Sitting of 27 October 1980

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  ORAL ANSWERS TO QUESTIONS
  Mr. Speaker: In case hon. Members have forgotten, supplementary questions should be brief and to the point.
  TRADE

    Aircraft Noise
    Mr. Jesselasked the Secretary of State for Trade what action he is now taking to reduce aircraft noise.
    The Under-Secretary of State for Trade (Mr. Reginald Eyre): We are continuing to encourage the development and introduction into commercial service of quieter aircraft and to ensure that aircraft landing or taking-off at airports designated under section 29 of the Civil Aviation Act 1971 are operated in such a way as to minimise disturbance.
    Mr. Jessel: As last month's report on the effect of aircraft noise on sleep shows that night disturbance to sleep does occur, and as the report also shows that over half the people living around Heathrow go to bed between 10.30 pm and 11.30 pm, will my hon. Friend look into the possibility of bringing forward the beginning of night noise restraint by one hour. from 11.30 pm to 10.30 pm?
    Mr. Eyre: As my hon. Friend knows, there are strict quotas on night flights at Heathrow and Gatwick and the noisier flights are being phased out. I think the House would wish to acknowledge that my hon. Friend, who has been raising this matter since 1970, has played a considerable part in achieving the restrictions. Without his efforts, there would probably have been rather more noise incidence.
    Recent research into the relationship between aircraft noise and sleep disturbance indicates that our policy has been broadly right. My hon. Friend the Minister responsible for aviation will wish to consider comments, including the suggestion that my hon. Friend has put forward, on the research report before deciding on any changes.
    Mr. Clinton Davis: Will the Minister indicate the Government's view of the effect of the current recession in aviation on the ability of airlines, and particularly British Airways, to acquire in sufficient

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    numbers the aircraft that will meet the new noise certification levels in 1986?
    Mr. Eyre: The hon. Gentleman raises an important point, but it is a long-term consideration. One would hope and expect that the trading position of the companies concerned would improve considerably before the date he mentions.
    Sir Ronald Bell: Is my hon. Friend aware that those living around Heathrow have been looking forward to a diminution of aircraft movement at night and not a substitution involving more movements by less noisy aircraft? Will he bear this factor in mind in relation to the peak period charges that are now being levied and consider whether that might have the effect of shifting movements sideways into non-peak areas?
    Mr. Eyre: I take the last point that my hon. and learned Friend raises. He is firmly supporting the plea made by my hon. Friend the Member for Twickenham (Mr. Jessel). I am sure that my hon. Friend who is responsible for these matters will take full account of those points.

    Monopolies and Mergers Commission
    Mr. Neubertasked the Secretary of State for Trade whether he will list the references made to the Monopolies and Mergers Commission under the Competition Act.
    The Minister for Consumer Affairs (Mrs Sally Oppenheim): Under section 11 of the Competition Act, my right hon. Friend has so far referred questions relating to British Rail's London and South-East commuter services, on which the commission has now reported, the Central Electricity Generating Board, and the Severn-Trent water authority. The Director General of Fair Trading has also launched two preliminary investigations under section 3 of the Act into possible anti-competitive practices by Petter Refrigeration Ltd. and T. I. Raleigh Ltd.
    Mr. Neubert: Although those references of public authorities are welcome, now that the prices charged by nationalised industries are going up very much faster than retail prices in general, is my right hon. Friend satisfied that there are sufficient powers under the Act to ensure maximum efficiency and value to the customer in public sector monopolies?
    Mrs. Oppenheim: I hope that the commission's reports on public sector references will indicate ways in which costs can be cut and efficiency improved in order to contain future price increases which, in the public sector, I agree are causing a great deal of concern.
    Mr. Christopher Price: Will the right hon. Lady tell the House what she is doing about the present monopoly in London evening newspapers? Will she assure the House that, if it later turns out that the present merger between the Evening Standard and the Evening News is simply a paving mechanism for property speculation in the vicinity of Fleet Street, she will see whether she has any powers to intervene?
    Mrs. Oppenheim: As I believe the hon. Gentleman knows, the Government have no powers to do anything about the monopoly to which he refers. What he described as a merger is in fact the opening of a new publication, a new newspaper. Anything that is in breach of the terms of the Fair Trading Act could properly be considered by the Government.
    Mr. Marlow: Will my right hon. Friend refer without delay the clearing banks to the commission, as they have started charging their customers quarterly interest without paying their depositors quarterly interest? That leads to an additional rate of interest to most captive customers of up to ½ per cent. a year. That is unacceptable and is an abuse of the monopoly power that the banks undoubtedly have.
    Mrs. Oppenheim: I am sure that careful note will be taken of my hon. Friend's remarks.
    Mr. John Fraser: Will the right hon. Lady ask the chairman of the commission whether he will try in future to produce monopoly reports on the private sector with the same speed and pungency as he produces them in the public sector?
    Mrs. Oppenheim: As the hon. Gentleman knows, the chairman has special requirements under the Competition Act, in the case of section 11 references, to produce those reports within a certain period. I hope that the hon. Gentleman will endorse my own view that those reports that have been presented have been excellent and thorough, despite the

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    limited period of time. One would hope that certain monopoly reports could, where it is feasible and valid to do so, be produced slightly more quickly.

    Companies Legislation
    Mr. Canavanasked the Secretary of State for Trade whether he has any new proposals for changes in companies legislation.
    Mr. Eyre: Yes, Sir. Over the last year my right hon. Friend has published two Green Papers and issued a number of consultative documents seeking views on possible changes. The response is being assessed.
    Mr. Canavan: In view of the Lords' decision on the Vestey case, may we have an assurance on exactly how and when the Government will introduce amending legislation to close the tax loophole? Will the legislation be made retrospective, so that the millions of pounds of unpaid tax will have to be repaid to the public purse by scroungers like the Vesteys?
    Mr. Eyre: The hon. Gentleman's questions on taxation are matters for my right hon. and learned Friend the Chancellor of the Exchequer, who has already declared his intention in this matter.
    Mr. Nelson: Is my hon. Friend satisfied with the action taken by the Council for the Securities Industry in stopping dawn raids on public British companies, or does he intend to introduce legislation now to outlaw them?
    Mr. Eyre: The action taken by the CSI, to which my hon. Friend referred, has been admirably strong. There is a question as to whether legislation will be helpful in respect of disclosure of shareholdings. That is now being considered very carefully.
    Mr. Clinton Davis: Is the Minister aware that that prevarication is most unsatisfactory, when it is abundantly plain, and should have been plain to the Government long ago, that legislation needs to be undertaken to tackle this abuse of the furtive acquisition of significant British companies by the use of nominees and overseas companies acting in concert?
    Mr. Eyre: The hon. Gentleman will see in due course that all those factors have been properly taken into account.

    Manufactured Goods
    Mr. Meacherasked the Secretary of State for Trade what is the current overall level of import penetration of manufactured goods; and in how many sectors import penetration exceeds 50 per cent.
    The Secretary of State for Trade (Mr. John Nott): For the 12 months ended March 1980, import penetration of the products of manufacturing industry in total was 26 per cent. This can be compared with the 25 per cent. share of total manufacturing output which was exported. An import penetration of greater than 50 per cent. was recorded in only one broad sector of industry—instrument engineering—where the figure was 58 per cent., but exports in this sector in the same period were 59 per cent. of sales.
    Mr. Meacher: But, given that under the present Government the surplus in trade in manufactured goods has dwindled to almost nothing, and is now moving into deficit, and given that under this Government's policies any reflation of the economy is bound to lead to a huge surge in imports, in what precise circumstances can this Government ever take the country out of deepening slump?
    Mr. Nott: In the first nine months of this year, compared with the first nine months of last year, the export-import penetration figures of British manufacturing industry improved—rather the opposite of what the hon. Gentleman suggests.
    Mr. John Page: Would my right hon. Friend care to hazard a guess as to why people import goods instead of buying goods that are manufactured in the home market?
    Mr. Nott: I think that it is sometimes because imported goods are cheaper, sometimes because they are better, arid sometimes because people need to buy imported goods because there are no domestically produced goods to take their place. That is what trade is all about. Everyone benefits from it.
    Mr. John Smith: In view of the disastrous levels of import penetration in the

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    man-made fibres industry, which to a great extent arise from United States energy pricing policy and the unfair advantage that it gives to United States manufacturers, and which has caused disasters to ICI, Courtaulds and other major British companies and the people who work for them, will the Secretary of State urgently consider what action can be taken unilaterally or within the European Community to obtain better protection for British industry against blatantly unfair trading?
    Mr. Nott: I consider this difficult matter the whole time. There is a question on the Order Paper about this subject. We should reach it, and I would rather go into the full details then. The answer to the right hon. Gentleman's question is, of course, "Yes". We shall review the matter; we are reviewing it now, and we shall continue to do so.
    Mr. Gummer: Would not my right hon. Friend agree that one of the reasons why people sometimes buy imports is that they do not know that they are imports? Is it not very important now to proceed faster with origin marking, so that we know when we are buying British?
    Mr. Nott: My right hon. Friend the Minister for Consumer Affairs has a programme for the origin marking of a whole range of products. We are still in the statutory consultation period, but as soon as it is over we shall table the necessary orders, and we shall be going straight ahead with origin marking. We intend to do that for a range of products.
    Mr. Cryer: What benefits does the Secretary of State think trade has brought to the 6,000-plus people made redundant in the first six months of this year in the wool textile industry? More specifically, what provision will he make to ensure that imports from Portugal, the second low-cost importer, are curtailed preparatory to, and during, her entry into the Common Market? At present, they are losing the industry many thousands of jobs.
    Mr. Nott: I am aware of the current severe difficulties in the textile industry, but the wool textile industry would not have employed the number of people that it employs now had it not been so successful throughout history in exporting. Indeed, the industry has built up
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    its reputation, its skills and its success, on exports.

    Lloyd's (Fisher Report)
    Mr. Aitkenasked the Secretary of State for Trade what representations he has received concerning the Fisher report on Lloyd's; and if he will make a statement.
    Mr. Eyre: Decisions about the Fisher report are a matter for Lloyd's, and I understand that a general meeting has been arranged on 4 November for that purpose. I have received no representations.
    Mr. Aitken: Does my hon. Friend agree that one of the most serious issues now affecting Lloyd's is the lack of adequate powers and procedures for dealing with the growing problem of international insurance frauds? Will he make sure that if there are to be any new proposals for a Lloyd's Act that gap will be filled?
    Mr. Eyre: Lloyd's has made a valuable contribution to the country's economy for hundreds of years. I regard it as most important that Lloyd's should continue as a self-regulating body. The proposals that will come forward for consideration in the Bill place responsibility upon Lloyd's for dealing with matters of internal regulation to which my hon. Friend refers.
    Mr. John Wells: I am delighted to hear from my hon. Friend that he believes that Lloyd's should continue to be self-regulating. One would deprecate any Government interference—
    Mr. Cryer: Question.
    Mr. Wells: We shall come to a question in a minute.
    Mr. Speaker: In a second.
    Mr. Wells: In a long second, Mr. Speaker.
    One would deprecate any Government interference with a body that has produced such wealth for our country from international sources. I hope that my hon. Friend—[Hon. Members: "Question"] A hope is a question. Will my hon. Friend assure the House that the Government will give the Lloyd's Bill a fair wind when it comes before us?
    Mr. Eyre: I appreciate my hon. Friend's comments and his strong emphasis on the virtue of self-regulation. I shall report on the Bill when it has been submitted to Parliament.

    European Community
    Mr. Dobsonasked the Secretary of State for Trade what is the current imbalance in trade in manufacturing goods between Great Britain and the EEC.
    Mr. David Knoxasked the Secretary of State for Trade what has been the deficit on visible trade with the EEC so far in 1980; and how this compares with the deficit during the same period in 1979.
    Mr. Nott: In the first three-quarters of this year the United Kingdom had a crude visible trade deficit with the European Community of £448 million, a considerable improvement on the deficit of £2,589 million for the corresponding period of last year. In the first three quarters of this year the United Kingdom deficit in manufactured goods with the Community was £1,638 million—again an improvement on the deficit of £2,118 million in the corresponding period of last year.
    Mr. Dobson: Does the Secretary of State accept that since Britain had a favourable balance of trade with the Six before we joined the Common Market the figures demonstrate how disastrous joining the Common Market has been for British manufacturing industry?
    Mr. Nott: I do not think that the figures demonstrate any such thing. The figures before and after entry cannot be compared in that simplistic way. Whether we are in the Community or outside it, nine out of our 10 leading markets are now in the Community. Our export and import trade with the Community is improving year by year.
    Mr. Knox: Can my right hon. Friend confirm that the deficit fell by 80 per cent. in the first nine months of this year compared with last year? Does he anticipate that we shall move into surplus in the near future?
    Mr. Nott: I am afraid that I cannot calculate the percentage as fast as that. I hope that we shall move into balance in due course. It is vitally important that
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    we continue to improve our trading position in the Community. Trade is better than it has been for the last few years. I hope that it will continue that way.
    Mr. Jay: Do the Secretary of State's figures refer to trade with the Six or the Eight?
    Mr. Nott: The figures in my initial answer refer to the existing Community.
    Mr. Dykes: The deficit has come down by three-quarters since the autumn of last year. Would that process be further helped at this stage by lowering the value of sterling in exchange rate terms?
    Mr. Nott: Much as I should like to debate that broad and interesting question with my hon. Friend it must await another occasion.
    Mr. Newens: Is the Secretary of State concerned about the contribution to the imbalance in manufactured goods caused by movements of goods within multinational companies? Is he aware that many multinational companies import goods into Britain on terms which are totally unfair to our other organisations which are seeking to do a reasonable job on behalf of Britain?
    Mr. Nott: There is a problem involving over- and under-invoicing by multinationals. That used to be a matter of concern for exchange control purposes but is no longer. It could now conceivably be a problem for the Inland Revenue and the tax authorities. Other than that I can see no reason why we should be worried about the cross exchange of goods between multinational corporations operating in Europe or anywhere else.
    Mr. Teddy Taylor: The Secretary of State indicated that our manufacturing trade with the EEC was £1,638 million in deficit for the first nine months of the year. Does he have to hand our trade balance in manufactured goods with the rest of the world? Why does he think that our trade with the EEC in manufactured goods has been so bad compared to our trade with the rest of the world since we joined the EEC?
    Mr. Nott: Over several decades we have tended to have a larger surplus with the rest of the world than with the original Six. We had a larger surplus before we entered the EEC. The total

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    current deficit with the whole world this year is £200 million. That compares with a £3½ billion deficit last year. The position has improved in nearly all markets, including the Community.

    Russian Greetings Cards
    Mr. Robert Atkinsasked the Secretary of State for Trade if he is satisfied with the restrictions which have so far been imposed on the dumping of Russian-produced greetings cards in the United Kingdom.
    Mr. Eyre: Following discussions which my Department has had, these imports appear to have ceased. The question of imposing restrictions does not, therefore, arise at the moment.
    Mr. Atkins: Does my hon. Friend accept that that is not entirely so? Is he aware that I am informed by people who are in a position to know that not only Christmas cards but greetings cards generally are still coming into Britain? Does he agree that, of all countries from which they should originate, Russia is the worst?
    Mr. Eyre: My hon. Friend knows that contact between the industry and the European Commission about the antidumping complaint is continuing. I am disturbed to hear that there is some evidence of the trade continuing. We shall continue carefully to monitor the situation.
    Mr. Sheerman: Is the Minister aware that there is widespread dissatisfaction concerning the anti-dumping unit in his Department? May we be assured that wool textile cases are also being taken up?
    Mr. Eyre: I assure the hon. Gentleman that the anti-dumping unit in my Department is good and effective. It wants to help industry. It is willing to receive evidence and to assist in the preparation of cases to be submitted to the European Commission. I hope that the hon. Gentleman will accept that and encourage industrialists who have problems to send them to the anti-dumping unit in my Department.

    Footwear Industry
    Mr. Marlowasked the Secretary of State for Trade what action he will take
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    to strengthen the trading position of the footwear industry.
    Mr. Nott: The Government are assisting the British Footwear Manufacturers Federation in preparation for their next round of negotiations with South Korea and Taiwan. They are working with the federation on possible anti-dumping cases against East European footwear. New representations have been made to the Canadians and Australians about their quotas on footwear. Discussions are taking place in the Community about possible areas of compensation from these countries. Brazilian exports of footwear have fallen dramatically from 1·2 million pairs in the first quarter of this year to ½ million pairs in the second. Following our representations the Brazilians have reduced their export tax on raw hides to 18 per cent. from 36 per cent. and finished leathers to 5 per cent. from 18 per cent.
    Mr. Marlow: I am pleased to hear what my right hon. Friend says. Is he aware that workers in the footwear and clothing industries have started a campaign to buy each other's products and that this is going well? Can my right hon. Friend help to expand and extend that campaign throughout British industry by, for example, encouraging British farm-workers to buy British cars and British car workers to buy British apples? Could he assist in that by telling people that Fiestas are made in Spain and Granadas in Germany, because many people do not know?
    Mr. Nott: I agree that the footwear EDC in particular is doing an extremely valuable job in bringing the retailers and producers closer together. That should happen in as many industries as possible. My hon. Friend has advertised the position of the Fiesta. He is free to do that on repeated occasions.
    The link between retailer and producer is desirable and I want to encourage it wherever I can. Of course I prefer people to buy British rather than foreign goods, if they are competitive. I encourage it.
    Mr. Trippier: Is it not unfair trading within the EEC that the Italian shoe industry should encourage a cottage industry? Is my right hon. Friend aware that Italian housewives are encouraged to make up shoes at a cost in our currency

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    of 50p a shoe, or £1 a pair? Is he aware that many of those women contract a fatal disease from the glue used in the making up process and are not subject to the provisions of any Health and Safety at Work etc. Act as we are? Is that not unfair trading? Can my right hon. Friend do something about it?
    Mr. Nott: As my hon. Friend knows, repeated representations have been made to the Commission about certain aspects of the Italian shoemaking activity. Concern has been expressed along the lines that he mentioned. It is a significant complaint. However, the real reason why Italian shoes are so successful is that their design is excellent and consumers actually want to buy them. That is the heart of the matter. It is one of the principal reasons why the Italian industry is so successful.
    Mr. John Smith: Does not the Secretary of State think that when asking people to buy British it might prove more helpful if he took every opportunity to praise British products rather than ostentatiously praising foreign products, as he has done twice during Question Time?
    Mr. Nod: I spend my whole life praising British products. The more competitive that British products are with overseas products, the happier I shall be. I believe that one of the best things that has happened in a long time is the successful launch of the Mini Metro. I hope that it proves very successful.

    South-East Commuter Fares (Report)
    Mr. Durantasked the Secretary of State for Trade when he expects the Monopolies and Mergers Commission report on South-East commuter fares to be published.
    Mrs. Sally Oppenheim: My right hon. Friend presented the report to Parliament and published it on 2 October 1980, The commission has found, as have a great many commuters, that performance could be improved, and has made a number of constructive recommendations for the better running of British Rail's London commuter services, particularly in the key areas of efficiency and productivity, and service levels and standards. My right hon. Friend the Minister of Transport is pursuing with the chairman of the British Railways Board the action
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    to be taken on these and other important areas of the report.
    Mr. Durant: Is my right hon. Friend aware that commuters have had a rough time during the past few years because of rising prices and deteriorating services—although not necessarily in my constituency of Reading? Will she discuss with the chairman of British Rail the pricing policy that he is undertaking, and ask him to shift some capital resources towards the commuter area?
    Mrs. Oppenheim: My right hon. Friend the Minister of Transport is pursuing with the chairman of British Rail the action to be taken following the recommendations of the Monopolies and Mergers Commission in the following main areas—improvements in efficiency and cost control, by which a better service may be provided for no increased cost, the cost and effectiveness of rolling stock and design and the objectives for the board's operation of the London and South-East commuter services. Naturally, efficiency and cost are key questions in relation to future price increases. I have the greatest sympathy with my hon. Friend's question.
    Mr. John Fraser: If it is necessary for British Rail to increase public expenditure to meet the objectives of the report, will the Minister support that expenditure?
    Mrs. Oppenheim: That is entirely a matter for my right hon. Friend the Minister of Transport.
    Sir Albert Costain: Does my right hon. Friend appreciate that the ordinary commuters who live on the South-East coast were at one time offered special low rate fares by British Rail because the train had to go past Sevenoaks before it turned around? Is she aware that British Rail have now abolished that offer? Is not that sharp practice?
    Mrs. Oppenheim: I cannot comment on that instance. However, I am aware that commuters in the south-eastern area, including the area to which my hon. Friend refers, are far from satisfied with the service that they receive, and that may be one aspect.
    Mr. Newens: Is the Minister aware that users of the Central line, where it passes through Essex from Debden to Ongar, are subject to a special premium

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    charged as a result of the refusal by Essex county council to make a subsidy available towards the running of the line? When the right hon. Lady is considering the high cost of fares to commuters will she have a word with her right hon. and hon. Friends about that matter because people in my constituency and the adjoining constituencies are subject to a burden which is greater than that imposed in any other constituency?
    Mrs. Oppenheim: Essex county council's spending priorities are entirely a matter for that council. They have nothing to do with British Rail.

    Monopolies and Mergers Commission
    Mr. Formanasked the Secretary of State for Trade what will be the next reference under section 11 of the Competition Act to the Monopolies and Mergers Commission.
    Sir Anthony Meyerasked the Secretary of State for Trade what will be the next reference under section 11 of the Competition Act to the Monopolies and Mergers Commission.
    Mrs. Sally Oppenheim: We have a number of prospective candidates under review and I hope to make an announcement very shortly. Meanwhile, I intend to extend the terms of reference of the Severn-Trent Water Board reference to the Monopolies and Mergers Commission to include the question of scope for more extensive optional metering.
    Mr. Forman: Is my right hon. Friend aware that that announcement will be welcomed by those concerned with those matters? Will she note that section 11 references are a useful reinforcement of the Government's competition policy?
    Mrs. Oppenheim: I agree with my hon. Friend. There is no shortage of candidates for the investigations, which have proved to be extremely popular and effective. It is simply a question of choosing between competing priorities and demands.

    Eastern Bloc (Car Exports)
    Mr. Altonasked the Secretary of State for Trade what was the value of cars exported from Eastern bloc countries into the United Kingdom over the past five years.
    Mr. Nott: I shall publish full information in the Official Report, but between 1975 and 1979 imports from the Eastern bloc increased by £36 million, compared with an increase from the European Community of £1,573 million. The first half of this year shows a downward trend in imports from the Eastern bloc.
    Mr. Alton: Does not the Secretary of State agree that it was hypocritical of us to retaliate against the Russians following the invasion of Afghanistan by trying to prevent our athletes from going to Moscow, while at the same time allowing Russian cars to be imported into Britain? Will he say what he is doing to ensure that the Mini Metro is sold to Eastern bloc countries?
    Mr. Nott: It is not for me to ensure that the Mini Metro is sold to Eastern European countries. That is the job of the management of British Leyland. I sincerely hope that we can get British cars into the Eastern bloc. We have a surplus on our trade with the Eastern bloc this year, and I do not wish to see that disappear. As the hon. Gentleman is a Liberal, I am sure that he is in favour of liberal trading policies, in the great tradition of his party.
    Mr. Hal Miller: Does my right hon. Friend accept that it is not a question of the total value of Soviet imports, but the price at which they enter Britain? It is a political price. The Soviet Union supplies 25 per cent. of all cars sold in Britain for less than £3,000. That is a damaging practice. Is my right hon. Friend aware that many people think that it is not an example of the fair, free and liberal trade to which he referred?
    Mr. Nott: I understand the complaint about Eastern European car imports. That complaint has been made especially by Sir Michael Edwardes. However, the share of the market taken by those cars has fallen fairly significantly in recent times. It is an indication that the consumer is more discriminating than some of us sometimes think. I do not think that there is any real competition for British Leyland from those cars. In any event, I hope that that is the case.
    Following is the information:
    Imports of cars from Eastern bloc countries—£,000–1975 12,312, 1976 14,309, 1977 23,168, 1978 32,258, 1979 47,896, Jan.-June 1980 13,583.

    Kenya
    Mr. Hooleyasked the Secretary of State for Trade how many trade missions will visit Kenya during 1980.
    Mr. Nott: The British Overseas Trade Board expects to provide financial support for a total of five trade missions to Kenya in 1980, and my hon. Friend the Minister for Trade has recently returned from a trade visit there.
    Mr. Hooley: Is the Secretary of State aware that that answer is welcome only as far as it goes? Is he also aware that Kenya, like Tanzania, Mozambique, Angola and other countries in that area, offers enormous opportunities for British trade, and will continue to do so during the next decade? Does he agree that it would be healthier to develop that trade than to be involved with the Republic of South Africa?
    Mr. Nott: We are doing all that we can to increase our trade with Kenya, and there is a small surplus on our trade. We must continue our efforts to expand our trade even further. The Kenyans have twice visited Britain to discuss bilateral trade negotiations since we came into government.

    Israel
    Mr. Greville Jannerasked the Secretary of State for Trade what is the current state of trade between Israel and the United Kingdom.
    Mr. Nott: The value of United Kingdom-Israel trade for the period January-August 1980 has fallen slightly from the equivalent period in 1979. Two-way trade for this period totalled £327·4 million, comprising British exports of £156·2 million and Israel exports of £171·2 million.
    Mr. Janner: Has not the time come when the Government should stop authenticating Arab boycott documents that are designed to interfere with free trade between two friendly democracies?
    Mr. Nott: I understand the hon. and learned Gentleman's question. I must have answered that question at least five or six times. He knows our policy towards authentication. I understand his concern
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    about the present arrangements. We are going as far as we can to satisfy him. I am conscious that we have not gone quite as far as he wishes. The matter is very much on my mind.

    Consumer Protection
    Mr. Ioan Evansasked the Secretary of State for Trade what further measures he intends to introduce to improve consumer protection.
    Mrs. Sally Oppenheim: The Competition Act is now on the statute book. The grant to citizens advice bureaux has been doubled. Orders and regulations have been introduced dealing, among other things, with upholstered furniture, dangerous novelties, advertisements and quotations, and petrol price display. I intend to make a number of further orders and regulations which will benefit consumers in due course. These will deal with the country of origin marking. which I hope to lay before the House by the end of next month, estate agents, consumer credit, consumer safety and VAT inclusive pricing.
    Mr. Evans: Does the right hon. Lady agree that the consumer has had a raw deal from this Government with the consumers' tax—VAT—increased from 8 per cent. to 15 per cent., high interest rates, the artificially high value of the pound and the fact that there have been 10,000 price increases in this year alone? Will she consider bringing forward legislation in the Queen's Speech to restore the consumer advice centres, because they are needed much more today than they ever were in the past?
    Mrs. Oppenheim: I find it very difficult to reconcile the hon. Gentleman's criticisms of this Government's record on consumer protection with his own party's policies—in so far as it has any policies—of calling for higher inflation through a measure of reflation and less choice for consumers through extreme protectionism, which represent the most blatant anti-consumer policies of any political party for many years.
    Mr. Anthony Grant: While welcoming my right hon. Friend's diligent activity in this area, will she hesitate a little before placing additional bureaucratic burdens on industry at the present time? Will she bear in mind that the best protection which the consumer can possibly

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    have is the ability to buy the best goods at the best prices, from whatever source in the world?
    Mrs. Oppenheim: In considering any consumer protection legislation, one must balance very carefully the benefits to consumers and the cost to industry and make sure that any new regulations that one introduces do not result in the costs outweighing the benefits to the consumer.
    Mr. Pavitt: Will the right hon. Lady have a look at the highway robbery that is now taking place as a result of increases in medicines that are not sold to the NHS? In some cases the price of non-proprietary drugs have risen two or three times in the last 18 months, and I have a seven page list which I can give the right hon. Lady if her Department does not have it.
    Mrs. Oppenheim: I know of the hon. Gentleman's interest in this matter, but it is one for my right hon. Friend the Secretary of State for Social Services.
    Mr. Adley: Is my right hon. Friend aware that matches are being imported from the Soviet Union indicating both the origin and the quantity, which satisfies Customs and Excise, but that subsequently labels are stuck over the top indicating that the product is made in Austria? Will she ensure that in her forthcoming legislation the country of origin is shown to the consumer as well as to Customs and Excise?
    Mrs. Oppenheim: That is the purpose of the origin marking orders which I propose to lay before the House but which do not include matches. It may well be that the practice to which my hon. Friend has referred is in breach of the Trade Descriptions Act.
    Mr. John Fraser: Does the right hon. Lady agree that one area where consumers still get ripped off is doorstep selling for cash? Will she now go ahead and legislate on doorstep selling and tell the EEC Commission what it can do with its directive?
    Mrs. Oppenheim: As I am sure the hon. Gentleman is aware, negotiations with the EEC on the doorstep selling directive have been extremely prolonged because of the difficulties that we have encountered in the way in which it cuts
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    across British law, which we feel is more effective. I am certainly keeping an eye on this whole area to see whether any malpractices arise which give need for further or new thought on the matter.

    Multi-fibre Arrangement
    Mr. Woolmerasked the Secretary of State for Trade what progress has been made in finalising the United Kingdom negotiating position in relation to the re-negotiation of the multi-fibre arrangement.
    Mr. Nott: The Government consider it essential for there to be an effective successor arrangement to the current MFA, and that the arrangement should be the best deal it is possible to obtain for the British textile industry—taking account of British interests as a whole. We are continuing our consultations with all interested parties on the detailed provisions of our negotiating position.
    Mr. Woolmer: Bearing in mind the devastation being suffered in textile communities and towns throughout the length and breadth of the country, does the Secretary of State acknowledge the deep anxiety felt in those communities about the current negotiations that are taking place? Can he confirm that the language which he has just used does not imply a weakening of resolve by the British Government to look after the interests of British workers and industry? Will he insist that it is not simply a question of an acceptable MFA but one which is at least as firm as the present arrangement?
    Mr. Nott: I understand the deep anxiety felt throughout the House about the current grave situation in the textile industry. There is certainly no weakening on the part of the British Government in their resolve in regard to MFA 3. I can assure the hon. Gentleman of that.
    Sir Frederick Burden: Does not my right hon. Friend agree that, while he must do his best to protect the British textile industry, one of the problems is that textiles are manufactured by countries which are undergoing development? This is one of the first products which many of those countries produce. Therefore, they are coming into competition in the textile world.
    Mr. Nott: My hon. Friend is right. That is the major problem in arriving at the kind of satisfactory MFA 3 to which the hon. Member for Batley and Morley (Mr. Woolmer) referred. The MFA is a contract, if I can describe it as such, between the poorer countries, the low-cost producers, and the developed world. The question at issue is whether we can manage to negotiate another contract of the same kind. There were discussions last week on this subject, but that is the key issue.
    Several Hon. Members rose—
    Mr. Speaker: Order. I propose to call one more hon. Member from either side before calling the Opposition Front Bench spokesman.
    Mr. Straw: As well as understanding the deep anxiety of the industry, does the Secretary of State understand that the industry—both management and unions—places a major part of the blame for its catastrophic decline at the door of the Government because of their complacent policies? When will the Government substitute positive action for sympathy in order to save the industry? Does the right hon. Gentleman propose to take any action to ensure that there is a Lancashire cotton, textile and allied industry worth saving before the MFA comes up for renegotiation?
    Mr. Nott: Of course the textile industry places the major part of the blame on the Government for its problems, just as the textile industry placed the major part of the blame on the Labour Government for its problems when the Labour Government were in office. I remind the hon. Gentleman that 150,000 people lost their jobs while the Labour Government were in office. Therefore, this problem is not new. Several hundred thousand people have left the textile industry in the past 30 years. Of course, I realise that the Government are being blamed for many things, and all Governments will so be blamed for transitional difficulties.
    Mr. Henderson: While praising my right hon. Friend's efforts in these negotiations, may I ask him whether he agrees that a root problem is the artificially low pricing policy on energy followed by the United States Government, which is affecting not only this industry but others, including paper? Can he confirm that he
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    and his right hon. Friends are seeking to do something about that?
    Mr. Nott: My hon. Friend is absolutely right. There is a major problem with the low feedstock prices in the United States. It is not just in fibres that this is causing difficulty. As my hon. Friend said, it is also causing problems in chemicals, plastics and a range of European industries. I am now in the process of considering our response to the United States proclamation that they would retaliate against other parts of our textile industry unless we raise our quotas by the end of the year. These matters are now under consideration, but frankly I do not think that we shall make very much progress in discussions in the United States—if we decide through the Commission to discuss these matters with the United States again—until the American election is behind us.
    Mr. John Smith: Why is it that when he is asked about whether the MFA will be renewed, the Secretary of State always uses the phrase that the Government are committed to a successor to the MFA? Is there any reason why he uses that particular form of words? Secondly, does he agree that one of the Government's objectives ought to be a recession clause in the MFA, whereby the capacity of this country to absorb imports was related to the strength of domestic purchasing power?
    Mr. Nott: As I said in the last debate which took place on this matter on 30 July, all the trading arrangements that at present apply to textiles were negotiated by the right hon. Gentleman himself and his predecessor. They were not negotiated by me but by the then Labour Government. I am working within the trade framework which I inherited from the Labour Government.
    I could use some other word rather than "successor". I cannot give any guarantee that there will be an MFA 3—[HON. MEMBERS: "Oh"]—simply because I cannot guarantee that the low-cost producers will put their signatures to a further agreement, and that is at the root of the whole MFA. The MFA does not exist unless it is a two-way deal. That is why I talk of a successor to MFA 2. Of course I realise that the matter is worrying. About 40 countries are involved in the MFA, and we need their agreement

    23
    for a successor. I know that the right hon. Gentleman appreciates that. With regard to a recession clause, I cannot be blamed for such a clause not being included in the MFA. If that is the fault of anyone, it is the fault of the previous Labour Government.

  OVERSEAS DEVELOPMENT

    Expenditure
    Mr. Ioan Evansasked the Lord Privy Seal what representations have been received to increase expenditure on overseas development in developing countries.
    The Minister for Overseas Development (Mr. Neil Marten): The Government have received a number of representations arguing for such an increase.
    Mr. Evans: Does not the Minister realise that there has been disappointment on both sides of the House at the Government's response to the Brandt Commission report? Will a more favourable response be included in the Queen's Speech?
    With regard to Government expenditure, does not the Minister realise that the cause of world peace would be better served by dealing with the cause of world poverty than by increased expenditure in the arms race?
    Mr. Marten: Regarding the hon. Gentleman's second point, that view has been expressed. With regard to his first point, I suggest that he awaits the Queen's Speech.
    Mr. Budgen: Will the Minister confirm to the House that aid to overseas countries is now running at almost the same level as our contribution to the EEC? Does he not agree that the Government's response to the Brandt Commission report should be firm and negative and that we should indicate clearly that the time has come to cut these contributions?
    Mr. Marten: The Government's response to the Brandt report has been justified as correct.
    Mr. McElhoneThe Minister must surely be aware that his answer is totally unacceptable to Labour Members. Having regard to the 14 per cent. cut that he announced earlier this year, will he assure
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    the House that he will not accept further cuts in the aid programme?
    Mr. Marten: I am aware of the first point raised by the hon. Gentleman, and I cannot comment on his second point at this stage.
    Mr. Dykes: Would we not show our enthusiasm for the Brandt exercise if we were to take a full and active part in the forthcoming world summit on aid to the underdeveloped countries?
    Mr. Marten: We shall play our full part in the forthcoming summit on the Brandt report.
    Mr. Foulkes: Will the Minister either confirm, or preferably deny, the weekend reports that overseas aid is being considered as one of the targets for he further round of Government expenditure cuts? If this is so, will the Minister give an assurance that he will resign his position?
    Mr. Marten: There is not much future in commenting on highly speculative press reports.

    Zimbabwe
    Mr. Spearingasked the Lord Privy Seal if he will make a statement concerning developments in aid to Zimbabwe.
    Mr. Neil Marten: Britain is providing the £75 million already announced, and implementation of programmes within this is under way. In addition, we are spending £6 million this year in training Zimbabweans already on courses before independence, and we have forgone payment of £22 million of official debt.
    Initial pledges by other donors and pledges by the international community amount to about US $400 million. Longer-term assistance, and membership of the European Community and the World Bank, should increase this sum substantially. We are continuing to encourage generous aid from the international community.
    Mr. Spearing: Will the Minister tell the House what approximate proportion of the £75 million is being spent in kind on assisting Government services and agencies, and what is being spent on new and additional projects that might not otherwise have taken place?
    Mr. Marten: We are discussing with the Zimbabwean Government the quantity of aid for land resettlement. The discussions have not yet been completed with the Zimbabwean Government. When agreement has been reached I can give an answer on the balance that will be available.
    Mr. David Steel: If, in the Minister's words we are encouraging generous aid from other donors, should we not begin by setting a better example ourselves? Does not the Minister agree that the aid quotas for Zimbabwe fall far short of the sums that were discussed prior to independence?
    Mr. Marten: Yes, but the previous Anglo-American proposals were a different ball game. There was no international reaction to the figure that was proposed then, which, I think, was plucked out of the air. Our pledge of £75 million is generous, and it will be one of our largest aid programmes in Africa.
    Mr. Paul Dean: As one who visited Zimbabwe during the Summer Recess—as, I believe, did my hon. Friend the Minister—may I ask whether he recognises the political significance of the British aid programme in assisting that country to resettlement? In view of that, will the Government consider the possibility of making the £75 million available over an 18-month period, rather than over a three-year period?
    Mr. Marten: No, we have budgeted for the £75 million to be spent over three years, and that has been accepted by the Zimbabwean Government.

    World Food Programme (Canned Fish Processing)
    Mr. McQuarrieasked the Lord Privy Seal what further progress has been made in gaining new orders from the World food programme for the canned fish processing industry.
    Mr. Neil Marten: Since May 1980, 10 further orders for canned fish, totalling 536·2 tonnes, have been placed in response to requests from the world food programme.
    Mr. McQuarrie: The Minister's reply is totally unsatisfactory because there is a serious situation in the fish processing industry in the United Kingdom. Is he
    26
    aware that unless further aid is granted from the world food programme—rather than cash—in order to produce positive canned fish orders the industry in Scotland will go out of fexistence?
    Mr. Marten: I much admire the persistence of my hon. Friend on the question of canned fish. However, the problem is that there is a limited demand for canned fish in the developing countries, and other countries supply it. We do our best to help my hon. Friend and the industry in his constituency.
    Mr. Jessel: Will my hon. Friend say whether the world food programme includes the canning of kryll, which is a small crustacean now in glut in certain Arctic and Antarctic waters, having been the diet of whales which are now reduced in numbers?
    Mr. Marten: I have never come across kryll in dealing with the world food programme, but I shall look into the matter and write to my hon. Friend about it.
    Mr. Pavitt: Will the Minister say whether canned fish is included in the food programme for Zambia? Since the Minister's discussions with President Kaunda a few weeks ago, many events in that country rest on the success or failure of the food programme. Is there anything more that the Minister can do in this urgent situation?
    Mr. Marten: We shall keep a close eye on the situation and do what we can to help.

    Overseas Students
    Mr. Hooleyasked the Lord Privy Seal what is now the estimated sum which his Department will expend on support for overseas students in the United Kingdom in the current financial year; and approximately how many students will benefit.
    Mr. Neil Marten: £41 million, from which about 12,000 students and trainees will have benefited during this period.
    Mr. Hooley: Is the Minister aware that I have evidence from the University of Sheffield that the savage increase in overseas students' fees has had a damaging impact on the intake of overseas students? Does he not agree that if this

    27
    phenomenon is widespread he has a duty to bring compensatory funds to bear to support overseas students, particularly from the poorer countries, whose chances of higher education have been virtually eliminated by the Government's policy to date?
    Mr. Marten: I do not think so, but if the hon. Gentleman sends me the figures that he mentioned I shall look at them.

    Aid Budget
    Mr. Deakinsasked the Lord Privy Seal whether further cuts in the aid budget will need to be made in the current year.
    Mr. Neil Marten: No, Sir. But all public expenditure plans are constantly under review.
    Mr. Deakins: Is the Minister saying that his Department's forecast expenditure for the coming year is not as safe as it should be? If so, is that not an appalling commentary on the Government's attitude to overseas aid expenditure generally?
    Mr. Marten: The answer to the first part is "No". There is therefore no answer to the second part.
    Mr. Cyril D. Townsend: Will my hon. Friend confirm that the last time round overseas aid suffered more than its fair share of cuts, and that we are not just talking about charity but about looking after our future trading partners?
    Mr. Marten: There certainly were cuts the last time round. I hope that there will be a satisfactory solution to the Government's current examination of the future programme.
    Mr. Greville Janner: During the recess did the Minister visit India or any other country suffering grave hardship, hunger and poverty, to refresh his memory of what the programme is all about? If so, does he agree that both compassion and enlightened self-interest require an increase, not a decrease, in the programme?
    Mr. Marten: I hope that the programme will be increased when we have our economy right. I have visited Zimbabwe and Zambia during the recess, and I visited India earlier in the year.

HOUSING (EXPENDITURE)
Mr. Winnick Mr. Winnick (by private notice) asked the Secretary of State for the Environment whether he will make a statement on the Government's decision to halt all further local authority expenditure on housing.
The Secretary of State for the Environment (Mr. Michael Heseltine): The housing investment programme for local authority housing this year is £2,200 million. The latest returns of local authority expenditure between April and June, the more recent HIP submissions for 1981–82, and discussions about them with individual authorities suggest that there could be an overspend of up to £180 million in 1980–81 above that figure. The Government attach fundamental importance to ensuring that cash limits are observed.
As soon as I knew of the risk, therefore, I considered it essential to find out the precise position and to ask local authorities not to enter into further commitments until we knew the position. I have therefore sent them a circular asking them to let me have returns of their expected expenditure in 1980–81 on the basis of existing commitments, together with their estimated expenditure on statutory grants in the year. When I have these figures I shall be able to see what action is needed in the longer term, and I shall make a further announcement.
Meanwhile, however, I have asked authorities not to enter into any further new housing commitments except those which follow from a statutory obligation. and I have withdrawn related borrowing approval except that which is needed to cover payments resulting from existing commitments.
Mr. Winnick: That is a disgraceful decision. Is the Secretary of State aware that his decision will be a bitter blow to the housing hopes of so many people desperately waiting in the housing queue, and that their misery will continue as a result of his statement? Is he aware of the disastrous effect of the decision on the building industry and employment?
Mr. Heseltine: The hon. Member will be fully aware that my action is to prevent an overspend on an announced budget. It is not a reduction in the existing

29
programme that was announced to the House. It therefore has to be taken in the overall context. It is unthinkable that the Government could countenance a general attitude that allowed cash limits to be exceeded by about £180 million with no attempt to do anything about it. The hon. Gentleman has no concept of the effect of attitudes of this sort on the private sector, and he should find out what is happening as a result of the attitude that lay behind so many of the previous Government's policies in this sphere.
Mr. Adley: Is my right hon. Friend aware that the increasing burden of the rates is becoming well-nigh intolerable in many places, and that for industry particularly the rates burden is every bit as great a problem as the high rate of sterling or any other factor in the economy? Is he aware that in spite of the difficulties he will have widespread support if he is somehow able to control local authority expenditure from going over and above the limits announced by the Government at the beginning of the year?
Mr. Heseltine: I am most grateful to my hon. Friend for supporting that view. No organisation can countenance expenditure excesses of £180 million and do nothing about them.
Mr. Frank Allaun: Why has the Secretary of State gone back on his public and categorical rejection of such a moratorium only last month? How long will it last? If it is intended to last only a week or two it is unnecessary. Or is a much longer stay intended? That was not done even in the hungry 'thirties.
Mr. Heseltine: When I announced the Government's views of the overspending of current expenditure by local authorities I believed that we could avoid the moratorium on capital expenditure that we are now considering. Subsequent to that decision, new information has become available indicating that there is a potential excess expenditure on capital account on one of the housing cash limits. That was why I was forced reluctantly to introduce the circular that the House is now considering.
The question that the hon. Gentleman asks about timing is of crucial concern. I have asked the local authorities to let
30
me have their revised estimates by the end of this week.
Mr. Allaun: They might keep the right hon. Gentleman waiting.
Mr. Heseltine: I cannot wait. If I had announced to authorities my intention to withhold, in a week or so time large numbers of contracts might have been entered into which would have aggravated the situation even further. The consequence of waiting would have been to enable those authorities most likely to overspend to consolidate the overspending at the expense of the underspending authorities.
Mr. Alton: What economic sense does it make to throw more people into the dole queue with all the economic and social implications of such an action? Is the right hon. Gentleman aware of the unemployment in the building industry? Is he aware of the indignity suffered by over 1 million people in the United Kingdom who have homes without inside toilets or bathrooms? What does he intend to do about that?
Mr. Heseltine: What economic sense does it make to pile up capital debt, the interest on which will be paid for generations to come, in order to sustain public expenditure which the nation cannot afford?
Several Hon. Members rose—
Mr. Speaker: Order. This is an extension of Question Time, but I will call two more hon. Members from either side before I call the right hon. Gentleman on the Opposition Front Bench.
Mr. Alan Clark: Does my right hon. Friend accept that there is a certain latent injustice in applying this moratorium simultaneously to underspenders and overspenders? Is he aware that the city of Plymouth, which has consistently underspent, has had to halt a number of schemes, including one involving £200,000 of underspending which had been put to one side for housing improvements and has had to cancel the granting of mortgages to young people in the city? Is he aware that the sooner the moratorium can be lifted or, at any rate, made more selective, the better pleased we shall be in Plymouth?
Mr. Heseltine: I am most grateful to my hon. Friend for his comments. He is right, but the longer I allowed the situation to continue the worse might have become the gap between the overspenders and the underspenders. The legislation now being considered in another place will enable me to distinguish much more between those who overspend and those who underspend, both on capital and current accounts.
Mr. Dubs: Is the Secretary of State aware that his moratorium has also caused great difficulties for individuals who are seeking mortgages from local authorities for private house purchase? Can he reconcile that with his intention to make house buying easier?
Mr. Heseltine: The building societies now have substantial sums available for house purchase. The local government Bill that we hope shortly to be considering will enable local authorities to guarantee private sector finance in this form, so there will be considerable relief in that way.
Mr. Kaufman: Why does the right hon. Gentleman mislead the House when he refers to not having brought about a reduction in the existing programme? Is it not a fact that his statement on 21 February reduced the HIP allocation to local authorities by one-third over the previous year, bringing it down to the lowest level ever, and that he has now cut off even that miserable trickle of funds?
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Secondly, the right hon. Gentleman rebuked my hon. Friend the Member for Battersea, South (Mr. Dubs) by asking him to consider the position of the private sector. Is he aware that last Friday the Daily Telegraph accused him, in his circular, of hitting the wrong target with a vengeance, because the private enterprise construction industry will feel the chill?
Is the right hon. Gentleman further aware that the director-general of the National Federation of Building Trades Employers said that this was a further body blow to the building industry, which is accelerating into decline and has in prospect the worst recession since the war? The right hon. Gentleman is a disaster to housing and is bringing about a disaster to the housing industry and he should resign.
Mr. Heseltine: I am sure that in all the vagaries of the policies on the Opposition Benches the right hon. Gentleman's support for the Daily Telegraph will not go unnoticed. As the right hon. Gentleman knows, I have announced, and the public expenditure tables show clearly, the level of provision for housing this year. Therefore, the action that I took last week was designed not to reduce that programme but to ensure that it was not exceeded. That is what I did, and I believe that it was necessary. Indeed, the right hon. Member for Leeds, East (Mr. Healey), the former Chancellor of the Exchequer, found it necessary in 1976 to take similar action, and he was supported by the right hon. Member for Manchester, Ardwick (Mr. Kaufman).

NORTHERN IRELAND (PRISONS)
Mr. J. Enoch Powell Mr. J. Enoch Powell (by private notice) asked the Secretary of State for Northern Ireland if he will make a statement on the recent changes in prison rules in Northern Ireland and in the situation at Her Majesty's prison Maze.
The Minister of State, Northern Ireland Office (Mr. Michael Alison): My right hon. Friend the Secretary of State, who for reasons which the House will understand is in Belfast today, announced on 23 October that, following a detailed study of the requirement to wear prison uniform in Northern Ireland, the Government have decided to abolish this uniform as such and to substitute civilian-type clothing. No amendment of prison rules is involved. The change will apply to all male prisoners. It will not affect the privilege accorded to those prisoners who obey the prison rules, of wearing their own clothes at weekends, and for recreation and visits. The new clothing will be introduced as quickly as the administrative arrangements can be made.
This change arises from the Government's determination that their attitude to prisoners' living and working conditions should be guided at all times by a humane and enlightened approach, and they will continue to keep the prison regime under review with this principle in mind.
Several prisoners at Maze prison claim to have started a hunger strike today in support of their demand for political status. The Government have made it amply plain on numerous occasions—and I repeat it—that they cannot and will not concede this issue of principle.
The situation at Maze prison is calm. It is too early to say whether the prisoners will carry out their threat of a prolonged hunger strike. The Government would still hope that they would heed the advice of Churchmen and many others not to do so. But, if they do, they must understand that the Government cannot give way to the view that those found guilty of some of the most vicious crimes imaginable are less blameworthy than others because of a political motivation for their crimes.
Mr. Powell: Is the Minister of State aware that on a matter as grave as this,
34
whatever the circumstances, the Secretary of State personally should be at the service of the House?
Is the hon. Gentleman aware that this pretence that the change was made as a result of reconsidering prison conditions is transparent and will deceive no one. that the attempt to buy off blackmail not only encourages the blackmailers but destroys the credit and sincerity of the Government, and that so it will be in this case?
Mr. Alison: I must ask the right hon. Gentleman to accept from me that the question whether the Secretary of State should be here must turn on his judgment of the situation in a critical area of the United Kingdom in which security and other matters must have preeminence.
I entirely repudiate the allegation that we are giving in to blackmail. The question of a development or evolution in the prison clothing regime in the Province has been under discussion for some months now. As the right hon. Gentleman will know, there have in the past been evolutions in the treatment of prisoners in Northern Ireland of no less significance than the present one. There is no doubt that we have brought forward to coincide with the threat of a hunger strike, possibly ending in death, consideration of this matter, which had started much earlier. There is no question but that the attempt to save the face of a few crazy hunger strikers is a cheap price to pay if it will save lives all round.
Mr. Merlyn Rees: The House must be absolutely clear on one point. I understood what the Minister was saying—that special category status, when it was introduced five or more years ago, was a mistake and that it was right to end it and that for anyone who murders or kills anywhere in the United Kingdom there is only one treatment, and that is to be treated as a criminal sentenced by a court of law.
One point arises out of what the Minister said. He said that it is not special category status, but I put it to him that if in one part of the United Kingdom it is right to treat sentenced prisoners in such a way that they can wear their own clothes, it will be seen to be special

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unless that treatment can be accorded to sentenced prisoners this side of the Irish Sea.
Mr. Alison: I am grateful to the right hon. Gentleman for underlining the point that I made in my statement—namely, that there can be no basis for differentiating between crimes on the basis of motivation. There is no such thing as a political crime in Northern Ireland.
As regards prison clothing, I hope that the right hon. Gentleman will recall that since 1976 in a number of different directions—for example, 50 per cent, remission and the more liberal regime in the Province of wearing own clothes at different times for recreation and visits—there has been an extended differentiation in Northern Ireland compared with the rest of the United Kingdom, due largely to the exceptional numbers of prisoners, and long-term prisoners, in the Province.
Rev. Ian Paisley: Is the hon. Gentleman aware of the widespread outrage and deep anger among the majority of people in Northern Ireland at this announcement? Does he realise that it is an insult to the intelligence of the Ulster people to say that this package is the result of prison reforms when everybody in Northern Ireland knows that it is a shoddy deal to buy off the Irish Republican Army in its threat of this hunger strike? Has he considered the feelings of the relatives of the prison officers who have been done to death because they carried out the Government's wishes in the Maze prison? Will he tell the House about the other concessions that he mentioned to me as being on offer, through the Cardinal, to the IRA prisoners—concessions regarding extra visits, parcels, recreation and educational facilities?
Mr. Alison: The hon. Gentleman will have to remind me about the other concessions that I mentioned to him, because I have no recollection of them at all. If he cares to refresh my memory I shall be only too glad to discuss them with him.
Rev. Ian Paisley: I shall be glad to refresh the hon. Gentleman's memory.
Mr. Alison: The hon. Gentleman is over-stressing the significance of this latest proposal in the evolution of the prison
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regime in the Province in the context in which he has placed it. It is certainly far less significant than the decision, some years ago, to offer 50 per cent. remission to prisoners in Northern Ireland. In my view, it is certainly far less significant than the development of the use of own clothing for recreation and other periods of prisoners' own time, which is unique to the Province. It is a good deal less significant than the offer that we made of the availability of physical training kit for exercise and of special PT facilities for extra exercise that came forward in March and late summer this year.
There was no fuss about that. This is part of the evolution of humanising a regime in which there are more prisoners per head of population in the Province than in any other part of the United Kingdom, and in which there are more prisoners serving longer sentences. If it had had the effect of letting hunger strikers off the hook and avoiding further deaths, it would have been irresponsible not to have brought forward the development at this time. It is in no sense a concession or a giving in to blackmail. We are standing firm on principle.
Mr. Beith: Will the Minister confirm that there has been no change in the fairly recent policy that if a prisoner in full possession of his faculties decides to go on hunger strike it is his decision and no attempt is made to prevent him ending his own life by that means?
Mr. Alison: I can confirm that that is the position.
Mr. Speaker: I propose to call one more hon. Member from each side of the House.
Mr. Stanbrook: If this is not the disgraceful surrender to the IRA that most people think it is, when will the privilege of wearing civilian clothing be extended to the rest of the United Kingdom?
Mr. Alison: It is clear that it is not the sort of concession that the IRA or the prisoners were looking for, as my hon. Friend suggests. The latest information that I have is that the hunger strike is going on, although we have no firm evidence that it has started. It is in no sense a concession to the IRA. Indeed, it is not a concession in any sense. I repeat for the benefit of my hon. Friend that the hunger strikers are striking on

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the ground that they are claiming the right to political status. We decline to concede that principle in any shape or form. Civilian-type clothing from within the prison system will become available in a matter of months. Much depends on the availability of administrative facilities and on the extent to which prison workers themselves can provide the clothing where necessary. It will not be less than a matter of months.
Mr. Kilroy-Silk: Is the Minister aware that his reply to the hon. Member for Orpington (Mr. Stanbrook) is disingenuous? If the decision, which I welcome, has been taken on the ground of humanising prison conditions in Northern Ireland and the Government have not succumbed to blackmail, when will the same conditions be given to prisoners in other parts of the United Kingdom?
Mr. Alison: That is a different question, and one that I would not be competent to answer.

PRISON OFFICERS (DISPUTE)
The Secretary of State for the Home Department (Mr. William Whitelaw): With permission, Mr. Speaker, I shall make a statement about the current dispute in prisons in England and Wales.
I should like to emphasise that this is not a dispute about pay. It arises from a claim by the Prison Officers' Association for two allowances for meal breaks. The May committee was set up by the right hon. Member for Leeds, South (Mr. Rees) to consider, amongst other things, the whole question of allowances for meal breaks. Its recommendations on pay and allowances were immediately accepted and implemented by the Government. This was, by any standards, fair and generous treatment for the prison service. A number of claims, including this present one, were examined but not supported by the May committee. Having found the money for what May did recommend, the Government cannot now accept and finance further claims.
The Prison Officers' Association has asked for arbitration. As the Association itself recognises, the matter lies outside the terms of the Civil Service arbitration agreement. Nor could the Government agree to put to arbitration an issue which was considered by the May Committee last year.
As I said in my statement to the House on 31 October last year, this country has been fortunate in the men and women it has secured to run its prison system. Their duty is to protect the public, to serve the courts and to care for the inmates in their charge. This duty is arduous, difficult and sometimes dangerous. I therefore regret all the more the action which the Prison Officers' Association has chosen to take in pursuit of its claim. This has included a refusal to allow contractors not only to work in prisons but also to undertake certain other duties which are necessary to maintain conditions for prisoners, and to provide the facilities to which they are entitled.
Even more seriously, prison officers at many establishments have refused to receive prisoners remanded or sentenced by the courts. This action amounts to a deliberate and unacceptable disruption of the criminal justice system. As a result, this morning about 3,500 prisoners who

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would otherwise be in prisons are now being held in police cells, many of which are unsuitable for this purpose. The police have coped magnificently with the additional demands which have been made on them, but the number of people in their custody is approaching the limit of the available accommodation. The police are also being diverted from their primary tasks. The inevitable result of this is to place the public at risk.
The Government must do all that they can to fulfil their responsibility to protect the public and ensure the functioning of the criminal justice system. The House will be aware that, following consultation with my noble and learned Friend the Lord Chancellor and the Lord Chief Justice, I arranged for a circular to be issued to magistrates' courts last Tuesday seeking their understanding of the problems that we face.
We need to do more than that, however. Measures will be taken to provide additional accommodation with the help of the Army. I am now arranging for the new high security prison, which is nearing completion, at Frankland near Durham to be brought immediately into use to provide emergency accommodation to relieve the pressure on police cells. It will have a governor, assistant governors and administrative and specialist staff from the prison service and a police presence to assist with security; but otherwise it will be manned by Service men. We shall use military camps as necessary.
For these and other purposes I shall need to ask the House to agree to immediate emergency measures to relieve the criminal justice system of some of the burdens placed on it by the prison officers' actions. I intend to present a Bill tomorrow. For the convenience of right hon. and hon. Members, I shall be arranging for typescript copies of the draft Bill to be made available later this evening.
Mr. Kilroy-Silk: Why was Parliament not recalled?
Mr. Whitelaw: The measures that I seek will include provisions to cover the approval of places other than prisons for the detention of prisoners. I shall seek provisions to cover the position of those who care for prisoners in these circumstances. Other provisions will be de-
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signed to provide relief for the police in the very difficult circumstances that they face. In particular, I shall propose that the requirement that remand prisoners be produced regularly before the courts shall temporarily be suspended.
I do not, however, propose to alter the normal requirement for the courts periodically to review remands in custody. I shall seek powers to order the temporary release on my authority, if it is absolutely necessary to do so, of selected prisoners who have been remanded in custody or committed in custody for trial or sentence. This is a power I would use, with every feasible safeguard, only to ensure that custodial places were available, in police cells and elsewhere, for dangerous offenders. I shall also need power, for the time being, to order the early release of sentenced prisoners nearing the end of their sentences. I shall ask for a power to restrict magistrates' courts, if necessary, in committing people to prison for such matters as non-payment of fines or rates.
All these provisions will be temporary and will be allowed to lapse when the present dispute is resolved. In addition, the measures will include a permanent provision putting it beyond doubt that it is lawful for the police temporarily to hold people committed to prison custody when it is for any reason not practicable to secure their admission to prison.
I am satisfied that these powers, regrettable as they are, are necessary in the situation which has been caused by the prison officers' industrial action, which goes well beyond the limits of what is acceptable. But there is an alternative. I cannot look back; I want to make it very clear that I am determined to look forward. That is why discussions are far advanced between the Home Office and the Prison Officers' Association on a new duty system which would eliminate the anomalies which gave rise to this dispute. The early introduction of such a system would far better serve the interests of prison officers than the dangerous course on which they are now embarked.
This industrial action by prison officers is all the more regrettable because it comes at a time when following the May committee, so much constructive work

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is going on to improve the prison service for the future.
In view of all this, I invited the Prison Officers' Association, when I met its representatives last week, to reconsider its action. I still hope that it will not persist in it while these negotiations continue. Of course, I remain ready to see the Prison Officers' Association at any time.
Mr. Merlyn Rees: The Home Secretary's statement reflects the deteriorating situation in our prisons. Sentenced and remand prisoners are not being allowed into gaols. We have been told that there are 3,500 prisoners in police cells. Many of those cells are unsatisfactory. The situation will only become worse in the days to come. It is vital that action should be taken. Prisoners are being locked up for 23 hours a day. No educational training facilities are available in many prisons. It is right to act. The Home Secretary will be aware that the position he faces is one that the previous Labour Government faced in the latter part of 1978.
The plain fact is that it is not the governors who run many prisons but the local branch of the Prison Officers' Association. Something must be done. The May committee was set up for that reason. Its terms of reference were drawn up to deal with this situation. I accept that a number of claims, including the present claim, were examined but not supported by the May committee. The Opposition cannot ignore that fact. The facts have not changed just because the Labour Party is in opposition.
The Home Secretary is aware of the basic problems. I notice that agreement has been reached in the discussions on the new duty system. It would be a good idea to publish the terms of that agreement. As regards the Bill, the Government recommend profound changes, such as the use of the Army. We need to know how the Army is to be used and what its role will be. Will the new legislation conflict with what used to be called the Army Act? I know that the Home Secretary is aware of all the problems of Executive bail. Executive group releases are proposed along with changes in the accountability to the courts of remand prisoners. Why not go less far than that in the long run. Why not use the present situation to make long-term changes
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in penal reform? Why not use this occasion to introduce 50 per cent. remission? Why not use this occasion to secure that reduced sentences and non-custodial sentences are given? If such action is good enough in the short term, it must, to a lesser degree, be good enough in the long term. We should ensure that these events are used to bring about prison reform. Such action would result in something for which the Prison Officers' Association has asked for a long time. The need for overtime would be reduced. The Prison Officers' Association constantly says that its members have to work too many hours in overtime. We must consider such steps during the next few days.
We shall examine the Bill and do what we can to help. This Bill is important.
Hon. Members: Why?
Mr. Helfer: My right hon. Friend is speaking for himself.
Mr. Rees: I am speaking on behalf of those who face up to the reality of the position in our prisons. Do we need to get this Bill through in one day? There are four or five important clauses. Is it, therefore, absolutely necessary to have this legislation by Wednesday? We must consider the legislation, but we on this side of the House cannot ignore the reality.
Mr. Whitelaw: I am grateful to the right hon. Member for Leeds, South (Mr. Rees). He has set out the position that existed when he appointed the May committee. Most of those who consider these issues will be grateful to him, because he has made it clear that he stands by what he said when he appointed the May committee. Without such assurances, the future of committees considering any subject, would be extremely hazardous. I shall consider publishing the new duty system as soon as that is possible.
We can discuss the Army's role during the passage of the Bill. I understand that the Bill will not conflict with the Army Act. The Army will be responsible for manning the prisons, but prison department staff, governors and assistant governors will be there. The police will provide a security role outside. In the short term, the various measures that I have proposed are necessary. They are the only measures that we could take

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quickly to relieve a dangerous and very worrying situation in our prison cells.
I agree with the longer-term proposals that the right hon. Gentleman put forward. Following the May committee's report I have sought to achieve exactly that. No one can pretend that the Home Office and I have not made many considerable strides towards improving the conditions in our prisons since the publication of the May report. That is a fact of life, and it makes it all the more regrettable that such action should interrupt the progress that we were making.
Naturally, I very much regret having to ask the House to consider the Bill quickly. However, I must make the position clear to those who may have doubts. The situation in prison cells is extremely unsatisfactory for everyone in them. It is also extremely unsatisfactory for the police. In addition, it is dangerous because, in certain circumstances, we could run out of places this week in which to put those who have been convicted or placed on remand by the courts. I cannot believe that the House wishes to put any Executive in that position, or that it would wish there to be no places in which to put those sent from the courts. If the Bill is not enacted quickly, that will be the result. I very much hope that the House will agree to enact it quickly.
Mr. Edward Gardner: Is my right hon. Friend aware that the measures he seeks to introduce will be widely seen as regrettable but inevitable, if he is to prevent the actions of prison officers from turning a crisis—due primarily to overcrowding—into what could become a catastrophe as a result of inadequate security? Will he urgently consider removing many of the 3,500 prisoners in police custody to available accommodation in open prisons, in those cases where the offences concerned can be covered by locally acceptable agreements as regards categories?
Mr. Whitelaw: I shall consider what my hon. and learned Friend said, and I am grateful to him for making those points. However, industrial action prevents there being any intake of prisoners into open prisons or other establishments. However, I shall look into that matter and I hope that the Prison Officers' Association will also consider it.
Mr. Kilroy-Silk: Does the Home Secretary accept that we are in this position because of the continuous neglect by the Home Secretary and his predecessors of industrial relations and overcrowding in prison cells? It is an extraordinary sign of the Home Secretary's failure that he should have to come to the House today to announce legislation and that that legislation will be along the very lines that many hon. Members have repeatedly asked for and warned about for the past few years. Is it not unacceptable that Home Secretaries seem to act only under pressure and not on the merits of the case? Does the Home Secretary accept that prison officers feel they have a legitimate grievance, and that the May committee did not arbitrate on this issue? Ultimately, the Home Secretary must work with the prison service. If the right hon. Gentleman does not wish to damage seriously its morale and cause a catastrophe in the prison service he should not introduce the Bill tomorrow. If he believes in the merits of his case, he can announce now that he will accept the results of independent arbitration. That is the way to deal with this issue in a civilised manner, rather than using a bludgeon which will serve only to exacerbate the situation.
Mr. Whitelaw: On the first point, I must tell the hon. Member that of course I accept that there is overcrowding. I have discussed the matter very reasonably with him in the past. But I must make it perfectly clear that the pursuit of this claim and the industrial action being taken would have happened, in my judgment, whether we had done anything about overcrowding or not. Whatever steps had been taken, this would have happened. This has been going on ever since the May committee reported, and nothing that could have been done would have changed that situation. I much regret it but I must emphasise that from my own contact with the Prison Officers' Associaion I know that that is a fact of life.
I turn to what the hon. Member says about arbitration. I must point out that, as the right hon. Member for Leeds, South (Mr. Rees) said, the May committee examined all these claims and it recommended that some of them be accepted—[Interruption.] Hon. Gentlemen must listen to me for a second. The May committee recommended various claims for

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payment. The Government met all the claims whose acceptance were recommended by the May committee. Surely it must be agreed that it was fair and generous to do that immediately. The May committee examined the other claims and did not recommend their acceptance. I cannot see how it makes sense to re-open those claims now when the Government did everything that was recommended by an independent committee set up by a Labour Home Secretary.
Mrs. Knight: May I assure my right hon. Friend that he has a good deal of sympathy and support from his colleagues in the House in the difficult situation that he faces? However, will he reconsider one of the points that he raised—that he and the House will take upon themselves the power to release prisoners before the sentences which the court has imposed upon them have been completed? Does he not agree that this is an extremely dangerous action to take and could be used as a precedent in a way that would worry us all?
Mr. Whitelaw: Of course there is always that danger. However, I am more worried about the Executive use of bail which I will use only in very exceptional circumstances. I put it forward only because it impinges directly on the position of police cells. I would use it only with the most stringent safeguards and I would ensure that the action was temporary.
On the proposal which my hon. Friend mentioned, the action would be taken towards the end of a sentence—I would find that easier. Equally, I believe that this should be a temporary procedure and I would have it in mind to write very plainly into the bill that all these measures would lapse, unless renewed by affirmative resolution of this House, after a very limited period.
Mr. Mark Hughes: Under what powers have the Army already moved in to Frank-land prison, in my constituency? What discussions, if any, have his Department had with the local authority, and what courteous communication, if any, has he had with the Member of Parliament for that constituency? What agreement or facility has he given to my constituents, who are now told that their security
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lies in the hands of military persons with bullets up the spouts of their rifles? Who commands them, and will they be empowered to pursue escaping prisoners? What defence would my constituents have against the absolute power of the Home Secretary?
Mr. Whitelaw: I must make it absolutely clear that the security of the lion. Member's constituents would be a matter for the police and not for the Army. Therefore, the other points that he makes do not arise. The police are responsible for the security of the hon. Member's constituents because they are responsible for keeping the whole prison system secure.
There have been consultations between my officials and the chief constable of the area concerned. I believe that that was proper. I apologise for the fact that I have not had consultations with the hon. Member himself. It is entirely my fault, I regret it and I apologise here and now. I am sure that the hon. Member will appreciate that I have had many other matters with which I have had to deal.
On the question of right, this was a prison in the hands of the Property Services Agency and which the Home Office had not yet taken over. However, we shall take it over at an early date and it is our responsibility to do so.
Mr. Teddy Taylor: Is the Home Secretary aware that he is proposing very wide-ranging and draconian powers which will undoubtedly cause concern as they are implemented? Will he take all possible steps to explain to the public that the considerations are a great deal wider than a minor dispute about meal breaks? Will he tell the House, and everyone involved, precisely the procedures for the consideration of claims on wages and working conditions between annual awards? Finally, will my right hon. Friend give us an indication of the response of the prison officers to his proposals?
Mr. Whitelaw: Of course I appreciate that these are wide-ranging powers. I thought that I had made clear, and I will continue to seek to make clear, that the particular dispute is not about pay. It is about two claims for meal break allowances, which were examined by the

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May committee and whose acceptance was not recommended. That is the fact. The arrangements for dealing with pay are clearly set out through the Civil Service arrangements, with the particular formula for the prison service, and they will be proceeded with in the future.
I do not wish to be drawn into wider subjects because I am most anxious to seek to work with the prison officers. I have set out my position very plainly; I have seen them and discussed the matter with them. I have made clear how keen I am to have a new duty system and to cooperate in seeking to bring about an improvement in the prison service which the hon. Member for Ormskirk (Mr. Kilroy-Silk) and others have talked about so busily. That is what I want to do. It is only fair to my new prison department, which has been set up in accordance with the May committee recommendations, to give it a chance to run the prison service directly by itself and subordinate to me. I think that it should be given that chance, and I greatly regret that this action is not giving the department the chance to which it is entitled. Given the chance, I am sure that it would fulfil its task with outstanding ability.
Mr. Joseph Dean: Is the Home Secretary aware that if he continues on this course he will exacerbate the present situation to the point where the law enforcement agencies that have normally cooperated with one another—the prison officers and the police force—may not look upon one another in such favourable light in future? Will he reconsider his decision and send the claim to independent arbitration, which I believe the prison officers will accept?
Mr. Whitelaw: Of course I understand the dangers that the hon. Member puts forward; and everything will be done to ensure that these do not arise. I must make it clear, however, that the May committee put forward recommendations on pay and allowances which the Government immediately paid in full. That is not something that all Governments have done as soon as they have received such reports in the past. That was very important. Now I am being asked to go back on claims that were not recommended. The Government decided to find the money to meet the claims that were recommended by the
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May committee. Now I am being asked to finance further claims. It must be accepted, bearing in mind the current position of public expenditure in this country and my need for money in the prison service, that it would be very wrong for me to seek to finance further claims that were not recommended by May. That would be depriving the prison service of money in other areas where it is desperately needed.
Mr. Alton: Will the Home Secretary confirm that he received representations from them last week about the cells in Liverpool, Cheapside, which concern people from the city of Liverpool?
Mr. Heller: The hon. Gentleman is not, then, referring to Walton?
Mr. Alton: I was not referring to Walton gaol. Can the Home Secretary say what the response is to those representations? Will he also tell us what generally is the position of juveniles currently held in police custody?
Mr. Whitelaw: I confirm that I received the hon. Gentleman's representations. If he wishes to see me or one of my Ministers, we are naturally prepared to discuss these problems. We are always ready to receive representations about this very difficult situation. I am very worried about the position of people in police cells. That is why I am putting forward these proposals.
Mr. Nelson: Will my right hon. Friend accept that many of us recognise that he had an extremely difficult judgment to make in bringing these proposals to the House and will support them if he considers it necessary? However, eventually some break in the impasse will have to occur, and there appears to be a difference across the Floor of the House about whether the May committee considered the matter fully. Has my right hon. Friend therefore ruled out referring this isolated aspect of the claim back to the May committee, if he is not prepared to go to arbitration?
Mr. Whitelaw: It would be wrong to rule out any action. However, the May committee considered the whole matter, and it seems hard to believe that only a year after it made its recommendations it would change them.
Mr. Litherland: Why does the Home Secretary keep referring to the May committee and accepting its recommendations as being tantamount to the result of arbitration when the committee has categorically stated that it does not want to be regarded as arbiters? Why does he not accept the committee's recommendation that we should use the services of ACAS to enable us to overcome this problem?
Mr. Whitelaw: I maintain that what the May committee recommended was fair and generous to the prison service, and the Government implemented those recommendations. That is of the greatest importance, and I hope that hon. Members will bear it in mind. The committee was specifically asked to recommend on these matters, which it did, and the Government implemented what was recommended. That was the sensible way to proceed. I find it hard constantly to be asked to go back on that. In the circumstances I do not believe that ACAS would be a suitable vehicle for the settlement of the dispute.
Mr. Crouch: Will my right hon. Friend accept that I condemn the industrial action taken by the prison officers? However, like him, I see prison officers and they have raised complaints with me, which I have raised with the Home Office and in the House. Is my right hon. Friend aware that I am still awaiting an answer from the Home Office? The complaints that I raised are not major complaints, but if they go unanswered a feeling of frustration will build up. Is my right hon. Friend satisfied that the Home Office gives sufficient priority to the management and administration of prisons? Should not those priorities be reviewed?
Mr. Whitelaw: I shall look into the complaints immediately and get in touch with my hon. Friend. However, I do not believe that I can be accused of not having sought to improve the general situation. Since the May report the Home Office has completely restructured its prison department, including its methods of financing and standing. It has changed the personnel. We have set up a completely new prison department to make the running of the prison service more efficient and effective. That has been done in a very short time, which is recognised by everyone, including the
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prison officers. I realise that there are complaints. I have visited many prisons and talked to many prison officers. I have told them that I regard the improvement of industrial relations and of prisons generally as a major priority for me as Home Secretary. It is my greatest challenge. I therefore regret all the more such industrial action at this time, which is holding up and frustrating the developments that I am anxious to see.
Mr. Heffer: Will the right hon. Gentleman accept that everyone, including the Prison Officers' Association, realises that he has done a great deal since the May report? However, the meal break dispute was going on before the May committee and under a Labour Government. Some of us intervened with my right hon. Friend the Member for Leeds South (Mr. Rees) and also persuaded the prison officers, particularly in Walton, to return to normal working, pending a solution. Does he therefore agree that it is stupid for the Government to enter into confrontation with the Prison Officers' Association instead of trying to settle the dispute and in that way save money?
Mr. Whitelaw: I am grateful for the hon. Gentleman's acknowledgement of what I have sought to do since the May report. It is because I want to get rid of the anomalies in the meal break system that we have been pursuing with the Prison Officers' Association arrangements for a new duty system. That is sensible. I was surprised when I was chided for looking forward. The obvious way forward is a new duty system to remove the anomalies. That is what I want to achieve constructively with the prison officers, and I told them that last week. I am ready at any time again to discuss a new duty system that will remove the anomalies. That is a constructive approach and I hope that it will be seen as such.
Mr. Lawrence: Will my right hon. Friend remind the House of the generosity of the financial settlement made for the prison officers when we took office and also what is involved financially in giving way to the present demands? We can then form a view about how utterly irresponsible is the prison officers' attempt to blackmail the Government at a time of increasing lawlessness.
Mr. Whitelaw: Under the arrangements made following the May report and in other pay settlements an officer in his first year, on the basis of 13 hours' overtime, which is the average, today earns over £8,000 a year, taking account of quarters and rent allowance. That is reasonable and even generous for an officer in his first year. If this claim were to be settled in full it would cost about £10 million now and a further £3 million a year in the future. On the basis of the pay and allowances that I have described, that seems to be—
Mr. Foulkes: Peanuts.
Mr. Whitelaw: With the help of my colleagues I have managed to secure, at a time of economic stringency, money for many of the improvements in the prison service that the House is constantly asking for. The hon. Gentleman would not say "peanuts" if he had to find such money.
Mr. Speaker: Order. I propose to call the three hon. Members who have risen.
Mr. Ennals: In view of the questions put by all three main parties, does the right hon. Gentleman accept that there is a strong feeling in the House that some of the proposals are more likely to cause confrontation than settlement? Many of us with prisons in our constituencies are aware of the important role of prison officers and have a high regard for their work. Does the right hon. Gentleman realise that there is an anomaly affecting local prisons? Does he agree that it would be preferable to seek a settlement of these disputes, and that the proposed legislation will create confrontation?
Mr. Whitelaw: I do not think that the proposed legislation, temporary as it certainly would be and continuing only until the dispute ended, could be described as confrontation. Its aim is to remove the difficult situation that has arisen in our prisons and it would not be necessary if the prison officers were prepared to allow those remanded from the courts to be admitted to prisons. That is a fact of life. There is no confrontation on my part.
I repeat that I am anxious to settle the dispute on the basis of a new duty system for the future. Is that not a constructive way forward? We agreed
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to pay everything that the May committee recommended and we wish to go forward to a new duty system. That is what I am proposing. I cannot see any element of confrontation in that.
I say to the prison officers and to the right hon. Gentleman that if the officers would suspend their industrial action and enter discussions on a new duty system there would be no need for the proposed measures I cannot see why I should be accused of confrontation.
Mr. Faulds: I have no prison in my constituency, although I do have a number of my constituents incarcerated in Winson Green. Will the right hon. Gentleman carefully consider the point made by his hon. Friend the Member for Chichester (Mr. Nelson)?
As the prison officers are prepared to go to negotiation, would it not be more reasonable and responsible of him to summon the May committee to examine this particular grievance, rather than to move into a dangerous situation in which he is requiring the Army to do a job for which it is not trained and in which it will be armed? The right hon. Gentleman is introducing a series of measures which are highly irresponsible and damaging to both the conduct of the law and the functioning of the prison service.
Mr. Whitelaw: The hon. Gentleman says that prison officers should enter negotiations, but I am in negotiation with them over a new duty system. I am prepared to continue those negotiations and to get the new duty system. All that I am asking is why we cannot centre our negotiations on that matter, instead of going back to claims that the May committee examined but whose acceptance it did not recommend.
It would be much better to go forward to the new duty system for the future. I cannot understand why that should not be recognised as the most sensible and best way forward. I really believe that it is. I hope that the hon. Gentleman and others who are asking for negotiations will agree that that is where the negotiations should take place.
Mr. Thomas Cox: Is the Home Secretary aware that nothing that he has said will help to resolve the dispute? If prison officers have such a wonderful job, as was suggested by the hon. Member for Burton

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(Mr. Lawrence), why is there such an enormous shortage of officers throughout the country?
Is the right hon. Gentleman aware that he can quote the May committee report as much as he likes, but prison officers do not accept the committee's finding on this aspect of their grievances? In view of the problems in our prisons, which will, as the right hon. Gentleman must be aware, get worse, why does he not at the eleventh hour look at the issue realistically—it is not a question of losing face—because if he does not do so, there will be a total collapse of our prison system in the near future?
Mr. Whitelaw: On the question of a shortage of prison officers, following the increase in the rates of pay after the May committee reported, there has been a considerable increase in recruitment to the prison service. The hon. Gentleman should not rely on that argument.
Mr. Cox: There is still a shortage.
Mr. Whitelaw: I know the figures and the hon. Gentleman does not. I have an advantage over him in that.
Mr. Cox: Some of us have prisons in our constituencies and we know what is going on.
Mr. Whitelaw: As for what the hon. Gentleman said about the May committee and future negotiations, I understand the difficulties, but surely it is inherent in committees that have examined various matters over the years that some of their recommendations please people and some do not. Even if a committee is asked to examine a number of matters and the Government carry through everything that it recommends, people will still sometimes not get everything they want. An independent committee was asked to examine these matters and it did not recommend the prison officers' claim. Surely we should seek to get away from the anomalies and move to a new duty system. I cannot see what is wrong with that course.

