Sitting of 30 July 1980

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

  SOUTH YORKSHIRE BILL [Lords] (By Order)
  As amended, further considered.
  Amendments agreed to.
  To be read the Third time.

  INVERCLYDE DISTRICT COUNCIL ORDER CONFIRMATION BILL
  Considered; to be read the Third time tomorrow.
ORAL ANSWERS TO QUESTIONS
  ENVIRONMENT

    Sheltered Housing
    1. Mr. Bowdenasked the Secretary of State for the Environment how many sheltered housing units will be built in the year 1980-81 in England and Wales.
    The Minister for Housing and Construction (Mr. John Stanley): Some information about numbers of sheltered housing units being built will be given in local authorities' housing investment programme returns for 1981-82. Authorities have been asked to submit these by 8 August. Copies will be placed in the Library.
    Mr. Bowden: What steps will my hon. Friend take to ensure that the elderly are given high housing priority in these difficult days, when the programme has had to be cut back?
    Mr. Stanley: In the circular on this year's HIP allocation my right hon. Friend the Secretary of State has asked local authorities to give high priority, within their allocations, to special needs, particularly those of the elderly and the disabled. My hon. Friend will be glad to know that in the first five months of this year starts on new dwellings for the elderly in England represented 46 per cent. of all local authority and new town starts, compared with 26 per cent. last year.
    Mr. Frank Allaun: As it is estimated that council house starts will drop from their present low record to 30,000 a year, does that not mean that such starts will be confined to houses for the elderly and the disabled? What will happen to the other half of the population, who cannot afford to buy council houses or houses on the private market? Even with the aid of a mortgage such people cannot afford to buy a house.
    Mr. Stanley: As the hon. Gentleman knows, we are looking to the private sector as well as to the public sector to meet the need for rented accommodation. In view of what the hon. Gentleman has said, I hope that he will urge the Opposition Front Bench to withdraw its commitment to repeal shorthold, as that will make more rented accommodation available.
    Mrs. Kellett-Bowman: Does my hon. Friend accept that Lancaster city council is eager to sell council houses and has the best record for such sales in the North-West? Does he also accept that the council is extremely anxious that it should not be obliged to sell old people's dwellings? It has a high proportion of such dwellings which are not, strictly speaking, sheltered accommodation. Will the Minister seriously consider the amendment put forward on 21 July in the House of Lords, which would not oblige councils to sell houses that have been specifically built for and habitually occupied by, old people? At the very least, will he introduce a permanent preemption clause for councils?
    Mr. Stanley: My hon. Friend will be aware that that amendment was the subject of debate yesterday during consideration of the Tenants' Rights Etc. (Scotland) Bill. During the proceedings in the other place, their Lordships chose to

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    reject that amendment decisively. I shall consider the point that my hon. Friend has made about pre-emption, before the Bill comes back to the House.
    Mr. Kaufman: Since, in Committee, the hon. Gentleman constantly rejected any attempt to make comparisons between the Scottish Bill and the Bill relating to England and Wales, will he now give a clear answer to the question asked by his hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman)? As the House of Lords has voted to exclude not only sheltered accommodation, but other old people's dwellings, from compulsory sale, will the Government accept the amendment and retain it in the Housing Bill?
    Mr. Stanley: The answer is "No", but we shall consider pre-emption.
    Mr. Frank Allaun: Shame.

    Local Authority Expenditure
    2. Mr. Durantasked the Secretary of State for the Environment what response he has received from local authorities to his request for revised budgets for 1980-81.
    4. Mr. Andersonasked the Secretary of State for the Environment whether he will make a statement on the response to his circular to local authorities of 13 June on their revised expenditure plans.
    The Secretary of State for the Environment (Mr. Michael Heseltine): We have asked the local authorities to return their revised, reduced expenditure plans by 1 August. Until my Department has analysed the revised plans, it will not be possible to say whether local government as a whole has made the reductions we requested.
    Mr. Durant: Will my right hon. Friend not weaken in his resolve to deal with this matter, which is of great importance? Will he bear in mind those local authorities, mainly Conservative, which have cut back over the years at the request of the Labour Party? Will he deal firmly with those irresponsible authorities that have little regard for their ratepayers and financial prudence?
    Mr. Heseltine: I welcome my hon. Friend's support. The provisions of the Bill will give to the Government, in their administration of the block grant, a more sophisticated method of allocating resources between those authorities which overspend and those which underspend. The problem goes a little wider than the difficulty facing Conservative authorities. It is clear that there are Labour as well as Conservative authorities that are complying with the Government's target. All that the authorities are doing by not complying with the Government's request is pre-empting resources from those that are. If there is to be a degree of fairness, it is important that all authorities understand that the burden must be spread equitably throughout the country.
    Mr. Jim Marshall: When will the right hon. Gentleman realise that there is no more sophisticated way of allocating rate support grant resources? Secondly, when will he wake up and accept that local authorities are responsible bodies and that his actions represent an unwarranted intrusion into local democracy?
    Mr. Heseltine: The hon. Gentleman knows that the traditional relationship between central and local government is that the Government set the guidelines for local government expenditure. It is sometimes necessary for the Government to ask for reductions to take place, as my predecessor did in 1976. I have not yet used the draconian measures that the previous Labour Government used to secure those ends. I have tried to rest on the voluntary basis, which hon. Members prefer as a first priority. If I am not able to secure the targets that the Government have set—we shall not know that until the next few weeks have passed—I shall have to consider a range of other measures, some of which the Labour Government used rather earlier than I have done in similar circumstances.
    Dr. Mawhinney: In considering these revised budgets, will my right hon. Friend bear in mind that in some county and district councils that have high growth areas and new towns, one component of the increased spending is population growth? Will he bear that in mind when considering the revised budgets?
    Mr. Heseltine: My hon. Friend has raised an important issue. We shall be able to consider factors such as that under the new grant-related expenditure parts of the block grant proposals. The Government have asked local authorities to reduce by only 2 per cent. what they spent in 1978-79. In view of the magnitude of the national economic difficulties, that is not an impossible target for any authority.
    Mr. Hattersley: The Secretary of State has referred twice to the block grant, which will begin not this year but next year. Does he recall that on Monday Sir Gervas Walker urged him to postpone the introduction of the block grant for a year, as he believes that it cannot be operated fairly and equitably next year? Does the right hon. Gentleman believe that Sir Gervas was motivated by malice or ignorance in advocating that postponement?
    Mr. Heseltine: I know Sir Gervas extremely well, and I know that he would not be motivated by either of those motives. It does not serve the right hon. Gentleman well to trivialise a debate of this sort. The leaders of the local government associations are right to express their legitimate concern about the Government's proposals. That is a vital part of the democratic process. It is the Government's view that the block grant proposals will answer many of the deep-seated criticisms that right hon. and hon. Members have expressed about the present basis of regression analysis. It is upon that basis, and in the light of the work that we have done so far, that we shall press ahead with the block grant in 1981-82.

    Agricultural Land (Building Use)
    3. Mr. Lyellasked the Secretary of State for the Environment what steps he is taking to discourage building on good agricultural land between new towns and other urban areas.
    The Under-Secretary of State for the Environment (Mr. Marcos Fox): The Government's policy is, where possible, to avoid development of agriculural land and, where it must be taken, to use lower, rather than higher quality land.
    Mr. Lyell: I am grateful to my hon. Friend for that answer. That may be the
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    policy where possible, but will my hon. Friend please remember that there is a large amount of vacant and dormant land around new towns throughout the country? Will he consider imposing a moratorium on the use of agricultural land until that land is used?
    Mr. Fox: If my hon. Friend considers carefully the measures that the Government have taken since coming into office, he will realise that we have done that which he has asked me to do. We shall ensure that underused land is brought forward for development. Only as a last resort will we consider using agricultural or green belt land.
    Mr. Douglas-Mann: Is not the one principal measure that the Government have taken that of virtually stopping all building? Has the Minister had an opportunity to consider yesterday's report of the Select Committee on the environment, which predicts that building starts in the private sector will stay at 100,000 and that starts in the public sector will decline to 31,000? Is that not the sort of measure that the Government are taking, rather than the measures indicated by the Minister?
    Mr. Fox: In due course the Government will give their answer to the issues raised at yesterday's meeting of the Select Committee. My responsibility is for land availability. The Labour Government were not very successful in building houses or in providing land. We intend to ensure that when our economy expands—[HON. MEMBERS: "When?"] That will come sooner than Labour Members realise. Our intention is to ensure that shortage of land will not be a detriment to building the number of houses that we deem to be necessary.
    Mr. Chapman: Will my hon. Friend establish beyond doubt that at least 50,000 acres of agricultural land are used for development purposes of various sorts, while at the same time probably a quarter of a million acres are lying derelict or unused in our large towns or conurbations? I recognise the progress that the Government have made in utilising derelict urban land, but will he ask his right hon. Friend to consult the Minister of Agriculture, Fisheries and Food to ascertain whether fresh initiatives can be taken to encourage the conservation of agricultural land?
    Mr. Fox: Our relationship with the Ministry of Agriculture, Fisheries and Food is on an ongoing basis. The difference between this Government and the Labour Government is that our Departments work closely together. I assure my hon. Friend that Environment Ministers, and sometimes Ministers from the Ministry of Agriculture, Fisheries and Food, are involved when it comes to the use of green belt land. A register of derelict land is being prepared. I take note of my hon. Friend's remarks.
    Mr. Hardy: Will the Minister tell the House a little more about the relationship between his Department and the Ministry of Agriculture, Fisheries and Food? It may be ongoing, but we do not know where it is going. Have the Department's consultations on conservation covered the deplorable proposals which the Ministry of Agriculture, Fisheries and Food has put before the House, which will make the Government's already deplorable record on conservation quite outrageous?
    Mr. Fox: The hon. Gentleman tempts me to give an ongoing answer, but I shall resist that. We shall be prepared to defend our record on conservation, certainly when it is compared with that of the previous Labour Government. What we have done already is quite an achievement.

    Herbicide 2,4,5-T
    5. Mr. Hooleyasked the Secretary of State for the Environment if he will issue a circular to local authorities on the use of the pesticide 2, 4, 5-T in municipal parks, gardens or on highway verges.
    The Minister for Local Government and Environmental Services (Mr. Tom King): The need for advice will be considered in the light of the Government's conclusions on the present review of 2, 4, 5-T by the Advisory Committee on Pesticides.
    Mr. Hooley: Will the Minister accept that that at least gets us somewhere? Is he aware that Sheffield has already banned the use of this dangerous pesticide? Will he encourage other authorities to follow that excellent example?
    Mr. King: The hon. Gentleman will be aware that the matter has been considered before. I have here the review
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    of the safety of the use of the herbicide 2, 4, 5-T in the United Kingdom, dated March 1979, which was submitted by the chairman of the Advisory Committee on Pesticides to the hon. Member for Edinburgh, East (Mr. Strang) when he was Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food. In view of further evidence, the advisory committee is reconsidering the matter. The National Union of Agricultural Workers has also produced a dossier of evidence, which is being reviewed. The advisory committee will then report.
    Mr. Latham: Does my right hon. Friend know whether local authorities use that pesticide in municipal parks and gardens, and along highway verges?
    Mr. King: My understanding is that it is used by local authorities. One or two have decided temporarily to cease to use it. The hon. Member for Sheffield, Heeley (Mr. Hooley) referred to one such authority.
    Mr. Concannon: Due to disquiet about that pesticide, will the Minister accept that it may not be a bad idea to ask local authorities to keep a register of where it is used in their localities?
    Mr. King: The advisory committee will report shortly. The last report was only 16 months ago. The Royal Commission on environmental pollution, in its seventh report on agriculture and pollution, also considered the matter but did not suggest that such steps were necessary. All pesticides, even, for example, sodium chlorate, are dangerous. The question is the method and extent of their use. That is why we should adopt a sensible approach, and the Government feel that it is right to take the advice of the best qualified advisory committee on the matter.

    Programme and Partnership Authorities
    6. Mr. Anthony Grantasked the Secretary of State for the Environment to what extent programme and partnership authorities have attracted private investment for urban renewal in their areas.
    16. Mr. Thompsonasked the Secretary of State for the Environment to what extent programme and partnership authorities have attracted private investment for urban renewal in their areas.
    Mr. King: It is not possible to measure the amount of private investment in urban renewal deriving from the many activities of partnership and programme authorities. However, my right hon. Friend made it clear in his statement on inner cities policy last September that urban programme resources should help create the right conditions for private investors.
    Mr. Grant: Does my right hon. Friend agree that a great deal more can be done? I appreciate that he cannot give orders, but will he do all that he can to encourage clearing banks, pension funds and insurance funds to change their attitude to investment in inner city and urban renewal?
    Mr. King: We are giving the matter the highest priority. In discussions that I had with the previous chairman of the Development Commission about the rural areas, I encouraged the enlargement of private sector finance, which enabled the commission virtually to double the resources available at a time of considerable public expenditure restraint. On the urban side, the Post Office superannuation fund has purchased 100,000 sq ft of new factory development, which otherwise might have fallen on the urban programme for Beckton, and the work by Legal and General in Team Valley is helping with funds. There is also the work by Commercial Union on a feasibility study for the Manchester central station site. All those projects are receiving private sector funds, and the burden does not fall entirely on public sector resources.
    Mr. Speaker: Order. I appeal for shorter questions and answers.
    Mr. Thompson: Will my hon. Friend consider ways to guarantee loans from building societies and other financial institutions in the more difficult urban areas?
    Mr. King: I apologise, Mr. Speaker, for the length of my previous answer, but there is a long list of private sector investment in these projects.
    There are a number of possibilities, and my hon. Friend has mentioned one. I cannot give a commitment, but we are anxious to examine every possible way in which to stimulate private sector regeneration of urban areas.
    Mr. Dixon: Will the hon. Gentleman accept that, when programme and partnership authorities were introduced by the previous Government, a promise was made that the matter would be kept under review? It he aware that South Tyneside metropolitan district council, which covers my constituency of Jarrow and the constituency of my hon. Friend the Member for South Shields (Dr. Clark) has an unemployment rate of 174 per cent. or 11,784 men, women and children out of work, and only 154 notified vacancies? Will he consider regrading South Tyneside from a programme to a partnership authority?
    Mr. King: We have been considering reviewing authorities. We have protected the volume of resources available for the urban programme, but it is not possible at present vastly to expand them. It is important to sustain programmes in designated areas so that we can see what results are achievable and monitor progress. I hear what the hon. Gentleman says, but will he understand that if one dissipates it widely it will be difficult to judge the impact of the urban programme.
    Mr. Steen: As one of the problems of inner cities is the refusal of banks, insurance companies and large financial institutions to invest in inner cities, will the Government consider setting up a register, not of derelict public land, but of the amount of money that the clearing banks are investing in the inner areas to show how much they are concerned about urban renewal?
    Mr. King: We are having discussions with a number of major companies, institutions and clearing banks about the ways in which they can contribute to that important objective. I shall bear in mind my hon. Friend's point.
    Mr. James A. Dunn: Is the Minister aware that in spite of the information that he has given today about companies and institutions moving towards investment and changing their attitudes, there is still concern about enterprise zones? Is he further aware that those bodies would like to know all the conditions attached to the establishment of the zones before making the final disposition of the allocation of their resources, to see what advantages would accrue if they sited themselves there?
    Mr. King: My right hon. Friend the Prime Minister made an announcement yesterday, and my right hon. Friend the Secretary of State will answer a further question on the matter today. The information about enterprise zones and our proposals will therefore become much more widely available. We see them as a major step in encouraging enterprise in some of the most derelict areas of our industrial cities. We hope that they will make a useful contribution to regeneration.

    New Town Policy
    7. Dr. Mawhinneyasked the Secretary of State for the Environment when he expects to announce the results of his review of new town policy.
    Mr. Stanley: The Government's conclusions on target dates for winding up the development corporations of the first and second generation new towns were stated in my reply to my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) on 23 June. We expect to announce our conclusions on the third generation new towns before the end of the year.
    Dr. Mawhinney: Bearing in mind the uncertainty about how much agricultural land will need to be used, and about whether enough jobs can be created to meet current third generation target figures, will my hon. Friend ensure that that announcement is made as quickly as possible?
    Mr. Stanley: I recognise what my hon. Friend says about the need for the maximum degree of certainty. These are important decisions. They affect six major new towns, and they require careful evaluation. We shall do all that we can to produce the results for the third generation as soon as possible before the end of the year.
    Mr. Graham: Is the hon. Gentleman aware that there is frustration and despair in the new towns? When the long-delayed and long-awaited policy emerges, will it reflect the opposition that I and the hon. Gentleman's colleague heard at Harlow at a conference on new towns? Is he aware that there is particular hostility to selling commercial and industrial assets and the terms on which Development Corporation housing is
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    likely to be transferred to district councils?
    Mr. Stanley: I have almost completed a series of visits to third generation towns, and I have visited towns in the North-East. It is not my view that there is a mood of frustration and despair. Each of the new towns that I visited is making an important contribution to industrial development and the creation of new jobs.

    Housing Stock (London)
    8. Mr. Christopher Priceasked the Secretary of State for the Environment if he will publish in the Official Report his correspondence with those London boroughs which have yet to complete the takeover of housing stock from the Greater London Council.
    The Under-Secretary of State for the Environment (Mr. Geoffrey Finsberg): I have today placed copies of the consultation letter sent to local authorities, and other relevant correspondence, in the Library of the House.
    Mr. Price: Why did the Minister, earlier this month, send bullying letters to the eight London boroughs, giving them wholly inadequate time to respond, when his own powers were in doubt? Although no date has been set, the eight London boroughs have decided to appeal. Will the Minister delay the enforced handover of dilapidated housing, which in many cases has been stripped of decent assets, until the courts have disposed of the matter, instead of continuing to ride roughshod over the courts?
    Mr. Finsberg: The Government, unlike their predecessors, do not try to ride roughshod over the courts. The situation is perfectly clear. As was said in the letter, consultation was without prejudice to the outcome of proceedings brought by certain local authorities.
    Mr. Squire: Will my hon. Friend reconfirm that the sooner Greater London is treated in the same way as the rest of the country, and has one housing authority and one level of responsibility instead of two, the better it will be for all concerned? Many of us would consider that to be a substantial improvement.
    Mr. Finsberg: I note what my hon. Friend has said. I think he will understand that if I expressed any view on

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    the merits of the case I should be prejudging my right hon. Friend's decision, which he must take in a quasi-judicial capacity.
    Mr. Tilley: Does the hon. Member intend, after the court case is settled, to consult the tenants direct? People in my constituency bitterly oppose the prospect of the handover, not for any love of their Tory GLC landlords, but because the financial provisions that are on offer from the GLC mean that the boroughs will not have the necessary money to put right the rundown state of those estates after three years of Tory rule.
    Mr. Finsberg: Of course we shall take account of any views that tenants care to express. It is interesting to recall that about two years ago the London borough of Camden asked its GLC tenants what they wanted. When they said that they wanted to be transferred to Camden, the council appeared to drop the results of that questionnaire.
    Mr. Nicholas Baker: Will my hon. Friend encourage the London boroughs and the GLC, by correspondence or any other means, to solve their own housing problems in their own areas and not to purchase land for housing in rural areas?
    Mr. Finsberg: As my hon. Friend knows, the purchase of land in areas outside London requires permission from the Secretary of State and is, in any case, contained in the allocation of money under the annual programmes. The wholesale grabbing of land that went on under the last Administration will not find favour with this one.

    Housing (Homeless Persons) Act
    9. Mr. Soleyasked the Secretary of State for the Environment if he will give guidance in accordance with section 12 (2) of the Housing (Homeless Persons) Act 1977 to all authorities having international ports or airports within their areas on the implementation of the Act.
    Mr. Geoffrey Finsberg: A code or guidance already exists for the use of all authorities with responsibilities under the Act. We are currently reviewing both the Act and the code of guidance to see whether any changes may be necessary.
    Mr. Soley: Will the Minister bear in mind that some boroughs, particularly
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    Hillingdon, have already turned down offers of help from the GLC? Will he take this opportunity to remind the London borough of Hillingdon that it is morally objectionable to use homeless families as political pawns to serve its own rather dubious political ends?
    Mr. Finsberg: I doubt whether the hon. Member is qualified to ask me to tell the London borough of Hillingdon its moral duties. I am satisfied that the views of the London borough of Hillingdon—and the views of the London Boroughs Association, which have been conveyed to the Government—will be given due weight in the review.
    Sir Albert Costain: Does the Minister appreciate that it really is pathetic to make a political issue out of this? Does he also appreciate that in the Channel ports, for example, there is a special problem, and that people on the housing waiting lists suffer very severely? They will continue to do so until there is some revision of the rules.
    Mr. Finsberg: I understand the frustration of thousands of people on waiting lists who find that their places, which they have been keeping for years, are suddenly overtaken for one reason or another. That is why the Government are taking some time to consider the whole process. If my hon. Friend's authority wishes to express any views, it should do so as soon as possible.
    Mr. Winnick: In view of the Select Committee's report, published yesterday, is it not clear that the Government's policies are leading to an acute crisis that will make many more people homeless? Why should thousands of people, waiting desperately for housing, have to wait longer and longer on the waiting lists and become homeless as a result of Tory domga over council housing?
    Mr. Finsberg: In view of the dogma of the Labour Party in trying unsuccessfully to kill shorthold, such a criticism lies ill in the mouth of the hon. Member. With regard to the press reports about the Select Committee, I must tell the House that when the Government have a chance to read the Committee's report in full, a comment will be made, as is normal.
    Mr. Shersby: Does my hon. Friend agree that it was not the intention of Parliament in 1977 to impose on a borough such as Hillingdon, which has an international airport within its boundaries, a national duty to house people from all over the world at the expense of the indigenous population of that borough? Is my hon. Friend aware of the amendment in the names of 56 hon. Members to early-day motion No. 786? Will he amend the Act as soon as possible in the interests of the people of this country? [Interruption.]
    Mr. Finsberg: We are reviewing this matter as quickly as we can. I understand the depth of sincerity with which my hon. Friend puts the views of his constituents, and I find it somewhat objectionable to hear the comments from the Labour Benches.

    Domestic Rating System
    10. Mr. Knoxasked the Secretary of State for the Environment what representations he has received supporting the domestic rating system.
    Mr. Heseltine: None, Sir.
    Mr. Knox: Does that not suggest, to put it mildly, that the domestic rating system does not have many friends? In view of the unfairness of the system, particularly to single-income households, when will my right hon. Friend introduce legislation to abolish or reform the system?
    Mr. Heseltine: Had my hon. Friend turned the question the other way around, the answer would have been very different. I am considering the issue of domestic rates. In my Department we have begun working on the alternative to the present system. I shall have to ask the House to bear with me until we are able to complete the detailed work that is necessary to enable us to take a considered judgment before bringing any proposals to the House
    Mr. Marks: I am sure that the Secretary of State has in front of him the figures that would result from increasing VAT or income tax to provide the equivalent of the domestic rate. Will he give us those figures? In view of his dictation to local authorities, is it not
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    time that those taxes took over some of the burdens of domestic rates?
    Mr. Heseltine: It would be wrong to give the impression that the Government are committed to those alternatives. We are looking at all the alternatives, of which those are only two. It would be wrong to plant figures in the minds of hon. Members as if that indicated the only option that the Government were considering.
    Mr. Murphy: Will my right hon. Friend confirm that a poll tax is among the alternatives that he is considering?
    Mr. Heseltine: Yes. I am looking at the poll tax, in that I see it as my duty to look at all the alternatives. That is one of them.
    Mr. Straw: Why should the House show any patience with the Secretary of State, bearing in mind that in 1976 he said that the abolition of the domestic rating system was one of the wisest political commitments that he and his party had ever made? Did he make that statement not knowing how he would replace the domestic rating system? As the alternatives to domestic rating were well aired in the Layfield report, which does he intend to pursue—local income tax, a block Government grant or a local sales tax?
    Mr. Heseltine: The hon. Member might wait until we look at all the alternatives. He should remember that since the initial commitment was made to abolish domestic rating we have had a Labour Government who dramatically increased the levels of income tax. It is the reduction of that income tax that has priority over and above the question of domestic rates.

    Water Authorities
    11. Mr. Temple-Morrisasked the Secretary of State for the Environment if he will make a statement of progress on his monitoring of the water authorities.
    Mr. King: I am currently considering a number of issues arising from my meetings with water authority chairmen and chief executives, including issues of accountability and manpower levels. I am also considering the performance aims to be set for next year. The most recent batch of references to the

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    Monopolies and Mergers Commission included a major water authority.
    Mr. Temple-Morris: As a result of my right hon. Friend's inquiries, has he been made further aware of the unsatisfactory situation whereby water charges in some parts of the country greatly exceed those levied in other parts? This is largely unrelated to the efficiency or otherwise of the individual water authorities. What is the Government's approach to this not unimportant matter?
    Mr. King: My hon. Friend will have noticed that I referred in my answer to performance aims. One of the approaches that we are adopting is the introduction of performance indicators—initiated by the previous Government—following on to performance aims, to start to get a real measure of the performance of individual water authorities. It is true that they vary. This is due partly to the geographical situation and the availability of cheaper resources and partly to the incidence of smaller sewerage plants, as opposed to major, more economic plants. This is a matter of the general efficiency of the industry, to which we are giving particular attention.
    Mr. Crowther: Is the Minister aware that one of the most useful actions that he can take is to ensure that the authorities have adequate resources for capital expenditure so that they can do their job of reducing pollution in the nation's rivers, especially in the industrial areas? Does he realise that the progress that was being made in improving the badly polluted rivers Don and Rother in South Yorkshire has come to a stop because of the Government's attitude to public expenditure?
    Mr. King: I do not know what justification the hon. Gentleman has for the instance that he cites, of which I am not aware. We have broadly tried to safeguard the capital investment programme of the water industry, but it is a substantial programme. More than £100 million is being spent, for instance, on one sewerage scheme in Tyneside. The scale of resources required is massive to catch up with years of neglect and the acceptance of levels of pollution that are no longer acceptable. We shall do the best that we can within the resources available.
    Mr. Rathbone: Will my right hon. Friend accept that, because of the scale of expenditure by water authorities, it is crucial that they manage their own finances better? Is he aware that the Southern water authority, for instance, does not even have a finance committee to supervise those expenditures? I hope that he has taken that factor into consideration in his talks with them.
    Mr. King: My hon. Friend and a number of hon. Members came to see me about the Southern water authority. I am seized of the point that he made about its structure and how it operates without a finance committee. Water authorities have wide responsibilities and deal with substantial sums of public money. This is one of the aspects that I shall consider with the chairmen concerned.

    Enterprise Zones
    Mr. Nicholas Bakerasked the Secretary of State for the Environment if he is now able to announce the location of the proposed enterprise zones.
    Mr. Heseltine: My right hon. Friend the Prime Minister announced the locations of the proposed enterprise zones yesterday. Those for England are: on Tyneside, parts of Newcastle and Gateshead; on Merseyside, Speke; in Greater Manchester, parts of the Salford docks area and Trafford Park industrial estate; and in London's docklands, the Isle of Dogs.
    One or two further enterprise zones will be announced in due course. One of these will be in the Midlands. The other sites announced yesterday are at Belfast, on Clydeside, and in the Lower Swansea valleys. Questions on them are, of course, for my right hon. Friends the Secretaries of State for Northern Ireland, Scotland and Wales.
    Mr. Baker: Is my right hon. Friend aware that the Government's initiative on enterprise zones will be welcomed by everyone on this side of the House and the country as central to the regeneration of the economy? Will he when reviewing other potential sites, consider placing them in areas where the benefit from them will not be destroyed by hostile Labour authorities?
    Mr. Heseltine: I thank my hon. Friend for his support of this imaginative concept. I should go over old ground if I were to repeat that the object of the exercise is to establish enterprise zones in areas where there is a degree of welcome and co-operation. There are far more authorities asking for enterprise zones than we are able to provide. Large numbers of those authorities are Labour controlled.
    Mr. Parry: Has the Secretary of State received any proposals from the Freedom Association concerning enterprise zones suggesting that legislation covering health and safety, trade union organisation and minimum rates of pay should be ignored? If the Secretary of State receives any such proposals, will he reject them out of hand?
    Mr. Heseltine: I should have to look carefully to see who had written to me on what aspects of the matter to answer specifically the question that the hon. Gentleman has asked. I think that I can assure him that it would not be my intention, or that of my colleagues responsible for other facets of the legislation, to do anything that would prejudice public health or safety.
    Mr. Hawksley: When does my right hon. Friend hope to be able to announce the location of the Midlands enterprise zone?
    Mr. Heseltine: I hope to do so within the next few weeks. I realise that it is a matter of urgency. I would want to enable that area, once chosen, to catch up with the rate of progress that we hope to make in the areas already chosen.
    Mr. Jay: Do the Government intend to declare north Wandsworth an enterprise zone?
    Mr. Heseltine: I have to say to the right hon. Gentleman that we have announced the sites that we have chosen. There is a wide range of applications from other areas, but we shall be able to choose only another one or two in the first round. After that, there will undoubtedly be a significant pause. I am committed to one of the sites yet to be announced in the Midlands. It is unlikely that the one remaining candidate will not be chosen from somewhere in the North of England.
    Several Hon. Members rose—
    Mr. Speaker: Order. I shall call one more hon. Member from either side on this question.
    Mr. Nicholas Winterton: Does my right hon. Friend agree that it should be Conservative philosophy to have enterprise zones in every area of the United Kingdom, because that means less restriction, less government and more business? When will we get on with it?
    Mr. Heseltine: I hope that my hon. Friend will see yesterday's announcement as a step in the right direction, if not the culmination of all his wildest hopes. This is an important experiment. If the lessons work as we hope, there will be opportunities to apply them elsewhere. The House will realise that substantial public resources go with the commitment, at a time when these have to be conserved.
    Mr. Spearing: Does the Secretary of State agree that intervention is required by the Chancellor of the Exchequer, to the extent of about £50 million a year? If these zones are successful, even by the Government's criteria, it will mean that they are successful because of public money. If they fail, they will be a waste of public money. Are not both policies contrary to the stated belief of the Government?
    Mr. Heseltine: The hon. Gentleman is trying to make a narrow doctrinal point. I understand that the £50 million is the full cost of the rating concession that would fall to the Chancellor if the enterprise zones were successful. I must ask the hon. Gentleman to calculate the enormous increase in wealth, jobs and investment that will have been brought about if we find ourselves with a £50 million bill.

    Local Authority Staff (Car Allowance)
    14. Mr. John Huntasked the Secretary of State for the Environment if he will issue a circular to local authorities in respect of the level of car allowances for local government employees.
    Mr. King: No, Sir. The rate of car allowances for local government employees is negotiated nationally between the employers and the unions concerned.

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    and is thus a matter for each individual employing authority.
    Mr. Hunt: Will my right hon. Friend confirm that the rate per mile for local government employees now stands at the staggering figure of 31.5p, which means, on the basis of a car doing 30 miles to the gallon, that these town hall employees are being reimbursed at the rate of nearly £10 a gallon? How can that be justified? Is it not a further indication that the financing of local government administration is out of control?
    Mr. King: The way that my hon. Friend has put the question is somewhat misleading. The rate that he mentions is only at the bottom level, up to 1,000 miles. It falls smartly, in the same scale of cubic capacity, to 8-4p a mile for a car that is being used for more than 9,000 miles in a year. If my hon. Friend has based his question on the letter in The Times, I must tell him that the letter was extremely misleading. This is a matter for local authorities. We want them to negotiate in an effective and responsible way. While they are doing so, it would be helpful if the figures were accurately reported.

    Vacant and Underused Land
    15. Mr. Pawseyasked the Secretary of State for the Environment on what basis and by what criteria he selected the 21 areas where vacant and underused land would be registered; and if he will make a statement.
    Mr. Heseltine: The selection took into account the possibilities for land release in these areas, the opportunities this would give to developers, and the extent to which land records were already available. The districts chosen are also mainly urban in character since it is in urban areas that the benefits of registers are chiefly to be gained.
    Mr. Pawsey: I welcome that reply. Does my right hon. Friend accept that registers do not necessarily ensure that local authorities sell off their land banks? Does he agree, therefore, that he should take steps to ensure that land banks are reduced, to the general benefit of local ratepayers?
    Mr. Heseltine: I am glad to be able to commend to my hon. Friend the Local
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    Government, Planning and Land (No. 2) Bill, which gives me powers, in the last resort, to direct the disposal of the land that we are discussing. We are talking not only of local authority land, but of land owned by public bodies. Large acreages of land are owned by the nationalised industries.
    Mr. Heddle: I welcome my right hon. Friend's statement. Does he accept that 250,000 acres of vacant and derelict land are ripe for development? In the areas that he has not designated for registers to be set up, will he continue to encourage local authorities and other bodies to release land for sale by way of partnerships, for the building of "half and half" homes for people on local authority housing lists?
    Mr. Heseltine: I should like to go further. Once we have established a basis of understanding about the original 21 registers, I intend to move further and designate additional areas for registers. That is the most effective way of achieving the results that my hon. Friend has in mind. There is nothing to stop local authorities from getting on with the work of preparing for registers—an important step in bringing about a quicker disposal of land.

    Cheshire County Council
    18. Mr. Nicholas Wintertonasked the Secretary of State for the Environment if his Department is satisfied with the budget for expenditure in the next financial year by Cheshire county council; and if he will make a statement.
    Mr. King: We have no information regarding the expenditure plans of Cheshire county council for the next financial year. We have asked all authorities to reduce their expenditure in this financial year by 2 per cent. below what they actually spent in 1978-79.
    Mr. Winterton: I thank my right hon. Friend for that reply. Does he agree that it is increasingly difficult for hon. Members to explain to their constituents why their borough council can peg the rate for four consecutive years, while the county council increases its rate by more than 25 per cent. each year? Will my right hon. Friend examine Cheshire's expenditure plans carefully with that in mind? Does he accept that borough

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    councils can peg the rate, but that county councils are unable to do so because of their spendthrift policies?
    Mr. King: It is important to recognise the different services provided by the different levels of authorities. One cannot ignore the impact of Clegg on county council expenditure. It has had severe implications. It is difficult to explain what is happening in county, district and metropolitan counties. It is difficult to obtain accurate information so that electors, councillors and Members of Parliament understand what is happening. Clause 2 of our Bill has been welcomed widely because it will enable more meaningful information to be published by all authorities so that we have a better understanding about what is happening.
    Mr. Hattersley: Does the right hon. Gentleman agree that his hon. Friend's question reflects the fact that there is a great deal of uncertainty in many authorities, particularly in the county authorities, about how the Government's policies will operate next year? If it is the Government's intention to penalise 20 authorities on the transitional arrangements, may we be assured that even if the 20 authorities cannot be named before the recess, there will be a statement about the rules under which they will be penalised, under a Bill which has not been passed, but which the Minister intends to operate in November?
    Mr. King: The right hon. Gentleman knows that we cannot determine which authorities will be affected by the provisions until we have the revised budgets. It would be wrong not to wait for the revised budgets, which will determine the levels of spending proposed by the different authorities for this year.
    At the appropriate time we shall put before the House for its approval the rules and criteria by which we hope to operate the transitional arrangements under the increase order in November. It will be for the House to determine whether the rules and the approach are fair. That is the democratic procedure. The Labour Government operated a clawback procedure which did not involve the House, but which was an arbitrary exercise by civil servants.
    Mr. Hattersley: Will the Minister confirm that the clawback of which he is so
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    critical will operate next year? If the Minister proposes to penalise 20 authorities in November, is it not intolerable that such authorities will not know the rules under which action might be taken? I ask not for the names, but for the rules. Is the Minister aware that if we are not given them before the House rises the Opposition will pursue the matter in every way open to them?
    Mr. King: We have made clear in the House, in Committee and at length in circulars to local authorities, the ground rules for the transitional arrangements. They have been made absolutely clear, and local authorities understand the position. When we receive the revised budgets we shall be in a better position to give further information. We shall then put our decisions before the House for its approval or otherwise.

    Sports Council
    19. Mr. John Carlisleasked the Secretary of State for the Environment when he expects to meet the chairman of the Sports Council to discuss the allocation of resources for those sporting authorities who refused to participate in the Olympic Games.
    The Under-Secretary of State for the Environment (Mr. Hector Monro): This was one of a number of matters that I discussed very recently with the chairman and principals of the Sports Council at one of our regular informal meetings.
    Mr. Carlisle: Does my hon. Friend agree that the presence in Moscow of so many British athletes is an insult to the British Government and British taxpayers, who over the years have spent millions of pounds on providing facilities for them? Is it not about time that the Government either withdrew their facilities or asked the athletes to come home?
    Mr. Monro: The Government have made their position clear in relation to the Olympic Games in Moscow. Little more can be added at this stage. My hon. Friend will know that the Sports Council has not assisted financially in the transport or other arrangements for the team in Moscow.
    Mr. Dalyell: Is the Sports Council, or are civil servants, to give any money to

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    bodies such as the Royal Yacht Squadron and the equestrian team, which refused to go to Moscow? If that is so, is it because the Sports Council has refused to muddy its fingers, quite rightly in the opinion of many of us, in something that amounts to bribery by the Government?
    Mr. Monro: That is a convoluted question. The body to which the hon. Gentleman referred is not the Royal Yacht Squadron, but the Royal Yachting Association. The Government made a firm commitment to assist those sports which decided not to participate in Moscow, and that we are doing.
    Mr. Wilkinson: Does my hon. Friend accept that many of us, notwithstanding the politically mistaken view of the athletes who are participating in the games, have great pride in the achievements of British athletes in Moscow? Will he undertake not to take action that is in any way vindictive, petty or mean-minded?
    Mr. Monro: Of course we shall not take such action. I warmly welcome the successes of our medal winners and of the athletes who have broken British records in Moscow. However, I should have preferred them not to go, and to have taken the advice of the Government, bearing in mind that Russia has invaded Afghanistan and is committing atrocities there.
    Mr. Hattersley: As the Minister responsible for sport echoes the Prime Minister's good wishes to athletes who have won medals, may I ask whether the Prime Minister intends to follow precedent and give a reception for the team when it returns?
    Mr. Monro: The right hon. Gentleman will know that the Prime Minister and the Government do not indulge in U-turns. We have made it clear that we do not approve of our Olympic team being in Moscow. Naturally, it cannot expect a warm welcome on its return.

    Urban Development Corporations
    20. Mr. Bob Dunnasked the Secretary of State for the Environment when he plans to designate the area of the docklands urban development order.
    26. Mr. Peter Lloydasked the Secretary of State for the Environment when
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    he plans to designate the area of the two urban development corporations.
    Mr. Heseltine: I intend to make the orders designating the urban development areas in London and Merseyside docklands as soon as possible after the Bill receives the Royal Assent.
    Mr. Dunn: Will my right hon. Friend undertake to draw the boundaries to include some of the blighted hinterland of the London docks, especially the North Greenwich peninsular?
    Mr. Heseltine: If my hon. Friend will forgive me, I do not wish to give assurances at this stage about precisely where the boundaries will be drawn. In general terms, the hinterland of the disused docks is bound to be included, but I should not wish to go as far as to indicate which local authority areas are likely to be chosen.
    Mr. Steen: In view of the mess that Liverpool planners have made of the inner area of that city, will my right hon. Friend ensure that they have as little as possible to do with the planning necessary in the enterprise zone at Speke?
    Mr. Heseltine: I think that my hon. Friend will understand that the enterprise zone concept means that local and central Government have to agree the planning régime that will apply in each zone. It is a condition of establishing an enterprise zone that such agreement should be reached before designation. Therefore, it will be for me to establish in my own mind that the right conditions exist for an enterprise zone.
    Mr. James A. Dunn: Will the Secretary of State take an early opportunity to discuss with those on Merseyside the problem of the attraction of the three schemes—the inner city partnership the urban development corporation and now a new enterprise zone? There are not sufficient resources to support them all. Will the Secretary of State undertake a review, and at the same time examine, the criteria used to appoint people to office in the corporations?
    Mr. Heseltine: It is not necessary to have a review other than the continuing attention that is paid to these matters by my Department. We are apprised of the urgency of the real problems on

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    Merseyside. That is why we are giving them so much attention.

VANUATU (UNITED KINGDOM TROOPS)
Mrs. Dunwoody Mrs. Dunwoody (by private notice) asked the Lord Privy Seal when it is his intention to withdraw British troops from Vanuatu.
The Lord Privy Seal (Sir Ian Gilmour): In response to an earlier request from the Government of Vanuatu that we and the French should leave our troops on Santo for one week after independence we have agreed to do so. We have reason to believe that the French Government will also agree. British troops will, of course, remain under our control. Yesterday afternoon the Vanuatu Government asked both Britain and France to leave our troops in the country for a total of three weeks after independence. We are considering this. My hon. Friend is in Vila and we are in touch with him on the question of how best we can further assist this newest member of the Commonwealth.
Mrs. Dunwoody: We are happy to hear that British troops are to remain on the island for a limited period, but can the Minister give us an assurance that the writ of the central Government there runs throughout all the islands? An undertaking about that has been given in this House more than once. Can the right hon. Gentleman say that there is no danger of immediate secession by the rebel régime of Jimmy Stevens and that British citizens will be safe from harassment and possible violence?
Sir I. Gilmour: I hope that I can give an undertaking that British citizens will be safe from harassment and violence. The hon. Lady will be aware that negotiations have been in progress for some days and have only recently broken down. That is the reason why the Prime Minister of Vanuatu made the request referred to in my statement.
Mr. Dalyell: Is it not one thing for British Service men to ensure stability in a British Crown colony but something quite different to have them in a position in which they are at the service of those who may be of a particular group or faction in an independent State? Does
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that not alter the situation? Does the Lord Privy Seal understand that some of us are greatly concerned lest a week becomes three weeks and then runs into months, or even years? There must be a finite time limit.
Sir I. Gilmour: British troops being in that country while it is still a British colony is, obviously, different from their being in an independent country. I agree that there must be a finite period, and the point made by the hon. Member for West Lothian (Mr. Dalyell) will be an important factor when we consider our decision. The hon. Gentleman will also be fully aware that there are many precedents for British troops remaining in a country after independence. He will hardly have forgotten Malaya, but even if he has forgotten that he will not have forgotten Kenya or Tanzania.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to call the three hon. Members who have been rising. However, I hope that they will bear in mind that we are to have two short debates later today and other business before that.
Mr. Maxwell-Hyslop: Will my right hon. Friend confirm that, independence now having come to Vanuatu, it is no longer necessary to get the agreement of the French to anything that the Government of the United Kingdom decide to do?
Sir I. Gilmour: I am not sure that I agree with either the premise or the conclusion of my hon. Friend. It was not necessary before and it is not necessarily necessary now. But I think that my hon. Friend will agree that since we are dealing with a former condominium it is desirable that we should, if possible, work in full conjunction with the French.
Mr. Hooley: In the event that the newly independent State requests some form of United Nations or Commonwealth presence in the early days of independence, would such a request receive support from Her Majesty's Government? Is there any evidence that American commercial interests are still interfering in the affairs of the territory?
Sir I. Gilmour: I have no information concerning the second part of the hon. Gentleman's question. In relation to the

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first part, it would be entirely a matter for the new Government of Vanuatu.
Mr. Christopher Price: The Lord Privy Seal said that negotiations have been going on for some days. Is he aware that negotiations have been going on for several years and that no agreement has been reached with Jimmy Stevens? Is the right hon. Gentleman further aware that Walter Lini's Government looks to Britain to safeguard their interests against French and American commercial interests? Will he assure the House that British troops will not be withdrawn from the New Hebrides unless French troops are withdrawn simultaneously?
Sir I. Gilmour: I hope that the hon. Gentleman will give me credit for understanding that negotiations have been in progress for a long time. I was, of course, referring to the most recent negotiations. The second part of the question seems to be expressed in unduly contentious terms. I should not like to endorse that. The third part of the question is genuine, but at this stage I do not wish to go further than my original answer to the hon. Member for Crewe (Mrs. Dunwoody).

BRITISH NATIONALITY
The Secretary of State for the Home Department (Mr. William Whitelaw): With permission, Mr. Speaker, I will make a statement about the law on nationality.
It has long been recognised that our nationality law is out of date. The previous Government published a Green Paper in 1977. We said in our election manifesto that we would introduce a new British Nationality Act. I have published today a White Paper that contains our proposals for legislation. A Bill will be introduced as soon as parliamentary time permits.
It is widely accepted that we need a new citzenship, confined to those who have close connections with the United Kingdom. We propose that this should be known as British citizenship.
The Green Paper proposed that all those citizens of the United Kingdom and colonies who did not become British citizens should become British overseas citizens. We have, however, been impressed with the argument that a separate citizenship should be established for the dependencies as a whole. We propose that this should be called citizenship of the British dependent territories. I emphasise that the establishment of this separate citizenship will not alter the United Kingdom's obligations and commitments to our overseas territories.
Those who are now citizens of the United Kingdom and colonies but do not qualify either for British citizenship or for citizenship of the British dependent territories will become British overseas citizens.
Children born in the United Kingdom, the Channel Islands or the Isle of Man will normally acquire British citizenship by birth, but we think that in principle there is a good case for providing, with the safeguards contemplated in the White Paper, that a child of parents neither of whom is a British citizen and neither of whom is settled here should not acquire British citizenship solely by his birth in the United Kingdom.
A British citizen by birth, whether male or female, will transmit his or her citizenship to the first generation born abroad, and, normally, to the first generation

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only. But children born abroad to Crown servants who are British citizens will be citizens by birth, and there will be special provisions for children born abroad to certain other people who have close connections with business and other organisations based in the United Kingdom, or with some international bodies.
All adults, whether Commonwealth citizens or foreigners, who wish to obtain British citizenship will do so by naturalisation. The present automatic entitlement of wives to obtain our citizenship by registration will be ended. Instead, both husbands and wives will be able to apply for naturalisation on the same terms as. others, though after three years' residence instead of five.
The present entitlements to acquire citizenship by registration possessed by wives and by Commonwealth citizens who were settled here before 1 January 1973 will be preserved for an interim period of two years. After careful consideration we have decided not to introduce any restrictions on the holding of dual nationality by those people who come here and acquire British citizenship by naturalisation or registration.
Citizenship of the British dependent territories will be acquired under the same general pattern as that proposed for British citizenship. This citizenship will not give the right of entry to a dependency other than that with which a person is connected.
British overseas citizenship represents, in essence, the relationship with the United Kingdom held by people connected with countries that were once part of the British Empire, or whose ancestral connections with the United Kingdom or its present dependencies are not sufficiently close to qualify them for British citizenship or citizenship of the British dependent territories. Children born after the Act comes into force to parents who have become British overseas citizens will not themselves hold that citizenship.
I make it clear once again that we shall continue to recognise the special position, for immigration purposes, of certain United Kingdom passport holders, mainly from East Africa, and we shall maintain our undertaking to continue the special voucher scheme for them.
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It will no longer be necessary to use the term "British subject" as the common status of all people connected with the Commonwealth. In the Bill, the only expression denoting the common status of all people connected with the Commonwealth will be "Commonwealth citizen"
All those who have citizenship of the United Kingdom and colonies at the time when the Act comes into force will acquire one of the new citizenships. No one who is then a citizen of the United Kingdom and colonies will be left without a citizenship. Generally speaking, those citizens who or whose parents or grandparents were born, adopted, naturalised or registered in the United Kingdom will become British citizens. Those citizens of the United Kingdom and colonies from overseas who have been here for five years and are settled will also become British citizens.
There is a small group of people, formerly stateless, and most of them children, who have become patrial by registration overseas and who we think ought to be given whichever citizenship their mothers acquire. Apart from these, every citizen of the United Kingdom and colonies who is patrial will become a British citizen, and no one who has the right of abode in this country will lose it. In the long term, only British citizens will have the right of abode. But individual people who are not citizens of the United Kingdom and colonies but now have the right of abode will retain it. The Bill will not adversely affect the position under the immigration law of anyone who is lawfully settled in the United Kingdom, whether or not he becomes a British citizen. Nor will it affect our commitment to admit the wives and dependent children of men lawfully settled here.
When the Act comes into force there will be some applications for citizenship still outstanding. The Bill will provide that an application for citizenship that has been properly made and is still under consideration at the time when changes in the law come into effect should be dealt with according to the law at the time when it was made, though if citizenship is granted it will, of course, be whichever of the new ones is appropriate.
Mr. Speaker, I commend our proposals to the House.
Mr. Merlyn Rees: I have had the White Paper—quite properly—for only a short period. Although I have been concerned with and about the nationality legislation for over 10 years, I must admit to finding the White Paper a complicated matter. I hope, therefore, that before we reach the point of producing legislation a way will be found of discussing these issues—perhaps in Select Committee fashion, or something like it—so that when we discuss principles we shall not be bogged down with British citizens without citizenship, protected persons, and so on. There are principles to discuss and we ought to get the basic material cleared up.
Given the amount of material in the White Paper, I wish to raise only matters of general important principle. Do the Government intend to hold a meeting of members of the independent and equal Commonwealth countries to discuss the issues concerned? Do all the countries in the Commonwealth wish to continue with Commonwealth citizenship? Are they prepared to give us reciprocity with the steps that will be taken in the new legislation? When we in the Labour Government were discussing this sort of legislation I found some Commonwealth countries who kept their distance and seemed to regard it as a matter for us, whereas we are legislating on a Commonwealth basis.
I do not think that the EEC is mentioned in the White Paper, but are there any implications for citizenship in the law of the EEC that ought to be taken into account before we legislate? What is the position of citizens of Pakistan in this country, given the changes that have arisen from that country's leaving the Commonwealth? Does the White Paper confirm that there will be full legal rights of citizenship on British women? There are three factors here. There is the question of equal rights of transference of citizenship and of the equal entitlement of a spouse of either sex to nationality by registration. Is there to be equal treatment for foreign fiancés and spouses, with the same right of entry regardless of sex?
The right hon. Gentleman spoke of people being left without citizenship. However, he said in his statement:
"There is a small group of people, formerly stateless and most of them children, who have become patrial by registration overseas, and
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who we think ought to be given whichever citizenship their mothers acquire."
Is that a qualification?
At a first look I cannot see the case for three citizenships rather than two. In our Green Paper the Labour Government suggested two. What prompted the Government to go to the third classification? We believe that the right hon. Gentleman is right to propose that British citizenship should descend only to the first generation of children born abroad. Will he, however, take into account the words that he used in his statement:
"we think in principle there is a good case for providing, with the safeguards contemplated in the White Paper, that a child of parents neither of whom is a British citizen and neither of whom is settled here"—
on the face of it that is fine—
"should not acquire British citizenship solely by his birth in the United Kingdom."
I am concerned a little about the way in which that is put.
The right hon. Gentleman did not refer to the Irish Republic in his statement, but it is dealt with in the White Paper. May I congratulate him on maintaining the status quo of section 2 of the 1948 Act?
Mr. Budgen: Why?
Mr. Rees: Because it is good sense.
Mr. Budgen: Why is it good sense?
Mr. Marlow: Why should they be treated differently from other foreigners?
Mr. Rees: If Conservative Members want to shout they should shout at the Home Secretary, not at me.
With regard to dual nationality—a subject on its own—while I feel strongly that acquisition of citizenship must be a positive act of identification with this country, I think that there is good sense in paragraph 89 of the Secretary of State's statement.
Mr. Whitelaw: The right hon. Member for Leeds, South (Mr. Rees) asked many questions, to which I shall do my best to reply.
I agree that this is a highly complex and difficult subject, and that it is therefore right that the House should have an opportunity to discuss it. I fully respond to the right hon. Gentleman's idea that it might be discussed before the legislation, in some form of Select Committee

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or otherwise. That would be sensible, and with the permission of the Leader of the House—who seems to have left me—I consider that to be a reasonable proposition.
From the time of the Green Paper issued by the previous Labour Government, Commonwealth Governments have been aware of the general lines of our proposals. We do not plan to hold a meeting, but they are totally free to comment on the proposals. They all have different sorts of arrangements for us, and many different detailed plans.
I am given to understand that EEC law mainly concerns freedom of movement, not citizenship, and therefore there is no conflict with our proposals.
The position of Pakistan is the same as for other foreign countries now.
British women will have equal rights for the first time. They will be able to obtain nationality by naturalisation. The position regarding the immigration rules is separate from the Nationality Act, but I made clear at the time they were changed that if the Bill were passed we should consider the implications for British women.
On the question of people being left without citizenship, British overseas citizenship will provide certain protection, and I do not think that it should be undervalued. There will be British consular protection for British overseas citizens, and, at the same time, many of the people concerned will acquire the citizenship of the country in which they were born or of the country in which their mothers were born. That should meet the point raised by the right hon. Gentleman, but it can be carefully considered.
We changed to three citizenships instead of two because it was the wish of some of the dependencies concerned. We felt, after discussion with them, that this was a reasonable change.
The proposal about certain citizens of Eire being British subjects is limited. It is confined to people who were British subjects before 1949. The proposal does not affect civic rights, or the right to vote. The right of citizens of Eire to vote was given in the Representation of the People Act 1949, and if there is to be any change that Act will have
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to be amended. [HON. MEMBERS: "Why?"] That point can be argued, and my hon. Friends may wish to argue it. Since the right was given in the Representation of the People Act, if it is to be changed it would seem right to do so in that way.
I am grateful to the right hon. Gentleman for his support on the proposal for dual nationality. It is a sensible provision.
Mr. David Steel: Like the right hon. Member for Leeds, South (Mr. Rees), I have had only a cursory glance at the White Paper. Does the Secretary of State accept that there should not only be a debate in the House but that it would be an obvious candidate for a pre-legislation Select Committee? Some of the detailed provisions in the White Paper are extremely welcome, but does the right hon. Gentleman not accept that the White Paper as a whole does nothing to remove some of the repugnant, discriminatory features of the Immigration Act 1971? Whereas that Act divided our citizens into sheep and goats, this White Paper merely proposes to divide them into sheep and two lots of goats.
What will be the rights of entry for British protected persons? The White Paper is rather vague on that. What will be the future status of United Kingdom passport holders? Are the queues in other countries to continue indefinitely, or will this legislation assist people to gain their right of entry?
Mr. Whitelaw: Rights of entry are not affected by the White Paper, and the voucher system will continue. I should have thought that our citizenship proposal was a major step forward, and one that accorded with this country's position in the modern world. Our British citizenship, which gives full rights to British citizens, should be confined to those who belong to this country and who have a close relationship with it. We can also base all our future immigration control policies on the principle of our nationality and citizenship, which is a considerable advance in the modern world.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to allow 20 minutes for questions from Back-Bench Members in order to guard the business, and then I shall have to move on.
Mrs. Kellett-Bowman: Will my right hon. Friend reconsider his proposal not to include the Irish and their civic rights in the Bill?
Mr. Whitelaw: This is a nationality Bill, and therefore it is not concerned with civic rights. Civic rights should be dealt with separately.
Mr. Faulds: How will the White Paper affect someone such as my sister—a genuine sister who was born on the mission field, as I was, and who married a South African, but is now a widow, and who may wish to remarry and return to this country? How would it affect four of her children, two of whom are girls, who were born in Southern Africa, who might wish to marry Commonwealth—[Interruption.]
Mr. Speaker: Order. That is a very important question. If my sister were concerned, I should like the question answered.
Mr. Faulds: It should be an important question to Conservative Members who are always concerned about kith and kin.
How would the White Paper affect four of my sister's children, two of whom are girls, who might wish to marry Commonwealth or foreign citizens and return to Britain?
Mr. Whitelaw: It would be unwise of me to give a snap answer now, on which the hon. Gentleman's sister would subsequently rely as being entirely correct. I should prefer to look into the particular circumstances of the case if the hon. Gentleman will give me the details. I should then, of course, give a considered reply.
Mr. Edward Gardner: I welcome the White Paper as a valuable contribution to the debate on nationality, but will my right hon. Friend say when he expects parliamentary time to be given to permit the introduction of a new nationality Bill to replace our obsolete laws, so that our immigration rules can be firmly based upon our nationality laws? As this new legislation will be of profound importance, not only to this country but to other Commonwealth countries, including the territories of Hong Kong and Gibraltar, will my right hon. Friend assure
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the House that he will do everything possible to consult fully representatives of those Commonwealth countries before he introduces legislation?
Mr. Whitelaw: I am grateful to my hon. and learned Friend, who has made a considerable study of this matter. Indeed, much that is now planned is based upon proposals in the document that he put forward.
With regard to parliamentary time, I understand that although the doctrine has been somewhat eroded in recent years, one is not entitled to anticipate the Queen's Speech. Being an old traditionalist, I propose to maintain that position and refuse to anticipate the Queen's Speech, so I will simply say "As soon as possible".
As my hon. and learned Friend knows, we have already had considerable discussions with the dependencies, out of which has come the proposal for citizenship of the British dependent terrorities. We shall wish to hear all the comments from all sides. That is the purpose of having the White Paper. In the final event, when we have had all the comments a decision about the citizenship of this country must be a matter for this Parliament. I think that every Commonwealth country would accept that that should be the case.
Mr. Alexander W. Lyon: Will the Home Secretary give an undertaking that any Commonwealth citizens at present settled in this country will either become British citizens on day 1 or become eligible to be naturalised under the procedure outlined in the White Paper?
Secondly, among the many controversial issues of detail that arise, why has the Home Secretary included in the requirements for British citizenship those who have a right of abode by reason of a grandparent who was born in this country? Is not this a way of perpetuating the worst effects of patriality contained in the 1971 Act?
Mr. Whitelaw: First, with regard to those lawfully settled here, there is that undertaking.
Secondly, with regard to the grandparent position, the proposals cover the transitional period. It is, in my view, a sensible provision, but it is one of the details that can be argued.
Mr. Stanbrook: Is my right hon. Friend aware that our sense of national identity in this country is derived from a sense of common allegiance to Her Majesty the Queen? In those circumstances, are not the provisions in the White Paper regarding the continuation of the privilege for Irish citizens, dual citizenship, and transmission of British nationality by a mother living abroad to her children, things that will weaken the effect of that national identity? Should they not therefore be rejected?
Mr. Whitelaw: In the long term, the purpose of these proposals is to have a citizenship that is confined to those who basically belong to the United Kingdom. There are certain transitional arrangements to be made clear, but that is the fundamental purpose in the long run.
I have already answered the question about the Irish.
Mr. Bidwell: Will the right hon. Gentleman have in mind that during the course of the events that led to the giving of British citizenship or British passports to many East African people of Asian origin, a pledge was given by the Crown? Is it, therefore, necessary to carry on with the voucher scheme? Surely there cannot still be many people of that kind of origin who wish to come here. During the course of the discussion, will the right hon. Gentleman reconsider that matter, and particularly have in mind that the Select Committee in the last Parliament specifically recommended that British passport holders overseas in this category should be admitted forthwith unless they wished to remain and obtain their livelihood in other States, in which case they should take out citizenship of those States. Does he agree that there is a special obligation towards these people and that there is no necessity to keep them away any longer?
Mr. Whitelaw: The commitment of the Government concerning the special voucher scheme to the passport holders was based on the 1968 Act, brought in by a Government that the hon. Gentleman supported. That was our commitment. We have stood by it because it was a commitment of a previous Government. We continue to stand by it. The special voucher scheme must remain for the purpose of immigration policy.
Mr. Wilkinson: May I congratulate my right hon. Friend on having traced a remarkably careful path through a political and legal minefield, and add that the document is a work of great skill and very careful drafting which will commend itself not least to members of the Asian community settled in this country?
Will my right hon. Friend accept from me that the White Paper follows very largely the proposals of the Anglo-Asian Conservative Society's document "Passport to Britain", and that with regard to dual nationality and the rights of Commonwealth citizens settled in Britain the White Paper is slightly more generous than "Passport to Britain"?
Mr. Whitelaw: I am grateful to my hon. Friend, particularly for what he said about dual nationality. I shall pass on his kind remarks to the very skilled people who drafted the White Paper. The House will be fully aware that I was not one of them.
Mr. Jim Marshall: May I press the Home Secretary a little further concerning paragraphs 41 to 44 of the White Paper? He will remember that he failed to answer my right hon. Friend's question in this regard. Will he give a categorical assurance that those children covered by paragraph 44, born here prior to the legislation coming into effect, will not lose their British citizenship?
Mr. Whitelaw: Children born here prior to the legislation will be all right. That is the undertaking that I give.
Mr. Biggs-Davison: Another statute is involved, and there is a unique relationship with the Irish Republic—to use the expression in a recent communiqué—but are the Government contemplating that they should seek reciprocity in voting rights and the right to stand for Parliament?
Mr. Whitelaw: That is something that can be considered. It refers especially to the relationship that was enshrined in the original Acts between this country and the Republic of Ireland, and is somewhat different from nationality all over the world.
Mr. Tilley: In view of the confusion arising over the ending of the status of British subject, will the Home Secretary

1527
give a categorical assurance that Commonwealth citizens residing in this country who are not yet British citizens will, like Irish citizens, not lose any of their civic rights, including their right to vote, as a result of the White Paper?
Mr. Whitelaw: As I said in the original statement, I give an absolute assurance that the Bill will not affect the position under the immigration law of anyone lawfully settled here, whether or not he becomes a British citizen. I am glad to re-emphasise that. That also goes for civic rights.
Mr. Budgen: Does my right hon. Friend agree that many people in all parts of the country will be concerned because he has no proposals to end the anomaly of dual nationality? Will he not, on reflection, agree that the cohesion of our country depends upon the rights and obligations of British citizens being restricted to those who owe their principal allegiance to the British Crown and constitution?
Mr. Whitelaw: My hon. Friend should appreciate that some of the pressures for dual nationality come from all parts of the Commonwealth—the old Commonwealth as well as the New Commonwealth. Many people in all parts of the Commonwealth would be very upset if it were taken away. I hope that my hon. Friend will take that into account.
Miss Joan Lestor: Does the right hon. Gentleman recall correspondence that I have had with him and a discussion in this House with regard to the status of girls born abroad who have been adopted by families in this country, and whether they would be regarded as having the same rights as any other British girls to bring in a foreign husband? He may recall that his reply was that it would depend on the circumstances of the adoption.
Since this has caused a great deal of concern among many people in this country who have adopted such girls, will the right hon. Gentleman say whether his White Paper gives them that equal status? I find it rather confusing.
Mr. Whitelaw: Subject to correction, I think that I am right in saying that those who are adopted in this country would have the full rights. May I check
1528
that and inform the hon. Lady if I am wrong?
Mr. Kershaw: My right hon. Friend said that he would have no objection to dual citizenship for those who came here and acquired British citizenship by naturalisation or registration. How does that leave people who acquire dual citizenship by foreign process of law, who are otherwise British citizens but have dual citizenship wished upon them by the place where they were born?
Mr. Whitelaw: I understand that on that basis they can have dual citizenship, the same as the others.
Mr. Douglas-Mann: Does the Home Secretary agree that the proposals in the White Paper affecting young people-particularly paragraphs 44 and 78 to 82—are capable of creating great hardship to people who have spent most of their lives here and may suddenly be banished to countries in which they would be virtual strangers—for example, on the death of their parents? Does he further agree that the hardship under the existing regulations—I have in mind the case of Suto Miah, of which the right hon. Gentleman may be aware—should be alleviated rather than intensified? Will he assure the House that such discretion as he has under the regulations and will have under the new legislation is and always will be exercised with humanity and discretion?
Mr. Whitelaw: The hon. Gentleman fairly raises various immigration control points. As for children born here neither of whose parents are settled in or have a close connection with this country, it is fair to point out that we are referring, for example, to foreign students who may be here for a very short time. If that is the case, ours is a reasonable proposition.
Mr. Kenneth Lewis: Is my right hon. Friend aware that the House will be gratified to know that he does not propose to introduce a Bill in this Session? Under the title "Citizenship of the British Dependent Territories", will he explain how many citizens are involved and whether they will be able to come and live here?
Mr. Whitelaw: I understand that there are several million. I could read out the

1529
dependencies to my hon. Friend, but I do not think that either you, Mr. Speaker, or the House would wish me to do that. It is in appendix C of the White Paper. They have not got the right to come here.
Mr. Arthur Davidson: As the purpose of any legislation is to make sense out of the confusing state of the nationality law, what is the purpose of the third category of citizen? British overseas citizenship seems to confer no right of abode and a passport that is almost meaningless, and seems not to simplify the present law but to make it more confusing.
Mr. Whitelaw: The first point of simplification is the main purpose of full British citizenship. A British citizen is a person who belongs to this country and has full rights here. That is a new and sensible position, on which we can base our policies in future.
British overseas citizenship is in the main a transitional provision, as the hon. and learned Gentleman will see, because it is not transmitted.
Mr. Hal Miller: Does my right hon. Friend accept that there will be a wide welcome by dependent territories for the introduction of the third category? Will he assure the House that there will be an opportunity for further consultation, particularly about the name chosen?
Mr. Whitelaw: I shall stick to what I have said. There has been considerable discussion already. We are ready to receive comments. We could not say that we would go into a further long period of consultation, because we are coming to the point at which we must put legislation before the House.
Mr. Dubs: Is the Home Secretary aware that there will be a wide welcome for his assurances that the rights of people resident here will be fully safeguarded whether they be of Commonwealth or of Irish origin? Could he say a little more about the position of the third category—British overseas citizenship? What would be the position of such people under international law if for some reason they were to be deprived of their right of abode in the countries in
1530
which they are now residing? What would this country's obligations be in that respect?
Mr. Whitelaw: I understand that we are bound by the convention on the reduction of statelessness. We would consider any case against that background.
Mr. Bruce-Gardyne: Reverting to my right hon. Friend's answer to my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman), he said that it was not appropriate to deal with the position of Irish citizens in this country because this was not concerned with civic rights. Will he specify which parts of these proposals have nothing to do with civic rights?
Mr. Whitelaw: The proposals for nationality do not impinge on voting rights. That was the point that I was trying to make to my hon. Friend. They do not impinge on voting rights because voting rights arise from the Representation of the People Act. That is the position. I think that they are genuinely separate.
Mr. Bruce-Gardyne: Nonsense.
Mr. Whitelaw: My hon. Friend says "Nonsense". Voting rights are normally based on the Representation of the People Act.
Mr. Garel-Jones: Further to the question asked by my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne), I should like to press the Home Secretary a little further on civic rights and duties. Paragraph 14 of appendix A says that
"civic privileges do not stem directly from the law of nationality".
Does not the right to vote stem in part from one's position as a British citizen? If we are not to discuss the matter on this White Paper, will my right hon. Friend indicate when we might discuss the two serious anomalies, first, of British subjects resident abroad who are disfranchised and, secondly, of foreigners in this country who register as voters and vote?
Mr. Whitelaw: They are two different propositions. On the Irish position, I repeat what my right hon. Friend the Prime Minister said in answer to my hon. Friend the Member for Northampton,

1531
North (Mr. Marlow) on 20 November 1979:
"the Government has no proposals to change the unique position of Irish citizens living in this country who, although not British subjects, enjoy the privilege of voting in our elections."—[Official Report, 20 November 1979; Vol. 974, c. 90.]

DRAFT EDUCATION (ASSISTED PLACES) REGULATIONS
Mr. Cryer: I am grateful for the opportunity to raise what I consider to be an important point of order, Mr. Speaker. It concerns the Draft Education (Assisted Places) Regulations, which are to be dealt with tonight.
The Joint Committee on Statutory Instruments was established by a Standing Order of the House and the instructions to that Committee are set out in the current Standing Orders in page 97 and onwards. It is the duty of the Committee to examine instruments that are placed before the House. The instructions require the Committee to report to the House from time to time on matters laid before it and to make reports.
The regulations that are to come before the House tonight were first considered by the Committee on 29 July. That was the first occasion on which the Joint Committee considered the instrument. The Committee examined the instrument and asked for a memorandum from the Department.
The Committee cannot report to the House that the instrument is either within or without the criteria laid down by the Standing Order. The Committee must direct its attention to eight matters when considering an instrument. Therefore, it asked the Department for a memorandum, which it must have before making the report.
We are informed that the memorandum will be available by next Tuesday. In order to expedite matters, the Committee has also asked for witnesses to be present in case it wishes to elucidate the position further.
It is clear that if the instrument is dealt with tonight the Joint Committee on Statutory Instruments will not be able to carry out the functions and duties that the House has laid upon it. Therefore, I ask the Government to agree to withdraw
1532
the instrument until the Committee can fulfil its function of examining the instrument and obtaining the memorandum. I emphasise that it must obtain the memorandum, because that is laid down in the Standing Orders. The Department must be given an opportunity to present its case before the Committee makes the report. Arrangements have been made for that case to be given in writing and orally next Tuesday.
I submit that it is impossible for the House to consider the matter before the Joint Committee has completed its consideration and made a report. Under the circumstances, I ask that the instrument be withdrawn until the report is completed.
Mr. Foot: Further to that point of order, Mr. Speaker. We are deeply conscious that we are eroding the time that is available for the next debate, but the point raised by my hon. Friend the Member for Keighley (Mr. Cryer) is of extreme importance to the House. Before you give your ruling, Mr. Speaker, I submit that it would be inconvenient—and a great ill-usage to the House—if the Government were to proceed in these circumstances. Irrespective of your ruling. I trust that the Government will take the opportunity provided by my hon. Friend to say that we shall not proceed with the matter today. That might assist you with your verdict on the point of order.
The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): Further, to that point of order, Mr. Speaker. I am aware of the necessity not to cut into the time allowed for the Liberal Party debate. I am aware of what happened in the Joint Committee on Statutory Instruments. If it is a question of vires, and if the regulations are defective in any way on those grounds, the Government do not intend to move them. However, it may be that a political point is involved about the discretion held by my right hon. Friend the Secretary of State on that matter. I cannot make an off-the-cuff decision. I must consider it in greater detail during the course of the afternoon. I assure the hon. Member for Keighley (Mr. Cryer) that the rights of the Joint Committee will be respected. If there is any question of

1533
the regulations being defective in any way, or of being unsatisfactory on basic grounds, we shall not move them.
Mr. Foot: Further to that point of order, Mr. Speaker. I appreciate the remarks made by the Leader of the House, but it is not only a question whether the orders are defective. The House wishes to know the view of the Committee. We shall not know that view if the debate is held tonight. The only way in which the Government can deal satisfactorily with the matter is to say that they will not proceed with the question today. That would be best for the House. If the Government decide to debate the matter tonight we shall find ourselves in difficulty. As my hon. Friend the Member for Keighley said, the Joint Committee has the right to consider the matter according to the normal procedure. I hope that the Leader of the House will go further, because it is not only a question whether the regulations are defective.
Mr. Cryer: Further to that point of order, Mr. Speaker. I press the Leader of the House to withdraw the instrument for at least a week until the Joint Committee has had the opportunity to consider it at its regular weekly meeting. The Committee has asked for the evidence. The right hon. Gentleman said that he would consider whether a question of vires had been raised. We have asked a wide range of questions. It is not for the right hon. Gentleman to judge what the Joint Committee will do about the instrument. There are eight separate bases on which the instrument can be reported to the House, including vires. It is wrong for the right hon. Gentleman to prejudge the position. If we do not give the Department the right to present its point of view the Committee will be in breach of the duty laid upon it. If the Leader of the House will not withdraw the instrument, he will also be in breach of the Standing Orders of the House.
I appeal to the right hon. Gentleman to withdraw the instrument for a week to give the Committee a proper opportunity to make its judgment.
Mr. St John-Stevas: Further to that point of order, Mr. Speaker. I am taking fully into consideration everything that
1534
the hon. Member for Keighley said, but it is unreasonable to ask for a snap decision. I must have time to consider the complex issues involved. I have given an undertaking that the interests both of the Committee and of the House will be fully taken into account.
Mr. Kinnock: Further to that point of order, Mr. Speaker—
Mr. Speaker: Order. I shall take the point of order raised by the hon. Member for Bedwellty (Mr. Kinnock), but I remind him that there are two short debates to follow. I warn the House that an enormous number of hon. Members wish to speak on textiles.
Mr. Kinnock: Further to that point of order, Mr. Speaker. I am aware that there are two debates to follow. That is why I was reluctant to make an earlier contribution. I hope that it is within the consideration both of yourself, Mr. Speaker, and the House, that there is no rush about this business. All the time that is needed can be taken to observe the rights and to enable the duties to be fulfilled by the Committee chaired by my hon. Friend the Member for Keighley (Mr. Cryer). There is no political implication involved.
Mr. Speaker: I am sure that that point will be noted.

BRITISH STEEL CORPORATION v. GRANADA TELEVISION
Mr. Greville Janner: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the effect of today's decision of the House of Lords, in the case of the British Steel Corporation v. Granada Television, upon the freedom of the press."
The decision will give any court the power to order any journalist to reveal his source of information about any matter. If the journalist refuses, he is, by definition, in contempt of court and liable to be imprisoned. The decision extends to the protection of private interests—a power previously and rarely exercised for the protection of the public in matters of the security of the State, such as that of the Daily Mail journalist, Mulholland.

1535
As no journalist will reveal his source, the immediate and damocletian nature of the danger suspended over the heads of all journalists is obvious. The matter is specific, urgent and important. I hope that there will be a space later tonight, when another debate may be postponed for a week, when this matter can be discussed.
Mr. Speaker: The hon. and learned Member for Leicester, West (Mr. Janner) gave me notice this morning, before 12 o'clock that he would seek leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the effect of today's decision of the House of Lords, in the case of the British Steel Corporation v. Granada Television, upon the freedom of the press."
I listened with care to what the hon. and learned Gentleman said. As the House knows, I am directed to take into account the several factors set out in the order, but to give no reasons for my decision. I have to rule that the hon. and learned Gentleman's submission does not fall within the provisions of the Standing Order. Therefore, I cannot submit his application to the House.

UNITED KINGDOM PARLIAMENT (RESUMPTION OF TRADING POWERS)
4.25 pm
Mr. Tony Marlow (): I beg to move,
That leave be given to bring in a Bill to restore to Parliament the right to raise tariffs, set quotas and to make anti-dumping regulations, notwithstanding the provisions of the European Communities Act 1972.
In seeking leave to introduce the Bill, which will restore to Parliament the right to raise tariffs, to set quotas, and to make anti-dumping regulations, I have two purposes. First, I wish to give the Government the necessary powers. Secondly, I wish to show the Government that, should they feel inclined to move in that direction, they will have the support of the House—even though the proposals could lead to a change in the nature of our relationship within the EEC.
It would be wrong at this stage to become bogged down in the theology of Europe. It is manifest, however, that
1536
we, geographically Europeans, are part of historic Europe. There are vast areas—political, economic and even sometimes military—where we must work together. In 1973 we joined at the wrong time the wrong institution, fashioned not for us but for the needs of others. The momentum of that commitment is such that some of us still continue to deceive ourselves that it is best to persist in damaging tactical activities—pregnant though they are with natural conflict, and thus wildly destructive of any sensible and necessary common strategy. We have fundamental and structural differences from Continental Europe. It is time that we recognised that we do not have a similar industrial or agricultural economy. We damage both ourselves and Europe unnecessarily so long as we pretend that we do.
What of the present arrangement? Despite the great success of my right hon. Friend the Prime Minister, the budget deal struck is far from satisfactory. When will we get back our money? Delay means borrowing, borrowing means interest, and time is cash. What strings are attached? Who holds them and by what authority will they be released? That is an obvious quarry in which my right hon. Friend the Member for Taunton (Mr. du Cann) and his Select Committee could properly excavate.
The criminal waste of the CAP runs on. Last year £4 out of £5 of the whole European budget, 60 per cent. of all Europe's spending, blued on surpluses—50p out of every pound that we sent to Brussels poured alone into milk and beef—butter balls for Comrade Brezhnev and contre-fillet and cutlets for the colonial colonels of Kabul. No Hindus ever cosseted such a sacred cow.
In all this muddle, harmful harmonisation proposals pour out of Brussels overriding the sovereignty of this House and bearing heavily, through cost and administrative burden, on our hard-pressed industry. Harmonisation, whose purpose is to equate trading environments throughout the EEC, is rendered pointless, dwarfed by the massive difference in fuel and financing costs within the different countries of the Community.
I come now the area in which there is an urgent need for legislation. On joining Europe we surrendered our right to an independent trading policy—to tariffs,

1537
to quotas, and to anti-dumping measures. Times have changed. The North Sea ensures that we have and will continue to have a strong currency—quite unrelated to our industrial performance or potential. In one year the paradoxical and simultaneous surge in both sterling and wages shattered our competitiveness by 25 per cent. Mr. Speaker, no other industrial economy has ever faced a similar problem, certainly no country bereft of its own trading powers but blessed instead, as we are, with more than its fair share of unproductive and declining industries.
Not surprisingly, the desk of my right hon. Friend the Secretary of State for Trade is smothered with an ever-growing mountain of pleas for help—textiles, footwear, foundries, paper, car components and now even wooden doors. Yet the poor fellow is powerless; there is nothing he can do. He has no authority, and few—and then only limited—voluntary measures at his disposal.
Of course, in our dramatically changing circumstances, some industries will die while others are born. That is evolution. But some need not and should not die. They have a viable future. But first they have to be steered past the rocks and currents that lie ahead. But what can my right hon. Friend do? After all, we have delivered the steering gear to Brussels.
We are threatened in two ways—first, from outside Europe. In nine years we have moved from balance of trade with Japan to a balance of two and a half times in Japan's favour. In such circumstances of imbalance, whatever my right hon. Friend might conceive, there could be no risk of retaliation. But sadly, as his powers are so limited, such conception could not lead to policies, however embryonic.
The men's footwear industry in my constituency, as elsewhere, is threatened by dumping from Czechoslovakia and the Third world. Salvation lies with Brussels. Cruelly, Europe's perception of its interest in trading with Comecon is quite different from our own. After all, Germany has its Ostpolitik. Italian ladies' shoes are unaffected. So the steamroller rolls on. Imports rush in, the industry declines, without the Minister having any
1538
direct influence whatever, and without a single European finger being lifted.
We are also threathened by Europe herself—efficient Europe, productive Europe, a Europe of unjustifiably cheap, unfairly cheap, energy, cheap currency and cheap finance; a Europe on a different competitive footing. And should we wish and should the Minister ever wish, there is nothing that he can do to nurse and protect our industries, our jobs and our constituencies from Europe's onslaught, the strength of which is daily reinforced by the necessity for them to seek fresh markets during the international recession.
Finally, a plea from the heart: please, no more bogus statistics. We must remember not that Europe is our fastest-growing market but that it is our greatest threat, the area in which our trade deficit in manufactured goods has become most marked, from balance to £2½ thousand million in eight short years.
This House has one purpose and that is to secure the best interests, long and short term, of the people of the United Kingdom. It has of itself no commitment to Europe save where that commitment enhances this basic function. Where treaties and Acts of Parliament conflict with that function, it has a bounden moral duty to seek all necessary modifications and amendments.
It is for these reasons that I believe that we must urgently return to Parliament the powers to supervise our own trade and return to our Government the ability to act on behalf of our people.
4.35 pm
Sir Anthony Meyer ()rose—
Mr. Speaker: Is the hon. Gentleman rising to oppose the motion?
Sir A. Meyer: Yes, Mr. Speaker.
My hon. Friend the Member for Northampton, North (Mr. Marlow) is concerned—who of us is not?—about the loss of jobs in many industries facing foreign competition, so he wants this country to set aside its treaty obligations by erecting our own national barriers to trade. This proposition is doubly foolish. It is foolish because, as the Prime Minister so forcefully pointed out yesterday,
"we do not feel that general import controls really deal with the problem and they could

1539
have very damaging effects on exports and on our industry generally. If trade is two-way, barriers also work two ways, and in this country there are a lot of jobs in exports. Indeed, one-third of our manufacturing output goes into export. We export a greater proportion of our GNP than all our major competitors—double that of Japan and four times that of the United States."—[Official Report, 29 July 1980; Vol. 989, c. 1306.]
Indeed, after the Prime Minister's speech yesterday, I am astonished that my hon. Friend has not withdrawn his Bill, as the hon. Member for Dunbartonshire, East (Mr. Hogg) so fruitfully withdrew his Bill yesterday.
If import controls have any role in saving jobs, whether in infant industries or in industries threatened by really unfair competition, this can be done only through the mechanism of GATT under article 19. The one field in which the EEC has proved outstandingly successful, even by the admission of its severest critics, has been in conducting negotiations under GATT, where it has been able to deploy, as the world's largest trading bloc, considerable powers for securing for its member States better deals than they could possibly have got for themselves had they negotiated separately.
By far the largest factor causing our terrifyingly high level of unemployment is the world recession. This—and we all know it perfectly well—can be cured only by effective international action to expand world trade. It can only be aggravated and perpetuated if each country takes measures to restrict international trade. For this country, which, as the Prime Minister said yesterday, exports a greater
proportion of its production than all our major competitors—for this country of all countries—to set an example of cutting trade would amount to suicide while the balance of our minds was disturbed.
What my hon. Friend is doing is pursuing his own vendetta against the European Community. He is entitled to his point of view. But membership of the European Community has been the policy of every Government since 1962. It was massively endorsed by the people in the referendum in 1975. It is and it remains the policy of the present Government and of the Conservative Party, and we shall not abandon it because it is temporarily unpopular.
I do not honestly see how any of my hon. Friends can possibly support a Bill which is so clearly contrary to the policy of the Conservative Party and contrary to the country's wider interests. I invite Opposition Members who still believe in international co-operation and in the importance of keeping our pledged word to think very carefully indeed before they enter, even for this one vote, into so dubious an alliance.
I invite the House to reject this foolish and faint-hearted measure.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—
The House divided: Ayes 136, Noes 153.

