial attitudes which have no economic arguments whatever in support of them.
The sale of public assets? How will that help the economy? Not at all. There is no justification for it at all. I should like to know what the Government are doing on that, and whether we can do something more with management in connection with exports. It is a tragedy when we understand that what was a great exporter of British cars is in danger of utter collapse. I should like to give a bit of publicity here. I have driven Austin, Morris, BMC, British Leyland, for the last 30 years, and British car-workers can make good cars. I am into my fourth Marina, and anybody who wants to buy a new car can buy a Marina and he thoroughly satisfied with it.
I have endeavoured, and I hope other noble Lords will follow, always to try to buy British made goods when I need them. Only last Saturday I went into a big store which boasts in its name "British", and I could not find a single shirt that was not made in Hong Kong or Taiwan. I have always opposed import controls, fearful of retaliation, but I believe that we are getting to the
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situation in some of our industries where the Government have really got to look at certain selected import controls if we are to keep some of our industries going which are so essential to us.
In conclusion, may I refer to the question of defence expenditure. I do not want to join in the arguments as to whether we should have extra expenditure on defence or not. There is talk of even going beyond the 3 per cent. increase in defence expenditure. May I ask the simple question: Is not that an increase in public expenditure? Where will the Government finance public expenditure for a defence programme? If it can be found for defence, why cannot it be found for other constructive efforts? Mention was made of 1931. I can remember 1931. What we were talking about then was creating demand by having public schemes that would create demand. If the Government believe that they can go ahead with great public expenditure on defence, then from the same source that that is being financed surely we can go ahead with constructive schemes of development which are so vital to our country.
7.8 p.m.
Baroness GAITSKELL: My Lords, I am always grateful to my noble friend Lord Kaldor when he opens a debate on economics because I know very little about economics and I get a glimpse of the difficulties we are enduring at the moment in our country. I shall be brief: just long enough for my intervention not—and I repeat not—to be interpreted as a Valentine for the Government. The noble Lord, Lord Cockfield, opened his speech by referring to the hard and stony path that his Government had to tread. These two words are most appropriate and suit a hard and stony Government.
I believe that this Government will go down in history as one of the hardest and most short-sighted Governments of our age. It is tarnished with a hard, punitive attitude to the previous Labour Government, and that is unbecoming of any Government who come in with a large majority. I have been through many elections. Incoming Governments, I know, usually blame the previous Government for all the ills that they inherit. This is quite usual. They also always exaggerate the economic state of

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the country when they win, and, as I said, blame the outgoing Government. I have experienced the heady feeling of success when one's own party wins, so I can excuse this Government feeling dizzy with success because of their handsome majority.
However, what did we get? There was immediate talk of a short, sharp shock which the Government were going to inflict (the punitive attitude again) and it was going to happen to all of us; we were all to be in the same boat. Vandals, criminals, young offenders, everybody was going to be subject to a short, sharp shock. I have not spoken of the trade unions; they were going to have a bigger shock than anybody. Tax cuts were mentioned, but they were for the rich only. With prices rising sharply, daily, the economic scenario unfolded. Rates were forced to take the full brunt of the Government measures.
I heard the Prime Minister, Mrs. Thatcher, indulging in what I can only call economic baby talk, comparing the running of a country, of a Government, with running a family. Mrs. Thatcher is a clever woman and though she punctuated her remarks with little puffs of moral fervour, nevertheless they were sickening to hear. There was a certain amount of drooling also about small businesses, and that ended by pushing them right out of business. The only haberdashers in the large borough of Hampstead, a shop which had been there since 1899, was forced to close down because their rent was doubled to £7,000 or £8,000 from about £3,000.
Words no longer seem to have any meaning when unemployment soars by thousands and thousands and redundancies multiply; the way in which the numbers of people out of work trip off the tongues of Tory Ministers is staggering. It seems that the present Government intend to rescue our country—short of just shooting the breadwinners, men and women, of the hallowed family—by putting everyone on the dole. This fact alone has finally killed the myth of trade union power. If the trade unions really had the power that most people in this country believe they have, there would be very little unemployment; and that is the acid test of power in the trade unions.
Thus, what the noble Lord, Lord Cock-field, was telling us this afternoon was
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that more and more unemployment was on our road to success. That seems to be the only way by which the Tory Government can think of achieving success. That is the road to ruin, not success. We have reached a terrible impasse and I really feel for the poor and less well-off people of Britain. So far from the Tory Government it has been promises, promises; nothing hopeful has yet emerged, just promises and an ugly, punishing approach.
7.14 p.m.
Lord HARRIS of HIGH CROSS: My Lords, I rise from the Cross-Benches rather late in the evening to challenge or confront the noble Lord, Lord Kaldor, on his repeated and central criticism of the Government's monetary policy. I am not altogether unhopeful of making some progress, although I think it may be in stages and modestly over a period, because there is much room for misunderstanding in these matters as well as much blindness and wilful misrepresentation of them.
I should also like to bring some cheer to the noble Lord, Lord Boothby, because he was regretting the passing of the gold standard, as I must say do I. The great merit of the gold standard was that the politician could not tamper with the supply of gold, and while we are stuck with paper currencies we must do our level best to see that the politician does not play fast and loose with the supply of paper currency.
When the noble Lord, Lord Cockfield, alighted on Hansard for 7th November I rather feared he had shot my fox because it so happened that on that day I made my maiden speech and I attended most closely to the remarks that the noble Lord, Lord Kaldor, presented, following the usual courtesies of which I make no complaint. He threw down a challenge with some impressive-seeming mathematical adornments. He drew on what he called the admirable storehouse of information, the IMF's international monetary statistics. I think the noble Lord has monetarism on the brain because there is no such document; the document is called International Financial Statistics, and I went through it very closely to see what he had told us.
On that occasion he selected changes in M3 for a five-year period, 1973 to 1978,

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and he looked at the behaviour of money and inflation in each of four countries, the United Kingdom, Germany, Belgium and Switzerland. All four he claimed, correctly, by surprise, had increases in the money supply clustered around 10 per cent. Yet, he said, over this period of five years, correctly, their average rates of inflation varied, astonishingly, between 15 per cent. and 4½ per cent. The noble Lord, Lord Kaldor, then went into some more obscure statistics which I cannot follow him in tonight and then, in the endearingly emphatic way he has, apparently for the hard of hearing, he said that of course this is nonsense but it is nonsense because monetarism is nonsense. Equal rates of change in money supply, totally disparate changes of course; it seemed very persuasive and I must admit that for the moment I was scratching my head and wondering what was the explanation.
As the noble Lord, Lord Cockfield, told us, the noble Lord, Lord Kaldor, in his somewhat casual approach to these matters, misled himself into totally omitting any reference to changes in real output, which even the most elementary first-year monetarist brings into the reckoning. Obviously, if the money supply is increased by 10 per cent., the effect on inflation depends a great deal on whether real output increases a lot, a little or not at all. But that is a minor factor, a 2 or 3 per cent. variance one might allow for varying changes in real output.
When I had time to study Hansard and go back to the International Financial Statistics, I spotted that, rather more importantly, the noble Lord in his comparison had, possibly carelessly, overlooked the time-lag which all monetarists insist applies between the monetary increase and the price change. He had, in the words of the noble Lord, Lord Cock-field, assumed an instantaneous effect. Without being dogmatic, I go along with Lord Cockfield; I agree that the interval is generally put by authorities on Labour Benches and elsewhere at around two years—a two-year delaying effect between a change in the money supply and changes of the same order of magnitude in the price level. So I delved back into this tainted source of statistics and what did I find? This is interesting and I think
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it will help us in our future debates on these matters.
I found that the apparent discrepancies in the average national rates of inflation in those countries are very closely predicted indeed by differences in the monetary expansion for the period two years earlier; namely, compare monetary change in 1971 to 1976 in these countries and then look at their price record over the period 1973 to 1978. Thus, for example—no surprise—the United Kingdom raised its money supply most rapidly over this five-year period, indeed by an average of 17 per cent. per year. After a two-year lag, it duly achieved the highest annual rate of inflation, averaging 16 per cent. It was not the bull's-eye, but it was very close indeed to the level that one would predict for the monetary expansion. Over the same periods one will find that Switzerland held the record for the lowest monetary increase, of between 6 and 7 per cent., and wonders of wonders! Switzerland achieved the lowest inflation—around 4 per cent.
The truth is that Britain's experience in the 1970s offers much more evidence for monetary policy than it may suit even the noble Lord, Lord Cockfield, fully to reveal to us. Thus, it was Mr. Heath's Administration which, in 1972–1973, inflated the supply of money in a single year by as much as 25 per cent. a year—and bequeathed to an incoming Labour Government a record rate of inflation around 25 per cent. roughly two years later. It was to Mr. Healey's enduring credit that, with the help of the IMF, he got the money expansion down to around 10 per cent., thereby bringing inflation towards single figures in 1978–79. Alas! even for Mr. Healey virtue proved to be rather tiring, or the NEC perhaps proved rather taxing, because in the latter part of 1977, and in 1978 and 1979 Mr. Healey allowed the money supply M3 to rise by nearer 15 per cent. a year. That explains why the underlying rate of inflation from now into 1981 is most likely to be of the order of magnitude of 15 per cent.
The noble Lord, Lord Balogh, finds monetarism theoretically most unsatisfactory, and I must tell him that if one observes the figures, one will find it empirically most impressive. I do not deny that there are many difficulties in

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operating a consistent monetary policy, not least in persevering, as I hope the Government will do, with real cuts in Government spending. But if the present Government are resolved to phase out inflation towards zero over a period of five years, I fear that they are unlikely to succeed unless they incorporate at least two further supporting measures. The first is what economists call pre-announcing annual targets for the decline in the monetary expansion for some years ahead. The aim, in the economists' jargon, is to get the expectations of people working in the same direction as monetary policy.
If practical men and women in the unions, industry, and commerce increasingly believe that the Government are sticking to their monetary guns, their judgments and decisions which affect wages and other prices throughout the economy are increasingly likely to accommodate themselves to declining inflation. In the absence of such confidence in the Government's intentions, unemployment and the other withdrawal symptoms from cutting down the drug of inflation are likely to be more prolonged.
I come to the second aid to the effectiveness of the monetary policy, which must be to remove barriers, obstacles, and resistances that now prevent markets from responding more flexibly to the new opportunities that receding inflation will inevitably and assuredly open up for entrepreneurs. We need more mobility, both occupational and geographical. I believe that the reform of the trade unions will help a little, as will the sale of council houses, though that measure would be more effective if the tenant-owners of council houses were allowed to sell and move without waiting for five years for their freehold under the present proposals. Likewise, the ingenious innovation of the shortholds will contribute towards mobility, though not as much as phasing out the great destroyer of accommodation; namely rent control, starting perhaps with furnished flats and going on to all new buildings.
Let me conclude by offering a couple of further extensions of Government policies aimed at reducing the inevitable, transitional cost in unemployment of squeezing inflation out of the economy. First, briefly and dogmatically, let the Government
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bring union-imposed working arrangements within the scope of the Monopoly and Restrictive Practices Court, alongside business practices. Secondly, let the Government remove the incubus of so-called "employment protection" measures from all new jobs created by private enterprise in places such as South Wales which are most likely to be affected by the growing redundancies and unemployment in steel, cars, shipbuilding and the rest.
The noble Baroness, Lady Gaitskell, has left the Chamber, but I should like to say to her, following her moving and sincere speech about unemployment, that I am certain that there is no difference between any of us in this House and among larger numbers that involuntary unemployment is an appalling affliction for our fellow countrymen; less painful than at one time, but still for many a desperate possibility and prospect. On this matter I am clear that our hearts should all be in the right place, which is left of centre, but we should also keep our heads in the right place, which is above our emotions. My case, resting on rational analysis and demonstrable empirical evidence, is that much of the present unemployment is a hangover from past monetary excess. It is that excess that the Government must stop. I call to my aid an unusual witness, Mr. James Callaghan, who in 1976, as Prime Minister, told the Trades Union Congress:
"We used to think that you could just spend your way out of a recession, and increased employment by cutting taxes and boosting Government spending. I tell you, in all candour, that that option no longer exists, and that in so far as it ever did exist, it only worked by injecting bigger doses of inflation into the economy, followed by higher levels of unemployment as the next step. That is the history of the past 20 years".
It seems to me that in order to keep unemployment down so far as one can while the battle against inflation continues, the emphasis should not be crudely on holding down wages, but all the time on holding down labour costs per unit of marketable output. If the noble Lord, Lord Kaldor, had trumpeted that economic truth to the workers of British Steel and British Leyland, he would have done a better turn, it seems to me, than by offering a rehash of the old collectivist policies that have got us into our present pickle.
7.27 p.m.
Lord PITT of HAMPSTEAD: My Lords, I must begin with two apologies. The first is to the noble Lord, Lord Kaldor, because I was not in time to hear his speech. I know that he was aware that I would not be present, and I have no doubt as to the kind of speech he made. I shall certainly read it in Hansard with great interest. I heard all the other speakers, including the Minister. My second apology is to the noble Lord, Lord Harris of High Cross. I earlier looked around and did not see anyone rising to speak, so I thought that I had better get to my feet. This is the explanation of why I rose to speak before the noble Lord. I cannot follow him in his very interesting speech because I want to deal with something quite specific. The noble Lord, Lord Cockfield, said that the proportion we spend on public services must bear a certain relationship to our wealth; that if in fact we are not as wealthy as some other countries, then we cannot spend as high a proportion of our wealth on public services as those other countries do. I want to start to challenge the noble Lord there, because it is characteristic of the poor that they have to spend a higher percentage of their income on the basic necessities. I am sorry that the noble Lord's logic was not sound on this occasion.
I want to talk about a couple of basic necessities which have suffered, are suffering, and will continue to suffer from the policy which this Government are following. First, I want to deal with housing. I have previously spoken in this Chamber about housing, and I make no apologies for repeating what I have said because this is a matter of the utmost importance. Figures just published indicate that housing starts— that is the buildings started—in 1979 were the lowest since 1951.
That is a serious matter, and it is made more serious by the fact that a couple of years ago the then Labour Government published a consultative document in which they pointed out that we needed 300,000 houses a year in order to keep pace with our requirements. Last year we started 219,600 houses, which is a very far cry from the 300,000 target. What is worse, of that 219,000 only 46,658 were council dwellings. At the same time, a recent survey by Shelter has indicated
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that there are a million people on council housing waiting lists. So there we are, my Lords; this is the situation we have got ourselves into.
The consequences are quite clear. The homeless families will suffer because, of course, it is much more difficult for the local authorities to meet their needs. But there are other people who will suffer, too. There are the families living in the high tower blocks which we proceeded to build. We are now quite anxious to move them, but we cannot move them unless we have additional buildings into which to put them. Therefore, they will continue to be confined to these high buildings. Then there are the young families who are coming along. There will not be places for them to buy or to rent, or to move into.
Therefore, this is a very important point in terms of the policies of this Government, because recent local government guidelines to local authorities advised them that they should put up their rents by £1·50 a week. That would possibly be all right if they had the places to put them in, but what we are having is a suggested increase in rent at the same time as we are not getting the buildings. What is more, recent circulars from the Department of the Environment have restricted municipalisation, and, therefore, again, there will be less properties in the hands of local authorities which they can use.
Moreover—and this is much more important—the recent circulars have restricted land acquisition, which means that local authorities will not have the land on which to build. Then, I have read recently that there is a threat to reduce the housing subsidies further, and that that is part of the next cuts we are going to have. I hope that when the Government are proceeding to cut the housing subsidies they will start by cutting the subsidies to the house-owners, the people who have in fact bought large properties and have large mortgages; because, if we are going to cut, that is where we should start the cutting.
The other basic service I want to talk about is the one in which I am daily engaged, and that is the Health Service. The last time we had a debate on the Health Service I spent most of my speech

