Sitting of 2 July 1980

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  ENVIRONMENT

    Water Authorities (Budgets)
    Mr. Rentonasked the Secretary of State for the Environment what response he has received from the water authorities in answer to his appeal for restraint in their budgets.
    The Minister for Local Government and Environmental Services (Mr. Tom King): I have discussed with chairmen and chief executives of water authorities a number of ways in which economies might be made and performance improved. I have already received confirmation from certain authorities of the action they will be taking, and I am now considering the most effective ways in which these matters might be further pursued.
    Mr. Renton: Is not the insensitivity of the water authorities such that my right hon. Friend should consider putting them into liquidation? Have not some of them shown great irresponsibility in their increases in charges, which the domestic consumer cannot avoid by saving water? Is it not a fact that the Southern water authority, which has a budget of many millions, does not even have a finance committee?
    Mr. King: My concern is to make the present system work effectively. I do not think that my hon. Friend's initial suggestion would accelerate that process. I am considering a number of aspects of the structure of water authorities. On my hon. Friend's last point, I am concerned that there is no finance committee in the Southern water authority. That point has been made to me forcefully by a number of my right hon. and hon.
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    Friends and by other hon. Members who came to see me. I shall take up the matter with the chairman of that authority.
    Sir. Frederick Burden: Has my right hon. Friend received any proposals from the Southern water authority to improve its efficiency, cut its costs and ensure that the increased charges do not continue next year?
    Mr. King: I took up with the chairman of the authority the question of its levels of manpower. I am pleased to say that I have received undertakings from him that there will be reductions in manpower levels, which is an important element, although not the largest element in its costs.
    Mr. Oakes: May I come to the defence of water authorities which, after all, are the creatures of a former Conservative Government and which were bitterly opposed by the Opposition? What do the Government intend to do for the North-West water authority, which faces the imminent collapse of its sewerage system over most of its area? Will the Government give any assistance to that authority rather than allow the burden to be placed entirely on water users in the North-West?
    Mr. King: The responsibility of Ministers is not merely to pass legislation, but to observe clearly how that legislation is operated. I make no apologies for the fact that I appear to be the first Minister who has taken the trouble to see individually the chairmen and chief executives of every water authority to discuss the system's operation. As the House learnt on an earlier occasion, I am well aware of the state of the sewers in the North-West. It is a major problem, not confined entirely to the North-West, but the North-West water authority is considering it at the present time. I shall certainly consider its proposals with sympathy.

    House Building
    Mr. Skinnerasked the Secretary of State for the Environment if he will bring forward new measures for increasing the level of house building.
    The Minister for Housing and Construction (Mr. John Stanley): I refer the hon. Member to my reply on 4 June to the hon. Member for Huddersfield, East (Mr. Sheerman).
    Mr. Skinner: Is the Minister aware that hon. Members on both sides of the House, and especially on the Opposition side, are receiving complaints from brick manufacturers, who have millions of bricks in stock? Is he also aware that we are receiving complaints from bricklayers and others who work on building sites because as many as 250,000 are out of work and from builders—those who voted Tory—who are going bankrupt, as well as from the homeless who need houses? Why cannot the Government put all those ingredients together and stop their savage policy?
    Mr. Stanley: The ingredients come together in the fact that during the five years of the previous Labour Administration the national debt doubled, and the interest paid on it trebled. That Administration did not provide the economic growth to pay for the interest.
    Mr. Frank Allaun: Is it not now becoming obvious that the Cabinet will be forced to relax the squeeze? Will the Minister press the Chancellor to reduce interest rates, to de-restrict council house building and improvement, and to remove the threat of a moratorium on council house building?
    Mr. Stanley: I can tell the hon. Gentleman that my hon. Friends are united in pursuing the Government's economic strategy.
    Several Hon. Members rose—
    Mr. Speaker: Order. By mistake, I called two hon. Members from the Labour Benches in succession. I shall now call two Conservative Members.
    Mr. Stanbrook: As it seems unlikely that there will be a significant increase in the level of house building in the near future, should not we look to the better utilisation of our existing housing stock? In those circumstances, has the Minister any proposals for a revision of the Rent Acts?
    Mr. Stanley: I agree with my hon. Friend that it is essential to many of the provisions of the Housing Bill that we should achieve a better utilisation of the existing stock. That is why we made it easier for owner-occupiers to sublet parts of their homes, why we have given council tenants the right to take in lodgers and to sublet and why we have
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    introduced shorthold. It is a matter of the greatest regret that the Labour Party is not supporting us in bringing about that important means of increasing the housing stock.
    Mr. Heddle: Does not my hon. Friend agree that one of the best ways of increasing the level of house building output is to encourage all local authorities to identify those areas of land which are not presently being used which they and other statutory undertakers own so that they can be used for the development of starter homes in partnership with the local authorities and the building industry?
    Mr. Stanley: That is exactly the policy which my right hon. Friend the Minister for Local Government and Environmental Services is pursuing. As my hon. Friend will be aware, powers are available in the Local Government, Planning and Land (No. 2) Bill which will enable spare land to be identified. Indeed, my right hon. Friend has identified the initial local authorities which will be asked to compile land registers.
    Mr. Alton: Regardless of the massive reduction in public house building which is now taking place, is not the Minister also alarmed about the reduction in private house building which is taking place throughout the United Kingdom? When will he do something about the Government's disastrous record on mortgage rates, which is one of the greatest disincentives for people buying a new home of their own?
    Mr. Stanley: As the hon. Gentleman is aware, we have already taken substantial steps to release land and to speed up planning permissions. However, the Government's first and overwhelming priority is to restore the economy to a sound footing, from the chaotic situation which was left by the previous Administration.

    Local Authority Expenditure
    Mr. Jim Marshallasked the Secretary of State for the Environment what action he proposes to take against local authorities which fail to re-examine their expenditure plans and do not make fresh returns to his Department by 1 August as requested in his circular letter of 13 June.
    Mr. Andersonasked the Secretary of State for the Environment what sanctions he is considering against those local authorities which do not comply with his circular of Friday 13 June calling for further expenditure cuts.
    The Secretary of State for the Environment (Mr. Michael Heseltine): The relationship between central and local government depends on voluntary cooperation. I have no evidence as yet to suggest that any local authority wishes to change that basis.
    Mr. Marshall: I am sure that the Secretary of State will agree that that reply is just a reiteration of the circular letter which he sent to local authorities some weeks ago. Surely he is aware that, if local government is to be able to plan ahead, it needs to know what the Government's intentions are. Therefore, can I ask the right hon. Gentleman to cast aside his crusading inertia and tell local authorities whether he intends, first, to reduce the capital allocation available to local authorities; secondly, reduce the rate support grant settlement for this year; or, thirdly, reduce the rate support grant settlement for next year if they refuse to comply with his exhortations?
    Mr. Heseltine: I take the hon. Gentleman's point about the need for local government to plan ahead. But the central Government also need to plan ahead. It is because the returns which have been submitted by the local authorities are so far in excess of the targets which they have been asked to achieve that I have asked individual authorities to resubmit their budgets. It would seem to me quite wrong to anticipate the judgment which each authority is now making by saying what I intend to do in a range of hypothetical circumstances. It is much more responsible to wait until the local authorities themselves have given me the facts upon which to make judgments.
    Mr. Neubert: Will my right hon. Friend consider using the powers in the Local Government, Planning and Land (No. 2) Bill to bring into line those local authorities which refuse to revise their excess spending budgets? Is it not intolerable that an authority such as Manchester should employ another 1,000 full-time or part-time staff during the past 12 months, in defiance not just of Govern-
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    ment policy but of the national economic interest?
    Mr. Heseltine: It seemed to me that it was taking a reckless gamble with the livelihood of the 1,000 people to use them as pawns in a political game in this way. I agree with my hon. Friend. I cannot understand how, when the Government are asking for reductions in public expenditure, an individual authority could recruit an additional 1,000 people. I think that my hon. Friend is pursuing the right line of inquiry. But it still remains my view that we should now wait until local authorities have produced their revised budgets so that we can make a decision based upon the facts.
    Mr. Allan Roberts: Will the right hon. Gentleman state categorically that he has ruled out the possibility of imposing a moratorium on capital programmes if local authorities fail to respond? If he is not willing categorically to rule that out, is he not admitting that that is one of the things with which he is threatening local authorities? Does he not realise that if he imposes a moratorium on, say, council house building, he will no longer be able to blame local government for stopping house building in the way that he is doing at present?
    Mr. Heseltine: I looked at what the Secretary of State for the Environment did in 1976 in order to secure reductions in local authority spending. Of course, a capital moratorium was part of the proposals of the then Labour Government. It would be quite irresponsible of me to rule out that possible weapon, however undesirable I might think it to be.
    Mr. Chapman: I am sure that my right hon. Friend recognises that the imposition of a moratorium on local authority capital expenditure plans would be yet another grievous blow to the construction industry. Will he confirm that this would be used as a last resort? If he is minded to do it as a last resort, will he consider putting a longer moratorium on the profligate offending authorities rather than a shorter moratorium on all local authorities?
    Mr. Heseltine: My hon. Friend is absolutely right. The weapon of a

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    capital moratorium is an extremely undesirable one to use. What the Government clearly believe, and what they gave a year's notice of their intention of achieving, is that we must reduce the levels of current public consumption. Our failure to do that prejudices our ability to get the economy under control and will worsen the burdens faced by the construction industry along with the economy at large. Therefore, the responsibility now is for local authorities to respond, as they have traditionally, to the guidelines set down by the national Government.
    Mr. Eastham: May I refer to the uninformed point made by the hon. Member for Romford (Mr. Neubert) about the additional 1,000 workers employed by the Manchester local authority? Can I assure the Minister that that is not the case? Therefore, will he assure the House that in future, before Conservative Members respect statements which appear in the newspapers, they will check them?
    Mr. Heseltine: One of the reasons why I have asked local authorities to publish the details of their manpower figures is that there can then be an informed and factual debate about what is going on in each individual authority. I think that my reading of the local newspapers in the area represented by the hon. Gentleman clearly indicates that a wide public debate is taking place in that area on this matter.
    Mr. Budgen: Does my right hon. Friend agree that the ultimate sanction of the refusal of capital for major items ought to be exercised against those local authorities such as Wolverhampton which have increased their expenditure specifically to go against central Government policies, and have thereby imposed a massive increase of 56 per cent. in their rates this year?
    Mr. Heseltine: My hon. Friend is right to draw attention to the harm which flows from rate increases of the sort that he mentioned. I shall have to consider what I recommend to my colleagues, and put before the House by way of action, when we see the revised budgets of individual local authorities. The judgment that we shall have to make—the House should understand it now—is whether
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    one expects all local authority organisations, including those which have responded and behaved in a responsible way, to bear any excess expenditure that there may be, or whether we look for methods which indicate a more selective approach. In what I have said so far I have made it clear that the Government's views on this matter have not yet been finally determined. Obviously, a selective approach is desirable in logic. However, the weapons needed to secure a selective approach are Draconian.

    Olympic Games
    Mr. Roy Hughesasked the Secretary of State for the Environment what recent discussions he has had with representatives of British sports organisations to discuss participation in the Moscow Olympic Games; what was the outcome; and if he will make a statement.
    Mr. Canavanasked the Secretary of State for the Environment when he intends to contact the British Olympic Association about participation in the Olympic Games.
    The Under-Secretary of State for the Environment (Mr. Hector Monro): I was present at the 17 June meeting between my right hon. and noble Friend the Secretary of State for Foreign and Commonwealth Affairs and representatives of most of the sports bodies still committed to going to the Moscow Games. In the light of my right hon. and noble Friend's explanation of the wider issues involved, I remain hopeful that at least some of those governing bodies or competitors will think again about participating in these Games.
    I have no plans at the moment to contact the British Olympic Association again. It is fully aware of the Government's view of the Moscow Games.
    Mr. Hughes: Is it not time for the Government to stop persecuting the British athletes? Does the Minister appreciate that next week the beleaguered Llanwern steelworks in Newport will start work on a major order from the Soviet Union—an order won in free competition? Does he not agree that this is the way forward rather than the cold war hysteria being whipped up by the Prime Minister and her acolytes?
    Mr. Monro: It is obvious that the hon. Gentleman has neither understood the argument over the last six months, nor begun to understand the horror and aggression being carried out by the Russians in Afghanistan. That is the reason for our stand on this issue. I hope that he will realise that our objective is to bring home to the Russians our total abhorrence of their action and that we shall not condone it in any way.
    Mr. Canavan: Is it not typical Tory Party cheek and hypocrisy for this spoilsport Tory Prime Minister to condemn world-class athletes such as Steve Ovett, Sebastian Coe, Linsey MacDonald and Alan Wells for taking part in the Moscow Olympics when the Tory Party chairman is making huge profits from supplying track equipment for the Olympics?
    Mr. Monro: I wish that the hon. Gentleman would set his sights a little higher, and not go for cheap publicity. I hope he will also realise the serious question that we posed to the athletes and other competitors. We understand that they wish to take part in the Moscow Olympics, but in the light of events in Afghanistan we believe that our advice was correct.
    Mr. Garel-Jones: Is my hon. Friend aware that the Socialist-controlled Watford borough council recently decided to give a donation of £500 to the Olympic appeal? Does he not consider that to be a disgraceful misallocation of ratepayers' money?
    Mr. Monro: Yes, I most certainly do. It is astonishing that Socialist-controlled councils—hard-pressed as they say they are—are prepared to give large sums of money to the Olympic appeal—[Interruption.] Those Labour Members who cheer their action should think more of the women and children in Afghanistan rather than the money that is being put forward by those councils.
    Mr. Dalyell: Now, like it or not, the athletes are going to Moscow. Do Ministers wish them well?
    Mr. Monro: Over the years the hon. Gentleman—
    Mr. Dalyell: Answer the question.
    Mr. Monro: Of course I shall answer the question. The hon. Gentleman has been putting questions to me for six
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    months; I am not going to dodge one now. It is clear that the Government's position has been to discourage our competitors from going to Moscow. Therefore, it is our wish that they should not be in Moscow this month. I warmly applaud the efforts of superb quality by Coe and Ovett last night, but I am more delighted that they were successful in a country that will not be sending a team to Moscow. I do not wish any of out athletes to be in Moscow this month.
    Mr. Kimball: Will my hon. Friend say specifically whether he is satisfied with the action of the Sports Council in supporting the Government's policy towards the Olympics? Will he also say whether it may be possible to abolish this less than satisfactory organisation and give its functions to the Central Council for Physical Recreation?
    Mr. Munro: I am perfectly satisfied with the actions taken by the Sports Council and by its chairman, Mr. Dick Jeeps. They have fulfilled the wishes of the Government admirably. I have no intention of removing the Sports Council from its position. The Central Council for Physical Recreation knows where it stands. It has an important part to play in the development of sport. But both organisations must operate together in harmony.

    Housing Starts
    Mr. Weetchasked the Secretary of State for the Environment what, in his estimate, will be the number of public sector and housing association starts in the years 1980–81, 1981–82 and 1982–83, respectively.
    Mr. Dubsasked the Secretary of State for the Environment what estimates are available to his Department of the number of public sector and housing association starts for 1980–81 and the two subsequent years.
    Mr. Cryerasked the Secretary of State for the Environment what is the anticipated number of local authority houses to be completed in the current year.
    Mr. Strawasked the Secretary of State for the Environment what estimates are available to his Deparment of the

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    number of public sector and housing association starts for the three years 1980–81, 1981–82 and 1982–83.
    Mr. Winnickasked the Secretary of State for the Environment if he will estimate the number of public sector housing starts for the three years 1980–81, 1981–82 and 1982–83, respectively.
    Mr. Heseltine: Accurate estimates cannot be made in advance. Starts by local authorities will depend on the proportion of their housing investment programmes which they decide to allocate for new building. Their submissions for 1981–82, to be received in August, will indicate the starts and completions they expect this year, though in past years even those have not been very reliable. Housing association starts similarly will depend on the present and future plans of associations. Final decisions for future years will only be taken closer to the years in question.
    Several Hon. Members rose—
    Mr. Speaker: Order. I propose to call first the five hon. Members whose questions are being answered.
    Mr. Weetch: Does the Secretary of State realise that the Government's public expenditure policies will have a serious effect on the level of local authority house building starts during the next two or three years? Does he further realise that in Ipswich the housing situation has never been more serious, and in its effects to cope with a record waiting list the Ipswich borough council is being frustrated by financial restrictions that are forcing it into a declining level of housing starts in the face of serious problems?
    Mr. Heseltine: I understand that there is a declining level of public provision of housing—as there has been for the last four years or so. The question that the hon. Gentleman must join me in trying to answer is whether there is any way in which we can create the wealth that alone will sustain improved provision, unless we continue with the policies that the Government have adopted. My firm conviction is that there is no alternative.
    Mr. Dubs: Does not the Minister accept that waiting lists are increasing, and that there are as many as 1 million people waiting for council homes? Will he explain to the House how he connived at
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    these major cuts in expenditure on housing without knowing the consequences of such cuts?
    Mr. Heseltine: The cuts that I have introduced are a continuation of the cuts that the previous Government—
    Mr. Kaufman: Not true. Stop misleading the House.
    Mr. Heseltine: As the right hon. Gentleman suggests that what I am saying is not true, it may be helpful if I remind the House again of the figures from 1976 to 1979.
    Mr. Kaufman: No, no, no—
    Mr. Heseltine: I was going to provide the facts. It may help the House to know that there were 176,000 starts in 1976, which declined to 81,000 in 1977, which declined to 67,600 in 1978, which declined to 46,647 in 1979. By my standards, that is a declining programme.
    Mr. Cryer: This year there will be the lowest number of housing starts since the war—as the figures for 1979 were the lowest since the war. Is the right hon. Gentleman aware that the Government's cuts are inhibiting Labour-controlled councils, such as that in Bradford, in providing decent, low-rent accommodation for newly married couples and elderly people? What message have his hard-faced Tory Government, most members of which have two or three residences, for the nearly 1,000 people on the housing waiting list in Keighley who see little relief from this Government?
    Mr. Heseltine: The message is partly to explain that the situation has been deteriorating, along the lines of the figures that I gave, for years; partly to explain that if there is to be a real prospect of improvement in public provision of services for those people there has to be real wealth; and, finally, to remind them that the record of the last five years of the previous Labour Government was one of decline, in public expenditure terms, and in the whole provision of all goods and services in the public sector. That record is a devastating indictment of the economic failures of that Government. The reversal of those directions is absolutely central, and can be achieved only if we rein back on the public sector and allow the wealth-creating sector of the economy to expand.
    Mr. Straw: Is the Secretary of State aware that he would be well advised to stop his parrot-like repetition of the Labour Government's record, which is daily becoming more flattering when compared with this Government's record? Will he admit that his personal contribution to the collapse of the United Kingdom's economy, which the Government are hastening, is to bring public house building to its lowest ever post-war record with rising waiting lists and increasing numbers of people being unemployed in the construction industry? The Secretary of State a moment ago said that the Government need to plan ahead. What do the right hon. Gentleman's future plans contain for public house building?
    Mr. Heseltine: When the right hon. Member for Manchester, Ardwick (Mr. Kaufman) was master-minding the decline of the house building programme at the Department of the Environment, I am sure that he must at least have learnt the difficulties that a Government have in trying to predict what local authorities would do and in giving accurate figures for future building in local government. That is why it must have been galling for him to hear the Labour Government say that in 1977 there would be 95,000 local authority houses—actually there were 81,000—and that in 1978 there would be 95,000 when in fact there were 68,000. That indicates beyond peradventure that it is extremely difficult for central Government to make forecasts in advance of the events. I have looked carefully at all the statements made by Ministers in the previous Labour Government and realised that the lesson of those statements and predictions is that central Government do not know about the figures that they continually parade. Therefore, it is better to tell the House frankly that one does not know and to rely on what is patently the real situation when the local authorities send in accurate returns.
    Mr. Winnick: Has the right hon. Gentleman any idea of the acute family and housing misery that will be caused throughout the country as a result of council house building virtually coming to a stop? Is he aware that the charge against him is that, instead of trying to defend housing at Cabinet meetings when
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    discussing the cuts, he clearly has become the most enthusiastic supporter of the savage cuts which are taking place?
    Mr. Heseltine: If I dare to venture a forecast which is helpful to the right hon. Member for Manchester, Ardwick (Mr. Kaufman, as well as to the hon. Gentleman, it is that we shall find that council house building does not come to a halt as has been widely forecast on the Opposition Benches. The House will have the information on which to make judgments about how informed the views of the right hon. Gentleman were when he said that there would be no more council house building, or words to that effect.
    I understand the hardship that is created by an economy in decline. The hon. Gentleman was not with us at the time, but we were concerned to see the housing programmes fall consistently year after year. The question now is whether there is any way to reverse the decline unless we create the growth and the wealth to pay for the additional provision. It is that agonising readjustment that the Government are determined to make and that the Labour Party will frustrate and avoid at every turn.
    Dr. Mawhinney: One of the difficulties about making estimates concerns the need to have a realistic assessment of future need. Will my right hon. Friend tell the House how helpful he found the 1977 Green Paper in making assessments of need for housing over the next few years?
    Mr. Heseltine: I have seen the 1977 Green Paper. It made some estimates of need and it had the frankness to state that its figures were highly speculative. I had to decide whether there would be any public gain in going through that exercise again when the broad underlying facts about housing need will not have changed significantly. They may have changed by a few percentage points, but there is so obviously a need on such a scale that we do not need to have precision about that need to know that we require a significant housing programme.
    If Opposition Members would pause to reflect upon the £1 billion programmes which exist in housing, they would realise that the Government are determined to apply what resources they

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    can afford in that direction. The major change introduced by the Government is to give greater flexibility to individual authorities to meet housing needs in their own way in the light of circumstances of which they have a more detailed appraisal than the Government.
    Mr. Hattersley: Why does the right hon. Gentleman persist in talking about flexibility of choice for local authorities when everybody knows that he has provided them with no money for house building, improvements or mortgages and that they cannot choose between any of those items because they have no money for any of them? We understand the right hon. Gentleman's reluctance to provide figures. However, I should like to ask him a simple question about his intention, for which presumably he is answerable to the House. Was his housing investment programme statement in February made with the intention of ensuring that this year there should be the lowest number of starts for public house building since the war?
    Mr. Heseltine: It was not my intention, but it was almost certain to be the direction in which the level of starts would go, provided that the trends of the last four years were continued. It was not an unreasonable assumption that both Labour and Conservative-controlled authorities would continue in the direction in which they had gone in consequence of the policies of the past four years. So that the House may understand, there is a public sector provision for housing in excess of £2 billion. Anyone who can describe that as a non-programme is using language that has no real meaning.
    Several Hon. Members rose—
    Mr. Speaker: Order. I appeal to the House for short questions and answers, if possible.
    Mr. Gummer: Does my right hon. Friend agree that many local authorities would find it much easier to provide the housing necessary for the really needy if we could have all-party support for a system of shorthold to bring into operation housing which is already in existence and could be used were it not for the right hon. Member for Manchester, Ardwick (Mr. Kaufman) who has made
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    more people homeless than any other Minister?
    Mr. Heseltine: My hon. Friend has made a critical point. Significant numbers of people in the greatest need are now to be denied the opportunity of rented accommodation in consequence of the deliberate decision of the Labour Party to frustrate shorthold. There was an opportunity to move in a direction that would have opened up a new area of letting. The Opposition are doing everything in their power to keep those people without homes in a cynical way which I find inexcusable. The Government are determined to pursue their policies and to widen the opportunities for letting, particularly for council tenants who will have the right to sublet their properties to people who otherwise might not get homes. We are pursuing the widest range of initiatives in housing that this country has seen since the war.
    Mr. Kaufman: If the right hon. Gentleman regards shorthold as so important a part of his policy, why in the talks that he held with my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) and me did he refuse to accept even one of the safeguards in the Bill introduced by the hon. Member for Kensington (Sir B. Rhys Williams)? Why has he completely abandoned those safeguards, as a result of which the Labour Party maintains its pledge to repeal the shorthold tenancy when it returns to office?
    Secondly, why does the right hon. Gentleman persist in peddling his fabricated and untrue statement about housing starts? Does he deny that in every year of Labour Government there were more housing starts than the number of starts that they inherited from the Tory Government in 1974?
    Mr. Heseltine: The Labour Government, when they came to power, pushed up the levels of public expenditure and increased the number of public sector starts. They then found that they had bankrupted the economy and they had to pull right back, leaving the country with a projected public sector expenditure based on a wholly spurious level of growth.
    The right hon. Gentleman suggested that I was being untrue in the positions

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    that I depicted. I have constantly put the actual figures before the House to show the record of the Labour Government. The figures show that the rate of decline of the local authority house building programme under Labour and Conservative-controlled authorities, broadly at the same rate, was consistent and went on year after year. If, Heaven forfend, a Labour Government had been elected in 1979, the same decline would have continued. It would have continued for one economic reason: that local authorities of all parties realised that we could not afford to go on building council houses, the annual subsidy for which was well over £1,000 for every house that we built.

    Allerdale District Council
    Mr. Campbell-Savoursasked the Secretary of State for the Environment what consultations he has had with the Allerdale district council regarding the operations of the Government's strategy on housing by those local authorities, part of which fall in a national park.
    The Under-Secretary of State for the Environment (Mr. Geoffrey Finsberg): My right hon. Friend has had no consultations with Allerdale district council about the right-to-buy provisions contained within the Housing Bill.
    Mr. Campbell-Savours: Is the Minister aware that, at great expense, the South Lakes authority and Allerdale district council sent a delegation to the Select Committee to put their case about the right to buy? Has the Minister read the minutes of the Select Committee? What comments does he wish to make as a result?
    Mr. Finsberg: I have read the minutes. I remain of the view that, as amended, the clause is fair.

    Homeless Families
    Mr. Pawseyasked the Secretary of State for the Environment what are the latest annual figures of the number of homeless families housed by local authorities under the Housing (Homeless Persons) Act.
    Mr. Stanley: In 1979, local authorities in England reported that they had accepted about 57,000 homeless households under the Act.
    Mr. Pawsey: Is my hon. Friend aware that many local authorities are concerned because the Act is increasing the amount of time that certain people have to wait before being rehoused? Can he take any action to relieve pressure on local authorities that are being subjected, through no fault of their own, to lengthening queues?
    Mr. Stanley: As my hon. Friend knows, we are carrying out a review of the Housing (Homeless Persons) Act, during which we shall review both the Act and the code of guidance. We are anxious to announce conclusions as soon as possible. As a result of recent court decisions, we have had to consider several supplementary submissions very carefully.
    Mr. Joseph Dean: As vast numbers of single homeless people are often forced to seek accommodation in shabby hostels and lodging houses—which have been debated during the past 12 months —when does the Minister intend to issue the report of the housing advisory unit?
    Mr. Stanley: At the Report stage of the Housing Bill I said that I hoped that the report would be available before the Bill's proceedings came to an end. That remains our objective.
    Mr. Wilkinson: Notwithstanding the particular case of Hillingdon, which is being heard by the Court of Appeal this afternoon, will my hon. Friend consider boroughs that have ports of entry into the United Kingdom? Does he realise that at present those boroughs have a statutory duty to house homeless people who come into their area?
    Mr. Stanley: As my hon. Friend knows, the statistics show that the legislation has substantial geographical variations. London boroughs that are situated as my hon. Friend has described are particularly affected by the Housing (Homeless Persons) Act. We are taking that factor into account.
    Mr. Stephen Ross: As revision of the Act is taking some time, will the Minister reassure the House that circular No. 18/74 of the Administration headed by the right hon. Member for Sidcup (Mr. Heath), which sets out the priority groups, will not be disturbed? Will he also take great care about the figures that

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    are reported by airports and docks, and ensure that they are up to date? Is he aware that I believe that those figures are nothing like the ones that have been made out in the House and elsewhere?
    Mr. Stanley: As the hon. Gentleman knows, detailed statistics are collected by the Department from local authorities in accordance with the Act. The figures are published as soon as possible and copies are provided in the House. They are the best statistics available on an authority by-authority basis.

    Domestic Water Supply (Metering)
    Mr. Eggarasked the Secretary of State for the Environment when he expects to receive the review the National Water Council is carrying out in connection with the problems associated with the extension of optional metering to domestic households.
    Mr. King: I understand that the working party expects to submit its report to the National Water Council by the end of September, and I would hope to receive it shortly afterwards, together with its advice.
    Mr. Eggar: As Thames water authority consumers are already paying a considerable subsidy to consumers in other areas, and as consumers sometimes have to pay water rates on garages that have no water or sewerage connections, will my right hon. Friend ensure that authorities have to offer the option of metering to all water consumers?
    Mr. King: As my hon. Friend appreciates, some authorities offer that option. I should like to await the report before I consider the matter further. We shall look at this issue seriously.
    Mr. John Wells: Will my right hon. Friend consider the entire water industry again? Does not he accept that there are major problems not only in metering, but in the entire carry-on of all water authorities?
    Mr. King: My hon. Friend may have missed my reply to question No. 1, in which I made clear that that was what we were doing.
    Mr. R. C. Mitchell: What is the estimated public expenditure costs of instal-
    1516
    ling water meters in all domestic households?
    Mr. King: The figures were last estimated in 1975, and the top range was £950 million. An approximate estimate might be £1,500 million.

    Land Registers
    Mr. Wallerasked the Secretary of State for the Environment when he proposes to announce a further list of local authorities which are to be required to publish land registers.
    Mr. King: In the autumn.
    Mr. Waller: Is my right hon. Friend satisfied that the plot size identified in the requirement for local authorities to register land is adequate if sufficient land is to be made available? If experience shows that a variation in the plot size is advisable, will he make that change?
    Mr. King: Yes, Sir. We wish to start with the main areas of land. Initially, we do not want to have too small a plot size, as that would greatly complicate the exercise. At a subsequent stage, we shall reduce the plot size.
    Mr. Sever: Has the Minister any estimate of the cost to public funds of gathering the information needed for the publication of such registers?
    Mr. King: The cost will be modest, but it will be dwarfed by the savings that will be made to public funds by the better use of public assets. There are considerable amounts of under-used or unused publicly-owned land. Such land is lying derelict, and could be put to profitable use. That would be an asset to the public sector. I hope that when the Local Government, Planning and Land (No. 2) Bill is discussed, our proposals will receive widespread support from both sides of the House.

    Rate Support Grant
    Mr. Grahamasked the Secretary of State for the Environment if he will now make a statement on the discussions he is having with local authorities on the rate support grant for the current year and 1981–82.
    Mr. Douglas-Mannasked the Secretary of State for the Environment if he

    1517
    will now make a statement of the discussions he is having with local authorities on the rate support grant for the current year and for 1981–82.
    Mr. Heseltine: The rate support grant settlement for 1980–81 was made last November. The settlement for 1981–82 —including the increase orders for 1979–80 and 1980–81—will be the subject of discussions in the consultative council on local government finance later this year.
    Mr. Graham: Has the Secretary of State seen press reports this morning about the speech made by the chairman of the Association of County Councils? Is the right hon. Gentleman aware that the chairman urged complete opposition to the Government's proposals? Does he acknowledge that he has succeeded in uniting the whole of local government against the vindictive proposals affecting local government finance? Does the right hon. Gentleman expect or deserve the co-operation of Conservative and Labour councils when he has dismissed their reasonable, alternative proposals derisively and arrogantly, and in other ways as well?
    Mr. Heseltine: The hon. Gentleman will be pleased to know that we shall table some amendments to the Local Government, Planning and Land (No. 2) Bill in order to meet some of the recent criticisms that local authority associations have put forward. I do not wish to give any impression other than that local government is concerned about the provisions of the Bill, particularly those concerning block grant. The Government's view is widely understood outside the House of Commons. We believe that incentives must be given to authorities that manage their affairs prudently and carefully, and keep to reasonable levels of public expenditure. The present method of distributing the rate support grant encourages high levels of expenditure. We have therefore decided to change from the regression analysis to the block grant mechanism.
    Mr. Colin Shepherd: Does my right hon. Friend recollect that when the Labour Party came to power in 1974 it made a major shift in RSG in favour of Wales, ostensibly to recognise the increased cost of the provision of water there? Does he recall that the Welsh
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    water authority services part of Herefordshire and Cheshire? Will he bear that in mind when deciding how best to assist local government in its funding next year?
    Mr. Heseltine: As from this moment, it will be a matter which I shall never forget. It is certainly something that I shall examine when we come to make detailed assessments for next year.
    Mr. Tilley: If the Secretary of State is saying that he will make the decisions about the increase order only at the time of the annual meeting of the consultative committee does he realise that that means that it will be impossible for those local authorities that have been threatened with some loss in that increase order, under the legislation that is going through Parliament now, to make proper financial decisions? Will he accept that instead of just swinging through the municipal jungle making vague threats, he has a duty to give local authorities a clear indication of what money they will have to spend this year?
    Mr. Heseltine: The hon. Member will be aware that within the workings of the RSG settlement there is an element of clawback which is not totally predictable in advance to local authorities in the normal way. However, the logic of his question is that on the basis of returns of expenditure and rates, in which I do not have sufficient faith, I should make decisions about the changes that are to be made to secure compliance with the Government's public expenditure programmes. That would be an act of irresponsibility. The only way to avoid that is to get revised budgets, which I have asked local authorities to submit.
    Mr. Squire: During these discussions. will my right hon. Friend bear in mind that the totality of local government expenditure, contrary to the publicity in recent years, has been, in the last four years ending 1979–80, less than the totality agreed at the date of the RSG discussions, and that this bears well and favourably on the reputation of local government?
    Mr. Heseltine: Yes. My hon. Friend is perfectly right. There is a variation of between 1 and 5 per cent. between the volume forecasts and the actual out-turn. My problem is that the latest

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    returns show a budget in excess of 5·6 per cent., and I cannot rely on that 5·6 per cent. disappearing in the way that my hon. Friend suggests has sometimes happened in the past.
    Mr. Hattersley: May I remind the Secretary of State that under the Local Government, Planning and Land (No. 2) Bill he proposes plans to penalise a number of local authorities in November? When will those local authorities know that they have been chosen to be penalised? More importantly in terms of equity, when will he establish and publish the rules against which local authorities can measure whether they will incur his wrath? At present, most of them are operating absolutely in the dark.
    Mr. Heseltine: I do not think that the right hon. Gentleman is right in suggesting that local authorities are operating in the dark. We have sent to every local authority a precise figure showing exactly what we believe their levels of expenditure should be to secure compliance with the Government's targets. Every authority has got that figure clearly stated. Therefore, I do not believe that there can be any doubt in the minds of many authorities as to exactly what the figures are all about.
    The hon. Gentleman asks when I shall make an announcement about the precise use transitional arrangements. I shall be looking at that matter when I have secured the revised budgets, and I would imagine that we shall be talking about it some time in September.
    Mr. Hattersley: Just in case anyone believes that the Secretary of State understands his own Bill, may I ask him to confirm that the precise figures for local authority expenditure are for what happens for next year and not what happened for this year, and that his answer is based on a total misunderstanding of his own Bill, which we shall be debating next week?
    Mr. Heseltine: I should have to examine in detail with the right hon. Gentleman—[Interruption.]—the precise words that I used. But when he comes to check the record he will find that what I have said is totally in compliance with the existing legislative proposals.

    Mortgage Repayments
    Mr. Easthamasked the Secretary of State for the Environment what evidence his Department has of owner-occupiers applying to council housing departments for rehousing as a result of inability to meet increased mortgage repayments caused by high interest rates.
    Mr. Stanley: The only evidence we have is from statistics supplied by local authorities of homeless households accepted by them under the Housing (Homeless Persons) Act 1977. In 1978 about 3,300 and in 1979 about 2,700 households in England were accepted as homeless because of mortgage default or inability to pay for owner-occupied accommodation.
    Mr. Eastham: In view of the Government's phoney election campaign about home ownership, may I ask whether the Minister is aware that the city of Manchester is now being confronted with owner-occupiers applying to be considered for council houses at the rate of 60 per month? That can be repeated in many other cities as a consequence of the high mortgage interest rates. In view of the hon. Gentleman's policy, what does he intend to do about this matter?
    Mr. Stanley: I think that the city of Manchester could solve the problem simply by selling council houses, which would enable the many tenants in Manchester who want to buy to have the opportunity of getting a mortgage. It would also enable the city of Manchester to add to its HIP allocation and to increase the availability of local authority mortgages in the next financial year.
    Mr. Robert Atkins: Bearing in mind how many members of the Labour Party, Labour councillors, and probably some Labour Members of Parliament, want to buy their own council houses, what does my hon. Friend intend to do about those Labour-controlled councils, such as Preston, which regrettably are putting a stop on the sale of council houses?
    Mr. Stanley: I am glad to tell my hon. Friend that I hope that within a matter of weeks the right to buy legislation will receive the Royal Assent.

    Bison Wallframe Building System
    Mr. Shersbyasked the Secretary of State for the Environment what representations he has received from the hon. Member for Uxbridge concerning the repair of flats constructed under the Bison wallframe system; and if he will announce his policy for assisting local authorities to remedy the defects that have now emerged as a result of using this type of building for their housing programmes.
    Mr. Geoffrey Finsberg: My hon. Friend has made representations both through parliamentary question and correspondence. We have concluded that we cannot offer special Government assistance under the existing subsidy system. It remains for decision whether the costs of such remedial works should count under the new subsidy system which we propose bringing into effect on 1 April next. We expect to make our view on this point known in the near future.
    Mr. Shersby: Does my hon. Friend agree that in the light of the defects which have now come to light in the Bison wall frame system, it is reasonable to cast doubt on the validity of the National Building Agency certificate? When will his Department make available to Hillingdon council its appraisal of the remedial work required? Will it give guidance on carrying out such work?
    Mr. Finsberg: The situation on industrialised building is that successive Governments have recognised the contribution which the use of industrialised building methods can make towards meeting housing need at reasonable cost. Concerning the NBA situation, I shall need to have further consultations, but I hope that it will not be too long before the requisite information is available.
    Mr. Allan Roberts: Will the Minister give a rough estimate of how many of these Bison wallframe system flats are likely to be purchased under the right-to-buy provisions? If the people living in that kind of accommodation do not purchase what chance will they have of getting a transfer out of this catastrophic accommodation into other houses, if they are all sold off?
    Mr. Finsberg: Bearing in mind your injunction, Mr. Speaker, I shall answer the first of those two questions. The properties would have a reduced value, and I am certain that a large number of tenants would be delighted to have the chance to buy, which is denied by authorities such as those of Manchester and Birmingham.

    Local Authority Manpower
    Mr Altonasked the Secretary of State for the Environment if he is planning to introduce legislation to limit the number of people employed by local authorities.
    Mr. King: No, Sir.
    Mr. Alton: Is the Minister aware that in many local authorities, where there are high unemployment rates anyway, local authorities are being faced with the cruel dilemma of having to decide whether to cut services or to sack employees? Does he not, therefore, think that it is the height of arrogance and a slap in the face to civic leaders from the city of Liverpool to turn down their recent request to meet the Secretary of State to discuss these difficulties?
    Mr. King: I understand that my right hon. Friend has met the leader of the council of the city of Liverpool on a previous occasion. Obviously we are anxious, whenever it is reasonably possible, to meet leaders of principal local authorities. But in these difficult decisions, the Government have to face difficult expenditure priorities, as do local authorities.
    Mr. Gummer: Is it not right that in order to meet the difficulties of the past five years, private enterprise has had to cut the number of people that it employs? Are not those employees extremely upset that local authorities, far from cutting their staff, seem to go on increasing their staff without any good reason being given to the electorate? Who pays?
    Mr. King: One of the concerns of local authorities is the level of employment in their areas, yet many local authorities seem quite unaware of the serious impost that rate burdens place on industry. It is the largest single tax impost that falls on manufacturing industry. Undoubtedly in certain areas the

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    level of rate increases has led to considerable unemployment among many industrial concerns.

    Public Land (Transfer)
    Mr. Stephen Rossasked the Secretary of State for the Environment whether he will take steps to encourage the transfer of public land to private builders on a leasehold basis, similar to the scheme recently announced for Belfast.
    Mr. Heseltine: A number of authorities in England have already undertaken or are considering undertaking partnership schemes with builders. As part of my drive to promote low-cost home ownership I am already encouraging all housing authorities to consider promoting such schemes to help meet the housing needs of their area.
    Mr. Ross: Is the Secretary of State aware of the scheme in Northern Ireland whereby the land will be let on a leasehold basis to builders and then the freehold will be transferred later to the purchaser by the housing authority in Northern Ireland? Is that not an ideal scheme to keep down the costs of new houses, for first-time buyers in particular?
    Mr. Heseltine: As the hon. Member knows, this scheme is in its infancy. It is an interesting scheme. I believe that
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    something not dissimilar in principle is under way in Liverpool. Of course I shall watch experiments of this sort, and, wherever possible, I shall encourage them.

    Planning Applications
    Mr. Iain Millsasked the Secretary of State for the Environment if he will make a statement on progress in accelerating the speed of determining planning applications.
    Mr. Heseltine: I have set in train various measures which should result in substantial improvements in the handling of planning applications. Trends in speed of decision will become apparent in due course from the regular statistical bulletins which my Department is now publishing.
    Mr. Mills: Is the Secretary of State aware that an additional delay is often caused at the local authority end? Will he consider introducing some form of instant decision-making on this matter?
    Mr. Heseltine: I have secured agreement from the local authorities that they would also publish the details of the time taken for them to reach decisions on planning applications. I also intend that my planning inspectors should give their decisions within a matter of days of the inquiries being concluded in a large number of cases.

NORTHERN IRELAND (GOVERNMENT)
The Secretary of State for Northern Ireland (Mr. Humphrey Atkins): With permission, Mr. Speaker, I will make a statement on Northern Ireland.
The Government have today published a Command Paper entitled "The Government of Northern Ireland—Proposals for Further Discussion". Copies are available in the Vote Office. Publication of this paper is the latest stage in a process that began with the resolve expressed in the Gracious Speech to:
"seek an acceptable way of restoring to the people of Northern Ireland more control over their own affairs."
Last summer I held talks with the leaders of the principal political parties in Northern Ireland, and in October last I announced the Government's intention to hold a political conference to identify the highest level of agreement on how powers might be transferred to locally elected representatives. To assist that conference we published a working paper—Cmnd. 7763. That working paper set out certain principles to which the Government believe any transfer of responsibility should conform, and it gave a number of illustrations of ways in which transferred powers might be exercised.
The conference met in Belfast between January and March, and was attended by three of the four main Northern Ireland parties. It did valuable work. It identified a substantial number of issues on which very little seemed to divide the parties. It enabled the parties to describe in detail to me and to each other what their views were and the reasons for them, and it explored very fully the key questions that still have to be resolved if we are to establish any kind of acceptable local administration in Northern Ireland.
Mr. R. C. Mitchell: On a point of order, Mr. Speaker. At the beginning of his statement the Secretary of State said that copies of the document were available at the Vote Office. They are not. Could someone make inquiries?
Mr. Speaker: I shall have inquiries made.
Mr. Atkins: Copies should be available. In addition, we have had the benefit of submissions and views expressed
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by parties and individuals not represented at the conference, including the paper submitted to the Prime Minister by the Ulster Unionist Party.
The document published today has two principal aims. First, it describes those areas where it is now possible to see fairly clearly how powers might be transferred. For example, there is a clear desire for the transfer of both legislative and executive powers over a range of subjects similar to that transferred in 1973, and for the establishment of a single elected Assembly for Northern Ireland with about 80 members. As was made clear in the working paper, the Government at Westminster would need to continue to be responsible for certain functions, especially law and order and the determination of Northern Ireland's share of the total of public expenditure, and some arrangements would be needed whereby elected representatives were able to give advice to the Secretary of State on the exercise of those functions.
Mr. J. Enoch Powell: That is us.
Mr. Atkins: Secondly, the document analyses and puts forward for discussion proposals on those aspects where, as is well known, there is disagreement between the parties, namely, how the executive powers of government in Northern Ireland are to be exercised so as to
"take account of the interests of both parts of the community"
as the principles in the working paper put it.
On the one hand, some wish to see the Executive formed by the leader of the party or parties commanding a simple majority in the Assembly. On the other, some believe that an adequate role for representatives of the minority community could only be assured if executive powers are exercised by a more broadly based body.
Mr. Skinner: Another house of cards.
Mr. Speaker: Order. I am sorry to interrupt the Secretary of State, but I must say to the hon. Member for Bolsover (Mr. Skinner) that it is unfair, as well as discourteous, to hold a running conversation while someone else is addressing the House. It is simply a matter of good manners.
Mr. Skinner: On a point of order, Mr. Speaker. I heard the right hon. Member for Down, South (Mr. Powell) making a few odd comments. I thought that if it was in order for a Privy Councillor to do so it might have been in order for me. I was merely pointing out that—
Mr. Speaker: Order. It really should be possible for the Secretary of State to make a statement on a serious subject such as this and be heard in silence.
Mr. Atkins: It is clear that further discussion and negotiation are needed in Northern Ireland on this issue, and the Government have set out in the paper specific proposals, on two somewhat different approaches, as a basis for further talks with and between the parties.
I do not need to tell the House the importance of this subject to the people of Northern Ireland and to the people of the United Kingdom as a whole. For that reason I ask, and I believe that the House would expect, that all concerned should study this document with great care. I do not intend this afternoon to summarise the contents of the document. It deserves more extended consideration, and my right hon. Friend the Leader of the House has already promised an early debate, when I look forward to hearing the considered views of hon. Members.
Following that debate, my colleagues and I will discuss the proposals as widely as possible in Northern Ireland. I hope also to embark upon bilateral discussions with the Northern Ireland parties, and I shall of course welcome any views or ideas that may be put forward for our consideration. I envisage these talks taking place in confidence and, to begin with at least, with the parties separately. It is not my intention for the time being to reconvene the conference.
For my part, I approach these talks determined to make progress. I must emphasise that for that to happen a constructive approach is needed from the people of Northern Ireland and their political representatives. It is my hope to complete this further stage by the end of the Summer Recess. The Government can then reach their own conclusions on what proposals it would be appropriate to put before the House.
The document published today refers to the need for peace and stability in
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Northern Ireland as a basis for economic reconstruction. The present economic situation in the Province is a telling reminder of how urgent that task is and how desirable it is for the elected representatives of Northern Ireland to be directly involved in it.
I would say one final thing. The House will be aware that the men of criminal violence will, if they can, disrupt the progress of political discussion and reconciliation, and hon. Members on all sides will, I hope, join with me in appealing to the people of Northern Ireland to support the security forces who are committed against terrorism, so that these further discussions about their future can take place quietly and with confidence.
Mr. English: On a point of order, Mr. Speaker. In view of what the Secretary of State said, will you refrain from asking anyone to put a supplementary question today? The Secretary of State said that right hon. and hon. Members should consider the Green Paper, which we cannot do at present, in view of the earlier point of order that was raised by my hon. Friend the Member for Southampton, Itchen (Mr. Mitchell). Therefore, I suggest that you should ask for supplementary questions tomorrow.
The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): Further to the earlier point of order, Mr. Speaker. I have checked on the situation. The paper is, in fact, available at the Vote Office.
Mr. Speaker: On the point of order raised by the hon. Member for Nottingham, West (Mr. English), the House has heard the statement and I am sure that every hon. Member will want to behave responsibly. I am bound to allow some supplementary questions on a major statement on a matter that hon. Members know to be an important and delicate issue.
Mr. John: Will the right hon. Gentleman accept from me and others in the House that as the statement is thin and somewhat lacking in detail, and as the White Paper is, at best, not long to hand, we cannot go into detail on this statement and we shall welcome the opportunity of an early debate on it?

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We are all disappointed that the right hon. Gentleman has not got a great deal further with his talks than he appears to have done. There is so much still to do, particularly in terms of deciding how the powers that he agrees should be referred to the Northern Ireland Executive are to be exercised.
Does the Secretary of State agree that the talks that he proposes to launch in Northern Ireland as a result of the White Paper will be crucial if any progress is to be made? We want to see a properly devolved Assembly, with people working together in Northern Ireland, as the main aim, but may we assume that such an Assembly will not be established without a wide measure of agreement in the Province?
The right hon. Gentleman mentioned talks. Is he aware that since there is so much hanging on the talks between the communities in Northern Ireland, the Labour Party will not do anything to impede those talks or to make an admittedly already difficult task much harder?
The task is not made any easier by the Secretary of State's conduct of economic affairs. He will know, as I know, that the debate on the constitution will take place in the framework of a Northern Ireland that is in severe economic decline. That will obviously colour the attitudes of those who are considering constitutional ways forward.
Is the right hon. Gentleman aware that I agree with what he said about the men of violence? I condemn them and hope that they will not be allowed to get in the way of the proper talks by those who desire nothing more than peace. I agree wholeheartedly that the only place where law and order for Northern Ireland can be controlled is this House.
Is the right hon. Gentleman considering a referendum to validate the proposals for constitutional change if he gets far enough to put them to such a test?
Mr. Atkins: I am grateful to the hon. Gentleman for saying that the Labour Party will not seek to hinder the talks that are necessary. He said that there is still a lot to do, and he is right. However, we have made substantial progress over the past months and, as the hon. Gentleman will find if he studies the White Paper, there is quite an area of agreement that is clear to all.
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It is essential—the Government have laid this down as a pre-condition from the word "go"—that any proposals must be acceptable to both communities in Northern Ireland. It is that acceptability that we are seeking to pursue the whole time.
The hon. Gentleman mentioned the economic situation. I shall not discuss that in detail today, but I believe that it will be of advantage to Northern Ireland if its elected representatives have some power in Northern Ireland, which they do not have at the moment. That is at the back of everything that we are seeking to do.
We have never ruled out a referendum, and I certainly do not rule it out now.
Mr. Molyneaux: I thank the right hon. Gentleman for agreeing to the request of my party and the official Opposition for the statement to be made in the House and not elsewhere. For reasons that will be obvious, I have not seen the document, but may I ask whether the right hon. Gentleman is aware that any attempt to resurrect the 1973 rigged Executive would be rejected by the electorate in Northern Ireland as decisively as was that earlier experiment?
Is the Secretary of State aware that any design for two rival Cabinets would be a recipe for disaster and would make government in Northern Ireland impossible? As the 1972 Stormont Government were dismissed and abolished for refusing to relinquish powers over security, what credibility could be attached to any structure from which those powers were withheld?
Mr. Atkins: The hon. Gentleman will find the answers to his questions in the White Paper, which I know he will study with great care. There are alternative approaches to the method of forming the Executive and the way in which it should work. Neither is precisely what has happened in Northern Ireland before, and I can assure the hon. Gentleman at once that there will not be two Cabinets.
If I invited the House to agree to a transfer of responsibility for law and order when there were still 12,000 Regular Army soldiers in Northern Ireland I think that the House would decisively reject such a request.
Rev. Ian Paisley: Will the right hon. Gentleman take it from me that no matter what proposals he is putting before the House for discussion, the people of Northern Ireland are gravely concerned about the deterioration in the security situation? Is he aware that this year alone the IRA has claimed to be responsible for 35 hideous murders? Is he aware that one of the UDR victims this week received a letter from the right hon. Gentleman's office denying him the use of a personal weapon for his defence and that his wife got the letter after her husband had been mown down at Aughnacloy? Does the right hon. Gentleman not think that that sort of situation is one with which he should concern himself?
I welcome the fact that there is no mention in the White Paper of any involvement by the Government of the Republic. That will be generally welcomed in Northern Ireland. What response is the Secretary of State prepared to make to the representations made to him in Northern Ireland that any new Assembly should have some sort of role in security matters? There is such a role even for local government, through district councils, in Northern Ireland at present.
Will the right hon. Gentleman take it from me that any attempt that he or any future Government may make to rig a Government in Northern Ireland so that the minority can, by artificial devices, become a majority and exercise a veto will be unacceptable and will be utterly rejected by the electorate of Northern Ireland?
Mr. Atkins: The pursuit of political advance has not detracted in any way from the Government's determination to overcome terrorism, nor will it do so. If the parties in Northern Ireland can agree to support a structure of government, that will be a big step forward in isolating the terrorists still further from the community. I know that the hon. Gentleman will study the proposals. He will find the answers to at least some of his questions there. The role of any new Executive in security matters will be an important advisory role, though responsibility will remain with the Government at Westminster.
Mr. Stephen Ross: Is the Secretary of State aware that the Liberal Party supports his request to the main political parties in Northern Ireland to give his proposals a fair wind and not to reject them out of hand? Is it his experience from his time of office in Northern Ireland that the ordinary residents there desperately want their political leaders to get together so that a meaningful Assembly can be re-established at Stormont to deal with those matters that it would be best able to deal with?
Mr. Atkins: It is my understanding that the people of Northern Ireland want the matter resolved so that they can once more have an elected body in Northern Ireland responsible for a wide range of activities. I am certain that that is what they want, and the response of the people of Northern Ireland to the setting up of the conference was indicative of that. Overwhelmingly, they wanted their political leaders to talk, and I am glad that they did.
Several Hon. Members rose—
Mr. Speaker: Order. The House knows that there is to be a reasonably early debate on this matter. I propose to call four more hon. Members from each side of the House to elicit what information they wish.
Mr. Biggs-Davison: While wishing my right hon. Friend well in his search for co-operation in what he calls the two parts of the community in Northern Ireland, may I ask whether the Government will bear in mind the effect of any proposals for legislative devolution on the other parts of the United Kingdom?
Mr. Atkins: I am grateful for my hon. Friend's good wishes. The answer to his question is "Yes".
Mr. Donald Stewart: Can the right hon. Gentleman give any rational and honest explanation why the Government are busy laying on separate government for Northern Ireland, in view of the opposition of one of the main parties there and the belief of the majority of the residents that they are more British than people on the mainland when, at the same time, the Government refuse devolution for Scotland, for which the majority voted in favour?
Mr. Atkins: The right hon. Gentleman is mistaken in his original assertion. It is the declared policy of all the political parties in Northern Ireland that devolution should come to the Province. The other difference between Northern Ireland and the other parts of the United Kingdom is that this is what people were accustomed to up to 1972, and they want it back again.
Mr. McNamara: May I first thank the right hon. Gentleman for agreeing to make a statement to the House in response to the wishes of the House expressed last Thursday? We are grateful to him. Is it the Government's intention, at the end of the period of discussions—whether or not there is a referendum—to legislate for some sort of Assembly, come what may, whether or not an agreement exists?
Mr. Atkins: I am always happy to make a statement to the House, if that is what the House wants. In answer to the second part of the hon. Gentleman's question, that is what we hope to do. If we can get a high level of acceptance of a system in Northern Ireland, we shall lay before the House proposals for legislation.
Mr. Mates: In wishing my right hon. Friend well in the talks to come, may I ask him to impress upon all parties to those talks the urgency that now exists to bring these matters to a conclusion and a decision? Is he aware that since it is undoubtedly the wish of all people in all communities in Northern Ireland to resolve this long-standing problem, the leaders owe it to all of us to stop prevaricating, to come together and to discuss the matter, and agree, or not agree, that some means forward can be found? Does my right hon. Friend agree that if there is no agreement the Government must consider the question of continued direct rule for an indefinite period?
Mr. Atkins: I agree that there is an urgency about the matter. We have been pursuing this aim for 14 months. There is a desire in Northern Ireland for an accommodation. I hope very much that the political parties with which I hope to have discussions will press ahead with this. We hope to achieve a high degree of acceptability. It is no use the Government putting before the House proposals that are not going to be accepted
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in Northern Ireland. I believe that there is a chance, and I shall pursue the matter as energetically as I can.
Mr. S. C. Silkin: I am sure that virtually the whole House would hope that there would be a high degree of acceptability of the proposals of the Government, but have the Government considered the situation that would arise if that were not achieved? If so, what conclusions have they reached?
Mr. Atkins: Yes, Sir. If the right hon. and learned Gentleman will study paragraph 64 of the paper, he will find the Government's thoughts on that matter.
Mr. Peter Mills: Does my right hon. Friend agree that it is important to make a start after all these years? That is why I wish him well in what he is attempting. I am sure that, on the whole, the people of Northern Ireland wish to make a fresh start. Will my right hon. Friend try to go forward in those areas where agreement has already been reached and then gradually proceed to other areas, as confidence is gained?
Mr. Atkins: That is a possible approach, and one that we might consider. I will be frank with the House. We are aiming higher than that at this stage. I hope very much that we can make an advance in the directions that we have indicated in the paper.
Mr. McCusker: Is the Secretary of State not yet aware that the fundamental concern of my constituents is to stay alive and to hold on to their jobs if they are lucky enough still to have jobs? What reassurance can the right hon. Gentleman give that this paper contains anything that is likely to deal with either of those important matters? Will he give an assurance that in the bilateral talks that are about to take place the Official Unionist Party will be able to raise these two vital matters with him?
Mr. Atkins: The establishment of a generally agreed system of government in Northern Ireland that the whole community could support would, in my judgment, be a great step forward in the security situation. It would totally isolate the terrorists. This is a prize that we must all seek to gain. On the economic front, I hope very much that we can make some

1535
arrangements that will enable people elected in Northern Ireland to play a part in the economic affairs of the country. This is what we are after. I hope that we can do it.
Dr. Mawhinney: I welcome this paper from my right hon. Friend. In respect of the discussion on which he is about to embark, can he say whether he will choose those with whom he wishes to consult, or whether he will consult those who wish to consult him?
Mr. Atkins: I want to have the widest possible discussions throughout the Province. The first discussions that I hope will take place is a debate in this House but thereafter I am anxious to talk to anyone who has ideas about how we can make progress.
Mr. Arthur Lewis: On a point of order, Mr. Speaker. I should like to refer to the point raised by my hon. Friend the Member for Southampton, Itchen (Mr. Mitchell) on the general principle and not the particular case. With great respect, I do not mean to be critical either of the Secretary of State for Northern Ireland or the Leader of the House. We have, Mr. Speaker, by arrangement with you, a request that a statement should be made. Therefore, obviously, the Minister must have consulted you. In that statement, he makes a claim that papers are available. We are then advised that the papers are not available [Interruption.] This is not a laughing matter. It is a serious matter. We are then told, nine minutes afterwards, that the papers are available.
I am not criticising this Government. It has happened on many occasions in the past, under both Governments. It is rather discourteous to Mr. Speaker. If you are told, Mr. Speaker, by advance notice, that a statement is to be made—I understand, rightly, that you are given a copy of that statement—and the statement says that papers are available, and the press and everyone except the House of Commons has a copy, it is surely incumbent on the Government—neither of the right hon. Gentlemen responsible is listening—especially when a printed document must have been prepared some hours, if not days, before, to see that the papers are available.
1536
My point of order is this: will you, Mr. Speaker, see to it—I think, with respect, that this is the job of the Chair—that papers and documents are available. When any Minister tells you that papers and documents are available, steps should be taken, before the statement is made, to ensure that the papers and documents are in fact available.
Mr. Speaker: I am much obliged to the hon. Gentleman. It was not at my request that the unusual—I think it is unusual—step was taken, when a Minister was to make a statement, for a copy to be put in the Vote Office. The hon. Member for Keighley (Mr. Cryer) has on several occasions requested that this be done. He has done so on a point of order at the end of questions in statements. I can also tell the hon. Gentleman —since it is not generally known—that although the House sees that I read a statement, I get it when the Minister rises in his place. It is not my responsibility. It is the responsibility of the Minister concerned. It is not for me to defend the Front Bench; it is their responsibility. I think, however, that an effort was made today to make the statement available.
Mr. English: Further to the point of order, Mr. Speaker. This system of publishing things after a statement has been made brings the whole system of government into contempt. Had this document been published earlier, all hon. Members would have had the opportunity to notice that paragraph 26 contains a complete misstatement of fact about the system of election in Northern Ireland. This is rather important.
It would have been easier if that had been pointed out earlier. Now the error must be pointed out afterwards and the Government will be brought into contempt for not getting the facts right.
Mr. Speaker: The contents of documents are not my responsibility. The House will have the opportunity to debate the document, as we have been promised.
Mr. Nicholas Winterton: On a point of order, Mr. Speaker. Am I correct in thinking that a few minutes ago you said that you would call four additional hon. Members from either side of the House? Am I right in thinking that so far you

1537
have called only three hon. Members from either side? I hope that I shall be the fourth additional hon. Member to be called from this side, because I am particularly interested in what happens in Northern Ireland. Is it your intention, Mr. Speaker, to call a further hon. Member from either side of the House?
Mr. Speaker: I called four hon. Members from either side. I have the names before me. I must confess that I was becoming a little anxious for the health of the hon. Member for Macclesfield (Mr. Winterton), as I could see that he was becoming more and more frustrated at not being called. From time to time that is the lot of almost all hon. Members.

THE HON. MEMBER FOR BIRMINGHAM, PERRY BARR
Mr. Rost: On a point of order, Mr. Speaker. Following the publication today of the report from Rolls-Royce on the outcome of its investigations into allegations of corruption against one of my constituents, have you yet had notification from the hon. Member for Birmingham, Perry Barr (Mr. Rooker) that he wishes to make a statement to withdraw his unsubstantiated allegations and to apologise to Rolls-Royce and my constituent for the injury and damage caused?
Mr. Speaker: I have received no request from the hon. Member for Birmingham, Perry Barr (Mr. Rooker).
[HON. MEMBERS: Disgraceful.]
Mr. Dykes: Further to that point of order, Mr. Speaker. To all concerned it must appear that the hon. Member for Birmingham, Perry Barr (Mr. Rooker) has gravely damaged the reputation of the House. Either it was a genuine mistake
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on his part in misconstruing the wrong information or, subconsciously and without realising it, it was merely an attempt at self-aggrandisement. In those circumstances it is incumbent upon the hon. Member to do the only honourable thing and get to his feet and withdraw his unfounded allegations.
Mr. Alexander W. Lyon: Further to that point of order, Mr. Speaker. If this is an occasion for asking whether statements are to be made by hon. Members, has a request been made by the hon. Member for Wokingham (Mr. van Straubenzee) to withdraw a statement that is now accepted to be defamatory?
Mr. Speaker: I have received no such request. This is not the time to debate what has happened. I have no doubt that there will be other opportunities. It is up to the House.
Mr. English: On a point of order, Mr. Speaker. I have not had the opportunity to read any statement from Rolls-Royce, or the evidence that I presume was published with it, as a Select Committee would publish evidence of an inquiry. I should like to read such evidence before it is commented upon in the House.
Mr. Speaker: I am obliged to the hon. Gentleman.

BUSINESS OF THE HOUSE
Ordered,
That, at this day's sitting, notwithstanding the provisions of Standing Order No. 4 (Prayers against statutory instruments, &c. (negative procedure)), the Motion relating to Education may be proceeded with, though opposed, until half-past Eleven o'clock or for one and a half hours after it has been entered upon, whichever is the later, and Mr. Speaker shall then put any Questions necessary to dispose of proceedings thereon, if not previously concluded.—[Mr. Brooke.]

MENTAL PATIENTS (RIGHT TO VOTE)
4.4 pm
Mr. Barry Sheerman: I beg to move,
That leave be given to bring in a Bill to amend and repeal section 4(3) of the Representation of the People Act 1949 which prevents mental patients resident in psychiatric hospitals with no alternative electoral address from using the hospital for registration purposes.
Under the present law informal or voluntary patients in mental hospitals are denied the right to vote, not because they are thought to be unfit to do so but because a mental hospital, unlike a general hospital, is not allowed to be used for electoral registration purposes. The problematic legislation is the 1949 Representation of the People Act, section 4(3) of which applies to
"A person who is a patient at any establishment maintained wholly or mainly for the reception and treatment of persons suffering from mental illness"
or other form of mental disorder. Under that section patients who, for various reasons, have no alternative address are denied the vote but patients who still have a home address can register at that home address.
The criterion is dependent not on mental condition but on individual circumstances. If a patient has a home to go to he has a vote. If he has lost that home, by one of the many unfortunate circumstances that mental patients face, such as the break-up of a marriage, his right to vote is lost. He loses that right for a reason other than his mental health. Patients who are domiciled in hospital because they have no other place to go lose their electoral rights.
A further anomaly lies in the present system. A homeless mental patient in a psychiatric unit of a district general hospital can use that hospital address for voting purposes. A patient suffering exactly the same condition in a psychiatric hospital cannot use that address. Two patients suffering the same illness are therefore granted different rights. Many mentally ill patients living in the psychiatric wings of general hospitals are far worse than some patients in so-called psychiatric hospitals.
Government figures estimate that about 130,000 people are disenfranchised be-
1540
cause of the present law. The 1973 Speaker's Conference on electoral reform recommended a repeal of the section, but successive Governments have failed to take action. The issue has a long history, under Governments of both parties, of postponement and inertia—most recently of inertia by the interdepartmental working party that has been established since 1974. Such Government delay and prevarication in dealing with the enfranchisement of the mentally ill illustrates the political powerlessness and social low standing of psychiatric patients as a group in the community.
This is an opportunity for the House to show that it believes that mental ill health is a fact of life. As many people will experience mental ill health as experience physical ill health and hospitalisation. My small Bill will be a step towards persuading men and women that they are not second- and third-class citizens and that they are not shut away and forgotten by the House and the people with power in government.
Similar issues have been raised and resolved in regard to residence at other institutions, such as the universities and geriatric and general hospitals, and in respect of members of the Armed Forces. The problem has been effectively solved in the United States and Ireland. There is no reason, legal or moral, why an insular minority should not improve its political and social position through the franchise. The franchise would help this large minority of people towards their rights and towards taking their place in society.
The problem was brought to my attention through a constituent who was disenfranchised at the last general election. He is a senior bank clerk, who had a mental breakdown. His marriage broke up. Because he was mentally ill for a time—but not unfit to vote—he lost his right to vote at the general election. That did not help him on the path to recovery. He was cross and angry that society should have treated him in that way.
I hope that this Bill will obtain the Government's favour and persuade them quickly to bring in an amendment to the existing law. I thank you for your patience, Mr. Speaker.
Question put and agreed to.
Bill ordered to be brought in by Mr. Barry Sheerman, Mr. Charles Irving, Mr. David Alton, Mr. John Tilley, Miss Janet Fookes, Mr. Jack Straw, Mr. John Dunlop, Mr. Arthur Davidson, Mr. Martin O'Neill and Mr. Michael Welsh.

MENTAL PATIENTS (RIGHT TO VOTE)
Mr. Barry Sheerman accordingly presented a Bill to amend and repeal sec-
1542
tion 4(3) of the Representation of the People Act 1949 which prevents mental patients resident in psychiatric hospitals with no alternative electoral address from using the hospital for registration purposes: And the same was read the First time; and ordered to be read a Second time upon Friday and to be printed. [Bill 239.]

EUROPEAN COMMUNITY (BUDGET)
[Note: Document 8073/80, updating documents 5437/80 and 7767/80, is also relevant.]
Mr. Speaker: I have selected the amendment in the names of the Prime Minister and her colleagues.
4.10 pm
The Chancellor of the Exchequer (Sir Geoffrey Howe): I beg to move,
That this House takes note of European Community document COM(80)147 on Convergence and Budgetary Questions, of the conclusions of the Foreign Affairs Council on 29 and 30 May annexed to the Explanatory Memorandum on document 7943/80, of documents 7943/80 and 7944/80 containing draft regulations implementing the agreement recorded in those conclusions, of documents 5437/80 and 7767/80 on the Community Budget for 1980 and 7389/80 on the Common Fisheries Policy; and welcomes the agreement reached at the Foreign Affairs Council on 29 and 30 May for reducing the United Kingdom's net contribution to the Community Budget.
I have no doubt that the House will share my pleasure at our having been able to arrange a full debate on the budget agreement reached in the Council of Ministers on 30 May. I say that because it is the view of the Government that that arrangement will turn out to have been one of the most significant and fruitful developments since we became members of the Community in 1973.
The agreement is significant, first of all, because of the general lesson that we can learn from it about the way in which the Community works. For it is now clear that provided we take a firm but constructive attitude in Community discussions it is perfectly possible to secure changes in the way the Community works—in our interests and those of the Community as a whole. This agreement has been achieved on a complex of problems that touched the essential interests of member States and that only a year ago seemed absolutely intractable.
The second and perhaps even more important aspect of the Brussels agreement is that which opens up the way to the future—the specific commitment to a fundamental review of the scope, balance and operation of the community budget. That decision is the consequence of a very explicit insight on the part of all the member States. It is an insight into
1544
the need for changes of the kind that successive Governments have long regarded as essential.
It is becoming surprisingly easy to forget the scale of the problem that we faced a year ago. The state of affairs that this Government inherited when they came to power was profoundly unsatisfactory, and it threatened to deteriorate further. In 1978 the Labour Administration made a net contribution of £860 million to the EEC budget. And the upward trend in our contributions was going to take us, as the House knows, above £1,000 million by 1980, with no prospects of substantial relief.
This steady and increasing cash drain —this is an important point—was accompanied by a reluctance on the part of our partners in the Community even to listen to our case, let alone to do anything about what was already a manifest injustice, and an injustice that was plainly becoming more serious.
We can now see that the previous Government were seriously, indeed doubly, handicapped in tackling this situation.
Mr. Eric S. Heffer: If that is the position, will the right hon. and learned Gentleman explain why he and his colleagues, when in Opposition, did not support the then Labour Government when they were making every effort to secure a reduction? When they were in opposition the Conservatives were constantly criticising the Government for trying to get a reduction.
Sir G. Howe: On the contrary; we criticised the style and conduct of the previous Government, and if we judge by results we were entirely justified in doing so. The previous Government launched a well-trumpeted attack on the structure of the Community and set about a much-advertised pattern of renegotiation. As I said, they were totally handicapped from achieving success in that operation.
They were handicapped first by their lack of commitment to the Community and they were handicapped, in the result, by their lack of determination. They failed to achieve what they set out to achieve. Their lack of commitment was apparent to the rest of the Community. That was hardly likely to encourage our partners to work out a solution. The then Government's lack of determination

1545
can be judged by what they achieved. They achieved results, in the so-called renegotiation of 1975, that were largely marginal. That is one of the crucial reasons why the position on this issue, among many others, was fundamentally improved by the change of Government just over a year ago.
Mr. Douglas Jay: Will the right hon. and learned Gentleman tell us who introduced the European Communities Bill into this House in 1972?
Sir G. Howe: I think that I was one of those whose names were on the Bill. I was certainly one who spent more hours in this House defending the Bill than most other hon. Members. I make no apology for that. In due course I shall come to some of the provisions that we had in mind in 1970–71. I am now dealing with the abysmal record of the previous Government in this matter, despite all their protestations. This must be a bitter pill indeed for Opposition Members to swallow, particularly those who have felt as long as has the right hon. Member for Battersea, North (Mr. Jay) that it was fundamentaly important to secure these changes.
His party launched into these matters in 1975 and they emerged with a busted flush. This Government achieved success in 12 months. We did so in the first place because we made it unmistakably clear to our partners that we were firmly committed to the Community. It was a great deal better than anything supported by Opposition Members. The Labour Party achieved nothing; we have achieved a measurable success. I shall come to that in a moment.
What my right hon. Friend the Prime Minister did at the European Council at Strasbourg, within a month of taking office, was to make plain our commitment to Europe. At the same time she declared, and demonstrated, our complete determination to secure correction of the budgetary situation, which was quite wrong. That was a change of posture that was achieved only as a result of a change of Government and the replacement of the previous Government.
I turn now to the Budget problem and to the history to which Opposition Members have rightly referred. They are quite right to remind us of that. At the
1546
time of our entry negotiations in 1970–71 it was recognised that the operation of the "own resources" system— I remember hon. Members discussing it durnig debates—which had come into force in April 1970 could lead to a high level of gross contribution at the end of the transitional arrangements. In addition, it seemed unlikely that we should derive significant net benefit from the then established pattern of Community spending.
We raised those matters at the time of the negotiations and set out our concern about them in the middle of 1970. The Community replied that our fears were ill-founded and gave assurances that the proportion of agricultural expenditure in the average budget of the Community would fall and that there would be a development of regional and other policies. We were assured that Britain, in particular, would benefit from those new Community policies.
It is not, after all, a party matter. In all these matters we were then supported by a substantial number of Opposition Members. Subsequently, in the referendum, we were supported by a substantial majority of the people of this country. It is important to remember that these questions were analysed at that time.
It turned out, as we feared it might, to be a matter of capital importance that at that time the Community gave us an undertaking that if the assumptions made by the Commission and Council did not turn out to be fulfilled—to use phrases that I have quoted before—the very survival of the Community would require its institutions to find solutions to an unacceptable situation that might arise in the budgetary arrangements. That vital commitment was set out in the White Paper published in September 1971, and it was that commitment that laid the foundation on which we were able to build the foundations that have now been completed.
It is true that the Labour Government of 1974 raised the question of the budgetary problem when they announced their intention to renegotiate the terms of entry. That grand-sounding word "renegotiation" suggested something radical and far-reaching. In practice, as could be seen in the result, it achieved only the most marginal adjustments, of

1547
which we can now see that the much-vaunted financial mechanism was perhaps the least effectual.
The truth is that 1975, seen from the point of view of Labour Members, was a massively missed opportunity—
Mr. Heffer: The right hon. and learned Gentleman did not say that at the time.
Sir G. Howe: I said "seen from the point of view of Labour Members", who were urging upon their Government that they should renegotiate. It was the Labour Party in Government whose present leader and then Prime Minister returned from Dublin presenting renegotiation as a triumph. It was the Labour Party that supported the then Prime Minister and the then Foreign Secretary in those renegotiations. We now see that by their own standards they were an ineffective solution. Indeed, they were worse than ineffective, because they enabled the Community nevertheless to argue that the commitment to rectify an unacceptable situation had been met when it had not. They attempted to renegotiate, but by their failure to achieve a remedy they made it more difficult for those who came thereafter to do so.
Against the background of the last Government's increasingly reluctant co-operation in so many other areas, it is hardly surprising that the Council showed little willingness thereafter to address the problem seriously. This was yet another example of the way in which the divisions within the Labour Party so often inhibit it from pursuing with vigour and effectiveness policies that might benefit the people of this country. It was only when the present Government came to power that any real momentum was put into the negotiations.
My right hon. Friend the Prime Minister firmly set the ball rolling at Strasbourg at the June 1979 Council. Only one month after we came into office the Community's Heads of Government recognised for the first time that the United Kingdom's net contribution posed a serious problem which, unless solved, could seriously damage the Community. That was real, solid and substantial progress within a short time. That acknowledgement of the problem was vital
1548
because it was that that opened the way to further progress and further work by the Commission. It produced its "Reference Paper on Budgetary Questions" which was debated by the House on 22 November, and that demonstrated beyond any possible doubt that an unacceptable situation had arisen.
This did not of course mean that we were instantly offered everything that we wanted, but we made headway stage by stage. At Dublin last year we were offered amendments to the 1975 financial mechanism that would at least give some substance to it and offered to yield a refund of around £350 million for 1980. That alone was unacceptable, but another solid march forward had been made, and ground had been gained.
Recognising that that would not be enough to resolve our problem, the Council then at Dublin asked the Commission to go further and to suggest ways in which the Community might increase its spending in Britain so as to offset our low share of CAP receipts. It was the Commission's proposals on that subject, together with its suggestions for amending the financial mechanism, which also stand on the Order Paper this afternoon.
That document, with some ideas put forward by the French President, formed the basis of discussion at the European Council in Luxembourg, and it was Luxembourg that produced a major step forward. For the first time, at least in respect of 1980, the scale of relief necessary to deal with our problem was clearly recognised. It did not prove possible on that occasion to get the right combination of duration and amount for an acceptable settlement. Moreover, we were asked to agree to a sheepmeat regime which was patently damaging to United Kingdom consumers and New Zealand producers, and to accept a text on fisheries which involved principles to which we were not prepared to agree.
There were those who thought that when my right hon. Friend came back from Luxembourg she should have accepted what was on offer. They have been keeping quite since 30 May because in the period since Luxembourg significant progress was achieved on all these points. It was upon these issues that discussion concentrated in the Foreign Affairs and Agriculture Councils which led to the agreement on 30 May.
Mr. Donald Anderson: Will the right hon. and learned Gentleman remind the House of the negotiating posture which the Government adopted at the end of last year and at the beginning of this year, and the criteria then adopted of a broad balance and no tradeoffs, so that it can measure the present agreement against the criteria for success which the Government themselves set?
Sir G. Howe: The House will no doubt have been studying the terms of the Opposition amendment. It draws attention to resolutions of the House of Commons on 16 July and 22 November. It fails, however, to draw attention to the subsequent resolution of the House when, on 24 March, it considered the matter again and adopted a resolution that supported the Prime Minister.
"in her efforts to secure agreement … to action which will bring about a substantial, immediate and lasting reduction in the United Kingdom's net contribution to the Community Budget"
and would ensure
"that there is a commitment by the Council to long-term restructuring of the Budget".— [Official Report, 24 March 1980; Vol. 980, c. 1135.]
It is precisely those objectives that the agreement has achieved. Those were the considerations that the House endorsed in the debate on 24 March, rejecting the earlier wording which had been before the House.
Mr. Peter Shore: If the right hon. and learned Gentleman wishes to be frank with the House, at least he must draw attention to the major retreat in the Government and by the Government between 22 November and the further debate on the resolution that he quoted in March this year.
Sir G. Howe: The right hon. Gentleman must surely take account of the fact that as a result of these various steps forward in the negotiations the amount available to this country was substantially increased on each occasion. We finished by securing a result that was far beyond the wildest dreams of the Labour Party, and far beyond its miserable achievements.
Mr. Nick Budgen: I hope that my right hon. and learned Friend will not simply concentrate on the history leading up to the
1550
deal. Will he also explain how the Government propose that the EEC budget should be fundamentally reviewed over the next two years and tell us what the Government's attitude will be if it is not so reviewed?
Sir G. Howe: I am grateful to my hon. Friend for his advice as to how I should make my speech. I shall come to deal with those points in due course.
Mr. Eldon Griffiths: Will my right hon. and learned Friend accept the warm support of many people for the nerve that he and my right hon. Friend the Prime Minister showed when a large number of people were saying that they should settle for half a loaf or there would be no bread?
Mr. Heffer: Who was saying that?
Mr. Griffiths: Will he advise the House whether among those who were saying that my right hon. Friend and my right hon. and learned Friend should give in and settle for less than they eventually got were a significant number of people within the higher echelons of the Foreign Office and the Treasury?
Sir G. Howe: I am conducting an open-ended seminar in response to my hon. Friends, and I would not dream of being drawn by my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) into responding to a question of that kind. The Government's decisions are taken by the Government. It was the Government who decided that the earlier offers were not sufficient, an attitude which led us to the result upon which my hon. Friend is congratulating my right hon. Friend.
I was dealing with the agreement as it emerged on 30 May. The House is familiar with the mathematical details of that and I pass on therefore to say that, viewed in the round, this agreement represents a substantial advance on what was on offer at Luxembourg and a vast improvement on the prospect that we should otherwise have faced. We have a minimum rebate of £1,570 million in 1980 and 1981, reducing our estimated net contribution for those years by about two-thirds, we have a risk-sharing formula in case those estimates are exceeded and we have a firm basis for similar arrangements in 1982 if the Community's global review has not by then and by other means removed our problem.

