Sitting of 28 February 1980

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

  TYNE AND WEAR BILL [Lords] (By Order)
  Orders for Second Reading read.
  To be read a Second Time upon Thursday 6 March.

ORAL ANSWERS TO QUESTIONS
  HOME DEPARTMENT

    WELSH LANGUAGE BROADCASTING
    Mr. Ioan Evansasked the Secretary of State for the Home Department what representations he has received regarding allocating the fourth television channel in Wales to the Welsh language.
    The Minister of State, Home Office (Mr. Leon Brittan): We have received some 165 letters about the Government's proposals for Welsh language broadcasting. Most of these were in favour of a concentration of all Welsh language television broadcasting on the fourth channel in Wales.
    Mr. Evans: As all the political parties in Wales have said that the fourth channel should be allocated to the Welsh language, as the Conservative Party said that in its manifesto, and as all the letters which the Government have received advocate that being done, will the Government reconsider their attitude and revert to their view which they held before the election?
    Mr. Brittan: No. Sir, we will not do that. We have looked at this matter care
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    fully, and we are firmly of the view that the fastest, most efficient and most economical way of increasing the amount of broadcasting in Welsh is the way suggested in the Bill.
    Mr. Grist: Does my hon. and learned Friend appreciate that the policy that he is putting forward is by far the best that is possible, that there is no way in which everybody in Wales can be pleased or satisfied on this matter, that what is proposed is generous to the Welsh language, and that any alternative would arouse considerable opposition? Opposition to this policy arises either from those who are opposed to the use of the English language or from opponents of the Welsh language itself.
    Mr. Brittan: I am grateful to my hon. friend for his support. I am not surprised that opinion is much further in the direction in which the Government are moving than the hon. Member for Aberdare (Mr. Evans) would have us believe. That is not surprising when one takes into account that under the proposals the IBA will increase the amount of Welsh broadcasting on the channels that it controls, from seven to 12 hours. That is a considerable increase.
    Mr. D. E. Thomas: In view of what the hon. Member for Conway (Mr. Roberts) said in reply to a question that I asked during the Second Reading of the Broadcasting Bill, why cannot the hon. and learned Gentleman's Department leave the broadcasting authorities in Wales to decide where it is best to concentrate their programmes?
    Mr. Brittan: I believe that the proposal that we have come up with for the distribution of Welsh language programmes, as described during the debate on that Bill, combined with the machinery for consultation to avoid any scheduling difficulties, provide a fair solution to what I concede is not an easy problem.
    Mr. Barry Jones: Is the hon. and learned Gentleman aware of the desperate struggle for survival which the language faces under modern conditions? Does he not realise that throughout Wales there is a feeling that the Government shortchanged the language after the General Election?
    Mr. Brittan: I do not agree with the hon. Gentleman's second observation. The

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    difference between us is not whether we should take steps to foster and help the Welsh language, but over how to go about it. I believe that these proposals, which will enable a substantial increase to take place in the Welsh language broadcasting, present an optimistic opportunity for those who wish to further the cause of the Welsh language.
    Mr. Alan Williams: Was it not the height of cynicism to fight the election on 3 May on a commitment to provide a Welsh language fourth channel in Wales and then 12 days later, deliberately—as the Home Secretary indicated during the debate on broadcasting—to weasel-word the relevant section of the Queen's Speech to enable the Government to wriggle out of that commitment? What happened in those 12 days to change the Government's mind?
    Mr. Brittan: By the words which the right hon. Gentleman has chosen to use he has indicated that he is quite an expert in the use of weasel words. What was said in the Queen's Speech was that we would seek an early start for Welsh language broadcasting on the fourth channel. However, it is right to say that, compared with the manifesto, a decision was taken to approach the matter in a different way. My right hon. Friend the Home Secretary, and my right hon. Friend the Secretary of State for Wales, have both made that absolutely clear. I believe that the change is justified.

    Firearms
    Mr. Newensasked the Secretary of State for the Home Department if he will review the provisions for obtaining licences for firearms.
    The Secretary of State for the Home Department (Mr. William Whitelaw): I have nearly completed a review of firearms matters generally, and hope to be able to make a statement shortly.
    Mr. Newens: In view of the frequent use of shotguns in crimes of violence and the comparative ease with which a shotgun certificate can be obtained, will the right hon. Gentleman ensure, as a matter of urgency, that the regulations for obtaining shotguns are as stringent as those for obtaining other firearms?
    Mr. Whitelaw: The hon. Gentleman will appreciate that the issuing of firearms certificates is a matter for chief officers of police. It is one of the matters which I am considering and discussing with them.
    Mr. Burden: Will my right hon. Friend consider the possibility of introducing regulations for the control of the crossbow, which is an extremely dangerous weapon, not least because of its silence?
    Mr. Whitelaw: My hon. Friend will be the first to appreciate that a weapon such as the crossbow is not a firearm, by definition. I am advised that the police consider that they have adequate powers to deal with this matter, but I shall, of course, consider the position.
    MI. Woolmer: When reviewing the use of firearms, will the right hon. Gentleman take into account the growing problem of the use of air weapons, especially by youngsters under 17 years of age? Will he give an assurance that in that review he will consider the issue in detail and see whether there is some way of bringing a growing social problem under control?
    Mr. Whitelaw: I accept what the hon. Gentleman says about air weapons. It is an issue which I shall have in mind.
    Mr. Farr: When my right hon. Friend is considering this procedure, will he consider whether he can make sensible economies in the issuing of shotgun and firearms certificates, perhaps by extending the life of the certificates?
    Mr. Whitelaw: I shall naturally consider that proposal. The cost of issuing the certificates and the charge that is made have to be considered at the same time.

    Television Licences (Sale)
    Mr. Parryasked the Secretary of State for the Home Department what consideration has been given by Sir Derek Rayner to the agency agreement between his Department and the Post Office for the issue of television licences through sub-post offices.
    The Under-Secretary of State for the Home Department (Mr. Timothy Raison): Sir Derek Rayner has not been asked to include this agreement in his reviews.
    Mr. Parry: Will the hon. Gentleman assure the House that television licence holders, especially pensioners, the handicapped and the aged, will continue to be able to renew their licences at sub-post offices and to purchase tickets to assist them so to do?
    Mr. Raison: I hope so. It is our desire to have as many outlets as possible for the sale of television licences.

    Remand Facilities
    Mr. John Evansasked the Secretary of State for the Home Department if he is satisfied with prison remand facilities in North-West England.
    Mr. Brittan: No, Sir. There is a shortage of suitable accommodation. Plans for affording permanent relief to Risley remand centre, which serves the North-Western courts, are under urgent consideration, as my right hon. Friend made clear in his answer to a quesion by the hon. Gentleman on 15 February. For the longer term, we are considering the recommendations of the May committee in respect of the building programme and the facilities available to remand prisoners.
    Mr. Evans: Does the hon. and learned Gentleman accept that solving the overcrowding problems at Risley in my constituency will not be helped by remanding people to Strangeways gaol at Manchester? Will he concede that the only true solution to the problems in the North-West is the provision of a new remand centre as quickly as possible?
    Mr. Brittan: That question will have to be considered in the general review of prison building arising from the May report. I do not agree with the preamble to the hon. Gentleman's supplementary question. If it were possible to move a substantial number of prisoners from Risley to Manchester prison, and to move some of the prisoners now at Manchester to the developing prison at Wymott, which, as the hon. Gentleman knows, is currently being planned and negotiated, that would make an important contribution to an urgent problem.
    Mr. Robert Atkins: Does my hon. and learned Friend recognise that everyone is apparently in favour of more prisons,
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    provided that they are not build in his constituency or adjacent to it?
    Mr. Brittan: I accept my hon. Friend's point. I hope that everyone who asks for further prison facilities to be provided will take that on board when any plans are made.
    Mr. Kilroy-Silk: Will the hon. and learned Gentleman bear in mind that there are about 6,000 men, women and school children on remand at any one time, and that over 50 per cent. of them are eventually found not guilty or given non-custodial sentences? Will he also bear in mind that all of them have, in effect, served a prison sentence? A not insignificant number of men, women and' children serve a sentence on remand that is longer than the sentence that they could have been given if convicted of the alleged offence. Will he take urgent steps to reduce overcrowding by reducing the number on remand and the time that they spend on remand?
    Mr. Brittan: The issue of the facilities at Risley and the wider questions which the hon. Gentleman raises are related, but they are not the same. I agree that action is needed on both scores.

    Telephone Tapping
    Mr. Flanneryasked the Secretary of State for the Home Department if he has completed his review of the law on telephone tapping.
    Mr. Cryerasked the Secretary of State for the Home Department when he anticipates making a statement on telephone tapping following completion of his review.
    Mr. Andrew F. Bennettasked the Secretary of State for the Home Department when he expects to complete his review of the law on telephone tapping.
    Mr. Whitelaw: I will make a statement to the House before Easter.
    Mr. Flannery: Does the Minister realise that there is grave disquiet and considerable unease now that it is known that up to 1,000 telephones can be tapped at any moment by one device? Does he realise that there is a sense of urgency in a wide section of the community? Will he give an assurance that his review of the law will come out as soon as possible?
    Mr. Whitelaw: I do not accept some of the hon. Gentleman's remarks, but I realise that there is considerable interest in this matter. That is why I promised the House that I would make a statement before Easter.
    Mr. Cryer: Will the right hon. Gentleman take note that there is continuing public concern and unease that this issue is being swept under the carpet by the issue of D notices on the recent New Statesman articles? There is concern that only one warrant is being used for a multipicity of tappings. Before assessing the Malone position, will he make a statement on his intentions as soon as possible, preferably next week?
    Mr. Whitelaw: I do not accept the hon. Gentleman's first supplementary question. I turn to the broader issue. I think it right that I should make a full statement dealing with the Malone position and with all the other matters that arise at the same time. I have promised to make a statement before Easter. Bearing in mind all the complicated circumstances, that is a reasonable way of dealing with a matter of urgency.
    Mr. Bennett: Does the right hon. Gentleman agree that it is necessary not only for there to be a full statement but for the Government to provide time for a full debate?
    Mr. Whitelaw: I have promised a statement before Easter, and that is where I shall remain for the moment.
    Mr. David Atkinson: Does my right hon. Friend accept that the use of telephone tapping by Customs and Excise as part of its investigation of VAT evasion represents a dangerous sledgehammer that is being applied to a comparatively small nut in our free society?
    Mr. Whitelaw: If I were to respond to my hon. Friend I should tresspass on what I said I will not do before my statement. I wish to rest on the fact that I shall make a statement before Easter.
    Mr. Merlyn Rees: Is the right hon. Gentleman aware that the Opposition are glad that he is to make a statement? As has already been said, we hope that he will announce that there will be an inquiry. Many allegations are made which
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    I cannot deny or agree with, and it is important that the matter is cleared up.
    Mr. Whitelaw: The right hon. Gentleman has considerable knowledge of these matters, and I take careful note of what he has said.

    Association of Chief Police Officers
    Mr. Straw: asked the Secretary of State for the Home Department when he expects to meet representatives of the Association of Chief Police Officers.
    Mr. Whitelaw: I met the president and representatives of the association on 20 February. I have no immediate plans for another meeting, but I frequently have occasion to meet individual chief officers.
    Mr. Straw: Does the right hon. Gentleman agree with the chief constables, who yesterday told the employment Select Committee that they consider that the scope of the existing law on picketing is adequate?
    Mr. Whitelaw: The chief constables are totally independent, and I think that I must leave them to speak for themselves. If I start to comment on what they say to Select Committees I shall be in trouble with the chief constables and with the Select Committees. I think that that would be unwise.
    Mr. Marlow: The next time that my right hon. Friend meets the chief police officers, will he tell them that the enforcement of law is as important as public order, as opposed to a statement attributed to a police officer yesterday that first he had to have public order and then, if he could do so, he would enforce the law? They are as important as each other.
    Mr. Whitelaw: I accept what my hon. Friend says. However, in recent months the police have had to face difficult problems in difficult situations. The House should be extremely grateful to the chief officers of police, and to all those in the various forces concerned, for the way in which they have been determined impartially to uphold the law.
    Mr. Meacher: Bearing in mind the close association, nationwide, which Home Office reports indicate between a large number of complaints against the

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    police alleging assault in different police areas per 10,000 arrests and the number of deaths in custody, and bearing in mind that of the 26 complaints to the Director of Public Prosecutions following deaths in custody, in 20 cases the complaint was assault causing death or police maltreatment, does the right hon. Gentleman accept that the Home Office evidence shows clearly that police maltreatment is at least one factor, among others, in deaths in custody, and as such there is a need for a full public inquiry to establish all the causes and remedies?
    Mr. Whitelaw: I do not wish to take refuge behind the Select Committee, but, it is conducting an inquiry into deaths in police custody. I think that the hon. Gentleman will agree that I have responded Cully to many of his questions. I shall write to him again. I do not think that I can accept all of his statistics, because I am not quick enough on my feet to take into account all the implications of all the figures that he has given to me. Nevertheless, we should await the report of the Select Committee on the matter which he is pursuing.
    Mr. Mellor: I accept what my right hon. Friend has said about the difficulties faced by chief constables in maintaining law and order on the picket lines, but is it not a fact that if—as appears to be the case from the pronouncements of certain chief constables—they do not intend to enforce the criminal law as rigorously on the picket lines as they do in disturbances in public houses or outside football grounds, it becomes difficult to resist the public argument that there should be a new law on picketing?
    Mr. Whitelaw: I do not think that I obtained that interpretation from the evidence given by chief constables. It is for them to speak for themselves. I wish to rest on what I said to my hon. Friend the Member for Northampton, North (Mr. Marlow), that in a difficult position each chief constable must judge the best way in which he can deal with the matter in the interests of the public and of society as a whole. In making those judgments, the chief constables deserve considerable gratitude from the House.
    Mr. George Cunningham: Does the Secretary of State recollect that on Monday of this week the Attorney-General
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    told the House that in June of last year, through the Association of Chief Police Officers, the Home Office was assured that the guidelines on jury vetting were being adhered to in all police forces? Is it the practice of the Home Office, when it is aware that there is doubt about such a fact in one police force, to make its inquiries and accept assurances through the ACPO rather than to deal direct with the police force concerned? Will the Secretary of State tell us what is happening about the flagrant breach by the Northamptonshire police of the guidelines on jury vetting?
    Mr. Whitelaw: My right hon. and learned Friend the Attorney-General is is considering the matter, and he mentioned it on Monday. As the hon. Gentleman knows, it is normally the case that the Home Office deals with the Association of Chief Police Officers on these matters. We have its assurance. I realise that there has been a mistake, and I am personally looking into the matter.

    Television Programmes
    Mr. Stoddartasked the Secretary of State for the Home Department if he will now make further funds available for improving reception and choice for viewers of independent television programmes.
    Mr. Raison: No, Sir. The Government have no plans to alter the existing arrangements under which the IBA provides the ITV service at no cost to public funds. We believe that the IBA's engineering resources and the very limited UHF frequency channels should be used to extend UHF television cover to those parts of the United Kingdom which are as yet without it and to provide for a service on the fourth channel rather than to provide some areas with a choice of service from two or more ITV companies.
    Mr. Stoddart: Is the Minister aware that I regard that as an unsatisfactory reply? Is he aware also that my constituents in Swindon are utterly dissatisfied with the service that they receive from the Midlands-based ATV company, which is notorious for its bad service to peripheral areas? Can he do nothing at all to satisfy the overwhelming demand by my constituents that they remain in the South-West and receive a service covering the town from the Bristol based South-West service?
    Mr. Raison: I expected the hon. Gentleman to be a little disappointed with my reply. I recognise that many living in Swindon might prefer to receive HTV programmes. However, I can find no ground for making an exception to the general policy in their favour. I believe that the sense of priorities that I have stated is right.
    Mr. Lang: Does my hon. Friend agree that it is desirable, on social grounds, that independent television and radio programmes should be receivable, as far as possible, in all parts of the country? In that context, will he undertake to give special consideration to the plans for independent local radio in South-West Scotland?
    Mr. Raison: I understand my hon. Friends point, but his request about radio programmes in South-West Scotland does not arise on this question.
    Mr. Dykes: In view of the widening choice and facilities in radio, is citizens band radio coming nearer?
    Mr. Raison: I must ask my hon. Friend to await a statement from the Government on that matter.

    Juvenile Offenders
    Mrs. Renée Shortasked the Secretary of State for the Home Department what response his Department has made to the proposals in so far as they refer to his responsibilities of the report "In Whose Best Interests" published by the Cobden Trust and MIND, a copy of which has been supplied to him.
    Mr. Brittan: We shall take account of this report, and of other published material on the treatment of juvenile offenders, in preparing our own proposals for amendment of the law.
    Mrs. Short: Is the Minister aware of the serious position now obtaining, in that there are twice the number of children in institutions of different sorts as there are adult prisoners? Does he realise that tranquillisers are being used to control children in some of the institutions and homes? Does he accept that the rehabilitation record of borstals and detention centres is not exactly high?
    Why is not the Minister acting on the report of the Select Committee on Expenditure on the working of the Children
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    and Young Persons Act 1969, and caring for very many more children in community and foster homes? Will he take that on board and ensure that reasonable rates are given to foster parents?
    Mr. Brittan: I accept the importance of children being treated in the community. I take on board many of the points made by the hon. Lady. I do not accept the general condemnations that seemed to be implied in the first part of the question. They are the sorts of points that we shall take into account in our review of these matters.
    Mr. Christopher Price: Is the hon. and learned Gentleman aware that statistics are now collected of the amounts of psychotropic drugs that are administered in prisons, while they are not collected for the amounts of psychotropic drugs used in institutions under the control of his right hon. Friend the Secretary of State for Social Services? Will he consult his right hon. Friend so that statistics about drug intake are collected even-handedly between his Department and the Department of Health and Social Security?
    Mr. Brittan: I shall be happy to draw to the attention of my right hon. Friend the point made by the hon. Gentleman.

    Children and Young Persons Act 1969
    Mr. Budgenasked the Secretary of State for the Home Department when he proposes to introduce legislation to amend the Children and Young Persons Act 1969.
    Mr. Brittan: We hope to inform the House of our proposals in the course of this Session, and to introduce the necessary legislation as soon as practicable thereafter.
    Mr. Budgen: Is my hon. and learned Friend aware of the widespread concern being expressed by magistrates who sit in juvenile courts because they cannot ensure that, in appropriate cases, children are placed in community homes? Will he tell the House what progress is being made towards implementing our manifesto commitment to introduce a residential care order?
    Mr. Brittan: I am aware of the concern felt in this respect not only by magistrates but by others. I share that concern. The proposals on which we are

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    working concentrate on a form of residential care order which will give courts the powers that they need to ensure that juveniles who continue to commit offences are not allowed to remain at home.
    Mr. Kilroy-Silk: When will the Minister implement that part of the 1969 Act which requires the phasing out of borstal institutions? If he is not to do that, will he at least close down the only closed borstal for girls in the country, Bullwood Hall, because of its inaccessibility? Is he aware that about 40 per cent. of the girls who left that institution last year did not receive a visit from their relatives their probation officers or social workers? Would it not be more appropriate to have a series of smaller institutions in every part of the country?
    Mr. Brittan: It might be more appropriate to do that, and it is something that we shall consider. No doubt the hon. Gentleman will take into account the expenditure implications of such a change. On the general question of the future of borstals, that is something that will be considered in the course of our review of the treatment of young offenders.
    Mr. Lawrence: Bearing in mind the Government's concern that, wherever possible, executive powers on sentencing should be diminished, and judicial powers increased, would it not be sensible to make the care order a determinate sentence? When is my hon. and learned Friend proposing to introduce such a change?
    Mr. Brittan: I have a great deal of sympathy with my hon. Friend's suggestion. It is one of the points that we are considering in our review.
    Mr. Merlyn Rees: A moment ago the Minister explained to the House that within a matter of days of taking office he changed his mind on a manifesto commitment about the fourth channel. Why are the Government sticking to the Conservative manifesto pledge to give magistrates the power to send children direct into some form of custodial care, when he must know that, compared with 10 years ago, the number of special units is now 300? Is he aware that that number is growing rapidly and that without any new moves the problem for magistrates becomes less and less every day?
    Mr. Brittan: I do not accept that the problem for magistrates gets less and less every day. As my hon. Friend the Member for Burton (Mr. Lawrence) pointed out, there is considerable feeling among magistrates that, in appropriate circumstances, they ought to have the right to make a determination of the kind that I have described. That is something to which we gave expression in our manifesto and which we shall implement in the proposals which we shall put before the House in due course.

    Prison Service (May Report)
    Mr. Joseph Deanasked the Secretary of State for the Home Department what response he has had so far from organisations representing people affected by the May report; and if he will make a statement.
    Mr. Whitelaw: I have received a number of representations from such organisations, and I recently met the Prison Officers' Association to discuss issues arising from the May report.
    Mr. Dean: I thank the Home Secretary for that reply. Is he aware of the serious concern that has been expressed by prison officers at Armley prison, Leeds, which is in my constituency, over the serious overcrowding there, which is resulting in the incarceration of prisoners for almost 24 hours a day? That has resulted in a potentially dangerous situation between the staff and the inmates. When can we expect some relief in overcrowded prisons such as that?
    Mr. Whitelaw: The hon. Gentleman is perfectly right in what he says. It is a serious matter, and one which has existed for a considerable time. When the May report was published I promised the House that the Home Office would undertake a substantial reorganisation of the prison service. That we are doing, and I hope to announce the results of that as soon as possible—I trust very soon after Easter.
    Mr. Dubs: Is the right hon. Gentleman aware of the urgency of the problem? Prisons throughout the country are grossly overcrowded—Wandsworth prison in my constituency is just one example—and there is a crisis in our prison system. It is urgent that action is taken quickly to

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    consider the May report and to act on its conclusions.
    Mr. Whitelaw: I accept what the hon. Gentleman says. This is a problem which has plagued successive Home Secretaries. I do not put any blame on them or on anyone else. It is something which the community as a whole must face. I intend to put forward proposals soon after Easter, when I believe that we must make a substantial change in many of our prison arrangements. Indeed, some of the people who are in prison should not be there.
    Dr. Summerskill: When the right hon. Gentleman puts forward his proposals, will he do so either in a debate on the May report, as we have repeatedly requested, or in a White Paper, so that all the many recommendations in that extremely valuable report can be fully discussed by the House and we can be made aware of the Government's proposals on each of those recommendations?
    Mr. Whitelaw: I am grateful to the hon. Lady. The question of a debate is for my right hon. Friend the Leader of the House. I should greatly welcome it. I should be prepared to discuss, both through the usual channels and with the House as a whole, whether it would be more suitable for me to make a statement first, to be followed by the debate, or for me to make a statement in the debate. I should be open to doing either—whichever suited the House best.
    Mr. McQuarrie: When my right hon. Friend investigates the May report, will he bear in mind the necessity to decant the families of prison officers who are at present compelled to live within the prison grounds and integrate them within towns, such as Peterhead in my constituency, where a prison is situated? The families would be far happier living among ordinary citizens of that town instead of being restricted to the area of the prison grounds.
    Mr. Whitelaw: My hon. Friend will be the first to appreciate that I must not trespass on Scottish ground, but I realise that this is a major problem. At the same time, major expenditure problems are involved in carrying out such a suggestion.

    Kidney Transplants
    Mr. Dalyellasked the Secretary of State for the Home Department whether he is satisfied with guidelines to coroners on the circumstances in which they allow hospital authorities to take kidneys for purposes of transplant.
    Mr. Raison: Yes, Sir. The code of practice recently issued by the Department of Health and Social Security was circulated to coroners on 18 December 1979, and the opportunity was taken to remind them of the guidelines set out in the Home Office letter of 29 April 1977. Copies of both these circulars have been placed in the Library of the House.
    Mr. Dalyell: Is not there substantial evidence of the fact that as the practice varies between coroners in different parts of the country, that inhibits many doctors who might otherwise set in motion procedures for transplants?.
    Mr. Raison: There is some variation in practice between coroners in different parts of the country. The hon. Gentleman should remember that the coroner is an independent judicial officer. I believe that most coroners arrange a perfectly satisfactory procedure with their local hospital.
    Mr. Marlow: What action does my hon. Friend intend to take to preserve the anonymity of donors? Recently, we have had to put up with some distasteful reports in the press.
    Mr. Raison: I shall look into that matter and write to my hon. Friend.

    Prison Population
    Mr. Soleyasked the Secretary of State for the Home Department if he will seek to set up an interdepartmental working party with instructions to report urgently on ways of reducing the prison population.
    Mr. Brittan: I can assure the hon. Member that the recommendations on reducing the prison population put forward in the fifteenth report of the Expenditure Committee and the May committee's report are already being examined by the Home Office and other Departments concerned.
    Mr. Soley: If the Minister accepts that prison overcrowding is at crisis levels, should not we take more radical action and look at ways of reducing the length of sentences, and in some cases not sentence people to prison when imprisonment does not work?
    Mr. Brittan: It is a question not so much of evolving new alternatives to custody but of encouraging the use of existing alternatives to custody, which we certainly favour doing in appropriate cases. As my right hon. Friend and I have made clear on many occasions, both in the House and elsewhere, except in cases of violent crimes, which require long custodial sentences, we recognise that the deterrent effect that is required can often be achieved by shorter prison sentences than are sometimes imposed.
    Mr. Kilroy-Silk: What about mentally disordered offenders?
    Mr. Brittan: I am anxious to remove as many of them as possible from the prison system. My right hon. Friend is doing what he can in that respect. We are engaged in consultations with the Department of Health and Social Security in order to get as many such prisoners as possible out of prison and into the appropriate accommodation.
    Mr. Ioan Evans: As we have one of the largest prison populations in Europe, and as it costs more than £100 a week for each prisoner, will the hon. and learned Gentleman look at some of the experiments that have been carried out in some of the Scandinavian countries which are aimed at reducing the number of people who are kept in prison?.
    Mr. Brittan: Naturally, as we are responsible for running, financing and maintaining so large a prison system, we are anxious to consider all ways of reducing the strain that at present exists. Any proposals that come forward, whether from Scandinavia or from climes further south, will be most carefully considered on their merits.

    British Broadcasting Corporation
    Mr. Dormandasked the Secretary of State for the Home Department if he will secure the future of the BBC by agreeing with it the future level of the licensing fee over the next five years.
    Mr. Whitelaw: When I announced the increase in the television licence fees on 23 November 1979 I made it clear that the new fees should last for at least two years. I also published a paper on the BBC's forward planning which contained proposals for dealing with the BBC's expenditure over a four-year period.
    Mr. Dormand: Is the right hon. Gentleman aware of reports that regional broadcasting is to be cut disproportionately by the BBC because of the present financial situation? Is he further aware that in the Northern region, regional television and radio programmes make a vital contribution to the life of the region and, indeed, that many of those programmes more than match the quality of networked programmes? Will he therefore make immediate representations to the BBC to ensure that regional broadcasting is expanded rather than reduced?.
    Mr. Whitelaw: I understand that the proposals which have been put forward are still a matter for discussion within the BBC. How the financial targets are met must be a matter for the BBC governors themselves.
    Mr. Jessel: Is my right hon. Friend aware that although BBC licence fees were substantially increased last year, it is reported today that the BBC intends to cut out five orchestras? As Britain is one of the musical capitals of the world, is not the BBC cutting the wrong things?.
    Mr. Whitelaw: I must repeat that I understand that these proposals are still a matter for discussion within the BBC. What the BBC decides to do within its own financial targets, and with the money that it receives from the licence fee given by this House, must be a matter for the governors of the BBC.
    Mr. Charles R. Morris: Is the Home Secretary aware that the director-general of the BBC has made a statement today indicating that there will be substantial cuts in regional broadcasting? Will he undertake to make a statement to the House about these cuts?.
    Mr. Whitelaw: No, for the perfectly simple reason that these proposals are still a matter for discussion within the BBC, and anyway they are entirely a matter within the discretion of the governors of the BBC.
    Mr. John Townend: Before my right hon. Friend agrees to any further increase in the licence fees, will he inform the BBC that he expects the corporation to negotiate with the unions reductions in the excessive manning levels in force in the production of television programmes?
    Mr. Whitelaw: As I have said, keeping within financial targets is a matter for the governors. Manning levels in the BBC are also the concern of the governors.
    Mr. Armstrong: While those discussions are taking place will the Home Secretary remind the director general, in no uncertain terms, that viewers and listeners in the Northern region pay exactly the same licence fees? Will he tell him also that we very much resent the savage cuts which are now proposed in regional broadcasting? The quality of broadcasting in the North—meaning Newcastle, not Manchester—is greatly superior to the more costly London-based programmes.
    Mr. Whitelaw: I represent a constituency in the Northern region. I must point out to the right hon. Gentleman that he is entitled to make representations to the director-general. I am entitled to make representations to the director-general as a Member of Parliament for a Northern constituency, but not as Home Secretary.

    Civil Defence
    Mr. Michael McNair-Wilsonasked the Secretary of State for the Home Department what consideration he is giving to recreating a civil defence organisation.
    Mr. Brittan: The current review of home defence arrangements is examining how volunteer effort can best support the plans of local authorities.
    We are not persuaded that a new national organisation is required.
    Mr. McNair-Wilson: Does my hon. and learned Friend agree that a credible national defence posture requires a strong civil defence organisation? Does he agree also that whether one is thinking of a war-time situation or of a national emergency, an organisation is required to meet such a contingency?
    Mr. Brittan: I agree that the credibility of our general defence arrangements involves having adequate civil defence arrangements. That is why my right hon.
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    Friend the Home Secretary initiated the review that is currently taking place. However, there is more than one view about the precise form that the arrangements should take and the precise way in which volunteer efforts should be mobilised.
    Mr. Cryer: Is it not true that the reality of nuclear warfare is that stirrup pumps and whitewashed windows are no defence against the horror of mass extermination? Is it not true also that that underpins the basic strategy of NATO and of nuclear weapons? Is it not also the case that the BBC banned the film "War Game", which showed civil defence in action, because it was thought that the population would become even more fearful?.
    Mr. Brittan: I do not accept any of the hon. Gentleman's assumptions or conclusions. The object of our defence posture is to avoid war. It would do no service to the community simply to say that if war came we could do nothing to mitigate the consequences. We recognise that any responsible Government must do what they can. As a result, a review of civil defence is taking place.
    Mr. Hugh Fraser: I note my hon. and learned Friend's great realism. Does he agree that if American rockets are to be stationed in Britain there will be great demand for a proper civil defence organisation as part of that deterrent?
    Mr. Brittan: As I have indicated, the Government accept that the existing civil defence arrangements need review. That review is taking place. As I said during the Adjournment debate last week, my right hon. Friend will announce the outcome of that review shortly.
    Dr. Summerskill: As civil defence is closely related to military defence, will the Minister say what consultations the Government are having with the Nato civil defence committee in the course of drawng up the review? Britain is a member of the Nato civil defence committee.
    Mr. Brittan: Naturally, the international dimension is being considered. However, it would not be right to describe in detail the nature of the consultations.

    "Athina B"
    Mr. Bidwellasked the Secretary of State for the Home Department if he

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    will state the nationalities of all members of the Greek-owned motor vessel "Athina B", which ran aground at Brighton on 21 January; what steps were taken to return seamen to their countries of origin; and what other action was taken concerning them.
    Mr. Raison: The crew comprised 13 Greeks, I German, I Egyptian, I Portuguese and 5 Indians. Also on board were the British wife and children of the captain and 1 French passenger. Tickets were provided by the owners of the ship to enable the crew to leave the United Kingdom. As to the other action taken, I refer the hon. Member to the reply I gave to a question by the hon. Member for Keighley (Mr. Cryer) on 19 February.
    Mr. Bidwell: Does the Minister accept that that "other action" meant that three Indian nationals in the crew were put cells for two or three days before removal to Harmondsworth, and ultimately to India, via Athens? Is not that disgraceful in view of the fact that these seamen had been through a traumatic experience and had been tossed about in the Channel before beaching at Brighton? Will the Minister give an assurance that in future there will be no such discrimination against shipwrecked mariners who reach the shores of Britain, which has a rich history in succouring such people?
    Mr. Raison: The three Indians were not regarded as professional seamen. The rest of the crew, including two other Indians, were considered to be regular seamen. There is a significant risk of desertion in United Kingdom ports by persons who are not regular seamen. They are scrutinised closely to prevent that. Those considered likely to desert are refused entry. They are usually kept on board until their vessel departs, under arrangements made by the ship's master. If that is not possible, as in this case, they are kept in secure accommodation on shore. However, in the light of this incident, I am considering whether instructions to immigration officers in respect of nonprofessional seamen require amendment.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. John Evansasked the Prime Minister if she will list her official engagements for 28 February.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet. In addition to my duties in this House, I shall be having further meetings with ministerial colleagues and others.
    Mr. Evans: Despite her busy schedule, will the Prime Minister find time to spare a few moments' thought for the forthcoming Moscow Olympics? Does she feel that Mr. Brezhnev's reported interest in declaring Afghanistan a neutral State will enable British athletes to travel to Moscow? Will not that get the Prime Minister off the ridiculous hook on which she has hung herself?
    The Prime Minister: We are naturally very pleased if Soviet Russia is considering making Afghanistan into a neutral State. However, we shall require more than words as evidence of its good intentions. We shall require the withdrawal of Soviet troops from Afghanistan.
    Sir Graham Page: Will my right hon. Friend find an opportunity today to congratulate those British Service men and policemen in Rhodesia who are having such success in ensuring a good turnout at the elections?
    The Prime Minister: I shall gladly do so. Indeed, I shall congratulate all those concerned with administering the elections. I am happy to report that they seem to be going extremely well at the moment.
    Mr. Freud: In view of President Carter's fine example in inviting the victorious American ice-hockey team to dinner in the White House, will the Prime Minister emulate that by asking Mr. Robin Cousins to have tea at No. 10 Downing Street?
    The Prime Minister: I rather thought that he deserved more than that. Is the hon. Gentleman fishing for an invitation?
    Mr. Hannam: Will my right hon. Friend ask the Leader of the Opposition today to use his influence with the TUC in order to persuade it to reverse its outrageous decision to boycott the financing of State-financed secret ballots?
    The Prime Minister: I do not know that I have very much influence over the Leader of the Opposition. I shall gladly join my hon. Friend in requesting the

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    TUC to withdraw that advice. It seems that most people would wish to take advantage of postal ballots that are paid for by the Government. In that way the TUC can ascertain the views of its members in a truly democratic way.
    Mr. Whitehead: As No. 10 Downing Street appears to have been turned into a temporary ashram for the maharishi of monetarism, did the Prime Minister and her fellow disciples ask Professor Friedman yesterday what he meant by his statement that she has the right ideas but that she is not putting them properly into practice? Can it be that he wishes her to move towards the perfect Friedmanite state that is found in the military dictatorship of Chile?
    The Prime Minister: If I may say so, I believe that the hon. Gentleman can do greater justice to himself than that. We had a very interesting meeting, which I was able to attend only briefly. On the Conservative Benches, we have an open mind on these matters.

    PUBLIC EXPENDITURE
    Mr. David Atkinsonasked the Prime Minister whether she is satisfied with the present proportion of the gross domestic product which is spent by the State.
    The Prime Minister: No, Sir. Our aim is to reduce it.
    Mr. Atkinson: I totally agree with my right hon. Friend, but may I ask for her assurance that the Government will now be bolder in cutting public expenditure? Does she agree that they could perhaps even emulate the previous Labour Government, particularly the performance of the right hon. Member for Leeds, East (Mr. Healey) when he was Chancellor of the Exchequer between 1976 and 1978? The right hon. Gentleman reduced public expenditure by £6,000 million, which amounted to 8·5 per cent. Does my right hon. Friend agree also that the right hon. Gentleman did that not out of political conviction but because he had brought the country to the brink of bankruptcy?
    The Prime Minister: I agree with my hon. Friend that we need to cut public
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    expenditure further, and there will be another White Paper at or about the time of the Budget. I totally agree that if we are to restore the private sector we must stop draining money from that wealth-creating sector into the public sector.
    Mr. Campbell-Savours: How does the right hon. Lady respond to the suggestion in the House and in the country that increasing numbers of Conservative Members are publicly dissociating themselves from the policies which she and her Government are pursuing, certainly with regard to the steel industry? Will she now in the national interest intervene in the dispute to bring it to an end?
    The Prime Minister: With regard to the first part of the hon. Gentleman's question, perhaps he will await the result of the Division tonight. I believe that he will find that, as usual in this House, the majority will be right. With regard to the hon. Gentleman's suggestion that I should intervene in settling the steel dispute, as he knows full well, the word "intervention" usually means that the Government will provide more taxpayers' money. That I cannot do.
    Mr. Best: When considering reducing public expenditure, particularly local authority spending, will my right hon. Friend have regard to cutting bureaucracy rather than services? Will she and her right hon. Friends look carefully at whether local authorities plan to cut services rather than administration costs?
    The Prime Minister: I very much agree with my hon. Friend. It is a source of great concern that sometimes local authorities seem to find it easier to cut services to the public than to cut administration, which could often easily be cut without reducing the standard of services. We shall draw that point to the attention of all our local authorities.
    Mr. Dalyell: What did the Prime Minister learn from Professor Friedman last night?
    The Prime Minister: I am very sorry to disappoint the hon. Gentleman but I was present only right at the beginning of the meeting. As the hon. Gentleman will understand, I had rather a lot of other matters to prepare for today.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. Heddleasked the Prime Minister whether she will list her official engagements for Thursday 28 February.
    The Prime Minister: I refer my hon. Friend to the reply which I gave earlier.
    Mr. Heddle: During the course of her busy day, will my right hon. Friend take time to reflect on the TUC's proposal to call a one-day national strke on 14 May, bearing in mind the damage that that will do to our economy and the disruption that will ensue in our daily lives? Does my right hon. Friend agree that the TUC leadership would do well to listen to the chorus of opinion that is growing daily among its members and their wives, who wish to express their right to work rather than blindly obey the diktats of Congress House?
    The Prime Minister: I am grateful to my hon. Friend. I totally agree with him that such a day of action would do no good to British trade unionism, British industry or the reputation and standing of British goods and services abroad.
    Mr. Faulds: Will the right hon. Lady find time today to instruct the Governor of Southern Rhodesia that, after the elections are declared, he must summon to form the Government of Zimbabwe the man who has won the most seats?
    The Prime Minister: No, Sir, because that it not quite the constitutional position. [HON. MEMBERS: "Oh!".] That is not quite the constitutional position, unless one party wins a clear majority. If a party does not win a clear majority, the constitution requires the Governor to appoint whoever, in his judgment, is best able to command the support of the majority. It is for the leaders of the parties, and not the Governor, to decide what coalitions to form. That is the constitutional position.
    Mr. Churchill: Will my right hon. Friend find time today to consider the plight of the people of Cambodia? Is she aware that for a nation of 42 million people there are only 56 doctors in the entire country, and that all outside assistance has been refused by the authorities in Pnom Penh, apart from a 10-man Soviet team, which is but a drop in the
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    ocean? Is she further aware that the International Committee of the Red Cross says that up to the end of last year, of the 40,000 tonnes of relief supplies that it delivered to Pnom Penh, only 2 per cent. were distributed? Will she make representations to the United Nations and also the Soviet Government, who are financing the Vietnamese occupation of Cambodia to the tune of $2½ million per day?
    The Prime Minister: I shall, of course, look further into the matters revealed by my lion. Friend. I thought that the relief operation through this country and the EEC was going well. In view of the new points that my hon. Friend raises, I shall look at the matter again.
    Mrs. Renée Short: Is the Prime Minister aware that the Secretary of State for Social Services said that the Government had taken no decision about changing the method of paying social security benefits? Will the right hon. Lady take the opportunity categorically to deny that the Government have any intention of changing the system?
    The Prime Minister: I believe that what the hon. Lady is asking is that, if they wish, retirement pensioners can continue to have their pensions paid weekly through a post office. I agree that that is right. However, if others want theirs paid through a bank at, say, fortnightly intervals or at periods less than quarterly, they, too, should be able to make that choice.
    Mr. Moate: Is my right hon. Friend aware of the Treasury answer which shows that in this calendar year our net contribution to the EEC budget will not be the often-quoted £1 billion, but £1·3 billion? In her efforts to secure a broad balance, will my right hon. Friend ignore the faint-hearted, wherever they may be, and recognise that she will have the full-hearted consent of the people in whatever action is necessary to secure her objective?
    The Prime Minister: I am grateful to my hon. Friend. It is true that unless we get a settlement of the budget problem, our net contribution looks like rising. That is why it is so important not only to get a settlement for next year, but a formula that will affect future years.

    RHODESIA
    Dr. Edmund Marshallasked the Prime Minister whether she plans to meet the Governor of Zimbabwe-Rhodesia in Salisbury.
    The Prime Minister: I have no plans to do so.
    Dr. Marshall: In the light of today's reports that a request may be made for the Governor to continue in Salisbury to help the new Administration achieve stability, will the Prime Minister indicate the Government's attitude to that suggestion and what legislative and other steps would be necessary if it were adopted?
    The Prime Minister: One would naturally not expect the Governor to leave before independence, but we would not expect him to stay very much after that.
    Mr. Latham: Does my right hon. Friend agree that it is heartening that the first steps have been taken to merge the various armed forces in Rhodesia, and that the Governor and others involved deserve considerable congratulation?
    The Prime Minister: I entirely agree with my hon. Friend. It is extremely heartening. When I think of the number of complaints and criticisms that we have had over this difficult period, I believe
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    that the Governor deserves our congratulations even more on the way that he has brought Rhodesia to a state where the country can have free and fair elections.
    Mr. Alexander W. Lyon: Will the Prime Minister tell us where her constitutional advice comes from? Does she accept that the constitutional practice is always that, where the leader of the party with the largest number of seats in any Parliament is in a position to begin negotiations, he should be called on first to decide whether he can form a coalition? Only if he cannot is someone else called upon.
    The Prime Minister: I am advised that the Governor has to judge who is the person most likely to be able to form a government. Forming coalitions is a matter for the parties themselves. If, of course, there is a majority, the question does not arise.
    Mr. Peter Bottomley: If my right hon. Friend goes to Salisbury there will be two members of the Cabinet there. If there were a nuclear war, and if there were 17 command centres with one Minister for each, who would be the three Ministers to draw the short straw?
    The Prime Minister: My hon. Friend may rest assured that those matters are always thought about and that there are always a number of Ministers present in Britain to deal with any emergency that may arise.

BUSINESS OF THE HOUSE
Mr. James Callaghan: Will the Leader of the House please state the business for next week?
The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): The business for next week will be as follows:
MONDAY 3 MARCH—Completion of remaining stages of the Companies Bill [Lords].
Motion relating to the Road Traffic Accidents (Payments for Treatment) (England and Wales) Order 1980.
TUESDAY 4 MARCH—Motions on Members' secretarial and research allowances.
Proceedings on the Highlands and Islands Air Services (Scotland) Bill.
Motion on the Prevention of Terrorism (Temporary Provisions) Act 1976 (Continuance) Order.
WEDNESDAY 5 MARCH—Supply [12th Allotted Day]: Debate on an Opposition motion on the damaging effect of Government cuts in employment and training opportunities when unemployment is rising steeply.
Proceedings on the Slaughter of Animals (Scotland) Bill [Lords], and remaining stages of the Reserve Forces Bill [Lords], which are both consolidation measures.
THURSDAY 6 MARcH—Second Reading of the New Hebrides Bill.
Proceedings on the Consular Fees Bill and on the Police Negotiating Board Bill [Lords].
FRIDAY 7 MARCH—Private Members' Bills.
MONDAY 10 MARCH—Supply [13th Allotted Day]: Subject for debate to be announced.
Mr. Callaghan: First, has the Leader of the House given further consideration to the allocation of time for the debate on the immigration rules, which have undoubtedly attracted the attention of a great number of hon. Members?
Secondly, will the right hon. Gentleman indicate that in due course the Government will be prepared to have a
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debate on the report of the Brandt Commission, not only because of its impact on Third world countries but because of the impact that it will have on our industrial future?
Mr. St. John-Stevas: With regard to a further opportunity for debate on the immigration rules, as I told the House when the matter was last raised, any alterations in the rules have arisen from representations that were made when the matter was fully debated in the House.
I agree entirely with the right hon. Gentleman about the Brandt Commission report. It is a most important report but it has not yet, as I understand, been published in Britain. The matter is being considered by my right hon. and noble Friend the Foreign Secretary.
Mr. Callaghan: I return to the question of the immigration rules because I did not gather what the Leader of the House said. Is he not aware that a large number of hon. Members have signed a motion asking for a debate on the matter, despite the fact that in his view a debate would merely be a repetition of an earlier one? As Leader of the House will he please give consideration to this request?
Mr. St. John-Stevas: There is an opportunity to pray against these regulations, and there would also be an opportunity—if the right hon. Gentleman feels strongly about it—to raise the matter on a Supply day. The matter has been fully debated in the House.
Mr. Nicholas Winterton: Is my right hon. Friend aware that the textile and textile machinery industries in Britain continue to face grotesque and unfair competition? Is he further aware that this year at least one mill has closed every week in the North-West? Will he arrange for an early debate on the problems facing the textile industry, so that those hon. Members who represent constituencies with a considerable number of employees in the industry can present to the House the sort of action that we believe this Government and previous Governments should have taken in order to protect the industry from unfair competition?
Mr. St. John-Stevas: I share my hon. Friend's concern about the future of the British textile industry. My right hon. Friend the Secretary of State for Trade has recently made a statement, and there

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have been opportunities to debate the position of the textile industry. Therefore, I cannot promise a further early debate.
Mr. Christopher Price: In view of the fact that the Government issued a D notice last week to prevent further discussion by the press of the New Statesman series on telephone tapping, may we have a debate on the issue, in order to demonstrate the Government's commitment to open government and a free democratic society?
Mr. St. John-Stevas: We cannot have a debate on telephone tapping next week, but my right hon. Friend the Home Secretary has given the House an assurance that he will make a statement on the matter.
Mr. Farr: Will my right hon. Friend give the House some indication of what his attitude will be should the Education Bill, which is now in another place, be altered, especially in respect of clause 23, relating to school transport? Will he assure the House that should the Bill come back in an altered state, removing or substantially amending clause 23, the Government will not tamper with it further?
Mr. St. John-Stevas: That is a hypothetical question. However, my right hon. Friend the Secretary of State for Education, by tabling an amendment to clause 23, has met many, if not all, of the objections that were raised.
Mr. John Home Robertson: In view of the problem of Scottish school holiday dates, about which the Leader of the House knows, can he give an assurance that the House will not sit during the month of August? I have no direct interest in the matter, but I am speaking on behalf of my constituent, the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton), who cannot speak for himself because he is a Whip.
Mr. St. John-Stevas: I assure the hon. Gentleman that I have no direct interest in the matter, either. However, I have previously expressed my sympathy with Scottish Members with families who want to spend part of their vacation with their children. I shall do my best to ensure that the House does not sit into August,
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but if I am to achieve that end I need some help from hon. Members.
Mr. Montgomery: Following the request by the right hon. Gentleman the Leader of the Opposition for a debate on immigration rules, does my right hon. Friend recollect that when the Labour Party was in power, whenever Conservative Members asked for a debate on immigration the right hon Member for Ebbw Vale (Mr. Foot) said that we could use a Supply day? Could not the Opposition use a Supply day to debate this important issue?
Mr. St. John-Stevas: I have made that suggestion to the right hon. Gentleman. It is not a matter for me to decide; it is a matter for the Opposition.
Mr. Ennals: Has the attention of the House been drawn to motion 459 concerning the future of Westminster Hospital, the proposals in relation to which would virtually lead to the decimation of that great hospital?
[That this House, conscious of the great service provided by the Westminster Hospital to the citizens of Westminster, its great medical achievements with a worldwide reputation in teaching and research and the quality of service provided for many years to Members of both Houses of Parliament, expresses its deep concern at the proposals published by the London Health Planning Consortium which propose the closure of 410 of the 510 beds at the Westminster Hospital, thus reducing it to a small support hospital without facilities for teaching or research; and calls upon the Secretary of State for Social Services to give an early assurance that Westminster Hospital will continue.]
Will the Leader of the House find time for a debate, not simply on the motion but on the Flowers report and the report of the London health planning consortium?
Mr. St. John-Stevas: The last document to which the right hon. Gentleman refers is a discussion document. With regard to the Flowers report, as I understand it, that is an internal matter for the University of London. It has not come before Ministers. However, I assure the right hon. Gentleman that my right hon. Friend the Secretary of State for Social

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Services is watching closely those recommendations. It would be premature to suggest a debate at this stage.
Mr. Alan Clark: In view of the continuing intransigence of the European Community concerning our contribution to the budget, particularly the report today that we are to be obliged to increase public spending to match the various grants and projects that are alleged to offset the liability, might it not be an idea to have a debate on the subject so that the views of the House of Commons can be learned?
Mr. St. John-Stevas: My right hon. Friend the Lord Privy Seal is making continual statements on this matter. There are plenty of opportunities for hon. Members who are interested in the subject to raise the matter. Some press reports of European affairs should be taken with a large pinch of salt.
Mr. Hugh Fraser: In view of that reply, is it not time for a balance sheet to be drawn up of the advantages and disadvantages of our membership of the Community? Is it not time that the general issue was debated?
Mr. St. John-Stevas: That balance sheet was audited by the electorate and the decision was final.
Mr. Pavitt: I should like to press the Leader of the House once again on the point raised by my right hon. Friend the Member for Norwich, North (Mr. Ennals). Is the right hon. Gentleman aware that the morale in hospitals will be greatly undermined unless there is a speedy announcement by his right hon. Friend the Secretary of State for Social Services? The early-day motion has received the support of all sections of the House.
Mr. St. John-Stevas: I am well aware of the anxiety that is felt. I have tried to allay it by pointing out that my right hon. Friend the Secretary of State is concerning himself with the matter. Until discussions have taken place on both documents referred to, a debate in the House would be premature.
Mr. Kenneth Carlisle: Will my right hon. Friend find time in the next month or two for the House to debate the Finniston report on engineering? It is a most important document for the future of British manufacturing.
Mr. St. John-Stevas: I agree about the importance of the Finniston report. I read with interest the debate that took place in another place yesterday and the important contribution that was made by Lord Scanlon on the subject. The report is relevant to a number of matters concerning industrial affairs but I cannot promise an early debate on the report alone.
Mr. Heffer: In view of the high level of unemployment on Merseyside and the growing problems there, which have become far worse over the last nine months, will the right hon. Gentleman indicate when there will be a debate on Merseyside? If it is not held on the Floor of the House, could we not resuscitate the regional committees to debate these serious problems?
Mr. St. John-Stevas: I shall certainly look at the question of the regional committees. Perhaps there will be an opportunity to raise some of the matters concerning Merseyside when the debate on unemployment takes place on Wednesday.
Mr. Michael McNair-Wilson: Will my right hon. Friend say when he expects to find time for a debate on the Williams report on obscenity?
Mr. St. John-Stevas: Not immediately, I think.
Mr. Ashley: Is the Leader of the House aware that most of our great medical institutions have a high proportion of overseas students but that they spend most of their time doing research and not teaching? Is he further aware that as a result of the Government's policy to cut funds proportionate to the numbers of overseas students our medical institutions will be damaged or destroyed. When will we have a debate on that subject?
Mr. St. John-Stevas: I cannot promise a debate on the subject but I hope that with the changes announced in the fees for overseas students there will be a better balance between the needs of home and overseas students.
Mr. Thompson: Is my right hon. Friend aware that for the last three Fridays—and this will apply to tomorrow—the House has discussed matters that have raised the expectations of people

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outside, if not misled them, while many hon. Members knew that nothing would come of the debates? Is there anything that he can do to change that situation?
Mr. St. John-Stevas: I agree with my hon. Friend that there is wide-spread opinion in the House that it would be a good thing if the matter could be disposed of tomorrow. It is a matter for the House to decide.
Mr. Soley: In view of the growing crisis in our prisons and the risks to the lives of prisoners and prison officers and their general welfare, will the Leader of the House guarantee a debate on the May committee report before the end of April, at the latest?
Mr. St. John-Stevas: The date of the debate on the May report will depend on the termination of the discussion that my right hon. Friend the Home Secretary is having with various interested parties at this moment about the conclusions of that extremely important report.
Mr. Lawrence: As my right hon. Friend attaches so much importance to Foreign Affairs Question Time as a medium for expressing the views of all hon. Members on the subject will he tell the House how soon he proposes to implement the new extended foreign affairs timetable?
Mr. St. John-Stevas: The reforms will increase the amount of time devoted to foreign affairs by a considerable percentage. I am glad to say that they will be implemented within the next few weeks.
Mr. Harry Ewing: In view of the widespread concern in Scotland and other assisted areas throughout the United Kingdom about the location of the Inmos production unit, will the Leader of the House give an undertaking that if the Secretary of State for Industry makes a decision to allow the NEB to break its commitment to site the production unit in an assisted area, not only will the Secretary of State make a statement to the House but the Government will make time available for a debate on on this important matter?
Mr. St. John-Stevas: We have not reached that point yet, but I shall raise
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the matter with my right hon. Friend the Secretary of State for Industry.
Mr. Marlow: As we have just heard that the European budget is costing the country £100 million a month —and rising—would not a cut in that figure be the most effective and welcome cut in Government expenditure to the people of this country? Will my right hon. Friend take account of the hon. Members on both sides of the House who would like to have a debate on the issue to express our support to the Prime Minister in her determined and valiant effort to secure justice for the British people?
Mr. St. John-Stevas: My hon. Friend has made his point clear. With that expression of whole hearted support we hardly need a further debate.
Mr. Roy Hughes: I should like to draw the attention of the Leader of the House to early-day motion 417 which points to the deteriorating position of pensioners in our society and suggests remedies.
[That this House, mindful of the present state of inflation and its impact on retired persons, therefore calls upon the Government immediately to increase the State retirement pension by £3 per week for a married couple with a proportionate increase for single persons; and shall in future review the level of pension on a six monthly basis.]
Bearing in mind that the high level of inflation, increased fuel costs, and so on, does the right hon. Gentleman believe that it is necessary to have an early debate on the matter?
Mr. St. John-Stevas: It is extremely important that the interests of retirement pensioners and other pensioners should be safeguarded. Under the provision of the Social Security Act 1975 my right hon. Friend the Secretary of State for Social Services has a duty to review the rates of retirement pensions and other benefits before the end of the present tax year. He will announce the proposed new rates shortly after that review.
Mr. Bill Walker: I should like to draw my right hon. Friend's attention to early-day motion 460, which deals with violence against children.
[That this House calls upon the Government to act to dispel the growing concern which is being expressed by the public in the matter of the number of cases where children are being subjected to violence and death in the home environment, and to look into the recruitment. training and management of social workers.]
In view of the growing concern on the matter inside and outside the House, when will there be an opportunity for an early debate?
Mr. St. John-Stevas: This matter was examined by a Select Committee in the 1976–77 Session. The Government are gravely concerned at the numbers of cases of child abuse that have occurred recently and they are urgently considering what more can be done, particularly with training, to tackle the disturbing problem. When conclusions have been reached the decisions will be made known.
Mr. Cryer: Does the Leader of the House recollect that three weeks ago I raised the possibility of a debate on the first report of the Select Committee on Members' interests? I pointed out then that it was unfair that five hon. Members were refusing to declare their interests when every other hon. Member had done so. That position cannot be altered, because the Select Committee is leaving the matter to the House. Until a debate is initiated no action will be taken. Will the Leader of the House do something to initiate an urgent debate on the report?
Mr. St. John-Stevas: I have raised the question with the Chairman of that Select Committee. I am waiting to see what suggestions are forthcoming. It is right that the recommendations of that Committee and its decisions on the register should be implemented.
Mr. Speaker: Order. If the four hon. Members who rose just now will cooperate, I shall call all of them—if they will be brief.
Mr. Kilroy-Silk: May I ask the Leader of the House to reconsider the answer that he gave to my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) and give the House an assurance that there will be an early debate on the serious unemployment and economic prob
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lems of Merseyside so that we may have an explanation from the Government about the thousands of redundancies there, all of which are directly attributable to the Goverment's economic policy?
Mr. St. John-Stevas: I am afraid that I can only repeat what I have said. There will be an opportunity, subject to Mr. Speaker's rulings, to raise a number of these matters in an early debate, namely, next Wednesday.
Mr. Alexander W. Lyon: The Leader of the House promised last week that he would consider my argument that with the Select Committee report coming out there should be time for discussion of that report. Could we not combine the two and have a full day's debate on the immigration rules and the report of the Select Committee?
Mr. St. John-Stevas: In response to the prompting of the hon. Member, I investigated the situation about the report of the Select Committee. The position is that no date has been given for its publication. Until the report is published we cannot possibly debate it.
Mrs. Renée Short: The right hon. Gentleman appears to be going back on firm commitments that he has already given to this House about future debates. Is he aware that a fortnight ago he gave a firm commitment to me that the Finniston report would be debated? Is he further aware that the Prime Minister gave a firm commitment on Tuesday that the Flowers report would be debated? This is not an internal private matter for the right hon. Gentleman's Department. It is a matter of great concern both to the public and to the medical profession.
Mr. St. John-Stevas: I think that the commitment that I made to the hon. Lady was not that there would be an early debate but that it was relevant to a number of subjects. I agree with her that the Finniston report is extremely important. It would be quite premature to have a debate on the Flowers report when the university itself has not considered the matter.
Mr. Ioan Evans: In view of the fact that the Prime Minister, on the television programme "Weekend World", stated that she anticipated that the Chancellor

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of the Exchequer would cut public expenditure by £2 billion, that £1 billion of that would come from our reduced EEC contribution, and that there has already been a £1 billion cut in housing expenditure, are we to have a statement before the Budget on the success of the Government in reducing the Prime Minister's target of a £1 billion cut in our EEC contribution?
Mr. St. John-Stevas: The Government have been extraordinarily successful in reducing the weight of public expenditure and I have every faith in my right hon. Friend the Prime Minister that she will have equal success in reducing the unfair burden that the EEC budget places upon this country.
Mr. Campbell-Savours: In the light of the strong feeling among local authorities throughout the country and in the national parks at their being required to sell council properties, will the Leader of the House give an undertaking that we can have a debate on this matter, inasmuch as there is unanimity among all hon. Members that this problem must be resolved to protect the housing stock of local authorities within the national parks?
Mr. St. John-Stevas: I do not think that I can promise an early debate, but I will pursue the point with my right hon. Friend the Secretary of State for the Environment.

LAMBETH, SOUTHWARK AND LEWISHAM AREA HEALTH AUTHORITY
Mr. English: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the actions taken by the Secretary of State for Social Services and persons acting under him during the period in which the administration of the Lambeth, Southwark and Lewisham area health authority was being conducted illegally".
You will be aware, Mr. Speaker, of the precedent that I have notified to you privately that is the nearest in point to this case. In July of the 1943–44 Session
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the then Herbert Morrison, having created a national fire service illegally, came to the House on a Wednesday and made a statement confessing his mistake, as did the right hon. Gentleman in this case. Two days later, Mr. Morrison laid a Bill of indemnity covering himself and all the persons who had acted illegally in accordance with his instructions. In a very short time the Bill was passed through both Houses of Parliament, thus rectifying the situation.
You will be aware, Mr. Speaker, that paragraph (4) of the Standing Order states:
"In determining whether a matter is urgent Mr. Speaker shall have regard to the probability of the matter being brought before the House in time by other means."
Like you, Mr. Speaker, I had assumed that this precedent would have been followed.
It is now two days since the right hon. Gentleman's statement. However, it seems clear from that statement that the right hon. Gentleman's Department was as incapable of realising that this precedent existed as it was incapable of advising him correctly as to the law. Therefore, I suggest that, two days having elapsed, the precedent having been broken and no Bill of indemnity having been laid, we have the impossible situation that two hospitals were illegally closed and that the people who were working there are no longer working there. That is due to illegal orders having been given. They do not know whether they should, in order to comply with the law, go back to their former employment.
There is no question but that there could be actions for civil damages and it is possible that criminal offences have been committed. The only way in which this situation can properly be corrected is by an Act of Parliament, which was the solution adopted on the previous occasion. The first sentence of para. (4) of the Standing Order states:
"In determining whether a matter is proper to be discussed Mr. Speaker shall have regard to the extent to which it concerns the administrative responsibilities of Ministers of the Crown."
What could concern us more than that a court has determined that the Secretary of State has acted illegally? The position is now totally in limbo until it is corrected by this House.
Mr. Speaker: The hon. Member for Nottingham, West (Mr. English) gave me notice before 12 o'clock of his desire to make an application under Standing Order No. 9—though in different language from that which he read out to the House. That being the case, I will be pleased to have a copy of his remarks.
The hon. Member asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the actions taken by the Secretary of State for Social Services and persons acting under him during the period in which the administration of the Lambeth, Southwark and Lewisham area health authority was being conducted illegally".
First, the hon. Gentleman was quite wrong to allege that I had said that I was expecting a statement. It was quite wrong to say that. I never expect anything other than which turns up.
The hon. Gentleman has raised an important question, to which obviously the whole House has listened with concern. I am expected, and instructed by the House, to take into account the several factors set out in the Order—to some of which the hon. Gentleman referred. But the House has specifically asked me not to give reasons for my decision.
I have given careful consideration to the representations of the hon. Gentleman, but I have to rule that they do not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

HER MAJESTY'S GOVERNMENT (ECONOMIC AND INDUSTRIAL POLICIES)
Mr. Speaker: I have not selected either of the amendments on the Order Paper. I merely remind the House that on the day of such an important debate obviously almost every hon. Member in the Chamber would like to contribute. That being impossible, I hope that no one will come to the Chair to ask to be called to speak in the debate today. I must do my best and try to be fair.
4 pm
Mr. James Callaghan (Cardiff, South-East): I beg to move,
That this House has no confidence in the economic and industrial policies of Her Majesty's Government.
Those words accurately describe the doubts and anxieties of our constituents in every walk of life up and down the country. They are anxious because they see their personal standards and those of their families being eaten into by the long dreary catalogue of higher prices, higher rents, mortgage interest payments, fares and the rest. They are dubious about the Government's economic policies because they can see no visible signs of improvement in Britain's economic position. Instead, they observe a steady and progressive contraction in our industrial output side by side with growing unemployment.
Opinion in the country is mounting that a change in the Government's policies is urgently necessary. That feeling, as far as I can make out, is not confined to the Opposition Benches or to our supporters in the country. It is spreading through the ranks of Conservative voters. It has been taken up by certain of the Government's supporters in the House. It has reached into the Cabinet itself.
These doubts are fed—and deliberately fed—every day by the open disagreements and daily briefings about their differences that are given by Ministers themselves. The Prime Minister is as much responsible as anyone for this situation. When she openly conveys her scepticism about whether the policies of the Secretary of State for Employment will succeed, she undermines his position. She cannot be suprised that the Lord Privy Seal, among

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others, then conveys his patrician dislike of being dragged along at the heels of the feet of the Chancellor of the Exchequer and the Secretary of State for Industry.
If Ministers are not convinced about the wisdom and efficacy of the basic policies of their colleagues, how on earth can they expect the rest of the country to believe them? This is a matter not just of difference of temperament or of tactics. Some of them are saying that the Government's policies—the policies that are fundamental to their existence—are wrong. If any justification were needed for this vote of no confidence, the well publicised divisions in the Cabinet have given it to us.
The Opposition certainly have no confidence in the Government's policies, and our want of confidence is twofold. First, the Government's strict, almost religious, belief that a rigid monetary policy lies at the heart of their doctrine is weakening and bleeding this country's industries. As we now know, that view is shared by some Conservative Members. Secondly, the tone and style of the Government are out of keeping with their responsibilities to the nation, and much of the responsibility for that falls upon the Prime Minister personally.
Our charge against the right hon. Lady and the Government is that their policies are recklessly widening the social divisions in our society, that they make the rich richer and the poor poorer and that they are deliberately creating greater inequality and social injustice, with the result that dangerous tensions are growing in the country. That is the charge, and it lies against a Government who have thrown away more quickly than any Government I can recall the good will that every new Government acquire as soon as they have won an election.
When the Prime Minister first stood on the steps of 10 Downing Street—the first woman Prime Minister in our history—
Mr. Robert Atkins: As opposed to an old woman.
Mr. Callaghan:—her words were apposite and well chosen:
"Where there is discord, may we bring harmony".
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Can the right hon. Lady truthfully say that her policies and speeches since that day have been intended to bring harmony and unity? [HON. MEMBERS: "Yes."] Have they not rather sought to pander to every popular prejudice, to make the trade unions the scapegoat for every ill, to whip up resentment against any unpopular group and to glory in harshness and stridency? Has that not been the Prime Minister's tone since the election?
What has gone wrong? The Government faced considerable difficulties when they came to power. [HON. MEMBERS: "Hear, hear."] I have no need and no wish to underplay those difficulties, both international and on the domestic front. The painful increase in world oil prices, the upward trend in world interest rates and inflation, the slowdown in international trade and the slide into recession were formidable problems for the new Government. They were equally formidable a year ago during the lifetime of the Labour Government, but the then Conservative Opposition refused to acknowledge them and claimed that Britain's problems were of the Labour Government's own making. It was not we who peddled instant sunshine during the election.
Confidence is waning and doubts have grown because the Government's actions since the election are not those that they led the people to believe in those glossy television commercials that appeared on our screens a year ago. I am sure that no one who watched those performances has forgotten those immaculately screened broadcasts. Some of the slogans, I must say, now come back a little wryly. There were catchy slogans enough. They hardly bear repeating 10 months later. Indeed, I am told that the quickest way to empty a crowded room today is to walk in and shout "Cheer up, the Conservatives are coming."
Then there was that stirring slogan that was plastered throughout the steel constituencies of South Wales:
"Don't just hope for a better life. Vote for one."
Not many people in South Wales were taken in by that, but others were, and now there is no hope.
I turn straight away to the steel strike, which is now in its ninth week. It should not have been allowed to start. Two months ago, on 29 December, I wrote to

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the Prime Minister warning her that once the steel strike began attitudes would harden and therefore then, and on several occasions since, I have urged the Government to intervene.
That forecast has been borne out. But the Government have not lifted a finger. As the weeks have gone by, the atmosphere has soured and become much more bitter. Groups of workers who meet in the same clubs have, outside their workplace, come almost into physical conflict with one another. In a few places—I emphasise a few places as against the great majority of steel areas—some actions have tarnished the reputations of those who indulge in them in the name of trade unionism. Scars will be left for a long time.
Yesterday, the British Steel Corporation said that it proposes to ballot the steel workers in a preliminary vote to find out whether they would welcome a second ballot on whether to accept the latest pay offer. The unions' response today was that they will urge their members to ignore the ballot or to spoil their papers. I shall come to that again. I shall face it more truthfully than did the right hon. and hon. Gentlemen when in opposition.
It is clear that if these two ballots are to be conducted, whatever view may be taken of them, they will take some time. The results will be inconclusive. This is my view. I may be wrong. No one can say. There will be divided loyalties on this issu.e Let there be no doubt about it: it is a serious issue. I want to see the steel strike settled—and settled more quickly than two ballots conducted by the employers. There is hardship among many families in the steel areas. Some of them are my constituents. I know that their circumstances are getting worse. Because of this, I do not intend today to say some of the harsh things that I intended to say about the way these pay negotiations have been "bungled"—I use the Chief Secretary's word—from the first derisory offer of 2 per cent. The inquest can come later.
There is still room for mediation. I wish today, in all seriousness, to make a proposal that will involve the unions in reconsidering their present position, as well as the Government. The unions
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have had recourse to the Advisory, Conciliation and Arbitration Service. That body has striven hard, but without success, to bring the two sides together. Rightly or wrongly, from my discussions with them, some of the union negotiators do not have total faith in the independence of ACAS. In my view, such disbelief is not justified, and I have said so to them. Nevertheless, if this is a stumbling block, if procedures are needed to get these issues going again, would a possible way forward be for ACAS itself to appoint an independent mediator who would listen to both sides and, having considered their representations, then make his findings? I use the word "findings" deliberately. If this is a possible procedure, the unions and the BSC should undertake, in advance, to accept such findings as are made. A mediator could reach his conclusions within a week. That is a much shorter period than the ballots will take. The men in the steel industry could be back at work in the week after next and their families could begin to breathe freely once again. If that involves a little more money, it will be worth while.
I cannot understand the attitude of the Government, who are prepared to see this dispute drag on week after week with untold damage being done and then deride a sensible suggestion, when it is put forward, for trying to bring it to an end.
On the other troublesome aspects of the steel industry, I must add this. The unions accepted the need for a further rundown in manpower, but the timetable for closures, I say to the Government, is socially irresponsible.
In our view, the Government should conduct an examination of four aspects of the closures and the industry: first, the projected size of the industry, which in our view is too small on the basis of our long-term needs for one of the core industries of this country; second, the surrender of export markets, where in our view an effort should be made to keep them; third, the need for a rapid capital reconstruction; and, fourth, what effect the rundown in the steel industry will have on the production of coal and pit closures, especially in the South Wales coalfield.
What is to be the future of those miners and steel workers who have no

