Sitting of 6 June 1980

Preamble
The House met at half-past Nine o'clock
PRAYERS
[MR. SPEAKER in the Chair]
NEW WRIT
For Glasgow, Central in the room of Thomas McLellan McMillan, Esquire, deceased.—[Mr. Michael Cocks.]

STATUTORY INSTRUMENTS, &c.
Mr. Speaker: By leave of the House, I shall put together the three Questions on the motions relating to statutory instruments.
Ordered,
That the Education Act 1944 (Termination of Grants) Order 1980 (S.I., 1980, No. 660) be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Veterinary Surgeons Act 1966 (Schedule 3 Amendment) Order 1980 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Welfare of Livestock (Deer) Regulations 1980 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Jopling.]

ORDERS OF THE DAY
  FILMS BILL
  Not amended (in the Standing Committee), considered.
  FILMS BILL
    Clause 5

      EXTENSION OF PERIOD OF QUOTA
      9.36 am
      Mr. Clinton Davis: I beg to move amendment No. 4, in page 4, line 26, after ' 5 ' insert ' (1) '.
      Mr. Speaker: With this we may take amendment No. 5, in page 4, line 30, at end insert—
      '(2) The Secretary of State may by order made by statutory instrument extend the provision contained in this section beyond 1985 for such further periods as he deems fit.
      (3) Before making any order under this section the Secretary of State shall consult such bodies, including the Cinematograph Films Council, as he deems appropriate.
      (4) No order shall be made under this section unless a draft of the order has been laid before Parliament and approved by a resolution of each House of Parliament.'.
      Mr. Davis: At the outset, may I note that the Under-Secretary is making a last-minute debut in the world of the silver screen? We welcome him to these debates. I recognise, as he will also recognise, that if we had not put down any amendments he would have become a star of the silent screen, and we would have hated that to happen. Today, he has his chance to be a star—not a heavenly body, because that is impossible for the Minister. He could have his name in lights, although he might not remain a member of the Government if that were so. If, in the absence of the hon. Member for Chingford (Mr. Tebbit), the Under-Secretary, with his characteristic good sense, were to ignore the jargon which has been put in front of him marked " Resist " and yielded to the temptation to accept this amendment, he would have a happy future, certainly in the eyes of the Opposition.
      In these amendments, we are arguing that the Secretary of State should reserve to himself the ability to extend the quota beyond 1985, subject to parliamentary approval. In this sense, it is the antithesis of the power that the Minister seeks to take in clause 7, where he has the ability

      1833
      to suspend, subject to parliamentary approval, the quota system before 1985. The Government's proposals in that respect are contrary to the interests of the film industry. They will create a sense of uncertainty. They will not bolster confidence, which the film industry needs. Our provision is designed to mitigate the problems besetting the industry at present.
      It is not only the United Kingdom film industry that is going through a difficult period. Throughout the world there is a serious economic problem—a problem of recession—affecting the film industry and many other industries. I understand that in the United States attendance at the cinema—the movies, as they put it—is down by about 6 per cent. Admission prices are constantly escalating. The cost of film production is constantly increasing. The attraction of staying at home as against going to the cinema becomes more and more inviting.
      Against that, it is extremely important to retain an indigenous quality concerning film making, because this is something wider than the film industry itself. It has significance in asserting the values in which we believe, which are firmly rooted in this country. It would be extremely dangerous to ignore that. It is extremely important, too, in seeking to abate the uncertainty which afflicts the film industry, which represents a threat to employment and a threat to the film-making expertise which can so easily be allowed to drift away from this country, to do whatever we can, as I have said previously, to bolster the industry's confidence.
      I regret to say that I do not believe that this timid Bill is likely to do that. But, at the very least, the Government ought to say that the measure of protection which the British film industry has enjoyed over a period as a result of the quota should be continued and should not have a sword of Damocles hanging over it, as would be the situation as a result of clause 7. So we are taking a very different approach to this matter from that which the Government have advised.
      The quota is supported by substantial sections of the industry, although I concede that it is not universally popular. The Minister has received advice, upon which he has acted, at least in part, that the quota should go altogether. I suppose
      1834
      that we ought to be thankful for small mercies in that the Minister has not acted as he has been advised. We take the view, contrary to the advice which he has received, that the quota is an imperative in protecting British films and in enabling films to be shown that we might not otherwise see.
      Perhaps at this stage I may briefly summarise the arguments concerning the support for the quota, First, it provides some measure of stability of employment in an area in which employment has proved to be uncertain over a long period. Secondly, it ensures the supply of films—not as many as we would like—which have a firm root in the United Kingdom, which enable the vast talents that are here to be utilised and which enable us to use the experience that we have here to depict this country's way of life. It ensures, too, that we are able to maintain that expertise in this country. Let me say in parenthesis that, when it comes to the blockbusters in which British talents are used to such a degree, it is important to recognise that if we did not maintain the talent and the facilities of which I have spoken, in which this country's film industry is still rich, it would have an adverse effect on that form of production, too.
      9.45 am
      I do not gainsay the fact that although in this respect, talking of the blockbusters, it is a good thing that we are able to utilise these talents as a result of this factor, what I am really talking about is the need to maintain an indigenous quality in our film-making and to be able to produce films which have an intrinsic British quality.
      In saying that—I come to the third argument here—one also has to see the arguments which I have adduced against a backcloth of influence and dominance on the part of major United States film distributors. The quota is essential in giving exhibitors a duty to show some British films where otherwise they would probably not be exhibited at all, or very briefly.
      During our debates in Committee, the Minister presented what I considered to be an unconvincing argument against an extension of the quota that we were advancing. What he said, first, was that it was all a matter of judgment. He said that it was less likely that he would get

      1835
      his new legislation—there is no argument that new legislation will be required—because of the attitude of the Government's business managers. I am not attributing the exact words, because the Minister was not nearly as offensive about the Government's business managers as I was. Effectively, what he was saying was that his task would be far more difficult in the face of the Government's business managers because, if he had the power to extend the quota, they would say—because this particular type of legislation does not have much political sex appeal—that there was no reason for them to give time for further legislation even if there was a manifest demand for radical change.
      I find that argument singularly unconvincing. I have had some experience in this regard. Certainly the Committee was at one in saying that there would be a substantial need for new legislation. Quite apart from the questions of the quota and of the levy, there are many other matters which will need to be dealt with in the light of the rapidly changing scenario in the film industry—the new technology, the relationship with television, video discs and so on—and the power of the duopoly, which my hon. Friend the Member for Keighley (Mr. Cryer) and I have raised on a number of occasions. All these are factors which will need to be looked at.
      But when the Minister says that it is a question of judgment and that he would be singularly ill placed to advance a case for additional legislation, notwithstanding all the radical changes that are demonstrably necessary, if he were faced with the sort of amendment that we propose, I think, with great respect, that he is using that argument to defeat the amendment rather than treating it on its merits.
      The second point that the Minister raised in arguing about clause 7 was to adopt a totally different argument, because, as I have said previously, hovering over the quota, and, therefore, hovering over the interests and the confidence of the industry during the next five years, is the power that he is taking to suspend the quota altogether, albeit that he will be required to get the affirmative approval of both Houses of Parliament. I think that the argument that he has adduced in that respect is utterly wrong and is creating quite unnecessary anxiety in the industry,
      1836
      which will also affect the stability of employment in the industry and many other matters.
      I turn from my arguments in favour of extending the quota, having also adduced arguments to rebut the Minister's arguments for clause 7, to certain other aspects of amendment No. 5. We, too, adopt the line that any order made in this behalf should have the approval of both Houses. The second and important aspect, covered by our new subsection (3), is that before he sought to obtain any power under the clause the Secretary of State would have to consult
      " such bodies, including the Cinematograph Films Council, as he deems appropriate."
      We take the view that the consultation should be wider than the consultation that the Minister normally is statutorily bound to carry out, which is limited to the council.
      I believe that there is a feeling in the industry that that consultation is far too narrow and that the Minister should be under a statutory requirement to consult on a far wider basis. That matter is also dealt with in another amendment, in respect of which I do not propose to take up much time, because the Minister may feel it convenient, in the light of our proposed subsection (3), to deal with the point in this debate. Suffice it to say that we agree with the arguments, with which the Minister will be familiar, that the consultation currently required by statute is too limited, and, therefore, we wish to extend it.
      In dealing with the Eady levy in Committee, the Minister's colleague was reasonably forthcoming. After I had argued a similar point in relation to the levy, he said:
      " Yes, I can certainly respond to the hou. Gentleman on that. I should be surprised if between now and 1985 we were about to find another such effective means of obtaining money to assist the industry that we could dispense with the Eady levy".—[Official Report, Standing Commitee A, 8 May 1980; c. 60.]
      The hon. Gentleman added that he was awaiting the views of the interim action committee, led by my right hon. Friend the Member for Huyton (Sir H. Wilson), but he was very forthcoming, saying, in effect, " I can see every reason for extending the levy in due course if we come to further legislation, or whatever." But he was much less forthcoming about this matter.

      1837
      I should like the Under-Secretary to say that he will abandon clause 7, but I see no sign of that on the Notice Paper. However, it is incumbent upon him to reassure the industry that the quota will not be suspended. There is great anxiety about this matter. The hon. Gentleman will do much to add to the waning confidence in the industry if he gives it this reassurance.
      The introduction of clause 7 was unnecessary. It has caused unnecessary anxiety to an industry that can well do without it. Therefore, I hope that the Minister will have something far more reassuring to tell the House on this important point than his colleague did in Committee.
      Mr. Bob Cryer: I should like, first, to say how disappointing the selection of amendments is. I am in no way challenging the Chair, because that is not possible, but we should have liked to see a wider selection, including some of the new clauses, particularly the new clause that would have established a British film authority.
      I come immediately to the amendments before us, Nos. 4 and 5. It is important for the confidence of those in the British film industry at least to give them the knowledge that the Minister has powers that he may use to extend the quota system if the industry, which is already minuscule, should see itself facing total extinction. The industry is minuscule, as described in an article in The Guardian of 31 May, quoting Michael Houldey, a British television director:
      " ' The British feature film industry is nonexistent ', Houldey says. ' And television, in spite of the coming fourth channel, just doesn't have any work. I've spent all my working life in television, and today I'm just finding it difficult to get either drama or documentaries.' "
      He was out in Hollywood, trying to promote films to give himself an opportunity to work.
      That article contains a number of comments that I shall go into on Third Reading about the British directors who have left this country, not, as the article and their comments make clear, to line their pockets, but because they want to make films. If we are to retain an opportunity for people in this country to make
      1838
      films about this country, to make indigenous films and not cheap imitations of Hollywood, as one of the young directors describes much of the film-making in this country, we must give the Secretary of State powers that he can use in a time of difficulty to say "We shall make sure that the minimum exhibition time of British films is maintained."
      The Minister may well argue that over the past nine years the quota of first features has been exceeded anyway. In 1979 it was 36·8 per cent. when the standard, prescribed rate was 30 per cent. In 1978 it was 33·2 per cent. Therefore, the quota has been filled, and the hon. Gentleman may well ask " As it has always been exceeded, why worry about the future?" But anyone who takes the slightest interest in the industry will know that there is always good cause to worry about the future. One cannot say with certainty from year to year that the quota will be exceeded, in spite of the experience of nine years when it has been.
      Therefore, I believe that the amendment will be useful simply so that the industry will know that the Minister has powers for use in a crisis, if it were affected to such an extent that there was no opportunity for films to be shown. If one makes films, one must have an opportunity to show them. The quota system was designed to provide that opportunity against an overwhelming importation of American products.
      Since those days the American products have been dominant. In some instances the definitions of " British films " are less than satisfactory, with the result that mid-Atlantic films have been included in the quota. Nevertheless, in spite of the imperfections, if there are indigenous films that are concerned with the character and nature of this country instead of aiming at a synthetic, mid-Atlantic market, it will give confidence to the makers—they exist, and they want the opportunity to make films—to know that the Minister has additional powers to require the quota to be extended. We are not saying that the Minister " shall " have additional powers; the word in amendment No. 5 is " may ". It says that he may beyond 1985 extend the existing provisions, and that seems entirely reasonable.

      1839
      This is one of the rare occasions on which I am prepared to give the Government any powers at all to extend anything. If I were the Minister, I would eagerly seize the opportunity, because if I can take powers away from this Government I shall be happy to do so. The reality is that the Government are likely to be in office for a year or two, or perhaps some months. I am prepared to incorporate such a provision in the Bill so that a statutory instrument can be presented to the House if there is a crisis.
      10 a.m.
      The amendment says " beyond 1985." Of course, by that time there will be a change of Government, but the power will be there. One difficulty is that there is not always time to provide new legislation. Therefore, while we are using an opportunity to provide legislation for the film industry, it seems desirable to ensure that the Secretary of State—in case a fresh Government with an enormous economic crisis on their hands and urgent priorities to consider do not have time to promote new legislation immediately—has the opportunity to extend the powers in the Bill.
      My hon. Friend the Member for Hackney, Central (Mr. Davis) mentioned consultation. There are bodies, such as the Association of Independent Producers, which are lively, which have contributed such fresh thinking to the industry and which seem to be concerned to make and exhibit British films. I should have thought that the Association of Independent Producers was the kind of body that the Secretary of State might have in mind when considering the organisations that he can deem appropriate for consultation when extending the quota period.
      With the Government's general policy of non-intervention in anything except trade unions, there is a feeling among some people that they might allow the quota to wither away. Acceptance of the amendment would help to restore the confidence of people and give them a degree of certainty. I am talking about people who are not politically partisan and who want to feel that, whatever the complexion of the Government, there will be an opportunity to retain some of the facilities for making and screening British films.
      I hope that the Minister will look kindly on the amendment. Although we
      1840
      were reasonable and helpful in Committee, as we are on every Bill, the Government refused to accept any amendments. It was only towards the end of the Committee proceedings, when the Minister expressed great disappointment in the Labour side, that we felt we had expressed a clear and independent view. In view of the general wish of both sides of the House to retain some facilities for an indigenous film industry, the Minister could go some way towards giving certainty and support for it by accepting the amendment.
      Mr. Edward Lyons: The United Kingdom has a population of about 55 million. It does not seem unreasonable that a population of that size should have a film industry of considerable scale and an interest in seeing that life and culture, including multi-racial culture, in Britain are portrayed on the screen.
      The quota does not seem to cost the Government anything. It enables 30 per cent. of first-feature films shown in our cinemas to be either British or Community in origin. As the European Community provides only 6 per cent. of films shown in Britain, the quota compels a quarter of cinema time in Britain to be taken up with the showing of British films.
      In view of the unemployment situation and the shaky nature of the film industry, it is important that the quota should survive and be maintained, and that distributors and exhibitors are persuasively made aware of its existence and of the need to show British films in order to maintain a native industry.
      " The Europeans "—a brilliant, magnificent film based on the novel by Henry James—was made with money from the National Film Finance Corporation, but it has seldom been shown in Britain. Only a small audience has so far had the opportunity to see it. I submit that there is a need to ensure a better audience for films of such quality. If we remove the quota, the chances are that that film will scarcely get a showing. If it is to get very little showing, there is not much point in the NFFC's financing it.
      It is said by some that a quota is not in the best traditions of private enterprise and that we should get rid of it, but the Americans have no qualms about

      1841
      protecting their industry. By analogy, the American acrylic industry has a two-tier oil pricing policy which enables it to sell oil-based products abroad, including Britain, at a far lower price than British-made products can be sold here. The United States takes that kind of measure to protect and develop its own industry. The quota is a method of protecting our industry. The Americans have a 44 per cent. barrier against our textile imports, whereas we have one of less than half of that. In that way, the Americans ensure that they penetrate our market, but we have a difficult job penetrating theirs. I am not blaming them. However, it shows that it is not inconsistent, even with the private enterprise philosophy of the Government, to maintain the quota to defend British industrial interests.
      Film-making is a form of art. The existence of the quota means that British film makers have some assurance that there will be pressure to show their films. Therefore, we may not need to have so much violence in films as there is at present. I believe that British film makers often feel that the way to attract audiences into cinemas is to put large amounts of violence and sex into films.
      Cinemas tend to thrive only in countries where there is no television or where television programmes are infrequent or appalling. It may be a tribute to the British television industry that our cinemas tend not to do so well, whatever the origin of the films shown in the cinemas. I hope that the television industry will continue to do well and to improve its products.
      There is only one answer for the quota, and that is to maintain it. Distributors do not wish to be fettered by it, but in whose interests do they wish not to be fettered by it? Certainly not the interests of British film workers or the continuance of a thriving and surviving film industry.
      I hope that the Government will take a favourable view of the amendment and will bear in mind that the quota is a useful weapon in reminding those in the film industry that they have an obligation to encourage and develop the British film industry.
      The Under-Secretary of State for Trade (Mr. Reginald Eyre): I thank the hon. Member for Hackney, Central (Mr.
      1842
      Davis) for the kind welcome that he gave me in referring to the absence abroad of the Under-Secretary of State—my hon. Friend the Member for Chingford (Mr. Tebbit)—who has previously dealt with the parliamentary proceedings on the Bill. I have no claim to stardom and I see myself as playing an essentially supporting role this morning.
      I remind the House, as did my hon. Friend on Second Reading, of the speed with which technological advances are coming upon the film industry. Throughout the life of the cinema in this country, the structure of the industry has been constantly changing and developing. The hon. Gentleman fairly reviewed some of the factors affecting the film industry. Many of the long-term aims and the desire to retain an effective indigenous quality in our film industry are shared by both sides of the House.
      The way in which the quota operates may prove inadequate to cope with those changes. The need to return to the House in 1985 will facilitate any adaptation of the present system and ensure that we do not let the existing arrangements drift on even if they appear not to be fulfilling their intended purpose.
      The hon. Gentleman raised points on the quota that were discussed in Committee and on Second Reading. He asked whether the quota ensured that good-quality British films are shown. I am afraid that the answer is " No ". Often British films shown to satisfy the quota are the so-called soft porn films, which are made in the United Kingdom but scarcely contribute to our national standards.
      Every past extension of the quota has been made by primary legislation. To make the quota a matter for secondary rather than primary legislation seems inappropriate. I have sympathy with the point made in support of the desire that our film industry should be able to make films portraying good aspects and qualities of British life, as mentioned by the hon. Member for Keighley (Mr. Cryer) and the hon. and learned Member for Bradford, West (Mr. Lyons).
      Mr. Clinton Davis: The hon. Gentleman says that it is time honoured in custom that the quota should be dealt with by way of primary legislation. How does he reconcile that with clause 7?
      Mr. Eyre: Clause 7 deals with the special difficulties being encountered in the film industry and gives a degree of flexibility. My point was that the framework that applies to the quota has been dealt with by way of primary legislation. That is still the case in the Bill. I emphasise—this is important—that primary legislation enables the House to give the operation of the quota close scrutiny. Amendments to the legislation can thereby be more easily posed.
      Mr. Davis: The Minister has come to the debate at a late stage, and I do not want to take advantage of him. However, we were deeply concerned about the inconsistency in that argument in Committee. If the hon. Gentleman is saying that flexibility is required for the quota, surely our amendment provides that measure of flexibility and is in no way distinct in principle from the degree of flexibility in clause 7. The hon. Gentleman must address his mind with more clarity to the argument about primary legislation. It has little to do with the point raised in the amendment.
      10.15 am
      Mr. Eyre: In essence, the amendments relate to a period following 1985. Moreover—this is a sound practical point—to have this power expiring in 1985, along with the proposed expiry of other powers in the Bill, strengthens the case for a comprehensive review of the industry before then. Many of the points made by the hon. Gentleman acknowledge the number of diverse factors bearing on the difficulties facing the industry. The quota is by no means an answer to all those problems.
      I do not feel that to permit the quota to be extended by that means is likely to be in the best interest of the film industry. For that reason, I urge the Opposition not to press the amendment.
      Mr. Davis: The Under-Secretary has achieved the same distinction as his hon. Friend in being equally unconvincing.
      The hon. Gentleman says that the quota is not a panacea. No one has argued that it is. It is a help in maintaining stability of employment and a degree of confidence at a time when confidence in the British industry is waning. The hon. Gentleman is trapped between two arguments. He argues that the quota is unnecessary and undesirable and then
      1844
      seeks to maintain it. It emerged quite clearly from what the hon. Gentleman said that the Government are not sure. Notwithstanding the unconvincing arguments that the hon. Gentleman adduces, the quota is important in buttressing confidence in the industry at this time. I am sorry that he has seen fit to pour cold water on the amendent.
      The argument about primary legislation, frameworks and flexibility is a lot of hot air. It was as much hot air today as it was before. The Minister cannot explain the inconsistency in principle between clause 7 and his rejection of the amendment. He is caught in that dilemma.
      The hon. Gentleman's argument about convincing business managers of the need for new legislation before 1985 is a regurgitation of the old brief. My hon. Friend the Member for Keighley (Mr. Cryer) disposed of that argument.
      Mr. Cryer: The Eady levy, which forms the most important source of income for the NFFC, has been varied by this Government by statutory instrument. The process of varying the position of the components of the film industry is by no means confined to primary legislation.
      Mr. Davis: That adds strength to the argument that we have sought to bring to bear on the Minister, evidently without success.
      We record our opposition to the Government's reaction, although we shall not necessarily vote on the amendment.
      Amendment negatived.