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At Luxembourg, by contrast, we were offered a settlement of two years only, with no provision for review of the Community's budgetary arrangements, and dependent, as I have explained, on our agreeing to objectionable arrangements on sheepmeat and fish. Now our budgetary position is safeguarded for three years at least, and the Community is pledged to undertake the longer-term reforms required to avoid a recurrence of our problem. The contrast with the prospect that we would have faced in the absence of a settlement—and this is worth bearing in mind—of a net contribution still higher than the massive ones of the late 1970s and growing steadily is striking. The position has been transformed. Anyone who makes that objective appraisal of what has occurred must surely accept that this is a highly advantageous agreement.
Mr. Jack Straw: To what extent are the rebates tied to agreements on the budgets for next year and subsequent years? The Chancellor will recall that, immediately after the Brussels agreement, the French delegation issued a declaration. The French were pleased about the agreement because the credits were to come in the budget the following year. That meant that there would have to be an agreement on farm prices adopted before the full payments on the budget were made. That position is reflected in article 2 of the draft regulations. Even though some advanced payments will be made, does the Chancellor accept that it will be open, as the French interpret it and as is clear from the regulations, to any other member State to block the full payment of our contributions unless and until they get agreement on farm prices?
Sir. G. Howe: The hon. Gentleman has raised that matter before. I refer him to the long written answer that my hon. Friend the Financial Secretary gave on 20 June, which appears in col. 693 of the Official Report, which states that there is no reason to fear that the matter will be handled in that way. The proceedings of the Budget Council are recorded, and the United Kingdom's right to apply for advanced payment is also recorded.
Mr. Denzil Davies: Is it not the case that to get the advance payments there has to be a qualified majority? If
1552
France and Germany voted against us, thereby providing 20 votes, there would be no qualified majority and therefore no advance payments.
Sir G. Howe: The matter will not be handled in that way. I also refer the right hon. Gentleman to the discussions that took place at the budgetary Council meeting. This is a good settlement for us and also for the Community.
Mr. Tony Marlow: I have been trying for some time to get an answer about when we are to make the payments to the Community and when we shall get the receipts. Before the arrangements with the Community were arrived at, we were committed to a payment of £1,200 million net, which is roughly £100 million a month. We are already six months into the year. I presume that we have therefore already paid £600 million into the Community. As our total net contribution this year is supposed to be only £370 million, why are we continuing to make payments? When will we get the money back? The longer we have to wait for the money to come back, the longer we have to borrow from the public and pay expensive rates of interest. Can my right hon. and learned Friend please tell the House exactly when we are to get the money back?
Sir G. Howe: My hon. Friend has been pursuing that point, and he has written me a letter, to which I shall shortly reply on certain detailed aspects. The reality is that we have secured an agreement that will lead to our receiving the net refunds set out in that agreement by the conclusion of our current financial year. Because of the method of calculation, it is possible that a small proportion of the refunds in respect of each year will fall into the next following year. However, the great bulk will be offset or refunded by the end of this financial year. That is the intended effect, and it will be the effect. However, it will be achieved as a result of co-operation by other member States, which are halfway through their financial years. As a matter of physical reality, it would be unreasonable to expect them to readjust their budgets halfway through their financial years, which run from January to December, to accelerate the payments

1553
along the lines that my hon. Friend may have in mind. My hon. Friend will see the matter turning out as we go along.
Mr. Nigel Spearing: Will the Chancellor give way?
Sir G. Howe: No, I am afraid not. I have given way more times than the House can remember.
I was saying that the settlement is not only a good settlement for this country but also for the Community. As I have just been saying, we must not forget that the agreement involved substantial concessions by our partners, especially Germany, France and Italy. Germany now becomes by far the largest single net contributor, with a contribution this year some three times ours. For the first time France becomes a significant net contributor. Italy remains a net beneficiary, as is reasonable for one of the less prosperous members of the Community, but at a lower level than would otherwise have been the case. It must be acknowledged that some very real sacrifices were made, and I should like to take this opportunity to express particular recognition to my own colleagues, the Finance Ministers of the other member States, who, like myself, are all labouring under the same burden of controlling their own almost remorselessly growing public spending.
A number of other issues were agreed at the same time as the budget settlement. It is those which have apparently provoked the Opposition's amendment to criticise that linkage. However, it was inevitable that our partners, sensing that agreement really was going to be reached in the end, should try to add other issues to make up the package. We resisted fomal linkage of that kind, but agreed, where possible, to make rapid progress with Community issues on a timetable related to that for the budget question. So far as agricultural prices are concerned, the Leader of the Opposition himself, with reference to my right hon. Friend the Prime Minister, told the House on 29 April:
"we shall support her in not giving way on the agricultural price freeze until the budgetary issue is settled."—[Official Report, 29 April 1980; Vol. 983, c. 1154.]
So the principle of linkage in that sense was expressly endorsed by the Leader of the Opposition. Although the Opposition
1554
now seek to criticise it, he recognised that the link could work, as it did work, to our very clear advantage.
Even so, it was our clear view that the budget problem was something that had to be set right on its own merits, and it was not merely to be traded off against concessions on other fronts. It was on its own merits that agreement was achieved—
Mr. Norman Buchan: Will the Chancellor give way?
Sir G. Howe: I am afraid not.
On sheepmeat, we negotiated arrangements which will be considerably more beneficial to Britain than those offered in Luxembourg. Intervention will not operate within the United Kingdom. Producers will be provided with deficiency payments, based on a guide price well above that set for this year under our national scheme. Consumers will be able to buy lamb at reasonable prices. In the longer term, our receipts from the scheme could amount to £100 million per annum. The interests of New Zealand, and the security of our supplies from there, have also been safeguarded, because the Community scheme will not enter into force until New Zealand has concluded an agreement on voluntary restraint satisfactory to her.
We also obtained a number of important advantages from the farm price settlement, including the continuation of full Community financing for the United Kingdom butter subsidy and a commitment to pay refunds on whisky exports to compensate for the higher cost of grain within the Community. Even taking changes in green rates into account, the average rise in support prices is below the average rate of inflation in the Community, and the level of farm support will therefore be falling in real terms. The impact on the cost of living is minimal—0·7 per cent. on the food price index and only 0·15 per cent. on the RPI. However, the budget settlement in no way reduces our freedom of action in future negotiations on farm prices.
We welcome the new impetus to the fisheries negotiations provided by the statement on fisheries agreed at the Foreign Affairs Council. In setting out the general principles, that text fixed 31 December 1980 as a target for agreement on a revised common fisheries

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policy. The Government have repeatedly urged rapid progress towards a satisfactory settlement of that. The Foreign Affairs Council declaration in no way prejudiced the substantive issues for negotiation in the Fisheries Council. The matter of fish is allowed to be settled entirely on its merits, as we have always insisted is right. A further Council has been fixed for 21 July.
The budget agreement that was reached on 30 May was noted with satisfaction by the Heads of Government in Venice. It now remains for the legal instruments through which the payments will be made to be adopted.
Two draft regulations are among the documents that we are considering today. The first is a revised version of the 1975 financial mechanism. The second is the draft regulation under article 235 of the Treaty to cover supplementary expenditure in the United Kingdom by the Community.
The size of the rebate through the former will depend on the gap between our gross contribution and our GNP share—an amount that it is not possible to anticipate with precision. There is therefore to be flexibility built into the article 235 regulation, which will enable the Community to spend whatever residual amount remains to be filled between the amount coming through the financial mechanism and the level of rebate specified in the agreement of 30 May.
Those regulations are now being discussed in Brussels. Meanwhile, we are preparing for submission the expenditure programmes in respect of which we hope to get a financial contribution from the Community. The programmes will be chosen so as to meet the criteria laid down in the regulation and will be generally compatible with Community objectives. But I emphasise that it will be for the United Kingdom alone to decide what to include in them.
However, by far the most important part, in the long run, of the outcome of the Council of 30 May is the commitment to review the whole operation of the Community budget. No one should underestimate the extent to which that decision reflects a very striking and im-
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portant change of attitude to Community financial arrangements by other member States.
Whereas in earlier discussions there has been a tendency—and more than a tendency—to suggest that the operation, for example, of the "own resources" system is immutable and its consequences have therefore to be accepted, the Community has now set in hand a fundamental review, of which the stated purpose will be
"to prevent the re-occurrence of unacceptable situations"
for any of the member States.
Secondly, other member States are now increasingly coming to recognise that expenditure on the common agricultural policy cannot be allowed to continue to increase at a rate of over 20 per cent. a year. That rate of increase is now the object of concern, not only in this country, but elsewhere in the Community, and probably most importantly and most strongly in the Federal Republic of Germany. What is more, the French and German Governments have made clear their view that the ceiling on the Community's own resources represented by the 1 per cent. limit on the rate of VAT accruing to the Community must be maintained. This means that radical changes will have to be made in the way in which agricultural expenditure is financed from the Community budget. The historical rate of growth cannot possibly be accommodated within the rate of growth of own resources as at present defined.
In determining to embark on this review, the Community as a whole has at last grasped—and firmly grasped—the point that its budget will have to be subject to the same disciplines as all member States apply to their domestic budgets. Expenditure must be constrained by the amount of money available.
I shall not attempt now to predict the ultimate results of this review, but there is no doubt that it will be the most far-reaching review of Community finance since the late 1960s, when the own resources system was set up. This means that the Community as a whole now has a real opportunity, for the first time, to get the problems of CAP expenditure under control and at the same time to work towards a budgetary structure that will provide a reasonable balance of cost and

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benefit for all the member States, so that they all have a positive interest in the future development of the Community.
Now that the disputation over our budget contribution is behind us, the United Kingdom can join in these discussions and look at the problems in the same way as other member States. We are no longer one against eight. Others, too, now join with us in wanting to see change. We can work together to find solutions to the problems of the 1980s. I assure the House that this Government will not let the chance go by.
I cannot refrain from drawing a contrast between the achievement and the prospect of further progress under a Government who have been clear-sighted and single-minded in their commitment to the Community and to sensible reform of its policies, and the dismal performance and prospect that was available and would be on offer from the Labour Party. In these circumstances, I advise the House to reject the Opposition amendment.
The amendment, as I have said, refers to resolutions adopted by the House in July and November last year. But on 24 March we adopted a differently worded resolution and specifically rejected an Opposition amendment recalling those earlier resolutions. The resolution adopted on 24 March supported the Government in their efforts to secure agreement
"to action which will bring about a substantial, immediate and lasting reduction in the United Kingdom's net contribution to the Community Budget and furthermore to ensure that there is a commitment by the Council to long-term restructuring of the budget"—[Official Report, 24 March 1980; Vol. 981, c. 1069.]
That is exactly what was achieved by the agreement of 30 May.
The Opposition amendment also suggests that the Government bought the 30 May settlement at the price of unacceptable concessions on other matters, but that is not the case. On sheepmeat we have secured agreement to a regime that, unlike that proposed at Luxembourg, is acceptable and sensible for this country. On fisheries, we have endorsed a declaration that leaves the substantive issues to be settled on their own merits in the appropriate Community forum. On agricultural prices, we have agreed, as I have said, to a farm price settlement that adds only 0·15 per cent. to the retail price index.
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It is true that the settlement leaves the United Kingdom as the second largest net contributor to the budget, but, as I have explained, it also commits the Community to a far-reaching review of the development of Community policies. The purpose of the review is to identify the structural changes necessary to resolve the United Kingdom's problem so that the Community can act to ensure that such unacceptable situations never recur. The Community has pledged itself to solve the United Kingdom problem in this way. What better assurance of the Community's determination to undertake fundamental and lasting reform could the Opposition demand?
I understand that the Opposition, on a subject of this kind, face certain fundamental difficulties of their own. I noticed that the right hon. Member for Stepney and Poplar (Mr. Shore) was recorded in The Times of 9 June as saying—I quote his remarkable observation—that
"there are few issues on which the Labour Party is more united than on its policy towards the Common Market today."
He had that to say in the course of— [Interruption.] Look at the spectacle of unity behind him. He had that to say in the course of trying to quell an outbreak of civil war that was initiated on that day by his right hon. Friend the Member for Deptford (Mr. Silkin).
Today the boot is on the other foot, for in the same newspaper we find
"Labour faces rebellion on EEC vote. A group of pro-EEC Labour MPs are threatening to defy an Opposition three-line whip"—
and so on. We shall see, but it scarcely presents the picture of a party that is united in support of anything. The observation does not do much credit to the right hon. Gentleman, and it should not be at all surprising that the same report in The Times states that an electoral college of the Labour Party is facing the recommendations of a four-man drafting committee of the party's commission of inquiry. It must be said that the constitutional arrangements of the Labour Party are becoming as complex as anything that ever emerged from the Byzantine empire.
By contrast, the Government have a clear view and a clear purpose. We do not see the agreement of 30 May as an end; we see it as an important step in

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the continuing process of improving and developing Community policies. It is a striking example of the way in which, by persistent and diligent negotiation, we can contribute towards making the Community the effective vehicle of our own aspirations and of the hopes of Europe as a whole.
4.48 pm
Mr. Peter Shore: I beg to move, in line 12, to leave out from "Policy" to the end of the Question and to add instead thereof:
"but, recalling the unanimous Resolutions of the House of Commons on 16 July and 22 November 1979, urging a fundamental reform of the budgetary arrangements so that Britain's contribution to the Budget is at least not greater than the receipts, and recalling the Prime Minister's pledge that reductions in Great Britain's grossly unfair net contribution to the European Economic Community Budget would not be traded against sheepmeat, fisheries or further unjustified increases in Common Agricultural Policy prices, deplores the agreements of 30 May which leave Great Britain the second largest contributor to the European Economic Community Budget, which fail to make a fundamental or lasting reform in the European Economic Community's budgetary arrangements, which make concessions on sheepmeat and fisheries and which include further damaging increases in food prices and agricultural support costs.'.
This is the fourth debate since the important matter of the 1980 Common Market budget was first brought before the House on 16 July 1979. The documents before us are voluminous and complex. It is as well to remind ourselves of the central issues and the main themes of this and previous debates. They are the swollen size and increasing growth of the EEC budget, the distorted pattern of the budget's expenditure, the unprincipled and bizarre system of taxes which finance it, and, at the centre of our concern, the appalling and disproportionate burden that those arrangements impose upon the British people.
Outside the House people simply cannot understand why it is only now that the scale of the problem has been revealed, and how, above all, it came about that Britain can be subjected to such exactions. We know the answer to both those questions—and no one knows them better, from first hand involvement, than the Chancellor of the Exchequer. He made a brazen and frivolous speech, and gave a version of history that was both distorted and perverse.
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I shall begin by putting that matter right. The crisis in our budgetary contribution was, from the start, programmed for 1980. Under the terms which the then Prime Minister accepted in 1971–72 and which were embodied in the Treaty of Accession, the first five years of our membership were governed by a percentage payment related to our share of the Common Market total national product. The percentage was deliberately low in 1973, and rose to its full share in 1977. We began with a gross contribution of £181 million in 1973, which rose to £737 million in 1977. As the House knows, that was not all. From 1978 to 1980 the Treaty commitment obliged us to depart from the key and to pay further contributions based upon the application to Britain of the own resources system of the EEC.
In 1978 we were programmed to pay two-fifths of the difference, in 1979 a further two-fifths, and in 1980 the full amount. As the figures show, Britain's gross contribution leapt from £737 million in 1977 when the key formula was abandoned to £1,348 million in 1978, to £1,606 million in 1979, and to £1,809 million in 1980. Our net contribution rose just as spectacularly from £369 million in 1977 to £1,057 million in 1980.
When we debated these matters in 1971–72 the Government of the day vigorously denied what was in store. They asserted that no one could foretell the magnitude of our payment so far ahead. They accused those who made the necessary calculations of scaremongering, prejudice and worse. On 20 June 1972, when we put the matter specifically in an amendment on the budgetary contribution, the Chancellor and his party voted it down. In 1975, as part of the renegotiations by the Labour Government, an attempt was made to reduce the anticipated burden, and a corrective mechanism was introduced. It was hedged round with conditions, and it achieved very little—as I and the majority of my right hon. and hon. Friends are entitled to say, but about which no conceivable complaint can be made by the Chancellor or his friends in the Conservative Party. He has the gall now to speak about his inheritance. It was he and his party who, when the re-negotiation White Paper was put before the House on 9 April 1975, gave it their uncritical and wholehearted

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support. Into the Lobbies they trouped, to express their approval in a Division the result of which was 396 in favour and 170 against. The 170 against included virtually all those on this side of the House, and two or three from the Conservative Benches.
Sir Geoffrey Howe: Does the right hon. Gentleman agree that the motion that was carried with the support of Conservative Members was tabled by the Government of whom he was a member?
Mr. Shore: Most certainly I was a member of that Government. We had an agreement, a constitutional precedent, that on this matter we were free to express our judgment, and we did so. That led to the referendum campaign. That is a well-known fact, and the right hon. and learned Gentleman knows it. He cannot disguise the fact that in 1975 he voted specifically for the very proposal that he is now saying we should never have accepted, and that 170 Labour Members voted against.
Several Hon. Members rose—
Mr. Shore: I shall give way later.
Mr. Heffer rose—
Mr. Shore: I shall give way in a moment. I wish to finish this point and come to the substance of my remarks.
It is to rescue our people from the folly of these arrangements that we have now embarked upon a most difficult task. What the Conservative Government of 1970–74 conceded was embodied in treaty arrangements which, in their own terms, were incapable of change except with the agreement of all the beneficiaries of our surrender. When the reality of what was at stake hit the nation, with the publication in the summer of 1979 of the Common Market draft budget for 1980, it was our belief that the time had come —and we thought the Government believed it also—to say "Enough is enough".
Mr. Heffer: I refer to the exchange between my right hon. Friend and the Chancellor of the Exchequer. We all feel that the stand that my right hon. Friend and other Ministers took at that time was commendable. I wish to make it clear that they were standing on Labour Party policy—irrespective of what
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the Labour Government did at that time. [Interruption.] That point is very important because the Labour Party has a good record on this matter. It urged the people of this country to vote "No" at that time, and 8 million did so. In the previous general election 11 million voted for the Labour Party. Therefore, of that 11 million, 8 million supported the Labour Party on the referendum issue.
Mr. Shore: It was a free vote, and people behaved honourably according to their judgment at that time. But that does not in any way—and I know that my hon. Friend does not in any way wish to do so—take anything away from the point that I made earlier, and which I do not need to reiterate.
Mr. Eldon Griffiths rose—
Mr. Shore: I am doubtful whether I should give way, because I want to proceed. However, I shall give way.
Mr. Eldon Griffiths: I am much obliged to the right hon. Gentleman, and his giving way now will enable him to proceed to what he has described as the substance of his remarks, instead of the knockabout in which he indulged at the beginning of his speech. One presumes that he is speaking for the whole of the Labour Party, because he is the Front Bench spokesman. Will he make it clear whether today he is speaking for all his colleagues, for only that portion who agreed with him and voted against renegotiation, or for those who did not agree with him and who voted for the then Government's White Paper? Who does he speak for now?
Mr. Shore: That is below the hon. Gentleman's normal standard of intervention. It does not deserve a reply, and he will not get one. As I said, it was our belief, having seen the 1980 budget, that it was time to say that enough was enough. In the first debate on 16 July the Opposition tabled an amendment urging the Government to press for fundamental reforms in the budgetary arrangements so that Britain's contribution would at least be not greater than its receipts. That amendment was accepted by the Government, and it received the unanimous approval of the House.
We returned to the matter on 22 November, a week before the Dublin

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Summit, when the Chancellor of the Exchequer introduced a motion reaffirming the resolution of 16 July, and inviting our support for the Prime Minister
"in her determination to secure the objectives approved by the House on 16 July."— [Official Report, 22 November 1979; Vol. 974, c. 582.]
Now, following the Council meeting of 30 May and the Lord Privy Seal's statement of 2 June, we have at last before us the results of the Government's determination to secure their objectives. It is right, therefore, that we should give our judgment and advice on it. Today's debate requires us to take a forward look at the tasks and the unsolved problems that clearly lie ahead, and, inevitably, to undertake a post mortem on the events that have led to the deeply unsatisfactory arrangements which were wrung out of the Prime Minister and her Ministers in the meetings and negotiations from Dublin onwards, and which were finally conceded by the Foreign Ministers at their Council meeting on 30 May.
No one who has followed our debates, and no one who has studied the Chancellor's speech of 22 November will fail to understand why we are angry and disappointed today. The objectives that the Prime Minister, the Chancellor and the Government set deliberately and carefully for themselves were as follows. The first was the achievement of a broad balance between Britain's contributions and receipts from the EEC budget. The Chancellor will recall that he not only volunteered the phrase as his principal objective—a formula that was originally promulgated by the Prime Minister in her Winston Churchill memorial lecture some months previously—but happily responded to the intervention of my hon. Friend the Member for Blackburn (Mr. Straw) in order to stress and emphasise the point. The Chancellor said:
"My right hon. Friend and I have repeatedly stated our objective to be a broad balance in the United Kingdom's accounts with the Community."
To reinforce the point, he said:
"I am amazed at my own moderation."
Secondly, the Government sought a permanent solution to that problem. On 22 November the Chancellor said that the solution
"must operate in respect of 1980 and subsequent years. It must be robust. This time the
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solution must be one which, as far as can possibly be foreseen, will last as long as the problem."
He went on to assert:
"It follows from that that it will not be sufficient to offer a temporary measure that will afford relief for only a year or two and then leave us in as intolerable a position as ever"— [Official Report, 22 November 1979; Vol. 974, c. 593–7.]
The third objective which the House discussed, and which the Government accepted—I think with tongue in cheek— was to bring about a fundamental change in the budgetary arrangements, not a tinkering with existing arrangements on taxation or expenditure, but a fundamental change. That can only mean a change in the increasingly absurd "own-resource system" and a major assault on the CAP, whose distortions and surpluses dominate Community expenditure.
On 22 November the Chancellor said that these changes were essential because not only was Britain bearing a large and grossly disproportionate burden, but that there were reasons of principle as to why that could not be tolerated any longer. He said that there was no justification for the position under which the United Kingdom was transferring resources into much richer member States through the Community budget. He said that the budget embraced redistribution with a vengeance, in that it redistributed to those who have, taking away from those who at present have not.
Mr. Marlow rose—
Mr. Shore: The Chancellor made it plain—how could he do otherwise—that there were no offsetting gains in the balance of trade to justify the United Kingdom being called upon to pay a massive budgetary price to secure them.
On agriculture, in a characteristically British understatement, the Chancellor said:
"There are some resource costs, not gains, for the United Kingdom over and above the budgetary costs. We do not accept the arguments that special benefits to us outside the budget would satisfy a large budgetary price."— [Official Report, 22 November 1979; Vol. 974, c. 591.]
Against that statement of objectives and argument I welcomed the Chancellor's then stance on behalf of the Government. He was indeed a sinner come to repentance, and I promised full Opposition support, provided only that

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he did not retreat. The House accepted the motion on 22 November.
Little was achieved at the Dublin Summit on 30 May except that the 1975 refund arrangements were to be stripped of most of their cramping conditions. That still left a sum of over £700 million per annum. The Prime Minister said at a press conference in Dublin that the results were totally unsatisfactory and that she was not prepared to accept half a loaf. She said that the next Council meeting would be the last chance and that it was, after all, our own money that we were seeking to reclaim.
So far, so good. But in the Prime Minister's statement to the House on 3 December there was the first significant shift in the Government's position. She said that she was now ready to search for a "genuine compromise", and when I asked her whether she understood the implication of what she had said about our own money, she replied ambiguously:
"I most certainly said that I believed that in a way this was our own money."
But we were still encouraged by three main assertions. First, as the Prime Minister said:
"I left our partners in no doubt that my room for manoeuvre was limited."
The second was her explicit assurance that there would be no trade-off in reductions in Britain's budget contribution against the surrender of British interests in other areas—fisheries, energy, sheep-meat and agricultural prices. The third was her apparent willingness to make up the British argument with direct action. The Prime Minister said on 3 December:
"There are only two possibilities. One is to ensure that no further progress is made on any Community decision—which would be disruptive. The other, which we have not so far seriously considered, is to withhold contributions."—[Official Report, 3 December 1979; Vol. 974, c. 3042.]
So, what happened between then and the next Summit meeting in Luxembourg on 27–28 April, I do not know. Although some progress on the size of the refund was made, it was clear that we were falling far short of a broad balance, that no permanent solution was in sight, and that the Community had been pressing hard for British counter-concessions on agriculture prices, sheepmeat and fisheries. It was said that other Heads of Government were even refusing to discuss the
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matter at the next summit, or any subsequent summit.
The Prime Minister did not then accept the Community's offer—as the Chancellor reminded us—but no one could doubt that a major retreat was under way. It was hardly surprising, therefore, that the final settlement was left to such amenable and agreeable characters as the Foreign Secretary and the Lord Privy Seal at the Council of Ministers on 30 May.
Let us now assess the result. On the positive side the United Kingdom's net contribution for 1980 will be reduced by £700 million, and in 1981 by over £850 million. Fine—until we recall the outrage of these exactions, that it is our own money, and only two-thirds of it is to be restored to us. How does that relate to the Government's repeatedly stated objectives?
First, instead of a broad balance—or a broad balance minus a little room for manoeuvre—the British net contribution in 1980 will be £371 million, in 1981 a minimum of £445 million, and in 1982, although the figures are not yet available, a sum that cannot be less than £550 million. So much for broad balance. Britain is to continue to pay out substantial sums to countries which are in the main "richer than our own"—to use the Chancellor's words. Britain is now to be not the first but the second largest net contributor to the EEC budget. Why? On what principle of equity can one justify Britain being the second paymaster of the Community, when in terms of national income our position is entirely different?
Secondly, we must consider the duration of the settlement. Instead of a solution that will last for as long as the problem, we have at best a three-year arrangement that will expire on 31 December 1982. If nothing is agreed by then, in subsequent years Britain's net contribution will be based on the existing formula under the Treaty, and will be not less than £1,500 million per annum.
Thirdly, a specific pledge was given, first in 1979, during that year's price review, and again this year, by both the Prime Minister and the Minister of Agriculture, Fisheries and Food for an agricultural price freeze. On both occasions, the Minister has eaten those words. The 1979 settlement increased the cost of the CAP by about £700 million, and the 1980

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settlement, agreed on 30 May in the Council of Ministers, has added a further £1,000 million to agricultural expenditure. The cost of the budget this year will increase by about 17 per cent.
Fourthly, in spite of the Prime Minister's assurance that fisheries, energy and sheepmeat are separate questions each of which will be considered on its merits, and that they are not linked to a solution of the budgetary problem, the agreement of 30 May must have been a pure coincidence as it conceded to France the sheepmeat regime which it has sought throughout the past decade, and fisheries, on which decisions have yet to be taken, are clearly part of the same package deal.
When I measure the outcome of these negotiations and recall the clear and emphatic pledges of the Prime Minister and the Chancellor, I ask myself whether they ever meant what they said or whether it was all an exercise in cynicism. Is not it a gross contempt of this House that the Goverment can invite and accept resolutions, and then spurn them in negotiations when it no longer suits their purpose?
Mr. Michael Latham: How does the right hon. Gentleman have the gall to come to the House and complain about the Government getting refunds of hundreds of millions of pounds, when the previous Government got nothing at all? How does he have the gall to talk about price freezes? When did he ever get a price freeze?
Mr. Shore: I have no intention of going back over the first part of my speech. Had the hon. Gentleman been reasonably alert, he would have heard it and found the answers to his questions.
We must now ask about the future arrangements. This afternoon, the Chancellor obviously attached very great importance to what I suppose we can rightly refer to as paragraph 7 of the 30 May communique. That is the part which points to the special review of Community policies. When the Lord Privy Seal mentioned this in the House on 2 June, he referred to it as being of great importance, together with the restraint imposed by a 1 per cent. ceiling which
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"will enable us to press for lasting reforms, which will among other things, resolve the British budgetary problem".—[Official Report, 2 June 1980; Vol. 985, c. 1045.]
That 1 per cent. ceiling, of course, meant the ceiling on the VAT contribution and the approaching exhaustion of "own resources" for the purposes of the Community's finance.
I certainly agree that a major effort will have to be made and that that review has at least a potential importance. But I must warn the Government—[Interruption.]—My goodness me, about the easiest thing that one can get in the European Community is an agreement to set up a special study. First, I must warn the Government against facile optimism. There is no guarantee whatever that this review, any more than previous reviews, will lead to agreement or action. The largest problem is undoubtedly the CAP, which accounts for well over 70 per cent. of the total budget. But the truth is that nearly all Community countries except Britain are beneficaries of the CAP and that every one of them has a veto on policy change. Secondly, the 30 May communique itself gives anything but a free hand to the authors of the policy review. They are hedged in by the Council's specific agreement not to call into question
"the common financial responsibility for these policies which are financed from the Community's own resources, nor the basic principles of the CAP".
Thus, the principle of the CAP and the "own resource" system is specifically entrenched by the Council agreement of 30 May—an agreement to which Britain is now a partner.
Thirdly, I must counsel against too much optimism about the opportunities which will arise when the Community runs out of money in 1981–82. When this happens, it will not be the CAP that will be the first of the Community's expenditures to be cut. The CAP falls under the obligatory expenditure categories of the European budget. It is far more likely that the axe will first swing against the regional and social funds, which are non-obligatory in budget terms and which, are, of course, of some modest benefit to the United Kingdom.
Fourthly, the negotiations and discussions of Community policy are supposed to be completed by the end of June 1981

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so that new arrangements can operate from the beginning of 1982. I find that a wholly unconvincing timetable. I am made even more uneasy by the knowledge that our bargaining position will be weakened by certain features in the temporary arrangements for 1980–81 which the Government have agreed.
I am referring in particular to the new regulation under article 235, which authorises supplementary expenditure in the United Kingdom—if it works, the larger part of our refund. To begin with, the regulation is time-limited to 1980–81. Therefore, unless the Chancellor can claim the contrary, any payment to us for 1982 will require a separate agreement by the Council of Ministers. Further, under article 3, expenditures will need the approval of the regional development committee, with endless possibilities for objection and delay. In bringing forward the payments to the current year which the Government obviously wish to obtain, decision is subject to qualified majority vote in the Council. The right hon. and learned Gentleman had better have another look at the regulation. Finally, the Commission itself is entitled, if it is not satisfied with all the details and objectives of each expenditure proposal which Britain puts forward, to suspend the authorisation of payment to us.
Clearly, very considerable pressure could be mounted against us throughout the lifetime of this regulation. In addition, there is more than a hint in paragraph 9 of the Council communiqué of pressure on other Community matters that we will be expected to concede.
Our partners have made their own intentions entirely plain. When addressing French farm leaders in Paris on 5 June, President Giscard d'Estaing stated that if there were again problems in fixing farm prices next year he would insist that the already agreed reductions in Britain's budget contribution for 1981 should not be carried out until farm prices are fixed. On 16 June, France and West Germany warned publicly in Brussels that without solid progress over the next month towards a solution of the EEC fisheries dispute, the implementation of the British budget settlement would be delayed.
This is not exactly a pressure-free bargaining position for Britain to embark
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upon the major discussions which lie ahead, including, of course, the review of Community policy to which the right hon. and learned Gentleman attaches so much importance, and which is supposed to lead to a permanent solution.
Several Hon. Members rose—
Mr. Shore: I see little to rejoice about in this settlement.
Mr. Hugh Dykes rose—
Mr. Shore: Indeed, I believe that a major opportunity has been missed. Had the Government sustained their veto on CAP prices this year, there is no doubt that the CAP itself would have been substantially changed. The French would have been driven to national measures—they were absolutely on the point—to sustain their own farmers, an effective ceiling would have been placed on CAP expenditure and the rules would have been irretrievably broken. No wonder there was rejoicing, not only in France but in Brussels as well, where Commissioner Gundelach knew exactly what was at stake!
Mr. Dykes rose—
Mr. Shore: Equally, the opportunity was missed for Britain, by its own actions, to intercept the outflow of Britain's money going to the EEC. We promised the Government a quick legislative passage for such a measure, but our offer was refused.
It is not only the Opposition and the country who are disappointed and angry with this settlement. Our views are, I believe, substantially shared by the occupant of No. 10 herself. I can well understand it, for, after all, it was the Prime Minister who as recently as 20 March told the House of Commons:
"First, I adhere to the phrase which I used immediately after the Dublin meeting, that we are prepared to compromise, but that we have very little room for manoeuvre."
It turned out to be £1,500 million over three years room to manoeuvre.
"Secondly, in the last resort we shall have to consider withholding our value added tax contribution. Let there be no doubt about that."
Mr. Dykes: Will the right hon. Gentleman give way?
Mr. Shore: The Prime Minister continued:
"Thirdly, on the budget and a number of other matters which we need to settle—fish, agricultural prices, sheepmeat, and so on—we shall continue to treat each item on its merits. We simply must do so. Fourthly, the right hon. Gentleman"—
that was my right hon. Friend the Leader of the Opposition—
"asked about a price freeze. It is our intention to stick to a price freeze on products which are at present in surplus."—[Official Report, 20 March 1980; Vol. 981, c. 636.]
What can I or anyone else say? But I was certainly not surprised to read the account in The Sunday Times on 8 June of the Prime Minister's meeting with the Foreign Secretary and the Lord Privy Seal at Chequers on their return from Brussels: that they suffered a punishing interrogation, that she deeply disliked the deal and regarded it as a defeat which others put her in the position of being virtually obliged to accept. The returning Ministers, in my view, did not deserve a drink even though, after two hours, according to certain accounts, they were offered one.
Mr. Dykes: Will the right hon. Gentleman give way now?
Mr. Shore: But the real damage is to the Government's credibility and to that of the House of Commons.
Mr. Dykes rose—
Mr. Shore: The Community countries have now taken the measure of this Government, and I fear that our word and resolve have been seriously devalued. The House has been given assurances of the most specific kind and it has expressed itself again and again in unanimous resolutions. The impotence of Britain and of the House of Commons has been demonstrated in a way that we should all find impossible either to forgive or to forget.
Mr. Dykes rose—
Mr. Shore: In Common Market affairs, as we have seen so often before, wishful thinking among Ministers, together with briefing and manipulation of our so receptive media, can in the short term deceive people. But the truth will out and this last deal will prove to be no exception.
Mr. Dykes: Will the right hon. Gentleman give way?
Mr. Shore: Nothing has been settled. The Chancellor and the Lord Privy Seal know only too well that a new and exhausting battle will have to be fought. For the sake of our own people, my devout wish is that that battle will be fought by a new Government who have the will to succeed.
5.23 pm
Mr. Patrick Wall: The right hon. Member for Stepney and Poplar (Mr. Shore) will forgive me if I do not follow the ramifications of his biased and fanciful speech, because it is well known that the Opposition are split on the Common Market. The Leader of the Opposition takes one view and the right hon. Gentleman takes an opposite view.
I congratulate my right hon. Friend the Prime Minister and my right hon. and learned Friend the Chancellor of the Exchequer on obtaining a good deal for Britain. It needed a great deal of courage. I think that the whole country realises that and is grateful to them.
We are discussing a number of documents today. I want to concentrate on document 7389/80 on the common fisheries policy. The right hon. Member for Stepney and Poplar did not refer to that document at all, despite the importance of the fishing industry to this country. [HON. MEMBERS: "He did."] Only en passant, shall I say? However, it was referred to in some detail by my right hon. and learned Friend. I think that right hon. and hon. Members on both sides of the House will agree that this is an important subject to discuss today because, as my right hon. and learned Friend said, the Fisheries Ministers are to meet on 21 July and hope to devise an agreed common fisheries policy by the end of the year. I am sure that all right hon. and hon. Members wish them well in that difficult task.
The first heading in the common fisheries policy document refers to
"rational and non-discriminatory Community measures for the management of resources and conservation".
Recently, at a conference in London, a Mr. Michael Berendt, the fisheries liaison officer of the European Commission in

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London, presented a paper on the common fisheries policy. I should like to quote a couple of sentences from that paper because they are germane to the debate. He said:
"In fact, there are today no Community rules. Once the Council has reached and adopted regulations—we hope early next year—for a revised common fisheries policy, these regulations will have a binding legal force on all member States and will be enforceable through the European Court of Justice and through national courts."
They are not today. That is one reason why the fisheries industries of Western Europe are in such a mess.
The second point in the common fisheries policy document refers to fair distribution. Indeed, it refers to the special measures being taken to assist countries with traditional fisheries activities, the special needs of the local population and the loss of catch potential in third country waters. These matters are of great concern to the British fishing industry, both distant water—which has lost so much because of the 200-mile limits around Iceland, Norway and elsewhere—and the inshore industry.
So far the EEC has agreed total allowable catches, but not quotas. It is well known that about 60 per cent. of the EEC stock of fish is found in the British 200-mile zone. When finally it agrees on quotas, they will to some extent be based on the size of the fleet. This is important because the British fishing fleet is rapidly diminishing. If it goes on as it is going on before a common fisheries policy is agreed, we shall get far lower quotas than we expect or deserve.
The next item is "effective controls". Control is the responsibility of member States. I understand that the EEC proposes to bring in a standard log book, to have authorised places of landing, which will cover at least 80 per cent. of Community landings, to have any transhipment at sea reported by the skipper himself within 15 days and to have the total of all these catches debited against the quota of the flag country. That should be done today, but it is not being done equitably. I remember only too well that a certain quota was allowed to West Germany, Denmark and this country in Norwegian waters. The Danes and the Germans between them took up the whole quota. When our vessels went
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there, there was no quota left for them to fish. That is the position today. One hopes that if there is effective control, as there should be under an agreed common fisheries policy, it will be properly maintained. That, of course, means adequate policing.
The next point in the document relates to structural measures. It states specifically that if the fishing industry of the EEC, and particularly of this country, has to be restructured, financial contributions will be made by the Community. The number of larger vessels in the British trawler fleet is declining rapidly. In 1975 they numbered 300. By the beginning of this year the number was 150. The number is declining month by month. There are fewer than 100 operating today. Anyone who visits the major fishing ports will see many of them tied up. That is largely because of the 200-mile rule.
The fishing industry, particularly that concerning inshore vessels, is facing major fish import problems. In the first four months of 1980 imports of fish went up by 20 per cent. to 126,195 tonnes. That had the effect of depressing fish prices, thereby making it difficult for the smaller inshore boats to make profits. The distant water boats are tied up because of the 200-mile limit. Because of these two factors, the British fishing industry is in a very dangerous position.
Only yesterday there was a meeting at the Palace of Westminster attended by the four major catching organisations and the eight major fish producers' organisations of England and Scotland. At that meeting certain matters were made clear and there was a call for EEC help in due course. The Scottish Fishing Federation said that it had lost at least £12 million in the last six months. Those figures can be verified by the Scottish banks. The British Fishing Federation said that its average losses were £70,000 per trip. The average distant water trawler does only one trip, because of quotas. By September this year, the British trawler fleet's deficit will be £25 million. The British trawler fleet alone would need at least £9·1 million to carry on for the next six months.
The same applies to small ports. Share fishermen have agreed with their crews to reduce salaries by about 50 per cent. In

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many ports 80 per cent. of small vessels are already in hock to the banks as a result of mortgages. If they foreclose, those vessels will be tied up, since not many people will want to buy them. They are very much affected by increased fuel costs. Indeed, fuel costs will increase again in the near future. It was said that the distant and inshore fishing industry in Scotland and England would need about £35 million to keep it going for the next six months.
Two points were made, which I have been unable to check. However, they are germane to a debate on the EEC. I am told that article 36 of the Treaty of Rome lays down that there should be rough equality in standards of living. Article 22 states that if the level of imports endangers a country's industry, an appeal can be made to the EEC. If the EEC agrees, imports can be limited until they come into balance with the production of that country. I have not had time to verify that, but I commend those articles to the Minister. I am also informed that no member of the EEC has ever appealed under that article. If that is so, I hope that the Minister will consider the issue and do something about it.
Imports are having a serious effect. According to figures given yesterday, Canadian cod is imported at about £15 a kit. The British price for catching and selling the same amount of fish is double that, at £30. As a result of the failure to reach an agreement on the common fisheries policy, it has been impossible to negotiate swap deals with other countries, such as Norway, Greenland, Canada, Iceland and so on. Such deals are negotiated through the EEC and cannot be negotiated by Britain alone. That seriously affects the distant water industry. However, Germany has been fishing off Greenland. Agreements were made between the EEC and Canada that allow certain EEC vessels to fish off the Canadian coast, and in return imports are allowed into Europe. Most of those imports come to Britain. The sooner a common fisheries policy is negotiated, the sooner the distant water industry will have employment for its vessels.
Both the distant water and the inshore fishing industries are in a desperate position. The distant water industry is particularly affected by the 200-mile limit
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and the failure—as the common fisheries policy has not been negotiated—to achieve a swap deal. The inshore water industry is particularly endangered because of the increase in fuel prices. No subsidy is given to our fleet, although I am told that it might be possible to gain a subsidy from the EEC. I understand that such subsidies are sometimes given to the horticultural industry.
We may be successful in negotiating some form of common fisheries policy on 21 July that will come into force next year. However, the EEC is unlikely to provide any money until that policy is agreed. That will be too late for the industry. I hope that the Minister will tell his right hon. Friend the Minister of Agriculture, Fisheries and Food, who is meeting the industry tomorrow, that hon. Members who represent fishing constituencies agree that the industry is in a dangerous position and must have immediate help from Britain in order to tide it over until a common fisheries policy is negotiated. I wish my right hon. Friend all good fortune in those vital negotiations on 21 July.
5.34 pm
Mr. J. Enoch Powell: I share the interest of the hon. Member for Haltemprice (Mr. Wall) in the fishing industry, and my constituents share the interests of his constituents. I suppose that the subject of fisheries was the first to alert wide areas of the British public to what they had lost through membership of the European Economic Community.
I shall refer later to the paper on fisheries, which, curiously, and perhaps significantly, is included among the bundle of documents placed before the House in the context of the budget; but I want to begin by quoting a sentence written by the Prime Minister, which appeared in a letter that she wrote, on 12 June, to my hon. Friend the Member for Antrim, South (Mr. Molyneaux). In the context of the Community, she wrote:
"The first task was to deal with the inequitable budget contribution. That we have now done."
It would be hard to find words that illuminate more electrically the contrast between the point of view of the budget agreement held here—or at least in some quarters—and that held on the Continent.

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That difference of viewpoint is fundamental. It is summed up by the two heads upon which the official Opposition amendment is based. Those two heads are the temporary nature of the budget agreement, and its conditionality.
The right hon. Member for Stepney and Poplar (Mr. Shore) reminded the House that the Government set out to obtain a permanent settlement, which would embody a broad balance of contribution and receipt. It is no accident that the outcome has been the reverse in both respects. Perhaps hon. Members will look at the preamble, and the title, of one of the two framework regulations now before the House through which the budgetary agreement is to be implemented. I quote from the subject heading of document 7943/80:
"To contribute to the solution of the principal structural problems affecting the United Kingdom and hence to the convergence of the economies of the member States of the Community."
It is worth pausing to consider the nature and meaning of that concept of convergence. On this side of the Channel it is taken to mean that, as we continue as members of the Community and as the Community develops, we shall somehow be averaged up to the rest of the EEC; our gross national product per head will arrive at a beautiful equality with that of Luxembourg, Italy and, perhaps in due course, Greece and Portugal. Presumably, also, the structure of our economy will become identified with the structure of the economies of the Continental nations.
If that were the meaning, then certainly the application of the rules would eventually eliminate or greatly reduce the violent disproportion of the net British contribution. But no one can reasonably suppose that that is what convergence will mean.
There is another word in this context which ought to be brought into the picture. The document of the Commission, produced on 20 March, which dealt with the principles on which the budget settlement was to be reached —and on which, indeed, if hon. Members will refresh their memory of the document, it has been reached—set out
"the principles that must be respected in any attempt to resolve these convergence and budgetary questions."
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It then went on—and I draw the attention of the House to this sentence:
"the decisions which the European Council is invited to take have to be seen in the context of the need for Member States themselves to contribute to greater integration within the Community."
Thus, explicitly the Community aims at being an integrated economy and in due course an integrated State. Does anyone really imagine that an integrated West European economy of which this country was a part would be an economy in which there was near equality of income per head, measured in the old national boundaries and on the old national definitions? The result would be the opposite. The result of all amalgamations of this sort—its very consequence, as we know it ourselves over the centuries in the United Kingdom—is specialisation, centralisation, differentiation. Those, if hon. Members like—and we do like them in the context of the United Kingdom—are the rewards of unity, the rewards of integration; they are the very success which integration promises.
But that will not result in the net contribution of the United Kingdom, under current rules or anything like them, being painlessly eliminated. What it means, put in other and more direct terms, is that the United Kingdom will sooner or later accommodate itself—its people will sooner or later accommodate themselves —to the role which falls to them in an integrated economy of West Europe. These measures—it says so in the document—are to keep us quiet for a bit, for another year, or two years, or perhaps three years, until we have shaken down even further into the disadvantaged position which is fated for the economy of this country in an integrated EEC. Integration will not result in approximation of the shape of our economy to the rest. We shall still remain largely dependent upon imported foodstuffs. We shall still remain, in a sense that none of the rest of the member countries is, an overwhelmingly industrial country. But we shall learn to pay more and more of the price for being integrated into this particular kind of economy and of State.
Thus, our examination of the unfulfilled ambition to achieve a permanent equation of put-in and take-out—something incompatible with the very nature

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of the Community—serves to illuminate the contrast and the conflict which we shall find ourselves progressively exploring in the future.
I take the other matter—the matter of conditionality. We were told from the start of the negotiations that "all these matters will be dealt with on their own merits. "There is no connection whatsoever", the Government said, "between the price review, no connection whatsoever between fisheries policy and the budget. The budget is a matter which will be dealt with and settled, and on which we shall get our own terms, separately without regard to the rest." That was not how it turned out. The Lord Privy Seal, when, deputising for the Prime Minister, he made the statement to the House—I do not know whether his speech had been vetted carefully enough—referred to the result as "the package". There he was—reporting on the outcome of meetings of the Foreign Affairs Council, the Fisheries Council and the Agriculture Council; and what did he call it? He called it a "package". Of course, he was right. It is a package.
It is worth the House spending a few moments upon the communiqué put out on 31 May by Agence Internationale Europe, which includes such items as
"Text of compromise on 'British problem'"
I take from it the main points which have been mentioned already. First, the review of the common agricultural policy is to be an
"examination … without calling into question the common financial responsibility for these policies … nor the basic principles of the common agricultural policy."
If anyone thinks that that phrase means the flatulent and vague expressions in the Treaty of Rome about economic convergence, he had better try telling that to the French, by whom "the basic principles of the common agricultural policy" are known and understood to be the principles of the common agricultural policy as it was made by France her precondition for any consideration of British membership of the Community. Yet that is part of the settlement. Those words are part of the "Text of compromise" on the British budget contribution.
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Then there is the agricultural price fixing:
"Member States undertake to do their best to ensure that Community decisions are taken expeditiously and in particular that decisions on agricultural price fixing are taken in time for the next marketing season."
That might seem to be just a general expression of the desire to get on with the business and not have things held up. It is not to be seen in that light at all; for there is another section of this document headed
"How the debates went and the main points of the compromise."
Well, this was how that debate went:
"This point"—
that is, the point that I have just quoted—
"is seen by some Member States"—
guess which!—
"to be an intention to guarantee that the United Kingdom does not cause an obstruction next year when the time comes for fixing the common farm prices".
So—"No obstruction, and you may get your money." The two are linked together—at least, "some member States" say that they are linked together.
Mr. Ron Leighton: The ones with a veto.
Mr. Powell: The hon. Member says "The ones with a veto". At least they will be included in the qualified majority arrangements.
Then there is finally the matter of the fisheries policy, about which we were talking earlier. This is the text of the declaration:
"The Council agrees that the completion of the common fisheries policy is a concomitant part …"
I hope that hon. Members will savour that expression. One cannot deny the verbal fecundity of those who draft these documents. After all, not for nothing was Roget, who wrote the Thesaurus of the English language, a Frenchman, albeit a long-term resident in this country. It goes on:
"the completion of the common fisheries policy is a concomitant part in the solution of the problems with which the Community is confronted at present."—
that is, the British budgetary business.
"To this end the Council undertakes to adopt, in parallel with the application of the decisions which will be taken in other areas"—
please note the words "in parallel with"; one complies and one gets one's money

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—perhaps. One does not comply and one does not get one's money.
Those decisions include:
the decisions necessary to ensure that a common overall fisheries policy is put into effect at the latest on 1 January 1981."
Sir, is not that a package? Sir, is not that a decision linked with the budgetary outcome? Sir, is not that a condition? And what sort of a condition is it? We have always known that under the Treaty of Accession the cards in our hand diminished in value month by month as the fatal date of 31 December 1982 approached, when under the Treaty, the other countries will have the right to fish up to our beaches. But we have had two years knocked off it. So there is our bargaining position, with two years knocked out of it! We now have to arrive at that agreement at the end of this year. What sort of bargain does one arrive at, when there is a time by which one must agree with the other eight—who are against us — and when one must agree with them as a condition of everything else that one is hoping to get?
It might seem from some of my phraseology that I am imbued with a critical or even hostile spirit towards the other member States of the EEC. Far from it. There is, of course, an immense misunderstanding here, an immense gulf of meaning and intention between the United Kingdom and the rest of the European Economic Community; but if I had to say who was more to blame for it, I am afraid that I would not point to the rest of the EEC. After all, what do the other nations see? They would say to us "You must have understood all this. You passed an Act of Parliament by which, as a condition of joining the EEC, you stripped yourself of all the appurtenances of a nation, and laid aside your parliamentary jurisdiction, rights and powers. Presumably you did that with your eyes open. Do you not understand, have we not sufficiently explained to you, the intentions, ambitions and ultimate aims with which this Community was established and is being developed? Do you not read the documents? Have you not heard about 'progress towards integration'?" Those would be difficult questions to answer. Yet both sides must find the means of answering them: there must be a recovery of mutual understanding.
There is no sign yet that we are prepared to regard ourselves in the EEC as
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other than a nation. If we are a nation, then indeed we pay in and we get out in accordance with our national interest. If we are a nation, we bargain on one subject and arrive at a result, then bargain on another subject and arrive at a result on that. If we are not a nation, on the other hand, we will take the consequences of economic and eventually of political integration. If we are not a nation, if our State is superseded by the statehood of the EEC, then of course in the end all questions will be decided in common and one will not be distinguished from another.
Thus, the most fundamental of all issues is raised, and raised between us and the nations of the Continent, by this sham agreement, this agreement of mutual incomprehension, or, worse still, this agreement of mutual consent to mean different things.
As the months go by and the people of this country discover that what they have been told and promised and what the Government assured them they would receive is not forthcoming, there will have to be genuine understanding and genuine decisions taken in the end. We shall have to explain to ourselves and to others that our nationhood in the United Kingdom is incompatible, not with the most far-reaching co-operation, friendship and alliance with the peoples of the Continent, but with membership of the structure of the EEC.
5.55 pm
Mr. Richard Body: I find myself in total agreement with every word spoken by the right hon. Member for Down, South (Mr. Powell). It would be superfluous for me to say anything more, except that I wish that more of my right hon. and hon. Friends would ponder the argument that he put forward and appreciate the consequences for our country.
My hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) made a telling point when he referred to the upper echelons of the Foreign Office, and the part they played in this matter. It is disagreeable to speak ill of civil servants for what they have done, when clearly one would rather point the criticism at those who are constitutionally responsible. Nevertheless, in this matter, I believe that we have been badly served by certain Foreign Office officials.

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During the week before and the weekend following the meeting of the Council of Ministers when the Foreign Ministers reached an agreement that we should get back a little more of our own loaf, they orchestrated a very skilful campaign in the press through their information officers and the diplomatic correspondents. It should be recorded that some of the latter feel that they were deceived by the information that they were given. They claim that there were half truths, and the matter was presented to them in a very dubious way. They feel accordingly that they deceived their own readers in presenting the story in a way that they would not have done had they known the facts that they now know.
Worse than that, it looks as if that orchestration of public opinion was intended to undermine the Cabinet itself, and make it more difficult—perhaps even impossible—for the Cabinet to reach a more robust view of the settlement that had been arrived at. If Ministers themselves were responsible for the information—or lack of information—that went out, obviously they must share some part of the blame. On the other hand, if they did not, it is time they had firmer control over the activities of those responsible for the information emanating from the Foreign Office.
Is there any reason why this country should be a net contributor at all? In my opinion the essence of a Community is that there should be a sense of comradeship between the rich and poor, and the more fortunate and the less fortunate of those who form the Community. Our wealth, relative to that of other member States, is declining, and has been declining for several years—some of us will say ever since we entered the EEC. There seems to be no prospect now of that relative position improving. All the evidence points in the opposite direction and it is extremely serious to note the almost certain fact that this year will be the first year in five centuries of our history in which we have imported more manufactured goods than we have exported. Some of us are more than well aware of the reasons for that.
We shall become poorer and poorer members of the Community, although—and all Conservatives agree on this, if on nothing else—under the present Gov-
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ernment our standard of living will improve and our prosperity will gain ground. However, in relation to other States in the Community, our standard of living will decline. The main reason for that must be that we are engaged in a massive transfer of resources from this country to the rest of the Community, and that transfer represents an increasing proportion of our gross domestic product. All the evidence that comes out corroborates that fact, and it should be disturbing to every hon. Member, no matter what view he or she has of our membership of the Common Market. Yet it seems painfuly obvious that that major transfer of resources, representing an even greater part of our domestic product each year, will continue for as long as we remain net contributors.
If the raison d'être of the Community is that the stronger should help the weaker, the rest of the EEC should have understood the arguments deployed so forcefully by my right hon. Friend the Prime Minister in Dublin.
Mr. Marlow: My hon. Friend has told the House about the massive contribution that we are still having to make to the budget. Would he care to reflect also on the massive contribution that our housewives have to make by being forced to buy food at CAP prices rather than at world market prices?
Mr. Body: That is a favourite subject of mine. I do not want to be diverted on to it, but the extra cost is about £3 a week for every household. That is a severe drain on the wealth of this country and has a serious effect on our standard of living. That should be obvious to us all, no matter what view we take of the EEC.
The rest of the Common Market has shown, and continues to show, a lack of understanding in these matters. As the right hon. Member for Down, South said in quoting the French President, other EEC nations do not regard the Common Market as a true community. It remains for them—and I fear that it will have to remain for us—nothing more than a common market where one grabs what one can.
Mr. Nicholas Winterton: Like my hon. Friend, I support the views of the right hon. Member for Down,

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South (Mr. Powell). Will my hon. Friend explain why, if the French can take advantage of the EEC, the British Government and Britain as a whole cannot similarly take advantage and make the EEC act in the interests of this country?
Mr. Body: I agree with what the right hon. Member for Down, South said on that matter. If there are to be accusations about how each country has behaved, I cannot go along with the view that we have behaved totally with honour. We have broken our word several times. The House was not told with complete frankness about the secret talks that took place before we entered the EEC.
In a notable broadcast on French television, President Pompidou explained to the French people that this country had committed itself to the principle of Community preference, which meant excluding imports of food from our traditional suppliers and other consequences that went to the heart of the CAP. I regret that we have resorted to various devices to try to escape the obligations that were imposed on us by France before we entered the EEC.
The British people have not been told the whole story—as the French people were told—of how we came to enter the Community. In that broadcast, President Pompidou quoted General de Gaulle, who said:
"What I fear about the Common Market is that it will cause Britain and France to fall out."
That is one of the major reasons why I am hostile to the Common Market. I believe that as long as it is founded on the CAP it will cause disunity and ill-feeling in Western Europe at a time when we should be seeking unity.
There are attractive arguments for unity in Western Europe. Some of us dearly wish that we could have a clear and united voice in foreign policy, especially in view of the void that has been created by the ineptitude of the United States, but I do not see how we can achieve that voice while its several tongues are haggling over the minutiae of the Common Market. I do not understand why our Foreign Office officials do not appreciate the force of that point.
6.5 pm
Mr. Douglas Jay: The Chancellor of the Exchequer seemed to give us a poor defence of a dubious agreement. Of course, he is one of the guilty men who introduced the European Communities Bill in 1972. Therefore, he must bear a great personal share of the responsibility for all the damage that has been done to this country since then and is continuing.
The more the new package is examined, the more illusory and temporary the benefits seem to be. Basically, we have not got a broad balance. Instead, short-term budget reliefs have been bought at the price of an even more damaging tightening of the CAP net on this country. Even the budget reliefs are hedged about with conditions. The Lord Privy Seal told us in his statement on 2 June that the United Kingdom's net budget payment in 1980, which previously stood at £1,088 million, would come down to £370 million and that the payment for 1981 would come down from £1,305 million to £440 million, but even that is conditional on the risk-sharing formula under which we are likely, as I understand it, to pay rather more—we do not yet know how much more—in the first two years.
Certainly, very little is likely to be paid back to this country in 1980. A Conservative Member asked earlier when we would get back the money that we have already paid in the first six months of this year. We have not yet had an answer to that question. All that we are offered is, in the words of the communiqué, the "possibility of advance payments" in the calendar year 1980. There is no doubt from the official documents that even that is subject to a qualified majority decision.
The explanatory memorandum to the document COMM(80)329 says that only a maximum of £102·5 million has been included in the budget for advance payments in 1980. We are told elsewhere in the documents that the figure is £202·5 million. I hope that we shall be told clearly tonight which is the maximum figure for advance payments from the 1980 budget. The truth is, therefore, that we shall get little this year. And still do not know how much it will be. So

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much for all the hopes held out by the Prime Minister at one time of cuts in the public sector borrowing requirement and lower interest rates as a result of the huge refund that we would get some time this year.
Neither the Lord Privy Seal nor the Chancellor of the Exchequer has told us how much of the £700 million or so of relief that we are supposed to get in the current financial year is to come by way of lower United Kingdom contributions and how much by way of higher EEC spending in this country. That is something which we ought to have been told.
In so far as the relief comes by higher spending, we have now got ourselves into this dilemma. If the spending is additional to what the United Kingdom Government would have spent anyway, there is no relief to the United Kingdom budget or to the PSBR, as we were led to believe. If, on the other hand, it is not additional, needy areas and industries that are supposed to be receiving this benefit are not getting any extra help from the EEC at all. All that happens is that the EEC pays for some aid in Scotland, Wales or the north of England which those areas would have got anyway. It is well that people in those areas should understand.
I understand that all the extra expenditure is to be non-additional, although we have not been told so clearly. This is another matter on which Ministers might inform the House. It is also clear that the specific programmes now to be financed by the EEC have to be approved by the EEC Commission. This can only mean, presumably, that programmes will have to be found that were going forward anyway under the auspices of the United Kingdom Government, that are also able to secure the approval of the EEC and to which the EEC will then contribute 70 per cent. of the cost.
The net effect, therefore, of the whole of this operation on the expenditure side is that control and approval of these schemes is transferred from the British Government and Parliament to the EEC Commission. Article 7 of document 7943/80, another of those before the House, states specifically that this expenditure will not merely have to be approved by the Commission but actually "monitored". There are to be "on-the-
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spot checks" by Commission officials in this country, presumably continuously throughout the period of the programme. All that really happens is that considerable control over these programmes is transferred from the British Government to the Commission.
All this is for two years only. The Lord Privy Seal—we heard similar words from the Chancellor of the Exchequer today—said that the most important part of the package was the Council's promise to undertake what he called a "radical review" of the EEC budget and other policies. We have heard that often before. The communiqué did not state that it was to be a "radical" or fundamental review. The communiqué said that it was an examination:
"without calling into question … the basic principles of the common agricultural policy."
That is all that we have been promised. I fear that the Lord Privy Seal misled the House. He read out at Question Time, when challenged about that phrase, a number of platitudes that he said were the principles of the common agricultural policy as laid down in the Treaty of Rome.
Mr. Budgen: Will the right hon. Gentleman give way?
Mr. Jay: Not until I have finished this part of my speech. The words that the Lord Privy Seal quoted from the Treaty of Rome are not the "principles" of the common agricultural policy at all. They are the "objectives" of the common agricultural policy. It is one of the troubles of the common agricultural policy that its principles do not carry out its objectives. I am afraid that in this case the Lord Privy Seal had not been reading the Treaty of Rome.
Sir Derek Walker-Smith rose—
Mr. Budgen rose—
Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. I am sorry. I do not know to which hon. Member the right hon. Gentleman is giving way.
Mr. Jay: To the hon. Member for Wolverhampton, South-West (Mr. Budgen).
Mr. Budgen: I remind the right hon. Gentleman that the second of those platitudes included the phrase that the earnings

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of those directly employed in agriculture should increase. Was that not more than a mere platitude? Was it not an expression of the desire of the French people to have a protected and very prosperous agriculture?
Sir Derek Walker-Smith: When one has given way once, it is always convenient to give way another time. It gives the right hon. Gentleman who is interrupted more time to think of a convincing answer to the first point while the second is made. On the point of the platitudes enshrined as the objectives of the common agricultural policy in the EEC Treaty and the Treaty of Rome, it is surely significant that those are the only matters clothed with the authority of the Treaty. All the mechanism of the common agricultural policy can be changed without amendment of the Treaty and given only the political will to do so.
Mr. Jay: I do not altogether share the right hon. and learned Gentleman's idea of convenience. That is not my reading of articles 39 and 40 of the Treaty of Rome, which laid down in effect, what we normally regard as the mechanism and certainly the basic policies—the common prices and common markets, and so on. These are clearly part of the principles of the Treaty. I agree with the implication of the question of the hon. Member for Wolverhampton, South-West.
The most damaging effect of this agreement, in the long run, is the surrender of the Government to a further 5 per cent. increase in food prices as a condition of the budget and in direct violation of the repeated pledges given by the Prime Minister and other Ministers in this Government that no such bargain or surrender would be made.
Is it correct—I do not think that we have been given an official figure—that a sum approaching £1,000 million will be added to total CAP expenditure as a result of this bargain? Before this bargain, the CAP was costing £7,000 million a year. I understand that this total has now been raised to somewhere near £8,000 million. We can surely be given the figure.
Ministers try to imply that another 5 per cent. or 7 per cent. on food prices is not too bad or burdensome. What
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they do not mention is that most EEC food prices are already at least 100 per cent. above world prices. I would quote only a few of the EEC Commission's latest figures, giving the ratio of EEC food prices to world prices at the present time. These show wheat prices at 93 per cent. above world prices; barley, at 125 per cent. above; maize, 101 per cent. above; beef, 99 per cent. above; butter, 303 per cent. above; and skimmed milk powder even higher. When prices vary from 100 per cent. to 300 per cent. above world prices it is no great comfort to know that they are only going up by another 5 per cent. or 7 per cent.
Mr. David Myles: Will the right hon. Gentleman state sugar prices in relation to world prices?
Mr. Jay: The hon. Gentleman knows that for a short time, in the single case of sugar, the world price, which is not very representative for sugar anyway, has gone a little way above the EEC price and will probably stay there for a few weeks. Even if the hon. Gentleman can take any comfort from that situation, I am afraid that I cannot.
On top of all this, sheepmeat is now to be dragged into the common agricultural policy. So far from the French being shamed and made unpopular, as the Minister of Agriculture constantly told us would be the case, as a result of their breaking the law on sheepmeat, the French have gained considerably by their conduct in the whole affair. We are now to have the whole business of intervention, storage and import levies introduced into sheepmeat. In a comment on 31 May on this part of the agreement, the Financial Times said:
"The agreement to include lamb in the Common Agricultural Policy for the first time represents a capitulation to France on two important points: it introduces the right to use Community funds to buy surplus lamb opening the way to a lamb mountain, and it leaves open the possibility of subsidised exports from the EEC."
The Australian Government are already protesting strongly against the renewed threat to lamb exports. I hope that the Minister will explain how we can be sure, with all the apparatus applied to sheepmeat, that United Kingdom lamb will not go into intervention in France. I cannot understand how we can be sure that that will be prevented. Is it true

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that the Commission is proposing a further 20 per cent. cut in New Zealand imports of lamb into the EEC? May we have an assurance that the British Govenment will not agree to that?
We are told that all this depends on New Zealand's agreement. New Zealand is said to have a veto. But will not New Zealand be told, as has happened so often in the past, that if the veto is used, the French will veto the whole budget package? What assurance have we that that will not happen?
The right hon. Member for Down, South (Mr. Powell) spoke about fisheries. The French Minister in charge of fisheries was reported in The Times of 17 June as saying flatly that France will hold up the budget settlement until a fisheries agreement has been agreed. Until today Ministers have assured us that there is no link between the budget package and sheepmeat and fisheries, although I am not sure what the Chancellor was saying today. If they are not linked, I do not know why the fisheries paper, document 7389/80, is before the House. I know even less why that paper includes the words that the right hon. Member for Down, South quoted. They are worth quoting again. The paper states:
"The Council agrees that the completion of the common fisheries policy is a concomitant part in the solution of the problems with which the Community is confronted at present".
The document says that it is necessary
"in order to sustain the agreements in other areas, to adopt as swiftly as possible the decisions necessary to ensure that a common overall fisheries policy is put into effect on 1 January 1981."
That means that the issues are linked. It suggests that our Government must have reached a private agreement with the French Government as a condition of the budget settlement. The document makes it clear that the two issues are formally linked.
The temporary budget relief, however, is small in relation to the total economic burden of EEC membership on Britain, if it is seen in its true perspective. The cost of membership before the package to the United Kingdom balance of payments was running at £1,500 million a year from the budget and CAP together and at least £2,000 million a year on account of our trade deficit with the
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EEC in manufactured goods—which deficit totals altogether £4,000 million a year. At the lowest possible computation the total burden of membership is over £3,000 million a year.
Against that, for two years under this Government we are to receive relief of about £700 million in each year. That is about one-quarter of the total balance of payments burden on the country. The rest of the burden will grow and, even with the relief, it is intolerable.
The proposed review is hamstrung from the start because of the veto on questioning the principles of the common agriculture policy. Only one reform of the CAP would really remove the burden from Britain—a change in all cases to a deficiency payments system financed by each country nationally in its own economy. The tragedy of this agreement is that the French, for the first time, were forced to the point when they were willing to do that if we refused to accept the package.
There is one simple way, however, for Britain to return to deficiency payments, to lower the price of food, to restore moderate tariffs on imports of manufactured goods and to secure a 200-mile exclusive fishing zone—and that is to leave the EEC altogether.
6.25 pm
Mr. Selwyn Gummer: The speeches so far have had something in common—their attitude towards any documents that emanate from the European Community. It reminds me of the person who opened the first pages of "Wuthering Heights", who is said to have looked at the Bible in order to grab to himself all the promises therein and flung at everybody else the curses. I fear that we approach a debate of this kind by importing into its substance our preconceptions [HON. MEMBERS: "What about yours?"] If my hon. Friends will allow me, I shall admit that I, too. import my preconceptions into the debate.
My preconception is that Britain is a member of the European Community and it is as well to try to make our Community work. We do ourselves no favours by constantly harping on that which we find distasteful and never being generous enough to welcome that which clearly is an improvement. We shall achieve nothing if we write down the

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real successes that the documents represent and that the Government have managed to bring about.
Mr. Buchan: Will the hon. Gentleman give way?
Mr. Gummer: A number of speeches in one direction have been made and the hon. Gentleman has been kind enough to listen to them. Perhaps I can develop my argument a little.
The right hon. Member for Down, South (Mr. Powell) suggested that there was something intrinsic in the nature of the Continental members of the European Community which made them different from us. He said that because of that the European Community could in no circumstances work. That is what I call the "whole hog" approach. One starts by believing that no restructuring and no system can make the European Community work.
The right hon. Gentleman suggested that within the EEC Britain acted as a nation whereas the other countries saw themselves as other than nations. He said that they looked to a time when they would be able to celebrate their loss of nationality. I find it difficult to draw that distinction between Britain and France.
In its substructure, much of the speech by the right hon. Member for Stepney and Poplar (Mr. Shore) was involved in pointing out how much like a nation France had acted and that France and other nations had sought to inject into the discussions a great degree of national interest and concern. I do not object to that. However, on one hand it is suggested that the European nations, apart from Britain, are straining towards integration and that therefore we cannot be part of the Community. On the other hand, it is suggested that the nations are behaving so much like national units that we do not get a look in. They are not reasonable explanations of what happens in the European Community.
In the Community there are nations, and people within nations, who seek increasingly economic and political unification. I am certainly one of those who look for very close association between the peoples of Europe.
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I hope that political and economic close harmony will enable us to grow and act together. Perhaps in that view I am further along the road to integration than some of my right hon. and hon. Friends. There are other individuals and other nations in the Community who take a different view and find it possible to do so within the confines of the Treaty of Rome and as loyal members of the Community.
The problem that we face in this House is that every time we discuss the European Community we do not discuss how to improve it, how to change it or how to make it the kind of Community that will benefit us. We discuss it, as the right hon. Member for Battersea North (Mr. Jay) demonstrated, in terms of whether we should be in or out of it. In looking at these regulations I propose to discuss how best we should see them within the developing framework of the Community.
Mr. Budgen: Perhaps my hon. Friend will explain to me which passage in the Chancellor's speech pointed to any serious attempt to change the Community over the next two years in a way that would become acceptable to us?
Mr. Gummer: I hope that my hon. Friend will follow what I am about to say, because I think that it will answer his question.
It seems to me that when one looks at the documents before us we see a major change in the power structure and mechanics of the European Community. What is now important is that instead of it being Britain which has proportionately less interest in the CAP than other Community members—in my constituency it is not so—and instead of it being Britain which bears the highest proportion of the cost of the CAP, while being the nation pressing hardest for the reform of the CAP, as a result of changes Federal Germany now bears a considerable proportion of that cost. Federal Germany has become the principal paymaster in Europe.
West Germany now has a major reason to press for the changes in the CAP because that policy is becoming increasingly costly for Germany. That is why there was a considerable internal argument in Germany on the question whether this

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agreement would be accepted. Count Lambsdorff was faced with a major argument because it was seen that once this change takes place Germany will become the mainspring of the change in the CAP. It becomes a much more feasible and fundamental argument to believe that the CAP will be changed because it is in the interests of the principal paymaster instead of being merely in the interests of the country that is least strong in that particular suit.
I start by saying to my hon. Friends that that is a major and important change. If one looks at these documents —I am sorry that the right hon. Member for Stepney and Poplar did not mention the point—and the agreement, one should, first of all, ask what reception they received elsewhere. If this agreement is what the right hon. Gentleman says it is, and if it is an abject surrender to our partners in the Community, what should we have expected? We should have expected dancing in the streets of Paris. The people of Luxembourg, Holland and Belgium would have said that they had won again. But that did not happen, and the right hon. Gentleman said so.
President Giscard d'Estaing had to go to his farmers and explain away the fact that the British had achieved an extremely good result. The French President, making an election speech, had to explain to his most important electors that this agreement was, perhaps not what they thought it was, not what the British thought it was, and not what the rest of Europe thought it was. He had to find excuses.
However, if we are to take too seriously the electioneering speeches of the French President I wonder whether the right hon. Member for Stepney and Poplar should not reflect upon the damage done in the European Community by speeches on the Community made in this country by him and his right hon. and hon. Friends.
Is it any wonder that we have found it so difficult to begin the reform of the Community when most other countries felt, and continue to feel, that Her Majesty's Opposition, when they were Her Majesty's Government, were not in favour of the Community anyway and
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that they were not embarked upon the reform of the Community but were about its destruction?
The second reason I put to my hon. Friends—
Mr. Straw: Will the hon. Gentleman give way?
Mr. Gummer: If I may continue this point, I shall then give way. The second reason for my believing that this is a major change is that the Community now knows that it is dealing with a Government whose policy towards Europe is based upon two clear principles. The first is that of adherence to the Community itself. We have a belief in the Community and an intention to remain a member of it. The second is that we have the intention and the determination to see that Britain plays her full part in, and receives her full dues from, the Community. For the first time Britain is able to bring to bear upon the Community the kind of pressure for reform that has not been possible before.
Mr. Straw: I am concerned that the hon. Gentleman should not suggest that feeling against the Common Market and its lunacies is specifically confined to the Opposition, though we are, on the whole, united on this matter. Would the hon. Gentleman care to look around him and recognise that, probably, half of his hon. Friends in the Chamber tonight are anti-Marketeers and that they are as opposed to this settlement as are the Opposition?
Mr. Gummer: It is perfectly reasonable for the hon. Member for Blackburn (Mr. Straw) to sum up the views of my hon. Friends or his hon. Friends in his own way. I would not attempt to do that. There is a wide range of views and I think that the hon. Gentleman would accept that those of us who see that Britain's membership of the Community is of the utmost importance both to this nation and to the rest of Europe—as well as to the free world—find it hard to listen to him attempting to bracket my right hon. and hon. Friends with him and his hon. Friends. Opposition reasons for being opposed to the Market are fundamentally different from the reservations expressed by my right hon. and hon. Friends. Many right hon. and hon. Gentlemen are opposed to the European

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Economic Community because of the fundamental stand that it has taken in relation to the free world and in relation to other free enterprise economies.
When we examine the kernel of the speech of the right hon. Member for Stepney and Poplar, when he addressed himself, as he has often done, to the CAP, we find that he did himself an injustice similar to the one that he did recently in a debate when he left out a sentence from a document he quoted in order to make the previous sentence mean something opposite. The right hon. Gentleman had to be reminded of that. He was not gracious enough to admit it, but on the record one can see that that was so.
Speaking about the CAP, the right hon. Gentleman once again cast aspersions without giving facts. For example, he referred again, as have so many hon. Members, to the principles of the CAP. Later, an interesting discussion flowed backwards and forwards between the right hon. Member for Battersea, South and my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) about the nature of these principles.
There is no doubt in our minds—nor should there be in anyone else's mind—that the principles are clearly enshrined in articles 39 and 40 of the Treaty of Rome. Those principles are very clear, and I was sad to hear my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen)—his constituency is not, I admit, an agricultural area—casting doubts upon the most important element in those articles, namely, that they seek to ensure a fair standard of living for the agricultural community by increasing the individual earnings of persons engaged in agriculture.
For those of us who come from rural communities and represent agricultural constituencies it sounds very odd when other hon. Members, particularly Labour Members, talk so disparagingly about the need to ensure a reasonable return for those involved in agriculture—
Mr. Buchan: Oh!
Mr. Jay: Will the hon. Gentleman give way on that point?
Mr. Gummer: No, I shall continue my speech. Many changes to the CAP are
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necessary, and I and others would support many of them. But I beg Opposition Members to accept that in spite of the wholehearted view of the right hon. Member for Battersea, North, who wants the whole system swept away and replaced by deficiency payments—he is not supported in that by many members of the agricultural community—the CAP is a whole series of arrangements and we should be looking at them one by one to see which should be altered, which should be abolished, and which should be retained. Many of them do a great deal of good for the continuance of agriculture in this country and for the production of food.
Mr. Jay: Does the hon. Gentleman not understand, after all these years of debate, that the difference of opinion is not whether there should be a fair return to those engaged in agriculture but whether it should be financed by deficiency payments or extortionate prices?
Mr. Gummer: The difference of opinion between the right hon. Gentleman and myself is certainly that, but that is not a clear-cut difference, as he may have noticed when my hon. Friend the Member for Wolverhampton, South-West cast doubt even upon the nature of the security that many of us seek for the agricultural community—
Mr. Budgen: I did not.
Mr. Gummer: What worries me and also worries the National Union of Agricultural and Allied Workers is the way in which people talk about cheap food imports as though they were totally different from imports of other commodities, and that somehow it is possible to talk in slighting terms about the cost of food production in this country, suggesting that in that area alone people's livelihoods and returns should not be treated as we would treat those in manufacturing industry.
I come finally to the crucial point raised by my hon. Friend the Member for Holland with Boston (Mr. Body). He suggested that, year by year, our economy will decline compared with the economies of the rest of the Community. He believes that for some reason this is partly the fault of our membership of the Community. However, if my hon. Friend will cast his mind back to the time before we

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joined the Community he will recall that that was exactly the history of this country. Year by year, compared with our fellow members of the Community and our other neighbours, the British economy did less well. My hon. Friend suggests that that will continue while we are a member of the Community.
I suggest, however, that the reason for that decline lies within the nature not of the Community but of the decisions of successive British Governments and of the British economy. This is not a matter to be blamed on the Community which it has become convenient to blame by all those who do not wish to take the blame themselves. The fundamental reason for the relative decline of the British economy is that we in this country have listened far too much to the economic views of the Labour Party. We have constantly been concerned with egalitarianism. We have sought not to reward enterprise. We have sought constantly to trammel and hold up all the energies of our people by growing State control.
Mr. Arthur Lewis: What about last year?
Mr. Gummer: It is for these reasons that the economy has done less well compared to the economies of other nations. We must not blame the European Community for our failure to take the opportunities that it has offered. If we had shown the enthusiasm and the ability to seize the opportunities shown by the French and the Germans our economy would not be condemned constantly to decline in comparison to the economies of our neighbours.
Therefore, I suggest that my right hon. Friend has produced a remarkably successful solution to our budget problem. If the right hon. Member for Stepney and Poplar had produced anything like it, or if any of his right hon. Friends had done as well, we should never have finished hearing the crowing about it. They have to scrabble around for small points on which to object to the package instead of admitting the truth, which is that within the Community Britain has its best chance to improve its economy and to play a major part in the political decisions of the world.
This country will improve its economic prospects only if it is willing to take the
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opportunities that the Community gives. If we were half as successful in that direction as is highly nationalist France we should be able to realise what we all dream of, which is that Britain should become a leading nation of the Community and should not have to worry about paying considerably towards Community finances, because we would be where we could be—one of the leading economic countries in the Community.
6.47 pm
Mr. Donald Stewart: Having listened to the hon. Member for Eye (Mr. Gummer) I see that I was doing a considerable injustice to the negotiators who brought back the agreement we are now discussing. I thought that the evidence that had been laid showed that it was a pretty tattered and disreputable agreement. Having listened to the hon. Gentleman I see now that in some ways our negotiators were stalwart defenders of United Kingdom interests. If, by some chance, the hon. Gentleman were ever landed in that position—
Mr. Jay: God help us.
Mr. Stewart: —to change what the Iron Duke said, he would not frighten the French, but by God he would frighten me.
The hon. Gentleman referred to the common agricultural policy. I have listened for some time to Front Bench speakers agreeing that the CAP is far from ideal, that it acts against British interests, and that it must be changed. This has always been promised to us, like the end of the rainbow. However, we are getting no nearer to changing the policy. It will never be changed to the benefit of this country, and I do not need Highland second sight to assert that. The day that it fails to operate for the benefit of the French and the other countries concerned, they will call it off.
Mr. Russell Johnston: The right hon. Gentleman is presumably aware that both the Scottish and English farmers unions support the CAP.
Mr. Stewart: They have considerable reservations about it now. They are learning as they proceed, in spite of their initial support, that they have backed the wrong horse.

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The hon. Member for Eye should not have been too hard on Labour Members. The Chancellor was quite pleased to say today that our entry into the Common Market was supported by many Labour Members. Presumably he was quite pleased that the stupidity that he and his hon. Friends had shown was widely shared beyond the confines of the Conservative Party.
Mr. Arthur Lewis: Some of them have done very well out of it—like Roy Jenkins.
Mr. Stewart: I suggest that the budget settlement is not unconnected with the agreement to arrive at a common fisheries policy by 1981, and in view of what we have surrendered the settlement will be found to be very expensive. It seems to have no more beneficial basis in reality for the United Kingdom than Chamberlain returning from Munich waving a piece of paper and talking of "Peace in our time". I think that our freedom is even more fettered as a result of this settlement.
I want to deal with the document on fisheries policy—document 7389/80. The Scottish Fishermen's Federation has made a submission to the Secretary of State for Scotland which begins:
"After a period of relative prosperity the Scottish fishing industry has entered a period of recession which, if it continues unabated, threatens to be the worst in the post-war period."
If anything, that understates the position. After past recessions, our fishing fleets were able to carry on from where they left off. That option may no longer be open. Unless rational and fair decisions are made by the Government in their negotiations with the EEC, we may see the end of our fishing industry.
The new tariffs agreed on certain species of fish will go some way to counter the unfair competition from some of our alleged partners. The Council's declaration on the common fisheries policy speaks of:
"measures for the management of resources and conservation."
I am not being insular when I say that those measures need to be borne in mind by Continental fishermen more than our fishermen.
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The document goes on to refer to:
"the special needs of certain regions in which economic activity is largely dependent on fishing".
I hope that that aim will be at the forefront of the minds of our negotiators in all discussions. Many people in my constituency and elsewhere are angry that the Commission could not see its way to give a derogation for one vessel to fish with a drift net for herring. We should not have a problem with stocks today had the fleets been fishing by that method. The fishermen all agreed that that one vessel could not fish by any other method and that it could fish in that small area of water. However, the British Government were unable to get the EEC to make an exception.
The Commission must adopt the policy that fishing must be for human consumption only. Given the state of fish stocks and the concentration of vessels and types of gear, industrial fishing, which wastes resources and destroys young stock, should not be allowed to continue. It is essential that that is emphasised in any agreement. In view of the activities of some of our alleged partners, it is also essential to devise a system to police the waters to ensure accurate returns of catches. There should be severe penalties for infringement of regulations.
No settlement should be agreed with the EEC on the basis of a 12-mile limit and nothing else. I should welcome the assurance given to me by the Minister of Agriculture, Fisheries and Food a couple of weeks ago that he will not accept an agreement on those terms. However, I recall the assurance that he gave to the hon. Member for Holland with Boston (Mr. Body) that he would not agree to increase prices of produce in surplus, and that agreement was broken in negotiations with the Common Market.
The lobster fishermen in my constituency have today invaded the waters around the rocket range on Uist as a protest against the Government's lack of action over the importation of lobsters from Canada, which has virtually destroyed their market. The Ministry of Agriculture, Fisheries and Food and the Scottish Office have the matter in mind, and I hope that they will take steps to preserve this valuable industry as quickly as possible.

