Sitting of 14 December 1981

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    DERBYSHIRE BILL [Lords]
    Read the Third time and passed, with amendments.

HUMBERSIDE BILL
Order for Third Reading read.
To be read the Third time tomorrow.

Oral Answers to Questions
  TRADE

    Road Vehicles (Imports-Exports)
    Mr. Edwin Wainwrightasked the Secretary of State for Trade what were the values, in £ sterling, of imports and exports of road vehicles for each of the past five years.
    The Secretary of State for Trade (Mr. John Biffen): With permission, I will publish the information in the Official Report. At current prices, exports of road vehicles increased by 33 per cent. between 1976 and 1980 and imports by 134 per cent.
    Mr. Wainwright: Are there not tremendous opportunities for our vehicle industries if the Government will
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    only change their policies to give much greater help to exports? When will the Government take action to help our exports surpass our imports?
    Mr. Biffen: The hon. Gentleman will be delighted to know that for the four months of the current year for which figures can be identified—January, February, September and October—we are showing a £13 million surplus in the business.
    Mr. Geoffrey Robinson: Is not the situation deteriorating terrifyingly? Will the right hon. Gentleman confirm that in the last year for which figures are available our deficit on visible trade with the European Community was £2 billion, of which £1·3 billion was accounted for by our deficit on motor vehicles? With his long-standing and reasoned opposition to the Common Market, will the right hon. Gentleman take action over that unacceptable state of affairs?
    Mr. Biffen: The figures that the hon. Gentleman quotes are broadly true, but they could just as well reflect on the fortunes of our abilities in the motor trade as on our membership of the Community.
    Following is the information:

    United Kingdom Trade in Road Vehicles, 1976–80

    £ million

    Imports cif

    Exports fob

    1976

    1,431

    2,376

    1977

    2,134

    2,872

    1978

    2,797

    3,070

    1979

    3,943

    3,148

    1980

    3,348

    3,156

    Source: Overseas Trade Statistics of the United Kingdom, sac (R2) Division 78 and equivalent coverage under SITC (R1)).

    Channel Tunnel
    Mr. Dubsasked the Secretary of State for Trade what is his assessment of the likely reduction in demand for capacity at airports in the South-East as a consequence of the diversion of traffic through a Channel tunnel.
    The Under-Secretary of State for Trade (Mr. Iain Sproat): This has been considered by the air traffic

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    forecasting working party, which states in its report that the most modest tunnel schemes are expected to divert well below a year's growth of air traffic. The promoters of one of the more ambitious schemes claim that as many as 3·9 million passengers a year could be diverted from air routes by the end of the century, but even then the effect on South-East air traffic would be relatively small.
    Mr. Dubs: Is not the demand for airport and runway capacity more a function of the number of flights than of the number of passengers? As the Channel tunnel is likely to divert traffic from short-haul flights, will the hon. Gentleman reconsider his answer, as the Channel tunnel might make some planned expansion in airport capacity unnecessary?
    Mr. Sproat: My answer to the hon. Gentleman's first question is "No". Demand depends on flights and passengers. There is no point in running flights if there are no passengers on them.
    The fixed Channel link would probably draw some passengers away from the regional as well as the London airports, but the lead times for construction means that it is unlikely to have a significant impact during this decade. On the estimates provided by the promoters, the number of passengers diverted from air travel by the end of the century is likely to be very small in comparison with forecast air traffic demand.
    Mr. Teddy Taylor: Bearing in mind the importance and potential of Southend airport, will the Government maintain the principle of fair competition and not pour funds into the Channel tunnel project, when it may not be needed?
    Mr. Sproat: I and all my colleagues are acutely aware of the importance of Southend airport, but my hon. Friend should speak to my right hon. Friend the Secretary of State for Transport about the Channel tunnel.
    Mr. Ginsburg: In the light of that encouraging information, will the Minister tell the Secretary of State that, in the present state of the economy, the need to make progress in constructing the Channel tunnel is urgent, as, if it is not built soon, it never will be?
    Mr. Sproat: I shall ensure that the hon. Gentleman's remarks are drawn to the attention of my right hon. Friend the Secretary of State.

    Consultative Council on Local Government Finance
    Mr. John Fraserasked the Secretary of State for Trade if he attends meetings of the Local Government Consultative Council.
    The Under-Secretary of State for Trade (Mr. Reginald Eyre): When necessary, I represent my right hon. Friend at meetings of the Consultative Council on Local Government Finance.
    Mr. Fraser: In which case, I sympathise with the hon. Gentleman. Will the amount of money that is likely to be spent next year by local authorities on consumer protection be more or less than, or about the same as it is this year?
    Mr. Eyre: Expenditure by local authorities on consumer protection is estimated at £47 million for 1982–83, and that estimate has been agreed with the local authority associations concerned.
    Mr. Fraser: Is the figure for this year up, down or the same?
    Mr. Eyre: It is up.

    British Airports Authority
    Mr. Robert Atkinsasked the Secretary of State for Trade whether he expects to bring forward proposals to privatise the British Airports Authority.
    Mr. Sproat: I have no plans to do so at present.
    Mr. Atkins: Is my hon. Friend aware of the view held by many Conservative Members, that early privatisation of the British Airports Authority will be in the interest of airline operators, airport operators and, above all, the personnel, who could buy shares if such privatisation were to go through? Does he recognise that implicit in that demand is no criticism of the general management of the British Airports Authority—indeed, quite the reverse—but that urgent action in this sphere would be greatly appreciated?
    Mr. Sproat: I am glad that my hon. Friend made those remarks about the management of the British Airports Authority, with which remarks I completely agree. I am aware of the strong feeling among certain of my hon. Friends, and I draw attention to the remarks of my right hon. Friend the Secretary of State in c. 42 of Hansard of 16 November, which says all that needs to be said at present.
    Mr. Jay: Have the Government any plans for privatising the Palace of Westminster?
    Mr. Sproat: If they had, it would not arise on this question, and if it did, it would not be me who would answer.
    Mr. Anthony Grant: Is my hon. Friend aware that there is great scope for the use of private contract services in many of the activities undertaken by the British Airports Authority? Will he consider issuing a circular—as my hon. Friend the Minister for Health has done to health authorities—urging the use of private enterprise wherever possible?
    Mr. Sproat: The British Airports Authority already uses many private enterprise companies within the airports and draws substantial profits and benefits from the duty-free franchise. I shall ensure that its attention is drawn towards examining what more can be done in that regard.

    Industrial Goods (European Free Trade Area)
    Sir Anthony Meyerasked the Secretary of State for Trade if he has discussed with his European Economic Community counterparts the possibility of a free trade area for industrial goods in Europe.
    Mr. Eyre: The Community's free trade agreements with the EFTA countries already extend to nearly all the rest of Western Europe all the principal benefits of industrial free trade available within the Community itself. There are also preferential trade agreements with nonmember Mediterranean States. Greece will be fully integrated into the Community customs union in 1986, and negotiations for Portuguese and Spanish membership of the Community are in progress.
    Sir Anthony Meyer: I am grateful to my hon. Friend for that full reply. Does he accept that the idea of a free

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    trade area between this country and the remainder of the Community that excluded trade in agricultural products would be a non-starter? Does he further accept that even if such a project were available it would do nothing to solve the problem of British failure to compete in the industrial markets of the world?
    Mr. Eyre: I have noted my hon. Friend's judgment with regard to his first point, but I emphasise to him that in 1981 there is evidence of our increasing competitiveness in the export of industrial goods.
    Mr. Geoffrey Robinson: Does the Minister agree that the remarks of the hon. Member for Hint, West (Sir A. Meyer) were utter nonsense? Does he further agree that in his initiative with our partners in the EEC he should be working either for the abolition of the CAP, or for its combination with a common industrial policy, which would have the same aims for the weaker industries as the CAP has for the weaker agricultural countries? Will he take that initiative?
    Mr. Eyre: I have noted the hon. Gentleman's points. The responsibility for those areas lies mainly with my right hon. Friend the Minister of Agriculture, Fisheries and Food and with my right hon. and learned Friend the Chancellor of the Exchequer.

    West Germany (Trade Deficit)
    Mr. Teddy Taylorasked the Secretary of State for Trade if he will take steps to discuss with the Government of West Germany the deficit in manufactured trade with that country of over £2,000 million in 1980 with a view to improving the balance of trade.
    Mr. Biffen: No, Sir. With Western European countries our trade in manufactures largely reflects competitive differences.
    Mr. Taylor: Since the Foreign Secretary has already stated that our deficit with Japan of about £1 billion last year is costing this country tens of thousands of jobs, should not the Government consider seriously the horrendous £2 billion deficit with West Germany—the greatest deficit with any country? Will they investigate particularly whether any of that deficit stems not from competitiveness, but from non-tariff discrimination?
    Mr. Biffen: The two situations are simply not analogous. Japan has a well-established resistance to taking imports, as a result of which only 3 per cent. of its economy is accounted for by manufactured imports, whereas West Germany has a more open economy, taking over four times that percentage. That is an indication that we are in a free trade position where it is up to our manufacturers to do as well as they can.
    Mr. J. Enoch Powell: Does not that deficit show how wide of the mark was the hon. Member for Hint, West (Sir A. Meyer) in his intervention?
    Mr. Biffen: I am not sure upon what nuance the right hon. Gentleman is seeking to alight, but I am certain that my hon. Friend the Member for Flint, West (Sir A. Meyer) is right in saying that our trading role in Western Europe will be largely a factor of our competitiveness.
    Mr. Hoyle: Does the right hon. Gentleman agree that, in line with his remarks, the EEC has been a disaster for this country? Does he further agree that now is the time
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    to introduce import controls on exports of motor vehicles, electronics, and so on, particularly from West Germany? Would that not be of great benefit to British industry?
    Mr. Biffen: I am sure that the experiences of the EEC are a disappointment for those who had euphoric expectations. When we come to apply descriptions the word "disaster" will relate to those who seek to introduce trade controls and import restrictions.
    Mr. Ian Lloyd: Will not that deficit figure and others of an equally depressing character disappear rapidly when the term "strike command" becomes associated once again with the Royal Air Force rather than the Transport and General Workers Union?
    Mr. Biffen: My hon. Friend makes a pertinent point.

    World Trade
    Mr. Dykesasked the Secretary of State for Trade whether he anticipates any improvement in world trade by volume in 1982; and what prospects he sees for improving the United Kingdom's share therein.
    Mr. Eyre: World trade in manufactures seems likely to grow rather faster next year than in 1981. Whether we shall raise our share will depend on our ability as a nation to sustain and build on this year's success in reducing inflation and increasing productivity.
    Mr. Dykes: Will that stimulate the reaction of Western Governments or can it all depend on the hidden hand?
    Mr. Eyre: I hesitate to try to define exactly what my hon. Friend has in mind, but I believe that our future performance will be greatly affected by our efforts to return to being fully competitive in world trade.
    Mr. John Smith: Will the Minister explain what possible logic there is for a Government who profess to be keen to stimulate our exports cutting back drastically their assistance to the British Overseas Trade Board and to exporters trying to obtain markets abroad?
    Mr. Eyre: The right hon. Member is wrong in his assessment. It is necessary for all Departments of Government, in these times of economic restraint, to accept that resources available to them may be reduced. Nevertheless, it requires them to make the best possible use of those resources. With regard to the British Overseas Trade Board, there were areas where expenditure was not justified. We have sought to concentrate the resource s and to use them most beneficially in developing overseas trade.
    Mr. Eggar: Has not one of the most notable achievements of British industry in the past two years been the high level of exports made as against the expectations of, amongst others, the Treasury?
    Mr. Eyre: My hon. Friend is right, and our exporters deserve congratulations for doing distinctly better than was expected last year by the extra successes that they have registered.
    Mr. Ioan Evans: The Minister talks repeatedly about being competitive. How does he explain that countries in Europe, such as West Germany with a Socialist Government, are far more competitive than we are with a Tory Government?
    Mr. Eyre: If the hon Gentleman studied the policies followed in West Germany he would realise how

    7
    unsuitable his comments were. Our greatest weakness has been our loss of 50 per cent. in competitiveness in the period between 1975 and 1980. During 1981 we recovered that loss of competitiveness to the extent of 10 per cent. But we have to go on and be entirely successful in being competitive in world trade terms.

    Multi-Fibre Arrangement
    Mr. Strawasked the Secretary of State for Trade if he will make a statement on progress on the renegotiation of the multi-fibre arrangement.
    Mr. Meacherasked the Secretary of State for Trade if he will make a statement on the latest progress towards renegotiation of the multi-fibre arrangement.
    Mr. Biffen: As my right hon. Friend the Lord Privy Seal reported on 10 December, the Council of Ministers met on 8 December to consider further arrangements covering low-cost textiles and clothing imports. It resolved a number of points outstanding from the November Council. These decisions will enable the Commission to continue its full participation in the negotiations in Geneva on multi-fibre arrangement renewal, and also to open negotiations on future arrangements with the preferential suppliers.
    Negotiations in Geneva are continuing.
    Mr. Straw: Is the Secretary of State aware of the very grave anxiety and concern on both sides of the House and on both sides of industry about the lack of information on the decisions reached in the Council of Ministers in Brussels? Is the right hon. Gentleman aware, further, that there are fears that the quota base level may be set at the level of 1982 quotas, with a foreseen loss of 30,000 jobs if that happens, rather than 1980 actual levels of imports? Will the right hon. Gentleman now say what base level—is it 1980 quotas, 1982 foreseen quotas or somewhere in between—the Council of Ministers has decided to adopt as its negotiating plank in Geneva?
    Mr. Biffen: The hon. Gentleman will be aware that it has always been the practice not to reveal the detailed negotiating mandate that is in the hands of the Commission.
    As for the issue of 1980 actuals or quotas being used as the basis for multi-fibre arrangements No. 3, the Community is operating upon 1980 quotas with the use of a surge mechanism to moderate any take-up in the under-used quotas.
    Mr. Meacher: Is the right hon. Gentleman aware that it is both undesirable and dangerous to base the anti-surge mechanism on actual import levels in 1982, because it gives every incentive to supplying countries overseas to maximise their exports to us next year by every possible means, and because any restocking then will benefit them rather than domestic suppliers? Will not the anti-surge mechanism be ineffective if quotas currently under-utilised are filled by 1982?
    Mr. Biffen: The Commission has been charged to interpret and table the anti-surge proposals specifically to try to mitigate the differences which the hon. Gentleman has understandably identified.
    Mr. McQuarrie: When my right hon. Friend continues the discussions on the multi-fibre arrangement, will he ensure that an import control clause is incorporated
    8
    in the agreement to prevent unfair competition from foreign imports, which have affected British manufacturers seriously over the last few years and continue to do so?
    Mr. Biffen: Clearly, such action would have to come within Community competence, but I should like to consider what my hon. Friend has suggested.
    Mr. Woolmer: Will the Secretary of State say again whether agreement was reached at last week's meetings on resolving the various issues before the negotiators? Is he aware that there is a widespread feeling in the House and outside it that no agreement has been reached on growth rates, quotas, and the various ways of avoiding problems?
    Will the right hon. Gentleman say again whether the base level is, as he said, the 1980 quotas or whether the Government have accepted, against our advice, that the 1982 quotas should be used as the base level?
    Mr. Biffen: I have nothing to add to my first reply.
    I congratulate the hon. Member for Batley and Morley (Mr. Woolmer) on his first appearance at the Dispatch Box, speaking from the Front Bench on behalf of the Opposition. I can tell him that the negotiations at Geneva are proceeding, and that today could be one of the most decisive days. There is little that I can tell the House, other than to await the outcome, especially of today's discussions.
    Mr. Woolmer: I thank the right hon. Gentleman for his kind remarks, but I have to tell him that his answers are unsatisfactory. Will he say again whether agreement was reached at the Council of Ministers last week? If it was not reached, the right hon. Gentleman is in serious danger of grossly misleading the House.
    Mr. Freud: The Minister should congratulate the hon. Gentleman on a second occasion.
    Mr. Biffen: I hope that the hon. Member for Batley and Morley will grow more charitable with experience in his new post. I believe that agreement was not reached. But the negotiations continue. I must remind the House that these negotiations are being undertaken on behalf of the European Community nations by the European Commission. It is one of the inevitable consequences that I cannot answer blandly for what is happening minute by minute and hour by hour in the negotiations, given the relationships that we have in the Community.
    Mr. Bowen Wells: Has my right hon. Friend's Department made any progress on defining what is meant by a "recession clause" in the MFA, and is my right hon. Friend using that definition in the negotiations?
    Mr. Biffen: The Commission has the securing of a recession clause as one of its negotiating objectives. Again, it would not be consistent with precedent—and I do not intend to break precedent—to reveal the circumstances that the Commission counts as constituting a recession clause.

    Japanese Light Vehicles
    Mr. Marlowasked the Secretary of State for Trade what is the level of penetration of the United Kingdom market by Japanese light vehicles.
    Mr. Biffen: Nineteen per cent. of the light commercial vehicles registered in the United Kingdom in the first 11 months of this year were manufactured in Japan.
    Mr. Marlow: Is such a high level in the interests of the United Kingdom economy as a whole? If it is not, what action will my right hon. Friend take, bearing in mind the action that the Japanese take against United Kingdom exports, especially of footwear?
    Mr. Biffen: The Society of Motor Manufacturers and Traders, which is responsible for the voluntary restraint arrangement that we have with Japan on these matters, has itself been involved in discussions with its opposite number in Japan. It has stated that the understanding that has resulted from its recent meeting should mean a sharp decrease in the Japanese share of the light commercial vehicle market.
    Mr. Hoyle: Does not the right hon. Gentleman agree that we have now reached the stage with the Japanese, with all the hidden trade barriers that there are to exports from this or any other country to Japan, where we should tell the Japanese that we shall import one Japanese vehicle for every vehicle that they import from Britain?
    Mr. Biffen: I cannot think of a narrower, more unilateral approach to trade. The fact that the hon. Gentleman represents the soft Left reminds us how terribly difficult things must have become.
    Mr. Shersby: Will my right hon. Friend remind the House of the precise nature of the restraint agreement with Japan about the level of British imports of light vehicles?
    Mr. Biffen: It is an arrangement conducted between the SMMT and JAMA, its Japanese equivalent.
    Mr. Straw: Is the right hon. Gentleman aware that the market of BTB Engineering Ltd., a firm in my constituency that manufactures light vans, has been adversely affected by the continuing and rising imports of light vans from Japan? What positive hope can he offer to the employees of that firm and many others in the country that make light vans? When will we get from the Government the same tough approach to imports from Japan as has been shown by both Right and Left Governments in France?
    Mr. Biffen: I cannot give the specific message to the hon. Gentleman's constituents that he seeks, but I can tell him that the SMMT has said that it is
    "clearly satisfied with the outcome"
    of the latest agreement. If one is obliged to have such trade restraints it is far better done in that way than by arbitrary Government quotas and tariffs.
    Mr. Hal Miller: Does my right hon. Friend agree that it is better for such agreements to be left to the industries to negotiate than for Governments to interfere, even if, as is the case with light commercial vehicles, one of our major manufacturers is a significant importer of Japanese products?
    Mr. Biffen: I am reluctant to give an off-the-cuff reply to the main part of my hon. Friend's question. I am not a great enthusiast of government by trade association, but any arrangement that involved the Government taking unilateral action could easily provoke counter-action under article 19 of the GATT, with serious and harmful consequences for our national economy. That is something that we have experienced.
    Mr. John Smith: With regard to the right hon. Gentleman's remarks to my hon. Friend the Member for
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    Warrington (Mr. Hoyle), is it not crystal clear that the Japanese attitude to external trade is somewhat unilateral in character, in the sense that they have a low level of manufactured imports? Is it not also clear that, because our level of exports to Japan is so pitifully low, the scope for retaliation is necessarily limited? Will the right hon. Gentleman confirm that it is necessary continuously and relentlessly to put the maximum amount of Government pressure on the Japanese to get them to alter their attitude to world trade?
    Mr. Biffen: As a distinguished Scotsman, the right hon. Gentleman should not be too flippant about the ability of the Japanese to take harmful trade retaliation measures against us. The Scotch whisky industry is particularly well established in that market. Indeed, Scotch whisky is our largest single selling item in Japan. I believe that the most helpful way forward is to open up the Japanese market to our exports and for us to welcome Japanese investment in this country.
    Mr. Hardy: The Secretary of State may be right to reject the idea of a narrow. unilateralist approach to trade, and he frequently shelters behind the Commission's responsibility, but will he confirm that we are the most open market in the Community and that the French, Germans, Italians and everyone else in the Community seem much more capable of reducing Japanese imports, without facing any risk of retaliation?
    Mr. Biffen: It is a matter for genuine debate whether the United Kingdom is a more open market to the Japanese than is Germany.