BUSINESS OF THE HOUSE
The Chancellor of the Duchy of Lancaster, Leader of the House of Commons and Minister for the Arts (Mr. Norman St. John-Stevas): With permission, Mr. Speaker, I should like to make a short Business Statement.
In the light of my right hon. Friend's Statement the business for the remainder of the week will now be as follows:—
TUESDAY 28 OCTOBER—Proceedings on the Imprisonment (Temporary Powers) Bill.
WEDNESDAY 29 OCTOBER—Debate on unemployment on a motion for the Adjournment. This subject has been chosen by the Opposition.
Motion on the Education (Assisted Places) Regulations.
THURSDAY 30 OCTOBER—Debate on procedure.
Second Reading of the Overseas Development and Co-operation Bill [Lords], and proceedings on the Limitation Bill [Lords], which are consolidation measures.
Proceedings on the Statute Law Revision (Northern Ireland Bill [Lords].
FRIDAY 31 OCTOBER—Resumed debate on the motion on references in court to Official Report of Debates and reports of Committees, followed by a motion relating to recommendation 47 of the first report from the Select Committee on Procedure, Session 1977–78 on the publication of reports of evidence to Select Committees.
Mr. Mark Hughes: On a point of order, Mr. Speaker. It is difficult for us to consider the Leader of the House's statement. I have been to the Vote Office three times in the past seven minutes to try to acquire a copy of the Bill that is to be debated tomorrow. It is not available. Palpably, it affects my constituency and I cannot get to Durham, consult persons in my constituency, and be back here tomorrow for the consideration of the Bill. May we have a delay, at least so that the Bill will be available to hon. Members?
Mr. Speaker: The Business Statement is the responsibility of the Government Front Bench. I can do nothine about it.
Mr. Foot: On the proposed business for tomorrow, we on the Opposition Benches—and the House generally—are normally deeply anxious about proposals to take business at such short notice and to put Bills through the House in a single day. It is right that the House should be anxious about such a proposal, because often it is not the best way to legislate. Grave mistakes can be made when such precipitate measures are put to the House.
If the Leader of the House and the Government think that it is essential to bring forward the measures in that way, the Home Secretary must be responsible for making the case tomorrow, both on the Second Reading proposition and on individual items that may arise. We shall have to judge the matter on that basis.
The Leader of the House has also rearranged some of the business for the rest of the week. He could have left it as it was, which might have been more convenient for the House, or he could have had on, say, Thursday, a discussion on the calamitous replies given earlier by the Secretary of State for the Environment. That might have been a preferable arrangement, but it is a matter for the Government to decide.
The Leader of the House is proposing to postpone the business that he had previously announced for Thursday. I do not ask him to answer my question now, but will he take account of the fact that the motion on the EEC document on driving licences goes much wider than some might previously have supposed, and we should like a full debate on it before a vote takes place on the document?
The new business for tomorrow is the main point of the right hon. Gentleman's statement, and we shall have to wait and see whether the Government are able to make their case.
Mr. St. John-Stevas: I am in great sympathy with what the right hon. Gentleman says. I do not think that it is desirable to legislate in this manner on a single day unless there are overriding reasons of the national interest which compel us to take that course. The right non. Gentleman is right that it is not—
Mr. Mark Hughes: When will it be published?
Mr. St. John-Stevas: Just a minute. I shall deal with one question at a time. As I was saying, that is not the normal way of proceeding in the House and there is no intention on the part of the Government that it shall be. With regard to the publication of the Bill, which the right hon. Gentleman is rightly anxious about, it will be available at 6 o'clock in the Vote Office in draft form. It is quite a short Bill of four main clauses and four subsidiary ones.
With regard to the rival claims of the procedure debate and the European driving licences measure, I believe that it is for the convenience of the House that we should dispose of this question of procedure. It has been swept off the Order Paper for reasons that I need not go into again now. I believe that it is the general desire of the House that it should have an early opportunity to decide on these important measures of procedure. I have accordingly placed the debate to take place on Thursday.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to call those hon. Members who have stood in their places.
Mr. John Evans: Is the Leader of the House aware that there is situated in my constituency of Risley one of the largest remand centres in the country, where a great number of problems are being created at this time? Is the right hon. Gentleman aware that it appears that the Government are treating Back Benchers with contempt in not giving them the opportunity to discuss what is a serious dispute with the people involved? Is he aware that there is a grave danger that the introduction of troops into the dispute will exacerbate the situation and escalate it gravely and that we have no opportunity to seek to have discussions with the prison officers involved on the Bill which the Government propose to rush through the House in one day?
Mr. St John-Stevas: This is a grave situation. There is a duty on the Government to take immediate action both on grounds of security and, indeed, on humanitarian grounds for those who are sent to prison. I am sure that my right hon. Friend the Home Secretary will gladly receive any representations

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that the hon. Gentleman wishes to make about his constituency.
Mr. Abse: Does the Leader of the House appreciate that the Home Secretary is asking hon. Members in one day, tomorrow, in a Bill that is not yet published, to collude in an assault on civil liberties that is probably unprecedented in peace time in this century? Does he appreciate that in not responding even to the question of the postponement of the Bill or the question of two days of the Bill, he is again asking the House to collude in an assault upon the courts whereby executive action on the part of bureaucrats inside the Home Office can determine the liberty or otherwise of the subject?
Does not the right hon. Gentleman consider that it would be wise to recommend to the Home Secretary that we have more time, that the Bill should be postponed for a day or two, and that, above everything, the Home Secretary responds to the Opposition Leader in a way that he has not yet done by giving assurances about future penal reform, in particular the 50 per cent. remission. so that out of this shambles we can feel we have something, rather than that arising from a piffling dispute over meal breaks we could see the crumbling of the whole edifice of civil liberties in Britain?
Mr. St. John-Stevas: I do not think that we should have tomorrow's debate now at business question time. I should perhaps point out to the hon. Gentleman, who feels strongly on these matters, that the major provisions of the Bill are temporary and will lapse, as my right hon. Friend the Home Secretary said, when the dispute is settled. The other points must be debated tomorrow. My right hon. Friend the Home Secretary will have heard what the hon. Gentleman said. It is, however, right to pay tribute to the Home Secretary for the amount of penal reform that he has been able to achieve in extremely difficult financial circumstances.
Mr. Alexander W. Lyon: As some of the powers that the Home Secretary is claiming are Cromwellian in their extent, it is surely unacceptable for the House to get through discussion of those powers in one day. We should have longer to deal with them. Is the Leader of the House aware that the Prevention of
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Terrorism Bill was introduced as a tailporary measure and is still with us? It is surely unacceptable that we should be forced to go through this procedure in one day when the Home Secretary was last week exercising power, in what lie said when addressing magistrates, that he did not possess. The right hon. Gentleman could therefore afford to wait a little longer before he gets power under a Bill that has never been put before us.
Mr. St. John-Stevas: Some of the hon. Gentleman's remarks are relevant to the debate tomorrow. There are precedents for this form of action: the Northern Ireland (Temporary Provisions) Bill 1972, the Counter-Inflation (Temporary Provisions) Bill 1972, the Counter-Inflation Bill 1973, the Prevention of Terrorism Bill 1974—by mentioning which the hon. Gentleman kindly put me in mind of the precedents—and the Dividends Bill 1978 This is a recognised, although I agree it should not be a normal, way of proceeding in the House. But this is an emergency situation. My right hon. Friend the Home Secretary would have been open to much graver criticism if he had not acted promptly.
Mr. Christopher Price: Is the right hon. Gentleman aware that he might have added the Official Secrets Bill of August 1911 to the list of precedents that he has read out. Can he explain to the House why, when the Government have known the dimensions of the problem they are facing for at least the last seven days, they could not have presented the House with a draft Bill before the Home Secretary rose to speak? Can he explain the precedents that exist in this House whereby Members of Parliament have simply been given the period between 6 pm one day—now 7 pm—and 2.30 pm the following day in which to study a Bill, consider it and formulate amendments which are watertight and reasonable amendments, table those amendments and, if necessary, make the sort of "usual channel" representations that sometimes happen in these cases to explain their intentions? Is the right hon. Gentleman satisfied that the machinery of Parliament can operate properly within the time scale that he has laid down?
Mr. St. John-Stevas: Of course I am not satisfied with these proceedings.

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Nevertheless, it is essential, in certain circumstances, for the Government to be able to act swiftly and put proposals before the House. I am grateful for the precedent that the hon. Member for Lewisham, West (Mr. Price) added to mine.
Mr. Price: It is not a very happy one.
Mr. St. John-Stevas: That is why I did not quote it. It was not helpful to my argument, but it gave the hon. Gentleman the opportunity of joining in and putting it forward. All these Bills—I do not want to argue about the actual number of hours—were brought forward at short notice. There are, therefore, precedents. I hope that within an hour or so—I said 6 pm not 7 pm—the Bill will be available. It was not possible to publish the Bill earlier because it was not clear that the dispute could not be settled. My right hon. Friend the Home Secretary was trying, up to the last minute, to secure a settlement of the dispute and so avoid putting the House to this device.
Mr. Cryer: Does the Leader of the House accept that there are somewhat grim overtones of a Right-wing Government establishing prison camps to solve their industrial relations confrontation? As hon. Members are not going to hear an explanation of the Bill—which we are not going to see until tonight—before Second Reading, will manuscript amendments be permitted after Second Reading in order to counteract and combat the arguments that the Home Secretary will presumably be putting forward in his justification for trampling on the rights of Parliament?
Mr. St. John-Stevas: There is a serious point involved. But the hon. Gentleman does not advance his cause by the exaggeration in the first part of his question. With regard to manuscript amendments, it is customary in these circumstances for manuscript amendments to be allowed by the Chair. That is a matter for the Chair. If put forward, I understand, from preliminary inquiries, that it would be possible for them to be selected and debated.
Mr. Kilroy-Silk: Does the Leader of the House accept that if the Government
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were doing their job properly, if they acknowledged that they live in the real world and that the dispute would have to be settled some time, the Bill and the disruption of parliamentary business would not have been necessary? The right hon. Gentleman is more likely to obtain his Bill, or to obtain it more quickly, if some of the more interesting measures that the Home Secretary has announced, such as the non-imprisonment of fine and maintenance defaulters, were made permanent.
Mr. St. John-Stevas: I cannot argue the case from both sides. The point that I have taken is that the major provisions of the Bill are temporary. There are certain measures in it that the hon. Gentleman approves of, but it is a temporary Bill, except for one provision which is permanent. It may well be that good will come out of this, that out of the Bill it may well be possible to secure some permanent legislation.
Mr. Ennals rose—
Mr. Speaker: I shall call the right hon. Gentleman, although he rose after I had said which hon. Members I would call.
Mr. Ennals: I am grateful, Mr. Speaker. Does the Leader of the House accept that he not only has responsibilities for getting Government business through the House as quickly as he can but has responsibilities to individual hon. Members, to Back Benchers, to those of us who have prisons in our constituencies and who are entitled to consult and consider before we deal with the legislation that is placed before us? Is not the right hon. Gentleman putting Members of Parliament in an intolerable position? How can we properly consider the proposals that are to be laid at 6 o'clock tonight when we are required to debate them tomorrow? Is not this making nonsense of legislation?
Mr. St. John-Stevas: I fully accept my responsibility to see that there is adequate time for debate, but I must balance that against the emergency situation that we are in. I recommend to the right hon. Gentleman the rather more temperate words of the official Opposition spokesman on home affairs, for whose offer of co-operation I am grateful.

NORTHERN IRELAND
Rev. Ian Paisley: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the failure of Her Majesty's Government to defeat IRA terrorism in Northern Ireland and their capitulation to the H block dirty protesters with a deal which includes the wearing of civilian-type clothing by convicted murderers and gunmen."
Against the dark backcloth of almost 90,000 unemployed in Northern Ireland, when the House was in recess the IRA continued its terror campaign, and the other killer gangs were also busy in retaliation. Sixteen persons were done to death. The equivalent in Great Britain, in relation to population, would have been 592. The people of Northern Ireland ask what attitude the House would adopt tonight if 592 people had been murdered in Great Britain during the recess.
Of the 16 people killed, nine were murdered through IRA activity. The other killings have not been claimed by any group, although on the face of it they bear the hallmarks of retaliation killings.
One of the most barbarous murders was the killing of a Protestant aged 87, Mr. William Younger, and his daughter Lettie. She was stabbed through the neck with a garden fork and then shot dead.
The campaign of genocide against the Protestants continues in Fermanagh and County Armagh. The recent decision in a test case in the courts of the Irish Republic has made that country an even safer haven for the IRA murderers. It is no wonder that there are now 50 unsolved murders of Protestants in County Fermanagh. Those who have done these dastardly deeds are safe across the border in the Irish Republic. Yet the Government have not proceeded to put pressure on Dublin to have a proper extradition treaty with the South.
Now a great victory has been gained by the IRA in the capitulation to at least one of its demands. Convicted murderers and gunmen—
Mr. Speaker: Order. The hon. Gentlemen must not make the speech that he
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would make if I granted his application, but he is entitled to outline the reasons why he thinks the application should be made.
Rev. Ian Paisley: I am trying to do that, Mr. Speaker. I have called your attention to the latter part of the subject:
"which includes the wearing of civilian-type clothing by convicted murderers and gunmen".
Convicted murderers and gunmen are to be given special status once again. The IRA believes that this Government, having capitulated on this issue, would be prepared to give in to other demands, and it sees an amnesty right ahead.
What is even more serious is the fact that the vast majority of the people of Northern Ireland no longer have any faith that this Government have the will to win the war against the IRA. They feel that they have been let down. They are convinced that they are betrayed, and they feel that the Government should have backed the law-abiding citizens and safeguarded their right to live, rather than give in to those who are carrying out these dastardly deeds.
Mr. Speaker: The hon. Gentleman gave me notice before 12 o'clock today that he would seek leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the failure of Her Majesty's Government to defeat IRA terrorism in Northern Ireland and their capitulation to the H block dirty protesters with a deal which includes the wearing of civilian-type clothing by convicted murderers and gunmen."
The House will realise that the hon. Gentleman has brought to our notice a very serious matter. Under Standing Order No. 9 I am directed to take into account the several factors set out in the Order but to give no reasons for my decision.
I have listened carefully to the hon. Gentleman, but I have to rule that his submission does not fall within the provisions of the Standing Order, and therefore I cannot submit his application to the House.
The hon. Member for Belfast, West (Mr. Fitt) also gave me notice before 12 o'clock that he would seek leave to move the Adjournment of the House.

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His application differs in so far as it refers to
"the rapidly deteriorating economic situation".
Mr. Fitt: I assure you at the outset, Mr. Speaker, that there has been no collusion between me and the hon. Member for Antrim, North (Rev. Ian Paisley).
I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely.
"the highly dangerous and rapidly deteriorating economic and security situation in Northern Ireland since the beginning of the Summer Recess."
Shortly before the House went into recess. the Secretary of State for Northern Ireland used the device of a written reply to a question by the hon. Member for Knutsford (Mr. Bruce-Gardyne) to announce what he euphemistically called a reallocation of resources in Northern Ireland. At the first glimpse it was seen that £50 million was to be withdrawn from essential services in Northern Ireland and used in other ways. Since then £10 million has been taken away from education, £10 million from health and social services, £26 million from environment and £12 million from housing.
The cuts, and the way in which they were made, have resulted in complete disaster in every facet of life in Northern Ireland. We have had no opportunity to debate the issue.
On 7 August, the day before the House went into recess, I pleaded with the Leader of the House to provide an opportunity for a debate. I said that if he could not arrange a debate at that late stage he should organise the business so that we could have a debate on Northern Ireland in the first week after we returned from the recess—that is, this week. The business that the Leader of the House has announced this afternoon makes no provision for a debate on Northern Ireland.
Because of the action taken on 6 August there has been a dramatic rise in unemployment, in the number of redundancies and the number of people on short time. It has affected all the social
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services. No other part of the United Kingdom would have been treated in that way.
Security has been a grave issue in the last 10 weeks. Many brutal and vicious murders have taken place. They have affected both sides of the community. Young children have been burnt in their beds by petrol bombs in sectarian attacks. Men, women and children, both Catholic and Protestant, have been murdered in the most brutal and callous circumstances.
Only today was it announced that a hunger strike was to take place in the Maze prison. Potentially this is one of the most dangerous and disastrous issues with which the House will be faced in the coming weeks. Hon. Members should have an opportunity urgently to express their will on the hunger strike, whether they are for or against it. Those who are taking part in the hunger strike must be made aware at the earliest opportunity of the consequences of their actions. For those important reasons I ask you, Mr. Speaker, to approve my application.
Mr. Speaker: The hon. Member for Belfast, West (Mr. Fitt) gave me notice before 12 o'clock today that he would seek leave to move the adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the highly dangerous and rapidly deteriorating economic and security situation in Northern Ireland since the beginning of the Summer Recess."
I listened with anxious care to the hon. Gentleman, as I did to the hon. Member for Antrim, North (Rev. Ian Paisley), who made the previous application. The hon. Member for Belfast, West has brought grievous matters to our notice. However, as he knows, under Standing Order No. 9 I am directed to take into account the several factors set out in the Order but to give no reasons for my decision.
I listened very carefully to the hon. Member. but I have to rule that his submission does not fall within the provisions of the Standing Order and therefore I cannot submit his application to the House.

NATIONAL HEALTH SERVICE
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Le Marchant.]
5.3 pm
The Secretary of State for Social Services (Mr. Patrick Jenkin): During the passage through the House of the Health Services Bill 1980 an undertaking was given by the Government to the Opposition that the House would have an opportunity of a full day on the Floor of the Chamber to debate the reorganisation of the National Health Service on which we have now embarked. That is the purpose of this debate, which the Government very much welcome. I should perhaps make it clear to the House that, as indicated on the Order Paper, the debate is about the reorganisation in England. There was a full debate in the Scottish Grand Committee shortly before the Summer Recess. I am authorised to give an undertaking to the House that there will be an opportunity in the Welsh Grand Committee for a similar debate on reorganisation proposals in Wales. I shall concentrate, therefore, on the proposals for reorganisation in England which were the subject of the consultative paper "Patients First" and of the circular issued by my Department on 23 July last. In effect, I shall be giving the House a progress report.
I realise that some right hon. and hon. Members may wish to take the debate a little wider and discuss perhaps problems of finance or health strategy. As I understand it, subject to any ruling you may make, Mr. Speaker, this would be quite in order. I shall have a little to say on these matters towards the end of my speech, but if he should catch your eye, Mr. Speaker, my hon. Friend the Minister for Health will reply to other points when he winds up the debate tonight.
First, I shall put the debate into context. It is certainly important to get the structure and organisation of the National Health Service right. The Government have never pretended that that is the only thing, or even the most important thing, in our policy for health. On the contrary, structure and management are simply means to an end—the end being the good health of the people of this country in the widest possible sense. The
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promotion of good health, preventive medicine, health education, public health, a sound environment, proper nutrition and a carefully considered strategy on finance and priorities are essential for achieving an effective health policy. It is against that general background that we are discussing the particular matter of reorganisation.
No one relishes change for change's sake. There were persuasive arguments for leaving things as they were after the 1974 reorganisation. All change carries a cost and this cost falls inevitably both on the people working in the Service and on the patients—and others—whom they serve. Yet I have no doubt whatever that the Government were right to respond promptly to the very widespread feeling inside and outside the National Health Service that the arrangements as they have emerged since 1974 have not been satisfactory. That was the view which we came to as a result of a great deal of consultation when we were in Opposition. It was the view firmly expressed by the Royal Commission on the National Health Service and it was overwhelmingly the preponderance of opinion given in response to our consultation document "Patients First".
For me there is nothing to be ashamed of in being prepared to learn from experience. The 1974 changes which this party introduced had many virtues, but we now need to deal with the problems. There has been almost 100 per cent. support for four main propositions. First, there needs to be a substantial strengthening of the management of services right down at the local level. Those responsible for taking decisions in the hospital and in the community must have more authority, higher seniority, and more autonomy. Perhaps the loss of an effective decision-making capacity by hospital managements was one of the worst consequences of the 1974 changes.
Secondly, it has been widely agreed that the multi-tier structure below regional level is unduly cumbersome, involves confusion of authority, unnecessary bureaucracy and excessive management costs. There has been widespread support for a single-tier health authority below regional level, based in most cases on existing health districts.
Thirdly, it has been widely agreed that the planning system evolved after 1974

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was altogether too complicated and needed to be simplified. Fourthly, the professional advisory machinery—not just for doctors but for nurses and other professional groups—was too elaborate and time-consuming for those involved.
There also is wide agreement within the Health Service that the policy of trying to fix the boundaries of health authorities to match the boundaries of local authorities at almost any cost has given rise to great difficulties. After all, local authority boundaries do not necessarily bear much relation to the hospitals to which people naturally look. It is fair to say, however, that local authority interests have all along attached much more importance to this principle of common boundaries. The Government certainly agree that, where they can be achieved in a way that makes sense both for health and local authorities, that has obvious advantages.
Finally, there has been a good deal of support, but again not universal, for the view that many clinical and non-clinical support services are better managed at the unit level without an elaborate management structure for each such service existing at district or other level.
It is on the foundation of these six principles—the four almost universally agreed and the two that have achieved a wide measure of support—that the Government have decided that a further reorganisation is necessary.
We have decided, therefore, that the authorities which provide health services should be based primarily at the district level. We envisage that there may be up to 200 such district health authorities covering England—a number of them of course being existing single-district areas which, with minimum changes, could be reconstituted as district health authorities.
Within the district we want to ensure proper delegation of responsibility to management of the individual units for the day-to-day running of the Service. To make that stick, health authorities will keep to an absolute minimum the number of management posts in the different disciplines between the level of the unit and the district management team. One of the errors made after 1974 was the insistence by the Department of Health and Social
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Security that there should be, as it were, a management pyramid for each support function. It was that, perhaps more than anything else, which had the effect of sucking decisions away from the ground, up the line, and which has been so heavily criticised. One of the contributory causes of the suction-pump effect has been the fact that consultants' contracts are held at regional level. As I have made clear to the British Medical Association, I am very anxious that we should reach agreement with the hospital and community doctors' representatives that the new district health authorities should be the employers. We are currently engaged in discussion with a view to seeing what safeguards they feel to be necessary if something along those lines were to be laid down.
So our plan is, first, to eliminate the area tier and to set up district health authorities covering populations of between 150,000 and 500,000. Secondly, we shall simplify substantially the management structure below the level of the district health authority in order to cut bureaucracy and strengthen local management.
What stage have we reached? I shall deal first with staff. Although we Say "patients first", and that is quite right, from the outset we have been concerned with the impact of the changes upon staff. It is they who bear the immediate impact of the reorganisation. Many senior staff have a crucial role to play in its successful planning and implementation. I wish to take this opportunity to pay a tribute to the senior staff in the National Health Service, who do an extremely good job.
It is easy to under-estimate the amount of disruption that the changes mean for people running the Service. I am under no illusion that the anxieties and upheavals that individual members of the NHS staff are facing, particularly at area level, are not considerable. I know that all of us, whether we are involved as Ministers, members of health authorities, management or staff side representatives on the various Whitley councils, are determined to do our utmost to minimise the problems.
From the outset, the Government always recognised that the personal needs of staff would have to be fully and fairly

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met. Accordingly, on 4 June my Department announced the proposed terms for premature retirement, redundancy compensation and the protection of pay and terms and conditions of service of staff changing jobs. I also made it clear that those matters, and the arrangements for filling posts in the reorganised Service, should be the subject of negotiation in the Whitley council. That has been taken on board by a special reorganisation committee of the general Whitley Council. I can tell the House that negotiations are progressing steadily. I think that it is helpful that staff in the Service are being kept fully informed by the wide circulation of joint statements of progress.
Perhaps this is not the time to go into details of the proposals under negotiation, except to say that I think that they are as generous as is consistent with the realities of our economic position, and that they are comparable with what is available elsewhere in the public sector. Taken as a whole, the terms offered—particularly those for premature retirement—will go a long way to ensure that the overall reduction of posts will be met largely by premature retirement and natural wastage with the absolute minimum of recourse to compulsory redundancies.
When I made my statement to the House on 23 July a number of hon. Members asked a perfectly fair question about how many posts would be lost. A good deal depends on how regions' plans for structural change emerge and also on what the new district authorities decide about their management. But, as the House knows, we have set ourselves a clear target for an overall reduction in management costs by the end of the year 1984–85—after the transitional period—of about £30 million. One does not need to be either a clairvoyant or a senior wrangler to draw some inference from that figure. A figure of £30 million means a reduction in management costs of about 10 per cent. As we are talking about a group of staff that numbers something below 50,000, it follows that we are aiming at a reduction in the number of posts of about 4,000 to 5,000.
I must make it clear that that does not mean 4,000 or 5,000 redundancies. On the contrary, natural wastage is al-
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ready having an effect as people retire or leave and posts are left unfilled. We visualise that a good many older staff will welcome early retirement. However, at the end of the day health authorities may find themselves with a few staff for whom no posts can be found in the new management. In such circumstances, I shall expect authorities to take the honest decision and declare a redundancy. It cannot be stressed too strongly that the National Health Service is neither a job creation project nor an employment agency. It is certainly of no benefit to patients, or even in the best interests of the individual staff member himself, if staff are retained indefinitely in a supernumerary position with no real job to do.
Mrs. Renée Short: The Secretary of State may remember that when the Select Committee was considering the question of reorganisation and its effect on staff it was given a figure of £30 million saving. At that time there was no information available about the numbers of redundancies and, therefore, their cost. Does the £30 million include payments for any necessary redundancies?
Mr. Jenkin: If I did not make the matter clear when I gave evidence to the Committee, it was my failing. The £30 million is the reduction at today's prices in the running costs of management that we expect to be achieved after meeting the transitional costs that will have to be met in the immediate years ahead for early retirement, redundancy and protection. The £30 million is the figure at the end of the day. We cannot possibly achieve that immediately, because we have to meet intermediate costs. I hope that I have made the position clear.
We accept that redundant staff must be fairly compensated. Improvements to standing National Health Service redundancy compensation terms have been put to the staff side and are under urgent consideration. The next stage on staffing matters will be for the individual Whitley councils to negotiate much greater flexibility in the grading and salaries of individual posts, especially for senior management posts at unit level. That will not be easy, and staff sides will find it difficult to relinquish some of the very tight rules

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that have hitherto governed the appropriate grading for particular posts at particular levels.
I cannot stress too strongly that the health services and the patients that they serve will benefit enormously if the managers at local level are senior, experienced people able to wield authority effectively and to take management decisions on the spot By that I mean the people actually running the unit, for example, the community nursing service, the district psychiatric service or a district general hospital. To my mind, nothing will do more to improve the morale of staff at all levels than the restoration of that sort of local management authority. As my right hon. and hon. Friends said in July, if that means bringing back matron or, as has been put to me subsequently, the hospital secretary, I shall be delighted if the health authority finds it right to use those titles, because, in effect, that is what we are proposing. They are senior and authoritative people who are on the spot and who can lead the staff for whom they are responsible. To achieve that it is essential that we have the flexibility in grading and salaries for which the management side will be negotiating. I have no doubt that that will take a little time, but at the same time the prizes are great, and are worth waiting for.
Mr. Laurie Pavitt: Will the right hon. Gentleman give us a further indication? He was referring to senior administrative staff. I am thinking of two qualities that are necessary. For example, we have 90 area nursing officers and 90 area dental officers and we shall have, say, 160 to 180 district health authorities. Will each of those authorities have a unit officer? If that is so we shall have a greater number of senior administrative officers than under the present system.
Mr. Jenkin: Uncharacteristically, the hon. Gentleman has missed the point. If we are eliminating the area tier in a multi-district area, and instead have, say, three district health authorities, instead of having four teams as there are at present—an area team and three district teams—we shall have only three teams. Therefore, there will be a saving at that point.
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But, of course, the saving again will come as between the district health authority management team and the unit—which was what I was referring to when I referred to bringing back matron—and it is our intention that the absolute minimum of management staff should exist at the intermediate level, that we should have a senior person at the unit level and a senior administrator, or senior nursing officer, or director of nursing services—call it what one will—reporting directly to the district management team.
In that way, I believe that we shall achieve the saving we are looking for, a saving which should thus be available to provide better patient services. Not only will there be savings but when the period of transition is over I am confident that staff will find themselves, as they have not been in the last five or six years, working in an environment which gives a great deal more job satisfaction because it will provide a better managed Service much more responsive to the needs of individual patients.
Mr. Robin Maxwell-Hyslop: Every time the organisation alters there is great personal disturbance. Therefore, would it not be sensible to reform the regional health authority structure at the same time as these alterations are being carried out rather than doing the reorganisation in two stages with two lots of dislocation?
Mr. Jenkin: That is a fair point. We examined it with some care but concluded, as we said in "Patients First", that it was probably better to do it in two stages, for two reasons. First, there needs to be an agent of change in each part of the country, and such an agent can really only be the regional health authority. My Department simply does not have the staff and resources to undertake the job. If the region were itself to be changed at the same time there would be a double difficulty.
Secondly, there seems to us to be an advantage—and perhaps this is more important—in our proposals in that not until the new district health authorities are in office, are working and have determined their own management structure can we say what further steps should be taken at regional level to enhance the

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authority and autonomy of the regional health authorities.
I think that in the circumstances it is right to argue that the upheaval if we did the reorganisation in one stage would be a great deal more than if we do it in two stages. We often talk about the process of voluntary change, but, of course, it may not seem quite as simple as that to the area nursing officer or administrator whose job as such is disappearing; so to spread it all over a period of three or four years is not unreasonable.
What else has been happening since I made my statement? Regional health authorities have been working on their plans for reorganising areas into health districts and by Friday next all 14 regions in England will have issued consultative documents setting out their plans for creating health districts.
These are substantial papers and, as I have asked, they have been distributed to a wide range of interests for consultation and comment. I hope that regions will have finished their consultations by about February next and will then submit their proposals to me. The impression I have formed—it may be belied by events, but I think that it is right—is that the majority of the proposals for creating district health authorities will meet with little objection, but there will be a few in each region where the answers are not immediately apparent and where difficult decisions will have to be made.
It would not surprise me if a number of hon. Members on both sides felt it necessary after February, when they know what the regions are finally proposing, to express their points of view directly to Ministers in person. I give an undertaking that my hon. Friends the Minister for Health and the Under-Secretary of State and I will do our best to respond to such requests, as I think we usually do.
I hope to make decisions by about the middle of next year and to appoint the chairmen of the new district health authorities shortly thereafter. The regions in turn will be expected to appoint district health authority members so that the new health authorities should exist in shadow form by the end of next summer. Most regions envisage the new health authorities taking over on 1 April 1982. As before, there will be a period when they may overlap.
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One, however—the Wessex region—apparently expects fewer arguments than the rest—I am sure that one or two of my hon. Friends will not necessarily agree with that view—and is aiming for the handover to come on 1 October 1981. It remains to be seen whether the Whitley negotiations. which are vital to the change, are completed in time to enable that to happen.
The reason is that, until the new gradings and salaries are agreed, a district health authority cannot finally determine its management structure, because it will not know what flexibility it will have and therefore what posts it may create so as to live within the management cost limits on which we are going to insist.
Mr. Stanley Orme: Would the right hon. Gentleman consider making the prescribed day for the changeover the vesting day, and fixing it for 1 April 1982? If authorities such as Wessex do not conform to that date along with all the rest, they will create problems for many of the staff in relation to compensation or perhaps to a wish on their part to move. I have had representations, as the right hon. Gentleman probably has, from staff representatives. They are concerned about this aspect. Since apparently only one authority at the moment is aiming at a different date, I think that it would be advantageous to aim at a single vesting day.
Mr. Jenkin: I am grateful to the right hon. Gentleman for making that point. It is obviously one of substance and we have given consideration to it. Indeed, I have had representations to just that effect from the staff side. If Wessex were the only one, we would want to consider very carefully what the right hon. Gentleman has suggested, but it will not necessarily be the only one. There may be a problem in the case of London, although we are hoping that it will meet the same timetable. But it would be rash to try to guarantee that by naming a national vesting day. The suggestion we have made is that most people should aim for 1 April 1982. We should have some degree of flexibility. I believe that that is the right answer, although I understand the problems that may be faced by staff.
Mr. David Penhaligon: Can the right lion. Gentleman give an indication to staff in areas where no change,

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in effect, is taking place—such as Cornwall, for example? Does he expect that a senior administrator in that county will be paid more or less than he is currently being paid for administering the same area as now? That would give a good guide to whether the right hon. Gentleman will get the saving of money that he expects.
Mr. Jenkin: The hon. Gentleman can not tempt me into that. These matters are being negotiated in Whitley and it would be rash of me to comment. In the case of someone who will be fulfilling the same function under the new system as he is now, it would surely need persuasive argument to suggest that the nature of his task had been changed to such an extent that a change in conditions was required.
Dr. Alan Glyn: The fundamental point about change in the Wessex area or in London is that the change must be based on Whitley council recommendations. Does not my right hon. Friend agree that when they are established it does not really matter on what day the authorities choose to carry the change out?
Mr. Jenkin: I shall turn to the question of London in a moment. I hope that my hon. Friend will recognise that there are considerable complications, not least arising from the university's position and from a number of other points, which will make it difficult. I hope that we shall have the same timetable, but it would be unwise to guarantee it at this stage.
I turn now to the management cost limits—an issue that I regard as extremely important. The Government attach great importance to those limits. In our view, a great mistake was made last time, when the Department sought to lay down centrally, and in great detail, the management structures for area health authorities and districts. As a result, many unnecessary posts were created, many of which have since been eliminated and many of which it is the intention of the present reorganisation to eliminate. However, it would be equally mistaken if we were to try to determine centrally the precise details of the new slimmed-down management structure. That must be a matter for the new health authorities.
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How, then, do we prevent the proliferation of posts that seems to have accompanied so many other reorganisations—for instance, the local government and water authorities reorganisations? I believe that we have learnt the lesson. The key instrument must be an effective and enforceable management cost limit. We now have machinery for determining with some accuracy the management costs incurred in each health authority. We also have machinery to enable treasurers to hold the spending of health authorities within the limits determined first by the Government and then by regional health authorities. By combining those two financial disciplines and by fixing the management cost limits at the levels necessary to secure at the end of the transitional period the savings that we are determined to make we can achieve the objectives of this reorganisation and at the same time make the savings in management costs that we seek. We have the means. We are determined to use them to cut the costs of administration.
A great deal will depend upon the wisdom of the new district health authorities, and particularly their chairmen. When they are appointed, we shall impress on them, first, that it will be for them to decide what management posts to create; secondly, that they should create management posts only for which there is a proven need; and, thirdly, that their management structure, when finally settled, must be such as will meet the cost limits imposed on their health authority. They will have every incentive to do that because, as I have made clear on many occasions, both inside and outside the House, any savings in management costs will be money available to develop patient services. Neither I nor my right hon. and learned Friend the Chancellor of the Exechequer is seeking to claw back those savings. We are aiming to reduce the cost of administration and switch it directly into health care—whether for prevention or for the care of patients.
There are a number of other matters on which further consultation and further decisions will be necessary. I hope shortly to publish a consultative paper on the role and membership of community health councils in order to seek views on how their functions as watchdogs for the community can be made more effective.

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Talks are also being held with family practitioner committee representatives about how to achieve better collaboration between these committees and health authorities on planning, particularly in primary care. Arising from those talks we shall prepare a further draft circular, on which we shall consult the Service. One of the issues for decision will be whether the present "principal/agent" relationship between health authorities and family practitioner committees should be retained or whether FPCs should employ their own staff. My hon. Friend the Member for Belper (Mrs. Faith) moved an amendment to the Bill to that effect in Committee.
Early next year I intend to issue a circular on the procedure for the appointment of district health authority members, which will spell out more clearly than has been done in the past the role of members. I hope also to discuss the simplified planning system with the regional chairmen during the autumn, with a view to publishing proposals on that in the new year.
The chief medical officer in my Department, Sir Henry Yellowlees, is making a good deal of progress on his review of medical advisory machinery in discussion with the profession. This is a complex matter, and it will take some time, but I certainly hope that the Government's conclusions will be published well before the first district health authorities are created. Similar progress is being made in respect of the advisory machinery for other professions—for instance, nurses.
Mr. Maxwell-Hyslop: Is the deputy medical officer in agreement?
Mr. Jenkin: I understand that all members of my staff are in agreement on these matters. There are four deputies, and I am not sure which my hon. Friend has in mind.
There is another minor but sensitive matter on which we would wish to consult the Service—the question whether district health authorities with teaching hospitals in their districts should be designated as teaching districts, as teaching areas now are. There are good arguments both for and against, and I shall not want to make up my mind on it until I have consulted the various interested groups,
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particularly the universities and groups within the Health Service.
My hon. Friend the Member for Windsor and Maidenhead (Dr. Glyn) raised the question of London constituencies. He and other hon. Members will want to know how these developments will affect London, where there are special problems. The Government are keen that this restructuring of London should keep in time with the rest of the country, but, because of the complications, and to help us in this task, I established the London advisory group as a high-level committee representative of all the relevant interests in London under an independent chairman, Sir John Habakkuk, to advise me. The group has already put forward specific guidelines for restructuring districts in London. which were attached to the Department's July circular.
In the meantime, London university has been considering the Flowers recommendations on the future of Medical schools in London, and it is ex-expected that it will be making its decisions very shortly. The London advisory group will then have to take account of these decisions by the university in making recommendations for the future of the major teaching and non-teaching hospitals in central London. It will also have to consider, in clue course, the Thames regions' proposals for new DHA boundaries in London. The group will also have to consider the development of an effective primary care service in some of the more difficult inner city areas. This is at present the subject of a study commissioned by the London health planning consortium.
The House will see that the advisory group has a heavy programme, but I am confident that Sir John and his colleagues are doing their utmost to make sure that we keep to our timetable. I should like to pay tribute to the staff of my Department, who are bearing a considerable burden during this period of transition, and to thank them for what they are doing.
Dr. Brian Mawhimiey: Before my right hon. Friend leaves these matters, will he say what progress has been made by the group that is considering the ambulance service, when we are likely to receive a report from the group, and what opportunity there will be for the House to consider the report before

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decisions are taken about the ambulance service in the new district health authorities?
Mr. Jenkin: In order not to take up more time of the House at the moment, my hon. Friend the Minister of Health will deal with that point when he replies to the debate. The subject is important, and an important recommendation was made by the Royal Commission, which we shall examine carefully.
That is a progress report on reorganisation. but the House would not want me to complete it without some reference to other matters that are being pursued by my Department at this time. Reorganisation is only part of our programme.
The Government will be laying before the House a number of documents within the next two or three months in which we shall be setting out our policies on wider issues. For instance, the Social Services Select Committee, under the chairmanship of the hon. Member for Wolverhampton, North-East (Mrs. Short), made some interesting comments in its third report on the Department's expenditure. As I made clear in my statement at the time, the Government do not accept all the criticism of the hon. Lady's Committee, but we shall be replying to this report in a few weeks' time and I shall not today anticipate what we shall be saying.
Again, the Select Committee's report on perinatal mortality put forward a large number of important recommendations, which I and my colleagues have been studying with great care. Here, too, we shall be putting forward our response fairly soon.
On the question of strategy in health and social services and of the priorities that we shall expect health authorities and local authority social service committees to take account of in their planning, we shall be publishing a document, I hope early in the new year. It will be aimed primarily at the chairmen and members of health authorities and their social service committees. We want to give them guidance on the policies and priorities for which they will be looking to us when they make their plans for running the new district health authorities and for estab-
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lishing proper colloboration with local authorities.
While hon. Members may wish to take the occasion of this debate to state their views on all these subjects and, perhaps, others, I am sure that the House will understand if Ministers reserve most of their comments until the documents that we have in preparation are published and are available.
Mr. Paul Dean: Will my right hon. Friend say a word about the future of donors of kidneys and other human organs, in view of some disturbing reports that appeared in a BBC "Panorama" programme the other day, which suggested that in a number of cases organs are removed before patients are clinically dead? These are disturbing allegations and they will have a very bad effect on possible future donors unless they are disproved. Can my right hon. Friend tell us anything that will help to reassure the House and the country on this important matter?
Mr. Jenkin: I am most grateful to my hon. Friend for giving me a chance to say something about this matter. The broadcast was very disturbing, and nothing that has happened since then has gone any way to modify the grave anxieties that have been aroused in the mind of the public because of what the public fears about being an organ donor. As my hon. Friend the Minister for Health said at a conference over the weekend, torn-up kidney cards are now being sent back to the Department by people who have been frightened by what they saw. Much more important is the grave anxiety of the medical profession, because it feels that that programme got it entirely wrong.
The programme was based on the proposition that three American donors who would have been pronounced dead under the British rules subsequently survived. Hon. Members will have seen the article by Tony Smith in The Times and the letter by Professor Jennett in the current issue of The Lancet. Under the British rules established by the organ transplant committee of the profession none of those three patients would even have had the British tests applied to him. The most disturbing factor about the way in which the programme was constructed—Profes-

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sor Jennett made this point in his letter—was that he did not see that evidence—and he took part in the programme—about the American cases until the same time as the members of the public saw it. The failure of the BBC to give the leaders of the medical profession, who had vigorously protested before the programme went out, any opportunity to comment after having seen that is really shameful.
I hope that members of the public will now pay as much attention to the statement that I believe will be drawn up by the group from the Royal medical colleges, which is concerned with this, as they did to the original programme. I hope that the BBC will be persuaded to give the British medical profession an opportunity to answer the programme.
Mr. Orme: I take note of the Secretary of State's comments, but he knows that the programme created a great deal of public concern. It needs answering, and possibly his Department ought to answer, point by point, the issues that have been raised. In that way an alternative answer will be given and, if necessary, the BBC can be asked to give as much publicity to that as to the points originally raised. The House should recognise, as I am sure the Secretary of State does, given the reactions he must have had to that programme—reactions that I, too, have had—that there is public concern. That concern must be answered fully at the earliest opportunity.
Mr. Jenkin: I take the right hon. Gentleman's point, but I ask him to hear this factor in mind. The original recommendations and the code produced by the transplant advisory committee are produced by the medical profession. It is the medical profession that can draw up these provisions and that has the authority to make the rules effective within the profession. I believe that it is therefore right for us to look to the profession for the effective refutation of the charges that were made in the programme.
I think that the representatives of the Royal colleges are meeting today—I ask not to be held to that—and we must wait to see what they produce. I entirely take the right hon. Gentleman's point that there is now a need which there ought never to have been to reassure the public so that we can continue with pro-
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grammes of organ transplants as they have been conducted in the past. The terror that one has is that patients—particularly those requiring renal transplants—may go without the operation they need and may die because people have become frightened unnecessarily and irresponsibly by a television programme.
I turn now to the so-called Black report on inequalities in health, which was published after I made my statement on reorganisation in July. It has had an interesting reception. The right hon. Member for Lewisham, East (Mr. Moyle), almost within days of the appearance of this substantial report, suggested that it would be the basis of future Labour policy. We put the cost of implementing the report at not less than £2,000 million a year. The right hon. Gentleman and his right hon. Friend the Member for Salford, West (Mr. Orme) were Ministers in the Department when, so far from adding £2,000 million to expenditure on the Health Service, they cut capital spending on hospital and community health services from E.552 million, which it was when we left office in 1974, to £358 million in 1978–79—a reduction of one-third.
One simply cannot take seriously anybody who in office presided over health cuts on that scale and who in opposition cheerfully and blindly appears to welcome as the basis for his party's policy a report with a price tag of £2,000 million.
Mr. David Ennals rose—
Mr. Jenkin: I will not give way to the right hon. Gentleman. No doubt the Opposition will seek an opportunity to debate the report, which, let it be said at once, and as I said in the foreword, contains much interesting information even if it does not shed much light on the fundamental causes of health inequalities. We certainly look forward to hearing the Opposition explain why, for instance when we have had a National Health Service for over 30 years, which has been overwhelmingly financed from taxation, which is virtually free at the point of delivery and which covers the huge majority of the British people, inequalities in health care have in some respect increased. That is the evidence in the report. The Government are right to treat the report with considerable caution.

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A number of proposals in it warrant careful consideration, and that we are giving them. But anyone in the House—especially anyone who was a Minister in the last Labour Government—who argues that it is in any way conceivable that any Government in the foreseeable future could contemplate earmarking the finance that would be needed to fulfil Professor Townsend's dreams is living in cloud-cuckoo-land.
This is a serious point, because it brings into question the whole credibility of political debate. We read in the press that the Labour Party has just completed a series of meetings across the country on health affairs, including a substantial conference addressed by the right hon. Member for Salford, West the weekend before last. It is difficult not to feel some sympathy with one of the reporters who covered that event, because he wrote:
"It's certainly good to know what the goals—
of the Labour Party—
"are. But a little greater emphasis on how they are going to be achieved might have helped avoid that sagging cynical feeling at the end of the day."
The sympathy is increased when one realises that was the man reporting for Labour Weekly.
I have tried to show what we can do and are doing to improve care for National Health Service patients at a time of great economic difficulty. Our plans are realistic, and the House may think that the progress we are making is encouraging. They have the overwhelming support of those most closely concerned.
This may not be the stuff for political rhetoric and conference tub thumping, but for the patients, whose care must be our first concern, these plans will mean better housekeeping, better management and. above all, better care.
5.51 pm
Mr. Stanley Orme: The Secretary of State finished on Sir Douglas Black's report, and I shall have something, to say about that later.
"Patients First" is the basis of the Government's current policy. We all want to see improvements in administration and the cutting of costs, but it is worth noting that the British Health
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Service is one of the lowest administrative cost health services in the world. That is primarily because it is based on a policy of funding through direct taxation. It does not have any insurance input and it does not carry with it, as in other countries—for example, the United States and certain European countries—high administrative costs because of the costing of bills, insurance collecting, and all that goes with it.
The Labour Party fully supported the removal of the tier in the reorganisation of the National Health Service proposed by the right hon. Member for Leeds, North-East (Sir K. Joseph) in 1974. We think that will lead to some administrative improvements. Nevertheless, that is only part, not the whole, of the story.
Today, the Secretary of State has given us some figures of savings in staff ranging between 4,000 and 5,000.
Mr. Patrick Jenkin: Places.
Mr. Orme: Yes, places. I accept that these are not redundancies. The vast majority will be achieved through natural wastage and early retirement. The Secretary of State referred to savings amounting to £30 million. But those savings will not be made in the first year or two years, because it will be very costly to arrange early retirements and to enable people to accept redundancy. As we know from local government reorganisation, this is not by any means a cost-free exercise. Therefore, we should be interested to hear when the Secretary of State believes we shall be in the £30 million savings era.
I raised the question of a vesting day with the Secretary of State because of the anxiety of staff and the problem of overlap which could occur. The London situation immediately springs to mind. My right hon. Friend the Member for Lewisham, East (Mr. Moyle) will deal with that matter and the staff position in more detail if he catches your eye, Mr. Deputy Speaker.
The title of this document, "Patients First", is misleading. It is not about all patients or a whole health policy. Essentially, it is about patients in hospitals. It fails to reaffirm the importance to the community of the Cinderella services and the effect of the expense on acute medicine. It fails to indicate priorities, such

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as prevention—Sir Douglas Black comes into that—and to place the structural aspects of the NHS in a social or general medical context. A simpler structure is necessary, but this reorganisation does not guarantee better quality management, though we hope that that will be achieved in future.
We have to judge the proposed changes against the background of the Government's current economic policy. The National Health Service faces five years of unprecedented financial stress, and its ability to make sensible decisions will be even further impaired. Reorganisation, however good, is no substitute for the resources that are urgently needed by the NHS.
It is argued that there will be increased conflicts over money and unwanted variations in local health services by devolution to the districts. That, combined with RAWP and cash limits, suggests a frightening outlook, and there is a loss of morale in the NHS due to the Governments' economic policy and the severe cuts.
"Patients First" has little to say about capital investment, replacement of outdated hospitals, attempts to improve staff-patient ratios, community care, health education and investment in the Cinderella services. Sir Douglas Black's report is crucial to this debate, for he deals with patients and priorities.
The Secretary of State said that to implement Sir Douglas Black's proposals in toto would cost £2,000 million. No one suggests that this should be done overnight at a stroke. It would be impossible. However, certain proposals in the Black report, that would cost very little were not dealt with by the Secretary of State. The short-term investment in the problems raised by Sir Douglas Black would mean longer-term savings.
The Black committee was set up by my right hon. Friend the Member for Norwich, North (Mr. Ennals) when he was Secretary of State, and that committee reported to the present Secretary of State. That committee was set up because we were becoming aware that the NHS, freely available on a universal basis, was not necessarily getting to and dealing with some of the problems within our society. We readily admit that. Therefore, it was essential that a fresh
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look be taken at the lower income groups and the effects on family and child health, ante-natal problems, and so forth. Sir Douglas Black and his colleagues have produced a wide-ranging analysis, of which any Government should take note.
I did not like the way in which the Secretary of State dismissed the Black report, or the fact that copies were not readily available. Indeed, the Secretary of State in his letter to me admitted that initially copies were not available. A report of this nature should not be duplicated within the Department. It should be a parliamentary paper. I asked the Secretary of State to print it as a parliamentary paper and to make it available on that basis. I accept, as he rightly states in his letter, that hon. Members can now obtain copies. However, some hon. Members were told initially that they would have to pay £8 for a copy.
Mr. Patrick Jenkin: That was a complete misunderstanding on the part of someone in my Department. I think that the right hon. Gentleman will recognise that no Minister could conceivably have given an instruction of the sort that he has described. I agree that we underestimated the demand at the first printing. However, after a few days, when copies were not available, further printing took place and every demand is now being met. It is probably cheaper for my Department to publish the paper. It costs £8—about the same amount that had to he paid for the document that the Royal Commission published. The Department can commission printing to meet demand. The suggestion that we tried to hush it up must be set against the fact that we sent 100 copies to the national, provincial and specialist press. That is an odd way of hushing it up.
Mr. Orme: I accept what the right hon. Gentleman says about hon. Members. I accept that Ministers would not issue such an instruction. Nevertheless, the report should be a parliamentary paper. The right hon. Gentleman appears to have made up his mind, but I press him to keep the matter under consideration. I have no doubt that some of my hon. Friends will do likewise.
Sir Douglas makes some statements that we cannot ignore. For example, the report states that the difference between social class 1 and social class 5—I do

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not like that terminology; I prefer to talk of those who are better off and those on lower incomes, which is much more civilised—means that children in the first category are twice as likely to die at birth or in the first month of life, and four times as likely to die in the next 11 months, than children within the latter category. The study indicates that in some respects there has been no improvement in relative conditions over about 30 years and that by some standards the health of those in the lowest income groups has deteriorated.
That is something that I am not prepared to countenance. Mistakes may have been made in the past, and the result of those mistakes must be dealt with in the future.
The Secretary of State has talked about our hospital service. The NHS is far too hospital-orientated. It is a service that is based on hospitals. I should like to see a wider development, which would enable us to take some of the pressure off hospitals.
The Black report refers to school health statistics, the results of hearing and vision tests and the measuring of height and weight. As a first step it recommends that health authorities, in consultation with education authorities, should select a representative sample of schools and initiate routine assessment. If that were implemented it would not cost a fortune and it would take some of the pressure off the NHS.
The report recommends a study of the relationship between income and ill health in our society, including types of job. That points to a much wider occupational health service and preventive medicine. There would be savings if people were dealt with before they went to the doctor or hospital. Professor Black argues that further resources within the NHS and personal social services should be shifted more sharply towards community care and especially towards antenatal, postnatal and child health services and home help and nursing services for the disabled.
The report deals clearly with school meals and school milk. It states that free milk should be available in schools, especially for those in the income groups of which we are talking. It is recom-
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mended that that provision should begin for couples with their first infant child and for infant children in large families. Sir Douglas asks that there should be accessibility to the facilities of antenatal and child health clinics and that steps should be taken to increase utilisation by mothers, especially in the early months of pregnancy.
Sir Douglas deals with an issue with which the Secretary of State is not dealing—one that the right hon. Gentleman and his Department are ducking and that would not cost money, namely, smoking and advertising and the Government's attitude. We have now waited nearly 12 months for the Government to make a statement. The Minister for Health is always on the verge of telling us that the discussions with the industry are about to be concluded. However, we receive no firm information from the Department. If the industry is deliberately using tactics to delay and frustrate the Minister, it is time that the Government considered legislation. We have promised them support.
We should be dealing with some of the disquieting aspects of the smoking industry, which widen into sport and the arts and the way in which the restrictions on television advertising are being circumvented. Sir Douglas goes so far as to talk of the ultimate phasing out of cigarette smoking advertising and an agreement being reached within the industry to redeploy and to introduce fresh products. He says that studies should now be taking place between employers and the trade unions.
I accept that we can make a start only if we carry the public with us. I am convinced that the public are ready to be carried along on this issue. It is about time that we had some Government action. If they need legislation, let them tell us and we shall consider how we can assist.
Mr. Ennals: Will my right hon. Friend repeat the Opposition's commitment to support the Government if they introduce legislation that will impose further limitations on advertising? That would be a helpful assurance for the Secretary of State and the industry.
Mr. Orme: I am happy to repeat the commitment. When we are discussing

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this issue we are not seeking cheap political popularity. There is much criticism, as well as agreement. It is time for action to be taken. I reaffirm the Opposition's commitment.
Sir Douglas deals with health care at school on a wide front by including school medicals, school milk and school meals. He deals also with child benefit. Many Conservative Members are concerned about that issue, and they should take note of those points. There is speculation about the Government's intentions in relation to child benefit and uprating. This is seen as a key factor, particularly in relation to helping working-class mothers and one-parent families. The Secretary of State was once a strong advocate of child benefit. I wonder where he now stands.
Sir Douglas Black also deals with other points, including the maternity grant. Many of the proposals cost money. Nevertheless, they point in the right direction. Sir Douglas deals with the need for a comprehensive disablement allowance for people of all ages and suggests that it should be introduced in stages at the earliest possible date, beginning with those on a 100 per cent. disablement allowance. Sir Douglas Black's report is one of the most important reports to be published. Together with the Royal Commission report, it is as important as the Beveridge report was 30 years ago.
I make no apologies for raising the subject of the Black report. No doubt we shall consider it again in more detail. We may ask the Government to give not only the blanket cost but also the cost of individual items. Let us see which items cost very little. We could then consider the matter on that basis.
Recently, there have been some disquieting events. We heard the statement that the Secretary of State made at the Conservative Party conference about volunteers. The Labour Party is opposed not to volunteers but to using those volunteers for jobs within the National Health Service that should be done by National Health Service employees. We have heard of a terrible lottery that was held in a Liverpool hospital. Today, the British Medical Association has attacked the Health Service cuts which forced a surgeon to select patients by lottery. Mr. Lowe, head of the BMA's hospitals division said:
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"It must be very distressing for all the people involved."
He said that nine women at Mill Road maternity hospital, in Liverpool, drew lots for five empty beds in a gynaecological ward. The losers were sent home. He also said that it was very important that a doctor should be the only person to judge whether somebody should be admitted to a hospital.
Mr. Patrick Jenkin: Hon Members from all parties will condemn the heartless publicity-seeking action taken by the surgeon in that case. The BMA is right to say that only the doctor in charge can decide which patient should be admitted. However, that doctor knew that there were not enough beds for the patients that he summoned in. The whole episode gave the impression of having been set up for the benefit of the press. That is a matter for the doctors' professional bodies to consider. It is for them to decide how far that accords with the high standard of ethics that the medical profession rightly has.
Mr. Orme: I welcome the Secretary of State's condemnation. I was not seeking publicity. The facts are contained in the BMA's statement. I do not wish to see such developments within the National Health Service. If decisions about priorities are based on whether there is sufficient money, such things may occur. That is wrong, However, I welcome the Secretary of State's remarks. Perhaps we should wait until we have heard what the medical profession has to say. I should welcome a clear statement from it.
There is a great concern about the ambulance service and the possibility of disruption within that service. There is extensive disquiet, which needs to be cleared up. Rightly or wrongly, some of those who administer and work in the ambulance service feel that the reorganisation will be used to cut back the service and to restrict its facilities and job numbers. I hope that the Minister will respond to that point when he winds up the debate.
I listened to the Secretary of State's remarks about London and about the committee that he set up. We still feel that this subject is being dealt with on a piecemeal basis. We recognise the size of the problem in terms of teaching

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hospitals. We recommended a wider study which would take account of the Flowers report and of the consortium. We are concerned, and I hope the Minister will give us some clear guidelines.
We are also worried about rapidly rising unemployment and the link with health problems. There is evidence of a relationship between unemployment and some health problems. An American study has been made, and a British study was carried out by a lecturer at Warwick university. The Government should consider this issue and perhaps sponsor an inquiry. Many people, particularly one-parent families or parents of families in which unemployment exists, come to my surgery. To an increasing extent the women that I meet in my surgery are on drugs of one form or another—drugs that have been prescribed by their general practitioners. The taking of drugs is becoming prevalent in our society. It is a danger to our society. The stress and strain that some find as a result of living with the rigours of our society must be taken into account, particularly in terms of the Government's current policy.
We are not satisfied with the uncertainty that still surrounds community health councils. We are aware of what the Secretary of State said about community health councils and that Scotland is excluded from this debate. However, there are problems about Scotland. The Secretary of State has made a holding statement about community health councils, but a more positive approach is needed.
We are also concerned about democracy. The hon. Gentleman did not touch on that subject. I have received—as he has probably received—a decision from the Associated Metropolitan Authorities about local representation on area health authorities. That representation may be reduced from eight to four representatives in most areas. I do not say that that is the figure, but representation will be dramatically reduced. Such representation is a form of indirect democracy within the National Health Service. It would be wrong. to remove those people.
We have to keep a balance between those who work in the National Health Service—the ancillaries, as well as the medical staff—and those whom it serves.
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We must bear in mind that although the National Health Service employs I million people it serves 55 million people. who have a right to some say about its running.
I have received a letter that says:
"The AMA's Policy Committee resolved today (23 October) that further efforts should be made to persuade the Secretary of State to reconsider the question of representation following the results of inquiries by us into the views of the constituent authorities."
How do we get the right input? It is a direct democratic input and it is an input that the Secretary of State does not appoint. These people are elected by local authorities. I have lately been receiving many representations about the wholesale sackings of Labour Members on area and regional health authorities. I do not know what sort of attitude the Secretary of State will take with the creation of the new authorities, but I believe that there must be some safeguard—democratic representation that is not solely at the behest of the Minister. I do not care whether that Minister is Tory or Labour. There must be some protection in this situation.
Finally, I wish to make an important point. In his Department the Secretary of State has responsibility for both health and social security. We are told by the press—it was in The Observer on Sunday and has not been denied—that there are discussions going on in the Government about Treasury proposals for cuts in public expenditure. We are in some difficulty here. I have called the Secretary of State a Treasury mole, and I still believe that he is, but he has a responsibility within his Department to defend that Department against some of the wild propositions that are being made at present. God knows we have suffered enough already.
We have had enough cuts already under this Government. But the items that have been listed talk about a big increase in the revenue raised by prescription charges by removing the blanket exemption for old-age pensioners. That, in itself, could have health repercussions. Surely even this Government are not mad enough to do that, but, having seen some of the things that have already happened, we fear that this could be so. I warn the the Secretary of State that we shall watch very carefully the proposals that have been made—for example, the cancellation of

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the commitment to increase child benefit in line with inflation next November. It is not keeping in line with inflation at present. Sir Douglas Black's report says that the commitment is crucial to low income groups. We are also told that there could be possible cutbacks in housing and in the health budget as such.
Obviously, we totally disagree with the Government's economic policy. We have made that very clear in many debates. But what we are talking about here is the Health Service which affects millions of our people who depend on that Service. To have cutbacks at this time will be disastrous.
We are discussing reorganisation, but reorganisation is for people and for patients. It is for the people who work within the industry whether they are hospital porters or consultants. On that sort of basis we impress upon the Secretary of State that we want greater efficiency. We shall not obstruct the reorganisation and the removal of the tier but we insist that the points that I have raised this afternoon—Sir Douglas Black's points—are considered carefully. Threats are hanging over parts of the Service, and the Treasury is running rampant again. We believe that the British people will not stand for the Government going as far as some of their proposals.
6.25 pm
Mr. Anthony Grant: As a number of hon. Members wish to speak in this important debate, I hope that the right hon. Member for Salford, West (Mr. Orme) will forgive me if I do not follow his speech directly. He will be pleased to hear that I have given up smoking, and I have no doubt that my hon. Friend the Under-Secretary will be even more pleased. There has not been any particularly noticeable improvement in either my health or my temper. My hon. Friend will be less pleased to hear that I strongly oppose any legislation in this area, which I believe is essentially one for individual decision.
I wish to touch on an important and essential point—the effect of reorganisation on the ancillary services of the National Health Service. Here I declare an interest in the Pritchard Services Group which used to be in my constituency and which has a subsidiary company with a commercial interest directly in this field.
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The National Health Service is in a mess. It has been so for many years and will continue to be in a mess unless firm decisions are taken. it has failed to live up to the dreams that were held for it at one time. The service that it provides compares unfavourably with that provided, often in the private sector, in many countries which hitherto had envied our Service. Therefore, clearly something had to be done.
In the present economic climate the solution is not to be found in merely pumping more money freely into it, even if that money were available. Therefore, quite rightly, the present Government identified that the better use of existing resources and a cutback in bureaucracy were the priority policies to be followed. I am glad to give them my support for what they have done so far.
I have raised before in the House the question of how a more efficient use of resources could be achieved through the greater use of private enterprise in the ancillary services, such as the provision of cleaning services and laundries. When I raised this matter I drew attention to the millions of pounds a year which could probably be saved out of the enormous bill—it is close to £½ billion a year—that is incurred for cleaning within the National Health Service. If more private contractors were used in this area with financial disciplines and competition, a substantial saving could be achieved. This saving could be used for essential and much-needed medical equipment.
At that time the amount of private contract work done in the provision of ancillary services was about 2.3 per cent. of this total. I regret that that has now fallen to 1.6 per cent. for reasons which I shall explain later. However, the Government took on board the wisdom of this policy and issued a circular in June this year in which the Secretary of State drew attention to the fact that the contractual arrangement for ancillary services had established itself as a recognised way of providing such services. He said that facilities used in this way had proved to be a valuable supplement to facilities available in the NHS and that he was anxious that authorities, in deciding on the best and most economic provision of services, should give early consideration to the use of non-NHS

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facilities. The Secretary of State went on to say how the system could give an authority greater flexibility. That admirable intention is being defeated as a direct consequence of the Government's reorganisation plans.
Reorganisation is necessary. It is a second leg of the Government's policy. Attention was drawn to the problem by the Royal Commission when it stated that there were too many tiers, too many administrators in all disciplines, a failure to take decisions quickly and money was wasted.
As my right hon. Friend said, the consequence of reorganisation is a reduction in the number of administrators, officials and bureaucrats. There is, therefore, the inevitable and traditional running for cover. Bureaucrats will try to create work in order to justify their existence, as outlined by Professor Parkinson many years ago. With regard to the provision of ancillary services, the figure has gone down from a miserable 2.3 per cent. to an even more miserable 1.6 per cent.
Administrators are turning down private contracts because they retain a degree of importance if they have to administer direct labour schemes. It is done in a grossly unfair manner. Tenders from private contractors are turned down because the administrators say that they can do the work better directly. They do not have to make that dirty thing, profit. That is an over-simplistic approach. I hope that the Government will look at contracting in the Health Service. Are full costings prepared by hospital managements for directly controlled services? Are they prepared prior to receipt of commercial tenders in good faith or after, with the advantage of having looked at commercial tenders? Are costings prepared on a like-for-like basis? Are hospital administrators given the opportunity to express opinions, or are decisions taken at district or area level without such consultation?
It is essential to look at the matter urgently, establish a properly controlled and audited system of tendering and cost comparisons and make it work. I should like the Government to consider temporarily freezing all decisions until there
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has been a proper investigation into this question.
I believe that I have drawn this case to the Minister's attention. The firm concerned offered one free year to the authority, but the contract was still declined without justifiable reason. The authorities simply want to return to direct labour. It could become a scandal if the practice gains momentum.
I should like the Secretary of State to issue a fresh circular reminding authorities of his earlier expressed intention to encourage the greater use of private enterprise. He should insist on a proper comparison between direct and contract labour and proper financial monitoring of the system. He should in no uncertain terms tell bureaucrats who are minded to thwart his intentions that, unless they co-operate, far from saving their jobs, they will speed their demise. Unless my right hon. Friend comes to grips with the problem, I fear that his admirable intention of achieving greater efficiency and better use of resources will be thwarted, much to the disadvantage of the Health Service and the health of the nation.
6.34 pm
Mr. David Ennals: I congratulate the hon. Member for Harrow, Central (Mr. Grant) on giving up smoking, but I go no further in supporting what he said.
The hon. Member suggested that the Secretary of State should send out more circulars instructing administrators what to do. That would be the worst way to start the reorganisation. He suggests that the private sector should take over large sections of the Health Service, such as laundry, catering and cleaning. The private sector has to make a profit, unlike the public sector. Private companies may not be prepared to take the really dirty laundry and could not cope with laundry at the required speed. The hon. Gentleman may make his examinations to see whether we can save money, but I believe that it is a wild goose chase and could cause trouble.
The reorganisation is a difficult and important operation. I am glad that the Secretary of State paid tribute to the staff and administrators of the National Health Service. He is right not to be dogmatic about an appointed day and to

