Sitting of 17 June 1980

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

PRIVATE BUSINESS
WESLEY'S CHAPEL, CITY ROAD BILL
Lords amendments agreed to.
ALEXANDRA PARK AND PALACE BILL [Lords]
Order for Second Reading read.
To be read a Second time tomorrow.
TYNE AND WEAR BILL [Lords] (By Order)
SOUTH YORKSHIRE BILL [Lords] (By Order)
Read a Second time and committed.

ORAL ANSWERS TO QUESTIONS
  DEFENCE

    Expenditure
    Mr. Barry Jonesasked the Secretary of State for Defence what measures he is taking to secure value for money in defence spending.
    The Secretary of State for Defence (Mr. Francis Pym): I am determined that the Ministry of Defence shall play its full part in increasing efficiency and seeking value for money. A number of measures to achieve this aim have been taken and they were described in the recent defence debate. Others are under consideration.
    Mr. Jones: How efficient and ruthless is the right hon. Gentleman about controlling his officials, whose schemes have led to a gargantuan £11 billion defence budget? Does he frequently tell his Department that every mistake and example of wastefulness takes millions of pounds away from schoolchildren and pensioners?
    Mr. Pym: The Department and I are well aware of the size of the budget and of our responsibility for it. From the moment that I arrived in office, I have waged a war for greater efficiency, and I have undertaken several studies dealing with certain aspects of the Department. Other studies are in hand, which will cover more than one-third of the Department. It is a constant responsibility. Senior officials, civil servants and I vigorously tackle inefficiency. We do the best that we can.
    Mr. Goodhew: Will my right hon. Friend assure the House that we shall continue our endeavours to gain a 3 per cent. increase in real terms, as agreed with our NATO allies?
    Mr. Pym: I am grateful to my hon. Friend for that question. It is important that that increase is achieved throughout the Alliance. It is our clear intention and aim to fulfil our part of that responsibility.
    Mr. James Lamond: Is the Secretary of State satisfied that the £920 million that is being spent on the development of the Stingray torpedo is not being wasted ?

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    Is it not possible that we shall ultimately have a weapon that is far in excess of our needs?
    Mr. Pym: When the weapon is put into service it will not be in excess of our needs. It is fair to say that it took nearly the whole of the 1970s to develop this highly sophisticated weapon. During that time there was a series of underestimates as regards the cost. The programme was not particularly smooth. However, that is in the past. The Government and I had to make an assessment about its future, and we concluded that it was right to go ahead. It has proved quite expensive, but there is no doubt about its need.

    Warship Building Programme
    Mr. Viggersasked the Secretary of State for Defence if he will make a statement on the future warship building programme.
    The Under-Secretary of State for Defence for the Royal Navy (Mr. Keith Speed): I have nothing at the moment to add to the answer given by my hon. Friend the Under-Secretary of State for Industry on 2 June 1980, in answer to the hon. Member for South Shields (Dr. Clark).
    Mr. Viggers: While recognising the quality and sophistication of type 42 and type 22 frigates and their importance to the Fleet, does the Minister agree that their cost is now so great that we should look for alternatives that are cheaper?
    Mr. Speed: Yes, I accept that the best can be the enemy of the good, and even the Royal Navy is not immune from that criticism. I assure my hon. Friend that we are looking at possible cheap alternatives in the future, particularly in the anti-submarine area.
    Mr. Jay: Have the Government considered the suggestion made in the defence debate that we should preserve shipbuilding capacity in this country by building more small naval antisubmarine and fisheries protection vessels?
    Mr. Speed: That is the very point that I was making in reply to my hon. Friend the Member for Gosport (Mr. Viggers). At the moment we have under construction
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    at Hall Russell's in Aberdeen two new 75-metre offshore patrol vessels for which, I believe, there will be a considerable export demand as well.
    Mr. Farr: When my hon. Friend looks at this programme, will he consider the potential of building new warships and undertaking maintenance contracts at Harland and Wolff in Belfast?
    Mr. Speed: Yes, Harland and Wolff is invited to tender for particular refitting, not least on Royal Fleet Auxilliary ships. My officials bear the firm very much in mind when contracts for refits are submitted.
    Mr. Duffy: If the Government proceed with the Polaris replacement, will the Minister say where the specialist warship-building capacity will come from that will provide for that replacement and also for the Trafalgar class attack submarine and the new type 2,400 diesel-electric submarine?
    Mr. Speed: No decision has yet been taken on the system. When that decision is taken, we must ensure that we have the capability and the capacity to meet those problems.

    Cruise Missiles
    Mr. Cryerasked the Secretary of State for Defence what representations he has received concerning the siting of 160 cruise missiles in the United Kingdom.
    Mr. Roy Hughesasked the Secretary of State for Defence what representations he has received concerning the manufacture and deployment of cruise missiles.
    Mr. Pym: I have received some 860 letters and a small number of petitions about cruise missiles.
    Mr. Cryer: Do those representations include expressions of concern about the massive amount of money being spent—about £10 million—while the Government are starving the education services? Is the Secretary of State aware that the school meals service is disintegrating and the textbooks position gets worse week by week? Is the cruise missile not a disgraceful waste of expenditure, particularly bearing in mind that £10 million is only the direct cost, and that there is

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    an additional cost of a very large road works programme associated with this mad programme?
    Mr. Pym: Very few of the representations that I have received related to cost. In any case, it is rather a bad point because the great majority of the cost is being provided by the United States.
    Mr. Hughes: Is the Minister aware of the official policy of the Labour Party in this matter, as decided through proper constitutional channels? Is it not sheer hypocrisy for the right hon. Member for Stockton (Mr. Rodgers) to continue to serve as the Labour Party's official spokesman? Would it not be more honourable for him to retire to the Back Benches and put his point of view from There? Or should he join Mr. Roy Jen kins——
    Mr. Speaker: Order. The Minister is not responsible for Opposition appointments.
    Mr. Churchill: Will my right hon. Friend explain to the patriots below the Gangway opposite the fallacy of the unilateral disarmament theory? Will he point out to them that Hiroshima and Nagasaki would never have been bombed had the Japanese had nuclear weapons, and that Afghanistan would almost certainly not have been subjected to Soviet invasion today had it possessed effective modern weapons?
    Mr. Pym: I take the opportunity of pointing that out from time to time. At least we share an objective on both sides of the House that if it were possible to persuade the other side to reduce its arms and thus achieve multilateral arms reductions, that would be a great advantage. However, it is very dangerous to do that in a one-sided manner. We are working for mutual, balanced, verifiable arms reductions.
    Mr. Gummer: Does my right hon. Friend accept, as these weapons are possibly coming to my constituency, rather than to Keighley, that the people of East Anglia would put freedom before anything else? Does he further accept that there is no kind of education or school meals which matter if we are living in chains?
    Mr. Pym: I completely agree with my hon. Friend. We all admire the calm
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    good sense with which the people of East Anglia have accepted nuclear weapons in their vicinity for the past 20 years or more. There is no doubt that unless we provide adequate defence forces, with our Allies, our way of life and our freedom are at risk. This Government, like all their predecessors, are dedicated to preserving our freedom.

    British Army of the Rhine
    Mr. Gwilym Robertsasked the Secretary of State for Defence if he will publish the latest figures available of the total annual cost and balance of payments cost of maintaining British forces stationed in Germany, the total number of service personnel involved, the number of German civilians employed in conjunction with these forces; if he will reopen negotiations with the West German Government aimed at reducing these costs ; and if he will make a statement.
    The Under-Secretary of State for Defence for the Army (Mr. Barney Hayhoe): The budgetary cost of British Forces Germany in 1980–81, excluding equipment, is estimated to be £1,146 million; the initial incidence of cost on the balance of payments, ignoring various offsetting factors, is estimated at £762 million. The total number of Service personnel stationed in Germany on 1 April 1980 was 64,288 and the total number of locally engaged civilians, including those employed by the Property Services Agency was 28,300. Not all of these civilians are of German nationality. The Anglo-German offset arrangement ended on 31 March 1980 as a result of the agreement made by the previous Administration and there are no plans to reopen negotiations on this matter.
    Mr. Roberts: Does not the Minister accept that it is quite intolerable for Britain to subsidise in this way the richest country in Western Europe? In spite of the failures of the Labour Government in this respect, will he ask the Prime Minister to insist on further talks with the German Government on the basis that if they want British troops they will have to pay for them?
    Mr. Hayhoe: I recognise the hon. Member's consistency in that when he asked a similar question on 8 November 1977 he was very critical of the then

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    Labour Minister on the Front Bench. I must tell him that the terms of the agreement entered into by the previous Administration excluded reopening negotiations on this matter.
    Mr. J. Enoch Powell: What is the incremental, as opposed to the total cost, and is it not very much lower than the total figures that the hon. Member has just given to the House?
    Mr. Hayhoe: Yes, I have given the total cost, and of course a great deal of the cost would be incurred if the forces were stationed within the United Kingdom.

    Strategic Nuclear Deterrent
    Mr. Alan Clarkasked the Secretary of State for Defence what consultations he has had with British Aerospace or any other United Kingdom manufacturer concerning the provision of the next generation of strategic nuclear deterrent.
    Mr. Pym: My Department has had a number of discussions with British Aerospace and other United Kingdom manufacturers on several aspects of this question.
    Mr. Clark: I thank my right hon. Friend for that answer, which was, perhaps, not quite as comprehensive as one might have liked. Does not my right hon. Friend agree that the integration of our defence and industrial policies is absolutely essential, not only if export and development opportunities are to be exploited, but also if public acceptance of our increased level of defence spending is to be readily forthcoming? Will he accept that, in view of the tremendously important issues that are at stake, and some of the disappointments that have occurred in the last 12 months, there is some anxiety in this place that these responsibilities are entrusted to two of his noble Friends who sit in another place?
    Mr. Pym: I agree wholeheartedly about the importance of integrating Britain's defence and industrial interests. I also agree with my hon. Friend about the degree of acceptance and support that we have in the country for our defence policies. My noble Friend, other Ministers and I do everything we can to foster integration, and it is part of our policy that, wherever we can, we should place orders
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    with British industry rather than with anyone else. The overwhelming majority of our equipment programme is provided by British industry. I think that my right hon. Friend the Secretary of State for Industry would agree that we are very positive in this matter and that we are doing everything we can to help. This is a very important point and I certainly intend to continue that policy.
    Mr. Haynes: When will the Secretary of State realise that we cannot go on in this way, finding money to provide weapons to destroy life? Has he not seriously considered the necessity of finding the finance for machinery to preserve life?
    Mr. Pym: In answer to an earlier question I pointed out that, unless we protect our freedom and way of life adequately with our Allies, it will not be possible to fulfil the desirable social aims that we share.
    Mr. Robert Atkins: What consultations has my right hon. Friend had with British Aerospace about the provision of the next generation of fighter aircraft? When does he expect to make a decision favourable to British Aerospace in relation to AST 403 and 409?
    Mr. Pym: There is close co-operation on the matter with British Aerospace. Many discussions have taken place, and I have participated in some of them. I do not expect to be ready to announce a decision in the near future, but when we are ready we shall do so.
    Mr. Rodgers: Does the Secretary of State accept that the complexity of the supplementary question asked by the hon. Member for Plymouth, Sutton (Mr. Clark) and the strong view expressed by my hon. Friend the Member for Ashfield (Mr. Haynes) about the whole philosophy of the next generation of strategic nuclear weapons highlight the need to consider a Green Paper? Is the right hon. Gentleman aware that there were strong views on both sides of the House in favour of the Green Paper? Why can we not have one before a decision is made?
    Mr. Pym: The right hon. Gentleman knows as well as I do the practice of Parliament. The Government take decisions, which stand before Parliament to be challenged if necessary. That practice is especially relevant to a highly sen-

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    sitive and crucial matter of national importance. As I made clear in the debate on the White Paper, when a decision is taken I shall give my justifications and publish a document explaining the background. As I also explained in the debate, I do not believe that it is appropriate in such a case to publish a Green Paper.

    Northern Ireland
    Mr. Biggs-Davisonasked the Secretary of State for Defence if he will make a statement on the support given by Her Majesty's Armed Forces to the civil power in Northern Ireland.
    Mr. Hayhoe: Her Majesty's Armed Forces continue to support the civil power in the fight against terrorism in Northern Ireland. Members of all three Regular Services and of the Ulster Defence Regiment assist the Royal Ulster Constabulary throughout the Province in a wide range of tasks.
    Mr. Biggs-Davison: Has not the reduction of Regulars further added to the importance of the Ulster Defence Regiment? Has my hon. Friend considered the representations made against the closure of certain UDR bases as detracting from the essential local character of the regiment?
    Mr. Hayhoe: The increased contribution made by the Ulster Defence Regiment was taken into account in making the reduction. A further 350 men from the Ulster Defence Regiment are available to be deployed on operational duties, partly as a result of the closure of those five bases.
    Mr. Molyneaux: Will the Minister accept that I wholly support the hon. Member for Epping Forest (Mr. Biggs-Davison)? However, can the Minister assure the House that every encouragement will be given to the Army to fake all necessary steps to defend the frontier region of the United Kingdom?
    Mr. Hayhoe: Yes, indeed. I am absolutely satisfied that those force changes will not in any way reduce the fight against terrorism, which will continue unabated.
    Mr. Kilfedder: Despite what the Minister says, is it not scandalous further to reduce the strength of the Regular Army in Northern Ireland, when the Provisional IRA continues to pursue its bloody cam- 1324
    paign of terror and murder? Is it not time to increase the strength of the Army in Northern Ireland so that the movement of Provisional IRA terrorists across the border can be stopped and lives saved?
    Mr. Hayhoe: I do not believe that it is scandalous in any way. It has always been the Government's intention that no more troops should be diverted from their main NATO role than was absolutely necessary, and the changes were foreshadowed in this year's White Paper. Another factor taken into account was the increasing strength and capability of the Royal Ulster Constabulary, which will be welcomed in all parts of the House.

    Live Animals (Experiments)
    Mr. Chapmanasked the Secretary of State for Defence if he is satisfied that the experiments undertaken on live animals for purposes connected with defence at Porton Down are necessary and kept to the minimum ; and if he will make a statement.
    Mr. Hayhoe: Yes. Experiments on live animals are needed for such matters as the development of protective measures against toxic agents, the investigation of the nature and treatment of injuries and for studies in connection with the Health and Safety at Work etc. Act. All such work takes full account of the desirability of using alternative means of testing whenever possible.
    Mr. Chapman: I thank my hon. Friend for his considered reply. Will he confirm that his Department is under the same legal restraint as any other body concerning experiments on live animals? Because of the understandable public concern, will my hon. Friend assure us that there will be continuing close and personal ministerial surveillance of all experiments in his Department?
    Mr. Hayhoe: Control is very strict. All experiments are conducted strictly in accordance with the requirements of the Cruelty to Animals Act, and are subject to Home Office inspection. Unannounced visits are frequently made by the Home Office inspectorate. I hope to visit Porton Down in the near future.
    Sir Frederick Burden: Will my hon. Friend undertake to ensure that animals

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    used for such purposes are specially bred and not bought from agencies that may have acquired animals that were originally kept as pets?
    Mr. Hayhoe: May I first congratulate my hon. Friend? I shall write to him about his request, but I cannot give him a total assurance. A number of the animals used are specially bred for the purpose.
    Miss Fookes: How many experiments are carried out in the course of a year?
    Mr. Hayhoe: The latest figures show that about 25,000 animals were used in all the experiments at Porton Down in 1979.
    Mr. Robert C. Brown: Does the Minister accept the implication in the question of the hon. Member for Gillingham (Sir F. Burden) that an animal specially bred for torture will not suffer as much as another animal?
    Mr. Hayhoe: I do not believe that that was my hon. Friend's suggestion. I understood him to be submitting that we should not support those people whose methods of acquiring animals for experiment may be improper, and that every part of the process should be subject to the strictest control.

    Long-range Missiles
    Mr. Ioan Evansasked the Secretary of State for Defence what progress has been made with plans to install a new generation of long-range missiles in the United Kingdom ; and if he will make a statement.
    Mr. Pym: With permission, Mr. Speaker, I intend to make a statement on this subject at 3.30 pm.
    Mr. Speaker: I shall call the hon. Member for Aberdare (Mr. Evans) when the statement is made, if he is lucky—and I believe that he will be.

    Chemical Warfare
    Mr. Robert Atkinsasked the Secretary of State for Defence what discussions he has had with his North Atlantic Treaty Organisation colleagues about chemical warfare.
    Mr. Pym: In consultation with our allies we keep under review all aspects
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    of the threat that we face, one of which is the Soviet Union's massive offensive chemical warfare capability. The United Kingdom is committed to seeking a ban on the possession of chemical weapons, but unwillingness on the part of the Soviet Union to countenance the very necessary verification measures means that we cannot hope for early progress.
    Mr. Atkins: I thank my right hon. Friend for that detailed reply. When does he expect to make a decision in the interests of our defensive capability, if he feels that we should have one, as I believe that he does?
    Mr. Pym: Neither I nor the Government have plans for an offensive capability in that field. I am conscious of the increasing capability of the Soviet Union and the threat that that represents to us. It is, therefore, right to make inquiries and consider the implications in order to discover whether there are means by which we can deter the use of chemical weapons. It would be wrong for any country in the West to ignore the massive Soviet stocks of chemical weapons and the issues that those raise.
    Mr. Duffy: Is the right hon. Gentleman aware that any move by the Government to follow the path signposted by the hon. Member for Preston, North (Mr. Atkins) would be regarded as extremely controversial? In pursuing the ban, will he bear in mind the importance of seeing that it covers possession as well as use?
    Mr. Pym: Yes, but so far there has not been the slightest indication that the Soviet Union will move in that direction. That is the cause of my anxiety. Not only will the Soviet Union not move in that direction, but it is improving and developing its techniques, which represents a risk to us. It would be a controversial decision if any change in our policy were made and I do not anticipate any such change, but the problem does not go away and neither does the risk. It is part of my responsibility to think about that with out allies. If we come to any conclusions that require an announcement, I shall make it, but I have no such intention at present.
    Mr. Adley: Has my right hon. Friend noticed how the television companies seem to be obsessed with making so-called documentaries about our defence

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    effort in this and other areas, and programmes that seem to be aimed at denigrating our friends and allies, yet we never seem to see similar programmes giving the public details of what the Soviet Union is up to in this area? Will my right hon. Friend have a word at some time with the Home Secretary to see whether the balance can be redressed when meetings take place between the Government and the broadcasting authorities?
    Mr. Pym: I am not sure how much notice the producers of the programmes to which my hon. Friend has referred take of such representations. I regret that some of the programmes were not as balanced, informative or dispassionate as they might have been. A greater degree of genuine public information would be advantageous.

    Nuclear Deterrent
    Mr. Cartwrightasked the Secretary of State for Defence when he expects to announce a decision about the future of the United Kingdom's independent nuclear deterrent.
    Mr. Pym: I have made clear to the House that a decision will be announced as soon as it has been taken.
    Mr. Cartwright: Since the most widely favoured replacement for Polaris—the Trident system—is likely to absorb up to 18 per cent. of the defence procurement budget, which is already fully stretched in trying to meet the conventional needs of our forces, can the right hon. Gentle-man tell us how he can afford a highly expensive status symbol without cutting into our non-nuclear contribution to NATO or increasing defence spending still further?
    Mr. Pym: As the House knows, no decision has yet been taken on the successor system. Whatever is decided upon will, of course, take a proportion of the defence budget as a whole and a higher proportion of the equipment budget. However, it is speculative to put a figure on that until a decision has been announced. On any analysis of any of the options, the 18 per cent. mentioned by the hon. Gentleman would be too high.
    Mr. Lyell: Can my right hon. Friend reassure the House that while he is considering the future of the independent
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    nuclear deterrent he is also considering the conventional home defences of this country within the United Kingdom, which are so important to the credibility to the nuclear deterrent?
    Mr. Pym: The answer is "Yes ". It is necessary to have a fully comprehensive defensive capability with our allies, which includes home defence and a nuclear capability, which has always been provided for within the defence budget, as it would have to be in the future. I assure my hon. Friend that all aspects of defence are in my mind, because unless our capability is all-embracing and comprehensive, when allied to those of our friends and allies in NATO, it will not be adequate. It is our job to ensure that it is comprehensive at all times.
    Mr. Douglas: Will the right hon. Gentleman hurry up the decision, because of the difficulties in ascertaining the future role of a dockyard such as that at Rosyth and the future loading capabilities of British Shipbuilders, which will not know its future plans until the decision is made?
    Mr. Pym: That is a fair point, but it is important to take the right decision from the defence, national and Alliance points of view. After that, we must take the consequential decisions affecting whatever aspects of industry may be concerned.

    Exhibition and Sale of Arms (Aldershot)
    Mr. Sheermanasked the Secretary of State for Defence why his Department's exhibition and sale of arms at Aldershot from 23 June to 27 June excludes the public.
    Mr. Hayhoe: The British Army equipment exhibition is designed to display military equipment manufactured by British companies to a specialist audience of overseas professional and technical experts. However, much of the equipment will be demonstrated, or will be on show, at the Aldershot Army display, which takes place immediately after the exhibition and is open to members of the public.
    Mr. Sheerman: Is the hon. Gentleman aware that many suspect that the reason why the Government do not publish the names of the countries that have been

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    invited to the exhibition and the reason why the public are excluded is that some of those who are invited may be from repressive regimes? Is he aware that that is particularly worrying when one bears in mind that some of the companies at the exhibition specialise only in riot control, electronic surveillance and the production of CS gas?
    Mr. Hayhoe: Hon. Members and representatives of the press are invited to attend, but the exhibition is designed primarily for professional and technical experts. As to the countries that are invited to send representatives, it has been the practice of successive Administrations not to list the names of those concerned.
    Mr. Robert Atkins: Will my hon. Friend assure the House that no country outside those countries that are deemed to be our enemies will be refused admission to such an exhibition?
    Mr. Hayhoe: I can say, and this follows on an aspect of the previous supplementary question, that human rights considerations must be, and are, taken into account before a decision is made on whether a proposed sale should go ahead. Particular attention is paid to the use to which equipment might be put.
    Mr. Whitehead: If it is true, as many believe, that countries such as Argentina, Libya and Indonesia, which have used repressive technology against their own citizens, are invited to Aldershot, what criteria do the Government use to ensure that arms sales to such countries are not used for that purpose?
    Mr. Hayhoe: Arms sales have to be licensed by the Government and account is taken of human rights, operational and many other considerations before a decision is made. The position that the Government have adopted is fully justified.
    Mr. Duffy: Will the hon. Gentleman bear in mind that, as my hon. Friends have stressed, the modern police State is much more likely to use modern electronics than guns and batons, as some of his hon. Friends still seem to think? Will the hon. Gentleman pay heed to the warning of my hon. Friend the Member for Huddersfield, East (Mr. Sheerman) and ensure that his Department does not facilitate the export of repressive tech- 1330
    nology, especially when some of the items may be on the Customs and Excise C list?
    Mr. Hayhoe: I can only repeat that human rights considerations are taken into account. I am sure that it is the view of the vast majority of hon. Members that such questions should be considered before decisions are made about the export of equipment.

    Housing
    Mr. Moateasked the Secretary of State for Defence what representations he has received about the present arrangements for the provisions of housing by local authorities for those leaving the Armed Forces ; and what replies he has sent.
    Mr. Hayhoe: The majority of letters from hon. Members concern individual constituency cases. Whilst we do all we can to help, I must make it clear that the allocation of council housing is entirely within the discretion of local authorities. They are, however, urged by Department of the Environment circulars to recognise the particular difficulties of those leaving the forces and I am glad that so many authorities do not therefore insist on residential and employment qualifications before acceptance on their housing lists.
    Mr. Moate: I thank my hon. Friend for the way that he is handling this important matter. Does he agree that there is an unsatisfactory situation where a large number of Service men apparently have to go through the process of legal eviction because a number of local authorities insist on there being a court order for possession, even for Service men who have been registered on their housing list? Has my hon. Friend any proposals for overcoming the problem?
    Mr. Hayhoe: It is unfortunate that there are local authorities which insist on court orders for possession before they will act to rehouse. That causes unnecessary distress to all concerned and it is not a practice of which I approve. I am delighted to be able to tell my hon. Friend that we are discussing the problem with the Department of the Environment. Broad agreement has been reached that a certificate of impending homeless-ness will be issued and local authorities

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    will be urged to accept that in lieu of the need to obtain a court order.
    Mr. Allan Roberts: Will the Minister accept that most local authorities try to assist Service men leaving the Services but that they would be better disposed towards the problem if they were not angered by the fact that Ministry of Defence houses are kept empty unnecessarily and are not declared surplus to requirements when they should be?
    Mr. Hayhoe: I do not believe that any Ministry of Defence houses are being kept empty and surplus to requirements at the moment. If any hon. Member knows of such houses, I hope that they will get in touch with me. If the houses are genuinely surplus to requirements, they will be passed to the Property Services Agency for disposal.
    Mr. Viggers: Is the Minister aware that garrison towns can cope with the pressure of demand provided only that the towns or origin of Service men are prepared to accept their responsibilities? Will he ensure that the Department of the Environment keeps up the pressure to make sure that towns of origin accept their responsibilities and continue to do so?
    Mr. Hayhoe: My hon. Friend makes an important point. I hope that it will be noted by those responsible in local authorities away from the main concentrations of Service men.
    Mr. Concannon: Is the Minister aware that this exchange of questions and answers shows how unsatisfactory is the whole situation? It is becoming increasingly clear that to push this matter on to local authorities is not wholly fair. There must be some means by which the Ministry of Defence and the building societies can get together and devise some scheme so that the problem is not tossed on to individual councils, 90 per cent. of which try to assist. Does the Minister agree that this whole problem should not be placed on local authorities?
    Mr. Hayhoe: As the Government made clear in the debates on the Defence White Paper, consideration is being given to a scheme that would help Service men in house purchase. These matters are under consideration. There are considerable financial constraints at the present time that cannot be ignored.

    Stornoway Airport
    Mr. Donald Stewartasked the Secretary of State for Defence if he will make a statement on future plans for North Atlantic Treaty Organisation facilities at Stornoway airport in the light of refusal of planning permission by the Western Isles islands council.
    Mr. Speed: We are considering the objections by the council to our notice of proposed development at Stornoway airport. A decision on our next step will be taken as soon as possible.
    Mr. Stewart: Is the Minister aware that there is almost total opposition in the community to the provision of this base, strengthened by the bad faith of the Ministry of Defence in expanding its plans on at least three occasions? Is he aware that we have a right to protect our way of life and that we do not wish to be the sitting ducks for the first strike in the event of war?
    Mr. Speed: The latter point will necessarily be so. I am, however, aware of the deep objections of the Western Isles islands council and the right hon. Gentleman's constituents. That is why we are giving careful consideration to the problems before deciding what to do next.

    Shared Military Bases
    Miss Joan Lestorasked the Secretary of State for Defence when Her Majesty's Government last had discussions with the United States Government over the use of shared military bases.
    Mr. Pym: We regularly discuss such matters.
    Miss Lestor: Will the right hon. Gentleman be more forthcoming about The use of the Diego Garcia base? If the Prime Minister——
    Mr. Speaker: Order. The hon. lady, I believe, is aware that the matter to which she refers is covered by the three-months' ruling. Questions cannot be asked about the use of that base because the Prime Minister has indicated that she is not answering questions on the matter. [HON. MEMBERS : "Oh."]. Order. Miss Joan Lestor.
    Miss Lestor: Will the right hon. Gentleman, in view of that situation, comment on the fact that there have been reports that one or two of these bases shared with the Americans are increasing their activity and that there is much speculation that this increased activity is not being carried out in consultation with the British? Will the right hon. Gentleman comment on any particular cases and the general situation?
    Mr. Pym: I can only say, in reply to that question, that there is, indeed, continuous consultation with our allies and with the United States in particular. There is, naturally, increased activity at a number of bases all round the world at the present time, in view of international events and what has occurred. But the arrangements for consultations with our allies are satisfactory to us and, so far as we know, satisfactory to our allies. That is the position.
    Mr. Cormack: Did my right hon. Friend see the Labour Party's defence broadcast last week? If so, is he not concerned about those with whom it might wish to share bases?
    Mr. Pym: I do not know whether that broadcast actually represented the view of the Opposition. That is a matter for them.
    Mr. Dalyell: If questions on Diego Garcia are not allowed, why was question No. 32, in my name, uncharacteristically dodged by the Defence Secretary by transferring it to the Lord Privy Seal? It was a direct question on Diego Garcia that had been allowed by the Table Office. It looks as if the Defence Secretary did not want to answer it.
    Mr. Pym: On the contrary, questions on consultations with our allies are a matter principally for the Lord Privy Seal. I have not sought to dodge any question.

  CHEMICAL WARFARE
  Mr. Dalyellasked the Prime Minister if she will make a statement on her discussions with Mr. Harold Brown, United States Defence Secretary, on Monday 2 June about a United States proposal that Great Britain should acquire chemical warfare weapons for possible offensive use.
  The Prime Minister (Mrs. Margaret Thatcher): No such proposal was made. We did discuss the threat to the Alliance posed by the build-up of Soviet forces, and one aspect of this threat is the Soviet Union's substantial offensive capability in chemical warfare.
  Mr. Dalyell: In view of that reply and following the equivocal reply to question No. 11 by the Secretary of State for Defence, is it to be taken that offensive chemical weapons are not ruled out? Other than as a "bee-sting" response after Armageddon, in what circumstances would an occupant of Downing Street give a go-ahead for the use of offensive chemical weapons?
  The Prime Minister: We have no present plans to build up an offensive chemical warfare capability. I hope that the hon. Gentleman will agree with me that the current circumstances, under which the Soviet Union has a substantial chemical warfare capability and we have only a defensive capability, are very worrying.
  Mr. Warren: Will the Prime Minister consider the need, in view of her statement, for warnings to be made strongly to the British people about the deployment by the Russians of chemical weapons? Will she ensure that the Home Secretary issues to the British people warnings on how to protect themselves against these weapons?
  The Prime Minister: I believe that it is not widely known that the Soviet Union has a substantial offensive capability. I believe that it should be more widely known. I shall certainly pass on to my right hon. Friend my hon. Friend's message.
  Mr. Ernie Ross: Will the Prime Minister take time to explain to the British public how she distinguishes between offensive and defensive chemical weapons?
  The Prime Minister: I would not, with respect, have thought that difficult. We have no chemical weapons capability with which to deter the Russians' chemical weapons capability. We are pretty expert in protective clothing against the Russians' chemical warfare weapons capability.

  PRIME MINISTER ENGAGEMENTS
  Mr. Gordon Wilsonasked the Prime Minister if she will list her official engagements for Tuesday 17 June.
  The Prime Minister: This morning I held meetings with ministerial colleagues and others, and also visited the Japanese embassy to sign the book of condolence for Mr. Ohira. In addition to my duties in this House, I shall be having further meetings, including one with the Foreign Minister of Pakistan.
  Mr. Wilson: Will the Prime Minister take time today to study the large volume of representations against the unconditional disposal of the shares in Ferranti? In view of the fact that the view in Scotland is fairly unanimous that this should not take place, what weight is she giving to these representations? What action will she take, as Prime Minister, to ensure that there is no job loss in Scotland?
  The Prime Minister: The representations are being studied. No decision has yet been taken. The various options are under consideration.
  Mr. McCrindle: Has the Prime Minister noticed the strange posture of the Opposition with regard to our participation in the Moscow Olympics? Has she particularly noticed the accusations against her of thuggery by the right hon. Member for Birmingham, Small Heath (Mr. Howell)? Would she not agree that, in so far as thuggery has taken place, it is surely by the Soviet Union against Afghanistan?
  The Prime Minister: I am grateful to my hon. Friend. I agree wholly with that assertion. There is an interesting article in The Times today by Robert Fisk from Kabul. I hope that my right hon. and hon. Friends have also seen Sakharov's letter, published in this country, in which he says :
  "In particular, the broadest possible boycott of the Moscow Olympics is necessary. Every spectator or athlete who comes to the Olympics will be giving indirect support of Soviet military policies."
  Mr. David Steel: Does the Prime Minister's statement today to the effect that no decision has been taken on the
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  Ferranti question mean that she has moved away from the unfortunate position that she seemed to adopt last week, when she said that it was the NEB's job to sell the shares to the highest bidder?
  The Prime Minister: No direction has been given to the NEB and no decision has yet been taken. I mean exactly what I said.
  Mr. Stokes: Is my right hon. Friend aware that when she has to consider the new salaries for the heads of the nationalised industries, she will need to pay the market price, that she must not be afraid of differentials and, above all, that she must not pay attention to the egalitarians who want everybody to be paid the same amount?
  The Prime Minister: I have received the report from the Top Salaries Review Body dealing with the chairmen of the nationalised industries and certain other top jobs. It has not yet been referred to the Cabinet. We cannot go on having the big public sector wage awards that we have had in the past, especially at a time when production is flat. The only way to pay for increased awards is through in-increased output.
  Dr. Summerskill: Will the Prime Minister consider today the problems of Halifax, which she last visited during the general election campaign in order to persuade people to vote Conservative? Will she pay a return visit to see for herself the serious crisis which is facing carpet, machine tool, textile and most other manufacturing firms? Will she bear in mind that employees—both those who are redundant and those who are lucky enough to remain in work—and employers, rightly blame the Conservative Government for the crisis?
  The Prime Minister: I visited a carpet factory in Halifax when the last Government were in power and redundancies were being suffered then. The factory that I visited had to make a large number of people redundant because of totally different methods of production. It had to keep up with modern methods in order to stay in business.
  Many textiles are covered by quotas under the multi-fibre arrangement. That agreement provides for new quotas to be made under certain circumstances and

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  we are anxious that that process should be speeded up. Heavy imports of particular types of carpet come from the United States and my right hon. Friend the Secretary of State for Trade has been in touch with the EEC to say that if the imports are going up the EEC's attitude must be reconsidered.
  Mr. Colin Shepherdasked the Prime Minister if she will list her official engagements for Tuesday 17 June.
  The Prime Minister: I refer my hon. Friend to the reply which I gave a few moments ago.
  Mr. Shepherd: On the difficult question of Civil Service and public sector pay, will my right hon. Friend confirm that people who are employed in the public sector are not entitled to automatic compensation for every point by which inflation increases? Will she confirm that wage and salary increases must bear some relation to what the nation can afford? If civil servants do not like the conditions of the Service will she recommend them to join the private sector, which is trying to create the wealth to support them?
  The Prime Minister: In general I agree with my hon. Friend. The public sector is dependent on the output of the marketing sector for increasing standards of living. There is no way of getting away from that. At a time when there is little increased output available, the public sector will have to consider future pay claims carefully if inflation is to be brought down.
  Mr. David Watkins: Will the Prime Minister find time to contact the British Steel Corporation and inform it that the works at Consett, which it proposes to close at the end of September, is meeting all the criteria of profitability and viability laid down by the Secretary of State for Industry? Will she ask the BSC to reconsider its ill-judged proposal?
  The Prime Minister: I believe that I am right in saying that the Consett works had a long period of unprofit-ability lasting about five years. Recently it has come into marginal profitability. I shall not conceal from the hon. Gentleman that a decision to close Consett gives rise to serious concern. I hope
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  that consideration will be given to selling it to the private sector.
  Mr. Temple-Morris: As the Labour Opposition's parliamentary party seems, for some peculiar reason, to be about to abandon not only its policies but its leadership to an equally peculiar electoral college, will my right hon. Friend concentrate not only on making a success of her present term of office but of securing what is even more necessary—a second period of office?
  The Prime Minister: I am grateful to my hon. Friend. I am also grateful to the Opposition for the great assistance which they are giving me in securing that objective.
  Mr. James Callaghan: I can tell members of the Government that the country would sooner have me as Prime Minister than the right hon. Lady. I want to ask the right hon. Lady a question about an issue that will dominate this Parliament more and more in the light of answers to questions this afternoon—namely, unemployment. Has the Prime Minister noted the report by the Manpower Services Commission that school leavers' unemployment will double within the next 18 months and that training does not cater adequately for at least half the school leavers. Since the right hon. Lady answered me yesterday negatively by saying that she was not prepared to print money to alleviate unemployment among young people, what does she propose to do?
  The Prime Minister: With regard to the right hon. Gentleman's first comment, modesty was never one of his more obvious characteristics. On the right hon. Gentleman's later comment, perhaps it is pertinent to remind him that unemployment under his Government went up from about 600,000 to a peak of just over 1£ million—the sharpest rise in post-war history. Of course I am concerned about increasing unemployment, particularly among school leavers. Under the youth opportunities programme it is hoped that a place will be found for all school leavers. There is a substantial increase in some areas in the number of opportunities available under that programme.
  Mr. Callaghan: Is the right hon. Lady aware that her protestations of concern are totally contradicted by the Government's actions? Is she aware that

  1339
  the Manpower Services Commission has had to abandon the examination that it is making, that a special temporary employment programme providing temporary work has been halved and that other cuts in expenditure for the unemployment and training budget have been made? It is no use her expressing concern or trying to say what happened under the last Labour Government. The right hon. Lady has the responsibility now. I want to know what she proposes to do.
  The Prime Minister: My right hon. hon. Friend the Secretary of State——
  Hon. Members: Answer.
  Mr. Speaker: Order. This is very unfair. The Leader of the Opposition was heard. [Interruption.] Order. The Leader of the Opposition was not shouted down. He was heard, and the Prime Minister is also entitled to be heard.
  The Prime Minister: My right hon. Friend the Secretary of State for Employment has a programme, which the right hon. Gentleman knows well. It concentrates on the youth opportunities programme. I have one figure ready with regard to Scotland. For example, places for an additional 6,500 entrants to the youth opportunities programme will be provided in Scotland this year. That is 6,500 more than last year. That is good news. With regard to the right hon. Gentleman's comment about printing money, doubtless he will find some of the following phrases familiar.
  "We used to think that you could just spend your way out of a recession and increase employment by cutting taxes and boosting Government spending. I tell you, in all candour, that that option no longer exists and that, in so far as it did exist, it worked only by injecting a bigger dose of inflation into the economy on each occasion, followed by a higher level of unemployment as the next step."
  That is true today as well.
  Mr. Callaghan: I quite realise that the right hon. Lady is in a difficult position when she is reduced to quoting that sort of thing. We can debate those issues at any time. The point I wish to put to the right hon. Lady, and she knows it, is that she is slashing into programmes. School leavers will not get training, neither will they get jobs. We can debate what should be done about it but she is coming
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  forward with no proposals at all. That is the charge that I lay at her door. It is time that she did something.
  The Prime Minister: As the right hon. Gentleman knows, extensive proposals are already in operation. What he is asking us to do is print more money, and, as he knows, that would only produce higher inflation followed by higher unemployment which, he will recall, has been the history of the last 20 years.

HAMPDEN PARK STADIUM
Mr. Robert Hughes: On a point of order, Mr. Speaker. Have you received an application from the Secretary of State for Scotland to make a statement on the Government's decision not to proceed with the Hampden Park reconstruction? I ask you, Mr. Speaker, because I understand that the announcement was made just after noon today, which was too late to allow hon. Members to table private notice questions. I seek your guidance on what protection exists for Back Benchers in the face of this procedural chicanery, which attempts to stifle questions by hon. Members.
Mr. Speaker: I have received no request about the matter raised by the hon. Member.
Mr. Harry Ewing: Further to that point of order Mr. Speaker, you will have noticed that from time to time we have had occasion to raise with you the matter of the treatment of Scottish Members on both sides of the House. The Government should pay attention to how the Scottish Office is treating the House. This has happened on numerous occasions. I ask you, Mr. Speaker, to refer to the Leader of the House for his consideration the question of the way in which Scottish Members of Parliament have been treated by the Secretary of State and the Under-Secretaries of State for Scotland on various important matters involving major policy changes.
Mr. Speaker: The Leader of the House is present and he will have heard what the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) said.
Mr. James Hamilton: Further to the points of order made by my hon. Friends.

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Are you aware, Mr. Speaker, that a statement about Hampden Park was made by the Government? They have now reneged on that statement and, consequently, we are being denied the right to ask the Government why they have taken a different decision.
Mr. Speaker: I have to confess that I have received no request for a statement and that I can go no further.

CRUISE MISSILE SITES
3.33 pm
The Secretary of State for Defence (Mr. Francis Pym): With permission, Mr Speaker, I should like to make a statement about ground-launched cruise missiles.
I announced on 13 December last year the NATO Foreign and Defence Minister's decision to modernise the Alliance's long-range theatre nuclear forces. I am now able to advise the House where the 160 cruise missiles to be deployed in the United Kingdom will be stationed.
The missiles will be stationed at two existing military establishments. They are the United States Air Force standby base at RAF Greenham Common, in Berkshire, and RAF Moles-worth, a disused airfield in Cambridgeshire, currently used by the United States Air Force for storage purposes. Greenham Common will be the main operating base and will house six flights of cruise missiles. Moles-worth will house four flights. It is planned that the first units will deploy at Greenham Common in 1983.
The factors affecting the decision stemmed from the prime operational need to bring the first missiles into service as soon as possible. The choice had therefore to concentrate on establishments already in defence occupation which had sufficient space available and as many as possible of the basic facilities, in particular, adequate accommodation, road communications, and access to training areas and suitable dispersal areas. Many different locations for stationing have been very carefully studied but the two bases chosen proved to be the most suitable in the light of the considerations to which I have just referred.
The deployment of the ground-launched cruise missile force will generate very little aircraft movement at either of the bases—probably no more than a few a month. As to ground movements, it will be necessary from time to time to practise the deployment of the launcher and its support vehicles to dispersed sites away from the base. These exercises will be along preplanned routes and will take place after consultation with the local authorities concerned.

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No live missiles, or warheads, will be carried on exercises at any time, and no missile test-flying will take place in this country. The missiles will be stored in purpose-built shelters in conditions that fully meet the United Kingdom's very stringent safety standards—standards that have proved themselves effective since the inception of a nuclear capability in Britain. As part of the security arrangements we shall be contributing 220 British personnel towards the guard forces for the bases and dispersal deployments.
I am having an information folder prepared covering all aspects of the basing of cruise missiles in the United Kingdom. Copies will be placed in the Library and will also be sent to the local authorities in the areas concerned. The information folder will also be available to those members of the public living in the areas of the sites who wish to know more about the reasons underlying these decisions.
I am notifying the local authorities concerned about the deployment, and their views on the environmental and social aspects of the arrival of the units will be taken into account to the fullest possible extent. They will of course be consulted in due course on the detailed building plans.
The total cost to the United Kingdom of the whole modernisation programme thoughout the Alliance will be about £16 million. As I made clear in the House on 13 December, the 160 missiles to be based in the United Kingdom are an integral part of a programme to deploy 572 United States missiles in a number of European countries. The Alliance-wide support for the new system and its widely spread deployment throughout Europe is a clear expression of the determination of NATO as a whole to preserve its security.
The Soviet Union has developed a large and expanding capability in long-range theatre nuclear forces which directly threatens the whole of Western Europe. In view of the markedly increasing threat that we face, the Alliance has decided that it is essential to modernise its own theatre nuclear forces, which are ageing and becoming increasingly vulnerable. At the same time, the Government and the Alliance remain fully
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committed to the parallel arms control approach, which was agreed in December as part of the modernisation decision.
As the House will be aware, the Soviet Union has rejected repeated offers by the United States to negotiate and has maintained its obviously unacceptable demand that NATO should abandon its modernisation programme as a precondition for negotiation. However, we shall continue to try to persuade the Russians to come to the table and play their part in a genuine negotiation.
The instability in the world today and the growing military strength of the Warsaw Pact countries require us to be exceptionally vigilant. NATO's unanimous decision on theatre nuclear modernisation was taken for the continuing security of the whole Alliance, and the United Kingdom is determined to play her full part.
Mr. Rodgers: The whole House will welcome the fact that the right hon. Gentleman has made an oral statement today and not passed the matter off in the way that some of his right hon. Friends do in a written answer.
I know that the right hon. Gentleman will understand that even amongst those who accept the inevitable necessity for nuclear weapons and believe that Britain should be properly defended, these decisions and locations are bound to provoke strong feelings and natural anxieties. Although it is principally a matter for hon. Members who are directly concerned, it is right that the Government should accept an obligation to explain why these decisions have been taken and to deal fully with the genuine anxieties of the many people who will be affected by them.
The right hon. Gentleman referred to the arrangements for the security of the missiles and the fact that British troops will be available to help. Will he make clear that there is a single responsibility for security and say where it lies? Whereas the arrangements that he has described are in some ways satisfactory, any divided responsibility would clearly be very dangerous.
Secondly, will the right hon. Gentleman again confirm that there is no question of the use of these bases except by a joint decision—I repeat, decision—between the

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United States and Her Majesty's Government?
Finally, the right hon. Gentleman said that the first missiles would not be deployed until 1983. He will know that we attach the greatest importance to using this breathing space to negotiate an agreement that will make it unnecessary for the missiles to be deployed. Clearly the greatest step to such an agreement would be a plain decision by the Soviet Union to abandon its SS20 missile. Despite its present unwillingness to move, will the right hon. Gentleman say that even if it is impossible, in the coming year, to get round the table in further SALT discussions, he will look for ways, perhaps amongst the European members of NATO, to begin genuine negotiations as soon as possible, so that this breathing space is not wasted?
Mr. Pym: I certainly understand that a number of people will have anxieties about this decision. I recognised that from the outset. It is partly for that reason that I have agreed—indeed, volunteered in a positive way—to explain nationally and to individuals, if necessary, what is involved in this deployment. I certainly accept that responsibility.
The protection is a United States capability and the responsibility lies with that country, but we shall contribute to it as we believe to be appropriate and valuable in this context. On the question of use, I confirm absolutely and have no hesitation in saying that the political decision requires a joint decision by the two Governments.
As to the use of the interval between now and the deployment of the first cruise missiles for further arms control negotiations, if there were a change of heart on the other side of the Iron Curtain, certainly we would talk. But I must point out the facts to the House. In terms of the long-range land-based theatre nuclear forces, NATO has 226 systems altogether whereas the Soviet Union has 920, which is more than four times as many. That is a major imbalance. What is more, one new SS20 with three new warheads is coming into service at a faster rate than one a week.
I say to the House in all seriousness that arms control negotiations could be prejudiced by too great a gap between the
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one side and the other. Weakness puts us in a bad negotiating position. It is for this reason that the decision by NATO is so important. None the less, there is an unremitting effort on our part, and we shall take any opportunity that comes along should there be a change of heart on the other side of the Iron Curtain. Unfortunately, there is no sign of it, but, were it to come—were a new situation to be created—of course we would look at it. However, we must be realistic about the facts of the situation today.
Mr. David Steel: Is the Secretary of State aware that although the statement is unlikely to be welcomed it is bound to be accepted generally in the country as one of sombre and sad necessity, and part of our general commitment to the NATO Alliance? Will he explain why we do not get a forward statement about the Government's intentions on the Trident missile programme, which is not part of our NATO commitment? We believe that the two should be considered together. Does he accept that we, for our part, will oppose the expenditure involved in the attempt to maintain an independent nuclear deterrent when we are already undertaking the programme that he has announced?
Mr. Pym: I note what the right hon. Gentleman said. Both these weapons systems—the long-range theatre nuclear and the strategic systems—are part of a comprehensive pattern of defence capability and they must be looked at in that light. There is no decision on what is to succeed Polaris, and Polaris, as the right hon. Gentleman knows, is assigned to NATO. Undoubtedly the allies are of the view, as are the United Kingdom Government and as were all our predecessors in the past 25 or 30 years, that the strength of the Alliance and the effectiveness of the deterrent is enhanced by this capability. We must come to that other decision when we are ready to take it. This one applies to the whole Alliance, affects other countries in Europe, and is a widely based deployment. We intend to play our full part in fulfilling our obligations to our allies under this arrangement.
Mr. Michael McNair-Wilson: Is my right hon. Friend aware that, in my view, the vast majority of my constituents recognised the threat posed by the build-up

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of Soviet arms in the West and by the aggression in Afghanistan, and that Greenham must play its part in NATO's defence posture?
Having said that, I should like to ask my right hon. Friend three questions. First, will he reassure my constituents about the storage of nuclear warheads? Can he say that, as far as humanly possible, the danger of a radioactive leak or accident can be ruled out?
Secondly, how much of the £16 million modernisation programme is likely to be spent locally? Will it provide possible job opportunities, and are local construction companies likely to be involved?
Lastly, does my right hon. Friend's announcement this afternoon essentially resolve the future of Greenham, and will it spare the people of West Berkshire from the threat of noisy aircraft for the future?
Mr. Pym: I am grateful to my hon. Friend for what he said at the beginning of his questions. I feel sure that the whole House and the country appreciate what the leader of the Liberal Party indicated—that it is a sad necessity, but that for our protection we have to go along with this programme.
I think that I can give a strong reassurance on storage and the extreme unlikelihood of an accident or a leak. The United Kingdom's safety regulations are the most stringent in the world. It is a fact that since we have had nuclear weapons in this country we have been able to preserve ourselves from either an accident or a leak. That is a reassuring fact. The same most stringent regulations will continue in future.
Substantially more than £16 million will be spent in this country in connection with this programme. The £16 million is the United Kingdom's contribution to the whole programme, and that is shared throughout NATO. Quite a lot of work will be generated by this decision and it will be available to local contractors, but because it is arranged and organised under the NATO infrastructure scheme we must follow the rules and regulations. That means that it must be done by tender. However, I am sure that contractors in or near my hon. Friend's constituency will put in competitive tenders, so it is to be hoped that they will get the job.
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I have no plans to alter the present status of Greenham Common as a standby base, but I think that this decision finally resolves the status of that airfield.
Mr. Ioan Evans: When the Secretary of State is making his decisions about nuclear arms, will he read the speech made by the late Earl Mountbatten of Burma, in which he said that it was nuclear nonsense to believe that by increasing the total uncertainty one increases one's own certainty? Is the Secretary of State aware that if a 100-megaton nuclear bomb dropped on London, steel would melt in Watford and Slough and rayon would melt in Birmingham and Bristol? Surely we should try to return to talks about nuclear disarmament rather than join the arms race.
Mr. Pym: I had the privilege of conversations on that subject with the late Lord Mountbatten before his death. I recall his speech accurately. He was strongly against any unilateralism. Defence must be carried out on a multilateral basis if it is to be carried out at all.
The whole object of the decisions is to preserve peace and to prevent war. I do not think that anyone who thought deeply about the subject would have anything good to say about unilateralism.
Mr. Major: Is my right hon. Friend aware that I fully support the Government's decision to install cruise missiles in Britain, notwithstanding the fact that many of them will be sited in my constituency? Will he specifically reassure my constituents in Molesworth that no live missiles will be transported to and from that site, that no live warheads will be used on local exercises, that there will be no local test flying of cruise missiles, and that he will use his best endeavours to ensure that there is the minimum possible impact on the local environment?
Mr. Pym: I am grateful for my hon. Friend's support for the Government's decisions. I assure him that no live missiles will be used on exercises and that there will be no test flying of those missiles in the United Kingdom. It has never been the practice to indicate where the missiles will be stored, but they are being stored under conditions of the greatest safety, as I said in reply to an earlier question.
Mr. Jay: Would it not greatly improve the chance of nuclear disarmament and the early ratification of SALT II if the Soviet Union withdrew from Afghanistan?
Mr. Pym: That would create an entirely new position in the world. It would be a great relief to everyone. My right hon. and noble Friend the Foreign Secretary has taken initiatives to try to achieve that end. Unfortunately, there appears to be not the slightest sign that that will happen. If it did, it would create a totally different position.
Mr. Farr: I congratulate my right hon. Friend on all that he is doing to strengthen the NATO partnership. Is he aware that his American counterpart said that the firing of the missiles will be an American responsibility alone? Under those circumstances, will he make arrangements to ensure that firing will be impossible without the use of a British-held master key?
Mr. Pym: I adhere to what I told the House earlier. The decision to fire will be a joint political decision. That is the arrangement that exists between ourselves and the United States.
Mr. Frank Allaun: Does it matter where the missiles are stationed? In a time of military tension they would be widely dispersed. Would not the enemy destroy virtually the whole of Britain as a launching pad for the American missiles if we were suicidal enough to oppose it? Is the Secretary of State aware that next Sunday the Labour Party will demonstrate the country's opposition to the missiles?
Mr. Pym: I think that I heard the hon. Gentleman correctly when he said "If we were suicidal enough to oppose it"—meaning the Soviet Union. That is abject surrender. There are thousands of potential targets throughout Western Europe on which the Soviet Union could pick if it so wished, and if it wanted to launch a nuclear attack out of the blue—which everyone thinks is extremely unlikely. It has the capability. It will soon have a comprehensive capability to hit almost all targets with the SS20s that it is churning out at a rate of more than one a week, including three new warheads each.
If the Soviet Union would give some indication that it would stop doing that, it might give us some hope to think that
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it would be prepared to negotiate downwards. However, it has refused to negotiate at all, and is steadily and remorselessly increasing its nuclear capability. We should be concerned about that.
Mr. Eldon Griffiths: Because of the difficulties faced by the United States Air Force in building shelters for the Fills, will my right hon. Friend lend all his assistance to ensure that the underground shelters are built expeditiously, so that the weapon can be rapidly deployed? Will he say something about the point defence, and whether there is a role for Rapier? In his publication of information for the general public, will he not only give the devastating figures that he has given to the House but rebut the arguments of those who wish to shelter under the American nuclear umbrella while quite unwilling to help them carry it?
Mr. Pym: We shall do everything possible to ensure that the shelters are completed on time and that we do not become embroiled in the difficulties that have existed in some cases in East Anglia. On the question of point defence and the possibility of Rapier, only in the circumstances of a bolt-from-the-blue attack would those stations be vulnerable. As my hon. Friend knows, the design of the weapons system is such that in a time of tension, or if it is thought that the position is deteriorating, the weapons are sent from the bases to other areas, and no one knows where they will be. Therefore, the stations themselves are reasonably safe from the possibility of a direct attack.
On the question of public presentation, I do all that I can to make those points. It is crucial to appreciate that we cannot defend ourselves by ourselves ; neither can any other member of NATO. We can do so only by co-operating with our Allies. As a Government, we are dedicating ourselves to ensuring that that occurs.
Mr. Cook: Does the Secretary of State recall that the December communiqu6 saw the arms control negotiations taking place within the SALT process? If so, did he seriously imagine that those negotiations could commence while SALT II remained unratified?
Mr. Pym: There is no reason why the negotiations should not commence if

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there was a complete change of heart on the other side of the Iron Curtain. If the Russians were prepared to talk in a realistic and genuine manner we would be prepared—indeed, we would desire—to sit down and talk to them.
Mr. Cormack: Will my right hon. Friend take a little time to write personally to the hon. Member for Salford, East (Mr. Allaun), the chairman of the Labour Party, and all those who think like him, to explain three matters? Will he explain, first, precisely the events that are taking place in Afghanistan; secondly, the nature of the SS20 and details of its deployment; and, thirdly, the details of the free exchanges that do not take place in the Supreme Soviet and the Praesidium of the Soviet Union?
Mr. Pym: I would not single out the hon. Member for Salford, East (Mr. Allaun). I wish to present to the public all those aspects, and others, of our decisions. I have done my best to do so already at every available opportunity.
Mr. Cryer: Do not the cruise missiles represent a distinct escalation of the arms race? Is it not true that they are difficult to verify and that that is regarded as an asset by the Secretary of State? Are there not graver dangers in the vicinity through the road movement of the missiles? Does the Secretary of State agree that there will be widespread local and national opposition to an escalation of the arms race? Does he accept that already NATO and United States nuclear missiles outnumber Warsaw Pact and Soviet missiles by two to one? Is that not a step towards a graver danger?
Mr. Pym: As I explained to the House earlier, the number of long-range and land-based systems is greater in the Soviet Union by more than four to one when compared to the Alliance. Even if all 572 cruise missiles and Pershing IIs were in existence now, and deployed tomorrow, we should still be outnumbered in that area by the Soviet Union.
Mr. Churchill: Will my right hon. Friend confirm that the ground-launched cruise missiles have little to do with the defence of the United States but are evidence of the strong, vital and ongoing commitment of the United States to the
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defence of Western Europe, and should be welcomed as such?
Mr. Pym: I agree that they are part of a comprehensive defensive capability.
Miss Joan Lestor: Bearing in mind the block on any questions about the base about which I am not allowed to speak, and the widespread concern in many parts of the country that will follow the announcement that has just been made, will the right hon. Gentleman give an assurance that there will be no such block on any questions surrounding the activities around these bases and all questions emanating from them?
Mr. Pym: I am thankful to say that the question of blocking questions, Mr. Speaker, is a matter not for me but for you. [HON. MEMBERS : "Oh."] What I want to block is any aggressive activity by a potential enemy, and I want to preserve the peace and the security not only of the United Kingdom but of any allies and friends. That is my objective. So far as possible, as I think I have indicated, I wish to do all that I can positively to explain everything relating to this decision, why it is necessary, how it will work, and so on. I think that that is the most forthright way in which I can try to help explain, not only to the House but principally to the public, the importance of the decision.
Mr. Tapsell: I fully support my right hon. Friend in his statement and congratulate him on the leading and constructive role that he has played in the NATO discussions that have led to it. If one of the reasons why it is necessary for us to have these missiles is the growing and formidable capacity of the Soviet Union to make a first strike against the NATO countries, why is it wise to have only two of these bases? Is it really wise to assume that we can ignore the possibility of the bolt out of the blue?
Mr. Pym: We cannot ignore the possibility of the bolt out of the blue, but it is the one that really introduces a holocaust that we have dedicated ourselves to try to prevent. The point about the cruise missiles is that they will not be on just two bases. There are 10 nights altogether, and at a time of tension, or in war, they will not all be deployed in the same place. They will be deployed in many different places. Therefore, the number of targets

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is enormous. That is why it is not necessary to have more than two bases.
Mr. Dalyell: Will the Secretary of State forgive us for our somewhat sour and hollow laugh when he emphasises the words "joint decision"? What joint decision took place in relation to Diego Garcia and the exchange of letters? If the emphasis is on joint decision, and if the Americans had meant it, why the reluctance to give us a dual key system? Will the right hon. Gentleman answer the question that was put to him by his hon. Friend the Member for Har-borough (Mr. Farr)?
Mr. Pym: We could have a dual key if we shared in the cost and the ownership of the weapon, but we do not; it is a United States weapon. The dual key is appropriate in the circumstances of joint ownership, which applies in some cases. It is not appropriate in this case. We have taken the view that it is neither necessary nor a very sensible use of our very limited resources to have joint ownership, because the United States is willing to meet the cost of it. That is why there is no dual key but there is a joint decision.
For all his assiduousness, I think that the hon. Gentleman is in danger of doing a disservice by creating a wrong impression. What matters for the defence of the West, the maintenance of peace and the continuation of freedom is that the allies and all those countries in the rest of the world combine together and rely upon each other and make their own contribution to the mutual defence of the West. By continually going on about one particular matter, the hon. Gentleman is, I think, trying to create a wrong impression.
There is, as there has been for years, a very close alliance between ourselves and our European and American allies. We are entirely confident and content with the present arrangements. They are working mutually to our advantage and the advantage of the preservation of peace. Whereas, of course, the hon. Gentleman can ask any questions he likes, the crucial point is to realise that if the free world co-ordinates its efforts there is no reason whatsoever why, be- 1354
tween us, we should not continue to preserve the peace.
Mr. Gummer: Is my right hon. Friend aware that my constituents and others in Suffolk have willingly supported a high proportion of the present nuclear deterrent, and were willing and would be willing to continue, if that were necessary? In those circumstances, though, can he say whether a number of the warheads at present deployed in the United Kingdom, some of which are in my constituency, will not now need to be deployed, because of the decisions mentioned in his announcement today?
Mr. Pym: I am grateful to my hon. Friend for what he says. I hope that there will not be too much disappointment in Suffolk about what I announced earlier this afternoon.
As to the warhead position, at the time that the modernisation decision was taken in NATO a parallel arms control proposal was made by the United States unilaterally to withdraw 1,000 warheads. That process has actually begun. I am not able to say—and it would not be right to say—where any of the warheads were or are, but the process has already begun, so we are going to fulfil that whether or not there is a response from the other side. I think that that is the best and most positive answer that I can give to my hon. Friend.
Several Hon. Members Several Hon. Members rose——
Mr. Speaker: Order. I propose to call those hon. Members who have been rising in their places from the beginning of questions.
Mr. Bidwell: Will the right hon. Gentleman explain that in spite of his detailed explanation today, this decision will greatly stimulate millions of his fellow countrymen who are patriots and who believe in the defence of Britain to support the campaign for unilateral nuclear disarmament, on ground of this country's then being able more intelligently to play a role on the world scene?
Mr. Pym: It ought not to do so. I hope that it will not do so. Indeed, I think that the great majority of people in this country are very supportive of the defence efforts being made by this country, and appreciate the need for them. After all,

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some of us have been involved in war before, and we remember what happened when we became too weak. Whereas there is no desire on our part, or the Alliance's part, to match the Soviet Union weapon for weapon, we must nevertheless be sure that between us all we have an adequate guard, so that peace and freedom can continue.
Mr. Kilfedder: Does the right hon. Gentleman appreciate that at some time some country—some Government—must take the first historic step to end the nuclear stampede before a nuclear holocaust is unleashed on the world either through mistake or through fear? Surely this Government and this country should lead the way, since we pride ourselves on justice rather than that Britain should be treated as the first line in the defence of the United States.
Mr. Pym: I do not think that it is at all right to look upon this country in that light. All I can say is that I do not support unilateralism. I think that almost everyone who has thought deeply about this matter realises that that is an unsound path down which to go. Everyone dislikes nuclear weapons, but we cannot dis-invent them. We have managed to keep the peace for the last 30 years, and we are dedicating ourselves to continue that process for the rest of time.
Mr. Faulds: Does the right hon. Gentleman understand that many of us on the Opposition Benches who are not prepared to kiss the ring of Marx are nevertheless deeply concerned about the deployment in Britain of cruise missiles that are not under our immediate control—whatever the right hon. Gentleman says—because of the dangers of going along with American policy, either in foreign affairs or in defence matters, in America's present political hysteria, which some of us have, sadly, come to know in conversations in the last few months, both with the State Department and with members of the National Security Council?
Mr. Pym: I appreciate what the hon. Gentleman says, but I would point out that this was a unanimous decision of NATO. It was not just a United States decision, with support from us. We have been in that situation before now, but this decision was taken unanimously by all the members of NATO.
Mr. Delwyn Williams: Does my right hon. Friend agree that Britain should have an independent power of operating the cruise missile, on the grounds, first, that we face retaliation ; secondly, the genuine fear of many British people that America would not respond at all, or perhaps slowly, in the event of a Russian thrust into Europe; and, thirdly, the added strategic attraction of a dual control centre?
Mr. Pym: As the United States will be stationing these missiles in various countries in Europe, including the United Kingdom, we have taken the view that it is not necessary, nor is it a very sensible use of our limited resources, also to have our own completely separate cruise missiles.
Mr. James Lamond: Since the unanimous decision was taken by NATO to deploy these missiles in Western Europe at least two weeks before the Soviet intervention in Afghanistan, how can the Secretary of State pretend that that intervention played any, part in the decision making?
Does the right hon. Gentleman realise that one of the reasons given today by himself, that he was very anxious to press on with the preparations for stationing these missiles in Britain, is effectively destroying any hope that we have of multilateral negotiations with the Soviet Union, which has, despite what the Secretary of State said, changed its position, slightly at least, in the last few weeks, by saying that it no longer demands the abandonment of this decision but is prepared to negotiate provided that the decision is suspended to allow the negotiations to go ahead?
Mr. Pym: In answer to the first part of the hon. Gentleman's question, I have never suggested that the invasion of Afghanistan had anything to do with this decision. The decision was taken before that. In answer to the second part of the question, I do not think that the representation of the Soviet position is as the hon. Gentleman describes. I have already indicated to the House the massive superiority of the Soviet Union over the rest of the Alliance in this type of weapon, and I have also indicated the rate at which new weapons of that type are being created in the Soviet Union. That is not happening in the NATO Alliance at present. If

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there is a change of heart in the Soviet Union we shall review the decision.
Mr. Ernie Ross: Does the Secretary of State accept that in a week when the House debated the Brandt report, which clearly outlined the disparities between North and South and showed that hundreds of millions of people exist in poverty, his statement today that Britain will spend £16 million on a weapon that will never be fired will be found particularly offensive?
Mr. Pym: If we do not protect ourselves adequately, and if we do not have an adequate shield, freedom and democracy will not be continued into the future. I also point out to the hon. Gentleman the remarkable fact that the Soviet Union pays scant regard to the needs of other countries. It makes a very small contribution in terms of foreign aid. It will supply weapons if necessary, but practically no foreign aid. We should also take that point into account. It is all the more reason to make sure that we are adequately defended. It we are not, the whole world may be taken over by the Soviet Union, and we can imagine the fantastic mess that would result.
Mr. Ron Brown: The Government are great supporters of secret ballots. May I take it that the Minister will also organise a ballot of the people who live in areas surrounding these missile sites, or is that stretching democracy too far?
Mr. Pym: As the hon. Gentleman knows, that has never been the practice, nor would it be sensible to take decisions on major matters of national and Alliance security on the basis of local polls. People can express opinions, but decisions on national security—a concern that everyone shares—must be taken by national Governments, and the House understands that.
Mr. Frank Allaun: On a point of order, Mr. Speaker. It is a long-established custom in the House that if a question has been asked previously hon. Members cannot table the same question again. The Table Office forbids it. But this afternoon my hon. Friend the Member for Eton and Slough (Miss Lestor) asked a supplementary question. I have been a Member of the House for a fairly long time, and I have never known a supplementary
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question to be barred because it had been asked previously. May I ask for your guidance on this point, Mr. Speaker?
Mr. Speaker: It is quite simple. I am willing to make another statement tomorrow when I have looked at the matter again, but if a question is not permissible at the Table Office it is not permissible as a supplementary question. It is as simple as that. I shall look at the matter further in case I need to correct myself.
Mr. Dalyell: Further to that point of order, Mr. Speaker. When you look at the matter further tomorrow, will you lake into account that question No. 32 on the Order Paper on Diego Garcia implied considerations of troop movements?
Mr. Speaker: That point has not escaped me.