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other jobs to go to? That is the responsibility of the Government. Any Government should intervene to investigate these matters. It is by their own actions, and in some cases by their inaction, since the Prime Minister formed her Government, that they have made their own difficulties. In those television broadcasts a year ago, they told people that they would pay less income tax. Yes—but they were not so clear that the only way to do it would be to double VAT. The Labour Party said so in the election campaign, but it was denounced as a lie. When the Conservatives came to power they did it. What is worse, they did it at the very moment when a number of trade union summer conferences were meeting to set their wage objectives for the next round.
At that very moment the Chancellor rose in his place to announce that he was wantonly adding 3 per cent. to 4 per cent., or more, to the retail price index. What response did he expect to get from delegates meeting at sundry trade union conferences up and down the country? He got it, whatever he thought he was going to get. Even before he did that it was clear that 1979 would be a difficult year for the control of inflation. We said so. We had enlisted the aid of the TUC. We agreed with it to try to keep inflation in 1979 within the broad limits of 10 per cent. to 12 per cent. That was to be the first step towards fulfilling our joint agreement, which we reached a year ago, that inflation would be reduced over a three-year period to 5 per cent. by 1982. But at that very delicate moment, when the wage bargainers and their attitudes lay in the balance, the Government undermined and thrust aside any idea of co-operation with the trade unions.
The Government could have obtained that agreement in the first flush of victory. They did not want it. They thought that it was unnecessary. In the pride and arrogance of victory they thought that they could do without it. Now we see the results. The inflation rate has doubled. It doubled in 12 months, with all the resultant evils that flow from that.
The charge against Ministers is that by their rash and precipitous action since they have been in power the policies that
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they supported have made a difficult situation very much worse. In saying that I, of course, apologise to half the members of the Cabinet. I refer to the policies supported by the other half.
One of the less savoury features of Government policy has been the way in which they attempted to slide away from their responsibilities by foisting the responsibility for our shortcomings on to the trade unions. The Prime Minister led her Ministers in this. Many unfair and untrue things have been said about the trade unions. I tell the Secretary of State for Industry that to call the trade unions "a poison in society" is unforgivable.
Of course, not every member of a trade union is a perfect citizen. But then no more is anybody who works at a more exalted level of society. We all know this—and it should be acknowledged by Government supporters when they rise like flocks of birds every Tuesday and Thursday to pour scorn on the trade unions. Government supporters know that responsible, practical and experienced men and women are operating the trade union movement today.
Of course, it is right to condemn intimidation where it is practised. But Government supporters would carry more conviction if we heard from them at Question Time now and again a question that contained praise for the tens of thousands of active trade unionists who are carrying out their duties punctiliously. If trade unionists voted for the Conservatives, there is even more reason why they should defend their own supporters.
The Labour movement will not support practices that intimidate working people and blockade factories. Some of those who are trying to slipstream behind the Labour movement had better believe that, including those flying pickets who shoulder-charge their way into other people's genuine trade disputes. I do not intend today to enter into the detailed discussion of the Government's industrial relations proposals—that will come later—except to repeat my profound conviction that self-discipline and self-government are the best and only lasting guarantee of good industrial relations. In pursuit of that, the trade unions must act in accordance with the guidelines which they agreed with the Labour Government at the end of last winter and should be ready, where necessary, to take action against

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their own members if they break the agreed procedures.
In their relations with the trade unions the Labour Government had their failures in these matters as well as their successes, but when co-operation breaks down, as it did at the end of last winter, it is necessary to start again. The Labour Government made such a start just prior to the election in the documents that were agreed on the economic situation and trade union responsibilities, coupled with the TUC guidance on procedure and the conduct of disputes.
It would have been better for the country if, instead of Tory Members sniggering about them, the new Government had built on those arrangements. Instead, the Chancellor of the Exchequer threw them overboard in favour of his monetary policy. He told the Wall Street Journal that his rigid monetary policy was fundamental, crucial, inescapable and absolutely at the heart of his policy. The charge against him is that this policy is a gigantic gamble with the jobs and the livelihood of our people; that it is costing British industry dear because of high interest rates; that it is damaging small and developing businesses and discouraging new investment in plant and machinery; and that the results are hammering our exports through the exchange rate.
To use a Draconian monetary policy, as the Government are doing, as their main or only weapon is to embark upon a huge experiment with the people's welfare based upon entirely unproved theory. I am thankful that the Prime Minister was able to spend only a short time yesterday with Professor Milton Friedman. It may have saved us from much worse.
The Government had no mandate for that policy. There is little evidence that this kind of monetary policy used by itself will bring inflation under control without unacceptable social and economic consequences. Nor does economic evidence provide any proof that the rate of growth of money supply has a powerful restraining influence on wage bargaining. Nothing that has happened to earnings in the past 12 months can give the Government any comfort on that score.
Mr. Patrick Cormack: Will the right hon. Gentleman tell the House whether it is better
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to determine our own policies than to have a monetary policy imposed by the International Monetary Fund?
Mr. Callaghan: I will deal with these matters in my own way in my speech. I come immediately to one of them. Of course inflation must be brought under control; that is common ground. But reliance on monetary policy as the single or sole weapon produces a totally disproportionate and adverse effect on output in the country and on the growth of the economy. That is the difference, and I am sure the hon. Member for Staffordshire, South-West (Mr. Cormack) understands that.
I have commented on the adverse effect of the rise in oil prices on the Government's policies, but that rise is not the sole cause of our present discontent. The Council of Economic Advisers in the United States, in its annual review, commented that the United Kingdom's fall in output derived principally not from the rise in oil prices but from the very sharp shift towards the restrictive monetary and fiscal policies instituted by the new Government. That is where the responsibility lies.
In a euphoric moment at Question Time the Prime Minister told us that she believed that practically all her policies were working. Let us look at some of the major indices and form a judgment. The inflation rate in January 1979 was 9·3 per cent.; in January 1980 it was 18·4 per cent. Success or failure? The minimum lending rate in March 1979 was 13 per cent.; today it is 17 per cent. and has stood at that level for over three months. Success? The mortage rate in February 1979 was 11¾ per cent.; in February 1980 it is 15 per cent. Success? Mortgage repayments on an average £12,000 mortgage in February 1979 were £90 a month; in February 1980 they are £110 a month, an extra £5 per week. Success? In 1978 there was a balance of payments surplus of £700 million; in 1979 there was a deficit of £2·5 billion. Success?
Earnings in the year to December 1978 increased 13·3 per cent.; in the year to December 1979 they increased 19·6 per cent. Success? Manufacturing investment in 1978 increased by 11·3 per cent.; in 1979 there was a fall of nearly 3 per cent. in the last six months compared with the

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first six months, and there is a possible further fall of 7 per cent. in 1980. Success?
I have not yet finished this list of successes. I do not want to deny the Prime Minister any merit to which she is entitled. The gross domestic product in 1978 increased by 3 per cent.; in 1979 it increased by 1·6 per cent.; in 1980 there will be a probable decrease of 2 per cent. or more. There was a slow but steady fall in unemployment for nearly two years from October 1977 to September 1979. Now for the fifth month in a row unemployment has risen, and there is an expectation of 2 million being out of work. Which of these flawed gems does the right hon. Lady wish to mount in her crown?
The Prime Minister made the further assertion in a television interview last Monday that for the first time for many years public expenditure had been brought under control. That is untrue. Look at the figures. In 1977–78 public expenditure as a ratio of gross national product was 40·5 per cent.; in 1978–79 it was 42 per cent.; this year it is likely to be about 42 per cent. again. There is no jewel for her crown in that one.
The only conclusion that can be drawn from these figures is that, far from these policies being successful, the Prime Minister has lost control of prices, employment, business confidence and earnings and is now beginning to lose control of monetary policy.
Mr. John Farr: Is the right hon. Gentleman aware that the incoming Conservative Government were shocked by the appalling legacy that had been left to them by the outgoing Socialist Government? That is typified by the Polish ships deal which the Labour Government had negotiated at a cost of £112 million and which subsequently cost the taxpayer a further £68 million. That is an example of Socialist policies.
Mr. Callaghan: The legacy we left the Conservative Government was much better than the legacy they left us in 1974. All the figures were known and published. I undertook during the election campaign to let the right hon. Lady look at the figures if she wanted to do so before she made some of her unwarranted charges. She declined. I know
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why. She did not want to see them because she knew they would prove that it was impossible to reduce income tax without increasing other taxes. That was denied vehemently time after time.
When all these failures, or, in the right hon. Lady's curious terminology, successes, are known, is it any wonder that the tensions in the Cabinet are spilling out into public view? One group—the Treasury Ministers—is fearful that monetary policy will not succeed because it is not yet stern enough. Another part of the Cabinet believes that the very harshness of the policy will provoke confrontation with large groups and lose the Government electoral support. Speaking as one who totally disagrees with the policies of the Treasury Bench, I am bound to say that if monetarism is to work in any real sense of the word the Government must go much further than they have gone so far. I doubt whether their supporters on the Back Benches yet realise how far they need to go. Expenditure cuts would need to be far harsher than they have been so far. But if the spending Ministers successfully resist further cuts, there will be an increased strain in achieving their monetary targets. So what are they to do? If they resist, if they have difficulty in reaching their monetary targets, interest rates will be driven up even higher than they are today—and perhaps the exchange rate will also be driven up, with consequential further harm to our export prospects.
This is the real dilemma of Government policy. This is the nature of the argument going on in the Cabinet at the present time. This is the problem that the Government have to solve. This is the reason for the cries of anguish. The problem cannot be papered over. Nor would there be much comfort if a compromise were to be reached between the warring factions. A compromise at the present level and the present state of monetary policy would not stop industry from being driven into bankruptcy. The Secretary of State will continue to look on from afar, uttering his message to some of our industrial communities, "Come back in two generations and we shall let you know how the experiment is getting on."
I warn the Government, and I warn Conservative Members, of the serious deterioration that is taking place in the social atmosphere in some of our towns

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and cities. If the Government abandon their interest in the fate of working men and women, they will cease to be concerned with the interests of the community.
It was the Minister of Agriculture who said that
"a free market condemns the weak and therefore becomes a powerful source of social disorder".
Is that accepted by the Cabinet or not? After another 12 months of the present policies, no one should be surprised if his prediction appears to be coming true.
The Government's only answer seems to be one of further disengagement from responsibility. We live in a period of uncertainty about the impact of the new technology. We know that the failure to use the new technology will destroy jobs as well as creating new jobs. That will demand training and retraining in new and unfamiliar skills.
The Government's response is to disengage and to cut down public expenditure on the skillcentres for training and retraining our young people. The Government should be expanding these centres, not cutting them down. They should be giving greater opportunities for young and mature people to acquire the new skills that this country will need in the 1980s.
The Government are destroying the seed-corn by their attitude in this matter. They emasculate the National Enterprise Board. Instead, they should be creating a new and much more powerful instrument to seek out new opportunities for direct and indirect investment, either in partnership with private industry or on their own account—and, if necessary, the Government should provide the funds to enable it to be done. We must have an active policy and not just the passive approach that we have from the Government today.
Our preference is to see the Government intervene in the economy and to assist in the creation of new jobs, in both existing industry and in the new technologies. [Interruption.] I am asked "Where is the wealth?" My answer is: do not dissipate the revenues from North Sea oil. There is a fantastic amount accruing from that source.
As soon as we can see the Government actively intervening to assist
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with the creation of new jobs to assist with retraining and to give people the skills they want, we shall hope to see everyone playing his part. We would certainly play our part in encouraging people to accept the changes that will be necessary and the flexibility that will be necessary to go with the new jobs. But until that happens—let the Government make no mistake—we shall resolutely support people who are trying to save their existing jobs if the only alternative facing them is to join the lengthening dole queues in South Wales and elsewhere. That approach may not appeal to the free market economists but it is the only human response that can be made in a period when unemployment is threatening to go to 2 million or even higher.
In the meantime, I notice inspired leaks in the newspapers this morning that the Chancellor of the Exchequer may be able to keep his public sector borrowing requirement in 1980–81 at about the same level as this year, provided that the Budget is more or less neutral in tax terms. Neutral in tax terms, of course, means that he can still put up some taxes and put down others. But, on the whole, bang go all the expectations of further reductions in income tax that were held out to us last year on a continuing basis. It was not to be a once-for-all reduction. Every year we were to have these reductions in taxation unless, of course, the Chancellor decides to continue in that way but to increase indirect taxes once again, and to add further to inflation. In any case, the Chancellor of the Exchequer should refrain from the lunacy of squeezing his public sector borrowing requirement below this year's outturn.
As I have said already, we are at the beginning of a period when the phenomenal growth of Government revenues from North Sea oil will begin to reduce the borrowing requirement to quite small proportions. It would be madness over the next 12 months to do lasting damage to industry, when we know that these revenues will ease the Chancellor's problem in later years.
There are strict limits to what any Government can do by themselves, without the co-operation of the people. Co-operation, agreement and consensus will prove more enduring for the Government

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than any "tough guy" approach. The Prime Minister could do worse than listen to the views of her predecessor on this when he advises her to be wary of being a tough guy both at home and in her dealings with the leaders of other countries who are not as willing to be lectured by her as are the members of her Cabinet.
It may seem heroic to pose as the Iron Lady but it is not getting results, either in the EEC or elsewhere. It did not get her far in the battle of Dublin, where she was ninth in a nine-horse race.
It is for all these reasons that we have no confidence in the Prime Minister's approach or in the Government's policies. In 10 months the monetarist dream has turned into a nightmare. The Government's empty words are now producing empty factories and empty homes. The people in the country have rumbled the Government, and it is to express their anxiety, their disagreement and their fears about their future that I ask the House to vote for our motion tonight.
4.37 pm
The Prime Minister (Mrs. Margaret Thatcher): I have listened carefully to what the right hon. Member for Cardiff, South-East (Mr. Callaghan) said. At least, no one could deny his claim to be an expert in the failures of Governments. He gave some carefully selected figures of the record of his own Government. Let me give a few more.
Unemployment more than doubled under the right hon. Gentleman's Government, from 600,000 to 1·2 million. Output per person rose by less than 3 per cent. over the five years between 1973 and 1978. Real disposable income per head fell in 1975, 1976 and 1977. Under the Labour Government, inflation reached a peak of 27 per cent. per annum. The party that he leads presided over the five most catastrophic years in Britain's postwar history.
The right hon. Gentleman is not the person to give lectures on Cabinet disarray and disloyalty. He should read what one of his former Cabinet colleagues said about him on 4 December 1968.—[Interruption.] Barbara Castle said:
"I think Jim Callaghan is the most disloyal and damaging member of the whole Government."
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The following year she said:
"We have taken care not to circulate any papers beforehand, knowing our Jim."
—[Interruption.]
Mr. Speaker: Order. That is quite enough. [Interruption.] Order. There are two sides to this debate. The Leader of the Opposition had a reasonably fair hearing and the Prime Minister is entitled to the same.
The Prime Minister: After barely two years in office the right hon. Gentleman's party had brought Britain to the brink of total economic collapse. The country was saved not by his or his party's efforts but by Tory policies of monetary control and reduced public spending, humiliatingly imposed by the International Monetary Fund, and fully supported by my right hon. and hon. Friends and me.
As the monetary medicine began to work, the right hon. Gentleman tried to assign the credit to his incomes policy which promptly collapsed about his ears as his own lifelong allies, the trade unions, rejected both it and him. Having dithered over calling an election in 1978, he tried to buy off the industrial disruption of last winter and finally succumbed.
Today the right hon. Gentleman's party, increasingly infiltrated by people who wish to destroy the mixed economy—[Interruption]—advocates a return to the policies of excessive spending and excessive borrowing which would lead inevitably to another collapse. When I hear the right hon. Gentleman doing his best to explain to us the nature of Britain's difficulties and the remedies he proposes, it is plain that he and his policies are part of our problem and they can never be part of the solution.
The right hon. Gentleman referred to trade union matters, steel, monetary policy, the minimum lending rate, earnings, and so on, and I shall try to deal with those points during the course of my remarks. But may I first set the magnitude of the problem that we face in its context.
There is general agreement that Britain's problem is basically one of fast inflation since the early 1970s and a rate of economic growth which, for the last third of a century at least, has been slow

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in comparison with that of our competitors. While we were living fairly comfortably in the 1950s, our industries were failing to modernise themselves: not so in other industrial countries. Faced by the destruction of the war, they were creating an industrial base to suit the needs of the second half of the century. Their industries were building for the future, but too many of ours were still living off their capital and former reputation.
During that time in the 1950s and 1960s we missed out on the rapid economic expansion which characterised the early years of the EEC. There was a continual failure to recognise how far and at how fast a rate Britain was slipping. Governments planned over-optimistically for increases in public spending which could be justified only on assumptions about economic growth which were seldom realised.
Between 1963 and 1979 public spending, as a percentage of GDP, grew from 34 per cent. to 42 per cent. The Civil Service expanded from 660,000 to 730,000. The numbers employed by local government leapt from 1·2 million to over 2 million. Thus resources were drained away from wealth-creating industry and commerce to the wealth-consuming public sector. Perhaps most significantly of all, the balance of power within our economy shifted as trade unions increasingly used their strength in key industries.
The Labour Party responded to these problems by increasing public expenditure by 9 per cent. over a period when GDP actually fell. Unemployment more than doubled during their stewardship. The Opposition legislated to put trade unions above the law. They gave them unprecedented new powers as part of the price for their temporary co-operation.
That was the position when Britain voted for a new start and a new Government. The people wanted a Government prepared to face the basic problems realistically, a Government who regarded Parliament as paramount and who were not subservient to any other group, however powerful. People knew that the necessary changes would take time, but they wanted us to make a start right away. Now they expect us to do what we were elected to do and not to be deflected by the fears or the indignant cries of the Labour politicians they sacked last May.
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Our objective is clear: it is to return to steady economic growth, earned by people's own efforts in a free and responsible society Our first priority is to restore sound money and conquer inflation. We do not pretend that that alone will be sufficient to revive our economy, but we know that it is the essential precondition. We know, too, that freedom and social justice will be in peril unless we can get inflation out of the economic system.
The right hon. Gentleman and other Opposition Members challenge us because the retail price index has risen since the election. Let me remind the House of what the right hon. Member for Leeds, East (Mr. Healey) said in January 1979:
"Let us assume, for example … that the increase in the nation's earnings in the current pay round is as high as 15 per cent. … The most obvious and inevitable consequence of this assumption coming true would be that … the rate of inflation … would probably reach about 13 per cent. by the end of the year."—[Official Report, 25 January 1979; Vol. 961, c. 754.]
That was the right hon. Gentleman's prediction if wage increases reached 15 per cent.
The reality is that earnings over the last pay round rose not by 15 per cent. but by 16 per cent. to 17 per cent. So, on the right hon. Gentleman's own arithmetic the rate of inflation would have been over 13 per cent. by the end of the year. And that before anything he would have done, if he had continued as Chancellor, on indirect taxes, and before the doubling of oil prices, which has added, and will continue to add, to the index. The charge that we have been responsible for all, or even most, of the price increases since the election is thus blatantly false.
The right hon. Gentleman rightly said that we did increase prices in the Budget—as a result of the increase in value added tax and other Customs and Excise duties. The purpose of those increases, as the House knows, was to switch from direct to indirect taxes, thereby reducing tax on the pay packet—a cause that the right hon. Member for Leeds, East occasionally espoused when he was Chancellor of the Exchequer but not frequently enough.
Most of the other increases that the right hon. Gentleman attributes to us are hardly our fault. Nationalised industry finances were rapidly moving out of

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control when we took office because of high settlements in the last pay round. Higher prices were the inevitable consequence.
Mr. James Callaghan: Gas and electricity?
The Prime Minister: The right hon. Gentleman calls out "Gas and electricity". He knows that those matters were referred to his Price Commission. His Price Commission recommended far higher price increases for gas than the increases that have been implemented.
Milk prices to the farmer and distributor had to go up because the Labour Party delayed them before the election. The mortgage rate had to go up in spite of our efforts to get Government borrowing down. The spendthrift policies advocated by the Opposition would have pushed it up even further.
Yes, school meal charges have gone up from 25p in two stages to 35p.
Mr. Andrew Faulds: If the right hon. Lady would look behind her, she would discover the best reason for not allowing television cameras into the Chamber.
The Prime Minister: I see that when I look at the hon. Gentleman.
Yes, school meal charges have gone up from 25p in two stages to 35p. But the former Secretary of State for Education and Science put them up from 15p to 25p in one go, and she announced the increase from 25p to 30p well before the election.
Experience shows that the only sure way of attacking inflation is to keep the money supply closely related to the output of goods and services. Whenever Governments have not followed this simple rule—when money is in greater supply than goods—inflation has resulted.
It does not require A-level economics, or artificial labels like monetarism, to understand this. Even the Leader of the Opposition seemed to grasp it on 16 January 1979 when he said in the House:
"I make it clear that we do not intend, as a Government, to finance inflation … We intend to adhere to monetary targets, with inevitable effects both on the level of activity in the economy and on the level of unemployment."
That is what the right hon. Gentleman said then.
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So we are determined to bring the growth of the money supply down. There are only two ways of doing this—first, by reducing the burden of Government borrowing and, secondly, by ensuring that borrowing by the private sector does not grow too fast. If one or the other is ton high, and if we are to achieve our monetary targets, interest rates inevitably have to rise. That is the situation we have been faced with.
I deal with Government borrowing first. The Government are borrowing too much because public spending is too high. The right hon. Gentleman has scarcely been helping to get that down. The plans we took over from Labour were totally unrealistic—over 2 per cent. growth per year and no allowance for Clegg and the explosion in public service pay. The Clegg comparability awards which the right hon. Gentleman left us to honour and pick up will cost an extra £2,000 million next year, and last year's settlements for civil servants and local government staffs will cost another £1,000 million.
By the time we took office, we were largely saddled with the Opposition's plans for the present financial year. We cut them back as far as we could—£1½ billion on programmes and another £1 billion through our policy on cash limits. Without that, Government borrowing for this year would have been higher and so, too, would interest rates.
Our revised plans for 1980–81 and later years will be published in a few weeks' time, and they will show substantial cuts on Labour's plans. The Opposition will no doubt mount a chorus of complaint in spite of the fact that they were boasting a moment ago that they were able to cut them by 6 per cent. in one year under the aegis of the IMF. But what are the alternative policies? Are the Opposition suggesting that we increase income tax? [SEVERAL HON. MEMBERS: "Yes."]
They did that in 1974 and 1975. More and more people were brought into tax. and as a result incentive and enterprise were destroyed.
Are the Opposition suggesting that we borrow even more and allow interest rates to rise still further? The right hon. Gentleman seemed to know the answer a year ago. In that same speech he said:
"What would be the result of a small increase … in the quantity of money financing

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very large wage settlements of 20 per cent. or 30 per cent? There could only be one result—the weakest firms would go to the wall and there would be more unemployment. In addition, instead of easing interest rates, the country would be faced with further tightening".—Official Report, 16 January 1979; Vol. 960, c. 1554.]
The same holds true today. But for reasons of his own, the right hon. Gentleman chooses to ignore his own warnings.
The Opposition accuse us of being uncaring when we cut back certain spending programmes. Of course there are many things we would like to do in the social field, but they cannot all be done until we have a stronger economy. Yet we did provide for the pensioners' Christmas bonus last year. Moreover, we have introduced legislation to ensure that it is paid annually. In 1975 and 1976 there was no Christmas bonus for pensioners under Labour. Unlike the Labour Government, we did abolish tax on war widows' pensions.
Spending on the Health Service is not declining. And accusations that it is come ill from the party which between 1974 and 1979 decided to close over 250 hospitals. Education spending per pupil will continue to rise.
All these matters are part of Government spending and borrowing. I referred earlier to private sector borrowing and its effect on the supply of money and inflation.
In recent months, companies have been borrowing to finance not only high stocks but pay settlements that they simply cannot afford. If they go on doing so, interest rates will stay high, there will be less money available for new business and new jobs and companies will fail.
If that lesson is learned, the path to lower inflation will be shorter and less painful. But too many trade unions still seem determined to make demands which ultimately will inflict damage on themselves, on their fellow trade unionists, and on the rest of the community.
That is why—this brings me to the second main point that the right hon. Gentleman mentioned—we are determined to redress the balance of power in our society, away from the trade unions and in favour of the individual—whether he be a member of a union, a consumer, producer or taxpayer.
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After the events of last winter, under the right hon. Gentleman, when this country suffered the deepest indignities and insults at the hands of militant trade unionists, the standing of trade unions had seldom been lower in public esteem.
For years trade unions had campaigned for greater legal powers for themselves in industrial relations and employment. The previous Government increased those powers still further until it seemed that, whatever harm trade unions inflicted on others, neither individuals nor industry had any legal redress.
But as well as a right to strike, there is a right to work. As well as the justice of a demand, there is the injustice that industrial action may inflict on others. As well as a loyalty to the union, there is a loyalty to family and to company. As well as a right to a decent wage, there is a duty to society to provide essential services.
It had become abundantly clear that, just as the unions had at one time sought redress from the arbitrary actions of employers, so today individuals, businesses and citizens were seeking protection from the power and might of trade unions.
There is in this country a widespread view, which we on this side endorse, that a person who is not a party to a trade dispute should be entitled to freedom to carry on his business and go to work unhindered. People feel that these rights should be protected by the law of the land.
These feelings were the origins of the Government's Employment Bill now going through the House. It will no doubt be vigorously opposed by some trade union leaders, by the militants and by the Labour Party, but not by the rank and file trade unionists, and not by the overwhelming majority of the British people.
The militants will oppose the provision for secret ballots. They do not wish the silent majority to be heard, even on matters which vitally affect their members' future. But the rank and file want it even if the TUC General Council does not.
The militants will oppose the provisions which restrict picketing to the place of work of the picket. But those who have been at the receiving end of secondary picketing at Sheerness and Hadfields will welcome them.

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The militants will fight fiercely the provisions on closed shops which give the individual redress against the employer or the union or, in some cases, both. But the ordinary members believe that the remedy is long overdue.
Some trade union leaders will object to the clauses in the Employment Bill which prevent a repetition of the injustices practised by the SLADE union, injustices which were the subject of an inquiry, an inquiry to which the union refused even to give evidence. But those who work in the industry have been pleading for just this protection.
The Employment Bill begins to redress the balance of power in favour of individuals and those not involved in a trade dispute.
Some trade union leaders will acknowledge that what we are doing has to be done. Most trade union members know it beyond all doubt. The more quickly and smoothly we can make these changes, the more justice will be seen to be done, the sooner trade unions will return to public favour, and the quicker our economy will recover.
The right hon. Gentleman said a number of things about industrial policy. Of course, there are many other changes which are necessary to improve the operation of our mixed economy. The Government's job is to create the economic climate which will result in new jobs and present investment being used more effectively.
First, we want to increase the incentives and rewards for extra effort, unlike the Opposition. My right hon. and learned Friend the Chancellor made a start last year. We want a bigger gap between income in work and income out of work.
Secondly, in contrast to the Opposition, we believe that goods are produced more efficiently through competition in the private sector than under the monopoly protection of the public sector. Hence our programme on which we have started of denationalisation wherever this is possible.
Thirdly, there is much evidence that large firms, large plants, large organisations, are more prone to industrial discontent than smaller units. It is particularly to small firms that we have to look for many of the jobs of the future.
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That is where tax incentives and the reduction of controls are so important. Further, we are studying how best we can achieve the move towards smaller units in both nationalised and private industry.
Fourthly, Britain's industrial problems are not only those of low productivity, but in too many areas defects of quality, design, and delivery. This Government have restored to management the freedom and the responsibility to manage. We expect them to use it to improve their industry's performance.
The Government, however, can and will help to influence these matters by policy on public sector purchasing, and on research and development.
Fifthly, we must adapt to today's markets.
We recognise fully the problems of Britain's declining industries and those who work in them—industries which have similar problems in most of the older industrialised countries. These adjustments cannot take place overnight—whether in steel, shipbuilding or railways. [Interruption.]
Mr. Speaker: Order. I think that it is very unfair of hon. Members continually to interrupt the Prime Minister. No one should have to fight for a hearing in this place.
The Prime Minister: But they have to be made. The longer they are delayed, the more they tie up resources that could be deployed in new ventures. We must not flinch from the realities. It is easy for politicians to win applause by postponing the day of reckoning. That is only self-indulgence and deceit. It is what the Opposition practised in relation to these industries in the past.
The right hon. Gentleman referred to the present dispute in British Steel. It shows just what happens when people refuse to face the facts.
The previous Government poured taxpayers' money into BSC to cover its losses—well over £1,000 million over the five years that they were in office. This year, even before the strike, BSC was heading for a loss of over £300 million; and that the Government were prepared to finance. But we are not prepared to go on funding losses in 1980–81.
In May 1978, the right hon. Member for Chesterfield (Mr. Varley) endorsed

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BSC's aim of break-even by 1979–80, this financial year. But his right hon. Friend now wants us to go on providing for losses not just this year, but next year as well. And no doubt the year after that. BSC has offered a minimum of 14·4 per cent. in return for agreements on productivity. It says that there is scope for considerably more for those who want to earn it. The fact is that the dispute could end tomorrow on the basis of a substantial pay settlement for the steel workers.
The right hon. Gentleman put forward some proposals about what ACAS could do. The truth is that ACAS already has powers to appoint a conciliator, a mediator or an arbitrator with the consent of both parties. It does not need those powers. It already has them, and it could use them. The BSC has said that it would have either a mediator or an arbitrator, but the trade unions have refused. That is the position. All the powers are already there. They could be used, but it is the trade unions which will not use them, even though the members of the ISTC went out on strike without a ballot and without strike pay. They have now been out for about nine weeks and have been without good pay packets for that time. They could have had increased pay packets for that time.
Failure to reach a settlement can mean only two things—continued loss of earnings for steelworkers and their families, and a worse prospect for the industry. The longer the strike continues, the harder it will be for the BSC to get its business back and to achieve profitability, and the risk of greater redundancies will grow.
But I stress that we cannot hand over more taxpayers' money to an industry where earnings are already well above the national average and which has already received so much. We recognise the special problems which closures and redundancies are going to cause, especially in Wales. That is why the BSC has allocated a substantial sum for redundancy payments out of the £450 million cash limit for next year.
That is why my right hon. Friend the Secretary of State for Wales announced on 4 February the allocation of an additional £48 million to be spent over the next two years in the areas affected by the rundowns at Llanwern and Port Talbot. At a time when we have to cut
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public spending, the allocation of these funds on top of what would otherwise have been available to the Welsh Office is a clear sign of our determination to take effective action.
I spoke earlier about the wish of the British people last May for a new start and for a Government prepared to tackle the country's problems. We have been in power for less than 10 months.—[HON. MEMBERS: "Too long."]—But already we have had to take hard decisions which the right hon. Gentleman could not or would not face. We have had to take decisions to cut Labour's irresponsibly inflated spending plans, and to try to give the taxpayer and ratepayer value for money; to restore incentives by getting personal taxes down; to enable council house tenants to become home-owners and to give a charter of rights to remaining tenants; to reduce waste in the public service; to honour our defence obligations to our own people and to our allies; to provide the British people with better protection against violent crime at home and to restore confidence abroad, not only in our currency but in Britain as an influence in the world.
All these things we were pledged to do, and with all of them we have made a firm start and achieved a good measure of success. Despite the need to retrench, last year we made the biggest ever increase in pensions and social security benefits. We have taken special steps to help the disabled, one-parent families and war widows. We have made the biggest ever cuts in personal taxes, benefiting all taxpayers and increasing allowances to double what was needed to offset the previous year's inflation. And we are doing pretty well abroad. The pound is a strong currency, free of exchange controls for the first time in 40 years.
If, in 1975, after their first 10 months, the Labour Government could have pointed to a record of achievement even remotely comparable with that, they would have been boasting. But as it was they were still floundering amid policies already doomed to failure.
We are facing Britain's long-standing and deep-rooted problems with firmness and realism, which is exactly what the British people want. Attitudes are changing, as we have seen at Sheerness, Hadfields and in South Wales, and the mood of realism is spreading fast. Perhaps

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it will never spread to the Opposition, which is why the country finally rejected the policies of yesterday at the election. That is why I ask the House today decisively to reject their motion, thereby expressing confidence in Her Majesty's Government.
5.16 pm
Mr. David Steel: There is one obvious difference between this no-confidence debate and the last four or five no-confidence debates that have taken place in the House. It is that I doubt whether any hon. Member has been out ordering his election envelopes in advance of the day. Of course, at the end of the day, the result will be boringly predictable.
But for all that, this is a good opportunity to take a look at the Government's whole record in industrial and economic matters. I want to say straight away that with some of the Government's declared objectives, we Liberals find no quarrel. Of course we want to see an incentive society. Of course we want to see the Government bringing public expenditure under control and establishing monetary discipline. But our quarrel with the Government is two-fold. First, there is no sign that their policy is proving effective. And second, the reason why there is no sign of that is that the Government have no other economic policy. What they are doing is not part of their policy; it is the whole of their policy. Monetary policy is all that they have.
I should like to set out six areas of policy where I believe the Government ought to be taking some action. The fact is that at present, as we suggested in our amendment, the Government's policies have proved:
"economically disastrous and socially divisive".
Indeed, the Prime Minister is often characterised as a person of great conviction. But it turns out that her conviction means "10 years' hard" for the country as a whole. All the indicators—inflation, output, unemployment and investment—look bad in the years ahead. The fact is that the Government's greatest failing is that they are not uniting the country. That is why we have used the phrase "socially divisive". I believe that they are incapable of uniting the country
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behind the policies that they are pursuing.
Let us take the phrase "incentive society". Do not the Government realise that, far from creating more incentives at the lower levels of income, they have increased the poverty trap during their 10 months in office? It is not just that they have not looked forward to the long-term restructuring of our tax system. One cannot expect that in 10 months. We do not expect them to bring forward a tax credit scheme in that time. But the combination of their failing to update the child benefit scheme whilst at the same time they have introduced other fixed charges, such as school meals and transport, increased prescriptions and so on, means that, far from all the promises that were made by the Conservative Party when in opposition, it is now paying more people at the lower levels of income not to work than to work. Indeed, the very reverse of an incentive society is being created. Moreover, that does not just apply to the lower levels of income. The disincentives exist for those on the middle levels of income. The effects of inflation, and in particular the mortgage interest increases, have been very severe on those on middle incomes.
I remember the remarks of the right hon. Lady in her memorable speech during the censure debate on 20 July 1977. She may remember that she was kind enough to refer to my youth on that occasion. She said:
"Secondly, we must attack inflation and make that the top priority … It will be a very long struggle to get the inflation rate down, and we must not be satisfied even when it comes down into single figures."—[Official Report, 20 July 1977; Vol. 935, c. 1622.]
She has been travelling in the wrong direction. I am particularly bitter because I remember the attacks that came from the Conservative Party during the Lib-Lab period. During that 18 months, the rate of inflation came down from over 19 per cent. to 8 per cent. The right hon. Lady has succeeded in putting the rate almost back to the point at which we started in the spring of 1977. The Government have failed to act on a whole range of policies. She is therefore in danger of turning neglect into a political philosophy.

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I shall suggest six areas in which the Government should take positive action.
The first issue is that of industrial borrowing. I do not know how the Prime Minister had the nerve a moment ago to refer to the needs of small businesses. Certainly, that was a key point in the Conservative manifesto. On page 16 it states:
"The creation of new jobs depends to a great extent on the success of smaller businesses … our general and economic and industrial relations policies are the key to their future."
What do small business men say now? The Association of Independent Businesses stated in its newsletter of December:
"Are there not better ways of constraining the money supply than by clobbering every business that borrows in order to create jobs and more products and which are the meat and drink of the defeat of inflation? … They—
that is, the Government—
"look to the smaller firms sector for much of the improvement in the economy that non-interventionist policies in the public sector will not provide. Yet how can our members expand and take on new capital equipment and new staff with these sorts of interest rates?"
I have not quoted from a party pamphlet. I have quoted from the Association of Independent Businesses, to which the Conservative Party claims to appeal. The association is protesting about the present disastrous rates of interest. The time is long overdue for the Government to intervene directly. The Government should allow a system, either through the NEB or through the joint stock banks, that would enable people to borrow risk capital at lower rates of interest. That would create new business and more jobs. The Government should take action on that issue.
Second, the Government must shed their distaste for an incomes policy. If the economy continues to slide, we shall have the worst form of incomes policy possible, namely, a total freeze. That is the most Draconian and unfair type of incomes policy. It is time to work out a long-term agreement. We do not want short-term policies which have been produced in a panic by Governments who do not believe in them. We need a long-term sustained approach to settling control over wage inflation. It makes no sense for the Government to pay out increases of 15 per cent. or 18 per cent. to civil servants, yet at the same time to
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offer steel workers 2 per cent. The Government cannot expect to get away with that.
The bare bones of an incomes policy need not be rigid. There must be an attempt to secure agreement between the Government, the trade unions, and the employers as to what the country can afford. Beyond that, the framework of a future incomes policy should give every company and, better still, every plant every possible incentive to increase productivity, to engage in productivity barbaining and to enlarge profit-sharing schemes. People should be encouraged to earn more and to seek rewards for their efforts. If the Government have not begun to think in those terms and if they think this is some doctrinaire policy that does not fit in with their economic theories, we shall drift and drift.
Third, out of the wreckage of their policies, the Government will have to create a new mood of co-operation in industry. Again, I shall not quote from a party pamphlet. Some very interesting speeches have been made by men in responsible public positions on this theme.—[Interruption.] I do not wish to discuss their political leanings. I shall quote the chairman of the Stock Exchange. I do not think that he is part of the militant tendency. In a recent speech he said,
"We also need to ensure proper consultation within industry. And we need to encourage the widest possible ownership of industry and commerce because by this means we can involve more of our people in its success and convince politicians of the need for success."
He went on to point out that that had been behind the success of some of the French Government's recent policies.
The new chairman of the CBI has also spoken about the CBI's survey of 450 member firms. It showed that less than half the companies consulted had regular meetings between management and employees to examine the business, for any purpose. He said that those who talked with their employees about investment plans and those who agreed that their employees' views might influence fundamental decisions, could be represented on the fingers of one hand, or two at the most. That is a deplorable state of affairs and it has gone on for far too long.
We should listen also to the words of the director-general of NEDC. He spoke

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about the need for legislation in order to encourage a basic framework of cooperation within our companies. Liberal Members give their support to the Secretary of State for Employment in much of the legislation that he wishes to introduce. That alone will not be enough. Legislation on employee participation is urgently needed.
Fourth, I thought that the Prime Minister almost agreed that we must examine the type of industrial society that we need in the future. She hinted that for far too long we have assumed that larger and larger units of industry in the public and private sectors are automatically good. She seemed to hesitate on the brink of saying that "small is beautiful." She is right. One should consider the history of British Leyland, even before it was taken into public ownership and before large amounts of public money were spent. The philosophy of amalgamating independent firms into one great combine has meant that more and more decisions have been referred upwards to high salaried bureaucrats. That has been a mistake. The British Steel Corporation is another example of a case where we should break down the Corporation into smaller units. The Government should pursue a positive approach in creating smaller units of work.
Fifth, the Government should intervene more directly and should be more selective as regards public expenditure. Their control over public expenditure and their method of cutting back has been crude to say the least. I shall give one or two examples. The Government are fundamentally wrong to announce that they will go ahead with a £5,000 million programme on the Trident missile. That is no part of our defence commitment, of our commitment to NATO. The Government have made a deliberate decision. It will use up much of the defence budget over a period of 10 years. If the Prime Minister pursues that programme, she will discover that she has the most expensive face in history since Helen of Troy. Helen of Troy only launched 1,000 ships, but they were a dashed sight cheaper than four or five Trident submarines. There is is no case on defence grounds, on wider strategic grounds, or on economic grounds for proceeding with that programme.
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I cannot understand the announcement this week of the intention to cut insulation grants to private homes. After all the lessons of the past 10 years, surely we have learnt that we must conserve energy in every possible way. The removal of those grants is a false economy. I put down a written question. I did not pay very much attention to it until I received the answer. I asked whether any design effort had been made to include hydro-electricity generation in the construction of the Kielder dam in Northumberland. I am suspicious of the Government's dedication to massive expansion of the nuclear power programme. That is a huge expense. I received an answer to the effect that the work had been done but that no installation of generating capacity was going ahead.
That provoked the Northumbria water authority to write to me. It pointed out that it was willing to include electricity generating. The trouble was that no one would give it the money. It would cost £5 million to install hydro-electricity in the dam. That is enough to allow a town of 20,000 people to become self-sufficient in electricity. That is the sort of discriminatory decision that the Government should make. However, it requires direct and detailed intervention across the board.
We should also consider the Chancellor's policy of issuing Government bonds at 15 per cent. If the Government really believe that they can bring inflation under control, bonds at 15 per cent. will vastly increase public expenditure for future Governments. The Government are wholly inconsistent in putting that interest rate on Government bonds, while at the same time telling local authorities that in their forward budgets they must assume an inflation rate of 13 per cent. If local authorities do that in the current year, their books will be completely out of key by the end of the year.
One of our strongest objections to the Government's programme of public expenditure cuts is that they are leaving local authorities to do most of their dirty work. Whatever their political complexion, local authorities are getting increasingly angry at being left to make decisions on such items as school cuts, especially when the Government produce the silly scheme for spending money on assisted places. It does not make sense.

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In the constituency of the hon. Member for Berwick and East Lothian (Mr. Home Robertson), the local authority received a circular from the Scottish Office about saving electricity wherever possible. It proceeded to shut down, as an experiment, the sewage plant. Raw sewage was pumped into the Tweed until there was an outcry. Sir Harold Macmillan gave us the affluent society. The right hon. Lady is in danger of giving us the effluent society.
The Government do not admit that they are responsible, but they are imposing a squeeze all along the line.
Mr. Nigel Spearing: Will the right hon. Gentleman tell us about the Liberal Party's policy? In an important television interview with Mr. Brian Walden just after Christmas, the Prime Minister said that she would be happy to see a further £2,000 billion in public expenditure cuts, with the money going to productive industry. Can the right hon. Gentleman give any reason why the money saved by such cuts should go to productive industry? Does his party have a policy in that respect?
Mr. Steel: The hon. Gentleman is being a little unfair. He should have interrupted the Prime Minister and taken up her time. It is not my policy. It is the Prime Minister's.
My sixth and final point is that I believe that the Government should be much more active over import substitution. I am suspicious of the siren calls for import controls, which would be disastrous. However, I strongly believe that the Government are not nearly vigilant enough in encouraging home manufacture and reducing the scale of imports. There is no point in having public corporations without an overall policy of procurement in the domestic sector.
Three weeks ago I asked the Prime Minister whether she would intervene in the decision of the Civil Aviation Authority in awarding contracts for our new radar system. It is an important issue, and several factors are involved. It is not similar to problems such as those of the steel industry or British Leyland. It concerns new technology. The contract is worth between £20 million and £30 million, yet it is believed that it will go to America., to a bid from Westinghouse over a bid from Plessey and Marconi.
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Non-intervention falls down when we consider that case. The Westinghouse bid is based on a great deal of investment in research and development by the Federal Aviation Authority. We have State competition on the one hand, and the Government saying that it is nothing to do with them but entirely for the Civil Aviation Authority on the other. We are losing jobs on the frontiers of technology, bringing in imports and losing potential exports. I hope that the Government will reconsider their attitude to that case and to other aspects of public procurement.
In a short time I have covered six areas of policy in which we can justifiably criticise the Government. I have one final criticism, which is the reason why we shall be voting against the Government tonight. I believe that they have failed to give the necessary leadership to the country. Leadership is not a question of simply raising one's voice or humiliating Cabinet colleagues in television interviews. It should involve trying to set the country on a course that people will be willing to follow. I am worried that the persistent economic failure of our country is beginning to breed a new spirit of meanness. I am not worried just about the social consequences to which the Leader of the Opposition referred. There are other issues.
The Brandt report was published the other day. Certainly for the younger generation the report is of enormous consequence. It points out that while we in the northern hemisphere have one-quarter of the world's population, we have 80 per cent. of its income, 90 per cent. of its manufacturing capacity and use 85 per cent. of the oil. The implications of that report are enormous, yet in the same week what do we get? There is a miserable exposition of cutting overseas aid, threats to the work of the British Council and increases are announced in fees for overseas students. That is the image that the Government are projecting to our younger people and to the rest of the world.
I believe that the Government never had a mandate. As Leader of the Opposition, the right hon. Lady scorned the then Prime Minister because his Government existed on 29 per cent. of the electorate. She has 32 per cent., but it is still a minority. Even though the House may

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decide tonight, because of the in-built majority of the Conservative Party, that there is confidence in the Government, the people in the country do not have confidence in the Government, and they never had.
5.35 pm
Mr. Julian Amery: The Leader of the Liberal Party made an important speech, even if he was somewhat hurried in the development of his points.
I do not see why a motion of censure has been tabled. The country is facing difficult problems, and the Leader of the Opposition knows that well. I should have thought that we deserved his support today, just as we gave him our support when, at the end of 1976, the pound came to the brink of collapse.
The right hon. Gentleman and his right hon. Friend the former Chancellor of the Exchequer know the scenario well. Vast Budget deficits in 1974, 1975 and 1976 produced an inflation rate of 27 per cent. and brought us to the brink of collapse. In 1977 and 1978 the Labour Government adopted policies indistinguishable from those which we are pursuing. They exercised control over the money supply at least as strictly as my right hon. and learned Friend the Chancellor of the Exchequer, and their cuts in public expenditure were rather more severe than those that we have so far proposed. As a result the pound stabilised and inflation came down to 8 per cent.
The former Chancellor of the Exchequer was really Milton Friedman's prize scholar, and his policies were pure Chicago water, bottled under "appellation contrôlée". The only difference is that we believe that it is necessary. The Labour Government did it because they were told to by the IMF. The Opposition know perfectly well that, without monetary control and cuts in public expenditure, the economy would have collapsed in 1976 and would collapse today even more swiftly, under the pressure of the current world recession.
What do the Opposition want us to do? The Leader of the Liberal Party had the courage to say that he wanted a return to an incomes and, I take it, prices policy. I detected little enthusiasm for that in the speech of the Leader of the Labour
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Party. I am not surprised that, with the bitter experience of "In Place of Strife", our efforts in 1973–74, and his own "concordat" written across his heart, he does not go for the idea.
Whatever the theoretical rights and wrongs of an incomes and prices policy, I believe that we have to accept—and it is implicit in what the Leader of the Liberal Party said—that, within the present framework of industrial relations, and unless we can move in the direction of participation, it simply is not on at present.
What was the Leader of the Opposition saying? He was saying that we should go a bit more slowly. What does that mean? Does it mean that we should print a little more money? It will be a little more inflationary, he would say, but it will not hurt very much. It will buy a little peace. That is one way of looking at it. Cut a little less public expenditure? The borrowing requirement will have to be increased a little, and the interest rates will be forced up as a result. But it will buy a little peace. Increase taxes a little? It will destroy incentive a little, but it will be seen as being more fair, and it will buy a little peace. That is not much of an alternative policy. It is not a policy on which there should be a motion of censure.
I am as much of a pragmatist as any Conservative Member. I am prepared to accept that sometimes there can be good social reasons for adopting unsound economic policies. However in our present circumstances, to adopt unsound economic policies is more likely to produce worse social consequence in very short order than not to do so.
The duty of the pragmatist is to find out where public opinion is going. Does public opinion require a deviation from what the former Chancellor of the Exchequer in his heart must know—and the present Chancellor advocates—are sound economic policies? Should the Chancellor deviate from them for reasons of public opinion? It is a matter of judgment. In my judgment, the Government are not ahead of public opinion and, if anything, I suspect that they are a little behind public opinion. I think that there would be support for even greater cuts, particularly in the bureaucracy—central and local. It has grown by 40 per cent. since 1972. As far as I can judge, it has not

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given us anything like a 40 per cent. improvement in services as a result.
As a pragmatist, I add the following thoughts. I say to my right hon. Friend the Prime Minister and to my right hon. and learned Friend the Chancellor that there are policies that they can carry out this year which will gain the support of the public. I am not sure whether they will be able to carry them out next year or the year after if the recession grows. I suspect that this is not the moment to call a halt, or to retreat. If we can get a breakthrough in the battle against inflation now, we might have a decent chance of arresting the long decline in our affairs. But it is not enough to arrest the decline. We need a radical revision of our fortunes.
For a long time Conservative and Labour Members have said—the former Chancellor of the Exchequer also said it—that we have been paying ourselves more than we have been earning. For 10 years or more, there has been debate about how to pay ourselves less so that what we pay ourselves corresponds to what we are earning. There has not been sufficient emphasis on how to earn a little more, in order to catch up with our aspirations.
Low productivity is at the root of the British disease. Why is it that in Britain our output per man-hour is about half of what it is in West Germany and almost half of that in France, Belgium and Holland? That is dramatically illustrated in the motor car industry. Some of the multinational companies are making the same car in Britain, Germany and Japan, but the Germans and Japanese make twice as many as the British make in the same time.
Productivity depends on investment and equipment, and on the proper utilisation of manpower. There can be no doubt that in Britain over-manning and restrictive practices have deterred investment. We cannot expect the private sector, in its own interest to invest in new machinery if the machinery is not worked. It would be irresponsible of the public sector to do that if the trade unions block the operation of the new machinery.
There has been a scandalous case in Wales, where one of the best and most modern steel plants was installed. There was a six-month delay, during which time the plant was not used, while argu
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ments took place about the manning levels. Here is the main cause of the de-industrialisation of Britain. It is not the high rate of the pound, as some economists pretend. The Germans and the Japanese export perfectly well with a strong currency. It is the inability of our economy, because of over-manning and restrictive practices, to operate successfully the new machines that have been installed or which might be installed. We have talked about the problem for 20 years, but during those 20 years revolutionary changes have been taking place. If we fully exploited the machinery that is available today there could be an enormous increase in productivity, offering higher wages or shorter hours, or a choice between the two. If only over-manning and restrictive practices could be reduced—
Mr. Eric S. Heifer rose—
Mr. Amery: I shall give way in a moment.
If over-manning and restrictive practices could be reduced to the level of our competitors we would have an immense opportunity—because we are starting from a low level—to achieve an economic miracle.
Would that lead to unemployment? I do not see why it should. Once we become competitive, we can enlarge production that would provide new jobs. What is more, if shorter hours are within our reach because of the exploitation of machinery, more people could be employed on shorter shifts. That would maintain existing jobs. But trade union attitudes today block the exploitation of machinery and they will continue to block it until the unions accept obligations corresponding to their power.
That is why I agree with my right hon. Friend the Prime Minister that we need to change the legal framework of our industrial relations. There is an argument—I know that there is argument inside the Conservative Party—about how fast we should move. As a pragmatist, I am not sure that to move gradually is the right approach. The country is less worried about union bashing by the Government than it is about public bashing by the unions. The fear of the unions is strong, not least among trade unionists. It was strong at the time of the election,

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and has been reflected in public opinion polls ever since. I am not sure that the proposals now before the House go far enough. If we are to go further—as my right hon. Friend the Prime Minister indicated on "Panorama" on Monday evening—we should do so now. There are things that can be done in the green leaf which cannot be done in the sere.
But it is not sufficient to take a negative approach to these matters. I return to what was said by the Leader of the Liberal Party earlier. If we are to succeed, we must not only pull down the barriers to increase productivity, we must give positive encouragement to co-operation in productivity.
In our manifesto of October 1974 and in our publication "The Right Approach", we laid considerable emphasis on profit-sharing, consultation, works councils, even on worker-directors in appropriate cases, and on the development of a forum where these issues—possibly based on NEDO—could be discussed in public. What happened to those words? There is nothing in the legislative programme, and nothing in the speeches.
There is nothing anti-Conservative in participation, profit-sharing, works councils or even worker-directors. We have always viewed enterprises not as conglomerates of individuals but as families. There is nothing here against the social market philosophy which I know inspires my right hon. Friend the Secretary of State for Industry. West Germany is the home of the social market philosophy, and that country has developed participation to a higher level than any country in Europe. I have no blueprint to propose. Different industries will need to develop different plans. The Government need to work out methods of encouraging the development of such plans. There is company law to ensure that shareholders are properly treated, and there should now be changes in company law to encourage and help the development of participation.
The hon. Member for Liverpool, Walton (Mr. Heller) made a striking statement on the subject in a discussion with Professor Friedman on television. If I understood him correctly, he said that he thought the only way of preventing
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his brand of Socialism from becoming excessively totalitarian and authoritarian was to have what he called industrial democracy—some form of participation. Since 1948, when I was a candidate for Preston in the heart of industrial England—where I was the Member for 18 years—I have argued that the only way of preventing the potentially divisive aspect of the free enterprise system was to give all who work in private and national enterprise the assurance of a share in the profits and a voice in the control of the industrial process which they serve.
I go further. I should like to see NEDO developed into a forum for public discussion of these matters on the lines advocated by Sir Winston Churchill in 1930 in his well-known Romans lecture. I believe that if the claim of the steel unions that the public should pay for extra wages which they could earn themselves were discussed in that way, it would be laughed out of court by an audience of other producers who are also consumers of steel.
I have argued the case for participation on its own merits. But to my right hon. Friend the Prime Minister I would stress that the case for participation is urgent for other reasons. The recession in the world is deepening and the threat to peace is growing. It has never been more important than it is today to build up national unity.
I believe that our economic and financial policies are right. I stand by the Government's monetary policy, by the cuts which are proposed and by the reform of industrial relations. I would even go further if the Government decidede that they wanted to do so. However, if the policies are to prevail and command full assent from the public, the Government should also take positive steps to mobilise the widest possible support for them.
5.52 pm
Mr. J. Enoch Powell: In taking part in the debate I am bound to be conscious that I am one of those who come to the House from that Province of the United Kingdom which most acutely shares the extreme consequences of all the ups and downs of the economy of the United Kingdom. That is something of which Ulster and its people

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make no complaint. The United Kingdom is their birthright. In fact, it is because they are determined to assert it that they live under pressures unknown to the rest of the Kingdom.
Claiming that as their birthright, they accept, equally with the benefits, the burdens and the difficulties of integral participation in the economy of the United Kingdom. I stress that because, recently, a speech was made by one of the Northern Ireland Ministers which appeared to cast doubt upon that proposition and its implications, and I should like to take the opportunity, on behalf of my colleagues as well as myself, of acknowledging the frank and handsome withdrawal which that Minister publicly made in the last 48 hours. Certainly, it will be well received by those whom he tries to serve—and upon the whole succeeds.
The debate is essentially a continuation of the debate on the economy at the end of November. I argued at some length in that debate that the phenomenon of inflation and the inflation index at any particular time is, whether we like it or not, related to factors which already lie a considerable distance in the past. The 19 per cent. or so inflation rate is the most marked and urgent of our difficulties at this moment, but it derives from causes which lie at least a year or two back. That is not a proposition which can be disputed by the occupants of the Opposition Front Bench. In their earlier years of office, they never tired of pointing out that in the high rates of inflation experienced in 1975 and 1976 we were suffering from the monetary and budgetary mismanagement of 1972 to 1974. Accepting that as they did, and must, they and we are equally bound to accept that, on coming into office last May, the Government entered upon factors that were no longer within their power to control and which were bound to produce the economic constellation and particularly, the level of inflation we experience at the moment. That is the reason why my hon. Friends and I consider that it is, at worst, premature to censure the Government for the economic phenomena of the early months of 1980 after only 10 months in office.
It does not follow, however, that, although they were unable to control the
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factors which dictate our present circumstances, they did not enter upon heavy responsibilities or that the manner in which they have taken those up is beyond criticism. By the same taken, their responsibility from the time of entering office is for the state of the economy—and, above all, for the soundness of our money—in years ahead. Upon what they do or fail to do in the first two years of this Parliament will depend the economic and, certainly, the monetary fortunes of this country in the later years of the Parliament.
In her speech this afternoon the Prime Minister acknowledged—as did the Leader of the Opposition—the primacy of urgency of inflation. If we cannot bring a tolerable degree of stability into the value of our currency, there is nothing else, either at home or abroad, that we can be confident of achieving. It is, above all, against that test that policies and the means adopted to fulfil them must be judged. The right hon. Lady also said rightly—indeed it seemed an understatement—that the Government were still borrowing too much. In saying that, she identified the one measurable feature which, although it is not to be precisely equated or mechanically linked with the phenomenon of monetary growth, is the only apprehensible fact which we can deal with in seeking to come to grips with inflation.
For it is not disputed in any quarter, whatever other factors may be argued to exist, that it is the borrowing propensity of government and the ability of modern government to satisfy their marginal requirements by borrowing from the banks, and thus expanding the currency, which is the sine qua non of inflation—the condition without which there cannot be inflation as we have experienced it in the last two decades. [Interruption.] I am sorry that the right hon. Member for Battersea, North (Mr. Jay) who sits in front of me and with whom I agree on some of the most important matters of our national life, finds himself at such grumbling division from me on this; but the actions of his party in office have acknowledged, no less candidly than I am stating it, the crucial importance of the Government's total borrowing—of the public sector borrowing requirement. It is not for nothing that, whatever the jibes and the jokes about monetarism and so on, all economic

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commentators at home and abroad concentrate upon that index, upon that item, more than upon any other. They recognise in practice how crucial it is.
I repeat that the right hon. Lady was right in saying that it is too high. I will go further and say that it is dangerously high, 10 months after a new Government came into office. To be assured by those channels which turn out not to be so unofficial as they would like us to believe that the Chancellor of the Exchequer is hoping to get within reasonable distance of a £9 billion borrowing requirement is not good enough at this time of day. A country which has lived with our inflationary experience of the last five and more years is in no position to contemplate borrowing year by year sums verging on £10 billion. If the Government are looking for recovery and looking with the urgency that is necessary in the early years of this Parliament for the means to get a grip and a stranglehold on inflation, then neither £9 billion nor anything approaching that figure will do this year.
We should be aiming at a nil net borrowing requirement. Before any hon. Members starts to think, or to say, that that is a typically exaggerated and extreme statement from the right hon. Member for Down, South, let me recall that it is only 11 years since there was presented to this House a Budget with not merely a nil net borrowing requirement but a negative borrowing requirement—that is, a net repayment of tax—and I well remember the interesting debates that we had in which we discussed whether there was total symmetry between a positive and a negative borrowing requirement.
That was only 11 years ago. At that time we took it for granted. It is a perfectly possible and practical thing; it was achieved under the Labour Government, and with low unemployment prevailing. I do not remember outrage being expressed by any section of the Labour Party at the time of that Budget. "What, no borrowing requirement!" did they exclaim? "What no billions to be borrowed from the public!". Apparently it was perfectly reconcilable with almost any of the strands of Socialist thought. Only 11 years ago, then, the spending and the taxation, the incomings and the outgoings, of this country and its economy
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were in balance. So it is not an extreme statement nor is it a mere provocative absurdity to say that what we need is at any rate a period during which the Government of this country do not need to come cap in hand to borrow.
Mr. Hugh Dykes: Excluding defence and security spending, does the right hon. Gentleman accept the need, according to his own arguments, for cuts in the very heavy subsidies to Ulster?
Mr. Powell: I am not going to leave my argument at the point to which I had brought it. Indeed, I propose to be much more precise than those who have so far contributed to the debate on the ways in which I believe that what is necessary in my view could and should be done. I do not know whether the hon. Member for Harrow, East (Mr. Dykes) was in the House when I began my speech.
Mr. Dykes indicated assent.
Mr. Powell: He was in the House? So he would have heard me say that the Province in which I have the honour to represent a constituency fully accepts its share in the policies that are necessary for the United Kingdom as a whole. I stated that, and I state it again; so let me resume.
There are a number of ways—some of which can be used in tandem—for securing that major reduction in the net borrowing requirement which is urgently necessary at this stage.
Of course, it can partly be done by mirrors. As a former Treasury Minister I know that the Treasury has a set of very cunningly devised mirrors for use at Budget time to produce a different net borrowing requirement from that which would otherwise appear. But it is my belief that that is not very much to the taste of the present Chancellor of the Exchequer. He would certainly not be responding to the gravity of his responsibilities if whatever might happen in other years, he allowed himself to be diverted now into taking mirror reflections into his calculations upon the net borrowing requirement.
Nor can we—strong though the other reasons may be for it—look for any relief by way of reduction of the £1,000 million net tribute, mounting presently to

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£1,350 million, which we pay to the European Economic Community. For if we reduce what we pay to the Community—the gross sum—that is the equivalent of an increase in taxation, since it is from the additional taxation we levy at the behest of the EEC that we pay the Community this tribute, like the tribute the Greeks paid to the Cretans.
If on the other hand—and I am sorry to see that thoughts seem to be turning in this direction—we intend to come nearer to a balance with the EEC through an increase in the sums that it pays to us, it is a sobering reflection that that will do us no good at all unless those increased sums go to satisfy existing, but not additional expenditure in this country.
The Prime Minister indicated assent.
Mr. Powell: I am glad to note agreement coming from an authoritative quarter.
So, laying these delusions on one side, there are, so far as I can see, two or possibly three sources—they are terribly plain ones—from which we can deal with what we have to do.
The first is taxation. If I have a complaint of the general economic and fiscal behaviour of this Administration—I made it in the Budget debate last year, as well as in November—it would be that they attempted to pluck the fruits of tax relief before the buds had openend, let alone before the fruit had ripened on the branches. Although much of the tax relief in the last Budget was achieved by means of offsets, the background which the Government created by the suggestion that it was the first of a series of relieving Budgets has made it specially difficult for them to do now what has to be done—that is, to obtain a massive contribution from taxation; for that is one of the means of moving towards closing the gap between Government receipts and Government outgoings.
We need something like an additional £1 billion to £2 billion out of taxation in the coming Budget towards that task. How much more easily—with all their protestations of the damnosa hereditas upon which they entered—they could have done that a year ago! Then the Government could have said to the electorate with some correctness "We came in committed to tax relief, but we could
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not with any degree of responsibility begin it in the circumstances which we find. Indeed there have to be, for a time at any rate, further tax burdens." Further tax burdens indeed there have to be if we are serious about dealing with the root cause of inflation.
On the other side there is—I come to the remarks of the hon. Member for Harrow, East—expenditure. It is disheartening, after 10 months of hacking away at what it is alleged the Labour Government would have been spending—I think that is the correct formula and I believe that the right hon. Lady was careful to use it in her speech this afternoon—to find oneself more or less where one was at the start.
There has to be a rapid approach towards the centre of the gap from the expenditure side also. This will not be done by tightening the general collar of cost limits. It will not be done, fond though, as an ex-Financial Secretary to the Treasury, I am of sealing wax and candle ends, by those well known Gladstonian implements. It has to be done in large items; and the only way in which large items can be obtained from spending is through the deferment of major capital projects. This alone, over the course of 12 months and 24 months, will yield a substantial move towards balance between the incomings and the outgoings of government.
I think that the Chancellor, in his work on the Estimates, ought to aim at obtaining a substantial contribution on capital account by deferment of projects. Remembering that we are in what is called a crisis situation, we have to hit an objective, and hit it hard, at this stage in the Parliament. This cannot be done by a gradual gnawing, eroding process, which is constantly undone again, like footprints covered up as we walk across the sand. It has to be done by large, massive acts which will free the Government boldly from their present borrowing incubus.
Mr. Heifer: If the Government were unwise enough to agree with the right hon. Gentleman's suggestion of the deferment of major capital projects, would he explain what would happen to construction workers in Britain as a whole, particularly those in the unemployed sector in Ulster?
Mr. Powell: It is indeed bad news for the construction industry. But there is a good deal of other bad news: we are not in a position to choose between good news and bad news. The common predicament of politicians is having to choose the least of evils amongst the courses with which they are faced.
Now, if the Chancellor will permit me, I am going to apply an emollient to any wounds that I may have inflicted upon him. I am going to open to him, if he will only yield to my persuasion, an easy option.
Mr. Douglas Jay: An easy way out?
Mr. Powell: No, that would be too much; but, at any rate, something easier than the two necessary large-scale ingredients which I have already commended to him. I believe this is a time when we are entitled, and when it is sound, economically and monetarily, to apply part of our reserves to filling the gulf.
At the moment, even with the gold element undervalued, we hold $24 billion reserves, the only purpose of which is to enable the Bank of England to speculate on the currency exchanges. Incidentally, the only way that it can influence the currency exchanges by means of those reserves is to force the exchange rate of sterling up. Therefore, I hope that none of those on the Opposition Benches who groan at the strength of sterling—something which was our aspiration only a year or two ago—will take issue with me on that point. It is a dangerous temptation, and nothing better, that the Bank of England should have control over this huge asset—the fruit of various speculations and borrowings in the past.
If part of that asset is realised by the Government to meet their net borrowing requirement, that is no more sinful, no more uneconomic, than to sell off parts of the nationalised industries to the public. It is a method of converting capital assets into current cash. Indeed, it is the very process that the Government are commending to the British Steel Corporation, and I am suggesting that the Government should set an example by applying it. I do not suggest they should blue it all at once—the whole $24 billion—though I must say that there are attractions in getting rid of the entire net bor-
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rowing requirement at one fell swoop. I would take it a little more easily, besides, I think that there should be other contributions and I want to see the contributions which I have already mentioned both from the taxpayer and from the pattern of Government spending. If £2 billion, £3 billion or £4 billion of these assets are realised, the Government will be securing control of sterling as surely as if they issued a new gilt-edged stock: it is exactly the same process, no more inflationary—indeed, just as doflationary—in its effect.
Mr. Peter Tapsell (Horncastle): Is not one difficulty about the scheme that the right hon. Gentleman has outlined, which appears on the face of it to be so attractive, that by far the greater part of the $24 billion is not our money at all? It is money which has been lent to us by other Governments, or short-term deposits by people who place their money here and are free to withdraw it whenever they wish. Therefore, the idea of blueing the lot, attractive as it sounds, seems a somewhat socialistic approach for the right hon. Gentleman to advance.
Mr. Powell: First, if it is not our money, why is it that from time to time we spend it as if it were ours by exchanging it into sterling for the purpose of rigging the exchange rate?
Secondly, while it is true that as a nation we are an external debtor, that no more makes our assets the property of our creditors than it does in the case of anybody else. So this notion which got into the head of the City Editor of the Daily Mail, that the reserve somehow belongs to somebody else, does not stand up to examination.
I am not, of course, suggesting that this is the whole of the answer to the Chancellor's problem. I am not even suggesting that it is the greater part, but I mention it to emphasise the necessity at this stage in this Parliament of mobilising every resource to eliminate, within a measurable time, that great cause of our disability—the incubus that weighs upon the whole of the economy and of the British people—the large net borrowing requirement.
Mr. Robert Sheldon: Will the right hon. Gentleman give way?
Mr. Powell: I really ought to bring my speech to a conclusion. I apologise to the right hon. Gentleman for not giving way. No doubt my arguments can be dissected later here and elsewhere.
I want to conclude by addressing myself to the Opposition, though that may not be normal at the end of a speech in a censure debate. What is their position over the net borrowing requirement and the peril of ever-increasing and recurring inflation?
The Leader of the Opposition referred to the lunatic—I think that was the word that he used—desire to reduce the net borrowing requirement. Does he or does he not accept that it is because of the size of our borrowing requirement that—I am going to use the word "lunatic" again—we have lunatic interest rates at 17 per cent. and above? It is impossible to live a civilised existence in any economy with interest rates of 17 per cent. Does the right hon. Gentleman think that there is no connection between the Government wanting to borrow £9 billion or £10 billion and the level at which interest rates have to be held?
Again, does the right hon. Gentleman, after all that has been said and done by him and by his colleagues in office, deny that the size of that borrowing requirement is crucial to the existence, persistence and level of inflation? He does not. He cannot possibly deny it. He is hopelessly estopped by the words and actions of his party and colleagues.
So I ask him this at the end. Does not he consider that inflation is the most grave of all our social evils and that it lies at the root of the very industrial disturbances and the divisive misapprehensions from which the classes and parties in this country suffer?
I choose to end with that appeal to the Opposition, because this business of conquering inflation is a great matter, and a great matter such as this cannot be achieved without a broad common understanding and common will in the nation. Whatever differences and disputes there must be between the parties, there must be a common will to confront this evil and root it out. The Opposition cannot escape from responsibility for leadership in the manner in which they confront this most real of all the dangers and difficulties that lie before our country.
6.20 pm
Sir William Clark: It is a pleasure to speak after the right hon. Member for Down, South (Mr. Powell). I am sure that all Government supporters and many Members of the Opposition agree that after 10 months in office it is premature to have a censure debate. The Leader of the Opposition really had a nerve to criticize Government policies. As the ex-Chancellor of the Exchequer will recollect, in the Labour Government's four or five years in office, their policies, which they pursued with varying degrees of enthusiasm at different times, doubled prices, unemployment, taxes, Government spending and the national debt. That is not a good record for any Government. It is not a basis on which to criticise policies that have not had the opportunity to work through the system.
When the Government came to office, output was down by 4 per cent. and imports were being sucked in and were rising at an alarming rate of 13½ per cent. Therefore, it is slightly hypocritical to criticise the Government's policies.
I am delighted that the right hon. Member for Down, South paid so much attention to the public sector borrowing requirement. People do not understand what "PSBR" means. In modern jargon everything seems to get an initial. We glibly talk about the PSBR. The ordinary voter does not understand one bit of it. It would be better if the Government put this over in simple terms. If each of us realised that for every hour of every day we as a country spent over £1 million more than we earned, it would bring the matter down to an understandable level. The PSBR is far too high. I am sure that that is at the root of our economic ailment.
The Government have not allowed an increase in the PSBR. I am looking forward, as no doubt are many of my right hon. and hon. Friends, to the public expenditure White Paper, which we expect about Budget time, to see where we are making absolute cuts.
I do not agree with the right hon. Member for Down, South, who said that we should increase taxation to squeeze the £8 million or £9 million PSBR. I am not absolutely certain that it would be practical to use Government reserves to reduce it. However, that is by the way.