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say that, if there are changes in the regions, they will be at another time. The concept of an appointed day and everything happening at once was a misfortune of the previous reorganisation. The changes will nevertheless lead to uncertainty and turmoil. When I became Secretary of State, the staff were only beginning to come to terms with the 1974 reorganisation. It would have been grossly unfair for me or my predecessor to push forward further reorganisation at a time when they were settling down. We had to wait for the report of the Royal Commission. I wish the Secretary of State and the Health Service well in the reorganisation and in reducing one tier. The administrators will have a difficult task.
The three issues that I wish to deal with concern the Public Expenditure Select Committee and the Black report. It was strange to publish only 263 mimeographed copies of that report, and the Secretary of State now admits that 100 went to the press. There were not enough left for even a quarter of the Members of Parliament, let alone the health authorities. The right hon. Gentleman grossly underestimated the response. My third point concerns Westminster hospital and the medical school.
I hope that the Secretary will take seriously what my right hon. Friend the Member for Salford, West (Mr. Orme) said about money. The Times on Saturday suggested that the Secretary of State had asked the British Medical Association whether prescription charge exemptions could be further limited, including the exclusion of old-age pensioners.
Mr. Patrick Jenkin: The right hon. Gentleman will be aware of the extent to which the press speculates on such matter. He had to put up with it when he held office. It is pure speculation.
Mr. Ennals: I accept that absolutely. An advantage of the debate is that the Secretary of State can state firmly that such suggestions are untrue.
Mr. Pavitt: Not yet true.
Mr. Ennals: Does the Secretary of State support the widely publicised view of the Minister for Social Security that the cuts were too little and too late and if it means more cuts, so be it? Is that his attitude to the already hard-pressed
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NHS and the scandalous cuts in benefit entitlement, or will he stand up in Cabinet, as the Minister for Social Security would not conceivably do, to those who are trying to push him into making even more damaging cuts?
I turn to the third report of the Public Expenditure Select Committee, which included an interesting exchange based on interviews with the Secretary of State, the Minister for Social Security and the Minister for Health. I was struck by how little the Minister said and how little they seemed to know about the costing and administration of the Health Service—matters that are the meat of the DHSS at the Elephant and Castle.
The Minister for Health was asked about priorities in health and personal social services. He said that the only major and fundamental change in priorities from those that he had inherited was the planned cut in spending on the social services. That was an important statement and I suppose that it was correct. He said that otherwise he agreed basically with the priorities of the previous Government.
The Secretary of State said that it was not a fundamental change and the Minister for Social Security bobbed up in the House and told us that there had been no cuts and that we could rest assured that in real terms the growth in social service spending would continue to rise. I do not know how that links with his reference to "too little, too late" or what his Cabinet colleagues felt about the suggestion that social service cuts were not to be made.
It was clear that no serious thought had been given to the consequences of social services cuts for the service provided by the NHS. Cuts in residential and domiciliary care for elderly or handicapped people would clearly have a push effect on the demand for social services. The Secretary of State was asked about that and replied:
"I do not think it is possible to quantify, let aloc. estimate, what the impact of the cuts on the health service might be."
It is extraordinary that the Secretary of State had not made those calculations. The 16 per cent. increase in joint funding, which we all welcome and to which DHSS Ministers repeatedly drew our attention, is inadequate to compensate for

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the planned cuts in social services. As the Select Committee report succinctly put it:
"The increase in the former"—
that is, the joint funding—
"represents less than 10 per cent. of the planned reduction of the latter"—
namely, social service programmes. Yet the Secretary of State blandly reasserts that the increased expenditure on joint funding
"will go quite a long way—if not the whole way—to prevent there being … overspill from the personal services cuts into the NHS."
The Select Committee's wry comment was:
"since it appears he cannot 'quantify' or 'estimate' such overspills, nor monitor the effects of expenditure cuts in either service, this assertion seems to be based more on wishful thinking than realistic analysis."
I desperately hope that there will be no more cuts in the NHS, but if there are to be such cuts I hope that the Secretary of State and his Ministers will consider carefully all the implications of every action that they take, particularly during the reorganisation.
Mr. Patrick Jenkin: Was the right hon. Gentleman quoting from a document?
Mr. Ennals: I was quoting the report of the Select Committee and the evidence given by the Secretary of State.
Mr. Jenkin: Will the right hon. Gentleman confirm or deny that he was quoting from his own article on the back page of Social Work Today?
Mr. Ennals: I was drawing from writings that I have produced. Any of us is entitled to quote from our writings on the subject. If the Secretary of State thinks that he has scored a point, he should think again.
Let us see whether the right hon. Gentleman can score any points on the Black report. He has already admitted that he underestimated the demand for the report. He also underestimated the importance of the report and the task that was set the Committee.
Sir Douglas Black was asked to set up a study because the previous Labour Government were concerned with a serious situation, namely, inequalities in health. He set up a distinguished team, which did
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a thorough job. We were faced with some sharp distinctions and crude differences. For example, mortality rates between the various social classes were worrying. To take an extreme example, in 1971 the death rate for adult men in social class 5—unskilled workers—was nearly twice that of adult men in social class 1—professional workers—even when account had been taken of the different age structures of the two classes. The gap is even wider in death rates for specific diseases. For tuberculosis, the death rate in social class 5 is 10 times that of social class 1; for bronchitis it is five times that of class 1; and the rate for lung cancer and stomach cancer is three times as high. There are many other examples.
The conclusion reached by the Black committee was:
"The problem of inequalities in health … lies at the heart of the problem of better integrating British society…. Present social inequalities in health in a country with substantial resources like Britain are unacceptable and deserve so to be declared by every section of public opinion."
I had hoped that the Secretary of State would agree with that conclusion and that in looking forward to changes that are required during the reorganisation of the NHS he would recognise that one of the principal tasks that we have to tackle is the problem that although we have a basically free Service available to those who need it, large sections of the public are not using it, and we must find ways, through our organisation, to ensure that they have the opportunity of using it and are encouraged to do so. That is what the report was all about. It concluded its introduction by saying:
"We have no doubt that greater equality of health must remain one of our foremost national objectives and that in the last decades of the twentieth century a new attack upon the forces of inequality has regrettably become necessary and now needs to be concerted."
It looks as though another Government will have to do that, judging by the peremptory way that the Secretary of State introduced the document. Even if he had printed it on gold-leaf paper, his introductory words indicate that he had virtually no intention of considering it. That is a disgrace, not only to the report and its subject but to the distinction of those who produced it.
I hope that the right hon. Gentleman will have second thoughts not just about

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the publication but about taking seriously the problems that lie behind the report. It is no good saying that we cannot carry out the recommendations because they would cost £2 billion, or whatever. Many parts of the 37 recommendations would not be costly. Some would cost nothing.
It is my sad conviction that the Secretary of State wrote only three miserable paragraphs in introduction because the objectives set out in the report were not accepted by him, his party or his Government. They do not accept that the task before us is to try to bring about greater equality in health for all our people.
Mr. Patrick Jenkin: The right hon. Gentleman may be right. I have never regarded it as a fundamental part of my political philosophy to achieve a greater equality. I have devoted my political life to raising the quality of service for everyone. It matters to me far less that there is inequality, provided that I can point to a steady improvement in the condition of the people. That is a Tory tradition that goes back to Disraeli and beyond.
Mr. Ennals: I find that very disturbing. If our task is simply to provide a service and not give a damn whether or not people use it, or to what extent they use it, or the effect that it has on their health, it shows a very crude and inhumane approach to the concept of our National Health Service. I am certain that all those involved in the establishment of the National Health Service and all those involved in it today are not simply concerned with providing a service. They are concerned with the effect on the human beings involved. What did the Secretary of State mean by his document "Patients First" if it was not the welfare of the people dependent on the National Health Service? If he is concerned about the welfare of the people dependent on the Health Service, he must be concerned about the health of the patients. Yet he has made it clear that this is not his concept. We must take his word for that.
My final point, although there are many other remarks that I would have liked to make, relates to an urgent matter—the future of the Westminster hospital and the Westminster medical school. I recognise that hon. Members on
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both sides of the House have referred to this problem on previous occasions. It seems that a decision will be taken by the Senate of the University of London on Wednesday this week which could herald the end of the Westminster medical school and eventually of Westminster hospital itself.
The Secretary of State will know that a plan has been put forward on the basis of eight months' consultation following the Flowers report and that the proposals that will come before the Senate envisage
"four combined medical schools. In three of the statement says: "The Westminster Medical schools would combine, but the integral parts would remain based on their own hospital."
That is a quotation from a letter that I wrote to The Times. I hope that the Secretary of State will not feel that it is necessary to intervene. I occasionally quote myself. That is perfectly reasonable. I wrote:
"This applies to University College and the Middlesex, Bart's and the London, and Guy's, St. Thomas's and King's. Only in the case of the fourth merger—Westminster and Charing Cross—is it suggested that one of the new partnerships is to be totally uprooted. As the statement says: 'The Westminster Medical School would have actually to move to the Charing Cross Hospital Medical School site'."
All my inquiries show that there is not enough room in Charing Cross to take in the Westminster medical school. It is suggested that there will be some overspill to St. George's, in Tooting. That would mean the dismemberment of a great medical school—a centre of excellence in every sense, and the heart of vital research of which our country has reason to be proud. It would also tear the guts out of the very hospital itself. Not only would many of the most distinguished doctors depart; the whole entity of the pathology department would also disappear. As a hospital, it would never again be able to perform the sort of service that it has provided until now. I mean not the service provided to Members of this House but the service to the community of Westminster.
I believe that this decision will be taken on Wednesday, unless the Secretary of State intervenes. The right hon. Gentleman knows the feelings that exist on both sides in both Houses. It would be a great tragedy, which the House would for ever deplore, if the Westminster hospital and its medical school were now

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to start on the process of dissemination and disintegration. That is the direction that is likely to be taken following the decision to be made on Wednesday. It can be stopped only if the Secretary of State decides to intervene.
6.54 pm
Mr. David Crouch: The House will be pleased to notice that the right hon. Member for Norwich, North (Mr. Ennals) is in such good voice and will also appreciate that he has been active on paper in the few weeks that we have been away from this place. We regard seriously his contributions to health matters, particularly those concerned with health administration and the running of the Health Service. As Secretary of State he made it his task to do what he could to sustain the Health Service and not to run it down, and that is in line with the theories and philosophy of his party.
On my way here this morning I passed Alexander Fleming House, where the right hon. Member for Norwich, North used to be found and from where my right hon. Friend now operates. I have no doubt that when I passed by my right hon. Friend was sitting at his desk, accompanied by his other Ministers. It is quite the most unstructured building in London; the worst office building that I have ever seen.
I could not help wondering what was going on in the minds of my right hon. Friend's officials—senior and less senior—at the prospect of the House of Commons coming back to discuss the structure and administration of the Health Service. I wondered whether they had come to work any earlier to get ready for this taut and difficult day. It occurred to me that the permanent secretary, besieged by people worried at the prospect of so much discussion and decision on the matter, might say to them "Do not give them a second thought. They will debate for six hours and then we can get on with the job".
In all my years in the House I have never run down the importance of this place in the determination of real things that matter, but when listening to the right hon. Member for Salford, West (Mr. Orme) I had to remind myself several times that on the first day after the recess we were debating the structure and management of the National Health
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Service. The right hon. Gentleman touched on that subject only about twice in his speech. My right hon. Friend, on the other hand, made a speech proper to the occasion. I suspect that there will not be many speeches that are proper to the occasion about the structure and management of the National Health Service.
We have debated a Bill and made it an Act of Parliament. We have decided that the National Health Service should be reorganised, but we should give some thought to stopping people in Alexander Fleming House and officials in the National Health Service in the regions—I serve as a member of one of those regions—from thinking that they can have matters all their own way. The only word used by the right hon. Member for Salford, West with which I agreed was "democracy". Thank God that he mentioned it, because that is what we are about. The officials are concerned with the structure, administration and management. We have to make sure that the structure and management are what we want and, in the words of this oft-quoted pamphlet, what patients want. I maintain that the new structure should be what patients want.
During the recess I spent some time working on this matter as a member of the South-East Thames regional health authority. I should like to take a few minutes of the time of the House to relate to hon. Members some of the complexities in which officials and lay members will be involved, including myself, as they consider implementing what Parliament has enacted, namely, the Health Services Act. I remind the House that what we are really seeking is better and more efficient management. We are seeking to ensure that local decisions are taken by local people. My right hon. Friend emphasised this requirement impressively and properly when he referred to strengthened management at local level, and that should not be forgotten. Another important factor was touched upon by my right hon. Friend. One of our objectives is to find a significant reduction in costs.
I hope that the House will not think that I am running down the Department in these apparently denigratory remarks. I am talking about the difference between officials and Members of Parliament. There is a significant difference in responsibility.

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The Department has sent out criteria which should be very helpful in seeing that we achieve what we are seeking to achieve in the three matters that I have suggested. My right hon. Friend referred to the circular containing those criteria—circular HC(80)8. I wish to single out some major headings that should determine the proper structure of the new Health Service.
The first requirement is that the new district health authority should be the smallest geographical area, with a population of between 150,000 and 500,000. Secondly, that area should be associated with a district general hospital and—in the best of all worlds—with some other hospitals as well—hospitals for the elderly, the mentally handicapped and the mentally ill. The circular goes on to say that of course one cannot expect the new district health authority necessarily to be self-sufficient in regard to the last of those.
Another requirement that I think to be very important is that the new district should comprise a natural community, that it should be coterminous with the social services authority and with an education authority if possible—give or take a little.
The circular also mentions that London presents special problems and is sometimes a special problem in itself.
Having looked at those criteria, I hope that as we debate we shall not neglect them, because the officials must not neglect them. If the officials think that we neglect those criteria, which my right hon. Friend has sent out and which they know about, there could be a change of emphasis when it comes to interpretation at regional level. That is what I have tended to see in the region in which I serve. It is quite a difficult combination of criteria to achieve. There will have to be some give and take and some flexibility.
When one provides flexibility, one must aim all the time to produce a structure to serve the patient and not to serve the consultant or the convenience even of the senior nurses, the ambulance men or the administrators. The Department, the officials and the regions have a tendency to go for what they perceive as the best management solution. That sounds right in industry. It sounds just what we are
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looking for—the best management solution—but it could be interpreted as a signpost to bigness rather than smallness.
I have already seen that happening in the South-East Thames region, where the management, the administrators and their medical advisers have found a larger district much more attractive for management purposes, because they can see centralised control—either from the region or in the district itself. A small district identifying with a natural local community with strong local management may not be strong enough to have an identity back at region. It may suit the region to deal with higher forms of equals by having larger districts with slightly more powerful people to deal with. That happens in industrial management and elsewhere. I can imagine a region disliking the idea of having a proliferation of small, important district management teams to deal with, and perhaps preferring to deal with a smaller number.
We have debated this subject many times. We spent nearly two months in Committee during the passage of the Bill this Session. I want to say something about time. My right hon. Friend is asking for a further three months' examination of provisional proposals. The provisional proposals from the South-East Thames region were, I think, published on 16 October. They cover well over 100 pages. The regional health authority is required by my right hon. Friend to let him have a report by the end of February. That means barely three months in which to examine a detailed structure across the whole region, and that applies to all the other regions.
I welcome the period of three months, but it is a very tight schedule, bearing in mind the number of people to which such a document is sent. In the South-East it goes to over 200 bodies—councils, committees, societies, trade unions and so on, all the local authorities and all the local parties, and every Member of Parliament. I imagine that the great majority of those groups and people will be interested on behalf of their constituents. Not only Members of Parliament, but trade unions, local authorities and so on will seek to make a submission. They must do so in writing to the region.
Who will read all those documents? Will they be read by the officials? We assume that some officials will read them

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all, because they are required by the circular to make a summary for the Secretary of State, a summary to be sent to the Department at the end of February of all the submissions and protests, praise or whatever, that may come from those consulted.
That is democracy at work, and I welcome it, but it is a tight schedule. The work must be done. I do not want to make the period three years, or even six months, because I take on board what others have said in the debate—that there is unsettlement when the structure is altered. People are concerned about their future, where they may live, their future job and whether they will have a job at all. We need to get the show on the road, I hope by the date suggested, which is 1 April 1982.
We must show that what we are doing is working democracy. We must make a special effort. In the South-East Thames region I have suggested that there should be public meetings as well as paper submissions. We must show that we want to hear what people think, that a person can get up at a public meeting and say "I have listened to your presentation, but it is not right for me", or "I do not think that it is right for our council", or "I do not like it". I want people to have that opportunity. I do not want them to think that their written piece of paper goes along with several hundred other pieces of paper in one region, multiplied 14 times, ending up in a summary on the Secretary of State's desk, with him asking his permanent secretary "What on earth do I do with all this paper?"
We know that my right hon. Friend is as concerned as anyone about administration in the Health Service and making a success of it. We wish hurt well in his task, which is formidable. But when we practise democracy we must show that it works, and we must make a special effort.
We cannot afford to be wrong again in this reorganisation of the Health Service. We are on our mettle. It is we in the House who are on our mettle. It was Parliament that decided to restructure the Health Service. Therefore, we have a duty to repeat the word "democracy" and show how it can be worked outside Parliament. We must tell people "We are redoing it again. Come and look at
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it. We believe that the proposals are pretty good." Those that I have seen are pretty good, but in my region I have spoken strongly against some and have voted with one arm up. That is the only way that anyone can vote, but I assure the House that it is a very strong arm. We changed some of the proposals put forward by the officials. That again is democracy at work, at a regional level.
We must allow a few strong arms to be raised in the country as well as we present the proposals for the new National Health Service. That is all that I am asking my right hon. Friend and the Government to accept today.
7.10 pm
Mr. Laurie Pavitt: One of the pleasures of debates on health is that I seem always to follow the hon. Member for Canterbury (Mr. Crouch) or that he follows me. There is a great divide across the Chamber, but often I nod my head in response to a number of his arguments. We both made similar points in the months that we spent in Standing Committee and in the Second and Third Reading debates. I must slightly disappoint him because, like all my hon. Friends, I cannot obey the hon. Gentleman's discipline. He addressed himself fully only to reorganisation and structure.
Fortunately, the word "management" features in the debate. From the start. the Secretary of State made it clear that, although he was talking about saving resources in administration, fundamental and basic to the problem for the last 10 to 15 years has been the question of resources as a whole.
My hon. Friends and I wish to take up not only the points made by the gentlemen in Alexander Fleming House this morning. In the press we can hear the sharpening of knives by the Treasury. The Treasury has ordered all Departments to lop pieces from their spending.
The debate provides an opportunity to look at the Health Service in toto and to seek to discover what might happen. Like my right hon. Friend the Member for Norwich, North (Mr. Ennals), I am scared stiff at the rumours about prescription charges being imposed upon the elderly. That worries the soul case out of me. In spite of the Prime Minister's protestations during the election campaign that she had

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no plans to impose or increase Health Service charges, since 1979 the sick have had to pay for the healthy because of the increase in prescription charges. It would be unforgivable and insupportable if the elderly, who take twice as many prescriptions as the middle-aged, had to pay for middle-aged mothers looking after their families. I welcome the denial by the Secretary of State that such a decision has yet been made. I share the hopes expressed by the hon. Member for Canterbury that what we say in the House sometimes has an effect. I hope that our comments will have an effect in the DHSS.
Reference has been made to structural changes providing resources. We are speaking of the £10 billion resources available. Sometimes I believe that the Ministry, or the Minister, is petty about small items. The Government have just rejected a proposal that disposable syringes be supplied to blind diabetics. They would cost an infinitesimal amount. A person who is suffering from two such handicaps should, for hygiene reasons, be able to obtain disposable syringes on prescription. Such pettiness annoys me, particularly when 1981 is to be the year of the disabled. The Secretary of State should be able to take such small items in his stride without any bother or fear of financial difficulties.
If more resources are to be released, we must bring down the drugs bill. A working party has been established to investigate the cost of drugs. It is a piece of supine camouflage. The answers have been known for ages. The pressure of the drug manufacturers is such that it is easier to establish a working party than to act upon the 1958 Hinchcliffe report, which has been available for 22 years.
The Secretary of State said that he was worried that the cost of our drugs bill has risen by 57 per cent. since 1970 whereas the total cost of the NHS has risen by only 39 per cent. He must grapple with the problem. He can do that in two ways. First, he can follow the Hinchcliffe report. His new structural administration could be given the ability to do that through a genuine British pharmacopoeia, not written by bureaucrats but so that doctors could understand it and use it to bring down their drugs costs. Secondly, the Secretary of State can accept the pressure of the dispensing chemists for triple
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FP 10s, which would save a considerable amount in prescribing costs and in the number of drugs prescribed.
I turn to the question of the district health authorities and the consultations. I welcome the fact that the Secretary of State made it clear that hon. Members will be able to make direct representations about the way in which boundaries will be affected. Hon. Members come under pressure from local social services departments and from patients and health workers. The hon. Member for Canterbury talked about his regional authority. I welcome the documents which I have received from the North-West Thames region which come out strongly on the question of coterminousity for social service departments and district health authorities.
Accountability has been discussed. When one receives a consultative document, one first examines how it will affect one's own constituency. I am satisfied with the boundaries to be drawn for my constituency. They will leave the constituency with a district general hospital—the Central Middlesex hospital. We shall lose one district hospital which is more in Harrow than in my constituency. The borough boundaries will be the same as the hospital and general practitioner services, the community health service and the ambulance service. This is coterminousity in practice.
I have been fighting for one hospital for 15 years. My right hon. Friend the Member for Lewisham, East (Mr. Moyle) will remember all the parliamentary questions that he has answered on that topic, as will the hon. Member for Reading, South (Dr. Vaughan). I speak of the Willesden general hospital which we have been fighting to have turned into a community hospital rather than be designated a geriatric hospital. I have received many assurances from Ministers and from the regional health authority and yet the consultative document designates it a geriatric hospital.
This is an example of how the bureaucrats can defeat us. Only after action is taken by them do we have any say. Fortunately, it has been decided to have a young chronic sick unit. We might also achieve a health centre, and there will still be some type of out-patient service in

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that hospital. I resent the fact that even after my local authority, the local trades council and others have made their opinions known, the regional health authority completely ignores them and designates Willesden a geriatric hospital and we have either to take its decision or leave it.
I listened with care to the Secretary of State when he spoke of the circular on DHA appointments. I should like to make a suggestion. It will be a sad day if the number of local authority representatives is cut. Even more important is that the director of social services should be a fully fledged member of the district health authority so that he is there when resources are being planned and when the budgets and the balance between the pressures are worked out.
One of the big faults of the present system is that it perpetuates the joint committees and funding arrangements which lead to people dashing from one committee to another before making decisions. If only we could find the right mechanisms within the restructured NHS, we could cut out many of the liaison committees that meet simply to pass papers to each other.
I am afraid that the Secretary of State is once again dodging confrontation on the question of the place of the family practitioner committee within the new structure. He dodges the issue because the general practitioners have so much muscle that no Secretary of State, with all respect to my right hon. Friend the Member for Norwich, North, likes to take on the family doctors. The result is that the family doctors are left alone. The whole purpose of the Act introduced by the present Secretary of State for Industry was aborted because the family doctors refused to become an integral part of a medical team consisting of consultants, hospital doctors, registrars, community physicians, the general practitioner service and doctors involved in various specialist areas such as mental health, which should now be incorporated under the district health authority into a medical organisation which includes the family practitioners.
The Secretary of State announced today that he wants better liaison with the district health authorities. He said that
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the options are being considered for the family practitioner committee, but only in relation to planning. Who is considering the options? Is it the Secretary of State, his Department, the British Medical Association, or the General Medical Services Committee? What is happening about family practitioner committees? Until such time as we are able to get rid of the barrier between hospitals and the community medicine and domiciliary services we shall never make any sense out of a unified National Health Service. The pressure for that must come from the doctors themselves.
The Government's policy seems to be firmly committed to a first-class service for those who are able to pay, and a second-class service for those who are unable to pay. I refer to a recent circular about the Government's policy on private practice. At present we know that doctors do not give favoured treatment in medical and clinical services. Neither doctors nor nurses have different standards of treatment for private and National Health Service patients. However, certain privileges such as time and convenience can be bought. Those commodities are for sale. However, when I consider the cutback in public expenditure and the way that that affects hospitals in my area I am frightened that capital and minor capital expenditure may be cut back to such a degree that the ordinary hospital service becomes so uncomfortable that there is a tremendous incentive for people to go to BUPA.
I wish to quote the example of my local hospital, the Central Middlesex. It was originally a workhouse. The plan for refurbishing the wards is now approaching stage three. In some wards 25 patients are using one lavatory—but not in the wards that were refurbished under stages one and two which have been completed, and that will not happen on wards included in stage three when that is completed next year. It would be a disaster if the present economy cuts meant that stage four was arrested. The work will have to be undertaken at some time, and the cost to public expenditure will be much greater. Other problems at the hospital include the refurbishing of the maternity ward and the modernisation of the telephone exchange Every hon. Member could find similar problems in his district hospital where

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the cuts are eating into the quality of services.
I direct the attention of the House to the present calamity in the nursing profession. There has been no clear statement from the Secretary of State about the impact of lodging charges on nurses. The Whitley council machinery has broken clown on that point. I can understand that. With due respect to my right hon. Friends who have served as Ministers and Secretaries of State, I have to say that nurses have a vague feeling—which goes back 25 years—that the moment that they receive a rise in their pay packets there is immediately an increased debit for board and lodging charges, and that what is given with one hand is taken away with the other. The present lodging charge system is wrong because the charge is the same irrespective of the lodging. A student nurse sharing one bathroom with 10 nurses—and I could name a number of hospitals where that happens—pays the same amount for her lodging as a nurse at St. Thomas's hospital who lives in the style of the Hotel Ritz. Inevitably, that practice is not fair to the nurses.
I look forward to hearing the Minister's remarks on that matter when he replies. There should be a break between the amount of the lodging charges. They should not only be attached to salary but should take into account the lodging facilities themselves. There should be a greater degree of equality. Currently, senior nurses receive the best accommodation and the poor little student nurses receive the worst accommodation. We should raise the standards, but I know that we shall not get the sort of public expenditure needed to get rid of that injustice and inequality.
The Secretary of State referred to the £2,000 million needed if the Black report were to be implemented. No Government will achieve the Health Service that we want unless we move up to an expenditure of about 7½ per cent. of gross national product. That is a massive increase. It means that health must be given priority and that the matter must be debated with other Departments. I have been through all this before in the past 20 years. We usually do not win, but that is the aim that I wish to see achieved. There must be a greater allocation of resources towards prevention. More action should be taken on the Black
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report. I shall not repeat the arguments that were advanced so effectively by my right hon. Friend the Member for Norwich, North. No doubt they will arise again.
When the Secretary of State gave the figure of £2,000 million for implementation, and then quoted what happened under the previous Labour Government, he failed to point out that that Government had a deliberate policy between 1974 and 1978 that the money available had to go to people and not either to bricks and mortar or to equipment. The figures that the right hon. Gentleman gave in relation to minor and major capital works ignored the switch of resources that took place in a number of ways. In my view that priority was right.
I wish to discuss a subject that has been mentioned by a number of hon. Members, namely, prevention. Sir George Godber, the previous Chief medical officer, once said that the single greatest step towards preventing illness would be to do something about smoking. When the Queen delivers Her Gracious Speech we shall listen carefully to hear what will happen in the area of health.
In spite of a year's negotiation, the last agreement between the Department and the tobacco industry is now 12 months out of date. It may be that because of various pressures, and because Cabinet colleagues wish to introduce legislation first, the Secretary of State will say that there will not be an opportunity to introduce a Bill to deal with tobacco advertising.
I wish to make an offer to the Secretary of State. I have already introduced 14 Bills under various procedures. The House may recall that one Bill resulted in that innocuous notice on the side of cigarette packets which has not done much good at all, but which was at least a step in the right direction. Irrespective of the Government's intentions, I shall present a Bill at the first opportunity to deal with tobacco advertising. The Government need not do their homework on the subject: I will do it. All the Government need to do is to tell the Chief Whip that when I introduce the Bill he should not block it.
When the Secretary of State enters into fresh negotiations with the tobacco industry he can say that he is under pressure from his colleagues in the House and that,

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if the industry does not introduce suitable measures, Parliament will. I make this offer across the Floor to the Secretary of State. It is a genuine offer.
When considering expenditure it should be remembered that we never "spend" on health, any more than we spend on education: we invest in it. In 1979, which was quite a bad year for strikes, industrial action cost 310 million days of productivity whereas sickness and invalidity cost 386·2 million days. As a result, we should no longer talk about cuts in expenditure, but rather ensure that the new, restructured organisation does something to create a healthy community which in turn can lead to a healthy economic community.
7.30 pm
Mr. Den Dover: I should first like to say how fair, constructive and well balanced the Secretary of State's announcement was today. He was extremely constructive in many ways. However, in answer to a question from one of my hon. Friends he intimated that this was part of a two-stage reorganisation. I hope that that is not the case. My right hon. Friend intimated that regions will be reorganised at a later date, and I hope that the Minister for Health will deal with that.
Over the years, both before reorganisation in 1974 and since, the regions have played a major role in carrying cut the provisions of the Health Service, by the balancing of regional requirements, the allocation of capital funds among their various areas and hospital schemes, and the overall supervision and management of the Health Service throughout the country. I welcome what the Secretary of State said about the fixing of financial limits, although I am not sure whether that applied to the district health authorities or the regions.
In the North-West of England, where my constituency of Chorley is located. there is an unbalanced view of financial allocations around the country. We receive between 8 per cent. and 12 per cent. less share of funds—both capital and revenue—than the rest of the country. Something must be done about that. If that problem is to be overcome in the reallocation of resources, I very much
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welcome it. Here I draw the attention of hon. Members to the excellent speech made by the hon. Member for Rochdale (Mr. Smith) in the recent debate on the Health Service.
The views of the local authorities on the reorganisation of health services are extremely important. On that score, I agree entirely with their requests for a better representation on the new district health authorities. South Ribble, in Chorley, has had no representative at all on the Lancashire area health authority over the past six years. Only recently has there been one member. I regard that as poor representation for 180,000 out of a total population of 11 million. I agree entirely with the local authorities that they should have better local representation and an additional number rather than a reduced number on the health authorities.
When the Secretary of State has collected all the views from people throughout the country, perhaps he will bear in mind that the districts as they exist at present need not necessarily be the framework for the new district health authorities. In some cases swaps and exchanges between one existing region and another might be better. I also hope that my right hon. Friend will consider the possibility of allowing regions to work on an agency basis in respect of surrounding regions, as I believe that would improve the efficiency of the Health Service.
Like my hon. Friend the Member for Canterbury (Mr. Crouch), I wonder whether sufficient time has been given for local views to be obtained on the reorganisation proposals. The North-Western regional health authority has produced an excellent document, but it has asked for views within three months. By the time people have absorbed the contents of that document, discussed it locally, and reached a view upon it, I doubt whether sufficient time will be left for a considered view to be put from the region to the Minister.
Special circumstances arise in Chorley. The Minister for Health was extremely good to us, in that he heard our pleas a week or two ago. We find ourselves sandwiched between the existing district health authority, of which we are part—which represents a population of more

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than 300,000—and a smaller existing district health authority—the West Lancashire authority. If there are to be nearly 200 district health authorities, a population of 250,000 or 300,000 will be quite large. We in Chorley feel that so far we have received poor treatment. We are part of a large district health authority—probably larger than the national average—but we are not receiving the fair treatment that we deserve.
In the proposals of both the National Association of Local Government Officers and the regional health authority we see ourselves being squeezed out. On the one hand, a district with a population of only 105,000 is asking that it should be retained, whereas, on the other, our own district, with a population of more than 300,000 and growing quickly, is to be retained as a large authority.
That means that we shall not achieve the aim that the Secretary of State has laid down—in other words, a response to local demands and better local control by people who are responsive to local wishes and needs. That is a trend that Chorley is clearly showing to the rest of the country, and I hope that the Minister for Health will back that up by receiving our views and taking note that we need a better full-time casualty service and upgrading to district general hospital status as soon as possible, certainly by the 1984 start date if existing funds permit.
Chorley is an expanding new town, and there are not many expanding new towns at present. I draw the Minister's attention to the fact that where growing or large new populations have formed over the last six years since reorganisation, adequate funds should be made available, for otherwise health services in such areas will suffer. That is not good for expanding industry in those areas, or for future populations. I hope that the Minister will reply to some of those points, particularly my comments on the regional health reorganisation that I hope does not come about.
7.38 pm
Mrs. Renée Short: The hon. Member for Canterbury (Mr. Crouth) gave an interesting and graphic account of his work on his regional hospital authority. He said that it would be difficult to unscramble this particular omelette. It
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is, of course, regrettable that we must have a go at it at all. Had we got it right last time, we would not now be in a position of having to do this again so soon afterwards.
I hope that the Minister will take on board the hon. Gentleman's suggestion that the authorities should be encouraged to hold public meetings so that constituents in their areas can listen to and discuss the proposals that are put forward, because once the proposals reach the Minister it will be extremely difficult to remedy any mistakes.
We could say "We told you so", because it was the present Secretary of State for Industry who, in his previous incarnation as Secretary of State for Social Services, brought forward this rotten proposal in 1974. We said at the time that it would not work. It was based on a scheme put forward by an American public relations firm which knew nothing at all about our NHS set up, did not understand the situation and was not really in sympathy with it. We said at the time that the scheme would be too costly, burdensome and difficult to operate. But we are having to carry out this exercise, and I hope to goodness that we have got it right this time.
We must look at the effect of reorganisation on the services provided by the National Health Service. One of the major problems facing the Service today, and which is leading to many of the problems which are said to be health problems but which are really socio-economic, is the distribution of resources among the regions. The Royal Commission report dealt at length with the problem. The way in which resources are distributed at present constitutes an assault on the regions with the most difficulties. The Royal Commission report shows that the West Midlands and Merseyside receive considerably less for the hospital service and for the community health and practitioner services than do the London regions. The allocation for the West Midlands is £92 per head, compared with an allocation of £122 per head for North-West Thames and £139 per head for Northern Ireland. The same pattern appears in the distribution of doctors, dentists and nurses.
Many of the problems that stem from socio-economic conditions as well as

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National Health Service problems—such as bad housing conditions—remain large in the West Midlands and the North-West. It may even be said that some of the perinatal mortality problems stem from that, and therefore it is not surprising that the rates remain high in areas such as the West Midlands and North-West.
The effects of the Government's cash limits on the National Health Service—with roaring inflation, high unemployment and the high cost of borrowing—are bound to reduce still further the service to patients and to increase still further regional deprivation. The assumed level of wage and salary agreements at 14 per cent. is likely to be unrealistic. The price paid for goods purchased by the National Health Service is rising at a rate of 20 per cent., so the Secretary of State will have to fight hard to maintain the Service as it is at present, with all its inadequacies and poor distribution.
The Secretary of State must be aware of the acute problems faced by the Service in the regions. He touched on one of the problems when he referred to the committee, chaired by Sir Henry Yellow-lees, which is examining the work of senior medical staff. Part of the problem today is the enormous burden that has been placed on them in attending administrative committees. Those committees take medical staff away from their work with patients, and there is certainly frustration among senior consultants at having to attend so many committees.
All hon. Members can tell similar stories about longer waiting lists and frustrated doctors and patients. In my constituency there is a waiting list of over 4 years for hip replacement operations, which represents pain and continuing immobility for elderly patients.
When I was in Liverpool last week I visited one of the ancient Poor Law hospitals that is now being used for geriatric patients. It made my heart sink. I have seen many such hospitals in different parts of the country. The working conditions, as well as the conditions for patients, are deplorable. The staff of the hospital in Liverpool were engaged in a sit-in, and I have every sympathy with them. In view of the amount of money that is spent on the Health Service it is
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deplorable that working conditions are so bad in this day and age. The staff cannot be expected to do their best work in such conditions. I heard about the gynaecologist who held a lottery to decide which six of nine patients should have their operations. The whole place was buzzing with the scandal. It was a drastic way of drawing attention to the acute problem facing the hospital and patients.
Mr. Patrick Jenkin: One of the points that I might have added when I intervened in the speech of the right hon. Member for Salford, West (Mr. Orme) was that I understand that Mr. Attlee was a member of one of the committees that approved changes in gynaecological services against which he protested.
Mrs. Short: One meets illogical behaviour everywhere, even among consultants and Ministers.
There is also the problem that emergencies can put the operating list out of joint. A consultant may have had one or two serious emergencies and may have had to put some of his other patients further down the list. Clearly, there is a moral here.
I wonder whether the Minister is monitoring the difficulties and frustration that the Government are imposing on the hospital services and whether he is aware of the effect on patients who have to wait for urgent attention. Does he know the Government's expenditure plans and their policy objectives? If his expenditure plans are not adequate, and if there are cuts in Government expenditure, the policy objectives will go out of the window.
We were told that the reorganisation and restructuring would save administrative costs. The Minister suggested to the Select Committee that there would be a saving of £30 million per annum. At that time he was not able to say how he arrived at that figure; nor was he able to say what the likely cost of redundancy payments would be. Further, he could not say what the effects of boundary changes would be on local authorities. That might have some effect on the estimated savings that he hopes to make.
The planned cost cuts in personal social services expenditure in 1980–81 are bound to have an effect on National

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Health Service expenditure—that is inevitable—but the Minister of State could not give the Select Committee any information on the likely cost of the transfer of demand from community services to the more expensive hospital services. Elderly people are fitter and more active if they are allowed to remain in their own homes, supported by the meals-on-wheels service and by home helps, who are paid for by the local authority. When those services are withdrawn by the local authorities, the geriatric ward is the only alternative, deterioration is often rapid, and the costs escalate.
It was made clear to the Select Committee that the Secretary of State was, and still is, putting all his hopes on a corresponding upsurge of activity in the voluntary sector in order to meet the deficit in the personal social services expenditure. But if more and more men are losing their jobs at every level in industry and commerce, fewer women will be able to do voluntary work and less money will be available to support the voluntary organisations. The high cost of postage, petrol and public transport all serve to diminish voluntary effort rather than encourage it, and the Secretary of State has not taken that problem on board.
In 1977 the Select Committee proposed ways in which resources spent on attempting to cure certain serious diseases could ultimately be better used in preventing them. That is something that no Secretary of State—not this one, not his predecessor and certainly not the one before that, because he was beyond the pale as Secretary of State—has really taken on board. They have done nothing about switching resources from curing disease to preventing it. Prevention must, of course, include health education, and the amounts allocated by the Department for that under any Government are appalling.
Preventive medicine has had a very low priority for a long time—certainly since the last reorganisation, and before that as well. The Health Education Council received the derisory amount of £3 million in 1977–78 to carry out all its health education obligations across the board. Cigarette smoking places a huge burden on the Health Service. Lung cancer, coronary heart disease and bron-
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chitin take their toll, and the cost of treating these smoking-related disease was estimated in 1977, in evidence given to the Select Committee that looked into preventive medicine, at £85 million a year. Smoking causes between 50,000 and 80,000 deaths a year. Road accidents cost the Health Service about £50 million a year. Dentistry cost the Health Service £200 million in 1977.
However, in spite of all those facts, successive Governments, including the present, have refused, first, to ban cigarette advertising. The Select Committee that looked at preventive medicine recommended very strongly that we should follow the Norwegian example and ban it except at the point of sale—in tobacconists' shops. That would stop all press and magazine advertising, and there would be no advertising at football grounds where there is so much free television coverage of advertisements. No one would weep to see all that go.
In spite of the facts that I have explained, the Government refuse, secondly, to make compulsory the wearing of seat belts in motor cars. They refuse, thirdly, to fluoridate water supplies. The evidence on fluoridation shows that it is highly cost-effective. In Birmingham it costs about 2·3p per head of the population—about 10p per child under 15—to provide the support and help of fluoridation in reducing dental caries.
The British Association for the Study of Community Dentistry has said that in Birmingham, with the expenditure of £30,000 on preventing disease that would cost £1 million a year to treat, fluoridation is well worth while and is saving a large amount of Health Service money. In Watford, another area where fluoridation has been carried out for some years, about £1·62 a year is saved on this basis on each pre-school child. The cost of protecting by fluoridation the health of those aged between 3 and 14 is £3,000 a year, yielding a saving of £53,000 a year in dental costs.
Why, therefore, do the Government not switch resources from attempting to cure diseases that are often incurable but which may be preventable over a period? Why cannot the resources allocated to the Health Education Council be increased considerably so that it can do very much more? Why do not the Government

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accept the suggestion of the reintroduction of the Radio Doctor for five minutes before the 8 o'clock news every day and the carrying out of a planned programme of health education?
The high perinatal mortality rate was one of the socio-economic problems to which I referred. Especially in groups 4 and 5, the poorest women tend to live in the worst housing conditions in the country. They have the poorest diet. and they are often those who tend to smoke. All that is a major scandal. Will the Secretary of State try to duck the responsibilities which the Select Committee has placed upon him to reduce the level of perinatal mortality? That cannot be done overnight, but it must be started somehow.
We cannot remove all the sub-standard housing, especially that in the inner city areas, but we must make a start. The Government are playing with fire if they are proposing to bring in another programme of cuts across the board, as has been suggested in the press in the past few days. The Cabinet is now deciding where to inflict greater cuts, particularly in the social services, the Health Service and the education service. If that happens, will the Secretary of State refuse to carry out further cuts in the Department for which he is responsible and resign? If he does not, it will be a scandal.
I hope that when the proposals and the considered views come back from the health authorities the Minister will take on board the need to ensure that the resources that are allocated to the new authorities are adequate. No one in the House—certainly not the Secretary of State—has so far mentioned his appalling inheritance of the old and ailing hospitals. Hospital engineers and public works officers have suggested that about £4,000 million is needed to make good the deficit in hospital building alone. Again, that is not something that will happen quickly, but it has to start, and the old Poor Law hospitals, the geriatric hospitals, and some of the old hutted maternity hospitals that are still in use even in some of the new towns—Hemel Hempstead, for example—must be replaced.
The Service cannot flourish as it should and the health of the people cannot be improved as long as those appalling
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working conditions are imposed on doctors, nurses, ancillary workers and, above all, the patients. I hope, therefore, that the Department will make sure that the Secretary of State is aware of the concern of the Opposition and, I hope, of Government Members at the possibility of further reductions in public expenditure on the Health service in the near future.
7.58 pm
Mrs. Sheila Faith (Beiper): I am delighted that my right hon. Friend the Secretary of State is to give further thought to the possibility of allowing family practitioner committees to employ their own staff. I know that that will be greatly welcomed, as is the fact that this reorganisation of the structure and management of the Health Service is being embarked upon.
Doctors, dentists and nurses have been demoralised and disenchanted not only because they have seen scarce resources wasted on administration but because they have been smothered by red tape and tiers of bureaucracy. I believe that it is correct that in future, on the whole, the organisation should be in the hands of the smaller district authorities, which will be more sensitive to local needs. These proposals are a positive step towards making sure that the Service will be more personal and responsive to public opinion, However, I should like my right hon. Friend to give further detailed consideration to the future and the organisation of the community dental service, as this may well be more difficult to organise at district level.
It would appear that under the Minister's new proposals there is no provision for a dental officer to be present as of right whenever an item with implications for dentistry is on the agenda for discussion by the district health authority of the district management team. Yet it must be obvious that someone in the dental profession with the status of chief officer should be involved in any new developments and should have a say in the reallocation of the funds. If this does not happen, community dentistry will be taken out of the hands of the dental profession, and this will reflect on the status of the whole profession and there will be a return to the unsatisfactory situation that existed before 1974. when the then local authority dental service was completely dependent on the

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understanding and sympathy of the medical officer.
It should be obvious that the dental officer should be called on to advise the district health authority on subjects relating to dentistry, for we should bear in mind that doctors are not always well briefed on dental matters. For example, only a dentist really sees and is aware of the suffering caused particularly to children by toothache and will understand the need for fluoridation of water supplies. The subject has been mentioned by the hon. Member for Wolverhampton, North-East (Mrs. Short).
In many parts of the country the dental services need to cover a larger population than envisaged by the new district health authorities. There are fears that community dentists are duplicating services that already exist. In these difficult times for the economy, it is important to see that expensive staff, premises and equipment are put to the best possible use.
An experienced man working in a wider area can monitor these services closely and pinpoint the areas of greatest need. For example, there may be places where there is a shortage of National Health Service dentists working in general practice or where parents are not so conscious of the importance of conservative dentistry for their children.
It is also true that in future community dentistry may have to concentrate more on giving a service to the disabled, the handicapped and the elderly as more of these people are now living outside hospitals. It is policy today to treat more mentally and physically handicapped people in their own homes, and the social services aim to support more of the elderly so that they do not have to go into residential care.
Dentists in general practice are often not able to give up the time that is necessary to treat patients who require extra care and consideration; nor do they have time for domiciliary visits, and more and more of these visits will have to be carried out by community dentists in future.
It is important that the people attracted to this vital work should be of the highest possible calibre and feel that advancement is possible. Because of this and because of the need to pinpoint deficiencies and monitor the service for children and the handicapped over a wide
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area, in many cases the position of the area dental officer should be retained. He could possibly be employed by one district authority and by others under an agency agreement.
It is often also the case that an emergency dental service providing cover at weekends and on bank holidays could be more easily organised if two or three districts were combined. For example, emergency dental services in Derbyshire are centred on Derby. Of course, larger areas of organisation may not always be necessary in all parts of the country. Not all areas require the same solutions, so flexibility should be allowed, and perhaps some monitored experimentation could be carried out.
I should like my right hon. Friend to give us assurances that he is giving thought to the community dental service and realises that in many parts of the country this service should be organised over a wider area than the proposed district authorities and that access should be given of right to a dental officer to meetings of the new authorities.
I should like to make one further but important point. It is remarkable that in these new proposals little mention is made of financial control. Last year a highly respected small hospital in my constituency was closed, albeit temporarily. It was most frustrating that we could not be assured at that time that there had been any real economies in the bureaucracy. I still see no evidence that the growth of bureaucracy and the cost of administration in the district health authorities will be more closely monitored in future. I hope that my right hon. Friend will give urgent consideration to this matter.
8.5 pm
Mr. Clive Soley: I shall direct the bulk of my comments to London. I do this for two reasons: first, the circular on the structure and management in appendix 1 states that London has different problems from the rest of the country; secondly—and I make no excuse for this—since I became the Member for Hammersmith, North I have been made increasingly aware of the incredible problems of providing in that area a health service which is in some way linked with the social services and needs of the area.

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I recognise that there is a problem with numbers when looking at the London boroughs and that there is a problem concerning the teaching hospitals. But, having said that, I ask the Secretary of State to look again at the possibility of coterminousity with social service boundaries or at least some revision of some of the suggestions that have been made. In the North-West Thames region the only proposal that seems to make sense is coterminousity with the Hammersmith boundary. I say that because the need to link with the social services is important.
I recognise that that would produce certain problems in some areas. However, if we are to have some feeling by the local population of identification with a health area, it needs ultimately to be linked with the local borough. I do not understand the argument that there is no social geography in such an area. The social geography that Hammersmith, North is being asked to accept links it with Ealing and Hounslow, as in the past, which does not work very well, or with Ealing only, which is the current favourite suggestion, about which I am not very happy, or with North Kensington, which I would accept as second best.
Boundaries cause problems. Recently, I was looking into the problems caused for health visitors. I found that some families residing in one district were registered with a general practitioner in another district and visited by one health visitor but seen by another when attending clinics. That is the kind of nonsense that comes to light when we have boundaries that cross each other in this way. There was a suggestion that if they could not be made coterminous with local authority social service boundaries they should be made coterminous with education boundaries, but in London that again becomes nonsense and is difficult to support.
From my contacts with patients, staff, management, trade unions, social services and others, it is clear that there are disadvantages in all this. I would look for coterminousity on the basis of local authority social service boundaries or more tightly drawn boundaries that give some sense of social cohesion. I should regard the second-best alternative for Hammer-
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smith, North as being linked with North Kensington, although I recognise that that leaves problems for Westminster if it is followed through. I cannot help there, but I fall back on my earlier argument on coterminousity in terms of boroughs.
The importance of coterminousity to an inner city area lies in planning for health and social services. The needs of the social services authority can be linked closely with the health of the area. That can best be seen by taking two examples from the north-west area and, to a limited extent, from the south-west, because it affects that area, too.
In Hammersmith the provision of psychiatric services is abysmally inadequate. Psychiatric patients have to go to Springfield hospital, which is in the southwest of the region. There is a suggestion that ultimately they should go to the Charing Cross hospital. I have heard that suggestion from only one source. I am not sure whether the Minister is in a position to confirm it.
We look to the possibility of providing psychiatric services in Hammersmith, where there are empty wards. I gather that the money is not available for that purpose.
It seems that for a short-term solution we must turn to St. Bernard's hospital. I understand that recently that hospital was not admitting patients, because of a staff shortage.
That is the sort of problem with which we are faced in Hammersmith. As I understand it, it is not dissimilar from the problem that is faced by other areas of London. I urge the Minister to think again about the needs of London.
Hammersmith hospital has the peculiar problem of having had the carrot of modernisation and redevelopment dangled before it for many years. If the programme had been carried out, I suspect that the problems in North-West London would not be as great as they are. The Health and Safety Executive has commented adversely on the state of the mortuary and the X-ray department of Hammersmith hospital. There are grounds for insisting that the mortuary should be closed.
My case is not confined to securing more money for Hammersmith hospital. Redevelopment was discussed in the early 1970s and the hospital staff was given

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some hope that it might happen during that period. It is only the dedication of the staff that has maintained a standard that has given the hospital a national and international reputation.
I ask the Minister to consider the possibility of ensuring that the region has sufficient funds to enable Hammersmith hospital to provide the services that are the only way of making sense of a region that is based on a Hammersmith boundary, a Hammersmith-Ealing boundary, or a Hammersmith-North Kensington boundary.
It is difficult to consider the problems of London outside the needs of the inner city local authority areas. Whatever the problems concerning numbers, we should give that aspect greater emphasis than it has been given so far.
I do not wish to say any more on cigarette smoking than has already been said. I associate myself with the views that have already been expressed and I am happy to omit what I had planned to say on that subject. One could talk about prevention for a long time and select new and useful areas, such as road safety, stress and low income. I shall refer to only two topics.
The Under-Secretary of State already knows my views on the problem of alcohol abuse. I have recently seen papers that suggest that about one in seven general hospital beds are taken up by those who are not alcoholics, in the sense of being dependent on that drug, but who have as a complicating factor of the condition for which they were admitted a problem resulting from alcohol abuse. From that figure alone it is clear that the costs are enormous. That is not yet a proven statement, as the figures are the result of only one study. However, I regard it as a good study. I hope that further evidence will come forward to support it in due course. I have no doubt that it is a major cause of expenditure.
I am not asking for reductions in expenditure on the Health Service. However, many more advances can be made in medicine by prevention than can often be made by treatment. That is demonstrated by the history of the nineteenth century. That demonstrates that advances can best be made by public expenditure. Many of the advances in health in the
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past century were made by public expenditure.
A degree of alcohol is beneficial not only to society generally but to the individual. A small quantity can be good for a person. That cannot be said for cigarettes. There is a difference, but it is not so great that we should ignore the immense impact of alcohol—for example, one in four road deaths and a large number of injuries on the road result from people being under the influence of drink.
The general hospital figure that I have quoted ignores the treatment of those who are recognised to be alcoholics in the sense of being dependent on alcohol. It is a problem that has the same stigma attached to it as being anti-smoking. Then was certainly true in the early days.
I do not say that we should not drink in society. I do not speak as an abstainer. However, the problem is becoming so severe that the expense and misery that it causes to the community are out of all proportion. We must take steps to educate and prevent.
A major factor, along with cigarettes and alcohol, is nutrition. When we talk of nutrition we think of malnutrition. As soon as we talk of malnutrition everyone thinks of being underfed. The problem in Britain, as in most western countries, is that of being overfed rather than underfed. Malnutrition really means bad eating habits. The problem is not confined to obesity in the sense of being excessively fat. Bad nutrition generally adds enormously to the burden on the Health Service.
I add my plea to those that have already been expressed and I ask the Minister to reconsider the need for preventive medicine. That branch of medicine can be made effective only if the structure of the Health Service gives some priority to it. I do not see that priority in the present structure, or in any of the suggestions that I have heard so far.
8.18 pm
Mr. Raymond Whitney: I hope that the hon. Member for Hammersmith, North (Mr. Soley) will forgive me if I do not take up his remarks on the vexed issue of the delineation of the boundaries of London districts, for which I have no locus standi. However, I believe that the House will endorse the

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principles that he has advanced about the importance of health education and illness prevention.
I hope that when my right hon. and hon. Friends come to consider the organisation of the districts and the allocation of resources they will take into account the problems that have arisen in the resource allocation as it is now applied. My hon. Friend the Under-Secretary of State will be familiar with the argument that I am about to advance. It concerns an issue that has seriously affected Buckinghamshire. Those of my right hon. and hon. Friends who also have the honour to represent constituencies covered by the Buckinghamshire area health authority have raised it with him on many occasions.
I refer to the problems of resource allocation—RAWP—-which arise in an area in which the population is increasing rapidly. Regrettably, we are anything up to two years out of date. This imposes serious inequities. As we travel round the country, it becomes clear to us all that areas such as Buckinghamshire suffer a great many problems. The Secretary of State and my hon. Friend have considered these matters on many occasions. It seems to be outwith the bounds of the present mechanism to overcome the problem.
That is disappointing. We have an expensive and large bureaucratic machine. It is a machine that claims some degree of sophistication. Surely it is not adequate to say that we have to accept figures which are out of date and which create inequities. I hope that this ripple in the administrative framework can be put right before the new district organisation is introduced.
My second point goes far wider than the bounds of beautiful Buckinghamshire. It concerns the National Health Service as a whole. As Members of Parliament, we all have experience of how the Service operates within our own areas. We must all feel deeply uneasy about the present state of the Service. That does not imply any criticism of the many people who show tremendous dedication and who give a high quality of service. We all know that there is something very worrying about the National Health Service, and we must consider fundamental changes.
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I should like to suggest one change that has been floated—but, unfortunately, no more than floated. There was a brief reference to it in paragraph 39 of the document "Patients First". My right hon. Friend the Secretary of State also made a fleeting reference to it. I refer to the possibility of monitoring the National Health Service to a greater extent and to having some form of inspection system. I have had the privilege of being a Member of Parliament for two and a half years, and during that time I have come to know a little about the operation of the National Health Service within my area. Inevitably, I have been able to take only a spasmodic and intermittent interest in it, but that interest is deep. Even within the limits of so short a period it has become clear that things are seriously wrong in many areas. In the purest sense of the word, there is an element of irresponsibility.
The Health Service lacks responsible and accountable staff. Perhaps we should return to a method that worked well when our education system worked well. In the dear dead days that are almost beyond recall we were fairly happy with our education system. In those days the pseudo-progressives had not won the victories that they have recently won, and there was a splendid animal called HMI—or Her Majesty's Inspectorate. Inspectors existed until they were turned into things called "educational advisers" and "assessors", with the resulting problems that were found, for example, in the William Tyndale school. In those dear and happy days HMI maintained a splendid standard in our schools.
My right hon. Friend should consider whether a corpus of HMI-type inspectors would provide the answer to the problems of the Health Service. I recognise that my suggestion is open to the objection that it might result in more bureaucrats and yet another quango, but it might prod the Health Service and the many thousands of those who work in it into providing better results and a better service for the patient.
It is with sadness that I mention my last point. Even if my plan to adopt inspectors is accepted as a solution, I have no great hopes that, in the medium term, it will save the National Health Service from final collapse. Although we go on paying for the Health Service, it

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remains difficult to believe that it does not suffer from a chronic and terminal illness. I hope that I am wrong. There must be a better way of running the National Health Service. Hon. Members have said time and again that things are wrong. Nevertheless, this year we shall have spent nearly £12,000 million of our national treasure on the Service. Given the quality of service that the patient receives, the equation must be wrong.
I urge my right hon. Friend to look overseas, in case there is a better solution. Opposition Members may consider that I have uttered a heresy. However, we must take our heads out of the sand and not just accept that in the best of all possible worlds our Health Service is the best service possible. Let us look overseas, at Germany, France, Canada, the United States of America and Australia. Let us discover whether there are other ways of running a health service.
During the recess I briefly studied the health service in the United States of America. It was conventional wisdom in Britain, and it was also my belief, that every doctor in the United States of America was a millionaire and that everyone who had a tonsillectomy took 10 years to pay for it, but things are changing there. The grip of the American Medical Association is slackening. That great trade union now has only 50 per cent. of American doctors in it, just as the trade union organisation in Britain with which we are familiar has only 50 per cent. of workers in it.
The non-AMA sector of American medicine offers many interesting examples of group insurance schemes. The doctors and nurses and those employed by those schemes are well remunerated. In addition, the patient is blessed with a wider, quicker and more responsive service that is of a higher standard than most of the medical services available in this country. The patient can also exercise a far greater degree of choice.
This is a dangerous and provocative subject, and I have made a radical and bold suggestion. However, my right hon. Friend has the privilege of being a member of a radical and bold Cabinet. I hope that he will take his boldness and his courage in his hands and look at the National Health Service once again.
Several hon. Members rose—
Mr. Deputy Speaker (Mr. Bryant God-man Irvine): Order. Six more hon. Members would like to speak before the Front Bench speeches start at 9 o'clock.
8.27 pm
Mr. David Penhaligon: The hon. Member for Wycombe (Mr. Whitney) hit the nail on the head when he alluded to the United States of America. If he looks at the statistics he will see that the United States of America spends twice as much as Britain in percentage terms of GNP. If the radical Cabinet that he has referred to were to dare to do that—given the current levels of expenditure—many of the problems of our National Health Service might be solved.
The Government hope to save £30 million. I congratulate them on the reorganisation that they have achieved. Anything that brings decision-making nearer to the patient must be good. I doubt whether they will save £30 million at the end of the day. I am cynical about Government claims and about how much money they will save. However, for once we are not spending money and we may end up with something more efficient. An improvement has been made and I am glad that it has been achieved, although it could have been done last year or the year before that. For some time it has been a fairly obvious requirement.
We should work towards a more democratic system of running the National Health Service. The Liberal Party would like to see a system of regional government. If there were a system of regional government, the health authorities would have to report to it.
I have listened to most of the debate—I have missed only about an hour of it. The main issue on which I wish to concentrate has hardly been discussed. That issue is how we, in the long term, satisfy the demands of our constitutents and react rationally to the great breakthroughs in technology that are being made in the health world.
Let us take the current spate of heart transplant operations in this country. In about five years doctors will be able to carry out a heart transplant with 90 per cent. success, giving the person receiving that heart another 15 or 20 years of life. When that day is reached, and clearly it is not far off because medical progress has been quite remarkable, we shall face

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problems. Our admiration for the genius that is applied in these operations is preventing us from facing up to the sheer impossibility of the situation. I foresee a widespread demand throughout the length and breadth of the country for heart transplant operations. If the technology is perfected, every one of us in the House will have a never-ending queue of people coming to our constituency surgeries saying "How about John, Mary and Bill?" They will all want heart transplants.
In such circumstances the transfer of resources will stop all other medical treatment of every other ailment that we now attack with great success. I urge hon. Members to be far more honest with the people for whom we provide help. How can we provide help and allocate resources? How can we make all these operations universally available?
There cannot be a Member who has not been approached many times in the past two or three years by constituents in their middle or late sixties or early seventies who say that they have been waiting for three or four years for a hip operation. We write letters to the health authority and sometimes such a letter works miracles. I often wonder who gets pushed down the list in order to get someone else to the top. But that is not the point I wish to make. The truth is that many people in their sixties and seventies are waiting for operations and many will never have them because we cannot afford the resources to apply to problems in that age group.
Some argue that the way of allocating operations is to give them to those who can afford to pay. Those who do not agree with that argument, and I am one of them, must come un with a better solution than putting everyone on the waiting list and telling the vast majority that they will never get to the top of that list.
I look at the never-ending escalation of the Health Service budget and the never-ending increase in the numbers of staff and I am appalled by the apparent never-ending increase in the numbers waiting for various operations. By training I am an engineer and it is doubtful whether I have any right to make any comment on the efficiency of the Health Service. But I really believe that there is a
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strong argument for an efficiency audit of the Health Service to see whether the increased numbers of staff and the increased expenditure are being returned to our constituents and to the British taxpayer. I sometimes wonder about this.
Over the past five or 10 years a concerted effort has been made in my county to close down the voluntary car services and the voluntary ambulance services taking people to hospital in order to set up a bigger and grander Cornish ambulance service. I see no advantage in that operation. I can see that on the whole the ambulance men are pleased with it and perhaps the service is a little more efficient than it was but when one considers the immense cost on the basis of an efficiency audit of what else could be done with the same amount of money, one must sincerely doubt that we are getting value for money. It is beyond my competence to make the final judgment. I simply pose the question. I would like to sec the Government set up an efficiency audit so that these things could be looked at regularly and hon. Members could be far better informed about the various uses of given sums of money.
8.34 pm
Mr. J. F. Pawsey (Rugby): I shall speak only of my constituency. The background is particularly important in the light of the proposals made by the regional health authority for the West Midlands. Prior to the reorganisation in 1973, Rugby was grouped with Coventry and run by the Coventry hospital management committee. For the seven years prior to that reorganisation only £100,000 was spent on capital projects in the Rugby area. The previous hon. Member for Rugby and I both felt that Rugby had been deliberately starved of resources. Following reorganisation. the situation altered dramatically.
In my constituency we have three hospitals, St. Luke's, which is a long-stay hospital, St. Cross, which is a general hospital and St. Mary's, which is a maternity hospital. Since the reorganisation £1·2 million has been spent. In addition, £800,000 is being spent on the site at St. Cross, a new maternity block is to be started on 8 December at an expected cost of £1¼ million and a new pathology lab at a cost of £1 million is due to be started in 1981. The total value of those

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improvements in the seven years following reorganisation is £4¼ million. The comparison of the seven years prior to reorganisation and the seven years following is appalling.
As a deliberate policy, Coventry starved my constituency of resources. Money was spent in Coventry to provide a new district hospital at Walsgrave and on improvements and extensions to other hospitals in the area. That was all at the expense of my constituents, who have had enough of Coventry and its biased, selfish attitude.
The reorganisation suggested by the regional health authority seeks to put the clock back to the situation that existed prior to reorganisation. Rugby would be lumped again with Coventry. My constituents do not want that. The proposal is unanimously opposed by organisations ranging from the townswomen's guilds to the local borough council. My constituents have written to me in overwhelming numbers and have forwarded petitions protesting against the recommendation.
To make matters worse, even though the regional health authority says that its paper is for consultation only, it has had the gall to put forward only one proposal and has ignored possible alternatives.
Rugby and the surrounding area are a district authority in the Warwickshire area serving a population of between 86,000 and 100,000. Rugby has the principal virtue of being a clearly identifiable unit. To use the jargon in the paper, it enjoys coterminousity with the local borough council and the constituency of Rugby. It shares the social services department within the borough of Rugby, although it is run by the Warwickshire county council, and we also have an area education office. The significant identity in my constituency is a major advantage. I stress again that local people have no desire to be lumped with Coventry. Coventry has shown its true colours. As was asked earlier, why should we look into the crystal ball when we can read the book? The book with regard to Coventry is printed in large print and legibly.
Rugby wishes to control its own destiny as a district health authority. Not surprisingly in view of past events, there is
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within my constituency a substantial distrust of Coventry and there is little affinity of interest between Coventry and the West Midlands and Rugby. Coventry is part of the West Midlands metropolitan area, whereas my constituency is part of Warwickshire.
There are alternatives to Coventry. I do not think that it is necessary, but Rugby could be grouped with North Warwickshire and South Warwickshire to form a Warwickshire area health authority with a population of about 469.000—within the guidelines laid down so far by the Secretary of State. I admit that it would be a large authority, but it would at least have the virtue of conforming to one set of local government boundaries and it would obviate the need to cross local authority boundaries. Even more important, there would be an atmosphere of trust, without the suspicion that must colour any discussions or merger with the city of Coventry and the West Midlands.
My constituents and I believe that Rugby, which would handle a budget of about £7 million, would be viable on its own, but we are prepared to consider the possibility that we shall have to merge. If we have to look elsewhere, we should look to our associates in the north and south of Warwickshire and become part of a Warwickshire area health authority. I stress to the House and particularly to the Minister who is to reply that Ruby feels that it has a case to develop itself within its own resources.
On 3 June, the Secretary of State issued a press release headed:
"We must restore local pride."
It is not necessary to restore local pride in Rugby, because it exists already. However, that pride would be lost if we had to merge with another authority. The press release says:
"We have come to the conclusion that the district concept is broadly right."
Of course it is right, and Rugby is a district par excellence. The press release continues that "Patients First" is designed to attack not the people, but the system. It does not attack administrators, but bureacracy and aims at better management.
Rugby would be a small district, with a population of between 86,000 and 110,000, but surely the events of the recent

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past have shown clearly that biggest is not best. I instance the appalling situation in our great nationalised industries. Does any hon. Member seriously doubt that the smaller units usually give the best form of administration, closer management and better value for money, particularly compared with the large and unwieldy mammoths that are so expensive and that have been criticised by the Secretary of State? Those large organisations are not only expensive but are unresponsive to public opinion.
My hon. Friend the Member for Canterbury (Mr. Crouch) referred eloquently to the importance of bringing democracy back into the NHS. What better place is there to find democracy than in a small district which has an intimate relationship with its population?
The Secretary of State's press release said that the NHS had lost something of the spirit of local pride which used to characterise its service and that, if we could recapture pride, a great deal could be achieved. Let me say to the Secretary of State, whom I am delighted to see in his place, that Rugby has pride in its hospitals and services and we ask him to let us keep that pride.
I turn to a report produced by the West Midlands regional health authority on the consultative document "Patients First". It refers to the ambulance service and states that the authority:
"welcome the proposal to review functions of the ambulance service, but consider that radical changes should be avoided at the present time in a service which has found great difficulty in settling down since 1974."
I visited the Rugby ambulance service station last Saturday. I spent three hours talking to the crews. They are appalled by the prospects of a link with Coventry and the West Midlands. They believe—as the people on the spot they should know—that the only result of such a merger would be to increase the amount of remote control. The ambulance service, perhaps more than any other service, should be a local service able to respond rapidly to demands. To legislate for control of that service to come from some central point, 20 or 30 miles away, completely ignorant of the conditions that exist in my constituency, is a recipe for disaster. From the standpoint of the ambulance service, it is critical that
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Rugby remains outside the West Midland metropolitan area.
The final sentence in the regional health authority's report says:
"The Regional Health Authority fears that the turbulence that the Government's proposals portend will far outweigh the benefits that Ministers ambitiously seek to achieve."
It is not for me to remark on Minister's ambitions. I am surprised that the regional health authority should try to do so. If, however, Rugby merges with Coventry and the West Midlands, I have no doubt that turbulence will occur. My constituents oppose positively and absolutely any merger with the West Midlands. If the West Midlands regional health authority is genuinely concerned about turbulence, it should not pursue this proposal further. On page 4, the consultative paper "Patients First" states:
"As Napoleon said, 'morale is to material as three is to one.' Change for change's sake must be avoided."
If the Minister believes what he has written—I know him to be an honourable man and I have no doubt that he means every word—I ask him to allow Rugby, despite its administratively small size, to become an independent district within its own right. Within my constituency morale is high, but the damage caused by a link with Coventry would be very great. The report says that the district of Rugby might be small but adds that certain of the services could be supplied on an agency basis. This would answer most of the objections that might come forward. Because of the coterminousity of boundaries, Rugby's link with local government is particularly strong. There is a clear identity of need and of direction and, above all, a common purpose felt within my constituency.
The document is rightly entitled "Patients First". If a proper regard is to be given to patients, Rugby should become a new district authority. Rugby's patients would then be coming first and not a poor second best as was the case when we were last linked with Coventry. An earlier predecessor of mine in the House was Mr. Roy Wise, a man, who I know, Mr. Deputy Speaker, was known to yourself. Roy Wise described Coventry as an octopus of civic imperialism. That phrase is as valid today as it was on the day he first used it. My constituency has

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no desire to be grasped by the tentacles of that octopus.
8.50 pm
Mr. Alfred Dubs: The hon. Member for Rugby (Mr. Pawsey) will forgive me if I do not follow him along the highways and byways of the Health Service in the Midlands.
Several hon. Members have referred to the recently published report on inequality in health, which I do not want to go into in the detail that I had originally planned. The report makes clear that many of the alarming inequalities in health care and health standards can be attributed to factors outside the Health Service, such as the environment, work accidents, overcrowding, poverty and deprivation. I hope that before too long the Secretary of State will separate those inequalities due to deficiencies in the Service from those that are due to other factors so that we can properly attribute blame.
The report makes it clear that at least some of the inequalities in health are due to cigarette smoking. Without going into all the details of the argument that other hon. Members have already put before the House tonight, I say simply that there is no excuse that lack of resources prevents the Government from taking action to prevent cigarette advertising and reduce the amount of cigarette smoking. It is a test of political will, and political will alone. I hope that the Government will say whether they have the courage to exercise political will or whether they will seek refuge in some other excuse.
The next few years will be particularly difficult for the NHS, which will have to absorb yet another reorganisation. In principle, I agree with what is intended, but there will be the traumas of absorbing the difficulties for the staff and the structure of the Service. In addition, there will be difficulties due to increased pressure on resources—the pressure that the Government have put on the NHS already and the extra pressures that are apparently in the pipeline because of further cuts, not only in London but in other parts of the country.
A third difficulty will be that imposed by the Government on the NHS: their intention to increase the private sector, which is demoralising for the Health
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Service and makes life for NHS administrators and doctors that much more difficult. The new structure will cause tension and stress for those working in the NHS, for whom there is plenty of tension and stress already. Just outside my constituency recently there was the closure of St. Benedict's hospital, a typical example of where the relationship between the Health Service and the local community was made worse by Government imposition on the area health authority.
Several hon. Members have spoken tonight of the need to introduce democracy into the Health Service. Some have suggested that small districts—and there is certainly an advantage in them—are equivalent to democracy, but that need not be so. Democracy does not necessarily follow from having small units of organisation. The need to make the new districts accountable to their local community will depend on other matters, including the regrettably small number of elected local authority members. I wish there were more.
I turn to the subject of resources generally and a matter that has not been mentioned so far. It seems to me that a fair bit of responsibility for resource allocation within NHS authorities depends upon the way in which doctors exercise their powers, that for all the administrative decisions, for all the decisions officially made by members of the old AHAs and by members of the new district, a fair bit of responsibility for resource allocation will rest upon the doctors themselves. I should like the Secretary of State to accept that as a genuine statement of the problem and to make suggestions about whether the present way in which resources are allocated through the power of the doctors can be made more responsive to democratic needs and pressures.
The structure of the regional health authorities is closely related to the way in which resources are allocated. There is a link between structure and resource allocation. In London, in particular. because of the wedge-shaped pattern of the regional health authorities from the inner cities, through the suburbs and to the green fields, a tension in resource allocation is imposed upon each regional health authority, with which authorities find it difficult to cope. I hoped for some words

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of comfort from the Secretary of State that would lead to a better system.
It is not surprising, where there is so much emphasis on hospital services, that health authorities are less interested in the arguments in favour of coterminousity than the local authorities, which place more emphasis on community-based services. It is not surprising that local authorities are the champions of coterminousity. I hope that the Secretary of State will not be over-influenced by certain arguments but will consider carefully the valid points in favour of establishing the same boundaries for the different services. particularly because of the advantage that that would have for the elderly.
I have examined carefully the initial report by the London advisory group published in the DHSS circular in July. The group states clearly why London requires different treatment, but its conclusions are a little tame and not the direct result of the arguments in the report. We are talking about a new structure for the Health Service in London, when one of the key factors—the future of medical education in London is still an unknown quantity. I hope that the university of London will finalise its view of the Flowers report and that the Secretary of State will come to a decision soon enough to influence the new structure for the Health Service in London. If that does not happen, we shall have some inconsistent authority boundaries, possibly without hospitals.
It is over-optimistic to assume that the new structure and the definition of responsibilities for members of the new district councils alone will result in the level of efficiency we all wish to see. I speak as someone who believes fervently in the public sector and who would like to see it as efficient as possible. That is why I welcome the tentative suggestion made by both sides of the House that we might take a leaf out of the education book and appoint the equivalent of inspectors of education. That might help hard-pressed health authorities to learn from each other.
I urge the Secretary of State to consider advising the new health authorities to introduce a method of monitoring efficiency. The pressure will be such that
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cuts in the money made available to local health authorities and the difficulties of reorganisation will mean that they will not have time to consider efficiency. A monitoring system should be established so that the efficiency of service is kept under scrutiny.
Above all, let us allow the National Health Service to get on with the job. Compared with other countries we have a service on the cheap but it is still worth while, and we should be proud of it. I hope that the Secretary of State will do all that he can to improve morale in the Health Service. The staff have taken a severe battering in recent years. Let the Health Service get on with it and provide the service that it wants to provide for the people of Britain.
9 pm
Mr. Roger Moate: In one minute I shall endeavour to make two points. First, I warmly welcome the proposals, essentially because they will introduce a vitally needed element of democracy into the National Health Service. Like many other hon. Members, I speak as one who, in recent years, has been involved in endeavouring to obtain more resources for a deprived district. I and other Members have felt acutely the lack of democratic structure in our existing Health Service. It is significant that there has been such a general welcome for the proposed changes. There are arguments about detail, but in broad principle people accept that our Health Service should be based on strong districts. The districts must be more democratic.
I think that my right hon. Friend the Secretary of State was wrong to say that there should be only four elected members serving on the new authorities. I am not saying that having extra elected members is the answer. It is not. It clearly does not work in such bodies as the water authorities. It is not a complete answer, but there is no other way to achieve such democracy. I urge my right hon. Friend to reconsider his proposals and to introduce as many elected members to the new strong districts as can be sensibly accommodated.
Secondly, I wish to make a brief point about the ambulance service. Kent has gone through a traumatic experience in recent times. I am not blaming anybody