AIR SERVICES (LONDON-HONG KONG)
The Secretary of State for Trade (Mr. John Nott): With permission, Mr. Speaker, in view of the widespread interest in the matter, I should like to make a statement about the decision that I have taken concerning air services between London and Hong King.
Last year three airlines, British Caledonian, Laker and Cathay Pacific, a Hong Kong-based airline, applied to the Hong Kong Air Transport Licensing Authority and the Civil Aviation Authority for licences to operate on the London-Hong Kong route in addition to British Airways. At present, British Airways provides the only direct service, although there are, of course, already a large number of services between Hong Kong and other European cities.
Both authorities heard evidence separately on these applications. In December the Hong Kong authority licensed Britsh Caledonian and Cathay Pacific, but restricted their frequency of service to four and three flights a week respectively. In March this year, the Civil Aviation Authority announced its decision to license only British Caledonian.
The two applicants who were unsuccessful before the Civil Aviation Authority submitted appeals to me under the provisions of regulation 16 of the Civil Aviation

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Authority Regulations 1972. I also received a number of representations, including one from the Government of Hong Kong, that under the powers conferred on me by section 4(3) of the Civil Aviation Act 1971, I should direct the authority to license Cathay Pacific in the interests of the United Kingdom's relations with Hong Kong.
I gave this matter the most careful consideration, in particular against the criteria set out in section 3 of the Act, and I found myself in disagreement with the Civil Aviation Authority in a number of ways. In particular, I was convinced by Sir Freddie Laker's contention that there is a large untapped market for this route if fares are pitched at the right level. In his evidence he described this market as consisting of
"the forgotten men and women at the bottom end of the market"
who might wish to fly if they could afford to do so. I find myself in agreement with this dynamic approach to civil aviation, and in my view it should be acknowledged.
I also felt that the authority had placed too much emphasis on the economics of the proposed additional services in the short term, and too little on the benefits to the development of the United Kingdom civil aviation industry generally of choice of service and competition on a route such as this—in particular, competition with other non-British airlines.
I felt that it was in the interests of airline passengers that they should be offered a wider choice of service than exists at present, that it would be unreasonable to expect British airlines, within the meaning of section 3(1) of the Act, to be granted exclusive rights when Cathay Pacific is based in Hong Kong and commands much local loyalty, and can expect to draw traffic from its network of regional services.
I concluded therefore that the substantial new traffic likely to be generated over a period by a wider variety of services would offer a reasonable prospect that four operators could, over a period, achieve an economic return on this route.
I have accordingly upheld the Civil Aviation Authority's decision to license British Caledonian but, in addition, have directed it to reverse its decisions on the other two applications and to issue licences in the same terms to Cathay Pacific
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and Laker, but without prejudice to the former's existing rights between Hong Kong and Bahrain. The authority and the other parties to the appeals are being informed of my decision today.
As I have reached this decision by the normal appeal criteria, I do not intend to issue a political direction under section 4—and I have informed the Hong Kong Government accordingly.
I believe that my decision will be welcomed by airline passengers generally, and in Hong Kong, where freedom to compete is one of the cornerstones on which the economic success of Hong Kong has been built. I hope, therefore, that the Government of Hong Kong will lend support to the applications which Laker may now wish to renew to the Hong Kong Air Transport Licensing Authority and to any applications which British Caledonian and Cathay Pacific may wish to make to increase the frequency of their services, should they believe it is in their interests to do so.
Mr. John Smith: I am sure that the Secretary of State will be aware that in this extraordinary and surprising decision he has effectively overturned a CAA licence decision. Does he recollect that in recommending the Civil Aviation Bill to the House recently he argues that a Secretary of State should play less of a role in licence applications and that he should give greater scope and authority to the CAA? In this early decision on a licence application, is he not totally confounding the policy that he says underlines the Bill?
Is he aware that in the evidence that was given at great length to the CAA at the licence hearing nearly everyone except Laker argued that the market was limited in scope and demand? The CAA was clear in its decision that this was not a North Atlantic situation. It said in crystal clear terms that on the evidence that was given it believed that too many carriers would destroy the route and would not provide a proper service to the public.
Does the right hoh. Gentleman realise that if he takes a different view from the body that was established to judge these matters on the same evidence he undermines any confidence in its future decisions? Has he accepted evidence from any other body that was riot before the

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CAA when the licence decision was taken? Has he received any further evidence from Hong Kong or from any of the other interested parties?
The right hon. Gentleman has effectively countermanded the CAA's decision, and in the forthcoming Bill he is depriving himself of powers to decide a general policy for the authority to follow. There will be total confusion about British civil aviation licensing policy, on which the Government's view is to be deduced from random decisions made by the Secretary of State rather than by parliamentary approval, as in the past. In this circumstance, has not the right hon. Gentleman totally undermined the process of civil aviation licensing in Britain?
If the right hon. Gentleman feels that there were some other matters that the CAA should have taken into account but which it did not, surely the proper course would have been to refer those matters back to the CAA for further consideration, which would be fair to all those whose interests are involved.
Mr. Nott: It is true that in this case, having studied the same evidence as the CAA, I came to a different conclusion. That is the purpose of the appeal procedure. The change that I am making in the new Bill is a major one in the sense that I am removing ministerial guidance and placing within the Bill the criteria on which the CAA will operate in future. I am keeping an appeal procedure. In that respect the position will remain exactly the same. There was nothing extraordinary or new about using the appeal procedure.
I did not take into account the North Atlantic route in arriving at my decision. I arrived at it purely on the evidence submitted to the CAA and on the basis of the evidence submitted by the parties on the various submissions. I took no evidence into account other than that contained in the appeal procedure and in the original submissions.
There is no confusion about the policy. Section 3 of the 1971 Act is continuing in the new Bill in more or less the same form. It provides a series of objective criteria to avoid arbitrary political decisions. I have not made an arbitrary political decision. My decision was taken
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entirely in accordance with existing appeal arrangements. I have exercised my judgment in an entirely proper way.
Mr. Smith: The right hon. Gentleman referred to arbitrary political decisions. If a Secretary of State comes to a totally contrary decision from the Civil Aviation Authority, and without taking any further evidence or bringing to bear any further consideration overrules the authority, is that not an arbitrary political decision? If it is not, what is?
Mr. Nott: There is no point in having an appeal procedure if it is not used. I found myself convinced by Laker's argument that there was a large untapped market for an air service that was safe, efficient and cheap. I favour a dynamic approach to civil aviation. I believe that
"the forgotten men and women at the bottom end of the market"
will fly on holiday to the Far East if fares are at the right level. It is in that belief and on that judgment that I have come to my decision.
Mr. Anthony Grant: Is my right hon. Friend aware that the CAA is not God Almighty, and that he is entitled to reverse its decision if it is in the national interest to do so? Is he further aware that any stimulus to competition on this important route will be welcomed by the air traveller, especially by the business air traveller? Is he satisfied that this will not lead to such cut-throat competition as might cause bankruptcies or financial failures that would be gravely damaging to the travelling public?
Mr. Nott: I am making no judgment on the timing and frequency of the flights, which the four operators must decide for themselves. How often each airline decides to fly the route, or whether it decides to fly it, must be for its economic judgment. As long as unforeseen circumstances do not arise, I believe that all four carriers should be able to operate profitably on the route. In the end it will be the market that decides. The operators that have sought to fly the route must seek the additional traffic, find it and tailor their operations to the market as it develops. That is what business is all about.
Mr. Donald Stewart: Is the Secretary of State aware that his decision will mean that no longer will the CAA be regarded

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as the arbitrator of licensing and that it will be regarded as a stage in applications until the appeal goes to the Minister? That is the inevitable effect of the decision that he has taken.
Is the right hon. Gentleman further aware that his decision will cause great alarm in Scotland, as the British Caledonian operation was tied up with the installation of the aero-engineering works at Prestwick, which will not now be a viable proposition?
Mr. Nott: I do not believe that the right hon. Gentleman's latter statement is correct. I have read a statement made by Mr. Kelvin Kellaway, the managing director of the plant in Scotland to which the right hon. Gentleman referred. I believe it to be an accurate report. On Friday he was alleged to have dismissed the fear that the right hon. Gentleman has enunciated. He said that
"the plant had been planned before British Caledonian was awarded the Honk Kong licence. The possible loss of work—about 6 per cent. of the total expected business—was easily within the business fluctuations forecast."
That is what he is reported to have said. I have no reason to believe that that is an inaccurate report of his views.
Mr. Hordern: My right hon. Friend will know that I am in favour of free competition and the free market. However, does he consider that the system is adequate that allows the Civil Aviation Authority to grant a licence, upon which substantial investment subsequently takes place, which decision can then be revoked by ministerial judgment? Is there any useful purpose, in those circumstances, in allowing the process of the CAA to grant a licence?
Mr. Nott: It is desirable to have a licensing procedure because it enables all the facts to be considered by an independent body. That is what happened in this instance. To end the licensing procedure and to make every decision subject to ministerial decision, without the objective criteria that are legally based in the Act, would lead to one political decision after another.
I favour a continuation of the objective legal criteria that are contained in the 1971 Act, and that we are continuing in the new Bill, so that politics are, as far as possible, removed from the process.
In deciding the appeal I have made a judgment that is based purely on the
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evidence presented to the CAA. We could get rid of the appeal procedure, but I do not think that that would be sensible, as ultimately aviation policy must be subject to a judgment by the Government of the day on the basis of the criteria that are set out in the Act.
Mr. Sheerman: Is the right hon. Gentleman aware that many of my constituents may feel that it is fantasy to believe that competition will see those at the bottom end of the market flying to the Far East for their holidays? Bearing in mind the present levels of unemployment, they will be lucky to go to Scarborough.
Has the right hon. Gentleman considered the nature of a policy that allows a Minister to interfere with the decisions of the CAA? I remind him that his hon. Friend the Under-Secretary of State for Trade repeatedly assured us in Committee, when we were discussing the Civil Aviation Bill, that it was important for the CAA to have a more independent role so that the Government would not interfere continually with route licensing, and that the CAA was to be trusted to be an independent arbiter. Many people in the industry will be appalled at this decision, especially in the light of the Government's stated intentions. I refer the right hon. Gentleman to those many pages where this attitude was spelt out.
Is the Secretary of State satisfied that this will produce a safe, efficient and cheap airline industry? Many of us in this House are worried about the safety aspects of competition. Sometimes corners are cut and people are put at risk.
Mr. Nott: All the safety aspects are laid out in the Act, and clearly they are of overriding importance. The Secretary of State, in deciding the appeal, and the CAA, in considering applications, have to act in accordance with the 1971 Act.
On the question of the ability of the hon. Gentleman's constituents to travel to the Far East, may I tell him that Hong Kong is just over 6,000 miles from here and Edinburgh—which is within distance of the constituency of the right hon. Member for Lanarkshire, North (Mr. Smith)—is nearly 400 miles away. At present a sleeper journey from London to Edinburgh costs almost £50. In the submissions to the CAA, most of the applicants

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were suggesting a single one-way tare to Hong Kong, at the lower end of the scale, of between £100 and £150. The present lowest return APEX fare is £400. The hon Gentleman is saying that his constituents will not be able to afford the fare. On the basis of the evidence submitted, it is not much over double what it now costs to go on the sleeper journey to Edinburgh. I believe it costs more than £100 for his constituents to go on their holidays in Spain.
Mr. McCrindle: Would the Secretary of State accept from one who is a believer in competition in aviation that there are several reasons to question whether the maximum potential foreseeable traffic on the London-Hong Kong route can conceivably justify four airlines flying it? In coming to his decision, did he have occasion to look across the Atlantic to see the results of the deregulation policy introduced a few years ago in the United States and note the plunge in profitability of some of the airlines there, as a result of which many of them are on the verge of bankruptcy? Would he not agree that if that were to be the result of his decision it could not conceivably be in the long-term interests of the business or domestic traveller?
Mr. Nott: Clearly if that were the result, it would not be to the advantage of their airline operators or the passengers. I think that is an indisputable fact.
May I remind my hon. Friend that similar gloomy predictions about competition in world aviation were made before the arrival of Skytrain on the North Atlantic? In the year following the arrival of Skytrain on the North Atlantic, which was in 1978, British Airways passenger revenues on the route exceeded all previous records. Pan Am and TWA had an equally good year.
May I remind my hon. Friend of what happened on the North Atlantic? I accept that at present the airlines are not going through a profitable phase. That, overwhelmingly, in the current period is because of massive increases in aviation fuel costs. In 1979 airline passenger growth rose by 9 per cent. over 1978. The current problems of the airlines are the problems of rising aviation fuel costs and other costs. I do not think that we
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can decide a medium-term and long-term aviation policy on the basis of short-term criteria. If we are frightened for the future, we shall never have the right aviation policy.
Mr. Gregor MacKenzie: Is the Secretary of State aware that by effectively countermanding the decision taken by the CAA he has succeeded in pleasing no one because the three airlines concerned could not operate viably on this route? I am ignoring the Secretary of State's geographical error when he talked of taking a sleeper train to Edinburgh. It is a pity he did not take a sleeper train to Glasgow to consider the effect on the employment prospects of the people who work for British Caledonian in the Strathclyde area, which already suffers from exceptionally high unemployment. We hoped that that was a factor he would take into consideration. We all regret that he seems to have ignored it completely.
Mr. Nott: I did not think that the appeal which I was deciding was, by its very nature, one in which I would please everyone. I certainly accept that this decision on appeal will not please all the airline operators, but I believe it will greatly please future airline passengers.
My duty under the Act is to weigh the interests of the airline passenger with those of the airline operator. On the evidence submitted on the appeal—aviation fuel costs have of course risen since then—we are talking about extremely attractive fares at the lower end of the scale.
I am not instructing the airlines how many flights to fly ; I am not telling them what frequency they should have. British Airways now have seven flights a week to Hong Kong. I am not saying how many flights British Caledonian or Laker or Cathay Pacific should fly. That is up to them. They must make their own economic choices. I believe that this route will throw up a large untapped market of future air travellers. That is why it is important. It is the only cabotage route, the only international route, on which we have control and are able to make a decision. I believe that there are great prospects on this route over the long term. I think that the CAA took too short term a view in this case.
Mr. Trotter: Does my right hon. Friend see extra traffic developing here from the

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whole of the Far East area which could be to the interests of all the operators on this cabotage route? Is the practical consequence of his decision that both British Caledonian and Cathay Pacific can operate immediately, whereas Laker, in practical terms, must obtain the approval of the Hong Kong Government?
Are there any implications here for the future? Is there any possibility of its leading perhaps to more competition on routes nearer home on which the fares are even more outrageous than those on the sleeper route to Glasgow?
Mr. Nott: I think I had better leave other routes alone for the present. Sixth freedom carriers are fairly numerous on this route—Swissair, Lufthansa, Air France, KLM, Singapore Airlines, Malaysian Airlines, Thai International and Air India.
I believe that there is scope—I cannot say how great it is—in attracting business to British airlines on the Hong Kong-London route. I want British airlines to compete as effectively as possible with other foreign airlines. That is the whole basis upon which I am instructed under the Act to pursue the policy.
I cannot tell how much diversion there will be, but I believe that there should be a considerable amount as a result of this decision.
Mr. David Steel: Has not the Secretary of State admitted in both his statements and his replies to questions that he has, in effect, overruled the CAA by bringing his political view of the development of aviation to bear on exactly the same evidence? If so, is he not directly intervening ministerially in the decisions of a statutory body and therefore virtually setting aside its role? What is its role to be in future licensing?
Mr. Nott: I have not taken a political view in any way. I deny that suggestion completely. I have looked at the evidence which was presented to the CAA on the applications. I have looked at the appeal papers and I have made a judgment about this route, based on the evidence that was given to the CAA. It was not a political decision. In this case, under the 1971 Act, I acted in an appeal capacity, in a quasi-judicial capacity, and it was solely in that capacity that I took this decision.
Several Hon. Members Several Hon. Members rose——
Mr. Speaker: I propose to call four more hon. Members on either side, which I think will give a good run.
Mr. Tapsell: Is my right hon. Friend aware that, whether or not events prove that there is room for three new airlines on this route, there will be much satisfaction at his decision to overrule the CAA and that if he had sustained his decision to exclude Cathay Pacific from the route there would have been deep resentment in Hong Kong—one of our best potential export markets—where there has been a feeling of resentment over many years that air traffic rights in Hong Kong have been used by Britain to the disadvantage of Hong Kong as a form of what I have heard described as "old-fashioned colonialist exploitation"? Should not that last point weigh with the Opposition?
Mr. Knott: I am grateful to my hon. Friend for making that point. Of course, I was asked by the Government of Hong Kong, given that that was their view, to make a political direction under section 4 of the Act. I rejected that application in favour of a decision under section 3 of the Act, because there is a large market here which all four airlines, over a period, can make economic if they go out and really sell their business to the general public at what will be a wider choice of fares and at lower fares. What my hon. Friend said about the feelings in Hong Kong is true.
Mr. Harry Ewing: Is the Secretary of State aware that his decision appears to be based on no more than the report that Freddie Laker said that there were more passengers available?
Is the Secretary of State aware that the Scottish Council (Development and Industry), as well as British Celadonian Airways, says that the right hon. Gentleman's decision will cost a substantial number of jobs in the Prestwick area? The Secretary of State for Scotland claimed that his personal intervention on another aircaft matter caused the creation of jobs. In this instance, is it the case that the Secretary of State either did not intervene, or intervened and was merely brushed aside by the Secretary of State for Trade?
Mr. Nott: I note the hon. Gentleman's view that this decision will cost a number of jobs. However, British Caledonian is not operating this route at present. It is due to start operating the route in August. If the hon. Gentleman is talking about future jobs, that is a judgment for British Caledonian to make. I believe that British Caledonian is likely to fly this route. The frequency and the timing with which it does so is entirely a matter for it, based upon its own economic judgment of how it can make this route pay.
Mr. Onslow: Will my right hon. Friend underline the fact that he has not withdrawn any licence from British Caledonian in the way which has sometimes been suggested and that there would be general disappointment among British Caledonian's many friends in this House if its management took the view that it could not compete in this situation which my right hon. Friend has created?
Before the Civil Aviation Bill comes back to the House, will my right hon. Friend take another look at the draft guidelines which have been linked with the Bill? If he finds that they do not reflect the same dynamic approach which his decision today indicates, will he change them so that they do reflect it?
Mr. Nott: I thank my hon. Friend for his remarks. As he says, no one is withdrawing a licence already granted to British Caledonian. It was granted a licence by the CAA and I am upholding that decision. [HON. MEMBERS : "Oh ".] That is surely correct. The right hon. Member for Lanarkshire, North, (Mr. Smith) is entitled to be a protagonist for one airline. I understand that. If he had read the evidence, he would know that there were protagonists for all the airlines.
Unless I am mistaken, the existing draft guidelines relate to the 1971 Act. The CAA has not yet issued any guidelines in connection with the Bill which will come before the House and which will change the basis of the policy. Certainly I shall be looking with great interest at any guidelines which the CAA may decide to issue in relation to the Bill when it becomes an Act.
Mr. Ogden: As the Government were elected to provide competition, those
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outside the House who put the Government in office should not complain if he does so. Will he deal with a practical point? He knows from experience that Hong Kong has only one international airport; we have several. Will he use his influence to persuade the operators, especially the tour or leisure operators, that the United Kingdom end of the route does not have to be only Gatwick or Heathrow ; it should also be the Midlands, the North-East or Scotland. That is where the key to the leisure traffic lies.
Mr. Nott: I very much agree with what the hon. Gentleman said. Of course, we want the airline operators to use the widest number of regional airports in attracting the kind of traffic which I believe is available for the Hong Kong route. The question whether the traffic should go from regional points to Hong Kong, or from regional points via London to Hong Kong, is important. I agree with the hon. Gentleman's general point that there is a broad market in the United Kingdom. Of course, I should like to see the tour operators attracting people from all round the United Kingdom with what will be lower fares and a greater choice of service.
Mr. Speaker: Mr. Kenneth Warren.
Mr. Warren: It is so nice to have the name correct, Mr. Speaker. Does my right hon. Friend appreciate that I thoroughly applaud his decision and trust it will mean that he will have the same progressive attitude towards forthcoming decisions on cheaper air fares to Europe? May I press him further? Bearing in mind that he does not want to use the section for political direction, which he rejected, will he say precisely what negotiations he had with the Hong Kong Government to make sure that Laker is allowed to operate out of Hong Kong?
Mr. Nott: I have not had any negotiations with the Hong Kong Government. The Hong Kong licensing authority operates independently of the Hong Kong Government. I merely said in my statement that if Sir Freddie Laker decided that he wished to reapply to the Hong Kong licensing authority. I should hope that the Hong Kong Government would support that application—I cannot say more than that—and that they would grant it. It is up to Sir Freddie Laker to

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decide whether he wishes to reapply. Naturally I hope that he will, but the decision is for him.
Mr. Foulkes: Surely the Secretary of State appreciates that if British Caledonian take two DC 10s out of service it will pose an immediate threat to the future of Caledonian Airmotive, and the forgotten men and women at the bottom of the pile will not get jobs. They could not fly even to Luton, let alone Hong Kong. Does the right hon. Gentleman accept that the Secretary of State for Scotland has once again been overruled and slapped in the face on this issue? Will he perhaps advise the Duke of Edinburgh, who is officially to open this plant on 3 July, what he can say about the future of jobs at Caledonian Airmotive?
Mr. Nott: I do not share the hon. Gentleman's view of British Caledonian. I think that it is an excellent airline. It can and will compete on this route. I do not understand why so many members of the Opposition feel that British Caledonian is uncompetitive. I am not instructing British Caledonian about how often it should fly. I am merely upholding the CAA's decision that it should be allowed to fly. That is perfectly correct.
I read in the newspapers that British Caledonian has purchased two DC10 aircraft for this route. If it did so before a decision was taken on the route, that cannot be my responsibility. I believe that British Caledonian will want to fly this route and that it will fly it successfully. There is a very large untapped market here. In due course, the four airlines will be profitable on this route.
Mr. Geoffrey Johnson Smith: On the question of the purchase by British Caledonian of two DC10s, will my right hon. Friend confirm that as far as he knows that was done without a nod and a wink from his own Ministry and on the initiative of British Caledonian, not in expectation of getting the route which was awarded to it by the CAA on the basis that there would be two carriers? Will he take it that Government supporters fully understand the philosophy that guided his decision and are friends not only of competition but of British Caledonian with respect to the part that it has played in private aviation in this country? Will not my right hon. Friend need to say rather more than he has to-
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day
about the reasons that led him to believe that the route to Hong Kong can support four airlines as opposed to two? Does it not take considerable investment for an airline to support any number of flights, be it one a week or two a week?
Mr. Nott: I think that my hon. Friend will find the evidence submitted to the Civil Aviation Authority of great interest. Laker Airways and British Caledonian operate from Gatwick. I believe that there is a large, untapped market. Many
"men and women at the bottom end of the market"
will fly here if they are given the opportunity to do so. I do not share the pessimism or belief that the world airline market is static. I believe that it is dynamic. British airlines must go out and capture the market in competition with other airlines. I do not share the negative attitude to airline competition. Having read the evidence, I believe that I am justified in taking that view.
Mr. Dalyell: The Secretary of State taunted my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) and other hon. Members when they argued in favour of British Caledonian. However, is it not equally true that he has been the protagonist of Laker Airways? The Civil Aviation Authority said in black and white that it believed that Laker Airways had failed to make a convincing case for a licence. In those circumstances, what is the purpose of having the CAA?
Mr. Nott: In return, may I ask the hon. Gentleman what the purpose of an appeal procedure is if it is not used in such a case as this?
Mr. Maxwell-Hyslop: If my right hon. Friend's decisions are consistent rather than capricious, will he apply the same principles as he has enunciated today to another greatly abused cabotage route on which excessive fares are charged for a poor service? I refer to the route between the United Kingdom and Gibraltar.
Mr. Nott: If airline operators submit fresh applications for that route, the CAA will examine them under the existing licensing system. Those who object to its decision are free to appeal to me. I shall make a decision on the facts contained in those applications. If my hon.

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Friend knows of any operator that is interested in that route, I hope that he will encourage it to apply.
Mr. Clinton Davis: Is the right hon. Gentleman aware that the appeals procedure exists for him to review the evidence in a quasi-judicial capacity and not—as has been the case—in a political capacity? What evidence is there, in contrast to the findings of the CAA, to show that there is a vast, untapped market? Will he draw our attention to the specific evidence that he has relied on?
Has not the right hon. Gentleman totally undermined the authority of the CAA? Not only is the finding on the evidence in complete conflict with the findings of the CAA; the right hon. Gentleman has undermined any previous definition of policy. Will he bear in mind that the CAA and the Hong Kong authorities conclusively found that that route would not bear four carriers? Indeed, they concluded that only two carriers should be maintained. Why did he not remit the issue to the CAA so that it could consider the evidence about which he had expressed anxiety and thus ensure that justice was done?
Mr. Nott: I founded my decision on appeal on the evidence that was presented to the CAA and on the appeals that were submitted to me. On appeal, I am entitled to take a different view from the CAA about the evidence. I did so. As the hon. Gentleman would have wished, the process was handled as a quasi-legal procedure.
As the hon. Gentleman made a political charge, I shall conclude with a political point. If the attitude characterised by the hon. Gentleman's remarks were to prevail, it would be almost as expensive to travel from Westminster to Hackney Marshes as it is to travel from Westminster to Hong Kong. I believe in a dynamic market. The route provides great opportunities. Over a period, the four operators will take advantage of those opportunities. That will be of great benefit to airline passengers, because it will mean lower fares and a wider choice.

CONCESSIONARY TELEVISION LICENCES FOR PENSIONERS
4.56 pm
Mr. David Winnick: I beg to move,
That leave be given to bring in a Bill to provide for pensioners living by themselves to receive concessionary television licences in line with the concessions already available in old people's homes and warden controlled accommodation.
I wish to bring in a Bill to legislate on the need to introduce a concessionary television licence fee for retired pensioners who live on their own, in their own homes. Previous attempts have been made to bring in such legislation. Whether or not my present attempt succeeds, I remain confident that sooner or later the concession will be provided. No one is likely to contradict the fact that many retired people want this concession.
At present, some elderly people live in communal or sheltered accommodation and pay only 5p for their television licence. When my right hon. Friend the Member for Leeds, South (Mr. Rees) was Home Secretary he extended the concession and allowed the communal facilities to be outside the boundary of a group of dwellings. The ground floor of a block of flats for the elderly may contain accommodation of a communal type. On that floor, the pensioners would pay only 5p. However, those living in other flats in the same building would have to pay the full television licence fee. Those retired people who do not share that facility or concession are not critical of the concession, but wish to share it. I believe that it is right that retired people who live in their own homes should be eligible for such a concession.
The present television licence fee is not excessive. One must consider the amount of programmes that are provided and the need to ensure that the BBC does not have to rely on advertising. I am not criticising the amount of the licence fee.
Mr. Tim Eggar: Why not advertising?
Mr. Winnick: I do not wish to discuss that issue. It was debated last December, and I expressed my views at that time. Although the amount of money involved in licence fees for colour televisions and for black and white sets may not seem

1375
much to us, it represents a large amount to pensioners who live on small fixed incomes. Pensioners, in the main, rely on their pension and on supplementary benefit. After they have paid for food, rent, clothes and fuel they are left with a very small sum of money. I do not understand why they should pay the same amount for their television licence as the rest of the community does.
It may be argued that it is more important to increase pensions than to provide concessions. However, we already provide concessions. I do not believe that any hon. Member would argue against the existing rebates or against travel concessions for the elderly. Such concessions are welcomed. Unfortunately, the majority of pensioners, and future pensioners, will have to rely on a small income for a long time to come. It is not right to argue that instead of providing such a concession we should increase pensions, when both are necessary. As the pension goes up, so does inflation.
There can be little doubt that television plays a significant role in the lives of many elderly people. This is particularly so with people who are in their 70s and who do not get out much, especially during the long winter months. Television provides them with their only form of entertainment. Moreover, for many elderly people television is a link with the outside world. So many elderly people are lonely and do not have many relatives or visitors. Their television set provides them with companionship and a link with the outside world.
I have had a letter from Help the Aged, and its director has authorised me to quote from that letter, he says :
"Help the Aged welcomes the move towards the provision of a television licence for a nominal payment … The high cost of the television licence—very high when seen against the incomes of many elderly people whose income is harshly reduced by retirement—is causing hardship."
Therefore, Help the Aged supports this kind of measure.
The sorts of hotels where rather poor people stay—the Savoy, Claridges, the Ritz, the Hilton and the Dorchester—all
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pay a single television licence fee. My constituents living at home on limited incomes have to pay the same fee. Hotels which have hundreds of guests need only pay a single sum of £34. Some might argue that such hotels might be able to afford a little more.
I do not wish to be controversial, but In the Labour Party manifesto last year we gave a clear pledge that if we were returned we would phase out television licences for old-age pensioners in the lifetime of the next Parliament. Some cynical Conservatives Members might say that was just an election pledge and that we would not have carried it out had we been returned to office, but we know the reaction that would have resulted from pensioners had we not implemented our pledge. Many of us are determined that the same pledge will go in the next Labour Party election manifesto.
I am asking for simple justice for elderly people. Our senior citizens are making a modest enough demand and I hope that this concession will be provided for the vast majority of those who are retired and who live in their own homes. They should have the same concession as those who live in the other kinds of accommodation that I have described.
Question put and agreed to.
Bill ordered to be brought in by Mr. David Winnick, Mr. Jack Ashley, Dr. David Clark, Mr. Frank Dobson, Mr. William Hamilton, Mr. Roy Hughes, Mr. William McKelvey, Mr. Michael Meacher, Mr. Laurie Pavitt, Mr. James Wellbeloved and Mr. Frank R. White.

CONCESSIONARY TELEVISION LICENCES FOR PENSIONERS
Mr. David Winnick accordingly presented a Bill to provide for pensioners living by themselves to receive concessionary television licences in line with the concessions already available in old people's homes and warden controlled accommodation : And the same was read the First time; and ordered to be read a Second time upon Friday 4 July and to be printed. [Bill 223.]

COAL INDUSTRY BILL
Order for Second Reading read.
Mr. Deputy Speaker (Mr. Bernard Weatherill): Mr. Speaker has selected the amendment in the name of the Leader of the Opposition.
5.5 pm
The Secretary of State for Energy (Mr. David Howell): I beg to move. That the the Bill be now read a Second time.
This Bill is an expression of the Government's confidence in the future of coal and in those, both management and men, who work in the coal industry. Coal's prospects have never been better. We believe that the industry now has the opportunity to secure for itself a prosperous and good future based on new market opportunities and efficient and competitive production. We believe that the National Coal Board can now be set on a course which will give it full scope to take advantage of the new opportunities which will be open to it in future.
It must be recognised that in the past there was undoubtedly a feeling that the coal industry was no more than a survival, doomed to irreversible decline and early extinction. This view is utter rubbish. Nothing could be further from the truth. Coal is our greatest single natural resource. Our total coal resources are about 200 billion tonnes and the NCB's estimate of operating reserves at existing mines and those in the planning stage totals about 10 billion tonnes. Over time, about 45 billion tonnes are thought to be suited to extraction by existing technology and its developments—that is, over 300 years' worth of production at current rates. By any standards, this is a secure, indigenous source of energy.
As oil becomes dearer and supplies more vulnerable and less reliable worldwide, and as our own offshore oil and gas resources decline in the 1990s, as they are bound to do, I am confident that there must be new opportunities and a new demand for coal. That is the reason why we have put coal, along with higher energy efficiency through conservation, and with nuclear energy, at the centre of our energy policy.
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Coal, however, has one special advantage which is not open to nuclear power. Nuclear power, for the foreseeable future at least, will be used only for the generation of electricity. Coal can look forward to new markets. First, there is reason to expect that new opportunities will be open for coal in the industrial and commercial markets. Looking further ahead, probably 20 years to the next century, rather than this, provided that coal can meet these market requirements at competitive prices, we can look forward to exploiting the potential of coal as a source of liquid and gaseous fuels and of chemical feedstocks by way of different processes of gasification and liquefaction. As these new markets open up for coal, the industry can hope to move away from its present overwhelming dependence on sales to the electricity industry.
Mr. Dennis Skinner: Will the Secretary of State also understand that there is another factor in relation to pits which does not play a significant part in most of our manufacturing industry? During a world recession or a recession in this country the coal industry can suffer to the extent that pits must close. With the massive imports coming in at present—6 million tonnes a year—and with the recession, pits cannot be put out of action one year and then be expected to open up again the following year when the market expands. In order to ensure that the pits are available to produce later, they must be kept open now. That means importing less and saving the Welsh and other coalfields in order to take advantage of all these wonderful things that the Secretary of State talks about in the future.
Mr. Howell: I recognise the hon. Member's feelings. The strategy that I shall explain in my speech is designed to secure the best future for the coal industry as a whole. I shall come to some of the details later. The hon. Member has made some fair points and I shall address myself to them.
The future therefore holds major prospects for the industry. For its part, the British industry has many reasons for confidence in its ability to face these long-term opportunities. As benefits work through from the substantially increased capital investment since 1974, which my party supported, under "Plan for Coal ", there are encouraging signs

1379
that the long decline in deep-mined output and in productivity has been reversed. In 1979–80 deep-mined output showed an increase, taking one year on another, for the first time since 1963 if the years affected by industrial disruption are left out of account. Output per manshift showed a further improvement and, thanks to a remarkable improvement in attendance, output per man-year rose by 4½ per cent. The industry's relations with its suppliers in the mining machinery industry are in many ways a model, and British mining machinery leads the world. Above all, there is the greatest expertise and dedication at all levels of the industry, and there is a long tradition of constructive discussions between management and unions, and, where necessary, of tripartite discussions between management, unions and Government, which must be the foundation for continued co-operation in future.
The Government's strategy for the coal industry, which is embodied in the Bill, has been developed with these points in mind. It has three essential parts.
First, we shall continue to support the board's capital expenditure on projects that will produce efficient capacity. Coal is an extractive industry, and, like other extractive industries, must constantly renew its capacity as faces or pits become exhausted. That is inevitable in an extractive industry if it is to stay in tune with the modern world and meet the challenges of tomorrow. Today the National Coal Board is in the middle of replacing old, often worn-out, uneconomic capacity with new, high-yielding faces and collieries, creating a new industry out of the old one. Over £1,000 million has been invested since 1973. The 10-year capital investment programme is now past its half-way stage and reaching a peak. The latest public expenditure White Paper, published just before the Budget, shows provision for capital expenditure by the National Coal Board of £600 million in last year's values over each of the next four years.
In respect of the board's capital expenditure the Bill does two things. Clause 1 increases the limit on the board's power to borrow from the present £2,200 million to £3,400 million, with provision for a further increase to £4,200 million. Since the board's borrowings were £2,080 million on 7 June, I must tell the House that
1380
that increase is now needed. I would expect that the new level would be sufficient to last the board for about three years, depending on its success with other parts of the financial strategy. Thereafter Parliament will have the opportunity for a further review of progress before authorising further increases.
Mr. Eric Ogden: What rate of inflation has the Minister used to calculate that the sum will last three years?
Mr. Howell: The figures make allowances in 1979 money in constant terms. What the rate of inflation will turn them into we shall have to wait and see. I said that the £600 million was the annual investment in 1979 money.
Clause 2 of the Bill is also relevant to capital investment. It opens the way for me to make deferred interest loans to the board to finance expenditure on capital projects with long lead times, as are often found in extractive industries. If the board takes advantage of that possibility, it will be able to match the interest payment on its major projects more closely than at present to those projects' earnings. That provision is a new departure in nationalised industry finance, which we have tailored, after careful consideration, to the special position of the coal industry. I must make it clear, however, that, under these loans, interest will be deferred, not forgone, and that we shall not be asking the taxpayer to bear an additional burden. The provision is intended to give the National Coal Board flexibility in the timing of its payments, as must be right in this kind of industry. It is not—I repeat not—a concealed subsidy.
The second part of our strategy is a new financial target for the National Coal Board. If there is one single thing on which we must be clear today it is that our coal industry can take advantage of the opportunities open to it only if it is efficient, competitive, profitable and free from dependence on Government subvention. I make no apologies for saying that the only long-term and lasting foundation for the coal industry—indeed, for any industry—is profitability. Only if it can compete in the market and make its own way can the industry provide good pay and conditions for its employees, offer its customers long-term secure

1381
supplies and make the contribution to the economy that we can reasonably expect. Ever-growing dependence on Government aid is no basis for a secure and prosperous future in any industry. It is simply a way of taking a whole industry down a blind alley.
In recent years, the industry's reliance on Government finance has been growing. The board last made a profit before operating grants in 1976–77. In that year, its return on capital was 12 per cent. and at the year's end its borrowings stood at £694 million. Since then its position has worsened. Last year the board broke even only after operating grants totalling £192 million, its return on capital was minimal, and by 31 March its borrowings had risen to £1,983 million. Immediately after last year's election, we began a thorough review of the board's financial position. It was clear, despite encouraging signs of increased productivity and output, that we could not go on as we had been going.
Therefore, after an exhaustive review, undertaken in conjunction with the board, of the industry's position and prospects, we decided that the time had come when the board must be set a firm financial objective, and that, for the reasons that I have earlier discussed, that objective should take the form of a phased return to independent financial viability over a number of years.
Mr. Frank Haynes: Will the right hon. Gentleman give way?
Mr. Howell: This will be the last time that I give way. Many hon. Members who have great experience in the industry wish to speak, and we started late.
Mr. Haynes: The Minister is emphasising profitability. Many Ministers, including the Prime Minister, also emphasise profitability. The Prime Minister's attitude is that if something does not pay, it must be closed. Is the Minister saying that there should be pit closures or that the board will be forced to close pits because of the Government's financial limitations?
Mr. Howell: I am saying that coal will be a profitable industry. We are moving to a position of vast energy scarcity throughout the world. Energy industries
1382
will, therefore, be profitable. Coal is an extractive industry. Like any such industry, progress involves closure of the uneconomic parts and expansion of the economic and profitable parts.
Mr. Tim Eggar: Assuming constant real oil prices, can my right hon. Friend confirm that it will be possible for the NCB to become profitable by 1983–84 without raising the real cost of coal supplies to its major customers, particularly the Central Electricity Generating Board?
Mr. Howell: That will be for the National Coal Board to work for. However, the competitive advantage of coal over oil has increased and is greatly increasing. In 1978 it was ·85 to one. It is now ·65 to one. That allows room for radical improvement.
I have, therefore, set the board the financial objective of returning to profit, on a historic cost basis after interest and social grants, from 1983–84 onwards. In the meantime, however, we shall support the board by continuing to pay operating grants. Over the four years 1979–80 to 1982–83, the Bill allows those operating grants to total up to £525 million, with provision for an increase to £590 million if necessary. It is, however, essential that, as the board moves back to profitability, the operating grants should taper off, year by year, according to a pre-determined plan. We have fixed maxima for each year as follows : for 1980–81, £135 million ; for 1981–82, £109 million; for 1982–83, £28 million. All those amounts are in 1978–79 prices and will be adjusted by the Government to each year's values. They exclude social grants, which we shall continue to pay.
We also propose changes in the way in which the operating grants are paid. We shall stand by the existing arrangements which we inherited for grants to support stocks of coke and to secure extra sales of coal to the South of Scotland Electricity Board, and may give further specific operating grants within the total limits of operating grants for each year which I have just mentioned, if exceptional circumstances arise which make them clearly appropriate. But the bulk of operating grants to the board will take the form of a single, explicit, deficit grant, which will be paid, up to the maximum levels which

1383
I have just announced for each year, to offset the deficit arising on all the board's operations and shown in the consolidated profit and loss account of the board and its subsidiaries.
The board will show the deficit grant, as such, in its proper place in its revenue account. That is the same structure of grants as we provided for 1979–80, in isolation, before the Bill was brought forward, and I am convinced that the change will make for better accountability and will enable the industry's progress towards financial viability to be seen clearly.
Clause 3 gives me the power to pay the new, explicit deficit grant, clause 4 sets new aggregate limits for the grant and for other operating grants, and clause 5, repeals the power to pay the regional grant, which has been used only twice in the past five years, and is no longer required under the new financial regime.
I turn to the third part of our strategy. Coal is an old industry in the process of constant renewal and has rightly been described as our bridge to the future. Individuals have given their whole lives to the coal industry and some communities are wholly dependent on it.
It is completely right that the Government should help the industry in its unique circumstances to cope with the strain of changing from an old industry to a new and expanding one, and help individuals who would otherwise bear an unfairly large share of the transition. We shall, therefore, continue the established social grants—including a substantial contribution to the deficiency in the mine-workers pension scheme in respect of men who retired before 1975 and including our contribution to the social cost of pit closures and to the cost of the redundant mineworkers payments scheme. Clauses 6 and 7 extend the time limit set in previous Acts and raise previous financial limits for that purpose.
In addition, I am glad to propose a number of further improvements in the social grants. First, when a pit has to close it is often possible to place numbers of the men—sometimes all of those who want to move—in work at a nearby colliery. Clause 6 will widen the basis of the Government contribution to the costs of the disturbance allowance and the retention money which the board will be paying to encourage the men to stay in work at the new job.
But increasingly there will be a need for trained and experienced men, perhaps from far afield, to man up the new faces and new pits that are being constructed. So it is in everybody's interest that men who have been made redundant should be given financial inducements to move their homes and take up re-employment at the new pit rather than remain unemployed at their old locations. The board will, therefore, offer a disturbance allowance of £2,000, generous removal allowances and retention payments. Clause 6 will enable those payments to rank as relevant expenditure "so that they can qualify for Government grant.
The enhanced transfer payments will be made in addition to the normal redundancy payments which the man receives when he is first made redundant. The board believes that they will be attractive enough to enable it to transfer the men with the skills and experience which will be absolutely essential to the operation of the new pits of the future.
Of course, grant will not be paid on the wider range of allowances until parliamentary authority has been obtained—which implies approval of the relevant Estimates and the passage of the appropriate reference in the Bill. But, subject to that having been achieved, we propose then to contribute to the board's expenditure on these items as from today.
Second, we have also looked again at the level of redundancy payments, and decided that the time has come to improve the lump sums for men under 55 who become redundant. My hon. Friend the Under-Secretary will explain the details when the House debates the Redundant Mineworkers and Concessionary Coal (Payment Schemes) (Amendment No. 2) Order 1980, later tonight.
Third, clause 7 deals with the redundant mineworkers payments scheme for men employed at coke ovens and coking plants, and so ends the unacceptable anomaly whereby the Government contribute to good redundancy payments for men who mine coking coal but not to those who work at the board's coke ovens and are equally affected by the decline in demand for coke.
Last, I know that the whole House will welcome clause 8, which proposes an increase in the limit on Government contributions to the industry's pneumoconiosis compensation scheme from £100

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million to £107 million. The purpose of the increase is to enable the widows of pneumoconiosis victims who died before 1970 to receive an improved lump sum by way of compensation. In taking this step we are following the precedent of the Pneumoconiosis (Workers Compensation) (Payment of Claims) Regulations which my hon. Friend the Under-Secretary of State for Employment introduced last December, and which were generally welcomed. We shall remedy in an equitable way an anomaly which has long woried both the board and the unions, and rightly so.
In conclusion, I turn to the Opposition's amendment. First, let me deal with the reference to :
"the extra finance … needed for the early retirement scheme ".
I presume this refers to the effects of clause 5 of the Social Security (No. 2) Bill when it comes into force on 1 April next year. My right hon. Friend the Secretary of State for Social Services made clear that that does not affect the redundancy payments scheme. On the other aspect, we have begun discussions with the NCB about the rather complex ways in which the Bill might affect it and until the discussions are completed it is too early to say precisely what the effects will be. However, I can assure the House that the men will not suffer from the application of clause 5 of that Bill, since the basic payments to which they are entitled will remain unchanged. However, it should be added that for the first year, from April 1981, there might be some income tax effects, depending on the circumstances in each case.
As for the major part of the amendment, I can understand concern about the pace of growth facing the industry and the pace of change and the strains which that will impose. I understand the points that the hon. Member for Bolsover (Mr. Skinner) raised at the beginning of my speech about capacity and meeting import challenges, both for coking coal, where there is a serious problem, and for steam coal, where the coal industry has nothing to fear if it keeps on its present path.
However, when I read the amendment I have to ask whether the Labour Party in Parliament has caught up with the real
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world and the prospects for energy or whether it has been too busy on other things. The amendment seems to be arguing that by phasing out grants we shall be putting production at risk. Production depends on investment. It is the lesson that surely has been learnt. Investment has never been financed by grants, not under any Labour Government, nor under any Conservative Government. The industry's capital investment has always been appraised on a commercial basis and financed by advances out of the National Loans Fund.
I invite the House to compare the approach of the amendment with the approach in the Bill. The amendment is defensive, and fearful. It looks backwards. It asks the House to think of a coal industry fixed in its present shape and permanently dependent on Government grants. These grants are to be given, apparently—to go by the motion—just to emulate our European neighbours, all of whose coal industries are static or contracting.
By contrast, our approach, accepted by the National Coal Board and the unions in broad outline at the latest tripartite meeting I held with them, is a viable, profitable industry, accepting change and determined to make it own way in a competitive market.
The Government firmly believe that the future market for energy will open new opportunities to the coal industry. The policy embodied in this Bill is to equip the industry to take advantage of these opportunities. The choice of means must be for the board to decide, after discussion with the unions and all those who work in the industry. I do not pretend that the task will be easy, but I am confident that it is attainable and sure that it would be wrong not to go along this path now. The industry has many things going for it and has many factors on its side.
The benefits of past investments in "Plan for Coal" are now coming through. Output and productivity are rising. Above all, the industry has the men and I believe the spirit and the will to succeed. For all these reasons, I and, I believe, many of my Friends, whatever mood may exist on the Opposition Benches, are full of confidence in coal's future. I am glad to have the opportunity of moving the second

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reading of the Bill that will mark the next step in its progress.
5.31 pm
Dr. David Owen: I beg to move, to leave out from "That" to the end of the Question and to add instead thereof :
this House declines to give a Second Reading to a Bill which, by phasing out Government grants at a time when coal producing countries in Europe are increasing their national support, puts the National Coal Board under severe financial pressure to accelerate pit closures, putting at risk the planned indigenous coal output targets which are a vital part of the national energy policy of self sufficiency, and makes no provision for the extra finance now needed for the early retirement scheme.
The Secretary of State's speech dealt almost exclusively with the profitability of the coal industry and the need for the industry to pay its way in three years' time. The central charge that we make against the Bill is that the financial targets were first discussed and negotiated with the National Coal Board in August last year and that events since then make it extremely doubtful whether the coal board can live within those targets. We fear that the Secretary of State is putting the National Coal Board in the same sort of straitjacket in which the British Steel Corporation was placed with appalling consequences.
We fear that, given the Secretary of State's monetarist attitudes and given his personal animus against the public sector, in almost all forms, he will stick rigidly to these financial figures regardless of what happens and that we shall face a number of short-term choices that are extremely dangerous.
It is noticeable that the Secretary of State, throughout his speech, did not mention the overall strategic necessity for this country to move into self-sufficiency in all aspects of energy. No mention was made of the fact that the board, under considerable prompting and pressure from the European Community, has decided to revise upwards its output forecasts so that by the end of the century the National Coal Board is now aiming to produce 200 million tons a year, an increase of 30 million tons on the previous target of 170 million tons. It is a vital national interest that these targets are fulfilled. To the extent that the Bill follows the increased investment that successive Governments have wanted, we
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welcome it. Our fear is for the short term. There are now substantial grounds on which that fear is justified.
Before moving to the basis of the next three years, I should like to ask the Secretary of State what his intentions are in relation to the current financial year. The right hon. Gentleman made a speech in which he paid generous tribute, in which I am sure both sides of the House would wish to join, to the extraordinary success of the coal industry in the past year, ending at the end of March. He drew attention to the increased output of deep-mined coal for the first time since 1963, to the productivity and to the whole record, amounting to a formidable achievement, following six years of steady investment and stability in the industry.
I understand that the right hon. Gentleman is now considering using the powers that he possesses to direct the National Coal Board so to arrange its accounts that one of its most successful years ever, when it has been using a system of operating grants, will show an overall loss. I hope that the Secretary of State will consider the matter carefully before he jigs the finances of the National Coal Board, effectively retrospectively, to show a loss in this financial year.
The right hon. Gentleman should at least wait until his legislation passes through all stages in the House before changing to a deficit grant system for future years. Nothing could be more damaging to the morale of the industry, after a successful year, than to find that, through a juggling of the figures, it faces an overall loss and that it starts upon the challenging period of the next three years' financial arrangements against an overall loss.
On the actual financial arrangements, the changes in the financial position since the August strategy review are formidable. It is amazing, in a way, that the Government sought in August last year to compel the board, given the likely outcome over the forthcoming financial year. Even in August, most financial commentators and even the Treasury believed that many of the key assumptions of this strategy would be wrong. Inflation in August was already higher than the 14 per cent. budgeted for in the strategy. At that time, it was 15·6 per cent. Since then, it has been rising steadily.

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The changes can be summarised briefly. There has been an economic downturn, overall, that has resulted in a loss of projected sales approaching £50 million. There has been a substantial change of markets. The British Steel Corporation, for example, has taken much less coking coal than previously. The board has had to sell coal in lower priced markets, losing £35 million. There has been a rise in the costs resulting from higher national insurance that the board has had to meet, amounting to £12 million.
We do not know what is the likely outcome for inflation on a year-on-year basis. It will certainly be substantially higher than 14 per cent. It is inconceivable, in my view, that it will be less than 17 per cent. I fear that it will be much higher. For every 1 per cent. point of the rise in the cost of living, the cost to the National Coal Board is an extra £12 million.
The cost of imports is falling due to the high exchange rate. The board has intervened to try and preserve some of the coking coal market. There has been a grant that is due to expire in December this year. If that is not continued for subsequent years, the effect in South Wales will be devastating. The cost of the grant is increasing all the time because of the change in the exchange rate. The massively high interest rates affect the National Coal Board just like other forms of industry.
The strategy budgeted for interest of £211 million in 1981–82. It is now expected to reach £295 million. That is a change in just one financial year. If the Secretary of State wishes to hold any credibility for these financial targets, they should be revised in the light of the dramatic financial changes undertaken since they were negotiated with the board. It is unfair to put the board into a financial straitjacket. Even before the House has agreed to it, we can see that the figures do not add up. The Minister must show that he is prepared to re-enter into negotiations with the board and to fix more credible fingures. At least the House would then be being asked to accept figures based on a degree of reality.
How we deal with the board's finances goes wider and covers the whole question of the nationalised industries. The postwar habit of successive Governments, try-
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ing to make the public sector ape the private sector, has not been successful. The Secretary of State says that he wishes to treat the National Coal Board as a private sector company operating in the market. Whether or not we accept that there is a free market is energy—and I do not—it behoves the Secretary of State to put both constraints and easements on the National Coal Board similar to those operating in private industry. Nationalised industries do not have the same access to capital markets as private industry and, in particular, to the sources of finance which specialise in long-term, high risk borrowing. The coal industry must borrow from the National Loans Fund on unattractive terms. It is also asked to self-finance an increasing part of its investment.
Clause 2 allows the Secretary of State to make loans to the National Coal Board. Provision is made for the board to defer interest payments on projects with long lead times. That introduces some degree of flexibility, but we have not yet been told to what extent. It is nowhere near as flexible, for example, as public dividend capital. British Airways, British Shipbuilders, British Aerospace and the British Steel Corporation each have some public dividend capital. Other industries have been allowed greater flexibility in borrowing abroad and have used that facility successfully. Why must the board be stuck with the high interest rates of the National Loans Fund? If it is to be treated like a private industry, why cannot it have the same flexibility to borrow at lower rates?
The NCB does not have access to sterling finance from banks, bills of exchange or acceptance. It does not have the same freedom to choose the timing and repayment terms of loans that private industry has. That freedom is rigidly circumscribed by the National Loans Fund and that is why the Treasury likes it.
The NCB is not able to lease equipment. Leasing costs only 60 per cent. of the cost of borrowing to buy equipment. The board cannot lease any underground mining equipment and yet the coal industries in the United States and Australia, with which the NCB has to compete, are able to lease mining equipment. The Post Office and the British Gas Corporation are able to use the United States' commercial paper market with its low

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interest rates. Such freedoms are not given to the NCB.
If profitability is the only criterion, the NCB must be treated as if it has access to the same flexibilities as the private sector. We do not believe that profitability should be the only criterion for the NCB. A balance must be struck in financial targets as well as the output targets. The failure to strike any balance is the most severe indictment of the strategy. We recognise that any industry must have financial targets. If they are administered flexibly no one objects to them. There is some advantage in operating under an overall guidance.
The National Union of Mineworkers wishes not to have to depend upon Government support. Everybody in the industry believes that the coal industry can achieve that. What is at dispute is the rate at which it can move and the constraints under which the industry currently operates. A public sector industry has added responsibilities. We are extremely anxious about unemployment throughout the country. In some parts, unemployment is savage. South Wales has been struck a severe blow because of the rundown in the steel industry. South Wales is experiencing severe unemployment and many job opportunities for school leavers are being lost. On top of that, through no fault of theirs, the people of South Wales have to cope with the loss of the coking coal market that would result from a decline in steel output anyway. That difficulty is magnified by imports.
The Government have a social responsibility. Extra financing should be made available to the BSC so that it can continue to buy coking coal from South Wales. I have never wanted an argument between the BSC and the NCB or between steel workers and miners. But there is an overall social responsibility. The Government must balance the cost of attracting industry to South Wales against the cost of closing pits. We all accept that exhausted seams should be closed but anthracite pits which produce coal for the domestic markets should not. That might not be economic, but what is that cost when compared with the cost of redundancies and closures and of introducing new industry to the region? The Secretary of State said that regional aids
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were used only twice. My right hon. Friend made an important decision to make regional aids available to the coal industry, as to other industries.
In other areas we worry that the financial constraints on the coal industry will act against the medium to long-term interests of the industry. Where is the financing for some of the schemes which we believe to be necessary? There is no guarantee of finance for the liquefaction plant in North Wales.
The domestic coal market is short of smokeless fuel. More and more people are turning to a supplementary source of heat in their homes. They are opening up their fireplaces and wanting to burn smokeless fuel. What is to happen to the Phurnacite plant in Aberavon? Over 1,000 jobs are at stake. What is to happen to the five pits involved, employing about 4,000 people? Is anything to be done about bringing in a new technique such as anthracene?
Coking plants such as that in Mex-borough are under threat of closure. Does that make sense when there is a shortage of smokeless fuel? Are we to import smokeless fuel? The import strategy is not satisfactory. On a number of occasions in the last year the Secretary of State has used the threat of imports. He is wrong to say that the coal industry is declining throughout Europe. It is projected that the West German coal industry will expand.
The Secretary of State cannot go to the Council of Ministers, put his name to declarations of intent to increase coal production, and take part in an interventionist policy in the European Community which allows substantial support for an industry to preserve self-sufficiency, and at the same time preside over the total abolition of all forms of Government support for the industry. Government support for the coal industry is only £1 a tonne whereas they pay something like £24 a tonne in Belgium, between £14 and £15 in France and £11·9 in the Federal Republic of Germany.
If some of those Governments are as committed as the right hon. Gentleman to the forces of the market and to profitability and can intervene to assist their industry because of an overall strategic requirement to expand coal output, I cannot for the life of me understand

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why even the right hon. Gentleman might not be able to swallow some of his monetarist principles on behalf of the strategic interest and energy self-sufficiency requirement of this country and give it a far higher priority than hitherto.
There are some other points I would wish to make about this Bill. There are parts of the Bill which we thoroughly welcome. We welcome investment and we welcome the stability given to the industry that has been agreed by successive Governments. We welcome some of their social provisions for pneumoconiosis and other diseases. On the overall question, were it not for the fact that we have lived through a year with the Secretary of State for Industry—whose financial views are identical to those of the Secretary of State for Energy—presiding over the emasculation of the steel industry and with appalling social consequences to boot, we might have more confidence that the right hon. Gentleman would use the powers that he will take in this Bill with flexibility and more social concern. It is because we have not got that confidence and because we believe that the Government's strait-jacket will be applied around the coal industry and will result in decisions taken over the next two or three years which we shall all regret and will damage the long-term strength of the industry that we believe that the amendment that I have moved better represents the sensible strategy for this vital industry.
5.53 pm
Mr. Patrick McNair-Wilson: I support the Bill because it represents yet another milestone on the road to the essential investment that this industry must have. At the same time, I must make it clear that I have grave reservations about whether the industry can meet the targets that my right hon. Friend has set out for us today.
Most hon. Members know of my interest in the industry, and I well recall winding up, from the Opposition Benches, the debate on the Coal Industry Bill 1965, which, 15 years ago, set out to bring about the contraction of the industry, to which many Labour Members—some of whom, unfortunately, are not now here—were so strongly opposed.
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Only six years ago the engines were asked to go smartly into reverse, and having contracted the industry we were told that it had to be expanded rapidly because those who had, rightly, pointed out that we needed security in the supply of energy wanted to see that industry expanded again. We have seen this industry operate by fits and starts over the last 15 years, and I am afraid that I regard the short and medium-term future of the industry as rather bleak.
I know that it is fashionable to talk about the glowing prizes that lie ahead for the coal industry and about the replacement of coal as the chemical feedstock instead of oil, but let us be honest. Coal is not an easy product to use in this form. It is a difficult, solid hydrocarbon to break down, and I am sure that, as my hon. Friend the Member for Bedford (Mr. Skeet) reminded me a moment ago, the realisation of those glowing forecasts is a long way off.
We have to face the fact that what the coal industry needs more than ever is a period of four or five years with an act of faith by the Government. I do not believe that in the short run we can turn this industry into one of the most profitable in Britain, but that does not alter its strategic importance. We must recognise that we are entering—indeed we are well into—a period of recession. The figures issued today by the Central Statistical Office show that the recession effects everyone. It certainly affects those who supply fuel. If one looks at the demand pattern for the coal industry, one sees that it is very depressed.
The steel industry will not be in any hurry to expand its iron-making capability. It has shown that it will have to contract substantially, and as a result I guess that it will go for the electric melting of scrap rather than for making substantial quantities of iron. If the steel industry were prepared to expand its iron-making capacity, the 5 million tonnes that it requires from the coal industry can, I believe, be met from British pits. There is a quarrel about the quality of coking coal, and we are all aware of that. If the figure were much higher we might run into problems, but I believe that the medium volatile coal, is available to meet that demand.

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I hope that the talks which have, I believe, started between the National Coal Board and the British Steel Corporation will continue to ensure that we really can work out a deal whereby we can use British coking coal in the manufacture of iron. Let us be honest about it : we are already seeing great congestion in the ports from which imported coal is coming. There is congestion in the ports at Hampden Road, Baltimore and New South Wales. It is in everyone's interests for the steel industry to try to buy British coal, if only for security of supply.
Mr. Jack Dormand: Perhaps the hon. Gentleman will tell the House why he thinks the British Steel Corporation is so reluctant to take his view, when in my own area in Durham there have been experiments that have achieved the right blend. Surely there is much more to the problem than getting the blend right.
Mr. McNair-Wilson: The hon. Gentleman is right, but he must recognise that there is a substantial price differential. The British Steel Corporation wishes to keep its business alive as strongly as it can, so it tends to bring in imported coking coal. There are substantial differentials—between £10 and £18 a tonne, delivered to this country.
The problems of importing coking coal from the cheapest sources of supply and getting it to the corporation's mills and blast furnaces can create the situation that I have described, which is congestion at the ports and problems of transportation. There are swings and roundabouts here, and I should like to see the board and the corporation try to work out a viable package whereby at least that 5 million tonnes which the corporation would wish to buy would come from British pits.
If we look at electricity business, we do not find an altogether rosy picture. The CEGB is committed to take about 75 million tonnes from the NCB, given certain provisos with which, I am sure, hon. Members are familiar. With electricty demand substantially depressed it is not easy to see that figure increasing.
Here I should like to make a suggestion, because we have a lot of oil-fired capacity. We have a large oil-fired
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station at Fawley in my constituency. I should like to think that we would consider the possibility of burning in these stations a mixture of oil and pulverised coal, to step up the demand for coal. I believe that this can be done. If one mixes light oil with coal, one can make a substance not entirely dissimilar to bunker C, which is a sort of treacly mixture and which will burn perfectly adequately. That would at least provide an opportunity to increase the electricity market, but at the moment we have a market here for 75 million tonnes.
Finally, we have the industrial market. Everybody talks optimistically about this market increasing substantially. At the moment it is about 12 million tonnes, but people talk of it going up to 40 million tonnes. I sincerely hope that it does. With new furnaces, such as the fluidised bed, we may see industry converting swiftly, but at the moment we are talking of a market from the big customers of approximately 90 million to 100 million tonnes.
The domestic coal market is far from happy. I am one of those referred to earlier who have opened up a chimney to burn coal once again. What a pity that under the previous Labour Government and—dare I say it?—under this Government we have not made more progress with the building of chimneys on houses and that the review that has been going on in the Department of the Environment since Adam was a lad has not been concluded to get this done. I regard the domestic market as a substantial growth market for the industry. When we consider that more coal goes out in the concessionary coal scheme than is sold on the domestic coal market, we can see what a long way there is to go to increase the availability of coal to the domestic consumer.
I want to relate this matter to the financial situation. The coal industry has a limited demand pattern of about 100 million tonnes, and it is unlikely to increase substantially. We are probably all right for the current financial year, but with the recession continuing—this is a world-wide phenomenon; it is not peculiar to this country—I see 1980–81 as the last of the good years for the short run, and I see the following three years being extremely difficult. We are not being realistic if, in that difficult period,

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we expect the industry overnight to break even, because I do not think that that is possible. We should merely be raising false hopes.
We must recognise that this winter the coal miners will make another wage claim. Based on the OPEC oil price, they obviously have a strong hand to play. It must be for them to decide how far they wish to play that hand. As some of the hardest working people in the community, I am sure that they will weigh all the factors in the balance. Nevertheless, given that inflation will probably be in the 15 to 16 per cent. bracket this time next year, and for perhaps some time to come, it is asking too much to hope that we shall meet a financial break-even point in 1983–84. I think that it would be wise to have a more flexible approach. I am sure that the industry wants to stand on its own feet, but it takes a long time and a great deal of money to develop new coalfields. It is not a question of switching on and off. Therefore, whilst I foresee another energy crisis in future, I have to say that in the immediate future we shall probably face an energy glut rather than a shortage.
In the short term it will be disturbing if we make the industry, upon which we shall have to rely towards the end of the century, take perhaps shortsighted and over-dramatic decisions to try to meet some arithmetic target. I believe that common sense and national self-interest should dictate that pragmatism and realism, rather than arithmetical precision, should be the guiding principles.
6.4 pm
Mr. Jack Ashley: The Government have just heard a very clear warning from one of their own supporters. The hon. Member for New Forest (Mr. McNair-Wilson) said that he had reservations about whether the industry could meet these targets. The Government ought to note that warning very carefully. The hon. Gentleman underlined what was said by my right hon. Friend the Member for Plymouth, Devonport (Dr. Owen) about the dangers of putting a straitjacket on the coal industry by imposing stringent targets on the National Coal Board. I hope that the Minister will take on board the points made by my right hon. Friend.
When a Conservative Back Bencher says that we need an act of faith by the
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Government, things have come to a pretty pass. The hon. Gentleman said that he supported the Bill, but the misgivings that he expressed were a serious warning which the Government should note. The last thing that we want is the trauma that we had in the steel industry being repeated in the coal industry. I hope that the Government will take full account of the proposals put forward by my right hon. Friend about the bonuses and the flexibilities as well as the penalties being given to the NCB.
I want to concentrate on one narrow aspect of the coal industry which is of grave concern to all mining areas. I refer to the impact of mining causing subsidence and tremor damage. This is causing more trouble and heartache in mining areas than any other factor.
Thousands of people in mining areas are seeing their houses collapsing. Walls are cracking, ceilings have holes appearing in them and foundations are being wrecked by subsidence. This is a serious matter for many people. It is a matter of great concern and financial loss. It also affects the health of many people in my constituency.
The legislation on subsidence is faulty in this respect. First, the National Coal Board has only to make houses "reasonably fit" after they have been damaged. What a marvellous phrase to insert in legislation—"reasonably fit". The NCB should restore those houses to their former standards and not simply make them "reasonably fit".
Secondly, the NCB does not have to pay full compensation or the depreciation in value for houses damaged by subsidence. It does not have to pay the difference between the sale price of a house damaged by subsidence and one not so damaged. It is remarkable that anyone owning a house damaged by subsidence should lose and not have proper compensation as a result of the activities of the National Coal Board.
According to present legislation, the NCB does not have to compensate for loss of earnings or for inconvenience caused by repairs to property or for the stress caused to those whose houses are damaged by subsidence.
Under existing legislation—this applies to no other area of life—the NCB is guilty of causing subsidence in a mining

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area until it can prove its innocence. The normal burden of proof is reversed, and that is as it should be. That is a valid provision. Yet there is no provision for full compensation.
Under some existing court procedures on subsidence the reverse is the case. Those whose homes have been damaged must be able to prove that the damage was caused by subsidence. If they prove that, they receive full compensation. It is a confused position. There are two different provisions—one is the present subsidence legislation, and the other is the High Court order. Under one provision, a person does not have to prove damage but does not receive full compensation, and under the other he must prove damage, but when he does he receives full compensation.
We should amend existing legislation to ensure that a person whose house is damaged by subsidence does not have to prove a case of damage against the National Coal Board. It should be assumed that it caused the damage. In addition, the householder should receive full compensation. The amended legislation should require the NCB to restore his house to its former standard and not simply to make it "reasonably fit". The NCB should be required to pay full compensation, including depreciation in value, and to pay the extra costs involved, such as loss of earnings, inconvenience to the householder during repairs and stress caused by subsidence.
In some areas earth tremors are triggered by mining. Yet there is no legal provision to cover damage caused in that way. In Stoke-on-Trent between September 1975 and September 1977, there were no fewer than 1,068 earth tremors. During that time houses were rocked, chimney pots were dislodged and roof tiles were thrown from the roof. A great deal of damage was caused to many houses, and many people were gravely disturbed. Although some damage was visible, it was not possible to assess the damage to the foundations. The people in Stoke-on-Trent were very worried.
The first essential is to stop the tremors, and that is the responsibility of the National Coal Board. In 1977 we were given an assurance that it would review its mining plans, and pay special attention to the orientation of coalfaces
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to avoid future earth tremors wherever possible. The earth tremors have started again in Stoke-on-Trent, and I want to know what is being done to stop them. It is a legitimate and important question which affects thousands of people. I hope that the Minister, when he replies, will be able to give me some assurances.
The second provision that I wish to see included in the Bill is a new legal provision to ensure that those whose houses suffer tremor damage receive full compensation, as required for subsidence damage. There should be full consequential loss, full compensation, and payment for time off work, inconvenience and distress.
I would like each hon. Member to imagine his reaction if a juggernaut smashed into his home and caused great damage. He would not be satisfied if he was told that his house would be made reasonably fit. Nor would he be satisfied if he was told that some effort would be made to pay some compensation. He would want his house restored to its former standard, and he would demand full compensation. What is good enough for hon. Members is good enough for those whose homes have been damaged by subsidence or earth tremors. I hope that my suggestions will be acceptable to the House.
Mr. Deputy Speaker (Mr. Bryant God-man Irvine): Mr. Speaker has asked me to mention that it was his intention to announce that from 7 o'clock speeches will be limited to 10 minutes.
6.15 pm
Mr. Iain Mills: Many hon. Members may not associate my constituency of Meriden with coal mining, but there are three large pits in that area. I have come to know, like, welcome and cherish those pits. Therefore, I am grateful to you, Mr. Deputy Speaker, for calling me to make a contribution in this important debate.
I wish to say how glad I was to hear and how welcome is the statement that my right hon. Friend the Conservative Secretary of State has stopped the coming and going, and the stopping and going, on the green light. I welcome his expression of confidence in the industry. I am sure that my constituents, especially those who work in the pits, will be pleased that we now have decision in place of vacillation.

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All should welcome the expression of confidence that coal will be at the centre of our future energy policy.
We have had many interesting experiences in Meriden, the most recent being the expansion of Dawmill near Coventry, where mining takes place in that famous Warwickshire thick seam that runs under Coventry. The pit is now proving so successful with the new drift that production is to be doubled. I can see the realities of the Government's policies on coal as they affect pits in my constituency.
There are two other pits in my constituency, one of which is of medium age and the other dates back to the last century. I have an unusual, if not unique, spread of ages, and therefore of problems. There is an interesting spread of people working in the pits. Much as I welcome the traditional closed, tremendously bouyant and self-able community in the pits, the closure of much of the motor industry in the Midlands has resulted in new people entering the pits. That must be welcomed. Their additional skills, and their learning of the traditional mining skills, must make a contribution to widening the base of employment.
It is splendid to know that coal is now near the centre of our energy policy, but if it is to be the corner-stone of our future policy, and if it is to give secure employment to those that I have mentioned—not only in my constituency, but in others—we must ensure that the markets truly expand.
As this is a wide-ranging debate on policy, I wish to take the opportunity to say how much I hope—as I am sure many other hon. Members do—that industry will accept the long-term running advantages of the fluidised bed system in all sizes of factories. In my constituency we are trying hard to encourage the small factory looking for a £500 type of operation, whose traditional choice was gas, to consider seriously the fluidised bed system. While the capital costs are higher than the alternatives of gas and oil, the long-term costs must be of great benefit to any well-run factory. I am sure that that sort of market could expand and allow us to use our liquid hydrocarbons in more appropriate ways. I urge the Government to use all appropriate means to encourage the expansion of coal in small and medium-sized factories.
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We need to provide a secure future overall wherever we can, but we must accept that in providing security overall there is the inevitability of change, and it is not just in coal and the pits that change is being seen in our country today. I welcome the clauses in the Bill that will allow more flexibility of investment by the NCB. We must recognise that "Plan for Coal" has not proceeded under previous Governments in anything like the way in which it should have done, so flexibility is essential if we are to see the right projects chosen.
The long-term future of any industry in Britain will depend very much on the ability of the management and the people employed to accept change. The experience of those in many other older industries has been equal to, if not worse than, that of those employed in the coal industry. The coal industry now has a guaranteed expanding market. It is guaranteed in the sense that it is a cornerstone of the Government's policy.
In other parts of my constituency—indeed, it was my previous employment before I came to this House—there is the heart of the motor industry and the motor component industry. In my constituency, in the centre of England, we really see and feel the problems of declining industry. In the measures announced tonight the coal industry is, perhaps, enjoying more security than the car component and car manufacturing industries, which contain many private enterprise companies that are having to face the rather severe crunch, as has been seen by the redundancies announced recently in Lucas, Dunlop and many other companies.
Those concerned have no real guarantee of a future, and the problems of change to them are even more difficult. The British coal industry is leading technology. We have the knowledge and ability and we make the machinery that is welcomed throughout the world. Our car and car component industry is now desperately trying to find the same sort of technological lead so that it, too, may innovate out of problems.
Therefore, without trying to dodge the issue that there will be change, we must realise that it is not only in the coal industry that change will occur. The measures in the Bill to provide for problems of redundancy are to be welcomed.

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One may say that they are not generous enough, but they are certainly splendidly generous in comparison with those of other industries, and it is an enormous initiative to the good. At my advice bureaux in my constituency, miner after miner comes to ask for my help to fight for better conditions, particularly for those who, in the old Warwickshire pits, such as Kingsbury, were made redundant between the ages of 50 and 55 and now see, as the only return for the pounds that they put into their pension fund, pennies each week. This will be a continuing problem, so I welcome the provisions in the Bill aimed at assisting those miners who must face change.
We should be positive and say that change does not mean just redundancy and unemployment. As I understand it, part of the objective of the Bill is to encourage mobility. Mobility is often difficult, particularly in closed communities where the lads do not want to move. However, if in some way the Bill contributes towards overcoming that problem, it will indeed be welcome.
I must offer two slight warnings. I am concerned about the timing of this issue. I should be glad to hear the Under-Secretary's comments. I am sure that hon. Members on both sides of the House will go into this matter in more detail.
The second warning is that, however we segment and organise the NCB's activities, I know that in my constituency and others there is great concern that opencast mining operations will be seen as a cheap and easy way of providing for the nation's resources, and that these, which may be legitimate in some areas, should not in any way result in the closure of deep mining pits locally. In saying that, and in using as an example the Orchard site near Dordon, where it is proposed to opencast, I urge the Government very strongly to take social and environmental conditions into consideration in local pits of this sort, where opencast can savage the ground, and if it is seen reduce employment by closing marginal pits nearby, it will be a sad day.
Following those few words of some slight doubt, I must say that the Bill seems to be an excellent step forward in providing those employed in the mining industry and the pits, certainly in my
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constituency, with the assurance that the Government believe that coal is a great asset and that they intend to use it for the nation's future energy resources in the best way that they can. I applaud the Government's initiative.
6.24 pm
Mr. George Grant: It is about five years since the coal industry was the subject of a major debate on the Floor of the House. That is not without significance. In the late 1950s and throughout the whole of the 1960s the mining industry was decimated—from 600,000 men to 200,000 men. It was much debated in this Chamber at that time, when the decision was to close pits and to import cheap oil. In 1972 and 1974, because of the situation in the industry, the miners went on strike because they had drifted so far in the wages league. When the Labour Government came to office in 1974, they immediately set up the tripartite talks. It was from those talks that "Plan for Coal" arose, setting out a plan for the industry to produce 200 million tons of coal by the year 2000.
During these years of decline, the industry was kept short of capital investment. Morale in the industry was at rock bottom. Since the setting up of the tripartite talks, it is remarkable how the situation has changed. Confidence and morale in the industry today are high. In 1979–80, for the first time in a year since 1963, there was an improvement in coal production—109 million tons. During the first nine weeks of 1980–81, there has been a 5 per cent. increase on even the good performance of 1979. Attendance figures in the pits are showing new records, and the same applies to safety matters.
The Secretary of State says that the Opposition must be out of touch with the industry in view of the theme of the amendment. If anyone is out of touch with the industry, it must be him, because the amendment is in line with the feelings of the National Union of Mineworkers. In phasing out grants and in trying to put the NCB in a break-even position by 1983–84, the financial targets will be impossible to achieve. The time for achievement is too short. In addition, I remind the House that coal stocks, distributed and undistributed, are 2 million tons more this year. They now stand at 29 million tons. Despite the extra coal won,

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there were 2 million tons more coal on the ground than there was last year.
The fear throughout the mining industry is that as a result of the Bill there will be an acceleration of pit closures. I remind the Secretary of State that mining areas are like families. When one gets hurt, everyone feels it. Therefore, after what the industry went through in the 1950s and 1960s, there is a fear that the same thing will happen again.
The phasing out of regional grants may not appear important to the Secretary of State, but we are members of the EEC, and who can say that by depriving the NCB of regional grants, in the not-too-distant future areas such as my own Northumberland and Durham, and South Wales in particular, will not be debarred from receiving European grants because the Secretary has phased them out in his own national Government?
Mr. T. H. H. Skeet: That is nothing to do with it.
Mr. Grant: Feelings in South Wales are running high. An area director recently spoke about 12 pit closures that would not be subject to the review procedure. All the employees of the South Wales coalfields were up in arms, as was the National Union of Mineworkers.
Recently, Labour Members of Parliament met the Coal Traders' Association. One of its complaints was that it could not get anthracite in sufficient quantities and that it was having to import it, yet there is a desire to close anthracite pits in South Wales. The price of the anthracite that is imported by the Coal Traders' Association is more than the price that is paid for it from the National Coal Board.
If the financial structures of 1978–79 are replaced by the structures that the Secretary of State now recommends, instead of the board being in a break-even position it will face a loss of about £79 million, but to meet the targets that the Secretary of State is setting it will have to show a profit of £216 million. These attempts to put the board in such financial strictures can only breed unrest, and they will affect morale and output. I warn the Secretary of State that if he thinks that the National Union of Mine-workers will step aside and allow pit closures to accelerate because of these policies, he is mistaken.
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The EEC recently agreed that there was a need to double coal production. The world coal study group, which consists of 16 major industrialised countries, recently said that there was a need to treble coal production by the year 2000, and that steel production should be increased 10 to 15-fold by that year. That is interesting, but, as a member of the EEC, we should consider the financial year 1978–79. In that year France subsidised its coal industry to the tune of £14 a tonne. West Germany subsidised its coal industry to the tune of £12 a tonne, and the United Kingdom subsidised its industry by £1 a tonne, and I understand that the figures for France and West Germany were surpassed last year. I should have thought that in these difficult times, and looking to the future, the Government would seek to stimulate and expand coal production, and that morale in the rnining industry would be important to them.
In answer to a parliamentary question on 21 April from the hon. Member for Bedford (Mr. Skeet) on coal bum, the Under-Secretary of State said :
"In 1979 United Kingdom power station coal burn was about 89 million tonnes … and could lie between 65 and 78 million tonnes in 2000."—[Official Report, 21 April 1980 ; Vol. 982, c 30.]
Where does the "Plan for Coal" fit into those figures? I should have thought that the Government would seek to expand the coal industry, not contract it. I hope that the Government are not relying on bridging the energy gap by a rapid expansion of nuclear energy. The public would not stand for a rapid increase in nuclear power stations. Proposals to build a nuclear power station in my area will be met with stiff opposition from everyone.
The Secretary of State said that miners would not be affected by the ramifications of the Social Security (No. 2) Bill. While miners might be affected only by having to pay income tax according to individual cases, the National Coal Board will have to pay the social security and unemployment benefits. That applies to early retirement payments, the redundancy scheme and the sickness and pneumoconiosis schemes. Although the cost has not been accurately estimated, the board has said it will probably be about £50 million.
I have expressed my fears about the Bill, but I welcome parts of it. I welcome

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the increased borrowing powers that are given to the National Coal Board, the provision for deferred interest loans, the increase of contributions to the pneumoconiosis scheme, and the inclusion of coke oven and coke plant workers in the miners redundancy scheme.
Bearing in mind the political upheaval in the Middle East and the escalating world oil prices, and in the interests of the British mining industry and the British economy, I ask the Government to consider a number of matters. The industry's planning must be based on clear production targets, and the financial framework that is required to achieve those targets must embrace continuing Government support, at least until the completion of the "Plan for Coal" is in line with general EEC practice. The research and development efforts aimed at securing new markets must be greatly increased, with a clear Government commitment to the use of new technology and unambiguous support for the construction of the proposed liquefaction and gasification plants. Medium-term coal supplies or sales must be safeguarded by the introduction of effective controls of coal imports and by the construction of new coal burning plants.
What I have said will probably not change the vote in the event of a three-line Whip tonight, but I hope that the words of Labour Members, who are seriously concerned about the industry, will be considered in Committee.
6.38 pm
Mr. Jocelyn Cadbury: I am glad that the hon. Member for Morpeth (Mr. Grant) shares my optimism about morale in the coal industry, but I cannot agree with his view of the Bill.
I shall speak in support of the Bill, but first I should like to say a few words about the importance of coal in the United Kingdom energy strategy. Coal occupies a fundamental position in supplying Britain's energy needs, and we are fortunate in having about 300 years' reserves. By contrast, our brief period of self-sufficiency in oil is likely to come to an end by about the turn of the century, and we shall no longer be able to rely on the OPEC countries to fill the energy gap.
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Although the Government have rightly put new life into our nuclear industry, that is a long-term development and we are unlikely to be producing more than 20 or 25 per cent. of our electricity from nuclear power by the year 2000. Therefore, we are assured of a reliable supply of coal. At the same time demand for coal is certain to become stronger as we progress through the remainder of the century and as the price differential between oil and coal continues to widen.
At present about 80 per cent. of our electricity is generated from coal-fired stations. Current projections indicate that the consumption of coal by power stations will grow in the 1990s. Sales of coal to the industrial market are likely to increase substantially by the end of the century. That trend will be encouraged by new developments such as the fluidised bed combustion system. Before I came to this place I was fortunate enough to work in a factory which was, I believe, the first plant to install such a system. That was a chocolate factory. Nevertheless, it was in the forefront of technology in that respect.
I do not share the scepticism of my hon. Friend the Member for New Forest (Mr. McNair-Wilson) about the applications that coal has for producing petrochemical products. With the price of naphtha following the increased price of oil, there is no doubt that coal will become, and is becoming, an attractive feedstock for the chemical industry.
As oil supplies begin to decrease, it will become economic and essential to begin to produce oil synthetically from coal. The South Africans already do that on a large scale. The Coal Board is currently working on a project to develop the production of oil from coal at the Point of Ayr colliery.
With all these developments ahead, the demand for coal can only become stronger. It is true that the coal industry has suffered some setbacks in its attempt to retain its share of the coking coal market. The decision of the British Steel Corporation not to use the board's coke for its Redcar plant was a severe blow to the coal industry, which had invested a large amount in coal mining equipment in pits in the North-East.