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My main point is that I do not think that we should try to reverse the trend that we started of cutting income tax.
The public expenditure system in government must be considered. I feel sorry for the Chancellor and his team at Cabinet meetings. Those Ministers are trying to control the expenditure of taxpayers' money. They sit round the table with spending Ministers. No matter how good they are, spending Ministers are fighting their own corners. They are trying to spend more. It would not be a bad idea if in each large spending Department one junior Minister were wholly responsible for the financial policy of the Ministry. I ally that idea with the practice in commerce. Where a group company has various subsidiaries, there is a financial director in each subsidiary who reports to head office. In this case each Minister should report to the Chancellor of the Exchequer. That idea is worth considering.
We must consider what we did in the first Budget. Taxation was cut by £4,500 million in a full year. Could we once and for all set out of our minds the idea that the whole of that sum went to the rich? Nothing could be further from the truth. On the top rates of income tax, the amount of tax that was relieved totalled £862 million. The amount of tax relieved on the lower echelons of the tax systems was £3,638 million. Roughly, there was a 19 per cent. relief at the top echelon. That was in our manifesto. Let us make no mistake about that. On page 13 the manifesto says, about cuts in income tax, that:
"It is especially important to cut the absurdly high marginal rates of tax."
It goes on:
"The top rate of income tax should be cut to the European average."
I do not think that anything could be clearer than that. We said that in the manifesto. I cannot think why people were surprised when we did what we said.
Many other things were said in the manifesto. I am irritated when people say that the Conservatives did not tell the public this or that. If we had time to go through the manifesto we should see that even on page 8 we spoke about the borrowing requirement. We said that we
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would cut the PSBR. In the manifesto we gave a warning that prices would go up and that unemployment would temporarily rise. The Opposition cannot charge the Government with having hoodwinked the public. It was in the manifesto. I do not know how many Members of the Opposition have read the manifesto. [Interruption.] I assure those right hon. and hon. Gentlemen who are laughing at it that it is not a funny book. It is serious. It put before the country what we wanted to do when we won the election.
Mr. Heffer rose—
Sir W. Clark: I shall give way in a moment.
On another page of the manifesto we talked about social security. The Opposition and many Government supporters would agree that we must do something about that. I am not referring to the retirement pension. That is already linked to earnings or prices, whichever are lower.
We are building up two nations. First, there is the person who works. He may, depending on where he works, receive an increase in his salary of 8 per cent. or 10 per cent. If he is not working, and receives short-term social benefit, he automatically receives a 17½ per cent. rise, or whatever it is. That must be wrong. We cannot go on telling the working population that they must accept the market forces that entitle them only to 8 per cent. while at the same time we are protecting the people who are receiving benefits. Successive Governments, for whatever reason, have made unemployment far too attractive. We must make employment attractive.
We said in our manifesto what we would do about picketing, and so on, and industrial legislation is going through the House now. The previous Government increased the immunity of trade unions. Where there is a closed shop or a semi-closed shop the amount of power exercised over the workers on the shop floor by the leaders of the trade unions is so dictatorial that the workpeople are afraid to say anything to their leaders. There is too much victimisation within the trade union movement.
Some of us would like the provisions for secret ballots to be made stronger. Only yesterday the TUC turned down the

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secret postal ballot proposals. If the ballot is a permissive right, we must ask oureslves to whom we are offering it. We are offering it to the trade union leadership, and if those leaders want it they will have it. The man on the shop floor has no say in it. We must follow company law and provide that if a certain percentage of the workers want a ballot a ballot shall be mandatory on the trade union leadership. I am not union bashing; I am making a reasonable proposition. Under company law if a certain percentage of shareholders feel that the directors of a company are not satisfactorily carrying out the business of the company they have a right to demand a special meeting. Why cannot a similar right be given to workers in the trade union movement?
I am sure that the Leader of the Opposition, with his great experience, will half agree with me when I say that there is a great deal of apathy among the workers and that that is why there is not true democracy in the trade union movement.
We have been criticised about our policies for the nationalised industries. Our manifesto clearly lays down that nationalised industries must be commercially viable and subject to financial discipline. Nationalised industries are an important part of our industrial and economic structure, and we must run them as a commercial proposition. If we want to run part of the nationalised industries as a social service, that part must be taken away and funded differently. A nationalised industry should make a profit on the taxpayers' money that it put into it. Even with the price increase, domestic gas will give a return of about 9 per cent. or 9½ per cent. on capital employed. The taxpayer has provided that capital, and it is not a commercial proposition for the taxpayer, through the Government, to borrow money at 15 per cent., put it into the gas industry and get a return of only 92 per cent. We must get away from the feeling that the nationalised industries are part of the Welfare State. They are nothing to do with the Welfare State and they should be commercially viable.
Mr. Michael English: Perhaps the hon. Gentleman will agree, on reflection, that he chose a bad example. There is no consistency in the form of accounting employed by
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nationalised industries, because the Treasury has not yet imposed any consistency. The British Gas Corporation chooses a form of accounting that allows it to conceal the extent of the profit it made even before the recent increase.
Sir W. Clark: I do not agree with that. I have been into this matter and I can say that on historic cost accounting there will be a 9½ per cent. return with the increased price when it has gone through the pipeline. A 9½ per cent. return on capital that is borrowed at 15 per cent. is not commercially acceptable. Nationalised industries have either to be commercially viable or part of the welfare services. We cannot have it both ways.
The Leader of the Opposition accused us of not telling the voter what we would do. It is all in the manifesto—even the switch from direct to indirect taxation. I do not know what the censure motion is all about. We said that we would do certain things and we have started doing them. It is as easy as that. We have promised to do certain things; we have delivered some and we will deliver the rest. The Opposition are fighting on the platform on which they fought the general election last year. They were heavily defeated then and I hope that they will be defeated tonight.
I agree with the right hon. Member for Down, South that we must eradicate the disease of inflation. There is no easy way to do that. A whole package of measures is necessary to kill inflation. We have been in office for nine or 10 months, and the policies that we have adopted will take some time to work out.
We have tried incomes policy, and we have tried spending ourselves out of the recession, but those policies did not work. This policy at least has a chance of working. I am convinced that it will work. We want to kill inflation and create more work. In the past we have been spending wealth before it has been created.
6.38 pm
Mr. Douglas Jay: When the hon. Member for Croydon, South (Sir W. Clark) said that the Conservatives told us during the election what they would do and then did it he was, I suppose, thinking of the increase in VAT from 8 per cent. to 15 per cent.

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I welcome the fact that we are having a comparatively quiet interlude in the debate, in which we may perhaps forsake some of the party cries and continue the serious economic argument.
My case against the Government is that they are pursuing unsound economic policies. When I say "the Government" I refer only to that half of the Cabinet known in Downing Street as the "hawks" as opposed to the "wets". I compliment the hon. Member for Croydon, South by including him with the hawks, whom I now propose to criticise.
As the Prime Minister told us earlier today that she had an open mind on these subjects I shall start by analysing the economic errors that I think are at the root of the Government's policy. I add, to my regret, that some of them also exist in the mind of the right hon. Member for Down, South (Mr. Powell).
The first fallacy is the Government's apparent belief that we are suffering from a demand inflation. We are not; we are manifestly suffering from a cost inflation. A demand inflation causes high profits, rising production and rising employment, as well as rising prices. A cost inflation produces low profits, rising unemployment, closures and bankruptcies. Everyone knows that it is from the latter that we are suffering at the present time. Every business man knows that in 1980 his prices are being pushed up by costs and, mainly, by pay claims, and not by a pressure of demand.
Therefore, a large part of what is becoming parrot talk about the money supply and the public sector borrowing requirement is irrelevant to the present realities of the economic situation. Of course, some monetary restraint is necessary; there is no dispute about that. The question is whether it is the only remedy for our present position.
The second fallacy from which the Government and Treasury Ministers suffer is that even if it were a demand inflation with which we are faced at the present time, money demand is not immediately determined by the stock of money—the so-called money supply; it is determined by the flow of money incomes and money spending, which are in turn influenced by a number of other factors as well as by the stock of money.
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We hear a good deal of talk about A-level economics, but our present Treasury Ministers seem all the time to fall into a major confusion between the stock and the flow of money in the economy.
Thirdly, even if the volume of money were the sole cause, in recent years the increase in that volume—here I cone to the argument of the right hon. Member for Down, South—has been caused, mainly, not by public borrowing at all but by the persistent pressure of the clearing banks, in search of profit, to extend their private advances. I gave the figures that prove that beyond question—particularly in the period of the Barber boom, from 1971 to 1973—in the debate on 28 November 1979. Therefore I shall not repeat them here, but I recommend them to the right hon. Member for Down, South.
At a time, however, when the high cost of Government borrowing—which I agree is excessive—is all supposed to be due to market forces, it is just worth reminding the House in passing that during the war and in the immediate postwar years the clearing banks were required to lend a given sum to the Government by way of Treasury deposit receipts, at a rate of interest that, in the years from 1940 to 1950, never exceeded 2 per cent. And they were given a ceiling beyond which their private advances were not allowed to rise.
I am not saying that that is the only way of controlling the monetary base—there are many other ways of doing it—but at a time when interest rates stand at 17 per cent. and when the National Westminster Bank reports a profit of £440 million in one year for one bank, it is worth looking back at the system that was enforced in the immediate post-war years instead of talking about market forces as though they were something that we can in no way control. It is perfectly practicable, in fact, to carry out the policy that we carried out then. The powers exist in the Bank of England Act 1946.
The next and most simple-minded fallacy of all that is muddling the Government's mind is that which is particularly beloved by the Prime Minister. She repeats over and over again that we all have to live within our means, but she forgets that the Government's economic policy is largely itself determining our

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means and indeed reducing them at the present time.
For example, the Government's deflationary and interest rate policies first cut down the demand for steel; and then we are told that as the demand is not there for the moment we must destroy steel-producing capacity, with lasting damage to the country. Indeed, the most serious criticism that I would make of the Prime Minister in this respect is that she is weakening the future defence capacity of this coutry by the damage that is being done to the steel and ship-building industries. I hope that we shall hear something about that before very long from the Government Front Bench.
Next, the Government—indeed, all Conservative speakers—seem to have entirely forgotten that deflation is a cumulative process. Each time the Secretary of State for Industry closes another factory—which he does almost once a week—and hundreds of people are thrown out of work, income tax revenue is reduced and spending on unemployment benefit increases. The PSBR goes up again as a result, and the Chancellor of the Exchequer then says that he must have another round of cuts, and so we have another round of deflation.
That is what is happening now. We are told that the Treasury expects a 2 per cent. or 2½ per cent. reduction in real gross domestic product in the coming year. But after all these efforts—I understand the sorrow of the right hon. Member for Down, South—the PSBR is still to stay at £8½ billion. That is because a monetary deflation is a cumulative process. That is also why the Financial Secretary to the Treasury has been so desperately wriggling with his estimates for this year that for the first time ever he apparently cannot publish a public expenditure White Paper until Budget day. On this issue, I wish Ministers would remember that one man's spending is another man's income in the economy.
Have Ministers also forgotten that the cumulative deflation in the years between 1929 and 1933 went on and on until all the banks were closed in March 1933, when the Roosevelt Government came to power and the State had to come to the rescue of the economy? It is worth while remembering that that can also happen.
Ministers also seem to have forgotten the simple truth that, of course, price
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inflation—Conservative Members talk about inflation without specifying what they mean—can be caused not merely by rising money demand but by falling physical output. By cutting down industrial output, as they are now doing, Ministers are helping to stoke up price inflation from the supply side. We hear a lot about productivity, and I fully agree that that is extremely important, but falling production means lower productivity as well as higher prices.
The net effect of the Government's economic policy so far is that they are simultaneously cutting down demand and allowing costs—in particular, pay rates—to be inflated without any restraint. That must mean—I do not think that Govern-members can deny it—depressing the whole economy, which the Government then call a "recession", as though it were some entirely natural process and not what it really is—an imbalance between demand and cost which has been forced upon the economy largely by Government policies.
So long as those policies and that process continue we shall have cumulative deflation with employment, production and Government revenues tending to fall, but wage costs and prices continuing to rise. And if Government Ministers think that present monetary policies themselves will prevent pay rates rising excessively, they may have to wait five or 10 years.
The basic fact about the contemporary economy is this: output and employment cannot be raised until demand is raised; and demand cannot be raised until there is some control over costs and pay. Whether we like it or not, that means that there must be some sort of incomes policy. The Government have a sort of incomes policy, but unfortunately it is one that will not work. We must of course have an incomes policy as an addition to other restraints. With a workable incomes policy we could return to full employment reasonably soon. We will certainly not get full employment without an effective incomes policy within a foreseeable period.
If any of my right hon. and hon. Friends think that we can indulge in a reflation of demand without an incomes policy the answer is that that would lead to accelerating price inflation. That is

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the reality. I realise that incomes policies are troublesome and difficult, but it is not true to say that they are unworkable.
I will give two simple examples. In the past two years, Norway, by a firm incomes policy, has reduced the rate of price inflation to 4 per cent. a year in 1980. And unemployment in Norway is under 2 per cent. There is no basic reason why we should not be able to achieve the same. Secondly, between 1975 and 1978 in this country the then Government performed the remarkably difficult operation—and it was due to an incomes policy and not the IMF—of reducing the rate of price inflation from over 20 per cent. to 8 per cent. or 9 per cent. So it is no good anyone saying that it cannot be done.
To achieve the recovery we all want to see, this country needs three basic economic policies. First, we need to import our food and materials, without any restriction, at the lowest world prices. Secondly, we need to impose on imported manufactured consumer goods, from wherever they come, at least our present GATT tariffs. Thirdly, we need to introduce an effective incomes policy. I fully agree that the first two would mean breaking away from the present shackles fastened on us by the EEC. The third represents a return to a voluntary incomes policy. I am in favour of all three.
6.54 pm
Mr. Donald Stewart: I do not agree with the view of the right hon. Member for Battersea, North (Mr. Jay) about an incomes policy. It has been my experience that any freeze of wages is restricted to the people on the shop floor. At management and directorship level salaries can be upped during a wage freeze by creating new titles. I also take issue with the right hon. Member for Down, South (Mr. Powell)—not, I hasten to add, on the main theme of his argument but in relation to his belief that it is possibly premature to have a censure motion on this Government.
I am prepared to accept that the Government's legacy on taking office was a barren sheep that might have left a lot to be desired. There were certain commitments, and I think that the right hon. Gentleman the Leader of the Opposition was frank about them in his opening
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speech. However, the Government have been in office long enough to know that no Government since the war have had less right to a vote of confidence.
The lines that the Government intended to follow were clear from the start. They set out like inverted Robin Hoods to take from the poor to give to the rich. In the Budget the Government looked after their rich friends. Having taken them on board the ship they pulled up the ladder on the great mass of the population.
Despite the election campaign denial, VAT was increased to 15 per cent. That was serious. It still has not percolated right through the economy. When it does people will discover that the Government have completely betrayed their election pledge.
On the ground of making economies the Government have attacked school meals and transport, but there was no question of making savings when they rifled the public till to assist fee-paying schools. The hopes of young people wishing to buy a home have been dashed by interest rates that are quite beyond them, but the banks are now shovelling in loot without increasing production in any way. The Government have laid it on for the banks to get their snouts into the trough. This has all been done in the name of curbing inflation, which is escalating. The tax incentives have produced nothing, though they have increased the balance in the bank books of the wealthy.
Throughout the country rates are due to rise—in most cases by about 33 per cent. The price of food is allowed to soar. There is some merit in saying that the previous Administration's Price Commission was a toothless animal, but the answer was to give it real teeth and not to abolish it. The Government might have received more public co-operation had they done that.
In short, the philosophy of this Government seems to be that the weak should go to the wall. It is not surprising that some Government Members are alarmed at this trend. The naivety of the Government is as staggering as their heartlessness. Their monetarist policy is put forward in the belief that there are simple solutions to complicated problems. The Prime Minister and others have mentioned A-level economics. One

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would be reassured if one were certain that the Government were working at that level.
The Government's programme for nuclear power is allowed to proceed before the problems of safety and waste disposal have been solved. The Prime Minister imagines that because she sat on top of a nuclear reactor at Dounreay and was able to walk away from it all problems of safety have been solved.
The Government are operating on the premise of a pure balance sheet; if something pays it is in, if it does not, it is out. Everything has a price ticket.
The country is in a parlous state, so we are told. I remember when we were debating our entry into the Common Market we were told that we were being thrown a marvellous lifeline that would change everything yet the EEC question drags on. I must tell the Government that there is no prospect whatever—I tell the Minister this now, and events will prove me right—that the common agricultural policy and the fisheries policy will be changed in any way to give a semblance of a fair deal to the United Kingdom.
The Prime Minister totally mishandled the question of the United Kingdom's contribution to the Community budget. Noisy demands and threats were made, but they were totally nullified by the Prime Minister's assurance to the EEC that we had no intention of ever withdrawing. The only card of any value was thoughtlessly discarded. In spite of the threat to fisheries, the Government still refuse to give the fishing industry the help that it needs to get it through a difficult and worrying period.
I am sorry that the right hon. Member for Down, South has left the Chamber. He said that Ulster should not escape the difficulties of the rest of the United Kingdom. I do not express that view about Scotland. Scotland should escape, because the wealth on which the Government are depending is that gained from the Scottish oilfields.
The Tory manifesto for Scotland in 1979 promised a more prosperous country. It added:
"We need to concentrate more on the creation of conditions in which new, more modern, more secure better paid jobs come into existence."
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What is the reality? A generation of Scots has been denied the right to secure employment and economic stability. A few years ago, when works were being closed down, the workers sat in to keep them open. There is now a loss of confidence. That is spreading with epidemic force. Workers now look to redundancy payments. The Government have a great responsibility in that direction.
The Irish Development Agency is recruiting Scottish time-served men to work in the Republic. Redundant craftsmen are preferring to emigrate to get away from Scotland and from the United Kingdom altogether. They do not wish to face the risks in another locality in a few years' time. The loss of these skills is bloodletting of enormous consequence. Even such aids as the employment transfer scheme—so useful in a constituency such as mine, with just on 15 per cent. unemployment and few opportunities—and the STEP programme have been abolished or whittled away. The Government deserve censure on these grounds.
The background that I have described is all totally unnecessary from Scotland's point of view. The proven oil and gas resources in Scottish waters are of enormous value. In 1980 30 per cent. of public expenditure in Scotland will be met by oil taxation. That revenue is not being used to alleviate the collapsing economy and bleak future.
A majority in Scotland voted in favour of the Scotland Act. The obstacles and sabotage placed in its way in the House are irrelevant. I know that the Government have advanced derisory ideas about improving the Scottish Grand Committee and Select Committees. Such improvements should take place in any event. They are no substitute for any form of Scottish Government.
In the referendum Lord Home advised Conservative voters to vote against the Scotland Act. He said that he would provide a better measure. He has done nothing—almost a year has passed—to provide it. The Scottish people are learning the hard way.
I have heard Conservative Members say that the Labour Party, if in Government, would lead Britain to a State rather like one of the East European States. Nothing will bring that on

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quicker, if it is coming, than the way in which the Government are now acting.
7.5 pm
Mr. Richard Page: I rise for the first time to address the House as the Member for Hertfordshire, South-West. I am well aware that one cannot make two maiden speeches. However, I wish to follow the format of a maiden speech. I shall understand if Opposition Members decide not to give me a free ride. I hope that they will equally understand if I decide not to follow the convention of being non-controversial.
I have the privilege to follow two Members of Parliament who served the constituency since 1950. Sir Gilbert Longden served from 1950 until 1974 and he established rapidly a reputation for accuracy of phrase and expression. In this day of the cliche and sloppy grammar that is indeed a reputation to be emulated wherever possible. He in turn was followed in 1974 by Geoffrey Dodsworth, who sadly, in the latter part of 1979, had to step down for medical reasons.
I am glad to tell the House that Geoffrey Dodsworth is now considerably better. During the period in which he served the constituency he gained for himself a reputation for diligence on behalf of his constituents. Wherever I have gone I have found that constituents regard him with warmth and affection and if during the period in which I serve the constituency I gain that same warmth and affection, I shall consider myself to be very fortunate.
The constituency, before any ravages of the Boundary Commission descend upon it, is shaped as a rather ragged letter "C" around Watford. It is well-served by seven railway stations and underground stations but I must confess that at times the travel conditions are such that if we were dumb animals there would be several organisations campaigning on our behalf.
One can judge the essential character of the constituency by the names of its hostelries—not for South-West Herts the usual run-of-the-mill titles that seem to be named after various severed parts of the anatomy of departed monarchs. For my constituency there are slightly more evocative names. I shall mention two of them. One is called the Whip and
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Collar, that brings back memories of farming days. Another is called the Land of Plenty, which is a monument to the failed Chartist movement of a century ago.
The constituency is responsible for providing the birthplace of several famous men. It would be wrong to start enumerating them, but it has the unique claim of providing the only English Pope, Pope Adrian IV, who lived in the Abbots Langley area.
It is not for me to go on about the delights of my constituency, because I should hate to bring to Opposition Members any feelings of discontent and jealousy when they return to their constituencies. I shall turn to this rather inappropriate censure motion. The fact that it has been tabled indicates that the Opposition still have no idea of what goes to make up the economic facts of life in our economy. Surely to goodness Opposition Members must know that the economic position, with the exception of the VAT change, is the result of the measures taken in 1978 by the then Chancellor of the Exchequer, the right hon. Member for Leeds, East (Mr. Healey).
I remember the intervention of the IMF in 1976–77 because I entered the House at the same time. The then Labour Government were made to slash public expenditure with the IMF's economic package. Surprise, surprise, in 18 months' time inflation fell into single figures. In turn, it is not surprising that inflation is now in double figures, which is the result of the direct reversal of that economic package by the right hon. Member for Leeds, East in 1978.
The Opposition's condemnation in the motion is a condemnation of their policies some 18 months ago. However, in this world nothing is ever completely new. It has always occurred in some form or other, possibly centuries before, I am irresistably drawn to the parallels of the problems between 1974 and today and to the conditions that existed at the time of the Emperor Diocletian in the third century in Rome. He was faced with demands for increased public expenditure but he did not want to increase taxation because the burden was heavy enough on the people of Rome. He hit upon the bright and brilliant idea of

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minting more coinage to pay for any increased expenditure. I suppose that it was the Roman equivalent of the PSBR of today.
At first the idea seemed marvellous. The coinage washed into the system and the Emperor managed to get a little of his public expenditure paid for. However, as all the extra coinage moved into circulation prices began to rise and inflation appeared.
However, never let it be said that a Labour Chancellor of the Exchequer can be outdone by a mere Roman emperor who had life and death at the snap of his fingers. Whilst Diocletian pushed up the bronze coinage from eight old coins to 15 new coins, the Labour Government managed in their five years of office, as well I know, to double not only individual tax paid but prices and unemployment.
Of course, Diocletian tried other measures as well. He tried taxing land—the equivalent of the Community Land Act 1975. He tried a prices and incomes policy and one thousand other edicts, all punishable by death—I suppose the equivalent of squeezing the rich till their pips squeak.
Despite those very strenuous Socialist measures, there were uprisings, there were riots, and prices rose. After all those problems. Diocletian was lucky enough to be able to abdicate and retire to his farm south of Rome. Probably there are more parallels to be drawn here than I thought originally.
The censure motion provides us with an opportunity to understand that Britain is in almost the same position as that which existed in Rome some 16 centuries ago. It required Constantine the Great—I do not mind giving Opposition Members a short history lesson—to restore common sense by introducing currency reform as well as embracing Christianity. Our Conservative Government are, by strenuous efforts, taking the same necessary steps to ensure that Britain lives within its means.
Of course it will be a painful and hard process, but it will be in no way as difficult or as painful as it would be if we allowed inflation and public expenditure to continue unchecked.
Let us not forget that during the period that the Opposition were in government, they not only doubled everything that I
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have mentioned but they had an absolutely flat industrial production rate. That was at a time when all our main competitors had increases in production of between 4 per cent. and 13 per cent. That is why our competitors are doing so much better than we are at present.
I do not share the pessimism of some of the experts on the speed of Britain's recovery. When the people and the businesses of Britain realise that we have a strong leadership and that inflation is being brought under control—and it will start to drop in June—the upturn will be dramatic indeed.
Any revival does not need good housekeeping only and I prefer the word "housekeeping" to "monetarism", because housekeeping is what we are engaging in, namely, living within our means. It requires increased industrial activity, especially the understanding that industry cannot receive vast sums for modernisation year after year and increasing wage packets without giving a balancing factor of flexibility of working practices and reduced unit production costs.
I wish to touch on the present steel troubles. I hope that the ISTC executive, especially Mr. Bill Sirs, will cogitate on the fact that one cannot have the penny and the bun. One cannot have thousands of millions of pounds for investment and one of the lowest productivity rates in the world, and also expect large wage increases.
I question the whole necessity of the steel strike. From the telephone calls and letters that I have received I believe that if a ballot had been held before the strike began the answer would have been "No" to a strike. If a ballot were held now, the answer would be "Please let us return to work".
I believe that it is to the individual and the smaller businesses that we shall have to look for an increase in our gross national product, and to restore the sort of social standards and employment for which we wish. Those social standards will come from earned, and not borrowed, money.
The first step towards achieving that aim is the switch from direct to indirect taxation. I hope that over the lifetime of this Parliament—although perhaps not

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in the next Budget—that will be one of several steps in the right direction.
The inflation rate will begin to drop after June. All the major clearing banks are telling us that it will begin to drift downwards at that time. When that happens I shall look to the Government to provide further encouragement to our small business sector, which already provides about 25 per cent. of our gross national product.
We must bear in mind that the countries which we hold up as an example of productivity—countries to emulate and follow—have vastly increased their smaller business sector. The Government must produce encouraging packages—for example, to allow the smaller business man to obtain a self-financing loan to start up a business without a bank demanding his home as a guarantee; to allow companies to buy a percentage of their own shares; to allow individuals to invest in the equity of smaller businesses; to allow that sector of our economy to expand and provide the wealth and the jobs that we need.
In conclusion, I must say that I am grateful to you, Mr. Deputy Speaker, for giving me the opportunity to speak in the debate. This censure motion is itself a condemnation of the Labour Party's policies between 1974 and 1979, and as such will be resoundingly defeated in the Lobby tonight.
7.17 pm
Mr. Tony Benn: I welcome the hon. Member for Hertfordshire, South-West (Mr. Page) back to the House. Having heard his speech I can understand why Workington found it wiser to return to another representation. We shall listen to everything that he says with great interest—the greater as we get further from his election speeches.
One of the purposes of the debate must necessarily be to clarify the choices and open up some of the issues, so that people can see what are the alternatives. When I listened to some of the speeches, especially that of the right hon. Member for Down, South (Mr. Powell), on monetarism, and I saw heads nodding or shaking, I received the impression that much of the debate was about some economic philosophy. However, the reality of the life of people in Britain today has
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nothing whatever to do with the finer points of monetary flow, as I intend to show.
When Conservative Members were trying to follow the right hon. Member for Down, South, I noticed that they were puzzled as he went into the details. But, when he said "cut public expenditure" they nodded. That is because the Government want to cut public expenditure. Let us have rather less of the discussion at a high, sophisticated, mathematical, economic level. Those listening to the debate want to know what we have to say about the reality of their position.
What is the reality of the position? First, it is not only in Britain that the capitalist world is in slump. When listening to some of the speakers one would have thought that we were the only country with unemployment. There are 6 million unemployed in the EEC. The United States—which has not had by any manner of means a Socialist Government—is facing a decline of activity. The truth is that the whole Western world is slipping into a decline.
Britain has 1½ million unemployed, rising to about 2½ million. If there are one or two dependants in every household where there is an unemployed person, that means that there will be 4 to 5 million directly affected because the breadwinner in the home in which they live is denied an income. They wish to know what we, as their representatives, have to say about that in this debate.
We know that public expenditure is, in part, being cut back because money that should be available for education in the era of the micro-chip, or should be available for health at a time when modern technology has improved health possibilities, is being directed to pay those who are able-bodied to do nothing. That is one reason why public expenditure is under pressure.
I do not know the latest figures, but I should not be surprised if almost the whole of the public sector borrowing requirement was used to keep the unemployed unemployed. That is a nonsense. One does not need an economics degree to realise that. We know that unemployment is socially divisive. My hon. Friend the Member for Liverpool, Walton (Mr. Heifer) will no doubt speak later in the debate, and correct me if I am wrong, but I understand that in some parts of

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Merseyside there is almost 50 per cent. unemployment among school leavers. In Corby, where there is 30 per cent. male unemployment due to the closure of the steelworks, there are disaster areas with social consequences that Dr. Milton Friedman would not understand if they were shown to him under a magnifying glass.
When people are out of work they become bitter. They do not watch the money supply figures to see whether they will find a job later. They become bitter and suspicious. It divides black workers from white workers. It could have profound effects upon race relations. The Government are tipping a wink in that direction with their new immigration rules. It has an effect in dividing men from women. Tomorrow we shall again discuss the "Corrie Bill". Do not let anyone be under any illusion. The biggest attack upon the rights of women that we have witnessed in the last two or three years, as the slump has come on, is the fact that women have been driven back home to make room for jobs for men. Women's living standards and family incomes are directly affected by the policy which the Conservative Party holds up as the answer to our problems.
In the end, it is a question of law and order. We all know that when there are high levels of unemployment, problems which should be settled by economic, industrial and social policy, present themselves to society as problems of law and order, such as vandalism. Then the special patrol group or detention centres are brought out as a remedy to problems for which the true responsibility lies with this House and with parties from both sides who have occupied positions of responsibility.
While all that is happening, imports are pouring into the country. Where do they come from and how do they get here? They are financed by oil. The strong pound makes the import cheaper and exports more difficult. Oil is being used to mask from us a balance of payments deficit in terms of manufacturing so massive that if it were revealed and understood we would again crush the economy, just as we did during all the post-war stop-go periods which some of my right hon. Friends remember. Imports are also pouring in under the Common Market rules.
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What is sauce for the goose is sauce for the gander. Why do not Treasury Ministers warn that subsidised steel imports are coming in from Germany on a substantial scale? The German steel industry receives £3 billion a year through Government subsidies to the German mining industry. That was when I last checked the figure. Much German steel comes into the country with wheels on it, and destroys our motor car industry. That destroys our mining industry, which is the cheapest mining industry in Europe.
What people fear, and what I fear, is that the cycle of deindustrialisation will go on so rapidly that as one sacks the shipbuilder it will have an impact on steel, and as one sacks the Corby worker he will not buy the Leyland car—so there is less demand for the Corby worker—as a result of which coking coal pits that were specially built with public money in Durham and South Wales close because there is no demand for steel. We shall then have mass unemployment, just as we had before the war. People will ask "Why was it done?".
To be candid, I do not believe for a moment that the Cabinet is mesmerised by monetarism. What it believes is that in order to defend the interests which paid for it to get into power—[Interruption.] As so many Conservative Members are now attacking monetarism, is it not nice if I can acquit the Government of true monetarism? They want to raise profit margins. That is the real object of Government policy—[Interruption.] The Conservative Party had better listen to what I am saying, because it is an analysis which may help it solve its own problems.
The Government want to cut wages, which is why they offered 2 per cent. to the steel worker when inflation was 20 per cent.
Mr. Robert Atkins: We did not offer it, the British Steel Corporation did.
Mr. Benn: The hon. Gentleman is one of the new wags of the House. The Government want to cut wages and public expenditure and to shift the burden of taxation on to the poorest in order to restore profit margins. If the Financial Secretary to the Treasury were honest—indeed, I think that he is—he would admit that the pressure on profit margins is one of the reasons why our investment has been too low. The main obstacle to the

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shift of money back into profits is the trade union movement. Therefore, the Government's second objective is not to follow Friedman in detail, but, by unemployment, to cut back on the bargaining power of the unions, by legislation to cut back on union capacity effectively to defend the interests of members and by divisive propaganda to divide the rank and file from the trade union leadership.
I have wanted to say this for some time, and perhaps I can put it on the record. Derek Robinson said in Birmingham exactly what Lord Ryder was saying. It was identical. If Lord Ryder was a Red wrecker whose whole purpose was to undermine Michael Edwardes, why was his name not linked with that of Derek Robinson? What the Leyland shop stewards were doing—I wonder how many people have ever read their policy statement—was to point to the deliberate cutting back of Leyland production in order to get short-term profitability, whereas Lord Ryder said "Here is a capacity which could be re-equipped at a higher level of production. If you wait a bit longer you will have a bigger domestic industry and then you will have fewer imports and more exports, as a result of which you will be stronger."
I cite that example because I have never met Mr. Robinson, and anyway these things are not personal. However, the propaganda that was designed to divide the shop floor from the rank and file motor car workers involved misleading people about what the conveners were saying. What they were saying, and they were absolutely right, is that Michael Edwardes is cutting back Leyland production below its full capacity. My belief is—I hope to God that I am wrong—that within a year volume production at Leyland could well be at an end, because that has been the strategy of many people in the last year or two. Those workers who sacrificed the 13 plants that they agreed to close, followed by their convener, will find that they will lose their work. The propaganda, and the effect of it on the steel industry—
Mr. Richard Page rose—
Mr. Benn: Perhaps the hon. Gentleman will allow me to continue. I want to be fairly brief because many hon. Members also want to speak.
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This is the first Government in the lifetime of many people—although those who remember the 1930s will remember a parallel—who do not believe in full employment even as an objective, and who do not believe in the Welfare State—[Interruption.] They believe in a two-tier Welfare State, where they run down the services for the many and help to finance special services for the others. In fairness, Conservative Members should not shout because they know that is what they want. The Government do not believe in social justice, if social justice involves narrowing the gap between rich and poor.
In the whole of our history, I do not believe that we have ever had a Government—certainly not a Conservative Government, who normally have a Union Jack on their waistcoat—who have put the interests of the United Kingdom below the interests imposed by international market forces. If there is uneasiness in the Conservative Party, it is because it knows that the destruction of British industry, upon which our future depends, in the interests of allowing internatioal market forces to work their way through, is an act which in its own terms can only be called an economic treachery.
In the case of the EEC, the Government make loud noises about the right to a due balance between our payments. But when it comes to the crunch, the Iron Lady is not really fighting for this country because she cannot fight for the country without raising the question of our membership.
To those doubters in the Cabinet who are now supposed to have anxieties about whether this is the right course of action to follow, I must say that I do not believe that there is another course of action which the Government can follow. I believe that the bridges have been blown up behind them by what they have said and done since last summer. I believe that the greatest achievement of the Chief Secretary and his colleagues has been that they have destroyed confidence in the consensus which they have replaced with their policy. There are those in the Cabinet, such as the Lord Privy Seal and the Secretary of State for Employment, who would like to creep back across the bridge. But there is no bridge. The Chief Secretary has destroyed it. Therefore, once the British people know what

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the Government's intentions are, they would not believe a U-turn even if a U-turn were offered.
As I said before the Chief Secretary entered the Chamber, the Government's policy is not one of monetarism. It is not that such an intelligent man and his colleagues worship that economic philosophy. We are witnessing the restoration of the old balance of wealth and power in our society. Tax changes and privatisation are not being undertaken in pursuit of what some Chicago professor has said. The Government want to get back to a society where their kind can dominate, as they did before.
I had an opportunity to listen to Friedman on the radio. When he was asked about the State he said:
"First of all the State is not interested in anybody. The State has no interest. The State is a figment of the imagination."
That is the philosophy lying behind Government policies. They want to demobilise the forces of the State—set up as a by-product of parliamentary democracy in order to defend the people from those who have economic power—so as to leave people defenceless in the face of economic power. That is a denial of the role of government in a democracy. It plants a seed, the harvest of which has yet to be reaped.
There is one other ingredient that takes me back to pre-war years. Those who recall those years will know that the last slump was cured by rearmament. The closure of Palmer's yard in Jarrow triggered off the great hunger march. "Queen Mary", the old Cunarder, lay rusting for five years on Clydeside. Anyone who visited those areas or who visited Ebbw Vale and engineering plants in Britain, will know that the pre-war slump was cured by rearmament. That brought capitalism back to full employment. Perhaps the Prime Minister's cold war speeches can be explained by an attempt to get back to full employment. Perhaps the House does not appreciate that rearmament is financed by public expenditure.
The private consumer does not go to his local aircraft dealer. He does not order a Spitfire or a Bren gun. The Government buy it all. Public expenditure brought full employment, and with
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it, a capacity to finance the Welfare State. The Government spent that money on weapons of war in the 1930s. Public expenditure funded the war, the post-war boom, and the Welfare State. Harold Macmillan is now a figure of hate in the Daily Mail and elsewhere. However, public expenditure allowed Harold Macmillan to say that we had never had it so good.
What are the alternatives? The Liberal leader hopes that when the Government fall, he, Roy Jenkins and one or two people who live at Colombeyles-Deux-Eglises and Sidcup will join together in a third party. I admire the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel). When I met him the other night in the Lobby, I warned him not to let Roy Jenkins wreck his party, as he had tried to wreck ours. However, the right hon. Gentleman's hopes are destined for utter failure. The names of those associated with the third party are the same as those associated with a federal Europe, a statutory pay policy and some type of corporate structure for society. That has been rejected. The right hon. Gentleman should enjoy himself with those cast-offs from the other parties. However, he should keep his purity as a Liberal.
When the Labour Party comes to power it will inherit a country as badly damaged by monetarism as it was by Hitler's militarism. When Hitler bombed our factories, we spent any amount of the taxpayers' money in order to keep them open. Britain needed factories in war and in peace. We shall find those factories closed by the Secretary of State for Industry. There will be not 2½ million soldiers and airmen to be demobilised, but 2½ million demoralised unemployed. There will be a demand for an alternative policy.
Full employment is the legitimate aspiration of our people. Technology permits us to meet all our needs by means of a 35-hour week. Any Government who attempt to deny responsibility for creating full employment—not all can easily succeed—do not merit the support of the British people. We should re-equip our industry by means of oil and other revenues. We must find ways of recycling the nation's savings back into industry. Perhaps private enterprise will not do that.

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We should not destroy the economy so that wages are so low that money is invested here, instead of in Taiwan. There must be investment by the public, with public accountability and public ownership. We must re-equip our basic industries as we did after the war. There should be an expansion of public investment, of public accountability and of public ownership. I hope that that expansion will not be left in the hands of the Finnistons, Marsh's and Robens' of this world. That is not the type of public ownership that we want.
We must plan our trade. Even The Guardian put its toe in the water on Tuesday. We cannot sit back and see our industries destroyed. I am not in favour of import controls if they merely feather the bed of inefficient industry. That was not in our manifesto of 1974. However, if public money is put in to reequip the Durham coalfield to produce No. 301 coking coal, one does not wish to find that the British Steel Corporation has undercut that investment with imports from Australia. If one wishes to reequip British Leyland one should not allow it to be destroyed. It produces £3 billion a year in production terms. It directly employs 153,000 people. A further 500,000 people are probably employed in component and other factories. It exports £1 billion worth of products a year. That should not be destroyed at a time of re-equipment. We must plan our trade.
It should not be thought that we do not have import controls. We do. We call it unemployment. When a man is out of work in Merseyside he cannot buy a Japanese television. He cannot buy as much American tobacco or as many French shoes as he would like. If we want our industry to grow, we must plan our trade. That would enable us to have a larger market at home. I was unable to persuade my colleagues to do this. However, along with the Government, they will have to come round to the idea of planning trade.
We should expand our public services. There is nothing more absurd than to have perhaps 500,000 people or more on hospital waiting lists. How many people are waiting for hospital treatment? How many people attend schools that are inadequate? How many people live in
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houses that are inadequate? However, there are unemployed building workers. Where is the money going? Some of it is going into speculation. I made inquiries in the House of Commons Library. If anyone had put £10,000 into gold on 19 January 1973, it would now be worth £120,000.
Mr. Robert Atkins: Good move.
Mr. Benn: The money that is used in speculation could be used to bring our people back into employment. That is common sense and it is Socialism.
Mention has been made of participation in industry based on the old Churchillian idea in 1930 of building up NEDO. Those who create the wealth in industry have an equal right with investors to decide how those firms should be run.
That is the fundamental difference between the open door policy and a little bit of participation, making company accounts a little more acceptable. People will, rightly, not accept today the destruction of their jobs.
They should not be destroyed simply because the owner of a company will benefit from selling a firm, or by rationalising it out of existence or selling the land at a profit to create a parking lot or a warehouse. I do not believe that anything other than a shift of power at the place of work will meet the problem that we call industrial relations.
We must restore the power to govern ourselves. There has been much talk about the Common Market from both sides of the House. The Prime Minister accidentally gave the kiss of life to the sleeping giant of English parliamentary democracy by demanding the right to have a fair balance. Looking back to 1975, we realise that it was a disaster to accept the terms. It was a disaster for the House of Commons to abandon its ancient right to pass its own laws, tax its people and change its own Government, laws and taxation. As it goes on, even the Chancellor when he draws up the Budget will have certain things preset by the Treaty of Rome and Council of Finance Ministers that he cannot change.
I do not say immediately, but at some stage the British people will recognise that there is nothing nationalistic in wanting to govern ourselves or to work with others as a fully self-governing State. We

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cannot accept a society in which we no longer have the power to govern ourselves.
Around that policy support will grow.
Mr. Nigel Forman: Will the right hon. Gentleman give way?
Mr. Benn: No, I shall not give way because I wish to allow other hon. Members to speak. I apologise for taking so long.
The whole philosophy of the Government is based on a political view of life that deliberately, conscientiously and, in fairness, publicly abdicates responsibility for the economy of this country. The tradition of Parliament is to allow our people to elect their representatives and to choose a Government to meet their aspirations and needs, and to do so democratically. This Government have been the first to discover that capitalism and democracy are incompatible. That is why the transfer of power to Brussels and to local government from the centre and the growth of law and order are dominant themes in this Government's philosophy. In the guise of extending freedom they are restricting it. In all sincerity I believe that the Government are playing with fire.
The Government much misread the mood and temper of the British people who, above all, believe in decent conduct, one with another. They should not believe that a single ballot at Longbridge or what happened in South Wales means that the country is being swept along on an enthusiastic wave of public opinion. They are not. The British people are thinking deeply about what is happening. When they realise what is being done to them, I believe that this Government will be thrown out in such a way as to sweep them in to the dustbins of history, and replace them with a Government more in line and in tune with the spirit of the people whom they represent.
Several Hon. Members rose—
Mr. Deputy Speaker (Mr. Bryant God-man Irvine): Order. There are 23 hon. Members who wish to speak, and I am sure that brevity will be widely appreciated.
7.43 p.m.
Mr. Julian Critchley: I shall comment only on one of the extra-
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ordinary range of assertions that the right hon. Member for Bristol, South-East (Mr. Benn) made—that the Government are about to secretly embark on a programme of rearmament to restore our economic situation. Would that they were about to embark on a whole progress of rearmament. If we accept, as I do, the nature of the Soviet threat, the anxiety is that, sooner or later, over a decade in which there will be little or no growth, we shall be obliged to reduce defence expenditure rather than incraese it. It is an extraordinary assertion for the right hon. Gentleman to make.
The object of a censure motion is to unite the Opposition. The effect of it is to unite the Goverment. I suggest that the unity on either side threatens to be short-lived.
I have yet another confession. In the somewhat inelegant but forceful language employed by our masters, I am a "wet". So are many of my best friends. I am also the author of that now notorious anonymous article in The Observer. I hoped to follow in the illustrious footsteps of the author of those three magisterial articles that appeared in The Times in the mid 1960s, signed "A Conservative". Alas, I was rumbled, and I hope to have learnt my lesson. But I stand by the theme of the article.
There is something about the style of the Government and the stridency of their policies that I dislike. What would be the effect of Government policies were they not to change? We need look no further than my right hon. Friend the Chief Secretary to the Treasury. I do not object to his view that we face three years of hard labour, but I do object to the relish with which he says it.
I suppose that I was responsible for the phrase "A-level economics". I have little or no economic expertise, but when I see the destruction wrought by those who profess to economic expertise I feel no sense of shame.
We are the only country in Europe that has a monetary policy without an incomes policy, either formal or informal. Our problem is how best to avoid a long recession at a time when there is no real modification of wage claims. Unemployment is not of itself the cure for inflation, probably because the wrong

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people are made unemployed. If unemployment reaches 2 million it will be a recipe for social disaster. We need a permanent economic machine or machinery to try to determine what incomes should be.
Finally, I wish to turn to the steel industry and the steel strike. I believe that the steel strike should never have been allowed to take place. It is asking far too much of the workers in the steel industry not only that they should have been initially asked to accept an increase of only 2 per cent. but that they should lose a large number of their work force and that factories should close. It was never possible for Bill Sirs to sell that deal to his essentially moderate union, which had never struck in the past 50 years.
The Secretary of State for Industry is a man of luminous intelligence and great charm, but he has not yet realised that politics is essentially an irrational activity.
What is the effect of the steel strike on the Conservative Party and the Government? It has inflamed relations within industry at a time when it was in the Government's interest and the national interest to play it long rather than short, to introduce the reforms that are necessary in the trade union structure, but always with the consent of the great bulk of trade unionists in the country.
It is the steel strike, yet unsolved, that has made the task of the Secretary Of State for Employment so much more difficult. And it was the Secretary of State for Employment who learnt last Monday evening, if he did not know it already, that life is one humiliation after another.
It would be humbug for me to pretend that I am an enthusiast for the economic policies of the Government. I shall vote for the Government tonight in the pious hope of a conversion, but I shall be first into the Lobby and first out.
7.50 pm
Mr. Eric S. Heifer: I am honoured to have been called to speak after the hon. Member for Aldershot (Mr. Critchley) because I had intended to quote from his article.
I welcomed his article in The Observer, and I think that it might be a good idea to quote a small part of it. He said:
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"It is a matter both of policy and personality. Mrs. Thatcher is didactic, tart and obstinate. Her economic policies are 'Thatcherite' rather than Conservative."
That is the point that I wish to make in relation to the argument. I do not entirely agree with everything that was said by my right hon. Friend the Member for Bristol, South East (Mr. Benn)—in this sense only. I agree with him 99.9 per cent. However, I want to make it clear that in my view there is a serious difference within the Conservative Party between the monetarists and the traditional Conservatives. I am not saying that the traditional Conservatives are better than the monetarists. It is a matter of degree. Both monetarists and traditional Conservatives are concerned with maintaining the balance of privilege, power and wealth in a small minority, at the expense of the mass of working people. It is important that we understand the basic arguments within the Conservative Party.
If the policies of the right hon. Member for Oswestry (Mr. Biffen) and the policies of his right hon. and hon. Friends continue, Britain will face abject poverty, mass unemployment, and the destruction of the Welfare State. The position will be far worse than that of the 1930s. Traditional Conservatives, in the sense that they accept the basic concepts of Sir Harold Macmillan, Lord Butler and even Disraeli, should acknowledge, before it is too late, that enough is enough and that it is time for the Government either to make a U-turn or to get rid of the present leadership, not simply in party interests but in the interests of the nation. We cannot tolerate this sort of situation for much longer, with this sort of Government in power.
The classic monetarist today is the right hon. Member for Down, South (Mr. Powell), who is absent from the Chamber.
Mr. Benn: He spoke a lot of rubbish.
Mr. Heffer: Yes, it was destructive rubbish. The right hon. Gentleman has now entered the Chamber. I intervened during his speech to ask him what would happen if there were a massive cutback in capital expenditure. I asked him what would happen to the construction workers not only in England, Wales and Scotland, but in Ulster. He rightly accepted that it was bad news. That means that

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it is bad news for ordinary working-class people, many of whom are already suffering. In the construction industry there is no hope for the workers. So many are unemployed—
Mr. Dykes: Can the hon. Gentleman give a figure?
Mr. Heffer: We do not have a figure. We never get figures from the monetarists. The Government do not have time to give figures. The right hon. Member for Oswestry is the only member of the Government who gives figures. He admitted in his White Paper that his policies would lead to a further increase of 300,000, at least, in unemployment. That is a sad prospect for Britain.
Mr. Dykes: I am sorry to interrupt the hon. Gentleman, but he is being a little unfair to the right hon. Member for Down, South (Mr. Powell). The right hon. Gentleman gave a figure of £2 billion for the whole of the United Kingdom. Is it not right that the people of Ulster should know their proportion of that £2 billion?
Mr. Heffer: The hon. Gentleman should put that question to the right hon. Member for Down, South at another time, and not in the middle of my speech. His intervention has taken time out of my speech, and it means that other hon. Members—
Mr. D. N. Campbell-Savours (Working-ton): The right hon. Member for Down, South has given a figure. He gave a figure in Carlisle five weeks ago. He said that £9,000 million was an acceptable figure. Perhaps my hon. Friend would care to comment on that.
Mr. Heffer: I do not intend to comment at length on what was said by the right hon. Member for Down, South. I had hoped to continue to develop my own arguments and to make some additional points.
Mr. J. Enoch Powell: I shall be brief in my intervention. I apologise to the hon. Member for Liverpool, Walton (Mr. Heller) for not being present to hear the first part of his speech. His remarks and his exchange with the hon. Member for Harrow, East (Mr. Dykes) provide an explanation of why Britain has suffered so severely, for so many years, from inflation.
Mr. Heffer: I hope that hon. Members will bear with me and that they will allow me to continue my own speech, in my own way. I have stimulated sufficient argument in relation the right hon. Gentleman's point.
I wish to make another point in relation to the attitude of the Government towards the trade union movement. I listened carefully to the right hon. Lady the Prime Minister this afternoon. It is not their proposals but the attitude of the Government that is at fault. It is their nastiness towards the trade union movement, which springs from the fact that the right hon. Lady the Prime Minister and most of her right hon. and hon. Friends have never understood the trade union movement, that is at fault. They have never understood its aims and objectives.
Mr. John Stokes (Halesowen and Stourbridge): That is all over and out of date now.
Mr. Heffer: It is not. It is not all over, and it cannot be all over so long as there are two sides in industry—one that is trying to make the maximum profit and the other that is trying to get decent wages and conditions. It can never be all over in our type of society. That is one of the reasons why we argue for the introduction of genuine industrial democracy within our industries—particularly within our public industries. We wanted the workers to be able to have a say in the running of the industries. If workers are allowed to make decisions, matters will be different. Workers will be involved in decision-making.
The right hon. Lady the Prime Minister refers constantly to militants. Her policies have transformed a union renowned for its moderation into one of the most militant unions in the country, being supported by sections of other workers. If they continue along the lines that they are now adopting they will transform the entire trade union movement. They boast that they have split the workers in South Wales and got the workers to vote to return to work, and so on, in BL. That is all very fine, but there are certain special conditions about that. The special conditions in South Wales apply because the miners' union in my opinion went slightly too quickly

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beyond the rest of the movement. However, that will not continue. Sooner or later the entire trade union movement will be involved in South Wales as well as in other parts of the country.
I make no bones about it. I support any workers who are involved in any form of strike struggle to defend their wages, conditions and jobs. I make no apologies for that. As a former worker in industry, I have always shown my solidarity with other workers when they have been fighting for their rights. That is what those sections of workers are fighting for. If the Chief Secretary has any real influence with his right hon. Friend the Prime Minister he should tell her to stop the nagging and the hectoring way that she has with the trade unions. The right hon. Gentleman should tell her to stop her legislation programme. If not, we will be faced with disaster.
You asked us to make brief speeches, Mr. Deputy Speaker. I wanted to say a lot more. I had a lot to say—it is all documented here and I have not looked at any of it. You will have to forgive me for that—you are probably pleased that I have not looked at it. I conclude by saying that my party is absolutely right to put down the motion of censure. It is not to unite us. As a matter of fact, the party is 100 per cent. united in its opposition to the policies of the Government. If there are arguments in our ranks they are not on the fundamental issues in which the Conservative Party is now indulging they are on questions of the best way to improve our organisation and make it a better fighting machine so that we can get the Government out at the earliest possible moment. Having got them out, we will be able to get in a Socialist Government that will have the consent and support of the people.
8.3 pm
Mr. Patrick McNair-Wilson: It ill-becomes a party which in Government saw unemployment double and which produced the biggest economic smash-up that we have seen for years, to the point where we had to be rescued by the IMF with all the draconian policies which that implies, to table a censure motion after the Conservatives have been in government for only 10 months. The Labour Party went out of office leaving behind an economy which was cobbled
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together with taxpayers' money and overseas borrowings, the interest on which is £10 billion a year which is being funded by the people of this country. Its performance was an insult to parliamentary democracy.
For the Opposition to accuse my right hon. Friend the Prime Minister of trying to divide the nation, when they produced such a weak base from which we had to start, is beyond description. Far from being as pessimistic as many hon. Members have shown themselves to be, I regard this as the best opportunity since the war for taking fundamental new attitudes to the problems which have dogged us for over 20 years. I came into the House at the same time as the hon. Member for Liverpool, Walton (Mr. Heifer). In all the years that I have been in this place I have listened to debates of this sort, backwards and forwards, depending upon which side of the House one is sitting, all the time watching Britain and her economy graually becoming weaker and weaker every year. The hurling of insults one way or another has made no difference to the British performance in the great world away from this building. Britain has found it harder and harder to pay her way.
I believe that if the strategy which this Government set out so clearly in their manifesto and which is now developing can be adhered to, and if we do not become too concerned with tactical setbacks and problems, by the end of the decade Britain can become one of the most prosperous and successful countries in the Western world. If the decisions which we take now are the right ones, we have, coupled with our unique strength in energy resources, a glittering future to look forward to. However, that requires changes in our attitude.
The first of those changes must be a recognition that Governments of all complexions have wrongly raised false hopes in the minds of the people. Since the war, there has been an assumption that people get richer automatically. Every year, people still hope that that will he so. Certainly we all hope to fulfil that, but we do not live in that sort of world. I believe that it is the duty of Ministers to make clear to the people of this country that we can pay for the services that we want only by having a strong economy and we can pay the wages that we want

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only by having strong industries. We must recognise—a fact which Opposition Members have been trying to use as a charge against the present Administration—that one person will be able to enjoy a substantial wage award where another may well have to go without.
It is an unfair world. There is no way in which we can all have wage awards every 12 months. The steel workers of this country must recognise—indeed, I believe that most of them do—that they are working for a bankrupt employer. If that employer were in private hands, he would have gone bust long ago. This bankrupt employer cannot really afford to grant any increase at all. We know that an offer exists, not only of actual cash in the hand, but the facilities to build up a substantial amount more out of local productivity deals. It is totally futile for the Opposition to continue to egg the strikers on in the belief that they will get money from the Government. There is no future in that line of argument. It is almost dishonest to try to persuade people who have already lost about £1,000 in this dispute that they should continue to withdraw their labour from the plants when, by doing so, they make their own future, when they go back to work, that much more uncertain.
As I have done on many occasions before, I declare my interests. I am associated with a company that makes smelting electrodes. I know the industry well—I used to be in the Iron and Steel Trades Confederation and I am in contact with the industry almost daily. When BSC's salesmen go out at the end of the dispute to their customers, be they stockholders or anyone else, and try to replace the orders that have been lost through the strike, they will, unfortunately, find that their customers have already placed orders elsewhere. In cases where they are buying from, for example, Holland, the suppliers there have made clear that they are not prepared to supply on the basis of covering the strike, but they want reasonably long-term contracts. The customers that BSC's salesmen will be looking for will have disappeared for ever. So far from having produced a stronger industry and a larger wage packet the salesmen will be at least £1,000 lighter in their own wages. They will return to an extremely uncertain future.
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Even if we accept the view that was put forward by the Leader of the Opposition that £20 million is not worth 2p—that is what he said some time ago in the House and we all remember his remarks this afternoon—and give more money to the industry at this time, our share in the market will become smaller still because of rising steel prices. The fact is that world demand for steel has never been higher. It is our share of it that is getting smaller and if we try to solve this dispute by taking action that raises prices we will do no service to the industry.
Of course I recognise the sense of grievance that someone feels who sees the miners getting a pay rise of 20 per cent. and whose request that his wages should keep pace with the cost of living is refused. But these are the realities of life and I do not believe that we do anyone any service if we try to encourage people into believing that somehow my right hon. Friend can manufacture wealth and prosperity for them.
I publicly congratulate my right hon. Friend the Secretary of State for Industry on his steadfast refusal to intervene in this dispute. It would do absolutely no good if politicians were to get themselves between management and unions in this dispute. They are the only two bodies which can reach a satisfactory solution.
Far from censuring the Government on their industrial policy we should be—and I am—congratulating them. The Government are, rightly, not indulging in political judgments which in the past have proved to be so disastrously wrong. This strike in a sense is a microcosm of all our ills because it relies on the old belief—seen so clearly in 1974 and somehow still lingering on—that if one hangs on long enough the Government will write the cheque. It is essential that when my right hon. and learned Friend replies to the debate he makes it crystal clear that that will never happen.
If we take the firm decisions about which we have spoken; if we try as a nation to live within our means, and if somehow we can—though it is difficult —accept the fact that we are a poor nation for the time being the future can be good after this period of belt-tightening. I say to my hon. Friend the

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Member for Aldershot (Mr. Critchley) who, like everyone else, is entitled to his view, that weakness now will damage our future. To go back on the old toboggan run will be to betray those who voted for us in the last election. Indeed my right hon. Friend might care to remember what was said by Cervantes in "Don Quixote":
"Faint heart never won fair lady!".
8.14 pm
Mr. L. R. Fletcher: I have a lot to say because I have not been able to speak in this House for three years. That means an enormous accumulation of, perhaps, a little wisdom but certainly a lot of words and I must pack it all in to 10 minutes. That means that the House will hear a very truncated speech as I am a somewhat truncated Member.
I am getting rather fed up with all the "isms" that have been floating around in this debate. We have heard of "monetarism" and "Friedmanism". There has been talk of this "ism" and that "ism".
Mr. Michael Brown: And Socialism.
Mr. Fletcher: I have not used the word "Socialism" yet. One wishes sometimes that these "isms" could be converted into "wasms" because they do not really exist. There is no such thing —I say this in order to correct what has been said by some hon. Members—as "Friedmanisms". I read Friedman, just as I contribute to the publications of The Institute of Economic Affairs. That is a very odd situation. That is an organisation supported by those who would pay thousands to get me removed from Parliament and yet the Institute allows me to contribute to the various symposia that it publishes from time to time. All my contributions are somewhat heretical.
In a pamphlet published in 1975 the great guru Milton Friedman talked about the effects of trade unions on inflation. He said
"I doubt that, in practice, any part of your inflationary problem has been produced by mischievous unions. No doubt there have been many mischievous actions; I am not saying there have not. I am not trying to defend unions, far from it. I think they do an enormous amount of harm. But I believe that we do no good by using bad reasons for good objectives."
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Professor Friedman was using those remarks about this country, having made similar remarks about his own country.
Therefore, the first delusion that we have to get rid of is that all our troubles are due to trade union pressure. I would argue if I had the time that one of the reasons for the trouble in which we find ourselves is that the unions have not been strong enough, have not been sufficiently organised and have not been sufficiently constructive in their approach to successive Governments.
The first majority Labour Government asked the unions to put forward proposals for certain industries. Answer came there none. Instead, we got bureaucratic monstrosities which I detest as much as anyone in this House. That argument could be sustained. It has been suggested —and I pick and choose from a whole volume of ideas floating around in my mind—that something has gone wrong with this nation and particularly with our industries and that the ills can be cured by more productivity, incantations, rhetoric, speeches, exhortations, television appearances and banging on gongs. The only thing left now is to call in a witch doctor and have fires built up on the Floor of the House.
I depart from economic matters to say that it may well be that many of this nation's troubles began to aggravate themselves to the point of really dangerous inflation when the people decided not to remain a nation any more and subsided into what they assumed would be the comfortable bed of the European Community. From that moment the sense of nationhood in this country diminished. We must not dismiss that as mere airy-fairy nonsense belonging more to grand opera than to political discourse. It is real. A sense of nationhood can affect what goes on in a factory. It can affect productivity. There is a feeling that faceless people in Brussels are deciding our future, by writing regulations governing the quality of our beer, and the types of car and lorry that we drive. That feeling debilitates a nation and it also has an industrial effect.
I argue that when a nation is so affected by disorders of this kind, whether it is a collective loss of will or whether, more importantly, it is because of divisiveness injected into the body politic by one side

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or the other, and when a nation ceases to think of itself as a nation all sorts of distastrous consequences follow. I do not dispute much of the analysis of our deflationary problems put forward by the right hon. Member for Down, South (Mr. Powell). I am always getting into trouble for supporting the right hon. Gentleman. However, I face that with my customary fortitude. There is no doubt that if there is too much money sloshing around in the economy inflation results. There is no doubt that if we borrow too much we will get inflation. But I also argue that, if the nation is falling apart and becoming a warring group of tribes, one against the other, that also creates an inflationary dangerous situation.
At one of the lectures that I was privileged to deliver down the road, I argued, purely hypothetically, along these lines: let us assume that the terrible consequences of inflation—I confess, I was thinking more of the hyper-inflation of 1923 in Germany than of what we have now in this country—are its causes. The analysis seemed to work, but nobody in that audience agreed with me. Lord Robbins, who was in the chair, thought that I was suggesting that all economists should go and see their psychiatrists. Only one member of that audience agreed with me, and he is now in the present Government. I shall not tell on him. I shall not sneak on him in any newspaper, even if someone offers me £75,000, which I understand is the going rate for selling muck.
If we have unnecessary industrial strife, for whatever reason it is not correct to ascribe it solely to trade union pressure. Let us not forget that stupid investment decisions that preceded the present trouble in the steel industry. The steel industry was not brought under proper scrutiny or control by the House of Commons.
I recall once reading in The Economist a mock Socialist manifesto to the effect "We intend to bring certain industries—coal, steel and so on—under public control. To this end, we propose to denationalise the lot".
We have had no control over investment programmes. We have not been consulted or told about them over the years. Consequently, the seeds of the present conflict in industries which are supposed to be owned by the nation and
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controlled by Parliament were sown. There will be other conflicts and they will contribute further to inflationary pressure.
I had better round this off by backing my Leader and having a bash at the Chancellor of the Exchequer. He is the nicest fellow in politics, but he really has to have it. I do not propose to quote at great length, because others want and have a right to speak in the debate, but I refer the right hon. and learned Gentleman to the French experiment in using primarily monetary methods to get out of an inflationary situation—the so-called plan of 1976. The French started rather differently. There was a freeze on most prices, a reduction in the standard rate of VAT, and so on. I shall not go on with the whole story. It is in Barclays Bank Review—an excellent journal. It does not cost a penny. I like free journals. However, it demonstrates that between 1976 and now there were ups and downs and a far from easy ride in France, and still they have not got the thing under control. They still have difficulties and problems.
No one can accuse the present French Prime Minister of being a softy. No one can say that the French bureaucracy is anything other than ruthless when the occasion requires ruthlessness. Yet, four years after the inception of the plan, the French face more or less the same rate of inflation as in 1976 and many of the same problems.
The present Government, in pursuing the policies that they have pursued up till now, are trying to reverse not merely what the previous Labour Government did, but—something much more ambitious—to reverse almost everything that has taken place in politics since 1906 with the great Liberal landslide: attitudes, institutions and everything else. It was at that point that Welfare Statism—one of those horrible words that I said one should not use—and all sorts of other things started to come in. We imported many of them from Germany. Bismarck was the first guy to have a go at this sort of thing.
Speaking generally, I argue that if we take the monetary road—by that I mean making the monetary instrument the main instrument to drain inflation out of the economy—we shall require a time span. I naturally want to see inflation taken out of the economy. I do not want

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an inflated economy. It is costing me enough now in interest charges to my bank. If this policy is to succeed—I do not make the assumption in politics that all my opponents are scoundrels, villains, highwaymen, muggers or fools; many are, but I do not assume that all are—it will require a time span of at least a decade. How in the hell—perhaps I should not have said that, but I have been away a long time, so perhaps you will forgive me, Mr. Deputy Speaker—can we get through a decade with the kind of divisive policies now being pursued to attain the inflation-free goal?
I do not want to offer any assistance to the Chancellor of the Exchequer in winning the next election. But, in view of the harsh measures that he will have to take for three years, or even four years, how will he win the next election so that he can carry on with his 10-year programme of using the monetary method to deal with inflation?
Frankly, I have not always been happy with the policies of the Labour Party—being too much of an individualist I am not happy with the policies of any party —but I am far more worried about the kind of policies now being advocated and pursued by the Prime Minister than anything that has been suggested by the Labour Party at any time in the 15 years that I have had the honour to be a Member of this House.
8.28 pm
Mr. Michael Brown: It is a great pleasure for me to follow the hon. Member for Ilkeston (Mr. Fletcher). This is the first opportunity that I have had of listening to him since I came to the House. Although he may have been in poor health in the past, he certainly seemed to be in good health this evening. I hope that we shall hear from him on many future occasions.
The hon. Gentleman said that he was an individualist and that he did not necessarily go along with some of the views and policies of his own party. I believe that I am here today as a result of the views and policies of the Labour Party, as the first Conservative Member of Parliament for a heavily industrial, steel-dependent constituency, Brigg and Scunthorpe. Last year my constituents noted that the policies of delay of the
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Labour Government between 1974 and 1979 resulted in a loss of 1,700 jobs in February of last year just before the General Election. About 17,000 of my constituents—one in five—work in the steel industry, but 9,000 of them are on strike at present.
My constituents recognise that the borrowings of the nation and the steel industry had to stop. They did not flinch from taking what was for them, perhaps, a difficult decision, and going against the party that they were accustomed to have representing them. They realised that the nationalisation by the Labour Government in 1967–68 gave them neither ownership of industry nor job security. Indeed, over the past 10 to 15 years the steel industry became uncompetitive and reliant upon a begging-bowl approach to the Government.
Some of my constituents take a different view from me. The ordinary steel workers, many of whom are on strike against their will, recognise reality. They realise that it is useless to be paid merely an inflationary wage increase which will add to the public sector borrowing requirement and therefore lead to higher inflation. The overwhelming majority of my steel-working constituents want the opportunity to work in a profitable steel industry which is not totally dependent on Government handouts and public dole all the time.
I contend that if only the union leaders gave my steel-working constituents the opportunity to decide on the pay increase which was offered by the British Steel Corporation, they would be back at work tomorrow. Although the union leaders may not like the idea of a ballot, I know that it will be regarded with relish by the overwhelming majority of my constituents, who have now lost well over £1,000 each in many cases and who wish to return to work at the first opportunity.
Mr. Spearing rose—
Mr. Brown: I am conscious of the pressure of time. I should like to give way but shall not do so on this occasion, if the hon. Gentleman will excuse me.
If the Government can be accused of anything, they can be accused only of sticking to the promises and pledges that they made at the last general election.