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pointing out the way in which the Health Service in Hackney has been completely destroyed. The people of Hackney have been placed in such a terrible position that in fact the Hackney Borough Council decided to withdraw its members from the Area Health Authority in protest. I have been reading recently (and I am sure other Members of your Lordships' House have read) of a cardiologist at King's College Hospital complaining that, as a result of the restrictions, he is no longer able to deal with the cardiac cases as he should, and that there is a real danger of people dying. I am sure many Members of your Lordships' House will have read that.
I know also from my friends who are kidney specialists that they have the same sort of worry, that the restriction of their budget means that they can deal with fewer kidney cases; and while, of course, it will take a little longer for the person to die, there is also the danger of people dying because of this sort of restriction. Moreover, there is, of course—I mentioned this the last time, and I do not want to go into it again—the usual question of closing wards and employing fewer nurses.
The other thing I want to talk about is the steady increase in prescription charges. One of the first things this Government did was to raise the prescription charges from 20p to 45p. They are to go up to 70p at the beginning of April. I have read (and I hope what I have read is wrong) that it is the intention of the Government to increase those charges further. All these charges, at a time when we have doubled VAT and at a time when school meals, school transport and rents are going up, must play havoc with the poorer sections of this community. I want to make an appeal to the Government. I am not entering into this monetarist debate at all tonight, but accepting, as Lord Cockfield does, that his monetarist policy is essential for the wellbeing of the country, I appeal to the Government that they recognise the consequences of those policies on the people in this community who are least able to take care of themselves, and that they in fact readjust their policies sufficiently to take that into account.
One of the other things I wanted to mention is the fact that, at this moment,
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hospitals give their patients prescriptions for a short period and tell them to go to their general practitioner for the medicines that they need in the future. From the hospital point of view this is sensible because of the way in which the Health Service is now budgeted—and everybody has to live within their budget. Of course, they can save by letting the GP do the prescribing. But drugs which are prescribed by the general practitioner cost the Health Service more than the drugs which are prescribed in hospitals. There is quite a simple explanation, of course. The hospitals employ pharmacists; they pay them their salaries, and therefore those salaries do not have to be added to the cost of the drug; whereas whenever I prescribe for a patient the pharmacist's fee, the chemist's fee, has to be added to the cost of it. Therefore, from the Government's point of view, if they are trying to save money it is much more sensible that the hospitals should be giving the medicines than that the GPs should be; but because of the way in which everybody has a limited budget to which they must conform—and to which they conform in lots of, I think, dangerous ways, like shutting wards, having fewer nurses and that sort of thing—this particular method is adopted.
I have also read that there should be additional cuts in local authority expenditure. That, too, has serious effects for the ordinary man. I hope that nobody is going to suggest that that is not so. They have been asked to cut their expenditure, in effect, to 2½ per cent. below their last year's spending. That is a fact. I know that the Government have this policy idea: that money saved by reduced taxation will go into manufacturing industry. I hope that the noble Lord, Lord Cockfield, remembers that Mr. Heath had the same idea. But it did not happen. All that we had was a boom in offices—Centre Point. That was the consequence of the reduced taxation that they got in that period. In this period, it may well be that the noble Lord, Lord Boothby, will have his wish because it seems to me what is happening is that they are using the reduction given them in buying gold. What they are not doing is putting it into manufacturing industry. This is where all the suffering that the people being invited to endure is, in fact, to no avail.
Lord ROBBINS: My Lords, I apologise for interrupting, but would the noble Lord not agree that the property boom which arose at the time of the Heath Government was a direct by-product of inflation?
Lord PITT of HAMPSTEAD: Yes, my Lords. All that I am saying is that when you reduce the taxation, as Mr. Heath did, they do not spend it on manufacturing industry. They do not invest in manufacturing industry but in other things from which they think they can get profit. That is why I mentioned gold en passant; that is the current craze. I want to conclude where I started by making this appeal to the noble Lord, Lord Cockfield. The consequences of Government policy bear very hard on the lower sections—I am speaking income-wise—of the community. Please bear that in mind in formulating policy and take steps to ensure that the social wage is not eroded too much.
7.43 p.m.
Lord MACKIE of BENSHIE: My Lords, I shall try not to detain your Lordships for too long, but I should like to start—as everyone does; but in this case I really mean it—by saying how grateful I am to the noble Lord, Lord Kaldor, for introducing this debate. The reason I am grateful is because I greatly enjoy his speeches. I do not necessarily agree with them or understand them, but I enjoy them for their mischievous quality. The last time I heard the noble Lord initiating a debate, he started with an ingenious comparison of the Conservative programme with the Communist Manifesto, which he carried to extraordinary lengths and in a most enjoyable manner. Whether it was right or not, I do not know. On this occasion he proceeded to go backwards and to praise, with his tongue firmly in both cheeks, the enormous achievement of Conservative Governments of past times. Even to an ignoramus in these matters like me, it appears that at that time the trouble was lack of spending; but this time, I rather agree with the Government that our troubles come from spending which is, to put it mildly, perhaps a little overdone. However, after this school-masterly discourse, I did not know how I would take to the noble Lord, Lord Cockfield, but immediately I was reminded of my youth; and the terrifying certainty
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with which he expounded the message was like that of the Free Kirk ministers who used to belabour me for my sins long ago.
I think this has been a remarkable debate. I listened with enjoyment to several of the speeches. I listened to the noble Viscount, Lord Amory, and to my old friend Lord Rhodes. I am sorry that Lord Amory pinched my crack about "no silicon chip, he". After him, the noble Lord, Lord Bowden, made a remarkable speech full of absolute truths which we should all ponder, certainly in our own businesses. The practical turn was followed by the noble Lord, Lord Boothby. I think that he is practically the only politician whose speeches you can look back upon and find that he has nearly always been right; but, perhaps, the noble Lord, Lord Kaldor, can look back and pick up some occasions when he was not right.
I should like to put one or two salient points to the noble Lords, Lord Cockfield and Lord Kaldor, and point out the position of agriculture, which has not been mentioned. Agriculture is of immense importance to our recovery in the production of food and in the saving of imports. Agriculture is really up against it at the present time because the room for putting up prices has now been eroded wholly by the rise—official, perhaps—in the strength of the pound. The result is that there is no room for this Government to put up prices and there is a necessity on the part of Europe to hold down agricultural prices. With 17 per cent. to 20 per cent. inflation, agriculture is in a position of very had squeeze. It is an enormously important industry. I do not suggest that it should have special treatment but I suggest that the noble Lord. Lord Cockfield, should turn his mind and his attention to these matters agricultural which matter enormously.
Agriculture suffers, like all other industries, from the interest rate as well as from general inflation. I should like the noble Lords, Lord Cockfield and Lord Kaldor, to explain to me (simple peasant that I am) how it can pay this country, having paid enormous prices for our oil, then to take the money in and to pay enormous sums in interest to these chaps to leave the money here, upsetting our whole industry. At the end of the day what is to prevent us from reducing the

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interest rate? We have £10 billion reserves, I understand. It is only a few years ago that they were a great deal less. I should like a simple, elementary lesson on why we should not do that; for it is without doubt one of the main causes of a quite proper lack of enterprise in the smaller businesses on which we depend for new enterprises and new employment. But looking at something like 20 per cent. overdraft rate frightens the life out of people.
Then we come back to the question of inflation. I should like the noble Lord, Lord Cockfield, to say what we are going to do about oil. I have the prices of light Arabian oil per barrel over the years since 1973. In the year before the great hoick in prices by the OPEC countries it was 2.4 dollars per barrel. It remained steady at 10.5, 10.72, 12.70 and 12.78 dollars. I am talking about Saudi Arabia, one of the more responsible Arab States. The 12.78 dollars was the 1978 price; and the official current price is quoted at something like 26 dollars. My figures may or may not be 100 per cent. accurate but it is about that sum. I have seen newspaper headlines that the price of light oil has gone up to 33 dollars a barrel. This is a fantastic increase in this last year. I hate to think what will happen regarding inflation and fuel costs in this country when that gets into the pipeline. Surely the time must come when we, the Western industrial countries, can go to the OPEC countries and say, "Let us stop chasing our inflationary tails".
I know that the oil producing countries — even the responsible ones—think that inflation which is the result of their putting up the price, is a deliberate policy on the part of the Western industrial countries to reduce the price of oil again, with the result that we have this extraordinary elevation of price year after year now apparently going to run away. The time must come when an international conference of some sort must be called in order to produce some order which would guarantee the price of oil to the producing countries and give the Western industrial countries some form of stability.
I think that the Government's diagnosis is correct. I must say it has appeared to a lot of practical men who earn their own living— and I earn mine as a farmer, and
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also as an industrialist in a small way who has built a business in the Highlands— that we have been living in Cloud Cuckoo-land; that our industrial relations and industrial thinking have gone totally haywire. Any sensible chap knows that there is a time when you must cut. I think that that diagnosis is correct, and I think that the recommendation for surgery, to cut, and to have an operation is also correct.
I think that occasionally the Government, instead of using a scalpel, are swinging an axe on the patient. More care and more choice must be given. We on these Benches have spoken often enough about putting up fees to an enormous height for overseas students, and we have said time and again—and I think this is obvious—that this is a case of eating the seed corn. There is no question that the business contacts of the future in any country are the people who have studied and enjoyed themselves in this country.
It was right of the noble Lord, Lord Pitt of Hampstead, to point out the difficulties that are occurring, and the real distress and hardship that is being caused. Maybe all of us will have to suffer real hardship. I think it is right that the Government should know where the practical cases are occurring because they must consider a greater degree of selectivity in the cuts we are applying. I do not think that it is any use throwing the baby out with the bath water.
Everyone has spoken— and rightly so— about labour relations. One has only to look at certain strikes and certain attitudes to know that we have all gone "bonkers"—and I think, on the whole, rather more "bonkers" on the trade union side than on the employers' side. I must say that frankly. However, I think that the Government should recognise and must be gratified by the signs of common sense which we see appearing in industries which have had appallingly bad labour relations. When you see men voting as sensibly as they have done on several occasions, it means that the signs are having an effect, that commonsense is breaking through.
When you come to giving advice, it is all very well for Keith Joseph— and he does it beautifully, and has done it very