    Clause 7

      POWER OF SECRETARY OF STATE TO SUSPEND QUOTA REQUIREMENTS
      Mr. Clinton Davis: I beg to move amendment No. 8, in page 5, line 26, leave out " the Cinematograph Films Council " and insert
      " such bodies, including the Cinematograph Films Council, as he deems fit ".
      As I said in advancing the argument for amendment No. 4, which encompassed this issue as well, the Government's duty to consult is too restrictive. I hope that the Minister will indicate the way in which his Department will consult. Will it take into account and discuss the views of those beyond the Cinematograph Films

      1845
      Council? I consider wider consultation to be wholly desirable. I understand that there is a sense of some injustice in some bodies in the industry. The matters raised by clause 7, and perhaps matters that go wider than the clause, deserve the widest possible consultation. I invite the Minister to outline how he sees the consultations developing and with which bodies they will take place. I hope that he will say that they will go beyond the CFC.
      Mr. Tony Durant: I declare an interest as a consultant for the Film Production Association of Great Britain Ltd. I support the view that wider consultation is important.
      The industry is concerned about the membership of the Cinematograph Films Council, which sometimes tends to be too narrow in its outlook. If my hon. Friend the Under-Secretary is able to give certain reassurances, I shall feel pleased that the widest possible consultation is to take place. There are opportunities to put more members on the council. When the appointments are made, I hope that those who are concerned much more with the production side of the industry will be given the opportunity. Those who are engaged in production feel that they are not well represented.
      I urge my hon. Friend to bear in mind the arguments for the widest possible consultation, which is important in an industry that often feels unprotected, not fully recognised and not fully supported by the Government. I urge my hon. Friend to consider this issue closely.
      Mr. Cryer: I am pleased that the hon. Member for Reading, North (Mr. Durant) has urged upon the Minister the need for wider consultation. That is especially important when we bear in mind that clause 7 will suspend the quota by statutory instrument whereas it is possible to extend it only by primary legislation. Therefore, before an order is presented to the House it will be incumbent upon the Minister to have the widest possible consultation.
      This issue was raised in Committee. The Under-Secretary of State gave the impression that the Cinematograph Films Council was a worthy body of independent, noble and lofty people who might be relied upon to give wonderful guidance.
      1846
      That may be so, but I suspect that bodies such as the council are described in rather better terms than can be ascribed to human beings. It is interesting that the hon. Gentleman says that there is some dissatisfaction with the CFC being the sole body of consultation and that consultation should be wider and as wide as possible. That is right. If what we said when discussing amendment No. 4 was correct and if the quota is suspended, or is likely to be suspended, by the Government, it is important that consultations should be as wide as possible.
      I have mentioned previously the Association of Independent Producers. I do not say that it is the only other body that should be consulted, but it represents one of the sources of new and more radical thinking. I say " radical " not in a political sense but in a sense of commitment to making feature and short films in Britain. It is radical in a sense of seeking not to have its objectives watered down by commercial pressures. The association produces an interesting monthly newsletter. It has regular meetings. It promotes the showing and sale of independent productions. It is a body that should be consulted. That is the type of organisation that I have in mind in supporting the amendment.
      I hope that the Minister will accept the amendment. I see no reason why the Bill should pass unamended. Our amendments cannot be considered by any conceivable stretching of the imagination to be wrecking in character. They are designed to improve the Bill. They represent, as has been demonstrated, a consensus view. Amendments are tabled in Committee and on Report to tighten legislation.
      The Minister may say " Yes, I shall consult as widely as possible. My right hon. Friend the Secretary of State will ensure that that is done. Of course, he has all these worthy bodies in mind." However, in two or three years we are likely to have another Secretary of State. The new incumbent will act not on what was said by a Minister in Committee or on Report but on what is set out in the legislation. If he is challenged in Parliament, he can rightly and justifiably say " But I followed the legislation. That is the duty upon me. It is not my duty to heed and follow the fine words of others." That is why we try to change

      1847
      the wording of Bills. ' Statutes are important because they have to be observed by Ministers.
      I suggest that on this occasion the Minister should accept the amendment. I am sure that he will give assurances in the best of spirits, but he may not be in his present office in a year or two. Indeed, he may not be in the Government. The best way of proceeding is to accept the amendment. It will then be incorporated in legislation and we shall know that wider consultation will take place. It will give the Secretary of State discretion "as he deems fit". It will enable organisations that are not mentioned in the Act to say " We have something to say and you should listen to us. We hope that you deem fit that we should be consulted." This innocuous but helpful amendment should be accepted.
      Mr. Eyre: I am grateful to the hon. Member for Hackney, Central (Mr. Davis) for the terms in which he introduced the amendment. It would reduce the statutory obligation to consult the Cinematograph Films Council to a discretionary power to consult the council plus any other bodies that the Secretary of State deemed fit. The CFC is the statutory body appointed to advise the Secretary of State on matters affecting the film industry. On an issue of such importance as that dealt with by clause 7—namely, the suspension of the quota—surely it is preferable to retain the statutory obligation to consult the council.
      10.30 am
      I imagine that the real intention behind the amendment has become obscured. I am sure that it is not the Opposition's intention to reduce the obligation to consult the CFC, although that appears to be the effect of the words that have been used. It am sure that the purpose of the amendment is to extend the consultation by providing discretionary power to consult other bodies. Even so, such an amendment would not change the present position or that proposed in the Bill.
      I appreciate the importance of consultations. I have noted carefully the words that have been used by the hon. Member for Hackney, Central and by the hon. Member for Keighley (Mr. Cryer) and I appreciate the points made in support of those requests by my hon. Friend the Member for Reading, North (Mr. Durant).
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      My right hon. Friend the Secretary of State has shown his willingness to consider all aspects of the problems affecting the industry. I have no doubt that consultation on those problems will be on a wide basis.
      I assure hon. Members that the Secretary of State will want to act fairly and with great consideration in all these respects. There is nothing in the Bill to prevent the Secretary of State consulting other bodies on important film industry issues. The writing into the Bill of the discretonary power proposed would not change this. The strong point made by the hon. Member for Keighley is therefore answered. I emphasise that there would be no substantive difference and, therefore, no point in accepting the amendment.
      Clearly, on important film industry issues it has been, and, as I have tried to say firmly, will continue to be, both sensible and helpful to consult widely. I am sure that the Secretary of State will not take a different attitude in the future.
      Amendment negatived.

    Schedule

      ENACTMENTS REPEALED
      Mr. Eyre: I beg to move amendment No. 12, in page 7, line 4, column 3, at end insert—
      " In the Schedule, paragraph 8(2)(a)."
      Mr. Deputy Speaker (Mr. Richard Crawshaw): With this it will be convenient to take Government amendment No. 13.
      Mr. Eyre: The amendments are straightforward. They repeal parts of legislation that are overtaken by the Bill. Nothing is changed by them. They merely acknowledge the change of circumstances caused by the Bill. When the National Film Finance Corporation was a recipient of Government loans from the Department of Trade, there clearly had to be certain legislative provisions concerning those loans.
      Clause 2 of the Bill, however, withdraws the ability of the corporation to borrow from the Government, so a few minor provisions become superfluous. These allowed the Department to waive interest charges on capital repayments in certain circumstances on the money it

      1849
      had loaned and obliged the Department to inform Parliament of these remittances. The two amendments repeal what have become irrelevant provisions of previous Acts. The amendments make a small contribution to the tidying up of the diffuse body of films legislation.
      Amendment agreed to.
      Amendment made: No. 13, in page 7, line 9, at end insert—
      "2 & 3 Eliz. 2, c. 15. The Cinematograph Film Production (Special Loans) Act 1954. Section 2(2) and (3).".—[Mr. Eyre.]
      Motion made and Question proposed, That the Bill be now read the Third time.
      10.36 am
      Mr. Clinton Davis: I share the disappointment expressed by my hon. Friend the Member for Keighley (Mr. Cryer) that, on a politically uncontentious Bill, the Government saw fit to accept no amendments, apart from the minor amendments that they themseves have introduced. A convincing case has been put forward on a number of matters relating to the Eady levy and to the quota on which the Government could have shown some flexibility—a word which is favoured by Ministers of all Governments but which has disappeared in relation to the Films Bill. That is a great pity. This is a timid Bill. Using the parlance of the Prime Minister, it is a wet Bill introduced by a dry Minister, if that is the appropriate adjective.
      I see no reason, now that we have reached Third Reading, to withdraw the criticisms that I made on Second Reading and in Committee. Offering some help to the industry is better than offering none. Our desire was that the Government should go further. It is no use the Government saying that the previous Labour Government did not seize the opportunity. When one looks back to the problems of the last 12 months of the previous Government, one can see how difficult it was for my hon. Friend the Member for Oldham, West (Mr. Meacher), who was in charge of the film industry for the Government, to have persuaded his colleagues that a radical Films Bill should be introduced. I know that it was his wish, as it was the wish of my right hon. Friend the Member
      1850
      for Lanarkshire, North (Mr. Smith), that this should have been done.
      I believe that had we succeeded in the election we would have been more radical in our approach than this Government. In mitigation of the hon. Member for Chingford (Mr. Tebbit), I am bound to say that he, too, has had a difficult task in persuading his business managerial colleagues to go as far as they have. To that extent, my criticism is more muted than it would have been. We shall have to wait a long time before another Bill comes before the House that will offer a radical look at the film industry. At best, this Bill can be viewed only as a temporary palliative. One would have hoped, in the absence of legislative proposals, that Ministers, in their speeches, would have offered more confidence to the industry than has been the case. They have glossed over the real problems besetting the industry.
      One simply has to ask " Do we want a British film industry at all? " in order to examine some of the principal arguments. Suffice it to say that the Government have deferred answering that question. They seem to be unsure whether they want a flourishing British film industry. If we are to embrace a more radical review, we shall clearly need more than this Bill to sustain the industry. My doubt is whether a British film industry, with all the problems and dilemmas confronting it, will survive until we reach the stage of the next Bill in 1983, 1984 or 1985 under the aegis of this Government or their successors.
      It would be wrong not to recognise that the industry today is racked with doubts about its future. There is an inadequacy of investment available. There is almost a total reliance on extremely volatile foreign money. The industry is unquestionably going through a lean time. I do not believe that the proposals in the Eady levy will be sufficient to sustain the industry.
      It is quite clear that the contribution from the television industry is wholly inadequate having regard to the benefits that the industry enjoys as a result of the film industry's activities. I refer to the talent that it is able to draw from people who are specifically trained to be engaged in the film industry. The contribution to compensate for siphoning off that talent

      1851
      to the television industry is wholly insufficient.
      One of the questions to which the Government will have to address their mind is whether part of the Eady levy should be set aside as a fund for setting up or renovating cinemas under a system akin to that currently used in France with some success. We have to try to halt the large number of cinema closures and to improve the position of the smaller independent cinemas which find it extremely difficult to afford to spend the necessary money on new seating and equipment.
      In talking about that, one is driven immediately to consider the position of the powerful duopoly, or perhaps it is an emerging triopoly, which has, to a large extent, the power of life and death over the distributive side of the industry. Its position was examined in 1966, but there is some doubt whether the recommendations of the Monopolies Commission at that time are being carried into effect by the people against whom the inquiry was brought. One of the points made in paragraph 261 of the commission's report was:
      " we agree with the view of the Cinematograph Films Council … that ' the introduction of a larger measure of competition into film exhibition … would be advantageous to the industry '; we would add that it would also be advantageous to the public."
      That is demonstrably true.
      The independent cinemas, in seeking lo compete with the large chains, are being denied, as a result of the increasing use of the barring system, some of the good new films being produced. Even if that system can be shown to be justified, its use should be far more limited. I think that it should be limited to a reasonable maximum distance of, say, five miles and a reasonable time limit of, say, four weeks. The burden of proving that the system is needed should fall clearly on those who claim that it is.
      There is a need to sustain the smaller independent cinemas which limit themselves to smaller budget and high-quality films which are particularly aimed at British and Continental audiences. It is sad that some of these cinemas are faced with the threat of closure. One of them is the Arts cinema in Cambridge, which has performed a very important function for a number of years. I understand
      1852
      that it is faced with a demand for substantially increased rent which it is unlikely to be able to pay. These smaller cinemas have performed a very useful role. Since grants are made to the theatre and the opera, a case could clearly be made for sustaining this form of cinema, too.
      The regulation of competition with television is an extremely important matter. It certainly needs considerable improvement. At present, the only restriction on the television showing of feature films is the rule that bans the television showing of British films less than five years old. In other countries there are far more restrictions, so that although in Britain over 900 films were shown on television in 1977, the number was 377 in Germany, 444 in France and 120 in Italy. Moreover, with three television networks in Britain compared with 13 in the United States, the competition leading to a bidding up of the price of films is much less. So the BBC acknowledged in 1978 that it spent an average of £4,000 per hour showing a feature film compared with £44,000 per hour for its own drama productions.
      The result is that the film industry's receipts from television—I have no figures beyond 1976—were around £2·2 million, much less than the £33·5 million from cinemas, although the number of television viewers to cinemagoers was roughly in reverse proportion. This is widely regarded as an inequity.
      It has been suggested that the number of cinema feature films shown on television should be substantially reduced. Other proposals are also made, including that a higher quota should be reserved for British films for television exhibition.
      These are some of the matters that require close scrutiny and I hope that the Minister will agree to look carefully at them in the next year or so. I should like to see television compelled to pay into a central fund a levy on all films screened. It should be related to the saleability of the films in cinemas and should be higher in peak viewing times.
      There is a significant omission from the Bill. The Government say that they have not yet made up their mind about the need for a British film authority. This case has been convincingly argued in a series of reports now before the House and which the Government have had

      1853
      ample opportunity to consider. Many arguments justify establishing such an authority. We tried to set them out in our new clause 1 in Committee. One of the most important features which I should have thought would find favour with the Government was the need to rationalise all the various agencies that currently advise the Government or play some part in the film industry.
      The duties of the Cinematograph Films Council, the National Film Finance Corporation, the Minister's Department and the Department of Education and Science could all be merged and rationalised under such an authority. The point that I have been making about regulating arrangements between the film and television industries is a matter that a BFA could examine in a way which would to some extent be free of the diffuse arguments that are presented to the Minister as a result of the present set-up.
      The need for better statistical information about the film industry could be satisfied by a BFA instead of our having to rely on the various bodies which now collate statistics. One of the important elements in favour of the establishment of a BFA would be the creation for it of a marketing arm for United Kingdom films.
      Those are some of the matters which we believe, justify the establishment of a British film authority in the near future. The Government say that they have not made up their mind. Perhaps the Minister will give an indication of when he thinks that the Government's consideration of the matter will be concluded and what are the consultations upon which he is proposing to embark.
      I say no more about these matters now. Suffice it to say that we find the present approach in this legislation disappointing and timid. We need a more radical review of the film industry now rather than in three or four years. That may be too late. However, we shall not vote against this proposal. We support it as far as it goes; but it could have gone much further.
      10.51 am
      Mr. Durant: I rise to speak in this short debate principally because I feel that the tenor of our discussions about
      1854
      the industry has been very gloomy. I believe that this is unjustified, bearing in mind the great amount of talent, skill and productive ability in the British film industry. I should not wish us to leave this Chamber saying that the atmosphere in the industry was all gloom and that there was little hope for the future.
      The hon. Member for Hackney, Central (Mr. Davis) spoke of the lack of finance in the industry. That is a key factor. There is a great lack of risk capital in the industry. The more we are able to bring in the entrepreneurial skills to use money—which might perhaps come from the City—for the film industry, the more we shall be able to make a fundamental difference to the activities of the industry. We are far too dependent on overseas money.
      I wish to make it clear that there is still great hope for the industry. It still possesses great talent, and if we can find the capital to enable us to implement some of the points made by the hon. Member for Hackney, Central—with which I agreed—particularly in relation to television, I think we shall once again have a viable and exciting film industry.
      I believe that television has a responsibility, and if there is to be another channel we should recall that the available material is now running out. There is a great shortage of good material for screening on television. Anything that can be done to encourage provision of that material will be helpful. In the past, the television companies have done bad deals with the film industry. They have been able to buy movies at far too low a cost. I am happy to say that that trend is now changing and the companies are having to pay fees more closely related to the market value of the material. I believe that the Government should look at this issue in order to enable the production sector of the industry to provide the necessary material, not only for the cinemas but for television.
      I hope that the atmosphere of gloom and despondency that has pervaded this debate will not spread outside the Chamber. I believe that there is hope for the industry. It has talent and imagination, and I am sure that if we can get the right capital behind it we shall have a viable and exciting industry.
      10.53 am
      Mr. Cryer: The hon. Member for Reading, North (Mr. Durant) is right. There is a great deal of talent available in the British film industry, but there are not many opportunities to use it.
      When I suggested to the Under-Secretary in Committee that an additional technician might be appointed to the NFFC, since the Bill provides for an additional appointment, he said that that was all very well but that a technician might not be able to talk competently. The gist of the Minister's view was that someone who was good at doing things with his hands might not talk competently. That was the Minister's assessment of some of the people whom he repeatedly claimed—and both sides of the Committee agreed—were capable of fine work.
      There has not, therefore, been any firm step by the Government in the direction of recognising that there are people of ability and talent in the film industry and that we should integrate them more closely into the governing apparatus of the tiny public sector and into the administration of the money for the industry through the Eady levy provided by the Bill.
      The Bill is the latest in a long series of sticking plasters that have been stuck over the gaping wounds of the film industry since 1949. Some people take the view that the 1949 Act was imaginative and far-sighted. I do not think it was, and I wrote to The Manchester Guardian, as it was at that time, to say so. This Bill and the previous Act simply prop up the duopoly which has served the British film industry ill over the years.
      If there are no opportunities to provide the talented and exciting film makers—I quote the words of the hon. Member for Reading, North—that is not the fault of the State. It is the fault of private enterprise exercising its duopoly through the ownership of the major studios and two cinema chains. They are the people who have witnessed the decline of the film industry and who have had props supplied to them by the State from time to time.
      The Bill does not cover a number of issues and leaves a number of questions unanswered. I am not alone in saying that. I have here the April newsletter, No. 25, of the Association of Independent Producers. It reads:
      1856
      "The Films Bill is presented in total disregard of the latest report of the Interim Action Committee: Statistics, Technological Development and Cable Television and in no way tackles problems such as the incentives for television companies to invest in feature films for primary cinema release,"
      That is absolutely true. The newsletter refers to
      "the imposition of a tax system on cable television for the rights to transmit feature films."
      It goes on to say:
      "The NFFC can now borrow up to £5m. from the commercial market (previously £2m.)—but what is it to use as collateral? … The National Film Development Fund, now subsumed into the NFFC—Why? And how will the £200,000 annual Eady allocation for script development be treated in future?—also evidently to be ' submitted ' into the overall allocation from Eady for the NFFC."
      These are questions being asked not just by me but by people working in the industry who are expressing anxiety. That is an indication of the defects and the deficiencies of the Bill, and that is possibly why the comments in this debate have been gloomy. We fully recognise that there is talent and imagination for making good films in this country if the film makers are given the opportunity. That means that they must have money to spend in making films, but the money is not available.
      The Bill says nothing about the need for the television industry to make a contribution to the National Film School. The independent television companies, in most cases, do not have a training scheme. Their training scheme is called the BBC. Once again, the private sector makes use of the State sector to get a supply of trained and competent technicians.
      The National Film School, which by common consent is reasonably successful, provides an important grounding for people wishing to enter the film industry, but it receives a tiny proportion only of its funds from the commercial television industry, which benefits greatly from the production of graduates at the school. The Bill does nothing about remedying that position and compelling the television companies to make a better contribution to their source of talent in future.
      In Committee the Under-Secretary claimed that the difficulty was not that the Bill was inadequate, as we claimed it was, but that the universal butter of tax incentives was being spread everywhere

      1857
      by the Government and that that was what was missing in the film industry. That meant that all the wonderful entrepreneurs would be making the decisions that would revitalise the British film industry.
      I referred earlier to an article in The Guardian of Saturday 31 May about some of the people to whom the hon. Member for Reading, North referred—imaginative and talented directors. Michael Houldey, a British television director, said:
      " The British feature film industry is nonexistent."
      Franc Roddam, who made "Quadro-phenia ", went to Hollywood. He said:
      " I was offered 120 scripts when I walked in here … and I could have made any one of them by now. Ten that I rejected have been made, but I want to make a film on my terms, not theirs, and this means working with a writer right from scratch I didn't come here to make money. I came here to make films—and get away from Mrs. Thatcher "—
      and that is understandable, goodness knows. That refutes the claim by the Under-Secretary of State that all that is needed is a few tax concessions for the higher earners and everything will be all right because the incentives created by the Government will remedy the burden of tax imposed by Labour Governments.
      Speaking of England, Mr. Roddam continued:
      "I'd be back tomorrow if I could make a film there but that's a day dream. Any film made there is now imitation Hollywood, so I may as well stay here and pick and choose my subjects."
      That is the reality—the little patchwork quilt of Elastoplast and sticking plaster to try to keep the whole thing together. We want film makers to make films that represent this country rather than make imitation mid-Atlantic films.
      Michael Tuchner, who made " Bar Mitzvah Boy " and the television production of " Phyllis Dixey ", is a detached student of success. If hon. Members smirk at the name of Phyllis Dixey, they should remember that it was a haunting and rather sad production of a sad woman. Michael Tuchner says that going to Hollywood
      " was a career decision. It isn't money. In fact if you open me up you'll find ' BBC ' printed on my soul. But all I want to do is make feature films. And the only place is Hollywood."
      1858
      That is another indication that publication of the Bill, which was probably published before Michael Tuchner went to Hollywood, did not exactly lure him back to this country.
      The Bill does nothing about the problem of the duopoly formed by EMI and Rank. I made a number of suggestions in Committee, but they were rejected by the Minister as being impracticable. He said that decisions must be taken by business men in executive office suites and that the public interest had no place in the scheme. Arbitrary decisions are taken not to show films for reasons which often are not clear. That goes back to 1949, when the legislation was first introduced. The trade unions daringly embarked on a production through a co-operative, and the duopoly saw that as a threat to its production system and simply banned the film from circuit distribution.
      The duopoly banned " Salt of the Earth " in 1951 because that was supposed to be a terribly wicked film about strikers and women in America. Political discrimination was used against that film. A few years later the duopoly sought to discriminate against " Saturday Night and Sunday Morning " and " Kes ", both successful films.
      Nobody can deny that " Kes " represented an aspect of living in Britain. It was an indigenous, triumphant production, and yet the distributors thought that they should not venture distributing it. After all, the people in it spoke with a Yorkshire accent and would not be understood south of Potters Bar. They said that the strange accent from Yorkshire, where people live in bungalows as they do in the South, would not be understood. However, the film was released in London and the critical support for it pressed it out on to the circuit. It was a struggle.
      The same can be said of " The Europeans ". I can guarantee that that splendid film, financed by the National Film Finance Corporation, will not receive much of a circuit distribution from EMI or Rank. In my town it has been shown only in a special regional film theatre, not in an ordinary cinema.
      The quota is now being exercised on a complex whilst the Eady levy is exercised on screens. That is a nice differentiation. The British quota could be fulfilled by shoving the British film on to the 100-seat

      1859
      cinema screen whilst the big screens are filled with the American blockbusters. I hope that the Miniser will keep a close eye on the arrangements in clause 6 which alter the quota position.
      Another film to be released shortly is " Babylon ", which is financed by the NFFC. I have not seen it, but I understand that it is reasonably controversial. It is about an indigenous problem—race relations. What circuit release will that receive? I guess that it will be limited.
      The Bill does not provide sufficient money for the NFFC to give sufficient financial support for such films. The rising costs of film production mean that a feature film cannot be made for much less than £350,000 The NFFC's participation is likely to be slim in future. I understand that the NFFC sometimes has difficulty in achieving even a show-case release for its films in the West End of London. Such a screening is important to set a film off with a good impact so that people know what is available. The Bill does not tackle that difficulty.
      The Bill does not allow the managers of cinemas owned by the duopoly, often in key important central positions, to exercise an independent role. The notion is that if there were a State holding in a cinema chain the dead hand of the State would instruct cinema managers what films to show. As it is, the dead hand of the duopoly instructs managers. I am disappointed that one of my amendments to establish a charter for cinema managers to allow them to exercise independent judgment was not selected for discussion. That would have provided a code of practice, under which account would have had to be taken of local circumstances and needs and the showing of films of merit would have been emphasised.
      In allowing the domination of Rank and EMI to continue, the Bill is a reflection of public squalor and private affluence. The public sector, as represented by the NFFC, is in a minority position with no real influence or scope, while the private sector is dominated by those two companies, which are investing not in this country but mainly abroad.
      " Shoestring " was a recent television series that I found appealing, well made and attractive, with a characteristically British philosophy. It was very popular, since it struck a chord in people. I understand
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      that the story has now been sold for a big feature film. The hero will be played by an American and the location will be shifted to America to meet the demands of the American market. That is a typical erosion of success on which we should have built. We should try to break into other markets through the success of our independent attitudes and aspirations.
      If we really believe in using the ability and talent of imaginative film makers, there is no alternative to tighter control of the duopoly or a State film industry, at least in part, including a major studio and a cinema chain. Only then will we achieve meaningful public participation.
      Without the Bill, the limping organisation that is the NFFC will wither away. We hope that it will have an expanding future, but that is unlikely under the Bill. Despite all its merits and abilities, the British film industry will continue to limp along, with the possibility looming on the horizon that it will wither away and be sucked into the hungry maw of the American industry.
      11.13 am
      Mr. Eyre: I do not think that it has ever been claimed, either by my hon. Friend the Member for Chingford (Mr. Tebbit) or myself, that the Bill provides a definitive answer to all the problems of the British film industry. The word " modest " has been used to describe it on several occasions. I would concur with that description.
      But the Bill's acknowledged modesty should not be allowed to devalue its worth or understate its considerable importance to the British film industry. Without the Bill, the National Film Finance Corporation would be unable to continue investing in film production; the Eady levy would lapse—removing an incentive for film production in this country and the financial support of several worthy film industry institutions; and the quota also would lapse.
      Labour Members have sought to make an inoifensive Bill more radical by the creation of a British film authority. We have resisted their demands, but not through any fundamental dislike of the concept. The complicated factors bearing upon the problems of the industry—the hon. Member for Hackney, Central (Mr. Davis) described many of them in an interesting way—deserve the most careful

      1861
      consideration, which they will receive. But because of all those problems our minds are genuinely not made up.
      All hon. Members will agree that the creation of a BFA would require a major legislative initiative and the provision of substantial financial support. The Government do not wish to commit themselves to either without considerable deliberation. My hon. Friend assured the House that the concept of a BFA was " not deep frozen ". I hope that the House accepts that assurance.
      The Bill safeguards the future of the NFFC—which should commend it to the Opposition. It has been suggested that the Bill does not give enough money to the corporation. I suspect that it would be impossible to hit on a percentage that was agreed by all to be just right. If we had raised the percentage grant to the corporation, we should have reduced the money available to the film producers who invest in this country, and we would have been criticised on that count. The important point to remember is that the corporation will now have a guaranteed income each year and is no longer encumbered by past debt. It will be enabled to make a distinctive contribution to film making in this country, The House should welcome that.
      The Bill also extends the quota—a fact at times overlooked in the heated exchanges over clause 7, which would enable the Secretary of State to suspend its operation. Labour Members should remember that the power to impose quota would have expired at the end of this year, had the Bill not included a clause extending it. This is scarcely the act of a Government determined to see the end of quota as soon as possible.
      The House has been reminded on several occasions—but a further repetition may be desired by the Opposition—that the Secretary of State is not obliged to suspend quota if Clause 7 is enacted. He will merely be able to review its operation—which has been increasingly criticised in recent years—with the possibility of a trial suspension. The Secretary of State will always be able to reimpose quota by order should its suspension—if it came about—be harming the industry. He cannot abolish quota without putting primary legislation before the House.
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      I assure the Opposition that there is no duplicity behind the introduction of clause 7. We are not out to remove quota if the industry needs its protection. We are prepared to evaluate its operation constructively.
      Any Bill which renews powers rather than revising them can be called interim. However, this expression has no sinister import. It has at times been inferred that the present five-year extension to the levy and quota denotes their termination thereafter. My hon. Friend went out of his way to allay these doubts in Committee. There is no intention of withdrawing any legislative support from the industry—unless it is outdated or can be replaced by a better alternative. This does not mean that our present legislative framework will, in five years, be found entirely adequate to cope with all the developments in the industry which will have occurred by then.
      The hon. Member for Keighley (Mr. Cryer) referred to a number of outstanding problems affecting the film industry, all of which will require serious attention. I certainly do not agree with some of his views about solutions, but I agree that these problems are of great consequence to the future of the industry.
      Modifications may be needed, but that is entirely different from serving notice on the industry that after five years there will be no renewal of existing legislation. The Bill is needed by the film industry, which the Government certainly wish to have a successful future and to make full use of the talent and ability which are undeniably available in this country.
      My hon. Friend the Member for Reading, North (Mr. Durant) mentioned some encouraging factors, including some powerful points that should give us optimism for the future if we can get the supporting arrangements right.
      If the Bill does not receive Royal Assent by the Summer Recess, there will be no legislative provision for the Eady levy, a major feature of the post-war British film industry. The National Film Finance Corporation would face serious financial difficulties and its future would become uncertain. The continuation of quota would be at risk simply because it will lapse under present legislation before the end of 1980. I accept that the Opposition would like the Bill to include additional provisions. My hon. Friend

      1863
      and I hive explained that on such questions as a British films authority we must remain open-minded.
      Differences of view and emphasis there may be, but of one thing I am certain. It would be quite wrong to subject the film industry to any more uncertainty by delaying the progress of the Bill and putting at risk its enactment before the Summer Recess.
      As my hon. Friend said during Second Reading, the Bill helps to set the stage for the British film industry. On all sides of the House we wish the industry well for the future.
      Question put and agreed to.
      Bill accordingly read the Third time and passed.