    USSR (United Kingdom Exports)
    Mr. Chapmanasked the Secretary of State for Trade what recent initiatives he has taken to encourage exports to the Union of Soviet Socialist Republics.
    The Minister for Consumer Affairs (Mrs. Sally Oppenheim): A number of initiatives discussed at the May 1981 meeting of the British-Soviet Joint Commission are being pursued, including co-operation in the energy and automotive sectors.
    Mr. Chapman: I commend those initiatives. Will my right hon. Friend confirm that trade between the two countries has consistently been at an imbalance of 2:1 in Russia's favour for about 20 years? A significant reason is that it is in our interests to re-export some Russian imports, but does my right hon. Friend agree that the time has come when we can say to the Russian Government, with legitimate concern, that if they do not take more of our exports, particularly machinery and goods. we have the right to review imports of what we regard as inessential goods, including, though not exclusively, vodka and caviar?
    Mr. Robert Atkins: And Christmas cards.
    Mrs. Oppenheim: Leaving out the movement of diamonds, which benefits British firms, the trade balance is not too adverse to us. For example, we have a considerable surplus of trade in manufactured products. We are not significantly dependent on Soviet imports, except diamonds and precious stones. Our imports from the Soviet Union largely comprise raw materials, such as oil products and timber, and any replacement of those supplies would certainly take place at a higher cost to the economy and the consumer.
    Mr. Wilkinson: Can my right hon. Friend assure the House that the Government are being exceedingly cautious about trade with the Soviet Union at present, particularly on high-technology items that could improve the Soviet Union's military potential? Can she also confirm that if the Soviet Union sent even one man across the Polish border trade with the Soviet Union would be terminated?
    Mrs. Oppenheim: We trust that Poland will be left to settle its own affairs without interference from any quarter. I cannot speculate on how the United Kingdom and other Western countries would react if the Soviet Union intervened. We very much hope that it will not do so. It is clear that Soviet intervention would have far-reaching consequences for our relations in every sphere. In line with the policy agreed after the invasion of Afghanistan, the United Kingdom is not processing export licence cases that would require the unanimous approval of our COCOM partners. There are limited exemptions to that policy; for example, equipment intended for medical use only.
    Mr. John Fraser: Apart from what the right hon. Lady has already said, does any aspect of Russian foreign policy or Russia's denial of civil rights have any effect on trade policy?
    Mrs. Oppenheim: The hon. Gentleman will be aware that the Government have made abundantly clear their view about the Soviet Union's appalling—I repeat appalling—human rights record, but I believe that trade that is genuinely to our mutual advantage should continue.
    Mr. Emery: Can my right hon. Friend assure the House that the Government will not provide export credits to the Soviet Union for vast sums at massively subsidised rates, as did the previous Government, much to the detriment of the United Kingdom?
    Mrs. Oppenheim: I can give my hon. Friend that assurance. We offer credit to the Soviet Union on the same terms as those offered by other OECD countries. There would be no sense in offering either worse or better terms or discriminating in favour of the Soviet Union. The agreement that ended in February 1980 is not to be renewed.

    European Community—Japan
    Mr. McNallyasked the Secretary of State for Trade if there are further plans for co-ordinated European Economic Community approaches to Japan to encourage a more equitable and economically stable trading relationship with the Community; and if he will make a statement on the present position.
    Mr. Biffen: At the meeting of the Foreign Affairs Council on 8 December a list of requests for specific action was adopted. The list is being transmitted to the Japanese Government. It stresses the need for Japan both to open up her home markets and to moderate her exports in sensitive sectors. The Council will be assessing the Japanese response in February 1982.
    Mr. McNally: As I have addressed the question to the Secretary of State in his communautaire role, I hope that he will not be as tetchy as he was last time. Is there any time scale on the request to the Japanese or any threat of retaliatory sanctions if they do not respond positively? With reference to the right hon. Gentleman's earlier remarks about Scotch whisky, may I remind him that he is here as a representative of the Tories and not of Suntory?
    Mr. Biffen: I am sorry that my tetchiness provokes such music-hall humour. I will do much to avoid that in future. The hon. Gentleman must not take the fact that I remind him that he belongs to the most communautaire party in the House as a sign of tetchiness. As to the time scale involved, I have said that the Council will be assessing the Japanese response in February 1982 and I cannot go beyond that.
    Mr. Waller: Will my right hon. Friend continue, both directly and through the channels of the Community, to make it clear to the Japanese Government that we are anxious to see an expansion of open world trade, but that the continuation of such free trade depends on all countries opening their markets to one another and that if calls for restrictionism continue to grow it will be the fault of the Japanese themselves?
    Mr. Biffen: I am happy to give that assurance to my hon. Friend. The same points have been noted by the American Administration as well as the nations of Western Europe.
    Mr. J. Enoch Powell: Will the right hon. Gentleman confirm that the less the Japanese import from other countries the more capital they have to export to other countries?
    Mr. Biffen: Yes. That is why I think that the two factors should be kept clearly in context.
    Mr. Ian Lloyd: Will my right hon. Friend accept that everyone wishes to encourage and support his efforts to liberalise Japanese trade? Does he agree that if we want to turn the recession into the most catastrophic international slump, the best way of doing so would be to endeavour to insist that every country's trade must balance exactly 50 per cent. with that of every other country?
    Mr. Biffen: Yes. I have no intention of picking up that bacillus from the Bennites.

    Monopolies and Mergers Commission
    Mr. Neubertasked the Secretary of State for Trade whether he is satisfied with the powers of the Monopolies and Mergers Commission.
    Mrs. Sally Oppenheim: Yes, Sir.
    Mr. Neubert: Does my right hon. Friend agree that the powers of the Monopolies and Mergers Commission would be better used in tackling public sector monopolies such as coal, gas, electricity and the British Leyland price ring—which maintains car prices in the United Kingdom at thousands of pounds in excess of prices on the Continent—rather than using its powers to determine who should run that over-large sweet shop in Knightsbridge?
    Mrs. Oppenheim: I have a good deal of sympathy with what I think is the point that my hon. Friend is making, which is that the service to consumers, the prices offered by the public sector industries and the service that they render to the economy as a whole are far less satisfactory than the contribution made by the private sector. If that is my hon. Friend's point, I entirely agree with him. The Government have recently announced measures to strengthen the Commission's role in the external scrutiny of the nationalised industries' efficiency. The membership and staff are being reinforced as necessary. Existing powers to call for information are sufficient for all present purposes.
    Mr. Freud: If the Minister is so satisfied with the powers of the Commission, might she also explain to it the difference between commercial danger and crises of identity, an example of which was raised in the House of Fraser and Lonrho merger?
    Mrs. Oppenheim: I think that the legislation is sufficiently explicit for the Monopolies and Mergers Commission. The hon. Gentleman will be aware that the Commission has wide discretion in determining the criteria—
    Mr. Freud: Too wide.
    Mrs. Oppenheim: These are all matters for ongoing Government consideration. The Commission is an independent body and that is its main strength. It has wide expertise to call upon and the Government will not criticise individual reports from the Commission.
    Mr. Squire: Does my right hon. Friend recognise that to some of us, at least, the criteria adopted by the Commission in considering the House of Fraser issue, and to some extent the Sealink reference, are rather worrying? Will she continue to ensure that she keeps an eye on the criteria that are adopted? Is she aware that some of us think that we are getting the wrong answers and that we may be asking the wrong questions?
    Mrs. Oppenheim: I am not sure whether my hon. Friend is aware of the recommendations contained in the Liesner report of July 1980. The Government took a keen interest in the recommendations and they will continue to consider them. That matter will be part of the ongoing consideration of policy concerning the Monopolies and Mergers Commission and the competition policy that is involved. These are matters for continuing consideration and are dependent on the legislative timetable.
    Mr. John Smith: Is the right hon. Lady aware that, following the decision of her right hon. Friend on the inquiry into the acquisition of the House of Fraser, it was said that undertakings were expected to be given by Lonrho Ltd. to the Director General of Fair Trading? Since that time there has been considerable comment in the press and elsewhere to the effect that the undertakings have not been forthcoming. It is rumoured that some artifices are being adopted to try to avoid the recommendation and the Secretary of State's decision. Will the right hon. Lady make it crystal clear that the decision is meant to stick on all the parties to that effect?
    Mrs. Oppenheim: I am much gratified by the right hon. Gentleman's knowledge of commentary and rumour. Any action that had to be taken would depend on the circumstances. I can give him the assurance that if necessary there would be recourse to the order-making powers under the fair trading legislation.

    Spain (Balance of Trade)
    Mr. Hal Millerasked the Secretary of State for Trade what is the United Kingdom's balance of trade with Spain in motor vehicles, castings and forgings.
    Mr. Biffen: In 1980 there was a crude deficit of £135 million on trade with Spain in motor vehicles and a surplus of £93,000 on trade in iron and steel castings and forgings. It is not possible to identify separately trade in either all castings and forgings or those specific to motor vehicle use.
    Mr. Miller: Does my hon. Friend realise that the imbalance of trade in motor vehicles could be speedily rectified if the discriminatory Spanish import duties and export subsidies were removed, thus allowing the Metro, for example, to compete with the Fiesta? Will my right hon. Friend ensure that no further progress is made in the discussions on Spain's accession to the EEC until suitable undertakings are received from the Spanish Government on discriminatory import duties and export subsidies?
    Mr. Biffen: My hon. Friend is right to say that the present Spanish duties have an impact upon our car exports to that market. We have made the most vigorous representations to the Spaniards about this inequity. As my hon. Friend may know, there is a European Community-Spanish joint committee and we have today in Brussels sought to have this issue further discussed.
    Mr. Deakins: Is it the Government's policy in the negotiations over Spain's entry into the EEC to insist that there should be free trade in industrial products from the start of any long transition period or at the end of it?
    Mr. Biffen: The Government would like to see a transitional arrangement that was reasonably short and that had substantial tariff cuts from the beginning.

    British Products (Counterfeiting)
    Mr. Canavanasked the Secretary of State for Trade what complaints he has received recently about counterfeiting of British products by overseas manufacturers; and what steps he has taken.
    Mrs. Sally Oppenheim: In the past six months we have received three complaints about the counterfeiting of British products by overseas manufacturers. We urge British companies to secure the greatest possible protection for their patents, trade marks and designs and we are prepared to back them in pursuing cases where patents, trade marks and designs are infringed. In many cases these efforts are successful, but I shall not he satisfied until the practice has been brought effectively under control.
    Mr. Canavan: Why is the Minister so reluctant to give maximum support to complaints by Smith and Welstood, whose heating stoves, which are manufactured at Bonnybridge in my constituency, are being counterfeited by unscrupulous manufacturers in Taiwan, who are using the counterfeits to undermine Smith and Welstood's position in the international market? If the international courts are unable or unwilling to take effective action against the pirates, will the right hon. Lady consider imposing import restrictions on Taiwan until such time as it stops illegal practices that are damaging to industry and that destroy jobs in Britain?
    Mrs. Oppenheim: We very much sympathise with the dilemma of Smith and Welstood and other small companies. We have advised Smith and Welstood on how it might protect its rights. The company has yet to respond to our offer of a meeting to discuss how it might pursue its complaints. As the United Kingdom has no diplomatic relations with Taiwan it is not possible to make direct representations to the Taiwanese Government. However, the British Government have warned Taiwan publicly on a number of occasions of their deep concern about counterfeiting. It appears that the Taiwanese authorities

    15
    are now taking these warnings seriously, because in August they introduced a series of measures aimed at stopping malpractices. These measures included a review of policy and of fines as alternatives to prison sentences, which may be made longer.
    Mr. McNally: The Minister may be aware that 12 months ago the Prime Minister of Taiwan assured the Select Committee on Trade and Industry that prosecutions would take place if specific instances were provided by British firms. Is the right hon. Lady aware of successful prosecutions in Taiwan against counterfeiters?
    Mrs. Oppenheim: I was not aware of the statement to which the hon. Gentleman referred. However, the number of cases brought to the attention of the Department has decreased significantly in recent months. I hope that that is the result of the successful resolution of such cases in Taiwan and the result of the measures to which I have referred.
    Mr. John H. Osborn: Will my right hon. Friend outline the role of the Sheffield defence fund and its relationship with the Government? The term "Made in Sheffield" hitherto implied "Made in Sheffield" and not in a Sheffield elsewhere in the world. Is she now satisfied that the relationship between the Government and that fund is working well?
    Mrs. Oppenheim: I am sure that my hon. Friend is aware, as is the whole House, that I laid regulations before the House to require country-of-origin marking in particular on such goods as those produced by the Sheffield manufacturers to which he is referring, and that those country-of-origin markings make the matter perfectly clear if blanks, for example, are produced in Taiwan or any other country, or in any place other than Sheffield.
    Mr. John Fraser: Is the right hon. Lady aware that it is not enough to refer British companies to their legal rights in third countries and that she ought to make it clear to the Taiwanese Government that if they cannot control the export of counterfeit goods from that country to third countries, we most certainly can control the entry of Taiwanese goods, whether counterfeit or genuine, into Britain?
    Mrs. Oppenheim: I have already said that the Government have publicly made it clear to the Government of Taiwan that we disapprove of counterfeiting. We have made public statements to that effect—not through diplomatic channels, because they do not exist—and the Taiwanese authorities have taken action. It now remains to be seen whether that action is appropriate and adequate. From the reduction in the number of cases, it would appear that it is proving to be successful. It is far too soon to make a judgment.

  OVERSEAS DEVELOPMENT

    Least Developed Countries
    Mr. Deakinsasked the Lord Privy Seal if he will take steps to increase United Kingdom aid to the least developed countries.
    The Minister for Overseas Development (Mr. Neil Marten): It remains the Government's intention to continue to give priority to the poorest countries, including
    16
    the least developed, in allocating aid. When the health of the economy improves, the Government hope that they will be able to do more.
    Mr. Deakins: Will there be any increase in British aid in real terms to these countries next year as a result of pledges made by the Government at the recent United Nations conference on this subject?
    Mr. Marten: At that conference we pledged ourselves to the target of 0·15 per cent. of GNP but no specific time was given for it. We shall attempt to achieve it as soon as we can.
    Mr. Kenneth Carlisle: Is my hon. Friend aware that the best aid that we can give to the least developed countries is to provide a market for their goods in this country? In this regard, will he be particularly delicate with the least developed countries in respect of the multifibre arrangement negotiations, because they have not increased their markets substantially in this country, and if we are genuine in our desire to help them we must provide a reasonable market for their textiles here?
    Mr. Marten: Yes, I take note of the points that my hon. Friend has made. They are points of which the Community, which is the negotiating body on this occasion, is well aware. It is a question more appropriate to my right hon. Friend the Secretary of State for Trade.
    Mr. McElhone: Are not double standards revealed in the Minister's answer? Will he confirm that in Mexico the Prime Minister approved a subsidy of £30 million to a British firm for a steel project in that country, which is not one of the poorest countries? Will he also confirm that she approved a grant of £150 million to the same British firm for a steel project in India without that project going through the normal procedures in the right hon. Gentlemen's Department? If that is so, how does the Minister justify the disgraceful fact that this money came from a much reduced aid budget?
    Mr. Marten: It came from that section of the aid budget called the aid/trade provision, which was set up under the Labour Government, and it is doing exactly what that Labour Government wanted to do, which was to use a certain proportion, albeit a small proportion, of our aid to help our industries in Britain with orders that have to be subject to developmental appraisal.
    Mr. Bowen Wells: Does my hon. Friend agree that one of the best ways to increase aid to the least developed countries is through the Commonwealth Development Corporation, which has considerably increased its dispersals to the least developed countries in the past five years? Is my hon. Friend yet able to tell us the conclusions of the interdepartmental review on the future of the CDC?
    Mr. Marten: I agree with the first part of that question. On the second part, perhaps my hon. Friend would await the answer to his question later on the Order Paper.

    Students (Underdeveloped Countries)
    Mr. Teddy Taylorasked the Lord Privy Seal what progress has been made by his Department in providing assistance through overseas aid to enable students from underdeveloped countries to be educated at British universities.
    Mr. Neil Marten: As my hon. Friend the Minister of State, Foreign and Commonwealth Office told the House

    17
    last March, we are making additional funds available this year to restore to the levels of 1978 and 1979 the number of new awards available under our training programme for the Governments of developing countries. In 1980–81 there were about 3,900 new awards and in the current year the number is expected to exceed 4,600.
    Mr. Taylor: Were the Minister and his Department consulted over the amazing decision on overseas student fees, whereby foreign and Commonwealth medical students are being charged £6,000 a year this year, while students coming from the EEC or the French overseas territories are paying only about £900? In view of this ridiculous situation, will the Minister give an assurance that underdeveloped countries in the Commonwealth will continue to get increased aid to help their students to come to Britain?
    Mr. Marten: Yes. The developing countries concerned are able to use part of their development aid for education. As I have just said, we hope to have 4,600 new awards this year. In 1980 there were over 14,000 students under the aid programme in Britain, which was exactly the same number as in 1978.
    Mr. Spearing: Does the Minister agree that his answer in regard to the multi-fibre arrangement and the difference in fees that have to be charged in Britain to students from the French overseas départments and the Commonwealth show that the House and the British Government have no control over either matter? Will he make representations about these matters to his right hon. and noble Friend the Foreign Secretary, bearing in mind that people in Britain are fearful of the extent of the erosion of the powers of this House by the EEC?
    Mr. Marten: My right hon. and noble Friend the Secretary of State for Foreign and Commonwealth Affairs always reads Hansard in respect of the questions that I answer, and he will read the hon. Gentleman's very sage observations. My hon. Friend the Under-Secretary of State for Education and Science told the House on 23 November that the Government are committed, in common with other member States, to promoting student mobility within the Common Market. It is as a result of our membership of the Common Market that this has happened. I think that it is within the memory of hon. Members that this was not a matter of which I, and one or two others, including my right hon. Friend the Secretary of State for Energy, approved at the time.
    Mr. Alton: Does the Minister accept that last year's decision by the Government to reduce the amount of money available for overseas students and the introduction of full cost fees have been disastrous for many students in underdeveloped countries? Does he not accept that, even if enlightened and humanitarian reasons should not prevail, in terms of our self-interest it has been a disastrous decision to introduce full cost fees and that we ought to reverse that decision and include more people from those countries in our educational institutions so that courses at universities in Great Britain will not have to close?
    Mr. Marten: I do not think that the policy has been disastrous. There is no question of a return to the earlier general subsidy for all overseas students. If the hon. Gentleman would be kind enough to read what I said in my previous answers, he would understand that it has not been quite as disastrous as he has made out. Commonwealth students alone predominated by a ratio of 2:1.
    Mr. Wilkinson: Does my hon. Friend not agree that the matter to which my lion. Friend the Member for Southend, East (Mr. Taylor) referred is a preposterous situation that demands the collective attention of the Government to get it put right in negotiation with our Common Market partners?
    Mr. Marten: Yes, it is a question for the whole Government. An interdepartmental group of officials are monitoring the impact of increased fees on overseas student numbers. It has done it for one year, and it is doing it for a second year.
    Mr. Christopher Price: Was the interdepartmental group consulted about the decision last week, when the home student fee was halved, thus doubling the subsidy to EEC students and increasing the differential, making the position far worse than that suggested by the hon. Member for Southend, East (Mr. Taylor)? Was the Minister consulted about the decision taken last week to increase the differential between Commonwealth students and EEC students?
    Mr. Marten: No, I do not think that I was.