Division No. 436]

AYES

[1.40 pm

Aitken, Jonathan

Davis, Clinton (Hackney Central)

Harrison, Rt Hon Walter

Alexander, Richard

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

Hawksley, Warren

Bagier, Gordon A. T.

Deakins, Eric

Haynes, Frank

Barnett, Guy (Greenwich)

Dixon, Donald

Home Robertson, John

Bennett, Andrew (Stockport N)

Dobson, Frank

Hooley, Frank

Blackburn, John

Dubs, Alfred

Hughes, Roy (Newport)

Booth, Rt Hon Albert

Eadie, Alex

Janner, Hon Greville

Brown, Michael (Brigg & Sc'thorpe)

Eastham, Ken

Jay, Rt Hon Douglas

Budgen, Nick

Edwards, Robert (Wolv SE)

Jessel, Toby

Callaghan, Jim (Middieton & P)

Ellis, Raymond (NE Derbyshire)

John, Brynmor

Campbell-Savours, Dale

Evans, John (Newton)

Johnson, James (Hull West)

Carlisle, John (Luton West)

Fitt, Gerard

Jones, Barry (East Flint)

Carmichael, Nell

Flannery, Martin

Jones, Dan (Burnley)

Carter-Jones, Lewis

Fletcher, Ted (Darlington)

Kerr, Russell

Clark, Hon Alan (Plymouth, Sutton)

Fookes, Miss Janet

Kilroy-Silk, Robert

Clark, Dr. David (South Shields)

Foot, Rt Hon Michael

Kinnock, Neil

Cocks, Rt Hon Michael (Bristol S)

Forrester, John

Lambie, David

Cohen, Stanley

Foster, Derek

Leighton, Ronald

Cox, Tom (Wandsworth, Tooting)

Fry, Peter

Lewis, Arthur (Newham North West)

Crowther, J. S.

Graham, Ted

Lloyd, Peter (Fareham)

Cryer, Bob

Grant, George (Morpeth)

Lofthouse, Geoffrey

Cunningham, George (Islington S)

Greenway, Harry

McDonald, Dr Oonagh

Davidson, Arthur

Hamilton, James (Bothwell)

McElhone, Frank

Davies, Ifor (Gower)

Hardy, Peter

McNamara, Kevin

Marlow, Tony

Powell, Raymond (Ogmore)

Straw, Jack

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

Prescott, John

Summerskill, Hon Dr Shirley

Marshall, Dr Edmund (Goole)

Price, Christopher (Lewisham West)

Taylor, Mrs Ann (Bolton West)

Marshall, Jim (Leicester South)

Proctor, K. Harvey

Taylor, Teddy (Southend East)

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

Race, Reg

Thorne, Stan (Preston South)

Maynard, Miss Joan

Rees, Rt Hon Merlyn (Leeds South)

Urwin, Rt Hon Tom

Mikardo, Ian

Richardson, Jo

Varley, Rt Hon Eric G.

Millan, Rt Hon Bruce

Roberts, Albert (Normanton)

Wainwright, Edwin (Dearne Valley)

Miller, Dr M. S. (East Kilbride)

Roberts, Ernest (Hackney North)

Walker, Rt Hon Harold (Doncaster)

Mills, lain (Meriden)

Robinson, Geoffrey (Coventry NW)

Waker, Bill (Perth & E Perthshire)

Mitchell, Austin (Grimsby)

Rooker, J. W.

Weetch, Ken

Moate, Roger

Ross, Wm, (Londonderry)

Welsh, Michael

Molyneaux, James

Rowlands, Ted

White, Frank R. (Bury & Radcliffe)

Morris, Rt Hon Alfred (Wythenshawe)

Sheerman, Barry

Winnick, David

Morris, Rt Hon Charles (Openshaw)

Shepherd, Richard (Aldridge-Br hills)

Winterton, Nicholas

Newens, Stanley

Silkin, Rt Hon John (Deptford)

Woolmer, Kenneth

Orme, Rt Hon Stanley

Soley, Clive

Wright, Sheila

Palmer, Arthur

Spearing, Nigel

Young, David (Bolton East)

Parris, Matthew

Speller, Tony

Parry, Robert

Stallard, A. W.

TELLERS FOR THE AYES:

Pavitt, Laurie

Stewart, Rt Hon Donald (W Isles)

Mr. William Whitlock and

Pawsey, James

Stoddard, David

Mr. John Fart.

Powell, fit Hon J. Enoch (S Down)

Stott, Roger

NOES

Alison, Michael

Grant, Anthony (Harrow C)

Needham, Richard

Alton, David

Gray, Hamish

Nelson, Anthony

Arnold, Tom

Grieve, Percy

Newton, Tony

Atkins, Rt Hon H. (Spelthorne)

Griffiths, Eldon (Bury St Edmunds)

Nott, Rt Hon John

Atkins, Robert (Preston North)

Grimond, Rt Hon J.

Osborn, John

Banks, Robert

Grylls, Michael

Parkinson, Cecil

Beith, A. J.

Hampson, Dr Keith

Penhaligon, David

Benyon, W. (Buckingham)

Hannam, John

Percival, Sir Ian

Berry, Hon Anthony

Haselhurst, Alan

Pollock, Alexander

Bevan, David Gilroy

Havers, Rt Hon Sir Michael

Porter, Barry

Boscawen, Hon Robert

Heddle, John

Prentice, Rt Hon Reg

Bowden, Andrew

Heseltine, Rt Hon Micnael

Price, Sir David

Boyson, Dr Rhodes

Higgins, Rt Hon Terence L.

Renton, Tim

Bradley, Tom

Holland, Philip (Carlton)

Rifkind, Malcolm

Brignt, Graham

Howell, Rt Hon David (Guildford)

Roberts, Michael (Cardiff NW)

Brittan, Leon

Howell, Ralph (North Norfolk)

Roberts, Wyn (Conway)

Brocklebank-Fowler, Christopher

Hunt, David (Wirral)

Ross, Stephen (Isle of Wight)

Brooke, Hon Peter

Hunt, John (Ravensbourne)

Rossi, Hugh

Brotherton, Michael

Hurd, Hon Douglas

Royle, Sir Anthony

Browne, John (Winchester)

Jenkin, Rt Hon Patrick

Sainsbury, Hon Timothy

Buchanan-Smith, Hon Alick

Johnson Smith, Geoffrey

St. John-Stevas, Rt Hon Norman

Butler, Hon Adam

Johnston, Russell (Inverness)

Shaw, Giles (Pudsey)

Carlisle, Rt Hon Mark (Runcorn)

Jopling, Rt Hon Michael

Shepherd, Colin (Hereford)

Chalker, Mrs. Lynda

Joseph, Rt Hon Sir Keith

Shersby, Michael

Channon, Paul

Kellett-Bowman, Mrs Elaine

Silvester, Fred

Chapman, Sydney

Kershaw, Anthony

Sims, Roger

Clark, Sir William (Croydon South)

King, Rt Hon Tom

Skeet, T. H. H.

Clarke, Kenneth (Rushcliffe)

Knox, David

Speed, Keith

Cockeram, Eric

Lamont, Norman

Spence, John

Cope, John

Lang, Ian

Spicer, Jim (West Dorset)

Corrie, John

Lawrence, Ivan

Stanley, John

Costain, A. P.

Le Marchant, Spencer

Steel, Rt Hon David

Cranborne, Viscount

Lester, Jim (Beeston)

Stewart, Allan (East Renfrewshire)

Critchley, Julian

Loveridge, John

Tebbit, Norman

Crouch, David

Luce, Richard

Thompson, Donald

Dorrell, Stephen

Lyell, Nicholas

Waddington, David

Douglas-Hamilton, Lord James

McCrindle, Robert

Wainwright, Richard (Colne Valley)

Dunn, Robert (Dartford)

Macfarlane, Neil

Wakeham, John

Dykes, Hugh

MacGregor, John

Warren, Kenneth

Edwards, Rt Hon N. (Pembroke)

McQuarrie, Albert

Wells, John (Maidstone)

Emery, Peter

Marshall, Michael (Arundel)

Wheeler, John

Eyre, Reginald

Mather, Carol

Whitehead, Phillip

Fairbairn, Nicholas

Maude, Rt Hon Angus

Whitney, Raymond

Fairgrieve, Russell

Mawhinney, Dr Brian

Wiggin, Jerry

Fenner, Mrs Peggy

Mills, Peter (West Devon)

Wilkinson, John

Finsberg, Geoffrey

Mitchell, David (Basingstoke)

Williams, Delwyn (Montgomery)

Fisher, Sir Nigel

Mitchell, R. C. (Soton, Itchen)

Young, Sir George (Acton)

Fletcher, Alexander (Edinburgh N)

Monro, Hector

Younger, Rt Hon George

Forman, Nigel

Moore, John

Foulkes, George

Morrison, Hon Charles (Devizes)

TELLERS FOR THE NOES:

Fox, Marcus

Morrison, Hon Peter (City of Chester)

Mr. Tom Ellis and

Gardner, Edward (South Fylde)

Mudd, David

Mr. Robin Squire.

Garel-Jones, Tristan

Question accordingly negatived.

ORDERS OF THE DAY
  SUPPLY
  [28TH ALLOTTED DAY]—considered

  SMALL BUSINESSES
  Mr. Speaker: I have selected the amendment in the name of the Prime Minister.
  Mr. Stanley Orme (): On a point of order, Mr. Speaker. I understand that the Liberal Party would accept the amendment of the official Opposition. If the Government oppose the motion and do not move their amendment, our amendment could be taken.
  The Under-Secretary of State for Industry (Mr. David Mitchell): Further to that point of order, Mr. Speaker. The Government have a constructive amendment on the Order Paper that we should like to be debated.
  Mr. Speaker: In that case, I am afraid that my selection must stand.
  4.51 pm
  Mr. Stephen Ross (): I beg to move,
  That this House deplores the indifference of Her Majesty's Government to the desperate plight of small enterprises in the United Kingdom.
  We have great sympathy with the hon. Member for Salford, West (Mr. Orme). He now knows what it is like to be a member of a minority party and not have one's amendment called.
  It is a rare occasion on a half or even a quarter Supply day when the Liberal Party is invited by the official Opposition to choose the subject for debate. We are grateful to the official Opposition.
  Today sees the publication of a sombre document by the CBI, showing that the morale of manufacturing companies is at its lowest ebb since 1974, when we had the three-day working week. No less than 91 per cent. of the firms that replied to the survey report a shortage of orders. No less than 72 per cent. are pessimistic about the future. Only 2 per cent. were optimistic, and 26 per cent. said that they were experiencing no change. Those are frightening statistics.
  1544
  In a press release, Mr. Cleminson, chairman of the CBI's economic situation committee, said:
  "The Survey results show that, as expected, both home and export demand have weakened. We cannot force people to buy British made products when they cost more than comparable products from other countries. The cost competitiveness of industry has deteriorated even further. The result of all this has been that output and employment in the UK have fallen and this decline is expected to continue at least as rapidly over the next few months."
  Mr. Bryan Rigby, the deputy director general of the CBI, said that he was worried about the effects on small firms. He went on to say:
  "It is vitally important that the industrial base necessary for economic recovery is not prejudiced by irreversible damage to small suppliers and whilst the CBI is not pressing for interest rates to be reduced in advance of the necessary reduction in monetary growth, it does feel that a steady fall is essential to the well-being of manufacturing companies, whether they be large or small."
  We agree with the terms of the amendment in the name of the Leader of the Opposition, which highlights one more burden that the overpressed small business sector is being expected to carry. My hon. Friend the Member for Truro (Mr. Penhaligon) referred to the matter on 31 March in the House.
  It may seem that the motion is a little unkind to the Under-Secretary of State, whose heart is known to be in the right place. However, I fear that he does not carry sufficient muscle to persuade those hard-faced men in the Treasury and the Prime Minister of the disaster hitting many of our smaller enterprises. I am glad to see so many Members on the Opposition Front Bench. We managed to persuade the previous Administration to give the job to a Cabinet Minister of known authority. With no disrespect to the Under-Secretary, we believe that that policy should have been continued by this Government.
  The Government have carried out welcome reforms, particularly in regard to taxation, legislation and investment, but such reforms presuppose that firms are able to survive and make profits in what is now a hostile environment.
  The Bolton report, published in 1971, defined small businesses as those with up to 200 employees. That appears to be the type of enterprise that the CBI and many Conservatives have in mind when they

  1545
  talk of small businesses. The other criterion appears to be firms with a turnover of £½ million or more. We wish to deal with firms that are very much smaller—the seed corn on which to base the future, if there is to be one.
  I declare an interest. I am a very small business man. I am the proud owner of a china retail shop, with only one employee. My wife has a bookshop, with one and a half employees. I lease premises to a furniture manufacturer, a firm making double glazing, a potter and an architect. I lose on the deal because I have not dared to put up the rent for the past three years. My bank overdraft increases.
  Mr. Russell Kerr (): The hon. Gentleman needs a business manager.
  Mr. Ross: The hon. Gentleman is right. I am also a non-executive director of Pilotus Britten Norman, which employs about 235 people at Bembridge, on the Isle of Wight. It is a bit larger than the firms that we wish to discuss in this debate.
  Mr. Toby Jessel (): Will the hon. Gentleman give way?
  Mr. Ross: I should like to continue.
  I know from personal experience how infuriating it is to be on the margin of deciding whether to register for VAT, and I know the time that is spent dealing with returns. The lift in the Budget from £10,000 to £13,500 was not worth while. We were criticised for that when we were in the Lib-Lab pact. We should be pressing, through the EEC, to take that figure to £30,000 at the very least. The present figure is hardly worth collecting.
  Mr. Bob Cryer (): The hon. Gentleman voted for the EEC.
  Mr. Ross: What is wrong with that? I shall give way if the hon. Gentleman wishes to say something. He used to speak for small businesses in the previous Administration, although he did not do much for them.
  My bank overdraft on the business always seems to be increasing. It gives a hard-working manager little heart when interest rates are running at 20 per cent. or more and other niggling charges ap-
  1546
  pear on the bank statement. Constantly escalating rate demands and heating and water charges continue to pour in without respite. I pay a water, sewerage and environmental charge to the Southern water authority on a store to which no water or soil drainage is connected. Under present legislation I am obliged to do so.
  Hoteliers are having a poor season and are incensed at having to pay water rates on a domestic and not commercial tariff. The water authority has found out that the commercial tariff is lower. Hotels, however, are closed for about six months of the year. The Government should look into all these matters and try to remedy them.
  Poor unfortunate glasshouse growers are consulting local NFU secretaries on the best way to make their already reduced work forces redundant. They dare not face a new planting season with the prospect of even more astronomical losses than at present. I doubt whether their banks will finance them much longer, anyway. The Dutch, Germans, French and probably Albanians, for all I know, are already giving their growers subsidies to cover the ever-increasing cost of energy. Our producers are efficient and have invested heavily in recent years, mostly with Government encouragement and grants. Will they be left to go to the wall, or is there a chance of a little compassion, even at this late hour? I beg the Minister to put his oar in on their behalf with both the Ministry of Agriculture and the Department of Energy.
  The Government's amendment talks about policies which
  "increase incentives … whilst reducing obstacles which discourage the"
  establishment of small businesses. That really misses the point of the debate. The point is highlighted by examples provided to me by two of my constituents only last week. Incidentally, both constituents are paid-up members of the Conservative Party. They certainly did not vote for me in the last election. When I was canvassing they told me that they would not vote for a man who kept "that shower" at 10 Downing Street. I am sure that they have changed their minds now.
  Those constituents have a small factory in South Hampshire designing and manufacturing helpful aids for desk and table

  1547
  tops which are sold through multiples, such as Boots and W. H. Smith. Their products are exported in quite large quantities to the United States. Until this year their turnover averaged about £300,000. Now it has fallen dramatically. Their goods are over-priced in the United States and they are replaced by cheaper imports at home.
  My constituents are very indignant, and I quote from a letter that they sent a few days ago to the local chairman of the Conservative Association in their area. They said:
  "Loyal Conservative businessmen all over the country are questioning not monetarist policies, which are largely doses of good old-fashioned deflation, but the Chancellor's interpretation—or misinterpretation—of their execution. Professor Milton Friedman, criticising the March Green Paper on Monetary Control, quotes the United Kingdom administration as an egregious example of misunderstanding. He is far from approving the application of his principles. We knew Geoffrey and Elspeth Howe, having lived and voted in Woldingham for 20 years. He is capable of being wrong like anyone else. What if he is? The Sunday Times says that the mechanism chosen is crude, slow and wasteful. What if they are right? Please do not tell me again that Wedgie Benn is the only alternative, so that we must therefore blindly accept everything that the present administration does without question. Moderation now would help to keep him out; it is not we who are putting him in: you are.
  Listen to a moderate man writing to The Daily Telegraph: 'If the price of beating inflation, which is clearly necessary, is to put private enterprises out of business, let the Government say so clearly, so that we can retire gracefully and with the minimum loss. For this was not in the election manifesto.' No it wasn't, was it! …
  Traditionally many small businessmen have been staunch Conservatives, which makes this casual betrayal by their own party even more despicable. Many of the Government's supporters were voting for their own self-destruction without being told from the election platforms. Being made bankrupt through no fault of one's own concentrates the mind wonderfully: there will be long memories and longer time to reflect; with bankrupt Tory businessmen for voters Conservatives may well find that their enemies outnumber their friends in 1984."
  It is hard for people like my constituents to be told by their local chairman, who is a retired military man with an inflation-proof pension, to "grin and bear it". There cannot be many hon. Members who are not being approached at ever more frequent intervals by small manufacturing enterprises in their constituencies who are unable to meet their
  1548
  PAYE or VAT payments and who now face imminent seizure of plant and machinery.
  I must make it quite clear that I always get a sympathetic hearing when I contact the collector of taxes or the VAT collector and I plead for time for firms to pay. Usually they allow me that time. I wish to put that fact on record. But they have their job to do and they cannot wait for ever. Surely this is an area in which a sympathetic Government could help, perhaps by dropping the interest charges or putting a lien on the property. The answer does not lie in moving in and taking away the machinery that the company needs if it is to survive. Larger firms can help also by paying their bills more rapidly. I appreciate that the Minister has appealed to them in this respect.
  The CBI bulletin of 18 July also highlights the problems that smaller firms face in this respect. Lower rates of tax, fewer planning controls and improved incentives for outside investors are to be welcomed, but they are of little interest to the business man who is fighting to survive on a week-to-week basis. He has had to contend with usuary rates of interest for far too long and he cannot survive much longer. He has been priced out of overseas markets, not because he is inefficient but because his goods are 30 per cent. dearer today, in competition with the Japanese and others, than they were 12 months ago. He can do absolutely nothing about that.
  Of course we all want to see inflation brought down, but not totally at the expense of the creators in our midst. We should positively discriminate in favour of manufacturing industry. If that means some form of two-tier interest rates, so be it. I wish that we had discussed that in the House before now. Perhaps, we could give some relief on insurance payments. My right hon. Friend the leader of the Liberal Party suggested that yesterday. Perhaps such payments could be taken away immediately for employees under 21. The surcharge could also be removed, at least for certain businesses.
  A Government who were really sincere in their desire to help the small man would devise ways to give temporary relief for rate payments to local authorities for firms that were facing excessive

  1549
  increases. This has been done before. It was done in 1929, and agricultural rate relief still exists. There is a case for considering whether we could give some rate relief to smaller commercial enterprises.
  We should also ensure that there are no foreclosures through failure to pay VAT or PAYE where there is a real chance of the enterprise remaining viable. We must ensure that as far as possible our firms compete on equal terms with those in other countries. I hope that the auspices of COSIRA, the Development Commission and other development agencies will be used to provide a much more comprehensive service for financing small firms and for the presentation of their future intentions to bankers and others.
  We should look much more closely at the whole area of co-operation. I am trying to save two small firms in my constituency through such a suggestion. I am trying to get the work force involved in a co-operative. The Government would do well to look at the Mondragon experiment in Spain, which is a really amazing story of the success of co-operation in that country. Let us look at what has happened in Northern Ireland through Ledus. That has been very successful. In an area that still has the highest unemployment in the country, it has nevertheless achieved a considerable amount.
  There is a case for looking again at the small firms employment subsidy. I know that it has been run down, but it played a useful part. Owners of small firms have told me that if they could continue to employ with grant aid, some of the people whom they took on under the work experience programme, beyond the prescribed six months, they would do so. There should be some flexibility in that respect, although I realise that the idea is to give everyone an opportunity. A small grower in my constituency employs mentally handicapped people who are very good at that job. He hates having to lose them after six months, particularly those with special attributes. A small builder wrote to me recently saying that if only he could have a little financial help he would continue to employ a particular lad who had done extremely well in the firm. It seems a great shame to put that young man back on the dole.
  1550
  I want to see small firms given greater opportunities for tendering for Government contracts. That happens in the United States—up to a certain percentage—and there is something to be said for having it here.
  I was shopping in Norwich at the weekend and I was horrified to go into a tailor and to find that there was not one British shirt in the place. That firm used to sell only British shirts, but now it, seems to have only shirts from Taiwan, Hong Kong and India. I believe that shopkeepers should indicate in their windows the percentage of British goods on sale. That could be done without cost.
  The Government could do a lot more by guaranteeing loans and subsidising interest rates, but after yesterday's debate there seems to be no hope of that.
  Those are the sort of measures that are long overdue. They are not meant to be permanent, but unless first aid is provided now, the patient will be dead and buried before the year is out. With the collapse of our industrial base, everything else will go as well—social welfare, pension and education provision and so on. That is not a pleasant prospect and it should not be allowed to happen.
  The Minister recently lunched at 10 Downing Street with several representatives of small enterprises from various parts of the country. I am sure that he knows about their worries. He receives deputations and he visits factories. He must know all about the problems, and he must be just as worried as we are. When will his Government react? Perhaps the Minister, too, has given up the ghost. We do not expect a total U-turn, but a little light relief would be very acceptable at this time.
  5.10 pm
  The Under-Secretary of State for Industry (Mr. David Mitchell): I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
  "this House supports the Government's policies to increase incentives to entrepreneurs whilst reducing obstacles which discourage the start-up and growth of small businesses in the United Kingdom."
  The Government have made considerable progress with their programme to help small firms. I recognise that there is

  1551
  still much to do, but it is ridiculous to refer to us as indifferent to their problems. Before getting to the substance of what I have to say, I should like to consider the indifferent case that has been presented to the House. It is based upon a series of points with some of which I shall seek to deal at the beginning of my remarks and the rest as I develop my argument.
  The hon. Member for Isle of Wight (Mr. Ross) referred to the gloomy forecasts of the CBI. I join with hon. Members on both sides of the House in their concern at the situation revealed by those forecasts. I notice, however, that the CBI is not calling for a change of policy; it is simply hoping that it will work soon. To that I say "Amen", as do many others. There is a subtle difference. This policy, pursued to its end, will work, and will produce what we need as a sound basis for growth by giving us sound money, not inflation, and lower interest rates. That combination is the basis for business growth. To follow the siren voices that press alternatives would simply restart the engine of inflation.
  The hon. Gentleman called for a Cabinet Minister to be responsible for small business policy. I have to tell him that we have a Cabinet Minister responsible for small business policy. My right hon. Friend the Secretary of State for Industry has that task and responsibility. [HON. MEMBERS: "Where is he?"] My right hon. Friend was here earlier and intends to return shortly, but he has had to go to another engagement. The timing of the debate has not fallen when most hon. Members expected. We know that it has been delayed for good reasons. It is I who do the donkey work.
  Mr. Russell Kerr: Very well put.
  Mr. Mitchell: It is, therefore, perhaps appropriate that I should later reply to the debate.
  The hon. Member for Isle of Wight asked that the VAT exemption limit should be raised to £30,000, yet he was one of those who supported the Lib-Lab pact. He was one of those who supported the EEC negotiation when the previous Government sold the pass and arranged that there would be no increase in VAT exemption greater than that sufficient to cover inflation.
  Mr. Stephen Ross: Are the Government negotiating over the possibility of raising the exemption? We are never told these things. It is all very well to keep firing matters back. Are the Government negotiating to see whether the exemption can be raised?
  Mr. Mitchell: That is a valid point and I shall answer it. There is no point in opening a negotiation when one knows that one has no prospect of winning it. We could get that change only with the consent of the other members of the EEC. The hon. Gentleman will know that we have the highest exemption within the EEC. There is no reason to think that we would get any response from the others to give us a higher exemption than any of them. I say without fear of contradiction that Opposition Members sold the pass when in office.
  The hon. Gentleman talked of his own small businesses. I recognise that he talks with experience. I value the points that he made. He spoke about how his overdraft is growing year by year. In that respect, he speaks as the authentic voice of many small businesses with the same constant worrying problem. Why?
  Mr. Kerr: They are being squeezed by the Government.
  Mr. Mitchell: The reason is that inflation makes every small business cash hungry. One needs more money to do the same volume of business. That is why it is the top priority policy of the Government to attack the causes of inflation. It ill behoves those who left us the legacy of the Augean stables of inflation to complain about the size of the shovel that we have to use to clear up the mess left to us.
  I should like to refer to two other amendments on the Order Paper. The amendment in the name of my hon. Friends the Members for Hertfordshire, South-West (Mr. Page), Upminster (Mr. Loveridge), Luton, East (Mr. Bright), Fareham (Mr. Lloyd), Bridlington (Mr. Townend) and others welcomes the enterprise package in the Finance Act 1980 and looks forward to more similar benefits. They have perhaps not overlooked the saying in politics that gratitude is a lively anticipation of further benefits to come.

  1553
  The other amendment proposed by the official Opposition is extraordinary. It calls for the withdrawal of the consultancy paper on sickness pay. Surely the purpose of a consultancy paper is to enable people to make their views known and for the Government to take those views into account. We shall listen to what is said in the debate. To call for the withdrawal of the possibility of further consultation seems an extraordinary response to an invitation to make one's views known.
  It is right and proper that I should report back to the House on the work that has been done in the small firms area. I shall not spend much time on the scene because the House is not unfamiliar with it. There is, however, a recognition on both sides of the House of the importance of small businesses as the seed corn from which wealth creation and many jobs in the future will come. We have far too few such businesses. We need many more. The balance between the incentives to start a business, the hurdles which face those who start and the burdens they have to carry has been tipped so far that the logical person has not felt it worth while to start a business.
  The Government are engaged on a threefold task. The first is to identify the burdens and to pull them down, to identify the hurdles and to take them away, so that it is easier for people to start. Secondly, we have to increase incentives for them to do so. Thirdly, we have to look at the problems of financing those who have started, or are seeking to start, in terms of the money inside the business as well as incentive in terms of what one can take out in reward for success.
  I should like to examine the burdens. The compliance cost of dealing with Government regulations and controls is much higher for the small business than for the large. The smaller the business, the higher up the management pyramid one goes. It is a case of "Mon Dieu et mon droit ", or, as my children translate it, "My God, I am right". In a small business, it is the working proprietor whose time is taken out from driving the business forward by having to deal with the cost of compliance. I invite the House to study what the Government have been doing and what has to be done.
  1554
  For those who are starting a business, there is the problem of planning. Two central areas are involved. The first is the delay in getting a decision and the second is the decision itself. Planning is important. Most people starting a business begin in their own back yard. When their wives tell them to get off the kitchen table or out of the garden shed, they need sub-standard, low-cost second-hand premises in the neighbourhood—a double garage or something of that nature. At that point they come up against the planning regulations.
  My right hon. Friend the Secretary of State for the Environment has made two changes to speed up planning decisions. First, there can be an appeal to him if no decision is taken by the local authority within eight weeks. Secondly, in many, although not all cases, inspectors will issue their decision at the time of their inquiry instead of waiting between three and six months.
  An important question is the decision itself. I am able to say to the House that within six or eight weeks the Secretary of State for the Environment will be issuing a development control circular which will make considerable advances in relation to the ability of small firms to start up and to continue their businesses where they are not disturbing the neighbours. regardless of the zoning of the area in which they are operating. After the substandard starting stage a small firm needs purpose-built and modern premises of about 2,500 sq ft. A substantial survey conducted by Coopers and Lybrand and Drivers Jonas shows that there is an acute shortage of premises for small firms. It also shows that the absence of premises stops people from starting a business. The availability of premises is one of the catalysts which persuades a man to start a business. It is therefore important to get it right.
  Mr. Michael Grylls (): Will my hon. Friend examine the over-stringent building regulations which result in new premises being built to such a high standard that their prices are much higher than comparable premises in California, for example? Premises there are built to a lower standard, but they are cheaper.
  Mr. Mitchell: As chairman of the Small Business Bureau, my hon. Friend

  1555
  is in touch with the problems from which small business men suffer. I take my hon. Friend's advice on board.
  We have made some progress. As a result of the survey, the Chancellor of the Exchequer introduced a 100 per cent. tax allowance for three years on new premises up to 2,500 sq ft, and on conversions. In the Budget £5 million was provided for the assisted areas. The Department of Industry has taken that money and found another £15 million in pension fund money from the private sector. With that we shall start building over 1,000 units up to 2,500 sq ft in the assisted areas this year. In addition, we have done a deal with Barclays Bank. It will invest £5 million in small firm premises in the assisted areas. That is hardly an indication of indifference.
  I turn to the Employment Protection Act, which has been a major burden for small firms. We have made three significant changes. First, the tribunal procedures will be revised to take into account the size and resources of small firms. Secondly, people who present frivolous claims will be warned that they will be liable to pay costs. That is of major importance. It means that the chap who has no case will no longer be able to blackmail his employer to the tune of £400 or £500. Thirdly, for firms with up to 20 employees we have introduced a two-year qualifying period for unfair dismissal which aligns with the two-year qualifying period for redundancy payments. That removes one of the major worries of small firms which take on additional employees.
  We have taken two further minor steps forward. First, we are allowing small businesses to pay rates in instalments. Some local authorities already allow that, but others do not. Secondly, we have also introduced fairer treatment for mixed hereditaments in relation to the domestic portion of such premises.
  Mr. D. N. Campbell-Savours (): Will the hon. Gentleman give way.
  Mr. Mitchell: I am sure that the hon. Gentleman will be able to make his own speech. I have many things to say which I wish to get on to the record, and time is short.
  The Under-Secretary of State for Trade has introduced a £1 million cut-off in
  1556
  terms of disclosure which reduced substantially the amount of disclosure for businesses with turnovers up to £1 million.
  Mr. Richard Wainwright (): Will the hon. Gentleman give way?
  Mr. Mitchell: I am sorry. My hon. Friends have asked what we are doing. I have been accused of being indifferent. Surely I should be allowed to explain what we are doing.
  We have prevented over 1 million questionnaires going out. That will save a substantial amount of work which would have landed in buff envelopes on the desks of small firms. Office development permits have gone. IDCs do not affect small businesses now. We are sweeping away much of the frustrating paraphernalia, regulations and controls which have restricted small firms.
  I do not need to remind the House of the substantial change in incentives contained in our first Budget. The change has increased from 17 per cent. to 40 per cent. the take-home pay of successful small business men. Changes in the Budget this year affect the pensions of the self-employed. Minor changes have been made in capital transfer tax, and further changes are to come.
  Some of my hon. Friends are worried about finance inside businesses. Some progress has already been made and we hope for more. All the high street banks have in the last 12 months introduced some new form of loans for small businesses. Many banks are giving new options and new opportunities and several of them do not require the same degree of security which they have required in the past.
  Mr. Campbell-Savours: At market rates.
  Mr. Mitchell: Yes, at market rates. The banks have been moving in response to requests to extend the frontiers of their lending. We should welcome that. The European Investment Bank loans operate in the constituency of the hon. Member for Workington (Mr. Campbell-Savours). He will be glad to know that the rate has been reduced to 10 per cent. for interest over seven years. We have also reduced the size to a minimum of £15,000 compared with the previous

  1557
  £17,000 minimum. I hope that the hon. Gentleman will welcome those improvements.
  The hon. Member for Isle of Wight referred to the problems in country areas. The Council for Small Industries in Rural Areas will have about £4 million to lend this year in its traditional role of lending to small firms in the rural areas. In addition, it has made arrangements for £9 million from either the Industrial and Commercial Finance Corporation or the banks to be made available to enterprises which it has vetted and to which it would have lent, so that if demand exceeds its resources that money will be available. That means that small businesses will be able to obtain the money that they need either direct from COSIRA or from the money that it can tap.
  Pension funds are a major source of investment money. The problem is that they cannot cope with small investments when they are investing £1 million or more a day. We are using the Department of Industry's counselling service to make the assessments. In the East we are involved with the Post Office pension fund and in the North-West with the Norwich Union. We shall do the work through the counselling service and present the evidence to the investing institutions. That is a practical way in which we can bridge the gap in order to bring outside equity into the smaller firm.
  However, the small enterprise needs a private backer to start. In the Budget this year the private backer was given the opportunity of having his interest allowed for tax. If he loses money on the investment, that can also be written off against income tax. The top tax on investment income has been cut from 98 per cent. to 75 per cent., so encouraging the private backer yet again.
  If one adds to all that the other concessions such as lowering corporation tax, and doing away with the close company regulations and controls which prevent small businesses from accumulating money for investment, it comes to a substantial package of measures achieved.
  I could go on much longer, but if I did I should be trespassing on the time of the House. I hope that I have opened up the area in such a way that my hon. Friends may suggest other things that
  1558
  we might do in the coming year. I hope that the House will say that the charge of indifference is not fair in view of our record of achievement.
  5.30 pm
  Mr. David Penhaligon (): The Minister made an interesting speech. He sounded to me like a doctor who has been treating a patient for an annoying bunion when the patient was suffering a serious attack of cancer. The problems referred to clearly need attention.
  During the general election I remember, while trying to persuade one of my farmer constituents not to desert me, telling him that we had persuaded the Labour Government to introduce rollover taxation relief for farmers. He replied "Ar boy, it would help if I had paid any tax in the last 15 years." His point was that this minor modification—no doubt useful to the agriculture industry—was of no real import if our economy was experiencing enormous difficulties.
  My accusation against the Government is not that their heart lies in the wrong place but that the record of their performance during the past 15 months compares so miserably with their rhetoric in 1978 and 1979. Today we are discussing one of the greatest rip-offs by a political party in the history of British politics. The cynicism that has built up in this great nation towards politicians who have miserably failed to deliver what they promised is a matter for concern. The attitude of small business men towards the Government has to be seen to be believed and I do not doubt that there are Conservative Back Bench Members who know precisely how the owners of small businesses feel.
  One of the most effective lines produced by the Conservatives during the general election was that if each small business in Britain took on one extra employee between one half and two-thirds of our unemployment problem would be eroded. We heard that slogan time after time. I do not know who thought it up, but I understand that the organisation that I suspect was its author has also got the sack.
  When we compare the mood and the expectations created by that kind of electioneering to what has happened, it is obvious that the contrast is appalling. The

  1559
  Minister said that the Government's first intention was to get rid of inflation. I do not decry that as a major aim, but I recollect that at the end of October 1978 inflation was 9 per cent. At the general election I think, though I stand to be corrected, that it was 11 per cent. Inflation is now 17 per cent. and we are being told that it is a triumph that it is coming down. If we take out VAT the underlying inflation rate is currently 17 per cent.
  I prefer the new index invented by the Government because it gives a truer indication of the level of inflation. It will be interesting to see whether the Government mention that index from the end of next month, because it will register a higher figure than the crude index of inflation that we formerly used. Inflation has almost doubled in the past 15 months. That fact hardly compares favourably with the rhetoric at the general election.
  If one wishes to borrow money for a slight risk enterprise—that is what small businesses are engaged in—interest rates are 20 per cent. I pointed out to the House long ago that if inflation continued at 20 per cent. until the day I retired at 65, the average wage in Britain would be something like £45,000 a week. That is what compound interest at the rate of 20 per cent. produces.
  Bankruptcies have hit appalling levels. More frightening than the levels recorded by current statistics is the feeling in one's own constituency that bankruptcies are on an upward trend. One gets the feeling that we have not reached the peak and, therefore, cannot expect an improvement. The feeling in one's constituency is that the situation is deteriorating. Clearly, business men wil not approach their Member of Parliament and tell him, just before it happens, that they are about to go bankrupt the following week. They can hardly allow that to become public knowledge if they believe that they can survive. One gets the feeling, talking to one's constituents and to owners of small businesses at all levels, that bankruptcies are escalating. The number of bankruptcies, it seems, has no real chance of being reduced in the near future.
  My hon. Friend the Member for Isle of Wight (Mr. Ross) mentioned the ending of the small firms employment subsidy. I believe that that was one of the most useful aids afforded to genuine
  1560
  small firms. It also helped alleviate some of the unemployment experienced in far too many areas. I am pleased that the official Opposition have specifically referred to the ending of the sickness benefit scheme. That is what the Green Paper means. The idea that the Government should no longer make a major contribution to the sick during the first eight weeks of sickness heralds the end of the national insurance principle for working people. We all know that big firms—in which the Conservative Party is so interested—might well approve of the Government's new scheme. On the principle of swings and roundabouts they can virtually run their own sickness schemes for what they formerly cost the Government.
  However, for a person employing two or three people, the scheme could be an unmitigated disaster if two of those three employees were sick at the same time. Such employers will not only have to pay the sickness benefit for the first eight weeks; they will need to employ someone else in the short-term to do the valuable work done by their regular employees. To have one out of three employees sick means, for the small business man, that one-third of his work force is missing, and in a small firm that is undesirable.
  A side effect which does not affect small businesses but which is potentially desperately unfair in areas such as my constituency, where unemployment has long been a major problem, is that, given the new arrangements, many firms will be less willing to take on the person in his late forties or early fifties with a record of sickness. If the principle is included in legislation it could mean that small firms would not take on workers who were unable to produce an Al health record. That would be highly regrettable in a section of the community which already has enough troubles to deal with.
  Will the Minister tell us what is the present position of sub-post offices? They are small businesses in rural areas and on urban estates. Some of them are the only elements of small business left in certain areas. Where do we stand in relation to current proposals, which, if fully implemented as originally outlined, would close down at least one-third of

  1561
  the sub-post offices in Britain? I gather that the Government have retreated somewhat on that issue. But how far have they retreated? Why do not the Government announce that the scheme has been chucked into the bin where it belongs?
  Mr. W. R. Rees-Davies (): Has the hon. Member seen the Select Committee report on this matter? Having investigated the issue carefully we found that a considerable volume of agency work could be put in the way of sub-postmasters. They had been pressing for that. If that happens, the sub-postmasters will have substantial additional income from the Giro, the agencies, the electricity boards and the tourist board. Those issues were well and fully covered by the Select Committee and the sub-postmasters are happy about the future.
  Mr. Penhaligon: I have to choose to argue with the hon. and learned Member. For many years I was a sub-postmaster and therefore have had some marginal experience of running such an office. The backbone of post office business, which the post offices are losing, is the payment of family income supplement and pensions and—tragically, in my part of the country at least—unemployment benefit. No agency work can make up for that loss. There is no agency work in the poorer parts of the country where these offices are the only small business enterprise. Obviously they would appreciate the extra agency income, and there are one or two areas in which it might be useful. What is the Government's position on this matter? Are they to give agency work? How much work is to be withdrawn?
  In effect, the Government have wrecked the small insulation businesses that were growing up throughout the country. Insulation was one of the growth industries and it was badly needed in order to help the country make more use of its valuable energy resources. The Government wrecked that industry's prospects by substantially reducing the insulation scheme grants. The announcement about that reduction was made the day after the Government announced that they would find the money to build 10 pressurised water reactors at a total cost of £12,000 million. In reducing the grant, the Secre-
  1562
  tary of State for Energy told us that he was seeking to save £12 million. I shall never forget the sequence of events in the House on those two consecutive days.
  Mr. David Alton (): In supporting my hon. Friend may I tell him of a firm in my constituency which has folded after only 12 months? It has provided jobs for six people installing domestic insulation. As well as providing employment it was helping do something about the energy problem. I agree with my hon. Friend, therefore, that on two fronts—employment and energy—the Government's actions are having a disastrous effect.
  Mr. Penhaligon: I must indicate my basic agreement with my hon. Friend. If the Government want a stop-gap arrangement to combat unemployment, the labour-intensive household insulation schemes are probably the most sensible area for them to consider.
  The crux of the matter is that there are two types of small business. There are those businesses that run on the internal economy—building, retailing, and so on—which compete with other businesses in this country. That section—apart from building—while not doing well, is surviving. The building industry is so dependent upon interest rates and confidence in being able to sell its products when they are constructed that it is a special case.
  The section that is in desperate trouble is that which competes in the external economy, the economy which faces international competition. Sometimes the industries in the external economy do not conceive that they are competing with foreign interests. The tourist industry in my constituency is an example of that. Every year it says that it is having a bad season, but this year I am inclined to believe that it is. It is complaining about interest rates, but its true problem is the exchange rate. One has only to read the newspaper advertisements to see the trips to Spain, Portugal, Italy and even, under some incredible offers, to the United States, that are open to people who used traditionally to holiday in my part of the country and elsewhere in Britain. The tourist industry is being crippled by the exchange rate which the Government have imposed upon it.

  1563
  The same argument can be made in respect of textiles, cars and other industries. The one big issue upon which the Government should be concentrating is the exchange rate. The current level is buoyed up by North Sea oil and the Government's interest rates policy. That rate is wreaking damage upon this country in a way that no other policy has done before.
  It is all very well for the Government to say that they are cutting the economy back to enable it to grow forth more vigorously. The simple reality is that if they pursue that policy there will be very little basic industry and small business left to grow forth. The time has come for the Government to produce at least a Green Paper on possible ways of reducing the exchange rate to a more sensible and intelligent level. There is no way in which tourism and textiles, cars, and other manufacturing interests can survive if left to compete internationally on the basis of the current rate of exchange.
  The one period during which unemployment fell during the past five years was when the pound was at a low level against other currencies. During that period, British industry was highly competitive. That is not, in splendid isolation, a solution to our problems. Clearly the sensible exchange rate is to be found somewhere between that low point and the current high level. Unless the Government bring the exchange rate down, they will wreck that part of the economy which competes internationally, the sector that provides the basis of our standard of living. The internal economy would collapse soon after because it is dependent in turn upon the external economy.
  5.46 pm
  Mr. John Loveridge (): I am glad to take part in the debate, and I congratulate the Liberal Party on its initiative in drawing attention to some of the requirements of small businesses. We on the Conservative side, particularly my hon. Friends who are officers of the small businesses committee, of which I have the honour to be chairman, believe that the smaller business sector can conquer unemployment. That is a big claim. Large firms will shed labour. In good times they will do so because of the silicon chip. In bad times they will do
  1564
  so for lack of demand. It is noticeable that in recent years small firms employing up to 100 staff have provided all the new jobs in the kingdom, net of those vacancies created by people leaving employment.
  In this country our small business sector is too weak. It needs strengthening. There are 1.3 million firms in the United Kingdom compared with 5-2 million in Japan, which is twice as many as we have on a population basis. Likewise, Germany and America are also ahead of us. It is because they are ahead of us that their economies are so lively and adaptable. We need to build up our small business sector—in part by a transfer of resources from the public to the private sector. The private sector is repeatedly squeezed whenever there is an economic squeeze. It was well said that the construction industry formed the economic regulator for the economy.
  The Budget this year has helped the small business sector. I hope that the Liberal Party will note that: an estimate in the Financial Times put the value of that help at £369 million. Since then the Government have added more. The combined measures are a great help to small businesses starting up. The small man has been helped by the Government. He is greatly encouraged to found new business.
  Let me list just a few of the measures. There are tax cuts on income, stock relief measures, the removal of double taxation in respect of capital transfer tax and capital gains tax, employment protection improvements, planning improvements, enterprise zones, the provision of new premises, and encouragement to banks, which have responded well with new ideas, including a recent scheme to replace interest rates with royalties. Form filling has been cut, and there has been a Green Paper on the buying in of companies' shares.
  Those are only a fraction of the measures that have been taken by the Government, but they form a goodly package. Some are measures in response to proposals put forward by members of the Conservative small businesses committee. Here I should like to recognise the work of the Minister responsible for small businesses. He has set up a regular system of consultations with outside

  1565
  organisations as well as those in the House. He has done more than any of his predecessors to keep in personal touch with organisations such as the Association of Independent Businesses, the Union of Independent Companies, the National Federation of the Self-Employed, the National Chambers of Trade and the small business section of the CBI, as well as the Smaller Business Bureau. This regular exchange of views is a great help to the whole of the small business sector.
  I wish to put forward two specific proposals, one of which has already been touched upon by my hon. Friend the Member for Hertfordshire, South-West (Mr. Page). It is a proposal to set up an operations room within the Department of Industry where all those who are interested can see, set out dramatically, international comparisons, so that they may draw their own conclusions and see for themselves what is happening worldwide in this sector. Is Japan ahead because it has a larger small business sector? Is high taxation a disincentive? Which incentives have worked best, in which countries? There are too many partial studies, and no one central place in Government where information is gathered together, and where those people who are interested in this sector can make their own comparisons. Such research should be readily available to hon. Members and others who wish to know.
  We have some clear guidance already. We know that medium-sized firms have been vanishing over the last 30 years. We know from the Wilson inquiry that there are 71,000 manufacturing firms with up to 100 staff, and only 3,000 firms with between 100 and 200 employees. Those figures are of the greatest importance, and I hope to be able to demonstrate why.
  The famous Massachusetts Institute of Technology survey of 1969-76 showed that firms with fewer than 20 staff at the beginning of the survey provided, during the course of the survey, two-thirds of all jobs in the United States, and that most of those jobs were in new firms. Those figures have been widely quoted in the House. What is not as generally known is that the firms that grew from under 20
  1566
  staff at the beginning of the survey to medium-sized firms employing 100 to 250 staff by the end of the survey provided most of the jobs. Thus, it can be seen that it is the fast-growing firm—from small to medum size—that can provide the jobs that are needed in this country, as in the United States. We can only conclude from the figures that the proper way in which to create new jobs and new demand within the economy is to build up the medium-sized firms sector as quickly as possible.
  As I said, the Budget has done much for start-ups. The next step is to drive for expansion of existing firms. That requires a change of attitude, because so many of our firms stop growing at about 100 staff. First, we need easier access for the fast growers to capital in firms that do not involve the loss of equity. I ask the Government to examine closely the self-financing loan guarantee scheme that was put forward by the officers of my committee. I hope that the Government will in no way compare it with the schemes in the United States, which might put them off. Our scheme is self-financing and totally different.
  Secondly, we want less fear of destruction of a firm by capital transfer tax. It is possible for medium-sized firms in the ownership of a man and wife to be hit to the point of destruction by the impact of capital transfer tax when the owners die. That cannot be right when we wish that sector to grow.
  The Chancellor of the Exchequer has told us:
  "We have, as I promised last year, subjected capital taxation to a thorough review … What I can do this year must be constrained by our financial position."—[Official Report, 26 March 1980; Vol. 980, c 1482.]
  Of course, he has done much to help the smallest companies. He has helped by removing the double taxation charge and raising the capital transfer tax threshold. That has freed any business with assets of £100,000 or less from any charge on the death of its owners. But was the Chancellor right when he said that he should be constrained this year over his review of capital taxation in relation to the medium-sized business? If, as the figures plainly show, it is to the medium-sized firms that we must look for the creation of new employment, should we

  1567
  not immediately and urgently act on all the questions relating to this sector, including capital taxation, which is radically reducing its growth and the will of individual firms to grow?
  Thirdly, should we not remove anomalies, such as the so-called marginal relief for corporation tax? It is agreeable to have a 40 per cent. reduced rate for small businesses up to a certain level of profits. But what inconceivable folly then to throw in a band of taxation far above the normal. It suddenly leaps to 66 per cent., not to the 52 per cent. which is the normal rate of corporation tax. There is a very wide band at 66 per cent. Many firms have no desire to leap that band and go through that heavy tax area. That should be put right, even if it means reducing the threshold at which the 40 per cent. band operates so that the cost to the Government is not increased. The medium business sector is especially significant to job creation, and now is the time to push it, because it takes two or three years for any push to be activated. Firms do not grow overnight like mushrooms. They require effort and time.
  Hon. Members have referred to the economy and to the effect of high interest rates, to firms failing through no fault of their own, and to the 64 per cent. in the CBI's latest survey of industrial trends which show that their volume of new orders is falling. In my constituency I have had complaints from people, who have had to wait to be paid for their goods, and the time they have had to wait has increased from 30 to 90 days. That is causing severe liquidity problems. It is an area in which the Government could and should help to take mitigating action. Likewise, although exports have kept up well, one of my constituents, the owner of a trucking company, told me that he had 380 lorries but had had to sell 70, and of the 310 that remain most are leaving the country empty and returning full. It cannot augur well if that trend is increased or becomes general. I do not know what delay there is in the export figures that come through to the Government, but at home it is time to increase demand, as inflation is brought under control, and a considerable improvement in this area should be seen this month. I hope that that improve-
  1568
  ment will be seized upon by the Government and that they will act urgently, as best they may, to increase demand in the private sector, which is so heavily hurt by the squeeze. In order to do this, they must keep their own housekeeping in good order in the public sector.
  But the secret of the future of our country's expansion lies, I am sure, in developing the medium-sized firms. I do not think that this has been recognised before throughout the kingdom. There is evidence of it, and I hope that the Government will pursue this area of fast expansion and give it the stimulus that it requires.
  6.1 pm
  Mr. Bob Cryer (): I shall be as brief as I can because I know that a number of hon. Members wish to speak in the debate.
  The hon. Member for Isle of Wight (Mr. Ross), the Liberal spokesman who introduced the debate, was rather scathing about the record of the Labour Government. It is worth mentioning that in 1977-78 we were responsible for what must have been a record number of improvements and opportunities for small firms. Indeed if that economic environment could be produced today small firms would very much welcome the improvement and the change.
  We introduced the small firms' counselling service in 1976 and extended it throughout the country in the next two years. We introduced the market entry guarantee scheme to help small firms export abroad by guaranteeing them 50 per cent. of the cost We introduced the small firms employment subsidy, which has been mentioned by several Opposition Members in somewhat glowing terms. I shall return to that in a moment. We introduced improvements to the Council for Small Industries in Rural Areas—COSIRA. In the special set of measures announced in the following year, we introduced a number of tax concessions which were greatly welcomed by small firms. Above all, we created an economic environment which was not punishing to small firms. By contrast, the Conservative Government, as a deliberate act of policy, have created an environment in which there are swingeing rates of interest, which are crippling small firms and driving them to the wall.

  1569
  I refer particularly to the small firms employment subsidy that we introduced. It was a product of collaboration between the Department of Industry and the Department of Employment. In my own constituency, over 50 jobs were created by that subsidy. Nationally, about 50,000 jobs were created by it.
  If a Minister came to the Dispatch Box today and said "We have a scheme for creating 50,000 jobs nation-wide", Conservative Back Benchers would cheer him to the echo, because our present economic climate is the reverse of what it was under the Labour Government. Ministers now come to the Dispatch Box to announce measures that are putting 50,000 extra people on the dole month by month—and many of those redundancies relate to small firms.
  The temporary short-time working compensation scheme was introduced by the Labour Government to replace the temporary employment subsidy, which was stopped by the EEC. That scheme was a great boon to small firms, but the Government have cut back the temporary short-time working compensation scheme by 50 per cent. as part of their public expenditure cuts, to enable them to reduce taxes for the better off.
  The Under-Secretary of State for Industry talks in comatose terms about the position of the small firms sector and all the Conservative Government are supposed to have done, but they are not creating jobs. There are more and more people on the dole. Their numbers are increasing week by week. More and more small firms are going to the wall because they cannot succeed in the economic climate which the Secretary of State for Industry—who is barely awake—is creating, along with his other Cabinet cronies. He and his Cabinet cronies have a lot to answer for. They are deliberately creating the dole queues. They are deliberately smashing small firms to the wall. It is part of their policy, and it is time that we made that absolutely clear.
  The cutbacks that the Government have introduced are severely affecting small firms. Many of the public contracts that are now being cut back were provided and fulfilled by small firms. The small firms in particular are suffering from the ricochet effect of Govern-
  1570
  ment policy, but we cannot leave large firms out of the debate, because small firms are often suppliers of components and services to the large firms.
  I remind hon. Members that when the Labour Government saved British Ley-land and Chrysler, both actions were opposed by the Conservative Party, so we know its view about creating and retaining jobs. Conservative Members voted against those measures. When those companies were saved, 10,000 small firms were also saved, because they supply components and services to the two giants. When people buy a Mercedes or a Renault car, they might bear in mind that some of the components on the British cars that they are ignoring are supplied by small firms—perhaps small firms in their own constituencies.
  I should like to refer briefly to the position in the textile industry, which was mentioned earlier in the debate, because it is affecting industries in every sector of manufacturing. I want to anticipate slightly and peripherally the debate that is to take place later. The textile industry, like the car industry and other manufacturing sectors, is facing great difficulties. It is an industry that has as its hallmark small manufacturing concerns employing fewer than 200 people.
  I noticed in my local paper yesterday a not unusual announcement for these days, during which the country is led by the Conservatives. It stated:
  "Textile firm cuts workforce by half",
  It went on to say:
  "A Keighley textile firm is to make almost half its workforce redundant. Forty-one weavers and ancillary staff employed by Smith Bros, and Foster Ltd., worsted manufacturers, will lose their jobs during September and October. A sharp fall in demand for commission weaving is blamed for the redundancies."
  The Government could help small firms in the textile sector almost at a stroke by toughening up the multi-fibre arrangement and pressing the EEC to take action about dumped imports in this country. It is no good saying that there is an anti-dumping mechanism in the Department of Trade, because we know that that has been used as an excuse for inaction for far too long. It is something that the Government could do and ought to do to save small—and also large and medium-sized—textile firms.

  1571
  My own constituency depends to a great degree on small firms. Under the Labour Government it was doing relatively well. The same newspaper reports:
  "Unemployment is now at its highest since records began in 1945 with almost 9 per cent. of the local workforce on the dole. In addition, a growing number of firms are operating on short time and, according to Keighley Jobcentre manager, Mr. Vic Boyce, the immediate outlook is not very promising."
  He can say that again.
  It is interesting to note that the textile industry has done everything that the Secretary of State for Industry—and the Prime Minister, whose thoughts he seems to control so well—desires from an industry. This point has been made by the general secretary of the National Union of Dyers, Bleachers and Textile Workers. He said:
  "It has rationalised and reorganised. It has invested heavily in new plant and machinery. Its improvement in productivity is second to none. It has not been subject to exorbitant wage claims and its record of disputes is as good as any other industry and better than most. Yet, after a decade of doing what the Tories say we should do, the result in 1980 will be a loss of up to 100,000 jobs."
  That is what comes of conformity. As I said, many of the firms that are vitally affected are the commission weavers which I mentioned earlier. We cannot isolate the small firms sector from the general level of the economy, but we can say that small firms are affected more by high interest rates. They should be reduced to enable small firms to survive.
  Some of the incentives to small firms that were of enormous benefit, such as the small firms employment subsidy, should be reintroduced if the Government are concerned about preserving jobs. The public expenditure cuts and the national schemes of assistance introduced by the Labour Government should be restored. It is not true that, for example, the schemes of assistance introduced under the Industry Act 1972 benefited only the large firms. The majority of the expenditure under the ferrous foundries scheme, for example, went to firms employing fewer than 200—the small firms sector about which we are talking. We need that kind of stimulus for the small firms sector.
  The hon. Member for Upminster (Mr. Loveridge) said that it was time to provide a stimulus to demand, and he is right. As more money is put into workers'
  1572
  pockets they will demand products, many of which stem directly or indirectly from small firms which form an important and integral part of our economy.
  In order not to suck in imports we shall need an effective system of selected import controls. I am sorry that the Secretary of State is leaving, because I am giving him an outline of what is necessary. It will not affect him, of course, because there will be no U-turns. The worst news for many decades for small firms and workers is that there will be no U-turns. The Government will go on to the bitter end. That means that many small firms will go to the wall and the dole queues will lengthen.
  I started my remarks with the Labour Government's record. Many small business men did not regard the Labour Government with much approval and criticised them in many respects. We met some of those criticisms and had a far better record than many of them, with their views and attitudes, had any right to expect. If we could turn back the clock, many small business men would say "Give us back a Labour Government. They did a better job for us than the Tories."
  It is no use the Tories shaking their heads. They know that it is true. [HON. MEMBERS: "It is not."] If they go round their constituencies with any regularity they will not get the praise that they were getting in May, because small business men are disappointed with the Government for which many of them voted. The letter read out by the hon. Member for Isle of Wight from two dedicated Conservatives is an illustration of that kind of change. They will be part of the move towards the restoration of sanity, decent economic principles and full employment, which will be brought about by the next Labour Government.
  6.13 pm
  Mr. Michael Grylls: There seems to be no difference of view between the two sides of the House that small firms are suffering extremely from the effects of the measures to deal with inflation. Indeed, over the past few years they have suffered badly from inflation, but we should remind ourselves that the small business sector will gain the most when inflation

  1573
  is conquered and brought down. There is a major gain to be achieved.
  I want to consider one aspect which I believe to be important to small business. I want to look critically—and I hope to take some Opposition Members with me on this matter—at the Government machinery that looks after the interests of small business and see whether it is adequate to defend those interests. Looking at it impartially, the answer must be a resounding "No". We do not have the machinery to ensure that small business has a proper hearing. I think that all would agree that over the years the over-regulation that has taken place in Britain, America and Western Europe has made it difficult for small business to exist and even to start. We are paying the price for that folly here and in America and Western Europe.
  The pendulum has been pushed by both parties against the small business man through over-regulation. Therefore, the small business man has started at a grave disadvantage to the large firm. The large firm can employ tax lawyers and—dare I say it?—the services of a Member of Parliament as a consultant to help it through the maze of regulations and laws. The large firm can do that, but the small firm cannot.
  There is a need—I hope that I take the hon. Member for Isle of Wight (Mr. Ross) with me on this matter because his speech was generally helpful—for positive and effective discrimination in favour of the small business man. The House would be wise to recognise that need.
  Let us consider what the Government machine provides for small business. With no disrespect to the Minister, he is, unfortunately—not from his own choosing—an Under-Secretary of State, not a senior Minister. Therefore, we have one Minister only for small business, and he is a junior Minister.
  In the Department of Industry there is the small firms division. It may surprise the House to know that the small firms division reports not to the Minister, but to the Secretary of State and the Permanent Secretary. The Secretary of State, poor man, has a very wide remit. He is like the beam of a lighthouse going
  1574
  round. Because there are only 24 hours in a day, he can think for only brief moments in the day about small business. So in no way is he a small business Minister.
  In the small firms division there are 25 people. There are about 52 people in the small firms advisory service, spread throughout the country, and 130 part-time counsellors. That is all that Britain provides to counteract the disadvantages from which the small business suffers. There are 1¼ million small firms employing 5½ million people.
  I want to compare that with what is provided for agriculture, which is not a bad example. There are 228,000 farms, employing 650,000 people. What do they have to look after their general interests and to protect them? There is a Cabinet Minister, two Ministers of State, one Parliamentary Secretary and 14,000 civil servants to look after the agriculture lobby—the farmers and farm workers. They do a good job, because agriculture is very productive. The small firms sector has just under 200 people, compared with 14,000 for agriculture.
  There is a real need for a more effective body to defend the interests of small business. The representative bodies of small business—I am the chairman of the Small Business Bureau—which try to look after small business outside the Government machine are weak and fragmented. They do not operate together. There is no national agency, to coin an American expression, to fill the advocacy role for small business. That is perhaps the most effective part of the Washington bureaucracy in helping small firms. There is no one omnipotent part of the Government machine that can say "That regulation may be all right for the large firms, but it is no good for the small firms because it will damage them".
  My hon. Friend the Under-Secretary of State has done a noble job in the year that he has been in office, but, for the reasons that I have put forward—that he does not control the civil servants in the small firms sector of the Department—how can he carry out the advocacy role? He has no one to do it with him. What he does is a miracle, but how much more could he do with the proper, modest staff to back him up? The small firms division, within the Government machine, is

  1575
  ill co-ordinated to know what is happening in other Departments about new regulations and laws. It has no responsibility over other Departments.
  My right hon. Friend the Minister with responsibility for the disabled is listening to the debate. I am glad to see him here. There is no official link—and he would be the first to accept this—between his Department and that of my hon. Friend the Minister with responsibility for small business. What can we do about that? My proposal may appeal to the Opposition because it was made originally by the Wilson committee. It is a sensible proposal. We should establish a modest structure called the English Development Agency for small business. It should not be included in the Department of Industry, but should be in the Cabinet Office. A Minister of State would head that agency—I hope that it would be my hon. Friend, who deserves promotion. He would be able to go direct to my right hon. Friend the Prime Minister and say that other Departments were damaging the small business sector and that they must stop doing so. That happens in Washington. Vernon Weaver, the director of small business administration, has direct access to the President if he believes that action being taken in other areas may damage small business. If the Minister with responsibility for small business is to be really effective he must have direct access to my right hon. Friend the Prime Minister.
  Under the Minister would come the small firms department—currently included in the Department of Industry. That should be included in the Cabinet Office. Directly under that department would come the really effective organisation—the Development Commission, which would continue to look after COSIRA, but not within the ambit of the Department of the Environment. That is an unsatisfactory and illogical place for COSIRA. I would place the Development Commission and COSIRA under the direction of the Minister, within the Cabinet Office. Alongside COSIRA I would establish the English development agency for small business.
  There is an argument for a third office—the office of advocacy—which would do nothing other than comb every new and past regulation to judge its effect on
  1576
  small business. The English development agency would look after such matters as the inner urban decline, the small firms advisory service, and the working together of the public and private sectors to help small business generally.
  In the few minutes available to me I have tried to put forward my proposals for an effective method of giving small business a positive discrimination at the heart of the Whitehall bureaucracy which parties of both political persuasions have built up, for good or ill, over the past few years. That would provide small business with a better opportunity to achieve what my hon. Friend the Minister wants it to achieve—and which it has started to achieve—namely, to cut away the shackles of restraint that make it difficult for small firms to start operations and for existing firms to expand. We all want to achieve that.
  6.24 pm
  Mr. J. W. Rooker (): I intervene briefly, out of necessity, to put some points on behalf of the Opposition. They are rather narrow points about the recent consultation paper on the change in sickness benefits, to which the Minister alluded in his speech. The Liberal Party spokesman, the hon. Member for Isle of Wight (Mr. Ross) intimated that he would have accepted our amendment, but Mr. Speaker, in his wisdom, did not select it.
  The Minister said that he was surprised that our amendment called for the withdrawal of the Green Paper because it is a consultation paper. We know that it is a consultation paper, but, quite frankly, we are opposed to the change, root and branch. Perhaps the Minister would note that point for the future. We do not wish to consult about a change such as that proposed in the Green Paper. It undermines the national insurance principle and attacks the benefit entitlements of the sick.
  The July Journal of Social Welfare Law states:
  "These proposals will implement further structural discrimination against sick and disabled people."
  The proposals also invade privacy in doctor-patient relationships. The British Medical Association will tell the Government its views about that in strong terms.

  1577
  We are concerned with the effect of the proposals on small business. They will be highly damaging to that sector. I would be the last to say that the Government have not considered the problem of small firms in respect of the change in sickness benefits. They have clearly done so, and that is spelt out in paragraphs 32 to 34 of the Green Paper. Paragraph 32 states:
  "The Government's policy is to encourage small firms".
  It points out the infrequency of sickness pay schemes in small firms. It points out also that if there are only a few people on the staff it needs only one or two to be away from work and not only must the sickness benefit be paid but wages for the replacement temporary staff that are necessary because, without them, the business cannot function.
  The Government have other problems in mind. For example, if an employee suffers a long spell of sickness at the end and beginning of a tax year, that could be highly damaging to a small firm. The Government are aware of the problems faced by small business when trying to impose a burden on employers to pay the first eight weeks of sickness benefit.
  Paragraph 33 dismisses those arguments. Far from consultation, it appears firmly to close the door on any gateway for small firms to avoid being penalised by the legislation. Paragraphs 32 and 33 show that there is not an open mind on the part of the Government. They make the point that there is no obvious line to draw between small firms and others in the number of employees. Paragraph 33 states:
  "Any definition would be arbitrary and would create inequity between those just within and just outside the definition."
  It goes on to argue:
  "Many small firms are in industries, such as construction, where the work force is highly mobile."
  That is true, but they do not comprise the whole of the small firms sector. The Government also claim that it would not be possible to monitor small firms.
  Our point is that none of those considerations applies to other changes that have been made in respect of small firms—some of which the Minister mentioned. The argument about where the line is drawn on numbers of employees did not
  1578
  figure when the Government introduced a limit of 20 when they changed the rules about unfair dismissal. They did not argue about firms employing 18, 21 or 22—they drew the line at 20 and stuck to it. Likewise, the argument did not apply when they set the limit of employees at five when they changed the rules about maternity leave. The Government cannot claim that there is no possibility of drawing a line on the number of employees in small firms so that they will not be discriminated against by legislation passed by the House.
  When talking about equity and monitoring, there do not appear to be any problems when removing the rights of workers. That is all that the Government have done in their changes for small firms. It is not the same position for the sickness benefit scheme. The argument about not finding a dividing line does not hold water. The Government have closed off that possibility in paragraph 33.
  More frightening, almost Orwellian, is that the Government claim that they have saved 1 million forms from being sent to small firms. They say that they do not want to impose burdens on small firms. I must put on record the final two sentences of paragraph 33. The Government say:
  "And finally it must be recognised that any system of claiming reimbursement in respect of expenditure on individual employees, however streamlined it might be, would inevitably mean an increase in paperwork. This would fall, if small firms were involved, on just those employers who are least well equipped to cope with it and whom the Government are trying to relieve of such burdens."
  The Government are saying "We put the burden on you; we find a way of relieving the burden to get some of the money back; but you will have to fill in some paperwork. But we are also committed to reducing the paperwork burden on small firms, and therefore, in line with our policy, we cannot proceed". It is Catch-22. It is ridiculous for the Government to have put that statement in the Green Paper. That leads small firms to believe that there is no hope of changing the Government's mind about consultation.
  There will be other problems over the changes in sickness benefits as they affect small firms. The trade unions that are organised in small firms will undoubtedly

  1579
  press for higher benefits. When the earnings-related supplements are abolished in 1982, that will have a catastrophic effect on small firms, as opposed to larger firms, because there will be an attempt to secure from the employer the benefits that have been taken away under the national insurance system.
  There is another factor about which we complain, and we take this early opportunity to put it on record. In the Green Paper it is stated that employers will be relieved partly of the national insurance contribution—½ per cent.—because of what they will be doing for the Government. There is no mention of any reduction in national insurance contributions by employees, yet their benefit will be removed following a payment to the national insurance fund. Therefore, employees will again put pressure on small firms. That is where it will be felt, and more of them will go under.
  The Minister mentioned the number of small firms' organisations with which he was in contact. One of those is the National Federation of Self Employed and Small Businesses Ltd. I want to quote briefly from the letter that I received from the West Midlands regional chairman, Dr. Juby, whose letter has been with the Minister of State since 9 July. In respect of the Green Paper he said:
  "Federation members in your constituency (and indeed throughout the country) are becoming increasingly disturbed by the implications contained in the Government's Green Paper entitled "Income During Initial Sickness—A New Strategy." We see it not only as being potentially disastrous to employer/employee relations and a means of taxing yet again the self-employed and small businesses of this country but it also demonstrates quite clearly"—
  I am not quoting Labour voters—
  "the total lack of understanding of the problems that face small business men and self-employed people today!"
  That is what spokesmen of the self-employed and small business men are saying about proposals put forward by the present Government.
  I wish to make one last point in respect of the Green Paper. It ought to be taken on board by Conservative Members who complained during the years when my party was in power about the growth of bureaucracy. The only way in which one can complain about the growth of public bureaucracy is by being able to know its
  1580
  size. When it is in the public sector, Members of Parliament can table questions and make points in debate, and therefore they can challenge the arguments because they have the facts.
  In this Green Paper the Government are moving part of the public bureaucracy, namely, that in respect of payments of sickness benefit, to the private sector—private bureaucracy, in other words—where there will be no possibility of measuring the scale. The problem will not go away. The benefits will still have to be paid. There will still be problems of the number of days, waiting days, and so on. It is no good the Minister for Social Security shaking his head. He will have to take cognisance of this in the consultations that he is undertaking.
  I quote again from the Journal of Social Welfare Law.
  The Minister for Social Security (Mr. Reg Prentice)rose—
  Mr. Rooker: Perhaps I might just make this point, because I want to give way to the Liberal spokesman. It is the Liberal Party's debate, and a Liberal Member will be winding up the debate. I want to make this last quotation:
  "By spreading the administrative burden amongst numerous employers it becomes impossible to see or discover the size of the private sector bureaucracy."
  There is no way out of that.
  The Minister for Social Security may want to take up some time, but I do not see why I should give way to him. This is a consultation document, and we shall hear a winding-up speech from the Minister responsible for small firms. Let him answer the debate. I thank the Minister for Social Security for sitting in on the debate, but I do not think that he ought to take up time. Ministers have a collective responsibility. That is what it is all about. That is what we were always told about.
  The House will not be in a position to know the scale of private bureaucracy when the Government hive off an important part of the public sector.
  The Minister responsible for small firms has received many congratulations from his hon. Friends on what a good job he has done for small firms. From the speech of the hon. Member for Surrey, Northwest (Mr. Grylls), I was astonished to

  1581
  learn that the small firms unit in the Department does not report to the Minister responsible for small firms. That explains something that happened to me and to some of my constituents a few months ago. I do not intend to use my position at this Dispatch Box to lay out a constituency case, other than to say that the Minister knows that on 26 March I wrote to him about a serious case in my constituency of a small firm that could not get any electricity supply to a new factory unit. I received a letter—[Interruption.]
  Does the Minister of State, Department of Industry want to intervene?
  The Minister of State, Department of Industry (Mr. Adam Butler)indicated dissent.
  Mr. Rooker: The Minister of State seemed to intervene from a sedentary position. If he has anything to say, he had better get up and say it. [HON. MEMBERS: "Get on with it."] No. If the Minister of State, Department of Industry wants to intervene on what has just been said from a sedentary position, let him do it. He obviously does not want to intervene.
  The Under-Secretary knows that on 26 March I wrote to him about the serious problem regarding electricity supply. It took his office until 22 April to reply, in a lettter from him, and to say "Sorry, pass the problem over to the Department of Energy". Of course, I wrote back saying "You are the Minister for small firms. That is why I wrote to you in the first place". By the time that the Department of Energy wrote to me, six weeks later, my constituents said "Sorry, we cannot afford to go to that unit".
  The Minister apologised. There had been a slip-up in the office. He wrote and told me that. I can understand why there was a slip-up in the office if the Government have a Minister responsible for small firms, but the small firms unit of the Department of Industry does not report to the Minister. It is no wonder I and other hon. Members have problems in pursing the difficulties of small businesses, irrespective of the arguments that I have put forward on sickness benefits.
  1582
  I should have thought that the Secretary of State would take on board that point. Clearly, he is too busy to deal with all the minutiae of problems. That is why I did not bother him about it, but I do not see why my constituents should have to suffer in the way that they did if the departmental structure laid down by civil servants is incorrect for the workings of small business. I hope that the Minister will take that point on board, as I hope that the Government will take on board the rest of my points about their proposals to abolish another vital part of the national insurance fund.
  6.37 pm
  Mr. Richard Wainwright (): On parliamentary occasions such as debates on the Queen's Speech and the Budget, usually a special cupboard is opened, and, after a great deal of dusting down, a set of pious assurances and generalised promises are brought forward by some superior Government butler in the form of the treatment of small businesses. Eventually, this teapot is put back in the cupboard until the next great occasion. The Libera] Party has now sent for the whole tea-set off season, so to speak. It is not a teapot day. Unfortunately, all that has happened is that a very hardworking and diligent Government footman has had some difficulty in bringing out a lot of very broken and dilapidated china. Furthermore, I gather that the very same footman has the difficult task of taking it all back to the cupboard in a few minutes' time.
  That is not what the Liberal Party wanted when it put down this motion, hoping that it was a service to the whole House. The essence of the many problems of new and small enterprises of all kinds, whether companies or cooperatives, or whether sole traders or the self-employed, derives from major policies of the Government, and is not confined to these minor matters of which the junior Minister spoke.
  It seems that the Government—or at any rate the Department of Industry—are unable in this sphere to distinguish between a small irritant, on the one hand, and a poison. We had a long speech about the removal of certain irritants, based on the assumption that almost all small businesses are still making profits which cause them liability for tax. In

  1583
  our view—and this is why, out of many subjects which tempted us for the rare occasion of a Liberal Supply day, we chose this topic—it is the Government's central policies that are destroying small enterprise.
  I am sure that the whole House is obliged to the hon. Member for Surrey, North-West (Mr. Grylls), speaking from an eminent position in his own party, for raising the central issue of the constitutional position with regard to enterprises that need special protection because they are not of a size that enables them to employ public relations lobbyists in this Palace, and so on. We heartily endorse most of the proposals that the hon. Gentleman made. I hope that he will forgive me if I say that we preceded him, because in July 1977, when the then Government were somewhat dependent upon Liberal support, we made a specific proposal to the then Prime Minister that the Chancellor of the Duchy of the time should be appointed, as a senior Cabinet Minister, with a completely roving commission throughout all Departments, for the protection and encouragement of new and small enterprises.
  The Prime Minister of the day accepted that suggestion with some alacrity. It worked so successfully in collaboration with the Department of Industry—whose contribution in the shape of the hon. Member for Keighley (Mr. Cryer) I do not want to decry—that in April 1978 the leader of the Liberal Party wrote to the Prime Minister asking that this position be fully regularised and that it should become, so far as any Prime Minister can do it, a feature of the Cabinet. We asked that a senior Cabinet Minister, with a special title for the job and without responsibility for any other major Department, should be given the job of looking after the interests of new and small enterprises of all kinds and the needs of the self-employed.
  Unfortunately, the Prime Minister at the time did not see his way to accepting that. Therefore, the way was open for the present Prime Minister to downgrade the whole proceeding, with the disastrous results that small businesses are now experiencing. I need scarcely repeat that it is not the arrival of buff envelopes, or the possibility of some minor bureaucratic fracas, that is destroying small
  1584
  businesses. It is the monstrous interest rates which were denounced by the right hon. and learned Member for Hexham (Mr. Rippon) as usurious only the other day, the chronic over-valuation of sterling, which makes it almost impossible to start a new export business at present and the chaos of pay bargaining, led by the Government's own cowboys, that is doing that. They have created a situation that is the despair of anyone wanting to build up a small labour force, yet on none of those issues have we so far heard a word today in respect of the Government's views.
  The other feature that has contributed to the depression among small businesses has been the ample demonstration over the past 15 months that it is impossible to combine tax incentives with reliance upon rigid monetary control as the total arbiter of Government policy. Therefore, the dual promise which the Prime Minister held out at the election, of tax incentives and reduced inflation, has come to pieces in her hands, and small businesses are suffering accordingly.
  As the hon. Member for Upminster (Mr. Loveridge) mentioned, there are also irritants of a major kind with which the Minister has not so far dealt. For instance, there is the national insurance surcharge, which means that before a small business man ever starts work, and as soon as he has signed a contract with his first employees, he is landed with the horrific poll tax of national insurance—20–5 per cent. of the employee's wage altogether—which most jungle chieftains would hesitate to impose upon members of their tribe.
  The hon. Gentleman also pointed out that the Government have entirely reneged on their promise to reform capita] taxation. Therefore, those small businessess that are still managing to achieve something like success are scared stiff that the rewards will all be creamed off in the shape of an extremely unfair tax on inflation, known as capital gains tax.
  Nothing has been said about Government purchasing. Surely we could be told that the Government are genuinely trying to get buying Departments to have regard for the smaller enterprises, even if only by insisting that the larger suppliers do a great deal of sub-contracting

  1585
  in the course of fulfilling Government requirements. Surely we should hear something about that from the Minister.
  Mr. Michael Shersby ()rose—
  Mr. Wainwright: I am sorry, but I am pressed for time. I hope that the hon. Gentleman will forgive me if I do not give way.
  On VAT, there was a most extraordinary suggestion from the Minister that this country is unique in the threshold that it applies for VAT. Is the Minister really suggesting that throughout the length of Italy small traders account meticulously for the VAT on their sales, or is he suggesting that anywhere, except perhaps in the prim Duchy of Luxembourg, VAT is paid on the nail and in the right amounts by small traders? That is not the impression among European tax experts. To rely upon the letter of the statute in a matter such as that is wholly unreal.
  There are other matters that weigh upon small traders, especially the iniquities of the rating system. It is within the recollection of hon. Members that when the present Prime Minister was in Opposition she promised that her party would abolish the rating system. That prospect was a shot in the arm for many small businessess. Instead, rates are soaring to unimagined heights, and a desperate Secretary of State for the Environment is now trying to chase after them when they already have a big start, are wearing roller skates and are likely to get away.
  In the "no confidence" debate yesterday, the Prime Minister received a great ovation from Conservative Members for suggesting that she was about to set on foot seven small enterprise zones in a mere handful of towns in this country. It is the Liberal view that the people of Britain want the whole of these islands to be one enterprise zone. It is because the Government through their major policies—not simply the policies of a small section of the Department of Industry—are crushing enterprise throughout the length and breadth of the country that we condemn them as indifferent and will vote accordingly tonight.
  6.47 pm
  Mr. David Mitchell: We have had an interesting debate covering a wide range
  1586
  of subjects. [HON. MEMBERS: "With the leave of the House".] By leave of the House, I should like to reply to a number of points that have been particularly directed towards me.
  The hon. Member for Truro (Mr. Penhaligon) started by contrasting the Conservative Party's election promises with performance. I hope that he will forgive me if I point out that we have not been in office for the lifetime of a parliament, and he can be assured that well before then we shall have fulfilled all of the promises relating specifically to small businesses that we made in our election manifesto.
  I was fascinated—I am sure that the House was as well—by an important and beautifully illustrative remark that he made. The hon. Member referred to the fact that when he reached retiring age the average wage would be £45,000 a week if we continued as we are. Does not that underline how right it is for the Government to give absolute priority to dealing with the causes of inflation?
  The hon. Member also asked about the pension work of sub-post offices. I can assure the hon. Gentleman that no pensioners will be forced to draw less often than weekly against their wishes. Therefore, there is an absolutely clear assurance on that. As to the various alternatives, such as electricity accounts and so on, being paid through sub-post offices, we are certainly studying what the options are.
  The hon. Member also referred to cutbacks in relation to the insulation grant. I think that he will welcome, as I do, the new £4 million scheme that will come into operation in August. It will provide a 90 per cent. grant towards insulation improvements in the homes of old-age pensioners. I am sure that he will welcome that, not only because it will benefit pensioners but because it will provide extra work to those in the insulation and building industries.
  Mr. Penhaligon: Does the Minister still intend to introduce a system that will make it far easier for those in receipt of a pension to have it paid directly into a bank account? That is the crunch of the matter. If that is made easier, one-third of the pensioners will probably opt for that system.
  Mr. Mitchell: This is a complex matter and it is still under consideration. I cannot give the hon. Gentleman an answer today.
  My hon. Friend the Member for Up-minster (Mr. Loveridge), who is also chairman of the smaller businesses committee, raised several important points. He drew attention to an item that time did not allow me to deal with earlier, namely, the assistance that the Government have given as regards stock relief. The Government have arranged for the first two years to be written off. In addition, the Government have arranged for the entire liability to be written off six years in arrears. My hon. Friend also raised an important point about the Green Paper, which my right hon. Friend the Secretary of State for Trade introduced, dealing with firms buying their own shares. He has put his finger on an important point. It is part of reality that empire builders in the world of business do not like outsiders muscling in on a share of that empire. This is one way in which temporary outside equity investment can be made. Those who own the business will know that they can buy them out later. I am sure that my hon. Friend was right to draw attention to that.
  Mr. Clinton Davis (): The Minister referred to some of the provisions proposed by the Department of Trade. How can it be in the interest of the small business man to abolish the registry of business names, upon which small creditors substantially rely?
  Mr. Mitchell: Unfortunately, time is short and it is difficult to deal with that point in addition to the others that have been raised. I should be happy to discuss this matter with the hon. Gentleman, although it is primarily a subject for the Department of Trade. The existing register is very patchy in its impact. If I were to trade under my own name I would not appear in the register. Nobody would have any means of tracing me. If I were to disappear tomorrow after I had been trading in one town and living in another, nobody would know where to find me. They would have no means of tracing me. The register is very partial. I urge the hon. Gentleman not to go too far in his assumption that it plays
  1588
  an important part in the operation of credit security.
  My hon. Friend the Member for Up-minster also drew attention to the importance of the middle-sized firm. He stressed some rather frightening figures. He pointed out that only 3,000 manufacturing firms employed between 100 and 200 employees. There are two reasons for that. First, a decade ago not enough small businesses started. Secondly, capital taxation means that many business men in their fifties decide that they cannot pass the business on to the next generation. Such business men ask themselves why the next generation should have the business when they are only going to be forced by taxation to sell it. They realise that they may as well sell the business and live on the proceeds in their old age. Because of the impact of capital taxation, far too many industries have become part of the ever-increasing concentration of British industry. My colleagues and I welcome the review carried out into capital taxation by the Treasury.
  The hon. Member for Keighley (Mr. Cryer) mentioned the work done by the noble Lord Lever and the previous Labour Government. I should like to pay tribute to Lord Lever and to the work that he did. The hon. Gentleman also asked for sanity and sound economic principles. I found it slightly uproarious that such remarks should come from him. He also referred to the ferrous foundry scheme. That industry has sought grants to modernise plant and to increase production and productivity. It now seeks grants to rationalise the industry and to close down some of the units in production. Whether that is sanity and sound economic principles I do not know. I would take a certain amount of convincing. The hon. Gentleman then said that if more workers have more money in their pockets, they will want to spend it on the products of small businesses. Those workers will want to spend their money in a way that will give them the best value for money. The customer is king and he is the deciding factor. We must create the circumstances in which small businesses can provide the customer with the best value for money. One does not do that by artificially distorting the pattern of demand.