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well on television— to say simply that you cannot go on supporting an industry which has had £3½ billion or some such figure—of public money and is in the state that it is in. That is absolutely right. It is all very well to tell people what is wrong; and it is right and proper for the Government to hammer it home, but the Government must give more of a lead. I do not suggest that they should put more money on the table; but I think that they must give more leadership, explanation and understanding and use more influence to get a settlement, within their guidelines if necessary. I do not think that they can stand aside.
I also think that the Government must be prepared occasionally to lose a trick. I should not like Lord Cockfield's Presbyterian thorough-going conscience to overcome him to the virtues of common sense. We must not get into a position where we drive ourselves to a confrontation of a completely useless kind. I think that the Government are getting common sense into the population. They should show a little themselves and perhaps on occasions proceed as softly as the excellent Minister of Labour appears to want to do.
7.55 p.m.
Lord BRUCE of DONINGTON: My Lords, I should like to echo the sentiments that have been expressed in the House to my noble friend Lord Kaldor for having initiated the debate in the way he has done. When the text of his speech sppears in Hansard, and the text of what purported to be a reply to it, I have no doubt that on mature reflection a fairly accurate idea can be obtained of the true merits of the arguments.
The noble Lord, Lord Cockfield, spent quite a fair time out of the 33 minutes during which he was kind enough to address us in informing us in some detail of the nature of the terrible legacy that his Government took over in May. As my noble friend Lady Gaitskell said, of course most Governments do this and, to some extent, it is all part of the political cut and thrust. Nevertheless, the noble Lord, Lord Cockfield, has repeated this on so many occasions now— and I feared that he was going to do it again today— that we have to do a little gentle arithmetic to begin with, particularly on the question of
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inflation. After all, inflation is one of the principal planks of the programme of the party opposite. They continue to speak of it at very great length, sometimes even lucidly. So perhaps it should be borne in mind that the inflation rate when they took over was running at 8·3 per cent. The figure at which it is now running is 17·2 per cent., although of course there are already hints of it rising up to 20 per cent. on account of the increased telephone charges, postal charges, a further increase in the mortgage interest rate, increases in gas, electricity and railway fares. But, my Lords, leave it at 17·2 per cent. for the moment.
The difference between the rate of inflation which they inherited, 8·3 per cent., and the latest figure, 17·2 per cent., is if my arithmetic is right, 8·9 per cent. Let us look at the measures that the Government themselves have taken. I am not arguing about their merits— that has been done before. I am merely saying that they are Government actions following their election. Their increase in VAT put another 3¾ per cent. on the rate of inflation; they reduced local authority grants by another 1 per cent.; reduced support for nationalised industries an other ¾ per cent.; increased National Insurance contributions another ½ per cent.; the green pound devaluation, ¾ per cent.; increased mortgage interest rates, 1¾ per cent. There were all those actions by the Government. That is 8·5 per cent. out of the 8·9 per cent. that inflation has increased by. So the underlying pressure on that basis—aside from any arguments that the noble Lord, Lord Harris of High Cross, may wish to make on his two year delay factor, the residual increase which was in the pipeline-amounts to 0·4 per cent. I have no doubt that we shall have the benefit of the observations of the noble Lord on that; but it is quite clear, and indeed, a little odd, that a party dedicated, so sincerely to bringing down the rate of inflation should in fact take such deliberate action to increase it.
But, of course, the debate has been more about the matters that have given rise to the situation of which we complain. No one can doubt that any Government, Conservative or Labour, at this time or in this decade are faced with very considerable problems. It is perhaps fortunate that, in the unique forum of Westminster, these things can be argued out

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between us and we can listen to each other's point of view and, perhaps, if we hear things that appear logical to us, we can be changed by them. This is a very honourable and long parliamentary process.
Much has been made today of the whole problem of increasing productivity and, indeed, of increasing the gross domestic product itself. The necessity to abandon the restrictive attitudes that have been taken up over these many months must now be obvious to most of us. Certainly, within the Conservative Party itself, if Press reports are to be relied upon, there is already some considerable degree of unease about the way things are going.
I was surprised when the noble Lord was addressing us in terms of productivity and, indeed, in terms of who was generally to blame for the situation. He kept on referring to the necessity for people to behave responsibly, and he mentioned strikes. But it is quite clear that his mind was concentrated all the time on the necessity for labour to behave responsibly. Labour needed to be taught a sharp lesson. Indeed, in the whole nature of Government speeches over the past few months— and it is implicit in the proposed trade union legislation as well as in the penal nature of the expenditure cuts— is an endeavour, explicitly or impliedly, to lay the blame for the current state of affairs upon those at work, upon labour generally.
I was a little surprised, too, at a Minister representing the Government going all the way through the debate without having once mentioned the possible role of the capitalist. I use the term purely in its technical sense and not as an abusive term. We are told that all production is the result of the application of labour power to raw materials, with the aid of machinery and the necessary finances and working capital involved. There are two parts to the machinery necessary to ensure production— the provision of capital, in whatever form it may be necessary, and the application of human endeavour in the form of labour to the various raw materials and other things that are necessarily used in the course of production. In the production of steel, labour is only 29 per cent. of the total cost. It is an important element, but it is only 29 per cent. Listening
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to the noble Lord opposite, one would think that the only people who had any control at all over the whole production of the country were the workers, the trade unionists, and that all that was needed was the exercise of more muscle power, of more endeavour, of greater application, of greater enthusiasm and longer hours.
Lord MACKIE of BENSHIE: My Lords, will the noble Lord allow me to intervene?
Lord BRUCE of DONINGTON: My Lords, I must proceed for the moment. I will give way to the noble Lord later So that the role of capital was not mentioned. I must, therefore, with the permission of the House, remind your Lordships that one of the biggest problems in the whole of British industry over the past quarter of a century has been the chronic lack of investment in manufacturing industries in the United Kingdom. In the 20 years up to 1972, we were investing as a proportion of the gross domestic product 34 per cent. less than France and 40 per cent. less than Germany, and, of course, as one would expect this attracted some attention.
Sir Frederick Catherwood, who, as the House is probably aware, was a director of the British Institute of Management and is, I believe, a reputable Conservative in the European Parliament, addressed himself to this subject on 8th April 1975. He said then:
"I would have thought that by now all responsible opinion in Britain had accepted that lack of adequate investment in manufacturing industry was one of the single major causes of our economic weakness".
He continued:
"Our biggest single restrictive practice at present is our failure to put new risk money behind British industry. On any international comparison, British investment is behind those of its major international competitors. As our share of industrial capacity declines, so does our share of world trade. That is why we have a non-oil deficit of more than £1½ billion. If we wish to remain a trading nation, we have to make up that investment".
Then he concluded:
"To recover in time, before our whole market is irretrievably lost to imports, requires massive new investment up to the extra £3,000 million suggested".
And, indeed, if we go further and compare the production, and even the deliveries, the quality and everything else, of what is produced in the United Kingdom with what

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is produced in competitive countries, we might do as well to realise that the machine power behind the arm of a German worker is roughly three times the average amount available to a worker here, and that in Japan the figure is four times as much.
What is going to happen in 1980–81? As we on this side understood the noble Lord, and indeed understood the Chancellor of the Exchequer when he reduced direct taxation by giving very significant reliefs to those in the upper income brackets, the whole purpose was to free initiative, enterprise and drive. There was going to be a new surge forward of enthusiasm by those gentlemen who were directing our affairs. But what is envisaged for 1980–81? According to the EEC's figures, published about a fortnight ago, investment would decline by 8·7 per cent. That figure has now been modified again to approximately 10 per cent. lower than it was last year. These do not seem to be very formidable fruits of the new enterprise, initiative and drive which we were expecting. With your Lordships' permission, I shall return to that point when I deal, as I intend to deal, in view of what the noble Lord said, with the public sector borrowing requirement.
The fact of the matter is that capital in the United Kingdom is free to move at will. If there is a lack of investment—and the evidence is overwhelming that there is—what can be done to restore investment and make up for the lack of investment in the past in order that we can rgeain our competitiveness and produce the things for which there is a market, either at home or abroad? If the capitalist does not choose to invest for a variety of reasons which are quite relevant, what is to be done? The answer to that question, so far, has been that successive Governments have sought to induce or bribe the capitalist to invest. Under Mr. Heath's Administration, which the noble Lord opposite played some part in advising, massive capital allowance reliefs were given or accorded to industry. In the case of plant and machinery, these could be taken in such a way that the entire capital cost of a new plant could be written off in the first year against profits. Then there was the freeing of the banking system— with which I shall not be unkind enough again to reproach the noble Lord, unless he
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wants his nose rubbed in it once more—and the colossal increase at that time in the amount of money put into the banking system.
What happened as a result of these inducements, given in good faith by the Heath Government? By August 1973 he was complaining to the Institute of Directors in the most explicit terms. He said, "The Government have given you everything you wanted. We have given you every inducement and still you won't invest". Under Sir Harold Wilson's Labour Administration, investment in 1975 was still low. It had improved slightly, but there had been no impact in terms of the investment requirements so clearly set out by Sir Frederick Catherwood.
So what did the Wilson Government, with Mr. Healey as Chancellor, do? They gave what was euphemistically termed stock appreciation relief, whereby corn-panics and firms were allowed to reduce their profits for tax purposes in order to take account of a notionally calculated stock appreciation relief. Industry professed itself to be very pleased with this. Indeed, they had every reason to be, because in the fiscal year 1976 the yield of corporation tax sank to a derisory level. Industry paid very little corporation tax in that year. There was almost a complete year's remission of tax, as the noble Lord, with his taxation experience, well knows. And still there was no investment, though corporation tax had been reduced from its nominal 50 per cent. to something like 26 per cent.
So we come to the régime of the right honourable lady, Mrs. Thatcher. Once again there is no investment, or there is nothing like the investment that is required from the capitalist. So what does she, or rather her Chancellor, do? They give tax remissions to the higher income groups, to which we have already referred. They abolish exchange control. They reduce Government expenditure. The reasons for that are very clear and they were quite clearly put by Mr. Biffen at the time, as reported at a meeting which took place at North Petherton, Somerset, on Saturday, 27th January. He said this:
"When the Government was known to have a massive borrowing requirement it was no wonder that interest rates increased. Government, with its insatiable demand, crowded out those who wanted to borrow for productive purposes".

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This indeed has been the whole burden. It has been in the party political broadcasts. It has been said many times in this House by Members of the Front Bench and, indeed, by Conservative supporters in your Lordships' House.
The whole purpose of bringing down the public sector borrowing requirement, it was said, was to free money for the private sector. This is complete and utter nonsense. There is no shortage of funds in the private sector. Indeed, if one reads the Financial Times any day one finds that most of the leading companies are still gorged with funds. There is a takeover battle going on at the moment—or there was when I last read about it—between Racal and GEC to take over Decca for the sum of £100 million or thereabouts, payable in one case in cash. So it does not sound as though they are short of money.
In point of fact, what is happening, put quite simply, is this: instead of using liquid funds for the purpose of investment—and I repeat that there are plenty of liquid funds available—either they are putting them on deposit at a very high rate of interest and leaving them there, or they are investing abroad at a very considerable rate indeed, or they are involving themselves in the very attractive financial exercise of taking over other companies, which does not add to the productive capacity of the country.
But we are still left with the problem— it will not go away— of what we are to do when the voluntary actions of your capitalist (I do not use the term in an abusive sense) result in his failure to perform what is assumed to be his honourable and justifiable function of investing risk capital in industry. What is any Government to do? The answer of the noble Lord is: complete non-intervention just let it rip. If that happens, because of the amount of investment that is already taking place overseas by British capital, freed from all exchange control, there is going to be great investment in countries where labour rates are one-eighth and one-sixth what they are here and they will earn their money all right; but the United Kingdom will become an industrial desert.
What is to stop it? None of the monetary laws which have been enunciated by the noble Lord will stop it. He believes
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in non-intervention. So far as he is concerned, they are quite free to go where they like. That is why we on this side of the House advocated the setting up of the National Enterprise Board. We knew of the deficiency of capital investment and risk capital in new enterprise in this country. We did it specifically to promote investment in those industries in which private enterprise should have invested. We did it to promote investment that private enterprise or your capitalist was not prepared to risk in the new technological sections of industry. They would not put their money into the micro-chip, for example. We also did it in order, in due course— and many noble Lords have mentioned this, notably the noble Lord, Lord Leatherland— to start industries in import substitution, because quite clearly something has gone wrong. We are importing machinery of all kinds, we are importing consumer durables of all kinds from the countries of Europe, from the United States and everywhere else. Not only on the question of price, but on questions of design, on purely technical aspects of it, on questions of marketing and everything else, and unless through the National Enterprise Board the United Kingdom retains its ability to promote import substitution industries, then our import problem will become progressively more impossible.
That, of course, is mainly why the Conservative Party wants to hamper, cripple and ultimately do away with the National Enterprise Board, because it does not give a hang what happens to manufacturing industry, where and when it is neglected by those whose historic function it is to provide risk capital for its continuance and its expansion. The noble Lord dealt at some length with an aspect of monetary policy which is indeed fascinating; he dealt with the public sector borrowing requirement. As my noble friend Lord Balogh pointed out, this is a somewhat illusory concept and the daily journal of the party opposite, the Daily Telegraph, records that Sir Donald MacDougall, who was the economic adviser to the Confederation of British Industry, is fond of telling people how we cut £1,000 million off the public sector borrowing requirement before lunchtime when he was chief economic adviser to the Treasury, so there is no reason to believe that the fundamental difficulties have been