    India
    Mr. John Townendasked the Lord Privy Seal if, in view of the proposed purchase by India of Mirage fighters from France to a value in excess of £100 million, he will reduce the aid to that country by a similar amount.
    Mr. Neil Marten: No, Sir.
    Mr. Townend: My right hon. Friend will not be surprised that I am somewhat disappointed by his reply. Does he agree that where a country can afford to spend this amount on sophisticated weapons, particularly with our overseas competitors, the whole question of the need for aid is brought into doubt?
    Can my right hon. Friend understand the irritation of my constituents, who, with a local male unemployment rate of 23½ per cent., are told that the Government cannot find the money to make Bridlington a development area, but find that the Government can grant large sums of money to countries that are spending massive sums on sophisticated arms?
    Mr. Marten: Yes, I can understand the feeling of those people, but they should understand that, under article 51 of the United Nations charter, every country has the right to self-defence. India has bought Jaguar aircraft from Britain. The contract for the Mirage deal is still being negotiated; nothing has yet been finalised.

Poland
3.30 pm
The Lord Privy Seal (Mr. Humphrey Atkins): With permission, Mr. Speaker, I will make a statement on Poland.
Martial law was declared in Poland from midnight on 12–13 December. A Military Council for National Salvation, consisting of military leaders, has been set up under the Prime Minister and Party Secretary, General Jaruzelski. Military commissars have been appointed to oversee central and local government. Other steps taken include the sealing of the borders, the severing of telex and telephone links, the imposition of a curfew, the suspension of civil liberties, a ban on strikes and gatherings other than religious ceremonies, a takeover of the broadcasting system, and suspension of regional broadcasts.
General Jaruzelski announced these measures in a speech broadcast to the Polish people early on 13 December. He stressed that they were intended to be of short duration and would be rescinded when calm and order were restored. He said that the measures were intended to preserve the fundamentals of the Polish "Renewal" and that reforms would be continued. We regard these two commitments as very important.
There are no reports of danger to the safety of members of the British community in Poland. The British embassy is in touch with British nationals and as a precautionary measure has advised them to stay at home. This advice has also been broadcast, at the Government's request, on the BBC world service.
Her Majesty's Government are following developments with the closest attention and with great concern. We are, and shall remain, in close consultation with our partners in the Ten and in the North Atlantic Alliance. The next few days would appear to be of critical importance to the future of Poland. We sincerely hope that the Polish Government and people will be able to resolve their problems without bloodshed, by compromise and consensus. We shall observe a policy of strict non-intervention, and we expect the same of all signatories of the Helsinki Final Act.
Mr. Denis Healey: The official Opposition share the concern of Her Majesty's Government at what has happened in Poland in the last 24 hours. I think that we would all agree that it is a tragedy that the movement towards greater freedom and democracy in Poland over the last 12 months has been halted. We must hope, with Her Majesty's Government, that the progress will be resumed as soon as possible.
We agree that there must be no intervention by foreign Governments in the attempts of the Polish people to solve their own problems peacefully by their own efforts. It would be a disaster if any action or statement by any representative of any Western Government were taken as justification or excuse for intervention by the Soviet Government or by any East European Government.
The right hon. Gentleman will be aware that the Polish economy is extremely fragile and that it depends very largely on the readiness of Western banks and Governments to reschedule Polish debt. I understand that agreement has been reached at the technical level between the banks and Governments concerned on such a rescheduling. It was due to have taken place during the next week or so. Can the right hon. Gentleman assure the
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House that Her Majesty's Government will use their influence with all concerned, both banks and Governments, on the Western side, to ensure that the debt is rescheduled and that Poland is enabled to have access to the amount of foreign exchange that she needs to keep her economy on the road. If they do so, they will have the full support of Her Majesty's Opposition.
Mr. Atkins: I am grateful to the right hon. Gentleman for his support for the position that I have enunciated on behalf of Her Majesty's Government. In particular, I am grateful for his support for our view that intervention by any other State in the internal affairs of Poland would be a most serious matter.
The right hon. Gentleman is correct about the Polish economy. Poland's economic difficulties are well known. Over the past few months Her Majesty's Government have agreed to the rescheduling of debt and to the provision of new credit, but the Government are not solely involved; there are also the commercial banks. Our view is that it would be premature for them to take any decision to change what they had agreed.
Mr. J. Enoch Powell: What justification or business have we to express the opinion that the matters on which there is disagreement in Poland ought to be settled by compromise?
Mr. Atkins: If there were intervention by a foreign Power, or if there were any attempt in Poland to settle matters by force, it might well involve our friends and allies in Western Europe. This is a matter that must concern Her Majesty's Government and, I should have thought, the right hon. Gentleman.
Mr. Powell: Why?
Mr. Julian Amery: I appreciate that we must pursue a policy of non-intervention in physical terms, but does my right hon. Friend agree that the Polish Government and Poland have been subjected to completely unacceptable pressures from the Soviet Union and other members of the Warsaw Pact? Would it not be more appropriate for Her Majesty's Government at least to express regret at the suppression of the degree of freedom that had developed in Poland over the last few months?
Mr. Atkins: It is always a matter of regret to Her Majesty's Government if civil liberties are suppressed and a curfew and martial law are imposed by any Government over their people. Our chargé d'affaires in Warsaw had a meeting yesterday with the Polish Deputy Foreign Minister and made Her Majesty's Government's views very clear.
Mr. James Wellbeloved: Is the Minister aware of the widespread support in Britain for the struggle of the Polish people against the tyranny and inefficiency of the Communist regime? Is he also aware that he commands the full support of the SDP—[Interruption.]—in his call for non-intervention by the Soviet Union in the internal affairs of Poland? Will he bear in mind that the stark tragedy occurring today in Poland should be a warning to us all of the fate that would engulf us if we were to fall under the jackboot of the Marxist philosophy?
Mr. Atkins: I am, as always, grateful for the support of the hon. Gentleman and his party. I am particularly

21
grateful for the support that he and others have expressed for Her Majesty's Government's view that intervention by any other Power would lead to an extremely grave situation. It must be for the Polish people themselves to decide.
Sir Bernard Braine: I share the concern expressed by my right hon. Friend about the developments in Poland, and I support his warning against any intervention by a third party, but is he aware that there is a further pressing problem? Is he aware of the considerable effort mounted by British and Polish charities in this country in recent months to channel essential food and medical supplies, through the Church and through Solidarity, to people in dire deed? If he is correct in saying that the frontiers have been closed and all communications cut off, is that flow of humanitarian aid to cease? As some contact has evidently been made at diplomatic level, will the right hon. Gentleman use his good offices to ensure that at least humanitarian aid of that nature does not cease and that the Polish people are not left to go through the depths of a hard winter at the mercy of a cruel and oppressive regime?
Mr. Atkins: Yes, the Government are well aware of the substantial efforts made by voluntary and Church organisations, particularly in the supply of food and medicines. As my noble Friend the Under-Secretary of State said in the House of Lords only last week, the Government have been helping to co-ordinate those efforts. I am sorry to tell the House that the restrictions imposed from Sunday have gravely hampered that work. We shall, of course, make representations that such humanitarian work should be allowed to continue.
Mr. David Ennals: Is the Lord Privy Seal aware that his reply to the hon. Member for Essex, South-East (Sir B. Braine) is unsatisfactory? Is he aware also that, as voluntary organisations have been sending substantial amounts of food and medicine, I inquired of the Polish Government this morning about the position? Is he further aware that the lorries supplying those goods are in Britain and that permission would be granted for them to take supplies to homes for the elderly and for children and to hospitals? Would not our solidarity with the Polish people be better shown by positive help than by some of the bellicose statements that have been made today?
Mr. Atkins: I am delighted to hear that the right hon. Gentleman has been in touch with the Polish Government, and I hope that his efforts to further that humanitarian work will bear fruit. We, too, are seeking to pursuade the Polish Government to allow into Poland vehicles containing food, medical supplies, and so on, raised by the voluntary efforts of people in this country.
Mr. David Alton: I echo the sentiments expressed by other parties. Is the Lord Privy Seal prepared to press the various banking and other agencies further on the rescheduling of the Polish hard currency debt? Will he contact the director-general of the BBC to ensure that objective, impartial news services are available to the Polish people through the BBC overseas service?
Mr. Atkins: As I have said, the Government believe that it is too early for anyone—the Government or private commercial banks—to make any change in the
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arrangements so far agreed with the Polish Government about the rescheduling of debt and the provision of further credit. We must see how the situation develops.
I have no doubt that the BBC will continue to give impartial reports of events in Poland. As I have said, the world service has been broadcasting advice to British citizens in Poland. In view of the difficulties caused by the suspension of telephone links, and so forth, it is important that our subjects in Poland should be aware of the Government's advice.
Mr. Healey: Will the right hon. Gentleman clarify his comments about the rescheduling of debt? I understand that the agreement reached between the Polish Government and Western Governments and Western banks at the technical level was due to be signed last week. Will the right hon. Gentleman confirm that the meaning of his comments is that the rescheduling agreement should be signed forthwith? Can he give any information about the position of Mr. Lech Walesa? Is he at liberty and perhaps in negotiating contact with the Polish Government?
Mr. Atkins: I understand that the final agreements were due to be signed this week. Clearly, we shall have to decide how to proceed as day succeeds day. From the information that we have so far, it is clear that we should not jump into making changes in what was previously agreed. That is the position as I speak today.
I understand that Mr. Lech Walesa is at liberty and is in touch with the Polish Government.
Several hon. Members rose—
Mr. Speaker: Order. I shall do my best to call those hon. Members who have been rising in their places, but there is a Private Member's motion on unemployment in Wales, which will have to finish at 7 o'clock, and there is also another statement, so I hope that questions will be brief.
Mr. Kenneth Warren: Does my right hon. Friend consider that it would help the right hon. Member for Down, South (Mr. Powell) if he were to recall the gallant way in which the Polish soldiers kept the bright light of freedom burning in this country during the Second World War and the special relationship that we have with the Polish people? Will my right hon. Friend therefore, be stronger and ask the Soviet Government not to intervene in Poland?
Mr. Atkins: If my hon. Friend studies my statement he will find that that is precisely what the Government are asking of the Soviet Government, and, indeed, of every other Government. With regard to the Polish people, I do not think that anyone in the House would disagree with the view that what affects Poland must be of great concern to us.
Mr. Giles Radice: Although what happens in Poland is clearly a matter for the Poles, will the Government remind the new military authorities that Solidarity is in a real sense the Polish nation and that any repression or reversal of the reforms achieved since August 1980 would in the end be self-defeating? Secondly, what efforts is the Minister making to ensure that food parcels from this country get through to Poland?
Mr. Atkins: I think that I have already dealt with the second part of the hon. Gentleman's question. W e are

23
doing all that we can to persuade the Polish authorities to allow food parcels and other gifts of a humanitarian nature to help to alleviate the sufferings of the Polish people, which everyone recognises to be extremely serious.
On the first part of the hon. Gentleman's question, I must repeat that this is a matter that can be settled only by the Polish people themselves.
Mr. Eldon Griffiths: Will my right hon. Friend confirm that the bans on meetings and on a free press are clearly in breach of the human rights basket of the Helsinki agreement? In the light of that, does he intend to continue with the Helsinki process? Can he give an assurance that on all the practical matters that the West must now consider, such as food supplies, credits and technology, the NATO Allies will act in concert and will remain united on this issue, which they failed to do on Afghanistan?
Mr. Atkins: The answer to the first part of my hon. Friend's question is "Yes". The answer to the second part is that we are in close touch with our NATO partners—we were in touch yesterday, and another meeting is scheduled for today—because we believe that it is essential that we keep closely together and act in concert.
Mr. Phillip Whitehead: Will the Minister seek an early meeting with the new Polish ambassador and impress upon him that, although we wish to continue to help the Poles to overcome their economic crisis, it will be on the basis that there is widespread support in this country for the aims of the free trade union, Solidarity, and a widespread view that the economic crisis has been brought about not by Polish trade unionists but by those who have held a monopoly of power in Poland for 35 years?
Mr. Atkins: We are using every means available to us to convey our views to the Polish Government, including their representatives here. I shall, of course, draw the attention of the Polish Government to what the hon. Gentleman has said.
Mr. Churchill: Recalling that it was in defence of the freedom of Poland that Great Britain drew the sword against Nazi Germany in 1939, will the Government send a warm message of support and solidarity to the Polish people in their hour of trial? Does my right hon. Friend agree that it is a moral outrage that 36 years after the end of the Second World War Soviet troops remain in occupation of Poland? Finally, will the Government look again at the number of hours currently being broadcast by the BBC to Poland in the Polish language and see that this is stepped up?
Mr. Atkins: I do not believe that the Polish people are in any doubt about the feelings of both the Government and everyone in Britain because of their contribution 40 years ago, as well as our admiration for the Polish people. I shall study the amount of time made available for BBC broadcasts in Polish and discuss with the BBC whether it could or should be profitably extended.
Mr. David Winnick: Is the right hon. Gentleman aware that those of us who believe in genuine trade unionism everywhere, be it in Chile, Britain or Poland, must be deeply disturbed by the action that has been taken by the Polish authorities? Is he also aware that
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the message from the British labour movement is now one of complete solidarity with the Polish people in their time of crisis?
Mr. Atkins: I believe that all the people in Britain, be they trade unionists, members of the Labour Party or whatever, have followed events in Poland over recent months with the greatest of interest and admiration for the activities of the Polish people. I do not know whether it would be appropriate for me to send messages on behalf of the Labour Party, but I take note of what the hon. Gentleman has said.
Dr. Alan Glyn: My right hon. Friend has stressed the importance of nonintervention by other nations. Does that include the use of Soviet troops that are garrisoned in Poland?
Mr. Atkins: In our view, non-intervention by other nations means every other nation. We believe that this is a matter primarily for the Polish people themselves. They ought to be allowed to organise their own affairs and settle their own differences without intervention by anyone else.
Mr. Greville Janner: Is the right hon. Gentleman aware that the only hope of preventing the sort of intervention referred to by the hon. Member for Windsor and Maidenhead (Dr. Glym) is by enabling the Polish people to survive? I have just returned from Poland, where everyone is agreed that survival is the key. What is being done to move mountains of food—not just food parcels—so that people can eat? Why is it sensible for British citizens to stay at home, when the Minister should know that they will have nothing at all to eat if they do so?
Mr. Atkins: I have already been asked about food parcels and voluntary organisations. The Government have made large quantities of food available over the last few months. We have contributed nearly 500, 000 tonnes of barley, 10,000 tonnes of butter and 3,000 tonnes of beef. That was part of an effort by ourselves and our European partners to alleviate shortages of the kind to which the hon. and learned Gentleman referred. It is essential that the Polish people are enabled to survive the winter, and the Government will continue to help in the way that I have described.
Mr. Michael Morris: Will my right hon. Friend give an undertaking to review within the next 24 hours Polish language broadcasts? If the resources are insufficient, will some means be found to ensure that those broadcasts are performed in such a way that the Polish people can understand what is happening?
Mr. Atkins: I assure my hon. Friend that I shall review this matter not within the next 24 hours but within the next six.
Mr. Peter Bottomley: Will my right hon. Friend be prepared to make another statement if there is intervention by an outside Power? Will he make it plain to the Polish authorities that international cooperation on debts and aid to Poland will to a large extent be contingent on there being no interference by an outside Power?
Mr. Atkins: I note what my hon. Friend said in the second part of his question. I am always ready to make a statement about any matter that affects us all.
Mr. Tony Marlow: Will my right hon. Friend comment on the possibility that Russian

25
troops are already in action in Poland, only in Polish uniform? Will he comment also on the possibility that there is some connection between Israel's smash-and-grab raid in the Golan and problems in Central Europe?
Mr. Atkins: I have no evidence to suggest that either of those matters is happening.
Mr. Healey: Does the right hon. Gentleman agree that Britain has a moral obligation towards Poland as a result of the decisions taken by Sir Winston Churchill, as Prime Minister, to put Poland in the Soviet sphere of influence after the Second World War, and that inflammatory speeches at this time by persons who object to that policy will not be helpful to anyone? The important thing is that we should all do our best to assist the Polish people to achieve a peaceful solution of their problems and to ease the economic background to a peaceful solution in every way that we can, including the provision of aid, financial assistance and food, as the Community has already agreed to do.
Mr. Atkins: I am very much in agreement with the right hon. Gentleman. Everyone in the House is conscious of the service rendered by Poland to the Allied cause during the last war. We are conscious of the efforts that have recently been made to re-establish democracy in Poland. The last thing that anyone wants to do is to hinder those efforts. We want to help as much as we can. If at present we can be most useful by providing food and other essentials to enable the Polish people to survive what, unfortunately, is likely to be a severe winter, that is what we should concentrate on.
Mr. Churchill rose—
Mr. Speaker: I will call the hon. Member for Stretford (Mr. Churchill). [HON. MEMBERS: "No."] Order. The hon. Gentleman was referred almost by name—[Interruption.] Well, I felt that he was. Mr. Churchill.
Mr. Churchill: I am much obliged, Mr. Speaker—
Mr. Healey: On a point of order, Mr. Speaker. I was referring to the hon. Gentleman's grandfather, not to him—
Mr. Speaker: Order. I heard what was said.
Mr. Churchill: On a point of order, Mr. Speaker. I am obliged to you for calling me. Is it in order for the right hon. Member for Leeds, East (Mr. Healey)—who just cast aspersions on the memory of my grandfather, particularly with regard to the fate of the Polish people at the end of the war—to be reminded that under the terms of the Yalta agreement, Marshal Stalin agreed—
Mr. Speaker: Order. We cannot pursue that now.