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Few Members of Parliament, whatever their political views, would accuse the Government of not sticking by the policies on which they were elected. I congratulate the Government. As one who has a difficult task of standing by the Government—a task which I am happy to perform—I recognise that if we depart from the policies upon which they were elected there will be many more redundancies in the future than have been announced. There will be much greater inflation in the long term if we flinch, as did the Labour Party when it was in power, from taking the important necessary decisions.
The Government must take painful decisions. I compare the situation faced by the Government with that faced by an alcoholic. The nation has constantly been given supplies of alcohol, which we may translate in terms of public funds. It has been punch drunk for many years, deluding itself that public money and excess public borrowing may in some way solve the nation's problems. The alcoholic has been drunk for many years and not noticed the pain. However, when the doctor tries to solve the problem of alcoholism there is a painful short-term period. When an alcoholic decides to reform and become sober the early days are painful. If ever one has drunk too much there is a difficulty when one walks along the road to sobriety. I suggest that the country is now going through a painful process of readjustment, which is necessary and which was recognised as being necessary by the electorate when it took its bold decision last year.
Although my right hon. Friends have painful decisions to take, I believe that the electors who made a bold choice last year are with the Government. Although the Leader of the Opposition believes that our measures are unpopular, I note that the opinion polls are not against the Government in the way that the Opposition would like to believe.
The motion of no confidence is inappropriate and ill-timed. It comes from the Labour Party which, if it had the responsibility of guiding the nation through the difficult years ahead, would not have much confidence in itself.
My right hon. Friend the Chief Secretary to the Treasury, the Prime Minister and the Chancellor of the Exchequer have pointed out the difficult decisions that
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have to be taken, and we cannot flinch from them. I ask my hon. Friends to stand by the Government's policies. It is vital that the country should become less dependent upon public funds, public borrowing and taxation. The only way we can do that is by ensuring that in the future the nation earns the wealth that in the past it has been used to spending when it has not been earned.
The people are behind the Government at a difficult time and it is vital that we solve the problem of inflation. If we do not we shall have a higher public borrowing requirement, and that will be even more dangerous for the steel industry. I urge the trade union leaders to give their members the opportunity to vote for the British Steel Corporation offer which I believe most trade unionists would accept.
8.36 pm
Mr. Jack Dormand: The hon. Member for Brigg and Scunthorpe (Mr. Brown) will probably agree that the drunkards who received a huge tax handout last year had a greater feeling of euphoria than did the Government.
My right hon. Friend the Member for Bristol, South-East (Mr. Benn) touched upon the question of coking coal. He was right to do so, but he did not go far enough. In my Dart of the world an investment of £40 million was made for the production of coking coal. A few miles down the road, at Redcar, an investment of £500 million was made to enable the coal that was being produced that short distance away to be used. At least we can say about the Australian coking coal that it was economic. It was open-cast, and the easiest mined coking coal in the world. The coking coal that the Government permitted us to use was heavily subsidised, and some came from the Common Market. It is that kind of economic and political madness that has led the Opposition to table the motion.
I shall be brief, and shall refer only to one aspect of the Government's policy, namely, regional policy. Nowhere is the failure of the Government's economic and industrial policies illustrated more vividly than in their regional policy. In July last year a reduction of £233 million was made in the aid given to regions. That was a cut of one-third, the biggest

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single cut in the whole range of public expenditure cuts. The Government's feeling is that because the reduction is concentrated in that way it will produce better results. That policy has fallen flat on its face. It is not just because of the high interest rates, inflation, and particularly the high rate of sterling, but because business men in the deprived regions, as they have told me, have lost confidence in the proposals that were made by the Government some months ago.
I should like to illustrate my argument by referring to the Northern region. This week we have had the unemployment figures. In the Northern region, 128,000 people are unemployed, representing 9·2 per cent. of the work force, compared with a national figure of 6·1 per cent. The Northern region figure of unemployed has risen in seven consecutive months, and the February figure is the highest since the war. That is the most astonishing statistic. Putting it more graphically, in the Northern region there are now 15 people unemployed for every vacancy.
Against that background and the claptrap that we have had from the Government about the more efficient use of people, and the upgrading of areas—the Secretary of State for Industry has made a great song about this subject—there was not a single upgrading in the whole of the Northern region. Indeed, the only change was that several areas were downgraded and became less eligible for regional aid.
I want to be constructive, and I have two suggestions to make. First, the Government should at the earliest opportunity establish a northern development agency, on the lines of the Welsh Development Agency and the Scottish Development Agency. It must have the same type of structure and the same kind of resources. In the Northern region we have put up with a great deal over the generations and are not prepared to put up with a second-class development structure. The agency would be a focal point and would co-ordinate the present wasteful efforts.
It is of considerable interest that most people in the Northern region support the idea. The northern group of Labour Members of Parliament have been pressing for it. The local authorities accept the need for it. I am sure that some Con-
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servative Members—I do not see any of them present at the moment—support the idea. If that does not impress the Government, perhaps they will be impressed by the fact that the CBI in the Northern region supports the proposal.
Some hon. Members may ask "Why the Northern region? Why not the South-West or some other region?" I point out that we have—and always have had—the highest rate of unemployment, and it looks as though we shall continue to have it. That is one good reason for having a northern development agency.
Unemployment in the Northern region stems from the older industries—steel, shipbuilding and coal mining. In respect of those industries, the country has lived on the back of the Northern region, and the establishment of an agency would be some recompense for that. I hope that the Government will give the suggestion sympathetic consideration.
The other point that I wish to make is that the Government should have a second look at the way in which the northern National Enterprise Board is working. Unfortunately, we have seen evidence of the kind of thing that has made the National Enterprise Board the lapdog of the Government. There was a clean sweep of the former members of the board. They expressed a complete lack of confidence in the policies of the present Government and resigned en bloc. That sort of thing would not serve the needs of the Northern region, which requires more resources; even more important, it requires more flexibility and autonomy. I understand that the trade union representatives have withdrawn from the board. I think that their contribution is essential and I hope that the Government will make some attempt to get them back on to the board.
Before I sit down I want to refer briefly to what I suppose I can now call the infamous letter received by northern Labour Members from the managing, director of Inmos. In that letter he states that the new industrial "superstars"—that is his word—will not come to places such as the North of England because they are "depressed industrial areas". It is unbelievable that the head of one of our newest and most exciting companies should hold that medieval view, especially when it is public money that

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is involved. No risk capital is involved; it is all public money.
I do not want to harp on the details tonight because the Minister will receive them in a letter from me, but we in the North refute the argument put forward by the managing director of Inmos with all the force at our command. We hope that the Secretary of State will tell him that his view is not shared by the Government. The people of the Northern region are hard-working, versatile, and flexible, and have a first-class industrial relations record. They will play their part in responding to Government initiatives, but in today's difficult circumstances those initiatives are a first essential. The onus now rests fairly and squarely on the Government.
8.46 pm
Mr. Tristan Garel-Jones: I hope that the House will reject this censure motion for two main reasons—first, because of its provenance and, secondly, because of the motives that lie behind it. What is the provenance of the motion? We are led to believe that it is a censure motion tabled by the Leader—at least for the time being—of Her Majesty's Opposition. The House and the country are entitled to ask what credentials enable him to put forward such a censure motion. Lord Wigg—an unimpeachable source I should have thought—tells us that in the early 1940s the right hon. Gentleman told him his recipe for political success. It was to find out what the trade union line was and to follow it. If he has done nothing else the right hon. Gentleman has certainly been consistent in that.
My right hon. Friend the Prime Minister made a brief reference to the diaries of Barbara Castle earlier in the debate. I do not want to go into that further, apart from saying that it seems quite clear that the right hon. Gentleman was regarded by the majority of his colleagues as a kind of trade union nark inside the Cabinet. In February 1974 he was to be found in the valleys of Wales—as, indeed, he was this afternoon—urging that settlement should be made. The right hon. Gentleman's message seems to be "pay up". It is also worth saying that after a lifetime of service to the Labour movement he was mandated into Downing Street as Prime Minister not by a rank
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and file vote of the nation as a whole, but, appropriately enough, by a vote inside the Labour Party, which many of us have come to regard as a subsidiary company of the trade union movement.
The right hon. Gentleman's career represents, in many ways, the compromises that have caused the difficulties this country now faces. It is not surprising that the right hon. Gentleman's masters, having placed him in Downing Street, should have turned upon him and thrown him out, after he had attempted to resist their demands.
The right hon. Gentleman is left as the nominal leader of a nominal Opposition who seem to be united in their wish to oppose the Government's policies regardless of the cost to the nation. My only surprise is that the right hon. Member for Bristol, South-East (Mr. Benn) and the hon. Member for Liverpool, Walton (Mr. Heffer), who have an alternative policy and who advance it with courage and conviction, do not feature on the Order Paper as having signed the motion.
There is one thing that unites right hon. and hon. Members on the Opposition Benches. As the hon. Member for Ormskirk (Mr. Kilroy-Silk) once naively confessed, each one of them carries in his rucksack a field marshal's baton, just as the foot soldiers in Napoleon's army used to do. The only point that seems to be at issue is whether this army intends to retreat from Moscow.
It is hardly surprising that, against a background of no serious opposition from the Labour Benches, many of my colleagues are emboldened to make suggestions to our right hon. and hon. Friends within the context of the Government's policy.
There can be no doubt that the Government were elected for two reasons above all others. The first reason was to try to help the trade union movement to regain a position of public esteem—a position that it should enjoy in the life of Britain—so that it may begin to play its real role of working towards greater productivity and higher wages for its members. Secondly, the Government were elected so that the country might have honest money once again. Opposition Members may laugh, but we were elected to do that by a combination of monetarist and fiscal controls that are

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familiar to the Leader of the Opposition. The right hon Gentleman attempted to operate those controls with the help of the IMF from 1976 onwards. These policies are not new to the right hon. Gentleman.
My right hon. Friend the Prime Minister has made it clear that there will be a difficult road ahead and that great sacrifices will have to be made by all the British people. I cannot conceive a Conservative Party that will not do its utmost to ensure that the burdens are distributed with compassion, especially towards poor families and the elderly.
I urge my right hon. Friend to ensure that the arguments that we used when in opposition in favour of child benefit should be borne in mind. I can do no better than quote the argument advanced by my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin), who is now the Secretary of State for Social Services. Before doing so, I must make it clear to the Opposition that there are many Conservative Members who are willing to argue on detail within the context of the Government's main policies. I accept that the Labour Party is used to such a wide degree of unity that Labour Members find it extremely surprising that there is any discussion in other parties. I accept that. However, I am sure that my right hon. Friend the Prime Minister would not expect her party to run in any other way.
I remind my right hon. Friend of the statements that we made in opposition. We said that child benefit was the best way to restore the position of families, the best way to ease poverty, the best way to help poor families in work, the best way to reduce the nonsense of people being better off out of work and the best way of reducing the dependence of families on means-tested benefits. I refer to the words of my right hon. Friend the Secretary of State for Social Services.
I remind my right hon. Friend the Prime Minister that we made no increase in child benefit last year, and that no sum less than £1 will be sufficient to restore child benefit to the level that many of us would like to see.
May I also make a plea for the pensioners' Christmas bonus? I know that it
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is something that the Opposition have never liked. The Labour Government did not pay it in 1975 or 1976. The Conservative Government wrote it into the Social Security Act 1979. I urge the Government to aim to double the £10 allowance by 1984. If we allow it to remain at £10 the whole concept will fall into disrepute as the bonus loses value.
I realise that having proposed Government expenditure of £600 million for child benefit and £103 million for the Christmas bonus, it is perhaps incumbent upon me to make one or two brief suggestions on how those proposals could be financed. Unlike the right hon. Member for Down, South (Mr. Powell), I cannot offer my right hon. and learned Friend the Chancellor of the Exchequer the prospect of £24 billion.
I wish to make three suggestions. First, in the next few months the clearing banks will be announcing profits of £1½ billion. Those are not true profits in the sense that I understand them, in that they have not been earned by business acumen or by any wise decision of the clearing banks. They are the result of the temporary high minimum lending rate. There is a good case for placing a levy on those profits, which might raise as much as £½ billion.
Secondly, further sales of Government assets, especially through the Property Services Agency, could be undertaken. I was surprised, when making inquiries, to find that the PSA makes no valuation of its properties. Unlike a company, it feels that it is not required to produce a balance sheet. It should do so as soon as possible. All property which is surplus to Government and defence needs should be offered for sale to the private sector.
Thirdly, in the longer term, the whole area of company taxation should be considered. It is a tremendous condemnation of this country that some of its brightest and most able men are now employed as tax advisers and tax lawyers. They spend most of their time devising schemes to assist people to avoid taxation. For all the contribution that they make to the economy of Britain, they might as well be doing The Times crossword puzzle.
In the last year for which I have figures, 1978–79, the total yield of corporation tax to the Exchequer was £3,940 million, while the total loss to the revenue from capital allowances and stock relief

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alone was £4,000 million. There must be a case for removing most, if not all, of these allowances, lowering the rate of corporation tax, and attempting to gain a bigger yield for the Exchequer.
Some weeks ago a motion was read out in the House in the name of the Leader of the Opposition. I confess that I was bumptious enough to shout out "Where is he, where is he?". He appeared from behind Mr. Speaker's Chair, wearing a smile and waving a white handkerchief. That gesture symbolised not only the right hon. Gentleman's own career, but the whole approach of the Opposition in this debate.
The British people are in no mood for surrender. That mood is adequately reflected in the attitude taken by my right hon. Friend the Prime Minister and her Government. I hope that this side of the House will reflect that attitude by rejecting this tatty little motion tonight.
8.59 pm
Mr. Denis Healey: Some may find it a little surprising that the House of Commons is celebrating what is almost the start of a new decade with a motion of no confidence in the policies of a Government elected only nine months ago. It is a motion for which a large number of Conservative Members, Front Bench as well as Back, would vote if they had the courage of the convictions that they have expressed, mainly anonymously, to the Lobby correspondents. I should at least like to congratulate the hon. Member for Aldershot (Mr. Critchley) for having the courage to express his views directly.
What I find a little surprising about the Prime Minister is that she is terribly keen on secret ballots in the trade union movement. I wonder whether she would dare to face a secret ballot of her own party tonight?
A year ago, everyone would have agreed that for Britain the 1980s would be a decade of exceptional economic and industrial advance. For the first time this century, we are self-sufficient in energy, when none of our world competitors have that advantage. North Sea oil is at last starting to bring immense benefits to our economy—to our national wealth, our balance of payments and to the Government's revenue. We in Britain have
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security of supply when no other country in the world can rely on it, and when there is great risk of a sudden interruption in world output.
The recent doubling of oil prices has more than doubled Britain's relative advantage in all these areas. Yet the astounding thing is that the United Kingdom's prospects in this new phase of the oil crisis are not better but worse than those of all our competitors. For example, Germany is totally dependent on imported oil, but this year she is expecting growth in her economy of 2 per cent. The United Kingdom is totally independent in oil—indeed, is selling large quantities of oil to Germany—yet the Government expect our output to fall by 2 per cent. this year. The reasons are not controversial, but are universally agreed. First, the Government have decided to adopt a fiscal and monetary policy that is far stricter than any other industrial country in the world and, secondly, they have abdicated their essential responsibility for helping industry to improve its performance at a time when all our competitors are accepting increased responsibility for helping their industries.
The House may still not be fully aware of the revolution in our situation that has been produced by North Sea oil. In 1974, just after the first oil price increase, the incoming Labour Government found that the first OPEC increase was cutting our gross domestic product by 5 per cent., was increasing by£1½ billion a current account deficit which already amounted to £1 billion and was rising fast, and was having a big impact on domestic prices. The incoming Labour Government in 1974 had to cope with that situation at a time when the money supply had been growing at nearly 30 per cent. for the two previous years and earnings were set to rise by 13 per cent. in their first six months, solely because of the ill-starred threshold agreements established by the right hon. Member for Sidcup (Mr. Heath).
It was a very different situation when the right hon. Lady took office in May. In 1979, the incoming Conservative Government faced another increase in oil prices of roughly the same economic magnitude as the first increase, although it was a doubling of oil prices rather than

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the quadrupling which took place in 1973–74. But because we were almost self-sufficient in oil in 1979, the second increase in oil prices means that North Sea oil will this year add 5 per cent. to our gross domestic product.
A benefit of £7 billion will be derived from our current account in the balance of payments from North Sea oil this year, instead of a disbenefit of £1½ billion in 1974. In addition, this year the Government will derive additional revenue of £4,000 million from North Sea oil. However, I understand that not all of it will go into the Treasury coffers when the money is due. That is a windfall of staggering magnitude.
Despite that, our prospects today are far worse than they were in 1974. They are also worse than the prospects of any of our competitors. However, none of them enjoy our advantages. That is not only my view, it is also the view of the Government. The other day the Chief Secretary told us that we face three years of unparalleled austerity. A couple of days ago the Cancellor of the Exchequer extended that three years to 10 years, in a speech that he made in the City of London. His pessimism is not surprising. There has been a frightening deterioration in every aspect of our economic performance since the Government came into power and found themselves floating on a sea of oil that was steadily increasing in value.
This afternoon, the Prime Minister quoted some selected figures about the Labour Party's performance during its five year's of office. Some of them were very daunting. They included the first two years of painful readjustment to the increase in oil prices and to the legacy inherited from the previous Tory Government. However, once the adjustments had been made—it took us only two years —it was a very different picture. The record of our last three years in office has been described in detail by the Chancellor in a letter that he recently sent to the right hon. Member for Taunton (Mr. du Cann), as chairman of the Select Committee. He pointed out that during those last three years the average increase in output was well above 2½ per cent. He further pointed out that there had been a steady movement into surplus on current account, a steady fall in unem
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ployment for two years and a growth in money supply over the whole five years that averaged just over 10 per cent.
The Government have recently published figures showing that during the last two years of Labour Government, private manufacturing investment rose by 26 per cent. in volume. Industrial productivity rose by 11 per cent. and inflation was under 10 per cent. for our last 15 months of office. That progress was stopped in its tracks by the election of the Conservative Party to government. Growth has fallen steadily since it took office. According to the Government, output will fall by 2 per cent. this year. Indeed, fresh leaks suggest that they forecast a 3½ per cent. fall for this year. The Government have spent the last 48 hours furiously massaging the figures in order to produce a better outturn.
All of that is taking place at a time when North Sea oil is adding 5 per cent. to our gross domestic product. It is forecast that the balance of payments deficit for this year will be £2 billion. However, oil will benefit our balance of payments by £7 billion. Investment is set to fall by 7 per cent. this year. Productivity has just begun to fall and that is shown in the figures published yesterday, where the third quarter for last year is compared with the second quarter. The only thing that will rise this year is inflation and unemployment.
Unemployment has risen by 9½ per cent. in the past six months. That is shown in the figures that were published on Tuesday by the Government. The rate of inflation has doubled during the past 12 months. The right hon. Lady will be able to celebrate her first anniversary in power by announcing that inflation is above 20 per cent. It will have doubled since the election.
The only bright spot in the whole picture so far as the Government are concerned, if we are to believe that this morning's leaks from the Chancellor are more accurate than those of yesterday, is the prospect for the public sector borrowing requirement. We were told yesterday, unanimously in six or seven newspapers, I suppose as a result of a briefing by the Chancellor or one of his officials, that without drastic action in the Budget we should have a PSBR of about £11 billion. We are told today that without any action

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by the Government we shall have a PSBR of only £8 billion.
I can well understand that that should be true. This year the Government will get an extra £2 billion in oil revenue and £2 billion more from the increases in VAT decided last June.
I am interested to know why the PSBR estimate has changed by £3 billion in 24 hours. Is it because the right hon. and learned Gentleman used the £11 billion figure yesterday to frighten his colleagues into public expenditure cuts, and has chosen £8 billion today to reassure the City, because cuts in public expenditure will not be large enough?
I tell the Chancellor that if he is aiming at a PSBR of £8 billion next year, it is far too low for the state of the economy. The savings ratio jumped 3 per cent. between the second and third quarters of last year to 17 per cent., a level of almost Japanese magnitude. The economy is set to work far below its natural capacity.
I say to the hon. Member for Croydon, South (Sir W. Clark) that Britain is not living beyond her means. We are not spending more than we earn, if people are saving 17 per cent. of their income, and the Government decide to borrow 5 per cent. of total income out of those savings in order to finance public services that need help to get going and to raise the rate of growth in the economy. There is no Government in the world that does not hold that view except the present British Government.
The excuse that the right hon. and learned Gentleman gives for getting the PSBR down to that level—and we heard it echoed by some of his Back Bench colleagues this afternoon—is that interest rates cannot be lowered unless the PSBR is brought down. That is bunk, and the right hon. and learned Gentleman knows it. Interest rates were much lower under the Labour Government, when the PSBR was almost twice as high as a percentage of our GDP.
The problems for the Government's monetary policy are not created by the PSBR. The right hon. and learned Gentleman has more than financed that in the past 12 months, although at far too high a price. The problems arise entirely because of excessive lending by the clearing banks to private firms. The Chancellor
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of the Exchequer has admitted that, because he told us many times in recent months that he will not reduce the minimum lending rate until private bank lending is reduced. That is the problem. It is not the PSBR.
The right hon. and learned Gentleman has got himself into an extraordinary situation. It is the banks that are responsible for breaking his monetary target, but instead of punishing them he is rewarding them by raising interest rates, which will double their profits. That is the economics of the madhouse. How can he justify it?
If the right hon. and learned Gentleman is not able to announce in the Budget a large fall in the minimum lending rate, we shall press, I hope with support from many Conservative Members, for a windfall tax on these excessive bank profits, which have been generated wholly by his monetary incompetence. That is only one example of the appalling intellectual and practical muddle that the Government have got themselves into by attaching themselves to punk monetarism, as preached by Professor Milton Friedman, the TV pundit, who seems to bear no relation to Professor Milton Friedman. the Nobel prizewinner.
The right hon. Member for Down, South (Mr. Powell) treated us once again to his version of the higher lunacy, in a speech that I found somewhat overlong, and a little over-familiar. Unfortunately, the right hon. Gentleman was not invited to No. 10 Downing Street yesterday to hold a seminar for the inner Cabinet. Professor Friedman was invited and, so far as I am able to tell, he was asked to conduct a seminar for the benefit of the Lord Privy Seal. I confess that I am not entirely clear—perhaps the Chancellor could enlighten me—as to whether tie was present to learn along with the Lord Privy Seal or to prevent the Lord Privy Seal from getting away.
I strongly recommend that all right hon. and hon. Members, especially Conservative Members, watch Professor Friedman's television series, which started a week or so ago. They will find it at least as entertaining as a comic strip by Saatchi and Saatchi. They should watch it because it provides the intellectual foundation of the Government's economic, industrial and social policies. That foundation is laid out so that all its

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logical fallacies and moral repulsiveness are clearly exposed. They will find it a series of stupefying shallowness and disgraceful dishonesty. But at least they will have the benefit of seeing the shallowness and dishonesty exposed in the discussions that follow. It is a tragedy that the right hon. Lady and the "Gang of Six", of which she is the centre, take this charlatanism seriously and that they are using it to crucify the British people.
Monetary control must be one element in economic policy. I used it myself. I kept the money supply at 10 per cent. for five long years, without any of the consequences that followed the right hon. Lady's monetary policy. However, it is one thing to give a dose of quinine to a patient who is suffering from a fever, but it is quite another to sit the British people down in front of a tank of quinine and tell them that they must drink a pint for breakfast, a pint for lunch, a pint for dinner and that they should eat or drink nothing else in three years—or 10 years, as the Chancellor of the Exchequer now tells us. That is the Government's policy at present. I warn Conservative Members who have shown some restiveness, that, as the first pint gurgles down their gullets, the consequences that they are now seeing are only just the beginning.
The right hon. Member for Brighton, Pavilion (Mr. Amery) warned the right hon. Lady that he could take it for one year, but that if it went on beyond 12 months, she would be hearing from him again. The Chief Secretary to the Treasury has told us—and the Government forecasts in a fortnight will show it in detail—that 1981 will be as bad a year as 1980. It could be worse. He said that 1982 will be as bad as 1981. One reason is that the Government have made their self-imposed ordeal more painful by the massive increase in prices which in that wonderful dawn, the Chancellor recklessly inflicted on the long-suffering British people.
I listened carefully to the Prime Minister's speech this afternoon. She did not attempt to deny that 5 per cent. of the increase since the last election was the direct result of Government policy. Therefore, the bulk of the increase since the last election flows entirely from the policy of the Government. By the middle of this year, further price increases that are al-
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ready decided by the Government will add 8 per cent. at least to the RPI which the Government inherited. Indeed, one reason for that is that most of the so-called public expenditure cuts are not cuts in Government spending. They are new ways of financing existing spending by raising prices rather than raising income tax.
The consequence of that for earnings is liable to be horrific. The other way in which the right hon. Lady is financing existing spending is by selling oil which we have not yet produced—forward oil—and selling off priceless national assets such as the BNOC. However, I am glad to see that the most junior member of the "Gang of Six", the Secretary of State for Energy, is putting up a sort of pallid battle against that decision.
The irony is that among those who will suffer most severely from the Government's policies are precisely those people who voted for the Conservative Party at the last election because they believed that its policies would protect them. I shall take two examples at opposite ends of the spectrum. If we take an average family with two children living in a council house in a safe Conservative area such as Kent or Cheshire, it will face an increase in outgoings of about £6 a week this year. That increase will be caused by rents, rates, school meals charges and school bus fares alone. A similar family in Kent would face an increase of about £9 a week. Those increases come at a time when their cost of living has already been pushed up by about £15 a week. So far, that family has received only a few pounds help from the income tax cuts of the last Budget.
How can the right hon. Lady be surprised if ordinary working people demand compensation for the imposts that are inflicted upon them by the present Government and which owe nothing to their wage increases in the past? At the other end of society, we should consider the effects of the Government's policies on British industry—especially on the small firms for which so many crocodile tears have been shed by Conservative Members in this debate. The increase in MLR is forcing them to run down their stocks and drop investment plans that are already under way in many cases and have been going on for one or two years. The increase in MLR is still not enough to

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keep the Government's money supply growth on target. It is still growing at about twice the target rate, if the acceptances which the Governor set himself last October of 7½ per cent. to this October are included.
The effect of MLR has not been to reduce bank borrowing. That has been remarkably resistant, as the Government should have known, because the Bank of England explained in detail why bank borrowing is so resistant to changes in interest rates. The only effect, besides the swelling of bank profits, of which I have already spoken, has been to push up the exchange rate so that the firms which are already crippled by MLR cannot compete at home or abroad in markets which are shrinking steadily. Indeed, they are shrinking at home because of the over-tight Government fiscal policy.
The right hon. Lady made a great deal of sterling being a petrocurrency. I ask the right hon. Lady to consider this. Last week when the interest rate differential dropped by a few percentage points between Britain and the United States, the pound sterling dropped three cents in a day.
The fact is that excessive interest rates are bound to attract some of the 100 billion petrodollars that are now moving round the world unwilling to go into any long-term vehicle and therefore attracted by any short-term differential. I hope that the right hon. and learned Gentleman will assure us—and he showed some sensitivity when he broke all his principles last week by lending £500 million to the clearing banks to slop short rates rising again—that he will not allow the irresponsible increases in interest rates that obtain in some other capitals, particularly Bonn and Brussels, to push him into raising MLR yet again.
Nothing would be more healthy for our industry than for this differential to disappear so that the pound could settle to a more realistic level in relation to the growth of Britain's industrial costs. Squeezed as it is between excessive earnings increases generated by the Government's inflation policy, excessive MLR generated by their monetary policy and an excessive sterling exchange rate generated by the excessive MLR, industrial confidence is now at its lowest level since the war. Consumer confidence
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according to the Financial Times consumer confidence survey is the lowest since records began. I warn Conservative Members to take this seriously even if their Government do not.
We shall see a financial freeze particularly on small firms later this year that will litter the country with bankruptcies. I do not need to describe, because others have already done so, the human misery and humiliation involved in unemployment and the steady fall in living standards which the Government are inflicting on the British people. I ask the House to consider this. Supposing that the monetary policy succeeded in the aim that the Government have set for it in bringing down the rate of inflation in three years or 10 years as the Chancellor has suggested. Where will the growth come from?
By that time vast areas of Britain will be an industrial desert. Whole sectors of manufacturing industry will have disappeared altogether and what is left of it will have carried out no investment during the previous three to 10 years.
Sir William Clark rose—
Mr. Healey: What basis is that for the industrial miracle that the Government claim they will create? These are the years of the oil revenues. They will not last for ever. We should be channelling Government money into industry on an increasing scale, as all our competitors are doing. The Chancellor spoke fine words earlier this week about the importance of the National Economic Development Council. But did he read the speech by its director a couple of days ago, saying that the Government really must use their power to intervene in industry so that industry might trade and invest in the way that our competitors all over the world are doing?
Did the Chancellor read the latest NEDC report on the vital new industry that the microprocessor will generate to improve office administration? Here again we shall be totally incapable of competing unless the Government are prepared to use their power to channel those oil revenues into industry.
However, the Government have another plan. They are planning to use these revenues exclusively to finance unemployment on an increasing scale and

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to replace the revenues that they are losing because of an over-strict fiscal policy.
Sir William Clark rose—
Mr. Healey: The British people will accept sacrifices. They have proved that. They will accept sacrifices for years if need be, provided that they can see some light at the end of the tunnel.
Sir William Clark rose—
Mr. Healey: The hon. Gentleman is simply cutting the time available to his right hon. and learned Friend, but that may be his intention.
There is no light at the end of this tunnel. We are falling, falling, falling into a bottomless pit. The reason is—
Sir William Clark rose—
Mr. Healey: —that the right hon. Lady is deaf to all the wiser voices which are addressing her from inside her Cabinet and on her Back Benches. She is deaf because she is constitutionally incapable of listening. She is incapable of balance or moderation. "Everything to excess" is her watchword.
I was not in the least surprised the other day to see that President Giscard d'Estaing and Chancellor Schmidt saw her as a rhinoceros—an image, I may say, a great deal more appropriate to her than to her jovial companion sitting on her right, the right hon. Member for Lowestoft (Mr. Prior). She has an impenetrably thick hide, she is liable to mad charges in all directions and she always thinks on the trot.
A country such as Britain cannot afford to be led by a Prime Minister who treats the trade union leaders as dirt, who treats foreign statesmen as if they were trade union leaders and who treats her colleagues in the Cabinet as if they were foreign statesmen. She is a one-woman walking disaster area, and the sooner we get rid of her, the better.
9.32 pm
The Chancellor of the Exchequer (Sir Geoffrey Howe): I should like to begin on a harmonious note by saying how much the House welcomed the reappearance in our debates of my hon. Friend the Member for Hertfordshire, South-West
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(Mr. Page), returning to the House after a very short absence.
That allows me to move immediately to the rather strange remarks with which the right hon. Member for Leeds, East (Mr. Healey) began his speech when he confessed that it was somewhat surprising to find this debate taking place on this occasion. I share that sense of surprise.
We heard on the radio this morning that the principal objective of the debate was to enable the Labour Party to get its policy across to the nation. We have seen precious little sign of that. I am not in the least surprised, because the Opposition have not yet made up their mind which one.
It appeared subsequently that the object of the exercise was to set about denouncing the Government in relation to their responsibility for the present state of the nation.
The Opposition were joined for that purpose, rather remarkably, by the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel), the Leader of the Liberal Party, who said that there was no sign of our policies being effective yet. Surely he should realise that a lapse of 10 months is scarcely sufficient to judge any policy. Surely in his party and position he must have learned that patience is the politician's most precious commodity. After more than half a century out of government the Liberal Party should have learnt that.
We heard the Leader of the Opposition, in a rather over-rehearsed section of his speech, giving a catalogue of success and failure, which his right hon. and hon. Friends took a long time to get on cue for, indicating the folly of that line of argument. Towards the end of his catalogue he began denouncing my right hon. Friends for the balance of payments in 1979, as I understood him, and comparing it with the balance of payments in 1978 as though that were something for which my right hon. Frends and I were to bear exclusive responsibility. We came to the management of the account only half way through the years. If the right hon. Gentleman wishes to be judged by this test, one half of the total balance of payments deficit last year was accumulated in the first quarter of the year, and two-thirds of it in the first six months of the year. If those are the standards

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on which the right hen. Gentleman founds his case, it collapses at the outset.
In the course of this recurrent tendency to denounce my right hon. Friend the Prime Minister for having the courage and clarity to stand up for Britain's interest, the Leader of the Opposition had the gall to criticise her conduct of our country's case in Dublin. He should know. Who was the Foreign Secretary at the time of the designing of the present financial mechanism? Does not the House remember, in 1975, at the conclusion of the triumphant renegotiations, for which the right hon. Gentleman was responsible. his coming back to the House? It is worth marking these words carefully. He said in the Report on Renegotiation", Cmnd. 6003, that:
"The Government"
—that is, the Labour Government—
"therefore sought an arrangement to ensure that the United Kingdom would not have to pay a disproportionate contribution to the Community budget. At the meeting of Community Heads of Government in Dublin on 10–11 March agreement was reached on arrangements which, though complex, will result in a refund to the United Kingdom if in any year our contribution goes significantly beyond what is fair in relation to our share of total Community GNP."
The House should know, if it does not already know, that under that remarkable financial arrangement negotiated by the right hon. Gentleman, not one penny piece has yet been refunded to the United Kingdom. My right hon. Friend the Prime Minister, in the negotiations that she undertook at Dublin before Christmas, was struggling to strip away from the existing financial mechanism the checks and balances and restraints that the right hon. Gentleman put on to it. An that she has so far been able to do is to undo the shackles placed upon the mechanism by the right hon. Gentleman's foolish handiwork. How he has the cheek to raise that case in this House I cannot imagine.
The same goes for the Shadow Chancellor. He reminded us this evening of a theme that we have heard from him so often during his time as Chancellor of the Exchequer, of which he was reminded by the right hon. Member for Down. South (Mr. Powell), in which all the shortcomings of the first two years of his administration were ascribed, whenever it suited his convenience, to the errors and
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mistakes of Lord Barber. If the right hon. Gentleman claimed that his inheritance expunged the first two years of his disastrous administration, he should be under a self-imposed vow of silence for at least 14 months.
We still wonder why this debate takes place at all. I heard it suggested on good authority that the Opposition Chief Whip was by no means enthusiastic about these proceedings. It appears, according to the usual channels that inform us about these matters, that the chief protagonist for tonight's piece of premature and misguided political exhibitionism by the right hon. Gentleman was the Shadow Chancellor himself. I can well understand his impatience. He referred to the prospect of a secret ballot within the Conservative Party. But is he not panting to take part in a secret ballot for the leadership of his own party?
I understand the right hon. Gentleman's impatience, because I see well that the rubicund bloom of advanced middle age will not linger much longer upon his cheeks. I fear that he may have quite a long time to wait. We should recollect that the right hon. Gentleman the Leader of the Opposition, upon whose decision the right hon. Member for Leeds, East must wait for his great opportunity, is not renowned for his willingness to take a decision if he can possibly postpone it.
Let me give the right hon. Member for Leeds, East a little advice, For us to have the opportunity to topple the Leader of the Opposition from his place we had to table and carry a motion of no confidence in him. If the right hon. Member for Leeds, East wishes to do the same, we could give him advice on how to displace his Leader and give him a chance of getting to the front. It must be very gratifying for the right hon. Member for Leeds, East to evoke such a chorus of support from his hon. Friends behind him.
Let me turn to the case that the right hon. Member tried to make in suggesting that the present state of inflation owed anything to the Government's policies. He suggested that we made a major mistake in changing the pattern of our tax system from direct to indirect taxation. Does he not realise that if we had not increased value added tax in that first Budget we should have been unable at

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any stage to set about the major changes that are vitally necessary to reform the excessive burden of our direct tax system? Had we not done that, such was the scale of the inheritance that he left us that, even after reducing public expenditure by £3½ billion, we would probably have had to raise income tax as well.
If we had attempted to hold down the prices charged by nationalised industries as he had been doing before the election, that would have increased the public sector borrowing requirement, with still further inflationary effects. At the moment when he handed over the economy to the Conservative Government we were suffering from an expansion of the money supply by 16 per cent. the year before, and we were facing substantial movements in world prices and an explosive collapse of the pay policy, over which he and his right hon. Friends had presided. Indeed, the public sector borrowing requirement is still suffering from those things.
The special problem of catching up public sector pay settlements was consigned to Professor Clegg and other authorities. These settlements were promised but not paid by the Labour Administration. We are still picking up the post dated cheques they left behind, which will add about 10 per cent. or more to public sector pay costs in the current calendar year. There was nothing that we could have done to refuse those disastrous consequences.
Moreover, the difficulties facing our economy have been substantially increased by what has been happening in the world outside during the past 12 months. It is all very well to point to what has happened to consumer prices in the United Kingdom, but during the past 12 months the rate of inflation in all the major OECD countries has risen from 8 per cent. to 12 per cent. As a result of those increases in import prices, the total input costs of material and fuel to British industry have increased by 27 per cent. in the present year, compared with 9 per cent. in the previous year. Those are the conditions with which we have to cope, in addition to the longstanding decline of the British economy under Labour management.
In 1978 we manufactured 4 per cent. less than we did in 1973. In that same
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year, manufactured imports rose by 13 per cent. That is the measure of the deindustrialisation that the Labour Government left behind them.
Many things are necessary in order to put that right. It is not enough, as my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) said, to arrest that decline. We must set about reversing it. We shall need many of the measures that the Leader of the Liberal Party mentioned for further co-operation in industry, and for the extension of profit-sharing, along the lines introduced at our suggestion in 1978.
Of course, we need to tackle deindustrialisation. The one thing that Labour Members ought to understand about that process is that far and away the most potent cause of deindustrialisation in this country has been the defence and protection of restrictive practices by the Labour Party and its willingness, far more often than not, to promote and sustain strike action. Far more jobs have been destroyed in the last 20 years in this country by misguided industrial action than by any other economic measure.
It is important also to focus attention on our economic and industrial policy. The first priority in our policy—
Mr. Heffer rose—
Sir G. Howe: —is to get inflation down, as an essential precursor to the return of economic vitality.
Mr. Heffer rose—
Sir G. Howe: The right hon. Member for Leeds, East not only did not give way but overran his time by 2 minutes.
I want to address myself to the conquest of inflation, which the right hon. Member for Down, South rightly identified as the most important task of the Government. He made a very important contribution when he pointed also to the heavy burden of responsibility resting on the Labour Party. We shall not be able to conquer inflation as effectively as we should like unless we have the support from the Labour Party that ought to be forthcoming, if it is true to what it has said in the past.
The Leader of the Opposition spoke today about monetarism, charactistically with two voices. At one stage he was complaining of rigid monetary policy. He

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referred in another epithet to draconian monetary policy. That appeared to imply that there was a good monetary policy but that it could tip over the edge and become draconian, or rigid. At a later stage in his speech he went a great deal further and sought to refer to it as an entirely unproven theory. Which is it? Do the Leader of the Opposition and the Shadow Chancellor regard monetary policy as some way-out eccentricity, or do they regard it as central to the conquest of inflation?
It is important for the House to be clear that this is not some manifestation of Friedmanism. John Maynard Keynes, in one of his own. writings—[Interruption.] I am delighted that this evidence should be so applauded by Labour Members. Speaking of monetary policy, Keynes said:
"This theory is fundamental. Its correspondence with fact is not open to question."
That is from "A Tract On Monetary Reform". It should be accepted by the Labour Party as well as by everyone else. Long before Professor Milton Friedman was born—[Interruption.] If the Leader of the Opposition is unwilling to accept that, I will remind him of what he had to say on the subject. In his speech at Blackpool on 28 September 1976 he said:
"We must ask ourselves unflinchingly what is the cause of high unemployment. Quite simply and unequivocally it is caused by paying ourselves more than the value of what we produce. This is an absolute fact of life which no Government, be it left or right, can alter. We used to think that you could just spend your way out of a recession and increase 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 worked by injecting inflation into the economy. And each time that happened the average level of unemployment has risen. Higher inflation, followed by higher unemployment. That is the history of the last twenty years".
Does the right hon. Gentleman still accept that analysis of the vital part played by monetary policy in causing inflation? Does the right hon. Member for Leeds, East still accept his own statement?
At the heart of his first letter to the IMF in January 1976, at the moment when he decided to go straight in his management of the affairs of this country, he had this to say:
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"It is essential that our policies should not be undermined by excessive monetary expansion."
Is that still right? Is monetary policy still at the heart of economic management? It is necessary not only for the House but for the Opposition to understand the central importance of this proposition. As the right hon. Gentleman put it only a year ago:
"The Government are determined to maintain the monetary policy to which they have pledged themselves and the fiscal policy implied by those monetary policies."
May that be taken from now on as common ground in the approach to the policies that we are following? May it also be taken as common ground that a Budget stimulus, the injection of demand into the economy, will not necessarily achieve expansion by itself and that an increase of that kind will be met, as the right hon. Gentleman said, by imports and by setting inflation going again?
How, then, do the Opposition seek to criticise or challenge our present policies? Do they want us to go in for higher borrowing and for a larger public sector borrowing requirement? What effect do they suggest that would have on interest rates? Or do they want us to go in for less borrowing, to raise taxes, or to go in for lower or higher public expenditure?
It would be interesting to have confirmation of one other point. Again the right hon. Gentleman for Leeds, East, in one of his other letters to the IMF—[Interruption.] I quite understand why the Opposition do not like being reminded but let them weigh each word in this sentence because it is very important:
"An essential element of the Government's economic strategy will be a continuing and substantial reduction in the public sector borrowing requirement relative to national income".
Is that still a crucial part of economic strategy, because no such qualifications were contained in that letter to the IMF, nor were they intended? It is true that that obligation was sustained only for so long as the Opposition were under surveillance by the IMF, but the proposition is still important.
I come now to the other part of the equation. How far do the Opposition accept the importance of keeping expenditure under control? We regard it as paramount, if we are to get interest rates

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down and to restore prosperity in our economy, to keep public expenditure under control.
I was interested to read a speech made by the right hon. Member for Heywood and Royton (Mr. Barnett). He had this to say:
"I have no sympathy whatsoever with those who try to 'con' working people into believing that it is somehow possible, at one and the same time, to have increasing public expenditure, with lower output from an ever-declining manufacturing base, and without levels of taxation which would be unacceptable to the average worker".
In other words, we cannot continue to have our cake and eat it. The sooner that we stop pretending that we can the better it will be for the country.
The Government's policies on monetary control are crucial to the conquest of inflation, but so, too, are the changes that we propose in the Employment Bill. The changes proposed in that measure are desired by the overwhelming majority of working people. We propose to limit the range of picketing as it has been so far conducted. The Leader of the Opposition this afternoon said "The Labour movement will not support those who blockade factories". The people certainly agree with that, and so does the Bill introduced by my right hon. Friend the Secretary of State for Employment. Will the Labour Party accept legislation to prevent misconduct of that sort?
The Leader of the Opposition said "The Labour movement should be ready to act against those who break procedures." Does that include procedures about expulsion from a closed shop? The people agree on the need for enforcement of fair procedures in relation to the closed shop, and so does my right hon. Friend's Bill. Will the Labour Party support changes to that effect?
Mr. Mike Thomas rose—
Sir G. Howe: The British people expressed themselves last year overwhelmingly in favour of secret ballots on behalf of union members. They know that such ballots allow working people to make their views felt. They know that secret ballots enable people to show themselves increasingly realistic and responsible. They enable working people to show how
1698
detached from them are the leaders who claim to speak for them. Is not the Labour Party impressed by the fact that the workers at Hadfield's, when given the opportunity to decide for themselves, cast aside the leadership that they had been given by their leaders? Is it not impressed by the fact that the workers at Longbridge, as soon as they had the chance to vote, cast aside the leadership that they had been given by Red Robbo?
Mr. Mike Thomas rose—
Sir G. Howe: Is it not even more impressive that the workers in the South Wales coalfields, as soon as they had the chance to vote in a secret ballot, rejected the advice that they had been given by their leadership by an overwhelming majority?
In the Bill introduced by my right hon. Friend we are proposing that funds should be available for secret ballots, not by compulsion but entirely voluntarily at the option of the trade unions. How can there possibly be any objection to the use of public funds to give workers a better chance to vote secretly, or not to have to vote?
I see in today's newspapers that the TUC is apparently proposing to regard that proposal as the main lever in its campaign to frustrate reform of industrial relations. How out of touch can union leadership get with the feelings of ordinary working members? The truth is that working people are declaring that they have no confidence in their industrial leadership, just as those same working people 10 months ago said that they had no confidence in their political leaders in the Labour Party.
It is remarkable that the Labour Party has the gall to suggest that the British people have no confidence in Her Majesty's Government. The most remarkable thing for the people to analyse is what on earth it is the Labour Party now seeks to stand for. No Opposition have been more deeply divided. No Opposition have launched a more empty censure debate than that launched tonight.
Who speaks for the Labour Party on pay policy? The Shadow Chancellor has been waxing increasingly keen on a pay policy to be introduced forever. However, half his party wants nothing to do with

1699
a pay policy. Does the Labour Party want a pay policy? The country will be asking that question time and time again. Does the Labour Party believe, as the Shadow Chancellor used to believe, that the control and reduction of public spending is important? Does the Labour Party continue to believe that public spending should continue growing forever?
The truth is that there is no reason for the House or the country to have confidence in the Labour Party and every reason to have confidence in the Government.
Question put:—
The House divided: Ayes 268, Noes 327.

Division No. 201

AYES

[10 pm

Abse, Leo

Edwards, Robert (Wolv SE)

Leighton, Ronald

Alton, David

Ellis, Raymond (NE Derbyshire)

Lewis, Ron (Carlisle)

Anderson, Donald

Ellis, Tom (Wrexham)

Litherland, Robert

Archer, Rt Hon Peter

English, Michael

Lofthouse, Geoffrey

Armstrong, Rt Hon Ernest

Ennals, Rt Hon David

Lyon, Alexander (York)

Ashley, Rt Hon Jack

Evans, Joan (Aberdare)

Lyons, Edward (Bradford West)

Ashton, Joe

Evans, John (Newton)

Mabon, Rt Hon D J. Dickson

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

Ewing, Harry

McCartney, Hugh

Bagier, Gordon A. T.

Faulds, Andrew

McDonald, Dr Oonagh

Barnett, Guy (Greenwich)

Field, Frank

McElhone, Frank

Barnett, Rt Hon Joel (Heywood)

Fitch, Alan

McGuire, Michael (Ince)

Beith, A. J.

Fitt, Gerard

McKay, Allen (Penistone)

Benn, Rt Hon Anthony Wedgwood

Flannery, Martin

McKelvey, William

Bennett, Andrew (Stockport N)

Fletcher, L. R. (Ilkeston)

MacKenzie, Rt Hon Gregor

Bidwell, Sydney

Fletcher, Ted (Darlington)

Maclennan, Robert

Booth, Rt Hon Albert

Foot, Rt Hon Michael

McMahon, Andrew

Boothroyd, Miss Betty

Ford, Ben

McMillan, Tom (Glasgow. Central)

Bottomley, Rt Hon Arthur (M'brough)

Forrester, John

McNally, Thomas

Bradley, Tom

Fester, Derek

McNamara, Kevin

Bray, Dr Jeremy

Foulkes, George

McQuade, John

Brown, Hugh D. (Provan)

Fraser, John (Lambeth, Norwood)

McWilliam, John

Brown, Robert C. (Newcastle W)

Freeson, Rt Hon Reginald

Magee, Bryan

Brown, Ronald W. (Hackney S)

Freud. Clement

Marks, Kenneth

Buchan, Norman

Garrett, John (Norwich S)

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

Callaghan, Rt Hon J. (Cardiff SE)

Garrett, W. E. (Wallsend)

Marshall, Dr Edmund (Goole)

Callaghan, Jim (Middleton & P)

Gilbert, Rt Hon Dr John

Marshall, Jim (Leicester South)

Campbell, Ian

Ginsburg, David

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

Campbell-Savours, Dale

Golding, John

Mason, Rt Hon Roy

Canavan, Dennis

Gourlay, Harry

Maxton, John

Cant, R. B.

Graham, Ted

Maynard, Miss Joan

Carmichael, Nell

Grant, John (Islington C)

Meacher, Michael

Carter-Jones, Lewis

Hamilton, W. W. (Central Fife)

Mellish, Rt Hon Robert

Carlwright, John

Harrison, Rt Hon Walter

Mikardo, Ian

Clark, Dr David (South Shields)

Hart, Rt Hon Dame Judith

Millan, Rt Hon Bruce

Cocks, Rt Hon Michael (Bristol S)

Hattersley, Rt Hon Roy

Miller, Dr M. S. (East Kilbride)

Cohen, Stanley

Haynes, Frank

Mitchell, R C. (Soton, Itchen)

Conlan, Bernard

Healey, Rt Hon Denis

Morris, Rt Hon Alfred (Wythenshawe)

Cook, Robin F.

Heffer, Eric S.

Morris, Rt Hon Charles (Openshaw)

Cowans, Harry

Hogg, Norman (E Dunbartonshire)

Morris, Rt Hon John (Aberavon)

Cox, Tom (Wandsworth, Tooting)

Holland, Stuart (L'beth, Vauxhall)

Morton, George

Craigen, J. M. (Glasgow, Maryhill)

Home Robertson, John

Moyle, Rt Hon Roland

Crowther, J. S.

Homewood, William

Newens, Stanley

Cryer, Bob

Hooley, Frank

Oakes, Rt Hon Gordon

Cunliffe, Lawrence

Horam, John

Ogden, Eric

Cunningham, George (Islington S)

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

O'Halloran, Michael

Cunningham, Dr John (Whitehaven)

Howells, Geraint

O'Neill, Martin

Dalyell, Tam

Huckfield, Les

Orme, Rt Hon Stanley

Davidson, Arthur

Hudson Davies, Gwilym Ednyfed

Owen, Rt Hon Dr David

Davies, Rt Hon Denzil (Lianelli)

Hughes, Mark (Durham)

Paisley, Rev Ian

Davies, Ifor (Gower)

Hughes, Robert (Aberdeen North)

Palmer, Arthur

Davis, Clinton (Hackney Central)

Hughes, Roy (Newport)

Park, George

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

Janner, Hon Greville

Parker, John

Deakins, Eric

Jay, Rt Hon Douglas

Parry, Robert

Dean, Joseph (Leeds West)

John, Brynmor

Pavitt, Laurie

Dempsey, James

Johnson, James (Hull West)

Pendry, Tom

Dewar, Donald

Johnson, Walter (Derby South)

Penhaligon, David

Dixon, Donald

Jones, Rt Hon Alec (Rhondda)

Powell, Raymond (Ogmore)

Dobson, Frank

Jones, Barry (East Flint)

Prescott, John

Dormand, Jack

Jones Dan (Burnley)

Price, Christopher (Lewisham West)

Douglas, Dick

Kaufman, Rt Hon Gerald

Race, Reg

Douglas-Mann, Bruce

Kerr, Russell

Radice, Giles

Dubs, Alfred

Kilfedder, James A.

Rees, Rt Hon Merlyn (Leeds South)

Duffy, A. E. P.

Kilroy-Silk, Robert

Richardson, Jo

Dunn, James A. (Liverpool, Kirkdale)

Kinnock, Nell

Roberts, Albert (Normanton)

Dunnett, Jack

Lambie, David

Roberts, Allan (Bootle)

Dunwoody, Mrs Gwyneth

Lamborn, Harry

Roberts, Ernest (Hackney North)

Eadie, Alex

Lamond, James

Roberts, Gwilym (Cannock)

Eastham, Ken

Leadbitter, Ted

Robertson, George

Robinson, Geoffrey (Coventry NW)

Stewart, Rt Hon Donald (W Isles)

Welsh, Michael

Rodgers, Rt Hon William

Stoddart, David

White, Frank R. (Bury & Radcliffe)

Rooker, J. W.

Stott, Roger

White, James (Glasgow, Pollok)

Ross, Ernest (Dundee West)

Strang, Gavin

Whitehead, Phillip

Ross, Stephen (Isle of Wight)

Straw, Jack

Whitlock, William

Ryman, John

Summerskill, Hon Dr Shirley

Wigley, Dafydd

Sandelson, Neville

Taylor, Mrs Ann (Bolton West)

Willey, Rt Hon Frederick

Sever, John

Thomas, Dafydd (Merioneth)

Williams, Rt Hon Alan (Swansea W)

Sheerman, Barry

Thomas, Jeffrey (Abertillery)

Williams, Sir Thomas (Warrington)

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

Thomas, Mike (Newcastle East)

Wilson, Gordon (Dundee East)

Short, Mrs Renée

Thomas, Dr Roger (Carmarthen)

Wilson, Rt Hon Sir Harold (Huyton)

Silkin, Rt Hon John (Deptford)

Thorne, Stan (Preston South)

Wilson, William (Coventry SE)

Silkin, Rt Hon S. C. (Dulwich)

Tilley, John

Winnick, David

Silverman, Julius

Tinn, James

Woodall, Alec

Skinner, Dennis

Torney, Tom

Woolmer, Kenneth

Smith, Cyril (Rochdale)

Urwin, Rt Hon Tom

Wrigglesworth, Ian

Smith, Rt Hon J. (North Lanarkshire)

Varley, Rt Hon Eric G.

Wright, Sheila

Snape, Peter

Wainwright, Edwin (Dearne Valley)

Young, David (Bolton East)

Soley, Clive

Wainwright, Richard (Colne Valley)

Spearing, Nigel

Walker, Rt Hon Harold (Doncaster)

TELLERS FOR THE AYES

Spriggs, Leslie

Watkins, David

Mr. James Hamilton and

Stallard, A. W.

Weetch, Ken

Mr. Donald Coleman.

Steel, Rt Hon David

Wellbeloved, James

NOES

Adley, Robert

Clarke, Kenneth (Rushcliffe)

Grylls, Michael

Aitken, Jonathan

Clegg, Sir Walter

Gummer, John Selwyn

Alexander, Richard

Cockeram, Eric

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

Alison, Michael

Cope, John

Hamilton, Michael (Salisbury)

Amery, Rt Hon Julian

Cormack, Patrick

Hampson, Dr Keith

Ancram, Michael

Corrie, John

Hannam, John

Arnold, Tom

Costain, A. P.

Haselhurst, Alan

Aspinwall, Jack

Cranborne, Viscount

Hastings, Stephen

Atkins, Rt Hon H. (Spelthorne)

Critchley, Julian

Havers,Rt Hon Sir Michael

Atkins, Robert (Preston North)

Crouch, David

Hawkins, Paul

Atkinson, David (B'mouth, East)

Dean, Paul (North Somerset)

Hawksley, Warren

Baker, Kenneth (St. Marylebone)

Dickens, Geoffrey

Hayhoe, Barney

Baker, Nicholas (North Dorset)

Dorrell, Stephen

Heath, Rt Hon Edward

Beaumont-Dark, Anthony

Douglas-Hamilton, Lord James

Heddle, John

Bell, Sir Ronald

Dover, Denshore

Henderson, Barry

Bendall, Vivian

du Cann, Rt Hon Edward

Heseltine, Rt Hon Michael

Benyon, Thomas (Abingdon)

Dunn, Robert (Dartford)

Hicks, Robert

Benyon, W. (Buckingham)

Durant, Tony

Higgins, Rt Hon Terence L.

Best, Keith

Dykes, Hugh

Hill, James

Bevan, David Gilroy

Eden, Rt Hon Sir John

Hogg, Hon Douglas (Grantham)

Biffen, Rt Hon John

Edwards, Rt Hon N. (Pembroke)

Holland, Philip (Carlton)

Biggs-Davison, John

Eggar, Timothy

Hooson, Tom

Blackburn, John

Elliott, Sir William

Hordern, Peter

Blaker, Peter

Eyre, Reginald

Howe, Rt Hon Sir Geoffrey

Body, Richard

Fairbairn, Nicholas

Howell, Rt Hon David (Guildford)

Bonsor, Sir Nicholas

Fairgrieve, Russell

Howell, Ralph (North Norfolk)

Boscawen, Hon Robert

Faith, Mrs Sheila

Hunt, David (Wirral)

Bottomley, Peter (Woolwich West)

Farr, John

Hunt, John (Ravensbourne)

Bowden, Andrew

Fell, Anthony

Hurd, Hon Douglas

Boyson, Dr Rhodes

Fenner, Mrs Peggy

Irving, Charles (Cheltenham)

Bradford, Rev. R.

Finsberg, Geoffrey

Jenkin, Rt Hon Patrick

Braine, Sir Bernard

Fisher, Sir Nigel

Jessel, Toby

Bright, Graham

Fletcher, Alexander (Edinburgh N)

Johnson Smith, Geoffrey

Brinton, Tim

Fletcher-Cooke, Charles

Jopling, Rt Hon Michael

Brittan, Leon

Fookes, Miss Janet

Joseph, Rt Hon Sir Keith

Brocklebank-Fowler, Christopher

Forman, Nigel

Kaberry, Sir Donald

Brooke, Hon Peter

Fowler, Rt Hon Norman

Kellett-Bowman, Mrs Elaine

Brotherton, Michael

Fox, Marcus

Kershaw, Anthony

Brown, Michael (Brigg & Sc'thorpe)

Fraser, Rt Hon H. (Stafford & St)

Kimball, Marcus

Browne, John (Winchester)

Fraser, Peter (South Angus)

King, Rt Hon Tom

Bruce-Gardyne, John

Fry, Peter

Kitson, Sir Timothy

Bryan, Sir Paul

Galbraith, Hon T. G. D.

Knight, Mrs Jill

Buchanan-Smith, Hon Alick

Gardiner, George (Reigate)

Knox, David

Buck, Antony

Gardner, Edward (South Fylde)

Lamont, Norman

Budgen, Nick

Garel-Jones, Tristan

Lang, Ian

Bulmer, Esmond

Gilmour, Rt Hon Sir Ian

Langford-Holt, Sir John

Burden, F. A.

Glyn, Dr Alan

Latham, Michael

Butcher, John

Goodhart, Philip

Lawrence, Ivan

Butler, Hon Adam

Goodhew, Victor

Lawson, Nigel

Cadbury, Jocelyn

Goodlad, Alastair

Lee, John

Carlisle, John (Luton West)

Gorst, John

Lennox-Boyd, Hon Mark

Carlisle, Kenneth (Lincoln)

Gow, Ian

Lester, Jim (Beeston)

Carlisle, Rt Hon Mark (Runcorn)

Gower, Sir Raymond

Lewis, Kenneth (Rutland)

Chalker, Mrs Lynda

Gray, Hamish

Lloyd, Ian (Havant & Waterloo)

Channon, Paul

Greenway, Harry

Lloyd, Peter (Fareham)

Chapman, Sydney

Grieve, Percy

Loveridge, John

Churchill, W. S.

Griffiths, Eldon (Bury St Edmunds)

Luce, Richard

Clark, Hon Alan (Plymouth, Sutton)

Griffiths, Peter (Portsmouth N)

Lyell, Nicholas

Clark, Sir William (Croydon South)

Grist, lan

McCrindle. Robert

McCusker, H.

Parris, Matthew

Stanley, John

Macfarlane, Neil

Patten, Christopher (Bath)

Steen, Anthony

MacGregor, John

Patten, John (Oxford)

Stevens, Martin

MacKay, John (Argyll)

Pattie, Geoffrey

Stewart, Ian (Hitchin)

McNair-Wilson, Michael (NewBury)

Pawsey, James

Stewart, John (East Renfrewshire)

McNair-Wilson, Patrick (New Forest)

Percival Sir Ian

Stokes, John

McQuarruie, Alber'

Peyton, Rt Hon John

Stradling Thomas, J.

Madel, David

Pink, R. Bonner

Tapsell, Peter

Major, John

Pollock, Alexander

Taylor, Robert (Croydon NW)

Marland, Paul

Porter, George

Tebbit, Norman

Marlow, Tony

Powell, Rt Hon J. Enoch (S Down)

Temple-Morris, Peter

Marshall, Michael (Arundel)

Prentice, Rt Hon Reg

Thatcher, Rt Hon Mrs Margaret

Marten, Neil (Banbury)

Price, David (Eastleign)

Thomas, Rt Hon Peter (Hendon S)

Mates, Michael

Prior, Rt Hon James

Thompson, Donald

Mather, Carol

Proctor, K. Harvey

Thorne, Neil (llford South)

Maude, Rt Hon Angus

Pym, Rt Hon Franci

Thornton, Malcolm

Mawby, Ray

Raison, Timothy

Townend, John (Bridlington)

Mawhinney, Dr Brian

Rathbone, Tim

Townsend, Cyril D. (Bexleyhealh)

Maxwell-Hyslop, Robin

Rees, Peter (Dover and Deal)

Trippier, David

Mayhew, Patrick

Rees-Davies, W. R.

Trotter, Neville

Mellor, David

Renton. Tim

van Siraubenzee, W. R.

Meyer, Sir Anthony

Rhodes James, Robert

Vaughan, Dr Gerard

Miller, Hal (Bromsgrove & Redditch)

Rhys Williams, Sir Brandon

Waddington, David

Mills, Iain (Meriden)

Ridsdale, Julian

Wakeham, John

Mills, Peter (West Devon)

Rifkind, Malcolm

Waldegrave, Hon William

Miscampbell Norman

Roberts, Michael (Cardiff NW)

Walker, Rt Hon Peter (Worcester)

Mitchell, David (Basingstoke)

Roberts, Wyn (Conway)

Walker, Bill (Ferth & E Perthshire)

Moate, Roger

Ross, Wm. (Londonderry)

Walker-Smith, Rt Hon Sir Derek

Molyneaux, James

Rossi, Hugh

Wall, Patrick

Monro, Hector

Rost, peter

Waller, Gary

Montgomery, Fergus

Royle, Sir Anthony

Walters, Dennis

Moore, John

Sainsbury, Hon Timothy

Ward, John

Morgan, Geraint

St. John-Stevas, Rt Hon Norman

Warren, Kenneth

Morris, Michael (Northampton, Sth)

Scott, Nicholas

Watson, John

Morrison, Hon Charles (Devizes)

Shaw, Giles (Pudsey)

Wells, John (Maidstone)

Morrison, Hon Peter (City of Chester)

Shaw, Michael (Scarborough)

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

Mudd, David

Shelton, William (Streatham)

Wheeler, John

Murphy, Christopher

Shepherd, Colin (Hereford)

Whitelaw, Rt Hon William

Myles, David

Shepherd, Richard (Aldridge-Br'hills)

Whitney, Raymond

Neale, Gerrard

Shersby, Michael

Wlckenden, Keith

Needham, Richard

Silvester, Fred

Wiggin, Jerry

Nelson, Anthony

Sims, Roger

Wilkinson, John

Neubert, Michael

Skeet, T. H. H.

Williams, Delwyn (Montgomery)

Newton, Tony

Speed, Keith

Winterton, Nicholas

Normanton, Tom

Speller, Tony

Wolfson, Mark

Nott, Rt Hon John

Spence, John

Young, Sir George (Acton)

Oppenheim, Rt Hon Mrs Sally

Spicer, Jim (West Dorset)

Younger, Rt Hon George

Osborn, John

Spicer, Michael (S Worcestershire)

Page, John (Harrow, West)

Sproat, Iain

TELLERS FOR THE NOES

Page, Rt Hon Sir R. Graham

Squire, Robin

Mr. Spencer Le Merchant and

Page, Richard (SW Hertfordshire)

Stainton, Keith

Mr. Anthony Berry.

Parkinson, Cecil

Question according negatived.