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resolved. Nor have they, my Lords, because I do not know what kind of statisticians they now have at the Treasury under the distinguished leadership of the noble Lord opposite, but they were only £3·3 million out in the year 1977, they were £4,200 million out in 1978— in other words they overestimated by £4,200 million, and there is not much evidence that they can do very much better today.
But, in any case, let us assume that it is possible to estimate the public sector borrowing requirement with a sufficient degree of approximation which might be considered useful for practical purposes. Let us say we could limit it. What effect will that have on the money supply, to which the noble Lord has referred and which was referred to—I will not say too modestly, but at any rate referred to by the noble Lord, Lord Harris of High Cross. What is the effect of it? If you control the public sector borrowing requirement to whatever approximate figure, you are still only controlling one-fifth. Your impact is to be able to have control over one-fifth and nothing more. Do not let there be any fiction that you are controlling the total money supply, because you are not. The noble Lord, Lord Harris, thought that you could probably fix it. Not a bit of it, because it is not possible to do so.
Lord BOOTHBY: My Lords, will the noble Lord allow me to ask a brief question? Why does he go on talking about money supply? There is no money — he should talk about paper supply.
Lord BRUCE of DONINGTON: My Lords, I am afraid I cannot accept the noble Lord's well-known contention concerning the validity or otherwise of Bretton Woods and the gold standard. I would be grateful if he would allow me to pursue my argument in my own way. The astronomic rates of interest that are now already in force in this country have attracted considerable deposits from all over the world. They have attracted hundreds of millions of pounds from all over the world into the country and these form the deposit base on which the banks advance money. The noble Lord opposite does not propose to nationalise the joint stock banks— that would be heresy. Indeed, the banks are in business to make money and when they get these deposits,
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from wherever they come, abroad or otherwise or from their subsidiaries or associates, this forms the deposit base on which they can then advance further sums of money and indeed make profits.
The noble Lord is, of course, aware of this—or if he is not he should be, because the Prime Minister was quite specific on the point when the same question was put to her by Mr. Tapsell in another place He asked:
"Is it not time to bring domestic credit expansion under more effective control by issuing directives to the banks and other main lending institutions to reduce their lending to within the declared Government monetary limits?"
This is what the right honourable lady replied.
"If that of itself would work, we would be prepared to consider it. But there has been an enormous so-called explosion in financial technology, which means there are various ways of getting around lending by banks. Of course, that means that any such directive to the banks would largely be inoperative because the lending would be transferred to other financial institutions"—.[Official Report, Commons, 7/2/80; col. 734.]
If the noble Lord has any improvements to offer on what was said by his right honourable friend concerning monetary supply, he should perhaps do so.
In short, so far as the monetary aspects of the Government's policy are concerned, it is a complete failure, and they know that it is a complete failure. It has only succeeded so far in "clobbering" small firms that have been unable to obtain the money that they need not only to maintain their business but for expansion. I have been no more controversial than the noble Lord opposite was in his opening remarks. We are still left with the problem and what is required is a coordinated effort by both capital and labour, which means that both sides— and I repeat, both sides—need to accept some disciplines. I have always held that view. Above all, what is required is a sense of community. That is vital, as indeed the Lord Privy Seal has been good enough to indicate in a recent speech in Cambridge, with which I entirely agree. He said:
"Economic liberalism A la Professor Hayek, because of its starkness and its failure to create a sense of community is not a safeguard of political freedom but a threat to it. Lectures on the ultimate beneficence of competition and on the dangers of interfering in market forces will not satisfy people who are in trouble. If the State is not interested in them, why should they be interested in the State?"

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Then, at the conclusion of his article, he quotes from Mr. Harold Macmillan who, in his book The Middle Way, wrote:
"If capitalism had been conducted all along as if the theory of private enterprise were a matter of principle, we should have had a civil war long ago".
It is not possible for us on this side of the House to dissent from those general observations both of Sir Ian and of Mr. Macmillan. But there cannot be a sense of community where there are deliberately inflicted injustices by the Government, aimed at one section of the community only.
The noble Lord should know, as indeed the general public outside know, that most of the Government's measures so far have been directed against that section of the community that is least able to defend itself. What they have to do now, if they are going to command even a residue of respect, is to stop cosseting the rich and stop clobbering the poor. We have all got to work hard. This we appreciate. But if the Government are going to stimulate the economy, if the Government are going to restore industrial relations to a point where organised and planned and enthusiatic production is possible, they have got to cease to be divisive and they have got to see that justice is done to all our people.
8.32 p.m.
Lord COCKFIELD: My Lords, despite the lateness of the hour, I hope I may have your Lordships' permission to speak for a second time. There have been a large number of speeches made of very high quality and very great interest. I am only sorry that I will not be able to reply to them all in detail, but I do assure all noble Lords who have spoken that what they say will be studied with very great care. I do not on this occasion have the pleasure of congratulating a maiden speaker, but I do instead have the pleasure of congratulating the noble Lord, Lord Boothby, on his 80th birthday, which I understand took place yesterday. The passage of time has dimmed neither his wit nor his wisdom, nor his enthusiasm for gold as the sole medium of exchange.
I want to take up two points made by the noble Lord, Lord Bruce of Donington, in his oration. The first one relates to the rate of inflation. The figures that he quoted were those derived from a news-
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paper article published in January. This was the subject of a Question asked in your Lordships' House by the noble Lord, Lord Jacques. I disposed of the matter effectively on that occasion and I hardly think it is necessary to spend much more time on it. Many of the individual figures are wrong; the method used for drawing the conclusions was inaccurate. The noble Lord is quite mistaken in taking 8.3 per cent. as in any way representing the true rate of inflation at the time when the Labour Party were removed from office by the electorate. The rate of inflation at that time was rising very rapidly, and if inflation is rising rapidly it is necessary to take a much shorter period than 12 months. As I said in my opening remarks, a better measure at that date would have been about 13 per cent. per annum, with a very great deal still to come from the wages explosion which was the legacy of the collapse of the Labour Party's incomes policy.
The noble Lord also spent a great deal of time talking about investment, and I would like to make two points on that. One of them is that it is not just sheer quantity of plant and machinery which is the only factor. Just as important is the efficiency with which the capital stock is used. Some figures were published last year by the OECD which showed that net output, as a percentage of capital stock, on average in the years 1971–5 was 46 per cent. in the United Kingdom, 68.6 per cent. in Germany and 130 per cent. in the United States. In other words, we are using our existing stock of plant and machinery inefficiently. We could use it a very great deal better, and we could get a big increase in productivity and in output if we could reduce overmanning, restrictive practices and bad working methods generally.
The second point I should like to make to the noble Lord is that his explanation of the reason why people do not invest is an extremely incomplete one. With profits as disastrously low as they are at present, it is not at all surprising that a lot of industries are reluctant to invest, and it is only as the level of profitability can be improved that we will see a rise in the level of investment.
A number of noble Lords—Lord Leatherland in a most interesting and thoughtful speech; Lord Rhodes, and

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my noble friend Lord Amory, in an outstanding contribution— all raised the question of the impact of imports on the national economy and in particular on trades such as textiles. In the field of international trade the Government's commitment to free trade in general is a firm one, but so, too, is our determination to assist British industries which are threatened by unfair trading practices by foreign competitors. Quite apart from the protection afforded under the Multi-fibre Arrangement, the Government recognise the special threat posed recently by cheap imports of certain products from the United States of America which have the advantage of cheap oil. Application has been made to the EEC Commission for quotas under Article 19 of the GATT, and the Commission's reply is expected within the next few days.
Concern was also expressed by a number of speakers about the effect of the present high sterling exchange rate. We believe that the exchange rate should be determined primarily by market forces, with the authorities only intervening to smooth excessive fluctuations in the rate. It is true that the present rate may create problems for some exporters, but it also has counter-inflationary benefits in that it keeps down the cost of imported raw materials used by industry and thus lowers the general rate of inflation. To improve our competitive position in export markets the answer is not to engineer an artificial depreciation of the exchange rate, but to raise productivity in the United Kingdom.
The noble Lord, Lord Rhodes, asked, if I may paraphrase his speech, "Where has North Sea oil gone" It is important not to overestimate the importance of North Sea oil. So far it has amounted to around 2 per cent. of the gross national product, and at its peak will account for probably less than 5 per cent. Revenue to the Government was £500 million last year, and this year, fortified by the bringing forward of £700 million of petroleum revenue tax payments— which were opposed, apparently, by the noble Lord, Lord Bruce of Donington— the Government's take will amount to £2,000 million. It is true that this is helping the Government's objective of reducing public borrowing. In the longer run it should help with our objective of lowering the
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burden of taxation, which is essential to restore incentives. North Sea oil, however, will not provide the answer to all of our problems, and it is important to keep it in proper perspective.
Coming to quite a different subject, it was, of course, very encouraging to see the virtual unanimity in the House that something really needed to be done about the powers of trade unions This point was made by Lord Amory, Lord Hankey and Lord Hanworth. The Employment Protection Bill provisions for limiting secondary picketing and encouraging the use of secret ballots will help to restore a better balance in industrial relations, and will also help to protect the rights of individuals. But this, as we recognise, is a field in which one needs to make progress, and progress must he made, with caution.
The noble Lord, Lord Bowden, in a most interesting speech, raised the question of inflation accounting, and he said that the present system of historic cost accounting deceived everybody concerned, although apparently not the noble Lord himself, and the effect of the adoption of historic cost accounting for taxation purposes amounts, he claims, to a concealed capital levy on industry.
This is a matter, of course, where the initiative must rest with the accounting profession. An exposure document No. 24, dealing with accounting in an era of inflation, was issued by the Accountancy Standards Committee of the accountancy bodies on 30 April 1979. There has been a great deal of discussion as a result of that document and one hopes that a definitive standard will be prescribed by the accountancy profession in the not too distant future The consideration which is currently being given to the implications for the taxation of companies is making good progress, but obviously we cannot come to any final decisions on this and, indeed, the extent of our progress must be limited until such time as the accountancy bodies themselves decide what the correct accountancy standards should be.
The noble Lord, Lord Bowden, also quoted a phrase, the origin of which he said that he was unable to trace. I hope that I may assist him in that respect. The phrase comes from Tacitus' The Agricola. The point is relevant to the debate as the noble Lord will realise in a minute. The

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phrase refers to the Roman conquest of Britain, the second conquest of Britain, and while, therefore, the noble Lord, Lord Kaldor, seems to have pushed the frontier of our troubles back to 1850, the noble Lord, Lord Bowden, now seems to have trumped his ace and got us back to AD 45!
Lord BOWDEN: My Lords, I should like to thank the noble Lord very much for that information— I have been looking everywhere for it.
Lord COCKFIELD: My Lords, the noble Lord, Lord Balogh, in a most interesting speech, and one which will clearly repay a great deal of study afterwards, asked why monetary theory had so quickly been adopted and, in a space of a few years, had become universally accepted. He attributed that to the fact that it absolved everyone from all and every responsibility. I do not think that that, in fact, is a really adequate explanation.
Over a long period of time we have, not only in this country but elsewhere learned the lesson slowly, but I hope surely, that the State is not an all-powerful and is not an all-benign entity. The simple truth is that the power and the wisdom of the State, of Government and of Whitehall, are limited Great damage has been done by people thinking and acting as if they had powers they simply did not possess The development of monetary policies, and indeed the other policies of the Government, reflect a much more modest and realistic view of what Government can do. That is a thought that I would commend also to the noble Lord, Lord Underhill, and to the noble Baroness, Lady Gaitskell.
The noble Lord, Lord Harris of High Cross, and indeed the noble Lord, Lord Hankey, before him, stressed the need for the Government to stick firmly to their monetary and financial policies as that was the only way in which inflation could be cured. I entirely agree with them. It is absolutely essential that people should be convinced that the policies will be maintained. Everything depends on changing inflationary expectations That we are determined to do.
We in this country face innumerable problems, both in the social field and in the field of unemployment. The noble Baroness, Lady Gaitskell, and the noble
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Lord, Lord Pitt of Hampstead, spoke eloquently about the problems in that respect. We realise, of course, that they are important and urgent problems, but it is only if we succeed in defeating inflation that we shall open up the way to make progress: and that, and that alone, is the way in which all of these other problems, to which a number of your Lordships have drawn attention, will ultimately be solved.
8.46 p.m.
Lord KALDOR: My Lords, I understand that it is a tradition of this House that the mover of a Motion has the right to the last word, on condition that he limits himself to two minutes. I think that that is an extremely wise restriction which saves one from innumerable temptations, such as trying to convert the noble Lord, Lord Harris of High Cross, or even the noble Lord, Lord Cockfield, to the Scottish dissenting theory of inflation which is so much better empirically or econometrically based than the monetarist theory.
I have found the debate extremely valuable and interesting. I was particularly impressed by the speech of the noble Viscount, Lord Amory. If I am able to speak with so much eloquence and wit if, and when, I reach his age I should feel very proud. He did not disclose the one fact that I recently learnt. He is the only Chancellor of the Exchequer since the war who left the Treasury with the same retail price index as existed when he entered it two-and-a-half years earlier. He did not claim all the credit for that. He thought that the credit for that was largely due to the fall in world prices, which, I think, ought to give the noble Lord, Lord Cockfield, and all those who believe in the monetary theories of inflation some food for thought. My Lords, I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn

CRIMINAL JUSTICE (AMENDMENT) BILL [H.L.]
8.48 p.m.
Lord WIGODER: My Lords, I beg to move, That this Bill now he read a third time. In so doing I should like, if your Lordships would permit me, to express my appreciation to those Members of your

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Lordships' House who have enabled this Bill to reach this stage I have in mind particularly the Lord Chief Justice, the noble and learned Lord, Lord Widgery, who, in the midst of a crowded schedule, found it possible to come to your Lordships' House to support this Bill. I should also like to thank two former Lords Chancellor, the noble and learned Lord, Lord Elwyn-Jones, and the noble and learned Lord, Lord Gardiner, who each expressed their very real concern at the state of affairs which this Bill is designed to remedy; the noble Viscount, Lord Bridgeman, who was one of the original Members of the Tucker Committee, who expressed his support for the Bill; and the noble Lord, Lord Mischcon, who at all times devoted himself to the detail of this Bill with a constructive attitude that was most helpful. I must finally mention the noble Lord, Lord Belstead, and his colleagues in his Department who have displayed the utmost co-operation and patience in dealing with the problems raised by this Bill and who have so materially assisted with the drafting of the Bill as it now is in its present state.
The Bill is put forward as a modest measure which is designed to deal with a very real grievance that some defendants feel in certain circumstances. I venture to hope that, if the Bill is given a Third Reading in your Lordships' House, and passes from here to another place, the Government might find it possible, in view of the wide support that it has received in your Lordship's House, to find time for it in due course in another place among the rather more major and controversial matters in which they are at present engaged. I beg to move.
Moved, That the Bill be now read 3a.— (Lord Wigoder.)
The PARLIAMENTARY UNDERSECRETARY OF STATE, HOME OFFICE (Lord Belstead): My Lords, I should like to express gratitude to the noble Lord for the thanks which he has given to my noble Lords and also to the Home Office for the work which we have been glad to do with the noble Lord on this Bill. This Bill, of course, is sponsored by the noble Lord and is in every sense his Bill. If I may say so, I shall watch with great interest its further progress in another place.
On Question, Bill read 3a, and passed, and sent to the Commons.