NEW TOWNS BILL
As reported (from ths Standing Comminee), considered.
Bill reported, without amendment.
11.22 am
The Minister for Housing and Construction (Mr. John Stanley): I beg to move, That the Bill be read the Third time.
Mr. Stanley Newens: On a point of order. Mr. Deputy Speaker. Would you make it clear from the beginning that, since this measure did not have a normal Second Reading, those who participate in the debate will have an opportunity to bring in the wider aspects of new town policy which it has been customary to discuss on Bills of this kind?
Mr. Deputy Speaker (Mr. Richard Crawshaw): This is the Third Reading. The House can consider only what is in the Bill.
Mr. Newens: Further to that point of order, Mr. Deputy Speaker. I accept that entirely. However, I repeat that the Bill did not have a normal Second Reading. In the past, when discussing Bills of this kind on Second Reading, it has been customary to debate general new town matters. In the circumstances, I am anxious to have some assurance that we shall be able to discuss these matters in the way that was intended when this legislation was first introduced.
Mr. Deputy Speaker: The fact that there was no discussion on Second Reading does not alter the fact that this is a Third Reading debate. However, I am sure that the Chair will not be unduly restrictive.
Mr. Guy Barnett: Further to that point of order, Mr. Deputy Speaker. It may be within your recollection that the last occasion on which a Bill of this nature was considered was in February 1977, when there were wide-ranging debates about new towns on Second Reading and on Third Reading. Having received the assurance from the Chair that we have, I am sure that the House will be allowed, as it was in 1977, to debate the issues of new towns fairly broadly in

1865
the light of the fact that this is a money Bill.
Mr. Stanley: I begin by welcoming the hon. Member for Edmonton (Mr. Graham) on his appointment to the Opposition Front Bench as a member of the environment team. We look forward to the contributions that he will make.
On new towns, it may be that there will be a greater measure of agreement than there has been on some of the other environment topics that we have debated in the recent past. Those hon. Members who served on the Standing Committee which considered this provision as clause 106 of the Local Government, Planning and Land (No. 2) Bill will already know why it was necessary, as it was debated to some extent in Committee upstairs. I should like, however, to outline briefly for the benefit of the rest of the House the reasons for the Bill.
New town development is largely financed by 60-year loans from the national loans fund. Like all bodies financed in this way, the new towns are subject to statutory limits on the amount of borrowing that may be outstanding at any one time. This limit has periodically been increased, most recently by the New Towns Act 1977 and a subsequent order of 1979. The present limit for all new towns is £3,250 million. I expect this to be reached on 14 September, when interest payments of £150 million to the national loans fund are due.
Without the increase in the borrowing limit by then, the new towns would be unable to raise the money needed to make the payment of £150 million due, and their development programmes would consequently be brought to a halt. The Bill provides for the borrowing limit to be increased to £3,625 million and subsequently to any sum up to £4,000 million that my right hon. Friend the Secretary of State may specify by order—subject to the affirmative resolution procedure. The length of time that the proposed increase in the borrowing limit of £750 million will last is difficult to estimate with precision, but it should suffice at least until the end of 1983.
The new borrowing will cover major expenditure on the four main areas of new town development: housing, roads, sewerage and other local expenditure.
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The latter covers industrial and commercial development, parks and items such as community centres. The specific items of expenditure will be a matter for decision by individual corporations, subject to the normal approval procedure by the Secretary of State. To take some examples, the new borrowing will enable the town centres at Basildon and Redditch to be completed. It will also fund some or all of the second phase of the shopping centre at Telford, the completion of the road system at Bracknell, the Riverside Parkway at Peterborough, Cwmbran Drive to open up the new industrial area at Cwmbran, and the Cumbernauld spine road. These are only a very few illustrations but I think they are sufficient to show how important it is for the new towns that the borrowing limit should be raised.
I know there is particular interest in the House about the relationship of the Bill to both housing and industry in the new towns, and I should like to say a word about both. Our central housing policy in the new towns is to bring about a substantial increase in home ownership. In our view, there has in the past been far too much emphasis on the provision of rented housing in relation to the provision of housing for sale.
Apart from the new towns such as Northampton and Central Lancashire being developed alongside established communities, the figures show that the levels of owner-occupation are way below the national average of 54 per cent.
During the last Conservative Government, vigorous steps were taken to promote home ownership in the new towns. The general consent that we issued in October 1970 enabled corporation dwellings to be offered at discounts of 20 per cent. That was followed by a massive increase in sales. Some 27,000 dwellings were sold between 1970 and 1974, when, regrettably, the incoming Labour Government halted sales completely. During the last Administration the imbalance was worsened again when for every seven houses built for rent only two were built for sale.
Up to 31 March this year the proportion of owner-occupied housing built on land passing through the hands of new town corporations nowhere exceeded 50 per cent. of the total housing provided. In many cases it has fallen far short. Of the

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second and third generation towns, Red-ditch has provided the highest proportion of owner-occupied housing and there it has been only just over 40 per cent. In Central Lancashire it has been 35 per cent., in Washington and Warrington 31 per cent., in Milton Keynes, Northampton and Peterborough 27 per cent., in Runcorn 22 per cent. and in Telford and Skel-mersdale it has been below 20 per cent.
There is a substantial unsatisfied demand for home ownership in the new towns and we consider it of fundamental importance to try to meet this demand. Within 14 days of taking office in May of last year, we issued a new general consent to enable new town tenants to buy their homes on the terms set out in our election manifesto. The response has shown the measure of support for our right-to-buy policy. During our first 12 months, some 8,000 new town tenants have either bought their homes or are firmly negotiating to do so. That represents about 9 per cent. of all new town tenants—or one in every 11 new town homes.
In Northampton, the proportion who have either bought or are under firm negotiation to buy is now 12 per cent. in Telford 13 per cent. and in Basildon no less than 18 per cent. Equally significant is the number of inquiries about the possibility of buying. There have been a total of 22,500 inquiries, representing a quarter of all new town tenants. Clearly, many still would like to buy, but are unable to do so at present. Here, the Housing Bill will provide them with a new opportunity to do so. Under the Bill they will have the opportunity of a two-year fixed price option if they cannot buy outright immediately. If they still cannot buy at the end of the option period, the corporation will be able to make a sale on a shared ownership basis, with the ownership element being purchased at the original right-to-buy price.
I am confident that a considerable number of those who were new town tenants at the beginning of this Parliament will be new town home owners by the time it ends.
Mr. Newens: Does the hon. Gentleman agree that many people who wish to buy feel betrayed by the Government's policy on mortgage rates? Many people cannot envisage buying the houses about which they have made inquiries.
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The Government's policy has not made it easier for owner-occupiers. It has made it more difficult.
Mr. Stanley: The hon. Gentleman uses the word " betrayal ". Betrayal would come only if the Labour Party was in a position to implement its commitment to withdraw the right to buy from 6 million new town and council house tenants.
With regard to future building in new towns, we see this as being overwhelmingly for sale or shared ownership rather than tor rent.
Mr. Roy Hattersley: If the hon. Gentleman intends to use that sort of florid language, will he kindly use it more precisely? Betrayals happen when promises are broken, and this Government have broken promises. The promise to which he referred has never been made by the Labour Party. Its policy on the sale of council houses has been clear for 20 years.
Mr. Stanley: I still say to the right hon. Gentleman that if the Labour Party was in a position to implement its commitment there would be a tremendous disappointment among, and sense of loss by, the 6 million council house tenants whose right to buy would be withdrawn.
Given the large stocks of rented housing that already exist, we see no need for a continuing major programme of new rented housing. At the same time, we want to give every encouragement to meet the demand for new homes for sale. Last year, following the change of Government, a total of 770 acres of housing land was made available to private house-builders by the development corporations and the commission, compared with only 440 acres the year before. This trend will continue.
The development corporations are also responding energetically to the seven-point programme for low-cost home ownership that we have put to housing authorities. Telford has 21 developers building on more than 25 sites. Warrington has 18 developers on over 20 sites. Milton Keynes is in negotiation with developers for some major starter-home schemes. Telford has carried out an improvement-for-sale scheme in the Severn Gorge. Skelmersdale has sold nearly 100 houses at low prices for improvement by

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the purchasers. Milton Keynes, Peterborough and Central Lancashire have already produced shared ownership schemes to bridge the gap between full home ownership and renting. At Red-ditch the corporation has joined the Dickens Housing Association to provide an extremely imaginative scheme for first-time buyers, which is of wider significance.
Just as they have been pioneers in many other ways, so I expect that the new town corporations will pioneer a number of nationally important home ownership initiatives in the next year or so.
Mr. Martin Flannery: Does the hon. Gentleman agree that the best houses will be sold and that the people who want to live in a reasonable house, and who are perhaps on the housing list, will have fewer houses from which to choose? Does he agree also that we must ensure that there are many houses that can be rented, so that people with little money will have somewhere to live?
Mr. Stanley: With regard to the best houses being sold, we have debated this issue a great deal already. If we look no further than the new towns and at the experience, for example, of Skelmersdale, which has been selling unimproved homes at low prices, we see that there is a great demand for the very worst houses—which is reflected in their prices. That provides a means whereby people who would have had no other opportunity to buy their homes can do so.
Equally relevant to the provisions of the Bill is the highly significant contribution that the new towns have made, regionally and nationally, to industrial development.
Mr. Guy Barnett: The Minister is now proceeding to another aspect of new town development. He has given the House a good deal of interesting information about owner-occupation, whether by new building or by the sale of homes. Will he comment on the provision of further rented accommodation in the new towns, particularly for young married couples?
Mr. Stanley: As I have said, we do not see a case for a major programme for rented accommodation in new towns, in view of the proportion of rented accommodation
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that already exists. A number of initiatives that have been taken on shared ownership will be of direct help to the families to whom the hon. Gentleman has referred. It may well be within the capacity of many young couples to take a 50, 60 or 70 per cent. equity in a house and to pay rent for the balance. That will enable them to get their foot on to the first rung of the ladder, and it will make easier the transition to full ownership later.
I do not think that many people would seriously contest that, in the area of industrial development, the new towns have been extremely successful. Over the last 30 years new towns have provided, either by building themselves or by providing land for private developers, about 110 million sq. ft. of industrial floor space, representing nearly 200,000 jobs. More recently, the new towns have produced about one-fifth of the total net increase nationally in industrial floor space.
In the development areas, towns such as Washington, Cwmbran and East Kilbride have played an essential role in creating additional jobs. Elsewhere, new towns have developed into regional centres of economic growth.
There are some particular aspects of the new towns industrial development which I should like to highlight briefly. First, the last few years have seen an increasing scale of private investment. Since the beginning of 1978, more than £67 million of private money has been invested for the construction of new industrial premises through the agency of development corporations. In the last financial year £39 million was raised from private sources, providing about 2½ million sq. ft. That meant that about half of the new towns industrial development was privately financed. We want to see this proportion increased.
Secondly, the new towns have demonstrated their ability to attract investment from overseas, and the third generation new towns, in particular, have had conspicuous success in securing foreign firms. For example, Northampton has attracted more than 45 overseas firms, and Warrington has attracted about 32 such firms. In many cases this is investment which would otherwise not have taken place in this country, and it has resulted in economic growth and additional employment

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opportunities which would otherwise not have occurred.
Mr. Newens: Is the Minister aware that many of the firms which he rightly says have been attracted to new towns have gone there because houses have been provided by the development corporations or the local authorities for skilled workers in the towns? If, as a result of the Government's policy, these houses will not be available in the future, the incentives for firms to go to new towns will be diminished. Is he aware that many firms in my new town have expressed their concern to me on this issue?
Mr. Stanley: It is not a question of not providing any houses. It is a question whether the houses provided will be almost overwhelmingly for rent, which is the Labour Party's policy, or whether we try to secure a better range of housing opportunities in the new towns, which is our policy. We think that there is substantial demand, particularly by the skilled and semi-skilled workers who come to the new towns to work in the firms to which the hon. Member has referred, for low-cost home ownership outright and for shared ownership. That is the way in which we are trying to meet the very type of housing demand which the employees and firms in question particularly want to see.
The third point about industrial development in the new towns is that, while they have successfully attracted a wide variety of industries of all sizes, they have achieved considerable success in fostering small businesses. Many new towns have developed nursery factory units, mini factories and small workshop units which have been an important factor in encouraging the setting up and expansion of small firms. Additional assistance is sometimes provided through small business advisory services, as in Telford and Milton Keynes. This, too, is another aspect of the new towns industrial development that we are anxious to encourage.
I hope that I have left the House in no doubt that the Bill is essential to the continuing development of the new towns-essential for their infrastructure development, their shopping development and their residential development. Despite
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the substantial injection of private finance that we wish to see, and despite the level of home ownership that we hope to achieve, the continuing use of some public funding will be required. I hope that the House will, therefore, agree to the Bill.
11.41 am
Mr. Ted Graham: First, I should like to respond to the Minister's kind welcome to me on my first appearance at the Dispatch Box for the Opposition. I hope very much, in time, by my contribution, to make him reflect on the warmth of his welcome.
The Opposition are fortunate indeed, because, unlike the Government, they have present four Opposition Members who served on the Standing Committee on the Local Government, Planning and Land (No. 2) Bill. This debate, in effect, is a debate on a clause detached from that Bill. Those Members are my right hon. Friend, the Member for Birmingham, Sparkbrook (Mr. Hattersley) and my hon. Friends the Members for Greenwich (Mr. Barnett), for Harlow (Mr. Newens) and myself.
When listening to the Minister's eulogies about the Government's intentions in respect of new towns I hardly recognised that what he was telling us today was the Government's concept of what should happen in new towns, bearing in mind what my hon. Friends and I had to listen to in Committee Room 12—namely, the Government's butchery and savagery of new towns. We had to endure listening to the Government's intention to dismantle, to our dismay and that of a great many people, a vital part of the new towns and their concept—the forced sale of the industrial and commercial assets.
Opposition Members will not oppose the Third Reading of the Bill. We have facilitated its pasage and its translation from clause 106 of the Local Government, Planning and Land (No. 2) Bill. We are realists and not wreckers on the question of new towns. We always held the view that the Government got themselves into a mess from the beginning concerning that Bill. In their haste to try to deal with what they considered were a number of problems they produced not one Bill but five or six Bills rolled into one.

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We have before us part of the outcome, which could have been foreseen by prudent business managers as almost inevitable. My hon. Friend the Member for Greenwich rightly pointed out in Committee that the significance of the date of September 1980 was forecast by himself when he introduced an order on this issue on the previous occasion when it came before the House. That was in February 1979. We have seen the Government's arrogance in presuming that the Opposition would not challenge their intention when they brought forward the Local Government, Planning and Land Bill in another place in December last year. The Minister's excuse in Committee and on the Floor of the House was that because there had been a delay in bringing the Bill before this House, a delay caused by the Opposition's representations, in some way the Opposition had aided and abetted the little local difficulty which the Minister said this represented.
The Opposition do not withdraw for a moment what they did to ensure that the Local Government, Planning and Land (No. 2) Bill saw its passage through this House before going to another place.
The Bill before us now is one of the Bills that was rolled into the Local Government, Planning and Land (No. 2) Bill. Another separate Bill was rolled into that Bill—one concerning enterprise zones. There was another separate Bill concerning urban development corporations. There was another Bill concerning the financial relationships with local government—rates, capital and so on. There was certainly a separate Bill concerning town planning and many other matters. A clause was detached from the main Bill, and the Bill before us has been substituted for that clause. In effect, a new Bill was added to the original Bill—a 32-clause Bill concerning enterprise zones. Also included is the old Bill, but with major parts of it dropped.
It was revealed in Committee that the Government had a remarkable knack of keeping in the main Bill large sections of matters of great interest outside the House that were bitterly opposed. They have jettisoned many parts of the original Bill which would have been welcomed not only by people outside the House but by hon. Members. I refer to the clauses
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that were dropped relating to caravans, highways and so on. We shall not oppose the procedure. It is our intention to assist the Government to keep the new towns alive and to encourage in any way their ability not only to pay their debts but to undertake the expansion which the Minister said is part of the intention of the Bill before us.
However, it is not possible for Opposition Members to allow the Third Reading of the Bill to pass without paying special attention to the Government's Jekyll and Hyde attitude to new towns. It is clear that in the Local Government, Planning and Land (No. 2) Bill the Government have embarked upon an attempt to dismantle not only their own work but that of other Governments over the past 30 years in producing what has been recognised throughout the world as a major British success in planning and public work. We are not talking of a small sector of the economy. We are talking in terms of the 2 million people who live in new towns, of 400,000 new dwellings that have been built over the past 30 years, and of areas that have 700 new schools and provide I million jobs.
If, on the one hand, the Government are asking the House to approve the provision of large sums of money for the purposes outlined, we must take into account, on the other hand, their intention to strangle the attempt of the new towns, the commission and the corporations to do a successful job. The commission, the development corporations and many outside bodies deplore the damage that is being inflicted on the ability of new town corporations to produce a viable result by the Government reducing their profits and undoing the sound planning concepts that have been built up over the past 30 years.
What will be left is a disparate jigsaw. The commercial and industrial undertakings that will be sold, whether to a consortium or to individuals, will be those, like housing, which are in greatest demand and can easily be sold. They will be forced sales, and the prices realised will do no good for the new towns.
There is a great mystery. The question of the Secretary of State's ability and right to instruct and advise the managers of our new towns on the sale of their assets has yet to be clarified. We had an

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interesting and illuminating debate on the Stevenage Development Authority Bill, when we had the benefit of contributions by the hon. Members for Hertford and Stevenage (Mr. Wells) and for Welwyn and Hatfield (Mr. Murphy), who, I acknowledge, have taken a special interest in these matters. We are still not clear of the extent to which the Secretary of State is acting ultra vires. When the other Bill reaches the statute book, the clauses relating to new towns will give him the powers that he requires, but the Opposition remain wholly unconvinced of his legal right to carry out his present bullying of the new town corporations to sell their assets.
Our suspicions and unease are shared by a number of the development corporations, which are taking legal advice. When the matter was last before the House my right hon. Friend the Member for Sparkbrook told the Minister of State:
" when we next debate the new towns in this House, whether it is on the Local Government, Planning and Land (No. 2) Bill on Report or the special Report stage that the Minister promised us on the new Bill, which was clause 106, the Government owe it to the House to have a Law Officer of the Crown describing exactly what is the legal position—who can require or enforce sales and what the new town corporations' rights are in terms of selling or retaining their assets. I hope that the Minister will make it clear that we may have a categorical statement on that point."
On the Floor of the House and in Committee the Opposition repeatedly sought that clarification.
The Minister of State replied:
" I listened carefully to what the right hon. Member for Sparkbrook said about the legal aspects. I answered those questions extremely fully in Committee, to my total satisfaction, but I will write to the right hon. Gentleman before Report, as he requested, to ensure that he has a full explanation of our views."—[Official Report, 8 May 1980; Vol. 984, c. 678–82.]
We have had no information from the Government. There has been no letter to my right hon. Friend about the Secretary of State's intentions and his legal sanctity. If the Government wish the House to join them in ensuring that the new towns are given the full support that they want, to treat my right hon. Friend so cavalierly is not the right way to go about it.
While the new towns' borrowing is secured by the Bill, we want to know
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when the Local Government, Planning and Land (No. 2) Bill will again come before the House. In discussing new towns, we cannot exclude discussion of other matters.
We shall not oppose the Bill. The Opposition look upon our new towns and the new towns movement with pride and passion. We have a proud record of support, not only by making funds available, as the Bill provides, but by giving new towns encouragement to be strong and proud in their own right. We welcome and support the Bill and shall continue to fight to see that new towns flourish and expand, even under this Government.
11.55 am
Mr. Bowen Wells: It gives me uncommon pleasure to support the Bill wholeheartedly and to see that we have great support from the Opposition, though probably for entirely different reasons.
I see in the Bill a modest increase to the total amount of money to be borrowed by the new towns. This reflects the policy of building and then disposing of new towns. I congratulate the Government on embracing that policy It is a nettle that successive Governments have failed to grasp.
The establishment of the Commission for the New Towns was an example of the confusion in thought as to exactly how the new towns should be reabsorbed into the general fabric of ownership, control and government of towns. On taking office, the present Government adopted a clear and exact policy. We see the new towns movement as an excellent method of development, which enables a town to be planned in totality and to begin a great deal of industrial and commercial activity. In the Bill we have the element of self-financing, through building and then disposal, therefore making the funds available once more for investment in new towns.
The Bill also confirms the Government's commitment to the new towns, in that the amount of money that the Government will invest in them exceeds the amount of disposals. The commitment to the urban development corporations is another example of this Government's commitment to new towns and their concept.