ST. JOHN'S HOSPITAL, DROITWICH
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Waddington.]
10.16 pm
Mr. Robert Edwards: I greatly appreciate the opportunity to raise on the Adjournment a matter of vital importance. I realise that it is something of an anti-climax after a debate on the economy, but it relates to the matters that we have been discussing. We have been concerned today with the need to increase the totality of wealth production, and many Government Members referred to the effect of industrial disputes on production.
I wish to deal with the proposed closure of a specialist hospital that deals with rheumatoid arthritis. More working days are lost each year through rheumatic diseases than through industrial disputes. The latest figures show that in one year 24 million working days were lost in this country through certified rheumatoid arthritis. During the same period, only 9,100,000 days were lost through industrial disputes.
If there is any such thing as an English disease, it is rheumatism. We do not know enough about it. We do not do enough research. We do not know whether rheumatic diseases are hereditary or due to environment or working conditions. We do not spend enough money on the problem.
We are today facing the closure of one of our best hospitals, which for many years has specialised in treating people suffering the agony of arthritis and rheumatic disease. The hospital is not in my constituency, but many of my constituents are patients there. Indeed, 71 patients from Wolverhampton have been treated in this hospital. More than 100 patients from Bilston, which was previously part of my constituency, and more than 200 patients from Birmingham have been treated there. It is not simply a local hospital. It covers the whole of the West Midlands. Patients come from London, Birmingham, Liverpool and South Wales to be treated there. If any hospital in the country has a specialised knowledge of the disease and its associated agonies, it is this hospital.
1706
The hospital keeps data on the patients, and it uses specialised drugs. It knows everything about the disease. To close it would be a dastardly crime. It would be the nth degree of human stupidity. A saving of £200,000 is involved. As the local committee has suggested, there will be no redundancies, so that sum could be cut by half. Therefore, a trivial sum of, say, £100,000 is involved. It is nothing compared with the work of the hospital. At present only the local committee at Bromsgrove has suggested the closure, and the matter still has to go before the area health council that meets tomorrow, Friday 29 February. That is why this short, modest debate is so appropriate.
I do not wish to bore the House at this late hour with a recital of the problems, but I feel compelled to read extracts from some of the letters that I have received. I have had scores of letters from constituents and from people all over the country. A petition, organised by the Friends of St. John Ambulance, has been signed by 3,000 people.
I should like to read extracts from one or two letters. A man aged 36 wrote:
"I urge you to do all you can to keep this hospital open as I was unable to walk with rheumatoid arthritis until I spent 8 weeks in the hospital, and as I am only 36 years of age this has meant that I have been able to resume full-time work as a sheet metal worker for the last 12 months. It is of vital importance to people like me that there is a place like this where we can go to be treated."
Another constituent, an older lady who served in the WAAF during the war, wrote to me. Who knows—nobody knows—whether her contribution to the war effort was the cause of her problem? She says:
"I could not move a bone in my body at that time without being in great pain. At my arrival at St. John's I was given a thorough examination, put to bed. After having several blood tests I was found to have rheumatoid arthritis.…So you may have some idea of how ill I was. I could not lift my arms to feed myself. However, they did everything possible for me, giving me suitable drugs, and after 7 weeks of their care and treatment I was able to walk out of the hospital."
I have received a petition from the patients in ward 7 at St. John's hospital which states:
"If St. John's is forced to close, it means many hundreds of people…are getting progressively worse, and could end up either chair-bound or house-bound, with more calls

1707
on other social services. Most important is the confidence a patient has in the treatment given by the staff…How will the patients manage, some coming from so far afield, as there is no hospital in their areas who do this specialised work."
I received another composite letter from the patients in ward 3 of the hospital:
"The close work and the detailed attention given to the treatment of the disease in this hospital is beyond praise. The expert staff treat patients from all parts of the country with a high percentage of success."
I could go on quoting from detailed letter after letter.
I also received a note from the major doctor in the hospital, Dr. Popert, who says that he feels that the suggested transfer of patients to another hospital in Bromsgrove would not be practical and would virtually mean the end of this specialised treatment. He is a doctor who knows more about these diseases, in my opinion, than any other man in the country.
Having stated the local position, I should like to say a few words about the national position, to highlight the nature of the problem that we are dealing with in this modest localised debate. In 1973, 22,200,000 working days were lost by working people suffering from rheumatic diseases. In that year, only 11,800,000 working days were lost through strikes. In 1974, 21,400,000 working days were lost through rheumatic diseases, whereas in that year only 9,700,000 days were lost through strikes. I can go on. In 1976, 24,300,000 working days were lost through rheumatic diseases as against 5,500,000 lost through strikes. The latest figures I have are for the year 1977, when 28,100,000 days were lost by people who were certified to be suffering from rheumatic diseases as against 9,500,000 that were lost through strikes.
Of course, the media talk about the evil British disease—the industrial disease of strikes—yet here we have the real cause of the reduction of wealth production in the country—certified sickness. If anybody doubts that, let me give the House the latest figures that I have. In the year 1977, 353 million working days were lost through sickness and of that figure 28 million were lost through rheumatic diseases. In those circumstances, how can any Government reduce and diminish what is being done to treat
1708
rheumatic diseases? We do not do enough. We do not know enough. We have to spend more money, not less.
The hon. Member for Bromsgrove and Redditch (Mr. Miller), who is not in his place, has, to his credit, taken up this matter, as was his duty, and has asked the Minister to visit the hospital and discuss with the people concerned the proposed closure. The Minister has so far not been able to make a visit. I do not blame him. He has been involved each Friday, in his limited time, with the Abortion (Amendment) Bill. However, I hope that he will take an early opportunity to visit the area.
I hope that the Minister will take account of the committee that has been set up to defend this hospital—the League of Rights for St. John's Hospital—and the petition with 3,000 signatures from local people representing local opinion. I hope that he will end the nonsense of cutting back on important specialised hospitalisation which is doing an important job for people whose lives are a nightmare of pain. Many people have been relieved of that nightmare and are now able to lead a healthy, active, working life.
10.32 pm
The Under-Secretary of State for Health and Social Security (Sir George Young): I congratulate the hon. Member for Wolverhampton, South-East (Mr. Edwards) on securing this debate, giving me, as it does, an opportunity to clear up some of the misunderstandings that may have arisen about the future of St. John's hospital, Droitwich. I hope to allay some of the concern that has been expressed. I also thank the hon. Member for letting me know in advance some of the issues that he intended to raise tonight.
The hon. Gentleman spoke with knowledge and feeling about the subject, read some very moving letters from those who suffer from rheumatism and presented the House with some interesting statistics about days lost from rheumatism contrasted with days lost from industrial disputes.
Although it might be an exaggeration to say that my Department has received a deluge of complaints and representations about St. John's, there has certainly been a steady shower. Reflecting, I am sure, the work done at St. John's, the

1709
showers have been fairly widespread across the West Midlands and beyond. It would not, I fear, be practicable to refer to all hon. Members on both sides of the House and to all the organisations who have made representations to us, but I should like to mention especially the concern expressed by the League of Friends of Droitwich Hospitals and by my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller).
I also have an obvious and clear duty to report the views of my right hon. Friend the Member for Worcester (Mr. Walker), in whose constituency the hospital is situated. He has conveyed to me the anxieties of his constituents, the patients and the staff at the proposed closure of what he sees as a fine hospital with a great reputation. I shall pass on to my hon. Friend the Minister of State the kind offer of a visit which was extended.
Mr. Iain Mills: I am grateful to my hon. Friend for allowing me to add to his list in my brief intervention. I have recently received a petition, comprising signatures of people from as far from Droitwich as Chelmsley Wood, testifying that they have benefited enormously from the services of St. John's hospital. Droitwich. I humbly beg my hon. Friend to do what he can in this respect.
Sir G. Young: My hon. Friend the Member for Meriden (Mr. Mills), who I am pleased to see in his place, underlines what I have just said. The importance of this hospital extends far beyond the boundaries of the constituency in which it is located.
I should like to state categorically at the outset that no decision has been taken to close St. John's, nor, indeed, is any final decision imminent. I shall be referring shortly to the various stages that have normally to be gone through before a hospital can be closed. As the final stage might involve a decision by Ministers in my Department, it would not be proper for me to pre-empt that decision or the decision of the relevant health authorities at this very early stage. What I should like to do is to set out a framework giving some of the factors that we will take into account should the issue come before us. The area and regional
1710
health authorities might also like to take these factors into account.
St. John's hospital, which has 57 beds, and Highfield hospital, with 63 beds, together comprise the Droitwich Centre for Rheumatic and Locomotor Disorders. They jointly provide a sub-regional service in rheumatology and rehabilitation. Although both are located in Droitwich, and thus within the geographical boundaries of the Worcester health district, the two hospitals are administered by the Bromsgrove and Redditch health district. Bromsgrove and Redditch health district is one of four within the Hereford and Worcester area health authority.
In 1978, St. John's hospital treated something like 600 patients. Of these, only 4 per cent. came from the Bromsgrove and Redditch district itself. Some 25 per cent. came from other districts in the Hereford and Worcester area health authority, and no fewer than 56 per cent. came from other areas in the West Midlands region. The remaining 15 per cent. came from outside the region. The same story applies to Highfield hospital, where the number of cases treated is slightly higher. At the Droitwich centre there is a specialist medical staff made up of three consultant physicians and a consultant rheumatologist, all of whom have beds at St. John's.
In addition, three orthopaedic surgeons with a number of sessions at the centre carry out hip operations in their respective theatres and return their patients immediately for post-operative care at St. John's or Highfield. A general surgeon carries out hand surgery on St. John's patients and also holds an out-patient clinic at the hospital. There are a full-time physiotherapist and occupational therapist at St. John's, each having a separate room to treat their patients.
At Highfield, there is a team of seven physiotherapists with four helpers to carry out hydrotherapy and physiotherapy on patients from Highfield and St. John's. Similarly, there are six occupational therapists, an aide and a technician to carry out splint-making and undertake assessments so that the patients may return to their homes to carry out housework and so on with aids adapted to their particular condition.
The Droitwich centre is one of seven centres designated for rheumatology in

1711
the West Midlands region at present. These have been developed on a sub-regional basis. Rheumatological treatment is undertaken both by specialist rheumatologists and by physicians with a special interest. The specialty of rheumatology is characterised by its high outpatient work load.
Rheumatic disease is prevalent at all ages, but its incidence increases with age. Rheumatic diseases affect not only bones and joints but may affect tissues in the body including blood vessels, kidneys, skin, eyes, brain, heart and lungs. Some rheumatic diseases result from infection. Although there is no evidence that the incidence and prevalence of rheumatic disorders are any less in the West Midlands than nationally, there are many fewer consultants in rheumatology per head of population in this region than in any other region.
Similar deprivation is illustrated by the fact that proportionately eight times as many new out-patients are seen in the four Thames regions as in the West Midlands region. Thus, we have a picture of a relatively low level of development of rheumatology services in the region with respect to estimated demand. Indeed, the recently published regional strategic plan of the West Midlands regional health authority suggests that rheumatology should be accorded a higher priority than the other medical specialties. That is clearly a major factor that will have to be taken into account in considering the possible closure of St. John's.
I understand that the initial proposal to close St. John's hospital arose from an examination by the Bromsgrove and Redditch district management team of the district's financial position. In common with a large number of other districts, the team is having to look critically at its budget to see what scope there is for savings to keep within financial allocations. A large range of options have been and are being considered. Many of these do not involve a reduction in the level of patient services.
In suggesting that St. John's might be a possible candidate for closure, the team had in mind that the expenditure might be transferred to Hill Top hospital in Bromsgrove. This would, it was felt, assist in the commissioning of Hill Top as an orthopaedic and rheumatology unit,
1712
in conjunction with Highfield hospital, and there would, of course, be significant savings—of between £100,000 and £150,000 a year—in overheads from the St. John's buildings and services. It would also enable a more intensive and efficient use of the buildings, including the upgraded theatre, at Hill Top. But there would be an overall reduction in services of around 25 per cent., and I am sure that everyone would wish to avoid such a reduction if at all possible.
I understand that the district management team has started informal consultations with the staff. No doubt it will have been told in no uncertain terms of the strength of feelings on the issue. Detailed proposals are contained in the district plan which is to be submitted to a seminar of members of the Hereford and Worcester area health authority, tomorrow, Friday 29 February. As the hon. Gentleman implied, that seminar is not empowered to take decisions.
Any decision to involve the full closure procedure will have to be taken by a full meeting of the authority. I understand that the next meeting is due to take place on Friday 21 March, by which time, I am sure, the members will have had an opportunity to study the record of our proceedings here tonight.
It might be helpful if I make one or two general remarks on the financial situation facing the National Health Service and our attitude to closures in that context. In the national context, it is the Government's firm intention to continue the redistribution of resources in favour of the needier regions, and the West Midlands, as a relatively deprived region, will continue to be among those receiving a higher share of the available additional resources. The rate of progress towards equity will depend, however, on the level of additional resources that can be afforded to provide for the NHS. And this in turn depends, of course, on how soon the national economy responds to the Government's policies. It will also be affected by the intention that the process should be one of levelling up as far as possible. It is inevitable, therefore, that there will be some slowing down in the rate of progress over the next few years.
The Government attach the greatest importance to controlling expenditure and

1713
have stressed the need for health authorities to stay within their allocations. Many authorities are now searching for ways to save money, and to some it will seem that the temporary closure of a hospital is the only answer. I do not rule this out as a last resort, but such a decision must be reached only after the most careful exploration of all other possibilities. Where there is a need to cut back in order to avoid overspending, this must be done in the way that has least effect on patients. Closures always have an adverse effect and so must be avoided wherever possible.
Perhaps I should say that while we reluctantly accept that some temporary closures may have to be made for financial reasons, my fellow Ministers and I will not agree to permanent closures as a way out of short-term difficulties. Every permanent closure reduces the Health Service's precious stock of hospitals at a time when the country can ill afford to make good the loss, and the cumulative effect of a number of small closures can be substantial. Thus we are quite firm that permanent closure should occur only as a part of agreed long-term plans for the development or rationalisation of health services in a particular area.
Proposals for permanent closure will normally first appear in strategic plans well in advance of the intended closure date. These plans are widely consulted upon before being accepted for implementation by authorities. Nearer the time, the authority must undertake separate formal consultation on the closure in accordance with procedures laid down by the Department. These procedures are rather complex, but I shall try to summarise them.
Briefly, the AHA must issue a formal consultation document setting out its pro-
1714
posals to the community health councils and local authorities involved and to staff and professional interests. Three months are allowed for comment, and all comments must be passed to the CHC for any furthed observations it may wish to make. If the CHC does not object to closure, the AHA considers all the comments on its proposal and decides whether to close. If the CHC objects, it has to submit a counter-proposal to the AHA, which, if it wishes to proceed, must refer the matter to the RHA. The RHA, if it supports the case for closure, then submits the case to Ministers for a final decision.
I hope that my observations here tonight will have done something to reduce the concern so clearly felt about the future of St. John's.
It is, of course, right that the future should be widely discussed. But there is an unfortunate tendency now to believe that, because possible closure is being considered by local management, that course is inevitable. As I indicated at the outset, it would not be proper of me to give a firm decision here tonight about the future of St. John's, but I hope I have shown that there can be no question of a precipitate decision on closure being taken.
I am quite confident that the Hereford and Worcester area health authority and, if appropriate, the West Midlands regional health authority will look at this issue most carefully bearing in mind not only the local feeling expressed so forcefully here this evening and elsewhere but also the wider regional and national considerations to which I have referred.
Question put and agreed to.
Adjourned accordingly at sixteen minutes to Eleven o'clock.

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Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Southwell):
The LORD CHANCELLOR on the Woolsack.

LENGTH OF SPEECHES AND PROCEDURE
The Earl of LISTOWEL: 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 the Leader of the House whether he is satisfied that the Resolution of the House on the length of speeches (13th July 1965) and the recommendations of the Procedure Committee concerning the usual courtesies of the House in debate are being sufficiently observed at the present time.
The MINISTER of STATE, MINISTRY of AGRICULTURE, FISHERIES and FOOD (Earl Ferrers): No, my Lords. On the whole, my modest view is that speeches are too long, questions are too long, and answers are too long—and life is too short. Your Lordships might find it useful to be reminded that the Companion to the Standing Orders has recently been revised and reprinted. I commend its study to all Members of the House. On page 88 it succinctly states—and I have no reason to think that your Lordships would take a contrary view—that long speeches engender tedium and tend to kill debate.
Lord PEART: My Lords, I am grateful for what the noble Earl has said—
Several noble Lords: Order!
The Earl of LISTOWEL: My Lords, I am grateful, and I am sure the House is grateful, to the noble Earl for his reply. I should like to ask him whether he does not agree that there may be something to be said for the ministerial practice of the late Lord Halifax when he was Foreign
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Secretary, when he firmly refused to reply to any speeches made by noble Lords unless they were present when he wound up, thus discouraging discourtesy and shortening debate.
Earl FERRERS: My Lords, I think that your Lordships have a record of being particularly courteous, and that is the reason why very often speeches of noble Lords are referred to by Ministers who wind up even though the noble Lords may not still be in their places. I would re-emphasise the noble Earl's point, that those who take part in debate ought to be present to hear the opening speech; they should not leave the Chamber until after the speaker succeeding them has spoken; and they should remain to the end of the debate.
I am glad that the noble Lord the Leader of the Opposition did not fall foul of the noble Earl's Question by asking a supplementary before the noble Earl had had that privilege.
Lord PEART: My Lords, I agree entirely with what the noble Earl has said. I remember that the Motion I moved that we should shorten our speeches was carried overwhelmingly. In yesterday's debate—which was a very fine one—Members did basically keep to that rule. Our debates are far better when we have short, concise speeches.
Earl FERRERS: My Lords, I agree with that; but I am not sure what the question was.
Lord BYERS: My Lords, good as the Companion is, would it not be worth while issuing a short note of the major conventions which are in breach and are becoming more in breach? Yesterday, for instance, three Members of this House walked out in the middle of an important maiden speech. These are the courtesies which we must uphold.
Earl FERRERS: My Lords, I agree with the noble Lord, Lord Byers. If I may say so, Members walking in and out of the Chamber during maiden speeches is a practice which has been growing. A person should not walk in or out of the Chamber at this time. There is no excuse for not knowing, because there is a list of speakers and your Lordships

1505
are supposed to know whether there is a maiden speaker. I would say to the noble Lord, Lord Byers, that there is a pocket guide to the Companion which is given to all noble Lords when they first come to the House as part of their "kit" with which they are issued.
Lord CAMPBELL of CROY: My Lords, would not our proceedings be improved if also the reverse of the medal proposed by the noble Earl, Lord Listowel, were more widely observed: that when a noble Lord finds that he cannot stay for the closing speeches in a debate he should withdraw his name from the list and refrain from taking part? When this happens it is a praiseworthy act of self-denial. Sometimes it can also be an act of mercy when it helps to shorten a very long list of speakers.
Earl FERRERS: My Lords, I think that my noble friend is entirely correct in that. Indeed, if that practice were to be followed I fancy that the list of speakers would be truncated quite a lot.
Lord DRUMALBYN: My Lords, is it not equally undesirable—and this has happened on two or three occasions recently—that there should be a large exodus of noble Lords just at the time when a maiden speaker rises to speak? Does the noble Earl think that this is conducive to a better maiden speech, and is it reasonable in view of the strain which a maiden speaker is bound to experience the first time that he speaks in your Lordships' House?
Earl FERRERS: My Lords, I know the occasion to which my noble friend refers because I was here. I am bound to say that I was horrified at the total exodus from the Chamber. This was no reflection on he who was about to make the maiden speech, but it must have been peculiarly upsetting and disarming because he may well have thought that it was. I think that your Lordships—if I may say so with respect—ought corporately to be a little more careful when maiden speakers are making their speeches.
Lord LEATHERLAND: My Lords, is not that exodus when a maiden speaker rises due to the fact that he usually does so about 4 o'clock when most noble Lords are just about to go out for their
1506
tea? Yes, my Lords, it is a fact; I have noticed it several times.
Earl FERRERS: My Lords, I agree that the exodus takes place when noble Lords are about to go out. Whether it is for their tea or for another purpose, I do not know.
Lord FERRIER: My Lords, my noble Leader referred to the length of Questions. He did not refer to the length of supplementaries. Is there not an understanding—if not a rule—that supplementaries should not be read?
Earl FERRERS: My Lords, it is perfectly true that supplementaries should not be read. I did refer to supplementaries, both the questions and the answers, which I thought on the whole—including my own—were too long.
Lord ELWYN-JONES: My Lords, would the noble Earl think it desirable to draw attention to the increasing appalling emptiness of the Benches at times in your Lordships' House, as I have noticed in the past six years? If I may be permitted to give an illustration, in the Second Reading debates on both the Industry Bill and the Education Bill—both of great importance—there were only about 10 noble Lords in the House during the last hour of each of the debates. If I may say so, I have been impressed since I have been in the House that the attendance has tended to be better here than in another place. But that has deteriorated very badly, and, worst of all, in this Session of Parliament. Perhaps the House ought to be looking at that because the impression it makes upon visitors in the Gallery is deplorable.
Earl FERRERS: My Lords, the noble and learned Lord is quite right to draw attention to that because the purpose of debate is in order to hear and to take part. It is not supposed to be only for those who are taking part. Again, it is something we ought to attend to corporately. We should, as partakers of what goes on in the Chamber, be prepared to be here and listen, even though we are not taking part.
Lord NUGENT of GUILDFORD: My Lords, is my noble friend aware of the experiment which took place in the

1507
other House recently when between certain hours of the debate—I think between 7 p.m. and 9 p.m.—a convention was observed to shorten speeches to 10 minutes or less? Is my noble friend aware that this seemed a useful experiment to shorten speeches? Would he consider such an experiment being made here?
Earl FERRERS: My Lords, that would be something for the Procedure Committee to do if that was considered desirable. My own view is that it would be very difficult to limit speeches. We have the clocks which are supposed to help. I know that my noble friend the Government Chief Whip did suggest on one occasion that it might be appropriate to put a cuckoo in the clock so that whenever the 10 minutes appeared there was an appropriate birdlike noise which might interrupt the speaker. But I think it would be difficult to restrict noble Lords to 10 minutes.
Lord DAVIES of LEEK: My Lords, is the noble Lord aware that, despite the enthusiasm of some of us to listen to the debates—and some of us apologise even for not listening to the opening speakers—there are legitimate occasions when some of us who may be on important Committees which meet at 4 o'clock stand at that time? There may be 30 or 40 people moving out of the Chamber legitimately without any offence to the speakers or the debate. That must be taken into account rather than give people the impression that masses of people are walking out without any other objectives.
Earl FERRERS: My Lords, I am sure the noble Lord, Lord Davies of Leek, is quite right. It is the presentation of it that is important, because however important it is for noble Lords to go to other meetings, it is equally important that they should not imply discourtesy to a maiden speaker.

PSYCHIATRIC HOSPITALS: STAFF/PATIENT RATIO
3.10 p.m.
Lord AYLESTONE: 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 state the ratio of nursing staff to patients in psychiatric hospitals in the United Kingdom on a convenient date in each of the last five years.
Lord CULLEN of ASHBOURNE: My Lords, the figures that I have show that the ratio has increased from 45·3 for every 100 in-patients in 1973 to (provisionally) 61·3 in 1977 in England, from 45·7 for every 100 in-patients in 1973 to (provisionally) 62·9 in 1977 in Wales, and from 45·84 for every 100 average occupied beds in 1973 to 54·34 in 1977 in Scotland. Figures are not available for Northern Ireland, and could only be obtained at disproportionate cost. In view of the debate we have just had, I will circulate the rest of the figures in the Official Report.
Following is the information referred to above:
The number of nursing staff per 100 in-patients in mental illness hospitals and units in England and Wales for the last five years for which figures are available is as follows:

England

Wales

1973

45·3

45·7

1974

48·1

50·9

1975

54·8

55·4

1976

57·7

60·0

1977

61·3 (provisional)

62·9 (provisional)

The number of in-patients is recorded at 31st December each year, while the number of staff in post is recorded at 30th September. In view of this time lag the staff/patient ratio must be regarded as approximate.
The information for Scotland relates to the number of nursing staff per 100 average occupied beds for each year ending 30th September and for the last five years for which figures are available is as follows:

1973

45·84

1974

46·80

1975

51·86

1976

53·92

1977

54·34

I regret that figures for Northern Ireland are not available.
Lord AYLESTONE: My Lords, I thank the noble Lord for his reply. If I have the figures correctly, there has been an improvement over the last five years, which is extremely gratifying. May I ask him whether the Government will do their utmost, if not to improve these figures, to see that they are maintained in the future?—because this is a particularly difficult branch of nursing for recruitment.
Lord CULLEN of ASHBOURNE: My Lords, I entirely agree with the noble Lord, and since 1977 the figures have continued to improve. It is certainly the intention of the department to encourage that in the future.

INDUSTRIAL TRAINING BOARDS: MSC REVIEW
3.12 p.m.
The Earl of KINNOULL: 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 when they expect the review of industrial training boards being carried out by the Manpower Services Commission to be completed.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie): My Lords, I am informed by the Manpower Services Commission that they expect to receive in July the report of the review body which is considering, in the aftermath of the 1973 Employment and Training Act, the adequacy of the arrangements for encouraging and providing training for employment in industry and commerce.
The Earl of KINNOULL: My Lords, while thanking my noble friend for that reply, may I ask whether he could confirm that the review will be sufficiently comprehensive to meet the essential role of the training boards in easing the labour market and unemployment? Can he also confirm that the board's attention will be drawn to the need particularly to help to equip people with skills in the 1980s? I have in mind, in particular, the micro-electronic industry.
The Earl of GOWRIE: My Lords, I sympathise with my noble friend. These are indeed technical issues and an occasional aide-memoire, as Ministers well know, comes in very handy. I can assure him that the review will be sufficiently wide-ranging. It covers not only industrial training boards but all aspects of industrial training that come within the scope of
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the Employment and Training Act 1973. These cover sectors of industry outside the scope of the boards. If I may add a quick personal note, as the Minister responsible for micro-electronic technology within my department, I have asked that micro-electronic training be covered and we have in fact made additional provision, in money terms, for that.
Lord WYNNE-JONES: My Lords, will the noble Earl confirm that it is not the intention of his department to close down training centres, but rather to extend and improve them?
The Earl of GOWRIE: Yes, my Lords.
The Earl of KINNOULL: My Lords, would my noble friend also confirm that Her Majesty's Government are now happy with the terms and conditions of the training board staffs themselves?
The Earl of GOWRIE: My Lords, there are some difficulties there and we are trying to improve the situation. As my noble friend may be aware, the industrial training board managements do find it unsatisfactory that they have to apply to Government for permission to raise salaries, or whatever. This is somewhat anomalous in the present situation, and we are looking for ways to improve it.
Lord WALLACE of COSLANY: My Lords, will the noble Earl agree, bearing in mind the excellent maiden speech made yesterday by the noble Lord, Lord Scanlon, that this is a question where we simply cannot afford any economies whatever, and in fact we must have expansion? Will he undertake that, when the Government have received the report, they will give it urgent attention and report immediately to Parliament so that we can have an immediate debate?
The Earl of GOWRIE: My Lords, I should certainly like to add my tribute to the maiden speech of the noble Lord, Lord Scanlon, with whom I have had some private discussions about training. I will take the noble Lord's remarks into consideration.

PETROLEUM: PRICES AND TAXATION
3.16 p.m.
Lord BALOGH: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, in view of the rise in the petroleum prices dictated by OPEC, they contemplate increasing oil taxation to relieve the Budget and the invisible balance of payments.
The MINISTER of STATE, TREASURY (Lord Cockfield): My Lords, I have noted the noble Lord's suggestion, but I am unable to antitipate the Budget proposals of my right honourable and learned friend the Chancellor of the Exchequer.
Lord BALOGH: My Lords, while thanking the noble Lord the Minister for that completely unsatisfactory Answer, may I ask whether he is aware of the fact that the windfall profits this year amount to many billions of pounds, and to even more dollars? Does he also realise that this is going over the exchanges? Finally, would he ask his right honourable friend to institute an independent inquiry into the whole problem of oil taxation, which has completely changed during the last two years?
Lord COCKFIELD: My Lords, far from being unsatisfactory, my reply assured the noble Lord that his suggestions, which are always worth paying attention to whether or not one agrees with them, have been noted by my right honourable and learned friend the Chancellor of the Exchequer. The position is that under the terms of the Petroleum Revenue Tax Act 1980, which went through your Lordships' House last month, an additional £700 million of tax is being collected from the North Sea revenues this year, a further £300 million next year and additional sums thereafter. As a result, the total tax take, including royalties, from the North Sea this year will be four times what it was last year.

PROCEDURE OF THE HOUSE
3.18 p.m.
The CHAIRMAN of COMMITTEES (Lord Aberdare): My Lords, I beg to move the Motion standing in my name on the Order Paper. I think I should draw special attention to the first item on Unstarred Questions, because this was a matter that was brought up on the Floor of the House by the noble Lord, Lord Derwent, and referred to the Procedure Committee. The Procedure Committee went into it very carefully and, I think I can say, unanimously considered that the Unstarred Question was a very valuable part of the procedures of this House, especially for those who sit on the Back Benches, and that although there had been occasions when they have gone on rather late at night, on the whole it would be a mistake to restrict them at this moment.
I was asked to draw your Lordships' attention to the Resolution of the House of 13th July 1965,
"That speeches in this House should be shorter",
a subject of which we have already heard a great deal this afternoon, and I do not think I need labour it any further. I beg to move.
Moved, That the Third Report from the Select Committee be agreed to.—(Lord Aberdare.)
The report is as follows:
1. UNSTARRED QUESTIONS
The Committee have considered whether any restriction should be placed on the length of Unstarred Questions. They recognise that Unstarred Questions provide back-bench members of the House with a valuable means of raising a wide variety of subjects and that any restrictions would be an erosion of the rights of members of the House.
The Committee believe that the answer to the problem of lengthy debates does not lie in restricting the length of either Unstarred Questions or Motions but in urging all members of the House to make shorter speeches, especially late at night. They draw attention once again to the resolution of the House of 13th July, 1965, "That speeches in this House should be shorter".
2. STANDING ORDER No. 62
The Committee have considered the terms of Standing Order No. 62 which governs the practice of the House on the attendance of Lords at Select Committees. They consider that the Standing Order should be amended so as to make clear that a Lord who is not a member of a Select

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Committee may not attend a deliberative meeting of that Committee unless invited by the Committee to do so. They recommend therefore that the Standing Order should be amended to read as follows:—
"At a Select Committee of the House any Lord, though not of the Committee, is not excluded from coming in and speaking, but he must not attend any meeting while the Committee deliberate, unless invited by the Committee to do so, and he must not vote."
3. CONTINUITY OF SESSIONAL COMMITTEES
The Committee recommend that Standing Order No. 61 (which provides that the orders of appointment of Sessional Committees named in that Standing Order and any of their sub-committees shall remain in force and effect notwithstanding the Prorogation of Parliament, until such time as the House, or Committee, makes further orders of appointment in the next succeeding session) should be amended so as to include the Select Committee on Science and Technology, which the House has recently appointed.
On Question, Motion agreed to.

WATER (SCOTLAND) BILL [H.L.]
3.20 p.m.
The LORD ADVOCATE (Lord Mackay of Clashfern): My Lords, I beg to move that this Bill be now read a second time. It is a consolidation measure and it consolidates the enactments relating to water in Scotland. It is pure consolidation and is intended to make no change in the existing law. If your Lordships approve, it will be referred to the Joint Committee on Consolidation Bills which will consider it and make its report to the House in due course. My Lords, I beg to move.
Moved, That the Bill be now read 2a.—(Lord Mackay of Clashfern.)
On Question, Bill read 2a, and referred to the Joint Committee on Consolidation Bills.

RESIDENTIAL HOMES BILL [H.L.]
The LORD CHANCELLOR (Lord Hailsham of Saint Marylebone): I beg to move that the Commons amendments be now considered.
Moved, That the Commons amendments be now considered.—(The Lord Chancellor.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[References are to Bill [88] as first printed for the Commons.]
[Nos. 1–4]
Page 9, line 11, after 'effect,' insert 'subject'.
Page 10, line 10, after'2.' Insert '—(1)'
Page 10, line 13, at end—
'(2) In section 128(1) of that Act (sexual intercourse with patients) for the words "Part III of this Act" there shall be substituted the words "the Residential Homes Act 1980".'
Page 10, line 16, leave out from 'etc.)' to 'Section' in line 18 and insert 'for paragraph 31 there shall be substituted the following paragraph—
"31'
The LORD CHANCELLOR: My Lords, I beg to move that the House doth agree with the Commons in their amendments. All four being drafting amendments, it may be convenient if, by leave of the House, I speak to all and move them all en bloc. Of course, if any noble Lord objects, I will move them separately.
The first amendment corrects an obvious clerical error in Clause 11 of the Bill. I am told that it is a mystery how the word "subject" came to be omitted and how its omission went unnoticed for so long. The second and third amendments effect a consequential amendment to the Mental Health Act 1959 which was overlooked. Section 17(2) (a) of the Interpretation Act 1978 would, in fact, translate the reference, but it is felt that an express amendment would be kinder to the reader. The fourth amendment corrects a provision which was drafted before it was decided to include Sections 19 to 21 of the Mental Health Act 1959 in the consolidation. Now that those sections are included the words,
"including subsection (2) as applied by section 19 of the Mental Health Act 1959",
carefully preserved by paragraph 3 of Schedule 1 to the Bill, become otiose and should therefore be omitted. My Lords, I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(The Lord Chancellor.)
Lord ELWYN-JONES: My Lords, I am sure that your Lordships are grateful to the noble and learned Lord the Lord Chancellor for his clear explanation, his clarifying of mysteries and his exposition of the normally inexplicable, which has

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been done with such clarity and grace; and I support the amendments.
The LORD CHANCELLOR: My Lords, I am much obliged to the noble and learned Lord.
On Question, Motion agreed to.

PROTECTION OF TRADING INTERESTS BILL
3.24 p.m.
Bill read 3a, with the amendments.
Clause 2 [Documents and information required by overseas courts and authorities]:
Lord MACKAY of CLASHFERN Lord MACKAY of CLASHFERN moved Amendments Nos. 1 and 2:
Page 3, line 25, after ("and") insert ("(a)")
Page 3, line 29, after ("Kingdom") insert (";or
(b) any requirement imposed by such a court, tribunal or authority to produce or furnish any document or information to a person specified in the requirement,").
The noble and learned Lord said: My Lords, if I may, I will speak to these two amendments that are down in my name together. Clause 2, as presently drafted, allows the Secretary of State to give directions for prohibiting compliance with a requirement to produce a commercial document or commercial information to a court, tribunal or authority of an overseas country. It has been pointed out several times in earlier debates that in the United States discovery in civil proceedings can be both extensive and burdensome. Subsection (3)b), which was amended on Report, is specifically aimed at such forms of discovery which can occur either before or during litigation.
However, we understand that it is not unusual for United States courts to order discovery—that is, the production of documents—by a party or witness directly to another party. A doubt has been raised whether the requirement to produce in such cases would be covered by the term "to produce to any court". Consequently, the purpose of this amendment is to place beyond doubt that discovery, irrespective of whether it is to be furnished to the court or to another person, is covered by the clause. My Lords, I beg to move.
Lord ELWYN-JONES: My Lords, this is a matter which was raised in some detail by the noble Lord, Lord Lloyd of Kilgerran, at an earlier stage of the discussions on the Bill. I am sure that we are grateful to the noble and learned Lord the Lord Advocate for giving the matter further thought and I certainly approve the amendment that is proposed.
Lord LLOYD of KILGERRAN: My Lords, may I rise to support this amendment, which is a further step towards reinforcing the defences of United Kingdom firms against attempts by other countries to enforce their own economic and commercial policies against British industry. Perhaps, with the leave of the House, I may take this opportunity of congratulating the Government on introducing this Bill. It is sad, however, to realise that this Bill, which has long been overdue, has arisen largely because of the actions of United States authorities. To use the words of the noble and learned Lord the Lord Advocate on Second Reading on 24th January, at column 554 of Hansard, about the United States of America:
"That powerful friend and ally has over several decades been developing a policy of enforcing its economic rules outside its own jurisdiction, in a manner which has become even more acutely difficult for us over the last few years".
Also with the leave of the House, may I congratulate the Government, too, in the context of the Government's praiseworthy efforts to give protection to British firms, in their international trading, from the judicial and economic imperialism of our friend and ally, the United States, on the passing of the order known as the Double Taxation Relief (Taxes on Income) (United States of America) Order 1980. The operation of the taxation arrangements of the United States of America was referred to in the other place, when this order was considered, as "international robbery".
As no doubt it became clear from my many speeches during the passage of this Bill through your Lordships' House, there is another field in which British firms are often outrageously dealt with by United States authorities in the course of international trading; that is, trade where patents, trade marks and confidential know-how are involved—a field in which I had and still have a continuing interest. I am obliged to the noble and learned

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Lord the Lord Advocate for his expressions of appreciation from time to time, and indeed for indicating on at least a couple of occasions that in the field of intellectual property this seems to him to be an area to which this legislation could possibly extend at some later stage.
On Question, amendments agreed to.
3.29 p.m.
Lord MACKAY of CLASHFERN: My Lords, I beg to move that this Bill do now pass. We have now concluded our scrutiny of this short but important measure. I should like to recall the words that I spoke at the end of the Report stage last week, when I expressed the Government's appreciation of the spirit and the constructive manner in which this Bill has been discussed in both Houses of Parliament. I believe that we have in your Lordships' House improved the drafting of the Bill in a number of important respects. In relation to the most novel and controversial clause, which is Clause 6, discussions in this House have brought to light a number of significant points. We have been able to take account of several of these and I believe that the clause is better drafted and more effective as a result.
In conclusion, I should like once again to put this Bill in perspective. When a measure has been in preparation for some time, it is easy for those who have been intimately concerned with it to exaggerate both its effect and its significance. However, the Government believe that this is an important Bill in the way in which it reinforces our defences against the unjustifiable application against United Kingdom trading interests—and I include intellectual property in this—of the laws and economic policies of other countries. I believe that noble Lords of all parties take the same view, and it is widely said—as the noble Lord, Lord Lloyd of Kilgerran, has just said—that the Bill is in fact overdue.
It is regrettable but inevitable that most of the discussion of this measure in Parliament has been in terms of protecting such interests of the United Kingdom against actions by agencies and authorities of the United States of America. Nevertheless, it is with American laws and policies that we are chiefly dealing and
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there is no point in trying to disguise that fact. Certain provisions of the Bill have of course been criticised in the United States but we have also seen many expressions of understanding there for what we are doing, and why.
Let me repeat, therefore, what was said by my right honourable friend the Secretary of State for Trade when moving the Second Reading of the Bill in another place. He finished with these words: that the Bill was not anti-American, or, indeed, anti-anybody and that it was designed to protect and not to provoke.
The problems between our own country and the United States with which this Bill deals are of a very special nature. They have not affected the otherwise close and friendly relationship between our two countries. We have too many shared economic, political and social objectives for that to happen. My right honourable friend said that he hoped he would have little cause to use the discretionary power conferred by the Bill, but he left no doubt that he would be prepared to use it in the defence of the legitimate economic and trading interests of our country.
I should like to underline that statement. If, when it becomes law, the operation of this Bill causes arguments, even with our closest friends, we are ready for that. We hope, however, that what we are doing will stimulate discussion and bring opposing interests to the meeting table. The right way to settle international difficulties in the economic field, as in so many others, is by discussion and negotiation between Governments. We believe that this Bill will contribute in an important manner to that process. My Lords, I beg to move.
Moved, That the Bill do now pass.—(Lord Mackay of Clashfern.)
Lord ELWYN-JONES: My Lords, we on this side of the House regard the Bill as both timely and necessary. It is unfortunate that diplomatic efforts over the last decade or two to resolve the difficulties created by the actions of the American courts were not successful. However, I am glad that the noble and learned Lord the Lord Advocate has indicated that continuance of discussion on these problems, which will not be

1519
eliminated by this Bill, is very important and that our attitude here is not one of confrontation but of willingness to get round the table to eliminate what is damaging in its present practice, not only to the trading interests, at the end of the day, of the United Kingdom itself but possibly to those of our friends in America, many of whom have also been discontented with the operation of some of the American provisions. Therefore I welcome the Bill and fully agree with what was said by my noble friend Lord Lloyd of Kilgerran in his interesting Third Reading speech.
Lord HACKING: My Lords, may I, from the Cross-Benches, comment for a few moments upon this Bill. Having, in my various activities in moving amendments at both the Committee stage and the Report stage, put in severe jeopardy my membership of the New York Bar, I desire to say a few kindly words towards the United States of America, which was described by the Secretary of State for Trade in the Second Reading debate in the House of Commons as "our most powerful and valued friend".
As we have learned, going through the various stages of this Bill and examining each of the clauses, this Bill will have widespread application to laws that are in current existence in the United States of America, well beyond the field of anti-trust upon which the latter clauses of this Bill concentrate. I refer to such measures in recent times as the Foreign Boycott Amendments of 1977, the Foreign Corrupt Practices Act 1977 and various Tax Acts, in particular the 1976 Tax Act, all of which gave powers to seek information from persons abroad. Those powers can now be restricted, so far as United Kingdom interests are concerned, by directions issued by the Secretary of State under Clauses 1 and 2 of the Bill.
I suggest that all these measures have been introduced to enable the United States to protect its domestic economy and, to a lesser extent, its national security. It is my judgment that in the main, although not always, these measures have been introduced from a defensive posture and not from an offensive posture. I will venture also to say to your Lordships that the United States of America has every right to ask its friends and neighbours
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to restrain those who seek to damage its economy and its interests. Even in this country United States interests are responsible for over 9 per cent. of our employment. I made a calculation a year or two ago to ascertain how many persons—wives and children as well as the employees themselves—were supported by United States companies, and my calculation came out at a figure of 80 million persons throughout the world. Therefore I very willingly join, if I may, the noble and learned Lord the Lord Advocate when he says he hopes this Bill will stimulate discussion. May I put it in this way to your Lordships: May this Bill become a spur to obtain greater international agreement on trading laws and in particular on competition laws.
Finally, I should like to thank the noble and learned Lord and the Department of Trade not only for their courtesy towards each and every one of my amendments but for their even greater kindness in accepting the principle, if not the words, of the various amendments that both I and other noble Lords have moved in your Lordships' House.
May I end my few words by making a request to Her Majesty's Government? It is a twofold request. It would be enormously helpful, as soon as this Bill has received the Royal Assent, if the Government could state how they intend to exercise their powers and, more specifically, how the Secretary of State intends to exercise his powers under Sections 1 and 2 of the Act, as it will shortly become. Secondly, it would be of immense help if the Government could introduce a lucid explanatory memorandum, to be issued as soon as possible after the publication of the Act. As so often happens, an Act as first introduced in our Houses of Parliament becomes a much more complicated document by the time it leaves Parliament in order to receive the Royal Assent. That is precisely what has happened in this Bill. To take just one example, that arithmetical formula in Clause 6, which was of elementary simplicity and which did not require any blackboard for the instruction of those who found difficulty in understanding it—alas! by the time it leaves your Lordships' House, it has become much more complex and extremely difficult to follow. I take that as only

1521
one example. If the Government could spare the time, it would be of immense value if they could do that. As your Lordships' know, it is most important that this Bill should be read and understood by those abroad.
On Question, Bill passed, and returned to the Commons.

NATIONAL HERITAGE BILL
3.39 p.m.
Lord MOWBRAY and STOURTON: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Mowbray and Stourton.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 [Establishment of National Heritage Memorial Fund]:
Lord ABERDARE: The reference in Amendment No. 2 is incorrect. It should start "page 1, line 7". Therefore it precedes Amendment No. 1. So may I call Amendment No. 2?
Lord DONALDSON of KINGSBRIDGE Lord DONALDSON of KINGSBRIDGE moved Amendment No. 2:
Page 1, line 8, leave out from beginning to ("which") in line 9 and insert ("As the National Land Fund, which was set up to preserve the national heritage and in this way to commemorate those who gave their lives in defence of the nation, is to be wound up, there shall be established a National Heritage Fund, with the same objectives,").
The noble Lord said: I move this amendment as very much a probing amendment to find out not only what the Government think but also what my colleagues on both sides of the Committee think. I have no intention of being dogmatic or trying to force any issues. My honourable friend Mr. Tam Dalyell, who moved an amendment very much like this at the beginning of the Committee stage in the other place was later, as a result of discussion, persuaded to drop it and to accept the word "Memorial" in the title. I think all of us are in favour
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of the same thing: we all want to record that Hugh Dalton, in his original setting up of the Land Fund, wanted it to be used (in my words here) "to preserve the national heritage and in this way to commemorate those who gave their lives in defence of the nation". There is probably nobody who does not want this included somewhere.
I find the word "Memorial" in the title wrong. To me—and I know this is not the case with everybody—a memorial fund is something where one is collecting money to put up a statue and when that is done the fund is finished. The National Heritage Fund will go on for ever so I feel—not passionately but fairly strongly—that to have it only in the title is in itself a mistake and anyway it will he dropped as soon as people start working in and talking about the National Heritage Fund. However, I think something must be in and the wording I have put here in Amendment No. 2 expresses most of our feelings.
It could possibly be better in the Long Title, but I am putting this amendment forward quite simply, thinking it to be the better course. My consequential amendments delete the word, "Memorial", where it appears, but if noble Lords for the Government wish to deal with the point in any other way I shall not be difficult about it. I beg to move.
Baroness BIRK: I should like to second this amendment which was really the child of my noble friend Lord Donaldson of Kingsbridge and myself. In doing so, as I was unable to be here at the Second Reading I should like to say how happy I am to see this Bill making its way (as I hope it will) so early in the Government's career to the statute book, and also how pleased I am that it covers so closely the White Paper for which I and my colleague were responsible in the last Government.
I feel quite strongly about bringing in some of the history and referring to the National Land Fund. I think just to have the word "Memorial" could be taken as a memorial to the heritage or it could be a memorial to Mentmore, but I do not think that it would be at all clear to certain people who do not know the history of the Land Fund and any young people. I also think that we must try to

1523
find something which combines the past and certainly refers to what Hugh Dalton did in 1946. Also, I think we must be careful that we are making it quite clear that we are looking to the future as well and that the National Heritage Fund will be built into our cultural and heritage society. As my noble friend has said, we have no very strong feelings about where this should be. In the Long Title I think the word "Memorial" could be left, and it may well be—and perhaps the Minister would like to look at this—that it would be better placed in a preamble to the Bill. I know that is unusual, but in a case like this I think probably the Bill needs a preamble which would make it absolutely clear. From then on, I think it makes good sense to delete the word "Memorial" for purely practical reasons, because the fund will be known as the National Heritage Fund for working purposes and it is much better to explain what it is about and then go on to mention the National Heritage Fund. I hope the Committee will support this amendment.
Lord VAIZEY: I hope my noble friend on the Front Bench will not necessarily accept this amendment, because in its present formulation I do not think it is correct, as the noble Lord who moved the amendment has said. I certainly think it is important to establish the continuity with Hugh Dalton's original concept, which was the National War Memorial and was agreed by the great post-war Parliaments. It is something which is of great importance because it is the memorial to the people who died in the Second World War and I think that must be stated somewhere in the Bill.
I disagree with what the noble Baroness has just said. The fact that it is a memorial fund to the people who died in the war against Hitler and the Nazis will make a tremendous difference to a large number of people over quite a long period of time, and it is important that it should be in the statute. So if my noble friend will look at this again, I hope that he may be able to move an amendment, perhaps at Report stage, which will meet the unanimous wishes of the House that the Bill should be a memorial to those who died in the Second World War.
Lord ROBBINS: I do not wish to detain your Lordships by minute discussions of the wording or its place, but from a very early stage I knew the late Lord Dalton very well because he first taught me economics and he was an excellent, impartial and clear teacher. I formed a friendship with him then and, in spite of many differences of opinion on public affairs, we remained intimately friendly until his death. I am quite sure that he would wish something of the amendment to be part of the Bill. In the latter part of his life, I am reasonably sure that he regarded the setting up of the Land Fund as being probably the thing in which he took the most lasting pride. It seems to me that since we are all agreed—or I hope we are all agreed—that this was a good thing to do, we should commemorate it in words which would commend themselves to the founder.
Baroness AIREY of ABINGDON: I should like to support the retention of possibly the word "Memorial", but certainly something which would bring to mind the original reasons for this fund. I believe that the children of the future would also like that, not only for that reason but because I believe that in the future people might wish to leave or to give money to this fund if they know that it is a memorial fund for those who died in the last war.
Baroness BIRK: Just in order not to confuse the Committee—I think it was due to getting the page number wrong—I do not think it was the intention of my noble friend and it was certainly not my intention that the word "Memorial" should be left out of line 1 in the Long Title. I certainly think it should be there. It is when it becomes a working title that I think it should be left out.
Lord DONALDSON of KINGSBRIDGE: In fact, it was my intention, but I am perfectly prepared to withdraw it.
Lord MOWBRAY and STOURTON: The Government, as always, come to this Bill in a most benign mood. We are totally content to abide by the wishes of your Lordships. If your Lordships are content to accept the amendments in principle, I would undertake to check that they are technically acceptable as a piece of legal drafting and, if they are not,

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we would draft something of our own for the Report stage.
I am delighted to see the noble Baroness, Lady Birk, in the Committee: we missed her very much in the Second Reading debate, although I fully understood that the work she was doing prevented her from being here. She suggested that it might be put in the preamble. The noble Lords, Lord Vaizey and Lord Robbins, and the noble Baroness, Lady Airey, as she did in her maiden speech on Second Reading, all liked the idea of the word "Memorial" being somewhere—the idea of the late Lord Dalton in setting up his heritage memorial fund. Of course, the heritage itself is a memorial to everything in the past always. I am not quite sure whether the suggestion of the noble Baroness, Lady Birk, that "Memorial" should be moved to the preamble, would meet the approval of the three noble Lords who wish to retain the word "Memorial", or whether they would still like to see it in the body of the Bill. The Government would like to know what your Lordships would like us to do. Originally we did not have the word "Memorial" in; it was moved in in the Commons. I would like to get more opinions from your Lordships.
Lord DONALDSON of KINGSBRIDGE: I wonder whether other noble Lords agree. My view is that I do not like it in the title. I think the noble Baroness, Lady Airey, suggested that she did like it in the Title. If other people agree with her we can step down, but if they agree with me I think I would ask the noble Lord, Lord Mowbray, to do what he has suggested and accept the amendment in principle. I will withdraw it for him to examine it and we can bring it back on report. But I do not want to force this view unless other people agree.
Lord VAIZEY: I personally would prefer to have "Memorial" in the Title. I think the point Lady Airey made is relevant, that people will wish to leave substantial sums, or small sums, because it is a memorial to the hundreds of thousands who died in the war. I am not sure that the drafting is correct, so I welcome what my noble friend has suggested, that he should bring forward something appropriate. But I would like to keep it in the Title.
Lord REIGATE: Since opinions have been called for, I should like to support the noble Lord, Lord Donaldson. It has the merit of being rather a briefer title. I hope I shall not be thought too flippant if I say that if there is to be an office for the fund the telephone operator will have to answer in a bright voice every time, "National Heritage Memorial Fund". It is a little flippant, but it is a practical point. We all know that it will be known as the "Heritage Fund" eventually, and therefore I think the nearer we get to that the better.
I hope I am not putting a cat among the pigeons too much if I say that the word "fund" is wrong, because it has a connotation which is largely financial. It is a bit late in the day to say that. The obvious title for it is "trust", but that has been pinched by another absolutely admirable body. The only other word I can think of is "foundation".
Baroness BIRK: I obviously have not made myself clear. I want to retain the word "Memorial" in the Long Title; then when it goes on to Clause 1 to say, "There shall be a fund known as the National Heritage Fund". I hope that the Committee will agree with me that whether the explanation goes into the preamble or whether it goes in where we have suggested or whether it goes into the Long Title I think we probably would be willing to leave to the Government, as long as it is explicitly stated somewhere where people will see it and understand it.
Lord MOWBRAY and STOURTON: Perhaps your Lordships will leave it to me to take the matter back with the views your Lordships have expressed. I take it the great silent majority is like the Government, not feeling very stongly one way or the other. If that is not the case I hope noble Lords will jump up quickly and inform the Committee.
Lord ROSS of MARNOCK: I think we are all agreed about the desirability of, in some way or other, having the original purpose there. But the word "Memorial" alone is not enough because people will ask "Memorial to what"? I favour the idea of the title being shorter, but somewhere early on, it may be in the preamble, the extended explanation that was related to the National Land Fund should appear,

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so that people will know that although the word "Memorial" is not there it is a memorial to those who gave their lives in the last war.
Lord MISHCON: I wonder whether I may make a brief intervention in the hope of helping. In the same spirit as the noble Lord, Lord Reigate, I hope I shall not be taken to be flippant. If we allowed this to remain as the working name of the fund it would look, at least to succeeding generations, as though it were a memorial to our national heritage which has now disappeared. That I would have thought would be the last thing in the world we would want.
Baroness ELLIOT of HARWOOD: I should like in a few words to support the noble Lord and also the noble Lord, Lord Reigate. I think if the suggestion made by the noble Lord, Lord Donaldson, and the noble Baroness, Lady Birk, could be incorporated and the fund itself could be the National Heritage Fund, that would be excellent. I am all for putting in the reason, but I think the title should be left as it is.
Lord DONALDSON of KINGSBRIDGE: I think we have shown sufficient consensus for me to withdraw the amendment and to point out that the consequential amendments will need to be withdrawn as well. What I do not want is for it to be described throughout as the "National Heritage Memorial Fund". I do not mind it being in the Long Title. With the permission of the Committee, I beg to withdraw the amendment.
Lord MOWBRAY and STOURTON: I take it that would mean Amendments Nos. 1, 3 and 38?
Lord DONALDSON of KINGSBRIDGE: Yes.
Amendment, by leave, withdrawn.
[Amendments Nos. 1 and 3 not moved.]
3.56 p.m.
Lord REIGATE Lord REIGATE moved Amendment No. 4:
Page 2, line 2, leave out from ("appointed") to end of line 4 and insert ("by the Crown on the advice of the Prime Minister").
The noble Lord said: I beg to move the amendment standing in my name. My main argument for putting forward this proposal is the immense importance that I attach to the establishment of this trust and the immense importance I attach to the quality and calibre of the trustees. I do not think any noble Lord here today is likely to disagree with that point of view. Therefore, I feel that the appointment should be made at the highest level—that is, on the advice of the Prime Minister. If your Lordships read the subsection as it stands it seems to me there are two rather obvious flaws. The Chancellor of the Duchy of Lancaster, who is named, may in the future have, as he has had in the past, other duties. He may be superfluous and redundant to this Bill when it becomes an Act. That is one flaw. The Arts may be subsumed into the operations of another Department. Another obvious flaw is the division of responsibility between two Ministers who also have the need to consult the territorial Ministers. Of course in practice this is perfectly workable. But I do feel that this fund is of such standing that nothing less than appointment by the Prime Minister is really correct. But for that, this will really be just another quango, even if it is the queen of all the quangos, so to speak.
I have heard the argument used that if the power of appointment is removed it diminishes the status of the Minister or Ministers. I hope this argument is not going to be put forward by my noble friend, because, if so, I may say now, before he utters it, that I think that is absolute nonsense. The trustees of the British Museum are appointed by the Prime Minister. If my noble friend does not agree with what I am putting forward, I am prepared to quote a list of many other appointments. None of these, in my view, diminish the standing of the Minister. It is on the deeds and words of a Minister that his reputation depends. Therefore, as I think this is of the greatest importance, I beg to move.
Lord COTTESLOE: I should like to support my noble friend. It is, of course, a slightly clumsy arrangement that the appointment should be made jointly by two Secretaries of State. It would be simpler if the appointment were to be made by the Prime Minister. The important aspect of this is that this would

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give the fund status, whereas if they are appointed by the Secretaries of State jointly it will not quite carry the same weight. It is a point of some importance and I should like to support everything that my noble friend has said.
Lord MOWBRAY and STOURTON: I appreciate the idea behind the amendment of my noble friend Lord Reigate. However, the National Heritage Memorial Fund Trustees are, as he has said, an important body of people and appointment by the Crown on the advice of the Prime Minister would, of course, serve to emphasise that point. However, this is not a proposal that the Government are able to accept. There was a time when the Prime Minister made appointments, but that is no longer the practice even with bodies, dare I say it, much more important than this fund. For the most part it would misrepresent the true situation, as the Prime Minister—and a fortiori the Sovereign—would have much less background knowledge of the field of selection and would have to act on the advice and recommendations of the Ministers departmentally concerned.
The noble Lord, Lord Reigate, referred to the Chancellor of the Duchy of Lancaster being mentioned by name. That is only the case in this Bill because normally one just says "the Secretary of State" but purely technically the Chancellor of the Duchy of Lancaster happens not to be a Secretary of State. That is why in this case we have had to include this name in the Bill.
The principle by which the Government operate nowadays is that appointments should be made by the Ministers who are functionally responsible. They are answerable for the policy area within which the body works and they provide its money. It would undermine their standing, vis-à-vis the trustees, if they were not also answerable for the appointment and dismissal of the trustees. As is the case generally with appointments to important bodies, the Ministers concerned will take care to consult the Prime Minister and secure her approval, particularly as to the post of Chairman which will be a crucial appointment for the successful launching of the fund.
In summary, the amendment is contrary to modern practice, would not reflect
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the reality of the process of appointment and would weaken the position of the Ministers with responsibility for policy in this field. I hope that I have said enough to persuade the noble Lord to withdraw his amendment.
Lord ROBBINS: Would the noble Lord please bring me up to date? He referred to "modern practice." At what stage did that practice come into being? Is it not the case, as the noble Lord, Lord Reigate, urged, that the trustees of the British Museum are appointed by the Prime Minister? Is it not the case that the trustees of the National Gallery are also appointed by the Prime Minister?
Lord ROSS of MARNOCK: Before the noble Lord, Lord Mowbray and Stourton, replies, will he address himself to the fact that, as I understand it, the Chairman of the Forestry Commission is a Crown appointment on the advice of the Prime Minister. It would be an admirable way out—and I could sleep much happier in my bed—if I knew that the appointment was made by the Prime Minister recommending to the Crown. I am very troubled about mention of:
"the Secretary of State and the Chancellor of the Duchy of Lancaster".
I think that it is very bad to mention, in a Statute which has to last for all time, the Chancellor of the Duchy of Lancaster when he, obviously, will not. It may well be that the next Chancellor of the Duchy of Lancaster will have nothing to do with the arts. It really is very bad to do it this way.
Of course, the point to be made about the "Secretary of State", is: which Secretary of State? The implication in the Bill is that only two Ministers will be involved, in which case we must change the English or draft the provision in a different manner. If we look right through the Bill it refers to "either of the Ministers" and as far as I know that means two Ministers. It says that "either of the Ministers" may do something or other. I always understood that "the Secretary of State" was a rather hydra-headed individual who could appear as the Home Secretary, the Secretary of State for Foreign Affairs, or the Secretary of State for Scotland and that is why it is very handy just to put it "the Secretary of State". Nobody would be worried

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about that, but I am worried when it says:
"the Secretary of State and the Chancellor of the Duchy of Lancaster".
I am very unhappy about this provision. I certainly support the amendment and I think that, from the status point of view, it is absolutely right.
Lord COTTESLOE: With great respect to my noble friend on the Front Bench, I disagree with almost everything he has said. I hope that, on consideration, he will take the matter away and think about it and perhaps bring forward a corresponding amendment on Report.
Lord GLENDEVON: I should like to rise simply to say that I think that the argument put forward by my noble friend is unanswerable and I am, therefore, not altogether surprised that the Government have been unable to answer it.
Lord MOWBRAY and STOURTON: I now have the facts regarding the British Museum and the National Gallery about which I was asked. They were set up by statute long ago and those appointments are made under those statutes by the Prime Minister. All the other bodies one may consider, including the Forestry Commission, are dealt with, in fact, by the departmental Ministers concerned.
I tried to explain that the Chancellor of the Duchy of Lancaster had to be mentioned in this Bill because he is not a Secretary of State. Five Ministers are involved in the Bill: the Minister for arts, who happens at the moment to be the Chancellor of the Duchy of Lancaster; the Secretary of State for the Department of the Environment; the Secretary of State for Scotland; the Secretary of State for Northern Ireland, and the Secretary of State for Wales.
"The Secretary of State", as has always been the case, means the Secretary of State who is the operative person in that context. If, perish the thought—I cannot believe that the noble Lord, Lord Ross of Marnock, is right and that the Chancellor of the Duchy of Lancaster will not be around for a very long time yet—the Chancellor of the Duchy of Lancaster were, perchance, to cease to be interested in the arts, that part of the Bill would need
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to be altered. But, as long as he is in his present position, we must do it this way. It is no great problem. At the moment the two Ministers primarily responsible are the Secretary of State for the Environment and the Chancellor, and the other Ministers, of course, will come into consultation immediately the trustees or the in lieu provisions start to affect their particular areas of responsibility. But, on the general scheme of the appointments, it will be the first two Ministers that I have mentioned. It is modern practice, despite what noble Lords say, that the appointments are made on the advice of the departmental Ministers concerned. I have said that the Prime Minister would be consulted. I think that your Lordships would be advised to leave the amendment as printed in the Bill.
Lord MISHCON: Would the noble Lord not add to his obvious virtue of pertinacity the fault of obstinacy? I say that for the following reason: there may be parallel cases in regard to museums, as we have heard, and other very worthy institutions. We are dealing on this occasion, and I believe for the first time, with a matter which affects our national heritage. It is quite unique. In the circumstances and as it deals with matters affecting our national heritage, can one imagine anything more suitable than that the Crown should be associated with it, even if it be nominally, and that the first Minister of State, the Prime Minister, should be the first person to advise the crown on appointments of this nature?
Baroness ELLIOT of HARWOOD: I should like to support that view very strongly. We want to make this fund something special and if we have, as I think the noble Lord said, five Secretaries of State who might, in the course of their lives, put a finger in the pie, I cannot imagine anything more completely muddling. All we want is one person who—and I agree with the noble Lord, Lord Mishcon—in view of the importance of this Heritage Fund, should be the first Minister in the Government. If the noble Lord could take this back and think about it again, I am sure that it would add enormously to the importance of the fund and also simplify matters greatly, because five people would not then be concerned.
Lord WINSTANLEY: My primary concern at the moment in this matter is this rather odd entanglement, with the Chancellor of the Duchy of Lancaster being included. But quite clearly it is a matter which, on some future occasion, might require an amendment to the Act itself. The Secretaries of State concerned and the Chancellor of the Duchy of Lancaster are subsequently referred to throughout the Bill as "the Ministers". Is there any fundamental reason why we cannot call them "the Ministers" to start with?
Lord DONALDSON of KINGSBRIDGE: When the noble Lord, Lord Reigate, introduced his Bill which was overtaken by the event of an election, he asked this question and I rather think that I managed to avoid giving him an answer. The answer that I was certainly advised to give was the one which has been given by the noble Lord opposite. But this is not a very necessary reason for accepting it. It seems to me that, whatever happens, in the end the trustees will be appointed on the advice of the Ministers concerned. My noble friend Lord Ross of Marnock has made it perfectly clear that, if nothing else, there needs to be an alteration in this subsection. I shall certainly not oppose this amendment, and I think that the feeling of the Committee is pretty solid that the Minister should take it away and think about it.
Lord MOWBRAY and STOURTON: In the face of the volume of advice supporting the amendment of my noble friend Lord Reigate, I am perfectly prepared to take this amendment away and have it reconsidered. I have a note here which says that we shall also be discussing this when we deal with Amendment No. 46. I revert to my argument and repeat that I shall take this matter back for further consideration. However, I should not like the Committee to go away thinking that this Heritage Fund will be the be all and end all in the heritage world. My two right honourable friends, in a day-to-day advisory capacity, are already interested in the major artistic historical heritage of this country. All the committees and commissions are appointed by these Ministers who have financial responsibility for the funding of all the museums, the Historic Buildings Council,
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the office of Arts and Libraries, and the Department of the Environment. I want to emphasise that the vast bulk of our heritage is already the responsibility of these two Ministers.
I turn to the point about five Ministers being involved. My noble friend Lady Elliot of Harwood and the noble Lord, Lord Ross, complained about there being five Ministers involved. It was thought that it would not be regarded very highly North of the Border if the Secretary of State for Scotland did not have a say in appointing at least one trustee from North of the Border who would be qualified to give advice on matters concerning Scotland which might be considered to be of outstanding or pre-eminent interest and value in Scotland. Another trustee South of the Border might not fully understand the Celtic view or appreciate it so much.
A similar argument applies to the Secretaries of State for Wales and Northern Ireland. They were included to help in the appointment of at least one trustee from each of those parts of the country. This was done to help Scotland, Northern Ireland and Wales. They will not have a day-to-day interest in the matter. It is not a question of five Ministers interfering. Once they have done their job and appointed the trustees and the chairman, it will be primarily for those trustees and the chairman to manage their own affairs. Having said that, I shall get my right honourable friend and the departments concerned to look again at this amendment.
Lord REIGATE: I must confess that I am very disappointed in my noble friend's reply. It is exactly what I thought I would get. I could have written the speech for him, and, if I may say so, I think I would have written it better. My noble friend entirely missed the point. We all know perfectly well that the recommendations will be put forward by one Minister or the other. I foresee certain difficulties with regard to co-operation. The sort of dialogue I am frightened of is one Minister saying to the other, "Look here, I appointed your friend Lord Snodgrass last time. I think it is time you let me have a go. I want to appoint Sir Simeon Stylites, who is a great expert." These matters are sorted out, as we all know, behind the scenes.