INTERPRETATION OF LEGISLATION BILL [H.L.]
8.51 p.m.
Lord SCARMAN: My Lords, I beg to move that this Bill be now read a Second time. After the economists have kept your Lordships' House entranced for some four to four and a half hours, finding it necessary, so far as I can understand them, to quote Tacitus's Agricola in order to understand economic problems of 1980, I feel that we lawyers must be happy to have waited until those discussions have concluded before, even at this late hour, we come and ask this House to sit even later into the night. My one ambition tonight is to make sure that the Second Reading of this modest little Bill concerned with law reform will be able to demonstrate one thing at least: that lawyers need not be as long-winded as economists.
The Bill is, indeed, modest both in its purpose and in its scope. It offers no more than a limited degree of statutory intervention in the practice of statutory interpretation by the judges. It has two purposes: first, to improve communications between Parliament and the Judiciary; and, secondly, to assist the judges towards a clearer understanding of Parliament's legislative intention when construing Parliament's enactments. Modest though the Bill is, it is clear from that statement of its purpose that it challenges, to a certain extent, established judicial thinking. It has been axiomatic among lawyers and, indeed, in our legal professional thinking for a very long time that the interpretation of statutes is a matter for the judges; it is not a matter for legislation.
To this extent the Bill is, within its limits, an attempt at a fundamental new approach in law reform. However, I would ask your Lordships to think of this Bill not so much as an attempt— and, of course, it is an attempt— to help judges in their task of interpreting statutes, as an attempt to save and relieve Parliament from the frustration of judicial interpretation by judges not sufficiently guided or informed as to Parliament's intentions.

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There really are dangers to Parliament if judges are not given sufficient information to enable them to construe statutes according to the intention of Parliament.
The Law Commission, in a report to which I shall be referring, quoted a passage from a book by my noble and learned friend Lord Devlin, talking on the subject of the interpretation of statutes. My noble and learned friend said:
"The law is what judges say it is. If the House of Lords were to give to an Act of Parliament a meaning which no one else thought it would reasonably bear, it is their construction of the words used in preference to the words themselves that would become the law".
It is in an attempt to help judges avoid putting that sort of construction upon the enactments of Parliament that this Bill produces a few measures, which I shall explain in a few minutes. Nevertheless, it is an immense power that the judges have interpreting statutes, and I think that it was the immensity of this power and the ancient tradition that it is a power belonging to the judges that led my noble and learned friend Lord Wilberforce to say in a debate in this House in November 1966:
"Statutory interpretation is what is nowadays popularly called a non-subject".
The noble and learned Lord said:
"I do not think that law reform can really grapple with it. It is a matter for educating the judges and practitioners and hoping that the work is better done".— [Official Report, 16/11/66; col. 1294.]
This Bill is a little more than an educational exercise for the judges. It is a little more than an expression of hope that they will improve their practices and their rules for the interpreting of statutes. Nevertheless, that purpose is inherent in the Bill. When my noble and learned friend Lord Wilberforce said in 1966 that he thought it was a "non-subject" for law reform, because of the history of the subject as well as of the difficulties in legislating, we did not then have the benefit of the Joint Report on the Interpretation of Statutes produced by the two Law Commissions in 1968. This Bill is no more than the embodiment of the draft clauses which the two Law Commissions, in their joint report, put forward in 1968.
Since 1966 we have also had the report of the Renton Committee on the Preparation of Legislation. That committee reported
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in 1975. Its report includes an extremely interesting and penetrating assessment of the draft clauses put forward by the two Law Commissions in 1968, the clauses which are embodied in this Bill. The committee came to the conclusion in 1975 that an early enactment of a suitably modified version of the Law Commission's draft clauses was desirable.
I have spent a little time on the background and the history because it may be said, when one looks at this Bill in detail and when one looks at current judicial developments since 1969, that there really is now no need for this Bill at all; that the judges have developed the law since 1969 and events therefore have passed by the Law Commission's report of 1968. That was not the view of the Renton Committee in 1975. I suggest that it would be unwise to think that, because there have been certain favourable developments in the judicial attitude to statutory interpretation since 1968, there is now no longer a need for this Bill.
I turn to the Bill. It is an extremely short Bill. It does not, of course, pretend to be a code of rules and principles governing the whole business of the judicial interpretation of statutes. It does not purport to alter, or amend, or restrict the common law on this subject. It supplements the existing law. It produces new aids to interpretation. The Bill consists of only five clauses. Those five clauses incorporate the four clauses which were the joint recommendation of the two Law Commissions.
The fifth clause is an important clause. It is the clause which would extend the operation of this Bill to Northern Ireland and Scotland. That is wholly proper, bearing in mind that the Bill is based upon the recommendations of the two law reform bodies who, between them, are responsible for law reform throughout the whole of the United Kingdom. The one clause of principle in the Bill is the second clause. That declares two principles for the interpretation of Acts of Parliament. Of course, these are not exclusive of already existing principles. They are to be included among the principles already applied by the judges in interpreting statutes.
I think that nobody could criticise either of these principles, save some might say they were unnecessary because the

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judges have gone that far already. The two principles are, first, that a construction which would promote the general legislative purpose underlying the provision which is the subject of interpretation is to be preferred to a construction which would not. As the Renton Committee commented, it would be valuable to have that guidance laid down by Parliament; that indication as to the priorities in interpreting statute laid down by Parliament however far the judges have already taken the case law in that direction.
It is valuable because judicial fashions, like other fashions, change from generation to generation. It is possible that in the last 10 or 15 years one has seen a more liberal approach towards the interpretation of statutes among the judges than was to be noticed in the preceding period. One knows of course in the United States of America how you get a Warren court or a Burger court. In this country nothing quite so sensational; certainly no name dropping of that sort. Nevertheless, judges from generation to generation vary. The old habit of sticking to the literal meaning of the words used, and refusing to depart from them even when they produce a result which is clearly inconsistent with the intention of Parliament but no departure because the words are clear, is still lurking in the back corridors of the legal system, and must be exterminated and can be exterminated and laid to rest forever only by a statutory provision such as is to be found in Clause 2(a).
The second principle in the clause—and these are the only two principles in the Bill, and again the same observations I made on the first principle apply equally to this—is that:
"… a construction which is consistent with the international obligations of Her Majesty's Government in the United Kingdom is to be preferred to a construction which is not ".
I suggest that those two principles—both of them recommended by the two Law Commissions; both of them winning the approval and support of the Renton Committee— are appropriate guides for Parliament to lay down; guides for the judges indicating the approach which Parliament wants and requires to its enactments. One must bear in mind that the judges' job is to obey the will of Parliament as expressed in its enactments.
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If Parliament can give guidance to the judges in the approach that it expects of them towards its legislation, then constitutionally that is appropriate and practically it will help to ensure that Parliament's enacted intentions are indeed fulfilled in the application and enforcement of the law by the judges.
So much for Clause 2. The clause which may create most controversy in the Bill is Clause 1, and of course there are Committee points to be made on that clause and on the very separate provision with which I will deal shortly, Clause 4. Clause 1 sets out a number of aids to the interpretation of statutes. The great difference between judicial interpretation of statutes in this country and judicial interpretation of statutes in America and most countries of Europe is that our judges are confined to the context, the words, of the statute. As a general rule they may not go outside the words of the statute to determine the intention or purpose of the legislation or to decide what is the meaning of the specific provision which is under review at the time.
That is very different from other countries. In America, the legislative history is of course always available to help the judges, or perhaps some would say sometimes to confuse the judges, as to the intentions of the legislature. Both in America and indeed in Europe explanatory material is provided, committee reports are looked at and very often specific memoranda are produced and referred to in a preamble, and the judges and indeed the public are told they may have resort to those memoranda in the interpretation of the particular measure.
We have the very strict rule which I have described. This Bill, if enacted, would not take us anything like as far as our European neighbours and American brothers have gone in developing aids to interpretation outside the words of the statute. But even in this country the strict rule that you may look only at the provision in its context is subject to an exception, and the exception is that one may look to previous reports and to the previous state of the law before the enactment under consideration to determine what the mischief was which Parliament was seeking to remedy. That is still the law today but it is a rule which is very

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often not observed in practice; and judicial practice in regard to referring to material outside the words of the statute in order to discover its meaning is very divergent in this country, and we have not as a body of judges as yet established what are legitimate aids to interpretation outside the statute and for what purpose they may be used.
Even in the small gathering of this House tonight we have a number of distinguished judges who were recently concerned in a case in the House of Lords in its judicial capacity. Some of them said, "The mischief rule is the only rule by which we can look at committee reports or other material preceding the Act to explain the Act. We may not use it", said some of these judges, "as an aid to the construction of the statute". But others, also in this House tonight, in the same case said, "On the contrary; we are going to and we can use these preliminary reports as an aid to construction". One noble and learned Lord, who is in this House tonight, said:
"What else can you do as a matter of commonsense? Are you going to allow a judge to read a report in order to discover the mischief which Parliament was seeking to reduce or diminish, and then tell him that when the report reached the recommendation stage he must close his eyes? Must he selectively read it, and then go blind when he comes to a recommendation?"
Judges are widely divergent in their practice in the use of explanatory material. One could say that they fall into three classes. There are those in the strict class, who will go outside the context only to discover a mischief. There are the liberals who go far enough to use relevant reports as an aid to construction. Then, it will not surprise your Lordships to hear, there is a third class: the do-as-you-please judges, who will look either openly or secretly at whatever material they think appropriate in order to get at the purpose of Parliament.
It is with those considerations in mind that I ask your Lordships to look briefly at Clause 1. I am not going to weary the House with Committee points. I think that some of these provisions in Clause 1 could be tightened up: but see the sense of them, my Lords:
"In ascertaining the meaning of any provision of an Act …"
the following matters may be considered. First,
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"all indications provided by the Act … including cross-headings, punctuation and side-notes …".
The old law is, just the words. Judges cannot help looking at side-notes. They cannot help looking at cross-headings, or noticing the punctuation. They are there to help them, and they are helped. How absurd it is that they must disregard those matters, even though they may be of very light weight indeed in guiding them. But how can they be asked to disregard them?
The clause also refers to:
"any relevant report of a Royal Commission Committee or other body which had been presented or made to or laid before Parliament …".
I have dealt with that. The clause goes on to mention
"any relevant treaty or other international agreement … of which copies had been presented to Parliament …
"Any other document bearing upon the subject-matter of the legislation which had been presented to Parliament by command of Her Majesty before",
the passing of the Act. These aids are already used by the liberal and the do-as-you-please judges. They are used to a very limited extent by the strict school. Is it not better to legitimise the practice, to put it above board so that we know where we are, and in doing that provide the judges with valuable and helpful material?
There are two safeguards. The first is that the judge shall remain the arbiter of the weight to be attached to these matters when construing the Bill. This of course is of the utmost importance. An old report, a comma, are matters which may have very little weight. A Law Commission Report, with clauses attached, those clauses being part of the Bill or the Act which has been passed, obviously are of very considerable weight.
The other safeguard is that the Bill continues the prohibition of any reference to Hansard. Nothing in the Bill
"shall be construed as authorising the consideration of reports of proceedings in Parliament …".
We will therefore avoid any practice of reading into the work of Parliament for the record speeches which can later be used by judges or counsel in interpreting or twisting the meaning of statutes.
There is only one final provision, which is quite separate from those that I have discussed, and which I have not yet