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Apart from that single setback, the outlook is for an expanding coal industry with a bright future. Coal has an assured future in Britain. We have a highly successful industry. In recent years performance has been extremely encouraging. That is partly due to the fact that the investment that has already been made in "Plan for Coal" is beginning to pay off. It is also due to the bonus scheme. The output of coal has increased by almost 9 per cent. from the first quarter of 1979 to the first quarter of 1980.
Productivity schemes have succeeded in increasing productivity by about 5 per cent. from 1979 to 1980, have helped to reduce absenteeism and have reduced the number of disputes. There has not been the rise in accidents that was predicted by certain union leaders, notably by Arthur Scargill. Although it is difficult to make international comparisons, it is probably true to say that we have the most efficient deep mining coal industry in the world. It is against the background of a successful industry that we should examine the Bill.
The Bill aims to build on success, first, by increasing substantially the borrowing powers of the National Coal Board. It takes account of the fact that the industry is entering the years of peak investment under the "Plan for Coal" programme. The new borrowing powers will enable the board to invest £600 million a year, which is a real increase over preceeding years.
The fact that the Government are prepared to back the National Coal Board to that extent at a time of general financial stringency is a sign of their determination to bring "Plan for Coal" to fruition and to raise productivity in British mines to the highest possible level.
The second way in which the Bill will assist the NCB's investment plan is contained in clause 2, which enables the Secretary of State to make loans to the board through Parliament. That means that the Secretary of State can tailor the type of loan to the specific needs of the industry. That is important, because the lead times in mining are extremely long. The average time for developing a mine is about 10 years. The Selby mine will
1410
take about 14 years to reach peak production.
I have no doubt that the freedom to defer interest payments on loans will be of great assistance in easing the board's cash flow in the early stages of investment projects. It does not amount to a subsidy but it will go some way towards removing the financial straitjacket which normally has to be endured by nationalised induustries.
Thirdly, unlike Labour Members, I consider the decision in clause 5 to end regional grants to be a positive step forward to clear and honest accounting. The regional grants were never related to regional assistance. They have been used mainly for cosmetic purposes to hide deficits wherever they have occurred, It is better for the morale of both management and men if they can see clearly where losses are occurring. It is equally important if they can monitor progress towards reaching break-even and profitability. Clause 5 is an expression of confidence by the Government that progress can and will be made to end losses. The conflicting view that the Opposition appear to be taking is a policy of defeatism.
In my experience, one of the most elementary aspects of an open style of management is to provide employees in any enterprise with accurate information on how well they are performing. There is no reason why that should apply to miners any less than to workers in other industries.
It is worth re-emphasising what my right hon. Friend the Secretary of State said, namely, that regional grants have had only a marginal effect on the balance sheet. They have been paid in only two of the past five years. On each occasion they represented only 2½ per cent. of turnover.
I turn to the fourth and most important aspect of the Bill to which I wish to refer, namely the overall financial strategy that my right hon. Friend has adopted for the coal industry. It is the switch from targets of output to targets of profitability that is at the heart of the Bill, and I welcome the change. I support the plan to break even by 1983–84, for three main reasons.
My first reason is that profitability is the single best measure of efficiency in

1411
any industry. It is a better yardstick than output alone. Secondly, I am convinced that subsidies perpetuate inefficiency. They do that mainly because they undermine the determination of management and men to improve performance. Employees prefer to work in a successful enterprise and in one that is capable of standing on its own feet. The Bill demonstrates the Government's belief that the National Coal Board can achieve self-sufficiency. That must be good for the men working in the industry.
Thirdly, by 1984 "Plan for Coal" will have been in operation for 10 years. It should by then have reached fruition. By that time the industry should have developed a solid base of well-equipped high productivity mines. Labour Members should ask themselves whether the public are not entitled to expect the industry to have achieved break-even after such enormous investment.
There is understandable concern about the implications of pit closures in terms of the 1983–84 break-even target, but I believe that there is a difference between the well-tried consultative approach that the NCB has developed in recent years when it has closed pits, and what I call the monolithic top-down approach of the British Steel Corporation. The latter approach was unfortunate. It is one reason why the BSC has had industrial relations problems. The board has been wiser and more sensible in its approach. It also is important to take into account that although some pits are closing down, new pits are being developed in Yorkshire, Nottinghamshire and Leicestershire.
The mining industry is dynamic, like any other industry. Old pits must die, but the difference between now and the 1930s, and indeed the 1950s and 1960s, is that new, highly productive pits and faces are being developed, albeit in different areas. It should be remembered that the post-war running down of the coal industry took place under both Labour and Conservative Governments. Indeed, the Labour Governments of 1964 to 1970 saw the loss of 200,000 jobs, and 249 pits were closed.
Mr. Albert Roberts: I heard a similar speech made in 1954 in this Chamber when the then Minister for Fuel was Geoffrey Lloyd. He painted a golden horizon for the future of the mining
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industry. Three years later, coal was being stocked at 10s. a ton.
Mr. Cadbury: I thank the hon. Gentleman for his contribution. This has not been so much a party matter. Both parties in the past have been responsible for closing pits. My point is that we are now making progress and actually going forward. That is what the Bill is all about.
My last point relates to transfer payments. It is obviously right, in view of the changing pattern of the industry and the fact that pits are closing in some areas and opening in others, that we should give the maximum assistance to miners to make moves. The Bill not only maintains the level of transfer payments, but makes them more flexible. A particular improvement which I welcome is that people who have already left the industry through redundancy may qualify for a grant if they resume mining in another area. This seems to me to be both socially desirable and an effective way of attracting skilled personnel back into the industry.
I bellieve that the Bill is an expression of optimism and confidence in the future of the coal industry. Surely it is time to throw off the gloom of the 1930s and to look forward to a prosperous, highly productive coal industry that will play a fundamental role in meeting our energy needs in future centuries.
6.53 pm
Mr. A. J. Beith: The optimism of the Government and some of their supporters about the Bill belies the fact that its presentation has brought to a head a great deal of anxiety in the coal industry. There is feeling that the policy behind it means unrealistic targets and accelerated pit closures which will be irreversible.
Even the good features of the Bill—and there are useful parts of it—cannot take away the impression that has been created that the Government have embarked upon a course of action that will increase difficulties in the industry, by the unrealistic nature of the targets, and will bring about closures for which we shall pay a high price when we try to increase the production of coal. This is against a background of very good management in the industry, of excellent improvements in productivity at the coalface and, as many Members point out, a generally improved state of confidence

1413
and morale throughout coal mining. Some of it has been achieved with the aid of measures which this Bill will weaken or get rid of.
My hon. Friend the Member for Colne Valley (Mr. Wainwright) has drawn attention to pits in his constituency which are at the margin of profitability but which will be shown to be much more profitable in future years as they are affected by rising prices of oil. The NCB in my own constituency has so far confounded the critics who have suggested that collieries like Shilbottle and Whittle have no future by increasingly investing in them and developing them as one unit, and showing that they see a future for them. Many of those areas, like the one in my constituency where the National Coal Board is a major employer, are areas where there is no alternative employment and no realistic way in which the jobs provided by the industry can be replaced.
It is hard to see in this Bill any guarantee against situations developing in some parts of the coal industry which will be all too much like Consett. One has only to look at the situation in a steel town like Consett to realise what will happen in some of our mining areas if we become involved in another pit closure programme.
I am bound to be worried, given the hostility that my hon. Friends and I have to the scale of the Government's nuclear energy programme, that their attitude towards nuclear power colours their attitude to the coal industry. I feel that they do not want to see the energy gap filled by coal to the extent that we believe it can be.
It is inevitable that, when the Central Electricity Generating Board wants to place a nuclear power station in the middle of the Northumberland coalfield, people in the industry and outside it should see that as an insult to the prospects and potential of coal in electricity power generation.
I share the hostility expressed by the hon. Member for Morpeth (Mr. Grant) to the Druridge Bay nuclear power station proposal, standing as it does in an area of extensive deep mining, an area which has also borne a considerable amount of the burden of opencast mining, and looks like doing so in years to come.
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The international competitors of this country are clearly ready to make substantial subventions to their coal industries on a scale which we are not even able to contemplate or which has even been suggested in this debate. The Government should listen to the voices from all sides in this debate which say it is unrealistic to take away forms of aid which seek to shelter the industry through an important transition period, when it has shown itself prepared to make good use of the benefits which it may receive.
I echo what the hon. Member for New Forest (Mr. McNair-Wilson) said when he pointed out how extraordinary it is that successive Governments, while not giving sufficient encouragement to the coal industry, have at the same time cut its throat by hitting its domestic markets very hard in the matter of the household use of coal. They have destroyed much of the coal industry's domestic markets and put council tenants in houses which they cannot afford to heat and which are not satisfactorily ventilated. The sooner we make sure that we build houses heated by solid fuel and undo some of the damage that has been done by converting all-electric houses, the better. By bringing solid fuel back to these properties, as certainly one of my own local authorities is trying to do, we shall do good both for the industry and for the tenant.
I refer to a point which the Government seem rather annoyed and irritated should have been raised in the debate at all. It is the effect of another piece of legislation regarding the early retirement scheme. There is bound to be irritation expressed because a great deal of uncertainty has been created, initially for the men working in the industry, latterly for the industry itself, and for the NCB, by the Government's apparent total confusion on the matter.
I tabled a question on 22 April to ask what would be the effect of the Social Security (No. 2) Bill and its proposals to abate unemployment benefit on the early retirement scheme. The Minister said that he would let me have a reply as soon as possible. That took until 15 May, when the Minister said that there would indeed be an abatement of unemployment benefit for retired miners, and that officials from the Department of Health and Social Security had been in touch with officials

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from the Department of Energy about this and other matters.
I tabled another question in June on the same subject which was answered on 12 June—answered by the hon. Member for Croydon, Central (Mr. Moore), who I presume is to reply—asking what discussions had taken place with the NCB and whether it was envisaged that the scheme would be continued in such a way that the income of miners taking early retirement was maintained. The hon. Gentleman replied that consideration of the relationship of the Social Security (No. 2) Bill to the early retirement scheme was "at an early stage". That was in June after the Bill has gone through this House and is now well through the other place.
Is it surprising that both the NCB and miners should be extremely concerned that a matter of considerable importance and on which another piece of legislation has such a profound effect should be of so little urgency to the Government that, after months of inquiry from many hon. Members in questions and correspondence, they say that matters are still "at an early stage"? They can still give no clear indication of how they are to maintain the scheme.
Mr. J. D. Concannon: It is as well to stress that when this was brought up in the Social Security (No. 2) Bill the Minister at the Dispatch Box "passed the buck" back to the Minister in the Department of Energy. Total confusion has reigned, bringing confusion to the coalfields and to the miners themselves.
Mr. Beith: I very much agree with the right hon. Gentleman. Not only should we be anxious about that point, but we are bound to view with some scepticism the introduction of further new measures for miners who leave the industry early or who have to travel to other areas if we have such a lack of confidence in the ability of the Government to maintain such schemes through the various legislative adventures in which they become involved.
If this is to be the experience, and if early retirement is to be a model for some of the other schemes, the Government must face the situation more squarely. We cannot fool about with people who have spent a lifetime underground
1416
in the mining industry and say to them "Here is a scheme under which you will be able to retire early. You will be guaranteed benefits" and then allow them to spend months in considerable uncertainty, not being sure whether those benefiits will be continued, and, if so, how.
If people are to be encouraged to take advantage of the various schemes and the successors to them, matters must be managed a great deal better than this. This is no way to treat the industry or those who work in it. It is hardly surprising that this and other factors undermine confidence in the Government's intentions. The mining industry has great opportunities. It has shown by the efforts of its workers and management that it is pepared to take them, and it deserves a better Government attitude than this.
7 pm
Mr. T. H. H. Skeet: The hon. Member for Berwick-upon-Tweed (Mr. Beith) is wrong when he indicates that nuclear stations are an insult to the coal industry. After all, the CEGB stations use 70 per cent. coal. There is no way of producing cheap electricity from expensive coal.
Mention was made of the £1 tonne subsidy in the United Kingdom compared with the high figures in Europe. Let us be perfectly consistent about this. The production of coal in Belgium is only 6·4 million tonnes ; in France it is 18·5 million tonnes; in Germany it is 95 million tonnes, compared with our 120 million tonnes. Let us get the figures in the right order. It is true that we have the cheapest coal in the EEC, but British coal is one of the most expensive in the international coal market. Let us be absolutely clear about that.
Reference was made to the WOCOL report. I am afraid that more coal for power stations, in EEC terminology, means more South African, Australian and Polish coal. Even if projects were carried through, it is doubtful whether a subsidy of £6·35 per tonne would be enough to enable British coal to succeed.
The Minister said that the phasing out of coal grants would put coal output at risk. Let me make this perfectly clear. In my judgment, markets determine targets—not vice versa. Clause 6 could be one

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of the greatest advantages to the coal industry. The elimination of uneconomic pits through exhaustion and closure is certainly the key to the future prosperity of the board. It is in that connection that clause 6 become so relevant.
Properly managed, the productivity of the industry could be transformed, resulting in a more favourable cost structure. The actions of the NUM on the scene is not reassuring. After all, if a target has been established—whether it be 135 million tonnes, 170 million tonnes or 200 million tonnes by the year 2000—it depends upon what the mines will produce. If we take the OMS of the new mines in 1978–79, these work out at 4·80 tonnes. If we take the figures planned on completion of the new mines, this is over 10 tonnes per man shift.
Let us deal with one or two of the facts to which I hope the Minister will refer. On the basis of 44 cwt per man shift, there are only four mines out of 38 in South Wales that qualify. In South Wales in 1979 there was a loss of £18·9 million. Only two mines out of 30 in the North-East would qualify. Area loss was £20 million in 1979. Only two mines out of 19 in Scotland qualify. There was a loss of 12·2 million tonnes. There are only seven mines out of 22 in the western area that qualify. The area loss in 1979 was 24·8 million tonnes.
Do not the Opposition realise that if there is a higher rate of productivity at Selby, the Vale of Belvoir or in new mines in which there is high productivity, the unit costs will come down? The mines will be more profitable and more people will be employed. It is as easy as that.
Mr. Allen McKay Mr. Allen McKay (Penistone) rose——
Mr. Skeet: I am sorry. My speech falls within the 10-minute band. I should be delighted to deal with the hon. Gentleman on a future occasion, but I am afraid that Mr. Deputy Speaker will rule me out of order.
The inability of Governments to tackle this problem has dogged the industry for years. Admittedly the colliery review procedure exists, but even though declining mines have been identified, little has so far been achieved. The mines closed in 1979 accounted for only 1·8 million tonnes. In fact, since the Coal Industry
1418
Act 1977—the last Act to deal with this industry—15 collieries have been closed, 12 due to exhaustion of reserves, two, at Granville and Hylton, due to insurmountable geological difficulties, and one at Blaenavon because of safety requirements. Those closures affected the jobs of 6,000 miners, two thirds of whom were redeployed in the industry. Therefore, the National Coal Board's record does not appear to be unreasonable.
Due to the difficulties of the BSC, a further six to 12 collieries—nine producing coking coal—employing about 8,000 miners may have to close. That is in Wales. However, uneconomic performance over an extended period of years does not fall within the accepted closure criteria.
The Tymawr-Lewis-Merthyr mine in the Rhondda Valley has no possibility of substantially improving production, due to its high cost structure over a considerable time. Its demise would seem, in my judgment, to be warranted. Much will have to be achieved if the National Coal Board is to be rendered viable. Surely it is here that the miners can see their future—not in maintaining forever unprofitable pits. Why can they not see their future based on trying to make the industry more profitable? That is the purpose of the Bill.
I shall devote my remaining remarks to operational and social grants. Between 1973–74 and 1980–81—that is, a period of eight years—operational grants averaged £64 million per annum, including the deficit grants. However, if one compares them with social grants, one sees that the operational grants were much more modest. As I understand it, at the moment there is no question that the social grants will be abated in any way. In 1973–74 to 1980–81—that is, again, eight years—the social grants averaged £96 million per annum, including the regional grants. They are made up of social costs—redundancy payments, travel and removal expenses, subsidised housing—regional grants, pneumoconiosis compensation, Government contributions to the mine-workers' pension fund and the redundant mineworkers' payments scheme.
This is the point that I want to make to the House. Three specific items—the staff superannuation scheme, which is carried by the National Coal Board, the

1419
mineworkers' pension fund and the redundant mineworkers' payments scheme—together cost the Government £52 million per annum and the National Coal Board £50·8 million. All three are so constituted that they will continue to grow with time. The staff superannuation scheme imposes a considerable burden on the National Coal Board and demonstrates the folly of index-linked pension schemes in times of high inflation. It is only by moving to a pay-as-you-go system that savings will be made. Pension schemes represent the largest charge against revenue after wages and materials.
According to a report in the Financial Times on 24 July 1979, the National Coal Board
"paid to some 254,000 former miners and their widows a total of £328 million, including National Health Service contributions. The National Coal Board is paying more former than present employees."
Heavy contributions payable by the board to cover deficiency payments in the staff superannuation scheme figure at about £20 million per annum and will be advancing. Surely, if economies have to be made, might not the board consider moving on to a pay-as-you-go scheme?
The mineworkers' pension scheme provides a better example. The Government contribute to the deficiency in respect of pre-1975 pensioners. In 1978–79 the Government contributed £36 million, and the National Coal Board contributed £30·8 million. That makes a total of £66 million. On 1 September 1978, 252,843 members contributed £47 million. However, the National Coal Board and the State both contributed. In standing contributions, the National Coal Board provided £45·42 million. The contributions of the National Coal Board and the Government to the deficiency of the fund totalled £65·98 million. That totals £111·40 million. I therefore conclude that for every £1 that members contribute, the National Coal Board and the Government contribute £2·3. The National Coal Board can ease its financial problems by changing the way in which it finances its employees' pensions. Present arrangements devour capital at a rate that the board cannot afford.
Finally, I wish to deal with the redundant mineworkers' payments scheme.
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There is an order before the House. The scheme is funded by the Government, and in 1979–80 they were committed to spending £16 million. Due to the improvement in lump sum payments, that amount will rise to £26 million.
I am unable to discuss the many mysteries of the Bill, due to a shortage of time. It is a good Bill, which should be encouraged. As my hon. Friend the Member for New Forest (Mr. McNair-Wilson) said, we may not have enough time to implement it. That depends on several factors. We have made a courageous start. The Selby and other fields have had to be phased forward. The scheme in the Bill may also have to be phased forward. However, it should be noted that the miners want to be free from Government control. The sooner that we can do that, the better. If a target has been established, it is right to establish that target now. We may find that we are pushed slightly off course——
Mr. Deputy Speaker: The hon. Gentleman's time has expired.
Mr. Skeet: May I conclude my sentence?
Mr. Deputy Speaker: Either there is a 10-minute rule, or there is not. I am afraid that the answer is "No".
7.12 pm
Mr. Lawrence Cunliffe: The National Union of Mineworkers has said that it would like to be financially independent. However, it has also said that independence must be given over a rationally phased period. The Opposition have repeatedly and clearly said that if industry is given incentives, and is allowed to use its initiative, it will create the type of financial conditions that all parties would welcome.
Sometimes, planning and intervention are necessary. Indeed, every industry occasionally finds that planning or intervention is imperative. I congratulate the hon. Member for New Forest (Mr. McNair-Wilson) on his remarks. He said that the mining industry involved an act of faith. He envisaged a more realistic approach, and had more vision and foresight than the Secretary of State for Energy. The Secretary of State said that the Bill represented an expression of confidence. However, at the same time he has imposed financial restrictions. That

1421
undermines the confidence that has been built up within the industry.
It is ironic that not all parties have acclaimed the industry's magnificent performance during the past year. There has been a remarkable improvement in productivity and in the industry's ability to meet its financial objectives. There has been a reduction in the amount of absenteeism. Morale has improved and the industry's public image has improved.
Given the industry's performance over the past three months alone, I was disappointed that the Secretary of State did not congratulate both management and labour on an 8 per cent. productivity increase. Since this time last year, productivity has increased by 2·5 milion tonnes. The industry's employees would like some encouragement. It is not true that regional grants are the beefed-up finances of a particular firm. Some collieries were kept open because regional grants were made available in areas of deep depression and high unemployment. In my constituency three pits were merged into a major mining complex with the help of such grants.
Although jobs were shed, several hundred jobs were saved. That was a magnificent operation. Efficient centralisation took place, and jobs were saved. As a result, a magnificent complex now produces coal in large quantities.
The NUM does not relish certain parts of the Bill. The financial restrictions have stimulated anger and resentment among the miners. Given the long history of Conservative Governments, they understandably suspect that the Government have ulterior motives when presenting such Bills. Some—perhaps a minority—have said that clauses 1 and 2 mean that the Bill is not so much a coal Bill as a colliery closure Bill. I hope that the Minister will reassure the miners that that is not so. However, I am not convinced that the Government's intentions are honourable.
It may be claimed that 80 per cent. of the Bill is good. Indeed, that has been said not only by miners' representatives, but also by the president of the NUM. However, miners believe that certain irresponsible and irreconcilable parts of the Bill place the industry in a financial strait-jacket. That is ironic, because the industry is viable and can meet its produc-
1422
tivity targets. The Government's policy is a crazy form of monetarism. Even Milton Friedman would not advocate financial interference when an industry was performing well. Last year there was a certain amount of industrial recession. In the next few years, there will be a still greater recession. The mining industry and the board will not find it easy to reach their financial target. Certain factors are outside their control.
If the Minister wants an expression of faith, and if he wishes to inspire confidence in the industry, he must introduce other measures. Like other hon. Members, he knows that there is unfair foreign competition. Energy subsidies are being given. What will the Government do to stop such unfair trading? Miners feel extremely aggrieved about such subsidies. We cannot always argue that we should keep a stiff upper lip and fight by the Queensberry rules while our competitors take advantage of us. I hope that the Minister will comment on that.
The Yorkshire Post printed an excellent article in a special report on world energy. The Secretary of State showed a certain amount of indifference and lethargy when he was asked whether Britain would face the energy challenge. He said :
"Britain faces failure in its bid to beat the energy problem if everyone relies on the Government"
We on this side of the House would accept that without any scruples if that is the kind of attitude that is developing. The Minister went on :
"Britain's salvation will come from ingenuity and enterprise,"
but there is nothing very bold or imaginative about the financial restrictions in the Bill. In fact, the opposite is the case. The restrictions will discourage the board from reaching its financial objectives.
The Minister then said :
"If we look to Government planning, people will be disappointed."
That is a crazy comment. It amounts to the fact that the Government will not give leadership and will not take the initiative on these issues. They want to opt out of the general economic policies. The question must arise whether the Government are prepared to intervene at all.
We have discussed the closure of collieries. I take the line taken by Herr Guido Brunner, the EEC Commissioner,

1423
who is no friend of the Labour Party. He states quite specifically that Europe will need more coal and therefore we should avoid closing mines. He suggests that we must switch immediately from oil-fired electricity generators to coal-fired generators. He points out that it is often more expensive to close a mine and then reopen it than to keep it running for some time, apparently at a loss. As oil becomes increasingly more expensive, marginally profitable mines and even unprofitable ones will become profitable. That is the line that we should take. That is what the Minister should be saying to the mining industry today to give it encouragement.
There is a great future for coal mining in this country and it is up to the Labour Party to expose the Government's indifference and platitudes, and to challenge them to express confidence by much more positive action. I hope they will agree to amend the Bill which takes away initiative from the board and makes it subject to market mechanisms so that it cannot possibly reach its target within the period set down in the measure. That was made clear by the hon. Member for New Forest. It is rather peculiar that we have had more sense, realism and vision from the Back Benchers in this debate than we have had from the Secretary of State.
7.23 pm
Mr. John Hannam: I join the hon. Member for Leigh (Mr. Cunliffe) in his first remark, if not the latter part of his speech, when he congratulated the coal industry on its recent wonderful productivity record. I recall my right hon. Friend the Secretary of State having expressly congratulated the coal industry in his opening speech. I do not know why the hon. Member failed to hear that.
Having taken part in all the coal debates since the early 1970s, and having experienced all the frustrations of supporting an industry which never seemed to be able to escape the shackles and the bonds of Government and political interference, I now welcome the Government's declaration of confidence in the future of coal, which is inherent in this Bill.
Over the years I have argued for higher investment in new plant and pits plus a great deal more research into new technologies. I was also involved with
1424
hon. Members on both sides of the House in the campaign for the pre-1970 widows pneumoconiosis compensation and I am extremely pleased that the Government have agreed a lump sum payment scheme which brings the coal industry widows into line with the slate workers' widows. I also welcome the improved redundancy payments and the inclusion of coke workers in the scheme.
I return to the whole question of confidence in the future of coal. I underline my right hon. Friend's comments about the basic optimism now pervading the world about the future of coal, although I recognise the short-term problems. Consumption of coal in the world needs to triple by the year 2000, and the international steam coal trade needs to increase by as much as 15 times if the world is to achieve even fairly moderate economic growth. That is the forecast of the WOCOL coal study which has just been completed by 80 experts from 16 major coal countries. Also, the EEC Council of Ministers' report, which has just been presented, shows the same kind of optimism for coal in the future. That report forecasts a doubling of coal consumption in Europe by the year 2000 and a production increase of nearly 60 million tonnes—coming mainly from British and German coalfields.
Coal consumption in the Community increased last year by 6 per cent. Most went on power generation and steel coking plants. The opportunities for our United Kingdom industry look assured in the medium and longer term with the Community looking to us to provide the major part of that 60 million tonnes increase in production. It looks to us to provide 46·4 million tonnes by the year 2000.
The Commission goes on to state that in order to achieve these worthwhile targets for production and consumption, substantial capital investment will be required, as will good wages, attractive working conditions and the closure of uneconomic pits. The Commission therefore recognises that there must be continuing closures of uneconomic pits. I fully accept the argument, often deployed within the industry, that as energy prices rise so the economic marginality of pits will change. That happens in the oil industry or any other extractive industry. From my experience of the NCB, it takes

1425
due account of that factor before putting forward any proposals for closures.
Having said that I strongly take issue with those Labour Members and members of the NUM who resist every attempt to close pits, regardless of the losses being made or the conditions of work in the older pits. When one considers that the average age of our pits is around 80 years, and only 13 per cent. of our national output comes from pits sunk since the Second World War, and that more than half of the pits currently in use were sunk before 1914, one realises that in the interests of the miners themselves and the industry as a whole we should ensure the carefully linked approach of new investment and the phasing out of old uneconomic pits.
When the 1973 oil price crisis hit us it became obvious that the rundown of the coal industry in the 1960s had to be reversed. The then Conservative Industry Minister, Mr. Tom Boardman, whom I served as Parliamentary Private Secretary, set up the "Plan for Coal" strategy which was adopted in 1974. This strategy will produce results in terms of increased output in years to come. Already in the pipeline since that "Plan for Coal" was initiated, are four new mines and 119 projects at existing collieries. That was the figure at March 1979. That adds up to 33 million tonnes of new capacity. Together with the four new planning applications in the pipeline for Leicestershire and Staffordshire, this will provide all the 42 million tonnes of new and replacement capacity which was envisaged in the original "Plan for Coal". We are very near to achieving the targets laid down.
I welcome this opportunity to congratulate Mr Boardman on his Birthday Honours List elevation to the peerage. His knowledge and experience will be of great value in another place.
In the context of the Bill I reject the accusation that the Government are embarking upon a programme of pit closures. That accusation has been made during the progress of every coal Bill since the 1970s. I understand the historic feelings arising from the 1960s when the industry was run down and when, under a Labour Government, 249 pits closed and 200,000 jobs were lost. I can understand the background fears of Labour Members that their Government might do it again. But that is certainly not the case
1426
under this Government or under the provisions of this Bill. For years our strategy has been the sensible use of investment and efficiency, creating good pay and productivity and a competitively priced commodity.
I believe that, in the context of rapidly expanding world consumption of coal in the next 50 years, there should be no fear of contraction. The coal industry has the opportunity to regain its pride of place as our number one energy industry.
European coal markets will appear, as French and Belgian mines contract. Although, temporarily, there will be cheap coal from Australia and other parts of the world, if we continue to improve our productivity and quality, the price and quality advantages of British coal will reassert themselves. World oil reserves are running out, but United Kingdom coal reserves can give us about 300 years of supply. I contend that the coal industry is set on an exciting path. The Government are right to expect the industry to set its sights at becoming financially viable in a few years.
However, there has to be flexibility in the timing of that objective. The right hon. Member for Plymouth, Devonport (Dr. Owen) appears to accept in principle the argument for profitability but is concerned about the time scale, as was my hon. Friend the Member for New Forest (Mr. McNair-Wilson). If I have a reservation about the Bill, it is that, given the difficulties of world recession, it may not be possible for the board to break even by 1983–84. However, that proviso applies to all current industrial planning. If the economy experiences a worse recession, lasting longer than we expect, the board must have extra time to achieve its financial objectives. I am sure that the Government will build that flexibility into the programme.
We are facing a period of coal expansion, where the gap between coal and oil prices is widening and not contracting. It is, therefore, welcome for the Government to place faith in the ability of the miners and the industry. This morning, on the radio, Sir Derek Ezra clearly refuted the Opposition's allegations. He stated :
"Our position on the closure of pits is very clear and will not be changed by this Bill".

1427
The editorial in the Financial Times yesterday got it all wrong.
Mr. Skinner: Sir Derek Ezra is a Tory.
Mr. Hannam: It appears that anyone other than Mr. Scargill is a Conservative in the opinion of the hon. Member for Bolsover (Mr. Skinner).
The article in the Financial Times con tained three errors. First, it stated that The Government were eliminating subsidies of £255 million in three years. How ever, that figure includes social grants, which are continuing. The second error is that the article stated that the Bill was in advance of the "Plan for Coal" improvement in output. That is incorrect. Although the new pits in Leicestershire and Stafford are subject to intensive planning inquiries, the bulk of "Plan for Coal" improvements have already started at the 119 older pits. Thirdly, the argument in the editorial that we are about to replace unfair——
Mr. Deputy Speaker: Order. The hon. Gentleman's time has, unfortunately, expired.
Mr. Hannam: I should like to support the Bill.
7.33 pm
Mr. Michael Welsh: As has been said, it is the timing in the Bill that is wrong. In Committee that factor must be given serious consideration. A break-even time between 1986 and 1990 may have been sufficiently flexible.
I oppose the Bill as it stands. It concerns investment and the future of the mining industry. Investment and grants are the life blood of the mining industry. The mining industry is the life-blood of our country. It will be more so towards the end of the century. An efficient mining industry is vital to Britain's future. With that in mind, the Bill leaves much to be desired.
The Government appear to want to move from grants to loans. That is strange. In a letter to Commissioner Brunner on 4 October 1979, the Minister stated that we should go beyond the proposals and :
"provide aid for all forms of production investment and do so by way of grant."
He went on :
"I have in mind a scheme for grants totalling 250 million EUAs a year."
1428
We would get the biggest share, because we would be the biggest producer.
The effects of the proposals in the Bill could be disastrous for the mining industry. Switching from grants to loans to finance the NCB's deficit in a period of heavy capital spending could have serious effects on the industry. The NCB has been carrying out a major development programme, involving annual capital expenditure of between £500 million and £600 million, in order to meet the coal output targets that Governments have set. Increased borrowing would tremendously increase interest charges. That is why it is not possible to break even in a short time. A borrowing increase of £1,000 million would increase interest charges by £150 million.
The loss of grants and increased interest charges would cause large accounting losses. The Minister wants below-the-line losses. He could then say "Here is a nationalised industry that cannot pay for itself." I hope that I am wrong, but that seems to be the Minister's reasoning. Those large accounting losses could be reduced only by large scale closures of unprofitable pits. As a result we should lose irreplaceable carbon fuel reserves and create unemployment in areas that already have high unemployment ; for example, Wales and Scotland.
There is only one shaft in this country—all the shafts put together. Closing one pit reduces overall shaft capacity. However efficient the other pits are, without that shaft capacity production cannot be increased. Productivity can be increased but not production.
Closing pits may give rise to industrial trouble. Yorkshire is a moderate area. I am a Back Bencher and do not have much power. However, if pits are closed in Yorkshire, Yorkshire will take on the Government. We will strike. That resolution is on the books at Barnsley. If the Government throw down the gauntlet, we shall accept it and do battle. The miners will no longer tolerate being industrial gipsies. They want a good life where they are. They are willing to work hard and produce coal. It is the Government's job to see that investment is at hand so that they have the tools to do the job. If pits are closed, unit costs increase to pay for the total investment. That is frequently not taken into account.

1429
In fairness to the NCB, it made a request for public dividend shares as half of its borrowing requirement. That was rejected by the Government. The extension of the use of grants to cover deficits, as well as other specified items, is of little value. The aggregate grants are due to be held up until 1982–83 at a figure below current annual levels. They will be no good to the industry.
It seems strange that the country that produces the cheapest coal in Europe should be faced with such a Bill. Figures have been bandied about, but the figures that I have for 1978 show that we produced coal at £24 per tonne and that it cost West Germany £40 per tonne. Direct and indirect aid to our industry totalled £1·40 per tonne and Germany was receiving £32 per tonne in such aid. It is said that we may have to close pits, even though we are producing the cheapest coal in Europe. The EEC said in October that we must increase production and maintain subsidies for the industry. The Bill does othe opposite to what our EEC colleagues want the Government to do.
The Bill is already out of date. Hon. Members have commented on the other disciplines of the Government that put extra burdens on the NCB before the Bill was produced. The Social Security (No. 2) Bill will add another £100 million to the NCB's burden before this Bill becomes law. I received a letter on 15 May from the Department of Health and Social Security saying that the cost to the NCB would increase and that the matter would have to be discussed by the Secretary of State and the board.
Another important factor is that the Secretary of State for the Environment has stopped virtually all council house building. We were hoping that councils would provide houses for miners in areas where new pits are being developed. But no money is to be provided for such house building and that is another discipline which interferes with the Bill. The NCB will have to pay for its own houses. The mining industry has no wish to be dependent on the Government or anyone else, but we believe that we should be treated on equal terms with our colleagues in the EEC coal industries. That is the least that we deserve.
1430
Unless there is some liberal thinking by the Secretary of State in Committee, the Bill will be a recipe for unrest throughout the coalfields of Great Britain. I do not desire that and the miners do not desire that. Let us hope that the right hon. Gentleman will change his mind in Committee so that we can bring forward a Bill that is acceptable to the mining fraternity and to the House.
7.43 pm
Mr. John H. Osborn: May I first make it clear that I support the Bill and respect the judgment of my right hon. Friend the Secretary of State on how fast to go forward? Much of the debate has been concerned with whether we are going forward fast enough or too fast. I wish to make one or two comments in looking to the future and I hope that they will not be too critical.
I should like my hon. Friend the Under-Secretary who is to reply to the debate to bear in mind that our relationship with the EEC and the way in which it can help is all-important. I congratulate my hon. Friend on having gone round the pits, certainly in the area near which I live, and gained the respect of those who manage and work in the pits. He knows what advice to give to the Secretary of State.
Like the hon. Member for Don Valley (Mr. Welsh), I come from South Yorkshire, though in deference to the hon. Gentleman I should say that I come from Sheffield where there have been many closures because coal has run out. That is one of the main difficulties that would face any Government.
I have been in a position over the past 25 or 30 years to employ miners' sons who had no intention of going into the mining industry, but I am glad that the image of the industry is improving, particularly in the new pits that provide security for the future. The risks in mining compare with those of workers in the North Sea. I have many friends who work on oil rigs where the life is particularly challenging.
Though I speak from a European point of view, because of my current work in the Council of Europe and my previous membership of the European Parliament, I was in Washington last week when I discussed with those interested in energy some projections for doubling and trebling the extraction of coal, the shipment

1431
of that coal to ports which are, as has already been pointed out, congested and the opportunities not only for exports, but for supplying the Eastern seaboard from the Middle West.
I was also involved with the American Academy of Sciences over the impact of the water table on mining. My information is that the activity in Australia and South Africa is equally vigorous and I regret that such a vigorous atmosphere in the world is in contrast to the measure before us, which is a Bill of the old type.
I accept that the NCB's borrowing powers must be increased, but I should like the coal industry not to have to turn to the Government for any more money, but to finance its activities from other sources. That point came out when the right hon. Member for Plymouth Devon-port (Dr. Owen) regretted some of the financial restrictions placed on the board.
There is another aspect that I should like my hon. Friend the Under-Secretary to bear in mind. Earlier this month, I attended a meeting of the Western European Union where I pointed out that in the Community we were interested in the security of supply of food, materials and energy. The most economical source of supply is not necessarily the most secure. I mean that in the economic, rather than the defence or military, sense. In a confrontation, North Sea oil would be vulnerable. If we can supply energy from our own resources, the Community will be stronger. It already imports 55 per cent. of its energy through imported oil and that figure could rise to 75 per cent. after enlargement.
Of course, if the cheapest source does not give security of supply, we should look to where supplies are secure. In the coal projections with which I was concerned some time ago—namely 300 million tonnes per annum for the Community—about 50 million tonnes would have been imported. Who would supply that requirement? My previous speech in the House was in the debate on the appointment of the new chairman of the British Steel Corporation. His former company, AMAX, includes mining coal among its many activities, including mining scarce minerals.
Many of the oil companies in America and elsewhere in the world are extracting oil, gas and coal and are even supplying
1432
nuclear power. That free enterprise coal, provided by public companies, whether from America, Australia or elsewhere, could be coming into this country at two-thirds of our pithead price. Our industry would face that sort of competition.
About 10 years ago the NCB needed a Bill such as that before us to obtain money to go into North Sea oil. What a pity that one or two of our coalfields were not sold to oil companies so that they could deal in coal as well as in oil, bringing both industries to the United Kingdom.
I found in the United States a vigorous approach to making the best of what is now a seller's market. I hope that the NCB will take advantage of the opportunity, will extract itself from the clutches of any Government and will gain the independence of its overseas competitors.
There has been reference to subsidies. As time is short, I do not wish to dwell on this matter for too long. German and French coal is much more expensive than British coal. Despite big subsidies, British coal is still in a most competitive position. I hope that the Minister will make an observation on the coking subsidy which is a matter which concerns the steel industry.
When the Danish electricity industry is looking for coal, it wants the cheapest—Polish, American or Australian. It denies itself to some considerable extent the opportunity of obtaining coal from nearer at hand, namely Great Britain. This is a strong bargaining point that the Minister could produce in his talks with Commissioner Guido Brunner. The aim of the common agricultural policy was to give Europe independence in food. This country is the biggest importer. The concept of a common energy policy would give Europe greater security, and independence in energy. Germany imports 35 to 38 per cent. of its natural gas from the Soviet Union. Would it not be better if there was a premium on that imported gas, as there should be a premium on imported coal from other sources?
This country has a card that we can play from a position of strength in the Community. I hope that this will be borne in mind. We have a commodity that others want to buy. I hope we take advantage of that situation.

1433
We are talking of production of 170 to 200 million tons of coal by the turn of the century. There is the opportunity of liquid fuels from coal. Reference has been made to the fluidised bed. One of the key experiments was in conjunction with the United States of America. I talked last week to the chairman of the Congressional science and technology committee, Mr. Don Fuka who came to Grimethorpe, Sheffield, to see the first international energy agency project on fluidised bed combustion, involving American, Japanese and European money.
We have the opportunities in Yorkshire, in the Selby field, to reach higher rates of output and higher productivity. The question arises whether one can expect greater automation and mechanisation in the pits and reduced manpower. There are still those who have reservations about going underground. What has not yet been considered is the possibility of exploiting some of the fields under the North Sea. They involve high cost and difficult access. There is even the possibility of underground gasification, although I have my reservations whether even if it is technically possible, it is commercially possible.
I welcome the fact that the Secretary of State has looked forward. Whatever the Bill's limitations the House must make possible the opportunity for the National Coal Board to stumble towards independence. Hon. Members must decide in Committee whether the pace is too fast or too slow. I look forward to the day when the board is more independent. I hope that my right hon. Friend understands the reasons.
7.54 pm
Mr. Frank Haynes: It is a privilege to be speaking in a most important debate on the coal industry. Many hon. Members on the Opposition side had a pick and shovel in their hands many years ago, but also they have been pioneers of mechanisation in the pits. They were prepared to accept automated machines at the coalface. That was unsuccessful. The machines had to be taken out.
Government Members have mentioned the question of change. The miners are in the forefront of accepting change.
1434
They will endeavour, in many ways, to improve their lot and to play their part in improving the economy.
Many parts of the Bill are acceptable. There are, however, certain clauses that are totally unacceptable. I should like to pay a compliment to the Under-Secretary of State for the visits he has paid to the industry. He has visited my county of Nottinghamshire. Praise has been poured upon him for coming to see the problems and how he can help. I applaud his action. That is his job. I cannot, however, accept his support for the Bill. The miners stick together. They will protect one another. They will protect themselves against this Bill.
Belvoir and Selby have been mentioned. Those pits will not come on stream for 10 years. When the production stage is reached, very few employees will be involved compared with the number now employed in mines.
I served for 30 years in the pits. There are eight pits in my constituency. Some of them are in difficulty. One pit is closing at this moment. The decision aroused opposition. A carrot was dangled by the National Coal Board. The same carrot is now dangled in this Chamber in an attempt to persuade people to transfer to different pits. The carrot dangled is money. The Secretary of State should be aware that many people working in the mining industry in my constituency are sick to death of moving from pit to pit. Some have been involved in four or five moves. They do not want any more.
The mining industry can produce the coal that is necessary. Management and representatives of the NUM meet regularly to discuss problems at pit level and to see how difficulties can be overcome in the interests of mining coal. The difficulty is that management continually says that equipment cannot be replaced. There are constant breakdowns but equipment cannot be replaced due to financial considerations. Production is lost. This problem will no doubt be known to the Under-Secretary of State as a result of his visits.
I liken the Bill to the Secretary of State for Industry when he put forward his proposals for the steel industry. I liken it, too, to some of the comments made by Ministers, including the Prime Minister

1435
in the House. Their approach is to say "If it does not pay, close it."
The Secretary of State, in introducing the Bill, has painted a glorified picture. Many hon. Members have spoken of confidence in the industry. There is a lot of confidence in the industry, from management down to the last man in the pit. The results prove it. I fear, however, that with the introduction of the Bill the NUM membership has got the message. Its members will stand firm. They will not accept pit closures. They have gone through this before. There have been demonstrations, but they have not gone to the lengths that they would have liked. I am afraid that they will do so on this occasion. I warn the Secretary of State that in Committee he must listen carefully to the Opposition on the clause relating to pit closures. He has admitted that there will be pit closures in the new scheme of things. Ghost towns will be created in the mining districts.
The NCB can often soak up labour from closed pits. Not long ago a notice board was established at the end of each pit lane advertising jobs. The boards are no longer there. The NCB has its full complement of manpower. Where will the men be transferred to?
Hon. Members have mentioned shaft capacity. Many of my hon. Friends know what mining is about because they have worked in the industry. Once 100 per cent. capacity is reached, that is it. It cannot be increased further unless a shaft is made larger. That takes time and money. We must be sensible and think through what we are doing.
I welcome many parts of the Bill which are in the interests of the economy and those who work in the industry. However, a couple of clauses are totally unacceptable. Our amendment has been criticised. I am convinced that the Government will get the message loud and clear from the people who work in the industry.
I was amazed that the Secretary of State should mention only the National Coal Board, as if there were no trade union movement in the industry. Not once did he mention the National Union of Mineworkers or the National Association of Colliery Overmen, Deputies and Shot-firers. The members of those unions will take the brunt of the proposals in the Bill. I hope that the Government will in the
1436
interests of sanity change their mind and withdraw the unacceptable clauses. It would be insane to ruin an industry on which the nation's economy is based.
Reference has been made to nuclear energy. Some of us are frightened to death by the way in which some Conservatives in the sticks are talking about nuclear energy. We are not ready for that yet. We must make a lot more pro gress on safety. The Government have not convinced people——
Mr. Deputy Speaker: Order. The hon. Gentleman's time has expired.
8.5 pm
Sir Anthony Meyer: I welcome the Bill, as have hon. Members on both sides, with minor reservations. In spite of the weasel words of the Opposition's amendment, it is evidence of the Government's determination to support the coal industry, as have recent Governments of both parties. The industry is the one incontrovertible basis for optimism about the country's future. As my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn) said, it is one sphere in which the country can take a lead in formulating an effective European energy policy. I hope that we shall move towards establishing a common energy policy.
Unlike my hon. Friends the Members for New Forest (Mr. McNair-Wilson) and for Bedford (Mr. Skeet), I have no expertise in these matters, but there is a coal mine in my constituency—the Point of Ayr—to which my hon. Friend the Member for Birmingham, Northfield (Mr. Cadbury) referred. I do not suppose that anybody there votes for me, but there are few places in my constituency that I visit with more pleasure.
The workers there have a splendid record of productivity, industrial discipline and output. They speak in glowing terms of the Under-Secretary of State, who made an excellent impression on his recent visit. He impressed the workers with his unshakeable faith in the coal industry. The prospects for that colliery are bright. A promising new seam is being worked which stretches under the Dee Estuary. The new experimental plant is situated there, and ultimately the new production plant for deriving oil from coal will be placed there. My constituents are grateful for the decision to site the two plants there.

1437
In some ways the coal industry is unlike the steel industry, with which I have also been involved to some extent. Like steel, coal is internationally competitive. Unlike steel production, there can be no argument about the vital need to maintain a high level of coal production. There is room for argument about how long basic steel making can be maintained in Britain except for purely strategic reasons, but there is no room for any such argument about the coal industry. Whatever the advances of technology, there will be need for coal for decades or centuries.
Coal is more like water than steel. It is free, but one must pay for one's bucket. The problem is how to get the stuff out of the ground. That is one of the reasons why I am unhappy about proposals for new opencast coal mining. An application is being considered in the delightful village of Northop, which will be completely wrecked if the application for opencast mining is accepted. I have opposed the application on environmental grounds and on the ground that every new opencast operation diminishes the pressure on the Government to invest in the real stuff—the coal underground—and to provide incentives to the miners. Opencast coal is easily won by contractors using great earth-moving equipment. Deep mined coal requires an investment in men. We neglect that investment at our peril.
How do we best handle the courageous, cussed men with their awkwardly long memories, particularly of grievances? In spite of talk about the Government not having an incomes policy, they necessarily operate an incomes policy in the public sector. They are nervous because of the ability of the National Union of Mineworkers to win large wage increases by flexing its industrial muscle. I am not sure that it is either wise or credible to threaten coal miners with the consequences of market forces. Coal miners suspect, with some justice, that the laws of economics may be suspended in their case, as they have been suspended before. I believe that in this area, perhaps uniquely, the Government would do well to demonstrate a degree of faith in the good will of the men who carry out this dangerous and vital occupation.
Of course there must be a limit to the extent to which the taxpayer can meet
1438
demands for wage increases that are unmatched by production and the extent to which uneconomic mines can be kept open, but I feel strongly that with this industry the Government would be too wise to err in the direction of faith rather than in the direction of careful calculation. I derive confidence from the presence of my hon. Friend on the Front Bench, and I look forward keenly to his reply.
8.10 pm
Dr. Roger Thomas: Unlike my hon. Friend the Member for Ashfield (Mr. Haynes) I have only one large anthracite colliery in my constituency. However there are many square miles of rural West Wales that have been desecrated by opencast mining and by a mean reluctance to rehabilitate large parts of the countryside.
I wish in particular to speak to clauses 7 and 8 of the Bill which I feel, if amended, could modestly and moderately be transformed into totally worthy and humanitarian measures.
It appears from what the Secretary of State said at the opening of the debate that efforts will be made to eliminate the considerable anomalies that still affect many who, for technical and other rather petty reasons, have hitherto been disqualified and found themselves outside compensation schemes.
Within closely knit communities, as in the mining valleys, those who fall outside certain arrangements are naturally aggrieved and great discontent is aroused. Even with the Minister's reassurances all is not well or satisfactory. The advent of formidable antibiotic and anti-tubercular drugs, and the vigorous treatment of the other cardio-respiratory complications of dust disease of the lungs—such as pnemoconiosis, with its conversion of healthy lung tissue into large fibrotic coal-laden masses—has meant that those disabled by the effects of working underground survive far longer than they did before.
This means that they are now able to develop intercurrent conditions affecting other organs of the body. They are now quite likely, in the meantime, to develop heart circulation insufficiency and coronary disease just as they are as likely as anybody else to develop carcinoma in varous organs of the body.

1439
But it has to be realised that when such misfortunes need and demand surgical treatment the prognosis of a successful outcome to surgery is grossly diminished in a person whose heart and lungs, as well as his general resistance, have been weakened by years in the dust-laden bowels of the earth.
I have to say, sadly and not without considerable bitterness, having looked after men—comparatively young men—breathless to the point of having no real or positive existence, gradually going downhill despite all our medical supportive measures, that when these long-suffering people the they are found, at autopsy, to have developed an intercurrent cardiac or carcinomatous condition. In such cases, however much pathological evidence there is of the progressive effects of dust disease, the cause of death is, primarily, placed upon the comparatively new and newly discovered condition.
The man's dependants are then denied all monetary compensation. A bitter wrangle develops, and sometimes these battles take on an unsavoury character. Far too little emphasis, or recognition, is given to the evidence of those doctors who have helped the sufferer along over the years—sometimes for two or more decades—of ill health. In the 25 years I spent in the anthracite mining valleys of West Wales I have found myself upset and frustrated by medical appeal tribunals as men I knew, who gave their lives for their industry and for their country, were found to have died of a condition unconnected with the industry.
The result is that their widows and near dependants are offered miserly sums of monetary compensation even though, during their lives, these men were getting reasonable compensation for a progressive disability. Nothing causes more bitterness than for a widow, having witnessed years of progressive hell, to discover that for all that suffering she is not eligible for compensation.
We must legislate so that when dust disease is discovered during life, compensation must be automatic after death. Anything short of that is tantamount to gross injustice and is a slur upon the brave men whose prime desire, so often, is to the knowing that their widows and near dependants are cared for. If what
1440
I hope and suggest comes about the cost will be far more than what is allowed for in the Bill. However, a miserly attitude can be countered only by an intense sense of moral indignation.
We are far behind the continental mining industries in the fairness with which we treat our miners. Far too few people have any idea of the conditions that still prevail in many of our pits which are geologically difficult to work and very nearly completely worked out. The age of massive mechanisation and the total absence of hard slog has certainly not arrived in many pits in South Wales.
After 30 or 40 years' work in low seams the physical toll upon the human frame is enormous and progress towards honourable and early retirement cannot be made quickly, or generously enough. Still, we are moving in the right direction even though it must be admitted that expertise is often lost. Something far more valuable is gained, however, in that miners are now allowed to retire at an age when they are fit enough to enjoy their leisure time and their favourite pastime in the same way as the stockbroker and the City gent.
8.18 pm
Mr. Jack Dormand: I greatly enjoyed the speech of the hon. Member for Flint, West (Sir A. Meyer), who has now left the Chamber. He spoke about his objections to opencast mining but, having heard the speeches in the debate, I would have thought that one of the things that he would mention was the fact that the Coal Board derives great profit from opencast coal mining.
I wonder what the hon. Member for Flint, West, thought of the speech of his hon. Friend the Member for Bedford (Mr. Skeet), who, with his usual knowledge, addressed the House and provided a mass of financial statistics. The hon. Gentleman reflected the Government's attitude that the principal issue—and if I may say so we heard a naive speech on these matters from the hon. Member for Birmingham, Northfield (Mr. Cadbury)—is the financial structure. I am sure that many hon. Members who have spoken will not deny that.
I had the pleasure of speaking at the Durham miners' summer school at Stirling university last week, and I can tell

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the Secretary of State that if he thinks that the Bill is welcomed by the mining fraternity he is in for a rude shock, not only because of the points made in the powerful speech of my right hon. Friend the Member for Plymouth, Devonport (Dr. Owen), but because of the practical experience of some of my hon. Friends.
Those who come from mining families and live in mining areas have long memories about the ups and downs of the coal industry and are entitled to be suspicious of any Tory legislation relating to the industry. I have attended every mining debate since I entered the House in 1970 and spoken in most of them, but I have not heard such a chilling speech as that by the Secretary of State. His reputation as a hawk and a monetarist is fully confirmed by the manner in which he addressed the House and the content of his speech.
The most important boost that the industry has ever received was the 1974 tripartite agreement, initiated by the then Labour Government, of which the most valuable aspect was the emphasis on investment in the industry. It was not so long ago—some Conservative Members have referred to this—that coal was regarded as a not very important commodity. It was not the "in" thing. But I have read two articles this week which describe it as black gold. That is the kind of new emphasis that is being placed on coal. The most important assurance that we could have from the Government today is that the high investment of recent years will continue. I am glad to see the Under-Secretary nodding assent.
I refer the hon. Gentleman and the Secretary of State to a report of an investigation which has been reported in the press lately from the Massachusetts Institute of Technology—perhaps one of the most highly respected academic institutions in the world—and which, among other things, said that anything from one-half to two-thirds of the increase in world energy demand should be met by coal for the rest of this century.
I refer the Minister also to the report of the Select Committee on European Communities in another place, which said :
"There is the prospect of a disastrous energy shortage, which will either cut back economic standards in the Community or
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necessitate severe conservation measures. It is thus essential that coal be developed to the maximum possible extent, and a deliberate decision to do this should be made soon, before it is too late."
I have referred to those two reports because they completely contradict what was said by the Secretary of State and by Government Back Benchers about the differing emphasis on the production of coal and the financial straitjacket, which is probably the most appropriate word to be used in relation to the Bill.
The proof of the wisdom of adequate investment and a more flexible financial attitude can be seen in my area. I am sure that it applies to the rest of the country, but I know the North-East well. Production in the 29 pits in the North-East area now exceeds 2 tonnes per man shift. Indeed, my constituency had a record output of 3·26 tonnes per man shift.
I have no doubt about the difficulties that will be encountered by the board in breaking even by 1983–84. In 1979 the loss was £19·4 million. As the Secretary of State said, 1980 showed a small profit. However, to require the board to break even by 1983–84 shows a complete lack of understanding of the nature of the industry.
The House has been informed—and it is in the Bill—that there will be a single deficit grant. What will happen if the board does not break even? That point has not been mentioned by the Secretary of State. Perhaps we shall hear something about it from the Under-Secretary of State when he replies to the debate.
I could suggest what might happen. First, there is likely to be—I had better moderate my language—a row. Indeed, some of my hon. Friends have referred to this matter. I could go on about that. The main effect will be on morale. A number of hon. Members have spoken about the high morale in the industry, and I can confirm that, but this will break that morale. Therefore, I hope that the Government will have second thoughts about it.
I am concerned also that there might be too strict control of expenditure by the board. It would be reasonable for the board to do that, but what concerns me even more is that there might be a reduction in output, and that is the

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crucial thing that this single deficit grant might affect
I hope that we shall hear from the Under-Secretary about the assistance that European countries receive for their coal industries. My hon. Friend the Member for Morpeth (Mr. Grant) gave some figures, which I shall not repeat, but, to use an Americanism, we get peanuts for our industry.
I add my concern about the possible effect of improved redundancy and transfer payments. If the money to be paid for transfers is anything like that reported in The Guardian yesterday, those inducements will be hard to resist, because miners have an extremely difficult, hard working life.
I should like to say a few words about closures—I have had experience of a closure in my constituency within the last nine months—which might put some clothes on the statements that have been made today. Nine months ago the board proposed to close a pit in my constituency. The miners objected to the closure. All the workmen at that pit were transferred to a nearby colliery. That was a good move for the board, because it met the wishes of the union and the miners to reinvestigate the position. I am happy to report that that pit is not only working again, but is breaking records. That is the kind of thing that the Government in particular, and the board to a lesser extent, should consider. When closures are possible, we must have consultation to the enth degree before they are announced.
The Bill says nothing about one aspect of the industry that is completely underrated, under-developed, under-financed and under-discussed, namely, the development of by-products from coal and coal liquefaction in particular. I regularly write to the Under Secretary and ask him questions about that matter.
The two experimental projects in operation at Stoke Orchard, and the two pilot plants in North Wales, are inadequate. They are a measure of the Government's pusillanimous attitude towards research. There is a lack of both urgency and interest. I hope that the Government will rethink their policy and include a provision in the Bill——
Mr. Deputy Speaker: Order. The hon. Gentleman's time has expired.
8.30 pm
Mr. Allen McKay: I am pleased to follow my hon. Friend the Member for Easington (Mr. Dormand) because he put his finger upon a number of salient points about colliery closures. Before I became a Member of the House, I knew of a colliery that was closed as a paper exercise prior to the consultation period. It was losing a great deal of money at that time, but it is now operating efficiently and profitably and has another 20 or 30 years of life. About 14 years ago I was given the task of solving an industrial relations problem at a colliery which the Government and the NCB had decided to close. It was a task that I could only win. That colliery is now creating record after record each succeeding week.
When we talk of economic problems at a pit, I ask the question "What do you mean by economic?" If decisions are taken on the basis of a period of weeks, months, or years, a horrible mistake could be made if the colliery is closed. That decision could bring devastation to the area in which the colliery is situated.
The hon. Member for Sheffield, Hallam (Mr. Osborn) said that the oil industry should take an interest in coal. In America the oil industry is taking an interest in coal, but it happens to be Australian coal in which it is investing. For a number of years I have believed that there should be one energy industry covering oil, electricity, gas and coal. It is ridiculous that these industries are in competition with each other then they are all supplying energy to Britain.
The hon. Member for Bedford (Mr. Skeet) said that there should be a pay-as-you-go scheme for pensioners and that we should dispense with index linking. That is hardly appropriate when there are more pensioners than there are workers. There appears to be a policy that, if there is a financial problem, the best action to take is to shoot the pensioners and then the problem will be solved.
I agree with the remarks made about the Under-Secretary. He visited a number of collieries and created a good impression. He visited the colliery at Elsecar where I started work. That pit is probably coming to the evening of its life. I commenced my employment as an outbye worker, and finished it as an

1445
electrical engineer. The hon. Gentleman also visited Grimethorpe area headquarters where I worked as the manpower officer before I came to the House. I would return to the industry if, for some reason, my stay in the House was not for as long as I would wish it to be.
The Under-Secretary disappointed my union when he made arrangements to speak at a meeting but, for some reason, did not turn up. I had told a number of people that he was a good fellow, even though he was a Tory. They were disappointed that he did not come to speak to them. Now that he is taking part in the debate on a Bill which will decimate the industry, he will tarnish his reputation a little further.
I have seen the industry move from private ownership to nationalisation. In 1947 there were 958 pits with a manpower of 704,000. In 1979 there were 223 pits, with a manpower of 235,000. The 10 years between 1960 and 1970 were a vicious period. During that time we lost 400 collieries and virtually saw the end of the NCB. We saw the loss of the divisional structure of the NCB and the merger of areas. Through those turbulent years the miners held their cool and their temper, and continued to work as never before. We passed through that period with few disputes, despite the extent of the closures. The tonnage lost in disputes between 1950 and 1959 was 16 million, but during the closure period of 1960 to 1969 the loss was only 12·2 million. That demonstrates the way in which the miners co-operated with the events taking place in the industry.
I wish to say to the Secretary of State, the Under-Secretary and Conservative Members that there must be no return to the 1960s. The mood in the coalfield is that, rather than go under as we did in the 1960s, we shall fight—and we intend to fight together. Therefore, all these matters must be looked at very closely in Committee. We need a very strong coal industry. Other countries recognise that they need strong coal industries and they are increasing their national support for those industries. The House of Lords has recognised what is happening and has asked for a strengthened industry for the future.
We cannot completely oppose all the clauses in the Bill, because it allows the
1446
industry to continue to invest and it increases the transfer allowances. However, hon. Members should make no mistake about the transfer allowances. People are fed up with transferring from colliery to colliery. I have been ashamed to be interviewing people transferring from collieries as I have interviewed them on similar matters three times before, because during that period we have closed about 18 pits, transferring the men or making them redundant, offering early retirements or whatever. Therefore, I know that they have come to the end of a period, and that no longer are they willing to move around.
The Bill seems to put cash limits on the industry. We have a right to be suspicious about that. We are all agreed that the timing must be closely examined. If we are asking the industry to become viable in terms of profit in three years' time and if we are to close uneconomic pits, we must ask where the replacement coal will come from. There is no way in which we can replace the coal that we shall lose from the pits that we are closing.
We went through the period of Schuman's marvellous ABC theory, in which the C pits would close and the men would go to the B pits, which would become as profitable as the A pits. What was forgotten was that, irrespective of incentive, one can beckon a man but he can say "Sorry, mate, I ain't coming." That is exactly what could happen under this Bill. We shall be losing mining capacity.
The Bill abolishes regional grants. I accept what the Minister seemed to imply—that this will not interfere with EEC grants. But it lumps together all the grants—social, operational, CEGB burn and stocking. I understand that it will be shown in the accounts as a deficit grant. That will mean that the NCB's accounting system never shows a profit. There is nothing worse to put in the face of miners, when they are trying their best, as they have done for a considerable time, than the thought that they are not paying their way.
There are items outside the NCB's control which must be considered. There is the economy as a whole. The CEGB, like other bodies, is subject to monetary policies and will not be stocking the

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amount of coal that it used to stock. Therefore, the stocking cost will fall on the NCB. Inflation and high interest rates will also affect the NCB. Therefore, if we tie the NCB to these cash limits, in order to meet the Government's measures it will have only three choices. The first is higher productivity. But how one achieves that I do not know, because during the last 10 years 83 per cent, of coal output has been mechanised. How does one increase that mechanisation? There must be a breakthrough into another sphere if we are to increase the amount of coal produced.
Therefore, one looks at price increases. If one increases the price, one gives a further twist to the inflationary spiral, and it only helps to bring in more imports. Therefore, one falls back on the third choice—the closure of uneconomic pits. That closure will fall very heavily on Wales and Scotland.
I am fortunate in that I am probably living in an area which is viable, after a very large investment programme, and it looks as though it is set for the next 25 years. However, as has been said, what affects one pit will affect all, particularly with a programme such as this. Each man will look to his colleagues and will support them when they are in trouble. Therefore, if the Government think that they can get away with it as they did in the 1960s, they had better think again.
We must also take into account the provision for the early retirement scheme that has been included in the Social Security (No. 2) Bill. In answer to a written question on 29 April the Minister said :
"The consequences of the proposed changes are complex, and their effect on a number of coal industry schemes is still being studied."—[Official Report, 28 April 1980; Vol. 983, col. 350.]
The miners are worried about what will happen to their pension and redundancy schemes. One of the steel holders in my constituency is already telling shop stewards that he is having to reduce his pension scheme contributions in order to make up for the loss in earnings-related supplement that is no longer being paid——
Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. I am sorry to interrupt the hon. Gentleman, but he has spoken for 10 minutes.
8.41 pm
Mr. Geoffrey Lofthouse: I shall not attempt to cover ground that has been adequately covered by my hon. Friend the Member for Penistone (Mr. McKay), and I hope that the Government will take my remarks in an advisory capacity rather than as a threat or a warning.
The Bill is causing great concern throughout the mining industry. I welcome the speech of the hon. Member for New Forest (Mr. McNair-Wilson) which was informative and realistic, and I hope that the Government will take note of it. I also welcome the remarks of the Secretary of State. He paid tribute to the mining industry and said that he had confidence in the management and workers. I particularly welcome that, because 18 months ago, when I made my maiden speech, I had cause to refer to a speech made by the right hon. and learned Member for Surrey, East (Sir G. Howe), who is now Chancellor of the Exchequer, in which he referred to the miners' bonus scheme as bogus. The remarks of the Secretary of State today have put paid to that notion.
The main concept of the Bill is obviously the two-year break-even period. I do not believe that any hon. Member—including Ministers—really believes that the National Coal Board can break even within that short period. That being so, we are forced to turn our thoughts to the Government's motives. Surely, if we believe that it is not realistic to expect the industry to break even over that period, there must be a motive behind the Government's proposal.
There are other aspects of the Bill that concern me. It gives the National Coal Board the right to defer interest payments from inoperative pits such as those at Selby. I believe that the pits at Selby should become operative and that they could be beneficial if the arrangements were administered by a Labour Government. I am not convinced about the flexibility of the present Tory Government. They have not stated any period of time during which the interest payments can be expected to be made. It would be interesting to know the effect on one year's operations. Perhaps the Minister can give some information on that. The Bill does not allow the National Coal Board to borrow public dividend capital.

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It requires it to take out a national loan over 15 years. Why? If we bear in mind that the National Coal Board saved £6·1 million last year by borrowing in other areas, we can appreciate the concern of the board about the provisions of the Bill.
The Bill abolishes parliamentary power to make regional grants, but if the Bill does not allow regional grants we can hardly expect the EEC to allow them. The Bill lumps the present grants together. It seeks to replace the present system of two grants, described as the social grant and the operational grant, with a deficit grant. I can envisage headlines each year stating that the National Coal Board has made a further loss. If it is the Government's intention that the industry must break even and go on to make a profit, there will be pressure on the NCB to increase its prices or to close pits. One of the main fears of the mining industry is pit closures.
I was pessimistic about the Bill before the debate began. I became depressed when listening to the Secretary of State. I could see the ghost of the steel industry staring the mining industry in the face. If that is what the Government are holding before us, they will be well advised to rethink their policy.
Those in the mining industry are becoming fed up with the Government's policies. I have had first-hand experience in the industry over many years. It was my duty to move in immediately a colliery was designated for closure. I spent years in the areas of the Scottish and Durham coalfields. I saw the effect on families who had lived in the one village all their lives. They had to decide whether to leave their village to move across the country. Everyone must accept that a coal mine must close when it is exhausted. However, it is a different cup of tea when the decision is based on economics and the mine is not exhausted.
There is a feeling in some sections of the industry that the Bill has been introduced in an attempt to limit the so-called muscle of the National Union of Mine-workers. It is considered to be politically doctrinaire. It is thought that the Government are attempting to run down the
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mining industry and to restrict its industrial power.
I assure the House that rank and file mining workers are responsible men. They support democratically elected Governments as much as anyone else. They will fight to preserve those Governments. However, democratically elected Governments must not deceive them. If that happens—I do not want to use the language of strikes—the miners will be annoyed. They will fight to preserve their standard of living and the industry in which they work.
I comment briefly on two articles that I noticed in the press. The Minister may refer to them when he replies. The first article appeared in the Financial Times and is headed :
"What to do with coal".
Part of it states :
"Until the new mines, and the 87 existing collieries which are being expensively but slowly mechanised and refurbished, begin to make a substantial contribution to coal output, management will have only two options in striving to meet the Government's break-even target. It will either have to accelerate the closure of uneconomic pits or to raise prices."
The Minister may care to comment on another article that appeared in the same paper which is headed
"Private stake in £1 billion North Sea pipeline planned".
It says :
"Private capital may also eventually be invited into the whole or part of the National Coal Board's interests."
The Minister will probably be prepared to refer to that.
Giving a friendly word of warning in conclusion, I quote an experience I had 40 years ago in the coal mine. An elderly gentleman was picking coal off the face with a pick. In those days there was no mechanisation. It was an hour's walk to the coalface and an hour back. On this particular day the under-manager arrived in what we called "the hole". The old gentleman was wiping the sweat from his body at 12.25 pm. The under-manager arrived and asked him what he was doing. The old gentleman replied : "I have just come out five minutes early to wipe myself down." The under-manager said "It is 12.20, not 12.25. This is a true story and not a gimmick. The old gentleman took his watch from his pocket, put it on the ground and trampled on it,

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breaking it—to my amazement as a young man of 15, and to the amazement of the under-manager. His words to the under-manager were "I do that to everything that tells me a lie."
Let that be a warning to the Government if they are lying in this.
8.53 pm
Dr. David Clark: After listening to the lucid and compassionate speech by my hon. Friend the Member for Carmarthen (Dr. Thomas)—a speech based upon his experiences in the anthracite valleys of South-West Wales—and contrasting it with the sterile and monetarist speech by the Secretary of State—and I am sorry that he is not here to deal with what I have to say—I am once more convinced of the Tightness of the Socialist cause. They exemplify the differing approaches of the two sides of this House, not only to the Bill, but to all industry and to all life.
As I listened to my hon. Friend the Member for Carmarthen, I thought about a compatriot of previous years, Nye Bevan, who described this country as one "built on coal, surrounded by fish", and added that even an economist could not deny that. When I contemplate what the EEC has done about fishing to confound Nye Bevan's comment, I wonder whether this Government, by the introduction of this Bill, will in the long term help to confound Nye Bevan's comment relating to coal.
I do not want to be churlish. I welcome various parts of the Bill, but I come back to the main thrust of our opposition to the Bill. Our main disagreement is that it replaces the time-honoured production targets by purely financial targets. As has been said repeatedly, there is extreme concern about the 1983–84 breakeven point. It is easy to set break-even points, but it is extremely difficult when one cannot take account of the other variables involved.
We see what is happening to our regions. Much has been said about Wales and its problems. I come from the North of England. One in five of the men in my constituency is without a job—as I shall never tire of telling this House until the situation improves. I become very annoyed when I hear people talking about financial targets, realising that the main
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employers in my constituency are mining, shipbuilding and local government.
I am surprised that Government supporters are not more concerned about statements made by such moderate people as Joe Gormley, who was quoted in the "Miner" recently as saying that the Bill threatened the morale and output of the coal industry. There are few industries in which the co-operation of the labour force is as vital as it is in the coal industry. We are threatening to damage the industry at a time when we should be expanding it. We are doing this at a time when the world coal study has recommended and predicted an expansion in the use of coal—I am sure that that day will come—and at the very time when we should be co-ordinating our research and spending more effort and money on all aspects of mining techniques to enable us to mine further under the sea.
The pit in my constituency goes out about five miles under the sea, which causes problems, as the Minister is aware. We need a vast amount of money with which to research the particular technology of mining, let alone the other technologies of gasification and liquefaction, which have been mentioned in the debate.
I want to deal briefly with the short-term aspects. It has been estimated that if the world coal study is right, the demand for coal and the shipment of coal will be such that another 1,000 ships of roughly 100,000 tonnes dead weight must be built. The Minister will understand my interest in this matter. Thanks to the controversial Polish deal, we still have a viable shipbuilding industry in this country. If the philosophy advanced by the Government Front Bench today had been applied to the shipbuilding industry five years ago, there would not have been a shipbuilding industry today. That is why many of us are sceptical about financial constraints and ties.
If one foresees the ripple effects on the demand for ships and steel, one can forecast the requirement for the skills of the boilermakers. We still have these skills in the traditional regions, and we can do the job as well as the workers in any other country. We are all anxious that the coal industry should not be allowed to decline.