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One of the problems that have not been debated and thought out carefully is exactly how the disposals will be managed and what will be the exact position of borough councils after the disposal of the assets. These matters need careful handling. For example, many new towns have built up new shopping centres which are a whole and which on disposal in parts could disintegrate and become sloppy, dirty, unattractive messes. The management of the disposal of shopping areas needs to be planned into the whole concept when the town is set up. In my own new town, Stevenage, that matter was not taken into consideration.
However, what I have just said does not mean that commercial centres of that kind cannot be disposed of and that proper management for the future cannot be ensured. I urge Ministers to make certain that the commission and the development corporations involved ensure when disposals take place that proper management is built into the developments.
The other question that we must think about is redressing the balance in the housing sector. In my own new town, the borough council still owns 70 per cent. of the housing—far too high a proportion. What is more, the Stevenage borough council has not taken advantage of the general consent of 18 May to dispose of housing to council tenants at advantageous discount rates.
Mr. K. Harvey Proctor: Disgraceful.
Mr. Wells: It is utterly disgraceful, because it has denied many of the Stevenage tenants the ability to purchase those houses at values which 12 months ago were current. Now, some of them cannot afford the houses at the new enhanced values. That is the means by which the borough council has denied the people of Stevenage the ability to begin to own their own homes.
There has been no attempt to introduce shared ownership schemes or to do imaginative things, such as those to which the Minister referred, in terms of starter homes and other arrangements for young married couples and others to begin on the path of home ownership.
If we continue to keep the new towns in the ownership and under the control
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of development corporations or totally under the control of borough councils, that kind of bureaucratic political meddling will disadvantage the people who live in the new towns. Therefore, the policy to dispose of the housing assets in new towns to the people living there is to be welcomed and is reflected in the modest increase proposed in the Bill for the total amount of lending in new towns.
I congratulate the team at the Department of the Environment. However, I give one word of warning. We must make certain that these disposals are carried out with sensitivity. We must leave the borough councils involved in a similar position to those of other mature towns of comparable size so that they are able to carry out their functions as planning authorities and to operate on a basis which will not increase rates to an extent which more mature towns would not have to bear. Therefore, they must be left in a position which does not disadvantage new town government.
I am sure that my hon. Friend will give close consideration to this matter. For example, it will mean that the borough councils must own their own town halls. They must have certain assets in common with other mature towns. Therefore, as I said, this matter must be handled with sensitivity.
The policy to share the ownership of the new towns—to spread it around and not concentrate it in one authority—is right and is to be welcomed. I believe that it will stand the test of time.
12.3 pm
Mr. Newens: I shall not follow all the remarks made by the hon. Member for Hertford and Stevenage (Mr. Wells), as we have crossed swords on this issue on numerous occasions.
I support the argument put forward by my hon. Friend the Member for Edmonton (Mr. Graham) and congratulate him on his new responsibilities. Like him, I have no wish to oppose the purpose of the Bill, which is to increase the amount that may be borrowed for the development of new towns.
New towns have proved to be a most successful and attractive form of urban development. They have provided pleasant homes in an attractive environment within easy reach of schools, shops, amenities and places of work.

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While it is the aspiration of many young people born in our older city centres to move out to homes in the country, many regard that aspiration as one that can be satisfied in a new town. I am continually approached by or on behalf of people living in all parts of the British Isles who would like to live in Harlow. I have a never-ending stream of letters from people who have left the town and gone to other parts of the world—even to Australia—who wish to come back. I am sure that my experience is shared by other hon. Members who represent new towns.
Mr. Christopher Murphy: Could it be that a number of those former inhabitants of Harlow wish to return because they have heard that under a Conservative Government they will be able to purchase the homes in which they used to live?
Mr. Newens: On the contrary. I am glad that the hon. Member made that point. It enables me to make my point even more strongly. They get in touch with me when they return because they want the tenancy of a house. If they have come back and wish to buy a house, they do not normally announce to me, as their Member of Parliament, that they have arrived back on the scene. They come to me because they need a house to rent. It is because the Government are denying many people the opportunity of a tenancy that their aspirations will be denied in future.
Moving on to the basic issue in the Bill, I believe that the Government are right to prpvide for the financial limit for borrowing purposes to be raised. However, their proposals contrast with other aspects of their policy, as has already been pointed out.
The attempt to dispose of assets that have been developed in bulk sales on the open market is deplorable. The Government have argued that there is no contradiction and that the money to be invested by the public in new towns should be raised by sales elsewhere. However, great damage will be caused over the next few years by the policy on which the Government are embarking.
The concern and sense of apprehension at what is happening are not limited to Socialists, who have long accepted that the communities created by new towns should ultimately own and control their
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assets. Doubts are now also voiced by people of a Conservative turn of mind. I detected from the remarks made by the hon. Member for Hertford and Stevenage that he was concerned. Indeed, I suspect that a number of his Conservative friends have expressed apprehension to him.
At a recent meeting of the new towns sub-committee of the Association of District Councils, universal concern was expressed at some aspects of what is taking place. Many representatives of the new towns believe that they may in the long run be saddled with the no-profit-making—in fact, the loss-making—assets and that they will require to be supported from the rate fund.
The Government have not yet made any clear statement on the details of their policy for the residual assets. They should at the earliest possible stage come clean on this issue. They have stated that the Commission for the New Towns is to be wound up. Therefore, the vestigial loss-making assets cannot be permanently vested with the commission. In these circumstances, only one other possibility is feasible—that the loss-making assets should be foisted on the local authorities. In such circumstances, the local authorities have a right to ask " Will you tell us on what terms you are likely to ask us to take responsibility? "
The fact that we need to be concerned is undermined by experience with the housing assets which were accepted by the local authorities, the transfer of which I firmly supported. However, since transfer many design defects and maintenance needs have come to light, and they are imposing considerable burdens on the new towns. Estimates were submitted to the Department of the Environment some time ago. We are still awaiting the outcome of a full investigation of those estimates by the National Building Agency. I understand that the Government have offered to approve loan sanction for the necessary work to be carried out and that 40 per cent. of the cost will be met from Government funds. It is extremely important to resolve this matter as soon as possible. It is also important that, if at a later stage new town authorities are to be saddled with additional loss-making assets, the same process to secure additional funds should not need to be repeated.

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The position with regard to housing assets varies from one new town to another. In Crawley, where industrialised building techniques were apparently viewed with greater suspicion than elsewhere, fewer defects remain to be made good than in other new towns. In Harlow, estimates amounting to £10 million have been submitted. The situation is perhaps most critical in Peterlee, where the local authority is Easington. My hon. Friend the Member for Easington (Mr. Dormand) is deeply concerned. There the estimate of the sum required to put the housing in proper order is £13 million. We need to resolve the issue speedily, but we also need sufficient funds to put the defects right. While we are discussing the question of funds, the Minister should deal with that most important issue. In opening he said nothing about the source of the funds to remedy those defects or whether it was envisaged that they would be encompassed in the moneys that we are voting today.
The Government are starving new towns, along with local authorities generally, of funds needed for many purposes, but particularly for new housing. The reduction in the HIP allocation will be serious for many areas, including Harlow.
The Minister said that there was a great demand from tenants to buy their own homes. Many of us in the Labour Party are concerned about provision for owner-occupiers. As I have said on many occasions, I am an owner-occupier in Harlow new town. In the past I strongly favoured a policy whereby the Harlow development corporation built houses which those who wished to buy could purchase and others which could be rented. The hon. Gentleman said that he could not see a case for providing further rented accommodation for newly married couples in view of that which already exists. However, he is proposing that that rented accommodation should, to a large extent, be sold to owner-occupiers. Where, then, will the rented accommodation come from for newly married couples? The Government's policy will deprive young people who cannot afford to buy of hope of a home of their own.
The Government's concern is with those in the income bracket that provides them with the opportunity to buy, and the devil take the rest. That is wrong.
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We should be concerned about owner-occupiers, and I endorse any effort to assist them. However, this Government have little credit in that regard with their policy on mortgage rates.
People who want houses to rent will be denied the opportunity of a home. Tomorrow morning, together with local councillors, I shall be in the Harlow advice bureau dealing with problems. I guarantee that not one person will tell us of his difficulty in finding a house to buy, but there will be a long queue of people to tell us that they cannot afford to buy but want a house to rent. Those people are being sold down the river by this Government. Those of us who are against the wholesale sale of houses in new towns are standing up for the whole communty and not only the better-off sections with which the Conservative Party has traditionally been exclusively concerned.
Mr. Bowen Wells: Does the hon. Gentleman agree that the reduction of the HIP allocation will have this effect? In order to provide housing in Harlow, other new towns or elsewhere, new housing will have to be built by the private sector. It will also enable the private sector to build those starter homes which the public sector has conspicuously not provided up to now.
The hon. Gentleman asks where people who wish to become council tenants will go. He and I know that in new towns people move around the town. People will come out of tenanted occupation into the new houses built for sale. Those who cannot afford to buy—and I hope that they will become fewer—will go into that tenanted accommodation. That is how the policy will work. It is a dynamic concept which Labour Members fail to understand.
Mr. Newens: We fail to understand the concept on the basis of experience and facts. Not far from my new town, and within my constituency, there are quite a few houses previously owned by the Ministry of Defence. I sought for many years to persuade the Epping Forest district council to purchase them. It has now done so but insists that they should be sold and not let. Throughout the time that the council resisted purchase and since it has owned those houses, they have stood empty, in some cases for as long

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as seven years. The hon. Member for Hertford and Stevenage is shaking his head. I shall provide him with details. I do not make any statements idly. I am not blaming the local authority for the houses standing empty for the entire period; I am blaming the difficulties that exist. The houses have stood empty for a long period while people have been crying out to rent houses, and the houses could not be sold. I merely ask that such practices should not continue.
Mr. Bowen Wells: I do not support the situation of houses lying empty. If houses in the possession of local authorities stand empty for seven years, it is a disgrace. It should be avoided at all costs.
Mr. Newens: I did not say that the houses were in the ownership of the local authority for that length of time. They were in the ownership of the Ministry of Defence and were transferred more recently to the local authority. As a result of the difficulties of the policy of sales, houses have stood empty for as long as seven years.
Industry must be encouraged, but one of the attractions to industry of the new towns has been the availability of housing for key workers. If the Government are now to dismiss that need, as the Minister did this morning, I shall bring that to the notice of local industrialists who continually pester me—I entirely welcome their attentions—on the need for a continuing supply of houses for their key workers if they are to achieve the results that we all wish them to achieve.
The Minister referred to small businesses. Many small business men feel gravely threatened by the proposal to sell over their heads the premises that they now rent to a pension trust or some other outside authority.
The Government are insisting that assets are sold off in blocks. That is understandable, but it often means that small business men can buy their premises only if they form a consortium. In some rare cases it may be possible for small business men to form a consortium, but in the majority of instances that is not possible. As a result, small business men will find themselves under a new landlord—for example, a pension trust—who understandably will be out to obtain the highest return on the capital invested
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and will not be concerned, as the development corporations have been, with the service provided by the local industry and the employment opportunities that exist in the town.
There is no doubt that small business men in general deplore the Government's policy. They regard it as detrimental to their interests. When Conservative Members claim to be defending the interests of small business men, they should recognise that in this respect they are betraying their interests.
The policy of the disposal of assets is fraught with tremendous dangers. However, the Government refuse to allow new town communities such as Stevenage—for example, when the Stevenage Bill was introduced—to purchase their own assets. The Government's policy on new towns is damaging and the new towns' populations will reap the harvest in future years. They will have reason to rue a great deal of what the Government are now doing. That in no way gainsays the need to raise the borrowing limits that the Bill proposes.
The Government's general policy on now towns is to be viewed with the greatest concern and even alarm, but I shall support the Bill's passage.
12.23 pm
Mr. Christopher Murphy: It is to the credit of the Government that the circumstances of the new towns have at last been fully recognised. It was because of the clear understanding of the problems and difficulties in such communities that the Conservative Party received such overwhelming support from the electorate in new town constituencies at the general election.
The sale of assets has been of fundamental importance to many families in new towns. The opportunity to purchase one's own home is greatly desired, and the Government's determination to provide that opportunity with a generous discount scheme is to be applauded. Under the previous Conservative Administration, new town tenants in my constituency, in both Welwyn Garden City and Hatfield, had that chance and it was greatly accepted. It was a disgrace that the Labour Government sought to end that provision. It is equally to their shame that the Opposition are determined on that course once again.

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It is vital that new towns have the opportunity to become similar to other urban areas. It must be right to enable private enterprise to buy the assets rather than continuing pseudo-Government involvement via the Commission for the New Towns or the new town corporations.
New towns do not need to be under the thumb of the quango. There should be full democratic principles exercised locally, as in older towns. It is significant that the concept of giving the tenants of factory and commercial premises special options to own their property has been accepted and that those who have put their faith in towns such as Hatfield and Welwyn Garden City can have that opportunity.
The Government are right to deal with the current situations to be found in the new and expanding towns and to look for their completion in realistic terms. Equally, the longer-term approach towards the concept of new towns has to be considered.
It seems unnecessary for any more new towns to be created. Their initial growth coincided with an upturn in population trends which has not continued and with trends in social policy which in some respects have been found wanting. Destroying further countryside by green field new towns would be a serious and legitimate concern. The attraction of those in industry to such areas would be achieved largely in consequence of unfair competition with inner city and other urban areas. The net result would be to create further environmental problems of serious proportions in the major towns and cities.
The lessons of the new towns have been largely learnt, and that experience can be used to regenerate the inner urban areas. The urban development corporations are a step towards that. We must ensure that the balance is right between Government involvement and the private sector. What is needed is the provision of infrastructure and the giving of real freedom to private enterprise to develop, thus ensuring that a return on Government money is eventually made and that further public finance is not involved.
The initiation of enterprise zones is much in tune with that thinking, and
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such an approach, in tandem with the advantages of new town development, could revitalise our cities.
The team of Ministers in the Department of the Environment has taken positive steps to fulfil the hopes and aspirations of those who live in the new towns. The confidence that the electorate in new town constituencies placed in a Conservative Government is clearly seen to have been built on sure foundations.
12.28 pm
Mr. Guy Barnett: I begin by congratulating my hon. Friend the Member for Edmonton (Mr. Graham) on his promotion to the Front Bench and on his speech. We are debating an extremely important subject, and someone should protest that we are doing so when, inevitably, it is difficult for hon. Members on both sides of the House to be present. I know that Government business sometimes has to be taken on Fridays. However, it is relevant to members that when the House last debated a new towns money Bill in 1977 the Second and Third Readings were fully debated during normal weekdays. It was, therefore, possible for many more hon. Members to take part in the debates.
The discussion of a new towns money Bill is invariably an opportunity to raise new town issues in general, and that is precisely what the Minister did. We heard an encomium of everything that the new town movement has achieved. The hon. Gentleman described how it is that some 2 million of our fellow citizens live in new towns and that over I million find their jobs in such towns.
It is not always people who live in new towns who find jobs there. The new towns provide jobs for people who live in the neighbouring region, just as some people who live in new towns find it convenient to work elsewhere. What has characterised the debate and practically every speech—certainly the informed speeches—is that the whole new town story has been a success story of which we can be proud. It is a success story in terms of town planning at a time when a good deal of criticism is bandied around about planning in general. It can be stated without fear of contradiction that the 21 new towns in England are magnificent examples of town planning.

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As has been pointed out by several hon. Members, new towns have been remarkable in the degree to which they have been able to attract industry. They have attracted innovative firms from overseas. We should place on record the degree to which towns in the North-East of England have been able to provide jobs for people living in the area—jobs that would otherwise never have gone to the North-East, if, indeed, they had come to this country at all.
Why have new towns been so successful in attracting industry on to their estates? There are a number of reasons. My hon. Friend the Member for Harlow (Mr. Newens) gave one reason that the Government have not taken fully into account. New towns, as part of their policy, have been able and willing to provide housing for key workers if firms moving to the town wish to bring them with them. It is not always possible or easy for a skilled worker to enter into a purchase arrangement for a house because he wants to move to a new town. There needs to be a reservoir of rented accommodation to attract a new firm, especially a firm that may think of investing in this country although its headquarters are located abroad.
Another consideration is that new towns, almost without exception, have on their industrial estate some of the highest levels of environmental care and estate management that exist anywhere in this country. I have visited a large number of industrial estates in new towns, and I can bear witness to the fact that immense care has been taken to see that the working conditions are of the highest standard. Industrialised estates in this country generally can be criticised for the fact that they are below the standard of many of our industrial competitors. New towns are the exception. For that reason, new towns have been conspicuously successful in attracting investment from abroad.
I have mentioned two points that seem to characterise the great success of the new towns—their magnificent record as planning authorities and their success in attracting industry, particularly modern, technological and innovative industry, from abroad to their areas. One would have thought that with a record of almost unqualified success behind them the Government would want to develop some
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of the policies that have orginated in the new towns movement.
There was, many years ago, a good deal of talk about " new town blues ". One finds in many new towns thriving new communities living and working in happy and well-planned environments.
Mr. Murphy: Does the hon. Gentleman agree that the phrase " new town blues " now has a different meaning in terms of the large number of people in new towns who vote for the Conservative Party?
Mr. Barnett: The hon. Gentleman has wasted the time of the House once. I do not propose to give way to him again if it means having to deal with frivolous comments that are out of character in this important debate. I am surprised that the hon. Gentleman, who represents a new town, should waste the time of the House in that fashion.
The people of this country, particularly those who live and work in new towns, have a great deal for which to thank the planners of the new town movement. It is therefore surprising, after hearing the Minister's speech, to recall the haphazard fashion in which this legislation has come forward. It needs to be underlined that in 1977, when the House had two full debates on new town matters, the Conservative Opposition found it expedient to oppose the new towns money Bills brought forward at that time.
My hon. Friend the Member for Edmonton spoke of the willingness of the official Opposition to be as helpful as possible, despite the disgraceful muddle into which the Government got themselves, in order to provide sufficient money for the new towns so that they are not rendered bankrupt in September of this year. The Labour Party has always been a strong supporter of the new towns movement. I should like to believe the same of the Conservative Party. In past years, I think that the Conservative Party has been a supporter of it, but the disgraceful manner in which this matter has been handled must call into doubt the Government's commitment to the new towns as a whole.
We are debating a money Bill. The Minister has given scant indication of whether the sum of money that we are

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voting is sufficient for new towns development or what sort of development he foresees. He has, admittedly, given some examples, but it is important that questions should be asked about the sums of money being requested. The amounts appear to be remarkably small. I understand that we are voting the sum of £500 million as a consequence of the passage of the Bill. The Minister said that he expected the sum to last until the end of 1983. That is at least three and a half years, yet he informs the House that he needs only £500 million to cover that period. That strikes me as odd—
The Under-Secretary of State for the Environment (Mr. Geoffrey Finsberg): If the hon. Gentleman looks at the face of the Bill—no one on the Opposition side appears to have done so—he will find that the figure is £750 million, not £500 million. That is a rather different sum.
Mr. Barnett: I agree that it is a rather different sum. I beg the hon. Gentleman's pardon if I have not done my mathematics correctly. The sum is £250 million more. I stick to my point, however, in wondering whether the sum is sufficient. If the Under-Secretary of State consults the housing and construction statistics published by his Department, he will see the degree to which inflation has affected the costs of new construction.
Taking 1970 as the base year, the sum of £3,250 million increased in money terms by 1980 to about £16,091,000. Similarly, £2,750 million in 1970 is represented in 1980, with construction costs having increased considerably, by £13,616,000. That may put into context, although admittedly the figures do not do it precisely, whether we are talking about £500 million or £750 million, the additional borrowing power being given to the new towns generally. One has to ask whether the money that the Government are seeking to provide will be sufficient for the various sorts of work that has to be done in the new towns.
Recently I discussed this matter with my hon. Friend the Member for Kettering (Mr. Homewood), who, unfortunately, cannot be present today. I have been in
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touch with the management of Corby new town on this issue. I understand that it is likely that Corby, which is doing a magnificent and highly relevant job in answer to the serious problems facing the town, will run out of money for its industrial programme by Christmas. There will then be nothing left to finance advance factory building. Work is now being done and will be done in the next financial year on sewers, roads and other forms of development. Given the facts that my hon. Friend the Member for Kettering has frequently quoted about the level of unemployment in Corby, I should have thought that the Government would give business and commercial development the highest priority and prevent the Commission for the New Towns from being short of funds to build the advance factories that Corby desperately needs if it is to attract industry.
I am also informed that the Government are operating two schemes in Corby as a means of attracting industry. The first scheme is to try, as the last Government did, to attract the interest of pension funds to invest in the new towns. I gather that the commission is holding cocktail parties and various other events to try to persuade the pension funds to invest in Corby. That is all very fine and relevant. However, my experience was that often the public interest was better served by selling off completed assets than attempting to get the pension funds to invest in building new factories and offices.
One of the strong arguments in favour of the roll-over of assets is that generally the public interest does better from the sale of completed assets or of an interest in them than from trying to attract private funds into the development of new construction. Nevertheless, that is one form of investment in Corby that may be successful. I hope that it is.
I find it interesting that the Government are trying to pioneer another form of investment in Corby. It is to persuade private industrialists to invest in the town; that is, to move in, build their own factories and develop new industrial enterprises. I gather that very little progress has been made on that score. In view of my interest in the experience of the last Government, and given my concern for Corby—and I emphasise here the concern felt about Corby by my hon.

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Friend the Member for Kettering—I should be interested to hear the Under-Secretary's comments on those points. Regardless of whether we live in Corby, we have every reason to be concerned about a town that faces the most serious consequences from the Government's policy towards the steel industry.
My hon. Friend the Member for Harlow very properly raised the issue of the future of the Commission for the New Towns. That is an issue that the House ought to consider. We want something that looks like a definitive statement about the Government's plans for the future of the commission. The commission and its staff do not know what the future holds. Many highly qualified staff on it are now consequently beginning to seek jobs elsewhere because of the uncertainty that clouds their future. If they knew that the commission would be wound up in 1985, they would know where the hell they were—if I may put it in those terms—but they have no idea of what is to happen. I think that the Government should come out with a clear statement on the future of the Commission for the New Towns.
I do not understand how the Government can give any clear undertaking for the winding up of the Commission for the New Towns, for two reasons. The first, given by my hon. Friend the Member for Harlow, is that the commission is responsible for a number of assets in a variety of new towns. Those assets include parks, gardens and community assets of one sort and another, and unless the Government force the local authorities, possibly against their will, to take responsibility for these assets the Commission will, presumably, need to consider, administer and run them.
The second, and most important, reason is the consideration of the future of the industrial and commercial assets in the hands of the Commission for the New Towns relating to Welwyn and Hatfield, Hemel Hempstead, Crawley and Corby. There is a programme, though I do not know whether the Government are sticking to it precisely, to wind up the first-generation development corporations and hand over their commercial and industrial assets to the Commission for the New Towns. Therefore, in one way or another, the commission will for some
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years continue to be an important management body, whether we like it or not.
I know that it is the policy of the Government to sell off assets as fast as they can. I have warned the Government on several occasions—as I warned them when they were in Opposition—of the dangers of the wholesale disposal of industrial and commercial assets. The consequence of placing large numbers of assets on the market will be to depress the price, which will be to the disadvantage of the directors, the Treasury, the taxpayer and the public interest. If industrial and commercial assets are to be sold, their sale must be to the general advantage of the public purse.
I am afraid that the Government are so anxious to wind up the Commission for the New Towns, and to pursue their ideological belief that no assets should be owned by a public authority, that they are likely to promote the sale of assets regardless of the public interest and to do so with questionable legality. The House and the country are entitled to an indication of the policy of the Government on this issue. How long do the Government expect the Commission for the New Towns to continue in order to manage assets that are either unsaleable—such as community assets—or assets that should not be sold now so that the country can expect to recoup a proper price on an investment originally made by the taxpayer? Questions need to be asked on this issue.
The Opposition, including my hon. Friend the Member for Edmonton and others, have pointed out the importance of the role of the new towns in the management of their industrial estates. My hon. Friend the Member for Harlow has quite rightly told the House on previous occasions that there has been hardly any criticism from the tenants of industrial estates in new towns about the quality of estate management, and similar evidence has come my way. Unquestionably, this has been a factor in the relative economic success of the industrial firms operating in new towns. I am afraid that one of the consequences of the sale of assets and the disappearance of the development corporations and of the Commission for the New Towns as landlord will be that the same level of service will not be available to the firms that operate in new towns.