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mentioned. It is Clause 4 of the Bill, which deals with a presumption in regard to the enforceability of a breach of statutory duty. It provides that:
"Where any Act passed after this Act imposes or authorises the imposition of a duty … it shall be presumed, unless express provision to the contrary is made, that a breach of the duty is intended to be actionable … at the suit of"
a party who has been damaged by its breach.
My Lords, that sounds a mouthful, but what it is all about, in fact, is this. At the end of the 19th century the courts had to consider whether breaches of the Factory Acts gave rise, or should give rise, to an action for damages. It was decided in 1898 that they should. The reason given was that there should be a remedy available for a breach of statutory duty if, on a view of the statute as a whole, such a remedy could be said to be intended. That was the reason given by Lord Justice A. L. Smith in the case of Groves v. Wimborne. Twenty-five years later the problem was considered by the Court of Appeal, including Lord Justice Atkin, in the Britannia Hygienic Laundry case. This time, Lord Justice Atkin propounded a somewhat different test. Then, later, in a case concerning the Wandsworth Greyhound Stadium, the matter was considered again and a different test was propounded. The law is now so confused that Lord du Parcq once said that surely it is not asking Parliament much to say, when it imposes a statutory duty, whether it intends that statutory duty to attract civil liability at the suit of someone who is damaged by the breach of it. All that that clause is intended to do is to meet that very reasonable requirement voiced by Lord du Parcq after the Wandsworth Stadium case.
My Lords, I have been longer than I should have been at this time of night, but this Bill is a piece of law reform which, though in a strange area for law reform, could do an immense amount to improve communications between Parliament and the judges, and to enable the judges to know what material they can look at and what principles Parliament is asking them to apply when interpreting their statutes. My Lords, I beg to move.
Moved, That the Bill be now read 2a.—(Lord Scarman.)
9.23 p.m.
Lord ELWYN-JONES: My Lords, I am sure that the House will be grateful to the noble and learned Lord, Lord Scarman, for introducing this Bill. As chairman of the Law Commission he fathered it about 11 years ago, and it is obvious that he still has tender feelings for his offspring. It is right that Parliament should review and consider the difficult problem of the interpretation of statutes, and if extraneous aid in that difficult task could be obtained from Parliament by legislation it would indeed be very welcome. In these days of dramatic disagreements with regard to the interpretation of statutes, not only between judges but regularly between the Court of Appeal unanimously, on the one side, and the Appellate Committee of your Lordships' House, on the other, if I thought that the introduction of these legislative proposals would tend to reduce rather than multiply those differences, I am sure all the learned Members of your Lordships' House who are here would welcome it. But the real question is whether it would help.
The report upon which it is based I read again after an interval of 11 years, and I found it enormously stimulating and full of constructive criticism and analysis of the existing law and practice of the courts, and indeed also of the legislative process. It points out that statutory interpretation is not a topic where there are any clear-cut defects for which, once diagnosed, legislative intervention can promise a dramatic cure. I suspect that that will be a generally accepted view; and your Lordships will have heard with interest the observation of the noble and learned Lord, Lord Wilberforce, when he described statutory interpretation as a "non-subject". But the Law Commission concluded after long discussion, consideration and consultation that a limited degree of statutory intervention was required in this field for the purposes set out in the report-and this Bill is the consequence.
As I see it, the task is to strike a balance between the advantages to be expected for a limited number of cases from enabling the courts to refer to material which might be relevant on a question of interpretation and the price to be paid for a change which might impose additional uncertainties on those who are concerned with the effect of legislation and with litigation and would lead to extra work in the machinery

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of Government. We considered this matter carefully when I was in office, but I confess that at that time the disadvantages seemed to us then to outweigh the advantages. But it is a matter that, certainly, I am very anxious should be considered by the House again and by the expertise which is available here to analyse it.
The heart of the Bill, as the noble and learned Lord has indicated, is in Clause 1. If it became law, I think that the scope for argument on the meaning of a statutory provision would tend to be increased rather than diminished. Not only will that argument turn on the wording of the statutory provision itself but it will be necessary also in the course of that interpretation, or, at the very least, desirable, to consider the relevance and content of Royal Commissions and other reports which may be relevant, international agreements and other documents. It will also have to consider how much weight it would be appropriate to give to this material in the circumstances and what is revealed by this material in identifying the underlying purpose of the statutory provision; and, in regard to the provision regarding the treaties, what, on its true interpretation, are the Government's obligations under a treaty or other international agreement.
I notice that Clause 1 does not include, as was sometimes rumoured to be the intention — and it was examined carefully by the Law Commission—the use of Hansard. I was charmed on reading the report to see the comment about this matter which reads:
"… the process of enacting legislation is not 'an intellectual exercise in the pursuit of truth but an essay in persuasion or perhaps almost seduction', and that, in these circumstances, 'to appeal from the carefully pondered terms of the statute to the hury-burly of Parliamentary debate is to appeal from Philip Sober to Philip Drunk'."—
attractive but perhaps harsh words upon the proceedings indeed. At any rate, "Philip Sober" has apparently prevailed and we are not to take the advantages of opening the doors of Hansard in the problem of interpreting statutes.
Other doors, as Clause 1 indicates, are indeed to be widely opened. One wonders with regard to the reports whether there is a time limit as to the date on which the referrable reports would be thought
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to be helpful. There is no indication to that effect in the Bill. I understand for instance, that a Bill on industrial relations is about to be laid before Parliament if the "hawks" and "doves" in the Cabinet can agree upon its terms. It will be interesting to reflect whether if this clause operated it would be appropriate to refer to the Donovan Report and even to In Place of Strife in the consideration of the new Bill when it comes before the courts, because they would be relevant matters in the consideration and interpretation of such legislation. However, perhaps there will be some restraint upon the time element when it comes to the test.
I confess that I fear that if the clause did beome law it would lengthen Parliamentary proceedings in the consideration of Bills in the Committee stages and I think the burden on Government could be considerable. I wonder, too, about this. If the clause became law a good deal of the legislative task would have been done before Parliament was ever seized of the matter, for Parliament could clearly make no change in the contents of the report whose relevance and use would be introduced by the introduction of the Bill.
These are the kinds of factors which filled us with anxiety in the prospect of giving effect to the Bill. Points of detail in the Bill, like Clause 1(1)(a), allowing the courts openly to take account of punctuation and side notes, seem to me to be very helpful. I wonder what is meant by the phrase "all indications", but perhaps that is a point of detail for the Committee stage when we come to it. Clause 1(1)(d) raises a matter of importance to which I might refer at this stage. It says:
"any other document bearing upon the subject-matter of the legislation which has been prseented to Parliament by command of Her Majesty before that time".
Does that include White Papers, Green Papers or Green Papers with white edges? Presumably it is intended to do so. I cannot help thinking that as far as the parliamentary draftsman would be concerned, if the Bill was preceded by a White Paper they would be having to look over their shoulders in the drafting of the Bill at the White Paper in their work of construction. It would probably be prudent to ask parliamentary draftsmen also to draft the White Papers and the

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Green Papers; but perhaps not. I have certainly known of occasions when proposals in a White paper, not finalised, not fined down to a legislative point, proved very embarrassing indeed when the Bill came to be drafted. That possibly never happens in the Administration of the noble and learned Lord the Lord Chancellor, but it can come to pass. I wonder what the result would be. Those difficulties will be far more serious if the White Paper is to be part of the record after the Bill is published, and to be examinable by the courts in interpreting Acts of Parliament.
I wondered what Clause 1(1)(e),
"any document … which is declared by the Act to be a relevant document for the purposes of this section",
was intended to cover. But again perhaps that is a matter for later enlightenment. Is it intended to provide for an explanatory memorandum or for some supportive document of that kind?
I find Clause 2 acceptable, but I think that judges already apply the principles set out in it. Whether advantage is gained by giving them express statutory authority, I know not. I should have thought it might not be very advantageous, but they are such admirable principles that I would certainly not quarrel with them for that limited purpose. I now want briefly to come to Clause 4. I wholly agree with the noble and learned Lord, Lord Scarman, that the present position with regard to statutes imposing a statutory duty is very unsatisfactory, because of the wide area of doubt which has arisen about whether or not the imposition of a statutory duty carries with it a civil remedy. But I think that the clause as it stands is extremely wide and, on the face of it, covers the breach of any statutory duty; for example, the breach by a Minister of a duty to make a scheme or hold an inquiry. I do not think it could really be contemplated that civil action should lie in all such cases.
What I fear might be the result if it became part of the law would be that the provision has to be excluded in nearly every case in which a new duty was imposed costing parliamentary time and causing difficulty. There would, indeed, be a host of cases and it could be merely automatic to exclude it, including most of the statutory
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duties that are imposed upon Ministers. Indeed, I fear that its more or less usual exclusion might become so automatic that it would defeat its own object. It may well be that the better course would be to inverse the provision of Clause 4.
Your Lordships will see that I certainly lack enthusiasm for this Bill, but I do not lack enthusiasm for the need for us to consider whether there are possibilities by legislative means of limiting the differences that arise in the interpretation of statutes. Unfortunately, I cannot see any myself and we shall have to rely on the kind of approach that the noble and learned Lord, Lord Wilberforce, whose early recovery to health we all greatly wish, identified in his intervention 14 years ago.
9.39 p.m.
Lord DIPLOCK: My Lords, before I came into the Chamber, I took the opportunity of looking at the standard text book on this subject, of which the first edition was published in 1875. The twelfth edition is now in force. It has 375 pages and cites about 1,500 cases. I suppose that two-thirds of the work of the Appellate Committee of this House involves disputed questions on the interpretation of statutes. It is a subject with which I am familiar and which, I am bound to say, I dislike. I am looking at what is proposed as a new statute, now before this House. In view of what my noble and learned friend Lord Elwyn-Jones has said, I think I can express my views upon it very briefly, because he has made most of the points which have made him view the Bill with what he calls a lack of enthusiasm but which in my case I can express as strong dislike.
The Bill falls into three parts. Each one of them, so far as they do anything at all, would in my view do more harm than good. Part of the defect is that the date of drafting, which was in 1968, is now 12 years ago and, perhaps very significantly, before this country entered the European Economic Community, a matter which would be required to be taken into consideration when one is looking in the future at the interpretation of statutes.
Clause 1 lists a number of documents which one is to look at, for whatever weight they are worth. What is not clear

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to me is whether this Bill intends one, when the words of the provisions you are construing are quite clear and unambiguous, to go and look at a large list of documents to see if you can find there some excuse for finding an ambiguity in the plain words of the statute. I still think that the public is entitled to look at the legislation to see what it says. It will be a temptation to the courts and to counsel before the courts to go into a large number of documents. I am perfectly confident that if this were done we should be spending our time construing the documents which we were asked to look at as well as construing the Act itself.
With regard to Clause 2, it lays down principles. They are already applied by the courts, but again they will not overrule the clear words of the statute. Finally, Clause 4 lays down a presumption. Of course, it would be helpful if Parliament, when it imposes a statutory duty, were to say whether or not it intends a right of action for damages to take place. But Parliament, despite long and frequent pleas from the judiciary, has failed to do that. I doubt whether putting in a presumption will make it any more conscious of the desirability of doing it, with the result that one will get quite unreasonable results because Parliament has failed to make the exception; whereas looking at the statute, as a matter of common sense and as one construes it now, one would say that of course Parliament did not intend that there should be a right of action for a breach of this kind of duty. My Lords, it is a modest Bill. I have not wanted to take any Committee points about it, but I would urge this House to say: Do not let us have a Second Reading of it; this is a matter which is not a subject for legislative interference.
9.44 p.m.
Lord MISHCON: My Lords, I yield to no one in my admiration for the scholarship and the clarity of mind of the noble and learned Lord, Lord Scarman. It was with that usual clarity that he moved tonight the Second Reading of this Bill. I also yield to no one in my admiration for the work of the Law Commission, of which he was such a distinguished chairman, and whose report, as we have been told, some years old, is the background to the Bill now before us. Having said that, my Lords, I
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find myself quite literally in the midst of my lords and masters, since I am the only practitioner who is in fact speaking in this debate tonight, and I am surrounded by those so much more learned and experienced than I am, namely the noble and learned Lords who have spoken and who are about to speak in this debate. But I think it is right that a practitioner should speak.
If I may try in very simple terms to put what is normally in the minds of the practitioners as principles which ought to govern the matter of interpretation of a statute, I would say that there are three propositions. The first one is that Parliament must be the supreme lawmaker and the judges supreme interpreters and enforcers of that law as made by Parliament. There must be no confusion of functions. Over the last few days we have seen a possible example, to which my noble and learned friend Lord Elwyn-Jones referred with some subtlety, of where confusion can lead. The cloud was no bigger than a distinguished judge's hand; but we must not allow it to be turned into an overcast sky.
The second proposition that I would put before your Lordships is that the interpretation of an Act of Parliament is not just the job of the courts; it is the almost daily job of my profession in advising ordinary citizens, and that power to interpret must not be beset by measures which make that interpretation uncertain or cumbersome or expensive.
My third proposition is—and I can, and do, put it most respectfully in this House—that Parliament must do its job properly and legislation must be clear and careful. In that context I bemoan the day, if ever it should occur, when there is not a second Chamber such as this in order to assist in the examination of legislation which comes from another place in order to make that legislation clearer, as so often your Lordships' House has managed to do.
Having said that, I would be the last person in the world to advocate that this Bill should not have a Second Reading. But I want, if I may, to turn to Clause 1 of the Bill, which has been discussed, especially in relation to reports of Commissions, and so on, which the judges will have to take into account if the Bill is passed in its present form.