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The important thing is the status of the body. My noble friend rather pooh-poohed the question of the British Museum and virtually suggested that the standing of the Minister was diminished because it all fell within the province of his responsibility. The British Museum is not the only one; there is the National Gallery and the National Portrait Gallery and the National Maritime Museum. A whole list was given in a Hansard Answer on 14th February 1978, and includes the Imperial War Museum, the Museum of London, the National Maritime Museum, the National Gallery, the National Portrait Gallery, the Tate Gallery and the Wallace Collection. The museum sphere falls completely within the responsibility of the Chancellor of the Duchy of Lancaster. I do not think that his status is in any way diminished by that fact; rather, it is enhanced. It is the Crown which makes the appointments in his province. My noble friend may disagree, but let me take another example. I believe that poetry is one of the arts. Who appoints the Poet Laureate, my old friend Sir John Betjeman?—the Crown, on the advice of the Prime Minister. If it is modern practice to have all appointments made by the Minister, I hope that at least that one will be left where it now is, because of its close link with the Crown.
These are all historic appointments. That was one of the arguments which my noble friend put forward. I simply say that I hope we are making history today, and that when this Bill becomes an Act it will make history too. These are historical appointments and they should be made on that basis. With the support that I have received, I beg leave to withdraw my amendment. My noble friend will hear from us again.
The EARL of WEMYSS and MARCH: Before the amendment is withdrawn, I should like to add further to the catalogue of important bodies that are appointed by the Crown. The Royal Commissions on Ancient Monuments in the three countries, England, Scotland and Wales, on the advice of various Secretaries of State, should not be forgotten.
Amendment, by leave, withdrawn.
4.18 p.m.
Lord REIGATE Lord REIGATE moved Amendment No. 5:
Page 2, line 7, leave out from ("applied") to end of line 9.
The noble Lord said: I beg to move Amendment No. 5. I must make it quite clear that I am not in any way averse to the spirit of the subsection as it stands. First, I must congratulate the Government on not having included for once the statutory woman and statutory trade unionist—without any prejudice of course against any appointments in that sphere. I also have no prejudice against England, Wales, Scotland or Northern Ireland. I just think that it is totally unnecessary. I dislike the wording. It panders to a kind of devolutionism which still perhaps slightly exists. It is not necessary and is largely meaningless because it does not commit the Ministers or the Prime Minister—as I hope it will be—to appointing anybody anywhere, even the whole of Scotland. It excludes only Manxmen and Channel Islanders. Would they be eligible?
The wording does not even exclude foreigners if they are "resident or otherwise". Whoever makes the appointment should be totally unfettered in what he wants to do, even without this curious territorial inclusion.
Lord DONALDSON of KINGSBRIDGE: May I just say that the Arts Council is administered with this in mind, but not in writing, which is what the noble Lord is suggesting.
Lord MOWBRAY and STOURTON: I must say to my noble friend that the fund is intended to be able to operate, as I said in the previous amendment, over the whole of the United Kingdom. It is going to have the difficult problem of achieving a balance in its assistance as between the different parts of the country, and it will no doubt be criticised for tending to favour one region probably at the expense of others. No doubt this criticism will be wholly unjustified, but the trustees themselves would be much more vulnerable to criticism from those in one of the constituent countries of the United Kingdom if that country did not have at least one trustee on the fund. I can assure your Lordships that these words which the noble Lord, Lord Reigate, seeks to delete

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were inserted at the insistence of the Secretaries of State concerned, and we would be deeply unpopular and suspected of the worst English perfidiousness if we were to accept the amendment.
Lord REIGATE: I am quite prepared to withdraw my amendment. I am sure that the Minister would be the recipient of many attacks from his colleagues if he did not mention England and Scotland. Did he have any attacks from the Home Secretary for not referring to the Channel Islands and the Isle of Man, which are also part of the United Kingdom, or territorial appendages? I just wanted to object to the rather woolly wording and, in any way trying to fetter or tie the hands of the Ministers in this matter.
Lord WINSTANLEY: Before we leave this matter, surely if the words which the noble Lord, Lord Reigate, would like deleted meant anything at all, any clear meaning which they did have seems to me to have been totally obscured by the addition of the words "or otherwise". Persons who are "connected by residence or otherwise with England, Wales, Scotland and Northern Ireland respectively". I cannot think of anybody to whom that might not possibly apply. But I wonder whether the noble Lord, Lord Mowbray and Stourton, could tell us what he and his colleagues have in mind when they talk about "or otherwise". Is it by birth? Are we back to grandfathers, or paternity, or whatever?
Lord DONALDSON of KINGSBRIDGE: There is a slight problem here as it stands. When the Arts Council were dividing the amount of money available between different countries there was always a tremendous argument about headage. We had a great deal of trouble, if my Welsh colleagues will forgive me for saying so, with Wales about this. If you put a thing like this in writing in exactly the form it is in, you are liable to get people in England saying, "What proportion of the national heritage is in Northern Ireland? You have got one out of 10. What proportion in Wales? You have got two out of 10", or whatever it may be. This is awkward. I am not sure what the right answer is, but I am not at all clear that this is the right answer.
Lord MOWBRAY and STOURTON: I should have thought that the answer to the noble Lord, Lord Winstanley, would be supposing, for the sake of argument (and perish the thought) my noble friend Lord Wemyss did not live at Gosford in Scotland, but, for whatever reason, he might want to hand over to his son, and he lived in London. Because he lived in London would not remove the fact that he was a Scot of eminent distinction who knew all about Scottish affairs and art. I would suggest to the noble Lord, Lord Winstanley, that "or otherwise" would cover that sort of case.
Lord REIGATE: My noble friend will agree that it is the most awfully woolly wording. It does, as I really think it should do, give the Ministers a pretty free hand. If the Minister wanted to, I suppose he could appoint a Manxman who had a bank account in Scotland, or London. I just put this up. I am sure my noble friend would be able to defend it, but to me it is bad law making.
Lord MOWBRAY and STOURTON: I am not sure whether my noble friend Lord Reigate is planning to take up residence in the Channel Islands or the Isle of Man. It sounds as though he is trying to get a soft option on a trustee for one of those. But they are not kingdoms, or principalities as such. I think we can leave those out. "Or otherwise" is a legal expression which is understood, and for the purposes of common sense I think there will be no difficulty in interpreting this. It is the Secretary of State of the area concerned who will have the chief say in choosing his man, and he can interpret "or otherwise" perfectly easily, I should have thought.
Lord MISHCON: Having risen twice before, I would never have risen on this amendment if the noble Lord had not said that "or otherwise" was a terminology with a clear meaning known to the law. I look at the noble and learned Lord the Lord Advocate in the hope that Scotland is as clear as England is in regard to such matters. When a lawyer wishes to say that everything ought to be let in to any document or any set of circumstances, he hits upon the words, "or otherwise", and regards that as a

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net which catches nearly everything in the world. I would ask the noble Lord, the Minister, at the risk of being thought facetious, if he would regard a lady living in Paris, who was the mistress of a gentleman residing in England, as being connected or otherwise with England?
Lord MOWBRAY and STOURTON: In face of the noble Lord, Lord Mishcon, I hastily withdraw that "or otherwise" is a legal term. All I say is that in the context we have here—
"… persons who have knowledge, experience or interests relevant to the purposes "[or]" residence or otherwise"—
I think the Secretary of State of the area concerned in this case will have no hesitation in knowing what sort of advice it is giving him.
Lord ROSS of MARNOCK: It must have been a lovely meeting of the Cabinet, or the Cabinet Committee, where we saw all these Secretaries of State demanding their rights in this respect. Can the Minister tell me whether there is any precedent for this in any other statute? There are many cases where the various Secretaries of State have to decide as to who is going to be on various committees, maybe the UGC, may be the Forestry Commission, or maybe something else. I have had lots of experience of this, but I have never seen a statute where it is spelt out in this way.
Indeed, the noble Lord, Lord Mishcon, has led us, and the mind boggles at the various possibilities of the "or otherwise". I cannot remember anything where we had this "connected by residence or otherwise" whether it was England, Scotland, Wales, or Northern Ireland respectively. He has already told us that "Secretary of State" includes, or embraces, Secretary of State for the Environment, Secretary of State for Scotland, Secretary of State for Wales, and so on. There is nothing else needed.
This only proclaims the extent to which these Secretaries of State in the various areas at the present time in the present Government do not trust one another. I think you should remove that right away. I think that the noble Lord, Lord Reigate, should persist with this amendment, or at least suggest that some further
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thought should be given to it. It is all rather trivial. It tends to reduce the national status of the trustees. As a Scotsman I am prepared to leave out that part. I am perfectly sure that someone from Wales would say the same, and be prepared to trust the Secretary of State of the particular country. I do not even like them saying they are all going to get one each. This is wrong. It is the wrong attitude to it and to the nature of the trust we are establishing.
Lord REIGATE: It does not say they will get one each. If that is what they agreed to, they have been had for mugs.
Lord ROSS of MARNOCK: The noble Lord will appreciate that the Minister said, "one".
Lord MOWBRAY and STOURTON: It is merely anticipated that there would be one each. However eminent the English Secretary of State for the Environment and the Chancellor are, there may be people in Scotland who are suitable for trustees who are not known to them. Such people who might not be known to them would more than likely be known to the Secretaries of State of the areas concerned, or their advisers. This is merely trying to be helpful to the areas concerned to ensure that they get possibly some advice to ensure that a trustee with interest and knowledge of their parts is one of the trustees. I think we are making very heavy weather of what is meant to be a helpful point.
Lord DONALDSON of KINGSBRIDGE: Would the noble Lord take this away and consider a phrase of the kind, "after consultation with the Secretaries of State for Northern Ireland, Scotland, and Wales"? That would cover it, would it not?
Lord MOWBRAY and STOURTON: I will certainly take it away and have it looked at because I think we are all trying to arrive at the same result.
Lord REIGATE: I am grateful to the noble Lord, Lord Donaldson, for intervening and making some sense out of what I thought was going to result in absolute chaos. I had no intention of pressing the amendment to a Division, my noble friend will be glad to hear, but we have done

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something to show up a bit of rather bad and foolish drafting. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Clause 2 [Payments into the Fund]:
4.31 p.m.
On Question, Whether Clause 2 shall stand part of the Bill?
Baroness BIRK: I shall be brief so that the Committee can get on. I cannot let Clause 2, which deals with the financial side of the Bill (and therefore I do not think it would have been possible for me to table an amendment), pass without referring to the finances of the fund. It will be given initial capital of £12 million plus in April next; that is, if one subtracts the £3½ million for money in lieu, and we must accept that in these hard times £12 million plus is all the country can afford this year.
I was happy to see that this matter was raised on Second Reading, but I do not feel it would be right to let the clause stand part without referring once again to the £50 million which was financially raped—or, to put it more politely, grabbed—by the Treasury in 1957. If that had not happened, it would have been worth between £250 million and £400 million today, which is probably a conservative estimate, depending on whether it had been invested by the Treasury or outside investors. This is an important point because it would have made a tremendous difference, certainly so far as Mentmore is concerned, which remains a permanent scar, and there may have been other situations where financial stringency based on the paucity of resources prevented acceptance in lieu.
While I realise that at this time there cannot and will not be put into the Bill a reference to paying into the new National Heritage Fund that amount or part of it, I would like to feel sure that it will have a priority claim on resources when they become easier. As things are so readily forgotten, a point referring to this should be included in the promised guidelines to trustees and in any explanatory material that is given out to the public. It should not be forgotten that this was taken out of the fund.
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Secondly, as for the money going annually into the fund, I was pleased to see that on Second Reading, at column 107, the noble Lord, Lord Mowbray and Stourton, assured noble Lords that, in his opinion, unless the cow jumped over the moon or something awful like that happened, this sum would be sacred. The economic situation being what it is, one might say that the cow has already jumped over the moon or is likely to do so. I would therefore like an assurance that in any public expenditure cuts which, as we know, the Government are considering for the future, this will be exempt. These are two important points, particularly the latter, and I should like the Minister's assurance on them.
Lord MOWBRAY and STOURTON: The noble Baroness, Lady Birk, knows as well as I do that "never" is not a word one can ever use in Government. All I can promise her is that the full £15½ million will be paid in on 1st April. As I said on Second Reading, that is the intention, but I could not possibly give any guarantee that it will never be affected by future crises or expenditure crises.
Baroness STEDMAN: That really is not good enough. When this matter was debated in the other place some reassurance was given, albeit in a half-hearted way, that these sums would be paid over each year and would not be subject to cuts. We have a right to ask for a firm assurance from the noble Lord that these sums—which are small enough, heaven knows, when one thinks of what we might have had if it was what was put into the National Land Fund—will be paid in each year and will be absolutely inviolate from cuts. Not only have we a right to ask for that at this time, but the Minister should be in a position to speak at least for the period when his Government will be in office; we will do our job right when it comes to our turn.
Lord MOWBRAY and STOURTON: If, as the noble Baroness, Lady Stedman, says, her party does its job right and helps us all the way round the clock to get the economy better, I should probably be able to be more certain, but I am not certain that she and her friends will do that. Our view of how to get the economy right and hers differ on some rather important points. The noble Baroness,

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Lady Birk, asked if this cow was sacred and whether I could give a guarantee, and in reply I said that "never" was an impossible word to use in Government. As for future payments to this fund and payments in lieu, she is really asking for the moon when she asks me to give that guarantee. We fully accept the importance of making adequate provision for this heritage and we have demonstrated that by the introduction of this Bill and in other ways. However, as noble Lords will appreciate, future expenditure plans can never be regarded as totally sacrosanct so it would be misleading for me to say that grants in the fund and provision for acceptance in lieu will march with the level of inflation for all time, or even for the foreseeable future. We will do our best, but final decisions must be taken from year to year against the general economic background. I am sorry that I cannot say more.
Baroness BIRK: In that case, may I ask the Minister whether the amount that was taken out—and if one translates that into 1979, let alone 1980, values it is a large amount—will certainly be taken very strongly into consideration? There is money owing to this fund; I am not asking for an increase which has to come out of the air, as it were, as if there were no background for it. The fund has a priority claim as a follow-on from the National Land Fund. We should like to be assured of that, otherwise it will be forgotten and all disappear.
Lord MOWBRAY and STOURTON: I think we have paid lip-service to the wish that we should have the whole of what had been the fund, but let us be quite honest about this: it is a notional fund and the money is not there. What is there is the £15½ million, and that we have guaranteed to put in as soon as the Bill receives the Royal Assent. However, much we might like to do things, it is a bookkeeping entry into the fund and the bookkeeping money has gone. The £15½ million is all that is there and we really must be content with that.
Baroness STEDMAN: How can one expect the trustees to do their work if they are not certain there will be any money in the kitty for them next year?
Lord MOWBRAY and STOURTON: The trustees, like everybody else, will have to work from year to year.
Clause 2 agreed to.
Clause 3 [Grants and loans from the Fund]:
4.40 p.m.
Lord SANDFORD Lord SANDFORD moved Amendment No. 6:
Page 2, line 24, leave out ("or preserve") and insert ("preserve or restore").
The noble Lord said: I beg to move Amendment No. 6, and I wish at the same time to speak to Amendments Nos. 16, 17, 20, 22 and 25, which all deal with the same point. I apologise in advance because I do not think that we shall get quite so much fun out of this amendment as we got out of Amendment No. 5. It deals with quite a narrow point. The Bill sets up a fund and provides for the appointment of trustees whose job it will be to safeguard and to increase the various elements that make up our national heritage. The process by which this is done is described at various points in Clause 3. Amendment No. 6 refers to that part of Clause 3 which mentions acquisition, maintenance or preservation, and elsewhere we read about maintenance, repair and insurance. Further on we read about maintenance and preservation, and further on still we read about preservation, and finally we read about improvement and preservation. Taken together those phrases give one a fairly clear impression of the range of activities with which the trustees will be concerned.
The object of my amendment is to make good what I consider to be a gap in this range of activities. In my view the heritage as a whole cannot be conserved and increased and kept in the shape in which we should all like to see it unless provision is made for parts of it to be restored from time to time, and I put it to the Committee that that process of restoration is different from maintenance, repair, preservation or acquisition, and needs to be specified separately.
It would be easy—and if necessary I shall do so—to give many examples and instances where funds have had to be applied to restoration which did not include maintenance or preservation and had

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nothing to do with improvement, but I shall leave my remarks at that for the moment because I trust that the purport of my amendments has already become quite clear to my noble friend, and I hope that he will be able to say without further hesitation that he can accept them. If he has something else to say, I for my part shall also have something else to say. I beg to move.
Lord LEATHERLAND: Naturally I am completely in harmony with the noble Lord who has moved the amendment, but I wonder whether the word "restore" would be quite appropriate in all cases. Let us take that famous work of art, the statue of Venus—the lady who seems to have everything except her two arms. Would this amendment require Her Majesty's Government to restore the two missing arms to the statue of that lady? I hardly think that it would. Therefore I think that the inclusion of the word "restore" here might do more harm than good.
Lord SANDFORD: It confers a power, not a duty.
Lord MOWBRAY and STOURTON: I fear that I am going to disappoint my noble friend Lord Sandford because we have to resist these amendments—not, I hasten to add, because we do not totally agree with his intentions, but because we do not think that they are necessary or that my noble friend is going about the matter in the right way. The purpose of the amendments is to make it clear on the face of the Bill that the trustees may give financial help towards the restoration of outstanding heritage items, such as buildings, land and pictures. I am able to assure the Committee that the amendments are quite unnecessary. The possibility that the trustees might, say, wish to help with the restoration of an historic building is already allowed for in the terms "acquire, maintain or preserve". These terms are construed very widely, and the Government are satisfied that they give the trustees power to discharge fully their responsibilities for preserving the heritage.
However, my noble friend Lord Sandford wishes to place a wider meaning on the word "restoration". He wishes to make clear that the trustees can help to restore an historic building to its original
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form, so that if, for example, there was a Tudor building which had been altered or extended in the Georgian or Victorian style, the trustees could help to remove the work of the latter period and restore the Tudor building. I think that this presents great problems. On the one hand I doubt whether the word "restore" includes demolish, but if it does, so does the word "repair". On the other hand, I am very aware of the deep passions aroused by some proposals to restore houses to their original form. I think that the wording we have at present reflects the wording of the 1953 Historic Buildings and Ancient Monuments Act, under which the Historic Buildings Council have operated happily for 25 years. We are firmly convinced that these are the right words for buildings.
So far as works of art are concerned, I do not think that anyone has suggested that "preservation" cannot include restoration. I should like for a moment to take the opportunity to clarify how the Government see the trustees becoming involved in repairs and restoration. As has already been made clear on numerous occasions, we see the fund essentially as a "safety net" which will make it possible for various heritage bodies to acquire and preserve outstanding items of the heritage which might otherwise be lost to the nation, through export, decay or demolition. We recognise that, in helping a body to acquire an item, the trustees may also wish to help to put it into good condition. Thus they might wish to help with the repair and restoration of an historic building which they have helped the National Trust to acquire.
But the fund is not large enough—and could never be large enough—for the trustees to provide help with the restoration and maintenance of all the outstanding items in our national heritage; and, in any case, there are other sources of help which can, and should, be tapped. In the case of historic buildings, for example, there are the grants administered by the Department of the Environment, the Scottish Office, and the Welsh Office on the advice of the Historic Buildings Councils. While the trustees may help with restoration and repairs, therefore, the Government will make it clear to them that we expect them to do so only exceptionally and that, for the most part, where requests for repair grants are

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received, they should be directed to existing sources of help, such as the Historic Buildings Councils.
I must apologise to the Committee for this rather lengthy reply, but this is a point which the Government consider to be of some substance. I hope that, in view of what I have said, my noble friend will now agree to withdraw his amendments.
Baroness BIRK: I have listened carefully to what the noble Lord, Lord Sandford, said and to the Minister's reply. I appreciate both what the noble Lord, Lord Sandford, is trying to do and his interest in this matter. I must confess that I think that the Government are right over this one. I think that the word "preserve" embraces restore to the extent that one needs it to do, and that it covers retaining, too. The other point is, where does one stop? One could include the word "conserve" and a great many other words. I think that the matter is much better left in this way. From my experience of dealing with the Historic Buildings Council I think that this is the way the provision should work and that the matter should be left open as far as the Government have it set down in the Bill itself. Frankly, I should prefer to see this provision left as it is.
Lord SANDFORD: I think that what my noble friend the Minister has said is perfectly true in regard to ceramics and pictures. The term "preservation" which is in the Bill at the moment covers putting together something which is broken, which is restoration; and the term "restoration" when used in respect of pictures is much the same as preservation. However, I am very far from convinced that in respect of buildings it is conceivably possible to think of maintenance, repair or preservation as covering restoration, and I think that to leave out the term on the grounds that, if it were included, the trustees could not be relied upon to use their judgment as to whether or not to apply their funds appropriately and would go off and spend far too much on restoration, is to underestimate altogether the calibre of the trustees whom we expect to see administering the fund and the range of decisions which we expect them all to take.
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I am not by any means convinced that in respect of buildings it is appropriate to leave out the term "restoration". However, I will think about this between now and the next stage, perhaps have some discussion with my noble friend and return with either this or a similar amendment confined, if necessary, to buildings—that is, to the matter with which I am particularly concerned. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.50 p.m.
Baroness VICKERS Baroness VICKERS moved Amendments Nos. 7 to 9:
Page 2, line 27, after ("outstanding") insert ("archaeological")
Page 2, line 29, after ("outstanding") insert ("archaeological")
Page 2, line 33, after ("outstanding") insert ("archaeological").
The noble Baroness said: I beg leave to move Amendment No. 7 and Amendments Nos. 8 and 9. Having read the debates in the other House, both in Committee and on the Floor of the House, I think this amendment had considerable support in the other House itself. In fact, at Committee stage it was lost by only three votes to four. My Amendments Nos. 8 and 9 go a little further than the ones discussed in the other House, because they include single objects, collections and groups of objects. It is apparently suggested that the interests of archaeology are covered by the words "historic" or "scientific". However, the Council of British Archaeology state that there are 105 archaeological trusts in Great Britain.
I gather that the total number of museums likely to come under this Bill is about 950, and they are classified as follows: fine and applied arts, archaeology and antiquities, natural sciences, industry, physical sciences and social history. For archaeology there are 24 museums belonging to local authorities and nine to the universities, and there are 34 "private and other". I think the "other" refers to small collections and some National Trust museums, like the one at Avebury. So there is a total of 67. It would seem to me that to have 67 separate museums, with local authorities spending the rates maintaining 24 of them, indicates that these authorities and the universities do

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not consider that the subject is covered by historic or scientific museums. There is also the important fact that there are 34 private museums, which shows that people have a real interest in the subject.
On 18th December reference was made (col. 54 in Committee F) to the danger of losing archaeological sites because of improved agricultural methods, and I therefore think that this needs particular attention. I realise, as my noble friend the Minister said, that it is intended to issue guidelines to the trustees, and they, of course, will be very knowledgeable people. But they will also be human beings, and they will have their likes and their dislikes. Having lived near Dartmoor for 20 years, and now on Salisbury Plain, I have naturally taken a great interest in these sites and this subject. As 34 of these museums are private, it would be very advantageous if, under Clause 3, they could have loans. I am not suggesting grants, because most of them are very able at raising money and looking after themselves.
To give your Lordships one example, a little museum in Devizes, which is entirely archaeological, has just recently been building an extension. They have had to collect most of the money themselves; but, one of the interesting things is that, though I expect a lot of people know all about Stonehenge, I wonder how many people have heard of Woodhenge. This is now having a special room for itself, and I think will have great interest to many people. Of course, we have an exceptional curator there, who has given over 20 years of service. The worrying factor about archaeological finds is that these areas are very scattered, and I wonder how many of the trustees will have had the time or the interest to go and visit them.
In April 1946 Hugh Dalton, when we had this fund of £50 million, was thinking of saving the aspects of British landscapes, and these sites that I am particularly thinking of are on the British landscapes. Therefore, I hope it will be considered that archaeological interests should be completely separate and should be accepted into this Bill. I beg to move Amendments 7 to 9 en bloc.
Baroness BIRK: I should like to support this amendment moved by the noble
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Baroness, Lady Vickers. Frankly, on reading the Bill for the first time I was amazed to find that the word "archaeological" had been omitted. I must say that I thought first of all that it had perhaps been omitted by error, or was a printer's error, but evidently it was not. So much of the heritage of this country is archaeological. As I understand it, the Minister is probably going to tell us that this is included in "scientific" interest. I feel that to make archaeology a poor relation of the heritage is really a bit hard and is not only undignified but is not giving enough credit to a large part of the great cultural wealth of this country, which is in archaeology going back to Roman times, medieval times. It is quite magnificent. What is stated here is not covered by the Ancient Monuments Act; this is an entirely different point. If the Government are going to say that it is covered in the Bill, then I do not think it is asking too much to say, "Put in that one word". If it is not covered in the Bill, then this is an entirely different situation and I think we shall then want to know why, and certainly I imagine all sides of the Committee will want to insert it.
Lord VAIZEY: I should like to support my noble friend Lady Vickers. I am sure the original intention of the National Land Fund was principally about the landscape; it was about things like the White Horse, the Icknield Way and things of this kind. It would seem that no harm would be done by putting "archaeological" in, but a great deal of harm might potentially be done by leaving it out, and I would have thought that in principle, whatever the Minister's advice may have been, he would be wise to accept this amendment.
Lord MOWBRAY and STOURTON: Let me start off by saying that in no way does anyone regard archaeology as a poor relation; and let me quickly say to my noble friend Lady Vickers that I cannot conceive that the intention of this Bill was to provide new wings for places like archaeological museums at Devizes. I should like to preface my remarks in that way, because I think we are going off at a tangent if we start thinking of things like that.

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There are two reasons why the Government cannot accept this amendment. First (as your Lordships have guessed I was going to say), it is unnecessary. The words "historic" and "scientific" in the list of criteria are sufficient to cover "archaeological". These words are all very broadly construed. "Historic" does not exclude "prehistoric" Secondly, if we were to add the word "archaeological", we would begin to cast doubt on how widely the other words in the clause could be construed. I beg your Lordships to take this point on board. Furthermore, in other places in the Bill where similar combinations of words appear, the absence of the word "archaeological" would lead by necessary implication to the exclusion of archaeology. For example, in Clause 3(7)(a) we have a list of the types of collection which museums which are eligible recipients of assistance from the fund may have. These collections are described as collections of historic, artistic or scientific interest. The noble Baroness's amendment would have the implication that museums of archaeology were not eligible. Similarly, in Clause 16(2)(a) there is a description of museums which may benefit from the Government indemnity if they maintain a collection of historic, artistic or scientific interest.
These amendments are a perfect illustration of the danger that can arise from adding unnecessary words to a Bill. I hope that the noble Baroness will accept my assurance that archaeology is well and truly covered by the Bill in Clause 3, both in 3(1) and in 3(7), and that there is no need to make these amendments. As a general proposition, I hope it will be accepted that we should not add words unnecessarily to the Bill. Clarification is often desirable, but, as in this case, it can have unfortunate side-effects. I can assure your Lordships that full guidance on the scope of the trustees' ability to assist will be published, and that this will make it clear that archaeology is covered.
Lord VAIZEY: The Minister's reply has added new horrors to the clause. I therefore hope that my noble friend Lady Vickers will be fairly fierce. First of all, if the Minister believes that "historic" includes "prehistoric", I can assure him that he is just incorrect. Secondly, the notion that you cannot have consequential
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amendments as a result of the acceptance of one extremely wise amendment to one clause seems to me to be quite contrary to the normal practice of your Lordships' Committee. It is perfectly possible at Report stage to move amendments if the civil servants think them necessary. It is clear that these words do not include archaeology otherwise the archaeologists would not make such a fuss.
Lord MOWBRAY and STOURTON: I did not say that historic meant prehistoric. I said that historic did not exclude prehistoric.
Lord REIGATE: Would it help my noble friend if he found the opportunity to insert somewhere the words "or otherwise"?
Baroness BIRK: I must agree with the noble Lord, Lord Vaizey, over this. I found the answer extraordinary. We get back to the crux of it; which is that if the Bill is meant to include archaeology, and archaeology is accepted as part of our heritage, why are the Government not prepared to put in the word so that it is on the face of the Bill as well as in the intention of it? I take the Minister's word, personally; but in this context we have only his word for it. Since reading Hansard is not the way that Bills are allowed to be interpreted, it must be in the Bill. There is no use in having it in Hansard saying, "Yes, we did mean that"—or that is not going to do any good. I would point out that when the Minister was talking about land, buildings and structures outstanding, it would have to go in and we were not thinking of buildings; that is up to the trustees. What is more important are the objects or groups of objects. This is the point that has been made to me by archaeologists.
Lord DONALDSON OF KINGSBRIDGE: Would the noble Lord explain why we could not cut all this out and use "scientific" to mean historic and architectural as well as archaeological?
Lord MOWBRAY and STOURTON: I had, in effect, said in my speech what the noble Lord has said. The noble Baroness said that what is in Hansard is not in the Bill. I accept that. She must accept that there is going to be guidance to the trustees. I have made it

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clear not only that it is legally all right already, but it is going to be in the guidelines for the trustees to make it clear beyond peradventure.
Lord LEATHERLAND: If a lawsuit should develop over any action or lack of action by the trustees, what would be the attitude of the judge if, in addition to being provided with the text of the Act, he has the text of the guidelines as well? He would say: "The guidelines do not matter; I shall go by the text of the Act".
Lord MOWBRAY and STOURTON: I do not know why the noble Lord, Lord Leatherland, with his clarity of thought, should think in terms of judges being involved. We are dealing with advice to the trustees who are going to be helping to save objects of great historic and scientific interest. There is no question of the trustees being taken to court. This is merely a guideline to explain where their interest lies. There is no problem here.
Baroness VICKERS: Having heard my noble friend's explanation, I should like to point out that I did not suggest the extension to museums. I was showing how it was done by private people and how interested people were in this subject. In view of what my noble friend has said, I will withdraw the amendments now and return to the matter at Report stage. I beg leave to withdraw the amendments.
Amendments, by leave, withdrawn.
5.3 p.m.
The DUKE of GRAFTON The DUKE of GRAFTON moved amendment No. 10:
Page 2, line 33, leave out second ("or").
The noble Duke said: Before I address the Committee on the first of my amendments, I must declare my interest. I am the owner of a house and a collection of pictures and furniture et cetera which I venture to suggest might be considered to be outstanding heritage property. I am also the patron of the Historic Houses Association, which one might loosely describe as the trade union of owners of outstanding country houses. I must set aside these declarable interests and, instead, wear several other hats. I am a member of the executive committee of the National
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Trust for England, Wales and Northern Ireland and chairman of its regional committee for East Anglia. I am speaking today for our chairman, the noble Lord, Lord Gibson, who has asked me to say how much he regrets (as I do) that he is not able to be here to follow up various points he made at Second Reading. I am speaking today also as chairman of the Joint Committee of the National Amenities Society, the Society for the Protection of Ancient Buildings, of which I am also chairman, the Georgian Group, the Victorian Society, the Ancient Monuments Society and the Civic Trust. Those may be known to some of your Lordships.
This Committee has been very much involved since 1974 in the protection of heritage from the potentially destructive taxation then proposed. I am also a longstanding member of the Historic Buildings Council for England; but I do not speak for the Council today. My membership of it for some 27 years has given me a unique opportunity to study many of these problems. I am also chairman of the trustees of the Sir John Soane Museum and the vice-chairman of the trustees of the National Portrait Gallery, appointed, incidentally, by the Prime Minister; but I do not now speak for these bodies.
I now turn to my first amendment. I beg to move two of the three amendments I have tabled to Clause 3, Amendments Nos. 10 and 11. The first is tabled for purely grammatical reasons. There is an "or" to remove if another paragraph is to be added to Clause 3(1) as is the substance of my Amendment No. 11. It is to this that I shall now refer. The Bill sets out in Clause 3(1) all sorts of categories of property with respect to which grants and loans can be made so that eligible recipients can make purchases. Under Clause 4(1), the trustees can make other expenditures on property falling within Clause 3(1); so that it is important that Clause 3(1) should cover all types of property of importance. This it seems to do with one exception which was raised by my noble friend Lord Gibson on Second Reading; that is, associated rights with respect to land not being purchased.
Land, in Clause 3(1), by definition, includes all rights associated with it. But it may be that some eligible body, such as one of the National Trusts, is trying to purchase rights over land which is not

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itself being purchased and a grant is in question thereon. Let us say that it is a right of way to use a length of road, the last link in the chain being put together to open up fine countryside; or, to take another example, there may be a bird sanctuary, already safely owned by the Royal Society for the Protection of Birds and they have an opportunity to purchase shooting rights over adjoining or associated land which they can then control so that birds may live in peace and quiet.
This subject was raised in Committee stage in a nother place by Mr. Bulmer, Member of Parliament for Kidderminster, who mentioned Offa's Dyke, access to beaches and coast paths, fishing rights and tree planting rights. The Minister gave an assurance, without commitment, to look at the problem and, if necessary, to put down an amendment. No Government amendment was brought forward at Report stage. Mr. Bulmer was not present to raise the subject again. Study of the present Bill certainly suggests that an amendment is still needed to cover this important point.
As well as owning a large tract of countryside of 426,000 acres and about 400 miles of coastline, the National Trust for England, Wales and Northern Ireland holds covenants over another 76,000 acres of countryside and a further 27 miles of our coastline. In many cases we have had to buy these covenants. Thus the National Trust exercises a control over and above that exercised through the planning Acts. On a lot of important land it is a control which the National Trust would like to extend with the help of the fund on occasion. We have a case at this moment where the National Trust owns a house to the West of London where we hold covenants over some important land which makes the setting of a unique group of medieval buildings. Planning permission has already been given, lamentably, for the building of housing quite close up to this group, actually on the covenanted land, land over which the National Trust holds covenants. We are resisting this. We are at the last ditch over this particular site. I only instance that to try to impress on the Committee the importance of these covenants. That is all I have to say to introduce this subject. I beg to move the amendment.
5.11 p.m.
The Earl of WEMYSS and MARCH: In rising to support the amendment so ably moved by my noble friend the Duke of Grafton I should also like to declare a very strong interest in this subject, being at present the president of the National Trust for Scotland, and also having been involved with both National Trusts for something like 35 years which, if I have it right, is rather longer than the existence of the National Land Fund itself. This is apart from some family interests of my own in the heritage. The two National Trusts are united in not only their welcome to this Bill but in the various improvements that they are trying to bring about in it. I am deeply sorry that I was unable to be present to hear the speech on Second Reading of the chairman of the National Trust, the noble Lord, Lord Gibson, which read very well in Hansard.
This new heritage trust is going to take the central role to some extent which we, the two national Trusts—often with difficulty and always with inadequate funds—have tried to take in the centre of the movement to save the heritage up to this time. We are very glad indeed that this extra body is going to be inserted and we wish it every success. On the subject of what has been called associated rights, I too am aware of the promise that was made in another place by the right honourable gentleman in charge of the Bill, speaking to the amendment of Mr. Bulmer. It is to be found in column 88 of the relevant Hansard.
However, there was a slight misunderstanding; namely, that the right honourable gentleman, in his reply, seemed to think that the associated rights referred to were associated with the land that the trustees were going to acquire or had actually acquired. It is not so much that that we are talking about this afternoon, not the land purchased but some adjoining land. The better phrase, rather than "associated rights", is "geographical association". For example, there could be land which overlooks an area or on which it would be desired that there should be a prohibition against the building of houses or some covenant not to fell trees without consent.
Some of your Lordships may know the charming little borough of Culross in Fife, much of which is owned by the

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National Trust for Scotland. How marvellous it would have been if we had had some sort of right to prevent those beastly council houses being erected on the skyline overlooking it. Some of your Lordships may know Castle Sween in Argyll, where it would have been a very good thing if someone had had the right to prevent or inhibit the caravan site being located far too near this beautiful and historic ruin. As a success story, I should like to quote the Galloway Dee, where the National Trust for Scotland have succeeded by persuasion—with the owner's willing consent—in getting the owner across the other side of the river from our wildfowl gathering place, to refrain from exercising shooting rights. In the two Trusts we have special arrangements already existing and therefore, with respect for every other body, we have more experience of this matter than anybody else.
We have what we call restrictive agreements. In England they are called restrictive covenants. It is the same thing by another name. Nowadays in both countries we are inclined to call them conservation agreements, which is more positive than the word "restrictive". This agreement can be obtained by the generous gift of somebody, or possibly by purchase at a preferential price less than the market price, or maybe by paying the full market price for this covenant, inhibition or prohibition. Whatever it is, it is bound to be cheaper than actually having to buy the land concerned, the geographically associated land, which is probably not necessary and is an unnecessary or extra trouble for the Trust, or whatever body owns the land that we are seeking to protect. I have pleasure in supporting this amendment.
Lord DONALDSON of KINGSBRIDGE: As president of the Royal Society for the Protection of Birds, I should like to associate myself fully with this amendment.
Lord MOWBRAY and STOURTON: This amendment has powerful support. I have listened with great interest to the speeches in support and I gather that the point at stake is that the trustees may wish to acquire rights over land without acquiring the land itself. An obvious example is that given by my noble friend
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the Duke of Grafton of a nature reserve where trustees helped to acquire and presumably extinguish shooting rights or hunting rights over land surrounding the reserve so that birds and animals sheltering in the sanctuary are fully protected.
My noble friend Lord Wemyss and March talked about Culross Abbey, which I know well. I congratulate him and the Scottish National Trust on the admirable job that they have done not only there but in the surrounding village where some of their restoration of houses has been most admirable. I am sad that the noble Earl and his fellow trustees have not been able to influence the local planning authorities at Culross, and their advice was possibly not heeded.
The noble Duke and the noble Earl referred to a Government assurance in the Commons that the point would be considered and they would do something on this matter. We have considered this matter very carefully. We have concluded that the amendment must be resisted. Apart from other considerations, even its most ardent supporters would accept that the amendment is somewhat unhappily worded. Although I have understood the principle involved from what has been said this afternoon, I do not think it is at all clear from the drafting of the amendment before us.
We must also consider more fully whether this amendment is necessary, given the wide powers already at the disposal of the trustees. The Committee will agree that the occasions on which the trustees may wish to acquire rights over surrounding land are likely to be very few and far between. We have mentioned shooting and I have mentioned hunting. The noble Duke mentioned approach roads, and we can think of one or two others. I need only point out the difficulties of acquiring, say, the shooting rights around a nature reserve, particularly when as is often the case, those rights are owned by several different parties. Unless all the parties are willing to sell their rights, the acquisition would not be worth while. In most cases the existing owners would wish to rent out rights rather than sell them off altogether.
Furthermore, in many cases it would be necessary to acquire rights for miles around a piece of heritage land in order

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to protect it. One thinks of the shooting in a sanctuary and how far birds will fly. To be effective one would really have to buy rights over quite a large area. In the Government's view that is impracticable.
We take the view that, even if a suitable form of words could be found, the addition of this provision to the existing powers available to the trustees would be of little value. As your Lordships know, the trustees may already help acquire or themselves acquire land, and therefore the rights associated with that land, which they consider to be of outstanding heritage importance. They can also help acquire or themselves acquire land, and consequently rights over that land, which in their view it is desirable to acquire by reason of its association with heritage land. Thus, as the Bill stands, the trustees would already acquire rights over surrounding land if they thought that was absolutely necessary. I hope, in view of what I have said, that my noble friends and the noble Baroness will not press the amendment.
Lord DONALDSON of KINGSBRIDGE: I could not quite understand the noble Lord's last remarks. He said that if it were valuable for the trustees to purchase some rights on neighbouring land, they would do so. Surely the point of this amendment is that the trustees could give money towards, for example, the RSPB to do so. The fact that the RSPB have not done so may have been because they have not got any money—though I am glad to say that that is not the case at the moment.
Lord MOWBRAY and STOURTON: I take the noble Lord's point, but what we are worrying about really is what lies behind my noble friends' amendment, in that buying up rights in the surrounding area of country beyond what they own could be very hard indeed, because it is very hard to know, if you are thinking of a sanctuary and therefore buying up shooting and hunting rights, how near the boundary would have to be. For instance, birds have to fly about, and therefore an imponderable amount of discussion would be involved as to how much you would need to buy. Therefore, if you start by buying a bit, it is hardly worth buying at all.
Baroness BIRK: I think this is a very complicated subject, and the Minister may well be right in saying that perhaps the drafting is not quite correct. However, I think it is the point of principle we are really concerned with. As I understand it, he is saying that if the trustees want to buy land and in buying that land they acquire the associated rights, that is correct. But what this amendment is getting at is to be able to buy certain rights without buying the land. If it is possible to do that, it seems to be quite wrong for the trustees or anybody else to be either forced or encouraged to buy land when all they want is certain rights over it. When the Minister asks where it would end, and when he says that it is very difficult to judge how much land would be needed, those surely are matters we need not be too concerned with as regards the Bill. They are a question of arrangement and negotiation between the trustees. There are legal questions involved, and so on. All I want to know is this: is it possible to buy associated rights under the Bill as drafted?—because I think if I understand it correctly, there is a certain difference of legal opinion about that. If I may say so, this is not clear from what the noble Lord has said so far.
Lord MOWBRAY and STOURTON: I quite agree that it is a very complicated matter, and it is not helped by the slightly imperfect wording of the amendment; but the last sentence that I read out to your Lordships—that is,
"As the Bill stands, the trustees would already acquire rights over the surrounding land if they thought this was absolutely necessary",
seems fairly clear.
Lord DONALDSON of KINGSBRIDGE: If that is the case, then it seems to me to meet what is in the amendment. Is that what the noble Lord is telling us?—that, in other words, the trustees can advance money to an institution to buy rights associated with the neighbouring land without buying the land itself? That is the question at issue. Is the noble Lord saying that under this Bill they can do so? If so, I think we shall all be perfectly happy.
Lord MOWBRAY and STOURTON: The last sentence of my brief was as I read it out to your Lordships, but since then I have received further advice. The Committee

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must know that covenants often cannot be enforced unless there is a continuing interest in the land over which the covenants are given or bought. The only real way to preserve is to own the land—to purchase it. A covenant is not a safe investment. That is therefore saying that although I take it that my last sentence is technically correct, and though it is equally correct, from what I have just read out, that one can buy a right without owning the land, if the trustees do so it seems as though they would be pushing their luck somewhat.
Baroness BIRK: I do have a great deal of sympathy with the Minister, quite seriously, because it is a very difficult and technical matter and one is sometimes in a difficult position when—shall I say?—the pigeon arrives at the last moment and one has to read out the information and sometimes the handwriting is not quite clear.
In view of what the Minister has said, I wonder whether it would help if he could take this point back, because I think that when he and his officials have a chance to read this in Hansard he will see that there is a very specific point we are all on about: that is, whether it is possible to buy associated rights. If it is, when is it in the Bill? If not, then how can it be put right? If it cannot be put right we want to know exactly why it cannot, including the legal reasons, and so on.
The EARL of WEMYSS and MARCH: With the greatest respect to the noble Lord, Lord Mowbray and Stourton, there is some misunderstanding here both on his part and on that of his advisers. If we are told it is not likely to be very useful to acquire rights round about—rights which are at present in no legal way associated with the land the trustees are going to acquire—how does he get past the fact that the National Trust holds many thousands of acres and all those miles of coastline in Cornwall and elsewhere, as well as the three cases I have quoted in Scotland and incidentally the wildfowl refuge on the Dee that I mentioned? It is only necessary to acquire or get an understanding about one other property with shooting rights: it is quite enough in the context. It is by no means necessary to get 17 other people in a ring all round. Geography is not like that, at least not in Scotland.
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I would strongly request that the noble Lord would take this back. If it would be any help, we could provide him with a list from Scotland, and I dare say from Queen Anne's Gate in London too, of all the covenants and restrictive agreements held in all these counties, just to show him and his advisers how extremely useful and valuable these are.
Lord MOWBRAY and STOURTON: I can assure the noble Earl that I will take this back, because I do seem to be advising your Lordships that the trustees have rights, while on the other hand I am saying that if they use those rights they will have to watch it! Therefore I will take this back and consider it further.
Lord WINSTANLEY: If the noble Lord is taking this back to look at it again, I hope he will bear in mind that it might be considered desirable or even essential for somebody to acquire rights over other land—not wholly, as the noble Lord appeared to think, for the purpose of extinguishing them. I think he should look at the other side of it. There may be many circumstances in regard to access and things of that kind where the need to acquire rights over neighbouring land is not solely for the purpose of extinguishing them but for the purpose of allowing others to use them in a different way.
Lady SALTOUN: There is one kind of right which has not been mentioned so far: what are called easements in England and wayleaves in Scotland. In the case of buildings or houses, they are very necessary for obtaining water supply and electricity. Does the Bill, as it stands at present, enable the trustees to buy these?
Lord MOWBRAY and STOURTON: I should have thought that it would cover that. But I will take advice and confirm it and, if I am wrong, will write to the noble Lady.
Lord ROSS of MARNOCK: I am very glad that the noble Lord has said he will look at this, because it is of very considerable importance. I can think of one small town in Scotland with an abbey owned by the Church of Scotland. I can remember the heart-rending letters that I used to get from an ancient minister at that place, asking that something be done. Unless the planning department of

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the local authority are prepared to exercise certain rights, then you will see a vital part of the national heritage being spoiled by a slow growth around it. In this case, it was not council houses; it was private houses going right up. This place sits in a valley and that surrounding saucer of houses spoiled the whole area.
The noble Lord said that it was impractical, but he must explain to me how it is that along the coast, in the part of the country where I live, from Culzean to Dunure and up to the Heads of Ayr, the National Trust of Scotland—and I am very proud to be a member of its council—has conservation agreements. You have only to look at certain parts of our coast, even in the North of Scotland, to see that the whole place has been devastated. It would have been desirable, from the point of view of the heritage, to have reached some agreement or to have been able to buy a certain right, in order to restrict development of that kind. If we really mean to conserve the heritage, let us not forget this aspect. You can separate rights from land, and there is nothing worse than going across a beautiful area and seeing a great scar of quarrying. I hope that the noble Lord will give the power that we ask here. I also hope that he will find words. It is no good the Minister saying that the drafting is bad, because the drafting can be put right if he wants it to be put right. He did not say that he accepted the principle; he said that he understood the principle. What I should like him to say is that he accepts the principle as well.
Lord MOWBRAY and STOURTON: It is really for the trustees. But we must put out of our minds that this would be a usual occurrence. If this were to happen, it would be a most unusual occurrence. But I have told my noble friend that I will take it back and look at it sympathetically.
The Earl of WEMYSS and MARCH: In view of my noble friend's sympathetic answer, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 11 not moved.]
5.33 p.m.
The Duke of GRAFTON The Duke of GRAFTON moved Amendment No. 12:
Page 3, line 5, leave out ("securing or improving") and insert ("ensuring public benefit or reasonable").
The noble Duke said: This amendment touches on public benefit and reasonable public access. Subsection (3) now contains the phrase "securing or improving public access", it being incumbent on the trustees to have regard to just that when considering the making of grants and loans. A great deal has been said on this subject, both in another place and in our own Second Reading debate, and I know that the Government have taken the points made. But there has been no change in the wording of the Bill and I find it difficult to read all that should be read from the words in the Bill, as it stands now.
There seem to me to be two main points. First, access may have to be limited for the public benefit. It may well be necessary, for example, to close off a headland to allow the turf to recover from over-use. Privacy of nature reserves is surely another obvious example. For the public benefit, the trustees may need to weigh and ensure privacy by limiting public access.
Secondly, access may need to be carefully controlled for other reasons. There may be circumstances, particularly in connection with private premises, where works of art have been left in situ and where reasonable public access is enough. This is a phrase which is very well understood in what one might call heritage circles. Indeed, it is a very difficult subject, which has been the concern of the Historic Buildings Council since very early days. Reasonable public access has to be set, so that occupants of private houses et cetera and the visiting public can co-exist in harmony. There are many cases where access taken to excess will destroy the thing which visitors have come to enjoy.
My amendment deals with those two points by inserting the words "public benefit or reasonable", but it begins by changing the word "securing" into "ensuring". I think that the new word has a slight edge on the old, but I do not want to over-stress that and would leave

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it to the Government for consideration. Overall, changing the words to "ensuring public benefit or reasonable public access" seems to meet the need more clearly, but I look forward to hearing the Government's view. I beg to move.
Baroness BIRK: I wonder whether it would be for the convenience of the Committee if we also discussed Amendments Nos. 13 and 14, because they are on the same point.
Lord MOW BRAY and STOURTON: I should be most grateful if we could do that.
Baroness BIRK: I shall be moving Amendment No. 14, which covers the same point, and which I prefer to the amendment moved by the noble Duke. I prefer to keep the word "improving", in connection with access. I spent many years trying to improve access to various places and I think that the word is simpler. I know that the word "reasonable" goes through Finance Acts and other Acts, and I was always trying to get that changed to "adequate". Therefore, I think that "improving access" is a better phrase. Having said that, I find that I am in opposition to myself, since Amendment No. 14 seeks to insert the word "controlling." As I have said, I have always been anxious to increase access, because I think that there should not be financial privilege, whether by way of taxation or grant, without social responsibility. This is the right place to pay tribute, in passing, to the many house owners all over the country, who give access beyond what they are asked to do. I have had the opportunity to visit many of those houses.
As the clause now stands, it assumes that public access of any kind is always desirable. But there certainly are situations, some of which were pointed out by the noble Duke, where uncontrolled public access is in danger of destroying the heritage. As he said, there are bird sanctuaries and wildlife habitats. However, there are also places such as Stonehenge. That has nearly 800,000 visitors each year, and when I was a Minister in the Department of the Environment I instituted a form of crowd control, in order to protect the monument. Incidentally, it also made it very much easier
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for visitors to walk around with much greater facility and in greater comfort.
The whole question of crowd control is something over which we are still at a primitive stage in this country. We do not deal with it in the same way as, for example, America, and with the increasing number of tourists it is very important to have more control under this Bill. This also applies to houses. Some of them, such as houses recently bought by the Government, like Baddesley Clinton, a small manor house, and Kelmscott, William Morris's old house, cannot take a tremendous weight of visitors at any one time because of wearing out the fabric of the house. It seems to me to be a very good step forward to have both improved access on the one hand and, on the other, the opportunity to control it, both in the built-up historic areas—environment—and also in the countryside. Therefore, I beg to move Amendment No. 14.
The DEPUTY CHAIRMAN of COMMITTEES (Baroness Wootton of Abinger): Amendment No. 14 is alternate to Amendment No. 12. The noble Baroness will take Amendment No. 14 in order when it comes.
Lord MOWBRAY and STOURTON: With the permission of the Committee, I can speak to Amendment No. 12 of the noble Duke and the noble Earl and also to Amendments Nos. 13 and 14 which stand in the names of the noble Baronesses opposite and the noble Lord, Lord Donaldson of Kingsbridge. As I have said, I should like to take all these amendments together.
The Committee will know that the question of the trustees having power to control or restrict public access to items they help to acquire was fully debated in another place. At that time the Government made clear that, in our view, the clause as drafted adequately covered the possibility that the trustees might wish to help with the acquisition of, say, a nature reserve or a small manor house to which it would clearly be undesirable to admit vast hordes of visitors. Your Lordships will recall that I stressed this point in my opening speech during the Second Reading debate.
Clause 3(3) only requires the trustees to have regard to the desirability of securing

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or improving public access, a sentiment which would, I am sure, have the support of the Committee in the majority of cases. But it lays no rsponsibility on the trustees always to insist on such access. If they were to feel restrictions on access are desirable, they could just as easily make this a condition of grant. Strictly speaking, therefore, these amendments are unnecessary.
Nevertheless, the Government recognise the strength of your Lordships' feelings on this question and we are prepared to concede that some declaratory phrase be included in this clause to reflect this concern. However, I fear we must resist the amendments tabled by the noble Duke, the Duke of Grafton, and the noble Earl, Lord Wemyss, for two reasons. First, in the Government's view the word "reasonable" is rather weak. We must expect people to be reasonable and, not least, the trustees on whom we intend to place so much responsibility for the preservation of our heritage. Second, the Government wish to retain the idea that public access should, in appropriate cases, be improved and this would be lost if we accepted the proposed amendments.
We think it is right that in deciding to give grant the trustees should consider whether public access to the item in question can be improved. We are, after all, talking about preserving the heritage for public benefit. If we are to make clear that the trustees should consider restricting public access in some cases, it seems appropriate that they should also be required to consider improving it in others. I therefore hope that the noble Duke and the noble Earl will agree to withdraw their amendments.
This leaves us with the amendments proposed by the noble Lord, Lord Donaldson, and by the noble Baronesses, Lady Birk and Lady Stedman. I am delighted to be able to say that the Government would wish to accept this amendment. I think it should lay to rest the fears that many have felt about the need, in certain circumstances, to control public access, and we welcome it.
Viscount MASSEREENE and FERRARD: I support Amendment No. 12. Here we come up against the word "reasonable". This is a word which is used in statutes, and I prefer it
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because the word "improving" might mean that you could build a great tar-macadam road to the point of interest. One cannot always guarantee what Governments will do. That might very well spoil the amenities. I prefer here the word "reasonable".
If we may go back to Amendment No. 5, I thought that the Committee dealt rather hardly with my noble friend on the Front Bench. We had a big debate on the word otherwise Several noble Lords, especially the noble Lord, Lord Mishcon, described the word "otherwise", which is in the Bill, as "a complete nonsense"—or words to that effect. If one finds the word "reasonable" in statutes, I cannot see the word otherwise" is any wider than the word "reasonable". Noble Lords may not quite understand what I am getting at.
Lord DONALDSON of KINGSBRIDGE: Is the noble Viscount aware that the Government have asked that this amendment should be withdrawn in order that the next amendments can be accepted? Is he saying that he is not in agreement with the second amendment? If not, he is wasting our time.
Viscount MASSEREENE and FERRARD: No, I agree with it, but I thought that the Government were accepting Amendment No. 14.
Lord DONALDSON of KINGSBRIDGE: I hope that they are.
Viscount MASSEREENE and FERRARD: I thought that they were not accepting Amendment No. 12.
Lord DONALDSON of KINGSBRIDGE: That is right.
Lord MOWBRAY and STOURTON: We are not accepting Amendment No. 12, but we are accepting Amendments Nos. 13 and 14.
Viscount MASSEREENE and FERRARD: I understand. Therefore I will sit down. I am content.
The Duke of GRAFTON: In view of the noble Lord's very friendly acceptance of these amendments, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
5.45 p.m.
Baroness BIRK Baroness BIRK moved Amendments Nos. 13 and 14:
Page 3, line 5, leave out ("or").
Page 3, line 5, at end insert ("or controlling").
The noble Baroness said: I beg to move Amendments Nos. 13 and 14 en bloc. I should like to thank both the Minister and the Government very much indeed for accepting these amendments.
On Question, amendments agreed to.
Lord DONALDSON of KINGSBRIDGE Lord DONALDSON of KINGSBRIDGE moved Amendment No. 15:
Page 3, line 7, leave out subsection (4).
The noble Lord said: We are going awfully slowly, so I shall be rather fast on this amendment—or I shall try to be. I think that the subsection that I am asking to be withdrawn is quite ridiculous. Who would lend money to somebody they would not give money to, and who would give money to somebody they would not lend money to? The test of financial stability is exactly the same in both cases, so the distinction is foolish. It is just as easy to assist the heritage by lending money at no interest, or even at interest, as it is to assist the heritage by giving money.
Secondly, what on earth has it got to do with the Treasury? If the Bill had said, "Without consultation with the Ministers" I should have objected, but not half so much as I object to bringing back the Treasury again. The glorious thing about this Bill—the Treasury are just as pleased as we are about it—is that we have got the Treasury right out of it. For goodness' sake let us keep them right out of it! I beg to move.
Lord MOWBRAY and STOURTON: The Government do not envisage that the trustees will often wish to make use of their power to give assistance by way of a loan rather than a grant. Certainly we would not wish them to regard giving a loan as the easy option in marginal cases, on the basis that over a period the money would be repaid so that, in effect, it could be recycled for heritage purposes. It will be important that before giving a loan the trustees are fully satisfied that it will be repaid, otherwise it is simply a grant by another name, which clearly will not have been the trustees' intention.
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It is in this area that the Treasury can help, in assessing the recipient's future cash flow projections and in determining the period of repayment and the rate of interest, if any, which would be reasonable. We think it right and proper that this should be so, as it will be monies provided by Parliament which will be involved.
There is no reason to anticipate difficulties arising between the trustees and the Treasury. If—and I stress the word "if"—they did, then the last word would always rest with the trustees since they could decide to proceed by way of grant if their proposals for a loan were unacceptable. But we do not expect this to happen. It is not a question of the dead hand of the Treasury seeking to frustrate the wishes of the trustees. It is, as I have said, a matter of ensuring that the trustees and their small staff are not misled into believing that a loan represents an easy option in marginal cases.
There was a lively debate on this point in Committee in another place, and the Bill now makes it clear beyond doubt that the trustees will be able to make interest-free loans. However, it would in the Government's view be most unwise to go further and leave the trustees alone with the responsibility of deciding whether, on financial grounds, assistance in a particular case should be given by way of loan. Therefore I hope the noble Lord, Lord Donaldson of Kingsbridge, will withdraw his amendment.
Baroness BIRK: Before my noble friend replies I should like to make one point. In the subsection as it is now—and this was put in to the Bill in another place—it says "Interest (if any) on any such loan" and the noble Lord has made quite a lot of the point that, as I understand it, they would be able to make a loan at a low rate of interest. I find that extremely doubtful. I really cannot envisage the Treasury giving permission for a loan at a low rate of interest. I just cannot see it happening and in fact in another place in Standing Committee F, Official Report col. 99, the Minister said:
"The trustees can say 'if the Treasury will not let us make a loan we will give a grant'.".
I think this is an incentive for the trustees to be more or less forced to give grants rather than to make loans. When I was

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dealing with this area in the department I was anxious that the Historic Buildings Council should, where possible, make loans rather than give grants. There were circumstances where they could and the recipient would have been happy with that position, but the trouble was that the Treasury rate of interest made it almost impossible and people were not prepared to accept it. So the situation at the moment will be exactly the same unless this subsection is deleted.
Since the Government made great play about unfettered discretion for the trustees—and obviously they will be sensible people and members of this fund—it should be left to them and they should have this opportunity. If they go berserk, which I cannot imagine happening, the Government would have to withdraw this, but I just cannot see why they should not be able to make loans rather than to give grants, which is really an uneconomic stance for a Government which is anxious for us all to make economies.
Lord COTTESLOE: What is the point of the Government appointing trustees and then not trusting them? They will not get the right trustees if they are not prepared to give them reasonable freedom of action on their own responsibility. There is no point in keeping them on leading strings and I hope the Government will think again about this.
Lord WINSTANLEY: I really must support the noble Lord, Lord Donaldson of Kingsbridge, and the noble Baroness, Lady Birk, on this particular amendment. It seems to me that the noble Lord, Lord Mowbray and Stourton, has arrived at the committee today with a difficulty for every solution. He told us earlier how very important it was not to include any unnecessary words whatsoever in the Bill. Now, by his own words, he has made it utterly clear that this subsection is unnecessary. He has told us over and over again how sensible the trustees will be; he has told us that the trustees will be entirely free to seek the advice of the Treasury, and he himself has demonstrated that this subsection is not necessary. If, as he says, we should not include unnecessary words in the Bill, why does he resist us when we try to help him to remove some?
Lord DONALDSON of KINGSBRIDGE: I should like just to reply to the noble Lord's answer to my amendment. Of course, I read the report of the discussion in the other place very carefully, and it was because the Government's answer was so totally unsatisfactory that I have raised the matter again. The noble Lord really did not answer with the frankness that we have come to expect from him. This does not say, as he implied, that the trustees shall not make a loan under this clause except after consultation with the Treasury, which would be an obvious thing to do anyway. It says "except with the consent of the Treasury". I object totally to this, and if the noble Lord cannot take it back and alter it I think we should divide on it because it is against the whole basis of the new world that this Bill is bringing in.
Lord MOWBRAY and STOURTON: I think there is one point that the Committee have not fully grasped. This is not meant to be the Treasury acting as Big Brother stopping the trustees from using their powers. The trustees are people of great common sense in the world of art. They are not financial experts; they are not in a position to assess the financial stability of the people to whom the loan is being made. This is where the Treasury is reckoned to be useful. It is the Treasury's interest in whether it is financially prudent to make that loan. They will not be particularly interested in the rates of interest; it is the mere fact of whether it is a prudent loan. It might be that their advice would be that these were not worthwhile people, their cash flow was not suitable, and it would have to be a grant or nothing.
Lord DONALDSON of KINGSBRIDGE: But the advice that is being laid down to posterity is absolutely incredible. We should not give a cash loan to somebody who is economically not viable. That is absolutely ridiculous. The whole business of the trustees is to look at the people to whom money is being given, to see whether things are properly run and proper accounts are kept; and every now and again, if they wish to do so, they can consult the Treasury. What we are objecting to is that the Government are saying that something should be done with the consent of the Treasury, and then they say that

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this is not meant for the Treasury to forbid. It may not be meant to, but like so many other things in this Bill, that is what it does.
Lord MOWBRAY and STOURTON: Obviously the Committee feels strongly on this. The intent was good but I will take this back and have it looked at.
Lord DONALDSON of KINGSBRIDGE: In return for that—so long as the noble Lord will give it what is known as "a good looking at"—I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments 16 and 17 not moved.]
The DEPUTY CHAIRMAN of COMMITTEES: Amendment No. 18 should be taken after Amendment 19 because they were unfortunately printed in the wrong order.
5.56 p.m.
Lord TEVIOT Lord TEVIOT moved Amendment 19:
Page 3, line 29, after ("gallery") insert ("record repository").
The noble Lord said: This Amendment asks for the words "record repositories" to be added to museums and art galleries as eligible recipients for grants. Before I go any further, I should make it quite clear that assurance has already been given by a Minister in the other place, Mr. Hector Munro, that record offices are within the scope of "other similar institution". I suppose I should bear in mind what has already been said about unnecessary words, but I still feel that "record repositories" are necessary words.
The reason for adding these words is to make the position entirely clear. For a few moments I shall endeavour to explain what a record repository is; how in character it differs from a museum or art gallery. I shall take the second point first. The main purpose, surely, of museums and art galleries is to preserve works of art and antiquity for display and study, whereas the function of a record office or a repository is to preserve the nation's historic records and documents for research by the public. Their display is very much a subsidiary activity.
Archives and records are an integral and essential evidence for the knowledge
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and understanding of the historical heritage of this nation. Their importance has been recognised by the acceptance for the country of the Blenheim archives and the papers of the first Duke of Wellington, for example, and also by the public concern that was shown over the sale of the estate archives from Warwick Castle. It is well known that collections of historic documents are in danger from dispersal and export.
There is at least one record office in every county in England and Wales—with one exception—and there are archive departments of universities and other learned institutions in the United Kingdon, amounting to about 230 to 250, whose aims include the systematic collection and preservation of records to make them available to the public. It is strongly felt by the archival profession that all this should be recognised. Another point worth mentioning is that archives and records are managed by persons who have taken diplomas as well as degrees in a subject, which count as professional qualifications.
The words "record repository" have been chosen to embrace all kinds of records. One has toyed with the words "archive repository", "record office" and even "muniments", but I have chosen "record repository" as being the term used in the directory Records Repositories in Great Britain, published for the Royal Commission on Historical Manuscripts by HMSO, now in its sixth edition having been first published in 1964. I hope my noble friend will be able to accept this amendment. As I have said, there is a need to give recognition to the importance of records, which are primary sources of historic learning. I beg to move.
Lord MOWBRAY and STOURTON: The position here is similar to that we have already discussed as regards the words "archaeological" and "restoration". In other words, these words add nothing to the Bill which cannot already be done under its powers. We are advised that archive and record offices are already covered, both in Clause 3(7)(a) and in Clause 16(2)(a), by the words "museum, art gallery or other similar institution", and that the Government amendments which I have tabled which add "library" to the list reinforce this. I am sorry this amendment has been moved out of order,

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because it would have been easier for the noble Lord had we done it in the order that we had planned.
There is absolutely no doubt that record repositories are already covered. However, if we now proceeded to add them explicitly to the list we should have quite a mouthful and we should have the unfortunate side effect that the more specific drives out the general. In other words, the words "other similar institution" can at present be construed quite broadly because all the members are described in general terms. But if we mention specifically a type of body which is already covered we have to interpret the words "other similar institutions" much more narrowly. This could have very unfortunate effects in the future when some marginal cases come to be considered by the trustees. I hope, therefore, that the noble Lord will accept my assurance that record repositories are already adequately safeguarded, and that he would not wish to be the cause of excluding others and will therefore withdraw his amendment.
Lord TEVIOT: I shall withdraw the amendment, but I would like to say very strongly that I do think a record repository is something quite different, and I do not really accept the argument that it would narrow the category of "other similar institutions". I can think of a lot of other similar institutions. But this has gone around the mill in the other place and I am not going to waste the Committee's time by pressing it here. I would just say I am sorry it has not been accepted, and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No.18:
Page 3, line 29, leave out from ("gallery") to ("a") in line 31 and insert (", library or other similar institution having as its purpose or one of its purposes the preservation for the public benefit of").
The noble Lord said: I would like to speak, in moving Amendment No. 18, to Amendments Nos. 21, 24, 33, 41, 42, 45 and 47. This is a very complicated set of amendments, with a very simple purpose. It was always the intention that the trustees should be able to assist private non-profit making libraries—such as cathedral libraries. But the explicit references to
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public libraries and university libraries in Clause 3(7)(b) implied that private libraries were excluded. So we propose to add the word "library" to 3(7)(a) and to remove the explicit references to public libraries and university libraries in 3(7)(b) and 3(9).
This has consequential effects on Clause 9(2), where we no longer need to refer back to the separate category of recipient in 3(7)(6), and in Clause 16(2), where we can no longer refer back to an earlier full definition of the libraries covered and we have therefore to reinstate the definition in full here. There are other purely technical drafting changes to Clause 19.
I should also direct your Lordships' attention to the widening of the terms of 3(7)(a) and 16(2)(a), which now cover institutions having as their purpose or one of their purposes the preservation for the public benefit of a collection. The previous wording restricted the scope to those institutions which existed wholly or mainly to preserve such collections. It could not be argued that a university library or a local authority library existed wholly or mainly for such a purpose, but in so far as they did maintain a collection of historic, artistic or scientific interest clearly this would be one of their purposes. I beg to move.
Lord DONALDSON of KINGSBRIDGE: I think we will all join in welcoming this amendment and its consequences. As somebody who has taken a very great interest in libraries, I am particularly pleased. I think it is perfectly clear from the words the noble Lord used that Lord Teviot's amendment is covered by what has just been said. I hope the noble Lord, Lord Teviot, will think so too.
Lord TEVIOT: I thank the noble Lord for referring to that. It does cover it, but I would also like to say that again a library is a very different place from na archive. A library is very much concerned with books—I hate to state the obvious—to be referred to either for lending or for reference. An archive is a place of primary source and if there are books in an archive they are there only for reference to help with the archives. But I do take the point, and I am glad that my noble friend has moved this amendment,

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because if he had not moved this amendment libraries would have come under "other similar institutions".
On Question, amendment agreed to.
[Amendment No. 20 not moved.]
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 21:
Page 3, line 33, leave out paragraph (b).
On Question, amendment agreed to.
[Amendment No. 22 not moved.]
6.7 p.m.
Lady SALTOUN Lady SALTOUN moved Amendment No. 23:
Page 4, line 14, at end insert (";and
(g) the proprietor of any land, building, structure, object or collection or group of objects, falling within subsection (1) above.").
The noble Lady said: I beg to move Amendment No. 23. I propose this amendment purely as a safety net, and I hope a very temporary one. All of us who are concerned at the imminent fate of many of the smaller and more awkward houses which are of importance to our heritage, hope that in the forthcoming Finance Bill there will be some provision for tax relief on maintenance costs. But should this not happen this year, this amendment is designed to empower the trustees to help out urgent cases pending the legislation that we really so desperately need. It might save the struggling owners of these properties from giving up at a time when real help may be just around the corner. If do not envisage that expenditure of a very considerable sum would be involved in any particular case, but the sums, which might be "peanuts" to the trustees, might be too large for private owners to find. Naturally, in the event of the fiscal legislation we are hoping for, the trustees, being trustworthy people, would cease to give assistance of this kind to private proprietors.
Lord MOWBRAY and STOURTON: I appreciate the idea behind this amendment. It is of course to seek to maintain as much of the national heritage as possible in private hands; to enable private owners to maintain their houses and contents intact; to avoid their being dispersed, sold abroad or acquired at vast expense
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by the State. There are, however, already provisions which deal with this, and which cover expenditure incurred on the advice of the Historic Buildings Councils, and tax reliefs administered by the Inland Revenue and the Treasury. The amendment would go much wider than that and would allow the trustees to provide assistance to anyone who was the owner of an object of outstanding heritage quality, even to help such people to acquire more. This would widen the field of potential activity of the trustees enormously and into a situation where they had to spread their assistance very thinly indeed. Their supply of "peanuts" is very limited. This fund is not intended to provide that kind of help. Its primary task will be to assist in the acquisition of truly outstanding property, and the eligible recipients of the funds are therefore restricted to nonprofit-making bodies and institutions which might wish to acquire land or objects.
There is a further serious objection which I should mention. Your Lordships will be aware that it is the Government's intention to provide that the fund shall be treated for tax purposes no worse than a charity, though it does not in fact qualify for charitable status. The relevant tax reliefs from corporation tax, CGT, CTT, and stamp duty will be provided in this year's Finance Bill, as my right honourable friend the Minister of State at the Treasury promised during the Report stage of this Bill in another place. Rate relief is provided in the Bill itself. I must advise the Committee that this very important concession is dependent on the fund remaining very similar to a charity. If it were able to make grants to private persons for their own property this would take it so far away from the charitable field that the Government would have to reconsider the desirability of granting these tax reliefs.
The amendment is based on a misapprehension of the nature and purposes of the new fund and could, as I have explained, jeopardise its claim to an important range of tax reliefs on its income, its capital gains and capital transfers to it. Therefore, I hope that the noble Lady will agree to withdraw it.
The Earl of WEMYSS and MARCH: Before the noble Lady withdraws the

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amendment, as I think she will, may I say that I am sure that many of your Lordships are extremely grateful to her for so widening the scope of the debate for a few minutes and drawing your Lordships' attention to what is really, when we boil it down, far more important than the National Heritage Memorial—or otherwise—Fund. I am very happy indeed that the noble Lady has drawn from the noble Lord, Lord Mowbray, the assurances that he has just given about the protection and fostering of the heritage in private hands, to which we all look forward in a favourable Budget.
Lady SALTOUN: I beg leave to withdraw Amendment No. 23.
Amendment, by leave, withdrawn.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 24:
Page 4, line 21, leave out subsection (9).
The noble Lord said: I beg to move Amendment No. 24. I have already spoken to this amendment.
On Question, amendment agreed to.
On Question, Whether Clause 3, as amended, shall stand part of the Bill?
Baroness STEDMAN: I hestiate to intervene at this stage because I realise that the noble Lord, Lord Mowbray, has rather a lot on his plate this afternoon. However, I hope that he might be in a position to give the Committee some information about the guidelines that will be laid down for the trustees. On two or three occasions this afternoon he has said that "this" or "that" will be covered by guidelines. I asked a rather long series of questions for ideas of the sort of things that might be used as guidelines for the trustees. The noble Lord did not reply on Second Reading and I have not heard from him in writing. If he is not in a position to reply this afternoon, may I ask whether he would write to me between now and the Report stage?
Lord MOWBRAY and STOURTON: I thank the noble Baroness, Lady Stedman. I am in rather the same position as the noble Baroness: I know a little, but I do not know the whole.
Baroness STEDMAN: Am I to take it that the noble Lord may know the whole before the Report stage and will write to me?
Lord MOWBRAY and STOURTON: I cannot guarantee that, but I would hope so. Obviously, if we are to get the Bill on the statute book by 1st or 3rd April, whenever it may be, the guidelines will have to be hurried up somewhat. I shall try to make sure that they come my way before the Report stage.
Clause 3, as amended, agreed to.
Clause 4 [Other expenditure out of the Fund]:
[Amendment No. 25 not moved.]
The DEPUTY CHAIRMAN of COMMITTEES (Baroness Wootton of Abinger): I must call your Lordships' attention to the fact that if Amendment No. 26 is agreed to, I shall not be able to call Amendment No. 27.
6.14 p.m.
Lord REIGATE Lord REIGATE moved Amendment No. 26:
Page 4, line 37, leave out subsection(3).
The noble Lord said: I beg to move Amendment No. 26. It might be for the convenience of the Committee to discuss Amendments Nos. 26 and 28 together because they are, in effect, the same. I shall be very brief. I echo the words of my noble friend Lord Cottesloe on an earlier occasion, when he said, "Trust the trustees". This provision seems to me an unnecessary shackle to be imposed on what I think is going to be a most reputable body of people. I think that the noble Baroness, Lady Stedman, has another amendment down allowing a freedom for 12 months; but I really do not see why even that impediment is necessary, and I should like to see it removed altogether. I shall leave the matter at that. I beg to move.
Lord MOWBRAY and STOURTON: With the permission of the Committee I should like to speak to four amendments, Amendments Nos. 26, 27, 28 and 29. That will save the Committee's time as it is getting rather late. I understand the various amendments. However, I should

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like to say that the Government are not convinced that we should accept the proposed change.
While I think that the Government have fully honoured their undertaking to give the trustees unfettered discretion in the operation of the fund we believe that, where the holding of property is concerned, giving total discretion to the trustees is neither necessary nor desirable—even for a limited period of time. It is not necessary because we do not believe that there will ever arise a case where the trustees have to respond within a matter of minutes—or even within a matter of hours or days.
As far as land and buildings are concerned, it is the nature of transactions to be ponderous and slow. This does not mean that a fairly early commitment to purchase is not sometimes necessary, but the Government know of no case where such a commitment was required so quickly that, had the trustees been involved, they would not have been able to obtain the permission of Ministers. And, though your Lordships have suggested that the trustees may need to move quickly to acquire works of art from auction rooms, the Government believe that in the vast majority of cases involving works of art of importance to the heritage, museums and galleries in this country would already be attempting to acquire them and would have approached the trustees for help.
It must be remembered, too, that a list of the items which are to appear at auction is nearly always available several months in advance of the auction date—when the catalogue is published—so that even if no museum or gallery showed interest in a particular case, the trustees would have plenty of warning and could seek the necessary approval of Ministers if they wished to acquire the item themselves.
The Government also believe that it is undesirable for the trustees to have these powers, particularly in respect of buildings and land. All those concerned with preserving historic buildings will know only too well of the expense involved in repairs and maintenance—expense which could be a significant drain on the resources available to the new fund. Some will also know that once an historic building has been acquired it is sometimes very difficult, even with the best will in the world, to
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dispose of it as soon as might be wished. We do not want the trustees to become burdened with such a responsibility unless we have also had an opportunity to consider and to discuss with the trustees whether any alternative means of saving the item exists.
Your Lordships will also appreciate that, if the amendments were accepted, and the trustees were to acquire a property which they could not get rid of within 12 months, Ministers would effectively be presented with a fait accompli—confronted with no choice but to endorse and perhaps underwrite a decision in which they had had no voice. We do not wish to be put in this position and therefore consider that it is entirely reasonable to require the trustees to obtain Ministers' permission before making an acquisition themselves or accepting a gift of property.
I hope that your Lordships will accept the reasoning behind the Government's refusal to give way on this and that the noble Lord and the other noble Lords and noble Baronesses who have not yet moved their amendments will see fit, in due course, not to press them.
Baroness BIRK: I wonder whether it would help the Committee, as we are taking these amendments together, if I spoke to my Amendment No. 27. I shall be brief because I am conscious that time is going by, and the one thing that we do not want to do is to lose the Bill by drawing out the proceedings. I do not altogether go along with the amendment of the noble Lord, Lord Reigate, mainly because if there is no time limit, I do not think that it has a chance at all. I should like to see the trustees having a certain amount of discretion, in the event—it may be the very rare event—when they have to step in very quickly to get a picture or house, where negotiations take time, otherwise it might be lost.
We must be practical about this. Ministers are extremely busy people. Although they may feel strongly about a particular matter often it gets to the bottom of a box; and, in the case of a Cabinet Minister it can be the bottom of the third box. Therefore, decisions can be held up. Again—and I am sorry to keep coming back to this, but it is still on my mind—we have only to look at how three Government departments

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managed to delay as long as they did over the whole problem of Mentmore. Really the question is one where speed is necessary. I do not think for one moment that the trustees will use their discretion ad lib. They should not be holding objects or property—indeed, they will not want to do so; there is no point in it. However, I think that there should be this discretion in the odd case.
6.20 p.m.
The Earl of WEMYSS and MARCH: We are grateful to be allowed to discuss the four amendments, Nos. 26, 27, 28 and 29, because they are all bound together. The noble Lord, Lord Reigate, has said that the phrase "trust the trustees" was becoming a cliché, but it cannot be said too often. We shall surely see very responsible people appointed to this job, so why cannot they be left to improve their procedures and to get on with their responsible job?—as has been promised by the Government on numerous occasions. Can we not leave the timing and the tactics to the trustees?
This is a much larger principle than the comparatively detailed points about which the noble Lord, Lord Mowbray and Stourton, has told us, although they also are important. I am not so much frightened about the question of movables—chattels—because admittedly, as has been said somewhere, the trustees can give a grant to the X or Y museum and it can buy the object. It is heritage land and buildings that cause the trouble. There again, it is not so much the big cases (the conceivable other Mentmores) but the smaller properties, nature reserves, parts of coastline and so on where the good offices of the trustees—without being fettered by Ministers, and according to the experience which both the National Trusts have had—will very often be required to secure an acceptable solution to this sort of problem.
Let us suppose that in the recent story of Iona the Argyl trustees had really been in a hurry and that the national heritage trustees could perhaps have come in, had they existed; they might have had quite some difficulty in finding someone to take it over. Yet someone had to take it over quickly. Why should they not take it
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over themselves? There could be a case where the owner is hesitating, where he might change his mind before Ministers return from being on hoilday, or wherever they are, or before the necessary process of obtaining ministerial consent—looking at all the accounts and everything else—is completed. This is even more important in the case of Clause 5—that is, the acceptance of gifts—than it is in the case of purchasing. To be unable to buy without Ministers' consent is bad enough, but to have to be churlish in refusing to accept a gift is even worse.
Thus, to keep the trustees in leading strings is surely a thoroughly bad idea, and I am afraid will very often cause the price of whatever is to be bought to rise. Let the trustees please get away from the aura of Government, politics and all that and, if I may say so without offence, the aura of the Treasury in which this business of the preservation of the heritage has been sunk for far too long. Can we not trust the trustees?
Lord DONALDSON of KINGSBRIDGE: I should like to endorse that. As a Minister, it has been my business to deal with chattels, and it may often be desirable to decide to buy a chattel on behalf of an institution, or to give an institution money towards buying a chattel, before the institution knows where the rest of the money will come from. This kind of thing has to be done from time to time. It is entirely desirable that the trustees should not become collectors. I quite agree with a time limit, but we must demand a time limit; they must be allowed to buy and keep for a period. In relation to real property I think that a year would be the minimum, but in relation to chattels my own view is that three months would be sufficient. However, it would probably be less trouble to have both periods the same. This is extremely important.
Lord MOWBRAY and STOURTON: For the reasons I gave, the Government do not want the trustees to have unfettered discretion in this case. The noble Earl, Lord Wemyss and March, said that he found the gift aspect particularly stuck in his gullet. As he will know, in the Bill we allow unconditional gifts, but we have all heard of gifts which are conditional and which are nothing but white elephants.