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for that, but it is a fact. It was the result of an attempt to centralise the ambulance services. It proved conclusively to me, and to most other people involved directly in the ambulance service, that the new Service should be based on the districts. I hope that when my right hon. Friend replies he will say something more about his thinking on that matter. It is wrong to contemplate dividing the ambulance service between those dealing with emergencies and those dealing with community transport. They are one service and should be kept as such.
No areas will remain, so some new structure for the Service must be concluded. Obviously, it is illogical to base that on the region, because it would have to re-think a new structure. The district is the natural and proper unit. Those responsible for the large districts, and the large number of hospitals within the districts, should also be directly responsible for the ambulance service.
Even if I were not one who has taken advantage of the emergency service in recent weeks, with immense appreciation of its skills, I should still say that in my area we feel that confidence has been undermined in the ambulance service itself, among those who administer it, and among the patients, by the changes that took place. Let us return the ambulance service to the districts. There might be variations in certain areas, but as a general rule I hope that the Government will lay down a guideline that the ambulance service should be administered by district authorities.
9.3 pm
Mr. Roland Moyle: We have had a wide-ranging debate this evening. I hope to reply to many comments quite apart from those on the pending reorganisation of the National Health Service, about which, of course, I shall have something to say. Many of my remarks, especially in the opening part of my speech, will not be entirely unfamiliar to the Minister of Health, because I made them often in Committee on the Health Services Bill during the early part of this year. I make no apology for repeating the points, because we have not yet received answers to some of them. By continuing to pound away from time to time we force
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the odd glimmer of light out of the Treasury Bench, which helps us to feel our way forward in the surrounding gloom.
It is necessary to state the attitude of the Opposition to the reorganisation. We believe that it is necessary to improve morale in the Health Service and to attain greater administrative efficiency. The scheme adopted by the Government is broadly that which was recommended to them by the Royal Commission on the Health Service, which we appointed. The administrative efficiency that is likely to accrue could be overstressed and exaggerated. For example, one result of the reorganisation will be that the links between the local authority social service departments and health authorities will be more complex than in the past.
There was some virtue in the suggestion made by my hon. Friend the Member for Brent, South (Mr. Pavitt) that social service directors should automatically be made members of health authorities. The link between the existing area health authorities and family practitioner committees is tenuous. One might say that they are almost independent fiefdoms within the kingdom. It will become more tenuous as a result of the reorganisation, because, instead of one health authority relating to one family practitioner committee, several health authorities will usually have to relate to one family practitioner committee.
Surgery of a sort will be applied to the Health Service, rather than any less drastic therapy. In those circumstances. I believe that the Government have a great responsibility to the staff, because at the end of the reorganisation the fundamental problem of Health Service costs will not be touched at all. That fundamental problem is the application of economically uninformed therapies by the medical profession. That will be left untouched. The staff will bear the burden of any reorganisation and any savings, but the essential problem will be left untouched.
The Government also aim to make financial savings. Here comes the advantage of battering away. because we are grateful to the Secretary of State for at last authoritatively setting out the figures on job losses. Job losses will be about 4,500 to 5,000. As a result, the

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right hon. Gentleman is aiming to achieve savings of £30 million—I assume at the moment that these are 1979 figures, although they might have to be updated by about £5 million or £6 million for inflation—over a five-year period. That means that savings will accrue to the Health Service at an average rate of about £6 million for each year over the next five. That will therefore mean a very minor saving on the NHS budget altogether.
What is happening in the Health Service at the moment—and I thought that the hon. Member for Belper (Mrs. Faith) gave clear expression to it—is that many medical people are looking forward to the cutting out of many administrative jobs, in the hope that large sums of money will accrue to various therapies in the Health Service, most of them administered by the medical profession. As a result of what the Secretary of State has said, it is now clear that that will not happen. No one will notice the degree of saving that comes to the Health Service, particularly—as I shall demonstrate in a few minutes—when substantial costs will have to be met in the initial period of those four to five years.
Even though the Secretary of State has given us the information that he has provided today we are still in a quandary, because the basis of his information is flawed. The basis of the £30 million figure is something that we have been seeking for the best part of 10 months. The best basis that we have is the remark made by the Under-Secretary of State during the Committee stage of the Health Services Bill, when he said:
"My hon. Friend the Minister for Health, with his vast personal experience of the Health Service, believes that more than that can be achieved, and has set the target at 10 per cent."—[Official Report, Standing Committee G, 12 February 1980; c. 102.]
He was talking there of management costs. That is the basis.
We have already had one quotation from Napoleon, so I shall mention the other one while we are at it. He said:
"Beware the voice of experience",
and added that all that any of his grenadiers saw of Russia was the knapsack of the man marching in front of him. I pay an unsolicited tribute to the Minister for Health, which is that there
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are few greater authorities in this world on the provision of child psychiatric services at Guy's hospital than the hon. Gentleman. That being said, the House ought this evening to be given a more scientific basis for the calculation of £30 million, which we have been seeking solidly for 10 months.
Are the Government saying "We shall use the reorganisation to save £30 million", or are they saying "We have a better system of administration as a result of the advice of the Royal Commission on the Health Service, and as a result of applying that we shall save £30 million"? From the Opposition side of the House it looks very much as though they will save £30 million by hook or by crook, no matter where it might come from.
We have established that there will he reorganisation costs. Conservative Members did much of the probing in Committee. There will be the painting of various new signs, an increased number of authorities, and so on. At present there are 90 authorities with members, which have to be administratively served. In the future there will be 170 or 180 such authorities, which will mean increased costs. There will be an increase in the costs of what I call euthanasia—the quiet putting down of various people who will lose their jobs—and salary protection for those who will lose their present responsibilities and have to accept lower jobs. There will also be the friction costs of reorganisation. The administrators will concentrate not on the effective, economic administration of the Health Service, but on putting into effect the reorganisation, and on wondering what will happen to their personal jobs and futures. That will incur increased costs.
What will the costs be? In Committee the Minister said:
"We have had warnings that it could he expensive. We have also been advised that it need not be expensive."—(Official Report, Standing Committee G, 4 March 1980; c. 391.]
That was 10 months ago. The Minister has had 10 months to reflect on the cost of reorganisation. I drew to the attention of the hon. Member for Truro (Mr. Penhaligon) the fact that we must not assume that the Government will not spend money in this exercise. If this degree of imprecision in their estimate of the costs remains, they may ultimately

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spend more money. It the reorganisation goes amiss, that quotation will certainly hang around the neck of the Minister like a millstone.
Further, all the figures that we have are last year's figures. The figure of £30 million was first mentioned in 1979. We are now in 1980, with an intervening period of inflation, often at 21 per cent. Must we now update the 1979 figures to £35 million? Those matters are crucial to the well-being of the National Health Service and the staff.
The Government have an overwhelming responsibility for the welfare of the staff. It is because of the Government's incompetent previous reorganisation that the present reorganisation has to be undertaken. Broadly speaking, the people who will be dismissed from their present jobs in the next two years are those whom the Secretary of State and his hon. Friends put there in 1973 to do the jobs that they are now doing.
It seems to Labour Members that this reorganisation will be carried through without the benefit of any anaesthetic. The Secretary of State has refused to give a "no compulsory redundancy" undertaking. There has also been a withdrawal of the Crombie code of compensation for public servants at the crucial moment when that code is desperately needed by everyone in the Health Service. The staff must be reassured that they will have as good a code to replace it.
In Committee the Minister for Health said:
"… redundancies—I know that that is a point that the hon. Member for Wood Green (Mr. Race) is concerned about—but I suggest to him that taking time, not doing these things in one burst overnight, will enable staff changes to be made with the minimum of disruption and will reduce the number of redundancies considerably "—[Official Report, Standing Committee G, 4 March 1980; c. 393.]
In view of the fact that as a result of this reorganisation we are moving towards an appointed day throughout the National Health Service when all these changes will be synchronised—certainly outside London—what effect will that one rapid D-Day have on the number of redundancies? The clear implication of the Minister's remarks in Committee was that the number of redundancies would be reduced with the operation spread over a long period. Therefore, the number of redundancies will be substantially in-
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creased if the appointed day procedure is adopted.
The staff have constantly asked for a staff commission to protect them. We have argued the case in the House and in Committee for a staff commission to protect the staff who will undergo the reorganisation. The Secretary of State has persistently refused to appoint such a commission. We have done our best to warn him. One of the prime objects of this exercise is to improve staff morale. The staff commission approach is a tried and trusted remedy that has been applied in countless public reorganisations in the past couple of decades in all spheres of activity. If the reorganisation goes sour and the staff get disgruntled, it will be on the right hon. Gentleman's head, because he will not have provided the sort of support that the staff want.
Then there are the functional officers. Their careers have been organised on a functional basis from area health authority downwards. They are mostly laundry, catering, personnel and works officers and some nurses organised on a divisional basis. Even if they remain in the National Health Service the right hon. Gentleman will have destroyed their careers, because most of the steps in those careers will go.
I raised this problem on 23 July when the right hon. Gentleman made his statement about the future organisation of the Health Service. He said that he would negotiate protection. So far no protection is emerging, and if some of these people read in management documents that the future organisation of their jobs is "a matter for conjecture at this stage" it scarcely serves to reassure them about what will happen under reorganisation.
In summary, therefore, the surgery that the right hon. Gentleman and his Friends are about to apply to the Service shows every sign of being conducted not with a scalpel but with a chopper, and without the benefit of an appropriate and adequate anaesthetic.
Another problem concerns London, to which my hon. Friend the Member for Battersea. South (Mr. Dubs) referred. It is a highly complex problem. The Royal Commission has advised the Secretary of State what to do about London, which is to hold a comprehensive inquiry into the

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health services with a view to promulgating a proper policy for those services and—this is important—to take the people of London along with him when he is composing a reorganisation. We have supported that approach as being the right one.
Again, the right hon. Gentleman has ignored all advice. He spoke this afternoon of machinery for planning and various committees, but he did not explain how the people of London would be involved in the planning and be taken along with the future reorganisation of the London health services. We in the Opposition regard his approach as irresponsible. We regard it as within our sphere to support opposition to those policies in London, and we shall do so. That means that battles on behalf of Westminster hospital, and other such hospitals, and King's College pre-medical year can be and will be fought by us because the right hon. Gentleman and his colleagues have not done the job that they should be doing in promulgating proper health services for London.
Throughout the discussions on "Patients First" there has been constant criticism of the Government for having treated district health services as an afterthought. The hon. Member for Belper made this point. The Government have denied the accusation. The Black report had a tremendous amount to say about the provision of district health services and the role that they will play in the future of health services.
The Government's attitude to the Black report reinforces the charge that they are disregarding the district health services. They are saying that here is an organisation that suits hospitals and that they think that it might well do for district services as well. I criticise that approach, and I believe that the Black report will prove to be one of the most important Government social documents of our time.
I reiterate that it will become one of the basic policy-making documents of the Labour Party in the run-up to the next general election, yet the Secretary of State embraced it with the friendliness of a boa constrictor embracing its victim. He embarked on a badly bungled attempt to manipulate the news to ensure that discussion was suppressed. Only recently
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prominent journalists have made the point that that is what the Government have been doing again and again.
Mr. Patrick Jenkin: I apologise if I am interrupting the right hon. Gentleman before he has made his case. We sent 100 copies of the report to national, provincial and specialist newspapers. In those circumstances, to argue that we are trying to hush up the thing is absurd.
Mr. Moyle: In that event, why did the Daily Telegraph, for example, not have a copy of the report on the day of the press conference by the working party? Why did not most of the regional health authorities have copies? Why did my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) have to send a cheque for £8 to the Department to get a copy so that he could consider it?
The report was received in April and published—if "published" is the word—in August week, some months after, when it was no doubt assumed by the right hon. Gentleman that most Members of Parliament and journalists would be on holiday. It was not given to Her Majesty's Stationery Office to print and publish; it was photostated in the basement of the DHSS. Its publication—
Mr. Patrick Jenkin rose—
Mr. Moyle: I have already given way once to the right hon. Gentleman. Its publication was made the responsibility of such a junior official in the press department of the DHSS that it took all Professor Peter Townsend's research acumen to trace his telephone extension. Finally, the original time of publication was supposed to be midnight—to make sure that everybody knew about it. In fact, it was brought forward to a reasonable time of day only because the working party announced that it was going to have its press conference. In that way, it forced the hand of the Department. Of course, the Secretary of State did not deign to have a press conference on the matter.
It must be a record in callousness, even for this Government, to be told that 30,000 of our fellow citizens are needlessly dying every year and for the Government to turn their back on them. The right hon. Gentleman is not responsible for the creation of that problem.

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That problem evolved before the National Health Service was established, as a result of optimism, complacency and inadvertence. But, now that the right hon. Gentleman and his right hon. and hon. Friends have been told that the problem exists, they become responsible.
The right hon. Gentleman turned down the recommendations on the ground of cost. I have today put down about two dozen questions on the costs of the recommendations in the Black report. As the right hon. Gentleman has turned them all down because of the cost factor, I shall expect precise answers on the costs of those recommendations, because he has had from April to August to work out the excessive cost, as he would say, of turning down those recommendations.
Fortunately, we are now getting more copies of the report. The TUC is to produce a pamphlet that summarises the report, and that pamphlet will be printed in large numbers so that people will have access to it.
The right hon. Gentleman did himself less than justice when, during his opening speech, he sneered and said that it would cost £2,000 million to apply the dreams of Professor Peter Townsend. That is not the sort of approach that is required. If the dreams of Professor Peter Townsend are not applied, it will probably mean 30,000 avoidable working-class deaths per year. That is what the right hon. Gentleman is trying to brush under the carpet, and it is not good enough.
How much would the Black recommendations on smoking cost? On 9 May last the House of Commons debated policy on smoking. It was almost uniformly critical of the current position regarding the sale and promotion of cigarettes. That concern was based on the best available advice that cigarette smoking was the single largest avoidable cause of ill-health among our people. At the end of that debate a resolution was approved, without a Division, that called
"on Her Majesty's Government to make new initiatives to alert the public to the dangers and costs of smoking and also to agree measures with the tobacco industry which will lead to a reduction in the promotion of cigarettes to the young."
At the time that that resolution was passed, the second in a series of three-
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year agreements that would gradually restrict the cigarette industry was already two months overdue. Nevertheless, the motion was approved by the House on the basis that there was sufficient good will in the tobacco industry to reach a voluntary agreement. That was certainly the basis on which the Labour Opposition proceeded. The Secretary of State said:
"So long as progress by agreement is possible, it would be wrong to introduce legislation".—[Official Report, 9 May 1980; Vol. 984, c. 783.]
As my hon. Friend the Member for Brent, South said, the three-year agreement is now nearly eight months overdue.
The view of the Labour Party is that the attempt to proceed by voluntary means has collapsed. The Government must legislate. We hope that in doing so they will put the Opposition's policy into effect. If they do not do that, they should at least write their own policy on restricting the tobacco industry and enact the Bill. It is clear that there is no good will in the tobacco industry.
I was going to say that I would urge one of my colleagues who is fortunate in the Private Members' Ballot to introduce a Bill restricting the cigarette-smoking activities of the industry and promotion in all its aspects. I now have a definite offer from my hon. Friend the Member for Brent, South, who says that he will introduce such a Bill. It is now a race between the Government's Bill and a Private Member's Bill introduced by my hon. Friend. In view of the debate that took place on 9 May, I wonder whether the Government have enough political clout to be able to stop such a Private Member's Bill if they really want to do so.
One or two other matters have arisen as a result of "Patients First". First, there is the hospital building programme. A district health authority is supposed to be an area that can support a district general hospital. Until now, 209 districts have been supposed to be able to support a district general hospital. The number of districts is now to be reduced to about 180 or 170. Those are districts that are also supposed to support a district general hospital. That in itself arouses the deepest possible suspicion.
This issue was raised when the Health Services Bill was being considered in

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Committee. We had some weasel words from the Under-Secretary of State to the effect that the reduction in the number of districts would not involve a reduction in the number of hospitals that would have been built anyway. When we couple the number of districts with talk about preserving small and well-loved local hospitals—a phrase of that sort appears in the Government's consultative document on the hospital building programme—it is clear, in our view, and in the view of most of those who are involved in the Health Service, that the hospital building programme will be substantially and savagely cut. It ill becomes the Secretary of State to talk about cuts in the capital building programme when he talks about the previous Labour Government.
There is a quiet resistance building up in the Health Service to the Government's urging to subcontract. The hon. Member for Harrow, Central (Mr. Grant) was right to draw the Secretary of State's attention to the quiet resistance to the circular that is building up in the Health Service. Most of the subcontractors find that they cannot do the job that is required by the Health Service. The administrators lack control over the operation once they have put it out to private contractors. Over the next two or three years they will be so involved in reorgianisation that they will not have time to worry about that sort of thing anyway.
Mr. Anthony Grant rose—
Mr. Moyle: No, I shall not give way. I am coming to my conclusion.
This is a reorganisation that will be carried out without the resources that are needed to fund it. We have established that it will cost money, and none of that money is forthcoming. The reorganisation will be imposed on an anaemic Health Service. The previous Labour Government were criticised for reducing growth in the NHS. Possibly that criticism was justified. However, the Government have introduced a new concept into the NHS, namely, that of absolute shrinkage of the Service. They have done so in defiance of their most obvious and specific manifesto commitments to maintain spending on the National Health Service.
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In page 6, paragraph VI of the third report of the Select Committee states:
"Current spending on the hospital and community health services, in volume terms at 1979 survey prices, was £160 million below the total planned in Cmnd. 7439, the last White Paper published by the outgoing Labour Administration. In addition, capital spending was £44 million below the Cmnd. 7439 figures for 1979–80. Overall, real expenditure on the National Health Service was less than in the previous year."
That is the first time since 1948 that it has been possible to say such a thing in any public document about the National Health Service. This is the first Government to introduce shrinkage as a concept in the administration of the National Health Service. The Secretary of State admitted as much when giving evidence to the Select Committee.
The National Health Service is being sacrificed. Until now the Government have maintained a fairly twisted and tortuous logic, to the effect that the National Health Service will be sacrificed so that the burden on private industry can be relieved, thus enabling it to earn lots of money that will in time provide extra resources for the NHS. That argument has no appeal to the Labour Party. It is a tortuous and twisted argument that has a fantastically convoluted logic of its own.
Nobody with eyes to see or ears to hear can maintain such a case now. Conservative Members must face the fact that after 18 months of Conservative Government the message is clear. The National Health Service is being sacrificed so that the ICIs of this world can also be sacrificed. The Government are on a course that cannot give rise to hope. They are in an untenable situation, and we shall fight them all the way.
9.33 pm
The Minister for Health (Dr. Gerard Vaughan): Until the closing remarks of the right hon. Member for Lewisham, East (Mr. Moyle), which were particularly vicious and misplaced and which did not do the debate justice, I would have said that this had been an interesting and wide-ranging debate. I welcome the opportunity to answer as many individual points as possible. Earlier this year the Opposition asked whether they could have such a debate. They felt that it was essential that the House should consider

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what was happening in relation to restructuring. We were happy to agree.
Since 1974 the Opposition have consistently criticised the structure of the National Health Service. Throughout the period in which the Labour Party was in government, they criticised it. The previous Labour Government set up the Royal Commission. However, during their five years in office they did nothing to correct what they saw as major faults.
Mr. Ennals: is the hon. Gentleman suggesting that we should have immediately gone back on the reorganisation that had already been carried out? Is he suggesting that we should not have waited for the report of the Royal Commission? Does he further suggest that we should have taken action before we were ready to do so, which would have created further disturbances in the National Health Service?
Dr. Vaughan: The right hon. Gentleman knows perfectly well that I am stating an historical fact. The previous Labour Government endlessly criticised the situation and spoke about the damage that had been done to the National Health Service, but they did nothing to put it right. It has fallen to us to take the action that virtually everybody agrees is necessary. We are having to take such action at the same time as we are having to restore the vitality of the National Health Service.
I wish to comment on the background which is very relevant to the pace at which we have been able to proceed with the restructuring. We have had to keep in mind that we are asking a great deal from the staff. This was referred to by the right hon. Member for Lewisham, East. We are asking the staff to continue running the Health Service for patients at the same time as dealing with the reorganisation and the restructuring. This fact has played an important part in our consideration of the pace of any changes.
We inherited a cumbersome and top-heavy structure with too many committees. I noticed that the hon. Member for Wolverhampton, North-East (Mrs. Short) talked about the time wasted by professional staff on committees. I agree with her. This is something that we intend to stop. We inherited too much paperwork. The previous Administration increased
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the number of administrators from just over 82,000 to just over 100,000 during their time in office. So much for their views on the need to cut down the amount of administration. We also inherited too much delay and too much frustration.
At every hospital I visit I make a point of meeting the representatives of the staff. Over and over again I find that it is damaging to morale at the grass roots of the Service that there should be this delay in the implementation of any suggestions they might make. This leads to frustration. It is not surprising that we inherited very low morale in many places.
The winter of 1978 saw the most appalling scenes of industrial unrest. That was, to a considerable extent, the result of the indecision and confusion that occurred under the previous Administration over the direction of the Health Service.
We inherited the longest waiting lists in Western Europe. They had increased by a quarter of a million in the previous four years. I do not wish to dwell on the distress, pain and suffering that this causes to large numbers of people.
Mr. Pavitt rose—
Dr. Vaughan: No, I will not give way at this point but I will in a few minutes if the hon. Member still wishes to intervene. In those years 280 hospitals were closed and a further 31 closures were in the pipeline.
I find it very difficult to follow the right hon. Member for Salford, West (Mr. Orme) and the hon. Member for Brent, South (Mr. Pavitt) when they talk about cuts. This talk is so fashionable in the press, but in five years under the Opposition's control the capital spending of the Health Service was radically reduced by one-third.
Most of all I deplore the drift and indecision in the National Health Service. Hospitals were actually closing down because they could not get clear answers about their future and staff were leaving because they felt that their careers were in jeopardy. Hospitals were losing staff on a huge scale and falling into disrepair, not only because of shortage of money but because of this indecision and drift. That is one reason why we wish urgently to see a more local service which is able to respond to the needs of the local community.

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When considering the restructuring, I never believed that it would have to be in the context of such a fall in standards and so much confusion of purpose in the Health Service. That is what we inherited and hon. Members know that it is true. More than this, although it was clear early on that many of the new hospitals being built were hopelessly wrongly designed and in some cases were not even needed because the hospitals they were intended to replace had been refurbished, and although it was clear that some of them would be excessively costly to run and staff, our predecessors did absolutely nothing to stop the process. Now we have. I am grateful to The Daily Telegraph for drawing attention to the problem. We now have a long list of new buildings that cannot be staffed and cannot easily be run.
Mr. Ennals: They cannot be staffed because the Government will not provide the money.
Dr. Vaughan: It is not only a question of money. There is a difficulty in staffing. That is the background against which the restructuring has to take place.
Since taking office we have had systematically to set about reducing the chaos, and I believe that we are succeeding. Morale is rising. One has only to tour the country to realise that. It cannot be denied. I was especially pleased the other day when some of the voluntary organisations said that for the first time for years they feel they are welcome when they try to assist in hospital procedures.
We are steadily reviewing hospital building policies. The week before last we announced a new low energy hospital design. It makes no sense to have a hospital that, like a cuckoo, eats up resources endlessly.
As the House will know, waiting lists are falling. It was suggested earlier that waiting lists are three times larger. That is not so. They are falling. The hon. Member for Wolverhampton North-East mentioned the distress involved in hospital waiting lists. In March 1979, 752,000 people were on the waiting lists; in June the number was 740,000; in September, 698,000; in December, 677,000; and in March of this year. 662,000. Waiting lists have come down by 90,000. I am not saying that they will
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not go up again, but I believe that this important downward trend will continue.
Mr. Ennals: The hon. Gentleman is making a comparison with the period at the height of the industrial disputes. During almost the entire period of the previous Labour Government waiting lists were well below 600,000, but the figure is now in the upper half of 600,000.
Dr. Vaughan: I do not know what the right hon. Gentleman is trying to tell us. Throughout the period of the Labour Government waiting lists increased steadily. If it is true that all that has happened is a fall off in the waiting lists that built up as a result of industrial unrest, lists would level out and not decrease. In the past year we have not only been catching up on the waiting lists built up during the industrial unrest but dealing with the new people coming onto waiting lists.
The right hon. Member for Salford, West made a sincere but somewhat misinformed speech. When listening to his comments on the Black report I could not help thinking of his comment not long ago that the National Health Service is the jewel in Labour's crown. if so it is beginning to look very tarnished.
The right hon. Gentleman made a completely misguided point about "Patients First". He said that there was no great reference to community services and the social context. Of course not. That is not what the document is about. It is about the changes that we consider necessary in the administrative structure, mainly in the acute hospital section of the Health Service, in order to pull this end together and transfer the resources that we hope can be saved into preventive and community services.
The right hon. Gentleman was right when he said that we must not continue a hospital priority service. Before Christmas there will be a strategy document from the Government on our priorities for preventive medicine and improving community services. I ask the right hon. Gentleman to await our document before he makes any more such comments on "Patients First".
My right hon. Friend the Secretary of State dealt adequately with the comments on the important Black report.

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It is totally untrue to suggest that we restricted its distribution. We do not underestimate its importance as the right hon. Member for Norwich, North (Mr. Ennals) suggested. I share the right hon. Gentleman's view that we should not talk about social class 1 and social class 5. They are all people living under different conditions. I also share the right hon. Gentleman's view that we must do more for those who have fewer environmental provisions than they need.
However, we must consider not only the relative differences between groups, though they are important and it is a matter of great urgency that we do something about them. The actual improvements in all social groups are also important. I concede that those improvements have not taken place as quickly as we should like. I ask the right hon. Member for Norwich, North and the hon. Member for Wolverhampton, North-East to accept that we recognise the importance of the report on perinatal mortality and we shall shortly be commenting on it.
A number of hon. Members, including the right hon. Members for Norwich, North and for Lewisham, East and the hon. Members for Wolverhampton, North-East and Brent, South, raised important questions on smoking and health. I say only that it takes two to make an agreement. We have set our minds to reaching an agreement. The Opposition would be the first to complain if we did not come up with an agreement that met our proper obligations.
My right hon. Friend the Secretary of State has said:
"So long as progress by agreement is possible, it would be wrong to introduce legislation, for instance on advertising, although no Government could rule that out for all time."—[Official Report, 9 May 1980 Vol. 984, c. 783.]
That is the position on which we stand.
Mr. Orme: Is the Minister prepared to set a deadline on how long the Government will negotiate with the tobacco industry? We have waited 12 months and the House is entitled to a specific date.
Dr. Vaughan: The right hon. Gentleman will know that specific dates can be helpful in negotiations, but they can also be damaging. Our aim is to get a
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voluntary agreement with the industry which will work. That is what matters. As a Minister and a doctor I am as aware as any hon. Member of the appallingly high figures of mortality from smoking.
In passing, I cannot resist congratulating my hon. Friend the Member for Harrow, Central (Mr. Grant) on giving up smoking.
Mr. Anthony Grant: And without legislation.
Mr. Pavitt: Is the tobacco industry arguing as one group, or does the battle that is being waged between British American Tobacco and the Imperial Tobacco group mean that the Government are negotiating with two groups?
Dr. Vaughan: The hon. Gentleman knows that it would be wrong for me to comment on such points. We are carrying on responsible negotiations and we are determined to get an agreement. Labour Members would be wise to leave it at that.
The right hon. Member for Salford, West and my hon. Friend the Member for Peterborough (Dr. Mawhinney) asked about the ambulance service. It is because we share the concern over the ambulance service and the anxieties about its working situation and its future that we set up a special working group on the ambulance service. We are now awaiting its report, which I hope will be available soon. I regard the report as very important.
A number of hon. Members have talked about London and our view that the Royal Commission's recommendation that there should be yet another inquiry was misplaced. As Opposition Members know, we do not agree with them on this matter. We think that there is already a wealth of information on London. The need now is for decisions and a clear programme for London's services. That is why we set up the London advisory group. On community health councils, we are looking urgently at their membership and their role. We shall be bringing a document before the House this autumn.
A good deal of anxiety was expressed by the right hon. Member for Salford, West and for Lewisham, East and the hon. Member for Brent, South about local authority representation. There is no

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doubt that local authority work has increased to such an extent that many local authority members find increasing difficulty in doing their local authority work and also, for example, serving as a member of a health authority. We concluded that it would be much better to have a smaller number of people able to devote the enthusiasm and thought to the health side of the Service than a larger number who were unable to do so. We hope that the chairman of the social services commtittee will be a member of the health authority wherever possible.
Much was said about democracy.
Mr. Moate: My hon. Friend gave the impression that the Government have decided to limit the number of local authority members to those recommended in "Patients First". Is he rejecting any recommendations or arguments that are put forward? Or will he respond to the requests to increase the number?
Dr. Vaughan: We have received some 3,500 recommendations and views on "Patients First". We have weighed them carefully. My right hon. Friend has stated that we shall proceed with reducing the number of local authority members.
The right hon. Member for Salford, West talked of wholesale sackings. I have no idea what he means. We are seeking to keep on health authorities people with a genuine, on-going interest in the Health Service. We are only replacing people who, clearly, have no real interest in the Health Service, are too busy, or, for various reasons—health grounds and things of that kind—are no longer suited. Under our restructuring, we are removing not one tier but two tiers—the area health authority and the sector tier. We shall watch carefully any recommendations of an administrative structure being put between the new district authorities and the unit organisation.
My hon. Friend the Member for Harrow, Central made the point that simply to pump more money into the National Health Service was not the sole answer. I believe that he is right. Regrettably, unlimited money can all too often lead to almost unlimited waste and extravagance. I share my hon. Friend's views. Many people with great experience in the
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Health Service say that we could make much better use of the money that is available. I share my hon. Friend's views on the value to the National Health Service of collaboration—I think that is the word—and partnership between the National Health Service and the private sector. Contracting out can offer great value to some parts of the Service. I am having discussions with representatives of various organisations.
The right hon. Member for Norwich, North suggested that we were on a wild goose chase. I do not understand what he means by that. I believe that there can be real savings in many cases as a result of restructuring, and that it makes sense.
I was glad that the right hon. Gentleman supported us by saying that it would be a mistake to have a single appointed day. I wish that he would talk to some of his colleagues about this matter. We do not think that it is in the interests of the staff as a whole to have one day of national change, although it may be desirable to have a set day within the whole region or a local area. We wish all our administrators well, because we are asking a great deal of them.
The right hon. Gentleman went on to talk about the Westminster hospital. I understand his preoccupation with the hospital and the medical school, because he has a great deal to thank them for personally.
Mr. Pavitt: So have we all.
Dr. Vaughan: Of course, but we have the whole hospital service of London to consider, and the medical schools are the university's direct repsonsibility. I suggest that we wait until we hear the university's recommendations. They will be settled by the court of the university, which does not meet on this matter until 5 November.
Mr. W. R. Rees-Davies: I do not share my hon. Friend's view on this matter. It is essential that we maintain the medical school at Westminster, which is immensely successful.
Dr. Vaughan: I am grateful to my hon. and learned Friend for stating his view. It is an admirable medical school, but I suggest that we wait until we hear the recommendations of the court of the

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university. We recognise that any changes in the medical school would have repercussions for the hospital as a whole, but we have never envisaged that this great hospital would close or cease to do acute work. I ask hon. Members who are present to reassure other hon. Members about that.
My hon. Friend the Member for Canterbury (Mr. Crouch) talked about the need for a more local service, and I agree with him. What we have asked of the regional chairmen is that they should look for the smallest size of health authority that will be viable and be able to run an efficient Health Service. That is why we have given the range of size for health authorities in "Patients First".
The hon. Member for Brent, South made a number of important points. For example, he talked about drug costs. I share his anxieties about this matter. That is why we have asked the profession to come to us with views on self-regulation and what we can do about it. We are treading into clinical freedom here, and I think it best first to hear from the profession what it thinks should be done about it.
The hon. Gentleman also made some comments about general practitioners and accommodation and other facilities for nurses. I am very aware of the problems of nurses. That is why I am holding for the first time for many years discussions with the nursing groups about their careers and future in the NHS.
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A number of hon. Members raised other topics. I apologise for not having reached all of them in the time available, but I shall be glad to take up detailed matters in writing. I think particularly of my hon. Friend the Member for Belper (Mrs. Faith), the hon. Member for Hammersmith, North (Mr. Soley) and my hon. Friend the Member for Wycombe, (Mr. Whitney).
The hon. Member for Truro (Mr. Penhaligon) posed a very difficult question—the dilemma of how far to go with new technology, how many resources should be put into something that to begin with may not have the best of returns but tomorrow may be a matter of everyday procedure in the Health Service. That is why we went for the £100,000 funding for the Papworth heart unit.
This has been a useful debate. The Opposition should not try to escape from their own record. They criticised the National Health Service structure but did nothing to put it right. We on this side of the House have grasped the nettle. We are simplifying the structure. We are starting not at the point of administrative convenience but at a point of service to the patient—
Mr. Walter Harrison: rose in his place and claimed to move, That the Question be now put.
Question, That the question be now put, put and negatived.
It being after Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

MERLEY SCHOOL, POOLE (REORGANISATION)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Waddington.]
10.2 pm
Mr. John Ward: I am grateful to my hon. Friend the Minister for being present at this late hour to answer the debate. I know of his dedication to the cause of good education. We shall not be wasting our time tonight by discussing the proposals that the Dorset county council are about to submit to the Secretary of State for the reorganisation of the Merley combined school, in my constituency.
The Dorset county council is controlled by Conservatives. It saddens me to have to criticise members of my party, but my first duty is to my constituents. I shall fight for them as vigorously as I am able. The Merley parents are as well aware as anybody of the need for wise spending in the public sector. The parents have been consistent in their view that what they want can easily be achieved within the county budget if quality of basic education is given priority over some of the desirable but fringe activities of the county authorities.
Ironically, the parents are asking for what is envisaged in the East Dorset structure plan, which was prepared at considerable expense for the Dorset county council. That point was well illustrated in a letter dated 19 March 1980 from Mr. Ian Andrews, the town clerk and chief executive of the borough of Poole, to the county education officer. In the same letter Mr. Andrews makes it quite clear that Poole council opposes the plans and, perhaps surprisingly, reveals that there was no consultation between the county and borough councils before the announcement was made public.
Attached to Mr. Andrews' letter is a report prepared by Mr. Graham Rogers, the borough architect and town planning officer of Poole. It is a reasoned and objective study, which sets out detailed objections to the county proposals. It highlights the fact that Dorset county council has, over the years, consistently underestimated the demand for school places in the borough. I shall quote but one paragraph from the report:
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"The proposals appear to be based on finance and the need to utilise spare capacity at other schools rather than on the educational welfare of the children. Bearing in mind all the disadvantages of the proposal, one is forced to question the reliance on the concept of 'viability' expressed in terms of numbers alone. It is particularly pertinent in the Merley instance where it is not a proposed school which is under consideration but one which has successfully established itself as an integral part of the community"
Elsewhere in the report Mr. Rogers rightly questions the wisdom of spending large sums of money at Broadstone middle school now when the county council itself suggests that a middle school may well be required at Merley in future.
I shall try to divide my speech into three main sections, covering education, finance and social effects. Merley was a fairly isolated village in my constituency, which was chosen as one of the areas for expansion into a balanced community. A site was chosen, and still exists, for a first and middle school. Buildings are already operational, catering for children in both first and middle school age brackets. Many young people bought houses in the area, secure, they thought, in the knowledge that a first school would be built, allowing the existing buildings to become a middle school.
I have a recent notice issued by the county council on 13 July 1979, which states:
"The intention is to build a new school at Merley for children between 5 and 8 years of age. When the school opens the present combined School will become a Middle School for children between 8 and 12 years of age. If later the number of children in the area justifies changing the age range of the Middle School to between 9 and 13 years, the First School age range will be changed to between 5 and 9 years. Should such a change be proposed a Public Notice of them will be published at that time."
For some reason that has never been satisfactorily explained to me, there are no less than three ages of transfer to secondary education in my constituency. The Merley combined school has been built up over the years to be one of the best of its type in the county. The headmaster, Pete Willis, is dedicated to his profession. He is backed by enthusiastic staff and managers and, with tremendous support from parents, the school has developed into a community. It is bustling with activity during lunchtime and in the evenings, and it serves children and parents alike.

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The parents' support has been forthcoming in more practical ways. In 18 months they have purchased a minibus for the school, and they have recently bought £500 worth of library books. It is little wonder that the parents refer to it as "our school".
The county council now proposes to back down on its previous promises, mainly, it is said, because of falls in rolls elsewhere. It proposes that Merley should now be a first school only, catering for children in the 5 to 9 age group. Using the council's own figures, the 420 pupils for a viable 9 to 13 middle school are available at Merley, yet the children in that age group will be dispersed to three schools in other areas. In no way do either I or the parents criticise the other schools. However, I wish to examine that proposal carefully with my hon. Friend. I believe that the county has not appreciated the damage that the proposal will do to the community and the danger that will exist for young children.
I wish to examine briefly the means of access to each school. First, there is Allenbourne school in Wimborne. It entails a difficult journey of 1·8 miles, partly along a trunk road, which involves crossing the River Stour, which frequently floods in winter. At least, that journey has the merit that most of it is through built-up areas. Lockyers school, Corfe Mullen, is another proposed school, and I find it difficult to use restrained language when referring to it. The council is seriously suggesting that children of 9 and 10 years of age should cross a busy trunk road and then travel a distance of 2·1 miles along a narrow country lane with steep banks, overhanging trees, no footpaths and no lighting and which is in places not wide enough for two vehicles to pass. I say in all seriousness that no child of mine would be allowed to attend that school if it meant such a journey.
The third school is Broadstone middle school, which is 24 miles from Merley. The journey entails a walk of one mile down a trunk road serving Poole harbour, and here the council has accepted that a footpath will be needed. What consideration has been given to parents with a child at Merley first school and another at one of the three middle schools that I have mentioned? Apparently, there has been no consideration at all. I conclude
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that few, if any, of those who made the decision on dispersing children from Merley have done as I did and travelled each of the proposed routes. If my hon. Friend thinks that I exaggerate the danger, in all seriousness I invite him to visit Poole and to bring his right hon. and learned Friend the Secretary of State and Baroness Young also. We shall walk those routes together, and they can judge for themselves whether it is irresponsible to suggest that young children should be put into such unnecessary danger.
With his long experience of running an outstandingly successful school, my hon. Friend will agree that it is not buildings but people who make a good school. He will also agree that in the important formative years, between the ages of 9 and 13, children should be set on the path to citizenship and learn to associate with their fellows in school sports and cultural activities out of school hours. No child living in Merley and attending one of the three schools that I have described will be able to do that, because of the travelling involved.
When these plans were first mooted, there was a predictable outcry from the parents, and the county council asked the education committee to reconsider the matter. The education committee said "No change". It was wrong then and it is wrong today. In desperation, the parents have now obtained their own quotations for building a first school at Merley in order to demonstrate to the council that the scheme which they propose could actually save money. Another factor is that although the council is saying that there is a shortage of pupils at Broadstone middle school, I have received complaints from parents of children at that school who wish their children to stay in the selective system. They said that at two weeks' notice the county council told them that their children would have to move to other schools, although previously they had been told that the move would be made only in one year's time.
I now intend to examine the financial implications of the Merley scheme and to suggest ways in which the county council education budget could have been more wisely used. I must say that the parents believe that the county has been less than objective when dealing with the

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financial aspects of this problem. Let us first consider the one-mile length of footpath down the Wimborne Road that would be needed if children were to reach Broadstone middle school in any degree of safety. Here the council has admitted that "something would need to be done". It allowed £25,000 to £30,000, and said that it expected it to come out of the highways budget and not the education budget, as though that would affect the cost to the ratepayers. When pressed, it was conceded that perhaps £39,000 would be needed, and when pressed again the estimate was raised to £45,000.
The parents decided to get expert estimates and were told that a minimum of £70,000 would be required—nearer £100,000 if drainage and fencing were included. Similarly, between March and June this year the council updated its own estimates for the proposals and what it said the scheme requested by the parents would cost. The parents have analysed the county council's costing very carefully and are unhappy because the cost of the scheme preferred by the parents appears to have escalated at a far greater rate than the scheme preferred by the county council. It is this sort of thing that makes the parents question the reliability of the figures on which the councillors based their decision.
I now turn to the parents' own design for a new first school on the existing Merley site, not a do-it-yourself effort but proper quotations and professional costings. In the short time available to them, the parents have designed and costed a prefabricated school, designed to a specification drawn up at their request by the present headmaster. The buildings would cost about £174,000 and would be available in months. Ground works would cost another £15,000, but this could be reduced to £7,500 because more than 130 parents have offered to do the unskilled labouring on the project.
The response from the county authorities is that they would require additional expenditure to bring it up to what are euphemistically called "standards", and the cost would be £450,000—roughly what it is proposed to spend at Broadstone middle school to accommodate Merley children. The county admits that the final numbers for Merley school children
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are far from clear. For instance, 54 new four-bedroomed houses are about to be occupied. Incidentally, it is proposed that mobile classrooms should be used in the first instance to extend the Broadstone middle school. Why not use them at Merley?
Again, there are considerable savings, which the council might consider, in other areas of education. Two items of county expenditure have particularly worried the parents of Merley, who rightly, in my opinion, question the wisdom of such expenditure if good schools are to be destroyed. First, last year an excellent comprehensive school was opened at Corfe Hills, and many of the Merley parents hoped that eventually their children would go there. As it was built during the big spending period of the Labour Government, no expense was spared on buildings or equipment. It is true that gym classes must use the school assembly hall—not a big hardship, one would think, given the high standard of the buildings and equipment that they have at present. Now, the Merley parents find that the county is to spend £600,000 on this already well-equipped school to build a music and gymnasium complex, and this within 21 miles of Merley school, which the county is proposing to destroy. I would have thought that tact, if not good housekeeping, would have called for the postponement of this expenditure.
Secondly, we have in Dorset, working from county headquarters, about 21 education advisers. Their function is frequently called into question by councillors, ratepayers and even school governors, yet they have an amazing capacity for survival. We are told that their role is both inspectorial and advisory and that they cost the county about £200,000 per annum. If that figure is made up mainly of salaries, and if travel and overheads are included, their true cost must be much higher. Those are just two items in the county education budget, which could save at least £800,000 and probably much more. Certainly, what by those standards amounts to small change would save Merley school.
Having prepared their own scheme for a Merley first school, the parents pressed for a meeting of councillors and parents so that the proposals could be clearly explained. They also asked the county

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officers and me to attend. I was presented with a petition with 900 signatures asking for help.
Knowing how important it was that the councillors should fully understand the proposal, I wrote a personal letter to every county councillor urging him to attend. Unfortunately, only a handful of county councillors accepted the invitation to the meeting, which was attended by 400 parents. Four county councillors and one official met a group of parents the night before to be briefed on the scheme, but we cannot escape the fact that only a very few county councillors know the full details of the parents' proposal when 60 councillors made their decision on Merley school at their meeting on 24 July. Still fewer have seen the dangerous routes that the young children are expected to use.
By now, Mr. Deputy Speaker, you may think that you know this resourceful and determined group of parents, and you would expect them to check an alternative means of transport. They have done so. If buses were available, it would cost parents £2.25 per child per week. I said "If buses were available". The parents have checked with the local bus company, which says that it does not have the extra capacity in its existing fleet, nor would it be willing to add to its existing fleet vehicles that would be used only twice a day during term time.
Let us consider the social effects of the county council's proposal. It would do much to destroy a school that has received enthusiastic support from everyone in Merley, not simply parents. It would reduce by half that all too rare brand of volunteers who have already done so much for the school and the village. It would mean children being dragged from a school in which they are happy to attend schools that are remote from their village. It would deprive those children of a chance to take part in many of the extra-curricular activities which are so important for their development. It would give endless worries to parents whose children would have to use ill-lit roads through wooded areas without footpaths. Instead of being educated and growing up with those who live near and share their interests, there is a three-to-one chance that they will have little contact with their fellows.
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On the Conservative Benches we know that money is important, especially when it is provided by the ratepayer and taxpayer. But having looked at this problem I am sure that, given good will and an unbiased approach, a solution could be found that would meet both sides in this dilemma and yet not cost more on the county budget.
I have made some suggestions about savings in the county education budget. On the cost side, I quote for the benefit of those who did not attend the parents' meeting the words of one parent:
"When the county calculate the cost they have not allowed for the potential cost of the loss of a local school. They have not allowed for the potential cost of destroying a good community in Merley. They have not allowed for the potential cost of a child being injured or killed on the dangerous journey to the alternative schools".
There is much common sense in those remarks, and I hope that my hon. Friend the Under-Secretary of State will bring his own brand of common sense to this debate. The parents are seeking a sound basic education for their children. They do not want flashy buildings or a mass of way-out subjects. Surely that is not an unreasonable ambition for any group of parents. The parents are asking that they be treated as caring parents who want the best for their children and the community. An objective study by a neutral body is now needed—a study that is not determined to see all the good things about one scheme and none of the difficulties and drawbacks and, at the same time, all the difficulties in an alternative scheme and none of the benefits. They seek the protection of the House and of my hon. Friend and his colleagues from the bureaucratic bulldozer being driven through their lives by people who could not by any reasonable process have reached the conclusion they reached if they had visited the area and fully understood what was taking place.
10.19 pm
The Under-Secretary of State for Education and Science (Dr. Rhodes Boyson): I have listened with care to the views put forward by my hon. Friend the Member for Poole (Mr. Ward). I visited his constituency under his distinguished predecessor. I pay tribute to the present. hon. Member for Poole for the way in which he has worked in the House. Having studied the documents on this

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case, I know how highly he is respected in his constituency. It is my hon. Friend's home ground, and lie knows his way around it—not just the paths and the roads, but all that is happening—better than any of us here. We were almost privileged to have this debate two and a half months ago, but then we had to wait to see what happened. I am told that parents were driving around the area with car stickers saying "Merley schools for Merley children". I have no doubt that at the general election they will be displaying stickers which bear my hon. Friend's name.
I wonder whether my hon. Friend realises that he has put me on a spot this evening. For reasons that I shall explain, I am inhibited in what it would be proper for me to say in reply to this debate. The House will recognise how painful that is for me. I must be careful in what I say. The changes in school organisation which Dorset county council approved on 24 July will call for formal proposals to be published under what would have been section 13 of the 1944 Act but which from 1 August has been section 12 of the Education Act 1980.
The authority will be obliged to publish its proposals with a copy to the Secretary of State and provide a two-months' period during which objections may be made. I have been told today that there is every likelihood that the formal proposals for the change in school organisation will shortly be made by the Dorset authority. That will provide a two-months' gap for objections to be lodged—no doubt my hon. Friend will be involved in them—and during which the parents of the area can take whatever action they wish.
A copy will go to my right hon. and learned Friend the Secretary of State. If there were no objections—and it seems from my hon. Friend's speech this evening and from what we know of the area that that is most unlikely—the decision would rest with the local education authority unless my right hon. and learned Friend called in the proposals, as he is entitled to do under the terms of the 1980 Act.
If there are objections, the issue will come before the Secretary of State. The fact that we are having the debate this
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evening indicates to me that it is fairly certain that my right hon. and learned Friend will have to consider the proposals and take the decision. That is why I must watch what I say. Any comment I make about the merits of what is proposed or likely to be proposed in the near future could be held to prejudice my right hon. and learned Friend's decision. When he makes it, he will do so only after he has studied all the evidence, including the views of the objectors. I have no doubt that my right hon. and learned Friend will be aware of the objections put forward this evening by my hon. Friend. That will be part of the material that will be examined before my right hon. and learned Friend makes his decision.
If my hon. Friend had been hoping to hear my views, I am afraid that he will be disappointed. I shall not say whether I think that the proposals are good or bad, right or wrong. I can say only that my hon. Friend made a very good case on his side. I propose to spell out in a wholly neutral fashion, which will be good for my self-discipline if for nothing else—a kind of Lenten exercise—the reasons as I understand them for the decisions that Dorset county council has made.
Poole was once an excepted district. In simple terms, it ran its own education service. Local government reorganisation in 1974 brought it within the county of Dorset. That local government reorganisation took place before my hon. Friend and I entered the House, so we are clear of any responsibility there.
One of the differences between Dorset's education and that provided by Poole was that, whereas the county's pattern involved children transferring between the different stages of their schooling at 9 and 13, the transfers in Poole took place at 8 and 12. That may seem a minor matter, but it is crucial to a proper understanding of the changes which Dorset now proposes to make.
The pattern of comprehensive education which operates in the area in which Merley is situated and in other areas of the county is a three-tier system of first, middle and upper schools. In what I may loosely describe as the Poole area—but excluding Poole itself; a real conundrum—first schools are for the 5s to 8s,

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middle schools for the 8s to 12s, but the upper schools, which are in Corfe Hills and Wimborne, take children not only from these 8 to 12 middle schools but from middle schools elsewhere which provide for children aged 9 to 13. In practice, therefore, Corfe Hills upper school has taken a dual intake of both 12 and 13-year-olds each year. Dorset is now saying that Corfe Hills, where numbers are high, can no longer take on this double load. Its solution is to make all the middle schools available for children aged 9 to 13 and the first schools for children aged 5 to 9.
This obviously affects the situation in Merley. The original plan was that Merley should have a 5 to 8 first school and 8 to 12 middle school with the children going on to Corfe Hills upper school at 12. Progress towards that objective had been made by planning and building a middle school, which served initially as a combined school for pupils aged 5 to 12, which is what Merley now has. When numbers in the appropriate age group had grown sufficiently, the combined school would take on its planned role as the middle school and a new first school would be provided for the 5s to 8s. That was all well and good, and I understand that Merley folk were quite happy about that arrangement.
However, the problem which Dorset says has arisen is that Merley cannot provide enough children aged between 5 and 13 to justify two schools. No responsibility was put on my hon. Friend for the shortage of children in that area. I have no doubt that since he became the Member for that area people with child-
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ren have been moving in, knowing that they had a staunch defender of educational standards. The confidence of living there may even have increased the degree of, fertility. I do not think that if there should be a deficiency—my hon Friend disputed that there was any deficiency—any responsibility rests on him. However, Dorset holds that there is a shortage of children aged between 5 and 13 to justify two such schools—a 5 to 9 first school and a 9 to 13 middle school. Therefore, instead of turning the combined school into a middle school and building a new 5 to 9 first school, it now plans to make the combined school into a 5 to 9 first school. When children reach the age of 9, they are to go either to Broadstone or to Allenbourne middle schools—not far away, but not in Merley. At 13 there will be a choice of upper school—either Corfe Hills or Queen Elizabeth's at Wimborne.
There it is. I am not expressing an opinion one way or the other on which is the best arrangement, whether there are enough schools or whether the pied piper has been at work. This will have to be considered later. When the time comes, it will be up to the Dorset local education authority to produce the arguments and the facts and figures to satisfy my right hon. and learned Friend. It will also be up to the opponents of the scheme to marshal their arguments as they have been marshalled this evening by my hon. Friend and prove to the satisfaction of the Secretary of State that the local education authority is wrong.
Question put and agreed to.
Adjourned accordingly at twenty-nine minutes past Ten o'clock.

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  DEPARTMENTAL SECONDMENT
  DEPARTMENTAL SECONDMENT

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

RPI INCREASES AND THE NATIONALISED INDUSTRIES
Lord ORR-EWING: 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, during the last 12 months, has been the percentage rise in the retail price index in wholesale prices and in nationalised industry prices.
The MINISTER of STATE, TREASURY (Lord Cockfield): My Lords, in the 12 months to September the retail price index rose by 15·9 per cent. and wholesale prices rose by 14·8 per cent. Nationalised industry prices included in the RPI have risen by 25·1 per cent. over the same period.
Lord ORR-EWING: My Lords, do not those figures illustrate the fact that the private sector, through better use of
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manpower and higher productivity, has been substantially more successful in keeping prices down than the public sector?
Lord COCKFIELD: My Lords, my noble friend draws attention to a point of great importance. Many of the nationalised industries are not subject to the same pressures of the market place as are industries in the private sector, and too often this has meant that their costs have increased and their prices have increased to a far greater extent than has occurred in the private sector.
Lord LEATHERLAND: My Lords, does not this show how very badly indeed the Government have looked after the nationalised industries during the last 12 months?
Lord COCKFIELD: My Lords, I do not know whether the noble Lord is suggesting that the Government should intervene in the conduct of the nationalised industries. That is not our policy. We believe that the nationalised industries ought to be conducted efficiently and well, and it should be possible—indeed, there is a very heavy duty resting upon them—greatly to moderate the level of their price increases.
Lord ROBERTHALL: My Lords, is it not something of a contradiction in the Government's anti-inflation policy that monopoly industries should be allowed

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to pass on prices, which accentuate the squeeze on the private sector, where most people would think that they have gone far enough already?
Lord COCKFIELD: My Lords, there is a great deal in what the noble Lord says. Many of the nationalised industries are in a monopoly position and, as with all monopolies, this enables them to pass on excessive cost increases and excessive price increases. It is the Government's policy to reduce the monopoly of the nationalised industries wherever this can sensibly be done; where the monopoly continues, it has been the Government's policy to refer some of these monopolies to the Monopolies and Mergers Commission for a report.
Lord LEE of NEWTON: My Lords, will the noble Lord say that it is because of the Government's policy of non-intervention in nationalised industries that they have lost two highly capable chairmen of nationalised industries in the last few months?
Lord COCKFIELD: My Lords, the present Question relates to the prices charged by the nationalised industries. I do not know whether the noble Lord is trying to suggest that the high level of these price increases is due to the loss of the two chairmen in question.
Lord BOYD-CARPENTER: My Lords, does my noble friend recall that when the post-war Government nationalised these industries they did so on the grounds that they alleged that they were failing the nation? Do not the figures which my noble friend has just given to the House suggest that, applying that logic, they had better be very speedily de-nationalised?
Lord COCKFIELD: My Lords, I would not go quite as far as my noble friend suggests, but where they can sensibly be privatised we are following that policy. But there may always be a residual core of industries which remain in the public sector, and we believe that it is in the interests of everybody—not least in the interests of the nationalised industries themselves—that they should be conducted efficiently, that they should restrain their cost increases, and that they should keep their price increases down to more reasonable levels.
Lord IRVING of DARTFORD: My Lords, nevertheless, will the noble Lord accept that, in requiring the British Gas Corporation to bring the level of gas prices up to the price of oil, the Government are interfering in the conduct of a nationalised industry, and would they cease to do so?
Lord COCKFIELD: My Lords, in regard to gas prices the noble Lord is not entirely on a good point. For the period covered by the Question and the reply, gas prices rose by just over 16 per cent., which is substantially less than the increase in other nationalised industry prices. Therefore, if we excluded gas prices the position would look worse and not better.
Lord BYERS: My Lords, can the noble Lord say what instructions the Government gave to the Gas Corporation on prices?
Lord COCKFIELD: My Lords, that goes wide of the present Question.
Baroness VICKERS: My Lords, can my noble friend say by how much the prices of household goods, particularly those of food and clothing, supplied by the private sector have risen?
Lord COCKFIELD: My Lords, food prices have risen by about 11 per cent. compared with an increase of 15.9 per cent. in the RPI. Clothing and footwear prices have risen by 8 per cent. and household durables have risen by about 9 per cent. The position is that shop prices generally have risen substantially less than the RPI.
Lord BRUCE of DONINGTON: My Lords, is the noble Lord aware that some of his replies went very wide of the original Question that was asked? Is he further aware that the main price rises which have already taken place and which are due to come have been due to the results of direct Government intervention?
Lord COCKFIELD: No, my Lords, that is not true. There are of course some price increases which are due to factors outside the control of the individual nationalised industry. This is particularly true in the case of energy prices. But far too often the excessive rise in

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nationalised industry prices is due to the fact that their pay settlements have run at a significantly higher level than pay settlements in the private sector.
Lord DRUMALBYN: My Lords, will the Government intensify their references to the Office of Fair Trading to investigate the price of monopolies in general, and also in particular of the nationalised industries?
Lord COCKFIELD: My Lords, I note the point that my noble friend makes.
Lord PLANT: My Lords, does the Minister agree that the directive that the Government have issued to the water industry to use current cost accounting next year will increase prices to the water user?
Lord COCKFIELD: My Lords, current cost accounting itself goes somewhat wide of this Question but it represents a sensible advance in accounting methods.

WIND-ASSISTED COMMERCIAL SHIPS
2.45 p.m.
The Earl of LINDSEY and ABINGDON: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have any plans regarding the development of sail driven ships for commercial uses.
Viscount LONG: No, my Lords. Her Majesty's Government have concluded from several reviews that the considerable expenditure involved in the necessary research, development and design of wind-assisted commercial ships is not justified at the present time. Should a commercial organisation decide to undertake the design and construction of a sailing ship of novel design, it could apply to the Department of Industry for support for the research and development aspects of the project.
The Earl of LINDSEY and ABINGDON: My Lords, while thanking my
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noble friend for that reply, may I ask him whether he is aware that our main maritime trading competitors, such as Japan, are giving serious consideration to the development of these ships as an alternative means of saving fuel? Further, as we are an island where large tankers and so forth come into deep water ports such as Milford Haven, could not the Government give serious consideration to the financial feasibility of developing smaller container ships and tankers for transportation of commodities from these large deep water ports to other destinations in the United Kingdom and the Continent of Europe?
Viscount LONG: My Lords, it is quite true that other countries are examining the question, as we have done, but, apart from a Japanese case, no owner or operator has been prepared to place an order for a wind-assisted ship. In Japan a shipping company has fitted a small tanker of 1,600 tons with unconventional sails controlled by a computer. It is estimated that a 10 per cent. fuel saving will be achieved. This has yet to be proved in practice, as has the efficient and effective operation of the sails. If I may go further, I would add that if there were such a ship then no doubt this method would be a great help in bringing such a ship into port, but as yet there has not been enough experimental work done in this matter.
Viscount ST. DAVIDS: My Lords, has the noble Viscount seen the papers as issued as pre-prints for the symposium on wind propulsion of commercial sailing ships which is taking place under the auspices of the Royal Institution of Naval Architects next month? Is he aware that on first sight it appears that the conventional sailing ship is never likely to return as a cargo carrier because her manning would be too costly; but that there is a considerable chance that by automation and with the aid of computers a sailing ship without a crew, or with a very small crew, might indeed be viable?
Viscount LONG: Yes, my Lords, there is to be a three-day symposium on sail and wind-assisted commercial ships to be opened by His Royal Highness the Duke of Edinburgh in the early part of next month. It has been arranged by

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the Royal Institution of Naval Architects from the 4th to the 6th November and a wide range of papers will be presented. This will no doubt cause a flurry of interest in the press. It represents a serious attempt to examine a wide range of topics relevant to the use of wind assistance in the light of current technology. Your Lordships will see from the programme, however, that most of the papers are academic studies and that they are not presented by owners or operators.
Lord ELWYN-JONES: My Lords, is the noble Viscount aware that a sailing ship without a crew is my idea of ideal sailing in the North Sea in rough weather?
Viscount LONG: Yes, my Lords, I go along with the noble and learned Lord.

CANADIAN CONSTITUTION: PATRIATION PROPOSALS
2.48 p.m.
Lord AVEBURY: 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 proposals were made, or information given, by Mr. Mark McGuigan, Canadian Minister of External Affairs, and Mr. John Roberts, Minister of Science, Technology and the Environment, concerning the patriation of the Canadian constitution during their recent meetings with the Prime Minister and the Secretary of State for Foreign and Commonwealth Affairs.
The LORD CHANCELLOR (Lord Hailsham of Saint Marylebone): My Lords, the two Canadian Ministers came as emissaries of the Canadian Prime Minister to tell Her Majesty's Government of the intentions of the Canadian Government on this subject.
Lord AVEBURY: My Lords, does the position of Her Majesty's Government remain as stated by the noble Lord, Lord Trefgarne, on 25th July 1979, that if a request to patriate the Canadian Constitution were to be received from the
8
Parliament of Canada it would be in accordance with precedent for the Government to introduce in Parliament, and for Parliament to enact, appropriate legislation complying with that request, as we have done on the 14 occasions since Confederation when the Federal Parliament has made such requests? Has the noble and learned Lord noted that the Canadian House of Commons voted by 156 to 83 in favour of the proposals presented to it by Mr. Trudeau? Would the Government publish a document setting out the basis on which the Canadian Legislature is asking us now to act?
The LORD CHANCELLOR: My Lords, no request has been received as yet from the Canadian Legislature and I notice from the public prints that it is still going through that Legislature. So far as I know, there is no change in the constitutional position since 27th July. It so happens that the Parliamentary Answer I have was given in another place by my honourable friend Mr. Luce; it would surprise me if it were different from that which was given by my noble friend Lord Trefgarne.
Lord GARNER: My Lords, are the Government satisfied that Canadian Ministers are sufficiently alive to the embarrassment which might be caused to this Parliament if proposals which were controversial inside Canada were to be put forward?
The LORD CHANCELLOR: I do not as yet feel any embarrassment myself, my Lords.

"THE WAR GAME" AND BBC TELEVISION
Lord NOEL-BAKER: 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 public interest in civil defence, and in view of the fact that numerous copies of the film "The War Game" have been sold by the British Broadcasting Corporation to private organisations, they will

9
advise the Director General of the BBC that it would be in the national interest that the film should be shown on the corporation's television programmes.
The PARLIAMENTARY UNDERSECRETARY of STATE, HOME OFFICE (Lord Belstead): My Lords, the broadcasting authorities are responsible for the content of their programmes. It is for them to decide what programmes to broadcast and it would be contrary to long-established practice, endorsed by successive Governments, for Ministers to seek to influence their decisions. It is therefore for the BBC alone to decide whether to show "The War Game" on their television programmes.
Lord NOEL-BAKER: My Lords, while thanking the Minister for that reply, may I ask whether he is aware that 12 years ago, when the BBC first suppressed this film, the director wrote to me saying that the impact would be so terrible that if they showed it, fathers would kill their children and mothers would jump out of windows? However, that did not prevent the BBC from selling the film to private societies for exhibition. Is the noble Lord aware that it has now been seen by perhaps half a million people, and no fathers have killed their children or mothers jumped out of windows? Is he further aware that it has been sold to the German education authorities who have made a German soundtrack, and every school now sees this film every year in Germany? Is it not the right of British citizens to see what a nuclear war would be like, if it is possible for German children to see it?
Lord BELSTEAD: My Lords, I am aware that the noble Lord wished this film to be shown and I am also aware that the BBC have not shown it. I have not seen copies of correspondence between the corporation and the noble Lord. There are other ways than seeing this particular film that the people of this country can become acquainted with the possible effects of nuclear war.
Lord GLADWYN: My Lords, irrespective of the merits or otherwise of showing this film, do the Government realise that no effective civil defence against nuclear bombardment of this
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country is possible and that it is gravely misleading the public to suggest otherwise?
Lord BELSTEAD: My Lords, we believe that to be seen to be as much prepared at home as possible, as well as capable of military deterrence and defence, will make war less likely, and that is the policy the Government intend to pursue?
Lord ORR-EWING: My Lords, may I ask my noble friend to say whether his departmental officials have vetted the film for accuracy about civil defence, bearing in mind the great expertise in his department? Will he bear in mind that the BBC is not always accurate, as it was not on the one o'clock news when it announced that Parliament would reassemble today?
Lord BELSTEAD: My Lords, I am not aware whether officials of my right honourable friend's department have either seen or vetted this film. I have myself not seen it.
Lord BROCKWAY: My Lords, following the supplementary question asked by the noble Lord, Lord Gladwyn, may I ask the Minister whether he appreciates the widespread concern about the ineffectiveness of any civil defence against a nuclear attack, as illustrated yesterday by the largest demonstration there has ever been in this country? Is he aware that wherever "The War Game" is shown it is wanted to be seen not merely by crowded audiences but by hundreds who cannot obtain admission? Will the noble Lord at least send to the BBC the Official Report of these discussions so it may be aware of our desire to see that this matter of public interest is shown on the BBC?
Lord BELSTEAD: My Lords, the noble Lord asks me whether I am aware of a variety of things. I am aware that since 1945 the peace of this country has been kept by the contribution which we have made to the North Atlantic Treaty Organisation. Part of that contribution means being prepared, so far as we can be, both at home and abroad. In answer to the second part of the noble Lord's supplementary question, of course I reply, yes; I shall indeed draw the attention of the BBC to the exchanges in your Lordships' House on this issue.
Lord AVEBURY: My Lords, if a new information film were to be made on the same lines as "The War Game", in colour and brought up-to-date with the most recent knowledge on the effects of a nuclear bombardment, would the Minister give an undertaking not to interfere with the making of such a film or the showing of it on television?
Lord BELSTEAD: My Lords, the whole basis of all the answers I have given in the last few minutes is that the Government do not interfere with what is actually broadcast.
Lord STEWART of FULHAM: My Lords, in view of the Minister's reference to NATO, may I ask him to assure us that it is the Government's policy to continue to fulfil the pledge about the increase of our defences that was made to that organisation?
Lord BELSTEAD: I think that is going very wide of the original Question, my Lords.

BUSINESS
Lord DENHAM: My Lords, with the leave of the House, at a convenient moment after 3.45 my noble friend Lord Belstead will be repeating a Statement on the prison officers' dispute. That will be followed by a Business Statement by my noble friend the Leader of the House.
It may also be for the convenience of your Lordships to know that dinner will be available this evening. It is expected that the Report stage of the Local Government, Planning and Land (No. 2) Bill will be adjourned at approximately 7 p.m. for approximately 40 minutes.