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I have an idea that there is a reason—not the usual reason of delay—why this report that we have been discussing tonight, which was issued in 1969, only now emerges into a Bill, some 10 or 11 years later. The Renton Committee has been referred to, and indeed the Renton Committee advocated that when the Interpretation Act 1889 was brought up to date then, as a comprehensive measure, any matters dealing with the interpretation of legislation should be brought into it. That Interpretation Act was brought up to date in 1978, but Parliament, in its wisdom or otherwise, did not take that opportunity of incorporating any new rules in regard to the interpretation of statutes.
When we come to Clause 1, and especially to subsection (1)(b) and (d), I must bring to your Lordships' attention a fact that I believe has not so far been referred to; namely, that the Renton Committee, whose report was published in May 1975, in fact disagreed, for reasons which were set out in paragraphs 19.15 and 19.23 of their report, with the recommendations in Clause 1. I do not intend to bore your Lordships at this time of night by repeating the reasons why the Renton Committee did not approve of those important recommendations, which one might say are almost the meat of this Bill in the sense that other provisions here, as the noble and learned Lord, Lord Elwyn-Jones, said, were already existing law.
My Lords, the additions that I want to make to those points are the following: that I believe it is impracticable and most unwise that the interpretation of statutes should be made for the ordinary practitioner that much more difficult, and more expensive for his client, by the practitioner himself having to take the precautionary step, before advising on a statute, to see that he had available to him the relevant reports and White Papers, in order that he might read them and see whether they could have an effect on interpretation.
I can envisage most definitely the prolongation of trials which deal with the question of interpretation of statutes. I can at this very moment—closing my eyes in order to do it, and not, I assure your Lordships, because I am asleep from
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boredom at my own speech—hear one astute counsel after another trying to drag from a report of a Royal Commission phrases which would help their interpretation, as against their opponent's, of a statute, and then hearing the other counsel replying and quoting some other phrases.
Lord ELWYN-JONES: Both, my Lords, no doubt instructed by a highly assiduous solicitor.
Lord MISHCON: Sitting behind counsel and finding that day after day it is an even more expensive exercise for his client.
I am going to close my remarks, if I may, by trying to give your Lordships—I hope you will bear with me—a practical example as I, a practitioner, see it, of how it would develop if this clause were in fact enacted, and if indeed a judge were to be called upon to interpret a statute in accordance with a reference to Royal Commission reports or White Papers. With your Lordships' permission, I shall quote to your Lordships a case where in fact a very distinguished judge of the Court of Appeal, as he then was, did something of this kind, and he did it at great length; he did it in order to prove that the Royal Commission's report or the Commission's report with which he was dealing had nothing to do with the point he had then to interpret, and he then came to the conclusion that the terms of reference of that Commission would not have covered the point anyway. If your Lordships can imagine what would have happened in that case if indeed everyone could have referred to a relevant Commission report, your Lordships will realise that there is some substance in the point I have been trying to make.
The case is one which will be very well known to the lawyers in this House, and I venture to think it may be of interest not only to them, if I bring back their recollection to it, but also to those in the House tonight who are not lawyers. It was the case of Lucy v. Henley's Telegraph Works, reported in All England Law Reports 1969, volume 3, page 460. Perhaps I may recite the facts very briefly. It was a tragic case where the widow of a workman who contracted cancer as a result of coming into contact with a damaging chemical, brought an action

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within the proper time against her late husband's employers, who were Henley's. She did it, as I have said, within time. Then, just before the action was due to be heard, Henley's submitted that, if there were any liability at all, it was the liability of ICI. She then found that she was in difficulty in bringing proceedings against ICI because she would have been out of time. She sought to have ICI added as a defendant and argued that that was not, in fact, an initiation of a fresh action.
As the noble and learned Lord, Lord Denning, has been referred to in the course of the proceedings tonight, but always with the utmost affection and respect, I only wish to quote, if I may, one portion of his judgment in which he says:
"I cannot believe that Parliament intended that the widows should be in a worse position than the living claimants. Seeing that the living claimants have been permitted to join ICI as defendants, I think that Mrs. Lucy and Mrs. Wild should likewise be permitted. It comes back once again to the ever-recurring question: How should we construe an Act of Parliament?"
Then he comes in very clear terms to the method of interpreting an Act of Parliament:
"I have said before, and I repeat it now, that we should so construe an Act of Parliament as to effectuate the intention of the makers of it, and not to defeat it. If they have by mistake overlooked something, we should do our best to smooth it out. We should construe it so as to avoid absurdities and incongruities, and to produce a consistent and just result. This can be done quite simply by construing the words the action ' in s. 3(4) as meaning simply the action which Mrs. Lucy brings in respect of the death of Mr. Lucy'."
Not for the first time, not for the only time by any manner of means did that noble and learned Lord—whatever else one may ever have to say by way of criticism of some of his judgments, and one says it respectfully—try to come to the rescue, within a proper interpretation of the law, of somebody who was in distress.
Now I wish to give this example of where we would be getting to under Clause 1 of the Bill. The noble and learned Lord, Lord Justice Edmund-Davies, as he then was, happened to be chairman of a Commisssion and this is what he said—and I am reading from the report:
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"Claims which fail simply on the ground of effluxion of time since the cause of action arose frequently give rise to a feeling that the claimant has been denied justice … It was to make fairer provision for certain of these cases that the Limitation Act 1963, was enacted".
He then goes on:
"The contents of the 'Report of the Committee on Limitation of Actions in Cases of Personal Injury' cannot, under our present law, be adverted to in construing the Act which followed it within less than a year".
I say this with the utmost respect.
The noble and learned Lord then went on to deal with the report:
"Nevertheless, it is not without interest to note that what the report recommended was that—"
and he then sets out at length what is recommended. He continued:
"The report discloses that this recommendation (which was later reflected in s. 1(3) of the Act of 1963) was formulated after consideration of many other proposals. The simplest of these, viz., that the courts should have unfettered discretion to extend the three-year period in any case which appeared appropriate, was rejected"—
and he quotes—
"'by the practically unanimous opposition of the legal witnesses to the conferring on the Courts of a wide discretion'."
He then goes on to consider various aspects of a report of a commission of which he was a distinguished chairman, and then says:
"This 12-month fixed period of limitation was supported by both the Trades Union Congress and the British Employers' Confederation".
For two more pages of his judgment he goes on to consider the report and comes to the conclusion that the report was irrelevant to the matter before the court, and in any event was not one that could properly be dealt with in interpreting the statutes.
I have referred to this matter only in order to give your Lordships an indication, very humbly, of where this would lead in regard to prolongation of trials and arguments, uncertainty and expense if, indeed, the judges were enjoined to look at Royal Commission reports, White Papers and matters of that sort in interpreting statutes—the example that I have tried to give your Lordships being of a case where the learned judge realised, first, that he was not entitled to do it and, secondly, that it was irrelevant.
10.2 p.m.
Viscount DILHORNE: My Lords, my noble and learned friend, Lord Scarman, moved the Second Reading of this Bill with a most persuasive speech. He said that it was a modest little Bill with two objectives, with neither of which one could possibly quarrel: to assist in the communications between the courts and the legislature and to assist in the interpretation of statutes. Despite his advocacy, I must say that I think this modest little Bill could, in fact, be productive of a very great deal of harm. When listening to his speech, I thought I detected a gap in his argument, in his failure to demonstrate that the provisions of the Bill would really assist in the task of interpretation.
We all know how difficult that sometimes is. We are all frequently faced with that problem. Indeed, sometimes one wonders whether Parliament has really appreciated what it has done when it has passed a particular provision. We may have had an instance of that recently when Parliament, by enlarging the meaning of the words "trades dispute", considerably extended the application of what I see has been referred to, I think somewhat inappropriately, as
"the golden rule of immunity for acts done in furtherance of a trade dispute".
Reference was made just now to the observations of the noble and learned Lord, Lord Denning, with regard to the interpretation of statutes. They are not very new. It was three centuries ago when Coke said that:
"a statute was to be expounded according to the intent of them that made it ".
The opening sentence of the book to which I think my noble and learned friend Lord Diplock referred, in the most recent edition, is that:
"that is the fundamental rule of interpretation to which all others are subordinate".
Nowadays it is fashionable in some quarters to call that a purposive construction, but that is just another way of saying precisely the same thing. From reading the newspapers one thing I doubt is sufficiently appreciated at the present moment: that our duty sitting judicially
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is to seek to give effect to the intention of Parliament, whether or not we like what Parliament has done.
I noted the The Times said in its leader last Saturday:
"… recent decisions [of this House] have tended to extend the area of total legal immunity which the trade unions enjoy."
The Times, of course, is not alone in saying that. I did not sit on the cases to which they referred but I should like to say—I hope it will not be improper for me to do so—that that is quite untrue. The Times has got it very wrong and not for the first time when dealing with legal matters. Those decisions did not extend the legal immunity of the unions; they gave effect to the clear intention of Parliament expressed in Acts passed by Parliament. Perhaps The Times—and it may be others, even Members of Parliament—did not fully appreciate what had been done. The decision of my noble and learned friends, as I see it, did not extend the law; it merely stated what it had been for many years.
Now we have this Bill, the purpose of which is to help us in the task of interpreting Acts of Parliament. I do not think that it will. And to help us understand what Parliament has said we have all these paragraphs in subsection (1). I do not think that (1)(a) is really worth enacting.
"… cross-headings, punctuation and side-notes, and the short title"
are things that one cannot fail to see when one reads any Bill or Act of Parliament. I know of no authority for saying that a judge must shut his eyes to what is in the Bill or Act that he is reading.
All this Bill does is to say that one must give such weight to them as is appropriate. That, I suspect, is very little because these side-notes, the cross-headings—and Parliament has no control over them—are written in presumably by the draftsman, and while it may be comforting to think that the interpretation one gives to the language of the section is supported by the side-note, the side-note cannot govern the construction nor can the cross-heading. I do not think it is really worth legislating about that.

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It is when we come to (b) that we really see the dangers of this Bill, and there I am in substantial agreement with the noble Lord, Lord Mishcon:
"…any relevant report of a Royal Commission, Committee or other body"
et cetera. Anything which has been presented to Parliament. And at the same time and rightly this Bill excludes reference to Hansard. If one wants to see what was the intention of Parliament and go beyond the language of the Act surely the best guide would be Hansard. But it is quite rightly rejected because no one knows which is the right Hansard to look at. If you have to look at all of them in the Commons, in this House, the proceedings in Committee, the proceedings before a court to determine the meaning of a particular sentence would last a long time at great cost to the litigants.
This Bill rightly says that if you want to find out the intention of Parliament you must not look at Hansard, but you must and can look at
"any relevant report of a Royal Commission, committee or other body which had been presented"
to Parliament. Is it to be assumed that Parliament has accepted all that the Royal Commission or a committee said? Only if that can be assumed can the report of a Royal Commission or committee be a reliable guide, aid, to the construction of an Act.
It has been said, and rightly said, that it will be very time-consuming if we have to look at these documents. We really would have to look at any document counsel or solicitors like to put before us, because unless we had seen them we could not say whether or not they were relevant, and, if relevant, what weight they should bear.
It must not be forgotten that these statutes have to be construed not only in this House, in the Court of Appeal, in the High Court and in Crown Courts and circuit courts, but in magistrates' courts throughout the country, and copies of all these things are not readily available. My chief reason for opposing this particular provision is that it will divert attention from what Parliament has said to what a Royal Commission or committee has
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said, and may lead to a court construing an Act giving effect, as it does so, not to the intentions of Parliament but to those of a Royal Commission or committee.
Paragraph (c) is less objectionable; I do not think it is really necessary when an Act is passed to implement a treaty. The courts can look at the treaty. But to say that copies of all treaties or international agreements relating to the subject-matter of the Act can be considered by the courts, whether or not this country is bound by them, seems to me to be going far too wide. Paragraph (d) is, I think, thoroughly objectionable, for there can be no limit to what the courts will be asked to look at. Again, I think it will divert attention from the real task of the court. Paragraph (e) is of little importance.
My noble and learned friend Lord Scarman referred to the different approaches of judges and divided them into three categories. I think it is the ease —I am sure it is —that some judges, seeing what appears to them a grave injustice resulting from the language Parliament has used, are tempted in order to prevent injustice to cross the line between judicial and legislative functions. That sometimes may happen but, however desirable that object, that in my opinion should never be done. The words of that great judge, Lord Reid, in a case I argued 20 years' ago should not be forgotten. In that case, he found it difficult to believe Parliament ever really intended the consequences which flowed from the contentions I had advanced, and he said:
"But we can only take the intentions of Parliament from the words which they have used in the Act, and therefore the question is whether those words are of a more limited construction. If not, then we must apply them as they stand, however unreasonable and unjust the consequences and however strongly we may suspect that this was not the real intention of Parliament".
If the words used are capable of two constructions, then Clause 2 with its statement of principle applies now; there is no need for legislation, as I see it, on that subject at all.
The main reason why I am opposed to the Bill, and I hope it will not get a Second Reading, is that Clause 1 of it appears to secure that for the purpose of construing an Act the courts can consider