Steel Industry
3.56 pm
The Secretary of State for Industry (Mr. Patrick Jenkin): With permission, Mr. Speaker, I should like to make a statement about the private sector of the steel industry.
When the 14 major companies in the United Kingdom steel industry were nationalised in 1967, it was recognised by the Government of the day that special measures were needed to ensure fair competition between the public sector, which was expected to represent well over two-thirds of the industry, and the private sector, which would consist of about 100 firms covering the remainder of the industry. Accordingly, the 1967 Iron and Steel Act contained provisions to this end.
When Britain joined the European Community on 1 January 1973 the steel industry in this country came under the regime of the Treaty of Paris—the European Coal and Steel Community—and, in so far as products fell outside that treaty, within the industrial articles of the Treaty of Rome.
Since the competition provisions of the 1967 Act were inconsistent with those treaties, they were repealed by the European Communities Act 1972. Accordingly, since then competition between the BSC and the private sector has been governed by the provisions of those treaties.
As the House well knows, the period since 1974 has been one of continuing, indeed, intensifying, decline for the whole European steel industry. Production in Europe, which in 1974 was 156 million tonnes of liquid steel, had fallen by 1980 to 128 million tonnes, leaving substantial spare capacity.
Price competition became increasingly intense. Prices today are lower in money terms than they were two years ago. At the same time, costs—particularly energy costs—have continued to increase. By mid-1980 there was hardly a steel company in Europe operating profitably.
Those difficulties were so great that, although the Treaty of Paris prohibits State subsidies to the steel industry, the Council gave its assent to a decision of February 1980 which allowed the Commission to give temporary approval to State aids linked with restructuring.
Towards the end of 1980 mandatory production quotas were introduced by the Commission, with the approval of the Council. Despite these measures, by mid-1981 the Community steel industry faced crisis conditions. Prices were well below any possible break-even point for the industry and severe disruption through massive overcapacity and unrestricted competition threatened.
Accordingly, a further crisis package of measures was agreed comprising the extension of mandatory production quotas for some products, voluntary industry restraint agreements, monitored by the Commission, for others, and strict enforcement of the ECSC rules on pricing transparency by both producers and the larger distributors. It is against that background that the position of the private sector in the United Kingdom falls to be considered.
The measures to stabilise prices and to increase them so that firms may once again move into profitability will, of course, help the private sector along with the rest, but, by itself, this will not be enough. In other Community countries various forms of aid are available from Governments, both to public and privately owned companies. In Britain help has been confined to the British

27
Steel Corporation. The private sector has received no assistance apart from regional aids, which are also available to the BSC.
Since 1975 successive Governments have made available to the British Steel Corporation a total sum approaching £5,000 million partly to fund operating losses, partly to finance investment in the modernisation of plant, and partly to meet the costs of closures and rationalisation, mainly redundancy and resettlement costs.
The British Independent Steel Producers Association has for some time been making representations to the Government about the extreme unfairness of the system under which it is expected to operate. The association has pointed out that steel is unique in that it has its own regime under the Treaty of Paris, something that is not applicable to any other industry.
The association has pointed out that in no other European country have massive sums of aid been given to the public sector while nothing has been given to the private sector. It has pointed out that the effect of this is that even where Community aid is available it has gone exclusively to the BSC. I have been giving urgent consideration to this powerful case.
I am pleased to tell the House that I have decided to introduce a scheme under section 8 of the Industry Act 1972 to help the private sector steel companies in Britain with rationalisation and restructuring projects and with the costs of redundancies.
The scheme will offer up to £22 million of assistance to the industry by the end of 1984. Eligible projects will attract grant at the rate of 25 per cent. The scheme will also guarantee 85 per cent. of the cost of statutory redundancy payments, and in addition provide a maximum contribution of £500 per person to the employer's costs of any ex gratia or severance payments.
This scheme is intended to cover steel products as defined by the Treaty of Paris, with the addition of the drawing, cold rolling and cold forming of steel, but excluding the drawing and manufacture of steel wire and wire products. I will publish details of the eligible sectors of the industry in the Official Report, and they are available in the Vote Office. Full details of the scheme will be available very shortly from my Department.
The scheme has, of course, to conform with the obligations that we undertook when we agreed to the ECSC decision on state aids, promulgated in August of this year. As such, it has to be confined to assisting restructuring, rationalisation and redundancies. Applications for help with restructuring projects must be made by September 1982. No payments can be made after 31 December 1984.
As required by the treaty, the scheme is being notified to the Commission for approval, but I do not anticipate difficulties in this regard.
Quite separately, the steel casting sector has drawn up a scheme to allow the rationalisation of that part of the industry whereby firms reducing capacity will be compensated by a voluntary levy paid by companies remaining in production. To work, the scheme requires front end loading and I am giving urgent consideration to making a grant under section 8 of the Industry Act 1972.
Any payment would be conditional on a substantial majority of this industry agreeing to fund a significant
28
reduction in capacity, thus fulfilling the requirements of section 406 of the Income and Corporation Taxes Act 1970.
The Government are determined to secure the survival of a healthy, profitable and, hopefully, expanding private sector in steel. I believe that the measures I have announced are fair and responsible. They can be accommodated without any increase in the allocations to my Department. I commend them to the House.
Mr. Stanley Orme: The Opposition have supported both the private and the public sectors of the steel industry, and will continue to do so, because such support saves jobs and assists our basic industries and our economy. The Secretary of State's proposals are modest by any criteria. We want to maintain jobs and sustain capacity. We do not want to see redundancies increased and capacity reduced even further. The reduction in both the private and public sectors has already gone much too far. I hope that the Secretary of State will be able to say that his statement is not just a redundancy package, but is something far more significant.
The statement raises the crucial question of Government intervention in the whole of the private sector. While the proposals amount to modest redundancy payments of £500 to any person made redundant, they will raise a few questions and cause eyebrows to be raised in the rest of the private sector. However the statement is phrased, it amounts to Government intervention in the private sector.
The statement says nothing about imports into the European Community, which are causing great difficulty. The right hon. Gentleman's hon. Friend the Under-Secretary of State referred to this matter only last week. What steps are being taken to see that these imports are controlled in a way that is beneficial to our industry?
The Secretary of State briefly mentioned energy costs. Again, we look, apparently without hope to Government intervention in regard to energy prices, which represent one of the major costs faced by the steel industry in both the private and public sectors.
What discussions has the Secretary of State undertaken with the United States about the American market and the effect of proposed restrictions on the British steel industry, not least the private sector, which exports considerable quantities of steel to the United States?
The key paragraph of the right hon. Gentleman's statement says:
"Any payment will be conditional on a substantial majority of this industry agreeing to fund a significant reduction in capacity",
and it goes on to refer to section 406 of the Income and Corporation Taxes Act 1970. Can the right hon. Gentleman give the House more information?
Finally—[Interruption]—this is an extremely important statement, following which I am sure my hon. Friends, at least, want to hear questions put to the Secretary of State on issues where men's jobs are at stake—the Opposition will want to study the statement in more detail. I give notice to the Secretary of State that the Opposition may ask for a fuller debate on the proposals.
Mr. Jenkin: I am grateful to the right hon. Gentleman for this general welcome for my statement. I assure him that this is not just a redundancy package. On the contrary, we would secure the approval of the Community for this package of aids only if it involved measures for the

29
restructuring of the capacity of the industry. Like the right hon. Gentleman, I hope that the steel industry, both the public and the private sectors, will, as I indicated in the statement, eventually be able, when the market turns up, to meet increased demand by increased production. I told the Select Committee last week that the British Steel Corporation could increase its output by up to 20 per cent. without any increase in capacity.
On the question of a general policy of intervention in the private sector, I must point out to the right hon. Gentleman that this case is unique. No other industry has had to face a combination of a substantial regime from the Community, under the Treaty of Paris, coupled with a massive subsidisation of a major public sector competitor in its own country. That is what makes the private sector of steel unique. I thought it right, as an exception to the Government's general policy of non-intervention, to come forward with this scheme.
The question of imports to the EEC from outside was the subject of a decision by the Foreign Affairs Council last week, when a negotiating mandate was agreed for the renewal of voluntary restraint agreements with overseas countries. These negotiations must now take place. We, of course, were party to that mandate.
The Government are acutely aware of the specific problem that electricity costs cause to major high-load factor users. That is a matter for my right hon. Friend the Secretary of State for Energy. The Government are considering the serious difficulty caused to parts of industry by energy costs.
The right hon. Gentleman asked about the American market. I had meetings last week with Senator Brock, the President's special trade negotiator. We discussed the difficulties that have emerged in America as a result of the suits for anti-dumping and countervailing duties. Section 406 of the Income and Corporation Taxes Act provides for a special tax relief in cases that fall within the restrictive conditions of the steel casting sector. The levy is relevant only to that separate scheme for the casting sector. We have not yet had a firm proposal, but I am considering whether it has a case for aid.
Whether there should be a debate is a matter for my right hon. Friend the Leader of the House.
Mr. Richard Page (Hertfordshire, South-West): I thank my right hon. Friend for his practical statement. When one bears in mind the fact that the BSC has received about £5,000 million of taxpayers' money, £22 million to help the private sector to reorganise is not excessive. I hope that this will not be the start of a continual drip feed. What steps will my right hon. Friend take to ensure that the rest of the EEC steel producers cut their production, as we have done in the United Kingdom, to allow our steel producers, both private and public, to move into profit?
Mr. Jenkin: I am grateful to my hon. Friend for his welcome of the measures that I have announced. A large part of the £5,000 million given to the BSC was to fund the losses and to provide for investment. Only a part went towards restructuring. I accept that substantial sums were involved. I accept also that if the European Community's regime is to be effective it must be applied fairly and firmly by the Commission to all members.
I am sorry to say that the weather disrupted the meeting of EEC Industry Ministers that I convened last week. Only one Minister managed to survive the snowstorms and
30
reach London. It is for the Belgian Presidency to reconvene that meeting, I hope early in the new year. The purpose of the meeting will be to review progress under the June agreement and to call upon the Commission to carry out its terms in respect of all members of the Community without fear or favour so that all are treated equally.
Several Hon. Members rose—
Mr. SpeakerOrder. I believe that these questions should finish at 4.30 pm at the latest, to be fair to those who wish to take part in the Private Members' business. I hope, therefore, that questions will be brief.
Mr. John Morris: Does the Secretary of State understand that some Opposition Members think that his statement represents, if not a U-turn, a U-swerve in the Government's realisation that intervention is necessary? There are shades of 1972 about it.
As £22 million is a modest sum, how many firms will benefit, what will be the scale of job losses and how will the miserable sum of £500 and the 85 per cent. guarantee compare with the sums that BSC workers receive?
Mr. Jenkin: I cannot reply to the right hon. and learned Gentleman's questions about how many firms and redundancies will be involved until the industry comes forward with schemes for restructuring and the consequences of them. The sum of £22 million is considered reasonable in the light of the likely development, but we cannot be certain about that.
Redundancy payments to be funded by the Government under the scheme amount to 85 per cent. of the statutory redundancy, plus 85 per cent. of anything above that up to a maximum of £500. If one assumes an average statutory payment of £1,500, which is right for the industry, that is an average of £800 extra and amounts to an average payment of about 63 per cent. that is funded by the Government. That is less than steel corporation workers receive, but it is fair to say that the British Steel Corporation conducted a massive investment campaign, which resulted in huge over-capacity in steel and a correspondingly large restructuring and rationalising job. In those circumstances, it was right that where there were large numbers of redundancies, sometimes in extremely painful circumstances, the sums paid to BSC workers should have been larger than the funds available to the private sector. We are talking now of a smaller scheme, and more modest sums are appropriate.
Mr. Speaker: Order. If questions and answers are as long as that, many hon. Members will be disappointed.
Mr. David Alton: I welcome the Secretary of State's statement, but does he accept that if more money had been made available earlier for restructuring there would not be the need now to spend money on redundancies? May I press the right hon. Gentleman further on how many redundancies are likely to occur? Has he any idea of what proportion of the money will go on restructuring and what proportion on redundancies? How many people made redundant by the BSC were re-employed?
Mr. Jenkin: My reply to the hon. Gentleman's first question is that I cannot add to what I said to the right hon. and learned Member for Aberavon (Mr. Morris). BSC (Industry) Ltd has been successful in placing many of its redundant steel workers. I pay tribute to the work of Sir

31
Charles Villiers and his staff. If the hon. Gentleman tables a question about the numbers involved, I shall do my best to answer it.
Mr. Hal Miller: I congratulate my right hon. Friend on moving so quickly to make up the deficiency in the treatment of the steel industry by the Government and the ECSC. I thank him warmly for remedying an injustice about which many of my hon. Friends felt strongly, and about which I felt very strongly, to the point of resignation. May we have an assurance that the money is not intended to include further Phoenix-type deals between the private and public sectors, but that they will be considered separately?
Mr. Jenkin: I am grateful for my hon. Friend's generous comments. In fairness to my predecessor it is right to point out that he instituted a system to ensure fair competition between the public and private sectors, which proved valuable and helpful until the recent collapse of steel prices in Europe. That gave rise to the serious problems that confront the private sector. I assure my hon. Friend that the money is not intended primarily for the so-called Phoenix schemes. The funding for Phoenix 1 came out of the BSC's external financing limits.
Mr. D. N. Campbell-Savours: As such a large amount of public money is involved for use on a global basis throughout the private sector, which we support, and because we cannot expect a corporate plan for the private sector, may we have a general plan for reconstruction in the private sector?
Mr. Jenkin: I would not regard myself or my Department as in the least competent to try to draw up a structural plan for an industry that is as complex, as technological and as rapidly changing as the steel industry. That must be left to the management of the industry. If it comes up with a plan that involves a measure of restructuring, we shall help with the cost.
Mr. Sydney Chapman: I welcome my right hon. Friend's statement, which I understand lessens the discrimination that has been practised by successive Governments against the private sector of the steel industry. Will my right hon. Friend bear in mind the question asked by my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) and recognise that the £22 million to be made available by the end of 1984 has to be put in the context of the £6,000 million or more of public subsidy to the British Steel Corporation? Does my right hon. Friend agree that the best way to avoid discrimination between the private and public sectors is by significantly reducing the public sector subsidy? What hope can he give the House of that?
Mr. Jenkin: The sum of £5,000 million to which I referred relates to the period since 1975. In evidence to the Select Committee last week I said that the British Steel Corporation was on target to halve its loss this year over last year and to breaking even next year. That, of course, will lead to substantially reduced funding from the Exchequer for the corporation. We are discussing what may happen in the future in the context of the BSC's corporate plan, and certainly an element of privatisation through Phoenix schemes will form part of the Government's plan.
Mr. Roy Hughes: Does the right hon. Gentleman appreciate that, although his package will be welcome to many private steel manufacturers, not least the Alpha steel works in Newport, the real job of a Secretary of State for Industry is to announce an end to cuts in our manufacturing capacity? Is he aware that what we need now is an expansionist package?
Mr. Jenkin: I hope that the hon. Gentleman will have noted the announcement that the underlying rate of growth in manufacturing output is reported by my statisticians to be 2 per cent. per quarter. That is a helpful and hopeful sign. Of course, that is over a short period and we must hope that it will continue.
In the steel industry throughout Europe, in previous decades there was a substantial investment in new capacity. This is now far in excess of the market demand for steel, so rationalisation and withdrawal of capacity had to be the order of the day. What I have announced, will help the private sector to some extent instead of concentrating the help solely on the British Steel Corporation.
Mr. Kenneth Carlisle: Will my right hon. Friend accept that many of us welcome and understand the justness of the move, but does he agree that we must aim for a return to profitability of the whole private sector, and will he bear in mind that public sector costs have borne heavily on the private sector in the last two years? Will he use his position in the Government to fight to control public sector costs in the coming year?
Mr. Jenkin: I understand and greatly sympathise with what my hon. Friend has said. I firmly believe that competition is the most effective way to get any organisation to keep its cost, and therefore its prices, under control. I know that my hon. Friend cheers as loudly as I do when I point out that the Government have done more to introduce competition into State industry in the last two and a half years than their predecessors did in the last 30 years.
Mr. Peter Hardy: The Minister said that he was hoping for advance, but does he accept that there can be little advance for £22 million, which could be described as too little too late? The Minister said that there had been a 28 million tonne contraction in steel capacity in Europe in the past six years, but does he acknowledge that Britain has supplied the greater part of that, and that if other countries had operated EEC policy as scrupulously and as diligently as Britain has done we might not have been facing the current level of industrial decline in steel areas?
Mr. Jenkin: The figure that I gave was not for a reduction in capacity, but for a reduction in output of liquid steel. The hon. Gentleman's point is perfectly fair. Under the European regime and the arrangements agreed over the last two years within the ECSC, it is essential that all countries with excess capacity should be as forthright and firm in complying with restrictions as the British Steel Corporation has been. It is the intention of the meeting of Industry Ministers—which, unhappily, had to be postponed last week because of the weather—to bring that fact home to the Commission as forcefully as we can. The Commission fully accepts its remit in this regard.
Mr. Anthony Beaumont-Dark: I, too, welcome my right hon. Friend's initiative,

33
but, in the £22 million rationalisation and restructuring, is it not just as important for private sector companies, which have borne so much of the heat of the day, to feel that the BSC deals with them in an open-handed and fair manner over the sacrifices that have to be made in restructuring? Does my right hon. Friend agree that private companies fear that in talking to the BSC they go into a big den and are only mice?
Mr. Jenkin: My hon. Friend is right.That was one complaint by BISPA. If private-sector companies are confined to seeking help via the Phoenix schemes, inevitably they have to turn to the corporation for help. What I have announced this afternoon will give them another door to go through for sensible rationalisation and restructuring schemes.
Mr. Frank Hooley: What does the Minister mean by "a significant reduction in capacity?" Is he talking about 20 per cent., 30 per cent., 50 per cent., or what? Is he aware that massive imports have seriously threatened the Sheffield special steels industry? Is he further aware that if he cuts capacity further it will be a green light to our competitors inside and outside the EEC? Will any of the money be conditional on merging with any segment of the BSC?
Mr. Jenkin: It is a separate exercise from the Phoenix arrangements, which are under discussion between elements in the private sector and the BSC. We have had Phoenix 1 involving Allied Steel and Wire Ltd. Talks are going on about the areas of engineering steels and heavy forgings. On the hon. Gentleman's first point, imports would threaten were it not for the voluntary restraint agreements, which it is hoped to renew early next year, and for which a mandate was given by the Foreign Affairs Council at the meeting last week.
Mr. Orme: May I press the Secretary of State on the question of restructuring? Does he accept, as my hon. Friend's have said, that we welcome that aspect of the announcement, although we hope that the majority of the public money going to the private sector will be used for restructuring and not redundancies? Therefore, should there not be public accountability, and will the Department monitor developments?
Mr. Jenkin: My Department has to agree a scheme before the money becomes payable. I made it clear that the
34
scheme is under section 8 of the Industry Act, and there will be all the normal parliamentary and other checks on the money.
Following are the eligible activities:
Assistance will be considered only in respect of establishments on the private sector primarily engaged in the following activities:
SIC Activity
ex 2210 Manufacture of the following products, described in annex 1 of the ECSC Treaty, from ordinary or special steel:

(i) Crude and semi-finished products, including products for re-use and re-rolling—liquid steel for castings; ingots for remelting and forging; semi-finished products such as blooms, billets, slabs and bars; and hot-rolled wide coils other than finished products;

(ii) hot-finished products such as rails, sleepers, soleplates, joists, heavy sections of 80mm and over, sheet piling, bars and sections of less than 80mm and flats of less than 150mm, wire rod, tube rounds and squares, hot-rolled hoop and strip hot-rolled sheets under 3mm, plates and sheets of 3mm thickness and over, and universal plates of 150mm and over; and

(iii) certain steel sheets and strip; namely, tinplate, terneplate, blackplate, galvinized sheets and other coated sheets; cold-rolled sheets under 3mm; electrical sheets; and strip and wire for tinplate.