LOCAL GOVERNMENT, PLANNING AND LAND (No. 2) BILL
2.58 p.m.
Further considered on Report.
Clause 15 [Rates of return: powers of Secretary of State]:
Lord BRUCE of DONINGTON Lord BRUCE of DONINGTON moved Amendment No. 43:
Page 15, leave out lines 19 to 22.
The noble Lord said: My Lords, this amendment seeks to delete from Clause 15 the provisions which specify that a rate of return shall be shown in respect of any description of work specified in regulations under the relevant subsection. It will be within your Lordships' recollection that when we were discussing the earlier provisions of this part of the Bill relating to accounting matters I sought to demonstrate that it was quite impracticable to obtain a rate on the capital employed in each of the particular sections which, as the House will recall, relate to work on the highways, contracts above and below £50,000 and maintenance work.
I thought that my arguments at that time found favour with your Lordships, because of course in order to determine a rate of return on capital employed for each description of work, one has to ascertain the capital relating to each particular degree of work. As I explained, where a direct labour organisation has its own warehouses, stores, and plant and machinery of a wide variety, it is common for that organisation to use that equipment generally. It may at very short notice be switched from one description of work to another, and consequently, as we discussed in earlier clauses, it is not possible to prepare a balance sheet in respect of each particular description of work carried out. I believe that when it came to the accounting provisions the noble Lord was constrained to accept that amendment on the grounds that it is not possible to prepare a balance sheet in respect of each particular description of work.
Arising from that point (in which I was sustained by the noble Lord, Lord Avebury, who is not present at the moment) it would follow that it is not possible, with any reasonable degree of accuracy, to determine the amount of capital employed in terms of division of assets, stock in trade, or whatever it may be, spread over the four headings. Of course, I am well aware that by means of very considerable analysis, and a great amount of extra clerical labour, it is possible to ascertain the number of hours that an individual machine, formally belonging to the whole of the direct labour organisation, is used in any particular category of work. Therefore one could arrive at

13
a rough—and it would be very rough asset utilisation factor which would produce a result showing so much capital consumed during the period under review. But that is not the same as a return on capital employed, because as I say even though it is possible to work out in meticulous detail machine usage, there would be very lengthy periods of time when the capital was not in use by any of the five departments at all, and so the result would be completely artificial.
This part of Clause 15 which insists on the calculation of a rate of return for each description of work is completely unrealistic. If there is any endeavour to enforce it, it will involve a number of assessments and approximations and some crystal gazing that would make the result quite meaningless, and indeed it is to be hoped that the Government will take that into account.
There is another reason involved. Your Lordships will recall that under Clause 8 of the Bill the local authority, when determining the cost of the service being provided, actually fixes the price. It must in advance make a written statement of the amount that corresponds to the selling prices, and under the Bill the Minister himself has power—because he can do virtually anything—to vary that. If the Minister does not like the selling price that goes into the accounts for the purpose of determining the rate of return, he can alter it. In short, within the provisions of this part of the Bill, the Minister himself can virtually determine in advance what would be the rate of return on capital employed, always on the assumption that he could go through the contortive calculations, to which I have ventured to draw your Lordships' attention, which would involve a very considerable waste of time and extra expense within the local authority.
On the assumption that it is feasible and indeed desirable for the Secretary of State to fix a rate of return on capital employed—and this is a very large assumption—it is practicable to do so only on the DLO as a whole rather than on the individual descriptions of work, and I should have thought that commonsense would have dictated such a course. It is in order that even at this late hour the Government may quit what I shall call nit-picking at the local authorities,
14
insisting upon some detail of this kind, which as I have said, is entirely worthless, that I hope that the House will support the amendment. I beg to move.
3.6 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Lord Bellwin): My Lords, we discussed most of the arguments involved in this matter when we were considering Amendment No. 41, which the noble Lord, Lord Bruce of Donington, moved to Clause 14. The Government's case is that we must prevent the risk of cross-subsidisation. We must therefore require authorities to calculate separately the rate of return that their DLOs are earning on the separate parts of their business. We must have information available in as clear a form as possible, so that councillors and ratepayers can see just where their operations are succeeding and where they are failing.
We have looked at the arguments so very well put by the noble Lord, Lord Bruce, at this stage, and in Committee, too. We have looked at the arguments and have weighed the objections, and in the end have concluded that notwithstanding the points that he makes—and some of them have some validity in themselves—in the context of the totality of what we are seeking to achieve by these measures, we cannot accept the amendment. Clearly we could debate this question at greater length, but I fear that we should not get very far in so doing. Since the last stage we have discussed this matter with the institutes, the professional bodies, to which the noble Lord, Lord Bruce, referred earlier. While certainly they do not say that what we are requiring is easy, nevertheless, as the noble Lord himself has said, the view is that, yes, it can be done. We recognise the possible difficulties, but on balance we feel that the weight of the argument is such that we cannot accept the amendment.
Lord BRUCE of DONINGTON: My Lords, I very much regret that the noble Lord cannot accept the amendment. I feel that I must correct him ever so slightly; I do not think that he in any way sought to mislead the House. He referred to the professional bodies and I think that I ought to speak for my own

15
Institute of Chartered Accountants in this particular respect. The institute said—and I have the correspondence—that segregation in this way, and the requirement of a rate of return on capital employed on each description of work, would produce a very considerable degree of approximation. I think that I ought to make that clear. My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The DEPUTY SPEAKER (The Earl of Listowel): My Lords, before I call the next amendment, I should point out that if it is agreed to I cannot call Amendment No. 44.
3.10 p.m.
Lord SANDFORD Lord SANDFORD moved Amendment No. 43A:
Page 15, line 38, leave out ("shall have power at any time, if he thinks fit, to") and insert ("may, if the rate of return on the capital employed is less than the required rate,").
The noble Lord said: My Lords, we were brought to this point in the Bill at the Committee stage by a wide-ranging debate opened by a powerful speech from the noble Lord, Lord Sefton, and then, immediately before this point, a rather more precise amendment was moved by my noble friend Lord Renton—and I am sorry that neither of those noble Lords are present. I am sorry; I am glad to welcome my noble friend Lord Renton to his place at this propitious moment, because he moved an amendment in much the same words as the one I am now moving. Incidentally, I think it would be convenient if at the same time I spoke to Amendment No. 48A. That had the effect of obtaining from my noble friend Lord Bellwin an assurance that he would look at this matter again and see whether the purpose sought by my noble friend Lord Renton and now by myself was in fact achieved by the Bill as drafted, or whether, as I still believe, an amendment of this kind is needed in order to restrict the powers of the Secretary of State to the purposes which he is setting out in the Bill, not only in this clause but in the Explanatory Memorandum to the Bill itself. I beg to move.
Lord RENTON: My Lords, I wonder whether I may briefly support my noble
16
friend Lord Sandford, and thank him for mentioning that I raised this matter at the Committee stage. I am thankful to say that I arrived here just in the nick of time. A point which I think should be stressed is that the Bill as originally drafted and the Bill as still drafted fails to carry out the intentions of the Government as declared in the Explanatory Memorandum. If noble Lords would turn to col. 251 of the Official Report, or, indeed, to the Explanatory Memorandum attached to the Bill as it came to us, they will find that paragraph 4 of that Explanatory Memorandum said, relation to Part III, that it:
"enables the Secretary of State to deprive authorities of the power to maintain direct labour organisations where a prescribed rate of return on capital has not been achieved …".
I would suggest, bearing in mind that that is clearly the purpose, that the purpose should always be stated where it is clearly the intention of the Government and of Parliament, and that should be done in this particular case; and that therefore this simple amendment—either my noble friend's or mine, which differ only to the extent that he has the word "and" in front—should be accepted. Accordingly, I am thankful to be able to support him.
Lord EVANS of CLAUGHTON: My Lords, I think your Lordships will recall that at the Committee stage of the Bill the noble Lord, Lord Bellwin, conceded, as reported in cols. 247, 248, 249 and 251 of Volume 413, No. 184, of the Official Report, that there was considerable concern about the Secretary of State's unrestricted and, some people would suggest, unprecedented powers in this clause, first, to call for a special report under subsection (4) and, secondly, to require cessation of operations of a direct labour organisation under subsection (5). As the noble Lord, Lord Renton, has said, it does not even carry out the wishes or the intentions as set out in the Explanatory Memorandum. I had hoped, and I am sure several of your Lordships had hoped after the encouraging words of the noble Lord the Minister, that there would have been some amendments put down to this Bill; but I hope that, in the absence of that, your Lordships will be willing to accept this amendment, which I think goes most of the way to settling the doubts, the problems and the reservations which were expressed at Committee stage.
Lord BRUCE of DONINGTON: My Lords, the powers taken by subsection (4) are very wide indeed. They provide:
"The Secretary of State shall have power at any time, if he thinks fit, to direct a local authority or development body to make and submit to him, within such time as he may specify in the direction, a special report …";
and then the remainder of the subsection covers that. These are very wide powers. Indeed, on the receipt of the special report required under this particular subsection he may, under the current drafting of the Bill, order the closure of all or any part of a local authority's direct labour organisations even if there are no irregularities in the accounts which are produced.
These are very wide powers indeed, and, if I may say so, they highlight the whole of the Government's attitude towards local authorities. Their attitude is based on the assumption that local authorities do not know what they are doing, that their electorates are not informed and that they are not subject to any of the ordinary democratic checks. This is a direct taking of power by the central Government on the basis that the central Government know best, and they can exercise it precisely as a matter of caprice or personal whim of the Minister and the local authority has got to come to heel.
I understand that, if Amendment No. 43A is carried, then Amendment No. 44, which is in the names of my noble friends Lady Fisher of Rednal and Lord Sefton of Garston and myself, will not be able to be called. I am bound to say on behalf of myself and my noble friends that we much prefer Amendment No. 44 to Amendment No. 43A, which has been moved by the noble Lord, Lord Sandford. Undoubtedly, however, the amendment moved by the noble Lord, Lord Sandford, is much better than the existing wording of the section, and for my own part I am constrained to support it on those grounds—that it is better, and in politics it is sometimes better to have half a loaf than no loaf at all. So we shall wait to see what happens to the amendment moved by the noble Lord, Lord Sandford, and shall reserve our rights accordingly.
Lord BELLWIN: My Lords, when we had quite a lengthy discussion on this in Committee I undertook to have another look at the drafting, but I hope I was
18
careful to say that that re-examination would be limited to the wording and would not extend to the substance, because quite clearly there is a difference between the noble Lord, Lord Bruce, and myself as to the intentions of what we are proposing here; and I am not so sure that the same is the case in relation to the points raised by my noble friends Lord Sandford and Lord Renton.
The Government have always envisaged that it would be failure to earn the rate of return which would precipitate the call for a special report, and it was on that basis that the clause was drafted and the Explanatory Memorandum was drafted, too. Meanwhile, however, it has been pointed out that there are other circumstances where action might be necessary; for example, in relation to abuses of the tendering procedure. Thus, although the Explanatory Memorandum remains a substantially true description of our purposes, it is not necessarily an exhaustive one. There is, of course, no opportunity to amend the Explanatory Memorandum at this stage; it is not part of the Bill, and has served its purpose of giving a general description of the effects of the Bill. I understand very well the arguments put forward in support of this amendment, and, as I undertook at Committee stage, we have examined the drafting very carefully indeed. At that stage it was obvious on all sides that there was much concern over the words
"the Secretary of State shall have power at any time if he thinks fit".
At first glance, it could look like a very autocratic discretion. Both my noble friends in moving this amendment have done us a service in pointing out how little difference there is between this formula and the familiar phrase, "the Secretary of State may".
My noble friend's amendment as a whole, however, makes a real change in the meaning of the provision. It seeks to restrict the power of the Secretary of State to call on an authority to prepare a special report to those circumstances in which there has been a failure to earn the required rate of return. At earlier stages in the development of our policy I might have found it easy to agree with him. Certainly, a failure to make the return has been the trigger that we have always envisaged as the most important and

19
likely occasion for a request for a report. I have no doubt that, in practice, the Secretary of State will be looking for that very thing.
It has been pointed out with some force that there are, as I have indicated, other circumstances in which it might be useful to be able to ask an authority to justify itself. For example, an authority might be tempted to comply with the letter of the tendering provisions but to avoid its merits. There is no requirement, and we do not seek to impose one, that authorities should always accept the lowest offer received as a result of the invitation issued under Clause 8. It would be open to an authority to continue to give work to its direct labour organisation in the face of the evidence of competition that there were cheaper and more efficient alternatives. It would be easy to fix direct labour organisation prices on this basis to ensure an apparently satisfactory rate of return, but such a case would cry out for investigation.
We have been persuaded that we need the power for this purpose as well as to look at the failures in purely accounting terms. I hope that my noble friend may feel that his amendment goes further than at first sight seems to be a simple and logical attempt to take away an autocratic power such as the words "as he thinks fit" would seem to indicate. If so, no doubt he will not pursue his amendment.
Lord SANDFORD: My Lords, it is certainly true that there may be circumstances other than a failure to achieve the rate of return required which may cause the Secretary of State to want to have a report submitted to him or to investigate a matter. If the situation is that with my amendment he could not do that, there may be a case for leaving these very wide powers in the opening sentence of subsection (4). To that extent my amendment goes further than the amendments of my noble friend, Nos. 47 and 48, which only restrain the power of the Secretary of State to the purposes set out in the Explanatory Memorandum and in the first subsection of the clause.
I think that the sweeping powers given to the Secretary of State to cause an investigation to be carried out or to call for a report need to be limited, as I have
20
argued and as my noble friends and others have argued, before he is able to take the action prescribed in subsection (5)(b); namely, that of requiring a local authority to cease to operate a direct labour organisation. Before that happens, I think it is necessary for him to be satisfied that the rate of return has not been achieved.
Unless my noble friend wants to make any further comments, I would now propose to withdraw my amendment but to suggest to my noble friend that his rather more limited amendment should be discussed again when we reach No. 47. If he is disposed to press it, then I would certainly be disposed to follow him. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.25 p.m.
Baroness FISHER of REDNAL Baroness FISHER of REDNAL moved Amendment No. 44:
Page 15, line 38, leave out ("if he thinks fit") and insert ("where a local authority has failed to conform with the appropriate statutory provisions").
The noble Baroness said: This amendment that I move on behalf of myself and my noble friends follows the discussion that we have been having but perhaps does not require emphasis on just one point; that is, the capital employed. What we say is that, if local authorities fail to conform with any of the statutory provisions, obviously that will be when the Secretary of State could quite likely call for a special report. But, as my noble friend Lord Bruce was saying, the whole clause is drafted in a very wide way; and we have to recognise, in my view and in that of my noble friends, that all the way through the direct labour part of this Bill the drafting shows quite clearly that the dice is loaded against direct labour organisations. If there are no irregularities in the accounts, if there is nothing that a local authority has done wrong, still the Secretary of State can demand a report. It is this that worries me particularly. Here again we have directly elected representatives on local authorities who are having power taken away from them whether they have a direct labour organisation or not.
What is particularly worrying—and I should be glad if the noble Lord when he answers would give some indication of what actually constitutes a direct labour

21
organisation so that all noble Lords will understand what we are talking about—is that I believe that many noble Lords think that a direct labour organisation is some adjunct to a housing department and that during the winter months they sweep the snow from the roads. To cite the example of the authority I know best, it has three large direct labour organisations, but they are not so named. The actual DLO which was set up was completely disbanded when the Conservatives took control of the city. The very large organisation which is called the city engineer's department has a direct labour organisation; the education department of that city, because it has such a lot of schools and colleges to look after, again has a direct labour organisation; and the housing department, which has the largest number of council houses of any city in Great Britain, has a very large direct labour organisation which is called the city maintenance department for housing.
These are not small departments employing 30 or 40 people. These are huge departments in the local authority. What is worrying is that it might be that one of those departments of the direct labour organisations is not showing a true return on capital or it is not fulfilling some obligation and this may mean that the whole DLO of the city would have to be closed down because one of the large component parts of it was not doing everything that was asked for in this particular clause. Therefore, our amendment is clear, and is something which I think will be acceptable to all local authority associations, bearing in mind that they are keeping to the letter of the law. I beg to move.
Lord BELLWIN: My Lords, I will do my best to answer the points the noble Baroness made when she referred to the different bodies. So far as I am aware, there is not in the Bill a definition of DLOs as such, but I think that what a DLO is will be obvious to most people. Here I am taking a chance in giving my definition, but it seems to me that it would be a unit of people employed directly by the local authority themselves to carry out certain works. We know that in practice what that usually means is either works of maintenance or, in some cases, of new building, or whatever.
22
It is quite true, as the noble Baroness said, that some authorities have departments which themselves employ a direct labour organisation. Some housing departments do it. They employ their own staff who do maintenance and so on. Certainly my former authority, which was only marginally smaller in terms of having a housing section, did not have a separate section at all. There was just the one organisation within the city. But there will be various types.
I do not think that what the Bill requires matters so much. Indeed, I think the noble Baroness made my case very well for the need for a separate return in the case of separate sections of a DLO, so that it will be possible to ascertain the facts. If I were a ratepayer in that authority I should very much want to know that one part of the organisation was perhaps doing badly. I might also be happy to know that another part was doing well. But the only way I could know would be if separate returns were required.
This amendment seeks to limit the power of the Secretary of State to call for a special report in those circumstances explicitly set down under the Bill or its orders or directions; but this is too narrow. As I think I indicated when speaking to the last amendment, there could be other circumstances where the spirit if not the letter of the legislation is being broken. I mentioned then the persistent failure to choose the lowest tenderer under Clause 74. To take another example, there could be such a margin of failure by a DLO that a special report became imperative before matters got out of hand. We are living in a world where waste cannot be allowed to go unchecked, and the Secretary of State must be given discretion to step in and at least ask for an explanation. That is the first such step, and I do not think many people quarrel with that as a philosophy on its own.
This is not an unfettered power. There is protection at all times in the courts. If it is found that the Secretary of State has exercised his power for an improper purpose or on legally irrelevant grounds, the courts can order such action to be quashed. I appreciate the concern on this matter, particularly from noble Lords opposite, but at the end of the day it

23
comes back to the whole issue of everybody knowing, and knowing of the success or failure of the component parts, if I may put it that way. I see no harm at all in that; quite the contrary. I think it is long overdue.
Lord BOWDEN: My Lords, I should like to make one small observation. I myself was responsible for an organisation which, by comparison to those which have been mentioned was very small; nevertheless from my own point of view it was a very important part of the university of which I was in control at one time. The point which bore itself on me, time after time, was the appalling complexity involved in making realistic comparisons between costs of work done in different ways. If one had a works department one had to carry the overhead costs of it whether it was being employed or not. Very often it is more important, in the interests of the efficiency of the work, that the date at which the work begins should be convenient rather than that the actual total cost of the measured work should be low.
All of these points constantly obtruded on attempts made by accountants to assess the efficiency of our works department, and I came to the general conclusion that acccounting in not the precise, determinate enterprise that people think. It is arbitrary; it involves an enormous number of assumptions and it is very easy grossly to oversimplify the apparent costing concerned and come up with arguments which are most misleading. For that reason I hope that some form of amendment, which does not give the Secretary of State too sweeping powers to intervene in what may be a much more complicated matter than he has any reason to understand, will somehow be in this Bill.
Lord BRUCE of DONINGTON: My Lords, your Lordships will be grateful to my noble friend Lady Fisher of Rednal for having elicited from the noble Lord the fact that a direct labour organisation as such has been nowhere defined. My noble friend drew his attention to the fact that the provisions of the Bill might very well apply to the city engineer's department or that part of that department which was concerned with maintenance
24
of schools. In short, it may well be that the application of this Part of the Bill goes far wider than would ordinarily appear from the contents of the Bill itself, together with its explanatory notes. It is all very well for the noble Lord, in the exercise of his usual personal charm, to indicate to the House that of course all these powers will be used very reasonably. In fact, he was talking in such modest terms that one would wonder whether it was likely they would ever be used at all, so amenable was his whole attitude towards this application.
Here we have to be concerned with the text of the Bill. It says quite clearly that
"The Secretary of State shall have power at any time, if he thinks fit …".
These powers cannot be mitigated, and certainly would not be mitigated in law, by any statement of the noble Lord that they will always be exercised reasonably and perhaps very rarely. The words are what they are, and we in this House must be concerned with them; and we must be concerned also with their consequences.
One of the consequences of allowing this phrase to remain in the Bill is that it will also enable the Minister's right honourable friend Mr. Heseltine to order the closing down either of a direct labour organisation as a whole or of that particular section which gives offence. He can do that, if necessary, without giving any reason. It is all very well for the noble Lord to say, "Well, if the local authority is aggrieved it can bring an action in the courts". In these circumstances, is it not better that the other side of the coin should be shown? If the Minister has any reason to believe, or the reports show, that the local authority has broken the law, then of course it is always open to the noble Lord's department to go to the courts and show due cause.
This is a matter of balance: what can be done one way can also be done by the other way. We are dealing with two democratically elected organisations. On the one hand, a Government deriving their responsibility from Parliament democratically elected; and, on the other hand, a local authority which is dependent on its local franchise. In regard to the affairs which it is actually administering under the very noses of its constituents, the

25
local authority is much more closely linked with the people that elected it than Parliament themselves.
Therefore we think that it is very unreasonable that this power should remain. The noble Lord, in the course of replying to my noble friend, threw more interesting light on the operation of the clause as a whole. He mentioned that it would of course be possible to close down one department that was not paying its way in terms of yielding the rate of return, calculated on a current cost accounting basis, determined by his right honourable friend.
May I invite the noble Lord to contemplate the results of that? It would mean that if one type of work was closed down, it would no longer have any share in the assets of the direct labour organisation as a whole. Therefore if one department was closed down, and on the assumption that the direct labour organisation owned all the assets that were used—plant and machinery, cranes, bulldozers, joiners' shops and all the rest of it—then the remaining three descriptions of work would have to be reapportioned out. That would throw up the actual capital employed by the remaining three, so that one or two of the remaining three would then find their rate of return on capital employed diminished by the same proportion as that obtaining in the one that was closed down. In short, the noble Lord has revealed that if he took action in regard to one department, it would have a domino effect and would be very likely to put one, two or the remaining departments into the red so far as the rate of return is concerned.
I have said on previous occasions—and I will not weary your Lordships—that this part of the Bill is a hodge-podge. It is going to work with a degree of approximation that involves the undue use of astrology and crystal ball gazing. It is going to waste an enormous amount of time of the local authorities. If the various provisions of this clause are going to be checked thoroughly at the Minister's headquarters in Marsham Street, he is going to have to engage many more accountants and staff there. I would have preferred him to abandon this part of the Bill, which is largely irrelevant except that it seeks to protect local private building interests rather more
26
than it does the actual ratepayer. However, he is not prepared to do that and, at this stage, I would not press him to do so. But he would be well advised to accept Amendment No. 44. If he does not, I am afraid that I must ask the House to divide upon it.
3.44 p.m.
Lord EVANS of CLAUGHTON: My Lords, may I follow one point that the Minister has made which was mentioned by the noble Lord, Lord Bruce of Donington: the right of the local authority to resort to the courts if they think that the Minister has not behaved reasonably. The words used by the Minister of Housing in another place were that the Minister would have to show good cause. The only way a local authority can challenge the Secretary of State in this is that he has acted either in bad faith or fraudulently. As I said in Committee, I do not believe that any Government would be likely to act fraudulently or unreasonably.
Several noble Lords—particularly noble and learned Lords—will tell your Lordships that unreasonableness is something that is very narrowly constructed by the courts. A local authority, in taking proceedings against the Secretary of State, will have to be placed in the position of proving a negative: namely, that the Secretary of State has not acted properly. That is an extremely difficult, onerous and almost impossible basis for a local authority to proceed upon.
What worries me—and I regard it as an unprecedented invasion of the liberty of local authorities—is that the procedure is activated by the Secretary of State calling for a report. All he has to prove is that he has considered that the direct labour organisation needs to be considered in depth. He cannot prove that it has been considered in depth until he has called for the report. Once he has the report, he can close the organisation down. This seems extremely arbitrary.
On those two grounds, I am concerned—as I am sure several other noble Lords are—about the arbitrary powers that this clause in its present form gives. I hope that the Government might be prepared to consider some form of amendment.
3.48 p.m.
Lord MISHCON: My Lords, I wonder whether I might present to the House a somewhat different angle although it leads to the same conclusion. As I understand it, this House has always been keen to prevent the use of dictatorial powers, from whatever source they may come. Therefore, this House—without regard to the political complexion that a Minister might have—is anxious not to give him too many powers over the citizen over which the Government have jurisdiction in so many respects.
Obviously, there is an even greater need to restrict that power when one is dealing with an authority that the citizens have elected regarding the decisions that they have made. Therefore I ask the House to consider carefully the words:
"if he thinks fit".
That is the sole discretion which the Minister has to exercise, if it be a discretion at all.
There is another principle that this House holds dear—indeed, we hold it dear as a nation; that is, no man shall be judge in his own cause. We are so careful in all our legislation, in all our provisions of justice, to see that the person who calls for a report, the person who has the power to decide, shall not always be the judge in his own cause; that there shall always be a right for a third party to look at his judgment and question it.
There is no right of appeal here at all. There are two principles which are very sacred to us which, in my submission, are very relevant to this matter. There is a third point and, having made it, I will sit down. The whole of the atmosphere of this Bill, we were told, was to create a better relationship between central and local government because restrictions on local government were in many cases being decreased. I do not ask the House to go into a dialectical debate at this moment—we have had it before—as to whether that is the effect of the Bill. But I do not have to go that far in suggesting to the House that the words
"if he thinks fit",
which enable him to close the department, are not only worsening the relationship between central and local government, but lead into a situation about which the
28
noble Lord the Minister in this House and indeed the Minister of Housing in another place have said: "The local authority can go to the courts and challenge the decision of the Minister to close it down".
Are we looking at a Bill regarding the relationship of central and local government, and doing it as we should do, when we lead ourselves to the stage that if a Minister's power is to be challenged at all it has to be challenged in a law case where the local authority is the plaintiff and the Minister at the central Government is the defendant? Is that the way we are looking at this Local Government Bill?—because if so, if I may say so, we are looking at it in a myopic condition which is not worthy of us. That is why I ask the noble Minister to look very carefully at these three points and to see whether rather radical principles are not at stake. I hope that he would have valued all those principles, or if not all three at least one of them, and that he would find it possible to soften and therefore yield in some measure to this amendment.
Lord BELLWIN: My Lords, I think what we have to do immediately is to get this whole thing into perspective. What are we talking about? So far as this amendment goes, we are talking about calling for a special report. We are talking about the Secretary of State calling for a special report to consider the position in a direct labour organisation where, for the reasons we have talked about before or indeed for any other reason, he feels he ought to look at exactly what is going on in that organisation. With that as the basic fundamental point, everything else falls into place, because not only can I see no harm in that but I think it is eminently desirable and, indeed, long overdue, that there should be such an interest taken, in the interests of those people who are not always able properly to see that their interests in this way are looked after.
I think it is right and proper that there should be such a power to call for a report to highlight the position and see if there have been shortcomings in procedures, performance or anything else on the part either of a direct labour organisation in its entirety or indeed in any separate part of such an organisation.
Therefore, my Lords, although I

29
subscribe to the generality of what the noble Lord, Lord Mishcon, said about principles as a whole, when we apply them to what we are talking about in this amendment, then I think that the case rests, and I think it is important that we should not accept this amendment and that we should not seek to diminish in any way that which the Secretary of State is trying to ensure is done on behalf of
every body in these whole proposals about direct labour organisations.
3.53 p.m.
On Question, Whether the said amendment (No. 44) shall be agreed to?
Their Lordships divided: Contents, 78; Not-Contents, 111.

CONTENTS

Airedale, L.

Gaitskell, B.

Mishcon, L.

Amherst, E.

Garner, L.

Noel-Baker, L.

Amulree, L.

Gladwyn, L.

Oram, L.

Ardwick, L.

Gordon-Walker, L.

Pargiter, L.

Bacon, B.

Gosford, E.

Peart, L.

Balogh, L.

Greenwood of Rossendale, L.

Ponsonby of Shulbrede, L. [Teller.]

Banks, L.

Grey, E.

Beaumont of Whitley, L.

Hale, L.

Reilly, L.

Beswick, L.

Halsbury, E.

Ross of Marnock, L.

Birk, B.

Hampton, L,

Segal, L.

Blyton, L.

Hayter, L.

Shinwell, L.

Boston of Faversham, L.

Henderson, L.

Stamp, L.

Bowden, L.

Houghton of Sowerby, L.

Stedman, B.

Brockway, L.

Ilchester, E.

Stewart of Alvechurch, B.

Brooks of Tremorfa, L.

Jacques, L.

Stewart of Fulham, L.

Bruce of Donington, L.

Kilbracken, L.

Stone, L.

Byers, L.

Kilmarnock, L.

Strabolgi, L.

Collison, L.

Kirkhill, L.

Strauss, L.

Cooper of Stockton Heath, L.

Leatherland, L.

Taylor of Gryfe, L.

Crowther-Hunt, L.

Lee of Newton, L.

Taylor of Mansfield, L.

David, B. [Teller.]

Listowel, E.

Underhill, L.

Davies of Leek, L.

Llewelyn-Davies of Hastoe, B.

Walston, L.

Davies of Penrhys, L.

Lloyd of Hampstead, L.

Wedderburn of Charlton, L.

Donaldson of Kingsbridge, L.

Longford, E.

Whaddon, L.

Elwyn-Jones, L.

Lovell-Davis, L.

Wigoder, L.

Evans of Claughton, L.

Maelor, L.

Wilson of Radcliffe, L.

Fisher of Rednal, B.

NOT-CONTENTS

Abercorn, D.

Denham, L. [Teller.]

Hill of Luton, L.

Abinger, L.

Derwent, L.

Hylton-Foster, B.

Addison, V.

Digby, L.

Keyes, L.

Alexander of Tunis, E.

Dormer, L.

Kinloss, Ly.

Allerton, L.

Drumalbyn, L.

Kinnaird, L.

Alport, L.

Dudley, B.

Kinross, L.

Ampthill, L.

Ebbisham, L.

Lindsey and Abingdon, E.

Auckland, L.

Effingham, E.

Long, V.

Avon, E.

Ellenborough, L.

Loudoun, C.

Barnby, L.

Elliot of Harwood, B.

Lucas of Chilworth, L.

Belhaven and Stenton, L.

Evans of Hungershall, L.

Luke, L.

Bellwin, L.

Exeter, M.

Lyell, L.

Belstead, L.

Faithfull, B.

Mackay of Clashfern, L.

Berkeley, B.

Ferrers, E.

Macleod of Borve, B.

Bessborough, E.

Fraser of Kilmorack, L.

Mansfield, E.

Boardman, L.

Gage, V.

Marley, L.

Boyd-Carpenter, L.

Gainford, L.

Middleton, L.

Bridgeman, V.

Glenkinglas, L.

Milverton, L.

Buckinghamshire, E.

Gormanston, V.

Minto, E.

Caithness, E.

Gowrie, E.

Monk Bretton, L.

Chelwood, L.

Grimston of Westbury, L.

Montgomery of Alamein, V.

Clancarty, E.

Haig, E.

Morris, L.

Clwyd, L.

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

Mottistone, L.

Cockfield, L.

Murton of Lindisfarne, L.

Coleridge, L.

Harmar-Nicholls, L.

Northchurch, B.

Cottesloe, L.

Harvington, L.

Nugent of Guildford, L.

Cullen of Ashbourne, L.

Hatherton, L.

Nunburnholme, L.

Davidson, V.

Hemphill, L.

Orr-Ewing, L.

de Clifford, L.

Henley, L.

Penrhyn, L.

Pritchard, L.

Skelmersdale, L.

Trefgarne, L.

Radnor, E.

Soames, L. (L. President.)

Trenchard, V.

Redmayne, L.

Somers, L.

Vaux of Harrowden, L.

Reigate, L.

Spens, L.

Vickers, B.

Renton, L.

Stanley of Alderley, L.

Watkinson, V.

Roberthall, L.

Strathspey, L.

Willoughby de Broke, L.

St. Davids, V.

Teviot, L.

Wynford, L.

Sandys, L. [Teller.]

Torphichen, L.

Young, B.

Savile, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.2 p.m.
Baroness FISHER of REDNAL Baroness FISHER of REDNAL moved Amendment No: 45:
Page 15, line 43, leave out ("three") and insert ("five").
The noble Baroness said: My Lords, in moving Amendment No. 5, I am asking that we delete three years and insert five years. It is proposed that the special report, for which the Secretary of State can ask, will be based upon the preceding three years' accounts. But I and my noble friends are of the firm opinion that this period is not long enough to judge the performance of a direct labour organisation, bearing in mind the peaks and troughs of the building industry.
I hope that the Minister will take into consideration the fact that, in the private building industry, which he sees as something that is highly competent and something to be copied by direct labour organisations, companies maintain a rolling programme of work. Anybody who knows anything about the building and construction industry knows that private companies are tendering constantly and are being awarded contracts which keep them in operation over a long period of time. This rolling programme, which makes them able to sustain their financial status, is not available in the same way to direct labour organisations, though they have to be comparable with outside builders and contractors. To give them a greater degree of fairness, since they do not have the same rolling programme, we are asking that three years should be replaced by five years. My Lords, I beg to move.
Lord BELLWIN: My Lords, we agree that DLO performance must be judged over a reasonable period and we think that three years is a fair minimum. There is, of course, nothing to stop a local authority from preparing a report which covers a period longer than three years.
32
But we must all remember that here we are speaking of ratepayers' money, which is tied up in a DLO—risk capital, one might say, involuntarily collected and applied. The period must be as short as is reasonably practicable. Shareholders in a company would be asking their directors to report if things went wrong over a much shorter time-span than that. In our view, three years is a generous minimum, in that light.
I recall discussing this point at some length in Committee and, if I said anything more now, I should have to go over those arguments once again. I understand exactly what the noble Baroness seeks to achieve by this amendment, but we feel that three years is a fair minimum.
Lord HARMAR-NICHOLLS: My Lords, I think it ought to be on the record that I think three years is too long. If you want to remedy something that is going wrong, the sooner you know about it and can apply a remedy the better. The indication that something is going wrong is generally within two years and, in order to support my noble friend's reply to the noble Baroness, I would say that, if anything, he is being generous in the direction for which she argues.
On Question, amendment negatived.

PRISON OFFICERS' DISPUTE
4.6 p.m.
Lord BELSTEAD: My Lords, with the leave of the House, I shall now repeat a Statement which is being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"With permission, Mr. Speaker, I shall make a statement about the current dispute in prisons in England and Wales.
"I should like to emphasise that this is not a dispute about pay. It arises from a claim by the Prison Officers'

33
Association for two allowances for meal breaks. The May Committee was set up by the right honourable Member for Leeds South to consider, amongst other things, the whole question of allowances for meal breaks. Its recommendations on pay and allowances were immediately accepted and implemented by the Government. This was, by any standards, fair and generous treatment for the prison service. A number of claims, including this present one, were examined but not supported by the May Committee. Having found the money to pay for what May did recommend, the Government cannot now accept and finance further and consequential claims built on the foundation of what was recommended and accepted.
"The Prison Officers' Association have asked for arbitration. As the Prison Officers' Association themselves recognise, the matter lies outside the terms of the Civil Service Arbitration Agreement. Nor could the Government agree to put to arbitration an issue which was considered by the May Committee last year.
"As I said in my statement to the House on 31st October last year, this country has been fortunate in the men and women it has secured to run its prison system. Their duty is to protect the public, to serve the courts and to care for the inmates in their charge. This duty is arduous, difficult and sometimes dangerous. I therefore regret all the more the action which the Prison Officers' Association have chosen to take in pursuit of their claim. This has included a refusal not only to allow contractors to work in prisons, but also to undertake certain other duties which are necessary to maintain conditions for prisoners, and to provide the facilities to which they are entitled.
"Even more seriously, prison officers at many establishments have refused to receive prisoners remanded or sentenced by the courts. This action amounts to a deliberate and unacceptable disruption of the criminal justice system. As a result, this morning about 3,500 prisoners who would otherwise be in prisons are now being held in police cells, many of which are unsuitable for this purpose. The police have coped magnificently with the additional
34
demands which have been made on them, but the number of people in their custody is approaching the limit of the available accommodation. The police are also being diverted from their primary tasks. The inevitable result of this is to place the public at risk.
"The Government must do all they can to fulfil their responsibility to protect the public and ensure the functioning of the criminal justice system. The House will be aware that, following consultation with my noble and learned friend the Lord Chancellor and the Lord Chief Justice, I arranged for a circular to be issued to magistrates' courts last Tuesday seeking their understanding of the problems we face.
"We need to do more than that, however. Measures will be taken to provide additional accommodation with the help of the Army. I am now arranging for the new high security prison which is nearing completion at Frankland near Durham to be brought immediately into use to provide emergency accommodation to relieve the pressure on police cells. It will have a governor, assistant governors and administrative and specialist staff from the prison service and a police presence to assist with security; but otherwise it will be manned by servicemen. We may also need to use military camps.
"For these and other purposes I shall need to ask the House to agree to immediate emergency measures to relieve the criminal justice system of some of the burdens placed on it by the prison officers' actions. I intend to present a Bill tomorrow. For the convenience of honourable Members I shall be arranging for typescript copies of the draft Bill to be made available later this evening.
"The measures I seek will include provisions to cover the approval of places other than prisons for the detention of prisoners. I shall seek provisions to cover the position of those who care for prisoners in these circumstances. Other provisions will be designed to provide relief for the police in the very difficult circumstances they face. In particular, I shall propose that the requirement that remand prisoners be produced regularly before the courts shall temporarily be suspended. I do

35
not, however, propose to alter the normal requirement for the courts periodically to review remands in custody. I shall seek powers to order the temporary release on my authority, if it is absolutely necessary to do so, of selected prisoners who have been remanded in custody or committed in custody for trial or sentence. This is a power I would use, with every feasible safeguard, only to ensure that custodial places were available, in police cells and elsewhere, for dangerous offenders. I shall also need power, for the time being, to order the early release of sentenced prisoners nearing the end of their sentences. I shall ask for a power to restrict magistrates' courts, if necessary, in committing people to prison for such matters as non-payment of fines or rates.
"All these provisions will be temporary and will be allowed to lapse when the present dispute is resolved. In addition, the measures will include a permanent provision putting it beyond doubt that it is lawful for the police temporarily to hold people committed to prison custody, when it is for any reason not practicable to secure their admission to prison.
"I am satisfied that these powers, regrettable as they are, are necessary in the situation which has been caused by the prison officers' industrial action, which goes well beyond the limits of what is acceptable. But there is an alternative. I cannot look back; I want to make it very clear that I am determined to look forward. That is why discussions are far advanced between the Home Office and the Prison Officers' Association on a new duty system which would eliminate the anomalies which gave rise to this dispute. The early introduction of such a system would far better serve the interests of prison officers than the dangerous course on which they are now embarked.
"This industrial action by prison officers is all the more regrettable because it comes at a time when, following the May Committee, so much constructive work is going on to improve the prison service for the future.
"In view of all this, I invited the Prison Officers' Association, when I
36
met them last week, to reconsider their action. I still hope that they will not persist in it while these negotiations continue. Of course, I remain ready to see the Prison Officers' Association at any time".
That, my Lords, is the Statement.
4.16 p.m.
Lord BOSTON of FAVERSHAM: My Lords, I should like to thank the Minister, the noble Lord, Lord Belstead, for repeating the Statement. It is a sombre statement and a very serious one indeed. I would say, first, that it is absolutely right for the Government to give priority to safety and to preserving and protecting the criminal justice system and, indeed, to give priority to the care for inmates. But it is of vital importance, first of all, to regard public safety as of paramount importance.
May I also ask the Minister to find some means of conveying thanks to the police for the way in which they are coping with their extra tasks in this very difficult situation? The Statement itself reflects the deteriorating situation in our prisons: people are not being allowed in on remand and police cells, as the Minister has indicated this afternoon, are being filled up.
So far as this particular dispute is concerned, as I think has been clearly indicated in the Statement, it is one which began concerning continuous duty credits—a matter which was fully and thoroughly considered by the May Committee of Inquiry, a most authoritative body, widely representative, and presided over by a most distinguished judge. There have been indicated in the Statement observations with which I can only fully agree as to the thoroughness with which this particular matter was considered, by the May Committee among others.
So far as the future is concerned, your Lordships will have noted the discussions which have been referred to in the Statement about a new system of allowances to replace the continuous duty credits system and other allowances. What I would ask the Minister to consider is this: why should those details not now be published? It would, I suggest, be of great public interest and, indeed, it would be appropriate to do so.

37
So far as the powers envisaged are concerned, and in particular the role of the Army, I would ask the Minister to accept, if not now then in the very near future indeed, that we would need to know precisely how they are going to be used, though clearly within the obvious limits of the need for security. What is their role going to be? And are any special instructions, particularly about training, to be issued to the Army, bearing in mind that they are hardly experienced, most of them, in dealing with a role of this particular kind?
Finally, I would ask the Minister to accept that I should certainly join in calling upon the Prison Officers' Association, who have over the years undertaken arduous tasks in the public interest and have, most of the time, received precious little thanks for the difficult duties that they perform—duties which I am sure we should not be very happy to have to deal with—to consider again very seriously indeed, in the public interest, their actions, and the course of those actions, and to decide where it is that their duty lies and where it is that the public interest itself lies.
Lord WIGODER: My Lords, everyone in your Lordships' House must deplore the prospects of a confrontation between the Government and the Prison Officers' Association, a body of men and women who not only carry out a difficult, important and dangerous task but very often have to carry it out in wholly intolerable working conditions. Therefore I think it is for all of us to see whether it is not possible to suggest some way out of the present difficulties.
As I understand it, the prison officers' claims were examined by the May Committee. There were in fact 16 claims in all which related to meal breaks, continuous duty credits in one form or another, and it appears from the report that the May Committee came down against nine of those. In relation to three they found in favour of the Prison Officers' Association and the Government have implemented the findings on those three, but, as I understand it—and I may be wrong about this—the present dispute arises largely out of a disputed interpretation of one of the three in which the May Committee found in favour of the Prison Officers' Association.
38
There were a further four findings on which the May Committee clearly sympathised very strongly with the case put forward by the Prison Officers' Association and suggested that equity was on their side. I would respectfully agree that where the May Committee has considered these claims in such detail it would now be quite wrong to refer them to some other arbitrator. But there is (is there not?) something to be said for the suggestion that the May Committee might be asked to reconvene to clear up the matter of the interpretation of the one finding which at the moment is in issue and to make specific recommendations about the four claims where they clearly sympathised strongly with the case made by the Prison Officers' Association.
I suspect that if that course were taken it could be taken without any loss of face by the Government in the present situation and it would be sufficient to enable the Prison Officers' Association to abandon their present action while the negotiations for new terms of service were brought to a satisfactory conclusion.
I should like to make two other brief observations. First, the Statement refers to the circular sent round to magistrates by the Lord Chancellor and the Lord Chief Justice, which has met with some criticism. May I venture to say that such criticism appears to me to be entirely ill-conceived and that the Government would be failing in their duty if they did not bring to the attention of the judiciary at all levels the purely practical difficulties which face everybody at the present time.
Secondly, there is a series of courses proposed towards the end of the Statement which might lead to some diminution of the prison population. In many ways this is the crux of the problem, because the conditions in which prison officers have to work are bound to encourage intransigence in claims of this sort rather than sensible, moderate, levelheaded negotiations. May I urgently ask that the Government should look again at the proposal which many of us have made on many occasions that the remission rate should be fixed at a half rather than at a third? This would immediately lead to a substantial reduction in the number of people in our prisons and would therefore make their working conditions far more tolerable for the

39
Prison Officers' Association. The noble Lord will no doubt be aware of the recent research into these issues, which suggests that if that course were taken it could be done without any danger being created for the public.
Lord BELSTEAD: My Lords, perhaps I may just reply to the two Front Bench spokesmen. The noble Lord, Lord Boston asked me if I would draw to the attention of my right honourable friend the desirability of thanking the police for the work that they are doing. My right honourable friend did indeed see the Association of Chief Police Officers in this regard last week and the Superintendents' Association and the Federation representatives this morning. I am grateful to the noble Lord, though, for what he said in that regard.
I am also grateful to the noble Lord for his confirmation from his Front Bench that meal break payments were thoroughly investigated by the Committee which his right honourable friend the former Home Secretary set up in difficult circumstances in 1978. I agree with the noble Lord, Lord Boston, that the report of the May Committee is the final word on meal break payments, and of course the Government accepted immediately all the recommendations for improvements in pay and allowances which were made by the May Committee.
The noble Lord asked me whether details of the new duty system should not now be published. The discussions have been going on at official level between the Prison Officers' Association and the Home Office and, as I understand it, until now there has been agreement that the details should be published as soon as both sides feel that they are ready. My understanding is that that will be very soon.
The noble Lord asked me a specific question about the use of the Army, saying to your Lordships that of course soldiers are not trained for working with prisoners. So far as any of the plans for the use of Frankland Prison are concerned, at the moment the prison service will provide governors, assistant governors, administrative and specialist staff. I think that at the moment I should leave it at that, and no doubt I shall be reporting again to your Lordships about how that
40
particular project is going to work out in practice.
The noble Lord, Lord Wigoder, asked me in essence about reconvening the May Committee in order to look at this aspect of Claim 16, and I hope the noble Lord will not think that I am being deliberately unhelpful if I say that I feel that I have answered that question in one of my replies to the noble Lord, Lord Boston. The claim which the dispute is about was put in as a claim to the May Committee. The May Committee considered it and did not recommend that meal break payments should be made for this particular aspect of what is known as Claim 16. As I have already reminded your Lordships, as soon as the May Committee reported, my right honourable friend accepted absolutely and in full the recommendations for the improvements in conditions and pay which the May Committee made.
I am grateful to the noble Lord for what he said about the circular which was sent out by the Home Office last week, and I should like to meet the point which the noble Lord made to me. Of course at the Home Office we shall be only too ready to look at the noble Lord's recommendations about remission, but I know that my right honourable friend always beats in mind the dangers of the executive action which he is now being forced, most regretfully, to take so far as the judiciary are concerned.
I shall end my first answer by repeating what my right honourable friend has said in another place. We believe that this can be solved by the new duty system and by looking forwards and not backwards, and we think that this is the way in which a resolution can be reached.
Lord BROCKWAY: My Lords, the Minister has made a serious statement about a very serious position. Is it not the case that the tension in the prisons today is much deeper than this conflict with the Prison Officers' Association? Is not the tension also among the prisoners themselves and have they not suffered most from this conflict in being confined to their cells for 23 hours out of 24 in the prisons and by the intolerable conditions which there have been in many of the police cells? Therefore, in looking at

41
this problem, will the Minister look at it rather more comprehensively than concentrating on this immediate conflict?
If I may ask the Minister first about this conflict, as the spokesman from the Liberal Benches said, have not the Prison Officers' Association doubted the interpretation of the May Report? I have listened to what the Minister has said about it, but surely, if the sensible men and women who are in charge of the Prison Officers' Association come to that conclusion, it would be reasonable for the Government to seek the view of the May Committee upon that problem.
May I also ask the Minister whether the Bill that is to be introduced tomorrow will give authority for troops to be used in prisons other than the new prison which is now to be opened? If so, would he consider that very carefully indeed? Has he seen the governor's report, which actually used these words: that with the use of troops there would be "the probability of both staff and prisoners being killed"? I hope that is an exaggeration, but it does indicate the situation.
The LORD PRESIDENT of the COUNCIL (Lord Soames): My Lords, I wonder whether the noble Lord will forgive me, but I think questions and answers after a Statement should not go too far into the subject matter. I hope noble Lords will keep their questjons as brief as possible. A very good example was set by the noble Lord, Lord Boston.
Lord BROCKWAY: My Lords, I take heed of what the noble Lord the Leader of the House has said. I put my last question very briefly indeed. In view of the necessity for shorter sentences—I welcome what the Minister has said—would he not, very generously indeed, seek to end the long sentences, in view of the fact that the Home Office inquiry has said that short sentences do not increase crime in the country?
Lord BELSTEAD: My Lords, I agree with a great deal of what the noble Lord has said about prison conditions which have built up over the years. It is for this reason that we now have a realistic prison building programme, and this is another reason why it is most regrettable
42
that this dispute is occurring at the present time. With regard to the noble Lord's point about the May Committee's reconvening, I have nothing to add to what I have already said. The noble Lord asked me one specific question about using places in other prisons. This was not exactly the form of words I used in the Statement. I suggest that the noble Lord, and I think all of us, would do well to wait for a short time until copies of the draft are available, and then I know it will be possible for this point to be debated in your Lordships' House
Lord ELWYN-JONES: My Lords, is the noble Lord aware that we on this side of the House certainly give priority to the protection of the public and to ensuring the function of criminal justice in this very grave crisis in prison administration? The proposals mentioned in the Statement for the new powers to be given to the Home Secretary are unprecedented, and noble Lords will not be surprised if I indicate that we shall, of course, examine them in detail when the Bill is presented to the House on Wednesday. But may I make one general comment? Would this not be a good moment to examine the whole question of the fact that in this country there are more people per head of the population in prison than in any country in western Europe? Is there not now an urgent need to examine how many of the people in prison need to be there and to consider once again proposals of the kind the noble Lord, Lord Wigoder, has mentioned about remission of sentences?
Of course, we must ensure that violent prisoners who have committed offences of violence must be kept in gaol and must be seriously punished. But now would be an excellent moment to examine the intolerable situation that has grown in the prisons. We may perhaps have been a little remiss in the last Administration, and so far in this one, in not looking at some of the deeper issues that underlie the present crisis in prison affairs.
Lord BELSTEAD: My Lords, the noble and learned Lord has said that the proposals for powers to be taken in emergency legislation would be unprecedented. I do not differ from the noble and learned Lord's use of wording. But the proposal is that those powers shall be

43
temporary and they are being taken for the public safety, and that intention is also being written into the draft legislation. The noble and learned Lord has made the point that now would be the moment to look also with the greatest seriousness at reduction of the prison population. I should like to put on record that my right honourable friend the Home Secretary has, since he came to office, consistently sought ways of increasing the alternatives to imprisonment available to the courts and has not lost any opportunity to show his support for the use of shorter sentences for non-violent offenders.
Lord RENTON: My Lords, is my noble friend aware that all who have been involved in the prison administration in the past and have admired the prison service will greatly regret the nature of this dispute and the fact that such a narrow dispute should have such wide implications. Is he also aware that the Government will have as they have had in this House today, the full support, of people throughout this country when they find themselves forced, because there is no alternative, to seek the approval of Parliament for such wide powers as are now proposed? Can my noble friend say how soon he hopes to get the Bill on to the statute book?
Lord BELSTEAD: My Lords, my noble friend, with his experience of these matters at the Home Office in previous years, has referred to a narrow dispute with wide implications. I have to say, with regret, that I regard the action which has been taken by the prison officers as going indeed far beyond the limits of what is permissible in the cause of an industrial dispute, let alone an industrial dispute on this particular subject, and wholly disproportionate to what is in issue. My noble friend asks when the Government would hope to get these proposals, if Parliament agrees, on to the statute book. I think this is the moment when my noble friend the Leader of the House would like to make a Business Statement.

BUSINESS
4.24 p.m.
Lord SOAMES: My Lords, in the light of the Statement which my noble friend Lord Belstead has just repeated, it might
44
be for the convenience of the House if I make a statement of the Government's intentions on the proposed Bill on imprisonment to which my noble friend referred in his Statement. Copies of the typescript of the Bill should be available in another place later today. I have arranged that further copies should be available in the Printed Paper Office tonight, I hope, from 7 p.m. onwards. It is expected that another place will complete their consideration of the Bill tomorrow. Depending on what time the Bill is brought from another place, it will receive a First Reading in your Lordships' House either tomorrow night or at the beginning of business on Wednesday. We would then intend to take the Bill through Second Reading and remaining stages in this House as first business on Wednesday.
The fourth day on Report of the Local Government, Planning, and Land (No. 2) Bill will, therefore, be taken on Thursday of this week and not on Wednesday as previously planned. The Report stage of the Broadcasting Bill, at present on the order paper for Thursday of this week, will now take place on Monday, 3rd November.
Any further changes to next week's business resulting from this alteration of business will be reflected on tomorrow's Order Paper. I would add that, in these exceptional circumstances, the Public Bill Office will accept amendments with reference to the Bill as printed in the Commons in the course of tomorrow, Tuesday. I regret very much any inconvenience which this alteration in business will cause Members of this House. I hope that the House will appreciate from my noble friend's Statement the urgency, as has indeed been reflected from the Opposition Front Bench, of the legislation which the Government propose.
Lord PEART: My Lords, may I thank the noble Lord for explaining to the House how the business will be altered. Of course, this means a great upheaval, but we understand the emergency under the present circumstances. I believe that the House will accept the necessity for the change. I do not think I need go beyond that.
Lord WIGODER: My Lords, we entirely accept the need for urgency in

45
this matter, although clearly the Bill will need to be scrutinised with care. Can the noble Lord say when he anticipates the Royal Assent will be given?
Lord SOAMES: My Lords, I think it is a little early for me to say that, but obviously from the Government's point of view it will be the sooner the better after the Bill has passed through both Houses.

LOCAL GOVERNMENT, PLANNING AND LAND (No. 2) BILL
4.40 p.m.
Consideration oil Report resumed: Clause 15.
Lord RENTON Lord RENTON moved Amendment No. 47:
Page 16, leave out lines 8 to 11.
The noble Lord said: My Lords, I beg to move Amendment No. 47. This is principally a drafting amendment and I suggest that the words which I propose to leave out are not necessary. It is certainly not intended as a paving amendment for Amendment No. 48: the two matters are quite separate. I should like your Lordships to turn to page 16 of the Bill, subsection (5)(b) where your Lordships will see that the Secretary of State, if he has given a direction under Subsection (4) and:
"either—

(i) he has received a special report within the time specified in the direction; or

(ii) he has not received a report within that time",

may give certain directions. We could quite easily paraphrase those words, which seem to me to cancel each other out, by saying that he may give a direction whether he has received a special report in the time specified or not. In other words, in law, those words all taken together are a nullity, they are of no legal effect at all. I suggest that we should not enact words which are of no legal effect, certainly not unless there is a very good reason for doing so.
In Committee my noble friend Lord Bellwin said of this amendment—and I moved it then as well—that it would
46
remove the requirement that the Secretary of State should give an authority the chance to explain itself and would allow him to close down a direct labour organisation on the sole grounds that the target rate of return had not been met. With great respect to my noble friend, I do not think that that was an accurate statement.
If we read the Bill, we see that the truth is that the local authorities are given the chance, anyway, of making a special report—they are given the chance by subsection (4) of this clause and, indeed, it could be said that that is confirmed by subsection (5)(a). Therefore, it seems to me that subsection (5)(b) is quite unnecessary. If anything, the inclusion of those words would seem to nullify the chance, but I do not wish to push my case as far as that. I merely say that these words are of no legal effect and are better left out. I beg to move.
Lord BELLWIN: My Lords, of course, following the discussions in Committee we have examined very closely the drafting of this clause to which my noble friend spoke in Committee. We agree with him that these two paragraphs look odd—they certainly do to me, as a layman. Nevertheless, having looked at it carefully, it seems that they do serve a useful purpose.
The Secretary of State, in directing an authority to prepare a special report, is obliged to set them a time limit within which to prepare that report. Subsection (4) does that. But, having set that time limit, must not both he and the authority be bound by it? In other words, the Secretary of State must be prevented from taking any further steps before that time has elapsed, or at least until the authority have effectively signalled their readiness by submitting their report. On the other hand, the authority must not be allowed to thwart the Secretary of State by more inaction. If they refuse to prepare the report in the time required, the Secretary of State must be allowed to proceed and that is what these two paragraphs do—they interpose a further step in the process to close down or limit. After the call for the special report, there must follow either the report, or the deadline for its completion, before the Secretary of State can consider exercising his powers to limit an authority's direct

47
labour activity. This seems to us to be a sensible and, indeed, welcome safeguard. In those circumstances, I wonder whether as regards this at least, my noble friend may feel able to accept my explanation.
Lord RENTON: My Lords, I am grateful to my noble friend. His fuller explanation on this occasion was less unconvincing than the previous one. In the circumstances, I would not divide the House, but would beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord RENTON Lord RENTON moved Amendment No. 48:
Page 16, line 11, at end insert—
(" ( ) the rate of return on the capital employed is less than the required rate.").
The noble Lord said: My Lords, I beg to move Amendment No. 48. This is an amendment of substance. Quite frankly, I should tell your Lordships that I do not mind whether direct labour organisations are discontinued either generally or in particular cases. But I do mind when a matter is left vague or uncertain in an Act of Parliament, as seems to me to be the case here—as I shall explain in a moment—and I do mind when what appears to be the intention of Parliament, as requested by the Government, is not made clear, especially when it affects the exercise of ministerial powers, and affects them in this case in relation to the activities of local authorities—sometimes very important activities.
The whole tenor of Part III of the Bill is that works contracts may be carried out by direct labour organisations in a general way, but that where the Secretary of State directs otherwise they shall be discontinued. It was made clear in the Explanatory Memorandum—and I suggest that it is clear from the whole of the preceding part of Part III of the Bill—that the intention was that the power of the Secretary of State to suspend direct labour organisations should be used only when the required rate of return on capital has not been achieved.
Quite frankly, it would not worry me very much if directions could be given on other grounds. But if it is intended that they should be or could be given on other grounds, then I suggest that it should be stated. If it is not stated, and
48
if subsection (6) of Clause 15—which is the most operative part of Part III of the Bill—is left as it is, it seems to me that there is a very serious risk that if the Secretary of State gave a direction on a ground other than the ground that the required return on capital had not been achieved, then a local authority could dispute his direction and take him to court for a declaration. There would be a wrangle as to the vires of the matter and, of course, the public would pay for a dispute between the Secretary of State and local authorities—the public would inevitably pay the whole of the expenses of both parties. There might be several million pounds involved. I would not like to anticipate such wrangles.
That is why I think that I should again ask my noble friend if, having had a chance to consider the matter, he has any clear statement to give to your Lordships' House of the Government's intention as to the exercise of this power, if it be the Government's intention only to use the power where the required rate of return on capital has not been achieved, then let that be clearly said. However, if it is the Government's intention that the power may be used in other circumstances, then I suggest that those circumstances should be specified. Frankly, speaking for myself, I do not mind which way it is decided, so long as it is made clear.
I move this amendment in the hope of enabling your Lordships to carry out what seems to be the intention. Of course, if the intention was mistakenly put in the Explanatory Memorandum, if it was too narrowly expressed, or if a reading of the earlier clauses of Part III gives rise to a false assumption as to the interpretation of Clause 15(6), that is another matter, and a further amendment would be required. My amendment has been tabled in almost exactly the same form by my noble friend Lord Sandford, perhaps for a different reason. His amendment is No. 48A, the next one to be dealt with. If neither his amendment nor my amendment is accepted, then the matter will be left vague and open, and that does not seem to me to be a satisfactory situation.
Lord SANDFORD: My Lords, I rise to support my noble friend—which will not surprise the House—because, as he

49
said, I have tabled an amendment in almost similar terms. Like my noble friend—although my interest in them is perhaps greater—I do not rise to defend direct labour organisations. In fact, I should like to preface my remarks by saying that I agree with the Secretary of State in the purposes which he seeks to achieve in this part of the Bill; because I think that there are direct labour organisations which need to be improved, controlled, curbed and made subject to the requirements imposed on them in the Bill.
However, my reason for supporting this amendment is not precisely the same as that of my noble friend. I think that he made a cogent legal point that this Bill is defective if an amendment to this effect is not moved into it. I moved an earlier amendment, Amendment No. 43A, which went rather further than these amendments because it fettered the otherwise unfettered power of the Secretary of State to interfere in the affairs of local authorities and their direct labour organisations in particular, to the extent of requiring him to investigate matters or call for reports only when it was clear that the prescribed rate of return on the capital employed was not being achieved.
But in this part of the Bill—over the page as it were—we come to the Secretary of State's "ultimate sanction", to use the phrase employed in the Notes on Clauses. He seeks the power to use the "ultimate sanction" of requiring local authorities to close down and cease operations with their direct labour organisations. I rise to defend local authorities, and in particular district councils, against the use of this undifferentiated and unlimited power of the Secretary of State to interfere in their affairs.
If we have, established by statute, local authorities with particular functions, duties and powers to perform, so far as possible they must be left free to exercise those powers in accordance with their discretion. If Parliament decides that there are circumstances in which the Secretary of State has a right—indeed, a duty or a power—to interfere, those must be carefully prescribed. At the present moment the point at which he exercises his ultimate sanction of closing down an organisation within a local authority is not so prescribed. It is for
50
that reason—in order to defend local authorities from an unfettered power by the Secretary of State—that I join my noble friend in supporting this amendment.
If by any chance my noble friend cannot accept this amendment as it stands, I have to say that for my part he will have to give us a very firm assurance that this time, when he takes the matter away, he will return with some further amendment or have something to say to us which will go a good deal further than he was able to go in Committee, when he raised our hopes, and further than he has so far gone today.
Lord UNDERHILL: My Lords, on this side of the House we support the amendment so ably moved by the noble Lord, Lord Renton, in a very concise and cogent manner. It qualifies an arbitrary power given under this subsection to the Secretary of State. It lays down an essential qualification before the Secretary of State acts to direct a local authority that it shall cease work with its direct labour organisation. Your Lordships will see that we have tabled Amendment No. 49A, which argues the whole case. It is not my intention at this stage to argue the case for that amendment. However, the amendment in the name of the noble Lord, Lord Renton, will well fit in with our amendment, Amendment No. 49A. Therefore, for the reason that it limits the arbitrary power of the Secretary of State, we will support Amendment No. 48.
Lord BOYD-CARPENTER: My Lords, I fully support my noble friend Lord Renton in this part of his tireless crusade for the better drafting of legislation. I yield to no one in my admiration for him over that. But certainly I could not support this amendment as it stands, as, although he indicated that he did not care one way or the other whether its effect would be to restrict the powers of the Secretary of State to cases in which the return on capital was below the prescribed rate, I am bound to confess that I do. I should be very disappointed if at this stage we sought to limit the Secretary of State solely to acting on that consideration. There may well be other cases in which it would be right for the Secretary of State so to act. One obviously would be if a direct labour organisation was

51
riddled with corruption. Another, and perhaps more likely, case is where the tendering policies of the local authority concerned, by way of favouring the direct labour organisation, were such that there was a perfectly adequate return on capital, but very gross unfairness to the private sector of the building industry with which it competed. I do not believe that cases of that kind would be at all frequent. However, I think it would be valuable for local authorities, which might be tempted so to act in respect of their direct labour organisations, to know that this ultimate sanction lay in the hands of the Secretary of State.
I should be very interested—as I think will be my noble friend—to hear from my noble friend the Minister what is the intention. It certainly appears that the wider interpretation, which I hope is right, seems to be inconsistent with the Explanatory Memorandum attached to the Bill as originally presented to us. But that obviously is not conclusive. Indeed, we had a case earlier this afternoon in which that situation had arisen. Therefore, I rise particularly to ask my noble friend whether it is the Government's intention to exclude all possibility of action, save where the prescribed rate of return on capital is not achieved, and—if that really is their intention—to argue why this power, which is being taken, should be so restricted. Until I hear some argument that convinces me, I shall be very much against my noble friend's amendment if it has the effect of that exclusion.
5 p.m.
Lord BELLWIN: My Lords, as my noble friend Lord Boyd-Carpenter said, whenever my noble friend Lord Renton speaks on these matters one has to listen particularly carefully because of his obviously great expertise and, indeed, interest and background in all such matters. Because of that, I say that not only have I listened carefully to what he has said now, but I also listened carefully in Committee the other week, as indeed I did when my noble friend Lord Sandford was moving his amendments both on this and on past occasions. In other words, this was the amendment to impose the same restriction on the Secretary of State's power to call for a special report.
52
I have looked again at ways of reducing the Secretary of State's discretion in these matters while at the same time preserving his right to intervene in the public interest if things are going sadly wrong and public resources are being wasted and misapplied. I have had to conclude that the public interest cannot be measured merely in accounting terms, which is the point to which my noble friend Lord Boyd-Carpenter referred, and that therefore the discretion cannot be fettered strictly to a failure to earn a specified rate of return. There are wider considerations. I mentioned earlier possible tendering abuses. There are others. The key to this is that this must all be seen in the context of the legislation as a whole. These intentions in this clause as regards direct labour organisations must also relate to such matters as efficiency, fairness or competition—and tendering policies I have mentioned. There may indeed be other things of which I do not know readily.
I take the point that my noble friend Lord Renton makes as to the unsatisfactory nature of the vagueness, if you like. Is it too wide a power. I am asking him to consider it within the context of what the legislation seeks to achieve, with what the intentions are. It may be that that is not enough in strict terms. It may be that that is too wide, and he will have to decide if that is so.
My noble friend Lord Sandford asked whether I would give a firm assurance more clearly than I had done before that we will come up with something more specific, narrower, perhaps better, to meet the points raised. I cannot say that I am able to do this. The only thing I can say, because I have such respect for the great knowledge of my noble friend Lord Renton and for the views of my noble friend Lord Sandford, is that I cannot accept this amendment, and indeed we must stand on it, for the reasons I have given.
I do not want to make another speech about the principles underlying what we are seeking to do with this section of the Bill as regards direct labour organisations, or why we consider it is so very necessary that there should be material changes. If we divide on the issue, well then, so be it, and I can do no more. If we do not divide, all I can do is to say that of course

53
we will look carefully at everything my noble friends have said, and not least on the point of vires, which I think must be always something which should concern us carefully. That of course I will do. But I should also not want to mislead. After all, we are coming now to the last stages of this Bill and I do not want to give any wrong, impression that I am going to go away and come back at Third Reading with something else. I cannot promise that. I undertake, because I consider it so important, that we will look closely at the wording, and I will discuss it again and do all that I can to take advice, but, as it stands at the moment, I would have to say that I could not accept the amendment.
Lord RENTON: My Lords, before seeking leave to withdraw the amendment, may I thank my noble friend for his offer of further consideration? As I said, when I moved the amendment, I do not mind very much what the powers are so long as they are clearly stated. I entirely take the point made by my noble friend Lord Boyd-Carpenter that there might well be other circumstances justifying the exercise of the power, but the whole tenor of Part III is such as to lead at the moment to a wrong climax in subsection (6). If we could have the climax more clearly stated, then I should be happier. In these circumstances, I think the right thing for me to do is to withdraw my amendment, by leave.
Amendment, by leave, withdrawn.
[Amendment No. 48A not moved.]
5.5 p.m.
Lord UNDERHILL Lord UNDERHILL moved Amendment No. 49A:
Page 16, line 12, leave out from ("that") to end of line 17 and insert ("the local authority or development body shall conduct a comprehensive review of the Direct Labour Organisation and publish the report of such review").
The noble Lord said: My Lords, this continues in a different form the discussion the House has just been having on subsection (5). As has been made clear, this gives authority to the Secretary of State to direct that a local authority shall cease in effect all work by its direct labour organisation. It is one thing to encourage efficiency; it is one thing to demand accountability; but surely it is another thing to give this arbitrary power to the
54
Secretary of State, as has been made clear on the previous discussions, with no qualifications and no criteria laid down at all before the Secretary of State so acts. It is far more serious than a question of, "If he thinks fit, he shall ask for a report". It enables him, either having had or not having had a report, to tell a local authority to cease work with its direct labour organisation.
The noble Lord, Lord Bellwin, said at the Committee stage that this was not an unfettered power. He said:
"There is protection at all times in the courts".
The noble Lord has reiterated that statement this afternoon. I am sure there will be a general feeling, as my noble friend Lord Mishcon said, that this was surely a sorry way to treat local authorities; that the only recourse was to the courts, which of course local authorities generally would not wish to make use of.
This provision is an interference with the right of a local authority to determine whether it is in the interests of its own people that it should continue with its direct labour organisation. The local authority is accountable to its local community, but this subsection removes all the authority of the local authority. We have often heard talk in this House about manifesto commitments. Some of these local authorities have given a manifesto commitment with regard to their direct labour organisation. There is no consideration being given to any dislocation of the work of a local authority that this arbitrary provision may cause. I have already mentioned that there are no criteria laid down. There is no provision made even for consultation with the local authority before the Secretary of State takes this arbitrary power. There is no provision for the local authority to make representations before this arbitrary power is carried out. There is no right of appeal whatever, and no report to Parliament before the Secretary of State takes this very unusual arbitrary power upon himself.
The amendment gives the local authority opportunity, the Secretary of State having considered any report or not considered a report, to conduct a thorough review of its direct labour organisation. But it is not to leave it there; it must actually publish details of the report.

55
In other words, it has to let its own community know; to let everybody know precisely what it proposes to do. The point of the amendment is to prevent the authority being given to a Secretary of State—any Secretary of State, not just this one Secretary of State—to take this arbitrary power. I believe that all the local authority associations have expressed concern about this particular feature. I hope that your Lordships may feel disposed to accept this amendment. I beg to move.
Lord BELLWIN: My Lords, the ultimate sanction against an authority which fails to get its DLO operations under firm continuing control will be an intervention by the Secretary of State to remove or restrict its powers to use direct labour. Such action can come only after the submission of a special report required under subsection (4) and cannot therefore happen until the authority has had an opportunity to explain itself. Closure or restriction will not follow automatically. There may be special circumstances which explain an unsatisfactory performance, or there may be a need to retain a small direct labour force to deal with certain sorts of work—for example, winter highway maintenance in remote areas—for which no contractors can be found, and the decision of the Secretary of State will be able to take account of those factors. Furthermore, the close-down or restriction will not necessarily take even immediate effect. The subsection allows the Secretary of State to set the effective date so that authorities would have time to make the necessary alternative arrangements to enable them to fulfil their statutory duties by means other than through their own directly employed labour force.
But at the end of the day the Secretary of State must have power to act, to end the wasteful use of ratepayers' money and the nation's resources if failure persists. We expect public opinion to play its part. Local democracy is important in this respect and Clause 15 provides for information to be publicly available. Without an ultimate sanction, and when all else has failed, an awkward DLO might still
just cock a snook and carry on in its unreformed way. It is surely not unreasonable, albeit in these unlikely and extreme circumstances, to have in effect a weapon of last resort.
I note what the noble Lord, Lord Underhill, says, but this must be put into the context of all we are seeking to do in the Bill. The time really has come for there to be accountability and a greater emphasis on efficiency and achievement than ever before. That is all we are seeking to do throughout the Bill, and, while I understand the concern the noble Lord has expressed, we cannot accept the amendment.
Lord UNDERHILL: My Lords, I am sorry the Minister cannot accept the amendment because we want to give an opportunity for local public opinion to play its part. The Minister says this will happen when all else has failed, but there will have been no opportunity for all else to fail; no consultation, no opportunity for representation, only the demand for a report, and on that report the Secretary of State will take this arbitrary power. It is not a weapon of last resort but of second resort, the first being to demand a report and the second to act—without any conditions, not even an attempt to state in the clause that there must be opportunity for consultation and representation by the local authority.
A similar amendment was tabled in Committee, and withdrawn because the Minister said he wished to reconsider the wording of subsections (4) and (5) and we have heard the Minister's argument today. But this matter has never been tested in your Lordships' House. In our view, this arbitrary power should not be given to any Secretary of State of any Government, and for that reason we must press the amendment.
5.14 p.m.
On Question, Whether the said amendment (No. 49A) shall be agreed to?
Their Lordships divided: Contents, 73; Not-Contents, 118.

CONTENTS

Airedale, L.

Banks, L.

Blyton, L.

Amherst, E.

Beaumont of Whitley, L.

Boston of Faversham, L.

Bacon, B.

Beswick, L.

Bowden, L.

Balogh, L.

Birk, B.

Brockway, L.

Brooks of Tremorfa, L.

Kirkhill, L.

Ross of Marnock, L.

Chitnis, L.

Leatherland, L.

Segal, L.

Collison, L.

Lee of Newton, L.

Shinwell, L.

Cooper of Stockton Heath, L.

Llewelyn-Davies of Hastoe, B.

Stamp, L.

David, B. [Teller.]

Lloyd of Kilgerran, L.

Stedman, B.

Davies of Leek, L.

Longford, E.

Stewart of Alvechurch, B.

Davies of Penrhys, L.

Lovell-Davis, L.

Stewart of Fulham, L.

Donaldson of Kingsbridge, L.

McCarthy, L.

Stone, L.

Elwyn-Jones, L.

Maelor, L.

Strabolgi, L.

Evans of Claughton, L.

Meston, L.

Taylor of Gryfe, L.

Evans of Hungershall, L.

Mishcon, L.

Taylor of Mansfield, L.

Fisher of Rednal, B.

Noel-Baker, L.

Underhill, L.

Gaitskell, B.

Ogmore, L.

Wade, L.

Gladwyn, L.

Oram, L.

Walston, L.

Gosford, E.

Paget of Northampton, L.

Wedderburn of Charlton, L.

Greenwood of Rossendale, L.

Pargiter, L.

Wells-Pestell, L.

Hale, L.

Peart, L.

Whaddon, L.

Hampton, L.

Phillips, B.

Wigoder, L.

Houghton of Sowerby, L.

Ponsonby of Shulbrede, L. [Teller.]

Wilson of Radcliffe, L.

Howie of Troon, L.

Wynne-Jones, L.

Jacques, L.

Rhodes, L.

NOT-CONTENTS

Abercorn, D.

Gainsborough, E.

Montgomery of Alamein, V.

Abinger, L.

Garner, L.

Morris, L.

Addison, V.

Glenkinglas, L.

Mottistone, L.

Ailesbury, M.

Gormanston, V.

Murton of Lindisfarne, L.

Airey of Abingdon, B.

Gowrie, E.

Newall, L.

Allerton, L.

Grimston of Westbury, L.

Northchurch, B.

Alport, L.

Haig, E.

Nugent of Guildford, L.

Ampthill, L.

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

Orkney, E.

Atholl, D.

Orr-Ewing, L.

Auckland, L.

Halsbury, E.

Penrhyn, L.

Avon, E.

Harmar-Nicholls, L.

Radnor, E.

Barnby, L.

Hatherton, L.

Rawlinson of Ewell, L.

Bellwin, L.

Hemphill, L.

Redmayne, L.

Belstead, L.

Henley, L.

Reigate, L.

Berkeley, B.

Hill of Luton, L.

Renton, L.

Bessborough, E.

Holderness, L.

St. Davids, V.

Boyd-Carpenter, L.

Hornsby-Smith, B.

Sandford, L.

Bridgeman, V.

Ilchester, E.

Sandys, L. [Teller.]

Brookes, L.

Kemsley, V.

Savile, L.

Cathcart, E.

Keyes, L.

Seafield, E.

Cockfield, L.

Killearn, L.

Shannon, E.

Colville of Culross, V.

Kinloss, Ly.

Skelmersdale, L.

Cottesloe, L.

Kinnaird, L.

Soames, L. (L. President.)

Craigavon, V.

Kinross, L.

Spens, L.

Croft, L.

Lindsey and Abingdon, E.

Strathcona and Mount Royal, L.

Cullen of Ashbourne, L.

Long, V.

Strathspey, L.

Davidson, V.

Loudoun, C.

Swinfen, L.

de Clifford, L.

Lucas of Chilworth, L.

Torphichen, L.

De Freyne, L.

Luke, L.

Tranmire, L.

Denham, B. [Teller.]

Lyell, L.

Trefgarne, L.

Digby, L.

Mackay of Clashfern, L.

Trenchard, V.

Dormer, L.

Macleod of Borve, B.

Vaux of Harrowden, L.

Drumalbyn, L.

Mancroft, L.

Vernon, L.

Ebbisham, L.

Mansfield, E.

Vickers, B.

Ellenborough, L.

Marley, L.

Watkinson, V.

Elliot of Harwood, B.

Middleton, L.

Willoughby de Broke L.

Exeter, M.

Milverton, L.

Wise, L.

Ferrers, E.

Minto, E.

Wynford, L.

Freyberg, L.

Monk Bretton, L.

Young, B.

Gage, V.

Monson, L.

Resolved in the negative, and amend-ment disagreed to accordingly.
Clause 18 [Interpretation of Part III]:
5.22 p.m.
Lord ROSS of MARNOCK Lord ROSS of MARNOCK moved Amendment No. 50:
Page 19, leave out line 6.
The noble Lord said; My Lords, this is a very simple amendment. By deleting the line referred to in the amendment we leave out of the definition of development body the Scottish Special Housing Association. There has been controversy over direct labour organisations but, as I mentioned on Committee, I have heard

59
little, if any, controversy over the activities of the Scottish Special Housing Association, and your Lordships will recall that the noble Earl, Lord Perth, the noble Baroness, Lady Elliot of Harwood, and other noble Lords from Scotland paid tribute to the work of the Scottish Special Housing Association.
In fact the association has one job, and that is to build houses. It was given that job by Parliament. The association was created by a Conservative Government. I hear Ministers speaking about waste of public money, and saying that the Secretary of State must act. Parliament has created the Scottish Special Housing Association, but it is the Secretary of State for Scotland who appoints all the members and the chairman. They must report to him every year. He can see them at any time he wishes, and he agrees their programme with them annually. The association's finance is controlled by Parliament and by the Secretary of State for Scotland.
So whatever may be said about the direct labour organisations and local authorities cannot be said about the Scottish Special Housing Association. One reads of the powers that the Secretary of State takes. He already has all these powers with regard to the Scottish Special Housing Association. The only thing that he cannot do without parliamentary approval or new legislation is wipe out the association, but with the powers that he has here he virtually could stop the association from functioning. I am perfectly sure that that is not the Government's intention; the Government would be much more honest and would come forward with a clause in this Bill or in some other Bill simply to wipe out the association. On Committee I could not obtain any justification of the reason why the Scottish Special Housing Association is included in this way. I suggest that it would be sensible to omit the association from the definition of development body. That is the effect and the purpose of the amendment. I beg to move.
The MINISTER of STATE, SCOTTISH OFFICE (The Earl of Mansfield): My Lords, as the noble Lord, Lord Ross of Marnock, has said, there was a short but comprehensive debate on this matter in Committee. Your Lordships
60
will recall the interesting exposition given by the noble Lord, Lord Ross, during that stage, and you might also well recollect the perfectly adequate explanation given by my noble friend Lord Bellwin. The point is that this provision does not in any way reflect adversely upon the SSHA, nor is there any criticism of the SSHA. As the noble Lord, Lord Ross, said in effect in Committee, the Secretary of State can obtain information on the SSHA's DLO activities by means of the existing arrangements under the terms of its formal agreement with the Secretary of State for Scotland.
However, that is not the point of this provision, and it is not the reason why the clause is to extend to the SSHA. The main purpose of this part of the Bill is to improve the efficiency and accountability of all public sector direct labour organisations. The SSHA is part of the public sector, and in the interests of equity I could not agree with the noble Lord that it should be excluded from this part of the Bill. In other words, we want to make it plain that the same tests of efficiency and the requirements of responsibility shall apply to the SSHA as apply, for instance, to the Scottish local authorities. So there it is. It is a matter of policy and equity as to why the SSHA is treated in the way that it is under the Bill.
Lord ROSS of MARNOCK: My Lords, that reply was very disappointing indeed. There is no equity or equality involved in respect of the treatment of local authorities and the Scottish Special Housing Association. As I pointed out, the association is the creature of the Secretary of State. He appoints the members, he can sack them, he can direct them. He sits down with them every year and decides which programmes should go on. If he is not satisfied with their efficiency, he just says, "You will not build this, you will not build that".
With regard to the point about cornpetitiveness—and this is part of the so-called efficiency test—one reason for the association being set up was so that it could build in places where there were no other builders. That was the job that it was given, to build in the Highlands and in other areas. In those days when there were local authority areas which formed small borough a penny rate would produce perhaps £500, and

61
in many cases less than that. Those boroughs had housing powers, but they could not possibly build, and so the association was created by a Tory Government to do that, and to introduce an clement of competition in some areas.
The association was told to go in and build, and so it set a standard. The Act that set up the association also contained a provision to enable it to build with experimental materials; to use Highland materials in the Highland area. Think of the cost of building in the Highlands and Islands—in many cases building perhaps only three or four houses in a rural area where no private builder wants to look at the job. I do not know whether the Minister of State realises it, but where possible private builders are used. There is simply no justification for this proposal. There is no logic in comparing the association with the local authorities; there is no comparison whatever. The Scottish Office should think again. Has there been any single complaint regarding the building efficiency of the Scottish Special Housing Association?
I see pictures of Ministers opening houses all over the place for the Scottish Special Housing Association. They are proudly paraded in the Scotsman and the Glasgow Herald—pictures of the Minister of State, or the Under-Secretary for this and that. Yet here, despite all their smiles, all their plaudits and all their congratulations, they come along and say, "Ah!—we do not think you are all that efficient; we do not say that you are not efficient, but we do not exactly trust you"; and for no reason at all, or for the rather specious reason of equity—comparing them with a local authority where there is no comparison whatever—they say, "We must have them in this Bill". My Lords, I think they should not be in this Bill, and I am afraid I have to press the amendment.
5.31 P.m.
On Question, Whether the said amendment (No. 50) shall he agreed to?
Their Lordships divided: Contents, 72: Not-Contents 117.