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Prawn fishermen are also in difficulties, partly due to the Spaniards trying to extend their fishing into United Kingdom waters. Spain is lining up to join the EEC. In that situation, I imagine that the British Government have some muscle in order to see that our fishermen can dispose of their catches in the same way as in the past.
Oil development is bringing great profit to the United Kingdom exchequer. I shall not go into the side issue of whose oil it is. Fishermen on the East Coast are being disadvantaged because the pursuit of North Sea oil interferes with their grounds, causes debris, destroys their trawls and so on. The Government could at least make a financial contribution to help those fishermen. It is fair that those who gain should in some small way help those who lose.
6.54 pm
Mr. David Myles: I sincerely hope that I can make a more constructive contribution than many speakers have so far made. I should like to get away from the gramophone repetition of platitudes about difficulties, and consider what we can achieve from the position that we are now in, rather than that which we might have been in. Harping on the past and saying that we should not have done this or that is of no benefit.
Although the CAP interests me greatly, I shall not go into too much detail. However, Opposition Members, especially the right hon. Member for Western Isles (Mr. Stewart), want to come out of the Common Market. They want cheap food from elsewhere, although the right hon. Gentleman does not want cheap lobsters from Canada or perhaps cheap New Zealand lamb. I do not know how the right hon. Gentleman hopes to solve his constituents' problems by shouting the odds in that way. However, we are used to members of the Scottish National Party putting political gain—
Mr. Donald Stewart: Will the hon. Gentleman give way?
Mr. Myles: It will be worth intervening when I have finished my remarks. Members of the SNP put political gain above the long-term interests of their constituents, and that includes fishermen.
Mr. Stewart: The hon. Gentleman says that I do not represent my constituents. I remind the hon. Gentleman that my constituency was the only one to vote against entry to the Common Market. We are still congratulating ourselves on our foresight and common sense.
Mr. Myles: When the common fisheries policy is complete, and when the European sheepmeat agreement is working, I imagine that the farmers and fishermen of the Western Isles will be at the forefront of those who welcome policies that look after their interests. I shall try to look after my constituents, especially the fishermen.
I have a few suggestions about what we want to see from the common fisheries policy. Although the agreement mentions the common fisheries policy, it does not tie our hands.
Mr. Austin Mitchell: Will the hon. Gentleman concede that accepting a deadline for the agreement to be in operation by 1 January next year, when our demands have not been accepted by any other member State, is tying our hands?
Mr. Myles: That observation comes ill from the mouth of the hon. Gentleman, considering the deadlines that there have been—perhaps not so much deadlines as dead stops. People just said nothing, or they said "No". We should not behave like the "abominable no-man". That is not the way to be constructive. Having a deadline puts pressure not only on us but also on our European competitors. I shall deal with that later when I talk about fishing matters.
On behalf of the fishermen, I ask for nothing less than the seven "Cs", I do not mean the high seas. I do not mean that we want to claim all the seas. [Interruption.]. If hon. Members will be patient, I hope that they will understand what I am speaking about when I urge the need for being constructive, and so on. These are the "Cs" that I am speaking about.
My first "C" stands for cash, and it is absolutely necessary that the fishermen should have this. If we were to follow a cheap food policy, the fishermen would be denied this "C". The fishermen must have a reasonable return on their catches when they come into the pierhead. If

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they do not have that, they have nothing. We must therefore ensure that in the common fisheries policy there are no unfair subsidies and things of that sort. We must ensure that third country tariffs are adequate. in that regard, I welcome the 1 July increase in the tariff on whitefish, which I sincerely hope will help the industry in the state in which it finds itself at the moment.
The second "C" is the catch. Our fishermen must be allowed a proper catch. We have the greater share of the European pond, but our fishermen must be allowed to continue to catch the fish and bring them into this country. We must have fair and equitable quotas which will allow our fleets to continue fishing. Nothing in what has been agreed already means that we cannot have equitable quotas.
Thirdly, we must have adequate agreed measures of conservation. From the way that many Opposition Members speak it might be thought that we could suddenly float this island out into the middle of the Atlantic, where we could have 200 miles all the way round it. If we were to insist on 200 miles, it would take us half way into France.
Mr. Leighton: Does the hon. Member agree that, had the whole of the United Kingdom had the sense to vote as the voters of Western Isles voted, we would have had—as far as it was geographically possible—a 200-mile limit within which we could have done as we pleased?
Mr. Myles: I agree with that, but a bird in the hand is not necessarily better than the one in the bush. The one in the bush can, in the long term, be very much better, for the simple reason that when there is no 200-mile limit and median lines are drawn, the fish do not know where the lines are. The fish are liable to swim across and to be caught up in the industrial net that is used by the Danish fishermen and by other fishermen from EEC countries.
We must have control over them if we are to have proper conservation. We can have that control only by being a member of the club. We cannot have control and conservation without having conservation over the whole of the waters—over the whole of the North Sea. We must have that, and we cannot
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get it unilaterally. As I have already said, the fish do not respect median lines.
My fourth "C" follows from conservation. It is control. We must achieve coastal State control. That is the only way in which it can work properly. We cannot have real control unless there is control by the State whose waters come up to the median line. That is the State which must look after the waters totally. We cannot tolerate any longer the scandal of countries not obeying the conservation rules that will have to be obeyed when we have an agreed common fisheries policy.
The fifth "C" is co-operation. It seems strange to me that the Labour Party, which has a history that is related to the great co-operative movement, now seems to want to abandon all co-operation with anybody else. Indeed. Labour Members can hardly co-operate with each other at the moment. But it is strange that they should now want to abandon totally the concept of co-operation that has been part of their history for so long. We must have co-operation with all other member countries. We must have co-operation with third countries. We must have co-operation within all the sectors of the fishing industry. Sadly, that has been slightly lacking in the past.
The sixth "C" is construction. We must have the construction of fishing boats to keep our independent boat building yards in the North-East and elsewhere—here I include Campbelltown, another "C"—viable. Without construction, there is no way in which we can carry on, and we need EEC money to support that construction.
We should look occasionally at the aid that we get in FEOGA grants—
Mrs. Elaine Kellett-Bowman: My hon. Friend is presumably[Interruption.]—talking about the scrap and build policy, which no doubt he would support. [Interruption.] Would he agree that under that policy it is only fair that the compensation paid[Interruption.]—should be related—
Mr. Arthur Lewis: The hon. Lady is getting £30,000 a year out of it.
Mrs. Kellett-Bowman: —to the age of the ship that is scrapped? It would clearly be unfair to pay the same amount

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for an ancient ship as for a relatively new one.
Mr. Myles: We can have control of all those things once we get the common fisheries policy agreed. [Interruption.] I wholly agree—
Mr. Deputy Speaker (Mr. Richard Crawshaw): Order. One intervention is quite sufficient. The hon. Member for Newham, North-West (Mr. Lewis) has shouted about eight times in the last half minute.
Mr. Arthur Lewis: May I apologise, Mr. Deputy Speaker? I should not have said it, but the hon. Lady gets £30,000 a year out of the Common Market—and so does her husband.
Mrs. Kellett-Bowman rose
Mr. Deputy Speaker: Order. I have not called the hon. Lady. I am sure that if we were to start to add up what everyone gets we should be here all night. I do not think that the hon. Lady needs to reply.
Mr. Myles: I am very pleased that you intervened, Mr. Deputy Speaker, but really there was no need to do so, with respect. As Conservative Members know —and perhaps Opposition Members ought to know—I am very deaf, so that interventions do not matter much to me.
I was trying to talk about construction, and I certainly have in mind the scrap and build policy. We must have more sensible allocations of FEOGA funds. When my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) intervened, I was about to add my welcome to the £69,000 that will be going to a progressive fish processing plant in Buckie under the recent allocation of FEOGA funds. I also welcome the allocations that have been made for fishing boats.
I sincerely hope that we can hurry up and meet the deadline, so that we can keep our boat yards going with Community funds.
My last "C" is much the most important one—confidence. It could be said to be linked with another "C"—conservative. The one thing that is desperately lacking, and desperately required, in the fishing industry is confidence. No
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Government can create an industry, or relatively make it succeed without it. It needs confidence in itself to succeed.
I attended the Catch 80 exhibition in Aberdeen. I did not notice many Opposition Members there—especially the right hon. Member for Western isles. He may have been there, and I apologise for my remark if he was. As I walked around the exhibition I was greatly heartened that there was a slight light shining behind the clouds. The industry is beginning to believe that there can be a settlement, and that it can again have confidence. I hope that we can build on that, and not betray its faith. I solemnly believe that the Conservative Party can do that. For so long fishermen have had to put up with the sort of thing that we saw in the "World in Action" programme. The sooner we have control and common sense in our Community fisheries policy, the better. We must have confidence so that the fishermen in one of our greatest traditional industries will invest in the industry and go out and catch fish.
7.11 pm
Mr. Julius Silverman: The Scrutiny Committee will welcome the allocation of a day's debate for this important topic. The Chancellor's speech was most unilluminating, and I do not think that any hon. Member was any wiser at the end of his speech than when he began.
Mr. Arthur Lewis: That was the objective.
Mr. Silverman: I wish to probe the questions relating to the financial part of the agreement. I shall not deal with fisheries—not only because I do not know much about that subject but because I might get lost in the "seven Cs" referred to by the hon. Member for Banff (Mr. Myles). Neither the Government's nor the Commission's explanatory memoranda give any figures. If I provide certain figures that are far out, no doubt I shall be corrected by the Government. I know that some of the figures have to be finally decided because there are certain variables, especially in the figures relating to 1981–82.
I understand that the total amount of relief that we expect to receive under the agreement is about £750 million in the first year. It may not be as much in

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Subsequent years, but that has to be worked out. That will leave us with a deficit approaching £400 million during the first year. While the amount of relief is substantial, it comes from the wholly unacceptable figure of our present contribution. Many hon. Members, apart from those who have already spoken, may think that it is wrong that we should pay £400 million a year—which is not by any means chickenfeed—as our contribution to a Community of which most other members are wealthier than Britain yet derive more benefit.
The Chancellor pointed out that the German contribution would be substantially higher than our contribution. That contribution is paid by the German Federal Government, who have joined a club from which they gain a great deal. It is a small contribution in relation to the benefits of having an open market in Europe of which West Germany makes the fullest use. It is able to export its goods freely to the extent of thousands of millions of pounds a year. I am not blaming the German Federal Government for taking the greatest advantage of that position. We are on the receiving end on imports. As everybody knows—because it has been stated many times—we have a considerable deficit on manufacturing goods, to say nothing about agricultural produce. I wish to know whether those figures are correct. They are my best calculations, from what has already been said and from what I know of the agreement.
Mr. Spearing: Does my hon Friend agree that one of the lamentable omissions in the Chancellor's attempted exposition was that he made no indication of the proportion of the sum that we shall receive—and I think that my hon. Friend is nearly right—which is to be paid in programmes rather than in so-called cash?
Mr. Silverman: I was purporting to deal with that. I am making estimates based on information from earlier speeches. The amendment of the 1974 financial mechanism will result in about £250 million relief for Britain. This year's EEC budget provides for about £200 million to assist Britain in this respect. Therefore, we hope to receive about £500 million in special measures. These measures correspond roughly with
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the present regional development fund. Based on that sum, in conjunction with the amount that we shall have to contribute—bearing in mind that the maximum contribution from the Community is 70 per cent., and we may not receive the full 70 per cent. in all cases—it is possible to calculate that the total value of the projects, if they are achieved and if we receive the relief, will be about £750 million. That represents a large number of projects.
During the past two years we received£37 million in 1978 and £70 million in 1979, although the commitments were significantly greater than that. We are embarking upon a programme of projects. It is a restrictive programme related to infrastructure matters. Yet we have not heard a word from the Government about the sort of projects that they intend to approve, what it is all about, and how it will affect the various areas.
Mrs. Kellett-Bowman: The projects are not confined to infrastructure. There is a limit on the amount that can be used for that purpose. I hope to catch the eye of the Chair later in the debate. The new measures are very wide indeed. They cover the whole range of urban renewal, housing and advance factories. They will be of enormous help.
Mr. Silverman: That may be so, but for the most part the documents that I have seen deal with infrastructure in what are called the assisted areas. I should like to deal with that point. By assisted areas, the documents mean areas described as assisted areas on 1 January this year, except in very special cases. That means that apart from those assisted areas, other areas of the country will get nothing at all.
I am particularly concerned from a constituency angle. I am a West Midlands Member. Recently, there was a debate in the House that described the dramatically deteriorating economic situation in the West Midlands. There have been closures and redundancies in my own constituency, and only a few days ago one of the GKN factories in my constituency announced that it was closing, with about 1,000 redundancies. That is happening to small firms and large all over the place.
Birmingham and West Midlands industry and the West Midlands press have

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pointed out that we would not get a brass cent out of the regional development fund. As a result of this regulation, there will be projects which, if realised, will be several times as large, yet the West Midlands will still not get a brass cent. I hope that West Midlands Members and the West Midlands press will ask why. That is undoubtedly what will happen under the agreement as it now stands. Yet we have not heard a word about it, although it is a serious matter indeed.
There are exceptional cases. I do not know what they are. There is the question of coal, but any scheme for coal will take several years to develop. It is difficult to know how many of these projects will come within a three-year period. Therefore, there are many questions to which we want answers. I have put just some of them. I hope that before the end of the debate we shall receive some real information about this financial agreement. So far, we have received very little. I have not dealt with the question of agricultural prices, fisheries, or the other concomitant agreements that go with it, some of which may be disadvantageous to us. I have merely dealt with the financial element in the agreement. To my mind there are many unsatisfactory aspects to it and many dark spots that require illumination.
I know that other hon. Members want to speak. I shall therefore confine my remarks to that aspect of the agreement, and I hope that the information that I have sought will be forthcoming.
7.23 pm
Mr. Albert McQuarrie: The right hon. Members for Battersea, North (Mr. Jay) and for Western Isles (Mr. Stewart), both of whom unfortunately have now left the Chamber, stressed the fact that we appear to be dealing with a document which should have been considered independently rather than with the budget documents, as it deals entirely with fisheries. By so doing, we would have had a greater opportunity to discuss this very important issue.
In the hope of catching the eye of the Chair, I purposely placed around my neck this tie, on which there is a small fish with a Union Jack on it, underneath which it says "Save Britain's Fish".
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That is exactly what the debate would have been all about had it been confined to one on fisheries. I am, therefore, constrained to discuss only document 7389/ 80. If that document does nothing else, it stresses the need to reach agreement on a common fisheries policy by 1 January 1981.
No one should underestimate the enormousness of that task, which has been tried by successive Ministers on both sides of the House, unfortunately without success. The Commission is saying that the regulations will have a binding force on all member States and will be enforced through the European Court of Justice and national courts. I accept that the United Kingdom could take action in the courts here, as it has done on many occasions. However, if we are to take the example of the manner in which the French accepted the decision of the European Court with regard to lamb, what faith can we in Britain have that we shall not see similar examples by member States and third countries that flout the new common fisheries regulations?
It is right to say that enforceable legislation is desperately needed. We have only to look at what is now happening in our own waters fully to support that view. Our fishermen are being fished out of their own waters by third countries and Common Market members which are coming here simply because—as my hon. Friend the Member for Haltemprice (Mr. Wall) said earlier—there are no Community rules.
The European Commission believes that conservation must provide the basis of the new common fisheries policy. That is exactly what we in Britain have been doing in recent years, to the detriment of the income of our fishermen. But where has it placed our fishing industry? Never in the long history of that industry has such a critical stage been reached. There seems to be no light in the tunnel. Despite what my hon. Friend the Member for Banff (Mr. Myles) said earlier the fishermen see no light at the end of the tunnel, hence the reason for their asking for an important meeting with my right hon. Friend the Minister for Agriculture, Fisheries and Food next Thursday, at which I hope they are extremely successful.

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All along, our fishermen have played the game, only to see fishermen from other member States and third countries come into United Kingdom waters and disregard our conservation measures, for the simple reason that there are no Community rules. Until there are Community rules, there will be no solution to the difficulties which confront our fishermen. It has reached such a stage that the British fishing industry cannot even wait for the possibility that the new common fisheries policy will come into operation on 1 January 1981. Its present position is such that many vessels will be laid up, the fishermen will have no jobs and there will be no fish in the sea. Where will that place us in our negotiations with our partners with regard to the new common fisheries policy? Total allowable catches will be based on the catching capacity of the member States. If the United Kingdom fleet has been virtually wiped out of existence before the end of 1980, our Ministers' bargaining strength will be considerably weakened.
It is all very well for the document to speak about historic rights and fishing plans, distribution of catches, inspection and control. They are what the British fishing industry has been fighting for over the past years—not fighting just to earn a living, but fighting for survival. Sadly, at present it is not succeeding.
In Scotland and the United Kingdom as a whole, the fishing industry has on the one hand been caught by the unprecedented level of imported fish into the United Kingdom—due to the loss of catching opportunities for our own fleet and to the conservation measures which, rightly, have been imposed by the Government—and, on the other, by falling prices, high interest rates and astronomic rises in fuel and other overhead costs, which no fishing owner could have anticipated.
Even with all those problems, the fishing industry supported both this Government and the previous Government in their efforts to secure a new common fisheries policy. The document before us is but a fraction of the work which will need to be carried out before we eventually see the new common fisheries policy implemented.
The document lays down five basic principles for the introduction of the
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global policy. It speaks of conservation methods, fair allocation of catches, effective control, adopting structural measures with a Community cash contribution and a long-term agreement with third counties. How hollow those are to the fishermen who are desperately seeking aid! Those matters will be discussed by Ministers over the next six months in an effort to gain agreement on the new common fisheries policy. They are matters in respect of which the British fishing industry must be seen to be receiving a square deal. In no circumstances must Ministers give way on Britain's rights as the major contributor in the fishing waters of the Community, and I am confident that they have no intention of doing so in the forthcoming negotiations.
I turn to the question of historic rights and fishing plans. The Commission has rightly agreed that fishermen in coastal waters must be given a high priority in their country's coastal waters. In the case of the United Kingdom, 68 per cent. of the fish caught in Community waters are caught around the shores of the United Kingdom. For that reason, we have the right to expect that our Government will have control of the inshore waters around our coasts, and will be able to negotiate reciprocal arrangements with other member States and third countries. It is up to our Ministers to prepare the fishing plan within the coastal belt, and to be firm with the Commission as to where we stand in the matter. In all the plans the welfare and security of our fishing fleet must be the predominant factor.
The document indicates that the proposals will not provide a sudden new lease of life to British deep sea fishing, which has been so badly hit by the restrictions placed upon it by Iceland, the Faroes and the Soviet Union. At our meeting yesterday, we were horrified to hear about the vast number of deep sea trawlers that are now lying idle at the quaysides. If that situation continues, at the end of this year we shall be lucky to have 25 per cent. of the vessels that were operating two years ago. It cannot be said that the inshore and middle water fleets will gain unless there is a positive decision by the Community to safeguard the interests of these sectors of the industry.

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The Commission must agree, and our Ministers must insist, upon a new common fisheries policy that is the same for all the member States and third countries. It must be a fair policy for British fishermen. There must be equality for all. The fishermen in the United Kingdom have never been militant. They are a decent and honest group, who desire only to follow the calling of their forebears, and give the consumer in the United Kingdom and overseas a food which has a high protein value for health. To do that, they must receive similar honest treatment from the Commission, because it is an industry which has so much to offer to the Community.
Alternatively, the fishing industry will be totally opposed to the concept of the Community—which would be a disaster for the United Kingdom.
The fishing industry has faith in the negotiating power of our Ministers in forming a new common fisheries policy. We fail it at our peril. If we do not wish this wonderful industry to go out of existence, we must exert every effort to ensure that on 1 January 1981 the new common fisheries policy is brought into being with the full approval of the fishing industry, which is dependent upon it for its existence in the years that lie ahead.
7.34 pm
Mr. Russell Johnston: The hon. Member for Aberdeenshire, East (Mr. McQuarrie) made a powerful plea for the fishing industry, to which I shall refer briefly later. His contribution and that of the hon. Member for Haltemprice (Mr. Wall) covered the position well, and it is agreed across party lines.
I refer the House to the amendment that we are discussing. The first three lines, which were referred to briefly by the Chancellor, recall:
"the unanimous Resolutions of the House of Commons on 16th July and 22nd November 1979, urging a fundamental reform of the budgetary arrangements so that Britain's contribution to the Budget is at least not greater than the receipts,"
The use of the word "unanimous" is inappropriate and misleading. It makes no allowance for the fact that abstention is often used as a device by hon. Members of both major parties to express disapproval of an official policy. They ab-
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stain in order to say that they do not like a policy, not to say that they are neutral or uncertain. Technically, we can say that if a vote did not take place, the result was unanimous, but I do not think that that would ever happen. If there was disapproval of this form of words, which describe accurately and precisely what the French call juste retour, why was there not a vote? During the debate on this matter in July the Financial Secretary went out of his way to say that he did not believe in juste retour. He said:
"This does not mean—I underline these words—that we hold to the concept of the so-called juste retour—the doctrine that each member of the EEC should get cut of the Community precisely as much as each puts in —to the last penny."—[Official Report, 16 July 1979; Vol. 970, c. 1038.]
Mr. Denzil Davies: The Government accepted that resolution, and if the Liberal Party had wished to oppose it, it should have voted against it, but it did not.
Mr. Johnston: The right hon. Gentleman should have been a little more patient, because I was about to deal with that point. The Government did not vote, but then, and indeed in the November debate, the Chancellor opened his speech by commending the resolution. During a debate on the budgetary contribution, the size of which the Government rightly deemed to be too great, they did not wish to do anything that would weaken their case. I agree with the right hon. Member for Llanelli (Mr. Davies) that it can be argued that the Liberals should have voted. Clearly, there is no question that this resolution was accepted unanimously by the House—nor could that be so. That must be stressed. If the principle is that:
"Britain's contribution to the Budget is at least not greater than the receipts,"
the whole concept of the Community would be set at naught. If each country simply gets what it puts in, the idea of redistribution of wealth throughout the Community is set aside.
Mr. Marlow: Will the hon. Gentleman give way?
Mr. Johnston: I shall give way in a moment. The right hon. Member for Down, South (Mr. Powell) made that point, and he was right. If that is the

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principle on which we would operate, we can forget about regional, industrial, redistributive, social policies, and so on.
Mr. Marlow: The hon. Gentleman said that it did not seem right that countries should get out of the Community the same amount as they put in. Equally, it does not seem right that one of the poorer countries of the Community should put in a damned sight more money, and get less out.
Mr. Johnston: That is an entirely different point. If we accept the concept of redistribution, it inevitably and implicitly means that we recognise that the country that is poorer does not pay more. That is common sense. But that is not what the amendment means. It means that a country gets what it puts in, no more or no less. I would never vote for such an amendment, and I ask Labour Members who believe in the potential redistribution that the Community offers whether in honesty they can do so either.
As one who was critical of the Prime Minister's abrasive tactics and who does not necessarily believe that, because abrasive tactics get results, we could not necessarily get the same results if we proceeded in an equally determined but perhaps more good-natured fashion, nevertheless I agree with the Chancellor that the way is now open for a radical restructuring of the budget and that we must take the fullest advantage of it.
The Chancellor paid tribute to his fellow Finance Ministers, in particular to the Germans. I would add a person and a party for congratulations. The first is Emilio Colombo, the Italian Foreign Minister, who, from all accounts, chaired this difficult session very well.
Secondly, I repeat what I said when the Lord Privy Seal made his initial statement in the House—that the influence and effect of the German Liberal Party was significant. A number of the more nationalist hon. Members on the Government Benches interrupted me when I said this before. However, it must be remembered that it was a considerable step for a very small party under serious electoral pressure to stand up for and argue that its country should give away a large amount of money. That should be recognized.
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The Chancellor did not go on to give us much idea of the new directions which the Government would encourage the Community to take. I want to indicate some of the directions that I should like to see him pressing.
First—and I think that the House must face this at some time—if we are to have a Community which is capable of pooling resources in a mutually supportive fashion, we must have more than one Community policy. At the moment we have one Community policy. The common agricultural policy is not quite the 75 per cent. about which hon. Members go on about, because lumped in with the CAP budget go Lomé payments, food aid payments—
Mr. Leighton: Administration.
Mr. Johnston: Of course, administration. The hon. Gentleman as a Socialist, should know that more than most. If we remove also the monetary compensatory amounts, which are a financial mechanism, the figure is much nearer 55 per cent. than 75 per cent. of the budget.
Nevertheless, it is an illusion to believe that to solve the budgetary problem all we require to do is to take money from the farmers and to give it to somebody else. Community-wide, the sums are far too small to have any more than a marginal effect on industrial problems.
In this regard, it would be interesting if the Minister who is to wind up would give us an assurance of the cost to the Exchequer if we reverted to the agriculture deficiency payments system that we operated before we entered the Community. It would be an interesting updating of the figure given by the right hon. Member for Deptford (Mr. Silkin), who was Minister of Agriculture, Fisheries and Food in the Labour Administration, before the European elections.
If the Community is to pursue programmes of redistribution, it will require a larger budget. The basic reason why many Members here oppose it is that they are opposed to being in the Community at all. I do not oppose it. I believe in it. It will not work any other way. If one of the main principles of the Community is redistribution, then that it must be.
What do the Labour Opposition think about redistribution? In the debate on

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22 November last year there was an exchange between the right hon. Member for Llanelli and the hon. Member for Flint, West (Sir A. Meyer), who inquired about the juste retour. The right hon. Gentleman said:
"It is late at night. One does not want to get involved in metaphysical, semantic arguments about what these French phrases mean. But broad balance is broad balance; one gets out what one puts in. That, I understand, is fairly close to the concept of juste retour."
I asked:
"Would the right hon. Gentleman apply the same rule to Germany?"
The right hon. Gentleman said:
"I would apply the same rule in terms of the Common Market, provided that one was operating the present mechanism. If there was a genuine desire to create a redistribution we should look at the matter again."—[Official Report, 22 November 1979; Vol. 974, c. 706].
Does that mean that if there is a commitment—I hope that the Government will be making a strong commitment—to develop the redistribution element, which means increasing the budget, the Opposition will support it? For example, the record of successive Governments has not been good on the regional fund. The former Foreign Secretary, the right hon. Member for Plymouth, Devonport (Dr. Owen), blocked the proposal by the European Parliament to double the size of the regional fund. The present Government are blocking the small 13 per cent. non-quota section of the regional fund and show no enthusiasm for increasing its size for the basic reason that, because of the rules of additionality, it means greater public expenditure. The same to some extent goes for the social fund as well.
Secondly, I think that the Minister should say something about co-operation in other areas where clearly such co-operation is to our common advantage—for example, in energy. It is not merely a question of what sort of agreement we may or may not reach on oil. There are wide areas, before we get to that admittedly difficult area, in which we can embark on common programmes looking for alternative energy sources, tackling nuclear safety, transport, and so on. One wonders whether we are getting anywhere nearer to having a Channel tunnel or whether other joint ventures are being contemplated, perhaps in the aircraft
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industry. There are also relations with the Third world.
Fishing has been well defined by other hon. Members. I agree that it is odd that this subject should be tagged on to this debate when inevitably stress will be on the budget and the different views of hon. Members.
I do not believe in quotas. They do not work. Any agreement must be founded on a licensing rather than a quota system. The evidence is that a quota system is easily breached and is extremely difficult to police in an effective fashion. An agreement of some kind is required because the fishing industry is in a desperate situation.
The budget debate, one phase of which was concluded last month, has been extremely acrimonious. I hope that that can be put behind us. I am delighted at the reported agreement on the appointment of Gaston Thorn, the Foreign Minister of Luxembourg as the next President of the Commission. He believes strongly in the capacity of the Community countries to overcome their difficulties, and to do so together. I hope that he will, in seeking to bring that about, have the support of the Government.
7.48 pm
Mr. Richard Shepherd: In the year that I have had the good fortune to represent Aldridge-Brownhills, there has been a number of debates on the budgetary consequences of our membership of the EEC and points arising out of it. What has been instructive to me has been the range and power of the arguments that have tried to identify to what extent Europe is not in the economic interests of this country. What is also extraordinary is that I have heard no Government Front Bench spokesman argue that there is an economic advantage in our membership of the EEC. I have listened for that, because it seems crucial in any evaluation of our relationship with Europe.
One of the most significant things in the last year has been that my right hon. Friend the Prime Minister has identified the size of our budgetary contributions as a major obstacle in our relationship with Europe. Hon. Members from all parties concur with that. My right hon. Friend the Prime Minister rejected the possibility

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of a settlement at Dublin. All hon. Members will remember how those in favour of Europe thought that she had done this country a grave disservice. I remember the crabbing remarks that were made at that time. At Luxembourg, she rejected a greater settlement that seemed, on the surface, to be more in our interest.
I am slightly distressed, because I can see no significant improvement in the subsequent terms negotiated by my right hon. and noble Friend the Foreign Secretary and by my right hon. Friend the Minister. In the other place my right hon. and noble Friend said:
"This Government came to office determined to make a success of our membership of the Community. The first task was to deal with the inequitable budget contribution. That we have now done."—[Official Report, House of Lords, 2 June 1980; Vol. 409, c. 1130.]
I cannot agree that we have dealt with the budget problem. We have succeeded only in ensuring that we see a return on part of our contribution.
Many hon. Members have pointed out that the fault lies not only in the size of our net contribution but in the entire own resources policy of the Community. That policy insists that we charge our domestic consumers higher prices than world food prices in order to ensure "a fair and equitable distribution" of agricultural incomes across Europe. That is damaging to our national economy. I would like the Treasury, the Ministry of Agriculture, Fisheries and Food and the Foreign Office to let me know how they quantify the proposition that Europe is in our economic interest.
I almost winced when I thought that negotiations had passed from the Prime Minister's hand to those of the Foreign Office and the Ministry of Agriculture, Fisheries and Food. I am very interested in how we quantify our position when we negotiate. Earlier this week, I tabled several written questions. I shall refer to them, because the answers are revealing. I asked the Minister—who was earlier in the Chamber—the following question:
"from what countries and for what commodities as the United Kingdom is unable to secure its current imports at third country offer prices."
My hon. Friend the Minister of State, replied:
"I assume that my hon. Friend has in mind the minimum offer prices on which the Euro-
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pean Community Commission bases its calculation of variable levies. It seems unlikely that the United Kingdom could obtain from any particular country a significant quantity of imports of the main traded commodities at these prices."
I find it difficult to accept that that is an honourable reply to a direct question. Of all the commodities that I can think of, only butter provides a possible exception. I should love to know the Minister's view on cereals.
Mr. Budgen: Surely New Zealand can supply the butter?
Mr. Shepherd: I thank my hon. Friend for that intervention. I asked my right hon. Friend the Minister for Agriculture, Fisheries and Food three questions that related to quantifying the cost of membership. First, I asked:
"What has been the cost to the United Kingdom consumer of the common agriculture policy for each year of the United Kingdom's membership of the EEC; and how it has been quantified."
I then asked:
"What has been the gain to United Kingdom producers of the common agriculture policy for each year of the United Kingdom's membership of the EEC; and how it has been quantified."
Finally, I asked the following question:
"What has been the loss to taxpayers as a result of the common agriculture policy for each year of the United Kingdom's membership of the EEC; and how it has been quantified."
It is not unreasonable to suppose that these propositions are needed if one is to argue an economic case and to defend the interest of Britain. My right hon. Friend the Minister deemed the following reply to be appropriate:
"To answer these questions would require assumptions about the levels at which, and in particular the methods by which, farm production in the United Kingdom would have been supported in the absence of the common agricultural policy. I do not consider that it would be realistic to make a series of hypothetical assumptions of this sort, and in any case the preparation of the answer would involve disproportionate time and effort."—[Official Report, 30 June 1980, Vol. 989, c. 456–8.]
Mr. Dykes rose
Mr. Shepherd: That reply is slightly less than insulting and an awful approach to quantifying the cost of our membership.
Mr. Dykes: Will not my hon. Friend accept that the wording of those answers

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is couched in the conventional language that is used when extensive statistics are required at great public cost for hypotheses that cannot be proved? Will he not further agree that the gross cost of our domestic farm support system before we joined the Community in 1972 was £330 million? Allowing for increases in inflation that could amount to over £1,000 million now.
Mr. Shepherd: I do not know what to make of that intervention. However, I am happy to think that we could return to a form of deficiency payment, as the right hon. Member for Battersea, North (Mr. Jay) suggested. The cost—which is borne I nternally—is to the benefit of our own British community, rather than the European Community.
Mrs. Kellett-Bowman: Does not my hon. Friend agree that the same system applies to lamb? A 100 per cent. deficiency payment is paid by the Community.
Mr. Shepherd: I am grateful to my hon. Friend, who is a Member of the European Assembly, for that information.
Mr. John MacKay: Does not my hon. Friend realise that the deficiency payment system exists only in this country? The rest of Europe is subject to the usual "buy for a mountain" policy.
Mr. Shepherd: I am amazed that every time a pro-European hon. Member stands up, he digs his own grave when it comes to costing the CAP.
Mr. Buchan: Does not the hon. Gentleman also agree that, whatever the cost of deficiency payments in relation to British agriculture, it would nevertheless favour British agriculture and allow a cheaper food policy?
Mr. Shepherd: I absolutely agree. In considering an analysis of economic policy a Government's first consideration —and that of any hon. Member—should be the economic interest of their countrymen. In some ways, we let that go too easily. We do so at our peril. Our political interests are never far from our economic interests. The two are indivisible.
I mentioned the answers that I received from the Minister because there
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should be a better quality of argument at Government level. The country should be better informed of the consequences of the actions that the Government take. Better information will give rise to a more determined fight for our national interests. Certain consequences resulting from events during the last year have distressed other hon. Members and me. In the West Midlands the strength of the pound is criticised. We suffer the strength of that pound when it comes to selling our manufacturing goods to the United States. We derive no benefit from that in respect of buying of foods on the free world market.
It is extraordinary that the Minister has accepted devaluations of the green pound during the past year. That has increased the cost of food to our fellow citizens. I cannot understand how it can be in our interest deliberately to increase the agricultural burden on our fellow people. It has been well pointed out that if we were free to buy on the world market we could buy food at substantially lower prices. I found it extraordinary that the Minister could attack arguments that appeared in The Sunday Times about the cost of the CAP. According to his arguments, it is not worth while to make such quantifications.
The arguments of the institute of Fiscal Affairs is based on some reasoning. My right hon. Friend has decided not to listen. It would seem that no accounting has been undertaken that measures the economic cost of the CAP. The way in which those costs are distributed has not been measured, nor have those costs been assessed against the benefits. If the costs are not measured, they cannot be controlled or monitored. I accept absolutely the arguments of hon. Members on both sides of the House who argue that the interest of our country is best served by scrapping the CAP and returning to deficiency payments.
7.59 pm
Mr. James Johnson: I enjoyed the speech of the hon. Member for Aldridge-Brownhills (Mr. Shepherd), although I do not wish to take up his remarks.
Some hours ago I listened with care to the Chancellor's speech. I did not enjoy it a bit. I enjoyed very much the speech of the right hon. Member for

1625
Down, South (Mr. Powell). He was talking about fisheries and why it seemed to him unusual—I think that he used the word "singular"—that the fisheries document should be alongside the others of the budget. I would sooner use the word "sinister" than "singular" in this package, as regards document 7389/80 being alongside the other two. It is sinister that it should be there.
I find in it some unusual words. On the second line of page 1 there appears the word "concomitant". It is said that
"the common fisheries policy is a concomitant part in the solution of the problems with which the Community is confronted at present".
To me, "concomitant" means integral and essential. It means that the CFP is a solid integral part of the wider package which the present Government hope to deliver.
A little below that, I see phrases such as the following:
"It is necessary in order to sustain the agreements in other areas to adopt as swiftly as possible the decisions necessary to ensure that a common overall fisheries policy is put into effect on 1 January 1981."
Why is it necessary, essential or vital to adopt "swiftly" and to make these decisions as early as possible? What is the object of this action? The CFP should be put into action by old year's night. The Government's stated deadline is that that must be so. It must be in effect and functioning on the first day of the new year. I hope that this means a good Hogmanay for the Scottish fleet. I am not sure whether it will mean that. After listening to the hon. Members for Haltemprice (Mr. Wall) and for Aberdeenshire, East (Mr. McQuarrie), I am wondering whether the all-party fisheries meeting last night conveyed to me as much as it did to them. To me it was doom and gloom, almost inspissated gloom. Good men were present, but more of that later.
The text of the communication is exact, so that all that we need to ask Ministers tonight, and to keep asking them over the coming weeks, is whether we can turn these words into deeds. That is the important thing. Our delegates meet next on 21 July. We last met on 16 June. Luxembourg sources then, particularly in
1626
the shape of a French fisheries Minister called Joel Le Theule, gave a stark warning—at least, it sounded to me like a stark warning—that unless the United Kingdom agreed to the terms of accession, there would be serious consequences for Her Majesty's Government. Our Ministers—I am glad that a fisheries Minister is now present—deny this. They say that the words of the French Minister were for domestic consumption only. Perhaps there were some elections in Paris, municipal or otherwise. I am not sure. Perhaps it was a by-election. It is said that it was for that purpose that the French Minister was uttering these fire-eating words signifying thunder—for domestic consumption.
As I understand it, the United Kingdom stands firm for an exclusive 12-mile zone, a preferential 50-mile zone, and beyond that,
"the largest quotas possible beyond."
How large? Are these quotas consonant with the 60 per cent.-plus of fish stocks that lie within our territorial waters, or are they to be the 25 per cent. which has been mooted by Commissioner Gundelach?
I am sure that the Minister of State, Foreign and Commonwealth Office, is listening acutely. He has said that there must be cast-iron guarantees to protect the hard-pressed British industry. A short while ago he answered me in much the same vein, saying that the British quota must be boosted to take account of the fishing grounds lost since 1970. I assume that these are Iceland and Norway, basically.
This is all beautifully stitched up in this document. It says that catches must have regard to
"the loss of catch potential in third country waters."
I take it that those are identical statements in different language.
It is obvious to me that on 16 June there was merely an initial skirmish. Our people were milling about with the others on the Continent. Perhaps the Ministers were dipping their toes into the water. They were not taking any dives into deeper water then. Therefore, I take it that on 21 July the battle begins. Only hard men will survive. If they do not, fishing will not survive. My inner fear is

1627
that as time nags away nothing definite will emerge. As has been said, the French have stone-walled. Why should they not do so? It is in their national interest to stone-wall. Deadlock can then follow.
Earlier, the Chancellor said "We are not prepared to accept "—in other words, we shall decide the matters on their own merits. Again, I heard the phrase "No longer are we one against eight". What are we? Are we two against seven? Are we three against six? We have to be nine to nothing, as I understand it, to get what we want when discussing these matters at Ministers' meetings.
August will come. September will come. As each month goes by the industry will slowly bleed away, as it is bleeding now. Firm after firm and family boat after family boat is suffering losses on its voyages—of £2,000, £5,000 or £10,000 a time. They will go bust. We heard last night at the meeting that banks in Scotland now had debts owing to them of about £25 million, from family boats and the like.
Mr. McQuarrie: I must correct the hon. Member. The figure in Scotland is £71 million for loans and overdrafts affecting Scottish boats.
Mr. Johnson: I do not mind accepting that correction, it merely underlines the deficiency. I am scared by this figure of £71 million. It is much worse than I thought. I understood that the deputation would go to the Minister tomorrow and ask for £35 million or something of that ilk.
Those of us who represent fishing constituencies believe that many of these family firms are heading for bankruptcy. Unless they receive some help before September, the fleet as such will disappear. Perhaps we shall have half, or even only a quarter, of our fleet left by the end of the year. Last night my colleagues heard all this stated in an atmosphere of gloom, as one good man after another got up and gave the facts.
There is a Catch 22 situation here. Let us forget the French blockers and the anti-Anglo-Saxon types. If we are to get a beneficial common fisheries policy next week, never mind next month or on 31 December, and if a large part of the fleet is not there to receive the benefits,
1628
our so-called partners will argue that we do not have the catching capacity so we will not need these big quotas. Then we would have to do without. That is the headache facing the industry. We all hear the same tale told to us. Unless the industry receives some help to hold the fleet together, when the time comes to accept the policy—even if it is a good one—we shall not be entitled to take up the benefit.
I do not know the answer. If the fleet is decimated in the coming months and there is no Government help forthcoming, there is no answer. The Minister must have had all these arguments ad nauseam. No doubt he will hear them again when the industry meets him tomorrow. He must get the message because it is simple. All of us—Ministers, Back-Benchers and the industry as a whole— must make sure that we have a catching fleet that can put to sea if and when a just, decent and honourable settlement is finally achieved. It may be too late. Many people think that it is. This Government must not sell the pass over the CFP. I do not think that they will. It would be unthinkable for any Government to do such a thing, but if this Government continue to behave in the despicable way that they have behaved over steel and textiles, they may, wittingly or unwittingly, allow the same fate to befall our own fishermen. If that were to happen it would be the worst betrayal that I have ever come across in my political life.
8.13 pm
Mrs. Elaine Kellett-Bowman: It is a great pleasure to speak after the hon. Member for Kingston upon Hull, West (Mr. Johnson), because I have followed his speeches in many fishing debates and I believe that he is an honourable and truthful man on this matter. I join with him in begging the Minister to ensure that our fishermen, who serve us so well in both peace and war, get a fair deal.
It is pleasant to find the House discussing these documents while the trail is still warm and, for once, at a civilised hour. Far too often we discuss matters of the greatest importance at an hour of the night or in the early hours of the morning when we are almost incapable of thinking clearly.

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In December, when the European Parliament threw out the Council's budget, it did so for three good reasons. First, it believed that the budget was unbalanced and that too much was being spent on the common agricultural policy and too little on other Community policies. As someone who is passionately interested in the regional fund, I shared that view. Secondly, it knew that the gap between the prosperous and less prosperous regions of the Community was increasing. The Parliament believed that it should, through its budget, make a conscious and practical effort to reduce that widening gap. Thirdly, the majority of Members of the European Parliament wanted to reform the CAP. There is nothing wrong with the principles of the CAP; it is the way that they are put into practice that is at fault.
Getting the budget into balance will be a long and trying business, but when one is on a long road one must take the first step. I believe that we are further along the road than most hon. Members appreciate. From 1976 to 1979 the growth in agricultural spending averaged 30 per cent. In the budget now before us it has increased by only 12 per cent. By contrast, the non-compulsory spending, which includes the regional and social funds, and which increased by only 15 per cent. In that same period, will increase in 1980 by 21 per cent. That is not as much as we would want, but it is a useful step in the right direction.
Mr. Buchan rose
Mrs. Kellett-Bowman: No, I shall not give way. The hon. Member for Renfrewshire, West (Mr. Buchan) has interrupted other hon. Members a number of times already.
The rejection of the budget shook the Council, and it was instrumental in causing it to mandate the Commission to restructure the budget by 1982 to give it a better balance—something for which the British Government have constantly striven.
We cannot separate these developments from the Prime Minister's triumphant success over Britain's net contribution to the Community budget. Had either the right hon. Member for Huyton (Sir H. Wilson) or the present Leader of the Opposition been offered a reduction of 350 million units of account in our net
1630
budget contribution, as the Prime Minister was offered in Dublin in 1979, they would have rushed home and declared a triumph. When in office, they were both extraordinarily good at dressing up defeats in the robes of victory. That is what they would have done on this occasion. But, thank God, the Prime Minister is made of sterner stuff. She rejected the one-third of a loaf.
The second offer was much more tempting. Messrs. Giscard d'Estaing and Schmidt almost had apoplexy when she calmly declined it, as did a number of faint-hearted Members of this House. But the third offer, made in Venice on 30 May, was a tribute to the Prime Minister's tenacity. Not only did it reduce our net contribution over two years by 1,580 million units of account, with a possibility, if the underlying imbalance continued, of a similar reduction in 1982, it also secured us one ally, and possibly two, in the efforts that we have been making over the years to reform the CAP.
As long as we were paying the piper, Germany and France were content to leave things as they were. They were doing very nicely, thank you. Why should they worry? However, once Germany became the biggest contributor, as everyone in the House now admits that it is, it began to see why we had for years advocated the reform of the CAP to fit in with the needs of the Nine and their consumers rather than only with the needs of the original Six.
Hon. Members will not be surprised to know that I was particularly interested in the fate of the regional fund. Last year, while the right hon. Member for Heywood and Royton (Mr. Barnett) was looking the other way, the European Parliament managed to secure a substantial increase in the regional fund, to 1,100 million units of account. This year, the Commission attempted to build on that progress by proposing 1,200 million units of account for the regional fund commitments—a modest increase, but an increase nevertheless.
The Council, evidently smarting from its reversal in the 1979 budget—many of the Council members had been involved in that budget—reduced the sum to a mere 850 million units of account. That was the first time in the history of the fund that it had been reduced not only in real terms but in money terms. Merely

1631
to keep it in line with inflation would have required a sum of 1,005 million units.
The Council realised that it would not get away with its offer of only 850 million units of account and it grudgingly went up to 1,035 million units—just a little above the inflation rate, but nothing like good enough. In the present budget it has increased the amount to 1,165 million units of account. That is still not enough, but it is a vast improvement on the original offer of 850 million units.
But the United Kingdom has gained much more. Document 7943/80, to which is annexed document 80/333, contains an interesting package of measures to increase EEC spending in the United Kingdom and to help to redress the budgetary and regional imbalance. The package is the most flexible that we have ever seen. It can meet not only the needs of assisted areas but, in exceptional cases, the needs of areas outside the assisted areas, as provided for by article 3(2).
The package has two great advantages. It does not necessitate any additional spending by the United Kingdom Government, because payments made by the Government since January count as their share of the expenditure. Secondly, the range of projects that may be covered under article 2 includes all those items that have been found to be most helpful in the past.
For years we did no real assessment of what induces industry to go to the regions. However, a survey was carried out recently and it found that transport, infrastructure, advance factories and the servicing of industrial sites are high among the priorities of those firms which want to go to the regions.
I hope that areas that are particularly hard hit, such as the textile industry areas, parts of Lancashire, and fishing ports such as Fleetwood, which were grievously hit by the previous Government's calamitous policy towards Iceland, will be able to benefit from the money that we shall be getting.
I believe that it is vital that we rectify the growing gap that exists not only between the countries of the Community, but between the North and the South of this country. But even within the areas
1632
that are not in the North or the South, there are black spots that we need to clear up. The EEC measures are sufficiently wide to cover help for such black spots outside the assisted areas. We must help places such as the East End of London, which has many problems and which desperately needs infrastructure and an urban renewal programme. It can get such help from this present EEC programme
Mr. Spearing: We not not want EEC help, thanks very much. The hon. Lady should look after her own area.
Mrs. Kellett-Bowman: Thanks to the Prime Minister, we got an exceedingly good deal out of the budget and related measures. It is up to us to build on that for the future.
8.26 pm
Mr. Norman Buchan: It is with great pleasure that I follow the speech of the hon. Member for Lancaster (Mrs. Kellett-Bowman). I know of her enthusiasm for Europe and I understand that she has to make the best of the case that she has. The hon. Lady referred to the percentage increase in the regional fund, but the important point is the tiny amount available to the fund from the EEC budget.
The ability of the European Parliament to change the views of the Council of Ministers is narrowly limited. Of a £10 billion budget this year, 60 per cent. is spent on one simple objective—the disposal of food surpluses. The cost of the disposal of food surpluses is £5,580 billion. That is a fantastic figure, compared with the £300 million or £400 million that is available for regional development.
The hon. Member for Lancaster suggested that the Government should claim credit for the new deal under which we are to get money, not in cash, but in a resources element coming back to this country. But it is our money. It has been shipped to Brussels and, under terms, will come back for our use. If it had not gone in the first place we should have had even more flexibility in applying that money in regional aid.
The CAP has been a disaster to the finances and agriculture of Britain, and the EEC as a whole has been disastrous in another way. One of the problems

1633
that we face is that the concentration by the Government on a single element of the cost of the EEC, namely the crude financial cost, has minimised the effect of the EEC on the general economic malaise from which Britain is suffering.
We are in the middle of a severe crisis and the heart of it is what is happening to our industrial economy. Given the effect of the EEC and its contribution to that malaise, the £700 million cross-payment of our own money is minimal. It is not the most crucial point. The most crucial thing is what has been happening to our industrial economy since our entry to the Common Market. I want to give one or two figures. In general trade in manufacturing exports and imports, Britain does well compared with the rest of the world. So we should. We have to import a large amount of our food. It would be strange if we did not have a surplus in trade in manufactures.
Britain, in relation to the rest of the world, has a £5 billion surplus in trade in manufactured goods. When we compare out trade in manufacturing with the EEC, that figure is almost exactly reversed. We are in deficit to the tune of £4 billion. Britain is a manufacturing nation. Those figures mean that, in relation to our main competitors in the world market, we are in hock annually to the order of £4 billion. That phenomenon has occurred since our entry into the Common Market.
Before joining the Common Market, we had a small surplus in relation to the EEC. In 1970, we were in surplus to the tune of £103 million. In the years since our entry in 1972, we have gone into hock to the tune of £4 billion. That figure is much more serious than a financial costing factor. It is reflected in the bankruptcies, the liquidations, the redundancies and the closures that the British industrial economy is experiencing. There is the additional cost of the unemployment benefit, probably doubling the figure. That is the real cost.
The hon. Member for Aldridge-Brownhills (Mr. Shepherd), in a courageous and excellent speech, said that it was difficult to get real costings. This is an element of the real costings to Britain— £2,600 million in hock in manufacturing trade to Germany, £800 million to Italy,
1634
and £730 million to France. When one considers how rapidly this situation is accelerating, I can even give a more frightening figure.
We depend on the export of manufactures. The volume of manufactured exports from Britain has ceased to grow. Between 1977 and 1979, exports of finished manufactures fell by 2 per cent. At the same time, the volume of finished manufactured imports increased by nearly 40 per cent. This is not just a prescription for saying that the EEC is harmful. It is a prescription for economic and industrial disaster.
We can solve this situation only by taking very radical measures. Those measures cannot be taken due to our membership of the EEC. I do not argue the case for leaving the EEC with acrimony. It is not because I am anti-Europe. On the contrary, if anything has been wrong in nomenclature in this discussion, it is the pro-Marketeers claiming the right to speak as pro-Europeans. I do not accept that they are pro-Europeans. If I want to hear any anti-European nationalism, I have only to listen to the European Conservative Members when they talk about France. Those are the occasions when one hears a bit of chauvinist anti-European nationalism. I happen to love France, and Italy is my second country. I am a pro-European. I am anti-Common Market.
One of my objections to the Common Market—it can be seen in the deal that we are being forced to make in the papers before us—is not only the cost to Britain of the common agricultural policy, which is enormous, but its effect in distorting our agriculture. The proud boast eight years ago that Britain had the most efficient agriculture in Europe is now seriously coming under question. The new report from the Centre of Agricultural Strategy Studies at Reading university suggests that the situation is now altering and that, per acre and in relation to labour force, we are now beginning to decline in comparison with Europe.
Conservative Members, with certain notable exceptions, argue that we must not hark back to the past and must not remind people of what was said. I believe, on the contrary, that it is important to hark back to what was said in

1635
the past. Not long ago, when standing at the Dispatch Box during discussions on the Common Market, I predicted exactly what has happened. I was, however, wrong because I minimised the situation. It is more dangerous and more serious than my hon. Friends and I were saying.
It is sometimes necessary to say "We told you so." Otherwise, no one would start thinking how to get out of the mess. I am continuing to say "I told you so" tonight. The real problem for British agriculture is that the Common Market is forcing it towards a cash crop husbandry. No longer does a farmer ask "What is the best crop that I can get?" Britain produces only two-thirds of its temperate food. The farmer no longer asks whether he should grow grass and keep livestock—he wants the best cash return that he can achieve. That means that land which should be used for high quality grass production is being used for expensive cereal production. That is in a world which is starving for lack of vegetable protein.
It makes no sense in world terms or in British terms from the cost aspect. It makes no sense in relation to food prices. The unconcealed cost includes not only our funding of the CAP but the fact that we pay money, not to keep food cheap but to push up prices. This is the only time in recorded history when what we lose on the swings we lose on the round-abouts.
The EEC farm gate price for butter is 3·8 times the world price. Sugar is 2·5 times the world price. We still have a problem with our honour and duty to the developing countries. Wheat costs twice as much. Consumer prices for meat have gone up 200 per cent.—three times as much as they have risen I n North America and Australia.
Mr. Dykes: The hon. Gentleman is wrong about sugar.
Mr. Buchan: I think that my figures are right. However, I shall investigate them again. We are paying dearly for building a high mountain of sugar beet in Europe when we should be benefiting from the importation of cane sugar from the developing countries. That cost must be added to our payments to the CAP. The figure quoted for the guarantee and
1636
deficiency price, which might reach £1,000 million, goes towards a factor which is three or four times as high as that deficiency payment, at the expense of distorting British agriculture.
In terms of our primary industry and our secondary industry the cost of being a member of the EEC is not only inhibiting but is a positive danger. We must find a solution to the collapse of our industrial economy. I do not believe that we can find a solution within the rules of the CAP. We must no longer reiterate the argument for not joining the EEC. We must now adduce arguments in favour of our leaving.
We shall leave with no sense of pleasure. It has not been a particularly pleasant experience. However, we must leave without acrimony, understanding that we are no help to Europe if we allow our industrial economy to collapse. It is in the interests of Europe that we should leave. Only in that way can true internationalism and friendship be established. More important, only in that way can we take measures to control imports.
The motor car industry has almost halved production in the last six years. We now import more cars than we produce. Between 56 per cent. and 59 per cent of our cars are imported. About 38 per cent. of our cars come from the EEC. I say "Enough is enough." It is with no sense of acrimony but with a deep sense of reality that I say that we should forget the mock victory and remember the real economic nightmare that we face. We must take the crucial step— and it will be difficult—of leaving Europe.
8.40 pm
Mr. Hugh Dykes: The hon. Member for Renfrewshire, West (Mr. Buchan) is a true internationalist and no one quarrels with his affection for the world and the words that he said about Europe. We would quarrel—though the right hon. Member for Stepney and Poplar (Mr. Shore) presumably would not— with his view on the need to leave the Community. That presumably would be the programme of the right hon. Gentleman if he were to be a candidate for the leadership of the Labour Party. Immediate withdrawal from the Community would be his principal plank, I imagine, from what he said in his vitriolic speech today.

1637
However, other hon. Members would probably not come to the same chilling conclusion as the hon. Member for Renfrewshire, West. We all share his anxieties about the state of British industry and British agriculture. I think the underlying reasons for his conclusions are different from ours, and not only in the sense of formulation of policy for the future to counteract this positively chilling trend.
We also see that our problems are not intrinsically the fault of the Community. That is why the conclusion of the hon. Member for Renfrewshire, West is so disturbing. The fault of the Community has only been that since 1973, when we joined, it provided us with what we wanted, namely, a large free market in Europe. Gradually and progressively we hoped that it would be free of all kinds of barriers to trade and that the United Kingdom would prosper thereby.
In the sense of building up trade within the Community we have more recently achieved and developed a more favourable ratio. We are still substantially in deficit, and the disturbing and freezing conclusion is, of course, that we have failed to cope with the opportunity that we were given. We have not, therefore, managed with free trade, and so on.
My conclusion and recipe is to let this country really go for an important and significant revival in our economic strength, output, and manufactured exports, so that we can build. Opposition Members in increasing numbers advocate that we should put up barriers and import controls. I do not believe that that would be a solution.
Can the hon. Gentleman not accept that there is a basic contradiction between his saying that it is sad that regional funds in the community are too small and then insisting on blaming everything on the Community? The same conclusions, I submit—different conclusions from those of the hon. Gentleman—apply to agriculture. I do not think that the first disturbing signs of weakness in British agriculture and industry—on which we formerly prided ourselves as being the most efficient in Europe—that have come along in the last 18 months are intrinsically to do with the CAP. There may be some truth in that, but it is not mainly that. I think that it is the
1638
progressive over-capitalisation of the British agricultural industry.
We must remember that substantial grants are available. That can be a good thing in one way, but I think that they have distorted relationships and values in British agriculture much more than the CAP. After all, if we are still the smallest and, happily, one of the most efficient agriculture industries, and we do not contribute as much as other countries to the surpluses, we cannot say that the CAP has had a massive distorting effect on us. That is an intrinsic contradiction.
The total amount of grant available for British agriculture from domestic sources, let alone the CAP, is £300 million, and I think that the low return on agricultural investment and the fact that land values have really reached a very distorted level now—which in many ways is good, because it helps the farmer to cope with a mounting overdraft, though it is bad in other ways—are much more worrying to the Ministry of Agriculture, Fisheries and Food than are some marginal effects of the CAP.
The whole question should be put into perspective. We need to get away from what has always been the narrow-minded chauvinism of the Labour Party, which is affecting a small number of my hon. Friends.
The agreement concluded by the Foreign Secretary and Prime Minister is a tremendous one for this country and a solid achievement for the Government. Everyone should objectively and wholeheartedly congratulate my right hon. Friends and their colleagues on having achieved it. It is spectacular and it is no wonder the Labour Party is jealous of it and furious that it could not have done as well. It did not even begin to think about discussing the matter, except at one or two minor meetings of Councils of Ministers, when it was broached at the tail end of the meeting. It is understandable that the Labour Party is rigid with anger and frustration that this honour did not accrue to its Government. The only reference in the Labour Government's six-monthly White Paper to the problem of our excessive payments was in the last one before they left office. It contained a couple of lines saying that there were disturbing signs of the growth of our contribution.

1639
Let me now return to some of the facts instead of concentrating on the hysteria and grotesque emotion that keeps manifesting itself on the Labour Benches. None of the figures showing the growth in the United Kingdom's gross contributions, adjusted for inflation and the internal devaluation of money here, is in any way removed from or greater than the adjusted figures in the White Paper produced by the Conservative Government in 1971 and containing an extrapolation of what our payments would be. One of the years in that period produced a surplus which the former Chief Secretary to the Treasury in the Labour Government was proud to announce with a flourish. Other than that, the deficit was as we had expected. In those days the figures were small, but because of inflation and, more recently, the rise in the value of sterling, which has been substantial in recent months, the figures have naturally swollen.
Let us consider the elements in the contribution. Because the CAP takes 70 per cent. or even 75 per cent. of the Community budget, the common fallacy among many Labour Members is that we devote three-quarters of our contributions to agriculture. That is not true. The latest figures for 1979 indicate that agricultural levies accounted for 25 per cent. of the gross contribution. The rest came from our normal import payments and the equivalent of a 1 per cent. VAT base paid over as own resources.
The conclusion therefore has two aspects. Germany has the most efficient industry in Europe. It also has an agricultural industry that we regard as backward but that provides the Germans with self-sufficiency in agricultural products. If our farming industry were self-sufficient our agricultural imports would be lower and our levy payments, and therefore our gross contribution, would have been lower. If we had imported fewer industrial goods—consumer durables such as Japanese cars, and white durables—our gross contribution would, again, have been less. The only thing to have been unchanged would have been the VAT contribution equivalent to the 1 per cent. VAT base.
Let us now consider the net contribution and the reasons why, quite rightly, people have said that the CAP has got out of hand in recent years and needs
1640
substantial changes. I think that everyone will accept that—even the most fervent Europeans like myself and other sensible hon. Members. The net payments have increased because of that, but not only because of that. One of the reasons is that this country, and principally under a Labour Government, has never argued robustly enough for sufficient budget appropriations in the Community for other desirable purposes, such as the regional and social funds. That is what we must aim at in the future.
I believe that the total Community budget should be larger in the future than may be envisaged. If, for example, there is a strong adherence to maintaining the 1 per cent. figure, the Community will have to look seriously to alternative sources of finance. One that attracts me and a growing number of people who are seriously studying the matter as opposed to histrionically studying it, like my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), is to have an oil market or an energy market on oil levy.
If we could persuade the other member States to consider a marginal percentage on the oil import prices that they will be paying in future—and, after all, they have risen tenfold since 1973, so maybe even ½ per cent. would be sufficient —a considerable amount of extra money would accrue to the Community, and we should not be paying extra as we have our own North Sea oil. Other aspects can also be considered in the future.
If the Community budget is developed gradually and becomes significantly larger in the long-term future, the Community will have the opportunity to do that which is increasingly urgent in underdeveloped regions of member States, which are becoming increasingly clapped-out. National funds are not sufficient to take care of the problem. We need more from the regional and social funds. We need that money, as do Italy, Brittany and even some parts of Germany. It is the sensible way to proceed.
The agreement is not only an excellent and outstanding success for the Government; it is the right way to proceed in the Community. After all, the documents that we are considering are regulations. We do not have to pass legislation in this House. We now have to see how the Commission copes with the difficult task

1641
of fitting the details and elements in the two parts—the adjusted financial mechanism and the supplementary payments—to the political figures achieved in the negotiations. That is the way in which the Community works. The legislation therefore has to be framed in accordance with that. Inevitably some parts are vague, which is understandable. There is nothing sinister about that. It is nothing that should cause the continued growth of narrow-minded chauvinism on the Opposition Benches.
Although the Commission has only until June 1981 for the finish of this mandate, which is a colossal task, I believe that it will be successful in producing money for the host of extra schemes that the Treasury will be putting forward. There has to be proper scrutiny of those schemes by the Commission. Without that, hon. Members could say that the Community was chucking money about without proper surveillance.
My final point may appear trivial, but I hope that it will not be regarded as such. It is time for the Commission to return to proper advertising at the site of schemes involving Community money. Signs are erected in Wales, and I want to see more signs in this country, so that people can identify schemes financed by Community money. Since our membership we have received about £4 billion, aside from our budget contribution. The facts will register with the man and woman in the street if they can see how Community money is spent. The more signs that we have—if necessary, even illuminated signs—to show what the Community can do, the better it will be. As we all know, in underdeveloped countries one sees signs at airports saying that such-and-such a scheme has been financed by Canada; "We thank Canada." I should like to see similar advertising in this country.
Hon. Members who still wish to fight a losing battle and be churlish about the new agreement will continue to harp on the theme that it is our money. It is not. We have signed an international treaty. We have, by treaty, assigned those funds to the Community, and they belong to the Community. We should like the other member States to treat contributions in that spirit. People should stop being narrow-minded, defeatist and negative.
8.55 pm
Mr. Nigel Spearing: I shall not follow the hon. Member for Harrow, East (Mr. Dykes) in what I believe were a number of logical flaws in his speech. I shall refer only to his comment that the Prime Minister has negotiated a magnificent and successful package. I do not think it is magnificent. He gave no reasons why he thought it was.
I do not think that the debate is very good, either. It was opened by a Chancellor of the Exchequer who demeaned his office by not telling us the details of the package. He did not even tell the House how much came in cash and how much had to be accepted in programmes.
The other constitutional matter to which I draw attention is that the package was negotiated by the Foreign Office. It was the Lord Privy Seal who announced the results to this House. We have had a junior member of the Foreign Office on the Front Bench, and the Treasury is now taking responsibility for the debate. That shows the extent to which the Foreign Office has now taken over even in matters related almost to domestic expenditure—a role that it would never have dreamt possible some time in the past. It illustrates the lines that get crossed in our constitution, as our membership of the EEC successively erodes not only the powers of this House but the proper procedures within it.
The half loaf that we have got is nothing like as good as Conservative Members have constantly tried to make out. For the purposes of my argument, I leave aside the fact that it is not the broad balance to which my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) referred in opening the debate. It is in the region of £700 million a year, we are told, for two years only, with a possible extension to a third, but after that it is all up for grabs. In other words, the lasting settlement that the Prime Minister declared was her aim —and that this House twice endorsed as the policy of this House—has been thrown entirely to the winds.
When we get to the longer-term programme that is to be negotiated, there is no guarantee at all of any success. This country, therefore, has time and time again to negotiate from a position of

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weakness even to hold what we have at present. This package is no exception to that general rule.
I wish to concentrate for a few moments on the so-called programme that we are told will be a part of the repayment moneys. It is contained in a document 7943/80, which is an EEC regulation. It is the sort of document that the Department of the Environment might impose on a local authority. These are the rules which have to be kept in the expenditure of what might be up to £500 million a year.
The hon. Member for Harrow, East has regarded any expenditure of the EEC in this country as a good thing. Many of us on the Labour Benches do not regard it in that way, because that expenditure illustrates the power of the EEC. Article 5 lays down some of the regulations and conditions. It states:
"The Commission can request all additional information required for the examination and assessment of a special programme. When the success of a special programme requires that public authorities take complementary measures not financed by the Community, these measures will be contained in the programme."
It also states that
"the Commission shall take all necessary steps to ensure that assistance granted in accordance with the present regulation is given suitable publicity."
In other words, we shall be told that the EEC has graciously consented to help with some infrastructure project, using our money to do so.
I suggest that the whole of this document stems from an attitude of central Government to a local municipal undertaking. Indeed, article 6 tells us that:
"The maximum rate of the financial contribution of the Community to a special programme, or part thereof, will be 70 per cent."
The Minister should be able to tell us where the extra 30 per cent. will come from. Will it come from moneys which are already in the Estimates? Will these programmes, which include a wide range of activities, be those which are already in the Government Estimates, or will they be additional to them? If they are already in the Estimates, what is the Treasury to do with the money that is ostensibly saved by the EEC providing up to 70 per cent. of it? The House is entitled
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to those answers in a debate initiated by, and presumably to be wound up by, a member of the Treasury Front Bench.
Even given these sums in restitution, the deal is bad. Not only will those moneys be expended on domestic matters that should be entirely within the responsibility of the House—and we have given to Brussels the choice about what that money should be expended on—but the rest of the package entrenches the common agricultural policy, and makes it even more difficult for a fisheries policy to be negotiated that will be helpful to Britain. It introduces yet another scheme for intervention, this time in the sheepmeat sector.
My hon. Friends mentioned the most important point when they said that the so-called fundamental review cannot be a fundamental review at all. The absence of Foreign Office Ministers from the debate is constitutionally of great significance. [AN HON. MEMBER: "The Minister is from the Foreign Office."] I apologise to the Minister. In an earlier incarnation he was constantly and actively dealing with Treasury matters. I hope that he will answer the questions relating to the principles of the common agricultural policy. Are they the principles which are de jure in the articles of the Treaty of Rome, or are they the principles that have grown up through custom and practice? I do not believe that the Minister could claim that the French would regard the former as being the proper principles, but would regard only intervention buying and the stabilisation of markets as the fundamental principles.
This package contains the seeds of disaster for the future. They will not be immediately apparent. They are apparent to those who have taken part in the debate, and they will be apparent to the country as time goes on. Because of the continued industrial disaster in Britain, the increasing call on the regional fund, which may be looked upon initially as a good thing, will be seen to be making Britain a continual outside pensioner of the EEC.
My final point is important in relation to the regional fund, which is part of the special measures included in the £500 million. As we know, the regional fund

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is included in the non-obligatory part of the budget, which itself is in the final control of the EEC Assembly. Unless the Minister can give me any reason to the contrary, I take it that all the programmes that we have discussed in relation to the possible £500 million, and that are contained in the regulations, will be not only consequent on next year's EEC budget, but consequent on the permission of the EEC Assembly. If that is not so, perhaps the Minister will explain the matter. The regional fund is dependent upon the EEC, and the regulation is dependent upon the regional fund. It follows that there is a risk that the House, for the first time in its history, will be directly subservient to the directly-elected EEC assembly.
9.4 pm
Mr. John MacKay: I do not wish to follow the hon. Member for Newham, South (Mr. Spearing) into the high spheres of the financial part of the document. I intend to talk about the fishery document. I wish to get away from my hon. Friends the Members for Aberdeenshire, East (Mr. McQuarrie) and for Banff (Mr. Myles), and others who have spoken about the problems of the East Coast. I shall address myself to the problems of the West Coast, including the Firth of Clyde.
I refer to paragraph (b) of the document before us, which says that the common fisheries policy should be based on a
"fair distribution of catches having regard, inter alia, to traditional fishing activities, to the special needs of certain regions".
It is those special needs of certain regions to which I wish to refer—for example, regions covered by the hon. Member for Inverness (Mr. Johnston), whom I can see on the Opposition Benches, and by other right hon. and hon. Members, including my right hon. Friend the Secretary of State for Scotland.
In particular, I want to talk about the subject as it affects my constituency of Argyll, which has a longer coastline than France. I was musing whether that would entitle me to an equal position at the negotiating table with the representative of France, but I doubt whether it would. By and large, that fishing is based on the small ports all along the West Coast. It is based on small ports in the Firth of Clyde, whence came the famous
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Loch Fyne herring. I should tell hon. Members that if for the next 20 weeks—and only for the next 20 weeks—they scour the shops of this country, they may be able to find some Loch Fyne herring for sale. I hope that they will do so, because it will perhaps remind them of the poor imitations which we import from Canada and that the British palate has been badly soured by the taste of Canadian herring, as a result of which it will rapidly forget the taste of some decent herring.
In the Firth of Clyde, 560 men are involved in fishing, and on the West Coast to the north of the Firth of Clyde 800 men are involved. The most interesting thing about that fishing is that that small number of men—1,360 in all—is involved in 881 boats, all of which are under 80 feet. in length and the vast majority of which are under 30 feet in length.
Those small boats, which are much smaller than those operating elsewhere in United Kingdom waters, operate close to their home port, or at least to a port where daily landings are made. That pattern of smaller vessels, which has inflicted less serious damage on the fishing stocks than other fishing methods, is the very reason why for the next 20 weeks herring can be caught in the Firth of Clyde when they can be caught nowhere else in the United Kingdom.
The fishermen on the West Coast are not nomadic in type. By and large, they fish in the waters which lie near their ports. Therefore, over the years they have known that if they do not conserve and preserve that fishing, their liveihood will disappear and they will have nothing else to do. That is why there are still herring there.
The pattern of fishing, not only elsewhere in the United Kingdom but elsewhere in the world, has been a rapid increase in catch thanks to modern technology, which must then be paid for by a still further increase in catches. Thus, the cycle overtakes the ability of the fishing stock to replace itself, decline sets in, pressure is transferred to other stocks and the cycle repeats itself.
I do not say that the fishermen on the West Coast of Scotland and the Clyde have totally avoided falling into that trap. Indeed, some of them think that

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they have done so. I was interested to hear the right hon. Member for Western Isles (Mr. Stewart) suggest, as many of my fishermen have done, that had it stuck to the drift net method of herring fishing, the whole fishing industry would still be able to fish for herring, not just in the Firth of Clyde but in the Minch and elsewhere.
When we look at this and other European documents we can see in them—this is what my right hon. and hon. Friends must do when they go to the negotiations—a policy which is firmly based on the need to preserve the fishing industry where it is based on its own home port or on one close by. To that end, the Clyde Fishermen's Association and the Mallaig and North-West Fishermen's Association, basically in the constituency of the hon. Member for Inverness, have produced a fishery plan for the whole area. I believe that that plan is consistent with the Common Market document, and is certainly well within paragraph (c) of the document that we are studying this evening.
In past documents, referred to here and in the treaty, and in various draft resolutions, the EEC has established the right to regional preferences, which is what the scheme from the Clyde and the West Coast involves. Those regional preferences provide special provision for local boats in local waters, and delineate certain areas, not just within the 12 mile limit but beyond it, in which those boats have special privileges. They do so for four reasons:
"to distinguish and regulate the exercise of the special fishing rights referred to in Articles 100 and 101 of the Treaty of Accession and the exercise of fishing activities within the meaning of paragraph 3 of Article 100 of that Treaty.
"to contribute towards assuring respect of conservation measures and to promote rational exploitation of the biological resources bearing in mind the social and economic needs of certain categories of fishermen in specific regions of the Community"—
the West of Scotland easily falls into those categories—and finally:
"to assure in regard to those regions, the enjoyment of the natural geographical advantage in catch possibilities within a few hours steaming time from home ports so as to favour balanced development in line with the progressive improvement of fish stocks."
It is within those objectives that I believe the Clyde and Mallaig have
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drawn up a plan which is unashamedly for local preference. It would be a licensing scheme for boats, which would include restrictions on both size and horse power. It would give preference to fishermen operating from the ports in the plan. They must operate from those ports for the whole year, or virtually the whole year, and they must also be domiciled in the area of the plan, so that people cannot slip round the edges. Once the boats are licensed, they will be allocated a percentage of the total allowable catch. For some stocks they will be allocated 100 per cent. of the total allowable catch. For other species, some of the TAC will be left over and that should go to equally licensed and controlled boats from elsewhere—preferably those that have historically fished off the West Coast of Scotland and the Clyde.
Mr. Russell Johnston: I agree entirely with the hon. Member. Does he agree that the Commission's view is that there is no problem with the proposals from the Clyde, Mallaig and the Orkneys and Shetlands? The real pressure in reaching an agreement comes from trawling interests in the United Kingdom, which has often been detrimental to West Coast fishermen.
Mr. MacKay: By implication I suggested that when I said that West Coast fishermen in their small boats and their home-based boat operations had preserved their fish to a greater extent than fishermen elsewhere had done, and that they continue to preserve it and do not allow British foreigners or foreign foreigners to reap the harvest that they have preserved.
I believe that the plan that has been set out obeys the criterion for the application of such a preference. We believe that such a plan is vital for the continuation of fishing stocks in this large area. Only such a plan can preserve the fishing industry—inside or outside of the Common Market. With such a plan we can preserve not only the industry but the fishing communities of the West Coast. By careful exploitation of the methods we use, and the vessels, we can preserve fishing and employment, and continue to supply the British housewife. If we do not have such a plan I fear that large, powerful boats that are super-efficient will come in, and before we know where

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we are, all that we have preserved will have gone.
The Common Market claims to be mindful of the prosperity of remote areas. This plan gives them an opportunity to preserve their fishing and keep their employment and boats—which they have successfully kept over many years of decline.
The report concludes—I say this also on behalf of my absent right hon. and hon. Friends who will conduct the negotiations on behalf of the United Kingdom—that:
"It is essential to understand that the West Coast fleet is by construction limited to West Coast waters. If the possibility of maintaining a reasonable livelihood by fishing in these waters is denied, they are left with nowhere to fish. If the opportunity to grasp and deal with the problems raised in this paper is not taken now, then not only will the stocks in the area be exhausted, but 'The Deserted Village' will be a reality throughout the area."
Although I am in favour of the Common Market, I am not as fanatically in favour of it as is my hon. Friend the Member for Harrow, East (Mr. Dykes). I apply tests to each and every thing. Frankly, if there is any danger of "a deserted village", the Common Market will have failed the test as far as I am concerned.
9.15
Mr. Donald Anderson: For me, the budget settlement of 30 May was a positive step. It is certainly an improvement over the pre-existing situation. No one can gainsay that, whatever queries he may have about the small print. I hope that my hon. Friend the Member for Newham, South (Mr. Spearing), who made a noise, will listen to the rest of my speech. He may then make a different sort of noise. However, it is only fair to begin by saying that it is a positive step, but not a cause for jubilation.
Judged by the criteria that the Government set themselves towards the end of last year as they approached the Dublin summit and before the Prime Minister set out on that steep learning curve that eventually culminated in Brussels, it has not been a major success. We remember the hostages to fortune that the right hon. Lady gave at that time by talking about "our money", despite international commitments to the contrary, allegedly aiming for a "broad balance", and it being made
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clear by the Government that there was to be no trade-off between our just demands on the budget and the other areas of contention between ourselves and our European partners. Clearly, that linkage resulted. The whole package was described as a comprehensive settlement in the communiqué following the Brussels meeting, and linkage was a fact.
The ghost at the feast following the celebrations on 30 May was that the principle of United Kingdom membership was still a live issue. The agreement on 30 May bought time for two years—the currency of the agreement—and probably for the subsequent year. If the European Governments cannot use those two or three years profitably and wisely to ensure that major changes are not made within that period, we shall have the difficulty of being on the eve of an election in this country and there will be all sorts of unfortunate pressures to make the principle of EEC membership part of the election campaign. That will be at a time when many other issues may be paramount, when people will be searching for scapegoats, and when the fault may be not in the EEC but in ourselves.
Because the system, particularly the CAP, was manifestly working against our interests, as part of the Brussels settlement we received the budget equalisation element and new resources for infrastructure projects within assisted areas of this country, with the emphasis particularly on financial assistance to the coal industry.
I have already said that there clearly was a linkage between the budget settlement, the farm price agreement, the common fisheries policy target date and the introduction of the sheepmeat subsidy. But several basic problems remain. One, which has been mentioned by hon. Members, is the definition of the totality of the cost of membership. I shall not go into that matter, but there was a helpful letter in The Sunday Times on the definition by Mr. G. H. Peters, director of the Institute of Agricultural Economics at Oxford University. It would be helpful if the Government or the Ministry of Agriculture, Fisheries and Food would release detailed estimates under the different headings of the costs of EEC membership to promote a wider debate in this country.

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The second obvious matter is that, given the structure of our agriculture, Britain will never benefit greatly from the common agricultural policy. That policy will come under greater strain following the accession of Greece at the end of this year and the accession of the Iberian countries within the next three years. The CAP will suck in more resources, and that will be at the expense of the social and regional funds. It will also be at the expense of making a greater contribution to the less developed countries.
Although the settlement of 30 May may be an advance, it would be naive to assume that it solves the problems of United Kingdom membership. Many questions remain, but, sadly, the Chancellor of the Exchequer did not try to answer them. From the wording of the communiqué, it appears that Britain has undertaken to refrain from disturbing the status quo in the foreseeable future, at least during the currency of the agreement. We have bound ourselves to do our best to ensure that Community decisions are taken expeditiously and, in particular, that decisions on agricultural price-fixing are taken in time for the next marketing season.
In the structural review relating to the financial mechanism we agreed that the basic principles of the CAP would not be questioned. One can discuss what those "principles" are. It has been said that they stem directly from the wording of the Treaty. Perhaps they encompass the custom and practice—the encrustation of practice—that has grown up in the CAP.
It would be helpful to know the Government's attitude to the increase in farm prices. The European Assembly held a debate last Friday and it was said that the decision would mean that the proportion of the budget devoted to the CAP would rise from 75 per cent. to 80 per cent. Do the Government accept that estimate? If so, 80 per cent. of that 80 per cent. will, on past form, be devoted to the disposal of agricultural surpluses.
The increase of between 5 per cent. and 7 per cent. in agricultural prices adds about £300 million to our contribution to the Community. Our farmers, by the same token, will gain at the expense of consumers. Judging by past records, the sheepmeat regime is liable to lead to
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higher prices. It will have an adverse effect on New Zealand's position. It has a formal veto but, like the nuclear deterrent, it cannot be used in practice. It is likely to lead to sheepmeat mountains.
It is significant that the production levy on fresh milk surpluses has been shelved, at least until February. I did not know what a sacred cow was until I studied the CAP. Faced with the mistakes that have accumulated during the lifetime of the EEC, it is ridiculous that negotiators at the budget settlement could only add to those difficulties and sins. The old Book says:
"For the good that I would I do not: but the evil which I would not, that I do."
The increase in agricultural prices will increase the number of problems. Another question has not been answered properly by the Chancellor of the Exchequer, although we were referred to a written question on the same subject. Does the drawing of compensation funds from the EEC budgets of the years following the years to which they are allocated mean that re-financing—the sums that we are likely to obtain from the EEC budget— is "held hostage" and is dependent on United Kingdom acquiescence on other issues? This is a possible construction of statements attributed to a French Minister. It would be helpful to have a clear indication from the Government whether they accept this construction.
What do the Government envisage to be the areas in the United Kingdom to which the additional resources will be allocated? My hon. Friend the Member for Newham, South has already made the point about the 70 per cent. and the 30 per cent., and the point of additionality. Certainly, coming from South Wales, where we could desperately need such funds, I think that it would be helpful to know at an early stage, given the emphasis on the coal industry both during this budget settlement and at the Venice summit, whether the Government are prepared to envisage additional EEC funds to underwrite the coal industry in South Wales. Of course, we also desperately need funds for our declining steel areas, which decline has stemmed directly from Government policies. The least for which we can hope is that a portion of the additional bounty coming from Brussels will be devoted to the problems arising from the steel crisis in our area.