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We are concerned about what is in the Bill and about the way in which its provisions may be applied. When I heard the Secretary of State introduce the Bill, all my fears were confirmed. We are dealing with a Government who are hooked on a monetarist policy, which, to me is patently wrong. We are dealing with an industry which is a bridge to the future and which has a future. I know that the Minister will agree. However, the future will not be easy, especially in the next few years. It seems to me that the Bill fails because it creates doubts and uncertainty. Furthermore, it threatens the output and the morale of the miners in the pits.
When history passes judgment, this Government and this Bill will have been found wanting. The Government are trying to measure our future energy demands, not by what is needed on a long-term basis, but by short-term monetarist financial constraints, purely to satisfy an economic theory advanced by Professor Friedman and accepted, hook, line and sinker, by the Government.
8.59 pm
Mr. Alec Woodall: Even at this late stage I welcome the opportunity to speak in this important debate. The Government have heard a lot of advice and threats about clauses 4 and 5. Hon. Members are concerned about making the industry viable by 1983–84. Last year, the national executive committee of the NUM presented a pay demand to the National Coal Board. In response, the board opened its books. Those books showed the full financial implications of the demand, and the amount of money that would be available to meet it. When the numbers had been worked out quickly on calculators, it showed that the board's response was equivalent to 2 per cent. My hon. Friend the Member for Easington (Mr. Dormand) earlier used an Americanism, and said that that was "peanuts". Whatever wage demand the NUM may put forward in 1983–84, there will not be enough money in the kitty with which to meet it.
Mention has been made of the financial problems that will face the board. That is why the NUM is worried. There will be serious trouble. The NUM does not want that. It would rather have a system
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whereby reasonable demands can be put forward in expectation of a reasonable response. After the steel strike, we know that at a time of inflation, 2 per cent. is peanuts. It is not acceptable. My hon. Friend the Member for Penistone (Mr. McKay) spoke about the financial aspect which the National Coal Board and other people could not see. The board will soon face that problem.
In Yorkshire there is a serious problem of colliery waste disposal. As the Minister must know, the three county councils in Yorkshire and Humberside county council, have joined together to devise a scheme to help the National Coal Board with colliery waste disposal. Unfortunately, the scheme—which was launched a year ago—was costed at £180 million. The scheme would have prevented the National Coal Board from taking 80 acres of good Yorkshire land every year for colliery dirt. Where will that money come from? If that sum is put on the National Coal Board's shoulders it will only add to its problems. I beg the Government to reconsider that problem.
Reference has been made to our membership of the EEC, and of its attitude to energy and coal. I have an EEC background report, dated 30 April 1980. It states:
"Community production costs are well above world prices, and would not find markets without various aid to producers and consumers through forms of national subsidy."
Although the EEC accepts that we are the prime energy producer in the Community, we have turned our back on the EEC and refused to subsidise the coal industry. The Government should wake up and realise that the coal industry will not be viable in 1983–84, and that there will be insufficient money in the kitty to carry out the necessary development of new fields and pits. What type of response can the NUM make if it puts forward a responsible claim and is offered a paltry 2 per cent.? It must be borne in mind that the industry will have to meet the effects of inflation. An inspired guess might be that inflation will be down to 15 or 16 per cent, by next year.
If the Government have not got the steel industry's message, they should have done. The same position will face the coal industry. The Government know what that means. We do not want trouble. The miners do not want trouble. We

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want a fair reward for our efforts. Last year, the Labour Government said that they would not give a blank cheque, and that the board could go into deficit financing in order to give miners a reasonable reward for their efforts. The productivity bonus scheme was put into action. Everyone heaps praise on the industry for its high output, productivity and reasonableness.
I warn the Government that if, when the miners make their demand after the conference which will be held in two weeks' time, they receive an offer of 2 per cent., boy, there will be trouble, and a lot of it. I urge the Government to think hard, and then think again. There are many hidden costs which the Coal Board will have to meet, and the less money there is in the kitty the more trouble there will be from the miners over their wage demands. I beg the Government to think again on this matter.
9.5 pm
Mr. Alex Eadie: I am very glad that my hon. Friend the Member for Hemsworth (Mr. Woodall) managed, by his endurance, to speak in the debate. I am sure that the whole House welcomed the fact that by his diligence he was able to get the opportunity to speak.
The Government will be well aware that the unions have welcomed the provision in the Bill dealing with investment and social costs. It was reported in the last issue of the "Miner" that there was mounting anger about other provisions in the Bill.
There seems to be a general consensus developing in the House, judging by the contributions that have been made—there can be no doubt that everyone wishes the industry well—because there is great concern about the scale and time scale of financial viability. It is becoming obvious that the Government have got it wrong. Therefore, I wish to concentrate my remarks on this matter and to develop the argument. The House of Commons is about argument and discussion and if a Bill goes into Committee, the Government must be prepared to listen, however dogmatic they may appear to be at times.
We certainly welcome the fact that the Bill contains a commitment to carry on with the investment in the industry. It would have been the height of folly for
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any Government not to have done that. In fact, it would have been utterly irresponsible. I believe that the Government know the progress that the industry has made this year.
I wish to put on the record some of the industry's achievements this year. They have been referred to in the debate, but only in a sketchy way. Not enough has been said to the country about the progress that has been made. The amount of deep-mined coal is up by 3·8 million tonnes, to a total of 109 million tonnes. This is the first increase over a previous year since 1963. The productivity of all mine workers is up by 1·5 per cent. and in the last three months it has been 4 per cent. higher, making overall output per man shift 2·27 tonnes. There was record-breaking productivity at the coalface—more than 9 tonnes per man shift since last November. Attendance at work improved by an average of six shifts per man over the year. One million more man shifts were worked. There were 29 fatal accidents, compared with 72 in 1978–79 and there were slightly fewer serious reportable accidents. Recruitment improved by 6,000 and manpower wastage—those leaving the industry for all reasons—fell by about 1,700, despite 7,700 mine workers choosing to take early retirement.
I wanted to put those facts on the record because to some extent they are essential to my argument. We achieved that result because of the Labour Government's strategy of pouring investment into the industry and reversing the trend of a couple of decades.
The object was to create a new modern technological industry from the old industry. To use the language of the miner, miners were not prepared to break their backs to wrest mother nature's treasures from the bowels of the earth. When I was in the pits, and at various meetings, I said that it was the fairy tale of fairy tales to suggest that hard work never killed anyone. That is generally said by those who have never done a hard day's work. The cemeteries surrounding mining villages refute that remark.
Miners and their leaders have put up with much abuse during the past six years from those who thought that the new investment should have instantly paid off. The industry was starved of investment and the morale of miners was badly

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undermined. Coal production cannot be turned on and off like a tap. When morale has been sapped for years, it cannot instantly be built up. Those factors are central to our criticism of the Bill.
The Bill's philosophy and final intention should be considered. My hon. Friends have made it clear what they think of them. Two aspects are important. First, I am sorry to say that it is difficult to avoid the conclusion that there is a change in the main thrust of the Government's energy policy. Nuclear power is taking greater precedence. That industry will not have the same financial constraints imposed on it as the coal industry under this Bill.
Secondly, the Bill reeks of the dogma of market forces. The proposal to attain financial viability within three years is ill conceived. Some Opposition Members have even expressed serious doubts about the philosophy. The grants to the industry will cease after three years, with the exception of social grants. That approach is entirely wrong. It is far too inflexible. The board's market or technical ability to implement "Plan for Coal" or even "Plan 2000" is irrelevant. Planning constraints are the problem.
The Vale of Belvoir inquiry took about six months and has just been completed. The decision is not yet public. The inquiry has cost the NCB about £1½ million in planning consultancy and legal fees.
I am sure that hon. Members have seen reports of the inquiry. I understand that the Duke of Rutland has amended his decision to lie down in front of the bulldozers if they enter the site. It was reported in the press that the Duke has said, though I do not know on what authority, that if coal is mined in the area he and his ancestors will come back to haunt us.
If the Government persist in their policy of extinguishing grants, two substantial consequences will result and the House must consider them seriously. The first is pit closures. If the NCB does not achieve its target within three years, while it is shackled by cash limits, it will be told—if it needs telling—to have an accelerated programme of pit
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closures. That is a serious step for any Government to contemplate.
The second consequence flows from the first. The Government will be pursuing a policy of reducing coal production. Hon. Members have stressed the need to stabilise coal production and for the industry to produce coal for the nation. If the Bill is implemented, we shall be talking not about a replacement policy but about a pit closure policy.
It is an act of sheer vandalism to reduce coal production when all the coal-producing nations of the world are calling for increased production. It is against the national interest to make the people of these islands more vulnerable in energy provision. We know that the parts of the world where most of the energy is produced are tortured by so much political uncertainty.
It is significant that, though the Government talk about financial viability, their policies are piling costs on the industry. My right hon. Friend the Member for Plymouth, Devonport, (Dr. Owen) analysed the situation facing the NCB. About £50 million has been piled on the NCB because of the general economic situation.
Mr. Skeet: Will the hon. Gentleman give way?
Mr. Eadie: No. I have too much to say.
A further £35 million has been piled on as a consequence of the NCB having to deal with the question of sales and the British Steel Corporation.
Mr. Skeet: Will the hon. Gentleman give way?
Mr. Deputy Speaker: Order. The hon. Member for Bedford (Mr. Skeet) has heard the hon. Member for Midlothian (Mr. Eadie) say that he is not giving way.
Mr. Eadie: Some hon. Members looked a little sceptical when one of my hon. Friends said that the NCB has calculated that there will be an increase of about 14 per cent, in its costs. My right hon. Friend the Member for Devonport said that the board was lucky if it was getting away with an increase of 17 per cent. My right hon. Friend also pointed out another significant aspect of Government policy. Every percentage point on the rate of inflation costs the NCB about £12

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million. The Government talk about financial viability, but they are piling further costs on the industry. Interest, even if prices in 1978–79 were level, will be £295 million in 1981–82, £240 million in 1980–81 and £183 million in 1979–80. Government policies are piling costs on to the industry. Some of the calculations that have gone into the Bill indicate that Government thinking on finance has become out of date since the publication of the Bill. I hope that the Minister will say whether the costs that we have outlined are accurate or inaccurate.
The Bill seems to be in the hands of accountants because accountancy runs through it. I wonder, incidentally, how much coal was produced by the accountants who drafted the proposals. There is a proposal in the Bill for the National Coal Board to write the records in the annual report differently. I hope that the Minister has not acted before receiving parliamentary approval. The Bill still has to undergo parliamentary scrutiny. I should like an undertaking from the Minister that until he receives parliamentary approval this proposal will not be implemented.
We understand that the grants, in the compilation of the board's reports, will come under the heading of deficit financing. However well the industry performs, its balance sheet will continue to show a loss. One can imagine the holiday that the media will have when the balance sheet and annual report of the National Coal Board are published. I can already see the headlines. This will have a shattering effect on morale in the industry. However well the miner performs, the industry, according to the balance sheet, will continue to be shown in deficit. I wonder whether the Government have considered the damage that will be done to our standing overseas when the headline "British coal industry in the red" appears.
In his opening speech, the Secretary of State paid proper tribute to the expertise of British mining engineers. Their reputation is world-wide. If, however, the accounts are to be published in the manner that the Government intend under the Bill, what will happen to the £200 million worth of exports on which we depend? What will happen to the people working in these industries who
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depend on those exports? The Government have got the matter wrong. Great damage will be caused to the industry.
Mr. Eggar Mr. Eggar rose——
Mr. Eadie: I am sorry; I am not giving way.
I should like to ask the Minister about coal imports. The Under-Secretary of State, who will be winding up the debate, has said about imported coal :
"We cannot necessarily rely on the long-term continued availability and low price of imported coal. We in Britain are not alone in taking this line. As recent International Energy Agency studies have shown, the potential importance of coal is increasingly recognised everywhere."
The Opposition could not have put the matter any better. That statement does not pursue the logic of the Bill or what we are told is happening. Perhaps the Minister, in his winding-up speech, will give some information about coal imports.
We read in the press that the Central Electricity Generating Board is planning to increase coal imports and that it has received Government sanction to do so. Has the South of Scotland board received a similar green light? The House and the industry are entitled to that information. It is central to the Government's case.
What about the agreement on coking coal? An agreement involving 900,000 tonnes of coking coal expires at the end of the year. That is relevant to South Wales. What did the Minister mean when he referred to defending imports?
The debate is not only about the well-being of the coal industry; it is also the well-being of the nation. Energy is a life-giver to the nation. Without it we die. The contraction of the coal industry has repercussions outside the industry. In the last financial year the National Coal Board spent more than £1,000 million on goods and services. The board has a "Buy British" policy which other industries should have. Almost all the NCB's spending took place in Britain.
The board spends money in Britain on shaft sinking plant hire, haulage ropes, supports, machinery, electrical goods, locomotives, transformers, ventilation plants and all types of general services. That expenditure provides work and

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wages for people outside the industry. Other industries depend on coal for their livelihoods.
Successive Governments have made promises to miners and have failed to keep them. The miners have suffered enough. It is time to call a halt to anything that smacks of uncertainty. The nation was brainwashed into believing that coal was a redundant fuel. Because of that propaganda, many people still believe that to be so.
I do not know who drafted the Bill, but I have a feeling that some of the same hands were involved. They compiled a brief to me when I went to the Department of Energy in 1974. They said that coal would never be a viable proposition. I described the men of yesteryear as the undertakers. That description fits them today.
The Government said that they wanted to unite the nation. If the Bill remains unchanged, it will create conflict. That view is endorsed by my hon. Friends. The miners and their leaders have said that they will stand and fight against any contraction of the industry. Not only do the miners and their leaders voice anxiety about the Bill's implications, but the Bill has not had a good press. The Scotsman, which by no stretch of the imagination can be described as a friend of the miners, said :
"The coal industry, consequently, is a prime example of the risks that Mrs. Thatcher is taking with the country's industrial heart in her unswerving pursuit of monetarist purity."
We shall therefore challenge the Government in the Lobby tonight. They have got it wrong and it is my earnest wish that they appreciate that before it is too late.
9.30 pm
The Under-Secretary of State for Energy (Mr. John Moore): Before I deal with the debate may I endorse the words of the hon. Member for Morpeth (Mr. Grant) who, quite rightly, said that we should have more full day debates on our great national coal industry? It is an industry of key importance and it is sad that it has been so many years since we had a full day's debate. I offer my thanks to those hon. Members who have been, perhaps, foolish enough to make kind
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references to me. I hope that they will make them at the end of this half hour.
It is difficult to respond to an outstanding debate such as this in half an hour. The debate has ranged widely over the industry and though I shall do my best I apologise in advance to those hon. Members whom I cannot answer in detail. I shall obviously get in touch with them in writing. We shall also have the opportunity to investigate points in greater detail in Committee.
Let us look briefly at the industry. The picture of the industry is not as dismal as has been painted by some hon. Members. I was pleased to hear the wise and intelligent references from both sides of the House to the strengths of the coal industry as I believe that it is a most exciting energy industry on the brink of an outstanding future.
There is much common ground throughout the House when we congratulate the coal industry, especially on its outstanding achievements of the past year. I join with all hon. Members who have voiced congratulations in thanking the men and the management on behalf of the House as I have so often done in public. This has been an outstanding year. Everyone has spoken of high production and of the crucial aspect of safety. I took the points made by the hon. Member for Carmarthen (Dr. Thomas) and shall pursue them later. He spoke of health problems in the industry, which are an important and crucial issue. Even though he was quite right to say that we must look at those problems in detail let us not forget the enormous success of the safety record of our deep mine industry.
Beyond that we should also acknowledge that, despite the steel strike and the fundamental cutback in BSC, we are already looking to 1980–81 as a year moving very much in the same direction as 1979–80. The picture for the industry is looking good. I stress that point before I endeavor to reply to the debate. With coal, our largest indigenous energy asset, it is crucial to develop a strategic fram-work for the industry.
We believe that that framework is embodied in the Bill.
I take on board many of the comments that were made about the degree to which some hon. Members believe that the

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framework is inflexible. Nobody in the energy world—the post-ayatollah and post-1973 world—would begin to think that the last word has been said in terms of any particular energy decisions. One cannot make such an inflexible statement. Equally, one should not look at a framework by assuming that it will fail. One should endeavour to establish a framework and recognise its potential for flexibility. All of us would, I am sure, wish our coal industry to succeed. It is important, therefore, that I tackle the points raised tonight to show why I believe them to be basically invalid in terms of the potential success of the industry. I believe that the Bill charts the final stages along the industry's path to profitability.
Before I do that I pick up one or two specific points before dealing with general matters. Specific points raised, for example, included the problems of subsidence, and I will come back to that in detail. We have recently conducted further reviews into subsidence in conjunction with the board. I hope to deal with the matter in more detail later and if I can respond to hon. Members in private I shall do so.
The point raised, rightly, by the right hon. Member for Plymouth, Devonport (Dr. Owen) at the beginning of the debate and raised also by the hon. Member for Morpeth and my hon. Friends the Member for Flint, West (Sir A. Meyer) and Birmingham, Northfield (Mr. Cadbury) concerned the question of liquefaction. Clearly, a crucial stage has been reached in national development and clearly we hope to take decisions. The hon. Member for Midlothian (Mr. Eadie) will understand that it is a matter of timing and that the decisions must be taken outside the framework of the Bill in terms of potential.
Equally in regard to Phurnacite, the right hon. Gentleman legitimately asked about the problem relating to the project in the constituency of the hon. Member for Aberdare (Mr. Evans), whose diligence on that matter I publicly acknowledge. I am still in the process of having discussions with the National Coal Board. It would be premature to make a statement now. Therefore, I hope that I may leave it at that at this stage.
Beyond that, the debate has gone around six basic areas : closures, imports,
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whether we are arguing about an industry with production or profitability goals, the question of deficit or regional grants, the question of the relative aid that other countries give to their coal industries and the crucial question whether the strategy is too quick and too hard. Perhaps I may address myself to those six fundamental areas and try to cover them within the time allowed.
Mr. Beith: I am sure that it would be widely appreciated—it is probably an accident on the hon. Gentleman's part not to have mentioned it—if he would refer more definitely to the early retirement scheme to which reference has been made by many hon. Members.
Mr. Moore: I draw the hon. Gentleman's attention to the specific statement made by my right hon. Friend, which I think cleared that point in toto for the miners and showed that discussions were still going on with the board regarding its implications. I should like to leave it there, because I think that it is satisfactory. I shall go into more detail in Committee. I am sure that all hon. Members will be happy with the conclusion.
Many right hon. and hon. Members have referred to closures. With my limited experience of the industry, I understand the reality and fear because of the past. The suggestion that the Bill is a closure programme for the industry is untrue. However, the issue needs tackling and understanding to see why this idea has got into so many people's minds. Many hon. and right hon. Members have legitimately referred to the fear of the past. That is understandable when one considers the mentality of the industry itself. Since 1947 it has seen 908 pits closed. It is understandable with that kind of pattern until 1974—when it was closure, closure, closure, not openings—that there will be fear and suspicion. But I should make it clear that the fundamental commitment in the Bill is to an investment programme—a commitment to the continuation, not the destruction, of this industry.
Let us look specifically at the fear expressed by hon. Members in the debate about our specific strategy, assuming that we all agree that the world of the pre-1974 mining industry will not happen again in this country. First, it fails to note the nature and character of this long-term

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extractive industry. Openings and closings of faces and of pits are part of the permanent scene.
Since 1974 when there was the joint commitment to the new "Plan for Coal", there has been a massive injection of capital into the industry each year. What happened in the years 1974, 1975, 1976, 1977 and 1978? In those years 50 pits were closed—an average of 10 per year. There was no assumption then by the Labour Party that there was a closure programme in the industry. It is part and parcel of the programme.
Let me try to get across the second point which is crucial to the debate on investment in this industry. The strategy to 1983–84 is not just for new pits. It commits £272 million per year or about 50 per cent, of all capital investment in existing production. That is not a strategy for closures.
I draw to the attention of the House the words of the chairman of the National Coal Board on the radio this morning. He said :
"Our position on the closure of pits is very clear and will not be changed by the Bill."
I appreciate that we have to face the reality of the special situation regarding coking coal. No one who looks at our great national coal industry could do otherwise. But this part of the industry has had to come horrifyingly to grips with the reality of the fundamental change in demand from the British Steel Corporation.
Let us get the matter into proportion. If we are talking about 1980–81 as a whole, we are talking about 4 per cent, of our total NCB production. Nobody would want that to be anything other than larger, but that is the size that we are discussing. How do we seek to make adjustments over a period of time? Subject to ECSC rules, we hope to continue coking coal grants within our overall grant position. We have covered that point with the ECSC.
In answer to those who asked specifically about this year and next year, discussions are now in progress between the BSC and the NCB for 1981. Their past negotiations covered the whole of 1980.
Let us consider the positive side of this great industry. The hon. Member for Easington (Mr. Dormand) knows the
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North-East very well. What happened in the coal industry during 1979–80 regarding coking coal capacity in that area? It was able to put much of its coking capacity into the CEGB steam market—although at a cost. That year showed the best productivity figures. By the end of 1979–80 the North-East had 13 per cent, of its total capacity in coking coal.
I reiterate quite clearly, as we have a tripartite agreement, that all closures are subject to the established colliery review procedure at area level between the NCB and the NUM. The union has the right of appeal to the NCB at national level against any closure decisions. That process has not changed, and will not change.
Let us consider the question of imports. With respect to those who are worried about that subject, we must put the facts into perspective. We are not talking about imports flooding into Britain. In 1979 we imported 4·38 million tonnes, or 4 per cent. of our consumption. I will not pick out each of the figures for the past five or six years, but in 1975 we imported 5·07 million tonnes. We were also exporting during that time—and more last year than in 1974, when we exported more than 2 million tonnes. In other words, our net self-sufficiency for 1979 was 97·62 per cent. Have we any other great national industry that could say that? We are not talking about imports flooding in.
The Government's view of the future is clear. The United Kingdom coal industry will continue to meet the great bulk of demand in Britain. As many hon. Members have said during the debate, we are not alone in that view. The world coal study took the same view. It predicted that a half to two-thirds of the world's additional energy needs in the next 20 years will be met by coal. That will require a two and a half to three times increase in world coal production. The question that we should be asking ourselves again and again, when we consider the coal industry is not the defensive protective question but how we seize part of that expanding world coal market.
Last year, the problem in the industry was one of supply. Even then, in a world recession, imported steam coal was price competitive only at power stations close to port facilities. Let us consider the

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European Community to the end of the century. Last year it imported 60 million tonnes of steam coal, and by the end of the century it will be importing 300 million tonnes. Therefore, the investment in our strategy for coal is to ensure that we are competitive enough to seize that larger market. A successful strategy should give us export opportunities, not the fear of imports.
A key feature of the strategy is the discussion about whether we are arguing about the industry, about profitability, or about production targets. Despite the clear failure of planning with arbitrary targets, which has been discredited by eastern European experience, I understand the attitude in the mining industry. Anybody who saw the events up to 1974 could not do anything but understand the degree to which the industry needed targets to cling to and goals at which it could aim. It wanted to show that the nation was committing the capital to reshape the industry into a new industry for the future.
That commitment is clear. It stretches across both sides of the House. We make that commitment clear in the £600 million-worth of investment in that industry for the next four years.
The return is certain. We know what the returns are, not just on new investment, but on old plan-for-colliery pit investment. Our latest assessment suggests that those returns, even on the worst, most pessimistic price and cost assumptions, will be 32 per cent. [Interruption.] No one would deny the past. Surely all that we are talking about in this debate is how we confirm that past with success for the future.
The two key weaknesses in the arguments that the Opposition adduce for the production view of the future are, first, that failure to attain goals, as the hon. Member for Midlothian rightly said, is seen as a failure by the miners and the mining industry. Anyone involved in the detail knows full well that, quite the reverse of what the Financial Times said, "Plan for Coal" saw for 1985 about 120 million tonnes of production. That is now seen as about 112 million tonnes.
If one is looking to see where it has failed, one sees that it has not failed in the investment, as the hon. Gentleman
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will know, in the long-life pits. They are ahead of plan. There will be about 108 million tonnes production, as opposed to 100 million tonnes that had been foreseen. It is in the new mines, where the figure now expected is about 4 million tonnes, against the expectation of 20 million tonnes.
Mr. Dormand: Will the Minister give way?
Mr. Moore: I have a lot to try to get across.
The hon. Member for Midlothian was quite right to say that planning delay is part of the whole process of our democratic debate, but the degree to which it is then blamed upon the mining community is a key flaw in the attachment to production targets.
The second feature is that production targets regardless of demand are a recipe for trouble, especially when the growing long-term demand will be competitive with other fuels as we go into the industrial markets and the SNG markets. Let us not write off the great excitement of the industrial uses of coal—11½ million tonnes last year, and I hope at least 45 million tonnes by the end of the century. That is a major increase in the industrial market. Therefore, it is crucial in our legislation to get across and create a profitable industry that can meet markets competitively.
There has been enormous and understandable confusion in the debate on the part of many who do not know the intricacies of coal industry grants and about the Government's proposals concerning deficit and regional grants. It is important to make one or two points clear. If I may, with the time limitation, I should like to come back to other details later.
First, why were regional grants introduced, and what were they? They were introduced by the former Conservative Government in section 9 of the Coal Industry Act 1973, for the process
"of assisting the Board in moderating contraction of the coal mining industry in Great Britain ".
That was in the Act, as a Bill in 1972, when we did not see the changed world for coal. The grants have been paid only twice, as has been said so often in the debate, in the past five years. The

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regional grants were essentially used in the same way as we now propose to use deficit grants. We have covered this point with the European Community. The problems of the regions, the problems surrounding the burdens of the past, are and will continue to be the difficulties covered by social grants, as they have been, and these we are enhancing and continuing beyond the planned strategy.
People may ask "Why change if it is a matter of nomenclature, and if the grant structure actually stays the same?". This is a crucial psychological judgment. I believe that the coal industry has an enormous future, a great future, but I believe that the confusion that exists in the minds of the public and in the industry because of the complex nature of the grants prevents people from believing that the industry has the potential for profitability. Believing that, we believe that the industry—and I have such respect for it, having seen it just for a year—will accept the challenge when it understands just how easily it can reach profitability.
Throughout the debate, rightly, there has been constant reference to foreign comparisons.
Mr. Ogden Mr. Ogden rose——
Mr. Moore: I think that this is a legitimate point that has been raised. Many hon. Members on both sides of the House have said that while we are moving to a position in which we hope, within the strategy, to be out of the subsidies in operational terms, other industries are being provided with greater subsidies. Throughout the debate no hon. Member has referred to the expanding coal industries of Australia and the United States, where subsidies are not associated with that expansion.
There are two aspects to the question. The first aspect is legitimate. Do we take full advantage of Community aid? Yes, we take full advantage of all available forms of Community aid, missing no opportunity to investigate the opportunities for that aid. The second aspect that has been raised many times is that of whether we should follow the West German and French route of increasing subsidies to their coal industries. That point was raised by the right hon. Mem- 1470
ber the Devonport, the hon. Member for Easington, the hon. Member for Berwick-upon-Tweed (Mr. Beith) and the hon. Member for Leigh (Mr. Cunliffe).
We must recognise and reconcile ourselves to the fact that those countries have huge complex subsidy systems. The size of the subsidy for West Germany for 1975 was approximately £500 million, and by 1979 it was approximately £1·6 billion for the full year. They are huge subsidies for an industry that produced 95 million tonnes of coal in 1974 and only 93 million tonnes in 1979. The coal industry in France received £300 million in subsidies last year, and produced only 18 million tonnes of coal. Both countries support static or declining coal industries.
It is important that hon. Members look at the French example. In 1974, France used 45 million tonnes of coal and imported 20 million tonnes. Its coal intake is increasing. The estimate for this year is 53 million tonnes, and of that 53 million tonnes, it will import 35 million tonnes. But the industry is declining and more jobs are being lost. Yet it is being subsidised more heavily. Subsidies are ultimately a blind alley. They must not guarantee inefficiency. We must help to make the coal industry competitive and profitable if we are to seize new markets. I ask the Opposition whether they still believe that profitability should be the ultimate goal. During the Committee stage of the Coal Industry Bill in 1979 the hon. Member for Midlothian said :
"it is right that the Government should be able to provide operational assistance when necessary. But it is surely very satisfactory and indicative of the health of the industry if it can meet its financial objective without the need for operational grants."—[Official Report, Standing Committee A, 29 March 1977; c. 170.]
I agree entirely. I now turn to the key question——
Dr. Owen: The Under-Secretary has been speaking for over 20 minutes and he has not yet addressed himself to the central issue about which his right hon. and hon. Friends and many other hon. Members spoke. Can he justify the three-year straitjacket and the break-even points, and will he attend the Committee proceedings of the Bill having revised the figures in the light of changed economic circumstances since August last year?
Mr. Moore: I appreciate that intervention by the right hon. Gentleman, because

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I was about to comment on the crucial point that he raised. "Too quick, too tough" seems to be a definition of what the right hon. Gentleman is saying. It has been argued by many hon. Members tonight that the Bill is a straitjacket, but it is not argued by those who have the faith in the industry's ability that Conservative Members clearly have. We are not talking about a three-year programme. We are talking about a 10-year programme—"Plan for Coal"—from 1974–84. Happily, "Plan for Coal" always had as its objective a profitable coal industry. That has not changed in any way, and we are now six years into "Plan for Coal". The results are not simply in our mind. They are there on paper. The investment in the industry over the last six years is now paying off. The incentive agreement system seems to be working. The men are doing well. They are earning good money, they are working more shifts, and absenteeism is down. That is exciting and positive.
The right hon. Member for Devonport suggested that we were presenting an inflexible framework. It is a four-year framework, not a six-month framework. It is a framework that reflects the reality of the world's changed scene. I remind Labour Members of the reality of the coal-oil ratio, which they seem to have forgotten. It is the good side of the difficult position that the recession presents. In 1973 the coal-oil ratio was 1·03. In 1978 it was slightly better, namely, 0·85. It is now 0·65. That is a radical improvement, and we should welcome it. It gives opportunities to our coal industry. We have not talked very much about the potential change of the world market and the degree to which industry is now seeking prospects and opportunities for coal.
Many hon. Members have talked about the new deferred interest provisions within the Bill. Why did the Opposition, when in government, not recognise the need to introduce such a radical change in the financing provisions of the National Coal Board? It is said to be a way of loosening the supposed strait-jacket. Much will depend on the projects, but the scheme could be worth £30 million to £40 million a year.
I acknowledge the comments of my hon. Friends the Members for Meriden (Mr. Mills) and for Northfield, who rightly said that the scheme was an indi- 1472
cation of the Government's flexibility. Conditions have been difficult in the past year. On the other hand, how many hon. Members on both sides of the House have said that morale is staggeringly good in the industry? We cannot have it both ways. Morale cannot be staggeringly good if at the same time we are told that the industry has no prospects and no chance.
What are we talking about? What is the massive burden which, in three or four years, at the end of a 10-year programme, will prevent our great coal industry from attaining success? What is the enormous burden that seems to obsess so many Labour Members? Total grant for this year is 4£ per cent, of the £4 billion turnover. Is that percentage, which will decline to nothing by 1982, to prevent our coal industry finding its future? Of course it is not. It is a relatively small proportion of the industry's great future.
It could well be assumed by outsiders that the Opposition had not been in Government for the past six years and had never had the opportunity to make the changes that we have discussed. The Bill illustrates classically the divide between the Opposition and the Government.
The coal industry has a choice. It can sink back into the past in fear, without confidence and hoping at best, as so many Labour Members have assumed, for stagnation, with its decline masked a little, but inevitable. There are those who see it bolstered by subsidies but entering into a decline marred with bitterness and strife, a decline into the world of State handouts and dependence, a vision of ultimate failure and hopelessness.
The Opposition have made clear their choice for the coal industry's future. It is a timid, hesitant and frightened group that sit opposite the Government Benches. There is no will, no imagination and no faith on the Opposition Benches when it comes to recognising the potential in our great coal industry.
In the Bill the Government see a different future. They see a new industry, with great assets, great opportunities, expanding markets and—I should have thought

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that this was crucial to hon. Members opposite—the security that success for coal will give to our miners and to our country. The Bill recognises the burdens and obligations of the past, but it has faith in our coal industry's future, and
it is in that spirit that I commend it to the House.
Question put, That the amendment be made :—
The House divided : Ayes 229, Noes 291.

Division No. 364]

AYES

[10 pm

Abse, Leo

Field, Frank

Meacher, Michael

Adams, Allen

Fitch, Alan

Mellish, Rt Hon Robert

Allaun, Frank

Flannery, Martin

Mikardo, Ian

Anderson, Donald

Fletcher, Ted (Darlington)

Miller, Dr M. S. (East Kilbride)

Archer, Rt Hon Peter

Foot, Rt Hon Michael

Mitchell, Austin (Grimsby)

Armstrong, Rt Hon Ernest

Ford, Ben

Morris, Rt Hon Alfred (Wythenshawe)

Ashley, Rt Hon Jack

Forrester, John

Morris, Rt Hon Charles (Openshaw)

Ashton, Joe

Foster, Derek

Morris, Rt Hon John (Aberavon)

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

Foulkes, George

Morton, George

Barnett, Guy (Greenwich)

Fraser, John (Lambeth, Norwood)

Moyle, Rt Hon Roland

Barnett, Rt Hon Joel (Heywood)

Freeson, Rt Hon Reginald

Newens, Stanley

Beith, A. J

Garrett, John (Norwich S)

Oakes, Rt Hon Gordon

Benn, Rt Hon Anthony Wedgwood

George, Bruce

Ogden, Eric

Bennett, Andrew (Stockport N)

Gilbert, Rt Hon Dr John

O'Halloran, Michael

Bidwell, Sydney

Ginsburg, David

Owen, Rt Hon Dr David

Booth, Rt Hon Albert

Gourlay, Harry

Palmer, Arthur

Boothroyd, Miss Betty

Graham, Ted

Park, George

Bottomley, Rt Hon Arthur (M'brough)

Grant, George (Morpeth)

Parry, Robert

Bradley, Tom

Grant, John (Islington C)

Pendry, Tom

Brown, Hugh D. (Provan)

Hamilton, James (Bothwell)

Powell, Raymond (Ogmore)

Brown, Robert C. (Newcastle W)

Harrison, Rt Hon Walter

Prescott, John

Brown, Ron (Edinburgh, Leith)

Hart, Rt Hon Dame Judith

Race, Reg

Buchan, Norman

Hattersley, Rt Hon Roy

Radice, Giles

Callaghan, Rt Hon J. (Cardiff SE)

Haynes, Frank

Rees, Rt Hon Merlyn (Leeds South)

Callaghan, Jim (Middleton & P)

Healey, Rt Hon Denis

Richardson, Jo

Campbell, Ian

Heffer, Eric S.

Roberts, Albert (Normanton)

Campbell-Savours, Dale

Holland, Stuart (L'beth, Vauxhall)

Roberts, Allan (Bootle)

Canavan, Dennis

Homewood, William

Roberts, Ernest (Hackney North)

Cant, R. B.

Hooley, Frank

Roberts, Gwilym (Cannock)

Cartwright, John

Horam, John

Robertson, George

Clark, Dr David (South Shields)

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

Robinson, Geoffrey (Coventry NW)

Cocks, Rt Hon Michael (Bristol S)

Howells, Geraint

Rodgers, Rt Hon William

Cohen, Stanley

Huckfield, Les

Rooker, J. W.

Coleman, Donald

Hughes, Mark (Durham)

Ross, Ernest (Dundee West)

Concannon, Rt Hon J. D.

Hughes, Robert (Aberdeen North)

Ryman, John

Conlan, Bernard

Hughes, Roy (Newport)

Cook, Robin F.

Janner, Hon Greville

Sandelson, Neville

Cowans, Harry

Jay, Rt Hon Douglas

Sever, John

Crowther, J. S.

John, Brynmor

Sheerman, Barry

Cryer, Bob

Johnson, James (Hull West)

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

Cunliffe, Lawrence

Johnson, Walter (Derby South)

Shore, Rt Hon Peter (Step and Pop)

Cunningham, George (Islington S)

Jones, Rt Hon Alec (Rhondda)

Silkin, Rt Hon John (Deptford)

Cunningham, Dr John (Whitehaven)

Jones, Dan (Burnley)

Silverman, Julius

Dalyell, Tam

Kaufman, Rt Hon Gerald

Skinner, Dennis

Davidson, Arthur

Kerr, Russell

Smith, Rt Hon J. (North Lanarkshire)

Davies, Rt Hon Denzil (Llanelli)

Kilroy-Silk, Robert

Soley, Clive

Davies, Ifor (Gower)

Kinnock, Neil

Spearing, Nigel

Davis, Clinton (Hackney Central)

Lamborn, Harry

Spriggs, Leslie

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

Lamond, James

Stallard, A. W.

Deakins, Eric

Leadbitter, Ted

Steel, Rt Hon David

Dean, Joseph (Leeds West)

Lestor, Miss Joan (Eton & Slough)

Stott, Roger

Dempsey, James

Lewis, Arthur (Newham North West)

Strang, Gavin

Dixon, Donald

Litherland, Robert

Straw, Jack

Dobson, Frank

Lofthouse, Geoffrey

Summerskill, Hon Dr Shirley

Dormand, Jack

Lyon, Alexander (York)

Taylor, Mrs Ann (Bolton West)

Douglas, Dick

Lyons, Edward (Bradford West)

Thomas, Jeffrey (Abertillery)

Douglas-Mann, Bruce

Mabon, Rt Hon Dr J Dickson

Thomas, Mike (Newcastle East)

Dubs, Alfred

McDonald, Dr Oonagh

Thomas, Dr Roger (Carmarthen)

Duffy, A. E. P.

McKay, Allen (Penistone)

Thorne, Stan (Preston South)

Dunn, James A. (Liverpool, Kirkdale)

McKelvey, William

Tilley, John

Dunnett, Jack

MacKenzie, Rt Hon Gregor

Torney, Tom

Dunwoody, Mrs Gwyneth

Maclennan, Robert

Urwin, Rt Hon Tom

Eadie, Alex

McNally, Thomas

Varley, Rt Hon Eric G.

Eastham, Ken

McNamara, Kevin

Wainwright, Edwin (Dearne Valley)

Edwards, Robert (Wolv SE)

McWilliam, John

Wainwright, Richard (Colne Valley)

Ellis, Raymond (NE Derbyshire)

Magee, Bryan

Walker, Rt Hon Harold (Doncaster)

Ellis, Tom (Wrexham)

Marks, Kenneth

Watkins, David

English, Michael

Marshall, Dr Edmund (Goole)

Weetch, Ken

Ennals, Rt Hon David

Marshall, Jim (Leicester South)

Wellbeloved, James

Evans, loan (Aberdare)

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

Welsh, Michael

Evans, John (Newton)

Mason, Rt Hon Roy

White, Frank R. (Bury & Radcliffe)

Ewing, Harry

Maxton, John

White, James (Glasgow, Pollok)

Faulds, Andrew

Maynard, Miss Joan

Whitehead, Phillip

Whitlock, William

Wilson, William (Coventry SE)

Young, David (Bolton East)

Wigley, Dafydd

Winnick, David

Willey, Rt Hon Frederick

Woodall, Alec

TELLERS FOR THE AYES :

Williams, Rt Hon Alan (Swansea W)

Woolmer, Kenneth

Mr. Hugh McCartney and

Wilson, Gordon (Dundee East)

Wright, Sheila

Mr. James Tinn.

NOES

Adley, Robert

Elliott, Sir William

Lennox-Boyd, Hon Mark

Aitken, Jonathan

Emery, Peter

Lewis, Kenneth (Rutland)

Alexander, Richard

Eyre, Reginald

Lloyd, Peter (Fareham)

Alison, Michael

Fairbairn, Nicholas

Loveridge, John

Amery, Rt Hon Jullan

Fairgrieve, Russell

Lyell, Nicholas

Ancram, Michael

Faith, Mrs Sheila

McCrindle, Robert

Arnold, Tom

Farr, John

Macfarlane, Neil

Aspinwall, Jack

Fell, Anthony

MacGregor, John

Atkinson, David (B'mouth, East)

Fenner, Mrs Peggy

MacKay, John (Argyll)

Baker, Kenneth (St. Marylebone)

Finsberg, Geoffrey

Macmillan, Rt Hon M. (Farnham)

Baker, Nicholas (North Dorset)

Fisher, Sir Nigel

McNair-Wilson, Michael (Newbury)

Banks, Robert

Fletcher, Alexander (Edinburgh N)

McNair-Wilson, Patrick (New Forest)

Beaumont-Dark, Anthony

Fletcher-Cooke, Charles

McQuarrie, Albert

Bell, Sir Ronald

Fookes, Miss Janet

Madel, David

Bendall, Vivian

Forman, Nigel

Major, John

Benyon, Thomas (Abingdon)

Fowler, Rt Hon Norman

Marland, Paul

Benyon, W. (Buckingham)

Fox, Marcus

Marlow, Tony

Best, Keith

Fraser, Rt Hon H. (Stafford & St)

Marshall, Michael (Arundel)

Bevan, David Gilroy

Fry, Peter

Marten, Neil (Banbury)

Buffen, Rt Hon John

Galbraith, Hon T. G. D.

Mates, Michael

Biggs-Davison, John

Gardiner, George (Reigate)

Mather, Carol

Blackburn, John

Gardner, Edward (South Fylde)

Mawby, Ray

Blaker, Peter

Garel-Jones, Tristan

Mawhinney, Dr Brian

Body, Richard

Gilmour, Rt Hon Sir Ian

Maxwell-Hyslop, Robin

Bonsor, Sir Nicholas

Glyn, Dr Alan

Mayhew, Patrick

Boscawen, Hon Robert

Goodhart, Philip

Mellor, David

Bottomley, Peter (Woolwich West)

Goodhew, Victor

Meyer, Sir Anthony

Bowden, Andrew

Goodlad, Alastair

Miller, Hal (Bromsgrove & Redditch)

Boyson, Dr Rhodes

Gow, Ian

Mills, lain (Meriden)

Braine, Sir Bernard

Gower, Sir Raymond

Mills, Peter (West Devon)

Bright, Graham

Grant, Anthony (Harrow C)

Miscampbell, Norman

Brinton, Tim

Greenway, Harry

Mitchell, David (Basingstoke)

Brittan, Leon

Griffiths, Peter (Portsmouth N)

Moate, Roger

Brocklebank-Fowler, Christopher

Grist, Ian

Monro, Hector

Brooke, Hon Peter

Gummer, John Selwyn

Montgomery, Fergus

Brotherton, Michael

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

Moore, John

Brown, Michael (Brigg & Sc'thorpe)

Hamilton, Michael (Salisbury)

Morgan, Geraint

Browne, John (Winchester)

Hampson, Dr Keith

Morris, Michael (Northampton, Sth)

Bruce-Gardyne, John

Hannam, John

Morrison, Hon Charles (Devizes)

Buchanan-Smith, Hon Alick

Haselhurst, Alan

Morrison, Hon Peter (City of Chester)

Budgen, Nick

Hastings, Stephen

Mudd, David

Bulmer, Esmond

Havers, Rt Hon Sir Michael

Murphy, Christopher

Burden, F. A.

Hawkins, Paul

Neale, Gerrard

Butcher, John

Hawksley, Warren

Needham, Richard

Butler, Hon Adam

Hayhoe, Barney

Nelson, Anthony

Cadbury, Jocelyn

Heddle, John

Neubert, Michael

Carlisle, John (Luton West)

Henderson, Barry

Newton, Tony

Carlisle, Kenneth (Lincoln)

Heseltine, Rt Hon Michael

Onslow, Cranley

Carlisle, Rt Hon Mark (Runcorn)

Hicks, Robert

Chalker, Mrs Lynda

Higgins, Rt Hon Terence L.

Oppenheim, Rt Hon Mrs Sally

Channon, Paul

Hogg, Hon Douglas (Grantham)

Osborn, John

Chapman, Sydney

Holland, Philip (Carlton)

Page, Rt Hon Sir R. Graham

Churchill, W. S.

Hooson, Tom

Page, Richard (SW Hertfordshird)

Clark, Hon Alan (Plymouth, Sutton)

Hordern, Peter

Parkinson, Cecil

Clark, Sir William (Croydon South)

Howe, Rt Hon Sir Geoffrey

Parris, Matthew

Clarke, Kenneth (Rushcliffe)

Howell, Rt Hon David (Guildford)

Pattern, Christopher (Bath)

Clegg, Sir Walter

Howell, Ralph (North Norfolk)

Patten, John (Oxford)

Cockeram, Eric

Hunt, David (Wirral)

Pawsey, James

Colvin, Michael

Hunt, John (Ravensbourne)

Percival, Sir Ian

Cope, John

Hurd, Hon Douglas

Pink, R. Bonner

Cormack, Patrick

Irving, Charles (Cheltenham)

Pollock, Alexander

Corrie, John

Jenkin, Rt Hon Patrick

Porter, George

Costain, A. P.

Jessel, Toby

Prentice, Rt Hon Reg

Cranborne, Viscount

Johnson Smith, Geoffrey

Price, David (Eastleigh)

Critchley, Julian

Jopling, Rt Hon Michael

Proctor, K. Harvey

Dean, Paul (North Somerset)

Joseph, Rt Hon Sir Keith

Pym, Rt Hon Francis

Dickens, Geoffrey

Kaberry, Sir Donald

Raison, Timothy

Dorrell, Stephen

Kershaw, Anthony

Rathbone, Tim

Douglas-Hamilton, Lord James

Kimball, Marcus

Rees, Peter (Dover and Deal)

Dover, Denshore

King, Rt Hon Tom

Rees-Davies, W. R.

du Cann, Rt Hon Edward

Knox, David

Renton, Tim

Dunn, Robert (Dartford)

Lamont, Norman

Rhodes James, Robert

Durant, Tony

Lang, Ian

Ridsdale, Julian

Dykes, Hugh

Langford-Holt, Sir John

Rifkind, Malcolm

Eden, Rt Hon Sir John

Latham, Michael

Rippon, Rt Hon Geoffrey

Edwards, Rt Hon N. (Pembroke)

Lawrence, Ivan

Roberts, Michael (Cardiff NW)

Eggar, Timothy

Lee, John

Roberts, Wyn (Conway)

1476

1477

Sainsbury, Hon Timothy

Stewart, Ian (Hitchin)

Waller, Gary

St. John-Stevas, Rt Hon Norman

Stokes, John

Walters, Dennis

Scott, Nicholas

Stradling Thomas, J.

Ward, John

Shaw, Michael (Scarborough)

Tapsell, Peter

Warren, Kenneth

Shelton, William (Streatham)

Taylor, Robert (Croydon NW)

Wells, John (Maidstone)

Shepherd, Colin (Hereford)

Taylor, Teddy

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

Shepherd, Richard (Aidridge-Br'hills)

Temple-Morris, Peter

Wheeler, John

Shersby, Michael

Thatcher, Rt Hon Mrs Margaret

Whitelaw, Rt Hon William

Silvester, Fred

Thomas, Rt Hon Peter (Hendon S)

Whitney, Raymond

Sims, Roger

Thompson, Donald

Wickenden, Keith

Skeet, T. H. H.

Thornton, Malcolm

Wiggin, Jerry

Smith, Dudley (War. and Leam'ton)

Townsend, Cyril D. (Bexleyheath)

Wilkinson, John

Speed, Keith

Trippler, David

Williams, Delwyn (Montgomery)

Speller, Tony

Trotter, Neville

Winterton, Nicholas

Spence, John

van Straubenzee, W. R.

Wolfson, Mark

Spicer, Michael (S Worcestershire)

Vaughan, Dr Gerard

Young, Sir George (Acton)

Sproat, lain

Viggers, Peter

Younger, Rt Hon George

Squire, Robin

Waddington, David

Stanbrook, Ivor

Wakeham, John

TELLERS FOR THE NOES :

Stanley, John

Walker, Rt Hon Peter (Worcester)

Mr. Spencer Le Merchant and

Steen, Anthony

Walker, Bill (Perth & E Perthshire)

r. Anthony Berry.

Stevens, Martin

Walker-Smith, Rt Hon Sir Derek

Question accordingly negatived.
Main Question put forthwith pursuant to Standing Order No. 39 (Amendment on Second or Third Reading), and agreed to
Bill accordingly read a Second time.
Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

COAL INDUSTRY [MONEY]
Queen's Recommendation having been signified—
Motion made, and Question proposed,
That, for the purposes of any Act of the Present Session to increase the limit on the borrowing powers of the National Coal Board and otherwise to amend the law with respect to loans to the Board; to make new provision for grants by the Secretary of State to the Board and to provide a new limit for those grants and for grants to the Board and other persons under certain existing powers, it is expedient to authorise—
Increase of borrowing limit
1. Any payment out of the National Loans Fund or the Consolidated Fund due to increasing the limit on borrowing by the Board to £3,400 million, and to enabling that limit to be increased by order to £4,200 million.
Deficit grants
2. Grants to the Board out of money provided by Parliament, being grants—

(a)for reducing or eliminating any group deficit of the Board and any of their subsidiaries for any year of the Board mentioned in paragraph 3 of this resolution ; and

(b)subject to the limit in paragraph 3 of this resolution.

Sale, stocking and supply of fuel
3. Grants out of money provided by Parliament—

(a) for promoting the sale of coal to electricity bodies;

(b) for the cost of building up and maintaining stocks of coal and coke ; or

(c) towards measures for securing supplies of coke for use by the iron and steel industry ;

being grants to the Board and to any other person carrying on in Great Britain a business which consists of or includes the production of coal or coke—

(i) for or by reference to the years of the Board ending in March 1980, 1981, 1982 and 1983 ; and

(ii) subject to the aggregate (together with grants authorised by paragraph 2 of this resolution) to a limit of £525 million capable of being increased by order to not more than £590 million.

Any grants made by the Secretary of State during any year of the Board mentioned above in this paragraph in exercise of his existing power under section 8 of the Coal Industry Act 1977 (regional grants) shall be taken into account for the purposes of the limit in this paragraph.
Grants in connection with pit closures
4. Grants out of money provided by Parliament to assist in the redevelopment of the manpower resources of the Board and the elimination of uneconomic colliery capacity, being grants—

(a) towards expenditure for the years of the Board ending in March 1979, 1980, 1981, 1982, 1983 and 1984 ; and

(b) subject in the aggregate to a limit of £170 million.

Redundant Workers
5.—(1) Payments out of money provided by Parliament to or in respect of persons who, at any time between 17 July 1967 and 1 April 1984—

(a) are employed at a coal mine or at any place used for providing services or facilities ancillary to the working of one or more coal mines ; or

(b) are employed by any person carrying on in Great Britain a business which consists wholly or mainly of the production of coke and are so employed either at a coking plant or at any place used for providing services or facilities ancillary to the operation of one or more coking plants ;

and who in either case become redundant.
(2) The aggregate amount of the payments authorised by this paragraph during the years of the Board ending in March 1979, 1980, 1981, 1982, 1983 and 1984 shall not exceed £220 million.
Grants towards compensation for pneumoconiosis
6. Payments out of money provided by Parliament due to increasing the limit on grants under section 1 of the Coal Industry Act 1975 from £100 million to £107 million.
Administrative expenses and receipts
7. Defrayment of administrative expenses out of moneys provided by Parliament.
8. Any payment into the Consolidated Fund or the National Loans Fund.
In this resolution 'order' means an order by the Secretary of State approved by resolution of the Commons House of Parliament.—[Mr. John Moore.]
10.13 pm
Mr. Eric Ogden: The debate on the Bill was one of the quietest that I have heard for 16 years. It was quietly and responsibly introduced by the Secretary of State, and was responsibly replied to by my right hon. and hon. Friends. The Minister showed a growing degree of enthusiasm. I should not like the Minister and his colleagues to have been lulled into a sense of security by the quietness of the debate. He may have thought that my hon. Friends and I had fallen asleep or that we were complacent. However, an hon. Member who did not speak on Second Reading has chosen to speak on the money

1481
resolution, and that may convince the Government that we are aware of all the tricks in the business and that we may well use them in Committee.
I urge the Under-Secretary to bear two points in mind. He and his right hon. Friend have talked continually about the profitability of the industry. He denied that there was any deliberate purpose in seeking pit closures. On that we seem to be agreed, but the lasting concern on these Benches is that when he and his colleagues talk about a profitable industry they are talking of an industry that is concentrated in the centre of these islands to the exclusion of the western area, the North-East and South Wales.
My second point concerns the dilemma of priorities and uncertainty about the Government's priorities. Are they concerned with production, security, maintenance and all the other things that have been mentioned today, or are they concerned with financial profitability? Those are some of the points that we shall wish to pursue in Committee.
10.16 pm
Dr. David Owen: In view of the fact that the Under-Secretary did not, in replying to the Second Reading debate, address himself to what was assumed to be the central question whether the three-year straitjacket
1482
or time limit of the financial provisions is satisfactory to the industry—we shall expect much more detailed answers to such questions in Committee.
It will facilitate the business tonight if we may have an assurance that the Secretary of State and the Under-Secretary will take to heart some of the detailed financial questions that are being raised about the scheme. I hope that in Committee they will be prepared to listen to argument and to demonstrate flexibility and readiness to consider revising the financial arrangements in the light of the discussions. We do not ask for an off-the-cuff commitment now to change the position, but we ask for a readiness in Committee to consider the arguments deployed from both sides.
10.17 pm
The Under-Secretary of State for Energy (Mr. John Moore): On the basis of the remarks of the hon. Member for Liverpool, West Derby (Mr. Ogden) and the right hon. Member for Plymouth, Devonport (Dr. Owen), I look forward enormously to our debates in Committee. Listening to and often taking action on what one hears is a key role for any parliamentarian. Obviously anyone who is not flexible in considering intelligent suggestions should not be in this place.
Question put and agreed to.

REDUNDANT MINEWORKERS AND CONCESSIONARY COAL
10.18 pm
The Under-Secretary of State for Energy (Mr. John Moore): I beg to move,
That the draft Redundant Mineworkers and Concessionary Coal (Payments Schemes) (Amendment No. 2) Order 1980, which was laid before this House on 19 May, be approved.
My right hon. Friend the Secretary of State has already told the House of the improvements in social grants that are being provided for in the Coal Industry Bill, and he mentioned that we have also reviewed the level of redundancy payments. This order is the result.
Under section 7 of the Coal Industry Act 1977, the Secretary of State can make a scheme for payments to men made redundant at coal mines and certain prescribed places. The current scheme is set out in the schedule to the Redundant Mineworkers and Concessionary Coal (Payments Schemes) Order 1978.
Men over 55 get approximately two-thirds of their previous pay for three years, and after that, until they are 65, weekly payments equivalent to the current rate of unemployment benefit plus their mine workers' pension, now £7·37 per week. We think that this is an entirely reasonable provision and do not propose to change it.
However, for men under 55 the arrangements have remained unchanged since 1973. Men under 35 do not get anything. Between 38 and 54 they get a lump sum of £50 for each year of service with a maximum of £1,250. There is a sliding scale for those between 35 and 38. We think it is high time that these payments were improved and we propose therefore
1484
that for each year of service after age 20 men between the ages of 21 and 34 should get half a week's pay, those between ages 35 and 44 one week's pay, and those between ages 45 and 54 one and a half week's pay. The latter also applies to men over 55 with less service than the 10 years needed to qualify for weekly benefit. Obviously the new arrangement will vary according to the earnings of the men concerned, but for the average miner at present one and a half week's pay would be about £190. It would thus give a man of 50 with 30 years' service £5,700.
The cost will be about £9 million a year at 1980 survey prices. It will require an equivalent reduction in the NCB's net borrowing from the Government and hence in the total figure for external finance.
The changes in lump sum benefits will be brought into effect by the order. I hope that the House will find these proposals equitable and timely and will be prepared to approve the order.
10.20 pm
Mr. Alex Eadie: We welcome the proposed improvement. Any measure that will benefit those in the industry who find themselves in unfortunate circumstances is welcome.
We welcome the abolition of the 10-year rule, although the effect will be only minimal in some areas. Lowering the age rule to 21 will be beneficial. In the mining trade unions there has been discussion on how to improve the scheme. We look forward to further improvements.
Question put and agreed to.

INTERNATIONAL DEVELOPMENT ASSOCIATION
10.21 pm
The Minister for Overseas Development (Mr. Neil Marten): I beg to move,
That the draft International Development Association (Sixth Replenishment) Order 1980, which was laid before this House on 13 May, be approved.
As hon. Members probably know, the International Development Association is the affiliate of the International Bank for Reconstruction and Development, which gives loans for development projects on highly concessional terms to the poorest of the developing countries—those that would have great difficulty in servicing a large external debt on conventional or near conventional terms. That means that the IDA's resources must themselves be provided on a concessional basis whereas those of the IBRD are obtained mainly through borrowings on the money markets.
Since the IDA began operations in 1960, most of its funds have come from periodic replenishments of its resources by the industralised countries, known as the part I member countries, although others, including oil-exporting developing countries, also contribute. These replenishments of the IDA's resources are now carried out at three-year intervals on a regular and planned basis.
The resources provided by the fifth replenishment are expected to be fully committed at the end of this month. Discussions on the sixth replenishment, to provide the IDA with resources from mid-1980 until mid-1983, began towards the end of 1978, and agreement on proposals for the amount of the replenishment and the shares of individual donors was finalised by executive directors in January of this year. It is their report which has been reproduced as Cmnd. 7900.
The board of governors adopted the resolution approving the replenishment on 26 March, the United Kingdom governor having voted in favour, and the agreement is now, where necessary, being put for the approval of legislatures.
We have great respect for the administrative efficiency of the IDA, which is well established as an aid agency, and consider that it is sensitive to our views. About 90 per cent. of all IDA resources
1486
are channelled to the world's 40 or so poorest countries and IDA credits normally finance the foreign exchange costs of development projects proposed by the borrowing country with the IDA's assistance. The main sectors concerned are agriculture, rural development, transportation and power.
The IDA is also a useful source of procurement for British firms. In the 12 months to 30 June 1979, $66·2 million was earned by United Kingdom business, which was 10·2 per cent. of total foreign procurement by the IDA in part I countries. It is important to bear that in mind as we discuss the amounts that we are proposing to contribute to the new replenishment.
The total replenishment of $12 billion is expected to provide an increase over the last replenishment in real terms as well as in cash. It was reached after taking into account both the needs of the poorest developing countries and the donor countries' ability to pay.
The United Kingdom's proportionate share of the total contributions to the IDA is decreasing as the IDA has found new contributors and as some traditional donor countries have been able to increase their contributions as their economies have strengthened. Our share in IDA 6 as compared with IDA 5 has reduced slightly, from 10·6 per cent. to 10·1 per cent. Nevertheless, a contribution on that scale is much higher than would be justified by our present economic strength relative to other part I members—the traditional donor countries. We have therefore agreed with the IDA management, with the understanding of the other donor countries, a special arrangement whereby the drawings against our contribution will be lower than they would otherwise have been for the first six years.
That formula will enable us to reduce substantially the cost to public funds over the next few years of contributing to the replenishment. Had we insisted on a reduction in our overall share, the negotiations, which were at an advanced stage by the time we took office and reviewed the financial position, would have been likely to collapse.
Hon. Members will note that the amounts are expressed in sterling, and not in United States dollars or their equiva-

1487
lent. As with the two previous replenishments, the amount of our contribution is fixed in sterling and there is no obligation on us to maintain the value of our contribution in terms of any other currency.
If the House approves the draft order, we shall be able to inform the IDA that we are prepared to make our contribution and subscription under the terms of the resolution establishing the replenishment.
Thereafter, once the replenishment has become effective, we shall deliver three promissory notes, each representing one-third of our contribution—the first in November this year, the second next year, and the final one in 1982. The IDA will then draw against the notes to meet its disbursements. As shown in the table in paragraph 16 of the Command Paper, drawings of all donors are expected to continue for 10 years, reaching their peak in the fourth and fifth years. In the case of the United Kingdom, the phasing of drawings will be subject to the special arrangement that I referred to earlier.
I turn to a point of particular importance. For the replenishment to become effective, it is necessary for the United States to authorise its full contribution and subscription, and appropriate some part of it. The budget for the United States fiscal year 1981 is currently under consideration in Congress. The draft order that we are considering presupposes that the replenishment will become effective. Unless and until that happens, the order cannot be given effect.
I feel sure that hon. Members will wish to ensure continuity over the next three years in the lending programmes of the IDA, with its continuing emphasis on the poorest countries and on those sectors which will bring particular benefit to the neediest people in those countries. I ask the House to approve the order.
10.29 pm
Dame Judith Hart: In the light of the Minister's remarks, it is a good thing that we brought this matter to the Floor of the House. The hon. Gentleman raised points that some hon. Members may wish to explore. The IDA, as the soft loan end of the World Bank, benefiting poor countries and their infrastructure, with its concentration on agriculture and rural development, is supported by the Opposition. We also
1488
support the order. There are, however, questions that I should like to put to the Minister.
As the hon. Gentleman has said, our contribution—our major multilateral commitment—represents a reduction in percentage terms. In the fourth replenishment, we stood roughly equal with Japan and Germany. In the fifth replenishment, the same was broadly true. In this instance, we have fallen considerably back to third place with a contribution of £226·5 million compared with £251 million in the fifth replenishment at constant prices, taking 1973, the time of the fourth replenishment—according to an answer by the Minister—as the base.
We have noted from remarks by the Minister and others that the Government are intent upon seeking a further reduction in the seventh replenishment for which negotiations will begin in 1982. We should like to know more of what the Minister has in mind. It is the nature of the way in which we organise our affairs in the House that we cannot vote tonight on increasing the financial commitment to IDA as the Opposition, I believe, would have wished.
The issue must be seen in the multilateral element of the whole aid programme. The public expenditure White Paper, announcing the cuts in the overseas aid programme, indicated an absolute reduction of 1·3 per cent. this year and 6·7 per cent. next year and the year following. In his statement on the Government review of aid policy, the Minister said that the Government would be looking critically at expenditure on multilateral aid programmes.
The multilateral aid programme, within which the IDA replenishment is set and must be seen in context, includes our contributions to a number of United Nations programmes. I note from information supplied in answer to questions in the House that during this financial year the provision in the Estimates indicates a cut in a number of the programmes. We have cut our contribution to the United Nations development programme. We have cut our contribution to the general programme of the United Nations High Commissioner for Refugees. We have cut our budget core contribution to UNICEF, the United Nations children's fund. We have cut our contribution to the world food programme.

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We have cut our contribution to the United Nations University. We have cut our contribution to the FAO fertiliser programme and to the international fertiliser supply scheme.
I regard these cuts as mean and nasty. I do not envy the Minister his duty in trying to explain them when he attends United Nations bodies and visits other countries. I believe that this is the first time that any Government have reduced their core budget contribution to UNICEF. Our second major multilateral commitment is to the European development fund. I understand—the Minister will correct me if I am wrong—that there are no choices. We are committed to an increasing proportion of the EDF budget over a period of years. It would be interesting to hear from the Minister—this is one of the few occasions on which we can draw him out on the matter—the pattern of the increase in our compulsory contributions from a declining aid programme. I have given his office notice of these detailed questions, but I recognise that he may be unable to give detailed answers tonight. We should like to hear the decrease in the proportion of the multilateral aid programme that this represents for this year and next year. What proportion of the total aid programme during the two years—this year and next year—does it represent?
I seek not to depart from the replenishment order but to elicit information which will enable us to make judgments on each amount within the framework of the multilateral element of our aid programme, a high proportion of which is constituted from the European development fund.
Am I right in calculating that this year 17 per cent., and next year 19 per cent., of the total British aid programme will go towards fulfilling our commitments to the European Community? That was sad enough when we had an increasing aid programme, but it is doubly sad when we have a reducing aid programme. In terms of the Community commitment, we have no check on spending or underspending ; we have no control over allocation ; we have no power to ensure that a higher proportion of money goes to the non-associated countries of the Commonwealth which tend to be the largest and the poorest.
1490
Two weeks ago the Minister of State announced that net Briitsh aid to the developing countries in 1979 amounted to £974 million—equivalent to 0·52 per cent. of GNP. In a press release he said :
"These figures … have been compiled according to the Development Assistance Committee's new basis of assessment which requires the inclusion of promissory notes deposited in respect of certain multilateral agencies instead of the cash drawn down by those agencies."
I assume that the replenishments to IDA are much related to the inclusion of promissory notes and what is drawn down from them.
We should welcome a more substantial explanation of the Minister's remarks about the degree to which drawing down is related to commitment. How is that likely to be reflected in calculating the aid disbursements for the year? Have we made a commitment on which money is likely to be spent only if the United States Congress agrees to the American contribution? Are we making a commitment which will not be fulfilled unless that condition is met? Are we making a commitment which could be reflected in a serious underspending of the already much reduced aid programme for this year if the money is not drawn down?
Will the Minister explain more fully the change in the new basis for assessment by the Development Assistance Committee? His written reply was interesting but did not explain. May we have the comparative figures for the ratio of official development assistance to GNP by other OECD members for 1978 and 1979? That is an important change in the way in which the aid programme is assessed in official terms.
The memorandum of the Select Committee explains that the agreement on the sixth replenishment
"contains safeguards against the possibility of serious delay or default in the payment of contributions."
I suppose—the Minister will tell me if I am mistaken—that that reflects the concern felt during the past two or three years about the problems faced by the Government of the United States. They have given commitments to the IDA, but they were unable to fulfil them because of difficulties in obtaining Congressional approval.
I know how much of a problem that has been and we fully appreciate that

1491
there are important differences of procedure in terms of approvals, authorisations and so on between one country and another. In a sense, I think that we are remarkably fortunate in our procedures at Westminster. However, it would be helpful to have further details about the safeguards which have been agreed which I think relate to the point about drawing down and the point about whether our commitment means anything in view of the fact that the United States is not able to obtain authorisation for its contribution.
In other words, are we debating something which is real or something which is conditional upon two or three factors beyond our control? If the latter, what will be the effect on our aid programme? We approve the order, but we would be grateful for an explanation of these points.
10.41 pm
Mr. Christopher Brocklebank-Fowler: My hon. Friend the Minister will know that I try to be helpful to the Government on as many occasions as I am able and this evening is no exception to that rule.
Some of us have been familiar for some time with the IDA replenishments, and orders of this kind provide us with regular opportunities to consider in some depth certain aspects of the Government's aid programme. I welcome the Government's commitment to continue to give substantial support to the IDA, but there are, nevertheless, a number of questions I ask my hon. Friend to answer more fully than he sometimes feels able to answer at Question Time or in other broad-ranging debates.
First, I note the reduction in our share of the IDA contribution from 10·6 per cent. to 10·1 per cent. I hope that I recall correctly that in the fifth replenishment we made a contribution of about 11 per cent. and that that had reduced very substantially over the years during which we have contributed to the IDA from an initial contribution of about 22 per cent. I ask my hon. Friend to take time to put this latest reduction in the context of what I think I am right in saying is a series of reductions over a number of years.
Secondly, may I ask my hon. Friend to say something about the possible com- 1492
mercial effects of these reductions, bearing in mind the quite proper attention of the Government to the political and commercial advantages which are some of the criteria by which we should judge the quality of our aid programme? Is my hon. Friend able to forecast the effect that that may have on the possibility of the United Kingdom benefiting from orders which arise on the IDA disbursements to the poorest countries?
Thirdly, I wonder whether my hon. Friend would say something about administrative costs. Many of us who are concerned not only with our own aid programme but with international multilateral aid programmes have been concerned in recent years about the rate at which administrative costs have risen. That was the subject of debate when we examined the fifth replenishment. I should be grateful if my hon. Friend could tell us something about whether the administrative costs are increasing and, if so, to what extent.
Fourthly, it is undeniable that, at a time when the Government have decided, for reasons which they have fully explained and which are understood by the House, to make substantial cuts in the aid programme, any increase in the multilateral part of the aid programme can only be at a cost to the bilateral aid programme. As my hon. Friend will no doubt agree, the bilateral part of the aid programme comes closest to fulfilling the revised aims of our programme—namely, to provide a greater degree of political influence and a larger source of orders for British industry. To what extent will this new replenishment diminish our disbursements of bilateral aid over the next year and the year after that? What assessment has he made of the likely effect of that on British industry and on our exports to countries which benefit from this programme?
Fifthly, will my hon. Friend tell us about the maintenance of value payments and whether on this occasion we are to be subject, yet again, to maintenance of value payments during the sixth replenishment? If so, what further diminution is that likely to have on our bilateral aid programme?
Sixthly, will my hon. Friend tell us about the shares of disbursements and explain the percentage that he expects to go to India and Africa, which in previous years have been the largest

1493
recipients of disbursements from IDA, and how that proportion is likely to be varied in future?
Finally, I should like to make a point on voting rights. I think that I am right in saying that on the fifth replenishment, by some Machiavellian and perhaps historic arrangements, the United Kingdom contrived to be the third largest contributor but the second largest voter. I note from the order that a major part of the increased contribution is to carry voting rights and that a much smaller part is not to carry voting rights. Will my hon. Friend explain whether that diminishes our power in respect of voting rights in IDA?
If my hon. Friend can genuinely take some time to answer these pertinent questions, I think that he will feel pleased to know that I at least will be very happy to hear at length what he has to say.
10.47 pm
Mr. Kevin McNamara: I am sure that the Minister will be happy to have that tremendous vote of confidence from his hon. Friend the Member for Norfolk, Northwest (Mr. Brocklebank-Fowler), who has put a number of pertinent questions to which the House as a whole would like replies.
We must be immediately concerned about the 0·5 per cent. reduction in our contribution to the IDA and to have an explanation for it. Is it because we have decided to make a cut or that there are other countries which we would all be happy to see making contributions to meet that reduction?
Equally, we are concerned about the 0·5 per cent. reduction against the background given by my right hon. Friend the Member for Lanark (Dame Judith Hart) of reductions in other spheres : UNIDA, UNHCR, UNICEF, the world food programme and so on. These must be matters of concern, because we are making reductions in these programmes at a time when recession is setting in and this country is in a difficult position. But our difficulties are as nothing compared with the countries which in the past have been recipients of our development aid and resources, whether of a multilateral or bilateral nature.
1494
Therefore, I turn to the next matter about which we are concerned. I grant that we shall make this replenishment, but what does it, and other multilateral replenishments to various organisations, mean in terms of the amount of money that we shall give in bilateral aid? What share will bilateral aid have in the diminshing budget of the Government when compared with past aid? What does it mean in real terms to the individual countries that had reason to expect a more generous approach to their immediate problems from the Government than they may have expected from multinational organisations?
We have tremendous responsibilities, some unwanted, which are part of our unwanted inheritance of empire, influence and trade. In that position we are responsible, both in terms of Commonwealth countries and countries outside the Commonwealth, for formulating a more generous bilateral policy than seems to be the present aim of the Government.
If we consider the multilateral aid that we are bound to give by treaty, together with future commitments, and then consider the probable contribution to the contingency fund, we find that there will have to be considerable reductions in our bilateral aid. If the Government are to maintain those reductions, how do we compare that with the points put before the Foreign Affairs Select Committee by the Foreign Secretary of trying to maintain our economic, strategic and political interests? Where will the money come from if we are to maintain the multilateral aims and obligations into which we have entered and at the same time maintain the fund for contingencies?
We should maintain the IDA. We should have a full explanation of why our contribution has diminished. If the input of other countries into that fund and their ability to maintain themselves have increased, that is splendid. But what has happened to the 0·5 per cent? Is it intended that it should be written off, or will it be used for other purposes? We know, because of what the Government have published in their White Paper, that any gains that we may make on one swing we shall lose on the roundabout of cuts in public expenditure. The Government must come clean on the matter. If we are to maintain our contribution to the multilateral agencies, as

1495
committed by treaty, and if we are to increase our sums for contingency, for strategic and for political reasons, our bilateral policies must suffer drastically. The Government must make the position plain, not only in global terms but to the countries involved.
10.54 pm
Mr. Frank Hooley: I suppose that it is in some way suitable that we should be debating the order hard on the heels of the debate on the Brandt report. Unfortunately, owing to parliamentary commitments elsewhere, I was not able to be in the Chamber yesterday to listen or contribute to the debate. I read one or two brief press comments, which seemed to indicate that the Government were extremely unforthcoming about Brandt—which I regard as both tragic and shortsighted.
However, we are now discussing an instrument which could have been used by the Government and, indeed, by the Western world as the beginning, or a token, of a move towards recognising the plea inherent in Brandt for a great increase in the shift of resources from the Western world to the Third world and, in particular, to the poorest parts of the world.
If I understand the Minister correctly, what we have done under this replenishment is to make a commitment, which I think he said was slightly more than the previous commitment under the previous replenishment, in actual cash, though there seem to be some curious conditions attached to the drawing of the money, which I did not wholly understand from what he said. He dressed it up in some phrase—I am paraphrasing, and if I have it wrong I apologise—to the effect that the drawings would relate to the economic circumstances in which this country finds itself.
Mr. McNamara: I think that we understood that any of these drawings were subject to what was decided in the United States Congress.
Mr. Hooley: With respect, that was not quite the point I was making. I want to come to the question of the United States contribution shortly.
I understood the Minister to say that, even assuming that the Congress votes the necessary money—which we all hope
1496
it will; it would be catastrophic if it did not do so—the IDA's ability to draw down the actual contribution made by the United Kingdom would be limited by an informal agreement that drawings would not be made beyond a particular figure.
I should like the Minister to spell that out a bit, because, as my right hon. Friend the Member for Lanark (Dame Judith Hart) said, this would have implications for the disbursement of our aid programme overall. Clearly, if for some reason the drawing by the IDA were limited by some informal understanding, which is not on the record and which is not even explained to this House, we might find that instead of our aid programme including, say, £50 million to the IDA in a particular year, the effect was about £25 million. Then we would come to the end of the financial year and, lo and behold, to our surprise, the aid programme would have again been underspent by £20 million or so, instead of its reduced aggregate being spent right up to whatever the new figures is.
We need some clear explanation of these limitations on drawings, what the practical effect will be and, in short and simple terms, what is likely to be our expenditure against the aid programme on the IDA—I emphasise "expenditure", not "commitment"—during the current financial year and the following financial year.
I would not make quite such a point of the reduction from 10·6 per cent. to 10·1 per cent., because clearly this ratio is determined not so much by what we contribute, although that has an effect, as by the range of contributions of other countries. If the 0·5 per cent. adjustment means that countries such as Japan and West Germany, and possibly some of the oil States, are now contributing up to the amount that they should be contributing, our fallen percentage is an adjustment that one does not need to take too seriously. It would be interesting to know whether West Germany and Japan, particularly, which do not have a brilliant record against the United Nations 0·7 per cent, target over the past few years, and are countries which are undoubtedly powerful and wealthy—more so than we are at present—are now making a better contribution through the IDA than they have done in the past.

1497
It would also be interesting to know whether we have managed to draw in some of the oil-rich countries which do not have enormous populations. Obviously, one would not expect it from Nigeria or Mexico, or countries with very large populations and considerable problems, but some countries could make a larger contribution to the IDA.
If the change in percentage from 10·6 to 10·1 means that other countries are now contributing more generously, that is a matter for satisfaction rather than regret. I hope that the Minister can give some figures so that we can gauge the true position. The figure about which I am particularly concerned is the cash contribution through the IDA set against our aid programme in the current financial year, next year, and, if possible, the following year.
At the summit in Venice there was some vague reference to the Brandt report, but the Prime Minister did not refer to Brandt in the context of Venice in her report to the House yesterday. As we know, there will be another summit in Venice, which will be more important in the sense that the President of the United States will be present, and no doubt a representative from Japan. Can the Minister say whether the British Prime Minister will go to the second summit with a view to impressing on world leaders the enormous importance of the North-South dialogue, the immense significance of the Brandt report and the relations between the West and the Third world if the West seeks to cut back on its obligations in respect of pay?
This is not a light-hearted matter. We know that present relations between the West and the oil-producing world—the Arab world, Venezuela and other countries—are not happy. But those countries identify themselves with the Third world. If they feel that at the summit and elsewhere the West is taking the problems of the Third world seriously, and is prepared at least to move in spirit and intent towards some of the ideas put forward in the Brandt report, some of the tensions that exist between the oil-producing countries and the Western world may be slightly eased. But if the second Venice summit pays as cursory and as little attention to the North-South
1498
problems as the previous summit, it will not help world relations, and it will not help Western Europe and the United States in their dealings with Third world countries.
In the context of the IDA replenishment and this debate, I hope that the Minister will represent to his right hon. Friend the Prime Minister that the North-South dialogue, the Brandt report, the replenishment of the IDA and our contributions to the various United Nations agencies constitute an important element in our relations with two-thirds of the nations of the world. We can neglect them ; we can deride the importance of aid provision; we can plead perpetually that we are poor, when in fact we are one of the richest countries in the world. If we do so, it will be no use complaining bitterly that our standing, prestige and rating in countries in certain parts of Africa, Asia and other parts of the world have declined, and that other people do not like us or understand us. If we show no understanding of their problems, it is unlikely that they will show understanding of ours.
11.5 pm
Mr. Neil Marten: The sum referred to in the order is £550 million or more. Surely any developing country must realise the concern that we show for it and other such countries when it considers that figure. If the hon. Member for Sheffield, Heeley (Mr. Hooley) is able to obtain a copy of tomorrow's Hansard, he will find the answers to his questions about the Prime Minister going to the second Venice summit. Yesterday's debate on the Brandt report—I must not stray on to that because I know that it would be out of order to do so—was magnificent. There were many good speeches. I gave an assurance at the end of the debate that the contents of the debate would be brought to the attention of my right hon. Friend before she went to Venice No. 2. That answers the thrust of the hon. Gentleman's remarks on the Brandt report debate.
The hon. Gentleman asked whether other countries are stumping up because our contribution is decreasing slightly. I gave the answer to that question in my opening speech. I said :
"The United Kingdom's proportionate share of the total contributions to the IDA is decreasing as the IDA has found new contributors

1499
and as some traditional donor countries have been able to increase their contributions as their economies have strengthened."
The hon. Gentleman spoke of drawing down our commitment. The commitment is not altered, but when IDA is requiring funds it will not necessarily take up the whole of our commitment for years one, two or three. Over the 10 years it will try, due to our economic situation, to use less of our commitment in the early years and to make up for that in later years.
Mr. Hooley: I fully understand that the commitment is not altered. However, if the IDA does not draw down the commitment in, for example, the current financial year to the extent that it might have done but for the understanding, it could mean that the aid budget would be under spent. Is not that correct?
Mr. Marten: I doubt that very much. I cannot see that the aid budget will be underspent as I consider the present position.
Dame Judith Hart: It is the figure that is in the aid framework that matters, namely, the figure for IDA spending in this financial year. To the extent that there is a figure in the aid framework, it cannot be allocated elsewhere, and not until January-February is it possible to discover that the figure allocated to the IDA is unlikely to be fully spent by the end of March. It is then too late to allocate it to other further spending. It is the figure in the aid framework that matters, the figure that has been allocated to the IDA spending for this year.
Mr. Marten: That comes back to the depositing of the promissory notes for the years one, two and three. It is a technical point——
Dame Judith Hart: No.
Mr. Marten: It is a technical point on which I do not claim to be expert after one year——
Mr. McNamara Mr. McNamara rose——
Mr. Marten: I had better get on be cause the debate last only until——
Mr. McNamara: My intervention is on the aid framework.
Mr. Deputy Speaker (Mr. Richard Crawshaw): Order. The hon. Member for
1500
Kingston upon Hull, Central (Mr. McNamara) must not rise and start speaking unless the Minister gives way.
Mr. McNamara: With great respect, Mr. Deputy Speaker, if the Minister knew the issue that I wished to raise, he might be willing to give way. It relates to the aid framework——
Mr. Deputy Speaker: Order. The hon. Gentleman cannot explain his intervention before the Minister has given way, and he obviously has not given way.
Mr. Marten: I have not given way, Mr. Deputy Speaker.
Mr. McNamara: May I ask the hon. Gentleman——
Mr. Deputy Speaker: The hon. Gentleman should ask the Minister, not me.
Mr. McNamara: Will the hon. Gentleman give way on the aid programme?
Mr. Marten: No.
Mrs. Gwyneth Dunwoody: Why not?
Mr. Marten: Time is running on. This is a limited debate.
Mr. McNamara: There are 40 minutes left.
Mr. Marten: I was asked a number of questions. I must explain to the House that I am not an instant mathematician with expertise on the percentages by which budgets fall, or other percentages. I shall write to hon. Members on the points they have raised when I am able to get out my calculator and work out the figures accurately. I am very bad at the instant calculation of percentages.
The right hon. Member for Lanark (Dame Judith Hart) asked about EDF expenditure as a percentage of multilateral and total ODA expenditure. I regret that I am unable to give figures for 1980–81 and 1981–82. It is not the practice, as she knows, to announce forward planning figures. These are based on—and I think that I use her own words to a Select Committee—intentions and assumptions which may not be realised. She will understand, for example, that the date of entry into force of the second

1501
Lomé convention could have a substantial effect on the size of our contribution to the EDF 5 in the current financial year. Before she intervenes, may I remind her that the next debate is on the European development fund. My hon. Friend the Minister of State, who is here, heard what she said. Perhaps she will stay and put her points to him.
Dame Judith Hart: I do not want to press the Minister unfairly on this. My understanding has been that we have a commitment to the European Community for a certain contribution each year and that this has been an increasing contribution over the years. Therefore, unlike other aid framework figures, it is not quite so mutable.
Mr. Marten: The commitment to the Lomé convention was made as a global sum about this time last year.
Dame Judith Hart: This is our commitment to the EDF?
Mr. Marten: Yes. This is our commitment to the EDF. The figure is 18·7 per cent.
The right hon. Lady asked about aid performance as a percentage of the GNP. The net official development assistance in 1979 amounted to £974 million, equivalent to 0·52 per cent. of the GNP, which compares with £759 million in 1978, equal to 0·47 per cent. of the GNP. These figures are compiled according to the OECD development assistance committee's revised basis of a settlement, which requires the inclusion of promissory notes deposited in respect of certain multilateral agencies instead of cash drawn down by those agencies. That comes back to the answer which I, perhaps rather ineffectively, gave earlier.
The change was introduced to ensure proper international comparability of aid performance figures. A detailed explanation of the change is contained in the 1979 development co-operation review by the chairman of the OECD development assistance committee.
I have here a table which I confess I cannot read as I do not have my spectacles with me. It is very small print. It gives the 1978 ODA performance figures for DAC member countries on the revised basis of reporting. The average for DAC
1502
donors as a whole was 0·35 per cent. of GNP. The United Kingdom's performance compared well with this figure and was significantly greater than those of certain of our other major industrial partners : West Germany, for example, 0·38 per cent., the United States, 0·27 per cent., and Japan, 0·23 per cent. We need not be ashamed of our performance. The 1979 data for all OECD countries will not be published until the end of June.
The right hon. Lady and others raised the question of the United States legislative position. Authorisation by the United States Congress is necessary for IDA 6 to become effective and for the United Kingdom to become legally bound to make its contributions, as effectiveness requires a commitment of about 80 per cent. of total contributions. The proposed United States share is 27 per cent.
As the right hon. Lady will remember, there has been difficulty in obtaining timely congressional approval for the United States contribution to previous replenishments. A bridging arrangement was agreed for the IDA fifth replenishment in 1977 which enabled IDA to continue to commit funds to projects, pending United States legislative authority for its contribution.
As regards the IDA sixth replenishment, there is no certainty that Congress will eventually authorise and appropriate its full contribution, and we and other donors are therefore reluctant to consider a bridging arrangement. Congress is due to debate the relevant Bill on or about 18 or 19 June. If no authority or appropriation has been secured by 30 June, representatives of all donor countries will be convened by IDA to discuss how to proceed.
My hon. Friend the Member for Norfolk, North-West (Mr. Brocklebank-Fowler) asked about the administrative costs of the IDA operation. He gave notice of that question because he raised the same question in Committee three years ago. Having read the report of that debate, I was forewarned. For the five years ending June 1981, actual or estimated administrative costs vary from 5·4 per cent. to 6·2 per cent. of gross disbursements for IDA and the International Bank for Reconstruction and Development combined. The two institutions have the same staff. Next year's figure is budgeted to be 5·6 per cent. For IDA alone the figures range from

1503
5·6 per cent. to 10·2 per cent. Next year's figures are budgeted at 8·9 per cent.
The wider variation in the annual figures for IDA reflect lower than budgeted disbursement figures in recent years due to problems encountered in the implementation of projects. The fact that administrative costs measured against gross disbursements tend to be higher for IDA than for IBRD reflects the greater difficulty in administering aid to the poorer countries that form IDA's clientele.
At the start of each year, the World Bank produces a detailed, analytical statement of its administrative costs and other budgetary projections for approval by the executive board. The bank is highly cost-conscious, and year-on-year statistics indicate that its administrative efficiency is of a high order. A valid comparison of the administrative costs of the World Bank with those of other agencies cannot readily be made, because the World Bank carries out a range of tasks, such as research and advisory work, that cannot be paralleled in other lending institutions.
My hon. Friend also asked about voting rights. The voting rights on IDA are dependent on our contributions
1504
throughout the period since IDA's establishment. Our present contribution, which is very much in line with our share in previous replenishments, will not have any substantial effect on our voting rights. My hon. Friend also asked about the percentage of business that we got out of it. I mentioned that point in my opening remarks, but perhaps my hon Friend was not then in the Chamber. I said that the IDA was also a useful source of procurement for British firms. In the 12 months to 30 June 1979 $66·2 million was earned by United Kingdom businesses. That was 10·2 per cent. of the total foreign procurement by the IDA in part I countries. It is important to bear that in mind when discussing the amounts that we propose to contribute in the new replenishment.
Many other points have been raised which I either cannot answer or remember. I shall go through the report of the debate carefully and will write to hon. Members on any points that I may have missed. I hope that the House will approve the order.
Question put and agreed to.
Resolved,
That the draft International Development Association (Sixth Replenishment) Order 1980, which was laid before this House on 13 May, be approved.