  1589
  My hon. Friend the Member for Surrey, North-West (Mr. Grylls) spoke about the need to have a Cabinet Minister responsible for small businesses. We already have a Cabinet Minister responsible for small businesses and he is sitting on the Front Bench. I refer to my right hon. Friend the Secretary of State for Industry. I do the donkey work and I report to him direct on matters of small business policy. My hon. Friend pointed out that 14,000 civil servants are employed to look after small businesses in the agriculture industry. Indeed, that industry is dominated by small businesses. I hope that my hon. Friend did not seek to suggest that we should set up another empire of 14,000 civil servants to look after smaller businesses. That would conflict with his other objective of bringing about economies in Government expenditure.
  The hon. Member for Birmingham, Perry Barr (Mr. Rooker) was concerned about the proposals for sickness benefit. He will know that the Government have issued a consultation paper. We shall bear in mind the hon. Gentleman's views, and the views of many of the organisations which represent small firms and that have written either to me or to the Secretary of State for Social Services. My right hon. Friend has sat here throughout the debate and the House will know that he has listened carefully to all the comments that have been made on this subject.
  The Government have two significant goals, which they hope to achieve. First, we wish to save 5,000 civil servants, and the cost that that involves. Secondly, the Government seek to ensure that sickness benefit is paid through PAYE, as we wish to make certain that people are not better off sick than at work. The consultation document seeks to discover the most effective way of achieving that. I hope that we shall not in some way lose
  sight of the substantial benefit to be gained from achieving that.
  The hon. Member for Colne Valley (Mr. Wainwright) raised some important points and I am glad that he drew attention to them. Several of his points were raised by other hon. Members and I have tried to cover them. He also harked back to the suggestion that VAT exemption should be lifted to £30,000 or £40,000. It would appear that my earlier remarks did not go home. The Labour Government made an agreement in Brussels to the effect that the exemption would be no higher than £5,000, indexed for inflation. We cannot go back on such an agreement unless we secure the consent of the other Governments involved.
  Mr. Richard Wainwright rose—
  Mr. Mitchell: Unfortunately, the clock is against me and I shall not give way. The small business community wants to see a return to sound money, and that is the Government's priority.
  The business community wants lower interest rates. They will come as our attack on the causes of inflation succeeds. It seeks fewer hurdles. Of all the things that smaller businesses need, the most precious ingredient is motivation. There is a need for lower taxes so that the personal motivation of the individual may be harnessed with the national interest. That is the most powerful combination, and it is featured in our policies for small businesses.
  I ask the House to support the Government's amendment and to reject the motion which suggests that we are indifferent to a community for which we have great concern.
  Question put, That the original words stand part of the Question:—
  The House Divided: Ayes 245, Noes 310.

  Division No. 437]

  AYES

  [7 pm

  Abse, Leo

  Barnett, Rt Hon Joel (Heywood)

  Brown, Ronald W. (Hackney S)

  Adams, Allen

  Benn, Rt Hon Anthony Wedgwood

  Brown, Ron (Edinburgh, Leith)

  Allaun, Frank

  Bennett, Andrew (Stockport N)

  Buchan, Norman

  Alton, David

  Bidwell, Sydney

  Callaghan, Rt Hon J. (Cardiff SE)

  Anderson, Donald

  Booth, Rt Hon Albert

  Callaghan, Jim (Middleton & P)

  Archer, Rt Hon Peter

  Boothroyd, Miss Betty

  Campbell-Savours, Dale

  Armstrong, Rt Hon Ernest

  Bottomley, Rt Hon Arthur (M'brough)

  Cant, R. B.

  Ashley, Rt Hon Jack

  Bradley, Tom

  Carmichael, Nell

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

  Bray, Dr Jeremy

  Carter-Jones, Lewis

  Bagier, Gordon A. T.

  Brown, Hugh D. (Provan)

  Cartwright, John

  Barnett, Guy (Greenwich)

  Brown, Robert C. (Newcastle W)

  Clark, Dr. David (South Shields)

  Cocks, Rt Hon Michael (Bristol S)

  Hooley, Frank

  Powell, Raymond (Ogmore)

  Cohen, Stanley

  Horam, John

  Prescott, John

  Concannon, Rt Hon J. D.

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

  Price, Christopher (Lewisham West)

  Cook, Robin F.

  Huckfield, Les

  Race, Reg

  Cox, Tom (Wandsworth, Tooting)

  Hudson Davies, Ednyfed (Caerphilly)

  Radice, Giles

  Craigen, J. M. (Glasgow, Maryhill)

  Hughes, Mark (Durham)

  Rees, Rt Hon Merlyn (Leeds South)

  Crowther, J. S.

  Hughes, Robert (Aberdeen North)

  Richardson, Jo

  Cryer, Bob

  Hughes, Roy (Newport)

  Roberts, Albert (Normanton)

  Cunliffe, Lawrence

  Janner, Hon Greville

  Roberts, Allan (Bootle)

  Cunningham, George (Islington S)

  Jay, Rt Hon Douglas

  Roberts, Gwilym (Cannock)

  Dalyell, Tarn

  John, Brynmor

  Robinson, Geoffrey (Coventry NW)

  Davidson, Arthur

  Johnson, James (Hull West)

  Rodgers, Rt Hon William

  Davies, Rt Hon Denzil (Llanelli)

  Johnson, Walter (Derby South)

  Rooker, J. W.

  Davies, Ifor (Gower)

  Johnston, Russell (Inverness)

  Roper, John

  Davis, Clinton (Hackney Central)

  Jones, Barry (East Flint)

  Ross, Stephen (Isle of Wight)

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

  Jones, Dan (Burnley)

  Rowlands, Ted

  Deakins, Eric

  Kaufman, Rt Hon Gerald

  Ryman, John

  Dean, Joseph (Leeds West)

  Kerr, Russell

  Sandelson, Neville

  Dempsey, James

  Kilroy-Silk, Robert

  Sever, John

  Dewar, Donald

  Kinnock, Neil

  Sheerman, Barry

  Dixon, Donald

  Lambie, David

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

  Dormand, Jack

  Lamborn, Harry

  Shore, Rt Hon Peter (Step and Pop)

  Douglas, Dick

  Leadbitter, Ted

  Short, Mrs René e

  Douglas-Mann, Bruce

  Leighton, Ronald

  Silkin, Rt Hon John (Deptford)

  Dubs, Alfred

  Lestor, Miss Joan (Eton & Slough)

  Silkin, Rt Hon S. C. (Dulwich)

  Duffy, A. E. P.

  Lewis, Arthur (Newham North West)

  Silverman, Julius

  Dunn, James A. (Liverpool, Kirkdale)

  Lofthouse, Geoffrey

  Skinner, Dennis

  Dunnett, Jack

  Lyons, Edward (Bradford West)

  Smith, Cyril (Rochdale)

  Dunwoody, Mrs. Gwyneth

  Mabon, Rt Hon Dr J. Dickson

  Smith, Rt Hon J. (North Lanarkshire)

  Eadie, Alex

  McDonald, Dr Oonagh

  Soley, Clive

  Eastham, Ken

  McElhone, Frank

  Spearing, Nigel

  Edwards, Robert (Wolv SE)

  McKay, Allen (Penistone)

  Stallard, A. W.

  Ellis, Raymond (NE Derbyshire)

  McKelvey, William

  Steel, Rt Hon David

  Ellis, Tom (Wrexham)

  MacKenzle, Rt Hon Gregor

  Stewart, Rt Hon Donald (W Isles)

  English, Michael

  Maclennan, Robert

  Stoddard, David

  Ennals, Rt Hon David

  McNally, Thomas

  Stott, Roger

  Evans, Ioan (Aberdare)

  McNamara, Kevin

  Straw, Jack

  Evans, John (Newton)

  McQuade, John

  Summerskill, Hon Dr Shirley

  Faulds, Andrew

  McWilliam, John

  Taylor, Mrs Ann (Bolton West)

  Field, Frank

  Magee, Bryan

  Thomas, Dafydd (Merioneth)

  Fitch, Alan

  Marks, Kenneth

  Thomas, Jeffrey (Abertillery)

  Fitt, Gerard

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

  Thomas, Mike (Newcastle East)

  Flannery, Martin

  Marshall, Dr Edmund (Goole)

  Thomas, Dr Roger (Carmarthen)

  Fletcher, L. R. (Ilkeston)

  Marshall, Jim (Leicester south)

  Thorne, Stan (Preston South)

  Fletcher, Ted (Darlington)

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

  Tilley, John

  Fool, Rt Hon Michael

  Mason, Rt Hon Roy

  Tinn, James

  Ford, Ben

  Maynard, Miss Joan

  Torney, Tom

  Forrester, John

  Meacher, Michael

  Urwin, Rt Hon Tom

  Foster, Derek

  Mellish, Rt Hon Robert

  Varley, Rt Hon Eric G.

  Foulkes, George

  Mikardo, Ian

  Wainwright, Edwin (Dearne Valley)

  Fraser, John (Lambeth, Norwood)

  Millan, Rt Hon Bruce

  Wainwright, Richard (Colne Valley)

  Garrett, John (Norwich S)

  Miller, Dr M. S. (East Kilbride)

  Walker, Rt Hon Harold (Doncaster)

  Garrett, W. E. (Wallsend)

  Mitchell, Austin (Grimsby)

  Weetch, Ken

  George, Bruce

  Mitchell, R. C. (Soton, Itchen)

  Welsh, Michael

  Gilbert, Rt Hon Dr John

  Morris, Rt Hon Alfred (Wythenshawe)

  White, Frank R. (Bury & Radcliffe)

  Ginsburg, David

  Morris, Rt Hon Charles (Openshaw)

  White, James (Glasgow, Pollok)

  Golding, John

  Morton, George

  Whitehead, Phillip

  Gourlay, Harry

  Moyle, Rt Hon Roland

  Whitlock, William

  Graham, Ted

  Newens, Stanley

  Willey, Rt Hon Frederick

  Grant, George (Morpeth)

  Oakes, Rt Hon. Gordon

  Williams, Rt Hon Alan (Swansea W)

  Grimond, Rt Hon J.

  Ogden, Eric

  Williams, Sir Thomas (Warringon)

  Hamilton, James (Bothwell)

  O'Halloran, Michael

  Wilson, William (Coventry SE)

  Hamilton. W. W. (Central Fife)

  Orme, Rt Hon Stanley

  Winnick, David

  Hardy, Peter

  Owen, Rt Hon Dr David

  Woodall, Alec

  Harrison, Rt Hon Walter

  Paisley, Rev Ian

  Woolmer, Kenneth

  Hattersley, Rt Hon Roy

  Palmer, Arthur

  Wriggiesworth, Ian

  Haynes, Frank

  Park, George

  Wright, Sheila

  Healey, Rt Hon Denis

  Parker, John

  Young, David (Bolton East)

  Heffer, Eric S.

  Parry, Robert

  Holland, Stuart (L'beth, Vauxhall)

  Pavitt, Laurie

  TELLERS FOR THE AYES:

  Home Robertson, John

  Pendry, Tom

  Mr. A. J. Beith and

  Homewood, William

  Penhaligon, David

  Mr. Clement Freud.

  NOES

  Adley, Robert

  Baker, Kenneth (St. Marylebone)

  Biffen, Rt Hon John

  Aitken, Jonathan

  Baker, Nicholas (North Dorset)

  Biggs-Davison, John

  Alexander, Richard

  Banks, Robert

  Blackburn, John

  Amery, Rt Hon Julian

  Beaumont-Dark, Anthony

  Body, Richard

  Ancram, Michael

  Bendall, Vivian

  Bonsor, Sir Nicholas

  Arnold, Tom

  Bennett, Sir Frederic (Torbay)

  Boscawen, Hon Robert

  Atkins, Rt Hon H. (Spelthorne)

  Benyon, Thomas (Abingdon)

  Bottomley, Peter (Woolwich West)

  Atkins, Robert (Preston North)

  Benyon, W. (Buckingham)

  Bowden, Andrew

  Atkinson, David (B'mouth, East)

  Bevan, David Gilroy

  Boyson, Dr Rhodes

  Braine, Sir Bernard

  Grist, Ian

  Morrison, Hon Charles (Devizes)

  Bright, Graham

  Grylis, Michael

  Morrison, Hon Peter (City of Chester)

  Brinton, Tim

  Gummer, John Selwyn

  Mudd, David

  Brittan, Leon

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

  Murphy, Christopher

  Brocklebank-Fowler, Christopher

  Hamilton, Michael (Salisbury)

  Myles, David

  Brooke, Hon Peter

  Hampson, Dr Keith

  Neale, Gerrard

  Brotherton, Michael

  Hannam, John

  Needham, Richard

  Brown, Michael (Brigg & Sc'thorpe)

  Haselhurst, Alan

  Nelson, Anthony

  Browne, John (Winchester)

  Hastings, Stephen

  Neubert, Michael

  Bruce-Gardyne, John

  Havers, Rt Hon Sir Michael

  Newton, Tony

  Bryan, Sir Paul

  Hawkins, Paul

  Normanton, Tom

  Buchanan-Smith, Hon Mick

  Hawksley, Warren

  Nott, Rt Hon John

  Budgen, Nick

  Heddle, John

  Onslow, Cranley

  Bulmer, Esmond

  Henderson, Barry

  Oppenheim, Rt Hon Mrs Sally

  Butcher, John

  Heseltine, Rt Hon Michael

  Osborn, John

  Butler, Hon Adam

  Higgins, Rt Hon Terence L.

  Page, John (Harrow, West)

  Cadbury, Jocelyn

  Hil, James

  Page, Rt Hon Sir Graham (Crosby)

  Carlisle, John (Luton West)

  Hogg, Hon Douglas (Grantham)

  Page, Richard (SW Hertfordshire)

  Carlisle, Kenneth (Lincoln)

  Holland, Philip (Carlton)

  Parkinson, Cecil

  Carlisle, Rt Hon Mark (Runcorn)

  Hooson, Tom

  Parris, Matthew

  Chalker, Mrs. Lynda

  Hordern, Peter

  Patten, Christopher (Bath)

  Channon, Paul

  Howell, Rt Hon David (Guildford)

  Patten, John (Oxford)

  Chapman, Sydney

  Howell, Ralph (North Norfolk)

  Pattie, Geoffrey

  Churchill, W. S.

  Hunt, David (Wirral)

  Pawsey, James

  Clark, Hon Alan (Plymouth, Sutton)

  Hunt, John (Ravensbourne)

  Percival, Sir Ian

  Clark, Sir William (Croydon South)

  Hurd, Hon Douglas

  Peyton, Rt Hon John

  Clarke, Kenneth (Rushcliffe)

  Irving, Charles (Cheltenham)

  Pink, R. Bonner

  Cockeram, Eric

  Jenkin, Rt Hon Patrick

  Pollock, Alexander

  Colvin, Michael

  Jessel, Toby

  Porter, George

  Cope, John

  Johnson Smith, Geoffrey

  Prentice, Rt Hon Reg

  Cormack, Patrick

  Jopling, Rt Hon Michael

  Price, David (Eastleigh)

  Corrie, John

  Joseph, Rt Hon Sir Keith

  Prior, Rt Hon James

  Costain, A. P.

  Kaberry, Sir Donald

  Proctor, K. Harvey

  Cranborne, Viscount

  Kellett-Bowman, Mrs Elaine

  Rathbone, Tim

  Critchley, Julian

  Kershaw, Anthony

  Rees, Peter (Dover and Deal)

  Crouch, David

  King, Rt Hon Tom

  Rees-Davies, W. R.

  Dean, Paul (North Somerset)

  Kitson, Sir Timothy

  Renton, Tim

  Dickens, Geoffrey

  Knight, Mrs Jill

  Rhodes James, Robert

  Dorrell. Stephen

  Knox, David

  Ridsdale, Julian

  Douglas-Hamilton, Lord James

  Lamont, Norman

  Rifkind, Malcolm

  Dover, Denshore

  Lang, Ian

  Rippon, Rt Hon Geoffrey

  du Cann, Rt Hon Edward

  Langford-Holt, Sir John

  Roberts, Michael (Cardiff NW)

  Dunn, Robert (Dartford)

  Latham, Michael

  Roberts, Wyn (Conway)

  Durant, Tony

  Lawrence, Ivan

  Rossi, Hugh

  Dykes, Hugh

  Lawson, Nigel

  Rost, Peter

  Eden, Rt Hon Sir John

  Lee, John

  Royle, Sir Anthony

  Edwards, Rt Hon N. (Pembroke)

  Lennox-Boyd, Hon Mark

  Sainsbury, Hon Timothy

  Eggar, Timothy

  Lester, Jim (Beeston)

  St. John-Stevas, Rt Hon Norman

  Elliott, Sir William

  Lewis, Kenneth (Rutland)

  Scott, Nicholas

  Emery, Peter

  Lloyd, Ian (Havant & Waterloo)

  Shaw, Giles (Pudsey)

  Eyre, Reginald

  Lloyd, Peter (Fareham)

  Shaw, Michael (Scarborough)

  Fairbairn, Nicholas

  Loveridge, John

  Shelton, William (Streatham)

  Fairgrieve, Russell

  Luce, Richard

  Shepherd, Colin (Hereford)

  Faith, Mrs Sheila

  Lyell, Nicholas

  Shepherd, Richard (Aldridge-Br hills)

  Farr, John

  McCrindle, Robert

  Shersby, Michael

  Fell, Anthony

  Macfarlane, Neil

  Silvester, Fred

  Fenner, Mrs Peggy

  MacGregor, John

  Sims, Roger

  Finsberg. Geoffrey

  MacKay, John (Argyll)

  Skeet, T. H. H.

  Fisher, Sir Nigel

  Macmillan, Rt Hon M. (Farnham)

  Smith, Dudley (War. and Leam'ton)

  Fletcher, Alexander (Edinburgh N)

  McNair-Wilson, Michael (Newbury)

  Speed, Keith

  Fletcher-Cooke, Charles

  McNair-Wilson, Patrick (New Forest)

  Speller, Tony

  Fookes, Miss Janet

  McQuarrie, Albert

  Spence, John

  Forman, Nigel

  Madel, David

  Spicer, Jim (West Dorset)

  Fowler, Rt Hon Norman

  Major, John

  Spicer, Michael (S Worcestershire)

  Fox, Marcus

  Marland, Paul

  Sproat, lain

  Fraser, Rt Hon H. (Stafford & St)

  Marshall, Michael (Arundel)

  Squire, Robin

  Fraser, Peter (South Angus)

  Marten, Neil (Banbury)

  Stainton, Keith

  Fry, Peter

  Mates, Michael

  Stanbrook, Ivor

  Galbraith, Hon T. G. D.

  Mather, Carol

  Stanley, John

  Gardiner, George (Reigate)

  Maude, Rt Hon Angus

  Steen, Anthony

  Gardner, Edward (South Fylde)

  Mawby, Ray

  Stevens, Martin

  Garel-Jones, Tristan

  Mawhinney, Dr Brian

  Stewart, Ian (Hitchin)

  Ginsburg, David

  Maxwell-Hyslop, Robin

  Stewart, John (East Renfrewshire)

  Glyn, Dr Alan

  Mayhew, Patrick

  Stokes, John

  Goodhart, Philip

  Mellor, David

  Stradling Thomas, J.

  Goodhew, Victor

  Meyer, Sir Anthony

  Tapsell, Peter

  Goodlad. Alastair

  Mills, lain (Meriden)

  Taylor, Robert (Croydon NW)

  Gorst, John

  Mills, Peter (West Devon)

  Taylor, Teddy (Southeno East)

  Gow, Ian

  Mitchell, David (Basingstoke)

  Temple-Morris, Peter

  Grant, Anthony (Harrow C)

  Moate, Roger

  Thatcher, Rt Hon Mrs Margaret

  Gray, Hamish

  Monro, Hector

  Thomas, Rt Hon Peter (Hendon S)

  Greenway, Harry

  Montgomery, Fergus

  Thompson, Donald

  Grieve, Percy

  Moore, John

  Thomas, Neil (Ilford South)

  Griffiths, Eldon (Bury St Edmunds)

  Morgan, Geraint

  Thornton, Malcolm

  Griffiths, Peter (Portsmouth N)

  Morris, Michael (Northampton, Sth)

  Townend, John (Bridlington)

  Trippier, David

  Walters, Dennis

  Wilkinson, John

  van Straubenzee, W. R.

  Ward, John

  Williams, Delwyn (Montgomery)

  Vaughan, Dr Gerard

  Warren, Kenneth

  Winterton, Nicholas

  Viggers, Peter

  Watson, John

  Wolfson, Mark

  Waddington, David

  Weils, John (Maidstone)

  Young, Sir George (Acton)

  Wakeham, John

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

  Younger, Rt Hon George

  Waldegrave, Hon William

  Wheeler, John

  Walker, Rt Hon. Peter (Worcester)

  Whitelaw, Rt Hon William

  TELLERS FOR THE NOES

  Walker, Bill (Perth & E Perthshire)

  Whitney, Raymond

  Mr. Spencer Le Marchant an

  Walker-Smith, Rt Hon Sir Derek

  Wickenden, Keith

  Mr. Anthony Berry.

  Waller, Gary

  Wiggin, Jerry

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments), and agreed to.
  Mr. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to, pursuant to Standing Order No. 18 (Business of Supply).
  Resolved,
  That this House supports the Government's policies to increase incentives to entrepreneurs whilst reducing obstacles which discourage the start-up and growth of small businesses in the United Kingdom.

  TEXTILE AND CLOTHING INDUSTRIES
  Mr. Deputy Speaker (Mr. Richard Crawshaw): Mr. Speaker has selected the amendment in the name of the Prime Minister.
  7.13 pm
  Mr. John Smith (): I beg to move,
  That this House deplores Government policies which are causing massive damage to the textile and clothing industries and leaving them exposed to unfair foreign competition.
  There can be little dispute about the crisis in the textile and clothing industries, the extent of which can be measured in many ways. Hon. Members from all parts of the country have in recent weeks been drawing the attention of the House to the crisis by pointing out bankruptcies and closures. The most telling and poignant measurement is the sharply rising level of unemployment in those industries. Over a number of decades employment in the industries has been declining, but in the late 1970s there was some stabilisation. Since April 1979 there has been a steep and vicious acceleration. Since the Government came to power about 50,000 jobs have been lost in the textile industry and 25,000 in the clothing industry.
  1596
  Those are tragic figures in that short period. They are over twice the loss for the total of the previous three years, which throws the crisis into sharp relief. In one and a little bit years, more jobs have been lost than in the previous three years. The present rate of job loss is six times the average for the preceding three years.
  Domestic demand for the products of the textile and clothing industries has sharply declined. It has dropped by at least 6 per cent. The deflationary policies of the Government and the increase in VAT are largely responsible, particularly in the clothing industry. Over the past year import penetration in footwear and clothing has sharply increased from 25 to 29 per cent., and in textiles from 31 to 33 per cent. Those figures are slightly out of date, and I suspect that the current figures are worse.
  Those industries have always had a good export record, particularly at the high-fashion end. From time to time the Government comfort themselves with the thought that export figures are holding up better than might be expected, but that is an illusion. The present figures relate to past orders and not to current or future orders. When the orders work their way through the system we shall see a sharp turndown.
  I doubt whether our textile and clothing industries have ever been in a worse position. There does not even appear to be a glimmer of light at the end of the tunnel. The predicament can largely be laid at the door of the Government. In their somewhat defensive amendment they refer to what they call their "broad economic policies". Those policies are the basic difficulty. The lethal combination of high interest rates and an overvalued pound, leaving aside cuts in our standard of living and doubling VAT, have caused havoc throughout British industry. Nowhere is that felt more deeply, swiftly and, I suspect, permanently, than in the textile and clothing industries.

  1597
  For much of the 1970s, investment in those industries was high. That is drying up, and confidence is being destroyed. Export effort is being crippled by the savage loss of competitiveness caused by the rise in the exchange rate. That exchange rate also acts as a magnet to draw in imports on an ever-increasing scale. British industry generally is suffering from the effects of the Government's policies. Apart from the general engineering industry, the textile industry is bearing the brunt of those policies. Those broad economic policies are central to our indictment of the Government.
  In addition, we have to add to the problems of the textile and clothing industries the dilution of the regional development policy, and the schemes for employment assistance and financial assistance to investment that were undertaken by the previous Government but are largely disappearing under this Government. A dramatic indication of the plight of those industries, particularly in regard to employment, is given by the figures for the temporary short-time working compensation scheme.
  The Employment Gazette contains figures for May which show that, of the distribution of potentially reundant jobs covered by the scheme, 32–5 per cent. are in textiles and 17 per cent. in clothing and footwear. If one adds those together, one sees that the clothing, footwear and textile industries cover 50 per cent. of all the jobs covered by the temporary short-term working compensation scheme. I hope that the Secretary of State will confirm that that scheme will continue, because it is vital to maintain such little confidence as is left in the future employment prospects of the industry.
  All those problems are bad enough for any industry, but over the years the textile and clothing industries have had to struggle to survive in the face of intense and sometimes unfair foreign competition.
  Mr. Thomas Torney (): Is my right hon. Friend aware that the level of American imports of carpets is 10 per cent. today, whereas it was only 4 per cent. a year ago? Is he also aware that in the carpet industry, which is part of the textile industry, the
  1598
  numbers employed fell from 32,000, to under 26,000 in May this year? Those numbers are now down to 25,000, a quarter of whom are on short time. This is due to the unfair subsidisation of American oil used in the manufacture of tufted carpets.
  Mr. Smith: I am grateful to my hon. Friend for drawing attention to that serious matter. A little later in my speech I shall concentrate specifically on the question of man-made fibre imports from the United States.
  We have two problems relating to imports which affect the textile industry—those that arise under the multi-fibre arrangement and those arising from the United States. It is true that the multi-fibre arrangement provides the best overall framework that can be obtained for the regulation of imports from low-cost countries. When it started in 1973 it had a number of important defects. Some of these were put right in 1976 by the previous Government, but I am under no illusions that there are still a number of defects to be put right when the Government renegotiate the arrangement.
  Some problems will be difficult to deal with—for example, those of free circulation and that of the Mediterranean associates. These problems are complicated by the attitudes that are taken in the European Community, and also by what I might describe as a certain lack of alacrity by the EEC Commission in monitoring the arrangement and seeing that the quotas are adhered to. I am not underestimating some of the difficulties that exist in this scheme. I have no doubt that other hon. Members will point out defects that affect firms in their own constituencies.
  The present MFA will have to remain in force until it is renegotiated in 1981. I hope that the House will concentrate for a moment on the importance of successful renegotiations in 1981. The Government must set clear objectives for what they hope to achieve. When they came to office they did not seem to have any clear idea about the importance of the renegotiation in 1981. In the months since they were elected we have pulled them around to a more realistic appreciation of the need for that, but that hesitation will be seen by other countries in the EEC as a lack of resolve on the

  1599
  part of the Government, let alone by those with whom we must negotiate outside. We should like the Government to commit themselves to certain objectives now, and we hope that they will campaign within and without the EEC to achieve them.
  The most important new thing that needs to be negotiated is a recession clause. With the benefit of hindsight, I think that it was a mistake not to have one in the 1976 arrangement. It was not foreseen that there would be a world recession on the scale that we see at present, and certain disastrous policies that are now afflicting the industry were not being proposed then, or even thought of. It is important that the Government should make the recession clause one of their objectives. I am being frank about the position, and I hope the Government will be equally frank.
  Mr. Cyril Smith (): It is very important that the right hon Member should make the point that even under the 1976 arrangement there is nothing to stop the Government from doing something to revise the existing quotas.
  Mr. John Smith: I believe that the whole MFA must be constantly policed and monitored by officials from the member States, including this country. It must be watched very closely because the Commission, particularly, has a habit of allowing the horse to gallop around the course long before it even thinks of slightly closing the stable door.
  Mr. Robin Maxwell-Hyslop (): Does the right hon. Gentleman agree that one of the disastrous weaknesses of the MFA is that when additional signatories come in they are given an extra quota, rather than an alloction within the existing quota? That seems to be the greatest single weakness of the arrangement.
  Mr. John Smith: That is another fair criticism of the MFA, and there are problems that will be caused by the accession of other countries to the EEC. The hon. Member's point is also particularly relevant to China. There is a possibility of a massive inflow of textiles from that country if care is not taken. A recession clause is something that should command the assent of all Members of the House, and the Government should start cam-
  1600
  paigning for it now, with the resolve of a united House of Commons behind them.
  There is one other important area that has come very much to the fore in the last 18 months—the upsurge of man-made fibres from the United States, to which my hon. Friend the Member for Bradford, South (Mr. Torney) referred. Here the Government are not faced with the complexities of the MFA, and I believe that they have been plainly incompetent in dealing with the matter. The problem arises from the unfair policies of the United States Government, who intervened to ensure lower energy prices, which were translated into lower feedstock prices for their man-made fibre producers. That is unfair trading.
  This problem was realised by the previous Government, and in April 1979 I proposed a motion to the EEC Council of Ministers—the Council dealing with foreign affairs—and it was resolved that in the event of artificial differences in the price of energy and petroleum raw materials the Community would have recourse without delay to the appropriate provisions of the GATT. There was a recognition that action needed to be taken. I am afraid that the present Government did nothing. They were hoodwinked by the EEC Commission and the United States Government into permitting long delays in the negotiations. That was, of course, in the interests of the United States exporters, who were busy cornering their share of the market while the long-delayed negotiations were going on.
  In February 1980, many months after the Government took office, they received EEC approval to impose quotas on two products. They asked for them on three products, including tufted carpets, for which they were given no quota at all, so there remains no protection against the flood of imports of tufted carpets. On nylon carpet yarn the quota for 1980 was 30 per cent. higher than the disruptive level of 1979, and for polyester filament yarn the quota allowed consolidation of the considerable increase that had taken place in 1979. That is a hopeless form of protection.
  I believe that in the course of these negotiations the Government played their cards badly and were outmanouevred by the United States. They have allowed a

  1601
  manifestly unfair state of trading to continue, and the protection offered by these quotas is simply hopeless. For all those reasons, we indict the Government.
  Mr. Jim Marshall (): Does my right hon. Friend agree that it is grossly unfair to the Third world countries, which are adversely affected by the MFA, when we take protectionist measures against them but seem to shrink away from taking measures against our more powerful trading ally, the United States?
  Mr. John Smith: There is a great deal in what my hon. Friend says, especially when we know that the EEC as a whole, under the MFA, takes a far larger share of the Third world exports than does the United States, which has a quite restrictive agreement on access of Third world goods. The problem that arises is serious. I believe that the figures for our trading relationship with the United States will show that it is deteriorating badly over the present year. This is due to the overvalued pound, and for other reasons. There will have been great penetration in this area.
  Mr. Michael Latham ()rose—
  Mr. Smith: I have given way a great deal, and I am not prepared to do so again. Many hon. Members wish to speak.
  I deal now with the defensive terms of the amendment. Hon. Members will notice that the Government give support to the multi-fibre arrangement, with the important qualification "wherever possible". That allows a considerable loophole to the Government. The amendment talks of the "existing" multi-fibre arrangement. There is not a hint of a commitment to renewing the arrangement.
  The Government refer to new restraints that are being imposed, not all to the good. To say that 32 new quotas have been approved does not tell the House very much. We want to know what quotas, at what levels, and with what effect. Over the last year there has been a considerable increase in import penetration into this country.
  1602
  At the end of the amendment, the Government refer to their broad economic policies. The truth is that these broad economic policies—high interest rates, the over-valued pound, the cuts in the British standard of living and the whole deflational impetus of the Government's policy—are creating disaster for British industry. That disaster is felt all the more keenly in the textile industry, weakened as it is by all the other factors to which I have referred. Faced with this grim situation for the industry, for its management and for the very large work force that it sustains throughout the length and breadth of these islands, it did not seem right to the Opposition to rise for the Summer Recess without drawing the attention of Parliament and the nation to the gravity of the problem. That is what we seek to do. I hope that the House will support our motion. I believe that it is sensible.
  7.32 pm
  The Secretary of State for Trade (Mr. John Nott): I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
  "this House welcomes the Government's continuing commitment to support, wherever possible, the textile and clothing industries under the existing Multi-Fibre Arrangement which was both negotiated and accepted by the previous Labour Government; acknowledges that the Government has negotiated through the European Community a number of new restraint arrangements in addition to 32 new quotas on imports from other suppliers since it came into office; expresses its concern at the continuing decline over many years of textile employment; applauds the successful record of the textile and clothing industries in export markets; and believes that the long-term health of the industries can best be restored by the success of the Government's broad economic policies".
  It is a little hard to believe—I put it no higher—listening to the speech of the right hon. Member for Lanarkshire. North (Mr. Smith), that until 15 months ago he was Secretary of State for Trade in the Labour Government. During his Government's period in office, the number of people employed in the textile and clothing industries fell by 150,000. His attempts, no doubt sincere, to stem the long-term decline in textile employment signally failed. More than 700,000 jobs have been lost in the textile industry since 1950. It was the right hon. Gentleman's predecessor and the right hon. Gentleman himself who had charge, for

  1603
  the then Labour Government, of the negotiations which created the present shape and structure of our trading arrangements for textiles. We have not changed the structure of the trading arrangements for textiles. We have kept that structure in place and we have substantially increased the number of quotas and restraint arrangements that we inherited from the right hon. Gentleman and his colleagues.
  I should like to remind the House of the current international trading arrangements for textiles that we inherited from the right hon. Gentleman on 5 May 1979, the date on which he tends to imply that the problems all began. First, the basic elements of the multilateral trade negotiations were skilfully conducted and sometimes orchestrated by Mr. Edmund Dell between 1976 and 1979. The ratification of these new world trading agreements fell to us but the essential features for the maintenance and strengthening of the open trading system under the MTNs were negotiated and agreed by the Labour Government—and by the right hon. Gentleman himself. It is remarkable how only 15 months later all that seems to have been forgotten.
  The specific feature of those negotiations which cause textile exporters particular concern is the high level of tariffs against our textile exports overseas. The wool textile industry, hard-pressed but signally successful as an exporter, is confronted by tariffs of 44 per cent. against our exports to the United States and tariffs of 34 per cent. or more against our exports to Australia. I can give many other examples. In contrast, the EEC tariff, at 13 per cent., offers to foreign companies opportunities in the valuable European market that are clearly not matched by similar opportunities for British exporting firms. Even when the final tariff cuts of the Tokyo Round have been made, we shall still have a tariff of 35 per cent. against our woollen textile exports into the United States. The House and the country should know that, however dense the smokescreen to which we have been treated by the right hon. Gentleman, these agreements were made while he was in office and some of them while he held my present job.
  I am not saying that this country has an automatic right to have a balanced trade in each particular sector. Of course
  1604
  we have not. I do believe, however, in reciprocity of opportunity and I make no disguise of the problems of access that our textile exporters face even at the end of the latest tariff-cutting round. This lack of reciprocity is a matter of deep concern to the Government. The Minister for Trade and I have visited some 40 countries in the last 15 months. Our principal objective is to get those tariff barriers down against our goods. In my visits to countries such as Korea and Brazil, both publicly and privately to Ministers, I have done my utmost to press them for greater equality of opportunity for our textiles, but I have to recognise that we have their exports to us under constraint. In 1979 we ran a surplus with these countries of £1 billion on our balance of payments.
  Mr. Michael Meacher (): The right hon. Gentleman is well known for his antipathy to import controls on the ground that they would lead to retaliation. If he is so strongly opposed to what I agree are excessively high tariffs that are unfair, why does he not retaliate?
  Mr. Nott: Why did the hon. Gentleman, while a Trade Minister, not resign when his own Secretary of State agreed to these world-wide tariff arrangements under the MTNs?
  I come now to imports. If the problem of low-cost imports stems in part from the lack of a "recession clause" in the existing MFA, as mentioned by the right hon. Gentleman, there may be fault, but the fault cannot lie at the door of the present Government. By no means do I claim that the right hon. Gentleman's predecessor could have obtained a "recession clause" in those negotiations. I do claim, however, that it is a preposterous assertion to suggest that the growth in low-cost imports during the present recession is in some way due to us. An inbuilt growth in low-cost imports was an integral part of the MFA that the right hon. Gentleman had a part in negotiating. That growth pattern in imports was specifically agreed and accepted by the whole Labour Government of the day, including the right hon. Gentleman himself.
  I remind the House of the facts. Growth rates under MFA II agreed by the Labour Government probably average between 1 and 2 per cent. a year. The

  1605
  Labour Government negotiated a 7–5 per cent. growth per annum for T-shirts from Korea. The Labour Government agreed a 3–78 per cent. growth per annum for jerseys from the Philippines. The quota for jerseys from Sri Lanka is 10–1 per cent. per annum and for trousers from Malaysia 16.9 per cent. per annum. They are the basic growth arrangements, superimposed upon the quotas, agreed by the Labour Government. It is not in our power to change them until the expiry of the existing MFA at the end of 1981. Thus, the basic framework governing trade in textiles was already in place when we came to office. I do not deny that we have not been able to change it.
  Mr. Torney: Playing politics from the Dispatch Box does not help. It is no consolation to the thousands of my constituents in Bradford who are jobless, who face losing their jobs, or who are already on short time. We want action on the quotas. The Government must examine the problem caused by Portugal and Spain threatening our textiles. We want a social clause inserted in the agreement. If the Secretary of State cannot achieve that through the MFA, he should act unilaterally.
  Mr. Nott: Now that the hon. Gentleman has made his constituency speech and thereby kept other hon. Members out of the debate, perhaps he will withdraw from the Chamber. He has made two constituency speeches already. As a politician, I do not see any reason why I should not bring politics into the debate.
  Perhaps it is not universally appreciated that the MFA was not imposed on the developing world. It was a two-way deal. It restricted access to our markets in return for an assured growth in exports to us by the developing world. With over 400 quotas now in place, we cannot abandon the arrangement before the expiry of the present agreement.
  Within the overriding constraints of the MFA, agreed by the previous Government, we have been continuously active in extending wherever possible protection for our industry. Since we took office 15 months ago, 32 new quotas with 14 countries have been negotiated through the Commission. Each has re-
  1606
  quired painstaking and lengthy negotiation. The MFA was never an imposed solution. It was a bilateral and overall GATT deal. The new quotas have had to be negotiated. That has taken time.
  Mr. John Smith: I hope that the right hon. Gentleman will be fair and will concede that I did not attack the present Government on the basis of the existing MFA since I know that the rules cannot be changed until renegotiation. My criticism of the Government was twofold. First, they are slow to agree to a renegotiation of the MFA. Secondly, they should seek a recession clause as an objective. Will he deal with those matters?
  Mr. Nott: The right hon. Gentleman's motion is critical of the Government for what is described as "unfair" trade. He mentioned a "recession clause" and said that with hindsight it was probably a pity that we do not have one. Some of the problems about which hon. Members complain stem directly from an agreement into which the right hon. Gentleman entered.
  Mr. Jack Straw (): Will the right hon. Gentleman give way?
  Mr. Nott: I have much to say. I am sure that the hon. Member will get into the debate.
  We inherited many outstanding problems with individual countries. For instance, Turkey, Cyprus, Malta and China pose problems. As members of the Community we have not been free to act unilaterally in each of the cases, but we have done our best for the textile industry. If hon. Members have questions about the many negotiations involved, the Minister for Trade will deal with them later.
  I appreciate that imports exceeded two of the global ceilings, but by only small amounts. As opportunities open up for British exports—in China, for example—we cannot ignore the need for jobs in other British industries. The right hon. Member for Lanarkshire, North would not if he still held my post. Total inflexibility might possibly benefit some sections of our textile industry, but it would be damaging to our wider trading interests, and to our textile exports.
  The MFA is concerned with the low-cost, developing countries. It is easiest

  1607
  to see them as the greatest threat to our textile industry. But nearly 60 per cent. of our imports of clothing and textiles come from other advanced industrial countries. We cannot claim that they are taking advantage of low wages. In 1979 our imports from developed countries totalled about £1–6 billion, but our exports to that same group of countries also totalled £1.6 billion. We were nearly in balance. Such an exchange of goods is what trade is all about. We cannot rush into protection for the textile industry against developed country competition because the first to suffer from retaliatory action would probably be the textile industry itself.
  I turn to the question of synthetic textiles from the United States. We made our applications to the Community first under an article of the GATT. We failed. We made another application under article XIX of the GATT to restrict imports of three products, including carpets. We did our best to persuade the Commission to include carpets. It was agreed that only polyester filament yarn and nylon carpet yarn should be included. At the time of the application the penetration figure for tufted carpets into our market from North America was 8½ per cent. That figure has now risen to between 10 and 12 per cent. of the market. The Commission and the Government are monitoring this situation. I do not rule out further action if it becomes essential. We must have good cause before we take action against the United States under the international rules of procedure.
  I negotiated the quotas through the Commission. I went to Washington to discuss the matter. As soon as we obtained the quotas the United States applied for compensation of $ 60 million against our industry. The negotiations are not concluded. The United States claim that we must agree to that compensation and impose lower tariffs on other textiles in the European Community. [HON. MEMBERS: Why?] We operate under the rules of international trade. We have a huge export business to the United States. It is not in the interests of the Western trading community to destroy the basis of international trade which has regulated the trading world since the war.
  I did my best to achieve a good deal with the United States. I regret that we
  1608
  were not able to negotiate a better one. As soon as we imposed the quotas, complaints were made because by imposing quotas we raised the basic price of raw materials for large sections of the textile industry. The parts of the industry affected are upset at the quotas. Those are the facts of life when dealing with a complex industry such as the textile industry, which depends largely on low-cost imports for its basic raw materials. It is impossible to get it right both ways.
  Dr. Keith Hampson (): Talking of realities, the United States industry has the gross advantage of deliberately keeping gas prices below world prices. Our industry relies on oil for basic raw materials. Since the United States does not intend to decontrol gas prices until 1985, and most of our chemical producers do not think that that target will be met, we face a long-term, critical problem.
  Mr. Nott: I entirely agree with my hon. Friend. That was one of the principal justifications for our ability to apply for the quotas in the first place and we naturally used that principal argument.
  This problem, which we have raised continuously with the United States, goes on and there are now before the Commission proposals for definitive antidumping duties to be imposed on acrylic yarn from the USA. A formal investigation is going on into the pricing of American polyester filament yarn and the industry is now pressing for antidumping action to be taken against polyester woven fabric. The anti-dumping unit in my Department is now helping with these cases which, to a considerable extent, are the result of low energy pricing in the United States.
  What more can we do apart from exercising constant vigilance against fraud together with a continuing determination to monitor and uphold the existing agreements? Even the upholding of existing agreements is not without its dangers. We shall uphold them vigorously. But only recently there was an example of how difficult it is to arrive at a correct balance in these matters.
  At our insistence quotas were imposed on imports of shirts, blouses and trousers from Indonesia. We took that action because we were concerned about the effects on other MFA suppliers of our

  1609
  agreeing to large quotas. But already we believe that as a consequence of our insisting upon upholding the quotas we may have lost a £4 million export order for scientific instruments.
  That single order is worth as much as the whole of our textile imports from Indonesia at present. Apart from that, we have export orders worth over £150 million with Indonesia in a late stage of negotiation with the possibility of a further £700 million worth of trade. At the moment our textile imports from Indonesia are extremely small.
  We shall uphold the quotas, but I must tell the House that we cannot continue always to transfer job losses from one industry to another. That is the dilemma faced by any trade department and it was the dilemma that faced the right hon. Gentleman when he had my job.
  Mr. Barry Sheerman (): Will the right hon. Gentleman tell the House how many successful actions there have been against dumping in the past year? I am not talking of Indonesia; I am asking how many successful actions against dumping have been drawn to the attention of his Department.
  Mr. Nott: I shall check the figure. My recollection is that the figure is about 14 since we came into office.
  Mr. John Smith: That is trivial.
  Mr. Nott: It may be trivial, but I guess that the figure is rather higher than that which obtained when the right hon. Gentleman was in the Department. However, we shall check the figures and inform the right hon. Gentleman. He spent five years in the Department of Trade negotiating half the problems from which the country now suffers. What more can we do?
  Mr. Bob Cryer (): That is typical.
  Mr. Nott: The hon. Member for Keighley (Mr. Cryer) had the good sense to resign. It was a sensible thing for him to do; the record of the then Government should have led to many more resignations.
  Mr. Cryer: It is no good the right hon. Gentleman answering my hon. Friend the Member for Huddersfield, East (Mr.
  1610
  Sheerman) in that trite way. The Secretary of State must accept that the MFA was renegotiated by the Labour Government from the very poor base instituted by the former Tory Government. Therefore, the question of anti-dumping hardly arose because there were only 12 months of Labour Government during which anti-dumping action could have been taken.
  Mr. Nott: The MFA has nothing to do with anti-dumping. What more can we do? I have already spoken of the 32 new quotas which have been negotiated since we came into office. There are new voluntary restraint agreements with several countries and we are, of course, continuously making applications to control free circulation under article 115.
  But there are other means by which we are endeavouring to help the textile industry and British purchasers of its products. Nothing will lead me to say that the plight of the textile industry is not extremely grave. Of course it is.
  Mr. Straw: That is because of the Government's policies.
  Mr. Nott: It may be something to do with some policies, but, as I have said, 150,000 jobs were lost in the textile industry during the period of office of the Labour Government.
  I stoutly defend the right of British people to have a wide choice of goods at prices they can afford. But that right includes the choice of buying British. One of the most heartening developments of the past year has been a greater coming together of retailers and manufacturers to discuss their problems and their requirements. I am sure that that can greatly improve the responsiveness of British manufacturers to customer preference.
  Although the Government, local authorities and public corporations are obliged to look for value for money, we have a prime obligation, as public purchasers, to ensure that British manufacturers provide that value. Well over 90 per cent. of central Government purchases of textiles and clothing are from United Kingdom sources. I trust that all hon. Members, whether as trade unionists, or through their connections

  1611
  with local government and the nationalised industries, will do their best to convince the public sector of its responsibility. That responsibility is to use its purchasing power to specify the right design, price and delivery from British manufacturers. The House will also know of the determination of my right hon. Friend the Minister for Consumer Affairs to provide for greater consumer preference under her origin marking proposals for textiles but I shall not deal with that now.
  I turn briefly to the question of the next MFA. I do not think that we have been slow to say that we shall do our utmost to negotiate the best possible deal that we can for the British textile industry. There is no reason for us not to do that. That is our job. I said to my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman):
  "We shall obviously, discuss whether there should be a recession clause in MFA III. That will be a central matter for negotiation and I take the comments of my hon. Friend to heart."—[Official Report, 14th July 1980; Vol. 211, c. 1036.]
  Of course, we shall do our best to negotiate a sound MFA III for the industry. That is what we are here to do.
  Mr. John Smith: So that the House knows where it stands on this matter, will the right hon. Gentleman say whether it will be one of the Government's central objectives to seek to obtain a recession clause?
  Mr. Nott: I have said we shall get the best possible deal that we can for the textile industry. I have explained to the many delegations of trade unionists and employers who have seen us that it would be foolish of us—because it would not help in negotiations—if we tied ourselves down in the House of Commons to what we hope to achieve, what we can achieve and what we shall fight for. I do not think that that would help us to get the best possible deal. However, MFA III, like MFA II, will not be an imposed arrangement. It will be a deal between groups of countries that will involve an extremely difficult and delicate set of negotiations.
  When the present Government took office in May 1979 we inherited an environment in which 150,000 jobs had
  1612
  been lost in the previous five years. Over 32,000 men and women were kept in work by the temporary employment subsidy, which the Labour Government, if I recollect rightly being told in the textile areas, were committed to ending. Under the Labour Government we were a temporary employment Britain and, to a large extent, we had a temporarily employed textile industry when we took over. We shall see, after five years of Conservative Government, whether we have succeeded in arresting the decline.
  I deplore, as do all my right hon. and hon. Friends, the acceleration of unemployment in the textile and clothing industries during the past few months. But the notion, sedulously fostered by the Opposition, that insecurity, lack of confidence, decline and import penetration began in June 1979 is simply and clearly not the case. The clothing and textile industries have had grave problems for many years.
  Our commitment is to do our best to ensure the arrest of that decline and see it reversed. That is our task and I am happy to have it. Whether we succeed or fail will ultimately depend upon whether the industry can produce the goods that the public wish to buy.
  The right hon. Member for Lanarkshire, North dwelt on the high price of the pound. It is not simply a question of price. If price were to be the prevailing factor, we should sell no woollen and worsted products in the United States over a tariff barrier of 44 per cent., but we do. Last year over that tariff barrier we exported to the United States 2–3 million square metres of cloth compared with 2 million for the year before when the right hon. Member for Lanarkshire, North was in office.
  The notion that as more low wage countries enter the world market with their products we can become more competitive with a weak pound where we are not now competitive with a strong pound is false. When the Labour Government lurched from one financial crisis to another, with sterling falling in value from $ 2–40 to $ 1–60, there was no sudden upsurge in overseas sales. The decline in the United Kingdom textile industry was not arrested.
  Mr. Austin Mitchell (): I am sorry to interrupt the Secretary of State's long procession of excuses for why the Government can do nothing to arrest the decline. Since he is now discussing the value of the pound, does he accept that in a highly competitive market, where margins are very slim, the fact that the pound is heavily over-valued—the Financial Times last week said that our decline in competitiveness last year was 30 per cent.—constitutes such a disastrous burden that the industry simply cannot bear it?
  Mr. Nott: The hon. Gentleman's point about declining competitiveness is most serious. In the past five years competitiveness has declined by 50 per cent., but that is overwhelmingly due to wage increases generally—
  Mr. Cryer: Not in textiles.
  Mr. Nott: I talk of the economy generally in response to the general comment of the hon. Member for Grimsby (Mr. Mitchell).
  Last year, with a strong pound, the value of exports of textiles rose to over £2 billion. So far this year they are up to £900 million against £791 million for the corresponding period last year. That represents an increase in textile exports this year of 15 per cent. It has happened in spite of a high value pound because our textile industry came out top on fashion, design, delivery and style, and that, with more and more low-wage countries coming into the business, has to be where our future lies. We have no choice.
  Even if we wish to do so we cannot wish away the benefits of North Sea oil. They exist and they are ensuring a higher standard of living than would otherwise be possible. It is a matter of congratulation, optimism, hope and confidence that even in a recession our clothing industry managed to expert £750 million of goods last year, and is aiming for £1 billion this year. If the clothing industry has that target even with a strong pound it is not for me to criticise it.
  In the meantime, nobody can be other than deeply concerned at the current loss of employment in the textile industry. However, over the period from 1977 to 1979 consumption in this country rose generally by 10 per cent. while non-oil
  1614
  industrial production generally rose by only 2 per cent. In three years we suffered a 30 per cent. decline in our competitiveness. If the Government were to reverse this process a recession from the pre-election consumer boom of 1978 and 1979 was inevitable, and this has led to falling demand for textile products, to de-stocking and to low production with some of the severe difficulties that face the industry today. But after a pre-election boom demand was bound to be lower. As my right hon. Friend the Prime Minister said yesterday, "No U-turns are available." Until inflation is reduced and competitiveness is restored to our economy the Government cannot and will not relax their present policy.
  8.5 pm
  Mr. Ben Ford (): First I congratulate my hon. Friend the Member for Batley and Morley (Mr. Woolmer) on having been selected to reply to the debate for the Opposition. My hon. Friend has worked assiduously in the Chamber, and I am sure that the House will listen to him with interest.
  The question to be asked tonight is the one that was put in an article in the Investors Chronicle of 20 June. Under the heading
  "Will textiles become the new waste land?"
  it said:
  "The pace of decline in British textiles has speeded up dramatically this year. The stockmarket predicts disaster."
  It continued:
  "Of the embattled sectors of British textiles, the Yorkshire woollen industry is probably most at risk. It has already been in the doldrums for a couple of years and could now be on the verge of extinction."
  Hon. Members and all organisations representing sections of the textile industry have approached the Government, many with constructive suggestions, and the response that they have received is summed up in the Yorkshire Post report of 17 July, which reads:
  "A plea for a Government commitment to prevent the textile industry from slipping below an agreed level fell on deaf ears in Whitehall yesterday."
  I do not think that the Yorkshire Post is noted as a particularly Left-wing Socialist organ.
  Throughout this year mills have been closing, on average, at the rate of one per week. Redundancies in June totalled

  1615
  1,245. The total for this year so far is 12,100. The average is 2,016 redundancies a month—2,016 personal and family tragedies—yet the Government have turned down a proposal for a new skill-centre for training redundant people in Kirklees. It seems that there is no end to the decline in the textile industry, and again one must ask
  "Will textiles become the new waste land?"
  I want to put one clear and specific question to the Government. It may be said to be hypothetical, but it becomes less so every day, as I have illustrated. There have been reports in local newspapers in the past few days of mill closures and redundancies. Should a national emergency occur and our imports be interfered with, and, as has been suggested in the quotations that I have made, there is no textile industry, what contingency plans have the Government to meet the demand? What would people do for clothes? It seems that the Government would have us back in the days of the spinning wheel and homespun cloth. We need textiles for many classes of products—fanbelts, tubing, fire hoses, overalls, parachutes, brake linings, tents and upholstery. The list is endless. Most products of engineering could not operate without some component of textiles. I repeat, what plans do the Government have in the event of the total loss of the textile industry should a national emergency arise? I can envisage the time when our national flag will be smuggled in by submarine from Hong Kong.
  I understand the Government's philosophy. It is enlargement of the private sector—more competition, high interest rates and a strong pound. I do not agree with it. It is quite clear, however, that they are attempting to shake out inefficient firms and to tame the trade unions, which in the textile industry have cooperated in the industry's rationalisation and by making moderate wage demands. Yet they are still suffering, despite the repeated words of the Prime Minister. We have not often had a Government who, in engineering terms, are prepared to test their theories to destruction.
  It becomes a matter of fine judgment when to modify those policies in time for industry to stage a recovery, particularly when we are in the throes of a world recession. For the textile industry that time is here now. If the party
  1616
  opposite errs in making that judgement, the result will be economic and social chaos. They, and perhaps the political system as we know it, will be swept away, and the Prime Minister and her right hon. and hon. Friends will for ever be reviled in the annals of British history.
  8.11 pm
  Mr. Tom Normanton (): Right hon. and hon. Members who are present in the Chamber tonight, and who have been present for our many other debates on textiles, could be forgiven for having a feeling of dé jà vu, but today we are dealing with four major differences from those debates, which are probably still vividly—certainly in my personal and industrial experience—deeply and painfully in our minds.
  The first difference is that whereas in the past when we talked of textiles what we really meant were cotton products and products from allied textiles and fibre sources and processes, today the problem extends right across the board. Secondly, whereas in the past we have expressed our concern about the British textile industry, today the problem faces the whole of the European industrial sector, not simply Britain in isolation. We in the Western world are experiencing one of the most traumatic and painful recessions in our history.
  Thirdly, when we talk about the competition facing our industry we must realise that not only is there a new source of competition; that competition has been regulated, which has eased some of the impact of the recession. We are experiencing competition from the sophisticated producers of the world, particularly the United States. Fourthly, we have handed over to Brussels full responsibility for commercial policy, including responsibility for dealing with anti-dumping measures. I make a particular point of that, for reasons that most hon. Members will appreciate.
  I have highlighted the four differences from previous debates. I wish to make four points in connection with those differences. First, we are facing a multi-fibre, multi-process and multinational industry that is in considerable difficulty. An industry of that magnitude demands an appropriate mechanism to deal with the difficulties that it is facing, both now and in the future. A man-made fibre

  1617
  arrangement has been in operation and will continue until the end of 1981. Without it there would have been total disaster for the British and European textile industry.
  We must concentrate on discovering ways in which the policy that was appropriate in 1977 can be updated to deal with the changes that have taken place since then. As the Secretary of State said, what is desperately needed is a commitment by the Government to a more appropriate regulatory mechanism in international trade and to the expansion of trade. Any move that restricts or restrains trade is bound to be to the detriment of our economy as a whole. I hope that my right hon. Friend will apply his mind and ingenuity to that new sort of regulatory mechanism—an updated MFA—to try to ensure that by 1982 we have an appropriate measure to deal with the pressures that the textile industry will face.
  Secondly, I believe that the GATT, which has been responsible for an enormous expansion of growth of world trade, and which was an appropriate mechanism for the world trading and industrial economy of the 1950s, should be updated in the light of the new conditions into which we are moving.
  Thirdly, I earnestly hope and believe that my right hon. Friend the Secretary of State will exercise all the dynamic drive and determination that is necessary to ensure that the drafting of the mandate, which the Council of Ministers has asked us to present to the Commission, reflects the needs of the textile industry for the next five years. That would be a starting point for our negotiations for a new mandate—a new MFA.
  The depth of the crisis has been aggravated by the American Government's concealing subsidies on man-made fibre production. There is a danger that if we and our European partners step too far in the direction of a regulatory mechanism that can be interpreted and then played back against us, we shall be the poorer. A trade war and a trade protection policy would bring disaster. I was glad that my right hon. Friend the Secretary of State repeated that. It needs to be repeated again and again.
  I make one suggestion to my right hon. Friend, and I hope that it will reach the
  1618
  ears of the important and responsible people in the industry. The representational machinery in the textile industry is the oldest in Britain. The employers and unions on both sides of the dividing line between Yorkshire and Lancashire have seen the burden of the development of representational machinery. I earnestly hope that we can move to establishing one voice for the British textile industry, instead of continuing with a surplus of representational machinery. We want one voice for the British textile industry and one voice for the European textile industry. The sooner we have that the better we shall be in the representation of our interests to the European Community and to the Governments of the nine Member States.
  The fourth and probably most important point is to indict the Labour Government for the way in which, throughout the whole period of their Administration, they undermined Britain's credibility in the Community. That attitude left behind it an albatross around Britain's neck, and it has been a great hindrance in our efforts to be more effective in representing our interests within the framework of Community policies. I hope that my right hon. Friend will concentrate all his efforts to ensure that his representations, unlike those of the Labour Government, have credibility in the eyes of the politicians and administrators of the other member States.
  I trust that my right hon. Friend will continue with his efforts to be even more effective in influencing Community policy. At least his political integrity, in terms of our membership of the Community, is crisp and clear. That is a good starting point from which to enter into negotiations.
  I am sure that the House will reject the critical and highly hypocritical Opposition motion.
  8.21 pm
  Mr. Frank R. White (Bury and Rad-cliffe): I associate myself with the compliments paid to my hon. Friend the Member for Batley and Morley (Mr. Woolmer), who will be replying to the debate, and congratulate him on his position on the Front Bench.
  I start in this debate, as I have in all the textile debates in the House since 1974, by asking this Administration, just

  1619
  as I have previously asked the Labour Administration, this simple, basic question: do the Government want a British textile manufacturing capacity and, if so, what is its level to be? Is it to be 20 per cent., 25 per cent., 30 per cent. or 40 per cent. of the British market? Let us define it sector by sector and justify it for all the reasons which have been expounded by hon. Members on each side of the Chamber over many years. Once we have defined it, everything else falls into its place.
  Ministers, past and present, have catalogued instances of action taken on behalf of the industry. We have seen it again tonight. Unfortunately, that action has followed disruption and damage to the industry rather than preceding it or anticipating it. No Government and no Ministry can claim not to have received early warning signals from each side of the industry.
  Hon. Members have made reference to the American man-made fibre imports. They were anticipated over 15 months ago. The damage that they would cause and have caused to the industry was catalogued and related to the Department and to Ministers by each side of the industry.
  Regrettably, after mill closures and loss of capacity and jobs that cannot be replaced, the Government indicate their actions and have the gall to expect us in the industry, and those on the unemployment list, to be full of gratitude.
  The Prime Minister has indicated to the House on a number of occasions that she rejects import controls but that she would act to prevent disruption and unfair imports coming on to our market. She would also further help by directing positive policies towards buying British through a campaign generated by Government contracts. Her words would carry more weight if her Government's actions followed her good intent.
  This morning hon. Members on each side of the House will have received a leaflet from the Society of Civil and Public Servants entitled "UK Exposed!" In this document the society makes a strong case against Government cuts in the Customs service. Under the heading "The Control of Cargo" it states:
  "Cuts in the Department have:—severely reduced the number of consignments selected
  1620
  for examination. These checks are necessary to ensure that … duties are properly levied, import restrictions are not evaded, quotas are not being exceeded and so on."
  I ask the Minister what good it is crowing to the House about his quota policies if he fails effectively to control those quotas at the point of entry.
  In the area of public purchasing, the United Kingdom Government lead the field in the EEC in opening our tendering procedures to the Community, while the rest of the Community—notably France and Germany—operate very strict national closed shops. I trust that the hon. Member for Cheadle (Mr. Normanton) will take that message back to his previous incarnation. These two instances alone indicate areas where Government deeds fail to match their words. The United Kingdom insists on playing to the rules, while the rest practise karate. Unfortunately, it is the United Kingdom textile operative who takes the chop.
  I realise that many hon. Members wish to speak, so I shall not repeat the arguments or go over ground that they may wish to cover. I would rather quote to the House two instances which have occurred in my constituency. They are living examples of the failure of the Government to respond to the needs of the industry and fully justify the motion before the House this evening.
  Recently, Bury Ring Spinning Company went into liquidation and 120 operatives lost their jobs. The company specialised in fine spinning and doubling, and had an established place in the market for its type of product. Having weathered most of the market difficulties in the past, last year the Government's monetarist policies placed it in severe financial difficulties, but they were difficulties that the company set out to overcome. It secured a large order from a well-known multinational company but could not fully service the order, as it appeared that for three to four months in the summer it would have a severe cash flow problem. The bank refused to bridge the loan—the period involved was three months, as I have mentioned—despite the fact that on presenting the accounts it could be seen quite clearly that there would have been a break-even position in the autumn, going into profit by the end of the year.