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What structural reforms will the Government promote over the next two years to prevent a recurrence of the crisis that has already arisen? This is a fundamental question. We were given no insight at all in the Chancellor's speech as to the answer, and what he has in mind. How can this House properly carry out its democratic function of debating this settlement if we are not taken into the Government's confidence and given certain guidelines as to the Government's view on this and other key issues?
Over the immediate future there are practical political problems in other member countries. There are the German elections in the autumn and the French elections in May of next year. In the second half of next year we shall hold the presidency of the EEC. Let us hope that by that time we have a clear idea of the structural adjustments that are necessary.
The budget settlement on 30 May, the compromise package, and the Venice summit that followed that are important for Britain in relation to our budgetary contribution and to our relations with our European partners. They are important because there are bound to be fundamental strains on the financial system within the EEC, not only because of the financial crisis that looms next year—the debate about the 1 per cent., and so on—but because of those financial and administrative problems that will be posed by the fact of enlargement. The Government, surely now and particularly before the issue of membership is caught up in a future general election campaign, must produce proof of the benefits of membership and the development of the EEC in a way which is acceptable to the British people. The time has never been better for this. I hope that the Government will start immediately to provide that framework.
I can see no future for this country save in a very close relationship with our EEC partners. If we were to be outside, decisions would be taken that would affect us fundamentally but over which we would have no control. But I find, in the budget settlement and in the other areas, that the British Administration as a whole have to make a substantial propaganda effort in co-operation with our partners.
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It is a matter of judgment. If the balance has swung the other way at the end of the period, those of us who fought for Europe will not feel constrained to go all the way if it is clear that the two years plus one year have not been used profitably by us and our European partners and that there has, in fact, been only a postponement of the "big bang".
I hope that this period will give the Government and our EEC partners the opportunity to exorcise from our national psychology the debate about the principle of membership itself, so that the change in Europe in relation, for example, to the movement away from dependency on the absurdity of the CAP and the assertion of a Europe of consumers, as against the way in which the Market has developed so far, can be seen. I hope that we can see developments in a direction that will not ensure that those who all along have held doubts about the fact of our membership will have their position strengthened in the minds of the British public.
9.32 pm
Mr. Nick Budgen: I find myself in much agreement with many of the points made so well by the hon. Member for Swansea, East (Mr. Anderson). He finds it necessary to criticise my right hon. and learned Friend the Chancellor for the vague way in which he spoke of a future review of the EEC budget. I agree with him entirely. It seemed to me that the Chancellor had much to say about the details of the history leading up to the deal. He spoke most forcefully and eloquently about the advantages of the deal. But the deal has been struck and there is nothing much that we can usefully say that will change it.
On the whole, the deal—or linkage or package or whatever—was probably the best that could be struck if, and only if, my right hon. Friend the Prime Minister took the view that, for wider considerations, she wished to play no more with the risk of coming out of the EEC. I believe that she got the best deal possible because for a long time she was prepared to contemplate with equanimity the possibility of our coming out. When that view was made plain to our allies they gave her a good deal.

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However, the Prime Minister has put fire to a very large conflagration which will go on burning and bubbling for the next three years. It will be no good our saying in two years' time "We were in favour of a review of the EEC budget" and then saying "Well, we will fudge it on the night." The British people will remember what the Prime Minister has said over the last six or nine months. She has raised the expectations of the British people and those expectations will not go away.
Therefore, in my opinion, it is dangerous for the Chancellor to say in a vague and unspecified way that there will be a reform of the EEC budget, without giving us further and better particulars. For example, is the reform to be principally directed towards the CAP? If it is, a great deal of persuasion will be needed within the ranks of the Tory Party. The Tory Party—and all parties are coalitions—contains within it those who represent the Whig traditions, who are, on the whole, in favour of low food prices and not too much protection for the farmers. It also contains others, such as my hon. Friend the Member for Banff (Mr. Myles) who principally applaud the EEC because they see it as a means by which they can acquire a level of protection which they would be unable to acquire from my urban constituents, for example.
If there is to be a reform of the CAP there will have to be a great process of persuasion of those in the Tory Party such as my hon. Friend the Member for Banff. However, there are others in the party, including my hon. Friend the Member for Harrow, East (Mr. Dykes), who believe that the best way to reform the EEC budget is massively to expand the EEC regional and social funds. We want an explanation of how we can say that we want a massive increase in EEC expenditure and, at the same time, wish to reduce greatly our future contribution to the EEC. That calls for a great deal more clarity and particularity than has been offered by my right hon. and learned Friend the Chancellor of the Exchequer. We also want an explanation of how we are to reduce our contribution to the EEC budget in future while adhering to all the principles of the CAP as set out in article 39.
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I should have thought that the French were entitled to argue that the second of those principles was the way in which they referred to their historic tradition of high food prices and their tradition of self-sufficiency in food, which goes back even before Napoleon's time. It was certainly enshrined in the Code Napoleon, which has created a structure in French agriculture by which farms are not merely owned by comparatively small farmers, but by which ownership has been split up and divided and sub-divided over the past 150 years.
If one wished to hit, in a populist way, the land owners in Britain, one could identify the Duke of Devonshire or the Chasworth estates and say "They can stand a bit of a knock". In France, the land-owning class is about 20 per cent. of the population. The owners may have only small acreages, but they are important to those people.
Those are issues that my right hon. and learned Friend ought to have touched on. In two years' time the issue will not have gone away. I expressed some sympathy with the hon. Member for Swansea, East because I predict that in two years' time the Labour Party will be solidly and fundamentally opposed to the EEC.
Mr. Tristan Garel-Jones: They are opportunists.
Mr. Budgen: There is an element of opportunism in us all. What will be the consequences for the Tory Party? It will not be posible for us to say blandly that we spent nine months saying that we wanted our money back and playing the British Gaullists. We shall not be able to say that we wanted a fundamental reform of the EEC budget, but had done nothing about it in those two years. It will be no use our saying, in the words of my right hon. and learned Friend the Member for Hexham (Mr. Rippon), that we felt sure that on the night, with enough cognac, we should be able to knock out a fundamental reform of the EEC budget. That will not work.
The Tory Party must understand that this may be the last chance to reform the structure of the EEC. I understand and respect the arguments of the right hon. Member for Down, South (Mr. Powell), who says that what I suggest

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may be possible is, in fact, impossible. I suspect that, as one who has advocated our entry and our remaining in the EEC, I grossly under-estimated the forces, particularly of French nationalism, and I probably grossly under-estimated the protectionist element within French society.
I accept that I did not adequately understand or study the institutions of the EEC. None the less, we are now embarked upon an attempt to change the structure of the EEC. It is a massive task, massive within the Tory Party, and massive within Europe. It is no good saying that it can be done vaguely and left until two years' time. By then, it may be impossible, in any event. It will not be enough simply to say "We said it would happen." By then, our clothes will have been well and truly stolen by the Labour Party.
Several Hon. Members rose—
Mr. Speaker: Order. I must inform the House that it is likely that the winding-up speeches will begin at 10.30 p.m. Seven hon. Members have indicated to me that they hope to catch my eye. On my arithmetic, if there are seven-minute speeches, I shall have one minute to spare.
9.41 pm
Mr. Austin Mitchell: I do not propose to follow the remarks of the hon. Member for Wolverhampton, South-West (Mr. Budgen) with which I agreed except to express the hope that the eventuality that he foresaw of the Labour Party being fundamentally committed against the Common Market in two years' time comes about. If that happens, I hope that the hon. Member for Harrow, East (Mr. Dykes) becomes the spokesman for the Conservative Party, putting the case for the Common Market against us.
I propose to concentrate my remarks on document No. 7389/80 on a common fisheries policy. I see it in the context of a budget agreement that is fundamentally unsatisfactory. The agreement itself is a bad augury for the kind of fisheries settlement that will come about if it demonstrates how the Government defend the national interest on the budget question.
The budget agreement betrays the promises and belies the hopes that were held out to the people of this country, specifically that we would secure a broad
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balance between expenditure and receipts and that there would be no connection between the budget agreement, the agricultural agreement and the fisheries agreement. There clearly has been that connection. In the light of that tawdry agreement, the projection by our prostituted press of a national humiliation as a triumph is the worst example of managed news seen in this country for several years.
The press may now regret this song of praise. It has become clear that the Prime Minister is not altogther happy with the settlement that has been brought back. The press is not sure now to whom it should be sycophantic. This creates a division of loyalty. But the manner in which a settlement that was fundamentally unsatisfactory was projected was an appalling example of managed news.
It seems clear that the settlement is unsatisfactory because the pro-Europeans in the Cabinet—that means the overwhelming majority of the Cabinet—were dismayed at the repercussions of the strong stand the Prime Minister was taking and dismayed at the impact in the country where people were discovering what we are paying to be a member of this Common Market club. An anti-European feeling was developing rapidly and on a considerable scale. The right hon. Lady was taken by the arm by the Foreign Secretary and told quietly "Enough is enough ". The result is a settlement that is disastrous in many ways. It is disastrous not only for the concessions made on the common agricultural policy, with the increase in prices and the further impetus to build up mountains; it is also potentially disastrous for fishing—the area to which I wish to address my main remarks.
It is always an ominous sign for the fishing industry when the Foreign Office negotiates on its behalf and takes the issue out of the hands of the Department of Agriculture, Fisheries and Food, which has the industry's interests more at heart. I fear that concessions have been made in advance. Statements from France and Germany indicate a link between the budget agreement and a common fisheries agreement. The Minister vehemently denies that. I hope that he is right, because his career is at stake. If he is entering negotiations with his hands tied

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in any way it must be made clear to the fishing industry. The industry cannot be defended by a Minister who is in such a situation. The industry will judge the events accordingly.
The industry's demands are clear. They have been expressed clearly and strongly. The industry demands exclusive control over the waters to 12 miles. It demands a dominant share of the catch—or a dominant preference—in the waters up to 50 miles, and the ability to impose national conservation measures to protect threatened stocks in the waters up to 200 miles. Those demands are basic, clear and straightforward.
It is impossible to have a healthy and viable fishing industry without the satisfaction of those demands. Only the nation State has the interests of conservavation at heart, because that conservation represents the future for the industry and its fishermen. That is not true of the multinational arrangements proposed. Our future is in the fish stocks. Without national control, catches cannot be policed unless there is limitation and registration. That is not proposed. National Governments have ignored conservation measures. The proposal does not include measures to ensure that national Governments enforce the regulations. There is no equalisation support proposal.
On the basis of this inadequate prospectus there is no case for the industry abandoning its claim for control over its own waters. To do so would be to swim straight into a purse seine net. The negotiations must be handled independently of any other subject. If necessary, the negotiations must go on beyond the deadline. When our demands suit nobody but us and are opposed by eight other countries the battle will be uphill, particularly if we point a pistol at our own head and accept the deadline. The deadline is lamentable for the industry.
In the light of that I would like to put three questions to the Minister. Will there be any budget repayments before 1 January next year, the date at which the common fisheries policy is to come into effect? If there are no repayments before then the potential for holding us to ransom is enormous. What procedure will be used for the budget repayments? If the procedure involves the use of the
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qualified majority, it is possible that France and Germany, whose interests do not coincide with ours in this respect, will use the qualified majority to block the repayment to this country unless they get a satisfactory common fisheries policy.
Will the Minister give his interpretation of the text quoted by the right hon. Member for Down, South (Mr. Powell) on the guidelines for the fisheries settlement? It says:
"The Council agrees that the completion of a common fisheries policy is a concomitant part in the solution of the problems with which the Community is confronted at present."
What does "concomitant part" mean? It goes on:
"To this end the Council undertakes to adopt, in parallel with"—
another text says "to sustain"—
"the application of the decisions which will be taken in other areas, the decisions necessary to ensure that a common fisheries policy is put into effect at the latest on 1 January 1981."
What is our Government's interpretation of that text? I am not an expert in Eurospeak or Euroglook, but on any reading that is possible within the Common Market the two things are interconnected and the common fisheries settlement will not be agreed. If it is not agreed the budget repayments will not be made. That, therefore, is the interpretation of the words "concomitant" and "in parallel with". It is therefore important to hear the Government's interpretation of those words.
I am worried and alarmed by the prospects facing the fishing industry, given the indications that the Government are preparing to compromise the just demands of that industry—demands without a constructive response to which there can be no viable fishing industry.
The Government have two ways in which to show that they are serious about the fishing industry. The Prime Minister made commitments which she revised and strengthened considerably in the course of the campaign when she reached Scotland. Those commitments should be maintained. The first way in which the Government can show that they are serious is to take account of the state of the industry. It is an industry in a crisis of galloping proportions. It is the second crisis to hit the industry in six years. It has been caused because costs,

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particularly fuel costs and interest charges are up and catches are down as a result of drastic over-fishing. Receipts for the catches are down because of the huge increase in fish imports in the first few months of this year. That increase is now slowing, because the cold stores are bursting at the seams with fish. It is impossible to import any more. We are now importing over half our fish.
Given the state of the industry created by the crisis it is imperative that the industry be kept going until the common fisheries agreement is reached. Equally, the Government must show themselves to be serious about providing adequate aid to the industry. They have provided £2 million. In some sense it is an achievement to get that much money out of a Government who are determined to spend nothing. The figure, however, is totally inadequate given the scale of the problem.
Yesterday we met the representatives of the industry and they described the problem to us. They need £35 million in operating aid for the next six months alone. In other words, the figure is running at £70 million a year—the size of the deficit that is accumulating because every trawler is coming back in debt, making no profit on the catch. If we are to have an industry to negotiate for, it is crucial that the Government should show themselves serious in terms of the amount of aid that should be forthcoming in the next few weeks.
The second way in which the Government can show themselves to be serious is to increase the negotiating pressure on our Common Market partners. That approach has proved successful for the French on the question of lamb imports. It is the only technique that promises to be successful where it is Britain against the rest. The Government must increase the negotiating pressure by imposing further national conservation measures to protect our threatened stocks, must help our industry and must put pressure on the countries with which we are competing to increase the mesh size, to accept the one-net rule and to ban beam trawling.
The measures are desperately needed. If the aid is not forthcoming and if the Government do not increase pressure we shall lose not only another industry —industries are falling like ninepins at
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the moment—but a way of life that is crucial to this country.
9.55 pm
Mr. Tony Marlow: If I were to have a text for what I am about to say, it would be the expression dredged up by the right hon. Member for Down, South (Mr. Powell) from a sackful of bits of paper that we were all required to read before starting on this debate—the need for member States to contribute to greater integration within the Community.
I reject that concept absolutely. I believe, in the circumstances in which we now find ourselves, with an increasingly aggressive Russia and an increasingly uncertain United States, that it is absolutely vital for European nations to get together and to work together in certain areas such as foreign policy, defence and our approach to the Third world. Those areas, however, in which we have been integrated in the past, such as trade and agriculture, have, from this country's point of view, proved to be an absolute disaster. Any attempt to move further down the road to integration will destroy what European unity we might otherwise have.
My right hon. Friend the Prime Minister has performed a signal service to this country. Not only has she come back with a much improved position with regard to the Common Market financially. She has also opened the eyes of the country, and of many hon. Members, to the true situation existing between ourselves and the European Community.
Opposition Members will say that the Conservative Party is divided on the subject of Europe. I do not believe that the Conservative Party is divided. It is in the process of transition. Opposition Members will realise that for many years Europeanism in the Conservative Party has been next to godliness. Unquestionable loyalty with regard to Europe has been the requirement. I believe that, even now, many of my right hon. and hon. Friends regard Europeanism as the last memorial to the previous—and perhaps I should say lamented—leader of the Conservative Party.
As Opposition Members will realise, there is always a reluctance to forsake accustomed pilgrimages to the shrines of

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past gods and theologies. My right hon. Friend the Prime Minister has, in that respect, done the undoable, attacked the unassailable, achieved the unachievable and vanquished the unconquerable. There is no doubt in my mind that she returned from the Continent with a package better than anyone else would have dared to ask for.
My right hon. Friend has done two things as well, both of them beneficial. First, she has alerted the other countries of Europe, as many hon. Members have said, to the inconsistencies, the unfairnesses, the absurdities and the stresses of the system we have at the moment. Secondly, and far more importantly, she has alerted the people of the United Kingdom to the scale and nature of the damage that has already been done and is still being done. Such damage will continue to be done unless and until the remaining problems can be resolved.
Among those problems is that of finance, which we still face. Before the Brussels agreement we were faced with a payment of £1,200 million net to the Community this year. That has now been reduced to £370 million. I have a vision in my mind that on the first Friday of every month a crocodile of civil servants dressed in Civil Service type rig and carrying Gladstone bags boards a plane with £100 million to take to Brussels. On the first Friday in January £100 million went to Europe, on the first Friday in February it was £200 million, in March, £300 million, and April, £400 million. We have already sent £400 million to Europe. When will these civil servants stop boarding the Viscount jet to Brussels with their briefcases? When will someone go there with an empty briefcase to start to bring our money back?
Additional to the cost of our budget contribution is the immense burden on our housewives of having to buy food at CAP prices instead of world prices. A calculation in The Sunday Times put the figure at £1,500 million a year, net of the cost that we would have to pay for agricultural support. My right hon. Friend the Minister of Agriculture, Fisheries and Food in an answer to me said that the figure was £500 million. Let us add the lower figure to our budget contributions. That still makes us net contributors to Europe to the extent of £900 million a
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year, which is £64 for every family of four in the country. What benefits do we get? If there are benefits, does not every other member State benefit as much as we do? Why should we continue to pay?
Let us take a look at the CAP. When we joined the Community, 60 per cent. of the Community budget was being spent on the CAP. Promises abounded that it would reduce to 40 per cent. It now gobbles up 80 per cent. of the Community budget. The point has been made that, whereas in 1975 the CAP took 60 per cent. of the Community budget, it now takes 80 per cent., and 60 per cent. of the total budget is spent on the disposal of surpluses. In other words, £3 out of every £5 that we spend in this country—£50 for every family in this country—goes on the disposal of surpluses in the Common Market.
Where do those surpluses go? They are spent on butter, which we sell to the Russians for 31p a pound and which the Russians sell to their people for £1·20 a pound, using the profits to make helicopter gun ships, napalm, bullets, rockets and gases in order to bomb and destroy villages in Afghanistan and harass and kill innocent people. Since January, 60,000 tonnes of European beef has gone to Russia, which is more than in any other period since we have been in the Common Market. It has gone through Romania to Afghanistan, to feed the Red Army in its blundering and plundering.
What about the problems of trade? Not only have we surrendered our agricultural policy and our ability to buy cheap food on the world market. We have also surrendered our trade policy. As many hon. Members know, I represent a constituency that manufactures footwear. When footwear is dumped in the United Kingdom, what can we do about it? We can do nothing. We have to go to Brussels. Is Brussels concerned with what is happening in Northampton? When we have problems getting our footwear into other countries because their tariffs are too high or because of unfair trading practices, what can we do about it? We can do nothing.
Hon. Members may say that Europe is our fastest growing market. So it is. However, let those hon. Members remember that when we joined the Community we

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were in net balance with our manufactured goods. In the past year we had a net deficit of £2,400 million in manufactured items to the European Common Market. We should look closely at our relationship with Europe. Any action that interferes with trade puts up prices and reduces choice, which is bad. It condones inefficiency. Every industry requires a bread-and-butter level of trade in order to cover its overheads and go on to make a profitable output. If through replacement we could produce half that £2,400 million of deficit of manufactured items in the European Community, we could save and bring back to this country 100,000 jobs, so much good is the European Community doing us at the moment.
Despite the magnificent achievements of my right hon. Friend the Prime Minister —[Interruption.] No one would have done
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better. No one would have attempted what she has done. The European Community is still manifestly unfair to the people of this country, and it is seen to be unfair. Inasmuch as politics have a meaning, realities—however much anyone tries to suppress them and gloss over the top with propaganda—will come through. If the approach and the activities of certain hon. Members of this House do not reflect those realities, then realities themselves will impose their own disciplines by changing the very membership of this House.
We must change our relationship with Europe. We must disengage from the stupid little nitty-gritty, items of harmonisation so that we can the better combine with Europe and our European friends on those issues that are so important to us.
10.5 pm
Mr. Ron LeightonThe last speech underlined the fact that the House has received this collection of documents with something less than euphoria. That is probably because we are now inured to not receiving any glad tidings or any good news, comfort or joy from the Common Market.
Tonight we have heard none of the lyrical enthusiasm for the Common Market that we used to hear some years ago. The hon. Member for Aldridge-Brownhills (Mr. Shepherd) asked why we have not heard from the Front Bench about any of the benefits of membership. I suspect that the reason is that there are no benefits, and that what we discuss now is to minimise the damage that the Common Market is doing to us in terms of the budget, food prices, and fish—and the damage that is being done to New Zealand.
When we talk about internationalism, I remind the House that in 1970 we were receiving 160,000 tonnes of butter from New Zealand. In a year's time we shall be receiving 90,000 tonnes—roughly one-half. Under the same heading of internationalism, I note that Spain has applied to join the EEC, and that instead of that leading to an outbreak of brotherly love it looks as though there is something like warfare between France and Spain.
I should like to look rather more closely at the Brussels deal. When I do so I find it very difficult to come to any conclusion other than that the Government and the Prime Minister have reneged on pledges and undertakings given to the House. We know that the House passed a motion urging Her Majesty's Government
"to press for a fundamental reform of the budgetary arrangements so that Britain's contribution to the Budget is at least not greater than the receipts."—[Official Report, 16 July 1979; Vol. 970, c. 1096.]
I note the words "not greater". I should have thought that, if there were any sense of justice, it should be less—that there should be a broad balance.
What was the Government's undertaking? I refer to the evidence given by the Financial Secretary to the Treasury to the Select Committee on European
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legislation on 16 April 1980. One of his hon. Friends asked:
"Would he care to say what he believes would be a reasonable proposal?"
The Financial Secretary replied:
"As you know, the Prime Minister has said on a number of occasions that we have very little room for manoeuvre and that she would consider it appropriate, if we were to make a net contribution, for that contribution to be less than that of France. I do not think it would be sensible to go further than that."
The Chairman asked:
"Just for the record, what is the contribution of France?"
The Financial Secretary said:
"It is slightly complicated, because if you look at the table you will find that it is roughly a break even ".
That is what the Government were asking for—a break-even point.
In Luxembourg the Prime Minister was offered half a loaf with strings, and she rejected it—perhaps slightly to the consternation of the Foreign Office. It was not enough and she stuck out for the full loaf. She said that there would be no package, no linking, and especially no increase in food prices for goods in structural surplus. We heard repeated statements from the Dispatch Box, from the Minister of Agriculture, Fisheries and Food, that he would not agree to price increases for goods in structural surplus. We were assured that those matters would be dealt with on their merits. There can be no possible merit in increasing the price of goods in structural surplus.
The Commission wanted an increase of slightly more than 2 per cent. As was pointed out, one of the ways to reform the CAP would be continually, year after year, not to increase food prices but to freeze food prices for goods in structural surplus.
What came out of Brussels? The details were extremely vague and the Chancellor did not tell us. The Scrutiny Committee reported to the House that:
"in neither of these instruments is there any indication of the size of the funds likely to be available to the United Kingdom, either in terms of expectation of total reduction of the Budget contribution in 1980 and 1981, or of sums likely to be allocated to the special measures"
As to the proportions of the refund likely to arise strictly in cash terms available for reducing the public sector

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borrowing requirement and for financing certain measures, the Council's conclusions are silent. The details of what we are likely to receive are extremely vague.
We were told that there would be no strings. We now know that there are strings. There is to be a 5 per cent. increase in food prices across the board. I regard that as a disgrace and a betrayal of the repeated promises made from the Dispatch Box. The Minister of Agriculture, Fisheries and Food has no further credibility either in the House or in the country after making those promises and then betraying them when he went to Brussels.
The CAP has been entrenched, made worse and more expensive. The European Assembly blocked the budget. One of the reasons for that was to contain agricultural spending—but that spending has increased. Yet the Assembly has agreed to the budget. The so-called European Assembly is a damp squib. It is ineffective and futile, and has no means of establishing democratic control over the EEC. The moral is that we can expect no salvation there.
We were to have a broad balance. We are still the second largest contributor. We belong to a club in which there are only three net contributors—everyone else is a net beneficiary. That is a strange club. Let us consider the German figures, which give an impartial analysis. I am indebted to the embassy of the Federal Republic. The figures refer to millions of European units of account, which I fear that we have to call MEUs. In 1980 Britain will pay 623 MEUs and the French will pay 365 million. In 1981, we shall pay 783 MEUs and the French will pay 335 million. We shall be spending twice as much net, as the French.
I see no justification for that. Part of the condition of that agreement is that we do not interfere with the CAP. The Lord Privy Seal read out article 39 of the Treaty. We were told that it was simply flatulent wording, but, as the hon. Member for Wolverhampton, South-West (Mr. Budgen) pointed out, paragraph (b) states that it is to ensure
"a fair standard of living for the agricultural community".
There is no way in which one can give a decent standard of living to the poorer
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peasant farmers of the Continent by high consumer prices without at the same time giving huge profits to the efficient barley barons and building up huge surpluses. That is built into the agreement.
I must close, because there is not much time left. In my view, we have been in the Community for a long time and have tried to achieve reforms. We have not got them. This will be a great burden on Britain, not only in budget terms but in trade terms. For example, we have a deficit in manufactures of £4,000 million. I hear that Terry Duffy is going to see the Minister to try to stop Japanese imports into Britain. We already have an arrangement with the Japanese. It is not the Japanese car industry that is destroying the British motor industry, and thereby the British steel industry—it is the French, Italian and German industries, particularly the German. We must negotiate arrangements with the Germans in the same way as we have done with Japan.
If we cannot do so, in the interests of all we must revise our arrangements with those countries on a basis other than membership. Some people fear that. They say "We might be punished. We might suffer if we left the Community". I do not believe that that is so. The Community may say "We will deny you a common fisheries policy". That means that we would have 200 miles around our coasts and all the fish to do what we liked with. It could say "We will refuse to allow you to contribute to the budget". That would not be a bad thing. It could say "We will stop trading with you". The Community would cut its own nose to spite its face, because it has a huge surplus. It could say "We will stop you from trading freely in food". Yet, if we were outside we could trade freely with New Zealand and we could get Common Market food at Russian prices.
Therefore, if we do not achieve reform we should draw the proper conclusion, namely, that we should revise our arrangements with these countries on a basis other than membership. If we did so we would have far better political relationships, instead of continually arguing over the budget, lamb, fish, and everything else.
10.17 pm
Sir Anthony Meyer: I apologise to you, Mr. Speaker, and to the House for having missed the earlier part

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of the debate, but I was attending a Select Committee.
From comments that have been made from both sides of the House I have been trying to piece together just exactly what it was that my right hon. and learned Friend the Chancellor said. It is rather like trying to reconstruct the character of Hamlet from the observations of Rosencrantz, Guildenstern and the First Grave Digger. I am not quite sure who the first grave digger is in this equation.
The one thing that has struck me about the debate is how incredibly unrepresentative it has been of opinion in this House. It may represent temporary fluctuations in the opinion polls, but it most certainly does not represent the opinion of this House. My hon. Friend the Member for Northampton, North (Mr. Marlow) said that the Conservative Party was not divided on this issue. It is divided, rather as the iceberg is between its visible and invisible portions.
At times it has struck me that 100 per cent. of Conservative anti-Marketeers are present for this debate and virtually nil per cent.—with the exception of the hon. Member for Swansea, East (Mr. Anderson)—of the Labour pro-Marketeers. In that connection, it has surely not escaped notice that the Opposition amendment conspicuously omits the name of the right hon. Member for Leeds, East (Mr. Healey), whose name might have been expected to figure on that amendment.
The danger of this highly unrepresentative debate is that, amazingly, reports of it might actually be read in foreign capitals, thereby giving a totally erroneous impression. The danger also is that the course of this debate will cause us to lose sight of the historic importance of the budget agreement secured by my right hon. and noble Friend Lord Carrington, thanks to the intransigent toughness of my right hon. Friend the Prime Minister.
I say "historic importance", because, for the first time, Germany is visibly feeling the strain of its budgetary contribution. That means that from now on the Germans will have a vested interest in pressing for a new structure of Community financing. In other words, the agreement has broken the existing budgetary mould, which seemed to be set
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to our disadvantage. From now on, new perspectives open up in Europe.
I cannot continue my speech without taking issue with my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd), who has now left the Chamber. I was disturbed, as were some of my hon. Friends, by his assertion that no Minister has yet set out the long-term economic advantages to this country of membership of the EEC, and by his misrepresentation of the attitudes of Ministers.
He cannot have heard my right hon. Friend the Prime Minister when she made it plain that, however ruthless her determination to secure a better deal for Britain within the EEC, she was not prepared to use Britain's membership as a bargaining counter in that process.
Surely my hon. Friend cannot be ignorant of the fact that my right hon. Friend the Minister of Agriculture, Fisheries and Food, who has fought so hard and successfully for the interests of British farmers, was originally a convinced anti-Marketeer, whose experiences have convinced him of the advantages of membership. Surely he cannot be ignorant of the fact that my right hon. Friend the Secretary of State for Trade, who is by no means the most enthusiastic supporter of Britain's membership, has made it plain that to leave the EEC is not an option for consideration at any point.
Those right hon. Members and the Prime Minister have reached that conclusion for the good reason that decided the Government to apply for membership of the EEC 15 years ago. We applied for membership because outside the EEC we could not face the competition that it provided in the Third world countries. That threat is still there. If we were outside the EEC not one of our problems would thereby be made easier. That is merely if, by some miracle, we were transported out of the EEC. We should add to that the fact that by leaving the EEC we would for ever destroy the credibility of our country as a reliable partner. The argument is totally conclusive.
The budgetary agreement now gives us a chance to go forward, to lift up our minds above the petty squabbles and idle recriminations that have occupied three-quarters of the time of this debate, and to look towards the future. It gives

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us an opportunity to do something about the common energy policy, to which the hon. Member for Inverness (Mr. Johnston) referred and where we are uniquely well-placed to take the lead. Above all, it gives us an opportunity to remedy the total failure of the second Venice summit to deal with the problems of the Third world and to bring home to the people of this country and to the people of Europe the fact that their short-term prosperity is directly and immediately dependent on taking massive measures now to increase the purchasing power of Third world countries. It is not a matter of being disinterested; it is highly in our interest that we should do something now, through the unique medium of Europe, to assure our own future.
10.25 pm
Mr. Tam Dalyell: I never was a Euro-fanatic, but listening to this debate I feel somewhat in the position of the last of the Mohicans, as an unreconstructed pro-Marketeer—at least a rare specimen when it comes to the vocal part of the species.
From this position I say that anybody who talks about CAP reform ever so blandly is guilty of cant and humbug. The truth is that we cannot have a Community and, in the words of the hon. Member for Aldridge-Brownhills (Mr. Shepherd), say "Scrap the CAP." If anyone does not believe me, I suggest to him go to Paris and to Bonn to ask and find out. If the British Presidency in the latter part of 1981 thinks that it can do anything about reforming the CAP, I shall believe it when I see it. It has no notion of how to go about it in an acceptable way.
I agree with my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) that there should be more than one Community policy. My hon. Friend mentioned the doctrine of swings and on the roundabouts. A great deal of that, even from the point of view of a pro-Marketeer, is true. Therefore, we have to look at the roundabouts that can be improved.
I start briefly with energy. We have Culham. Let it expand. Let us have more help for nuclear power, but particularly for the coal industry.
The leaders went to Venice. What did they do? First, they said "We must cut
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down on public investment". At the same time they said "Ah, but we must double coal production".
How is that to be done? It cannot be done quite like that. The Community should give its mind to helping to resolve problems in central Scotland with the sinking of the Musselburgh pit, and, indeed, Selby and others. I say to my hon. Friend the Member for Bolsover (Mr. Skinner)—I know that he will take it—that Mick McGahey, Eric Clarke and many other members of the National Union of Mineworkers in the Scottish area rightly and properly ask for investment because of the real problems that they face, not least with the oil from coal projects.
We have to examine the position under article 235 in relation to the help that can be given by the Community to make up certain unfairnesses to Britain in an area where we need greater coal investment. The same goes for help on the railways, not least the Channel tunnel. That policy is strongly supported by the National Union of Rail-waymen. Any help that can be given to this energy-saving exercise through the European Investment Bank or European funds would be greatly welcomed.
The Community has great problems. I speak as a pro-Marketeer. We have had very little from the Government. I thought that the Chancellor's speech was frivolous. He did not tackle the problem of enlargement. What will happen when Greece, Spain and Portugal join, plus the considerable undertakings that Germany has given to Turkey? It may be that that source of funds, given its obligations to Ankara, will wind up.
Let us be specific about another area in which, in the opinion of many of us, we should act on a Community basis. I refer to Lomé. What will be done on the question of major additional external assistance for food? This is one way in which the roundabouts can be made up. Another is on co-operative management of the world's economy through automatic revenues, as suggested by the Brandt report, in page 274.
What will be done about the World Bank's increased borrowing capacity, to which we are committed both as national

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and Community Governments? Presumably the recommendation of the Brandt report is acceptable to both the Government and the Opposition. What will be done to strengthen the regional development banks? The Brandt report recommends that that should be done, and it could be achieved through a Community system. What about the additional multinational finance that is required to support mineral and energy exploration in developing countries? Again, the Brandt report recommends that that should be given.
We are aware that help must be given to Zimbabwe. The roundabout allows us to seek help from our partners. Perhaps I could have the Minister's attention, as I should like to ask him a direct question. Indeed, there has been a notable absence of senior Ministers tonight. [HON MEMBERS: "Hear, hear".] Does the Minister think that help should be given to Zimbabwe on an EEC basis? If the New Hebrides need help after 30 July, will it be given on an EEC basis? Some hon. Members think that the EEC, rather than individual countries, should finance such aid. Indeed, the same applies to many other projects.
Some hon. Members are bothered about the number of projects that are being diverted from Britain to Eire. Only tonight an industrial diamond firm with 500 employees has decided to go to Eire rather than to the new town of Livingstone. That might be all right, it were not for the fact that Eire is flouting the EEC's rules.
Perhaps the Government will bear in mind that the Irish development associations have got away with a great deal. Hitherto, a Nelsonian eye has been turned. I see that the Chief Secretary is nodding. It is dangerous to nod when I make speeches. He knows that it is assumed that, as Eire is relatively small and poor, we should not make too much fuss. Projects that might have come to us continually go to Eire. The Irish are unscrupulous about flouting the rules. What is being done to ensure that Eire keeps to the rules? Whether we should have them is another matter. The Irish are flouting the rules. What is the Foreign Office going to do about that?
10.32 pm
Mr. Denzil Davies: This is the fourth time in the past year that we have debated the Common Market budget. After four debates and three summits the Government have been unable to achieve the objectives that the House endorsed a year ago, on 16 July. Nor have they achieved the conditions that the Chancellor of the Exchequer laid down on 22 November. He hardly referred to them this afternoon. Perhaps I may remind the House of those objectives and conditions.
On 16 July the House accepted a motion that our budget contributions should not exceed our receipts. During the debate in November the Chancellor of the Exchequer said that the Government sought a broad balance between payments and receipts. The year 1980 will involve a payment of at least £370 million, and at least £440 million will be paid next year. The payment could be higher, because a provision allows for an increased payment if the budget is higher. Nobody could argue that those two payments represent anything like the kind of broad balance that the Government endorsed and the Chancellor accepted in the debate in November.
In that debate the Chancellor also said that there must be a permanent solution. He said that it would not be sufficient to offer a temporary solution that would afford relief for a year or two. That is exactly what the Government have negotiated, and exactly what we are being asked to endorse tonight. The Chancellor also said:
"Neither I nor any succeeding Chancellor wishes to make speeches in this House in a year or two about yet another debate…on this same subject."—[Official Report, 22 November 1979; Vol. 974, c. 593–94.]
I do not know about succeeding Chancellors, and who they will be, but clearly that will not happen, because in the next 18 months the House will again debate the Common Market budget at least two or three times, because the Government have not been able to secure the kind of permanent solution that apparently, a year ago, they wished to have. The Government have simply postponed the evil day to the review in 1981.
All that the Government have achieved so far, as the motion makes clear, is that for 1980 and 1981 we shall now be the

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second largest contributor to the EEC budget instead of being the first major contributor. We shall remain one of the poorest countries in Europe, and it seems that we shall become poorer every day as a result of this Government's policies.
Even that, even the inadequate reduction in our net contribution that the Government have obtained, has been secured—as we have heard time and time again in the debate—at too high a price. The price that the Government have paid is an even worse deal for our fishermen than would otherwise have been made; substantial extra payments for food by the public, not only this year but next year; and—probably the highest price of all—giving up our right to try to change the fundamental principles of the common agricultural policy when the review is carried out in 1981 or 1982.
There have been a number of speeches about a common fisheries policy, which is an important issue. In their haste to reach a compromise the Government have seriously damaged the prospects of obtaining a fisheries policy that will safeguard the interests of British fishermen. The official press agency text of the declaration on fisheries policy made this clear. I quote from paragraph 1, which said:
"The Council agrees that the completion of the common fisheries policy is a concomitant part in the solution of he problems with which the Community is confronted at present. To this end the Council undertakes to adopt in parallel with the application of the decisions which will be taken in other areas the decisions necessary to ensure that the common fisheries policy is put into effect at the latest on 1 January 1981."
The Minister of Agriculture, Fisheries and Food has tried to argue in the House a number of times that the budget agreement is not conditional on a fisheries agreement by the end of this year. If that is the truth—and there are doubts about that construction—as is said in the criminal courts, it is not the whole truth and it is not nothing but the truth.
The reality on fisheries—a reality buried in the documents that we are debating—is that unless we agree on a common fisheries policy under duress by the end of this year we shall not get our money from the budget. That is clear from the documents. The refunds for 1980 that we shall be entitled to under the documents cannot be paid to us unless
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there is an authorisation in the budget of 1981. For there to be an authorisation in that budget, the Budget Council has to agree.
The Council can vote authorisations in the budget only by a qualified majority. As the Financial Secretary well knows, a qualified majority means 41 votes out of 58. If France and Germany, the two countries with the most to gain from a fisheries policy at our expense, wish to cast their 20 votes against us in that Council, we cannot get an authorisation in the budget estimates for our refunds. If we do not agree a fisheries policy it is very likely that they will not vote for the authorisation.
The documents provide that somehow we can get advance payments before the 1981 budget, but those are also subject to the qualified majority. Once again, France and Germany, casting their 10 votes each, could deny us the payments and hold our Government to ransom until they agree a fisheries policy. I submit that if there is no fisheries policy by the end of the year there will be no payment under the budget. Of course, there will be a fisheries policy, because the Government have linked the one with the other, but the result will be that our fishermen will get a much worse deal than they would otherwise have got.
It has been estimated that of the £1 billion of fish in the European pond—as it is described—about £700 million worth is caught in the British sector. Anything in access of the £700 million that British fishermen are allowed to catch as a result of a fisheries policy cannot be recouped by the budget deal and will be lost to the British fishing industry and the British economy.
The agreement on the budget also means, as the Government have admitted, that British housewives will have to pay an extra £200 million in higher food prices this year. Indeed, there is little benefit for the consumer in a reduction of £200 million on the budget if £200 million has to be paid in higher food prices. There is no point in such a tradeoff.
Not only have the Government agreed to food price increases this year; as part of the deal they have agreed that they will not veto next year's price-fixing

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agreement. Paragraph 9 of the agreement says:
"All Member States will do their best to ensure that Community decisions on agricultural price-fixing are taken in time for the next marketing session."
That statement and the need to secure a qualified majority to authorise the payments from the budget mean that the Government have effectively traded in their veto on next year's price fixing for this inadequate deal. As a result, British housewives will have to find at least an extra £200 million next year. Inflation in Western Europe will not be very different next year. Price increases this year are 5 per cent. on average and next year they will be at least that.
Mr. Dykes: Will the right hon. Gentleman say what is the total amount spent on food in this country?
Mr. Davies: No. I will not. I am merely contrasting the refund from the budget with the £200 million that will be lost to the British consumer as a result of the deal. That puts the budget deal in a better perspective.
The Financial Secretary to the Treasury (Mr. Nigel Lawson): Rubbish.
Mr. Davies: I remind the Financial Secretary of the Tory Party manifesto commitment on price fixing and the CAP.
"We will insist on a freeze in CAP prices for products in structural surplus. This should be maintained until the surpluses are eliminated."
That is another of those lies—like the prescription charges lie and the lie about VAT—that were a hallmark of the Tory manifesto in last year's election.
Having saddled the British economy with the extra costs, the Government apparently have no intention of using the extra money to try to limit some of the worst effects of the depression. The Prime Minister has told us that the money will be used to reduce the public sector borrowing requirement. It is clear from the documents that there is no additionality here. It is not a case of money coming from Europe and an additional sum being spent by the Government. The money from Europe will replace expenditure by the Government.
The Prime Minister told the House that the money would be used to reduce
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the PSBR and interest rates. The Chancellor has not told us by how much the money will reduce the PSBR. Let us assume that it will be £500 million in the current fiscal year, though that is probably on the beneficial side. Let us suppose that £500 million will be taken off a PSBR of £8½ billion, which, according to the newspapers, is increasing. The relationship is not a direct one, but, at best, that could not mean more than a ¼ per cent.—or perhaps ½ per cent.—reduction in interest rates. What use will that be to British industry, which is paying interest at 16 per cent?
The Government should use the money directly to benefit those areas and persons suffering worst from the depression and not merely to reduce the PSBR, which will mean that the depression will get worse. Perhaps, briefly, we can suggest some ways in which the Government could have used the money. Why could it not have been used to increase child benefit, since poorer families in particular are suffering from increases in food prices? Why not do that instead of effecting a token reduction in the PSBR? Why not use that money to help poor families who are suffering from the effects of inflation?
Alternatively, why not use it for the disabled? The disabled are also suffering because of inflation. Why not help the disabled directly instead of using it to reduce the PSBR? If the Government do not like that, why do they not use the money for job creation schemes for young people? Why do they not use it to stop the closure of manpower training facilities, as is now happening? There are many ways of using that money, if it ever comes, that will be more beneficial to the economy than by reducing the PSBR.
The Government seem to have accepted the agreement reached in Brussels in the hope that all the deficiencies and failings of the budgetary system can be swept away somehow when the Community runs out of funds in 1981 and 1982. That point has been touched on in the debate. Apparently in about 1981 it will be all right on the night. The coffee and cognac that we have heard about will secure a fundamental revision and a change of the whole system, and we shall somehow be able—so the illusion goes—on that

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occasion to rewrite the rules of the club for our benefit.
As so often happens in their dealings with the Common Market, the Government's view is based more on Foreign Office wishful thinking than on any realistic and hard analysis of the true situation. In the negotiations on the budget the Government have given away their main weapon for future negotiations by agreeing not to call in question the basic principles of the CAP.
I hear the Financial Secretary to the Treasury muttering from a sedentary position. If he has something to say he should reply to the debate. The Minister of State, Foreign and Commonwealth Office is present, and we are glad to see him. We do not see him often these days. I am told that his responsibilities include South America, the Outer Hebrides, Heligoland and various other parts of the world. We are pleased to see him, but we wonder why the Lord Privy Seal, the Financial Secretary or the Chief Secretary to the Treasury are not to reply to the debate. The Chief Secretary seems to indicate that he does not wish to reply to the debate. He is making that quite clear. In that case I think that the Financial Secretary should contain himself. He could very well have replied to the debate if he had wished to do so.
In accepting the agreement the Government have given away their main negotiating weapon, because they have accepted—for the first time by any Government since we entered the Community—the basic principles of the CAP. That is clear from paragraph 7 of the official communiqué. It says
"The examination."—
—that is, the 1981–82 examination—
"shall concern the development of Community policies without calling into question the common financial responsibility for these policies which are financed from the Community's own resources."
—that is accepting the "own resources" system of financing:
"Nor the basic principles of the Common Agricultural Policy."
That is accepting the basic principles of the CAP. That is in the text of the communiqué and I am glad to see that the Euro-fanatics on the Government Benches agree with that. Obviously they are very pleased. It is in the text, it is in the
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agreement, and that is what the Government have done. The Government will not be able to challenge the policy that is causing most of the problems—the common agriculture policy.
I remind Government Members of the principles of the CAP. A common market in agricultural products is not achieved by the efficient use of resources. It is achieved by an artificially administered price. That price is fixed not on the basis of efficiency but on the basis of bargaining between countries.
Mr. Gummer: The principles were quoted in the debate when the right hon. Gentleman was present. Instead of inventing principles of his own and objecting to them, he should refer to the real principles. It is easy to set up one's own Aunt Sally and bash it down. The right hon. Gentleman should stick to the facts.
Mr. Davies: The hon. Gentleman confuses principles with objectives, as he confuses so many other issues relating to Europe. The principles are clear. They are based on an administered price. The income from that administered price does not go to poor farmers or poor regions according to need; it is paid on the basis of production. That is why France, with 30 per cent. of its people employed in agriculture receives a large sum of money from the CAP and we receive nothing.
Mr. Gummer: Will the right hon. Gentleman give way?
Mr. Davies: No, not again.
Mr. Dennis Skinner: Sit down.
Mr. Davies: We are paid little because we are a non-agricultural country. If hon. Members do not agree, I quote the French Prime Minister, who, a few days after the Brussels meeting, said:
"We have a common agricultural policy which was designed for producer countries, for countries with a farming population."
He is right. Britain long since gave up major agricultural activity. That is the basis of the CAP. That is why it is of no benefit to us and why the Government have given up their main negotiating card.
The Government believe that next year they will be successful. The CAP will remain intact. There will be no changes in it. There will be no reduction in the

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amount of money spent on it. All that will happen is that the VAT ceiling will be increased from 1 per cent. to 1½ per cent. At the end of the day the total proportion of the amount spent on agriculture might be less, but the budget will be enlarged.
Mr. Keith Wickenden: When did the Labour Party first notice the problems that would arise from the budget deficit? What steps did its members take, in government, to do anything about it?
Mr. Davies: We noticed that in the debates in 1972. The hon. Gentleman was not in the House, but if he looks up the reports he will see that the then Chancellor of the Exchequer moved a guillotine motion and the House was given half an hour to debate the CAP.
In the Financial Times last Friday appeared an article by Mr. Malcolm Rutherford on the 1981 negotiations. The article is interesting, because it is based on background briefings. I do not know whether the Treasury had anything to do with it. There seems to be some connection between the Foreign Office and the Ministry of Agriculture, Fisheries and Food, and I suspect that the Treasury has been left out. The article no doubt owes something to briefings from the Foregn Office and the Ministry of Agriculture, Fisheries and Food. He writes, on the subject of the negotiations in 1981–82
"Sir Ian Gilmour thinks that the possibility of going above 1 per cent"—
that is, of VAT—
"will be a lever in the negotiations."—
a classic Foreign Office remark. It goes on:
"Mr. Walker is more inclined to the view that the lever will have to be used. There is probably no other way of reducing the proportion of Community resources going to agriculture."
So, ultimately, all that will arise from the renegotiation is that the CAP will remain, the surpluses will build up, money will still be spent, the butter will still be sold to the Russians, the VAT payment and the Common Market budget will increase, and this country will be no better off.
The agreement that we are being asked to endorse—although I do not suppose that it matters whether we endorse it or
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not—is a typically wet Foreign Office compromise. It is no wonder that the Prime Minister did not have the courage to come to the Dispatch Box to make the statement after the Brussels meeting. It was no coincidence that she sent the Lord Privy Seal to make the statement. He has not been here in the debate, but I understand that he is the leader of the wets in the Cabinet. On this issue, however, is not the Prime Minister, for all her bluster and for all her talk, as wet as the rest of them?
The agreement does nothing to resolve the fundamental conflict between the structure of the Community budget and the interests of this country. It merely enmeshes us still deeper in arrangements that are of little benefit to this country and will make it more difficult, if not impossible, to obtain a fair and just solution in 1981–82. This agreement and the budgetary problem will not go away, and at the end of the day this House will seek to take back the unencumbered power that it once had to decide these matters in the interests of the British people.
10.57 pm
The Minister of State, Foreign and Commonwealth Office (Mr. Nicholas Ridley): I do not know which was worse—the hon. Member for Newham, South (Mr. Spearing) saying that he thought that I was a Treasury Minister or the right hon. Member for Llanelli (Mr. Davies) saying that he wished that I were one. The right hon. Gentleman made a strange speech, with many inaccuracies, which even a wet Foreign Office Minister like myself will be able to point out to him as I go over the ground of this most interesting debate. Many points have been raised and many questions asked. I shall do my best to answer as many as possible, but there will not be time to answer every one.
I start with the motion and the Opposition amendment. I have a number of quarrels with the amendment. It refers copiously to the resolutions of 16 July and 22 November last year, but it does not refer to the resolution of 24 March this year, which overtook the previous resolutions. The two parts of that resolution have been met, in that the budget settlement achieved
"a substantial, immediate and lasting reduction"

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in our budget contribution and that a
"commitment…to long-term restructuring of the Budget"—[Official Report, 24 March 1980; Vol. 980, c. 1135.]
and thus the common agricultural policy was entered into by the Community.
Those are the conditions under which the Government were negotiating on the mandate from the House of 24 March, and those were the conditions achieved in the negotiations.
The Opposition amendment says that the settlement of 30 May made concessions on sheepmeat and fisheries. I want to discuss those two statements first, because neither of them is true. Hon. Members have raised many points about them which I can answer.
To say that we made concessions on sheepmeat is a little far from the truth. A variable premiums system was introduced for United Kingdom producers, which has the effect of bringing the price paid to United Kingdom producers of sheepmeat well above EEC prices but leaving United Kingdom prices to consumers well below them. Contrary to what the hon. Member for Swansea, East (Mr. Anderson) suggested, the price of sheepmeat will remain lower as a result of the settlement, whereas the United Kingdom producers will get an increase of 17 per cent., as at present figured, in their return. The right hon. Member for Battersea, North (Mr. Jay) did not understand how that would prevent the taking of sheepmeat into intervention store in France. If the price in Britain is higher than the intervention price, the trade will cease. That is his answer.
The right hon. Gentleman also raised the question of New Zealand. That point is still to be negotiated. The New Zealanders have every opportunity to come to an agreement with the Common Market. As those negotiations have not yet been concluded, it is not possible to say what the result will be. The Common Market is prepared to negotiate in full good faith with New Zealand.
Mr. Jay: Can the right hon. Gentleman assure the House that the British Government will not agree to the further 20 per cent. reduction in New Zealand exports of lamb, which the Commission is apparently suggesting?
Mr. Ridley: I do not like to trespass on negotiations that are about to start, but I assure the right hon. Gentleman that the matter requires the consent of the New Zealanders, and they can look after their own interests perhaps even better than we can.
There were no concessions on fisheries. It is extraordinary how the mention in the amendment that we made concessions on fisheries returns over and over again in the speeches of hon. Gentlemen. The only concession that was made, if it was a concession, was that we would do our best to try to come to an agreement on a common fisheries policy by the end of the year.
Mr. Buchan: The British Government have to.
Mr. Ridley: No. We shall do our best. We undertook to work for agreement on a revised common fisheries policy by the end of the year. We shall stick to trying to do that. We want an early solution. No direct link with the arrangements concerning our budget contribution was made at any time, and the fisheries question was left to be settled on its merits.
The hon. Member for Kingston-upon-Hull, West (Mr. Johnson) and my hon. Friends the Members for Banff (Mr. Myles), Haltemprice (Mr. Wall) and Aberdeenshire, East (Mr. McQuarrie) appear to want to see a fisheries policy agreed with our partners in Europe. However, some hon. Members did not want to see a fisheries agreement concluded. The Government do want to conclude the agreement, and I believe that in that we have the support of the majority of the House. It was no great sacrifice to use our best endeavours to try to get that agreement concluded by the end of May—by the end of the year.
Mr. Straw: Is it by the end of May or by the end of the year?
Mr. Ridley: By the end of the year. My hon. Friend the Member for Haltemprice asked about low-priced imports. As my hon. Friend suggests, there is provision in article 27 of the current fish marketing regulations for reference prices lo be fixed for imports from outside the Community. These have recently been raised for the most important species, the increases ranging from 6 per

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cent. to 25 per cent. There is also provision for the prohibition of imports that enter the country at prices below the reference price. There is currently no evidence of any serious breach of these regulations.
The Government recognise the serious concern in all parts of the House about the fishing industry. My right hon. Friend the Minister of Agriculture, Fisheries and Food is having very full talks with the industry tomorrow. I would only say to all those hon. Members who have raised this question that it is for him to see what he can do to add to what the Government have done in aiding the industry earlier this year with £3 million. I am sure that he will do the best he can in the difficult period that lies ahead for the industry.
My hon. Friend the Minister of State, Ministry of Agriculture, Fisheries and Food has been listening to the debate and has heard what hon. Members have said. I am sure that it would be right to pursue these fishery questions with him and with my right hon. Friend on another occasion.
The third thing that the amendment talks about is
"damaging increases in food prices".
I should like to correct the hon. Member for Renfrewshire, West (Mr. Buchan), who was wrong about sugar prices. He might like to know that the world market price of sugar is £70 to £80 per tonne above the European price at the moment. He said that it was the other way round, and he is wrong. [Interruption.] I cannot say what it will be next week.
There was a considerable interest in the question of the increase of 5 per cent., which is the increase in the weighted average price of food target prices and intervention prices in Europe.
The first point that did not appear to emerge at all from the debate was that these are increases in money prices and not increases in real prices. Regrettably, there has been a rise in inflation in this country to 21·9 per cent. in the past year. In those circumstances, an increase of only 5 per cent. in the reward of the agriculture industry is not really very high. I do not know whether there is any other industry which in the last year has managed to
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cope with a 21·9 per cent. increase in prices with a 5 per cent. increase in its reward.
Mr. Leighton: Is the hon. Gentleman aware that the Minister of Agriculture, repeatedly from that Dispatch Box, despite the things that the hon. Gentleman is mentioning, said that he would not agree to any price increase, regardless of inflation, for goods in structural surplus, and that he misled this House?
Mr. Ridley: I shall come to that, if the hon. Gentleman will allow me to deal with it in the sequence of what I have to say.
The farmers are not overjoyed by the increase in food prices. When I have put the figures to the House I think that hon. Members will get them in prospective. The effect of this increase on the food price index will be 0·7 per cent., and the effect on the retail price increase will be 0·15 per cent. Indeed, in the last eight years, food prices have risen by 200 per cent., of which the common agricultural policy alone has been the cause of 8 per cent. to 10 per cent.
Opposition Members may not entirely understand the way in which this works. [Interruption.] They do not understand everything. Of every 100p that the housewife spends in the shops, 50p goes to British or foreign farmers and Common Market farmers, 20p goes to manufacturers, 20p goes to retailers, and 10p goes to wholesalers. Thus, the effect of inflation upon distribution, processing and relief systems is far more serious than the increase of 5 per cent. in food prices. Taking a 22 per cent. inflation rate on United Kingdom industrial costs, and a 5 per cent. increase in food prices, that gives a 14 per cent. increase in the price of food. That is exactly what is happening at the moment—a 14 per cent. increase in food prices as against a 22 per cent. increase in all other items. That shows that the effect of the price rise negotiations by my right hon. Friend upon United Kingdom costs has been small. The right hon. Member for Llanelli said that food prices had increased by £200 million, but he did not quote the full figures. The total food bill of the nation increased from £26·76 billion to £26·96 billion—not quite what he intended to convey by his remarks.
Mr. Russell Johnston: I cannot remember whether the Minister was in the Chamber when his hon. Friend the Member for

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Holland with Boston (Mr. Body)—a well-known opponent of the Community—alleged that the CAP was directly responsible for £3 extra per week on the food bill of every housewife. Perhaps the Minister will take this opportunity to correct that.
Mr. Ridley: I heard my hon. Friend the Member for Holland with Boston (Mr. Body), but unfortunately my hon. Friend is not here to hear me. I think that he will be keen to read what I have said. I turn to the point raised by the hon. Member for Newham, North-East (Mr. Leighton). I shall quote the right hon. Member for Cardiff, South-East (Mr. Callaghan), the Leader of the Opposition—
Mr. Leighton: No, I want the Minister to quote the Minister of Agriculture, Fisheries and Food.
Mr. Ridley: When we debated the outcome of the summit in Luxembourg, the Leader of the Opposition asked whether the Prime Minister was aware that our trump card in the budget was a price freeze. Of course, he was right. However, if he had been at the summit he would still have had the trump card in his pocket long after the game had finished. We used that card. Anybody who knows anything about the negotiations will know that it was the use of the trump card that resulted in such a favourable solution to the problem—
Mr. Leighton: I do not think that the Minister understands the matter. The case made by the Minister of Agriculture, Fisheries and Food was that if, during a time of inflation, we kept a freeze on the price of goods in structural surplus, eventually the real price would go down, market forces would make their play, and the surpluses would be eliminated. The Minister repeatedly promised us from the Dispatch Box that he would do that.
Mr. Ridley: I agree that food prices were linked to the budget contribution. I also agree that the settlement on the food prices issue was not exactly that wished for by the Government, but, as I shall show, we achieved a very good bargain overall.
Mr. Denzil Davies: Will the Minister confirm or deny that next year the Gov-
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ernment will still have the power to veto any price increases in next year's price fixing?
Mr. Ridley: Of course they will have that power. The Government can play what cards they choose—and so can any other member of the Community—in the years to come. No one is bound in years to come, other than by what appears in the budget and the communiqués. We are perfectly able to do what we like over food prices next year.
I was asked by many Opposition Members—the hon. Member for Birmingham, Erdington (Mr. Silverman) in particular, as well as the hon. Member for Newham, North-East, the hon. Member for Swansea, East, and my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd)—to give a much more careful explanation of the settlement that was reached. If the House will bear with me I shall certainly do that, but it is full of figures and a little complicated. [Interruption.] I cannot get it through continuous shouting. A break in the shouting would help to get some of the figures across.
Our net budget deficit with the Community was £369 million in 1977; £804 million in 1978; and £959 million in 1979, making in those three years a total of £2,132 million. After the settlement, our net budget contribution in 1980 is likely to be £370 million; in 1981, £440 million; and in 1982—the figure is very much a guess—£500 million. That is the best guess that I can make, thus making, for those three years, a total of £1,310 million. The saving for 1980—the refund that we have achieved—is £710 million; £860 million for 1981; and, on the same guess, about £1 billion for 1982. Therefore, instead of losing £2·1 billion in the last three years of the previous Government we shall have a net contribution of only £1·3 billion, with £2·5 billion saved.
I should like to explain how the refund is made. For this purpose I take the year 1980 in order to give the House the full figures. These figures will be in million European units of accounts, and not in million pounds. [Hon. Members: "Ah".] Well, hon. Members asked for these figures and I am trying to give them. They must not complain if it is a little complicated.

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Our net contribution was to be 1,784 MEUAs, but the refund will be about 1,175 MEUAs, leaving us 609 MEUAs. Of the 1,175 MEUAs, which is our refund, 500 million comes in the form of a cash refund and 675 million comes under section 235 in the form of—
Mr. Frank Dobson: Green Shield stamps.
Mr. Ridley: —payments towards projects. Of that 500 million refund, 75 per cent. will be paid by 1 January and 25 per cent. will be paid in June of next year. That is well in advance of the agricultural price fixing, so the two are unlikely to coincide.
Payments under the section 235 item cannot be held up, because it is written into the budget for next year that they shall be paid. The Commission merely has to consult the Regional Policy Committee but not necessarily take its instructions. There is no power to delay the payment of those sums. Once they are agreed and the necessary checking has been done, they become due.
Mr. Denzil Davies: Will the hon. Gentleman give way.
Mr. Ridley: No, I wish to finish my point first. The House has become a little muddled on the question of making payments in advance of the sums being due. In those cases, payments in advance of sums that are due, which were not negotiated as a possibility under the 1975 renegotiation of the right hon. Gentleman's Government, would be made only if a qualified majority did not object.
Mr. Davies: Is the Minister telling the House that it is not necessary for those payments to be agreed by the Budget Council and for the heading for the payments to be included in the budget? If that is so, there must be a qualified majority in the Council before the entry is made in the budget. Is the Minister saying that that is not the case?
Mr. Ridley: It is obligatory expenditure. The Commission has power to make the payments. It does not have power to make the payments in advance of the sums being due unless there is a qualified majority in favour of so doing.
I commend this settlement to the House. As my hon. Friend the Member
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for Harrow, East (Mr. Dykes) said, the negotiation has been a great success.
Mr. D. N. Campbell-Savours: Will the hon. Gentleman give way?
Mr. Ridley: I have given way many times. I do not have very much time in which to finish my speech.
The House can welcome the renegotiation of the budget contribution. We must realize—
Mr. Campbell-Savours rose—
Mr. Ridley: We must realise that our partners have made considerable concessions in agreeing to these very big changes in our contribution. As my hon. Friends the Members for Lancaster (Mrs. Kellett-Bowman) and Eye (Mr. Gummer) said, we should not be so churlish as to fail to pay tribute to the way in which they have been prepared to negotiate seriously to find agreement on this extremely difficult problem. As my hon. Friend also said, there has been a profound change in the attitude of our partners in Europe, in that by making them pay the full share of the cost of the CAP that is their due, they have accepted that there is a greater need for reform than they seemed to feel before the negotiation. I do not think that it will be difficult for the House to be persuaded by a quote from the German Cabinet statement of 5 June on the question of renegotiating the budget and the CAP—
"The Federal Government emphatically agrees with the necessity expressed in the European Community decision to correct existing imbalances in the budget of the Community by structural changes. It underlines in this connection the necessity that the European Commission should in the suggestions which have been put forward by 1 June 1981 provide effective means or, inter alia, the elimination of agricultural surpluses of the European Community. Other changes in the Community's expenditure structure should be made in good time so that they can become effective from 1982 at the latest."
There is an example of the sort of sweeping, thorough review of the principles of the budget and of the farm policy that the German Government envisage. Even the French have realised that there must be changes, although they are, perhaps, more cautious in their approach to this problem than are the Germans.

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There was much debate today on what were and were not the principles of the common agricultural policy in relation to farming. I think that I can clear the matter up when I say that the only mention of rules relating to agriculture in the Treaty of Rome is in article 39. I do not know whether they are called the objectives, the principles, or what, but they are the ones quoted by my right hon. Friend the Lord Privy Seal in the recent debate. Any other principles that there might be have grown up either nationally or within the CAP and are not principles that are enshrined in the Treaty of Rome.
We have achieved the possibility of getting a great deal more of what we want in the negotiations that will take place on the Commission's proposals. The Commission's proposals will be available by June 1981. If we cannot get agreement on a new system both for the budget and the CAP we are none the less covered by the agreement negotiated by my right hon. Friends in Brussels for the year 1982.
Mr. Spearing: One year.
Mr. Ridley: But it is almost certain that there will have to be agreement. The agreement of 30 May states:
"For 1982, the Community is pledged to resolve the problem by means of structural changes…Taking account of the situations and interest of all member states, this examination will aim to prevent the recurrence of unacceptable situations for any of them."
If the review is not complete by 1982, the Community has undertaken to make arrangements for that year along the lines of those made for 1980–81.
Mr. Campbell-Savours: Will the hon. Gentleman give way?
Mr. Ridley: I do not know—[Interruption.]
Mr. Campbell-Savours: Why does not the hon. Gentleman answer the question?
Mr. Ridley: I do not know what the Labour Party will do about the muddle that it is in. Some Labour Members want us to remain in the Common Market; others, such as the right hon. Member for Llanelli, want us to have another go at renegotiation, and others, such as the right hon. Member for Deptford (Mr. Silkin), want to leave altogether.
What about the doctrine of collective responsibility on the Opposition Front Bench? It was never a very strong tradition in the Labour Party, but it is even more weakened now. The right hon. Gentleman had the cheek to say, in the paper:
"There are very few issues on which the Labour Party is more united than on its policy in relation to the Common Market."
I take the words of my hon. Friend the Member for Northampton, North (Mr. Marlow), that Labour is in a state of transition in its policy towards the Common Market.
We, on the other hand, are going to build on the advantages—[HON. MEMBERS: "Oh."] We are going to forge ahead with strengthening and improving the Community in Europe. I ask the House to reject the amendment and to pass the original motion.
Question put, That the amendment be made:—
The House divided: Ayes 193, Noes 258.

Division No. 385

AYES

[11.30 pm

Abse, Leo

Carmichael, Neil

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

Allaun, Frank

Carter-Jones, Lewis

Dean, Joseph (Leeds West)

Anderson, Donald

Cartwright, John

Dempsey, James

Archer, Rt Hon Peter

Clark, Dr David (South Shields)

Dixon, Donald

Ashley, Rt Hon Jack

Cocks, Rt Hon Michael (Bristol S)

Dobson, Frank

Ashton, Joe

Coleman, Donald

Dormand, Jack

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

Concannon, Rt Hon J. D.

Douglas-Mann, Bruce

Barnett, Guy (Greenwich)

Cook, Robin F.

Dubs, Alfred

Barnett, Rt Hon Joel (Heywood)

Cowans, Harry

Dunlop, John

Benn, Rt Hon Anthony Wedgwood

Craigen, J. M. (Glasgow, Maryhill)

Dunn, James A. (Liverpool, Kirkdale)

Bennett, Andrew (Stockport N)

Crowther, J. S.

Dunnett, Jack

Bidwell, Sydney

Cryer, Bob

Dunwoody, Mrs Gwyneth

Booth, Rt Hon Albert

Cunliffe, Lawrence

Eadie, Alex

Bray, Dr Joremy

Cunningham, George (Islington S)

Eastham, Ken

Buchan, Norman

Cunningham, Dr John (Whitehaven)

Ellis, Raymond (NE Derbyshire)

Callaghan, Rt Hon J. (Cardiff SE)

Dalyell, Tam

English, Michael

Callaghan, Jim (Middleton & P)

Davidson, Arthur

Evans, Ioan (Aberdare)

Campbell-Savours, Dale

Davies, Rt Hon Denzil (Llanelli)

Evans, John (Newton)

Canavan, Dennis

Davies, Ifor (Gower)

Ewing, Harry

Cant, R. B.

Davis, Clinton (Hackney Central)

Field, Frank

Flannery, Martin

McCartney, Hugh

Ross, Ernest (Dundee West)

Fletcher, Ted (Darlington)

McCusker, H.

Ross, Wm. (Londonderry)

Foot, Rt Hon Michael

McDonald, Dr Oonagh

Rowlands, Ted

Forrester, John

McElhone, Frank

Sever, John

Foster, Derek

McKay, Allen (Penistone)

Sheerman, Barry

Fraser, John (Lambeth, Norwood)

McKelvey, William

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

Freeson, Rt Hon Reginald

MacKenzie, Rt Hon Gregor

Shore, Rt Hon Peter (Step and Pop)

Garrett, John (Norwich S)

McNally, Thomas

Short, Mrs Renée

George, Bruce

McTaggart, Robert

Silkin, Rt Hon John (Deptford)

Gilbert, Rt Hon Dr John

McWilliam, John

Silkin, Rt Hon S. C. (Dulwich)

Graham, Ted

Marks, Kenneth

Silverman, Julius

Grant, George (Morpeth)

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

Skinner, Dennis

Grant, John (Islington C)

Marshall, Jim (Leicester South)

Soley, Clive

Hamilton, James (Bothwell)

Maynard, Miss Joan

Spearing, Nigel

Hamilton, W. W. (Central Fife)

Meacher, Michael

Spriggs, Leslie

Harrison, Rt Hon Walter

Mellish, Rt Hon Robert

Stewart, Rt Hon Donald (W Isles)

Hart, Rt Hon Dame Judith

Mikardo, Ian

Stott, Roger

Hattersley, Rt Hon Roy

Millan, Rt Hon Bruce

Strang, Gavin

Haynes, Frank

Mitchell, Austin (Grimsby)

Straw, Jack

Healey, Rt Hon Denis

Molyneaux, James

Summerskill, Hon Dr Shirley

Heffer, Eric S.

Morris, Rt Hon Alfred (Wythenshawe)

Taylor, Mrs Ann (Bolton West)

Hogg, Norman (E Dunbartonshire)

Morris, Rt Hon Charles (Openshaw)

Thomas, Dr Roger (Carmarthen)

Homewood, William

Morris, Rt Hon John (Aberavon)

Thorne, Stan (Preston South)

Horam, John

Moyle, Rt Hon Roland

Tilley, John

Hughes, Mark (Durham)

Newens, Stanley

Torney, Tom

Hughes, Robert (Aberdeen North)

Oakes, Rt Hon Gordon

Varley, Rt Hon Eric G.

Hughes, Roy (Newport)

O'Halloran, Michael

Walker, Rt Hon Harold (Doncaster)

Janner, Hon Greville

O'Neill, Martin

Watkins, David

Jay, Rt Hon Douglas

Orme, Rt Hon Stanley

Weetch, Ken

John, Brynmor

Paisley, Rev Ian

Wellbeloved, James

Johnson, James (Hull West)

Park, George

Welsh, Michael

Jones, Rt Hon Alec (Rhondda)

Parry, Robert

White, Frank R. (Bury & Radcliffe)

Jones, Barry (East Flint)

Pendry, Tom

Whitehead, Phillip

Kaufman, Rt Hon Gerald

Powell, Rt Hon J. Enoch (S Down)

Whitlock, William

Kilroy-Silk, Robert

Powell, Raymond (Ogmore)

Willey, Rt Hon Frederick

Kinnock, Neil

Prescott, John

Wilson, William (Coventry SE)

Lamborn, Harry

Price, Christopher (Lewisham West)

Winnick, David

Lamond, James

Race, Reg

Woodall, Alec

Leadbitter, Ted

Radice, Giles

Woolmer, Kenneth

Leighton, Ronald

Rees, Rt Hon Merlyn (Leeds South)

Wright, Sheila

Lestor, Miss Joan (Eton & Slough)

Richardson, Jo

Young, David (Bolton East)

Lewis, Arthur (Newham North West)

Roberts, Ernest (Hackney North)

Lewis, Ron (Carlisle)

Roberts, Gwilym (Cannock)

TELLERS FOR THE AYES:

Litherland, Robert

Robertson, George

Mr. James Tinn and Mr. George Morton.

Lofthouse, Geoffrey

Robinson, Geoffrey (Coventry NW)

Lyon, Alexander (York)

Rooker, J. W.

NOES

Adley, Robert

Butcher, John

Fenner, Mrs Peggy

Aitken, Jonathan

Cadbury, Jocelyn

Finsberg, Geoffrey

Alexander, Richard

Carlisle, John (Luton West)

Fletcher, Alexander (Edinburgh N)

Alton, David

Carlisle, Kenneth (Lincoln)

Fletcher-Cooke, Charles

Ancram, Michael

Carlisle, Rt Hon Mark (Runcorn)

Fookes, Miss Janet

Atkins, Robert (Preston North)

Chalker, Mrs Lynda

Forman, Nigel

Baker, Nicholas (North Dorset)

Channon, Paul

Fowler, Rt Hon Norman

Beith, A. J.

Chapman, Sydney

Fox, Marcus

Bell, Sir Ronald

Churchill, W. S.

Fraser, Rt Hon H. (Stafford & St)

Bendall, Vivian

Clark, Hon Alan (Plymouth, Sutton)

Fry, Peter

Benyon, Thomas (Abingdon)

Clark, Sir William (Croydon South)

Gardiner, George (Reigate)

Benyon, W. (Buckingham)

Clarke, Kenneth (Rushcliffe)

Garel-Jones, Tristan

Berry, Hon Anthony

Clegg, Sir Walter

Glyn, Dr Alan

Best, Keith

Cockeram, Eric

Goodhew, Victor

Bevan, David Gilroy

Colvin, Michael

Goodlad, Alastair

Biffen, Rt Hon John

Cope, John

Gorst, John

Biggs-Davison, John

Costain, A. P.

Gow, Ian

Blackburn, John

Cranborne, Viscount

Gower, Sir Raymond

Blaker, Peter

Critchley, Julian

Griffiths, Eldon (Bury St Edmunds)

Bonsor, Sir Nicholas

Crouch, David

Griffiths, Peter (Portsmouth N)

Boscawen, Hon Robert

Dean, Paul (North Somerset)

Grist, Ian

Bottomley, Peter (Woolwich West)

Dickens, Geoffrey

Grylls, Michael

Bowden, Andrew

Dorrell, Stephen

Gummer, John Selwyn

Boyson, Dr Rhodes

Douglas-Hamilton, Lord James

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

Braine, Sir Bernard

Dover, Denshore

Hamilton, Michael (Salisbury)

Brinton, Tim

du Cann, Rt Hon Edward

Hampson, Dr Keith

Brittan, Leon

Dunn, Robert (Dartford)

Hannam, John

Brooke, Hon Peter

Durant, Tony

Haselhurst, Alan

Brotherton, Michael

Dykes, Hugh

Hastings, Stephen

Brown, Michael (Brigg & Sc'thorpe)

Edwards, Rt Hon N. (Pembroke)

Havers, Rt Hon Sir Michael

Browne, John (Winchester)

Eggar, Timothy

Hawksley, Warren

Bruce-Gardyne, John

Elliott, Sir William

Heddle, John

Bryan, Sir Paul

Emery, Peter

Henderson, Barry

Buck, Antony

Eyre, Reginald

Heseltine, Rt Hon Michael

Budgen, Nick

Fairgrieve, Russell

Hicks, Robert

Bulmer, Esmond

Faith, Mrs Sheila

Hogg, Hon Douglas (Grantham)

1696

1697

Holland, Philip (Carlton)

Montgomery, Fergus

Spicer, Jim (West Dorset)

Hooson, Tom

Morgan, Geraint

Spicer, Michael (S Worcestershire)

Hordern, Peter

Morris, Michael (Northampton, Sth)

Sproat, Iain

Howe, Rt Hon Sir Geoffrey

Morrison, Hon Charles (Devizes)

Squire, Robin

Howell, Rt Hon David (Guildford)

Morrison, Hon Peter (City of Chester)

Stanbrook, Ivor

Howell, Ralph (North Norfolk)

Mudd, David

Stanley, John

Howells, Geraint

Murphy, Christopher

Steel, Rt Hon David

Hunt, David (Wirral)

Myles, David

Steen, Anthony

Hunt, John (Ravensbourne)

Neale, Gerrard

Stevens, Martin

Hurd, Hon Douglas

Needham, Richard

Stewart, John (East Renfrewshire)

Johnston, Russell (Inverness)

Nelson, Anthony

Stokes, John

Jopling, Rt Hon Michael

Neubert, Michael

Stradling Thomas, J.

Kellett-Bowman, Mrs Elaine

Newton, Tony

Tapsell, Peter

King, Rt Hon Tom

Normanton, Tom

Taylor, Robert (Croydon NW)

Kitson, Sir Timothy

Onslow, Cranley

Taylor, Teddy (Southend East)

Knox, David

Page, Rt Hon Sir R. Graham

Tebbit, Norman

Lamont, Norman

Page, Richard (SW Hertfordshire)

Temple-Morris, Peter

Lang, Ian

Parkinson, Cecil

Thatcher, Rt Hon Mrs Margaret

Langford-Holt, Sir John

Parris, Matthew

Thomas, Rt Hon Peter (Hendon S)

Latham, Michael

Patten, Christopher (Bath)

Thompson, Donald

Lawrence, Ivan

Patten, John (Oxford)

Thorne, Neil (Ilford South)

Lawson, Nigel

Pattie, Geoffrey

Townend, John (Bridlington)

Lee, John

Pawsey, James

Townsend, Cyril D. (Bexleyheath)

Le Marchant, Spencer

Penhaligon, David

Trippier, David

Lester, Jim (Beeston)

Percival, Sir Ian

Trotter, Neville

Loveridge, John

Peyton, Rt Hon John

van Straubenzee, W. R.

Luce, Richard

Price, David (Eastleigh)

Vaughan, Dr Gerard

Lyell, Nicholas

Prior, Rt Hon James

Viggers, Peter

Macfarlane, Neil

Pym, Rt Hon Francis

Waddington, David

MacKay, John (Argyll)

Raison, Timothy

Wakeham, John

Macmillan, Rt Hon M. (Farnham)

Rathbone, Tim

Waldegrave, Hon William

McNair-Wilson, Michael (Newbury)

Rees, Peter (Dover and Deal)

Walker, Rt Hon Peter (Worcester)

McNair-Wilson, Patrick (New Forest)

Rees-Davies, W. R.

Walker, Bill (Perth & E Perthshire)

McQuarrie, Albert

Renton, Tim

Walker-Smith, Rt Hon Sir Derek

Madel, David

Rhys Williams, Sir Brandon

Wall, Patrick

Major, John

Ridley, Hon Nicholas

Waller, Gary

Marland, Paul

Ridsdale, Julian

Ward, John

Marlow, Tony

Rifkind, Malcolm

Wells, John (Maidstone)

Marten, Neil (Banbury)

Rippon, Rt Hon Geoffrey

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

Mates, Michael

Roberts, Michael (Cardiff NW)

Wheeler, John

Maude, Rt Hon Angus

Roberts, Wyn (Conway)

Whitelaw, Rt Hon William

Mawhinney, Dr Brian

Ross, Stephen (Isle of Wight)

Whitney, Raymond

Maxwell-Hyslop, Robin

Royle, Sir Anthony

Wickenden, Keith

Mayhew, Patrick

Sainsbury, Hon Timothy

Williams, Delwyn (Montgomery)

Mellor, David

Shaw, Michael (Scarborough)

Winterton, Nicholas

Meyer, Sir Anthony

Shelton, William (Streatham)

Wolfson, Mark

Miller, Hal (Bromsgrove & Redditch)

Shepherd, Colin (Hereford)

Young, Sir George (Acton)

Mills, Iain (Meriden)

Shersby, Michael

Mills, Peter (West Devon)

Silvester, Fred

TELLERS FOR THE NOES:

Mitchell, David (Basingstoke)

Sims, Roger

Mr. Carol Mather and Mr. John MacGregor.

Moate, Roger

Speed, Keith

Monro, Hector

Speller, Tony

Question accordingly negatived.
Main Question put and agreed to.
Resolved,
That this House takes note of European Community document COM(80)147 on Convergence and Budgetary Questions, of the conclusions of the Foreign Affairs Council on 29 and 30 May annexed to tthe Explanatory
1698
Memorandum on document 7943/80, of documents 7943/80 and 7944/80 containing draft regulations implementing the agreement recorded in those conclusions, of documents 5437/80 and 7767/80 on the Community Budget for 1980 and 7389/80 on the Common Fisheries Policy; and welcomes the agreement reached at the Foreign Affairs Council on 29 and 30 May for reducing the United Kingdom's net contribution to the Community Budget.