EUROPEAN COMMUNITIES (DEFINITION OF TREATIES)
11.18 pm
The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hard): I beg to move,
That the draft European Communities (Definition of Treaties) (Second APC-EEC Convention of Lomé) Order 1980, which was laid before this House on 3 June, be approved.
I also seek approval for the three treaties that are listed in the schedule to the order, namely the new convention, the provisions for tariff-free access for ACP products in the area covered by the ECSC, and the arrangements for the implementation of the Community's aid obligations. All those documents are contained in Cmnd. 7895.
In addition, I understand that the House has asked for consideration to be given to document 11817/79, which provides for maintaining the main provisions of Lomé I in force, pending the complete ratification of Lomé II and also document 11932/79 which governs the relations between the Community and the dependent territories of member States. The first of these documents breaks no new ground and the second is modelled directly on Lomé II.
The Lomé II treaty, which we are discussing this evening, is of quite substantial importance between the European Community and 58 developing countries. Twenty-nine of these—exactly half—are members of the Commonwealth. In fact, they constitute two-thirds of the membership of the commonwealth, so we are dealing here with a substantial treaty covering a substantial part of our relationships with the developing world.
The negotiation of the treaty spanned the general election and my predecessor in this post, Mr. Frank Judd, played a strenuous part in getting the negotiations under way. They were difficult negotiations, and towards the end the negotiating room became fairly smoke filled. Quite naturally, the ACP countries were trying to introduce into the Lomé negotiations many of the ideas—some of which we debated yesterday to some extent—for a new international economic order. There were difficulties on the European side in dealing with some of these requests, and therefore the nego-
1506
tiations—rightly, because they were dealing with real issues and not rhetoric—took a long time. One of the sessions lasted 26 hours. But when the smoke cleared and agreement was reached, it could be fairly claimed that the second Lomé treaty, while not a sensational breakthrough in the area of the North-South dialogue, was, nevertheless, a solid achievement. It preserved all the achievements of Lomé I, and added to them. It preserved in particular the basic principle of the first Lomé treaty which is, of course, free access to the European market for industrial products from ACP countries.
I shall summarise briefly the main ways in which the new Lomé treaty developed from the first Lomé treaty. In trade the new Lomé treaty affirmed all the benefits of Lomé I, and in addition it provided better access to the Community market for various agricultural exports, including some of the most important ones from the Commonwealth point of view—rum, which is very important to the Caribbean countries, and beef which is important to Botswana, Swaziland and Kenya—particularly Botswana. It has also revised and improved the banana protocol.
Some of the complaints and difficulties of the ACP countries related to the operation of the rules of origin, which were designed to ensure that the access promised acted in favour of products originating in the ACP countries concerned. There is now more flexibility in the new treaty in this respect.
Sugar was not discussed because the sugar protocol does not have an expiry date. It is an indefinite protocol, and therefore did not come forward for renegotiation. It continues and we fully support it.
The next matter was the Stabex scheme which was an important innovation in Lomé I. In the new treaty it covers an expanded list of products. Eight new products have been included for the first time, including rubber, and a number of others which are important. The Community also agreed to consider the possibility of including tobacco and sisal, both of which are important to Commonwealth countries.
There are a number of new provisions that increase industrial co-operation.

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The right hon. Member for Lanark (Dame Judith Hart), in the previous debate, raised the question of aid. It is difficult to produce the figures in the exact form that she wanted. We do not give forward figures for our bilateral aid programme. I can give the figures for the European development fund in the five years covered by the new treaty. It was one of the most substantial points of argument. Naturally enough, the ACP countries were pressing for an even more substantial increase in the aid than we were able to undertake. Nevertheless, there is a substantial increase. The total for the new five-year period will be £3,136 million, which represents a substantial increase over Lomé I. I have given the figure in sterling for the convenience of the House.
The Commission reckoned that inflation between Lomé I and Lomé II could be estimated at 40 per cent., and it is worth pointing out that the new fund in Lomé II is 54 per cent. bigger than the Lomé I fund. That is a real increase over and above the figure for inflation. One could argue about the proper figure for inflation, what account should be taken of population and so on, but that is an endless argument. My point is that the new figure represents a real increase.
The United Kingdom share of the new European development fund under the new treaty is 18 per cent., as, broadly speaking, it was under the old, although there has been a slight adjustment. Our share amounts to £523 million over the five-year period. That is a substantial sum by any account.
There is a new arrangement for minerals. That is an innovation in the new treaty, designed to cover the special problems brought to our attention of certain ACP mineral producers, notably Zambia and Zaire, which have suffered acutely from disruption of mineral production for various reasons. Minerals do not come under the Stabex, and therefore may be claimed. After much discussion and negotiation, a new arrangement has been designed, and we shall have to see how it works out. It is intended to remedy the harmful effects on the income of those countries of serious temporary disruptions of mineral production beyond their control.
The Community emphasised the importance of encouraging and protecting
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investment. Various new commitments were undertaken, designed to eliminate discrimination and thus encourage investment.
There is a new chapter on agricultural co-operation, and a new technical centre for agricultural and rural co-operation. There is also an expanded declaration on sea fishing, providing for the possibility of bilateral fishery agreements.
I have tried briefly to summarise how the new treaty represents an advance on the old. I do not claim that these advances add up to a total breakthrough. Nevertheless, they are advances, when so often the accusation against Europe and the developed world generally is that we are in retreat in these areas.
From a United Kingdom point of view, the negotiations were on the whole satisfactory. We achieved the main objectives that we sought. One disappointment was in the difficulty that we found in inserting in the new treaty a substantial provision about human rights. The previous Government set their hand to that. As the right hon. Member for Plymouth, Devonport (Dr. Owen) made clear, they knew the difficulty of asking ACP countries to insert in a treaty about economic co-operation even a provision in the preamble about human rights. That proved to be too difficult, but the new treaty refers to the principles of the United Nations charter which cover human rights and the preamble describes one of its aims as being to promote the well-being of populations—as opposed to Governments. That is the main point that the House, the Government and the previous Administration have aimed at. We want to make it possible for the Community in cases of flagrant violations to take particular care that its aid benefits peoples and not regimes.
That was the difficulty that arose in the case of Uganda before President Amin was overthrown and we want to ensure that, as in that case, we can make sure that aid benefits people and we believe that our discussions in the Community and the references, albeit oblique, to human rights in the new treaty will make that possible.
There is one point to which we attach great importance. We and the Select Committee on Overseas Development in the previous Parliament have worried about the small proportion of the business

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arising from the EDF that is taken by British firms. As the figures that I have given indicate, there are substantial opportunities for British firms, not only in the new fund, but in the 20 per cent. of the Lomé fund that has still to be taken up.
Up to the end of 1979, only 10·2 per cent. of all EDF business won by firms in the Community had gone to British firms. That contrasts with our contribution of 18 per cent. to the expenditure of the fund. We have been trying to get to grips with the problem, to see where the problems are and to alert the Commission, our delegation in Brussels, the Commission offices throughout the ACP countries and, above all, British business so that our firms realise the opportunities. There is some preliminary evidence that the position is improving. British firms won nearly 13 per cent. of all EDF business won by member States in the latest period for which figures are available. However, there is still a long way to go before we can be satisfied that we are getting our fair share of the business. That is something that we in the Foreign Office and our colleagues in the Department of Trade are anxious to see improved.
Mr. Frank Hooley: Another point that worried the Select Committee was the considerable slowness in disbursing EDF funds. Is any attention being paid to that problem, and are the Government taking steps to try to speed up the process?
Mr. Hurd: That is a fair point. Of course, the Commission has a problem here. It is anxious to ensure that projects that are submitted meet the high standards that are reasonably required and we must be chary of criticising slow disbursement on the one hand and suggesting that the administration is a little slapdash on the other. There is an increasing realisation in the Commission that the problems of administering the European aid programme are substantial and that the machinery for doing so needs to be tightened up and improved. The Commissioner concerned, M. Cheysson, deserves a good deal of credit for the energy that he has devoted to that task. The procedures have improved over the past year or so.
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We mean to play our full part in Lomé. We think that it is an important exercise, particularly because of the growing participation of the Commonwealth in it. The new secretary general on the ACP side is a Kenyan. We are anxious to keep in close touch with the Commonwealth members of the Lomé agreement. Yesterday the House showed its considerable interest in this general area of the North-South dialogue. One of the difficulties of the dialogue is that it produces a great many well-meaning conferences which are a bit strong on rhetoric and slow on action. The Lomé treaty is, by contrast, a real agreement, about real trade and aid. To that extent we think it is important, and we intend to give it full support.
11.35 pm
Mrs. Gwyneth Dunwoody: It is probably very sensible for us to be discussing, in a week when the Brandt Commission has been one of our main considerations, the implications of the Lomé treaty. The Minister said that one thing about the Lomé agreement was that it was about real things, about trade, about the way we could develop our relationships with the developing world. This is a good moment to examine Lomé because we now have a second treaty. In spite of the kind words about the development, the advances, the improvements, we have a need to look at it fairly objectively.
What, then, will we find? Lomé is basically an agreement between the Western European countries and those of their ex-colonial partners. It has one fundamental difficulty and it is one that is rarely discussed in detail. That is that there is a positive divide between the Francophone and the Anglophone countries. I am not, in case anyone should think that this is our "Let's hate the French week", bothering to use the normal arguments that the British know how to deal with former colonial territories and the French do not. I am simply pointing out that there is one great stumbling block in Lomé. That is that the British, when dealing with English-speaking former colonies, will always recognise that, once a territory becomes independent it has a responsibility for its own affairs. It certainly has a liaison with the countries of the Commonwealth but

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such a country has the duty and the responsibility to concern itself with its own trade agreements and to fulfill the role that it sees for itself in world trading.
The former French colonies, on the other hand, have a totally different relationship with the mother country. That is one, in many instances, which is reflected in Lomé as almost a subsidiary status. We see, time and again, inside the agreements that are put forward under the umbrella of Lomé, an extraordinary anomaly whereby English-speaking countries, when they enter into agreements with Lomé are always firmly put on the side of ACP while, on the other hand, the French-speaking territories are given specific trade agreements and a considerable number of concessions, on the basis that they are part of the territory d'outre-mer. This has produced an extraordinary situation inside the Community.
Let me give an example. When, as a member of the agricultural community, I asked why it should be that considerable concessions were given to pineapple growers of the French islands of the Caribbean I was told "You do not understand. They are part of metropolitan France." When I then asked why these concessions should not be given to the English-speaking countries of the Caribbean I was told "You do not understand. They are not part of metropolitan Britain."
All that we should do at this point is to say to ourselves that if Lomé is a trade agreement, if it is to be upheld, as the Government appear to be upholding it, as an advance on the relationships that we have with the under-developed world, let us look at the way it is operating and let us look at what is wrong with it. I shall tell the hon. Gentleman what is wrong. It is fundamentally paternalistic. Its interests lie in protecting those aspects of European trading policy that have grown from the ex-colonial relationship previously to independence. It enshrines, in many instances, the very discrimination that it purports to do away with.
The present Lomé convention is only a marginal advance in terms of trade on the previous convention. It says, for example, that there is free access for agricultural exports from ACP nations. That is fine. What it fails to say is that, inside the Community, policy decisions
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are being taken in fundamental ways that will affect the world markets of the ACP. I take sugar as an example. We are told that there is no need to discuss sugar because it has not been at risk in these negotiations and has not even been discussed. Is it not true, however, that inside the Community, the sugar beet producers, year after year, are encouraging and developing their own production and receiving positive subsidies from the Community in such a way that, when the sugar quota is far greater than necessary, sugar will be unloaded on to the world market in opposition to the ACP countries themselves? While saying that access is being provided to our home markets, we are going into positive competition with those countries on world markets. That can do them nothing but harm.
We are told that, under the new Lomé convention, new agreements have been reached on rum. I looked carefully at the implications of the rum protocol. What happened under the previous convention was scandalous. We were told that there would be special arrangements for the rum exports of ACP countries. When it came to the point, the quotas negotiated had the effect of restricting the export of rum to the Community markets. We are now told that agreement has been reached with the ACP and that all should be well.
The treaty actually says that if there should be agreement on a common organisation of the market in alcohol, the arrangements for rum will have to be examined again. The common arrangement in relation to alcohol internally in the Market means that because far too much wine is already produced, we are looking for an absurd scheme of distillation that will produce considerable advantages to the growers and very few advantages to consumers inside the Community.
It appears to be suggested that because a surplus already exists in a particular field for which no practical answer can be found, we may have to restrict the access of rum to the Community because it would be one way of getting rid of our own agricultural surplus.
Mr. Kevin McNamara: Not, of course, rum from Guadeloupe because that is a departement d'outre-mer
.
Mrs. Dunwoody: I should have made clear that everything I say relates only to those countries that are not departements d'outre-mer. I should not wish to be ruled out of order by using any dreadful foreign language. I should perhaps say that my remarks relate only to English-speaking African, Caribbean and Pacific countries and not to those that are French-speaking, for which there are special concessions.
In the new treaty, there are problems with rum. Although, on the surface, it looks as if there is agreement, there is written in a caveat saying "We will let you do it now, but if there are any difficulties, you will be the first to suffer.'' We have problems with beef. We have problems with bananas. The Minister sped rapidly over the question of the banana protocol. The British have complied with the terms of the banana protocol and have done whatever they can to organise the market in bananas, but many Continental countries have used non-tariff barriers to keep out bananas from nations which are not traditional suppliers. That happens again and again under the Lomé agreements.
What does the Minister mean when he talks about the advantages of the Lomé convention in terms of the new Minex and Stabex? One of the policy decisions taken a long time ago was that there should be a positive means of stabilising the market for nations which rely on one basic mineral or commodity. Not surprisingly, ACP countries which were worried that they did not come within the scope of the original Stabex agreement were anxious to expand the money available and to put it into a more efficient fund.
A fundamental policy argument is involved. Lomé should not be a cheap way of providing minerals for the developed countries of Western Europe. It should be accepted as a straight transfer of resources from the rich nations to the poor nations. Even with its paternalistic flavour it should at least be possible to say "We believe that there is a problem. We have examined the difficulties and we have agreed to help you to develop existing markets."
The Select Committee, from which the Minister quoted so approvingly, made it clear that it believed that the successor convention should make it explicit that,
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short of a total abrogation of the treaty relationship, the EEC will not discriminate and will include aid and public investment funds against the development of export industries in ACP States. The Select Committee said that it regarded the Lomé convention as a straight aid to ACP nations and not as a means of safeguarding their mineral interests.
If that is so, about what sums are we talking? Are we talking about an efficient organisation with access to real sums that will enable exporters of minerals to stabilise world prices? Are we talking of a movement towards proper commodity agreements or about a gesture? Gesture politics are in favour with the Government. They have cut positive aid and tell us that they are making a great contribution to the Lomé convention. That is not good enough.
Mr. Anthony Nelson: The hon. Lady said that the Lomé convention should imply a clear transfer of resources to developing countries. Such a statement must be incompatible with the principle behind Stabex and many of the commodity, equalisation or stabilisation proposals. The essence of those schemes is an artificial price for commodities. Such artificiality makes sense neither to the developed nor the developing countries. The hon. Lady is saying that such aid should be overt and that the market should be free. It is difficult to understand her support for the clear transfer of resources when she argues that there should be an artificial pricing system.
Mrs. Dunwoody: I am sorry if I did not make myself clear. My argument is terribly simple to me. It is that, in the case of nations that rely heavily on one commodity or agricultural export, we should be prepared to take that dependence on a narrow exporting base into account when we calculate the arrangements that we make within the Community.
I believe that when we talk about the amounts of money available to Stabex or Minex we should make it available on the clear basis that it is in the interest—put in the most narrow terms—of the Western world that there should be orderly commodity markets. It is certainly in the interest of the producing countries that those markets are capable of being planned in a reasonable way so that the

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countries concerned know how much money they have coming in ; so that they are not at the obvious risk of having their entire economy wiped out by speculation in particular commodities and that they have guarantees that the people with whom they are dealing, namely the Communty, have thought about the implications of the market and are prepared to put their money where their mouths are. That is to put it in a rather crude way.
I thought that that was the point that I was making clear but if I was not I hope that the hon. Member for Chichester (Mr. Nelson) will acquit me of any double standards. I wish to make it clear that I believe that, though this is a trade agreement, it is, nevertheless, plainly part of the aid that we should be prepared to give to the under-developed and lesser-developed countries with which we traditionally trade. That was the point I was making strongly. I hope that the Minister catches your eye, Mr. Deputy Speaker, so that he can tell us how much money Minex has at its disposal and how much more money Stabex has at its disposal than it had before.
I come to a point which I believe follows immediately on that one. We are told that there should be no discrimination against products that compete with Community products. That statement is in the treaty. I must say that one of the sad things that one learns when one sits, as I did, for many years on ACP committees is that there is a normal ambivalence which we seem to elevate to the status of a political policy in the Community in our dealings with the ACP.
On the one hand we say that we are going to give those countries money and technological help; that we will give them expertise and send out people to show them how to organise better and produce more. The treaty says that we will help them to market and assist in ensuring that the things that are produced will be given freer access to the Community. But as soon as those commodities come into conflict with anything that we traditionally produce we put up a number of barriers.
They are not always obvious barriers. I must be fair and say that the British are not as efficient at putting up barriers as are the French. The French are very good at it. They know how to bring into operation all sorts of things from
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their gendarmerie to the width of particular manufactured goods and they know how to make sure that their own markets are not too fully, or too rapidly, impregnated.
However, the fundamental problem remains. The Community is committed to assisting investment. It is, presumably, accepting that many of the nations with whom we trade will move out of the commodities which suit us into the manufactured goods which we normally expect to sell to them. What it does not say is what its attitude will be when that point arises.
There is clear evidence that we will then put up considerable barriers against the products of the Third world and say that it is not convenient for us to afford free access to them once a country has arrived at the point where it thinks it is able to sell to us.
I should like the Minister to say that the Government have considered the implications of the kind of technological advice that is enshrined in the new treaty and that they are prepared to accept that there will be occasions when we must give real free access to manufactured goods and that that will produce considerable political difficulties for us inside the Community.
Some of the other points may not be as important as those that I have mentioned, but the length of the treaty was raised more than once by the Select Committee on Overseas Development and certainly by the ACP nations. It is a shame that, when they are trying to plan their forward economic involvement with the Community, they are restricted to five years. It makes it virtually impossible for them to have any long term planning. Some ex-Commonwealth countries, which had much longer term agreements under previous United Kingdom treaties, are now suffering.
When the Minister said that Commissioner Cheysson had looked closely at the operation of the machinery that is needed, he perhaps overstated the matter. The machinery inside the Community is not only inefficient, but extremely slow and incompetent. In many instances it uses the excuse that the ACP partners are unable to give the necessary information and details to promote particular projects when there is clear evidence that the problem lies on the side not of the

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ACP countries, but of the Community. I put on record that over four years I have complained bitterly to the Community that its machinery is not geared to deal with the emergency situation. It is certainly not geared to deal with the fairly urgent but not dramatic crisis. Over a long period it has proved itself inefficient in dealing with even the day-to-day administration of the ACP problems.
I welcome the one change in the treaty which seems to suggest that in future the cost of the EEC staffs in the ACP countries will be borne not, as before, by the EDF, but by the Community itself. I think that is important. It is also vital that the staff who arrive in the country with which the Community is trading should be efficiently geared to getting the information back to the Community as fast as possible and to producing projects which are simply and easily put into operation. We should move away from this business of having two years of preparation before quite small sums are expended on the ground. I hope that the Minister will look carefully at that aspect when he talks to his colleagues in the Community.
We are told that the amount of money that is to be spent under this new Lomé convention is larger than the amount that was to be spent under the previous one. In fact, we are told that the British share will be 18 per cent. over five years. I do not wish to appear to be ungracious to the hon. Gentleman, but I learnt a long time age to beware of those who speak softly and, without bearing the big stick, who occasionally seem to be concerned to push through their own ideas irrespective of the people with whom they are dealing.
The Lomé convention is still resented, even by many of the nations involved in it. It has no section dealing with some of the poorest nations of the world. It excludes the whole of the Indian Subcontinent. It restricts itself narrowly to those areas of trade which would appear to the outside world to be of interest to the EEC and not automatically to the ACP countries. It has a basic problem inasmuch as it has not yet been prepared to look at the way that internal Community policies affect external Community policies, particularly in agriculture. Sugar is a basic problem, but there are
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other areas where the Community takes decisions internally with, apparently, no concern for the commitments that it has given in the ACP to the nations outside.
I do not believe that it is all that one hopes for in a trade agreement. It is a small step in the right direction, but that is not always enough. I know that the Government do not have any strong feeling that we should take a lead in the North-South dialogue, but I would like them to say that, if we are to transfer resources in a meaningful way from the richer nations to the poorer nations, this agreement is one way in which we could begin to look at the machinery to see where it could be improved. In effect, we have patched up a fairly inadequate agreement. We have not been prepared to be honest about many of the difficulties involved. Having said that, I suppose that I shall have to give it one small cheer, and hope that we shall do better next time.
12.2 am
Mr. Nigel Spearing: My first point of a number of short, sharp points, is procedural. Technically we are not debating the Lomé treaty but the European Communities (Definition of Treaties) (Second ACP-EEC Convention of Lomé) Order 1980, which is the means of ratification of international treaties under the European Communities Act 1972.
I make complaint yet again about the explanatory note attached to the statutory instrument. We thought that there might have been some reference to the nature of the ACP-EEC convention of Lomé. Instead, there is the startling sentence :
"The principal effect of declaring the Convention and related agreements to be Community Treaties as so defined is to bring into play, in relation to them, the provisions of section 2 of the European Communities Act 1972 which provides for the implementation of treaties so specified."
There is no description of the meaning of the convention of Lomé, the numbers of ACP countries concerned—I am not suggesting that they should be listed—and, broadly, the matters covered by the treaty. A brief explanatory note of a couple of paragraphs could have covered those items admirably. I have mentioned this matter in the House on a number of occasions. It appears that the Department concerned with the definition of treaties

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orders is either blind, deaf or illiterate—I suspect that sometimes it is all three.
I wish to ask the Miniser about the technicalities of the treaty, which he did not mention in his introduction. It is still to be ratified and there are provisional regulations to which he referred at the beginning of his speech. For the record, will he tell us, if ratification proceeds smoothly, when the treaty will come into force? Presumably it ceases to take effect five years after the date of its implementation. The order does not help us in that respect. It does not tell us the date, and it is not contained in the treaty.
My second point relates to the printing of Cmnd. 7895. The treaty, which was signed in late October 1979, has almost certainly been printed in its English version of the EEC documents. I have seen some pink documents around this evening. But Cmnd. 7895, which is the United Kingdom version of the treaty, was presented to Parliament by the Secretary of State for Foreign and Commonwealth Affairs in June 1980. Therefore, the print in the Vote Office is of relatively recent origin. Although we have scrutinised it in some way, it has not been published in the United Kingdom for very long—possibly a matter of weeks or even days before its effective ratification this evening.
My first major point is related to sugar. My hon. Friend the Member for Crewe (Mrs. Dunwoody) properly referred to this, and I think that the Minister did, too. It is in article 48 and protocol 7, which repeats protocol 3 of the original ACP agreement, and unlike the treaty, the protocol is one of indefinite period. Nevertheless, we cannot dismiss it entirely because it was done in relation to Lomé, and, as my hon. Friend pointed out, the departements d'outre-mer always come into it. Indeed, Reunion and Gaudeloupe produce sugar which is part, I believe, of the beet quotas of metropolitan France.
Protocol 7 repeats the original protocols. There has been argument about the operation of the force majeure clauses. If there is a shortfall, particularly due to climatic conditions, and the Commission has it within its power to reallocate the quotas, meaning a permanent reduction in the quotas of some of the member States, there has been argument between the Commission and the member States as to whether the force majeure provision was really necessary, and about its operation.
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I understand that there have been agreements since those arguments which have regularised the position, but I notice that they are not so written into the renewing of the treaty. I am not necessarily suggesting that they ought to be, but if some modus vivendi has been reached on this, at what stage is this, as it were, entrenched in some sort of agreement, or is it a gentleman's agreement? I have no wish to say that it should not remain so, but I think that if there have been arguments in relation to force majeure and sugar and if they have been resolved, there should be some means of so defining that.
My second point follows up that of my hon. Friend in relation to what appears to be an almost permanent negotiation. Here we have what on any ground is a fairly thick volume of 191 articles and seven protocols, which is in operation for only about three years, or even less than that if it is not ratified, and then we start the round all over again. This was a matter of concern to the Select Committee on Foreign Affairs' Sub-Committee on Overseas Development. It puts a considerable onus sometimes upon very small territories in having to watch out for matters which could be of vital significance to their internal economies. I notice, with some wryness, that the Minister was signing the treaty with three hats. I understood that he did it on behalf of Her Majesty and on behalf of the Solomon Islands and Kiribati, for which he was appointed plenipotentiary.
I am not suggesting that that is in any way irregular or wrong, but it underlines my point that some of the smaller members of the ACP treaty will find it very hard to keep up with the marathon negotiations and will have to get others to negotiate on their behalf. I do not know whether it has happened before. I suspect that it may have happened. But here we have the Minister having signed the treaty with three hats and on both sides at once.
The Minister referred to beef and Botswana. It seems extraordinary that Botswana, until fairly recent discoveries one of the poorest of Britain's former territories in Southern Africa, should need such a lot of trouble to ensure that its beef is exported to traditional markets in the United Kingdom.
Mr. McNamara: One day's supply.
Mr. Spearing: I was about to remark that I thought that it was three days' supply, but my hon. Friend tells me that it is one day's supply for the EEC. Is haggling over that sort of figure really necessary, and does it mean that Botswana will have to fight again in five years? If, in five years, the expected mineral riches materialise, will the arrangement fall? If so, it would have severe consequences for the people who are dependent for their livelihoods on cattle-raising in Botswana. I do not believe that anyone would like those herds to be decimated, or people to lose their jobs or to go out of business in favour of becoming miners.
I know that the Minister will not be able to answer that point, but I use it to illustrate that the Lomé convention is not what many people have said it is. It is spoken of as a great new breakthrough in North-South relations. The Minister is shaking his head, but he did not shake his head five years ago when his party was in opposition, and when certain people advocated the championing of the Third world by the EEC. It was said then that the Lomé convention was a new stage in the relationship between the rich North and what we now call the South. I suggest to the Minister and to the House that the Lomé convention is not as it was cracked up to be.
Can the Minister of State say whether there has been any change in the criteria for investment of the European development fund? Another matter that engaged the attention of the Sub-Committee was the sort of project in which the European development fund, in association with the European investment bank, appeared to be interested—in particular, the curious distortions of investment and disbursements from the European development fund in relation to the per capita disbursements to members of the ACP.
There seemed to be a considerable imbalance in Lomé I as there was in its predecessor, the Yaoundé convention. Perhaps the habits of Yaoundé were continued in Lomé I. I had hoped that they would have been ironed out in Lomé II. The Minister may not be able to say now whether there were agreements that would have assisted those changes, but he may wish to reply to that point later.
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That was another concern of the subcommittee, and it underlined my hon. Friend's point that the Lomé convention is not a partnership. It is a means whereby some of the former colonial territories to which we have obligations can be assisted—but only where it also suits the convenience of the EEC. The proof of that is shown not only in the exclusion of some large countries—former and present members of the British Commonwealth—but of some not so large territories, such as Malaysia, whose trading links with Britain were broken to some extent after our accession to the EEC. Therefore, I cannot commend Lomé II wholeheartedly to the House. I would give it two-and-a-half cheers at the most.
12.14 am
Mr. Kevin McNamara: I am in a difficult position. My hon. Friend the Member for Crewe (Mrs. Dunwoody) suggested half a cheer for the new convention. But my hon. Friend the Member for Newham, South (Mr. Spearing) who sat with me for many long hours on the Foreign Affairs Sub-Committee on Overseas Development has suggested two-and-a-half cheers. I cannot say that I am torn between either. It is in the nature of their characters that they are both being over-generous.
Anyone who considers objectively the arrangements that have been made through Lomé with the ACP countries must come to the conclusion that someone is getting something out of it. It is true that the ACP countries are getting something out of it, but the majority of what is to be obtained is finding its way to the countries of the European Community. If that is so, we have a trade agreement which is based upon former Imperial ties, whether it be of the French, the British or the Belgians, and the general principle of exploitation, or, if not that, at least upon that which does not present immediate competition to us. On the North Hull estate, for example, there are no great banana plantations. It is an agreement that will not produce any immediate pressure upon our resources, our manufactures and our own industries.
If I felt that there was a community of interest between the banana producers

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of the Caribbean or Africa and the machinery producers of my constituency, I might believe that there was a compatability and a mutuality of interest about which the Brandt Commission speaks and supports so strongly. I do not happen to believe that such an arrangement exists in the philosophy behind the Lomé convention.
When we were discussing, thinking and talking about this matter in the Select Committee, we came to a conclusion among ourselves that the agreement with the ACP countries existed for the benefit of the ACP countries but that the greater benefit existed for the countries of the Community. The ACP countries are given access to our markets for goods that we cannot produce—especially agricultural products—and we supply goods to them that do not amount to a parallel of agreement. That is because they have supplies from other sources or because they have no interest in or cannot afford to buy the items that we are prepared to sell. In many ways the traffic is one-way.
The small-mindedness of the agreement is illustrated by Botswana beef. There was not great interest in that activity until the enormous mineral and diamond discoveries in Botswana. Presumably it will become an area for competition between EEC countries. Britain will suddenly remember its Imperial heritage, notwithstanding the evils of South Africa, when it comes to who shall control, govern and who will exercise control over that market.
I speak with a degree of bitterness. Lomé could have presented an opportunity for the countries of the Community and the countries of the developing world to reach an understanding, an agreement, and an arrangement that would have been for the benefit of all. They would not have exploited us over the price of bananas and we would not have exploited them over the price of our manufactured products. There could have been a co-operative agreement, understanding and arrangement.
That opportunity has gone. We were not arguing and debating at arm's length. By no stretch of the imagination could it be said that the Lomé countries were as strong, as well informed or as technically competent as the countries of the EEC.
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The sub-committee, of which I was chairman at the time, suggested in its report that there should be a stengthening of the ACP's negotiating position, its ability and the facilities that it had to support its ideas.
The idea that we are arguing between equals just cannot be confirmed. It may exist as a figment of the imaginations of lawyers or the signatories of treaties, but it does not exist in fact. In some ways this was shown by the mild, if I may give it that epithet, alteration in the rules of origin. The rules of origin of added value in the ACP countries were to be of tremendous importance to them, if they could bring in semi-manufactured goods, add to and export them. Because of the way the rules of origin worked, it meant that they could not add any skill or entrepreneurial advantage to goods imported into their countries and then exported. Nevertheless, despite the fact that we could not give that advantage to the ACP countries, it still existed for those countries which were beyond the ACP. I refer to Hong Kong, Taiwan, South Korea and other countries in the Far East.
Stabex is still held up as being a tremendous example of how we, the munificent West, were prepared to give equality of treatment over the years to Stabex commodities. However, every one of those commodities we can use and exploit to our benefit. Any commodity that is shared with non-ACP countries—for example, commodities such as copper—are immediately put outside the scheme. Such an arrangement for copper would have been of tremendous importance to Zambia and Zaire.
The Minister of State referred to commodities and mentioned en passant the advantage of tobacco as a great new introduction into Stabex. Great. We give the people lung cancer and an early death to help improvements in Third world. However, we should be looking for those commodities which will improve the health of all people rather than a cash crop such as tobacco, which is now subject to a great deal of criticism from development agencies and the United Nations. Tobacco is a cash crop which produces an immediate income but in the long run results in detrimental effects upon the health of the people in the producer and other countries. I should have

1525
preferred the Minister to announce cuts in the list than the introduction of tobacco.
In these matters we take three steps forward and two steps back. We understand that. To regard Lomé as an important step forward in terms of the North-South dialogue and the improvement in the relationship between North and South is to look at it through spectacles that were rose tinted on the Côte d'Azur, in Knightsbridge or Régine's, but not to look at the position in terms of what is happening.
The agreement is dishonest. It completely cuts out the countries with the greatest problems. I have criticised Labour and Conservative Governments impartially. However. I may have adopted a degree of vehemence towards this Government that I did not adopt towards my party. The agreement does not include Bangladesh, which has an enormous problem. It does not include Sri Lanka, the Indian sub-continent, Pakistan or the enormous problems of South-East Asia. Those countries have been left out because the French did not have any interests in them. We did not want to include those countries because of the enormity of the problems involved. The French gave us a good excuse for leaving them out. It is wrong to regard the agreement as a great step forward in the North-South dialogue.
The agreement improves a neo-colonial and neo-imperialistic position. Although the agreement is of advantage to the developing countries en passant, it is designed to improve the position of EEC countries. If we approve the order, we do so on that basis. It may help the poorest of the poor. However, the agreement predominantly favours our selfish interests. It may be argued that we must look after Jack. However, if that is so, we must also look after Jill and the other parties to the agreement. We have not done that. We are co-partners in an agreement that is considered to be an example of forward co-operation between North and South. I do not believe that that is so. It is a paltry step forward, if that. As such, I do not even give it the half cheer that my hon. Friend the Member for Crewe was prepared to give. I certainly do not give it the two and a half cheers that my hon. Friend the Member for Newham, South gave. I shrug my
1526
shoulders and say that it is better than nothing. Anything that is better than nothing is better, but by God, nothing really is nothing.
12.27 am
Mr. Hurd: With permission, I shall reply to some of the questions that have been raised. The hon. Members for Crewe (Mrs. Dunwoody), Newham, South (Mr. Spearing) and Kingston upon Hull, Central (Mr. McNamara) have been rather grudging. Rather than re-enter the argument, I shall deal with the points on which clarification was sought.
As regards the length of the treaty, we would have been prepared to consider a longer period. However, a clear majority of the ACP countries preferred five years. The hon. Member for Crewe asked about the mineral scheme. Over the period of the treaty, £168 million has been allocated. The scheme is experimental, but it is generally designed to help those mineral producers who find—through no fault of their own—that their income and production have been disrupted.
The hon. Lady also asked about Stabex. The figures are £225 million for Lomé I and £330 million for Lomé II. She criticised the existence of safeguard clauses. However, they are commonly found in trade agreements and exist in GATT. As regards Lomé, they have never been used. However, if she considers the textile industry and constituencies such as Crewe, in which that industry is important, she will understand that there is a case for including safeguard clauses in such agreements.
I take the point made by the hon. Member for Newham, South about the explanatory memorandum. A full summary of Lomé II was put to the House in October last year, before the convention was signed, and again afterwards. The hon. Member is on to the right point over force majeure. There has been a problem. It was agreed at the ACP-EEC Council of Ministers meeting in May to institute the good offices procedures, which are provided for in the convention to consider the dispute. There has been a friendly decision as to how this matter can be handled.
The hon. Member for Crewe mentioned particular advantages for French overseas territories. Most of the Francophones involved in the treaty are independent

1527
States, and there is no particular discrimination in their favour. We have secured our special arrangements, such as the beef arrangement, which are of particular interest to the Commonwealth countries. The position over sugar is unchanged, while that of rum is somewhat improved. Of course one can make points against the CAP in this context, but I shall not enter into that argument now.
Mrs. Dunwoody: It appears from the treaty—and I hope I am wrong—that a marginal improvement has been agreed for the moment, but if a Community scheme for alcohol is agreed, it is possible that the concessions given on rum will be withdrawn. Is that the position?
Mr. Hurd: I take the hon. Lady's point. I have always understood that rum is an alcoholic drink, and if there were an arrangement for alcohol it would be perfectly natural and obvious that rum would have to be considered as part of it. However, there is no immediate prospect of the rum provisions that were negotiated with such difficulty being called into question in that way.
The main criticism has been that the treaty is paternalistic and selfish. The analysis which brings forward that criticism is becoming a little out of date. The ACP countries are now showing themselves to be robust negotiators. They are sticking up for themselves, and I can bear witness to that from my own experience. They are not quite the downtrodden exploited people that the hon. Member for Kingston upon Hull, Central supposes. They and we regard this treaty as a step forward, not solving all their problems, and certainly not solving all the problems of the countries which are outside Lomé. Nevertheless, the arrangements represent a realistic step forward, arrived at after difficult negotiations. The outcome is one that they and we welcome, and we all want to make it work.
Question put and agreed to.
Resolved,
That the draft European Communities (Definition of Treaties) (Second APC-EEC Convention of Lomé) Order 1980, which was laid before this House on 3 June, be approved.

WATER SUPPLY (BIRCOTES, NOTTINGHAMSHIRE)
Motion made, and Question proposed, That this House do now adjourn.—[Lord James Douglas-Hamilton.]
12.33 am
Mr. Joseph Ashton: Although it is well after midnight, I make no apology for detaining the House for what is a very serious problem in my constituency, namely the water supply to houses at Bircotes, in North Nottinghamshire, near Doncaster. Bircotes is the name of the colliery village for Harworth colliery. It has 1,050 houses which were built by the people who sank the colliery in 1929. There are about 3,000 people living there, and since the pit was sunk it has supplied about 100,000 gallons of domestic water a day.
In 1974 when the water industry was nationalised, this area, which is surrounded by the Severn-Trent and Yorkshire water authorities, came under neither of those authorities. The National Coal Board houses, which had been taken over on nationalisation, belong to the NCB, and it became the water authority for these houses.
There had been spasmodic troubles over some years before the events of spring 1979, when after cleaning of the reservoirs by the NCB, a dry spot occurred and mosquito larvae, worms, bacteria, and all sorts of foul, offensive-smelling bodies got into the water supply, and bred inside the pipes. This made the water discoloured, and turned it into a very offensive liquid that the villagers were expected to drink, bathe in, and use to wash their clothes. Naturally there was a great deal of anger.
The Bassetlaw district council was called in. The public health officer checked the water. He said that by world health standards it was fit to drink, although it was offensive to one's taste. Further, that officer and local doctors said that they would not drink the water and that it was barely fit to use to wash their cars. The world health standards for water ensure only that there it contains no cholera or typhoid. Water straight from the Nile or Ganges may be fit to drink. However, If the troops abroad had had to drink such water from the Nile or Ganges, they would have mutinied.

1529
After the negotiations with the NCB, which produced little result, the miners' wives demonstrated outside the pit and the miners went on strike. The strike lasted several days. The men felt that the board had refused to do anything about the water supply. At the end of May 1979 I was present at negotiations between the Severn-Trent water authority, the local authority, the union and the NCB. As an emergency measure, the Severn-Trent authority agreed to bring in tankers, which stood for several days on the street comers of the village. The board agreed that it would hand over supply to the Severn-Trent authority, having first put the supply system in order, which required the expenditure of perhaps several hundreds of thousands of pounds.
Everything seemed to be going satisfactorily, until May of this year, when we had another hot spell. The water again became foul, offensive and discoloured, with sediment, bacteria and larvae in it. The miners again felt that they had no option but to go on strike. Angry scenes ensued. In the preceding 12 months the NCB claimed that it had spent £5,000 on relining and cleaning out the reservoirs, and a further £26,000 on putting in new filters. The system was still not satisfactory. At this stage, after agreement with the Severn-Trent authority, an outside firm was called in to chlorinate the water heavily. Although the water then became clear, it had a strong smell of TCP or phenol and was still unsatisfactory to drink.
The original contamination probably occurred because the water source comes from underneath some old, disused coke ovens. The board wants to be involved with the water supply only to wash coal. It is not interested in being a water authority. Four years ago the board said that it would prefer to hand over responsibility to the Severn-Trent water authority, and merely use some of the water for washing coal. The source is no good, the system is no good and there needs to be a complete change.
The Severn-Trent authority has examined the position. It agrees that there needs to be a new supply of water to these 1,000 houses. It is test boring holes in Barnby Moor, a few miles away, something it has previously done at
1530
various places in the vicinity, including Everton, but that water has not been the right quality or quantity to supply the houses. Even if the Barnby Moor borehole is successful, it will be September 1981 before the authority can supply the houses. In the meantime, from May until the end of August this year and next year the same thing will happen. In August, when the schools go on holiday and industry tends to close for its summer holidays, these houses may be able to have a full supply of Severn-Trent water. From September onwards when the rains come, the pit supply will probably be good enough to keep going.
Obviously the people in the area are angry. They ask why the water authority claims that it cannot supply water or it has insufficient water when new houses are being built, new factories are being built—I opened one within a mile of the village on Friday—and they are immediately supplied with water, while houses that have been there for 50 years have to wait.
Obviously the people in those houses ask why the water authority cannot ration the water so that, perhaps, for one afternoon a week the water is switched off for everybody or there is a ban on hosepipes. They ask why new houses can immediately be put on to the water supply while existing houses have to put up with an unsatisfactory supply.
When I put those questions to the water authority, it blithely replied that the new developments were its customers and it had to give them priority and would continue to supply them, but the existing houses were NCB customers and the water authority had no responsibility for them.
The NCB would like to hand over the system to the water authority lock, stock and barrel and let it supply water to the village. But the authority says that the system that has existed since 1929 is not good enough and it refuses to accept it. It says that the standpipes to the houses in this colliery village are often behind or to the side of the houses when they should go to the front. The authority says that each house should be on a separate standpipe, but that would cause problems, because although the NCB inherited the houses as rented properties on nationalisation, many have been

1531
bought recently by miners working at the pit and they would not be happy at having to find several hundred pounds to alter the water supply. The water authority claims that existing pipes are often responsible for the larvae breeding and that the chemical smell is caused by the extensive amount of chlorine that has had to be put into the pipes to try to kill the larvae.
We have the crazy situation of two nationalised industries telling different stories and giving a different version of events, while the villagers suffer, and will continue to suffer at least until September next year. There is at least one road in the village, Colliery Road, where the villagers have been unable to drink the water from their taps for more than 12 months. There is a water tank on the pavement outside the houses and the women have to take a bucket to it every day when they want fresh water. That system has not existed elsewhere in this country in this century.
There is a continual wrangle. The NCB says that it is willing to hand over the supply, but the water authority will not take it over because of the state of the system. The authority admits that it could supply water if the houses were its customers or if it rationed water throughout the district and cut back on the supply to new developments.
I have taken the matter up with the Minister for at least a year since the first occurrences. In a letter to the Bassetlaw district council on 4 March, Mr. Ritchie of the Department of the Environment said :
"I must again point out that unless and until the Department receives evidence that the Council and the Authority are in dispute as to whether the present supply to these houses or the area generally is insufficient or unwholesome or causes a danger to health, the Secretary of State cannot take any action under section 11(4) of the Water Act 1973. He has no locus in this matter."
In other words, the Secretary of State says that he can do nothing unless the local council and the water authority are in dispute. The council says that it cannot rule that the water is unfit to drink because, although it looks and smells bad, it is, by world health standards, fit to drink—even though no one would drink it. The water authority will not take this matter up because it cannot supply the water. The National Coal Board cannot supply it because its supply system is no
1532
good, coming from those ancient sources beneath the coke ovens. The argument goes round and round between the two nationalised industries, the Minister and local government.
If the Ombudsman were able to officiate on this sort of thing I would have called him in long ago. But he cannot come in because it is a dispute between two nationalised industries. Already there have been two justifiable strikes. This year alone, 12,000 tons of coal were lost, costing the board £360,000. I do not blame the men for going on strike. It is sheer anger and pent-up frustration. They have tried negotiating with their employers, they have tried going to the council. I have raised the matter with the Department.
It seems that this is bureaucracy gone mad. There is a continual buck-passing exercise between nationalised industries, Government Departments and local councils. These 3,000 people are expected to suffer. The board has massive expansion plans for Harworth colliery. It is a "super pit". It has many years of life in it and the board is to recruit men to work there. Yet it is losing production because of this dispute.
I ask the Minister to step in and adjudicate. If he has no powers, perhaps he can bang a few heads together in the two nationalised industries and get them to come together and reach agreement. It may be that the Severn-Trent water authority is asking for far too much in the way of replacement before it will take over the system. Perhaps the NCB wants to spend too little. Perhaps the local medical officer of health is being a bit too rigid in his application of world health standards. This is for the Minister to investigate and decide. This situation, in 1980, is intolerable for my constituents and, rightly, they have asked me to protest on their behalf.
12.47 am
The Under-Secretary of State for the Environment (Mr. Marcus Fox): I am sure that the people of Bircotes will be grateful to the hon. Member for Basset-law (Mr. Ashton) for the forceful way in which he has spoken on their behalf this evening. I do understand the hardships and suffering he has described.
Hon. Members will find it surprising that, in this day and age, a whole village, such as the hon. Member has described,

1533
should be without a public supply of pure drinking water. We tend to take it for granted that the entire population—give or take a few isolated farmhouses and cottages—is on mains supplies. We are almost right in doing so. It is estimated that 99 per cent. of people in this country receive a public water supply in pipes. That record cannot be criticised. To my knowledge there is only one other country in the world that can claim such success—the Netherlands. A similar proportion of the population receives a public supply in that country.
For the efficient maintenance of this enormous system and for the absolute reliance we can put on the purity and wholesomeness of the water available on tap 24 hours of the day, 365 days of the year—and it is an enormous project—we all owe a tremendous debt of gratitude to the hard-working and dedicated men and women of the water industry. It is right that at this time, when they have been the subject of considerable criticism in certain respects, I should pay this tribute. I would not like to let the opportunity pass without saying that.
The village of Bircotes, as the hon. Member has pointed out, is a mining village—and this is part of the problem—of 1,050 houses built in the 1920s specificially to house workers at Harworth pit. At the time the village was built—and this was not an uncommon occurrence—the owners decided that it was cheapest to supply the village with water from the same source which supplied the mine itself at Harworth. This was a local underground source. This had an advantage of cheapness; as a private supply, there could be no question of paying any charges to a statutory water undertaker. At a later stage, following nationalisation of the coal industry, an agreement between the National Coal Board and the central Nottinghamshire water board provided that the NCB would maintain its own private supply in the area.
No doubt for as long as the supply of clean water to the village was adequate there were no problems. But, as the hon. Gentleman has pointed out, last year the villagers began to notice that their water tasted abnormal and that there were dirt particles and worm-like creatures in the water. I do not think that any commu-
1534
nity would accept that situation without complaint. It is a cause of regret that, as the hon. Gentleman has described, strikes have taken place because of this situation. The people complained to the Bassetlaw district council, which carried out tests and found that the abnormal taste was attributable to the presence of chlorophenols in the water, and that the worms were, in fact, chironomus midges. I hope that the hon. Gentleman understands this. If he understands it as well as I do, he is doing well.
I understand that these are a gill-breathing immature form of widespread, usually non-biting, midges, which may gain entry into water mains via treatment works filters or open supply reservoirs. They are, however, believed not be a hazard to the health of consumers of the water, although they are aesthetically objectionable. That sounds like a Civil Service explanation. I am sure that anyone who found creatures if this sort in water would take the same view as the people of Bircotes.
The district council took the matter up with the Severn-Trent water authority, which arranged to supply the village on the emergency basis that the hon. Gentleman has described. It did this by pumping water from its own sources into the village distribution system. At the time, however, it made clear that its own supplies in the area were stretched more or less to the limit in supplying the properties for which it was responsible. It could not guarantee to maintain supply to Bircotes through the summer months when resources were low.
Nevertheless, it was the intention of the authority to augment its resources. It hoped that it would be possible to provide a permanent public supply to the village within about two years, or about 18 months from now.
Meanwhile, with technical advice and assistance from Severn-Trent, the National Coal Board set about improving the purity of its own supply. Severn-Trent extended the periods of its emergency supply to 20 May this year, to enable remedial work to be completed, and on that date the NCB resumed responsibility for supplying the village. It quickly became clear, however, that the supply was still unsatisfactory. Problems of discolouration and taste persisted, largely, I understand, because a chlorine

1535
dioxide plant that had been recommended by Severn-Trent had not been installed. I know that the hon. Gentleman has described other factors.
Severn-Trent again arranged an emergency supply and the new plant was installed. For a few days, all went well, but then this sad story took another twist when the plant broke down and again the supply reverted to its original condition.
The present position, I am informed, is that the manufacturers of the equipment, the NCB and Severn-Trent have been trying to repair the equipment, and that, meanwhile, Severn-Trent yet again introduced an emergency supply on Friday 6 June.
That is the background. Although I understand that there have been difficulties between the NCB and Severn-Trent on this case, it seems that both bodies are now co-operating urgently to solve the only problem that matters—that a satisfactory supply be assured to the village as soon as possible. In the long term—this is apparently recognised by both bodies—the solution must lie in having a supply provided by Severn-Trent. I think that is what the hon. Gentleman was asking me to say.
The NCB is not a water undertaker. It has, I am sure, enough technical problems of its own to worry about without adding the running of a water undertaking. Today, in the House, we have been discussing some of those other problems.
Severn-Trent has agreed to provide a permanent, piped supply as soon it can. Meanwhile, it has made an emergency supply available on several occasions, and has provided technical and scientific assistance to the NCB. For its part, the NCB has, I understand, agreed to lay a new water distribution system in the village to Severn-Trent's standards, to replace the present wholly inadequate system. This enables the new water supply, when it is available, to be delivered adequately to every house.
Perhaps, I should, at this point, explain briefly what are the statutory obligations of Severn-Trent. Section 11 of the Water Act 1973 imposes a general duty on water authorities to supply water within their area, but, as I have explained to the hon. Member in writing, this is not a duty to
1536
provide a supply to every property or group of properties within that area. There are and will always remain, areas where, because of the distance from any source of supply, or the sparseness of the population, it would be prohibitively expensive to lay mains.
Our water supply legislation, as it effects existing dwellings, is on the basis that it is the responsibility of owners or occupiers to pay for bringing water into their area for the first time, although it is possible for local authorities to provide help. Thus, owners and occupiers of houses without mains water have a power to requisition a supply from a water undertaker, as provided in section 29 of the third schedule to the Water Act 1945. They may do so, and the undertakers must comply with the requisition if the amount of water charges payable annually once the mains are laid will be not less than one-eighth of the cost, and if they agree to take a supply of water for at least three years.
Where the charges payable do not cover one-eighth of the cost of providing the mains, it is possible for the district council to undertake to pay the difference between those two amounts. It must agree to do this until the charges payable meet the amount which would have enabled a requisition to be made by the owners or occupiers, or for 12 years, whichever period is the least. If the local authority take this course, the water authority is obliged to lay the mains. It is also possible, in that case, that the work will qualify for a grant from the Department towards the cost of laying the mains under the rural water supplies and sewerage Acts.
As I understand it, the NCB has considered the possibilities which the legislation offers, and has concluded that the water authority's offer to bring water to the village at its own expense—provided that the NCB lays the new distribution system—is a better option.
Mr. Ashton: What if there is a dispute about the quality of the system for which the NCB agrees to pay? That is the crux of the matter. If there is a dispute between the NCB and the Severn-Trent about how much should be spent, who adjudicates in the dispute?
Mr. Fox: Water standards are the responsibility of the water authority and,

1537
ultimately, of my Department. The hon. Member has raised an important point. I understand that the differences are being resolved. I shall look carefully at whether the question of quality is causing the delays. Severn-Trent is doing what it is required to do by law.
The hon. Member asks the Secretary of State to send an inspector to mediate. I can understand his concern. It is not open to me to do that. We have no powers to send an inspector to the area. I have given an assurance which I hope that the hon. Gentleman will accept.
Although the Secretary of State has devolved powers under section 13 of the Water Act 1945, they come into play only if a water authority is in breach of its duties. There is no evidence of that in the present case. I do not think that
1538
anything that an inspector could do would help the present situation, the urgency of which does not seem to have been lost on any of the parties.
I take note of what the hon. Gentleman has said, particularly of his comment about bureaucracy going mad. He asked me to bang a few heads together. We all want to see the matter remedied as quickly as possible. I would ask only that all concerned show a little patience while remedial measures are carried out. I shall certainly do my best to bring a satisfactory conclusion at the earliest possible moment to this most difficult problem.
Question put and agreed to.
Adjourned accordingly at one minute to One o'clock.

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  Personal Taxation
  Personal Taxation
  European Community (Interest Payments)
  European Community (Interest Payments)
  Mortgage Tax Relief
  Mortgage Tax Relief
  £ Sterling
  £ Sterling
  Burmah Oil Company Limited
  Burmah Oil Company Limited
  Family Income
  Family Income
  Public Sector Borrowing Requirement
  Public Sector Borrowing Requirement
AGRICULTURE, FISHERIES AND FOOD
  Government Policy
  Government Policy
  Fruit Pulp Imports
  Fruit Pulp Imports
  Horticultural Imports
  Horticultural Imports
ENERGY
  British National Oil Corporation (Employees' Interests)
  British National Oil Corporation (Employees' Interests)
  Nuclear Power (Advertising Expenditure)
  Nuclear Power (Advertising Expenditure)
  British Nuclear Fuels Ltd.
  British Nuclear Fuels Ltd.
FOREIGN AND COMMONWEALTH AFFAIRS
  Diego Garcia
  Diego Garcia
  Mediterranean (Nuclear-free Zone)
  Mediterranean (Nuclear-free Zone)
  Royal Ulster Constabulary (United States Arms Embargo)
  Royal Ulster Constabulary (United States Arms Embargo)
  Republic of Ireland (Voting Rights)
  Republic of Ireland (Voting Rights)
  Defence Equipment (Sales)
  Defence Equipment (Sales)
  South Africa
  South Africa
  Afghanistan
  Afghanistan
TRANSPORT
  M27 (Chilworth-Hedge End)
  M27 (Chilworth-Hedge End)
  Commuters
  Commuters
  Severn Bridge (Motor Cycles)
  Severn Bridge (Motor Cycles)
  Vehicle Excise Licence
  Vehicle Excise Licence
  Driving Test Examiner (Carmarthen)
  Driving Test Examiner (Carmarthen)
  British Railways
  British Railways
  Road Traffic Act 1974
  Road Traffic Act 1974
ENVIRONMENT
  Southern Water Authority
  Southern Water Authority
  New Towns
  New Towns
  Mr. Leslie Chapman
  Mr. Leslie Chapman
  Public Rights of Way (Warwickshire)
  Public Rights of Way (Warwickshire)
  Footpath Reviews
  Footpath Reviews
  Whales and Whale Products
  Whales and Whale Products
  Public Sector Housing
  Public Sector Housing
  Mortgagor Defaulters
  Mortgagor Defaulters
  Water Service Charges
  Water Service Charges
  Planning Applications
  Planning Applications
  Home Insulation
  Home Insulation
SOCIAL SERVICES
  Social Security Act
  Social Security Act
  Immigrants (Repatriation)
  Immigrants (Repatriation)
  Mobility Allowance
  Mobility Allowance
  National Health Service (Audit Department)
  National Health Service (Audit Department)
  Departmental Working Parties
  Departmental Working Parties
  Prescriptions
  Prescriptions
  Alcoholism
  Alcoholism
  Pension Entitlement (Member's Correspondence)
  Pension Entitlement (Member's Correspondence)
  National Radiological Protection Board
  National Radiological Protection Board
  Brain Scanners
  Brain Scanners

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Chester.

THE BELFAST WELFARE RIGHTS PROJECT REPORT
Lord HYLTON: 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 is their reaction to the report of the Belfast Welfare Rights Project, published in March 1980; whether they will make a statement on its implications (a) for social policy generally, and (b) for statutory and voluntary social workers; and when they expect to bring forward proposals in the light of the report.
The PARLIAMENTARY UNDERSECRETARY of STATE, NORTHERN IRELAND OFFICE (Lord Elton): My Lords, the Government have welcomed this report, which provides a great deal of valuable information about the take-up of means-tested benefits in selected areas of Belfast and points out the many social problems facing, especially, those living in the inner city. The main implication of the report for social policy is to underline the importance of concentrating resources on the Belfast areas of special social need, and this continues to be the Government's policy. My honourable friend, the Minister with responsibility for the environment in Northern Ireland, is chairing a committee representative of all the public agencies involved, with a view to co-ordinating their programmes and ameliorating social conditions in these areas.
The report underlines the need for the training of social workers in welfare rights work and the Government are
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examining the extent to which such training is already included on recognised social work courses or as a part of in-service training. It may be necessary to discuss this recommendation with the Central Council for Education and Training in Social Work.
The project will end next month but the Government are currently considering how the flow of information to the public about social security and other benefits can best be improved. The noble Lord will appreciate that the report contains a number of other recommendations which will need to be examined and these will be followed up as appropriate in the light of available financial resources.
Lord HYLTON: My Lords, I am grateful to my noble friend for his detailed reply and also for the Government's welcome to the report. In view, however, of the fact that Northern Ireland has a much colder and wetter climate than most of Britain, and that there is higher unemployment and worse conditions of housing by and large, would the Government consider a more generous scale of welfare benefits for that part of the United Kingdom?
Lord ELTON: My Lords, I do not think there is a great prospect of having a separate scale or administration for the Province; but the noble Lord began by talking about assistance in respect of the climate, which led me to suppose he was interested in assistance with fuel costs, on which the report made a recommendation. I have to tell the noble Lord that, in our view, the report is quite wrong in representing that the measures to help poor consumers in Northern Ireland with their fuel bills last winter were a withdrawal of assistance from the elderly. In fact, largely the same range of people were eligible for assistance and almost twice as much was spent on last winter's package of measures as on the previous discount schemes. The Government are aware of the particular problem posed by high fuel costs in Northern Ireland, and consideration is at present being given to what extra assistance can be provided next winter for poor consumers in addition to the national measures announced recently by the Secretary of State for Social Services.
Lord BLEASE: My Lords, is the Minister aware that there is a considerable amount of discussion and talk around this report? Is there not a possibility that this penetrating and useful social survey may be relegated to nothing more than talk and, indeed, a depressing statistical exercise? May I ask the Minister: is there not a tendency to over-concentrate on the relief of poverty and unemployment rather than to take suitable action to prevent these social evils and problems? While I wholeheartedly welcome the Government's support for the general publication of the report, may I ask the Minister whether he would not agree that there is a need for some form of concerted action generated by the Government in order to tackle the proposals arising out of this report?
Lord ELTON: My Lords, in response to the first part of the noble Lord's question, the answer is "No", the report will not be relegated to some dusty in-tray or pending-tray. Secondly, my honourable friend the Minister with responsibility for the environment is already chairing a committee embracing all the interests concerned on the very question of co-ordinating relief, to which the noble Lord refers. Thirdly, I as well as the Government entirely agree with him that the basic problem is not to cure the symptoms but to cure the disease itself. That is what our economic policy is about. The noble Lord and his friends may not agree with us in the way we tackle it, but we are in fact dedicated to curing the economic crisis; and that is the only way to remove poverty.
Lord TAYLOR of BLACKBURN: My Lords, may I ask the Minister: does not the same code of practice prevail in Northern Ireland as prevails in the rest of the United Kingdom?
Lord ELTON: My Lords, I thought I had already said so.
Lord HYLTON: My Lords, can my noble friend comment on the recommendation in the report for a single integrated housing benefit to be applicable to Northern Ireland? If that could be experimented with there, would it not also be of great benefit to the rest of the United Kingdom?
Lord ELTON: My Lords, the notion of a simple, single, housing benefit is not entirely new and there would appear to be certain advantages in it. It is clearly a recommendation that requires further consideration, and it will receive it.

DROUGHT PREVENTION
2.42 p.m.
Lord DE CLIFFORD: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, in view of the early spring drought, which has seriously affected agriculture and the environment, they are satisfied that water authorities and other bodies have adequate plans to prevent the effects of a drought like that of 1976; and what steps they are taking to ensure minimum inconvenience to the public, horticulture and agriculture.
Lord MOWBRAY and STOURTON: My Lords, the dry weather in April and May has led to water supply problems in some parts of the country, because of the unusual demand on distribution systems. However, there is no general shortage of water. Impounded stocks are higher in most areas than in 1976 and ground water levels are above average for the time of year. In some areas increased demand has resulted in temporary restrictions on the use of hose-pipes, and in a relatively few areas a deficiency of resources has led to the water authorities concerned taking action under the Drought Act 1976 to seek orders to enable them to conserve supplies in order to minimise inconvenience to consumers.
Lord DE CLIFFORD: My Lords, I thank the noble Lord for his reply, and appreciate that we have been having rather peculiar weather lately. But is he aware that in the border counties of Wales and England the water has just managed to get down to the potato level? Is he also aware that if we get a shortage in the future there may be great difficulties in these areas?
Lord MOWBRAY and STOURTON: My Lords, I am upset about the level of water not reaching the potatoes. But, quite honestly, the water supply to farmers has been arriving from the water authorities. If the water supplies of his higher lordship God are not reaching the noble Lord's potatoes, that is something which this Government cannot help.

CONTACT LENSES: PRESCRIPTIONS FOR CHILDREN
2.44 p.m.
Lord SEGAL: 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 in how many cases have contact lenses been prescribed on the National Health Service for children of school age within the Greater London Area during the last five years.
Lord CULLEN of ASHBOURNE: My Lords, I regret that statistics are not collected centrally in the form requested, and could be obtained only at disproportionate cost. However, I can say that some 15,000 pairs of contact lenses were prescribed in England in 1978, only a small proportion of which are likely to have been for children. The statistics do not break down the lenses prescribed by age groups.
Lord SEGAL: My Lords, I should like to thank the noble Lord for that reply. Is he aware that he is quite right in assuming that only a very small proportion of the figure he has given can refer to children of school age? Also, would he not agree that the prescribing of contact lenses ought to be extended to cover psychological needs, where the wearing of conventional spectacles can adversely affect the whole of a child's future, as in the cases of, for example, sensitive, introspective children or pupils at a ballet or drama school? Why cannot a recognised ophthalmic specialist at a large London hospital be allowed a much wider latitude to prescribe these contact lenses in all cases where he thinks that their use is advisable?
Lord CULLEN of ASHBOURNE: My Lords, as I am sure the noble Lord knows, contact lenses can be prescribed under the National Health Service only when, in the opinion of a hospital consultant ophthalmologist, they are clinically essential. NHS contact lenses are not available through the general ophthalmic services. I fully understand the noble Lord's point, about sensitive children not wishing to wear glasses and look different from other children, but certainly at this stage there is no way in which the consultant is able to prescribe contact lenses on other than clinical grounds.
Lord SEGAL: My Lords, is it not totally wrong that a recognised ophthalmic surgeon has to refer a child for a psychiatrist's report before a child can be given these contact lenses?
Lord CULLEN of ASHBOURNE: My Lords, I do not really believe that that is true, although I feel very wary about saying that to the noble Lord, who has so much more knowledge and experience on this subject than I have. But I have asked the department about this, and I understand that a psychiatrist is brought in only if the child concerned has a psychiatric history.
Lord SEGAL: My Lords, does the noble Lord not agree that the cost of these contact lenses is comparable to the cost of ordinary conventional spectacles, with the added advantage that there is no requirement for the notoriously expensive spectacle frames?
Lord CULLEN of ASHBOURNE: Yes, my Lords. I know that in the private sector contact lenses cost from about £25 up to £100 or more, and this, I agree, is an appalling cost. Frequently contact lenses are desirable on account of cosmetic rather than ocular reasons.
Lord SEGAL: My Lords, the cost to a National Health Service patient of contact lenses is only £6·25.

AL FATAH CONGRESS AND EUROPEAN COUNCIL POLICY
2.48 p.m.
Lord JANNER: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps were taken at the EEC summit in Venice on 12th and 13th June in respect of the manifesto of the Congress of A1 Fatah (the largest terrorist group affiliated to the PLO, headed by Mr. Arafat), which calls for the elimination of Israel and the escalation of violence against that state.
Lord TREFGARNE: My Lords, we took full note of the results of the recent A1 Fatah Congress in considering our policy at the European Council. Any policy not involving recognition of Israel's right to live in peace is unacceptable to us. There is no question of encouraging the Palestine Liberation Organisation in such a policy.
Lord JANNER: My Lords, is the noble Lord aware that many people are very disturbed about the Government's attitude in respect of the PLO, which they regard as encouraging the PLO to believe that, even though they are determined—as they have recently stated again in the document to which I have referred—to destroy Israel, we are proposing to have dealings with them? Secondly, will the noble Lord let the House know whether that document has been presented to NATO, and whether it has been considered by the defence officers in this House, in view of the potential danger of such an entity, which is governed by the PLO, upon our defence and armament position?
Lord TREFGARNE: My Lords, the noble Lord expressed his views very forcefully yesterday, when my noble friend the Foreign Secretary made his original Statement. But the fact of the matter is that prospects of achieving a settlement in the Middle East are not realistic without taking into account the positition of the Palestinian people and the PLO.
The Earl of LAUDERDALE: My Lords, can my noble friend tell us whether there is any evidence yet that the notorious stand of the PLO has been modified or is in the process of being modified to conform with the purposes and spirit of the Council's resolution?
Lord TREFGARNE: My Lords, we sometimes receive a number of conflicting reports on the views of the PLO and their associates, and the document referred to in the Question was one of them.
Lord BLYTON: My Lords, is the Minister aware that it was the Conservative Party, in their Balfour Declaration, who created the State of Israel? Why, therefore, do they take a jump now to support the Palestinians in the Arab world, who are out to destroy the State of Irsael which Balfour created?
Lord TREFGARNE: My Lords, the Balfour Declaration was before my time.
Lord JANNER: My Lords, is the noble Lord suggesting that Balfour, Lloyd George, Churchill and the other people who were instrumental in producing the Balfour Declaration had no idea what was happening? Does not the noble Lord realise that they considered the position very carefully and came to the conclusion that one democratic state in the Middle East would be very valuable, and that in view of what had happened the Jewish people were entitled to have some place from which they could protect themselves?
Lord TREFGARNE: My Lords, of course we agree with the position of the State of Israel which was carefully described in the declaration which came from Venice the other day, but to bring Lloyd George into it is, I think, a bit much.
Several noble Lords: Why?
Lord DERWENT: My Lords, reference has been made to the defence officer of this House. Is that Black Rod or the Government Chief Whip?
Lord ELWYN-JONES: My Lords, the noble Lord disowns responsibility in this matter because all these things happened before his time, but in fact the State of Israel politically came into existence in 1948, which I think is just about within his time.
Lord TREFGARNE: Yes, my Lords, of course that is right, but I was asked about the views of Mr. Balfour and of Mr. Lloyd George.
Noble Lords: The noble Lord should know about that.
Lord TREFGARNE: I should have said the late Lord Lloyd-George. This is history, and of course that is fine. But the position of the State of Israel is not in question, and we have supported the declaration in that context.
Lord BROCKWAY: My Lords, is the Minister aware that, despite what was said in the other place yesterday and what has been said in this House today, many of us welcome the European statement about the Middle East, with its acceptance of the double principle of the security of Israel and the right of the Palestinian people to self-determination?
Lord TREFGARNE: My Lords, I am grateful to the noble Lord.

BUSINESS
Lord DENHAM: My Lords, with the leave of the House, at a convenient moment after 3.30 this afternoon, my noble friend Lord Strathcona and Mount Royal will repeat a Statement being made in another place on cruise missile bases.
My noble friend Lord Trefgarne will then repeat a Statement on Hong Kong to London air services.
It may also be for the convenience of your Lordships if I announce that dinner will be available this evening at the usual time. The Committee stage of the Social Security (No. 2) Bill will be adjourned at about seven o'clock for approximately an hour, and the debate on the 42nd Report of the European Community's Committee on powered industrial trucks will be taken during this period.