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The Government do not wish to see the trustees put in a position of that sort. I think that this is reasonable. In these days of telephonic communication there is no problem. Very seldom is it that all Ministers are away or off-duty; nearly always there is someone about. As I said earlier, these important matters do not normally arise overnight.
Lord REIGATE: My noble friend galloped through his remarks on my amendment with such speed and fervour that I am not sure that I took the purport of all his remarks on board. Therefore, I propose to withdraw my amendment, and I hope that we might return to the battle, in some form or another, on a further occasion.
The noble Baroness, Lady Birk, referred to Mentmore where she suffered a "desolating experience", if I may quote a remark made by an honourable Member in another place. I remember the case very well indeed and she was in great difficulty. My noble friend must appreciate that any efforts I made were in order to give the power of immediate decision to someone who was not hedged in, if I may say so, by politics. That is the whole point. It was not a question of anyone going away on a summer holiday. It was a question of someone taking a decision, and jolly quickly. However, I shall reconsider his remarks; but at the same time I must say that when it comes to white elephants, I think that the trustees will know much more about white elephants than does the Treasury. I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Baroness BIRK Baroness BIRK had given Notice of her intention to move Amendment No. 27:
Page 4, line 38, after ("section") insert ("for longer than 12 months").
The noble Baroness said: In view of what the Minister has said to the noble Lord, Lord Reigate, I take it that matters are so intertwined that he will look at both amendments. In that case, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
[Amendments Nos. 28 and 29 not moved.]
Clause 5 agreed to.
[Amendments No. 30 and 31 not moved.]
6.28 p.m.
Baroness BIRK Baroness BIRK moved Amendment No. 32:
After Clause 8, insert the following new clause:
"Evaluation of, and consultation on pre-eminence in historic settings
.Where an object or collection or group of objects is formally offered in satisfaction of tax the Ministers shall obtain advice from those experts that appear to them to be appropriate as to any significant association of any such property with a particular place and where they are advised that such a significant association exists they shall consult with the Trustees of the National Heritage Memorial Fund as to whether it is desirable for such property to be accepted with a view to its being, or continuing to be, kept in that place.".
The noble Baroness said: This group of amendments is concerned with preeminent objects and objects in situ. I have been made aware of the widespread feeling in the historic houses world that these matters should be made clear on the face of the Bill. Although I certainly do not doubt the Government's good intentions as expressed in Clause 9(5), which has made a tremendous difference to the approach to this whole subject, the point which motivates all these amendments is not yet specifically spelled out. I do not want to enter into, nor am I any party to, a battle—a sort of Wars of the Roses—between the historic houses world and the museums. When I was Minister in the Department of the Environment I was fortunate to have the happy task of dealing both with historic houses and with museums. Certainly in the museum world I made many friends and achieved as much satisfaction as I did when I dealt with historic houses.
I know that the directors of national museums are apprehensive about this being spelled out even more, but I do not think they need be. Let me take the case of a very important picture where it could be argued that it had an association with the house, with the significant place, but at the same time was so magnificent or unique that the proper resting place for it should be in a pre-eminent place in a gallery or museum. In spite of different attitudes being adopted on certain objects or property between the Minister for the Arts and perhaps his colleagues from Environment, I believe that in this case

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the trustees would be the people to arbitrate, because they would not have, and should not have, a vested interest in either side of our cultural heritage.
Those who have worked in both these worlds know what can be achieved by these close associations between museums and historic houses in their vicinity. Here we talk not only of the national museums but also of the provincial museums. This is why I think that the amendments in the name of the noble Duke, the Duke of Grafton, and my noble friend Lord Donaldson and myself, are what I would call more moderate than the amendment to be moved later on by the noble Marquess, Lord Hertford—maybe he will feel at this stage that he will withdraw that amendment in favour of these amendments.
All these amendments do is to spell out in a little more detail what is in fact in the Bill both by implication and in a wide way set out in Clause 9(5). These amendments also stress the point on disposal and also when objects or property are offered in lieu of tax. I hope the Government will feel that what I would call this moderate approach, which is really a bridging operation and a clarification, is something that can be accepted without upsetting anybody.
The DEPUTY CHAIRMAN of COMMITTEES (Lord Nugent of Guildford): Before I put this amendment to the Committee, I should "stand part of the Bill" Clauses 6, 7, and 8, unless there is any debate noble Lords wish to initiate.
Clauses 6 to 8 agreed to.
6.32 p.m.
The Duke of GRAFTON: I apologise. I have been trying to condense five clauses to try to save time. The noble Baroness has covered some of the ground already. I must start with Amendment No. 30, which we are still on, and which slots into the Bill after Clause 5, and refers—
Baroness BIRK: It is too late.
The Duke of GRAFTON: May I go on to Amendment No. 31? With the leave of the Committee, I refer to my Amendment No. 35, which is to leave out
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Clause 9(5), but I really only bring this forward on the basis that your Lordships accept my new clause, Amendment No. 32, which makes it superfluous. Without my new clause, the existing Clause 9(5) is of course essential.
Finally, on this complex problem of leaving in situ, I should like to refer, with the leave of the Committee, to my Amendment No. 37 to Clause 12. The effect of my amendment is to alter wording in paragraph 17 of Schedule 4 to the Finance Act 1975, and in particular in (a) and (c) of sub-paragraph (4). Subparagraph 4 contains the provision whereby pre-eminent objects, or collections, or groups of objects, are accepted in satisfaction of tax. The important words are:
"pre-eminent for its national, scientific, historic, or artistic interest".
It is to this that my amendment would add the words:
"or is pre-eminent in a particular place with which it has significant association".
I am deeply conscious that a firm assurance has been given on the interpretation of the existing wording to which I have been referred by the noble Lord, Lord Mowbray, at the opening of the Second Reading debate. I hope it will not be thought that I question the good faith in the giving of that assurance. I certainly do not. The problem is that the interpretation of the words behind that assurance has been justified on the strength of words in sub-paragraph (5) of paragraph 17, to which I have already referred. It says that "national interest",
"includes interest within any part of the United Kingdom".
That is not really clear. We are dealing here not with national interest but with historic interest. Therefore, what is contained in sub-paragraph (5) is irrelevant.
The interpretation of sub-paragraph (4) must stand on the words in that subparagraph alone, it seems. It seems to me here that there is a doubt to be resolved. I hope that the noble Lord, Lord Mowbray, will be able to set all doubt at rest and assure us that the interpretation now placed on the words already in subparagraph (4) really is absolutely right. Perhaps it is not the interpretation that has changed but Government policy on leaving in situ, and that is really what all

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the confusion has been about. I am persuaded by my advisers that an amendment is needed, if for no other reason than the avoidance of doubt. I must apologise for having come in late and having spoken at length on this complex problem.
Lord DONALDSON of KINGSBRIDGE: My noble friend made an unusual error in saying that my name was on this amendment. It certainly is not. I do not agree with what is in this amendment. I think that we are much better off to stick to Clause 9(5), which gives the in lieu situation everything they can possibly want, in my opinion. This amendment suggests that the Ministers, whose duty it is at the moment to accept objects in lieu, should before they decide what to do with them consult with the trustees. This I am totally and absolutely opposed to, because what you do not want is two lots of non-expert enthusiasts asking advice from various other people, and then coming to different conclusions. It is bad enough having two Ministers, but to have two Ministers consulting 10 trustees is simply foolish.
My experience is that the right thing to do is to go ahead as in Clause 14, when we come to it, and I shall have something to say about it then. But until we go ahead as in Clause 14, after Clause 8—that is to say in relation to objects accepted in lieu—I beg the Committee and the Government to leave it to the Ministers to make the decision. Of course they can consult whom they like. In the case of large estates I should think they will have to consult the trustees. But to say they have to do so over every old-fashioned clock, or something of that sort, is not the right way to do it. This is the first time I have had to ask that an amendment from our side of the heritage lobby, if I may so describe it, should be rejected, but I really think it is quite mistaken.
Baroness BIRK: May I apologise? I do not suppose it can be struck from the record. I made a mistake, perhaps because we skipped one or two amendments. As is absolutely clear, my noble friend and I are not in total agreement over this.
6.38 p.m.
Lord MOWBRAY and STOURTON: I think I had better make it clear that I am
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speaking to Amendments Nos. 32 and 35. This amendment was debated in Standing Committee in another place, along with a number of other amendments designed to oblige Ministers to seek advice specifically on whether objects offered in lieu of tax should be kept in their historic setting. I have already made it clear that the Government wish to encourage the retention in situ of pre-eminent objects which have been accepted in lieu of tax, where this is consistent with the requirements of security, conservation, public access and opportunity for study.
There are two stages at which this falls to be considered: first, when the object is offered to the State and, secondly, if it is accepted by the State, when it is disposed of. The existing law is so framed as to allow the desirability of leaving objects in situ to be fully considered at both these stages. The Government added some words in Clause 9(5) in Report stage in another place, which the noble Duke wishes to delete, and which are intended to be a balanced explanation of what should happen when the objects which have been accepted come to be disposed of. The position on in situ, when objects are initially offered and assessed as to whether they are pre-eminent and can be accepted, is covered by words in the Finance Act 1975, Schedule 4, paragraph 17(4) and (5), on which I will say a little more when we come to debate the noble Duke's amendment to Clause 12.
Turning to the noble Duke's new clause to go after Clause 8, I have to advise your Lordships that this is incompatible with the acceptance in lieu procedure, for the following reasons. First, it requires Ministers to seek advice on the in situ aspect in all cases, even when, in the vast majority of the cases of objects offered in lieu, it would be quite irrelevant. The number of cases where there is any suggestion of any hint or possibility of the objects staying in situ is in fact very small and it would be a pointless task to obtain expert advice for what would be self-evident fact.
Secondly, the new clause requires the Ministers to obtain advice on the in situ point before they obtain advice on whether the object is pre-eminent. This is putting the cart before the horse. An object can be pre-eminent in its own right and it can be pre-eminent only by virtue of, or in, a historical setting. But Ministers can and

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do get expert advice on both these possibilities. There is no point in seeking to establish the in situ case unless the preeminence case has been established first. Thirdly, the new clause requires the Ministers to obtain the advice of the National Heritage Fund trustees on whether it should be accepted. The trustees are not experts and would have to consult experts themselves. The Ministers already consult experts, probably the same ones as the trustees would have to consult.
Finally, as regards the allocation of the object, Ministers consult now the Standing Commission on Museums and Galleries and the Royal Commission on Historical Manuscripts. These bodies will remain the appropriate bodies for advising on the allocation of objects. They are expert in themselves but can co-opt and consult other experts. They are fully sympathetic to the arguments in favour of leaving objects in situ wherever possible. They are aware of Ministers' desire to encourage this. The cases which I have mentioned as being in the pipeline testify to this.
I hope I have said enough to convince the noble Duke that the Government are at one with him in the policy that he wishes to see pursued, but that the new clause that he has tabled would not be an appropriate or effective means of achieving it.
The DUKE of GRAFTON: In view of my noble friend's most friendly reception of my amendment, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Clause 9 [Disposal of property accepted by Commissioners]:
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 33:
Page 6, line 39, leave out ("(b)").
The noble Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
6.42 p.m.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 34:
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Page 6, line 40, after ("it") insert ("to the National Art Collections Fund or the Friends of the National Libraries if they are willing to accept it,").
The noble Lord said: This amendment is designed to provide explicitly for what has been Government policy since 1973, following a ruling by Mr. John Nott, then Minister of State at the Treasury. If a testator requests that his property should be offered in lieu of tax on condition that it is allocated to the National Art Collections Fund or the Friends of the National Libraries, then provided that the property is regarded as of pre-eminent quality, this condition can be accepted and the property can be transferred to these two bodies. The decision as to the allocation of the property to a gallery or library in the United Kingdom is then a matter for the discretion of the NACF or the FNL.
In the normal course, Ministers refer to the Standing Commission on Museums and Galleries and the Royal Commission on Historical Manuscripts for advice on the final allocation of objects and manuscripts accepted in lieu of tax and they pay due regard, of course, to the wishes of testators and executors. But this alternative route of using the NACF or the FNL has, in law, always been available; and it has been available as a matter of policy since 1973. The Government were pressed in another place and on Second Reading in your Lordships' House to provide explicitly on the face of the Bill for this situation, and we are happy to do so. I hope my noble friend Lord Cottesloe in particular will be happy.
Lord COTTESLOE: This is a point I raised on Second Reading and I am immensely grateful to my noble friend Lord Mowbray and Stourton for introducing this amendment to give effect to it. It will give great satisfaction to those concerned with the National Art Collections Fund and the Friends of the National Libraries to have those institutions specifically named in the Bill.
Lord DONALDSON of KINGSBRIDGE: On this side of the Committee we are equally delighted at this sensible concession by the Government.
On Question, amendment agreed to.
[Amendment No. 35 not moved.]
6.44 p.m.
The Marquess of HERTFORD The Marquess of HERTFORD moved Amendment No. 36:
Page 7, line 19, leave out from ("shall") to end of line 23 and insert ("direct that such object, collection or group of objects shall be or continue to be kept in that place unless they receive expert advice to the contrary.").
The noble Marquess said: I move this amendment with a good deal of hesitation and diffidence. This is such a good Bill that nobody wants to delay its passing. It will, I believe, do a lot to diminish the flow of works of art across the Atlantic or into other countries where taxation is less of a burden than it is here. What I think the Bill will not do at the moment is discourage the equally steady, and in my view almost equally regrettable, flow of works of art out of country houses and into museums.
Perhaps I should declare an interest, as I am the owner of a country house which is a tourist attraction. But I also speak as president of the Heart of England Tourist Board. The Tourist Board has a clear duty to attract tourists away from London and into the countryside, and to persuade English people to spend their holiday money here rather than abroad. Our task is made much easier by the popularity of the historic houses and castles in our area, so I hope noble Lords will forgive me if I dwell briefly on the reasons for that popularity.
Few people visit a historic house for just one reason, such as its architecture. The glory of the English country house is greater than the sum of all its parts. It is the combination of the architecture, the interior decoration, pictures, furniture, china, books, garden, park, woods and the farmland around that makes it such a very special experience and one that gives pleasure to so many millions of people. Seeing works of art in the setting for which, in many cases, they were designed, or in settings which in some cases were specially designed for them, obviously enhances their value, and if they are still in use by the family who first built and furnished the house, there is an additionally pleasing sense of history and continuity. That is why visits to historic houses and castles number about 27 million every year, and it is why the tourist trade earns more foreign currency than any other industry.
We all know how historic houses have been gradually denuded of their contents by taxation; it is a process that has been going on for the whole of this century. Some of us had hoped that our new and enlightened Government would stop this steady deterioration of one of our greatest national assets. But this Bill does not do that. All it says, in effect, is that a work of art should, or may, or might in some circumstances, be left where it belongs, provided that no museum curator or director thinks it should be in his own collection. There is not a private house in Britain which has to store works of art away in the cellar for lack of room to display them. My amendment is a modest attempt to tilt the balance just a little away from the overcrowded museums, away from London and towards the country houses.
6.50 p.m.
Lord DONALDSON of KINGSBRIDGE: Anyone would think from the remarks of the noble Marquess that the National Gallery, British Museum, Tate Gallery and Walker Gallery were not great English assets. I was astonished to hear what he said, and I know he did not really mean it. Of course we must have both. We all know that. To me the satisfactory thing about the Bill is that it is putting into the hands of a jury of so-called, and we hope, cultured people the decision as to what shall be done with objects which are acquired.
The situation will be perfectly simple. If a great house has a picture that it wants to sell, first of all will a gallery want it? Secondly, will that gallery think it suitable to leave it in that house? Thirdly, will anyone else think that that gallery ought to leave it in that house? All these matters will be considered by the trustees This is the whole point of the Bill, and to make what would be an anti-museum rule, as it were, would be something which I for one could never tolerate or support for a moment.
I think that the noble Marquess has made his point that all of us want to see many fine houses lived in, with fine objects in them, and open to the public; of course we do. But there are difficulties about it. The noble Duke, the Duke of Norfolk, comes to mind in this regard and this kind of thing is being done absolutely

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admirably at three or four places. This is what we hope will happen in the future.
But with regard to the smaller objects, it must be possible for an ordinary individual who has a picture or article which he wants to sell to be able to sell it and have a museum take it, and get the trust to go some way towards financing it. I do not believe that the noble Marquess will press this amendment, but if he does, I shall certainly vote against it.
Lord MOWBRAY and STOURTON:The Committee will be aware that the question of leaving objects in situ when they have been accepted in lieu of tax has already been very fully debated. The Government's position is that they favour leaving property in situ where this is consistent with security, adequate public access, conservation, and opportunity for study by scholars. We must of course remember that the property in question has been accepted by the State; it has become public property. It would not be right to leave the original owner in what was effectively full enjoyment of the property if the objects could be disposed of to better advantage for the benefit of the public as a whole.
We have to balance here the interests of the country houses, which none of us wishes to see stripped of their contents, and the interests of our national museums and galleries, which are major European cultural institutions and which aim to display fully representative collections. I was very glad to hear the noble Lord, Lord Donaldson of Kingsbridge, spring to their defence because they are, I think, almost second to none.
The wording which the noble Marquess is now seeking to amend was introduced after considerable debate in another place. There was no strict need to have the subsection in question, subsection (5), in the Bill at all, since Ministers already have the discretion to leave objects in situ, and indeed in certain cases are already proposing to do so. The words which were inserted in Clause 9(5) are in fact declaratory and reflect a careful balance between the interests of the country house owners and the interests of the museums The wording proposed by the noble Marquess would very slightly—as he very fairly said—move that balance towards the country
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house interest, and as such would be regarded by the museums as a provocation. It is important that we should be even-handed in our administration of the heritage and that neither wing of the heritage movement should antagonise the other.
The Committee will realise from what I have said that this is a very sensitive and delicate issue on which it is important that the Bill should use only the most neutral and impartial phrases. In the interests of preserving amity and co-operation within the heritage world, I ask the noble Marquess, whose reasons I fully understand and appreciate, to withdraw the amendment.
Baroness BIRK: As I said earlier, I consider that the noble Marquess has turned the whole thing on its head and has gone too far, but I think that he has done great service in spelling out this side of the problem. Having had the opportunity to visit his lovely house and to see the objects there, I can appreciate the problem. Although I personally should have liked to see something spelt out rather more clearly in the Bill and in more detail—though on the whole this is an extremely clearly drafted Bill—on the lines of the amendments that were to be moved by the noble Duke, the Duke of Grafton, I must acknowledge that we have come a long way in the appreciation of leaving objects in situ, compared with even a few years ago. I hope that this point is taken on board and looked at very carefully, and that the trustees will be aware of it. It is a balancing act, and I think that the balance has to be right. The noble Marquess is absolutely right in what he says about a house which we do not want. I think a point was made at Second Reading by the noble Baroness, Lady Airey of Abingdon, about not having houses denuded, as they are in France. At the same time there must be a flow of objects and pictures to the museums.
If at this stage, in order to help get the Bill through and on to the statute book, we rest on Clause 9(5) and give it a chance to see how it works, I am quite certain that if the balance goes wrong, or something happens regarding houses, there will be—as there should be—a very quick reaction. I say this because I feel that this is a matter which one could go on discussing and arguing ad infinitum. Frankly,

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while I should have preferred the noble Duke's amendment to have been accepted in some form, even if the drafting was not right, I should still rather see the Bill get on to the statute book. Therefore, I hope that the noble Marquess will withdraw his amendment, because I think that the points that he made have now been recorded, and we are all aware of them.
6.56 p.m.
The Marquess of HERTFORD: I was taken aback by what the noble Lord, Lord Donaldson of Kingsbridge, said because I had not in any way meant to imply that museums are not of the utmost importance. I was, I hope, making the point that the countryside is sometimes unnecessarily impoverished of works of art of which London is quite full; most of the galleries and museums in London are very full. It seems a pity to remove and bring to London a work of art that is being enjoyed in the Provinces. Obviously, the National Gallery attracts more visitors than the average country house, but it already has more items in it.
Lord DONALDSON of KINGSBRIDGE: May I interrupt the noble Marquess for a moment? The bulk of the in lieu chattels—that is to say, pictures, et cetera—over the last two years have all gone to the Provinces.
The Marquess of HERTFORD: I am delighted to hear that. I should also like to say that my amendment only very slightly tilts the balance, because it says of the Ministers,
"unless they receive expert advice to the contrary"
which of course they very often might do. I must say that I am not changing my mind as to the desirability of my amendment, but I realise that it has very little support, and so I beg leave to withdraw it.
Amendment, by leave, withdrawn.
On Question, Whether Clause 9, as amended, shall stand part of the Bill?
Lord DONALDSON of KINGSBRIDGE: I feel that I must make a few short remarks at this stage about a matter which is not mentioned in the Bill and which has not been mentioned here; namely, the current system by which the
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national institutions, if they are to receive an object in lieu, have to pay for it out of their grant if its cost is less than 25 per cent. of the grant, as it was, but which has now been reduced to 15 per cent. I think that there were quite good reasons for this in the past. It was frightfully important that the rich, central institutions should not be able to buy everything. But under the new system I do not think that this 15 per cent. is any longer necessary. For example, if a modern picture comes up in some place or other, and the trustees have the chance of acquiring it in lieu, it seems to me that they are just as likely to give it to the Whitechapel Gallery as to the Tate Gallery. Equally, if a fine masterpiece comes up, the trustees are just as likely to give it to Cardiff as to the National Gallery; in fact, I should have thought more likely. If the trustees do not do this kind of thing, they will not be any good and we shall have to change them.
To keep the 15 per cent.—which because museums are very conscious of their need for purchasing objects is something which they resent very much—would be a great pity. I believe that the coming of the Bill gives the Government a chance—I think that it can be removed without legislation—to wipe this arrangement off altogether as soon as the trustees are appointed, and I hope very much that they will be able to do so.
Lord MOWBRAY and STOURTON: We are well aware of the concern of the museums and galleries about the 15 per cent. rule of reimbursement to the National Land Fund if a national collection is allocated an object which costs less than 15 per cent. of its annual purchase grant. We are considering the recommendation of the Expenditure Committee of the other place that the rule should be abolished. I hope the noble Lord will not press me too hard on this question, as I hope an announcement of the Government's decision will be made before very long.
Lord DONALDSON of KINGSBRIDGE: I am most grateful to the noble Lord.
Clause 9, as amended, agreed to.
Clauses 10 and 11 agreed to.
Clause 12 [Approval of property for acceptance in satisfaction of tax]:
7.2 p.m.
The Duke of GRAFTON The Duke of GRAFTON moved Amendment No. 37:
Page 8, line 16, at end insert—
("( ) in sub-paragraph (4) (approval by Treasury of objects to be accepted), in paragraphs (a) and (c) after the words "artistic interest" there shall be inserted the words "or is pre-eminent in a particular place with which it has significant association"").
The noble Duke said: I beg to move the insertion of this paragraph on page 8, line 16. I have already spoken on the subject. I just think that it is an improvement on the existing wording. I beg to move.
Lord MOWBRAY and STOURTON: This, we think, is an unnecessary amendment, in that the law already provides that when objects are assessed for their pre-eminence they may be regarded as pre-eminent even if they are pre-eminent only in a particular setting. This interpretation of the law has always been accepted by the Treasury, and there are cases currently in the pipeline which have been accepted under this interpretation. However, I accept that the amendment proposed here by the noble Duke may be a useful clarification, and I should like to have a further opportunity to study it with the benefit of the advice of the parliamentary draftsman.
One problem which the amendment may produce is that if we add these words we may be obliged, under the canons of legal construction, to interpret the existing words differently; and this may, for example, deprive us of the power to assess objects as pre-eminent in relation to a local, as opposed to a national, collection. This would be an unfortunate narrowing of the existing scope of the law, and contrary to Government policy. If the noble Duke will consent to withdraw his amendment, I undertake to consider the words he has suggested, without commitment, and if they have merit I will table a Government amendment on Report.
Lord DONALDSON of KINGSBRIDGE: Perhaps I may say that I think the amendment is something which must be very seriously considered, and I
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am very glad that the noble Lord said that it will be. We all remember the case of the Doddington Reynolds, which fits this exactly. It was quite wrong that it should have worked out the way it has, and I hope that this amendment, or something that the noble Lord will be able to do, will put that right.
The Duke of GRAFTON: In view of the kindly reply of my noble friend, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 12 agreed to.
Clause 13 agreed to.
Clause 14 [Transfer of Ministerial functions]:
[Amendment No. 38 not moved.]
The EARL of WEMYSS and MARCH The EARL of WEMYSS and MARCH moved Amendment No. 39:
Page 9, line 16, at end insert—
("(4) A draft Order in Council shall be laid before each House of Parliament within three years of the bringing into force of section 8 above transferring the functions of the Ministers with respect to the acceptance of land in satisfaction of tax.").
The noble Earl said: I am in a slight difficulty here as one does not wish to say anything unkind about what has been said in that other place which we normally speak of as though it was the only other place, but certain people are rather worried about the effects of a rather indirect thing that happened there. It can be found recorded in Hansard at column 1434 of 30th January, which was at the Report stage in that other place, when a promise was apparently given that an order bringing into force the Section 8 which is referred to in my amendment would never be moved unless the museum people—those who are concerned with museums—gave their consent, so to speak. This is rather worrying for those of us (and this surely includes all your Lordships) who are concerned, not only with things that might go to museums but with land and the buildings upon it. Therefore, the amendment which stands in my name concerns itself only with land—land of course includes buildings—and says nothing whatever about chattels or moveables.
The demand of this amendment, if your Lordships see fit to pass it, is that within three years there shall be brought before each House of Parliament a draft Order in Council transferring the functions of the Ministers to the new trustees—that is, taking the thing out of Part II and putting it into Part I—but only in respect to the acceptance of land, including, as I say, buildings. This leaves the moveables and the chattels and the museum interest, unless they consent, where it is put in the Bill. So far as I know, nobody who is concerned with land and buildings dissents from this, though I stand to be corrected. The desire is to have the whole business of acceptance in lieu, acceptance of gifts, purchasing and all other means of acquisition under one responsibility; namely, that of the new trustees, whom we must trust, and trust to build up their own comprehensive centre of intelligence and contact all round.
Of course, if this draft order is laid before the Houses of Parliament it may be turned down, but at least there will be a chance for the matter to be discussed. Of course, also, this will mean, if it is agreed to, redividing the available money and transferring something more to the trustees, but leaving, surely, sufficient still, under the Part II acceptance in lieu arrangements, for dealing with the museum interests, objects and moveables. Accordingly, I beg to move.
Lord DONALDSON of KINGSBRIDGE: I should like to give qualified support to the noble Earl's amendment. Our belief when we were in Government was that the right solution to this is contained in Clause 14, and that the final structure of the trustees and their funds should be that they deal with everything, as the noble Earl said. At that time I do not think the museums were very apprehensive. In any case, the Government fell, so we never got to final discussions with them. I hope that this will happen in the end, but, of course, I would not support doing this against the museums' open objections. I think one has to get round those or else postpone doing it.
The noble Earl is suggesting that three years is long enough, and that if the Minister for the Arts cannot get the museums to agree to a system of this kind within the three years then the heritage
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be divided, one hopes temporarily, between real property and chattels, roughly speaking. I must say that I have a certain sympathy with that. I feel pretty certain that the noble Lord will not be able to accept this. I am not quite sure why, but I feel pretty certain that he will not, and I certainly do not want to divide on it. However, I think the fact that the noble Earl has put this forward and has given his reasons, and that we from this side have agreed with his reasons, though not necessarily with his solution, may take the whole thing a stage further.
Lord MOWBRAY and STOURTON: Part II of the Bill transfers responsibility for acceptance of property in lieu of tax from the Treasury to the Secretary of State for the Environment and the Chancellor of the Duchy of Lancaster, and, as the noble Lord has said, Clause 14 provides that, if the Government so decide, they can transfer the responsibility on from the Ministers to the National Heritage Fund trustees without recourse to any further primary legislation. The transfer from the Treasury to the departmental Ministers will be a significant change, which will be carefully monitored; and, once the new system has been in operation for a year or two and has settled down, we shall review it to see whether it should be maintained under Ministers or transferred on to the trustees. In this review we shall have to consider the views of the various elements in the heritage world, who it is well known, as has been said, do not all see eye to eye on this point.
I gladly give an assurance that the Government will undertake such a review well within three years from the start of the new system, but it would be wrong, we think, to prejudge the outcome of that review or to oblige the Government to proceed, within a particular deadline, to implement their decisions.
The Earl of WEMYSS and MARCH: I think I understand what the noble Lord is saying, but could he make it a little clearer that the promise apparently given at second-hand in the other place (and it is difficult to say that without discourtesy) that the museum interests would be able to block what the land and buildings heritage interest wants, is really not so? And that the review that the noble Lord

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promises will, if necessary, override that apparent promise to the contrary given in another place? If that is so, I will withdraw the amendment.
Lord MOWBRAY and STOURTON: I am not willing to give a firm assurance on a hypothesis. We have said that we will consider all the views of the various elements. It would be wrong to anticipate a misconception because, if we do so, it will encourage it. I anticipate that there will be harmony.
The EARL of WEMYSS and MARCH: I think we have probably said enough. On that understanding and seeing the point has been made that land and buildings could be taken out of Part II by leaving movables in Part II, if that is so, I am happy to withdraw my amendment.
Amendment, by leave, withdrawn.
Clause 14 agreed to.
Clause 15 agreed to.
Clause 16 [Indemnities for objects on loan]:
[Amendment No. 40 not moved.]
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 41:
Page 10, line 3, leave out from ("which") to ("a") in line 4 and insert (" has as its purpose or one of its purposes the preservation for the public benefit of").
On Question, amendment agreed to.
7.12 p.m.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 42:
Page 10, line 12, leave out paragraph (b) and insert—
("(b) a library which is maintained—

(i) wholly or mainly out of moneys provided by Parliament or out of moneys appropriated by Measure; or

(ii) by a library authority;

or the main function of which is to serve the needs of teaching and research at a university in the United Kingdom,").
The noble Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 43:
Page 10, line 16, leave out ("or") and insert ("and").
The noble Lord said: This corrects a slip in the drafting when amendments were tabled in another place. "And" is the right word in this context. "Or" would imply that these bodies listed were in some way alternatives. I beg to move.
On Question, amendment agreed to.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 44:
Page 10, line 29, leave out ("(3) and ") and insert ("to").
The noble Lord said: This amendment is intended to correct a slip in the drafting and to avoid any doubt as to the position of objects owned in Northern Ireland, which are, of course, within the scope of the indemnity arrangements. I beg to move.
On Question, amendment agreed to.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 45:
Page 10, line 34, at end insert—
("( ) In subsection (2) above "library authority" means a library authority within the meaning of the Public Libraries and Museums Act 1964, a statutory library authority within the meaning of the Public Libraries (Scotland) Act 1955 or an Education and Library Board within the meaning of the Education and Libraries (Northern Ireland) Order 1972 and "university" includes a university college and a college, school or hall of a university.").
On Question, amendment agreed to.
Clause 16, as amended, agreed to.
Clauses 17 and 18 agreed to.
Clause 19 [Short title, interpretation, repeals and extent]:
Lord REIGATE Lord REIGATE had given Notice of his intention to move Amendment No. 46:
Page 11, line 20, at end insert ("or such other Minister as may from time to time have responsibility for the Arts.").
The noble Lord said: The hour is late. In the circumstances, I shall not move the amendment.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved amendment No. 47:
Page 11, leave out lines 21 and 22.
On Question, amendment agreed to.
Clause 19 as amended, agreed to.
Schedule 1 [The Trustees of the National Heritage Memorial Fund]:
Lord DONALDSON of KINGSBRIDGE Lord DONALDSON of KINGSBRIDGE moved Amendment No. 48:
Page 13, line 15, after ("allowances") insert ("and to the Chairman such emoluments and allowances").
The noble Lord said: This is the only amendment that I am moving with some determination. Most of the time we have been half agreeing. Here we may find a real difference. We on this side of the Committee believe that, although it is very often possible to get absolutely first-class people who do not require payment and who, in many cases, would not take payment, occasions can arise when you cannot get the best man without payment. Therefore, this Bill should be permissive in that way. We do not think this is necessary in the case of the trustees. The trustees of the British Library are paid a small sum, as they are in certain other organisations; but generally the trustees' work is a meeting a month or something of that sort. The chairman, particularly for a post as important as this, will have to give two to three days a week, at least at the beginning.
I should have thought that anybody that this Government with their particular friends and relations are likely to appoint would probably not particularly require to be paid and might even not accept payment if given it. But this Government, thank goodness! will not be in power for ever. The rate of 20 per cent. inflation looks as if it may, and monetary situations will change very much. I visualise, for example, that a director of a museum who has a serious illness and has to give up his job might be exactly the man that we want for chairman, but he might not be able to take it because he cannot afford to work without being paid. Our party, on the whole, take the view that work should be paid for. If people have enough money not to require it, they can give it back. My amendment says that. It does not ask that the trustees
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should be paid. It does not ask that the chairman should be paid. It asks that it whould be possible to pay the chairman. I beg to move.
Baroness BIRK: I should like to support my noble friend on this amendment. On this, we are in complete agreement. I think it is very important that a permissive power should be in the Bill for payment to the chairman but (I agree with my noble friend) not necessarily to the trustees. We have seen such cases. The noble and learned Lord the Lord Chancellor, when the payment for Cabinet Ministers came up, accepted the principle of it but refused the increase himself, as, I believe, did the Prime Minister.
When this fund gets under way (as I hope it will very soon) I would imagine that there will be quite a lot for the chairman to do. It will not be a sinecure. I should have thought it would take certainly half-time or three-quarter-time work. I am not suggesting a large salary should be paid, but, for somebody who would find it really difficult to do it without any payment at all, a quite small emolument could make all the difference between somebody being able to accept or not.
Some years ago I was for four years chairman of the Health Education Council. I was not paid because, for the time being a kept woman, I was able to do it without being paid. I was appointed by the late Richard Crossman when he was Secretary of State for Health and I continued under Sir Keith Joseph. During my term of office I pointed out to Dick Crossman that, although I would not have suggested there should be a change during my tenure of office (for that would have been quite wrong), I thought that the chairman of a body like that-which really involved a considerable amount of work-ought to be paid; and that it was quite wrong to have to rely upon people who were able to do it and wealthy enough to be able to afford to do it without payment. I think it very unusual to set up a body like this without making it possible to pay the chairman.
As we all know, in another place on a Division on Committee stage, this provision was in the Bill. Then, at Report stage, the Minister for the Arts took it out. I do not know why I should be suggesting

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to the Government how they can improve their image, but I should have thought it very wrong, particularly for a Conservative Government, to have something in a Bill like this which does not even give the power to pay a chairman, let alone the chance for a chairman to be able, with great grace, to refuse the emolument. It is not a party political point; it is something that people from all sides of the Committee would agree should be in the Bill.
7.20 p.m.
Lord VAIZEY: I hope that the Minister will look at this amendment carefully. It seems to me that everybody agrees that my right honourable friend the Chancellor of the Duchy of Lancaster has really worked miracles in getting the Bill this far, and in getting the sum that he has in circumstances of great economic difficulty and fiscal stringency. I understand the reasons for not wishing to create another Quango with paid officials, friends and relations of Ministers of the Crown.
On the other hand, it is a fact that the arts have always been a field where people have been expected to do something for nothing. For example, I put down a Question when the previous Government were in office about the fact that the charter of the Arts Council forbids the chairman to be paid, which makes it practically impossible to appoint somebody in a full-time job to that particular position which is itself a full-time job, if it is properly done. This is a great misfortune and something which I hope will be looked at. The last Government did not do that. Some Government in the future, I hope, will do so.
I share the view of the noble Lord on the Front Bench that it is a pity to tie the hands of any Government about the possibility of at least paying some emolument to a chairman if it turns out—as it almost certainly will turn out—that this is a substantial job. I do not necessarily agree with the noble Lord, Lord Donaldson of Kingsbridge, that this job is something for somebody whose health has broken down and who has been compulsorily retired. I hope very much it will be for somebody vigorous. For example, it seems to me that the noble Baroness,
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Lady Stedman, would be an excellent chairman of such an institution. I hope that it will be somebody who is very vigorous and goes bustling around the countryside and is able to visit these wonderful places and chivvy the civil servants.
I appreciate that my noble friend on the Front Bench will not be able to accept the amendment tonight; but I hope that he will look at the matter very seriously. It is a pity if the particular financial stringency at this time affects the staffing of the Heritage Fund, which is something that we all hope will last well into the next century.
Lord WINSTANLEY: I too should like to support this amendment, very much on the lines outlined by the noble Lord, Lord Vaizey. I believe that it is absolutely essential that the choice of the person for this important and onerous office must be as wide as it could possibly be. I am not saying that it will necessarily fall on to somebody who will need payment. I do not think that the Government would be wise at this stage to narrow down their choice when, as they know—and as the noble Lord has said so often—we are relying on getting people as trustees, and as a chairman in particular, of quite unusual ability, expertise and dedication. It may well be that they find somebody who does not require and does not need payment. At this stage to narrow the choice would be very ill-advised. I too hope that this amendment will be looked at with sympathy.
Lord SEGAL: We all realise, or ought to realise, by now how terrified the Government are of any new suggestions which would involve them in additional expenditure. But, on the other hand, as the noble Lord, Lord Winstanley, has said, it would be a fundamental mistake for the Government to narrow their choice to the extent that will probably be likely, unless this amendment is carried. We on this side of the Committee realise that people may be particularly qualified to render the Government this assistance and yet are denied the opportunity of doing so through no fault of their own. I warmly support the amendment.
The Marquess of HERTFORD: I am sure that the Committee is aware that I

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have absolutely no interest to declare in supporting the proposition that the chairman should undoubtedly be paid, simply because it seems a great mistake to limit the choice of chairman to those who can afford to give up their time. Surely I would be right in supposing that the pay would come out of the Land Fund which has already been allocated by the Government. Therefore, there will no no question of any extra Government funds being required.
Lord REIGATE: It is very important that every voice possible should be registered from these Benches in support of the principle of this amendment. It is permissive. I accept that present circumstances are unfavourable; but there is nothing to stop the Minister saying to an appointee, "I do not propose to give you the emoluments that I could give". That is perfectly all right. The other arguments are absolutely valid. I must also say that I think it is rather surprising that something which was agreed by a Committee upstairs should be reversed. I think that we ought to go back to that position.
7.26 p.m.
Lord MOWBRAY and STOURTON: Like the noble Lord, Lord Donaldson of Kingsbridge, this is a matter on which the Government also feel very strongly—so strongly that when it was debated in another place they twice took the matter to a Division: in Committee, when they were defeated; and on Report, when they restored the position that no trustees would be paid.
The Government regard this as a matter both of principle and of practicality. As regards the principle, no bodies in the arts world funded by the Government pay their chairman except the British Council and the British Library which have a very heavy executive load. The chairman of the Reviewing Committee on the Export of Works of Art, the chairman of the Standing Commission on Museums and Galleries, the chairman of the Arts Council, the British Film Institute, the Crafts Council, the South Bank Theatre Board, and the national museums and galleries are not paid for their services. It is the case that the chairman of the Historic Buildings Council is paid, but that post also has a heavy executive load. Contrary
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to what my right honourable friend the Chancellor of the Duchy of Lancaster said in another place, the chairman of the Ancient Monuments Board is not paid.
It is the considered view of the Government that it would diminish the post of chairman and the status of the fund in the eyes of those it was designed to assist if it were to be a paid post.
Baroness BIRK: I wonder whether I may interrupt? Could the noble Lord tell me why it would diminish the chairman to be paid? I wonder whether the Minister feels diminished as a Minister because he is paid. I do not feel that he is diminished; I do not feel that he is paid enough.
Lord MOWBRAY and STOURTON: Of course I do not mean that merely because he receives pay in the abstract it diminishes anyone. Every workman is worthy of his hire. But in this case we are dealing with Government bodies, and the chairmen whom I have mentioned are not paid. No chairman of any charity is paid; and although I accept that this is not technically a charity, it is to be treated as a charity as regards tax matters.
Quite apart from the principle of the matter, is there any need for payment? There is no need to offer an inducement to attract candidates. There is no shortage of candidates of the highest calibre. Will the post have a heavy executive load? Many noble Lords seem to think that it will. At first, setting up a new important body will make some demands, obviously, on the chairman's time. But the fund will essentially be a reactive agency which deals with applications from other bodies. It will have a skeleton staff and meet probably no more than once a month. This is not a post like some of those which were mentioned in another place: the Gaming Board, the Horserace Betting Levy Board, the Forestry Commission, the Tourist Boards, the Development Board for Rural Wales, et cetera. These are all bodies with a remit to take initiatives and launch projects of their own. The National Heritage Fund is a totally different animal.
Will the trustees be out of pocket? Again, the answer is, No. They will be able to claim their travelling costs, subsistence and any loss of earnings. It has been suggested that unless the chairman

1611
is paid, a large section of the community will not be able to take on the post. A large section of the community would not be capable of taking on the post. As my right honourable friend the Chancellor of the Duchy said in another place, we are looking for cultural generalists, people with a high degree of cultural perceptiveness. The field is already a narrow one, but I can assure the Committee again that it is still a very rich field, with an embarrassingly large number of excellent candidates.
The noble Lord, Lord Winstanley, said that it was narrowing the choice. From the candidates coming forward, I do not believe that it is at all narrow. The noble Lord, Lord Vaizey, said that it was a substantial job. I think I have explained that once the initial settling in is over we do not anticipate that it will be that heavy. This is not the time to start new paid jobs. This Government are determined to try to "cut our cloth" and we are doing what we think is quite a lot in this Bill.
This matter of paying the chairman, and so on, is a small one. Before, in another place, the other side tried to pay all the trustees. We have now narrowed it down to enabling only the chairman to be remunerated. As has been pointed out, it is permissive, but we feel very strongly that on principle this is wrong. It is not
necessary and we feel very strongly on this and we shall not budge on it, I am afraid. I would ask your Lordships to reject the amendment and I hope, while we are doing this, that we are talking about the amendment of the noble Baroness, Lady Stedman, as well.
Lord DONALDSON of KINGSBRIDGE: I do not think there is any point in arguing about this. The noble Lord speaks of a principle but he has not given us a principle. He said that a number of people doing similar jobs are not paid. Of course, that is true. There is no principle involved in it. The principle which we wish to have involved is that cultured people without large incomes can be approached on this point. It is only permissive and, if I were Minister for the Arts, when the first chairman was appointed I should not pay him, but I should be very glad to know that I could if the time arose when it was suitable to do so. I think we have a principle, but I do not think the noble Lord has; and in any case we will let the Committee decide.
7.33 p.m.
On Question, Whether the said amendment (No. 48) shall be agreed to?
Their Lordships divided: Contents, 35; Not-Contents, 49.

CONTENTS

Avebury, L.

Hale, L.

Northfield, L.

Birk, B. [Teller.]

Hanworth, V.

Reigate, L.

Boston of Faversham, L.

Hertford, M.

Saltoun, Ly.

Bowden, L.

Hood, V.

Segal, L.

Boyle of Handsworth, L.

Janner, L.

Southwell, Bp.

Brockway, L.

Kirkhill, L.

Stone, L.

Bruce of Donington, L.

Llewelyn-Davies, L.

Strabolgi, L.

Cledwyn of Penrhos, L.

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

Thurso, V.

Crathorne, L.

Vaizey, L.

David, B.

McCarthy, L.

Vickers, B.

Davies of Leek, L.

Mishcon, L.

Winstanley, L.

Donaldson of Kingsbridge, L.

Morris, L.

Wynne-Jones, L.

NOT-CONTENTS

Airey of Abingdon, B.

Falkland, V.

Lyell, L.

Belstead, L.

Ferrers, E.

Macleod of Borve, B.

Bessborough, E.

Ferrier, L.

Mottistone, L.

Caithness, E.

Gainford, L.

Mowbray and Stourton, L

Cathcart, E.

Galloway, E.

Murton of Lindisfarne, L.

Cockfield, L.

Gowrie, E.

Northchurch, B.

Cottesloe, L.

Grafton, D.

Nugent of Guildford, L.

Croft, L.

Haig, E.

Orkney, E.

Cullen of Ashbourne, L.

Harvington, L.

Sandford, L.

Daventry, V.

Holderness, L.

Sandys, L. [Teller.]

de Clifford, L.

Hornsby-Smith, B.

Sempill, Ly.

Denham, L. [Teller.]

Inglewood, L.

Strathclyde, L.

Dundee, E.

Kintore, E.

Swansea, L.

Elliot of Harwood, B.

Long, V.

Trefgarne, L.

Trenchard, V.

Vernon, L.

Wemyss and March, E.

Tweeddale, M.

Vivian, L.

Westbury, L.

Vaux of Harrowden, L.

On Question, Motion agreed to.

[Amendment No. 49 not moved.]
Schedule 1 agreed to.
Remaining schedule agreed to.
Title agreed to.
House resumed: Bill reported with amendments.

FARM CAPITAL GRANT (VARIATION) SCHEME 1980
7.41 p.m.
Earl FERRERS: My Lords, I beg to move that the Farm Capital Grant (Variation) Scheme 1980, which was laid before this House on 31st January, be approved. I think that it might be for the convenience of the House if we took at the same time the Horticulture Capital Grant (Variation) Scheme 1980, which was also laid before the House on 31st January. These two schemes are subject to Affirmative Resolution by your Lordships. But I should like to refer also to the Farm and Horticulture Development (Amendment) Regulations 1980, which were laid at the same time, but which, strictly speaking, do not require debate as they are subject to the Negative Resolution procedure. But they all form part of the same proposals which represent the first step towards a new simplified scheme.
As your Lordships know, we have had a number of capital grant schemes. Over the years these schemes have been modified, supplemented and sometimes replaced in line with the ever-changing requirements of the needs of the agricultural industry. In my view, there is no question that the various capital grant schemes have greatly benefited the agricultural industry and have contributed to its outstanding record of increasing productivity and efficiency. When we took office last May, we undertook to reduce public expenditure and to find ways of raising the efficiency of public business. The Prime Minister asked Sir Derek Rayner, in consultation with Ministers, to help to identify ways
1614
in which staffing and other costs of administration could be reduced. A study of the capital grant schemes was undertaken and we have accepted, in principle, the recommendation that the existing grant schemes should be replaced by a radically simplified and rationalised new scheme.
We are at present engaged in consultations with the farmers' unions and other organisations, including those representing the staff concerned, who can advise on the practical application of the proposals put forward. Following these consultations, a new scheme will be presented to Parliament before the Summer Recess. One of the changes which was proposed for the new scheme was a rationalisation of the grant rates. This followed speculation in the farming Press over recent months as to whether the Government's intention to reduce public spending might result in changes to the grant rates. My right honourable friend the Minister of Agriculture believed it was right to end this uncertainty and, at the same time, to take a step towards the proposed rationalisation. The schemes before us today do this.
The schemes came into operation on 1st February 1980, the day after being laid before Parliament. If we had given longer notice, this would have invited a flood of applications, with all the undesirable effects which that would bring. The orders make two main changes; they adjust certain grant rates and they introduce a limit on the total amount of investment which can attract grant. If I might take the grant changes first, contrary to a widely held view most grant rates have been increased. Taking all three schemes—the Farm Capital Grant (Variation) Scheme, the Horticulture Capital Grant (Variation) Scheme and the Farm and Horticulture Development (Amendment) Regulations—a total of 59 rates go up and 43 go down. Forty-four rates remain unchanged. The basic rate of grant for buildings and works under the FCGS and the HCGS is now 22·5 per cent. Under the Farm and Horticulture Development Scheme it is 32·5 per cent. This change will remove the previous discrimination against sheep housing compared with cattle buildings. Grant-aided investment on sheep housing

1615
has been increasing over recent months and we wish to encourage this trend. I am sure that the industry, which has been pressing for such an improvement for some time, will welcome it. Although horticulturists will get slightly less aid for buildings and works under the HCGS than before, there has been an equivalent increase in the rates for these items under the FHDS.
We have retained the present grants for horticultural plant and equipment at their existing levels, because we recognise that horticulture generally benefits less from price support arrangements than does agriculture. I hope that growers of protected crops, in particular, will see the continuance of these grants as an indication of the Government's confidence in the future of this sector, which we all know is facing increasing difficulties, not least from rising energy costs.
Assistance for dairy and cattle buildings is reduced to 22·5 per cent. under the national scheme and 32·5 per cent. under the EEC scheme. They were given a higher rate in 1976, in order to encourage the better utilisation and conservation of grassland and economic milk production. We believe that, in the present climate, there is less justification for the advantage given in 1976, especially following three devaluations of the green pound and two increases in the milk price, which have benefited dairy farmers substantially. It is for the same reasons that grants for dairy plant and equipment for the loading and unloading of silos, which were introduced in 1976, will no longer be available under the national schemes, although they will continue, at lower levels, under the FHDS.
Where grant on other forms of equipment has been reduced, it is worth remembering that this equipment benefits from the 100 per cent. write-off provisions in the year of purchase for income tax purposes. Farmers and growers outside the Less Favoured Areas will generally get 10 percentage points higher grants under the FHDS than under the FCGS. Inside the Less Favoured Areas, they will enjoy a further five percentage points advantage on most items.
The Advisory Committee on Agriculture and Horticulture, under the chairmanship
1616
of Sir Nigel Strutt, recommended in their most recent report that more incentives should be given for water conservation. I am therefore glad to be able to tell your Lordships that we have decided to increase to 22·5 per cent. the rate of grant on water supplies and conservation. We considered that, to reduce grant for field drainage to the basic rate, would probably have led to an unacceptable lowering of the amount of work undertaken. For this reason, we deviated slightly from our policy of rationalisation by creating additional grant rates of 50 per cent. for the lowlands under the FHDS and 37·5 per cent. under the FCGS.
Over the last 20 years, the area of land drained has steadily risen from just over 40,000 hectares per year to over 100,000 hectares in England and Wales and, in the five years between 1975 and 1979, the value of investment grant-aided has risen from £16 million to £33 million per year. I believe that this shows the appreciation by farmers and landowners of the value of drainage. I am confident that the capital grant schemes will continue to make a major contribution to this investment, which is so very important.
We are, of course, retaining the 70 per cent. grant for hill drainage in Less Favoured Areas. In recognition of the special natural handicaps with which these areas have to contend, we are also retaining the 50 per cent. level of grant on hill land improvements.
If I could refer to the new limits, a substantial proportion of grant is going to a small number of applicants who are operating large enterprises. In the main, these applicants have benefited from the tax changes which were made by my honourable friend the Chancellor of the Exchequer in his Budget and so they will have a higher proportion of net income available for investment. We have, therefore, decided to impose a limit on the amount of investment which can qualify for grant.
Under the national schemes, the limit is 160,000 European Currency Units, which is about £100,000, on which grant may be paid in any six year period. Under the EEC Scheme—the Farm and Horticulture Development Scheme—the limit is not 160,000 units but 220,000 European Currency Units, which is about £136,000.

1617
We consider that this represents a reasonable level of investment for a family farm. But there will be no retrospection. In applying the limits, no account will be taken of any expenditure on which grant has been claimed where the application for approval of that expenditure—whether under the national schemes or the FHDS—was received before 1st February 1980. These limits will apply in addition to the existing labour unit limit and applicants will no longer be eligible under the national schemes while they have a current development plan approved under the FHDS.
Only a relatively small number of large enterprises will be affected by these limits. Under the national schemes, perhaps 1 per cent. of applicants will be caught by them over a six year period. Under the FHDS we expect only about 1 in 5 of development plans to be affected but all applicants will, of course, be eligible for grant on investment up to that limit. It is only grant on investment which exceeds the limit which will be affected. The limits and the changes in rates are expected to produce important savings for the Exchequer which are estimated at £4 million in 1980–81, rising to £35 million in 1983–84. We shall keep a close watch on the trends in grant applications, the cost of which will depend on the use which farmers make of the schemes.
In making these changes we have taken into consideration current events in farming and horticulture and the likely pattern of demand over the next few years. We would not rule out changes if these become desirable in the future. We believe however that these arrangements are in line with the present needs of the industry. I present them to your Lordships believing that, together with the changes still to come, they will enable the grant schemes to continue to benefit agriculture and horticulture in the continuous process of adapting and innovating.
My Lords, I commend these schemes to your Lordships.
Moved, That the Scheme laid before the House on 31st January 1980 be approved.—(Earl Ferrers.)
7.53 p.m.
Lord CLEDWYN of PENRHOS: My
1618
Lords, I read these orders with considerable interest and I should have liked to speak in some detail upon them, but in view of the hour and the substantial debate which is to follow I will seek to restrain myself.
I welcome some of the assurances which the noble Lord the Minister of State has given to the House and I should specifically like to congratulate Sir Nigel Strutt and his committee on the excellent work which they have done. There is one point to which I should like to address myself, and I should appreciate it if the noble Earl could answer me before the conclusion of the debate.
I must express some concern about the possibility, which seems to me to be inherent in the report, that the level of grant aid for field drainage may well be substantially reduced as a result of these orders. The Minister of State said that some of our apprehensions may well be unjustified. If he can satisfy me on this point I shall be very happy. There are some cuts in public expenditure which can be justified but there are others which do inflict long-term damage of a most serious character. Some grants made by the department are an investment. They bring returns in due course which are far greater than their value, and grants for field drainage fall into that precise category.
I well recall that when I was the Minister of Agriculture we had to economise in various ways; but I was always chary of cutting some services, and field drainage was one of them. Indeed, I increased the grant on field drainage because I felt that it was in the national interest and in the interests of agriculture. I understand that it is calculated that about 7 million acres of food-producing land are in need of drainage in the United Kingdom, and the consequences of cutting drainage grants will be incalculable. I should be grateful if the Minister of State could say whether the Government are proposing to make a saving of £3½ million on field drainage alone and what the amount of savings in the other categories is likely to be. This is what the House will want to know.
Farmers are going through a difficult time and we know that they are going to go through an even more difficult period in the months which lie ahead. This,

1619
therefore, is not the moment to undermine the confidence of farmers in this country. I greatly hope that, if I am right in my suspicion that the Government are proposing to make a major cut on field drainage, they will think again, because I would regard it as a very important step to take, a step which would in fact affect food production in this country over a considerable period of time. I wish that I could speak at greater length on this matter but, as I say, in view of my noble friend's desire to open his debate on a very important subject, I will desist. I merely appeal to the Government to think again about this particular point.
Lord SANDFORD: My Lords, could I quickly raise a point with the Minister, not on the rate or the scale of his grants but on the administration of them, particularly in relation to the proposals that I understand are going to be tabled later on this year in connection with Sir Derek Rayner's proposals for streamlining and simplifying the procedures? The context in which I want to do this is the recommendation of an earlier report from the advisory council to the Minister, that ADAS, who have such an important role to play in administering these grants, should assume greater responsibility for the conservation of the landscape, the conservation of wildlife, public access to the countryside, tourism and other industries based on farms. That report was accepted, and ADAS have been seeing how they can implement those extra responsibilities. It has involved a good deal of work in those parts of the country where conservation policies are particularly important, such as national parks, areas of outstanding natural beauty, nature reserves and so on.
I appreciate that that has got to continue side by side with economies and simplifications in the procedure which may make it possible to reduce staff in ADAS, or at any rate make the same staff able to get through a greater amount of work. If, among these proposals, it is intended—as I believe it is—to abolish the prior approval as part of the streamlining process, then it is very important that farmers should know where they stand before undertaking capital work not only in relation to the agricultural aspects of their proposals but in relation
1620
to the impact of those proposals on the countryside, on the landscape, on wildlife, on nature reserves, et cetera. That is to say, they must be able to understand the relationship of their proposals on which they hope to get grant aid to the conservation policies in force in particular areas.
I should be very grateful if the Minister could tell us now whether the consultation process has been begun—by which national park authorities, for instance—and the local staff of ADAS can begin to work out the mechanisms by which this process is to go on. My inquiries today have led me to find that there is no knowledge of this change in the process among the national park authorities so far, so I should like to be reassured tonight that a process of consultation is to begin and I should be grateful if the noble Earl would write to me and give me details of what procedures are intended.
8 p.m.
Baroness ELLIOT of HARWOOD: My Lords, I should like to ask one or two questions and I declare an interest that, as a farmer, I am a member both of the FHDS scheme and the Farming Capital Grants scheme. I view with some dismay the fact that at a period when everybody knows that the farming industry is in very low water these changes will probably reduce production and what farmers can do.
As the evening is late I promise not to speak for more than two or three minutes. Why must we have a limitation on the investment, to the effect that grants will be paid up only to the first three employees on a farm? There are some farms with a great many shepherds, for instance, and three employees is perhaps only half of what they have to use. On the other hand, there may be another farm with tremendous mechanisation and only two people are used, and therefore they will get the benefit of no limitation. That in itself is rather unfair.
So far marginal land has been included in the grant aid; and the noble Lord, Lord Cledwyn of Penrhos, has drawn attention to the question of draining, which is very important indeed. In marginal land, of course, a great deal more draining has to be done than on very well cultivated land. Also, having had six or seven years' experience of sending in applications.

1621
for approval before one can start a scheme, or before one knows that if one starts a scheme the grant will be available, I view with some anxiety what the noble Lord, Lord Sandford, has said, that farmers will be able to start (if they are brave enough to start) without the approval of the Ministry. I think there must be some safeguard about that, otherwise nobody will start a scheme of draining or hill drainage, or whatever it may be, unless they know that they have the approval of the Ministry. Up to date one has worked closely with the Department of Agriculture and they have been extremely helpful, but I would not dream of starting a scheme without getting their approval. I realise this is supposed to be one of the things which will cut down on administrative expenditure. It may do that, but if at the same time it deters people (which I am afraid it will do unless they have great confidence in the approval of their scheme) I think it will be a great mistake.
I realise that all these things must be looked upon as being economic, but I have now been in this work for so many years that I think the way in which our agriculture in this country is run is extremely economical. Sitting, as I do, on the Committee on EEC agricultural schemes, one realises how very much more efficient is British agriculture than continental agriculture; and when I see in the schemes a bias towards the small farmer, although to some extent it will help our own small farmers, what it is really designed to do is to help the very uneconomic small farms on the continent, where people earn their living by doing something else and just call themselves farmers for perhaps two or three days in the week.
I hope the noble Earl will view with a critical eye what the EEC are recommending in the way of limitations, and that the Farm Capital Grant scheme (which is our own scheme) will not be cut down in any way, provided that the approval of the Ministry is there for increase in production.
8.6 p.m.
The EARL of CAITHNESS: My Lords I should like to raise two small but quite major points. The first point relates to the overall limit on which grant can be claimed. At the moment, as my noble friend said, it is £100,000 on the FCGS scheme and
1622
approximately £136,000 on the FHDS scheme. As I understand it, this is linked to the European currencies and therefore, if the value of the pound increases, so there will be a proportionate reduction in the amount of grant; so that we could have the pound increasing and only be able to claim grants on, say, £100,000 on the FHDS scheme and £75,000 on the Farm Capital Grant scheme. This could be a very serious encumbrance on the farming community.
The other point concerns the lack of flexibility created by the new paragraph 5A in the principal scheme. At the present time if one is under a FHDS scheme one can also apply for grant under a FCGS scheme, but the revised paragraph does not permit this flexibility. So there is the situation where a person has applied for a horticultural scheme grant of, say, £80,000; 50 acres come up next door which the farmer must buy, and work is already commencing under the horticultural scheme on a cattle building, but as a result of buying the new land he must build on another bay to the cattle building. It now takes weeks, if not months, to get an alteration to the FHDS scheme, and that will cause considerable delays when there are contractors on site, erecting the building. At the moment all he does is to get an urgent works authority under the Farm Capital Grant Scheme, which is a very much quicker process, and the building can be put up, to the benefit of all. Can my noble friend comment on the speed with which the revised procedures will be brought in, so that the FHDS scheme that one is claiming under at the moment will be speeded up if any alteration needs to take place to that scheme?
8.9 p.m.
Lord BRUCE of DONINGTON: My Lords, the House will be grateful to the noble Earl for having explained so clearly the purport of the two statutory instruments to which he has referred. In introducing the scheme he said that a total of 59 rates would go up, 43 would go down and some 44 rates would remain unchanged. It was only at a later stage that we knew the total financial impact, which he put at a saving of £4 million in 1980–81 rising to £35 million in 1983–84.
We on this side of the House would like to support the instruments which he has

1623
introduced to us, on the principle of course that we are in favour of the intervention of Government in private industry wherever it is necessary so to do in order to ensure continued progress in the industry, for innovation and all that kind of thing; but what we find a little difficult is the dichotomy that exists between the noble Earl on the one hand and Sir Keith Joseph on the other. Whereas intervention in private manufacturing industry is deemed to be poison, something that goes right to the root of the whole enterprise of private industry, when it comes to agriculture then suddenly Government intervention into private agricultural industry becomes a virtue. I would not wish to enlarge upon this indefinitely at this time of the evening, but I am bound to point out the slight incongruity of the situation.
Undoubtedly the farming community would say, and possibly with some justification, that if it were not for these aids in many instances farmers would go bankrupt or horticultural institutes would go bankrupt, to which of course Sir Keith Joseph's answer would be, "We cannot help lame ducks because of the limitations imposed on Government expenditure". I do not want to be more playful than necessary with the noble Lord on this point, but I am bound to point out that there is this inconsistency about which the House will hear much more over the months that deploy themselves until the time, which we hope will be quite shortly, when the Government are driven to go to the country again for a new mandate. Certainly much more will be heard of it.
The noble Earl has already given the amounts of savings, and I should be very glad if he could give us the revised total figures to be spent in the next financial year under each of the schemes. We may then know the true magnitude of the intervention by the Government, intervention which we entirely support in this important sector of private industry.
8.12 p.m.
Earl FERRERS: My Lords, I am grateful for the observations which noble Lords have made upon these orders and I am grateful for the basic welcome of your Lordships. I must say that I thought the noble Lord, Lord Bruce of Donington, was stretching the point a little bit far
1624
when he said that before long the Government would have to go to the country again, all because we have lowered the Farm Capital Grants Scheme by 10 percentage points. It was a bit of a red herring and I do not think the noble Lord really expects me to follow it. I realise that he was, as he so graciously put it, being playful. He knows as well as I do that both parties, the party to which he belongs and the party to which we belong, hold the importance of agriculture in the standing of the country very highly indeed, and any Government that let agriculture decline or go into disuse will have a very heavy responsibility to bear. That is what we want to see protected, and we are determined to see that agriculture is permitted to play its proper part, not only as a private industry, but because it provides the food the nation requires.
The noble Lord, Lord Cledwyn, was, I am bound to say, a man after my own heart. To start with, he was a very distinguished Minister of Agriculture. I was glad to see him lay such importance on drainage because it is, in my judgment, a very important part of agriculture. If you have not got your land adequately drained you do not get the structure of the soil right, and if you do not get the structure of the soil right you do not get the crops. He was quite right, if I may say so, to be concerned about the lowering of the levels of grant. But I think I can persuade him of this point, that the level of grant at the normal rate on the EEC scheme has gone down from 60 per cent. to 50 per cent. and on the national scheme from 50 per cent. to 37½per cent., but in the Less Favoured Areas the level remains at the same rate.
He asked me about the financial side of it. I can tell him that the level of grant-aided investment for under drainage over the last five years, between 1975 and 1979, has gone up from £16 million a year to £33 million a year. So he will see that there is a considerable continuity of investment in drainage. The area of land drained has gone down marginally in 1977. In 1975 it was 109,000 hectares, then it went up to 114,000 and then dropped to 101,000. When he asks what is the estimated effect, it is very difficult to say what the effect will be because it depends on whether farmers have got the confidence to invest, the level of borrowing and a number of different factors. Of the

1625
estimated savings of £35 million in 1983–84 it is expected that about half will come from changes in the grant rates.
I would point this out, because I think it is important. Although these changes are coming in as from 1st February, anyone who has taken part in a Farm and Horticulture Development Scheme and has had approval of that scheme in advance of 1st February will be able to continue that scheme at the rates which then apply. In cases where some rates have gone up he will be able to get the benefit of the increase. Recipients will not get a decrease in rate for those schemes already in operation before 1st February. I think that is an important point.
My noble friend Lord Sandford referred to what was going to happen in the future about prior approval. I should like to tell him that of course the abolition of prior approval does not take place under this present scheme; he is thinking of what is likely to happen in the future. We propose to make special arrangements in sensitive areas such as national parks, areas of outstanding natural beauty and sites of special scientific interest. There will be a scheme leaflet which will remind farmers of the desirability of conserving the natural beauty and amenity of the countryside, and it will make clear that in the specified areas the farmer will have to consult the responsible statutory authority about his proposals before starting work if he wishes to claim the grant. If the farmer and the authority reach agreement on the work to be done then it can go ahead.
If there is an unresolved disagreement it will be a condition of grant that before any work starts ADAS must be consulted. The advisory service will, as they do now, offer advice and seek to assist the farmer and the authority to reach agreement. If they do, the work can go ahead. In the event of disagreement the Minister will consider the case on its merits, as at present, when the grant is claimed. When claiming a grant an applicant will have to sign a declaration that he has consulted the appropriate authority and reported any disagreement as required. If he cannot make this declaration, or it is found to be false, grant may be withheld or recovered. So it will be up to the farmer to make quite sure that he has consulted the appropriate authority before
1626
entering on expenditure for which he hopes to claim a grant.
My noble friend asked who has been consulted. A consultation document has been circulated to all the interested parties including the national parks authorities and the Countryside Commission. I will be happy to write to my noble friend as he suggested to amplify these matters if he feels concerned about this. My noble friend Lady Elliot said that she was concerned about the limitation that had been put on the scheme with regard to labour units. I think in fact she is in some error here, because the schemes will apply to all farms of any size which are carrying out improvements under these schemes. They will not be restricted to the larger farms; indeed smaller farms will be able to claim as well. I think my noble friend is under a misapprehension.
My noble friend Lord Caithness referred to the possibility that the limit of the grant will be lowered because of the value of the green pound. That is perfectly true; if the green pound goes up or goes down the limit will alter accordingly. He is also quite right to refer to the difficulty which can be experienced between a farm and horticultural development scheme and a farm capital grant scheme. At the moment, because there is no limit on either, we can operate both, but when there is a limit on the Farm and Horticulture Development Scheme it will not be possible to operate a farm capital grant scheme at the same time because that will, in fact, impinge on the Farm and Horticulture Development Scheme because it will mean that the limits will not be able to be adhered to if one has two schemes going at the same time.
I would merely add, if I may, because I know that this is of concern to the noble Lord, that in about August, when it is hoped that the newer schemes will come out, it is also hoped that they will be easier and more flexible, and that the Farm and Horticulture Development Scheme may be more flexible than it is now and the problem which I think he sees will, I hope, not materialise to too great an extent. However, I see that between now and the latter part of the summer it could be a problem. I hope that I have answered the points which have been made and that your

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Lordships' House will approve these two schemes.

HORTICULTURE CAPITAL GRANT (VARIATION) SCHEME 1980
Earl FERRERS: My Lords, I beg to move the second Motion standing in my name.
Moved, That the Scheme laid before the House on 31st January 1980 be approved.—(Earl Ferrers.)