SCHOOLS
11.41 pm
Mrs. Ann Taylor: I beg to move,
That an humble Address be presented to Her Majesty praying that the Education (Publication of School Proposals) (No. 2) Regulations 1980 (S.I., 1980, No. 658), dated 8 May 1980, a copy of which was laid before this House on 21 May, be annulled.
This will be a narrow debate on the implementation of section 13 notices under the Education Act 1944. Those notices deal with the procedures to be used when a school closes. The procedures are particularly important now, because school rolls are falling. As a result more local authorities are closing schools.
I wish to refer to the part of the statutory instrument that deals with nursery education. Earlier this year the House enacted the Education (No. 2) Bill, which made important changes in nursery education. That recent Act alters the procedure for closing a nursery school or class.
We believe that the Secretary of State was right to extend his powers regarding school closures to nursery schools and classes, but we think that he was doing it for exactly the wrong reasons. It has become necessary to amend the 1944 Act with regard to the closure of nursery schools and nursery classes only because of the changes that the Government made earlier this year, by the 1980 Act, removing from local authorities their legal obligations to make some nursery provision in their areas.
We should recall how the issue came up and why we are discussing it tonight. Had it not been for the change in the Act passed earlier this year, nursery education would not be covered by the regulations. It was at a very late stage in the passage of the Act, after over 100 hours of discussion, after the Government had guillotined debate, and after the Committee stage had been completed, that the Government introduced their unreasonable suggestion that local authorities should be freed from their obligation to make nursery provision.
The reason behind the Government's decision was simply that some local authorities were considering closing all their nursery places. It was as a direct result of education authorities such as Oxfordshire wanting to close all their nursery
1700
schools and all their nursery classes and to end all their nursery provision for all their under-fives that we had that change.
Mr. Deputy Speaker (Mr. Bryant God-man Irvine): I hesitate to interrupt the hon. Lady on her birthday, when I would wish to offer her congratulations. [HON. MEMBERS: "Hear, hear."] Nevertheless, I remind the hon. Lady that we are talking about the publicity prescribed by the regulations—and about nothing else.
Mrs. Taylor: Thank you for your kind comments about my anniversary, Mr. Deputy Speaker, as well as for your later ones.
I stress that had the law not been changed nursery education would not come under the regulations. The only reason why we are discussing nursery education is that that is where the major change occurs. We believe that the publicity given to the closure notices and closure proposals has often partly led to local authorities changing their minds. This relates to the specific matter of the way in which local people will know what the proposals are and what influence they can assert on their local authorities.
If the Secretary of State is to implement the new powers that he has taken in the 1980 Act, if he is therefore freeing local authorities from obligation to provide nursery education and is bringing them within the overall procedures on school closures, so that notices must be posted—all the procedure that normally appertains only to primary and secondary schools—we want from him an idea of how he will interpret whether local authorities have fulfilled their obligations. Before the right hon. and learned Gentleman can decide whether it is wise for a nursery school or a nursery class to be closed, or whether he is satisfied that the procedures have been adopted, it is very important that he shall have availed him-himself of opportunities to listen carefully to local opinion.
Many people will be concerned when they are faced with more nursery closures and with more nursery places disappearing in many areas. We require from the Secretary of State a clear indication of what his overall policy on nursery education will be. The right hon. and learned Gentleman is nodding his head in agree-

1701
ment. Clearly, he thinks it important that we should know what he thinks about nursery education. Indeed, the Secretary of State has in the past stressed the necessity for as many children as possible to have nursery education. We cannot reconcile what he has said with what he has written into legislation this year. Can he tell us of any place in this country where there is a surplus of nursery provision?
Mr. Deputy Speaker: Order. I am even more reluctant to interrupt the hon. Lady for a second time, but I fear that the Secretary of State cannot tell us that under this motion.
Mrs. Taylor: The Minister will be happy to have been let off that hook. It is a basic question behind the idea of closing nursery schools or any other sort of school.
In future, people will be told that they have an opportunity to protest when it is proposed to close a nursery school, but they will have no guarantee of what notice will be taken of their protests. Under the procedures that existed until the 1980 Bill became law, decisions on whether to close a nursery school or nursery class rested entirely with local authorities. In future, the ultimate decision will rest with the Secretary of State. In deciding how to go about influencing his decisions, parents and others involved will want to know his views on this matter.
Another important point about closures is difficult for those outside the House and the Department of Education to come to terms with. It concerns the discussions that sometimes take place between different departments within a local authority. The statutory instrument specifically relates to school closures and we know that there are often discussions in a local authority, at least in relation to nursery education, not only between parents, teachers and the local education authority but increasingly involving those on the social service side of local authorities.
Does the Secretary of State think that his provisions for consultation go far enough, given the fact that more and more people are saying that responsibility for the under-fives should be shared by local education authorities and local social service departments?
Mr. Nicholas Winterton: I am following the hon. Lady's interesting argument carefully, but will she address herself to the statutory instrument and indicate whether she is in favour of the publication of closures in one local newspaper, of notification being posted in one conspicuous place in the area or, in the case of proposals relating to an existing school, details being published close to the main entrance of that school. Does she support those proposals?
Mrs. Taylor: The hon. Gentleman could not have been listening when I started my speech.
Mr. Nicholas Winterton: The hon. Lady was out of order.
Mrs. Taylor: It would have been strange if I were out of order when I was saying that it was right that the Secretary of State should have the new powers.
I accept that the proposals are necessary. The question which arises is as to why it is thought necessary to include nursery schools and classes in the provision. Before the law was changed earlier in the year, nursery provision was not covered. Because nursery education is no longer obligatory and because the Secretary of State visualises that some local authorities will want to close nursery schools he has taken powers to try—
Mr. Deputy Speaker: Order. Perhaps the hon. Lady will now refer to the instrument.
Mrs. Taylor: I was trying to answer the question and to point out that if the law had not been changed earlier in the year there would have been no provision for the publication of notices relating to nursery schools. We should not have been discussing nursery education this evening had it not been for the change in the law. I am glad that the Minister agrees with me.
In view of what Ministers have said about nursery education in the last 12 months, we should be told whether they believe that nursery education and provision for the under-fives should be a joint responsibility. What provisions are contained in the statutory instrument to ensure that other local authority departments will be consulted? What will result from the consultation? Will the Minister

1703
dispel remaining fears by stating that he will not introduce charges for nursery education by the back door?
Mr. Deputy Speaker: Order. Should that invitation be accepted by the Minister, he will be out of order.
Mrs. Taylor: I hope that the Minister will find some other occasion to make his position clear.
I have stressed the importance of consultation and the new system. That is the basic change proposed by the Government. We do not object to the Secretary of State's taking new powers to provide for consultation and discussion locally of proposals to change the education system in an area. However, powers of this type would not have been necessary if the Minister had not acted in the way that he did earlier in the year. That is why it is important for the Minister to tell us more about how he thinks the new system will work. We should still like to know what led the Minister to include nursery education in the provisions.
11.59 pm
The Under-Secretary of State for Education and Science (Dr. Rhodes Boyson): The speech by the hon. Member for Bolton, West (Mrs. Taylor) was confused. Let me say at the beginning that this debate is something of a return to the splendid hours that we spent in Committee, and on the Report stage. It is fitting that we have returned to the subject on the birthday of the hon. Lady. It is fitting that people should return on their birthday to something that they have thoroughly enjoyed and from which they have gained so much all-round educational knowledge, as we did. I must be fair about that.
However, this is not the final regulation; there are further excitements to come. The hon. Lady must not throw away all her good lines tonight in her efforts to get them in order in relation to this statutory instrument. But even on the hon. Lady's birthday I do not intend to be misled in replying to points that have nothing to do with the regulations.
The debate gives me the chance to point out how excellently we dealt with this Act. Undoubtedly if the country—though most people will be asleep now—knew what we are about to say about the
1704
advantages of this Act, and what this method of closure is, the House would be full even of Labour Members. But one cannot see any signs of high indignation now, despite the splendid leadership given by the hon. Lady.
Section 13 of the 1944 Act established the procedure to be followed when a local education authority or governors of a voluntary school proposed to establish, enlarge or change the character of a school, or where a local education authority proposed to cease to maintain it.
There are two points here. We may find one of them unnecessary now. First, under the 1944 Act the proposal had to go to the Secretary of State. That was right, because the final decision would be made by him. Secondly, there was the question of public consultation. I am delighted that the hon. Lady is moving in the direction of full consultation. I trust that she is also moving towards the concept of full parental choice of school and all the other glories that follow.
I said in Committee that in the Labour manifesto there was no mention of parents at all in relation to education. I therefore hope that there will be an improvement in four years' time. I do not know how disillusioned the Labour Party will be by then, but we hope that it may be united on this measure, which we offer it with all friendship and courtesy this evening.
The second provision of section 13 was for full public notice to be given of proposals, according to regulations laid down by the Secretary of State. I hope that the Opposition spokesmen understand that the regulation that we are replacing was drawn up by a Labour Government in 1968. I know that it is the usual practice of the Opposition to oppose everything that the Government do, and one understands the envy that they must feel, from time to time, of our successes. But we have no envy or bitterness in our hearts this evening, or at any other time.
We looked at the 1968 legislation and decided that there was some good in it and that it was important that we carried it on. That showed the breadth of vision and the quality of temperament that exists among my right hon. and hon. Friends. I think that I should mention that on the hon. Lady's birthday.

1705
However, there is something that I must bring to the attention of the hon. Lady. There is a change here. [Interruption.] There is a lot of unemployment on the Opposition Benches tonight, though it is nice to have some hon. Gentlemen with us on this occasion. Not many of them were here previously, but their consciences were pricked, no doubt. That says a lot for the hon. Members who left the Chamber earlier.
Let us come back to these proposals. We must not be misled as the hon. Lady was misled. We must stick to the issues. The new method is that the proposals will be posted. We shall come on to the various points made by my hon. Friend the Member for Macclesfield (Mr. Winterton), who is a great expert on education. They were for the benefit of the whole House, and I may say that we treasure his interventions.
Once a proposal is posted, that same proposal is sent to the Secretary of State. Let us consider how much clerical work will be saved. Let us think how imaginative that gesture is. Instead of a separate statement going to the Secretary of State, a copy of what is posted goes to him. That shows how keen we are to avoid unnecessary clerical work. That is a most imaginative gesture.
Let me come to the improvements. These are the only changes on the 1968 regulations. First, if there are no objections the Secretary of State does not need to hold an inquiry. Any authority, therefore—even a Labour authority that brought forward such a proposal by mistake—could put a project into operation without having to go through all the procedures, with the waste of clerical staff at the Department—staff who should be dealing with core curriculum and other exciting matters with which we are concerned—that that would involve. That, too, is a most imaginative gesture.
The second improvement arose from our experience of the Labour Government's Bill, which, because of certain glorious events last year, never become an Act. The hon. Lady is concerned about consultation and parental choice of schools. Under Labour's Bill, if a school intake had been cut to a certain number but local people had still wanted to send their children to that school, they could have objected under
1706
a section 13 notice. That was designed to make schools more responsive not just to local authorities, but to parents. We could see that we could use that sort of provision to the advantage of parents. Therefore, we have provided that if there is a deliberate reduction, over a rolling programme, of 20 per cent. on the basic year—last year—in the intake of a primary or secondary school, that will have to be subject to a section 13 notice to enable parents to make known their desire for the school numbers to be maintained because they like what the school is doing.
The third improvement is that where it is proposed to close a nursery school —a matter gently mentioned in passing by the hon. Lady—that could not be proceeded with without the issuing of a section 13 notice. That is a completely new provision. Hitherto, all the nursery schools in the country could have been closed without the Secretary of State's being able to do anything about it.
Mrs. Ann Taylor rose—
Dr. Boyson: I am sorry, but I cannot give way on nursery schools. I shall give way on anything else, but not on that subject. The hon. Lady had more than her say on it, and she must now listen. On parental choice and any other subject I shall give way with alacrity.
The fourth and final improvement is that we are making clear that a local authority must inform parents, on the notice it posts, that they can object. Local authorities have always done that, but it has not been a statutory requirement. They could have put the notice up without spelling out that there was a right of objection.
I am sure that the House will be impressed by the degree of improvements that we have made—
Mr. Ivan Lawrence: Hear, hear.
Dr. Boyson: Even my hon. Friend the Member for Burton (Mr. Lawrence) is impressed.
Mr. Neil Kinnock: In the event of a notice appearing informing parents of the right of objection and the parents seeking to exercise that right, how will the Secretary of State interpret

1707
whether that right has been properly upheld or cursorily acknowledged? I have in mind the example of the immense changes taking place in the borough of Kingston upon Thames, where attempts by parents to object under the previous legislation were described, since they were similar to previous objections to an earlier plan, as being a lot of chat all over again. The consequence was that the Secretary of State returned the proposals to the Royal borough, lock, stock and barrel, with apparently little notice of the objection. We strongly endorse and thoroughly accept the purpose behind what the hon. Gentleman says, but how much reliance can we place on the way in which the Secretary of State will henceforth entertain objections in such cases?
Dr. Boyson: There will be careful consideration of all objections, as there has been in the past. We have had meetings galore, in many of which I have been involved.
My hon. Friend the Member for Macclesfield mentioned publication. There must be a notice in at least one local newspaper, in a conspicuous local place or places, and posted at or near the main entrance of any existing school. If those three conditions are adhered to, people should obtain the information, although other means could be suggested to spread the information more widely—a town crier, for instance.
The previous regulations stated that the information should be published
"in such other manner, if any, as appears to the authority…to be desirable for giving publicity to the notice."
That was not a firm regulation; it was merely a pious hope. This suggestion will therefore not be in the regulations but will be made in a circular to be sent out shortly.
Mrs. Ann Taylor: Has the hon. Gentleman considered that when objections are received by the Secretary of State and he uses his power to modify the scheme but does not completely accept or reject it, it may be a good idea if a similar form of notification is given to that proposed in the modification?
Dr. Boyson: We discussed the matter at length in Committee. I never know what coathanger the Opposition will use to hang the debate on, so I read the debate again in preparation for tonight.
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We said then that those modifications were often based on a falling birth rate, or the fact that buildings could not be completed in time. They were intended not to change the substance of a plan, but to ensure that there was no waste of public expenditure.
We have brought in this legislation to replace the section 13 procedures in the 1944 Act. We have improved the measure. We have cut out unnecessary work and given parents a right to object, as the form of the school is changed by a 20 per cent. reduction over the years. By the debate this evening we can bring to light the excellent work that has been done.
12.13 am
Mr. A. J. Beith: The Minister has properly intervened at the beginning of the debate to set out what is involved in the regulations, but I hope that that will not prevent him from answering any questions that may arise.
I am in favour of the regulations. As the Minister points out, they represent minor but useful improvements in economies in the procedures. The notification of nursery schools is perhaps a reminder that the Secretary of State has rather a good record. He has scored what may in Oxfordshire be regarded as a dazzling own goal over the whole question of nursery schools. He first convinced us all that he was deliberately letting Oxfordshire off the hook by taking away the statutory powers. He then imposed the full panoply of sticking notices on telegraph poles and making reference to himself, which so terrified the Oxfordshire county council that it fled from its initial proposals. At whatever stage the Secretary of State recognised the worth of what he was doing, the end result is something that we cannot complain about.
But as well as bringing nursery education into the procedure of publishing notices and appeals to the Secretary of State, the Education Act 1980 also brought, for the first time, the reduction in the size of a school within the scope of this kind of provision. Under section 15, the very same types of notices will be displayed in respect of reductions in the size of a school, and it is on that aspect that I want to question the Under-Secretary a little further.

1709
I am a little puzzled as to how the regulations seem to be out of phase with each other. When I put a question to the Minister a few weeks ago, I was surprised to find that the substantive regulations about reducing the intake to a school and, indeed, about parental choice will not be implemented with anything like the speed with which the improvements in the regulations will be implemented. The two are closely interrelated. Any parent who found that he ought to have access to this procedure to be able to look at publicly displayed notices about reduction in the size of the school would, on the other hand, be dismayed to discover that the local authority was not obliged to submit that reduction in the size of the school under section 15 to the Secretary of State for another whole year, because those provisions of the Act are not to be brought into effect until the academic year 1981–82.
I give the Under-Secretary a concrete example which has been brought to me and which rather worries me. The Queen's school at Bushey, in Hertfordshire, is a case where the local education authority wants to reduce the intake from an eight-form to a six-form entry, which reduces parental choice and deprives about 60 parents of the opportunity to send children to that school. When these people first contacted me, along with people in other parts of the country, as education spokesman for my party, I indicated to them that I thought they would be able to benefit from the provisions of this legislation and have a statutory procedure under which they could read one of these notices and send off the appropriate complaint to the Minister. But I found, when the Under-Secretary answered me, that the provisions which affect restrictions on admission will not come into force until 1 August 1980 and will not affect the restrictions on admission before the school year 1981–82.
The worrying thing is that local authorities, anxious at these procedures, can rush in in the next month or so and effect all the reductions in school sizes for which at any later date they would have to go through all this procedure. A number of authorities—Hertfordshire among them—may try to slip in quickly before the full effect of the Act is felt, and may be able to achieve reductions in the size of schools, limit parental
1710
choice and deny the effective use of the procedure to parents, simply by getting in quickly before the regulations have effect.
That is why I am puzzled that tonight we have this bit of the regulations which includes section 15(3), but that the other part, the relevant part, will not be in force for some time. This happens at roughly the same time as we have had wider indications by the Secretary of State that a lot of these issues that will widen parental choice will not be brought into force until at least 1981–82 because of the practical complications of setting up the procedures involved.
Mr. Nicholas Winterton: Has the hon. Gentleman any firm evidence to indicate that the Hertfordshire county council, for instance, or any of the other bodies which have made representations to him, intend to make the change this year, which means that they will not then be affected by the legislation we are now debating?
Mr. Beith: Yes, indeed. There is quite clear evidence that Hertfordshire intends to proceed on this basis, has already gone a long way with the proposal, and will be able to avoid the effect of the legislation by this means.
I am genuinely worried that, having set out a machinery, the Government will, by creating an interval of time, encourage local authorities to race ahead and bring into effect things that they could not do without making available the procedures of consultation.
One of the worries about bringing Acts into force stage by stage is that it creates a vacuum of this kind in which local authorities are not subject to the limitations that the Government intend. One gets the impresion that the limitations and problems of all these things, which stem originally from the parents' charter idea, are dawning a bit late on the Government.
I was very intrigued to read a leading article in the Daily Express yesterday or the day before. Perhaps I am getting cynical, but my thought was that somebody not a million miles from the Under-Secretary must have telephoned the Daily Express and said "We are on a bit of a hook here, could you let us off it?", because I was very surprised

1711
to find this sort of sentiment expressed. The Daily Express said:
"Ideally, parents would have total freedom to choose their children's schools. But, in reality, it is impossible to put such a worthy principle into practice.
That is why it comes as no surprise that the Parents Charter' provisions of the new Education Act, which only go as far as allowing parents to express their preference for a school, cannot be implemented before 1982.
The immense bureaucratic problems, involving as they will the dispensing of information about every school and the setting up of an appeals procedure in every area, are bound to be extremely costly—at a time when local authorities are being asked to cut their spending dramatically."
It goes on to question whether the whole exercise is still worth while. I am worried by that, and by the suggestion that the principles that were widely championed, and which underlie the changes of which this order is a small part, are now being seen as too complicated, too bureaucratic and too costly.
In Committee we pointed out some of the practical difficulties, and some of the areas where many hon. Members thought expectations had been aroused beyond what could reasonably be fulfilled. I am rather concerned that now that the Department and the Ministers have to get down to the detail they are suddenly finding that they cannot give to parents the full range of choice and opportunity that was promised to them in the parents' charter. The gap in the phasing of the different parts of the Education Act 1980 seems to be the beginning of the signs that parents will now be told discreetly, with the assistance of the Daily Express, "We are sorry that we led you to expect far too much. It will not be the promised land after all". I hope that the Minister will tell us a little more about that.
12.22 pm
Mr. Gerry Neale: Through you, Mr. Deputy Speaker, I congratulate the hon. Member for Bolton, West (Mrs. Taylor) on her birthday. I hope that I can expect half the tolerance from you on the basis that my birthday was 10 days ago.
My right hon. and learned Friend the Secretary of State is well aware of my interest in the affairs of schools when they involve their alteration or closure. I am especially interested in the involvement
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of the community in the affairs of local schools. While properly publishing the proposals contained in sections 12 to 16, to which the regulations relate, the matter is of obvious concern to hon. Members, councillors involved in local education authorities, teachers and educationists. But their concern cannot match the concern that must exist for the parents of pupils.
If we read sections 12 to 16 it is rather interesting to see that the word "parents" is not mentioned once. If we look through the amendments tabled by the Opposition selected and referred to in the Committee reports, we see that the word "parents" does not appear. If we look at the regulations, again the word "parents" does not appear. My hon. Friend the Under-Secretary has considerable experience and knowledge of education matters, which I respect. But, in view of the parents' charter that we sought to promote, I ask him why there should be that omission. Why not include a requirement that all parents of pupils in a school concerned with any change should be notified? Better still, why not include some measure that they should be informed at the earliest stage of the reasons why the proposals are being made?
It appears that those involved in education feel that the greatest failing of pupils is that they have parents. In one school in my constituency that was threatened with closure and removal to another site and a new building the parents were the last to be told. I cannot believe that these omissions result from a cavalier attitude on the part of those administering education. Nor do I accept that, simply because parental rights to information have never been given statutory emphasis, that principle needs to continue. I certainly cannot accept that parental rights to notices on such important matters as these should be placed on a par with the rights of motorists on the closure of a highway, or ramblers on the diversion of a footpath.
In any event, I ask my hon. Friend whether he would reflect, certainly in future orders of this type, just how effective in rural areas these provisions are, I think that the presumption is that the local newspaper will be circulated in the catchment area of the school. In a constituency such as mine in North Cornwall, that certainly does not apply. If one

1713
looks at the provision of posting of notices, one often finds that if the children are transported by the free transport provided there is no need for the parent to go to the place where the notice is posted. I believe that there is all-party consensus on the need to involve parents far more in the education of their children.
It seems that in Committee a great deal was discussed on the subject of parents. I must tell the House that I was not able to enjoy the 100 hours or so of the Committee proceedings. I have only one enviable compensation: I was detained in an adjoining room listening to the fascinating arguments put forward by the hon. Member for Kingston-upon-Hull, East (Mr. Prescott) on complicated transport matters.
However much Opposition Members may dislike the term, parents of State school pupils are the customers of the education service. They pay for it through their rates and taxes. They support it with their voluntary work. They augment it by their efforts at home. I believe that publicising proposals of this kind direct to parents would help to dispel the belief among many that it is a pointless exercise for them to complain, let alone take a constructive view, because nothing will come of it anyway as minds have already been made up.
Surely that is something that we must take to heart. There is also a suspicion in the minds of parents, threatened with reduction in size or the closure of the school, that some sort of skullduggery has taken place, or that some cloak of mismanagement has been thrown over the facts, simply because they are not given the courtesy of information about the proposals in good time. With, as the hon. Lady has indicated, the anticipated reduction of 1½ million school pupils by 1985, that will beg all sorts of questions about the future form, size and even existence of many of our schools.
I hope that my hon. Friend will interpret my contribution as being a sincere attempt to enfranchise parents. If we really expect parents to become participants in the State education of their children, with all the attendant problems, we owe to them the statutory right to be directly informed at the earliest stage.
Mr. Beith: I agree with much of what the hon. Gentleman has said, but does not
1714
he recognise that, although the publication of a statutory notice is an important safeguard to enable parents to state their point of view against the closure of a school, the school has probably suffered a great deal in the meantime? Teachers will probably have left, and some of the parents will have started to send their children elsewhere. The point at which parents need to know most about it, and ought to be in the know, is much earlier than that.
Mr. Neale: I agree. From my experience in my own constituency, which has led to queries arising from other schools in which I have been asked to assist, I can say that that is true. It is most important that the parents should be informed at an early stage to avoid the suspicion that something is being done to try to achieve change over their heads. Inevitably, if that goes on long enough, it will have the effects which the hon. Gentleman has described.
12.30 am
Mr. R. B. Cant: I present my chronological details. My birthday will take place in 10 days.
I had intended to screw my courage to the sticking point and abstain on a three-line Whip, and I am frustrated that there will be no vote tonight.
I rise to speak in favour of the proposals. They can do only a great deal of good for nursery education. I speak from practical experience, because I believe that in a sense the Government are perhaps a little more enlightened than some of the people who run our county councils at present. It was obvious that under clause 26 of the Education Bill many county council committee chairmen felt that they were being offered a way of charging for nursery education. The clause suggested that there might be some change in the nomenclature whereby nursery schools could be recast under certain National Health Service legislation. As soon as the question was raised in this Chamber, the Secretary of State made clear that he would not permit charging for nursery education. At present, nursery schools and nursery classes enjoy a privileged position. The burden of financial economies are taking place in other areas—in first schools, schools for the rising-fives, and so on.

1715
I am attracted by these publicity proposals because if things get worse, and they are bound to get worse under this Government, the burden that will be thrown on local authorities in terms of the need to make financial economies—no one dares to touch the central Civil Service—will be increased. There will be a temptation for chairmen of education and policy and resources committees in our various councils to begin to close nursery schools now that they have no statutory obligation to provide nursery education.
I am a great believer in the phrase "light is the sovereign antiseptic and the best of all policemen." My hon. Friend the Member for Bedwellty (Mr. Kinnock) can have that phrase. These proposals may not guarantee that anything will be different. But we found from discussions of the suggested closure of schools in Stoke-on-Trent that this matter arouses an enormous amount of public anxiety and passions. Large meetings are held, and there is an interest in education that I suspect did not exist previously. The need to give this publicity to any prospective closure of nursery schools or classes may diminish the enthusiasm of some chairmen of education committees who seek further economies in this service.
From the experience of the past few months there is no doubt that the Secretary of State is likely to be the better guardian of nursery schools in Stoke-on-Trent than perhaps the chairman of the education committee of the Staffordshire county council. I assume that these matters at this time are not reported and, as no one in Staffordshire reads Hansard, I can say that with a certain measure of impunity.
That is why I support the regulations. Whatever the detailed problems about phasing in and the ultra reactionary Tory county councils which are likely to exploit the fact that some of these matters will not apply until 1981–82, there is some virtue in these proposals. In any case, I am not as cyncal as the hon. Member for Berwick-upon-Tweed (Mr. Beith), although perhaps I should be.
Whatever the arguments one might have against the minutiae, I feel that these regulations offer parents, children
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and elected representatives safeguards against the desire of chairmen of education committees in the shire counties who feel that they need to save more money. If we can have these open discussions, perhaps nothing will change. But, at any rate, people will get enormous satisfaction from having been given the opportunity to have a good fight on behalf of what they regard as a good cause. If they lose, that is too bad. If they gain and a nursery school or class is kept open, that is a triumph for democracy.
12.37 am
Mr. Nicholas Winterton: I support the regulations. I am always pleased to follow in debate the hon. Member for Stoke-on-Trent, Central (Mr. Cant), because he and I share a common evening newspaper. I confirm what he said about the closure of a school generating considerable emotional interest. The Staffordshire Evening Sentinel covers such matters fully.
I am full of praise for my hon. Friend the Member for Cornwall, North (Mr. Neale) for emphasising in this brief debate while keeping within the rules of order the importance of parents. We are not as cynical as the hon. Member for Berwick-upon-Tweed (Mr. Beith) about our determination to implement the parents' charter which we promoted to the people of this country very forcefully before the election and, indeed, following the election because many of us believe that it is important. Teachers and those who serve on education committees are important, but we believe that the most important people in relation to a child's education are its parents.
I am delighted that the hon. Member for Bolton, West (Mrs. Taylor) supports what is established in the regulations: that nursery schools should be brought in. Previously that was not so. It is right that newspapers should carry a notice of a change in the intake to a school or of a proposed closure of a school. Indeed, such notices should appear not only in a newspaper, but in prominent places throughout the community served by that school, including on the main entrance to the school.
Will my hon. Friend indicate whether many of the requests made by the hon. Members for Stoke-on-Trent, Central and

1717
Berwick-upon-Tweed are already carried out by education committees, local councillors and, perhaps even more so, by the headmaster or headmistress of the school in question or by the governors or managers—governors now under the new Act —advising parents in a circular letter that a proposed closure or change in intake is likely? Certainly if my local village school outside Congleton—Astbury Church of England junior and infants school—is anything to go by, any change proposed in the school, however large or small, is notified to parents by the headmaster. I hope that the hon. Member for Berwick-upon-Tweed will admit that, even within the existing system, which is improved by what the Government seek through these regulations, virtually all parents are notified of changes. Perhaps my hon. Friend the Under-Secretary can confirm that.
I confirm what was said by the hon. Member for Stoke-on-Trent, Central, that if a local newspaper gets a sniff of anything to do with education, be it a closure or a change of intake, it will carry that story on the front page. I accept what was said by my hon. Friend the Member for Cornwall, North about parents in the rural areas. He represents an area where there are many remote villages. People in such places may not necessarily receive the weekly newspaper for their area. I believe that the rumour will spread by word of mouth very quickly, so that some of my hon. Friend's reservations can be overcome.
We Conservatives are putting into practice what we believe. We believe in improved communication, and this is very much a feature of the regulations. I am surprised that the hon. Member for Stoke- on-Trent, Central should have made unflattering comments about the economic intentions and performance of this Government, bearing in mind that he is one of the few hon. Members on the Labour Benches who believes in an element of monetarism. He has bravely stood up for sound money in the past and I am surprised that he said that the policy being followed by the Government would not produce the result we all want to achieve, certainly on the Government Benches, namely, a return to economic sanity. I warmly applaud the Under-Secretary for his lucid and articulate introduction of what appears to be a simple set of regula-
1718
tions because these regulations are important to all parents and children.
12.42 pm.
Mr. Neil Kinnock: Reacting to the concluding remarks of the hon. Member for Macclesfield (Mr. Winterton). I think I can say on behalf of my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) without fear of misrepresenting him that sound money and unsound people make bad government, whichever way we look at it. That is the problem we now have.
I rise to set the record straight on some of the content of the debate. There is some danger that one or two Conservative Members, notably the Under-Secretary —I am sure inadvertently—may have misled the House. First, I endorse the necessity and acceptability of introducing this statutory instrument. These are acceptable procedures for local education authorities to have to go through if they are setting their hands to the sometimes traumatic task of closing a school or substantially changing its charcter.
The people who will benefit most from all of this will be those running local newspapers. In the light of the worsening economic depression and the increase in the number of school closures, which the cuts are exacerbating, possibly the only secure source of finance for local newspapers over the next few years will be the advertising revenue from the insertion of notices of school closures.
There were two matters touched upon by the Under-Secretary which are deserving of a response to clarify the position. The first is the idea that he has expounded yet again: that somewhere in the legislation from which this statutory instrument arises there is the guarantee of a right of parental choice. There is no such thing. Clause 6 enshrines the right of a parent to express a preference, subject to certain economic considerations, to considerations arising from aided schools and to considerations of academic selection. I therefore hope that the hon. Gentleman will take that on board and correct his earlier proposition.
The second, and in the context of this statutory instrument more appropriate, correction to be made arises from the question why this statutory instrument is necessary—or, rather, why it is necessary for this statutory instrument to refer to

1719
nursery schools. The answer is simple. On Report of the Education Bill the Government, with scant notice and in the most hasty fashion, changed the law as it had existed since 1944. The Secretary of State then and the Under-Secretary tonight presented this change in the law as a great and beneficial—indeed, munificent—decision on the Government's part. We know that they were forced, by the over-zealous threatened action of a Tory-controlled local education authority and by their own failure to acknowledge and understand the statutory obligations imposed by section 8 of the 1944 Act on local authorities to make provision for pre-school education, to introduce a provision on Report of the Education Bill which facilitated the inclusion of nursery schools within what had until then been known as section 13 procedures and which are now replaced by clause 12 procedures.
The credit that the Government seek to take in these matters is rather like their asking for victory medals to be struck to commemorate their defeat. It is as if Napoleon had had a Waterloo medal struck. It is not fair for the Government to try to present the change in the law which they brought about as if it were a spontaneous and generous act. If they had not made that change, it would have been illegal under the 1944 Act for local education authorities to proceed with the termination of all nursery education in their areas. Although the Government seek to take credit for the way in which they may have frightened off the Oxfordshire authority, for instance, from setting its hand to the total closure programme it had promised, the fact remains that the Government's decision arose from inadvertent consideration and I do not think they can claim particular credit for the action which they took.
Finally, although my hon. Friend the Member for Stoke-on-Trent, Central has the feeling that the Secretary of State may be a better protector of nursery school interests than local regressive and reactionary Tory authorites, I wonder whether that essentially is so; or is it a measure of the excessive reaction of those local Tory Pharaohs by comparison with he less excessive reaction over which the Secretary of State and his ministerial colleagues are willing to pre-
1720
side? It is a matter of degree. All degree is important, and I am sure that my hon. Friend would say vive la difference.
Mr. Beith: I hope that the hon. Gentleman will allow for the reverse possibility. There are certainly some Tory local education authorities which are far more progressive than the lot who sit on the Tory Benches here. My local education authority, for example, which is Tory-controlled, is opposed to the assisted places scheme, the Government's proposals on school transport, the Government's proposals on school meals, and to just about anything else one cares to mention.
Mr. Kinnock: Without seeking to flatter the hon. Gentleman, in spite of the general good nature of this debate arising from the birthday of my hon. Friend the Member for Bolton, West (Mrs Taylor), I am sure that the relative —and I emphasise "relative"—sensibility and progressive nature of the hon. Gentleman's local education authority has something to do with the influence that he, and even the proximity of some of my hon. Friends to his county, may have on the attitudes of that authority. If that does not get him a mention in his local newspaper, nothing will.
It is a sad fact that, although local education authorities are required to follow appropriate procedures as regards the closure of nursery schools or the withdrawal of nursery places, they have not been denied the power to undertake them. I should be surprised and gratified if the Secretary of State were to transcend his general enthusiasm for cuts by accepting objections about the closure of nursery schools. He would have to contradict the policy decisions of local education authorities.
I hope that, if parents use the powers contained in the statutory instrument effectively, they will not fail to find a ready and sensitive response from the Secretary of State. I shall heartily welcome any use that is made of the provision for objecting to the closure proposals. However, the Secretary of State will remain subordinate to a cuts policy that is using falling school rolls as an excuse for cuts that are greater than might, in any other respect, be necessary.
Mr. Cant: Another point can be made about the proposals to consult parents

1721
and to give publicity to suggested closures. Once one gets into the arena of public meetings, discussions, the local newspaper and so on, even reactionary Tory councils have to give way. It was assumed that 33 closures would go through easily. As a result of the explosion in the Cabinet, six of the suggested closures were withdrawn before they reached the Secretary of State.
Mr. Kinnock: I am grateful for those remarks, as they allow me to point out that the House should welcome anything that generates a proper interest in education—including the use of powers of notice and rights of objection—and anything that brings people together to discuss the provision, purpose and pattern of education. That remains true, even if the provision has such unfortunate parentage.
12.52 am
Mr. Tony Marlow: I wish to add my congratulations to the hon. Member for Bolton, West (Mrs. Taylor) on her birthday. May I say that she looks as attractive as ever.
All hon. Members would agree that there are great benefits in nursery education. As the father of several children, I know that that is so. For some, nursery education is essential, for others it is desirable. Many of the parents of those for whom such education is desirable would be prepared to pay for nursery education.
In my local authority area many parents are prepared to pay for nursery education. However, some parents are unable to pay for nursery education. Given current economic circumstances, and given that local authorities must rightly make cuts, certain nursery schools will close. The regulations will be used to close them. If local education authorities were allowed to charge parents who could afford to pay, those schools would not have to be closed. Will my hon. Friend seriously consider any future proposal to the effect that local education authorities should be allowed to charge some parents for nursery education under certain circumstances? Nursery education could then expand rather than contract.
12.54 am
Dr. Boyson: With the leave of the House, I should like to reply to the debate.
1722
The hon. Member for Berwick-upon-Tweed (Mr. Beith) asked an interesting question. For various reasons, parts of the Act come into effect at different times. For example, parental tribunals cannot be set up immediately. I have here a list of which parts of the Act are operative from 1 August this year, which parts from next year, and which parts are likely to come into effect the following year, until they are all in operation.
The hon. Gentleman raised the question of the 20 per cent., which I and my hon. Friends, and some Opposition hon. Members, considered most important. A local education authority cannot, in the face of parental choice, reduce the intake of schools by 20 per cent. or more over a rolling programme of years without a section 13 notice. The hon. Gentleman said that certain authorities had rushed in to reduce numbers this year—[An HON. MEMBER: "Hertfordshire".] There may be other authorities. Let us say that authorities have done this.
What is the position? They can do it this year, because the Act is not operative. That part will become operative on 1 August next year. Once it does so, the base line on which a school is fixed is 1979. If the authority reduced the intake this year by 22½ per cent., which is more than it would be allowed to do by the Act, it would have to take a larger intake the following year, unless it gave a section 13 notice. The base year will be 1979, whatever an authority does. An authority cannot reduce the intake by 50 per cent. or 60 per cent. this year and presume that it will be exempt, because the Act will be operative next year.
Mr. Beith: This is a most interesting point, and we must get it absolutely right. Is the Minister saying that if a local authority has reduced the intake by, say, 22 per cent., and thus has a considerably smaller school, it must next year, even if nothing else happens, put the figures back to the 1979 base level? Or is he saying that that authority is simply faced with the difficulties of referring to the 1979 figures if it makes a further reduction, because this year's reduction could be the crucial one? I have quoted the example of an eight-form school down to a six-form school. Is the Minister saying that automatically, in a year's time, the authority will have to restore the

1723
position as of a year ago or go through the whole of this procedure in order to protect its right to keep the school as small as it has made it?
Dr. Boyson: I am grateful to the hon. Gentleman for raising this point, because I do not think that it has been made clear in the country. As I understand it, it is a matter not of the overall numbers in the school but of the intake control. If this year an authority drops the intake by 22½ per cent., it cannot retain that drop in the following year. It can drop it by 19½ per cent. once only; it cannot drop it again.
The provision affects the intake each year. Whatever reduction in intake is made this year, an authority cannot reduce the intake from then on for future years by 20 per cent. or more as a rolling programme without a section 13 notice.
Mr. Beith: That is what I understood the position would be. The provision clearly prevents any authority stage by stage cutting a school down year after year until perhaps it is wiped out of existence. Given that this year's change could be crucial for a school, would it not be desirable for the Minister to indicate to authorities that he would deprecate their making changes of 20 per cent. or more this year without their attempting to enter into the spirit of the legislation that will come into effect in a year's time—perhaps by simply conducting their own consultations with local parents?
Dr. Boyson: I take the hon. Gentleman's suggestion that authorities, knowing that that part of the Act is operative from next year, should do nothing against its spirit this year as regards intakes. I agree with what the hon. Gentleman said, and I put that on record as the approach of the Government.
We did not operate the proposal from this year because intake arrangements are often made early in the year. Indeed, the Government have encouraged those arrangements to be made early so that children know which schools they are going to. The Bill became law in April and by that time most authorities had made their allocations of numbers and staff and we could not suddenly land them with having to change their whole intake.
1724
Any further reductions will be outside the spirit of the Act. Indeed, from next year it will be impossible to do that without a section 13 notice.
My hon. Friends the Members for Cornwall, North (Mr. Neale) and Macclesfield (Mr. Winterton) and the hon. Member for Stoke-on-Trent, Central (Mr. Cant) mentioned the question of consultation with parents. That is an important factor, but we cannot put everything in regulations. We shall shortly be sending out a circular recommending other means that local authorities should use to communicate fully with parents. My hon. Friend the Member for Macclesfield suggested that heads should send out letters of consultation, but most schools have parent-teacher associations and another part of the Act provides that every school must have two parent representatives among governors. Parents will communicate.
I know that my hon. Friend the Member for Cornwall, North has fought in his constituency and throughout the country for parental choice of schools. I bow to no one in my belief in parental choice. I have advocated it all my life. When I was a head, I always said that if in any year there were fewer applications than there were places in my school I would resign. Any head wants the confidence not of the education authority but of the parents. The parents are the only people who look at their child as a child. A head may see him as a potential member of the football team or a potential O-level or A-level candidate and the local authority wants to get the number sorted out and to have no trouble with fractious parents.
Mr. J. F. Pawsey: Does my hon. Friend agree that the proposal in the Act that children should be allowed to cross local authority boundaries gives yet more parental choice and underlines the point made earlier in the debate that the Act is a parents' charter? The easier movement of children across local authority boundaries and the fact that authorities will be able to recoup charges from each other will assist my hon. Friend's case for more parental choice.
Dr. Boyson: I welcome the intervention of my hon. Friend, who was privileged to serve on the Committee considering the Bill. His presence in the long

1725
nights on that Bill was a take-off point for his career in the House. It is a pleasure to hear him speaking out again with such firmness and belief on parental choice.
Mrs. Ann Taylor: Will the hon. Gentleman give way?
Dr. Boyson: Let me finish with my hon. Friend. It is not his birthday and those of use who do not have a birthday today must have certain privileges. It is the Secretary of State's birthday on Monday, when he will be speaking in the House. I hope that he receives the same tolerance from the Chair that the hon. Lady received.
We put into the Bill a right for children to cross boundaries, providing there is a vacancy at the school of their choice and that the head will take them. That is another enfranchisement of parental choice.
Mrs. Ann Taylor: The Minister said that he was impressed by what his hon. Friend the Member for Rugby (Mr. Pawsey) said and that the argument about recruitment and parental choice across local boundaries was important. Has he any suggestions about the posting of notices in different local authority areas?
Dr. Boyson: That is an interesting intervention. It took me back to debates in Committee. I should be interested to know the experience in Bolton. In North-West London—Ealing, Hendon, Barnet and Brent—the same newspapers circulate. When buses pass schools with notices outside, people get off the buses to look. They cause great excitement. They are one of the reasons for bus delays in London. We must not take the matter too far because if we did the whole of London transport would come to a halt.
I have been turning the suggestions in my mind. The Government are open minded. The debate will be followed carefully throughout the country. Reports of it will be read in the quality and non-quality newspapers. I agree that local papers should give coverage. That shows how useful the debate is.
We have had an interesting debate, but others outside the Chamber may not be as interested as we are in it. We believe that this year's Act will do much to provide parental choice. That is important.
1726
The way in which closures are arranged and section 13 notices are applied must indicate to the parents and people in the area and surrounding towns what is going on so that they may object. I am convinced that the way in which we have drawn the regulations will be of advantage to parents.
Question put and negatived.

HOME OWNERSHIP
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Peter Morrison.]
1.7 am
Mr. Christopher Murphy: I wish to raise the subject of the current problems associated with home ownership, especially for first-time buyers. There is without doubt a clear desire in our society for home ownership. The Conservative Government, recognising the value of a property-owning democracy, are right to seek to promote it. Home ownership gives the individual and his family a personal stake in the country's capital wealth and enhances his freedom and independence. Home ownership engenders a spirit of personal pride and care, adding to the concept of greater responsibility.
In addition, there are economic arguments in terms of reducing council house subsidies and advancing the mobility of labour. Surveys show that 80 per cent. of young people wish to have the opportunity to buy their own homes and that over 70 per cent. of all families want to be home owners. Yet the Socialists deliberately fly in the face of the democratic wish of the people.
In my constituency, the Labour Party, at the time of the election, took control of the district council on a minority vote. In spite of the consent of the Secretary of State to sell council homes with up to 50 per cent. discounts, it has refused to accept the majority view of the local electorate and increase the level of discount from 30 per cent. The previous Conservative administration in the district, to its great credit, instigated a policy of sales giving the maximum discounts then available. That was popular. Since being in opposition, the Conservative group on the council has continually

1727
pressed for a greater discount to be made available.
My constituents, who are tenants of some years standing, have, therefore, been denied the right which they were seeking of obtaining higher discounts. In consequence, with house prices rising in Hertfordshire, many have been forced to forgo an opportunity to which they understandably feel they were entitled. This callous disregard of the hopes and aspirations of council tenants in Welwyn and Hatfield by the local Labour-controlled council has resulted in a stream of letters, telephone calls and "surgery" visits from frustrated families desperately keen to purchase their home. But in an already expensive housing area this chance is, cynically, denied them.
Politics should surely involve administration in the best interests of the people —not against them. Opposition Members—certainly not in attendance here—would do well to remember that as they declare their continued opposition to giving such fundamental rights to their fellow citizens who have been thwarted for far to long.
However, despite the negative approach of Socialism, this raw deal for council tenants will be overcome by the Housing Bill now completing its passage through Parliament, giving, as it does, the right to buy and a guarantee of full discounts. When this measure is enacted, it will prove to be, without doubt, one of the most significant pieces of social legislation this century ensuring enormous benefit to the future secure development of our society. I congratulate the Government and the Ministers involved, including my hon. Friend the Under-Secretary who is to reply to this debate, and I give them my full support in their determination to ensure natural justice.
The problems associated with home ownership are not, however, confined to the injustices suffered by tenants with Socialist councils. A particularly acute difficulty encountered by young couples seeking to purchase their first home is in obtaining sufficient cash to put down a deposit on that otherwise elusive property.
In the Conservative election manifesto which received the endorsement of the electorate a commitment was given to
"improve on existing legislation with a realistic grants scheme to assist first time buyers of cheaper homes."
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This follows on from the ideas canvassed during our days in opposition of providing a £1 grant for every £2 saved, up to a given maximum of perhaps £1,000.
May I say immediately that I fully recognise that such a scheme must inevitably await improvement in the overall economic climate. The citizens of this country would do well to remember that the ramifications of economic mismanagement by the previous unlamented Socialist Government go far beyond the apparent record levels of inflation and debt that such maladministration created.
However, I believe it to be essential that such a scheme should be introduced at the earliest possible opportunity, for this will do much to further encourage home ownership. Indeed, when one gives full consideration to the cost involved, the taxpayer will pay less overall than he now contributes to the continuing subsidies for more council housing.
Estimates in recent years point to the average cost of providing a council house as being about £1,600 per annum over a 20-year period when one takes into account building, maintenance, loan charges and all other relevant costs. If one subtracts from that the average rent paid, the relevant figure remaining is in the region of £1,200 per annum. Compare this with the maximum suggested under the first-time homes grant scheme of £1,000 and already, in the first year, there could be a saving. But the real advantage is that, instead of further costs being borne by the taxpayer for the next 19 years of council housing subsidy, no such further expenditure has to be contemplated with regard to a house purchase.
If I may again quote my own constituency of Welwyn and Hatfield, the cost of purchasing a first-time home may now well be about £20,000. Therefore, on a 90 per cent. mortgage, the couple would need to put down £2,000. If they can, therefore, save £1,333·66 the Government will provide £666·33 under the scheme. The net result would be less public spending than in the case of a council home and the satisfaction of home ownership.
A further problem associated with home ownership again involves the difficulty of raising sufficient finance, in this case meeting that continuing archaic form of raising revenue—stamp duty—which dates

1729
from 1694 in the reign of William and Mary, and was introduced as a temporary measure to last for four years. Earlier this Session I introduced a Private Member's Bill to abolish stamp duty on home purchase, and many of my hon. Friends who supported me have been encouraged, as I was, by the fact that my right hon. and learned Friend the Chancellor of the Exchequer has been able to go some way in our direction by raising the threshold from £15,000 to £20.000.
As I have already mentioned, in my constituency there are very few homes or flats on the market for less than £20,000, so it still means that virtually everyone is caught in the stamp duty trap from which there is no escape. Undoubtedly this is a simple way of raising revenue, and when the Government have inherited such a parlous economic state where we have continually spent what has not been earned I can fully appreciate the difficulties in removing this source of taxation until public sector borrowing has been firmly curtailed and public expenditure realistically reduced.
However, getting together the deposit and the solicitor's costs is hard enough for a family, and particularly one which is a first-time buyer, but the extra levy of up to 2 per cent. on the sale price can be the hidden extra cost which wrecks all the financial considerations. It is certainly to be hoped that this additional barrier to home ownership can be removed in the very near future, especially when one realises that less than 10 years ago 96 per cent. of all purchases were exempt, whereas now the figure is less than half that.
In this short debate, I have endeavoured to draw attention to some of the current problems associated with home ownership, especially for the first-time buyer. This is not to be blinkered about further difficulties that may be encountered—for example, with respect to obtaining a mortgage, and the level of interest rates—but what is of fundamental importance is to enable families to have the opportunity of satisfying their desire for home ownership.
The Government will clearly achieve a great deal in this direction because they understand the fundamental wishes of the people of this country. They also have the determination to put firmly into practice the means by which people can obtain
1730
the end which they clearly seek. I can do no better in conclusion than quote one of the main aims of Conservative political strategy as set out in "The Right Approach":
"To extend ownership so that many more of our citizens have a stake in the community".
That, I am confident, the Government will achieve.
1.19 am
Mr. Den Dover: I want briefly to touch on three problems relating to home ownership. The first concerns first-time buyers. Several years ago it was very difficult, if not impossible, for first-time buyers in the South-East to buy a home of their own. Now, even in the North-West, in my constituency in Lancashire, it is difficult for young people, even with allowance for the wife's earnings, to buy their own homes.
I praise the activities of the building societies which have done a marvellous job to help home ownership grow over the past few decades. But I ask my hon. Friend the Under-Secretary to raise with my right hon. and learned Friend the Chancellor of the Exchequer the possibility of involving the major banks in providing a prop for mortgage facilities. It is difficult for couples to obtain the initial mortgage for purchase and also to make the regular monthly payments. I should like banks to offer loans to help with the initial payments for the house and with topping up, the initial monthly repayments to the bank being much lower than in later years. That would greatly help first-time buyers.
My second point also concerns the Treasury. The £25,000 mortgage ceiling for tax relief should be raised. It is extremely important to have mobility not only of key skilled workers but of management and executives. They are very important to the economy. Raising the limit would enable them more easily to move around the country. It would also have a beneficial effect on the construction industry.
My final point concerns owner-occupiers in run-down towns, such as Chorley and Leyland in my constituency. Instead of being thrown out of their houses by compulsory purchase, many people would like to see their homes improved by a grant from the local athority. Instead of the local authority having

1731
to provide a council house if such people are made homeless, it is better economics to offer grants to improve such homes. The couple will then not be made homeless, and the necessary work can be done while the family is living in the house.
I submit those three points for the Minister's consideration.
1.21 am
Mr. John Wheeler: I am glad of the opportunity to contribute briefly to the debate. I congratulate my hon. Friend the Member for Welwyn and Hatfield (Mr. Murphy) on the excellent presentation of his case. I should like to add the inner London dimension, particularly the growing problem in dealing with the increasing number of empty properties. In one district alone in my constituency, the Marylands and Lawhill district, there are no fewer than 44 houses empty, with only a handful having work in progress on them.
The difficulty in inner London, and particularly in the city of Westminster, is that those properties are expensive to restore and difficult to acquire via the local authority. How can we provide homes that people can afford in central London? Employers are seeking people to fill the many job vacancies in central London, but there are no homes for those people to live in, even when there are many empty properties.
Is the report of the vacant property survey yet to hand? Will my hon. Friend be able to issue better guidance to local authorities, particularly those in inner cities, on how to deal with the problem of empty properties? It is a serious matter. I believe that we should encourage local authorities to acquire those properties and pass them on immediately, either to individuals, who will thereby become home owners, housing associations or co-operatives, and that requires the favourable interest and co-operation of the Department of the Environment. I know that my hon. Friend's endeavours are always in the public's interest.
1.23 am
The Under-Secretary of State for the Environment (Mr. Geoffrey Finsberg): My hon. Friend the Member for Welwyn and Hatfield (Mr. Murphy), in a most helpful and caring speech, raised a subject of particular interest and concern to
1732
the Government. My hon. Friends the Members for Chorley (Mr. Dover) and Paddington (Mr. Wheeler) raised additional points which I shall try to cover in the time available.
As my hon. Friends know, it is our firm policy to encourage the spread of home ownership. We are well aware of the difficulties that home owners and would-be home owners face at present. We are most conscious of the financial difficulties that people face when first buying their houses, and we want to make that crucial move possible for more families. That is why we are encouraging local authorities to consider promoting low-cost home ownership in their areas under a seven-point programme.
The first item in that programme is the sale of council houses or flats to sitting tenants. My hon. Friend has emphasised the great boon that this will produce for millions of council tenants who will no longer be serfs of some Left-wing despotic council. At present, it is for individual authorities to decide whether to sell to their tenants and, subject to the limits that we have set out in our general consent, how much discount they should offer. But those councils which deny their tenants the oportunity to buy their houses on the maximum discount allowable for their length of tenancy in order to satisfy their own narrow prejudices will no longer be able to do so when the right to buy becomes law. It is our hope that this will happen before the House rises for its well-earned Summer Recess.
On Third Reading of the New Towns Bill on 6 June, I accused Stevenage borough council of having double standards, since it wants to buy its own offices but refuses to let tenants buy their homes. Stevenage borough council has complained to me, saying that it lets people buy. The fact is that, while it allows people to buy, it is among those authorities, as my hon. Friend has mentioned, which are not prepared to allow the full discount that the Government have permitted in the general consent, and are thus setting up what I can only call wholly arbitrary and unnecessary barriers to people buying their own homes. The only people the council is harming is its own tenants.
What I wanted to convey was that they were not being good landlords, that they

1733
were not being public spirited, and that they were simply ensuring that their tenants will have to pay more than we believe is right. Under the Housing Bill, as my hon. Friend has said, we shall not only be obliging councils to offer the maximum discount possible; we shall also be removing any obstacles to building society lending on such sales, because the building societies have a problem over discounts and the market valuation, and we are making clear, by virtue of the Housing Bill, that there will not be any technical or valuation obstacles to their lending.
In order to assist local authorities, in view of their obligation under the Bill to sell to sitting tenants, the decision has been taken that from 1 April next they will be able to increase their single block allocation for capital spending for all services by an amount equivalent to 50 per cent. of the housing capital receipts received in the course of the year. It will be very interesting to see whether authorities such as Manchester and Birmingham, which deny their tenants the right to buy, will continue to do this and thus make it possible to build less accommodation than they would if they sold and used part of the proceeds. While it is fair to say that this is a choice that will be up to them, I should have thought that very few would not want to take the opportunity that we are giving to them.
The second point in our home ownership programme is building for sale, and here we are asking local authorities to make land in their ownership available for building for sale schemes with private developers. These will be new homes and the sale price can be below market value, so they should be readily mortgagable by building societies.
The third point in the programme is improvement for sale, and this touches partially on what my hon. Friend the Member for Paddington said. We are asking local authorities and housing associations to undertake the improvement of houses for sale. We are thinking mainly of older houses, generally vacant and in need of improvement. The authority will buy the house, undertake the improvements, and then sell it. There will be no question of the authority adding it to its housing stock. The selling price should cover the costs of acquisition and
1734
improvement, although there is provision for an Exchequer contribution in the event of a deficit.
Our fourth aim is the sale of unimproved homes. We are encouraging authorities to sell vacant and unimproved dwellings for improvement by the purchaser—as, for instance, the GLC has done with its excellent pioneering homesteading scheme.
Next, in the Housing Bill we are giving local authorities power to guarantee building society mortgages. This should enable building societies to lend on more down-market property than they would normally. It should help first-time purchasers, to obtain a loan to buy a property at a price they can afford.
The sixth item in our programme is also aimed at making homes available at a price which the first-time purchaser can afford. That is encouraging further cooperation between housing associations and local authorities, in offering starter homes to young people who may have the deposit to pay on a house, but whose incomes are insufficient at present to raise an adequate building society loan.
The seventh, and major element, in our low-cost home ownership programme is share-ownership—part owning and part renting initially, with the option to purchase the whole equity later. Some 1,500 houses have already been bought through various local authority shared ownership schemes, but there is scope for shared ownership to be offered as an alternative to outright ownership much more widely than at present. We are ensuring that there are no legal obstacles to prevent local authorities, new towns and housing associations from offering shared ownership as well as outright ownership on both new and existing dwellings. My Department is developing a model shared ownership scheme which brings together examples of best practice. We are also ensuring that shared owners who are former council tenants will qualify for discounts in the same way as outright purchasers.
I said that I had already covered partially the point raised by my hon. Friend the Member for Paddington. It is right to say that we are ensuring that the schemes that allow homesteading and the reaching of an agreement with the owner

1735
to buy property and resell it for improvement are being covered by an amendment being moved in another place this week. We do not want there to be any loopholes in that idea.
We recognise, as did my hon. Friend, that, because of inflation and increasing house prices, the costs involved in house purchase transactions have become quite considerable. One of the major costs was the Government tax, stamp duty. My hon. Friend may have not understood it correctly—perhaps the temporary tax was intended for four centuries rather than for four years. In the last Budget my right hon. and learned Friend the Chancellor of the Exchequer raised the threshold to £20,000. That means that the average first-time purchaser, in all areas except Greater London and the South-East, no longer has to pay stamp duty. The cost to the Exchequer of raising the threshold, and subsequent bands of payment, is estimated to be £85 million in a full year. At a time when the Government are pursuing a rigorous policy of restraint in public expenditure, that represents a most generous move in favour of first-time house purchasers. Any further changes in taxation are, of course, decisions for my right hon. and learned Friend the Chancellor. My right hon. Friend the Chief Secretary to the Treasury said, in reply to a question in the House on 22 May, that the duty will not be phased out, given the Government's need for substantial revenues.
My hon. Friend the Member for Chorley raised the question of the ceiling on mortgage tax relief and the banks' topping-up loans. It is true that many people are now seeking topping-up loans from other sources such as banks. While they are likely to be at higher interest rates than those of building societies, they are still eligible for tax relief within the £25,000 limit.
On the subject of raising the limit of £25,000 for mortgage tax relief, I refer my hon. Friend to the statement made by my right hon. Friend the Chief Secretary in the Standing Committee on the Finance Bill on 10 June. He pointed out that any change in the mortgage tax relief ceiling would have to be considered in the context of the totality of the Government's
1736
housing programme and the tax status of housing relative to that of other forms of investment.
Because we are committed to encouraging the spread of home ownership, and because we recognise that first-time purchasers need some assistance as costs have increased, we have continued the home loan scheme introduced by the previous Administration. That will enable the prospective purchaser who has saved for at least two years under the scheme, and who buys a house within the price limits we shall set, to obtain a loan of up to £600, which is interest-free and repayment-free for up to five years, and a tax-free cash bonus of up to £110. In our manifesto we said that we should like, in time, to improve on existing legislation with a realistic grants scheme to assist first-time buyers of cheaper homes. That is still our intention. But such improvements will, of necessity, as my hon. Friends recognised, have to wait until our economic policies have borne fruit.
We are hoping, with the help of these various measures, to encourage the spread of home ownership. I emphasise that among the 6 million council tenants are hundreds of thousands who will be able to buy their flats, not just their houses. But as a home owner I am conscious that the major problem facing most home owners today is the size of their mortgage repayments. High interest rates are a price that we have to pay at the moment for getting the economy right, and I make no apology for them. When our policies succeed, home owners will be among those who benefit. The essential ingredient of a successful extension of home ownership is co-operation between bodies outside Government—suppliers of land, house builders, and the suppliers of house purchase finance. Subsidies from central Government are not a universal answer. Our main role is to ensure that the climate is right, and the rest will follow.
I think that my hon. Friends have done a great service in raising this issue tonight, and I am most grateful to them.
Question put and agreed to.
Adjourned accordingly at twenty-five minutes to Two o'clock.

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  Child Benefit
  Hospital Admissions (Walsall)
  Hospital Admissions (Walsall)
  National Insurance Fund
  National Insurance Fund
  Death Grant
  Death Grant
  Health Service Commissioner
  Health Service Commissioner
  One-parent Families
  One-parent Families
  Psycho-surgical Operations
  Psycho-surgical Operations
TRANSPORT
  M1 (Bedfordshire)
  M1 (Bedfordshire)
  Motorway Maintenance
  Motorway Maintenance
  Vehicles and Traffic Forecasts
  Vehicles and Traffic Forecasts
  Pelican Crossings
  Pelican Crossings
  Motoring Offences (Fixed Fines)
  Motoring Offences (Fixed Fines)
  Lancia Beta Cars
  Lancia Beta Cars
NORTHERN IRELAND
  Terrorists (Apprehension)
  Terrorists (Apprehension)
  Shipbuilding
  Shipbuilding
FOREIGN AND COMMONWEALTH AFFAIRS
  United States of America (British Diplomats)
  United States of America (British Diplomats)
  Vietnam
  Vietnam
  Zimbabwe
  Zimbabwe
  Helsinki Final Act
  Helsinki Final Act
  FURTHER REPORT ON SOVIET AND EASTERN EUROPEAN IMPLEMENTATION OF THE HELSINKI FINAL ACT FOR THE PERIOD DECEMBER 1979 TO JUNE 1980
  FURTHER REPORT ON SOVIET AND EASTERN EUROPEAN IMPLEMENTATION OF THE HELSINKI FINAL ACT FOR THE PERIOD DECEMBER 1979 TO JUNE 1980

Preamble
The House met at half-past two of the Clock: THE LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Norwich.

NORTHERN IRELAND: AMERICAN INVESTMENT
Baroness VICKERS: My Lords, on behalf of my noble friend Lady Emmet of Amberley I beg leave to ask the Question which stands in her name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what has been the total of fresh American investment attracted to Northern Ireland since the formation of this Government.
The PARLIAMENTARY UNDER-SECRETARY of STATE, NORTHERN IRELAND OFFICE (Lord Elton): My Lords, since the present Government took office in May last year, industrial development agreements have been concluded with American companies in respect of investment of some £120 million in Northern Ireland.
Baroness VICKERS: My Lords, I thank my noble friend for that very encouraging Answer and congratulate him on obtaining the money. Would he be good enough to tell me how many new jobs have been created?
Lord ELTON: My Lords, it is anticipated that some 2,800 jobs will eventually be created as a result of this investment.
Lord BLEASE: My Lords, I hope the noble Lord the Minister will not be too surprised if I compliment the Northern Ireland Ministers on the expeditious way they have pursued the investment of American capital in Northern Ireland and on the effective way they have built upon the groundwork done and the seeds sown by the previous Labour Administration. Would he agree that the major factors attracting productive investment from
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America to Northern Ireland are the good industrial relations and the availability of a readily adaptable and highly-skilled labour force, and that not in any way does low pay contribute to that attraction?
Lord ELTON: My Lords, like many attractive insects, that beautiful butterfly surprised us with a sting in its tail. But I accept most of what the noble Lord says, and of course the level of wages is a factor in any prospective investor's mind when he is deciding where to invest. I think I should add that the investment incentives offered to foreign concerns investing in Northern Ireland are among the best to be found, certainly in Europe and quite possibly in the Western world.
Lord DAVIES of LEEK: My Lords, may I ask the noble Lord how home investors have reacted to the encouragement given to American investment, particularly in view of the Wilson Report, showing the massive amounts of money which are in the insurance companies and the banks at the present moment?
Lord ELTON: My Lords, strictly speaking, that is a different question. I think home investors are encouraged by anything which strengthens the United Kingdom economy as a whole.
Lord ROSS of MARNOCK: My Lords, could the noble Lord tell us what was the cost of the inducement in respect of this investment?
Lord ELTON: Not without notice, my Lords.

MATERNITY PROVISIONS SURVEY
2.40 p.m.
Lord McCARTHY: 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 have received the results of the nationwide survey on the operation and effects of the maternity provisions of the Employment Protection (Consolidation) Act 1978 undertaken by the Policy Studies Institute for the Department of Employment; whether those

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results were taken into account in framing Clauses 10 and 11 of the Employment Bill; and when they expect to be able to publish the results of the survey.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie): My Lords, the Government have only recently received the results from the first part of the survey of the maternity provisions, which deals with the experience of working mothers. A summary of the findings has been published in the May edition of the Employment Gazette, and the full report was published on 30th June. The second part of the survey, which deals with the experience of employers, is under way, and a report on this part should be available by the end of the year. The results of the research were therefore not available when the Government were framing the clauses dealing with maternity in the Employment Bill. Nevertheless, now that they have been received they confirm the Government's view that the right balance between employer and employee has been struck in the Bill.
Lord McCARTHY: My Lords, I thank the noble Earl for that Answer. I hope he will accept that when I put the Question down I did not know that in fact the Government intended to publish an account of the first part of this study in the Gazette. In respect of the second part of his Answer, may I ask him how, in the light of that article in the Gazette, and even more so in the light of the full publication of the PSI, survey by Mr. Daniel, the Government can now justify what they are doing in respect of maternity? The PSI report makes it quite clear that the overwhelming majority of small employers will not have to find jobs for women who are pregnant more than once in every 15 years and once in every 30 years. How can figures of this kind justify what the Government are proposing?
The Earl of GOWRIE: My Lords, like all such surveys and all such figures, it depends on what you read into them. The results show that about two-thirds of the women who say that they intend to come back in fact do not do so; and that seems to us totally to justify our provisions in Clause 11 governing notice
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of return. But in fact we do not seek to rest our justification on one particular survey; we rest it on a matter of judgment.
Lord McCARTHY: My Lords, will the noble Earl agree that what the survey shows is that the overwhelming majority of small firms have no problems about maternity return?
The Earl of GOWRIE: My Lords, the survey has taken no account, neither was its remit to do so—and I make no criticism of it—of the fears of employers. You cannot survey the disincentive effects of measures on things that have not happened. We want things to happen. We want employers to take on people in work. You cannot place any judgment of any coherence on surveys of this kind. They are useful. We publish the results. But they make very little difference to our overall judgment.
Baroness SEEAR: My Lords, would the noble Earl agree that the extent to which people do not return to work suggests that it is ridiculous to ask them to say in writing before they leave whether they intend to return? Any sensible woman when asked will say that she will return; she does not know at that stage.
The Earl of GOWRIE: My Lords, the noble Baroness, experienced as she is in these things, has missed the point of the provision. It is to let the employer know roughly what the situation is. It is to create certainty where uncertainty reigned before. That is all that it is designed to do.
Lord McCARTHY: My Lords, will the noble Earl agree that all that the survey shows is that he only needs to know once every 30 years?
The Earl of GOWRIE: My Lords, as I have said on this Question today and in the debates on the Employment Bill, I give very little weight to surveys. However, when they occur, I do not seek to suppress them; I have them published in the Employment Gazette. I find considerable justification for the Government's measures in this survey if I am prepared to see through a particular lens; but when looking at it through another lens, I find less justification. It seems to me to have very little relevance.
Baroness SEEAR: My Lords, I do not want to go on about this matter, but will the Minister agree that if he wants to give employers certainty it is absurd to ask women to write letters to the employers to say whether they are going back before they have had their baby?—because the one thing that the employer does not get from that is certainty.
The Earl of GOWRIE: My Lords, we are dealing with a handful of cases where we are concerned to see that the employers have a reasonable certainty that they will be able to tell whether or not a woman is going to come back after having her baby. She has the right to do so if she wishes and our legislation confirms that. On the general issue of surveys, I would say to both the noble Baroness and the noble Lord that if you took surveys about the status of the closed shop in this economy you would have to abolish it overnight.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, if the noble Earl is going to ignore the results of the surveys which are commissioned by his own department and to use two different kinds of lenses, is it not possible that he might end up cross-eyed?
The Earl of GOWRIE: My Lords, I do not ignore surveys; I take them with a pinch of salt. But I take the advice of the noble Baroness and will try to see things steadily and in whole.
Lord HARMAR-NICHOLLS: My Lords, is my noble friend aware that people in charge of small businesses require a little help in coming to some conclusions in running their businesses? While the clause as it stands cannot give them certainty, it minimises uncertainty, and this is an advance in the right direction.
The Earl of GOWRIE: My Lords, I am grateful to my noble friend for that. I must be careful that we do not stray during Question Time into a debate on the Employment Bill.

COMMODITY PRICE STABILISATION: THE COMMON FUND
2.46 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what were the conclusions of the renewed discussions between North and South representatives on 18th-19th June on the Common Fund for stabilising commodity prices.
Lord TREFGARNE: My Lords, the final round of the UNCTAD negotiations on the Common Fund took place from 5th to 28th June. I am glad to say that agreement was reached on the text of the treaty to bring the fund into operation.
Lord BROCKWAY: My Lords, can the noble Lord say whether the Common Fund will come into operation this year and can he answer two particular points? How much will the individual commodity agreements contribute to assisting a particular commodity suffering from a disastrous fall in prices? May I also ask whether in the case of the second window of the fund, progress has been made towards reaching the 280 million dollars required for diversification and market promotion?
Lord TREFGARNE: My Lords, some progress has been made towards achieving the figure required by the voluntary part of the second account, as it is now called, but I cannot give the noble Lord precise figures on that, since most are confidential and in any case a number of countries have not yet reached agreement on it. As to the date when the treaty will come into being, I have not got the precise date but I think it is next year.
Lord GORONWY-ROBERTS: My Lords, will the noble Lord, with or without notice, let us know how many signatories are attached to this treaty (which is really an agreement with schedules) and whether the total signatories include, in reasonably equal proportion, representatives of the industrialised West, the OPEC countries and the Soviet Union and its allies in the East?
Lord TREFGARNE: My Lords, I have not got the precise details for which the noble Lord asks. I will find out and write to him.
Lord ROBERTHALL: My Lords, can the noble Lord say what is likely to be the United Kingdom contribution to the Common Fund?
Lord TREFGARNE: My Lords, we have not yet made up our minds on that.
Lord KALDOR: My Lords, has the noble Lord any information on the nature of the commodity schemes on which agreement has been reached, on what kind of commodities are in contemplation for inclusion in such agreements and on how they would operate?
Lord TREFGARNE: My Lords, that is a separate question. I will write to the noble Lord.
Lord BROCKWAY: My Lords, has not insistence by the industrialised countries that there should be separate agreements rather than an overall plan led to a situation where commodity agreements other than in rubber may not be completed at all? In that case would the Common Fund be able to act effectively?
Lord TREFGARNE: My Lords, certainly it will. That is the whole intention.
Lord TAYLOR of GRYFE: My Lords, will the noble Lord indicate how many Governments require to endorse the agreement reached on the Common Fund before it becomes operative?
Lord TREFGARNE: My Lords, speaking from memory, two-thirds, I think.

ANKARA CONFERENCE OF NATO FOREIGN MINISTERS
2.50 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government
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what conclusions were reached at the conference of NATO Foreign Ministers at Ankara.
The SECRETARY of STATE for FOREIGN and COMMONWEALTH AFFAIRS (Lord Carrington): My Lords, I attended the meeting on the 25th and 26th June. Discussion covered a wide range of international developments of concern to the alliance. It was a good meeting. The broad measure of agreement among the allies is reflected in the communique, a copy of which has been deposited in the Library.
Lord BROCKWAY: My Lords, while recognising the wide range of subjects, may I ask the Minister this question: While welcoming the commitment to the pursuit of verifiable measures of disarmament and the avoidance of competitive arms strengthened by the visit of the West German Chancellor to Moscow yesterday, may I ask him whether it is true that an ad hoc group has been set up by the United States, West Germany, Great Britain and Turkey, as reported, to consider arming the Afghan opponents of the Kabul Government? Would not this be very dangerous in widening the war, and would it not be better to support the initiative of the Islamic Conference to bring about a settlement of this problem?
Lord CARRINGTON: My Lords, the answer to the first part of the noble Lord's question is, No, and so the second part does not arise.
Lord HALE: My Lords, will the noble Lord say whether this matter has any connection with the more or less defunct Baghdad Pact which finally took root in Ankara with a Turkish staff and apparently no other members, all the other members having resigned? If it is virtually pursuing with different personnel the objectives of the Baghdad Pact, is there to be any reference to it?
Lord CARRINGTON: My Lords, Turkey is a member of NATO. The NATO Council meets in different capitals each year. This is one of those meetings.
Lord SHINWELL: My Lords, will the noble Lord the Foreign Secretary say whether the representations made by Chancellor Schmidt recently on his visit

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to Moscow represented the views expressed at the meeting in Ankara?
Lord CARRINGTON: No, my Lords. Chancellor Schmidt did not go to Moscow representing the views of any other than the German Government.
Lord BROCKWAY: My Lords, would the Minister agree that one of the values of the conference was that the representative of the United States accepted the view that Western Europe could have different attitudes from that of the United States?
Lord CARRINGTON: My Lords, what this meeting demonstrated was that the alliance was united.
Lord SHINWELL: My Lords, in view of the answer that the Foreign Secretary just gave to my question about Chancellor Schmidt—that is, that he was not representing the views expressed collectively at Ankara, but the views of the German Government—are we to understand now that unilateral arrangements are permissible?
Lord CARRINGTON: No, my Lords. Chancellor Schmidt was very anxious not to go to Moscow in the capacity of representative of the Western alliance. He went there as Chancellor of Germany. That was the invitation that he received from Mr. Brezhnev, which is not to say that what he said in any way differed from the views of the Atlantic alliance.

BUSINESS
Lord DENHAM: My Lords, with the leave of the House, at a convenient moment after 3.30 my noble friend Lord Elton will repeat a Statement being made in another place on the Government of Northern Ireland.
It may also be for the convenience of the House if I announce that it is intended to adjourn the Committee stage of the Housing Bill at approximately 8 p.m. The House will then take the Unstarred Question on the EEC Budget for 1980 in the name of my noble friend Lord O'Hagan.

BREASCLETE HARBOUR ORDER CONFIRMATION BILL
Brought from the Commons; read 1a, and (pursuant to the Private Legislation Procedure (Scotland) Act 1936) deemed to have been read 2a and reported from the Committee.
BRITISH RAILWAYS ORDER CONFIRMATION BILL
Brought from the Commons; read 1a, and (pursuant to the Private Legislation Procedure (Scotland) Act 1936) deemed to have been read 2a and reported from the Committee.
HIGHWAYS BILL [H.L.]
Report received.

HOUSING BILL
2.55 p.m.
The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Lord Bellwin): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Bellwin.)
On Question, Motion agreed to.
House in Committee accordingly.
[The Earl of LISTOWEL in the Chair.]
Clauses 49 and 50 agreed to.
Clause 51 [Protected shorthold tenancies]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 112: Page 35, line 39, leave out paragraph (c) and insert—
(" (c) either a rent for the dwelling-house is registered at the time the tenancy is granted or—

(i) a certificate of fair rent has, before the grant, been issued under section 69 of the 1977 Act in respect of the dwelling-house and the rent payable under the tenancy, for any period before a rent is registered for the dwelling-house, does

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not exceed the rent specified in the certificate; and

(ii) an application for the registration of a rent for the dwelling-house is made not later than 28 days after the beginning of the term and is not withdrawn.")