SOCIAL SECURITY (No. 2) BILL
2.54 p.m.
The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Baroness Young): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, that the House do now again resolve itself into Committee.—(Baroness Young.)
On Question, Motion agreed to.
House in Committee accordingly.
[The Earl of LISTOWEL in the Chair.]
Clause 4 [Reduction and abolition of earnings-related supplement and addition]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 25:
Page 4, line 24, leave out subsection (1).
The noble Lord said: We come to Clause 4 of the Bill, which is responsible for the reduction and abolition of the earnings-related supplement and addition. The amendment which I now beg to move, and the one that follows it, seek to eliminate Clause 4 from the Bill. I have decided to do it in two parts. Nevertheless, with your Lordships' permission, I wish to speak to both parts but to move the amendments separately.
If I may refresh your Lordships' memories as to what the earnings-related supplement and addition are, the present position is that under Sections 14(7), 22(4), and 24(3) of the Social Security Act 1975, and Schedule 6, people receiving unemployment benefit, sickness benefit, maternity allowance and widow's allowance are entitled after two weeks on benefit to an earnings-related benefit which can be paid for a maximum period of six months. The Government are proposing to reduce the amount payable by way of the earnings-related supplement. The amendment now before your Lordships will prevent the Government from reducing the 15 per cent. rate of earnings-related supplement payable on earnings of over £30 a week to 10 per cent. from January 1981.
If I have understood the Government's attitude to the earnings-related scheme it is this: that because the average value of its benefits has diminished it might be just as well to abolish it. During the Commons Committee stage, the Secretary of State conceded that the reason for delaying the abolition of the earnings-related supplement until January 1982 was that people have already paid their

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national insurance contributions for the tax year 1979–80 in the belief that they would be entitled to an earnings-related supplement based on those contributions, in 1981. But the Secretary of State argued that the proposed reduction of the 15 per cent. rate to 10 per cent. in 1981 was such a modest change that it was not felt there was the same binding nexus between contributions and benefits. He referred to the Cabinet's sense of propriety, convincing them that if the benefits were abolished in 1981 people might have a legitimate criticism.
The Cabinet's sense of propriety, however, clearly has to be kept within bounds. Although precisely the same point of principle applies to the reduction of a benefit based on contributions that had already been paid, they were apparently prepared to swallow that. I do not want to go all over that again because I have already raised the question of the morality of taking contributions for a specific purpose and then reducing them, as has been done in the case of certain benefits that are not going up by 16½ per cent. but only by 11½ per cent.
In fact, this cut is not so modest as the Secretary of State's words might have implied. For somebody getting earnings-related supplement at the maximum rate on weekly earnings of £135 in 1981, it represents a reduction from £19·25 to £14 a week which, over the six-month period for which the earnings-related supplement runs, would mean a loss of £136·50. At a lower level of earnings—say, £80 a week—the loss would be about £2·50 a week, or £65 for the six-month period.
In the Budget speech the Chancellor of the Exchequer said:
"The earnings-related supplement scheme itself has been diminishing in worth and effectiveness over recent years. Redundancy payments are now more generous, and the development of the employers' sick pay scheme means that earnings-related supplement is much less needed than formerly. Of the unemployed, only about 10 pet cent. to 15 per cent. are in receipt of earnings-related supplement at any one time. All in all, the Government would find it difficult to justify its retention".—[Official Report, Commons; 26/3/80, col. 1461.]
But that is not the point. The point is that these people have paid national insurance contributions which we, on this side of the Committee, say have taken into
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account benefits to which they are entitled, including the earnings-related supplement. The main reason why earnings-related supplement has diminished in worth is because the £30 dividing point between the two rates on which it is calculated has not been raised, with the result that the one-third rate applies to a diminishing band of earnings.
The position at the present moment is that the percentage payable is one-third of earnings between £17·50 a week, which is the lower earnings limit, and £30 a week, and 15 per cent. of earnings between £30 a week and the upper earnings limit which is, I think, £135. But the lower earnings limit of £17·50 is now very much lower in relation to earnings than the lower limit of £9 when the scheme commenced in 1966. For low paid workers therefore the scheme is more effective than it was originally. For the average earner, too, it is still a very useful addition to his benefit. For instance, a man with earnings of £100 a week in 1981 would get earnings-related supplement in 1982 of about £13 a week. And this is not a gift; it is part of the money that he has paid in for and there are no grounds for saying that the statutory redundancy payments are now more generous. As the reply to a Member in the other place on the 17th April at column 670 showed, the average redundancy payment is worth little more in real terms than it was in 1965–66, and such increase as there has been took place almost entirely between 1965 and 1968. The relative value of redundancy payments compared with flat rate unemployment benefit was hardly changed at all.
The growth of the employers' sick pay schemes does not justify abolishing the earnings-related supplement for the unemployed, expectant mothers and widows. Anyway, many people, especially manual workers, are not covered by employers' sick pay, and the Government's proposals for compulsory sick pay would apply only to the first eight weeks of sickness, during which the amount payable would be only £30 a week. Even that would be subject to tax, reducing its value for most people down to something like £21 a week, because most people would have income for the whole year above the tax threshold.
To say that only 10 to 15 per cent. of the unemployed are getting earnings-

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related supplement is quite meaningless. The vast majority of unemployed people who remain out of work for more than two weeks (other than school-leavers) do qualify for an earnings-related supplement. Of those not currently receiving it, a large proportion have either been unemployed for less than two weeks or for more than 28 weeks, and if the Government are concerned about the latter group, as I and my noble friends think they ought to be, they should be thinking about extending earnings-related supplement beyond the six months or paying a higher flat rate benefit to those whose entitlement to earnings-related supplement has expired. Instead of which they are proposing to reduce the real value of the flat rate benefit and ultimately to abolish the earnings-related supplement.
The only other thing I want to say is in relation to subsection (2), the deletion of which I shall be moving subsequently. This amendment would prevent the abolition of the earnings-related supplement, and if earnings-related supplement were neither reduced nor abolished the rates payable in 1982 would be one-third of earnings between £23 and £30 a week, which would be £2·35, plus 15 per cent. of earnings for those earnings between £30 a week and £165. For a man who earns £100 a week in 1980–81 (roughly the national average) the earnings-related supplement in 1982 would be about £12.85 per week. If he continued to draw it for 26 weeks its total value would be in the region of £334. That is the amount that the Government are proposing to take—and I use the kindest possible word I can find when I say "take". I could use many others with every justification. But that is what they are proposing to take from the sick, the unemployed and widows in order to leave more money in the pockets of those fortunate enough to be in work. In the last analysis we must look at the position of those who are unemployed through no fault of their own, many of them who, once they become unemployed, stand very little chance of getting another job. I beg to move.
3.7 p.m.
Lord BANKS: I should like to support the two amendments to which the noble Lord, Lord Wells-Pestell, has spoken. I suppose the situation is the same in
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regard to these amendments as it has been in regard to previous amendments: that the Government are not against the earnings-related supplement, that they would not reduce or abolish the earnings-related supplement in the ordinary course of events and that they are only doing so in order to make a saving—because this Bill is about saving. I think they would argue that the people who are in receipt of earnings-related supplement are the least vulnerable; but it is true, of course, that this clause, although one of the shortest in the Bill, produces the biggest saving. It produces a gross saving of £360 million, but that is reduced to £285 million once one takes into account the extra amount which will have to be spent on supplementary benefit, because this clause will put more people on to supplementary benefit at a time when we should be trying to reduce the very large numbers who are dependent upon that benefit. It means that a total of £285 million is being saved on this clause out of £460 million saved by the Bill as a whole.
I should like to ask: Do the Government envisage the earnings-related supplement being restored when the Conservative millenium arrives and inflation is down to a nil rate of growth as a result of these draconian measures that they are introducing in the meantime? There is no indication that the earnings-related supplement is unbalancing the national insurance fund as a result of having to include earnings-related supplement in the benefits it provides. The fund is meeting its obligations and the one feature that has led to a small increase in the contributions recently is the increase in unemployment. It is anticipated that that will go further, and, if it does, that will be a result of Government policy. But there is no indication that there is going to be a problem in having to find the money for the earnings-related supplement. The fund is paying out some £10,000 million a year and we are talking about a saving of £285 million.
Presumably there will be no reduction in contributions. That would enable the Government, I suppose, to save the 18 per cent. of the total cost which they provide, but I suppose it would be more advantageous for the Government's purposes if the money were accumulated in the National Insurance Fund, because if it is accumulated there it reduces the public

973
sector borrowing requirement. I think that is really the reason why this is being done—not because there is any objection on the part of the Government to the earnings-related supplement, not because they hope to reduce contributions, but because they hope to reduce the public sector borrowing requirement by accumulating money in the National Insurance Fund. The question I would ask is, for how long we are to accumulate money in the National Insurance Fund, at the expense of benefits which it is generally agreed are desirable, in order to hold down the public sector borrowing requirement?
Lord MILVERTON: I would like to support Lord Wells-Pestell, which may surprise some of my noble friends on this side. On reading a different matter on this subject, I can only say that there is a sense in which in spirit I have felt a little disturbed and unhappy. I think my noble friends here and the noble Baroness, Lady Young, know that as far as possible I do my best to support Her Majesty's Government, but on this occasion I have an uneasy conscience and I do not think I really can. I have to be truthful and say that if I had been able to be here yesterday I most probably would have found myself supporting noble Lords opposite on most of the amendments.
Lord SANDYS: I think I should start by advising my noble friend Lord Milverton, if he would be good enough, to follow my remarks. I cannot possibly claim to give him satisfaction in this regard, but the history of this matter is an extremely long one. I begin by saying that the noble Lord, Lord Wells-Pestell, referred to Clause 4 of the Bill in his speech on Second Reading, at column 1124 on 2nd June. I remind your Lordships of his remarks:
"What the Government are proposing to do may be quite legal, but in my view it is open to serious question".
Then he went on to say:
"I recognise what the Government want to do in this matter, but people have paid national insurance contributions over a long period of time, and I would find it very difficult to believe that in assessing the amount of their weekly national insurance some consideration has not been given to the amount which is likely to be paid out by way of an earnings-related supplement".
974
Before we embark on a detailed study of the very complex formula, I would like to go into the history of this, because I think it will interest your Lordships, and as some noble Lords made very interesting speeches on this subject I think it would give a good opportunity to do so
This is an important issue of entitlements under a national insurance scheme. I hope I shall not weary your Lordships in making some excursions into the past in order to help to show how we have arrived at the present position. My noble friend Lady Young explained the provisions of the clause on Second Reading at column 1115. She said:
"It is significant that under successive Governments the real value of the earnings-related supplement has been allowed to decline since 1971. Maximum earnings-related supplement is now worth half what it was".
To reach the nub of the issue it is necessary to look at the national insurance scheme and how it was funded. As my noble friend put it very clearly at column 1116:
"The original proposals put forward by Beveridge were for a strict insurance scheme. The contributions each individual would pay over his lifetime would be related to the average benefits he could expect to receive over his lifetime. An inevitable consequence of this was that it would be many years before full retirement pensions could be paid out: Beveridge suggested 20 years. The Government of the day in fact introduced full pensions from the outset, and it followed that the scheme as originally designed was not financially viable".
The outset of the scheme was a particularly interesting one, and I propose to quote from the debates that took place in 1946 because I believe they are relevant to this, and also to the fact that a very important maiden speech was made on that Bill by the noble Lord, Lord Wallace of Coslany, which I have enjoyed reading this morning. I think I should refer to what the Minister said on 6th February 1946. He was of course, the right honourable Member for Llanelli, Mr. James Griffiths. At column 1738, he said:
"The next point of general importance to which I would refer is the scope of the scheme. I believe that Clause 1 of the Bill is an epoch-making document, and I hope that Members will read it".
I am sure they did, and this is what it said:
"Every person who on or after the appointed day being over school-leaving age and under

975
pensionable age … shall become insured under this Act and thereafter continue throughout his life to be so insured".
Lord DAVIES of LEEK: May I ask the noble Lord a question? He is not quoting dear old James Griffiths in support of this Bill, in the name of God, is he?—because he would be rolling in his grave if he knew.
Lord SANDYS: I am attempting to explain, and I thought I was embarking on a very useful explanation of how we have reached this point. I hope the noble Lord will listen and will contain himself. I have further to come on to the right honourable Member's next speech on this subject, on review, a matter of eight years later. I hope the noble Lord will allow me to do so and that I may be permitted to continue.
Lord DAVIES of LEEK: I apologise to the noble Lord.
Lord SANDYS: If I am allowed to continue in this vein, we reach a very important debate on 9th December 1954, when the Conservative Party were in Government. A review had been taking place and the Phillips Committee had reported. The same right honourable Member, Mr. James Griffiths, from Llanelli, at column 1216 said this:
"As one who eight years ago, just before this time of the year, completed several months of very hard work drafting the 1946 National Insurance Bill, and who piloted it through the House and began to bring it into operation … It was a new venture. My job was to translate the Beveridge Report into legislation".
Further down he said:
"It was inevitable that in the light of experience we should find a lot wrong with the Act".
The problem was a problem of funding so clearly identified by my noble friend Lady Young. Another former colleague of the noble Lord, Lord Davies of Leek, made a very significant contribution to that same debate on 9th December 1954. I am referring to Mr. Aneurin Bevan who had some very interesting comments to make. Of course, as he was not a Minister the Committee will not permit me to quote him verbatim. However, at columns 1149 and 1150 of the Official Report for that date he said that there was a danger that the House believed that it
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was dealing with insurance but, in fact, in his view, to talk about it as insurance was bunkum. He then cited the situation as follows. He believed that the contractual relationship which exists in insurance in its normal context was totally different when the state enters as a third partner. He believed that once the state became a third partner to the arrangement, the ordinary concept of insurance was immediately modified. He went on to point out that the state, as a sovereign body, can change the terms of an insurance contract and. therefore, to relate everything concerned with national insurance to the normal concept of insurance as we know it, is, in his submission, nonsense. I believe that the late Mr. Aneurin Bevan, a much revered figure by both the nation and the Labour Party, had hit upon a very important point.
Insurance is an extremely complicated issue and I believe that what he said identifies the problem which has so worried the noble Lord, Lords Wells-Pestell. He and his honourable and right honourable friends in another place believe that a contractual matter has been violated. Do I understand the noble Lord correctly? The noble Lord does not wish to reply, but it was clear from his remarks that he believed that to be so. It is our submission that that is not correct, because national insurance is in a rather different context.
I should like to refer to how the scheme went after the first review. It will be remembered, of course, that the change took place—and it was a very radical change—when funding was altered in 1959, and the system has been run on a "pay-as-you-go" basis ever since. Speaking on this very subject in connection with the earnings-related supplement, my right honourable friend Mr. Patrick Jenkin, the Secretary of State, said, in Standing Committee, at column 833:
"The essence of the working of a 'pay-as-you-go' scheme is that contributions paid this year finance the benefits paid this year. Benefits for the succeeding years will be financed by the contributions paid in those years".
That is an important matter to bear in mind.
I listened with interest to what the noble Lord, Lord Wells-Pestell, quoted from Standing Committee "B" and I must say that I was somewhat mystified

977
because he referred to column 670 and I could see no reference in that column to the matter. I wonder whether, in his subsequent remarks, he might wish to explain which column it was—to correct or confirm it. I believe that the remarks made by my right honourable friend in this context in Standing Committee "B" are the ones which give the best advice. I think that I can advise the noble Lord that it is our belief that the amendment as a whole should be rejected.
The noble Lord, Lord Wells-Pestell, has made it clear that the intention of this amendment is to preserve the existing formula—and it is a very complicated formula—for the rates of earnings-related supplement and earnings-related addition payable with the short-term incapacity, unemployment and widowhood benefits. Subsection (1) of Clause 4 gives effect to the Government's intention to reduce the rate of earnings-related supplement and addition in 1981, prior to abolition in 1982. This, as I have said, is a complex subject and it may be helpful if I explain the effect of the subsection in some detail.
Under the existing provisions, the amount of supplement or addition payable during 1980 is calculated in the majority of cases by reference to earnings in the 1978–79 tax year; the formula is one-third of weekly earnings between the amounts £17·50 and £30, and 15 per cent. of earnings between £30 and £120. The lower and upper earnings limits are raised year by year, as they are linked to the lower and upper earnings limits for contributions in the relevant tax year; the £30 cross-over point between "bands" remains constant, however, so that the one-third rate is gradually paid on a smaller and smaller earnings band. Subsection (1) has the effect of reducing the 15 per cent. rate to 10 per cent. with effect from January 1981. This means that in 1981 beneficiaries will receive one-third of weekly earnings in the tax year 1979–80 between the new lower limit of £19·50 and £30 and 10 per cent. of weekly earnings between £30 and the new upper limit of £135. I apologise that the explanation is lengthy, but I think that it will probably be very much easier to understand when read in Hansard than when spoken.
The automatic change in the earnings range coupled with the effect of the
978
change in the rate under Clause 4, while the cross-over point remains constant, means that a man entitled to the maximum level in 1980 (based on earnings in the 1978–79 tax year) would receive £17·67 per week, while someone entitled to the maximum rate in 1981 (based on earnings in the 1979–80 tax year) would receive £14·00.
Subsection (1) is intended to take effect from 4th January 1981, which is the start of the 1981 benefit year. The new arrangements would, however, apply only to claimants whose period of interruption of employment—through unemployment or incapacity—begins during that benefit year or, in the case of the widow's earnings-related addition, whose husband dies during that year. For these beneficiaries, entitlement to benefit will be governed by reckonable earnings in the 1979–80 tax year. We intend to make transitional arrangements under regulations which will allow a beneficiary whose period of interruption of employment commenced before 4th January 1981, or whose husband died before that date, to be entitled to benefit at the rates now in operation until entitlement is exhausted or the period of interruption of employment ends. This would be subject to a final cut-off date in June 1982. These will be people whose entitlement to benefit depends on reckonable earnings in the 1978–79 tax year or, in the case of linking claims, an even earlier tax year. This is to ensure that rates of benefit are not reduced during the middle of an existing claim and are not reduced where a current spell of incapacity or unemployment links with an earlier spell to form part of the same period of interruption.
I am coming to the end of my speech, as the noble Lord, Lord Wells-Pestell, will be pleased to hear. I have explained the operation of the subsection at some length. The Government decided to make this reduction in the earnings-related supplement to achieve substantial savings in 1981. I apologise to the noble Lord, Lord Wallace of Coslany, remembering his remarks in this regard last night, but I can assure him of the pleasure I had when I read his maiden speech in another place on 7th February 1946.
These savings amount to £65 million, partly offset by supplementary benefit expenditure of £5 million at current

979
benefit rates in the calendar year 1981. We must achieve savings in the social security programme, and this subsection makes an important contribution to overall savings. Earnings-related supplement and addition are paid for a limited period only to a limited number of beneficiaries, and are paid on top of the basic benefit. We could not accept an amendment which would reduce the total savings and force us to find savings elsewhere, which would be more painful. I must, therefore, ask for your Lordships' support in resisting this amendment.
Baroness WOOTTON of ABINGER: The noble Lord, Lord Sandys, has given us a very stimulating intellectual discourse which contained two points on which I should like to comment. The first was his elaborate explanation that there is no real actuarial basis for the benefits that people now receive under the National Insurance Act. Whatever else may be said from this side I should like to say that I am entirely in agreement with the noble Lord, and this has been true for a long time. The argument that what people are paid governs what they receive is, with great respect to my noble friend Lord Wells-Pestell, now out of date because that relationship has long since been destroyed. That is a simple matter which we can appreciate. People now receive what Parliament decides they shall receive.
The other point on which I should like to comment is the incredible complexity of the regulations. I doubt whether many of your Lordships who listened to the admirable explanation of the noble Lord, Lord Sandys, could repeat any part of it correctly. I should like to emphasise that if these are the regulations by which people who have had fewer educational advantages than many of your Lordships will find their incomes governed, then the regulations are completely disastrous. The great point is that we should get something simple. However, at the end of his remarks the noble Lord, Lord Sandys, said something which we can all understand and which I can understand—that those who would have received 15 per cent. of something will now receive 10 per cent. of something, and that is the "guts" of the amendment. For that reason, I hope that my noble friends will sustain the amendment.
Lord WELLS-PESTELL: I find myself in complete agreement with my noble friend Lady Wootton of Abinger. Anyone who knows the noble Lord, Lord Sandys, as I and many people have come to know him over the years, will realise that if he takes on something, he is extremely thorough. I say that because it is absolutely true. I have been against him for something like five years and I know that to be so. With the greatest possible respect, I want to say that this has nothing whatever to do with what is before your Lordships' Committee. We are not concerned with the philosophy of Beveridge; we are not concerned with the opinions of Nye Bevan; we are not concerned with what people thought in 1940. We are concerned with Sections 14(7), 22(4) and 24(3) of the Social Security Act 1975, which laid down what people receiving unemployment benefit, sickness benefit, maternity allowance and widow's allowance are entitled to. That is all we are concerned with.
Our welfare state was based upon concept, and my noble friend Lady Wootton is perfectly right when she said that our insurance scheme and our national insurance has no bearing whatever on the thinking of that time; for the simple reason that Governments have found that, whatever a political philosophy may be, it must be interpreted in political terms and ultimately in an Act of Parliament which goes on the statute book, giving people certain rights. There are noble Lords sitting opposite me who have seen more Acts of Parliament put on the statute book than I shall ever see, and who have participated in their formulation. The Social Security Act 1975 was another Act which laid down people's entitlement. The only way in which to do things in our society today is for Governments to look at something, come to a decision and put it on the statute book.
On this side of the Committee our quarrel concerns the fact that people are entitled to an earnings-related supplement. The noble Lord is quite right when he said, I think, that I said I did not question the legality of it. I do not question the legality of it because a Government can change an Act of Parliament, which is precisely what the present Government are proposing. On behalf of my noble friends, I am saying that it is thoroughy immoral to do so. People have been

981
promised an earnings-related supplement at a certain level, for which they have paid national insurance contributions. I say it is thoroughly disgraceful and immoral that the Government should come along when it suits them and say, "All right. Instead of giving you 15 per cent., we shall give you only 10 per cent." That is the nub or crux of the argument.
Lord SANDYS: It may well be that the noble Lord, Lord Wells-Pestell, feels that the Government are being immoral. But I have attempted to show that that is not the case. I would further point out the remarks of his noble friend Lady Wootton of Abinger, which related to the extreme complication of the situation as it is. What better way to relieve the noble Baroness of her anxieties—and, indeed, the anxieties of a very large number of people—in computing this scheme than to ensure its abolition at the cut-off date of June 1982, the date to which I have referred?
Lord ROSS of MARNOCK: When this scheme was introduced, can the noble Lord tell us what changes were made in respect of payments made by those who were insured? It is all very well for him to give us a long lecture starting in 1945, and jumping to 1954, and then 1959. It is a great pity that the Minister of Pensions and National Insurance at that time is not with us—he was the noble Lord, Lord Boyd-Carpenter.
I can remember all the arguments in respect of the notional fund relating to insurance. I can remember all the arguments about the projections that were made, as to whether this fund would be viable in 10, 15 or 20 years' time. The argument advanced was that pensions should be paid out of finance annually. But in 1959, or just before, another scheme was introduced by the noble Lord, Lord Boyd-Carpenter. It was supposed to be based actuarially, and there are certain aspects of our present national insurance which are still said to be based actuarially. There is no doubt that it is a bit of a mess. But it is not right to say that we should get rid of this by abolishing entitlements. On the basis of his last argument, we shall abolish unemployment benefit altogether. I think that the noble Lord, Lord Hill of Luton,
982
will remember the introduction of a free National Health Service in, I think, 1956. Then 10d. was added to the cost of the insurance stamp, but that had nothing to do with insurance; it was to do with payment for the National Health Service.
I can assure the noble Lord that his arguments have not satisfied me. In the subsection he is actually making a transitional reduction prior to wiping out an entitlement which people presently have and for which they have paid for some considerable time. If he had also said—if the noble Baroness wishes to interrupt me I will gladly sit down. I shall then be able to answer her in this speech rather than later on.
Baroness YOUNG: I was not intending to comment on what the noble Lord, Lord Ross, is saying, but there are two Statements to be made, and when he has completed his remarks I think we ought to resume the House to hear the Statements.
Lord ROSS of MARNOCK: We are in Committee, and it is very easy for me to sit down and resume my remarks later.
Baroness YOUNG: I beg to move that the House do now resume.
Lord WELLS-PESTELL: We have come to the end of this discussion, and we wish to divide the Committee. Surely we can do this before we hear the Statements. Having reached the point where we wish to divide, surely this is the right time to do it.
Baroness YOUNG: When the noble Lord, Lord Wells-Pestell, was speaking before, I thought that we were going to conclude the business and divide the Committee. Then the noble Lord, Lord Ross, started to speak and I thought that noble Lords wished to continue with the debate. We are in Committee, and we could conclude discussion on the amendment at any time. But certainly we will divide the Committee at this stage if that is the wish of the noble Lord.
Lord HAWKE: I was thinking of saying a few words, but I will postpone them until after the Statements.
Baroness YOUNG: As the noble Lord, Lord Ross, also wished to say something further—
Lord ROSS of MARNOCK: May I say that I have quite finished now? I can say anything more that I want to say on the next amendment.
Baroness YOUNG: I think we are in a difficulty. We are in Committee. We can go on with this debate, and of course we can divide the Committee at any stage the noble Lord, Lord Wells-Pestell, or his colleagues wish. But I think we should now resume the House in order to take the Statements.
Several noble Lords: No, divide!
Lord TREFGARNE: I am sorry to intervene once more, but if there are noble Lords who still wish to speak I think we must resume the House.
Lord PEART: Looking around, I think the consensus is that we should divide the Committee. We have two very important Statements to come, and there is a long way to go on this Bill. I think we ought to divide now.
Lord TREFGARNE: I am sorry to intervene once more, but my advice is that it is not proper to deny a noble Lord the right to speak. In that case, I beg to move that the House do now resume.
Moved, That the House do now resume—(Lord Trefgarne.)
Lord DAVIES of LEEK: We are in a proper mess now.
Baroness LLEWELYN-DAVIES of HASTOE: As neither the Chief Whip nor I was here at the beginning of this discussion, may I say that as we understand it nobody on our side of the Committee wished to say anything further on that particular amendment and that therefore it was proper to take the Division. What we did not think was proper was to resume the House.
Baroness YOUNG: May I just explain the position? The noble Lord, Lord Wells-Pestell, made a speech. I thought he was concluding the debate on the amendment. When he sat down, the noble Lord, Lord Ross, rose to speak. At that stage we
984
had the information that we could take the Statements. I then made a move to get up, and I said to the noble Lord, Lord Ross, who gave way, that I did not wish to interrupt his remarks but that when he sat down I should like your Lordships to take the two Statements. At that stage the noble Lord, Lord Wells-Pestell, said that he wished to divide the Committee. I was agreeable to that, but one of my noble friends wished to speak. We are in Committee. It is right that anyone who wishes to speak should be able to do so. We are perfectly willing to divide the Committee at any stage, although of course it is principally for the noble Lord, Lord Wells-Pestell, or for any member of the Committee to say when they wish to divide. It seemed to me correct that at this stage we should resume the House to take the Statements.
Baroness LLEWELYN-DAVIES of HASTOE: If we are still in the middle of a discussion on an amendment, of course we should continue with it. I am sure the noble Lord the Chief Whip will agree with me that we take Statements at a time agreed between the two Front Benches. That time was not agreed.
Lord DENHAM: I understand that my noble friend Lord Hawke wishes to keep the Committee for only one minute on this particular amendment. The difficulty is that, after the noble Lord, Lord Wells-Pestell, had concluded, had the Committee divided, then, of course, it would have been rather difficult for my noble friend to get up and speak. But there has been another speech. Perhaps we could hear what my noble friend Lord Hawke has to say.
Lord BYERS: With all respect to the Chief Whip, we are in the middle of a vote. We are in the middle of a Motion. It has been put once by the Chair, and surely we must dispose of that before we proceed to the next business.
Lord DENHAM: I absolutely agree, and it was this Motion that I was speaking to. May I suggest that it be put to the Committee? After it is put to the Committee, perhaps my noble friend Lord Hawke may say what he wishes to say and then we can conclude this amendment before we have the Statements.
The DEPUTY CHAIRMAN of COMMITTEES (The Earl of Listowel): Perhaps I should remind the Committee that the Motion is that the House do now resume.
On Question, Motion disagreed to.
Lord HAWKE: I do not think I have ever spoken in such baffling circumstances. I wanted to say one or two words about the background to the detail that has been dealt with so ably by my noble friend Lord Sandys. For a number of years I have viewed with concern and interest the tussle going on in this country between the producers and the non-producers, the producers being those in work, and the non-producers being the people at school, the old age pensioners and so on, whose numbers, if anything, have been increasing.
Successive Governments have handed out to the non-producers increasing amounts of money the whole time, perhaps not in real terms, but in money terms. That money has to come from
somewhere else, and it can come only from the producers. Time and time again the producers have rebelled when asked to pay higher and higher taxes and increased (what we call) national insurance contributions but which are in effect taxes. They have nearly gone on strike for more pay to meet those increases. The result is that an inflationary process has been set in train. In our economy, 1 reckon that the mainspring of inflation is the price of oil and coal; but the element which has kept it going more than anything else is the increasing cost of social security payments. This clause is just one small item in the attempt to keep those things down.
3.47 p.m.
On Question, Whether the said amendment (No. 25) shall be agreed to?
Their Lordships divided: Contents, 85; Not-Contents, 105.
Baroness YOUNG: I beg to move that the House do now resume.
House resumed.

SOCIAL SECURITY (No. 2) BILL
4.43 p.m.
House again in Committee.
[Amendment No. 26 not moved.]
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 27:
Page 4, line 33, leave out from ("allowance") to ("shall") in line 34.
The noble Lord said: This can be taken fairly quickly. I hope, having regard to the substance of it, that the noble Baroness the Minister will be able to accept it. This amendment would prevent the abolition of the earnings-related addition to a widow's allowance. The case for preserving this allowance I think is particularly strong for a number of reasons. First, of all the groups of people who might be asked to share in the sacrifices resulting from the Government's policies, women who have recently suffered the tragedy of the death of their husband are surely among the least appropriate victims.
In addition to the emotional stress resulting from widowhood, it has always been
1008
recognised that this is a time when they particularly need financial support to help them to adjust to the new situation. Secondly, the argument about incentives and the relationship between benefit and earnings which underlie the Government's hostility to the earnings-related supplements to unemployed and sickness benefit, has no relevance whatsoever to the situation of widows. Thirdly, the earnings-related addition to the widow's allowance must be seen in the context of the long-term provision for widows in the national insurance scheme. Widow's allowance is payable for the first six months of widowhood after which it is replaced by a widowed mother's allowance if there are dependent children, or by a widow's pension if there are no children but the widow is aged 40 or over.
Under the Social Security Pensions Act 1975 those benefits are increased by the earnings-related pension which the husband had earned by his contributions from 1978. But the additional earnings-related pension is not paid for the first six months of widowhood precisely because during that period the widow is entitled to a short-term earnings-related addition. If the earnings-related addition payable under the earnings-related scheme is to be abolished, the earnings-related pension payable under the 1975 Act clearly ought to commence immediately on the husband's death. Since the Government do not propose to extend, as I understand the situation, the 1975 Act pension in that way, it would be wrong to abolish the existing earnings-related addition for the first six months of widowhood.
I would say to the noble Baroness that it is really a special case. I am not unmindful that there is a lot to be said against special pleading. If one does it for one, why does one not to it for another? I accept all that; but there is a strong case to be made out here. I hope that the noble Baroness, unless she is quite adamant that this cannot be done or the Government will not do it, will take this amendment back and have a look at it. I beg to move.
Baroness MACLEOD of BORVE: I am grateful to the noble Lord for what he has said about widows being a special case. When widows are mentioned, having been twice widowed, I am apt to plead

1009
their case. Widows are frequently in financial trouble, sometimes because of the overlapping benefit rule, which is very strict. At the same time it would not be fair—as I said in Second Reading—to exclude them from the Government's reductions. However, I feel that there is a special case for them. The new widows have been greatly helped by the Chancellor, who agreed that they can keep the tax allowance for the first year, which is £770. But if the ERS is taken away, it would in most cases mean giving with one hand and taking away with the other.
The ERS has been paid for, after all, by paying Class 1 National Insurance contributions, and the abolition of the ERS on widow's allowance will of course affect only women. But if the ERS is abolished, those paying Class 1 National Insurance contributions will once again be paying and receiving no benefit. I know the Committee has heard reference to this today. Perhaps one should not expect to get out what one has put in. Some people seem to think that one should; and some people seem to think that one should not.
As understand it, the ERS was created in 1966 in order to cushion those in difficulties and lift those people up above the poverty line for this crucial short period of six months. It affects the widows over 60 if their husbands were under 65 and working at the time of death. It will be obvious to your Lordships that I am trying to find my way through this maze of difficulties. I have been given a few particulars by my widows, and perhaps I may ask my noble friend whether he can make an exception in these particularly difficult circumstances.
Lord SANDYS: I fully recognise the concern that has been expressed about this problem by both the noble Lord, Lord Wells-Pestell, and by my noble friend Lady Macleod. I think there is a considerable case for special pleading in this regard, but I am unhappy to say that it will be difficult for me to add very much to what has already been said in another place.
I fully understand why this amendment seeks to exempt widows from the provisions of Clause 4(2), but I am unable to accept the amendment. Subsection 4(2) abolishes, with effect from January 1982, the earnings-related supplement payable
1010
with short-term incapacity and unemployment benefits, and the earnings-related addition payable with widows' allowance during the first 26 weeks of widowhood. Under this amendment, widow's earnings-related addition would be exempt from this abolition, and would continue to be paid, though at the reduced rate introduced under Clause 4(1).
We have had to make difficult decisions on this Bill. We have had to find savings in the social security programme and it has not been an easy task. This subsection achieves substantial savings in 1982/83 and makes a major contribution to the total package. Earnings-related supplement was introduced in 1966, primarily in respect of unemployment benefit; but because of the close relationship between unemployment benefit and the other short-term benefits it was paid with these from the outset. It would be illogical to exempt any of these benefits from the effect of Clause 4(2) and it would also be costly. We would lose savings of around £12 million in a full year if this amendment were accepted, and we cannot accept reductions in the total package of this order.
However, I would refer to what the noble Baroness said in regard to the Chancellor's arrangements under his tax concession. I think she will be reassured to hear that from 5th April 1980 a widow has been able to qualify for a widow's bereavement allowance of £770 in the year of her husband's death, irrespective of when in that year her husband died. The concession will still be of benefit to a great many widows, whether or not the earnings-related addition is abolished, as it will reduce their tax liability during the year in which their husband dies or take them out of tax altogether. It is true that some widows will lose the benefit of the earnings-related addition when it is abolished from 1982, but only some 60 per cent. of widows are at present entitled to this addition and in many cases the amount of the addition they would have received during the tax year would be less than the amount gained owing to the tax concession. There are advantages and disadvantages but, on balance, I think the noble Baroness will agree that it is an advantage.
I have said that I understand the difficulties faced by widows. But I think

1011
we must recognise that the basic widows' allowance is paid at a much higher rate than the other short-term benefits (post November 1980 the proposed rate for widows' allowance is £38·00, compared with £20·65 for the single person's unemployment or sickness benefit) and the allowance is paid to younger widows, who may in fact be working before and after their bereavement. Widows have the unique advantage among short-term beneficiaries of receiving full benefit on top of full earnings. This and their high basic rate of benefit explain why comparatively very few widows are expected to have to claim supplementary benefit when the earnings-related addition stops. In making savings, we have, in Clauses 2, 4 and 5, concentrated on those areas where payments are received in addition to the basic benefits. Finding comparable savings elsewhere would involve still more difficult choices. In conclusion, I should perhaps remind your Lordships that the benefits of most value to most widows are the widows' pension and the retirement pension. These are not affected in any way by the Bill and are fully price protected.
Lord DRUMALBYN: If I understood him aright, my noble friend said that supplement would be abolished as from January 1982. Is that actually in the Bill or is it just the intention of the Government that that should be so? I cannot find it in the Bill.
Lord SANDYS: I think I said on the amendment we dealt with just before the Statements that the cut-off point is June 1982. I think the cut-off final date for ERS is June 1982.
Lord DRUMALBYN: But is it in the Bill? It seems to me that it is governed by Clause 8(2) and it is not yet actually in the Bill: it is an intention. Is that so?
Baroness YOUNG: As I understand it, it will be governed by regulations.
Lord WELLS-PESTELL: The noble Lord staggers me somewhat. He said, "Only 60 per cent." of widows will benefit. I should have thought that that was an enormous number. It is nearly two-thirds, and to argue that they would not derive much more benefit than they
1012
have already derived as a result of the changed tax structure means that if they had this earnings related supplement, however small, they would be that much better off. This is the 27th amendment. Are the Government saying that no matter what the merit of the case is and no matter how important the amendment is, in no circumstances are they going to consider the merit, even if the sum is small? I suggest that the amount of money which will be saved here is £12 million. It is an infinitesimal sum, and I really feel that if the attitude of the Government is: "All right: we are not going to give an inch; we are not going to budge; we are not going to consider the merits of the case put to us", why not say so? We could shorten these proceedings very considerably.
Baroness YOUNG: We on this side, of course, have a great deal of sympathy with what the noble Lord, Lord Wells-Pestell, and my noble friend have been saying, particularly because my noble friend speaks with a wealth of experience and represents an organisation of widows, and, therefore, has a great deal of knowledge of these matters. The fact is that we are not in a position to be able to accept this amendment, but I will, of course, draw the attention of my right honourable friend the Secretary of State to the remarks that have been made in the course of this discussion. But it would be quite wrong of me to pretend to your Lordships that we are in a position to take this back and look at it again, when I know in fact what the answer to that particular question is.
My noble friend Lord Sandys has explained very clearly that the Government's overall policies have, in some respects, meant an improvement for widows. Although we accept that by the abolition of earnings-related supplement some will be worse off, the fact is that we have introduced a great many other benefits which will be of benefit to widows. So I hope that my noble friend and her colleagues in her organisation will recognise those benefits, when they consider this matter which is before the Committee today.
5 p.m.
On Question, Whether the said amendment (No. 27) shall be agreed to?
Their Lordships divided: Contents, 92; Not-Contents, 108.

CONTENTS

Alport, L.

Gaitskell, B.

Plant, L.

Amherst, E.

Gladwyn, L.

Ponsonby of Shulbrede, L. [Teller.]

Amulree, L.

Gordon-Walker, L.

Ardwick, L.

Goronwy-Roberts, L.

Robson of Kiddington, B.

Bacon, B.

Gosford, E.

Rochester, L.

Balogh, L.

Grey, E.

Ross of Marnock, L.

Banks, L.

Hale, L.

Sainsbury, L.

Barrington, V.

Hall, V.

Seear, B.

Beaumont of Whitley, L.

Hatch of Lusby, L.

Segal, L.

Beswick, L.

Henderson, L.

Simon, V.

Birk, B.

Hood, V.

Stewart of Alvechurch, B.

Blease, L.

Irving of Dartford, L.

Stewart of Fulham, L.

Blyton, L.

Jacques, L.

Stone, L.

Boston of Faversham, L.

Janner, L.

Strabolgi, L.

Bowden, L.

Kilbracken, L.

Strauss, L.

Brimelow, L.

Leatherland, L.

Tanlaw, L.

Brockway, L.

Lee of Newton, L.

Taylor of Blackburn, L.

Bruce of Donington, L.

Leonard, L.

Taylor of Mansfield, L.

Burton of Coventry, B.

Listowel, E.

Underhill, L.

Byers, L.

Llewelyn-Davies of Hastoe, B.

Wall, L.

Chitnis, L.

McNair, L.

Wallace of Coslany, L. [Teller.]

Crook, L.

Maelor, L.

Wells-Pestell, L.

Cudlipp, L.

Maybray-King, L.

Whaddon, L.

Darling of Hillsborough, L.

Milverton, L.

Wigoder, L.

David, B.

Mishcon, L.

Wilson of Radcliffe, L.

Davies of Leek, L.

Ogmore, L.

Winterbottom, L.

Donaldson of Kingsbridge, L.

Pargiter, L.

Wootton of Abinger, B.

Elwyn-Jones, L.

Peart, L.

Wynne-Jones, L.

Fisher of Rednal, B,

Phillips, B.

NOT-CONTENTS

Airey of Abingdon, B.

Bolton, L.

Cottesloe, L.

Alexander of Tunis, E.

Brooke of Cumnor, L.

Craigavon, V.

Allerton, L.

Brooke of Ystradfellte, B.

Crathorne, L.

Amory, V.

Campbell of Croy, L.

Cromartie, E.

Ampthill, L.

Clancarty, E.

Cullen of Ashbourne, L.

Bellwin, L.

Clitheroe, L.

Davidson, V.

Belstead, L.

Clwyd, L.

de Clifford, L.

Berkeley, B.

Cockfield, L.I

De La Warr, E.

Denham, L. [Teller.]

Hillingdon, L.

Rawlinson of Ewell, L.

Derwent, L.

Hives, L.

Redmayne, L.

Drumalbyn, L.

Holderness, L.

Reigate, L.

Dundee, E.

Home of the Hirsel, L.

Renton, L.

Eccles, V.

Hylton-Foster, B.

Roberthall, L.

Effingham, E.

Ilchester, E.

Rochdale, V.

Ellenborough, L.

Inglewood, L.

Rugby, L.

Elliot of Harwood, B.

Kinloss, Ly.

Saltoun, Ly.

Elton, L.

Kinnaird, L.

Sandford, L.

Emmet of Amberley, B.

Lauderdale, E.

Sandys, L. [Teller.]

Exeter, M.

Long, V.

Selborne, E.

Falkland, V.

Lovat, L.

Soames, L. (L. President.)

Ferrers, E.

Luke, L.

Somers, L.

Fraser of Kilmorack, L.

Lyell, L.

Spens, L.

Gage, V.

McFarlane of Llandaff, B.

Strathclyde, L.

Geddes, L.

Mackay of Clashfern, L.

Strathcona and Mount Royal, L.

Geoffrey-Lloyd, L.

Macleod of Borve, B.

Strathspey, L.

Gibson-Watt, L.

Mancroft, L.

Tranmire, L.

Glenkinglas, L.

Mansfield, E.

Trefgarne, L.

Godber of Willington, L.

Marley, L.

Trenchard, V.

Gowrie, E.

Martonmere, L.

Ullswater, V.

Gridley, L.

Mowbray and Stourton, L.

Vickers, B.

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

Netherthorpe, L.

Vivian, L.

Newall, L.

Wakefield, of Kendal, L.

Hatherton, L.

Northchurch, B.

Ward of Witley, V.

Hawke, L.

Nugent of Guildford, L.

Young, B.

Hill of Luton, L.

Nunburnholme, L.

Hill-Norton, L.

O'Neill of the Maine, L.

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

CONTENTS

Amulree, L.

Grey, E.

Pitt of Hampstead, L.

Ardwick, L.

Hale, L.

Plant, L.

Avebury, L.

Hatch of Lusby, L.

Ponsonby of Shulbrede, L. [Teller.]

Aylestone, L.

Henderson, L.

Bacon, B.

Hood, V.

Ritchie-Calder, L.

Balogh, L.

Houghton of Sowerby, L.

Robson of Kiddington, B.

Banks, L.

Howie of Troon, L.

Rochester, L.

Beaumont of Whitley, L.

Hutchinson of Lullington, L.

Ross of Marnock, L.

Beswiek, L.

Irving of Dartford, L.

Sainsbury, L.

Birk, B.

Jacques, L.

Seear, B.

Blease, L.

Janner, L.

Segal, L.

Blyton, L.

Kilbracken, L.

Simon, V.

Boston of Faversham, L.

Leatherland, L.

Stewart of Alvechurch, B.

Bowden, L.

Lee of Newton, L.

Stewart of Fulham, L.

Brimelow, L.

Leonard, L.

Stone, L.

Brockway, L.

Listowel, E.

Strabolgi, L.

Bruce of Donington, L.

Llewelyn-Davies, L.

Strauss, L.

Burton of Coventry, B.

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

Tanlaw, L.

Byers, L.

Taylor of Gryfe, L.

Crook, L.

Longford, E.

Taylor of Mansfield, L.

David, B.

Lovell-Davis, L.

Underhill, L.

Davies of Leek, L.

McNair, L.

Wall, L.

Donaldson of Kingsbridge, L.

Maelor, L.

Wallace of Coslany, L.

Elwyn-Jones, L.

Melchett, L.

Wedderburn of Charlton, L.

Evans of Claughton, L.

Meston, L.

Wells-Pestell, L.

Fisher of Rednal, B.

Milverton, L.

Whaddon, L.

Gaitskell, B.

Mishcon, L.

Wigoder, L.

Gifford, L.

Noel-Baker, L.

Wilson of Radcliffe, L.

Glenamara, L.

Ogmore, L.

Winterbottom, L.

Gordon-Walker, L.

Pargiter, L.

Wootton of Abinger, B.

Goronwy-Roberts, L.

Peart, L.

Gosford, E.

Phillips, B.

NOT-CONTENTS

Airey of Abingdon, B.

Falkland, V.

Newall, L.

Alexander of Tunis, E.

Ferrers, E.

Norfolk, D.

Allerton, L.

Fraser of Kilmorack, L.

Northchurch, B.

Amory, V.

Gage, V.

Nugent of Guildford, L.

Ampthill, L.

Gainford, L.

Nunburnholme, L.

Balerno, L.

Geddes, L.

O'Neill of the Maine, L.

Bellwin, L.

Geoffrey-Lloyd, L.

Orkney, E.

Belstead, L.

Glenkinglas, L.

Porritt, L.

Berkeley, B.

Godber of Willington, L.

Rawlinson of Ewell, L.

Bessborough, E.

Gowrie, E.

Redmayne, L.

Bolton, L.

Grantchester, L.

Reigate, L.

Brooke of Cumnor, L.

Gridley, L.

Renton, L.

Brooke of Ystradfellte, B.

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

Rochdale, V.

Cairns, E.

Rugby, L.

Camoys, L.

Halsbury, E.

Saint Oswald, L.

Campbell of Croy, L.

Hanworth, V.

Saltoun, Ly.

Clifford of Chudleigh, L.

Hatherton, L.

Sandford, L.

Clitheroe, L.

Hawke, L.

Sandys, L. [Teller.]

Clwyd, L.

Hertford, M.

Selkirk, E.

Craigavon, V.

Hill of Luton, L.

Soames, L. (L. President.)

Crathorne, L.

Hillingdon, L.

Somers, L.

Croft, L.

Hives, L.

Spens, L.

Cullen of Ashbourne, L.

Holderness, L.

Stamp, L.

Davidson, V.

Home of the Hirsel, L.

Strathclyde, L.

de Clifford, L.

Hood, V.

Strathcona and Mount Royal, L.

De La Warr, E.

Hylton-Foster, B.

Strathspey, L.

Denham, L. [Teller.]

Lauderdale, E.

Tranmire, L.

Drumalbyn, L.

Long, V.

Trefgarne, L.

Dundee, E.

Lucas of Chilworth, L.

Trenchard, V.

Eccles, V.

Lyell, L.

Ullswater, V.

Ellenborough, L.

Mackay of Clashfern, L.

Vaizey, L.

Elliot of Harwood, B.

Mais, L.

Vickers, B.

Elton, L.

Mansfield, E.

Vivian, L.

Emmet of Amberley, B.

Marley, L.

Wakefield of Kendal, L.

Energlyn, L.

Merrivale, L.

Ward of Witley, V.

Evans of Hungershall, L.

Mowbray and Stourton, L.

Young, B.

Exeter, M.

Murton of Lindisfarne, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.8 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 28:
Page 4, line 36, at end insert ("unless it is a period in respect of which the weekly rate of earnings-related supplement or earnings-related addition is to be ascertained by reference to the claimant's reckonable earnings for a tax year not later than 1980–1981.")
The noble Lord said: This amendment would ensure that the earnings-related supplement continues to be payable for spells commencing up to January 1983, instead of only up to 1982 as the Government propose. The contribution rates for 1980–81 were fixed last November, as your Lordships know, long before there was any question of the earnings-related supplement being abolished. It is true that national insurance operates on a "pay as you go" basis, but from the point of view of the individual contributor there is a clear connection between what he pays in this year and what he draws out in future years.
The connection is particularly clear where, as with the earnings-related supplement, the amount of benefit is directly related to the amount of the contributions paid in a particular year. To fix the contribution rate and then announce that one of the principal benefits based on the contributions paid in that year is to be abolished may be defensible—I say that it may be defensible—in terms of "pay as you go" financing, but most contributors will look upon it with very grave suspicion. I shall not put a word to it, but I do not think "robbery" would be out of place.
The whole contributory basis of the national insurance scheme rests—and I think this is where the Government slip up very badly, indeed—on the confidence of the working population that the benefits for which they are contributing will be paid. If they only knew the working population a little better, and realised how important some things are to them, the Government would not get themselves into this difficulty. What I am trying to do is to be very generous and get them out of it, but over the months the Government have made it abundantly clear that they do not need my help and that they will not touch it with, if I may say so, the proverbial barge-pole.
Let me end by saying that the whole of the Bill, especially Clause 4, threatens to undermine the confidence of ordinary working people. There are millions of them and they ought not to have a view about any Government that will lead them to believe that they are being taken for a ride. It is on that basis that I move the amendment.
5.11 p.m.
Lord SANDYS: I have listened with interest to the arguments of the noble Lord, Lord Wells-Pestell. I think I can say that we on this side of the Committee always listen to his arguments with the closest care and, indeed, read them afterwards. But the problem is that it is impossible for the Government—indeed, for any Government—to say that the situation as regards national insurance is frozen in time. In the past, much has had to be superseded by changes in benefit, and this Bill makes further changes.
Clause 4 aroused a very great deal of criticism, both during the Second Reading and again in Committee. Clause 4(2) provides for the abolition of the earnings-related supplement and the earnings-related addition. It is intended to abolish the benefit from 3rd January 1982, the start of the 1982 benefit year. Claimants whose period of interruption of employment through unemployment or incapacity begins before 3rd January 1982, or whose husband dies before that date, will retain their entitlement to the supplement, or addition, until the entitlement is exhausted or the period of interruption of employment ends, subject to a final cut-off at the end of June 1982. These will be people whose entitlement to benefit depends on reckonable earnings in the 1979–80 tax year or, in the case of linking claims, an even earlier year.
The abolition of the earnings-related supplement and the earnings-related addition from January 1982 is a crucial part of our overall strategy to achieve savings in public expenditure. If abolition were delayed, we should have to find savings elsewhere in the social security programme which would be extremely difficult to achieve without causing a great deal of hardship.
It has been suggested that the abolition of the earnings-related supplement and the earnings-related addition is a breach

1017
of contract. The noble Lord has referred to this many times, both on Second Reading and on earlier amendments. The argument put forward is that the supplement paid out during 1982 will be paid for by contributions which people are paying at the moment and that they will therefore lose a benefit which they have already paid for. My noble friend Lady Young gave a detailed explanation of this point during Second Reading and I quoted her this afternoon, but it may be helpful if I go through the important points once again.
It is true that the entitlement to the supplement during the benefit year 1982 will be based on earnings upon which contributions have been paid in the current tax year 1980–81. Entitlement during 1982 is based on earnings in 1980–81, for the practical reason that we have to obtain information about earnings for 1980–81 from employers and it has to reach the Newcastle computer before the benefit rates can be calculated. But the 1980–81 earnings do not pay for the 1982 benefits.
The national insurance scheme is not a funded scheme, which I referred to earlier, but is run on a pay-as-you-go basis. Contributions are set each year taking account of likely expenditure on the benefit in that year. Earnings-related supplement will not be abolished until the latter part of the 1981–82 tax year, and the abolition will he one of the factors taken into account when the contribution rates for the year are fixed.
This is a complex issue and I hope that I have been able to explain what the real position is. We could not accept an amendment which would reduce total savings by some £275 million in 1982–83, and I must therefore ask your Lordships to resist this amendment.
Lord BANKS: Before we finally leave this subject of the earnings-related supplement, I should like to return to the argument which the noble Lord, Lord Sandys, has pursued in the course of his remarks about entitlement to benefit. We all know that it was originally envisaged, as the noble Lord explained to us on an earlier amendment, that national insurance should be fully funded. Also, we all know that in the event it was not fully
1018
funded and that eventually, because of that, it was transferred entirely on to a pay-as-you-go basis. But that does not alter the fact that people have an entitlement to national insurance benefits in relation to the contributions which they have paid. The fact that it is pay-as-you-go instead of on an insurance basis does not make any difference to that. When it comes to the question of benefit that people are going to get, this will depend upon the contributions which they have made. That will be the source of their entitlement.
We know that the Government have the right to alter the level of benefits, and we know that the Government have the right to alter the nature of benefits. But surely any Government ought to hesitate about abolishing benefits to which contributors believe they are entitled, especially when this is done to accumulate money in a national insurance fund at a time when contributions are proving to be quite adequate. It is not done because the fund is in difficulties; it is done for quite other reasons—for economic reasons, for reasons to do with the Government's handling of the economy. As the noble Lord, Lord Wells-Pestell, said, if this were done on any scale, confidence in the national insurance scheme would surely vanish completely.
5.19 p.m.
Baroness PHILLIPS: Before the noble Lord the Minister replies, may I draw attention to the fact that the Government are yet again perpetuating the rather curious idea that some benefits will be either better or worse according to the year in which a particular Act comes into force. To take, for example, the widow's allowance, it appears from what the Minister has said that a woman who becomes a widow in one year will be better off than a woman who becomes a widow in another year. That is something you do not determine, nor indeed desire.
We had an earlier discourse from the Minister on the original Beveridge plan, which of course was based on a totally different concept from the one described by the Minister. It was based on the concept that, while one was young and fit and working, one paid into a fund from which one drew if one was unfortunate enough to be handicapped,

1019
widowed, elderly, unemployed or in any other such circumstance. But since we have moved away from that principle, I would still suggest that it is very curious to say that certain benefits will come to you if the situation arises before a certain date whereas those who are unlucky enough to have the same circumstance occurring after that date will not have the earnings-related benefit. There is something curiously unjust and curiously difficult in that, and if we once institute this into Acts of Parliament we shall have ladies arranging to make sure that their husbands die at the right moment so that they get the earnings-related benefit.
I have seen this so many times in Acts of Parliament over the years, when advising people on the question of pensions and benefits, and I know that it involves something which is quite fallacious. We already have enough of these anomalies on the statute book and I should have thought that the Government would hesitate to add some more, even to save money, although of course a national insurance fund is basically not designed to subsidise the state; it is put there for those who have to draw from it if it is necessary.
Lord DRUMALBYN: I should like to raise a small point about the cut-off date. If I understood my noble friend aright, he said that the earnings-related supplement would end on 3rd January 1982 but that those who already had an entitlement still running would be allowed to continue until a cut-off date, which I think he said was towards the end of June. It looks as though that is all right for the sickness benefit because that is 168 days and that would be just about running out by that time. In other words, the benefit and the earnings-related supplement would end at about the same time. But when we come to unemployment benefit, that runs for 312 days and the cut-off date would cut off the supplement in the middle of the period of benefit. I wonder whether he could give consideration to that.
5.23 p.m.
Lord ROSS of MARNOCK: I wonder whether the noble Lord would now proceed to answer the question which I asked him. When earnings-related benefits
1020
were introduced, am I right in thinking that earnings-related contributions also were introduced, and those contributions were related to what supposed benefits were going to come from these six-month benefits? It is wrong to say that actuarial calculations do not enter into it. It means this. There are millions of people who have paid these contributions but who, because of the Government's decision to end this particular benefit, are not going to draw a penny out of it and they will have a feeling that they have been "done". There is no saying what is going to happen after 1982, as to whether some of these people will be sick or rendered unemployed, and what they have paid for will not be available to them.
Are the Government going to make any change in the earnings contribution? Are they going to reduce it? I fancy not, otherwise the whole purpose of the Government would be spoiled. All they want to do is to save money, but they are doing it by cutting off the rights of people while at the same time they are continuing to charge the same. This is a very important point. It has nothing to do with insurance at all; it has nothing to do with unemployment benefit, sickness benefit and the rest of it. It is purely to do with the Treasury and the decisions which the Government have taken in respect of public sector spending. The department which the noble Baroness represents has been told, "You must save so much: go ahead and do it". They have been driven to these quite unethical procedures of ending benefits but not ending the contributions to which those additional benefits were related.
What we are asking for here is only an additional one year and they should at least give us that and show that they are tender in their thoughts about what they are doing. It is all very well for the noble Lord to stand up and say, "What we are doing is legal; there is nothing unethical about it". But I wonder when last we did anything like this. I wonder when last we ended a benefit without making a similar balancing reduction in contributions. I cannot remember it and I was concerned with national insurance matters for many years. This is not something which any Government would enter into lightly, and it does not stem from the Department of Health and Social Security but comes really from the Treasury.

1021
The noble Lord has a distasteful task. It is not one which any Minister would enjoy but he does not help it by embroidering it with all sorts of fanciful talk about notional funds which have long since gone. When a new benefit is introduced contributions are assessed in relation to actuarial considerations. The actual fact is that in the early years there is a very considerable profit from a Government point of view; it is only in the latter years that it falls off and here we are, having taken the profit, cutting off the benefit but continuing to take the earnings-related contributions.
Lord DAVIES of LEEK: Millions of people will be affected by this. I am sure that in the Conservative manifesto the public were not told that earnings-related supplements and unemployment benefits, sickness benefit, maternity allowances, and so on, would be cut down. I am sure that millions of people did not realise that. The sick and those who really are suffering thought that this Government which was coming in would give justice and it would be a brand new world. I find this a piece of unnecessary legislation to save a fiddling amount compared with the health and wealth of those who are sick and who need help.
Lord SANDYS: I think much of the last two speeches of the noble Lord, Lord Davies of Leek, and the noble Lord, Lord Ross of Marnock, was replied to very well by the noble Baroness, Lady Wootton of Abinger. T expect the noble Lord, Lord Ross, will remember what the noble Baroness said. She referred to the extreme complication of the whole of the social security budget. There comes a time when a great complication and great rigidity is built into a succession of statutes. I need not recite them all, but starting with the 1973 Act in current legislation—I will not go back further—one statute has built upon another, and the noble Lord will remember that in the last Social Security Bill we built into it a thing called a Keeling Schedule, which is a device to make the legislation a little easier to understand. This is in the nature of an experiment: I hope that it will work, I hope that it will prove to be a means of understanding legislation more satisfactorily.
In referring to what the noble Lord, Lord Drumalbyn, said in regard to the
1022
cut-off date, I would remind him that the second six months of unemployment benefit are at a flat rate; earnings-related is the same as for sickness benefit, and I think that answers his particular point.
I am sure that the Committee will have agreed with much of what the noble Baroness, Lady Phillips, said in regard to the unpredictability of the situation of widowhood. I am sure the very great sympathy of the whole Committee was attached to what she said. So many statutes promote a very difficult situation. There must always be marginal cases which fall one side of the line rather than the other. It is one of the tasks of Government to draw that particular line and to make rules and regulations—of which there are all too many—to attempt to alleviate their particular problem. The noble Baroness may feel that the Government have fallen on the wrong side of the line here, but she will recollect that my noble friend Lady Young has agreed to bring the matter of all the discussions on widows' benefit this afternoon to the attention of her right honourable friend the Secretary of State.
Lord WELLS-PESTELL: Let us get this quite clear. The Government cannot hide behind what really is not true. You cannot say—no one can say—that this is due to the rigidity of the statutes. We are not simple-minded people on this side of the Committee.
Lord SANDYS: I never said that the noble Lord was in any way simple-minded. I think it requires very great flexibility of mind to understand the statutes.
Lord WELLS-PESTELL: We really must not be treated as if we are simpleminded. To hide behind a phrase, that the real trouble is the rigidity of the statutes, has nothing to do with what we are talking about, and what we have talked about since 3 o'clock yesterday afternoon. The trouble is that it is the rigidity of the Government, who are going to save money by fair means or foul, whether legal or illegal, whether it means appropriating money which should go to one source—
Lord SANDYS: I think the noble Lord has agreed that there is nothing illegal in what the Government are seeking to do.
Lord WELLS-PESTELL: Well, my limited understanding of the situation may well be that it is not illegal. I hope that some group of people in the not too distant future will test this in the courts.
Lord DAVIES of LEEK: In a company we would call that a "bucket shop".
Lord WELLS-PESTELL: It is the rigidity of the Government. They are going to save money by fair means or foul. They have made that abundantly clear. Do not let us hide behind the statutes and say that it is the rigidity of the statutes. We know the statutes are numerous; there are too many of them. They need to be looked at, but it would not help us here. From beginning to end this is a Bill which has been designed, from the first clause to the sixth clause, to save money on a whole variety of things, whether the amounts are small or whether the amounts are large. I would have more sympathy with the Government if they were honest enough to say, "The purpose of this Bill is to save money; we have looked at every possible field where we can save money and this is what we are doing"—it has nothing to do with statutes.
Lord SANDYS: There are two points here. One is that it has been said by my right honourable friend the Secretary of State in another place in Standing Committee B that this is a Budget Bill. Because it is a Budget Bill your Lordships' House has a certain difficulty in handling it. Nevertheless, I think the second point is closely associated with it; that is, that it is a matter of much concern to your Lordships that so many detailed provisions concern the funding of particular parts of the Budget in respect of those cuts. We believe that the Government have been very honest in your Lordships' House in making constant declarations that it is our aim to save money. It is a matter of complaint by the noble Lord, Lord Wallace of Coslany, who said he would start screaming if we said so again Now his noble friend says we have not said it enough.
Lord WALLACE of COSLANY: I am on the point of doing so.
Lord WELLS-PESTELL: At the appropriate time, I think the Committee has to
1024
consider amending the Long Title to make it Social Security (No. 2) (Confidence Trick) Bill.
On Question, Amendment negatived.
Clause 4 agreed to.
Clause 5 [Abatement of unemployment benefit on account of payments of occupational pension]:
5.36 p.m.
Lord BYERS Lord BYERS moved Amendment No. 29:
Page 4, line 43, leave out ("£35") and insert ("£50").
The noble Lord said: Now that the minuet between the noble Lord, Lord Sandys, and the noble Lord, Lord Wells-Pestell, has finished, perhaps I might have leave to move the amendment which stands in my name on the Marshalled List, which is at page 4, line 43, leave out "£35" and insert "£50". Even if one reluctantly accepts the principle underlying Clause 5—and I am rather doubtful that I do—that unemployment benefit should be withheld from men between 60 and 65 who are drawing substantial occupational pensions, there is clearly no one obvious answer to the question of what constitutes a substantial pension. I believe the Government have admitted in another place that there is no particular magic in this figure of £35, and I in turn am not particularly wedded to the figure of £50 rather than, say, £49 or £51, or some other figure close to that.
I do not think that in the middle of 1980 £35 a week constitutes a substantial income. I say this for several reasons. First, it is less than half the national average earnings. Secondly, it is clearly essential that our system of social security benefits should be a coherent one, and any figure used in this clause should be—and I am not saying it should be identical—at least consistent with the qualifying figure for, say, family income supplement. At the moment, a married couple, even with only one child, is entitled to support from this part of the social security system if their income falls below £56, a figure much higher than the £35 in Clause 5 as it stands at the moment. Even if one deducts the amount attributable to the child under family income supplement, the figure must be much higher than £35. How,

1025
therefore, can such a gap between these two figures be justified? If a married man earning £56 a week is entitled to additional support from the social security system, we cannot sensibly say that if his income takes the form of an occupational pension and falls to £35 that that is adequate or substantial.
Thirdly, the figure of £35 contained in the Bill is even less than the basic state pension for a married couple, which is £37.30. In the majority of cases, a married couple, for whom that constituted their only source of income, would be entitled to a supplementary pension in addition. How, therefore, can a figure £2 lower than this, and paid by a former employer instead of the state, be labelled substantial? Fourthly, whether or not we care for the principle, I think we have to admit that the aim of this clause is to apply some sort of earnings rule to those claiming unemployment benefit, albeit that the income measured is in the form of an occupational pension rather than true earnings.
In the context of state pensions, of course we already have an earnings rule, and it bites on those with earnings above £52. There is a prima facie case for using the same figure here. However, while there could well be arguments about whether to use a figure approaching £56, to be consistent with the family income supplement figure, or a figure of £52 to be consistent with the earnings rule figure, it would, to my mind, be quite inconsistent and would create an unnecessary anomaly to set the figure in Clause 5 as it is, at only £35.
I am aware that the £35 is merely the starting point at which the means test begins to operate to reduce the unemployment benefit and that total income will be higher than that. Nevertheless, I believe that the starting point is too low against the background of modern living. My suggested alternative of £50 is, I think, a modest one and I hope that it will command your Lordships' support in all quarters of the Committee. I beg to move.
Lord WALLACE of COSLANY: I rise to support the amendment moved by the noble Lord, Lord Byers. The point to which the noble Lord, Lord Byers, has
1026
referred and which he has embodied in his amendment was raised by my noble friend Lord Underhill on Second Reading, and I consider that the Minister did not make a very satisfactory reply. The noble Baroness more or less implied that £35 was picked out of the air as an alleged substantial sum. I entirely agree with the noble Lord, Lord Byers, when he asks how £35 a week can be regarded as a substantial income. When one comes to think about the matter—and we have a certain interest here—if one is a London-based or a suburban-based Member of this House that amount is equal to two days' attendance allowance here; and that is not taking into account having to keep one's wife and family because, of course, one does not keep one's wife and family on the attendance allowance: one is supposed to have another income or another job, which may not be the case.
In her reply to my noble friend Lord Underhill the noble Baroness said that she was grateful to the noble Lord, Lord Boyd-Carpenter, for putting right what could be regarded as an abuse. However, we have had no substantial confirmation that abuses are taking place. Of course, in social security—whatever area one looks at—there is a small element of abuse. That is bound to arise.
The noble Baroness also alleged that employers are wary of employing people who are over 60. I am not so sure about that. Some employers I know do, if possible, take on people who are 60 or just over 60, rather than a younger person, because they regard them as more reliable and not so unreliable as the younger generation.
Another point that we must bear in mind is that there is an increasing appeal to people to retire early. Many unions have agreed to that—for example, the National Union of Mineworkers—and I was somewhat surprised when my daughter, who is a teacher, told me last night that her education authority has issued a circular urging women teachers to retire at 50. I thought that there was a teacher shortage. That is the type of background that we must think about, and I believe that the Government should reconsider the matter—not necessarily accepting the amendment now—and give an undertaking to have another look at it and to sum up the situation in a better way than

1027
was done on Second Reading and will possibly be done in reply to the amendment tonight.
5.44 p.m.
Lord DRUMALBYN: I am interested to note from the two speeches that have been made that there is no substantial opposition to the principle of this particular clause. Perhaps it is worth recalling that quite a long time ago—about 17 years ago—our colleague Lord Evans of Hunger-shall made a report on this matter. I remember it very well because at the time I happened to be at the Department of National Insurance. That report has been in cold storage for quite a long time, but at last it has come out. I cannot say that I remember the details. Indeed, I doubt whether I would find a copy of it in the Printed Paper Office, but no doubt it is in the Library. I do not know whether the figure of £35 was in some way related to the figure of "disregard", so to speak, that the noble Lord recommended at that time. Personally, I have always felt inclined to accept the recommendation of that committee, difficult as it was to get a majority for it, particularly in the House of Commons.
As regards the actual amount suggested, if my arithmetic is right the benefit would disappear when the occupational pension was £69.90. Is that right? I think that after that there would be no further disregard. It is quite a substantial sum of money if one works it out in terms of annual occupational pension. It seems to me that it is a sum which is by no means derisory, given the terms in which the present position rests—that is, that in order to qualify for unemployment benefit at present one must be genuinely seeking employment. I remember that it was said in the report that a considerable amount of evidence had been accumulated to the effect that a number of people were claiming who, on retirement from their work, went to live in a place where it was almost certain that they would not be able to find work in the range of employment they were in previously. It was deemed at the start that they were not genuinely seeking employment if they did so, but gradually there was a relaxation and it was found increasingly difficult to interpret and apply that rule. So, in
1028
saying now that unemployment benefit should cease in part to be paid if the occupational pension is £35 a week, and should disappear altogether when it conies to £70 a week, does not seem to me unreasonable in the present circumstances.
Lord DAVIES of LEEK: I find that there is more in this than meets the eye. I do not want to make a party point because it is a fact all over the world that, with technology, micro-technology and so on, we shall face an issue of unemployment. We are asking people—sometimes people who genuinely feel that they have done enough—at the age of 60 in certain occupations to retire. I think that this will have a deadening effect. It will affect younger people and young married people, at the beginning of their lives, slipping into a job at a very difficult time. Frankly, that is what I foresee. I am not sure whether these figures are the law of the Medes and the Persians. I agree with the noble Lord, Lord Byers: I think that our social system at present is not by any means one of the best in Europe. I think that that of Albania is almost as good.
We are undermining the entire purpose of the society that we hoped to build-up after we had fought the Second World War for democracy and decent living. That is what hurts me. That is what is undermining the situation. It will not encourage the retirement of people who are still healthy enough to enjoy life, because if their occupational pension—which may be very meagre—reaches such a point there will be nothing for them. Consequently, I sincerely believe that we are making a mistake.
Finally, is there any hope—when I was in the Ministry of Social Security we used the phrase—of dynamising these figures? Are they static or will they be changed because of the terrific inflation that we may have to meet, whichever Government are in office? Inflation is one of those things that no one as yet has found a perfect formula for. That is why I see greater depth in this matter and a greater effect than can be seen superficially from just reading the paragraph for the first time. I hope that we shall go into the Lobby with the noble Lord, Lord Byers, because to me this is a matter of great principle.
Lord SANDYS: I listened to the noble Lord, Lord Byers, with close attention because I think that there is much to be explained as regards this particular situation. My noble friend Lady Young explained the position at Second Reading and I think that very often it helps to have an example, which I shall now quote. As the noble Lord, Lord Davies of Leek said, there is more to this than meets the eye. How right he was, because in the basic situation we start off with an occupational pension of £35 for an unemployed man.
Let us take the case of a married man with an occupational pension paid at the weekly rate of £35. At the age of 60 he would have, in the first year—but for no longer than that—a flat rate of £20.65 unemployment benefit for himself and an addition for his wife of £12.75. That totals £68.40. I agree that once his occupational pension exceeded that amount he would no longer be entitled to receive any benefit; but if his pension was less than £68.40, he could receive the amount of benefit that would bring his income up to that level.
I believe, first, that in arguing his case most cogently the noble Lord, Lord Byers, may have overlooked what my noble friend Lord Boyd-Carpenter said on Second Reading at column 1159 of Hansard, on Monday, 2nd June. Of course, my noble friend is very experienced in this particular field and he turned part of his remarks especially to this particular situation. He said:
"I return quickly to the other parts of the Bill to which I should like to refer. I am delighted to see the provision in respect of the limitation of unemployment benefit for the occupational pensioner. There is no doubt that in certain parts of the country this had the elements of scandal about it. To register for unemployment benefit for a type of work which one knows is non-existent in the area where one has decided to settle was certainly perfectly legal. But I do not think that those concerned are entitled to any very great sympathy if their unemployment benefit is moderately restricted, as is proposed by the Bill. Here again, applying if you like the hard test of priority, is payment of unemployment benefit to such people necessarily of the highest priority? Personally, I do not think that it is".
There my noble friend was speaking at a time when he did not have the benefit of seeing the amendment of the noble Lord, Lord Byers, as set down. Nevertheless, that was what was in his mind at that time.
1030
I turn to the amendment as it stands. At a time of savings in the social security expenditure, I repeat once again that, the Government's aim is to reduce expenditure in areas in which it will cause least hardship. In the circumstances, the Government consider that it is reasonable to abate the amount of unemployment benefit payable to people aged 60 or over who have retired on a substantial occupational pension. Those below the age of 60 are not affected.
The figure chosen to define a substantial pension is, of course, to some extent arbitrary. A case can be made out for a higher figure based on precedents or on "feel". But £35 is certainly not wholly arbitrary. The results of a recent survey have shown that about half the unemployed claimants aged 60 to 64 who have retired on an occupational pension receive a weekly amount of less than £35 from that pension. Under this clause a person over 60 who receives an occupational pension of no more than £35 a week will not be affected by the new rules and will receive his or her unemployment benefit in full, to which I have referred in that example. Thus, half those who might be involved are, in fact, exempted.
By deciding that abatement of unemployment benefit shall not begin until a person is receiving an occupational pension of more than £35, the Government will also ensure that full abatement will not apply unless a reasonably high level of occupational pension is being paid. For example, standard flat rate unemployment benefit for a single person in 1981 will not be fully abated unless his or her pension amounts to at least £55·70 a week, while the equivalent amount for a married couple is £68·40 a week. That, of course, was the example which I quoted.
It will be noted that Clause 5 is so constructed that the Bill itself sets only a lower limit to the pension figure from which the new rules begin. The actual sum is to be prescribed by regulations, and it is, therefore, not necessary to amend the Bill in order to prescribe a higher figure.
I hope that I have not wearied the Committee with the examples and details, but, as I have already explained, the main purpose of the first five clauses of this Bill is to reduce public expenditure. This clause will produce savings of about £25

1031
million in a full year, while protecting those on lower occupational pensions. The effect of this amendment would be to reduce those savings by about £9 million. Alternative savings would have to be looked for elsewhere in the social security field. I do not think that it would be easy to justify transferring this burden to others simply to ensure that the money could continue to be paid to some of the better off occupational pensioners, including many who, having retired from work, neither need nor wish to take further employment. I hope that the Committee will reject the amendment.
5.56 p.m.
Baroness PHILLIPS: I shall not pursue my point about the general principle until we come to the clause stand part debate. But the noble Lord, Lord Drumalbyn, will not be surprised because I have pursued several Governments on this point, including Labour Governments.
The Minister has just given some figures which are extraordinarily interesting. There seems to be the underlying principle that there is something very wicked in a person of 60 years of age who actually wants to work. It is a good job that that was not applied to this gentleman, Mr. MacGregor, who is 67 years old. I was delighted to hear that he was going to take part in the activities of the Steel Corporation because it was striking a blow for the over-60s.
But at the moment men have to retire at 65 years of age. If they are wicked enough and foolish enough to wish to work and they receive a retirement pension, immediately the earnings rule comes into operation. As the noble Lord, Lord Sandys, knows, if they earn enough they will lose their pension—and who knows what is enough, because they have to shop in the same market as everybody else; their loaf of bread costs exactly the same as that of a man who is earning; they receive no special privileges there. So now we are back to the same principle. If a man retires at 60 or is declared unemployed at 60 under our system he cannot collect a retirement pension. He may have an occupational pension towards which, in most cases, I would remind the Minister, he has made a contribution, and he then may seek work. I think that it is quite unjust of the noble Lord, who is not in his
1032
place, to suggest that people deliberately collect money without seeking work. Most pensioners of 60 who I know, who, after all, are not senile—because if we assumed that everyone over the age of 60 was senile, that would rule out quite a number of the Members of this House—are quite capable of earning money, of working, and want to do so. We are talking about a generation which liked to work. Therefore, it is quite slanderous to suggest that they go somewhere to live in order to go to the employment exchange to collect this magnificent sum because they do not wish to work. I do not think that that is true.
But let us suppose that they go along with the intention of finding a job. They then collect this vast sum and then, because they have an occupational pension, they are to lose a certain proportion. There is something totally unjust about this. No section of the population pay back £1 for every £1 they earn. They are always allowed to retain something out of it—even people who enter the class of the late Charlie Clore; they still retain some of their money.
This provision is quite unjust and unfair. If the amendment of the noble Lord, Lord Byers, were approved at least it would be lifted a little, but it is wrong to say that a pension of £35 a week is substantial. I suppose we are now to assume that the retirement pension is substantial. Most people who know people of that age would admit that they find it very difficult actually to live on the retirement pension. If they wish to work, I cannot see why we should be the ones who, by any Act of Parliament, deprive them of this privilege. At least let us raise this amount; it is in any case paltry enough.
Lord BYERS: I do not conceal the fact that I do not like the principle which has been introduced of penalising the occupational pensioner, but nothing which has been said from the Front Bench opposite has persuaded me that this figure of £35 is adequate. It is a bad starting figure. What I dislike is the suggestion that this is really brought in because there is an abuse. It is going to hit the unemployed person who is genuinely wanting work, is living in the right place, but is not able to get work.

1033
In those circumstances—I take the point made by the noble Baroness, Lady Phillips—these pensions on the whole have been paid for. A contribution has been put there by the employer and by the employee in order to make the sort of provision that people want, and a lot of them, as I shall say on the next amendment that I propose to move, have planned their retirement taking into account the fact that, if they could not find a job, they would at least get unemployment benefit when they had come to early retirement. I feel very strongly about
this. We have got the wrong figure. It is an arbitrary figure. There is no guarantee that regulations will dynamise this and I can see it being a trap for those over 60 who genuinely want to get work but cannot find it. I beg to move.
6.2 p.m.
On Question, Whether the said amendment (No. 29) shall be agreed to?
Their Lordships divided: Contents, 90; Not-Contents, 99.

CONTENTS

Ardwick, L.

Goronwy-Roberts, L.

Phillips, B.

Avebury, L.

Gosford, E.

Pitt of Hampstead, L.

Bacon, B.

Grey, E.

Plant, L.

Balogh, L.

Hale, L,

Ponsonby of Shulbrede, L.

Banks, L.

Hampton, L. [Teller.]

Ritchie-Calder, L.

Barrington, V.

Harris of Greenwich, L.

Robson of Kiddington, B.

Beaumont of Whitley, L.

Hatch of Lusby, L.

Rochester, L.

Beswick, L.

Hood, V.

Ross of Marnock, L.

Birk, B.

Houghton of Sowerby, L.

Sainsbury, L.

Blease, L.

Howie of Troon, L.

Seear, B.

Blyton, L.

Irving of Dartford, L.

Segal, L.

Boston of Faversham, L.

Jacques, L.

Simon, V.

Bowden, L.

Janner, L.

Stamp, L.

Brockway, L.

Kilbracken, L.

Stewart of Alvechurch, B.

Brooks of Tremorfa, L.

Kilmarnock, L.

Stewart of Fulham, L.

Bruce of Donington, L.

Kings Norton, L.

Stone, L.

Burton of Coventry, B.

Leatherland, L.

Strabolgi, L.

Byers, L.

Lee of Newton, L.

Strauss, L.

Chitnis, L.

Leonard, L.

Tanlaw, L.

Crook, L.

Llewelyn-Davies, L.

Taylor of Mansfield, L.

Crowther-Hunt, L.

Llewelyn-Davies of Hastoe, B.

Underhill, L.

Cudlipp, L.

Lovell-Davis, L.

Wallace of Coslany, L. [Teller.]

Darling of Hillsborough, L.