2235 Drawing, cold rolling and cold forming of steel—excluding the drawing and manufacture of steel wire products. This covers units engaged in cold rolling steel hoop, strip or sheet—over 3mm—from purchased or transferred hot rolled sheet; cold drawing steel bars and shapes from purchased or transferred hot rolled steel bars; and the manufacture of other cold finished products—except wire and wire products—not specified in the ECSC Treaty.
Assistance will not be considered in respect of establishments primarily engaged in the manufacture of raw materials for iron and steel production, pig iron and ferro-alloys, iron products, or steel products other than those listed above.

STATUTORY INSTRUMENTS, &C.
Mr. Speaker: By leave of the House, I will put together the questions on the two motions relating to draft statutory instruments.
Ordered,
That the draft Employment Protection (Variation of Limits) Order 1981 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Unfair Dismissal (Increase of Compensation Limit) Order 1981 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Goodlad.]

Employment Prospects in Wales
4.27 pm
Mr. Ray Powell: I beg to move,
That this House deplores the policies of Her Majesty's Government as they affect employment in Wales, in particular those that have decimated the greater part of Welsh industry, resulting in the highest rate of unemployment in the Principality since the 1930's; calls upon the Government to increase investment to create new jobs and to sustain existing ones and believes that finance should immediately be made available to the National Coal Board for developments that include the New (Deep) Mine at Margam, thus ensuring that the South Wales coalfield shares in the expansion and modernisation in this traditional industry Which is so essential to the nation.
I hope that my good fortune in drawing the first place in the ballot for today will be shared by others who may benefit from it.
For the major part of two and a half years I have listened to and participated in debates deploring the Government's economic policies I have attended numerous debates on unemployment. I am absolutely convinced that the arguments and warnings from the Labour Benches are accurate and acceptable to most clear-headed Members. Unfortunately, Members on the Government Benches have taken a little longer to accept them, although I am pleased to see that at last we are getting through and that there are signs of revolt and a breakthrough to more reasonable, acceptable and moderate thinking. A loss of solid, safe Tory seats might be one reason and threats to the seats of existing Conservative Members might be a further cause, but, whatever the explanation, let us hope that it will mean changes to help the people of Wales, to reduce the cancer of unemployment and to bring hope for the young and the middle-aged who are desperate for a chance of a job, for security and to be independent.
We could do no better than to ask all right hon. and hon. Members to read or re-read the excellent first report of the Select Committee on Welsh Affairs. That more than adequately and comprehensively covers all the arguments for developing opportunities in Wales. All the members of the Committee deserve our sincere thanks, especially my hon. Friend the Member for Pontypool (Mr. Abse), who ably presided. None the less, it is interesting to note that since July 1980 very few, if any, of the recommendations have been acted upon. It is even more interesting to note that the preparation of such an excellent document necessitated only one visit away from the House.
Without wasting a great deal of time repeating what has already been said many times, it is necessary to mention the effect of the Government's economic policies on employment prospects in the Principality. Within months of their election to office and without the necessary time lapse, the Government slashed the personnel of British Steel by 25,000. There is little hope of recovery from that action. The consequential repercussions were redundancies, factory closures and bankruptcies on an unprecedented scale. The Government also increased bank rate, doubled VAT and started the slaughter of local government services. The consequential repercussions were higher mortgages, higher taxes, higher interest rates, higher rents and rates and fewer and fewer services for the old, the sick, the disabled and children. There have been cuts in the meals on wheels service, medical treatment has been reduced, and there have been cuts in school meals,
36
school milk, school places and, in some areas, even schools. There are many more consequencies, too numerous to mention.
We all know the extent of this vicious rape of our industry and services. We know, too, of the serious consequences of the Government's policies—in particular, the tremendous escalation of unemployment. Hardly a skilled or unskilled industry or profession has escaped this malicious monetarist madness. Doctors, dentists, dockers, dairy workers, nurses, firemen, shopworkers, woodworkers, transport workers and all workers in the steel and construction industry have suffered and are still suffering. Many more could be added to the list. There are 170,221 people registered as unemployed, but there are thousands more who are not registered but are without work. The vast numbers of our people who are suffering this indignity, frustration and impoverishment in a so-called civilised society must be given hope.
It is not my purpose to make any political capital out of the plight and misery of those unemployed people. I see that happening every week. It is so easy for us to bandy the figures about in the House, whether socially, regionally or nationally, but how many of us really appreciate what unemployment means to our people in terms of human misery and suffering? How many of us realise the degradation, demoralisation and total despair that it creates? How many of us fully appreciate why it drives people to desperate action and to suicidal thoughts and, in some instances, acts? That misery, humiliation, suffering and degradation of the 170,221 unemployed people in Wales is more than a reminder of the 1930s. More and more we see men standing around the streets; more and more we see young people aimlessly walking around; and more and more we see poverty creeping back into our valleys. The young have soured and becomed sickened with life on the dole. They are depressed, dejected and prone to drug addiction. That has been brought about by a Government who have engendered more hate in two and a half years and destroyed more of our commercial and industrial undertakings in Wales than did the last world war.
What has happened over that period? The gap between the unemployment rate in Wales and that of Great Britain as a whole tended to narrow between 1965 and 1974. Since then, however, especially in the last two years, the gap has widened as unemployment has risen. Wales now has a higher percentage of unemployed people than any region in England. Wales is approaching the unenviable status of the worst-hit industrial nation in Europe. Official projections suggest that a further 13,500 people per year will enter the labour market in Wales between now and 1985. It has been estimated that regional policy created about 6,000 new jobs per year, at best, between 1960 and 1972. There is no evidence that that pace of new additions to the stock of jobs has been sustained in recent years.
Let us put on record and let us all clearly understand the present position. I refer to the replies given to me by the Secretary of State on 7 December 1981. He said that in Wales there was an 8 per cent. drop in the number of people in work compared with a 5·5 per cent. drop in the United Kingdom as a whole. In 1979, the number of unfilled vacancies in Wales was 619; in 1980 the figure was 171, but in 1981 it was only 129. Yet 170,221 people are registered as unemployed. If the unemployed workers accept the advice of the Prime Minister to look for work, where should they move to in Wales? If they have a bike,

37
where should they ride to? The number of 16- to 18-year olds unemployed in Wales in October 1979 was 14,171. In October 1980 the figure was 21,649. However, in October 1981 it was 24,924—an increase of 10,800 young people unemployed in two years.
Further to the replies that were given to me by the Secretary of State, up to 8 October 1981, 33,835 young people under the age of 20 were registered as unemployed and 17,290 were in youth opportunities programme schemes. In 1979, the number of unemployed school leavers under the age of 18 was 5,694; in 1980 the figure was 9,995, and in October 1981 it was 11,884. So, between October 1979 and October 1981, there has been a 110 per cent. increase in unemployed school leavers under the age of 18. The rate of unemployment in Wales is 15 per cent., whereas the lowest rate in England is 9 per cent.
What action will the Government take to remedy this problem? Promises are not enough. We need positive action, and we need it desperately. Instead, the Secretary of State for Employment is determined to add further insult to the injury of the young unemployed. The right hon. Gentleman should heed the warning that there is already wide opposition to the present inadequate youth opportunities programme, which offers the miserly sum of £23·50 a week. He wants to impose a training programme for young people at £16 a week and to withdraw supplementary benefit from anyone who refuses a place. That is quite obnoxious and could have been suggested only by a person with a twisted mind. Already our young people are deprived of what they need most—a job with an income. The right hon. Gentleman's proposals will unite and anger all those involved with the young unemployed.
Before the Secretary of State introduces such foolhardy proposals, I advise him to get on his bike and talk to the CBI, the TUC, the MSC, and especially the young unemployed, and, for a change, to listen to what those directly involved have to say.
With this shameful record, having created all this unemployment and industrial havoc, the Government suggest that if people in work are having their living standards reduced, those out of work must be expected to shoulder their share of the burden. But these people, put out of work deliberately and calculatedly by the Government, already bear more than their fair share of the national burden. Cutting their benefits by 2 per cent. in real terms will be an act of criminal irresponsibility.
The right hon. Member for Sidcup (Mr. Heath) summed it all up admirably in last Tuesday's debate when he described the ideas as fallacious and unacceptable, and as having no philosophical backing.
It is not my intention to speak at length about my constituency of Ogmore, but I suggest that what has happened recently is typical of most constituencies in Wales.
This weekend, the Ogmore constituency received an announcement from Bridgend Paper Mills that 70 jobs would be lost by the end of the year. Only 12 months ago, the workers agreed to the loss of 70 jobs and a cut in their pay packets. In Bridgend Paper Mills there is an excellent industrial relationship between management and workers. The manager claims unfair competition from European firms which receive heavy subsidies on their fuel costs, and that that is the main cause of the redundancies. There has been substantial investment to ensure long-term
38
security there, with £6½ million being spent on a coal-fired electricity generator to cut fuel bills. But Government policies, creating recession and lack of consumer demand, are the main cause of jobs being lost.
Again last weekend, 100 redundancies were announced at the Borg Warner factory, and we heard of a further 20 redundancies at Tensia Limited on the Bridgend industrial estate, with the managing director stating that the recession, costing problems and a lack of adequate premises were forcing him to close.
In only one weekend we have had these announcements of redundancies, closures and intended closures. At Bridgend, an electrical factory which has not had a strike in 45 years threatens closure if its workers will not accept the 2 per cent. increase that they have been offered. If the work force goes on strike, 96 jobs will be lost. The average earnings of those workers, most of them women, are about £55 a week. The 2 per cent. offer would mean an increase of £1·10 a week. The recent mini-Budget will take away the £1·10 a week from those 96 workers if they each have nothing more than a colour television set. It is no wonder that after 45 years the workers are talking of strike action.
The Secretary of State for Wales accepts that Ogmore has suffered as a result of Government policies and redundancies. On the last occasion that the right hon. Gentleman answered Welsh questions, he suggested that because Sony at Bridgend was receiving the first-ever EEC grant to a foreign company for extensions to its factory, with the eventual employment of 120 persons, Ogmore 's difficulties would be reduced substantially. We try continually to explain to the Secretary of State that, although we accept the good news of jobs coming to areas, the job losses, factory closures and redundancies that I have outlined are at least 400 per cent. to 500 per cent. more than the new jobs, and the position is getting worse week by week and month by month.
In the same week that we had the good news of the Sony development, with 120 jobs, we had the bad news of the Coegnant colliery closure, with the loss of 400 jobs. That is one of my reasons for initiating this debate. The outlook for jobs and the job market in Wales is very bleak.
Government agencies have warned that unemployment in Pembroke dock could soar to 30 per cent. next year. One in four persons in Tenby is out of work. Is it not ironic that £80,000 is being spent building advance factories in Tenby when the district as a whole has 150,000 sq ft of empty space which cannot be filled—and this in the constituency of the Secretary of State for Wales?
The latest issue of The Economist says:
"Nissan's giant Datsun car plant will be built in Wales if the Japanese firm decide to take the plunge in Britain."
I wonder whether the Secretary of State is having talks with Mr. Takashi Ishihara, the president of the company, to clinch the decision. I hope that the right hon. Gentleman will make a statement to the House as soon as possible.
I want now to discuss the coal industry and the changes in it that we have seen during the past 20 years. I have a vested interest because my father was a miner and, like Mr. Speaker, whose father was also a miner, I sere a Welsh constituency.
Over the past 20 years we have seen changes brought about by cheap oil prices which caused contraction, closures and continuous trouble in the mines. When that era ended at the close of the 1960s, the climate changed. We could still have had the right hon. Member for Sidcup as Prime Minister and avoided the embarrassment of the

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present Prime Minister's climb-down over pit closures. Rising oil prices changed the negotiating climate. Some have argued that Sheikh Yamani should be congratulated on saving the miners and sending them to the top of the wages table where they rightly belong.
Recently I signed an early-day motion congratulating Arthur Scargill on his outstanding victory to the important and responsible post of president of the NUM. His election will ensure that the miners receive just rewards for the dangerous and extremely hazardous work they do. We all want a satisfactory outcome to the pay offer.
Having visited the St. Johns colliery during the recess, my support is solidly behind the NUM and all those who work in the coal industry for less than £200 a week. The miners are asking for a necessary increase to keep pace with the cost of living, especially after the mini-Budget and other recent attacks on their living standards.
The latest colliery closure in my constituency is Coegnant Maesteg and it was that which prompted me to initiate the debate. Most miners there will be absorbed in another colliery, but the closure means a loss of job opportunities in an area that has already suffered at the Government's hands. The unemployment rate in the Maesteg area is over two and a half times greater than when the Government came to power. It is approximately 20 per cent. and getting worse. The men believe that they have not been given a fair chance, that there are valuable reserves of coking coal and that investment to open new seams would enable the pit to continue the extraction of coal which is in demand.
The National Coal Board estimated that the investment would cost £4 million and decided against that because of geological difficulties; there was no certainty that any new seams would be workable and profitable. The men had no alternative, apart from strike action, but to accept the decision, which they did on 7 November.
The lack of investment is putting other collieries in South Wales at risk. Although pits are producing large amounts of coal at the coal face, the lack of mechanisation is cutting the overall output figures. For example, output at the coal face in the Trelewis drift is 17·5 tonnes per man-shift, but overall production is 2 tonnes per man-shift. At the Marine colliery, production is 12·5 tonnes at the coal face, but only 2·5 tonnes overall. The production and profitability of many collieries—some in danger of closure—can be improved if the NCB is able to invest in developing new seams, improving mechanisation at the coal face and bringing coal to the surface.
On the brighter side, today's announcement of the £2·3 million spending to open up estimated reserves of 20 million tonnes of coal at the St. Johns colliery will be welcomed by all concerned. Indeed, that might help to alleviate the fears expressed by lodge secretaries in the area that miners in Maesteg are being referred to as "caravan colliers", because of the continued moves from one pit to another. I am sure that the House will place on record its welcome and express its hopes for the success of the new enterprise with grateful thanks to the management and union representatives for the continuation of excellent industrial relations.
The NCB manpower in South Wales coalfields is 25,000–950 fewer than a year ago. In one year there have been 473 early retirements and 300 men have left voluntarily. A total of 600 men, about half of whom were
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juveniles, have been recruited. The NUM complained that men were finishing on early retirement and not being replaced. There is a shortage of men on the coal face, the development of new coal faces is being held up, and often men are taken from the coal face to help in opening new faces. That means a substantial loss in output. Therefore, pits will become uneconomic and soon face closure threats. Serious trouble can arise unless more men are recruited to meet these needs.
From 1979 to 1980, the Government were spending £35·6 million on capital investment in the South Wales coalfields, in 1980–81 £35 million and in 1981–82 £30 million. The Government are spending £5 million less this year than last year and £5·6 million less than in 1979–80—a drop of approximately one-fifth in total investment in South Wales in the past three years. The Secretary of State for Wales said:
"The Government are committed to … Plan for Coal and are making available … £800 million for the industry in the current year."—[Official Report, 2 February 1981; Vol. 998, c. 9.]
Investment in the South Wales coalfield is substantially less in real terms than it was from 1977 to 1980.
At the end of November 1980, coal stocks in Wales were substantially reduced to 2·9 million tonnes of deep-mined coal—mainly steam raising coal—which is 1 million tonnes less than a year ago. In the 13 weeks up to the end of November 1981 900,000 tonnes were taken from stock. The reasons for that were the good performance at the Aberthaw power station, success of the export drive and higher sales to steel works. The NCB expects to clear stocks by mid 1983. The output of South Wales pits increased by 6·4 per cent. in the past 12 months. If British Steel wanted to buy more South Wales coking coal for Port Talbot and the Llanwern works next year, the NCB could not supply it because of its export commitments.
We are glad to hear of the extent of the NCB development and its success over the past year. British coalfields produce the cheapest and the best-mined coal in Europe. The cost of coal in nationalised British pits is £35 a tonne and in the private pits of West Germany £44 a tonne, France £45 and Belgium £61. The NCB find it difficult to compete with European countries because of the high subsidies they give to their coal industries. The subsidies paid to the Belgian coal industry are £27 a tonne, France £15, West Germany £12 and the French Government are increasing their subsidy substantially.
The NCB is heavily shackled by high interest charges on borrowed capital, currently totalling £185 million. Exports could be increased if the Government increased the NCB's subsidy and took over the burden of the high interest charges which are inflicted on it by the Government's policies.
While the demand for and supply of anthracite does not directly concern my constituency, I am sure that my right hon. and hon. Friend's will wish to mention it. It is claimed that there is a need for capital investment in anthracite, and that is an urgent matter. The western part of the South Wales coalfield is the only area in Britain that has anthracite reserves. It is the best anthracite coal in the world.
Anthracite coal of an inferior quality is being imported from Tunisia, the Soviet Union and Vietnam. Anthracite, especially that of the quality extracted in Wales, is in great