The noble Lord said: This amendment provides another important safeguard for the tenant under the Government's short-hold proposal. Clause 51 already provides that shorthold tenancies, unlike any other class of regulated tenancies, must have a registered fair rent. This amendment ensures that the fair rent will apply from the outset of the tenancy. I shall explain how this is achieved.
If a landlord grants a shorthold for a property for which there is already a registered rent, that rent will apply equally to the new shorthold tenancy. The Bill already provides satisfactorily for this. We are concerned here with properties which have no registered rent but which the landlord wishes to let as shorthold tenancies. At present the Bill requires that the registration of a fair rent is applied for within 28 days of the tenancy commencing. Although this in itself is a unique protection for the tenant, the point has been made in another place that there will be no fair rent until the rent is registered by the rent officer—perhaps three months after the tenant moves in. Our amendment bridges this gap. The amendment requires the landlord to obtain a certificate of fair rent from the rent officer before granting the tenancy as well as applying for the registration of a fair rent not more than 28 days after it starts. The rent specified in the certificate will be the maximum the landlord can charge before the fair rent is registered.
The certificates of fair rent provisions are well established ones. They already exist under Schedule 12 to the Rent Act 1977 and need no modification for this purpose. They are specially designed for circumstances where there is not yet a tenancy, and are, for instance, often used by housing associations before conversions or new dwellings are let. Once a certificate has been obtained, the subsequent application for a fair rent is a straightforward procedure, and unless there has been a change in circumstances the registered rent would normally be the same as that in the certificate. I should
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add that nothing in this amendment implies that a landlord who gets a certificate must of necessity let on shorthold, or alters the status of certificates in relation to other lettings. The amendment gives the shorthold tenant the full benefit of knowing from the outset what the registered fair rent is likely to be, and paying no more than that. I beg to move.
Baroness BIRK: We start on a rather happy note. I am pleased to welcome the Government's amendment. I hope that this is going to be one of many concessions that we shall be seeing during the afternoon and evening.
On Question, amendment agreed to.
[Amendments Nos. 113 and 114 not moved.]
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 115:
Page 35, line 43, at end insert ("; and
(d) the dwelling-house possesses at all times throughout the tenancy the amenities prescribed by Schedule 6 to the Housing Act 1974.").
The noble Lord said: This is a very simple, straightforward amendment which seeks to impose on landlords a minimum standard of repair with which they will have to comply if they wish to take advantage of the provision of shorthold tenancies. It states that Schedule 6 to the Housing Act 1974 should be incorporated, which merely provides that there should be a fixed bath or shower, a hand washbasin and a water closet. I should have thought that this was the kind of amendment which, with goodwill, the Government might accept, since I am sure that the Government, in introducing the concept of shorthold, would not want the shorthold tenant to be any worse off or any worse provided for than if he or she were in another type of tenancy. Therefore, this seems to me a reasonable amendment which might find acceptance with your Lordships, and I beg to move.
Lord BELLWIN: The intention of this amendment would be to require that all dwellings to be let on shorthold would have to measure up to a particular standard. The Government cannot accept this. There seems to us to be no reason

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why there should be a requirement in respect of shorthold when there is no such requirement at present in the public or private sectors. Of course, the Government want all property, whether it is owner-occupied or rented, to be brought up to as high a standard of improvement as possible. I am sure that is a view that is shared by noble Lords on all sides of this Chamber. But to produce a requirement of the kind that is proposed in this amendment for shorthold would materially reduce the availability of shorthold dwellings. Many furnished dwellings in the private sector already have shared amenities and therefore the tenants do not have exclusive use of all the amenities referred to in Schedule 6 to the Housing Act 1974. Many people, especially in cities, may be perfectly happy to enter into arrangements of this type where they share amenities. I do not think it would be right that they should he denied the possibility of taking a shorthold tenancy, and I wonder whether perhaps, on further reflection, the noble Lord may accept the validity of this point and perhaps feel able to withdraw his amendment.
Lord EVANS of CLAUGHTON: There is a world of difference between tenants in the private and the public sector. The tenant in the public sector can go to his councillor and complain about the quality of the amenities that he enjoys or fails to enjoy. The private tenant has the security of tenure. The shorthold tenant does not have security of tenure, except for the limited period from one year to five years, and he or she therefore might perhaps not feel quite the same courage about challenging his or her landlord as regards the quality of the tenancy's amenities. Therefore, there is in my opinion a considerable difference between the level of competition, as it were, that the tenant enjoys in relation to his landlord in a shorthold tenancy as against that which he would enjoy in a public or private tenancy. Therefore I think that the tenant of a shorthold tenancy is much less protected as regards the rights that he enjoys than is a tenant in the private or public sector. That is the reason why I moved the amendment, and I think it makes it a different proposition from that which the noble Lord put before your Lordships.
Lord SHINWELL: May I ask the noble Lord a question arising from this amendment? Perhaps he can clarify the position for me. In the event of a shorthold agreement being arranged, is it not likely—indeed almost a certainty—that there would be some increase in the rent? In that event, surely the tenant has the right to demand that the premises should be raised to a reasonable standard: first, because it ought to happen and, secondly, because the tenant is called upon to pay an increased rent. Surely he has the right to say to the landlord: "Before I pay any increased rent you must promote a reasonable standard of conditions." Can the noble Lord clear up that point?
Lord BELLWIN: I am glad to clear up one point, namely, that in the case of shorthold it is not a matter of their being an existing rent at all. A tenant will only go into a shorthold which would be new premises. Where any tenant at present has a regulated tenancy, with all that flows from it, the Bill says quite clearly that it cannot be switched into shorthold. That is an express condition in the Bill. Therefore the matter of it being a new rent does not arise at all, because we are starting from scratch with a whole new area of accommodation; so switching or increasing rents does not arise.
I think the noble Lord's question helps me to come to the point which was made by the noble Lord, Lord Evans, when he said that surely a shorthold tenant will have less security, and so on, and therefore will be less protected. We shall be discussing shorthold at some length in the next hour or so, I imagine, and no doubt we can cover this point and others then. But at this moment, since it concerns the amendment, I would say that the whole purpose of shorthold is that it should be what it says: shorthold. In other words, it is a tenancy for a limited period of time of up to five years. A prospective tenant who goes into such premises as will be offered and as we hope will come on to the market and be newly available, where at present they do not exist, will have the opportunity of inspecting the place where he is hoping to live and will be able to decide whether or not it is of a standard which he thinks is good enough. He will then either accept or reject the

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opportunity to be a tenant; but to suggest that he should move in and from that point during the short term of his tenancy, then have a new right, which does not exist even in the private sector at the moment, to have the premises brought up to a certain standard, is creating the kind of restriction that indeed, like a number of other restrictions that are called for in the amendments, would defeat one of the objects of shorthold. For that reason—and I hope that the noble Lord will understand this point—the Government cannot accept this amendment.
Lord EVANS of CLAUGHTON: As the noble Lord will appreciate and as I am sure his noble friends will also appreciate, many of us have considerable reservations about the whole concept of shortholds. Some of us think they might conceivably be worth experimenting with if there were adequate safeguards for the tenants; and this is one of the safeguards that I thought might be an example of the kind of safeguards we are looking for. The Government have said that shortholds will make tenancies available, say, to young married couples starting out on the great journey of life. I would have thought that young couples, perhaps with a child, would want a fixed bath or shower, a hand washbasin and a water closet in their premises. I would have thought therefore that, because of the exposure that the shorthold tenant is in in relation to his landlord, these were the kinds of protection—these and many others—that your Lordships should be willing to impose on a landlord who is in a very advantageous position in relation to his tenants.
However, as the noble Lord, Lord Bellwin, said, we shall have ample opportunity, of which I am sure we shall take full advantage, of probing the shorthold tenancies and trying to limit the exposure of the tenant in these circumstances. Because of that, and because, if I am not satisfied by the end of the Committee stage on this matter, I know that I shall be able to reserve the right to raise this matter again at Report stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.9 p.m.
Baroness BIRK Baroness BIRK moved Amendment No. 116:
Page 36, line 4, at end insert (", or any other dwelling-house in the same building or any other dwelling-house owned by the landlord (within the same registration area within the meaning of section 62 of the 1977 Act).")
The noble Baroness said: One of the most disturbing aspects of shorthold when it was proposed in the first version of the Bill has now, it is true, been partially rectified. At first it appeared there was nothing to protect a tenant who was fully protected from having an insecure short-hold tenancy perhaps foisted upon him. Although that was denied, the Government introduced in another place an amendment which spells out that such a tenant will retain protection. However, there is a snag even here, because the safeguard only applies to the accommodation actually occupied. It would be easy for a landlord to offer a shorthold agreement instead of whatever fixed-term agreement he is accustomed to use.
This was expressed very well by the chairman of the Westminster Housing Committee, Councillor Weeks, as reported in a press release put out by Westminster Council; which, incidentally, is a Conservative controlled council. He said that he supported Sir Brandon Rhys Williams in the view that it was important to ensure that landlords would not be able to "winkle out" tenants from existing tenancies where they may be secure and into a new one which was less secure. He went on to say that he would like to see the shorthold tenancy procedures tightened up considerably. That was since the Government amendment was incorporated in the Bill.
This danger of "winkling" still remains in the Bill, particularly as so many of the people involved will not be lawyers or knowledgeable about their own situation and may in certain circumstances take a shorthold agreement and lose the protection which they originally had. That is because if they move from the fiat or house where they have complete security, that security goes when they leave and nothing remains with the flat or house that is left.
The example I have in mind is that a landlord may make a fully protected tenant an offer which he finds difficult

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to refuse. One may say that he should refuse it and ought to realise that he will be losing security, but when we legislate we must remember that not everybody is highly knowledgeable about these very complex matters. A protected tenant in a small room in a multi-occupied house may be offered a larger room somewhere else in the house, but this time it would be under shorthold. Eviction could then take place at the end of a one-year term.
In different circumstances a protected tenant would be threatened if the landlord has several houses and the tenant accepts the offer of alternative accommodation in another house. Here, again, he would be exchanging complete security for a shorthold. We must tighten up these loopholes. Through no fault of his own, and through not understanding these very complicated rent laws, a tenant might work himself from a completely secure tenancy into one that is insecure. As the Government appear to have made it clear that that is not what they want to see, it seems to me that, having gone as far as they did in another place, they should accept this amendment which would tighten up the procedure even further and in a way that is necessary. If the Government do not want this "winkling out" position to arise, then they must tighten up the procedure even more than they have done so far. Therefore I hope that the Government will accept the amendment. I beg to move.
Lord EVANS of CLAUGHTON: I am delighted to be associated with the amendment moved by the noble Baroness. I said in the Second Reading debate, and I say it again, that the vast majority of landlords are good landlords: I do not dispute that for one second. As a solicitor, I act for very many good landlords. But the point of laws is not to protect us against the good, but to protect us against the evil.
There is a minority of landlords who look for the nooks and crannies and loopholes of the law in order that they can obtain advantages which the law never intended they should have. I remember how under previous legislation loopholes were exploited by ruthless landlords. I had plenty of cases, both as a lawyer and as a councillor, of tenants who did not know their rights. Perhaps they should have known their rights, but the
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complexity of legislation and of Government forms is very difficult for people who may not be very well educated, or who are elderly or confused by problems. They do not think of going to the citizens advice bureaux, because they are confused and frightened.
I must say, from my own personal experience under previous legislation and from my own personal fears about a small minority of landlords, that the Government would be well advised to accept this amendment to prevent what could be a very pernicious style of Rachmanism, of oppression of tenants, which could happen under the legislation as drawn at present. I hope that the Government will accept this amendment.
Lord JANNER: May I support this amendment, particularly from the point of view already expressed by my noble friend and by the noble Lord, Lord Evans. Your Lordships will realise how in legal matters people take for granted things which they should know about but which they do not trouble to know about. Consequently, when trouble arises they come along to people in my profession and say, "What on earth is happening? I did not know this".
Let me give your Lordships a very simple illustration. A large number of people have no idea that when their leaseholds expire their homes fall into the hands of the freeholder. They will come into a solicitor's office—and I am sure that this happens all over the country—and say that when they bought their leaseholds they thought that they were all right, and that they would never he taken from them. I remember that when the leases fell in in a certain area, hundreds of houses suddenly fell into the hands of the landlord. I can appreciate the point that the noble Lord, Lord Evans, made that a large number of landlords have some kind of human understanding, but there are others who might attempt to sell the freeholds for very large sums. People do not know, not because they do not want to know hut because they think they are all right until something untoward happens. Therefore any precaution in the nature of the one that is proposed here is something that we should consider very carefully, to enable the tenant to understand his position.

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The noble Lord, Lord Bellwin, knows what we all know about the shorthold business, and I shall not go into that yet. But people do not understand it, and if a landlord offered alternative accommodation people would not go to a lawyer to ask what the difference would be, and would feel that their protection was the same as previously. I hope that the noble Lord will take that into consideration. It is not a great thing to ask of him, and I trust that he will agree to the amendment.
3.20 p.m.
Lord BELLWIN: I do indeed know what Members who sit opposite feel about shortholds, and I trust that in turn they know what we on this side feel about them. We shall have several opportunities, very shortly, to debate in depth the basic intentions behind the shorthold proposals. For the moment, I ought to stick strictly to this amendment. It would have the effect of preventing somebody who is already a statutory or protected tenant from being granted a shorthold in the same building or in any other dwelling-house in the same registration area belonging to the same landlord. I recognise the concern which has been expressed: that existing statutory and protected tenants may be persuaded to sign away their security by agreeing to take shortholds. That is why we have specifically provided in subsection (2) of the clause that a shorthold of the same dwelling cannot be granted to an existing statutory or protected tenant.
This amendment seeks to go further. It would prevent a shorthold from being granted to an existing tenant not only of the same dwelling but also of any dwelling in the same building, or even of any dwelling belonging to the same landlord in that registration area.
We have considered whether there should be circumstances of this kind—whether landlords should be prevented from granting a shorthold to an existing tenant. Our view is that they should not, for two reasons. First, there may be circumstances in which it would be in a tenant's interests to take the shorthold of a different dwelling from the same landlord. Secondly, it would be difficult to draft a provision which would be foolproof.
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For example, would two subsidiary companies be the same landlord? This is the sort of difficulty which would arise with a provision of this kind.
However, we recognise the need to prevent existing tenants from being tricked out of their statutory security by being offered shortholds without realising what this involves. Our solution lies in the use of the prescribed notice that the landlord must serve on the tenant under Clause 51(1)(b). This notice will specifically draw to the attention of any prospective shorthold tenant who is already a protected or statutory tenant that short-hold offers him less security than his present tenancy.
This seems to me the best way of ensuring that tenants know what a short-hold entails. It seems better than denying tenants who may want to do so the opportunity to take a shorthold tenancy. As I have said, there are many more aspects of this shorthold proposal which we need to talk about. We can talk very much about loopholes, and I am sure that we shall do so, but in the interests of progress I think that I should stay with it at that and ask the Committee to reject the amendment.
Lord GIFFORD: In his reply to the amendment the noble Lord has not given the Committee a good reason why it should not be accepted. I find it quite impossible to imagine circumstances in which it could he in the interests of a tenant to change from having a protected tenancy, with full security at a fair rent, to having a protected tenancy, without any security beyond a year, for a fair rent.
When looking at this amendment and at some of the others which are to be moved later this afternoon, I think we should bear in mind that in times—and they are frequent—when the value of property rises steeply, the difference between the value of a house with vacant possession and the value of a house with protected tenants is measured in tens of thousands of pounds. A landlord who wishes to realise the full value of a house with vacant possession can, and will, go to his legal advisers and say, "What can I legally do?" As the Bill is now drafted, they can tell him that one of the things he can legally do is to invite his tenants to move around from one floor

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to another or from one house to the neighbouring house. Without even misrepresenting the position it can be put in a most attractive way to a tenant who may not be enjoying a fair rent that he can have a fixed term for a year and that he can have a fair rent, a lower rent, and perhaps a larger place. All that will be repaid one hundredfold when, in a year's time, the vacant possession value can be realised.
That is why we need to make the Bill tight. In the Rent Act, it was recognised that tenants should not be subjected to the danger of being shifted from one part of a building to another. That is already part of the law—Clause 12 of the Rent Act 1977. Why at least can this not be considered where the invitation is that a tenant should move from one part of a building to another, which is the most likely invitation because it is the least disruptive to a tenant and one which he in his ignorance may most readily accept? Will not the Minister give some ground upon the amendment? It cannot be to anybody's detriment for this amendment, or something like it, to be accepted.
Lord HYLTON: I appreciate the concern which has obviously motivated this amendment. Also I appreciate very much what my noble friend said in his very careful reply. May I put to him this question and suggestion regarding the notice which is provided for under Clause 51(1)(b): In future, would the department draft a model notice which could then be circulated to landlords' organisations and to solicitors and their professional bodies and generally made as widely known as possible? If this could be done, I think it would be helpful.
Lord JANNER: Before the Minister replies, may I underline the suggestion which has been made? If the Minister does not accept the amendment will he at least give an undertaking that in the notice which is handed by the landlord to the tenant, or when a landlord wants to persuade a tenant to move, it will be stated categorically—and I say "categorically" with emphasis—that his protection is being taken away from him?
3.28 p.m.
Lord BELLWIN: I am grateful to my noble friend Lord Hylton for the point
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he has made. I thought I had said, when speaking, that the notice would be a prescribed notice. That was the word which I used. It would be just that. I am certainly able to assuage his concern. But if there should be any doubt whatsoever that it is not as I have said, then we shall very carefully consider it. I am absolutely sure that the notice will be categorical, that it will be clear and that it will be in a prescribed form, but now that my noble friend has emphasised it I will look more closely into it. I am fairly confident that I can assure him about it.
As to the rest of the observations made, I cannot accept them because I do not believe in them. We have to consider what it is that these proposals set out to do. Again I am being very tempted to get into the debate we shall be coming to in a few moments. I shall try as best I can not to do so, but I must make the point that the basic objective of these proposals for shorthold is to give to landlords—those who own homes, those who live in them, those who have premises which they have deliberately kept vacant, for whatever reason—an incentive to bring that accommodation on to the market for tenants who would like to be in it.
I take the point which noble Lords have made, especially the point made by the noble Lord, Lord Gifford, about the kind of situation he envisages. Of course it is not impossible. Nobody can say that anything would ever be impossible, whatever the regulations. And who would know that, may I say with respect, more than the noble Lord who does a good deal of work in this field? But with the safeguard I have mentioned of the kind of notice that we propose, offsetting that, and the great need that exists for this kind of accommodation on the one hand, against the possibility that has been referred to—which I do not entirely deny, because who could?—on balance we say that to achieve our overall objective in the whole of these shorthold proposals we could not accept this amendment. I cannot go further than that.
Baroness BIRK: I shall restrict myself at the moment entirely to this amendment. In view of what the Minister has said, although I think we have gone rather

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wide now, I will withdraw the amendment for the time being, but it will be subject to the production of a draft of the sort of notice the Government are thinking of issuing. Obviously I do not expect the Minister to say at this moment what will be in it, but if he is really considering that then I will not press the amendment. If he is not, or if he is going to be halfhearted about it, then I will press the amendment. But if he will produce something along the lines that my noble friend Lord Janner suggested, in time for us to be able to see it before Report stage, then I will withdraw the amendment for the time being.
Lord BELLWIN: I cannot say that I will reproduce this before Report stage, but what I do undertake is to take it away. I believe this is a critical part of what we are proposing. I entirely understand that, and I gladly assure the noble Baroness that if it is at all possible I will try to do it. But I cannot give an undertaking so to do. If I fail so to do because I cannot, then she will have to decide her course of action.
Amendment, by leave, withdrawn.
Lord MOWBRAY and STOURTON: There is a Statement to be made, and I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

NORTHERN IRELAND: GOVERNMENT
3.33 p.m.
Lord ELTON: My Lords, with the leave of the House I will now repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for Northern Ireland. The Statement is as follows:
"With permission, Mr. Speaker, I propose to make a statement on Northern Ireland.
"The Government have today published a Command Paper entitled The Government of Northern Ireland—Proposals for Further Discussion. Copies are available in the Vote Office.
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"Publication of this paper is the latest stage in a process that began with the resolve expressed in the Gracious Speech to:
seek an acceptable way of restoring to the people of Northern Ireland more control over their own affairs.'
"Last summer I held talks with the leaders of the principal political parties in Northern Ireland. And in October last I announced the Government's intention to hold a political Conference to identify the highest level of agreement on how powers might be transferred to locally elected representatives. To assist that Conference we published a Working Paper (Cmnd. 7763). That Working Paper set out certain principles to which the Government believe any transfer of responsibility should conform; and it gave a number of illustrations of ways in which transferred powers might be exercised.
"The Conference met in Belfast between January and March, and was attended by three of the four main Northern Ireland parties. It did valuable work. It identified a substantial number of issues on which very little seemed to divide the parties. It enabled the parties to describe in detail to me and to each other what their views were and the reasons for them. And it explored very fully the key questions which still have to be resolved if we are to establish any kind of acceptable local administration in Northern Ireland. In addition, we have had the benefit of submissions and views expressed by parties and individuals not represented at the Conference, including the paper submitted to the Prime Minister by the Ulster Unionist Party.
"The document published today has two principal aims.
"First, it describes those areas where it is now possible to see fairly clearly how powers might be transferred. For example, there is a clear desire for the transfer of both legislative and executive powers over a range of subjects similar to that transferred in 1973; and for the establishment of a single elected Assembly for Northern Ireland with about 80 members. As was made clear in the Working Paper the Government at Westminster would need to continue

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to be responsible for certain functions, especially law and order and the determination of Northern Ireland's share of the total of public expenditure; and some arrangements would be needed whereby elected representatives were able to give advice to the Secretary of State on the exercise of those functions.
"Second, the document analyses and puts forward for discussion proposals on those aspects where, as is well known, there is disagreement between the parties, namely, how the executive powers of government in Northern Ireland are to be exercised so as to take account of the interests of both parts of the community ', as the principles in the Working Paper put it.
"On the one hand, some wish to see the Executive formed by the leader of the party or parties commanding a simple majority in the Assembly. On the other, some believe that an adequate role for representatives of the minority community could only be assured if executive powers are exercised by a more broadly-based body.
"It is clear that further discussion and negotiation is needed in Northern Ireland on this issue; and the Government have set out in the Paper specific proposals, on two somewhat different approaches, as a basis for further talks with and between the parties.
"I do not need to tell the House the importance of this subject to the people of Northern Ireland and to the people of the United Kingdom as a whole. For that reason I ask, and I believe that the House would expect, that all concerned study this document with great care. I do not intend this afternoon to summarise the content of the document. It deserves more extended consideration, and my right honourable friend, the Leader of the House, has already promised an early debate, when I look forward to hearing the considered views of honourable Members.
"Following that debate, I and my colleagues will be discussing the proposals as widely as possible in Northern Ireland. I hope also to embark upon bilateral discussions with the Northern Ireland parties, and I shall of course
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welcome any views or ideas they may put forward for our consideration.
"I envisage these talks taking place in confidence and, to begin with at least, with the parties separately. It is not my intention for the time being to reconvene the Conference.
"For my part I approach these talks determined to make progress. I must emphasise that to make progress a constructive approach is needed from the people of Northern Ireland and their political representatives. It is my hope to complete this further stage by the end of the summer recess. The Government can then reach their own conclusions on what proposals it would be appropriate to put before the House.
"The document published today refers to the need for peace and stability in Northern Ireland as a basis for economic reconstruction. The present economic situation in the Province is a telling reminder of how urgent that task is and how desirable it is for the elected representatives of Northern Ireland to be directly involved in it.
"I would say one final thing. The House will be aware, Mr. Speaker, that the men of criminal violence will, if they can, disrupt the progress of political discussion and reconciliation; and honourable Members on all sides will, I hope, join with me in appealing to the people of Northern Ireland to support the security forces who are committed against terrorism, so that these further discussions about their future can take place quietly and with confidence".
My Lords, that concludes the Statement.
3.39 p.m.
Lord BLEASE: My Lords, I should like to thank the noble Lord the Minister for repeating the Statement to this House. The Statement is indeed a very critical stage of the Government's initiative to deal with the constitutional problems involved in the transfer of responsibility and the transfer of powers within the United Kingdom. But I must honestly say that I am disappointed at the Statement's flimsiness and general lack of content. I had expected more from it.

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However, I look forward to reading the Command Paper in due course. I think we must not ignore the fact that we are dealing and deeply concerned with longstanding problems connected with the economic situation in Northern Ireland as well as with constitutional problems and as well as with three hundred years of conflict, mistrust, abuse of power and with terrorism. Certainly we have waited patiently for the past eight months for this stage in the Government's initiative in the search for a constitutional advance, and I wholeheartedly agree with what has been repeated by the Minister in the Statement; it would be wrong to jump to conclusions at this stage, and I do not intend to do that.
As the Minister has already said, I believe we ought to give earnest thought and consideration to the Statement and the White Paper before taking up any traditional stances or any position which would be misleading or unhelpful to the people of Northern Ireland and perhaps unhelpful to the Irish problem and indeed to the people of the United Kingdom. So the point I wish to raise is simply one of clarification. Can the Minister indicate precisely what arrangements there are for having some form of debate in this House about the contents of the Command Paper, and can he further elucidate the timetable for the future talks? Is it intended that the Government shall introduce legislation in the next Session of Parliament, after proceeding with the talks?
Before I sit down I should like to indicate to the Government and to this House that in no way would these Benches wish to impede the Government in their efforts to obtain an agreed form of devolution in Northern Ireland. We are certainly concerned about the constitutional advance but we are also deeply concerned about the economic and social problems that exist in Northern Ireland. The one cannot be tackled without the other, and we should like to give equal care and thought and attention to each of those sections.
Lord HAMPTON: My Lords, I too should like to thank the noble Lord, Lord Elton, for repeating this Statement. We shall of course read the Command Paper
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carefully and I want now to make only a few points. First, perhaps I may echo the words of the noble Lord, Lord Elton, when, a little time ago, speaking of his right honourable friend the Secretary of State, he said that he was a man of both courage and patience. We hope sincerely to be able to add to that the words "of success", also. Certainly we believe that the Government have a correct sense of the urgency of the continued effort to find solutions in Northern Ireland and that the people there are looking for a constructive lead. But we are conscious that it is essential that the different parties in Northern Ireland should understand the meaning of the word "compromise" and realise that any lasting solution demands of them some "give" and not all "take".
Thirdly, I agree with the Government and also with the noble Lord, Lord Blease, in regard to the vital importance of dealing with the critical economic situation, which must not be lost sight of behind the worries about the terrorist position. Lastly, I should like to join the noble Lord, Lord Blease, in asking whether it is possible to have a debate in this House on all the problems of Northern Ireland, as indicated by the Statement, and at a reasonably early date.
3.46 p.m.
Lord ELTON: My Lords, I am grateful for the reception which the noble Lord, Lord Blease, and indeed the noble Lord, Lord Hampton, have given to this Statement. The noble Lord, Lord Blease, recognised the size of the problem and also the intimate nature of its connection with the welfare of the United Kingdom. He indicated, however, that he was disappointed by the flimsy nature of the Statement. I make no apology for that. It seems to me that the greatest disaster which could befall this initiative would be if people were to seize a summary of what was in the discussion document, took that to be the sum total of what was in it and the limit of its extent and then, publicly and in Hansard, sprang to conclusions thereon which would be widely quoted. Therefore, I am greatly obliged to both noble Lords for not pursuing the detail of the document, which I think could prove to be a counter-productive exercise.

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Of course, as a corollary to that, there is a need to debate the Paper properly in Parliament. The Statement referred to the occasion in another place, and in this House the Government regard it as essential that your Lordships should have an opportunity to debate this important Command Paper at the earliest possible moment. This is still a matter for the usual channels, but I understand that an opportunity will be given towards the end of next week, probably on Friday, 11th July. A Motion will be put on the Order Paper, probably today or tomorrow.
I think those are the things with which your Lordships will be most urgently and immediately concerned, but the noble Lord, Lord Blease, asked for clarification of the timetable. Of course, a lot depends on what happens in the summer, but it is the Government's intention to be in a position to digest during the Summer Recess what they have received and then to come to Parliament with proposals which may or may not take the form of legislation, although of course it is likely that they will, but I cannot anticipate the date of that.
I should like to welcome again the commitment of the noble Lord, Lord Blease, to the co-operation of his party in achieving a peaceful settlement for the future of the Province, which is a very valuable gift which he brings to this House. I accept the importance also—as I have already done this afternoon—of the state of the economy as being one of the factors in the context in which these discussions continue. Finally, I should like to thank the noble Lord, Lord Hampton, for echoing what I said on an earlier occasion about my Secretary of State. I think he has now given evidence to all concerned that he has both patience and courage, and I think those are the two most necessary attributes—in addition perhaps to a pair of ears—if we are to arrive at a successful conclusion.
Lord LEONARD: My Lords, while I also wish to congratulate the Minister and Her Majesty's Government on their attempt to bring about some form of compromise in Northern Ireland, I should like to state that it is utterly futile to hope for any form of success without consultations with the Government of Southern Ireland. To me that is absolutely imperative to bring about any form of peaceful
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solution. As I have stated in your Lordships' House on previous occasions, Ireland is a geographical entity and it is a recipe for further strife if Her Majesty's Government do not approach the problem with this in mind. It is natural that all Irishmen, including the overwhelming majority of peace-loving Irishmen, are interested in their country, North and South, and I can only say that, without bearing this in mind—
Several noble Lords: Question!
Lord LEONARD: Would the Minister not agree that, bearing this in mind, there is as much chance of a settlement in Northern Ireland as there is of Belfast becoming the Vatican City?
Lord ELTON: My Lords, the noble Lord certainly will not expect me to agree with that somewhat protracted exposition of his interrogative position. So far as the constitutional position is concerned, the Government are wholeheartedly committed to maintaining Northern Ireland as part of the United Kingdom so long as that is the wish of the majority of the people who live there, as it clearly is at present. However, the document recognises that it is legitimate to work peacefully for the aspirations of Irish unity, and if a majority were ever to give its free consent to a change in the present status then Her Majesty's Government would respect that wish.
As for more practical and immediate matters, if a new Northern Ireland Government has a wide range of powers, including powers over matters such as industry, employment and the environment, then it would be free to consider how best to co-operate on these matters with the Government of the Republic. That makes sense both on grounds of geography and because both Ireland and Britain are partners within the European Community. That is the practical Irish dimension. It also recognises the importance of a settlement in Northern Ireland in the context of the wider unique relationship which exists between the United Kingdom and the Irish Republic.
Lord DONALDSON of KINGSBRIDGE: My Lords, the noble Lord has promised us a debate, and having given us a Statement which really says nothing

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beyond the fact that there is a White Paper for us to study, it is essential that we should have that debate. As my noble friend has said, we are on the same side as the Government in regard to looking for a settlement. However, I think that to have a debate on a Friday of something as important as this is treating the subject in quite the wrong spirit. I think we ought to have a debate. It is far more important than half the Bills we are being asked to consider. I ask the noble Lord whether he could not arrange that we have a debate at a major period of our sittings.
Lord DENHAM: My Lords, I should like to assure the noble Lord, Lord Donaldson, and indeed your Lordships' House, that choosing Friday for this debate was no belittling of the subject at all. The object was to give your Lordships the earliest possible opportunity to discuss it. Now I have made that absolutely clear, perhaps further discussion could take place through the usual channels.
Lord MONSON: My Lords, I, too, would like to thank the noble Lord, Lord Elton, for repeating the Statement. May I ask whether he is of the opinion that the Government's proposals, or tentative proposals, tally with the promise implied in the Conservative election manifesto, even if not specifically spelled out in the manifesto, that Ulster would be treated just like any other part of the United Kingdom, without devolution, which of course the Conservatives rejected in the case of Scotland and Wales, but with the restoration of the upper tier of local government?
Lord ELTON: My Lords, the Province will be treated in exactly the same way as the rest of the United Kingdom in this respect: that the Government which is given to it and which it elects to have will be that which it is prepared to accept. There is no point whatsoever in pursuing forms which would be rejected by any major sector of the population. Our commitment is to give the people of the Province an increasing say in the conduct of their own affairs. That is the direction in which we are moving. This paper is a narrowing down of the options that were
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in the first discussion paper. May I make a technical point? I think I know the reason, but people are referring to this document freely as a White Paper and I think I have seen that mentioned in writing at one stage. Of course, it is a discussion paper. There is an important distinction of machinery here which I should not like to be overlooked.
Lord ELLENBOROUGH: My Lords, in thanking my noble friend for repeating the Statement, I wonder whether I might ask him three questions. First, are not the Government being strangely inconsistent in that having opposed devolution in Scotland and Wales they are now trying to impose some form of probably unworkable devolution in Northern Ireland? Secondly, am I not right in thinking that Ulster representation at Westminster is to be increased from 12 to 17, quite rightly, so as to reach parity with the United Kingdom as a whole, and is there not really some danger that these proposals are going to rekindle Scottish nationalism? Lastly, and most important, why do the Government not feel that the best way to heal the divisions between the two communities is by integrating Northern Ireland more closely within the much wider, and I should have thought much safer, context of the United Kingdom as a whole, rather than trying to set up a complicated assembly or parliament which will inevitably act as a focal point for suspicion, bitterness and rivalries as among the various factions?
Lord ELTON: My Lords, there is a considerable range of ways in which the situation in Scotland and Wales differs from that in Northern Ireland. I will not weary your Lordships by producing the catalogue, but merely say that in Northern Ireland the whole of the population wishes to move in the direction of devolved government, and that cannot be said of either the Kingdom or the Principality. I also made it clear, and I really think the House would accept this point, that there is no prospect of a solution of any kind if it is not broadly acceptable to all the considerable bodies of opinion within the Province. If we tried to impose integration which would be repugnant to a very large number of people, we should really have wasted our time for 14 months.

HOUSING BILL
House again in Committee, on Clause 51.
3.58 p.m.
Lord STRABOLGI Lord STRABOLGI moved Amendment No. 116A:
Page 36, line 4, at end insert—
("(3) A tenancy of a dwelling-house is not a protected shorthold tenancy if it relates to a dwelling-house which—

(a) was subject to a regulated tenancy at the commencement of this part of this Act; or

(b) has, since the commencement of this Part of this Act, become vacant.").

The noble Lord said: I beg to move Amendment No. 116A standing in my name. I think it is conceded that the principle of shorthold will make considerable inroads into security of tenure. This is not a party matter. The noble Lord. Lord Bellwin, on one of the previous amendments spoke about "the views of noble Lords opposite". Well, I think the views that we hold will be held also by many of his noble friends. Security of tenure we owe, I think, principally to Mr. Christopher Tugendhat, the previous Member for Westminster, who was my Member, and other central London Conservative Members of Parliament. Mr. Tugendhat was a very good MP, and I personally was sorry when he left Westminster to take up an important post in Europe.
The reason why he strove so hard, and eventually got the Government of Mr Heath to agree, to put security of tenure on most flats below a certain rateable value, which indeed was to include most flats except the expensive penthouses, was because at that time we were in the middle of the break-up era which began in the late 'sixties and then came to its height in the early 'seventies, and the Rachmanism that went with it. Indeed over the last 10 or 15 years we have seen a complete revolution in the methods of tenure of apartments, in the centre of London mainly, and the other big cities.
In the era of cheap money, when they were able to borrow money cheaply from the banks, property developers then acquired these blocks of flats from old-fashioned companies, many of them family trusts. They then persuaded, or threatened in various degrees, the tenants
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with having to buy the long lease or to get out. It was called "winkling out". Of course many tenants then bought their long leases and lost the security of tenure, if those leases were for over 21 years, and those tenants are now in trouble with their service charges, as we shall find when we come to Schedule 18. Therefore, security of tenure was put on most flats in London and the big cities.
One of the snags of shorthold is that it removes the security that goes with the flat or the dwelling. At present if a tenant leaves his dwelling and a new tenant moves in the new tenant enjoys the same protection. But after shorthold comes in, if anybody has to move the tenancy will then go into shorthold. The Government say that nobody has to do this and that all existing tenants will have the same security that their party put on tenancies some 10 years ago. People often have to move. The family may grow or they may want to have their mother-in-law to live with them. They may have been abroad and have returned. Not all people have large companies who buy houses and apartments for them. Many of them have to find their own accommodation. They will go on to shorthold where they will he given a choice of a tenancy of one year, perhaps; if they are lucky, five years, with no opportunity to renew it. They will therefore have an increasing sense of insecurity. It will not even be worth having the curtains made.
I concede that there may be a case for shorthold on empty property. If there are as many properties empty as the Government claim, there may be a case for that. But there is no case for changing all properties into shorthold because, within a decade or two, there will be no security of tenure left at all—this, of course, in an area of acute housing shortage. This all started, of course, with a Private Member's Bill by Sir Brandon Rhys-Williams, but the aim of his Bill did not extend at all to future property becoming vacant. It was made quite clear that this was only for empty property. Indeed, the sponsor of the Bill and all the other Conservative MPs in Central London—this is not at all a party matter—are very concerned about this development and about the genie that has been let out of the bottle. They probably did not know what had been started.
The Government's switch of policy will lead to greater insecurity in the private sector, and it must also be seen in conjunction with increasing rents, the services charge loophole, and the acute pressure on housing in Central London. It is also not in line with the Government's very clear undertaking during the election campaign. One of their spokesmen (and I heard this myself) was asked by a listener who phoned in just a few days before polling day:
"I have always voted Conservative all my life. One thing I am worried about though are the proposals that you have for shorthold".
The spokesman said:
"There is no need to worry, only properties that are empty on a given date can fall within the scheme that we propose as regards shorthold".
If it is empty now, not if it becomes empty subsequently—I think I have made that point quite clear. Later on he said:
"What we have said is that where there are empty properties on a given date then those could be rented on fixed terms which would give security during the period of that term".
That was reinforced by the Conservative election manifesto which said:
"There are now hundreds of thousands of empty properties in Britain which are not let because the owners are deterred by legislation. We intend to introduce a new system of shorthold tenure which will allow short, fixed-term lettings of these properties"—
I repeat that, "of these properties"—
"free of the most discouraging conditions of the present law. This provision will not, of course, affect the position of existing tenants".
As the noble Lord, Lord Evans, said, there are many good landlords. I have always been fortunate in that respect myself. But there are also a number of landlords who will take advantage of this new provision. If, as the Government claim, there are all these huge numbers of empty properties, why do they not concentrate on the properties that are empty now and leave the other ones alone? That is why I submit this amendment to the Committee, because the tenants of Central London are considerably worried about it, and so are their Conservative representatives. There is considerable worry about this, and I hope the Government will have second thoughts.
4.5 p.m.
Lord BELLWIN: Again, I shall resist the temptation to make some of the
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observations on the generality of the intentions behind the shorthold proposals, although I was very interested in some of the historical points made by the noble Lord, Lord Strabolgi. These amendments would have the effect of restricting short-hold to tenancies that were not being let on regulated tenancies at the time the Act came into operation. It would also prevent from being let on shorthold any dwelling that became vacant after the Act comes into operation. Any dwelling that becomes vacant after the Act comes into operation would, if this amendment were passed, be prevented from being let.
I presume from what the noble Lord said that the intention of this amendment is to ensure that there is a continuing supply of accommodation available for lettings on ordinary regulated tenancies. I do not believe it would achieve this. In my view, the effect would be precisely the opposite. It would encourage landlords to sell as soon as they obtained vacant possession. The Government certainly hope that shorthold will encourage landlords who have been holding property vacant because they are deterred from letting by existing legislation, and that they will make that accommodation available for renting. We firmly believe that properties that are currently vacant should be a source of shorthold lettings, but the Government do not believe that this should be the only source. One of the reasons for the decline of the private rented sector is that landlords are selling when they get possession. I hope that shorthold will encourage them to consider re-letting rather than selling. The effect of this amendment would be to prevent them from letting on shorthold, and it would therefore severely restrict the opportunities for so doing. That may well be its aim.
I just cannot see how it can be logical to suggest that because a dwelling was at one time let on a regulated tenancy basis it should thereafter remain empty. What is magic about the date of commencement of the Act? It just does not make sense to me. The noble Lord, Lord Strabolgi, said this is not a party matter. I am glad to hear him say so. Would that his party had not already committed itself not only to doing away with shortholds but to going much further, as I shall mention when we come to discuss the matter

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further. I would have thought it was very much a party matter. It is true that there are members on, if I may put it that way, my side who are concerned, but I am satisfied that as we go through these amendments and as we discuss the matter a little further during today we shall be able to give explanations that will satisfy them.
The noble Lord said, why not concentrate on empty properties? Certainly that is one of the very hopes of what shorthold will be, that it will induce those who own those empty properties now to let them, whereas hitherto they have been unwilling to do so. Now they will be able to see a time when that letting will come to an end should they so desire it to do. But at least for a time there will be properties brought on to the market, if this succeeds, which at present are not there. They are not available to anyone at the present time. They are either empty or they are premises which are under-occupied for whatever reason. That is a fact.
I keep saying, to make all the points I have to make on the general philosophies behind shorthold, that as far as this particular point is concerned it will not, as the noble Lord, Lord Strabolgi, says, create additional pressure on housing in the centre of London. It will have exactly the opposite effect. If it has any effect at all, as we believe it will, it will be precisely the opposite. It is for that reason that we must resist the amendment.
Lord STRABOLGI: I am sorry that the Government cannot accept the amendment. As I said before, it would have been much better if they had started this new experiment with empty properties and allowed security of tenure on existing inhabited dwellings. I do not think that they have any idea of the sense of insecurity that they are bringing to people who do not own houses but who live in these dwellings. When they go into a dwelling of this kind they do not know how long they will be there—it may be one year, three years, four years or five years. They will be there entirely at the whim of the landlord who, of course, will bring all kinds of pressures to bear upon them in other ways in respect of not going to the rent officer and so on.
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However, once again these are points which we can discuss on subsequent amendments. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.11 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 117:
Page 36, line 8, leave out subsection (4).
The noble Lord said: As the clause stands at present it appears to allow the Secretary of State a dispensing power to be exercised very freely to release the only shred of protection that a shorthold tenant has, which is that the rent he pays must be a registered rent. I think that I understand the philosophy behind the proposal in the Bill in that the Government hope that there will be so much vacant property available in various areas of the country that this regulation will not be needed. But I should have thought that in a matter of this importance the deliberate protection of the shorthold tenant is minimal, and that this shred of protection of enjoying a registered rent is not one that we should be willing to dispose of in this fairly easy and cavalier way. In my view the Secretary of State should have to come back to your Lordships' House and Parliament generally if he wished to dispense with this power.
It seems to me that because of the very sensitive nature of this legislation, and the very sensitive balance that many of us feel as to whether we can or cannot support it, it is ill-advised that this clause should be inserted in the Bill and that is why I beg to move this amendment.
Lord FOOT: I should like to speak in support of my noble friend on a rather different ground from the one on which he has put the matter to the Committee. It seems to me—and I do not know whether I am the only person in the Committee who has this reaction—that subsection (4), which the amendment seeks to delete, is almost unprecedented in the legislative history of this country. If one looks at the clause, one finds that subsection (1), paragraphs (a), (b) and (c), sets out the conditions which must be complied with in order that a tenancy can be a protected shorthold tenancy. That, of course, if it is enacted and carried, will be

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enacted—as every part of this legislation is enacted—under the authority of the preamble to the Bill. I shall quote the preamble which says:
"Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same".
Then, to my astonishment, when we come to subsection (4), which we are discussing at present, we see that it provides that:
"The Secretary of State may by order direct that subsection (1) above"—
that is the subsection to which I have been referring—
"shall have effect, either generally or in relation to any registration area specified in the order, as if paragraph (c) were omitted".
Am I wrong in thinking that what that is saying, in effect, is that it will be within the power of the Secretary of State, and within his unlimited power, to abrogate what Parliament has decided upon? He will not only be able to abrogate it geographically, because the subsection provides that he may nullify the condition (c) generally or in relation to any registration area. Therefore, he may not only nullify the whole decision of Parliament with his decision, but furthermore the power which he is given under subsection (4) appears to me to be entirely unfettered. At his whim, and subject to no control whatever, he may abrogate and nullify the condition (c).
There is no mention in the subsection of any considerations to which the Secretary of State must apply his mind. On that account I suggest—and perhaps the Law Officers will be able to deal with this point in due course—that the decision of the Secretary of State, if he does decide to annul this condition either in whole or in part, will be wholly unchallengeable in the courts because it is quite impossible to say that his decision is ultra vires if no conditions are attached to the way in which he exercises that discretion.
I suggest that the third consequence of this subsection is that, because the Secretary of State will be entitled to apply the subsection or say that the subsection shall not apply to one particular region but shall apply to another, it will be within the power of the Secretary of State, of the Executive, to distinguish between the
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rights of the subjects in this Realm depending upon the accident of whether they happen to live in one place or another.
To my mind it is astonishing that at this stage, after the Civil War that we fought in this country to contest the divine right of kings, we should be asked to enact today that it shall be within the power of the Secretary of State to decide whether something which has been enacted by this Parliament and this Queen in her Realm shall be altered, and shall be, if necessary, abrogated and nullified. This is a much bigger point than the point involved as regards the Housing Act. It is a constitutional point and I suggest, with respect, that the inclusion of a clause of this type in any Act of Parliament is wholly unconstitutional and wholly improper.
Lord HYLTON: It is important that the constitutional point has been raised. I feel that the onus is on the Government to show that subsection (4) is absolutely necessary, otherwise we are faced, it seems to me, with a very uncertain state of the law if we pass the Bill in its present form.
Lord STEWART of FULHAM: I have listened with great interest to what the noble Lord, Lord Foot, has said. Like him, I have been trying to think whether there is any parallel for this sort of thing. I doubt that there is, but I do recall an item in the Rent Act 1957 that made it possible for the Secretary of State, by order, to decontrol certain areas. Of course, it is not a very happy precedent. The experience of what was called "creeping decontrol" was so unattractive that, after a time, the Secretary of State had to give an undertaking that there would not be any more for a while—at least not until the next general election was over. However, it was not as drastic a defiance of what is in an Act of Parliament as is now proposed.
There are two further points. The Secretary of State can create a situation in which paragraph (c) can be set aside. What happens? I think that it is clear enough that certainly one thing happens; namely, any future shorthold tenancy created, can be created, if the Secretary of State has used these powers, without there being any registration of rent.

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But what about shorthold tenancies already in existence with a registered rent? The offending subsection says:
"The Secretary of State may by order direct that subsection (1) above shall have effect, either generally or in relation to any registration area specified in the order, as if paragraph (c) were omitted".
I do not know whether, if he made such an order, that would be interpreted to mean that shorthold tenancies already in existence with a registered rent under subsection 1(c) no longer had such a registered rent; that the tenant had no certainty as to what the rent might become. I may be wrong in my interpretation of it, but I think that he would be a very resolute person who would flatly and confidently contradict me immediately. The tenants really ought to know where they stand on this matter. Does it apply only to future shorthold tenancies, or does it undermine the situation of people who have already entered into shorthold tenancies with a registered rent?
Then the noble Lord, Lord Foot, very wisely mentioned the unfettered nature of the power of the Secretary of State. Even the regulations under the 1957 Act allowing for creeping decontrol had to be made by means of an order which required the approval of Parliament. Surely if the Secretary of State is to make an order of this kind, it ought to be one that runs the gamut of parliamentary approval. Perhaps one might be able to dig out somewhere in this voluminous Bill a clause saying that an order made under Clause 51 must have the approval of Parliament. However, I am bound to say that I have not yet found it, though he would be a rash man who would say for certain that anything was not in the Bill.
Lord FOOT: Perhaps I may interrupt the noble Lord in order, I hope, to help him. I should like to draw his attention to Clause 140, which provides that:
"Any power of the Secretary of State to make an order or regulations under this Act shall be exercisable by statutory instrument subject, except in the case of regulations under"—
and then it quotes certain sections—
"or an order under section 59 or 142, to annulment in pursuance of a resolution of either House of Parliament".
In other words, certain regulations can become effective only if they are endorsed by Parliament; but that provision does
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not include Clause 51(4), which is the one we are talking about at present.
Lord STEWART of FULHAM: It is that which worries me. I think that the Government ought to look at this again. They should be able to say to us with confidence what the position is of a tenant who has already entered into a shorthold agreement, if this power is used, and be able to tell us on what authority they make that pronouncement. Secondly, they ought to put some greater limit on the powers of the Secretary of State than there apparently is in the Bill as it at present stands.
Lord BELLWIN: In moving the amendment, noble Lords have argued that wherever and whenever a shorthold letting takes place the rent must be one which the rent officer has registered. They have suggested that without a registered rent tenants will be subject to excessive pressure. In so arguing they have illustrated a tendency in landlord and tenant legislation which your Lordships may agree has caused much unnecessary difficulty. The tendency of which I am thinking is to legislate for the whole country on a uniform basis in response to a problem which has arisen in pressure areas. For example, can anyone seriously question that it was something of a disaster to apply full Rent Act protection to furnished lettings everywhere, as was done in 1974 when the problem, such as it was, and is, was alleged to be serious only in London and other city areas—areas of housing stress. The same is true of rents. In many places landlord and tenant would probably be happy to agree rents between themselves without the need for statutory intervention.
Where these rights have been established we are not, of course, taking them away. I am simply illustrating the fact that much previous legislation in this area has been far more sweeping than necessary. Perhaps I may digress for a moment and say that when I was on the committee studying the workings of the Rent Acts 1965 and 1968, to which task I was appointed by the noble Lord, Lord Greenwood of Rossendale, one of the facts that impressed me so much, when reading through and when taking oral submissions of evidence from hundreds and hundreds of organisa-

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tions and individuals, was the great problems that have been created by legislating for everywhere on a uniform basis in this way. There were also many other problems, some of which will come up during the course of discussions on other aspects of the Bill. This certainly was one of them. There were also the great fears to which it had led in landlords who had wanted to be landlords and who were only waiting for the day when they could no longer be landlords—landlords who wanted to get out of renting for reasons about which we all know.
Referring to the amendment specifically, where the rights, to which I have referred, have been established we are not, of course, taking them away. I am simply illustrating the fact—and I repeat it—that much previous legislation in this area has been far more sweeping than necessary. It is clear that this thought had occurred to the authors of the Labour Rent Act 1977. Section 143 says that where in relation to an area the Secretary of State is satisfied that the demand for rented accommodation of a certain category is not substantially greater than the supply, he can, by order, provide that no such accommodation in the area shall be the subject of a regulated tenancy. In other words, both security of tenure and rent regulation could disappear completely.
Turning back to shortholds, as it so happens we have been more stringent than the Rent Acts by providing in Clause 51(1)(c) that a fair rent must be registered for shorthold. In an ordinary letting the Rent Acts provide that a fair rent may be registered; in other words, registration is optional. In the subsection which this amendment seeks to remove we have simply allowed for a reversion to the normal Rent Act position of optional registration. If your Lordships agree that conditions in private renting can differ radically from one area to another—and I should hope that that is not disputable—it seems only sensible that we should have a power to revert to the normal Rent Act position by area if that seems reasonable in the circumstances. I certainly do not rule out a use of this power. There would otherwise be no point in having it in the Bill. Whether it is used, and where, would be a matter for my right honourable friend to decide
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in the light of national and local circumstances.
I should like to touch upon the point referred to by the noble Lord, Lord Stewart, about the position on rents already registered. I should like to stress that reverting to the normal Rent Act position would in no way take away the force of any registered rent in operation for a shorthold; nor would it take away the right of landlord or tenant to apply for a fair rent at any time. When one considers that the Labour Rent Act contains a power to remove the whole fair rent system and security by area, Clause 51(4) seems a very mild proposal indeed. I am quite sure that it should be retained.
I should like to refer to one or two other observations that were made, certainly by the noble Lord, Lord Foot. With respect, I should have to point out that Clause 51(1)(c) can, in fact, only be brought in by order by a Negative Resolution and, therefore, if prayed against it could, of course, be debated—it could not happen on its own. Whether or not there are, indeed, any aspects of this whole matter which are unconstitutional, in that the point has now been made, I am sure that my colleagues will look very carefully at that. I hope that that will satisfy my noble friend Lord Hylton who expressed concern on that matter. Of course we shall look at it. From my own knowledge of this, I certainly doubt it, but if it is so, quite clearly we must and shall look at it.
As for other points made by the noble Lord, Lord Stewart, who cited the precedent of the 1957 Act for decontrol, we shall be discussing certain aspects of that a little later. I am not sure that I quite follow how this makes a point in favour of the amendment; nevertheless, it is a matter about which I am looking forward to talking later. I do not think that I can helpfully add much more. I believe that it is another part of the objections to shorthold which I fully understand are held by noble Lords sitting opposite. I hope that in turn they would accept from me that we believe, with equal sincerity and conviction, that these proposals are a tremendous advance and step forward in this problem. I fear that so far as the amendment is concerned, I cannot accept it.
4.30 p.m.
Lord FOOT: May I follow the noble Lord before the noble Lord, Lord Boyd-Carpenter, because there is something I want to withdraw? When I interrupted the noble Lord, Lord Stewart, and drew his attention to Clause 140 of the Bill, I was in error. It is correct that the particular subsection we are talking about does come under the Negative Resolution procedure. I accept that, and I apologise to the Committee for having, temporarily at any rate, misled them.
However, that does not go to the gravamen of the argument that I was addressing to the Committee. The noble Lord, Lord Bellwin, sought to draw an analogy between this subsection in this Bill and a section in some earlier Rent Act. The section that he quoted—and I can only remember it from what he had to say—went something like this: "The Secretary of State shall, having regard to this, that, and the other, if he sees fit and thinks reasonable, make an order". That is very different from the subsection we are trying to delete from this Bill. The discretion of the Secretary of State here is unfettered in any way whatever. He has not got to be satisfied about anything. He has not got to apply his mind to anything. There is no way in which, if he laid an order, it could be challenged in the courts as being ultra vires.
I address my remarks now not on any party basis whatever but because I believe that we should be making at any rate a minor blunder if we allowed this subsection in this Bill to establish a precedent for the future. I dearly hope that if this matter is carried to a Division the Government Whips will not call upon their cohorts to come here and vote upon a matter of constitutional principle, when most of them—I do not complain about this, of course—have heard nothing of the discussion that has gone on. I hope that if we see fit to carry this amendment to a Division the Whips will not be put in control of their supporters in order to vote the amendment down.
Lord BOYD-CARPENTER: From the practical point of view, my noble friend the Minister has satisfied some of the doubts on this amendment that I held at an earlier stage of the debate. I hope he will not think it offensive if I say that
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he left me a little less happy on the constitutional point which was so well deployed—it is indeed a family habit well to deploy these constitutional points—by the noble Lord, Lord Foot.
It is now clear—and here the noble Lord, Lord Foot, has generously admitted that he was in error on the original point—that if the Secretary of State sees fit to make an order under subsection (4), that order will be subject to the Negative Resolution procedure. That is certainly how I also read it. But those of us who have had some experience of the Negative Resolution procedure know what an inadequate safeguard this is for a matter of substantial importance. In another place, as I understand it, the time for discussion on Prayers to annul these Negative Resolution instruments is restricted. It takes place late at night. In this House it is a very long time indeed since such a Prayer was carried to a Division. I wonder whether the Negative Resolution procedure is sufficient to cover a situation in which the Secretary of State will be giving himself power to suspend the operation of quite an important part of this Bill—soon, I hope, to be an Act—in respect of particular areas.
I formed the impression that my noble friend was his usual confident self on the practicalities of housing administration—and he has reason to have every confidence in himself on that subject because his experience is almost unique in this House—but seemed to me less than happy when he indicated that he would have another look at the constitutional aspect. For my part, I should he greatly relieved if my noble friend, without making any commitment, would say that between this stage and the next of this Bill he would, with his right honourable friend the Minister, have a look at the idea of substituting the Affirmative for the Negative Resolution procedure in respect of these orders.
As the Committee knows, if you have the Affirmative procedure the Government have to bring the instrument before the House, and they normally have to do it at an hour of the day when debate is effective. I hope that my noble friend, who seems to me very reasonable on this aspect, will indicate that he would be prepared, in view of the doubts raised—some of which seem to me to go beyond

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the normal party or controversial issues of this Bill—to see whether the Affirmative procedure could be substituted.
I know it iF never popular in Government circles to provide an additional order that comes in the Affirmative procedure. From the point of view of the Whips it is a nuisance, because they have to find time for it at some stage. But there is some force in what the noble Lord, Lord Foot, said about the fact that the subsection which would be suspended is to be the outcome of a considered legislative decision of both Houses of Parliament. Its suspension, perhaps over wide areas—I express no view; it might be sensible to suspend it over wide areas; I do not know—is quite an important constitutional act for any Minister of the Crown to take. Although I have the utmost confidence in the present Secretary of State there is always the possibility that there may one day be another in whom one might have much less confidence. I should like to see the Affirmative procedure adopted.
Lord HYLTON: In support of my noble friend Lord Boyd-Carpenter, may I just point out that Clause 59 of the Bill is already proposed to be under the Affirmative procedure.
Lord BELLWIN: Of course I readily agree that we should do precisely what my noble friend says. I am grateful to him for the way he put it. As I think I indicated before, how could I be on certain ground when a constitutional point is raised by noble Lords of experience and knowledge? Clearly one would have to look at it. The suggestion that my noble friend makes, that possibly the Affirmative order procedure might be better, could indeed be an answer. I cannot say, and I know he does not expect me to say at this moment, that that is so. I cannot make a commitment, but I think the point is valid that we should look at it. I think also that the power to the Secretary of State would be a far-reaching one and involve an important matter. Therefore I have no hesitation in saying yes, of course, we will do precisely that.
Lord AIREDALE: While the Minister is in this receptive mood, may I suggest to him that if he wants to rely upon that
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section of the earlier Act which he quoted, which began,
"The Secretary of State, if satisfied that certain circumstances exist, may make an order",
he should take this subsection away and write into it what the Secretary of State has to be satisfied about; because Parliament really would like to know what has to go through the Secretary of State's mind before he makes an order under this subsection.
Lord BELLWIN: I do not want to drag out this matter—we have so much ahead of us—but on that latter point I should have to say that of course we will look at it, but I am very doubtful whether the Secretary of State would want to lay down such rigid lines. It would take away from him any flexibility whatsoever. Indeed, the point I made earlier was that one of the matters that have so bedevilled housing above all other things in this country has been some of the attempts to legislate nationally for situations which differ so much locally. Having said that, I would add that of course if we are looking at this matter we shall look at everything, that is said on it.
Lord EVANS of CLAUGHTON: I had not realised the extent of the problems that would arise when I moved the amendment. From the housing administration point of view, the point of view on which I am perhaps more expert than I am on the constitutional point, I am not happy with the proposal to allow the Secretary of State to make these orders. However, in the light of what the Minister said and the helpful remarks made by noble Lords in all parts of the Committee about this, and the undertaking the Minister has given to have another look at it—bearing in mind that I can always return with an amendment on Report if I am not satisfied—I will withdraw the amendment. I had not realised that I said the Secretary of State was taking cavalier powers to himself, but on listening to my noble friend Lord Foot, I realise how apposite those words were, particularly bearing in mind the distinguished father he had who was a great expert on keeping cavaliers in their place. On those terms, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 118 not moved.]
4.41 p.m.
Lord STRABOLGI Lord STRABOLGI moved Amendment No. 118A:
Page 36, line 20, at end insert—
("(6) A tenancy of a dwelling-house is not a protected shorthold tenancy if prior to the grant of that tenancy a previous protected shorthold tenancy of that dwelling-house had been granted by the landlord and had been the subject of proceedings for possession under Case 19 in Part II of Schedule 15 to the Rent Act 1977.").
The noble Lord said: With permission, I will speak at the same time to certain consequential amendments, namely, Nos. 122A, 122B and 282A. This amendment, I submit, is an improvement on No. 118, which was not moved. This series of amendments seeks to give the shorthold tenant first option on any subsequent letting of the dwelling-house. It will be recalled that the idea that the shorthold arrangement should provide for such an option originally came from Sir Brandon Rhys Williams' Private Member's Bill, which I referred to earlier but which, like so much else, has been changed by the present Bill.
All that the amendment requires is that the notice served on the tenant should contain a declaration by the landlord that he does not intend to grant a further tenancy of the dwelling-house. Should the matter go to court, that declaration would then be part of the landlord's case for possession. This proposal thus entirely avoids the difficulties foreseen by the Minister in another place in establishing a separate procedural mechanism to deal with the offer and acceptance of an option. Nor is the amendment linked to the proposal that the rent officer should keep a separate register of all short-hold tenancies. That is a propsal that has its merits, but the Minister made clear on Report in another place that in his view a register for shortholds would be cumbersome, and there is probably much in what he said.
If the landlord cannot give some good reason why the existing tenant is unsatisfactory, and the landlord wants to continue letting the accommodation, then he is constrained to offer the existing tenant the option to remain. That is the nub of the option. The landlord can only get possession against the bad tenant when he intends to take the dwelling
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out of the market for renting. Thus good, shorthold tenants—I am sure there are many good shorthold tenants, just as the noble Lord continually reminds us that there are many good landlords—know they will be secure not only for the initial term of the tenancy but until the landlord no longer wishes to rent the dwelling. I beg to move.
Lord BELLWIN: This series of amendments would severely restrict, in a way we could not accept, the circumstances in which shorthold could be used. Their effect would be that a landlord could be sure of letting any particular dwelling on shorthold once only and that he could not let on shorthold at all any dwelling he might want to let again, whether on shorthold or, for that matter, on any other type of tenancy at some time in the future. That would be quite unacceptably restrictive. The Government's view is that shortholds should be widely available to encourage landlords to go on letting and to make more accommodation available. That is the whole object of the exercise.
The only restriction we are placing on the the use of shorthold is that an existing statutory or protected tenant cannot have his tenancy converted to a shorthold. We have done that because of our manifesto commitment that short-hold would not affect the security of existing tenants. As I have indicated, these amendments would completely undermine the whole concept of shorthold, and we therefore cannot accept them.
Lord STRABOLGI: The purpose of this series of amendments was effectively to give the shorthold tenant the option to remain where the landlord intends to continue renting and where there is no reason why, if he is a good tenant, the landlord should not continue renting to him. However, clearly they are not acceptable to the Government and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.46 p.m.
On Question, Whether Clause 51, as amended, shall stand part of the Bill?
Baroness BIRK: We are dealing with the whole basis of this part of the Bill

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and it seems that to have a general debate on the matter on Clause 51 is as good a place to have it as on, say, Clauses 50, 52 or 53. We are dealing with the whole principle of shorthold. I find—and I do not think this view is restricted to myself or members of my party—very little enthusiasm for this concept, except probably among members of the Conservative Party. It is clear from a Westminster Council press release which I read that they have very grave doubts about it, and they too discuss the problems of shorthold as set out in the Bill. Tenants do not like it because it leaves them with the threat of homelessness. I also find it strange that, while it is called "protective shorthold", the protection is very limited; the shortholds as laid down in the Bill are from one to five years and, as we know, in such a situation the minimum will become the maximum, so the likelihood is that shortholds will not be longer than one year.
Landlords do not like it. Certainly I have not seen a great deal of correspondence from landlords saying, "Support this". They are concerned about it because there is very little financial return in it for them. The taxation position makes it far more advantageous for a landlord to sell than to rent. Despite what I am sure the Minister will say, we have seen that from as far back as 1900, the private rented sector in this country has been shrinking all the time. Even after decontrol in 1957 the rented sector continued to decline. This seems, therefore, to be an ideological creature of the Conservative Party, who are committed to reviving the private rented market despite all the evidence to the contrary.
Indeed, there is very little evidence that this will generate new lettings. The surveys do not show that it will bring more accommodation onto the market and it will mean that lettings which are at the moment secure will, when they come to an end, become shortholds, so the whole area of secure tenancies will gradually be eroded—and it will not be such a gradual process because I fear it will happen quite quickly, and then we shall have a generation of homelessness. This is a delayed time bomb because once one gets beyond the first phase of shorthold lettings, when the tenant of the so-called protected shorthold will have
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no protection, it will become a very insecure shorthold letting and may necessarily go on for a period of only one to three months.
Today the private sector can exist economically only on high rents; this is what we are seeing. What about the average family who are looking for somewhere to live, but are unable to buy? Where can they go? Their only resort is to local authority housing—the public sector—or to housing associations; and these are the bodies which should be, and are, taking over the stock of rented accommodation. Here I refer to Part I of the Bill dealing with the compulsory sale of houses, or as the Bill describes it, the right to buy. These provisions make it extremely difficult for local authorities to increase their housing stocks, or even to keep them up. Because of the cut in the housing investment programme there will be a fall in rented accommodation, which is so very important for many families in this country.
What I regard as particularly unfortunate about the Bill is that the safeguards which were included in the Private Member's Bill moved by Sir Brandon Rhys Williams in another place have largely been dropped. Those which were in fact, accepted had to be pressed on the Government. I have in mind, for example, the provision about rent registration in relation to the application for shorthold. There has been no willingness to include in this Bill basic safeguards which in another place were incorporated in a series of Bills with considerable Conservative as well as Labour support.
In the original Private Member's Bill, for example, there was a provision that to start with only empty property should be available for shortholds, which makes sense. The aim was to bring empty properties into the market, and there is something to be said for that. We moved some amendments the other evening on those lines. The present Bill contains nothing regarding the minimum standards, and now the Government have just rejected a proposal regarding a tenant having first refusal at the end of a short-hold. My noble friend who moved the amendment providing for that was absolutely right. If the tenant becomes a nuisance and gets into arrears, he can be evicted; but he should have the first

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option. Yet under this Bill that will not happen.
I can see some of the effects of short-holds. There will he, for instance, the breaking up of many mansion blocks of flats. The landlord will be able to hold on to the shortholds as they become vacant, until the market rises, or alternatively sell the lot as an entire portfolio. Another of the effects will involve flats above shops in instances where the shop owners do not want to live there but do not want to create secure tenancies. In such cases, there should be shorthold lettings. However, in other respects short-hold lettings represent a frightening danger to security of tenure for tenants in this country.
The Government have often spoken about the single homeless, and when they were in opposition they were very concerned about them. It is claimed that the new form of tenure will benefit single people, particularly young single people. But in fact it will not. It will worsen their already desperate housing situation. Surveys carried out among young people by CHAR and After Six show quite conclusively that in 1979, for instance, most inquirers were wanting not temporary or short-term accommodation, but secure accommodation. About 5,000 people were already homeless. Half of them were on the streets and half of them were in temporary accommodation.
I cannot see how shortholds will help the single homeless, the average family, or indeed the majority of people looking for rented accommodation in this country, who in fact want permanent accommodation. At this stage I am restricting my remarks because we have a large Bill to get through. Many of us feel very strongly about this matter, and I urge that Clause 51 should not stand part of the Bill.
Lord EVANS of CLAUGHTON: T have given considerable thought to the question of shorthold tenancies, and believe that many of us, in all parties, will probably want to praise Sir Brandon Rhys Williams most warmly for the initiative that he took in the other place in introducing in season and out of season proposed legislation for the introduction of shortholds. Perhaps he was unduly idealistic in his belief that the proposal
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would produce in the private sector houses available for letting to young people. Nevertheless, it was a very fine initiative, and one which many of us supported at the time. Ever since the introduction of the rent and mortgage interest restriction Acts people have been looking for ways to revive the private housing sector, and the initiative of Sir Brandon Rhys Williams was perhaps one of the best. But, unfortunately, the protections which Sir Brandon and his friends included in his Bill have not been incorporated by the Government in the legislation that they have now presented.
I considered that the Government were most insensitive in that they did not include Sir Brandon Rhys Williams in the deliberations on the Committee stage of the Bill in another place. He is well known as an expert in this field, but because of the guillotine on Report he was not able at any length, to put forward the views that he and people like him hold on shorthold tenancies. Therefore, there was a tendency for the provisions on shortholds to go through in another place without being properly and fully debated, without the protagonists of a liberal short-hold policy having the opportunity to speak. Therefore we must try to fill that gap as best we can in this Chamber.
I think that the concept of Sir Brandon Rhys Williams was idealistic, but it was none the worse for that; and perhaps one is not a member of my party if one is not a bit of an idealist. In my view the gap in private lettings, which we all know about, is being filled best by housing associations. They are doing very well. I believe that it is widely accepted that despite Government cutbacks, the housing association movement is probably providing rented accommodation in the semi-private sector, as the noble Viscount, Lord Gage, is the first to tell us. Therefore I should have thought that in the future that kind of accommodation, outside the public sector, will most likely be found through the housing associations.
Not all landlords are bad; only very few are. Probably the average landlord owns only two or three houses. The advantages of selling in the present economy, rather than letting again, even on shorthold, are so great that most landlords would not in any event seek to take advantage of the shorthold pro-

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visions, as the noble Baroness pointed out. There is another point here. In the other place the honourable friends of the noble Baroness, particularly Mr. Kaufman, stated pellucidly that if there was not greater protection, a future Labour Government would abolish the concept of shorthold. That will be another obvious disincentive to landlords to take advantage of the system.
As I have said—and I am trying to keep my remarks to the minimum because of the time—I think it is basically a good idea which ought to be developed. I believe very strongly that it is not too late for noble Lords on the Government Front Bench or for the Minister and the Secretary of State and their colleagues to get together with those people who put forward the shorthold concept and other people who are interested in this subject. It is not too late for them to get together with those people to see whether a short-hold system might be introduced which would have adequate protection and could get the support not only of the Government themselves but of many members of the Government party who now oppose the inadequate nature of the protection, as well as the support, perhaps, of the Labour Party and, certainly, of my party.
I think the statesmanlike thing for the Government to do at this stage would be to have a conference with all the people interested to see whether some form which is widely acceptable could be worked out. But since the Government are quite clearly not willing to accept the amendments which are moved in reasonable terms from the Labour Benches and these Benches, as things stand at present we shall feel compelled to support the noble Baroness in her objections to this clause.
Lord HYLTON: I hope the noble Lord, Lord Evans of Claughton, realises that the housing association programme for the current year for England has been cut by very nearly 50 per cent. I do not know what are the prospects for it in the year after this one, but they are not all that bright, I am afraid. As a landlord, I disagree with the Opposition on this clause, and I will give just one instance of why I do so. At the moment I have one house which is let for less than two-thirds of its current rateable value. This
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was done intentionally, in order to preserve the possibility of regaining possession. When shorthold becomes law, my financial position in respect of that particular house will be very considerably improved. It may not be all I would hope, but at least it will be a lot better than it is now.
While I am on my feet, may I ask a question which will probably expose my ignorance about this particular part of the Bill? It is clear that unfurnished properties are covered by the shorthold concept, but I should like to know whether furnished ones could also come under the shorthold provisions.
5.2 p.m.
Lord JANNER: I am very disturbed about this particular proposal. Those of us who passed through the stages of the Rent Acts, the Leasehold Reform Act and the provisions which were being made by reasonable Governments after long discussions dating from 1915 onwards, were desirous of protecting those who occupied their homes—and let us use the word "homes" instead of "houses". We were desirous of protecting their tenure of places which they regard as home and which they have so regarded, in many cases, for very many years. We found ourselves at the end of the First World War in a situation in which unscrupulous landlords (I do not say all landlords) took advantage of the position, with the result that a large number of people were either evicted or were about to be evicted, and tremendous efforts were made in order to protect them. That is why the Rent Act is as it is.
But I quite understand why this proposal is introduced by the present Government. I do not blame the noble Lord who is carrying, I was about to say, the burden of having to try to convince us all that the Government are doing the right thing, but I hope that he will come to some other problems in addition to those which have been raised. I am not going to repeat what my noble friend Lady Birk has already put forward very well indeed; I want to deal with the general principles. The Government are determined to finish protected tenancies. There is not the slightest doubt in my mind that that is what they are after; and if you look at the effect of this particular clause you will

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see how simply it leads to that. Noble Lords may agree with it or they may not agree, but the fact of the matter is that the Government are intending to stop protecting people in relation to their homes.
Pensioners and old people, people who have lived in their home for years and years, are eventually going to be deprived of their tenancy. Take, for instance, the protected tenant. There are 200,000 protected tenants, I believe, in the country at present. They are people who have relied on remaining in their homes at a rental. It is perfectly true that there are difficulties, of course. There are always difficulties on both sides of the fence, if I may put it in that way. Many landlords suffered; but one has to look at the effect on human beings, 200,000 of whom are going to be deprived altogether of their protected tenancies.
Then we come to the question of the regulated tenancies. Later on we shall be discussing the kind of rents that are being demanded of regulated tenancies. If noble Lords will look at it they will see that pensioners who are living on non-linked incomes, and many thousands of other people, will be involved if the kind of pressure which there is at present to remove the Rent Acts altogether—because that is what it is intended to do—succeeds. Millions of people have depended on the provisions of those Acts—not thousands, but millions of people throughout the country. Millions of people have retained their homes because there have been these provisions protecting them.
I am thinking, of course, of unscrupulous landlords. There are some landlords who will not take advantage to the extent that they will be entitled to if the legislation contemplated in this particular Bill is put into force. There are some people with human hearts; some people who know their tenants, and who are not going to deprive them of their home. I want to emphasise that point, my Lords—that it is homes we are dealing with; it is not a question of houses, it is a question of the people being allowed to remain in their home to the end of their days. We must also remember that their children have lived in the home, too, and know the home and want to remain in it.
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Of course, I realise that there is no hope. They say that hope springs eternal, but I do not suppose for one moment that the Government will change their mind with regard to this. I want them to realise, however, that what they are in fact doing is to cut away 50 or 60 years of protection which people have had—protection for people who cannot afford to be put into the hands of landlords who are unscrupulous and who will take the biggest advantage they possibly can by removing the tenants and giving them this so-called short-term security, so that when the short term finishes the whole tenancy becomes free of any protection at all. I say it is an inhuman and unbalanced view to take in respect of protection for people who are tenants and who want to remain in peace.
Lord SANDFORD: I was glad to hear the noble Lord, Lord Evans, say that he approves and supports the concept of shortholds. I would have been moved, and I am sure all noble Lords would have been moved, by the noble Lord, Lord Janner, if this particular clause, which has to do with shortholds, affected at all the security of the existing tenants; but it does not. This proposal has nothing to do with existing tenants. The noble Baroness, Lady Birk, put forward the argument that this must be a had clause because the tenants are not cheering for it. Of course they are not; it has nothing to do with them. This clause concerns people who are not tenants at the moment but who want to obtain property for a short let of something between five years and one year. For them it is of enormous benefit.
However, I do not believe that this is the chief benefit of shorthold. The chief benefit is that it brings back on to the market hundreds of thousands of dwellings which previous legislation has taken off the market. This piece of the Bill makes its chief contribution in easing the heavy burdens placed on the housing authorities who would otherwise have to provide accommodation for people who will get it under the shorthold and it eases the burden of the housing associations, the point to which my noble friend, Lord Hylton, referred, who, if left to tackle this sector on their own, would never be able to cope with it in the present circumstances. This is the chief reason

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why we strongly support the provisions in Clause 51.
Lord GOODMAN: If I may briefly intervene, I am totally in agreement with what was said by the noble Lord who has just spoken. This clause relates only to new tenancies and therefore I think that the very warm-hearted deprecations of the noble Lord, Lord Janner, are not relevant. I am not in agreement with the noble Lord, Lord Janner, in smelling sulphur in every clause of this Bill which I think is a well-intentioned one and, in parts, even intelligible. That is a matter for complimenting the draftsmen. But think that this consideration ought to be taken into account: the purpose of this clause is to make available a greater amount of accommodation for letting; and it may do that.
But against that one must weigh the consideration that this would be appropriate for a more expansive period in the supply of housing and accommodation. At the moment there is a desperate shortage and, we are still in a situation where people are desperately in quest of accommodation, so that I feel that it is a premature provision. One must remember that a great many people will take short-hold tenancies because they cannot get anything else. They will feel a total sense of insecurity throughout the period of the tenancy. One of the great evils in the relationship between landlord and tenant—and I base this belief, if I may say so, on my too many years of experience of it—is the sense of insecurity that you may lose your home. I cannot help feeling that the benefits secured by having available a greater supply of letting accommodation will be more than counteracted by the sense of greater insecurity on the part of people who have to seize this accommodation because they can get nothing better.
I might suggest to the Government, if it is not too late, that the provisions of the old Rent Act which enabled a landlord to secure accommodation on the grounds of greater hardship should be reintroduced into this situation, so that in the case of genuine hardship the landlord could get his accommodation back without the same burden of proof that applies at the moment. It might be a more relaxed burden of proof. It would remove the
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deep social evil of a great number of people in terrible dread and apprehension that they may lose their homes.
5.15 p.m.
Lord BELLWIN: I am deeply grateful to everyone who has spoken on this. As the noble Baroness, Lady Birk, has said, this clause really is the fundamental part of this whole matter and I am glad that we can talk right across the whole spectrum of it. There are a few facts that I should state and I shall try to do so as quickly as I can, but I do feel obliged to try to cover the points that have been made.
Between 1961 and 1977 the number of houses and flats let by private landlords fell from 4.3 million to 2.2 million, and there is every sign that the decline continues unabated. This is fact and we can all agree about it. We may differ about the reasons for it. Possibly the growth of owner-occupation and the tax relief and subsidy available in the main housing sectors have played some part. But anyone who tries to pretend that the effect of the Rent Acts has not been a major, indeed, overriding cause of the massive withdrawal of private rentable accommodation is burying his head in the sand. The combination of rent restriction and security of tenure unto the second generation has proved to be devastating. Once vacant possession has been achieved, landlords have voted with their feet in their tens of thousands and got out. And who can blame them?
Relatively speaking, it was perhaps not so bad up to 1974. Before then, even though long-term renting in the unfurnished sector was certainly declining, the furnished sector was playing a vital role in housing the mobile worker, the newly-married and the young and single. But, despite the clearly expressed warning of the Francis Committee, the Labour Party blundered in yet again and, with the clamp-down on furnished letting in the Rent Act of 1974, the situation became even more desperate at a time when the need for short-term accommodation was growing.
I find it hard to believe that all the members of the party opposite both here and in another place did not realise in their heart of hearts that in the 1974 Act they had gone too far. Surely, they

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knew that many furnished tenants had been given a life-long security they did not want and that the price was paid by the homeless and frustrated movers who could not find a place to rent. For every tenancy this made secure, how many thousands more were denied the housing they so urgently needed?
I suppose that the nearest the Labour Party came to admitting that all was not well was the announcement in 1975 of yet another of their reviews of the Rent Act. Of course, they did say of the private rented sector in their 1977 Green Paper entitled Housing Policy (Command 6851).
"If the decline continued unabated and no action were taken to compensate for the loss of accommodation from the sector, many people particularly new and mobile households—might not be able to find the housing they need. To guard against this we need to consider what action can be taken to stimulate the supply of lettings within the private sector and what can he done to provide accommodation in the public sector".
"What action can be taken?", they said. And what action did they take? There are no prizes for guessing that it was none whatsoever. Far from legislating on the matter, they did not even publish the findings of their review which had been on the go for four years—presumably because it was not propitious so to do. Four years during which another half million or so private lettings went out of existence. What about that as an example of masterly inactivity! We can all understand why as prisoners of their own own history, the Labour Party made no constructive proposals of their own. Yet here they are, hack in Opposition—and with what vigour they criticise our proposals! We have shown that we are prepared to modify our shorthold proposals in the light of parliamentary and public discussion. What the Committee and the country cannot understand is why the Labour Party have adopted not merely a totally negative but a destructive attitude to shorthold. They have not merely said they would dicsontinue shorthold if and when at some future date they might come hack to power. They have said that life-long security will be given to everyone in a shorthold letting at that time.
The noble Lord, Lord Evans, was absolutely right—a very substantial contribution to try to ensure that shorthold
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does not succeed. Without even being prepared to see how it works and what it achieves, they rush to announce that if returned to power they will repeal it. I can only say that it may well turn out to be poetic justice for that undertaking will surely prove to he one of many which might have an influence on the likelihood or otherwise of their being returned to power.
Everyone—of whatever party—professes to be anxious that accommodation should be available in the private rented sector for those who seek it. Shorthold is a carefully considered proposal to encourage landlords to make accommodation available to meet that need. It recognises the fact that most people who are currently looking for accommodation in the private rented sector do not want or need long-term security. They are looking for relatively short-term lettings while they attend college, take up their first job away from home or save up to put a deposit on a home of their own. Surely it is better that they should be guaranteed security for one or two or up to five years under shorthold than that they should be unable to find any accommodation at all?
There has been a considerable amount of alarmist talk, both inside Parliament and outside, about the threat to tenants' security posed by shorthold. I should therefore like to take this opportunity, as my honourable friends have done in another place, to repudiate these claims, and to go over again the important safeguards for tenants that are incorporated in our shorthold proposals. First, we have ensured that there is no threat to the security of tenure of existing tenants from shorthold. The Bill makes it impossible for an existing statutory or protected tenant to have his tenancy converted to a shorthold.
Lord STRABOLGI: My Lords, I am sorry to interrupt the noble Lord; he is always so courteous. What happens if somebody wants to move who is at present a regulated tenant? The only choice that he will have will he buying a house, probably at a price he cannot afford, or becoming a shorthold tenant. What protection is that for regulated tenants? The Government assume that people will remain in their dwellings for the rest of their byes. People have to move.
Lord BELLWIN: My Lords, if someone wants to move who is currently a regulated tenant, first of all he will surely take into account the security that he has if he stays where he is. If he wishes to go into the open market for something else I would presume that, with the security he already has, he would make quite certain that he did not do so until he had found something that was an alternative. If the suggestion is that the shorthold provision that we are proposing will make it more difficult for him so to do, I respectfully suggest that the noble Lord does not follow the arguments that I am trying to make. I believe very deeply that there will be so much more such accommodation available. It will be up to the tenant who has the security at the present time to decide if that is or is not in his best interests.
But, if I may continue, I say that the second point is that a fair rent must be registered for a letting to be a shorthold. Compulsory rent registration has never been a feature of any previous Rent Act legislation, and thus the proposal provides an entirely new safeguard for tenants. Following the Committee's acceptance of the Government amendment we have just discussed, No. 112, the Bill now ensures that the tenant will pay no more than the fair rent right from the start of the short-hold. Third, we have ensured that tenants who stay beyond the end of the fixed term will be guaranteed a further year's security under shorthold, provided that the landlord has not exercised his right to recover possession during the last three months of the shorthold term.
Fourth, as shortholds will be protected tenancies under the Rent Acts, shorthold tenants will have the full protection enjoyed by other protected and statutory tenants with regard to such matters as the over-payment of rent and the charging of deposits. Fifth, the landlord must under Clause 51(1)(b) serve a prescribed notice on the tenant before the grant of the tenancy setting out the terms of the shorthold. This means there will be no question of tenants being unaware of their rights under shorthold, or of the fact that shorthold does not offer the same security as a fully protected tenancy. It will also spell out the conditions with which the landlord must comply in order to create a shorthold. If he does not
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comply, the letting will not be a shorthold.
And finally, we have given tenants the right to leave before the expiry of the fixed term, without penalty, provided that they give the landlord appropriate notice. What more safeguards can one practically give without destroying the scheme before it starts? It is constantly said—both the noble Lord, Lord Evans, and the noble Baroness said it today—that we have not incorporated safeguards proposed in the Private Members' Bills promoted by the honourable member for Kensington and Chelsea in another place. We have of course examined those Bills with great care but we have decided that there are simpler and more effective ways of safeguarding tenants who take shorthold than he had been able to devise. There was nothing in Sir Brandon Rhys William's Bill to say that shortholds should apply only to dwellings vacant on a particular date.
But I am bound to say that a number of proposals which have emanated from the Opposition—some in the guise of sweet reasonableness, some I am sure in an attempt to be helpful—are not really safeguards at all but limitations of one kind or another intended to ensure that the number of properties eligible for shorthold should be kept as minute as possible. For example, the proposal to confine shorthold to self-contained dwellings with all standard amenities would have applied a condition which is currently nonexistent in owner-occupied and public and private rented sectors alike. An even more extreme demand which emerged at a late stage during proceedings in another place and was Amendment 116A was that shorthold should not be possible in any dwelling with a private tenant in it on commencement date, even if he leaves and the property stands empty for a year. Incredible indeed! But surely also revealing in its stark highlighting of the Opposition's great wish—I put it no stronger than that—to undermine our attempt to bring more private accommodation back on to the market.
It has been claimed that shorthold means the demise of security of tenure in the private rented sector. The noble Lord, Lord Janner, said that with great feeling and belief. Let us look at this very emotive statement carefully. First

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of all, it assumes that in future every landlord will let on shorthold and not on any other basis. The Law Society have been quoted to this effect—no less an authority than that. But while I have great respect for that very distinguished body—indeed should I not?—I do not think they are in a position to speak for all landlords. What they said has in fact been contradicted by a number of landlords, including, if I may quote him, Mr. HoHamby of Chestertons, whose views were quoted in another place.
After all, shorthold will involve the procedural formalities of going to the rent officer and the serving of a notice spelling out the tenant's rights, and there may well be landlords who will choose to let at an agreed rent to a tenant without going through these formalities. There is no reason to think that every landlord will be concerned about the length of his letting and will automatically opt for short-hold. But let us just suppose that landlords find shortholds so attractive, that very large numbers of shorthold lettings are made. That, in itself, will mean that even for those looking for long-term security it will be of much less importance than it has been in the past because the shortage of accommodation to rent will be substantially eased.
The most important point of all, which is fundamental to our thinking in bringing forward shorthold, is that the overwhelming majority of people seeking private rented accommodation these days are the young, the mobile, newly-married couples who want somewhere quickly but not necessarily for long. Just to give one figure, 20 per cent. of all lettings in the private sector turned over to a new tenant in 1977. We are doing nothing to disturb the established arrangements of long-term tenants but we do feel strongly that the Rent Acts need reshaping to meet the needs of the 'eighties rather than the 'forties and 'fifties. Raising the spectre of the end of security of tenure is rather like bemoaning the end of the silent movies and the coming of the "talkies". Nostalgia for the concept of life-long security is no help to a young worker who wants a flat for a year or two for his first job away from home.
I have to try to comment on one or two of the other points made by noble Lords
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a little earlier. So far as the noble Lord, Lord Janner, is concerned, I have always respected deeply his great wanting to see a betterment of the conditions and availability of accommodation. No one questions that for a moment, least of all I. I was grateful to the noble Lord, Lord Goodman, for pointing out that he really has this one wrong. It will not have the effect on existing tenancies to which he referred. I am sorry that he used some other language which was so emotive. It makes pensioners and the others to whom he referred worry, when they really have no cause to worry. It is essential that I make that absolutely clear.
I was grateful to my noble friend Lord Sandford who pointed this out again and said that the clause is not about existing tenants. He said—and this is our dearest wish in this whole matter—that it would bring back thousands of dwellings which other legislation has taken away. We do not know whether it will bring them back and no one would be so arrogant—least of all I—as to say that is what it will do; but it might do, and if it does the prize is very great indeed and certainly worth the attempt. As long as we put in the safeguard to which I have referred and others which we may put in, if people bring them forward and they are meaningful, not meant to destroy the basis underlying the intentions, and if they are constructive—providing we do this, at least we are trying to do something about a problem which really is becoming worse. It would be wrong simply to go on letting it drift.
I said that the last Government talked for four years and did nothing. Well, we are doing something, and if it is not to the liking of everyone at least let us give it a try to see what it achieves. If it fails, then of course it will he done away with, but if it succeeds can anyone really envisage that the Labour Party, or anyone else, would take something which had succeeded and then do away with it? I suggest that they would not dare; nor would they want to, if it came to that. I beg to move that this clause stand part of the Bill.
Baroness BIRK: There are just a few points I should like to make on what the Minister has said. I am sure I heard him refer to "nostalgia for long-

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term security". This is hardly "nostalgia". What most people are looking for is security and, if I may use this analogy, I thought that his shop window was very attractive but that the goods behind it were not quite in such prime condition.
I took down what he said about the numbers of people looking for relatively short-term lettings. Most people are not looking for relatively short-term lettings and, with regard to this picture of a young couple who want something for a year or so, the noble Lord, Lord Goodman, answered that when he referred to the anxiety on behalf of people and the need for people to know that they had security. As regards this young couple whom the noble Lord says want a tenancy for only a year or so, under the Bill they can be evicted after one year. The landlord does not have to keep them there for five years: then he gives them notice to quit—
Lord BELLWIN: Will the noble Baroness allow me to intervene? With great respect, that is not correct. The tenant will not he able to he evicted within one year. He will not be able to be evicted during a period of less than the term for which he has signed the agreement for the shorthold, which can be up to five years. There is no way in which he can be evicted within one year.
Baroness BIRK: With respect, I did not say "within one year"; I said, "after one year". After all, it is more than likely, when a landlord can let for a maximum of five years to a minimum of One year, that he will opt for the shorter period. He would be less than human if he did not, and he could then see how things worked out. Of course, he may want to sell the property.
When my noble friend Lord Strabolgi asked about people moving, the Minister said that if they leave a protected tenancy they should find out whether they are moving to another protected tenancy. If they could not do that, the impression he gave to us was that they should stay put. So what price all this need for mobility of labour? In industry we want to encourage people to be able to move around the country, and every amendment moved on the first part of the Bill to encourage that in the public section was
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turned down. The same thing is happening and no doubt will go on happening throughout the passage of this Bill. If the Government really see the process by which people are having to leapfrog from one shorthold to another shorthold, there is no security in this at all: that is the anxiety and the worry.
The noble Lord refers to looking for relatively short-term lettings, but that is not going to help the basic housing situation in the country. I entirely agree with the noble Lord, Lord Evans, and others who see that, unless you get to very high rents, the rented sector in this country must be supplied by local authorities and housing associations. This, through other provisions of the Bill, with compulsory sale and also the cutting of the housing programme, means there will be less and less rented accommodation. This is the nub of the argument: not the question of whether there are a few more short-term lettings. The noble Lord, Lord Goodman, was absolutely right when he queried whether this was the time, given the economic situation as it is, to embark on this.
Finally, I would say that the noble Lord made a great deal of the safeguards that have been introduced. Those which have been brought into the Bill were brought in with the Government screaming against them. He is taking credit for amendments which, frankly, were absolutely pressed on the Government. As to the other safeguards which were in the Bill of Sir Brandon Rhys Williams, the noble Lord says they were examined very carefully before the Government decided against them, but that does not make them any less valid safeguards. As regards whether the next Labour Government would repeal this whole section, that depends, as my colleagues in the other place put it, on how far the Government are prepared to accept more safeguards and to accept improvements which would improve the Bill in the way we feel is necessary, so that people will have as little anxiety and insecurity as possible. For these reasons, I am afraid my friends and I will be pressing this Question to a Division.
Lord GOODMAN: May I ask the Minister a question before we divide? The noble Baroness has indicated her intention to divide and I must say it will

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leave some of us very troubled indeed as to how to make our decisions on this matter, The noble Lord said he was prepared to consider amendments to these provisions at a later stage. Could he give us a little amplification of that?—because I did indicate one possible amendment that has occurred to me and I think there are other safeguards that could be introduced. If the Government retain an open mind, I personally should abstain from the Division.
Lord BELLWIN: I am sorry if I did not earlier touch on all the points that have been raised, and I apologise to noble Lords for that. One point was that made by the noble Lord, Lord Goodman. In his suggestion about hardship, I thought he was referring in the main to the position as it is in the existing Rent Acts. It is a very interesting one to me. I gladly assure him—and I am sure that even noble Lords opposite will confirm to him that whenever I say that we will take something away and have a look to see whether
something can be done, we always do. I give him that undertaking.
As to the amendments, we have not felt able to accept any of the amendments that have been brought forward so far, but I meant it very genuinely when I said that if we can make this a better Bill we shall do so. The noble Baroness said that some of the amendments were inspired by others than our own people and put into the Bill, and I would reply: so what? What we are seeking is to get the best Bill we can. If we can make it better, of course, that is exactly what we want to do and yes, of course, we will consider anything that is suggested. I hope that will not be taken to mean that, if I resist some of the amendments that have been tabled today, I am going back on what I have said.
5.37 p.m.
On Question, Whether Clause 51, as amended, shall stand part of the Bill?
Their Lordships divided: Contents, 99: Not-Contents, 91.