  1621
  The multinational company concerned, anxious to maintain this valued supplier, arranged to cancel some outstanding debts and offered to match the bank pound for pound on credit to keep the company in business. The bank refused, and hence the receiver moved in. That capacity cannot be replaced in this country. Not only have jobs been lost; we have now presented an opportunity for import penetration to a foreign supplier whose Government, unlike our own, are actively supporting their textile industry in a most aggressive manner. Bury Ring Spinning Company has been sacrificed on the altar of false free market forces.
  The other company presents what I believe to be one of the most distressing examples of the plight of the textile industry. For 238 years A.C. Bealeys in Radcliffe has operated a textile finishing plant. The family which founded that company was a great benefactor to the community. Opposite the factory is the Bealeys community hospital, once a maternity home, where seemingly half of Radcliffe's citizens first saw the light of day.
  During past years the company has diversified its product range, has introduced high technology and, with a cooperative work force, has fought to maintain a place in the market. For the past few years it has either been profitable or it has broken even. Anyone who can say that in textiles for the past five years has been going some. The parent company, Whitecroft, has maintained a level of investment.
  Why now, after weathering all that and after 238 years, should this company, which has followed all the positive criteria urged upon the textile industry with full union support all along the line, fail?
  Mr. John Tavare, the chairman of Whitecroft and vice-chairman of the North-West CBI, gave the answer in a recent interview in The Guardian dated 21 July. Asked why this year, after 238 years, the company should fail, his answer was:
  "There is something special about this year's worsening economic climate. In the early days, companies were so glad to get labour off their backs that they did not react."
  1622
  When asked whether opposition to Government policies was economic or political, he answered:
  "I would also almost say it was political. Today they would not get in … there is a lack of understanding by the Government about what is happening to the manufacturing base of Britain as a result of the strong pound, high inflation and high interest rates—the first time that industry has had to suffer all three at the same time."
  Dr. Hampson: Oh, rot.
  Mr. White: Perhaps the hon. Gentleman who said "Oh, rot" will communicate to Mr. Tavare and the 130 workers to be made redundant at Bealeys what his views are.
  I would say to Mr. Tavare and to the management that the true sufferers of the Govenment's disastrous monetarist policies are the people who work at Bealeys and others like them throughout the North. Bealeys is now to close with the loss of 130 jobs. One family alone until recently had grandfather, father, son and two daughters working at that unit. The effect on the community is demoralising and depressing.
  The Prime Minister and the Chancellor of the Exchequer yesterday stated that no single party had the patent right to compassion for the unemployed. I accept that. If so, let them prove it by reversing the policies which are closing mills week by week. I believe that the Cabinet has no idea what it is creating in our industrial regions.
  In the article which I quoted the chairman of the North-West CBI verified that point. Mr. Jim Mundell, chairman of the CBI in the North-West, says:
  "The Government must have no idea what is happening to manufacturing industry because if they did know they would care."
  I now call upon the Government to prove their care and concern by changing their policies—policies which have achieved for Bealeys what Napoleon, the American Civil War, the Kaiser and Hitler failed to do. The Government have achieved in 15 months—at a stroke—the wiping out of 238 years of experience and textile expertise.
  As I mentioned, Bealeys had a place in the community, but it is no longer to be there. There is a commemorative plaque in Bealeys factory which shows that in 1793 the Methodist Society was established in Radcliffe at a meeting on the

  1623
  factory premises. It is even thought possible that Charles Wesley preached in the factory. In a short time that factory chimney will no longer smoke. No more shall we hear the engines. The plaque will go into a museum. The people of Radcliffe will regard the empty factory shell as a tombstone to the textile way of life destroyed by Tory monetarist policies devoid of human compassion. I fear that tonight is the start of a wake for the industry unless the Government change course.
  8.34 pm
  Mr. Eric Cockeram (): I should like to concentrate on the clothing industry. Many hon. Members do not appreciate that 70 per cent. of the clothing sold in this country is made here. The 30 per cent. which is imported has been the subject of many of the points made this evening. Imports are much higher than 30 per cent. in many industries. The motor industry is an obvious example. I believe that a mix between imported and home-produced goods is desirable.
  In an attempt to restrict imports, the Labour Administration introduced the multi-fibre arrangement. I do not speak against that entirely, but they did not appreciate its consequences. I shall mention two of them. First, overseas supplies no longer have to be so competitive on pricing as was formerly the case. They know that importers in Britain have an import quota and that, in consequence, there is now not the same competition on price. Secondly, overseas suppliers are trading up. Previously, they were allowed to export to Britain a higher quantity of merchandise units. The multi-fibre arrangement restricted the number of units, and in consequence they are sending more expensive garments. As a result, the British industry is feeling the competition from the Far East of a higher quality garment—a competition that previously did not exist.
  Why does Britain import so much clothing from Western Europe and the United States when our wage rates are often lower than those in other EEC countries? The answer is that other countries are more nimble on their feet in producing fashion garments and items of colour and design. The British textile industry has been slow, and has stuck to the classics. An example of that is the
  1624
  jeans industry. That was not started in Britain, and in the early days the fashion was imported. For many years Britain was desperately slow about producing the cloth needed for jeans. It was simply not available in Britain.
  We have heard a number of speeches this evening on behalf of various constituencies. That is proper. But let us not forget that there are 55 million consumers in Britain, and it is time that the House started to think about them as well as about the producers.
  Mr. Cyril Smith: Do not forget the employees.
  Mr. Cockeram: We are all employees. Those who argue that we should have more quotas and more restrictions on imports are advocating first, higher prices for merchandise, and secondly, reduced choice for the consumer. In the London shops during the past month one saw consumers exercising choice in cut-price merchandise. It is not in the interests of Britain to restrict the choice either in fashion, in colour or in price. I ask the House not to forget that while an important section of the community is engaged in the production of textiles, the remainder are consumers. It is in our interests to have choice and variety rather than restriction.
  8.38 pm
  Mr. Cyril Smith (): The speech of the hon. Member for Ludlow (Mr. Cockeram) will be a great tonic to the thousands of textile workers in the North-West who have been put on the dole during the past 15 to 18 months. I assure the hon. Gentleman that I shall read his speech in Hansard with great pleasure. I shall cut out his speech and use it to persuade people in the North-West not to vote Tory.
  The Secretary of State made a distressing speech from the point of view of the industry. He started with a political knockabout—which is all that we now expect, and all that we now receive, from the Government Front Bench. It is rather like a gramophone record about what the Labour Party did when it was in power, and how its performance record was no better. In every debate we now hear that gramophone record being played. We expected that today, and we got it—true to form. The

  1625
  right hon. Gentleman dealt with all his problems with the import agreement and the negotiations. It was perfectly fair and proper for him to outline those problems—but he did not deal with the problems of the industry. We know the Secretary of State's problems. He is a Minister, and it is his job to give some grain of hope to the industry. There was not a spark of hope in the whole of his speech for the textile industry.
  As I listened to the Minister, I began to wonder whether he understood what the problems were. At the end of his speech he had almost painted a picture in which there were no problems and nothing to worry about; the industry was exporting this and doing that; someone was exceeding a quota by exporting 2–3 million of something instead of 2 million.
  The first thing that one must do tonight is to place on record that what this House is discussing now is the most serious crisis that has faced the British textile industry for close on 50 years. That is not the view simply of Labour Members, or even of Liberal Members, or even of trade union officials. It is the view of all the employers' associations in the British textile industry.
  I could produce a long list of facts and figures to prove that statement, but probably the most graphic comment, which I imagine almost all hon. Members will have received, is in the opening sentence of the brief sent to hon. Members on both sides of the House by the British Textile Confederation. That sentence reads:
  "For many firms the renewal of the MFA after 1981 is an academic question. Their problem is to survive until then."
  That is the view of the British Textile Confederation. That is not a Left-wing trade union movement somewhere in Lancashire, in Rochdale or anywhere else. That is the employers' organisation, saying that the job of employers at present is not to worry about whether they will get a new agreement in 1981 but whether they can survive until 1981. There was not a word in the Minister's statement to show the slightest indication that the Government understand the seriousness of that situation.
  In my constituency of Rochdale closures since 1979 read like the death
  1626
  roll after an air disaster—the Eagle mill, 290 jobs; the Townhead mill, 220 jobs; the Croft mill, 240 jobs; the Shawclough mill, 70 jobs; the Arkwright mill, 100 jobs; the Lowfield mill, 120 jobs; the Moss mill, 240 jobs; and in today's local press there is the announcement of yet another closure, the Barchant mill, with the loss of 70 jobs. That is 1,350 jobs and eight mills closed between the beginning of 1979 and the present date—in my little constituency of Rochdale, with 90,000 constituents.
  Of course, I concede entirely that some of these closures took place during the remaining months of the Labour Government, so the Minister is right, if he wants to make the point, in saying that these problems did not start under the present Tory Government. Of course they did not start under this Government, but that does not alter the fact that they are continuing, that the Tories won the last general election, and that if anything is to be done about the textile industry, it is the present Government who have the power to do it.
  It is no good wailing on about what the previous Government did or did not do. Of course some of the closures that I have mentioned happened under the Labour Government, and of course that Government were as responsible for the situation as are the present Government for the current position. But the Labour Government are history. We are dealing with the position as it is, and not as the Labour Party or anyone else would like it to be.
  These closures and redundancies represent human misery, worry, the loss of self-respect, and the destruction of whole communities, as the hon. Member for Bury and Radcliffe (Mr. White) said. We are entitled to ask the Government for how long they intend to watch the industry bleed before they do something about it.
  The figures of unemployment and redundancies that have been read out tell only part of the story. They give no indication, for example, of short-time working in the industry. I should have thought that any Government who claim to know anything about business would realise that if more and more companies are on short-time working, ultimately those companies are potential closures. Short-time

  1627
  working compensation may help employees but it does not pay the overheads and standing charges of companies. Those go on whether or not the company is in receipt of short-time working compensation. As long as this situation continues, so much greater is the danger of those companies now on short time ultimately having to close, unless something is done to assist them.
  I shall not detain the House any further with the history of the situation. However, since the Minister almost suggested that there were no great problems in the textile industry, and so on, I felt it necessary at least to put on record what the situation was.
  I turn briefly to one or two constructive suggestions or possible solutions, the first of which relates to import controls. As a Liberal, I would like to be a free trader. I have had many rows with my colleagues in private on this matter, and I shall say in public what I have told them privately—that I have long since come to the view that free trade is a theoretical economist's pipe dream. Frankly, it works only so long as everyone else practises free trade. Imports to the United Kingdom largely come from countries that are sheltering behind high protection barriers. They come from countries which are aided by subsidies, which have low interest rates, which make cheap capital available, which have tax concessions, and so on. Many of those imports come in under false labels, particularly from Eastern Europe and often through West Germany. They are politically-priced exports as far as they and we are concerned.
  If one mentions import controls to the Government, even temporary ones, they immediately say "But there will be retaliation". I do not accept that there will be retaliation if we introduce temporary import controls. I do not believe that that has been proved to be the case in practice. If that is the position, and if the Government do not wish to introduce import controls on the basis of retaliation, we are at least entitled to ask when they intend to retaliate. If they say that retaliatory action will be taken against them, it is time that they stopped behaving like the gentlemen of Europe and retaliated themselves. For example, I understand that only this month the
  1628
  EEC Commission reported that Britain, alone among the Nine, gave details to Brussels of all her aids to industry. For God's sake, when will we stop being the gentlemen of Europe?
  I wish to make three other brief points. First, the Government should press for the proper labelling of goods in order fully to show the country of origin. That should be done to protect the consumer. I ask the Minister directly when that will be done. I do not want a promise that we are negotiating or that we are nearly there. When will it be done? In June, along with the hon. Members for Macclesfield (Mr. Winterton) and Blackburn, I was told that it was imminent. I should like a statement tonight about when that will occur.
  Secondly, dumping legislation could be strengthened. The burden of proof must be shifted to the supplying country. The price of goods in such countries should be shown at the point of export, and from time to time the Government should check that the prices shown are the correct ones.
  Finally, I believe that we should have a "Buy British" campaign. If they do nothing else, I hope that the Government will seriously consider whether they, either publicly or privately, cannot give some kind of lead in trying to persuade people to buy British. That should not be confined to Government Departments or local government departments. Perhaps they will consider the possibility of inviting privately to the Ministry members of all parties to see whether, collectively, they can do something.
  Some of us have already tried. The hon. Member for Burnley (Mr. Jones), the hon. Member for Macclesfield and I visited companies and pleaded with the managing directors to buy British. However, there are such things as transport, meeting rooms and hospitality in respect of which the Government could help if they were serious in their desire to try to promote a "Buy British" campaign. If they were to invite some hon. Members to come together as a sort of all-party committee to try to promote the purchase of British textiles—with the help of the Government, but not on the Government's initiative—that could be of great assistance. If nothing else comes out of the debate, that at least is a con-

  1629
  structive point which the Government could take on board.
  I ask that the Government should understand the serious plight of the industry. What is more, they should not only understand it but do something about it.
  8.49 pm
  Mr. John Lee (): This debate takes place against a bitterly depressing background of closures, redundancies and short-time working in the textile industry. It is a tragedy that this has happened in a sector that has manifested substantial capital investment, excellent labour relations and modest wage settlements.
  In my constituency of Nelson and Colne, where in years gone by well over 90 per cent. of the workers worked in textiles, the industry probably provides barely 20 per cent. of today's jobs. For every job vacancy there are 35 people in the queue. Nearly one-third of the unemployed are school leavers and people under the age of 20. One in 12 of those of working age is on the dole. On top of all that there is considerable short-time working. The decline of the textile industry is at the core of all those figures.
  The textile industry in Britain is suffering from the "IRI" syndrome, namely, interest rates, recession and imports, which work in combination. At present, the industry is going through the equivalent of open-heart surgery. It is in a critical condition. As with an open-heart patient, it needs the equivalent of oxygen, drugs and intensive care. I am sorry that all we have had from the Government—although the same is true of the previous Labour Government—is a mixture of sympathy and some swabbing of blood as it seeps through that absorbent gauze called the multi-fibre arrangement. Indeed it is probably imported gauze.
  The United Kingdom textile industry is haemorrhaging to death. According to today's edition of the Financial Times, one of our better and more successful textile companies, Vantona, announced half yearly profits that were 60 per cent. down. The Financial Times commented on the company's results and stated:
  "It now looks as though the textile sector's trough has deepened severely."
  1630
  No one pretends that there is an easy solution to our problems, but lower interest rates are imperative. I should have favoured a 2 per cent.—not a 1 per cent.—cut in the minimum lending rate. Once again, I raise the question whether the clearing banks have been overdoing it as regards the premiums that they have charged over and above the MLR. We have succeeded in creating a two-nation commercial society; the lenders and the borrowers.
  It is vital to get speedier and more effective action on dumping. It is nonsense that there should be only 16 officials working in the anti-dumping unit of the EEC, endeavouring to investigate complaints that involve all the Common Market countries and all products. That is an impossible task.
  The Government and industry should promote a "Buy British" policy for Governments and local authorities and for the general public. On Saturday, I shopped in the largest supermarket in my constituency. It was depressing and saddening to see goods on sale in the clothing section from Hong Kong, South Africa, Taiwan, Sri Lanka, the Philippines, Singapore, Macao, Italy and India. However, I should add that it is to the credit of that store that the goods were clearly labelled. There were substantial quantities of those goods. At times of pressure on family budgets the customer will gravitate towards cheaper items. In addition, our textile and clothing manufacturing industries may have declined to such an extent that certain ranges of clothing and fabric are no longer manufactured in the United Kingdom. How can the people of Lancashire and of the textile belt ask shoppers in Glasgow, Glamorgan, Cornwall and Coventry, to buy British if we do not do so when our relatives, friends and neighbours are suffering the hardships and trauma of unemployment and short-time working?
  In part the answer lies in our hands. I pay tribute to the way in which my right hon. and hon. Friend on the Front Bench have been available and willing to meet delegations of hon. Members and of representatives from both sides of industry. They have been willing to hear our case. We have been given considerable time and have been received most courteously. I thank my right hon. and hon. Friends. The Labour Govern-

  1631
  ment, this Government and, indeed, industry, lack the original ideas and initiative to ease the situation. One of our more successful business men in the industry advocated a gradual transfer of import licences from the importers and merchants to the manufacturers. This would provide a more direct link between the merchanting of both home-produced and imported merchandise and the employment of labour. It would help to encourage manufacturers to be more flexible and entrepreneurial and would result in profits accruing from cheaper imports being used to finance the development of our potential productive competitiveness.
  I advocate the acceptance by the Government and industry of a common, recognisable and colourful symbol or emblem for all United Kingdom-produced fabric and clothing, perhaps on the line of the British Standard mark or the wool mark. Many would prefer to buy British if they could easily make the identification.
  The carpet industry is embarking on a "Buy a British Carpet" campaign. The PR handout refers to
  "A British lion leaning nonchalantly on a roll of Union Jack carpet."
  What about a lion on a Union Jack as an example, an emblem that in time could be extended across a range of goods? The Government and industry have a duty to give a lead.
  We have had a lively but rather depressing debate. I am sorry that we have not had a firmer commitment to a strengthened and renegotiated MFA when the present one expires. Without it, which manufacturers will feel confident enough—with interest rates at their present high level—to invest and modernise on the scale that is necessary to meet the challenge of the 1980s?
  In all the circumstances I must register a protest. It is meant in a democratic sense and intended to convey the anguish and fear that exists in the mills, the valleys and the homes of Lancashire. I must inform the Government that I cannot support them in the Lobby. It is with regret that I intend to abstain at the end of the debate.
  8.57 pm
  Mr. William Whitlock (): I welcome the courageous speech of the hon. Member for Nelson and
  1632
  Colne (Mr. Lee). The Opposition will welcome him in their Lobby tonight. Like the hon. Member for Rochdale (Mr. Smith), I found the comments of the Secretary of State remarkably complacent. Nowhere in the textile industry can I find anyone who shares his complacency about the industry's future. I shall quote one or two comments that indicate the feeling of the industry.
  On 10 July I talked about the problems of the knitwear and hosiery industry and illustrated its excellent record. I do not intend to go over that again. I merely say that in spite of that record it is in danger of extinction, because it is being crucified. It is being crucified by the Government's monetary policy. It is being crucified by the doubling of VAT by the Government. It is being crucified by the high interest rates that obtain under the Government. It is being crucified by yawning gaps in import restriction arrangements, by fiddles, by quota dodging and by the bending of many international rules. That is going on without much effort on the Government's part to stop it.
  That is what the industry has been saying to Ministers for some time. An indication of the despair on the industry's part can be given by a sentence that appeared in a letter from the president of the Knitwear Industry Federation to the Financial Times. He wrote:
  "It would appear that we now have a Government that is prepared to oversee the destruction of British industry."
  Recently in the Nottingham Evening Post there appeared an article headed:
  "Lace chief blames Tories".
  That lace manufacturer claimed that Government policy lay behind the collapse of many parts of the lace industry. He said:
  "I simply don't believe that the Government and the public have got a clue about how things are."
  That is the trouble. The Government do not have a clue about how things are because they will not listen to those in the industry.
  That is illustrated by what the Secretary of State for Industry said in replying to the debate on 10 July:
  "Low-cost competitor countries, without any unfairness, buy the most modern machinery in the world, hire excellent management and put low-cost but fair labour to work, in order to

  1633
  compete with Britain and the rest of the world."—[Official Report, 10 July 1980; Vol. 988, c. 821.]
  Everywhere I went, the industry bitterly resented those words. That nonsense is at variance with all that the industry has been saying. Who told the right hon. Gentleman that?
  Our competition comes from countries where workers are savagely exploited, such as Sri Lanka. I can give many other examples. As I pointed out on 10 July, the textile industry agrees that developing countries must be assisted, but the responsibility for helping those countries must be fairly shared among all developed countries. The industry is demanding only a fair deal. The Government are making no effort to that end. They close their eyes to the fact that Britain is receiving the rawest deal of any developed country because our markets are more open.
  My right hon. Friend the Member for Lanarkshire, North (Mr. Smith) mentioned the American textile industry. In November 1978 President Carter said that he was determined to assist that beleagured industry. He invoked the consultation clauses in the multi-fibre arrangement and saw to it that import quotas from major competing countries were reduced. That industry is no longer beleagured. It is not only protected against disruptive imports; it is subsidised by artifically low energy prices and it is being helped by a weak dollar.
  The American textile industry is flooding Britain with garments of all kinds, to the detriment of our industry. T-shirts are coming here from America at an average price of 85p per piece, compared with £1–39 from Hong Kong and 91p from Portugal. Jumpers and pullovers from America are arriving at an average price of £1–72 per piece, compared with £2–39 from Hong Kong and £1–80 from Korea. Against that background, a leading knitwear group has announced that it is to slash its manufacturing operations in Leicester by half in favour of importing from Hong Kong.
  Do the Government want our industry to die and the home market to become a battlefield for every country that wishes to export textiles, including State trading countries such as Poland, which is dumping low cost goods here in a desperate
  1634
  effort to obtain foreign currency? The Government must come clean and tell the industry what they honestly believe its future to be. I hope that, following this debate, the Government will agree to meet leaders from the various sections of the industry, along with officers of the all-party group. They should listen to what they say. That is the key. They have not so far done so.
  Early in the last century operatives in Nottingham began smashing stocking machines. They had a legendary leader, Ned Ludd, and were known as Luddites. Luddism has come to mean senseless sabotage of machines, but those poor wretches were faced with absolute want, were meagre with famine, sullen with despair, careless of life and famished into guilt. Lord Byron used such phrases in his maiden speech in the House of Lords when he described the Nottingham scene, which he knew so well.
  Today we have a Government who seem bent on halting machines en masse and wishing Britain into an industrial waste. But members of the Government, unlike the Luddites, have no compelling personal reasons for their action beyond that of adhering to their own dogma. Increasingly they are seen in various parts of the country as Luddites. That is how history will portray them unless they change their policies. I hope that this debate tonight will result in changed policies, at least towards the textile industries.
  9.11 pm
  Mr. Charles Fletcher-Cooke (): I want to speak very briefly about competition from our high-wage competitors. In his excellent speech the Secretary of State said that this accounts for about 60 per cent. of our import penetration. Different considerations apply to high-wage competition from those that apply to the Third world and the MFA. The high-wage competition causes our main problems now.
  For the past 25 years we have had a paradox. In the United Kingdom we have a well organised, well run and highly competitive industry, with excellent labour relations. The industry has modernised itself and invested in itself. Why is it unable to compete with the industry in other high-wage nations? We all know

  1635
  the difficulties caused by low-wage countries. But I am talking about countries such as the United States, Canada, Western Europe and Australia. Those of us who sit for textile constituencies have always said that we cannot protect the industry against high-wage competitors. The industry must compete and succeed against them.
  Somewhere along the line we have been let down, because in spite of our efficiency, good relations, not-too-excessive wages and shifts worked we cannot compete with them. I have been pondering on this paradox for a long time and I have come to the conclusion that too many burdens have been imposed on British industry generally and the textile industry in particular compared with our competitors. This shows up particularly in the textile world because competition is so internationally cut-throat that even 1p a yard makes all the difference. In some other industries the difference in burdens that must be borne is not so obvious in the market.
  There are, of course, the great burdens of high interest rates and the high rate of exchange, which were referred to yesterday. I cannot discuss them again tonight but I support completely the reasons for them although they impose a particular burden on all our industry.
  There are other burdens that have been imposed by successive Governments and some that are about to be increased by this Government. These burdens seem to break the camel's back. First, there is the intolerable burden of increasing local government and water rates. These are increased every year because industry has no vote. That is taxation without representation. This burden is now falling with increasing velocity on British industry, and it is a burden that industry in Europe and America does not bear.
  Secondly, there is the increased burden of energy costs—costs which our competitors do not have to bear. This is a negative subsidy given to our competitors in Germany and elsewhere because industrial consumers there are not taxed at the same rate as ours. The Secretary of State for Industry should be having a considerable argument with the Secretary of State for Energy who is determined to keep up the net cost of energy to our industry in a way that does not happen
  1636
  among our competitors, not so much because their industry is charged less but because it is taxed less on the energy it consumes.
  I have also been amazed by the increasing burden on the level of social security contributions falling on industry. Hitherto, British industry has been somewhat better off than some of our competitors. Even that small advantage is apparently to be removed by the proposal, for example, that the first eight weeks of sickness of any employee is to be paid for by the employer. One may say that is a small burden. It is, nevertheless, an increase on British productive industry at a time when the burdens are already far too great.
  I understand the motives. The old motives were that one must temper rates to the individual domestic ratepayer, whether water rates or general rates, and impose the burden on industry because industry's shoulders seemed much broader. Straw after straw has been placed on the broad shoulders of industry in rates and energy costs and now social security contributions. The last straw is breaking the camel's back.
  The effect shows first in the textile industry—the most internationally competitive and the most sensitive. The way to cure this paradox is to take the financial burdens off industry even if individuals have to pay. So long as these enormous and exceptional burdens, in relation to those faced by our competitors, are placed on our manufacturing industry, no amount of tariffs and no amount of fiddling around, one way or another, will help. This is seen in the amount that industry has to pay for its feedstock compared with what the Americans have to pay. It is seen in the amount that industry has to pay for all these charges, including rates and water rates.
  We have too many burdens compared with those placed on our industrial competitors. All of our industrial competitors have some of these burdens but none of them has all of the burdens. It is time that we reduced them.
  9.13 pm
  Mr. Dan Jones (): I had intended to speak for at least 10 minutes, but because so many of my colleagues still

  1637
  hope to make a contribution I will speak for only five minutes.
  I do not believe that the Government know where they are going. We have heard successive leading Ministers talk of the need to work to provide a job. There is a certain logic in that approach. We have heard about people pricing themselves out of a job. Some of us are aware of that situation.
  In the textile industry we are dealing with one of the most responsible trade unions in the country. Since the turn of the century there has been no talk of strikes or go-slows or anything that could disrupt industry. The installation of new machinery has been accepted. It seems to me that this is the attitude, on which the Government depend for the economic recovery of our country, that will alone prevent serious repercussions. Yet you are crucifying the industry. Are you really sure where you are going? You have talked about the effect of the MFA and its contribution to rallying the forces of good will in the EEC. It can and should be used to obtain more help. Are you not aware—
  Mr. Deputy Speaker (Mr. Bernard Weatherill): I hate to intervene, but the hon. Gentleman must not accuse me of anything.
  Mr. Jones: I would not dare, Mr. Deputy Speaker. I am going at a pace because I promised to be brief.
  Just before the last election the authorities in Brussels made a statement about burden sharing. Can the Minister say truthfully that the Government have used the forces of good will for that purpose? The answer should be given. Frankly, we have been ruthlessly deceived by burden sharing. There is no doubt about that.
  The instrument to which I refer has been used to the advantage of the EEC. Can it be said that the textile industries of France and the Low Countries have suffered like the British textile industry? I expect the Minister to give an answer.
  My constituency has made as great a contribution to the nation's well-being as any other. Today, as a result of the joint machinations of both parties, instead of producing more textiles before breakfast than any other part of the country pro-
  1638
  duced in the rest of the day, textile production has been almost decimated.
  Do the Government really think that the economy, which is so precariously poised, can stand what they are doing? In 1947 the people of Burnley, when given an alternative form of work, were asked to stick loyally to textiles. They did that. The Government are now rewarding them with bankruptcy.
  The Government will suffer as they have made the people suffer. I know something about that because I was unemployed for five years. If Ministers had been in that position, their attitude would be distinctly different.
  9.19 pm
  Mr. Nicholas Winterton (): I shall try to be brief. I wish to make it clear that I shall not support the Government tonight. I intend to abstain. I shall certainly not support the Opposition, because I believe that successive Governments have neglected the textile industry. I feel deeply about the problems of the industry. I should have little or no credibility if I voted for the motion or the amendment. I am critical because the cant and hypocrisy that we have heard from the mouths of Ministers in successive Governments have let down one of the most important and strategic industries in Britain.
  I quote one or two figures that have not been mentioned in the debate because not all the facts have been put to the House. Mills have been closing at an alarming rate this year—a fact mentioned by the hon. Member for Rochdale (Mr. Smith). In the cotton sector alone mills have been closing at the rate of two a week. That is a serious state of affairs.
  Between March 1979 and March 1980, 40,000 textile jobs were lost. In the same period, 8,000 jobs were lost in the cotton and allied sector. The rate of job loss in the textile industry is increasing month by month, and over 11,000 textile workers in the North-West are on temporary short-time working compensation. Sadly, many of them are likely to lose their jobs unless the scheme is extended.
  Among the mills that have closed, or are in danger of closing, are many owned by highly efficient firms, which

  1639
  have installed the latest capital intensive plant and machinery.
  Rev. Ian Paisley (): Is the hon. Member aware of the serious situation in the textile industry in Northern Ireland? It once made up to 30 per cent. of the whole of the United Kingdom textile industry, but now it has almost disappeared.
  Mr. Winterton: I am aware of the extremely serious situation in Northern Ireland. The economy of Northern Ireland is greatly dependent upon textiles, which is one of the largest industries in that part of the United Kingdom. Many communities, not least that represented by the hon. Member for Antrim, North (Rev. Ian Paisley), are dependent upon this important industry.
  In the last 10 months, 18,000 clothing sector workers have lost their jobs, and it is estimated that between 70,000 and 80,000 in that sector are now working short-time.
  I wish to refer briefly to the evolution of MFA II, because I have followed and monitored it since it came into force. I pick up the comment made by my hon. Friend the Member for Ludlow (Mr. Cockeram), who spoke as a respected retailer; that the problem facing the clothing industry is the threat posed by low-cost imports, which account for 74 per cent. of total imports of clothing into this country. Whether or not the amount of imported cloning is great, the problems faced by our industry are the result, chiefly, of low-cost imports.
  I wish to mention the enlargement of the Community—a matter that has not been touched upon in the debate. The enlargement of the EEC will pose a serious threat to our industry. As often happens in Community affairs, the main focus of attention in discussions on enlargement has been on agriculture and horticulture. I believe that the implications of enlargement are far more important for the textile and clothing industries, because they employ more workers than our agriculture and horticulture industries together.
  It is vital that the accession treaties for Portugal and Spain—Greece is about to join the Community on agreed terms—should make specific proposals for trade in textiles and clothing if the entry of
  1640
  those countries into the Community is to be orderly and a positive step forward for Europe. The overriding political objective of bolstering democracy in those countries will not be achieved by allowing the markets of the Nine to be disrupted, with added unemployment posing a threat to the political stability of the EEC. I hope that my hon. Friend the Minister of State will deal with the question of the enlargement of the Community when he replies to the debate.
  I wish to make a number of proposals to the Government, all of which I hope will be taken on board. I recommend that the Government extend the short-time working compensation scheme, and that they improve its terms. They should give a firm and positive commitment to a new MFA which includes a recession clause. They should in due course introduce temporary selective import controls. In making that last proposal I remind my hon. Friends on the Front Bench that it is supported by the industry as a whole and by the Confederation of British Industry. I am not advocating those proposals just as a maverick from the Government Benches.
  I also believe that, failing a fairly dramatic reduction in interest rates in the near future, a two-tier interest rate system should be introduced to assist industry, and the textile and clothing industries in particular. The Government must consider the use of non-tariff barriers, such as a much stricter licensing system for imports like that used by France.
  We must have much more effective origin marking and commodity labelling. I want to back Britain and buy British. I hope that I am a walking and living advertisement for British clothing. I am wearing a light worsted suit that was made in Yorkshire. My shoes came from Northampton. My shirt was made in Congleton, in my constituency. My tie was made in Lancashire, and is the tie of the all-party cotton and allied textiles group. I am delighted that it is being worn by a number of my colleagues in the House today. My underclothes—St. Michael—were obviously also made in this country. I want to back our country, and I want our people to buy British.
  Mr. John Farr (): Is my hon. Friend aware that he is never properly dressed unless he is wearing something from Leicester?
  Mr. Winterton: I am grateful to my hon. Friend for that observation.
  I believe that the Government's proposals for origin marking are inadequate, and I should like to put one proposal in this respect. All garments should indicate whether they were manufactured in the United Kingdom. They should say "Made in the United Kingdom"—or "Scotland", "Wales" or "Northern Ireland" if that is more appropriate. All goods from abroad should be marked "Foreign", because how many people want to buy foreign goods when they have the chance to buy British?
  Retail outlets should be obliged by law to display notices indicating what percentage of the goods they sell are produced in the United Kingdom. The industry can help in the "Back Britain—Buy British" campaign by promoting itself. The TUC could encourage its members to buy British as well.
  Why can we not have a two-tier system of VAT—one for home-produced goods and one for imports? Why not use, as my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) suggested, our North Sea oil revenues to aid all British industry by no longer charging it above the odds for energy, which puts it in an uncompetitive position in trade abroad?
  9.28 pm
  Mr. James Molyneaux (): Yesterday the right hon. Member for Ebbw Vale (Mr. Foot) referred to redundancies in Courtaulds and in what he described as about another dozen textile factories in Northern Ireland. He seemed to imply that these difficulties were due to the Government's economic policies, and there was more than an implication that the problems could be resolved if the Labour Party's policies were adopted. I have to submit, however, that those aspects of economic policy that we were debating yesterday have relatively little bearing on the problems of Courtaulds, ICI and other man-made fibre concerns in Northern Ireland. We are tonight discussing a quite different area of Government policy, one from which the Opposition have not yet sufficiently distanced themselves. I refer to Britain's membership of the EEC.
  On 10 June, my right hon. and hon. Friends and I tabled a motion which read:
  1642
  "That in the opinion of this House the internal régime of the European Economic Community prevents measures of textile import control from outside the Community having the intended effect in assisting the British textile industry; and this House calls on Her Majesty's Government to ensure that additional measures to meet this problem are taken either by the Community or by the United Kingdom."
  Unless that reality is faced, all the chatter about safeguards and assistance will be valueless. We have been assured that two anti-dumping cases have been opened by the EEC Commission, but how long will that take, and how effective will be the resultant action? In February 1980 the EEC Commission decided to limit imports of various man-made fibres into the United Kingdom. The results have been totally inadequate.
  With regard to the free circulation of goods within the Community, it is said that mechanisms exist to deal with the problem, but representatives of the various branches of the textile industry in Northern Ireland inform us that this is their main difficulty. From the point of view of the textile industry in Northern Ireland the safeguards are not working. In the short term, the Government have a duty, as we say in our motion, to ensure that
  "additional measures … are taken either by the Community or by the United Kingdom"
  Government.
  The right hon. Member for Lanarkshire, North (Mr. Smith) almost boasted that in certain aspects of Community policy he and his colleagues had pulled the Government round. Perhaps I could suggest that when he has pulled the Government round full circle he should wholeheartedly join us in endeavouring to pull them out of the Community. That is the only effective way of restoring our freedom of action to put British interests first.
  9.31 pm
  Mr. K. J. Woolmer (Batley and Morley): The Secretary of State concluded his speech with what was clearly meant to be a clarion call. He said that there will be no U-turns, and no changes of policy. There was no waving of Order Papers tonight from the Government Benches. Tonight hon. Members from textile constituencies showed their deep concern about the direction of the Government's economic policies. There was

  1643
  opposition from the Labour Benches, and doubts—even fears—from Conservative Members in marginal textile constituencies.
  This has been an important debate about one of the largest groups of industries in the United Kingdom. It bears repeating that textiles employ over 400,000 workers, and that the clothing industry employs over 300,000 workers—a combined total of over 700,000 workers, or 10 per cent of manufacturing industry. Together they export well over £2 billion worth of goods. By all agreement in the House tonight, these are key industries in the nation. There are few urban constituencies where some employment in clothing and textiles is not to be found, although there are particular concentrations in West Yorkshire, the North-West, the East Midlands and Northern Ireland.
  The loss of jobs has been of frightening proportions since the electorate so unwisely voted this Government into office 14 months ago. Over 50,000 jobs have been lost in textiles, and about 25,000 in clothing. Over 75,000 jobs have been destroyed, tens of thousands more people are on short-time working, and even more workers are worried about the security of their employment. Virtually all sections of the textile industry have suffered—man-made fibres, cotton and linen, woollen and worsteds, knitting, carpets, finishing and clothing, particularly men's and women's outer wear and women's dresses.
  Figures that were issued by Credit Insurers "Trade Indemnity" this month show that textile and clothing companies lead the growing queue of businesses in the bankruptcy courts. There was a 46 per cent. increase in the number of business failures in the first six months of this year compared with last year. The number of textile and clothing firms going broke more than doubled in the first six months of this year. The monthly survey of trends in textiles and clothing, conducted jointly by the CBI and the National Economic Development Office, not only highlights the enormous loss of confidence by those businesses over the last 14 months but forecasts further substantial decline. The last survey, published in June, showed 76 per cent. of firms with order books below normal,
  1644
  68 per cent. with export orders below normal and 61 per cent. holding excessive stocks.
  Next Wednesday, the July trends for these industries will be published, and they are firmly expected to show further rapid deterioration. In April 1979 a clear majority of firms in these industries were optimistic about business prospects, with order books above normal, and the volume of new orders rising. It is not good enough to deny that this is the fault of Government policies. At local level these nation-wide figures mean closed mills and factories, lost jobs to towns and communities—scarcely an area untouched. Weekly, almost daily, the list grows—50 or 100 jobs lost here; 900 or 1,000 jobs lost there.
  Last year, the Secretary of State for Industry took pleasure in withdrawing regional assistance from large areas of the country. Now, just a few months later, many of the areas which are losing Government help are the very textile areas which are now suffering so badly from the result of these Government policies. Across the country unemployment has risen by an appalling 44 per cent. since the Tories took office. That is bad enough, but in the textile towns the rise in jobless has been even worse. In West Yorkshire, we have seen unemployment rise by 77 per cent. in Keighley, 83 per cent. in Dewsbury and Batley, 91 per cent. in Hudderstield, and 92 per cent. in Halifax.
  In the North-West, the rise in unemployment has been 68 per cent. in Bolton. It has been 87 per cent. in Preston. I do not see the hon. Member for Preston, North (Mr. Atkins) in his seat tonight. It has been 95 per cent. in Oldham, and 102 per cent. in Nelson. I am not surprised that the hon. Member for Nelson and Colne (Mr. Lee) is to abstain tonight. He should have courage and vote against the Government. In Accrington, there has been a shocking increase in unemployment of 110 percent.
  All the towns that I have mentioned are losing assisted area status at the very time that it is needed most. I ask the Secretary of State for Industry to look again at his policies. Now is not the time to be cutting regional aid to increasingly hard-pressed areas. I ask the right hon. Gentleman to reconsider the position of the worst-hit textile areas as a matter of urgency.

  1645
  There is also uncertainty about the Government's intentions regarding the short-time working compensation scheme, which employers and trade unions, as the Ministers know, wish to see maintained and strengthened in a number of ways. My right hon. Friend the Member for Lanarkshire, North (Mr. Smith) mentioned this in his opening speech and I shall be most grateful if the Minister will deal with it. I hope to see the Secretary of State for Employment respond quickly and sympathetically to the representations being made to him on this matter.
  The British Textile Confederation, in its latest note to Members of Parliament, has said candidly that
  "For many firms, renewal of the MFA after 1981 is an academic question. Their problem is to survive until then."
  I shall turn shortly to the question of the immediate future but I should like first to deal briefly with the international trading position of these industries. Trade Ministers have not helped confidence in the industries, nor their negotiating position within the EEC machinery, by the appearance they gave of half-hearted foot-dragging over the need for a firmer renewal of the MFA and the bilateral agreements when they expire at the end of 1981 and 1982 respectively.
  There are many issues on which dissatisfaction exists with the present working of the trade arrangements. Many have been voiced this evening, such as the need for a recession clause to prevent increasing imports compounding the difficulties of depressed home markets; the treatment of imports from the Mediterranean associate countries and the consequences of the entry of Spain and Portugal into the EEC; political pricing by COMECON countries; the abuse of free circulation within the EEC; outward processing; unreasonably high barriers to our own exports of textiles and clothing. I welcome from the Opposition Dispatch Box the statements made earlier by the Secretary of State and the efforts that are being made on this last matter. These are all vital matters on which the industry is looking tonight for clear and strong Government support. I hope that the Minister will give a view on these and not hide behind the veil of secrecy of negotiations.
  There remains the suspicion that the only country playing to the rules is
  1646
  Britain—a point made by my hon. Friend the Member for Bury and Radcliffe (Mr. White). The impression is frequently given that the Government and the European Commission are unable and unwilling to control and police adequately the existing arrangements.
  The tragedy is that on top of the worry caused by import penetration and difficult international trading conditions, the industry is in even deeper trouble as a result of the Government's deflationary economic policies. Within weeks of coming into office the Government had doubled VAT. Within a few months the living standards of all but the wealthiest began to slump. We had the remarkable sight of winter sales starting before Christmas last year as shops tried to unload unsold stocks.
  The Government's rigid monetarist stance with punitive interest rates and their use of North Sea oil revenues to finance deflation and unemployment rather than investment and growth have together led to a grossly overvalued pound, which makes exporting increasingly difficult and competing with imports often impossible. The Government's reckless disregard of the effects of the overvalued exchange rates upon manufacturing industry, such as textiles and clothing, is already causing considerable problems. I believe that the overvalued pound will wreak havoc over the nex few months.
  For textiles and clothing the recession is already well under way. There is no sign of the slump levelling out, let alone turning upwards, as the Government appear to hope. Indeed, recession is gathering pace into a downward spiral. When will the economy recover? When will the textile and clothing industries see the bottom of this apparently bottomless pit?
  Perhaps the Government will say that these problems are not their fault. Perhaps the doubling of VAT, record high interest rates, the overvalued pound and depressed demand are not the causes of the slump in textiles and clothing. I do not think that any Opposition Members will seriously believe that. Perhaps it is the fault of the workers in these industries. Perhaps they have not been listening to the Prime Minister's advice. Perhaps they do not understand monetarism.
  The record of the textile and clothing industries bears stating clearly. Earnings

  1647
  are typically £10 to £20 a week below those in manufacturing industry as a whole. The number of days lost in strikes has been far below the national average for decades. Last year, less than half of 1 per cent. of all working days lost were in textiles, clothing and footwear. Throughout the 1970s productivity per head increased significantly faster in those industries than in manufacturing as a whole. The unions have co-operated fully in technological change, labour-saving investment and rationalisation schemes. Carpet industry workers settled for a 10 per cent. wage increase in January. In March the wool textile workers settled for 14 per cent. The cotton and allied workers settled for 14 per cent. in May. Those settlements are well below the rate of inflation, as workers take cuts in real income and fight desperately to save their jobs.
  Yet, despite low wages, moderate pay settlements, better than average productivity and industrial relations, those industries have lost 75,000 jobs at the hands of the Tory Government. It is often the modern, efficient mills which are closing or working short time. Investment is falling—the very seedcorn of the future growth which the Government hope will come about as a result of their policies. The textile and clothing industries have records which stand the test of close examination.
  The Government must stop blaming others for the consequences of their policies. Is it any wonder that workers and their families—even employers—are desperately worried, even frightened, about their future? In April, the director-general of the British Textile Employers' Association told the Prime Minister that the industry was in the middle of a crisis of near disaster proportions. What further advice and moralising do Ministers have to offer those workers and industries? Are they to have no pay increases? Are they to move—unemployed textile workers swapping homes with unemployed steel workers? Is not the truth that the Government need to move to policies based on expansion, not deflation, and to policies which strengthen, not destroy, these two great industries?
  I ask the House to support the Opposition's motion.
  9.45 pm
  The Minister for Trade (Mr. Cecil Parkinson): I join with hon. Members on both sides of the House in congratulating the hon. Member for Batley and Morley (Mr. Woolmer) on his first appearance at the Opposition Dispatch Box, and on the assured and knowledgeable way in which he presented his case. It will come as no surprise to him when, in the course of my remarks, I demonstrate that I do not agree with much of what he said—but we all admire the way that he said it.
  I shall deal immediately with the question of origin marking, raised by the hon. Member for Rochdale (Mr. Smith) and others. He asked when we would bring forward our proposals. We were bound to put the proposals forward for consultation, and we did so. The consultation period ends tomorrow. As my right hon. Friend the Minister for Consumer Affairs said on 21 May, after the full representations have been considered she intends to prepare draft orders with a view to putting them before Parliament in the autumn. That is the Government's plan.
  The Government, like their predecessors, are in no doubt about the importance to our economy of the textile and clothing industries. They are important as employers, as suppliers to our home market, and as exporters. I stress that our home industry still supplies 70 per cent. of the home market. My hon. Friend the Member for Macclesfield (Mr. Winterton) is doing his best to raise the national average. At one stage in his speech I thought that he intended to undress to prove that we could rely on what he was saying. I am doing exactly the same. I shall not undress, but I am wearing the same proportion of British clothes. I repeat that our industry supplies 70 per cent. of our considerable home market.
  As various hon. Members said, the industry exports more than £2,000 million worth of goods a year to markets all over the world. Everybody in the House recognises that the industry is going through a tough time. I can claim to have seen more textile delegations in recent weeks than I have had hot dinners. The basis of that claim is not

  1649
  that I have suddenly been converted to cold meals. There is no shortage of knowledge in the Government about the problems of the industry.
  Opposition Members suggested that to-tonight they would reveal, for the first time, some strange truth that we have never heard before. They have been misled. I have seen innumerable delegations, visited many parts of the country, and discussed the problems of the industry with management, labour and representatives of federations. We know the problems. The Opposition try to claim that one of the causes of the industry's problems is that, somehow or other, the Government have exposed the industry to unfair foreign competition of a nature that they were protected from by the Labour Administration. My right hon. Friend the Secretary of State, in his typically gentle and uncontroversial style, destroyed that claim. But other Opposition Members repeated the allegation.
  A number of my hon. Friends, including the Member for Nelson and Colne (Mr. Lee), commented on the weakness of the present multi-fibre arrangements. We do not deny that. My right hon. Friend and I have spent a considerable time during the past few months strengthening the existing arrangements. That is why we introduced the 32 new quotas. That is why we used article 115, which restricts the free circulation of goods that might undermine the national quotas. That is why we have used it on a regular basis. That is why—I say this to the hon. Member for Burnley (Mr. Jones)—free circulation has not undermined the quotas. We have monitored them very carefully. We estimate that free circulation has, at most, added 1 per cent. to the flow of the quota goods. In making that assertion we take no account of the goods that have come in here and left under free circulation, and we know that they represent a fair proportion.
  Mr. Dan Jones: Why, then, is the industry being decimated?
  Mr. Parkinson: That is why we have negotiated new arrangements for Malta, Cyprus and Mauritius. There were gaps in the MFA arrangements, and we spent a considerable time plugging those gaps.
  1650
  The right hon. Member for Lanarkshire, North (Mr. Smith) was in charge of the Department of Trade during the negotiation of the terms for Greek accession. With his strong views about the need to be tough, one would have expected him to drive a very hard bargain for Britain. In fact, he drove no bargain at all. Our only defence against a possible flood of imports from that source is a weak safeguard clause which he must have known it would be virtually impossible to use. Having learnt from the right hon. Gentleman's mistakes, the present Government have set about, in our negotiations with Spain and Portugal, achieving as a prime objective proper transitional arrangements which will give our industry some safeguards.
  I am getting rather tired of defending at this Dispatch Box the right hon. Gentleman's own achievements to him. He knows full well that he wanted to have a recession clause in the last MFA. He knows that he and his predecessor, Mr. Edmund Dell, failed to obtain one. I accept the arguments of hon. Members on both sides of the House that it is absurd to have a policy based on a set of assumptions which are subsequently proved to be wrong and yet to continue to work on the basis that the original assumptions were correct. That is why we shall seek in the renegotiations to obtain a reasonable safeguard against this type of problem. We recognise, as the right hon. Gentleman does, that this is a problem, and we shall do our best to deal with it.
  Mr. Dan Jones: Will the Minister give way?
  Mr. Parkinson: I should prefer not to give way, if the hon. Gentleman does not mind.
  A number of my hon. Friends have asked about a successor to the present MFA and about the Government's proposals. We have always been committed to seeking a successor. The Prime Minister has confirmed that we shall be seeking a tough successor, and we are pledged to doing so in close consultation with the industry. Let there be no doubt at all about the Government's position on the successor to the MFA. We have made our position clear on a number of occasions. I should like to underline our commitment tonight.

  1651
  But one has the feeling that at the heart of Opposition Members' complaints—the hon. Member for Nottingham, North (Mr. Whitlock) spelt this out—is a fundamental hypocrisy, which I find distasteful. The Labour Party persistently demands discrimination against the products of low-cost suppliers. I find it a strange argument, from a party that pretends to care, that it should demand that we should ban products produced by other countries on the ground that they are produced by people who are poorer than we are. Labour Members persistently use this argument about low cost. They are actually saying that it is a crime in the modern world to be poor, and that if one is poor one deserves to be discriminated against. I find that particularly hard—
  Mr. Straw rose—
  Mr. Parkinson:—to take from a party that couples this total lack of concern about developing countries with criticism of us for the fact that we have reduced our aid programme.
  The truth is that trade and access to our markets are absolutely vital for the developing countries. If Opposition Members want a harder-headed reason for maintaining our markets for low-cost countries in the controlled way in which they are maintained now, I would point out that it is in our own interests to do so. Only one-third of the products that we import from those countries are manufactures. The rest are raw materials.
  Mr. Frank Haynes (): Will the Minister give way?
  Mr. Parkinson: Ninety per cent. of all our exports to those countries are manufactures. That is why we have a surplus of more than £2,000 million in manufactures in our trade with low-cost suppliers.
  The multi-fibre arrangement recognises the need to control the flow of imports, and as a result of that arrangement imports are controlled at about 12 per cent. of our market. Although there are flaws in the arrangements, and although they sometimes do not work as well as they could on some occasions, we work hard to strengthen them in order to make them work better. But, on the whole, the arrangements are effective, and low-cost imports represent only about 12 per
  1652
  cent. of our market, which was the intention when the policy was negotiated.
  Let there be no misunderstanding about this. We have had a lot of passion and breast-beating tonight from various Opposition Members. The truth is that on a day-by-day basis we work very hard to ensure that our market is not flooded by low-cost imports and that those which come in do so under control. Where there is fraud, we seek it out. We intend to strengthen the Government's capability for seeking out fraud, and we take action regularly.
  Mr. Straw rose—
  Mr. Parkinson: The second strand of criticism was criticism of the Government because sterling was strong, and interest rates and the rate of inflation high. The hon. Member for Batley and Morley seemed to suggest that the Government should embark on a big spending policy as a way of dealing with our problems. That would certainly be a way of lowering the rate of exchange, because it would be a way of announcing to the world at large that the Government had abandoned their economic policies and that they accepted that a Britain in which hyperinflation was a permanent feature of our existence was the only Britain which it was possible for a Government to have—
  Mr. Haynes: On a point of order, Mr. Deputy Speaker. The Minister is deliberately misleading the House—
  Mr. Deputy Speaker: Order. That is not a point of order. It is a debating point.
  Mr. Parkinson: Whenever the hon. Member for Ashfield (Mr. Haynes) speaks in the House, the only thing that he manages to prove is that he has a very loud voice.
  The truth is, as my right hon. Friend the Prime Minister pointed out last night, that there is nothing unnatural about a high rate of interest at a time of high inflation. A rate of interest that does not reflect the rate of inflation is a fraud on the saver and an encouragement to the spendthrift, and is no basis for a sound money policy. The Government are determined to restore soundness to the nation's currency. The truth is that those who are basing their expectations on a

  1653
  fall in the rate of exchange are wasting their time.
  Mr. Arthur Davidson ()rose—
  Mr. Parkinson: The Government have no intention of abandoning their economic policies. They believe that public spending must be properly controlled. They believe that a proper rate of interest should be charged. The Government recognise that only by getting inflation under control is there any hope for the country.
  As one talks to business men and discusses the problem with them, one hears

  Division No. 438]

  AYES

  [10 pm

  Abse, Leo

  Dobson, Frank

  Horam, John

  Adams, Allen

  Dormand, Jack

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

  Allaun, Frank

  Douglas, Dick

  Huckfield, Les

  Alton, David

  Douglas-Mann, Bruce

  Hudson Davies, Ednyfed (Caerphilly)

  Anderson, Donald

  Dubs, Alfred

  Hughes, Mark (Durham)

  Archer, Rt Hon Peter

  Duffy, A. E. P.

  Hughes, Robert (Aberdeen North)

  Armstrong, Rt Hon Ernest

  Dunn, James A. (Liverpool, Kirkdale)

  Hughes, Roy (Newport)

  Ashley, Rt Hon Jack

  Dunnett, Jack

  Janner, Hon Greville

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

  Dunwoody, Mrs. Gwyneth

  Jay, Rt Hon Douglas

  Bagier, Gordon A. T.

  Eadie, Alex

  John, Brynmor

  Barnett, Guy (Greenwich)

  Eastham, Ken

  Johnson, James (Hull west)

  Barnett, Rt Hon Joel (Heywood)

  Edwards, Robert (Wolv SE)

  Johnson, Walter (Derby South)

  Beith. A. J.

  Ellis, Raymond (NE Derbyshire)

  Johnston, Russell (Inverness)

  Benn, Rt Hon Anthony Wedgwood

  Ellis, Tom (Wrexham)

  Jones, Barry (East Flint)

  Bennett, Andrew (Stockport N)

  English, Michael

  Jones, Dan (Burnley)

  Bidwell, Sydney

  Ennals, Rt Hon David

  Kaufman, Rt Hon Gerald

  Booth, Rt Hon Albert

  Evans, loan (Aberdare)

  Kerr, Russell

  Boothroyd, Miss Betty

  Evans, John (Newton)

  Kilroy-Silk, Robert

  Bottomley, Rt Hon Arthur (M'brough)

  Faulds, Andrew

  Kinnock, Neil

  Bradley, Tom

  Field, Frank

  Lambie, David

  Bray, Or Jeremy

  Fitch, Alan

  Lamborn. Harry

  Brown, Hugh D. (Provan)

  Fitt, Gerard

  Leadbitter, Ted

  Brown, Robert C. (Newcastle W)

  Flannery, Martin

  Leighton, Ronald

  Brown, Ronald W. (Hackney S)

  Fletcher, L. R. (Ilkeston)

  Lestor, Miss Joan (Eton & Slough)

  Brown, Ron (Edinburgh, Leith)

  Fletcher, Ted (Darlington)

  Lewis, Arthur (Newham North West)

  Buchan, Norman

  Foot, Rt Hon Michael

  Lotthouse, Geoffrey

  Callaghan, Rt Hon J. (Cardiff SE)

  Ford, Ben

  Lyon, Alexander (York)

  Callaghan, Jim (Middleton & P)

  Forrester, John

  Lyons, Edward (Bradford west)

  Campbell-Savours, Dale

  Foster, Derek

  Mabon, Rt Hon Dr J. Dickson

  Cant, R. B.

  Foulkes, George

  McDonald, Dr Oonagh

  Carmichael, Neil

  Fraser, John (Lambeth, Norwood)

  McElhone, Frank

  Carter-Jones, Lewis

  Freeson, Rt Hon Reginald

  McKay, Allen (Penistone)

  Cartwright, John

  Freud, Clement

  McKeivey, William

  Clark, Dr. David (South Shields)

  Garrett, John (Norwich S)

  MacKenzie, Rt Hon Gregor

  Cocks, Rt Hon Michael (Bristol S)

  Garrett, W. E. (Wallsend)

  Maclennan, Robert

  Cohen, Stanley

  George, Bruce

  McNally, Thomas

  Concannon, Rt Hun J. D.

  Gilbert, Rt Hon Dr John

  McNamara, Kevin

  Cook, Robin F.

  Ginsburg, David

  McQuade, John

  Cox, Tom (Wandsworth, Tooting)

  Golding, John

  McWilliam, John

  Craigen, J. M. (Glasgow, Maryhill)

  Gourlay, Harry

  Magee, Bryan

  Crowther, J. S.

  Graham, Ted

  Marks, Kenneth

  Cryer, Bob

  Grant, George (Morpeth)

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

  Cunliffe, Lawrence

  Grimond, Rt Hon J.

  Marshall, Dr Edmund (Goole)

  Cunningham, George (Islington S)

  Hamilton. W. W. (Central Fife)

  Marshall, Jim (Leicester South)

  Dalyell, Tam

  Hardy, Peter

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

  Davidson, Arthur

  Harrison, Rt Hon Walter

  Mason, Rt Hon Hoy

  Davies, Rt Hon Denzil (Llanelli)

  Hart, Rt Hon Dame Judith

  Maynard, Miss Joan

  Davies, Ifor (Gower)

  Hattersley, Rt Hon Roy

  Meacher, Michael

  Davis, Clinton (Hackney Central)

  Haynes, Frank

  Mellish, Rt Hon Robert

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

  Healey, Rt Hon Denis

  Mikardo, Ian

  Deakins, Eric

  Heffer, Eric S.

  Millan, Rt Hon Bruce

  Dean, Joseph (Leeds West)

  Holland, Stuart (L'beth, Vauxhall)

  Miller, Dr M. S. (East Kilbride)

  Dempsey, James

  Home Robertson, John

  Mitchell, Austin (Grimsby)

  Dewar, Donald

  Homewood, William

  Mitchll, R. C. (Soton, Itchen)

  Dixon, Donald

  Hooley, Frank

  Morris, Rt Hon Alfred (Wythenshawe)

  them freely admit that an exchange rate at the present level coupled with a reasonable rate of inflation, would not be a problem and that it is the rate of inflation which is the principal threat to our exports. The Opposition—
  Mr. James Hamilton ()Mr. James Hamilton (Bothwell) rose in his place and claimed to move, That the Question be now put.
  Question, That the Question be now put, put and agreed to.
  Question put accordingly, That the original words stand part of the Question:—
  The House divided: Aves 252, Noes 309.

  NOES

  Adley, Robert

  Clarke, Kenneth (Rushcliffe)

  Gorst, John

  Ailken, Jonathan

  Cockeram, Eric

  Gow, Ian

  Alexander, Richard

  Colvin, Michael

  Grant, Anthony (Harrow C)

  Amery, Rt Hon Julian

  Cope, John

  Gray, Hamish

  Ancram, Michael

  Cormack, Patrick

  Greenway, Harry

  Arnold, Tom

  Corrie, John

  Grieve, Percy

  Atkins, Rt Hon H. (Spelthorne)

  Costain, A. P.

  Griffiths, Eldon (Bury St Edmunds)

  Atkins, Robert (Preston North)

  Cranborne, Viscount

  Griffiths, Peter (Portsmouth N)

  Atkinson, David (B'mouth, East)

  Critchley, Julian

  Grist, Ian

  Baker, Kenneth (St. Marylebone)

  Crouch, David

  Grylis, Michael

  Baker, Nicholas (North Dorset)

  Dean, Paul (North Somerset)

  Gummer, John Selwyn

  Banks, Robert

  Dickens, Geoffrey

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

  Beaumont-Dark, Anthony

  Dorrell, Stephen

  Hamilton, Michael (Salisbury)

  Bendall, Vivian

  Douglas-Hamilton, Lord James

  Hampson, Dr Keith

  Bennett, Sir Frederic (Torbay)

  Dover, Denshore

  Hannam, John

  Benyon, Thomas (Abingdon)

  du Cann, Rt Hon Edward

  Haselturst, Alan

  Benyon, W. (Buckingham)

  Dunn, Robert (Dartford)

  Hastings, Stephen

  Bevan, David Gilroy

  Durant, Tony

  Havers, Rt Hon Sir Michael

  Biffen, Rt Hon John

  Dykes, Hugh

  Hawkins, Paul

  Biggs-Davison, John

  Eden, Rt Hon Sir John

  Hawksley, Warren

  Blackburn, John

  Edwards, Rt Hon N. (Pembroke)

  Heddle, John

  Body, Richard

  Eggar, Timothy

  Henderson, Barry

  Bonsor, Sir Nicholas

  Elliott, Sir William

  Heseltlne, Rt Hon Michael

  Boscawen, Hon Robert

  Emery, Peter

  Higgins, Rt Hon Terence L.

  Bottomley, Peter (Woolwich West)

  Eyre, Reginald

  Hill, James

  Bowden, Andrew

  Fairbairn, Nicholas

  Hogg, Hon Douglas (Grantham)

  Boyson, Dr Rhodes

  Fairgrieve, Russell

  Holland, Philip (Carlton)

  Braine, Sir Bernard

  Faith, Mrs Sheila

  Hooson, Tom

  Bright, Graham

  Farr, John

  Hordern, Peter

  Brinton, Tim

  Fell, Anthony

  Howe, Rt Hon Sir Geoffrey

  Brittan, Leon

  Fenner, Mrs Peggy

  Howell, Rt Hon David (Guildford)

  Brocklebank-Fowler, Christopher

  Finsberg, Geoffrey

  Howell, Ralph (North Norfolk)

  Brooke, Hon Peter

  Fisher, Sir Nigel

  Hunt, David (Wirral)

  Brown, Michael (Brigg & Sc'thorpe)

  Fletcher, Alexander (Edinburgh N)

  Hunt, John (Ravensbourne)

  Browne, John (Winchester)

  Fletcher-Cooke, Charles

  Hurd, Hon Douglas

  Bruce-Gardyne, John

  Fookes, Miss Janet

  Irving, Charles (Cheltenham)

  Bryan, Sir Paul

  Forman, Nigel

  Jenkin, Rt Hon Patrick

  Buchanan-Smith, Hon Alick

  Fowler, Rt Hon Norman

  Jessel, Toby

  Budgen, Nick

  Fox, Marcus

  Johnson Smith, Geoffrey

  Bulmer, Esmond

  Fraser, Rt Hon H. (Stafford & St)

  Jopling, Rt Hon Michael

  Butcher, John

  Fraser, Peter (South Angus)

  Joseph, Rt Hon Sir Keith

  Butler, Hon Adam

  Fry, Peter

  Kaberry, Sir Donald

  Cadbury, Jocelyn

  Galbraith, Hon T. G. D.

  Kellett-Bowman, Mrs Elaine

  Carlisle, Kenneth (Lincoin)

  Gardiner, George (Reigate)

  Kershaw, Anthony

  Carlisle, Rt Hon Mark (Runcorn)

  Gardner, Edward (South Fylde)

  King, Rt Hon Tom

  Chalker, Mrs. Lynda

  Garel-Jones, Tristan

  Kitson, Sir Timothy

  Channon, Paul

  Gilmour, Rt Hon Sir Ian

  Knight, Mrs Jill

  Chapman, Sydney

  Glyn, Dr Alan

  Knox, David

  Churchill, W. S.

  Goodhart, Philip

  Lamont, Norman

  Clark, Hon Alan (Plymouth, Sutton)

  Goodhew, Victor

  Lang, Ian

  Clark, Sir William (Croydon Gouth)

  Goodlad, Alastair

  Langford-Holt, Sir John

  Morris, Rt Hon Charles (Openshaw)

  Roper, John

  Thomas, Dr Roger (Carmarthen)

  Morton, George

  Ross, Stephen (Isle of Wight)

  Thorne, Stan (Preston South)

  Moyle, Rt Hon Roland

  Rowlands, Ted

  Tilley, John

  Newens, Stanley

  Ryman, John

  Tinn, James

  Oakes, Rt Hon. Gordon

  Sandelson, Neville

  Torney, Tom

  Ogden, Eric

  Sever, John

  Urwin, Rt Hon Tom

  O'Halloran, Michael

  Sheerman, Barry

  Varley, Rt Hon Eric G.

  Orme, Rt Hon Stanley

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

  Wainwright, Edwin (Dearne Valley)

  Owen, Rt Hon Dr David

  Short, Rt Hon Peter (Step and Pop)

  Wainwright, Richard (Colne Valley)

  Paisley, Rev Ian

  Short, Mrs Reneé

  Walker, Rt Hon Harold (Doncaster)

  Palmer, Arthur

  Silkin, Rt Hon John (Deptford)

  Weetch, Ken

  Park, George

  Silkin, Rt Hon S. C. (Duiwlch)

  Welsh, Michael

  Parker, John

  Silverman, Julius

  White, Frank R. (Bury & Radcliffe)

  Parry, Robert

  Skinner, Dennis

  White, James (Glasgow, Pollok)

  Pavitt, Laurie

  Smith, Cyril (Rochdale)

  Whitehead, Phillip

  Pendry, Tom

  Smith, Rt Hon J. (North Lanarkshire)

  Whitlock, William

  Penhaligon, David

  Snape, Peter

  Willey, Rt Hon Frederick

  Powell, Raymond (Ogmore)

  Soley, Clive

  Williams, Rt Hon Alan (Swansea W)

  Prescott, John

  Spearing, Nigel

  Williams, Sir Thomas (Warringon)

  Price, Christopher (Lewisham West)

  Stallard, A. W.

  Wilson, William (Coventry SE)

  Race, Reg

  Steel, Rt Hon David

  Winnick, David

  Radice, Giles

  Stewart, Rt Hon Donald (W Isles)

  Woodall. Alec

  Rees, Rt Hon Merlyn (Leeds South)

  Stoddard, David

  Woolmer, Kenneth

  Richardson, Jo

  Stott, Roger

  Wrigglesworth, Ian

  Roberts, Albert (Normanton)

  Straw, Jack

  Wright, Sheila

  Roberts, Alan (Bootle)

  Summerskill, Hon Dr Shirley

  Young, David (Bolton East)

  Roberts, Ernest (Hackney North)

  Taylor, Mrs Ann (Bolton West)

  Roberts, Gwilym (Cannock)

  Thomas, Dafydd (Merioneth)

  TELLERS FOR THE AYES:

  Robinson, Geotfrey (Coventry NW)

  Thomas, Jeffrey (Abertlllery)

  Mr. James Hamilton and

  Rodgers, Rt Hon William

  Thomas, Mike (Newcastle East)

  Mr. Donald Coleman.

  Rooker, J. W.

  Latham, Michael

  Normanton, Tom

  Spicer, Jim (West Dorset)

  Lawrence. Ivan

  Nott, Rt Hon John

  Spicer, Michael (S Worcesetershir)

  Lawson, Nigel

  Onslow, Cranley

  Sproat, Iain

  Lennox-Boyd, Hon Mark

  Oppenheim, Rt Hon Mrs Sally

  Squire, Robin

  Lester, Jim (Beeston)

  Osborn, John

  Stainton, Keith

  Lewis, Kenneth (Rutland)

  Page, John (Harrow, West)

  Stanbrook, Ivor

  Lloyd, Ian (Havant & Waterloo)

  Page, Rt Hon Sir Graham (Crosby)

  Stanley, John

  Lloyd, Peter (Fareham)

  Page, Richard (SW Hertfordshire)

  Steen, Anthony

  Loveridge, John

  Parkinson, Cecil

  Stevens, Martin

  Luce, Richard

  Parris, Matthew

  Stewart, Ian (Hitchln)

  Lyell, Nicholas

  Patten, Christopher (Bath)

  Stewart, John (East Renfrewshire)

  McCrindle, Robert

  Patten, John (Oxford)

  Stokes, John

  Mactarlane, Neil

  Pattie, Geoffrey

  Stradling Thomas, J.

  MacGregor, John

  Pawsey, James

  Tapsell, Peter

  MacKay, John (Argyll)

  Percival, Sir Ian

  Taylor, Robert (Croydon NW)

  Macmillan, Rt Hon M. (Farnham)

  Peyton, Rt Hon John

  Taylor, Teddy (Southend East)

  McNair-Wilson, Michael (Newbury)

  Pink, R. Bonner

  Temple-Morris, Peter

  McNair-Wilson, Patrick (New Forest)

  Pollock, Alexander

  Thatcher, Rt Hon Mrs Margaret

  McQuarrie, Albert

  Porter, George

  Thomas, Rt Hon Peter (Hendon S)

  Madel, David

  Prentice, Rt Hon Reg

  Thompson, Donald

  Major, John

  Price, David (Eastleigh)

  Thorne, Neil (Ilford South)

  Marland, Paul

  Prior, Rt Hon James

  Thornton, Malcolm

  Marlow, Tony

  Proctor, K. Harvey

  Townend, John (Bridlington)

  Marshall, Michael (Arundel)

  Rathbone, Tim

  Van Straubenzee, W. R.

  Marten, Nell (Banbury)

  Rees, Peter (Dover and Deal)

  Vaughan, Dr Gerard

  Mates, Michael

  Rees-Davies, W. R.

  Viggers, Peter

  Mather, Carol

  Renton, Tim

  Waddington, David

  Maude, Rt Hon Angus

  Rhodes James, Robert

  Wakeham, John

  Mawby, Ray

  Rhys Williams, Sir Brandon

  Waldegrave, Hon William

  Mawhinney, Dr Brian

  Ridsdale, Julian

  Walker, Rt Hon. Peter (Worcester)

  Maxwell-Hyslop, Robin

  Rifkind, Malcolm

  Waker, Bill (Perth & E Perthshire)

  Mayhew, Patrick

  Rippon, Rt Hon Geoffrey

  Walker-Smith, Rt Hon Sir Derek

  Mellor, David

  Roberts, Michael (Cardiff NW)

  Waller, Gary

  Meyer, Sir Anthony

  Roberts, Wyn (Conway)

  Walters, Dennis

  Mills, lain (Meriden)

  Rossi, Hugh

  Ward, John

  Mills, Peter (West Devon)

  Rost, Peter

  Warren, Kenneth

  Miscampbell, Norman

  Royle, Sir Anthony

  Watson, John

  Mitchell, David (Basingstoke)

  Sainsbury, Hon Timothy

  Wells, John (Maidstone)

  Moate, Roger

  St. John-Stevas, Rt Hon Norman

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

  Monro, Hector

  Scott, Nicholas

  Wheeler, John

  Montgomery, Fergus

  Shaw, Giles (Pudsey)

  Whitelaw, Rt Hon William

  Moore, John

  Shaw, Michael (Scarborough)

  Whitney, Raymond

  Morgan, Geraint

  Shelton, William (Streatham)

  Wickenden, Keith

  Morris, Michael (Northampton, Sth)

  Shepherd, Colin (Hereford)

  Wiggin, Jerrry

  Morrison, Hon Charles (Devizes)

  Shepherd, Richard (Aldridge-Br hills)

  Wilkinson, John

  Morrison, Hon Peter (City of Chester)

  Shersby, Michael

  Williams, Delwyn (Montgomery)

  Mudd, David

  Silvester, Fred

  Wolfson, Mark

  Murphy, Christopher

  Sims, Roger

  Young, Sir George (Acton)

  Myles, David

  Skeet, T. H. H.

  Younger, Rt Hon George

  Neale, Gerrard

  Smith, Dudley (War, and Leam'ton)

  Needham, Richard

  Speed, Keith

  TELLERS FOR THE NOES:

  Nelson, Anthony

  Speller, Tony

  Mr. Spencer Le Marchant and

  Neubert, Michael

  Spence, John

  Mr. Anthony Berry.

  Newton, Tony

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments), and agreed to.
  Mr. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to, pursuant to Standing Order No. 18 (Business of Supply).
  Resolved,
  That this House welcomes the Government's continuing commitment to support, wherever possible, the textile and clothing industries under the existing Multi-Fibre Arrangement which was both negotiated and accepted by the previous Labour Government; acknowledges that the Government has negotiated through
  1658
  the European Community a number of new restraint arrangements in addition to 32 new quotas on imports from other suppliers since it came into office; expresses its concern at the continuing decline over many years of textile employment; applauds the successful record of the textile and clothing industries in export markets; and believes that the long-term health of the industries can best be restored by the success of the Government's broad economic policies.

  TEXTILE AND CLOTHING INDUSTRIES

    BUSINESS OF THE HOUSE
    Ordered,
    That, at this day's sitting, the Law Reform (Miscellaneous Provisions) (Scotland) Bill [Lords] may be proceeded with, though opposed, until any hour.—[Lord James Douglas-Hamilton.]

LAW REFORM (MISCELLANEOUS PROVISIONS) (SCOTLAND) BILL [LORDS]
As amended(in the Standing Committee), considered.
LAW REFORM (MISCELLANEOUS PROVISIONS) (SCOTLAND) BILL [LORDS]
  Clause 1

    QUALIFICATION OF JURORS
    10.15 pm
    The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): I beg to move amendment No. 5, in page 3, line 8, after ' ineligible ', insert ' or not qualified'.
    Mr. Deputy Speaker (Mr. Bernard Weatherill): With this we may take Government amendment No. 1.
    Mr. Rifkind: When the Bill was being considered in Committee, the hon. Member for Glasgow, Garscadden (Mr. Dewar) pointed out that, while there were certain penalties imposed for a person who was ineligible to serve on a jury, no such reference was made to one who was not qualified but who, despite that, served on a jury. The hon. Member's point was well founded and this amendment seeks to remedy that matter.
    Government amendment No. 5 is designed to ensure that the validity of a verdict cannot be challenged on the ground that one of the jurors was not qualified in terms of clause 1 (1). The effect of Government amendment No. 1 is that there should be the same penalty for serving on a jury when not qualified as there is for doing so when ineligible.
    I am sure that these amendments will be acceptable to the House, and I commend them.
    Mr. Donald Dewar (): I thank the Minister for tabling these necessary amendments. I pay tribute to him and to the Solicitor-General for Scotland, because I cannot remember a Bill on which Ministers have been more helpful or obliging. Perhaps this is not the most epoch-making measure, but it has been a useful exercise.
    I am also glad that we are imposing a possible fine of £200 rather than £1,000 which at one time I believed was in the
    1660
    ministerial mind. If one was of evil disposition, one could have a great deal of fun differentiating between a person who was "disqualified" and a person who was "not qualified" for jury service in Scotland. I shall resist the temptation to indulge in theological speculation.
    I am grateful to the Minister for clarifying this point, and I promise that I shall say nothing further on this measure.
    Amendment agreed to.
    Amendment made: No. 1, in clause 3, page 4, line 21, after 'ineligible', insert ', or not qualified, '.—[Mr. Rifkind.]

  Clause 23

    AMENDMENT OF PRESCRIPTION AND LIMITATION (SCOTLAND) ACT 1973
    Mr. Norman Buchan (): I beg to move amendment No. 2, in page 16, line 42, after 'above', insert 'the expression'.
    Mr. Deputy Speaker: With this we may take amendment No. 3, in page 17. line 6, at end insert
    '; but the expression does not include an interlocutor dismissing a cause by reason only of a provision mentioned in subsection (1) above.'.
    Mr. Buchan: This amendment seeks to clear up what I regard as an anomaly arising out of the favourable response of the Government to my new clause in Committee. This would remove my last remaining doubts. I should like to hear a word of confirmation that it meets all the points that I put.
    We have had two or three months of fairly heavy slogging in which we have been saying things that were not exactly nice about the Solicitor-General and the Under-Secretary, so I should like to take this opportunity to thank them for the response to my amendments, which, I suspect, will be favourable.
    Mr. Bruce Millan (): I did not have the good fortune to serve on the Committee, so I did not have the unusual experience of Ministers being helpful. I believe that this is an admirable clause and the amendment qualifies the remaining doubt about it. I, too, am grateful to the Government.
    The Solicitor-General for Scotland (Mr. Nicholas Fairbairn): I welcome the generous plaudits of the hon. Member for Renfrewshire, West (Mr. Buchan) and the right hon. Member for Glasgow, Craigton (Mr. Millan), who did not serve on the Committee but who had a great interest in it. This is an important amendment which I hope will assist us to do justice in situations in which justice may previously not have been done. Subject always to the concepts of equity and the controls of the court which will be contained in the Bill under the amendments introduced by the hon. Member for Renfrewshire, West, the Government are happy to give their endorsement of these amendments and to hope that justice will be done.
    Amendment agreed to.
    Amendment made: No. 3, in page 17, line 6, at end insert
    '; but the expression does not include an interlocutor dismissing a cause by reason only of a provision mentioned in subsection (1) above.'.—[Mr. Buchan.]
    Bill accordingly read the Third time and passed, with amendments.

INTERNATIONAL MONETARY FUND
10.21 pm
The Financial Secretary to the Treasury (Mr. Nigel Lawson): I beg to move,
That the draft International Monetary Fund (Increase in Subscription) Order 1980, which was laid before this House on 4 July, be approved.
The purpose of the order is to authorise payment by the United Kingdom of our share in the International Monetary Fund's seventh quota increase. This follows a decision by the Governors of the IMF in December 1978 that all members' quotas should be increased by 50 per cent. This will raise the IMF's general resources from 39 billion special drawing rights, or about £23 billion, to 59 billion special drawing rights, or about £35 billion. This decision will come into effect once members of the fund holding three-quarters of the quotas have ratified the increase.
This moment is still some way off. At the last count, members representing 34 per cent. of the fund's quotas had ratified the increase. As our quota ranks second after that of the United States at just under 7 per cent., this House's approval of the order will take the fund some way further towards its target.
The United Kingdom's present quota is 2,925 million special drawing rights, about £1,630 million. The increase authorised by the order before the House will take this to 4,387½ million special drawing rights, about £2,450 million.
I should explain that, because of the nature of the IMF's operation, the payment for the quota does not add to public expenditure. Twenty-five per cent. of the increase will be paid for with SDRs. Incidentally, this will not affect the overall level of the reserves since we shall simultaneously be increasing the so-called reserve position in the fund, that is to say, the amount that we ourselves could draw automatically on the fund by exactly the same amount. Since 1972, as the House will be aware, this reserve position has been counted as part of the United Kingdom's reserves.
The balance will be paid in non-interest bearing notes that will be re-deposited by the IMF at the Bank of England for possible use at another time.

1663
When the IMF needs to use some of this sterling to make up the currency package for another member country's drawing, our reserve position in the fund will again increase by the same amount. In other words, the fund would owe us money and our claims would be increased. We obtain one asset in exchange for another. Again, this does not score as public expenditure.
The House may be curious as to why it has taken until now for the fund to implement a decision taken at the end of 1978, but it was always expected that the legislative procedures in so many member countries would take the best part of two years. The fund planned on the basis that the quota increase would be implemented towards the end of 1980. I cannot yet guarantee to the House that the quota increase will be in place this year, but the Government hope that it will. The Government intend to play their part in this process as we and other industrialised countries committed ourselves to do at the recent Venice summit. I pay tribute to our predecessors, who smoothed the way for us by providing powers in the International Monetary Fund Act 1979 for the Treasury to make orders subject to the affirmative resolution of the House increasing our IMF quota. Previously each such increase had to be ratified by primary legislation.
The extra resources will now arrive at an opportune moment. The Government are keenly aware of the implications of the latest round of oil price increases for the balance of payments of a large number of countries, including the developing countries. A series of inter-related problems are involved. They will continue to be the subject of intensive public debate, as the interest of the House in the Brandt report showed recently.
Estimates of the OPEC balance of payments surplus for 1980 amount to over $ 130 billion. Non-oil exporting developing countries, on the other hand, may have a collective deficit of about $ 55 billion. Much of this will be concentrated in a few relatively advanced countries which will be able to arrange most, if not all, of their finance on the markets. However, other countries are less fortunately placed and will need official balance of payments assistance, mainly from the IMF.
1664
It is common ground, in the words of the Venice summit communiqué, that private lending will need to be supplemented
"by an expanded role for international financial institutions, especially the IMF."
Up to now the fund has got by on the basis of its existing resources, consisting of members' payments for their quotas, supplemented by borrowing under the so-called special supplementary financing facility from the richer OECD and OPEC countries.
The fund is possibly in a lull before what might be a storm. It will need substantially increased facilities to meet the needs of its members once the impact of the oil price increases is fully felt. The quota increase will make a sizeable contribution. Nevertheless, the fund will need to add to that by borrowing. That was also endorsed by the Venice summit. The fund management has started discussions with potential OPEC lenders. The Government welcome the discussions.
Within the IMF the United Kingdom's representatives are participating in the work which has been set in hand to improve both the size and the quality of the fund's contribution to the recycling process. I am well aware of how heavily the fund is criticised. Perhaps we shall hear some criticism this evening. Some of the critics do not fully understand the nature of the fund and its operation, and the delicate part which it has to play.
The fund is not an aid-giving institution. The essence of its lending and borrowing arrangements is that they are intended to lubricate the process of changing domestic policies so as to find a more sustainable balance of payments. The fund's resources are not unlimited. They are meant to revolve. As each member country recovers and repays, money becomes available for others.
The fund must be responsive to its members and to their social and political backgrounds. It is. However, marrying those requirements has never been easy. It is harder than ever in the difficult world economic environment in the wake of recent oil price increases. Indeed, countries face painful choices. The fund must continue to be able to influence its members to adjust their economies in the

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light of unfavourable economic developments. Such developments might frequently be outside the individual member's control, but they must be tackled.
The fund's effectiveness as a balance of payments financing organisation would be prejudiced, and nobody would be advantaged, if it were drawn into areas which are more properly the responsibility of individual aid donors and multilateral aid-giving institutions such as the soft loan affiliates of the World Bank. There are hard cases. However, the House will not wish to dwell too much on matters which are the subject of delicate negotiation between the fund and Governments.
I can assure the House that the fund's management and its executive board are very much alive to their responsibilities. The fund has fully recognised that the economic policy terms that it negotiates with borrowers under its main facilities must reflect the change in world circumstances and particularly the length of time that is necessary to adapt to the oil price increase and the likely duration of the OPEC balance of payments surplus.
Mr. Tam Dalyell (): Would one be wrong in assuming that this represents a change of philosophy in relation to the Third world from the days of Pierre-Paul Schweitzer when certainly some of us understood that the IMF thought that it had rather special obligations to the Third world? Is the Financial Secretary trying to tell us about a change of policy?
Mr. Lawson: The fund has obligations to the Third World as it has to all its members who have recourse to it. But there is no change in the fund's role—the reverse is the case. It is those critics who are trying to turn it into an aid-giving institution who are suggesting that it should have a different role. The role that I am outlining is the one that the fund has always performed, and with a considerable record of success. Of course, the Labour Government, of which the hon. Member for West Lothian (Mr. Dalyell) was a supporter, had particular reason to be grateful to the fund, both for the facilities that it made available to them and also for the policy prescriptions which it imposed upon them.
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For the reasons I have given, the fund is implementing or preparing significant changes in its arrangements. The first is to make regularly available significantly greater sums in proportion to quotas than has up to now been the case. The second is to make assistance available over longer periods by arranging for a succession of annual standbys for making loans under its extended financing facility. The third is to allow more time for adjustment, given the nature of the structural changes now needed in many countries to reflect the higher oil prices about which I spoke earlier. The fourth is to concentrate more on fixing its lending and conditionality policies on vital supply side factors such as energy measures and import substitution. One example of this is the IMF's co-operation with the World Bank in Guyana in order to finance hydroelectric investments which would make that country virtually self-sufficient in energy.
In order for the fund to play its proper part, it needs this quota increase, and I ask the House to make its contribution by approving the order.
10.33 pm
Mr. Denzil Davies (): This is an important debate which is being conducted fairly late at night. It may seem on the face of it to be a rather insignificant order. However, the factors behind it are extremely important. There are big questions to be asked about the role of the IMF and our subscription to it.
I could not follow the Financial Secretary's figures as well as I should have, but I understand that our contribution to this increase in the fund's assets is about £800 million. The hon. Gentleman went to great lengths to show that this was not an increase in public expenditure. It seems that even if the fund were to spend the money it would still be a loan by the British Government to the fund. I do not quite understand that. I accept that technically it may be that, if the money is spent it has been spent, and I do not suppose that the IMF would ever repay it. To that extent, therefore, it is an increase in public expenditure.
We on this side certainly have reservations about the role of the IMF. The Financial Secretary was very negative in his response to that. He seemed to suggest that all was well, that the IMF did

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not need to. change. But it was set up a long time ago in world conditions different from those now obtaining. I certainly argue that it needs to change and to fulfil a different role today. There is no need for it to be an aid-giving institution, but there is a different role for it and I would like to see a change in its role. I do not oppose this order, but, subject to certain conditions and reservations, the Government must press for a change in the composition and statutes of the IMF and the way in which it operates in order to take into account the changing world situation.
The House will agree that there are two major problems facing the international community in terms of monetary matters. Both are difficult problems, and they were touched upon in the Brandt report. The British Government and other Governments must address their minds to those problems.
The first problem, and perhaps the more difficult to resolve, concerns the reform of the international monetary system and the role of special drawing rights within that system. I hope that the Government will try to press for a change so that the SDR becomes an alternative reserve asset in the international monetary system, thus creating stability. The Brandt report recommended that the SDR should be used for asset settlements between central banks, and to some extent replace national currencies in those reserves. That could be done by means of a substitution account. I hope that the British Government will try to press for that.
I understand that the Americans do not wish the dollar to lose its reserve currency role. My fear is that sterling will then become a reserve currency. One of the dangers of the Government's policies and of the oil surplus is that sterling will become a reserve currency, with all the problems that that entails.
But the world has changed. We do not want one or two large reserve currencies. National economies cannot support that. It is not easy, but we must constantly press for some sort of change so that an asset such as the SDR can gradually take over national assets and provide the reserve backing that the world needs. Part of the problem of the last few years stems from the fact that President Nixon closed the gold window. One can argue about the position of gold,
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but at least there was some backing for the currency. When the dollar was no longer backed by gold the world had a reserve currency without economic strength and backing. We had the same problem with sterling, certainly after the end of the war. I hope that the Government will try to push forward the idea of that sort of reserve currency.
The second problem, which is more pressing and perhaps easier to solve, is the need to channel the OPEC surpluses to the non-oil exporting, less developed countries. The Financial Secretary said that the figure for 1980 for the OPEC surpluses would be $130 billion. I thought that it might be about $100 billion, but these are difficult matters, and they are related to the price of oil. The deficits of the non-oil exporting countries amount to between $45 billion and $60 billion. There is a great need for an international mechanism to channel some of that money to the less-well-off countries rather than to allow it to stay in bank accounts in New York, London or wherever.
Until now the commercial banks have not done a bad job in channelling that money. The multinational banks are in business to lend money, and the salaries of their managers are paid as a result of lending money. But we are now approaching a different situation. More and more frequently those banks are facing reserve asset requirements. Margins on lending are getting smaller, and the banks are becoming worried. If one or two banks collapse and one or two countries are unable to repay the money, part of the multinational banking system could collapse.
There are many multinational bankers—[Interruption.] I certainly believe that the system could collapse. I thought it would have happened before now and I think the possibility is even greater now. The Governor of the Bank of England and other central bankers are, as their speeches show, very concerned about it. There is a definite possibility of this happening, and if it were to happen the repercussions would be considerable.
I do not believe that permanently this is the role for the commercial banks. I recognise the problems and the very great difficulties. I think it should be done by an international institution. Some of my hon. Friends may say that it is not for

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the IMF, but the IMF is there, and provided that it can change its attitudes—and possibly even change its statutes—I believe that it should take on a greater role in channelling this money to help the poorer countries.
Mr. Stephen Dorrell (): Does the right hon. Gentleman agree that the point he is making has nothing to do with the argument that my hon. Friend the Financial Secretary was putting forward about the IMF being used as a quasi-aid organisation? If I understand him aright, he is suggesting, not that the money should go to the Third world as a form of aid to the Third world and the less developed world but that it should go—as is clearly in the economic interests of the West—as credit to them to enable those countries to buy the goods that we need to be able to sell to them if we are to secure an economic recovery for ourselves.
Mr. Davies: I think that the Financial Secretary was using the word "aid" in contradistinction to loans at a proper commercial rate of interest, with all the conditionality involved. That was how I understood him to be using the word "aid". I think he was drawing a distinction which perhaps we should not draw any more.
The IMF should possibly change its statutes, because it has been a balance of payments organisation, if one may put it that way. The whole basis of the IMF was that it merely provided room for balance of payments adjustments. That may be all right for Western industrialised countries, but, if the IMF is to play a role in channelling OPEC surplus money to countries that are too poor to operate in the same way as Western industrialised countries, it will have to change its statutes, if necessary, and its whole attitude. That means, not that it should not apply normal prudent yardsticks, but that it must change the way in which it lends money.
After the war we seem to have set up the IMF, which is on one side of the road in Washington, as the bank for the rich, and the World Bank, on the other side of the road, as the bank for the poor. I do not think that that sort of arrangement should continue in the present international monetary world,
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with all the problems that exist. We have to look again at those institutions. As the hon. Member for Loughborough (Mr. Dorrell) said in his intervention, it is in the interests of the West to ensure that this money is channelled to the poorer countries so that they can buy our goods and build up their own industries and therefore contribute to the health of the international economy.
It was pointed out recently in an article in the Financial Times that the IMF has only about $8 billion outstanding to the non-oil less developed countries. If we take repayments into account, we find that it has lent very little to these poorer countries because, as I have said, it has been a kind of bank for the rich Western countries and is not really geared to do what has to be done.
There are two criticisms to be made of the IMF, although I accept that they have restraints in their statutes. Its only policy is to apply a deflationary policy. If there is a problem, its policy is, first, to cut public expenditure; second, to devalue; third, to have tight targets for M3; fourth, to cut food subsidies; and, last, to have no import controls. That is the classic—almost monetarist—way of approaching the problem.
That might or might not be all right for a developed Western economy, but it makes no sense at all for the poorer countries. These monetarist policies mean nothing to the pooorer countries, especially to those which are primary producers. Looking at the examples of Jamaica, of Bolivia and of Ghana over the last few years, we can see that the IMF has been completely insensitive and quite incapable of understanding the real problems of those countries. Not only does it often apply classic monetarist policies; it does not differentiate between different economies. The economies of those three countries are completely different and the same orthodox economic solutions cannot properly be applied to all of them. That, again, is what has happened and that is the problem with the IMF.
We would put forward two conditions and qualifications. First, the IMF must look to its status. It must cease to be a balance of payments organisation mainly helping the richer countries to adjust their balance of payments between

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one and the other. It must try to develop to help the poorer countries. It must raise its own capital and try to channel some of the money in commercial banks in the interests of the world economy. It must look at import controls not as being terrible but as a partial solution sometimes to the problems of the lesser developed countries.
Secondly, the Foreign Office, which seems to be more progressive than the Treasury in this matter, in its commentary on the Brandt report, recognised that the IMF must change the way that it chooses staff. It must look elsewhere for recruits. It is no use recruiting staff from the Chicago Business School. They may be all right to deal with various orthodox economic problems. Conservative Members shake their heads. This paper has been produced by the Government and it clearly states that the IMF must take into account that there are different problems in developing countries and that its staff must understand them. If it recruits staff from the universities and business schools, which often do not teach them about these problems and deal only with classic economic problems, they will not be as sensitive to the problems of the poorer countries as they should be.
Those are the two conditions and qualifications.
The Financial Secretary was rather negative. He did not recognise that there was a problem. My hon. Friend the Member for West Lothian (Mr. Dalyell) mentioned Pierre-Paul Schweitzer, but the hon. Gentleman did not think that there had been a change. I think that there has been a change. This depends on the personality of the managing director. It may be that the present managing director looks at things differently from his predecessor—I do not know—but there certainly has been a change.
I hope that the Government will recognise, as the Foreign Office did to some extent in its memorandum on the Brandt report, that there is a problem and that it is necessary for institutions to change. Institutions ossify and conditions change. It is for the British Government, and other Governments, to try to change the attitude of the IMF to ensure that it is in tune with the problems of the international monetary system, especially the problem of channelling these vast surpluses to help the poorer countries.
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We shall not officially oppose the order, but I hope that in future we shall hear something positive from the Government on their approach to these matters, not the negative approach that we have had from the Financial Secretary.
10.47 pm
Mr. Stuart Holland (): Many of us are deeply concerned about the current activities of the IMF for a variety of reasons. One is its economic rationale, precisely because it is operating on criteria which are more relevant to the developed than to the less developed countries.
Another reason is the alleged neutrality of the intervention of the fund. The Financial Secretary said that the fund has to take account of economic and social circumstances, but in reality many of us are concerned that it does more than that and directly intervenes in the political process in individual countries and discriminates between those countries in the allocation of funds.
The first analytic point, which has been made by implication by my right hon. Friend the Member for Llanelli (Mr. Davies), concerns the general philosophy of monetarism in relation to financing by the fund. Many Government spokesmen now pride themselves on the fact that we have avoided beggar-my-neighbour protection, on the model of the 1930s. But, in practice, the standard fund formula of a domestic deflation of demand, coupled with devaluation, as a policy for rectifying balance of payments deficits has now been imposed on so many countries on such a scale that it is contributing not to beggar-my-neighbour protection but to beggar-my-neighbour deflation. In other words, the contraction of spending by several countries on which the International Monetary Fund has imposed deflationary policies is restricting world trade. Thereby, that falsely-based monetarist philosophy is actually aggravating the level of trade, and aggravating not only the exports of the less developed countries, but those of the more developed countries. It is a beggar-my-neighbour syndrome, as serious as in the 1930s, and even more serious in respect of one crucial aspect of the fund's intervention, namely, the attack on public spending programmes. Whether that country is Egypt, Tanzania, Portugal or Jamaica, there is a

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clear and explicit bias in the fund's programme towards individual countries.
Many hon. Members on the Labour side of the House, when considering whether to oppose the order, should take account of a current position of great seriousness—the relation of Jamaica with the IMF, which throws gravely into question the rather bland statement from the Financial Secretary about the relative neutrality of the fund's intervention. For example, the Financial Secretary said that the fund's managers take into account changing world circumstances including the OPEC price rises. If the fund takes them into account, what sense can be made of the IMF internal memorandum of November last year, which admitted in respect of Jamaica
"a number of events—severe flooding, sluggish mining (bauxite) exports, and a sharp increase in fuel prices and foreign interest rates—mostly unforeseen and outside the control of the authorities—have worsened the balance of payments prospects for 1979 in spite of a better than expected performance with respect to tourism and non-traditional exports and an import level somewhat below the original forecast."
Granted that Jamaica was performing somewhat better than expected on its import level and tourism earnings, and granted the admission of drought, disaster and external factors involved one could expect the fund, in those circumstances—if we are to take the Financial Secretary seriously—to have done precisely what he now says the fund is doing, namely, to extend further finance so that, on the second of his criteria, Jamaica could have longer assistance for stand-bys, to give, on his third criteria, more time for adjustment, and to relax his fourth criteria of conditionally—that is, the conditions for lending. In practice, that was not so.
The fund claimed that since Jamaica had fallen short on one of its performance criteria by less than 10 per cent. it could not support it. In practice, that means that it forecloses on the country. It means that the country is thrown into a position virtually equivalent to bankruptcy. For a country with very primitive resources that means not only taking oil from the transport on the roads but, in a country like Jamaica, taking the oil from the oil lamps on the tables by which many homes are lit.
Mr. Frank Hooley (): On a point of accuracy, my impression was not that the fund would not support Jamaica, but that Jamaica would not accept the fund's support on the conditions that it wished to impose. That is somewhat different.
Mr. Holland: I am grateful to my hon. Friend for his intervention.
If we look at the conditions on which the fund is offering that intervention, we see that they range far wider than its own test of purely economic criteria. For example, the internal memorandum of the fund claimed:
"The Government is not seriously committed to its economic programme, judging from perceived inconsistencies between its foreign policy and domestic political stances on the one hand, and the dictates of the programme on the other."
What does that mean in practice? Does it mean that Mr. Manley's Government happens to be avowedly Socialist? Does it mean that Jamaica has contacts with other countries in the Caribbean such as Cuba?
The key test which the fund was making here was political, not economic. We know, in practice, that on many missions which the fund makes to Latin America, it first clears its brief with the State Department, and that this is an area of intervention where it is clearly within United States influence and is not the neutral technical instrument which we are led to expect. This is of very considerable significance, granted that not only is the United Kingdom paying towards the IMF funding but also that we have a United Kingdom director on the fund.
The Jamaican example is significant. When the fund found, in April this year, that the Jamaican Government would not accept the scale of the deflation demanded by the fund, it claimed that to complicate matters for itself
"the balance of power within the ruling party shifted decisively in favour of those who opposed the basic tenets of the programme, viz., reliance on the market mechanism and on the private sector to effect recovery."
This is what the fund is actually about. It is a very serious situation indeed, not only for Jamaica but also for a country such as Tanzania.
The irony is that when the fund negotiates with a country such as Poland,

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it does not, in this sphere of influence, actually insist on the
"reliance on the market mechanism and the private sector to effect recovery."
When it was lending to certain other countries, for example, to Egypt, although the terms of the fund's loan to Egypt were enough to cause riots in the streets, it did not insist on the wholesale change of the Government's social priorities because that country happens to be in a different sphere of influence and because of wider and quite clear United States interests in relation to a Middle East settlement.
I shall not elaborate these specific cases further, but I want to underline the point that the Jamaican Government are in the front line not only of a fight against the pressures from the IMF, not only against the principles of monetarist policy, but also pressures of United States foreign policy.
It is improbable that hon. Members on the Opposition Benches—although I cannot commit them to this—will oppose the order. If we do not oppose the order, it will be because we are concerned that more funds should be made available on a major scale to increase international liquidity. But if we do not oppose the order, it will be with the most major misgivings on the policies of the fund.
We are concerned about the nineteenth-century ceteris paribus reasoning of the fund, its assumption when it deals with an individual country that the rest of the world economy basically stays in some kind of equilibrium rather than the fact that, as the Financial Secretary has admitted and as the fund formally admits, in practice everything is changing. We are concerned about the fact that the fund's reasoning on exports, devaluation and internal deflation—the same package as it recommended for this country—assumes that trade on a world scale is predominantly between different companies in different countries, whereas in fact it is now predominantly within the same companies in different countries. The global dimension of multinational companies' production is now greater than the total volume of world trade.
In key cases in Latin America, and in Jamaica, for example, where an individual commodity such as bauxite, subject to the pricing of multinational companies, pre-
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dominates and in the export trade, the activities of these companies and non-price factors are more important than the devaluation itself. To impose a devaluation, as the fund has done on several of these countries, in practice means raising their import prices without increasing their external export revenues.
I therefore urge Opposition Members, in considering whether to support the order, to urge on the Financial Secretary and the Government the case for challenging the beggar-my-neighbour deflation policies of the fund and the case for saying—as my right hon. Friend the Member for Llanelli argued—that if, in practice, we are to support the fund we must do so in terms of a transformed role not only for the fund itself, but also for other international agencies. There must be a recycling of OPEC surpluses and an extension of credit and aid to less developed countries.
It used to be argued that the less developed countries benefited from trade more than from aid. They now need both aid and trade. The IMF is not the most appropriate instrument for the job. It was originally tailored to the needs of the more developed countries and it is not serving the interests of the less developed countries. In many cases it is damaging their interests. We must strongly support the Brandt proposals for a world development fund within the context of not only pushing for a recycling of OPEC surpluses, but also of a higher aid content.
In addition, we must endorse a framework by which fund policies do not mean that individual countries are subjected to the trading and pricing decisions of multinational corporations rather than to those of their Governments. These practices can and should be restrained by both borrowing and aid-receiving countries without imperilling aid finance and transfers. For example, in the Portuguese case the Government, in negotiation with the fund, argued in favour of tougher policies towards foreign multinational capital. It was made effectively plain that aid would not be forthcoming if that policy was pursued.
Further, we must ensure that the Governments of recipient countries decide how to mix their economies between public and private enterprise, and in what way they distribute reflationary spending between their social and personal sectors.