McNair, L.

David, B.

Maelor, L.

Wedderburn of Charlton, L.

Davies of Leek, L.

Melchett, L.

Wells-Pestell, L.

Elwyn-Jones, L.

Milner of Leeds, L.

Whaddon, L.

Evans of Claughton, L.

Noel-Baker, L.

Wilson of Radcliffe, L.

Fisher of Rednal, B.

Northfield, L.

Wootton of Abinger, B.

Gaitskell, B.

Ogmore, L.

Wynne-Jones, L.

Gifford, L.

Pargiter, L.

Glenamara, L.

Peart, L.

NOT-CONTENTS

Adeane, L.

Crathorne, L.

Fortescue, E.

Airey of Abingdon, B.

Croft, L.

Gainford, L.

Allerton, L.

Cromartie, E.

Glenarthur, L.

Amory, V.

Cullen of Ashbourne, L.

Glenkinglas, L.

Ampthill, L.

Davidson, V.

Godber of Willington, L.

Balerno, L.

de Clifford, L.

Gowrie, E.

Bellwin, L.

De Freyne, L.

Gridley, L.

Belstead, L.

De La Warr, E.

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

Bessborough, E.

Denham. L. [Teller.]

Bolton, L.

Drumalbyn, L.

Hanworth, V.

Brooke of Cumnor, L.

Dundee, E.

Hatherton, L.

Brooke of Ystradfellte, B.

Eccles, V.

Hawke, L.

Brougham and Vaux, L.

Ellenborough, L.

Henley, L.

Cairns, E.

Elliot of Harwood, B.

Hertford, M.

Campbell of Croy, L.

Elton, L.

Hill of Luton, L.

Clifford of Chudleigh, L.

Emmet of Amberley, B.

Hives, L.

Clitheroe, L.

Exeter, M.

Hornsby-Smith, B.

Colwyn, L.

Faithfull, B.

Hylton-Foster, B.

Craigavon, V.

Falkland, V.

Kimberley, E.

Kinnoull, E.

Murton of Lindisfarne, L.

Spens, L.

Lauderdale, E.

Newall, L

Strathclyde, L.

Long, V.

Norfolk, D.

Strathcona and Mount Royal, L.

Lyell, L.

Northchurch, B.

Strathspey, L.

Mackay of Clashfern, L.

Nugent of Guildford, L.

Tranmire, L.

Macleod of Borve, B.

Orkney, E.

Trefgarne, L.

Mansfield, E.

Redmayne, L.

Trenchard, V.

Marley, L.

Renton, L.

Ullswater, V.

Massereene and Ferrard, V.

Rochdale, V.

Vaizey, L.

Merrivale, L.

Saint Oswald, L.

Vickers, B.

Milverton, L.

Sandford, L.

Vivian, L.

Monson, L.

Sandys, L. [Teller.]

Wakefield of Kendal, L.

Morris, L.

Selkirk, E.

Ward of Witley, V.

Mottistone, L.

Soames, L. (L. President.)

Young, B.

Mowbray and Stourton, L.

Resolved in the negative, and amendment disagreed to accordingly.

6.10 p.m.
Lord BYERS Lord BYERS moved Amendment No. 30:
Page 4, line 44, at end insert—
("This section shall not apply in respect of payments by way of occupational pension which commenced before 26th March 1980").
The noble Lord said: I am concerned over the timing of this measure. It is desirable, even essential, that people should plan their financial provision for retirement in advance. Indeed, it is a sad fact of life that all too many people grossly underestimate the length of time they are likely to spend in retirement and hence the amount of income they are likely to need. Fortunately, there are some people who make proper provision in advance; but whether or not they have made proper provision, if they have already made a decision and entered upon retirement, or indeed if retirement has already been forced upon them by way of redundancy, they are surely entitled to be protected from legislation which cuts out part of the income they are currently receiving.
It is that protection that my amendment seeks to provide. Without it, the Bill, as it stands, is in danger of undermining the basis of the calculations which many people now retired have already made. Such calculations will have led many people to decide that they can afford to retire, or others to decide that they can afford a certain lifestyle in retirement. Having made such decisions, they surely are entitled to protection from a measure that would now withdraw part of the income which they had planned upon having.
There is a strong case for making this provision effective from a date in the future so that this measure can be taken into account by anyone who is considering whether or not he can afford to retire, or, if the retirement is an enforced one, whether a certain standard of living can be maintained. On the other hand, the Government could argue—and indeed I expect them to argue—that the choice of an effective date in the future would give people the opportunity to frustrate the intention behind this clause by retiring immediately, or at least before the critical date arrives. With some reluctance, therefore, I have incorporated in my amendment an effective date based on the timing of the announcement of this measure in the Budget proceedings in another place.
The effect of this amendment, therefore, would be to exempt from the provisions of Clause 5 only those whose occupational pension had commenced before the day of the Budget. That means that there can be no possibility of anyone timing his retirement in order to frustrate the intentions of the Government, whatever we may feel about those intentions.
All in all, this amendment is a modest one, but one that in my opinion we owe in all fairness to those whose occupational pensions have already begun. Of course, if we were designing a social security system from the drawing board where none already existed, we would probably not make provision for unemployment benefit to be payable to certain occupational pensioners. But we are not faced with a blank sheet of paper; we are faced with a system already working and, whatever its defects, those who have taken the working of that system into account in making fundamental personal decisions were fully entitled to do so. It would be

1037
thoroughly objectionable if, at this late stage, we were to penalise them for doing so, and that is the principal at the heart of my amendment. I hope that it commends itself to your Lordships. I beg to move.
Lord WALLACE of COSLANY: I rise briefly to support the noble Lord, Lord Byers. He has outlined and made a cast iron-case. The amendment would avoid an obvious injustice. I think that this is a situation where the Government can come forward and meet this side of the Committee in an attempt at last to reach a stage where an amendment will he accepted, which would of course be revolutionary. But please do not mention anything more about financial savings.
6.15 p.m.
Lord SANDYS: I think the noble Lord will agree that in discussing Clause 5 it has been argued that many of those who have retired on an occupational pension have done so in the expectation that they will be able to claim unemployment benefit if they are unable to find work. In this context, it is interesting to note that the recent Cohort Study of a sample of unemployed men—which no doubt the noble Lord, Lord Wells-Pestell, has read or has had the opportunity of looking at—which was run for the Department of Health and Social Services, reported that 56 per cent. of those on occupational pensions, the subject with which we are concerned in this amendment, had applied for unemployment benefit but were not available for work.
It has been emphasised both in this House and in another place that in many cases they have paid national insurance contributions all their working lives in the expectation of drawing unemployment benefit when they retire. The facts are, first, that many people who retire from work with a substantial pension are, quite understandably, not really keen to obtain further work. This is, I think, disputed by the noble Baroness, Lady Phillips.
Baroness PHILLIPS: Will the Minister forgive me for intervening before he leaves this point? He said something that I have not heard before; that is, that the survey showed that these people were receiving unemployment benefit but were not available for work. How could you
1038
determine that? Surely, the mere fact that you go to the manpower services, I believe it is called now, or the manpower centre, means that you are seeking work.
Lord SANDYS: At this stage, without the survey in front of me, I can only say that this was embodied in the survey carried out by the DHSS. I shall be happy to answer the question, but I have not had the opportunity of looking at chapter and verse in the few moments since the noble Baroness has spoken.
Baroness PHILLIPS: Perhaps the Minister will let me know, because I do not see how he can reach that figure.
LORD DRUMALBYN: I think the Minister said that the numbers were of those who had applied for unemployment benefit. Perhaps he could verify whether they had actually received unemployment benefit.
Lord SANDYS: Once again, I would hesitate for several long minutes before replying to my noble friend Lord Drumalbyn on this point. As I have now been given a note on this, perhaps I could reply at short length. The recent survey known as the Cohort Study found that over half, that is to say, 56 per cent., of the unemployed men with occupational pensions of a size to be affected by this proposal admitted—and that is the crucial word—that they were not looking for work. I do not know whether that satisfies either the noble Lord, Lord Drumalbyn, or the noble Baroness.
Baroness PHILLIPS: No, it does not satisfy me.
Lord SANDYS: May I now resume my argument on this amendment. The facts are that this was borne out by the results of the survey referred to earlier—over half of the unemployed men over 60 with a pension large enough to be affected by this proposal admitted that they were not looking for work. Secondly, quite apart from the issue of whether or not a pensioner is looking for work, it must be remembered that unemployment benefit is extended as a short-term earnings-replacement benefit for people experiencing unforeseen periods of unemployment until they can find fresh work. Retirement

1039
from work can hardly be regarded as unforeseen. Moreover, if on retirement a person is awarded a substantial occupational pension, he will be receiving a form of earnings-replacement, and payment of unemployment benefit in addition is double provision for the same contingency. In the present economic circumstances it is difficult to justify spending £25 million to provide duplicate earnings replacement of this kind.
I readily accept that this amendment would not cost as much as some which have been proposed. Many people who retired before 26th March 1980 and who had then claimed unemployment benefit would have exhausted their entitlement before the start of the new provisions in April 1981, and to that extent the cost of the amendment would be reduced. But if those concerned obtained further work for at least 13 weeks or if, having worked for a time after retiring from their normal occupations, they then became unemployed, they could claim unemployment benefit at any time until they retired after reaching the state pension age of 65. Distinguishing the entitlement of these occupational pensioners from those who had retired after March 1980 would involve administrative complications, and would most certainly lead to a sense of unfairness as between those pensioners who received full unemployment benefit and others with similar occupational pensions who had had their benefit reduced or extinguished altogether. For those reasons the Government cannot accept the amendment.
Lord MOTTISTONE: When I retired from the Navy at the age of 47 I was unemployed for six weeks and drew unemployment benefit, primarily to find out what it was like to do so, and I discovered that they paid it from a different office from social security benefits, and that of course was a valuable thing to have learned. Do I understand that under the Bill I would not now be able to do that and gain the valuable experience that I did on that occasion?
Lord SANDYS: I do not think the provisions of this clause would apply. I am not fully conversant with my noble friend's situation and I would hesitate to confirm or otherwise the situation in such a particular case.
Lord BYERS: I was very disappointed indeed at the attitude of the noble Lord, Lord Sandys, and I was worried by a statement he made, and I am not sure whether he realises exactly what he said. As I understood him, he said retirement from work could not be entirely unforeseen. That is what is happening today; people are not able to get jobs and are forced to retire. That is not something they have foreseen. I am worried that we are being bedevilled by this 56 per cent. of people who say they do not really want work. It means that 44 per cent. of people are genuinely seeking work. If there are people taking unemployment benefit who do not wish to work, that should be treated as the abuse which it is and should not affect those who are genuinely seeking work and whom this will catch in a very bad way. As the noble Lord, Lord Wallace of Coslany, said, here was an opportunity for the Government at least to be sympathetic towards this idea and perhaps to have said they would have another look at it. I regard this as a potential injustice to a large number of people, and if the Government are not prepared to have another look at it, the Committee should press it to a Division.
Lord WELLS-PESTELL: I do not think we can leave the matter of the 56 per cent. there. I do not suggest we pursue it tonight, but my understanding of the regulations of the Department of Employment is that a person has to register or sign on once a week to get his money. If that is what he does, then he signs on once a week to get work and, if there is no work, he gets his money. The implication of what the noble Lord said—and I realise he was relying on a report—suggests that money is paid out without that requirement being exacted because, as I understand the situation, they must register for work once a week. The very fact that they sign on means that they sign on saying they want work. Perhaps the noble Lord could at an early stage pursue the matter. Many of us would like to know how this percentage of people interviewed admitted what the noble Lord described. We should like to know, of course, what conditions they had to fulfil.
Lord SANDYS: I will certainly look into this matter, and perhaps the noble

1041
Lord, Lord Wells-Pestell, would either like me to write to him about it or—if he thinks a larger number of people would benefit from such a course—if he would set down a Question for Written or Oral Answer in your Lordships' House, I should be only too happy to make what arrangements we can on behalf of the Government.
Lord BYERS: I do not think that would be satisfactory either to the noble Lord, Lord Wells-Pestell, or to those on these Benches. If the noble Lord will say he will have another look at this and come back with something positive on Report, I should be willing to withdraw the amendment. If not, I should like to press it to a Division.
6.26 p.m.
Baroness PHILLIPS: As the one who originally raised this point, I should like to pursue it because the reply given by the noble Lord, Lord Sandys, appeared to refer to a report. Was that report prepared by the department? From what he said, it seemed to be an outside report. We all know about market research; you can get any answer you like if you ask the right question. The report in question seems to have originated in this way, that people leaving the manpower services centres were stopped and asked, "Did you want work, or were you just coming here for a walk"? and they gave an answer.
It seems dreadful that we should he dealing with a prospective Act of Parliament on the basis of a piece of market research about which we have had no information. It is a slur on people I know, through Age Concern, who genuinely want work. The idea that more than half of them go along gaily to collect this vast sum of money in order to live, presumably in a nice place like Devon or Cornwall, is a total nonsense. In view of the sort of report this appears to be, we need the source, the kind of questions that were asked and all the facts that went with it; that is, if it is to be quoted as a reason for a provision in a Bill.
Baroness YOUNG: Perhaps we could take ourselves away from that point. It would be a great mistake if the Committee believed that Clause 5 had been inserted to cater for something that might be
1042
regarded as an abuse. On Second Reading, a few noble Lords raised the whole question whether the Bill was aimed at dealing with abuse, and I made it clear in my winding-up speech that it was not. It has nothing to do with that at all. In fact, that is a quite subsidiary point, which arose over the clause when it was said it was possible for somebody to draw unemployment benefit although he had an occupational pension and was not available for work. On the point that has been raised about the survey, to satisfy the Committee my noble friends and I would be very happy to write to anybody giving the full details of the survey to indicate where the information can be found, so that any of your Lordships who care to look at it can do so; but I would not want the Committee to think that the case rests on that.
Lord WALLACE of COSLANY: The noble Baroness, Lady Young, said this was not a Bill designed to deal with abuse. Why, then, did she say on Second Reading:
"I was very pleased to have the support of my noble friend Lord Boyd-Carpenter for putting right what could be regarded as an abuse"?
Baroness YOUNG: The way in which I couched my remarks on that occasion indicates that I do not regard that as a principal reason for the Bill. The noble Lord, Lord Wallace of Coslany, has said often enough that he is bored hearing us say it is a Bill to save money, but I indicated in my opening remarks that that was indeed the purpose of the Bill. In fact, the principal purpose of this clause—and we have not pretended about this fact—is another way of saving money. We have said that this is a group of people who have retired and who have an occupational pension, and we have chosen the figure of £35 as a cut-off point for those who would not be eligible for this unemployment benefit.
Lord BYERS: That was in regard to the previous amendment. What is the cost of this amendment? Will it really be very much?
Baroness YOUNG: I beg the Committee's pardon. I accept that the cost of this amendment is not as great as the cost of other amendments. The point that my noble friend Lord Sandys made was that it would distinguish between those who

1043
retired before the date in March 1980 when my right honourable friend the Chancellor of the Exchequer made his statement about the matter and those who have retired subsequently. To distinguish between the two would be a very complicated matter and would, I believe, create a sense of unfairness between two groups of occupational pensioners.
Lord WALLACE of COSLANY: Will the noble Baroness agree that the figure would probably be about £25 million per annum?
Baroness YOUNG: I can certainly give the noble Lord the precise figure.
Lord WALLACE of COSLANY: The figure I mentioned actually appeared in an early day Motion in another place.
Viscount MASSEREENE and FERRARD: I wish to make a quick observation. With regard to the 44 per cent. who want work—
Several noble Lords: It is 56 per cent.
Viscount MASSEREENE and FERRARD: No, it is 44 per cent., not 56 per cent. Some of these people are very choosey about the kind of work that they want.
Several noble Lords: Oh!
Viscount MASSEREENE and FERRARD: I just wanted to make that point because I have had experience of this matter.
Baroness PHILLIPS: We cannot let it go on the record that we started this business, because it was the Minister, the noble Lord, Lord Sandys, who said that his noble friend the noble Lord, Lord Boyd-Carpenter, had made the remark that we we have been discussing. That is why we followed up the point; we on this side of the Committee did not raise it. We have simply tried to answer the accusation and to point out that these people are not layabouts. May I say to the noble Viscount that, if he went to a labour exchange or a manpower centre, he would not think it unreasonable to expect the type of job to which he was accustomed, rather than one to which he was not accustomed.
Viscount MASSEREENE and FERRARD: I was not accusing people of being choosey about work; I was just making the point.
6.32 p.m.
On Question, Whether the said amendment (No. 30) shall be agreed to?
Their Lordships divided: Contents, 83; Not-Contents, 97.

CONTENTS

Ampthill, L.

Gosford, E.

Ogmore, L.

Ardwick, L.

Greenwood of Rossendale, L.

Pargiter, L.

Bacon, B.

Grey, E.

Peart, L.

Balogh, L.

Hale, L.

Phillips, B.

Banks, L. [Teller.]

Halsbury, E.

Pitt of Hampstead, L.

Barrington, V.

Hampton, L. [Teller.]

Plant, L.

Beaumont of Whitley, L.

Hanworth, V.

Ponsonby of Shulbrede, L.

Beswick, L.

Hatch of Lusby, L.

Ritchie-Calder, L.

Blease, L.

Hood, V.

Robson of Kiddington, B.

Blyton, L.

Houghton of Sowerby, L.

Rochester, L.

Boston of Faversham, L.

Howie of Troon, L.

Ross of Marnock, L.

Bowden, L.

Irving of Dartford, L.

Sainsbury, L.

Brockway, L.

Jacques, L.

Seear, B.

Brooks of Tremorfa, L.

Janner, L.

Shannon, E.

Bruce of Donington, L.

Kilbracken, L.

Simon, V.

Burton of Coventry, B.

Kilmarnock, L.

Stamp, L.

Byers, L.

Leatherland, L.

Stone, L.

Collison, L.

Lee of Newton, L.

Strauss, L.

Crowther-Hunt, L.

Leonard, L.

Taylor of Mansfield, L.

Cudlipp, L.

Llewelyn-Davies, L.

Underhill, L.

David, B.

Llewelyn-Davies of Hastoe, B.

Wallace of Coslany, L.

Davies of Leek, L.

Lovell-Davis, L.

Wedderburn of Charlton, L.

Elwyn-Jones, L.

McNair, L.

Wells-Pestell, L.

Evans of Claughton, L.

Maelor, L.

Whaddon, L.

Fisher of Rednal, B.

Melchett, L.

Wilson of Radcliffe, L.

Gaitskell, B.

Milner of Leeds, L.

Wootton of Abinger, B.

Glenamara, L.

Milverton, L.

Wynne-Jones, L.

Goronwy-Roberts, L.

Northfield, L.

NOT-CONTENTS

Adeane, L.

Emmet of Amberley, B.

Morris, L.

Airey of Abingdon, B.

Exeter, M.

Mottistone, L.

Allerton, L.

Faithfull, B.

Mowbray and Stourton, L.

Amory, V.

Falkland, V.

Murton of Lindisfarne, L.

Balerno, L.

Fortescue, E.

Newall, L.

Bellwin, L.

Gainford, L.

Norfolk, D.

Belstead, L.

Glenarthur, L.

Northchurch, B.

Bessborough, E.

Glenkinglas, L.

Nugent of Guildford, L.

Bolton, L.

Godber of Willington, L.

Orkney, E.

Brooke of Cumnor, L.

Gowrie, E.

Redmayne, L.

Brooke of Ystradfellte, B.

Grantchester, L.

Renton, L.

Brougham and Vaux, L.

Gridley, L.

Rochdale, V.

Cairns, E.

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

Saint Oswald, L.

Campbell of Croy, L.

Sandford, L.

Clifford of Chudleigh, L.

Hatherton, L.

Sandys, L. [Teller.]

Clitheroe, L.

Hawke, L.

Selkirk, E.

Cockfield, L.

Henley, L.

Soames, L. (L. President.)

Colwyn, L.

Hives, L.

Spens, L.

Cranbrooke, E.

Hornsby-Smith, B.

Strathclyde, L.

Crathorne, L.

Hylton-Foster, B.

Strathcona and Mount Royal, L.

Croft, L.

Kimberley, E.

Strathspey, L.

Cromartie, E.

Kinnoull, E.

Tranmire, L.

Cullen of Ashbourne, L.

Lauderdale, E.

Trefgarne L.

Davidson, V.

Long, V.

Trenchard, V.

de Clifford, L.

Lyell, L.

Tweeddale, M.

De La Warr, E.

Mackay of Clashfern, L.

Ullswater, V.

Denham, L. [Teller.]

Macleod of Borve, B.

Vickers, B.

Drumalbyn, L.

Mansfield, E.

Vivian, L.

Dundee, E.

Marley, L.

Wakefield of Kendal, L.

Eccles, V.

Massereene and Ferrard, V.

Ward of Witley, V.

Ellenborough, L.

Merrivale, L.

Westbury, L.

Elliot of Harwood, B.

Mills, V.

Young, B.

Elton, L.

Monson, L.

Resolved in the negative, and amendment disagreed to accordingly.

6.40 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 31:
Page 6, line 28, leave out from ("subsection") to ("as") in line 30.
The noble Lord said: This is a very brief amendment. It is one which the Government will have no difficulty in accepting, and I know will be pleased to accept. It certainly has no money implications at all, and therefore they cannot offer that as a reason for not accepting it. The amendment relates to subsection (5) of Clause 5, which deals with the function of the Social Security Advisory Committee, which will have the responsibility of making proposals and examining regulations once they have come into being. But subsection (5) says in line 28:
"such regulations as are mentioned in the preceding subsection, other than regulations which are made during the period of 6 months beginning with the date of the passing of this Act …".
I think it is understood that once the Act comes into being it will take a little time to set up the Social Security Advisory Committee. This I accept. It is not
1046
something which ought to be done in a hurry; it has to be done with very great care. That means that in the early stages regulations will have to be drawn up, they will come before Parliament and Parliament will make a decision on them; and there may well be other proposals put forward by the Secretary of State. We are not objecting to that. What we are saying is that, although this is a necessary procedure, once the Social Security Advisory Committee is in being, then no matter how many regulations have been passed and proposals adopted during the first six months, they should nevertheless go to the Social Security Advisory Committee so that they can look at them. It may well be that they will approve of all of them; but I think those of your Lordships who have followed the function of the National Insurance Advisory Committee (known as NIAC) will realise and will know that there have been times when they have seen things in regulations and proposals which have escaped the notice of everybody else, and that they have been able to make some valid and well worthwhile criticism and comment.
This is a very simple thing, and I do not honestly think there can be any rooted objection to it. I hope nobody

1047
will say that, of course, they will have so much work on their hands, because we do not know how much work they will have on their hands. At this stage, we do not know how often they will meet—whether it will be once, twice or three times a week, though it will be probably not as much as that. I see no reason for resisting this request because the regulations made in the first six months are really going to be of supreme importance. I know the answer is that they must come before Parliament, but Parliament has not a complete monopoly of wisdom, as we know from time to time. If they had, we should not have to amend so many Acts. Therefore, I ask the noble Baroness, or whoever is replying from the Government Front Bench, to say that this is a reasonable request, and that they will accept it. I beg to move.
Lord SANDYS: The noble Lord, Lord Wells-Pestell, will recollect that we had discussions on the first Social Security Bill a matter of a month ago on the subject of the Social Security Advisory Committee and its administration. Under this clause, proposals to make regulations under subsection (2), which would allow the introduction of certain detailed operating rules or the making of regulations to extend the definition of payments by way of occupational pension, must be submitted to the Social Security Advisory Committee unless they are made within six months of the Royal Assent to this Bill. This amendment would remove the proviso, so that any regulatory proposals made within six months of Royal Assent would also have to be submitted first to the Social Security Advisory Committee.
I hope that the noble Lord has a copy of the Notes on Clauses, because if he has looked at page 7 he will have seen that Ministers are minded not to use the regulation-making powers to counter arrangements which deal with lump sum payments and other payment practices, which could be used to avoid abatement of unemployment benefit, until experience of the new provisions has established the need and pointed to the best approach. This would mean that these particular proposals would not be made within six months of Royal Assent, and therefore would be submitted to the Social Security Advisory Committee before being made.
1048
As regards the regulations which are to be made within six months of Royal Assent the majority of these will be of a procedural or non-contentious nature; for example, for the conversion of monthly payments of occupational pension to weekly payments for calculation purposes and for ensuring that no adjustment of unemployment benefit is made for days before the occupational pension becomes payable. Opportunities for discussion of the general principles on which these regulations will be based have been provided during the passage of the Bill through Parliament, and the regulations will of course be subject to annulment in the usual way.
This apart, it is important that these regulations should be made some months before the proposed commencement of the new arrangements in April 1981, to allow time for the necessary local office instructions to be prepared and for staff to be properly trained. In this context, of course, the noble Lord, Lord Wells-Pestell, will recollect that we had certain discussions on the No. 1 Bill in regard to this highly important matter. It is unlikely that the new committee, which will be set up only in November of this year, would have adequate time to consider the regulations. On these grounds, I ask the Committee not to support this amendment.
Lord WELLS-PESTELL: I feel that that reply is a very unsatisfactory one. No case has been made out at all as to why the matters affecting the working of the Act should not be referred to them. The noble Lord says that there are a number of matters which will be non-controversial. They may well be non-controversial from the Government's point of view, no doubt, but I am not sure they are going to be non-controversial to people outside the Government or to Members on this side of the Committee. Furthermore, though the regulations will be dealt with by going through the Affirmative Resolution process, it does not necessarily follow that we shall not miss something.
I feel that it would be a simple matter to refer these things. Even if they come into being or have to be considered before the Social Security Advisory Committee comes into existence, there is no reason why, after that committee has been set up, it should not be asked to examine

1049
the regulations and the other things which have been decided upon. I should have thought it was a very good longstop and a very good safeguard.
On Question, amendment negatived.
Clause 5 agreed to.
Clause 6 [Supplementary benefit in cases affected by trade disputes]:
6.50 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 32:
Page 6, line 42, leave out paragraph (a).
The noble Lord said: I beg to move this amendment standing in my name. As noble Lords will realise, we are now moving into a very difficult and controversial area. The first amendment, on page 6, line 42, is to leave out paragraph (a). Paragraph (a) of Clause 6(1) provides that PAYE refunds to a person involved in a trade dispute and other relevant payments which, for practical purposes, I shall call "strike pay", are to be taken into account in full for supplementary benefits purposes, except to the extent that regulations provide otherwise. The intention is that PAYE refunds should be taken into account without any disregard while up to £12 of strike pay will be disregarded. The £12 disregard of strike pay could be provided for by regulations modifying Clause 6(1)(b). The effect of deleting Clause 6(1)(a), as the amendment I am moving proposes, would be to retain the existing £4 disregard of PAYE refunds.
The normal way of treating PAYE refunds for supplementary benefit purposes is to regard them as capital. Since a claimant can have as much as £1,200 of capital without any reduction of benefit, the result in most cases is that the tax refund is disregarded. Until 1971, the same rule applied to tax refunds received by strikers. In that year, as one of a number of measures to tighten up the supplementary benefits rules for strikers, it was decided that their PAYE refund should be treated as income, subject to the normal disregards. That remained unchanged under the Labour Government. Athough it constitutes a form of discrimination against strikers, most people would probably regard it as a reasonable compromise. To abolish the £4 disre-
1050
gard, as Clause 6(1)(a) proposes, is simply—and I do not think that I am using too strong a word here—vindictive; and I believe it will cause justifiable resentment.
After all, a tax refund is a man's own money which he has earned in an earlier part of the tax year. That is what we are dealing with. Whether he gets a refund at all depends upon whether the strike takes place early or late in the tax year. It hardly seems equitable that a man who strikes in April should receive substantially more supplementary benefit than a man who strikes in February or March. A £4 disregard to some extent mitigates this in equity. There may be a case for increasing it to take account of inflation; but I submit that there is no case for abolishing it. I move this amendment rather briefly, because what is in our minds is I think quite clear, and I do not think that any useful purpose will be served by prolonging it at this stage.
The LORD ADVOCATE (Lord Mackay of Clashfern): As the noble Lord, Lord Wells-Pestell, has said, this amendment would leave out Clause 6(1)(a) which is in two parts. Part (i) proposes, in effect, the removal of the £4 disregard on strike pay and it is the Government's intention to substitute a disregard of £12 a week on strike pay which will be brought in by regulations. This Government were elected on a promise to ensure that trade unions paid a fair share of the cost of supporting their members and families when they were on strike, and the proposed £12 a week disregard of strike pay would give unions every incentive to be responsible in this particular way. This amendment would provide for only a £4 disregard on strike pay, so there would be no incentive to unions to pay more than £4 a week in dispute pay to their members.
Part (ii) of Clause 6(1)(a) abolishes the present £4 disregard on income tax refunds. The striker gets a refund of tax only because he is on strike and has no earnings, and in most strikes it is part of his regular weekly income. We do not think it is right to continue with this £4 disregard which, in effect, provides an unwarranted bonus by increasing the entitlement to supplementary benefit for the striker who receives a tax refund.

1051
The noble Lord in moving his amendment pointed out that whether or not a person received a repayment of tax would depend upon the situation at the time. He suggested that it was unfair that a person who had a refund should have it brought into account; whereas if he did not have a refund, it would not be. This ignores the fact that supplementary benefit is supposed to deal with need. We see the income tax refund that he receives as something which ought to be taken into account in assessing his need. I invite your Lordships not to agree to this amendment.
Lord WELLS-PESTELL: I tried to point out that the refund of PAYE is money which a man has earned and which he has paid by way of taxation and, therefore, if he finds himself in the position of being locked out or on strike and gets that money back, it is iniquitous that anybody should seek to take into account part of that money. I do not know whether there is any point in raising the general principle behind this. The Government originally intended to deem that a man on strike would be receiving £12 a week from his union. But they discovered, of course, that union funds, generally speaking, would not permit payments of that kind; so that, at least, the word "deem" seemed to have died a natural death and we have not heard about it. But in its place we have legislation which is going to recover that amount of money, as I understand the situation, by reducing the supplementary benefit by that amount.
I know that noble Lords opposite have strong feelings about people being on strike. I do not know how many noble Lords opposite have ever in their lives accepted the fact that men sometimes have a justifiable reason for coming out on strike; but, as far as I can see in the Bill, there is no yardstick by which that is going to be measured. It is going to be a matter of whether people are out on strike. It also means, as a result of some people being out on strike, that others can be laid off or locked out.
It is difficult for noble Lords opposite because many of them are in the capacity of employers. If the employers of this country understood a little more about their employees, there would not be nearly
1052
so much trouble. I do not think that anybody on the Government side would deny that a good deal of the trouble that we have experienced in the industrial field has been due to bad management. I am not going to say that it is all due to bad management.
A noble Lord: Thank God!
Lord WELLS-PESTELL: We need not thank God for it. I am a fairly reasonable person. I do not think that right is always on one side, but I think that right can be on both sides. I invite noble Lords opposite to recognise that there is often right on the side of the workers.
What the Government are saying is that whether they have a good reason or not the married man, his family, will suffer to the extent of a £12 a week reduction in Social Security. For the very first time that I can remember we are now going by law to penalise the family. Just think of it—£12 a week! Not much to some noble Lords opposite, but £12 a week to a family is very considerable.
I am saying that we are enunciating a new principle; that it is going to be a kind of crime to strike. One of the great bastions of democracy which we have had longer than anybody else is the fact we have recognised the right of a man to withdraw his labour or, if it is more acceptable, to go on strike whether he was right or wrong in doing it, because he always thinks that he is right. The employer invariably thinks that he is wrong. But this is the way the things goes.
I have always been proud when I have been abroad and people talk about our democracy that we have permitted men to do this, but we have not permitted their families to suffer. I want to raise this as a general principle because I want to ask noble Lords opposite to have this at the back of their minds. I believe the Minister has received a letter from the Assistant Masters and Mistresses Association. They have sent me a copy of it and perhaps it is appropriate for me to read it, if the noble Baroness does not mind. It says:
"My Association is most concerned about Clause 6 of the Social Security (No. 2) Bill which is now under consideration by the House of Lords. The advice that the Association has received is that as Clause 6 of the Bill is at present

1053
drafted, and in the light of the comments that Mr. Jenkin made in the debate in the House of Commons, the Department of Health and Social Security will have no discretion to pay supplementary benefit if our members were prevented from working as a result of industrial action by some other group of employees in the education service. In these circumstances, we take the view that the Social Security (No. 2) Bill should be amended to ensure that the employees who are locked out by their employers, as a result of industrial action being taken by some other group of employees, will not have the deduction of £12 a week made from the supplementary benefit which is paid in respect of dependents".
I hope that somebody on the Government Front Bench is in a position to reply to that. If that is true, there is a very serious omission in the Bill.
I will not take up more time. I hope that nobody will go back on a long established principle which has been a pillar of our democracy: that we have permitted men to do this but we have not imposed some kind of sanction or penalty on their families. In the 1980s it is a retrograde step to take.
Lord MOTTISTONE: Before the noble Lord sits down, could he tell us why, in view of the letter he read out at the end of his speech, he did not put an amendment down to give effect to that letter instead of the amendment he has put down?
Lord WELLS-PESTELL: I have several amendments down—as many as I thought were necessary in the Committee stage proceedings. There is a limit imposed as to how many days we can have in Committee. We have two Committee days and we shall take them up because we shall not finish, so far as I can see, much before half past nine or ten o'clock tonight. Therefore it is always necessary to consider the period between the Committee stage and the Report stage for putting down other amendments.
Lord MOTTISTONE: That is not a very good explanation. It would have been better to concentrate on an amendment for which the noble Lord had a definite statement rather than making a general one and taking a particular issue. To take the noble Lord very quickly up on this point about the right to strike, of course it is entirely agreed from this side of the Committee that there must be a right to strike. Of course at the time the strike occurs the people who are striking believe in their cause; but it seems surely
1054
reasonable that there should be some means of making sure that trade unions that call strikes make a proper contribution from their funds towards the cost of supporting the strike.
As I see this particular clause in the Bill, it is attempting in a rather small way to bring an encouragement to the trade unions that are supporting strikes to do their share, as they used to in days gone by, in assisting strikes which they think are worth supporting. Is it not also reasonable that there should be some discouragement for the type of unofficial strikes of which we used to have a rash at one stage—particularly during the period of office of noble Lords opposite—and that those strikes need to be discouraged? This clause will serve to assist in that purpose. To try and draw a shadow across the whole debate to imply that noble Lords on this side do not know the facts of life is not only unreasonable but unworthy of the noble Lord who has just spoken.
Lord WELLS-PESTELL: I am grateful to the noble Lord for giving me an opportunity of adding to what I have said. One has to bear in mind that if one is going to impose a regulation of this kind upon the unions, one has to be satisfied that every union will be able to comply with it. Probably the noble Lord would be prepared to take it from me when I say that the funds in a large number of unions are such that they would not be able to do it. We have the "Big Four" or the "Big Five", like the high street banks, but there is an enormous number of unions that could not do it. Also, it would necessitate a very careful inquiry into their means. While that would not be difficult, in the last analysis, it would not be possible for the majority of them to do it. When it comes to imposing some stricture, some penalty, it is the wrong way of going about industrial relations. This is the mistake.
I do not pretend to be more informed on this—I am perhaps less informed—than some noble Lords opposite. I have not had the experience. I know that Mr. Heath came a "cropper". Mr. Prior, with his reasonableness—and I am no being sarcastic; he has more reasonableness than many people—is running into very serious difficulties. One cannot

1055
legislate for relations and relationships. All one does is to aggravate the situation. One has to start from a different angle. Therefore any imposition of penalty is going to exacerbate rather than help the situation.
Lord MACKAY of CLASHFERN: May I just say that a great deal of what has been said recently has nothing at all to do with the amendment. So far as this amendment is concerned, I cannot accept for a moment that there is anything iniquitous about taking account of an income tax refund as a resource when it is a question of need that is being assessed. So far as the £12 point is concerned, in this clause all that has been said is that if a union pays
strike money up to £12 it will be disregarded from the point of view of supplementary benefit and therefore, from that point of view, this clause is of considerable advantage to the striker. This particular part of the clause, of course, is not alone, but that is the way this part of its stands.
Lord WELLS-PESTELL: Yes. May I say that if I have gone into other fields it is because I allowed noble Lords opposite to seduce me!
7.11 p.m.
On Question, Whether the said amendment (No. 32) shall be agreed to?
Their Lordships divided: Contents, 57; Not-Contents, 89.

CONTENTS

Ardwick, L.

Hampton, L.

Ponsonby of Shulbrede, L. [Teller.]

Banks, L.

Hatch of Lusby, L.

Beswick, L.

Houghton of Sowerby, L.

Ritchie-Calder, L.

Blease, L.

Jacques, L.

Rochester, L.

Blyton, L.

Janner, L.

Ross of Marnock, L.

Boston of Faversham, L.

Kilmarnock, L.

Seear, B.

Bowden, L.

Leonard, L.

Simon, V.

Brockway, L.

Llewelyn-Davies, L.

Stewart of Alvechurch, B.

Burton of Coventry, B.

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

Stewart of Fulham, L.

Collison, L.

Stone, L.

Crowther-Hunt, L.

Lovell-Davis, L.

Strauss, L.

Cudlipp, L.

McNair, L.

Taylor of Mansfield, L.

David, B.

Maelor, L.

Underhill, L.

Davies of Leek, L.

Milner of Leeds, L.

Wallace of Coslany, L.

Evans of Claughton, L.

Mishcon, L.

Wells-Pestell, L.

Gaitskell, B.

Northfield, L.

Whaddon, L.

George-Brown, L.

Pargiter, L.

White, B.

Gosford, E.

Phillips, B.

Wilson of Radcliffe, L.

Gregson, L.

Pitt of Hampstead, L.

Wootton of Abinger, B.

Hale, L.

Wynne-Jones, L.

NOT-CONTENTS

Airey of Abingdon, B.

Ellenborough, L.

Lyell, L.

Allerton, L.

Elliot of Harwood, B.

Mackay of Clashfern, L.

Amory, V.

Elton, L.

Macleod of Borve, B.

Ampthill, L.

Falkland, V.

Mansfield, E.

Balerno, L.

Forester, L.

Marley, L.

Bellwin, L.

Fortescue, E.

Massereene and Ferrard, V.

Belstead, L.

Gainford, L.

Merrivale, L.

Bessborough, E.

Glenarthur, L.

Mills, V.

Bolton, L.

Glenkinglas, L.

Milverton, L.

Brooke of Cumnor, L.

Godber of Willington, L.

Monson, L.

Brooke of Ystradfellte, B.

Gowrie, E.

Morris, L.

Brougham and Vaux, L.

Gridley, L.

Mottistone, L.

Cairns, E.

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

Mowbray and Stourton, L.

Campbell of Croy, L.

Murton of Lindisfarne, L.

Clifford of Chudleigh, L.

Halsbury, E.

Norfolk, D.

Colwyn, L.

Hanworth, V.

Northchurch, B.

Crathorne, L.

Hatherton, L.

Nugent of Guildford, L.

Cromartie, E.

Hives, L.

Redmayne, L.

Cullen of Ashbourne, L.

Hylton-Foster, B.

Renton, L.

Davidson, V.

Killearn, L.

Rochdale, V.

de Clifford, L.

Kimberley, E.

Saint Oswald, L.

De La Warr, E.

Kinnoull, E.

Sandys, L. [Teller.]

Denham, L. [Teller.]

Lauderdale, E.

Shannon, E.

Drumalbyn, L.

Long, V.

Soames, L. (L. President.)

Eccles, V.

Lucas of Chilworth, L.

Spens, L.

Stamp, L.

Trefgarne, L.

Vivian, L.

Strathclyde, L.

Trenchard, V.

Wakefield of Kendal, L.

Strathcona and Mount Royal, L.

Tweeddale, M.

Ward of Witley, V.

Strathspey, L.

Ullswater, V.

Westbury, L.

Tranmire, L.

Vickers, B.

Young, B.

On Question, Motion agreed to.

Lord TREFGARNE: I beg to move that the House be now resumed.
House resumed.

CRUISE MISSILE BASES
3.55 p.m.
The MINISTER of STATE, MINISTRY of DEFENCE (Lord Strathcona and Mount Royal): My Lords, with the permission of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Defence about ground launched cruise missiles. The Statement is as follows:
"I announced on 13th December last year the NATO Foreign and Defence Ministers' decision to modernise the Alliance's long range theatre nuclear forces; I am now able to advise the House where the 160 ground launched cruise missiles to be deployed in the United Kingdom will be stationed.
"The missiles will be stationed at two existing military establishments, the United States Air Force standby
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base at RAF Greenham Common in Berkshire, and RAF Molesworth, a disused airfield in Cambridgeshire, currently used by the United States Air Force for storage purposes. Greenham Common will be the main operating base for the cruise missile units in the United Kingdom and will house six flights of cruise missiles. Molesworth will house four flights. It is planned that the first units will deploy at Greenham Common by about the end of 1983.
"The factors affecting the decision stemmed from the prime operational need to bring the first missiles into service as soon as possible. The choice had therefore to concentrate on establishments already in defence occupation which had sufficient space available and as many as possible of the basic facilities, in particular adequate accommodation, road communications, and access to training areas and suitable dispersal areas during operations.
"Many different locations for stationing have been very carefully studied, but the two bases chosen proved to be the most suitable in the light of the considerations to which I have just referred.
"The deployment of the ground launched cruise missile force will generate very little aircraft movement at either of the bases, probably no more

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than a few a month. As to ground movements, it will be necessary from time to time to practice the deployment of the launcher and its support vehicles to dispersed sites away from the base. These exercises will be along pre-planned routes and will take place after consultation with the local authorities concerned. No live missiles or warheads will be carried on exercises at any time and no missile test-flying will take place in this country. The missiles will be stored in purpose-built shelters in conditions that fully meet the United Kingdom's very stringent safety standards—standards that have proved themselves effective since the inception of a nuclear capability in Britain. As part of the security arrangements, we shall be contributing 220 British personnel towards the guard forces for the bases and dispersal deployments.
"I am having an information folder prepared, covering all aspects of the basing of cruise missiles in the United Kingdom. Copies will be placed in the Library and will also be sent to the local authorities in the areas concerned. The information folder will also be available to those members of the public living in the areas of these sites who wish to know more about the reasons underlying these decisions.
"I am notifying the local authorities concerned about the deployment, and their views on the environmental and social aspects of the arrival of the cruise missile units will be taken into account to the fullest possible extent. They will of course be consulted in due course on the detailed building plans.
"The total cost to the United Kingdom of the whole modernisation programme throughout the Alliance will be of the order of £16 million.
"As I made clear in the House on 13th December, the 160 cruise missiles to be based in the United Kingdom are an integral part of a programme to deploy 572 United States missiles in a number of European countries. The Alliance-wide support for the new system and its widely spread deployment throughout Europe is a clear expression of the determination of NATO as a
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whole to preserve its security. The Soviet Union has developed a large and expanding capability in long-range theatre nuclear forces which directly threatens the whole of Western Europe. In view of the markedly increasing threat we face, the Alliance has decided that it is essential to modernise its own theatre nuclear forces, which are ageing and becoming increasingly vulnerable.
"At the same time, the Government, and the Alliance, remain fully committed to the parallel arms control approach which was agreed in December as part of the modernisation decision. As the House will be aware, the Soviet Union has rejected repeated offers by the United States to negotiate, and has maintained its obviously unacceptable demand that NATO should abandon its modernisation programme as a precondition for negotiation. However, we shall continue to try and persuade the Russians to come to the table and play their part in a genuine negotiation.
"The instability in the world today and the growing military strength of the Warsaw Pact countries require us to be exceptionally vigilant. NATO's unanimous decision on theatre nuclear modernisation was taken for the continuing security of the whole Alliance, and the United Kingdom is determined to play her full part."
That concludes the Statement.
4.2 p.m.
Lord PEART: My Lords, I am grateful to the noble Lord, Lord Strathcona and Mount Royal, for repeating that Statement which is, in my view, a Statement of tremendous importance. I know that the House—and, I understand, another place—is divided on this matter, but the decision has been made that this will strengthen NATO, and the Minister gave the details. Has there been any opposition from local authorities on this matter? Local authorities and areas have been named, but I should like to know whether there has been any opposition from them. Further, has there been any opposition from the public? I have seen reports in the press that the majority of people in the areas concerned have supported the idea, although they may change their

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minds. This is an important aspect and I should like to know the position.
Is the Minister in a position to give any information about whether there was any discussion with our American allies on the question of offset? I will not go into the details of offset, which is an important matter and, after all, these cruise missiles are being built and we are paying for them. I see no reason why the British should be handicapped in any way; this is a sensible method of approach which helps the parent Government financially to a considerable extent.
I was glad to hear the Minister stress the fact that we shall continue to try to get a deal with the Soviet Union. I have argued time and again in defence debates—I argued this only recently—how important it is for the SALT talks to be got going again, otherwise we shall just have an arms race which will get out of hand. I therefore hope we can be assured that the Government really will try to keep the temperature down, especially in relation to matters like the Olympic Games. There has been too much talk of war and aggression, and I believe that we are now coming into another period when we can play an important part. I therefore hope we can be given full assurances on this matter.
4.5 p.m.
Lord GLADWYN: My Lords, I too thank the Minister for repeating that most important Statement. As noble Lords will be aware, we on these Benches are in favour of the stationing of these missiles on British territory as part of the NATO reply to the threat, constituted by the Soviet SS 20s, which is already upsetting the whole balance of power on which peace in the long run depends. We also share the view of the noble Lord, Lord Peart, that the decision, acceptable though it is, should involve increasing pressure—even greater pressure than that suggested in the Statement—by Her Majesty's Government on the Soviet Government to agree to negotiate on the whole matter of tactical nuclear weapons, long-range or otherwise. This means in practice getting on with SALT 3, and I have never been able to see why SALT 3 should necessarily have to depend on the ratification of SALT 2.
For the rest, I assume—although this does not appear in the Statement—that the
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missiles when installed will be under joint United Kingdom—United States control; in other words, that they will be launched only with our express consent. I also assume that they will primarily be designed to deter the use by the Russians of the SS 20s; in other words, that they are not designed to be used on a first strike. But I should be grateful if the Minister will confirm that both those assumptions are correct.
4.7 p.m.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am grateful to both noble Lords, and I am particularly grateful for the attention they direct to the question of peace negotiations because that is fundamental to our position in this decision. We have said on many occasions that the Alliance offer to negotiate is serious and remains open, and it is up to the Soviet Union to respond. These missiles will not be deployed until 1983 and we believe that this, if anything, will increase the possibility and will increase the pressure on the other side to enter into meaningful negotiations.
So far as offset is concerned, the question asked by the noble Lord, Lord Peart, I do not think that really arises. The cost to the United Kingdom is minimal. The cost to the United States is very much greater. We believe that in terms of the enhancement of NATO capability, this represents an exceedingly good bargain. On the question of control, raised by the noble Lord, Lord Gladwyn, these missiles will be under single key, but the arrangements which have obtained for many years will continue and the matter will be subject to a joint decision between the United States and the United Kingdom. On the question of local opposition, the position as I understand it is that no specific local opposition has arisen—because it has not been known exactly where the deployments were going to occur—but such indicators as there have been of local opinion have, on the whole, been quite favourable to the concept of stationing these missiles.
Lord BROCKWAY: My Lords, does the Minister appreciate that many of us feel that this is the most disastrous Statement that has been made while we have been Members of this House and even of another place? Does it not

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inevitably mean an intensification in the world of the confrontation of nuclear weapons which could destroy the whole of mankind? Does it not invite, in the case of war, the absolute annihilation of the whole population of this country? Instead of pursuing this disastrous course, will not Her Majesty's Government seek, by the negotiations which are now going on at the Geneva Committee for Disarmament, to secure world agreement on the ending of nuclear weapons and weapons of destruction altogether?
Lord STRATHCONA and MOUNT ROYAL: My Lords, the noble Lord and I have engaged in what I can only describe as a dialogue of the deaf on this issue. I do not wish to be discourteous to him, because he is always extraordinarily courteous to me, but the answer to his questions is: No, and I do not agree.
Lord DRUMALBYN: My Lords, does this mean an end in due course to the independent deterrent in this country?
Lord STRATHCONA and MOUNT ROYAL: My Lords, this is quite distinct from the decision on the Polaris replacement.
Lord TAYLOR of GRYFE: My Lords, the Minister said that 572 cruise missiles would be made available to the NATO Alliance; that 160 of these would he stationed in this country. Can he tell us whether all of the countries of the NATO Alliance have agreed to have these cruise missiles stationed in their territories, and if that is not the case, which countries have refused?
Lord STRATHCONA and MOUNT ROYAL: My Lords, the position is that the decision to station the 572 missiles was a unanimous decision of NATO as a whole, but certain countries have not yet agreed to the details of the stationing within their territories. Denmark and Belgium are the most notable examples in this respect.
Lord MILVERTON: My Lords, no matter how distasteful it may be, I believe it is necessary that we and our friends be prepared to defend ourselves, and in my view the first prupose of the present Government and of previous
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Governments, of whatever shade, has been merely to defend ourselves; and we must be able to defend ourselves. I ask the Minister whether he agrees that that is what the Statement is about. Is it not purely a matter of our wanting to be able to defend ourselves? Will the Minister agree that the Statement does not reflect a tendency towards being aggressive?
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am grateful to my noble friend. The intent is not an aggressive one. We believe that the NATO Alliance as a whole had fallen seriously behind in regard to theatre nuclear weapons. We believe that this decision to modernise these theatre nuclear weapons, however regrettable it may be, is necessary in order to redress the balance and to reduce the risk. It in no way prejudicies our abiding wish to continue towards the ultimate goal of peace negotiations.
Lord HILL-NORTON: My Lords, does the noble Lord agree that a very large number of people in this country regard this Statement as the best news for our country and for NATO that we have had for a very long time? Does he further agree that the stationing of these weapons in this country will, contrary to what is put about on various sides, in no way increase the risk of nuclear attack on this country, which is already very high indeed?
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am very grateful to the noble and gallant Lord. That question, coming from so authoritative a source, certainly reinforces the Government's view, and I agree in particular with the last part of what the noble and gallant Lord said. We believe that, if anything, the enhancement of the theatre nuclear weapon capability of NATO as a whole, and of this country in particular, diminishes the chance of a nuclear attack upon this country.
Lord HANKEY: My Lords, will the Government agree that if the Russians were allowed to go on increasing their strength without the strength of the West keeping pace with it, there would be much less likelihood of our being able to have a useful dialogue with them with a view to reaching the kind of agreement on arms

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limitation which the noble Lord, Lord Brockway, and many others among us are so anxious to see? Will the Government also agree that if a decision about the cruise missile had not been reached, the likelihood of a dialogue with the Russians would have been greatly diminished?
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am most grateful to the noble Lord. What he has said exactly reflects the view of the Government that when it comes to a question of negotiating with the Russians, it is a regrettable fact that it is impossible to negotiate if one is in a position of weakness. We believe that the best chance we have of bringing off successful negotiations—which continues to be our primary aim—is through demonstrating that we are willing to maintain our credibility, if that is what it costs us to do so.
Lord STEWART of FULHAM: My Lords, I do not think that the noble Minister answered the question of the noble Lord, Lord Gladwyn, as to whether these weapons would ever be used in a first-strike capacity. But whatever the answer to that question may be, is the noble Minister aware that a number of us here believe this measure to be essential to the credibility of NATO, and hold also that the evidence of the last 30 years is that the credibility of NATO is our strongest guarantee of peace?
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am very grateful to the noble Lord for the robust words at the end of his remarks. I did attempt to answer the noble Lord, Lord Gladwyn. It is difficult to postulate exactly the situation under which any nuclear missiles would be used, but of course we—and the Americans, too—have always said that it is not our intention to indulge in a first strike.
Lord PEART: My Lords, can the noble Lord say when SALT talks will take place? Has he any information about this? I think that the vast majority of noble Lords would wish to know whether SALT talks were going on.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I wonder whether the noble Lord was referring to SALT 3
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or to the resumption of the SALT 2 negotiations. I do not think that I have any further information. We are awaiting an indication of interest in resumption, and in fact we are not ourselves actively engaged in these negotiations. It is a matter between the Americans and the Russians.
Lord LEATHERLAND: My Lords, as one who believes that we have to defend ourselves in this way, may I ask the noble Lord whether he can tell us how many miles each of these two sites will be from the nearest well-populated town?
Lord STRATHCONA and MOUNT ROYAL: My Lords, I cannot exactly tell the noble Lord that because, apart from anything else, I am not wholly certain as to what he means by his question. One of the sites is near Newbury. The other site is near Huntingdon, in Cambridge. I suppose that the noble Lord would regard those as well-populated towns. I think that the sites are in the order of about 10 miles distant from the respective towns mentioned. Perhaps it would be opportune for me to say that the intention would be in moments of crisis to deploy the missiles out from these bases, for quite a considerable distance—of the order of 50 miles, rather than one or two miles.
Lord HATCH of LUSBY: My Lords, the noble Lord the Minister has partially answered a number of questions about the defensive qualities of the cruise missile. He has not yet answered the question asked by the noble Lord, Lord Gladwyn: Is the cruise missile anything more than a first-strike weapon? Can it in any circumstances be used as a defensive weapon, or is it to be held by the NATO countries simply as a bargaining tactic? Above all, will the noble Lord please answer directly the question of whether the cruise missile is capable of being used in any capacity other than as a first-strike weapon
Lord STRATHCONA and MOUNT ROYAL: Yes, indeed, my Lords. It is described as a theatre nuclear weapon, which means to say that it is being used in a battlefield sense. That postulates that some kind of hostilities have surely started already. I do not know whether

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I should expand upon that for the noble Lord. It certainly is not primarily a first-strike weapon.
Lord GORE-BOOTH: My Lords, I am somewhat shy about asking a question at all on this subject, which is not one in which I am expert, and in any case I believe that all of us feel very strongly that this is the most important, yet also the most dislikeable, matter that we have to talk about, given the basic issues that are presented to us. So I attach an importance to intervening, albeit unskilfully, though none the less expressing agreement with what the Government have decided. I do so because I feel that these matters have now reached a stage where, if one does not take up what is at least by implication an offensive challenge or an offensive threat, then by implication one is beginning to give up the main struggle altogether, and none of us would wish to do that. My other point—
Several noble Lords: Question!
Lord GORE-BOOTH: I am sorry, my Lords. May I ask the Minister whether he also agrees that when mention is made of too many threats of war, surely there is a very easy answer to the point; namely, for the Russians to move out of Afghanistan?
Lord STRATHCONA and MOUNT ROYAL: My Lords, I think the last part of the noble Lord's question is somewhat removed from the Statement, but I would not dissent from what he has said. As far as the ground launched cruise missiles themselves are concerned, they are intended to be in response to an enhanced threat from the other side. We believe that it would he unwise and, indeed, dangerous not to counter an enhancement of the threat from the other side, and this is the intention in the stationing of the ground launched cruise missiles.
Earl DE LA WARR: My Lords, before I ask my brief question perhaps I may say how much I welcome what my noble friend Lord Hill-Norton has said, that this is indeed the best news for NATO for many years. Having said that, may I ask my noble friend whether he could be a little more specific about his description of the control of this weapon as being single key and under
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joint control. Specifically, does this mean that the warheads are physically under British control; and, more generally, does it mean that in the final analysis it would be possible for the British Government to take a unilateral decision to use them?
Lord STRATHCONA and MOUNT ROYAL: My Lords, as far as the last part of that question is concerned there is no question of the British being in a position to take a unilateral decision to fire the weapons, if that is what I understood my noble friend to ask me. This arrangement has obtained ever since 1952, at the time of the Government under Mr. Attlee; and the arrangement has not been altered although the weapons themselves have been altered. The actual firing of the missiles could not take place without the necessary political authority under the same arrangement as has obtained ever since 1952. As I have said before, the question of the use of these bases is a matter of joint decision between the United States and the United Kingdom authorities.

HONG KONG-LONDON AIR SERVICES
4.22 p.m.
Lord TREFGARNE: My Lords, with your Lordships' permission, I will repeat a Statement being made by my right honourable friend Mr. Nott on Hong Kong to London air services. The Statement is as follows:
"With permission, Mr Speaker, in view of the widespread interest in the matter, I would like to make an oral statement about the decision I have taken concerning air services between London and Hong Kong.
"Last year three airlines, British Caledonian, Laker and Cathay Pacific, a Hong Kong based airline, applied to the Hong Kong Air Transport Licensing Authority and the Civil Aviation Authority for licences to operate on the London-Hong Kong route in addition to British Airways. At present British Airways provide the only direct service, although there are of course already a large number of

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services between Hong Kong and other European cities.
"Both authorities heard evidence separately on these applications. In December the Hong Kong Authority licensed British Caledonian and Cathay Pacific, but restricted their frequency of service to four and three flights a week respectively. In March this year, the Civil Aviation Authority announced its decision to license only British Caledonian.
"The two applicants who were unsuccessful before the Civil Aviation Authority submitted appeals to me under the provisions of Regulation 16 of the Civil Aviation Authority Regulations 1972. I also received a number of representations, including one from the Government of Hong Kong, that, under the powers conferred on me by Section 4(3) of the Civil Aviation Act 1971, I should direct the authority to license Cathay Pacific in the interests of the United Kingdom's relations with Hong Kong.
"I have given this matter the most careful consideration, in particular against the criteria set out in Section 3 of the Act, and I found myself in disagreement with the Civil Aviation Authority in a number of ways: in particular I was convinced by Sir Freddie Laker's contention that there is a large untapped market for this route if fares are pitched at the right level.
"In his evidence he described this market as consisting of 'the forgotten men and women at the bottom end of the market'—who might wish to fly if they could afford to do so. I find myself in agreement with this dynamic approach to civil aviation and in my view it should he acknowledged.
"I also felt that the authority had placed too much emphasis on the economics of the proposed additional services in the short term, and too little on the benefits to the development of the United Kingdom civil aviation industry generally of choice of service and competition on a route such as this—in particular competition with other non-British airlines.
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"I felt that it was in the interests of airline passengers that they be offered a wider choice of service than exists at present, that it would be unreasonable to expect British airlines, within the meaning of Section 3(1) of the Act, to he granted exclusive rights when Cathay Pacific are based in Hong Kong, command much local loyalty, and can expect to draw traffic from their network of regional services.
"I concluded therefore that the substantial new traffic likely to be generated over a period by a wider variety of services would offer a reasonable prospect that four operators could, over a period, achieve an economic return on this route.
"I have accordingly upheld the Civil Aviation Authority's decision to license British Caledonian but in addition have directed it to reverse its decisions on the other two applications and issue licences in the same terms to Cathay Pacific and Laker, but without prejudice to the former's existing rights between Hong Kong and Bahrain. The authority and the other parties to the appeals are being informed of my decision today.
"As I have reached this decision by the normal appeal criteria, I do not intend to issue a political direction under Section 4—and I have informed the Hong Kong Government accordingly.
"I believe that my decision will be welcomed by airline passengers generally and in Hong Kong where freedom to compete is one of the cornerstones on which the economic success of Hong Kong has been built. I hope therefore that the Government of Hong Kong will lend support to the applications which Laker may now wish to renew to the Hong Kong Air Transport Licensing Authority and to any applications which British Caledonian and Cathay Pacific may wish to make to increase the frequency of their services, should they believe it is in their interests to do so."
My Lords, that concludes the Statement.
Lord BESWICK: My Lords, I am sure the House is grateful to the noble Lord for repeating this Statement, on what is really a controversial decision. May I ask him whether I am not right in saying that quite recently and emphatically Her Majesty's

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present Government have emphasised that they are going to give greater weight to the decisions of the Civil Aviation Authority, and that that course is in accordance with the non-interventionist policy of Her Majesty's Government? Does not this decision go quite contrary to the declared policy; and may I ask the noble Lord how he reconciles this overturning of a CAA decision with the declared policy of Her Majesty's Government?
Secondly, on what information have the Government based their view that four carriers can make a profit and give a service on this route? There was a case for maintaining the rights of British Airways, and there was a case for extending the operation to a second carrier, but I have not heard it seriously argued anywhere that four carriers could be justified on this one route. May I ask the noble Lord whether, if there is other information that was not available at the hearing by the CAA, he could make that information public, and would it not be better if the whole matter was referred back to the CAA so that they might consider this additional information?
Earl AMHERST: My Lords, I, too, should like to thank the Minister for repeating this Statement, which we on these Benches are not too happy about, in that it seems to challenge the whole basis of validity, value and protection of the CAA licence. Only three months ago, or thereabouts, the CAA, who were set up to issue such licences, which were formerly issued by the Board of Trade, issued a licence for Caledonian Airways to operate this route. At that time presumably it took into full consideration all the arguments that were used by Cathay Pacific, Laker and anybody else interested, balanced the thing up and made the decision to issue the licence. Now, an airline, having got a licence, assumes considerable financial liability in order to find staff and equipment to operate that licence. If, a short three months after that licence is issued, the Minister, apparently on his own account, decides not to cancel that licence but so to modify it as to let in other operators, which renders practically valueless the paper on which the licence is written, have British Caledonian Airways any recompense for the money they have expended on aircraft and additional staff?
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I would also ask this question of the noble Lord: in the airline business, is not the share equity of an airline based largely on its assets? The average airline's main asset is its licence to operate. Without that, its whole equipment is virtually valueless. Therefore, if at short notice this licence is going to be modified, altered or challenged, does that not seriously prejudice the equity of the airline in question? May I ask the Minister whether he could not review this situation and inform us of some means by which to establish the validity and protection of these licences?
4.31 p.m.
Lord TREFGARNE: My Lords, I am obliged to noble Lords for what they have said. I am sorry that they were not more receptive to this Statement. This case hinged on the judgment that my right honourable friend made upon the traffic available on this route. My right honourable friend came to the conclusion that the figures advanced by Laker in their original application were more likely to prove justified than the more pessimistic figures which the authority took into account when they made their original decision. I can tell the noble Lord, Lord Beswick, that my right honourable friend had no additional information before him when he considered this appeal. Under the procedure, he is not permitted to do that but only to have regard to the facts as they were put before the authority at the original application. But he is entitled to consider any further clarification of the facts that the original parties to the application put before the authority at that time.
The noble Earl, Lord Amherst, referred to what he thought was the dilution (if that is the correct word) of the effect of the licence originally granted to British Caledonian and asked whether they were to receive any compensation. The original licence was granted only two or three months ago, in March. There is no question of compensation. In any event, as I have said, we believe that there is sufficient business for all four carriers on this route.
Baroness BURTON of COVENTRY: My Lords, as the House knows, the Civil Aviation Bill has gone to ground in the Commons and we are awaiting its Second

1003
Reading here. As my noble friend Lord Beswick has said, this Bill gives much more power to the Civil Aviation Authority. I am in favour of more choice for air travellers. May I ask the Minister whether I am correct in understanding the background to this matter when I say that I understand that the service given by British Airways to Hong Kong was not deemed satisfactory and that someone suggested that British Caledonian should apply for a licence? Is the noble Lord aware—and I must put this in the form of a question—that I, personally, think that British Caledonian is a first-class airline and I have always admired its slogan, "We never forget that you have a choice"? It would be useful if more airlines felt the same. Is he also aware that Cathay Pacific is reckoned also to be one of the best airlines in the world? At the time that the decision was reached, I regretted that British Caledonian and Cathay Pacific were not included in the granting of a licence.
May I ask three specific questions? Does it not seem unfortunate that the Civil Aviation Authority and the Government did not get together a little earlier on this matter? I am not talking about the appeal but about the application. Did they, in fact, get together; and is this a change of heart? Secondly, under the new arrangement, is it suggested that British Airways should have the larger share of the operation? Thirdly, if, as I understand it, British Airways did not make full use of the quota that they were given for the service to Hong Kong, could we not have a more equitable arrangement in the future? If that could be done, would it not help British Caledonian to overcome the financial drawbacks that they now fear and which they had no reason to suspect would be theirs under the ruling given by the Civil Aviation Authority?
Lord TREFGARNE: My Lords, there is no question of the Government getting together with the CAA in the first instance when the authority are considering the initial application. That, I think, would be wrong. The Government have a role in this matter only when there is an appeal from the original decision of the authority; and that is what has happened in this case. As for British Airways' share of the
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market, to which the noble Baroness referred, the future share of the market will depend upon the success of the individual airlines in a very competitive situation.
Lord TAYLOR of GRYFE: My Lords does the noble Lord accept that this is an industry in which regulation is essential and that the Civil Aviation Authority is the appropriate authority to weigh up all aspects of applications for licences? Is there a precedent for the Secretary of State overturning a decision of the Civil Aviation Authority? Does it not undermine the authority of the CAA in viewing future licences or is it now Government policy that there has to be a "free for all" on many other routes? Is that the logic of the decision in this particular case?
Would the noble Lord accept, too, that British Caledonian have entered into substantial commitments in order to service the licence that they were given—including the setting up of a maintenance depot in Scotland in an area of very substantial unemployment in order to increase employment facilities in the maintenance of aeroplanes? In view of all these circumstances, does the noble Lord not accept the suggestion made by the noble Lord, Lord Beswick, that this might be reviewed with the Civil Aviation Authority?
Lord TREFGARNE: My Lords, I think that the commitment to which the noble Lord referred, the British Caledonian engineering base, was made long before this matter became an issue. It would not be fair to say that they entered into that commitment simply for the purpose of operating this route.
Lord MONSON: My Lords, may I congratulate the Government on living up to their free enterprise and free competition philosophy in this instance to the great benefit of the consumers? May I ask the Minister whether the Government will now consider abolishing, or at any rate limiting, the power of the CAA to impose monopoly or semi-monopoly conditions on other routes and allow much freer competition, subject only to safety considerations?
Lord TREFGARNE: No, my Lords; I am afraid that I cannot accept that

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suggestion. The authority will remain as the body primarily responsible for licensing matters. Only when they come to appeal, as in this case, does the Secretary of State have a role to play.
Lord BESWICK: My Lords, may I ask the noble Lord whether he will make clear the Government's policy in this? Do they intend to give the authority a deciding role in these spheres or not? That, we understood, was the position. May I thank the noble Lord for making it clear that there was no other information available to the Secretary of State when he came to this modification of the CAA's decision. If there was no other information, can he seriously say that the "men in Whitehall knew better than the experienced and professional judgment of the CAA?
The noble Lord in the Statement said that it was hoped that the Government of Hong Kong would lend support to the application which Laker may now wish to renew to the Hong Kong authorities. Have the United Kingdom Government any reason to believe that the Hong Kong authorities will look more favourably at the Laker application?
Lord TREFGARNE: My Lords, I can confirm that our general policy in this matter remains unchanged and that we seek to provide to the CAA the maximum degree of autonomy and authority in these matters and only in very rare and special cases such as this one would the matter come before the Government in the form of my right honourable friend the Secretary of State. The second point the noble Lord raised has escaped me for the moment.
Lord BESWICK: My Lords, I asked about the reference in the Statement to the hope of Her Majesty's Government that the Government of Hong Kong will lend support to the Laker application.
Lord TREFGARNE: My Lords, that is a matter for the Hong Kong licensing authority. We have expressed our view, which I repeated in the Statement. I cannot predict the outcome of any application to that authority.
Lord SEGAL: My Lords, can the noble Lord confirm that the original
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decision to exclude Cathay Pacific and Laker on this route gave rise to a great deal of indignation locally in Hong Kong? Is it not a well-established precedent that when a new route or an extension of a route is granted, a reciprocal arrangement is made at both ends providing that each should have a share in the new trade thus created? May I join with the noble Baroness, Lady Burton, in welcoming the Government's decision and expressing the hope that the increased traffic which will result from the Government's decision now will be to the advantage of British Airways, of British Caledonian, of Laker and of Cathay Pacific and to the enormously increased benefit of Britain and Hong Kong in the interests of cheaper fares? I believe that the Government decision is one warmly to be welcomed.
Lord TREFGARNE: My Lords, if I may respond to the first point, Hong Kong is a very special case, not only for the factors that I have mentioned, but also because it is considered as part of British territory for air services purposes. That is why the matter came before the Civil Aviation Authority and my right honourable friend.
Lord DRUMALBYN: My Lords, if licences are granted to the three companies that have applied for them, will the companies be free to choose their own routes? Will they be free to negotiate intermediate freedoms with other countries?
Lord TREFGARNE: My Lords, all the airlines are now authorised to operate on the route, as I understand it, except for Laker Airways which still have to make a successful application to the Hong Kong authorities. As for intermediate stops, my right honourable friend has not authorised any addition to the licences in that respect but has however taken note of the existing authority to Cathay Pacific to stop at Bahrain for traffic purposes.
Lord TANLAW: My Lords, did the noble Lord have any discussions with his right honourable friend the Minister of Energy about the implementation of this policy which does not seem consistent with that of the conservation of energy? Will he confirm that this means overloading a route with aircraft and more

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seats? Cannot better use be made of energy by minimising the number of aircraft and relating the number of seats to those presently available and not to those that are hoped to be available?
Lord TREFGARNE: My Lords, I can assure the noble Lord that with fuel at the price it is, none of the airlines will be operating except in an economic way.
Lord GEDDES: My Lords, may I ask my noble friend whether the Government are aware of the satisfaction that will be caused in Hong Kong as a result of this announcement—albeit somewhat diluted satisfaction? Is he also aware of the extreme importance to the people of Hong Kong of allowing Cathay Pacific on to this route; and, further, the importance of Anglo-Hong Kong relations and Anglo-Sino relations?
Lord TREFGARNE: Yes, no doubt, my Lords; but those were not of course the considerations in my right honourable friend's mind.