CONTENTS

Ailesbury, M.

Falkland, V.

Merrivale, L.

Airey of Abingdon, B.

Ferrers, E.

Monson, L.

Alexander of Tunis, E.

Ferrier, L.

Morris L.

Allen of Abbeydale, L.

Forbes, L.

Mottistone, L.

Amory, V.

Fortescue, E.

Mowbray and Stourton, L.

Ampthill, L.

Fraser of Kilmorack, L.

Moyne, L.

Auckland, L.

Gage, V.

Murton of Lindisfarne, L.

Bellwin, L.

Glenkinglas, L.

Norfolk, D.

Belstead, L.

Godber of Willington, L.

Northchurch, B.

Berkeley, B.

Gormanston, V.

Northesk, E.

Bessborough, E.

Gowrie, E.

Nugent of Guildford, L.

Blake, L.

Greenway, L.

Orkney, E.

Bourne, L.

Gridley, L.

Orr-Ewing, L.

Broadbridge, L.

Grimston of Westbury, L.

Redmayne, L.

Cathcart, E.

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

Robbins, L.

Chelwood, L.

Rochdale, V.

Clifford of Chudleigh, L.

Hanworth, V.

St. Aldwyn, E.

Clitheroe, L.

Henley, L.

Saint Oswald, L.

Cockfield, L.

Holderness, L.

Sandford, L.

Colville of Culross, V.

Hylton, L.

Sandys, L. [Teller.]

Craigavon, V.

Hylton-Foster, B.

Selkirk, E.

Cranbrook, E.

Killearn, L.

Sempill, Ly.

Croft, L.

Kimberley, E.

Shannon, E.

Cullen of Ashbourne, L.

Lindsey and Abingdon, E.

Skelmersdale, L.

Davidson, V.

London, Bp.

Soames, L. (L President.)

De Freyne, L.

Long, V.

Spens, L.

De La Warr, E.

Lonsdale, E.

Strathcona and Mount Royal, L.

Denham, L. [Teller.]

Luke, L.

Trefgarne, L.

Digby, L.

Lyell, L.

Vaux of Harrowden, L.

Drumalbyn, L.

Macleod of Borve, B.

Vivian, L.

Elliot of Harwood, B.

Malmesbury, E.

Westbury, L.

Exeter, M.

Mansfield, E.

Young, B.

Fairfax of Cameron, L.

Marley, L.

Faithfull, B.

NOT-CONTENTS

Ardwick, L.

Gifford, L.

Pargiter, L.

Avebury, L.

Gladwyn, L.

Peart, L.

Aylestone, L.

Glenamara, L.

Plant, L.

Balogh, L.

Gordon-Walker, L.

Raglan, L.

Banks, L.

Goronwy-Roberts, L.

Rhodes, L.

Beswick, L.

Gosford, E.

Ritchie-Calder, L.

Birk, B.

Greenwood of Rossendale, L.

Rochester, L.

Blease, L. [Teller.]

Gregson, L.

Ross of Marnock, L.

Blyton, L.

Grey, E.

Sainsbury, L.

Boston of Fuversham, L.

Hale, L.

Seear, B.

Bowden, L.

Hampton, L.

Shinwell, L.

Brockway, L.

Harris of Greenwich, L.

Simon, V.

Bruce of Donington, L.

Hatch of Lusby, L.

Southwark, Bp.

Burton of Coventry, B.

Henderson, L.

Stedman, B.

Caradon, L.

Houghton of Sowerby, L.

Stewart of Alvechurch, B.

Chitnis, L.

Jacobson, L.

Stewart of Fulham, L.

Cledwyn of Penrhos, L.

Jacques, L.

Stone, L.

Collison, L.

Janner, L.

Strabolgi, L.

Crowther-Hunt, L.

Jeger, B.

Taylor of Mansfield, L.

Cudlipp, L.

Kaldor, L.

Underhill, L.

Darling of Hillsborough, L.

Kilmarnock, L.

Wall, L.

David, B.

Lee of Newton, L.

Wallace of Coslany, L. [Teller.]

Davies of Leek, L.

Leonard, L.

Davies of Penrhys, L.

Llewelyn-Davies of Hastoe, B.

Wells-Pestell, L.

Denington, B.

Lovell-Davis, L.

White, B.

Diamond, L.

McCarthy, L.

Wigoder, L.

Donaldson of Kingsbridge, L.

McNair, L.

Willis, L.

Evans of Claughton, L.

Maelor, L.

Wilson of Radcliffe, L.

Fisher of Rednal, B.

Meston, L.

Wootton of Abinger, B.

Foot, L.

Ogmore, L.

Wynne-Jones, L.

Gaitskell, B.

Oram, L.

On Question, amendment agreed to.

Resolved in the affirmative, and clause agreed to accordingly.
Clause 52 [Right of tenant to terminate protected shorthold tenancy]:
5.45 p.m.
Lord MONSON Lord MONSON moved Amendment No. 119:
Page 36, line 26, leave out ("one month") and insert ("two months").
The noble Lord said: I beg to move Amendment No. 119 and, with the leave of the Committee, I will speak at the same time to Amendment No. 120. Although not consequential, it is closely related to the previous one. On Second Reading, many Opposition speakers claimed that this whole new concept of shorthold tenancies was not only largely wrong in principle, but would in practice be a non-starter—a damp squib, in other words—and this assertion has been repeated this afternoon by some noble Lords on both the Labour and the Liberal Benches. I am bound to say that if the dice remains so loaded against a landlord, as I hope to be able to demonstrate, the Opposition's forecast will prove all too accurate.
The Conservative election manifesto promised,
"a new system of shorthold tenure … free of the most discouraging conditions of the present law".
I do not think that the proposed new system is free of all the shortcomings of the present law; for one thing rents are to be held below the market value. But to the extent that they are, new disadvantages are introduced which do not exist in the present law. Clause 52 gives the tenant a unilateral right to terminate after only one month, in the case of a shorthold tenancy of two years or less, and after three months in the case of a longer shorthold tenancy; in other words, a tenancy of between two and a half and five years. No corresponding right is granted to the landlord, should his circumstances unexpectedly change for the worse.
I ask your Lordships to consider the case of a small landlord, owning perhaps only one property, who happens also to be an engineer, who is offered and accepts a posting in Nigeria, say, or Western Australia for two years. He goes to the trouble and expense of finding a tenant and going through all the necessary legal formalities. He packs up and stores most of his possessions, he purchases

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a one-way ticket for Lagos or Perth and sets out on his journey. A fortnight after he arrives, he receives a communication to the effect that his tenant has given him one month's notice. It will not work like that, in practice, because if he is out in the hush or the outback letters will take fully a fortnight to reach him, so he will effectively have only two weeks' notice. It may be in the middle of winter in the United Kingdom. He is almost certainly likely to be worried about frozen water tanks or frozen pipes. What on earth is he to do? Is he to ask for a fortnight's unpaid leave only a month after arriving in the country, and to expend a large sum of money on returning to England? I submit that one month's notice is far too short in the circumstances.
I appreciate that there has to be some provision for early termination since shorthold tenancies cannot, under the Bill as it stands, be assigned. But if the intention was to equate the period of notice provided under Clause 52 with the time it will take, in the case of a traditional tenancy, to find an alternative tenant—an assignee, in other words—to secure references, to get the references approved, to get the legal formalities completed and so on, then I suggest that the Government have got their calculations quite wrong, because all this would certainly take more than one month.
It may well be that my Amendment No. 120 is superfluous—that the period of three months proposed in the subsection as it stands is not entirely unreasonable, given the difficulty of balancing the interests of the landlord and the tenant. Subject to what the noble Lord, Lord Bellwin, has to say, I do not intend to press my Amendment No. 120; but I think it is essential that the period of one month should be lengthened. I should have preferred a common period of notice, irrespective of the length of tenure, whether it be one year or five years. Failing that, I submit that it is vital to raise the minimum period of notice from one month to at least two months.
5.51 p.m.
Lord MOWBRAY and STOURTON: As he has explained, the amendments which the noble Lord, Lord Monson, has just moved, are concerned with provisions to enable a shorthold tenant to
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terminate his tenancy without penalty, provided that he gives appropriate notice to the landlord. What is provided for in the Bill is that a tenant must give at least one month's notice where the short-hold is for two years or less. For short-holds of between two years and five years, we have provided that three months' notice should be given.
I accept that our figures are not infallible. They are matters of judgment. When selecting the period of notice which would be required we had particularly in mind students who may not want to stay for a full year's shorthold. Normally they would pay their rent either weekly or monthly and it seems reasonable that they should give to the landlord at least one month's notice of their intention to leave. This should give the landlord adequate time to find a new tenant. However, for longer shortholds where the landlord has committed his property to the tenant for between two years and five years, with no opportunity of changing his mind, it seemed reasonable to us that the tenant should be required to give three months' notice of his intention to leave.
As I have said, there is no scientific basis for these periods of notice. Our main consideration was that rent is often payable either monthly or quarterly. These are easily memorable periods of notice which a landlord might expect to receive or which a tenant might expect to give. The amendment would extend these periods to two months and four months.
I must confess that I am not convinced that there is any justification for this. The noble Lord, Lord Monson, gave the example of a man who was suddenly called abroad to do engineering in the Gulf, or somewhere similar, and who would be out of touch. I suggest that it would be a very foolish man who went far away without giving the power of attorney to somebody at home. He could give it to a relative or to his legal adviser. A man who went abroad to do a full time job would be rash to try to deal with, for example, burst pipes. People who go abroad to be soldiers, sailors or diplomats normally grant a power of attorney to somebody at home. On balance, I think that we have got it about right and I would ask the noble Lord to take back his amendment.
Lord MONSON: I cannot agree that the Government have got it about right. I concede that they may have got it about right so far as longer tenancies are concerned; I also concede that there may be something in the argument put forward by the noble Lord. Lord Mowbray and Stourton, about students. But he is talking about a one-year not a two-year tenancy. If the one-month period of notice were confined to one-year short-holds it might be acceptable, but I do not think it is fair when one is thinking of a shorthold tenancy of 18 months or two years.
I ask the Government to think again about this point and to give serious consideration to what I have said. I reserve the right at the next stage to come back to Amendment No. 119. although I would not wish to go any further with Amendment No. 120. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 120 not moved.]
Clause 52 agreed to.
Clause 53 agreed to.
Clause 54 [Orders for possession]:
5.56 p.m.
Baroness DAVID Baroness DAVID moved Amendment No. 121:
Page 37, line 15, leave out (" (or is treated under section 54(2) of the Housing Act 1980 as having been so let)").
The noble Baroness said: In moving this amendment. I should like also to speak to Amendment No. 123 which leaves out subsection (2) of Clause 54. Rent registration is compulsory for shorthold, and the Government amendment means that registration will take place before the beginning of the tenancy. Therefore it is quite unnecessary for an element of discretion to be devolved to the courts when considering a claim for possession. This amendment seeks to remove that discretion from the Bill.
Clause 54(2) sets a precedent. It introduces an entirely new concept into the relationship between protected tenancies and rent registration. It seeks to extend
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the principe of court discretion, at present only applicable in cases applying to grounds for possession, to the giving of notice that tenancies will fall, under those cases, to the question of rent registration. At present, wording similar to that proposed in Clause 54(2) is included in Mandatory Cases 11 and 12 of Part II of Schedule 15 to the Rent Act 1977. Case 11 refers to owner-occupiers who let while temporarily absent, while Case 12 refers to owners who let the property which they intend to occupy later when they retire.
In both cases, the exercise of court discretion in relation to preconditions to the grant of tenancy concerns the giving of notice that possession might be recovered under these cases. Matters of rent registration have nothing to do with it. There is therefore no precedent for the concept contained in Clause 54(2). What possible circumstances can there be in which it is just and equitable for a registered rent not to apply to a shorthold tenancy? If the answer is that the Government take the view that failure by the landlords or the tenant to apply for registration should not be allowed to stand in the way of repossession, then what is the point of the requirement that rent registration is compulsory? Since the original publication of the Bill various changes have been made, or promised. The Minister has recently told us that he is willing to consider making more. Compulsory registration of rent by the beginning of the shorthold tenancy is one of the things upon which he has given way.
We felt that the need for Clause 54(2) was unproven when the Bill was in its original form. In the light of the Government's action on rent registration, we feel that Clause 54(2) has become completely redundant. Were it to remain in the Bill following these changes, it would amount to an unnecessary complication of what, without it, would be the clear role of county courts in such cases. I hope that the Minister will feel able to accept this amendment. I beg to move.
Lord GIFFORD: I support this amendment and I do so as a result of many years' experience of the vagaries of county court judges. The clause in the Bill which Amendment No. 123 seeks to delete gives a completely open discretion to a county court judge to determine whether

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it is just and equitable to order possession, even though the rent had not been registered or even though the proper notice has not been given. In the old days it used to be said that what was equitable was as long as the Lord Chancellor's foot. Even that was predictable when one knew who one's Lord Chancellor was. But now we have a provision for "just and equitable" which is going to be as long as 300 county court judges' feet. It means, quite seriously, that if one is advising a tenant who has a year's tenancy, but there is no fair rent, one cannot say whether or not it is going to be a protected shorthold tenancy until one knows what judge one is going to come before.
I know that what is likely to be said is that this clause is intended to cover only some bona fide mistake which may have been made in the drafting of the notice, or maybe a few days' delay in the application to register the rent, or some innocuous circumstance of that kind. If that is the case, as I anticipate it is, I would ask the Government to consider spelling that out in the Bill, because, whatever the noble Lord says, Hansard cannot be quoted in the courts, and this question of "just and equitable" will be completely at large in the county court.
Lord BELLWIN: I think I detected in the observations of the noble Lord, Lord Gifford, something of a cri de æcceur. His concern for past vagaries, as he put it, strikes a sympathetic note. I do not know whether or not I can help him, but certainly it does that. I think it is important that I should try to remove a misconception about Clause 54(2). It is not intended that this should allow a court to grant possession under Case 19 where there has been a major infringement of the shorthold requirements; for example, where the landlord has failed to serve any notice on the tenant or where no rent had been registered during the whole of the tenancy. In view of the express statutory requirement for these provisions in the Bill I do not think it would be possible for a court to be satisfied that it would be just and equitable to regard a tenancy as a shorthold if either of these requirements had been completely ignored.
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However, there are mistakes the landlord might make which in my view should not inevitably prevent him from being able to reclaim possession under Case 19. For example, there might be a defect in the formal notice that he has served on the tenant. The application for a registered rent might be made, say, 30 days after the start of the tenancy rather than 28, as required. These are the sort of circumstances in which, if no real harm had been done to the tenant, I think it is right that a court should have the power, subject always to the point made by the noble Lord, Lord Gifford, to grant a landlord possession under Case 19, provided they are satisfied that it would be just and equitable to do so. It is allowance for this for which Clause 54(2) is designed.
I would remind your Lordships that this provision mirrors an equivalent provision in Cases 11 and 12 of Schedule 15 to the Rent Act 1977, concerned with a temporarily absent owner-occupier and retirement homes. I understand that that provision was introduced in the Rent Act 1974, which was a Labour measure, and I am not aware of its having caused any difficulties in practice. It must surely be only right that there should be an equivalent provision in the shorthold, and therefore, while having carefully noted what has been said—we will note it carefully again later—I would ask the noble Baroness whether she feels able to withdraw the amendment.
Baroness DAVID: I thank the Minister for that explanation, which of course we shall study with care, but for the moment I shall withdraw the amendment.
Amendment, by leave, withdrawn.
6.5 p.m.
Lord GIFFORD Lord GIFFORD moved Amendment No. 122:
Page 37, line 26, at end insert ("; and
(c) the landlord has not knowingly received from the tenant any amount on account of rent in excess of the registered rent, or any premium.").
The noble Lord said: I beg to move this amendment, which stands in my name and the names of my noble friends. This is an important amendment because it seeks to deal with what I feel is a real, almost inevitable, danger in the shorthold pro-

419
visions as they are drafted at present; that is to say, there will be illegal overcharging and the demand of illegal premiums, either at the beginning of a tenancy or possibly as a condition of a renewal. There is the requirement, which has now been made a requirement at the beginning of the tenancy, that the rent should be registered. But let us consider what there is to stop a landlord charging a rent which is in excess, perhaps well in excess, of that which is registered. The only sanction at the moment is that the tenant has the right under the Rent Act to bring an action in a county court to recover the rent which has been overpaid.
A tenant who finds that he is being overcharged and who wishes to stay in his shorthold tenancy for more than the minimum term will be in this dilemma. Either he brings his action for the recovery of the rent overcharged, which almost certainly is going to be met with a notice at the end of the first year, or he sits tight and pays the excess rent. We have some experience that that is likely to be the case from the experience of rent control in the furnished sector. I appreciate that the provisions were different, in that there was not a compulsory registration, but the rights given to furnished tenants to apply to the rent tribunal to get a rent fixed were really a dead letter. No furnished tenant would exercise his rights because lie knew that that would be likely to be met with a notice to quit. And it is rather the same here.
This amendment seeks to give teeth to the fair rent system, to provide an effective penalty for the deliberate over-charging of rent, by inserting an extra proviso into the grounds which have to be established before possession of a shorthold can be obtained; that is to say, the landlord must show that he has not knowingly or deliberately overcharged rent or accepted an illegal premium. A landlord in that position would have to be advised that if he wants the shorthold provisions then he must not charge in excess of the registered rent. There may be different ways of dealing with this, and I shall be interested to hear how the noble Lord, Lord Bellwin, answers, but I suggest that there should be something much more effective to prevent a black market in excess rents.
Lord SHINWELL: So far I have endeavoured to refrain from excessive intervention in the debates, although there have been occasions when I was sorely tempted, but this particular amendment has a profound interest for me. In fact, I am an interested party, not as a landlord but as a tenant. I have observed in the course of the debate that we have gone all round the perimeter but have ignored the central feature, which in my judgment has not been so much the principle which is embodied in the Bill, the new device the Government propose to employ, hoping for success. A number of other items have been raised by my colleagues and by noble Lords on the other side of the Committee.
Reference has been made more than once to fair rent, hut no one has endeavoured to define it, not even the Minister himself. The assumption is that this is a matter primarily for the landlord to determine in the first instance. Subsequently, if there is disagreement about the amount demanded, a submission can be made to the rent officer. He comes to a decision which may be disagreeable to either party and the matter is referred to the rent tribunal. Who is to determine what is a fair rent and what is the criteria? Is it scarcity? Obviously that is a factor which can be excluded because indeed the whole purpose of the Bill is to deal with scarcity and to provide some remedy. Scarcity will not do. What worries me are the implications that derive from the language used in this amendment. I do not object to it—far from it. I seek to understand it and how it will operate.
It will operate in this fashion: there are in the United Kingdom at the present time and there have been for some considerable time—and to this I raise no objection whatever—many people who have come from other countries, some even from Iran. Some of them are neighbours of mine. I have not arranged it; it has been quite fortuitous, although one offers no opposition—why should one? A landlord has very little difficulty with people of that kind because they do not dip their hands into their own pockets in order to pay their rent or even the cost of the house or flat which they seek to obtain.
The sums required are usually paid either by the Governments they represent or by the business firms they represent.

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All the landlord has to do is to say, "I want a certain amount as rent", or a certain sum as the price of the house. No objection will be raised—or hardly ever. They can obtain flats and houses as easily as falling off a log and I understand (if your Lordships will excuse the cliché) that that can be done without much difficulty. But when it comes to a citizen of the United Kingdom who seeks to obtain a tenancy at a fair rent and he comes before the rent officer, can he be assured of impartial treatment? Is there any guarantee of that? Again I ask the question: What are the criteria upon which he comes to a judgment? I think we ought to know.
Without delving too far into this matter, I could say a great deal about it out of my own experience, but I do not want to make accusations against anybody in their absence. I prefer to make any accusations facing them, eyeball to eyeball. Nevertheless, I am bound to say that I have been somewhat disturbed and I want some protection, not only for myself. Indeed, I can look after myself. I can even go so far as to say (but do not tell the Inland Revenue) that I can look after myself financially and in other directions I am quite capable of looking after myself. However, I want some protection not only for myself but for others: neighbours, tenants nearby, where they are forming tenants' associations. Why are they forming tenants' associations? Most of them voted for Mrs. Thatcher in the last election, which of course amuses me. The people who are squealing most are those who asked for it at the last election. They were perfectly entitled to do so; this is a free country, as we know—so far—but now they are complaining. So strident are their complaints that they are forming tenants' associations. I have been asked to join one myself. All I have done is to refuse to commit myself more than to pay a subscription (that I can afford) in the hope of gaining something in consequence.
I am speaking for other people. I want the Minister to tell me, as clearly as he can—and there is one thing he can do, as was demonstrated in the course of our debates; he can speak clearly. He knows what he is talking about, even if we do not agree with it. I want him to answer this question: Are we going to place any kind of restriction?—and I ask noble
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Lords to excuse the use of the term "restriction" because the Minister himself has complained about its frequent use and has rejected it when it has been suggested by implication, and even directly in the course of the debates. What kind of restriction are we going to place on the landlord and, subsequent to the landlord's decision, on the rent officer?
Let me deal with the landlord first. I make no accusation against landlords at all. I am not acquainted with many; I know nothing of them and I agree with the noble Lord who said that the majority of landlords are decent, respectable, responsible people. I do not object to that at all. I can understand it and if the landlord seeks to make a profit there is nothing wrong in that. But what are the landlords going to do? They are going to try to obtain the highest possible price for letting either a flat or a house. I do not blame them, but we have to protect ourselves. I want the Minister to say what kind of protection he can afford for tenants who are probably unable to pay the price demanded either for letting or for buying and what kind of restriction we are going to impose on landlords who take advantage of the situation to obtain a price which is neither fair nor reasonable. That is a simple question and I should like a simple answer.
Lord BELLWIN: I will try to answer the noble Lord. Strictly speaking, it is not the subject of the amendment at all and indeed many of the points raised by the noble Lord are more apposite for discussion under the Rent Acts of 1977. Nevertheless, I will gladly try because he put it so well to me. Your Lordships will excuse me if I try to do it quickly in order to cover the points which the noble Lord made.
First, I am glad that he referred to the point about protection and tenants' associations and the fact that people are getting together in that way. I do not think that is ever a had thing. Why should there be fewer tenants' associations in the private sector than in the public sector? However, there is a great deal of misunderstanding about the proposals in regard to shorthold. The points referred to by the noble Lord were almost all to do with the Rent Acts of 1977. First, he asked what is the definition of a fair rent? I will tell him: a fair rent is

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defined as a market rent with the scarcity element removed. I do not have that from a brief; I remember it from the days of the Francis Committee, many years ago. I hope it is right. The noble Lord then asked how do we know if it is fair? That is a tremendously broad subject which I am sure no one will want me to go into now.
Basically, it is the rent officer who decides that and if the tenant or landlord is not satisfied with the rent officer's decision he then has the right of appeal to a rent assessment committee. Before the 1974 Act in the case of furnished lettings it was to a rent tribunal, but now it is to the committee. He may well consider at the end of the day that it is still not fair in the sense of "fairness", but the rent officer is trying to be fair as between the landlord and the tenant.
Inevitably this is a no-win situation, because if one is satisfied the chances are the other is not, once the matter has had to go to adjudication in this way. A perfect system no one would claim it is, but one that has worked reasonably well, and despite the reservations of the noble Lord, Lord Gifford, I am sure that he would agree with that. I think it has achieved a great deal in an area which is so complicated and complex. I am only saying, so far as the shorthold proposals go, that the benefit of this protection (a word which the noble Lord used) continues absolutely; in no way is that in the slightest affected. This proposal does not affect existing tenants at all, and if the noble Lord's question has enabled me to emphasise that yet again I am grateful to him.
If I can come to the amendment, the Government do not accept that there is a need for special provisions of this kind for shortholds. Because shorthold tenancies will be protected under the Rent Acts the same provisions relating to overpayment of rent and premiums will apply to shortholds as apply to other tenancies. Perhaps it would help noble Lords if I explain what these provisions are. First, with regard to over-payment of rent, the Rent Act of 1977 provides that once a rent has been registered any rent above the level of the registered rent is irrecoverable; that is to say, the tenant is not obliged to pay it and can get back any
424
excess he has paid in the previous two years. Once the rent has been registered it remains the rent limit until either a new rent is registered or the registration is cancelled.
So under shorthold the registered rent would be the rent limit not only during the fixed term but also during any period that the tenant stays on beyond the fixed term. The tenant will have the same right to recover any excess rent he has paid as any other Rent Act tenant. Secondly, there is the question of premiums. Sections 119 and 120 of the Rent Act 1977 make it an offence to charge a premium for granting or assigning a protected tenancy. This applies to shortholds just as it does to other protected tenancies. So does the clarification of what constitutes a premium which we are introducing in Clause 76 of the Bill.
These provisions seem to me already to provide adequate protection for tenants against being charged too much rent or being asked for a premium. I see no reason for extra provisions for shortholds. I cannot accept the implication that landlords who let on shortholds would be likely to try to trick the tenant in the way that might be suggested or implied. Nor would it seem to me to be right, as the amendment proposes, that the court should be required to consider whether the landlord has asked for excess rent or a premium before granting possession of the Case 19 tenancy. These are quite separate matters for which there are already separate provisions in the Rent Acts.
I fear that I may not have covered one or two of the points the noble Lord, Lord Gifford, made, for which I apologise. On the other hand, he may feel that what I have said is adequate in the circumstances, albeit not as satisfactory as he would have liked. If I have missed anything which he considers most important, I would be glad if he would take it up with me privately and discuss it with me.
Lord GIFFORD: I agree with the noble Lord, Lord Bellwin, in this at least, that the rent officer system has worked well since it was introduced by a Labour Government in 1965. But the rest of what the noble Lord said did, I suggest show an astonishing ignorance of what actually happens. What we are talking

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about—and I gladly reiterate my noble friend Lord Shinwell—what the amendment is about is people cheating. It happens now. Again and again the tenant is in complete ignorance that a rent for the property has been registered and is being charged double or more. But at least in the normal working of the Rent Acts so far there has been this protection, that when he finds out he can sue for the back rent or withhold his rent so as to compensate for what he has overpaid, without any fear that anybody, particularly the landlord, can impose any sanction or penalty or revenge upon him. This situation is changed with the shorthold provisions, because with the shorthold provisions there is always a threat that if you are not co-operative about the extra over-payment then the shorthold can be brought to an end.
Having said that, I am wanting to try, with the Government, to find a constructive solution to what I hope they will feel in a greater or lesser degree is a problem that ought to be looked at during the course of the passage of this Bill. As I said earlier, there may be other ways of dealing with this problem. For instance, the court, before it orders possession, could be required to make sure, to order, that any sums overpaid are repaid before the actual order is made; because at the moment the court would have to order possession on a mandatory ground leaving any question of over-payment to be put off to the future, and maybe to dilatory payment over months or more. Will the Minister look at this problem which I have sought to outline and, before Report stage, see whether some protection—perhaps not the one I have proposed in this amendment—might not be inserted to discourage and to sanction this kind of cheating?
Lord BELLWIN: May I say that I do not at all accept the point that if the tenant under a shorthold starts to take proceedings, or makes attempts to do anything at all about the rent, the shorthold tenancy will be brought to an end. I entirely fail to see that. The position is no different from that under the Rent Acts. On the contrary, the safeguard is even greater under the shorthold proposals, for two reasons.
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In the first place, the shorthold tenant has his fixed term in any case. Secondly, why should he need to go to court on the subject of rent, because the rent is fixed once, it is registered and it cannot be increased at all, not only during the term of the tenancy but even beyond if the tenancy should continue. So I do not take that point. But what I do accept is that if there is a better way to cover some of the points the noble Lord mentioned which concern him—I said it earlier and I meant what I said, and we will read very carefully what the noble Lord has said—I will of course consult with those who are more expert than I am on these matters. If the noble Lord thinks of another way that he has not mentioned, he should not hesitate to come forward with it. We want the best Bill we can get. If we can make it better, why not?
Lord GIFFORD: I say no more at this stage. We shall come back to this. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 122A, 122B and 123 not moved.]
6.39 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 124:
Page 38, line 6, at end insert—
("(3) For the purposes of the Housing (Homeless Persons) Act 1977 no person shall he treated as having become homeless intentionally or become threatened with homelessness intentionally by reason of his having accepted a protected shorthold tenancy of any premises and thereafter having been required to give up possession thereof.").
The noble Lord said: I hope I do not need to detain your Lordships long on this amendment, because it is an amendment which is really seeking information. It seems to me, as the legislation is at present drawn, that if a person becomes a shorthold tenant he or she knows, or can be assumed to know, that that tenancy is going to come to an end after one, two, three, four or five years. At the end of that time the person will have to remove himself or herself from the shorthold tenancy. It seems to me—and I believe I mentioned this to other members of my profession, and to members of Lord Gifford's branch of the profession—that it could be argued

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in the courts that any person who takes on a shorthold tenancy knowing that it is going to come to an end is, in fact, in danger of rendering himself or herself intentionally homeless under the Housing (Homeless Persons) Act 1977, in which case if you render yourself intentionally homeless the local authority does not have to rehouse you. Consequently, by accepting a shorthold tenancy, technically that person would be rendering himself or herself intentionally homeless, and therefore could not benefit from the provisions of the Housing (Homeless Persons) Act.
If the Minister could reassure me that that interpretation is wrong, I should be very happy, but I feel on a technical ground—and learned counsel do tend to use technical grounds; so do members of my part of the profession—it may be found that local authorities do not have to rehouse people. That would be a very serious outcome of the proposal which I am sure that neither the Government nor anyone else wishes. I should be glad to have an explanation.
Lord SANDFORD: I wonder whether I could respond to that request for information from the noble Lord, Lord Evans, before my noble friend replies to it. It is a matter to which the housing authorities, or at least those represented by the Association of District Councils, 300 or so of them, have given a good deal of thought. It is on their shoulders that the housing of the homeless under the Housing (Homeless Persons) Act 1977 chiefly falls. Their view is that when the shorthold provisions are enacted their burden under that Act will he considerably reduced, certainly reduced to some extent, the extent depending on the extent to which the shorthold tenancies are or are not sabotaged by the Labour opposition. But they will be reduced to some extent.
That leaves open the further fact that the operation of shorthold will produce in some cases a situation of hardship for tenants whose shorthold is ending, but it will also introduce to a small extent the possibility of deliberate abuse by tenants. It is, therefore, the view of the association as a whole that it would he better to leave the Act of 1977 and this Bill as it is drafted under which they can exercise their discretion as to what
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actually has occurred, whether it is a case of abuse or a case of hardship.
Lord STRABOLGI: Before the noble Lord replies, I must say that I think the noble Lord, Lord Evans, has a point here. I do not want to repeat the excellent arguments that he has put forward, but I may say that should fears on this question seem exaggerated it is worth noting that a survey by Shelter in 1978 and 1979 of local authorities' policies regarding applicants coming out of out-of-season lettings, showed that four authorities, as policy, judged all such applicants as intentionally homeless. Also in a regional newspaper the local health and housing officer was reported as saying that:
"Fixed term agreements already exist, but a landlord can have great trouble in getting a tenant out if he has to go to the courts. We regard anyone forced out of such a tenancy by the courts as voluntarily homeless, whereas we would do our best to house anyone who informed us their shorthold was running out".
Lord BELLWIN: I listened closely to what has been said and would say that the Government are in full agreement with the principle that a tenant should not be disadvantaged under the homelessness legislation merely because he has taken a shorthold and the shorthold has come to an end. We do not, however, think that there is a real problem here. Under existing legislation there are various types of letting where the tenant does not have permanent security of tenure. For example, tenants in houses let by absent owner-occupiers or by people pending their retirement can be made to leave under the mandatory grounds for possession in the Rent Acts. Tenants of resident landlords only enjoy limited security of tenure, and the occupants of tied cottages and lodgers have even less security.
The Homeless Persons Act does not provide that anyone who takes one of these lettings and then has to leave cannot thereby be intentionally homeless. Although there has been a recent case in the court of appeal—in fact reported in The Times yesterday—where someone was declared intentionally homeless at the end of an out-of-season holiday let, this depended very much on the circumstances of the case where a secure council tenancy had been given up in favour of the winter "holiday" letting. The mere fact of taking such a letting does not

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mean that someone will be making himself intentionally homeless. There is no reason to suppose that a court would take such a view of the ex-shorthold tenant. Therefore, there is no need for this amendment.
Moreover, and this is crucial, if we were to provide that taking a shorthold does not put a person into the intentional homelessness category, we should immediately be casting doubt on the status of all other tenants or occupiers without permanent Rent Act security. That would be highly damaging to the operation of the Homeless Persons Act and, I have no doubt, is far from the intentions of the noble Lord, Lord Evans, in whose name the amendment stands.
Lord EVANS of CLAUGHTON: I shall have to think more about this matter and take more advice. The noble Lord, Lord Strabolgi, has shot my fox a little, in that he brought up the precise points I was going to mention, and it is absolutely right that there are large areas here where there is uncertainty. I thought that this additional paragraph would make an area which is admittedly in the mind of barristers and solicitors an uncertain area, into a certain area. I should have thought that for the protection of themselves and their shorthold legislation, the Government might have welcomed this. I take the point made by the noble Lord, Lord Sandford. With no disrespect to him, the kind of problems which I envisage as a vice-president of the AMA, are probably more likely to crop up in metropolitan areas than in the areas of the ADC. What I will do, with some reluctance and a considerable amount of reservation, is to withdraw the amendment at this point, but I am going to consider it again and I may well come back to your Lordships' House with it again.
Amendment, by leave, withdrawn.
Clause 54 agreed to.
Clause 55 [Assured tenancies]:
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 124A:
Page 38, line 36, at end insert—

("(6) The preceding provisions of this section do not apply to a tenancy if, before the
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grant of the tenancy, the landlord has given the tenant a valid notice stating that the tenancy is to be a protected tenancy or, as the case may be, a housing association tenancy and not an assured tenancy.

(7) A notice is not valid for the purposes of subsection (6) above unless it complies with the requirements of regulations made by the Secretary of State.").

The noble Lord said: This amendment to Clause 55 removes from the assured tenancy scheme one unintended restriction on the ability of the landlord to let on a protected or housing association tenancy should he prefer to do so. Under Clause 55 as presently drafted a tenancy is automatically an assured tenancy if three conditions are met. These are: that the landlord has been approved by the Secretary of State; that the property was built after the Housing Act received Royal Assent; and that it was not previously let other than as an assured tenancy.
An approved landlord who has built new homes will, therefore, have no option but to let on assured tenancies. This restriction was never intended. It would, for instance, prevent an approved landlord from entering into an arrangement with a local authority whereby part of a building was let at fair rents. It would also prevent a housing association, which specialised in new-build, from becoming an approved landlord unless it was prepared to abandon building for letting at fair rents. A mixed programme of fair rent and assured tenancies would not be allowed.
The amendment puts this right by providing that an approved landlord can let on ordinary protected or housing association tenancies if he serves a notice to that effect on the tenants concerned. The notice must comply with the regulations made by the Secretary of State. It is a useful modification to the assured tenancy scheme which I hope will commend itself to your Lordships.
On Question, Whether Clause 55, as amended, shall stand part of the Bill?
Lord STRABOLGI: I should like to ask the Government three questions on Clause 55. I am bound to ask these questions because, as we said at the beginning of this Committee stage, they have not made

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the background notes available to the Opposition. First, with regard to approved bodies, what happens to the tenant if an approved body loses that status? Would the tenant be fully protected? Secondly, what sort of bodies do the Government have in mind for "approved body" status? Thirdly—and this is important with so many overseas interests buying in to our property—will approved bodies have the right to sell their interests to other non-approved bodies? If so, what parameters will be used to judge the eligibility of potential approved bodies? If the noble Lord cannot answer all of those questions, perhaps he will write to me about the matter.
Lord BELLWIN: Clearly, I could attempt to give an answer to the points that have been raised, as I understand them, but I would far rather ensure that the answers were authoritative and absolutely accurate. So, I thank the noble Lord for his suggestion and I certainly take it up.
Clause 55, as amended, agreed to.
Clause 56 [Effect of Interest of landlord ceasing to belong to approved body]:
6.42 p.m.
Baroness DAVID Baroness DAVID moved Amendment No. 125:
Page 38, line 37, leave out subsection (1).
The noble Baroness said: I beg to move Amendment No. 125 and I should like to speak also to Amendment No. 126. The Government's attention must now be devoted to what happens to the tenant if an approved body loses that status. These amendments relate to the status of tenants following loss of approved body status by the landlord. We see no reason why the tenant in this position should not enjoy full Rent Act protection. We want to look after individual tenants who may come up against bad landlords taking over from the approved bodies.
Clause 55(4) states that:
"'approved body' means a body, or one of a description of bodies, for the time being specified for the purposes of this Part of this Act in an order made by the Secretary of State".
Has the Secretary of State decided yet which will be the approved bodies? I feel that before we can really take in these three clauses dealing with assured tenancies we need to know a bit more about the whole matter. I beg to move.
Lord BELLWIN: These amendments relate to the Government's proposals under Clauses 55 to 57 to allow landlords approved by the Secretary of State to build for rent outside the Rent Acts. This assured tenancy scheme is a strictly controlled experiment designed to test the possibility of attracting new investment into private renting. The main sorts of body we have in mind for approval under the scheme are building societies, pension funds and insurance companies or housing associations backed by such bodies. But that, of course, is not to exclude other bodies if they are considered suitable. As we are speaking of an experiment, we shall monitor it carefully. I should stress that Clauses 55–57 are concerned only with new build, and hence will have no implications for existing tenancies.
These amendments would delete subsection 56(1), which contains a transitional arrangement whereby tenancies existing at the time of a variation in the order taking a landlord off the "approved list" would continue to be assured tenancies. Landlords subject to such an order would then have all their assured tenancies converted automatically into protected tenancies on expiry of the three-month period provided by subsection 56(2).
These amendments would make the assured tenancy scheme less attractive to potential approved landlords. If they are to commit finance towards the building of new homes, it does not seem reasonable that the potential rental income can be reduced at a stroke—to use a phrase—perhaps simply because Government policy has changed rather than because the body concerned has not proved a good landlord.
Tenants in occupation at the time when a variation order is made will have taken on their tenancies in the knowledge that they will pay market rents, and it seems reasonable that they should continue to do so. They will of course have the protection of their leases and of Part II of the Landlord and Tenant Act 1954 as modified by the Bill. If a landlord is

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taken off the approved list the sanction will be that he cannot build any new dwellings under the scheme or create new tenancies. If the body was in financial difficulty it would be a double blow to have the value of its existing holding cut as proposed by the amendment. I I wonder whether, with that explanation, the noble Baroness will feel able to withdraw the amendment.
Baroness DAVID: Once again I should like to study what the Minister has said and find out whether the answer is entirely satisfactory. But, for the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 126 not moved.]
Clause 56 agreed to.
Clause 57 agreed to.
Schedule 5 agreed to.
Clause 58 [Rent officers and applications for registration of rent]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 127:
Page 39, line 33, at end insert—
("(1A) In section 67 of the 1977 Act (application for registration of rent) for subsection (2) there is substituted the following subsection—
"(2) Any such application must be in the prescribed form and must—

(a) specify the rent which it is sought to register;

(b) where the rent includes any sum payable by the tenant to the landlord for services and the application is made by the landlord, specify that sum and be accompanied by details of the expenditure incurred by the landlord in providing those services; and

(c) contain such other particulars as may be prescribed."").

The noble Lord said: I beg to move Amendment No. 127 and for the convenience of the Committee I shall speak also to Amendments Nos. 128, 129 and 130. Under the present legislation, which is not changed by our proposals in Schedule 18 to the Bill, tenants with fixed fair rents are not statutorily entitled to information from their landlord on the cost of providing services. This is because they have the rent officer to protect them against unreasonable claims
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by the landlord. The rent officer also fixes service charges for the full registration period—which will be two years under the Bill—even though costs may rise substantially. The benefit this confers at a time when wages and the cost of fuel and repairs are rising rapidly should not be underestimated.
However, we have received representations that the right to information about costs could help tenants in their arguments before the rent officer and rent assessment committee on re-registration. Many fixed fair rent tenants have expressed concern that landlords influence rent officers to fix higher rents than they would otherwise have done by producing spurious data on services at the last minute without the tenant having the opportunity to contest it. I am by no means sure that rent officers are so easily misled, but these amendments to Clause 58 and Schedule 6 provide additional protection to fixed fair rent tenants by giving them the opportunity to challenge landlords' evidence to the rent officer on service costs. In introducing these amendments we are fulfilling an undertaking given in another place.
The amendment requires the landlord, when applying for a rent registration, to state on his application how much of the rent sought is attributable to services. He will also have to attach supporting evidence. The rent officer is then required to serve this information on the tenant. The tenant will then be asked whether he wants a consultation, as in all applications. If a consultation is to be held the amendments require that it should not take place until at least 14 days have elapsed since the serving of the notice.
This amendment will ensure that tenants on fixed fair rents always have the opportunity to see in advance and challenge the evidence on which their landlord is seeking an increase in rent attributable to services. I hope noble Lords will accept this—as I consider it to be—important new safeguard.
Lord STRABOLGI: I think that the Government's amendment goes some way, although it does not go far enough. We shall probably deal in more detail with the service charges when we come to Schedule 18. But I may say that, as a result of one case—I think that it was

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Campden Hill Towers v. Gardner in 1977—it was found in the courts that tenants can be charged for large-scale major repair works even though they are protected by Section 32 of the Housing Act 1961. The cost of works on flats other than their own can be put on the service charges. That is surely doubly unjust because tenants will have to pay towards maintaining the capital value of properties in which they have no capital stake, and as regards which there should really be a capital expenditure on the part of the landlord. And tenants have to pay twice—once through the service charges and again in rents, increased as a result of the repairs. This is a major scandal which is going on in particularly many of the flats in London, and I hope that it is something to which the Government will give their attention.
I am also very glad that the Ministers and the department concerned will be called before a Select Committee of another place which is to look into the question of London accommodation—particularly in flats—in some depth. Therefore, I hope that the Government will take some action to repair what is a very great injustice to many flat-dwellers in London and in the other large cities. However, as I say, the amendments go some distance, and we are grateful for that.
Clause 58, as amended, agreed to.
Schedule 6 [Applications for registration of rent]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 128:
Page 108, line 18, after ("application") insert—
("(b) stating any sum specified in the application in accordance with section 67(2)(b) of this Act;")
The noble Lord said: I have already spoken to this amendment when I spoke to the last amendment. I beg to move.
Lord BELLWIN Lord BELLWIN moved Amendment No. 129:
Page 108, line 24, at end insert—
("(2) Where, in pursuance of section 67(2)(b), the application was accompanied by details of
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the landlord's expenditure in connection with the provision of services, a notice under this paragraph shall be accompanied by a copy of those details.")
The noble Lord said: I also spoke to this amendment with Amendment No. 127. I beg to move.
Lord BELLWIN Lord BELLWIN moved Amendment No. 130:
Page 108, line 42, at end insert—
(".In sub-paragraph (2) of paragraph 4, for the word "notice" there are inserted the words "notice, or 14 days in a case falling within paragraph 3(b) above".")
The noble Lord said: I spoke to this amendment when I spoke to the last amendment, Amendment No. 127. I beg to move.
Schedule 6, as amended, agreed to.
Clause 59 [Applications for new registered rents and phasing of increases]:
6.53 p.m.
Baroness BIRK Baroness BIRK moved Amendment No. 131:
Page 39, line 38, leave out subsections (1) to (4).
The noble Baroness said: I shall be very brief on this amendment. It has had a very wide airing in the other place and has been discussed widely in newspapers, and so on. This clause reduces the normal period before fair rents can be re-registered from three years to two years, and alters the phasing of rent increases accordingly. It seems to me that if the Government had set out to find the worst possible time to introduce something that will fuel inflation in this way, this is it. To change the reviews at a time when inflation is over 21 per cent., with rates of interest as they are, and without any solid reason for so doing, is bad timing.
As rents increase, the money needed to gain access to new tenancies increases proportionately. As rents have increased, as I shall show, and are increasing, not only will tenants be paying more—and this is quite apart from the question of the change in reviewing and phasing—but Clause 76 of the Bill lays down that a £200 deposit can be charged, in addition to supposing that a tenant is paying

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£25 a week, a month's rent in advance and possibly, on top of that, a hefty agency fee. Therefore, the whole effect of this is, again, to increase the cost of living, to increase wage demands and to increase the vicious spiral that the Government say all the time they are trying to break.
The average registered rent for Greater London in the fourth quarter of 1979 was £18·70 a week. This represented a 33 per cent. increase on the previous year. For the rest of England and Wales the average for the last quarter of 1979 was f13·96 per week, which represented an increase of 36 per cent. on the previous year. Therefore, without changing the review system and phasing, I should have thought that rents are showing quite a considerable increase.
If this remains part of the Bill, it means that rents will increase 50 per cent. more rapidly over the next two years; and as a result of the change in reviewing from three years to two years and the phasing from two years to be spread over one year, it will require more rent officers, and more time and effort will be spent on going through the procedures every two years. As there is at present a bottleneck over rent reviews, I beg the Government—not, I am afraid, with very much hope—to look at this again. It will increase the need for manpower. It is increasing everyone's anxieties. Almost before one review has been completed, the next one will be on the way. It is bad from a human point of view; it is bad financially and it is bad economically.
Finally, if one looks at the takeup of rent allowances, one sees that only between 50 per cent. and 55 per cent. of people take them up at all. The whole system is so complicated. Unfortunately, it is one of the least effective of the grants or allowances available to people because they do not understand it, and because they have to present evidence of the rent charged, people are often uneasy and worried about doing so.
If rents are not registered—and, of course, this applies to more than half the rents—there can be no rent allowances. Therefore, the rent allowances in no way balance the effect of very considerable increases in rent. I am quite sure that the Minister will explain how landlords have fallen behind; and I submit that the
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increases which I have given have been quite considerable. Compared with some years ago—and I shall not bother your Lordships with the figures—when inflation was very much lower, it is true that rents were much lower. To do this at this particular time seems to add to a bureaucratic jungle and to be unviable, either financially or socially.
Lord GOODMAN: Without wishing to repeat what the noble Baroness has said, I should like to urge the Government to consider this on the purely administrative considerations that she advanced. I should declare a special interest here for I am the president of the Rent Officers' Association and, as such, I have a good knowledge of rent officers. I understand that at their last conference, at which I made a short address, there was a move to reduce their number. I wonder whether the Government will consider what the expenses involved in this earlier and more frequent rent review will be, as opposed to any increase in rents that might benefit the landlords. I have a feeling that if it were to be worked out, it would be found that a very considerable amount of administrative expenditure is involved. It is disheartening to the rent officers. Already they have to deal with a considerable backlog. I think that the Government ought to give it further thought and consideration on that ground alone.
Lord JANNER: I should like to support this amendment for perhaps a different reason. Today tenants' associations are very disturbed indeed—and I am not talking about the amounts to which my noble friend Lady Birk has referred—at increases as high as 500 per cent. being charged to tenants of flats by rent tribunals. Increases of between 200 and 300 per cent. are being charged in a vast number of cases. I do not think that three years is enough. If we are to reduce the period, the feelings of security that a tenant of a flat has will also be reduced by two-thirds. In my view and in the view of the tenants it is a very important consideration that that period should not be reduced.
Lord MONSON: I should like to oppose what the Opposition say about these amendments. So long as you have any phasing whatsoever, the whole concept of a fair rent is completely bogus

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and fraudulent. You are always one or two steps behind. After all, what is adjudged to be a fair rent in 1980 cannot possibly be a fair rent in 1981, still less in 1982 at the present rate of inflation or at any rate of inflation we have had in recent years. When the Labour Government were in power we had a Price Commission. The Price Commission did not come along to a manufacturer and say, "We adjudge the right price for a certain brand of children's shoes to be £10. This is a price which gives you a reasonable return. However, this year we will allow you to charge only £8 and next year £9." They allowed the manufacturer to charge £10 straight way. That is how it should be with fair rents.
I notice incidentally that in the Scottish Bill there is no phasing whatsoever. This is something that has only just been brought to my attention. I am not aware of the attitude taken by the Opposition to this fact, but if there is no phasing in Scotland there does not seem to me to be any case for phasing in England, and certainly not for retaining the three-year phasing which the Opposition wish to have.
7.2 p.m.
Lord BELLWIN: This amendment would delete the new provisions in Clause 59 relating to the period before a new fair rent can be registered and to the phasing of increases in fair rents. These are important measures which bring the present rent registration system into line with current circumstances. I should have thought that those were the operative words. I shall deal first with the provisions relating to the minimum period before a new fair rent can be registered. At present once a rent has been registered it remains the rent limit for three years. This period was introduced in 1965 when the fair rent system came into being and when the annual rate of inflation was only about 4 per cent. By reducing this period to two years Clause 59 seeks to ensure that the real value of the registered rent does not fall due to the present higher inflation rates as rapidly as it does now under the three year registration period.
Clause 59 makes a parallel change in the system of phasing increases up to a
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fair rent. It provides that increases will be phased in two annual instalments following a new registration rather than three as at present. The full fair rent will therefore become payable a year after the registration of the new rent instead of two years as at present. It is important that the tenant has some measure of protecton against steep increases in rent. However, under the present system, which the noble Baroness wishes to retain, a fair rent does not become payable in full until it has long since ceased to be fair. On that I entirely accept the observations made by the noble Lord, Lord Monson, and I am grateful to him for his comments.
I think I can best illustrate this by taking the example of a fair rent of, say, £7 which is increased on re-registration to £10. Let us first look at what would have happened in 1965 in these circumstances. Noble Lords will appreciate that at that time there were three years between the rent registrations but there was no phasing at all. In the first year the tenant would therefore pay the full registered rent of £10. With inflation running at 4 per cent. the rent would be 4 per cent. below (and this is the point Lord Monson made) the real value of the fair rent in the second year and 8 per cent. below it in the third year. At the beginning of the fourth year it would be re-registered and, assuming that the rent goes up broadly with inflation, the fair rent would go up from £10 to £11·25 and, once again, because it would be paid in full immediately, it would be at its full real value.
I will now take the same example with a rate of inflation of 14 per cent., and with phasing in three annual instalments as was introduced in 1975. In year one the tenant would not be paying the full fair rent of £10; because of phasing he would be paying £8 rent. That is 20 per cent. below the real value of the fair rent. In year two, as a result of the second instalment of phasing, the rent would increase from £8 to £9, which would still be 21 per cent. below the fair rent in real terms. In year three the rent would increase to £10 and would still be 22 per cent. below the real fair rent. In year four the rent would be re-registered, and again because of the effect of phasing the rent payable would be £11·57, which is still 21 per cent. below the full real value.

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The essential difference is that when fair rents were first introduced the rent remained at its real value for two out of every four years, and for the two intervening years it was only slightly below it. The effect of a high rate of inflation plus three annual instalments of phasing means that throughout the whole of the four year period in the latter example shown the fair rent remains about 20 per cent. below its real value.
It is this situation that Clause 59 seeks to alleviate and that the amendment strives to preserve. All that the changes in Clause 59 will mean is that tenants will pay the full fair rent more quickly, following its registration, than at present. The rent allowance system is available to those who have difficulty in meeting their rent. I entirely take the point the noble Baroness made about the degree of take-up at the present time. It is a matter of considerable concern. Frankly, it has always been a matter of concern ever since the introduction of the Rent Acts. But the Government are trying to do something positive about that, in that we are launching a publicity campaign to ensure that people are aware of the benefits which are available to them as of right.
From 1st July we are increasing the maximum rent allowance payable to £25 a week in London and £23 elsewhere. I can illustrate the very limited effect of the Bill on tenants' rents by again taking a typical case. At present if a tenant is paying a fair rent of £9 per week, he might expect an increase of £1 per week in the first year following re-registration of this rent. Under the Bill the equivalent increase would be £1·50. If it is assumed that the tenant was married with two children and had an income of say £5,000 a year, at least 90p of the £1·5O increase would be met by rent allowance. In some areas of London such as Westminster, El or more would be met by rent allowance. The net increase to the tenant would still be beneath the general rate of inflation.
The provisions of Clause 59 are designed to ensure that a fair rent means what it says, both to landlord and tenant. We had some discussion with the noble Lord, Lord Shinwell, as to what a fair rent would he. The amendment proposed by the noble Baroness and the noble Lord would perpetuate the present inequities in the pri-
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vate rented sector—I see that the noble Lord looks puzzled. Perhaps I may be able to do something about that later. May I just finish what I am speaking about now, and come back to the point later. The amendment would perpetuate the present inequities in the private rented sector which are forcing landlords to find other uses for the rented accommodation which is so badly needed, especially by the young and the mobile. I hope that noble Lords will reject this amendment.
Viscount SIMON: May I ask the noble Lord one question? In the interesting figures he gave us he appeared to be assuming that it would be fair and reasonable that rent should increase along with inflation. But is that right`? Surely only a part of the rent is required by the landlord for current expenditure. A large part of it is amortisation of his original capital, and that does not have to go up with inflation.
Lord BELLWIN: The point is that what the rent will become in due course, the new rent that it will lead to, will be a matter for determination by the rent officer. What we are talking about is the impact of inflation upon the rent which has been fixed for the time until the next registration. It is that that I was trying to give examples about when I was referring to it before. I think that that is what he wanted to be sure about.
Lord HYLTON: May I just say to the noble Viscount, Lord Simon, that a great part of rents is consumed by the expenses of repairs, and building costs over recent years have tended to rise more rapidly than general inflation.
Baroness FISHER of REDNAL: I follow what the noble Lord on the Front Bench was saying. One can follow that argument through. But then I come to the conclusion that the Government must expect for ever and ever to be facing inflation. One listens to the points put through the media that it is hoped to bring inflation down within the next three years. If the Government are so successful, will the tenant he able to appeal to the rent officer, when inflation is down, for a decrease in his rent?
Lord BELLWIN: I have every confidence that the Government's intentions

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regarding inflation will be entirely successful, and I am sure the noble Baroness would expect me to say no less. Should that happy event take place (I might say "when" it does; sooner rather than later is perhaps the best phrase I can use) we shall then have to see the extent of it. I was talking about giving illustrations of rents set when the rate of inflation was 4 per cent. We hope one day to return to that happy state, and when we do that will be the time for us to reconsider the kind of situation the noble Baroness happily presents to us as a possibility. Let us look forward to the moment when it becomes a probability and a fact.
Lord JANNER: Is the Minister aware that he is basing the whole of his argument on the question of inflation? Does he realise that today the increases that are being demanded are very much higher than the rate of inflation? Is he prepared in the circumstances to do something to prevent increases higher than the rate of inflation?
Lord BELLWIN: With respect, the noble Lord is talking of a separate category altogether. We are talking about rents which are applied under the Rent Acts where the determination of the new rent is fixed by the rent officer, and the basis the rent officer uses to do that is the formula we discussed earlier, which I am sure noble Lords would not wish me to go over again. The point which the noble Lord, Lord Janner, is so troubled about and which, understandably, he raises regularly in your Lordships' House, is rather different and, with respect, does not come within the context of the amendment now before the Committee. I am sure that will not prevent the noble Lord from raising it
again on many occasions in the future, and I will do the best I can either to assuage his fears or satisfy him as best I can.
Baroness BIRK: I thank the Minister for all he has said. I listened carefully to his remarks and to the comments of other noble Lords. I have not heard from the Minister a convincing reason why this change in review and phasing should take place at this time, and certainly there has been no answer to the points raised by myself and by the noble Lord, Lord Goodman.
Lord BELLWIN: May I ask the noble Baroness to permit me to intervene to correct a point she raised earlier? I am sure she would like me to put the record right because her figures were wrong. She probably gave figures for furnished lettings. The average rent registered for unfurnished lettings in London in 1979 was £668 or £12.84 per week. In England and Wales the figure was £483 or £9.20 per week. The noble Baroness gave percentage increases on the previous year, but those were misconceived because when rents are re-registered they are increased on a rent registered at least three years before, and the average increase on re-registration after three to four years in 1979 was, in fact, 47 per cent.
The DEPUTY CHAIRMAN of COMMITTEES (Lord Segal): I have to point out to the Committee that if Amendment No. 131 is agreed to, I cannot call No. 132.
7.14 p.m.
On Question, Whether the said amendment (No. 131) shall be agreed to?
Their Lordships divided: Contents, 62; Not-Contents, 88.

CONTENTS

Ardwick, L.

Davies of Leek, L.

Jacques, L.

Balogh, L.

Davies of Penrhys, L.

Janner, L.

Birk, B.

Denington, B.

Jeger, B.

Blease, L.

Donaldson of Kingsbridge, L.

Kaldor, L.

Boston of Faversham, L.

Evans of Claughton, L.

Lee of Newton, L.

Bowden, L.

Fisher of Rednal, B.

Leonard, L.

Brimelow, L.

Gaitskell, B.

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

Brockway, L.

Gifford, L.

Bruce of Donington, L.

Glenamara, L.

Lloyd of Kilgerran, L.

Chitnis, L.

Greenwood of Rossendale, L.

Longford, E.

Cledwyn of Penrhos, L.

Hale, L.

Lovell-Davis, L.

Collison, L.

Hampton, L.

McNair, L.

Cudlipp, L.

Hatch of Lusby, L.

Maelor, L.

David, B. [Teller.]

Jacobson, L.

Oram, L.

Peart, L.

Ross of Marnock, L.

Taylor of Mansfield, L.

Pitt of Hampstead, L.

Seear, B.

Underhill, L.

Ponsonby of Shulbrede, L.

Segal, L.

Wall, L.

Raglan, L.

Simon, V.

Wallace of Coslany, L.

Rhodes, L.

Stewart of Alvechurch, B.

Wells-Pestell, L.

Ritchie-Calder, L.

Stewart of Fulham, L.

White, B.

Rochester, L.

Strabolgi, L.

Wynne-Jones, L.

NOT-CONTENTS

Airey of Abingdon, B.

Fortescue, E.

Morris, L.

Amory, V.

Fraser of Kilmorack, L.

Mottistone, L.

Armstrong, L.

Gage, V.

Mowbray and Stourton, L.

Auckland, L.

Glendevon, L.

Moyne, L.

Bellwin, L.

Glenkinglas, L.

Murton of Lindisfarne, L.

Belstead, L.

Godber of Willington, L.

Northchurch, B.

Bessborough, E.

Gowrie, E.

Northesk, E.

Blake, L.

Greenway, L.

Nugent of Guildford, L.

Buxton of Alsa, L.

Gridley, L.

O'Hagan, L.

Campbell of Croy, L.

Grimston of Westbury, L.

Orr-Ewing, L.

Chelwood, L.

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

Redesdale, L.

Clitheroe, L.

Redmayne, L.

Colville of Culross, V.

Harmar-Nicholls, L.

Reigate, L.

Colwyn, L.

Holderness, L.

Rochdale, V.

Cork and Orrery, E.

Hornsby-Smith, B.

St. Aldwyn, E.

Craigavon, V.

Hunt of Fawley, L.

Saint Oswald, L.

Craigmyle, L.

Hylton, L.

Salisbury, M.

Croft, L.

Hylton-Foster, B.

Sandford, L.

Cullen of Ashbourne, L.

Kimberley, E.

Sandys, L. [Teller.]

Davidson, V.

Kinnoull, E.

Selkirk, E.

De La Warr, E.

Lindsey and Abingdon, E.

Selsdon, L.

Denham, L. [Teller.]

Long, V.

Skelmersdale, L.

Digby, L.

Lonsdale, E.

Soames, L. (L. President.)

Drumalbyn, L.

Lyell, L.

Strathcona and Mount Royal, L.

Elton, L.

Macleod of Borve, B.

Trefgarne, L.

Fairfax of Cameron, L.

Mansfield, E.

Vaux of Harroden, L.

Faithfull, B.

Margadale, L.

Vivian, L.

Falkland, V.

Marley, L.

Ward of Witley, V.

Ferrers, E.

Monson, L.

Westbury, L.

Ferrier, L.

Montagu of Beaulieu, L.

Moved accordingly, and, on Question, Motion agreed to.

7.22 p.m.
Lord MONSON Lord MONSON moved Amendment No. 132:
Page 40, line 1, leave out subsection (2).
The noble Lord said: I beg to move this amendment, and with the leave of the Committee I shall speak also to Amendment No. 151, which is more or less consequential. As the Committee will have gathered from my intervention on the last amendment, I consider the whole idea of rent phasing to be totally immoral. It ensures that allegedly fair rents always in practice remain unfair rents. Phasing does not occur in any other sphere of economic activity in this country or, so far as I know, in any other country. When I speak of economic activity I am referring to essentials as well as non-essentials and luxuries.
If private individuals are hard up as a result of rising rents and in consequence
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deserve a subsidy, the subsidy should surely be provided by the state, not by other private individuals. But in fact I do not think that such subsidies are to any great extent justified, because, despite what the noble Baroness, Lady Birk, and the noble Lord, Lord Janner, said, I believe that if they examine any 5-year period since fair rents were first introduced, they will find that the fair rents have always lagged behind the retail price index and, even more, behind earnings. In other words, the fair rents represent a smaller and smaller proportion of earnings. I know that the Labour Party is anxious that rents should not take up a higher proportion of the average person's earnings than they do, but if noble Lords look at the record they will find that what I say is the case. Fair rents—and excluding other rents—represent a decreasing, rather than a rising, proportion of these earnings. The reason that I move the amendment is that anything that reduces the period of delay in bringing into effect the full rent ought to be encouraged,

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and I hope that the noble Lord, Lord Bellwin, can give me some assurance on this.
Lord BELLWIN: The amendment would delete subsection (2) of Clause 59, which ensures that the new 2-year period before fair rents may be reviewed applies only to rents registered after commencement of the Bill. The 2-year period would therefore apply also to existing registrations. I do not think it reasonable that we should change the rules in mid-stream in the manner proposed by the noble Lord, Lord Monson. Tenants with existing rent registrations will not be expecting another change in the registered rent, except through phasing, until three years are up. They will probably have received notices of increase covering the whole period. If at the very moment that they were about to start paying the full fair rent under the existing registration a further increase were to be imposed from a new registration, this would cause confusion, not to say concern.
The amendment would moreover place a major burden on the rent registration system, which was referred to earlier by the noble Lord, Lord Goodman. All rents registered between two and three years previously would become due for review on the date of commencement, and the result would inevitably be delays, some of which could be very serious. I hope that on reflection the noble Lord will decide not to press his amendment. My sympathy for the philosophy behind his motivation in raising the matter is not inconsiderable, but I hope that in practical terms he will feel able to withdraw the amendment.
Lord MONSON: The noble Lord has very successfully convinced me of the difficulties that would ensue if the amendment were passed, and therefore I beg leave to withdraw it.
Amendment, by leave, withdrawn.
The DEPUTY CHAIRMAN of COMMITTEES: Amendment No. 133. I have to point out to the Committee that if this amendment is agreed to, I cannot call Amendments Nos. 134 to 136.
[Amendments Nos. 133 and 134 not moved.]
Lord MONSON Lord MONSON moved Amendment No. 135:
Page 40, line 34, leave out ("or increasing")
The noble Lord said, I beg to move this amendment. I find it very strange that a Conservative Government propose giving the Secretary of State the option to increase the period of delay. I suppose that in order to be consistent I should have introduced an amendment to delete the words "or increasing" in line 32 as well as in line 34, but because of the complexity of the wording I omitted to do so.
What is proposed in this clause seems to be a rather dangerous thing to do. I cannot visualise this Government seeing any occasion when they might wish to increase the period of delay before higher rents came into operation. It would give hostages to fortune if, "heaven forbid"!, a Government of highly Tribunite complexion were to come to power, since they would immediately seize upon the opportunity afforded them by the clause as it stands to increase the period. They might well do that by means of legislation later, but it seems rather silly for a Conservative Government to give them a toe-hold whereby they could do it that much sooner. I think it is quite unnecessary to provide for any possibility of the period being increased. I beg to move.
Lord BELLWIN: I say to the noble Lord, Lord Monson, I hear what you say. The Bill provides for the period of delay to be one year, which means that fair rents will be phased in two instalments, with the second instalment being due one year after registration. We believe that this is right for present circumstances, but would not necessarily be so in future. In particular it might be necessary to amend the period if the minimum period between registration was amended, as is also possible by order under Clause 59.
The amendment would provide that the Secretary of State could only reduce the period of delay, not increase it. That would detract from the flexibility that we are seeking to introduce and would make the power a one-sided affair. I can see no purpose in that. The amend-

449
ment would also have the anomalous effect that once the order-making power had been used to reduce the period of delay—say, to six months—it could then be used subsequently only to achieve a further reduction from six months. It would not be possible to revert to a period of one year without primary legislation. I dare say that this would provide a deterrent to the power being used at all, which is not, I think, what the noble Lord would wish to see. I hope the noble Lord will see the merit of the flexibility which Clause 59 as currently drafted provides, and perhaps will not press his amendment.
Lord MONSON: I do not intend to press the amendment now, of course, but I really would ask the noble Lord, Lord Bellwin, and his colleagues to look at this very carefully, because it really does give hostages to fortune. Can he really visualise a situation in which a Conservative Government might wish to increase the period before a new rent comes into operation? I cannot think so. I see one of the difficulties mentioned, which could be got round, perhaps, by a little redrafting; but I would ask the noble Lord whether he would look at this point seriously before the next stage, and on the assumption that he will do so I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.32 p.m.
Lord HYLTON Lord HYLTON moved Amendment No. 136:
Page 40, line 38, at end insert—
("(d) setting a limit on rent increases for any category of landlord for such a period as he may determine".).
The noble Lord said: This amendment, No. 136, may not be, strictly speaking, necessary, but I put it down to prevent unnecessary hardship to a small minority of housing association tenants. I have brought with me some examples of the kind of financial hardship which these tenants may face, and precise details of rent levels. However, in the interests of brevity I will not quote them now, but if my noble friend on the Front Bench would like to see them I will willingly let him have them. Suffice it to say that the new, much larger level of rent allowances is extremely welcome. However, it will
450
not help all the housing association tenants, because only if they are in extreme poverty can they benefit from the allowances unless the total rent per week exceeds £10. The result is that some housing association tenants will find themselves more harshly treated than similar tenants of local authorities or private landlords. In addition, there is also the point that rent allowances cannot relieve service charges which are sometimes made in respect of flats.
My noble friend and others who have studied these arcane matters will know that housing associations generally are not obliged to charge the full fair rent, or even the full permitted increase, and can therefore limit the extra burden on tenants to some reasonable sum, such as £3 a week or a little more. However, associations now receiving revenue deficit grant are expected by the Department of the Environment and the Housing Corporation to maximise their income. Concern therefore arises about a minority of tenants and a minority of associations. I hope that my noble friend will be able to make a statement that will set our fears at rest. I beg to move.
Lord EVANS of CLAUGHTON: I merely wish to say that the reason why I did not move Amendment No. 134 was that I thought, first, that the amendment to be moved by the noble Lord, Lord Hylton, was worded slightly better than mine and, secondly, that he would explain it very much better than I could. I want to say that I agree with everything he has said, working from the same basis as that from which he works—from a housing association basis—because housing associations do, as the noble Lord said, feel concerned about this and are looking for reassurances.
Baroness DENINGTON: May I give my support to the amendment moved by the noble Lord, Lord Hylton, and hope that the Minister will be able to help us. No doubt we have all had information from various housing associations, but some of it is absolutely alarming. There can be rent increases up to £12 a week, which is quite phenomenal. I have another example here that I received only today, I think, from an association of which I was for many years a member. They say that the rent increases will range

451
from £2 to £4·50 a week. I think it would be correct to say that probably for council tenants rent increases will be in the region of £2, and we are pleading for housing association tenants, who are going to be required to pay way beyond that particular figure. Some are going up (in this association they have done their homework) by £4 to £7. In addition to that, there have got to be service charge increases. The whole situation is really very serious.
I happen also to be a member of the Sutton Housing Trust, where we are not in receipt of revenue deficiency grant, and we have already taken a decision that £3 is as much as we can possibly put on our tenants. I would be so delighted if the Minister could indicate that that was the kind of figure that he would have in his mind.
Lord BELLW1N: I understand it has been suggested that I am taking a long time in dealing with some of the points raised. I fail to see how I can move more quickly when so many noble Lords feel—and I see no reason why they should not—that they wish to raise points; and I really can do no better than to speak at a rather rapid rate of knots, greater than is my normal wont, as I am sure your Lordships will agree. But I am doing my best from my side, and I will try to do the same on this amendment, also.
Let me deal with what I believe to be the principle behind these amendments. I believe they are saying that the fair rent system is all very well, but that it should be overridden if it results in increases in rent above a certain specified cash level. I would suggest that this is misconceived. Increases in registered fair rents over the last three years have been much the same as the average increases in earnings; that is, about 45 per cent. in both cases. However, because of phasing, tenants have not paid these increases in full—a point we were talking about earlier—for two years; that is, five years after the previous fair rent was fixed. This follows a period when fair rent increases were generally less than the level of inflation. Since 1970, for example, earnings have gone up by 258 per cent., and fair rents by 111 per cent. Of course, there are individual cases where recently registered fair rents
452
have risen more sharply than the average of 45 per cent. or so.
Some may ask: Why is this? The first reason is that the previous rent will often have been fixed several years ago, and this really is an answer that I ought to give to the noble Lord, Lord Janner, when he so frequently raises the same point. It really is, What is the starting base? For example, an 80 per cent. rent increase may sound very startling at first, but if the previous rent was registered, say, six years ago, the increase is rather less than in other indications of inflation. If a ceiling was placed on rent increases, it would be extremely difficult to take account of such factors. The landlord would be penalised for not having increased his rents sooner, which is hardly fair.
The second reason is that the fair rent system is not meant to be some means of index-linking. Where a rent has already been registered and is then reviewed without a change of circumstances, it is perhaps likely to be increased certainly in line with inflation. There are many cases where circumstances have changed since the previous legislation; where, for example, the property has been improved, or where rents are being registered for the first time. Two hundred thousand such cases will result from the conversion of controlled tenancies into rent regulation under Clause 63, and I am sure we shall be talking about that soon—at any rate, I hope soon.
The purpose of the fair rent system is to create an equitable and consistent system for rent fixing based on the statutory criteria in Section 70 of the Rent Act and on the building up of experience of comparable properties and circumstances. I need hardly remind your Lordships that this was a Labour measure. However, if a ceiling is placed on increases, the system becomes distorted. Comparable properties will not have comparable fair rents. In fact, rents will cease to be fair rents and become something quite different. In some cases—and a good example here is those properties coming out of control under Clause 63, where rents are at present pegged at 1956 levels—the result would be patently absurd. Where increases in fair rents do cause difficulties for individual tenants, the correct way of preventing hardship