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Not least, we must demand the joint reduction of interest rates by central banks and donor agencies, which would be justified by a higher volume of lending and sales on a global scale. I stress that I am recommending a "no holds" policy in fund lending towards the less developed countries. It does not mean blank cheques for the Mobutus and Somozas of this world so that they can squander funds as they think fit. It means recognition—as stressed in the Brandt report—that there is a genuine mutuality of interest between the less developed and more developed countries.
On several estimates, the sheer scale of the under-utilisation of resources is massive. It has been estimated in the Brandt case that that amounts to $200 billion in the developed countries.
The programme in favour of the less developed countries on both an aid and trade basis should be far in excess of that now being considered. We must insist that any further finance for the fund or major extension of its international financial role must be on the basis of "Keynes plus" rather than "Friedman minus". We must transcend this beggar-my-neighbour deflation of trade with a commitment to reflation of world trade through the channel of development in the context of a transformed fund.
11.3 pm
Mr. Frank Hooley (): The debate is becoming extremely interesting. A little while ago I was concerned about it, particularly—to be candid—in relation to the Labour Party. It seemed that we were in danger of attacking the concept of international mechanisms as regards co-operation in monetary and aid methods. I want not to destroy the IMF but to reform it. That is important, and needs to be said from this side of the House.
I am aware of the various criticisms of the IMF. The criticisms of individual cases and of its overall attitude to balance of payments problems over the past decade are justified. The IMF is becoming aware of those criticisms and is endeavouring to respond.
It has been said that the IMF has two roles. First, it has a traditional role within the OECD and the industrial
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North. Indeed, it was largely designed for that purpose. Secondly, it has a developing role—I take issue with the Financial Secretary for suggesting that it is not a proper role—in those Third world countries that run into difficulties.
I welcome the new idea of the substitution account, which was referred to by my right hon. Friend the Member for Llanelli (Mr. Davies). It is rather ironic that the Americans have been opposed to the account. Had it been established and had it existed, it would have saved President Carter a considerable amount of trouble.
If we can bring into effect an effective substitution account using the SDRs, that will take the pressure off a major reserve currency. It will save the United States, or possibly sterling should it become a reserve currency again, heaven forbid, pursuing deflationary policies for balance of payments reasons. That will be the effect if the strain can be taken by an international subsitution account. I welcome my right hon. Friend's comments.
I hope that we shall have a positive and energetic policy within the IMF in support of the idea from Her Majesty's Government. I hope that it will exercise some persuasion on the foot-dragging of the West Germans and the Americans, who do not seem so far to have grasped the importance of the concept.
It is not correct to say that the IMF should not have a role in aid for the Third world. The compensatory financing facility and the oil facility—there is a third factor that I cannot call to mind—were specifically designed within the IMF to help to meet the problems of the Third world. It could be said that it was not aid because it related to balance of payments, but we are drifting into a grey area if we try to divide what is aid and what is balance of payments help because both are inevitably interlinked.
In the broad sense it is not true to say that the IMF does not have and has not had an aid role. How has it exercised that role? We run into the conditionality argument, which has been so well spelt out by my hon. Friend the Member for Vauxhall (Mr. Holland) and illustrated by the various examples that he mentioned. I do not need to go into that in great detail.

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It is interesting that the IMF is becoming extremely sensitive in its published statements about that problem. It is getting neurotic about the statements that the IMF kills or starves babies.
Mr. Frank Dobson (): Quite true.
Mr. Hooley: I hesitate to say that. However, there is a school of opinion that claims that the IMF's rigorous conditionality has done serious social and economic damage to some Third world countries that have asked for its aid. Undoubtedly, there are indications—I do not know whether they stem from the change in managing director—that the IMF has become sensitive to such criticism and is endeavouring to do something about it.
The Financial Secretary mentioned Guyana. That is an interesting example, although it is regrettable that the exercise in respect of Guyana, sensible as it is in itself, where we have had a marriage of effort between the IMF and the World Bank, should have been in favour of a Government who seem to be killing the leaders of the principal opposition parties. That is a somewhat separate issue. Nevertheless, the concept of marrying up the efforts of the IMF to deal with the balance of payments problem of a Third world country to those of the World Bank to do something about the real resources of wealth of that country is a sensible and good idea. I hope that it will be developed, although perhaps in happier circumstances than in Guyana.
My fourth point concerns the control of the IMF. It is dominated by 20 of the wealthiest countries in the world, and particularly by the United States. It has been argued that the articles of agreement should be amended to allow Third world and OPEC countries to have a much more direct say in how policies are formulated, so that the IMF is not felt to be the preserve of the rich but a genuinely international institution in which North and South, and, if necessary, East and West, can combine for the benefit of the whole world.
This is an important debate. The debate on the role of the IMF is part of the fundamental debate about the international mechanisms, including GATT, that have served us reasonably well for two and a half or three decades, but which
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now need re-examining. However, in our enthusiasm for perfectly proper reform, we should not undermine the immensely important and sophisticated mechanisms that mankind has developed for itself over the past 30 years simply because they may have gone down a road that we do not care for.
11.12 pm
Mr. Frank Dobson (): When I first read the title of the order—
"International Monetary Fund (Increase in Subscription) Order"—
I thought perhaps the Chancellor of the Exchequer had received one of those letters that members of organisations these days receive, saying: "Dear Member, Owing to unforeseen circumstances, the present rate of inflation and the disastrous demands for wage increases by our members, unfortunately it has been necessary to call upon you once and for all to make an increase in your subscription." If there are unforeseen circumstances, and the world economy and trade are in such desperate straits, the IMF, as one of the primary monetary and financial organisations that the world has established to make things better, has been failing badly in the role that it was given in 1945.
It is worth reading two of those famous articles that set out the purposes of the IMF when it was established in order to see how far it has moved away from them. I do not know whether I agree that it is a body worth preserving if it can move so far away from its clearly enunciated purposes. One of its purposes is:
"To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of productive resources of all members as primary objectives of economic policy."
That the IMF has not done. It has acted contrary to that article on many occasions. It may not have intended to do so, but the practical effects of its intervention have been contrary to that article.
A further purpose enunciated in 1945 was:
"To give confidence to members by making the Fund's resources temporarily available to them under adequate safeguards, thus providing them with opportunity to correct mal-

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adjustments in their balance of payments without resorting to measures destructive of national or international prosperity."
That sounds sour to many poor people whose countries have been visited by the hatchet men from the IMF. Those people have suffered as a result. I make no mention of the adverse effects on the standard of living of ordinary people in this country that resulted from the IMF's most recent foray into the British economy.
The general approach of the IMF to underdeveloped or developing countries is to insist on domestic deflation, and cuts on welfare provision for ordinary people and public expenditure generally. It has always set out to frustrate the efforts of member Governments to redistribute the wealth of poor countries in favour of the worst off. It has insisted on the introduction of anti-strike or antitrade union legislation.
It has also set about promoting the role of the multinational companies in international trade. Consequently, many of its policies have smothered locally based industry and put it at a disadvantage in relation to the multinationals. It has insisted on the member country offering tax benefits to foreign investing companies which are not available to domestic companies and has also insisted, on occasions, that the country guarantees remittance of profits back to whichever country the multinational decides is convenient to own the multinational when sorting out how to minimise tax payments by shuffling their profits round the world.
These policies have been pursued unremittingly in the developing world. Generally speaking, the IMF has forced countries to adopt policies which put those countries increasingly at the mercy of the IMF and the richer countries rather than allowing and encouraging them to promote their own independence instead of dependence on the developed West. This can only be described as a long history of undermining democratically elected Governments by deliberately frustrating the aspirations of the ordinary people of many underdeveloped member countries. That has happened recently in Jamaica. It has occurred in many other countries.
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Sometimes, when the IMF has finished its process of undermining democracy, by imposing politically unacceptable solutions on the democratic underdeveloped countries, it has moved in like a vulture following the military coup that the fund itself has precipitated. A wonderful example is Chile. Not long after the generals had overthrown the democratically elected Government the IMF was picking up the pieces and praising the generals. Seen in the terms in which the IMF views Governments, economies and societies, that is right. The generals are its sort of people. Generals, armies and those possessing no democratic relationship with their populations are the people who can keep down the aspirations of their poor populations. The IMF has promoted such people.
In such circumstances, I cannot bring myself to say that we should not vote tonight. I believe that we should divide the House and vote against the order. The phrase "IMF riot" is used in the underdeveloped world. The IMF has often insisted on policies which have so depressed the standards of living of ordinary people that riots have resulted. It is unlikely that we can transform the organisation. It would be better if it were scrapped and replaced.
Someone who is more familiar with the issue than myself, and who is more familiar with the IMF's activities in the underdeveloped world than any hon. Member, is that good Socialist the president of Tanzania. He stated:
"The problems of my country and other Third world countries are grave enough without the political interference of IMF officials. If they cannot help, at the very least they should stop meddling."
11.22 pm
Mr. Tam Dalyell (): I do not know what conclusions to draw, but I suspect that if this debate had taken place 15 years ago there would have been a full House of Commons to hear it. Those of us who remember that incredible night involving George Brown, the then Foreign Secretary, and his ramifications of IMF prejudice must reflect that something has changed in the nature of British politics when the IMF attracts so comparatively few people to a debate, in spite of the deeply interesting speeches of my right hon.

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Friend the Member for Llanelli (Mr. Davies) and my hon. Friend the Member for Vauxhall (Mr. Holland).
I should like to ask one specific but long question arising out of the Brandt report. On page 255 of the report, recommendation 6 states:
"The use of IMF gold reserves either for further sales, whose profits would subsidize interest on development lending, or as collateral to borrow for on-lending to developing countries."
I should like to ask a question about the collateral that can be provided for gold reserves. The matter is mixed up with aid-giving.
There is a strong impression that in the days of Pierre-Paul Schweitzer there was a different concept by leading members of the IMF of its role. It had a great deal to do with Third world aid. Over the years, I do not say that it has become harder, but the concept of function has changed.
It is stated on page 246 of the Brandt report:
"There are ways of raising more automatic resources through the monetary system … These measures could be implemented relatively quickly. The continued creation of Special Drawing Rights consistent with the total reserve needs of the world economy and a more equitable allocation of SDRs to developing countries would be one such measure. Another measure lies in the use of gold holdings with the IMF. One possibility would be to use these gold holdings as collateral for raising resources in financial markets which can be re-lent to developing countries."
Do the Government agree with that? It is a great pity that in neither of our debates on Brandt—both the Friday debate, in which I took part, with a number of my hon. Friends, and the major Monday debate—was there any reference by the Government, as far as I know, having checked, to their attitude to these propositions.
The report goes on:
"The profits from the progressive sale of the remaining two-thirds of the IMF's gold holdings—about 100 million ounces—could amount, on the basis of a market price of $300 to $400 per ounce of gold, to a sum in the order of $30 to $40 billion over a period of time. Such a sum could yield annual revenues in the order of $2–4 to $3–2 billion, assuming a return of 8 per cent. If these resources are used to subsidize interest, they could enable a substantial volume of semi-concessional finance to be made available to developing countries."
That would do a heck of a lot.
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"Members could decide in negotiation the proportion of the profits which would be devoted to development lending as well as the purposes for their use. Even if member countries insist on keeping a part of these profits, they might agree to keep their share of the profits on deposit, and to permit the annual return from these deposits to go to development uses."
That was the considered view of the Brandt committee.
At a meeting upstairs, the right hon. Member for Sidcup (Mr. Heath) was asked whether he was serious about this recommendation. He very honestly and candidly said that there were certain proposals that he would find it very difficult to agree with and sustain an argument about. The arms tax, about which I asked him, was one. But the right hon. Gentleman made it quite clear that he and his colleagues were absolutely serious about this recommendation.
Therefore, I ask the Government what study has been made of Brandt's views on the whole question of gold and the collateral use of gold for development finance. If they do not accept it, will they use this opportunity to say why they do not?
It is a great pity that Brandt has been discussed in such general terms. Certainly some of us in the coming Session intend to go through the recommendations point by point. It may not be very sensible to suggest that any Government would accept every recommendation simply because it is enshrined in Brandt. I do not think that anyone would be so silly as to suggest that. But at least on this kind of recommendation, and many others, there comes a point when the Administration of the day must give good reasons why they are not acceptable.
I should like to hear the Financial Secretary say a word or two on the whole question of gold and the nature of the collateral benefits that could accrue to developing countries and—as is taken for granted by some of my hon. Friends, particularly my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) and others who also know a great deal about the matter—the consequent advantages to British and other Western European industry.
11.28 pm
Mr. John Browne (): Unlike the hon. Member for Holborn and St. Pancras, South (Mr. Dobson), I

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believe that the International Monetary Fund, together with its sister organisations—the World Bank, the International Bank for Reconstruction and Development and the International Finance Corporation—has done, given the circumstances of the world, a very good job. Over the years since those organisations were formed we have had a time of unparalleled economic growth, unparalleled financial prosperity and unparalleled international peace, on a major scale. For those three matters we owe a great deal to the efforts of the IMF and the World Bank and their member nations in sticking by their original principles, which grew out of the Bretton Woods agreement.
Not everything has been perfect, and I have a number of criticisms. They are important criticisms when we come here to vote an extra 1½ billion SDRs in our subscription. The responsibilities of the IMF were to encourage healthy economic growth, as we have been told by the hon. Member for Holborn and St. Pancras, South. That is true and it has happened. Whether, in latter years, growth has been so healthy is an open question.
Secondly, the aim was to discourage economic instability by reducing extremes of surpluses and deficits. The IMF has been fairly successful in controlling, and influencing for the good, reductions in deficits. Where it has failed has been in reducing surpluses. This has been a special problem since 1973, with the vast OPEC surpluses. One Opposition Member mentioned those who control the IMF and the World Bank. Originally the IMF was very much a United States-influenced body. In those days the United States ran gigantic surpluses. There was very little effort, as far as I can see, to reduce surpluses. All the effort was to reduce the deficits. Now, the United States is running deficits and the situation has changed. This will be a good thing.
The United States, with its large shareholding in the voting sense, has started to support a policy of equality. I ask whether it is not too late, when we have these gigantic OPEC surpluses, to stop now using only our old mechanisms. We have to try to achieve a balance rather than just hitting at deficits. I hope that
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our officials will press for such a balance now that they will get the agreement of at least the United States.
A third aim, or responsibility, of the IMF was to maintain international monetary liquidity by making facilities available to member countries. It has succeeded very well in this—one might say too well. The fourth, and, I believe, the most vital, of the responsibilities of the IMF was to maintain international confidence in money. I believe that the IMF, not alone but together with its member Governments, has most certainly failed in that, especially in recent years.
I want to spend a short time dealing with the issues of excessive liquidity and lack of confidence in money, illustrating what I mean. International liquidity has certainly been increased. We are increasing IMF liquidity tonight. I wonder whether past increases have been a camouflage for various nations which have not accepted monetary disciplines or faced economic reality. If they have, such increases in liquidity have largely been a disservice to the world because the basic problems have grown and grown whilst the IMF and other world organisations have pushed more and more dollars after the problems without solving the underlying problems. This is similar to the problem we now have in our own economy. The Government should be pressing for the same sort of monetary discipline for the IMF and the World Bank as they are pursuing at home. It is important that tonight's 1½ billion SDR increase in our subscription—with which I agree—should be accompanied by a demand for a much more serious and disciplined approach to its spending and the granting of liquidity to member nations.
It is appalling when we think that $450 billion a year is spent on armaments in the world. I am not saying that the IMF is to blame for this. The big super-Powers account for a huge chunk of it. But I am sure that member nations and recipient nations which benefit from the World Bank spend undue amounts of the money they receive on armaments. This is not a good use of proceeds, and we as a member nation must be much more strict in demanding a proper use of proceeds from the IMF and the World Bank.
My final point is about confidence in money. This is one of the five classic

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duties of any Government, and, therefore, it must be one of the five classic duties of an international government organisation, particularly one involved in finance. At birth, all these sister organisations were founded when the United States dollar was king and there was universal confidence in it. There was no real monetary problem for the world. However, with the massive deficit financing of the Vietnam war, because the United States Government would not face their population with reality and demand extra taxes to pay for the war, people began to get suspicious of the United States dollar.
The deficit financing of the United States ran up large surpluses in other countries. One of those countries, France, started to ask for the conversion of its dollars into gold. But the most important fact about the United States dollar was that, as a last resort, it was convertible into gold. The late President de Gaulle started to convert his French national dollar surpluses into gold. Confidence in the dollar was maintained. But in November 1971 President Nixon closed the "gold window" and with it the last link of any major trading currency with gold. Since then, we have had international monetary chaos largely because monetary confidence has evaporated. It has been salvaged partially and temporarily by all sorts of swap arrangements—this deal and that deal. There has been a tremendous financial massage to try to get—
Mr. Dobson: The gold standard.
Mr. Browne: The hon. Gentleman refers to the gold standard, but he must realise that there are four grades in the gold standard. I am not talking about going back to a full gold standard. I am talking about the gold exchange standard, where one deals and trades in normal money, but the paper money is itself convertible into gold.
I ask my hon. Friend the Financial Secretary to press, in the IMF and the World Bank, for the reinstitution of the gold exchange standard. If the United States is unwilling to have the United States dollar itself again convertible into gold, as it was until 1971—I see some Labour Members smiling. They should remember that there was relative international monetary stability until 1971. This was the great growth phase. The chaos has happened since
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1971, a time of no gold-currency convertibility. I believe that confidence will be restored only if, somewhere along the line, gold convertibility is restored. SDRs are virtually mere accounting transactions. I have yet to see a paper SDR—even a piece of paper. I think that even if the SDR is adopted, somewhere in that SDR there must be a gold convertibility clause. I believe that we should press for that at the IMF. I ask my hon. Friend to consider that and press for it in future negotiations, particularly as we are being asked to ante up our IMF subscription. This is the very time when we can ask for certain conditions.
Mr. Anthony Nelson (): I am interested in my hon. Friend's suggestion. Does he agree that one thing that has changed substantially in recent years is that the holdings of gold are more widespread than used to be the case? Whereas they were predominantly in the coffers of national Governments, notably in Europe, in recent years the removal of convertibility and the free exchange market in gold has meant that the ownership of gold has been much more widespread. I mention this because the result has been that gold has become a much more volatile commodity on the international market. Therefore, I—and, I suspect, others—question whether it is right that it should be restored as a basis for the value of the funds to which my hon. Friend is referring.
Mr. Browne: That is a most interesting point, and basically I agree with my hon. Friend. I would solve the problem by having gold convertible but not at the free market price. There is indeed a real risk that gold has catapulted itself out of the monetary system and out of its stabilising role. Governments must start clawing it back. The prime reason for this volatility in gold price is the lack of confidence in paper money. It is the duty of Governments to restore that confidence, and it is they alone who can solve the problem with gold. If they do not solve it, we shall end up on the full gold standard. People will not take money. They will accept only gold bars and gold coins. There will then be a world recession that would make 1939 look like a picnic.
The solution that I suggest is that the members of the IMF should agree a pre-

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mium conversion price for gold. For example, the price of gold today may be $650 an ounce. A new international currency should be created. I suggested such an international currency for Europe in 1972 and called it the Karl, because Karl der Grosse-Charlemagne was the first unifier of Europe. Also the K was a new monetary sign. None the less, if we create a new international currency to be used only by central bankers, not even used by the banking system—it could not be successful without all economies being the same—and convertible into gold not at, for example, $650 an ounce but at a premium of, say, $850 an ounce, people would not immediately convert into gold without a sound reason. This would start to restore confidence in the paper Karl currency because it would be convertible, not at the market price but at a big premium.
When I originally put the idea forward in 1972, gold was standing at less than $100 an ounce. I said that the conversion premium should be $200 an ounce. In those days that could have been done, but $200 an ounce is out of the question now. Some thought must be directed to restoring gold-currency convertibility while at the same time deterring a rush to convert the currency into gold. This could be done by creating a premium conversion price.
Of course, the selection of a specific but adjustable premium would be up to the members and the experts in the IMF and of the member Governments. With closer co-operation in the world, discount facilities could be allowed in the new currency. As a second phase, banks other than the central banks could then be allowed to use it if it were a success in its first phase as a central bankers' currency. I think that it would be a great success if we had the courage to implement it on a central banker basis. I hope that that answers the question by my hon. Friend the Member for Chichester (Mr. Nelson).
With that I should like to close and to ask my hon. Friend the Financial Secretary if he will consider my suggestions seriously.
11.43 pm
Mr. Lawson: In the few minutes that remain I cannot do justice to the many important issues that have been raised in
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the debate. Perhaps, therefore, it will be appropriate for me to begin by replying to some of the points made by the right hon. Member for Llanelli (Mr. Davies). He seemed to wish to merge the IMF and the World Bank into a single institution. I think that that would be a great mistake. I think that he was wrong to characterise the difference between the fund and the bank as the fund being for the richer countries and the bank being for the poorer. That is not the case. The difference has been much more accurately described in the rubric that the bank is a fund and the fund is a bank. They have very different roles.
The right hon. Gentleman was on to a better point when he asked what the fund was doing to help the developing countries that have been hit by the oil price increases. The International Monetary Fund fully recognises the difficulties of the less developed countries, and it is currently examining ways of making an increased contribution to the recycling process. Various measures, apart from the increase in quotas that we are now discussing, such as direct borrowing from the OPEC countries by the IMF, are under consideration.
The right hon. Gentleman was widest of the mark when he suggested that the fund had no interest in the less developed countries. The fund's operations are geared extensively to the needs of the developing countries. Until a few years ago, most of the standby arrangements were for 12 months or less. The fund has now recognised that, given the changes in the economic environment, many members cannot be expected to correct their balance of payments in so short a period. As a consequence, many arrangements now provide for longer adjustment periods.
The fund also has an extended financing facility providing enhanced credit over three years, with repayments staged up to 10 years. A supplementary financing facility, to which the hon. Member for Sheffield, Heeley (Mr. Hooley) referred, provides extra and substantial credit for members with standby and extended arrangements whose financing problems are large in relation to their quota. Of the $10 billion available under this facility, nearly $4 billion has so far been committed, all of it to less developed countries.

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The compensatory financing facility—the so-called CFF—provides credits virtually without conditionality to members at 100 per cent. of their quotas. The quota increase that we are now debating will increase the sums available under this heading by 50 per cent. Fifty-two less developed countries currently have drawings amounting to $3–4 billion on facility, which is nearly 40 per cent. of the fund's lending to the less developed countries.
Following a disposal of one-sixth of the fund's gold holdings—this refers to some extent to the point made by the hon. Member for West Lothian (Mr. Dalyell), although the Brandt proposal on gold is under discussion and is being considered by the IMF and the World Bank—about $1–3 billion of profit has been distributed directly to 104 developing countries. A further $2–6 billion has been lent to the poorest less developed countries at a ½ per cent. interest rate, with a maturity of six to 10 years. That gives the lie to much of what has been said by Labour Members, including the right hon. Member for Llanelli. The total lending to less developed countries by the fund currently stands at $11 billion—86 per cent. of total fund lending. Concessional lending to the less developed countries stands at $7–8 billion and constitutes 60 per cent. of total lending to all its members.
The fund insists on certain economic policies, in the sense of conditionality, which will lead to the recovery from the problems from which the countries are suffering. The hon. Member for Vaux-hall (Mr. Holland), with his infantile
Leftist economics, supported by the hon. Member for Holborn and St. Pancras, South (Mr. Dobson) and the right hon. Member for Bristol, South-East (Mr. Benn), suggested policies which would be disastrous if they were imposed in this country, and which would be equally disastrous if they were imposed in the less developed countries. Therefore, it is not surprising that the International Monetary Fund has no wish to see those policies followed in the countries concerned.
Mr. Stuart Holland: Rather than launching into elaborate adjectives, will the Financial Secretary answer a simple point? If there is a joint deflation in main trading countries, does it or does it not reduce their import trade from each other, and does it or does it not reduce their export trade to each other? When he argued that the sums he mentioned give the lie to arguments of Labour Members, is he not aware that the Brandt report reckoned that the total trade deficit for less developed countries this year would be $60 billion as opposed to the $7 billion or $8 billion about which he spoke?
Mr. Lawson: I hardly have time to reply to the hon. Gentleman. I entirely repudiate the suggestion that the policies of sound economics—
It being one and a half hours after the commencement of proceedings on the motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted business):
The House divided: Ayes 75, Noes 14.

Wakeham, John

Watson, John

Waldegrave, Hon William

Wheeler, John

TELLERS FOR THE AYES:

Walker, Bill (Perth & E Perthshire)

Whitney, Raymond

Mr. Tony Newton and

Waller, Gary

Wickenden, Keith

Mr. David Waddington.

Ward, John

Winterton, Nicholas

NOES

Browne, John (Wincheser)

Evans, John (Newton)

Roberts, Alan (Bootle)

Campbell-Savours, Dale

Faulds, Andrew

Soley, Clive

Cook, Robin F.

Hamilton. W. W. (Central Fife)

Cryer, Bob

Haynes, Frank

TELLERS FOR THE NOES:

Dalyell, Tarn

Holland, Stuart (L'beih, Vauxhall)

Mr. Frank Dobson and

Duffy, A. E. P.

Parry, Robert

Mr. Joho Home Robertson.

Question accordingly agreed to.
Resolved,
That the draft International Monetary Fund (Increase in Subscription) Order 1980, which was laid before this House on 4 July, be approved.

AXMINSTER (BYPASS)
Motion made, and Question proposed, That this House do now adjourn.—(Mr. Cope.)
12.1 am
Mr. Peter Emery (): It is with considerable pleasure that I raise, even as the first minute of the new day strikes, the largest single traffic and road problem in my constitutency, namely, the need for a bypass to the town of Axminster. It is no new idea or scheme. I have had correspondence during the past 13 years with different Ministers of Transport. I had hoped that the idea was enshrined and certain from the time of the 1978 White Paper, but it has been fought for since it was first predicted in 1949.
Axminster is a bustling, small in modern terms, town serving and connecting East Devon to parts of West Dorset and South-West Somerset. Its population in electoral terms is about 4,000, out of a total population of 5,500, but it has a trading catchment area of four times that amount. It provides a massive service to the agriculture community and industry in my constituency and its surround.
In a recent White Paper the Government set out the priorities governing the policy for roads in England in 1980. The White Paper stated:
"The first priority of the Government is national economic recovery. The road programme has to be judged in that context. We have to strike a balance. New road schemes can bring undoubted economic advantages. Exports can reach their markets more
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quickly; goods can be distributed more efficiently; traffic can flow more easily and fuel can be saved. At the same time substantial environmental benefits can be gained."
I was surprised to find little, if anything, in that paragraph about road safety and the saving of lives. Why I find that worrying will become more evident as I press on with the case for a bypass at Axminster.
I presented a petition to the Minister on behalf of my constituents, signed by more than 2,500 residents in East Devon and more than 25 different organisations. I shall not bore the House with all that it says, but it points out that those
"who live in Axminster and in the immediate countryside surrounding Axminster humbly do Petition that—

1. In order to relieve the danger to life and limb.

2. In order to lessen the traffic congestion.

3. In order to stop heavy traffic and juggernaut lorries passing through the 14½ ft main street of Axminster

immediate action should be taken by the provision of a bypass for the town of Axminster."
The problem in the town is that, coming down a steep hill from Lyme Regis, one comes into the centre of the town, round a bend where on one side there is no pavement, the road itself is 15½ ft wide and the pavement, according to the county engineer, is 3 ft 6 in wide. This is to transport all the people from one side of Axminster to the other—from the main shopping area up to the Co-op, or, if one does not like that simile, up to the post office or to many of the other shopping areas in the town. The wheels of two out of three juggernaut lorries which go round this corner mount the pavement. I have been all but crushed by a lorry turning that corner, avoiding traffic coming in the other direction, because the driver had no alternative but to mount the pavement. To make things worse, as one proceeds, having just come round the bend, one meets a pelican crossing, and having moved off from that

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crossing, 200 yards further down the carriageway narrows to 15 ft 9 in.
I have before me the Leitch report. In the references in that report, nowhere can it be shown that the widths of these roads are anything other than completely inadequate. Even the S73M recommendation, on page 15, would have, as the very minimum of any type of rural road layout, a 24 ft wide road. I believe that Axminster would probably qualify for a 33 ft road, if one were starting from scratch.
What I am saying, therefore, is that there is no other place in the constituency where there is such a need, on grounds of road safety and congestion, for traffic to bypass the town.
I accept immediately that in the White Paper the Government have stressed the need to deal with the problem of bypasses. Therefore, I find it most disappointing that Axminster has been struck out from the preparation pool to be dealt with "at some time", when it is convenient in the future. That is not good enough.
If we had all the money in the world—indeed, if there was a fairly reasonable level of capital expenditure—I believe that the Minister would immediately accede to my demands. I realise and accept the Government's problem in reducing public expenditure. I support the Minister and the Government in carrying through that policy. Therefore, for me to be able to demand that the Axminster bypass is restored immediately into the preparation pool, not only must I prove that this is the most important road improvement necessary in East Devon, but I must be willing to give up something in the Minister's financial programme to provide the finance with which that could be brought about.
In pages 39 to 57 of the White Paper setting out the scheme, East Devon is mentioned five times, I think. It refers to the A35 Honiton link and states that it constitutes 1–4 miles and will cost £1–5 million. It refers to the Honiton to Marsh link and states that it is 8–4 miles long and will cost £13 million. It refers to the Honiton to Exeter stretch of road which is equivalent to 22 miles and will cost £11–3 million. It says that Wilmington bypass will cost £1 million and is 1–3
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miles long and the Axminster bypass is 2–7 miles long and will cost £4–6 million.
Obviously, Tory Ministers favour Tory Members. I should therefore like to ask how much of the programme that affects my constituency will be left in. If my hon. and learned Friend does not know the answer, I shall not ask him to work it out. In fact, the answer is £1–5 million, and that is only 3–5 per cent. of the amount that my constituents know is necessary. The Honiton link has been approved, and will cost £1–5 million. I know that some people in Honiton will blame me for my next remarks, but I say this openly and to their faces. There is nothing as important as an Axminster bypass. If the Honiton link had to be postponed, I would ask the Minister to spend the money on the Axminster road.
I have had conversations with my hon. Friend the Member for Dorset, West (Mr. Spicer). In the 1984 reserve list there is a bypass for Bridport. My hon. Friend has informed me that the expensive part of the scheme has been left in—under the approved reserve list—but that a simpler scheme could be applied. That could mean a saving of 40 to 60 per cent. of the amount estimated. In other words, there could be a saving of about £3 million. Together with the Honiton Jink, that would provide the £4–5 million necessary for the Axminster scheme.
Will my hon. and learned Friend seriously consider this matter? I do not want him simply to accept the offer of putting these programmes back. I shall be after his tail if he does that and does not give me Axminster in their place. I have known Ministers who would do such things. However, I should not for one moment suggest that my hon. and learned Friend would think of doing such a thing. Will he consider whether Axminster could be reintroduced into the programme?
I stress that the Axminster bypass will have to be built. I beg the Ministry not to find itself being forced to take action because lives have been lost. Within the next 24 months, I believe, that lives will be lost. The lorries are so big that they have to back up to get round. When two lorries meet head-on, it is impossible for them to pass each other. Once lives have been lost, the scheme will be brought forward. Surely it is nonsense to defer

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such an important scheme which would cost so little until lives are lost.
I hope that the Minister will give way and accept my plea to restore the bypass to the programme. In addition, if the Minister is unable to restore the Axminster bypass to the programme he must ban all vehicles that weigh over 10 tons from entering Axminster. They must be routed via the other part of the A35, from Lyme Regis to Exeter on the southern route. Traffic from Bournemouth to Honiton could be routed on to the A30 and the A303 before it reached Axminster. I realise that that may add an extra 12 miles to the journey to Honiton and that it will add about 4 miles on to a journey to Exeter. However, local emotion is higher than I have ever known.
I think that my hon. and learned Friend will agree that I am not given normally to exaggeration. However, I shall have to restrain people from lying down in the street and disrupting traffic if there are not positive answers from the Department. I shall do everything in my power to stop such action because I believe that it does no one any good. I must inform my hon. and learned Friend of the strong feeling locally. My constituents feel that they have been promised a bypass for years and years and that the project has been postponed permanently. Surely I am not asking too much, especially when I am willing to provide the necessary funds so that my hon. and learned Friend does not have to go outside the budget to bring Axminster back into the scheme.
I conclude by asking which it will be: will the Axminster bypass be put back in the programme, or are we to have a ban on heavy vehicles in the town? It has to be one or the other.
12.16 am
The Parliamentary Secretary to the Ministry of Transport (Mr. Kenneth Clarke): I congratulate my hon. Friend the Member for Honiton (Mr. Emery) on his good fortune in obtaining the Adjournment debate and on the way in which he has pressed Axminster's claims.
I hope that my hon. Friend will dissuade his constituents from allowing their frustration to take any foolish forms. I
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assure him that I do not approve of direct action of any sort. It does not have the slightest effect upon any decisions on the roads programme, whether it takes place at public inquiries or on the roads of any town where people feel aggrieved. One is more impressed by cogent argument, and that is what my hon. Friend has produced. I realise that he feels strongly about the issue and that he and his constituents are disappointed by the decision that we announced in the recent roads White Paper to suspend preparation work on the Axminster bypass for the time being. I am sorry that that decision was taken. It was taken in the full knowledge of the fact that many in Axminster would be disappointed, especially because my right hon. Friend had received a petition, presented by my hon. Friend, from Axminster residents pressing for the bypass.
I know that there is a considerable claim for a bypass around Axminster. It is no part of my position to try to deny the need. I do not know the town intimately, but as part of my job I do quite a lot of driving in various parts of the country. I last drove through Axminster—I did so anonymously in the course of a personal visit—during Easter. I find that in my present job I look in a way that I did not do previously for potential bypasses and trouble spots when driving I recognise fully the description that my hon. Friend gave of conditions in the town.
Axminster has an old-fashioned road system. It is an old town which is unsuitable for modern traffic conditions. The worst of the traffic conditions occur in the middle of the main shopping centre. I well understand the frustration of those who live there that has been expressed by my hon. Friend.
The Government have to decide how best to progress the various claims for bypasses around many towns such as Axminster and how we can fit them into a realistic budget. That was the problem that my right hon. Friend and I faced when it came to producing the roads White Paper this year. We inherited the previous Labour Government's plans for about 400 trunk road schemes of various sorts throughout the country. We inherited plans that appeared to be based on the notion that there would be a steadily increasing sum available for

1699
building trunk roads, although the previous Government had severely cut the trunk road programme in 1976. However, they left us plans on paper that appeared to envisage the steady restoration over the next few years of that which they had taken out of their plans. Unfortunately, they left us not the slightest idea of where the funds were supposed to come from.
It is plain in the present economic position that there was no room for growth. We have therefore decided to stabilise the level of expenditure on trunk roads each year at about £300 million, which is the level of spend achieved by the previous Government. We are not intending to cut that expenditure, but within that realistic budget we have had to go through the entire programme and try to draw up a list of priorities and decide when schemes can be managed.
What we have decided is when roads can be built and not whether they will be built. The Axminster scheme has retained its place in the trunk road programme, and we are merely deciding whether it is possible to get on with the scheme in the next few years. The decision in the White Paper was to defer the bypass and its preparation for the time being. It was not a decision to abandon the proposal. We are merely deferring it to a time when we feel resources may be available to do more work on it.
In the light of what my hon. Friend said, that still seems a hard decision. We drew up priorities based on the stated principles set out in the White Paper. The first schemes must contribute most to the industrial revival of the country and be the large key schemes that link our major industrial centres and the ports. We have to make room for major routes of industrial importance, like the M25 motorway box around London and the Al-Ml link between the Midlands and the East Coast ports. Those schemes are vastly expensive compared with modest schemes such as the Axminster bypass.
My right hon. Friend and I have also been anxious to make room for as many bypass schemes as we can around older towns with old road systems but modern traffic. We are alive to the problems of road safety that are posed in those towns facing most difficulty. We are led to the conclusion that we can allocate funds for a number of schemes between
1700
now and 1984. We have to decide thereafter what to do about the substantial number that will have to be deferred. Unfortunately, there is a possibility that a number of schemes in our road programme cannot be built until at least the end of this decade.
We inherited a situation where some kind of preparation—engineering work and economic analysis—was under way for most schemes. There is a point at which it is no longer possible to justify expenditure on all the preparation work, including schemes that cannot be built until the next decade. The expenditure on preparation work was at the expense of present construction. We therefore decided that we would halt work on about 100 schemes until a later stage, which would be shortly before there was a realistic chance of finding the money to build them.
The Axminster bypass fell into the category on which, for the time being, we would suspend preparation work. However, as I said, that does not mean that the scheme has been struck out of the preparation pool. It is intended to build a trunk road scheme to bypass Axminster, but we have decided that we will suspend preparation until we are nearer a realistic date for building.
I hope that I have underlined the fact that we have made that decision knowing that there are serious problems of congestion in Axminster, although the A35 to the west of Dorchester does not carry a great deal of through traffic compared with many other roads in the country. A bypass will eventually provide substantial environmental and road safety benefits. However, looking at the country as a whole, there are large numbers of competing schemes. We have decided therefore that others are more urgent, including the Dorchester bypass, which is on the same road and not far from my hon. Friend's constituency.
Although we feel that the bypass cannot be built for some time, we realise the problem, and have decided to look at measures to bring short-term relief. My Department's officials at Exeter have been working with the Devon county council and the town council to try to improve the situation, pending the construction of the bypass. I am told that the restrictions on parking and waiting

1701
and the traffic circulation system at the George hotel have helped give relief. However, there are limits to what can be done without diverting traffic into residential areas. Now that we have announced our decision on the bypass, it is intended to ask our officials to consider whether anything further can be done to offer short-term relief, pending a proper solution.
My hon. Friend is trying to persuade my right hon. Friend and I to reconsider the decision to postpone preparation work. I assure him that we shall ponder on everything he has said to see whether there is anything we can do. It is not possible, even when my hon. Friend is fortunate enough to get an Adjournment debate, to concede that we should restart preparation work on this scheme. Eventually, if we were not careful, we would be making the same concession to many disappointed communities up and down the country and would find that we were carrying out a lot of work on preparation of schemes at the expense of immediate construction.
My hon. Friend accepted frankly the constraints upon the Government. He was not making an idle claim for increased public expenditure or imagining that it was easy to find the funds for which he asks. He realised that funds for Axminster meant finding resources at the expense of other schemes. He suggested that the scheme to improve the A35 and the A30 at Honiton—the so-called Honiton link scheme—is less important than a bypass at Axminster. I shall consider what he says. In trying to draw up priorities, we are influenced very much by the opinion of our colleagues who know their own constituencies and advise us that we may have made the wrong distinction between competing traffic claims in their areas.
The Honiton link is a smaller scheme from our point of view than the Axminster bypass. It is designed to deal with a difficult hill by building a "crawler" lane and making some realignment to the road. Most importantly, the Honiton link that has found a place in the reserve scheme with a definite date in the White Paper will cost only about a third of the amount that would be required to build a bypass round Axminster. We are using out-of-date figures
1702
in the White Paper, but those figures show £1–5 million envisaged for the Honiton link, as against £4–5 million for the Axminster bypass.
I shall discuss further with my hon. Friend the Member for Dorset, West (Mr. Spicer) the position at Bridport where, again, we have retained a scheme in the reserve list in the White Paper, intended to give relief to that town. If we have chosen an expensive and unpopular route, that is plainly a matter that we must reconsider. I do not recollect playing any part in choosing a preferred route for that bypass. I suspect that it was my predecessor. I shall, however, reopen the matter and see whether it is possible that some resources are being used that may not be needed. That, I am afraid, is all I can offer. I shall reconsider the matter and I shall allow myself to be influenced heavily by what my hon. Friend has said about his judgment of local needs and priorities to make sure that such resources as are available to use in Devon are being devoted where the local population will benefit most. I can make no offer beyond that.
I do not think that there is any realistic alternative. My hon. Friend suggested that a possible alternative, demanded by him and his constituents, was a lorry ban, with traffic being diverted on to other roads. It is not suitable, I suggest, to have a lorry ban on a trunk road. The road is designated as a trunk road in order to be a national arterial route. It may not be very suitable to be designated as such, but there are not many alternatives for heavy traffic to follow without making enormous detours.
My hon. Friend mentioned the possibility of diverting traffic on to the A303. I shall not bore him with the list of schemes for improving the A303, relieving considerable congestion along that road. I could refer to a number of hon. Members, not least my right hon. Friend the Member for Yeovil (Mr. Peyton), who would be somewhat alarmed at any proposal to divert more lorries through villages in his constituency on the A303 if a lorry ban was imposed at Axminster.
I am sorry that I cannot promise to bring any immediate relief of through traffic at Axminster. I can promise that we shall reconsider our priorities to see whether we can divert resources from other schemes so that we can at least

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resume some preparation work at Axminster. That preparation work may take a long time. There are geological problems, and a survey will probably be required before we can even get down to examination of a definite scheme for a bypass. We have looked at various routes to the south of the town, but there is a great deal of work to be done.
If we were to resume preparation work on the Axminster bypass, it would be only as a reserve scheme. It would be more expensive than the Honiton link. When it comes to fitting reserve schemes into spare resources, there is less chance for a £4–5 million scheme than for a £1–5 million scheme. There is a risk that we would finish by doing nothing for my hon. Friend's part of Devon.
I appreciate how strongly my hon. Friend feels. He has expressed the strongly-felt opinions of his constituents. I promise to review the decision and eventually to let him know my conclusion. I would not want to be too encouraging. Perhaps the most optimistic
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note on which I can conclude is that the difference between us, which I shall reconsider, is simply when we will build the bypass at Axminster. The fact that there will be a bypass has not been placed in doubt. We are simply trying to find a realistic place for it in the programme and to devise a timetable that will not raise false hopes in the locality.
Mr. Emery: With the permission of the House, Mr. Deputy Speaker, I should like to thank my hon. and learned Friend for listening so carefully to my remarks and for dealing in great detail with the points that I raised. He has made clear that he will consider the arguments that I put forward. My constituents can ask for no more than that. We hope that when his consideration is completed the conclusions will be favourable to us.
Question put and agreed to.
Adjourned accordingly at half-past Twelve o'clock.

MOHAMMED ZAMIR
  MOHAMMED ZAMIR
  MOHAMMED ZAMIR
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Preamble
(Sitting in the Royal Gallery)
The House met at half-past two of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Truro):
The LORD CHANCELLOR on the Woolsack.

LORD BOARDMAN
Thomas Gray Boardman, Esquire, MC, TD, having been created Baron Boardman, of Welford in the County of Northamptonshire, for life—Was, in his robes, introduced between the Lord Drumalbyn and the Lord Carr of Hadley.

HMS "ARK ROYAL"
2.42 p.m.
Baroness VICKERS: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will state what is the future for HMS "Ark Royal".
Viscount LONG: My Lords, following the invitation of tenders to purchase "Ark Royal" for scrapping, the Admiralty Board has accepted a bid from Kitson Vickers Limited of Blyth, Northumberland, and a contract has been awarded to the firm, as announced by my honourable friend the Under-Secretary of State, Royal Navy, in another place on 18th July.
Baroness VICKERS: My Lords, may I ask the noble Lord whether he does not consider it unfortunate that the demise of HMS "Ark Royal" should have been announced on a Friday in a Written Answer in another place? May I offer a tribute to the Royal Navy, the 230 officers, 2,380 ratings and airmen who have served on her over many years; and also pay tribute to the thousands of workmen in the Devonport Dockyard who refitted
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her over the years, particularly the last refit in 1967 under very difficult conditions when the ship was commissioned on time by Her Majesty the Queen Mother? Can the noble Lord also say why there was no acceptance of the offer by the committee dealing with the "Ark Royal" to turn it into a museum?
Viscount LONG: My Lords, I do not think I can answer the noble Baroness's first question on the procedure of another place when the question of the "Ark Royal" was dealt with in a written reply. I should like to join my noble friend and other noble Lords in paying tribute to this great and gallant ship, the "Ark Royal", for her marvellous and gallant services in the defence of our country. I would also like to join my noble friend in paying tribute to the officers and men, those who built her and designed her, and those who served on board her over the years.
If I heard my noble friend aright, she was asking about the committee that was set up. There was a series of inquiries from different trusts; these were narrowed down to one trust, which was the "Ark Royal" Trust, formed to preserve her. At this moment of time the "Ark Royal" is in such bad condition that it has been realised that she must, unfortunately, go to the scrapyard at the end of August.
Baroness BACON: My Lords, is the noble Lord aware that the City of Leeds adopted the "Ark Royal" as their particular ship and had great association with the men and the officers who served on her? I am sure the citizens will feel sad at the rather ignominious end of this great warship.
Viscount LONG: My Lords, the noble Baroness is quite right. Of course, in the trust there were a great many naval people. It is a very sad day, knowing that such a great ship has had to go.
The Lord Bishop of LONDON: My Lords, is the noble Lord aware that those of us who served in capital ships during the war very much regret that it was not possible to preserve a battleship? Can further consideration be given to the preserving of this splendid ship as one of the great symbols of our national heritage?
Viscount LONG: My Lords, in answer to the right reverend Prelate the Bishop of London, in 1978, when the ship had to have her equipment taken out, there were inquiries made by the Board of Admiralty to see if anybody was interested. Unfortunately, the ship is now in a very dangerous state; she will not last another winter where she is, and therefore must be towed away as soon as possible.
Lord COTTESLOE: My Lords, is my noble friend aware that if the Admiralty Board had waited a few more days they might have received a substantially larger offer for the ship from the committee anxious to preserve her as the last capital ship in the Royal Navy? That would have been beneficial to both the national finances and the national heritage. In those circumstances can the noble Lord tell the House what induced the Board of Admiralty not to wait a few more days?
Viscount LONG: My Lords, I understand that this was suggested, but I do not think it was a necessary condition to enable the trust to raise the required funds.
Lord SHINWELL: My Lords, will the noble Lord permit me to join in the tribute to this wonderful vessel and to those who have served in her? I can understand the sentiment that it should be maintained as part of a tradition, but would it not be far better to send the ship to a ship-breaking yard where the break-up can provide employment for nearly two years, thereby making a very valuable contribution to the industrial position of the country?
Viscount LONG: My Lords, in reply to the noble Lord, Lord Shinwell, the "Ark Royal" will sail about the middle of August to the scrapyard for exactly that purpose, which is sad, though of course it will give people employment in dismantling her.

THE PALACE OF WESTMINSTER: STONEWORK
2.50 p.m.
Lord LEE of NEWTON: 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 on what date the cleaning programme for the stonework of the Palace of Westminster will begin.
Lord MOWBRAY and STOURTON: My Lords, my right honourable friend the Secretary of State for the Environment is considering the report of the recent survey of the stonework. He has agreed that urgent repair work should go ahead. The timing of a major stone cleaning and repair programme will depend on when funds can be made available.
Lord LEE of NEWTON: My Lords, I am grateful to the noble Lord for that Answer. Is he aware that I am concerned not only about the appearance of the Palace, important though that is, but as I understand it the stonework, which is very soft stone, is now deteriorating rapidly? Moreover, while in 1973 the cost of repair was estimated to be some £2 million, the latest report, to which the noble Lord referred, estimates a cost of £6 million. Is it not the case that we cannot possibly wait for further deterioration to this magnificent building?
Lord MOWBRAY and STOURTON: My Lords, I am not quite sure whether I can accept the figures which the noble Lord has put forward. It certainly was £2 million, but as regards the 1980 figure it may not be quite as much as £6 million. However, it does include full cleaning and repair of the stonework. This year we shall start on the stonework which is dangerous, and we shall do the same next year. It will involve £70,000 this year and £75,000 next year. We are also doing a survey of certain areas which are suspected of being dangerous as well. We would all like to see the building clean, but we must do the essential work first.
Lord LEE of NEWTON: My Lords, would the noble Lord agree that while, for example, the Abbey, has been made to look very lovely, and many of the buildings around Whitehall which have been cleaned are also looking very fine, this building is of particular importance, not only in Britain, but throughout the world? He knows that much of the surface of the stone is now crumbling

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rapidly. It is a very false economy, is it not, if we are to allow that deterioration to go ahead at an accelerating pace, while, in fact, the other buildings which are not quite of the eminence of this one, are being cleaned daily? Somebody is bearing the costs.
Lord MOWBRAY and STOURTON: My Lords, I fully accept what the noble Lord says about the importance of this historic and most important building; he is pushing an open door in that respect. We are saying that at the moment, just cleaning for cleaning's sake to please the eye—although we would like to do it—is not financially "on". We want to get the structural stonework which is dangerous made secure and safe.
Lord MOYNE: My Lords, I should like to ask whether a stitch in time does not save nine? Ought not this work to be hurried on as fast as possible during this time when employment is so slack, before the boom which we hope is to follow?
Lord MOWBRAY and STOURTON: My Lords, in times of financial constraint everyone has his favourite things that he would like to see done. The Government must look at the broad spectrum of the country's economic situation. It is in the light of that—although we want to do everything—that we are not galloping ahead at the moment.
Lord ELWYN-JONES: My Lords, does the noble Lord's Answer mean that the cleaning of the Palace of Westminster is now to be postponed, apparently indefinitely? This is the greatest of our national institutions in a great many respects. It is a place which people come to in order to admire and to see. The noble Lord's Answer is alarmingly casual in view of the needs of the situation.
Lord MOWBRAY and STOURTON: My Lords, I understand that the noble and learned Lord's Government did precisely what we are doing now—they postponed it for reasons of cost. I do not think that we are doing anything particularly different from what noble Lords opposite did.

NATURAL GAS: PRICES TO INDUSTRY
2.55 p.m.
Lord JACQUES: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why British industry is being handicapped by having to pay substantially more for natural gas than its competitors in France, West Germany, Italy and the Netherlands.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie): My Lords, reliable international comparisons of gas prices to industry are not easy to make. But on the basis of the most up to date information available to the Government I would not accept that British industry is in fact paying substantially more on average than its competitors in other EEC countries.
Lord JACQUES: My Lords, I thank the Minister for that reply, and I should like to put to him two supplementary questions. First, is he aware that a document published by the Chemical Industries Association this month indicated that the gas prices paid by United Kingdom industry as at 1st April 1980 were, on average, 50 per cent. greater than the gas prices paid by industries in those EEC countries which I have named in the Question? Secondly, would the Minister not agree that if the industries in other EEC countries are being supplied with cheaper gas for whatever reason, then this Government should have reduced the prices to our industry so that it is not handicapped and so that there is greater harmony in the Community?
The Earl of GOWRIE: My Lords, I should like to take the noble Lord's supplementaries in reverse order. I think that he will find that if there is a discrepancy with our European Community competitors—and I am not convinced that there is—it will last very little longer, because gas prices tend to follow oil prices, as the uses of the two are largely interchangeable, and as oil prices throughout the world have been raised in the

871
last year or year and a half, so gas prices are inevitably following.
As regards the noble Lord's first supplementary, that matter is also connected. I am aware of the Chemical Industries Association figures, but because of the lag times between gas price rises and oil price rises it is rather hard to be precise. As I have said to the noble Lord, the evidence we have is that there is no significant differential.
Lord RHODES: My Lords, is the Minister aware that gigantic losses are being made at present by the fibres industry in this country due to the disparity in oil prices throughout the world? Is he aware that if that is allowed to continue for many more months, much of our fibres industry in this country will have to close down?
The Earl of GOWRIE: My Lords, I am aware—as we are all painfully aware—that increases in energy costs bear heavily on individual industries, on consumers and on whole economies. It is our duty and the duty of all the industrialised nations to adapt as fast and as efficiently as we can to dear energy. That is what we are trying to do.
Lord IRVING of DARTFORD: My Lords, will the noble Earl bear in mind that in the paper industry gas prices are already 15 per cent. of total costs? If the forecast in the Financial Times that a further 50 per cent. increase is due in the next 18 months is right, it will be totally ruinous to an industry already suffering great difficulties. Will he confirm that on the Third Reading of the Gas Bill he undertook to monitor the prices over the next 12 or 18 months? Will he be sure that he does that?
The Earl of GOWRIE: My Lords, I shall certainly honour that obligation and I am glad that the noble Lord reminded me of it. But the fact remains—as I said to the noble Lord, Lord Rhodes, and previously to the noble Lord, Lord Jacques—that the price of gas is very intimately related, though with some time lag, to the price of oil. We can no more protect industry, including the paper industry, from gas price rises in the long term, than we can from price rises in respect of oil.
Lord JACQUES: My Lords, why is it that the time lag seems to make it cheaper for everybody else except the United Kingdom?
The Earl of GOWRIE: My Lords, as I said to the noble Lord, I do not accept that. However, I may be able to give him an example. Let us say that the Dutch Government had negotiated gas contracts for a fixed price and for a term of years with the German Government. This is a hypothetical example. It would not be until that term of years had come to an end that the Dutch Government would be able, in respect of the German Government, to raise their tariffs. Both Germany and Britain do not operate on fixed tariffs: they operate in respect of industry on individually negotiated contracts, and that is another significant difference.
Lord BRUCE of DONINGTON: My Lords, in his reply the noble Earl appeared to cast doubt on the figures that were produced by my noble friend Lord Jacques. He referred to the evidence at his disposal. Will he therefore undertake that the evidence at his disposal, documented by source, will be published by him, so that we may know the facts? Will he give the House a further assurance that the Government's own policy of artificially fixing gas prices, as distinct from determining their cost, may receive some reconsideration?
The Earl of GOWRIE: My Lords, I should be delighted to publish a Written Answer to any Question that the noble Lord wishes to put to me. As I said, one of our difficulties is that many gas contracts in this country as well as in Germany do not follow fixed rates—as the noble Lord appears to suggest—but are negotiated between the consumers and the suppliers. This, of course, is not a matter within the remit of the Government but is within the remit of the British Gas Corporation. However, I should be delighted to publish the figures that we have which show that there is no substantial difference between our own tariffs overall and those on the continental mainland.
Lord SKELMERSDALE: My Lords, is my noble friend aware that the glasshouse sector of the horticultural industry has been complaining for years about the

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unfair competition between Holland and ourselves? Is this not something which the Treaty of Rome was set up to rectify, and can my noble friend say whether any discussions are taking place within the EEC forum to correct this unhappy state of affairs?
The Earl of GOWRIE: My Lords, we are continually sensitive of and continually working to reduce any disparities in fair competition between us and our trading partners, whether they are in the European Community or outside it. As to the horticultural industry at large, regrettably we cannot insulate it from dear energy costs. It will have to make that adaptation itself.
Lord BOWDEN: My Lords, if the Minister is about to publish figures for the relative price of gas, could he similarly include those for electricity? The figures that I have recently seen suggest that the cost of electricity in this country is three times as great as it is in any large industrial city in America, with the sole exception of New York City itself. Furthermore, will he itemise the differential between the cost to domestic consumers and to commercial consumers? In most countries in Europe I believe that the price is in favour of industry; in this country it is in favour of the domestic consumer.
The Earl of GOWRIE: My Lords, as I said to the noble Lord, Lord Bruce of Donington, if, like the noble Lord, Lord Bruce, the noble Lord cares to put down a Question for Written Answer—and I would respectfully suggest that complex issues of tariffs are perhaps better published in the form of a Written Answer —I shall, of course, answer it. With regard to the United States of America —and this is my own view—it seems to me that America's failure at sufficient speed to adapt to dear energy costs is probably largely behind her inflation and her very withered currency.
Lord RHODES: My Lords, is the Minister aware that the fibres industry depends on oil as a basic raw material? If other countries have oil at prices below those available to us we are bound to lose out, and it will not be long before the fibres industry of this country is on its beams end.
The Earl of GOWRIE: My Lords, I do not think it is true to say that our European competitors are gaining where we are not, and certainly our own energy position is considerably more favourable in terms of supply than is theirs. However, we are all having to adapt painfully to dearer energy costs.
Lord RHODES: My Lords, will the Minister then substitute "American" for "European"?
The Earl of GOWRIE: My Lords, I think that the point which I would wish to make in respect of America I made in respect of the previous supplementary question asked by the noble Lord on the other side of the House.
Lord LEATHERLAND: My Lords, can the Minister say whether it is a fact that the British Gas Industry is making very large profits, probably of £500 million a year? If that be so, would it not be possible for the gas industry to reduce its prices both to industry and to the household consumer?
The Earl of GOWRIE: My Lords, ultimately the benefit of North Sea gas, as of North Sea oil, derives on this economy and this country as a whole. It is certainly true that in this aspect of our economy we are being very successful, and I hope that that continues.

BRITISH SHIPBUILDERS: WARSHIP SHIPYARDS
3.5 p.m.
Lord BIRDWOOD: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what are their intentions towards the warship shipyards.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard: My Lords, as is well known, the Government are studying possible options for introducing private capital into British Shipbuilders. It is hoped to make a Statement before the Recess.
Lord BIRDWOOD: My Lords, I thank my noble friend for his prudent reply. Is he aware how much damage is being done to export prospects by the current uncertainty surrounding this industry?—and I refer in particular to the uncertainty surrounding British Shipbuilders as a commercial entity. I should also like to ask my noble friend whether any assurances were given to employee representatives of British Shipbuilders at the last pay settlement, that the group would be maintained intact.
Viscount TRENCHARD: My Lords, I am afraid that I shall not be helpful to my noble friend or to any other noble Lord. There was to have been the release of a Statement today on the financial position of British Shipbuilders, but it has been delayed by the congestion of parliamentary business. However, a Statement in some form will be released to Parliament before the Recess and, as I said in my original Answer, we very much hope to be able to make a Statement on privatisation and related matters.
Yes, I understand that uncertainty is never a good thing, but a proper foundation for the future of British Shipbuilders is important, and we intend to reach that situation. At the moment I cannot recall the detail of the assurances given to employees in relation to British Shipbuilders. We have all been in some doubt as to whether their advised tonnage in their preferred plan of 430,000 tonnes would prove realistic. I therefore believe that no absolute statement or guarantee was given to them. Their voluntary redundancy programme is a little behind-hand, but is otherwise going according to plan.
Lord SHINWELL: My Lords, I am sorry to trouble the House again, but this is a subject in which I have taken a profound interest for many years. Is the noble Viscount aware that, although I recognise that at the last election the Government were given a mandate which enabled them to dispose of certain nationalised and perhaps profitable interests, to dispose of these three shipyards, which for many years have been primarily associated with building war vessels, will have an adverse effect on the National Shipbuilding Corporation? If the Government proceed with this disposal,
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we may as well abandon the National Shipbuilding Corporation and make up our minds that British shipbuilding has come to a dead end.
Viscount TRENCHARD: My Lords, I would not accept what the noble Lord has said. We do, of course, accept that in certain yards and in the warship area profits are being made. Should any move—and that decision has not been taken—be made towards privatisation of those profitable parts of British shipbuilding, account will, of course, be taken of that in relation to the plans and the targets for the very important remainder of British shipbuilding—and here we disagree with the noble Lord; we believe that a viable British shipbuilding industry is a possibility in those areas.
Lord BRUCE of DONINGTON: My Lords, as the noble Viscount is already on record as saying that mere changes of ownership have very little economic effect, will he ensure that when a Statement, which might conceivably provide for what he calls "privatisation", is made, the Statement will at the same time also contain particulars of the advantages that might conceivably accrue to both productivity and employment as a result of any change that might be thought necessary?
Viscount TRENCHARD: My Lords, we shall, as usual, give the reasons for any decisions we make when we release them.
Lord HANKEY: My Lords, would the Government bear in mind that, if they were to lay on further orders for warships, this would not only require the production of more steel and keep in existence steelyards which we shall certainly need if there is more international tension, but would also give more employment and strengthen an arm in which this country is at present dangerously weak?
Viscount TRENCHARD: My Lords, the importance of the public sector orders to British shipbuilders is well understood and is given every consideration.
Lord BIRDWOOD: My Lords, does my noble friend believe that his last answers are calculated to reassure would-be customers of British Shipbuilders?
Viscount TRENCHARD: My Lords, I think it well might reassure some. It depends upon your view of the past history of British Shipbuilders, and your confidence in this Administration to help British Shipbuilders improve their competitive position, which is what we are trying to do: many important factors have to be carefully weighed.

BUSINESS OF THE HOUSE: BROADCASTING BILL
3.12 p.m.
Lord DENHAM: My Lords, with the leave of the House, my noble friend Lord Belstead will repeat a Statement that is to be made in another place on British nationality law at a convenient moment after 3.30 p.m.
It may also be for the convenience of your Lordships if I announce that dinner will be available this evening at the usual time, 7 p.m.
I should also like to inform the House that the Committee stage of the Broadcasting Bill will not now be taken on Wednesday next, 6th August. The Committee and remaining stages will be taken when the House returns in October. As my noble friend Lord Belstead confirmed to your Lordships during the Second Reading of the Bill last week, the Government wish to introduce amendments to the Bill to provide for the establishment of a Welsh language television committee. The Government believe that these amendments should be discussed in your Lordships' House at Committee stage, but the precise details still require to be worked out and further consultation with broadcasting authorities is essential.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I thank the noble Lord for that Statement. While we understand that, if the Government need time for consideration for amendments to the Broadcasting Bill, the first Committee day should be postponed, we should nevertheless like an assurance from the noble Lord that the Government will give full and proper time for consideration of the Broadcasting Bill during the autumn spill-over.
Lord DENHAM: My Lords, we shall certainly allow the Bill appropriate time when the House returns in October.
Lord ELWYN-JONES: My Lords, while thanking the noble Lord for informing the House of the Government's decision to postpone the Committee stage of the Broadcasting Bill, may I stress how vital it is that the proposed consultations should take place with as wide a range of Welsh interests as possible in view of the great importance of the Bill for the future of the beautiful and ancient Welsh language?
Lord DENHAM: My Lords, I am grateful to the noble and learned Lord, Lord Elwyn-Jones, and I shall certainly draw his remarks to the attention of my right honourable friend.

BUSINESS OF THE HOUSE: STANDING ORDER NO. 43
The LORD PRESIDENT of the COUNCIL (Lord Soames): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That Standing Order No. 43 (No two stages of a Bill to be taken on one day) be suspended until the Summer Recess.—(Lord Soames.)
On Question, Motion agreed to.

HOUSING BILL
Baroness BIRK: My Lords, before we go into the Third Reading, I must raise with the House—
Lord SOAMES: My Lords, I wonder whether the noble Baroness would forgive me. I have a statement to make first on this subject.
I have it in command from Her Majesty the Queen and his Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Housing Bill, have consented to place their prerogative and interest, so far as they are concerned on behalf of the Crown, the

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Duchy of Lancaster and the Duchy of Cornwall, at the disposal of Parliament for the purposes of the Bill.
The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Lord Bellwin): My Lords, I beg to move that the Housing Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Lord Bellwin.)
Baroness BIRK: My Lords, may I first apologise to the noble and learned Lord on the Woolsack for being so precipitate? I have just heard from the other place that at Question Time the Minister for Housing has said that the Government intend to reject the Lord's amendment excluding old people's dwellings from the right to buy. We have not yet had the Third Reading of the Bill in this House. The Bill has not yet been passed, and yet we have this behaviour on the part of the Government in another place which is an absolute insult to this House.
The amendment to which I am referring —noble Lords will, I am sure, remember well—was passed by a majority of 35 in this House on Report stage. The voting was 109 to 74. This included people from all sides of the House: from the Government Benches, the Cross-Benches, the Liberal Benches and the Opposition. It seems to me absolutely disgraceful that, before the Bill has even been through this House, this should have occured in another place.
We have spent hours and hours and hours on this Bill, and indeed I had intended to say at a later stage that I thought that this Bill had been improved in this House. But how are we, as a House, as one of the legislative Chambers of this country, to be able to proceed when we are treated in this way? I do not think that this is a party matter. I think this concerns the whole dignity of the House.
Lord BYERS: My Lords, I wonder whether we are going to hear from the Government whether what the noble Baroness has said is to be confirmed? If
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it is to be confirmed, many of us in all quarters of the House will regard this as a Parliamentary outrage of the first order.
Lord HARMAR-NICHOLLS: My Lords, is it in order for this House to castigate another place in such terms on pure hearsay? The noble Baroness said that she had heard. What was her source? Ought we not to subdue our prejudices until we see in print what has actually been said? Is the noble Baroness suggesting that in another place when the Minister is asked a question on a specific subject he must not give an answer because it may upset the prejudices that she has expressed in the way she has castigated the other place? I believe that a little bit of reticence, and finding out exactly what happened and why, would have been more becoming if we are part of a Parliament that can work as a two-Chamber system.
Baroness BIRK: My Lords, I was not castigating another place. I was castigating the Government. My source is a Member of the Front Bench, the Shadow Minister for Housing for the Opposition, who sent me this note. We have already asked whether it is so. To say that we cannot castigate the Government for behaving in this way is, I would say with great respect, absolute nonsense. This Bill has not been through this House. It has not yet been finished in this House. If the Minister is asked a question, there is a form of words that is not unknown, which is, "It would be inappropriate for me to comment at this stage as the Bill has not yet proceeded through the other place".
3.20 p.m.
Lord SHINWELL: My Lords, I rise to support my noble friend Lady Birk because, speaking personally—nobody can challenge this and I am sorry to intrude with a personal note—when there has been debate and controversy in political circles and throughout the country, I have defended the existence of your Lordships' House. When the Housing Bill was going through its various stages I seldom intervened; I think it unwise to speak on subjects about which one knows nothing, although I must at the same time observe that often one can make an eloquent and pragmatic speech on a subject about

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which one is completely ignorant. On this issue, however—I may be corrected in this observation—the Government in this House were defeated not only by the votes of noble Lords on this side but by the attitude of some Members on the Benches opposite.
I can understand those in another place seeking to offend this noble institution. They have been doing that for more than 100 years with no great success; whether they will be successful in the future is a matter of conjecture and high speculation. But when it comes to the other place ignoring not only the Opposition but Members of the Government party, then we are faced with a quite remarkable situation, and in those circumstances I suggest we do not now proceed with the Third Reading of the Bill. It would be not only inappropriate but, with such knowledge as I possess of the subject based on long experience, almost unconstitutional, and we must not embark on an adventure like that because that would be going a bit too far.
If on this occasion the Government take a pragmatic and objective view—I could add even a humanitarian view but it may be difficult for them to undertake a task of that kind, though I am ready to accord that sentiment to them—I suggest they should do what my noble friend suggested. As for the remarks of my erstwhile, now noble, friend Lord Harmar-Nicholls, I would not have expected him to say anything other than what he did say. He simply cannot help himself; he has to be on one side or the other, but usually on both, so I suggest we completely ignore his intervention.
I have an appeal to make to the noble Lord the Leader of the House, and, after all, in doing that I am appealing to somebody who can speak and act with authority. In his absence, perhaps there is some other noble Lord on the Front Bench opposite who will heed this appeal.
Several noble Lords: He is present.
Lord SHINWELL: So he is, my Lords, and I see him edging himself along to the end of the Bench, for what reason I do not know. Why he should indulge in a geographical change of that kind I cannot imagine. Be that as it
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may, I make an appeal to him as a person who is really objective; he always was objective and that was probably the reason why he was not in many Governments with less ability than he has himself, but I must not make too much heavy weather about that. I appeal to him to accept the suggestion, at any rate until tomorrow, that we should not proceed with the Third Reading of the Bill. Otherwise, what will be the position We shall make a laughing-stock of ourselves. The Government were defeated, and what a hullabaloo there was in the press about that! What a remarkable innovation that the Government should be defeated! Actually, I took no part in it; I conveniently absented myself, although that is by the way.
We now have an opportunity for your Lordships' House to assert itself. We can say to the other place, "It is all very well lambasting and criticising us, running us down and saying nasty things about us, and it is all right for some sections of the press and media to supplement those opinions of us, but we are an independent institution". Are we or are we not? We are, my Lords. But if we were to forsake our independence and throw it in the dustbin because certain people in another place, for some unearthly reason of which I do not have the faintest idea, decide to reject what we have decided, then that is going a bit too far.
Do not force some of us who have stood absolutely firmly, even theatrically and dramatically, by your Lordships' House to change our minds. It may not go well with you, my Lords, if some of us were to support those who want to abolish this House. It cannot be reformed. It could be abolished, and I am against the abolition of your Lordships' House. I want it continued, and although I may not be here for all that much longer, while I am here I want to enjoy being a Member of this House and be proud of the fact, as I am sure all noble Lords are equally proud. If so, show your pride today and tell the other place to go and jump in the lake.
I had better conclude, but I have one further comment to make.
Lord PEART: My Lords, I suggest—
Lord SHINWELL: Just a last word, my Lords?
Several noble Lords: Order!
Lord PEART: I urge my noble friend—
Lord SHINWELL: My Lords, my final comment is this: do not talk about the abolition of your Lordships' House. Talk about the abolition of the other place.
Lord PEART: My Lords, I interrupt my noble and dear friend Lord Shinwell simply to say that I should like the Lord President to make a statement about this matter. Lord Shinwell made an important point and he knows that I always respect his judgment very much. Nevertheless, I should like to know what the Government are doing and intend to do. I urge the noble Lord, Lord Soames, for whom I have great respect, to make a statement now so that we may see where we are going.
3.28 p.m.
Lord SOAMES: My Lords, I do not think any of us, including the noble Lord, Lord Shinwell—I am sure it is the last thing he would want to do—would wish to push anything too far, as he mentioned in his intervention. I really do not know what happened in another place. There was no intention of making any announcement, so if there was any discourtesy it was certainly an unintentional discourtesy. Those of us who know the rules of order of another place will appreciate that at 3.15 it is Question Time. There was certainly no original Answer to any Question which was intended to give such a reply. What exactly was said in the reply which I imagine was passed to the noble Baroness, Lady Birk, I am afraid I do not know. I do not know what was said, but it would have been said in answer to a supplementary. I am sure no discourtesy was intended to this House and I am also sure that no statement has been made on what the Government intend to do in another place, which presumably they will decide when the moment comes. I would suggest that this is not in any way a wilful indiscretion or incivility from one House to another. If it is, I am sure the Government would share my regret.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, since there is some confusion about what was actually said, and since our information is that the Government said that they intended to reject the Lords' amendment, can I ask the noble Lord the Chief Whip whether we should not suspend the sitting of the House for a quarter of an hour until we have heard what the Government said? lf, indeed, they did say what it is reported they said, it surely calls into question how and in what form we debate the Third Reading of a Bill which has not been through this House but a bit of which has been prematurely rejected in the other place.
Lord DENHAM: My Lords, I understand that my honourable friend in another place, in answering Questions, as my noble friend the Leader of the House has said, answered a supplementary question about the Government's intentions with regard to certain provisions in the Housing Bill. I understand—and it is quite impossible to know what, in fact, he did say until we have seen the Official Report tommorrow—that he indicated in some way that he was not, whether at that moment, or how, I will not know until I have seen it, prepared to agree on the first four amendments but was prepared to accept the fifth. How this was put, and whether it was put in a manner that was discourteous to this House, I do not know. I am sure that if any discourtesy could be taken to have occurred, it would be regretted by everybody.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, then I think we really must ask for a suspension until we find out what was said. The noble Lord clearly does not know what was said. We shall soon know, after the end of Questions, and if necessary I think we must ask the House to decide.
Several noble Lords: Hear, hear!
Lord HARMAR-NICHOLLS: My Lords, a mis-statement has been made. The Government are not in a position to turn down the amendments that your Lordships' House put in the Bill. The Government cannot do that. Parliament can do it. Are the noble Lords opposite suggesting that the Members of the

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elected Parliament, who constitute another place, are not in a position, in the time that we give to them, to make their own decisions in their own way? Would it not be wiser to wait until we see what has been said before we take precipitate action such as is being suggested?
Lord SOAMES: My Lords, I wonder whether I could help to clear this up? Of course, it would be a matter for regret if any slip of the tongue appeared to be a matter of discourtesy, but certainly we are talking about no more than that.
Several noble Lords: No!
Lord SOAMES: Had this not arisen, the Bill would have gone from this House to another place, and at the proper time the Government would have announced their intentions, of which this House is not yet aware. They would have announced them when it got to another place. It is my belief—I cannot be sure because I was not there; but I do not think that is necessary—that nothing has been said which could be construed as being more than a discourtesy, and certainly nothing which would warrant the postponement of this Bill being given a Third Reading in this House.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, if it is only a discourtesy, then we accept it; but I think the whole House wishes to know what actually happened. This is why, with, I think, the support of most parts of the House, I should like to move a temporary suspension during pleasure while we find out what was actually said. After that, we can find out where we go from there. So I think at this point—
The LORD CHANCELLOR (Lord Hailsham of Saint Marylebone): Does the noble Baroness beg to move?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I do beg to move, and was about to beg to move, that we divide on the Question, Whether the House should be suspended during pleasure until we have heard what happened in another place.
Several noble Lords: Hear, hear!
The LORD CHANCELLOR: May I take it that the noble Baroness has moved that the sitting of the House be suspended during pleasure? The Question is that the sitting of the House be suspended during pleasure.
Lord HARMAR-NICHOLLS: My Lords—
The LORD CHANCELLOR: No; I have not put the Question yet. The Question is that the sitting of the House be suspended during pleasure.
Lord BYERS: My Lords, on this new Motion I really do think that we must make a protest, because it is not just a matter of discourtesy. It is a question of knowing what the intentions of the Government are going to be. So far as the Third Reading of this Bill in this House is concerned, we ought to be aware of what their intentions are in another place. I think it is very important that we should divide the House on this Motion to suspend the sitting of the House during pleasure.
Lord HARMAR-NICHOLLS: My Lords, I hope the House will not make itself look ridiculous by reacting in that way to what is still hearsay evidence. We have got on our Order Paper today a bidding to be here to give a Third Reading to this Bill. What we do on the Third Reading can have no effect on the powers that another place has got when the Bill goes there. But I believe that to react in this way to what, as I say, is a third-hand account of what is supposed to have been said, undermines the dignity and the standing of this House. I believe that we ought to ignore such things and get on with our business. There is nothing that we can do today which can interfere with another place using their powers when the Bill eventually goes back to them. If I may be allowed to say so—I know it may not be happily accepted on the other side of this House—I believe that this is something of a manoeuvre. I believe that—
Several noble Lords: Withdraw!
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I ask the noble Lord to withdraw.
Several noble Lords: Give way!
Lord HARMAR-NICHOLLS: My Lords, I am not giving way.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I ask the noble Lord to withdraw.
Lord HARMAR-NICHOLLS: My Lords, I am not giving way.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I ask the noble Lord to withdraw now.
Lord HARMAR-NICHOLLS: No, my Lords. I am not giving way.
Several noble Lords: Order, order!
Lord HARMAR-NICHOLLS: I certainly shall not withdraw.
Baroness LLEWELYN-DAVIES of HASTOE: As the Leader of the House stood up, I sat down, but I shall not sit down now.
Lord HARMAR-NICHOLLS: There is no one who has any power to make me withdraw something that I believe is a fact.
Several noble Lords: Withdraw!
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I call on the Leader to ask the noble Lord to withdraw.
Lord HARMAR-NICHOLLS: I did not give way to the noble Baroness. I believe that making a mountain out of this molehill is part of a manoeuvre, and I believe that we ought to resist it.
Several noble Lords: Hear, hear!
A noble Lord: Shame!
Lord HARMAR-NICHOLLS: My Lords, I believe it interferes with the dignity of this House, and I would ask noble Lords to vote against the Motion that has been put to us and to retain our independence in that way.
Lord SOAMES: My Lords, I wonder whether my noble friend would allow me to say that it looks as if the wish of the House is that it should divide on this matter. I should just like to point out that there is, in effect, no way by which we can discover the exact words used in another place until tomorrow, until we see the Official Report.
A noble Lord: What about the recording?
Lord SOAMES: There is no other way in which we could find it out. This Motion has been put to the House by the noble and learned Lord the Lord Chancellor. In reply to the noble Baroness, I would say that we are absolutely convinced that we know enough about it to know that no statement has been made which could affect this House in any way, except in so far as it might have been a discourtesy. And I have already told noble Lords that if it be a discourtesy the Government will, of course, regret it.
Baroness BIRK: My Lords, just before we vote, I really must make a protest about what the noble Lord, Lord Harmar-Nicholls, said about this being a manoeuvre. I think that is quite disgraceful. What happened was exactly as we said. In fact, there was not even time for me to tell the noble Lord, Lord Bellwin, as I would have done out of courtesy. I had a note saying that John Stanley had said at Question Time that the Government intended to reject the Lords' amendment excluding old people's dwellings from the right to buy. It was on that that I proceeded. I take very great exception to the noble Lord saying that it was a manoeuvre. I was absolutely prepared to come along with the Third Reading. I ask the noble Lord to have the courtesy and decency to withdraw, but if he is not to withdraw, I should rather not be subjected to another speech.
The LORD CHANCELLOR: My Lords, the Question is that the House do adjourn during pleasure. That is the correct Question.
3.41 p.m.
On Question, Whether the House do adjourn during pleasure.
Their Lordships divided: Contents, 121; Not-Contents, 107.