CONTENTS

Airedale, L.

Greenwood of Rossendale, L.

Phillips, B.

Bacon, B.

Gregson, L.

Ponsonby of Shulbrede, L. [Teller.]

Balogh, L.

Hale, L.

Banks, L.

Hampton, L.

Rhodes, L.

Beaumont of Whitley, L.

Hatch of Lusby, L.

Ross of Marnock, L.

Beswick, L.

Houghton of Sowerby, L.

Shinwell, L.

Birk, B.

Howie of Troon, L.

Stedman, B.

Blyton, L.

Jacques, L.

Stewart of Alvechurch, B.

Boston of Faversham, L.

Kilmarnock, L.

Stewart of Fulham, L.

Bowden, L.

Kirkhill, L.

Stone, L.

Brockway, L.

Leatherland, L.

Strabolgi, L.

Brooks of Tremorfa, L.

Lee of Newton, L.

Strauss, L.

Chitnis, L.

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

Taylor of Gryfe, L.

Collison, L.

Taylor of Mansfield, L.

Cooper of Stockton Heath, L.

Lloyd of Kilgerran, L.

Underhill, L.

David, B.

Longford, E.

Wade, L.

Davies of Leek, L.

Lowell-Davis, L.

Walston, L.

Davies of Penrhys, L.

McCarthy, L.

Wedderburn of Charlton, L.

Donaldson of Kingsbridge, L.

Maelor, L.

Wells-Pestell, L.

Elwyn-Jones, L.

Minto, E.

Whaddon, L.

Evans of Claughton, L.

Mishcon, L.

Wigg, L.

Fisher of Rednal, B.

Noel-Baker, L.

Wigoder, L.

Gaitskell, B.

Ogmore, L.

Wilson of Radcliffe, L.

Gladwyn, L.

Oram, L.

Wynne-Jones, L.

Gosford, E.

Peart, L.

NOT-CONTENTS

Abercorn, D.

Barnby, L.

Chelwood, L.

Abinger, L.

Bellwin, L.

Cockfield, L.

Addison, V.

Belstead, L.

Colville of Culross, V.

Airey of Abingdon, B.

Berkeley, B.

Cottesloe, L.

Allerton, L.

Bessborough, E.

Craigavon, V.

Alport, L.

Boyd-Carpenter, L.

Craigmyle, L.

Ampthill, L.

Bridgeman, V.

Croft, L.

Atholl, D.

Brookes, L.

Cullen of Ashbourne, L.

Avon, E.

Cathcart, E.

Davidson, V.

De Freyne, L.

Keyes, L.

Radnor, E.

Denham, L. [Teller.]

Killearn, L.

Rawlinson of Ewell, L.

Digby, L.

Kinloss, Ly.

Redmayne, L.

Dormer, L.

Kinnaird, L.

Reigate, L.

Drumalbyn, L.

Kinross, L.

St. Davids, V.

Ebbisham, L.

Lindsey and Abingdon, E.

Sandford, L.

Ellenborough, L.

Long, V.

Sandys, L. [Teller.]

Elliot of Harwood, B.

Loudoun, C.

Savile, L.

Exeter, M.

Lucas of Chilworth, L.

Seafield, E.

Faithfull, B.

Luke, L.

Shannon, E.

Ferrers, E.

Lyell, L.

Skelmersdale, L.

Freyberg, L.

Mackay of Clashfern, L.

Spens, L.

Gage, V.

Macleod of Borve, B.

Stamp, L.

Gainsborough, E.

Mancroft, L.

Stanley of Alderley, L.

Gormanston, V.

Mansfield, E.

Strathspey, L.

Gowrie, E.

Marley, L.

Swinfen, L.

Grimston of Westbury, L.

Middleton, L.

Torphichen, L.

Haig, E.

Mills, V.

Tranmire, L.

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

Milverton, L.

Trefgarne, L.

Monk Bretton, L.

Trenchard, V.

Halsbury, E.

Montgomery of Alamein, V.

Trumpington, B.

Harmar-Nicholls, L.

Morris, L.

Vaux of Harrowden, L.

Harvington, L.

Mottistone, L.

Vernon, L.

Hatherton, L.

Mowbray and Stourton, L.

Vickers, B.

Hemphill, L.

Murton of Lindisfarne, L.

Watkinson, V.

Henley, L.

Newall, L.

Willoughby de Broke, L.

Hill of Luton, L.

Northchurch, B.

Wise, L.

Holderness, L.

Nugent of Guildford, L.

Wynford, L.

Hornsby-Smith, B.

Orkney, E.

Young, B.

Ilchester, E.

Orr-Ewing, L.

Kemsley, V.

Penrhyn, L.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendment No. 50ZA not moved.]
Clause 19 (Exemption of small direct labour organisations from requirements of Part III]:
5.39 p.m.
Lord SANDFORD Lord SANDFORD moved Amendment No. 50A:
Page 20, line 11, leave out ("less") and insert ("other").
The noble Lord said: My Lords, I beg to move Amendment No. 50A and, at the same time, to speak to Amendment No. 50B. I must apologise to the House for my inconsistency, for having spent the earlier part of the day complaining that the Secretary of State was taking greater powers than he needed to achieve his purpose, I am here suggesting that he should have some more. We greatly welcomed, I think, Clause 19 when it was introduced as a new clause at Committee stage allowing direct labour organisations below a figure of 30 to be exempted from the provisions of this part of the Bill. The Secretary of State has taken power to amend that number by order should he see fit to so do, but only downards. I am suggesting that he should have power
64
to vary either upwards or downwards at his discretion. His discretion will be controlled by the need to lay regulations, and for those to be laid before Parliament and to be subject to the Negative Resolution procedure. I would have thought that under those circumstances this would be a sensible adjustment, and I beg to move.
Lord BELLWIN: My Lords, the Government have recognised that there is a point at which the full benefits to be gained from the Bill will not be realised. It is a matter of judgment to decide where that point comes. We believe that point is reached when an authority employs 30 or less in its direct labour organisation. By building industry standards, an organisation employing 30 operatives and with an annual turnover of about a quarter of a million pounds is quite big. The clause will permit those organisations which are genuinely minimum-level DLOs to escape the rigours the Bill imposes. We should not wish to see a higher figure. I recognise that what my noble friend suggests gives a certain discretion; but we have been assailed on all sides for precisely the opposite reason. I do not think that at this moment we should depart from the path on which we have embarked. Therefore, perhaps he may not feel so deeply about it as to wish to press the amendment.
Lord SANDFORD: My Lords, I cannot press the Secretary of State to take powers if he does not want them. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 50B not moved.]
Lord UNDERHILL Lord UNDERHILL moved Amendment No. 51:
After Clause 19, insert the following new clause:
("Works undertaken on behalf of an authority
.—(1) Notwithstanding anything in section 101(10) of the Local Government Act 1972, the Local Authorities (Goods and Services) Act 1970 or any other enactment, a local authority may enter into arrangements for the construction of buildings, or the carrying out of other works by them on behalf of an authority to which this section applies.
(2) This section applies to—

(a) another local authority within the county or adjoining county

(b) the water authority

(c) the police authority

(d) the Passenger Transport Executive

(e) the Health Authority (within the meaning of section 128(1) of the National Health Service Act 1977) in the county.").

The noble Lord said: My Lords, an amendment similar to the one which I am moving this evening was moved at the Committe stage but it was caught up in a debate on a number of amendments and the discussion on this particular one was very brief. At the Committee stage, the noble Lord the Minister said that authorities must first prove that direct labour is the better way of doing work in their own areas. If commercial competitiveness is proven, why should not a local authority undertake work for other public bodies and for other nearby local authorities? I would ask what principle is involved in refusing this provision if competitiveness and accountability are observed.
The noble Lord, Lord Bellwin, at column 265 of the Official Report for 7th October, said:
"They"—
the local authorities—
"must keep their accounts clearly on a trading basis, earn a return on capital and prove all this before they can think of expanding".
He was not opposed, I gather, to the principle which we are advocating in this amendment. Therefore, I ask what
66
principle is involved in refusing the amendment.
At Committee stage, my noble friend Lord Bruce reminded the Committee that the working party on direct labour organisations which reported in August 1978 recommended that direct labour organisations should be permitted to undertake work outside, as well as inside their parent local authorities, for other local authorities and for public bodies. The terms of the amendment provide a new clause which will enable this to be done. This extension would help direct labour organisations to make their position more viable. It would further assist them to serve the desired aim of the return on capital—and this was the principle, your Lordships will remember, in the relevant clause of the Greater Manchester Bill which was approved by this House, and approved after consideration by your Lordships' Select Committee which went into this particular clause in that Bill with great care and decided that the Greater Manchester Authority should be allowed to have that extension which we are asking for in this particular amendment.
This provision would also help continuity of work and it would help to prevent decasualisation. It is one of the evils of the building and construction industry that when the job is done men are just pushed out. Continuity of work is an aim which I am sure this House will wish to have achieved. It will enable local authorities to be ready with adequate staff for emergencies—and we discussed the question of emergency work on an amendment last Friday. Clause 15 gives the Secretary of State control if the finances get out of hand and, therefore, there is that safeguard to what we are proposing. There is that reserve power and, while we opposed it, the House has now agreed to it; therefore there is that reserve power.
Lastly, there are accidents of geographical boundaries which should not prevent a local authority asking another local authority to do work for it. If the amendment is rejected, it would stop a local authority from doing that. I am sure that many noble Lords could think of examples where geographical boundaries would make it common sense that one authority should ask another with an

67
adequate direct labour organisation to do work for it. The Minister has on other matters appealed for flexibility and has justified flexibility. That has been argued in other Bills before this House. This is an example of common sense and flexibility which I hope your Lordships will agree to accept. I beg to move.
Lord EVANS of CLAUGHTON: My Lords, I should like to support the amendment moved by the noble Lord, Lord Underhill. It does not seem that there can be any political or philosophical reason why the Government should not give the direct labour organisations a wide discretion to carry out new work and maintenance, unless they are saying that they want to reduce direct labour organisations to mere emergency services, which I gather they do not. It seems to me, for the reasons the noble Lord has given, that for convenience and flexibility the only way a direct labour organisation can become competitive is if they can commercially tender for a wide variety of jobs and public and various works for the list of bodies mentioned in the amendment. I think it is a valid point that, from the experience of many noble Lords, a road or something like that would pass in and out of two or three local authorities. It would be more convenient and cheaper if one direct labour organisation was allowed to deal with that, rather than that two, three or four different bodies should deal with small pieces of the work.
Finally, and probably most importantly, your Lordships will remember a certain Friday morning not long ago when we had a very rumbustious debate about the Greater Manchester Bill. It was an occasion when I saw angry passions rise to a higher point than I remember and where a number of noble Lords on the Government side voted in favour of this very principle being enshrined in the Greater Manchester Bill. As this Bill is drawn, it seems that the Local Government, Planning and Land (No. 2) Bill could overtake the Manchester Bill and undo all the work that was done by your Lordships on that occasion. Therefore, I should have thought that on grounds of flexibility, of economy and of logicality this amendment should be supported.
Lord BELLWIN: My Lords, I must
68
say that I do not quite know what to make of what the noble Lord, Lord Evans, has just said, but I think I should put him right on one point. The debate on the Greater Manchester Bill was not on this issue at all; it was on the issue of constitutionality—as to whether or not something which has been decided by a Select Committee of your Lordships' House should later he reversed. It was not at all on the merits or otherwise of the particular point. I wonder also if the noble Lord quite appreciated what he was saying when he said that only if this amendment is approved can direct labour organisations become competitive. We have been hearing talk for so long now telling us how competitive they already are. I have no wish to attack direct labour organisations as such, but I hope that they have not had to rely on this type of possibility to be competitive in all they have been doing over the years.
My response to the noble Lord, Lord Underhill, is to ask what are the basic objectives? Why are direct labour organisations set up in the first place? Surely it is to carry out a function within their own authority, using their ratepayers' money, as I have said more than once, willingly subscribed as risk capital. Here we are contemplating their going into speculative ventures in competition with the private sector. I just do not see how that does other than destroy the whole argument to justify direct labour organisations being set up by an authority. They are not there to go into business as such. They are set up for a specific purpose, and if we accept, as I accept, that certain functions that they carry out are special to them—emergency situations, certain other maintenance work, and so on—then provided they are competitive, provided they fulfil the requirements of this Bill, I accept them and think there is a place for them. Noble Lords are contemplating widening this whole area of operation in this way. I must say, without going on about it, that we find the amendment quite unacceptable.
Baroness FISHER of REDNAL: My Lords, it really is not extending the Bill in any way. It is putting into the Bill what local authorities have been doing for quite a long time. Many local authorities, on what one might call the periphery of their area, have need for

69
something to be done when it would be quite expensive for them to put it into operation because it is perhaps 10 or 12 miles from the base at which they normally operate, and so they ask the adjoining authority to take on the task for them. This weekend I was travelling in a part of the country and I came across a big hoarding which said, "Road improvement scheme being carried out on behalf of such and such county council". It gave the name of the local authority. This is the kind of thing that local authorities are doing. All we are asking is that it should be legalised by putting it into the Bill.
Lord BROOKES: My Lords, I want to refer to the underlying concern, perhaps the unspoken concern. We are talking about the capacity to be competitive; we are talking about direct labour organisations. In truth, whether they are or are not competitive is always going to be open to question. That is the underlying concern, because if one has six competitors and five can go broke by reason of their irresponsibility, and one cannot, that is not competition in terms that business understands it. I think it is best to out with these truths. We might try to rest upon return on capital employed and our accountants might like to finesse and say, "Do you mean return on capital employed? Do you mean return on assets employed? Do you mean return on assets managed?" We all know that in large organisations—not merely local authorities but large businesses—there are vested interests who commit themselves to an activity because it creates managerial status, managerial salary and privilege. Therefore, one sets up a situation which is full of inequality and which cannot, beyond all reasonable doubt, satisfy the test that it is competitive, because it lacks the ultimate sanction.
Lord UNDERHILL: My Lords, I am grateful for the support of the noble Lord, Lord Evans of Claughton, and of my noble friend Lady Fisher. I believe they have put forward common-sense arguments as to why this amendment should be carried. It does seem so much common sense. A local authority may say, "Look here, you can do this job better for us; you are nearer or you have got a more effective organisation. Do it for us". Leaving out the public
70
bodies, that would appear to be a commonsense argument for approving this amendment.
I should like to give my impression of what took place on that Friday morning on the Greater Manchester Bill. If your Lordships will recall, your Select Committee was given instructions to look at a particular clause which was inserting similar powers in the Greater Manchester Bill. It was told to look carefully at this clause to see whether or not the provisions were unfair to the private sector. Your Committee reported that they were not unfair to the private sector. Admittedly there was a constitutional argument on the floor of this House, but there was also an amendment moved to delete that clause. The House refused the amendment to delete that clause; therefore in the Greater Manchester Bill there is this provision, approved by Parliament, and we were asking this afternoon for its extension. I think we are in a situation where, unless the building is almost going to fall down, we are not going to get amendments accepted by the Government, who seem to be in this situation because of the timetable and do not have regard to the common sense and the sensibility behind any amendment. It is not my intention to divide the House, but a principle is involved here and I will ask that the amendment be negatived.
Lord BOYD-CARPENTER: My Lords, before the House negatives the amendment, I think noble Lords will want to note the quite extraordinary argument used a moment or two ago by the noble Baroness. She said that at present DLOs were doing jobs which required legalisation. If that is true, it seems to me the worst possible argument for extending their powers.
Baroness FISHER of REDNAL: My Lords, I think the words were taken out of context.
On Question, amendment negatived.
Clause 20 [Consequential repeal or amendment of local statutory provisions]:
5.55 p.m.
Lord UNDERHILL Lord UNDERHILL moved Amendment No. 52:
Page 21, line 7, leave out from ("to") to end of line 8 and insert ("an affirmative resolution of both Houses of Parliament").
The noble Lord said: My Lords, at the Committee stage, when a similar amendment was proposed, I asserted that this was another example of the sweeping power being given under this Bill to the Secretary of State—another example of an arbitrary power. I would remind your Lordships that it is a power given to the Secretary of State to repeal or amend a local Act; in other words, a power to vary an Act of Parliament; power to amend or repeal legislation which has been approved by Parliament; and it can be amended or repealed by the Secretary of State. The amendment endeavours to preserve fully the authority of Parliament on legislation which has been approved by Parliament. I was grateful to other noble Lords who, in that debate at the Committee stage, came in to support the view of the seriousness of this power being given to the Secretary of State. I am pleased that the noble Lord, Lord Boyd-Carpenter, is with us this afternoon because he said to his noble friend—it is at column 269:
"It is, it seems to me, quite a serious matter for a Minister to repeal part of a statute, be it a public or a local statute".
The noble Lord, Lord Bellwin, said that there was a safeguard that under subsection (3) the Secretary of State would be required to consult the local authority.
However, what type of safeguard is that? Let us say that the local authority concerned argues that there should not be repeal or amendment of its local Bill. That could be set on one side by the Secretary of State. There is no provision for any appeal, and the Secretary of State can decide, irrespective of the representation that may be made to him, that he will proceed with action by order to repeal oramend. Therefore, there are good reasons why any action of this kind should be by Affirmative Resolution and not the Negative Resolution procedure as is provided in the Bill.
Your Lordships will recall that there were serious arguments advanced for this. I was pleased that at the Committee stage the noble Lord, Lord Bellwin, was able to say that he would think very carefully about this and see what we might or might not do about it. On that basis, the amendment was withdrawn. This is such a serious matter, affecting the repeal or amendment merely by Negative Resolution procedure of any Act of Parliament
72
that has been approved, that I hope that the Minister will be able to say that on reflection he will agree to what we are asking in this amendment; that is, that we change the Negative Resolution procedure to an Affirmative Resolution. We are not arguing a great principle about the Bill but one of the authority of Parliament to take what is a rightful procedure in a matter of this kind. I beg to move.
Lord BELLWIN: My Lords, it is quite true that I promised the Committee that I would examine this provision and look into the procedures. I assure your Lordships that I have done exactly that and very carefully. But I have to advise that I see no case for it. Before I say anything else, I ought to say that I have been impressed by exactly what is involved in the Negative Resolution procedure. I have heard it diminished in its importance so often in your Lordships' House that I assumed, in my ignorance, that only the Affirmative Resolution procedure could be the real safeguard. But the more that one looks at exactly what is involved, the more one realises that it is indeed very much a safeguard. I think it was my noble friend Lord Boyd-Carpenter who said something on those lines not long ago. Having had a look at it, I endorse that.
This clause is very much a reserve power. It will allow the Secretary of State to repeal any part of a local Act of Parliament whose provisions are inconsistent with this one. This provision is a standard one. There is nothing unusual about this. It is a perfectly proper way of ensuring that new requirements determined on by Parliament prevail over inconsistent provisions which may exist in local Acts. I have examined the precedents and there are many. The Administrations of both parties have provided recent examples. Section 262 of the Local Government Act 1972 is one. Section 81 of the Local Government (Miscellaneous Provisions) Act 1976 is another. There is in the Health and Safety at Work Act 1974 a power of this kind which is subject to no parliamentary procedure at all.
In the clause before us now the orders will be used to amend or repeal local Act powers which are inconsistent with the provisions of Part III of this Bill. They will not remove any power to carry out

73
work which may exist in local Acts, but simply ensure that when carrying out such works, the financial requirements of this Bill bite just as they do on "works contracts" and "functional work".
I said that before the Secretary of State could make an order, he would be required under subsection (3) to consult the local authority concerned. I repeat that again because I think it is important. With this safeguard, and Parliament having signalled its approval of the requirements for competitive tendering and proper accounting set out in this part of the Bill, we believe that it is unnecessary to require specific parliamentary approval of every application of these principles to individual authorities. To do so we feel would not be an appropriate use of Parliament's time. With my other observations on the Negative Resolution procedure, I ask the noble Lord not to press the amendment.
Lord UNDERHILL: My Lords, the noble Lord said that it is a reserve power; but then he said that he could not ask that Parliament shall waste its time on all the applications. Therefore, there is a possibility that there may be a number of applications, not merely just a reserve power. I can recall the arguments at Committee stage about the difference between Negative and Affirmative Resolution procedures by noble Lords with far greater experience than I who came down in favour of using the Affirmative Resolution procedure in a case like this. I have looked through the Bill and there are numerous examples of where the Affirmative Resolution procedure is being proposed by the Government, and I should have thought that this is one which is of great importance. It affects the repeal or amendment of legislation. The Minister has made his position quite clear. Therefore, I will not withdraw, but I will ask this amendment to be negatived and will not call for a Division.
On Question, amendment negatived.
Clause 21 [Part III—supplementary]:
6.7 p.m.
Baroness FISHER of REDNAL Baroness FISHER of REDNAL moved Amendment No. 53:
Page 21, line 23, at end insert—
("Provided that no such order shall specify a date prior to 1st April 1982".).
The noble Baroness said: My Lords, in moving this particular amendment, it is true to say that all the local authority associations, the Association of Municipal Authorities, the Association of County Councils and the Association of District Councils, while they may not be exactly agreeing to the words of the amendment, have the same feeling that there is a need to give local authorities more time than is specified by the Secretary of State when he has given a date for commencement. That is, so far as I understand it, to come into operation on 1st April next year.
All the local authority associations have drawn attention to the Minister the fact that there is a great deal of work to be done on the implementation of the procedures to do with accountancy. These have not yet really been worked out. There are all the regulations and directions. Heaven knows! there are enough regulations to keep the Civil Service happy for years, I should imagine, in this first part of the Bill. All those have to be put to the local authorities. The Minister said in Committee that they would continue to listen to further arguments from the local authorities on what they wanted to put in on timing, but they would have to see how things went. They would need good, hard evidence if they were to move away from the targets set for this Part of the Bill.
The progress of the Bill—and I do not need to remind your Lordships about this—has been very, very seriously altered. The Bill will not get the Royal Assent until practically at the end of this session. Therefore, this gives perhaps four months for local authorities to start changing over their procedures, especially those matters that are to do with maintenance. This is going to be a new set of documentation; a new set of alterations; and it will be of profound importance to local authorities that, to start with, they get this right. The tendering documents that will have to be issued for maintenance are something that the local authorities have to feel their way on and make sure that the right action is taken in the beginning, bearing in mind that that depends on whether or not they stay in business. If they do not get the tendering documents correct to start with, that might be a future hazard for them.
So I would ask the Minister to recognise the great difficulties that local authorities are to be placed in and some of the difficulties that are being put in their path. I would ask the Minister whether he would look again at this matter and make sure that all the negotiations have been gone through with the local authority associations. What we are asking for in this amendment is for the date to be delayed for 12 months. That will obviously help those local authorities which are going to work with the Secretary of State to try to make this work. The three-year period in earning a rate of return on capital will be much easier for them if they are given that 12 months' grace. I beg to move.
Lord SANDFORD: My Lords, I again rise to support this amendment, as I did in Committee and as did my noble friend Lord Ridley on behalf of the Association of County Councils, because it is perfectly true that all the associations feel that this part of the Bill is being thrust upon them. On the other hand, I have an amendment of my own shortly to be considered and I should like to speak to that now, because it seeks to apply this delay in respect of this Part of the Bill in connection with one or two items. As my noble friend said at Committee stage, it is true that the authorities know what is to be contained in the regulations to control tendering, as set out in Clauses 5 and 7. I still think the time is short to get all this into operation, but the Government have made that clear.
On the other hand, when we turn to the accounting and financial side of the matter, my noble friend said in Committee that the Chartered Institute of Public Finance and Accounting is developing, with the Department of the Environment's support, a standard computer system to enable authorities to meet the requirements laid down in the Bill. That may be so, but I am advised that it will not be ready in time to meet the requirements of the Bill that come into force in April 1981. It may be ready at some time after that and will then be useful, but it is certainly not going to be available and put into effect by the introduction date of April 1981. Although it is true to say that a draft code of practice prepared by the same Chartered Institute has been
76
available since July, a draft is not the same thing as a settled set of regulations approved by Parliament. Therefore, for those two reasons I think there is a case to be made for considering delay in introducing the accounting parts of this procedure, even if there is not quite such a strong case for delaying the tendering arrangements. I shall be interested to hear how my noble friend justifies the introduction of the accounting and financial side of this matter when the preparations are at this early stage.
Lord DIGBY: My Lords, the county councils have only a small number of direct labour organisations, but we have done a survey of our members and this shows that this part of the Bill will result in the need for 331 new technical officers and 54 new accountants. These will be required regardless of when it comes into force, but in the first year it is obviously going to be that much more difficult to get the organisation going. I should particularly like to support my noble friend Lord Sandford, who says that the CIPFA computer accounts programme will not be ready until probably next year. The noble Lord, Lord Bell-win, said that we had had lots of warning, but when you are talking of this number of staff, surely you cannot employ them in advance of a code of practice which has not yet been approved and the form of which you do not exactly know. Most local authorities do not have surplus manpower.
Lord BELLWIN: My Lords, I do not know where this figure of 331 technical officers comes from and, with great respect to my noble friend, I just do not accept it at all. I should want a lot more information (a) as to exactly how the figure is arrived at, and (b) how this work would fit into the existing work which such officers already carry out; because time and time again when new requirements have been put upon local authorities and when so many of them have said: "That's going to need so many extra staff" I have heard them go on to say, "How are we going to absorb this with our present staff"? It means everyone pushing up; it means looking again at the distribution of work; it means considering doing exactly what a private business would do, faced with extra work imposed upon it. So while I do not for a

77
moment say that my noble friend is wrong—and indeed how can I, when I do not even know the basis of how he makes it up?—I must nevertheless put a reservation on it as such.
I fully understand the local authorities' wish that the implementation of this part of the Bill should be delayed. On the other hand I am equally conscious of the strength of the concern in the building industry and among ratepayers who foot the bills for DLOs that we should act as soon as possible to ensure that no further public money is wasted by inefficient building departments. In saying that, I do not mean all of them. The noble Baroness and I had a little interchange on that point the other day and I think we probably agreed at least upon this point between us: that they were not all inefficient and that they were not all efficient. How could they be?
But, my Lords, we have to strike a balance. We believe that the authorities have had time to put their houses in order, though not, as my noble friend Lord Digby said, to be able to look at the nuts and bolts of exactly what is required: that is understandable. But the fact is that we are going back in time to August of last year, and I should have thought that responsible local authorities would have started moving in the right direction. Indeed I am sure that most of them have, and that implementation is still possible. We have made concessions to ease the burden of starting the new system, with easier tendering requirements—particularly the freeing of all maintenance work below £10,000 and of all highway authorities' winter maintenance programmes from compulsory tendering, together with de minimis exemption for the smallest authorities.
There have been concessions also in one or two other minor ways. But we really cannot offer further relaxations. Whenever the time comes, it is always at that moment that you have to get to it. I believe this is what local authorities will do, because in matters of this kind the track record is a very good one. I have seen so many things brought in that had to be taken on board, and were taken on board. My goodness me! I pay a tribute to many of them for the way they have done those things. I am sure they will do this the same way.
Lord DAVIES of LEEK: My Lords, may I ask the noble Lord for a little information? Having declared a moratorium on all building, where is the opportunity for all this wastage that is somewhere in the lost horizon? What would it do to the Government to delay the implementation, as asked for by a number of experts, and give the local authorities a chance to think about how to get the increased staff they will need? There will be a need for increased staff, and I sincerely ask him whether he can say if the moratorium on housing has altered the meaning of this clause and its implementation and purpose.
Lord BELLWIN: My Lords, by leave of the House, may I say not in the slightest.
Baroness FISHER of REDNAL: My Lords, I am sorry that the Minister has given the reply that he has. As the noble Lord, Lord Sandford, said, together with the noble Lord who spoke on behalf of the ACC, these are the local authority bodies speaking for the whole of the country. I might have thought that the Minister would not accept it because I was speaking: that might be the voice of the Association of Municipal Authorities and therefore not perhaps particularly important to his party's thinking. I should not have disagreed with that. But the fact that all the local authority associations are concerned about the starting date shows that the Government think very poorly of those who serve on local authorities up and down the country, and take no notice of those officers who guide and give information to councillors.
The noble Lord who spoke on behalf of the ACC gave some figures. I should be the last one to challenge those figures, but the authorities themselves would challenge them, especially the ACC. They would want to make sure that they were doing their best for the Government and helping to get the Bill through. It seemed quite serious for those figures to be challenged.
I must remind the Minister that all local authorities have been trying to cut back their staffs. That is what the Government have told them to do, so that is what they have been doing. They have been doing their very best to cut back. I want to make particular reference

79
to the maintenance departments. Their whole revamping will have to be looked at in a different light. People will not follow the normal pattern of costing and there will be a completely new accounting procedure. I am sorry that the Minister cannot accept the amendment and I intend to press it to a Division.
6.22 p.m.
On Question, whether the said amendment (No. 53) shall be agreed to?
Their Lordships divided: Contents, 71; Not-Contents, 108.

CONTENTS

Airedale, L.

Gregson, L.

Oram, L.

Bacon, B.

Hale, L.

Peart, L.

Beaumont of Whitley, L.

Halsbury, E.

Phillips, B.

Bernstein, L.

Hampton, L.

Ponsonby of Shulbrede, L. [Teller.]

Beswick, L.

Hanworth, V.

Birk, B.

Hatch of Lusby, L.

Rhodes, L.

Blyton, L.

Houghton of Sowerby, L.

Ridley, V.

Boston of Faversham, L.

Howie of Troon, L.

Ross of Marnock, L.

Bowden, L.

Jacques, L.

Sandford, L.

Brockway, L.

Kilmarnock, L.

Segal, L.

Brooks of Tremorfa, L.

Kinloss, Ly.

Shinwell, L.

Chitnis, L.

Kirkhill, L.

Stamp, L.

Collison, L.

Lee of Newton, L.

Stedman, B.

Cooper of Stockton Heath, L.

Llewelyn-Davies of Hastoe, B.

Stewart of Alvechurch, B.

David, B. [Teller.]

Lloyd of Kilgerran, L.

Stone, L.

Davies of Leek, L.

Loudoun, C.

Strauss, L.

Davies of Penrhys, L.

Lovell-Davis, L.

Taylor of Mansfield, L.

Digby, L.

McCarthy, L.

Underhill, L.

Elwyn-Jones, L.

Maelor, L.

Wade, L.

Evans of Claughton, L.

Milverton, L.

Wells-Pestell, L.

Fisher of Rednal, B.

Minto, E.

Whaddon, L.

Gainsborough, E.

Mishcon, L.

Wigoder, L.

Gaitskell, B.

Noel-Baker, L.

Wilson of Radcliffe, L.

Greenwood of Rossendale, L.

Ogmore, L.

Winstanley, L.

NOT-CONTENTS

Abercorn, D.

Ellenborough, L.

Mancroft, L.

Abinger, L.

Elliot of Harwood, B.

Mansfield, E.

Airey of Abingdon, B.

Exeter, M.

Marley, L.

Allerton, L.

Freyberg, L.

Middleton, L.

Alport, L.

Gage, V.

Mills, V.

Atholl, D.

Gainford, L.

Monk Bretton, L.

Avon, E.

Glenkinglas, L.

Montgomery of Alamein, V.

Barnby, L.

Gormanston, V.

Morris, L.

Bellwin, L.

Cowrie, E.

Mottistone, L.

Belstead, L.

Grimston of Westbury, L.

Mowbray and Stourton, L.

Bessborough, E.

Haig, E.

Murton of Lindisfarne, L.

Birdwood, L.

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

Northchurch, B.

Boardman, L.

Nugent of Guildford, L.

Boyd-Carpenter, L.

Harmar-Nicholls, L.

Orkney, E.

Brabazon of Tara, L.

Harvington, L.

Orr-Ewing, L.

Bridgeman, V.

Hatherton, L.

Pender, L.

Brookes, L.

Henley, L.

Penrhyn, L.

Brougham and Vaux, L.

Hill of Luton, L.

Radnor, E.

Campbell of Croy, L.

Holderness, L.

Rawlinson of Ewell, L.

Cathcart, E.

Hornsby-Smith, B.

Reigate, L.

Chelwood, L.

Inglewood, L.

Renton, L.

Cockfield, L.

Kemsley, V.

St. Aldwyn, E.

Colville of Culross, V.

Keyes, L.

Sandys, L. [Teller.]

Cottesloe, L.

Killearn, L.

Savile, L.

Craigavon, V.

Kinnaird, L.

Seafield, E.

Craigmyle, L.

Kinross, L.

Skelmersdale, L.

Croft, L.

Lindsey and Abingdon, E.

Soames, L. (L. President.)

Croham, L.

Long, V.

Spens, L.

Cullen of Ashbourne, L.

Lucas of Chilworth, L.

Stanley of Alderley, L.

Davidson, V.

Luke, L.

Swinfen, L.

de Clifford, L.

Lyell, L.

Torphichen, L.

Denham, L. [Teller.]

Mackay of Clashfern, L.

Tranmire, L.

Drumalbyn, L.

Macleod of Borve, B.

Trefgarne, L.

Trenchard, V.

Vernon, L.

Wise, L.

Trumpington, B.

Vickers, B.

Wynford, L.

Vaizey, L.

Watkinson, V.

Young, B.

Vaux of Harrowden, L.

On Question, amendment agreed to.

6.30 p.m.
Lord SANDFORD Lord SANDFORD had given notice of his intention to move Amendment No. 53A:
Page 21, line 23, at end insert ("provided that no such order in respect of the accounting and financing provisions shall specify a date prior to 1st April 1982.".).
The noble Lord said: My Lords, I had intended to move this amendment, but in the light of the result of the Division all I wish to say is that I think that that decision will in the end lead the Government to recognise that it will be a case of more haste, less speed, and, I am afraid, much greater cost.
[Amendment 53A not moved.]
Clause 22 [Right of councillor to opt for financial loss allowance]:
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 54:
Page 22, line 33, leave out ("(7)") and insert ("(3)").
The noble Earl said: My Lords, this amendment is necessary to correct either a printing error or a drafting mistake. It is designed to ensure that the Bill is internally consistent and also to clarify any doubts about the application of this clause to Scotland. The effect of the amendment is to create a new subsection within the clause which explicitly disapplies the whole of the clause to Scotland. I beg to move.
Lord ROSS of MARNOCK: My Lords, this is a very important amendment. I am vet y glad that the Scottish Office was awake at the time that I made the point at the Committee stage: that to put in that it would not apply to Scotland when what we are seeking to do is to put a new clause into a purely English Act, was otiose. But I hope that the Scottish Office realise what they are doing. We cannot make one amendment without making sure that all the consequential amendments are also made. If any Scot wants to know how much of this applies
82
to Scotland and starts at the beginning of the Bill and reads it through, he will have a devil of a job. No Scottish Act of Parliament should be dealt with in this particular way. But if he does want to find out, he goes to Clause 185, whose rubric is "Scotland". Subsection (1) says that Parts V, IX, XIV, XV and XVII of this Act apply to Scotland to the extent specified in so-and-so. And subsection (2) says that Parts VI, VIII, X and XII of this Act do not apply to Scotland. This means that those parts which are not mentioned there apply entirely to Scotland. Noble Lords will notice that Part IV is not mentioned there at all and it is Part IV that we are now dealing with. We have just left out one subsection of Part IV, so obviously Part IV applies to Scotland only in part. When they come to it, will the Government undertake to amend Clause 185 so that simple-minded Scotsmen who have the sense to look it up as one thing which guides the application to Scotland will be able to he assisted in respect of Part IV? Otherwise, the amendment is impeccable.
The Earl of MANSFIELD: My Lords, I am happy to give the undertaking that the Scottish Office, whenever it arises from its slumbers, will pay regard to the more tautologous arguments of the noble Lord. It always does so.
Clause 23 [Amendments relating to allowances to members of local authorities and other bodies]:
[Amendment No. 54A not moved.]
The Earl of MINTO The Earl of MINTO moved Amendment No. 55:
After Clause 24, insert the following new clause:
("Vice-Chairmen of councils in Scotland and application of Part IV to Scotland
.—(1) The following section shall he inserted after section 3 of the Local Government (Scotland) Act 1973:—
"vice-Chairman
3A.—(1) A council may appoint a member of the council to be vice-chairman of the council.

83
(2) The vice-chairman shall hold office until the expiry of the term of office of the council.
(3) A person holding the office of vice-chairman shall be eligible for reelection as vice-chairman but shall cease to hold that office upon ceasing to be a councillor.
(4) Subject to any standing order made by council, anything authorised or required to be done by, to or before the chairman may be done by, to or before the vice-chairman.
(5) A council may pay the vice-chairman, for the purpose of enabling him to meet the expenses of his office, such allowance as the council think reasonable."
(2) Section 22 above does not extend to Scotland, and this section extends to Scotland only.").
The noble Earl said: My Lords, during the Committee stage I moved a very similar amendment whose object was to bring Scotland into line with England and Wales and to allow it to have the same privileges and provisions. During the Committee stage the amendment was very much shorter. It was that a council in Scotland may appoint a member of the council to be vice-chairman of the council and then, having appointed him for the purpose of enabling him to meet the expenses of his office, to claim such allowance as the council may think reasonable.
This provision already exists in the Local Government Act 1972, but it does not exist in the Local Government (Scotland) Act 1973. There is no doubt whatsoever in my mind that it should, for at present the chairmen of the councils in Scotland are immensely overworked and rely entirely upon vice-chairmen, who are technically not vice-chairmen although they are carrying out the jobs of vice-chairmen. They also rely upon the good will of those people, since the councils are not able in any case to make suitable allowances to them. In making that particular amendment during the Committee stage, I was very grateful to receive support from all parts of the Committee. The noble Earl the Minister of State was kind enough to say that in view of that lie would take back the matter and have another look at it. On that understanding, I withdrew the amendment.
Since that time I have received a letter from the noble Earl the Minister and
84
Amendment No. 55 is a copy of a suggested draft that the Minister sent to me. It is slightly longer than mine was originally, for the simple reason that I had automatically assumed that if one retired from a council one would no longer be vice-chairman of it, and one or two other small items like that. But the draftsmen must be safe. Consequently, the amendment has become longer.
However, subsection (1) is entirely in keeping with my original amendment, and I am most grateful to the noble Earl for having sent this advice to me. Subsection (2) touches a little upon a matter which the noble Lord, Lord Ross of Marnock, commented upon a moment ago. It is a tidying-up purpose. By including in subsection (2) that Section 22 above does not extend to Scotland, and that this section only extends to Scotland, it is hoped that simple-minded Scots like the noble Lord and I will understand what does and what does not apply to Scotland.
In conclusion, the amendment in subsection (1) is something which I genuinely believe that councils in Scotland require. As we all know, at present they are overburdened. Individuals are unquestionably carrying a great responsibility upon their shoulders. I trust very much that this amendment may meet with the approval of your Lordships' House. I beg to move.
The Earl of MANSFIELD: My Lords, as the noble Earl has said, this amendment is acceptable to the Government. I should like to take this opportunity of thanking the noble Earl for drawing the anomaly to our attention and for providing the means of rectifying it. The second part of the new clause, subsection (2), will require a consequential amendment to Clause 185, which has been tabled in my name.
The Earl of MINTO: My Lords, may I thank the noble Earl for his response and for kindly explaining the consequential aspect of subsection (2).
Clause 25 [Disclosure of information]:
6.40 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 56:
Transpose Clause 25 to after Clause 175.
The noble Lord said: My Lords, this amendment transposes Clause 25 from Part IV of the Bill, which deals with local government allowances, to which it is not relevant, to a more appropriate place in the Bill. I beg to move.
Clause 26 [New Valuation lists]:
Baroness BIRK Baroness BIRK moved Amendment No. 57:
Leave out Clause 26.
The noble Baroness said: My Lords, this matter was discussed and voted on at Committee stage, but we are still not happy about the arrangements that are laid down in this clause; neither are the local authorities nor the local authority associations. I am moving the deletion of the clause to give the Government the opportunity once again to have a look at this point.
Briefly, what the clause does is to remove the statutory requirement for five-yearly rating revaluations and replace it with the power for the Secretary of State to order, with the agreement of both Houses of Parliament, a revaluation from time to time. This again is giving a particular power to the Secretary of State and, as was pointed out at the Committee stage by, I think, the noble and learned Lord the Lord Advocate, there have been only three revaluations since the war, and all under Conservative Governments. Therefore, it seems odd to celebrate this by abolishing the necessity to have a look every year to decide whether there should be revaluation.
Under the existing law, without this clause Parliament has to agree every year if a revaluation is to be postponed, whereas under Clause 26, if this were enacted and became part of the Bill (which we hope it will not) Parliament would hear of rating revaluations only when a Secretary of State saw fit to order revaluations. If revaluations are not carried out regularly the tax base is held at an artificially low level and anomalies in valuations arise both between different classes of property within a local authority area and in the level of valuations between local authorities themselves. As a result the tax base can become extremely unfair
86
as well as outdated, and can also distort the distribution of Government grants to local authorities.
For these reasons, in company with many local authorities and certainly the Association of Metropolitan Authorities, we believe that Clause 26 should he deleted from the Bill. I hope that in the intervening time since the Committee stage the Government have been able to take the opportunity to look into this subject and to see the really telling arguments in favour of the deletion of this clause, which are certainly not on a party political basis. I beg to move.
Baroness STEDMAN: My Lords, I should like to support my noble friend. We dealt with this matter at some length in the Committee stage and we are still concerned that while this clause remains in the Bill Parliament will hear about rating revaluations only as and when the Secretary of State sees fit to order such a revaluation. We all know that if revaluations are not carried out at regular intervals the tax base is held at an artificially low level and it becomes unfair and out of date, which in turn affects and distorts the distribution of Government grants to the local authorities. That in turn gives rise to substantial injustices between individual ratepayers in the size of the rate burden that they are all asked to bear.
Nothing that has been said from the Government Benches so far during the progress of this Bill has detracted from the suspicion that the clause may be a prelude leading to the abolition of domestic rates and towards a total dependence on Government block grant. If and when that happens it will be the end of democratic local government as we know it, because unless the revaluations are kept up to date the local authorities will be put to very serious disadvantage. We said, both at Second Reading and at Committee stage, that noble Lords opposite do not seem to appreciate that rates are the tax base of the local authorities. They base their revenue estimate upon rates; rates are all that local authorities have to live on to survive, and every time revaluation is postponed it means a greater burden on local authorities to finance those services that they have to provide. Then along comes a Bill like this one,

87
seeking to introduce a system obliging the local authorities to hold their rates down to the levels prescribed by the Secretary of State. We shall go on in Part IV of the Bill to look at the reformed type of the grant, which is very much dependent on rateable value. We maintain that the block grant cannot be fairly and equitably determined unless there is a regular revaluation. I hope that since the Committee stage the Government have had time to think and to decide that this clause could go.
The LORD ADVOCATE (Lord Mackay of Clashfern): My Lords, as has been said, we had a fairly full debate on this clause in Committee and in fact the Committee divided on the Question whether this clause should stand part of the Bill before it decided to retain it in tit, Bill. I accept, of course, that the valuation lists provide the tax base for the local authorities. I also accept that the longer the time between one revaluation and the next the more there is risk of anomaly growing up, but one has to balance that against the cost of mounting a revaluation. I mentioned at the Committee stage that the party of the present Government had a reasonable record in this connection as compared possibly with that of the party opposite, not to make any political point but just to underline that the Government would not willingly depart from a system of revaluation at fairly regular intervals unless there was good reason; and we consider that there is extremely good reason in the present circumstances.
The present circumstances are that the Government are engaged in a fundamental review of the rating system and alternatives to domestic rating. While this is going on it would be quite inappropriate to proceed with a revaluation previously planned for 1982. For the future it seems appropriate to keep the position flexible, as proposed in this clause and in Clause 28. Under the provisions of these two clauses we should be able to mount a revaluation in the future if that seemed desirable following our review; and under Clause 28 such a revaluation might be either across the board, or for one class of property only; for example, for non-domestic or domestic property. These possibilities exist but it would be quite wrong to seek to tie the position down more tightly
88
before the review is complete. I think that also implicit in that is that the review is going on, no decisions on this matter have yet been reached, the review has entered a very difficult stage and there is no truth at all in the suggestion that the Government have already decided what is to be the outcome of the review. Accordingly, I ask your Lordships not to agree with this amendment.
Lord DAVIES of LEEK: My Lords, may I ask a question? What I find difficult is this. We are having rapid and short-term increases in everything from postage stamps onwards and now this Bill seems to he abolishing altogether the quinquennial system while we are searching for a necessary new system of rating. The frenetic changes of costs upset more than ever the lower income groups in the case of heating, lighting and rates. In a depression period I think a little stability in this area would be worth while. My idea is that this Bill will increase instability in local rates and will cause much dissension.
Lord MACKAY of CLASHFERN: On the contrary, my Lords, there will perhaps be even more stability available in the valuation list than under a revaluation system.
Lord BOYD-CARPENTER: My Lords, may I say how much I welcome the indication my noble and learned friend has given that the Government are reviewing the rating system, because the rating system is. I think rightly, extraordinarily unpopular, very unjust in its incidence, and if a better system can be evolved, as personally I believe it can be, this will be a very great improvement indeed. May I add one further thing. If another system is evolved I hope it will take into account the impact of the rating system on industry and business. In industry we carry very heavy rate liabilities, and of course we have no local government vote. It is a classic example of taxation without representation.
Baroness BIRK: My Lords, I think we have had from the Minister an admission that the Government are considering the abolition of the domestic rate, and in the questions that followed both my noble friend Lord Davies of Leek and the noble Lord, Lord Boyd-Carpenter, were really making the same sort of point from perhaps

89
a slightly different standpoint. It seems to me what they were saying, and what I am saying in winding up on this amendment, is, if the Government are intending to change the rating system then they have no right, in our opinion, to change what is happening at the present time unless they are bringing forward a viable alternative. If they are considering changing it, then why not leave well alone at the present time?
My noble friend Lord Davies was absolutely right. The Government do not seem to appreciate that this is going to mean either a 5 per cent. increase in income tax or 5 per cent. on VAT. There really has been no argument put forward by the Minister which really substantiates what is Clause 26, and we have gone quite a bit further than at Committee stage. It does seem to me quite extraordinary that the Government should be pressing on with this when they admit that they are reconsidering the whole subject and every argument put forward has been for leaving things as they are at the moment while considering what to do in the future. If the Minister cannot now say that he has seen the point, and there seems to be a reason for looking at it again on Third Reading, I am afraid I shall have to press this amendment for the deletion of the clause.
Lord BEAUMONT of WHITLEY: My Lords, I find it slightly difficult to follow every single clause through all the stages of this very complicated Bill. Did I understand the Minister to say that on this
particular clause we had had the same amendment and divided on it at Committee stage?
Lord MACK AY of CLASH FERN: Yes, my Lords.
Lord BEAUMONT of WHITLEY: My Lords, I do not think that in the 11 years I have been in the House I have ever known the House divide on exactly the same amendment at two successive stages. I do not think that this is a precedent we should set, and I ask the Opposition Front Bench to think again.
Baroness BIRK: My Lords, if, with the leave of the House, I may reply, it is not quite the same amendment, because this amendment is to delete the clause and I think I am right in saying that the amendment on Committee was to alter the words. If the noble Lord, Lord Beaumont, thinks it is improper for the House to do this, he is wrong. This is something of such consequence—and we have heard what the Minister has now admitted, so the answer is different from the previous answer—that the House should have an opportunity to vote again. It is put in a different way.
6.54 p.m.
On Question, Whether the said amendment (No. 57) shall be agreed to?
Their Lordships divided: Contents, 52; Not-Contents, 111.

CONTENTS

Airedale, L.

Greenwood of Rossendale, L.

Oram, L.

Bacon, B.

Hale, L.

Peart, L.

Beaumont of Whitley, L.

Hatch of Lusby, L.

Phillips, B.

Bernstein, L.

Houghton of Sowerby, L.

Ponsonby of Shulbrede, L. [Teller.]

Birk, B.

Howie of Troon, L.

Boston of Faversham, L.

Jacques, L.

Rhodes, L.

Bowden, L.

Kilmarnock, L.

Ross of Marnock, L.

Brockway, L.

Kirkhill, L.

Segal, L.

Brooks of Tremorfa, L.

Lee of Newton, L.

Stedman, B.

Bruce of Donington, L.

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

Stewart of Alvechurch, B.

Chitnis, L.

Stone, L.

Collison, L.

Lloyd of Kilgerran, L.

Strauss, L.

David, B.

Lovell-Davis, L.

Taylor of Mansfield, L.

Davies of Leek, L.

McCarthy, L.

Underhill, L.

Elwyn-Jones, L.

Maelor, L.

Wade, L.

Evans of Claughton, L.

Mishcon, L.

Welis-Pestell, L.

Fisher of Rednal, B.

Noel-Baker, L.

Wilson of Radcliffe, L.

Gaitskell, B.

Ogmore, L.

Wynne-Jones, L.

NOT-CONTENTS

Abercorn, D.

Allerton, L.

Barnby, L.

Abinger, L.

Alport, L.

Bellwin, L.

Airey of Abingdon, B.

Avon, E.

Belstead, L.

Bessborough, E.

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

Murton of Lindisfarne, L.

Bethell, L.

Newall, L.

Boardman, L.

Halsbury, E.

Northchurch, B.

Boyd-Carpenter, L.

Hanworth, V.

Nugent of Guildford, L.

Brabazon of Tara, L.

Harmar-Nicholls, L.

Orkney, E.

Bridgeman, V.

Harvington, L.

Pender, L.

Brookes, L.

Hatherton, L.

Penrhyn, L.

Brougham and Vaux, L.

Henley, L.

Radnor, E.

Caithness, E.

Hill of Luton, L.

Rawlinson of Ewell, L.

Campbell of Croy, L.

Holderness, L.

Reigate, L.

Cathcart, E.

Hornsby-Smith, B.

Renton, L.

Chelwood, L.

Kemsley, V.

Ridley, V.

Colville of Culross, V.

Keyes, L.

St. Aldwyn, E.

Craigmyle, L.

Killearn, L.

Salisbury, M.

Croft, L.

Kinloss, Ly.

Sandys, L. [Teller.

Cross, V.

Kinnaird, L.

Savile, L.

Cullen of Ashbourne, L.

Kinross, L.

Soames, L. (L. President.)

Davidson, V.

Lindsey and Abingdon, E.

Spens, L.

de Clifford, L.

Long, V.

Stamp, L.

Denham, L. [Teller.]

Loudoun, C.

Stanley of Alderley, L.

Digby, L.

Lucas of Chilworth, L.

Strathcona and Mount Royal, L.

Drumalbyn, L.

Luke, L.

Swinfen, L.

Ellenborough, L.

Lyell, L.

Torphichen, L.

Elliot of Harwood, B.

Mackay of Clashfern, L.

Tranmire, L.

Faithfull, B.

Macleod of Borve, B.

Trefgarne, L.

Ferrers, E.

Mansfield, E.

Trenchard, V.

Gage, V.

Marley, L.

Trumpington, B.

Gainford, L.

Mills, V.

Vaizey, L.

Gainsborough, E.

Minto, E.

Vaux of Harrowden, L.

Glcnkinglas, L.

Monk Bretton, L.

Vernon, L.

Gormanston, V.

Montgomery of Alamein, V.

Vickers, B.

Gowrie, E.

Morris, L.

Watkinson, V.

Grimston of Westburv, L.

Mottistone, L.

Wise, L.

Haig, E.

Mowbray and Stourton, L.

Wynford, L.

Young, B.

On Question, amendments agreed to.

Resolved in the negative and amendment disagreed to accordingly.
7.2 p.m.
Lord TREFGARNE: My Lords, I beg to move that further consideration on Report be adjourned until 7.45 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.2 until 7.45 p.m.]

LOCAL GOVERNMENT PLANNING AND LAND (No. 2) BILL
Lord TREFGARNE: My Lords, I beg to move that this Bill be now further considered on Report.
Moved accordingly, and, on Question, Motion agreed to.
Clause 28 [Valuation and adjusted valuation]:
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 58:
92
Page 29, line 14, at end insert—
(" (4) Before exercising his powers under this section the Secretary of State shall consult with such associations of local authorities as appear to him to be concerned and with any other bodies with whom consultation appears to him to be desirable.").
The noble Baroness said: My Lords, I think that this is one of the amendments which was discussed rather late at night in Committee, where we were somewhat sidetracked in a discussion as to how the Bill should be printed, how wide the margins should be and whether we ought to be introducing Keeling schedules. All that we were asking for then and all that I ask again now is that we should know the outcome of the promise given in another place by the noble Lord's honourable friend, who said that he would look at the possibility of making statutory provision for consultation. All we ask is that before exercising his power under this very important clause and Section 22 of the 1967 Act, the Secretary of State shall consult with the local authority associations and such local authorities as he considers it desirable to consult.
When this Government first took office they made a decision about revaluation without adequate consultation with the

93
local authorities. The local authorities did not expect the announcement that was then made, and they think that they should at least be brought into discussions before a decision is taken. The councils, the councillors and the ratepayers all have to be taken along when we are considering these matters, because revaluation, in whole or in part, affects the level of rates and on what they ought to be spent. Therefore, it is a matter of considerable interest to all those who are involved in local government.
The local authority associations have all supported us in this amendment. They do not want to be a party to the decision itself, but they want it written into the Bill that they shall be consulted before decisions are made. Perhaps with the scarce attendance in the House we shall not get sidetracked into Keeling schedules, et cetera, tonight and we might be able to deal with this matter. I beg to move.
Lord MACKAY of CLASHFERN: My Lords, I hope that I do not carry any responsibility for sidetracking the noble Baroness. The amendment is very similar to one moved in Committee, but, with respect, I think it has been improved by reference to "other bodies" as well as to local authority associations. Notwithstanding that improvement, which I acknowledge, the Government, having considered the matter, remain opposed to this amendment. In practice we should, of course, in the event of a partial revaluation, expect to consult widely on many aspects. But the nature and timing of the consultation that might be needed must depend on the circumstances and the way in which the revaluation proposals are developed. It would tie things down too tightly to insist on statutory consultation before any exercise of powers under this clause. In the Government's view it is better to leave the clause as it stands and to rely on the assurances that I have given, that when the time comes there will be full consultation on all appropriate aspects when the powers of the clauses are exercised.
In a way, I think that to put statutory consultation into certain clauses may affect the general policy, which must be to consult with all those who have anything to contribute whenever any statutory power of this sort is to be exercised. Some
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reference was made to the decision with regard to the revaluation. I think that I dealt with that before by pointing out that a decision on the revaluation was required very quickly after the Government took office. I hope that in the light of those assurances the noble Baroness will feel able to withdraw this amendment.
Baroness STEDMAN: My Lords, naturally I am a little disappointed that the noble and learned Lord will not go a little further. Last time we had complaints that we were being rather too limiting in just restricting consultation to the local authority associations. As he said, we have widened it a little now and left him a great deal of discretion as to which other bodies he should consult. But I am sure that the local authority associations will read Hansard with care and will see the assurances that the noble and learned Lord has given, that wherever possible there will be consultations with them on these important matters. Again, with the proviso that I am a little disappointed that we have not got any further, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.49 p.m.
The Earl of RADNOR The Earl of RADNOR moved amendments Nos. 58A and 58B:
After Clause 28, insert the following new clause:
("Rating exemption for fish farms
. After section 26 of the 1967 Act there shall be inserted—
"Fish farms.
26A.—(1) Neither of the following—

(a) land;

(b) buildings (other than dwellings), shall be liable to rates or to be included in any valuation list or in any rate if used solely for or in connection with fish farming.

(2) The gross value for the purposes of section 19(2) of this Act of a house occupied in connection with land or buildings used solely for or in connection with fish farming and used as the dwelling of a person who—

(a) is primarily concerned in carrying on or directing fish fanning operations on that land or in those buildings; or

(b) is employed in fish farming operations on that land or in those buildings in the service of the occupier thereof and is entitled, whether as tenant or otherwise, so to use the house only while so employed,

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shall, so long as the house is so occupied and used, be estimated by reference to the rent at which the house might reasonably be expected to let from year to year if it could not be occupied and used otherwise than as aforesaid.

(3) In determining for the purposes of this section whether land or a building used for or in connection with fish farming is solely so used no account shall be taken of any time during which it is used in any other way, if that time does not amount to a substantial part of the time during which the land or building is used for or in connection with fish farming.
(4) In this section—

"building" includes a separate part of a building; and

"fish farming" means the breeding or rearing of fish or the cultivation of shellfish (including crustaceans and molluscs of any description) for the purpose of producing food for human consumption or for transfer to other waters but does not include the breeding, rearing or cultivation of any fish or shellfish—

(a) which are purely ornamental, ornamental, or

(b) which are bred, reared or cultivated for exhibition." ").

Insert the following new clause:
("Rating exemption for fish farms in Scotland
. After section 7 of the Valuation and Rating (Scotland) Act 1956 there shall be inserted—
"Provisions relating to lands and heritages used for fish farming and dwelling-houses occupied in connection there with.
7A.—(1) For the purpose of any valuation roll in force for the year 1981–82 or any subsequent year or for the making up of any valuation roll for any subsequent year the following provisions of this section shall have effect regarding lands and heritages to which this section applies and dwelling-houses occupied in connection therewith.
(2) This section applies to—

(a) lands and heritages (other than dwelling-houses) used solely for or in connection with fish farming; and

(b) lands and heritages consisting of—

(i) one or more buildings (other than dwelling-houses) used solely for or in connection with fish farming; or

(ii) any land occupied together with and used solely in connection with the use of such building or buildings.

(3) No lands and heritages to which this section applies shall be entered in the valuation roll, and any reference in any enactment to the person appearing from the valuation roll to be the owner or the occupier of any lands and heritages shall on and after the first clay of April nineteen hundred and eighty-one, have
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effect in the case of lands and heritages to which this section applies as if the reference to the valuation roll were omitted.
(4) Subsections (5) to (8) of section 7 of this Act shall have effect in relation to the gross annual value of any dwelling-house which—

(a) is occupied in connection with lands and heritages to which this section applies; and

(b) is used as the dwelling-house of a person engaged primarily in carrying on or directing fish farming operations on these lands and heritages or employed in connection with fish farming thereon; and

(c) is suitable in character and size for such use in connection with those lands and heritages

as they have in relation to the gross annual value of any dwelling-house referred to in subsection (4) of that section, and in that connection any reference in the said subsections (5) to (8) to agricultural lands and heritages shall be construed as a reference to lands and heritages to which this section applies.
(5) Where part of lands and heritages consists of one or more buildings and one or more parts of buildings (being a part of lands and heritages which is used for such a purpose that if it were in separate occupation it would be lands and heritages to which this section applies), then that part of the lands and heritages and the remainder shall each be treated as respects the year 1981–82 and subsequent years for the purposes of the Valuation Acts as if it were lands and heritages in separate occupation.
(6) In subsection (5) above, any reference to a building or part of a building shall be construed as including a reference to land occupied together with and used solely in connection with the use of such building or part.
(7) In determining for the purposes of this section whether during any year a building used for or in connection with fish farming is solely so used, no account shall be taken of any time in that year during which it is used in any other way, if that time does not amount to a substantial part of that year.
(8) In this section—

"fish farming" means the breeding or rearing of fish or the cultivation of shellfish (including crustaceans and molluscs of any description) for the purpose of producing food for human consumption or for transfer to other waters but does not include the breeding, rearing or cultivation of any fish or shellfish—

(a) which are purely ornamental, or

(b) which are bred, reared or cultivated for exhibition." ").

The noble Earl said: My Lords, I beg to move Amendment No. 58A and, if it is convenient to your Lordships, Amendment No. 58B at the same time, because the two are completely interrelated. If it is also convenient, perhaps I could speak to Amendments Nos. 74A and 74B, which are also related to the timing of the two amendments which I have already mentioned. Amendment No. 58A concerns the derating of fish farms in England and Wales, and Amendment No. 55B the same subject only in Scotland. Your Lordships will probably remember that there was a fairly full discussion on this subject in Committee. A number of noble Lords spoke in favour of derating fish farms throughout the British Isles, and straightening out this strange anomaly which has arisen where they are not considered as agriculture really because the industry arose since the time of the 1967 and 1971 rating Acts.
A number of noble Lords spoke in favour and no one spoke against it. The Government assured us that they on the whole were sympathetic to the idea of derating fish farms but that the wording of our amendment as then put down was not quite suitable. I believe that the wording is now suitable to the Government, and I hope that they will be able to accept these two amendments which will give the industry a chance to go ahead and fulfil its proper role in this country, and, quite honestly, give them a chance to operate on a level basis with foreign competitors who are putting fish into our markets. I was asked by the noble Viscount, Lord Thurso, and the noble Lord, Lord Cledwyn of Penrhos, to say that they are both sorry they are not able to be here. They are here in spirit, and I know that they feel strongly about this matter. I beg to move.
Baroness ELLIOT of HARWOOD: My Lords, may I support this amendment. Last week we had a debate on the fisheries industry. Although the question of fish farming did not arise, it is obvious that this is a vital food for the Community. The problems of fisheries in the EEC, particularly of our own fishing industry, are very great indeed. The question offish farming is vital. Certainly when speaking for Scotland I know that there are many interests there, and that fish farming would develop considerably if it had the
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opportunities that we ordinary farmers have in relation to rating. I hope that this matter will be dealt with favourably by the Government.
This is perhaps not actually the moment to do it, but I should like to add that the late Lady Emmet's great subject was fish farming. She spoke more often in this House on that subject than on almost anything else. I should like to pay a tribute to her work in this House, and to the fact that on this particular subject she was one of the people most enthusiastic about it. I should just like to mention that. I hope that the Government will see in this not only an important subject but one that is vital, which could be developed far beyond what it is now if given some aid.
Lord DE CLIFFORD: My Lords, may I also support this amendment. This is a young industry which needs every encouragement. Its future is absolutely vital to the food supplies of this country, and it is an industry on which we may well have to rely in times of crisis. This matter has been going on for a number of years now, and it is about time it was settled.
7.53 p.m.
Lord COLLISON: My Lords, may I in a few brief words add my support to this amendment. I am concerned with agriculture, as your Lordships know, and fish farming is a new development in the industry. I can well remember the first time that I went to India and I saw what was being done there by way of providing fish for human consumption, and in this country too this developing industry could do so much more than it is doing. It deserves support.
Baroness VICKERS: My Lords, I should like to thank the noble Lord the Minister for agreeing to this amendment, and I also congratulate the noble Earl on the fact that he raised it. It is nice to see that we have England, Scotland and Wales getting together on these amendments at this time. I should like to ask about one or two points that I am not sure about. In Amendment No. 58B it says: Provisions relating to lands and heritages used for fish farming and dwelling-houses occupied in connection therewith. Does this deal with rating?

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I have read Amendment No. 58A and, if I understand it aright, in both sections there will be no rates on the dwelling-houses if they are occupied by people actually employed in the fishing. It is essential, particularly at night when there can be a lot of stealing from some of these fish farms, and I should like to know if I have read this correctly because it would be of very great help.
When I spoke in the previous debate I brought up a question concerning a fish farm which was in an old mill and had a roof of two acres. That was rated at £13,000. I should like to know whether under these amendments we are clear of the rates in that higher proportion.
7.56 p.m.
Earl FERRERS: My Lords, in a relatively thin House it would be dangerous for a Minister to decline to accept an amendment which has had the support of every noble Lord who has spoken so far in this debate. I am grateful to my noble friend Lord Radnor for saying that he would couple with Amendment No. 58A Amendments Nos. 58B, 74A and 74B because they are all closely connected and tie up England, Wales and Scotland.
When the noble Viscount, Lord Thurso, moved an amendment with similar intent at Committee stage I said that the Government were urgently considering this matter, and that we would wish to consider it further and that was the reason why I could not accept the amendment at that particular stage. If the noble Baroness, Lady Stedman, was disappointed—and it surprised me that she was disappointed—with Lord Mackay's answer to the last amendment, that he was not able to accept it, I hope that she realised that f would be about to commend to the House that we should accept three pages of amendments, which is quite a substantial advance even on what my noble and learned friend Lord Mackay has done.
In saying this I would re-echo totally what my noble friend Lady Elliot of Harwood said about Lady Emmet. She was a forthright pursuer of fish farming interests. Since I have held this particular office she has, if I may mix my metaphors, badgered us consistently about fish farming. Indeed, she was sorry that she was
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unable to be present at the Committee stage which was just about two days before, alas, she died. I am able to tell your Lordships that the Government have decided in favour of the derating of fish farming throughout Great Britain. We have therefore been able to offer my noble friend Lord Radnor and the noble Viscount, Lord Thurso, some help in trying to draft this new clause. I can say on behalf of the Government that we would be glad to see it added to the Bill.
It might be helpful if I were to say a brief word about some of the provisions in the clause. In general, it follows corresponding provisions for agricultural derating as closely as possible, and I am sure that this is right in the interests of equity. I would say to my noble friend Lady Vickers when she asks whether dwelling-houses are derated, she will of course know that in agriculture agricultural land is derated, agricultural buildings are derated, but agricultural dwelling-houses are nevertheless rated but in a special category peculiar to themselves. That applies, and will apply, with dwelling-houses related to fish farming. They are not derated as such but they will be rated on the same basis as those dwelling-houses used in agriculture.
The rating exemption will extend to the farming of all kinds of fish for human consumption and indeed those which may relate to sporting interests. It will not, however, extend to the rearing of ornamental fish or to research establishments. Nor will it extend further down the chain to food processing establishments; in other words, factories which produce fish fingers will not be derated under the amendments. I think those are the correct parameters to be used and I commend the new clause and the amendments which go with it to the House.
The Earl of RADNOR: My Lords, I thank my noble friend for his remarks, having been forced into accepting such an enormous acreage of amendments all in one go, and echo what has been said about Lady Emmet, who was a tremendous fighter for this very new industry.
The DEPUTY SPEAKER (Lord Nugent of Guildford): My Lords, it may be convenient to take the amendments together, Nos. 58A and 58B; there is a small drafting amendment to be made to

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58B; in subsection (5) on page 7, in the second line, "and" should read "or". That correction should be made.
Clause 43 [Commencement and extent]:
The DEPUTY SPEAKER: I will now put Amendments Nos. 74A and 74B en bloc:
Amendments moved—
Page 41, line 6, at end insert
("(1A) Section (Rating exemption for fish farms) above shall have effect for any rate period, within the meaning of the 1967 Act, beginning on or after 1st April 1981.").
Page 41, line 42, leave out ("Section 42 above extends") and insert ("Sections [Rating exemption for fish farms in Scotland] and 42 above extend ").
8.2 p.m.
Baroness VICKERS Baroness VICKERS moved Amendment No. 59:
Before Clause 29, insert the following new clause:
("Rate relief for unoccupied property
In paragraph 1(1) of Schedule 1 to the 1967 Act (which provides for the rating of certain unoccupied property), for the words "three months there shall be substituted the words "one year".").
The noble Baroness said: My Lords, since the Local Government Act 1974, local authorities have been free to levy up to 100 per cent. rates on property after it has been empty for three months. A number of local authorities have used this discretion to levy between 8 per cent. and 100 per cent. on empty properties. This has created real hardship for small landlords and for people who have bought a house but have had to sell the house in which they have been living before they can move in. This has meant them paying rates on their new home before being able to take up residence. It is said that one of the reasons for this is that, although they are empty and bring no income for the owner, they still get the benefit of the services of the fire brigade and police if necessary, and it is therefore suggested there should by a payment.
There are at present in certain areas thousands of empty properties. In Devon and Cornwall, it is stated that there are as many as 24,000, and even the Borough of Islington, so I read in the newspapers,
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has 100 empty council houses. In reply to a Question, my noble friend Lord Bellwin said there were 22,700 vacant houses belonging to the Ministry of Defence, and I understand that area health authorities and water authorities have empty properties. I should like to know whether they are exempt. I know that many buildings belonging to the Ministry of Defence are exempted. In other words, is this payment intended only for private persons owning residential accommodation?
Nobody wants their property left empty and most would like to sell if possible. Another difficulty is that when a private landlord obtains possession of previously rented premises and decides to improve the property, possibly with a grant from the local authority, it would appear to me to be impossible to prepare plans, specifications, estimates and obtain approval for grant all within three months, let alone get the work done, particularly if the property needs a great many repairs. I understand that one authority has decided not to impose rates on empty houses because they have discovered that they would receive only £4,800 in rates—and of course they are not absolutely certain of obtaining that figure because some may have changed hands mean-while—but the cost of an inspector with a travel allowance would be about £7,000.
My reason for inserting one year in the amendment—of course I should like to see such properties not rated at all—is that it would give landlords a chance to make the necessary arrangements. I gather that many councils are looking for extra revenue, which is why local government may decide to take action in this sphere whereas they may not have done so up to now. For this reason I urge my noble friend, if he cannot in present circumstances waive the entire rating system in this respect, to agree that residential property should be relieved for one year instead of three months, which would give those concerned a better opportunity to get their property in order. Property left empty for some time deteriorates very quickly, which is another reason why many repairs may have to be done. I therefore hope my noble friend will accept the amendment. or even include a longer period if he thinks that is possible.
Baroness ELLIOT of HARWOOD: I support the amendment, my Lords. May I ask my noble and learned friend to say what the situation is in Scotland? In my experience empty dwelling-houses there are not rated, provided they are completely empty—that is, not containing furniture and so on—and pay rates only when they are inhabitated by people using the facilities provided by the local authority. It seems most unfair that if one has an empty house which one cannot let—one might like to but there is no possibility of so doing—one should be charged rates when one is not using any of the services supplied by the local authority. I hope the Government accept that people will be very upset if they suddenly find, through no fault of their own—because they cannot let a house—that they must pay rates on it.
Lord MOTTISTONE: My Lords, I too support the amendment, which is in keeping with Amendment No. 60, to which I shall be speaking at much greater length in due course. The basic principle, as has been said, is that it is not fair to have to pay rates on an unoccupied building. It is as simple as that and I hope the Government will take this extremely seriously.
Lord MACKAY of CLASHFERN: My Lords, the present situation in England and Wales—and it is not very different in Scotland so far as I recall—is that statutes give local rating authorities full discretion to levy rates on empty property at up to 100 per cent. of ordinary rates, subject to an initial free or grace period of three months; the amendment would increase that to one year. I should add that so far as current legislation is concerned, newly-erected dwelling-houses have a six-month period of grace. The Government are far from unsympathetic towards those whose property stands empty longer than they would wish and who must pay rates they can ill afford. Such problems are all the greater, especially for industry and commerce, in times of economic difficulty. Noble Lords will know, however, that the Government have taken steps in the Bill to improve their situation.
Clause 38 provides for the maximum level of the rates on unoccupied property and the initial grace period to be varied
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by the Secretary of State by order. Noble Lords have already heard that the Government intend to use the order-making power to reduce, with effect from 1st April 1981, the empty property maximum to 50 per cent. of ordinary rates for non-domestic property. The maximum rate for domestic property and the length of the grace period will be kept under review. I therefore hope your Lordships will agree that this is the right approach and that it is not right to get by statute a generous and unvariable grace period, as the amendment would provide. In contract, we would say that the correct approach is to put some flexibility into the scheme so that it may respond to changing circumstances in the property market. The Bill as drafted has this flexibility. The Secretary of State would have the power to come forward to Parliament with an order to vary the grace period when it seems timely to do so. I hope that, in the light of that explanation, my noble friend will feel able to withdraw the amendment, which has very much the same purpose as the more flexible approach which the Bill adopts.
Baroness VICKERS: My Lords, may I remind the noble and learned Lord of one question that he has not answered?—that relating to property belonging to the Ministry of Defence, as well as other Government property. Is this property going to go rate free?
Lord MACKAY of CLASHFERN: My Lords, I am obliged to the noble Baroness for reminding me of that point which I should have answered earlier. The situation regarding Crown property is that technically it is not liable to rates, but the Government pay a contribution in lieu of rates to the rating authority, and the same sort of situation would apply so far as they are concerned.
Baroness VICKERS: My Lords, I am obliged for that answer, though I am not very happy about the whole situation. The other point that I do not like is that relating to powers of the Secretary of State. I am on the Statutory Instruments Committee, and tomorrow we have 111 Statutory Instruments to go through. It seems that in more and more Bills the Secretary of State of whatever department is concerned is empowered to decide this and that. I am not very happy about all

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the powers given in this Bill to the Secretary of State. In the other House I was able to vote against an earlier local government Bill. I have not voted against this one entirely; I did not think there is much good going on doing such a thing. In all these Bills Secretaries of State are being given far too much power. I shall withdraw my amendment in the hope that my words have not fallen on deaf ears and that in future we shall have less of this situation of the Secretary of State ruling our lives. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.12 p.m.
Lord MOTTISTONE Lord MOTTISTONE moved Amendment No. 60:
After Clause 29, insert the following new clause:
"Rating relief for hereditaments which are (partly used
. There shall be added after section 25 of the 1967 Act the following new section—
"25A.—(1) This section applies where—

(a) the whole or part of any hereditament, which has been and remains constructed or adapted for use as a factory, mill or other premises of a similar character for use wholly or mainly for industrial purposes, is not so used (the unused part); or

(b) the whole or part of a hereditament comprising a commercial building is not used for the purpose for which it has been used remains constructed or adapted for use (the unused part)

provided that in either case no other use is made of the unused hereditament, but notwithstanding that the building or plant or machinery therein, or appurtenant land is or continues to be maintained in a workable condition.
(2) In this section, references to a hereditament comprising a commercial building are references to a hereditament (not being a dwelling-house or a hereditament having a floor space not exceeding 240 square feet and used as a lock-up garage) whose net annual value falls to be ascertained under section 19(2) of this Act.
(3) If the rating authority is satisfied upon application in the prescribed form being made to it that

(a) either paragraph (a) or (b) of subsection (1) above applies in respect of a hereditament, and

(b) the unused part under the said subsection (1) is sufficiently identified in the prescribed form then it shall request the valuation officer to apportion the rateable value of the hereditament between the unused part and remaining part of the hereditament; and if the
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apportionment made by the valuation officer is agreed by the authority and the occupier, then as from—

(1) the date upon which the unused part became unused; or

(2) the commencement of the rate period in which the request was made whichever is the later, until the event in subsection (4) below occurs the value apportioned to the remaining part shall be treated for rating purposes as if it were the value ascribed for the hereditament in the valuation list.