453
is not by distorting the fair rent system but by a phasing of increases and by rent allowances. It is often not appreciated how substantial rent allowances are, especially in meeting increases.
As I said earlier, from 1st July we are raising the maxima payable very considerably. I will not repeat the figures again in the interests of time, but may I say on this that if my noble friend Lord Hylton cares to send me his figures, as he said he would, I would be very interested to see what they are and what significance they may have in the context of this whole matter.
I hope that on reflection these amendments will not be pressed. I could talk to them at greater length but, at the end of the day, we really have a basic principle here. I think the great need is to ensure that people know what are their rights. We must do what we are suggesting. We will launch a new campaign—and some noble Lords may say, "Yet again"—I know it will not be the first. We will try to make it a better one. We want people to know what are their rights. The whole purpose is that they should be able to have this protection. They are the ones who need it and we will do our best to help them.
Lord HYLTON: I have no intention of pressing this amendment. My noble friend the Minister has given me a splendid answer but has given it on a very high plane of generality. I wish he had been able to take on board my particular point about the housing associations now receiving revenue deficit grant. This kind of thing applies very much where there has been a planning agreement between the housing association and the local authority when a particular property came to be modernised with the result that sometimes a tenant has been enabled to go on paying the old, unmodernised rent even after he has moved back into the new, fully-modernised property. This is the kind of case where we will have huge jumps in rent levels in the next re-registration.
I am not quite sure whether my noble friend took my point about rent allowances. Of course the increases are splendid and we are grateful. I hope that more will be taken up in future than in the past. But they do not bite immediately in a
454
case where you had a very low old rent and a medium, moderate £8-to-£10-a-week new rent. They work higher up the scale but not at that point. Could my noble friend say a little more?
Lord BELLWIN: I cannot remember the figures, but in an answer to a question recently I gave some examples; or, if I did not give them, they were in the brief that I had. They were very impressive as to the level at which allowances start to bite. The best thing that I can do is to write to my noble friend with that information. If noble Lords opposite would like to have the same, then I think I should do that, too. I felt that they were very impressive and I should like everyone to know clearly what they are. If anything is to be raised following that, then it will be done.
Lord STRABOLGI: We should be grateful to accept the noble Lord's offer.
Viscount GAGE: I hope that the noble Lord will look at the figures produced by my noble friend. I have noticed in other directions that where there are basic principles which I am in favour of, they sometimes produce ridiculous results. There ought to be some ministerial power to make some sort of allowances. It is a difficult question, but I do not think that all these things should be grouped under the heading of a principle which, in no circumstances, can be changed.
Lord HYLTON: With a little goodwill, which I am sure is available, these can be arranged by administrative means without amendment to the Bill. I am grateful for what my noble friend said when he spoke again. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord BELLWIN Lord BELLWIN moved Amendment No. 137:
Page 40, line 38, at end insert—
("(6A) An order under subsection (6)(a) above may make a corresponding reduction or increase in any of the periods for the time being mentioned in section 13 of the 1976 Act (application for registration of rent) and sections 73(1)(a) and (1A)(a) (cancellation of registration of rent under Part IV), 80(2) (reconsideration of rent under restricted contract) and 81A (cancellation of registration of rent under Part V) of the 1977 Act.")
The noble Lord said: Clause 59 enables fair rents under the 1977 Act to be reregistered after two years. This two-year period may be reduced or increased by an order made by the Secretary of State under subsection (6) of Clause 59. There are, however, other two-year periods in the Bill affecting the rent registration system for which there is at present no corresponding order-making power. These are subsection (2) of Clause 61 which enables fair rents to be cancelled after two years; Clause 68, which provides that reasonable rents for restricted contract lettings may be reconsidered after two years; and Clause 69 which provides that reasonable rents may be cancelled after two years. If the order-making power under subsection (6) of Clause 59 were exercised to alter the period between fair rent registrations this period would become out of line with the other periods I have just mentioned. This would create anomalies since the reason for a change in the period between fair rent registrations would apply equally to the period under the other clauses.
This amendment therefore allows the Secretary of State to vary the two-year period for the reconsideration of reasonable rents in Clause 68, the cancellation of fair rents in Clause 61 and the cancellation of reasonable rents in Clause 69. This is achieved by an extension of the order-making powers which subsection (6) of Clause 59 already grants the Secretary of State. No new order-making powers are created. I beg to move.
Clause 59, as amended, agreed to.
Clause 60 [Effect of registration of rent etc.]:
7.46 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 138:
Page 41, line 1, leave out subsection (1).
The noble Lord said: This is an amendment which is very important in the consideration of the Bill. I would admit that the present drafting of the existing Section 72(1) of the 1977 Act is not perfect; but there is general concern expressed by a large number of people involved in rent
456
and by rent officers about the re-wording of it. As the law stands at present, unless the rent officer fixes a different date, a registered rent takes effect from the date on which the application is made to the rent officer—that is, the date on which the party, whether landlord or tenant, making the application lodges the documents with the rent officer. This rule applies to both landlord and tenant. If the tenant is being overcharged and the rent officer fixes a lower rent, the tenant is entitled to a refund. If the landlord makes the application because the rent is too low, any increase awarded is backdated to the date of the application unless there are special reasons why this should not be so.
The most important advantage of the existing system is that neither landlord nor tenant can profit by deliberate delay or by the current backlog of work—of which noble Lords are aware—for rent officers, particularly in the Greater London area. The Bill's proposals as they stand would reverse this rule by making the registration effective from the date the application is heard, without any discretion to fix another date. If this stands as drawn, it will give a powerful incentive, on the one hand, to the landlord who knows that the rent is likely to be reduced and, on the other hand, to the tenant who knows that an increase is probable to delay proceedings for as long as they can. The existing text of the Bill needs simplifying in other respects, but the basic point that I make is that the date of the application should be the governing date and not the date of the decision.
I cannot understand the reason why the Government have made the change. I can understand that the drafting of the clause needs improvement, but why the philosophy of the date on which the new rent comes into force should be changed defeats me; particularly because of the present position with regard to rent officers. I wonder whether the noble Lord when replying could give some idea whether, with his Government's legislative attitude to public expenditure, he envisages appointing a sufficient number of rent officers to do the additional work which will be required; for otherwise the present position will, because of the changes, become considerably worse.
I move this amendment on two grounds. First, I feel that it is a matter of some

457
importance. I believe, for the reasons I have given, that it is fairer that the rent should be effective from the date of the application. Secondly, do the Government have in mind appointing more assistant rent officers in parts of the country where they are at present grossly overburdened and where this Bill is likely further to overburden them? I beg to move.
Lord GOODMAN: I wonder whether I may, with temerity and diffidence, venture a suggestion. The rent officer is vested with total discretion on much more important matters than the question of when the new rent is to start. Would it not be a complete solution to leave it to the rent officer to determine from what date the new register is to start, on the basis it does not start earlier than the application?
Lord GIFFORD: The noble Lord, Lord Evans of Claughton, has taken the same point as I and my noble friends are proposing to take on Clause 60 as a whole. We should therefore speak to it now. I do not know whether his amendment or mine better meets the point being made. Even as a lawyer I find the drafting of these amendments to the Rent Act and amendments to those amendments very difficult. Behind all the legal jargon there is one enormously important point on which I hope the Government are going to move: that is that when a tenant who is paying an excessive rent in an area of scarcity takes his rights to apply to a rent officer, he can at the moment do so in the security that if he is right and he is being overcharged, then when the rent is registered it will be effective from the time that he makes the application. This Bill changes that position completely. It is, as the noble Lord, Lord Evans, pointed out, an invitation to procrastinate on behalf of the landlord, who may be getting £20 or £30 a week for every week he could put off a determination. That cannot be desirable.
There is an even more problematic area which has to be considered. Very often when a tenant goes to a rent officer, and the rent officer asks for the landlord's representations, the landlord says: "He is not a protected tenant because I am a resident landlord", or
458
because it is a holiday let or something of the kind. What happens very frequently is that the rent officer feels that he cannot properly determine that issue and that it ought to be determined in a county court. He adjourns the application and invites the parties to go to a county court and get a declaration from the judge as to exactly what the position is. That extends the period over which the application is pending by months and possibly more than a year. All this time the tenant has to pay what may turn out to be an exorbitant rent, with no possibility of getting it back. I hope that, whatever the right form of the amendment needed to take account of that situation, the noble Lord will indicate that this is going to be considered.
7.54 p.m.
Lord BELLWIN: Clause 60 seeks to remove the confusion that has been caused by the present provisions relating to the date from which a fair rent takes effect and the date from which the minimum period before re-registration is calculated. This amendment would, by omitting subsection (1) of Clause 60 of the Bill, restore this confusion and the inequity that goes with it. The present provisions relating to the date on which the new rent takes effect are unfairly biased against the landlord. If the registration results in a rent reduction, the reduced rent is effective from the date of the application to the rent officer, and hence the reduction is back-dated. If, however, the new fair rent represents an increase, the increased rent, although theoretically effective from the date of application, can be recovered only from the date of registration—and then only if the landlord serves the correct notice on the tenant. This amendment will perpetuate that system.
When the Rent Acts were first introduced a significant number of rent registrations resulted in a reduction in rent because they were first registrations. They were therefore payable from the date of application for the registration of a fair rent and thus were in line with the date from which the minimum period before a rent can be re-registered runs. Now, however, the vast majority of registrations are re-registrations and will therefore inevitably result in rent increases. This is reflected by the fact that in England and Wales

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in 1978 only 4.8 per cent. of all applications for rent registrations were made by tenants. Although these rent increases take effect in the real world from the date of registration, their theoretical "effective date" is the date of application. It is this theoretical date, which has no other significance, from which the three-year period before re-registration is calculated. This causes considerable confusion to landlords and tenants alike.
Subsection (1) of Clause 60 removes this source of confusion by providing that all fair rents will take effect from the date that they are registered by the rent officer, except in the tiny minority of cases where the rent is changed on appeal to the rent assessment committee—currently about 2 per cent. All registered rents whether reductions or increases, will be payable from this effective date, which will also be the "relevant date" for calculating the period before re-registration can be obtained. Landlords will still, however, be required to serve notices of increase which cannot be back-dated for more than four weeks. This is simpler for landlord and tenant, and I believe much preferable to the present position which the amendment would restore.
The noble Lord, Lord Evans, and the noble Lord, Lord Goodman, earlier, made a point about administration, the number of rent officers, and so on. On that, I should like to say this: we accept this point that Clause 59 particularly—which we have gone past but the same point is still here now—will result in more registrations. In order to meet this, we have been reviewing rent officer output together with rent officers. A report was prepared and its recommendations were discussed with the Institute of Rent Officers (of which the noble Lord, Lord Goodman, is president) as a result of the amendments to the Bill which were introduced in another place to speed up rent officer procedures. This flowed from that. These have the full support of the Institute. We and they are confident that the increased number of registrations can now be dealt with with little or no delay and at only modest extra cost. If noble Lords have reservations as to that, I shall be pleased to hear them and of course to look at them. Indeed, if necessary, I will try to give more chapter
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and verse on them, if it is called for either by correspondence or in Committee.
I understand the points that have been made and that trouble the noble Lord, Lord Gifford. The answer that I have given covers them. I see the noble Lord shakes his head to intimate that it does not cover them. In that case I repeat what I have said: we will study what he has said very carefully. If we feel it is as he says, then of course he need not bring it back; we will bring it back in another way. Beyond that I cannot go at the moment.
Lord GIFFORD: The noble Lord may have a point with re-registrations. There is not the same problem of a rent which is probably excessive being charged. But when it is a first registration, the point that the noble Lord, Lord Evans, and I have made must be met. This is a matter which could be considered between now and the Report stage.
Lord MONSON: I wonder whether I could add my plea to the noble Lord, Lord Bellwin, to think about this matter again. The British Property Federation does not usually find itself in close harmony with the Labour or Liberal Parties, but it takes exactly the same view as they do about this clause. They would far prefer things to be left as they are. They anticipate an enormous log jam with the burden upon rent officers being uplifted by 50 per cent. as a result of the shortening of the re-registration period. Like noble Lords on the Labour Benches they would prefer matters to be left as they are.
Lord EVANS of CLAUGHTON: I take the point that the noble Lord, Lord Gifford, has made; it is a very good point. The noble Lord, Lord Bellwin, made the same point: it may well be that in the case of re-registrations the position is in order. So far as first registrations are concerned, the position from my point of view and that of a great number of people who have spoken to me about it is most unsatisfactory. The remedy that the noble Lord, Lord Goodman, suggests may well be the remedy, but we have not an amendment to that effect before us. No doubt it is a matter which the noble Lord the Minister would consider.
I am glad to hear what he says about rent officers. I hope and believe from

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what has been said that reconsideration could be given to the terms of this clause. I am not suggesting that the present Section 72(1) of the 1977 Act is perfect. I have been thinking of amendments I would make to that which I think would he far better, but they may only he far better in my opinion. They may well not he better in the opinion of the noble Lord the Minister, but if he could consider the position—we see the point as regards re-registration—on first registration and the inequitable result that will come principally to tenants, but which could also be unfair to landlords in the circumstances I have mentioned, perhaps we could have another look at it during Report stage. If the Minister were willing to say he could do that, I should feel able to withdraw the amendment.
Lord BELLWIN: I have to be very careful in what I say over these things, as I have learnt. I would only go so far as to say that some of the points that have been made, particularly by the noble Lord, and the noble Lord, Lord Evans, were interesting ones. I undertake that we will look at everything that has been said, and should points prove to have merit—because I repeat again that we want to get the best Bill we can—then of course we will do something about it. Beyond that I feel I cannot go.
Lord EVANS of CLAUGHTON: I am willing, on the whole, to accept that. It seems to me that when we get to the Report stage there may be hundreds of Divisions, but I hope it will not come to that. I thank the noble Lord for what he has said and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 60 shall stand Part of the Bill?
Lord STRABOLGI: The amendment to leave out Clause 60 is not to be moved.
Clause 60 agreed to.
Clause 61 [Cancellation of registration of rent]:
Lord GIFFORD Lord GIFFORD moved Amendment No. 138A:
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Page 43, line 10, leave out ("subject to a regulated tenancy") and insert ("occupied as a residence by any person (other than an owner-occupier)").
The noble Lord said: Clause 61 deals with cancellation and, as I understand it, the purpose of the clause is that cancellation of a registered rent under the present law is rather difficult and it is the intention of Clause 61 to make it easier. A landlord will be able to apply to cancel and indeed have the registered rent cancelled after two years if the dwelling-house is not being let on a regulated tenancy. What the amendment proposes is to change that and allow cancellation only if the premises are not being occupied as a residence by anybody.
The point is that it may well be that a landlord applies to cancel when he has let the property on what he thinks is not a regulated tenancy: that is to say, a holiday let or a licence arrangement, which may or may not be a protected tenancy. He can apply to cancel without giving any notice at all, under the Bill, to the occupier of the dwelling-house, and the rent will then be cancelled. It may be then that some months later the occupier will wish to go to a court and obtain a declaration that he has been all along a protected tenant. If he succeeds in that, the position will be quite chaotic. Will he be able to obtain a rebate on the excess rent he has overpaid? Probably not, because the registration will no longer be in the rent officer's book. It is to meet that sort of objection, and in the hope of being constructive, that I beg to move this amendment.
Lord BELLWIN: The effect of Amendments Nos. 138A and 138B is to add a further restriction to the circumstances in which a landlord can apply to the rent officer for cancellation of a fair rent. Clause 61 provides that where the rent was registered more than two years earlier, where there is no current regulated tenancy in the dwelling, the landlord can have the old rent cancelled. The amendments alter the second condition. Instead of no regulated tenancy in the dwelling the proposal is that a rent can be cancelled only if no one other than an owner-occupier is living there. The purpose, presumably, is to ensure that someone who is letting a property outside the Rent Act in some way cannot at the same time

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cancel an old registered rent for it. I do not see the justification for such a restriction.
The purpose of allowing cancellation under Clause 61 is to prevent the landlord from being penalised by the existence of an out-of-date registered rent. At present there is no means of cancelling an out-of-date registered rent where there is no current tenancy. Once a tenancy has started, although a new rent can be registered, the increase from the old rent to the new rent is phased: so the out-of-date rent which the landlord cannot otherwise cancel reduces the amount of rent that he can recover after re-registration.
Clause 61 removes the problem by allowing cancellation of an old rent. This seems only fair to me, whoever is living in the property, always providing it is not a regulated tenant. For example, if someone has let a property to an aged parent or to a friend at a nil or a very low rent, why should he not be able to cancel a registered fair rent at the same time? There is nothing wrong with bona fide lettings outside the Rent Acts. These amendments imply that there is, because it prevents someone using the property in that way from availing himself of this proposed new means of cancelling an out-of-date rent. If a rent is out of date and if there is no regulated tenancy, it is only fair that the owner should be able to cancel it, even if he is putting the property to some other use in the meantime. That is what Clause 61 provides, and I hope that noble Lords will accept this and perhaps the noble Lord may feel able to withdraw his amendment.
Lord GIFFORD: We are getting on to slightly technical ground. I must take up the noble Lord when he talks about "letting outside the Rent Acts". The circumstances in which you can let outside the Rent Acts are very, very limited indeed and concern only friendly arrangements, holiday lets and things of that kind. Obviously I am not going to press this to a Division; but will the noble Lord, who knows quite well that there are constantly in big cities lettings that may or may not be outside the Rent Acts—disputed holiday lets and things of that kind—undertake to consider what the impact of a cancellation would be when someone is in possession without know-
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ledge of a cancellation and subsequently comes to be declared a protected tenant all along? That is the particular difficulty I have in mind.
Lord BELLWIN: I can only say, as I tried to do on the last amendment, that if we are not careful we shall indeed, in an attempt to avoid dividing the Committee—if that is what is decided—be building up for ourselves at Report stage a situation that will be absolutely impossible. I have no intention, from where I am, of doing that. I would only repeat—and if I did not make it clear earlier I now say it again—that where points have been raised that are considered to be important, I assure noble Lords that everything that is said is sifted carefully; where points are raised which in the Government's opinion are valid, in the sense that they have not been considered or they raise new matter which we ought properly to be doing something about, I give the assurance that they will be looked at very closely. I cannot say that that is the same as saying, "We will withdraw" or, "We will consider formally". I cannot do that, but I can say, of course, that everything is sifted in detail.
Lord GIFFORD: I am sure the noble Lord will take it from me that lawyers and courts, let alone landlords and tenants, can get into terrible tangles in understanding the Rent Acts. It is on such a point, not on a point of great principle, that I asked for and have received that assurance. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord DENHAM: We said we would adjourn the Committee at approximately eight o'clock. I understand that if we go on to the next group of amendments, which rather naturally fall together, it could take us beyond a quarter-past eight. If one has said approximately eight o'clock and one goes beyond a quarter-past, then one is going beyond the spirit of the undertaking.
So perhaps I may move that the House do now resume.
House resumed.

EEC BUDGET FOR 1980
8.10 p.m.
Lord O'HAGAN Lord O'HAGAN rose to ask Her Majesty's Government whether they will make a statement on the draft EEC budget for 1980 and the consequences for the United Kingdom; and whether they will state their views on Part III of the Report of the European Communities Committee on the 1980 budget (57th Report, HL 301). The noble Lord said: My Lords, the draft 1980 budget of the European Economic Communities is branded on my sub-conscious. I am a member of the European Parliament's Budgets Committee, and we seem to have been in continuous session since the Parliament first met after direct elections. Matters have reached such a pitch that the other night I awoke in a nightmare, having dreamed that I was giving a press conference in French about the latest developments on Parliament's attitude to the budget.
I hope that this evening's debate will not convince your Lordships—whether I speak in French or not—that you are reliving that nightmarish experience. I am taking the opportunity to provide a chance for this House to examine the very curious development of the draft 1980 budget, if it still is a draft, and to assess the merits and the consequences of the settlement of our own national contribution to the coffers of the European Economic Community.
The draft 1980 budget should have been a real budget by Christmas. We are discussing a baby which is six months overdue and whose final birth as a real budget is still, if only marginally, in doubt. I must say that it has been a fascinating and an educational experience to take part in the activities dealing with the budget from the Parliament's point of view. I should like to begin with that and then broaden out.
We have dealt with this budget in great detail and the first dramatic point referred to in this report from the European Communities Committee of your Lordships House—an admirable report which I wholly endorse, with one exception which I shall mention later—was the rejection by the Parliament of the budget last year. We all felt a little like the poet Wordsworth at the dawn of the French Revolution, and we dreamed for a few seconds that
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we were embarking on a new chapter in constitutional history, only to discover as the days and weeks drew on that the likelihood of our making a real dent in the textbooks was a little less clear than it first seemed.
But there is one fact about that budget rejection which I would bring again to the attention of your Lordships, especially as it has had very little remark made on it in the British media. The fact is that out of the 288 who voted for rejection, there were 17 Frenchmen. Seventeen Frenchmen voted against a budget designed to prolong and extend expenditure on the common agricultural policy. That is something worth noting. It is also worth noting—and, again, this is a point to which I shall refer later in more detail—that all the noises, both articulate and inarticulate, that had been made by the British about the common agricultural policy for years prior to the settlement of our contribution are now beginning to be made by the Germans.
So that when we are looking at the core of the problem of the financing of the European Community, we are approaching a state of political mobility in which the two other major contributors to the EEC budget are beginning to change the degree to which they adhere to the common agricultural policy in its present form. If the Parliament gave a little opportunity for beginning that process, and demonstrating that part of that process had already occurred in France, then that itself was no mean part in saving the finances of the European Community, which are, on present calculations, doomed to reach bankruptcy within a very short space of time—probably next year, certainly the year after and certainly pretty much at the same time as enlargement. Therefore, the road towards CAP reform has been, if not made straight, at least signposted by the actions of the European Parliament in rejecting the budget earlier in its life, late last year.
The second point I would make about the nature of this year's budget—and the analysis of its content, its defects and its advantages is very well spelled-out in the report from the sub-committee—is that the attitude of the Parliament itself to the direction of European Community expenditure was not a right-wing attitude, or a British Conservative attitude or a partisan, mono-national attitude. I mean

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that the Conservatives themselves, as part of a group, let alone the group strength itself, are only 60 out of a Parliament of 410.
Our Budgets Committee is chaired by a distinguished Socialist, Herr Erwin Lange, who I am sure the noble Lord, Lord Bruce of Donington, may remember, and our rapporteur on the budget was a most remarkable and quadrilingual Dutch Socialist, Piet Dankert, who guided the Parliament through all its tortuous negotiations with the Council and towards the evolution of a sensible strategy for reducing, restraining and controlling agricultural expenditure, so that other more serious new policies could be gradually elaborated.
We were guided through our activities, both as a Budgets Committee and as a Parliament, by Socialists working in co-operation with people of other parties, not only ourselves but Liberals and, indeed, a strong contingent of Italian Communists. Therefore, the pressure for reform of the Common Agricultural Policy, as expressed through the Parliament's view of the draft 1980 budget, is something that was worked on from a cross-party basis which, to me, is not only highly satisfactory but part of the purpose of the European Community. It was not only cross-party, but cross-national, and I welcome it.
What is most interesting is that the logic of that position has been reinforced by the activities of Her Majesty's Government in making sure that our own contribution is no longer as glaringly out in front of all the others as it was. Naturally, I should like to congratulate my right honourable friend the Prime Minister on her pertinacity and force of argument, and my noble friend the Foreign Secretary on his skill and charm in tying up the package.
But what is important is that their combined forces are not only something which serves the British interest. They go rather beyond that in what they have achieved, because they add to, or confirm, the two pressures that I was referring to. There is a general anxiety in other large member states at the cost of the Common Agricultural Policy, which threatens not only to fossilize the CAP as something which drains more and more of the
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Community's resources, but which prevents the development of new policies whether it is an energy policy, a better transport policy or whatever it may be.
So when we are assessing this budget—I hope this is the spirit which the noble Lord, Lord Bruce of Donington, and the noble Lord, Lord Brimelow, and their friends in this House will be able to share—I hope that we shall not be looking at it in the same spirit as the Opposition in another place, where I understand that they have a three-line Whip against the Government's achievements in re-jigging our contribution as a member state of the European Community. To disapprove of and vote against what has been hard won by the Government is also to disapprove of and vote against the steps towards a genuine and fundamental reform of the budgetary balance of the European Economic Community's finances and the only method by which reform of the Common Agricultural Policy is likely to be achieved in the immediate future, because it is up against that threshold of the I per cent. value added tax ceiling, against which agricultural expenditure is straining, which will provide the opportunity for an overhaul of the Common Agricultural Policy as a whole.
Far be it from me as a temporary, if unwilling, absentee from your Lordships' debates and the arduous labours which noble Lords have been going through on all the Bills which they have been discussing in recent weeks to say how this question should be dealt with by other participants. I have seen my own role as modest—one of fulfilling the purpose of a dual mandate by bringing to your Lordships a brief account of how development of the budget has seemed from the point of view of a European parliamentarian. I should like to add to the report that I believe there are serious defects in some aspects of the budgetary control procedure in the European Community. Again this is a subject of which I know the noble Lord, Lord Bruce of Donington, has made a special study. Indeed, his final report, his valedictory tone, is still being referred to very much now that the Parliament has finally established a separate control committee.
I do not think that the paragraphs of the 57th Report, which deal with the provisional twelfths, really represent the truth. I do not think that the European Com-

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munity has yet developed a mechanism for checking the expenditure made by the Commission if and when a budget is rejected. I would hope that our own European Communities Committee, perhaps, and the Parliament's budgetary control committee, certainly, in alliance with the auditors, could look at this particular provision. Unless the provisional twelfths system really works, rejection of the budget is a meaningless exercise, because expenditure, grossly distorted on export restitutions, on unnecessary intervention, or whatever it may be, can continue and in my opinion may well have continued, particularly in the last two or three months. So I would dissent from that aspect of the 57th Report.
The European Parliament has a role in the budgetary procedure which is going to take some time to develop fully. It is not limited merely to rejection or amendment and modification. It extends to control and to the final act of discharge which is, as yet, an unexplored power. I hope that my noble friend Lord Cockfield will be able to give us a hint on whether the Government are prepared to see the budget of the European Communities as something a little more than an accounting exercise for policy decisions already taken. This is my final point and I shall allow myself just a few minutes to elaborate it.
By and large, if you think in French or speak in French your conception of a budget is merely the conception of the man who draws up the bus timetable after higher powers have decided when the buses should start and should stop, whereas those of us who think in language derived from political experience in the House of Commons see the budget itself as a policy instrument, if not the supreme fiscal policy instrument and the supreme instrument of spending money. What has yet to be resolved is the extent to which the Council of Ministers is prepared to make a decision between these two conceptions.
An examination of the Treaty, in my view—and in the view, I suspect, of most members of the European Parliament—shows that the original authors saw the budget as a dynamic instrument. It is not enough merely to enter something in the budget if there is no legal base. I quite agree with that criticism which is
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sometimes made by the Commission. Nevertheless, the powers over the budget given to the Parliament are not those which could be given to an elected body if all the policy decisions were outwith the powers of the Parliament itself. There would be no point in giving powers to a Parliament to deal with a budget which was merely a technical expression of decisions taken elsewhere.
If, therefore, for one second my noble friend Lord Cockfield could look beyond the immediate problem and the difficulties that have vexed the Treasury night and day, I am sure, just as much as Members of the European Parliament over this year's budget, which has nearly completed its birth pangs and soon is to become a proper budget, and say to which side of the argument Her Majesty's Government incline, this would provide your Lordships not only with an opportunity for hearing from the Government how they now see the 1980 budget in its wider framework but also with an indication that we in this country, after our national contribution has been dealt with, at least for the next two or three years, are now going to pick up the treaty, not hide behind it and use it as a defence, and work in it, with it and through it to construct a genuine European Community with a wide range of new policies that will make the European Community worth working for, and in, rather than merely the technical and remote bulwark against communism and extremism which it now seems to he to most people in this country and, I suspect, in other member states.
8.28 p.m.
Lord GLADWYN: My Lords, I think that we should all be very glad that this important matter has been raised by such a young, energetic and important Member of the present European Parliament as the noble Lord, Lord O'Hagan, who, I understand from his reference to the poet, was a year ago glad to be alive, but to he young was very heaven! I can only hope that the noble Lord, Lord O'Hagan, feels the same at the present time.
I propose to touch only very briefly on the second part of the Unstarred Question; namely, to ask the Government to state their views on Part Ill of the excellent report of the European Communities' Committee on the 1980 Budget. Para-

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graph 36, to which I hope the noble Lord, Lord Cockfield, will refer, inquires whether the Government are convinced that there is a reply to the five queries contained in that paragraph, which seem to throw certain doubts upon the expenditure solution which was agreed to in the recent compromise in Brussels on the British contribution to the Budget. There seem to be certain doubts about this, but I understand from the evidence that the Treasury officials are convinced that there is nothing in them. If that is so, perhaps the noble Lord, Lord Cockfield, will explain to us exactly why. I should be very grateful if he would.
I shall confine my brief remarks more to the future of the Community arising out of the budget debate, and the future of the Parliament and the Community as a whole. I suppose that the chief question in the chequered history of the 1980 budget was whether the European Parliament was in fact justified in rejecting it after they had refused to accept the amendments proposed by the Council of Ministers, though of course legally it was perfectly possible for them to do so. My own view, and without going into it at any great length, is that the gesture of the Parliament was justified if only because it demonstrated that the Parliament was a force to be reckoned with and that Ministers would have to take its view in future into serious consideration.
Of course, one can argue to the contrary. Those who are opposed to the European concept generally, and therefore more especially opposed to the European Parliament, undoubtedly will argue that the rejection was not justified because, in the event, the Parliament had effectively to climb down, and therefore it only showed that it had no real power, and so on. I do not believe that that is true. I believe it was justified for the reasons I have given. But clearly, apart from the overriding consideration, the gesture of the Parliament was ineffective. The approved budget—it was approved finally the other day—only gives the Parliament a very limited degree of satisfaction with regard to regional and social funds. And the chief object which the Parliament tried to achieve in rejecting the budget, namely, the freezing of agricultural prices, was rendered inoperative by the Council's decision of May of this year, when,
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as we all know, they accepted the 5 per cent. rise.
I suppose it can also be argued, though perhaps I would not argue it myself, that had it not been for the British veto on the rise in agricultural prices negotiation for the new United Kingdom contribuiton, which has now happily been agreed at two-thirds of what was originally asked for, would have been more difficult. As we all know, that agreement in Brussels the other day was based on an agricultural deal whereby in return for the very notable concessions made to us in regard to our contribution we had to agree, or we did agree, to a 5 per cent. increase in agricultural prices.
The Commission's proposals for the 1981 budget are, I understand, not yet formulated. I suppose they will shortly be discussed, as usual, with the Parliament in the relevant Committee. As we all know, discussions between the Commission and the Parliamentary committees are usually very fruitful and very constructive. The Parliament puts forward certain views and the Commission accepts them or not. Anyhow, there is usually a consensus which is then put up by the Parliament to the Ministers for acceptance or rejection. That, I suppose, will happen and the Ministers will then get the resulting document later in the summer. It will probably come before the Parliament in October. The Parliament will then reconsider it and before the end of the year it has again to accept it or reject it.
If a budget can be prepared in this way by the Commission and submitted to the Ministers—a budget which provides for the present expenditure in regard to the Common Agricultural Policy; that is to say, if the Commission believe that they will not be running short of cash in 1981, and I think there is some reason to suppose that they will not run short of cash in 1981 —then the European Parliament will probably have before it much the same sort of budget that it had towards the end of last year. I should have thought that it cannot differ very substantially from the 1980 budget. As we all know, the Parliament rejected that budget. Nevertheless, the Parliament will surely try to improve this document. It may do so to a certain extent, though surely only within strict legal limits.
In so far as the present recession goes on, as it probably will, the Governments

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will by the very force of things become increasingly niggardly from the Parliament's point of view, and therefore it is not to be expected that the Parliament will have very much success in amending the budget in accordance with its obvious wishes. I hope, therefore, that in those circumstances the European Parliament will not, if things work out in that way, repeat its gesture, not because I think it was unjustified last year but because, as I believe, it will have to reserve all its strength, as it were, for the immense debates which will naturally take place on the 1982 budget, a year later. A very significant struggle will obviously take place then. For what will happen in respect of the 1982 budget is that the Community will have run out of cash; I think there is no doubt about that. It will run out of cash and there will not be enough money to finance the Common Agricultural Policy. Therefore major decisions will obviously be necessary.
The budget, if it is eventually passed, will have to be completely restructured, involving naturally a revision of the CAP, which cannot be avoided in the circumstances. Surely there must be a re-think then about the whole purpose and future of the Community. If the Community is to go on it must be more broadly based financially than it is at present; in other words, there must be some increase in what are called "own resources" of the Community—its own money. Hence, one would have thought that in principle the 1 per cent. VAT which is now subscribed in addition to Customs receipts by all the member states will have to be increased if there is going to be any valid solution. That will have to happen if any really satisfactory solution is to be found. If the Governments have any sense at that point they will agree to increase the "own resources" because that is the only way in which one will ever work towards what is called convergence of the economies; that is to say, more money diverted perhaps from agriculture into the regional and social funds, more money circulating generally, and the only way to achieve in the long run any kind of sensible Common Agricultural Policy.
At the moment there is no prospect whatever of any such decisions. If the "own resources" are to be increased, as understand it, not only all the Nine
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Governments have to agree but all the Nine Parliaments, too. At the moment that is clearly out of the question. A deepening recession makes this improbable; nor is it, as I have said before, immediately necessary. But what will happen a year or a year and a half from now in the presence of perhaps a deepening recession? If they cannot agree on some such lines it seems to me that in all probability the Community will be in danger of disruption. Powerful forces will be working for protection as a result of any increasing slump. They will be working for protection in all the countries of the Community, but more especially, I think, in this country of ours. If they prevail, then inevitably we shall have separate and what are called directed economies in all the countries of the Community, and certainly here.
By the very force of things those will be run by elements hostile to NATO and who are possibly in favour of some deal with the Soviet Union. It is quite possible to imagine that these elements could be in power in 1983 or 1984. One does not have to be very imaginative to contemplate such a possibility. I do not think this is at all a flight of fancy or a prophecy of doom; it is a very real possibility which we must contemplate. If we choose the path of protection in 1983, or even 1982, which we may do—and the decision of this country will depend largely on what happens in Europe—then, as I see it, economic disintegration will inevitably imply and involve political disintegration, the one inevitably resulting from the other. In such distressing circumstances 1984 will certainly witness, if not the emergence of what Orwell called Airstrip One—a rather outdated conception, because Orwell wrongly imagined that we were going to have a nuclear war in the late 'fifties—at least the emergence and effective creation of what he called Eurasia, of which we should then be an integral part.
I think there are already a considerable number of people in this country who would not find this solution absolutely insufferable. Quite a few even now would not object to our becoming the equivalent of the German Democratic Republic which, after all, has not done badly for a communist state, and if the recession persists into 1982 and 1983—and this is not just alarmism—they could be a

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majority. In those circumstances of course there would not be a nuclear war, which would be a great achievement as such, but obviously we should have lost our freedom.
So I think we can at least all agree—and I hope the Government will agree—that the budget of the EEC will become more and more important as the years go by, and perhaps we can further agree that the role of the European Parliament in the formation of the budget, in conjunction with the Commission, will become more and more significant. I do not think that at the moment there will be many in this country who would also believe that unless we can agree in the European Economic Community to a measure of supranationality we are in for the gravest trouble. But I fear that we only have to wait for a year or two before this stark choice becomes increasingly plain.
8.43 p.m.
Lord SHERFIELD: My Lords, I should like to add my thanks to the noble Lord, Lord O'Hagan, for putting down this timely question on the EEC 1980 budget and for adding to his burdens by coining here at a rather late hour this evening to give us a first hand and authoritative account and interpretation of the proceedings of the European Parliament on this issue.
This budget has survived an exceptionally rough passage and has had to weather two separate major storms: the first was its rejection by the European Parliament and the second was the controversy over the British budget contribution. I shall not deal with the former because all the speakers in this debate know much more about it than I do but I will say a few words about the budget contribution.
There has been plenty of criticism of the tactical handling of this issue in the negotiations with our European partners, but I think the result has shown that the strategy was sound. There has also been criticism of the outcome. But since this was so much better than was generally expected I feel that there is more than a trace of sour grapes here because I would wager that if the Opposition or Liberal Ministers had brought back the same amount of bacon they would have been
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as pleased with themselves as the Government were.
Lord GLADWYN: My Lords, did the noble Lord say that the Liberals would be just as pleased? Of course we are very pleased with the compromise arrived at in Brussels. The Liberals are delighted.
Lord SHERFIELD: My Lords, however that may be, there was of course an element of compromise in the result. It was not practicable to deal with the budget issue in isolation. It was necessary to relate it in some degree to the resolution of other issues. That was to be expected, if not inevitable. So I find the objections which have been raised to the settlement somewhat contrived. It seems to me that only a committed opponent of the European Community would insist upon getting 100 per cent. of his opening demand in this kind of deal. It was not a perfect solution. There may still be some uncertainty about some of its implications, but it was a far better outcome than seemed obtainable at any previous stage of the negotiations, and our own negotiators—and also our Common Market partners—ought in my view to be heartily congratulated on the result.
Having said that, my Lords, I now want to say something about the report of your Select Committee on the European Communities on the 1980 Budget, which was published two days ago. I do this in the lamented absence of the noble Lord. Lord Plowden, the chairman of the subcommittee concerned, who was unable to be in his place this evening. The subcommittee took evidence from Mr. Pieter Dankert, a member of the European Parliament and the rapporteur on the budget questions; from Mr. Taylor and Mr. Balfe—two more members of the European Parliament—and from Treasury officials, and it also took evidence at an earlier stage from Mr. Nigel Lawson, the Financial Secretary to the Treasury. The committee is grateful to all those who helped in the production of this report.
The report itself is in three parts. The first gives an historical account of the rejection of the budget by the European Parliament, and its consequences. The second gives a similar historical account of the negotiations about the British contribution. These are matters of record and I shall not discuss them further tonight, other than to say, with reference

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to my opening remarks, that the committee considered that the final agreement represented a considerable achievement in temporarily redressing the balance of the United Kingdom contribution and they particularly welcomed the commitment to a review of the structure of the budget.
The third part of the report deals with the future and gives the conclusions of the Select Committee. Those of your Lordships who have followed the question of the British contribution over the years may recall that in 1975 the Council approved the adoption of a financial mechanism designed to refund in part excessive gross contributions to the budget. Owing to a number of restrictive criteria and conditions which were written into the document setting up this mechanism, the device was not particularly effective and the first solution proposed by the Commission to meet the British problem was to remove these restrictive conditions and to enable our contribution to be reduced by £350 million in 1980. It was this proposal which was rejected at the Dublin Summit in November of last year. It was a solution which covered one year only.
The final conference at Brussels last month covers two years explicitly and makes contingent provision, on similar lines, for a third year. But it contains two elements: the "mechanism solution" and the "expenditure solution"—that is to say, the adoption of special temporary and ad hoc measures for the purpose of increasing the current low level of Community expenditure in the United Kingdom.
Your committee were assured that the required level of expenditure in the United Kingdom could he attained without difficulty even if the agreemen' covered a third year and no doubt the Government are satisfied that these expenditures will, in the event, be forthcoming. Nevertheless, the solution found for our budgetary problem is, in essence, a transitional one and your Lordships' committee emphasise that the expenditure method cannot effectively form the basis for the permanent solution that must be found when own resources" have to be incteased. The Commission had originally itself criticised the expenditure solution on a number of grounds, as the noble Lord, Lord Gladwyn, pointed out. They have now accepted it, however, as an essential in-
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gredient of the compromise agreement, though their criticisms still have validity. They are five-fold. They are contained in paragraph 36 of our report, and I do not think that I need read them out this evening.
When he gave evidence to our subcommittee last December the Financial Secretary to the Treasury said that the Government believed that the best solution would be a new mechanism operating on the net contribution to the budget. Such a mechanism would be more consistent with Community principles, leaving revenues to be collected in accordance with the own-resources concept instead of their being artificially arranged so as to produce a desired distribution of net budgetary contributions.
Nobody, I am sure, will doubt the extreme difficulty of finding a solution to the Community's budget problem when the existing "own resources" run out in a year or two. But it was your committee's view that the objective should be a solution based on a mechanism controlling net contributions rather than a programme of Community expenditure in member states, which would need to be negotiated year by year, and would he liable to cause uncertainty, delay and friction. I think that this report of your Select Committee is highly relevant to this debate and I commend its conclusions to the House and to the Government. I hope that the Minister will be able to take some account of it in his reply to this debate.
8.52 p.m.
Lord CAMPBELL of CROY: My Lords, I, too, thank my noble friend Lord O'Hagan for giving us this timely opportunity to discuss this question, and also for giving us his own first-hand account of the events which led up to the Brussels meeting at the end of May. I am glad also to follow the noble Lord, Lord Sherfield, who has introduced the report which is referred to in the text of the Unstarred Question which we are discussing. In particular, he referred to Part III, in which the sub-committee who worked on this put forward their ideas for the future. As a member of the sub-committee myself I am grateful to the noble Lord, and to the noble Lord, Lord Plowden, for the amount of work

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that they have done in the preparation of this report.
I should like to start by congratulating the Government and my noble friend Lord Carrington on the success of the Brussels meetings. Agreement was reached at the end of May and it was outlined in my noble friend Lord Carrington's Statement in this House on 2nd June. Formulae were agreed for 1980, 1981, and for 1982 if more permanent arrangements have not by then been made. I will not examine these complex formulae tonight, but they do constitute welcome and justifiable relief for the burdens which the United Kingdom has been carrying, burdens which have been increasing.
I will tonight simply make three points. First, I would point out that fortuitously this year the annual determination of farm prices and the major decisions on agriculture have taken place at the same time as decisions on the annual budget. The two Councils, one of Foreign Ministers and the other consisting of Agriculture Ministers, were meeting at the same time. This happened by chance because of the budget having been rejected by the Parliament. Could not this be repeated in future years? Could not the EEC arrange for their financial year to coincide in future with the agricultural year? This is something which many of us have been pressing and we hope that Her Majesty's Government will also press it. I trust no one in your Lordships' House will consider that I am inciting rebellion when I suggest that it might even be worth the Parliament throwing out the budget every year on the first round if it were to lead to these decisions being taken sensibly at about the same time. Certainly the additional twelfths system which enables the Community to go on ticking, although it has great shortcomings which my noble friend Lord O'Hagan pointed out, none the less enables the EEC finances to continue.
My second point is this. It is the same as the one made by the noble Lord, Lord Sherfield, so I will be brief. The Brussels agreement is in two parts; first, the financial mechanism and, secondly, the special additional expenditure for the United Kingdom. The 1975 financial mechanism, which was part of the renegotiations and therefore related to the referendum which took place in 1975, I
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am sure was entered into in all good faith. But it has proved to be ineffective. The United Kingdom did not fulfil all the conditions required before the mechanism could be activated, even when we were bearing a very heavy burden and that burden was increasing. So that defective system has now been put right, we hope, for at least three years. The second part of the agreement, the special expenditure for the United Kingdom, does also carry with it some examples. They are given as the financing of coal projects, transport infrastructure, special interest rates on loans connected with the EMS, and agricultural improvement schemes. Those examples, I think, will cause your Lordships to realise that these are not matters which can be put into action very quickly.
I am delighted that it has been thought possible to do this for a period of two or three years and it is welcome that plans for this are already in hand. But as stated in Part III of your Select Committee's report, it is not easy to arrange for one member country to have, for example, additional expenditure on special public works programmes, which are not really seen as necessary, because if that happens it will be unpopular with the membership as a whole in the EEC. It may be acceptable for a short period as proposed, but it is not a long-term solution; so for the longer term we must concentrate on a mechanism solution. That is my second point. The mechanism governing net contributions must be the key to a long-term solution. There is a commitment to review the
"patterns of expenditure and the operation of the budget".
"The United Kingdom will be able to press for lasting reforms which will help solve the British budgetary problem".
These are extracts from the Statement made by my noble friend Lord Carrington, and they bring me to my third point.
I believe that the United Kingdom Government ought to be working now on possible solutions. If they are not they ought to start now. The Commission is due under the agreement which has been reached to submit proposals by June 1981. That is less than a year from now. The whole Commission itself is due to be replaced or reappointed during these coming months. The Commissioners themselves are in a state of uncertainty. It is in our interests in the

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United Kingdom to help with the groundwork and the vital quest for a satisfactory and lasting solution. Perhaps we could do this in consultation with the Germans. After all, they are now going to be the largest net contributor to the EEC budget. The formulae for a future mechanism must take into account the expected enlargement of the Community to 12 members. Greece is due to join in January, Spain and Portugal at some time from 1983 onwards. The one thing we do know is that they are to be net beneficiaries for their early years in any case, which means that their additional membership will add to the total burden being borne by existing members.
So I do urge the Government to give all the help they can to the EEC Commission in working out proposals which are likely to be acceptable for the Commission to put forward by June of next year. Those proposals may well have to be complex. That does not matter, provided they allow for all the situations that are likely to arise in the coming years. I feel sure myself that the Commission will be glad of suggestions from any interested quarter. Their task is hard enough in all conscience. Work should be started soon in preparation for this radical review which will inevitably be of the greatest importance to the United Kingdom.
9.2 p.m.
Lord ARDWICK: First, I would like to say a word of gratitude to the noble Lord, Lord O'Hagan, for arranging this debate today. I should also like to say a word about the report itself. Perhaps I ought not to do that since I am a member of the committee which produced the report, and indeed of the sub-committee which was responsible for it. Nevertheless, as an old editor I cannot resist giving my private Pulitzer prize to whoever it was who put the words on paper because they have dealt with a most difficult subject in a beautifully clear and concise manner. I am afraid that when you leave the rhetoric behind and get into the detail, many of the subjects with which the European Community deals are rather heavy going, none of them more so than the Community budget.
Even as a member of the European Parliament I was reluctant to spend my passions on it, and indeed there was no
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need because my noble friend, Lord Bruce, brought his political zeal together with his professional expertise. May I say for once that that word is used exactly—expertise. He led the battle of the budget. Meanwhile, he explained at every stage to us, the semi-numerate members, what the Ministers were up to and why they must be attacked. Had we followed his lead, the budget would have been thrown out by the old Parliament, and for exactly the same reasons that inspired the new one. What we learned two or three years ago under Lord Bruce's tutelage is now common knowledge: roughly three-quarters of the budget goes to agriculture, and only one-quarter to such things as the regional and social funds.
The first kind of largesse, the gift of town to country, it is generally agreed now is too lavish. It over-rewards the rich farmer and it calls forth huge surpluses of food that are costly to store and can be sold only to underserving foreigners at knock-down prices. The second largesse is inadequate. There can be no significant progress towards closer economic integration in Europe, there can be not much progress towards convergence, there cannot even be progress up the foothills beneath the summit of monetary union, without substantial transfers of resources to the poorer regions.
The present scale of redistribution effected by the regional and social funds is still so small that it is little more than a token, and the increase that Parliament asks for is a token increase, an assurance that the Community even in these dark days of world recession, of national stringency which we all find ourselves in, a sauve qui peut situation—that in spite of all this the Community has not lost all vision of the goal of closer union.
It would be reassuring to learn that this Government, despite their relentless though not unjustified pursuit of national interest in Europe, still adhere to that goal. The formula that the Government adduced to rectify the unintended fiscal injustice to this country was that of the broad balance, which meant that Community expenditures in the United Kingdom should be roughly equal to our gross contribution. It was a good formula in these special circumstances. But I hope it is a temporary formula, pending the grand reforms of the budget and of the

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CAP that are to be achieved over the next few years, for if it became the universal rule it would paralyse the development of the Community and end all hope of economic convergence.
This year I think we have talked too much about the budget and too little about the Community's actual works. This has been the consequences of the budget's involvement in two distinct but inseparable crises: the scandalous burden it put on Britain; and the desire of the new, elected Parliament to test its muscles by demanding larger non-compulsory spending.
The new Parliament was not only taking on where we had left off. The arguments about the CAP and the regional fund were unchanged. The only difference was that the new Parliament resolved to use its powers to the full. The powers, of course, are no different from those limited powers that we, their predecessors, had. How limited those powers are the new Parliament has now discovered. But the idea of an elected Parliament was conceived in a bed of beguiling illusions. Because a European federal government would require an elected Parliament with full legislative and budgetary powers, many people believed that an elected Parliament could demand such powers and pave the way to a federal government. Not a hope!
The next illusion was that the sheer legitimacy of an elected Parliament had such mystical force that the council would collapse before it and do its will. One blast of the legitimate trumpet and these walls of Jericho would fall. The advocates of this theory drew on a false historical comparison. Elected parliaments, they said, gained in power simply because they were the voice of the sovereign people, and so the tyrannous executives had to yield to them. It would be much nearer to the truth to say that parliaments have traditionally gained power because they, and only they, could raise the taxes from the people that were needed by the executive to run the state. The European Parliament, I am afraid, has not the power to raise one penny piece in taxation, not even for its own expenses.
As The Times pointed out the other day, this is in the hands of the national Governments responsible to their own democratically elected Parliaments. The only
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budgetary power that the European Parliament has is to have a say in how the money should be spent and to hold up the budget for a limited period if it disagrees with the proposed solutions. In the end, if the budget is held up too long, then the process must stultify the work of the Parliament itself. So it is a very limited power.
The six months war between the Parliament and the Council is now over. The Parliament has not gained a victory. The budget is not very much different from the one they rejected, but I do not think that they want to be too despairing on that account. After all, I think that it was Cyrano de Bergerac who said that the vain gestures are the most beautiful of all. They have not sustained a humiliating defeat. And, by what they have done as regards withholding funds in the dairy sector, they have signified their demand to be consulted when the reforms of the CAP are being discussed. I think that they can take quite a lot of pride in what they have done, even though the final result is rather disappointing.
Of course, the budget itself will have little effect on Britain which will have to pay some hundreds of millions of pounds less into the Community, or on France and Germany which will have to pay some hundreds of millions more, in consequence of the stand taken by the British Government. Because, large as those sums may seem in themselves, the Community budget is a pale shadow besides the gigantic budgets of national states—I think that it is less than 1 per cent. of the gross domestic product of the Community. The changes effected by this budget will make no visible change of which we shall be aware in our standard of living.
So I hope that the new Parliament will be less obsessed by the next budget and that as a consequence the very good work which is now being done by the MEPs in the committees, of scrutinising and working out amendments to the draft legislation, will be seen by the electorate to be both important and effective.
There is work of great importance to do in preparing the Community for the day when it will be possible to plan a concerted reflation or expansion on the basis of stable currencies and stable exchange rates. There is important work to he done, too, on eliminating the non-tariff barriers to trade, on developing

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an industrial policy and an energy policy and a creative and enlightened role vis-à-vis the developing countries. There is, in short, plenty of work, apart from these budgetary protests, for the European Parliament to do.
I was very struck by what the noble Lord said about whether policy should follow the budget. That can never happen. It is not only a French thing—it does not happen here. The Chancellor of the Exchequer does not say, "How much money can I raise?" and then look for worthy objects on which to spend it. Anyone who has experience of the Treasury knows that it is much harder than that. No, policy must precede the Budget. Surely the Community will find the money for the policies that it wants to carry out. The most significant and powerful work that Parliament can do is to change those policies and get those policies adopted by the Council of Ministers, rather than engaging in these splendid but rather futile demonstrations.
9.12 p.m.
Lord BRIMELOW: My Lords, when I fist became a Member of your Lordships' House, the noble Lord, Lord O'Hagan, was a Member of the European Parliament and I was deeply impressed by the quality of the contributions which he made to the debates on Community affairs. His introductory speech tonight again shows the advantages which a diligent Member of both the European Parliament and this House can make to these debates. I join gladly in the tributes which have been paid to him hitherto.
After the brilliant speech by the noble Lord, Lord Ardwick, I wish my own contribution to be brief and pedestrian. In his Question, the noble Lord, Lord O'Hagan, sought to elicit a statement from the Government. I should like to elicit such clarification as the Government may be willing and able to give of that part of the Brussels agreement which is reproduced verbatim in paragraph 29 on page xii of the Select Committee's report. It deals with the 1982 budget of the Community, and the noble Lord, Lord Gladwyn, emphasised the importance of that budget. It begins by saying that the Community is pledged to resolve the problem by means of structural changes. Yet, if we turn to Part III of the Select Committee's report—as the noble Lord,
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Lord Sherfield, has pointed out—in paragraph 37, the Select Committee draw attention to the evidence given by the Financial Secretary on 13th December last year, stating that the Government believe the best solution will be a new mechanism operating on the net contribution.
Is there not a potential contradiction between the recommendation of the Select Committee and the Brussels statement, with its emphasis on the structural solution? Have the Government any comment to make on that? Paragraph 29 continues:
"The examination should concern the development of Community policies".
The noble Lord, Lord Ardwick, spoke of a grand reform of the budget and the Common Agricultural Policy, not of the development of those policies:
"… without calling into question the common financial responsibility for these policies".
The noble Lord, Lord Gladwyn, said that the Community was going to go beyond the limit of its own resources. The question was raised in evidence—I refer to the right-hand column on page 24—and the witnesses said that if we get to the ceiling we must have procedures to gain time
"for a solution to be negotiated. These might include some form of national financing of expenditure which at the moment is financed from the Community, or possibly the raising of a levy on the production of particular agricultural products".
Is that ruled out by that part of the Brussels statement which says that there must be no:
"calling into question the common financial responsibility".
I think that this is potentially important, because if part of the present Community expenditure were to be transferred to the financial budgets, the relief on the Community budget could he considerable.
But the Brussels statement does not envisage that. It continues:
"without calling into question … the basic principles of the Common Agricultural Policy …".
The Treaty of Rome has nothing to say about the basic principles of the Common Agricultural Policy; it uses different language. It talks about the purposes and aims, not about the principles. It may be that this wording is intended to give the Community some freedom in its choice. I am not aware that there are

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agreed basic principles, but are the Government able to throw any light on what the Commission is likely to regard as the basic principles? If the answer is, "No", I shall take that as a completely satisfactory answer.
Then it says that:
"This examination will aim to prevent the recurrence of unacceptable situations … If this is not achieved"—
and here we have a safety-net under the preceding provisions—
"the Commission will make proposals along the lines of the 1980–81 solution and the Council will act accordingly".
The noble Lord, Lord Campbell of Croy, quoting the noble Lord, Lord Carrington, seemed to indicate that that is the more likely outcome: that this is something on which work will have to be done, and he called for suggestions. Do the Government also think that this is a more likely line of development than the preceding part of that statement? It is on those points that I should be grateful for such elucidation as the Government feel able to give.
9.18 p.m.
Lord ROBERTHALL: My Lords, I should like to associate myself with everything that has been said about the noble Lord, Lord O'Hagan. It was most refreshing and most interesting to hear directly from someone who is a Member of the European Parliament, and although this is very far from being a maiden speech, perhaps I could use the time-honoured formula used for such speeches, and say that I hope we shall hear a great deal from the noble Lord on some other occasions. It was most interesting.
Speaking as the last of the non-official speakers, I am in the usual position in that everything I had thought of saying has already been said, and I suppose that I should sit down at once. However, I should like to mention two of the points that have been stressed. As has been pointed out by several speakers, including the noble Lord, Lord Brimelow, the second part of the Question of the noble Lord, Lord O'Hagan asks the Government for their views on Part III of the report. Essentially, Part III deals with the two methods of financial adjustment—the financial mechanism and the expenditure. I very much agree with several speakers—
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including both the noble Lords, Lord Brimelow and Lord Campbell of Croy—that the Committee's strong recommendation to go for the mechanism is certainly the right one.
I agree with the view that has been expressed that our own Ministers did a splendid piece of negotiation. I should like to join in the tributes to our own Lord Carrington. Nevertheless, it was somewhat disquieting that there was so much stress paid in the negotiation on the principle of getting out as much as you get in, which is quite wrong for a body like this. I feel that the Government ought to go for a mechanism which will get it properly tied up so that you do not have this financial haggling, and also so that you do not have to give away all sorts of other points in order to get a settlement about money.
The second point I want to make has been touched on by several speakers—by the noble Lord, Lord O'Hagan, at the end of his speech, expecially by the noble Lord, Lord Gladwyn, and again by the noble Lord, Lord Brimelow—and that is that the review which has been promised to us, which is mainly going to be a review of the financial mechanism, is not really going to go far enough at present. The two things which are basically wrong with the Community at present are the Common Agricultural Policy and the failure to make any progress with convergence. We had a good debate on the Common Agricultural Policy on 17th April. Three of the speakers then called attention to the fact that the CAP now has diverged a good deal from the original intentions of Article 39. I am sorry that the noble Lord, Lord Gordon-Walker, is not with us tonight. He made a splendid speech in the debate on this very question.
That is closely tied up with the question of convergence, because the problem of the Common Agricultural Policy is not only that it has moved into a bad position but that it is taking three-quarters of the budget. What it takes for that is taken away from everything else, so that the convergence question in my view—and I agree with the noble Lord, Lord Gladwyn, on this—is going to get worse and worse with the enlargement that is taking place. The strains that will be set up in the Community if, instead of converging, the disparities in wealth and social standards,

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and that sort of thing, go on, will be a real threat to the Community. Although I do not suppose that the noble Lord, Lord Cockfield, can go as deep as this, I feel that we ought, if possible, to take the opportunity of this review, which has to be made because the money is running out, to look at where the Community is going and where it had hoped to go.
9.24 p.m.
Lord BRUCE of DONINGTON: My Lords, I should like to join in the expressions of appreciation which have come from all parts of the House to the noble Lord, Lord O'Hagan, first for having brought this subject on to the Order Paper at all, and secondly for the detailed and constructive account he gave of his activities, particularly in the Budget Committee of the European Parliament, and for the account he gave of the Parliament as a whole in regard to the budget. I am one of those who most certainly welcome the noble Lord, Lord O'Hagan, back in this House again. I recall that when it was first of all my privilege to be selected to represent your Lordships' House in the European Parliament it was a matter of great regret to me that on that occasion he unfortunately left the European Parliament, happily for only a temporary period. I also confirm in general what the noble Lord indicated about the spirit that pervades the European Parliament. It is of course true—and was certainly so during the time I was there—that very often the arguments cut right across both political and national boundaries.
I would, however, enter a small word of caution here. I found—I do not know whether the noble Lord has found it yet—that at the beginning of the budget year, which normally starts about May, when the Commission's preliminary draft budget is introduced, it meets with a united hail of abuse from all sections of the Parliament and lamentations concerning the gross defects of the Common Agricultural Policy wax loud from all sections of the House. However, one finds as the year passes that the protests gradually become muted as the respective delegations become more acquainted with the views of their national parliaments as to the way the budget should develop. It was one of my disappointments, which I hope is not given to the noble Lord, that in the end all one had when the budget was finally
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disposed of was a very mild whimper indeed out of Parliament.
Doubtless matters have changed, and as one who voted uniquely in 1976—I think I was the only Member of the European Parliament at that time to vote for the rejection of the budget—I rejoice in the consummation that has occurred recently and which has had certain constitutional consequences, which were dealt with very adequately by the noble Lord and by my noble friend Lord Ardwick, on the position of Parliament itself.
I had hoped that the Government might have considered it wise, in view of the importance of this subject, to make a statement immediately following the introduction by the noble Lord, Lord O'Hagan. That would have given the House some opportunity of taking a considered view on an expressed standpoint taken by the Government.
There may be perfectly good constitutional and other reasons why that did not happen, and I am certainly making no accusation or imputation of any kind in the establishment of the procedure that has been adopted. That being so, however, it leaves me and some of my noble friends in a position where, after having studied the response we shall get from the noble Lord, Lord Cockfield—which of course we shall not know until the end of the discussion—we may seek an early opportunity of debating the whole matter in very great detail.
Having said that, and addressing myself to the matters which were dealt with by the noble Lord, Lord O'Hagan, we come, first, to the refund of what the right honourable lady the Prime Minister described enthusiastically as "our money", or at any rate a certain proportion of it, by the negotiations that have taken place in Brussels, Luxembourg, Dublin and elsewhere. I say straight away that on the principle that some redress is better than none at all, certainly I welcome it. It means, I trust, that the public sector borrowing requirement will be reduced, although there are certain uncertainties with which I shall deal later. It is, of course, tempered by the fact that some £450 million still remains the net contribution of the United Kingdom, and that at a time of considerable stress in this country.

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For those like the noble Lord, Lord Gladwyn, who think in terms of the European dimension, the sum of £450 million out of the United Kingdom Exchequer is small beer. That could be. But when one considers the cuts that have been made in public expenditure, £450 million paid out to the EEC is a very large sum indeed. It represents money that could otherwise have been spent in the National Health Service on, for example, kidney machines, of which there is now a shortage, or on equipment to deal with infant resuscitation, which is in short supply, to the danger of infants. Such money could have avoided the hassle that we have had over the cuts in school meals and school transport. It could have avoided, had we had it available, the necessity for making economies in the provision of school books and so on. In other words, had we had this particular money, and of course on the assumption that Her Majesty's Government were willing to spend it on these items, it could have afforded us very considerable relief. So let us make no mistake; the £450 million that remains is still a very substantial drain on this country's resources.
Nevertheless I tell the noble Lord, Lord Cockfield, in advance that if he wishes to make it, I shall give him the political point that in this respect the Government have done much better than the preceding Government. In case he may be tempted to make the point, may I additionally say to him, as one who fought this question in the European Parliament over many years, that when, three years ago, I ventured to raise in your Lordships' House the question of the deficit, I was, as nearly as was decent for your Lordships' House, howled down for having suggested the possibility that there was a deficit. I am bound also to inform your Lordships that in the European Parliament itself members of the Conservative Party spent much of their time denying that there was a deficit in Britain's contribution to the European Budget. But, be that as it may, we have some money back, and I for one am very pleased indeed about it.
However, there are one or two small snags. In the first place we have the financial mechanism amendments to, I believe, Regulation 1172 of 1976—and I
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would ask the noble Lord whether he will kindly cause to be placed in the Library, or alternatively printed in the Official Report, the details of the manner in which this particular matter actually applies. He will recall that in Volume 4 of the Commission's preliminary draft budget there was set out on pages 513 to 517 inclusive an exact working-out, based on the then criteria, of how Britain would benefit by the application of the financial mechanism.
The financial mechanism will now be amended by the new draft regulation, and it would be of assistance to your Lordships, and I am sure of assistance in particular to the noble Lord, Lord O'Hagan, if we could have set out exactly in a paper, in accordance with the new mechanism, the calculation of the sum involved, which I believe is to produce in the region of £350 million.
I turn now to the second part of the rebate and, like the Select Committee report, referred to by the noble Lord, Lord Sherfield, to the supplementary measures under Title 5, Chapter 58 of the Community budget for 1980, in which the Regional Fund provisions—and the Regional Fund regulations themselves have been partly amended for this purpose—are to be used as a means of refunding money to the United Kingdom in respect of specific projects.
As the Select Committee of your Lordships' House pointed out, there are quite a number of snags in connection with this. The projects which are to be supported by means of this supplemental relief have got to fall into certain categories, and it is not at all easy to comply with these categories, which I shall not go into for reasons of time. I sincerely hope that Her Majesty's Government will have, as I am sure they will, a whole list of projects, together with the required particulars, to put into the Commission as soon as possible in order that these may be considered.
The hurdle I am a little bothered about is the Regional Policy Committee itself, composed of the technical representatives of the Nine, and sometimes also the ambassadors, which has to consider these proposals and then, I think, sometimes on the basis of a qualified majority but sometimes unanimously, has to give approval to the projects before they are further considered. I hope I am not being unduly cautious when I say that, in view

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of the remarks made by President Giscard d'Estaing on, I believe, 6th June, when he indicated that there would be difficulties with the refunds to Britain unless some understanding was reached in other fields —I believe, fish, as the noble Lord, Lord 011agan, says—I sincerely hope that account has been taken of that, because it would be quite alarming if the whole of this remaining sum, or any substantial part of it, were to be prejudiced by an obstructive action being taken by one or more member states, now that the matter has been agreed in general principle, when the matter came to be discussed in detail. As I am quite sure your Lordships are aware, whereas there is a tendency in the United Kingdom, to which I have previously drawn your Lordships' attention, to comply rigidly with EEC law and to make the appropriate enactments, there are some countries—and I have no hestitation in mentioning France —which are sometimes prone to obey just those directives and regulations which suit them, and to disregard the rest. So I sincerely hope that the Government's optimism about the recovery of these sums is well founded.
My Lords, there is one other anxiety to which I would draw your Lordships' attention, and it relates to what has been said by many noble Lords concerning the I per cent. VAT ceiling which was established under the decision of 20th April 1970. This particular budget, which has now been enlarged to somewhere in the region of £10,000 million, now represents the fact that we have achieved a rate of VAT of 0.7216. One normally allows 0.01 of a per cent. for each 100 million units of account of expenditure. This is the official method of calculation which the Commission itself uses. I venture to draw your Lordships' attention to the draft budget itself, where, if you examine the items under Chapter 41 and Chapter 58, which deal with the money to be paid out by the financial mechanism and also the money which is going to be paid to Britain by the supplemental means, you will find that there is a token entry only, which means that the total which will become due to the United Kingdom has not been allowed for in the total of the budget which produces this VAT rate of 0.7216.
It is a matter of elementary mathematical calculation to realise that the total number
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of units of account required to meet these extra payments to Britain, on the assumption that they in fact materialise, amount to 0·11 per cent., which brings the total up to 0·83. If agricultural expenditure continues at its existing rate—and the Chancellor of the Exchequer speaking in another place this afternoon seemed to indicate that it probably would—and bearing in mind that there is a supplementary budget due later this year when the harvest is complete, it is quite clear that we shall be beyond the 1 per cent. VAT (as indicated in the decision of 20th April 1970) by mid-1981; and consultations unofficially with the Commission confirm that that is the date they are expecting.
Lord O'HAGAN: My Lords, I followed the noble Lord's analysis and I agree with his conclusion. May I ask about one step in the logic? Is the case that he is putting forward dependent upon the British refund being in this year's budget or in next year's budget? My understanding is that because the budgetry years of the United Kingdom and the EEC differ, it is most likely to be in next year's.
Lord BRUCE of DONINGTON: My Lords, for all practical purposes it makes no difference. A slightly larger sum will have to be taken into account next year in any event. The short point that I am putting is that this is very likely. If the noble Lord, Lord Cockfield, has information to the contrary, I should be glad if he were to give it to the House. My information, and my mathematical conclusions on the basis of extrapolation of past statistics, is that this is highly likely. If that is so, when mid-1981 comes, what is going to give?—because something has to give unless a unanimous decision is made to amend the decision establishing the I per cent. VAT base.
I think that the noble Lord, Lord O'Hagan, will agree—and I hope that I will carry the noble Lord, Lord Cockfield with me on this—that one thing that will not give is the expenditure established under the existing agricultural regulations; because, under the admission of Mr. Gundelach, they are uncontrollable. If there is a large harvest or a poor harvest or harvests of varying qualities, it is an open-ended commitment which gives a contractual right to the individual farmers

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concerned. Clearly that cannot give; it will have to go on in law. If we are in the middle of 1981 and this 1 per cent. is reached, it means that other expenditure will have to fall to the ground. I trust that the noble Lord, Lord Cockfield, may be able to express his confidence that I am wrong, but one of the things which may go in the massacre of the expenditure in keeping the Community within its cashflow limits would be the refund of monies to the United Kingdom. I put that to the noble Lord as a distinct possibility and I hope that he is able to reassure me to the contrary.
It is quite clear that there is much in what the noble Lord, Lord Campbell of Croy, said, when he said that he thought that the EEC budget year ought to coincide with the agricultural year. Of course it should—because that is all that the EEC budget is about. It is only about agriculture. The rest of the items are completely peripheral. It would be far more honest to face the position that the EEC, originally conceived as a European Economic Community—and I have the articles here—is, in fact, nothing of the kind. It is an agricultural community, heavily protected, with its prices fixed with a lot of other peripheral activities surrounding it and giving it some grounds for assuming respectability.
It is like the emperor without any clothes. Everybody pretends that this is a wonderful European Economic Community. In fact, it is nothing more than an organisation for the basic protection—and I am not complaining about this—of the agricultural interests in Europe. This is its main fundamental purpose. I willingly concede that there are political advantages in the membership of the Nine. There is an advantage in political cohesion; there is an advantage in the continuous consultation that the Nine have about a whole series of matters outside the economic sphere. Why not be honest about that and say that the real impact of the EEC has very little to do with economics outside the agricultural sphere and is really all concerned with politics?
Unless we face this—and I base this on the examination of the budget itself—
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the people of our country are not all that dumb and there is a growing realisation that the grand vista of the Common Market, as once laid before them, is not really what they were led to believe it was. There is a growing disenchantment with it, and there is a very good reason for this because whatever political benefits it has brought—and I would agree with the noble Lord, Lord Gladwyn, and other that these have been many—if the noble Lord, Lord Cockfield, can get up and recite in net terms the economic benefits that have accrued to the United Kingdom and its population at large, then I am sure that the whole country would be most grateful.
Has not the time arrived when we look to the EEC for what it is as distinct from what a large number of people would like it to be, affect to pretend it to be or imagine it to be? Look at it starkly. When people say they are going to amend or reconstruct the CAP, let those who have any faith in those declarations of determination to alter agricultural structures without altering the principles, which I believe is the current stance taken by the Prime Minister, remember in Lord O'Hagan's experience, most certainly my experience, Lord Ardwick's and Lord Brimelow's experience; we have had these sonorous statements now for years. We have had proposals galore from the Commission for reconstructing agriculture. This time we want to know whether a really genuine effort is going to be made.
For this purpose, will the noble Lord, in his reply—and I am trying to be helpful to him in this respect—interpret to the House just what his right honourable friend the Prime Minister considers to be the basic principles of the Common Agricultural Policy in which she still believes? If they are those comprised already in the treaties, then one would be very glad to know how exactly it is proposed to alter them.
I renew my thanks to the noble Lord, Lord O'Hagan, for having raised this subject and extend also my grateful thanks to other noble Lords who have made some extremely constructive observations during the course of the debate. I hope that the Government may take the opportunity this time to make a very constructive statement as to what their intentions are.
9.49 p.m.
The MINISTER of STATE, TREASURY (Lord Cockfield): My Lords, we are all greatly indebted to my noble friend Lord O'Hagan for giving us the opportunity of debating these important matters. It is of course of particular interest to listen to somebody who is actually involved in the budgetary process in the European Parliament telling us exactly and precisely what went on. What he has told us this evening is, of course, ample justification for the existence of the dual mandate. We look forward to hearing from him again on many occasions to keep us in close touch with what is going on in Europe. The debate also provides us with the opportunity of discussing the report of the Select Committee of your Lordships' House on the 1980 budget of the Community, and it is to this that I propose directing my remarks rather than pursuing the broad anti-European line deployed by the noble Lord, Lord Bruce of Donington. We owe a real debt of gratitude to the Select Committee and particular to Sub-Committee "A" both for their vigilance and their penetrating analysis.
Reference has been made by a number of noble Lords to the fact that the report presents the issues involved clearly, simply and intelligibly. For all practical purposes, of course, the 1980 budget has now been adopted, and now that has been done and the question of Britain's budgetary contribution has been settled, it is possible to discuss these matters in a calmer and more reflective atmosphere. Indeed, the debate in your Lordships' House pays ample testimony to that. With the risk of confrontation now removed, we should all be able in the Community to proceed with the vitally important job of permanent reform of the financial structure.
Settlement of these matters has had another important effect, and my noble friend Lord O'Hagan referred to this in a very telling passage of his speech. So long, of course, as we were the only major net contributor, and indeed one of only two net contributors, other countries could regard these matters with a degree of detachment, if not indifference; but now that other countries have also become major contributors a greater sense of
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realism is already being brought to bear on the problems involved.
Tribute has been paid by nearly every noble Lord who has spoken, and particularly by my noble friend Lord Campbell of Croy, by the noble Lord, Lord Ardwick, and by the noble Lord, Lord Sherfield, to the success of the negotiations conducted by my right honourable friend the Prime Minister and my noble friend the Secretary of State for Foreign and Commonwealth Affairs. There has been some criticism of the settlement on the ground that we did not get all that we originally set out to get but, as the noble Lord, Lord Sherfield, so pointedly says, in this life one never does get everything one sets out to get, and where interests conflict, as they do here, and negotiations ensue, some degree of compromise is inevitable. We did in fact get two-thirds of our original objective and by any standards that is a considerable achievement—one in which we can take real satisfaction and also one on which we ought to congratulate both my right honourable friend the Prime Minister and my noble friend the Secretary of State for Foreign Affairs.
There is a further point here, namely, that any agreement needs to be satisfactory to both sides if it is to form the basis of future co-operation, and we do need to recognise that what we have gained other people have to pay. That is very clearly brought out in the table which appears in page XIII of the Select Committee's report. If we look at the actual facts of the settlement at Brussels, for 1980 our net contribution is now agreed at £370 million instead of £1,080 million: a reduction of £710 million. For 1981, our contribution will be £440 million instead of £1,300 million—a reduction of £860 million. For 1982, if the radical review of the pattern of Community expenditure and the operation of the budget is not then complete, there will be a corresponding reduction in the level of the United Kingdom's net contribution. In addition, there is a risk-sharing formula which ensures that if net contributions exceed the present estimates, we pay only a small and modest proportion of the increase.
The noble Lord, Lord Bruce of Donington, suggested that the amount we

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were left paying was still excessive, but I feel I must remind him that in 1978 our contribution was no less than £803 million, in 1979 it was £947 million and for both of those years, of course, the Labour Government, of which he was such a distinguished supporter, were responsible. So for those two years we contributed £1,750 million, while under the new agreement for 1980 and 1981 combined we shall be paying £810 million, which is less than half.
Just as important as agreement on figures was the agreement reached that there should be a fundamental review of the pattern of Community expenditure and of the operation of the budget. This is underlined by the agreed conclusion of the Foreign Affairs Council on 29th and 30th May. What they said was that this was,
"to prevent the re-occurrence of unacceptable situations for any of the member states".
There is, therefore, a very clear commitment to reform on these lines. But quite apart from the determination which is expressed in these agreed conclusions, as a number of noble Lords have said, the ceiling set on "own resources" by the 1 per cent. limit on the rate of VAT accruing to the Community is itself a powerful force compelling reform.
It is perhaps a matter of great significance that both the French and the German Governments made it clear that they, like ourselves, take the view that this limit must be retained. No one would disguise the fact—and this point was raised not only by the noble Lord, Lord Bruce of Donington, but by other noble Lords as well—that this presents a very considerable problem for the Community. But the Community has faced great problems before and it has found answers to them, and this is another problem to which we are confident the right answer will be found.
The comments made in the Select Committee's report about the nature of the procedure to be adopted to give effect to the agreement reached on the reduction of the United Kingdom's net contribution, are a matter of great
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importance. These comments appear in Part III of the report. As the Committee say, the solution is a mixture of a mechanism solution and an expenditure solution and, in a technical sense, this is perfectly right. We appreciate the anxieties which the Select Committee express and we are as much concerned as they are to avoid any untoward consequences. In particular, it is important that undertaking expenditure qualifying for assistance from EEC funds should not have the result of weakening control over the aggregate of our public spending in the United Kingdom, and we are determined that it should not do so. It is also important that the adoption of this particular mechanism should not lead to bureaucratic delays, a matter to which the Select Committee also draw attention.
Perhaps it is important in this respect to make the point that while the programmes qualifying for support under Article 235 will need to be approved by the Commission, approval will not be required for individual projects within the programmes, and this in itself should avoid the kind of delays which have been feared. But the final safeguard, and perhaps the most important point of all, is that the mechanism solution and the expenditure solution are intended as means to secure an end; namely, to give effect to a firm agreement that there should be refunds of net contributions of the agreed amounts for 1980 and 1981 and, if needed, for 1982 as well.
It is the Government's belief that the arrangements under Article 235 can be satisfactorily implemented so as to give effect to the settlement. Indeed, the Community as a whole is politically committed to this. While therefore we believe that the anxieties expressed by the Select Committee are met, so far as the present agreement spanning 1980, 1981 and 1982 is concerned, we agree that the situation is one which needs watching, and we note the reservations expressed by the Select Committee about the inclusion of an element of this kind in a permanent solution. It is certainly our intention to press for a permanent and simple solution to this problem in the course of the radical review of the budgetary arrangements to which I have referred and to which the Community is now committed.

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There are perhaps one or two individual points which were raised on this that I shall endeavour to answer. Lord Brimelow suggested that there might be some conflict between the resolution or the agreement by the Council of Ministers which is reprinted on page xii of the Select Committee's report, in which it is said:
"For 1982, the Community is pledged to resolve the problem by means of structural changes";
and the statement by the Financial Secretary which is quoted on page xv of the report, namely:
"that the Government believed the best solution would be a new mechanism operating on the net contribution".
The first point to which I must draw attention is that the Financial Secretary's statement which is quoted was made on 13th December 1979 before the negotiations were brought to a successful conclusion and he was stating what we felt to be the best solution which we ought to strive to achieve. In the event, it was necessary to compromise with the other member states in the Community on a mixture of both a mechanism solution and an expenditure solution. Nevertheless, it remains, as I have said, our view that the best long-term solution is a new mechanism. There is therefore no conflict between what was agreed by the Council of Ministers and what we have said, because what we have said represents the point of view that we shall press in the course of the review.
Lord Bruce of Donington asked specifically if we could supply the House with details of the calculations underlying the financial mechanism refund to which the United Kingdom will be entitled for 1980 and 1981. It is not possible to do that at this stage because the precise entitlement of the United Kingdom can only be ascertained when the Commission's accounts for the year have been closed. Nevertheless, if it is the wish of the House, we will certainly make available a model calculation of the United Kingdom's entitlement, based on the Commission's latest estimates of the various quantities involved.
My noble friend Lord Campbell of Croy raised the question of the agricultural year and he was supported in this by, I think, the noble Lord, Lord Ardwick.
Several noble Lords: No.
Lord COCKFIELD: He was supported elsewhere in your Lordships' House. The problem here is that if one changes the date of the accounting year one either has to have one very short year, in which event one has two years in the course of one calendar year, or one has to have one very long period of accounts—in this instance it would be an account for 17 months—which raises very difficult issues of forecasting. Interestingly enough, this is an issue which has been raised in this country over the last 200 years over the question of the financial year in the United Kingdom. Many people think it would be a great advantage if the financial year were made to correspond with the calendar year; but the transitional problems have always been felt to be such that the change has never been made. The same considerations apply very much in the case of the Community budget. But do not let me deter my noble friend from continuing to press on this front if he feels that this would be the right solution.
My noble friend Lord O'Hagan raised the question of the budgetary process itself and also the question almost of the division of power between the Council and the European Parliament in relation to the budget. There have, of course, been differences between the Council and the Parliament over the budget ever since 1974 when the Parliament was first given powers over it. These differences arise from different views of the functions of the budget, as my noble friend so clearly explained in the graphic illustration he used of the French approach and the British approach to budgetary matters. The Council considers that the budget should provide for the expenditure likely to result from existing policies while the Parliament considers that the budget has a policy role and should take account of future developments in other policies. As has been said in the course of this debate, these differences in view led to disputes in both 1979 and 1980.
I was greatly relieved to hear the view expressed by more than one of your Lordships that similar difficulties were not likely to be experienced over the 1981 budget—a matter of great importance, of course, because the refund to the United

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Kingdom arises, as my noble friend Lord O'Hagan mentioned, primarily under the 1981 budget rather than under the 1980 budget. As was mentioned in the course of the debate, there is a token entry which has been put into the 1980 budget, which is to enable advance payment to be made if there is a shortfall in expenditure in other directions and the money therefore is available. But I think the real answer is that the Community and its institutions are still in the process of development, and it is inevitable, therefore, that from time to time differences should develop. We must hope—and there are good grounds for so doing—that future differences will be solved in just the same way as were the differences in 1979 and 1980 and that in the end the Community will emerge stronger as a result.
Finally, I should just like to say this. The agreement reached on our contribution to the Community budget means that a major source of discord between the member states of the Community has been removed. It means also that in the period immediately ahead our net contribution will be held within reasonable bounds. This will allow time for the Community to complete the radical review of its policies and of the budgetary arrangements which has been agreed and which is designed to ensure that unacceptable situations of the kind we have had to face in the past do not recur either for us or, indeed, for other member states.
The commitment to this review is an integral part and a crucial element in the settlement. The necessity for this review and the determination to carry it out is buttressed by the fact that the ceiling on existing Community revenue makes such a review inescapable. The review will provide us with an opportunity which has never been available before, since we joined the Community, an opportunity to work together with other member states for lasting reforms which are to the advantage and in the interests of all the members of the Community.
Following the settlement of our contribution the member states will now be able to concentrate on ensuring that the review results in the changes to Community policies which are essential if it is to continue to develop. We have now for the first time for many years the oppor-
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tunity to take full advantage of all the opportunities that membership of the EEC offers us. There was never a time when we were in greater need of opportunity. It now rests with us to show the determination to take advantage of this opportunity.

FALMOUTH CONTAINER TERMINAL BILL [H.L.]
The order made on 9th June last discharged, and Bill committed to the Committee on Unopposed Bills.
  NORTH SEA GAS: ANNOUNCEMENT OF PLAN APPROVAL
  NORTH SEA GAS: ANNOUNCEMENT OF PLAN APPROVAL
  COINAGE: WEIGHT AND SHAPE
  COINAGE: WEIGHT AND SHAPE
  ENVIRONMENT MINISTERS' MEETING
  ENVIRONMENT MINISTERS' MEETING