CONTENTS

Amherst, E.

Foot, L.

Pargiter, L.

Ampthill, L.

Gaitskell, B.

Parry, L.

Amulree, L.

Galpern, L.

Peart, L.

Ardwick, L.

Gladwyn, L.

Phillips, B.

Aylestone, L.

Gordon-Walker, L.

Ponsonby of Shulbrede, L. [Teller.]

Bacon, B.

Goronwy-Roberts, L.

Baker, L.

Gosford, E.

Pritchard, L.

Balogh, L.

Granville of Eye, L.

Raglan, L.

Banks, L.

Gregson, L.

Rathcreedan, L.

Beswick, L.

Grey, E.

Reilly, L.

Birk, B.

Grey of Naunton, L.

Rhodes, L.

Blease, L.

Hale, L.

Ritchie of Dundee, L.

Blyton, L.

Hall, V.

Rochester, L.

Boston of Faversham, L.

Hampton, L.

Ross of Marnock, L.

Bourne, L.

Hanworth, V.

Seear, B.

Bowden, L.

Hatch of Lusby, L.

Seebohm, L.

Boyle of Handsworth, L.

Hayter, L.

Shackleton, L.

Broadbridge, L.

Henderson, L.

Shinwell, L.

Brock, L.

Hughes, L.

Simon, V.

Brockway, L.

Irving of Dartford, L.

Spens, L.

Brooks of Tremorfa, L.

Jacques, L.

Stamp, L.

Bruce of Donington, L.

Janner, L.

Stedman, B.

Burton of Coventry, B.

Jeger, B.

Stewart of Alvechurch, B.

Byers, L.

Kilmarnock, L.

Stewart of Fulham, L.

Caradon, L.

Leatherland, L.

Stone, L.

Chitnis, L.

Lee of Newton, L.

Strabolgi, L.

Clancarty, E.

Leonard, L.

Strauss, L.

Clifford of Chudleigh, L.

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

Taylor of Blackburn, L.

Coggan, L.

Taylor of Gryfe, L.

Collison, L.

Lloyd of Hampstead, L.

Taylor of Mansfield, L.

Cooper of Stockton Heath, L.

Mackie of Benshie, L.

Underhill, L.

Craigavon, V.

McNair, L.

Wall, L.

Crowther-Hunt, L.

Maelor, L.

Wallace of Coslany, L.

David, B.

Melchett, L.

Walston, L.

Davies of Leek, L.

Milford, L.

Wedderburn of Charlton, L.

Davies of Penrhys, L.

Milverton, L.

Wells-Pestell, L.

Diamond, L.

Monson, L.

White, B.

Donaldson of Kingsbridge, L.

Northfield, L.

Wilson of Radcliffe, L.

Elwyn-Jones, L.

Nunburnholme, L.

Wynne-Jones, L.

Evans of Claughton, L.

Oram, L.

Zuckerman, L.

Fisher of Rednal, B.

Paget of Norghampton, L.

NOT-CONTENTS

Ailesbury, M.

Dudley, B.

Home of the Hirsel, L.

Alexander of Tunis, E.

Dundee, E.

Hornsby-Smith, B.

Allerton, L.

Ebbisham, L.

Hylton-Foster, B.

Avon, E.

Eccles, V.

Ilchester, E.

Balerno, L.

Effingham, E.

Inglewood, L.

Balfour of Burleigh, L.

Ellenborough, L.

Ironside, L.

Barnby, L.

Elliot of Harwood, B.

Kemsley, V.

Beaumont of Whitley, L.

Elton, L.

Killearn, L.

Bellwin, L.

Fairfax of Cameron, L.

Kilmany, L.

Belstead, L.

Faithful, B.

Kimberley, E.

Berkeley, B.

Falkland, V.

Kinloss, Ly.

Bessborough, E.

Forbes, L.

Kinnaird, L.

Bethell, L.

Fortescue, E.

Kinross, L.

Boyd of Merton, V.

Gage, V.

Lauderdale, E.

Boyd-Carpenter, L.

Geddes, L.

Lindsey and Abingdon, E.

Caithness, E.

Godber of Willington, L.

Long, V.

Campbell of Croy, L.

Gowrie, E.

Luke, L.

Clitheroe, L.

Gray, L.

Lyell, L.

Cottesloe, L.

Gridley, L.

McAlpine of Moffat, L.

Cullen of Ashbourne, L.

Haig, E.

McFadzean, L.

Daventry, V.

Hailsham of Saint Marylebone, L.(Chancellor.)

Mackay of Clashfern, L.

De Freyne, L.

Macleod of Borve, B.

Denham, L. [Teller.]

Harmar-Nicholls, L.

Malmesbury, E.

Derwent, L.

Hertford, M.

Mansfield, E.

Digby, L.

Hill of Luton, L.

Margadale, L.

Drumalbyn, L.

Hillingdon, L.

Marley, L.

890

891

Middleton, L.

Rochdale, V.

Strathclyde, L.

Mills, V.

St. Davids, V.

Strathspey, L.

Mowbray and Stourton, L.

Sandford, L.

Sudeley, L.

Murton of Lindisfarne, L.

Sandys, L. [Teller.]

Trenchard, V.

Netherthorpe, L.

Seafield, E.

Vaizey, L.

Northchurch, B.

Selkirk, E.

Vaux of Harrowden, L.

Orkney, E.

Sempill, Ly.

Vivian, L.

Porritt, L.

Skelmersdale, L.

Ward of Witley, V.

Rawlinson of Ewell, L.

Soames, L. (L. President.)

Westbury, L.

Redmayne, L.

Strathcarron, L.

Young, B.

Resolved in the affirmative, and Motion agreed to accordingly.
3.52 p.m.
The LORD CHANCELLOR: Unfortunately, my Lords, the Motion did not contain a time at which the House should resume. Therefore, I hope I may do right if I select a time to return to the Woolsack. If I do it too soon, a further Motion, with a time limit, can be put; but, if your Lordships will allow me, I would propose to give the House half an hour. If I may resume the Woolsack then, I shall be here, and I hope that your Lordships will, too.
House adjourned during pleasure.
4.23 p.m.
House resumed.
Lord SANDYS: My Lords, in the absence of my noble friend the Leader of the House, I think it would be convenient to take the Statement at this juncture.

BRITISH NATIONALITY LAW
The PARLIAMENTARY UNDER-SECRETARY of STATE, HOME OFFICE (Lord Belstead): My Lords, with the leave of the House, I will now repeat a Statement being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"It has long been recognised that our nationality law is out of date. The previous Government published a Green Paper in 1977. We said in our election manifesto that we would introduce a new British Nationality Act. I have published today a White Paper which contains our proposals for legislation. A Bill will be introduced as soon as parliamentary time permits.
"It is widely accepted that we need a new Citizenship confined to those who have close connections with the United
892
Kingdom. We propose that this should be known as British citizenship.
"The Green Paper proposed that all those citizens of the United Kingdom and Colonies who did not become British citizens should become British Overseas citizens. We have, however, been impressed with the argument that a separate citizenship should be established for the dependencies as a whole. We propose that this should be called citizenship of the British dependent territories. I emphasise that the establishment of this separate citizenship will not alter the United Kingdom's obligations and commitments to our overseas territories.
"Those who are now citizens of the United Kingdom and Colonies but do not qualify for British citizenship or for citizenship of the British dependent territories will become British overseas citizens.
"Children born in the United Kingdom (or the Channel Islands or the Isle of Man) will normally acquire British Citizenship by birth. But we think that in principle there is a good case for providing, with the safeguards contemplated in the White Paper, that a child of parents neither of whom is a British citizen and neither of whom is settled here should not acquire British citizenship solely by his birth in the United Kingdom.
"A British citizen by birth, whether male or female, will transmit his or her citizenship to the first generation born abroad, and, normally, to the first generation only. But children born abroad to Crown servants who are British citizens will be citizens by birth, and there will be special provisions for children born abroad to certain other people who have close connections with business and other organisations based in the United Kingdom, or with some international bodies.

893
"All adults, whether Commonwealth citizens or foreigners, who wish to obtain British citizenship will do so by naturalisation.
"The present automatic entitlement of wives to obtain our citizenship by registration will be ended. Instead, both husbands and wives will be able to apply for naturalisation on the same terms as others, though after three years' residence instead of five.
"The present entitlements to acquire citizenship by registration possessed by wives, and by Commonwealth citizens who were settled here before 1st January 1973, will be preserved for an interim period of two years.
"After careful consideration, we have decided not to introduce any restrictions on the holding of dual nationality by those people who come here and acquire British citizenship by naturalisation or registration.
"Citizenship of the British dependent territories will be acquired under the same general pattern as that proposed for British citizenship. This citizenship will not give the right of entry to a dependency other than that with which a person is connected.
"British overseas citizenship represents in essence the relationship with the United Kingdom held by people connected with countries which were once part of the British Empire, or whose ancestral connections with the United Kingdom or its present dependencies are not sufficiently close to qualify them for British citizenship or citizenship of the British dependent territories. Children born after the Act comes into force to parents who have become British overseas citizens will not themselves hold that citizenship.
"I make it clear once again that we shall continue to recognise the special position for immigration purposes of certain United Kingdom passport holders, mainly from East Africa, and we shall maintain our undertaking to continue the special voucher scheme for them.
"It will no longer be necessary to use the term 'British Subject' as the common status of all people connected
894
with the Commonwealth. In the Bill, the only expression denoting the common status of all people connected with the Commonwealth will be "Commonwealth citizen".
"All those who have citizenship of the United Kingdom and Colonies at the time when the Act comes into force will acquire one of the new citizenships. No one who is then a citizen of the United Kingdom and Colonies will be left without a citizenship. Generally speaking, those citizens who or whose parents or grandparents were born, adopted, naturalised or registered in the United Kingdom will become British citizens. Those citizens of the United Kingdom and Colonies from overseas who have been here for five years and are settled will also become British citizens.
"There is a small group of people, formerly stateless and most of them children, who have become patrial by registration overseas and who we think ought to be given whichever citizenship their mothers acquire. Apart from these, every citizen of the United Kingdom and Colonies who is patrial will become a British citizen and no one who has the right of abode in this country will lose it. In the long term, only British citizens will have the right of abode. But individual people who are not citizens of the United Kingdom and Colonies but now have the right of abode will retain it. The Bill will not adversely affect the position under the immigration law of anyone who is lawfully settled in the United Kingdom, whether or not he becomes a British citizen. Nor will it affect our commitment to admit the wives and dependent children of men lawfully settled here.
"When the Act comes into force there will be some applications for citizenship still outstanding. The Bill will provide that an application for citizenship which has been properly made and is still under consideration at the time when changes in the law come into effect should be dealt with according to the law at the time when it was made, though if citizenship is granted it will, of course, be whichever of the new ones is appropriate.
"Mr. Speaker, I commend our proposals to the House".

895
My Lords, that concludes the Statement.
4.30 p.m.
Lord BOSTON of FAVERSHAM: My Lords, I should like to thank the Minister for repeating that Statement. It is a lengthy one, on a very complicated subject and therefore I am sure that your Lordships will appreciate that detailed comment will need to await both further study of the Statement and of the White Paper itself. I would say at this stage that I welcome in principle the proposal to bring in a new British Nationality Act. It is clearly needed. Indeed, it is something we had intended to do, as foreshadowed in the 1977 Green Paper. I would ask the Minister, first, whether the Government intend to seek to discuss this with the other Commonwealth countries, whether discussions have already taken place and whether any indications have come from Commonwealth countries of their views; because, as he has indicated in the Statement, there is a proposal for Commonwealth citizenship and there is, therefore, I assume, a need to seek reciprocity about that. I would ask also whether there are any implications for our citizenship law in the law of the EEC to be taken into account.
Perhaps I could now turn to the question of the status of women and ask the noble Lord, Lord Belstead, whether he can confirm these that proposals confer full legal rights of citizenship on British women as far as are concerned, first, equal rights with men on transmission of citizenship itself, equal entitlement for a foreign spouse of either sex to naturalisation and equal treatment for foreign fiancés and fiancées and spouses, with the same right of entrance into this country, regardless of sex.
I would agree with the conclusion indicated by the Government that it would be better on reflection not to make all those citizens of the United Kingdom and Colonies who do not become British citizens, "British overseas citizens", the new category which is proposed and which was envisaged in the earlier Green Paper. The working party of Justice was among those who had misgivings about the original proposals partly because of dangers of statelessness arising. The Justice working
896
party also suggested that such persons should be given a citizenship identifying them with a particular territory or country. I would ask the noble Lord whether this proposal would give as it is called here "citizenship of the British Dependent Territories" with any dangers of statelessness arising.
The only other comment that I would make at this stage is that I would certainly welcome warmly the decision to retain dual nationality. I think that that would be very widely accepted.
Lord BEAUMONT of WHITLEY: My Lords, we, too, should like to thank the Minister for repeating the Statement, and, on the whole, welcome the idea of a new nationality law which will bring some consistency into a very complicated field. In particular, we very much welcome what appears to be a complete absence of sex discrimination—which will be a considerable step forward; although, in this context, I would join with the noble Lord, Lord Boston, in asking about the question of fiancés and fiancées. The question of wives and mothers is a fairly clear one. That of fiancés and fiancées is not entirely so. We cannot from these Benches think that this idea of dividing—not only as suggested by the Labour Green Paper into sheep and goats —into sheep and two kinds of goats is a very good one.
It would have been a much fitter end to a chapter of the British Commonwealth if we could have incorporated the relatively small number of people to whom this applies within full British citizenship. But since this is the situation that we have, there is one serious question that I should like to ask of the noble Lord. Given this situation of something that Kipling never thought of—which is lesser breeds, half within and half without the law—if you are one of these peculiar forms of half citizens and you get expelled from the country you are in, what is your relationship then with this country? Will these people (having had UK and Colonies citizenship) have the right to come in if they are expelled from the countries in which they now live? I think that is an important question.
Lord BELSTEAD: My Lords, I am grateful to both noble Lords for the replies they have given to the Statement

897
of my right honourable friend today. I should be thankful if your Lordships would take the same view as that of the noble Lord, Lord Boston, who expressed the hope that detailed comment on this White Paper might await another, perhaps less exciting occasion. Incidentally, this White Paper, follows in many respects the recommendations of the previous Administration's Green Paper; except at the very beginning—something which caught the attention of both noble Lords, who have spoken—where there are proposals (and we are talking at the moment of proposals; legislation will have to follow) for three forms of citizenship and not two.
Perhaps I may now try to reply to the questions which were asked of me. This is a different situation from that in which the Commonwealth found itself in 1947 when members of the Commonwealth shared the same citizenship. Bearing that in mind, I would say to the noble Lord, Lord Boston, that we are naturally in touch with Commonwealth countries from time to time on nationality matters. I would stresss that there is nothing in the White Paper which needs disturb in any way our friends in Commonwealth countries or in the dependencies. The noble Lord asked whether these proposals would have any implications for our membership of the EEC. When we joined the EEC, we had to define who our nationals were from those who held citizenship of the United Kingdom and Colonies; we shall now have to redefine those who are our nationals for EEC purposes within the scope of the proposals of the White Paper.
The noble Lord asked me three questions about the position of men and women under these proposals and the noble Lord, Lord Beaumont, joined with the noble Lord, Lord Boston, in asking them. My answers are: yes, in these proposals there is equality between the sexes as far as the conferment of nationality is concerned; yes, in these proposals there is equality between the sexes as far as transmission of nationality is concerned; as far as the immigration, the entry, of fiancés or fiancées is concerned, my last two answers refer only to the question of nationality. For the conferment for the purposes of nationality, the White Paper proposes full equality between the sexes. If your Lordships want to pursue the question of
898
the entry of different sexes, that must be pursued on another occasion.
Finally, the noble Lord opposite referred to the difficult question of statelessness with regard to British dependent territories. I may ask the noble Lord to glance at paragraph 103 of the White Paper, he will find this sentence:
"While account will be taken of the United Kingdom's obligations under the international convention on the reduction of statelessness, it is generally understood that the country of birth should be responsible for remedying the situation".
"The situation" is the situation that the noble Lord, Lord Beaumont, asked me about in the one main substantive question which he put forward.

HOUSING BILL
4.40 p.m.
Third Reading debate resumed.
Lord SOAMES: My Lords, we have been able to confirm—though of course unofficially until Hansard, the record, is printed tomorrow—that the Minister for Housing in another place replied in the negative in answer to a supplementary question asked of him this afternoon as to whether the Government intended to retain the amendments in the Housing Bill. He went on to say that the Government would be considering pre-emption. Those were not the exact words he used. I paraphrase them.
After all the hard work that has been put into this Bill from all quarters of the House, I must categorically say that, as Leader of the House, I regret that this was said before the Bill left this House later today. I understand that this caused considerable dismay in your Lordships' House and it was natural that the matter should be raised as a genuine grievance, and I can but express my regret on behalf of the Government that this should have occurred.
Lord PEART: May I thank the noble Lord for what he has said? We accept the generosity—
Several noble Lords: Use the microphone!
Lord PEART: My Lords, I am sorry. May I thank the noble Lord for what he

899
has said? We understand the difficulties, et cetera, and let us proceed. No argument about tittle-tattle, and withdraw "manoeuvre". I hope there is no manoeuvre on this. That is clear.
Lord BYERS: My Lords, I should like to thank the noble Lord, the Leader of the House for what he has said, which I think was a perfectly adequate statement which the House should accept without difficulty at all.
Lord SHACKLETON: My Lords, may I just ask the noble Lord a question? I understand that he paraphrased the Minister's statement. I do not quite understand why he did that. Did I misunderstand him? As he knows, Ministers' statements can be quoted in full in another Chamber.
Lord SOAMES: Yes, my Lords; but not before publication in the Official Report.
The LORD CHANCELLOR: My Lords, I ought to remind your Lordships that I had proposed to the House on the Motion of the Leader of the House that the Bill should now be read a Third time, after which there was a procedural motion, which was carried. We are now back here again. There was then a Statement. The Question which, as I understand it, is now before the House is that the said Bill be now read a third time. As many as are of that opinion will say "Content". To the contrary, "Not-Content". The "Contents" have it.
On Question, Bill read 3a with the amendments.
Clause 3 [Meaning of "house", "flat", "dwelling-house" and "relevant time"]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 1:
Page 4, line 13, leave out ("Part of this Act") and insert ("Chapter").
The noble Lord said: My Lords, for the convenience of the House, I should like to speak to Amendments Nos. 3, 4, 5, 6, 7, 8, 9, 10, 11, 13, 14, 30, 31, 32, 68 and 69 with this amendment. The amendments to the commencement provisions for Chapter II of Part I will mean that, if
900
it proves practicable to get the necessary regulations et cetera made quickly, we shall be able to bring in the security of tenure provisions without waiting for the expiry of eight weeks from the date of enactment. We are of course eager for tenants to be granted security of tenure at the earliest possible moment. The other amendments will mean that as much as practicable of the provisions of the Bill will come into operation immediately the Bill receives the Royal Assent.
The only provisions which will be left to be brought into operation by appointed day order are those which depend upon the making of regulations or orders or the prescription of the form of notices et cetera or where it is desirable that those affected should first be able to get copies of the Act. These amendments have been left to Third Reading when the Bill would be reaching its final form and the commencement provisions could be considered as a whole. I beg to move.
Baroness BIRK: My Lords, this is an anti-climax after all that we have been through. I will take the Minister's word for this. I do not really follow every detail of it. I gather it is partly drafting, partly bridging and necessary to integrate the Bill. I think that would be correct.
On Question, amendment agreed to.
Clause 10 [Notice of purchase price and right to a mortgage]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 2:
Page 10, line 30, after ("7(2)") insert ("or (4)").
The noble Lord said: My Lords, this amendment will ensure that a tenant will always be able to tell just how the price that his landlord quotes for his home has been worked out. Clause 10 deals with the notice which the landlord serves on the tenant, as soon as practicable after its initial response to his right to buy notice, giving details of the purchase price of his home. The intention is that the tenant should be able to tell from the notice exactly how the price has been worked out and what has affected it. It will tell him the market value of his home and the discount to which he is entitled, as well as the purchase price itself.
As well as value and discount, the cost floor provision in Clause 7(2) can also affect the price of a dwelling sold under the right to buy. If it has affected what a tenant must pay he must be told about it in the Clause 10 notice if he is to make proper sense of the price which his landlord is quoting. Clause 10 provides for this. But the price may also be affected by the maximum discount that the Secretary of State may prescribe by order under Clause 7(4). Where this happens, too, the tenant will obviously need details if he is to understand his landlord's Clause 10 notice fully. Clause 10 as drafted does not cover this point: this amendment puts that right. My Lords, this amendment is small, but it will avoid possible confusion and I respectfully suggest that it is well worthwhile. I beg to move.
Baroness BIRK: My Lords, so far as I am concerned I find that amendment acceptable. It helps to clarify the Bill (which needs a lot of clarification) and it also helps people to understand what they are entitled to or concerned with.
On Question, amendment agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment Nos. 3 to 11 en bloc:
Page 23, line 22, leave out ("this Part of this Act") and insert ("Chapter II")
Page 23 line 23, leave out ("this Part") and insert ("Chapter II")
Page 23 line 33, leave out ("this Part of this Act") and insert ("Chapter II").
Clause 38 [Reimbursement of cost of tenant's improvements]:
Page 29, line 19, leave out ("Part of this Act") and insert ("Chapter").
Clause 41 [Provision of information about tenancies]:
Page 31, line 18, leave out ("Part of this Act") and insert ("Chapter")
Page 31 line 39, leave out ("Part of this Act") and insert ("Chapter")
Page 31 line 42, leave out ("Part of this Act") and insert ("Chapter").
Clause 43 [Consultation with secure tenants]:
Page 32, line 44, leave out ("Part of this Act") and insert ("Chapter").
Clause 45 [Exemption certificates]:
Page 34, line 37, leave out ("Part of this Act") and insert ("Chapter").
The noble Lord said: My Lords, as I have already spoken to these amendments, I beg to move.
On Question, amendments agreed to.
4.50 p.m.
Baroness DAVID Baroness DAVID moved Amendment No. 12:
After Clause 46, insert the following new clause:
( "Restriction on residential requirements
—(1) In considering whether an applicant for local authority housing is entitled to be admitted to a housing list, a council shall take no account of the age of the applicant provided that he is over the age of 18 years.
(2) In the allocation of local authority housing, a council shall take no account of the length of time for which an applicant has resided in its area nor of the age of the applicant provided that he is over the age of 18 years, nor of the income of the applicant and his family.
(3) Where an applicant—

(a) is employed in the area of the local authority; or

(b) has been offered employment in the area of the local authority; or

(c) is over 60 years of age and wishes to move into the area of the local authority to be near a younger relative; or

(d) has special social or medical reasons for requiring to be housed within the area of the local authority,

admission to a housing list shall not depend on the fact that the applicant is resident in the area.
(4) Where a local authority has rules which give priority to applicants on its housing list it shall apply those rules to an applicant to whom subsection (3) above applies no less favourably than it applies them to a tenant of the local authority whose housing needs are similar to those of the applicant and who is seeking a transfer to another dwelling-house belonging to the local authority.
(5) In the allocation of local authority housing, a council shall not impose a requirement that an application must have remained in force for a minimum period before the applicant is eligible for the allocation of housing.
(6) In this section "housing list means a list of applicants for local authority housing which is kept by a council in connection with allocation of housing.").
The noble Baroness said: My Lords, I said when withdrawing a somewhat similar amendment in Committee that I would probably come back at Report with a slightly different one. I did put one down but owing to pressure of time I did not move it, so I take the opportunity of doing so now. What I have done is remove two parts of my original amendment that were particularly criticised in Committee. One was the section giving someone seeking employment in an area

903
the opportunity to go on the housing list of that area. I gave that up a little reluctantly. The other section that I have removed is the one that dealt with the eligibility of someone with arrears of rent being accepted on the list. That, as a separate amendment, was debated on Report and was in fact withdrawn, the Minister alleging that it was unnecessary. I hope he is right.
I find the Government's attitude curious, as it was the Government that introduced an identical amendment at the Committee stage in another place in the Tenants' Rights (Scotland) Bill and which now stands part of Clause 26 of that Bill. My present amendment is almost exactly the same as that Clause 26, of which part was in the original Bill and part (paragraphs 3 and 4 of my amendment) were Government amendments in Committee. So, my Lords, you will see that my amendment has a good provenance.
Forward-thinking people and reports have for a considerable time encouraged councils to make access to their housing lists easier. The Cullingworth Report in 1969 recommended that no one should be precluded from applying for or being considered for a council tenancy on any grounds whatsoever. They gave two main reasons: first, that only by open lists can an accurate assessment of relative needs be made, and it is very important nationally that this assessment can be made; and, secondly, that there is now—and let us remember this was written 11 years ago— a clear need for greater mobility in the public sector between councils. Our stock of council housing should be looked on as a national asset, to be used with a view to national as well as to local needs.
I mentioned in Committee the Centre for Environmental Studies article which showed that council house tenants have only half the chance of owner-occupiers of moving between authorities. It is understandable why the CBI (not exactly a leftist organisation) supports this doing away with residential requirements, as does the LBA, which is Conservative-controlled, which recommended to its members that they should abolish such requirements. Their mobility scheme is weakened if different periods of eligibility apply to different areas. This, of course, applies to the national mobility scheme
904
too. Restrictive qualifications will remain for single people or owner-occupiers, and those groups will be ineligible for the mobility scheme. Far more mobility could be created by eliminating residential requirements which are still in force for one-third of all councils. We want this amendment to bring to all areas what is good practice in some areas, for the benefit of everyone—the noble Lord, Lord Hylton, mentioned Hammersmith at the Committee stage. But without some statutory backing it will all take too long for the more backward councils to catch up.
It was 10 years after the Cullingworth Report that another Government report, Allocation of Council Housing, by the Housing Services Advisory Unit made exactly the same recommendation and admitted that little progress had been made in those 10 years. Still one-third of all councils have the same restrictive residential requirements in 1978 as in 1968, and one-fifth refuse to register single people under retirement age. I would ask your Lordships to remember that today over half of all households are made up of one or two people.
The noble Lord, Lord Belstead, in answering me in Committee, begged the Committee to consider the desirability of trying to proceed by agreement and consent. I hope I have shown that, despite strong recommendations from highly respected people and reports—Culling-worth and the HSA Unit—there has been no progress that way. Why wait longer, when we have a Housing Bill going through Parliament? The needs of the nation are even more vital now. Industry desperately needs its workers, skilled and unskilled, to be mobile. I quoted the Prime Minister before when I moved an amendment on mobility; and she was asking for mobility. The CBI is urging it strongly, the unemployment situation demands it and Age Concern is pressing for it for other excellent reasons, which there is no need to dwell on. Could the Minister graciously give way and show that he can be flexible and forward-looking?
Although I am aware that there is a larger percentage of council houses in Scotland than in England and Wales, I still do not see why there should not be the same clause in both Bills. For

905
instance, why should a single person in Scotland get on a housing list, yet be prevented in many parts of England? It must seem absurd and intolerable to them. I was very impressed, when reading a report of the Committee stage discussion on this clause in another place, by how reasoned and reasonable it was, how there was a very real effort to achieve the best result for people individually and for the needs of the nation. I am convinced that if the Government can be forthcoming and forward-looking today, and be willing to accept the amendment, real progress can be made and there will be the possibility of the greater mobility that we all want. I beg to move.
4.56 p.m.
Lord HYLTON: My Lords, I should like to support this very important amendment. As the noble Baroness has made clear, it is a non-partisan and a non-party-political amendment. I think the noble Baroness deserves our thanks for drafting and moving the amendment to deal with a matter of very considerable public interest. She herself has pointed out how 13 years have gone by since the Cullingworth Report of 1967, which I have often quoted in your Lordships' House, and there has been very little progress indeed. No doubt the Government will say that we ought to give a chance to the voluntary scheme recently devised, and I would say this: by all means let us give it a trial, but let us have something in the Bill as a long-stop. Maybe this clause should not be put into operation for, say, three years or five years, but let us have it there—or something extremely like it—so that there is a target towards which the voluntary scheme will, we hope, lead us.
Lord EVANS of CLAUGHTON: My Lords, I very warmly support the amendment moved by the noble Baroness, Lady David. During this present period of very high unemployment we hear a great deal from the Minister's right honourable friend the Prime Minister that people should be willing to move from where they live to find work in areas where there is work available. Your Lordships may have read recently in the newspapers—perhaps those circulating more in the North of England than
906
in the London area—about a number of families from the Merseyside area, where there is endemic high unemployment, who took the Government at their word and went to areas where employment was available, and have now had to return to Merseyside extremely disillusioned, because not only was there no local authority housing available, or made available, for them, but they were not given any hope of getting accommodation in the future. In the case of one family—a man, his wife and four children—they had to live in a tent for some weeks. Considering the British summer, this is almost a greater hardship than being unemployed.
So I think this amendment is one to which the Government should be sympathetic because it complies with and supports their own policy of encouraging mobility. People should help themselves by going to seek employment where it lies. I hope the Government will give a favourable and optimistic reply.
4.59 p.m.
Lord BELLWIN: My Lords, this new clause would in fact remove much of the freedom which local authorities enjoy to give a reasonable degree of preference to local people in the allocation of their housing. It would oblige them to take on to their lists people from outside their area who might meet some highly debatable criteria; for example, those wishing to move for some quite undefined—as the amendment states —"special social reason". I would not want to have to interpret that one to any housing committee of which I was ever a member. The result of the amendment would undermine the freedom which local authorities have to manage their housing stock. Yet this freedom is what enables local authorities to tailor their allocation policies to local needs and to give preference to local people where they think it is deserved. I can see no cause for this Bill to interfere with such matters; and I think the proposed new clause betrays a fundamental distrust of local authorities' ability to make sensitive and intelligent allocation decisions.
We do not even believe that the clause would have the effect noble Lords opposite intend, for the groups of people they have singled out. It will not, as I suspect they may be assuming, make it any more

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certain that such people moving into an authority's area will, in fact, be treated on a par with local applicants. They will be certain only of going on the list, and then being treated on a par with tenants seeking a transfer; indeed, the effect of the clause could rebound, if some authorities made their transfer policies more restrictive in an effort to keep outsiders away. The clause also presents some formidable problems of definition and interpretation, if disputes about it were to have to go to the courts.
The noble Baroness, Lady David, referred to the Scottish Bill. There are substantial differences between conditions in England and Scotland which justify different treatment. For example, the proportion of public sector housing stock in Scotland is nearly double what it is in England and Wales. There are towns in Scotland, in fact, where the public sector has a virtual monopoly of rented accommodation, and it is nonsensical for the authority to impose more than a minimum of necessary rules about who can be admitted to the housing list. Nor are the Scottish local authorities planning to introduce a voluntary mobility scheme, although I hope very much that in due course they will become associated with the scheme in England and Wales.
My conclusion is that this clause as a whole is not well conceived, as well as being almost impossible to enforce. I do not believe that we should saddle local authorities with provisions of these kinds. Housing allocation policies are, and must be, a matter for locally-elected representatives, who are responsible for them to their electorate. The way to provide for people who need to move—and I say at once that we are, indeed, concerned about this—is through voluntary co-operation between one local authority and another. If we had some evidence to show that local authorities were either not acquiescing in that, or were not willing to consider it, then that might be one thing. But the fact is that this is precisely what the voluntary national mobility scheme, which is being promoted by the local authority associations themselves, with my right honourable friend's support, is going to provide. That is a far more satisfactory way than the heavy-handed
908
intervention in local affairs which this clause represents.
I was involved in another capacity in discussions of the whole proposals, when they were in the form of a Green Paper which the previous Government put out. I was then very concerned, on the one hand, to be sure that we could make a contribution to mobility, because it was obvious even then that the need for extra mobility would increase, and would become something of far greater significance and importance nationally than it had perhaps been in the past.
But I was also very seized with the great concern which local authorities were expressing and, indeed, it was because of that, and their willingness to see something done, that they all agreed to get out together a voluntary national mobility scheme, which would, hopefully, show what could be achieved within the context of their individual local housing situation, and could make a very important contribution. I really believe that that is the way forward.
I am not unsympathetic to the basic objectives of the amendment—quite the contrary. They set out to achieve something which we recognise as being important. But we must give what is being done at the moment, and what is being planned to be done, a chance to work. I would far rather that we did it in that way, than that we imposed some statutory obligation, such as this amendment sets out to do, with some of its shortcomings that I have mentioned. That must be the better way forward.
5.5 p.m.
Baroness BIRK: My Lords, I found it not only rather sad and frustrating, but highly amusing that the Minister, in rejecting this amendment, used such phrases as,
"It would remove much of the freedom which local authorities enjoy"
and:
"The heavy-handed intervention in local affairs".
One of the themes that is running through the whole of this Bill is exactly that—removing much of the freedom which local authorities enjoy, and heavy-handed intervention in local affairs.
But then we come on to an area where it is absolutely necessary for central

909
Government to take some part. This is almost linked to the amendment on mobility moved on Report by my noble friend Lady David, which was turned down by the Government. It is all in aid of the Government's industrial employment policy, as they put it across, that there should be greater mobility. But there can be greater mobility only if people have somewhere to live. In all the papers on Saturday morning—certainly, it was in the Daily Mirror—there was a story about a man who twice moved 300 miles in order to get work, but could find nowhere to live so on each occasion he had to go back.
I absolutely agree that local authorities are put in a difficult situation. There are long waiting lists and the problems in some parts are more real than in others. This is where a local authority needs the help and support of central Government, and it can get this only if it is put into legislation. A local authority would then be under an obligation to find accommodation for an applicant who was employed in the area, or who had been offered employment in it.
As regards paragraph (c) of subsection (3) of the amendment, which states,
"is over 60 years of age and wishes to move into the area of the local authority to be near a younger relative…".
I wonder whether the Minister appreciates that putting this duty on to local authorities would have the economic and social result of keeping a great many old people out of residential accommodation, because they would be able to live near their relatives. This is a tremendous problem, as all the voluntary bodies which are concerned with old people have pointed out. It seems to me, since the Government have turned down the mobility amendment, that there should be flexibility —certainly, one or the other should be in this Bill—to enable local authorities to allocate their housing in a way which would improve and increase the mobility of labour, and which would also have the various other social advantages on which my noble friend expanded.
Lord BELLWIN: My Lords, I wonder whether I might respond. I am pleased that I was able to amuse the noble Baroness. Perhaps that is something that one does not do what she says. The Bill, with the exception of the right to buy, which
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is fundamental to the Government's policy, as has been said so many times, gives more freedom to local government in housing than it has had in many directions. If the noble Baroness would like me to go through the whole list of those, no doubt we could debate them on this or on some other occasion.
The fact is that here is a classic instance where local authorities individually, and local authority associations as such, are most concerned that there should not be imposed upon them the kind of obligations which this amendment seeks to impose, and which I suggest would be counterproductive. As to the mobility argument, I thought I had made it fairly clear and, if I did not, I gladly take the chance to do so again—that the Government are most anxious to do something about this and want to see the maximum mobility. But what we are saying is that to impose statutory obligations such as this, which would only cause local authorities to resent them and to find ways of making things difficult, is not the way to do it. The way to do it is as we are doing; that is, to enourage the voluntary national mobility scheme which is now being worked through. I say that that is the way forward.
Baroness BIRK: My Lords, before the Minister sits down may I say this?—I did not want to interrupt his flow. He said that, apart from the right to buy, this is the fundamental Conservative policy. But that does not detract from the fact that it is taking away all autonomy from local authorities. You cannot say, except for that, that local authorities have complete autonomy and flexibility. I do not expect the Minister to smile at that, but I think I have made him smile more often than he gives me credit for.
Baroness HORNSBY-SMITH: My Lords, may I support my noble friend. Many members of your Lordships' House spent many years in another place, and week after week dealt with local authority housing cases. It seems to me to be quite wrong that we should try to impose on local authorities an obligation to take anybody from anywhere, provided that they have a large enough family or other need. I am sure that my noble friend will agree that many local authorities already make provision for people who are

911
coming into an area because of new employment opportunities which have been found for them. Provided that it is certified by the employer that people have been offered a job in that area and that they require accommodation, all forward-looking local authorities certainly endeavour to deal with problems of that nature. That deals with the mobility of labour point to which the noble Baroness referred.
There is still a great deal of community spirit. People take pride in having lived in their home town for many years. Local authorities throughout the country endeavour to keep a very strict and a very fair points system for those on their housing lists. Time and again young couples came to one and said, "We have now got 25 points. My pals have now got a house and they had 29 points, so we should get our house in another year". No local authority will be able to give any local person any idea of when they are going to be housed if anybody from anywhere, with no claim on the area and no job, is able to arrive and say, "Because I have a family of six or eight, I take priority over other people who have spent their whole life in the area".
I am sure that my noble friend is right in agreeing that local authorities should work together to build up a voluntary system, wherever it can be applied, because the differences between local authorities and the different problems which they face are known to every Member of this noble House. I feel that we should leave it to the local authorities. We should encourage them to extend, where they have not done so before, mobility of labour if people are coming to work for a firm and have accredited jobs. But we should not impose upon local authorities an obligation to ignore the needs of local residents—the affiliation, the family ties, the local ties and the time that they have spent in their own community—and override them. Those people must be considered. They must not be overridden by anybody from anywhere coming in and superseding their claims for accommodation.
Lord SANDFORD: My Lords, last week I spoke, I fear, rather roughly to the noble Baroness, Lady David, for pleading so often for flexibility and autonomy for local government and then for introducing
912
amendments which took it away. I have to say, though very gently, that here she is doing it again. I certainly confirm that the Association of District Councils would much prefer to be left to get on with the development of a voluntary mobility scheme. Councils increasingly see the need for this, but to impose upon them a statutory scheme would be counterproductive.
Baroness DAVID: My Lords, I do not think that the noble Baroness, Lady Hornsby-Smith, could have read my amendment. It does not ask that large families should be imposed on local authorities. Subsection (3) states very clearly which categories of people will have admission to the housing list and that their admission shall not depend on the fact that the applicant is resident in the area. It is definitely for certain categories—for people who have got work there, or who have been offered work. It is also for certain categories like the elderly who need to be near relatives and for others who have social or medical reasons. The Minister poured scorn on the social or medical reasons. But that phrase has been accepted by his Government in another Bill, so it seems strange that he should be so critical of it. As housing authorities are constantly having to make decisions about who, on medical reasons, is to have a council house it does not seem to me to be a very strange one.
Owner-occupiers already have the opportunity to move flexibly. The percentage of council house tenants who move is very small, compared with owner-occupiers. This amendment is trying to help council tenants to be a little more mobile. My noble friend has dealt with the point about freedom for local authorities which the Minister mentioned, so I shall not take it up again. However, it is quite extraordinary that the Minister can speak so confidently—I almost said arrogantly—and can ignore these very distinguished reports. I am not satisfied with the answers that the Minister has given and I shall press the amendment.
5.16 p.m.
On Question, Whether the said amendment (No. 12) shall be agreed to?
Their Lordships divided: Contents, 98; Not-Contents 115.

CONTENTS

Airedale, L.

Goronwy-Roberts, L.

Oram, L.

Amherst, E.

Gosford, E.

Pargiter, L.

Ardwick, L.

Greenwood of Rossendale, L.

Parry, L.

Aylestone, L.

Gregson, L.

Peart, L.

Bacon, B.

Grey, E.

Plant, L.

Baker, L.

Hale, L.

Ponsonby of Shulbrede, L [Teller.]

Banks, L.

Hampton, L.

Beaumont of Whitley, L.

Hanworth, V.

Raglan, L.

Beswick, L.

Hatch of Lusby, L.

Rathcreedan, L.

Birk, B.

Hooson, L.

Rhodes, L.

Blyton, L.

Houghton of Sowerby, L.

Ritchie of Dundee, L.

Boston of Faversham, L.

Hughes, L.

Ritchie-Calder, L.

Bowden, L.

Hylton, L.

Rochester, L.

Brockway, L.

Ingleby, V.

Ross of Marnock, L.

Brooks of Tremorfa, L.

Irving of Dartford, L.

Seear, B.

Bruce of Donington, L.

Jacques, L.

Segal, L.

Caradon, L.

Janner, L.

Shackleton, L.

Clancarty, E.

Jeger, B.

Shinwell, L.

Clifford of Chudleigh, L.

Kilmarnock, L.

Simon, V.

Collison, L.

Leatherland, L.

Stedman, B.

Cooper of Stockton Heath, L.

Lee of Newton, L.

Stewart of Alvechurch, B.

Crowther-Hunt, L.

Leonard, L.

Stewart of Fulham, L.

David, B. [Teller.]

Llewelyn-Davies of Hastoe, B.

Stone, L.

Davies of Penrhys, L.

Lloyd of Kilgerran, L.

Strabolgi, L.

Diamond, L.

Longford, E.

Taylor of Blackburn, L.

Donaldson of Kingsbridge, L.

McCarthy, L.

Taylor of Mansfield, L.

Evans of Claughton, L.

McNair, L.

Underhill, L.

Evans of Hungershall, L.

Maelor, L.

Wall, L.

Fisher of Rednal, B.

Melchett, L.

Wallace of Coslany, L.

Gaitskell, B.

Milford, L.

Walston, L.

Galpern, L.

Milverton, L.

Wells-Pestell, L.

George-Brown, L.

Mishcon, L.

Wilson of Radcliffe, L.

Gladwyn, L.

Northfield, L.

Wynne-Jones, L.

NOT-CONTENTS

Abinger, L.

Elliot of Harwood, B.

McAlpine of Moffat, L.

Alexander of Tunis, E.

Elton, L.

McFadzean, L.

Ampthill, L.

Fairfax of Cameron, L.

Mackay of Clashfern, L.

Auckland, L.

Faithfull, B.

Macleod of Borve, B.

Avon, E.

Fortescue, E.

Malmesbury, E.

Balerno, L.

Fraser of Kilmorack, L.

Mancroft, L.

Barnby, L.

Gainford, L.

Mansfield, E.

Bellwin, L.

Geddes, L.

Margadale, L.

Belstead, L.

Geoffrey-Lloyd, L.

Marley, L.

Berkeley, B.

Glendevon, L.

Middleton, L.

Bessborough, E.

Godber of Willington, L.

Mottistone, L.

Bourne, L.

Gormanston, V.

Mowbray and Stourton, L.

Boyd of Merton, V.

Gowrie, E.

Moyne, L.

Boyd-Carpenter, L.

Gray, L.

Murton of Lindisfarne, L.

Broadbridge, L.

Gridley, L.

Netherthorpe, L.

Caithness, E.

Haig, E.

Norfolk, D.

Caldecote, V.

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

Northchurch, B.

Clitheroe, L.

O'Brien of Lothbury, L.

Cork and Orrery, E.

Harmar-Nicholls, L.

Orkney, E.

Cottesloe, L.

Henley, L.

Piercy, L.

Craigavon, V.

Hertford, M.

Rawlinson of Ewell, L.

Craigmyle, L.

Hillingdon, L.

Redmayne, L.

Cranbrook, E.

Holderness, L.

Rochdale, V.

Crathorne, L.

Home of the Hirsel, L.

St. Davids, V.

Cullen of Ashbourne, L.

Hornsby-Smith, B.

Sandford, L.

Daventry, V.

Hylton-Foster, B.

Sandys, L. [Teller.]

de Clifford, L.

Ilchester, E.

Seafield, E.

De La Warr, E.

Inglewood, L.

Selkirk, E.

Denham, L. [Teller.]

Killearn, L.

Sempill, Ly.

Derwent, L.

Kilmany, L.

Sharples, B.

Digby, L.

Kimberley, E.

Skelmersdale, L.

Drumalbyn, L.

Lauderdale, E.

Soames, L. (L. President.)

Dulverton, L.

Long, V.

Strathclyde, L.

Dundee, E.

Lonsdale, E.

Strathspey, L.

Eccles, V.

Luke, L.

Sudeley, L.

Ellenborough, L.

Lyell, L.

Swansea, L.

914

915

Teviot, L.

Vaux of Harrowden, L.

Ward of Witley, V.

Trenchard,V.

Vickers, B.

Westbury, L.

Vaizey, L.

Vivian, L.

Resolved in the negative, and amendment disagreed to accordingly.
Clause 47 [Application to existing tenancies]:
Clause 49 [Exclusion of certain housing associations from Chapter II]:
5.25 p.m.
Lord BELLWIN Lord BELLWIN moved Amendments Nos. 13 and 14:
Page 35, line 20, leave out ("Part of this Act") and insert ("Chapter").
Page 36, line 9, leave out ("Part of this Act") and insert ("Chapter").
The noble Lord said: My Lords, I have already spoken to these with Amendment No.1. I beg to move.
On Question amendments agreed to.
Clause 52 [Protected shorthold tenancies]:
Baroness BIRK Baroness BIRK moved Amendment No. 15:
Page 38, line 4, at end insert (", or any other dwelling-house in the same building.").
The noble Baroness said: My Lords, this amendment, which we have discussed in a slightly different context before, I think is familiarly known to us all now as the winkling amendment. When I moved it in Committee it was very much wider and referred to dwelling-houses not only in the same building but in the same area—indeed I think it went further afield as well and the Minister pointed out that it could be rather difficult if it was going to cover properties owned by the same landlord in other parts of the country. So, on this occasion, I have narrowed it to what I feel is an absolutely bare minimum, and I hope that on this occasion the Government will accept it.
One of the most disturbing aspects of the shorthold as it was proposed in the first version of the Government's Bill was that then there was nothing to protect a tenant who was fully protected from having an insecure shorthold tenancy foisted upon him. But, in another place, an amendment was introduced at the Committee stage which spells out that
916
such a tenant who is fully protected will retain protection and that any shorthold agreement signed by the tenant will have no legal force. However, there is a snag even here because this safeguard only applies to the accommodation actually occupied, and we can see circumstances arising where the landlord offers to transfer a tenant into a bigger or better room or flat in the same multi-occupied house. Therefore, I think this safeguard should be widened to cover such an eventuality.
In the Commons Committee the Minister for Housing stated that the Government had carefully considered the issue raised here, yet had come down against it on the basis that there might well be occasions when the transfer from a fully-protected tenancy to a shorthold in the same building or an adjacent building would be advantageous to the tenant. We feel that such a circumstance, and the opportunity for exploitation created by not blocking this potential loophole, would be so rare that it far outweighs any consideration of potential loss of tenant opportunity.
I am particularly impressed by the press notice that was put out by the Conservative controlled Westminster Council as recently as last month, when Councillor David Weeks, who is chairman of the Westminster Housing Committee, said that he supported Sir Brandon Rhys Williams, MP, in the view that it was important to ensure that landlords should not be able to winkle out tenants from existing tenancies where they may be secure and into new ones which were less secure. He said that he would like to see the shorthold tenancy procedures tightened up considerably. This was not only from a Tory council, but a Tory housing committee, and somebody who also went on to say:
"On the points I have made I shall seek to publicise and support the good work of the Inner London Conservative Members of Parliament. We will certainly take all steps that we together feel are appropriate to pursue the interests of private rented tenants".
It was points like this, on the safeguard of tenants, that we wanted to see embodied in the shorthold provisions, which make all the difference between the attitude of the Opposition to this Bill and whether

917
the shorthold provisions are found acceptable or not. A number of the safeguards which were in the original Rhys Williams Bill, and which have been put forward not only by the Opposition but also by Members of the Government's own Party, in fact do take away this terrible anxiety which is going to beset so many people. I think it was on this particular amendment that the noble Lord, Lord Goodman, spoke at Committee, and he said that from his experience as a solicitor working in this field he was aware of the tremendous suffering and anguish which goes with this feeling of insecurity. This is why it is essential, even if the Government feel this is a small loophole, that it should in fact be blocked. This amendment has narrowed it down very considerably, to any other dwelling-house in the same building. I hope on this occasion the Government will accept the amendment. I beg to move.
Lord EVANS of CLAUGHTON: My Lords, as one who wishes the shorthold concept goodwill and a fair wind in principle, as I have said earlier in the discussions on this Bill, I do hope that the Government will accept this amendment. From my experience, both as a lawyer and as a councillor, this was the kind of loophole which was used by irresponsible and ruthless landlords under previous legislation, when attempts were made to persuade fairly innocent tenants to move around and lose the protection they thought they had. I fear there is always such an element, as I feel sure your Lordships on all sides will agree. I must say again that most landlords are perfectly reasonable, rational, fair-minded people, but there is a tiny minority of bad landlords, and one passes laws to protect the public against the bad and not against the good.
I cannot see why this very modest protection against trickery and chicanery, which will be employed by a very small minority of landlords, should not be agreed by the Government. If the Government want shorthold to work, if they want the private rented sector to come alive again and if they believe the short-hold tenancy is the way to do this, why not give it a chance and experiment with it, in spite of some of the threats that have been made in another place. If we really do want to give this new concept a chance why do we not accept the safe
918
guards which Sir Brandon Rhys Williams, and others who were the authors of the proposal, originally suggested themselves? For those of us who have goodwill towards the concept, it would be a great comfort to know that the Government have made this concession in order to make the concept of shorthold work.
Lord STRABOLGI: My Lords, I should like to support what my noble friend Lady Birk, and the noble Lord, Lord Evans, have said. Only last Sunday I happened to meet a lady—in fact I sat next to her at a luncheon party—an elderly lady, who has lived in a very small flat in the centre of London for 40 years. She told me that the building has recently been taken over by one of these big property companies and they are doing their utmost to persuade her to move from her flat, because they want to amalgamate it with a neighbouring flat and make a large penthouse, as I think they are called. They have offered her carpets, curtains and so on to move to a slightly larger flat for much about the same rent. What they said to her was,"Of course, you will have equal security. You are a regulated tenant at present, and when you move to your new flat you will still be a regulated tenant".
Of course, this is true at this moment in time, as they say on the radio; it is true this week, but it will not be true once this Bill has received the Royal Assent and becomes an Act. This lady, who is an elderly lady, had no idea that a Housing Bill is going through Parliament; she had never heard of it. She had simply no idea about shortholds and the inroads that the Government are trying to make, and will succeed in making, in security of tenure. I am happy to say I was able to warn her about what will happen, and warn her to stay in her present apartment and not listen to such blandishments or inducements to move with promises of free carpets and curtaining and so on. This is just the sort of thing which is going to go on if equal protection is not given to adjacent flats in the same building. Therefore, I support this amendment and I do hope the Government will take a realistic view.
Lord MONSON: My Lords, I find myself in something of a dilemma over this amendment and the two which

919
follow. In principle I am against imposing yet further restrictions upon potential landlords. Apart from anything else, these are likely to be the last straw which makes them decide not to put their property on the market, to the great detriment of students, single people in their first jobs, young couples who have not yet saved enough money for a deposit on a house, and so on. On the other hand, it must be said that the Government themselves are contributing towards this state of affairs—by which I mean a sense of pessimism, despondency and cynicism among landlords—for example, by permitting tenants under Clause 53 of this Bill to give their landlords an unjustifiably short period of notice.
Perhaps the Opposition series of amendments will not make things much worse, apart from paragraph (b) of Amendment No. 16, which, if I have read it correctly, is a very strange paragraph indeed. If the noble Baroness, Lady Birk, when she comes to sum up on this amendment could give a guarantee that your Lordships' acceptance of Amendments Nos. 15 and 17 would mean that the official Opposition would reverse its hostility to the whole shorthold concept, and if she could also give a guarantee that the official Opposition would, as a quid pro quo for your Lordships' acceptance of these amendments, undertake not to modify the short-hold scheme, except possibly in the most minor ways, in the event of their returning to power, then I suggest to your Lordships that these amendments are worth accepting, in a spirit of compromise, in order to ensure that potential landlords will freely make their properties available to those who so desperately need short-term accommodation.
Lord MTLVERTON: My Lords, I support this amendment, as I have done some others. After studying letters received from organisations such as Age Concern and this one from the Association of Metropolitan Authorities, and having tried to grasp this Bill and tried to come to a fair decision in my mind, I would support this amendment, as I did the previous one. As the Government know, I have always supported them and I am not always going against them, but on certain subjects—this subject and social security—perhaps I am more with noble Lords opposite than with those on this side.
5.39 p.m.
Lord BELLWIN: My Lords, I think we should make one or two things quite clear that would not be clear if one listened only to what has just been said. I made it clear in Committee that the Government of course recognise the validity of the concern that has been expressed, that existing statutory and protected tenants may be persuaded to sign away their security by agreeing to take a shorthold. That is precisely why the Bill makes it quite clear that an existing statutory or protected tenant cannot have his tenancy converted into shorthold. This shorthold proposal is basically about people who now do not have accommodation, who want to become tenants of accommodation which does not exist at all. There is great concern for what will happen to them.
The noble Baroness said as regards an earlier amendment that I had made her laugh. Some of these points make me laugh. How can they be so anxious about people who at the moment do not have accommodation? This is all about accommodation which at present is not available—it is not there at all. We have gone to the trouble of making it clear—because we recognise the kind of possibility to which this amendment refers that if one is at present a statutory or protected tenant, one's accommodation cannot be converted into shorthold. That is the first point and I think that it is pretty fundamental.
Our view is that it is right to restrict the prohibition on an existing tenant being given a shorthold to the dwelling in which he is already a statutory or protected tenant. So, taking my first point, I repeat: Yes, we say that one cannot have that converted into a shorthold and we think that that is right. We think that that is where the risk is greatest. As has been said, if someone were to try to persuade a tenant, under whatever blandishments—and I take the point made by the noble Lord, Lord Evans of Claughton, that there are some people who would try to do that—then he would be outside what the Bill does. That is where the risk is greatest.
But it might be to a tenant's advantage to move to a more convenient flat in the same building, even if his existing tenancy was fully protected whereas his new one

921
was a shorthold. There seems to be no reason to prevent someone from doing this, provided we can be certain that he is fully aware of what he is doing. That really picks up the point which the noble Lord, Lord Strabolgi, made when he expressed his concern, quite properly, about those who may not know what they are doing.
So we believe that we can be certain of this by ensuring that there is spelled out on the shorthold notice precisely what the shorthold is, and that it offers less security to an existing statutory or protected tenant, certainly less than his present tenancy.
During the Committee stage the noble Baroness asked if she could see a draft of the notice that would spell this out, that would be so categorical and so clear that it would at least, to some extent, satisfy her. I said then that I was not in a position at that time to produce such a draft, and nor indeed am I today. But I said then, and I repeat the assurance now as categorically as I am able, that it will make absolutely clear to an existing tenant that shorthold offers less security than his existing tenancy. That is absolutely fundamental and I accept the point.
Of course, I am concerned, and I accept my noble friend Lord Milverton's concern about the matter. But the fact is that the whole basis of shorthold is that it is an experiment. If it succeeds it will offer a great step forward in stopping the awful decline that there has been in the private rented sector. No one who has any interest in housing as such could doubt that something must be done. If it is not perfect, if it will not achieve all that we want and it will not achieve as much in view of what has been said by the Labour Party in another place; of course, it will frighten off some prospective landlords—we believe it right to continue to try to bring this kind of accommodation on to the market, and once and for all to stop that awful decline that has taken place. In doing that we also accept that we must be careful to ensure that those who will be affected, who might want to move, will know what it is exactly that they have taken on. So, all right, if it were not made absolutely crystal clear then there could be danger—I would not say otherwise. The fact is that we are restricting shorthold only to new accommodation; it cannot
922
apply to existing tenancies. Moreover, we shall make it clear to anyone who wishes to change that we shall not take away from him the right so to change, should he so desire, in the knowledge of all that that means.
Baroness BIRK: My Lords, I listened very carefully to what the Minister said and a number of points struck me about this really quite small amendment. Apart from himself, nobody has taken the side of the Government as regards this amendment. The Government have had no support whatever. However, there has been support for the amendment from different parts of the House.
The Minister said—and I accept this sincerity—that he is very anxious that shorthold should work, that people should be treated fairly, and I believe that he means that. I think that he is an honest man who means what he says. Nevertheless, we and various other noble Lords who have spoken in support of the amendment believe that this amendment is necessary in order to ensure that. We are not talking about a Minister's good intentions: we are talking about a piece of legislation. Some of the points which the noble Lord made when replying to the amendment generally concerned short-hold, but they were not strictly related to this amendment.
Trying to get more accommodation on to the market so that people can rent and we can house more people is something with which I personally go along. I cannot give the noble Lord, Lord Monson, a promise on behalf of a future Labour Government or of other people apart from myself. But there is no doubt that the more safeguards that could be put into the Bill and the less area for suffering and anxiety, the greater the support there will obviously be certainly from the Labour Party and certainly from the next Government.
The fact is that the Government are so rigid about this matter. Having narrowed this down to "dwelling-house in the same building" the Minister still says, no, he cannot accept this and we come back to the point about the notice. This is a matter of some importance. In Committee the Minister said that a notice would be drafted to make all clear. I am not saying at this stage that a notice would necessarily

923
cover the point that I have been making in this amendment. However, we have had a Committee stage and a report Stage and the Minister still comes forward and says that he is unable to produce a notice. I think that it is quite wrong for this House to accept something which, quite frankly, with great respect, is on spec—we are being asked to take a type of speculative action. I am sure that the noble Lord's intentions are very good. But if it will take all that time to draft something, the main ingredient of which has to be simplicity and clarity, then I do not hold out much hope for it. But even if that were so, questions would still arise.
I thought that my noble friend Lord Strabolgi, with his personal example, put the situation extremely well. I wonder whether the lady to whom he was referring would really have been in a position to do what was in her own best interests if she had in fact had a copy of the notice. I rather doubt it. We have seen this all across the board. One of the reasons why the take-up of rent allowances is so low is that people do not understand that they are entitled to them or they do not even read about them. That, frankly, is not the way to legislate. If we want to shut that loophole, if we want to make absolutely certain that people will not be moved from a protected tenancy, and I say again "in the same building", to one that is unprotected like a shorthold, then we must put those few words into the legislation. We have had several debates on the subject and I do not propose to prolong the matter any further. I intend to press the amendment to a Division.
Lord BELLWIN: My Lords, I should like to make a few more comments before the amendment is pressed. First, as regards the notice, it really is not fair to say that because the notice is not here one is having difficulty in producing it. That is not the case at all. It is quite normal practice. I am advised that in situations such as this notices of this kind are, in fact, prepared when the legislation is there and before it is enacted. I think that that is something of a red herring. But what is much more important is that, if the amendment is passed, it means that no one will be able to take a shorthold tenancy within the same building in which he lives, whether or not he wants to. He
924
will be excluded for all time from having that opportunity, if he so wishes. That must be absolutely clear; that is what the amendment says.
That is what we believe is wrong because, quickly to recap, we are saying that people must know, and will know, that they will not be allowed to have their existing tenancy converted—that will not be permitted. This amendment seeks to prevent a person ever being able to take a tenancy of a shorthold nature in the same building.
Lord SHINWELL: My Lords, it has been said more than once that this is a complicated Bill. I think that there will he general agreement on that. There are various courses that one can follow if one encounters a Bill of this character. One is to accept the party line, by which I mean that, if my noble friends on the Front Bench decide to press for a Division, one joins them in the appropriate Lobby. The other course is, because of one's ignorance of the subject—and I confess that I am in that unfortunate situation—to ask questions. I listened to the noble Minister when he replied to my noble friend. He made some remarks which appeared to me to be contradictory; at any rate, I confess that I failed to follow them. Let me state what they were.
First, he said that the primary purpose of the shorthold proposition is to make more accommodation available to people who need it. I follow that and, indeed, I agree with it; I think that my noble friend Lady David also averred. Then the Minister said that a person who is a tenant of a dwelling of some kind—it could be a house, a flat or a flat associated with a block of flats—could not obtain a shorthold agreement. I hope that the noble Lord will correct me if I have misunderstood what he said. He said that a tenant in that situation could not obtain a shorthold agreement. Then he said that anyone who managed to contrive a shorthold agreement would have less security than an existing tenant. I tried to follow that; I tried to make something of it.
Therefore, when is a tenant secure? Is a tenant secure as a regulated tenant who has been occupying premises under a regulated agreement? Is that tenant secure? If that tenant is approached

925
by the landlord who suggests that he might buy the premises, but the tenant declines the proposition and says that he wishes to continue residence there, and applies for a shorthold agreement which he cannot get, what is his position? According to the Minister, it appears that he has more security than if he has a shorthold agreement. What is the provision, in legislation, in understanding or in some form which enables that existing tenant to remain where he is and be secure? Why do I ask that? I ask it because I may find myself in that situation and I want to know where I am. When I say that I want to know where I am, I am sure that I am not unlike hundreds of thousands of tenants, or would-be tenants, in the United Kingdom. I do not blame the Minister for that. In parenthesis, I would say that no one could endeavour—indeed with some success—to present his argument with greater clarification than the noble Lord the Minister. I make no complaint on that ground. But when he said what I have just ventured to repeat, I want to know where one stands.
I should like to raise one final point, and I am addressing myself now to my Front Bench colleagues. I am asked to vote and, if I may say so—I hope that this is not hearsay—I want to know the reason. There is nothing particularly wrong with that. I could, of course, do what frequently happens; that is, disappear and find another engagement. That is not unfamiliar in this Assembly. But I am here, and it would appear to be improper to disappear when a vote is about to be taken. If the Minister cannot satisfy me as to what a person in my situation is likely to encounter, perhaps my noble friend Lady Birk can. Her knowledge of the subject is unchallengeable, and she has presented the case for the Opposition in a fashion that is worthy of the utmost admiration. I mean what I say; I am not in the habit of indulging in compliments. I have always found it a bit of a bore because one has frequently had to change one's mind on that subject. Either the Minister will satisfy me, and perhaps satisfy a great many others, or my noble friend will do so. But, for heaven's sake, let us know exactly where we are and where we are likely to be.
While I am on my feet, I shall put a further point which has a bearing on this,
926
although it is not implicit in the amendment or in what the amendment seeks to do. It concerns the question of rent. For example, if one cannot apply for a shorthold agreement—which I understand, if agreed, could continue for five years—and the landlord says that that person can stay where he is, that he is more secure where he is than if he had a shorthold agreement, but only on condition that he pays the rent that the landlord wants him to pay, that is where the trouble emerges. The landlord may receive many applications from would-be tenants, among them people who have come to the country recently, who are associated with the Diplomatic Corps or who are engaged in business, and whose rents are paid for them by an embassy or the Government that creates the embassy or by some business organisation. What is the position of that landlord?
People are inclinded to attack landlords, but I do not do that; I always introduce what might be described as motivation: why do people do this or that? It can be applied in many directions. So I do not criticise landlords. I can understand the landlord saying, "If I have to choose between someone who is prepared to pay me £100 a week rather than someone who is prepared to pay only what he originally paid, £75 a week, naturally I would prefer the £100 a week. "What is the answer to that? Is there an answer to that? Is there an answer from any quarter, either from the Government or my noble friends of the Opposition?
If there is no answer to that, then I am in for a rough time. I am going to be misinformed, misunderstood, frustrated, bamboozled, flabbergasted—indeed, I was going to say a metaphysical condition, but I do not think there is any metaphysics in it; it is more like physics than metaphysics—in a situation that I dislike. I ask the noble Minister, or my noble friends, to clarify the point for me.
6.1 p.m.
On Question, Whether the said amendment (No. 15) shall be agreed to?
Their Lordships divided: Contents, 83; Not-Contents, 111.

CONTENTS

Ardwick, L.

Goronwy-Roberts, L.

Milverton, L.

Aylestone, L.

Gosford, E.

Mishcon, L.

Bacon, B.

Greenwood of Rossendale, L.

Northfield, L.

Balogh, L.

Gregson, L,

Ogmore, L.

Banks, L.

Grey, E.

Oram, L.

Beaumont of Whitley, L.

Hale, L.

Peart, L.

Bernstein, L.

Hampton, L.

Raglan, L.

Beswick, L.

Hanworth, V.

Rhodes, L.

Birk, B.

Hatch of Lusby, L.

Ritchie-Calder, L.

Blease, L.

Hooson, L.

Rochester, L.

Blyton, L.

Houghton of Sowerby, L.

Ross of Marnock, L.

Boston of Faversham, L.

Howie of Troon, L.

Seear, B.

Bowden, L.

Hughes, L.

Shackleton, L.

Brockway, L.

Hylton, L.

Shinwell, L.

Brooks of Tremorfa, L.

Irving of Dartford, L.

Simon, V.

Bruce of Donington, L.

Jacques, L.

Stewart of Alvechurch, B.

Chitnis, L.

Janner, L.

Stewart of Fulham, L.

Collison, L.

Jeger, B.

Stone, L.

David, B.[Teller.]

Leatherland, L.

Strabolgi, L.

Davies of Penrhys, L.

Lee of Newton, L.

Taylor of Blackburn, L.

Diamond, L.

Leonard, L.

Taylor of Mansfield, L.

Donaldson of Kingsbridge, L.

Llewelyn-Davies of Hastoe, B.

Underhill, L.

Evans of Claughton, L.

Longford, E.

Wall, L.

Fisher of Rednal, B.

Mackie of Benshie, L.

Wallace of Coslany, L.

Gaitskell, B.

McNair, L.

Walston, L.

Galpern, L.

Maelor, L.

Wells-Pestell, L. [Teller.]

George-Brown, L.

Melchett, L.

White, B.

Gladwyn, L.

Milford, L.

NOT-CONTENTS

Abinger, L.

Fairfax of Cameron, L.

Mountevans, L.

Alexander of Tunis, E.

Faithfull, B.

Mowbray and Stourton, L.

Ampthill, L. Auckland, L.

Fortescue, E.

Moyne, L.

Auckland, L.

Gainford, L.

Murton of Lindisfarne, L.

Avon, E.

Glendevon, L.

Netherthorpe, L.

Baker, L.

Godber of Willington, L.

Norfolk, D.

Balerno, L.

Gormanston, V.

Northchurch, B.

Barnby, L.

Gowrie, E.

O'Brien of Lothbury, L.

Bellwin, L.

Gray, L.

Orkney, E.

Belstead, L.

Gridley, L.

Pender, L.

Bessborough, E.

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

Piercy, L.

Boyd of Merton, V.

Rawlinson of Ewell, L.

Brabazon of Tara, L.

Harmar-Nicholls, L.

Redmayne, L.

Brougham and Vaux, L.

Henley, L.

Rochdale, V.

Caithness, E.

Hertford, M.

St. Davids, V.

Chelwood, L.

Holderness, L.

Sandford, L.

Clancarty, E.

Home of the Hirsel, L.

Sandys, L. [Teller.]

Clifford of Chudleigh, L.

Hornsby-Smith, B.

Selkirk, E.

Clitheroe, L.

Hylton-Foster, B.

Shannon, E.

Colville of Culross, V.

Inglewood, L.

Sharples, B.

Cork and Orrery, E.

Killearn, L.

Skelmersdale, L.

Cottesloe, L.

Kilmany, L.

Stanley of Alderley, L.

Craigavon, V.

Kimberley, E.

Strathclyde, L.

Craigmyle, L.

Lauderdale, E.

Strathspey, L.

Cullen of Ashbourne, L.

Long, V.

Sudeley, L.

Daventry, V.

Lonsdale, E.

Swansea, L.

de Clifford, L.

Luke, L.

Swinfen, L.

De La Warr, E.

Lyell, L.

Todd, L.

Denham, L. [Teller.]

McAlpine of Moffat, L.

Trenchard, V.

Derwent, L.

McFadzean, L.

Tweedsmuir, L.

Digby, L.

Mackay of Clashfern, L.

Vaizey, L.

Drumalbyn, L.

Macleod of Borve, B.

Vaux of Harrowden, L.

Dulverton, L.

Mancroft, L.

Vickers, B.

Dundee, E.

Mansfield, E.

Vivian, L.

Eccles, V.

Margadale, L.

Ward of Witley, V.

Ellenborough, L.

Marley, L.

Westbury, L.

Elliot of Harwood, B.

Middleton, L.

Elton, L.