(4) The event referred to in subsection (3) above is whichever is the first to occur of the following:

(a) any of the unused part becomes used;

(b) a further apportionment of the value of the hereditament is made;

(c) the person in occupation of the hereditament at the time that the apportionment under this section is made ceases to be in occupation.

(5) (a) In determining whether the unused part is sufficiently identified for the purpose of paragraph (b) of subsection (3) above the rating authority shall have regard to the requirements of the valuation officer in determining whether he could reasonably carry out the apportionment mentioned in subsection (3) above if requested so to do and if either the applicant or the valuation officer is dissatisfied with the decision of the rating authority he may apply to the local valuation court who on hearing the applicant, the rating authority and the valuation officer or such of them as choose to appear before it may confirm or reverse the decision of the local authority.
(b) No appeal shall lie from the decision of the local valuation court.
(6) Without prejudice to any other statutory rights vested in any person where an application has been received by a rating authority the valuation officer may at any time enter upon the relevant hereditament to satisfy himself that the unused part is or has been or is likely to remain unused and such right of entry shall continue until any of the events mentioned in subsection (4) above occurs.
(7) (a) Where at any time in any period during which it has been represented to the rating authority that part of a hereditament is, was or will be an unused part as defined above that part or any of it was not in the opinion of the rating authority unused as so represented the authority may require rates to be paid in respect of whole hereditament as if none of it is, was or had been during the relevant period an unused part and may require interest to be paid on the said amount of rates at such reasonable rate as may from time to time be prescribed by the Secretary of State as if the whole of the said amount of rates had been due on the first day upon which any part of the rates in respect of the unused part would normally have fallen due if no application under section (1) above had been made.

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(b) Where a rating authority requires an amount to be paid by way of rates under paragraph (a) above the said sum shall be paid, without any option to pay by instalments under section 50 of the 1967 Act, on such date following the notification by the rating authority to the person liable for the rates on the hereditament upon which the next normal payment of rates on that hereditament falls due or if there is no such date on the thirty-first day after the said notification and allowance shall be made for any rates already paid on the part of the hereditament which was not represented to be unused.
(c) Where an amount falls to be paid under this subsection all rights and remedies shall be available to all parties concerned as if the said amount was a normal amount of rates and all time limits shall apply having due regard to the date for payment specified in paragraph (b) above.
(8) In this section

(a) the prescribed form shall be such form as the Secretary of State shall from time to time prescribe as being necessary for the proper application of this section.

(b) The Secretary of State shall issue regulations governing proceduses for appeals under subsection (5) above.

(c) The Secretary of State shall exercise his powers under this section by Statutory Instrument which shall be of no effect until laid before and approved by a resolution of both Houses of Parliament.".").

The noble Lord said: My Lords, in moving Amendment No. 60, with the leave of the House I should like to speak also to Amendments Nos. 72 and 72A, which are consequential on this amendment. A similar amendment on what we call "mothballing relief" was tabled in Committee and withdrawn. In the meantime we have endeavoured to improve the wording to meet the points made by my noble and learned friend at the Committee stage. At that time my noble and learned friend made a persuasive case for the earlier amendment and then sought to destroy his own argument for three main reasons. I hope to try to persuade your Lordships, and indeed the Government, that the reasons given at that time are in fact answerable; and where perhaps they were not previously answerable, they are now.
The first point made was that of the so-called
"fundamental principle that the use of part of a hereditament constitutes occupation of the whole "—
and I quote exactly my noble and learned friend's words as reported at column 340
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of the Official Report. I find that a hard fact to accept, since I have endeavoured to read the General Rate Act 1967, and it seems to me that within that Act there is provision for this so-called fundamental principle not in fact to be such.
I would go further and say that I remember an occasion back in the 1940s when my own noble father had part of his property derated because he completely evacuated it and took all the furniture, et cetera out of that part of it. As I understand it, it is still the law that one can do that. Therefore it seems to me odd that it should be regarded as a fundamental principle that the use of part of a hereditament, presumably the part one is living in, constitutes the occupation of the whole when I have had practical experience of that not having been so, at any rate in the 1940s.
Secondly, my noble and learned friend referred to the question of definition, interpretation and enforcement. We fully recognise that those three points are valid, and indeed we have attempted to deal with them in the extensions to the amendment, and it is in this area that the amendment differs from the earlier one. I shall come back to that. The third point is that in effect my noble and learned friend said that industrial and commercial judgments would be seriously affected, and, he implied, detrimentally affected, by the fact that if the amendment were passed, businesses would be enabled to reduce the rates that they paid on part of their property.
I have sought not to labour your Lordships with the argument that I produced at the Committee stage, since I think that to do that is terribly dull, though one often hears it from noble Lords opposite. I try to avoid it myself. However, I must refer back slightly to the extent that the whole point of my argument on Committee was concerned with firms making judgments on properties. At the moment businesses are having to operate in rather adverse circumstances, with high interest rates et cetera. If possible they should be helped to make a judgment in which they can say, "Don't sell that property", or "Don't vandalise this property "—and both those things have happened in order to get over this very point—so that they could feel that at least payment of rates will be cased during this time of difficulty. When

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things look up in the next couple of years, as I am fully confident they will, the firms can then use that part of their premises and the plant within it which had been taken out of use, and they would then pay rates on that part as heretofore.
But all this is a matter of commercial judgment and of encouraging the wealth-earning part of our overall industry to take not snap decisions, but longer-term decisions. Therefore, I should have thought that that third argument of my noble and learned friend was not wholly reasonable.
Fourthly, there was the argument of who pays if the business does not pay the full rates even though it is not occupying all the premises? I found it extraordinary that a responsible Government, a reasonable Government, even a Conservative Government, could put forward such an argument. Surely it must not be a fact of life that industry must be clobbered somehow, and that if it is not clobbered in this way, it will be clobbered in another way. That is an upside down way of looking at things. Surely what the Government are saying in all kinds of other areas, what I am endeavouring to support them in saying, is that wealth-earning productive industry needs encouragement at every corner, whether it is small businesses or large ones. Without that all the services provided—whether they be service industries, local authorities, or central government itself—have nothing on which to build.
This is a very fundamental point. To ask, who pays for the relief if someone is being encouraged to keep his business going when otherwise he might have to go to the wall, strikes me as an argument which I am sure my noble and learned friend would not put forward if he stopped to think, and an argument of which the Government could never be proud.
My noble friend Lord Harmar-Nicholls gave great point to the fact-I am delighted to see my noble friend enter the Chamber as I mention his name—that basically all the arguments that my noble and learned friend Lord Mackay of Clashfern put forward were those of the bureaucrat, and that the bureaucrat is here to serve us, to do his best to make life easy for people. It is not for him to say, "Oh, we can't do that
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because it is bureaucratically difficult." I think that that is the sense of the argument that my noble friend put forward.
I would repeat that and add not merely is that the case, but really the Government must recast their approach to this question. I realise that the situation can be difficult, with a long Bill and with many things to think about when one is trying to balance everyone's efforts. But, in terms of being a responsible Government, it is going a bit far to be taken for a ride by people who might find things administratively difficult.
To come back very briefly to the points on which we have sought to amend this amendment in order to take care of the Government's points, which were obviously very sensible ones—I say that hesitantly—the identification and definition of the particular types of property are spelled out within the added subsections. There are only two points, really, that I would make. One is that it is so written that if the valuation officer feels that he cannot reasonably identify the part of the property which is to have its rates reduced or be de-rated, then it is not a starter. It entirely depends on the valuation officer's being confident that he can do this, and that is taken care of in (I think it is) subsection (5)(a).
The second point we make, which is a point of which my noble and learned friend made quite a lot, is that the valuation officer may at any time—and this is in subsection (6)—enter upon the relevant hereditament to see that it was not being used; in fact, that people were not cheating. I should like to think that those supplements, coupled with the fact that on reflection my noble and learned friend may think that his earlier and other arguments do not really stand up as those of responsible government, may enable him to see his way to accepting my amendment. I beg to move.
Lord MACKAY of CLASHFERN: My Lords, my noble friend has come back to this point with his usual vigour, and has provided a new clause which attempts to deal with some of the matters I raised—which I must say I do not regard as bureaucratic, or as irresponsible. The main provision that is made for dealing with the definition of an unused part of a hereditament is by providing that the rating authority:
"shall have regard to the requirements of the

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valuation officer in determining whether he could reasonably carry out the apportionment".
My Lords, I do not think that this has achieved its purpose. There are very real difficulties in defining an unused part of a hereditament, and the amendment would do nothing to overcome them. I shall come a little later to my noble friend's experiences of the 1940s, because I think that is a slightly different point. The amendment would leave these difficult issues to the local valuation courts to resolve, which is a formula for uncertainty, inconsistency, and a great number of contested appeals. Nor am I happy about the provision in subsection (5)(a) for there to be no appeal beyond the decision of the valuation court. If the solution proposed is that of leaving it to the courts to settle all the difficulties, then I should have thought that the possibility of appealing to a higher court would require to be brought in—not that I am suggesting that that would be satisfactory, either.
However, this is simply to find fault with the clause as drafted, and my noble friend might, with justice, feel that if there is a way to overcome these practical difficulties then it is for the Government to find it and draft a suitable clause. Let me therefore return to the nature of these difficulties and ask your Lordships to consider whether a satisfactory formulation could be found.
I would suggest in relation to what has been criticised as bureaucratic that one commonly finds in legislating or devising rules for rates and other taxes that each attempt to bring relief to one group of people brings into question the fairness with which one is treating closely analogous cases. With exemptions and reliefs from taxes, the borderline can be shifted this way or that in response to pleading on behalf of particular groups. What is generally needed is a line drawn where it is most readily understood and defended, and where it gives rise to the least number of anomalies and inequities. The difficulty with this sort of relief is that it erases what is currently a clear line in rating; that is, that the occupancy of a hereditament is the unit, and that something less than a hereditament is not really a unit which is recognised for rating purposes. In place of this fundamental principle the clause would give relief to an office occupier who left much of his office empty, but not
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to an old person living now in only part of a house. The line would bring relief to a firm that was able to close down specific areas of floor space, but would leave fully rateable another whose factory was now at less than full production but operational in all its parts.
It may help to consider some examples. Imagine a large steel works that has two boiler houses; one is used throughout the year, but the other provides supplementary heat for only three winter months. Consider blast furnaces at a steel works where a furnace is put out of action for nine months or more so that it can be relined but perhaps not all of that time is needed for re-lining work. Consider factories for sugar beet processing, where plant is used only from September to January; and so on. One could multiply examples fairly readily. I should like to emphasise that it is not my intention to say that a statute could not distinguish between one case and another. Rather, my point is that in attempting such fine distinctions as this the statute would give rise to new anomalies, new grievances, new accusations of unfair treatment. In comparison, the present concept has served for many years without a great deal of complaint, is readly understood and, I hope, reasonably readily defended.
My Lords, I have been speaking of the difficulties of defining an unused part of a building. We should not forget the cost to the public sector of reasonable steps to police such an exemption. As drafted, the amendment would provide that the valuation officer should inspect premises when called on to do so; and it appears from subsection (5)(a) that either the ratepayer or the rating authority may take the initiative in asking for a reassessment to be made. It is easy to imagine that in major industrial or commercial centres, with hundreds of business hereditaments, the valuation officer and his staff will be kept very busy just making inspections in response to claims, both from ratepayers and from rating authorities, either side claiming that a floor area has changed or a piece of equipment has been switched on or switched off.
I should also say, as I did in Committee, that no one knows what the cost of these proposals would be, and the proposers themselves have so far not produced any figures. I think the cost would probably

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be quite substantial, not only of the actual relief but of the steps necessary under this amendment for setting it up; and all these costs would have to fall on other ratepayers or national taxpayers. My noble friend refers to the wealth-producing part of our economy, and, of course, I go along with him a great deal in that; every possible encouragement is needed to the wealth-creating sector of our economy. But the burden would fall on other wealth-producers if his particular proposal were accepted.
Perhaps I could say in conclusion that my noble friend's experience to which he refers in relation to the 1940s is, I think, a reference to the present law under which the clearer cases of mothballing are already catered for. Where it is possible for a building or a part of a building to be rendered suitable for separate occupancy, then the unused area can legitimately be described as a distinct hereditament and valued accordingly. Of course, if that distinct hereditmant is not in use, then the exemption applies. What my noble friend is trying to do, with respect, is to extend that principle into a completely uncharted area, where the difficulties of definition to which I have referred would be substantial. Where they are not substantial you can get relief just now. The ratepayer has the right to propose that a hereditament should be split in this way, and many cases arise. At one end of the spectrum there may be a shop with an unused flat above: at the other end, we find the office block with unused floors or the factory with unused units. Finally, may I remind noble Lords that in regard to the new provisions for empty property rating in this Bill the Government will bring forward an order under Clause 38 to ensure that wherever a hereditament as a whole is empty rates will be kept below a ceiling of 50 per cent. This will be to the benefit of many non-domestic ratepayers. Therefore, as before, I am very sympathetic to the point behind this amendment, but, for the reasons that I have given, we do not feel able responsibly to accept it. I hope that the noble Lord will withdraw it.
Lord BOYD-CARPENTER: My Lords, I do not think that my noble friend Lord Mottistone would claim that his carefully
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drafted amendment was free from flaws. But, with respect, I do not feel that my noble and learned friend the Lord Advocate has done justice to the very important issue of principle which arises from it. I could not help feeling during some parts of my noble and learned friend's speech that if the rating system necessarily involved such injustices and anomalies as exist at present there was a very strong argument relating to an earlier discussion for getting rid of the rating system itself.
There is here a very practical problem which anyone with connections with industry or commerce knows only too well is very relevant at the moment. Great firms, famous companies, are closing parts of their plants or of their offices and if one simply leaves the position as at present one is presenting them with the alternative of having to pay heavy rate payments when they are, as a matter of definition, earning no profits out of that part of the premises, or, as my noble friend has said, selling them or vandalising them, hereby excluding the possibility of putting them back into use when times get better.
Everybody in this House, and, I know, in the Government, is desperately concerned about levels of employment. If plants can be kept (although they cannot be used at the moment) in possession of their owners and ready to be put back when demand increases, the problem of unemployment will be of shorter duration. But if the whole force of the rating system is to be used—and that is how it works in many cases at the moment—to compel them to get rid of the unprofitable burden of a partially empty building attracting high rate payments, it will take all the longer to find appropriate premises when things get better, in which to give additional employment.
Therefore, notwithstanding all the difficulties I hope that my noble and learned friend will look at this further. I know very well from my own experience during two stints at the Treasury that my noble and learned friend is right when he says that when you try to remedy anomalies it is only too easy to create further ones and that the pursuit of some improvement can carry compensating disadvantages. All of us who have been involved in these things know that that is so. But I do not

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think that that dismisses the strength of the case of my noble friend Lord Mottistone. I hope that the Government, even at this stage of the Bill, can offer a little more than my noble and learned friend the Lord Advocate has offered us.
Finally, he used the argument which my noble friend Lord Mottistone anticipated which, if I may say so with respect, seems a poor one. He said that if you exempt these parts of these buildings from rates then the burden will fall on somebody else. Let us analyse that. If a local authority finds that the rateable value subject to its imposts is reduced, it is up to that local authority to reduce its own expenditure pro tanto and not simply to transfer the burden on to its otherwise heavily-burdened ratepayers. Every local authority in the country knows that it has to some extent to adjust its expenditure to the amount of rateable value available to its imposts. This, with respect, is what local authorities should do, and, I believe, could do, if they tried.
I do not know what my noble friend Lord Mottistone is going to do on this amendment, but I should like my noble and learned friend on the Front Bench and the House to realise that in the present state of industry and commerce this is an issue of much greater importance probably than anything else we have discussed this evening and does demand, if he will allow me to say so—and I have the greatest admiration for him—a rather more understanding and sensitive treatment than he has so far given it.
Lord HARMAR-NICHOLLS: My Lords, the noble and learned Lord the Lord Advocate said that he was not being bureaucratic; but I thought that his answer was the most obviously bureaucratic answer that I have heard from the Dispatch Box for a long time. In effect, he said, "We recognise that something should be done in this field"—that is surely what he meant when he said that he had a certain sympathy with the idea behind it—"but we must not make any attempt to do it now because, by moving the dividing line, it may create anomalies somewhere else; we must let everybody suffer because in relieving people who deserve relief from it it may be that other people will not be having the same advantage ". I do not think that anybody
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expects in this world that in remedying what is an unfair state of affairs one can put it right for everybody. I should have thought that where there is an opportunity to put it right even for a few, that ought to be done. The words that my noble friend Lord Mottistone has on the Marshalled List may not be the right words, but if the noble and learned Lord's department and his colleagues in Government really want to turn that sympathy which he said he had into real effect, they could find acceptable words which would fit into this Bill as it now stands.
I would re-echo the point made by my noble friend Lord Boyd-Carpenter. If we are not going to recognise now that industry and commerce deserve special thought and special aids if they can be given I tremble to think what the situation will be that we are going into over the next 12 months or two years where we know we shall have real problems. Commerce and industry can do nothing about the world recession. That is not within their parameters. I think they recognise that they cannot do anything about the interest rates which are so great a burden on running their businesses, but in order to defeat inflation they accept that they must remain. They do not now expect any drastic reductions in general tax, because they know we are committed to defence and to maintaining the general standard of living in this country which people expect.
But they are entitled to think, when it comes to the level of rates where they are being asked to pay for something they are not using, that the Government (and particularly a Conservative Government who are supposed to have sympathy and understanding for the problems of private enterprise) ought to go to a great deal of trouble to find words which will give relief—and it will be only a modest relief—against all imposts and expenses that commerce and industry have to pay today.
I was not at all impressed when he said that we may want extra values in order to justify the expenses. As I said at Committee stage, there is no need for that. The Government are prepared to accept a certificate issued by a chartered accountant as to what the profitability of a company is and on which tax would be levied. Why cannot the same accountants whose integrity and understanding is high

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because their very existence depends on their integrity issue a certificate, to say that this part and other parts of premises have not been used in the course of a particular year. I believe that this is an occasion where the sympathy which my noble and learned friend expressed could be translated into practical action. It would be fair, but even above fairness, I think it would be letting commerce and industry know that where help could be given this Government would be prepared to give it at a time when they are asking them in the national interest to accept many other imposts, which it is not within their power to do anything about.
Lord MORRIS: My Lords, in supporting my noble friend Lord Mottistone and other noble friends on this particular issue, which I supported also at Committee stage, I would ask Her Majesty's Government to consider it very carefully indeed. As noble Lords are aware, my noble and learned friend in no way proferred an argument against the principle. He mentioned the difficulties in definition, the difficulties about location, the difficulties of policing. As my noble friend Lord Harmar-Nicholls so rightly said, there will be no difficulties at all if the hereditament is properly metered for power, for water, for electricity. These are matters of fact, and it can be evidenced quite clearly that if the power charges are not paid it is because the building is not occupied. I cannot see the difficulty there at all. If this particular point became law it might have the extremely healthy effect of concentrating the minds of local authorities on their industrial ratepayers' needs rather more than is the case nowadays, if a monetary proportion of their rates were not paid because of non-occupation. I would implore my noble and learned friend to consider these issues with his normal great care.
Lord MACKAY of CLASHFERN: My Lords, by leave of the House, I should like to say that I certainly do not wish to give any impression that I am not sympathetic to the matter which has been raised by my noble friends; I hoped I had said that on the earlier occasion. But I do believe that what is proposed here involves a fundamental difficulty of principle in giving this kind of relief through the rating system, for the reasons I have sought to explain. Taking the
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example that my noble friend Lord Boyd-Carpenter mentioned, I think that where there is an identifiable area of a factory which is not used and that can properly be regarded as capable of separate accommodation, then relief is available. That is as far in this direction as it is possible to go under the present system of rating. But, as noble Lords know, the Government are very much committed to examining the rating system with great care to see whether there is some better system available, because the rating system in its nature must build on units which are hereditaments, and if one once goes beyond that one is into a very uncertain area indeed, a very difficult area to define.
I should like to pay tribute to the care with which my noble friend Lord Mottistone has proposed this amendment. He has endeavoured to grapple with the difficulty, but in grappling with it he is forced to a situation where it is entirely a matter of discretion for the local valuation officer. With all my noble friend's care, I am sure that if a better definition, a more satisfactory principle were available to separate out from others the cases he wants to benefit, he would have found it. The very fact that with all his care and all his attention to the matter this is the best he is able to do indicates the difficulty in principle that we face in this area. The point is not a bureaucratic one. It is a point about the limitations of differential relief which the rating system, as presently constituted, is capable of producing. The Government are heavily committed to try to improve on that rating system. It is not easy to see how to do it, but this is something that certainly we are endeavouring to pursue.
I shall read very carefully all that has been said, as I read what was said on this amendment at Committee stage, but knowing the situation as I do it would be quite unfair on my part if I were to give the House any impression that I was in a position to give anything on this particular matter. We have thought about it very deeply. I personally have thought about it a great deal, not without some experience in practice of trying to operate the rating system in a professional capacity. It is against that background that I say very seriously to my noble friends that we have thought about it very carefully indeed and it is with the greatest regret that I do not feel able to commend it.
Lord RHODES: My Lords, before the Lord Advocate sits down, may I ask him if he would examine what the Italians and the Japanese do in similar circumstances? In those countries, when there is a depression the unit of production is the one that is dealt with and the mothballing is commanded by the Government. It is the unit of production on which they give relief; it is not the building.
Baroness VICKERS: My Lords, when my noble and learned friend replied a few minutes ago to my question about the Ministry of Defence property I thought he stated that there were special arrangements for empty houses. The figure I was given the other day was 22,700. Whose word do they take that these are all empty? It has been suggested that the auditor could do it. Whose word is taken that there are 15,000 or 20,000 empty houses?
Lord MACKAY of CLASHFERN: My Lords, with the leave of the House, I should like to answer that question. So far as Government property is concerned, the situation is that being in the possession of the Crown it is not subject to the rating law, as that is laid down by statute, but by agreement the Government make a contribution in lieu of rates to the appropriate rating authority. These matters are much more capable of being dealt with by a discretionary arrangement of that sort than they are under the terms of the statute. Of course, the statute applies generally indiscriminately to all ratepayers and potential ratepayers. The difficulty of applying that system, the statutory system, to the situation my noble friend Lord Mottistone has raised is our fundamental difficulty here.
Lord MOTTISTONE: My Lords, I am not in the least bit satisfied, though I fully see my noble and learned friend's difficulty. He did not take up the point
that my noble friend Lord Boyd-Carpenter made and which my noble friend Lord Harmar-Nicholls endorsed. This is a special situation; it is not normal. We are in an altogether abnormal situation. We must encourage productive industry. There is an attitude of mind and a steady looking at things from the point of view of the administrators, who do not want to have things untidy, do not want to be faced by the fact that whenever one produces a borderline one creates anomalies and difficulties. I know that from practical experience. My noble friend Lord Boyd-Carpenter was saying how he knew it. I know it, too, but the fact of the matter is that we must get through to the Government the realisation that this is of much greater importance than just an amendment to a Local Government Bill. It is a matter of attitude of mind which is fundamental not just to the administrators of the country but to the country as a whole.
We have got to earn our living, and until we are really earning our living we cannot face up to the world; we cannot pay for all the splendid things we would like, including local government. With that in mind and with the thought that. with a push, perhaps the Government might come back at Third Reading with something of their own, which is what I was hoping my noble and learned friend would offer to do, rather than just to look at things—we are too far down the road for that-I must test the feeling of the House and see what it feels about this amendment and about the need to encourage productive industry.
8.49 p.m.
On Question, Whether the said amendment (No. 60) shall be agreed to?
Their Lordships divided: Contents, 59; Not-Contents, 61.

CONTENTS

Airey of Abingdon, B.

Elliot of Harwood, B.

Houghton of Sowerby, L.

Birk, B.

Elwyn-Jones, L.

Howie of Troon, L.

Boardman, L.

Gage, V.

Kaldor, L.

Bowden, L.

Gainford, L.

Kemsley, V.

Boyd-Carpenter, L.

Gainsborough, E.

Killearn, L.

Brooks of Tremorfa, L.

Gaitskell, B.

Kirkhill, L.

Bruce of Donington, L.

Greenway, L.

Lee of Newton, L.

Chelwood, L.

Haig, E.

Llewelyn-Davies of Hastoe, B.

Collison, L.

Hanworth, V.

Lovell-Davis, L.

David, B.

Harmar-Nicholls, L.

Macleod of Borve, B.

Davies of Leek, L.

Hatch of Lusby, L.

Maelor, L.

Ellenborough, L.

Hill of Luton, L.

Mishcon, L.

Peart, L.

Stedman, B.

Monk Bretton, L.

Pitt of Hampstead, L.

Stewart of Alvechurch, B.

Monson, L.

Ponsonby of Shulbrede, L.

Stewart of Fulham, L.

Morris, L.[Teller.]

Radnor, E.

Stone, L.

Morris of Kenwood, L.

Renton, L.

Strauss, L.

Mottistone, L. [Teller.]

Rhodes, L.

Underhill, L.

Mountevans, L.

Ross of Marnock, L.

Vickers, B.

Northchurch, B.

Spens, L.

Wynne-Jones, L.

NOT-CONTENTS

Abercorn, D.

Ferrers, E.

Reigate, L.

Airedale, L.

Gowrie, E.

St. Aldwyn, E.

Alport, L.

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

Sandford, L.

Avebury, L.

Sandys, L. [Teller.]

Avon, E.

Harvington, L.

Savile, L.

Beaumont of Whitley, L.

Hatherton, L.

Soames, L. (L. President.)

Bellwin, L.

Holderness, L.

Stanley of Alderley, L.

Belstead, L.

Hooson, L.

Strathcona and Mount Royal, L.

Brabazon of Tara, L.

Hornsby-Smith, B.

Torphichen, L.

Brookes, L.

Lloyd of Kilgerran, L.

Tranmire, L.

Brougham and Vaux, L.

Long, V.

Trefgarne, L.

Campbell of Croy, L.

Lucas of Chilworth, L.

Trenchard, V.

Carr of Hadley, L.

Lyell, L.

Trumpington, B.

Cockfield, L.

Mackay of Clashfern, L.

Vaizey, L.

Cullen of Ashbourne, L.

Mansfield, E.

Wade, L.

de Clifford, L.

Marley, L.

Watkinson, V.

Denham, L. [Teller.]

Middleton, L.

Winstanley, L.

Digby, L.

Mowbray and Stourton, L.

Wise, L.

Drumalbyn, L.

Murton of Lindisfarne, L.

Wynford, L.

Evans of Claughton, L.

Nugent of Guildford, L.

Young, B.

Faithfull, B.

Pender, L.

On Question, amendment agreed to.

8.58 p.m.
Clause 30 [Payment by instalments]:
Lord MOTTISTONE Lord MOTTISTONE moved Amendment No. 61:
Page 31, leave out lines 7 to 10 and insert—
("(5) This section shall extend to all hereditaments provided that in the case of a hereditament (not being a domestic hereditament) whose rateable value exceeds a prescribed sum the date from which under subsection (1) above rates fall to be paid by instalments shall be 12 months later than the date which would apply but for this proviso.").
The noble Lord said: My Lords, this amendment is also an improvement on an earlier one moved at Committee stage in which we were seeking to get instalment payments for all industry and not just for the smaller firms for which the Government, most wisely, have made or are planning to make provision. Indeed, my noble and learned friend at Committee stage said that he hoped that what the Government were proposing to do would extend instalment payments to 85 per cent. of non-domestic ratepayers. Business must be grateful for this. It certainly gives encouragement to small businesses.
However, there is a principle involved,
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as I have just tried to persuade the House. The principle here is of interest to productive industry. I will not run over the whole background again; but surely it is right that if we are to have payment by instalments, the interests of industry should come first and local authorities should adjust themselves to it. My amendment proposes that there should be a delay period of 12 months in which local authorities can adjust their administrative procedures to take care of instalment payments for all industry and not just for the smaller firms. I hope that this modification will appeal to the Government and that they will feel that this time they can accept the amendment. I beg to move.
Lord MACKAY of CLASHFERN: My Lords, as my noble friend has reminded your Lordships, we believe that the provisions already in the Bill will benefit most of the business sector but that some limits are necessary to balance the help to businesses against the risk of damage to local authorities' cash flow, which in turn will affect their ratepayers.
The Government believe it is right for limits to be set by the Secretary of State and that the minimum and maximum proposed are the best in present circum-

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stances. That does not mean that the limits, and indeed the need for them, will not be reviewed. It is a matter of judgment and the Government believe they have got it right at the present time. My noble friend's amendment would go further. It would extend the right to pay by instalments to all properties after 12 months, irrespective of the effect of its limited operation on local authorities' finances during those 12 months.
As I have explained, I think this goes too far, and I must advise the House against accepting this amendment. However, I can assure my noble friend that the Government will keep the proposed limit under review and indeed also the need for maxima of any sort. We shall be in a better position in a year or so to assess how the new provisions are working out and whether there is scope for any adjustment. I hope that, on this understanding, my noble friend on this occasion will feel able to withdraw his amendment.
Lord MOTTISTONE: My Lords, that indeed was a much more satisfactory undertaking than the noble and learned Lord was prepared to give me before. I am most grateful to him, and I understand that, as things progress and as the country does better, there will be an opportunity for this gradually to be extended until all industry is involved. With that, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn,
9.3 p.m.
Baroness BIRK Baroness BIRK moved Amendment No. 62:
After Clause 36, insert the following new clause:
("Abolition of rating surcharge on unused office etc. property
.—(1) Subject to subsection (2) below, sections 17A and 17B of the 1967 Act (rating surcharge on unused office etc. property) shall cease to have effect on 1st April 1981, and accordingly no person shall be liable to pay any surcharge under the said section 17A in respect of any period after 31st March 1981.
(2) Subsection (1) above shall not affect—

(a) any liability for a surcharge in respect of any period before 1st April 1981; or

(b) any offence under section 82, as applied by section 17B(1), of the 1967 Act committed before that date.").

The noble Baroness said: My Lords, this amendment was tabled very rapidly after the Committee stage and, because of the lack of time and the size of the Bill, it was tabled before we were really able to go over very carefully what had been said at Committee stage. I think it was the noble Earl. Lord Ferrers, who said that the Government did intend to include in the order the necessary provisions to achieve the effect that we wanted to achieve through the amendment. In view of that, unless the Minister is going to whittle away any of that or erode those assurances, I would be quite happy to withdraw the amendment at this stage.
Lord MACKAY of CLASHFERN: My Lords, in view of the attitude taken by the noble Baroness on the matter, I think it would be best for me to say nothing at all.
Amendment, by leave, withdrawn.
Clause 37 [Suspension of provision for liability to progressive surcharge in respect of unused office etc. property]:
Lord RENTON Lord RENTON moved Amendment No. 62A.
Page 35, line 25, leave out ("direct that") and insert ("suspend the operation of").
The noble Lord said: My Lords, I beg to move this amendment, and I suggest that in discussing it we should refer also to Amendment 62B which is over the page. This is a short and technical point, and I can ease the minds of the Government in these perilous times by saying that I do not intend to divide the House. It is a rather strange position that is produced by Clause 37, subsections (1) and (2), because we find that the Secretary of State "may by order direct" that certain provisions of a previous Act (the 1967 Act) "shall cease to have effect". That is said in subsection (1), but when we come to subsection (2) we find that he may bring them into force again. The words "shall cease to have effect", as the noble and learned Lord the Lord Advocate will remember from an interchange we had earlier this year on another Bill, are the words invariably used by the draftsmen when what they really mean to say is "repeal". I do not know why they go on using the expression "cease to have effect"—"repeal" or "be repealed" is

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much shorter—but here it happens that they have used it when it seems to mean that they do not mean it or ought not to mean it. What they mean is that the Secretary of State may by order suspend the operation of these provisions of the 1967 Act, and that is what I think we ought to say. That would be the effect of my two amendments taken together. Accordingly, I beg to move.
Lord DAVIES of LEEK: My Lords, very briefly, I support the noble Lord, Lord Renton, as before. With his trained mind, he eliminated phraseology that was in the imperative mood. The mood of language is one of the things that I object to through much of this Bill, and I wholeheartedly support him here because there is this tendency to over-centralise and to put things all the time in the imperative mood with Government. I hope sincerely that this amendment will be accepted because it is modified and yet it brings about what the Government want.
Lord MORRIS: My Lords, I believe that the draftsmen, wittingly or unwittingly, are supporting the noble Lord, Lord Renton. If one looks at the side-note it says, "suspension of provision …", which directly ties in to the improved drafting of the noble Lord, Lord Renton.
Lord MACKAY of CLASHFERN: My Lords, the object of this provision is to suspend the operation of the provisions in a sense, but I think it is wise in this particular area to use words which have themselves a definite effect. What we want to achieve is that once the order is made the sections in question are treated as if they were repealed. In the future it may be necessary to revive them, in which case an order-making power is provided. But the advice I have been given—and I believe it is correct—is that the wording that we have used here follows well-established precedent for a situation of this kind and that it would be undesirable to depart from it without justification. I therefore hope that my noble friend will feel able to withdraw this amendment, in the light of that assurance.
Lord RENTON: My Lords, I begin to wish that I had not said that I would not divide the House. But I still have no intention to do so, in spite of the answer which has been given by my noble and
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learned friend, which seems to be based on the proposition that because a thing has been done frequently before it was necessarily always right. That is often the case and, as Conservatives, we often think that. But I must confess that this particular drafting gambit is one which cannot appeal to reason. I really think it is time that the parliamentary counsel abandoned it, although I realise that on this occasion I have not succeeded in getting them to do so. Sadly, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 62B not moved.]
Baroness DAVID Baroness DAVID had given notice of her intention to move Amendment No. 63:
After Clause 37, insert the following new clause:
("Repeal of s. 21 of Local Government Act 1974
. Section 21 of the Local Government Act 1974 (valuation lists not to be altered on account of minor structural alterations to dwellings) shall cease to have effect.").
The noble Baroness said: My Lords, rather reluctantly, particularly in the light of the decision of the House on Clause 26, I shall not move this amendment.
Clause 38 [Rating of unoccupied property]:
9.9 p.m.
Baroness BIRK Baroness BIRK moved Amendment No. 63A:
Page 36, line 1, leave out subsection (2).
The noble Baroness said: My Lords, if I may, I will speak to Amendments Nos. 63A, 63B, 68 and 69. These are all concerning Clause 38 which is a new clause introduced by the Government. If enacted, it would increase the Secretary of State's power to prescribe how the empty property rate provisions of the General Rate Act 1967 may be used.
The Act of 1967 provides that a local authority may not levy empty property rate until a property has been empty for three months. After that period has elapsed, the authority may levy an empty property rate as it considers appropriate. Subsections (2) and (3) of Clause 38 would enable the Secretary of State to vary the time for which a property may remain empty before a local authority may levy

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empty property rate, and would also enable the Secretary of State to set different time limits for different classes of property.
The local authority associations have always argued that individual local authorities are in a better position to determine the needs and problems of their area than central Government. This is as true when the issue is the use, or non-use, of empty property rate, as it is for decisions on the level of services provided. If subsections (2) and (3) of Clause 38 are enacted, the Secretary of State will in effect be able to say that he knows better than any local authority whether, for example, a commercial property should be exempt from empty property rate for a period of six months or a year, while exempting industrial property for three months or three years.
This is yet another example of central Government, particularly the Secretary of State—and the noble Baroness, Lady Vickers, drew very emphatic attention to this on an earlier amendment—attempting to erode the autonomy of local government in a field where central Government or the Secretary of State are not really equipped to take decisions. This ties up—without my repeating it all over again—with the argument for subsections (2F) and (2H), which are covered by Amendments Nos. 68 and 69. My Lords, I beg to move.
Lord MACKAY of CLASHFERN: My Lords, the purpose of the various provisions against which these amendments are directed is to give the Secretary of State some flexibility to help those whose property stands empty for longer than they would wish, and who must pay rates that they can ill afford. Such problems are all the greater, especially for industry and commerce, in times of economic difficulties. Noble Lords will appreciate that the Government have taken steps in this Bill to improve the situation. Although no immediate change is proposed, the length of the grace period will be kept under review and I hope your Lordships will feel that this is the right approach.
This does not destroy the discretion of the local authority. All it does is give power to vary the grace period, and power to vary the maximum which may be im-
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posed, leaving the local authorities with their discretion to apply these periods or these maxima to particular situations. This, indeed, was one of the matters that my noble friend Lord Mottistone was anxious to secure in the amendment on which we divided a little while ago, in which noble Lords opposite supported him. I find it difficult to see how, in that situation, they could support this amendment.
Lord MONSON: My Lords, as we appear to be speaking on three amendments, I should like to support the noble Baroness, Lady Birk, in Amendment No. 69. When we discussed this clause in Committee I drew attention to the evident unfairness in the Government's intention not to grant relief in respect of domestic properties which remain vacant. The noble Earl, Lord Ferrers, talked about sticks and carrots and said that this was the necessary stick to induce landlords to let empty properties. However, it has been drawn to my attention since then that in a Commons reply on 15th May the Minister, Mr. Tom King, said that the Government had reached the conclusion that this was not an effective way of inducing landlords to let, which seems to contradict entirely what the noble Earl said in Committee. For that reason I am reinforced in my contention that this claim is unfair to owners of domestic property, and certainly so far as Amendment No. 69 is concerned I hope that the Government will think again.
On Question, amendment negatived.
[Amendment No. 63B not moved.]
9.15 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 64:
Page 36, line 21, at end insert ("and the amount of any rates payable by the Corporation in respect of office premises not situated on operational land shall be the specified proportion of the amount which would be payable if the Corporation were in occupation of them.").
The noble Baroness said: My Lords, may I at the same time speak to Amendment No. 65, because both amendments are similar. In each case they are only fairly small points. Amendment No. 64 is to enable the sub-paragraph as printed in the Bill to close a loophole in the General Rate Act 1967 whereby local

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authorities are unable to charge rates on unoccupied gas board showrooms. The local authorities also have had difficulty in collecting rates on unoccupied gas board offices as distinct from showrooms. One London borough has just lost such a case in the magistrates' court. If the noble and learned Lord were to accept Amendment No. 64 it would allow authorities to charge rates on empty office accommodation belonging to the gas corporation. If he were extremely generous and accepted Amendment No. 65 as well, that would refer to the electricity boards rather than to the British Gas Corporation. I beg to move.
Lord MACKAY of CLASFIFERN: My Lords, in the situation which exists here I certainly undertake to look at this matter urgently, to see whether we can do anything to meet the wishes of the noble Baroness on this point and, if necessary, table an appropriate amendment at Third Reading. I hope that this generous attitude will be appreciated.
Baroness STEDMAN: My Lords, I do not know whether I shall stay the course until 12 o'clock if the noble and learned Lord becomes so generous. I am most grateful to him and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 65 to 69 not moved.]
Lord MONSON Lord MONSON moved Amendment No. 70:
Before Clause 39, insert the following new clause:
("Rates not to be increased above 1979 levels in real terms, except with approval of the House of Commons
. After section 3 of the 1967 Act insert the following new section:—
"Rates not to be increased above 1979 levels in real terms except with approval of the House of Commons.
3A.—(1) Save as hereinafter provided, no rating authority shall, after 31st December 1980, have power to make or levy a rate higher than that sufficient to ensure that the total rates receivable by that authority in that year exceed the total rates received by the same authority in the selected base year (as hereunder denned) by a percentage identical to the percentage rise in the Retail Price Index during the intervening period.
(2) For the purposes of this section "base year" shall be whichever of the years 1977, 1978 or 1979 as each rating authority shall separately select.
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(3) The Secretary of State may by order permit a greater increase in the rate which can be made and levied than that provided for under subsection (1) above.
(4) An order under this section shall be laid before the House of Commons and shall not have effect until approved by a resolution of that House."").
The noble Lord said: My Lords, I beg to move Amendment No. 70, which is an improved version of the amendment which I moved in Committee, the improvement being stimulated by a specific criticism made by the noble Lord, Lord Bellwin, to whose views on these matters we naturally pay great attention. The purpose of the amendment is fairly self-evident. I would guess that at least 98 per cent. of local authorities would be unaffected by the amendment if it were to be passed, but it is not too melodramatic to say that the amendment is designed to protect the ratepayer in the remaining 2 per cent. or thereabouts of rating authorities from the possibility—I put it no higher than that—of tyrannical extortion, a possibility that arises because of the idiosyncrasies of our method in this country or raising local authority revenue.
My Committee stage amendment came up well after midnight, and inevitably not many noble Lords were present. However, I do not want tonight to repeat the arguments in detail. Suffice it to say that I tried to show that because in certain districts and certain boroughs local government electors who are not liable for rates, or who are not liable to pay them in full because of rent rebates and so on, outnumber the electors and their immediate families who are liable for rates in full, effective local democracy does therefore not work in those areas. In essence, in the relatively small number of areas concerned there is representation without taxation which is almost as troublesome as taxation without representation. I backed up this argument with quotations from recent articles by the former leader of the Liberal Party, Mr. Jo Grimond, the leader of the Greater London Council, Sir Horace Cutler, and from articles in the Daily Express, the Evening News, the Daily Telegraph and the Economist.
The noble Lord, Lord Bellwin, criticised my amendment on three grounds. I quote from column 363 of the Official Report of 8th October: He said:

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"To begin with, would not a ceiling become a national norm? We have all seen what happens with pay norms in incomes policies when they tend to become pay minima. A ceiling on rates of the kind proposed would be interpreted by some local authorities as a recommendation, and we could actually see authorities rating up to the 1979 level where otherwise they might have rated lower".
(My previous amendment gave a single base year of 1979, against which rises were to be limited.)
I submit that that is not really a valid argument. The difference is that when individuals are pressing for higher pay they are doing so because they wish to achieve a higher standard of living. Their motives are fairly simple and straightforward. Where local democracy works effectively, that is to say where the parties are fairly evenly balanced—as, for instance, in Leeds—or where most electors or their families pay rates, then there is every incentive for local councillors to try to keep rates down to the rise in the cost of living, or even below if they can achieve it. I do not think that is a valid argument; the two things are not quite the same.
The second criticism made by the noble Lord, Lord Bellwin, was that his argument was:
"likely to be strengthened by the knowledge that in the following year the discipline would be repeated. Treasurers would advise their councils to stoke up balances to guard against any shortfall in income in the next year, or the year after".
Again, for the reasons which I have put before, I do not think that is likely in practice, and those who are much more experienced in local government than I am—in fact I have no experience in local government—confirm that that is likely to be the case.
I must admit that the third argument raised by the noble Lord, Lord Bellwin, struck a chord and I concede that it has a certain validity. He concluded by saying:
"Worse still, a ceiling would be discriminatory and would penalise all those authorities that in 1979 had low rate poundages, while favouring any that rated highly in that year. And this discrimination would continue indefinitely, for year after year".—[Official Report, 7/10/80, col. 363.]
That of course is an absolutely valid and correct criticism which is why I have now altered the amendment to give local authorities the choice of three possible
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base years. It may not be particularly elegant phraseology, but legally I think it is a perfectly acceptable way of phrasing the subsection: to say that local authorities could choose whichever year—1977, 1978 or 1979—was most favourable from their point of view.
The Government will of course argue that the block grant will do the trick: I think the phrase used was that it will punish the overspending councils. Of course it will not; it will punish their ratepayers. The councils will not be hit; they will go on spending freely, as before. We have a duty to protect the hard-pressed ratepayer, particularly those on fixed incomes. And it is not only the ratepayer's purse we have to think about, but the wellbeing of the country as a whole. The London Chamber of Commerce has been drawing attention to the appalling effects that high rate increases will have on certain boroughs. We all know which they are, there is no need to name them. Of what use is it to allow councils to milk their ratepayers so that they may employ an additional leisure and amenity co-ordinating officer, Grade III, or whatever it might be, at the expense of driving firms out of business, which are employing workers making goods for export? Is this desirable from the point of view of the country as a whole? I think not. Therefore I urge the noble Lord to think carefully about this amendment. I beg to move.
Lord BELLWIN: My Lords, I can assure the noble Lord, Lord Monson, that indeed we do think very carefully about this particular aspect, because it goes to the heart of the whole rates debate, but as the noble Lord said, when we debated this at the Committee stage, I argued then that putting a freeze on all rates at the levels pertaining to 1979 would penalise those authorities that in 1979 had low rate poundages, while favouring any that rated highly in that year. As the noble Lord has said, this is an attempt in this new amendment to try to make some allowance for that; it attempts to overcome it by allowing rating authorities to select at which of the three years they would wish to see the levels frozen.
However, I cannot see that such a change will have the desired effect. Local

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authorities which consistently set low rate poundage will be discriminated against just as much under the proposal contained in this clause as in the previous one. Conversely those authorities which have shown a consistent tendency to rate highly would be favoured by the clause. However, I do not wish to dwell overlong on the technicality of a part of this new clause as I still feel we cannot accept it. As I said during debate in Committee, the Government believe that their block grant proposals, together with measures to provide full information to ratepayers (both of which are included in this Bill) will be successful in combating the worst excesses of local government expenditure.
We believe not in controlling overall spending through ceilings on rates, but in relating the very substantial grant to an objective assessment of need to spend. This places the onus firmly and progressively on each authority for financing from the rates any spending above that level. This will strengthen their local accountability for expenditure decisions. And it will focus the attention of elected members, officers, and ratepayers alike on the need for value for money and economy.
I know that there is concern that a few local authorities may continue to ignore our requests for financial constraint and will feel themselves secure from electoral pressures and therefore able to get away with high rates. My view, however, is that it is much too soon to reach that conclusion. We should not forget that block grant comes into effect for the first time next April, and that it will have an educative effect upon local authorities. They have not yet experienced the discipline of knowing that very high expenditure will lead to a tapering away of grant and a heightening of the recourse to rates. In addition there will come into effect Clause 2 of the Bill, which will strengthen accountability through giving ratepayers—and I mean all ratepayers, including council tenants—a full explanation for rate increases. It is surely preferable to exhort local authorities to tailor their budgets to meet national priorities and to strengthen the discipline of electoral accountability than to make central Government take over the rate-making responsibilities and usurp the traditions of local democracy.
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As the noble Lord, Lord Monson, rightly said, this is the great debate, if you like, as to where do we go in the future with rates. I choose my words very carefully in what I say here because it is no secret that the Government are looking at alternatives because of many of the anomalies and unsatisfactory situations we find in the present rating scene. I do feel that we have to see the effects of block grant. I do very fervently believe it will take us a long way in the direction we want to go.
I think that the vast majority of local authorities will want to take cognisance of the Government's exhortations about the national situation. Most of them are responsible. It is only a very small number who cock a snook, if you like, and could not care less about their ratepayers or anybody else. We have to take this very carefully and very steadily.
What this amendment calls for is so far reaching as to be beyond what one would want to be doing at all until one has seen, if ever, that there is no way at all in which local government responds. Frankly I believe local government will respond because it has a good record of responding in the past, as has been said here many times, and I have to remain confident that it will do so again. In those circumstances, while I pay tribute to the noble Lord, Lord Monson, for raising this issue as he has done, because it is a very important matter, nevertheless I hope he will be able at least to say well, let us wait and see; and, if so, perhaps he will not press the amendment.
9.30 p.m.
Lord ELLENBOROUGH: My Lords, perhaps I might briefly intervene because this amendment is also in my name as well as that of the noble Lord, Lord Monson. It is of course very similar to the one which was proposed in Committee. That came up very late at night, after midnight, whereas this time it has come up at the fairly sprightly hour of half-past nine. So possibly one may be able to say a few words without rather intimidating frowns from one or two Members of the Front Bench, such as one received on that occasion, if I may say so.
I am rather disappointed with what my noble friend the Minister has just said, because I feel that the plight of ratepayers

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is becoming an increasingly serious matter. I should have thought that this clause or something very akin to it was a necessary safety net for hard-pressed ratepayers who are increasingly resentful of the unfair burden that that part of the population bears as against that proportion which does not pay rates.
On 7th October my noble friend Lord Bellwin said:
"Block grant plus full information to ratepayers should bring a new dimension to the local taxation issue because it will highlight and focus on what local councils are doing".
That may be so, but it seems to me that there is altogether far too great an element of "Trust to luck, hope for the best and all will be well", about it. After all, there is a great deal of talk of 50 per cent. or more increases in rates coming along during the course of the next year. The fact is that the block grant—or even financial penalties—does not limit the amount of money that councils can raise in rates. Whatever financial penalties, no matter how severe, are imposed on the most extravagant councils, there is still no protection in the final analysis for that proportion of the population who are ratepayers, because local authorities can still raise additional monies by supplementary rate demands.
I, therefore, feel that my noble friend the Minister is missing his target and, worse than that, he is hitting the wrong one; he is hitting the unfortunate ratepayer. One has only to look across the Thames to the Borough of Lambeth—I do not particularly want to single out Lambeth but it has been mentioned previously—which was mentioned in a report in a recent issue of the Economist, which said:
"The leftish leader of Lambeth, Mr. Ted Knight, claims he has jacked-up local spending on 'socialist' principles in order to defend his poor electors' standards against the wicked Tories. Whereas in reality, practically all Lambeth's financial problems arise because the Council has botched the building of a sports centre in central Brixton".
There is far too much of that type of thing going on in various councils, not necessarily all Labour councils by any means. There is far too much talk of increases of 50 per cent. or more in rates next year.
I do not think that the Government have any conception of the anger that is being expressed by very many ratepayers'
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associations throughout the country. The crux of the matter is that under the existing rate system—about which the Government I understand now say they can do nothing for years to come; I thought that Mr. Heseltine made it abundantly cleat that nothing would be under review for 10 years or so—far too much revenue is drawn from too few electors, many of whom are ratepayers on fixed incomes eroded by escalating inflation over the years, and who now find that any benefits derived from national tax cuts are more than offset by savage increases in local taxes, that is to say, the rates. Of course, and that is the point—many of these people are just outside the limits of the rate rebate schemes.
Therefore, I feel that, because there is nothing in the Bill that brings any guaranteed safeguard to ratepayers against the worst excesses of spendthift councils and the apparent inability of the Government to recognise the plight of ratepayers who are being forced indefinitely to shoulder grossly unfair burdens, this clause is necessary, because at the very least it sets some limit as to what ratepayers may expect to pay. So I hope that the Minister will look a little more sympathetically at the amendment of the noble Lord, Lord Monson.
Lord BELLWIN: My Lords, by leave of the House, I thought that in responding to the noble Lord, Lord Monson, I had in fact expressed considerable sympathy with the motives behind the amendment—and I do so again. I entirely accept what my noble friend has just said, that there will be even deeper resentment if, despite the block grant, we see rate increases of the kind that some threaten they will punish their ratepayers by imposing. What they fail to appreciate is that industry and commerce pay 60 per cent. to 65 per cent. of all rates, anyhow. The people they are punishing most are those who are there to provide employment, and that is why it is not uncommon now—in fact, it is beginning to be more and more common—to see people moving away from areas precisely because rates are becomng so punitive that they simply cannot afford to carry on.
So when my noble friend wonders whether the Government understand and know what is going on, may I assure him

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that we understand and know very well indeed. In that to him it may be only something that he thinks about from time to time, when events presumably press upon him, I can assure him that it is not only the Government's job; but the whole time we are thinking and talking about this whole issue, and we are very well aware of all that is implied in what some people say they intend to do. However, there is a long history of people saying one thing and doing another, and it would be precipitate to presume what people might do in the future. It is not unreasonable for the Government to say that the block grant must have its chance to show what it can do.
However, all else apart, the block grant will ensure a fairer distribution of grant, which is what it is there to do. It is not there by itself to impose ceilings upon spending or on rates. To the extent that it is criticised for that by the noble Lord, Lord Monson, I accept the criticism. Indeed, it is a point that I have made all along. Therefore, without prolonging the proceedings, for we have so much to do, let me say "Yes, I am aware of the points that my noble friend raises, but I still think that it would be quite wrong at this stage to accept this amendment".
Lord MONSON: My Lords, I am grateful to the noble Lord, Lord Bellwin, for having given what is obviously serious consideration to this amendment. He expressed the view that this whole matter should be left to local accountability and local democracy. Of course, in theory that is an admirable principle. It would be splendid if it could be applied across-the-board. Unfortunately, because of the idiosyncrasies of our means of raising money for local authority purposes in this country, as he himself said, it cannot be applied quite across-the-board. As he said, there are a small number of local authorities which are likely to cock a snook at the Government's wishes in this matter. Indeed, we have learned only recently that the Labour Party in Greater London intend to double rates if they win control of the Greater London Council, no doubt confident that those who will benefit from the largess which they intend to distribute outnumber those who actually pay rates.
I do not think that my proposal is a very radical one. In the United States,
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after all, it is common for any local authority which wishes to raise rates by more than 10 per cent. to have to call a local referendum to approve such a rise. Given the rate of inflation in this country we should have had referendums all over the place had this been a rule here. Speaking of referendums, I have no doubt that if my amendment, or something very like it, were put to a referendum, it would be heartily endorsed by the people of this country.
It is sad, indeed, that the other place may not have a chance to debate this issue. Of course, if they reject it out of hand, well and good. I certainly do not intend to force a Division as such at this late hour, but I should like to hear what the House thinks of my amendment. Therefore, I do not propose to withdraw the amendment.
Lord MISHCON: My Lords, the noble Lords, Lord Monson, and Lord Ellen-borough, are perhaps content with the remarks that they have made and to which the House has listened. But in view of the fact that some political considerations have just been brought into the argument, I think that the record ought to be clear from the point of view of these Benches. That is the only reason I rise to speak. It is all very well for a Government to talk in terms of a reduction in taxation and lead the citizen to believe that that is really what is happening, when, with the other hand, as it were, a provision is written out for a VAT which has had a substantial rise and which is costing ordinary little people a dreadful amount because of the necessity of the purchases that they make day by day.
It is all very well for a Government to talk in terms of reducing grants to local authorities—and the noble Lord, Lord Monson, is responsible for my rising on this occasion—and then refer to authorities which he said have threatened to increase rates. Does anyone who has ever been in local government think that that is the way a local authority political party chooses in order to try to get votes? I can only say as a local authority member of some years' standing that the allegation was always made, "I know what they are going to do in the last year of their office. They are going to offer to reduce rates. That is the way they're going to get back."

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Does any Member of this House think that any political party go out on a platform of raising rates unless they have found that the vast majority of the citizens within their borough were suffering deprivation as a result of the lack of social services and therefore had to go out, in spite of the fact that they might lose votes, and say with honesty, "We may well have to raise the rate because we cannot get the money from government." Only last week, if I may give the House an example, and I promise at this late hour not to make a long speech—
A noble Lord: Hear, hear!
Lord MISHCON: I am sure that the noble Lord will forgive me if I say that I think this is of some importance. I had to try to look after a very old couple who could no longer look after themselves and who wanted to go into a home which was prepared to take them. They had not got the money, and, as noble Lords will know, there is a local authority grant that is made on some occasions. I had to apply for them to this local authority. I say at once so that it is seen immediately that I am not trying to make any political point on this, that the local authority happened to be a Conservative authority and I spoke to a welfare officer who was full of understanding. The need of these old people was to be somewhere near their own family outside the boundary of this Conservative authority. The Conservative authority had to say to me, "We are sorry. If you had come to us two years ago, we would have been able to give this grant in spite of the fact that the home is outside the area, and we would have done it on compassionate grounds. But under present restrictions we cannot do it, and we are therefore having to turn down old people—and doing it in a very substantial way—because of the limitations that have been placed upon us."
No noble Lord in this place gets any rejoicing out of this, and no local authority does either. But if you cannot get the money from central Government for these essential services, where are you going to get it from? Day after day we have been listening here to speeches from the Government Benches opposite as to the sheer necessity for all the restrictions
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that are being imposed. I know perfectly well that the Front Bench opposite gets no joy out of having to announce these restrictions. But I repeat that if you have elected representatives who are supposed to do a social duty, what do you think they can do except increase rates? What is the point of a motion like this if the central Government finds it cannot supply the money? Before we make political points, let us at least make sure that we are being honest with ourselves.
On Question, amendment negatived.
9.45 p.m.
Lord MOTTISTONE Lord MOTTISTONE moved Amendment No. 71:
After Clause 39, insert the following new clause:
("Removal of local authorities' rights to be a party to valuation appeals for their own properties
.—(1) In section 69 of the 1967 Act (proposals for alteration of current valuation list)—

(a) in subsection (1) for the words "including a rating authority" there shall be substituted the words "not being a rating authority unless it is the occupier or tenant of the hereditament in question";

(b) subsection (3) shall be deleted.

(2) In section 70 of the 1967 Act (provision for objections to proposals)—

(a) in subsection (1) paragraph (b) shall be deleted;

(b) in subsection (2) the words "or the rating authority for the area in which the hereditament is situated" and the words "or, in the case of the rating authority (where they are not the occupier) on the rating authority" shall be deleted.

(3) (a) In section 72 of the 1967 Act (agreed alterations after proposals) paragraph (e) shall cease to have effect.
(b) This subsection has effect in relation to proposals made after the passing of this Act.
(4) In section 76 of the 1967 Act (appeals to local valuation courts against objections to proposals) paragraph (d) of subsection (4) shall be deleted.").
The noble Lord said: My Lords, this amendment is the repeat of one I moved in Committee. I have repeated it at the invitation of my noble friend Lord Ferrers, who said that on this point the Government had not made up their mind and that if I cared to table it again I could find out whether they had done so by now. Perhaps I should remind the House of what it is all about. Back in 1949 the power of local authorities to do their own valuation was removed from them and put in the hands of valuation

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officers working for the Inland Revenue. I understand that was done because there were several areas in which the local valuation led to certain difficulties and people were not satisfied that locally the job could be done fairly.
In 1949 the power of a local authority to be a party to valuation appeals, which is the subject of the amendment, was left with them, and that has led on various occasions to local authorities getting themselves involved in valuation appeals as a party by right, and it is not thought that is fair from the point of view of the ratepayer—particularly if it is a business ratepayer, and I suppose also for a personal domestic ratepayer—and that it would be much better to carry the principle of the 1949 legislation right through and allow local authorities to be involved in valuation appeals only if the property is their own or if they occupy it or have a personal right themselves to the property. The point of the amendment is to remove this special privilege for local authorities.
It may be said that local authorities should have some sort of right on behalf of the ratepayers, but looking at it from a different point of view, a local authority is really not in the relationship that a ratepayer is to the valuation officer, who is specially established as being an independent body to adjudicate on these matters, and it seems right that if the property belongs to somebody, whether a person or a business, he should have a right to deal direct with the valuation officer on the issue. The local authority may seek, if it is involved, to put a different impression on the matter in question and it may hope to be viewed by everybody as a rather superior sort of body, in the way that central Government sometimes like to think of themselves as a superior sort of body who can give advice to everybody else.
In that respect local authorities are not seen by businesses at any rate as being anything different from a trader with whom they are doing business. The difference in this respect is that the local authority has a special privilege which a trader in the ordinary circumstances would not have. That is the purpose of the amendment, and I hope the Government may now have made a decision on the matter. I beg to move.
9.50 p.m.
Viscount COLVILLE of CULROSS: My Lords, I am sorry to prevent my noble friend Lord Bellwin from answering at once, but when my noble friend Lord Mottistone moved this amendment or an equivalent amendment at the Committee stage, I stayed silent for the very good reason that I have been involved professionally in the main cases that have given rise to the amendment that he has put down. Therefore, for the very good reasons that this House lays down, I cannot discuss those. Nevertheless, I very much hope that the Government will be very careful before they fall for the invitation that has been put forward in this amendment, not least because they have said that for the moment there is to be no revaluation, at any rate not until an order is brought in, we know not when.
The situation in particular is as follows. Under the 1973 revaluation, there were a number of properties, rather over 100, which were valued by a section of the Inland Revenue called the Special Properties Section, which has since then been disbanded. That section dealt with a collection of extremely complicated and difficult properties, the assessment of which did not come before the courts for the most part for quite some time. It is perhaps indicative that one local authority on the south bank of the Mersey has properties in this category which amount to 20 per cent. of its total rateable value. Therefore, it is not wholly surprising that local authorities with these very large properties within their areas are interested in seeing that the rateable value finally decided upon is correct.
What my noble friend has put forward is an amendment which will not entirely draw the teeth of the rating authorities. By his amendment my noble friend prevents them having as of right the opportunity to be heard in the local valuation court and subsequently in the Lands Tribunal. What he does not do is to prevent them from objecting to a proposal put forward by either the valuation officer or the ratepayer for an alteration in the valuation list.
These properties that we are talking about are premises such as oil refineries and steelworks. Every year a change in the structure takes place and a proposal is put forward. Such proposals, because

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of Section 20 of the 1967 Act, will fall to be determined by the value that applied when the 1973 valuation list was originally compiled—the "tone of the list". Therefore, one has every time to reopen the question of what was the basic valuation of all these properties?
In view of what has happened—and I say in particular—I would venture to guess that, if the amendment is passed, the rating authorities concerned will simply take the course of putting in a formal objection, which they are not in any way prevented from doing, to every single proposal from now on made in respect of these properties. That will do exactly the opposite of what my noble friend wants. It will redouble the problems of trying to seek and find a solution, because then they will be entitled to be heard; they will be entitled at least in the Lands Tribunal to obtain all the details of what it is that is being valued.
Perhaps, in general, I can say that I do not accept the point that has been made by my noble friend that when the Local Government Act 1948 transferred the duties of revaluation from the local authorities to the Inland Revenue, but at the same time left the powers of the rating authorities to be heard as of right at the subsequent hearings, that was some kind of oversight. I would suggest to this House that if Parliament is to remove that right, which is what my noble friend is trying to do, it should not do so at the tail end of a very long and very complicated Session in a Bill of this complexity, without the consultations that I should have thought my noble friends on the Front Bench would have thought to be quite essential to this matter.
I do not know, and I doubt whether any of your Lordships would know, what would be the outcome of placing this particular restriction upon the powers of rating authorities, with the inevitable result that those who thought that there might be something wrong would automatically have to object to every single proposal made by either the valuation officer or a ratepayer in their area. I should have thought that this was entirely counter-productive to the sort of solution that my noble friend has, I think, tried to suggest to your Lordships, and I very much indeed hope that my noble friend
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Lord Bellwin will not accept this because it requires a great deal more thought.
Lord BELLWIN: My Lords, I am grateful for that really impressive contribution from my noble friend Lord Colville. As I explained to my noble friend Lord Mottistone at an earlier stage when he raised the subject, Sir Derek Rayner has been conducting a review of the procedures governing valuation lists, and the statutory position of rating authorities is being covered in that review. I also said that I did not wish to reach a premature conclusion about this matter. I am afraid I can still go no further than that. The Government have yet to complete their wide consultations on this subject, and their examination of the issues, and, therefore, no conclusions have yet been reached. I hope that, as before, your Lordships will agree not to take this amendment further, but to await the outcome of the review.
I may say that the observations made by my noble friend Lord Colville will be looked at very closely indeed. They seemed to me to be not only cogent but very apposite; and the warnings he gave, I thought, were very serious ones. Nevertheless, I would say to my noble friend Lord Mottistone that I cannot go any further, as he will have gathered, at this time, but we will still ensure that what he has said, both on this occasion and in Committee, will be considered carefully and passed on to those who are looking into the matter.
Lord MOTTISTONE: My Lords, I had hoped that the inquiries that the Government were conducting might be further advanced, at any rate before this Bill leaves Parliament. It looks as though this is most unlikely, and it is obviously not particularly of value to pursue the matter at the moment. I will not accept all that my noble friend Lord Colville has had to say on this matter, but there is not time tonight to enter into a special little argument; I will go back to that outside the Chamber. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 72 and 72A not moved.]
Clause 43 [Commencement and extent]:
9.57 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 73:
Page 40, line 34, leave out ("and 33") and insert ("33 and 40").
The noble Lord said: My Lords, this is the first of two amendments to make necessary changes in Clause 43, the commencement provision for Part V of the Bill. This first amendment deals with Clause 40 of the Bill, which provides that where a new rate is made the rating authority shall give publicity to it, through newspapers and so on, within 21 days. Schedule 32 contains a consequential repeal of a few words in Section 4 of the General Rate Act 1967. The new provision and the repeal ought to have effect at the same time, but as drafted they would not. The amendment ensures that both will be brought into effect, for a new rate period, by the Secretary of State by order. Our intention is that this should happen with effect for the rate year beginning 1st April 1981. I beg to move.
Lord BELLWIN Lord BELLWIN moved Amendment No. 74:
Page 40, line 39, leave out ("Schedule 2") and insert ("Schedules 1 and 2").
The noble Lord said: My Lords, this is a second amendment to correct Clause 43. This second amendment deals with Clause 38, the new provision for empty property rating. This clause contains a minor provision, in sub-paragraph (2C), to the effect that domestic rate relief shall not be granted on empty property, which at present is to be found in Schedule 1 to the General Rate Act. In consequence, the present reference in Schedule 1 to the Act should be repealed, and Schedule 32 to the Bill does this. Clearly the clause and the repeal should commence at the same time, but under the present draft of the Bill they would not. The amendment will provide for them both to have effect on Royal Assent. I beg to move.
The Earl of RADNOR The Earl of RADNOR moved Amendment No. 74A:
Page 41, line 6, at end insert—
("(1A) Section (Rating exemption for fish farms) above shall have effect for any rate period, within the meaning of the 1967 Act, beginning on or after 1st April 1981.").
The noble Earl said: My Lords, I beg to move Amendment No. 74A and, with leave, to speak to No. 74B at the same time. These two amendments are consequential on Amendments Nos. 58A and 58B, and pinpoint the time from which fish farms in England, Scotland and Wales will be derated as being the 1st April 1981. I think this is the only logical dale from which to work. I beg to move.
The Earl of RADNOR The Earl of RADNOR moved Amendment No. 74B:
Page 41, line 42, leave out ("Section 42 above extends") and insert ("Sections [Rating exemption fur fish farms in Scotland] and 42 above extend").
The noble Earl said: My Lords, I thought I had covered this point. It is the same. This applies to Scotland and pinpoints the date from which fish farms in Scotland will be derated as the 1st April 1981. I beg to move.
Clause 44 [General potter to reduce rate support grant]:
Baroness DAVID Baroness DAVID moved Amendment No. 75:
Page 42, line 4, after ("may") insert ("after consultations with that authority").
The noble Baroness said: My Lords, we now move to a different Part of the Bill, to the penal clause, so-called. If such drastic powers as are given to the Secretary of State by this clause are to be wielded from on high, if the chopper is to come down on certain authorities, it would seem right and just that there should be consultations with those authorities before the axe falls. As there is no rational way to penalise authorities—different criteria can produce different results and the choice of the criteria is arbitrary—authorities must have the opportunity to