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all the material which was available to Members of Parliament and to this House in its legislative capacity when considering the Bill which has become an Act, but not of course Hansard. That will, to my mind, increase to a very great degree the danger that judges may be tempted to trespass into the legislative field and to decide not what it was that Parliament intended by the words it used but what, in the light of those documents, Parliament should have done; and that is going beyond the judicial function. This measure, though small, is important, and that is my excuse for inflicting this speech on your Lordships at this hour. I hope that my noble and learned friend, often having ventilated this topic, will think that perhaps, in all the circumstances, he need not press it to a Second Reading.
10.15 p.m.
The LORD CHANCELLOR (Lord Hailsham of Saint Marylebone): My Lords, I rather apologise for being here and for playing a part in the debate, but I think that I am expected to do so. This is the second night running that one of my noble and learned friends on the Cross-Benches has proposed the Second Reading of a Bill based entirely, or almost entirely —and I think in each case entirely —upon one of the reports of the Law Commission. Yesterday we had the Matrimonial Homes (Co-ownership) Bill, proposed by my noble and learned friend Lord Simon of Glaisdale. This evening we have the Interpretation of Legislation Bill, proposed by my noble and learned friend Lord Scarman.
During the hours of pleasure and indeed of entrancement in which I have listened to these successive debates I have wondered what function the Lord Chancellor could at the end usefully perform which would keep those noble Lords who remained in the Chamber away from their beds. In each case I have felt absolutely convinced that my true task was that of advocatus diaboli. Last night we had a chorus of praise for the Bill. Everybody said how enlightened it was, how beautifully drafted it was, how it was in accordance with modern thought and socio-economic development in the 20th century. So I began to point out, I am sorry to say —rather to the chagrin, I thought, of my noble and learned friend
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Lord Simon of Glaisdale —some of the rather bizarre consequences which I thought the Bill might have, and some of the reasons why, if it ever got to another place, it would not get very much farther this Session.
This is almost the mirror image of last night. You see, my Lords, my noble and learned friend Lord Scarman has proposed a Bill equally sponsored by the Law Commission, and there has been a chorus of disapproval from the lawyers. But again I feel bound to cast myself in the role of advocatus diaboli. I think that there is a great deal more to be said for this Bill than has been said by other noble and learned Lords who have spoken on it, and I should like to put the case as I see it I do not stress the point, though I repeat what my noble and learned friend Lord Scarman said: that the Bill was, after all, proposed by a Royal Commission some years ago and was virtually —except for paragraph (d) of Clause 1(1), which I agree would be better out of it, on any view of the case —broadly speaking endorsed by the Renton Committee. As I say, I do not do more than repeat the point, and will not elaborate it.
But I think that the Bill has therefore to be taken seriously, and one also has to ask oneself why it has lingered in the pigeonholes for so long. The noble and learned Lord, Lord Elwyn-Jones, gave some indications without lifting the veil of secrecy from the otherwise almost entirely publicised proceedings of the Labour Cabinet. But I shall be equally discreet and say boldly, and as a member of the present Administration and of some Administrations before that of which the noble and learned Lord was an ornament, that it got across the departments and aroused the antagonism of the parliamentary draftsmen. They are a very talented and dedicated body of men, and although I should have thought they have more firsts in "Greats" and in "Mods" than have any other body of men associated together in the Kingdom, none of them has probably ever conducted a case at law, and certainly none of them has ever tried one.
Then, of course, it got across the conservatives in the profession. I need not reiterate any arguments about that because it is a case of res ipsa loquitur tonight, the "res" being the speeches of my

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noble and learned friends on the Cross-Benches. But I should like to present, if I might, one or two facts which might give a second thought to some of them; I do not say more than that.
The first is that English Acts of Parliament are approximately three times as long as continental Acts of Parliament. I first came across this fact when I was Lord Chancellor before and I met the nearest thing the French at present have to one, named Garde des Sceaux, M. Pleven. He entertained me royally and showed me a draft of his legal aid Bill, which approximately did the same thing as the legal aid legislation of this country, of which my noble and learned friend Lord Dilhorne was one of the Godparents, so far as I remember, as long ago as 1949. It was about one-third of the length.
Then there was a gentleman called Sir William Dale, who wrote an unreadable but extremely stimulating book about three years ago in which he pointed out that the same was true of the French Copyright Act, which had to say the same thing as the English Copyright Act because both countries were parties to the same convention and had to enact the same law. It was smaller by a factor of three; it was a third of the length. He went on to point out that the same was true of Sweden and, to a lesser but still significant extent, not surprisingly, of Western Germany. Their legislation, saying the same thing, says it in about a third of the number of words as our legislation does. This, I think, should give us food (as it is called) for thought.
The second thing is that the history of the English law on the interpretation of statutes, which was, I thought, lucidly gone into by both my noble and learned friend Lord Scarman and my noble and learned friend Lord Dilhorne, really consists in a battle between two rival schools of thought. My noble and learned friend Lord Dilhorne, who quoted from his ancestor, Lord Coke, I think perhaps showed himself false to his lineage because Lord Coke really belonged to what is called the mischief school. The mischief school looks at what is perhaps humorously called the mischief of the Act, which means what the Act was intended to do; whereas my noble and learned friend of course belongs to the literalist school, which is the other school,
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which says that you must look at what the Act says.
Viscount DILHORNE: My Lords, the noble and learned Lord does me a grave injustice. I do not think he could have listened to my speech. I supported what my ancestor said fully, and I always have.
The LORD CHANCELLOR: My Lords, my noble and learned friend quoted his ancestor and quoted him accurately, but exactly misrepresented what he was really about. But the fact of the matter is that there has always been this battle between the literalist school, which says, of course, that the function of judges must really be to construe the grammar of the section and not look outside to see what it was intended to do, and what might be called the purposive or mischief school, which says that you must try to find out what Parliament meant to do and give effect to it. Neither of them upset the relationship between Parliament and the judges —let us get that absolutely clear. Both sides in this battle agree that Parliament's business is to legislate and the judges' business is to interpret what Parliament meant to do. I think the noble and learned Lord, Lord Diplock, was perhaps modestly understating the case when he said that two-thirds of the cases he had to try involved the distasteful task of trying to find out.
I would guess —but I am guessing, and not using research for this purpose —that nine cases out of ten which come before the House of Lords depend in the end upon the interpretation of a statute. It is a pretty rum system we have got if, at the end, we have got to go to the House of Lords to find out what Parliament was really trying to do; and I would venture to think that we might find some greater assistance if we looked to the purposes behind this Bill. Of course, if Parliament makes it absolutely plain what it intends to do, it is the business of the courts to give effect to it; and may I reinforce and underline what was said by my noble and learned friend Lord Dilhorne on that subject.
The Times —and some of the correspondence in The Times even more than the leading articles —have given a totally false idea of the recent series of cases to which allusion, more or less delicate —sometimes more, sometimes less —has been made in

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the course of this discussion. The decision of the House of Lords was not a question of whether it wanted to do justice or not; and the decision of the Court of Appeal was not according to whether it wanted to do justice or not. The function of the courts as contained in the judicial oath is to do justice according to the law, in accordance with the law and custom of the realm. It is not the business of judges to make law; it is their business to interpret law.
But the question in this Bill is on what principles the judges should interpret the law? And on that, I think, both schools of thought are absolutely agreed. I would venture to suggest that the noble and learned Lord, Lord Scarman, was saying no more than the truth when he said that judges do not now follow exactly the same pattern of practice in different cases. Different judges do behave in slightly different fashions. I say "slightly"; perhaps I am understating the case. There is still this undercurrent of doubt as to the extent to which you can look outside the words of a statute to try to give effect to what Parliament really meant.
It happened that today I was talking to a noble and learned Lord who has not made a speech. There are very few of them: but I spoke to one of them; We talked about the debate we were going to hold this evening; we talked about Lord Scarman's Bill. He could point at once to three cases which he had tried as a judge in the course of his not inconsiderable career, in which, without a reference (which he had made in the course of his hearing) to a report, it would have been extremely difficult to find out what the Act meant. But in each case he looked at the report and it completely dissolved his doubt. I heard one very noble and learned Lord, again, unfortunately deceased, who said to me that he could never understand why judges were not allowed to look at Hansard. I have often heard this. I have heard other professional judges who have never been in Parliament, in either House, make the same observation to me. But I have never heard a judge who has ever attended a midnight debate in the House of Commons make the same observation.
I wholly agree that Hansard should be absolutely excluded from all reference in the courts; and I think it is a matter of
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comity between the courts and the House of Commons (and the House of Lords in this capacity) that no reference at all should be made to Hansard. He was able to show three or four cases where doing the thing which is allowed in Clause 1 of the Bill helped him and that, if he had not done what was allowed in Clause 1, he would not have had it right. I was able in reply to point to two cases, in one of which the House of Lords manifestly went wrong by not looking at the Blue Book which preceded the statute and on which the noble and learned Lord, Lord Elwyn-Jones, afterwards had to legislate on behalf of the Labour Government in order to put the error right; and in which, by a curious quirk, the House of Lords (again applying its Scottish jurisdiction, in which the noble and learned Lord, Lord Elwyn-Jones, had not thought fit to interfere) reversed the previous decision of the House of Lords and said it was entirely wrong —simply by looking at the Blue Book. I think that the noble and learned Lord, Lord Scarman, has a very much better case on Clause 1 than other noble and learned Lords have thought. What can happen to this Bill must be for him.
I think that Parliament ought to give attention to the way in which it prepares its legislation. I began this rather rambling set of observations by saying that the thing ran into difficulty with the departments, it ran up against parliamentary draftsmen and met with the conservatism of the profession. One at least of the reasons why other countries manage to legislate in shorter and more intelligible language than England is that they take greater care about the preparation of their statutes. They have what are called in France the travaux preparatoire, which are very much more than blue books and reports like those referred to by the noble Lord, Lord Mishcon. I believe that we ought to consider our legislative process very carefully before we get enmeshed in this web of words which every year we churn out in the form of public and general Acts.
I only want to remind the House of one rather terrible fact: the Liberal Government of 1911 was supposed to be a great radical reforming Government. It passed 450 pages of public general legislation. I shudder to think of what will be said of us in 12 months' time, so do not think

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I am making a party point here because I know what the come-back will be in 12 months' time. But the last time looked at the products of the Labour Government they had passed 3,000 pages of public and general legislation at a time when they had a majority of one at the most. In addition, there were 10,000 pages of subordinate legislation.
Lord ELWYN-JONES: If the noble and learned Lord will allow me, I hope that he is preparing for August sittings of the House!
The LORD CHANCELLOR: There is no telling to what terrible lengths the tactics of the Opposition may drive us. The point is that we are suffering from a form of legislation which leads to a degree of verbosity which is not basically tolerable because the total addition to our statute book is cumulative, and the number of repeals, except for spent and obsolete Acts, is negligible compared with the net addition to our statute book. The noble Lord, Lord Mishcon, talked about the woes of the practitioner. How I sympathise with him! Even the specialist cannot keep up with the flow of legislation which emerges from this cloaca maxima that we call the Mother of Parliaments. I feel that we ought to consider whether the way we are setting about things is a good way.
I am not here as an advocate of my noble and learned friend's Bill. I am bound to tell him, as I told my noble and learned friend last night, that unfortunately the state of the legislative programme along the corridor is such that he has not the hope of an icicle in June of getting this Bill through this Session; I do not know about the next one. I hope that he will not be too discouraged by that. I think that he has done a very real public service tonight by introducing a very interesting and important topic. I only wish that there had been more noble Lords on both sides of the House who had heard him and had heard the debate. I am not going to waste the time of the House any more.
10.35 p.m.
Lord SCARMAN: My Lords, this modest little Bill has certainly spurred the heavyweights of the House into the gayest and most frolicsome dance that I
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have watched for a very long time. That such a slight thing could provoke such heady fun at this late hour speaks a lot for the Bill, for the democratic process and for the endurance of your Lordships. I think that the Bill has come through the dance without suffering too many bruises on her toes. They have kept off it.
But one thing is quite clear. While the two principles of interpretation to be found in Clause 2 are regarded as quite acceptable, and indeed the only criticism that was made of them, as I suspected, was that they really are necessary, Clause 1, which provides the suggested aids for interpretation, has come into a storm of criticism of one sort or another —criticism, perhaps, more to be expected at the Committee stage than at this stage.
The interesting development in the debate, which came with the encouraging speech from my noble and learned friend on the Woolsack, has been that it is very difficult to look at the problem of improving aids to the interpretation of statutes, and developing principles for the interpretation of statutes, without at the same time looking at the other side of the fence; that is to say, the business of preparing and drafting legislation. I was very struck, when I read the Renton Committee's report, with their proposition that what was needed was a comprehensive measure which would contain proposals relating to the preparation and drafting of legislation, as well as proposals dealing with the interpretation of legislation.
The longer my noble and learned friend the Lord Chancellor continued, the more I came to think that the correct course is for us to be giving thought, and perhaps for the Law Commissions and others to be giving thought, to a more comprehensive measure than the one which I have had the honour of introducing and moving tonight. In view of what the Lord Chancellor said about the opportunities for this Bill to be considered, and in view of the interesting points made in the course of the evening's debate, I think that the course which I shall take, with the leave of the House, is to beg leave to withdraw the Motion for Second Reading.
Motion, by leave, withdrawn.
Bill, by leave, withdrawn.

  BABOONS: EXPORT TO FRANCE
  BABOONS: EXPORT TO FRANCE
  OAK WILT
  OAK WILT
  COMPUTER DATA BASES: GOVERNMENT MATERIAL
  COMPUTER DATA BASES: GOVERNMENT MATERIAL
  RADIOACTIVE WASTE: DISPOSAL
  RADIOACTIVE WASTE: DISPOSAL
  RFA "TARBATNESS": CONVERSION
  RFA "TARBATNESS": CONVERSION