Mottistone, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.9 p.m.
Lord STRABOLGI Lord STRABOLGI moved Amendment No. 16:
Page 38, line 4, at end insert—
("( ) 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: My Lords, I beg to move Amendment No. 16. I put down this amendment for consideration on Report, but it was not reached until such a late hour—as has, I am afraid, usually and regrettably been the case with the private sector of this Bill that I did not move it. The Government gave an undertaking just before the last election that shorthold would be restricted to property that was empty on a given date. This was also implied in the Conservative manifesto. The Private Member's Bill of the honourable Member for Kensington was also to be applied to empty property.
There may be a case for shorthold on empty property if, as the Government claim, a great deal of property is being kept deliberately empty and withheld from the market. But the removal of security of tenure from property as soon as it becomes empty is a definite change of policy from the one that has been adhered to by Conservative and Labour Governments alike, which is that the security goes with the dwelling. The Government's shorthold policy will mean a rapid erosion of this principle. It will lead to a transfer within a few years of the private rented sector from security of tenure to insecurity of tenure, and all that that means for tenants of rented accommodation.
People often have to move for compelling reasons which the Government seem unwilling to accept, and the noble Lord, Lord Bellwin, did not persuade me when we dealt with this on an earlier part of the Bill. He said, "People have a choice. They can either stay in their present accommodation as regulated tenants or, it they wish, they can move somewhere else and have the option of a shorthold". But people often do net have that choice; they sometimes have to move. They might have served abroad and come back and have no option, and not everybody
930
works for large industrial corporations which are able to lend them money to buy houses and so on. So they have no option, or they might have to move to another part of the country.
The Prime Minister the other day stressed again how important it was to have mobility of labour in order to reduce unemployment. All this seems to be an inconsistent and contradictory policy. I believe people will not be willing to move if they must go on to shorthold with only limited security. This is not a party matter. Indeed, Conservative honourable Members for Inner London and other constituencies in the big cities are as concerned as everybody else; and of course they know full well of the problems from their experience in their constituencies. Even at this late stage of the Bill's progress the Government have a chance to think again.
The noble Lord, Lord Monson, asked what was my party's attitude to shorthold. So far as I am concerned, I think it could be a useful experiment if it were restricted to empty property, as the Government promised during the last election; it was one of the planks of their platform. They made it quite clear on the radio—I heard it myself—that shorthold would be restricted to empty property. They also made it clear in their manifesto. Now, however, the Bill tries to change the whole concept of security of tenure which hitherto has gone with the dwelling; whoever moves into it has the same security as the previous tenant, and of course that security and the regulation of tenancies was put on by a Conservative Government—I do not claim at all that it was put on by my party—and all credit to them, and rightly so. We should, therefore, go slowly and start this interesting experiment with property that is empty now—which the Government claim is remaining empty because people cannot let it—and go on from there. But to try to bring it in for all property once there is a move of tenancy is, I submit, far too sweeping. I beg to move.
6.12 p.m.
Lord BELLWIN: My Lords, I am not aware of the broadcast to which the noble Lord, Lord Strabolgi, referred, and I am not aware that the Conservative manifesto said we would restrict shortholds to empty

931
properties. If the noble Lord maintains that what he said is so he surprises me, because I must say that the amendment would restrict the scope of shorthold in a way that we would find totally unacceptable because, as he said, it would limit shorthold to dwellings that are vacant when the shorthold provisions come into force.
As I explained in Committee, we accept that vacant properties should be an important source of shortholds, but they should not be the only source. Landlords must be encouraged to go on letting rather than to sell when they obtain vacant possession. I hope that shorthold will do this and thus help to meet the demand for short-term rented accommodation that is so apparent in our cities. That is another aspect of the private rented sector which has removed so much of this type of accommodation—people have sold rather than re-let when accommodation has become vacant, because a regulated tenant has moved on or whatever. That has been one of the greatest sources of loss of this type of accommodation. If we were to do what the amendment suggests, we would not be helping that situation, which I consider to be a major factor in what is happening to the private rented sector, quite apart from the introduction of new lettings that would become available.
If the amendment were accepted, the scope of shorthold would be so limited that it could not hope to make a longterm contribution to meeting housing needs. I accept without question the noble Lord's sincerity when he says he would like the scheme to be given a chance to show what it can do with the restrictions he would like to impose on it. I suggest it would not have that chance with those restrictions. The need for a method of letting that does not involve lifetime security is widely recognised. If noble Lords opposite do not believe that landlords are deterred from letting by the security provisions of the Rent Acts, I would draw their attention to a report recently agreed by the housing committee of Brent Council—and nobody would suggest that was in any way a Conservative-inclined council which says:
"Many properties in the borough are not being used because owners do not want to become
932
involved in management problems as landlords. Rightly or wrongly, some fear the security of tenure provisions of the Rent Act".
They are therefore proposing to use a scheme under which owners of properties who let to Brent can be guaranteed vacant possession when they want on a certain basis, and that is an interesting thought in itself. The fact is that they recognise the reality of the matter, and I do not think any noble Lord would quarrel with that basic position.
I would draw attention again to the shorthold provisions in the Bill. I suggest that a shorthold scheme limited in the way proposed by the amendment would not provide the sort of encouragement to landlords that we feel is needed and which is recognised even by those who perhaps have other doubts. The problem exists, and we return to the question: what would be likely to make it workable and likely to make it succeed? We believe that if the amendment were carried and it could apply only to vacant property, it would never really get off the ground.
Lord MONSON: My Lords, I should like to support the Government on this amendment. May I point out to the noble Lord, Lord Strabolgi, that if this amendment were carried and an owner-occupier were living in his house at the time that this part of the Act came into force, if he were subsequently posted abroad on a three-year contract and if he wanted to let his house on a shorthold tenancy while he was abroad, he could not do so? So if the noble Lord, Lord Strabolgi, reflects upon that perhaps he would think again about pressing the amendment.
Lord STRABOLGI: My Lords, I have noted carefully what the noble Lord, Lord Bellwin, and the noble Lord, Lord Monson, have said. I think I probably know the Conservative manifesto better than the noble Lord himself. He doubted whether what I said was accurate. Perhaps I might read him the actual words. This is how the copywriter put it:
"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, free of the most discouraging conditions of the present law. The provision will not, of course"—

933
I like the "of course"—
"affect the position of existing tenants".
Lord BELLWIN: Will the noble Lord give way? I understand that is probably the only way I can properly speak on this. I am sure that is right, but it is not really the entire point. What that says is so, but it does not exclude our going further. It says, "Yes, for those premises we must give the opportunity for them to be converted into shorthold", but it does not say anywhere there that we should limit the shorthold experiment, if that is what it is, only to those. I would submit that is not so.
Lord STRABOLGI: My Lords, it depends how one interprets the wording, but I should not like to ask the Conservative Party to adhere to their manifesto any more than any other political party. I have noted what the noble Lord has said. I am disappointed that the Government are going so fast. I think it would be much better if they had brought in this experiment in a restricted way, but in view of the fact that they will not meet me I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.22 p.m.
Baroness BIRK Baroness BIRK moved Amendment No. 17:
Page 38, line 20, at end insert—
("(6) If at the end of the shorthold term the landlord intends to continue letting under the protected shorthold provisions of this Act he shall give notice of that intention in writing, to the tenant, not later than three months prior to the expiry date of the shorthold term (or any continuous period arising thereof), and shall, in that notice, offer a further term, of not less than one year, to the tenant. Upon receipt of such a notice the tenant shall reply, in writing, not later than two months prior to the expiry date of the shorthold term, clearly stating whether or not he wishes to take up an option to renew the tenancy for a further term. If the tenant thus indicates his intention to exercise an option for a further term the landlord shall offer a further term by serving a valid notice under section 51(1)(b) of this Act.").
The noble Baroness said: My Lords, this amendment is drafted somewhat differently from the one that I first moved on Committee. It is to give existing shorthold tenants a right of first refusal if, at the end of a shorthold period, their landlord decides to re-let the dwelling
934
for a further period. This again—and I know the Minister likes being reminded of this all the time—was another of the safeguards in one of the original Brandon Rhys Williams Bills, and it is another safeguard that we feel is absolutely essential if shorthold is to work and is to be fair all round. It is a basic safeguard for the tenant, and this was seen, and we see it, as an essential element.
Originally the Government did give pledges that they would go along similar lines. John Stanley, speaking in July 1979, said:
"We are being careful to ensure that the arrangements at the end of a shorthold term provide no incentive for a landlord to regain possession if he wishes to continue letting".
In other words, if the landlord wants merely to swap one tenant for another then he would not be entitled to vacant possession. He continued:
"In the right approach the landlord would be entitled to vacant possession at the end of it"—
that is, the shorthold term—
"unless he wanted to put in a different tenant".
So therefore the Government themselves, earlier on, were thinking along these lines. However, the Government have not honoured this pledge. The argument for omitting this safeguard that was advanced in another place by the Minister was that they would not want to force a landlord to continue letting to a tenant whom the landlord did not like or want.
Were it a question of a residential landlord letting to somebody in his own home, then I think one could argue that this certainly has some force. One has got to accept the question of the close relationship. But tenants of resident landlords do not enjoy full Rent Act protection and their landlords can already gain possession if they wish, with a tenant being able to get only a very limited stay of execution if the rent tribunal or court feel it reasonable to give such a stay of execution. Equally, if the tenant fails to abide by his tenancy conditions, does not pay the rent or causes a nuisance, the landlord, even if he does not live in the same building, even if he is not a resident landlord, can obtain possession. But what the Government appear to want, however, is another ground for possession which non-resident landlords who choose to let on shorthold may adopt; that is, to be able to say, "I do not like you" or

935
"I want to change; therefore you must leave".
Even worse, the absence of a right of first refusal is not only unfair to the tenant. We have heard such a lot about people having accommodation and feeling that they have a home; but it is no good their having a home unless they feel there is some security about it. The absence of a right of first refusal does leave the door open to unscrupulous landlords. It is agreed—the noble Lord, Lord Evans, has put it extremely well on several occasions—that there is a minority of landlords who do behave badly. I think he said this afternoon that our job in legislation is to protect the good and not the bad. So it does leave the door open for the unscrupulous landlord to demand illegal premiums or a higher rent as a condition of allowing the tenant to stay. He will not even have to give the tenant another period as a shorthold tenant but can leave him under threat of eviction if the tenant does not make the extra payments demanded, or if he tries to go to the rent office or tries to take any action in his own defence.
I hope that the Minister will not try once again to dismiss this by saying that premiums are illegal. As we pointed out repeatedly on Committee and during Report, where there is a shortage of accommodation the door is open to all sorts of undesirable practices; and I am afraid, whether they are illegal or not, they do take place, because the tenant is often put in a position of being a willing party and really conniving at the offence himself. There is absolutely no doubt that if the amendment is not accepted then there will be exploitation of some tenants and the charging of illegal premiums as the price for preventing eviction. But this amendment provides a safeguard against such practices. It also provides an incentive to the vast majority of tenants who do pay their rent regularly and cause no nuisance or offence, because it gives them the first option to remain as tenants and to keep their homes if the landlord intends to re-let.
This in no way ties the hands of landlords who do not wish to go on letting. They can still obtain possession when the shorthold comes to an end. Nor does it prevent the landlord from evicting the
936
bad tenant who fails to pay his rent. It does seem to me to be an eminently sensible amendment. It also seems to me to be a compassionate one, because it is going to save so many tenants the terrible heartache of not knowing what is going to happen to them when their shorthold lease comes to an end. I have covered all the points which would apply only where the landlord was a resident landlord, and it seems to me that in the Government's own interests, in making the shorthold policy a success, they should accept this amendment. I beg to move.
6.30 p.m.
Lord EVANS of CLAUGHTON: My Lords, may I speak very briefly on this amendment? I repeat that I want short-holds to be a successful experiment. The problem in the private rented sector is in trying to strike a balance between the advantages to the landlord and the advantages to the tenant. From my experience I suspect that under the old rent Acts the balance in regard to statutory tenancies, and tenancies during the inter-war years, was very much in favour of the tenant. We have heard of, and read, many stories about the difficulties of landlords not only in regard to making a living from the rents that they receive but also in losing a considerable amount of money. Obviously in that respect the balance was too much on the tenant's side.
I believe that the danger is that if we do not accept the amendment, in the short-hold field the balance will be too much on the landlord's side. I should not want a shorthold tenant to have the first refusal of a second term if he or she had been a bad tenant within the terms of the tenancy agreement or the normally accepted rules about obeying tenants' covenants, paying rent, and so on. On the other hand, I should not want the kind of things to which the noble Baroness referred to happen to a normally behaved, straightforward tenant, who would know that he was in a position in which he had absolutely no safeguard whatsoever, no matter how well behaved he was, or how reasonably and rationally he conducted himself as a tenant. If a tenant had a landlord who took a dislike to him, or who thought that he might receive a higher rent from someone else, such a tenant would have absolutely no protection in regard to

937
what during the period of the shorthold tenancy had become his home. This is a modest, humane, amendment which the Government might accept so as to encourage those of us who want the concept of shorthold to succeed.
Lord MONSON: My Lords, I am not terribly keen on this amendment for the following reason. In practice most landlords are only too happy to retain a good tenant, or even an average tenant, because the problems involved in switching tenancies are considerable. The trouble is that there are many ways in which a tenant can be a bad tenant without specifically breaking the terms of his tenancy agreement. Therein lies the difficulty. However, if acceptance of the amendment would lead to bipartisan agreement on shortholds, then I believe that, despite my misgivings, it would be worth accepting.
Lord BELLWIN: I do not think that there is much likelihood of that, my Lords, but may I say straightaway that as I understand it, the intention of the amendment is to give the sitting short-hold tenant the right of first refusal to a further term if the landlord intends to go on letting beyond the end of the short-hold term. This is a proposal which the Government examined very carefully when framing their shorthold proposals, but it is much less simple than it looks. We believe that it would be extremely difficult to operate in practice. Furthermore, we do not think that as a matter of policy it is on balance desirable, as I shall try to explain.
The first point is the question of practicability. The amendment requires the landlord to serve a written notice on the tenant, offering him a further term, at least three months before the end of the shorthold. It requires the tenant to take up that offer at least two months before the end of the term. That may be just workable so far as it goes. However, the amendment says nothing about what is to happen if the landlord does not serve this notice. What is the tenant to do then? What will happen if the tenant leaves, and then finds that the landlord has let to someone else when he had a statutory right to first refusal? The amendment does not resolve the problem of which tenant should take precedence in those circumstances; nor does it specify
938
the terms on which the landlord has to offer the further term. What happens if the landlord introduces new conditions? How is the tenant to know whether a new offer is a valid one? What opportunity does the tenant have to challenge the landlord's offer? Those are some of the difficulties that we see with an offer of first refusal that have convinced us that it would be impracticable.
We also believe that such a provision would be undesirable because there would need to be a penalty against landlords who did not offer their tenants a further term. The amendment does not make any attempt to spell out what the penalty would be, but the provision would have no force at all without some penalty for landlords who failed to comply with it. The penalty suggested by the Opposition in another place was that a landlord who is not prepared to go on letting must be required to keep the property empty for a specified period. I can describe that only as involving an awful waste of housing resources. If a landlord wants to go on letting, but does not want to go on letting to the same tenant, does it make sense that he should have to keep the property empty for six months or more? That does not help either the landlord or the tenant. There is a further point. If there is a penalty provision that the property must be kept empty, who is to enforce it? That would need a special check each time a shorthold tenancy changed hands.
Those are the reasons why we are against a statutory right to first refusal, but we believe that tenants who stay on beyond the original shorthold term should have a reasonable measure of security. That is why the Bill was amended by the Government in another place, so that tenants who stay on beyond the end of the shorthold term, with the landlord's agreement or acquiescence, should have a full year's security under shorthold. That, I believe, is both workable and fair.
The noble Baroness quoted what the Minister had said in a speech, in which he said that there would be no incentive to landlords to get rid of tenants at the end of the shorthold. But that is not the same as forcing the landlord to keep on the tenant against the landlord's will. The noble Lord, Lord Evans of Claughton, asked what happens if a landlord dislikes

939
a particular tenant? The whole basic principle of shorthold is that it should be an encouragement to landlords to bring new lettings on to the market. What kind of incentive would it be to landlords to do that if they knew that when the previously agreed term of tenancy was at an end, subject to the agreed procedures as to notice, they could not have what the very concept of shorthold sets out to provide; namely, the opportunity to end the tenancy? If that is not available, then shorthold has no meaning; there is no purpose at all in shorthold.
I see what is being attempted, and I sympathise with the motivation behind it. Nevertheless, if the amendment were passed, shorthold could not succeed, because no one would then undertake to bring new lettings on to the market, knowing that at the end of an agreed contracted period he could not, for whatever reason he may decide upon, say that the tenancy was at its end, which is his prerogative. The whole purpose is to make new accommodation—I do not mean that in the sense of new buildings, but rather in the sense of new lettings—available for private renting, where at present it does not exist.
Baroness BIRK: My Lords, I must say that the Minister's arguments are in the category of being very "iffy": if this, or if not; the amendment does not specify this, that, or the other. That was on the practical side. I would say only that if the Government's heart and head were in the right place in regard to this matter, it could all be worked out. The Minister has put up a great many obstacles, saying that this and that are not included in the amendment, and that this and that cannot be done. Anything can be done if one wants to do it. If the Government really wanted to accept the principle here, then with all the talent at their disposal—I see much of it assembled in the officials' box—they could bring forward an amendment to meet all the points and the obstacles that they have raised.
On the question of the proposal being undesirable, I cannot believe that the Minister has not considered the point that when a provision is passed into law and becomes practice, people will accept it. If somebody lets on a shorthold and knows that at the end of the period,
940
if they are going to relet, they will have to relet to the same tenant, unless the tenant has put himself into the position of being an undesirable tenant, then they will accept this as the practice and will do so. They will continue to do this because they are not resident landlords and, as I explained before, the tenants have paid their rent and have not become nuisances.
The main reason why landlords are reluctant to let—and this is the Government's own submission, through the Ministers—is, they say, because they cannot regain vacant possession so that they can sell. But under our proposal the right of a landlord to terminate the tenancy at the end of the shorthold tenure and then obtain vacant possession and sell is not affected. That is really what it is all about. But what I still do not understand is this—unless there is some extraordinary pressure on the Government, which I do not like the thought or the sound of, my Lords. They are bringing this in, and in dealing with shortholds they are making it quite clear that they are from a minimum of one year to a maximum of five years, so there is a period of time for the landlord. But if the landlord does not want vacant possession, why do they not then come along—I am asking this as a rhetorical question, because we have had the debate before—and say, "Yes, there is a great deal of sense in this; there are ways in which we can make it work; at least we can try it out, because we will be giving security to the tenant, and when the landlord wants his house or flat back with vacant possession to sell it he will still be able to have it"?
This is one of the worst points about shorthold, because it gives maximum insecurity to the tenant and really, I think, creates a great deal of trouble and anguish (I have used that word many times in relation to this Bill, and I use it again) besides laying it open to illegal premiums and all sorts of practices. This is the sort of thing that encourages the holiday lettings and licences, and the other loopholes we have been trying to stop. However, we have had this debate before—I think this is probably the third or fourth time—so I will not say any more on it except that I am pressing it to a Division.
6.42 p.m.
On Question, Whether the said amendment (No. 17) shall be agreed to?
Their Lordships divided: Contents, 68; Not-Contents, 102.

CONTENTS

Amherst, E.

Galpern, L.

Mishcon, L.

Ardwick, L.

Goronwy-Roberts, L.

Oram, L.

Aylestone, L.

Gosford, E.

Peart, L.

Bacon, B.

Greenwood of Rossendale, L.

Ponsonby of Shulbrede, L. [Teller.]

Balogh, L.

Gregson, L.

Banks, L.

Hale, L.

Raglan, L.

Beaumont of Whitley, L.

Hampton, L.

Rhodes, L.

Bernstein, L.

Hanworth, V.

Ritchie-Calder, L.

Beswick, L.

Hatch of Lusby, L.

Rochester, L.

Birk, B.

Houghton of Sowerby, L.

Ross of Marnock, L.

Blease, L.

Howie of Troon, L.

Seear, B.

Blyton, L.

Hughes, L.

Segal, L.

Boston of Faversham, L.

Irving of Dartford, L.

Simon, V.

Bowden, L.

Jacques, L.

Stewart of Alvechurch, B.

Brockway, L.

Janner, L.

Stone, L.

Brooks of Tremorfa, L.

Jeger, B.

Strabolgi, L.

Bruce of Donington, L.

Kilmarnock, L.

Taylor of Blackburn, L.

Collison, L

Lee of Newton, L.

Taylor of Mansfield, L.

David, B.

Leonard, L.

Underhill, L.

Davies of Penrhys, L.

Llewelyn-Davies of Hastoe, B.

Wallace of Coslany, L. [Teller.]

Diamond, L.

Lloyd of Kilgerran, L.

Evans of Claughton, L.

McNair, L.

Wells-Pestell, L.

Fisher of Rednal, B.

Melchett, L.

Gaitskell, B.

Milford, L.

NOT-CONTENTS

Abinger, L.

Gainford, L.

Mottistone, L.

Airey of Abingdon, B.

Gibson-Watt, L.

Mountevans, L.

Alexander of Tunis, E.

Godber of Willington, L.

Mowbray and Stourton, L. [Teller.]

Auckland, L.

Gormanston, V.

Avon, E.

Gowrie, E.

Moyne, L.

Balerno, L.

Gray, L.

Netherthorpe, L.

Barnby, L.

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

Norfolk, D.

Bellwin, L.

Northchurch, B.

Belstead, JL.

Harmar-Nicholls, L.

O'Brien of Lothbury, L.

Boardman, L.

Harvington, L.

Pender, L.

Boyd of Merton, V.

Henley, L.

Rawlinson of Ewell, L.

Brabazon of Tara, L.

Hertford, M.

Redmayne, L.

Brougham and Vaux, L.

Holderness, L.

Rochdale, V.

Caithness, E.

Home of the Hirsel, L.

Sandford, L.

Chelwood, L.

Hornsby-Smith, B.

Sandys, L. [Teller.]

Clifford of Chudleigh, L.

Hylton, L.

Selkirk, E.

Clitheroe, L.

Hylton-Foster, B.

Sharples, B.

Colwyn, L.

Killearn, L.

Skelmersdale, L.

Cork and Orrery, E.

Kilmany, L.

Soames, L. (L. President.)

Craigavon, V.

Kimberley, E.

Stanley of Alderley, L.

Craigmyle, L.

Lauderdale, E.

Strathclyde, L.

Crathorne, L.

Long, V.

Strathcona and Mount Royal, L.

Cullen of Ashbourne, L.

Lonsdale, E.

Strathspey, L.

de Clifford, L.

Lyell, L.

Sudeley, L.

Denham, L.

McAlpine of Moffat, L.

Swansea, L.

Digby, L.

McFadzean, L.

Trenchard, V.

Drumalbyn, L.

Mackay of Clashfern, L.

Tweedsmuir, L.

Dulverton, L.

Macleod of Borve, B.

Vaizey, L.

Dundee, E.

Mancroft, L.

Vaux of Harrowden, L.

Eccles, V.

Mansfield, E.

Vickers, B.

Elliot of Harwood, B.

Margadale, L.

Vivian, L.

Elton, L.

Marley, L.

Ward of Witley, V.

Fairfax of Cameron, L.

Marshall of Leeds, L.

Westbury, L.

Faithfull, B.

Middleton, L.

Fortescue, E.

Milverton, L.

Resolved in the negative, and amendment disagreed to accordingly.
Clause 55 [Orders for possession]:
6.51 p.m.
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 18:
Page 40, line 8, at end insert—
(3) For the purposes of the Housing (Homeless Persons) Act 1977 no person shall be 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: My Lords, I moved this amendment in the same words at Committee stage of the Bill. I put it down to move on Report stage but, as the noble Lord, Lord Strabolgi, said, we reached these amendments so late that it seemed better not to move it at the time. This amendment is even more important now since the Government's heart has not been softened by the pleas made on previous amendments by the noble Baroness, Lady Birk. Therefore, the extent of shortholds, and therefore of shorthold tenants, is very much larger than it would have been had those amendments been accepted.
As I have said, I should like to see short-holds having a fair trial. This is not a technical amendment because it is one that could be, can be, and almost certainly would be, extremely important to a large number of shorthold tenants, since as things stand at the moment, if a tenant takes a shorthold tenancy he is deemed to know that that shorthold tenancy is going to come to an end and he is going to have to leave the dwelling in which he finds himself. Therefore, it is arguable that he is thereby rendering himself deliberately homeless and thereby takes himself outside the protection of the Homeless Persons Act.
It might, therefore, happen that a perfectly straightforward tenant who had taken a shorthold tenancy, has not misbehaved himself, has not tried to take advantage of the system to get a council house, has behaved perfectly correctly just as the Government would want him to behave, has been a model shorthold tenant in fact, has been exactly the kind of person that the Government are claiming they seek to help, might find at the end of his term that he leaves the tenancy because he has to, there is no further chance for
944
him to renew the tenancy, goes to the local authority, asks for a council house under the Homeless Persons Act and they say: "We are sorry; you knew when your tenancy came to an end it would not he renewed. Therefore you have made yourself deliberately homeless; therefore you cannot use the provisions of the Housing (Homeless Persons) Act".
I know the noble Lord, Lord Bellwin, thinks this is far-fetched and a figment of the rather far-stretching imagination of lawyers, but, as Lord Strabolgi said in the debate on the Committee stage, there has been a decision in the Court of Appeal recently—the noble Lord, Lord Bellwin, mentioned it too—where a person who had an out-of-season letting was found to have made himself deliberately homeless and not therefore able to benefit from the Housing (Homeless Persons) Act.
I am not impressed by the arguments in reply at Committee stage, of the noble Lord, Lord Bellwin, that my amendment would cast doubt on the status of all tenants of all kinds who are at the moment outside the protection of the Rent Act. We are dealing with a Housing Bill, and a section of the Housing Bill which deals with shortholds, and I have therefore to deal with the situation that arises under a shorthold tenancy. It introduces—I do not think there can be any argument about this at least—a completely novel type of very insecure tenure, and I think the Government and your Lordships should be particularly concerned about the future of people who become tenants under this system without perhaps fully realising the possible result that might overtake them. If the noble Lord can give me and your Lordships an assurance that this type of tenant would not be outside the protection of the Housing (Homeless Persons) Act, then I would be quite happy to withdraw this amendment, but I am certainly not happy with the half-hearted and somewhat reluctant semi-assurances that I got at Committee stage.
I can say this as my final word. I am talking about the person who deliberately takes a shorthold tenancy in order that he can then slip through a loophole and force the local council to give him a tenancy, which was argued against me at Committee stage. I am talking about the

945
kind of person that the proposed legislation seeks to give an opportunity of having a shorthold tenancy. They are entitled, since the Government have not been willing to accept any of the reasoned amendments put forward, to limit the extent of shorthold. In view of the broad concept of shorthold tenancy, the Government should give these assurances.
Lord HYLTON: My Lords, I hope the Government will take this amendment very seriously and not by any manner or means brush it aside. When Mr. Ross brought in the Act of 1977, shorthold was not envisaged; it is something that has come up since then. Also, during the course of a shorthold tenancy which could be as long as five years, a person's circumstances may change completely; children may be horn; all sorts of things may happen. I do think this is an important and very serious amendment.
Baroness BIRK: My Lords, I should like to support the noble Lord, Lord Evans of Claughton, in his amendment. I was, as I mentioned before, Minister in the Department when the Housing (Homeless Persons) Bill went through. I remember making the point during the passage of the Bill that the number of intentionally homeless was not expected to be large. However, as was not to be unexpected, some local authorities have interpreted this provision in a much wider manner than was envisaged—indeed, there has been a recent court case on it which I will not go into now because we have discussed it before—and classify as "intentionally homeless" people who took short-term holiday lettings and were subsequently evicted and made homeless. I agree with the noble Lord, Lord Evans, that it must be made clear that people who do take shorthold lettings cannot subsequently be judged intentionally homeless and refused permanent housing by a vocal authority solely on the grounds that they have taken a shorthold letting. I should have thought that the Government would welcome this amendment, because it protects people who wish to take a short-hold tenancy but may be rather worried and deterred from doing so because they fear that at the end of their tenancy they will be refused housing by the local authority.
946
I think the noble Lord, Lord Evans, covered this matter so extremely well and clearly that there is nothing more I can add, except that I support him.
Lord BELLWIN: My Lords, I hope that it will not be felt because I deal with this perhaps more shortly than I have with other amendments on shortholds that we take it any less seriously. Indeed, I entirely take the point that my noble friend Lord Hylton made as to that. As to the observation by the noble Lord, Lord Evans, that he found my responses in Committee on this to be, I think he said, very halfhearted, and that I did not give him the assurance he wanted, I am not usually half-hearted about that which I say. In view of the other comments which have been made about what I have said over the course of the Bill, I would have thought that was one of the few suggestions that might have been made. However, I take it in the spirit in which I am sure it was meant.
Of course I have considered very carefully what was said in the discussion on this amendment during Committee stage. Like the noble Lord, Lord Evans, I looked very carefully at that which might well come back again; and he did intimate then that he might do just that which he has now done. I must tell noble Lords that I remain of the view that no special provisions for shortholds are needed under the Housing (Homeless Persons) Act. The main reason for this is that shorthold is not the only type of letting where tenants do not have lifetime security. The Homeless Persons Act makes no special provisions for these kinds of lettings, and as I said in Committee their status under the Act would be called into question if special provisions were to be made for shorthold.
We have considered the judgment in the Court of Appeal case, Dyson v. Kerrier District Council, reported in The Times on 1st July. As I said in Committee, this judgment depended very much on the circumstances of the case. It would be quite wrong to infer from that case that anyone who took a winter let or a shorthold and was required to give up possession at the end of the term would thereby be judged to have made himself intentionally homeless. What the case shows is that what happened before a short-term

947
letting was taken up may also be relevant to the question of intentional homelessness.
I should like to refer back to what my noble friend Lord Sandford said in Committee. He said that the view of the Association of District Councils was that no amendment should be made on this point so that local authorities can continue to exercise their discretion as to what has occurred, whether it is a case of abuse or a case of hardship. This is also the Government's view. Furthermore, your Lordships will also know that there is a review of the 1977 Act in progress at the present time. In saying that, I do not want to give the impression that, as regards the proposals in this amendment, we necessarily consider that any change is desirable. But the fact is that this Act is being looked at very carefully indeed, together with all its implications. While doing that, we will certainly be considering whether shorthold would have the kind of adverse effects that the noble Lord fears. Finally, may I assure your Lordships that the point about local authority policies toward people who become homeless on leaving winter lets—a point raised by the noble Lord, Lord Strabolgi) —is also being considered actively in the review of the Homeless Persons Act. With those remarks and the assurance I have given about the review, the noble Lord perhaps may feel able to withdraw his amendment.
Lord EVANS of CLAUGHTON: My Lords, I am not at all happy about this position. With great respect, it is all very well for the noble Lord to say that this does not apply to other lettings outside the Rent Acts, the unprotected lettings. I concede that it does not. But I happen to be dealing in this amendment with shorthold tenancies and not with the other types of tenancies. Had I been here at the time they were dealt with, no doubt I would have been moving similar amendments—possibly with greater success and support from the Government Benches than I am receiving now.
The second point is that if the Government accept this amendment, or if we force it to a Division and show that there is strong feeling here, it may encourage the Government, the legislators and those advising them to give that kind
948
of protection to lettings outside the Rent Acts, because it seems to me to be a very big loophole for two reasons. One, that you have got now a much broader spectrum of possible shorthold tenants because the Government have not accepted the amendment and, secondly, that there is presumably going to be a great encouragement among landlords to use this form of shorthold tenancies. I would have thought that it would have been helpful to the Government and to landlords who wanted to use this provision that their tenants would not be deterred from applying for shorthold tenancies because of their uncertainty about their position at the end of their shorthold tenancy. If they could have an assurance from (if you like) the mouths of the Government or from this Bill that they would not be declared deliberately homeless, it might influence a much larger number of people to apply to become short-hold tenants. I think that the Government's refusal to accept this is shortsighted.
The third and final reason is that from my experience in local government I am very unhappy about the way many local authorities interpret the deliberate homeless provisions of the Homeless Persons Act. I thought that, in a sense, what the noble Lord, Lord Sandford, said in Committee was rather chilling. Some local authorities obviously do not want an amendment like this, because many local authorities dislike intensely the Homeless Persons Act. They find it a nuisance and an inconvenience from a purely bureaucratic and administrative point of view. Therefore, I think we are only aiding and abetting those authorities that take an inhumane interpretation of the Act and we are not encouraging, by the means of giving this protecton, those people taking up shorthold tenancies—which the Government think is going to be a big way of revising the private-rented market. Therefore, I can only seek to divide the House to find out whether I can get support for what I think is a very reasonable amendment.
7.5 p.m.
On Question, Whether the said amendment (No. 18) shall be agreed to?
Their Lordships divided: Contents, 59; Not-Contents, 94.

CONTENTS

Amherst, E.

Gosford, E.

Ponsonby of Shulbrede, L.

Ardwick, L.

Gregson, L.

Raglan, L.

Baker, L.

Hale, L.

Rhodes, L.

Balogh, L.

Hampton, L.[Teller.]

Ritchie-Calder, L.

Banks, L.

Hanworth, V.

Rochester, L.

Beaumont of Whitley, L.

Hatch of Lusby, L.

Ross of Marnock, L.

Bernstein, L.

Houghton of Sowerby, L.

Seear, B.

Birk, B.

Hylton, L.

Segal, L.

Boston of Faversham, L.

Irving of Dartford, L.

Simon, V.

Bowden, L.

Jacques, L.

Stewart of Alvechurch, B.

Brockway, L.

Janner, L.

Stewart of Fulham, L.

Brooks of Tremorfa, L.

Jeger, B.

Stone, L.

Bruce of Donington, L.

Leonard, L.

Strabolgi, L.

Chitnis, L.

Llewelyn-Davies of Hastoe, B.

Taylor of Blackburn, L.

Collison, L.

Lloyd of Kilgerran, L.

Taylor of Mansfield, L.

David, B.

McNair, L.

Underhill, L.

de Clifford, L.

Maelor, L.

Wallace of Coslany, L. [Teller.]

Evans of Claughton, L.

Melchett, L.

Fisher of Rednal, B.

Milverton, L.

Wells-Pestell, L.

Galpern, L.

Mishcon, L.

Wigoder, L.

NOT-CONTENTS

Abinger, L.

Fortescue, E.

Mowbray and Stourton, L.

Airey of Abingdon, B.

Gainford, L.

Moyne, L.

Alexander of Tunis, E.

Gibson-Watt, L.

Murton of Lindisfarne, L.

Auckland, L.

Godber of Willington, L.

Mountevans, L.

Avon, E.

Gormanston, V.

Norfolk, D.

Balerno, L.

Gray, L.

Northchurch, B.

Barnby, L.

Greenwood of Rossendale, L.

O'Brien of Lothbury, L.

Bellwin, L.

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

Orr-Ewing, L.

Belstead, L.

Pender, L.

Boardman, L.

Harmar-Nicholls, L.

Rawlinson of Ewell, L.

Boyd of Merton, V.

Harvington, L.

Rochdale, V.

Brabazon of Tara, L.

Henley, L.

Sandford, L.

Broadbridge, L.

Hertford, M.

Sandys, L.[Teller.]

Brougham and Vaux, L.

Holderness, L.

Selkirk, E.

Caithness, E.

Home of the Hirsel, L.

Sharples, B.

Chelwood, L.

Hornsby-Smith, B.

Skelmersdale, L.

Clifford of Chudleigh, L.

Hylton-Foster, B.

Spens, L.

Clitheroe, L.

Kilmany, L.

Stanley of Alderley, L.

Colwyn, L.

Kimberley, E.

Strathclyde, L.

Cork and Orrery, E.

Lauderdale, E.

Strathcona and Mount Royal, L.

Craigavon, V.

Long, V.

Strathspey, L.

Craigmyle, L.

Lyell, L.

Sudeley, L.

Cullen of Ashbourne, L.

McAlpine of Moffat, L.

Swansea, L.

Denham, L.[Teller.]

McFadzean, L.

Trenchard, V.

Digby, L.

Mackay of Clashfern, L.

Vaizey, L.

Drumalbyn, L.

Macleod of Borve, B.

Vaux of Harrowden, L.

Dulverton, L.

Mansfield, E.

Vickers, B.

Dundee, E.

Margadale, L.

Vivian, L.

Elliot of Harwood, B.

Marley, L.

Ward of Witley, V.

Elton, L.

Middleton, L.

Westbury, L.

Fairfax of Cameron, L.

Morris, L.

Faithfull, B.

Mottistone, L.

Resolved in the negative, and amendment disagreed to accordingly.
7.15 p.m.
Lord LYELL: My Lords, I beg to move that further consideration on Third Reading of this Bill be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

COMPANIES (DIRECTORS' REPORT) (EMPLOYMENT OF DISABLED PERSONS) REGULATIONS 1980
Lord LYELL Lord LYELL rose to move, That the draft regulations laid before the House on 17th July be approved.
The noble Lord said: My Lords, during the passage in another place of the last Companies Bill the Government gave

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an undertaking that they would use the powers in what is now Section 81 of the Companies Act 1980 to make regulations requiring disclosure by companies in their directors' reports of information concerning their policy in respect of the employment of disabled persons. The Government also said that they would use the period between Report and bringing forward the regulations to consult representative organisations concerned about the content of the regulations. Consultations have been held with, among others, the Manpower Services Commission, the National Advisory Council for the Employment of Disabled People, the Confederation of British Industry, the Consultative Committee of Accountancy Bodies and the Law Society. The Government are grateful for the advice received from all these bodies, which the Government have endeavoured to take into account in framing these regulations.
Companies will in future be required to disclose in their annual reports their policies towards employing disabled persons, covering such matters as recruitment, training and career development. Their policies in this respect will be open to public scrutiny and we believe that this will provide valuable support to other statutory provisions concerning the disabled, and contribute to the improvement of the employment prospects of disabled people.
The regulations require disclosure not only of the policies that apply when the company considers applications for employment from disabled persons, but also of what policies operate for the training, career development and promotion of disabled employees including those who become disabled while in the employment of the company. Thus all persons about to be employed or already employed by the company are catered for.
Before dealing with the individual regulations, I should explain that Section 454 of the Companies Act 1948, as amended by Section 81 of the Companies Act 1980, empowers the Secretary of State for Trade, by regulations made by statutory instrument, to alter or add to the requirements of the 1948 Act for disclosure of information in the directors' report which is required to be attached to the annual balance sheet of a company, laid
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I before the company in general meeting and delivered to the registrar of companies where it is placed on the public file. Thus the information will relate to the financial year covered by that director's report.
Turning to the regulations, Regulation I is conventional. It states the title of the regulations and states that they shall come into operation on 1st September 1980. That is to say that the regulations apply to directors' reports prepared for financial years which begin on or after 1st September 1980.
Regulation 2 defines the terms used in the regulations. The Companies Act 1948 is commonly referred to as "the Act" in that it is the principal Act. The second paragraph of Regulation 2 defines a directors' report as that report which is required to be attached to the annual balance sheet of a company. The third paragraph provides that the use of the word "employment" in the regulations refers to employment to work in the United Kingdom; this is in line with Section 18(6) of the Companies Act 1967 which has the effect of not requiring companies to take into account employees working wholly or mainly abroad in calculating the average number of employees of a company and their aggregate remuneration. I hope that the House will agree that it is sensible for these regulations to apply to policies in the United Kingdom and not in respect of other countries where the statutory requirements and practice may be very different.
The fourth paragraph of Regulation 2 defines "disabled person". For the purpose of these regulations, the definition of "disabled person" will be the same as that used in Section 1 of the Disabled Persons (Employment) Act 1944. This is wider than that used in Section 6 of that Act which deals with disabled persons who are registered as disabled. Thus directors will be required to report on their policies for all disabled persons, whether they are registered as such or not. This is a point to which I understand that organisations consulted attach particular importance, and we can understand that. In addition to restating the operative date of the regulations, Regulation 3 states the size of a company that the regulations apply to. The Government have considered this matter very carefully indeed

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and have concluded that the regulations should apply to companies who employ more than 250 people. There are a number of reasons why we have come to this conclusion. First, the statutory duty on employers is to employ at least 3 per cent. registered disabled persons. Hence, any lower level than 250 would require many companies to make statutory policy statements in relation to a very small number of employees indeed and would result in a disproportionate burden on small companies. It is in any event particularly in companies employing more than 250 employees that a clear and distinct policy on the employment of disabled persons is most likely to be evolved. The Government recognise fully the desirability of small companies doing as much as possible for disabled persons and I hope their policies, whether published or not, will similarly reflect good practice in this matter.
Your Lordships will note that there are no provisions for the application of the regulations to groups. This is intentional; the regulations apply to all individual companies, whether in a group or not, where they meet the relevant size criteria. Companies with subsidiaries are not required to report on the group as a whole. In many cases there will not be a total group policy towards disabled persons, indeed such an overall policy could well be unpractical.
Secondly, from the technical point of view, subsidiaries often have differing financial years to their fellow subsidiaries and the present company; it could thus be very difficult to draw up an overall statement for a given financial year. Regulations made under the Companies Acts can apply only to the corporate sector. The Department of Employment will, however, be drawing the regulations to the attention of public sector employers, and I would expect the accounts of the nationalised industries to reflect on this point, as they do on others, the reporting requirements imposed on companies.
The rest of Regulation 3 deals with the manner in which the number of persons employed by the company is to be derived. This is the same method as that used in Section 18(3) of the Companies Act 1967, and will therefore be familiar to companies in the United Kingdom. Regulation 4 comes to the heart of the
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matter. It deals with the details of the statement to be included in the directors' report. Regulation 4(a) requires a description of the company's policy for giving full and fair consideration to applications for employment made by disabled persons with regard to their particular aptitudes and abilities. Regulation 4(b) requires a statement of policies towards employees who have become disabled during the period in which they were working for the company, and Regulation 4(c) requires disclosure of the policy relating to the training career, development and promotion of disabled persons. I do not think I need to elaborate on these; I hope your Lordships will agree they are fairly straightforward and I understand that they reflect the views of those consulted.
The Government are confident that the provisions of these regulations will help to ensure that companies examine fully their responsibilities towards all their disabled employees, both existing and prospective, and will have a beneficial effect on the employment of disabled persons. I beg to move.
Moved, That the draft regulations laid before the House on 17th July, be approved.—(Lord Lyell.)
7.27 p.m.
Lord WELLS-PESTELL: My Lords, I am grateful to the noble Lord for introducing this draft statutory instrument, and may I say it was rather a delight to have an instrument of this kind which is so clearly set out in its terms that anyone unfamiliar with it would have no difficulty in understanding its purpose. For that, I am particularly grateful. I feel I should like to thank the Minister also for fulfilling an obligation and a promise made some time ago in producing this particular order. I notice that the 38th Report of the Joint Committee on Statutory Instruments has nothing to comment on, and presumably this means that they are satisfied with the order.
There are just two matters I should like to raise with the noble Lord, and if he is not in a position to deal with them tonight I shall be quite happy if he gives me the answers verbally at some time because I am loath, having been in a department myself, to put further burdens on departments in writing letters. Therefore I

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should be quite content if I could be told verbally.
I notice that this requirement will be distributed and made known to firms employing 250 or more employees. As a matter of interest, how is this to be brought to the notice of such firms, of which there must be tens of thousands? Does it mean that distribution goes to every firm? If so, I am wondering whether there could be a note of some kind enclosed, drawing attention to the fact that if firms with less than 250 employees could employ one or more disabled people, that would help a group in our community who need the employment that is able to be offered.
Among other matters, I notice that the list of organisations consulted before the instrument was drawn up was a pretty comprehensive one, and I know that one of the organisations represents about 40 organisations; but I was a little intrigued to see that the accountants and the Law Society were consulted. I am wondering why, and if I could know the reason at some later date I should be grateful. We have nothing but praise for the order and we certainly give it our unqualified support.
7.30 p.m.
Viscount SIMON: My Lords, I feel that from all parts of the House there will be a welcome for the intention behind these regulations, and I thank the noble Lord, Lord Lyell, for presenting them so clearly. But I am bound to say that, while I am very strongly in favour of what the Government are trying to do, I am not entirely happy about the way in which the regulations have been drafted. I am sure that we are not going to seek to annul them, but perhaps it will be in order for me to outline briefly some of my worries, and the noble Lord may have comments to make.
First, I am a little surprised at the decision that the way to present this information is in the directors' report. I was looking into what was said when this matter was discussed in another place, and it is interesting to see that the Minister, at column 1238 of Hansard for 26th February, said that,
"no useful purpose would be served by introducing legislation requiring the inclusion of detailed
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employment and other non-financial information in company accounts".
I do not object to the Government changing their mind. But I was wondering what made them change their minds in this respect, because I should have thought it was not a very useful place to put this information. Once these regulations are established there will be a tendency for people to ask for all kinds of other information to be put into the directors' report until, in the end, the main purpose of the report—which is to report on the financial position of the company—will be completely submerged in other information.
If I may now turn to the proposals themselves, the introductory paragraph of Regulation 4 refers to a,
"statement describing such policy as the company has applied during the financial year"
in respect of these matters. I tried to put myself in the position of the director of a fairly small company, which falls within the ambit of these regulations, and wondered what I would say, if I had a free hand in doing what I wanted to do, after consultation with the employees; and I am sorry that there is no reference in the regulations to the desirability and, indeed, the necessity of these arrangements being discussed with the employees. I would say that my policy in relation to these matters is to do everything I can for anybody who is in this unfortunate position, and not much more than that, because what can be done for A, B or C will differ entirely, according to indvidual circumstances. It would be quite dangerous to put any detailed policy in a statement of this kind.
Let us suppose that a man has been working in a company for 15 or 20 years and has the misfortune to lose an arm in a railway accident, I am sure that we would do everything possible to try to find him a job where he could continue to work with that disability. At the same time, there might be a young man or a young woman who had been just a year with the company and, having driven rather rashly on holiday, came back with a broken arm. Would I have the same obligation to that person as I would to the first case? That is the kind of example that makes me feel it would be almost impossible to set out a policy, except in the most general terms, and I wonder whether that would perform any function at all.

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Turning to paragraph (a) of Regulation 4, there will be people applying for jobs who have various disabilities, but my information is that many companies find it difficult to recruit their 3 per cent. of disabled people. I should not have thought there would be many people who would not be seeking to find which job in the organisation could be done by any person applying. Again, I should have thought the policy would be that we do our best. I have already mentioned what would he the appropriate arrangements, which seem to me to depend very much on the circumstances of the case.
My only other point is about the training of people who have been engaged as disabled persons. One meets them in many organisations when one does business with them. They have usually been found a job where their disability can be overcome, and I do not know what is in view here in talking about training or development. If I had engaged a man with only one arm, I would find him a job as a lift attendant. I cannot see what development or training he could have. If it is training to enable him to do a different job, then, apparently, the employer has the responsibility of training him, only to lose him later because, when he can do the different job, that job may not be available in the organisation for which he is working. If he was well looked after in the job he was doing, it would be raising his hopes unduly to suggest that training would lead to promotion or development.
Those are the points that have worried me a little. There is only one other matter which I should like to mention. The noble Lord, Lord Lyell, referred to the nationalised industries and hoped that they would adopt similar procedures. I am wondering whether Government departments could also be brought into that category. I think that this point was raised by my noble friend Lord Banks in an amendment on the Health Services Bill. I hope that Government departments, as well as nationalised industries, will apply their minds to this problem of what can be done to improve the chances of disabled people.
7.38 p.m.
Lord LYELL: My Lords, I should first like to thank both the noble Lord,
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Lord Wells-Pestell, and the noble Viscount, Lord Simon, for their generous words and for their general welcome of these regulations. To deal with some of the points that were raised by the noble Lord, Lord Wells-Pestell, I am flattered and grateful that he found my remarks clear. That was more due to the drafting of the regulations and to the speech that was prepared for me; if the noble Lord found my remarks clear, that was far more due to the department than to my own talents, and I shall pass on the noble Lord's thanks to the department. I am also glad that the noble Lord is with us in fulfilling a promise that was made by the Government to deal with the employment of disabled persons.
The noble Lord gave me some prior notice of both of his questions. As to why the disclosure of information is limited to 250 or more persons in a company or a department, we believe that there are good reasons for this. I understand that there is an infinitesimal number of concerns employing more than 250 persons which are not bodies corporate. This means that in the vast majority of cases we are dealing with bodies corporate which will have to produce a balance sheet and, indeed, a directors' report, in which their policies regarding the employment of disabled persons will be clearly stated.
If we took the level to be the same as that requiring disclosure to trade unions under the present Employment Protection Act—that is 100—or if we took the level at which employers are required to take a DP quota—that is 20—then we think that we should find that companies would have to disclose their policies for one, two or three employees. We think that this is impracticable. It would be a very severe burden on small companies who might well not have the relevant personnel directors. Most of it might be run by one man or perhaps by two people, and it might be a little impracticable for them. However, we envisage that there will be widespread publicity through the press, the Department of Employment and the Department of Trade, and also through other legal and accountancy publications and journals that this will be a statutory requirement and is to be added to the directors' report of a company. We think that the mechanism for informing company secretaries who will be drawing

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up the directors' reports is adequate. However, I undertake that we shall look into any avenues which have not been explored if we think that the current channels of communication are in any way lacking. We believe, though, that they are satisfactory. Nevertheless, we will check.
The second point raised by the noble Lord, Lord Wells-Pestell, related to the two bodies which were involved in the consultations—the Consultative Council for Accountancy Bodies and the Law Society. In the case of the first body, I understand that the measure with which we are dealing is incoprorated in the Companies Act. As it concerns extensively auditors, auditors' reports, directors and balance sheets, it was thought fit that the accountancy bodies should give their opinion on how these matters of policy should be drafted. The Law Society are also concerned, because one has to get the language right in order to give the relevant information.
In this connection I come back to the point which is always raised by the noble Viscount, Lord Simon; namely, that of drafting. The Law Society were consulted with this point in mind and we hope that they have done a reasonable job. The noble Viscount, Lord Simon, who traditionally does his homework on all measures, expressed mild dissatisfaction with some aspects of the drafting. I think I heard him correctly and I see that he is nodding his assent. The noble Viscount raised one point about the directors' report.
We agree entirely with the general principles which the noble Viscount put forward. We believe that this policy statement which we intend to incorporate in the directors' report will not, and need not, clutter up any accounts. There has been general agreement on all sides of this House and in another place in favour of a policy statement of this type being incorporated where we believe that it should be incorporated; namely, in the directors' report. The annual accounts and the directors' report, which are published every year by companies, are a convenient place for the annual statement of this policy.
Powers exist under the Companies Act and the various other Acts which I have mentioned in my remarks concerning
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the regulations to require information of this type—and specifically the regulations which I have raised tonight—to be included in the directors' report. We think that this is the relevant and the best vehicle for all the bodies which were consulted in framing these regulations to become aware of the policies for the employment of disabled persons throughout the corporate sector.
Secondly, the noble Viscount raised the difficulty about finding the statutory number of disabled persons who must be employed by a company. I think the noble Viscount framed the likely remarks of directors as, "We are doing our best", but I believe that the directors would frame their remarks a trifle more narrowly than that. However, may I stress that the proposed regulations are to ensure that directors give some account of their policy regarding disabled persons. As I pointed out in my remarks, there are registered disabled persons and also disabled persons who, for various reasons, are not registered under the auspices of the 1944 Act. They too, we believe, merit special consideration. That is why the regulation is to be a little wider than the very narrow definition of 3 per cent.
I think that the noble Viscount was worried about discussing policy with employees. We think that this is desirable but the noble Viscount is worried that policy might not be discussed with employees. However, the Secretary of State has no power to require companies to discuss this or any other matter with their employees. Companies employing more than 250 persons will be fairly substantial concerns. If the regulations are incorporated into the Companies Act, we believe that there will be a de minimis level of employee discussion and participation as to employing disabled persons.
One of the methods for companies to be able to employ disabled persons in various sectors of their concerns would be through existing employees bringing to the notice of their employee representatives the fact, which could be passed on to the personnel department, that they knew people who were disabled and who could do a good job. In general, companies would welcome such information, were it to be given. This is part of the employee participation which goes on extra-legally—at the moment it is not statutorily required

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—and I believe that that point could be taken care of. I see that the noble Viscount has a point to make.
Viscount SIMON: My Lords, I intervene merely because something which the noble Lord said made me think that I must have expressed myself very badly. He seemed to think that I was worried about there being discussions with employees. I was worried about there not being discussions with employees.
Lord LYELL: My Lords, the lack of clarity was on my side, and I apologise. It was certainly in my mind that the noble Viscount was worried about the lack of discussion. I hope that I said that we do not think there is anything that we can enact by statute to enforce discussion between employees and employers on this or any other special subject. We hope that good companies of a respectable size, which we are dealing with tonight, will listen to and discuss any opportunities which should arise with their employees. I am sure that if companies have to publish —as they will have to do—what they have done and their possible programme for the employment of disabled persons, they will take this into account and will discuss it, possibly informally, with their employees. With that, I beg to move.
On Question, Motion agreed to.
Lord LYELL: My Lords, I beg to move that this House do now adjourn during pleasure until eight o'clock.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.49 to 8 p.m.]

HOUSING BILL
Further considered on Third Reading.
Clause 60 [Applications for new registered rents and phasing of increases]:
Lord JANNER Lord JANNER moved Amendment No. 19:
Page 42, line 33, at end insert—
"( ) Except in cases where an increase has not been registered in the preceding three years the Rent Office nor the Rent Tribunal may register a rent which increases the rent previously
962
registered by a sum the percentage of which exceeds the amount by which the Taxes and Prices Index has increased over the period since the rent was last registered.".
The noble Lord said: My Lords, I may be wrong, but I think that we are now on one of the most important sections of the Bill. I do not know whether the noble Lord opposite yet realises—and I am sure that he must have had quite a number of approaches on this matter—how terribly serious the position is for whose who are in flats and those who have been occupying homes for the last 30, 40 and in some cases 50 years. I speak from very long experience. Unless we move rapidly, we shall be allowing to be created—I would not say that we are creating—homelessness for hundreds of thousands of people in this country; because we are dealing with a situation which has placed the tenants, particularly in flats, in a position where they cannot possibly stay, in consequence of the fact that there is a speculators' market today, created by very ingenious people, who have cornered the property market and who are consequently placing, in particular elderly people, in that position. A lot has been said about the elderly people here. But, my Lords, I can go back to the time, before our particular party had created a different situation, when the very poor were able to exist by charity; the very rich were able to exist and they had their health looked after by their own means, but the poor middle man was in a terrible state because his resources were such as would not enable him to obtain the absolute necessities of life.
We are now going back to that position and that does not mean merely the former middle man; it means a very large section of the community who would probably be in that particular class, together with their fellow-men. I know that the noble Lord has consideration for the human side of this; it is not just a trivial matter. I am sure that the right reverend Prelate will understand what I am driving at when I say that I have seen what happens to people who are so-called middle class, and today I have the greatest fear and I think I am justified in that fear when it comes to a question of housing these people. What is actually happening?
We had a Rent Act which was supposed to be a protective Act—to protect people. We increased the amount of the rateable

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values. It does not protect them in the slightest today, because of what actually happens regarding speculators—and I am not speaking about the old type landlords and the many landlords who are (shall I say?) decent people who think about their tenants and who want to make a modest and a proper living from existing tenancies. But there are no such tenancies today in the speculators' field; they are not out for that at all. What they do is this. They go to rent tribunals who assess—and in many cases assess greater amounts than the rent officers had fixed, amounts which make it impossible for the tenants to remain in their flats or in their homes. This is not a trivial matter. It is a great pity that there are not more noble Lords present, because I am almost certain that this issue affects a very fair percentage of the Members of your Lordships' House.
What I am trying to do, with my colleagues, is to prevent an upsurge in this kind of speculation. The only way to do it (apart, of course, from protection of the tenants, which is extremely important) is by keeping rents within certain limits; and I consider it is our duty to do that. We did it with the leasehold system. We allowed leaseholders to buy their places—and mark you, my Lords, we are not helping the middle-class man to buy his place today. Not at all. We are not helping anybody who is just a leaseholder to buy his home in the private sector. I agree that in the public sector we are doing something to help—not that this Housing Bill will do anything to improve that help, but here we really have a problem which has to be solved. It has not only a human aspect to it but also a moral aspect.
Many of these speculators are still old landlords who have some kind of feeling for the tenants and who are obviously entitled to a fair rent, but these people create what I consider to be a scarcity value. No places can be rented because it does not pay the landlords. What they want to do is to purchase a place, raise the rents to such an extent that the tenants cannot remain, and then sell at enormous profits. How are we going to stop that? I do not say I am sufficiently full of (what shall I say?) prophecy to be able to do it entirely with any particular amendment. That is why today, subject to your Lordships' approval, I have put down two
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alternatives. If your Lordships will permit me, I will speak about both, as they both relate to precisely the same situation, and are put down with a view to giving the Government an opportunity to say they will accept one or the other.
I just cannot understand for one moment why we do not stop this racket; because it is a racket; it is an unwholesome one. Many speculators come from abroad and have offices abroad; they do not pay tax, they fail entirely to make any contribution to the country in which they are speculating. I am going to make an appeal to the noble Lord. I do not think you can deny what I have said. I think you will agree with me—I hope you will—in saying that this is a problem which is created at the present time, a problem of a vicious nature, and one which is putting into the pockets of those who are speculating in property, and who wish to make fortunes out of it, vast sums of money, and at the same time it is reducing accommodation that is essential.
We talk about scarcity value. I cannot for the life of me understand the interpretation, including that of the courts, that was put upon this matter. If people speculate in property to such an extent that there is no property left to rent at a reasonable rent, that to me creates a scarcity value. I may be wrong, but I cannot see what the answer to that is. Scarcity value is created by these people.
All this takes me back many years to a time when we used to talk about the tenants and their rights. The tenant, let us understand, creates the value of the place and of the district. If he has been living there for any length of time, he has created its value; he has paid the rates. He has made the district a valuable district. He is the person who is entitled to be considered, as he was in the case of the Leasehold Reform Act; after a long struggle we managed to get it through. I was myself, one of these people. Thank the Lord I was able to find some other place—which cost a very nice packet, and in order to do it one has to save for very many years. You do not have to go any distance at all to a tenants' association, on whose behalf I also speak, to know what misery the present situation is causing, what distress it is causing. Consequently, I appeal to the noble Lord to give his assent to one or other of these amendments. If he has

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some other method, by all means use that, but it is a little late in the day as far as this Bill is concerned.
I know he will probably say this is a matter for the Rent Act and all the rest of it. This is essentially a matter for the housing of people. The noble Lord said I was emotive. Of course, I am emotive; I cannot be otherwise than emotive on a subject of this description. You have to have a pretty hard heart not to be moved by the conditions that you find are facing people who come and talk to you. I am in a profession where they do so. I have acquired a very considerable amount of understanding of the man in the street, because when you are a Member of Parliament in another place you get it straight from the horse's mouth. All I can say is that if I do not succeed on this proposal, I shall feel myself to be a very poor advocate unable to put over a first-class cause. I have much pleasure in moving the first of these amendments. If the Government are not satisfied with the first, I will withdraw it and move the second.
8.16 p.m.
Lord BELLWIN: My Lords, I propose to speak to both of these amendments, No. 19 and No. 21, because what I have to say really covers them both. I do not for a moment question the noble Lord being emotive on the subject. Why not, if one feels deeply about it? I think it is right that one should. If I sometimes speak the same way, I hope the noble Lord would feel similarly so far as I was concerned. There would be something strange about a debate in your Lordships' House on housing if the noble Lord, Lord Janner, were not to raise the subject which he is raising now. I understand the very great feeling he has about it. Indeed, he tabled very similar amendments to Clauses 60 and 61.
My Lords, both the amendments seek to set an index-linked ceiling on rent increases. It might be helpful to the noble Lord, and to the House, if I comment on both together, because, as I say, the arguments are similar in each case. I shall not criticise the drafting of the two amendments. The noble Lord probably realises that they are technically defective. Instead, I shall comment on the general principle of placing an index-linked ceiling on rent increases. Increases in fair rents over previous years have not on average
966
been particularly high. The last year for which we have full data is 1979. The increases made then in cases where the previous rent was registered three to four years ealier averaged 47 per cent. in England and Wales as a whole and 41 per cent. in Greater London. This compared with an increase of 47 per cent. in prices, 45 per cent. in earnings and 57 per cent. in the price of secondhand homes bought with a mortgage. So in the last three to four years on average fair rents registered have just about reflected general inflation over that period. If, however, we look instead at the last 10 years, fair rents have gone up 111 per cent. compared with 206 per cent. increase in prices, 258 per cent. increase in earnings and 297 per cent. increase in secondhand homes. So registered fair rents have lagged well behind inflation over the decade. Since 1975 the phasing of increases has meant an even greater lag in rents actually payable, to the extent that a landlord's rent return on vacant possession capital value may be running at no more than 2 to 3 per cent.
My Lords, I cannot accept that there is a case based on recent increases for a statutory ceiling. Indeed, some would argue the case the other way round as did the noble Lord, Lord Monson, on Report—and say that fair rent in-creases should be no less than increases in other indicators of inflation. There is no doubt that fair rents would be a lot higher today if they had followed precisely increases in prices or earnings. I accept that there are some cases of increases significantly above the averages that I have quoted, and others of course that are significantly less. But these are more likely to occur on first registrations where the rent was not previously fixed according to the fair rent criteria. Clearly index-linking would be quite wrong in these cases, because a fair rent as assessed by the rent officer would never be changed. The wording of the noble Lord's second amendment would suggest that he accepts that point. As I understand it, he would apply the ceiling only to re-registrations where there has been no change in circumstances. Nevertheless, the amendments would make a charade of the whole fair rent system. I have visions of landlords lobbying for higher old-age pensions so that they can put up rents, and the Christmas pension bonus being—
Lord JANNER: My Lords, I have given the noble Lord an alternative not because I did not feel that one was better than the other, but in the hope that he might consider that if he is not prepared to accept the one which I would have preferred, then perhaps he would consider the other. Perhaps he will realise that in one of them I have put in something as regards one of the very important points he made on the previous occasion.
Lord BELLWIN: My Lords, I must say that I clearly think that it is wrong to link fair rents to some artificial, extraneous index. It would really undermine the whole of the Rent Act basis taking account of the particular circumstances of the tenancy on which they are assessed.
Where there is hardship for tenants we have the rent allowance system—and supplementary benefit—to deal with it. The allowances available are generous. We have increased from 1st July the maximum payable amounts from £13 to £25 in London—£10 to £23 elsewhere—to ensure that tenants in the highest cost areas can benefit from the scheme. Many of those who would not normally consider themselves eligible can receive help with their rent. To take one or two examples: where a married couple in Westminster have an income of £5,000 a year and rent of £20 a week, over one-third of the rent would be met by rent allowance. If their income was £10,000 a year and their rent £50 a week they would receive over £15 in allowance. Even with an income of over £14,500 a year a couple paying £50 a week would receive some help. The problem is not that the allowance is not generous enough, but that some people fail to take up the help that is available to them as of right.
The noble Lord talked, as he has done on many previous occasions, on the subject of scarcity being a factor in assessing rents. I always say that I do not want to get involved in that topic, not because I do not appreciate the arguments—I once spent a great deal of time looking into them—but because I firmly believe that, if scarcity were to be included, the consequences would be such that the Rent Acts as they exist today would cease to be effective in any way at all. There would be the most horrendous situations. I am sure that the noble Lord does not appreciate the significance of it. Govern-
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ments of all complexions have always said that, as regards the basis of assessment of rent, it was an absolute fundamental that scarcity should not be included.
The noble Lord said that rent tribunals fix higher rents than rent officers. I think that today that is so, but it was not always the case in the early days of the Rent Act 1965. But inevitably as they tend to deal with re-registrations, the rent tribunals or assessment committees take a broader view than an individual rent officer can take of his own situation in his own local area, and they are often better able to equate the rents in that area with those in others. After all, their job is to try to fix what it says—a fair rent. If the system can lead to some of the types of problems and situations to which the noble Lord referred—yes, I do not deny that there are situations which are less than desirable. But to contemplate ending the basis of the Rent Acts in this way is, I am sure, unthinkable to all parties because the alternatives that were there before and will be there again just would not do for the situations that one would then find.
So, I must say yet again to the noble Lord that I fear that I cannot help with his amendments. I know that it is disappointing for him and I know how sincerely he puts forward his point of view, but there are the other points which I have made. It just is not a starter to index-link rent increases and ceilings on rent levels. Therefore, I wonder whether—albeit I know with disappointment—the noble Lord will feel able yet again to withdraw his amendment.
Lord JANNER: My Lords, I could not hear everything that the noble Lord said so the noble Lord must forgive me if I do not deal with every point which he raised. First, as regards the payment towards the rent, I point out that it does not come anywhere near replacing the tremendous burdens placed on tenants. It is part of the rent and it is part of the increase, but it is nothing like the amount that they still have to find. Moreover, they may be wrong, but my experience has been that a great many people regard that type of thing as charity. If the noble Lord looks at the number of people who actually apply for these benefits he will find that it is comparatively few when one considers the number of people

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affected. There is that human factor—perhaps it is a failing; I do not know. But the independence of the individual is something in which he personally believes.
However, that does not cover the point that this speculation is going on, and everybody knows about it. People are making fortunes out of it at the expense of housing accommodation. The result is that we cannot get places to rent and "scarcity value" as a term is sheer nonsense having regard to the manner in which it is dealt with today. This is all created by the speculators themselves. We do not stop it. We make no attempt to stop it.
In those circumstances I think, with all due respect—and I know that that expression does not always convey satisfaction to the people to whom it is being said—I must ask the House to vote on this particular matter. It is much too serious from the point of view of the community.
On Question, amendment negatived.
8.28 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 20:
Page 42, leave out line 42 and insert ("½(P+S+R)").
The noble Lord said: My Lords, I beg to move Amendment No. 20. This amendment restates in simpler form the formula for the calculation of phased increases in fair rents contained in Clause 60(3). It achieves precisely the same effect as the more complex version currently in Clause 60, but in a manner which is more easily understood. I am deeply grateful to the noble Lord, Lord Stewart of Fulham, for—I shall not say suggesting the amendment to me—perhaps in the most effective way possible simply handing me a little piece of paper with an algebraical calculation and no further comment or suggestion. It spoke volumes for itself. If ever one wants a way to influence Government to put something down in a different way, this must be a rather classical or perhaps mathematically classical way of doing it. I am pleased to put it before your Lordships' House as a measure which, while it has no substantive effect, will make the Bill more easily comprehensible. I repeat my grati-
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tude to the noble Lord, Lord Stewart, and I beg to move.
On Question, amendment agreed to.
Clause 61 [Effect of registration of rent etc.]:
[Amendment No. 21 not moved]:
Clause 73 [Dwellings forming part of Crown Estate or belonging to Duchies]:
8.30 p.m.
Baroness FISHER of REDNAL Baroness FISHER of REDNAL moved Amendment No. 22:
Page 56, line 41, at end insert—
"( ) In the Duchy of Cornwall Management Act 1863 the words in section 21 "not exceeding Thirty-one Years in possession, but not in reversion, so that upon every such Demise, where the Subject matter thereof shall consist of Land or Property other than Mines or Minerals, there shall be reserved the full and fair annual Rent of the Property to be comprised therein, to be incident to the immediate Reversion of or in the Premises to be thereby demised without taking any Fine or Consideration in the Nature of a Fine for the granting thereof;" are omitted.".
The noble Baroness said: My Lords, with your Lordships' permission, my noble friend, Lord Northfield, when he gave me this piece of paper, was giving evidence to a Committee of your Lordships' House. I do not know whether he still is. He has asked me to give his apologies to the House and to move his amendment formally so that it will give the Minister an opportunity to tell us whether he has had any further thoughts on how the Duchy of Cornwall tenants can in some way become eligible for long leases and how the limit of 31 years can be changed. I understand from my noble friend that the Duchy has in draft a Bill to bring up-to-date the Management Act 1863. I am concerned when the Bill will be published and available in your Lordships' House. Can the Minister say whether he will use his best endeavours to ensure that the point in the amendment is included in the Bill? I beg to move.
Lord BELLWIN: My Lords, there are just two points that I should like to make. The first is that the way in which the Duchy of Cornwall manages its estate within its current statutory framework must, of course, be a matter for it, and

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not for the Government. The noble Baroness who has just spoken on behalf of the noble Lord, Lord Northfield, raised the same points as he did.
When the noble Lord, Lord Northfield, referred on Report to the agreement in principle by the Crown Estate Commissioners, he did so, as I understood it, hoping that they would grant assignable but non-enfranchisable long leases to sitting tenants. He seemed to suggest that this was some kind of expression of Government policy and that we should now do likewise in respect of the Duchy of Cornwall. I must stress that decisions on the granting of leases were made by the Commissioners and they alone, as a matter of estate management policy following consultation with their tenants, come to such decisions.
The noble Lord pointed out that the Duchy of Cornwall would apparently be prepared to act similarly were it not for the statutory bar on their granting leases of more than 31 years. This still leaves the possibility of leases of 21 to 30 years which are technically "long" for various statutory purposes, but perhaps the noble Lord has in mind leases rather longer than this. There might be a case for removing this statutory bar—I do not wish to comment on that. But there is no sense in which the case flows from the Housing Bill or from any commitment entered into by the Government. If there is a case, it must relate to general Duchy of Cornwall estate management considerations.
This brings me to my second point. It is that the Housing Bill is not the place to make a statutory change of this kind, and that Third Reading in your Lordships' House is most certainly not the time. The text of the noble Lord's amendment I think illustrates the difficulties. As the noble Baroness said, it relates to the Duchy of Cornwall Management Act 1863, which covers land and property generally; that, of course, goes much wider than housing. In that sense it is outside the general subject matter of this Bill. I just cannot tell what consequential problems would rise if we took a slice out of it in the way the noble Lord proposes.
The amendment has, however, drawn attention to the constraints on the granting
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of long leases by the Duchy, and what the noble Baroness has said will have been carefully noted. She might know that the Duchy is reviewing its powers—as she mentioned—on a general basis. It is in this kind of review, rather than on Third Reading of the Housing Bill, that the point in question can best be looked at, and I am sure that it will then be given the fullest consideration.
I cannot give the specific information for which the noble Baroness has asked; she asked whether it would be a Bill and when will it be published. I am not sure. I expect that that would depend upon the results of the deliberations of the Duchy and, obviously, I cannot foretell what they will be. So I fear that I cannot be more helpful on this particular matter and it seems to me that this will have to await the outcome of the Duchy's own deliberations on the matter.
Baroness FISHER of REDNAL: My Lords, I should like to thank the Minister for that very helpful reply. I feel sure that when my noble friend Lord Northfield reads the official record no doubt his great interest in it will be furthered in the best way that he thinks is possible. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 123 [Consent of Housing Corporation to disposals of land by housing associations and housing trusts]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 23:
Page 92, line 28, after ("for") insert ("any of paragraphs 2 to 7 of").
The noble Lord said: My Lords, this is a very minor amendment which will mean that the Housing Corporation's consent will be required before a registered housing association can grant a long lease of a dwelling in Scotland. The Bill already requires the corporation's consent to be obtained for such disposals in England and Wales and the Government have decided that it would be sensible to put these disposals on the same footing whether they take place North or South of the border. I beg to move.
On Question, amendment agreed to.
Clause 133 [Interpretation of Part VIII]:
8.37 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 24:
Page 97, line 45, after ("Act") insert ("or' as the case may be, section 208(1) of the Housing (Scotland) Act 1966").
The noble Lord said: My Lords, this amendment inserts the Scottish definition of a housing association into this clause which is the interpretation clause of Part VIII. The definition is almost identical to that for England and Wales which already appears in the clause, but as most of Part VIII applies to Scotland, it is clearly necessary to include the Scottish definition. I beg to move.
On Question, amendment agreed to.
Clause 137 [Avoidance of certain unauthorised disposals]:
Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 25:
Page 99, line 40, after ("has") insert ("otherwise than in pursuance of a binding contract made before that date").
The noble Lord said: My Lords, the reason I move this amendment at Third Reading is that it is an amendment to Clause 137, which is a new clause introduced by the Government. The amendment, to insert the words on the Marshalled List, seeks to protect people who have entered by way of a binding contract into a purchase with a local authority or a housing association not only before this Bill becomes law—which it has not yet—but before the purchasers concerned could possibly have known that a clause in these terms would be inserted in the Bill.
The noble Lord the Minister has criticised me and others for trying to introduce retrospection into legislation and with the greatest possible respect—which is shorthand for saying 'with no respect at all'—here we are with the Government doing precisely the same thing. It is being done in a small way in the sense that it affects only a small number of people, but it is a matter of quite important principle, because the Government are seeking to interfere with vested rights. Once a person has signed a contract for the purchase or the sale of
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property, that is a binding contract so far as the law of this country is concerned.
I would ask your Lordships to note the words in the new Clause 137 that such an agreement:
"… be deemed always to have been void".
In fact, in this clause the Government are seeking to say that a binding agreement or a binding sale that had been entered into by people who thought they were acting at arms' length, is now found to be a transaction which has been declared retrospectively, by this proposed legislation, as being void. It seems to me that, unless there are very cogent reasons, the Government should be very concerned. The subsection says:
"at any time after 18th July 1980 a local authority or a housing association has disposed of a house".
I say in addition to that, or has entered into a binding contract to sell a house. Those noble Lords who are involved in any way with the conveyancing law in this country will know that a binding contract for sale is virtually the same as a sale. It has the same purpose and brings about the same results, and it is a vested right in terms of the law.
The noble Lord might suggest that the word "disposal" on line 4 of page 100 covers this. I am prepared to concede, and I think the Law Society are, that it is possible that an agreement for a lease might be covered by "disposal"; but it does not seem to the Law Society—and who am I as a solicitor to argue with my professional body?—nor to me, that it would cover a contract for the sale of land.
Therefore, it seems that the Government have left, I hope unintentionally, a loophole in the law. I gather that the Law Society has written to the noble Lord the Minister about this. The only reason why the matter is being raised at this late stage is that it involves a new clause and there was no other way of raising it. I hope that the noble Lord can reassure me and those advising me by saying that the word "disposal" does in fact refer to a contract, or will accept my amendment. I beg to move.
8.42 p.m.
Lord BELLWIN: My Lords, I can see the point of this amendment, which I know has the support of the Law Society, but I

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am sure that the fears expressed are unfounded. The local authorities have given no indication that they share these fears. I should emphasise at once that the central purpose of Clause 137 is to deal with disposals which take place without the necessary consent of the Secretary of State. At present Section 128(2) of the Local Government Act 1972 makes a special provision, the effect of which is to give good title to those who take disposals of this kind from local authorities.
As a measure to deal with potential evasion of the right to buy, we have decided to remove that special protection to relate to council houses and flats disposed of after 18th July 1980, with one important exception. Similar provision is made in relation to housing associations. Turning to the exception, it should be emphasised that an individual purchaser, or two or more individual purchasers, of a single house or flat from a local authority, or housing association, would not be affected by this new clause, which provides for the avoidance of certain unauthorised disposals.
This exception is made because an authority or association might sell, or lease, a house or flat and do so without consent unwittingly, and such a disposal would not subvert the right to buy. So far as disposals by housing associations are concerned, there is at present no protection equivalent to that provided by Section 128(2) of the Local Government Act 1972. The exception made in the clause is an important one. We are not aware of disposals on a large scale which have taken place without necessary ministerial consent being obtained, and we hope that this is not so.
The noble Lord, Lord Evans, said that he is concerned about cases which do not require consent at present, but which would do so if this Bill was already in force. I make two comments on that. First, this is a very limited category of disposals, as I think the noble Lord himself said. The great majority of disposals, and all those which could be described as sales, already require consent. I cannot envisage circumstances in which a local authority would enter into a binding contract to make the sort of disposal which would not need consent
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now but would do so if this Bill was an Act.
If I am wrong, my second observation is relevant. Where consent may he needed it can always be sought. It is open to anyone who fears the effect which this clause may have upon him to approach the department to seek the consent of my right honourable friend to the disposal which he contemplates.
I do not think I can say much more. This is a technical and not too simple a matter, certainly for lay people. The noble Lord, Lord Evans, smiles, and I am glad to see that. I could not make the noble Baroness, Lady Birk, smile earlier in the day but at least I have succeeded with the noble Lord. I am sure he does so not without the concern he has expressed, but I fear that I cannot go further than I have on this. I hope he understands why, and that he may feel able in those circumstances to withdraw the amendment.
Lord EVANS of CLAUGHTON: My Lords, I certainly would not seek to divide the House on this, as the noble Lord the Minister said, technical point. But it can be quite important (a) because of its retrospective nature, and (b) because it might pick up a transaction which it was not the intention of the Government to pick up. I can understand—although I do not necessarily support—the Government's wish to stop-up an escape route. It seems to me and the Law Society bad enough to have a provision avoiding transactions from a date which will be some time before the Act becomes law. It would seem to me to have been on the face of it unacceptable in principle that it should affect transactions where a binding vesting contract has been entered into before the amendment was even tabled.
What reassures me is the second leg of the noble Lord's remarks, in that presumably on the few occasions where this has happened and an application was made to the Secretary of State, he would presumably look upon this kind of thing favourably in that people had committed themselves to a legally binding contract at a time before they could possibly have known that this amendment was being put down; and therefore presumably the Minister would look at the record of the speech of the noble Lord the Minister

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and say, "Well, by Jove, this is a typical example of where we have to let the thing go through". On the strength of that, and before the Minister can say that he did not mean that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.48 p.m.
Lord BARNBY Lord BARNBY moved Amendment No. 26:
After Clause 146, insert the following new clause:
"Amendment of s. 4 of 1977 Act
( .Class A in section 4(2) of the 1977 Act shall be deleted and the following substituted therefor:
"The appropriate day in relation to the dwelling-house fell on or after 1st April 1973, but before the date of passing of the Housing Act 1980, and the dwelling-house on the appropriate day has or had a rateable value exceeding £1,500 or the appropriate day falls or fell on or after the date of passing of the Housing Act 1980 and the dwelling-house on the appropriate day has or had a rateable value exceeding £3,500."").
The noble Lord said: My Lords, in moving this amendment I should first like to thank the noble Lord the Minister for his courteous and considerate hearing before discussion of this Bill, and of course without any commitment. The clause concerns what now appears as an oversight in previous legislation resulting in what appears to be called an injustice, because it is presently in conflict with the overall policy of security of tenure. Its aim is concerned against discrimination of a two-fold character, both against the occupier of a dwelling and also the owner of a building.
The plea for the amendment is generated by inflation which, as in so many other matters, has distorted values which now can be thought inappropriate. Although they were appropriate in the 1977 Act, they are now entirely out of relationship. Therefore the aim of the clause is simple and needs no tedious or voluminous explanation; it is to increase the rateable limit conferring protection under the Rent Act from £1,500 to £3,500 and so extend the security of tenure which is in step with the general policy of the Bill.
Lord STRABOLGI: I support the amendment, my Lords. The noble Lord, Lord Barnby, referred to the Rent Act 1977, which is of course dated only
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recently because it is a consolidation measure, and the amounts to which he referred go right back to 1973, as is implied in the Amendment. Those were the rateable values below which security was given to regulated tenancies; the larger amount refers, of course, to London, and the smaller amount to cities outside. They were put on by the Conservative Government of Mr. Heath with the support of the Opposition, and it was right that that was done at the time. On the other hand, it has been found since then that there has been great distress and trouble with some of the more expensive flats, particularly in London. A lot of trouble occurred, and was in the newspapers, at Arlington House, for example, where the tenants there had a most dreadful time with some of the new types of property speculators.
The Government should therefore seriously consider increasing the rateable value so as to give security of tenure and regulated tenancies on property which is more expensive and of a higher rentable amount. This is ever more necessary because there will be much more insecurity in the rest of the market with shorthold. I do not know whether they will consider a re-rating. There has not been one recently; but if there is to be a re-rating of rateable values then these amounts will hear little relation to what the new amounts will be. I therefore hope the Government will seriously consider the amendment.
Lord JANNER: My Lords, I hope the noble Lord, Lord Bellwin, now realises what is happening in certain places today, and even if the Government are not prepared to support the people concerned or remove the difficulty about which I spoke earlier, at least they should be merciful and see to it that those whose rents have been increased to exorbitant proportions shall have such little protection as the 1977 Act affords.
Lord BELLWIN: My Lords, I say at once that the Government have received a number of representations about the rateable value limits in the Rent Act 1977. At present these are £1,500 in London and £750 elsewhere, as has been said. Tenancies of properties above these rateable values are not protected tenancies under the Rent Act. There are a relatively small number of these tenancies, most of which