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put their case. There was no consultation with the 14 local authorities before the Secretary of State announced that they were to be penalised this year. That cannot be right. If there is no statutory obligation for consulting with local authorities, on whose advice will the decision be taken? On what basis will the Secretary of State make those decisions? Will it be on the advice of civil servants without local councillors having a chance to make their case? Will officers in Marsham Street consult with council officers? If a county overspends, will the districts within it be penalised although they have been frugal? Will there be any right of appeal?
As my noble friend Lady Stedman said at Committee stage, it is hard to play the game when there are no consistent rules. I hope that I have said enough to persuade noble Lords that consultation prior to action by the Secretary of State is fair, just and sensible. The noble Lord, Lord Bellwin, said a few minutes ago in reply to Lord Monson that the local authorities have a good record of responding. I beg to move.
Lord BELLWIN: My Lords, this amendment is identical to one that was put down in Committee and was rejected. It would impose on the Secretary of State a duty to consult with every authority whose grant was to be reduced as a result of the provisions of the clause before making the reduction. Although the amendment stems, I believe, from a concern that the Secretary of State might act arbitrarily under the powers of this clause, this is precluded by the fact that under Clauses 45 and 46 the Secretary of State is required to specify in an order the principles upon which he proposes to reduce grant under the transitional arrangements. This order is then subject to the Affirmative Resolution of the House of Commons. As I have made clear before, this in no way precludes an individual local authority making representations to the Secretary of State. I went into this subject at considerable length in Committee. I have in front of me copious notes indicating how all the authorities had every indication of the situation. I have no intention, unless pressed, to do the same thing all over again, and therefore I cannot accept the amendment.
Lord MORRIS: My Lords, the noble Baroness, Lady David, in suggesting that this clause is a penal clause, is performing a semantic handstand. It is to the benefit of the general taxpayer in this country.
Baroness DAVID: My Lords, I cannot agree with that, and the authorities that have been penalised would not agree with the noble Lord. I do not agree either with what the noble Lord, Lord Bellwin, has said; but the hour is late and I shall not press the amendment.
Amendment, by leave, withdrawn.
10.5 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 77:
Page 42, line 8, at end insert ("and if that authority has been informed that such a reduction will be made and of the size of that reduction by 1st July in the relevant financial year,").
The noble Baroness said: My Lords, again this deals with the clause which throughout the Bill we have made clear we do not like, but if we have to have it we would rather it were understandable and workable and would let the local authorities do their job. We think the addition of this amendment would be a sort of safeguard to the local authorities, in that they would know that the Secretary of State believed they were overspending and their rates would be higher than he would accept, and they would know in time to be able to do something about it if they felt that was possible. I beg to move.
Lord BELLWIN: My Lords, again, this amendment is identical to one that was put down at the Report stage in another place and was rejected. It is intended to prevent the transitional arrangements from being used this year. As I tried to emphasise in Committee, this is the one year and, after the introduction of the block grant, the only year in which they will exist, because they will then lapse. The amendment will not be necessary and hence we cannot accept it.
Amendment, by leave, withdrawn.
10.7 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 78:
Leave out Clause 44.
The noble Baroness said: My Lords, I know we discussed this as well and voted on it at the Committee stage, but we on this side of the House are still concerned at the inclusion of this clause in the Bill. We do not like this legislation, which in November can penalise councils and councillors for what they did absolutely lawfully last April. We are alarmed that there is no obligation, and the Government are not prepared to accept that there should be an obligation, on the Secretary of State to consult with the local authorities before coming to a decision. We still have not been given satisfactory answers to all the questions we posed as to who will advise the Secretary of State, what powers these advisers will have and on what basis or judgment the Secretary of State will determine the needs of any or of all the local authorities. Who did advise the Secretary of State which of the 14 authorities he should penalise? What information was requested from them and given, and what regard was paid to the circumstances of each and every authority on that list? How did the Secretary of State decide which authority was a profligate one and a high spender and what steps did he take to search out why that authority had higher rates? What were its special difficulties in meeting the statutory responsibilities laid on local authorities by successive Governments? And what right of appeal was open to them?
On the last occasion the noble Lord, Lord Bellwin, argued very persuasively that there was not a need to write consultation into the Bill because his door was always open. We said at the time that that was not our interpretation of consultation, and my noble friend's amendment sought to write consultation into the Bill. The noble Lord said his door was always open. I understand that when Islington, which was the second highest overspender in the "hit" list, found that they were in that list they wrote asking for a review of their position on the basis, first, that they had met one of the two sets of criteria the Minister had laid down; and, secondly, that in taking away the money which they had been given for the urban development the Government had included Government money in their expenditure and therefore were penalising Islington for having spent the Government money which they had been given.
I understand that the Islington Council sent a letter to the department on 18th September, that they had a meeting with the Minister for about five minutes on 2nd October, and on 10th October they received a waiver because their claim had been agreed. But that can only add to our suspicions as to how many other people could make out the same sort of case. Is this not the sort of thing that is inherent in any such arbitrary system of penalties as those that have been named with these 14 authorities? Some days ago one of the national papers reported that the Secretary of State was poised to transfer tens of millions of pounds from London and other big cities to the Tory-controlled shires. I understand the Secretary of State met the local authority associations about a week ago. We talked in the Committee stage about the "hit" list. According to the papers for that meeting, I understand that three different options were presented to the local authority associations. According to press reports, each one was capable of working in nine different ways. That means that something like 27 options are open to the Secretary of State. He can choose which one he wants to catch different authorities.
How is he going to choose which option to go for? What homework will be have done on these authorities? What advice will be have taken and from whom? Who did he set out to catch? Did he set out to catch the high spenders? Those who had high rates? Those who refused to cut back services? Or was it just to catch those Labour-controlled "baddies" on the "hit" list? That is the kind of power that this clause gives to any Secretary of State. We still maintain that it is not the power that should be given to any Secretary of State and this clause should be deleted. I beg to move.
Lord EVANS of CLAUGHTON: My Lords, it is a great pity that such an important matter as this should be considered at this hour. I concede that the matter was discussed at Committee. Nevertheless, it is a matter of great importance to those concerned about the independence of local government. I understand that both the Association of County Councils and the Association of Metropolitan Authorities feel this clause should not

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be included in the Bill. It is unique in that it enables the Secretary of State (and if the Secretary of State were the noble Lord, Lord Bellwin, perhaps we would not be quite as worried as we are) to intervene directly in the financial policies of individual local authorities.
In our opinion, it raises fundamental and deeply important constitutional issues about the financial responsibilities of local authorities; and, perhaps more important, their accountability to their ratepayers. Also, it is unfair in that it fails to distinguish between, as the noble Baroness, Lady Stedman, said, "baddies"; it fails to distinguish between county councils and district councils. There may be a naughty district council which is spending wildly and a perfectly well-behaved county council which is not, or vice versa. Under this clause, so far as I can see—and I hope that the Minister can correct me—the innocent will suffer with the guilty. It is arbitrary because the Secretary of State, once he has determined the notional rate referred to in the clause, has complete discretion to limit the application of the scheme by setting levels to catch a few authorities that he chooses to pick on.
It seems to me that he has picked on one authority which is under Conservative/Liberal control, and he has appeared to be continuing a personal vendetta against Mr. Knight in Lambeth. He seems to be taking draconian powers to continue what appears to many of us watching from the outside to be a private row. It seems very, very worrying because in general—and I make no apology for repeating what has been said previously—local authority expenditure is not out of control.
Since 1974–75 central Government expenditure has increased and is increasing—as we learned from our newspapers only last week—by 8 per cent. in that period. In the same period local authority expenditure has decreased by 14 per cent. I cannot understand why the Secretary of State—unless he is in pursuit of some extraordinary private vendetta—should have gone to this trouble to produce these clumsy and draconian measures to deal with a short-term problem.
10.14 p.m.
Lord DAVIES of LEEK: My Lords, what is difficult to understand—and I will be brief—is that on both sides of the House we have received documents galore from local authorities throughout Britain. In the majority of cases, the Association of County Councils is represented by the party of noble Lords opposite. They put forward their point of view in as constructive a way as possible, and the first fact that comes out—all of us have noticed this over the long time we have spent on this Bill—is that the Bill has been too rapidly pushed forward. It should be five or six different Bills. The system is ill-defined in the Bill and the widest powers are sought through secondary legislation, which is dangerous, without adequate safeguards against possible misuse. Also, in the view of the Association of County Councils the new proposals have significant disadvantages which Members on both sides of the House could talk about for another hour. I will not do it, because this is a well-informed House.
All this well-informed and constructive criticism has come in from people who have given their lives to the heart of democracy in local government, and hardly one iota of these constructive protests has been taken notice of. With that, and with a tired House, I think it would be unfair to try to belabour the point. I believe that we should have listened to the people who know what they are talking about throughout the country: those who have given their lives to local democracy.
Lord BELLWIN: My Lords, I would, I suppose, have to trot out a list of people who come in the category mentioned by the noble Lord but who feel precisely opposite to the way he does. I could produce such a list. The fact is that I would commend the House to read very carefully exactly what I said on this subject in Committee, because to do justice to what has been said this evening I should have to go over that almost word for word. But I will refrain from the temptation and perhaps comment upon one or two of the observations that have been made.
First I would refer to those which were made by the noble Baroness, Lady Stedman, who talked about the various per

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mutations of the three options, the fact that they multiply themselves and that this means that you can do what you like. That is not so, for the reasons that I have given previously. But I wonder whether the noble Baroness appreciates—this is a point I have made before—exactly how the current rate support grant distribution has been made. I would tell her, as one who was engaged for many years in the calculations on behalf of the AMA, my own authority and so on, that that was exactly how it was done before. Alternative options were put forward, but there were many permutations to each option, and at the end of the day it was the Secretary of State who pulled the levers—I used that term before—and came out with the answer that he wanted.
The difference between that and what will transpire in the future is this. Your Lordships will remember that I referred to a "black box". In the future the bits and pieces within the black box will be laid out on the table, so that everyone will be able to see exactly what is there, whereas now the levers are pulled and no one knows what is in the box. In the future, everything will be far clearer. If, therefore, it seems more complex, that is only because the elements will be there for everyone to see, whereas now they are not so seen. The noble Baroness wondered how these figures were arrived at and what was magic about the notional uniform rate. That was a very fair question to ask and I answered it in detail on Committee stage. I tried to explain then, and I repeat now, that it was essentially an arithmetical calculation. If I am pressed tonight, by leave of the House I will go into exactly how that calculation is arrived at; but I would ask your Lordships to accept from me that that is exactly what it is.
Lord AVEBURY: My Lords, if the noble Lord will allow me to intervene, rather than ask him to go into the arithmetical calculation which I am sure the House would not want at this hour of the night, may I ask whether it is not possible for the consultation document to which the noble Baroness referred to be made available in the Printed Paper Office, so that everybody can study how the calculations are supposed to be performed?
Lord BELLWIN: My Lords, first I
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would suggest that the noble Lord, Lord Avebury, reads what I said on Committee stage. If thereafter he still feels that he would like to have more information, may I say that this is the kind of subject that is very hard to absorb. I mean no disrespect, but it is very hard to absorb just by listening. Therefore, if the noble Lord would still like further clarification, it will be available to him or anyone else who cares to get in touch with me and asks for it. It is no secret. It is an absolutely open calculation for everyone to see.
It was accepted that, however arithmetical it may be, there will always be elements which are inexact. We took 30 per cent. and then came down to a handful of authorities—14 out of some 450. That is a small enough number, goodness knows! The noble Baroness gave the example of Islington. They simply came along and told us that they had made some changes. It is not for me to go into at what stage they made them. Suffice it to say that they did and they came within one of the waivers, about which the Government were very pleased.
The noble Baroness will be pleased to know that other authorities—at this moment, I do not want to say exactly how many—have since come along. But there will be some others of the remaining 13 who will be outside the penalty area—which is a term that I prefer to use—and the Government are very pleased as to that. I repeat, again, that the money that is withheld from these authorities will not be kept by Government, but will go back to all the other authorities. There is no intention here to keep such money; it is there for everyone.
The noble Lord, Lord Evans, again referred to the arbitrariness of this whole thing. I tried to assure him in Committee that, whatever it was, it was not arbitrary. You can work out exactly how this is arrived at and anyone can do the sums. So I do not see how, on that basis, it can be said that it is arbitrary, or that it is set to catch a particular person. It is nothing of the kind.
I am sure that the House does not want me to go into the pages and pages of matter which I have here, which I have spent so much time studying carefully and

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talking about. Therefore, I propose not to do so. The noble Baroness may feel able in the circumstances not to press the amendment. I hope that she will not press it. But I would tell her that if, by way of explanation and in written form, she would like much more than I said in Committee—and I say this to all of your Lordships—I shall gladly provide it for her or for anyone else.
Baroness STEDMAN: My Lords, the noble Lord is always courteous when he replies to criticism of the Government and we appreciate that from these Benches. No, I shall not divide the House tonight. I should like to do so, but I do not think that we are likely to convince any other people to come with us than those who came with us before, and at this time of the night it may be rather unproductive to try to divide the House.
I am not particularly consoled by what the noble Lord has said and I am not really convinced by his arguments. I know that there has always been an element of rough justice in the way the rate support grant has been administered and worked out at council level. But the noble Lord has got me a little more concerned, now he has told me that not only Islington, but others on the "hit" list, have now come within the scheme and are able to get the waiver. That makes one wonder whether the criteria were right to begin with, and whether they were the right 14 authorities.
As I say, we are still concerned about it. We still think it is a very sad day for local government when a Secretary of State has the, power to fire these penalties at authorities—if the noble Lord prefers to talk about penalties rather than a "hit" list. We think it is a very sad day. We regret that it has come to that, but in the circumstances we are not prepared to push the amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 45 [Reduction of resources element]:
10.24 p.m.
Baroness DAVID Baroness DAVID moved Amendment No. 79:
Page 43, line 16, at end insert—
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("In making a determination under this section the Secretary of State must demonstrate that those authorities whose grant is to be reduced have acted unreasonably.").
The noble Baroness said: My Lords, with this amendment I should also like to speak to Amendment No. 80 as the same principle applies. Consultation with local authorities before their rate support grant is reduced has been refused, as my Amendment No. 75 has not been accepted. Therefore, it is all the more important that these amendments should be accepted. The local authority associations are deeply concerned about the proposals for the transitional arrangements, and I think that there has been general agreement on this. The proposals in these three clauses can be exercised only by applying arbitrary criteria to local authority budget decisions.
The Secretary of State should in all fairness have to give some explanation as to why he has selected certain authorities to be penalised, so that they have a chance to explain their position and their reasons for their expenditure—why they have acted in certain ways—and also so that the Secretary of State can show to the council and to the people in the area of that council that he has behaved in a reasonable and fair manner. If he has to give some explanation for his actions and how he came to decide upon them, it will be possible not only for the local authority but for Parliament also to judge how the Act is working and how he is carrying out his responsibilities.
In replying to me when I moved this amendment during the Committee stage the Minister complained that the wording was ill-defined: that presumably the Secretary of State would have to demonstrate that an authority had acted unreasonably in overall levels of spending. I disagree. Councils would want to know in what areas they had acted unreasonably and in more detail—whether on education, roads, social services, or whatever. I decided that a very lengthy amendment would not be welcome, but I consider that in fact this amendment is perfectly clear and I beg to move it.
Lord EVANS of CLAUGHTON: My Lords, I apologise for speaking so late at night, but to me these are extremely important provisions which have a fundamental effect on local government. The noble Lord the Minister in dealing with

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this matter in Committee explained at considerable length—at col. 593 of Volume 413, No. 186—that it was a question of judgment as to the transitional arrangements in identifying authorities which would be caught under this system. He described the notional, uniform, arithmetically calculated rates and went on to speak about ample allowance being made for the unsatisfactory character of existing needs assessments. He said that it was a question of arithmetical calculation and that judgment was not needed. But arithmetical calculation is only one of the factors involved in reaching a decision. Therefore, it seems to me that the local authorities whom he is seeking to deal with under these arrangements should have an opportunity of understanding and having explained to them what are the reasons and the problems and the basis upon which the assessment is made for their being found guilty. Therefore, I should have thought that again this amendment would do something to ameliorate the lot of the allegedly guilty authorities.
Lord BELLWIN: My Lords, I do not take the point at all. The authorities concerned know quite clearly where they do or do not stand in relation to the calculations. There is nothing secret about it. They knew all along exactly where they stood. They have had the chance and they have the chance to this day to come along—there is still time—and, as I tried to say to the noble Baroness, some of them are indeed doing just that. And when they do come along they know quite clearly where they have to get to and what they have to do. The last thing we should want to do, as the noble Baroness, Lady David, said, would be to say, "You should spend more on education and less on housing, or less on social services ". That is the very last thing that they would ever want central Government to do. It is not our job to do it, nor would we try.
This amendment is identical to the one which was put down in Committee and subsequently withdrawn. The movers of the amendment intimated that it would be their intention to reintroduce it at this stage, having considered whether they wished slightly to change the wording. In the event, the wording has not been changed. For the reasons which I gave
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in Committee, I consider that the amendment is impracticable and undesirable.
So far as Amendment No. 80 is concerned, again it is identical to the amendment which was put down in Committee and subsequently withdrawn; and it, too, is identical to the amendment which was put down in relation to Clause 45. For the same reasons as I suggested then that we could not accept it, I say the same now. I am sorry to seem to be so categorical, but we debated the matter at length. There is nothing new here at all which we have not been over before, and that is why I fear we cannot accept the amendment.
Baroness DAVID: My Lords, I am afraid that the Minister did not listen to what I said. I did not say that the local authorities would expect to be told how much to spend on education, or social services, or whatever, but, if they were accused of overspending, that they would wish to know in what areas, such as education and so on, they had overspent. I do not think the two are quite the same. I hope noble Lords will realise that on this side of the House we are still extremely unhappy about these provisions, and clearly the Liberal Benches feel exactly the same. So I make no excuse for putting this forward. We did not divide on these amendments before, but I appreciate that the hour is extremely late and, although I personally would be keen to divide on this, I will respect the general feeling and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 80 not moved.]
Clause 47 [Supplementary grants for transport purposes]:
10.31 p.m.
Lord UNDERHILL Lord UNDERHILL moved Amendment No. 82:
Page 44, line 10, leave out from ("paid") to end of line 12 and insert ("except in respect of expenditure specified in the order which shall include such expenditure as is referred to in subsection (5) of the said section 6").
The noble Lord said: My Lords, even at this hour I make no apology for returning to the question of the transport supplementary grants. The provisions in subsection (2) were considered at the

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Committee stage and in the amendment that I proposed then I sought to delete the whole of subsection (2), which provided not only for the possibility of ending transport supplementary grants but of changing the basis for them. The noble Lord, Lord Bellwin, gave an assurance, which I accepted, that no decision had been taken on the question of ending the transport supplementary grant.
This is a different amendment. I recognise that it may be desirable to amend the items of expenditure on which TSG may be based. That is proposed in the subsection. The amendment would still enable that to be done. Grants would be paid only on expenditure as set out in an order which would be tabled by the Secretary of State, but there would be added an important qualification that such expenditure shall include the transport expenditure set out in the 1974 Local Government Act, Section 2 of which defines the expenditure of the county councils and the GLC. The headings are set out in Section 1 of the 1974 Act as the estimated expenditure on public transport, highways, regulation of transport and the provision of parking places. Whatever other changes may be proposed by order, we regard it as essential that these headings of estimated expenditure of the counties and the GLC should remain.
Another effect of this amendment would be to remove the possibility of the transport supplementary grant being ended. As stressed at the Committee stage, TSG brings together both capital and revenue expenditure of transportation and generally I think opinion is that this has worked well and is invaluable. Informed opinion is that any adjustment by the incorporation of TSG within a block grant system just could not work and could not meet the needs of transport as the present TSG does.
The noble Lord, Lord Bellwin, has stressed that this is a reserve power. Frankly, I am not too happy with reserve powers because reserve powers usually mean that somebody has it in mind to use them. We consider TSG to be so important to our transport policies and to the programmes of the county council that we would like it to be made clear by our amendment, which would take away any possibility of TSG being abolished under
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this Bill. It would require separate legislation and we think that is the way to deal with it. I beg to move.
Lord BELLWIN: My Lords, I wonder whether the noble Lord, Lord Underhill, would mind very much if I spoke also to Amendment No. 82A?
Lord UNDERHILL: My Lords, if may say one word on that I think it would be helpful. All I am saying in Amendment No. 82A is that, if there is to be an order which is going to change the basis of the expenditure items, then there should be consultation with the local authority associations and representatives of passenger transport operators. I know that the noble Lord has said to me and to the House on a number of occasions, Why should we have statutory provision for such consultations? All I would say on that is that there are quite a lot of occasions in this Bill where provisions for consultation are written in. Why not do it on this occasion?—because it would be absolutely important, in my view, that if there are to be changes in the items of expenditure for TSG the associations of local authorities ought to be brought into consultation, as should the passenger transport operators.
Lord BELLWIN: My Lords, I will try not to make that particular point when replying. At Committee stage of the Bill, amendments were proposed which would have had the effect of preventing orders from being made abolishing TSG completely, and would have ensured that the grant had to continue at least for a more limited range of expenditure, or for fewer than the total number of counties. On that occasion I gave a number of reassurances. These amounted to the fact that any decision to abolish TSG would not be taken lightly, and would be made only if the Government were satisfied that whatever arrangements succeeded it met the objectives of TSG. Moreover, I pointed out that under existing legislation it was already possible to pay TSG to fewer than the total number of counties.
In fact, because of some deficiencies in the drafting, it is far from clear that this latest amendment would have the intended effect. But that is really a side issue. I do not stand on that. The main point is that the fears which have been expressed

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are without foundation. I hope that the reassurances which have been given, and which I have summarised again now, provide proof of that, and are perhaps sufficient for the amendment to be withdrawn. There has already been extensive consultation over the last year or two with local authority associations about the future of TSG. They have made clear what their various views are about the grant. The Government certainly have it in mind that, before any order was made under this section, the associations would be consulted about the proposal.
Some local authorities are themselves passenger transport operators. But there are also private operators, nationalised industries and so on. Like RSG, TSG is intended to help local authorities in financing the subsidies and grants they pay to operators. Neither RSG nor TSG is paid direct to the operators themselves. For this reason they would not normally be consulted about changes in the method of grant-aiding local authority expenditure. Operators are, of course, consulted about grants—like New Bus Grant—which are paid direct to them by Government. But the main point is that we shall continue to discuss with the local authority associations any proposal we have for changing TSG.
I recognise the concern the noble Lord expresses, as he has done on a number of occasions throughout this Bill, particularly on this point. I have tried to assuage his fears by saying what I have said, and I still think those fears are unnecessarily borne; I do not think there will be the problem he anticipates. I recognise that that is not the same as not having the amendment in the Bill; how could it be? Nevertheless it is a question of a view, a judgment, and I hope the noble Lord will at least accept the position as I see it at the present time.
Lord UNDERHILL: My Lords, I naturally accept the statements made by Lord Bellwin. The problem is that the Government may take a slightly different view eventually from that expressed by the noble Lord here tonight. Our fears are that in any attempt at cutting down this may be one item the Government see the possibility of cutting, by abolishing TSG, merging it in some form of block grant, and we may find that a handicap to our
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transport needs. But in view of the statement made by the Minister and the lateness of the hour, I will beg leave to withdraw the amendment, making quite clear that we on this side, and I am certain many on the Government side as well, consider that the question of TSG is tied up very closely with the important question of road passenger transport and transport needs in general. We shall, therefore, be watching any orders very closely. I hope the consultations the Minister says will continue will have regard to the point we are making in this amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 82A not moved.]
10.40 p.m.
Clause 49 [Introduction of new system of rate support grants]:
Baroness DAVID Baroness DAVID moved Amendment No. 84:
Page 45, line 14, at end insert—
(" ( ) The commencing year for the purposes of this part of the Act shall not begin earlier than 1st April 1982.").
The noble Baroness said: My Lords, I beg to move Amendment No. 84. The proposals set out in Part VI of the Bill are opposed still, I think, by all the local authority associations. If a block grant system is to be introduced it should not be done hurriedly and before the system has been fully developed or, indeed, before its complexities are fully understood. The associations are concerned that the grant-related expenditure assessments which will underly the new grant system are very suspect. They have all, for varying reasons, expressed serious concern about the quality of the assessments, and for that reason it seems sensible to ask the Government to delay the implementation of this Part of the Bill for at least one year to enable the worst defects of the grant-related expenditure assessments to be overcome. Even the Minister in Committee admitted at col. 632 of the Official Report on 9th October that there would be some
"rough edges which will need improvement once the system is in operation".
Would it not be wiser to do some smoothing of the rough edges before rather than after the new system starts?
This Amendment was supported in Committee by the noble Lord, Lord Sandford, and from the following amendment I presume that it has the support, even though it does not go so far, of the Liberal Benches. I beg to move.
Lord EVANS of CLAUGHTON: My Lords, it may be for the convenience of the House if, in speaking to this amendment, I also speak to my Amendment No. 85 which, as your Lordships will see, is dramatically more radical than that moved from the Labour Benches and is, of course, by referring to 1st April 1984, pregnant with symbolism! First, I am grateful to the noble Lord the Minister for the very helpful and considerate letter which he sent me about an amendment that I moved in Committee in connection with per capita grants. I shall not detain your Lordships on that aspect except to say that I had suggested that per capita grants might be improved or considered on the basis of a weighted per capita grant. That is the only point to be made in that connection.
However, I think that there are strong arguments for delay of the introduction of the block grant. The general arguments against block grants are well known and have been underlined by a report in today's newspapers of a speech made by the noble Lord's right honourable friend Mr. Geoffrey Rippon, a former Secretary of State, who has spoken most movingly about this subject and about the whole philosophy of the Bill being contrary to Conservative Party philosophy. It will destroy the capacity of individual local authorities to make decisions about what they will spend and the rate that they will raise; it is more obscure and complicated than the system it replaces; and it will increase the dependence of grant on expenditure, which is the opposite to that which the Government say that they desire.
The specific arguments, therefore, for delay in implementing the block grant are threefold. The first is that the Government themselves appear to have little confidence in it. The noble Lord, Lord Bellwin, said in Committee at col. 632, Volume 413 of the Official Report, that he recognised:
"that block grants would probably not be the final solution … to grant distribution, but
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certainly we would expect that it would last for some time until we come up with something better ".
That is not a very enthusiastic way in which to introduce a block grant. It is reminiscent, indeed, of the introduction of the rate support grant itself in 1966 as a temporary measure "to prop up the present system" again until something better came along. Instead, rate support grant has, by general consent, become progressively worse, and no doubt this is the reason for the Government's introducing the block grant proposals.
But if we were to have a delay of perhaps one, two or even three years, as I suggest, it would give the Government time to bring forward a considered basis for making Government grants to local authorities which had some hope of permanence and formed part of a general reform of local government finance. Nothing would be lost by continuing the present system, bad as it is, until acceptable changes could be made.
The second argument is that the Government are clearly not ready for this changeover in a technical sense. At an early stage in the consideration of the Bill the Secretary of State said that the regression analysis would not be used in determining grant-related expenditure. He now appears to have discovered that there is no alternative to regression analysis; the schedules on which grant-related poundages are to be based have still not been made public. It was quite wrong of the Government to introduce a measure of this importance when its technical basis is still so very clearly incomplete. As the noble Lord, Lord Bellwin, should well know, no local authority in the country would dare behave as irresponsibly as this.
The third argument for delay is that Ministers themselves are labouring under such misapprehension about the Bill—with the greatest possible respect to the noble Lord the Minister—that they ought to be given the chance to understand it and its implications. I hope that noble Lords will not think that I am being unduly arrogant because the noble Lord, Lord Bellwin, said in Committee, again at col. 625, that the objective of the existing and block grant arrangements is:
" to enable all authorities to provide a comparable level of services for a similar rate in the pound ".

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This he described as the "equalisation principle" and the "pursuit of equity ".
It is true that the same or a similar rate poundage in every authority represents equalisation of a tautologous kind. It does not, however, lead to equality of rate burdens, for the obvious reason that rateable values differ from one part of the country to another, as I mentioned during the Committee stage. There is no equalising there. It might be argued that since rateable values represent wealth, the inequalities in rate burdens are somehow "fair", and that the concept of equity, rather than equalisation, is thus served. But this idea of fairness is scarcely apparent to ratepayers. Figures given in Committee, as I have said, show that the domestic ratepayers of Warwickshire pay an average of £240 a year on their property, and the domestic ratepayers of Tyne and Wear an average of £185 a year. The burdens are certainly not equalised, and can they really be said to serve equality?
Secondly, the Government appear to believe that the block grant arrangements are objective, and this comes back to an argument which we had at an earlier amendment. For example, at col. 591 the noble Lord the Minister said that the notional uniform rate:
"is the product of arithmetic, not of judgment".
This I submit is not the case. While there is arithmetic in it—indeed, a very complicated regression analysis is suggested—the factors which go into the analysis are matters of judgment and decision. Under the block grant the multipliers which will be used for such purposes as the Secretary of State may determine are also matters of judgment. It is absurd for the Government to claim that the block grant formulae will be the result of pure arithmetic, untouched by human hand or unsullied by human wickedness. There will be judgment and decision at every stage in the implementation of the block grant, and Secretaries of State will manipulate block grant even more than they manipulated the previous arrangements.
Thirdly, I think that the most frightening claim of the Government is that the block grant arrangements are less complex and more open. The noble Lord the Minister said, again at the same volume of Hansard at col. 646:
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"The fact that it looks more complicated even than before is simply due to the point I made earlier. The black box is open, the numbers are on the table, the formulae are on the table and the whole basis is there to be seen".
But the noble Lord the Minister then went on to say that:
"The mind starts to boggle"—
as I am sure your Lordships' minds are all boggling at the moment—
"because one begins then to discuss such things as needs assessment, standard expenditure, grant-related expenditure, national uniform rate, notional uniform rate, uniform rate. One could go on and on, so complex it is".
And he offered not one word of explanation of why this was.
As we discussed earlier, we on this side of the House still do not know what the formulae are. My noble friend Lord Avebury asked that this should be put in some simple form for us to understand. But I think we are entitled to know what will be the formulae used for calculating grant-related expenditure assessments. Will the Minister be able to give an example of an actual rate poundage schedule to be used for a class of authorities in 1981–82? In conclusion—and I apologise for making a long speech at this time of night—I think that the Government should be apologising to us for letting their programme bring us to perhaps the most important part of this Bill at this time of night.
It is the part that most concerns ratepayers, the public at large, local authorities and all local authority associations. The Government think that the block grant would mitigate the defect of the existing system that it relies heavily on actual past expenditure. The noble Lord said in Committee at col. 641:
"The formulae that it produces are a self-fulfilling prophecy … the more an authority spends the higher its assessed needs and the more grant it gets".
This is not quite true. The only part of the existing arrangements that is tied directly to the expenditure of individual authorities is the resources element which makes up only a quarter of the total grant. It is ironical that most of the 14 "guilty" authorities singled out by the Secretary of State do not attract the resources element because of their high rateable values, so whatever has encouraged them to spend it has not been existing grant arrangements.
The irony is that the block grant

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arrangements tie the whole of the grant (not just the resources element) to expenditure, so that in so far as the previous arrangements were objectionable the block grant must itself be equally objectionable, or even more so. In other words, what the Government are doing is tying their grants to expenditure to a greater extent than before, and then trying to mitigate what they believe will be the consequences by removing responsibility from local authorities for the proper management of their finances.
In my humble opinion this is typical of the lack of consideration of the Government in introducing this system. It is significant that there has been no exemplification of the consequences that may be expected from the introduction of the block grant. In Committee I introduced some amendments designed to give some effect to a population based grant, and I had a helpful and interested reply from the noble Lord the Minister. Some of the consequences of this have been worked out in a book called Ten Billion Pounds, the authors of which are Mr. Tyrrell Burgess and Tony Travers, which I think would be useful for consideration. I am glad to say that further work of a more detailed exemplification of their proposals has now been undertaken. It is in these kind of bases that everyone is having to work in more detail to find out exactly what the block grant arrangements will produce, that we are justified in begging your Lordships' House to put off the implementation of the block grant for at worse one year but, better still, for three years so that the implications of the grant system can be properly worked out and that people will know what they are up against and what the provisions are going to be. I should have thought that either the amendment moved by the noble Baroness or my amendment should receive the support, approbation and enthusiastic encouragement from Her Majesty's Government. I support the amendment moved by the noble Baroness.
10.53 p.m.
Lord BELLWIN: My Lords, I suppose I had better deal first with the noble Lord, Lord Evans, and the various points he made. I would start by referring him to what I said before except that he has quoted so extensively that I have to assume that
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he has read it. But from some of the deductions he has made from it, I would have to suggest a further reading might be called for because the key point I made initially was about the complexity of the present arrangements. I only wish that the noble Lord had been as assiduous in pressing the previous Government for an explanation of how rate support grant settlements were arrived at during the five years or so they were doing it as he is now in pressing us.
Lord EVANS of CLAUGHTON: My Lords, owing to the vagaries of the honours system, I have not been here long enough to do that.
Lord BELLWIN: My Lords, I do not know for how long the noble Lord has been there, but I assume that it is longer than I have and he must have been there for some time while the previous Administration were there. Therefore, I hope that for the whole of that time he was pressing them to explain exactly how rate support grant settlement was arrived at. The fact simply is, and it seems I am saying it again and again, that the previous system, based as it was in the main upon the multivariant regression analysis, was so very involved and was so very much a secret within the black box, as I referred to it, that no one did understand it at all. The levers that were pulled produced the answers that you wanted. As I have said time and again, the present system differs from that. Simple it is not, because any system that sets out to distribute grant to equalise among some 450 authorities cannot be a simple calculation. But at least we are going much further than anyone has ever gone before in bringing into the open what it is all about and how it works. Indeed, this will be debated in Parliament in a way that has never taken place before; it was not possible for it to take place because the information simply was not there.
The noble Lord said that the details of the GRE and other aspects of the grant machinery have not been revealed. With respect, I must remind him that the reports of the Grants Working Group, the official central and local government negotiating body, on the mechanics of the new system and the options for the first rate support grant settlement, have been placed in the Libraries of both Houses and thus made

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available. The formula, finally settled, will be published in the Secretary of State's report to Parliament. There is now a greater degree of openness in the whole matter than ever before, and for that we should be commended; it should certainly not be used against the Government.
The noble Lord, Lord Evans of Claughton, then pointed to rate bill discrepancies when we were talking of equalisation. The rate support grant system is concerned with equalising rate poundages, not rate bills; we are equalising the rate of tax, not the local tax bill. He said a Secretary of State could manipulate block grant more than was possible under the existing arrangements, and I have already pointed out that that would not be so. I think, with respect, that he was confusing the notion of uniform rate calculation, which is concerned in the main with the transitional arrangements, with block grant itself, which is a rather different matter, but I can well understand that.
When the noble Lord said that the Government had little confidence in block grant—because I had said we hoped eventually to come up with something better—that was not really fair. One always expects to come up with something better and we have said all along that we would go on trying to improve the system, and that we will do. Because we said that, it is not fair to say that we have no confidence in it. I have referred to the question he raised about obscurity, and I need not go over that again.
As for the points raised by the noble Baroness, Lady David, we discussed this amendment fully in Committee and rejected it. But several speakers have again maintained that the implementation of block grant should be deferred until 1982–83 to enable further development work to take place and to allow for further consultation with the local authority associations on the mechanics of the new system. As I said, and I repeat, I fully acknowledge that we have developed the system at a pace, but I cannot accept that there has been inadequate consultation. There have been extensive and continuous consultations with the local authority associations since the beginning of this year. Besides that, of course, there have been numerous informal meetings between
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Government officials and local authority advisers, as well as regular contacts between Ministers and the leaders of the associations.
At the end of this period the Government's view is clear. As I said in Committee, we believe that a workable system has been developed, a system which will allow an equitable grant distribution to be made for the next financial year. Of course development work will continue. As with any new system there will be some rough edges which will need improvement, but the fact is that the system is in operation. To defer the introduction of block grant would in my view be running away from the problem. The present rate support grant system suffers from serious defects; it is unfair and, by the encouragement it gives to ever higher levels of expenditure, it conflicts fundamentally with our commitment to sustained reductions in public expenditure. It must therefore be replaced at the earliest practicable moment. That moment has now arrived and I must ask your Lordships to reject the amendment.
Baroness DAVID: My Lords, I think the noble Lord protests too much. I should like to remind him of what a noble Lord from his Benches said when we were discussing this matter in Committee, as reported at col. 639 of the Official Report:
"the block grant will be completely and totally complicated—much more complicated than multi-variational regression analysis".
That was said by the president of the Association of County Councils, who added, at col. 640:
"It is a bitter pill that local authorities are being asked to swallow".
I am very sorry that we have not heard that noble Lord speak this evening. We feel very strongly about this matter. We are not in the least convinced by what the noble Lord has said, and clearly the noble Lord, Lord Evans of Claughton, is not convinced, either. So, despite the number of Peers who have come in on the other side, I think I shall press the amendment to a Division.
11 p.m.
On Question, Whether the said amendment (No. 84) shall be agreed to?
Their Lordships divided: Contents, 16; Not-Contents, 67.

CONTENTS

Beaumont of Whitley, L.

Evans of Claughton, L.

Pitt of Hampstead, L.

Birk, B.

Hooson, L.

Ponsonby of Shulbrede, L.[Teller.]

Bruce of Donington, L.

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

David, B.

Stedman, B.

Davies of Leek, L.

Morris of Kenwood, L.

Stone, L.

Elwyn-Jones, L.

Peart, L.

Underhill, L.

NOT-CONTENTS

Airey of Abingdon, B.

Faithfull, B.

Marley, L.

Alport, L.

Ferrers, E.

Monk Bretton, L.

Avon, E.

Gage, V.

Montgomery of Alamein, V.

Bellwin, L.

Gainford, L.

Morris, L.

Belstead, L.

Gibson-Watt, L.

Mottistone, L.

Bessborough, E.

Glenkinglas, L.

Mowbray and Stourton, L.

Boardman, L.

Gowrie, E.

Murton of Lindisfarne, L.

Brabazon of Tara, L.

Greenway, L.

Radnor, E.

Bridgeman, V.

Grimston of Westbury, L.

Renton, L.

Campbell of Croy, L.

Harvey of Tasburgh, L.

Salisbury, M.

Carr of Hadley, L.

Harvington, L.

Sandys, L. [Teller.]

Cathcart, E.

Hatherton, L.

Savile, L.

Chelwood, L.

Hill of Luton, L.

Soames, L. (L. President.)

Colville of Culross, V.

Holderness, L.

Spens, L.

Craigmyle, L.

Hornsby-Smith, B.

Strathcona and Mount Royal, L.

Croft, L,

Kemsley, V.

Torphichen, L.

Cullen of Ashbourne, L.

Killearn, L.

Trefgarne, L.

Denham, L. [Teller.]

Long, V.

Trumpington, B.

Digby, L.

Lucas of Chilworth, L.

Vaizey, L.

Drumalbyn, L.

Lyell, L.

Vernon, L.

Ellenborough, L.

Mackay of Clashfern, L.

Vickers, B.

Elliot of Harwood, B.

Mansfield, E.

Wynford, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendment No. 85 not moved.]
Clause 50 [The aggregate amount of rate support grants]:
11.8 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 86:
Page 47, line 24, at end insert—
(" (4A) The level of expenditure of local authorities on capital account in the (five) years preceding the grant year, and the consequences of that expenditure for authorities' expenditure on revenue account (including debt charges resulting therefrom and the likely costs of staffing and maintenance).
(4B) In taking into account future variations in the level of prices, costs and remuneration under subsection (4)(d) above, the Secretary of State shall have regard to the latest forecasts for movements in indices of prices and of earnings within the national economy produced by the Treasury under the Industry Act 1971, and by the National Institute of Economic and Social Research and other similar bodies.
(4C) A Rate Support Grant Report shall specify:

(i) the level of relevant expenditure upon which the Secretary of State is basing his determination of the amount available for
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grants and the date by reference to which the level of prices, remuneration and other costs is applied for this purpose;

(ii) the estimate of future variations in the level of prices, costs and remuneration taken into account under subsection 4(d) above;

(iii) the differences (if any) between the estimate referred to in (ii) above and those indicated by the forecasts referred to in subsection (4B) above, and the general considerations which have influenced the Secretary of State in arriving at the estimate under (ii) above if such differences exist.").

The noble Baroness said: My Lords, at Committee stage we put this amendment down as a probing amendment and received some qualified support from the noble Lord, Lord Sandford, to the extent that he asked Lord Bellwin whether he would consider it carefully. But then the Minister took exception to the fact that we had limited our named bodies to the National Institute of Economic and Social Research, so we have resubmitted the amendment. We have widened it to include other, similar bodies provided they are independent bodies and the Secretary of State does not just have to rely on Government forecasters and forecasting.
My Lords, we do not want to go over all the ground. I believe the acceptance

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of this amendment could lead to a much fairer settlement on the block grant because everyone will know on which specific considerations it will be based; and whatever guidance is given to the Secretary of State must also be understood by him and by the local authorities. I also think that if the Government were to accept this amendment then it would make it difficult for any Government to deliberately set the grant cash limit at a level which was markedly below that which was required to make adequate provision for the prevailing inflation rates. I beg to move.
Lord BELLWIN: My Lords, the fact is that the Secretary of State already has to have regard to the current levels of pay and prices and likely future movements as they will affect local authorities in the grant year. In so doing he has to consult the local authorities, whose representatives are quick, I assure your Lordships, to draw attention to all factors which they think will affect authorities. Subsection (4C) largely recognises present practice in preparing RSG settlements and reports. The level of relevant accepted expenditure and the price base are specified. So is the general allowance to be made for pay and price movements in the grant year. The present requirements of subsection (4)(d), and the established practice of RSG reports and settlements, already allow a responsible Government to make fair and realistic allowances for inflation during the grant year. We did this for 1980–81 and will be doing the same for 1981–82. With respect, this was more than the previous Government did for grant year 1979–80. I take the point that the noble Baroness makes about the fact that previously there were the limitations to which she referred and they are no longer the basis of the amendment. But I cannot help her with this, and I hope she may feel able to withdraw the amendment.
Baroness STEDMAN: My Lords, I am grateful to the noble Lord. We tried and it did not work. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 87 not moved.]
Clause 51 [The domestic rate relief grant]:
11.12 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 88:
Page 48, line 43, leave out (" determined ") and insert (" calculated ").
The noble Lord said: The use of the word "determined" in Clause 51(2) will require the amount of domestic rate relief grant payable to every local authority to be specified in the rate support grant report under Clause 56(6) of the Bill. This, of course, was never intended and would be quite impossible because the relevant rateable values cannot be precisely known in advance.
On Question, amendment agreed to.
Schedule 9 [Domestic rate relief grant]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 89:
Page 176, line 39, leave out (" determined ") and insert (" calculated ").
The noble Lord said: I beg to move this amendment, for the same reasons.
On Question, amendment agreed to.
Clause 52 [The block grant]:
[Amendment No. 90 not moved.]
Lord BELLWIN Lord BELLWIN moved Amendment No. 90A:
Page 50, line 15, after (" means ") insert (", subject to paragraph 6 of Schedule [Metropolitan Police District] below,")
The noble Lord said: My Lords, I think it will be for the convenience of the House if I were to speak to Amendments Nos. 92B, 94A, 94B and 95A. Amendment No. 94A would insert a new clause in the Bill and that new clause introduces a new schedule. Together they are designed to deal satisfactorily with the special position of the Receiver for the Metropolitan Police District, in a manner which will be acceptable both to the Government and to the local authority associations. As your Lordships will know, the expenditure of the Metropolitan Police is funded partly by specific grant (as with all police expenditure) and partly by a precept on the local authorities, the level of which is set by the Receiver, subject to the approval of my right honourable friend the Home Secretary as police authority. The fact that my right honourable friend is police authority means that, although local authorities

175
are fully consulted by the Receiver before the precept is set, they are not in a position directly to influence or control the force's expenditure. It would therefore clearly be wrong if the local authorities in the Metropolitan Police District either suffered, or indeed benefited, under block grant as a result of Metropolitan Police expenditure, and the purpose of the amendments is to ensure that this will not happen. Without going into more detail unless called upon to do so, I beg to move.
On Question, amendment agreed to.
[Clause 53 Determination of grantreletted poundage and grant-related expenditure]:
[Amendments Nos. 91 and 91A not moved.]
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 91B:
Page 51, line 34, at end insert—
(" ( ) The principles on which the grant related poundage and the grant related expenditure are determined shall be such that when an Authority's population increases its grant shall not in consequence decrease.").
The noble Baroness said: At Committee stage the noble Lord promised to look at our amendment to see if population numbers are given as much weight in the calculations as they should be. I handed him a document prepared by the council treasurers in support of my argument at Committee stage. Like the rest of us, he has not had much time since Committee stage to study a book of rather close figures, but I have considered what he said then. In his reply to me at Committee he referred to the fact that the resources element of the rate support grant system responds properly to population change. He is correct, but there is little controversy about this element of the rate support grant which, unlike the larger needs clement, treats all areas equally. But, under the block grant, this element will disappear, and in future it will be the change in standard expenditure or grant-related expenditure given by a highly complex formula which will determine how the grant responds to any democratic change.
I based my arguments previously on Cambridge. I believe this is the first time
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today we have even mentioned Cambridge, for which no doubt noble Lords will be very grateful. But on past formulas the factors did change from year to year. What we are suggesting does not mean that the standard expenditure of Cambridgeshire and similar centres of population will not be able to rise by the amount that is necessary to maintain their services for an expanded population, and it would leave Cambridgeshire with the choice of either reducing the services or increasing their rates. I hope the noble Lord would like to ponder on a question; I do not necessarily expect an answer straight away. How will the standard expenditure per head respond to population growth? If the new population is of identical composition to the existing population, then standard expenditure per head should remain the same. But if the new population is more needy then standard expenditure per head should increase. The worry of Cambridgeshire and counties with fast-growing populations like Cambridgeshire is that, as in the past, population growth may cause standard expenditure per head to fall to a degree which really does defy commonsense. We have found over the years that our population has gone up and our grant has gone down. I beg to move.
Lord BELLWIN: My Lords, when we discussed this amendment at Committee stage the noble Baroness argued that it would be quite wrong if authorities which have increasing populations were to experience a decline in grant. I explained then that this would only be wrong if block grant were to be paid out on the basis of so much per head of population. But this is not the case. Block grant is an equalising grant and authorities receive sufficient grant to enable them to levy the same rate poundage as authorities providing services at comparable levels. This may mean more or less grant for expanding authorities, depending upon how the increase in population affects the overall balance between their needs and resources. I said then that this amendment, by seeking to establish a direct relationship between population and grant, would undermine the equalisation objective of block grant and was incompatible with the block grant system. This remains the case.
The noble Lord, Lord Greenwood, also raised this issue in Committee and I

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undertook to consider the question of population weighting under the new grant system. This I have now done. It appears that there is no easy answer to this question because of the range of factors involved and because the Government have yet to reach final decisions on the form of next year's grant distribution. With these caveats in mind, it seems that under all the options for assessing authorities' grant-related expenditure considered in the consultations between central and local government upwards of about a half of the value of the assessments is likely to be based on population or population-related factors, such as school pupil numbers and numbers of elderly people, the balance being based on other indicators of relative need between authorities. I must emphasise that this is not a commitment about the amount of grant a growing authority might receive but the best provisional estimate 1 can make at this stage about the extent to which population-based factors may be taken into account in the calculations. As such, I hope the noble Baroness finds it helpful. Certainly it must be the case that population is a very important factor when we consider the expenditure needs of authorities, and we intend that the new grant arrangements will give full weight to it.
11.20 p.m.
Baroness TRUMPINGTON: My Lords, I think I am right in saying that my noble friend the Minister during the Committee stage agreed with me that an increased population did not necessarily result in an increase of resources. Since then I have had the opportunity to check up on this point with regard to the situation. I am sorry to bring back Cambridgeshire, but it was bound to crop up again. Although I use that county as an example, surely the same circumstances must apply to other counties—for instance, Buckinghamshire.
To cite examples: it is true that there will be an increase in ratepayers. But those new ratepayers who are the residents of Cambridgeshire bring with them their grand-fathers, their grand-mothers and their elderly relatives. Hence extra health care is needed. Their children will immediately increase the education costs. Crime, I am told, is significantly increasing and hence extra courts and secure accommodation. In the present economic
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climate there may be an increase in unemployment. All these and other matters will require extra resources. In due course resources may outstrip expenditure, but not now, especially when Cambridgeshire is still expanding. What I am actually trying to make sure of, when my noble friend replies finally to this amendment, is that when an authority's population increases, it shall not necessarily follow that its grant shall, in consequence, decrease.
Lord RENTON: My Lords, I wish to support the plea by the noble Baroness, Lady Stedman, and my noble friend Lady Trumpington. This amendment is really inspired, I am sure the noble Baroness will agree, by the experience that we had in Cambridgeshire in recent years of rapid increase in population due to five or more town development schemes, the enormous new town development, Peterborough, and a very high natural birth rate. Experience has shown so far that although a rapid increase in population gives rise to increased financial burdens, especially in education, the rate support grants have either not taken account of that or done so two or three years too late.
My noble friend has given us the hope that in the way that the Bill will be administered by his department this factor of population increase will be taken into account. But even he admits that it will be taken into account only to a certain extent. He said 50 per cent. or thereabouts. Whereas in Cambridgeshire the rapid increase has led to such a tremendous increase in educational expenditure, I am wondering whether the undertakings that my noble friend has given about the way in which the Secretary of State intends to operate his new powers will be sufficient. He has said that he is making no commitment, and I think that that is unfortunate.
Also, it did not seem to me, listening as carefully as I could to my noble friend when he was giving his answer rather rapidly, that he answered the question put by the noble Baroness, Lady Stedman, as to how standard expenditure per head will respond to population growth. I still feel in the dark on that important and specific point. I feel that whether this amendment is the right way to do it or not, it should somehow be written into the Bill that it is an obligation on the part of the Government to give not belated effect but immedi-

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ate effect each year as the matter arises to population increases which have taken place in the previous 12 months. That is the crux of the matter. I hope that my noble friend, who will have an opportunity to address the House again, will bear in mind that if we are to have the services which necessarily flow from rapid population increases, we would wish him to agree that something should be put into the Bill and not merely left to ministerial discretion, as he said, without commitment.
The Duke of ATHOLL: I know nothing about Cambridgeshire—I was an Oxford man myself—but I should like to ask the noble Baroness whether her amendment is not really meant to be situated at the end of line 33 rather than line 34, as published on the Marshalled List. It seems to make no sense at the end of line 34, whereas it would fit in at the end of line 33.
Lord BELLWIN: By leave of the House, may I say to my noble friend Lord Renton that I cannot go any further than I have. The fact is that population is a factor. I indicated that it will be more of a factor than it has been in the past, but it cannot be the only factor and, in my view, it would be wrong to write it into the Bill, because if you can think of a large population in an area of great need and a small population in an area of relative wealth, and then transpose them, you will quickly see why population can never be the only factor in this whole matter of assessing need for grant purposes. That is why, while I tried to explain and indeed to emphasise that we took very much to heart the importance of the point which was made by the noble Baroness, I do not think anyone would want to argue beyond that. I have just given the assurance I have as to the weight the Government propose to attach to this in the future, which is a change from the past, but it cannot be the sole, the major element in the sum.
Baroness STEDMAN: I am grateful to the noble Lord. In passing, I think the noble Duke is right: we have got this in the wrong place, but we obviously all know what we are talking about. I accept what the noble Lord says. I understand the difficulties: we found it difficult enough to find an amendment that might be
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acceptable. I see the dangers of writing into the statute specific groups of people when others' needs may be greater and thus may not get dealt with.
Our problem in Cambridgeshire, so my county treasurer tells me, is that every time we have one of these specific groups of people coming in, we have one single family first, and if we have one child we lose £142 of our grant. When we have a new town expanding at the rate of Peterborough and when we have town expansion schemes in Huntingdon and various other places in the county, it raises tremendous problems. When this all coincided with local government reorganisation in 1974 it raised even more problems, because when we only had money to deal with roofs over heads all the new projects came to Peterborough and we were in the black books of everybody else in the county, because no one else could even get a roof put back on their school if one blew off. Everything had to come into Peterborough. There are tremendous problems over it and I accept in good faith what the noble Lord has said. We shall certainly come back at him after the next one if we feel we have not been fairly treated.
In passing, he rebuked the noble Lord, Lord Evans, earlier for not trying to pester the previous Government about the rate support grant and how it was made up. I started off life in this House by doing that, and all it did for me was to make me a junior Minister in the Department of the Environment! I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 55 [Adjustments of distribution of block grant]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 91C:
Page 52, line 38, leave out from (" authorities ") to end of page 53, line 14, and insert—
(" (4A) Except as provided by subsection (4C) below, the power—

(a) may only be exercised—

(i) in accordance with principles to be applied to all local authorities; or

(ii) in accordance with principles to be applied to all local authorities belonging to the appropriate class; and

(b) may only be exercised for any such purpose as is specified in paragraphs (a) to (d) of subsection (4B) below.

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(4B) The purposes mentioned in subsection (4A) above are—

(a) limiting the change in the amount of block grant payable to an authority for the year from the amount payable in the previous year;

(b) taking account of less than the gross rateable value of an authority or group of authorities in calculating the amount of block grant payable;

(c) reducing, whether in whole or in part, disparities in the rates levied in different rating areas of Greater London other than the Temples; and

(d) any such other purpose as the Secretary of State may determine.

(4C) The power may also be exercised in accordance with principles to be applied to the councils of counties to whose police expenses section 57 of the Police Act 1964 applies (counties falling partly within the Metropolitan Police District).".)
The noble Lord said: My Lords, I should like to make it clear that in moving this amendment I am speaking to Amendments Nos. 91C and 92B on the second Marshalled List, which replace Nos. 92 and 92A, which I shall not be moving.
When I accepted the amendment of the noble Viscount, Lord Ridley, to this clause, I said that I welcomed it in principle but that some technical tidying-up might be necessary. So it has proved, and this is the purpose of this amendment. Except for subsection (4C) of the amendment, which I shall come to in a moment, the amendment is consistent with the purpose of Lord Ridley's original amendment and simply clarifies that all the specified purposes for the use of multipliers must be applied in accordance with general principles, both where they are determined for all authorities or for all authorities in a class.
Subsection (4C)is a technical amendment designed to enable the Government to modify the grant payable to home counties where part of their area is served by the Metropolitan Police rather than the county force. We have already had a discussion on the special arrangements for the Metropolitan Police under block grant on amendment to incorporate the new schedule. My Lords, I beg to move.
Viscount RIDLEY: My Lords, may I just thank my noble friend the Minister for tidying up my amendment, which I gratefully accept.
On Question, amendment agreed to.
[Amendments Nos. 92 and 92A not moved.]
11.31 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 92B:
Page 53, line 33, leave out from ("(e)") to end of line 35 and insert ("were omitted").
The noble Lord said: My Lords, I spoke to this amendment with No. 90A. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 93 and 94 not moved.]
Lord BELLWIN Lord BELLWIN moved Amendment No. 94A:
After Clause 59, insert the following new clause:
("Special provision for Metropolitan Police District
. Schedule [Metropolitan Police District to this Act shall have effect in relation to block grant payable—

(a) to the council of a London borough; or

(b) to the council of a district whose area is wholly or partly within the Metropolitan Police District.").

The noble Lord said: My Lords, I spoke to this amendment with No. 90A. I beg to move.
On Question, amendment agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 94B:
After Schedule 10, insert the following new Schedule:—

SCHEDULE METROPOLITAN POLICE DISTRICT
  PART I

    INTERPRETATION
    1. In this Schedule—

    "gross rateable value", in relation to the Metropolitan Police District, means the aggregate of the rateable values of the hereditaments in that District;

    "rateable values", in relation to hereditaments in that District, means, subject to paragraphs 2 and 3 below, rateable values ascribed to them in the valuation lists on a date to be specified for each year in the Rate Support Grant Report;

    "the Receiver" means the Receiver for the Metropolitan Police District;

    "Receiver's grant-related poundage" means a poundage determined by the Secretary of State and related—

    (a) to a given ratio between the Receiver's total expenditure and the Receiver's grant-related expenditure; or

    (b) to a given difference between his total expenditure divided by the

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    population of the Metropolitan Police District and his grant-related expenditure so divided;

    "Receiver's total expenditure" means that part of the Receiver's expenditure for a year which falls to be defrayed out of the Metropolitan Police Fund and which is not met by any such grant as is mentioned in section 50(7)(a) or (b) above but reduced by the amount of any payments of such descriptions as the Secretary of State may specify which fall to be paid for that year into the Metropolitan Police Fund;

    "Receiver's grant-related expenditure" means a sum determined by the Secretary of State as being the aggregate for the year of the Receiver's notional expenditure having regard to his functions;

    "relevant authority" means—

    (a) the council of a London borough; or

    (b) the council of a district whose area is wholly or partly within the Metropolitan Police District; and

    "relevant portion" means the portion of the Receiver's total expenditure for a year which bears to that total the ratio which the gross rateable value of the area of a relevant authority, or the part of that area within the Metropolitan Police District, bears to the gross rateable value of that District.

    2. The reference to hereditaments in the definition of "rateable values" in paragraph I above includes a reference to a notional hereditament which a body is treated as occupying by virtue of any enactment.
    3. A Rate Support Grant Report may provide that for the year to which it relates the rateable values of hereditaments in the Metropolitan Police District falling within any class of hereditaments shall be ascertained for the purposes of this Schedule otherwise than by reference to the values ascribed to them in the valuation lists.

PART II

  SPECIAL PROVISIONS RELATING TO BLOCK GRANT
  calculation of block grant
  4. Paragraph 5 below shall have effect in relation to the calculation of the amount of block grant payable to a relevant authority instead of section 52(6) above.
  5.—(1) The amount of block grant payable to a relevant authority is the aggregate of the two amounts specified in sub-paragraphs (2) and (3) below.
  (2) The first amount is an amount calculated by deducting from the relevant portion of the Receiver's total expenditure for the year the product arrived at by multiplying the Receiver's grant-related poundage by the gross rateable value of the authority's area, or, if their area is not wholly within the Metropolitan Police District, by the gross rateable value of that part of their area which is within that District.
  (3) The second amount is an amount calculated by deducting from the total expenditure to be incurred by a relevant authority during the year—
  184

  (a)the relevant portion of the Receiver's total expenditure for the year; and

  (b) the product arrived at by multiplying the authority's grant-related poundage by the gross rateable value of their area.

  Special meaning of "grant-related poundage"
  6. For the purposes of this Part of this Act, section 52(8) above shall have effect, in relation to a relevant authority, as if in the definition of "granted-related poundage" the references to total expenditure were references to total expenditure after deducting the relevant portion of the Receiver's total expenditure for the year.
  Adjustments of distribution of block grant to relevant authorities
  7. The distribution of block grant to relevant authorities shall be adjusted in accordance with paragraph 8 below instead of section 55 above.
  8.—(1) Subject to the following provisions of this paragraph, the Secretary of State may provide in a Rate Support Grant Report that the amount to be deducted under paragraph 5(2) or (3) above in respect of block grant payable to a relevant authority for a year shall not be the relevant product but that product multiplied by a multiplier determined by the Secretary of State.
  (2) In sub-paragraph (1) above "the relevant product" means the product mentioned in paragraph 5(2) or (3) above, as the case may be.
  (3) Except as provided by sub-paragraph (4) below, the power conferred by sub-paragraph (1) above may only be exercised in relation to either of the relevant products for the purpose of increasing the amount of block grant payable to a relevant authority.
  (4) The power may be exercised for the purpose of decreasing the amount of block grant payable to a relevant authority if the Secretary of State is satisfied that there will be an unreasonable increase, unless he exercises it, in the amount of block grant payable to the authority for a year compared with the amount payable to them for the previous year.
  (5) The power may only be exercised in relation to the product mentioned in paragraph 5(2) above so as to determine one multiplier and to determine it in accordance with principles to be applied to all relevant authorities.
  (6) The power may be exercised in relation to the product mentioned in paragraph 5(3) above so as to determine different multipliers for different relevant authorities.
  (7) The power may only be exercised in relation to that product—

  (a) for any such purpose as specified in paragraphs (a) to (d) of section 55(4B) above; and

  (b) in accordance with sub-paragraphs (8) to (11) below.

  (8) The power may be exercised in accordance with any principles to be applied under section 55(4A)(a)(i) above to all local authorities.
  (9) In relation to relevant authorities who are the councils of non-metropolitan districts the power may be exercised in accordance with any principles to be applied under section 55(4A)(a)(ii) above to all councils of non-metropolitan districts.
  (10) In relation to relevant authorities who are councils of inner London boroughs the power may be exercised in accordance with principles to be applied to all such councils.
  (11) In relation to relevant authorities who are outer London boroughs the power may be exercised in accordance with principles to be applied to all such councils.
  (12) If the Secretary of State exercises the power in relation to either of the products, the principles on which he exercises it shall be specified in the Rate Support Grant Report.
  (13) In its application to block grant payable to a relevant authority for the commencing year sub-paragraph (4) above shall have effect as if there were substituted for the reference to the amount of block grant payable to the authority for the previous year a reference to an amount determined by the Secretary of State.
  Supplementary reports
  9. In the application of section 57 above to the Receiver's grant-aided poundage and the Receiver's grant-related expenditure subsection (5) shall be omitted.
  Adjustment of block grant total
  10. Section 58(3) above shall have effect in relation to relevant authorities as if for the purpose of making a fresh calculation of the entitlement of each relevant authority to block grant it authorised the Secretary of State to substitute the total of the Receiver's expenditure actually defrayed out of the Metropolitan Police Fund for the figure calculated under paragraph 1 above as the part of the Receiver's expenditure which falls to be defrayed out of that Fund").
  The noble Lord said: My Lords, I spoke to this amendment with No. 90A. I beg to move.
  On Question, amendment agreed to.
  Clause 60 [Adjustment in connection with education etc.]:
  Lord BELLWIN Lord BELLWIN moved Amendment No. 95:
  Leave out Clause 60.
  The noble Lord said: My Lords, the present Clause 60 sought to apply the pooling provisions of the Local Government Act 1974 subject only to a simple change in nomenclature. This has since been found to be inadequate, and new Clause 59 was inserted into the Bill at Committee stage to replace Clause 60. Clause 60 should therefore be left out of the Bill. My Lords, I beg to move.
  On Question, amendment agreed to.
  Clause 61 [Submission of information]:
  Lord BELLWIN Lord BELLWIN moved Amendment No. 95A:
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  Page 56, line 10, leave out ("60 above") and insert ("[Special provision for Metropolitan Police District] above and to Schedule [Metropolitan Police District] to this Act").
  The noble Lord said: My Lords, I spoke to this amendment with No. 90A. I beg to move.
  On Question, amendment agreed to.
  Clause 63 [Changes in rateable values]:
  Lord BELLWIN Lord BELLWIN moved Amendment No. 96:
  Page 57, line 2, leave out ("determined") and insert ("conclusively calculated").
  The noble Lord said: My Lords, this is a technical amendment. The use of the word "determined" in this clause suggests, quite wrongly, that the amount of block grant payable to a local authority for any year will actually be specified in the rate support grant report. The use of the words "conclusively calculated" is consonant with Clause 62(2), which requires the Secretary of State to make a conclusive calculation and notify the result to each local authority. My Lords, I beg to move.
  On Question, amendment agreed to.
  Lord SANDFORD Lord SANDFORD moved Amendment No. 96A:
  After Clause 65, insert the following new clause:
  ("Grants in respect of rate relief for buildings occupied for charitable purpose
  . For the year beginning 1st April 1981 and each subsequent year the Secretary of State shall pay out of money provided by Parliament to any authority giving relief from rates under section 40(1) of the General Rate Act of 1967 (mandatory relief for charities) in that year a grant equal to 100 per cent. of the aggregate amount of relief given.")
  The noble Lord said: My Lords, in moving this amendment I should declare an interest, because it was first proposed to me by the City of Westminster, one of whose ratepayers I am. It concerns a cost to the ratepayers of no less than £4·3 million, and I shall be very directly benefiting if we succeed in getting the amendment accepted. But the principle has since been strongly supported by the Association of District Councils. It has to do with the relief in rates accorded to properties occupied for charitable purposes, and it seems to me that if relief can be given in the case of properties occupied by the disabled, then there is certainly a case in logic for relief to be given in respect of properties occupied by charities.
  There is a mandatory requirement under the General Rate Act 1967 on all rating authorities to afford relief to those charities. My contention is that when relief is so given, those authorities should be fully compensated for the relief that they give in accordance with that Act and in accordance with any other discretion that they exercise on top of it. The national status of charities—it is not a local matter—and the properties that they occupy fall quite arbitrarily. The national charities are concentrated rather heavily in the City of Westminster, and the fact that the City of Westminster has rather more resources than most other local authorities should not, in my view, be a reason barring them from the receipt of this relief, or barring any other local authority that happens to house a considerable number of charities. I beg to move.
  Lord BELLWIN: My Lords, I am in absolute sympathy with the new clause, but when one looks closely at this matter it can be seen that the case for a specific grant of this kind is at best a marginal one. Under the resources element of the present rate support grant, almost all rating authorities receive compensation for the relief that they must give. Under our new block grant, even more authorities will receive compensation. There will only be a handful of authorities at most which do not receive grant because they have such large resources of their own. That would appear to give adequate recognition to the authorities' loss of income.
  It is true that this compensation is given within the total of rate support grant, whereas under Clause 65 the new relief to the disabled is to be compensated outside rate support grant. That, however, reflects the innovation of a new form of rate relief to the disabled, only operative from 1st April 1979. In that case a new specific grant serves to give encouragement to local authorities to get the new scheme off to a flying start.
  Charities relief is different. It is long-established and no relief at all was given until 1978. In our view it is entirely reasonable that a form of relief as well established as this should be compensated for by redistribution within the rate support grant total. Finally, I should mention
  188
  the question of expense. To create a new grant as proposed would cost some £35 million a year.
  Lord SANDFORD: My Lords, that is all very well, but the bill is large when it is totted up, and this falls much more unfairly and unevenly on the local authorities than it does on the central Exchequer. I cannot say that this is a particularly convincing argument, but at this hour of the night I shall not press the amendment but will beg leave to withdraw it.
  Amendment, by leave, withdrawn.
  [Amendment No. 96B not moved.]
  Schedule 11 [Prescribed expenditure under Part VIII]:
  11.37 p.m.
  Baroness STEDMAN Baroness STEDMAN moved Amendment No. 96C:
  Page 182, line 9, leave out sub-paragraph (c) and insert—
  ("(c) the improvement or laying out of land other than the reclamation of derelict, neglected or unsightly land;").
  The noble Baroness said: My Lords, Clause 113 of the Bill extends the powers to make grants for the reclamation of land. Unfortunately, the very future of this reclamation programme is under threat because the expenditure upon it will have to be part of the capital allocation for an individual authority. Thus reclamation will have to compete with many other proposals in the same block within that allocation. Local authorities over the years have got a proven record of effective and substantial reclamation of derelict land, and I believe it would be a disaster if this were to change.
  The Government's intentions so far on this point are all the more paradoxical because in the same Bill they also emphasise the importance of identifying and making surplus land available. Much of the land in the metropolitan and in the older urban areas is land which needs to be reclaimed, and such land must take first priority. But national resources are essential over and above the capital spending allocations that will be granted under the powers embodied in this Bill I beg to move.
  Lord BELLWIN: My Lords, when expenditure on the reclamation of derelict

  189
  land was discussed in Committee, I tried to express my own conviction of the immense importance of this kind of work. I also tried to make it clear that the Government have no intention of withdrawing the 100 per cent. grant which is available to support local authorities' efforts to clear land which has fallen into disuse and dereliction. The amendment seeks to make special provision for this kind of expenditure by removing it from the control system altogether. In effect, we would be saying to local authorities—"The total amount that you spend on housing, education, transport, personal social services, libraries, sport and recreation, old people's homes and most of your other functions must not exceed such and such; but on derelict land reclamation, you can spend as much as you like and we shall do nothing to keep that spending within bounds".
  My Lords, I have asked myself whether that exclusion would be to the advantage of anybody. Obviously, it would result in an increase in the amount of derelict land clearance being practised by local auththorities. But think of the other inevitable implications. If the amount of public expenditure on derelict land reclamation goes up, then we must take steps to see that public expenditure on all other local authority services goes down by the same amount. The only way in which we could do that would be to reduce the expenditure allocations to be made for all the other services. That would not only reduce authorities' discretion to decide for themselves on which services to spend the resources that are available to them—it would be grossly unfair on authorities with no derelict land problems, who would find themselves with less resources with which to undertake other services which may be just as beneficial and socially desirable as derelict land clearance. I continue to believe that the disadvantages of accepting this amendment would outweigh the advantages, superficially attractive though the latter may be, and I wonder whether the noble Baroness may therefore feel able not to press this amendment?
  Baroness STEDMAN: My Lords, my Chief Whip says that the noble Lord's sweet smile is irresistible and therefore I must withdraw.
  Amendment, by leave, withdrawn.
  Lord BELLWIN Lord BELLWIN moved Amendment No. 97:
  Page 182, line 11, at end insert—
  ("(dd) the repair or maintenance—

  (i) of land (including dwelling-houses and other buildings) held under Part V of the Housing Act 1957; and

  (ii) dwelling-houses held otherwise than under that Part of that Act,

  to the extent that the expenditure is defrayed by borrowing;")
  The noble Lord said: My Lords, this amendment brings within the scope of "prescribed expenditure" such repairs to housing as are financed by loans known normally as "capitalised repairs". It thus aligns the Bill with current practice in the housing sector. The capital allocations which my right honourable friends the Secretary of State for the Environment and Wales make at present under the Housing Investment Programme system cover "capitalised repairs", and it is our intention that this established practice, already familiar to local authorities, should continue. I hope that noble Lords will accept that this is a sensible amendment designed both to maintain continuity and to fit in with the new housing subsidy system. I beg to move.
  On Question, amendment agreed to.
  [Amendment No. 98 not moored.]
  Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 98A:
  Page 182, line 23, at end insert—
  (" Expenditure in connection with the reclamation of derelict land which is to be grant aided by the Secretary of State under the provisions of the Local Government Act 1966, as amended by the Local Employment Act 1972 and this Act, shall not be prescribed expenditures for the purposes of this Part of this Act.")
  The noble Lord said: My Lords, at this late hour I do not think I need any encouragement from your Lordships to be as brief as possible. The reason I have once again to move this amendment, which is couched in the same terms as the amendment I moved in Committee, is that in a very charming letter the noble Lord the Minister admitted that, like me, he had misunderstood the position. This appears at col. 777 of Hansard. I think at that time it was believed by the noble Lord that the whole allocation system would be based upon local authorities making a hid. Those bids for derelict land grants would be considered on their merits and, as such, Merseyside

  191
  having a very considerable derelict land problem, this would be reflected in the eventual allocation.
  I understand that the position as described in the debate at the Committee stage is, in fact, wrong. The bid system will work for four out of the five proposed blocks, but there is an exclusion on the "other services" block, under which derelict land is one of the headings.
  I understand that the department of the noble Lord the Minister have confirmed that the Association of Metropolitan Authorities will be given a total allocation based on the public expenditure White Paper Guidelines for Capital Expenditure on those services falling within the "other services" block. As I understand it, the Association of Metropolitan Authorities would then derive a distribution formula for a distribution between its constituent members; in other words between metropolitan councils.
  Therefore, I think it will be seen that the Association of Metropolitan Authorities with the best will in the world are unlikely to be able to introduce a degree of objectivity in making allocations based on the objective need for derelict land treatment by some of their members, and will inevitably be restricted to a crude population/past spend apportionment which would be grossly unfair (I apologise for the technicality of this) to a metropolitan county council which has a special derelict land problem, as Merseyside does with the considerable dereliction left over from the 19th century and, for historical reasons, not dealt with. I think your Lordships are probably aware that areas such as St. Helens and other inner urban areas of Liverpool have an enormous and probably unique dereliction problem which has been reflected in the 100 per cent. grants made available.
  The fear of the Merseyside County Council is that this advantage they receive because of the peculiar nature of their problem will be lost because allocation in future will be on a crude population basis. I wonder if I could get some kind of assurance from the noble Lord the Minister, who, I understand, to be very sympathetic to the problem I have outlined. I beg to move.
  Lord BELLWIN: My Lords, this amendment is very closely related to Amendment No. 96C. I do not think that your Lordships would thank me for repeating at length my reasons for believing that it would not be right to exclude from control expenditure on derelict land clearance. The fact that this expenditure is grant-aided, in some cases up to 100 per cent., is strictly speaking irrelevant, because the main objective of Part VIII of the Bill is to introduce an effective, fair means of keeping local authorities' total capital spending within planned levels, no matter whether the expenditure is financed out of Government grant, local rates, borrowing, leasing or whatever other source of money.
  In my judgment, it is right that under the new system of capital expenditure control, each local authority should be free to spend up to an overall ceiling on whatever services they themselves choose—it is not for central Government to make up local government's mind about what services are more or less deserving of support than others. Of course, I believe in derelict land clearance and I would like to see more of it. But local decisions should be taken locally. I am not prepared to accept the reduction of local democracy which this amendment would entail. I am sure it is not at all what the noble Lord, Lord Evans, intends, knowing him and his involvement in local government as I do. But I think that would be the effect of it, and I hope he will feel able to withdraw it.
  Lord EVANS of CLAUGHTON: My Lords, at a quarter to twelve at night suppose I am not left with very much choice. Perhaps I have acquired the contagion of the Government, who claim to be in favour of local independence and then produce legislation which is not that way. I suspect that in my concern for the problems of Merseyside I have departed from my principles about equality, but I feel very deeply that areas with special difficulties, such as Merseyside has with dereliction, should have special treatment. But in the circumstance and because of the hour and the fact that I value my life—and I recommend Lord Bellwin, if he values his, not to come to Merseyside—I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord DENHAM: My Lords, I think we have probably reached the stage where it might be right to adjourn consideration of the Bill.
  I beg to move that further consideration on Report be adjourned.
  Moved accordingly, and, on Question, Motion agreed to.

  SIZEWELL B PRESSURISED WATER REACTOR
  SIZEWELL B PRESSURISED WATER REACTOR
  HERBICIDE 2, 4, 5-T: ADVISORY COMMITTEE'S CONSIDERATION
  HERBICIDE 2, 4, 5-T: ADVISORY COMMITTEE'S CONSIDERATION
  ENGLISH AND IRISH CONTINENTAL SHELVES: ARBITRATION
  ENGLISH AND IRISH CONTINENTAL SHELVES: ARBITRATION
  CHANNEL ISLANDS: AIR TRANSPORT LICENSING
  CHANNEL ISLANDS: AIR TRANSPORT LICENSING
  PTARMIGAN COMMUNICATIONS PROJECT
  PTARMIGAN COMMUNICATIONS PROJECT
  TUBERCULOSIS: CIVIL SERVANTS
  TUBERCULOSIS: CIVIL SERVANTS