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demand and a feasibility study is taking place on the development of anthracite reserves. It is essential for Britain that they be made available urgently.
About seven years ago, the NCB considered investing in a new deep mine at Margam. The estimated cost at the time was £80 million and it was expected that the project would employ about 150 men immediately, but nothing was done about it. Since then, pressure for the project has built up, mainly because it would release huge reserves of first-grade coking coal which will be in demand in the near future.
The current scheme envisages an investment of almost £200 million. It would take nearly 10 years to reach full production and would employ nearly 1,000 men. The mine would produce enough coal for the needs of the BSC and for export. It would be virtually on top of the huge Port Talbot steelworks and near to Llanwern, thus reducing transport costs to a minimum, and there is excellent access to ports and railways.
When the new mine was first agreed, it was hoped that it would be ready to absorb the men in the Maesteg area when the reserves at collieries there became exhausted. Since then, Caerau and the Coegnant colleries have closed and the Garw and Wyndham—Western Colliers have reserves for about 12 years. If the Margam project is commenced soon, the men from those colleries could be employed in the new pit. What will happen to those men, and others, if Margam is not opened? There will be even fewer jobs, still less coal being produced and more miners on the dole and perhaps lost to the mining industry for ever.
The work force at Wyndham-Western colliery in Nant-y-Moel holds the top position in the NCB's improved safety standards league, and that is attributable to the skills of that work force. The men work under very difficult conditions, calling for expertise, knowledge and skill. They should not continually and constantly be under the threat of closure.
The chairman of the NCB, Sir Derek Ezra, said that Margam is still a live project, but, because of the considerable depth, it appears that the costings are above the norm. Why is he not prepared to say to the Government that the project should be classified as different? It should have independent investment in addition to the overall "Plan for Coal". It should be started immediately to show the Welsh miners that the NCB has a duty to the Welsh coalfield. The only way that it can survive is by such a commitment. Margam, with its reserves of 20 million tonnes or more, would be the injection of confidence that Welsh miners need.
The young need to know that they have a future in the industry and the NUM needs to know that promises are kept. If South Wales is to be dismissed as a declining and decaying coalfield, the fight back must start now. The people of South Wales have been dominated by coal. Their whole environment has been destroyed by it, and now that things have changed they have earned the right to new hopes of a bright future—or of a least some future—and Margam should be the start.
I urge that the Government discuss the issue with the NCB and the NUM as a matter of urgency so that progress can be made at the earliest moment. It is a matter of national importance in which the Government must give a lead to preserve jobs, to create jobs and to safeguard Britain's energy resources.
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I know that a number of my right hon. and hon. Friends wish to take part in the debate. I have taken long enough, but, given the problems besetting my constituency and the Welsh coalfield, I could have gone on for much longer.
Several hon. Members rose—
Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. Before I call the next speaker, I remind the House that 14 right hon. end hon. Members have indicated their wish to take part in this important debate. It must end at 7 pm, and I hope that the House will understand if I do not give preference to those who are official Front Bench spokesmen and, therefore, have other opportunities to speak.
5.5 pm
Sir Raymond Gower: I compliment the hon. Member for Ogmore (Mr. Powell) on his choice of subject. I understand why he dwelt on the difficulties of his constituency and the coal mining industry. I found his speech a trifle imaginative only when he appeared to suggest that all the problems of British industry, including unemployment, started after the Government's arrival in office. I certainly share the hon. Gentleman's profound concern and anxiety about unemployment in Wales. Anyone who, like me, has represented a Welsh constituency for many years would take the same view.
Even when I was first elected to the House in the 1950s, unemployment was a lively issue in the Principality. We Conservatives were blamed, wrongly in my view, for having been responsible for all the pre-war industrial problems and difficulties, including unemployment, even though, for the most part, they had been of a world-wide character.
In my first 12 years in the House, I saw three successive Conservative Governments conducting with great skill policies that led to economic growth and what could be fairly described as full employment. Therefore, it must be obvious that, apart from humane considerations, the Government have every incentive to seek to reduce unemployment. There are many reasons why that is so, and I shall give just a few.
First, excessive prolonged unemployment suggests a degree of failure, and most Governments prefer success. Secondly, in our third year of office, the persistence of unemployment must be electorally disastrous. In addition, the industrial problems and failures that create unemployment must surely alienate our supporters. I could also point out that unemployment has been shown to be extremely expensive. Not only does it cost huge sums in the payment of benefits, but it involves heavy losses to the Exchequer through the loss of corporation tax from companies that have failed and the loss of income tax and national insurance contributions from those who are put out of work. When unemployment affects areas such as Wales that have been dependent on a few industries for too long the problems are compounded.
However, we must surely acknowledge the achievements of successive Governments, assisted by the Welsh Development Agency, the Development Board for Rural Wales and ancillary organisations, in promoting new industrial undertakings. The answer given to me by my right hon. Friend the Secretary of State for Wales last week that 108 advance factories, promising nearly 4,000 jobs, have been occupied in the past year shows the size of the

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achievement. The fact that 251 factory units, totalling 1·4 million sq ft, were allocated between January and November this year shows that the momentum is being sustained.
I appreciate the natural concern for the building of new factories and the creation of schemes for the young unemployed and I understand Ministers' preoccupation with the problems of the younger unemployed, but I suggest that sometimes the problems of middle-aged men and women who are put out of work can be even more intractable. I hope that Ministers will look carefully at those problems.
I am deeply concerned about whether we are doing as much for existing industries and firms that have been established for several years as we appear to be doing for new entrants into industry. I have in mind a company that is sited near my constituency and employs many of my constituents. It has been managed by a friend of mine and his family since before the Second World War.
Morfed Ltd. gave employment to a considerable number and over 100 jobs existed when the company ceased operations. I know of the tremendous exertions of the management and work force in seeking to keep the company in operation. I am aware of the magnificent efforts of the managing director, who travelled throughout the world seeking orders. He was indefatigable in his personal efforts. I supported the efforts of the hon. Member for Caerphilly (Mr. Hudson Davies) when we jointly tried to persuade the Welsh Development Agency and other agencies to give some financial help to the company. The company might have been saved if it had been offered a grant or loan. An excessively large amount would not have been needed.
I turn to another tragic problem in my constituency. After 24 years of fruitful association Geest Holdings Ltd. has decided to pull out of Barry docks. Its reason for doing so, so it has told me and declared publicly, is that its newest ships cannot safely enter and leave the docks in bad weather conditions. Experienced pilots—some of them with many years' association with the trade of the docks—assure me that the dock entrance is eminently safe for the newest Geest ships even in bad weather conditions.
The loss of Geest Holdings Ltd. is not due to economic decline. The company plans to transfer its valuable business to Bristol. There are some suspicions that the financial package that has been offered by Bristol is better than that offered by the British Transport Docks Board in South Wales. I ask my right hon. Friend: are large organisations such as the board unable to offer a package comparable to that offered by a single port such as Bristol? It seems inconceivable that it is unable to do so. It must be an expensive operation for Geest to transfer its business.
It is a fact that Barry has been able to offer many special advantages. It has a deep-water entrance that permits entry for more hours of the day than most of its rivals. It is advantageous that a dock should have a deep-water entrance if it is to be used by a company dealing in perishables such as bananas, which is the main commodity conveyed by the Geest ships.
Generally, industrial relations in the docks at Barry have been excellent during the 24 years that Geest has been there. The work force has shown itself to be competent and adaptable. Moreover, at this very moment road
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communications with Barry docks are being improved. Following the extension of the M4 the link road to connect the motorway with the docks is in the process of construction. Any help that the Welsh Office can give in retaining the valuable Geest business for the Barry docks will be greatly appreciated throughout my constituency.
It may be said that if Geest decides to stay at Barry it will continue to enjoy the support and good will of the entire community in the town and around it. As a major user of the docks, the company would continue to have paramount importance at Barry. In our anxiety to meet its needs it would be recognised as one of the chief users, which might not be recognised in a much larger dock such as Bristol.
The Geest business is a considerable proportion of the trade that passes in and out of the Barry docks. It would be serious if that trade were lost permanently to Barry. In some respects those in the Barry area have not suffered as much as those in the constituency of the hon. Member for Ogmore. Yet all Wales has special needs that have been recognised to some extent. Its dependence on a few industries has been partly rectified. Newer and more modern industries have arrived. I take pleasure from the fact that Wales has been getting some of the most modern industries over the past few years. But we must be vigilant.
I compliment the hon. Member for introducing for debate such an important subject. We must reduce unemployment. It is one of the most challenging issues to face any Government. I hope that we shall make significant progress during the months ahead.
5.16 pm
Mr. Roy Hughes: First, I congratulate my hon. Friend the Member for Ogmore (Mr. Powell) on securing the debate. The fact that he has done so is typical of the zeal with which he pursues his constituency's problems.
My hon. Friend rightly drew attention to the coal industry, which is basic to the Welsh economy. I support his call for more investment in the coal industry, especally for a new mine at Margam. I know that in this endeavour he will receive the support of the new president-elect of the National Union of Mineworkers, Mr. Arthur Scargill.
I wish to draw attention to another traditional sector of the Welsh economy, the Welsh ports. The ports have faced many difficulties. They were originally coal-exporting ports. They have survived over the years, albeit in reduced form. They have certainly suffered a reduced volume of trade and a much reduced labour force. It appears that once again they have cause for concern about their future.
It seems that the threat to the Welsh ports is coming from the new port development at Bristol, which to date has been nothing more than a white elephant and a waste of public investment. Nearly 16 years ago, when I first entered the House, there was a controversy raging over whether the port of Bristol should be allowed to build new docks. The then Labour Government firmly vetoed the proposal on both social and economic grounds.
At that time the ports in the Severn estuary were considerably under-utilised. It was felt, too, that if development were required for social reasons, South Wales had a far better claim, especially with the rundown of its traditional industries and the heavy unemployment from which it is still suffering.
On economic grounds it was felt that the money could be better spent on a new iron ore terminal to serve the

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Llanwern steel works. The Labour Government vetoed the proposal for expansion at Bristol. The controversy was raging during the run-up to the 1970 general election. The Conservative Party said "If a Conservative Government are elected, that Government will give the port of Bristol the go-ahead." The widely held belief at that time was that the intention was to win two marginal seats in the Bristol area for the Conservatives. In the event, the Conservatives won the general election and Bristol was given the go-ahead. It is worth pointing out that Bristol is a local authority port.
Sir Raymond Gower: I think that the hon. Gentleman will admit that his facts are slightly inaccurate. Surely the Bristol port was established as a result of a Private Bill that was supported by a majority of both parties, and the hon. Gentleman and I were among the few Members who voted against it.
Mr. Hughes: That is a complete distortion of the facts. It was a Conservative Government who gave the go-ahead and the proposal was firmly vetoed at all times by the Labour Party and by successive Labour Governments.
The new port development was subsequently opened by Her Majesty the Queen and for some years trade there has been negligible. Bristol's ratepayers have faced an enormous burden and my latest information is that the port is costing them 17p in the pound. It now appears that the port of Bristol is asking for further Government support for its investment. I wish to register the strongest possible protest because such assistance would be highly detrimental to the ports in South Wales and to employment prospects in our area. I hope that the Secretary of State will make that point of view felt in the Cabinet and that he will fight for Welsh interests in that respect. Such support from both local authorities and the Government would be a negation of fair competition.
We should consider what has already happened. The hon. Member for Barry (Sir R. Gower) referred to Geest Bananas and the excuse given by that company. The channel pilots have also been to see me. They point out that the excuse given by Geest that there are navigational problems is rubbish, and they should know about such problems. The real reason is that Bristol is undercutting and is able to do because of these unfair subsidies.
The port of Bristol has other aims as well. For example, it hopes to secure the timber trade from both Cardiff and Newport. That type of trade is basic to the survival of the ports at Cardiff and Newport.
There is the further example of what is known as the Egyptian potato trade. The contract is apparently awarded on an annual basis and last year Cardiff won it. Now the port of Bristol has made an offer that is lower than the price at which Cardiff obtained the contract last year. This undercutting is due to the subsidies which the port of Bristol is receiving.
I appreciate that Liverpool and London have already received financial support to cut the number of employees in their docks. But I maintain, as I did in the debate on that issue, that if there is to be Government support, it should be of a general character to British ports as a whole. It would be a scandal if Bristol were to receive both rate support and Government support. Some straight answers are called for from the Government Front Bench, particularly as I understand that the Under-Secretary is to reply and he, of course, is a Cardiff Member.
Mr. Ian Grist: While decrying these subsidies with which Bristol is, apparently, luring business away from Cardiff and other ports, does the lion. Gentleman agree that subsidies themselves are damaging, dangerous and always result in lost jobs in areas other than the areas which directly benefit from them, and that, therefore, they should, in general, be widely avoided?
Mr. Hughes: Yes, but it was the hon. Gentleman's Government who created this difficult situation, and that is the basic point I am making.
I have one final brief point to make which concerns the projected Datsun investment in this country. There was a very optimistic article about it in The Economist last week. It spoke of a $600 million development project. It said that it would almost certainly be in South Wales. That is why I say that it was optimistic. Up till now the content of the cars has been a controversial matter, but apparently that has been ironed out. The British content would he no less than that of British Leyland cars at present and probably more than that of the cars of Ford, Talbot and Vauxhall. It is also interesting that one of the reasons given in the article by the Japanese is Britain's stable Government. I should think that that repudiates the drivel talked in some quarters about proportional representation.
More specifically, however, South Wales has at present so much to offer, with an adaptable labour force and excellent sites. The interest that I declare is a particularly good one. From the Llanwern steelworks, steel could almost be thrown over the wall for the manufacture of cars. A number of Japanese firms have already been happily established in South Wales.
As it happens, I speak with a bit of experience of the motor industry. I appreciate that some people have misgivings about the Japanese as a result of the war. have some interest in the matter because I am the proud holder of the Burma Star. The Japanese can at least bring a new dimension to the British car industry with new technology and they can do much to revitalise this extremely important sector of our economy.
Mr. Tom Ellis: Another very important factor in persuading Datsun to come to the United Kingdom and, in particular, to South Wales is that Britain remains a member of the EEC.
Mr. Hughes: I am 100 per cent. in favour of Britain leaving the Common Market. The Western European car manufacturers have raped the British market, and it is time to call a halt to that. The vast majority of imported cars on British roads do not come from Japan; they are Volkswagens, Renaults, Fiats, and so on. That is the foreign competition with which we have to contend.
What is the latest position on the Datsun project? Perhaps the Minister can give hope to the people of South Wales. Some hope is needed after two and a half years of this Government.
5.28 pm
Mr. Tom Hooson: There is no more important subject on the Welsh agenda than the creation of more jobs. For that reason, we must welcome the debate initiated by the hon. Member for Ogmore (Mr. Powell) today.
I am struck by the amazing assumption that underlines the hon. Member's motion, which is that unemployment in Wales is overwhelmingly the product of the

47
Government's policies. One might imagine that unemployment was an unknown phenomenon prior to the last general election. The implication is that Labour Party policies would reverse the present tragic trend of unemployment, even though this is a problem that must be grappled with in many countries. It is a Socialist President who presides over unemployment of 1½ million in France. It is a Socialist Chancellor who presides over unemployment of 2 million in Germany. That is apart from the 2 million guest workers who have left Germany in the last two or three years.
Mr. D. E. Thomas: Is the hon. Member aware that the policies now being devised and put into effect by the French President, both on regional autonomy and economic regeneration, are markedly different from the monetarist policies being pursued by the Conservative Government? How does he explain that?
Mr. Hooson: It is remarkable that President Mitterrand has already, after three months, had to reverse his course. An important result was the considerable loss of confidence in the French economy. However, we are not here to debate the French economy; we are here to debate Wales. I am merely pointing out that we are dealing with a world-wide phenomenon.
Before Labour Members roar with laughter, let me remind them of the figures of Welsh unemployment for which they were responsible. In 1974 the Labour Government took over an unemployment figure of 38,000 in Wales. When they left office that figure was 84,000, yet there has been no basic change in Labour thinking and we have not had from them any plans for the creation of employment. Therefore, we can only assume that the ideas that a Labour Government would implement would be the same as those that led to the doubling of unemployment in the last period of office.
The great message of the Labour Party is that a Labour Government would promote reflation, which is another word for inflation. No one has spoken more lucidly about the fallacies of the Labour Governments policies than the former Labour Prime Minister, the right hon. Member for Cardiff, South-East (Mr. Callaghan). Labour Members would do well to refresh their memories by consulting his speech to the Labour Party conference in 1976. He said that there was a whole range of options which had once appeared to be solutions for unemployment, but which had been demonstrated not to have any permanent effect, and which very soon tended to destroy rather than create jobs. However, we still have that tired thinking from the Labour Benches, and we have heard no constructive suggestion from the official Opposition at any point in the life of this Parliament.
Mr. Tom Ellis: I remind the hon. Gentleman that more male jobs were lost in Wales between 1960 and 1970 than were lost between 1970 and 1981.
Mr. Hooson: I thank the hon. Member for his contribution.
There is something that is much more important than any measure taken by the Government. There is a great challenge facing our factories and services to increase productivity. There is much hope in the current developments in the economy in Britain as a whole.
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My right hon. Friend the Secretary of State for Industry referred last week to the spectacular improvement of 10 per cent. in the relative performance of Britain vis-á-vis the rest of the world in terms of output per man over the past year. This is the first time that Britain has improved, after many years of slipping behind our competitors in the international league. Of that 10 per cent. improvement, 7 per cent. was in output per man and the rest was accounted for by the fall in the value of the pound.
Sir Raymond Pennock, the president of the CBI, said one of the shrewdest things I have heard when he pointed out that halving the level of pay increases would have a far greater effect on the competitiveness of industry than any conceivable changes that could be brought about by Government policies, whether on taxes or interest rates, or in other directions.
Let us review the 1970s presided over by both Labour and Conservative Governments. Britain managed to come out of that decade having increased wages in real terms by 300 per cent., at a time when the increase in output over the whole 10 years was a pathetic 15 per cent. In the last five years of the period, 1975 to 1980, our unit labour costs rose by 88 per cent. In the same period the French increase was 45 per cent., the American 36 per cent., and the German 17 per cent. The most spectacular of industrial performers, the Japanese, did not increase their unit labour costs at all.
That is a lesson that is far more relevant to the needs of Britain than anything that can be done by way of Government policies, even though I am in favour of a number of ways in which the Government can helpfully intervene. The Conservative Government are doing all that they can in that direction. I am trying to inject a note of realism, which has been sadly missing in the debate. We must recognise that the greater part of the progress in fighting the blight of unemployment will not come from Government policies. At the end of the day, we can only hope that jobs will not be destroyed by an incompetent Labour Government. The best thing that we can hope for is that the talents of people and industry will be deployed properly. That is where trade unions can make a great contribution.
The hon. Member for Ogmore referred to the new president of the National Union of Mineworkers. I hope that, despite the hon. Gentleman's remarks, he will use whatever influence he has with Mr. Arthur Scargill to urge on him the value of making sure that if there is to be investment—say in the new mine at Margam—the mineworkers will be aware that the degree of investment will be closely related to the prospective return on investment. The most suicidal course is that being followed by Mr. Scargill, who advocates wage increases which bear no relationship to possible increases in productivity.
Mr. Ray Powell: The hon. Gentleman asked whether I supported the newly elected president of the NUM. I am convinced that he will, as his predecessors did, act in a rational and responsible manner because he represents the miners. I said that I thought that miners deserved £200 a week for working in such conditions. I believe that when miners look at the economics of mines they will act responsibly. However, if their production increases by 6·8 per cent., they expect to receive a 6·8 per cent. wage increase, but if inflation goes to 12 per cent. because of