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are in London. About 40 are in Grosvenor Square, and I know of the concern which has been expressed by those living in a particular block there. I have spoken with my noble friend Lord Barnby and other tenants about the problems they are facing. I would certainly accept that these problems are real for those concerned; rents which have been fixed for some years are rising substantially at the end of their leases and, as I understand it, the background may be the owners' plans to turn the flats over to some use other than long-term residential letting.
But it does not necessarily follow that the Rent Acts should be applied here. We are talking of tenants who have been paying agreed rents of some £10,000 a year and who may be prepared to pay more, and it is a far cry from the original purpose of the Rent Acts that rent officers should be asked to fix rents at that sort of level. We should keep the problem in perspective. The Rent Acts were introduced to deal with problems of housing stress, which were particularly acute for those on low incomes who had no other option except to rent the home in which they were living. I do not for a moment pretend that housing stress is limited to those on low incomes, but clearly the considerations are somewhat different for high rateable value tenancies which, typically, would have a value of £200,000 to £300,000 or more if sold on the open market. It cannot be right that we should apply the full panoply of the Rent Act and the fair rent system in these circumstances.
Having said that, let me make it clear that the Government's mind on this is not forever closed. We do not want to form a fixed and immutable view on how and where protection should apply, and we continue to bear in mind all the representations made. I know that there have also been suggestions to help high rateable value tenants which would fall short of applying the Rent Act itself. At this time I am not able to go further than that, but I hope the fact that I mention it, as I do, indicates that this is an area where thought is being given.
We cannot accept the new clause. Even if we were able to agree to an increase in the rateable value limits—and I do not want to mislead noble Lords, least of all
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my noble friend, by suggesting we are—this clause is not acceptable. Nor do I believe it achieves what my noble friend intends. It is drafted in such a way that it raises the London rateable value limits only for dwellings whose "appropriate" day is after the Housing Act becomes law. The appropriate day is defined in Section 25 of the Rent Act as being the day a dwelling first enters the valuation list, or 23rd March 1965 if that is earlier, so all existing tenancies outside the rateable value limits, including those in Grosvenor Square, would remain outside the rateable value limits.
However, I do not want to let the case stand on technicalities and I would not seek to base the Government's case solely on that. The point made by the noble Lord, Lord Strabolgi, was an interesting one which I had not previously heard put in this context. I trust that my noble friend Lord Barnby understands why we could not accept the amendment and why, for the reasons I have given, we do not feel that alterations in the rateable value limits within the context of the Rent Act could be done to help with this problem. But I repeat that our minds are not closed. This is an issue which we shall have to look at again, and although I can go no further than that, I hope I have made the position clear to him.
Lord BARNBY: My Lords, I ask for your Lordships' indulgence because of my partly worn-out hearing and because of the breakdown in the electrical arrangements which have no doubt denied your Lordships the possibility of hearing me properly. As I expected, therefore, I could not hear the totality of the Minister's reply; I say that without reflection on the obvious clarity with which he must have dealt with the matter. I suspect that while he could not agree with my amendment, he was courteous enough to explain in not a little detail the reasons why. I must therefore postpone my impatience until I have read in the Official Report—if it is printed tomorrow following the deliberations in the House earlier today—precisely what my noble friend said. I thank him for his comments and hope that the matter will continue to receive his sympathetic consideration. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 149 [Power of local authority to require repair of houses]:
9 p.m.
Lord JANNER Lord JANNER moved Amendment No. 27:
Page 106, line 36, leave out ("on a representation made by an occupying tenant").
The noble Lord said: My Lords, with your Lordships' leave, I propose to deal with Amendments Nos. 27, 28 and 29 together, because they cover a similar field. I am moving these amendments to tidy up the new section which has been introduced by the Government. I support the principle of the section, but I feel that it excludes categories of occupiers who very often are affected by disrepair; that is, licensees, especially in houses in multiple occupation. Line 24 means that a notice can be served simply when an officer of the council is satisfied that it is needed. The appropriate notice can be served without the requirement of representation being made by the occupying tenant. I do not feel that this is necessary in this section, either.
Where a public representation has to be made, this can later make life difficult for the occupier, and in particular this is important where the lawful occupant is a licensee and therefore not fully protected. Similarly, line 28 extends this protection to any lawful occupier, not only a protected tenant. The amendment in line 27 is a technical detail to clarify that this notice which can be served in 1(a), which I have referred to before without mentioning the actual section, refers specifically to property in substantial disrepair, but the express purpose of this section is to broaden the application of notices. I beg to move the first of these amendments standing in my name.
Lord BELLWIN: My Lords, for over 30 years, following a 1942 High Court decision, local authorities were able to use the statutory nuisance provisions in the Public Health Acts to secure the remedying of defects which might not have been substantial in themselves but which interfered with the personal comfort of the occupiers. Authorities made very considerable use of these powers. However, in 1976 the divisional court ruled that the earlier decision could not be sustained. The effect of their ruling was that conditions
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which affected only the occupiers could not be dealt with unless they were prejudicial to health. We introduced Clause 149, therefore, to give authorities power to deal with defects which, not substantial in themselves, are having a very specific adverse effect on the tenant's home. This will go a long way towards restoring the powers lost by authorities as a result of the 1976 court decision.
However, we restricted the power given to authorities by this clause so that they can only take action where they received representations from an occupying tenant. The first of the noble Lord's amendments would remove this requirement and thus leave local authorities free to take action on their own initiative. I appreciate the purpose of the change, and it may be that there will be cases where a tenant will be unwilling to make the necessary representations. The clause does not, however, require that the representation has to be in a particular form, or even that it has to be in writing. Given that the purpose of the power is to enable local authorities to require the remedying of defects on the ground that they interfere with the comfort of the tenant, it does not seem in any way unreasonable that it should be left to the tenant to decide whether he wants anything done.
There is, moreover, an even more serious objection to these amendments. The combined effect of the first and third amendments would be to enable a local authority to take action against an owner-occupier to compel him to put right defects in his own house which were interfering with nobody's comfort but his own. I hope that we live in a supportive society, but this does seem to be carrying things rather far. If I, as owner of my own house, am content to put up with some defect or other, and it does not interfere with anyone else, that surely is not only my own business but also my right.
Finally, I come to the second amendment. It is true that local authorities already have power to take action against houses which are in substantial disrepair, and it may, therefore, seem illogical not to exclude such a case from the much more limited provisions of this clause. However, there is a reason for not doing so; namely, that the "substantial disrepair" power is only exercisable, first, where the house as a whole is to be brought

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up to standard; and, secondly, provided this can be done at reasonable cost. The clause as it stands enables an authority to take action to remedy a specific defect in such a case even if there is no prospect of securing the much more expensive range of works which would be needed in order to meet the requirements of the "substantial disrepair" provisions. This amendment would remove that possibility and thus restrict the power of the local authority to act in the tenant's interests. In view of what I have said, I wonder whether the noble Lord, Lord Janner, may feel able not to press his amendment.
Lord JANNER: My Lords, it is late in the evening and I do not think I want to go into a long, disputative argument with the noble Lord. In the circumstances, I beg leave to withdraw the amendment.
Amendment by leave, withdrawn.
[Amendments Nos. 28 and 29 not moved.]
Clause 153 [Commencement]:
Lord BELLWIN Lord BELLWIN moved Amendments Nos. 30, 31 and 32:
Page 108, line 1, after ("(1)") insert ("Chapter I of")
Page 108 line 3, at end insert—
("(1A) Chapter II of Part I shall come into operation on such day as the Secretary of State may by order appoint or, if no such order has been made, on the expiry of the period of eight weeks mentioned in subsection (1) above.").
Page 108 line 4, leave out from ("Sections") to ("shall") and insert ("90 to 105, 108, 112, 113, 120, 122 to 127, 130, 131, 133 to 135, 137 to 140, 150, 151, 152(2) and 153 to 155")
The noble Lord said: My Lords, with your Lordships' permission might we take Amendments Nos. 30, 31 and 32 en bloc? As I have already spoken to them with Amendment No. 1, I beg to move.
On Question, amendments agreed to.
Clause 155 [Short title and extent]:
9.8 p.m.
Lord BELLWIN Lord BELLWIN moved Amendments Nos. 33 and 34:
Page 108, line 20, after first ("to") insert ("122(1), 123 to")
Page 108 line 21, leave out from ("section") to ("extend") and insert ("Schedule 14, Part II of Schedule 16, paragraphs 1to 3 of Schedule 17, Schedule 18, paragraphs 11 to 13, 24, 25 and 69 of Schedule 25 and the associated repeals in Schedule 26").
The noble Lord said: My Lords, for the convenience of the House I shall speak to Amendments Nos. 33 and 34 together. The first of these amendments disapplies all but Clause 122(1) to Scotland. Under the Bill as drafted the whole of the clause extends to Scotland, but save for the first subsection, which empowers housing associations to sell, the application is inappropriate. The second amendment sets out the schedules and parts of schedules to the Bill which are relevant to Scotland. My Lords, I beg to move.
On Question, amendments agreed to.
Schedule 3 [Tenancies which are not secure tenancies]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 35:
Page 116, line 45, at end insert ("or as mortgagee").
The noble Lord said: My Lords, this is a very minor change to the exclusion providing that lettings of dwellings leased to local authorities for use as temporary housing accommodation shall not be secure. We have provided this exclusion because, of course, we do not want to do anything to jeopardise the so-called "North Wiltshire" arrangements, where public sector landlords are offered, on lease, a dwelling from a private home owner to be used as temporary housing accommodation.
We have written into the Bill, as a safeguard against abuse, that the exclusion should not apply where the public sector landlord has an interest in the dwelling other than under the lease. However, it has been brought to our attention that there may be some instances where a public sector landlord may be offered, for temporary use, a dwelling subject to a mortgage which it has granted. There seems no reason, where this is the sole interest, why the benefit of the exclusion should not be available. This amendment therefore provides that such an interest does not prevent the exclusion applying. My Lords, I beg to move.
On Question, amendment agreed to.
9.11 p.m.
Viscount HANWORTH Viscount HANWORTH moved Amendment No. 36:
Page 118, line 13, at end insert—
("14. A tenancy is not a secure tenancy if the landlord is a housing trust which is a charity within the meaning of the Charities Act 1960 or is a housing association which is a charity within the meaning of the Charities Act 1960 and the principal object of such trust or association is to provide short term housing accommodation for persons who by reason of domestic marital or similar problems are in need of short term accommodation for themselves or their families and is granted a certificate of exemption under this paragraph by the Secretary of State.")
The noble Viscount said: My Lords, this is an amendment that I should like to put to a Division. It is unfortunate that there are but few Members now in the House, and I must decide, perhaps on the basis of who is on the Government side, whether in fact to press the matter to a Division. Those noble Lords who listened to me late at night at the Report stage of the Bill will know that this amendment, although less satisfactory than the one that I then moved with support from all sides, has the same object in view. I can describe it very briefly.
There are a considerable number of charities whose object is to provide relatively short-term accommodation to people in desperate need. Unmarried mothers with young children are a case in point but there are other people who need a limited period in which to readjust and to rehabilitate themselves. In nearly all cases there are long waiting lists for such vacancies. The Government do not, and cannot with limited funds, provide this kind of facility; nor are they likely to be able to do so in the foreseeable future. All they provide is bed and breakfast, which is quite unsuited, for example, to the mother of a young baby.
The Bill gives secure tenancies to these people. No doubt the Minister will refer to Ground 9 of Schedule 4, which allows the charity to go to the court for repossession if continued occupation of the dwelling would conflict with the object of the charity and alternative accommodation is available. That sounds quite reasonable, but really it is not so at all. The accommodation thus secured was specifically planned to provide short-term relief and is not necessarily appropriate for permanent tenants.
Further, by application to the court a heavy burden is imposed on these specialist charities. First, application to the court is costly; secondly, there can be a wait of several months before the case is heard; and thirdly, alternative accommodation often will not await the delay before the court hears the case. There are other reasons. A secure tenancy enables tenants to take in lodgers and to sublet, which is often undesirable in the case of single mothers, and which could mean yet another application to the court to terminate the sub-tenancy.
I think that the House has clearly shown its view about this Bill. What is so worrying is that it seems that the Government have tried to legislate in principle and in detail without regard to pragmatism and side effects; and this I think is one of those cases. Throughout the passage of the Bill I have been in close touch with the noble Lord, Lord Bellwin, who has always been most courteous and helpful, but unfortunately he has been unable to meet any of the suggestions that I put forward. This amendment may be defective, and, it would seem from the letter of the noble Lord, Lord Bellwin, to me, unacceptable to the Government, at least at the time that he wrote it. I nevertheless ask your Lordships to support this amendment.
This is a Bill which is going to be, I am afraid, a lawyers' paradise; and even if this amendment is in minor respects defective, I do not think this will make much difference to the problems of the Bill as a whole. This really is an important point. The Government will no doubt argue that of course it is up to the Secretary of State to exercise a discretion as to what charities should be exempt; but, of course, what I have quoted—Ground 9 in Schedule 4—does exactly that. The only difference is that it leaves it to the court to do it. In view of what I have said, I hope that if I take this amendment to a Division noble Lords from every Bench will support me. I beg to move.
Lord EVANS of CLAUGHTON: My Lords, may I say very briefly that I support the amendment proposed by the noble Viscount, Lord Hanworth, even though, as he says that if this amendment is not passed the situation will be a lawyers' paradise, from the point of view of self-interest I should oppose it. I would have

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thought that this was an important measure which will affect a minority of charitable organisations, but the kind of organisation which is in fact doing a very great deal to help the public sector from a voluntary point of view. They will be deterred, I suspect, if the security of tenure is involved, and all that goes with that—the right to take in sub-tenants, and so on.
Perhaps the noble Lord the Minister can deal with this, but I would have thought that the Government's control over this becoming a major loophole is well taken care of by the last few words of the noble Viscount's amendment; namely, that this right will be granted only if a certificate of exemption is provided by the Secretary of State. I would have thought that any danger that this would become a huge loophole in the Government's legislation was protected by the fact that it would be most unlikely that the Secretary of State would give such a certificate and provide such a loophole. I would have thought that an amendment, perhaps not in these precise words but something accepting principles of this kind, would be acceptable to the Government.
Baroness BIRK: My Lords, perhaps I may say two or three words in support of the amendment. I can see some of the difficulties which have been raised by the Government when they have been opposing it in the past, but I think the noble Viscount has put his finger on what is likely to be a very great problem; and the fact that it may be small in dimension does not make the situation any better for those who are going to suffer from it. If it means, as I understand—and the case put forward by the noble Viscount seems to me to be a very strong one—that in fact the charities which deal with, for instance, either battered wives or single-parent families are going to find that they are not able to turn over their clientele, which is really the only way they can work with limited resources, both financial and as far as property is concerned, then obviously it is going to be a very grave situation; and to be able to go to the court, as the noble Viscount pointed out, is not very much help when time and money is involved.
As the noble Viscount rightly said, as did the noble Lord, Lord Evans, even if the amendment itself is defective it really is the purpose behind it, I think,
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which is concerning and worrying many of us; and if the Government can bring forward something alternative, or be prepared to do something about this, I would have thought that this would have met the case. But it seems to me that the main thing is that a case has been made out, and we do not seem to have had so far a very satisfactory or completely clear answer to it.
9.18 p.m.
Lord BELLWIN: My Lords, I must say at once that I very much appreciate the concern which has moved the noble Viscount to table this amendment to the tenants' charter. I know he has been particularly anxious about this matter for some time; and, indeed, the very fact that he has felt the need to move it again at this late stage I think indicates the measure of his concern. I have great respect for that, and I do not mean that in the rather lighthearted way in which people were talking about respect earlier—I really do mean it. The noble Viscount is of course particularly anxious about charities which provide short-term accommodation for groups such as unsupported mothers or homeless families who are in urgent need; and the need for flexibility, which the noble Lord stresses, is something which I obviously accept. But, as I have explained previously, I cannot accept the amendment, which would have the effect of denying the tenants' charter rights to a potentially large number of tenants simply because of their landlords' objectives.
Again, as I said before, the use of the phrase "short-term" poses the most serious problems of definition. For instance, is a period of two or three years—which I believe is the sort of timetable on which some of the associations the noble Viscount is concerned about operate—really short-term? I do not believe it is possible to separate out particular types of need for special treatment.
I know that the suggestion of an exemption certificate procedure is a helpful attempt to avoid the problem of mass exclusions and consequent possible abuse, but I am afriad there are genuine and serious objections. At present, all exclusions from the tenants' charter are stated on the face of the Bill, so that tenants know where they stand. If this principle were

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breached, tenants could not be sure that at some time in the future their tenancy would not be declared insecure because an exemption certificate had been issued to their landlord. I do not think this would be acceptable.
A further difficulty arises on the criteria for granting an exemption certificate. If criteria were stated on the face of the Bill, the problems of defining, for instance, the phrase "short-term" would arise again. If there were no criteria, Ministers would be open to charges of arbitrariness.
However, I believe, as the noble Viscount quite properly assumed, that the amendment which has been tabled to Schedule 4 will meet many of the points which the noble Viscount is concerned about, by acting upon the grounds for possession rather than by exclusion. I know that many housing associations' short-term arrangements involve rehousing by local authorities at the end of the day. I believe an addition such as we are providing in Schedule 4 to allow possession to be sought where a local authority has offered secure accommodation, will allow associations to maintain a throughput of tenants without taking away the tenants' rights while they are in occupation.
I for myself am confident that this, combined with the existing grounds for possession, is the right approach. If I may make one or two other general observations on what has been said, Ground 9 is, of course, not the only option open to charities; alternative accommodation must be available when it is needed, such as when the order for possession takes effect. The Government must be satisfied with this.
I have said that I feel the amendment to Schedule 4 will meet most of the noble Viscount's points. At present, in any case, it should also be said that landlords already have to go to court to seek possession if the tenant is not willing to move. Furthermore, even if the tenancy is not subject to security of tenure, it is still necessary to go to court in order to evict the tenant. Neither the noble Viscount, Lord Hanworth, nor the noble Lord, Lord Evans, mentioned Ground 11 for possession. This could be even more useful than Ground 9, particularly if amended on the lines of the Government
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Amendment No. 37. As to the assertion that the Bill will be a lawyers' paradise, I will not make any comment on that. I wonder how many Bills on housing have not eventually turned out to be a lawyers' paradise, which brings another smile to the face of the noble Lord, Lord Evans, and understandably so.
I really am regretful if the noble Viscount feels I have not covered his points properly. I stress again, yes, his concern is a very real one, and because we have tried to pursue it over a period of time I have endeavoured to become involved in the discussions to feel satisfied myself on this. Because I have done so, it is not without confidence that I say I believe the fears are not groundless, they are certainly not groundless, but they will not in practice be justified to the extent they might have been. In any case, it would be the duty of any Government to monitor what did take place in practice, and that we will certainly do, whatever course the noble Viscount decides to take.
Viscount HANWORTH: My Lords, I should like first to thank the noble Lord, Lord Bellwin, for his very nice approach to this amendment, particularly after the rather caustic remarks I made about the Bill as a whole at Report stage. He will know that what he has said does not meet the point. I do not want to delay the House, but I would say first that it is inconceivable that the charities who take these people in on a short-term basis would be liable to throw them out on to the streets. He has admitted that if you apply to the courts you have to have alternative accommodation available at that time and, bearing in mind that it might take months to get the case heard in court, any accommodation that you may have lined up is unlikely to be available at that time. There we are. I am afraid that most of these charities—and there are a large number of them indeed—are very unhappy about this. They feel that it strikes at the roots of all that they are trying to do and that is something which the Government cannot do for them. They regard it as the Government kicking them in the face. I am afraid that, with all respect and thanks for all the trouble that the noble Lord, Lord Bellwin, has taken over this matter, I cannot withdraw the amendment.
The DEPUTY SPEAKER (Lord Greenwood of Rossendale): The Question is that Amendment No. 36 be agreed to. As many as of that opinion will say, "Content"; to the contrary, "Not-Content". The Not-Contents have it. Amendment No. 37. The Lord Bellwin.
Lord BELLWIN: My Lords, for the convenience of the House I will speak to—
Viscount HAN WORTH: My Lords, I did not withdraw the amendment. I said, "Content".
The DEPUTY SPEAKER: My Lords, the acoustics are very bad—
Schedule 4 [Grounds for possession of dwelling-houses let under secure tenancies]:
9.35 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 37:
Page 120, line 13, leave out from ("(a)") to ("and") in line 14 and insert ("either there is no longer such a person residing in the dwelling-house or the tenant has received from a local
Lord PEART: My Lords, may I suggest, in view of the fact that it is extremely difficult for the noble Lord the Deputy Speaker to have heard my noble friend that—
The DEPUTY SPEAKER: My Lords, perhaps I should put the Question again.
9.27 p.m.
On Question, Whether the said amendment (No. 36) shall be agreed to?
Their Lordships divided: Contents, 26; Not-Contents, 57.

CONTENTS

Beaumont of Whitley, L.

Hanworth, V.[Teller.]

Raglan, L.

Birk,B.

Hatch of Lusby, L.

Ritchie-Calder, L.

Brooks of Tremorfa, L.

Houghton of Sowerby, L.

Ross of Marnock, L.

Craigavon, V.

Irving of Dartford, L.

Simon, V.

David, B.[Teller.]

Janner, L.

Stone, L.

Davies of Leek, L.

Llewelyn-Davies of Hastoe, B.

Strabolgi, L.

Elwyn-Jones, L.

London, Bp.

Taylor of Blackburn, L.

Evans of Claughton, L.

Monson, L.

Tweeddale, M.

Gainford, L.

Peart, L.

NOT-CONTENTS

Airey of Abingdon, B.

Dundee, E.

Mowbray and Stourton, L. [Teller.]

Alexander of Tunis, E.

Elliot of Harwood, B.

Ampthill, L.

Elton, L.

Murton of Lindisfarne, L.

Avon, E.

Gibson-Watt, L.

Rawlinson of Ewell, L.

Balerno, L.

Godber of Willington, L.

Rochdale, V.

Bellwin, L.

Gowrie, E.

Sandford, L.

Belstead, L.

Gray, L.

Sandys, L.[Teller.]

Boardman, L.

Hornsby-Smith, B.

Selkirk, E.

Brabazon of Tara, L.

Long, V.

Soames, L. (L. President.)

Campbell of Croy, L.

Lyell, L.

Strathcarron, L.

Chelwood, L.

McFadzean, L.

Strathcona and Mount Royal, L.

Colville of Culross, V.

Mackay of Clashfern, L.

Sudeley, L.

Cork and Orrery, E.

Macleod of Borve, B.

Swansea, L.

Crathorne, L.

Mansfield, E.

Trenchard, V.

Cullen of Ashbourne, L.

Margadale, L.

Vaux of Harrowden, L.

de Clifford, L.

Marley, L.

Vickers, B.

Denham, L.

Middleton, L.

Vivian, L.

Drumalbyn, L.

Mottistone, L.

Ward of Witley, V.

Dulverton, L.

Mountevans, L.

Westbury, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

authority an offer of accommodation in premises which are to be let as a separate dwelling under a secure tenancy").
The noble Lord said: My Lords, I think it may be for the convenience of the House if in moving this amendment I speak also to Amendment No. 38. There has been some concern in this House about the problems of housing associations providing accommodation on a short-or medium-term basis for particular groups such as single-parent families or the homeless. In particular, many noble Lords have expressed their concern

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that such associations will, as a result of the Bill, be unable to keep up their existing valuable work by maintaining a throughput of tenants because the tenants will have security of tenure.
I believe, however, that we have drawn the exclusions correctly. Having looked again at housing associations' genuine need for flexibility, it has become clear that in many of the cases where associations are providing short- and medium-term accommodation they are doing so until the local authority is in a position to rehouse the tenants permanently. Of course, nothing in the Bill as it stands prevents local authorities from continuing to rehouse short-term housing association tenants, but there is no ground on which associations may seek possession in such cases in order to meet the pressing needs of new, and otherwise uncatered for, applicants.
This amendment therefore extends Ground 11 for possession. It will allow associations which cater for special needs to seek possession, if the accommodation is needed for someone in the "special need" class for which they cater, and the existing tenant has been offered a secure tenancy by the local authority. I believe this addition will give the extra flexibility that is needed to allow specialist associations more easily to carry out their valuable work.
Perhaps I should say, further, that in cases where our own amendment to Ground 11 is in use the certificate system can be expected to operate. It would conflict with this arrangement which has been specially designed to assist housing associations who lack the accommodation in which to rehouse tenants and would slow down the throughput of tenants for associations who are using Ground 11 if a further condition for suitability were introduced into the ground itself. This would be to the disadvantage of the local authority, the housing association and the people who are waiting for a tenancy with that association. Therefore, I think we must accept that a certificate from an authority saying that suitable accommodation will be available means what it says. I beg to move what I hope is a helpful and useful amendment.
Baroness BIRK Baroness BIRK moved, as an amendment to Amendment No. 37, Amendment No. 38:
Line 4, leave out ("an") and insert ("at least one suitable").
The noble Baroness said: My Lords, the Government amendment extends the grounds under which the housing association can, in certain circumstances, evict secure tenants. As it stands in the Bill, Ground 11 covers housing associations which let accommodation to special needs groups and allows them to obtain possession if there is no longer a person with a special need living in the accommodation and the association needs the dwelling to let to another person who has such needs: examples are the disabled, the mentally handicapped, or the elderly.
However, if the amendment were passed as it stands, without my amendment, it would enable the housing association to obtain possession if a tenant with a special need had been made an offer of accommodation by a local authority. The tenant may be reluctant to accept the particular offer either because it is in an inconvenient location or because its condition is not satisfactory, or for reasons of personal preference. Yet, as the amendment stands, the tenant would be under pressure to accept the offer or risk eviction. There are only those alternatives.
The only safeguard is that Ground 11 is subject to the court being satisfied that it is reasonable to give possession and that suitable accommodation will be available to the tenant when the possession order takes effect. Though this provides a safeguard, it does depend on the tenant defending the possession action in court. This can be expensive and time-consuming and some tenants may be intimidated by the thought of having to go to court.
The purpose of my amendment to the Government amendment is to make it quite clear that the tenant must have been given at least one suitable offer before a housing association can seek possession. This will provide a more effective safeguard for the tenant, while still enabling the housing association to obtain possession if the tenant has been given a number of suitable offers and has turned them all down without good reason. My Lords, I beg to move.
Lord BELLWIN: My Lords, I touched earlier on some of the points that I wanted to make on the noble Baroness's amendment, but perhaps I can just make one or two further observations. The noble Baroness has sought to make it a further condition that there shall have been at least one suitable offer of accommodation. If she looks at Clause 34, she will see that an order for possession under Ground 11 cannot be made, unless the court is satisfied both that suitable alternative accommodation will be available for the tenant and that it is reasonable to make the order.
Part II of Schedule 4 sets out the criteria against which a court shall judge suitable alternative accommodation. Paragraph 3 provides that a certificate from a local authority shall be conclusive evidence that suitable alternative accommodation will be available where a landlord, other than a local authority (such as a housing association) is applying for possession on a ground requiring suitable alternative accommodation. If I say more on this point, it will be repeating what I said previously about the certificate procedure. In those circumstances, I wonder whether the noble Baroness will feel satisfied.
Baroness BIRK: My Lords, I see the point that the Minister has made. I was aware of what is in Clause 34, but it seems to me that it would be better to include it here as well, so that the position is beyond doubt. I cannot see any objection to putting it in, if, as the Minister says, one is really underlining and repeating something that is elsewhere in the Bill. We are now dealing with Schedule 4 and one might not want to turn to one of the other parts of the Bill, when one seems to be spending half of one's life reading this Housing Bill. I should have thought this was something which could be easily accepted, in order to make the position clear. If the Minister has a real objection, perhaps he can explain to me what it is. He has explained that this is covered to some extent, but it obviously is not covered here in Schedule 4, because it does not read in that way.
The DEPUTY SPEAKER: Is the noble Baroness withdrawing the amendment?
Baroness BIRK: Yes.
Amendment to the amendment, by leave, withdrawn.
On Question, Amendment No. 37 agreed to.
Schedule 16 [Registered housing associations]:
9.44 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 39:
Page 149, line 4, leave out ("they relate") and insert ("it relates").
The noble Lord said: My Lords, this is simply a minor consequential amendment following on a previous change in Schedule 16. At Report stage, we accepted an amendment to alter the phrase "accounts give" in paragraph 4(2)(a) of the schedule to "revenue account gives". As a consequence, it is necessary to change the phrase "they relate" in the same subsection to "it relates". My Lords, I beg to move.
On Question, amendment agreed to.
Schedule 18 [Amendments of Housing Acts 1974 Part III]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 40:
Page 153, line 26, after ("lease") insert ("or licence to occupy").
The noble Lord said: My Lords, paragraph 1 of Schedule 18 makes it clear that grant can be provided for housing associations' shared ownership schemes. While the schemes operate in England and Wales by means of leases, in Scotland they operate by way of licences to occupy. The amendment thus enables grant to be given for Scottish shared ownership schemes and I invite your Lordships to accept it. My Lords, I beg to move.
On Question, amendment agreed to.
9.45 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 41:
Page 156, line 19, leave out ("and").
The noble Lord said: My Lords, for the convenience of the House I will speak also to Amendments Nos. 42 and 70. These amendments are simply small,

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consequential amendments to changes to the Housing Act 1974 which are already incorporated in Schedule 18 to the Bill.
Schedule 18 amends the circumstances in which revenue deficit grant may be paid. Under the 1974 Act it may only be paid on the provision of dwellings and any related property; under the Bill it may be paid on any of an association's housing activities. Section 32(8) of the 1974 Act contains a definition of "related property" which is no longer needed, as the phrase has been superseded under the new circumstances in which RDG can be paid. The amendments therefore repeal subsection (8). I beg to move.
On Question, amendment agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 42:
Page 156, line 21, at end insert—
("; and
(g) subsection (8) is hereby repealed.").
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Schedule 19 [Provisions replacing sections 90 to 91A of Housing Finance Act 1972]:
9.47 p.m.
Lord JANNER Lord JANNER moved Amendment No. 43:
Page 157, line 48, leave out from ("concerned") to ("and") in line 1 on page 158.
The noble Lord said: My Lords, with the leave of the House I propose to deal at the same time with the next two amendments; they refer to the same point. Despite all the attempts which have been made both in your Lordships' House and in the other place, very few changes have been made to the service charge provisions of the Bill. This amendment is to ensure that the one safeguard which requires the landlord to inform tenants of his intention to undertake major works and to give them the opportunity to make observations is effective. It is simply not enough to allow the landlord to display a notice so as to be likely to come to the attention of the tenants. He must be obliged, in my view, to give to each tenant a copy of the notice and to address one formally to
998
the tenants' association, in the particular place where there is such an association. The cost of putting out these notices would be negligible compared with the cost that tenants might have to bear if extravagant works were carried out without adequate consultation.
I should like to point out that in existing tenancies, particularly in blocks of flats, the notice might very well be overlooked by some of the tenants. Furthermore, many of them might be away and would never see this notice, or would not see it for weeks or months. I beg to move.
Lord BELLWIN: My Lords, paragraph 5 of Schedule 19 as drafted requires the landlord to inform his tenants of proposed work costing more than whatever is the prescribed amount in the particular block. He can do this either by giving each tenant a notice describing the works and inviting comments and a copy of the estimates for the work, or by displaying a copy—perhaps more than one—where it is likely to come to their notice.
Amendment No. 43 would remove the option to display a notice. I should have thought there would be situations where it would be the more practical and sensible alternative, and I would be reluctant to dispense with it. We believe that a flexible approach is the best here. I would remind your Lordships' House that if the landlord fails to observe this requirement he will run the risk of not being able to recover the full cost of the works. If he relies on displaying the notice and estimates rather than giving copies to every tenant, he will need to satisfy himself that it can be seen by all the tenants and remains visible for a reasonable time. Consequently, in a large block of flats a landlord might decide to display copies of the notice and estimates in each entrance or stairway. On the other hand, he might feel that he was on surer ground in giving a copy to every tenant. Indeed, he might consider it safest to do both. In any case, he has to give a copy to the secretary of a recognised tenants' association. I do not see that anything is to be lost by leaving the choice open and letting common sense prevail.
As far as Amendments Nos. 44 and 45 are concerned, I do not think they would

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serve any useful purpose and therefore wonder whether the noble Lord will feel able to withdraw the amendment.
Lord JANNER: My Lords, there is not much point in pursuing the amendment and therefore I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendments Nos. 44 and 45 not moved.]
9.51 p.m.
Lord JANNER Lord JANNER moved Amendment No. 46:
Page 158, line 20, leave out paragraph 6.
The noble Lord said: My Lords, with regard to this amendment, while in paragraph 5(6) of Schedule 19 the landlord is allowed to carry out the works if they are urgently required, in my view there is no need for this clause which allows the court to dispense with the requirements of the schedule if the landlord acts reasonably. I see no reason for that at all. I beg to move.
Lord BELLWIN: My Lords, I would remind the House that the consultation requirements in Schedule 19 to the Bill contain a very strong sanction, not to be found in the existing legislation, so that if the landlord fails to comply with these requirements he will not normally be able to recover the full cost of the works even if the cost was reasonable. He could be very heavily out of pocket as a result. Nevertheless we have to recognise that there may be circumstances in which he could not comply with the requirements. For example, in the case of very specialised work, such as repairs to a lift, he might not be able to get two estimates, because no firm other than the one which had installed the lift would quote for the job. It would be wrong in our view for the landlord to be penalised as a result, and paragraph 6 gives the court discretion to dispense with the consultation requirements if satisfied that the landlord had acted reasonably.
would not agree that this paragraph would enable the landlord to evade the consultation requirement generally, or to disregard the expressed views of tenants in particular. If the landlord, having consulted, decided to act in a way contrary
1000
to the expressed wishes of the tenants, he would have to satisfy the court, if challenged, that he had nevertheless had regard to their views. Paragraph 6 provides an essential safeguard for the landlord, but it does not provide him with a means of evasion.
Lord JANNER: My Lords, again I have listened with interest. I wish we had a few of the tenants' associations here and could give them leave to vote; I think the noble Lord would realise that his answers are not as satisfactory as they would want, but in the circumstances what can one do? I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord BELLWIN Lord BELLWIN moved Amendment No. 47:
Page 158, line 24, leave out from ("tenant") to ("requests") in line 25.
The noble Lord said: My Lords, in moving this amendment I beg leave also to speak to Amendments Nos. 48 and 49. These amendments are to Schedule 9 which deals with service charges in flats. They make a small but not unimportant change in the provisions under which tenants have a right to information about their service charge. The purpose of the first two is to safeguard the individual tenant's right to obtain a summary of costs relating to his own flat. They provide that the secretary of a recognised tenants' association may obtain the summary only if he has the consent of the tenant concerned.
This is needed because under paragraph 10 of the schedule a landlord is not required to produce a summary for a particular flat more than once for any particular year. This was in the 1972 Act and seems to be reasonable. This does mean, however, that, as a result of the rights we have provided for association secretaries, if the secretary obtained the summary first the landlord would not be obliged to provide it again for the tenant.
Although it seems unlikely that the secretary would not give the tenant a copy of the summary that possibility must be recognised, particularly where not all the tenants belong to the association. The amendment accordingly provides that the secretary must first obtain the tenant's consent. The tenant could then give his

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consent on condition that he received a copy of the summary. The third amendment similarly provides that the secretary can only inspect the accounts and receipts relating to a particular summary with the consent of the tenant concerned. I beg to move.
Lord STRABOLGI: My Lords, these are very useful amendments, considerable improvements to the Bill, and we welcome them.
On Question, amendment agreed to.
9.55 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 48:
Page 158, line 31, at end insert—
(" (1A) If there is a recognised tenants' association for the building and the tenant consents, a request under sub-paragraph (1) above may be made by the secretary of the Association instead of by the tenant and may then be for the supply of the summary to the secretary.").
On Question, amendment agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 49:
Page 158, line 41, leave out ("he") and insert ("the tenant, or the secretary with the consent of the tenant").
On Question, amendment agreed to.
Lord JANNER Lord JANNER moved Amendment No. 50:
Page 160, line 39, leave out paragraph 15.
The noble Lord said: My Lords, in my view the right to information and to challenge service charges must apply to tenants who pay non-variable service charges as well as to those who pay variable service charges. The purpose of this amendment is to put this right. I beg to move.
Lord BELLWIN: My Lords, Government amendments in Committee of your Lordships' House to Clause 59 and Schedule 6 fulfil our commitment to give fixed fair rent tenants the opportunity to challenge the evidence on service costs deployed by their landlords before the rent officer. The rent officer in fixing a fair rent would anyway only take account of service costs which he considered to be reasonable. But our amendments give an added safeguard to the tenant.
I would suggest to the noble Lord that this is a much better approach than that in his amendment because it places the safeguard in the right place. Fixed fair rent tenants can only have their rent increased by the rent officer, and it is at that point that we are providing them with a right to challenge the landlord's evidence. The noble Lord's amendment, however, seeks to apply the machinery of Schedule 19, which is designed for those whose leases
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provide for a service charge which can be varied at any time according to the costs incurred. It is not intended for fixed fair rent tenants, and I could not say quite what the legal effect would be if it was applied to them. All I could guarantee is perhaps uncertainty for all those involved. In the light of this, and of the major safeguard introduced by the Government at an earlier stage, I wonder whether the noble Lord would feel able to withdraw the amendment.
Lord JANNER: My Lords, I am not surprised that the noble Lord is not able to accept the amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 20 [Housing co-operatives]:
Lord BELLWIN Lord BELLWIN moved Amendments Nos. 51 to 62:
Page 162, line 1, leave out ("or") and insert ("a")
after ("corporation") insert ("or the Development Board for Rural Wales")
Page 162, line 5, leave out ("or")
after ("corporation's") insert ("or Board's")
Page 162, line 35, after ("corporation") insert ("or the Development Board for Rural Wales")
Page 162, line 37, after ("corporation's") insert ("or Board's")
at end insert ("or the Development of Rural Wales Act 1976")
Page 162, line 43, after ("corporation") insert ("or the Development Board for Rural Wales")
Page 162, line 46, leave out ("or") and insert ("a")
after ("corporation") insert ("or the Development Board for Rural Wales")
Page 162, line 49, leave out ("or")
at end insert ("or Board").
The noble Lord said: My Lords, for the convenience of the House I will speak to Amendments Nos. 51 to 62 inclusive. These amendments rectify an omission in the drafting of the Bill. The schedule is in effect a re-enactment of paragraph 9 of Schedule 1 to the Housing Rents and Subsidies Act 1975, which was used as the basis for a similar provision for the Development Board for Rural Wales in paragraph 5 of Schedule 5 to the Development of Rural Wales Act 1976. However, the board has not been included in the

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scope of Schedule 20 to the Bill. There is no reason why the board should not be covered in the same way as local authorities and new town corporations, and the amendments will accordingly bring within the scope of the schedule agreements made for the exercise by a housing co-operative of any of the board's powers under the Development of Rural Wales Act 1976 relating to land in which the board has a legal estate. I beg to move.
On Question, amendments agreed to.
Schedule 21 [Amendments of Leasehold Reform Act 1967 and Housing Act 1974, Schedule 8]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 63:
Page 163, line 24, after ("1980") insert ("or in pursuance of a contract entered into before that date").
The noble Lord said: My Lords, as your Lordships may be aware there is a provision in paragraph 3 of Schedule 21 to the Bill which closes a loophole in the Leasehold Reform Act 1967. Under this some landlords have been granting leases terminable by notice given by the tenant after the death of a third party, such as a descendant of King George V.
The Government decided that the change in the law should not operate retrospectively, and consequently it does not affect leases granted before 18th April 1980, the date on which the proposal was announced. The noble Lord, Lord Monson, has drawn our attention to a situation in which building agreements have already been entered into requiring the granting of leases of the houses which will be terminable on the death of a third party.
We take the noble Lord's point and in order to prevent this proposal operating retrospectively in these circumstances the Government have tabled Amendment No. 63. This exempts from the 1967 Act leases of this kind granted after 18th April 1980 as a result of a contractual agreement entered into before that date. I am grateful to the noble Lord, Lord Monson. I beg to move.
Lord MONSON: My Lords, I should like to thank the noble Lord, Lord Bellwin, and the Government very much for this amendment which will avoid accidental, unfair retrospection, which I know the Government would not wish to embark upon.
Lord BEAUMONT of WHITLEY: My Lords, it is slightly better than nothing. Thank you very much.
On Question, amendment agreed to.
Schedule 24 [Houses in multiple occupation: means of escape from fire]:
Baroness VICKERS Baroness VICKERS moved Amendment No. 64:
Page 169, line 15, after ("is") insert ("occupied by three or more households or six or more individuals or is")
The noble Baroness said: My Lords, I beg to move Amendment No. 64. Paragraph 1 of Schedule 24 gives the Secretary of State the power to specify certain types of houses in multiple occupation, and the local authorities will then have the duty to ensure that these houses are made safe with effective means of escape from fire. I ask my noble friend to tell the House precisely the type of premises that are to be covered by this duty. I believe that there is real concern that if this new duty is to be worth the paper that it is written on it must cover multi-occupied houses like the hostel in Kilburn where the fire last March occurred in which 11 women died and that was a three-storey terraced house.
My amendment—and I shall call it, if I may, the "Kilburn Amendment"—seeks to ensure that houses in multiple occupation which are occupied by three or more family households or by six or more single people, would be covered by the new duty. I can well understand that local authorities would not want the duty to cover every house in multiple occupation in their area. What is essential, therefore, in my opinion, is that the houses occupied by two-family households are excluded from this amendment, but that small hostels, like the one in Kilburn, containing people, are included. That is what my amendment seeks to do.
I am aware that on Report my noble friend said that he would need further

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talks with the local authorities—and I hope that he has had the opportunity to have them—about the scope of the duty. My amendment would leave the Secretary of State with the power to specify types of premises over and above those houses now listed in the amendment. It would therefore leave the Secretary of State with flexible powers, while at the same time setting crucial safeguards for people living in small hostels.
I am pleased that the Government have in this Bill moved some way to recognise the need to protect vulnerable, single homeless people. But I urge my noble friend to go one step further and give them adequate protection in law by accepting this amendment. It would show that the Government are ready to respond to the great public concern over what I think a great many people consider to be a matter of life and death. I beg to move.
The LORD BISHOP of LONDON: My Lords, I rise to support this amendment. It concerns a very vital and important area of safety, and we have already seen in London the awful consequences when there are not proper safeguards. The amendment of the noble Baroness gives a cutting edge to this clause, and I hope that the Government will accept it.
Baroness DAVID: My Lords, we also should like to support this amendment. I think it is very necessary to cover the people living in small hostels, and I hope that the Minister will be able to accept this.
Lord BELLWIN: My Lords, you may recall that, when I moved at Report stage the amendment that brought Schedule 24 to the Bill, I explained that it was an amendment with far-reaching implications, in that it provided a means of laying a duty on local authorities to take action in the matter of means of escape; and for this reason we felt that it was imperative to allow time for the most thorough consultation on the question of whether, and if so how, the scope of the duty should be restricted.
I stand by what I said then, and I am afraid that I cannot accept an amendment that would pre-empt those consultations. I have to say to my noble friend Lady Vickers that there has been no evidence put
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forward that the implications of her amendment have been considered, in respect either of the effect on local authority resources, or of the kinds of property that would be affected; and it is possible that, at worst, the acceptance of this amendment could be so damaging as to lead to widespread closures and homelessness. It would be tragic if this were to happen simply for lack of careful consideration of all aspects of the matter.
We are most concerned about this situation and noble Lords would surely not expect otherwise, but we must take into account all the implications of what we seek to do. If the amendment were accepted as it is, it could mean that unless the definition of HMOs was clearly made in such a way that local authorities could cope with the situation, it would lead to what I have suggested. I do not want to sound dramatic about it, but this is far too serious a matter for us just to be tossing around by way of discussion.
There is considerable concern here that the problem is very far-reaching in its implications. We are most anxious that we should not do anything in a way that may, on the face of it, seem not to be right. I very much take the points made by those who have spoken, but at the same time there is much in this which is very difficult, and we shall only obtain the best solutions if we are able to do this without preempting the consultations and discussions which we are having, and must have, with all those concerned, not least local authority associations.
In the light of the way in which I have expressed the concern, I wonder whether my noble friend will feel able, if not competely satisfied—because I suppose one never is completely satisfied if one puts forward an amendment which is not accepted—to accept what I am saying in the way in which I said it and perhaps in those circumstances feel able to withdraw the amendment.
Lord SANDFORD: My Lords, I am most grateful to my noble friend Lady Vickers for having moved this amendment, and also to my noble friend Lord Bellwin for the comment that he has made on it. It is certainly the case that, although housing authorities—and I speak for the ADC—are fully seized of the problem which was thrown up and revealed by

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the tragic episode in Kilburn, they do not have the resources to deal with the matter on the scale that is likely to be before them if this amendment were to be accepted. That is not to say that the issue ought not to be looked at, and suitable priorities developed after appropriate forms of consultation. I can certainly give my assurance that every housing authority is fully seized of the importance of this matter and wants to deal with it in the best way possible in the light of the resources available to them.
Baroness VICKERS: My Lords, in view of what my noble friend has said, I should like to ask him two questions. He said that he will discuss the matter with the local authorities. Will he also discuss the matter with the environmental officers and particularly with the fire officers?— because one of the difficulties is that in different boroughs of London and in different counties they have completely different standards. Perhaps he could consider this and write to me about it. I should be grateful if he could consider those three points. I was a little sorry that the answers to my Amendment No. 147 in the previous debate did rather prevent me from expressing myself on that occasion, and that is why I put down this amendment today.
Lord BELLWIN: My Lords, with leave, may I just say that after having heard my noble friend I shall again read carefully what she has said. Of course, I shall write to her on the point.
Baroness VICKERS: My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord BELLWIN Lord BELLWIN moved Amendment No. 65:
Page 171, line 3, at beginning insert ("section").
The noble Lord, said: My Lords, this is a purely drafting amendment. It corrects an error in Schedule 24, dealing with means of escape from fire in houses in multiple occupation, which was added to the Bill at Report stage. I beg to move.
On Question, amendment agreed to.
10.12 p.m.
Baroness VICKERS Baroness VICKERS moved Amendment No. 66:
Page 171, line 9, at end insert—
("16. In section 70 of the Housing Act 1969 after the words "Part IV of the 1974 Act "there are added the words" section 147 of and Schedule 24 to the 1980 Act ".").
The noble Baroness said: My Lords, this is simply a drafting amendment which I hope my noble friend will feel able to accept. I should like to ask him how exactly local authorities would become aware of unsafe hostel conditions so that they would have to assume the duties and the powers set out in Schedule 24. Local authorities have a duty under Section 70 of the Housing Act 1969 to inspect the houses in multiple occupation in their district "from time to time".
There is some argument as to whether that duty is sufficiently rigorous, bearing in mind the dangers to life and limb in some hostels, of which we are all too well aware. However, local authorities have such a duty, and it would not be possible to amend it at this stage of our proceedings on this Bill. My amendment to Schedule 24 would ensure that local authorities are well aware that they must inspect hostels in their area from time to time to satisfy themselves that they are safe. I gather that this does not add to existing legislation but merely consolidates it. I hope that my noble friend will be able to accept this amendment.
Lord BELLWIN: My Lords, my noble friend Lady Vickers has tabled two amendments dealingwith houses in multiple occupation which would have the combined effect of placing local authorities under a double duty: first, to inspect their areas, and, secondly, to secure adequate means of escape from all houses in multiple occupation occupied by three or more households or six or more individuals. This may involve the inspection of tens of thousands of properties. What arguments are advanced to demonstrate the rightness of the arbitrary choice of size? How are the local authorities to find the resources of men and money?
As my noble friend Lord Sandford so rightly pointed out when we debated this topic on Report, we must guard against the best becoming the enemy of the good. It was for precisely that reason that the

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Government's proposals, set out in Schedule 24, were cast in such a way as to provide an opportunity for detailed consideration and wide-ranging consultation. My noble friend may argue that she is doing little more than continue the general duty under Section 70 of the Act of 1969. But we cannot overlook the further implications of the duty to require means of escape, whether defined in the terms proposed by my noble friend or in some other way. The provisions must operate in concert and consideration of their implications should be similarly concerted.
Naturally, we will consider in the discussions and consultations to which I referred when we discussed the last amendment, how these aspects should be linked. I would just say again that this is indeed a subject that we cannot just pass by because we are all so anxious to ensure proper provision. We must handle this carefully and properly, and after much consultation—and by that I do not mean that that should drag on, because I know that consultation can be an excuse for doing nothing, or for doing very little for a long period of time. If we do not do it very carefully, in the manner I have suggested, there is a real danger that local authorities will feel that they are unable to comply strictly speaking within what might be laid down in this way, and therefore we should have the kind of adverse results which no one wants to see. I hope I have given enough expression to the real concern we share with my noble friend, but it could not be done in the form of the amendment.
Baroness VICKERS: My Lords, in view of the lateness of the hour, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 25 [Minor and consequential amendments, transitional provisions and savings]:
10.16 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 67:
Page 176, line 20, leave out from ("in") to ("the") in line 21 and insert ("subsection (7) there are substituted").
The noble Lord said: My Lords, this is a minor consequential amendment to the
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amendments to Clause 61 and Schedule 25 dealing with the effective date of rent registrations which were made by the Government on Report in your Lordships' House. It has no substantive effect. Clause 61, as amended, already revises this subsection. The reference to it in Schedule 25 is therefore superfluous and the amendment simply deletes it.
On Question, amendment agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 68:
Page 181, line 33, at end insert—
(" (2) Section 104(3) of the 1957 Act shall have effect, in the period between the commencement of section 91 and the commencement of Chapter II of Part I of this Act as if Chapter 11 were in force.").
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 1. I beg to move.
On Question, amendment agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 69:
Page 181, line 37, at end insert—
(" 69A. Subsection (3A) of section 2 of the 1974 Act (inserted by section 123(4) of this Act) shall have effect, in the period between the commencement of section 123(4) and the commencement of Chapter II of Part I of this Act as if Chapter II were in force.").
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 1. I beg to move.
On Question, amendment agreed to.
Schedule 26 [Repeals]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 70:
Page 185, line 29, leave out ("subsection (4) ") and insert ("subsections (4) and (8).")
The noble Lord said: My Lords, I spoke to this with Amendment No. 41. I beg to move.
On Question, amendment agreed to.
10.18 p.m.
Lord BELLWIN: My Lords, I beg to move that this Bill do now pass. I wish at the outset to thank noble Lords for the very great effort they have put into the consideration of the Bill. We have

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had lengthy sittings, finishing very late on several occasions. We have had to consider the Bill on Monday and Friday as well as the more customary days in the middle of the week. We have spent many days and late nights on it with at least one false start and one interruption of a rather major nature. However, we are in the main most of us still here.
As a result of the lengthy and thorough consideration which your Lordships have given to the Bill, I believe that important issues have been aired and are at least better understood, even where we have not been able to accept all the points made. Despite what some may have said or felt, we have tried to be flexible and we have brought forward amendments to meet points raised wherever we could do so without breaching the fundamental principles behind the legislation. I do not intend to refer to them now, but I have with me quite an impressive list of amendments made both in this House and in another place, many of them in response to proposals made other than by the Government.
I wish to thank all who have taken part in the proceedings during the various stages of the Bill. To name names is always fraught with the danger of omission, but I should like to say particularly to the noble Baroness, Lady Birk, that I felt that her contribution at all times was never less than courteous and helpful in expediting the proceedings. We disagreed on many matters arising from the Bill, but she always made her case most ably, if I may say that without being misunderstood, and I gladly pay tribute to her very considerable abilities.
Although they are not all here, I should like to say to noble Lords opposite how grateful I am to them in the main for their great help in getting through what has been a very large number of amendments. Again, although he is not here, I should like to thank the noble Lord, Lord Strabolgi, for the way he helped us to get through a very complex, difficult sector. I hope he will feel it enabled him to get a long way along the road, either to where he wished to be or to where one day he hopes we will be. Likewise the noble Lord, Lord Bruce. Again, he is not here, but he took a complicated sector and put it together in a way that was most constructive.
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The noble Baroness, Lady David, was always very much to the point. We usually disagreed, as we seem to do on so many things, but she always made her case very powerfully. Noble Lords on the Cross-Benches, particularly the noble Lord, Lord Monson, and the noble Viscount, Lord Craigavon, successfully moved amendments which I am sure helped to make the Bill a better Bill.
I should like to thank, on my own side of the House, my noble friend Lord Hylton, who is not here. We disagreed down the line, time and again, but his points were always put very fairly. The noble Earl, Lord Selkirk, moved a very important amendment which we were glad to accept at the end. My noble friend Lord Sandford's contributions were always of immeasurable value. I also want to mention the noble Baroness, Lady Faith-full, the noble Baroness, Lady Vickers, and the noble Earl, Lord Kinnoull. Perhaps last, but certainly not least—in fact, almost "most"—I want to express my thanks to my noble friend Lord Mowbray, who was of immense value to me all the way through, and, indeed, to the whole of the passing of this Bill. I am deeply grateful to him, and I welcome the opportunity to say so as sincerely as I know how. I should also like to thank my noble friend Lord Belstead, who also helped out.
I am not going to spell out again or even summarise all the provisions in the Bill. It is a far-reaching and radical Bill. The right to buy shorthold, the tenants' charters, ending the old controlled tenancies are, in my submission, great steps forward in the context of housing. We have tried to protect and to extend the rights of individuals, to make a real attempt to preserve and revive the private rented sector and to give help to those who need it most. It is with no inconsiderable pride that I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.—(Lord Bellwin.)
10.23 p.m.
Baroness BIRK: My Lords, I want to start by thanking the Minister, the noble Lord, Lord Bellwin, for the very nice things he said about me personally, and also about my colleagues. I should like

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to reciprocate by saying how courteous we found him all the way through. He kept his cool extremely well and was as helpful as he was able to be, which was not all that helpful on the substance of the Bill. But he always performed his task in a pleasant manner and with a smile, and while one had to realise that really one was not getting very much, the cover was extremely nice. The noble Lord, Lord Mowbray, also played a great part in this Bill and was always very courteous. I do not think I can possibly emulate or even equal the Minister in going through a list of names. I would only say that I am very pleased to see the right reverend Prelate here this evening; he has been present so much and has played an extremely active part in the whole of the Bill.
When I come to speak to the Bill itself I am afraid the mood has to change, because I do not feel the same towards the Bill as I do towards the Minister and his colleagues. It is most fortunate that I do not; otherwise there would occur some sort of Greek tragedy very much greater than occurred at the beginning of this afternoon. At Second Reading I pointed out that major amendments were required if the Bill were not to be a monument to moral and social irresponsibility. The Bill has now passed through Committee, Report and Third Reading, and a great many amendments have been made. I should say that there have probably been about 200 amendments in this House alone; the Minister says that there were even more than that. Some important improvements have been made. For example, the discretion to local authorities to designate rural areas, in consultation with the Secretary of State, is an extremely important step forward. There is also the limitation on the Secretary of State's draconian powers; the amendment now puts a duty on the Secretary of State to give reasons for his actions.
There is also what I would call the very sensible compromise on windfall gains through the two-year option scheme—the scheme which we and many other noble Lords in different parts of the House viewed in various ways, ranging from complete animosity towards it to a feeling of considerable unease. One sensed that feeling coming from different areas of the Government Benches as well. The amend
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ment that is now in the Bill certainly helps to mitigate some of these things. There is of course the option mortgage extension which was moved by the Liberal Party in this House.
Finally, there is what I consider to he probably the most important of the amendments put into the Bill by your Lordships' House—that concerned with the exclusion relating to houses specially designed or adapted for elderly people. As we are all aware, that was the subject of our preliminary debate, the rather large curtain-raiser this afternoon to the Third Reading.
It is extremely important that these amendments—and there is not a tremendous number, if one considers them in the context of an enormous Bill of this kind —should remain in the Bill, should be accepted by the other place, should come back here as part of the Bill, and later become part of the statute. So far as the elderly are concerned, I feel that your Lordships would resist any attempt to change this provision, or take it out, in another place, since there was strong feeling about it in all parts of the House from noble Lords temporal as well as spiritual.
I must also mention the question of fire precautions in hostels. Although this proposal did not go as far as was wished by the noble Baroness, Lady Vickers, and those who supported her, it was certainly an improvement on the Bill compared with when it first reached us. There has been a certain amount of give on service charges, although my noble friends, particularly Lord Strabolgi and Lord Janner who are most closely concerned with it, would consider that it was not sufficient.
Having said that, I must add that the Bill remains defective and dangerous in many aspects. There are quite insufficient safeguards on shortholds. There is a chance that with the proper safeguards the shortholds could be the means of finding more property for rent and of encouraging people to rent out their property. The warlike resistance of the Government towards accepting any of the really fundamental safeguards makes that whole area of the Bill very different from what it should be. For instance, again this afternoon we saw an absolute resistance towards accepting the proposal

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regarding the sitting tenant having first refusal. I am not suggesting that the Minister himself thinks up all the reasons for resistance that were given, but those reasons, as well as the reasons given in another place, do not really cut any ice at all. They were quite trivial and extremely unconvincing.
Then we had the formula for the steep rent rises for private tenants and the phasing cut from three years to two years. The opportunities for steep rises or increases in rent at a time of high inflation in this country really does not make economic or social sense. It is going to cause hardship to a great many people, and it is not going to help the economy of the country at all. Then there was what I feel was the completely insensitive approach to the decontrol of controlled tenancies. We tried to let them erode themselves, to disappear through natural wastage, but this was turned down. I then moved an amendment, which was originally down in the name of the noble Baroness, Lady Vickers, to make sure that at least they reached a standard fit for human habitation before they were decontrolled; but that, again, failed.
Then there was the failure to end the medieval instrument of distraint, which takes us back centuries and should not be in a Housing Bill that is looking forward to the 'eighties. Then there were the completely inadequate provisions to encourage mobility through the refusal to accept our amendments on those and on allocations. Then again there was the refusal to accept any amendment which would have dealt with the problem which we all feel, right across the House—the problem of the number of houses which are boarded up and are not used as short lets while they are waiting to be rehabilitated by local authorities. There are, of course, a great many more matters. I would hate the noble Lord the Minister to think that that was the end of my list, but as it is late tonight I will not go through all the omissions from, or bad commissions in, this Bill.
On the key part of the Bill—the right of council tenants to buy—the Government have been so astonishingly doctrinaire and rigid it is almost unbelievable, except that one sees it written into the Bill. Of course there is a case for the sale of council houses, and a great many
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authorities have been operating it for a long time. Where it is possible and people want to buy their houses, then there should not be any obstacle so long as it fits in with the local authorities' structure and the resources that they have. But the way in which it is done in this Bill is a complete imposition on local authorities. There is no respect for local circumstances, no respect for the impact on the supply of lettings to those who can afford only to rent—and this is at a time when new house construction, and therefore the supply of lettings, is at its lowest level since the 1940s.
We saw today a report of the Commons Select Committee on Housing. The most recent White Paper forecast a total reduction in public expenditure of £2,800 million, which is about 4 per cent., between the period 1979–80 and 1983–84. Of that, £2,582 million, which is more than 92 per cent., will come from cuts in the housing programme. By 1985, nearly half a million fewer flats and houses will have been built than was expected in the 1977 Green Paper. The report of the Commons Select Committee on the Environment expects the number of housing starts in the public sector to fall to no more than 31,000 in 1983–84, and suggests that the total could be even lower than that; and the private sector starts this year are now running at about 100,000 units only.
However, the most extraordinary aspect about this report—and this is extremely relevant to a Housing Bill which we are in the process of seeing (reluctantly, so far as we are concerned) pulled through the legislative procedure —is that the cuts have been carried out in secret. The Secretary of State for the Environment did not give evidence. The committee is scathing about his secrecy, and as the Guardian says, it needed to be; not even the basic information has been provided. The Times also commented on the committee and on the committee's censure on the Government, and says that no other programme comparable to housing has been accompanied by so little information. This is at a time—and it should cause a great deal of unease among everybody—when the housing programme has been cut so very greatly; when inflation is so high; and the Select Committee, with incidentally a majority of Conservatives on that com

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mittee—quite naturally with a Conservative Government, and the Conservatives outnumber the Labour Members by six to five—reported unanimously. It was a report of evasion and secrecy in the whole of our housing field and what is projected for the future.
This, I believe, is a very serious matter. If we put the Bill in that context, then I think the drawbacks thereafter, the things that are worrying to so many of us, become even starker in their worry and their concern. Here we are, in the midst of a grave economic crisis, a time when today the CBI said that morale was at its lowest ebb among manufacturing industry, and we have a Government that is so doctrinaire about this that the right to buy has to override everything; shortholds without proper safeguards take precedence. It does not seem to me to have any real relevance to so many of the things that we are concerned with and that are important both to our economy and to our national life if we are to get on our feet again.
This Bill is really a Bill which is a doctored dogma. There are, it is true—and I will be fair; I said so at the beginning—some good aspects of it. I have seen through this House, and been connected with, a number of Housing Bills. I admit readily that none of them has ever been perfect; I do not think there is any piece of legislation that has been. Most of them are complex. They are complicated. But I do not think I have ever had anything to do with a Housing Bill that has been so bad as this one in its whole construction, policy, and purpose—this is not to do with the individuals who are dealing with it at the moment—and which has had so little wholehearted support.
During the process of this Bill, with the exception of the president of the ADC, the noble Lord, Lord Sandford, the Minister has really received very little support from his own side, let alone anywhere else. Although there is a Conservative in-built majority, and always has been, in this House, it is significant that the voting from the Opposition and those on the Liberal Benches, and those who joined us, particularly on many of the very important issues, was much higher than it has been on many other
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Bills. I would remind your Lordships that when we had a debate on clause stand part on shortholds, the voting was 98 to 90, which is quite amazing with a Conservative Government in this House.
I feel sorry for the Minister, though I do not think he will need me to feel sorry for him, because he has been landed with a Bill of this sort. The drawbacks to it are far greater than its advantages. It is a great pity. It has all the marks of not only being doctrinaire but of having been rushed through in a very mixed-up sort of way, so that it has had in so many ways the worst of all worlds. It would have been nice to be able to speed something off with some feeling that it had created something good or was doing something good. I am afraid that it is very difficult to find many good things to say—apart from the good intentions which I do not doubt underlie a great deal of it. I am sorry, but I am afraid that even the best of intentions cannot turn this Bill from a bad Bill into a good one.
10.40 p.m.
Lord EVANS of CLAUGHTON: My Lords, I should like to join in the words of congratulations personally made to the noble Lord the Minister for the way he has conducted the Bill through your Lordships' House, and, indeed, for the very remarkable support and considerable devotion which his noble friend Lord Mowbray and Stourton has given to him during the passage of the Bill. I probably ought to congratulate the noble Lord, Lord Belstead, most of all because he was the noble Lord who accepted one of my amendments as drawn. My Liberal colleagues on Leeds city council used to tell me that Lord Bellwin, when he was a mere councillor, as leader of the Conservatives there was very helpful and cooperative. Now, I would not go quite that far, but I think he is well on the way to being helpful and co-operative and, with a few more Bills of this nature, he might become really helpful and cooperative.
I would say that he has gone out of his way to try to explain the inexplicable and has tried very warmly to justify the unjustifiable in a very reasonable and very patient way. He has been very helpful, in my opinion, on some of the more difficult and technical matters in this

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Bill. Many of them have been very difficult and very technical. And it is quite apparent that he is a master of the subject of housing. Speaking possibly a little subjectively, I feel that in the case of the noble Lord, Lord Bellwin, local government has proved to be a very good grounding for your Lordships' House. I was going to thank the noble Lord for the graceful and charming tributes he made to the contributions from the Liberal Benches, but since he has said nothing about that, I am going to thank the noble Lord the Minister for accepting some of the smaller but useful amendments that have been moved from these Benches.
I suppose that we on these Benches do not need any thanks since the Government have gracefully accepted the substantial amendment moved by my noble friend Lord Banks on option mortgages. It will make a very great number of elderly and less-well-off people very happy; and I see that the Financial Times today says that this was a rare victory for the Liberal Party—so it will also make quite a lot more Liberals very happy. The noble Lord therefore must feel that he has spread a little happiness around the Palace of Westminster and elsewhere.
I am sorry that he was not able to accept some of the amendments put down by me and by other noble Lords about restricting the right to buy in rural areas. I feel that in five or ten years' time the Government will find that this has been a mistake. It was significant, I thought, that many noble Lords on the Cross-Benches and on the Government side seemed to take the same view as I and the noble Baroness, Lady Birk, took about amendments of this kind. I hope very fervently but without much optimism that the amendment dealing with the exemption of old persons' accommodation which has been widely hailed as a victory for commonsense will be accepted in another place and will not be brought back to your Lordships' House in an amended form.
I myself put forward an amendment for giving pre-emption for old persons' accommodation and, on reflection, I decided that the amendment so ably moved by the noble Baroness, Lady Birk, was a better and more effective amendment than mine which was based on pre-emption. I hope that the Government are not going to think that the
1022
granting of pre-emption, though it is better than nothing, would be nearly as good as the amendment that this House passed on Report stage, because I just do not think it is practical politics to consider the probability that local authorities in 10 years' time will be in a position to repurchase the many thousands of homes for the elderly which would otherwise be lost to the elderly because they were specially designed or adapted for the purpose of old people's dwellings. I hope and believe that, in spite of what happened in your Lordships' House today, wiser counsels will prevail and that the Government will accept the amendment that your Lordships passed on Report stage.
I also believe that the amendment requiring the Secretary of State to give the reasons when he intervenes in the affairs of housing authorities is a very good amendment and should be accepted. I, as a person who has spent most of my life in local government, believe that the continual erosion of the liberty of local government is a very serious matter indeed. It has been said that when Adolph Hitler wanted to destroy democracy he first destroyed local government. I would not in any way suggest that this Government are set on that kind of course. But we are moving very rapidly from a partnership between local government and central Government to local government being an agency of central Government. This to me, as a local government person, is very bad and unhealthy and is a matter that I suspect is going to be continued; and this erosion is going to be continued when we reach the Local Government Bill in your Lordships' House.
One of the great faults in the Bill was that it gave the Secretary of State almost unfettered powers to interfere with locally-made decisions. I agree with the noble Baroness, Lady Birk, that the old people's amendment is probably the most important; but an amendment was accepted to fetter the Secretary of State's right to interfere. Though he still has the right to interfere, the amendment as accepted made him explain why he was interfering. That is a very important amendment if we believe in local democracy, and f believe very firmly in local democracy. I think that was perhaps the most important amendment from that point of view.

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Again I say that this is the first major Bill that I have been engaged in; I have enjoyed very much the procedure of this Bill, and have become exhausted. I have felt that attempts have been made, within the limits that the noble Lord the Minister was allowed, to meet the criticisms made from these Benches and Opposition Benches generally. I should like to say a warm word of congratulation to him and his noble colleagues for the way that they have conducted the Bill through your Lordships' House.
10.48 p.m.
The Lord BISHOP of LONDON: My Lords, before we send this Bill on its way, I should like to add a word from these Benches. On the Second Reading, I observed that this was an extremely complicated and technical Bill, but that beneath all this verbiage there lay the most important things of human rights and human happiness. Therefore, we owe a great debt to those who have carried us through the complexities of this Bill.
I should like to express gratitude, first, to the noble Lords, Lord Bellwin and Lord Mowbray, for the lucidity with which they have explained the Bill, and for the courtesy that they have shown to all of us who have been concerned with it. I would also add my thanks to those on the Opposition Benches who have brought such illumination: I think especially of the noble Baronesses, Lady Birk and Lady David, and the noble Lords, Lord Strabolgi and Lord Evans of Claughton. It is as a result of their knowledge and their insight that the incomprehensible has been made at least partly comprehensible to those of us who have not the training that a Bill like this requires if one is to understand fully all that it implies.
I hope that the Government will appreciate that there are many of us—among whom I count myself—who approve and accept the main thrust of this Bill, but who also see that, when one is introducing new principles and new ideas, one must also very carefully examine all the consequences. If some of us have been concerned with amendments which have not commended themselves to the Government, I would ask the noble Lord, Lord Bellwin, to accept that we have moved these amendments because we want to improve a Bill
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of which we fundamentally approve. This is particularly true in my view, as the noble Lord, Lord Evans, has said, of the clause which was added to Schedule 1 concerning houses and accommodation, either built specially or specially adapted for old people.
It has been suggested to me that what I said at the Report stage on 21st July indicated that I thought that, if this was not carried, then a great many old people would be immediately in peril. I have read what I said and I can see that that interpretation could have been put on what I said; but of course I was thinking in a much wider and longer-term manner, believing that if it is possible for old people to buy these specially constructed houses then in the course of time they will eventually go out of the use for which they were first intended. Therefore I attach the greatest importance to this clause, and the worry I had about the matters which concerned this House earlier today was the suggestion that our amendment might be disregarded. I very much hope that will not be the case and that the amendment will be accepted, because I agree with many noble Lords that it is of very great importance.
I see also another broad-term danger about this Bill. It may be that as a result of passing it we might believe that we have solved the housing problem. When Cardinal Hume and I spoke at the beginning of May about this problem, we said there was a general complacency about the housing situation and that many people believed it no longer existed. Maybe that sentiment will be strengthened because we have a new Housing Act on the statute book; but when this Bill becomes an Act there will still be nearly 1 million families on the waiting lists of housing authorities, and there will still be thousands of people in London and other great cities who have nowhere to lay their heads and with no homes, who are sleeping rough or who may be, in the main, accommodated by voluntary associations. There will still be that jungle of regulations which brings despair to those who try to do something constructive. Above all, there will still be that terrible social problem of what is to happen to our great cities when the housing situation becomes so expensive and so difficult that, as I said earlier, they

1025
become deserts with no people living in them at all.
So I hope that this Bill, when it becomes law, will not just be food for those who feel self-satisfied—I do not suggest in any way that such is the case so far as the Government are concerned—but that it will rather be a spur to us to see that this is the great social problem of our day and that we must do everything that we can to solve it.
10.53 p.m.
Lord SANDFORD: My Lords, I congratulate my noble friend on the Front Bench on his mastery of this Bill and marvel at the tenacity of the Labour Opposition. I expressed the hope when we started that we might be able to enlarge the area of bipartisan approach to housing, but I think that the noble Baroness who is just leaving the Chamber has seen to it that we did no such thing.
Ten days ago The Times reported that this Bill was approaching the statute book almost unamended. It is interesting to note how wrong the press can be! As the noble Baroness, Lady Birk, has said, there have been innumerable substantial amendments and scores of useful minor ones, as a result of which the Bill is going on to the statute book considerably amended and considerably improved.
I am nevertheless grateful that it emerges very much in its broad original form in respect of Parts I and II, because I believe that the right to buy, which is perhaps the predominant element of the whole Bill, will confer on council tenants an individual choice which very large numbers of them are eagerly looking forward to exercising, and an individual sense of responsibility, which many of them are well capable of shouldering, and which they look forward to exercising. It will also confer a great deal more mobility.
The shorthold will, I am sure, have the very desirable effect of bringing onto the market, and making accessible, a large quantity of housing stock which is there in existence, but at the moment is not available for large numbers of tenants who would like to occupy it. So for those reasons, I particularly welcome the passage of this Bill onto the statute book.
10.55 p.m.
Lord MONSON: My Lords, I believe that this Bill leaves your Lordships' House a very much better Bill than when it first reached us, although there is still plenty of room for improvement. If—and it is a big "if"—the other place accepts your Lordships' extremely worthwhile amendments to Part I of the Bill, the part concerning council tenants' right to buy, then I do not doubt that Part I will have a beneficial effect overall, not only so far as purchasers are concerned, but also from the local authorities' point of view. It is interesting in this context to note that the Greater London Council estimates an annual surplus from existing council house sales of £2½ million.
Where I think the Government are being wildly optimistic is in their assumption that this part of the Bill will aid mobility of labour. I tried to emphasise this fallacy on Second Reading, and was interested to note that in the Observer last Sunday it was pointed out, in connection with the Prime Minister's suggestion that unemployed people should be prepared to move house in order to get a better job, that in Berkshire high-priced private housing and lack of vacant council accommodation mean that it is virtually impossible for a skilled man from a depressed area to move South. The first and second letters in yesterday's Daily Telegraph also drew attention to the Government's mathematical miscalculations in this regard.
I am extremely pleased that the Government accept the principle of coterminous leases, where local authority flats are sold. I have it on expert professional authority that this step will save the country millions of pounds in the future, so this noble House can certainly give itself a collective pat on the back here. I am afraid that I am less sanguine about the effects of Parts II and III of the Bill, which deal with private sector tenancies. I know that, in theory, the Government want to "arrest the decline of the private rented sector "—to quote the words in the Conservative election manifesto—but the various ways in which private landlords are hamstrung in this Bill, by the extraordinary Clauses 80, 81 and 82, for example, do not give much practical evidence of the Government's will in this

1027
matter. Another snag is the retention of phasing, which, in an inflationary age, means that the rent received by the landlord is always lower than the fair rent. A rent which is lower than the fair rent is by definition unfair and is certainly no incentive to landlords to let.
A further snag is that, unlike council tenants and owner-occupiers, private tenants are unique in getting no subsidy or tax relief, so that it is usually a poor financial proposition for both owner and tenant. All this is a very great shame, especially when one thinks of the great number of lonely widows in this country —given that, statistically, women live seven years longer than men—who would like nothing better than to invest their savings in rented residential property, where they could take a personal interest in their tenants, and even baby-sit for them on occasion, instead of investing in impersonal unit trusts, investment trusts or Government securities. But as things stand, no financial adviser worth his salt would recommend a widow to invest in residential property for letting in present circumstances. I should like to conclude by joining other noble Lords in paying tribute to the noble Lord, Lord Bellwin, for his great courtesy, his patience, his helpfulness and his good humour in coping with this marathon of a Bill.
11 p.m.
Lord HATCH of LUSBY: My Lords, I have taken part in the debates on this Bill from the Second Reading onwards but have particularly avoided intervening in the Third Reading until now because I have tried at all stages to concentrate on the basic principles upon which the Bill has been drawn. I believe that tonight we are facing a very serious situation. The noble Lord, Lord Bellwin, whom I congratulate—along with his officials and the noble Lord, Lord Mowbray and Stourton, too—has been excellent, patient and accommodating in every little detail. But I found that every time we came to the principles embodied in the Bill the noble Lord the Minister refused to meet the arguments. Time after time he referred either to the Conservative election manifesto, or to there being arguments on both sides, or he studiously ignored the arguments. And on one occasion he
1028
put them aside as simply contained in a political speech.
Today we know why. As my noble friend Lady Birk has pointed out, all has now been revealed by the Select Committee of another place. I believe that that revelation has demonstrated that this Government have deliberately and scandalously deceived both Parliament and the British public by refusing to give the relevant details upon which we should have been debating this Bill. Yet during every stage of this Bill, in both Houses, the Department of the Environment had the statistics and the consequent projections, and suppressed them. Now the Select Committee has exposed them. The Minister, if I may say so to him, can no longer use the excuse that I am making a political speech for, as my noble friend Lady Birk has pointed out, the findings of that Select Committee were unanimous. And there were six Conservatives to five members of the Labour Party upon it.
What is the relevance of that Select Committee to this Bill? It forecasts that by 1985, as my noble friend has pointed out, there will be a shortage of nearly half a million houses. It demonstrates, or projects, that the cuts of this Government in their housing allocations over the next four years will be 48 per cent. It calculates that council house building will be down to 31,000, or less, by 1984. It also points out that, whereas the subsidies to council house tenants are being cut back to £600 million, or less—or considerably less according to the forecast—the hidden subsidy of mortgage tax relief is standing at a figure around £1,500 million. These are the figures and the projections that the noble Lord the Minister's Secretary of State refused to give to the Select Committee and which he or his department—I am not attacking him personally—kept away from Parliament, away from the public and away from the press during the very time that we were debating this Bill.
May I ask him whether he has looked at the public expenditure White Paper. If he has, where are the figures for public expenditure on housing in 1981, 1982 and 1983? So far as I can discover, unless I am blind, there are blank spaces there. And if we recall the universally accepted Housing Finance Review of 1977, which estimated that there would be a demand of 300,000 houses or housing units per year up to the year 1986, where does that leave

1029
us and where does it leave this Government in their provision of housing over the next few years? What does this Bill do to meet that situation which has been secreted until today`? And yet this year —again according to the Select Committee —if we put together both the public and the private new building to be started this year, it amounts to no more than at the most 150,000—just 50 per cent. of what is estimated to be the need. What are the Government saying about this in their Housing Bill? We have yet to hear.
So far as I can see, the effect of this Bill which not I but the Conservative dominated Select Committee has reported, is the situation which is facing this Government and facing us all in this country so far as homes are concerned. The effect of this Bill will inevitably be to increase the number of the homeless, to lengthen the housing waiting lists, to enforce more house-sharing and to increase very rapidly the price of housing way above what it is today.
Let me say finally to the Minister that he knows, although I do not believe that he has ever met this argument, that my objection to this Bill from the start has been on a matter of principle. I refuse to accept the slogan of the "right to buy" and I repeat that this Bill is based upon the compulsion to sell. It will reduce the housing accommodation to let in the public sector; it will endanger, particularly if what we heard earlier today proves to be correct, the accommodation available to the elderly; it will handicap what members of the Minister's Government have been preaching over the last two weeks —that is, the necessity for mobility of labour, the injunction to the unemployed to move from where they live to other parts of the country. That will be handicapped by this Bill. As the noble Lord, Lord Evans, has pointed out and as many of us have tried to get through to the Government throughout the discussions on this Bill, it will undermine the character of the rural communities on which much of Britain's rich culture is based.
I believe that the Bill has been improved in this House, but it is still a bad Bill. It is a bad Bill for the ecomonic and social health of our nation; it is a bad Bill when it leaves this House. If in another place, as we have been warned, the improvements that have been made in this House are
1030
reversed, then I can assure the Minister and the House that there will be a deep and widespread resentment throughout our country.
11.9 p.m.
Lord BELLWIN: My Lords, I must say that when I tried very briefly to make a few courteous winding-up notes on this Bill I did not expect that the response would be the blatant political diatribes that we have had to listen to from the noble Baroness, Lady Birk, and the noble Lord, Lord Hatch, and I am very sad indeed that I have to wind up this whole thing on such a sour note. It certainly was not my intention to do so, but when the noble Baroness and the noble Lord read their speeches in Hansard tomorrow I think they will take the significance and the rectitude of what I have just said.
The fact is that I attempted merely to pay courtesies which I felt I wanted to pay in tribute to those who had helped to move the Bill on, and I thought that was all that one did in moving the Motion, That the Bill do now pass. I have learned a lesson; I have learned many lessons, and this is another one. Another time I shall think carefully before I move the Motion in that way. I am not going to rise to the bait, as might be expected. I will just say very briefly two or three things which I think ought to be said.
The fact is that it ill becomes spokesmen of the Labour Party to talk to us, after some 15 months in office, on housing, when they had the most appalling record in housing that this country has ever seen over a period of five years; when the number of dwellings was cut in a dramatic way regardless of the situation as it was then; when the whole of housing was deteriorating on a scale almost beyond belief. These people have the effrontery to come here and, because they do not like it, tell us that we are bringing forth a Bill that is adverse to housing as a whole. I refuse to accept just about everything that they have said about it. I am sorry to respond in that way, and I will not pick up the bait and go into the details of each point made. I would dearly like to, and I am sure there will be other opportunities when I shall.
May I, in conclusion, say to the noble Lord, Lord Evans, that I feel I owe an apology to him and to his colleagues on

1031
the Liberal Benches. I did say that mentioning names was fraught with the danger of omission, and I am sorry that I omitted to pay tribute, because at all times he and his colleagues were most helpful, and even when they differed with us, it was done in a most courteous way. Likewise, may I say to the right reverend Prelate that I was appreciative of what he said. It is true that the Bill does not solve the housing problem. Who could claim that any one Bill ever could, that the whole housing situation can be solved just like that? I, least of all, would make such a claim. This is only a moving on stage in an attempt to take us further forward. We do recognise all the difficulties. Finally, may I say, "thank you" to my noble friend Lord Sandford, who has been so constructive and helpful to me during the passage of this Bill.
I feel very badly about what was said at the end of the whole proceedings, but I still believe, with every bit as much conviction as noble Lords opposite and anywhere in this House, that this is a fine Bill which takes us a lot further down the road of getting the individuals who live in the houses of this country having the rights that many of us want to see, and that shortly we are going to see.
On Question, Bill passed, and returned to the Commons.

  YOUTH UNEMPLOYMENT AND JOB TRAINING
  YOUTH UNEMPLOYMENT AND JOB TRAINING
  MOTOR TAX PROPOSAL: EXEMPTION CRITERIA
  MOTOR TAX PROPOSAL: EXEMPTION CRITERIA
  WOOLLEN EXPORTS: TARIFF COMPARISONS
  WOOLLEN EXPORTS: TARIFF COMPARISONS
  OIL RIG GAS FLARES AND BIRDLIFE
  OIL RIG GAS FLARES AND BIRDLIFE
  LICENSING COMPENSATION FUND: WINDING-UP
  LICENSING COMPENSATION FUND: WINDING-UP