ECC REPORT ON POWERED INDUSTRIAL TRUCKS
7.18 p.m.
Lord KINGS NORTON Lord KINGS NORTON rose to move, that this House takes note of the Report of the European Communities Committee on powered industrial trucks. The noble Lord said: My Lords, the report deals with the draft directive published last May, which is part of the Commission's programme under Article 100 of the EEC Treaty for the removal of technical barriers to trade in industrial products. Your Lordships will learn, if you have not already done so, that it singularly fails to achieve this objective.
The majority of the vehicles embraced by the title "powered industrial trucks" are what we call "fork lift trucks", which are widely used in industry, and it is essential that they are so designed as to minimise the possibility and ill consequence of accidents.
The directive particularly examined in the report before your Lordships is the first of a series arising from a draft framework directive, by which is meant a general directive, related to the harmonisation of the design of lifting and mechanical handling devices. Although published in 1975, those of your Lordships who are familiar with the speed at which decisions are reached in the Community will not be surprised to learn that the framework directive has not yet been adopted. It has been the subject of a reserve, or estoppel, by the French. None of the subsidiary directives can be adopted until this reserve is removed and, as our report says,
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"there is no indication when this is likely to be".
Even if that great event occurred tomorrow we should still be far from the end of the road, because there are serious objections to the particular directive we are considering, which your Select Committee urge the Government not to agree to in its present form. The report states that,
"Agreement on the technical content of the directive may be reached only with difficulty".
Your Lordships will see from a study of the report that Sub-Committee F of the Select Committee have gone deeply into the directive, examining witnesses from the Health and Safety Executive, the British Industrial Truck Association and the Committee on Economic and Monetary Affairs of the European Parliament. They consulted the Select Committee on European Legislation of another place, and received and considered submissions from the CBI, the Independent Engineering Insurers Committee and the Associated Offices Technical Committee.
As a result of this investigation, your Committee draw attention in emphatic terms to two issues of principle raised by the draft directive. The first, and more important, is the inclusion of two requirements which appear to be unnecessary and which raise a serious political question. The second concerns the degree of harmonisation required—total or optional.
On the first point of principle, your Lordships will be interested to remark that the preparation of the draft directive took several years. During 1979, however, France imposed new national manufacturing standards and certification procedures, with which manufacturers from other member states had to comply in order to sell their products in the French market. Following the last meeting of the Commission Working Group, when the draft directive was finalised, two clauses taken from the recent French regulations were added by the Commission, even though they had previously been rejected by the experts. The two clauses concerned called for automotive-type pedal arrangements on trucks and for removable fuel tanks. Their declared purpose is to achieve greater safety.
Evidence to Sub-Committee "F" emphasised that the clauses had no value in relation to safety and amounted to a technical barrier to trade. There has therefore been surprise and disappointment at the last minute inclusion of these two provisions by the Commission. In the explanatory memorandum which accompanies the directive, the Commistion said that they,
"did not wish to preclude from the outset the technical measures recently taken by a Member State",
and this certainly suggests that the Commission were not persuaded by the French arguments in favour of the clauses, but that they foresaw that the French would insist on retaining them. The inclusion of the clauses has provoked a considerable and adverse reaction in the United Kingdom. The CBI claim that they have jeopardised the acceptability of what is otherwise a highly desirable directive, that,
"the French action is a violation of the fundamental aims of creating a Common Market"
and that member states should firmly resist
"such an abuse of Community rules".
At the time of publication of the Report before your Lordships, neither the European Parliament nor the Economic and Social Committee of the EEC—called ECOSoc, for short—had expressed opinions on the directive, but it is clear from the information supplied to your committee by the rapporteur of the Economic and Monetary Committee of the European Parliament, that the ECOSoc section concerned had developed the view that the provisions on fuel tanks and controls are unacceptable, because they do nothing for the safety, health or comfort of the operators or users; they add to the great and increasing diversity of national regulations; they constitute a design restriction which will hamper development, and they damage the export capability of EEC manufacturers to the rest of the world. Furthermore, the Parliament's committee, to which I referred, believe that the matter raises a political issue requiring debate on the floor of the European Parliament.
That is where this piece of European history stood when your committee's report went to press. But since then
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things have got worse. The ECOSoc section, with the sound views that I mentioned, recommended to the ECOSoc plenary session on 26th March that the two French clauses were unacceptable. But, through French intervention, ECOSoc did not accept the recommendation, so the draft directive now goes forward to the EEC Council with the two offending clauses still included. From the points of view of all interested parties who are not French, it is essential that the Council do not accept the draft without deleting them. However, there is one item of news on the credit side. I have just heard that the European Parliament have decided to hold a debate on the matter on 26th June.
May I now tell your Lordships about the second issue of principle. First, you must understand the difference between "total" and "optional" harmonisation. Total harmonisation means that member states are obliged to prohibit the marketing of all products covered by a directive which are not in conformity with its provisions. Optional harmonisation, which your Lordships may be forgiven for thinking is unlikely to be harmonious, means that while products conforming to a directive may be marketed and used within the Community without restriction, products not conforming may still be marketed and used with in a member state if it so permits.
Although Government witnesses emphasised that they had not yet taken a decision on which form of harmonisation they would press for in negotiations, optional harmonisation would be the more usual form and has definite administrative advantages. Whereas optional harmonisation would require only the minimum amendment of United Kingdom law by regulations under the Health and Safety at Work Act 1974, total harmonisation would require detailed government implementation and the application of appropriate enforcement measures. There is the danger that under total harmonisation it may be more difficult to adjust or amend the standards to meet innovative developments as they arise. The framework directive makes provision for technical progress committees to achieve this end, but such a procedure would in practice, be easier to operate within an optional scheme.
But the United Kingdom manufacturers favour total harmonisation. While under an optional scheme they would be entitled to market their products in other member states, it might in practice prove difficult to do this if member states continue to allow the marketing and use of products which do not conform. Similarly, since current United Kingdom requirements for industrial trucks are not stringent, there would be little to stop the import into the United Kingdom of inferior products which do not conform to the requirements specified in the draft.
As between optional and total harmonisation in this particular case, your committee express no definite opinion. They appreciate the advantages which a total scheme may bring to United Kingdom manufacturers but, if this cannot be negotiated, then optional harmonisation would be better, they think, than none. The ECOSoc plenary session on 26th March, however, appears to have agreed on total harmonisation.
On the objectionable clauses so unconstitutionally included by the Commission, your committee expresses itself categorically. They see no justification for the inclusion of the two clauses on pedal arrangements and removable fuel tanks. They urge the United Kingdom not to agree to the adoption of the directive without their deletion, and I hope that the Minister who is to reply will be able to assure us that this will be done. Your committee remarks that there seems little point in conducting exhaustive and time-consuming preparatory discussions if, at the last moment, the Commission include requirements which were rejected by expert opinion and were designed primarily to meet the demands of one member state.
The Commission should, in the first instance, the committee considers, have sought to persuade France to do away with its unnecessary standards. If such persuasion had failed, the Commission should have proceeded on the basis of expert advice and published the directive without the offending clauses. It would then have been open to France to argue for their inclusion during negotiations but, as the position now stands, one member state has a quite unfair bargaining position.
If barriers to trade arising from mandatory Government regulations cannot be satisfactorily removed by Community
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legislation, then it is preferable, the report states, that the problems of standardisation should be left to the international standards bodies who will overcome them slowly but by consensus.
Indeed, it is inconceivable that the Commission should try to harmonise standards across the whole field of industrial appliances. The difficulties arc reflected by the fact that in the current draft directive there are 50 pages of technical detail—50 pages just for fork lift trucks—and five years have passed and there are years of argument still to come. We have yet to start on the rest of the series under the framework directive; we have yet to start on turbines, caravans, cooking stoves, railways, nutcrackers, mousetraps—and goodness knows what else. The path ahead, through an undergrowth of frustration, is lost in the mists of the 21st century. Expressing a personal opinion, for the Commission the task is an impossible one.
Another point, my Lords. The draft directive which is the subject of the report which I am presenting to your Lordships, in my view represents an attempt to standardise design. I doubt whether in principle we should ever try to do this. Again expressing a personal view, what is needed in some areas, powered industrial trucks among them, is a set of safety requirements similar in philosophy to those so well devised for aircraft, European agreement for which is achieved by sensible international action without any help from the EEC Commission. I think that the Commission might well be put into a position to decide in what areas such requirements are needed. Then it should, I suggest, call upon the standards institutions, the relevant regulatory bodies and the industries concerned to collaborate to produce them. This has worked splendidly in aviation, and in my opinion it could work equally expeditiously in other areas of technology. My Lords, I beg to move.
Moved, That this House takes note of the Report of the European Communities Committee on powered industrial trucks (42nd Report, H.L. 205).—(Lord Kings Norton.)
7.33 p.m.
Lord SHERFIELD: My Lords, I should like to express my thanks to the

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noble Lord, Lord Kings Norton, for the crisp and trenchant manner in which he has explained this draft directive and, in a few words, to give my support to the general line which he has taken. At first sight, it may appear strange that this House should be troubled with what on the face of it is a technical matter affecting a limited class of product, but it is a link in the chain of harmonisation measures being forged by the Community, and experience already shows that technical harmonisation proposals may cover matters of more general import.
For this draft directive does not stand alone. The House may remember that a few days ago a Starred Question was asked by the noble Lord, Lord Plowden, arising from another Select Committee Report on an EEC draft directive dealing with scissions—a word hard to enunciate even before dinner! This is a rather obscure corner of company law relating to the winding up of companies. At first sight, there would appear to be no connection between fork lift trucks and scissions but in fact they are almost exact analogues. Both are examples of technical harmonisation in their respective fields. Both have been tailored to suit the interest of one member only of the EEC—in fact the same member in both cases. And in the scissions case an attempt has been made to by-pass the European Parliament and the Economic and Social Committee altogether rather than, as the noble Lord, Lord Kings Norton, has explained, to bulldoze the proposal through the Economic and Social Committee. However, as the noble Lord has also said, the European Parliament has proved to be made of sterner stuff.
Different departments of Her Majesty's Government are responsible for dealing with these two directives which are, of course, two of many. I hope the Minister can confirm that somewhere in Whitehall there is a department which watches the whole field of the harmonisation policies of the EEC; brings all the disparate directives together; and co-ordinates the responses of the departments concerned to those recondite but potentially significant attempts at harmonisation. This is important because, as in those two cases which I have mentioned, they can either involve the interposition of additional non-tariff barriers to trade or give rise to
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a great waste of time and effort both internationally and, later, nationally if legislation is required, as it usually is.
I should now like to probe a little further into a matter mentioned by the noble Lord, Lord Kings Norton; namely, the relationship of the harmonisation policies of the European Economic Community and the work of the standardisation bodies. I do not know the reasons for which the Community embarked on harmonisation in the industrial field, which is really standardisation under another name. It is obviously a Herculean task, with huge staff requirements, to cover the whole field of industry, and it is difficult to see how overlapping and confusion can be avoided.
As a former President of the British Standards Institute, I know something of the complexities of the work in the national field as well as the dedicated efforts of thousands of individual members of technical committees. And of course it all becomes infinitely more complicated when the national effort has to be integrated into the work of the two European standards institutions and, at the highest level, with that of the two international organisations, the ISO and the IEC at Geneva.
Moreover, one of the sub-committees of the select committee which is preparing a report on yet another harmonisation proposal has discovered that the Economic Commission for Europe is also busy in some areas of the harmonisation process, and to this extent a third variable is added.
Standardisation work is extremely slow and cumbrous but, as the noble Lord, Lord Kings Norton, has pointed out, so are the harmonisation procedures of the European Economic Community. It would probably have been more satisfactory for all concerned if the Commission had kept out of industrial harmonisation and left it to the standards institutions, but we are presumably now stuck with a dual and, in some cases, a triple system and it would be interesting to know what, if any, attempts are made to harmonise in turn the work of the Community in this field with that of the standardisation bodies. Perhaps the Minister might be able to say something on this point.
This apparently unimportant directive is merely the ears of the rabbit, for under-

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neath lies the whole body of non-tariff barriers to trade. The manipulation of standards is one of the most effective ways of erecting these non-tariff barriers and, as the present report shows, harmonisation can also be manipulated for the same purpose. An earlier example was the notorious noise level requirement for lawn-mowers.
This harmonisation process takes place in a jungle where predators abound, and those who operate in it need to be constantly on the alert. I hope that the departments of Her Majesty's Government who have to negotiate on these matters are well prepared, well co-ordinnated and resolute. If this report helps to make them more so it will have been worth the effort.
7.40 p.m.
Lord DAVIES of LEEK: My Lords, I will not take up much of the time of the House. I have read the report and I have decided, as somebody who is not on any of the European Committees, that it was my duty to listen to this debate because I have given examples before, and so have other Members of this noble House, of pettifogging meddling about with standards. I remember even an effort to standardise mustard throughout the European system. Consequently, what I am afraid of is that we shall get something like Japanese resistance to pharmaceuticals and to engineering; unless the number of an engine is stamped in a certain place on the engine itself in a car it will not be accepted.
All I want to say is that common sense insists that there shall not be a great overlapping of different bodies dealing with standardisation. We have just heard an authoritative statement from somebody who knows what he is talking about on this, and I hope that the Common Market will take it a little more slowly rather than interfere in this realm, and will allow the appropriate bodies which have been in existence for generations to deal with those things which they can deal with better than a heterogenous group in the Common Market itself.
Originally I was against the Common Market, and although I still am against it I have to bow before the wave of the referendum. Nevertheless, it hurts me to see the sovereignty of this House—of
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Parliament itself—being lost to pettifogging ideas such as this. Consequently, I hope that the Government in their wisdom will try to do something to rectify this continuous—yes, it is continuous; it is not continual—this continuous interference with the legislation of various Governments that goes on inside the Common Market.
7.42 p.m.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie): My Lords, I have listened to the debate with great interest. The Government are grateful to your Lordships' Select Committee for their very thorough examination of the European Commistion's proposal for a directive on the approximation of laws relating to powered industrial trucks, and we are also grateful to the noble Lord, Lord Kings Norton, for initiating the debate about it tonight. As the noble Lord, Lord Sherfield, told us, although this draft may appear to be of a technical character—indeed to take up the phrase of the noble Lord, Lord Davies of Leek, to be also of a pettifogging character—it does raise some really grave political issues and the noble Lord, Lord Kings Norton, spelt these out clearly to us. It raises the question of how the institutions of the European Community should or could respond when one member state—in this case, and indeed in another case that was cited, France—introduces some new technically-seeming barrier to trade which it seeks to justify on health and safety grounds. It is because the Department of Employment (my Ministry) is the sponsoring Ministry of the Health and Safety Executive that I am in fact answering this Motion.
In my view, this kind of activity is extremely dangerous not only to the free trading system on which Western prosperity since World War Two has largely been based but also to the political survival of the European Community as a coherent and dynamic entity. On the one hand, people can be alienated from the kind of pettifogging restriction to which the noble Lord, Lord Davies of Leek, drew our attention and, on the other hand, they become sharply aware that this bureaucracy is simply the jungle within which real predators are lurking, as the noble Lord, Lord Sherfield, told us.

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Under the rules of the Community it is for the Commission to make proposals for removing such barriers between member states and they accordingly produced this proposal for a directive, which was delivered to the Council of Ministers on 11th May 1979 and in due course was also published in the official journal of the Community. It then went to the Economic and Social Committee, which after detailed consideration eventually delivered its opinion on 26th March of this year. Since then it has been going through the European Parliament whose opinion is now awaited and I was glad to hear that that will be coming fairly shortly. All this while the Commission have been working towards producing additional technical material which will be essential to make the proposal complete.
Meanwhile here in this country the Commission's proposal has been considered by a Select Committee of your Lordships' House and also by the Select Committee on European legislation in another place, which has published its own report. The two Select Committees took evidence from the responsible Government departments and agencies and, in particular, the Health and Safety Executive and also from the Confederation of British Industry, the British Industrial Trucks Association and other interested bodies. The responsible Government departments and agencies have been undertaking their own consultations with the CBI, the BITA and other bodies with a view to establishing our negotiating position—the Government's negotiating position—in good time for the Council of Ministers' stage, which I understand is not likely to come before the autumn and possibly later than that.
That is the process of consultation, which is not yet quite complete. We are preparing our armoury, so to speak. Before determining our negotiating position the Government will of course take into account the views expressed in the debate tonight as well as any further debate in another place and also the debate which the noble Lord has told us will shortly be coming in the European Parliament.
I should like now to comment briefly on what has been said by the noble Lord, Lord Kings Norton, in introducing
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tonight's debate. First, the draft framework directive on lifting and mechanical handling appliances, upon which this particular draft directive on powered industrial trucks depends (fork lift trucks for short) has indeed been with the Council of Ministers since 1975. It is virtually complete but the problem of how to deal with imports from outside the Community has not yet been fully resolved. I think perhaps the noble Lord, Lord Kings Norton, was a little unfair in blaming the Commission for this delay, for which member Governments should really take responsibility.
Lord KINGS NORTON: My Lords, if I may interrupt the noble Earl, I said "the Community".
The Earl of GOWRIE: My Lords, I beg the noble Lord's pardon. It is, as I said, the member Governments that have been a bit lax here.
Next the inclusion by the Commission in their draft directive and the endorsement by the Economic and Social Committee of the current French requirements that fuel tanks should be removable and that pedal controls should be of the automotive type and layout. I can confirm that the French authorities have not yet produced any accident information whatsoever which could justify these two requirements. Accident information from the Health and Safety Executive in this country does not indicate that removable fuel tanks would make any significant contribution to safety, and does not indicate, either, that automotive pedal controls are any safer than non-automotive. This is a try-on, my Lords, and we all know it. In support of British manufacturers we will argue strongly to resist the inclusion of these requirements in the directive.
I wish now to turn to the question of total or optional harmonisation, which the Select Committee and the noble Lord, as well as the noble Lord, Lord Sherfield, have already explained to the House. It is clear that British manufacturers want total harmonisation, as they feel this would effectively protect them from competition from sub-standard trucks. But we must not—if this is the right image in this contest—get hoist with our own petard. We also have to take into account the interests of purchasers and users. These have also been consulted,

1069
and while many prefer total harmonisation, as this ensures a standard product, some want to be able to retain the freedom to purchase any truck which they consider would meet their particular requirements.
The manufacturers allege that this freedom could be abused, in that cheaper and less safe trucks might be ordered, perhaps from overseas. But the Health and Safety Executive tell me that they already have adequate legal powers under Section 6 of the 1974 Act to stop this happening, and that total harmonisation would require the making, administration and indeed enforcement of detailed technical regulations, while optional harmonisation would in this country require little or no legislation. I am, therefore, not yet persuaded that there is need for total harmonisation solely on safety grounds, but we will be taking into account the views of the manufacturers as well as the users in establishing our final negotiating position.
Finally, let me turn to what the Select Committee and the noble Lord said about the European Communities' harmonisation programme as a whole. It certainly is a burdensome programme for the Commission and for member Governments. I wish it were true that we could leave all this work to the international standards bodies to achieve by consensus. To answer Lord Sherfield, the European Commission are encouraging the two Pan-European standards-making bodies, the CEN and the CENELEC, to organise their programmes so as to produce the harmonised standards the European Community requires. So they are trying to achieve what the noble Lord wants in that direction. But the trouble, of course, is that they cannot always achieve consensus; and even when they do, it is not necessarily binding on member Governments, some of which seem intent upon maintaining and even developing their own national requirements which have the effect, if not always the intention, of being technical barriers to trade. The Government therefore see no alternative in the present circumstances to persevering with the programme in so far as it is necessary in order to remove such barriers where they already exist, and prevent their erection elsewhere.
The noble Lord, Lord Sherfield, asked whether there is a central co-ordinating
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department looking at all EEC harmonisation directives. The Foreign and Commonwealth Office, and the Department of Trade play the central co-ordinating role here. I am, as I say, most interested in this debate. We are preparing our negotiating position on this and it will be a very strong one. Our case will be strengthened by the remarks made in your Lordships' House this evening.
Lord DAVIES of LEEK: My Lords, may I put to the noble Earl this presumption? When they think something needs the attention of the Government it is their duty to inform the Government of the position, and the Government make use of that information?
The Earl of GOWRIE: My Lords, they are the Government, so to speak, at present, and so that difficulty would not be there. But I might give further reassurance to the noble Lord, Lord Davies of Leek, and to the House by saying that Ministers are also discussing, inter-ministerially if you like, about the whole issue of non-tariff barriers which cause such a lot of concern.
Lord DAVIES of LEEK: I thank the noble Earl.
Lord KINGS NORTON: My Lords, I do not think I have anything more to say. I am very satisfied with the reply.
[The sitting was suspended from 7.54 to 8.15 p.m.]

SOCIAL SECURITY (No. 2) BILL
House again in Committee.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amend-No. 33:
Page 7, line 8, leave out paragraph (b).
The noble Lord said: I beg to move Amendment No. 33. It is rather regrettable that one has to deal with this part of the Bill—and it is nobody's fault—which is perhaps one of the most important, if not the most important, part of the Bill so far as some of us are concerned, with less than a dozen people in the Chamber.

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It means that when we come to a Division, people will troop into the Division Lobby without hearing either the Government's argument or the Opposition's argument.
The point that I should like to raise at this stage—and your Lordships are generous enough to let one wander from time to time even if one is rebuked for it afterwards—is how many of the Government supporters realise that the sum of money involved in this particular matter is, I believe, £1 million. We have fought on de-indexing invalidity pensions because there was a saving of £140 million; on freezing the earnings rule because there was a saving of £16.5 million; on reducing the linking period because there would be a saving of £20 million; on abolishing the earnings-related supplement because there would be a saving of £360 million; on the reduction in unemployment benefit for occupational pensioners because of a saving of £25 million; but I say again, for the benefit of the noble Lords who have just come in, that as regards this particular matter which I think is of paramount importance; namely, the right of people to strike (and I know that there are more than two opinions on this) all that the Government will save is £1 million. It is much, much less than any of the other savings. I believe that, as a result they will have wrought havoc in industrial relations.
I ask noble Lords opposite to ask themselves whether it is worth it for £1 million. It may well be that noble Lords opposite will say, "Ah, there is a point of principle in this". I would not deny that for some noble Lords there may well be a point of principle. There is also a point of principle in it so far as we are concerned. However, Clause 6(1)(b) provides for the £12 reduction in the supplementary benefit entitlement of a claimant involved in a trade dispute. This amendment is deliberately designed to cancel that provision. The £12 reduction is entirely arbitrary. One does not know why it is £12 and not £10 or, for that matter, £14. Its effects will not only be grossly unfair, but will have far-reaching unpleasant consequences. In some strikes the union can afford to provide strike pay at the rate of £12 a week. In others, which may be equally justified, the union cannot afford that amount.
Some strikers stand to gain a great deal if the strike succeeds, others sometimes have very little to gain. Some strikers place themselves in a situation quite voluntarily, others out of loyalty or—I admit it—because they have no choice. Some trade disputes are the fault of the union and, as I tried to say previously, some are the fault of employers. Some strikers are highly paid; others are striking against poverty wages. I accept the fact that not every strike is really in respect of low wages. Yet Clause 6(1)(b) treats all these situations in the same way and imposes the same penalty.
It should be remembered that the £12 reduction does not stand by itself. Under the existing rules, the striker's own needs are ignored for supplementary benefit purposes. From this November that would mean that the striker and his family would have to manage on a income £17·55 per week below the normal supplementary benefit level if he was not on strike. Therefore, from this November there will be a reduction—because there is nothing for him—of £17·55. With the £12 reduction, it will be nearly £30 below the normal minimum in cases where there is no strike pay.
Therefore, we are really not talking about £12. I am trying to say, and probably saying very badly, that if a man and his wife and family were on normal supplementary benefit, they would receive supplementary benefit for the husband. As he is on strike, they receive nothing for him at all. So, having regard to what the benefit will be in November, he starts with £17·55 a week less. On top of that there will be a reduction of £12 benefit so far as the striker's family is concerned. So they will be £30 a week worse off than they would be if they were on supplementary benefit for other reasons. It should also be remembered that the cases we are discussing are those of strikers with families to support. The single striker hardly ever receives supplementary benefit, even under present rules. I do not think that the Minister will deny that for one moment.
One reason why this proposal is being put forward by the Government is the belief that in some cases unions could afford to provide strike pay but do not do so in the knowledge that their members can claim supplementary benefit. The idea that at the beginning of a strike the

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strikers all assemble at the local social security office to claim their benefit is, of course, totally false. The Government will not seek to say that they do. Most strikers do not claim supplementary benefit, even if they are not receiving strike pay. Most would not qualify even if they claimed, because most strikes end before any question of entitlement to supplementary benefit arises.
But if there is any substance in the suggestion that unions are discouraged from providing strike pay by the availability of supplementary benefit, it must be said that the changes made in the supplementary benefit rules in 1971 by the then Conservative Government might have been designed to produce this result. Perhaps I may say what I mean. Until that date, although the striker's own needs were disregarded in calculating his entitlement to supplementary benefit for his dependants, if his union paid strike pay up to the amount of his needs as assessed for supplementary benefit purposes, those payments were ignored. So until 1971 there was a situation that if the union made a grant to the man on strike and it was the amount that he would have received in the ordinary way from supplementary benefit if he had not been on strike but was applying for supplementary benefit for other purposes, this was ignored, and supplementary benefit was paid only for his wife and family. There was, therefore, a clear incentive to provide strike pay, because the man was allowed to keep it for himself, and supplementary benefit paid nothing at all, but only maintained the family.
In 1971 that arrangement was replaced by the present rule under which only £4 of strike pay is disregarded, and not even that if the striker is also receiving tax refunds. It would not be surprising if that change of policy had not made some unions—and I think that most noble Lords opposite are reasonable people and I believe that I can say this with their agreement—less anxious to finance some members during strikes, because when they did it was disregarded in the sense that it was not counted against supplementary benefit.
Having created this situation, the Government are now trying to get out of it by penalising strikers further, regardless of the hardship that this may cause,
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not only to those actually involved in trade disputes, but to their wives and families. I said before certain noble Lords came into the Chamber, and I want to repeat it, that we must get this in the right perspective. The Government admit that if this goes through they will save £1 million a year. This Social Security (No. 2) Bill will save the Government £562½ million, and only £1 million of that will be as a result of Clause 6.
My Lords, is it worth it? When I say that, I mean is it worth the reputation that the Government must get in carrying through legislation of this kind? Is it really worth the disharmony and unrest which this will produce? I was surprised myself when, on going into the matter, I realised that very few strikers in fact claim supplementary benefit. The noble Lord nods his head in complete agreement. I am sure I am talking to some noble Lords who think that the millions who go on strike in the course of a year immediately go down to the supplementary benefit office to claim for their wives and children. They just do not. I have given the reasons, and I shall not go through them again.
But is it going to be worth all the social disharmony, all the industrial unrest, for the sake of £1 million? Somebody may get up—I hope they will not—and say, "Oh, yes, but it's a matter of principle that strikers should not be assisted". Whatever one does, one is going to assist strikers. One is going to support their wives and families, only one is going to reduce it by £12; but one is still going to support them. So if it is a matter of principle, do not support them at all. It is all or nothing; it must be all or nothing.
It seems to me that in a matter of this kind we must get things into perspective. I think the Government would have a very good case if there were tens of thousands or hundreds of thousands in the course of one year trooping off to local social security offices demanding maintenance for their wives and families which was costing, if one likes, the British taxpayer a disproportionate sum. They cost the British taxpayer, you and me, £1 million a year. Is it a fraction of a penny per day? I do not think it is. One would have to divide it by 55 million and then by 365. It is an infinitesimal amount. Noble Lords are not sacrificing a principle

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here. They might not be supporting the Government, who I think are wholly out of step on this. But this is not the first time in this Bill that the Government, represented by their Front Bench, have been out of step with reality. There has been an abundant number of instances where they have been out of touch with reality. I ask noble Lords not to support this. I do not think they can do it in all conscience.
8.32 p.m.
Earl DE LA WARR: The noble Lord, Lord Wells-Pestell, said he feared that someone would get up and talk about matters of principle. I can put his mind at rest; I am not going to talk about matters of principle. This is a pragmatic thing. This is done because the Government recognise the extent to which this country is hurt by excessive striking. This is done in order, in my opinion, to make people think very hard of the consequences of their actions before they take them. The effect of this, in the unofficial strike, will be to penalise those who do it, and quite rightly. The effect of this in a large measure, in official strikes, will be to enable the union, if it has thought the thing out carefully, to support its members financially in doing what the union has asked them to do. This is what it is all about, as I see it, in its effect from the Government's point of view.
Let us not bother about whether it costs only £1 million. Let us not bother whether it costs £100 million or one penny. That is simply not the point. The point is that we are making it harder on those who choose to withdraw their labour, because this country is in such a way at the moment that this is the sort of thing that needs to be done. I am not sure whether the noble Lord was here, but he may know that I am one of those people who have supported, through thick and thin, the very moderate measures produced on another Bill, namely the Employment Bill, and I see this particular clause as very much in line with that. The noble Lord asked, "Why only £12?" He said that it must be a matter of principle—all or nothing. Not at all. This is a moderate measure to make people think what they are doing to the country before they do it.
8.34 p.m.
Lord BANKS: I suppose this is the first clause we have considered in the Committee stage of this Bill which has not been introduced primarily with the object of saving money, for, as noble Lords have been pointing out, had it been in operation during 1979 it would have saved only £1 million. I should like to endorse what the noble Lord, Lord Wells-Pestell, said about the number of strikers who claim supplementary benefit. I believe that the figure for all strikes is somewhere around 15 per cent. It is as low as that because most strikes are of short duration. Of course, if one gets a long strike then supplementary benefit is claimed, and if lots of workers are involved it could be comparatively expensive. But taking it overall, it is a comparatively small percentage of strikers who claim supplementary benefit.
The noble Earl, Lord De La Warr, was saying to us just now that he wanted to put some disincentive, some penalty, on striking, in order to discourage people from striking. I think much depends on how we regard this question of striking. If we say that there is a right to withhold one's labour, even if on many occasions we do not like how that right is used, then I wonder whether we are correct to try to prevent people from exercising that right by placing some penalty upon them for doing so. The noble Lord, Lord Mottistone, said that this clause would be an encouragement to the trade unions to pay strike pay. It would be perhaps a moral inducement, but there would be no guarantee that they would all do it. Indeed, as the noble Lord, Lord Wells-Pestell, pointed out, many of them could not do it because they would not be in a financial position to pay strike pay of £12 per week.
In these circumstances, it seems to noble Lords on these Benches that it is not fair to penalise strikers' families, because, as we have heard, the striker himself does not have a claim to supplementary benefit. To penalise strikers' families to try to induce the unions seems the wrong way to go about it. After all, a striker cannot determine whether he is given strike pay. It would be more logical to put an obligation directly on the unions. I do not advocate that, but I say that from the Government's point of view it would be more logical and certainly fairer. I say

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that, but I do not advocate it, even though it is true that we on these Benches are often critical of the exercise of union power.
We would like to see strikes resorted to less frequently, and sometimes we would like to see them resorted to more responsibly. But I put a rider to that. I think it is wrong to assume that all unofficial strikes are irresponsible. That is to give unions a tremendous monopoly of power. Why should they be the only people who can say whether individuals can withdraw their labour? Although on many occasions we would like to see strikes resorted to more responsibly, we would not say that that meant that all unofficial strikes were irresponsible. But I am convinced that this clause is not the way to get the better industrial relations which would result in fewer strikes and responsible strikes.
Lord UNDERHILL: It was my intention to ask precisely what was the purpose of this particular clause, but the noble Earl, Lord De La Warr, seems to have given the answer. In the Second Reading debate it was emphasised by the noble Baroness that one of the purposes was to ensure that the unions accepted some responsibility for their members and made a contribution. The noble Earl, Lord De La Warr, emphasised the damage done to the country by strikes, and, whether he intended this or not, the inference was that we are going to punish the unions for doing it.
Earl DE LA WARR: I really must ask for a moment's indulgence. I specifically said that it would make the unions think very hard before they decided whether they would bring people out on strike. That is what I said. I did not use the word "punish", and I hope that the noble Lord will withdraw that particular word because it is not right.
Lord WELLS-PESTELL: Did not the noble Earl use the word "penalise"?
Earl DE LA WARR: No.
Lord UNDERHILL: I am prepared to accept what the noble Earl says about not punishing the unions, but as I try to explain how I look at this I think he will
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understand exactly what I mean. My noble friend Lord Wells-Pestell put a powerful argument in favour of this amendment. I think that even those who may not fully support him when it comes to a vote will agree that he put up a powerful case.
The point made by the noble Lord, Lord Banks, is an important one. Is this going to help industrial relations? I do not think there is one noble Lord in this House who does not want to see the number of strikes diminished, but strikes do not just come about because people want to have a nice pleasant game. They come about because of a breakdown in industrial relations at some point. Strikers already lose heavily as it is. One would imagine from listening to some of the speeches that strikers do not suffer anything at all by coming out on strike. They lose heavily when they decide to strike, whether it be an official or an unofficial strike, irrespective of the question of the £12. Decisions to strike are not taken lightly.
As my noble friend emphasised, we are not talking here about assistance to the actual striker but the position of his family. I chose my words carefully: if it is felt that because a striker's family is going to be hit that will cause him not to come out on strike or will help to end the strike, then I believe that that is the wrong way to approach this issue. People come out on strike because there is a breakdown, and what we are likely to do as a result of this clause is to create more bitterness in industrial relations. The history of trade unionism and of strikes is such that, instead of this clause doing what the Government think it may do, it may do the opposite through the creation of a feeling of bitterness being driven into them by this decision.
The majority of strikes are unofficial. Therefore, most union rules will prevent anything being paid when there is an unofficial strike. If it is suggested that they should all be made official, then instead of shortening strikes in many cases you will prolong them. Many of the short, unofficial strikes can be got over fairly quickly. Once you start making a strike official, then the whole question of union rules and apparatus comes into it and the position is made more difficult.

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Listening to some of the speeches one would imagine that it is always the strikers at fault. There may be some irresponsible strikers, but by and large they do not come out and sacrifice their own financial position merely because they enjoy a few days off, or a few weeks off: it is because of a breakdown somewhere, and sometimes a breakdown caused by management. Yet the workers and their families are going to be made to suffer by this clause. I hope that the Government will reconsider this if only on the issue of industrial relations. It is not much use talking about removing the bitterness if we are going to create bitterness by this decision.
It is generally agreed that finance does not enter into this. It is not a question of saving on public expenditure. It is merely trying to tackle what the Government believe is a situation that has to be tackled. This is not the way to try to curtail strikes. This is not the way to try to improve industrial relations. On that aspect alone I hope that the Government will reconsider the position.
Viscount HANWORTH: One should not intervene, having just come into the Committee, unless one has heard the whole debate on the amendment. Nevertheless, having heard what the last noble Lord said I cannot resist intervening. He really must realise that in many cases the workers are called out to strike, and strike by loyalty, not because they want to do so but simply because their shop stewards who, in many cases are Communists and disruptives, call them out. I really think that the last noble Lord's speech should be seen in that context.
8.45 p.m.
Baroness YOUNG: At the beginning of his remarks the noble Lord, Lord WellsPestell, said that we should get this amendment in perspective, and I hope that in the course of this debate we can do so. First, I should like to confirm what indeed the noble Lord, Lord Underhill, said, that this clause is not about saving money. I said in my opening speech at Second Reading that, unlike the first five clauses of the Bill, this clause is not about saving money.
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While I am on that subject may I say in parenthesis that the steel strike that we have had this year cost £9 million in social security payments, and we estimate that half of this would have been saved had this particular clause of this Bill been enacted. No, the reason why we have this clause in the Bill is that it is a manifesto commitment, and we promised that we would ensure that trade unions paid a fair share of the cost of supporting the families of those of their members who were on strike. This is not in any way against trade unions or against their right to strike. Indeed, it was the noble Lord, Lord Banks, who asked whether we were denying them a right to strike. I think if he reflects on the matter—and indeed all those who considered this—he will recognise that the rights do imply responsibilities. What we are saying is that there is a responsibility which rests on the trade union, and there is a responsibility which rests upon the striker.
Lord BANKS: Would the noble Baroness allow me to intervene? What I was saying was that we should not penalise people for exercising a right. I did not say that we were preventing them from exercising the right. I said that we should not penalise them for exercising a right, and that that is what this clause does. Does the noble Baroness not agree that that is so?
Baroness YOUNG: I would not agree that we are penalising the striker in this. The striker has his right to strike. That is right. That is all part of the law of the land. It is not the responsibility of the state in those circumstances to take care of all the costs of the strike: that is what we are saying in this regard. I do not see that that is anything other than asking the trade unions to accept their fair share of responsibility in this matter, and of course the fair share of the responsibility of the striker himself not only for himself but for his family.
We have introduced this because it is a manifesto commitment, but it is not our intention to cause hardship to strikers' families. The remedy lies in fact in the hands of the trade unions. We shall bring in regulations under which up to £12 of strike pay will be ignored, and the responsibility will therefore be on the unions to be able to make good the £12 reduction

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which is proposed by this clause. I am pleased to see that one or two of the major trade unions seem to be adopting a more responsible attitude in this direction. For the trade unionist who goes on unofficial strike, or for the non-unionist involved in a trade dispute, he must be expected to make some provision for himself and for his family. We believe that it is unreasonable to expect the taxpayer to continue supporting them to the extent that he does at present.
Indeed, I was surprised to hear the noble Lord, Lord Wells-Pestell, say, why have we just had £12? Why did not we say all or nothing? I was grateful for the remarks of my noble friend Lord De La Warr, who said in fact that this was indicative that this is a moderate measure, as indeed it is. We regard this as a reasonable sum; something that could be reasonably provided by the trade unions. It is not in any way meant to be an extreme measure, as I have already indicated. It may be helpful to the Committee to know that there is some evidence that the trade unions are reacting to our proposals by increasing their strike pay. The General and Municipal Workers' Union, currently paying £10.50 dispute benefit, is increasing it to £13.50 from October and to £16.50 in July 1981; the engineering section of the A UEW has decided to increase its benefit from £9 to £12 from 1st January 1981; and later this month the T & GWU will be considering a proposal to increase its benefit from £6 to £12.
It seems to me that this is quite right and eminently reasonable. We believe that this must be seen in the context of all our industrial relations legislation and that it will encourage trade unions and those who take part in industrial action to see the strike as a last resort in all instances.
Lord WELLS-PESTELL: The noble Viscount, Lord Hanworth, was right when he said that it is perhaps not wise to intervene in a debate when you have not heard the major argument. Had the noble Viscount been here when I put the case for the Opposition, I do not say that it would have made any impression on him, but at least he would have had a clear exposition of the view we hold in regard to strikes. It would not be fair to those of your Lordships who were here at 8.15 if I were to go over all that ground
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again, but it applies to a number of other noble Lords who have come in late.
The noble Baroness, Lady Young, said that it was not the Government's intention to hurt the striker's family, but that just does not stand up. That is precisely what the Government are doing. If a family's income is to be docked by up to £12—and in cases where unions are unable to help, £12 will be stopped from their social security, bearing in mind that the husband is getting nothing—that is hurting the family. One cannot mess around and suggest that it means anything other than that, particularly when a large number of unions, because of their size and the low pay of their members, cannot pay as much by way of weekly or monthly rate as some of the bigger unions. They will never be able to build up a strike fund that will enable them to give their members strike pay.
Lord MOTTISTONE: Is the noble Lord aware that not once in his last remarks has he mentioned the responsibility of the individual towards his own family? He has been talking about the responsibilities of great amorphous masses, of trade unions and governments, but he has not taken into account the very important thing, the last resort—indeed, to some people the first resort—the responsibility of the individual towards his own family and the responsibility for his actions in and the effect that they may have on his own family.
Lord WELLS-PESTELL: The noble Lord usually listens very attentively.
Lord MOTTISTONE: I have been doing so.
Lord WELLS-PESTELL: He could not have done so tonight, otherwise he would have heard what I and the noble Lord, Lord Banks, said; namely, that very few strikers ever apply for social security. Indeed, the figure is less than 15 per cent., which means that the 85 per cent. who do not apply must be doing the very thing he is complaining they are not doing.
Lord MOTTISTONE: I am talking about actions, not money.
Lord WELLS-PESTELL: If the noble Lord wants to outlaw strikes altogether and make them illegal, regardless of what

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industrial dispute there may be, that is entirely another matter and this is not the place to discuss it. I remind the Committee that a great deal of responsibility is shown by strikers in that the majority of them, notwithstanding the fact that they get nothing for themselves, do not even apply for supplementary benefit for their wives and families. I call that being very responsible indeed. And the 12 per cent. to 14 per cent. who do apply are those who are unable to make provision for themselves.
I gather that my reference to the fact that it costs so little money makes no impression on your Lordships. I would only say that the amount involved is very small, but that the amount of chaos and industrial disorder that this clause will cause we will live to regret. I hope that some of your Lordships, who must have a real doubt in your minds, will not fail to have the courage not to vote.
Viscount HANWORTH: As the noble Lord, Lord Wells-Pestell, referred to me personally—and I am sorry I did not hear his speech—I must tell him that I know the arguments very well. One must say, first of all, that there are far too many strikes. This we must admit, and we must also admit that what is currently occurring is and has become more and more the law of the jungle. Unless we have the sanctions to prevent people from going on strike without reasonable cause, when they could have avoided such action by discussions and arbitration, it will remain intolerable that the state of our nation should be let down even further by the number of strikes we are now having.
8.57 p.m.
On Question, Whether the said amendment (No. 33) shall be agreed to?
Their Lordships divided: Contents 44; Not-Contents, 70.

CONTENTS

Ardwick, L.

Hatch of Lusby, L.

Ross of Marnock, L.

Banks, L.

Janner, L.

Seear, B.

Blease, L.

Lee of Newton, L.

Simon, V.

Boston of Faversham, L.

Llewelyn-Davies, L.

Stewart of Alvechurch, B

Bowden, L.

Llewelyn-Davies of Hastoe, B.

Stewart of Fulham, L.

Brockway, L.

Lovell-Davis, L.

Stone, L.

Brooks of Tremorfa, L.

Maelor, L.

Strabolgi, L.

Collison, L.

Northfield, L.

Strauss, L.

David, B. [Teller.]

Peart, L.

Taylor of Blackburn, L.

Davies of Leek, L.

Phillips, B.

Taylor of Mansfield, L.

George-Brown, L.

Pitt of Hampstead, L.

Underhill, L.

Glenamara, L.

Ponsonby of Shulbrede, L. [Teller.]

Wallace of Coslany, L.

Gosford, E.

Wells-Pestell, L.

Hale, L.

Rhodes, L.

White, B.

Hampton, L.

Rochester, L.

Wilson of Radcliffe, L.

NOT-CONTENTS

Airey of Abingdon, B.

Glendevon, L.

Norfolk, D.

Amherst of Hackney, L.

Glenkinglas, L.

Nugent of Guildford, L.

Amory, V.

Godber of Willington, L.

Orkney, E.

Balerno, L.

Gowrie, E.

Renton, L.

Bellwin, L.

Gridley, L.

Rochdale, V.

Belstead, L.

Hanworth, V.

St. Aldwyn, E.

Bessborough, E.

Hatherton, L.

Saint Oswald, L.

Bolton, L.

Hives, L.

Sandys, L. [Teller.]

Brougham and Vaux, L.

Hunt of Fawley, L.

Soames, L. (L. President.)

Crathorne, L.

Hylton-Foster, B.

Stamp, L.

Cromartie, E.

Killearn, L.

Strathclyde, L.

Cullen of Ashbourne, L.

Kimberley, E.

Sudeley, L.

de Clifford, L.

Lauderdale, E.

Swinfen, L.

De La Warr, E.

Long, V.

Tranmire, L.

Denham, L. [Teller.]

Lyell, L.

Trefgarne, L.

Drumalbyn, L.

Mackay of Clashfern, L.

Trenchard, V.

Dundee, E.

Macleod of Borve, B.

Ullswater, V.

Ellenborough, L.

Mansfield, E.

Vickers, B.

Elliot of Harwood, B.

Marley, L.

Vivian, L.

Elton, L.

Mills, V.

Ward of Witley, V.

Forester, L.

Mottistone, L.

Westbury, L.

Fortescue, E.

Mowbray and Stourton, L.

Young, B.

Gainford, L.

Moyne, L.

Glenarthur, L.

Murton of Lindisfarne, L.

Resolved in the negative, and amendment disagreed to accordingly.

9.6 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 34:
Page 7, line 16, leave out paragraph (c).
The noble Lord said: Under Clause 6(1)(c) persons involved in trade disputes will in future not be eligible for urgent need payments
"except so far as regulations provide otherwise".
I wish to repeat that, because it seems to me to be so extreme: under Clause 6(1)(c) persons involved in trade disputes will in future not be eligible for urgent need payments
"except so far as regulations provide otherwise".
This is an entirely unnecessary restriction, which the amendment would remove.
I consider this to be a most pernicious proposal, and I ask your Lordships' Committee to consider whether it is really human to do this. The Government have already made clear that the new supplementary benefit regulations to be made under the earlier Social Security Bill will limit urgent need payments to very restricted categories of cases. The list given in the Notes on Clauses relating to the earlier Bill included local disasters, loss of money, loss of travel tickets, visits to a dying relative, and disruption of transport.
During the Committee stage of the Bill in another place, the Secretary of State gave a rather similar list of circumstances in which strikers would qualify for urgent need payments under regulations to be made under Clause 6, the clause which we are dealing with at the present moment. As well as local disasters, theft and fares to visit a seriously ill relative, that list also included fares to take a handicapped child to school, maternity needs and essential household equipment, such as fireguards. It really comes down to a very serious, unfeeling situation when we have one list of needs for one section of the community and another list of needs for another section. It really does not seem necessary to have two separate but almost identical lists in two separate regulations, one for strikers and one for other claimants. It occurs to me that if the Government genuinely went to simplify the supplementary benefits scheme— and we hear so much about what they want to do to simplify the Acts—then they could avoid this sort of absurdity, because it is nothing short of an absurdity.
The one important respect in which it is clear that strikers are to be treated more restrictively than other claimants in regard to urgent need payments is where the striker is a single person without dependants. At present, because the trade dispute disqualification prevents the striker's own needs from being taken into account in the normal supplementary benefit calculation, single strikers can receive supplementary benefit only on an urgent need basis. The Supplementary Benefits Commission has laid down very tough rules for deciding whether a single striker should receive urgent need payments. Those rules can be summed up by saying that such payments are made only in cases of total destitution, where the striker has no other resources and no-one to whom he can turn for help. As a result, very few payments are made to single strikers in the course of the year, and where they are made the reality and the urgency of the need has to be beyond question.
Common humanity demands that adequate arrangements should be made. The Secretary of State told the Standing Committee on the Bill in another place:
"Although there is in the Bill a power to make a regulation to enable a hardship payment to be made for the single striker who has no resources and who would otherwise become destitute, it is not the Government's intention to make those regulations from the outset but to wait and see how the need develops ".
That is in Standing Committee "B", the Ninth Sitting, Part 2, on 9th May 1980, at column 983. I find this absolutely unbelievable. There are going to be no regulations; presumably the Government will wait to see how many of them collapse and die from hunger. How inhuman can a Government become?
One may not like what strikers do. We talk about their moral responsibility to society. What about our responsibility to them? I really find this quite unbelievable. How many cases of destitution will have to occur before the Secretary of State decides to use his regulation-making power? How many single strikers will have to be evicted from their homes or (I was going to say) driven begging on to the streets?
I know that that sounds very emotive. It is meant to be emotive; because it is possible. I think the Government must reconsider this while there is still time.

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It is clear that nothing will alter their determination to impose severe hardships upon families of the people involved in strike disputes—in the interests, as they feel, of better industrial relations. As we have just come through that discussion, I do not want to add to it. But deliberately to leave people in total destitution goes beyond the bounds of what is acceptable in a civilised society. I cannot think that noble Lords can really agree to that being in the Bill, and I invite the Committee to leave out paragraph (c) because it seems to me to go beyond the limits.
Baroness YOUNG: Clause 6(1)(c), to which this amendment refers, is an essential part of Clause 6 and this amendment therefore cannot be accepted. I should make that clear at the beginning. I am sure the Committee will recognise that it would not be a very sensible series of policies to reduce strikers' benefits by £12, as we propose—a matter upon which the Committee has just divided; and on which the Committee has supported the Government—if an immediate payment of £12 could then be made under the urgent need provisions to make good this deduction. That would be the effect if this amendment were agreed to.
As the noble Lord, Lord Wells-Pestell, made clear, we do not intend to exclude completely the urgent need provisions. We have power to make regulations which we intend to cover the rare and truly compassionate cases without in any way defeating the purpose of the clause. Regulations will provide for help to meet urgent need for losses of essential items due to disasters such as fire or flood, for a very expensive diet for the striker himself such as is needed by someone suffering from certain illnesses, for fares to visit seriously ill relatives or to take a handicapped child to school by special transport, for the immediate necessities for a newborn baby during a long strike and for the repair or supply of essential household equipment, such as would be needed if there were no working form of heating in winter. If experience shows that there are other rare circumstances for which similar provision should be made, we will introduce the necessary regulations. The present arrangements whereby help is given for expensive diets or extra heating needed on
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medical grounds by a striker's dependant will continue as this comes under the normal supplementary benefit rules and not under the urgent need provisions.
In the course of his remarks, the noble Lord, Lord Wells-Pestell, made a great deal about what he called the moral responsibility of the Government. I think that, as a country, if we are to talk about moral responsibility, we must talk about the moral responsibility of a great many other people, including, if I may say so to the noble Lord and his colleagues, the moral responsibility of the trade unions, when they consider their actions and the moral responsibilities of the individual strikers when they take action on these matters. This is really what much of this debate is about. It is about individual responsibility and what one should do in certain circumstances.
I think that I have made it clear that in what we are proposing here we intend that the strikers' needs provisions, which have been accepted in the past, will continue for the cases that I have enumerated; that, if there should be other rare but hard circumstances, then, of course, we will introduce regulations to cover those particular cases. But we cannot just say in this country, as it is too often said, that the moral responsibility is the Government's and that everyone else has no responsibility for their actions. We all have moral responsibilities; we all need to consider carefully our actions.
Lord WELLS-PESTELL: It has been said many times that a state ought to set the example of the good life. I hope that the noble Earl will not sit there and mumble. If he wants to say something, I hope that he will get up and say it.
The Earl of LAUDERDALE: The noble Lord has said that he expected the state to set an example of human behaviour. I simply cannot understand it.
Lord WELLS-PESTELL: That relieves me of trying to explain it to the noble Earl. If he cannot understand it, then there is no point at which I can proceed to enlighten him. I do not understand the noble Baroness the Minister saying that it is the intention of the Government to make regulations in due course. Her right honourable friend the Secretary

1089
of State apparently wants to wait to see what happens. If it is the intention of the Government to do something, why not make those regulations now? I cannot really see why the regulations should not be made now. There are already two lists of benefits that can be given, and if there is going to be a special urgent needs list for strikers I cannot see why that list and regulations could not be made available very soon.
I do not want to go over the ground that we went over before. There is no common ground between Members on this side and those on the other side of the Committee on this issue, I cannot get noble Lords opposite to see that comparatively few strikers ever apply for supplementary benefit. They are using (shall I say?) an enormous tractor to crack a small nut. Industrial relations are not going to improve with a Government taking these steps.
However, I realise it is quite pointless to continue. I make no impression because noble Lords' minds are made up. I am forced to the conclusion—and I regret it—that there is only one thing in the minds of many noble Lords opposite: to put on the statute book regulations which will have a punitive effect upon strikers. I am afraid that in industrial relations you are going to pay the price when this Bill goes on the statute book.
Lord DRUMALBYN: May I ask one question? There are those with many opinions. As has been said, one cannot indict a whole nation; it may be very difficult to indict a whole trade union. There are different opinions. The minority cannot control what the majority, however misguided, may decide. Would it not suffice to allow payments to be made on the strict understanding that they should be repaid when the people are back at work?
There is a feeling on the opposite side of the Committee—and I share this—that there must be some means, in any event, of meeting real need during the strike. We have not had this suggestion mentioned here; I have seen it elsewhere. But I share the view that it is wrong in principle to expect the public to pay to meet the needs of families of strikers, or indeed the strikers themselves, when the strikers are actually doing damage to others. The
1090
strikers should at least be able to look after their own, to make certain they do not do damage to those to whom they have obligations. But there is the difficult case that they may not be able to avoid doing that. The right course seems to be —it is not in the Bill and no doubt my noble friend will say that regulations will deal with it but it is important and it should be mentioned—that payments in cases of real need should be made on the understanding that they are repaid afterwards.
I do not like to use the word "principle". That is obviously a dirty word in the eyes of the noble Lord opposite. It covers what we need to secure; a sense of responsibility and at the same time that the public will retain the overall responsibility for ensuring that all needs are met, on the understanding that in this particular case whatever is provided is repaid.
9.25 p.m.
Lord WELLS-PESTELL: I am most grateful to the noble Lord for his intervention. He does me a very great injustice. I said nothing that would lead anyone in this Chamber to suggest for one moment that I think the word "principle" is a dirty word—in fact I have been throwing it about quite a bit this evening. I think there are principles involved and I said to the noble Lord, Lord Mottistone, that we feel this is a principle. I accept the fact that noble Lords opposite also have a principle, one which is different from mine, and so I do not think that the word "principle" is a dirty word. There are times when we could do with a little more of it: I accept that.
If the noble Lord will not mind my saying this, I do not want to be drawn on the question of assistance being given to a striker during the strike and that being subject to repayment afterwards. It sounds attractive on the face of things. But what I feel is a mistake—and I will withdraw this gladly and apologise if I am wrong—is that the Government really did not discuss this matter with the TUC when they were framing legislation. My recollection is that the Government did not do so. The Government have not shown a great deal of enthusiasm for discussing matters with the TUC. It is very unwise of them. I am not saying they never discussed industrial matters; I am talking about this particular Bill. I feel that if there had

1091
been discussions a better way may have been found, but I think it is helpful that the noble Lord, Lord Drumalbyn, has raised this matter.
Viscount SIMON: Before the noble Baroness responds, I wonder whether she could help us, when she speaks, over one thing. The noble Lord, Lord Wells-Pestell, read a statement made by the Secretary of State in another place which certainly seemed to suggest that the Government did not intend to introduce regulations right away, but would wait and see how things developed. The noble Baroness rather gave me the impression that the Government were quite ready to produce regulations, and she gave an outline of certain things that would be included in them. I suspect that there is a procedural difficulty in introducing the regulations before the Bill is passed, and I thought that the noble Lord, Lord Wells-Pestell, was perhaps asking for too much in asking for regulations now. Could the noble Baroness tell us whether the Government intend to introduce these regulations as soon as the Bill becomes law?
Lord WELLS-PESTELL: If the noble Baroness the Minister will allow me to speak before she does, I think perhaps I should repeat my quotation from the Secretary of State when he was speaking to the Standing Committee on the Bill in another place. He said:
"I think there is in the Bill a power to make a regulation to enable a hardship payment to be made for the single striker who has no resources and who otherwise would become destitute. It is not the Government's intention to make those regulations from the outset but to wait and see how the need develops".
9.29 p.m.
Baroness YOUNG: Perhaps I might take the opportunity to answer the point raised by my noble friend Lord Drumalbyn as well as that raised by the noble Viscount, Lord Simon, on this matter. May I say that the regulations to which I referred in my remarks, to help meet urgent needs for losses of essential items (and I listed them), will be made before the clause comes into force. I cannot say definitely that they will be available before the Summer Recess, but they will definitely be made before November, when part of the Bill would come into force. May I
1092
also go on to say that the list of circumstances, which the noble Lord, Lord Wells-Pestell, quoted for ordinary claimants, was, in fact, illustrative only. There will be a much fuller list which will be more substantial. I hope that that clears up these procedural points which are very important. I would not wish there to be any misunderstanding on that point by the Committee.
My noble friend Lord Drumalbyn raised a rather separate point which, if I understood him correctly, was that the full supplementary benefit should be paid to a striker's family in certain circumstances, on the understanding that it would be repaid when the striker went back to work—
Lord DRUMALBYN: If I may intervene, I did not go so far as saying "full supplementary benefit". I asked that payment would be made in accordance with need.
Baroness YOUNG: This is a matter which we have not considered in this connection. If I may, I will write to my noble friend on that point, but I think the answer will be that it would be very complicated to pay a benefit and then ask the person who had received it to repay it when he went back to work. I understand that this is something which is sometimes done in other connections in continental countries, but it would be a new departure in our country and would be very difficult, although I understand the reasons why my noble friend put it forward—
Lord DRUMALBYN: I am sorry to intervene again, but my noble friend begged the question by talking about a "benefit". What is being asked for is a payment in case of need, not a regular benefit.
Baroness YOUNG: Yes, I appreciate the difference. The fact is that it would be a payment of money which, if I correctly understood the point, would have to be repaid. However, I will write to my noble friend about this matter. But it would be very difficult to introduce what would be an entirely new principle into our whole benefit payments, and it would therefore create a number of difficulties. However, I hope, with what I have said

1093
on the main point about the regulations, that the Committee will agree not to accept this amendment.
Their Lordships divided: Contents, 38; Not-Contents, 69.

CONTENTS

Ardwick, L.

Hatch of Lusby, L.

Ross of Marnock, L.

Banks, L.

Janner, L.

Seear, B.

Blease, L.

Llewelyn-Davies, L.

Stewart of Alvechurch, B

Boston of Faversham, L.

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

Stewart of Fulham, L.

Bowden, L.

Stone, L.

Brockway, L.

Lovell-Davis, L.

Strabolgi, L.

Brooks of Tremorfa, L.

Maelor, L.

Strauss, L.

Collison, L.

Northfield, L.

Taylor of Blackburn, L.

David, B. [Teller.]

Peart, L.

Underhill, L.

Davies of Leek, L.

Phillips, B.

Wallace of Coslany, L.

George-Brown, L.

Pitt of Hampstead, L.

Wells-Pestell, L.

Gosford, E.

Ponsonby of Shulbrede, L.

White, B.

Gregson, L.

Rochester, L.

Wynne-Jones, L.

NOT-CONTENTS

Airey of Abingdon, B.

Glendevon, L.

Norfolk, D.

Amherst of Hackney, L.

Glenkinglas, L.

Orkney, E.

Balerno, L.

Godber of Wellington, L.

Renton, L.

Bellwin, L.

Gowrie, E.

Rochdale, V.

Belstead, L.

Hanworth, V.

St. Aldwyn, E.

Bessborough, E.

Hatherton, L.

Saint Oswald, L.

Bolton, L.

Hives, L.

Sandford, L.

Brougham and Vaux, L.

Hunt of Fawley, L.

Sandys, L. [Teller.]

Crathorne, L.

Killearn, L.

Shannon, E.

Cromartie, E.

Kimberley, E.

Soames, L. (L. President.)

Cullen of Ashbourne, L.

Lauderdale, E.

Stamp, L.

de Clifford, L.

Long, V.

Strathclyde, L.

De La Warr, E.

Lyell, L.

Sudeley, L.

Denham, L. [Teller.]

Mackay of Clashfern, L.

Swinfen, L.

Drumalbyn, L.

Macleod of Borve, B.

Tranmire, L.

Dundee, E.

Mansfield, E.

Trefgarne, L.

Ellenborough, L.

Marley, L.

Trenchard, V.

Elliot of Harwood, B.

Mills, V.

Ullswater, V.

Elton, L.

Monson, L.

Vickers, B.

Forester, L.

Mottistone, L.

Vivian, L.

Fortescue, E.

Mowbray and Stourton, L.

Ward of Witley, V.

Gainford, L.

Moyne, L.

Westbury, L.

Glenarthur, L.

Murton of Lindisfarne, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
9.41 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 35:
Page 8, line 38, leave out subsection (6).
The noble Lord said: We have come to the last amendment for which I am responsible, and I am sure there will be a feeling of pleasure all the way round. Certainly there is so far as I am concerned. At least I shall be doing something tonight which will meet with the approval of noble Lords opposite.
This is an amendment which I hope that the Government will accept. One
9.32 p.m.
On Question, whether the said amendment (No. 34) shall be agreed to?
can always hope. Ministers have admitted that the number of people claiming supplementary benefit is expected to increase by about 110,000 as a result of the cuts in national insurance benefits in this Bill. But they have also admitted that this figure is based on the assumption that only 75 per cent. of those becoming entitled to supplementary benefit will claim it. This means that the number of people living below the supplementary benefit level will increase by some 37,000, plus their dependants, which is thought to be in the region of about 100,000 people.
This is not acceptable, and I am sure that the Government do not feel that it is acceptable. We feel strongly that special measures should be taken to ensure that

1095
those 37,000 people—the figure, as I have said, may well be an underestimate in view of the current trends in the number of unemployed people—are made aware of their entitlement and are encouraged to claim.
Lord MACKAY of CLASHFERN: I wonder whether the noble Lord is thinking of Amendment No. 36?
Lord WELLS-PESTELL: Yes, I am dealing with No. 36.
The DEPUTY CHAIRMAN of COMMITTEES (Lord Amherst of Hackney): I called Amendment No. 35.
Lord WELLS-PESTELL: I beg your Lordships' pardon. I am very grateful to the noble Lord for intervening. I beg to move Amendment No. 35, page 8, line 38, leave out subsection (6). Clause 6(6) provides for the possibility that the changes in supplementary benefit rules for people involved in trade disputes may come into force before the other changes in the supplementary benefits scheme resulting from the Social Security (No. 1) Bill. Since the No. 1 Act changes are to come into force this November, it is not clear why the trade dispute rules should need to be changed before then, unless the Government believe that their policies have brought industrial relations in this country to such a low ebb that panic measures may be needed during the next five months.
If it is the intention to bring Clause 6 into effect before November, the Government must know by now precisely what modifications in the provisions of the supplementary benefits Act will be needed and that information should be laid before Parliament in the form of draft regulations instead of the Government
taking powers, as Clause 6(6) proposes, to make whatever modifications the Secretary of State considers appropriate. This seems to me to be quite a reasonable thing to expect of the Government, and I hope that the noble Baroness, the Minister, will be able to give us a very clear reason as to why it is going to be done in this way rather than in the way the amendment suggests. I beg to move.
Lord MACKAY of CLASHFERN: I am sure we are all glad to know that the noble Lord, Lord Wells-Pestell, is going to address us once more and that his threat that his present speech was the last one has turned out to be incorrect. So far as this particular amendment is concerned, the Government's intention is to implement the proposals in Clause 6 of this Bill at the same time as the changes in the rules for supplementary benefits introduced by the Social Security Act 1980 become operative, namely, 24th November 1980. That is the intention. However, we feel that we should be able to keep our options open and be able to introduce the new rules for strikers' benefits at an earlier date than November if the industrial situation should ever require it. It is not that we anticipate anything in the nature of panic, but we would think it appropriate if the industrial situation would appear to require it that the power should exist to bring these special rules into effect. We do not expect ever to have to make use of this subsection, but we do think it wise to preserve this freedom, and I therefore invite your Lordships not to accept this amendment.
9.45 p.m.
On Question, Whether the said amendment (No. 35) shall be agreed to?
Their Lordships divided: Contents, 38; Not-Contents, 69.

CONTENTS

Ardwick, L.

Hatch of Lusby, L.

Ross of Marnock, L.

Banks, L.

Janner, L.

Seear, B.

Blease, L.

Llewelyn-Davies, L.

Simon, V.

Boston of Faversham, L.

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

Stewart of Alvechurch, B

Bowden, L.

Stewart of Fulham, L.

Brockway, L.

Lovell-Davis, L.

Stone, L.

Brooks of Tremorfa, L.

Northfield, L.

Strabolgi, L.

Collison, L.

Peart, L.

Strauss, L.

David, B.

Phillips, B.

Taylor of Blackburn, L.

Davies of Leek, L.

Pitt of Hampstead, L.

Underhill, L.

Evans of Claughton, L.

Ponsonby of Shulbrede, L. [Teller.]

Wells-Pestell, L.

Gosford, E.

White, B.

Gregson, L.

Rochester, L.

Wynne-Jones, L.

Hampton, L.

NOT-CONTENTS

Airey of Abingdon, B.

Glenkinglas, L.

Norfolk, D.

Amherst of Hackney, L.

Godber of Willington, L.

Orkney, E.

Balerno, L.

Gowrie, E.

Renton, L.

Bellwin, L.

Hanworth, V.

Rochdale, V.

Belstead, L.

Hatherton, L.

St. Aldwyn, E.

Bessborough, E.

Hives, L.

Saint Oswald, L.

Bolton, L.

Hunt of Fawley, L.

Sandford, L.

Brougham and Vaux, L.

Killearn, L.

Sandys, L. [Teller.]

Crathorne, L.

Kimberley, E.

Shannon, E.

Cromartie, E.

Lauderdale, E.

Soames, L. (L. President.)

Cullen of Ashbourne, L.

Long, V.

Stamp, L.

de Clifford, L.

Lyell, L.

Strathclyde, L.

De La Warr, E.

Mackay of Clashfern, L.

Sudeley, L.

Denham, L.

Macleod of Borve, B.

Swinfen, L.

Drumalbyn, L.

Mansfield, E.

Tranmire, L.

Dundee, E.

Marley, L.

Trefgarne, L.

Ellenborough, L.

Mills, V.

Trenchard, V.

Elliot of Harwood, B.

Monson, L.

Ullswater, V.

Elton, L.

Mottistone, L.

Vickers, B.

Forester, L.

Mowbray and Stourton, L. [Teller.]

Vivian, L.

Fortescue, E.

Ward of Witley, V.

Gainford, L.

Moyne, L.

Westbury, L.

Glenarthur, L.

Murton of Lindisfarne, L.

Young, B.

Glendevon, L.

Resolved in the negative, and amendment disagreed to accordingly.

Clause 6 agreed to.
9.53 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 36:
After Clause 6, insert the following new clause:
"Duty of Secretary of State to ensure claim of benefit
(.It shall be the duty of the Secretary of State to make such arrangements as may be practicable with a view to ensuring that any person becoming entitled to supplementary benefit under section 1 of the Supplementary Benefits Act 1976 as a result of the provisions of this Act claims that benefit.")
The noble Lord said: I beg to move Amendment No. 36. I am grateful to the noble and learned Lord, Lord Mackay of Clashfern, for inviting me to make a second appearance. It is not often that I receive invitations in your Lordships' House to do that. However, having said in some detail what I wanted to say in relation to this amendment, perhaps your Lordships will allow me to say just two sentences rather than go all over it again.
Several noble Lords: Hear, hear!
Lord WELLS-PESTELL: In that case, perhaps your Lordships will accept this amendment! What we are concerned about—and I know that the Government are concerned about this—is the number of people who fail to take up benefits to
1098
which they are entitled. We are wondering whether the Department of Health and Social Security could launch a special take-up campaign for this particular group. It is important that people who are living below the level of supplementary benefit should, by some means or other, be informed that they are entitled to apply for, and would be successful in applying for, supplementary benefit. I know from personal experience that a tremendous amount is done in this area. It is not due to the department not moving in this particular area. I wonder whether the Minister would be good enough to look at this matter with the department to see whether anything more could be done than is being done at the moment. I beg to move.
Lord MONSON: Although I have been in favour of very few of the Opposition amendments so far, I can support this amendment wholeheartedly. The fact that so many highly-deserving people fail to take up the supplementary benefits to which they are absolutely entitled, whether through timidity or ignorance of their rights, really is a national scandal. I said "highly-deserving people", because many of the less deserving, in the moral rather than in a strictly legal sense, make certain that they claim every single penny that is going, aided and abetted by such dubious organisations as the Claimants Union.
In contrast, tens of thousands—perhaps hundreds of thousands—of elderly people whose sole income is the state retirement

1099
pension fail totally to claim any supplementary benefit out of shyness, misplaced pride or ignorance of the facts. I think that something should be done to rectify this, and this amendment seems to be a practical way of setting the ball in motion.
Lord MACKAY of CLASHFERN: As has been explained by the noble Lord, Lord Wells-Pestell, the proposed new clause would place on the Secretary of State an obligation to improve as best he can the take-up of supplementary benefit among those becoming entitled because of reduction in their contributory benefits. The amendment draws attention, as does the Explanatory Memorandum to the Bill, to the fact that there will be some increase in supplementary benefit claims: 110,000 extra beneficiaries as a result of Clauses 1 and 4: about a 4 per cent. increase in the existing case load.
Naturally the Government accept that they have an obligation to ensure that people who may be entitled to supplementary benefit are aware of that fact. This they already do by various means of publicity—in post offices, unemployment benefit offices and in the order books of social security beneficiaries. They are also continually seeking means to impove the impact and quality of their publicity. The obligation to help people know and claim their rights is not, of course, peculiar to potential claimants once this Bill becomes law.
The take-up of supplementary benefit is believed to be about 75 per cent. and the amount unclaimed was estimated for 1977 to be over £300 million. Later figures are not available. The reasons why the other 25 per cent. do not claim seem to be complex. The Supplementary Benefits Commission discussion paper, Take-up of Supplementary Benefit, which was put out in 1978, says:
"… some mixture of pride, ignorance, a sense of stigma, reluctance to make the efforts which a claim calls for, a desire for self-sufficiency on the part of an individual or family, an unwillingness to become involved with a government agency and a feeling that the whole business is not worth while".
The Government are far from complacent about this level of take-up, but it is important not to get the problem out of perspective. Many of the entitlements not taken up individually are small, and the expectation of a disproportionately small
1100
gain is clearly a significant factor in failure to claim.
It is also right to bear in mind that the incidental effects of the savings measures in the Bill do not make a dramatic difference to the numbers on supplementary benefit. Such difference as they do make is the inevitable outcome of maintaining the "safety net" intact, and in the light of what has been said earlier in these debates, it is most important to remember that the Government are maintaining the safety net intact. The new pension schemes will be making a dent in reliance on means testing, and this is our long-term aim.
The new clause is understandably rather vague in effect. Clearly, whether a person should exercise his right to claim supplementary benefit is essentially a personal decision for him; there can be no compulsion about it. Moreover, until a person has claimed benefit and made a statement of his financial circumstances and commitments, it is most unlikely that the department would be in a position to decide whether or not he had a title to benefit. But simplification of this scheme and a continuing regard to clear information and adequate publicity are certainly our objectives. We hope that your Lordships will feel that we will pursue these objectives without the necessity of enacting a clause of this kind. I would invite the noble Lord to be kind enough on this occasion to withdraw his amendment. It would be a very nice gesture for the last one.
Lord WELLS-PESTELL: It would be a very nice gesture on the part of the Government to accept one amendment out of 37; make no mistake about that. I wanted to ask the noble Lord whether he would explore with the Government, through the appropriate department, whether there is any possibility of asking BBC 1 and BBC 2 and ITV—the three television channels—if they will give just a few seconds to draw attention to the fact that supplementary benefit is available to people. I do not want to suggest the wording, but I think it would be a very generous gesture on their part. It would not cost them a great deal of money. They would lose perhaps a few hundred pounds every time they showed it, but they can well afford to make that kind of contribution.

1101
The other point is that I noticed that in my own doctor's surgery there was no reference to the social security benefit, although doctors' waiting rooms carry an enormous number of notices. I wonder, again, whether there could be discussions with, I imagine, the BMA to see whether doctors' surgeries and waiting rooms could be used for this purpose.
Lord MACKAY of CLASHFERN: I am grateful to the noble Lord for these suggestions and I shall certainly draw them to the attention of my right honourable friend the Secretary of State.
Lord WELLS-PESTELL: I think somebody ought to please somebody in your Lordships' Committee, and perhaps we will set the example. With the leave of the Committee, I withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7 agreed to.
10.2 p.m.
Lord BANKS Lord BANKS moved Amendment No. 37:
After Clause 7, insert the following new clause:
"Secretary of State to review cost of living for chronically sick
(.—(1) The Secretary of State shall review current provisions in the United Kingdom, and such other countries as seem to him to he appropriate, for meeting the extra costs of daily living as a chronically sick or disabled person and shall publish a consultative document setting out the various means by which these people could be compensated for both the extra expenses they actually incur as a result of their chronic sickness or disability and the extra expenses they should incur if their needs as chronically sick or disabled people are to be met.
(2) The review shall commence not later than three months from the date on which this Act receives the Royal Assent and the consultative document shall be published within a period of twelve months from that date ").
The noble Lord said: During the Committee stage of the Social Security (No. 1) Bill, I moved an amendment requiring an inquiry to be held into the extra cost incurred by disabled people by reason of their disablement. The noble Lord, Lord Sandys, said that an inquiry was going on into the position of disabled people with families and that there would be a report by the end of this year. But that,
1102
of course, is covering only part of the field, welcome though it is. There is a need for a general investigation of this problem.
As I understand it, there is general agreement in the Committee on the concept of a disablement income, which would be in two parts. One part would be for income maintenance, to replace earnings, to take account of inability to earn, and the second would be a disablement costs allowance to make up for the extra costs which a disabled person has to meet. The first of those benefits would be taxable; the second would not. Although there is agreement on that in principle, I understand that the Government's view is that it cannot be afforded at the present time, but the point is that further investigation is necessary. Public discussion in which the Government participate is necessary.
The question of extra costs and how they are to be met needs informed public discussion. The new clause which the amendment seeks to insert requires a consultative or discussion document to be published by the Government on the disablement costs allowance, the second of the two parts of the disablement income which, as I have already said, I understand we all agree in principle. The details of a disablement costs allowance must be settled so that the allowance can be introduced as soon as, in the opinion of the Government, the state of the economy allows.
I understand that this question of a Green Paper was first raised by the Disablement Income Group with the last Government in May 1978, and that after that time informal discussions continued. I understand also that preparations for issuing a Green Paper were set in hand and significant progress was made by April 1979. Unfortunately, it would appear that this work stopped with the advent of the new Government.
We have seen in our discussions on this Bill and on the No. 1 Bill how those on invalidity benefit have been hit by both Bills: the breaking of the link with earnings; the 5 per cent. abatement; the substitution of the 13-week linking rule by an eight-week rule. We have heard of the fears that the reformed supplementary benefits system might not be flexible enough to meet the needs of the

1103
disabled. All this makes a consideration of the extra costs of disablement all the more important and all the more urgent. All this amendment asks is that the Government should make a start in considering the matter themselves and in stimulating public discussion about it. I beg to move.
10.7 p.m.
Viscount INGLEBY: I should like to support this amendment asking for a discussion document, a Green Paper, on the disablement costs allowace; on the extra cost necessarily incurred by disabled people in their daily living which, as the noble Lord, Lord Banks, has said was supported by all three parties in their election manifestos. If I may, I quote for a moment from the Conservative manifesto, which referred to a,
"coherent system of cash benefits to meet the cost of disability so that more disabled people can support themselves and live normal lives. We shall work towards this as swiftly as the strength of the economy allows".
We all know that the economy does not allow it at the present time, but there would be a lot of work to be done before this could be implemented. This amendment allows a year for the discussion document, and then no doubt there would be a year or two after that before it was actually implemented; in other words, in two or three years' time perhaps, when we all hope that the black clouds over the economy would have turned to blue.
A start should be made now. As the noble Lord, Lord Banks, said, the York Study covers only part of the field, being families with handicapped children, and does not cover adult handicapped persons. I very much hope that all parties will stand by their election manifestos, and that the Committee will support this reasonable amendment.
Baroness ELLIOT of HARWOOD: May I say one word. In the last 10 years I have had a lot to do with the disabled and the integration of the disabled into the community, and into the ordinary way of life. The various kinds of disablement, the conditions under which disabled people live, and the way in which one can integrate them, are so valid that it is important to know what are all the possibilities.
1104
Costs vary, conditions vary, communities vary, and sometimes things are easier than at other times, but it is vital to have this integration between the disabled and the ordinary community. An inquiry of this kind would make it much easier, and at the end of the day I think save a great deal of money, because we would then know far more about what the conditions are and what money was required. I hope that the Government will accept this proposal.
10.10 p.m.
Baroness YOUNG: The noble Lord, Lord Banks, argued his case cogently, as he always does; and he expressed similar views during the proceedings on the first Social Security Bill. Unfortunately, as he will appreciate, the difference between us remains the same. The amendment concentrates on one aspect of possible future provision for disabled people, namely, a cash benefit to compensate for the extra costs of disablement and reflects the conviction that a consultative document would bring us nearer to the position we would all like to reach on this matter.
The noble Viscount, Lord Ingleby, quoted from the Conservative Party manifesto and was supported by the noble Baroness, Lady Elliot of Harwood. I wish to reaffirm that it is our intention to move forward, as quickly as the economy will allow, to improvements in the overall structure of benefits for people who are disabled, and to do so for all the reasons that have been put so well to the Committee. What that structure will be and what its relation to the costs of disablement will be I cannot say at this stage. We have been discussing the need for savings and economies throughout the Bill and I think it would be the general view of the Committee that there can be no question but that the economy at present allows no scope at all for even a more modest improvement in the existing schemes, and is unlikely to do so for some time. The realistic issue therefore is how we spend the time in the interim.
We are well aware of the views of the organisations representing disabled people. They express them to us from time to time and my right honourable friend the Secretary of State and his colleagues are always willing to listen to them and to the ideas they put forward. In particular,

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we are seeking to evaluate significant current research which is available and which will be available in the foreseeable future. That research has taken years of study and application to bring to fruition, and some of it is concerned with the extra costs to families with disabled children. It is bound to be of significance in our deliberations and at this juncture we believe it would be premature to consider issuing a consultative document or Green Paper, as has been suggested.
On the question of schemes of other countries, which is sometimes raised, noble Lords will be aware that the Library of the House has copies of the comparative social benefit tables for member states of the European Communities showing the position as at January 1979. There are, moreover, regular contacts between DHHS officials and officials from other countries concerned with these schemes.
I recognise that this will be a very disappointing reply to the Committee, but our long-term intentions remain the same as we stated in our manifesto, and we shall move forward when we judge that the economy is right and we are able to do so. I hope I have said enough to assure the Committee of our view about this, and I would say to the noble Lord, Lord Banks, who said he felt a Green Paper or consultative document would provide an opportunity for discussion, that the fact that he has raised this point, both on the first Social Security Bill and again on this one, has given your Lordships an opportunity to consider the matter, and what he said will be taken into account in the general deliberations on the future of this issue.
Lord BANKS: I thank the noble Viscount, Lord Ingleby, and the noble Baroness, Lady Elliot of Harwood, for the support they gave to the amendment, and I thank the noble Viscount in particular for correcting me in describing the investigation which is at present going on; I think I described it as being into the position of handicapped people with families whereas of course it is, as he said, an inquiry into the position of families with handicapped children.
The noble Baroness, Lady Young, was afraid we would find her reply rather dis
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appointing; and it was. Of course, I welcome the assurance she gave, but it would have been much more satisfactory and encouraging had she been able to say that an inquiry of this kind would be launched.
The noble Baroness stated as one objection to the amendment that it provided for an inquiry into one aspect of assistance for the disabled—namely, cash benefits—and it is possible that we ought to have asked for a Green Paper or an inquiry which would cover the whole field of assistance to the disabled. Although the reply of the noble Baroness was somewhat disappointing, I should like to consider it further and perhaps return to the subject at Report stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 8 agreed to.
Schedule agreed to.
House resumed: Bill reported without amendment.

COUNTY OF KENT BILL [H.L.]
Committed to a Select Committee in respect of opposed provisions.
WESLEY'S CHAPEL, CITY ROAD BILL
Returned from the Commons with the amendments agreed to.
  PALL MALL: REMOVAL OF PIPE
  PALL MALL: REMOVAL OF PIPE
  IMMIGRATION: ENTRY CLEARANCE WAITING PERIODS
  IMMIGRATION: ENTRY CLEARANCE WAITING PERIODS
  HOUSING BILL: GOVERNMENT ASSURANCES TO PARLIAMENT
  HOUSING BILL: GOVERNMENT ASSURANCES TO PARLIAMENT
  CIGARETTES AND THE RPI
  CIGARETTES AND THE RPI
  HOUSING: MOBILITY SCHEMES
  HOUSING: MOBILITY SCHEMES
  HOUSING: NATIONAL MOBILITY SCHEME
  HOUSING: NATIONAL MOBILITY SCHEME
  REHOUSING: MATRIMONIAL SEPARATION
  REHOUSING: MATRIMONIAL SEPARATION
  QUOTA VOUCHERS: WAITING PERIOD
  QUOTA VOUCHERS: WAITING PERIOD