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Rightly, there is much talk about the importance of small businesses. What impressed me was that if a small business man saw the opportunity of expanding, because of the development of a market at home or overseas, he had little or no difficulty in finding accommodation to suit the needs of his expansion through the good offices of a new town development corporation. The level of flexibility that the development corporations were able to provide to enable business men to occupy suitable premises was one of the great assets obtained from the new towns movement. It is a retrograde step to sell off the assets. The Government might make a buck or two as a consequence, but that action will deprive the new towns of their pre-eminence as attracters of industry and as areas of success for British industry.
We should not throw away those assets. We have done extremely well in a variety of ways as a consequence of new town development. We should learn from the success of the past. We are concerned enough about our economic future. The Government propose to sell off freeholds, which the last Government refused to do on the best possible professional advice. Professionals always advise against selling off the freehold. However, that is precisely what the Government are doing. Freehold is a tremendously valuable growing national asset. We should not deprive the national investment of it.
I am apprehensive about the way in which Government policies on new towns are developing. I welcome the increase in the borrowing limit available to new towns, and, therefore, I have no intention of delaying the Bill's passage. However, I should like an assurance that the Minister believes that the demands for new jobs in the towns will be satisfied by the money available for investment and the extension of industrial estates.
I should like an assurance also on the Corby question, because that causes anxiety to many people. I should also like some fairly certain information about the future of the Commission for the New Towns and how the winding-up programme is proceeding. If there is to be dispersal of assets—and in principle I am not against that—may we be assured that it will be undertaken in a responsible
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fashion, to the benefit of the community as a whole?
12.54 pm
Mr. K. Harvey Proctor: As a new town blue, I am delighted to follow the hon. Member for Greenwich (Mr. Barnett), particularly since he speaks with great experience and knowledge of new towns and their development. New towns do not stand still. They move forward with the position in which they find themselves. That rightly affects the Government's attitude to them.
The hon. Member made an error when he said that the Bill raised the borrowing limit by £500 million. My hon. Friend the Minister pointed out that it was £750 million. Of course, to Labour politicians £250 million here or there is pure chicken feed.
I welcome this modest Bill because it will place only a modest burden on further Government spending. I am delighted that from this public funding we shall be able to complete Basildon town centre. That is directly connected with the feelings of my constituents, many of whom believe that it is the facilities available to the present populations of the new towns that need developing rather than more development corporation housing estates.
When I meet people in my surgery or in the constituency, they say " When are you going to stop building more houses in the new town of Basildon, which is already very large? There are too many houses and people and not enough entertainments, recreational facilities or jobs for those already living there."
I am very much a supporter of the Government's housing policy. Of course, I do not say that there should be no further building. There should be specialised provision, particularly of sheltered accommodation for the elderly, who are largely neglected in many new towns, and there should be increasing provision, as there now is in Basildon, for single-person accommodation. Whether it is the role of the development corporation, of the local council or of private investment to provide that accommodation, I am sure that the private sector has a role to play even in those specialised areas.
I welcome the right-to-buy provisions in the Housing Bill. I am delighted at the

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take-up by the tenants of the development corporation and of Basildon district council. Basildon leads the new towns. Where it goes today, the rest follow tomorrow. Already, over 1,000 development corporation tenants have bought their homes and many thousands will do so. When they were able to do so before, in the early 1970s, they bought their own homes until the Labour Government stopped it. We are picking up where we left off.
A number of problems arise, and as this is a wide-ranging debate I hope that I shall not be out of order in referring to them.
Mr. Deputy Speaker (Mr. Bernard Weatherill): The hon. Genueman should not go too wide. This is the Third Reading of the New Towns Bill.
Mr. Proctor: I will certainly take your strictures to heart, Mr. Deputy Speaker.
The right-to-buy provisions have given rise to a number of housing problems in my new town. For example, estates were built in times of high inflation and very high land values. As a result, the houses on them have a very high all-in cost price—the base rate at which people can get in to buy their homes. People who would like to buy cannot do so at the moment because of that high all-in cost. The reason is that those homes were built for rent and not for sale. But it is not a party political point to say that they were built in a period of high inflation.
Some of my constituents in the new town live on estates which are served by district heating schemes, and there are difficulties there with the right-to-buy provisions. They want to buy, but there is the problem of what is to happen to the district heating scheme. There are people living in houses built by the development corporation which have structural defects. If a person cannot buy the house in which he is living, he may want to buy another one. I should like to know the Minister's views on that.
The treatment of stamp duty varies between the district council and the development corporation, levied in the one on the discount price and in the other on the market price. The reason seems to be the different arrangements made if the house is subsequently sold within a five-year period and the differing schemes as
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between the council and the development corporation. In the right-to-buy provisions, I believe that the type of scheme which will be adopted is the one that new town development corporations adopt currently, which is a one-fifth pay-back for each year up to five years. Stamp duty treatment on that sort of deal is higher than that in the district council scheme. I should be grateful if the Minister would look at that, too.
A problem has arisen recently involving a constituent of mine who lived in council accommodation in Northern Ireland and who is not covered under the Housing Bill as it is currently drafted from the point of view of having that discount allocated to the purchase of a house in Basildon under the right-to-buy provisions. I understand that the Government are giving serious consideration to amending the Housing Bill in another place. I add my encouragement to them to do so so that a person living in Basildon and wishing to buy his house may get the discount provisions set out in the Housing Bill regardless of where he lived before—in council or development corporation accommodation in England, Scotland, Wales or Northern Ireland.
I do not wish to incur your wrath, Mr. Deputy Speaker, so perhaps I should conclude my comments on the problems which arise from the right-to-buy provisions, which are going smoothly in my constituency. However, I wish to add a brief word or two about industrial development in new towns.
All hon. Members who have contributed to the debate so far have spoken of the role of new towns in attracting industrial development of various shapes and sizes and how successful they are. That is undoubtedly true of my constituency. However, I wish to put one matter to the Minister. It concerns the very small entrepreneur who may have got himself into difficulty with the local district council by falling foul of planning regulations, being moved from one locality to another because of planning regulations, and finding the small industrial sites in new towns too big and perhaps too sophisticated for his purposes.
What the really small man needs is a small area of accommodation before his business starts to take off—one that does not need a very sophisticated infrastructure. He needs somewhere to go.

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Many people who come to my surgeries have fallen foul of planning laws and have been directed to the development corporation. The accommodation and the prices charged by the development corporation are beyond their means. Therefore, I shall be grateful if Ministers will examine that point also.
All hon. Members are pleased to have had this opportunity to debate the new towns. We do not often have the opportunity to discuss their problems, so that this debate has been useful. I congratulate the team of Ministers at the Department of the Environment on their policies in this area, which are to the advantage of my constituents and to people in other new towns. Ministers richly deserve the praise heaped upon them by Conservative Members and by my constituents for honouring the election manifesto pledges that we made a year ago.
1.6 pm
The Under-Secretary of State for the Environment (Mr. Geoffrey Finsberg): The House has had a useful debate. As with all debates on new towns, anyone listening to this debate will have been impressed by the unanimity of view that the new town corporations have substantial achievements to their credit. In the course of a relatively short period—in some cases as little as 15 years—they have brought into being new and thriving communities. That is a credit to the enerev and drive of the boards of the development corporations and to the ability of their staff.
There is, of course, room for some divergence of opinion about whether the way in which new towns have developed has always been for the best. In our judgment, their initial development in the 1940s relied far too heavily on public investment and Dr. Dalton's cheap money. Many people who were conned into investing their money now bitterly regret having taken out Government bonds in those days.
As time has gone by, the private sector has played an increasing role in the development of new towns. We believe that the involvement of the private sector has not gone far enough or fast enough. As my hon. Friend the Minister for Housing and Construction made clear, the Government are committed to pursuing force-fully
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a greater involvement of the private sector in the new towns. That covers not merely future development. We have to redress the imbalance of the past. We need to review the proposals in the Bill against that background. The new towns need further public investment, and the Bill will provide that.
It is perhaps a commentary—I am sure that hon. Members will not mind any saying so—that the economic disaster that the Government inherited owes much to the point made by the hon. Member for Greenwich (Mr. Barnett) when he underestimated by 50 per cent. the provision that the Bill makes. That characterises so much of what the previous Government did in economic affairs.
Mr. Guy Barnett: I am not sure from where the Minister gets the figure of 50 per cent. I was concerned with the sum of money available under the Bill before the Government have to present an order to the House to enable them to obtain the other £250 million. That is what I had in mind, but I may have got a little confused. We deserve some response to the comments that I made about the adequacy of the sum in the light of the needs to which the Minister now draws attention.
Mr. Finsberg: I assure the hon. Gentleman that that was merely an hors d'oeuvre. I was indicating the general way that we felt the previous Government looked at these matters. In no way is it possible to make an increase of from £2,750 million to £3,625 million or from £3,250 million to £4,000 million the £500 million to which the hon. Gentleman referred. However, I shall return to that matter shortly.
The debate was opened for the Opposition by the hon. Member for Edmonton (Mr. Graham). I join in the congratulations and good wishes offered to him. My hon. and silent Friend the Member for Southgate (Mr. Berry) wishes to be associated with that. I wish the hon. Gentleman well—and a very happy decade in that position. I do not think that he quite aspires to be leader of his party yet, although many of us feel that the Labour Party would be in good hands in Opposition under his control.
The hon. Gentleman made much of what he called the butchery of new

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towns and the forced disposal of assets. I have said before, particularly in the debate on the Stevenage Development Authority Bill, that what the Government's policy on new towns is doing is to ensure that the national taxpayer is being repaid some of his forced investment. It is no good Opposition Members thinking that all the money that has been put into the new towns came from the new towns themselves. It did not. The overwhelming bulk of public money that went into them came from the national Exchequer, and the national Exchequer is long overdue to be repaid some of its investment. That is what is behind our policy, and I see nothing wrong with that.
As my hon. Friend the Minister for Housing and Construction said in opening the debate, we believe that private investment has a growing part to play in the future of new towns. I do not propose to follow the hon. Member for Edmonton on his tour de force on the Local Government, Planning and Land (No. 2) Bill. I had quite enough to endure in the adjoining Committee room on the Housing Bill. The delights of the Local Government Bill may well become apparent to the House when the Report stage catches up with us in the not-too-distant future.
The hon. Gentleman also said that the new towns and the commission deplore the decisions that we have taken which are against the new town concept. Those are not words that I have heard from most of the new town corporations. They recognise, unlike the hon. Gentleman, that the original intention of the new towns legislation was not that new towns would remain a permanent feature of this country but that as their tasks were done they would be wound up. The Government of which the hon. Gentleman was a member had already set dissolution dates for several of the new towns, so there is nothing new in what we are doing concerning new towns. I think that the hon. Gentleman's words were a trifle extravagant—but that might be thought to be the champagne bubbles of celebrating his new position on this occasion.
Mr. Newens: Is it not true that the original intention of those who put through the new towns legislation was that when the corporations were wound up the assets would be transferred to the local community and not disposed of in the way that the Government are proposing?
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Although there have been Bills such as that of 1959 and others since, the Government have embarked upon what is a recent innovation in disposing of such huge assets in this indiscriminate manner. Surely my hon. Friend the Member for Edmonton (Mr. Graham) is perfectly correct in what he said about the original intentions of those who put the legislation through the House in the 1940s.
Mr. Finsberg: I was referring to the new towns themselves. I shall come later to the commission. It was never intended that new towns would remain a permanent feature as separate, undemocratic, non-elected bodies. That is all that I am saying at this stage. I shall come to the other points as I go through what has been said.
I have had the privilege of visiting every new town in England, some more than once, although I have not yet had my passport franked to visit new towns in Scotland or Wales because I have no direct responsibility for those, although they are covered in this legislation. The outlook that I found in those new towns is very different from that which I should have picked up from most of the Opposition's comments if I had been a visitor from Mars. In all the new towns I found a realisation and acceptance that the ideal for them was to complete their task and then cease to be separate bodies.
My hon. Friend the Member for Hertford and Stevenage (Mr. Wells), who has apologised for not being able to remain, raised the important point of his new town shopping centre. He was right to stress the need for proper management. I do not think that anyone would disagree. Equally, I do not believe that any hon. Member, certainly on the Conservative Benches, would feel that purchasers, particularly the pension funds that we were told about, would put their investment at risk by running down a shopping centre or allowing it to become an eyesore.
I also warmly support my hon Friend's view that the time has passed when new town tenants, and tenants where the housing stock has already been transferred from the new town corporation to the local authority, should be treated as second-class citizens, as Stevenage council still persists in treating them.
Mr. Newens: No.
Mr. Finsberg: Perhaps I am being unfair—the tenants are probably being treated more as third-class citizens, when everybody says that Stevenage council wants to own the property that it occupies as offices yet denies its own tenants the right to buy their own homes. Let us have an end to these double standards and that hyprocrisy that we heard from Stevenage when its Bill was being put forward, not by its own Member but by the hon. Member for Harlow (Mr. Newens). He put it forward sincerely and capably, but double standards still exist there.
There is one problem with the hon. Gentleman. I mean it genuinely when I say that he is very pleasant and sincere. Any brutal rebuttal of his arguments must be tempered. I shall try to be less than my usual abrasive self when I deal with the hon. Gentleman, but I hope that I can still convince him.
The hon. Gentleman spoke about community-related assets, which are a very important issue. We are considering to whom community assets in the new towns should go and on what terms. The local authorities have a clear interest in assets such as parks and open spaces and the water gardens which are a marvellous feature of places such as Hemel Hempstead. I hope that it will be possible to arrange for the appropriate local authority to take them over on acceptable terms. We hope soon to be able to reopen discussions about this matter with the local authorities concerned.
The hon. Gentleman also asked me about defects. When going round the new towns I have made a point of looking at as many housing defects as possible. I have seen the substantial defects at Peterlee to which the hon. Gentleman referred. Indeed, one of the earliest Adjournment debates that I took was one answering the hon. Gentleman's hon. Friend the Member for Easington (Mr. Dormand) on this matter.
I cannot tell the hon. Gentleman very much about the matter, because we are discussing with the Association of District Councils the whole question of defects, and we are waiting for the claims to be quantified by the National Building Agency. I hope that it will not be too long before we can have discussions,
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based on the same criteria as were laid down by my predecessors. I do not believe that it will be possible to widen the areas where recompense can be made for defects involving further expenditure by the Government.
The hon. Gentleman asked me where the resources would come from. The answer is that they will come from the local authorities' housing investment programme allocation. Their needs for repairing defects are taken into account when HIP allocations are made. The Government have promised a grant towards financing the provision of those resources. That is the information for which the hon. Gentleman asked. It is not a surprise to the local authorities, although it may be a surprise to him.
Mr. Newens: If the Minister looks at the record, he will see that what he said is similar to what I was seeking to say. Will he enlarge on the question of the 40 per cent. grant? Will he look at the possibility of reviewing the effect on the HIP allocation? It would be unfortunate if, because of these defects, the local authorities in the new towns had additional burdens that were not imposed on other local authorities.
Mr. Finsberg: The hon. Gentleman puts two points to me. He asked about the offer of 40 per cent. That was not the original percentage. The 40 per cent. follows a meeting that I had with the relevant committee of the ADC. I had to tell the committee that I hoped that it would not take too long to make up its mind whether to accept that figure, because it cannot remain open for ever. I have to leave it at that.
I can hold out no hope to the hon. Gentleman that the HIP allocations will be changed. We do not have available a small crock of gold from which we can draw extra money. When we have the quantification, we shall look at the HIP allocations to the relevant authorities. The defects list would be one factor that we would take into account in an area that had to meet them which we would not take into account in another area.
The hon. Gentleman expressed the view that small industries would be worse off under a pension fund. I must say to him almost exactly what I said to my hon. Friend the Member for Hertford and Stevenage. I do not believe that it is in

1903
the interests of a pension fund to treat its tenants in such a way as to drive them away, thereby causing a void and a loss of return on investment. Equally, a pension fund will be subject to the provisions of the Landlord and Tenant Act 1954 regarding commercial rents, so it will not be able to overcharge small firms. I hope that more consortia will be formed so that small businesses can buy the premises which they and their neighbours occupy. If they are not able or do not wish to do so—some may not wish to do so—I can see no reason why those tenants will be in any worse position under the ownership of a major pension fund than under the ownership of a development corporation.
My hon. Friend the Member for Welwyn and Hatfield (Mr. Murphy) spoke of the need for a balance of interests. I hope that the tenor of my hon. Friend's speech and of what I have said so far reassure him that it is our firm policy to reduce the taxpayers' involvement and to encourage more injection of private capital into the new towns.
The hon. Member for Greenwich spoke last for the Opposition. From my knowledge of the work that he did on new towns, I should like to pay tribute to him. In going round the new towns, I hear nothing but glowing reports of his involvement, support and interest. Anyone who has anything to do with the new towns finds them fascinating institutions.
I was glad to hear the hon. Gentleman's views on industry in the new towns, because it clearly is a success story. The House will be pleased to know that, for example, in Washington new town in the first six months of this year 28 new companies, providing more than 500 new jobs, have started operating.
I am sorry that the hon. Member for Greenwich was so sharp with my hon. Friend the Member for Welwyn and Hatfield when he intervened to lighten the tone of our proceedings. I believe that the hon. Gentleman would secretly admit that the new towns wanted a change of Government and voted out in large numbers, including a Cabinet Minister, those Labour Members who were clearly out of touch with the aspirations of their voters. It does no harm for my hon. Friend to remind the House of that.
The hon. Member for Greenwich asked about provision for the new towns, specifically
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Corby. The assets of Corby were transferred to the commission on 1 April. The corporation is to be dissolved at the end of the month. The commission, in partnership with the local authorities, will continue the corporation's efforts to diversify the industrial base of the town to alleviate the serious unemployment caused by the closure of the BSC's steelmaking operation. The commission is providing advance factories, opening up land on which industrialists can build factories and taking an active part in efforts to attract industry to the town.
As the hon. Gentleman will know, Corby now has assisted areas status, which is helping considerably in attracting industry to fill the gap caused by the closure of the BSC's operation. We have made funds available to the commission to build the advance factories and open up Weldon, where firms will be able to build their own factories. We believe that, in general, the construction of factories could be financed by the private sector and that public finance should be confined to the form of investment not capable of being financed in other ways.
The commission, which is responsible for Corby, has not complained to the Department about a shortage of funds for the necessary development at Corby. The allocation of investment resources that we have made to the commission took full account of the needs of Corby, and I repeat that we have not been told that they are proving inadequate.
The hon. Member for Greenwich mentioned the New Towns Act 1977. He painted a somewhat misleading picture, I am sure unintentionally, of why, in Opposition, we took the line that we did. We felt that lending to the new towns was the easy way out and that more of the provision for new towns should have been financed by the sale of assets. That is what we are now proposing to do. The Bill and the Local Government, Planning and Land (No. 2) Bill will enable more to be done.
Mr. Graham: The Minister rightly keeps to the theme of the Government's intentions to finance many of their projects through the sale of assets. However, in Committee the Minister more than once stated that, from total commercial and industrial assets amounting to £760 million, they had instructions in the first

1905
year to dispose of £120 million worth and in the second year £200 million worth. They made it clear that they would not be satisfied until all the industrial and commercial assets that could be sold were sold. If all the assets worth buying are sold, and the management in new towns is left with only those that are unsaleable, the viability of those assets will be very poor.
Mr. Finsberg: The hon. Gentleman perhaps has not taken on board that the sale of assets that we mentioned for the first two years is the figure that we believe is realisable. We have not said that all the assets will be sold by a certain date or in a certain year. In the light of that, and in the light of what I said earlier about community-related assets, we have to work out the best way of making certain that the remaining assets, whether commercial, industrial or community-related, are disposed of in the most sensible way. I do not think that what the hon. Gentleman is predicting will happen. He would be wise to be a little patient. I do not think that at the end of the day his fears will be realised.
After some mental arithmetic without his pocket calculator, the hon. Member for Greenwich queried the adequacy of the money that we are providing. There are two factors that he may have overlooked. First, the new town programme is nearing completion. The first and second-generation towns are, in general, to be wound up over the next few years by decisions announced by the previous Labour Government. Secondly, about half of the new towns' finance is for housing. As the hon. Gentleman knows, we are reducing substantially new investment in public housing. That in itself reduces dramatically the need for a vast amount of new money. I assure him that the provision that we have made is sufficient, in our judgment, to cover the needs of the new towns as we have seen their programme.
Mr. Guy Barnett: I am reassured by what the Under-Secretary of State is saying. My experience was that the very rounding-off of the programme of the towns that were due for handover and the completion of work was putting one burden on resources, while the progress that was being made by the third-generation
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new towns was imposing a second burden. I found that the two burdens were making considerable demands on funds. That is one of the reasons why I expressed anxieties.
Mr. Finsberg: I hope that I have set the hon. Gentleman's mind largely at rest. I do not pretend that I have set it completely at rest. I hope that he will recognise that the provision that we are making will make a contribution to the new towns which we believe they need and which they feel that they can do with.
It was clear from what the hon. Gentleman said that he still does not have asset sales quite right. He, like his hon. Friend the Member for Edmonton, seems to think that they will all be unloaded on to the market at a time and in such quantity as to depress the market. That is not what we propose. Such an unloading would be detrimental to the best realisation of the assets. That is why we announced a staged programme. The hon. Gentleman referred to a two-year programme. He need have no worries that what he said might happen will happen, because that would not be sound management.
I do not accept that ownership by private enterprise will diminish the quality of management or the local environment. We have only to see the derelict—that is, in environmental terms—acres of rebuilt East London or parts of Liverpool to appreciate the quality of management and the quality of the environment built by local Socialist councils. All that they have done is to satisfy the local aspirations of the local Tammany Halls. Labour Members are wrong to say that private ownership of the new towns' assets will produce a lesser quality of life. I do not accept that.
I do not draw my comparisons from a narrow range of areas. I look at all areas. In a substantial number of areas, local government—I fear, mainly under the control of the Labour Party—has nothing to be proud of in what it has given to its citizens at vast expense.
Mr. Barneft: Come to Greenwich.
Mr. Finsberg: I have been to Greenwich, and there are certain comments that I could make about parts of the high-rise development in Greenwich.

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However, I shall accept the hon. Gentleman's invitation to visit Greenwich. I shall do so with the greatest of pleasure. He might provide me with a " pair " on that suitable occasion.
Mr. Newens: Does the Minister regard estate management in any of the new towns as being of the retrograde variety that he has described as existing under Labour authorities? The hon. Gentleman would perhaps like to comment on my own town.
Mr. Finsberg: My criticisms were not directed at the management of the industrial estates of new towns, which, as I have already said, are extremely good. It is only a pity that so many of those new towns, packed in too many cases with nominees of the Labour Party—
Mr. Barnett: Rubbish.
Mr. Finsberg:—did not manage to teach their friends in local government what was happening. The hon. Gentleman says " Rubbish ". He might reflect on how many non-Labour members there were of the Washington, Aycliffe and Peterlee boards when he left office. He can then decide whether my remarks are rubbish.
Mr. Barnett: That is most unjust. The hon. Gentleman knows that appointments to new town development corporations were made in the light of the political complexion of the local authorities in the area. He may say what he likes about new town corporations in the North-East. He had better look at Bracknell and other local authorities where Conservative councillors predominate and he will find that it is totally untrue to suggest that the Labour Government packed new town development corporations with members of their own political persuasion.
Mr. Finsberg: I do not withdraw a word.
The hon. Gentleman raised the question of freehold and leasehold. There is a problem over freehold and leasehold. Sensible estate management, in general, says that there is little purpose in holding on to a freehold. If a tenant has a long lease, it is, in general, wiser to realise the asset and to allow the tenant to become an owner.
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I am not privy to the advice or papers given to the Labour Government. The only reason, I guess, why advice might have been given to them to obtain the freehold is the knowledge that the policy of the Labour Party was to keep its hands on every bit of property that it could and to give no opportunity to individuals, whether council tenants or industrialists, to buy their own freeholds. I cannot be certain; I do not have the documents. I merely have to draw the conclusion from what I know of Labour Party policy.
I am glad that the Government have satisfied my hon. Friend the Member for Basildon (Mr. Proctor) about his excellent town centre. I hope that, on completion, it will be the credit that I am sure it will be. I endorse his wise words about the new direction of housing needs, with greater emphasis on the elderly, the handicapped and single people. I do not believe that the problems mentioned by the hon. Member for Harlow will be nearly as widespread as he claimed.
We shall look at the important point about stamp duty. We would not wish to have anomalies that acted to the detriment of tenants. We are also looking at the point about Northern Ireland to see whether it can be met.
On houses with defects, we are encouraging development corporations, where people want to buy but where their present house is not satisfactory for sale, to offer an exchange for another house that is suitable for sale. From my knowledge of development corporations, I can say that they are actively accepting this point of view.
Neither side of the House goes back on its support for the principle of new towns. We on the Conservative side are planning for the 1980s and 1990s. We have left behind the 1940s and 1950s, with the many mistakes that both parties made in those days.
It is right that I should deal with the unanswered question of the hon. Member for Greenwich about the future of the Commission for the New Towns. The commission has responsibility for the management of the disposal of its existing assets and those of Harlow and Stevenage which are being taken over in the next few months. My right hon. Friend the Secretary of State has made it

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clear that our policy is to wind up the commission in due course, but we have as yet reached no decision on a date.
We are anxious that the new towns should become as much like other towns as possible. More than one chairman has said to me " I will know that we have been successful when people forget that this is a new town."
Our debate today, given your semi-blind eye, Mr. Deputy Speaker, and that of the previous occupant of the Chair, has been an opportunity for Parliament to review what is happening in new towns. I hope that most of us have managed to stick strictly to the financial aspect which is the central consideration today. Nobody listening to the debate could doubt that the balance of stock-taking shows that the new towns have made and are continuing to make a positive contribution to the country's well-being, with thousands of pleasant new homes, thousands of new jobs, an attractive environment in which to live and a major contribution towards economic growth. I hope that the House will therefore give the Bill its Third Reading.
Question put and agreed to.
Bill accordingly read the Third time and passed.