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Government policies, they expect to have at least a reasonable amount to meet the cost of inflation imposed on them by the Government.
Mr. Hooson: If the hon. Gentleman uses his influence with Mr. Scargill to obtain a reasonable settlement, he will have the sympathy of Conservative Members. There is no question but that one of the most evil results of strong trade unions has been that men have been priced out of jobs. There is a lemming-like zeal for self-destruction that seems to appeal to the members of some uni ns.
I remind the hon. Member for Ogmore of the record of his own party over the coal industry in South Wales. During the lifetime of the Labour Government from 1964 to 1970, 39 pits were closed in South Wales, eliminating 30,000 jobs. That reduced employment in South Wales in the coal industry from 77,000 to 47,000. I have never heard the hon. Member tell us about the 30,000 jobs destroyed during that time.
Mr. Ray Powell: While your figures might be correct, and I do not wish to doubt them in any way, you have not mentioned that in the period from 1951 to 1964 the Conservative Government—
Mr. Deputy Speaker: Order. The hon. Gentleman must not bring me into the debate.
Mr. Hooson: I am astonished to hear that Mr. Deputy Speaker was up to such mischief in those years, but I remind the hon. Member for Ogmore that the same phenomenon was experienced under the most recent Labour Government, from 1974 to 1979, when again 14 pits were closed, reducing the number of pits in Wales to 36.
I have emphasised the limitations on what can be achieved by Government action. This is the realistic context in which we have to look at the problem. Within that realistic context, is it not impressive that half of all the new factory building taking place in Britain is in Wales? A new factory is being opened every day in Wales. At the depth of the world recession, the number of new lettings, in terms of space, is double that of a year ago.
The Government are to be congratulated also on the very high priority that the Secretary of State has given to maintaining the major road programme in Wales. This is extremely important, to ensure that the Welsh economy will be competive in the years to come.
I remind the House of the great importance of our participation in the European Community as the basis for attracting the foreign companies that have been drawn into Britain. We have already been told of the possibility of a Japanese car company arriving here. Car companies can also depart if they do not have access to the European market. I remind Labour Members that Mr. Ivor Richard is one person who has recently given a public warning, in an address on BBC Wales, that 50,000 jobs could be destroyed in Wales alone if official policies of the Labour Party were to be adopted.
I follow my hon. Friend the Member for Barry (Sir R. Gower) in underlining the great importance, as we seek to shift gradually the mix of industries in Wales, of a greater diversification of industries. I congratulate my right hon. Friend in particular on his progress in bringing a certain number of the most thriving electronic companies to Wales. It is very much the new industries that will be the basis of our prosperity. That in no way detracts from the
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reliance that we have on the old, traditional industries. I am sure that if the National Coal Board can justify an investment in a coal mine in Margam, helped to a degree by reasonable wage settlements, it will eventually have the money for that project.
Those of us who were members of the Select Committee that studied employment prospects in Wales were struck constantly by the complexity of the institutional arrangements and by the large number of bodies, all worth while in themselves, that are seeking to promote Welsh industry and to provide information. Our conclusion was that there was a particular onus on the Welsh Office, on the Secretary of State and on the Department of Industry to be the ultimate guiding voice to ensure that people understand the provisions that are available. In my constituency, I receive this lesson constantly by having business men telling me that they are bewildered by some of the provisions that are available. The take-up is limited, and a great deal of education is needed in this context.
I was delighted to see that one initiative by my tight hon. Friend was the recent establishment of business opportunities conferences in Wales. I was most favourably impressed by the large numbers of people who were attracted to the first two or three of these events. It is a very worthwhile step forward.
5.44 pm
Mr. D. E. Thomas: I shall not try to follow the negative, strident and predictable speech from the hon. Member for Brecon and Radnor (Mr. Hooson). It was a rehearsal of negative attacks on the Labour Government. It does neither the hon. Gentleman nor the Labour Party any credit to have that catalogue rehearsed. We need to have a positive analysis of the economic plight of Wales. It is not enough for the hon. Gentleman to say that, if working class people in Wales were prepared to tolerate a further drop in their living standards, suddenly all the problems would be solved.
The structural problems of the Welsh economy go deep and have been with us for a long time. They are the same problems as those that bedevil other regions—in England and in parts of the continent of Europe. They are problems that we experience with the decline of capitalism in Britain and in other European countries. It does this House no credit to give a simplistic analysis which would make us the laughing stock of any O-level economics student.
I do not want to look at the structural problems of capitalism as they affect Wales today. I want to look at the individual problems that face those who are made unemployed. I do so deliberately, because it is a dimension that is often neglected in our debates. We can now look at that dimension because the Welsh Office and the directors of social services in Wales have recently produced a working party report that ought to be read by all hon. Members and ought to have a wide circulation outside the House.
It was Beveridge who said, nearly 60 years ago, that the most important practical question with regard to an unemployed man was not how he came to lose his last job but how it came about that he could not get a fresh job. That is the question that has to be faced and answered by each unemployed man and woman, and by each young person leaving school in Wales and unable to find a job.
There is a growing body of research, to which the joint working party of the directors of social services and the

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Welsh Office has drawn attention, linking unemployment with a range of factors—mental illness, deviance and family violence—all of which point to the real cost of unemployment, in individual and family terms. The Government are supposed to believe in the nuclear family but families have been put under increasing stress as a result of the deliberate policies of the Government.
Unemployment does not fall evenly across the working population. The fit and the skilled are more likely to escape unemployment. The unemployed are more concentrated among the youngest and the oldest sectors of the community. We are still hearing what increasingly appears to be the empty rhetoric of the International Year of Disabled People—a year in which a higher proportion of the sick and disabled are now having to suffer from unemployment. In Wales and in other regions, the semiskilled and unskilled manual workers are far more likely to be unemployed than those in the more skilled or the so-called professional jobs.
The first problems that face unemployed people and their families are money problems. In all the studies of unemployment, over 70 per cent. of those made unemployed were found to be deeply concerned about their financial position. Nearly 60 per cent. of those interviewed in the surveys have mentioned the social or pychological costs of unemployment.
The usual financial difficulties are those relating to gas, electricity and heating bills. Those difficulties have affected many families during the recent cold spell. There are the problems of having to pay higher rents inflicted on people by the Conservative Government. There are the high costs of mortgages and the difficulties in ensuring that those costs are met.
The economic and financial burdens of unemployment are only the direct costs. There are also the hidden costs, or the costs that follow later, within the shorter time scale, up to five years, and within the longer time scale.
The Secretary of State for Education some years ago peddled a new social theory concerning some kind of cycle of disadvantage. The Conservative Government are deliberately perpetuating disadvantage, social and economic, in Wales and in the rest of Britain. Not only is there immediate disadvantage from the financial causes that I have mentioned. There are indicators linking mortality rates as well as levels of deviance and mental illness with the extent of unemployment. The House will be familiar with the work of Professor Harvey Brenner of Johns Hopkins university in the United States, who recently visited Cardiff, where the social, individual and family costs of unemployment were outlined at a major conference, to which a close friend of mine gave a paper outlining the psychiatric effects of unemployment.
On the basis of the work of Brenner and others the joint working party of the Welsh Office and directors of social services estimated in March this year, when considering a level of only 150,000 unemployed, that over the next five years there would be 2,500 extra deaths, 3,195 extra admissions to psychiatric hospitals and 695 extra prison sentences in Wales as a result of unemployment. If the Government are really concerned about the prison population, they should reverse their economic policy rather than pretending that the problems can be solved by shortening or cutting the number of sentences.
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Not only mental illness but actual physical illness arises from unemployment. Studies screening workers expecting redundancy in Europe, Britain and the United States show clear physiological effects of unemployment stress on men, women and children in such households. There are both physical and mental effects on individuals facing the failure to readjust to inability to find work. There is, first, the shock and grief at initial unemployment. There is then very often over-optimism about the possibility of finding a job, followed by prolonged depression, anxiety and deepening pessimism. The result of that pessimism and of the pressures on the unemployed now affect more than 170,000 of our population.
Last year, the NSPCC pointed to the link between unemployment and non-accidental injury to children. Yet the Government pretend that by keeping registers and trying to ensure that the National Health Service informs personal social services departments of such injuries the problem may be alleviated. If the Government are serious about solving the problem of non-accidental injury to children in Wales and indeed throughout Britain, they should reverse their economic policy and not pretend that the problem can be reduced by means of registers.
Women's Aid and other women's aid organisations in Wales have pointed to the link between unemployment and domestic violence. Again, rather than giving occasional grants to such organisations, welcome though such grants are, the Government should face the fact that their policies are increasing the amount of domestic violence in Wales and in other parts of the United Kingdom.
Finally, the Welsh Office and the directors of social services estimate that the actual cost of unemployment for the personal social services alone—with which, as the House knows, I have personal and family links—will amount to £2·7 million over the next five years to keep pace with the predicted levels of mental and physical illness and deviance arising out of the effects of unemployment in Wales. They state:
"At November 1980 prices…by the fifth year following a sustained increase of 1 per cent. in the unemployment rate, an additional £520,000 would be needed to maintain these services. For instance, in 1982–83 an extra £410,000 would be required…Over the following three or four years, if the further 5·2 per cent. increase in the unemployment rate which has taken place since March 1978 were to be sustained, then an extra £2·7 million would be needed".
Those are the costs shown in the Welsh Office's own document.
Will the Minister tell us, now or at a later stage, whether he accepts those figures and what he intends to do about the problem? Does he accept that the Government's economic policies are placing an additional burden not only on the personal social services in Wales but on the clients of those services? They are creating a generation of youngsters brought up in a culture of unemployment. Those of us who are concerned about social policy have delivered this warning over the years in all situations of high unemployment. I have referred to Beveridge, whose views were repeated by many people in the 1930s. Following that period, there was a new initiative associated with Keynesian economic management. We are now beyond the solutions that were then open. The Government must realise that the strident repetition of the virtues of lowering living standards and wage claims that we have heard from Conservative Members are no answer to the reality of the structural economic problems that Wales faces. The Government—and, indeed, the Labour

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Government—have presided over the continuing decline of the Welsh economy and they will reap the harvest of that decline in the deepening social malaise of Wales and in the sad and depressed lives of so many of our young people.
5.56 pm
Mr. Ian Grist: The hon. Member for Merioneth (Mr. Thomas) said that he did not intend to base his speech on the failure of capitalism, which we know to be his favoured form of address. Nevertheless, he managed to instil into it some of the acid that those in his area of the political spectrum always throw around. I think that I speak for all my colleagues when I say that we feel most strongly at being charged with "deliberately perpetuating disadvantage." We understand full well the problems of the unemployed, the sick and the disabled, the break-up of family life and all the other aspects of social disadvantage to which he has referred.
Regrettably, however, the difficulties faced by this and other Western countries are the result of years of neglect, failure to pay attention to basic economic realities and, more immediately, the cut in living standards imposed on Western industrial nations by the enormous rise in oil prices—not only in 1973–74, but even more in 1979–80 when purchasing power was sucked out of the Western economies by the oil-producing nations, dislocating all of us. Most Western industrial nations should at that point have reduced their standard of living temporarily in order to win back their position, just as a family which finds itself overspending must cut back in order, later, to recover its position. Some did this sensibly, but others did it too slowly. Britain certainly did it too slowly and has paid the penalty.
In addition, unfortunately, we had reached the end of the road in terms of the long-standing inefficiency of so many of our industries. I think that every hon. Member here today was aware of the overmanning in the South Wales steelworks. It was blatant and well known. I had step-in-laws at Port Talbot. Everyone connected with it knew of the scandal of the low productivity of our works. When the crash came, nobody should have thrown bricks or accused anybody else of being inhumane. We had got away with it for far too long.
In calling for an enormous subsidy for the Margam pit, the hon. Member for Ogmore (Mr. Powell) is going some way down the same tempting path. There is nothing politicians like more than giving away money, particularly when it is not their own fairly small contribution but that of the other 30 million taxpayers. They can therefore be irresponsible. The costings of the Margam pit that I have seen would be wholly uneconomic and could be achieved only by taking jobs away from other areas of the economy or other parts of the coalfield. Indeed, one of the grave difficulties facing the National Coal Board at present is to find money for investment because so much is sucked out in wage costs. I understand that, of the more than £102 million on offer in the current pay round, £40 mullion is covered by the planned productivity increases next year. Therefore, of the current offer, £60 million is covered by non-productive work. That is a serious point.
When talking about youth unemployment, I hope that Opposition Members will welcome the young workers scheme that is about to come into operation. That is a sensible and realistic attempt to try to price our young workers on the same basis as those in West Germany.
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There a young worker is recognised as someone who does not produce as much, or work as much, as an older worker. There is, therefore, a case for employing them at lower rates of pay. This is not a wicked way of introducing youth slave labour. The alternative of high pay for youngsters simply means that they will not get jobs, not least at a time of recession and at a time when a record number of youngsters have come on to the market. It is sad that the recession and this enormous number of youngsters coming on to the market should have coincided, but that is a fact of life and could not be avoided.
The hon. Member for Ogmore talked about the increased amount of coal going to Aberthaw power station. Those of us who have visited the power stations know of the CEGB's complaints about the quality of the coal that it receives—for example, the amount of stone and rubble that the coal contains. Everyone knows that many British coal importers and merchants can and would buy cheaper abroad but for the fact that successive Governments have erected a protective wall to help our mining industry. That is a socio-political decision., but it does not necessarily mean that our coal is competitive. Even if we mined Margam and got at the coking coal there, who would buy it? I recall that a number of hon. Members from North-East steel constituencies were not that keen on British coking coal at the time.
The hon. Member for Newport (Mr. Hughes) gave an extraordinary answer to an intervention from the hon. Member for Wrexham (Mr. Ellis). The hon. Member for Newport spoke of the possibility of Datsun establishing a plant in Britain, particularly in Wales. When challenged that this was because Britain and Wales were in the. EEC, the hon. Gentleman baldly stated outright opposition to our membership as though somehow or other that explained Nissan's decision.
The hon. Member for Ogmore did not refer to our membership of the EEC or to his party's position on it. He said that the major Sony plant at Bridgend had received a loan of £2·3 million from the EEC to take on 120 former redundant steelworkers from Port Talbot. Sony would not have gone to Bridgend in the first place but for our membership of the EEC. By the same token, it is highly unlikely that the Ford engine plant at Bridgend would have been established but for our EEC membership.
National Panasonic would not have its European headquarters in Cardiff unless we were in the EEC. Time and again, surveys have shown that Japanese inward investment has come to Britain not least because we happen to be English speaking and they wanted a foothold inside the EEC before any protective barriers were erected against their exports. They have come to us because we are in the Community.
More than 50 per cent. of American inward investment to South Wales has occurred since we have been members of the Community. Just as obviously, how many British people would invest in British export companies inside a Britain that was excluded from the European Community rather than investing directly inside a major market? Indeed, many European firms think it wise to invest inside the giant American market so that they are inside any protective barriers that are imposed.
I hope that the kind words that have been said about the newly-elected president of the NUM will come true, but I was alarmed to read in the newspapers this morning that

55
he had attended a celebratory function for Mr. Willie Gallacher, the late Communist Member of this House. Apparently, Mr. Scargill said:
"I can think of no more appropriate way to celebrate the centenary than that each and every one of us will take part in that campaign of mass opposition".
He was referring to opposition against the Government, and the mass campaign is a means of using the NUM's strike weapon to try to bring them down. Mr. Scargill believes that he managed to do so in 1974. He should remember that the present Government have a couple of years to run rather than a few months; that we are under a determined leadership; that we support the coal industry, but not at any price; and that we appreciate the necessity to build nuclear power stations in Britain that would make us as competitive in energy as the French. The French are now beginning to undercut the Germans on energy pricing because the Germans have a lunatic environmental lobby that will not allow them to build what they should. Unfortunately, they must import enormous amounts of oil to balance their accounts.
I hope that Mr. Scargill will recognise that Conservative Members are realistic and will accept that pits must be closed. For example, of the 23 pits that were allowed to remain open at the beginning of the year, five have already closed. As The Economist said on 17 October:
"So long as the board is stuck with the old mines it cannot open new mines and put in the new investment necessary to make new or better jobs".
At present, South Wales is making greater losses than the trading profit of the NCB.
At a time of stagnant or low growth, Britain also faces the extraordinary difficulty of having indexed much of our social spending. Since the mid-1950s, the number of pensioners has tripled. Has our production and wealth done so? Regrettably, the answer is "Not quite". Health spending has been maintained, despite what the hon. Member for Ogmore said. It has been increased in real terms. Most of that spending goes on increased pay. If such money is pre-empted because of pay, it cannot be used for equipment and the various labour-saving and lifesaving machines that are so often paid for by appeals that are launched, not least in Wales.
Mr. D. E. Thomas: Will the hon. Gentleman confirm that the Government are now arguing that working people, pensioners, those on fixed incomes, supplementary beneficiaries and the unemployed should all take their fair share of a reduction in living standards?
Mr. Grist: The hon. Gentleman could not have been paying attention. Pensioners will not take a cut. Pensions will be fully indexed. Pensioners—that huge engine of growth—will be paid a pension that will keep pace with the rise in the cost of living, at a rate which, frankly, the economy cannot bear. If the economy were growing, we could all bear it, but the Government are already preempting a higher proportion of our wealth in order to honour those commitments. So be it; that is our decision.
The hon. Gentleman referred to Keynes. He never anticipated that a Government would try to spend their way out of a recession, certainly one faced with the plateau of expenditure with which the present Government have had to deal. The Government have increased expenditure. So much for the accusations that they have been cutting
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all over the place. In fact, we have never spent more. If anything, the Government could be accused of overspending.
As my hon. Friend the Member for Brecon and Radnor (Mr. Hooson) said, Britain is part of Europe and the wider world, and there is a stoppage on economic growth virtually throughout Europe and in the United States. That fact should alarm us. Of all the countries with which we compete and compare ourselves, we depend more than any other on our exports and international trade. Together with West Germany, we export more of our production than any of our competitors, in many cases by a substantial margin. Any slump in world trade is particularly damaging to this country, to jobs and to our people. However, there is now less short-time working while overtime has been increasing.
Although growth is static in the world, our manufacturing output is up. With a bit of luck, we can expect a considerable increase in manufacturing output next year provided that pay settlements can be kept moderate. Output per head is expected to be 10 per cent. higher by the end of this year. GDP rose by 0·25 per cent. in the third quarter, the first rise in almost two years. Manufacturing output increased by 3 per cent. in the period from May to September. Industrial output was up by 0·5 per cent. in the third quarter. The hon. Member for Merthyr Tydfil (Mr. Rowlands) makes noises when he hears facts that he does not like. He sits and chatters in a high voice. It is a well known habit of his. Engineering output—
Mr. Edward Rowlands (Merthyr Tydful): Will the hon. Gentleman give way?
Mr. Grist: No, I shall not give way.
Mr. Rowlands rose—
Mr. Deputy Speaker: Order. I know that the hon. Gentleman was provoked. I do not want to get provoked.
Mr. Grist: The hon. Gentleman seemed to be attacking me without rising to his feet, so he has already had a good crack. Gross trading profits were up 4 per cent. in the second quarter. Pay is dropping. Average earnings are beginning to go down. Why did we ever get into the habit of thinking that we get an annual pay rise regardless of what we do, the skills we have, how hard we work and how profitable is the company for which we work? Where did we get this crazy idea that, come hell or high water, one is always paid more? Why and how did it start? If we can moderate or even stop this approach, our country would be in a fabulously strong position. One has only to contemplate what the Germans and the Japanese would give for our coal and our oil in order to be self-sufficient in energy. Those two countries would be out of the stratosphere if they possessed our advantages. What a mess we have made of things for so many years.
Hon. Members would perform better as representatives of the people of Wales if they indulged in some plain, straight and honest talking. It is necessary to recognise that the only firm and true jobs—those which can be taken by our children and grandchildren and in which they can feel pride—are jobs that can be paid for and supported by a profitable and productive industry. We need productivity that increases steadily year by year. Unless that position is achieved, we shall have these debates year in, year out. All too often, in the view of the people of Wales, we have engaged in such debates over the last 30 years or more.
6.13 pm
Mr. Donald Anderson: The hon. Member for Cardiff, North (Mr. Grist) has referred to what he describes as small but encouraging signs of improvement. Many economists say that a short, restocking period is inevitable because of the present low level of stocks but that this process is likely to peter out towards the spring or summer of next year. The hon. Gentleman talked about the bonus provided by oil. What is happening, sadly, is that the possible bonanza of oil is being used by the Government to pay for the long queues of unemployed.
There has been reference to the human cost of unemployment. The situation is a world away from the glossy picture presented in May 1979. I recall during the election campaign seeing a vast advertisement near High Street station, Swansea, with the words "Labour isn't working". Anyone reading that poster would have imagined that the Conservative Party at the time had the answers and intended to take action. The picture now, two and a half years later, is that unemployment has increased in Wales by 95 per cent. Although the figures for the United Kingdom as a whole have declined marginally over the last two months, those for Wales have continued to rise, month after month. It is a picture of massive failure in spite of the promises made at the time of the 1979 election.
The extent of the unemployment was clearly not foreseen by the Government. When the Secretary of State's then permanent under-secretary came before the Select Committee in March 1980 he said that the assumption of the Welsh. Office—I do not know whether he was carpeted for this remark—was that unemployment would rise to 125,000 at its peak. The figure is now 170,000 and rising. This shows the extent to which the Government were not prepared for the increase in unemployment. The Select Committee, in its report in July 1980, pointed to the job chasm that was arising as a result of the Government giving priority to tackling inflation through monetarist policies.
There was a certain inevitability about the increase in unemployment in Wales. It is true that unemployment has increased throughout Western Europe. However, the figure in West Germany, with a larger labour force, is 1·6 million—a far cry from the figure in this country. The inevitability arose partly because of a fall in the numbers ' employed in steel production and partly as a result of Government policies in the public sector, which affect Wales especially because of its dependence on the coal and steel industries and local government expenditure. Another factor was the dismantling by the Government of the regional development structure inherited from the Labour Government.
Mr. Alan Williams: Is there not a statistical fact underlying the remarks of the hon. Member for Cardiff, North (Mr. Grist) which indicates that unemployment in manufacturing in Wales must rise considerably in the next few months? I should welcome my hon. Friend's views. If productivity is rising, as claimed, by 7 per cent., but if the Government are holding back the level of increase in manufacturing to 3 per cent., this means that there is a 4 per cent. shortfall and that unemployment must therefore rise considerably in Wales in the next few months.
Mr. Anderson: I accept my right hon. Friend's economic expertise. It would appear even to me that as night follows day—as Treasury Ministers would say—the shortfall of 4 per cent. will mean increased unemployment.
The regional development structure is being weakened considerably. There was a reduction in July 1979 jai the areas and the amounts spent on regional funds. Last week, there was the abolition of the IDCs which, however small their effect, were a symbolic commitment of Governments in the past.
Mr. Hooson: As the hon. Gentleman is apparently in favour of very unselective identification of areas for development, does he resent the fact that Swansea was chosen as the very first enterprise zone created in Great Britain?
Mr. Anderson: That is a different point. In principle, I do not approve of enterprise zones but if one is to come to South Wales, I would want it in my area. I shall come to the point that the hon. Gentleman makes.
The IDCs have been abolished. This affects the regional development structure. All that the Government provided in response to the steel cutback was an investment of £48 million. On the basis that £30,000 of Exchequer subsidy is needed to create one job—this updates Dr. Marquand' s figures in a report for the Department of Industry—there are likely to be created only 1,600 new jobs, very small in terms of the need in Wales.
I turn to the position in West Wales. In the Swansea travel-to-work area male unemployment is now over 19 per cent. We are still not part of a development area, let alone a special development area. There is no evidence of any new technological ventures coming to our area. Some people talk about the golden triangle of South-East Wales, Inmos and Mitel and so on. Nothing of that nature has come to the area. There has been no Japanese investment further west than Bridgend. That is the picture that faces West Wales.
If the Government will not make the U-turn that the Opposition propose, even on the Government's criteria various aspects of selective investment may have a disproportionate job effect in the public sector. We know, for example, that the Government changed the rule with regard to rail electrification after the joint Department of Transport and British Railways Board report was published earlier this year. Under the new criteria involving not an 11 per cent. return but apparently a 7 per cent. return, perhaps only one main line, and that not in South Wales, will be electrified in spite of the energy-saving and job creation effects that would follow.
By changing the rules the Government are ensuring, by their own induced recession, that perhaps no more than one line will meet the new criteria. If rail electrification went ahead there would be an immediate effect on a number of companies in South Wales in both the public and private sectors. The steel industry at Llanwern and Port Talbot and companies such as South Wales Switchgear would benefit. The small companies that would benefit from electrification seem to be concentrated on the Bridgend area. There would be an immediate effect on a number of important Welsh companies from electrification.
The same applies to housing. The degree of unemployment had a certain amount of inevitability about