FAST BREEDER NUCLEAR REACTOR
8.22 p.m.
Lord NORTHFIELD Lord NORTHFIELD rose to ask Her Majesty's Government whether they have considered the Resolution (No. 720) in Document 4473 of the Council of Europe Assembly, and whether they will now announce approval for a commercial-size fast breeder nuclear reactor. The noble Lord said: My Lords, in putting this Question to the Government tonight I am aware that the subject of nuclear energy was debated on 20th November 1979, the debate being opened by the noble Lord, Lord Campbell of Croy, who apologises that he cannot be here tonight. However, I am grateful to the noble Earl, Lord Gowrie, for being here yet again to deal with this subject. I plead that the reason for raising it a second time is that on 20th November the fast breeder, as such, was not really dealt with, and I consider it very urgent that public attention be drawn to this issue because there is far too much mystery and far too much emotion and a great need for an early decision by the Government on a commercial-size fast breeder reactor.
Before I turn to the case for the reactor, I hope that I may draw attention to the significance of the Council of Europe document which is mentioned in the Question. A great deal of work went into preparing that document by the Assembly's Committee on Science and Technology—of which I am proud to be a
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member—under the very expert guidance of the Rapporteur, my German colleague Mr. Lenzer. If noble Lords will look at the document they will see that we held two full days of hearings in Brussels in a fairly unique form: namely, we heard on the one side ministerial representatives, plus delegations from European and national technical institutions, plus independent experts and representatives of international organisations, including, I might add, environmentalists; and on the other side they were questioned by special Rapporteurs—they were grilled pretty hard—and a jury of parliamentarians.
If one looks at the programme of those two days, which is set out on page 5 of Document 4473 I think that no one would disagree that it was a thorough examination of the subject. The significance lies not just in the hard work that went into it, but in what came out of it, because in paragraph 13 of the resolution there was recommendation that:
…it is in the general interest of Europe to keep open the option of having recourse over the coming decades to fast breeder reactor systems, and that current programmes in Europe for the development of fast breeder technology to the point of commercial-size demonstration plants should be continued".
The important point is that it was the Council of Europe Assembly that said that. The Council of Europe Assembly, of course, is mainly devoted in most of its work, as is the ministerial side of the Council, to matters concerning the environment and the protection of the quality of life. For such a body with such a preoccupation and with such emphasis in its work, to come down openly in favour of moving towards, or at least keeping open the option of fast breeder reactors, is in my view extremely significant, and I hope that it will be noted for that.
I now turn to the case for the fast breeder. When the debate took place in November the noble Earl, Lord Gowrie, mentioned the latest upgrading by the Department of Energy of the energy projections. However, he missed out what I thought was a most important point. On the demand side, as far as one can see at the end of the century, from the Government's best projections in this document, demand for energy in our community will be something between 445 and 510 million tonnes coal equivalent—let us put it in the range of

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450 to 500 tonnes—and that is allowing for a 20 per cent. achievement of conservation, which is a pretty strong hope. On the supply side, however, the Government envisage that there will be only 390 to 410 million tonnes of coal equivalent available and that—and now I come to the point that I think was not mentioned by the noble Earl—includes a four-fold increase in nuclear power.
So all I am saying is that on the best estimates that the Government can take, and with a very rapid increase in nuclear power in general, we are still going to have a most alarming energy gap at the end of the century. That is where the fast breeder reactor comes in. Our own gas and oil reserves will be running down in the 1990s. My plea tonight is that, given the lead time for constructing new installations of the size and complexity of a fast breeder, we really cannot delay beyond this year in making decisions, because it might take eight or nine years to build one—it will certainly take that long to build a second and a third, and to have them in operation in the 1990s when they will be beginning to be needed on a significant scale to prevent that energy gap causing us concern.
There is one other reason why I want to lay emphasis on nuclear energy generally before I come to the precise points about the fast breeder. I am referring to the effect on the Third World. If we have a large energy gap in the Western world at the end of the century, the great advanced countries will all be bidding up oil prices at an alarming rate. Also, the poorer countries and the Third World are heavily dependent on oil as their main source of supply for energy. So it is very important indeed that we should find a way of economising in the use of oil at the end of the century, otherwise we shall, in effect, be condemning many millions in the Third World to poverty and to stagnation in economic growth by the way in which we shall be depriving them of more and more expensive oil.
Let me turn to the reason why, in the 1990s, I hope that we shall be moving to the fast breeder reactor with the plans being laid now. First, as the Members of your Lordships' House who are better scientists than I will know, the important point about the thermal and fast breeder reactors is that the thermal reactor (the
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conventional reactor) uses only a small part of uranium; and at the rate we use uranium in the thermal reactors throughout the world, the world's supplies will not take us too far into the next century. Therefore, we now have to begin to think, for so many reasons, not only of economising on oil but about conserving and economising in the use of uranium.
Here the fast breeder uses the plutonium made by the thermal reactors and, if I may put a figure on it, makes 50 to 100 times more energy per tonne of natural uranium than the conventional form of thermal reactor which we have in operation today. Indeed, 20,000 tonnes of depleted uranium, which we have in stock in this country, in the fast breeder reactor is equivalent to about 400 years of our coal supplies, or five times all our North Sea oil. It is quite ridiculous that we should not move quickly to use these 20,000 tonnes in the fast breeder reactor, provided we can be sure of matters such as safety, with which I shall deal in a moment.
Recently I was in France when President Giscard d'Estaing was giving a Press conference on this same point. He made the same kind of claim for France; he said that if only France can get ahead with the fast breeder reactor, their own French reserves of uranium equal in energy source all the supplies of Saudi Arabian oil. Therefore, we must avoid the scramble in the 21st century for uranium. Here we have a magnificent supply of depleted uranium which will serve us for many years and stop the fast, forever diminishing supplies of uranium ore. That then is the first reason in favour of the fast breeder.
The second is that it was established—certainly at our hearings—that there is no really new technology in a fast breeder reactor. Everybody is frightened of the name. The environmentalist lobby is profiting from the words "fast breeder", which seem to indicate that there is imminent danger; that it is moving faster than any other kind of reactor; that it is breeding something that may harm us, and that the whole thing may blow up. It is very unfortunate that this great advance in science has a name which frightens everybody and which enables the environmentalist lobby unduly to criticise it.
The only really new element in a fast breeder reactor is that it is liquid sodium which is likely to be the conductor of the heat from the core. For the rest, of course, the liquid sodium so heated, becomes a furnace which drives the conventional power plant. There is, indeed, a considerable amount to be said for the fact that liquid sodium may be a good deal safer than pressurised water and some of the ways used to transfer the heat in the conventional thermal reactor.
The only main difference that makes these reactors fast and makes them breed is that something called the moderator is taken out of the core and allows the neutrons to do the work of converting more of the plutonium into energy. That is my second reason—that there is nothing very new or particularly frightening about it.
My third reason is that other countries are now going ahead very rapidly. We have had a great deal of experience. We had the Dounreay fast reactor, which gave us 18 years of great service, producing electricity. Then we went on to the PFR, the prototype fast reactor, in 1977 and that is in operation now. The French have Phenix and Super-Phenix, which is five times the size of our prototype and is going beyond that size. The Soviet Union has fast breeders and is apparently going to use mainly fast breeders after 1990. Therefore, we would not be striking out on some lone path that we have not already tried and which other countries of the world were not also trying, if we were to go ahead as rapidly as possible ourselves.
I come to my last two points in favour of the reactor, one of which is safety. One can simply say that there is no reason at all, given all the figures, to show that these reactors are dangerous or that the present methods of construction are in any sense likely to cause any great danger whatever. I do not want to go into that tonight; it would take me too long. But the facts and figures about this are well known. We all worry too much about this. I am sure that it is something that has to be carefully watched, but the extent to which there is danger is exaggerated.
My last point concerns the waste. Here everyone is now getting frightened
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that this kind of reactor, as well as the thermals, will produce large quantities of waste which will harm the environment. I looked up what Sir Fred Hoyle says in his recent book about it. He says that all the energy from our nuclear waste in any one year that has to be buried 3,000 feet underground amounts to about 100 vitrified cylinders, each 10 feet by 1 foot. That is approximately equivalent to a year's waste from normal nuclear energy use. That is not something about which we should be frightened. The American Physical Society has reported that there is no likelihood in the measurable future that the highly active waste, buried 3,000 feet below the surface, will in any sense harm our water supplies; there is no prospect at all that it will harm them in the measurable future if they are buried at that depth. Those are the advantages.
I shall now deal quickly with the alleged disadvantages. Of course, there is the first argument about plutonium—are we making plutonium that terrorists will get hold of in order to make bombs? Again, President Giscard was rather good about this at his Press conference when he said that a phosphorus match makes a flame, but you can have phosphorus bombs which make terrible explosions. The comparison is exactly the same. They are two quite different and distinct scientific techniques—the making of a flame or the making of energy in a power station, and the making of a bomb. That is the first answer: there is no comparison of techniques.
However, more important is the development that has arisen in recent years—and perhaps now is the time when this can be said openly—that, if countries or terrorists want to make bombs (and it is a very much more complicated process than people think), they can, by using centrifuges, now make them directly from uranium 235, and they will not need plutonium. Therefore, in a short time, even if not now, anybody who has access and, of course, all the scientific equipment the process would need, who wants to make bombs and be a nuisance with them, will not have to use plutonium any more; with centrifuges he can use ordinary Uranium 235. Therefore, the main argument against the plutonium aspect of fast breeders disappears out of the window.
I come to the last two criticisms. One

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is, of course, that reactors of this kind might explode like a bomb, which is nonsense. They cannot possibly do so. The second criticism is about accidents, with which I have already dealt briefly. I want to go no further because I want to be as brief as possible. I say to the Government that the urgency is very great indeed. The 1990s and the year 2000 are now approaching very rapidly. There is no chance of solar power and other forms of energy, much as we want them, making an impact by that date. We shall be left with an energy gap which will harm us, which will harm the Third World and which is utterly ridiculous to contemplate, given this new advance in science that is available to us. Above all, given the lead times, now is the time to make a decision so that we shall not be too late when the 1990s and the year 2000 are upon us.
In conclusion, I was reading again Sir Fred Hoyle's book where he describes most vividly, in a headline to his chapter called "It has all happened before" how all this happened before, when George Stephenson introduced the Rocket. In this book he explains that when Stephenson wanted to introduce a locomotive engine to draw trains between Manchester and Liverpool—the first one of its kind—there were all sorts of people pressing the need for efficient communications, just as today we all press the need for new energy sources. But on the other side there were equally just at that time all the same people talking about soft technology instead of hard technology; talking of the dangers of the railway; talking about the dangers of the science of all this. Opponents scorned his science. Distinguished scientists were put up against him, and there was a committee hearing in the House of Commons at the time in which Members doubted his sanity.
It was said that ploughing fields at the side of a railway line would be dangerous; that the costs would escalate. That one little bit of railway line would cost £270,000, although it worked out at £28,000. There were rumours during construction that the whole thing was blowing up and that horses had sunk in the works; that the works had been abandoned, and that railways were finished for ever. In the end, by the 1829
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Act, for the Newcastle-Carlisle railway, Parliament gave the promoters a law to allow trains only pulled by horses.
In other words, yes, my Lords, we have been through all this before, and it is just the same now. You try to make us stick to conventional forms of energy, and even stick to thermal nuclear reactors. It is like telling George Stephenson in his day that trains should continue to be pulled by horses instead of by the new locomotive power that became available, and about which he was so decried at that time. I think it adds to the perspective with which I hope we will regard this issue. As Sir Fred Hoyle says in his book, as a country we have all been here before, and it is time now to realise exactly what we are going through and to get on with the job.
8.42 p.m.
Lord AVEBURY: My Lords, Lord Northfield's comparison between the development of railways and that of nuclear energy is about as absurd as President Giscard's attempted comparison between phosphorus and plutonium. I do not intend to follow him any further into his historical dissertations on the development of railways. As to the report of the Council of Europe, which is before us, I must say that such reports are not my favourite bedtime reading, and after studying this one I can say with some confidence that they are unlikely to hit the best-seller lists. We find the usual turgid prose that we expect from international Quangos, where they "have regard to"; they "reaffirm"; they "believe"; they are "convinced"; they "recall"; and then the committee sets out the aim of their public hearings, to which the noble Lord referred—two days in which they took evidence from experts. Then after a few pages of O-level physics the committee comes on to state the conclusions they reached as a result of this intense process of two days of hearings. We do far better than that in the Select Committees of another place, and I hope we shall do in your Lordships' House, than to attempt to reach far-reaching conclusions such as are contained in this report on the basis of two days' hearings. It is really quite absurd.
Nevertheless, this debate is to be welcomed, not because a decision is

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required, as the noble Lord, Lord Northfield, claims, in the immediate future on the fast breeder reactor, but as a warning of the powerful onslaught which is to be expected from the nuclear lobby if, and when, the Government initiate the major public inquiry which has been promised before any decision is taken on whether to proceed down this route. I noticed that the noble Lord, Lord Northfield, did not mention that, even though there is a reference in the Committee on Science and Technology recommendations to further democratic and open public discussions. I would have thought that he would have wanted to emphasise the need for that to take place, as has been promised I think by this Government and their predecessor, before any final decision has been taken.
I also welcome this opportunity of reiterating the Liberal Party's policy of opposition to the development of the breeder, as stated at the party conference in 1977 and indeed even before that when in 1976, we commented on the Royal Commission on Environmental Pollution Report on nuclear power. On the Atomic Energy (Special Constables) Bill proceedings we drew attention to the threat posed to civil liberties by the plutonium economy. During the last general election campaign the Leader of the Liberal Party, Mr. David Steel, demanded a five-year moratorium on construction of a demonstration fast breeder, and in a special manifesto on ecology and the environment the Liberal Party stated that we were opposed to
"the drift towards an economy based on massive investment in nuclear power and fast breeder reactors".
We expressed our alarm over the security implications of an expanded nuclear programme, and we demanded that instead there should be restraint on energy and raw material consumption.
I do not think that we pointed out then with sufficient force what is, in my opinion, the major objection to the nuclear option: if these technologies are really so wonderful as they are claimed to be, then the few nations that are fortunate enough to have them already could hardly be selfish enough to deny them to others. I was glad to hear the noble Lord, Lord Northfield, make mention of the needs of the Third World.
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If we are going to extend nuclear technologies, what it means is that virtually any medium-sized nation would use plutonium fuel from which it would be technically possible to manufacture fission bombs. Already, as we know, several countries have succeeded in evading the safeguards in the Non-Proliferation Treaty, and it may well be that, in spite of all the precautions that are taken, we shall not succeed in halting the spread of nuclear weapons, but that the process has merely been delayed. I think, however, that the adoption of breeder technology, plus the reprocessing of the spent fuel from thermal reactors, which of course involves separation of the plutonium, would mean that by the middle of the next century, if the human race still exists, there would be perhaps 25 or 30 nations with at least a primitive weapons capability. Then it really would be simply a matter of time before a conflict of such destructive force was unleashed as to make all human life on this planet impossible.
One is bound to agree with the editorial in the Financial Times last week, which said:
"There was no 'technical fix', no way of preventing a nation determined enough to acquire nuclear weapons from doing so"—
Whether by the centrifuge route mentioned by the noble Lord, Lord Northfield, or otherwise. But I really do not see why we should make it easier for those who wish to take this option.
Lord WYNNE-JONES: My Lords, would the noble Lord forgive me for asking him whether he is aware of the fact that both Pakistan and India can at the present time, if they have not already done it, make an atom bomb without having any fast breeder reactors?
Lord AVEBURY: My Lords, I am indeed aware of that, and this is why I said that there are other techniques that nations have used already. I was coming on to mention the particular case of Pakistan, if the noble Lord had waited a few minutes. What I say is that we do not want to open up even more routes towards a weapons capability than exists at the moment.
May I draw attention to what was said on this issue at the Foratom Conference

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held in Lucerne last October, by Professor Dr. H. Grü mm, the Deputy Director general of the IAEA, and of course a proponent of nuclear power. I am using the report of his speech given in the UKAEA journal Atom for December 1979. Dr. Grü mm said that there were alreadly 66 tonnes of plutonium in non-nuclear weapons States under safeguard, and that this number was increasing by 10 to12 each year without any extension of nuclear programmes. He argued that new institutional arrangements were needed, like internationally controlled plutonium storage, to absorb all the plutonium not immediately needed in the fuel cycle and also to release the material under certain strict criteria and full safeguard control. In other words, he was saying that, in the absence of these arrangements, there was indeed a risk of plutonium being diverted to military purposes, or even, in the hands of a psychopathic régime, to the use of terrorists.
Now it may be contended that no responsible country would sell nuclear technology to régimes of that kind; but Governments change. Uruguay, for instance, which had the reputation of being the most democratic nation in Latin America, is today, according to Senator Church, the worst torture chamber in the hemisphere; and it is also possible for one State to develop nuclear capability through another, as indeed Libya is said to be doing through Pakistan. Everybody loves Pakistan today, because since the invasion of Afghanistan she is considered to be a bulwark against Soviet expansionism, and the story about the Pakistani spy who stole the secrets from Almelo has disappeared from the newspapers. But it is quite possible, as the noble Lord, Lord Northfield, reminded us, that Pakistan is indeed developing a weapons capability and that the work is being financed by Libya, with the latter having access to the results. It also appears that Israel and South Africa may have been collaborating with each other on weapons development.
With regard to the possibility of criminals or terrorists penetrating the fuel cycle, it is to be observed that so far in this country we have armed guards only at the sites where plutonium is held in separated form, as was provided for in the Atomic Energy (Special Constables) Bill. Further, President Carter has tried very
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hard, not with great success, to persuade America's allies not to take further steps along the path of fast reactors, partly because, in his opinion, it creates an additional element of risk. That was why the President launched the International Fuel Cycle Evaluation Programme as one means of persuading the rest of the world to postpone making any firm commitment to plutonium; and it so happens that during the course of those studies, world energy demand has been depressed by the huge rise in crude oil prices, and any decision which might have been necessary on a fast breeder reactor for commercial reasons has been deferred.
But does anybody imagine that the process of energy price rises has come to an end? For a few months there may be a glut of oil on the market, but the producer nations are likely to respond by curtailing production; and as energy becomes more expensive in real terms—and we can already see the absurdity of the assumption made by the Department of Energy in its Energy Policy Review at the beginning of 1977 that oil prices would only double by the end of this century from that time then consumers will have a much greater incentive to economise, and there will be nothing like the growth postulated in many recent studies, including that of INFCEP, which suggested that there might be a three to fourfold increase in the next 40 or 50 years.
Your Lordships have not had an opportunity of discussing in any detail the report by Gerald Leach on a low energy scenario for the United Kingdom which I mentioned in the debate last August; or the study more recently by David Olivier, who confirms that Britain could enjoy a very reasonable standard of living and use less energy by the year 2025. But even the Establishment have scaled down the figures they presented to us in the Energy Policy Review of 1977; we were talking about 500 to 650 million tonnes of coal equivalent by the end of this century, but the noble Lord, Lord Northfield, now says that it will be 345 to 510 million tonnes of coal equivalent, a considerable drop on the estimates that were made only two years ago.
In the meanwhile, the fears that were expressed a few years ago—that supplies of uranium at reasonable prices would prove inadequate to sustain a continuing

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programme of thermal reactors for very much longer—have proved unfounded. In most countries the expansion of nuclear electricity has been at a much slower rate than was thought likely in the 'sixties, while new deposits of high abundance have been discovered in several different parts of the world. Deffeyes and MacGregor, writing in Scientific American of January 1980 say, for instance, that at Jabiluka in Northern Australia there is more uranium in deposits of upwards of 10,000 parts per million in shallow ore bodies suitable for open-cast methods than was produced in the entire United States between 1948 and 1970. They conclude:
"The need for the liquid-metal fast breeder reactor could be postponed until well after the year 2000".
That finding is echoed by Buckley and Mackerron of Sussex University in a study reported in New, Scientist only last week. The Sussex workers concluded:
"A rather low priority, on conventional economic grounds, should be accorded to research into technologies which attempt to conserve uranium".
Yet another weighty opinion is that of the Stockholm Institute for Peace Reseach, which says in its 1979 Year Book:
"Plans for nuclear power have been considerably cut back. Earlier projections have been reduced in the face of falling demand for energy, political opposition to nuclear power, new regulatory demands and complexities, and stricter export conditions".
Perhaps it will be maintained—I noticed that the noble Lord, Lord Northfield, did not try to make this point—that even if there is enough uranium, nevertheless it would be economically wise for us to have a programme which included some fast reactors among the thermal ones. That certainly was the opionon of the Committee on Science and Technology which is referred to in the Motion, even though, according to their own figures, electricity generation cost would be almost 50 per cent. higher for the liquid-metal fast breeder than it is for the pressurised water reactor. They say:
"The importance of the fast breeder does not lie primarily in generating electricity at especially low costs".
What a masterly understatement! Economic Comparison of Breeders and Light Water Reactors, a study prepared for the United States Arms Control and Disarmament Agency, published last July,
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showed that for the liquid-metal fast breeder to be competitive with the PWR, U308 prices would have to be as high as 218 dollars per pound compared with 40 dollars per pound, which is roughly the current price.
I must point out again, as I did in the House on 23rd April last year, that while Britain has taken no official decisions yet in regard to a commercial fast reactor, we are helping to finance the French demonstration reactor, the Super-Phenix, through our participation in the Euratom loan scheme. I accept, as was explained to me by the Secretary of State then, that the money for these loans is raised on the international money market and that, even in the event of default by a borrower, recourse would be to the particular Member State which benefited from that loan. But none the less, I think that as partners in the institution which makes the loans, we have the responsibility of deciding on lending policy.
In my view, it is disingenuous to say, as the Secretary of State did in a letter to me on 18th October last, that since the Community as such had no policy either on thermal or fast reactors, there was no basis for discriminating between them under the Euratom loan scheme. In effect, we have decided that our vote will be cast in favour of any other Member State of Euratom wanting to borrow money for building a fast reactor, while at home we shall still insist on an exhaustive public inquiry before proceeding. It may be of interest to your Lordships for me to add that in 1978 a co-operation agreement was signed between France and the USSR providing for co-operation on the Super-Phenix and the BN600 Breeders. Therefore, through co-operation with France, other West European nations are also involved in the pooling o experience with the USSR, and through Euratom loans we are even helping to finance Russian advance in this field. I am not sure whether United Kingdom taxpayers realise that this is what we are doing.
On an Unstarred Question it would be inappropriate to enter into these arguments in any detail. I only have to say that it would be in flagrant contradiction of the Government's policy in every other area of their responsibility if they were to accelerate work on fast reactors, as the

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noble Lord, Lord Northfield, demands, or even if they were to grant the fast reactor programme immunity from the cuts that have been imposed everywhere else. The economic case for the fast reactor is non-existent, otherwise it could be turned over to private enterprise. Let us turn our attention to the real problems facing Britain and put this one back in the file where it belongs.
8.59 p.m.
Lord STRABOLGI: My Lords, I should like to say how indebted we are to my noble friend Lord Northfield for initiating this debate on the fast breeder reactor which, as my noble friend said, was not discussed by your Lordships in our previous debate. I must say that the attitude coming today from the Liberal Front Bench is rather different from the one that we have become used to in our previous energy debates. I note what the noble Lord, Lord Avebury, said; it is a point of view, but I do not think it is one that is at all realistic, as I shall hope to show. My noble friend Lord Northfield is a Member of the Council of Europe, and for all of us who take a realistic view of future energy requirements—unlike the noble Lord, Lord Avebury—it is most reassuring that the draft Resolution comes down fairly and squarely in favour of keeping open the option for the fast breeder, with the reservation that recourse to fast breeder technologies in Europe should be taken only after wide democratic debate. As my noble friend says, this is a most significant Resolution.
The great advantage of the fast breeder reactor is that it can be operated to produce new plutonium fuel from depleted uranium. Indeed, one gramme of new plutonium can be produced for every gramme of fuel that the reactor burns. This plutonium can be used as further fuel for itself and for other fast reactors. I understand that during the 25 years that we have had nuclear power in Britain we have already accumulated about 20,000 tonnes of depleted uranium from thermal reactors—the Magnox stations. If we were to burn and recycle this in fast breeder reactors, we could extract almost as much energy as from the whole of our proven coal reserves; that is, about 40,000 million tonnes. This is a point which I think the ecologists and the environmentalists'
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lobby should bear in mind. The fast breeder, therefore, has tremendous potential for our future energy supplies, and some idea of this potential can be grasped when we consider that one tonne of uranium, when used in a thermal reactor, is equivalent to about 14,000 tonnes of coal equivalent to produce the same electricity, but in the fast breeder it is equivalent to 2 million tonnes of coal equivalent.
It is, therefore, not surprising that most other countries in Western Europe, such as France, Germany, Italy, Holland and Belgium, have all made a series of agreements for long-term fast reactor work. It is also not surprising that France has the most advanced development, since, with little coal, and no North Sea oil—and being a realistic country—she must rely increasingly on nuclear energy. My noble friend mentioned France. By 1990 France plans to have 60 gigawatts of nuclear-generated electricity, while Germany will have 40 gigawatts, but in this country, at the present rate, we shall have only about 12 gigawatts.
In Britain there is the prototype fast reactor at Dounreay, which has been operating since 1974. I understand that a plant to reprocess the spent fuel from this prototype is being commissioned and will be the first of its type anywhere. Perhaps the noble Earl, Lord Gowrie, will tell the House something about this development when he comes to reply.
A further vital reason why, in my judgment, we must consider the fast breeder option is the question of future supplies of uranium. As has been said, there could be very great pressure on the world supplies of uranium by about the year 2020, if not before, which means that by then thermal reactors will be coming to the end of their use—and this is only about 40 years away—and indeed some shortages could be felt by the end of this century. It is therefore important that we should be able to use the latent energy in uranium to the utmost through breeding and incorporating the bred plutonium into new fuel, thus leading in the long term to the eventual elimination of the need for new uranium; and we have no uranium deposits in this country.
Although a fast breeder programme would require a higher annual uranium requirement during the first 25 years of

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the next century, countries with fast reactor technologies should be independent of outside supplies of new uranium by about 2050.
Uranium is a useless material for any other purpose, in our present knowledge. Rather than burning up the last remaining oil reserves, or being profligate with our coal deposits, it is surely more sensible to recycle uranium, which is also finite, in fast reactors to produce tremendous new amounts of renewable energy.
I should like to ask the Government whether we have any idea about world uranium supplies, as there have been conflicting reports about how much there really is, and the matter is made even more uncertain by the reluctance of the Soviet bloc to provide any information. If there is to be a world uranium shortage within a few decades, a decision on the fast breeder and the attendant problem of the international control of plutonium will have to be resolved internationally as a matter of urgency.
On the question of nuclear safety, I think we must be concerned to read reports that the staff of the Nuclear Installations Inspectorate is under strength by some 18 inspectors, due mainly to recruitment difficulties, as the salaries are too low and not competitive. I understand also that the decision to move the Inspectorate away from London for reasons of economy has not helped recruitment. I hope in this area at least that there will not be any shortsighted cheeseparing by the Government on economy grounds.
Of course, in the developing world there is hardly any opposition to nuclear power. It is only in the West that there is a measure of public opinion against it, as the more affluent nations are the only ones who can afford the luxury of protest. The richer the country, and the better endowed she is with alternative sources, such as coal, gas, and oil, the stronger and more vocal is the protest. There is, therefore, a great need for the public to be kept informed and made aware of the alternatives, if we opt out of the fast breeder.
How many pit casualties would there be during the next 70 years if we were to rely more and more on coal? What would be the standard of life of our great-
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grandchildren if we returned to what the protestors call a low-energy-consuming society? How many windmills would be needed on, say, the Sussex Downs to provide sufficient wind power for London? Perhaps we could be told, and perhaps the environmentalists could direct their minds to these problems.
Lord AVEBURY: My Lords, would the noble Lord allow me to interrupt him? I do not know whether he has read Gerald Leach's report, A Low-Energy Scenario for the United Kingdom, but if he has not then I suggest he does so, and then he would not make stupid remarks about windmills on the Sussex Downs.
Lord STRABOLGI: My Lords, the trouble with the proponents of the low-energy society is that they look back to sunny, happy days before the Industrial Revolution, when they are usually in the manor house and not in the cottage, or they are riding in the rickshaw with someone else drawing them along between the shafts.
I hope the Government will help by describing what some of these alternative strategies could mean in practical and in human terms.
My Lords, I do not think that any generation has the right to deny to future generations the fruits of its technical discoveries. I realise that any decision to build a full-scale commercial demonstration fast reactor will be subject to a full public inquiry. In company with my noble friend Lord Northfield, I must therefore ask the noble Earl, Lord Gowrie, as a matter of urgency, to tell the House when the Government intend to make a decision.
9.10 p.m.
Lord SHERFIELD: My Lords, I, too, am grateful to the noble Lord, Lord Northfield, for drawing the attention of the House to this Council of Europe report and draft resolution on the safety and economic effects of the fast breeder reactor; and I rise to make a few comments, if only to make it a bit of a field day. The draft resolution, as noble Lords have already said, is of special significance, because after a public hearing and debate it is positive in its attitude to fast reactor safety and on the need to

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continue work on its development, which it considers to be in the interest of Europe. This opinion on the safety of the fast reactor is nothing new to this House. Many noble Lords present, I think, will remember the powerful speeches of the noble Earl, Lord Halsbury, notably in the House on 22nd December, 1976, and I think again on a later occasion early last year—and I am delighted that the noble Earl is speaking again this evening.
Of course, there are those in this House, and out of it—and the noble Lord, Lord Avebury, is in sympathy with them—who are opposed to the development of fast reactors in particular, and indeed to the extension of nuclear power in general, sometimes as a matter of principle and even of dogma, on grounds of safety and for the other reasons, some of which the noble Lord, Lord Avebury, gave us this evening. But, my Lords, if you start with demanding absolute safety for a technological development, you are bound to oppose it, since absolute safety cannot be guaranteed. I do not want to add to the arguments about the safety and other characteristics of fast breeder reactors which have been put forward this evening: there are no converts to be made on a debate on an Unstarred Question at this time of night. What is important is that the body of public opinion which is open to argument and ready to listen to a reasoned case should be reinforced, and this exercise by the Council of Europe is important for this reason.
Moreover, it does not stand alone in Europe. At its meeting on 5th February, the Council of Foreign Ministers adopted, subject only to minor drafting amendments, three resolutions: one on the reprocessing of irradiated nuclear fuels; one on fast breeder reactors and one on a Community plan of action in the field of radioactive waste. These resolutions will, I am told, be adopted formally at the next meeting of the Council. These resolutions are all positive in tone. The resolution on the fast reactor records, inter alia, agreement that it is in the interests of the Community and of its Member States to preserve the option of making fast breeder reactors available on a commercial basis. Secondly, the resolution urges those States which have fast reactor programmes to get on with them, subject, of course, to provisos about safety, radiation protection and the protection
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of the environment. Thirdly, the resolution states that the Community will end its support to this work in appropriate ways. So the Council and the Commission are taking very much the same positive line as the Council of Europe.
But, my Lords, that is not all. This very week the International Fuel Cycle Evaluation Group is concluding its inquiry in Vienna, and its findings are being published by the International Atomic Energy Agency. Forty countries and four international organisations, including—and this is relevant to a point made by the noble Lord, Lord Northfield—a number of developing countries, have taken part in this inquiry which has lasted over two years, and not just two days, and in which the United Kingdom representative has been Sir Hermann Bondi. From the summary of the proceedings, it appears that the outcome is favourable to the development of the fast breeder reactor.
To take only two or three points, the relevant working party of the INFCE, as it is euphoniously called for short, with reference to the uncertainties about uranium supply, points out that a combination of thermal and fast breeder reactors could provide nuclear power deployment virtually free from uranium supply constraints. It adds that countries with nuclear power programmes will need robust policy options to guard against possible failure of uranium supplies in the future. Secondly, a comparison between the safety and the environmental impact of light water and fast breeder reactors gives the fast breeder reactor a marked advantage on nearly every count. Thirdly, on the issue of non-proliferation, the verdict is that the risk of diversion in the various stages of the fast breeder fuel cycle are no greater than in the case of other reactor types in the long term. Possibly, the noble Earl will not this evening be in a position to make a statement about the results of INFCE. I am not sure whether the final communique is yet available but I hope that he may be able to do so quite soon.
The important point that I want to make this evening is that in the course of two or three months a group of nine countries in the Community; the wider European group, 23 in all (I think) in the Council of Europe, and the group of 40

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countries in the INFCE have all issued statements which are positive on fast breeder reactor development. I think this is a very significant international development.
The purpose of the noble Lord, Lord Northfield, is to urge the Government to make up their mind to declare their intention, subject to public inquiry which has already been promised, to press ahead with work on the commercial fast reactor. Paragraph 10(g) of the draft resolution of the Council of Europe says that fast reactors are expected, notwithstanding their higher capital maintenance and construction costs, to produce electricity at prices comparable to the present generation of thermal reactors. Nevertheless, my Lords, the development and construction costs of commercial fast reactors are very heavy and there is a strong case for international co-operation in this work on the lines, for example, of Urenco, the European Centrifuge Company.
It is, I feel, a great misfortune that the last Secretary of State for Energy for reasons of prejudice (which can easily be guessed at) blocked two or three years ago the opportunity to collaborate with France and Germany on fast reactor development. No doubt it will be much more difficult to join this club now; but the effort should be made and, if we are rebuffed, we might consider collaboration with the United States which, in spite of President Carter's refusal to proceed with the construction of the Clinch River fast breeder reactor, still has a substantial research programme on fast breeders; although it has again been threatened with heavy cuts by the White House. However, clearly, it would be better to join a European programme, if possible.
A decision to embark on a multiple programme of fast reactors depends to a considerable extent on the availability of uranium supplies which, as the noble Lord, Lord Strabolgi, has pointed out, is at present uncertain and the subject of controversy. The Government should not wait for this issue to be resolved before going ahead with plans for a commercial station. The project is such a long lead one; the preliminaries of a public inquiry, the selection of a site, and so on are so time consuming; the construction and commissioning time is probably so lengthy
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that, in my view, no time should be lost in making a start. I hope, too, that the Government will not say that they cannot make a positive statement because they must first study the INFCE reports. They must have known how these were likely to come out for some months now. So I join with the noble Lord, Lord Northfield, in urging the Government to make an early and positive statement on a commercial fast reactor programme.
9.21 p.m.
Lord BOWDEN: My Lords, I have to confess to your Lordships that I cannot go along at all with most of the arguments which have been so far presented for fast breeder reactors. I have read, for example, the Ford Foundation's analysis of the fast breeder reactor programme in the United States. They analysed the case very thoroughly and pointed out that the case for a fast breeder depends entirely on the economics of the situation. No one can be found to deny that a fast breeder reactor will cost very much more than a conventional type. The ratio has been variously estimated as five times. The Germans found their own estimated cost has escalated 10 times since they first started on the work. What the ratio is one cannot say. The possibility of competing at all with the type of reactor that we have depends entirely on the advantage which is ultimately to be obtained, we think, if the price of uranium rises dramatically.
The question of world uranium supplies has been much studied. Only last month the United States geological survey published their considered estimate of the amount of uranium to be found if one estimates the amount to be had at differing prices. Obviously, the more that one is prepared to pay, the more is likely to be found. It turns out that if the price of uranium increased, say, 10 times, then the fast breeder might become worthwhile. But it also turns out that if the price of uranium were to be doubled or trebled, the amount available would probably increase not merely once or twice, but about 300-fold. There are enormous amounts of uranium to be had at slightly greater prices than those we now pay for them, and this is according to an elaborate survey recently published by the United States geological authorities.

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The remarkable feature is that this fact was foreseen several years ago as a result of work done by two Members of your Lordships' house who carried out the work 75 years ago. I refer to the work by Lord Raleigh and Lord Rutherford on the estimated amount of uranium in the earth's crust. From it, the Canadians deduce that there must be more uranium to be found than the then survey suggested. This result has been amply confirmed by the recent survey of the geological survey of the United States. There is ample uranium to be had, and the possibility of competing at all with conventional types of reactor depends for the fast breeder only on the conceivable risk that the price of uranium might escalate out of all reason.
The question of the safety of the reactors is very hard to dogmatise about in a debate of this kind. I read this paper which was submitted by the EEC and I found it at least worthy of mention that one reactor which is included in it was the Detroit Edison fast breeder which was instituted in about 1964. That had to be closed down within an hour or two of being switched on. If it had not been closed down, the whole of the city of Detroit would have had to be evacuated. This was the worst near-accident that was ever stopped by turning it off before it become out of control. This is nowhere mentioned in the document, nor is the enormous disadvantage of the very great capital cost of the fast breeders which so far have been built or proposed.
It is worthy of mention that the very first electrical power that ever was had from a nuclear reactor came from a fast breeder in about 1951, and it was about 150 watts—enough to light two or three lamps; and that was long before a commercial breeder of the more conventional type had been made. As you know, the first to produce significant power was built in England, but it was five or six years after the first generation of power had been demonstrated with a fast breeder. Ever since then people have been struggling with these enormously complex problems of making them reliable, making them safe and making them at a reasonable price. No one has done it yet.
My Lords, the Americans are very shrewd in their assessment of economic
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potential and they have decided there is no case for developing the fast breeder for several years to come because the reactors that they now have, that we have and the supply of uranium which is available, are all going to be quite all right for some long time. So I am afraid that if we go ahead with the fast breeder in Europe we shall repeat almost precisely the story of Concorde: it will be a technical triumph and an economic catastrophe.
This is not the time to discuss the other alternatives, but I would make one observation. It seems to me that if we cannot make Dungeness work, why are we messing about with a much more complicated, sophisticated and dangerous device in this country? I should have thought the first priority to which we should devote all our resources of skilled manpower in this country would be to get the reactors we now have working reliably. It is notorious that many of them either have not worked at all or have had to be closed down for a variety of reasons within the last few months. This is devasting: it is terribly important that they should be got right, because our survival depends on them; whereas the future, depending upon fast breeders, will hardly come in the lifetime of anyone here this evening.
I should like to make one other point before I sit down. The reactors we now have—both the advanced gas-cooled reactor and the pressurised water reactor we have been talking about—have both been described by impartial observers as "uranium guzzlers". There are other types of reactor which have been called near-breeders which get three or four times as much power per tonne of uranium as those to which I have referred. Furthermore, these reactors, ever since they were first built in Canada, have been the most reliable in the world. I have discussed this subject with your Lordships before, but it is true to say that the great reactors in Pickering and in Bruce, both of which I have seen, were for many years the best and most reliable in the world; and Hans Bethe who was a Nobel prizewinner and the nuclear physicist in America most concerned with nuclear power, said quite simply that the CANDU is a wonderful system; it always works and it uses uranium much more economically than ours do.

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There will be opportunities for development, in collaboration with the Canadians, of a style of reactor which will get three, four or even five times as much power from a tonne of uranium ore as our present ones do. The amount of power we shall in practice get from fast breeders is nowhere near the theoretical amount postulated. It will almost certainly take at least 20 years before the fast breeder can double the amount of fissile material it has to start with. It will take several tonnes of plutonium to start off a fast breeder and, when it has been started, the plutonium and the blanket has to be taken out and re-processed chemically many, many times. It is almost certain that the total multiplication factor will be less than a dozen times in practice on any system which has so far been proposed and worked out in detail, whereas we can get three or four times by taking the much simpler route to a thermal reactor of the type developed in Canada.
I beg the Government to consider this as an alternative, and I beg them to think that we could have everything we want from these reactors. The calculation has been made, I think reliably, that were they to be used all the electric power that the world will need—this includes making a very reasonable allowance for electric power for the developing countries which have hardly any now—could be provided with the known resources of uranium and thorium—which I cannot elaborate on now—for several hundred centuries; not for merely a few years. If we can be satisfied for even 100 years, it seems to me that that is all we reasonably should bother about.
I therefore feel that to embark on this alternative scheme is wasteful of resources and is likely to be dangerous, for reasons which have been mentioned. As I said, they once nearly evacuated Detroit. It is likely to be dangerous because of the chemical processing involved; and I do not believe that the economic advantages will be obvious in the lifetime of anyone present this evening.
9.31 p.m.
Viscount THURSO: My Lords, not all Liberals agree with the noble Lord, Lord Avebury. I think that a very large body of opinion within the Liberal Party agrees
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with me that nuclear power will be necessary to the country, and it is the duty of people who sit in your Lordships' House and in another place to see that we achieve the best means of providing it. I therefore dissociate myself from the criticism by the noble Lord, Lord Avebury, of the committee which produced the document that we are considering. I also dissociate myself from the Liberal Party's opposition to nuclear energy, and if it really persists for long in this I shall really have to look for some other Benches to sit on.
The Earl of GOWRIE: Here we are!
Viscount THURSO: Your Lordships can all woo me, if you like. I dissociate myself from the idea that to pursue the development of fast breeder reactors is to create a bomb hazard. This argument, to me, is rather like saying that if we sell cars we are selling the capability of making tanks, and therefore we must pack up the motor industry and go back to the stage coach. The argument that the fast breeder reactor is justified only if stocks of uranium are running low is, in my view, rubbish, because the fast breeder reactor is justified for all the other reasons of safety, efficiency, plutonium stock management and so on, which are adumbrated in this document. However, an Unstarred Question is not the time for family squabbles, so I will, if I may, turn to the document and to the supplementary questions which I should like to ask Her Majesty's Government.
Document 4473 of the Council of Europe excites my admiration of the European Parliamentary Assembly more than anything that I have yet seen coming out of Brussels, and I hasten to congratulate the noble Lord, Lord Northfield, on the part which he played in adopting the report as he sat in the committee. I thank him for bringing it to the attention of your Lordships' House and for asking the Government what they are going to do about it. In asking some questions of the Government myself, I should like to underline and amplify some of the very important facts which this report brings to our notice. I should like, also, to update some of the information in it, and to ask the Government whether they agree with my reading of the latest state of readiness of the world's fast reactors.

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First, I am delighted to see the call for public information. Do the Government hear this call? Are they aware of the vital importance of responding to it? What are they doing to respond to it? Are they aware of how abysmally misinformed the media often are about fast reactors? Do they not agree that the BBC, in particular, is guilty of uninformed and prejudiced reporting about the fast reactor system? For instance, in a recent programme about atomic energy, chaired by Mr. Robin Day, the BBC deliberately led us to believe that the UKAEA made extravagant claims about thermo-nuclear reactors at the time of the opening of Calder Hall by showing a headline out of the Daily Express saying "Unlimited power for 1,000 years" and an extract from a printed pamphlet making similar assertions. This was done in an attempt to discredit the ability of the Atomic Energy Authority to make reliable forecasts.
In fact, the headline and the pamphlet were not about Calder Hall or thermonuclear power stations at all. They were about Zeta, the Torus research tool at Culham and about our still embryonic attempts to harness the energy of atomic fusion. If it had not been that I happened to have one of those very pamphlets in my files at home, I might not have known this. Clearly Mr. Robin Day did not know it, because he was completely under the impression that this headline and this pamphlet referred to Calder Hall. To my mind this programme discredited the ability of the BBC to carry out unbiased reporting of atomic energy issues. Therefore, I ask: what are the Government going to do to try and make the BBC show a more responsible attitude?
Pages 12 and 13 of Document 4473 describe clearly and succinctly the inherent safety characteristics of the fast reactor but they do not tell us about the fascinating experiments carried out at Dounreay which have demonstrated conclusively the designed safety characteristics of our own British version of the sodium-cooled fast reactor. Our depth of knowledge on fast reactor safety is the best in the world. We are probably the only country to have done a full set of experiments simulating power failures, safety circuit failures and human errors. Other countries may have made calculations or even done some of the experiments, but
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we have boiled the sodium, we have tripped the switches, and we know.
Where this admirable document is not quite right is in suggesting that,
"except in the special case of France the sodium cooled fast breeder reactor is still in the prototype stage throughout the western world".
Our own PFR is a better and more comprehensive research tool than France's Phenix. It is true that France is building a Super-Phenix but that will only bring France level with us on fuel element design and boiler design. Phenix is only an expanded Rapsodie F whereas our own PFR deliberately contains fuel elements of commercial size such as will be used in CDFR and employs boiler and coolant pump designs of a commercial sort which will only have to be scaled up slightly for CDFR. Super-Phenix will have to use fuel elements and boilers of designs hitherto untested in practice, and will in consequence have a fairly large question mark hanging over it. The French approach to the the use of Phenix has been different from our approach to the use of PFR. The French have used Phenix largely as a power station while we have used PFR largely as an experimental tool. Therefore, when we each come to build our 1,200 megawatt power station ours will have been fully researched and the French one will be partly experimental.
My Lords, where we clearly and absolutely lead the world is in the field of materials reprocessing. We know more about fast reactor waste than the rest of the world. We really do know the answers to the management of the nuclear fuel cycle. In this connection, may I try to put some facts in perspective for your Lordships? A popular misconception is that plutonium is an evil, man-made metal, not known to nature and that its behaviour and the behaviour of its daughter isotopes is not known or unpredictable. This is not true.
At Oklo in Gabon where uranium mining was taking place the ore was found to be unusually depleted in U235. Investigations showed that some 2,000 million years ago water had entered the uranium deposits and had turned them into a water moderated reactor. This natural reactor produced energy for 500 million years, producing neptunium and plutonium just as they are produced today in the core of a thermal reactor

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power station. In the rocks of Oklo we can follow the decay life of plutonium and its daughter isotopes and their behaviour in a totally uncontained and unshielded situation. We, therefore, actually have much more information about the behaviour and decay of radioactive substances in nature than is commonly realised.
It is also not commonly realised that natural uranium is a comparatively innocuous substance. You can hold it in your hand with safety. It is no more hazardous to health than many sorts of coal. It is also not commonly realised that once atomic waste has been held in storage until it has cooled off and has then been made into glass blocks, this waste is less hazardous than many other substances that are used in industry and in the chemical industry in particular. It is also less radioactive than natural uranium. This, though, applies only to well-managed vitrified waste from fast breeder reactors. It is not true of the wastes produced by Magnox AGR or PWR types of reactor. Wastes from these reactors contain highly dangerous poisonous and radioactive plutonium. Therefore, Document 4473 is right in pointing out the importance of fast reactors to the safe management and regulation of plutonium stocks. I hope that the Government fully subscribe to this concept and that they will confirm it tonight.
Lastly, my Lords, before I summarise my questions to the Government, may I comment on the table on page 8 of Document 4473 and ask if the Government agree with my summary? First, although the Americans are spending massive amounts of money on atomic research, their progress with fast reactors is far behind Europe or Russia. EBRII is still running but FFTF is doing criticality tests only and work on CRBR has stopped. At the most optimistic estimate, US Comm 1 will not be operational before the early or mid 1990s.
Secondly, the state of progress in Russia indicates that BN600 is not yet critical and may not be operational until 1983 and although they are preparing to start on BN1600, they have a long way to go with its design, especially in the field of fuel technology.
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In Japan, where they very much need atomic energy to meet their power requirements, they are very far behind schedule. Monju, scheduled for operation in 1986, is not yet in building and it is only the equivalent of our PFR.
The state of progress of the Italian PEC is not clear to me, but obviously they do not yet have any real fast reactor experience. In Germany, their KNK11 is only a converted thermal reactor and their SNR300 is delayed by legislation; while SNR2 is still only a gleam in their eye. In France alone is progress being maintained. Super-Phénix is going ahead although in my view they are behind us in fuel element and boiler design and have an unproved fuel cycle.
Here in the United Kingdom we now have PFR working smoothly—in fact a few days ago I was standing on the top of it—and we are poised and ready to start CDFR. Were it not for Mr. Wedgwood-Benn's long running fence-sitting act as Minister of Energy we might even now be holding our public inquiries preparatory to starting work on CDFR. As it is the Department of Energy should jump nimbly down from the fence and get on with the job. If they do and we allow a year for the necessary inquiry and then eight years to build CDFR we could even now be operational ahead of the date in the table on page 8.
My Lords, may I therefore, sum up my assertions as follows? We still lead the world in fast reactor technology. We know more about safety and more about reprocessing and waste disposal than the rest of the world. The fast reactor is the safest reactor. Fast reactor waste is the easiest waste to handle. Fast reactors are the most economic reactors. To build more thermal reactors without at least building CDFR creates unnecessary waste disposal problems. We cannot really afford more AGRs and new PWRs as well as CDFR, and we need CDFR; so does Europe and so does the world. We should, therefore, proceed as soon as possible to set up the necessary inquiry, as we have been enjoined to do by the Council of Europe. Does the Minister follow my reasoning, and how far do Her Majesty's Government agree with my conclusions?
9.46p.m.
The Earl of HALSBURY: My Lords, I should like to add my thanks to those of previous speakers to the noble Lord, Lord Northfield, for giving us the opportunity to debate this subject. May I at this point offer my congratulations to the noble Viscount, Lord Thurso, for his faultless presentation of the facts which he has struck at with such scholarly command, thereby enabling me to economise on a lot of what I would like to say? Economy is much called for. Two years ago, somewhat euphoric because the Met. Office, of whose advisory council I am chairman, had successfully predicted a blizzard on Caithness some five days in advance of the actuality, I travelled to Caithness through all the hazards of those days and spent a very pleasant 24 hours at Dounreay, getting a lot of questions answered, which had been concerning me since the occasion of the motion of my noble friend Lord Sherfield. I returned so euphorically, to take part in the debate initiated by the noble Lord, Lord Wynne-Jones, on 1st February two years ago, that I spoke for 27 minutes, a calamity which I shall endeavour not to repeat at this late hour.
The danger is reduced because on the yellow page ii, paragraph 10, seven points are made all of which confirm what I told your Lordships two years ago, and since I have not changed my opinions in the interim it follows that I accept the document and I am greatly obliged to the authors for stating my case so well. I am also obliged to the editor of the Listener who has published two letters of mine in the last two weeks. Copies are in the Library and that enables me still further to economise on what I wanted to say.
Paragraph 10(a) in the document we are discussing states that fast breeder reactors are often misunderstood because of their name. They are fast in the sense that they work on fast neutrons, but all neutrons start life as fast neutrons, following fission, just as every golf ball starts life as a fast golf ball off the tee and ends as a slow golf ball in the hole; it is most unusual to hole out in one, though it is not unknown. At the same power level, for every 100 neutrons in a fast reactor there are about 45 fast neutrons in a thermal reactor. It is the case that fast neutrons are fast, but thermal neutrons
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are not all that slow. This is rather a rough way of looking at a complex matter, and experts could easily pick holes in what I have been saying, because there is no more than an arbitrary line of demarcation between fast and slow neutrons. But though not a perfect exposition of the matter, your Lordships will be less misled by supposing it true than by making the converse supposition and believing that the difference between the thermal and fast reactor is total rather than relative.
"Breeder" is also somewhat of a misnomer. The characteristics of these reactors can be adjusted so that they are between incineration on the one hand and breeding on the other. They can be net incinerators, or evenly balanced, or net breeders, in accordance with policy and the degree of collaboration with thermal reactors which can supply them with some of their plutonium. In fact you can think of this type of reactor as a device for getting rid of plutonium which you generate in a thermal reactor. Suppose I call them "low-waste" reactors instead of "fast"; this would be a very fair name in comparison with the PWR, because per unit of energy generated they produce less radioactive waste than a PWR would. Or what about calling them "high-yield" reactors? That again would be a fair comparison with an AGR because an AGR wastes—dissipates—about one and a half times as many neutrons as a breeder reactor, neutrons that get lost in the structure of the reactor, the biological shield and so on.
The report refers to another attractive feature of the breeder reactor in the sense that the liquid metal coolant is nowhere under pressure in contact with the fuel elements. This it shares with the Candu reactor which the noble Lord, Lord Bowden, talked about and, in common with the Candu reactor, a breeder can be made the start off for the thorium cycle. I would counsel your Lordships not to get, in the relative sense, too starry-eyed about the thorium cycle. Transforming thorium to U233 only generates a material which is easier to make bombs out of than plutonium and which is just as poisonous as plutonium is in the chemical sense.
The report mentions an explosion underground in America of reactor grade plutonium—that is plutonium taken out

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of a thermal reactor. The same grade of plutonium would represent the input to a breeder reactor—where of course it gets irradiated still further and poisoned still further with the even-numbered plutonium isotopes, so that it is still more difficult to make an atomic bomb out of than uranium. All the time it is going through these cycles it is getting more and more relatively difficult to make a bomb out of it and one would need all the facilities of a fuel reprocessing plant and a metal forming plant which, of course, are at the disposal of the American Atomic Energy Authority, but which would not be at the disposal of terrorists.
I believe that the noble Lord, Lord Flowers, in an interview recorded in the Press was asked if he could make some plutonium. I think he said, "Yes, if I was given a facility about the size of Imperial College to build it in." Of course, it cannot be done in a back street.
So much for the safety aspect. Let me now come to the characteristics of these reactors on page 8 which was so well summarised by the noble Viscount. My conclusion is very much the same as his. There is really only France and ourselves in it, but whereas he is absolutely right in what he said about the lead we had over France initially, I am very concerned with the way this is being overhauled, because if we go back to the days of the Dounreay fast reactor we then had a four-year lead on the nearest thing that the French were ever going to have to that. When it came to Phénix and the PFR, what had been a four-year lead had been converted by the time the reactors went on power, to a one-year lag. If we then look at the dates given in the table—1983 for the Super-Phénix and 1991 for the CDFR—we find that that one-year lag has stretched out to an eight-year lag. Remembering that we started with a four-year lead, we have lost 12 years in comparison with the French. I do not think that we can afford to do so.
Yesterday we had an interesting debate, which I regret that I could not take part in, on the report of Sir Monty Finniston. I could not help feeling, listening to some of the speeches—I was not able to attend the whole debate—that we were in very grave danger of applying a cosmetic cure to the situation in which this country
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finds itself. I do not believe that high technology, however good, can ever be a substitute for good management, good labour relations and commercial courage. Lack of them is what has undone this country, not bad engineering. If this was a nation of people who were commercially courageous, and capable of good labour relations, they would be able to hire good managers and the affairs of the engineering industry would adjust themselves accordingly, as they have elsewhere. If your Lordships want the proof of that, consider the enormous commercial success of the supertankers made in Japan. There was not one bit of new, advanced technology in any of those tankers; no new methods of welding were developed to build those tankers. They were built by conventional methods in conventional shipyards and were merely much bigger than anything there had been. What did the Japanese have that we did not have? We could have given work to our shipyard employees for years to come if we had built the world's fleet of supertankers. What did they have? They had the commercial courage to go ahead and build the first. That is what we need in the context of the fast reactor.
I come to the factors that stand in our way—the environmentalist lobby and protest movements in general. In the time available I cannot deal with this as I should like. All I can say here is that they abuse our tolerance for no good reason. The latitude given to objectors should not be exploited for the purposes of self-dramatisation, of which there is far too much in the environmentalists' lobby. As to Candu, the PWR and the remarks of my old friend, the noble Lord, Lord Bowden, I have always in this House stood up for the SGHWR and Candu as very interesting reactors. I would press the noble Earl, Lord Gowrie, to keep an open mind about the relative merits of a public inquiry into the PWR as opposed to a comparative inquiry into the comparative merits of the PWR and the Candu. It has a feature equally attractive with one of the fast reactors: the moderating elements are not in contact with coolant under pressure.
I believe that difficulties tend to resolve themselves under resolute attack. To the irresolute all things appear impossible—c'est le premier pas qui conte;; it is the one

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step that the irresolute never take. So I add my voice to those who have preceded me in urging the noble Earl, Lord Gowrie, to make a resolute reply and ensure that this new Government tackles this old problem with vigour.
9.57 p.m.
Lord WYNNE-JONES: My Lords, the speeches of the noble Earl, Lord Halsbury, and the noble Viscount, Lord Thurso, have made it almost unnecessary for anyone else to speak except for the noble Earl, Lord Gowrie, in reply. I have little to add to the excellent remarks that both of them have made. It is abundantly clear, not that we must have a programme of breeder reactors, but that we must go ahead to the next step of building a fully commercial breeder reactor.
My noble friend Lord Bowden spoke about the economics of it. We do not know the economics until we have built it. It is quite impossible to make economic speculation. Have we not had enough of economic speculation for years? It gets us nowhere at all. We must build one in order to find out whether or not it will work economically. Of course, it is perfectly true that the question whether the breeder reactor will be worthwhile depends upon the price of uranium. But I am surprised that my noble friend Lord Bowden should start speculating with some assurance about the price of uranium. Who would have speculated correctly 10 years ago on the price of oil? Who would speculate on the price of coal?
These are matters on which it is not possible to speculate. To say that there is uranium scattered all over the world in quantity is, of course, true. But the question is: How economical is it to mine that uranium and to use it? Those are questions that we cannot answer at the moment. They are absolutely impossible of answering. Therefore, the problem we are faced with is whether we will be prepared to have a breeder reactor, if it is required, at the end of the century. If we do not make a decision soon we know the answer: we will not have a breeder reactor, and this is absurd.
Mention has been made of the American experience. The Americans had a reactor at Clinch River which they closed down. This was not closed down for any technical
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or scientific reason at all. It was closed down because of a decision by the President of the United States, who was rather more ignorant than probably any Member of Congress—and certainly, I hope, than any Member of this House—as to what were the real problems. In fact after it was closed down the Comptroller General of the United States made an inquiry which was published last May, in which he went in detail into all the arguments which had been presented by the United States Department of Energy, and he showed that every argument that they presented was nonsense. He also showed that the arguments which came from the Department of State on the risks in foreign affairs were equally nonsense. The whole thing is published.
I had a copy sent to me from Congress in May. It is interesting reading because he absolutely destroys all the arguments which the Administration had used in order to close down Clinch River. There was one argument which they never published, and that argument was that the nuclear industry in the United States had run into such difficulties over their PWR programme that they did not want to divert any further energies towards continuing the Clinch River experiment, because they were fully occupied in repairing the errors which had cropped up with the PWR programme. It is not for us to tell the United States what to do; but equally it is not for the United States to tell us what to do, especially when they have shown no partcular understanding of this programme—at least on their Governmental side.
So far as we are concerned in this country we are faced not, I believe, with any immediate problem with regard to the generation of electricity. I do not think that the problem is serious for us over a number of years. Therefore, in my opinion, the most urgent thing for us to do is not to engage in a big programme of building thermal reactors, but rather to look to the future and start examining the problem of building a breeder reactor which may be necessary by the end of this century.
It may be argued that the cost will be high. I do not know what the cost will be, but I should guess that it would probably be not less than £2,000 million to build it, and it will take a number of

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years. Therefore there are two possibilities: first, that we feel we must go ahead and do it ourselves, or that we co-operate with the French and the Germans to build a commercial reactor—no longer a prototype; the prototypes have been built. If this could be agreed upon, if this could be done, then it would be a co-operative achievement for the Community which they have so far singularly failed to achieve in the energy field. Whether they would be prepared to do it I cannot say, but I would ask the noble Earl to consider this matter and put it before the Department of Energy to see whether they would be prepared to go ahead and could do something on these lines. If not, then it would be almost inevitable that, whatever the expense, we shall have to do it ourselves.
The Earl of GOWRIE: My Lords, the late poet W.H. Auden, who I had the honour of knowing slightly and admired very much, once said that when, as a literary man, he found himself in a gathering of scientists he felt like a shabby curate who had strayed into a room full of dukes, and that is somewhat the position in which I find myself this evening, as your Lordships' House is at its best when men are talking with passion about things they know well.
The debate has proved a most timely and worthwhile opportunity for us to review the considerations of fast reactor policy in the light of the recent resolution by the Parliamentary Assembly of the Council of Europe and I wish, whatever the deficiencies of its prose, as the noble Lord, Lord Avebury, said, to pay tribute to its work and to the work which the noble Lord, Lord Northfield, contributed to it; and we are in his debt this evening for having raised this issue.
The first priority of the Government in the nuclear field has been to develop the policies on the nuclear programme and the nuclear industry that were announced by the Secretary of State for Energy in another place on 18th December and which I repeated here: The Government will now be considering policy on the fast rector over the next few months in the light of the advice of the Atomic Energy Authority and other bodies concerned, and such has been the quality of the debate
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that it is more than conventional for me to say that they will be considering it also in the light of what has been said this evening. As we have seen already, this is a complex subject of great importance for our long-term energy prospects. There are many closely related issues to be considered and we cannot reach conclusions quickly, but the Government are working on the issue and a Statement will be made. I note the representations which your Lordships have made about the urgency of the issue in view of the long lead times.
The debate has taken place at a time when our thinking is still in the melting pot and therefore, as I said, the views that have been expressed can be taken into account in policy formation. But as I have already explained privately to the noble Lord, Lord Northfield, it also means that I will not be able to reply this evening in any detail in terms of existing Government policies and I hope noble Lords will bear with me on this point. The noble Viscount, Lord Thurso, to whom I would add my congratulations for a magnificent speech, asked me a number of questions but I am afraid he has put me rather in the position of the parson in one of Sir Osbert Lancaster's wartime pocket cartoons. The parson was depicted in the pulpit and under him were two old ladies, one whispering to the other, "Since the dear vicar was made military chaplain to MI5, his sermons have got so non-committal".
In spite of being in this unenviable role, I should like to make some general comments on where we stand at the moment on the fast reactor, and to reply where I can to the points noble Lords have made. As both noble Lords, Lord Northfield and Lord Strabolgi, clearly said, the case for the fast reactor rests on its ability to make use of plutonium and depleted uranium that are the by-products of thermal reactors so that eventually something like 50 or 60 times as much energy can be produced from the same quantity of natural uranium. Without the prospect of the widespread introduction of the fast reactor, shortages of natural uranium would eventually begin to restrict further ordering of existing thermal reactors.
So the potential advantages of fast reactors were recognised from the earliest days of nuclear power, and fast reactor

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research and development has been under way in the United Kingdom for nearly 30 years, as I think was pointed out by the noble Lord, Lord Strabolgi. Our first experimental fast reactor was built at Harwell in 1951. In 1959 the Dounreay fast reactor, with an electricity output of 15 MW, was opened, and it operated successfully for the following 18 years. Its successor, the 250 MW prototype fast reactor, also at Dounreay, was completed in 1974, and is still in operation. The effectiveness of the fast reactor in conserving uranium supplies depends crucially on its fuel reprocessing cycle, and this aspect is also under development in the United Kingdom. Last September the Prime Minister opened at Dounreay a reprocessing plant that is the first of its kind in the world.
All this means that the United Kingdom now has a major investment in fast reactor technology and an important international position. Probably only the French, who now have a full scale fast reactor—Super Phénix—under construction, can be regarded as having a lead over the United Kingdom in fast reactor development. Some of your Lordships have expressed scepticism about whether that lead is absolute in technical terms, although as the noble Earl, Lord Halsbury, reminded us, they are overhauling us in terms of time. I am afraid that the United States has been held back by the symbolic figure of Jane Fonda, and I think that this debate has been an admirable corrective to that kind of environmental emotionalism.
The fast reactor is not an economic proposition in the immediate present because, although its uranium requirements are much less than for thermal reactors, total capital, operating, and fuel cycle costs are considerably higher; and the noble Lord, Lord Bowden, reminded us of that. The question of whether fast reactors will become economic depends therefore on progress in refining the technology and reducing its cost, as well as on any future increases in uranium prices. This is something that has been looked at in some detail in the International Nuclear Fuel Cycle Evaluation (the INFCE), whose report has now been published. One of the points that emerged from their studies was that our knowledge of uranium resource potential is still very limited in
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many parts of the world. Of course, on the demand side, the future growth of nuclear capacity world-wide is also very uncertain. The noble Lord, Lord Strabolgi, raised this point, and he asked me about world uranium supplies. My information is that more than 80 per cent. of the uranium reserves that are known to exist are concentrated in Australia, Southern Africa, and North America, and INFCE recognised that individual countries will see the need for the fast reactor, and the likely time-scale, very much in the light of their own circumstances. On present evidence it seems unlikely that uranium reserves will be found in the United Kingdom that would be significant in relation to our own requirements for civil nuclear power, and that is of course something that we have to bear in mind when we consider our fast reactor policy.
I shall turn briefly to some of the other issues that have been raised in this evening's debate. The noble Lord, Lord Avebury, who put a contrary view with verve and passion, as we would expect of him, raised the question of the proliferation resistance of fast reactor technology. That is highly complex, but it is also one of the issues that have been under consideration by INFCE. Discussion in INFCE has highlighted the fact that the proliferation of nuclear weapons is above all a political problem, and one to which there are no easy technical solutions. Many noble Lords have reinforced that view tonight. There are no nuclear fuel cycles whatsoever in the world that completely avoid the use of materials that can eventually be made into weapons. But the construction and planned misuse of fuel cycle facilities is not the easiest, nor the most efficient, route to acquiring materials for making nuclear weapons.
The question of fast reactor safety was considered in a report published by the Health and Safety Executive in 1976. On this general topic, I enjoyed the references made by the noble Lord, Lord Northfield, to the Rocket and the fears of the early days of steam technology. However, while he was making them it occurred to me, as a Minister of the Crown, that the Rocket did succeed in killing one in the late and lamented Mr. Huskisson, so I am not sure whether his instance was quite as warmly received by

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me as it might have been by others. Of course, to be serious, safety is a technical as well as an emotive issue. But the Health and Safety Executive said that the faults that might lead to an accident in a fast reactor were similar to those that have to be considered for other reactor systems, and that the general principles involved in avoiding and, if necessary, in controlling such faults are similar to those adopted in thermal reactors. The Executive concluded that given, as seemed reasonably likely, a successful outcome to the development work in hand or envisaged, there should not be any reason why a commercial fast reactor could not be made safe enough to be licensed by the Nuclear Installations Inspectorate.
My Lords, coming to that Inspectorate, the noble Lord, Lord Strabolgi, raised the question of the levels of staffing. The Inspectorate do indeed have to recruit in a highly competitive market, and it is true that they are at present somewhat below strength, and this is a cause of concern to me. But they are arranging their work so that necessary resources can be devoted to the site inspection work and to assessment work for the pressure water reactor and the AGR programmes. The Government fully recognise the importance of maintaining an Inspectorate of the right size and composition, and we will continue to keep in touch with the Health and Safety Executive and watch the staffing situation closely. As I am primarily a Minister of employment rather than of energy, I would of course remind your Lordships that health and safety does find its sponsoring department in the Ministry of Employment.
My Lords, there have been suggestions in the Press that the status and role of the Inspectorate is declining. This is quite wrong. The Inspectorate were moved from the Department of Energy to the Health and Safety Executive about five years ago. The purpose of this move was to enhance their independence by taking them away from the department which has the responsibility for developing nuclear energy and putting them under the newly-created and independent HSE. The Inspectorate therefore remain the highly-qualified body that they have always been. The noble Lord, Lord Strabolgi, raised
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the spectre of dispersal to Bootle. The actual dispersal of posts from the HSE will be phased over some years in order to minimise any staffing problems, and the NII move will not be completed until the end of 1985—and the Inspectorate are, of course, perfectly informed of the timetable.
The noble Lord, Lord Bowden, has spoken before, as he did today, with eloquence on the scope for developing the CANDU reactor to a stage where it could represent a reasonable alternative to the fast reactor. It is certainly true that more power can be obtained from a CANDU reactor per tonne of uranium than from either a PWR or an AGR. Further savings of the order of 30 per cent. of uranium requirements are also believed to be possible by operating a once-through thorium cycle, as I understand it is called, which does not involve reprocessing in these reactors. But, my Lords, reprocessing is necessary if substantially greater savings ever the long term are to be achieved. So I do not think that CANDU can be regarded as an alternative to the fast reactor unless it is operated on the basis of processing; and, though we have corresponded on this subject and I am highly interested in the noble Lord's views, I myself think that some degree of caution is necessary in considering CANDU as a possible alternative to the fast reactor.
My Lords, one of the points on which the Council of Europe has rightly laid great emphasis is the need for public information and discussion on the fast reactor. I can assure the House, and notably the noble Viscount, Lord Thurso, that it is the Government's policy, and that of all concerned with the nuclear industry in the United Kingdom, to be very open about nuclear safety issues. As I have said in this House before, we have in this country over 30 years' safe experience of nuclear energy, and we are well aware that public confidence is essential for the continued expansion of the programme.
I hope, in that context, that the BBC is learning its lesson and listening tonight. The organisations concerned generally have an excellent record of making information of general public interest available, for instance, through leaflets and journals. A great many people have recently visited the travelling exhibition on nuclear power organised by the Nuclear

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Power Information Group. The prototype fast reactor at Dounreay is open to public tours and more than 2,000 people went to see it last year. I can confirm to the noble Lord, Lord Avebury, that the Government have also made it clear that any decision to build a full-scale commercial demonstration fast reactor in the United Kingdom would be subject to a full and thorough public inquiry.
The Government are now considering the next steps for fast reactor policy in the United Kingdom. Clearly the main issues will be the scope for international collaboration in carrying forward this very complex and costly technology and the case for building a full-scale commercial demonstation fast reactor here. In this context, I shall take careful note of what the noble Lord, Lord Wynne-Jones, has told us. I would say to the noble Lord, Lord Sherfield, if I may end on a personal note, that this is, of course, a House rather associated with ecological and environmental issues. I remember when, in the mid-1960s, I came to take my seat in your Lordships' House and wanted to work here, people said, "You will not enjoy that body much; it is always debating clean rivers and a better environment and other things like that".
My Lords, the terms of trade in that direction have rather turned in favour of your Lordships' House over the world; but I am glad to see that, on the evidence of tonight, this has not shown itself to be incompatible with entry into the nuclear age. I regret that I am not in a position to make an announcement this evening, but I am sure that the points that have been made during the course of this most interesting debate will be studied most carefully before any decisions are reached.

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