NUCLEAR ALERTS (UNITED STATES OF AMERICA)
Mr. Bob Cryer: On a point of order, Mr. Deputy Speaker. I should like your guidance on the ability of the House to discuss the warning that the Pentagon anounced yesterday that there had been a false nuclear alert. I understand—obviously, this is outside your jurisdiction—that a private notice question has been refused. Nevertheless, it is a matter of concern that such a serious emergency could take place without any opportunity for debate in the House.
Will you, Mr. Deputy Speaker, bring to the attention of Mr. Speaker the concern expressed in the House today? Clearly, there is only one opportunity to rectify a mistake such as this, and if that is not taken it is too late to do anything. In those circumstances, I shall be grateful if you will pass my expression of concern to Mr. Speaker so that special attention may be given to this serious matter for any future occasion.
Mr. Deputy Speaker (Mr. Bernard Weatherill): The hon. Gentleman has answered his own question. There is no opportunity today to seek to move the Adjournment of the House under Standing Order No. 9. I think that the hon. Gentleman will be able to use his parliamentary knowledge to do that on Monday.

WENDOVER MATERNITY HOSPITAL
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Cope.]
1.43 pm
Mr. Jack Aspinwall: I am pleased to obtain this Adjournment debate today, Mr. Deputy Speaker, because there are many points of which I must make my hon. Friend the Under-Secretary of State aware in support of the campaign to provide improved maternity services and to prevent the premature forced closure of Wendover maternity hospital in my constituency.
I welcome to the debate my hon. Friend the Member for Gloucestershire, South (Mr. Cope). The hon. Member for Bristol, North-East (Mr. Palmer) has asked me to apologise for his absence at a long-standing constituency engagement which he was unable to avoid. He wholeheartedly supports this campaign, which has been running with the support of the community health council since 1975. The constituencies of both hon. Members are in the health district affected.
My comments have no reflection on the doctors, nurses and ancillary staff, some of whom I have had the pleasure of meeting on a recent tour of Cossham, Frenchay, Wendover and Southmead hospitals. The warmth, dedication and caring attitude that I encountered left a deep impression, and the quiet display of skill, particularly in the specialist units, was breathtaking. This is perhaps a good time to place on record on behalf of my constituents at least a note of the gratitude and affection felt by our community for those who care for patients in our hospitals.
I wish to raise a number of points as I believe that the Avon area health authority has taken decisions without adequate research and study of the maternity services in an area where massive housing devlopment has been permitted and where even more land is due for release soon, all without the necessary infrastructure of essential services.
There could be an extra 30,000 people in the Frenchay health district by 1990. The district is roughly square in shape and its widest dimension is 16 miles
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across. The population is about 209,000 and rising and the concentration of people is greatest in the south-west of the district. The rough split of population in the three constituencies is as follows: Bristol, North-East 74,000, Kingswood 80,000 and Gloucestershire, South 55,000. Only part of the latter constituency is in the Frenchay district.
A high concentration of new housing development is occurring in the Yate-Chipping Sodbury conurbation in the Northavon district and the south-east of the Kingswood district. Much of this development has been allowed by the Secretary of State after an inquiry and an appeal and the vast majority of new home owners are young people often new to our area and without traditional family support close at hand.
The maternity hospitals used by the health district population are Bristol maternity, Southmead maternity, Wendover GP maternity and Chipping Sodbury maternity. Neither of the consultant hospitals—Bristol maternity and Southmead—is particularly conveniently sited, and in the constituency of Gloucestershire, South the distance from the main centres of population in Yate and Chipping Sodbury is 14 and 12 miles respectively. In my constituency the distance is seven and eight miles respectively. The most direct route from either of these areas to the consultant maternity hospitals does not necessarily coincide with the bus services on available bus routes. People using public transport can expect more than one change of bus on a journey in each direction.
There are 90 general practitioners in the district, all but six of whom are directly involved in the provision of maternity services. A few of the general practitioners based near the western boundary of the Frenchay health district are able to, or could if they wished, exercise clinical responsibility over inpatients in the GP units in the Bristol maternity and Southmead hospitals.
The majority of general practitioners involved in maternity work cannot, because of the distance between their practices and the consultant maternity hospitals and because of the time involved in travelling such distances on urban roads, safely exercise clinical responsibility over in-patients going into labour in the GP units of those hospitals.

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Thus, the majority of the general practitioners do not have a close day-by-day working relationship with the staff of the consultant hospitals, though in respect of maternity services all are involved with the care of the same patients for the same purpose. That purpose is the successful outcome of pregnancy.
Some older general practitioners are maintaining expertise in delivering babies by accepting clinical responsibility for deliveries in the home or in the GP hospitals of Wendover and Chipping Sodbury. General practitioners under 45 years of age have been taught to expect good facilities for delivery and close contact with specialist staff who would be readily available should complications occur. These conditions do not exist in the Frenchay health district.
The number of deliveries taking place in the district is 10 per cent. of the total deliveries of the population, and that percentage is falling year by year. Total deliveries in 1978 were 2,661. There were 19 deliveries at home, 263 deliveries in the GP hospitals, 2,374 in the consultant hospitals and five elsewhere.
Given present circumstances, it is inevitable that within a short time the general practitioner input to maternity provision will be confined to ane-natal and post-natal care. Given the age range of present general practitioners, it is anticipated that within 15 years the majority of doctors in the health district will not only not have current experience in deliveries but will have little or no previous experience. It might seem tidy for the GPs to concentrate on the more routine antenatal and post-natal care and for consultant hospitals to concentrate on sorting out and dealing with the more difficult ante-natal problems and conducting all deliveries. There is anxiety that that could affect the GP services adversely in several ways.
Involvement in delivery is an attractive aspect of maternity work. Restricting the GP to ante-natal and post-natal work might reduce the number of GPs who are willing to participate in the maternity services. Complications commonly occur at the time of delivery. Therefore, involvement with and clinical responsibility for delivery strongly reinforce the need for a high standard of ante-natal care. If general practitioners are not involved
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in deliveries and have little or no regular contact with consultant maternity hospital staff, other ways will have to be developed to ensure that they maintain high standards and are able to identify patients requiring referral to consultant services.
The Frenchay health district employs midwifery staff, some of whom work at the Chipping Sodbury maternity hospital. There are also 12 community district nurses, midwives and eight community midwives who deal with all ante-natal and post-natal patients in the health district. With the handful of home deliveries, the community staff are working to capacity. Their work load is managed by the health district and is prone to alteration without warning whenever Bristol maternity hospital or Southmead maternity hospital finds it necessary to increase early post-natal discharges to accommodate admissions.
Births to Frenchay district residents in 1979 totalled 2,744. They represent between 25 and 30 per cent. of births in the Avon area health authority. As in the rest of the area, births increased by 11 per cent. between 1977 and 1979, and the higher level is being maintained. Each mother-to-be is encouraged to book with the services in the third month of pregnancy. They remain patients of those services for six or seven months.
From that background, it is clear that there is anxiety about the medium and long-term availability and acceptability of maternity services. It is expected that the birth rate will continue to rise, although nobody knows by how much. Therefore, the maternity service provision must be flexible enough to cope with an increase in work load.
Delivery, ante-natal and post-natal obstetric care and paediatric care of the newborn must be provided and must be of a high standard. The general practitioner and community inputs into the services will arise from services based on the health district. The consultant maternity hospital which makes an input may or may not be sited within the area but must provide services which are available and easily accessible to the population.
In April 1979 the Frenchay district management team made a proposal as a contribution to the area health

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authority's consideration of the whole of the maternity services for Avon. The proposal was for a general practitioner consultant maternity hospital with an outpatient department and 60 in-patient beds providing a focus for the general practitioner and community midwifery services and ensuring the development of integrated general practitioner, community midwifery and consultant services which would be more accessible than the present maternity hospitals and which would be motivated to ensure that all those needing services had access to them. This proposal would be welcome if the site was right.
The area health authority's proposals to close Wendover and to increase the size of and upgrade Southmead is an unreasonable decision in that there has been no complete study of the maternity services in the Frenchay health district for either the medium or the short term. The authority has chosen to impose a large hospital.
The proposed closure of Wendover maternity hospital is of vital importance. Under the procedures set out in circular HSC(IS)207, Ministers are called upon to make a final decision. No closures will be agreed unless it can be shown clearly that they are in the best interests of local health services. How could a Minister agree, given those facts?
I am sure that my hon. Friend the Under-Secretary will agree that health authorities are well placed to determine the best pattern of service in their areas, taking into account the services available, but what happens when the district management team and the community health council disagree with the AHA proposals and there is a massive public protest?
I can appreciate the dilemma of an AHA which is required to make savings and provide a more efficient and cost-effective service—a highly commendable principle, but not at the expense of my constituents and those of my hon. Friends. A £1 million-plus extension and upgrading at Southmead are not the answer.
A particular medical philosophy—that of the gigantic baby farm—is being imposed by the AHA, and already the Bristol maternity hospital is under threat. Southmead is taking cases from that
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hospital, and to cope with the rising birth rate an early discharge policy has been established. Some mothers have been discharged after six hours.
The AHA, planning for a predicted rise in birth rates, intends to cope with an increase by adopting a discharge policy of three days for 50 per cent. of the patients as against, at present, 30 per cent. who stay up to three days. The estimated increase in numbers at the Bristol maternity hospital would be 32 per cent. and at Southmead 43 per cent.
This proposal would create a high-production " baby factory " system—more impersonal, dangerous, geographically wrongly sited, with poor transport, creating additional demands on already pressurised midwifery and community nurses who have to deal with the problems back in the community.
The present maternity facilities in the Frenchay health district are insufficient and inconvenient and costly to the vast majority of families. The proposal to close Wendover has been a fiasco. This hospital is controlled by another health district. As soon as proposals were put forward for its closure, uncertainty was created. Local doctors did not know where to send expectant mothers. Because of this peculiar state of affairs, the waste increased due to lack of proper direction—with dedicated and qualified staff being under-employed and facilities under-used due to a self-imposed problem. Many of the staff were placed on short-term contracts, which produced low morale and uncertainty.
There is still strong support to keep Wendover open, to increase its use and to make its operation viable. The postnatal care provided there is extremely important. Who can assess the relationship between baby battering, infant mortality, domestic tension and the early discharge of mothers and babies to homes without sufficient support? What is the cost to society?
Many mothers now demand home confinement rather than go into a big impersonal unit. Many doctors believe that Wendover is a safer alternative to home delivery. Let us keep Wendover, with its congenial, homely and peaceful family atmosphere, until there is a viable alternative. Economic viability can be achieved if all the parties concerned make the

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effort. There is a need without a doubt for this excellent hospital.
During the five-year campaign to provide improved maternity services, I must express my thanks for the determined way that the Fenchay community health council and particularly its very able secretary, Mrs. Mary Aitchison, have doggedly pursued this campaign. I should also like to express my thanks to the many mothers who wrote personally to me, to the women's institute branches, to the mothers and toddlers clubs, church organisations, playgroups, some of the young people now settling in on the new estates in my constituency and to the GPs, community nurses, midwives and staff at the hospitals, particularly Dr. Pauline Begley, who is the district community physician for the Frenchay health district, who gave me much recent factual information.
I also welcome the representations made by the Confederation of Health Service Employees and others and would say to them that there is no political capital to be made out of genuine problems. Our Government want the best provision of maternity services that is possible within the resources available.
In conclusion, I ask for a full inquiry into the provision of maternity services in the Frenchay health district and for the area health authority to keep Wendover open and fully operating until an inquiry has taken place, improving its viability by arranging for more mothers to go there and creating the conditions in which they can do so; to look at the possibility of providing a consultant obstetric unit at Cossham with the provision of pathology and laboratory facilities for joint use with the existing facilities, thereby ensuring the continued viability and future of Cossham hospital; or the scheme proposed by the Frenchay health district management team for a unit at Frenchay, because of the availability of laboratory and specialist X-ray facilities and the constant presence of anaesthetics.
A realistic view of the maternity services provisions must be taken in my constituency and that of the Frenchay health district. Getting the balance right between medical and other considerations is a vital factor. Getting it wrong can produce untold misery, unhappiness and inconvenience.
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I hope also that my hon. Friend the Minister will meet a small delegation from the Frenchay community health council to discuss at ministerial level the real fears of the community on this subject.
2.1 pm
The Under-Secretary of State for Health and Social Security (Sir George Young): I congratulate my hon. Friend the Member for Kingswood (Mr. Aspinwall) on securing this debate today about the proposed closure of Wendover maternity hospital and the alternative provision of maternity services. He made a forceful speech and a useful one, as might be expected by those who know him, and he spoke well on behalf of his constituents. His interest in the Health Service is well known in the House, as he is secretary of the Back-Bench committee on health and social security. I am also pleased to see in his place my hon. Friend the Member for Gloucestershire, South (Mr. Cope), perforce silent in this Chamber but active behind the scenes both in the House and in his constituency to improve the delivery of health care to those whom he represents.
I well understand the anxieties that can be aroused locally by proposals to close hospitals, and I am grateful to my hon. Friend for giving me the opportunity to set out the background—as I understand it—to today's debate and to give an account of the procedures that have to be followed when the closure of any hospital is proposed. I assure him that the procedures are designed to ensure that decisions are only taken after a full and searching examination of all the relevant facts, especially those which he mentioned.
I should say at the outset that no decision has yet been taken to close Wendover maternity hospital, nor, indeed, is any final decision imminent. I shall be referring later in my speech to the various stages that must be gone through before a hospital can be closed. If local agreement cannot be reached—in particular, if the local community health council objects—the final stage in the process involves decision by Ministers. It would not, of course, be proper for me to pre-empt that decision this afternoon or to seek to influence at this stage the views of the relevant health authorities. I can, however, indicate our national

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policy so that proper account can be taken of it in local discussion.
I should also make it clear that any proposal to close this hospital in no way reflects adversely on the high standard of care that past and present members of the hospital staff have given to their patients. I am well aware of the dedicated work that is carried out in hospitals such as Wendover, and I am grateful for this opportunity to pay tribute to the staff involved.
At present, hospital births in Avon take place in either consultant maternity units or in peripheral general practitioner units, and it may be helpful if I digress for a moment and explain the difference. In a consultant maternity unit, the expectant mother comes under the care of a consultant obstetrician who works from a particular hospital or hospitals. She may well attend ante and post-natal clinics run by the obstetrician and his staff, and the delivery of her baby will be supervised by the consultant's team, which will include resident medical staff. Such care is especially desirable—for example, in a mother-to-be's first birth—when it is anticipated that the special skills of a consultant obstetrician and full hospital facilities, such as anaesthetic, paediatric or pathology services, are, or might be needed. Where this is not the case, deliveries may take place in a general practitioner maternity unit. Here, mothers-to-be may remain in the care of their general practitioners throughout their pregnancies and hospital facilities are provided as and when appropriate. Usually in a general practitioner unit, there is no resident member of medical staff.
At present there are three consultant maternity units in Avon—at the Bristol maternity hospital, at Southmead hospital and at the Weston general hospital—and four peripheral general practitioner units, including Wendover maternity hospital. In 1979, 92 per cent. of births in the area took place in the consultant units and just over 7 per cent. in the peripheral units. A distinct change in pattern has occurred since 1975, when only 74 per cent. of births took place in consultant units. I should stress that this change has occurred not by direction of any health authority but by more and more mothers, no doubt in consultation with their general practitioners, electing
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to have their babies in one of the consultant units in preference to a general practitioner unit.
At first sight, it may seem somewhat paradoxical that the Avon area health authority, which is responsible for health services in my hon. Friend's constituency, is considering a proposal to close Wendover maternity hospital at a time when the birth rate in Avon appears to be on the increase. The previous decline in the area's birth rate ended in 1977, and there was a dramatic upswing in 1978. This was sustained in 1979, and over the two-year period there was an increase of 11 per cent. in births. Just over 10,000 births took place in 1979 and, judging by latest predictions, it is now necessary to plan for a peak of about 14,000 births per year in the period 1986 to 1991.
Sensibly, the health authority has reviewed its obstetric policies in the light of this increase. It has decided to make contingency plans for increasing obstetric facilities and to monitor the effectiveness of the general practitioner units. It was decided that the increased number of deliveries could be undertaken by the two consultant units in Bristol, with some support from the peripheral units, if a delivery suite was constructed at South-mead and approriate increases were made in nursing staff as the birth rate rose. It was also recognised that an increased number of community midwives would be required if the average length of stay in hospitals was reduced to accommodate the expected increased number of deliveries. The authority had previously emphasised the useful role that general practitioner maternity units could play and had advocated that both consultants and general practitioners should book suitable cases into the peripheral units to relieve pressue on the consultant units.
Despite all that, I understand that the use made of Wendover hospital—which has 16 beds—has declined. The work load has gradually transferred to the consultant unit at Southmead hospital, which is about three miles away. In. 1978 there were only 128 deliveries at Wendover, an average of fewer than three a week, and this serious under-utilisation naturally led to low staff morale and staffing difficulties. Because of staff resignations, the hospital was temporarily unable to provide safe delivery cover, and in September 1978 the health authority decided

1921
to close the hospital temporarily for deliveries and to use it for post-natal care only. There was no intention at that time to close the hospital permanently, and deliveries were resumed two months later as soon as a full complement of staff was recruited.
The expectation was that, with the increase in the birth rate, the unit's facilities would be more fully used. However, despite encouragement by the district management team, this did not happen and there were only 119 deliveries in 1979.
The position, as seen by the area health authority, is now as follows. That authority reviewed the situation in April 1980 and decided that, as Wendover hospital was not making any significant contribution to obstetric services in Avon, its closure should be proposed. By then, the average number of deliveries was only about two per week, compared with a potential of 19, and, in the authority's view, while the hospital remained open it was tying up valuable resources of staff that could be more economically deployed elsewhere. Because of the low volume of throughput—if that is the right word—the average cost of a delivery at Wendover in 1979 was £1,100, compared with a range of £388 to £600 for the other maternity hospitals managed by the authority. The total current cost of running the hospital is £130,000 a year, and the authority felt that these resources were urgently needed to meet the increasing pressures upon the consultant maternity units and upon the community midwife services.
It would not be right for me to comment at this stage on the validity of the case put forward by the health authority, other than to say that I am well aware of the strength of feeling that can be aroused among mothers-to-be, professional staff and others by proposals to vary maternity services. Factors such as reducing costs, maximising safety, providing a friendly, homely and sympathetic environment, and the convenience of patients and visitors do not always pull in the same direction and have to be balanced locally with tact and sensitivity.
I have so far concentrated on describing the local background to this debate, but it might be helpful if I set the matter into a wider context by referring briefly
1922
to the general financial position of the NHS and its relevance to closures and to our recent proposals on the future pattern of hospital provision.
Money is tight in the Health Service, although, as the White Paper on public expenditure made clear, we are standing by our manifesto commitment to maintain the level of spending on the Health Service planned by our predecessors. In 1980–81, health authorities' cash limits provide for a real growth of ½ per cent., compared with the planned level of spending in 1979–80, but because of the cash limit squeeze in the last financial year this means an increase of over 3 per cent. in real terms. The level of additional resources that can be provided for the NHS depends, of course, on how soon the national economy responds to the Government's policies.
The Government attach the greatest importance to controlling expenditure, and we have stressed the need for health authorities to stay within their allocations. I know that many authorities are now searching for ways to save money, and, as a last resort, closure may seem to be the only option. However, my fellow Ministers and I have repeatedly made it clear that we will not agree to permanent closure as a way out of short-term difficulties. As I have said before, permanent closures can reduce the Health Service's precious stock of hospitals at a time when the country can ill afford to make good the loss, and the cumulative effect of a number of small closures can be substantial. Thus, we are quite firm that permanent closures should occur only as part of agreed long-term plans for the development or rationalisation of health services in a particular area.
We have recently published a consultative paper about the future pattern of hospital provision in England. We recognise in that paper that there are sound medical reasons—and some financial ones—for concentrating some services in district general hospitals. Among other advantages, such hospitals can provide a much greater range of services and up-to-date expensive facilities, thus improving patient care. But there is a real risk of concentrating services more heavily than the advantages strictly justify to the detriment of other considerations, such as the accessibility of hospitals to patients and visitors and the sense of identity

1923
which many local communities have with their local hospital. What we are anxious to avoid is centralisation for the sake of it, and we consider that health authorities should take a long, hard look before deciding that big is best. Having said that, there is, of course, no point in providing local facilities that are not used.
To turn back to the main subject of this debate, what procedures must now be followed before any proposal to close Wendover maternity hospital can be put into effect? DHSS circular HSC(IS)207 sets out the answer. Briefly, the area health authority must have issued a formal consultation document setting out its proposals to the relevant community health council and to local authorities involved and to staff and professional interests. Three months are allowed for comment, and all comments must then be passed to the CHC for any further observations it may wish to make.
If the CHC does not object to closure, the AHA considers all the comments on its proposal and decides whether to close. If the CHC does object—and this is important—it has to submit a counterproposal to the area health authority. If the authority still wishes to proceed, it must then refer the matter to the regional health authority. If the RHA supports the case for closure, it submits the case to Ministers for a final decision. We have made it clear that, in cases where we are called in to intervene, Ministers would not support any case for closure unless
1924
it could be clearly demonstrated to be in the best interests of local health services and the community they serve.
But we are, of course, as yet a long way from that point in this case. Perhaps for that reason I may postpone a response to my hon. Friend's request for a meeting. The AHA is only just about to issue its consultation paper, which, as I have just explained, is only the start of a long road which does not necessarily lead to a closure. I assure my hon. Friend that the procedures are designed to be as scrupulously fair as possible, and very careful consideration will be given to comments received at all points in the procedure. I shall ensure that the area health authority receives a copy of the Official Report of this debate.
All comments that are received during the consultation process will, of course, be carefully studied by the area health authority and, if appropriate, the regional health authority, Additionally, I know that all concerned will give full consideration to the points that have been expressed here this afternoon, especially those that demonstrate the strength of local feeling on this issue.
I say again to my hon. Friend how grateful I am to him for having raised this matter today.
Question put and agreed to.
Adjourned accordingly at fifteen minutes past Two o'clock.

DEFENCE
  Departmental Staff
  Departmental Staff
TRADE
  South Africa (British Companies)
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  European Development Fund (Procurement)
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WALES
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  Voluntary Organisations (Grants)
  Rent Assessment Panels
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  Housing Expenditure
  Housing Expenditure
EMPLOYMENT
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  Fishing Industry (Decasualisation)
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  Temporary Employment Subsidy (Jarrow)
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  Redundancies (Jarrow)
  Health and Safety Executive and Nuclear Inspectorate
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EDUCATION AND SCIENCE
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EUROPEAN COMMUNITY
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FOREIGN & COMMONWEALTH AFFAIRS
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Preamble
The House met at Eleven of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Hereford.

PALACE OF WESTMINSTER: HEATING SYSTEM
Lord MORRIS: 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 was the installation cost of the heating air-conditioning system within the House of Lords.
Lord MOWBRAY and STOURTON: My Lords, expenditure over the first two years of the heating modernisation programme for the Palace of Westminster has been approximately —1,190,000. This figure could only be sub-divided between the House of Lords and the House of Commons at disproportionate cost.
Lord MORRIS: My Lords, I thank my noble friend for that answer. Is he entirely satisfied that the system is working properly?
Lord MOWBRAY and STOURTON: My Lords, it is part of a six- to seven-year programme so it cannot be expected to be working properly yet. It is only in the beginning stages.
Lord LEATHERLAND: My Lords, is the noble Lord aware of the fact that on this side of the House it is very cold indeed? We are almost shivering.
Lord MOWBRAY and STOURTON: My Lords, in hot weather some people like to be in a cooled atmosphere.
The Earl of HALSBURY: My Lords, could those responsible adjust the system so as both to conserve fuel and stimulate employment in the textile trade by turning the temperature down in winter and perhaps up a little in summer?
Lord MOWBRAY and STOURTON: My Lords, the whole object of this six-to seven-year programme is to save fuel. Those noble Lords who are scientifically minded may like to know that eventually we shall save some 190,000 therms a year.

TRANSPORT BILL
11.8 a.m.
Further considered on Report.
Clause 52 [Unfunded proportion of relevant pension obligations]:
Lord MISHCON Lord MISHCON had given notice of his intention to move Amendment No. 58:
Page 48, line 34, at end insert—
("() Before confirming or varying the said determination the Minister shall consult the persons administering the pension scheme concerned about the proportion he proposes to specify in the said order in respect of the scheme, and in the event of those persons giving notice in writing to the Minister within two months that they object to the said proportion, the Minister shall appoint an independent actuary, to be nominated by the president for the time being of the Institute of Actuaries, to report before the end of the second financial year on the proportion which would be appropriate and the Minister shall thereupon by order confirm or vary the proportion so as to give effect to the said report.")
The noble Lord said: My Lords, as your Lordships will see, the purpose of this amendment is to provide for independent arbitration if there is disagreement about the unfunded proportion of the British Railways Pension Funds. This amendment will not be necessary if the amendment immediately following it and an amendment to be put before the House by myself and my noble friends are successful, because they seek a review of the unfunded proportion at future dates. In order to save the time of the House, I shall not move the amendment now, but I reserve the right to bring it forward at Third Reading if necessary.
Lord MORRIS Lord MORRIS moved Amendment No. 58A:
Page 49, line 13, at end insert—
("(6) Either the Minister or the persons administering a BR pension scheme shall have the right to require a review of the unfunded proportion from time to time, provided that no such review shall be made before 31st December 1986 or before the expiry of 5 years after the previous review under this subsection unless the Minister and the persons administering the scheme consent. Within 2 years after such a review is required the Minister, after consulting

1733
with the persons administering the scheme and the Board, shall make the best possible estimate of the proportion of the pensions corresponding to the relevant pension obligations which cannot then be met by the assets held by the scheme in respect of such obligations and shall make an order to replace the proportion referred to in subsection (1) by the said estimate, which order shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament.")
The noble Lord said: My Lords, I fear that I have been left holding a baby. It is not only both sensible and just, but weighty. I can only hope that with the help and the support of your Lordships I shall not drop it. My noble friend Lord Selsdon expresses his deep regret that he is unable to attend your Lordship's House today, particularly as his amendment has no party political bias and seeks to ensure that there may be no inequity to either a pensioner of British Rail or to the British taxpayer at a date in the future.
This amendment was first moved during the Committee stage and my noble friend Lord Bellwin undertook to examine the position, and this he has now done. The amendment has therefore been tabled again in the hope that my noble friend Lord Bellwin will be able to give your Lordships' House, the taxpayer and the British Rail pensioner the reassurance that I believe they require and to which they are entitled.
Following the Committee stage my noble friend Lord Bellwin and his advisers met with my noble friend Lord Selsdon after an exchange of letters, and my noble friend Lord Selsdon has asked for answers to two questions. First, as the Bill at present stands, is it possible that the once-and-for-all assessment could be incorrect and that the taxpayer could be saddled with a higher contribution in future than would be either equitable or necessary?
Secondly, are the Government completely satisfied that no circumstances could arise whereby the individual pensioners might suffer in the future? We must recognise that over the past five years inflation has averaged some 16 per cent., and over the five years prior to that some 8 per cent. If over the next 10 years we see similar movements either upwards or downwards, it is possible either that the taxpayer will have made an excessive contribution—perhaps even as much as —250 million more than necessary—or
1734
that the Railways Board will have to find up to a further —250 million to fund pensions.
I know that the Government would not wish to find themselves in a position where they wasted public funds. Equally, I submit that neither this Government nor a future Government would wish a British Rail pensioner to suffer as a result of support being kicked from under him in the future. But British Rail is in a very sorry financial state. If it were a private sector company it would be near bankruptcy. If, in the future, it had insufficient financial resources to meet pension requirements, would the Government support it, and will they give an undertaking now so to do? If my noble friend Lord Bellwin can give the assurances for which my noble friend and other noble Lords on all sides of the House are asking then this amendment would be unnecessary and there would be no need for a review mechanism.
I would also ask noble Lords on the Front Benches opposite that, if they propose to speak to the amendment, they will give assurances that their parties will respect the position of British Rail pensioners and support the protection of their rights should a once-and-for-all assessment prove in the future to have been inequitable. I know that my noble friend Lord Selsdon is expecting the Minister to give the necessary reassurances and satisfy the House. I hope it will prove unnecessary to press the amendment.
11.11 a.m.
Lord MISHCON: My Lords, it may be convenient if I inflict upon your Lordships one speech, certainly one of any length, on this matter, and in doing that on this amendment I reserve my right to make a few remarks on my amendment which follows. This is an opportunity for this House to show itself at its best. It does so—I say this respectfully as a comparatively new Member—if it is dealing with a matter where justice, equity and judgment are required and where no political considerations enter into it. If my noble friends are not convinced by the arguments contained in the amendment or by any observations I make, I do not ask for their support. And in facing noble Lords opposite, I say precisely the same to them, hoping that, similarly, if they are favourably inclined towards the arguments

1735
I wish to put forward, they will regard this as not a matter of loyalty to party or Government but loyalty to principle.
The facts of this matter can be put in a very complex way, but lawyers are supposed to have the ability, not always exercised, to put complex matters simply. If I let my profession down this morning I know your Lordships will forgive me, but I am trying to put the matter in very simple terms. The railway companies, in now what are historic times, when they were run by private enterprise—this applies similarly after nationalisation—found that their pension funds were being employed in the running of the railways, not necessarily the type of investment which investment advisers would have given had they been consulted. Indeed, it was a question of having to lend money at low rates of interest to the railways, and the result of all that—I come immediately to 1974—was that the pension funds were in a mess. To use a technical phrase, they were substantially unfunded.
In order that justice could then be done it was decided, after great consideration and by Act of Parliament, that the proper way for the Government to behave in those circumstances, in justice to the pensioners—the people who had loyally served the railways whether under private enterprise or nationalisation—was by way of a capital contribution to the pension funds, which would make up for the unfunded portion. For that purpose they took an assessment of the assets and liabilities as at that date, did an actuarial exercise in regard to what the liabilities were likely to be in the future, and then a sum was quantified and, if my recollection is correct, that sum was as large as —575 million paid up to this year, with —1¼ billion still to be paid over the next seven years. That is a frightening exercise for any Government who are trying to secure some economy, and that would apply to a Government of whatever complexion.
This Government looked at the matter, and it is not in any way from my point of view grounds for a quarrel that this matter should be looked at; the Public Accounts Committee in another place cast some grave doubts on the wisdom of having this very large capital expenditure as a commitment for the future. Then, having reviewed the situation, they said,
1736
"We had better substitute for the capital funding, an obligation to pay year by year whatever the deficiency may be", and the calculation in regard to the deficiency was to be done in the following way. A Government actuary was to look at the state of the funds now and take a look at what inflation was likely to be in the future (a somewhat deterring task for anybody), take into account what investment rates might be in the future (a frightening task for anybody); then do the normal actuarial calculation in regard to lifespan and so on, look at the proportion that the unfunded part of the pension funds related to those matters, fix that proportion and make that the proportion year by year that the Government would be liable to pay out for the current pensions and any increases there might be.
I said that it was an exercise that could deter anybody, and your Lordships might feel that the pension fund trustees looked upon this exercise with great trepidation. They did so for the obvious reason that the calculation could turn out to be sorely inaccurate, and if the inaccuracy was against them in the future, they would of course be in great difficulty. The Government might well say that no pensioners would be worse off, but from where would the railway pension fund get the money—as we all know, its finances are already in enough of a parlous state—in order to pay the pensioners who obviously ought to be paid and who are entitled to be paid?
The trustees said to the Government, "We don't quarrel with the exercise that you are carrying out, but, please, if you turn out to be wrong—either way—what will happen?" If too optimistic a view, or too pessimistic a view were taken by the actuary in regard to matters of inflation, investment return and interest rates, either the pension fund or the taxpayer would suffer.
So that your Lordships will be aware of the extent of this question, may I say that literally hundreds of millions of pounds could be involved if the exercise goes the wrong way. That was the burden of an article in the Economist,to which I took the liberty of referring, on I believe Second Reading, though it may have been at Committee stage. That article stated that it was sorely unjust for there to be one fixed review by a Government actuary without even agreement with the pension

1737
fund actuary, or without procedure for arbitration; a once-and-for-all commitment.
It has been argued—and not very strongly—that this is all very well, but that one should look at the 1974 Act, to which I referred a few moments ago, which dealt with a once-and-for-all capital apportionment. It has been said that the unfunded portion was taken at that time, and that again it might have been wrong. The answer to that argument is very simple. If the pension fund trustees had had that capital sum at that time, their advisers would have so invested that capital sum, so lent it out at high interest rates which are now current, that they could be expected to be able to deal with the frightening factors that indeed face all pension funds' trustees and all trustees of settlements, wherever they may be at this moment, when trying to provide for beneficiaries. But the trustees are not going to get that opportunity. It is to be done on the basis of a year by year payment; to put it in simple terms, by means of a cheque, issued year by year, which will immediately be paid out to pensioners, with no opportunity at all for investment, for cover, or for a safety net.
In these circumstances the amendment that we are now considering speaks in the following terms. It says—my amendment is a different one, and I shall concentrate on this amendment—that nobody need be troubled by a review in future if the Government actuary was roughly correct, but if the Government find that the actuary was miles out and the taxpayer is suffering while the pension fund is gaining—possibly unjustly gaining—then by notice let there be a review at stated intervals. Then after the review takes place—and it will take place only if there is this transparent injustice, if something has gone wrong—the matter can be rectified and the proportions can be adjusted. That is a very just and sensible thing to ask for.
But if the Government say—and this is the only brief reference I wish to make to the amendment in my name and in the names of my noble friends—that we cannot have an open-ended commitment like that, with reviews that might take place, following notice from the pension fund trustees, at any time over the next 20 years, then my amendment endeavours
1738
to answer any objection that there might be in that regard by saying, let there be but two, and only two, review dates in the future, and then the Government will not be faced with an open-ended commitment. The reviews can take place at only two fixed times, and that would be an end to it.
I could weary your Lordships with many arguments which would, I hope, convince you about the case of the pension fund trustees, and I cannot over-emphasise how terribly concerned they are and how greatly they rely upon your Lordships this morning. In this instance your Lordships are not the ultimate court of appeal, but you are sitting as a court of appeal on no political matter, but merely on a matter of principle, honesty, and justice concerning people who have worked hard, who deserve this justice from your Lordships, and who indeed also deserve to have a fair substitution for the 1974 Act.
I noticed that the noble Lord, Lord Morris, asked for an assurance from the Government, and indeed at the Committee stage the noble Minister Lord Bellwin could not have been more fair. If I may paraphrase his remarks, he said that he could see much merit and considerable justice in the speech—and it was a very moderate speech—that had been made by the noble Lord, Lord Selsdon. He said that it merited much sympathetic consideration, and he suggested that he should confer with his ministerial colleagues to see what could be done in the interim period.
I gathered from the remarks of the noble Lord, Lord Morris, that some assurance was being sought from the Government and that it might be forthcoming. I must say this because otherwise I should not be doing justice to my case, nor to the pensioners for whom I am trying to plead. The noble Lord the Minister is serious enough and is experienced enough not only in governmental fields, but in other fields which possibly both of us think are even more glorious than national government fields, and I am sure he will realise that any assurance given—if it is given—must be binding.
Such an assurance must be directed, by means of a memorandum or letter, to the pension fund trustees, or must be written into the Bill. It would be quite wrong,

1739
and I should not have done my duty, nor would your Lordships have done yours, if we were to accept some general observation about it not being the habit of Governments to let down nationalised industries if they happen to have liabilities. Any general assurance of that nature would be an empty one in the letterbox of every pensioner of British Railways. I hope that this amendment will commend itself to your Lordships and that I shall be forgiven if I have to address your Lordships again should by some perchance this amendment be defeated, or if, indeed, the assurance we have called for is not a satisfactory one.
Lord SANDFORD: My Lords, I wonder whether I may say a brief word on this amendment. I have taken an interest in the subject for some time, although I have not hitherto spoken to it. I should like to start by thanking my noble friend Lord Bellwin for the letter he sent me on this matter explaining the position of the Government, but I have to say to him and to the House that, having thought about it a good deal, I am still of the opinion that my noble friends Lord Selsdon and Lord Morris are better advised than my noble friend Lord Bellwin in this matter.
That is not to say that I am yet fully persuaded that it is necessary to press either this amendment or the one that succeeds it. But, as the noble Lord, Lord Mishcon, has just been saying, I believe it would be a mistake for the House to leave this matter unless my noble friend Lord Bellwin is able to give us all, and more particularly the pensioners concerned, extremely firm assurances to the effect that their interests will not be impaired but rather will be secured by this Bill and the measures that the Government intend to take in default of either of these amendments to ensure that the Bill does not operate in any way to impair their pension rights and their pension interests.
I hope my noble friend will be able to give these assurances, because if he does and it is then possible for my noble friend Lord Morris to withdraw this amendment and for the noble Lord, Lord Mishcon, and his noble friends not to press theirs, I think this may be a satisfactory way out; and I would urge my noble friend to do the very best he can to respond to the last
1740
point that the noble Lord, Lord Mishcon, was making. It will then of course be necessary for noble Lords opposite to give similar assurances, in some way or another, about what successive Governments of another party might do, in circumstances in which we might find ourselves later on, should there be a change of Government; but the point today is for my noble friend Lord Bellwin to give the best assurances he possibly can.
Viscount AMORY: My Lords, the arguments adduced by my noble friend Lord Morris and other noble Lords who have spoken on this amendment seem to me to carry a good deal of weight, both in the interests of the pensioners and in the interests of public funds. If open-endedness is the difficulty my noble friend senses, then I think the suggestion made by the noble Lord, Lord Mishcon, might be worth looking at there, with the limitation of the reviews that he mentioned.
I therefore hope very much that when my noble friend comes to reply he will be able to give the kind of assurances that my noble friend Lord Morris has asked for, which seemed to me very reasonable; but I do agree that, in these circumstances, these assurances would require to be pretty specific if they are to be effective. May I ask my noble friend, if he can, to be as sympathetic as possible to a case which seems to me to be a pretty good one?
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Lord Bellwin): My Lords, may I say immediately to my noble friend Lord Amory—and, indeed, this is the stance I took when this was raised in Committee—that, of course, one is very sympathetic, because this is a matter which concerns the life and the future livelihood of many people. Therefore, one has to take this as seriously as I assure your Lordships both I and my ministerial colleagues in the Department of Transport, and even beyond that, do. My Lords, when my noble friend Lord Selsdon moved this amendment at Committee stage, I said that, in the light of that importance, we would take it away and think about it again, not least because we are talking of a very complex and difficult technical subject—and, if I may say so, I think that the noble Lord, Lord Mishcon, fully merits a pat on the back

1741
from his profession. I thought he put the matter very clearly and very explicitly, and I gladly pay that tribute to him.
My Lords, my noble friend Lord Morris made very clear that his amendment was prompted by concern (and perhaps noble Lords will bear with me if I, too, go through this rather carefully; I think it also merits that) that the position of members and pensioners of the various railway pension schemes might be at risk by the Bill. I say immediately that I share that concern. So does my right honourable friend the Minister, who, after all, is responsible for the Bill in another place. I want to make it absolutely clear—and I say this as emphatically as I am able—that we are not seeking to remove or to reduce the pension entitlements of members and pensioners of the railway pension scheme. The Bill does not affect pension entitlements in any way. Nor does it affect—and this is equally important—the legal obligations of the board to the pension schemes. Indeed, it expressly preserves those obligations.
I know that fears have been expressed in some quarters, and indeed again today, that the Bill puts members and pensioners of railway pension schemes at risk, but I believe that those fears spring from misunderstandings of the Bill and of the Government's intentions. I firmly believe that these fears are groundless, and I would not have the temerity to stand here and say so if my thoughts were otherwise. If the noble Lord, Lord Mishcon, says he is new to the House, what should I say? And if that is a reason for undue deference and care, then in my case it is even more so. So when I say, as I do with the conviction which I hope your Lordships will take from me, that those fears are groundless, then I do so with the utmost sincerity. I must say yet again that it is no part of our policy to worsen the position of railway pensioners.
As I have said, my Lords, the Bill does not make any difference at all to the pension entitlements of individual pensioners. The Bill is concerned with the arrangements whereby the cost of meeting the pensions is divided between British Rail with its pension fund and its railway business, on the one hand, and the Government and the general taxpayer, on the other. The pensions in question are railway pensions, and not Government
1742
pensions; and, as usual, are the responsibility of British Rail. But the Government are committed (I repeat that: the Government are committed) to giving financial support to British Rail to help with the payments. What this Bill does is that it changes the form of that help, although—and this is a key point—it does not change the extent of that help.
In fact, the arrangements proposed under the Bill are in many respects very similar to those which were envisaged under the 1974 Act. Under both, the responsibility for the historic pensions liabilities would remain with the board, though Government support for those liabilities would be provided. We are contemplating a similar approach to the calculation of the amount of support. Under the Act there would have been an actuarial valuation of the assets and liabilities of each scheme. As a result of that valuation it would have been decided how much of the liabilities of each scheme—what proportion of the liabilities—could not be met from the assets of the scheme. Funding debt would then have been created to cover that proportion. Under the Bill, the same proportion—no more, no less; the same proportion—of the liabilities would be met directly by Government support payments.
Perhaps I may turn to some of the particular points which my noble friend Lord Morris raised. He asked whether there was any risk of overpayment by the taxpayer. Before I answer that question, I ought to repeat one point. I say again that the pensions which we are discussing are railway pensions, being the responsibility of the British Railways Board and the railway pension schemes. But the Government have not taken over the management of these pensions. We are providing support. It may not technically be what is called a grant-in-aid, but many of the same principles apply. Let it by all means be said that the amount paid by the Government might in the event be less than the eventual cost of the board's obligations. Conversely, it might equally be more, and to that extent it can be said there might be overpayment. However, I do not believe that there is a real prospect of significant overpayments.
My noble friend asked what would happen if inflation were to fall to a much lower figure than is now being forecast?

1743
Equally, what would happen if things got worse? Would the taxpayer on the one hand, or the pensioners on the other, lose out? Those are very proper questions, I hope I can give my noble friend some reassurance. Most of the current burden of indexation is borne by the BR (1974) Pension Fund. The principal purpose of this fund is to pay increases in line with the cost of living to pensioners of the old railway pension schemes, which pay flat rate pensions which do not rise with inflation. Under the Bill, the payments made to this fund will move in line with the payments that it stands to make to pensioners. If inflation rises, the support payments will rise by an equal amount, and vice-versa. To a considerable extent, the same will 6e true for other funds. If inflation increases their liabilities, the unfunded proportion of the increase will be met by increased support payments, and vice-versa.
My noble friend asked what would happen if the Government support payments proved to be insufficient, and the funds had to look to the Railways Board for further funds to make good their obligations. I would answer by repeating that the Bill does not affect the pension entitlements of pensioners or the obligations owed by the board to the funds. Members and pensioners could only be at risk if the board were to default on their legal obligations to their creditors. The House will know that there have been a number of occasions in which nationalised industries have run into financial difficulties. Indeed, this has happened to British Rail on three occasions. On each such occasion, British Rail has been put in a position in which it could discharge its obligations. The noble Lord, Lord Mishcon, hoped that I would not put the point this way, but I feel it is in order so to do by saying that everybody deals with nationalised industries on the basis that their credit is as good as that of the Government. Whatever the technical legal distinction, this is the practical position and there is no reason whatsoever why they should not continue to do so. Railway pensioners can be confident that the board will be able to honour their legal obligations.
The suggestion that there should be an express guarantee is rather a different matter. As I have said, there is no
1744
realistic prospect that the board will not discharge their obligations. However, the effect of such a specific guarantee would be to transfer the obligations to the taxpayer. If the board ran into further difficulties to which the historic pensions obligations were a contributory factor, it would mean that the other assets and obligations of the board—in other words, the remainder of the board's finances—would not be brought into account. The 1974 Act did not transfer the board's obligations to the Government and we do not think that it would be right for there to be such a transfer now.
The noble Lord, Lord Mishcon, suggested that the actuarial assumptions may be wrong. This is true, of course. I think that he has a very fair point, I agree that there could be a measure of uncertainty about the actuarial assumptions. However, I cannot accept that this is a risk introduced by the Bill. The 1974 Act depended on actuarial assumptions. Every funded pension scheme depends on actuarial assumptions. Indeed, anyone who buys a life insurance policy depends on actuarial assumptions. I accept that there is some risk that these actuarial assumptions might to some extent be wrong and that the board might have to make further payments into their pension schemes over and above the payments to be made by the Minister. That risk also existed under the 1974 Act and, indeed, was considerably greater. On any given divergence between actuarial assumptions and experience the deficiency that would have emerged under the Act would have been substantially larger than under the Bill.
My Lords, I have spoken at some length but, because of the importance that the Government attach to this matter, I feel that it has been necessary, just as I feel that the subject merits it. I conclude by saying that the Government are committed to helping British Rail's pension fund. I repeat that what this Bill does is to change the form and not the extent of that help. As I hope I have sufficiently emphasised, I do sincerely believe and re-state the assurance that the technical changes in the Bill do not put pensioners and railway employees at risk.
Lord UNDERHILL: My Lords, before the noble Lord sits down, will he answer

1745
the point which my noble friend Lord Mishcon put strongly—which was the question that if there had been cash payments previously there would have been substantial investments accruing to the fund? That important point has not been answered. Will the noble Lord answer it?
Lord BELLWIN: My Lords, with the leave of the House, by itself I am sure that that may be true but it is only an assumption that there would have been the funds available. What we are talking about here is the contribution from the Government, from the taxpayer, to the fund. As I said, and as Lord Mishcon said, it is the form that contribution should take which is in question. Yes, of course, it is possible the pension fund could have had these huge capital sums and invested them and had their income. But the figures that we were talking about and which the noble Lord mentioned—the —578 million already paid, and the proposal that from 1979 onwards the additional —1.4 billion be paid over seven years in capital sums—is only one side of the balance sheet. The other side of the balance sheet says, I think, that the average figure at the moment is —73 million to make good the Government's contribution. But it is taxpayers' money that would go in that form, and the Government say that the basic object of the exercise is not to give the British Rail fund capital sums to invest but to ensure that the historic obligations can be met—and they can be met, the Government say, by making these annual support payments. You can argue that one is a better way than another, but the Government say that looking at the totality of the sums, as long as there is the assurance we are giving, namely, to support the ability to pay the historical obligations (and that is the key to it) that is what matters.
Lord MORRIS: My Lords, I am grateful to my noble friends and to noble Lords opposite for their intervention, and to my noble friend Lord Bellwin for his sensitive and understanding reply. While I accept that my noble friend's statement may technically have no legal binding commitment whatsoever, I believe that it indicates the strongest possible moral obligation by the Government to ensure that pensioners should not suffer in the future. However, I am slightly puzzled as to why the Government object to a
1746
mere review—which is what this amendment is all about. Furthermore, I am not quite so confident about the possibility of the taxpayer paying too much. On balance, I believe that my noble friend Lord Selsdon would not wish me to press this amendment since both he and I respect and hold in honour the promise of my noble friend Lord Bellwin, who would expect any future Government to do the same. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord MISHCON Lord MISHCON moved Amendment No. 59:
After Clause 52, insert the following new clause:
("Review of B.R. pension scheme
.—(1) Not later than 18 months after each review date the actuary of a B.R. pension scheme shall certify the extent to which the proportion determined under section 46(1)(b) should be increased or decreased, with effect from the date which is 2 years after the review date, in order to place the scheme in as nearly as possible the same financial position as it would have been in at the review date if the proportion determined under section 46(1)(b) had been based on the modified assumptions referred to in subsection (2).
(2) The modified assumptions are:—

(a) in respect of the period from 1st April 1980 up to the review date, the same assumptions as were made by the Minister in determining the proportion under section 46(1)(b) except that the assumed rates of pay, prices and dividend increases for the United Kingdom economy in general and the assumed rates of investment returns for United Kingdom pension funds in general will be replaced by the corresponding rates actually experienced by the United Kingdom economy and United Kingdom pension funds during the said period;

(b) in respect of the period after the review date, such assumptions about the future experience of the scheme as appear to the Minister to be appropriate as at the review date.

(3) Not later than 3 months after the review date the Minister shall notify the persons administering the scheme of the assumptions which he proposes to specify for the purpose of subsection (2)(b).
(4) In the case of the second review date, if the persons administering the scheme shall inform the Minister in writing not later than 3 months after the notification referred to in subsection (3) that they object to the specified assumptions, the Minister shall forthwith appoint an independent actuary, to be nominated by the President for the time being of the Institute of Actuaries, to determine the assumptions which are appropriate for the purpose of subsection (2)(b), and the decision of the

1747
actuary shall be binding on the Minister and on the persons administering the scheme.
(5) Following receipt of the actuary's certificate referred to in subsection (1) the Minister shall make an order to increase or decrease the proportion determined under section 46(1)(b) in accordance with the certificate. An order under this subsection shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament.
(6) If the actuary of a B.R. pension scheme shall certify prior to the second review date that the assets held by the scheme in respect of the relevant pension obligations are likely to become exhausted within 2 years, the date of the certificate shall be treated as the second and final review date.

CONTENTS

Amherst, E.

Gosford, E.

Peart, L.

Amory, V.

Granville of Bye L.

Phillips, B.

Ampthill, L.

Grey, E.

Ponsonby of Shulbrede, L. [Teller.]

Ardwick, L.

Hale, L.

Balogh, L.

Halsbury, E.

Porritt, L.

Banks, L.

Hampton, L.

Reilly, L.

Barrington, V.

Hanworth, V.

Ritchie-Calder, L.

Birk, B.

Hatch of Lusby, L.

Robbins, L.

Blease, L.

Henderson, L.

Roberthall, L.

Boothby, L.

Hughes, L.

Ross of Marnock, L.

Boston of Faversham, L.

Kirkhill, L.

Sainsbury, L.

Brockway, L.

Leatherland, L.

Sefton of Garston, L.

Collison, L.

Leonard, L.

Segal, L.

Cooper of Stockton Heath, L.

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

Spens, L.

Crook, L.

Stamp, L.

De Freyne, L.

Lovell-Davis, L.

Stewart of Fulham, L.

Elwyn-Jones, L.

McCarthy, L.

Strabolgi, L.

Gaitskell, B.

Mishcon, L.

Underhill, L.

Gladwyn, L.

Morris, L.

Wallace of Coslany, L.

Gordon-Walker, L.

Oram, L.

Wigoder, L.

Goronwy-Roberts, L.

Pargiter, L.

Winstanley, L.

NOT-CONTENTS

Abinger, L.

Dundee, E.

Mancroft, L.

Ailesbury, M.

Eccles, V.

Marley, L.

Airey of Abingdon, B.

Effingham, E.

Merrivale, L.

Auckland, L.

Ellenborough, L.

Mowbray and Stourton, L.

Barnby, L.

Evans of Hungershall, L.

Northchurch, B.

Bellwin, L.

Faithfull, B.

Orr-Ewing, L.

Belstead, L.

Ferrers, E.

Pender, L.

Bessborough, E.

Fraser of Kilmorack, L.

Polwarth, L.

Burton, L.

Gainford, L.

Redmayne, L.

Caithness, E.

Greenway, L.

Reigate, L.

Cathcart, E.

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

Sandford, L.

Chelwood, L.

Sandys, L. [Teller.]

Chesham, L.

Henley, L.

Savile, L.

Clancarty, E.

Hives, L.

Sempill, Ly.

Clwyd, L.

Home of the Hirsel, L.

Soames, L. (L. President.)

Cockfield, L.

Kinnaird, L.

Teviot, L.

Cottesloe, L.

Lindsey and Abingdon, E.

Trefgarne, L.

Cullen of Ashbourne, L.

Long, V.

Trenchard, V.

Davidson, V.

Lucas, B.

Vaux of Harrowden, L.

Denham, L. [Teller.]

Lucas of Chilworth, L.

Vickers, B.

Digby, L.

Lyell, L.

Vivian, L.

Drumalbyn, L.

Mackay of Clashfern, L.

Westbury, L.

Resolved in the negative and amendment disagreed to accordingly.

(7) "Review date" means 31st December 1991 or 31st December 1996.")
The noble Lord said: My Lords, your Lordships will know that fixed review dates are made in this amendment and I do not propose to weary the House with another speech. I beg to move.
11.50 a.m.
On Question, whether the said Amendment (No. 59) shall be agreed to?
Their Lordships divided: Contents, 61, Not-Contents, 64.
11.58 a.m.
Clause 54 [Reduction of payments in respect of certain supplementation schemes]:
Lord BELLWIN Lord BELLWIN moved Amendments Nos. 59A and 59B:
Page 49, line 39, leave out (" an obligation ") and insert ("obligations").
Page 50, line 1, leave out from ("If") to second (" the ") in line 2.
The noble Lord said: My Lords, it would be convenient for the House to take together all the Government amendments on Clause 54, that is to say Amendments Nos. 59A, 59B, 60A, 61A, and 62A. I apologise to your Lordships for having to trouble the House with yet more amendments to this clause. I cannot pretend that we have found it easy to get the drafting right.
The noble Lord, Lord Mishcon, made some very pertinent remarks when he replied to the amendments which I moved at Committee stage. He postulated two interpretations of the clause; namely, interpretation A and interpretation B. I confirmed that the latter interpretation was intended. In other words, when a surplus emerges, it will be used to pay a small proportion of all schemes of supplementation, rather than a large proportion just of next year's scheme. Amendment Nos. 59A, 59B, and 60A are intended to put this beyond doubt.
Amendments Nos. 61A and 62A are intended to make sure that we get the payments right. Suppose the actuary certifies that 85 per cent. of a surplus will meet 30 per cent. of future cost of living increases. If in future, the supplementation scheme pays the remaining 70 per cent., the cost will be reimbursed under Clause 50 and no deduction will be made. If, however, the supplementation scheme were to pay 100 per cent., as if the surplus and the actuary's certificate had never existed, the formula in the new subsection (3A) will secure that the taxpayer will still only pay 70 per cent., which is in the circumstances the proper figure. I beg to move.
Lord MISHCON: My Lords, to save the time of the House, I propose to address my very few remarks not only to Amendments Nos. 59A and 58B but to 60A, 61A and 62A. I appreciate what the noble Minister has said and the
1750
clarification that he has brought to this clause so that there is no doubt about it that interpretation B, as we have called it, is the one to be adopted. I know that he will forgive me if I say that I am not yet convinced that there are not some technical defects even in the amendment. I therefore direct his attention to this because it would appear to me that all future schemes of supplementation are not necessarily now safeguarded in regard to this amendment. There is no dispute on interpretation; it is purely a matter of draftsmanship. Possibly the Minister and I can exchange some correspondence, and that will save your Lordships' time.
12 noon
Lord MISHCON Lord MISHCON moved Amendment No. 60:
Page 50, line 3, leave out (" exceed its liabilities") and insert (" exceeded its liabilities on 31st December 1979").
The noble Lord said: My Lords, again I shall be brief. Unless this amendment is passed, the pensioners' position, in my submission, will be worse off than under the 1974 Act. This is because the funding debt created under the 1974 Act could have taken account of surpluses existing at 31st December 1979 but there is no way it could have taken account of surpluses arising after that date. If I may give a quick example, suppose there is a surplus in the GWR Widows and Orphans Pension Society at a future date because mortality has been higher than expected. Under the Bill, 85 per cent. will be clawed back by the Government whereas under the 1974 Act the whole of the surplus would have been available to increase the small pensions provided for the widows and orphans concerned. That is the purpose of this amendment, and I beg to move it. I hope it will be acceptable to the Minister and to the House.
Lord BELLWIN: My Lords, despite the arguments advanced by the noble Lord, I am not persuaded that the Bill represents a worsening of the position that would have existed under the 1974 Act. It is in relation to supplementation—the subject matter of the present clause—that the method of support contemplated by the Bill differs most markedly from the method that would have been

1751
adopted under the 1974 Act. It is necessary to compare the overall picture.
A pensioner of any of the schemes to which the clause applies receives his or her pension from two different pension schemes. The basic pension is debited to one scheme—the basic scheme—and the increases on that pension are debited to another scheme—the supplementation scheme. The pensioner will only receive one cheque, but two entries are made in the books. So we ought to consider together the sources from which that payment stands to be made.
Under the 1974 Act, a fixed amount of funding debt would have been allocated to each supplementation scheme. The basic schemes would also have received the appropriate amount of funding debt. In determining how much funding debt was to be allocated to the supplementation scheme, explicit account would have been taken of all surpluses which existed or could be foreseen at the time of the allocation. The question then is what would have happened to the supplementation scheme if new surpluses had in due course emerged in the basic schemes. The most likely scenario for the emergence of new surpluses would be a scenario in which inflation ran ahead of what had been assumed when the funding debts were fixed. If that happened, a deficiency would in all probability emerge in the supplementation scheme. The 1974 Act would not have obliged the board to introduce further schemes of supplementation, or to maintain full index-linking, if the funding debt proved inadequate. So there would have been a reduction in the supplementation paid by the supplementation scheme.
There is much more that I have before me to say on this matter. As your Lordships will have gathered, it is really quite complex and very difficult—most of all difficult to absorb mentally without having it before one to read and to consider. Therefore, if your Lordships will allow, I will not proceed further with the detail, other than to say that I invite the noble Lord, Lord Mischon, in view of what I have said, and not least in view of what I might further have to say, to consider withdrawing his amendment.
Lord MISHCON: My Lords, I remain in pleasant intellectual ignorance of
1752
what the Minister might have said but is not going to say. In those circumstances, since he may be able to communicate those thoughts to me and a useful exchange may take place between now and Third Reading, I ask the leave of the House to withdraw the amendment. I do not, of course, withdraw the principle, but merely seek an opportunity of reaching an accommodation.
Amendment, by leave, withdrawn.
Lord BELLWIN Lord BELLWIN moved Amendment N0.6OA:
Page 50, line 4, leave out from ("scheme") to end of line 9 and insert (" any obligation arising after the date of the actuary's certificate to pay or secure the payment of any increases of pensions payable under the basic scheme or, if less, the relevant proportion of any such increases shall not be regarded as a relevant pension obligation for the purposes of any determination under section 53(1)").
The noble Lord said: My Lords, I have already spoken to this amendment and I beg to move.
12.8 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 61:
Page 50, line 9, at end insert—
("(2A) If the actuary to the basic scheme certifies at any time following the giving of a certificate under subsection (2) that the liabilities of the scheme exceed its assets, then, in relation to the supplementation scheme, subsection (2) shall not operate in relation to the increases or, if less, the relevant proportion of the increases, in respect of the period after the date of the certificate given under this subsection.").
The noble Lord said: My Lords, with your Lordships' permission, it may be convenient, if I take with Amendment No. 61, Amendment No. 63. These amendments are new to the House since they relate to Clause 54 in the new form as it appeared after the substantial Government amendments introduced at the Committee stage. The purpose of the amendments still stands in spite of the new form of Clause 54, as now presented to the House.
The purpose of the amendments is to ensure that if a pension scheme is in surplus at one point of time but then runs into unforeseen financial difficulties the claw-back will cease to operate. At Report stage in another place—and I refer to col. 1346 of Hansard—the Parliamentary Secretary stated that he could not

1753
meet a somewhat similar point which was raised then, based on the clause as it then stood. The reasons he gave, if I may paraphrase them, are as follows—but perhaps it is better that I should actually quote what he said. The Parliamentary Secretary said:
"Summarised, the argument is that if we were to accept this amendment, or anything along the lines proposed, it would be possible, as soon as the basic scheme got into surplus, for the fund managers hastily to rearrange matters, to start giving out improvements in benefits to their members, and to make sure that they were in deficit again fairly smartly to prevent the Treasury from taking its 85 per cent. We would have to takes powers to control the scheme to prevent that temptation arising, and we would rather not do that".
I end the quotation and I ask that somebody at ministerial level asks the Parliamentary Secretary to take a somewhat kinder view of those who follow their task of being pension fund managers and who do so with the greatest of integrity and the greatest of effort on behalf of those they represent. Having quoted him, I now have to deal with the argument as such and I can only define it as a spurious argument. It overlooks the fact that if a scheme did distribute surplus, the members and the pensioners would retain only 15 per cent. of it. If a scheme then went back into deficit, the additional support payment from the Government would be limited to 85 per cent. of the amount by which the liabilities of the scheme exceeded its assets. In other words, the scheme would have gained nothing by its premature distribution of surplus.
In the Committee stage in this House, the noble Lord, Lord Bellwin, claimed that the clause is largely self-correcting and that an amendment along these lines was therefore unnecessary. However, he illustrated his remarks with a case which, if I may say so, was specifically designed to suit his very purpose, where a deficit arising in a scheme was assumed to be accompanied by a reduction in the burden of supplementation. There are other circumstances which could arise where this would not be the case and where the amendment would not be unnecessary; for example, if a deficit was caused by a change in the demographic experience of a scheme.
I hope, therefore, that now the Government are clearer about the effect of their own clause—and I do not say this in any spirit of sarcasm, although they have had
1754
several goes at drafting it—they may be able to see their way clear to accepting the amendment, which would give a small but useful safeguard to the pension schemes. My Lords, I beg to move.
Lord BELLWIN: My Lords, I am grateful to the noble Lord, Lord Mishcon, for the care which he has taken to study the arguments which I put forward in Committee. However, I am sure that the House needs no reminding that it was late in the evening when the corresponding amendment was reached at Committee stage, and not all the arguments were fully deployed on that occasion. Perhaps I may develop an argument on which I touched briefly at the end of my remarks in Committee.
I mentioned in Committee that it would always be open to the actuary to hold back a contingency reserve. This is, in fact, a very important point. I would suggest to your Lordships that it is the key to this amendment, and the reason why, with respect, the amendment is not necessary. The analogy of a "with-profits" life insurance policy may be helpful. A pension scheme is, after all, a form of group life insurance policy. Indeed, some of the corporations' pension schemes—if I may digress—were insured with life offices. Every so often, a bonus is declared on a with-profits policy out of the profits of the company. The profits are analogous to a surplus; they represent the surplus in the insurance company's life fund. At the end of the policy, a terminal bonus is declared. Yet the normal rule is that a bonus once declared is irrevocable. How can the insurance company enter into such a commitment? Obviously, the reason is that there is a substantial contingency reserve. If the actuary's forecast turns out to have been somewhat optimistic, the bonuses that have already been declared will be safeguarded.
I would expect the actuary to a British Rail pension scheme to adopt the same approach. That is what he would have done, regardless of the Bill or of the 1974 Act if a surplus had emerged. He would have held back some of the surplus against future contingencies. When the next actuarial valuation came, he would review the position and consider whether any of the contingency provision could be disclosed. I would underline one more point that I made in Committee. The clause does not compel any or all of a

1755
surplus to be distributed. All that it says is that 85 per cent. of any distribution should be available to meet the cost of supplementation. I hope that the noble Lord, Lord Mishcon, may feel that that, at least, takes him sufficiently far not to press the amendment.
Lord MISHCON: My Lords, it takes me to the beginning of the road and, unfortunately, not to the end of it. But these are technical matters, as the noble Lord so rightly said. Again, I think that the best course for me to adopt, since I feel that the Minister has not dealt with the points that I tried to make, which were fresh points as against those advanced at the Committee stage, is to beg leave to withdraw the amendment, on the basis that the Minister and I can exchange views in the meantime, again, hoping that some kind of accommodation can be reached.
Amendment, by leave, withdrawn.
Lord BELLWIN Lord BELLWIN moved Amendment No. 61 A.
Page 50, line 11, after ("means") insert (" subject to subsection (3A)").
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
12.15 p.m.
Lord MISHCON Lord MISHCON moved Amendment No. 62:
Page 50, line 14, leave out ("85") and insert ("60").
The noble Lord said: My Lords, happily I can be extremely brief, because I can put this amendment very simply. It has been the practice to offset about 60 per cent. of the surplus in the past, and 85 per cent. is obviously a worsening of the position. The figure of 85 per cent. has no known theoretical justification, and the purpose of the amendment is to ensure that the Government's "no worsening" promise is honoured. My Lords, I beg to move.
Lord BELLWIN: My Lords, yet again, I have before me a long and quite technical dissertation on this whole subject and the problem is to avoid going into it here and now. I have to say that we cannot accept this amendment, because we could not justify arrangements under which the taxpayer funded any of the
1756
cost of indexation if substantial post-retirement improvements in pensions were also being made. To leave 40 per cent. of any surplus for improvements would be too much, particularly as no contributions towards the cost of supplementation have ever been paid. If the noble Lord, Lord Mishcon, wishes to develop the argument further, I shall be glad to try, with the leave of the House, to come back again. But I fear that this is another amendment that we are not able to accept.
Lord MISHCON: My Lords, I think that the development of the argument could much more usefully take place in the intervening period, and not at the risk of wearing your Lordships' patience at 12.15 on a Friday afternoon. This is of such importance to the pensioners and the fund that it would be just to them to adopt that procedure. On that basis, I beg leave to withdraw the amendmnt.
Amendment, by leave, withdrawn.
Lord BELLWIN Lord BELLWIN moved Amendment No. 62A:
Page 50, line 15, at end insert—
("(3A) Where any obligation arising after the date of a certificate under subsection (3) is an obligation to pay or secure the payment of a proportion only of any increases to which the certificate relates, then, in relation to that obligation, the relevant proportion for the purposes of subsection (2) shall be given by the formula—
A+B-1/A
where A is the first mentioned proportion and B is the proportion certified by the actuary.").
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
[Amendment No. 63 not moved.]
Clause 58 [Interpretation of Part III]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 63A:
Page 53, line 7, leave out ("for the time being within ") and insert (" specified or described in").
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
Lord BELLWIN Lord BELLWIN moved Amendment No. 63B:
Page 53, line 12, leave out (" for the time being within ") and insert (" specified or described in ").
The noble Lord said: My Lords, again, I have already spoken to this amendment. I beg to move.
Lord BELLWIN Lord BELLWIN moved Amendment No. 63C:
Before Clause 59 insert the following new clause: ("Insurance or security in respect of private use of vehicle to cover use under car-sharing arrangements.
. At the end of section 148 of the Road Traffic Act 1972 (avoidance of certain exceptions to policies or securities, etc.) there shall be added the following subsections—
"(5) To the extent that a policy or security issued or given for the purposes of this Part of this Act—

(a) restricts, as the case may be, the insurance of the persons insured by the policy or the operation of the security to use of the vehicle for specified purposes (for example, social, domestic and pleasure purposes) of a non-commercial character; or

(b) excludes from, as the case may be, that insurance or the operation of the security—

(i) use of the vehicle for hire or reward; or

(ii) business or commercial use of the behicle; or

(iii) use of the vehicle for specified purposes of a business or commercial character,

then, for the purposes of that policy or security so far as it relates to such liabilities as are required to be covered by a policy under section 145 of this Act, the use of a vehicle on a journey in the course of which one or more passengers are carried at separate fares shall, if the conditions specified in subsection (6) below are satisfied, be treated as falling within that restriction or as not falling within that exclusion, as the case may be.
(6) The conditions referred to in subsection (5) above are—

(a) the vehicle is not adapted to carry more than eight passengers and is not a motor cycle;

(b) the fare or aggregate of the fares paid in respect of the journey does not exceed the amount of the running costs of the vehicle for the journey (which for the purposes of this paragraph shall be taken to include an appropriate amount in respect of depreciation and general wear); and

(c) the arrangements for the payment of fares by the passenger or passengers carried at separate fares were made before the journey began.

(7) Subsections (5) and (6) above apply however the restrictions or exclusions
1758
described in subsection (5) are framed or worded; and in those subsections "fare" and "separate fares" have the same meaning as in section 2(4) of the Transport Act 1980." ").
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
Lord BELLWIN Lord BELLWIN moved Amendment No. 64:
After Clause 60 insert the following new clause:
("Roof signs on vehicles other than taxis.
.—(1) There shall not, in any part of England and Wales outside the metropolitan police district and the City of London, be displayed on or above the roof of any vehicle which is used for carrying passengers for hire or reward but which is not a taxi—

(a) any sign which consists of or includes the word "taxi" or "cab", whether in the singular or plural, or "hire", or any word of similar meaning or appearance to any of those words, whether alone or as part of another word; or

(b) any sign, notice, mark, illumination or other feature which, having regard to the time and place at which it is displayed, may suggest to a person seeking to hire a taxi that the vehicle is a taxi.

(2) Any person who knowingly—

(a) drives a vehicle in respect of which subsection (1) is contravened; or

(b) causes or permits that subsection to be contravened in respect of any vehicle,

shall be liable on summary conviction to a fine not exceeding —200.
(3) In this section "taxi" means a vehicle licensed under section 37 of the Town Police Clauses Act 1847, section 6 of the Metropolitan Carriage Act 1869 or any similar local enactment.").
The noble Lord said: My Lords, again, have already spoken to this amendment. beg to move.
[Amendment No. 64A not moved.]
12.20 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 64B:
Page 56, line 19, after ("sections") insert (" Insurance or security in respect of private use of vehicle to cover use under car-sharing arrangements),").
The noble Lord said: My Lords, having already spoken to this amendment, I beg to move.
Lord BELLWIN Lord BELLWIN moved Amendment No. 65:
Page 56, line 19, after ("60") insert ("(Roof signs on vehicles other than taxis)").
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
Lord UNDERHILL: My Lords, is it Amendment No. 64 with which we are dealing?
Lord BELLWIN: No, Amendment No. 65.
Lord UNDERHILL: Then we have agreed Amendment No. 64?
Lord BELLWIN: Yes.
Lord UNDERHILL: This is a new clause and I had been waiting for it.
Lord BELLWIN: But we have already agreed Amendment No. 64.
Lord UNDERHILL: Then I shall have to write to the noble Lord the Minister.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 66:
Page 56, line 20, leave out (" Part I") and insert (" Parts I and IV ").
The noble Lord said: My Lords, these are very minor amendments consequential on the repeal, in Part IV of Schedule 9 to the Bill, of Section 100 of the Road Traffic Regulation Act 1967 which deals with articulated vehicles. As the provisions relating to articulated vehicles do not apply in Northern Ireland, it is correct that Part IV of Schedule 9 should be inserted in the list in Clause 66 of provisions not extending to Northern Ireland. I beg to move.
Lord MOWBRAY and STOURTON Lord MOWBRAY and STOURTON moved Amendment No. 67:
Page 56, line 21, leave out (" that Part") and insert (" those Parts ").
The noble Lord said: My Lords, I spoke to this amendment when I dealt with the last amendment. I beg to move.
Lord BELLWIN Lord BELLWIN moved Amendment No.67A:
In the Title, line 6, after ("schemes;") insert ("to amend Part VI of the Road Traffic Act 1972 as regards car-sharing arrangements; ").
The noble Lord said: This amendment is consequential. Therefore, having spoken to it, I beg to move.
Lord BELLWIN Lord BELLWIN moved Amendment No. 68:
Line 7 after ("vehicles;") insert (" to prohibit the display of certain roof-signs on vehicles other than taxis;").
The noble Lord said: My Lords, for the last time today, may I say that, having spoken before to this amendment, I beg to move.

  TRADE UNION RULES: POLITICAL ALLEGIANCE
  TRADE UNION RULES: POLITICAL ALLEGIANCE