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it. The Welsh Office predicted that over the period 1980–84 there would be a 46 per cent. reduction in public investment in housing. The job effects were bound to follow. Yet, in terms of the proportion of unfit housing in the housing stock and the proportion of pre-1919 houses, Wales is in a worse position than any other part of the country. The Government should give more funds for improvement grants. In the past the Conservatives have espoused that policy to ensure that the housing stock does not slip further into obsolescence.
Such a move would have little if any import content. It would have an immediate effect on construction workers, who make up about 25 per cent., of the total unemployed in Wales. It would have immediate human and economic effects. Yet in many parts of Wales the district housing authorities have virtually cut out discretionary grants. In my authority they are restricted to the disabled and to people in housing action and general improvement areas. A comparatively small investment in housing could create many more jobs.
The hon. Member for Brecon and Radnor (Mr. Hooson) referred to enterprise zones. My local authority has unearthed a fact in relation to small firms in the enterprise zone. It is that although the annual rate concession is an enormous bonus to the firms, more important to the small companies in that area and outside would be a reduction in social security taxes and in particular in the national insurance surcharge.
For one small enterprise, for example, the value of the annual rate concession is about £1,900 per annum. The estimated annual national insurance employment surcharge in respect of the same small enterprise is over £4,000. I hope that the Government will examine that matter carefully when they consider the second half of the Budget in April next year. I hope that they will consider introducing some alleviation of the national insurance surcharge for small firms, because that could have a major effect on job creation.
I hope that the Government will consider my ideas sympathetically and accept the need for change if the yawning job chasm referred to by the Select Committee and by my hon. Friend the Member for Ogmore (Mr. Powell) is not to be increased. If there is no change the prospect for Wales will be one of continuing decline and increasing human misery, as described by the hon. Member for Merioneth (Mr. Thomas).
6.25 pm
Mr. Anthony Meyer: I agree with the hon. Member for Swansea, East (Mr. Anderson) that the expenditure of a relatively small sum on home improvement would be an effective way of increasing employment. I also agree that the removal of the national insurance surcharge should be given high priority by the Government.
I have only a short time, and I wish to speak about the importance of training. I am convinced that tomorrow the Secretary of State will unveil an ambitious training programme. It will probably include allowances for training that are lower than the unions wish and more comparable with those available in Germany.
I am on record as saying that under no circumstances would I be prepared to support a cut in unemployment
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benefit. I stick to that, but I certainly would support a cut in the allowances to people who are training, even though that would intensify the poverty trap.
We must ask what we are training young people for. If we achieve a training system that is as effective as that which operates in the Federal Republic of Germany, will the trained people find jobs? There is still a shortage of skilled personnel. Why has unemployment fallen so cruelly on the young? We must face the answer fair and square. It is because for years we have faced every crisis in every firm with a policy of no redundancies but of natural wastage.
The appalling level of youth unemployment is a tribute to the strength of the unions in defending the jobs of their existing members. We had better face that fact if we are to make any sense of it. Training is fine, but what are we training young people for? We must recognise that industry has not yet completed the process of slimming down. There must be further slimming down if industry is to be competitive. Without that industry will not provide the hundreds of thousands of jobs that are so desperately needed.
Small businesses can offer a lot in terms of extra employment. I spent some time the other day seeing what was being done at the site of the old East Moors steelworks. British Steel Corporation (Industry) Ltd is doing splendid work there. We could do more to train and encourage young people to set up as entrepreneurs. In one small workshop after another we were told of people who, having discovered what people wanted, were prepared to work all hours to provide them with exactly what they needed. One person said "Recession, what recession?" I do not suggest that that is a generally true story, but it is true of those who are prepared to be elastic in meeting public need.
However, let us face it; the great majority of jobs will not come either from small businesses or industry. It is time to stop looking at industry as the provider of jobs. We should look at it as primarily the creator of wealth that can be used to finance public and private services, which are necessarily labour-intensive, and to finance much earlier retirement. With the present product of industry we could not conceivably afford early retirement on a decent pension on a scale big enough to make an impact on unemployment. If industry could produce the wealth that it is capable of producing the product of that wealth could be used to finance earlier retirement.
One thing worries me about the attitude into which the Conservative Party has settled. It constantly fosters the idea that, because they are more expensive than we can afford at present, in themselves public services are bad and we must cut them down, as an end in itself. I accept that at present even the current inadequate level of services is beyond our capacity to pay for, but the Conservative Party must never lose sight of the fact that a civilised society must have expanding and improving social services. Our policy must be to create the wealth to pay for them. The party to which I belong fundamentally believes that. The Labour Party would cheerfully inflate the public services with extravagant wage claims until they burst. Therefore, I feel secure in my allegiance.
The EEC has been mentioned. I shall not go into the moneys that come in and go out, but the much vaunted adverse trade balances with Western Germany and other

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member States are, as a proportion of our total trade, minuscule. As a proportion of the whole, our trade imbalance with Japan is 13 times what it is with the EEC.
As we are creating so little wealth, there is little chance in our lifetime of being able to set aside enough to finance the new jobs that we desperately need, so they must come from inward investment. Speaker after speaker pointed out that they will come only from other countries using Britain as a base to trade into the Common Market. Let me give one statistic. Before the Common Market was formed, Britain got 50 per cent. of all United States overseas investment. When the Common Market was formed with us outside it, American investment in Britain sank to 10 per cent. of its total overseas investment. Now that we are in the EEC, it has risen to 40 per cent., which represents a great many jobs.
6.33 pm
Mr. Donald Coleman: We are indebted to my hon. Friend the Member for Ogmore (Mr. Powell) for initiating the debate, which has ranged widely over the problems that confront our people in Wales and that arise from the unfortunate unemployment situation.
Many issues have been raised. The hon. Member for Merioneth (Mr. Thomas) is right to remind us of the social and mental stresses that have arisen from the recent massive unemployment. Only when one has been in a family afflicted by unemployment can one really understand the hardships.
My hon. Friend the Member for Ogmore spoke with passion and understanding of the problems that confront the part of Wales that we are both proud to represent. Those problems are a curse on the whole of Wales, as well as the rest of the United Kingdom. My hon. Friend was knowledgeable about the difficulties that have arisen from the closure of the Coegnant colliery, which has caused substantial job losses.
The hon. Members for Brecon and Radnor (Mr. Hooson) and for Cardiff, North (Mr. Grist) attributed a Luddite attitude to miners. No one understands better than the miner that one day the coal in his pit will run out and the pit will close. That is a fact of his life, but he cannot accept that he will then have no job.
We welcome my hon. Friend's comments about the possibilities of redeployment in the St. John's colliery, and I stress the need for the proposed development at Margam. The Government should give the go-ahead and make the money available to the National Coal Board. It is an investment in Britain's energy resources and will ease problems, such as those at Coegnant, which may arise in other parts of the South Wales coalfield.
The latest unemployment count shows the need to debate the problem today. At the last count, 12,948 people were registered as unemployed in the constituencies of my hon. Friend the Member for Ogmore and my right hon. and learned Friend the Member for Aberavon (Mr. Morris). If we add to that 4,638 in my constituency and 16,805 in the Swansea employment office area, we see starkly the mess of unemployment over which the Secretary of State for Wales presides.
Mr. Delwyn Williams: Does the hon. Gentleman recall a Labour sub-committee in 1976, presided over by the right hon. Member for Lanark (Dame Judith Hart) and of which the right hon. Member for Leeds, East (Mr. Healey) was a member—whose report
62
was so secret that it was published in The Observer —which forecast 2½ million unemployed by 1980? The reason given was the baby boom of 1960.
Mr. Coleman: In my constituency at that time unemployment stood at under 6 per cent. but today it is 18 per cent.
The figures that I have given for unemployment in West Glamorgan and Mid-Glamorgan are not the end of the story. Over the weekend we learnt of more workers being made unemployed. Ninety-six workers at the Kenfig plant of Borg-Warner are to be made redundant, and 120 workers have joined the dole queue as a result of the Mitel closures. On Christmas Eve, further redundancies will occur at the Port Talbot steelworks, which has already taken considerable steps to improve productivity.
References were made to the militancy of Welsh workers. It is right to nail that myth in this debate, because there is no truth in it. Evidence of it being a myth can be pointed to by the success of Japanese investment in Wales. The co-operation of Welsh workers and the quality of their work is further testimony of that.
Let me make it clear today, as I did at the time of the announcement of a possible investment in Britain by Nissan-Datsun, that a welcome awaits such an investment, especially in Wales. I hope that in his reply the Minister will tell us something about the progress of the Nissan-Datsun development.
I conclude by quoting some words that should be familiar to Conservative Members because they were written as a means of returning them here at the last election:
"There is one task that is even more urgent in Wales than elsewhere: the need to establish an economic climate in which wealth and jobs can be created."
Two and a half years have passed since those words were written and in that time thousands of Welsh jobs have been destroyed, not created. My hon. Friend's motion demands for the Welsh people an end to the destruction and a little more creation.
6.42 pm
The Under-Secretary of State for Wales (Mr. Michael Roberts): I am sure that the House is grateful to the hon. Member for Ogmore (Mr. Powell) for raising the subject of employment in Wales. I am particularly grateful to him because he couched his motion in positive terms and talked about employment. I recognise that the reason was the background of unemployment generally and unemployment in his constituency particularly. Apart from Members of the Liberal Party who have not been present during the debate, and Members of the SDP, who made a fleeting visit, Members of all the major parties in Wales have made serious contributions to the debate.
No one can dispute the fact that Wales, along with the rest of the United Kingdom, is facing a major economic difficulty. Wales has been particularly badly hit by the rundown of its more traditional industries—coal and steel. Both have been contracting, and the decline in steel making in particular has been marked. I do not underestimate or understate the problems. No one can minimise the personal hardships that go hand in hand with unemployment. Hon. Members referred to them today. Anyone who recognises the importance of work in the fulfilment of character and personality will at least have some appreciation of the frustration of unemployment,

63
particularly of young people unemployed for a long time. That appreciation and understanding is not confined to one side or part of one side of the House of Commons.
I also stress, because I have to respond to the theme of the debate—employment—that there are some grounds for optimism. The problem of training was not one that arose last week. It did not become a national interest just after we won the election in 1979. The problem has been with us for a long time. My hon. Friend the Member for Flint, West (Sir A. Meyer) referred to the need for training. I have no doubt that we all recognise the problems of the young. Over 44,200 people are currently being helped by special employment and training measures. In November 1981, about 17,300 youngsters were participating in YOP schemes in Wales—one-third higher than in November 1980. A substantial package of special measures for the next year was announced by my right hon. Friend the Prime Minister in July, and my right hon. Friend the Secretary of State for Employment will make an announcement soon about further measures in the form of a comprehensive training scheme for the young.
We are all agreed on the important role that effective training can play, both in the development of individual potential and in the strengthening of the economy for the creation of a better-trained work force. The Government have fully endorsed the objectives of the MSC's new training initiative and we shall make a statement later in the Session about the role that the Government and others can play.
Mr. Rowlands rose—
Mr. Roberts: Before I come to the specific question of Margam, I should like to draw attention to the developments in industry and commerce that hold out the promise of employment in Wales in the future.
Mr. Rowlands rose—
Mr. Roberts: I genuinely apologise to the hon. Gentleman for not giving way. I do not have much time, so I hope that he will forgive me. He knows that I normally give way—even though I have a bad reputation with the right hon. and learned Member for Aberavon (Mr. Morris). I apologise to him for that.
With regard to factory allocations, we have been particularly concerned to provide the infrastructure needed to encourage new industrial developments. In Wales, we have undertaken a major programme of Government-financed factory building and site preparation, and new factory units are being completed at a fast rate. At the end of October, 211 Welsh Development Agency factories were under construction covering 1·4 million sq ft, and a further 249 are planned covering another 1·1 million sq ft. However, the important and immensely encouraging point is that we are not just providing the buildings—we are getting them occupied. I emphasise again what the Secretary of State said during the last Welsh Question Time—that is a truly remarkable achievement providing much more than the previous Administration and during a period of recession, too.
This year, the number of Government factories formally allocated total 270 and carry the promise of just over 6,000 new jobs. We see little ground for pessimism that the level of interest in Wales will fall away and this
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successful bubble burst. Industrialists continue to be attracted by what we have to offer in Wales. So far this year, we have received almost 500 inquiries, which have resulted in nearly 200 visits.
Inward investment was referred to by the hon. Member for Newport (Mr. Hughes) and by my hon. Friends the Members for Brecon and Radnor (Mr. Hooson), Cardiff, North (Mr. Grist) and Flint, West. We have continued to make a special effort to attract inward investment. In the last 18 months, the Secretary of State has led two inward investment missions to the United States and one to Japan. They found immense interest in what we had to offer and a great awareness of the advantage of setting up manufacturing units in the United Kingdom. The hon. Member for Newport referred to the possibility of a major company coming into that area. The inward investment of so many companies depends on our continued membership of the EEC. It is no good his replying that he has always been opposed to membership of the EEC. He is not on the board of the companies that will be making the inward investment. Every time they will make the decision in favour of a member of the EEC.
I was recently in Gorseinon, opening an extension by the Minnesota Mining and Manufacturing company that will involve about 180 extra jobs. The company made it clear that it is in Gorseinon because Gorseinon is in the EEC. It recognises other advantages, too—the considerable advantages of the work force in that area and the good industrial relations. However, it made clear that its reason for expansion is that Britain is a member of the EEC. That is the only way in which we shall attract major companies to come to give the people of Wales the jobs that they require.
I turn to the subject of high technology. Among the types of firms that we need to attract are those which relate to new technology. We are all agreed about the crucial importance of new technology both in the development of a competitive industry and in the way that it will affect all our lives. We must continue to look to industrialists and innovators for their ideas and initiatives, but there will be a place for the Government to add their support and help, especially in research, and we must all have regard to this British development, especially in our purchasing programme.
On the more specific front, the Government are committed fully to promoting information technology. I need mention only a few schemes. In education, two schemes are directly relevant. The first is the microcomputers-in-schools scheme, which aims to have a microcomputer in every secondary school by the end of 1982. The more generous-minded Opposition Members will grant that this is an initiative which came from this Government, but that the need for microcomputers has existed for a considerable time. It might well have been taken up by the previous Secretary of State for Education and Science, who is now a member of the SDP.
The Department of Industry, with the MSC, is setting up information technology training centres under the YOP scheme, and training places are also provided under the training opportunities scheme and through the support of the Engineering Industrial Training Board. But if we are to develop this new technology to its highest extent, we must make sure that everyone is involved fully to train people and keep up to date. Next year is Information

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Technology Year, and we hope that Wales will make a considerable mark in that year. I know that Swansea is launching it in January.
I turn to what the Government are doing for small firms. Although I have placed most emphasis up till now on large firms, small firms are tremendously important to Wales, and the present Administration have been especially active in this area. The Welsh Office has been eager to help. We have set up a number of small firm clinics at various locations throughout Wales. The entrepreneurial spirit is very much alive in Wales. Two business opportunity conferences were held only last week in Cardiff and Llandudno at which 500 people turned up. There were 900 applications. These are people eager to start new jobs.
When we talk in the House about firms closing and about redundancies, sometimes we paint the gloomy picture that is there. But how many times do we record the small firms which are starting up? An enormous number of small firms are starting up in Wales and from these small beginnings can come economic and commercial success, bringing more jobs.
I draw attention to the importance of our urban programme. I am able to announce for the first time that the programme for Wales is to be increased in size from a planned £11·6 million to £15·3 million. That is a significant improvement. It is much in excess of 30 per cent. I hope that the House will welcome that announcement because it will be translated into new opportunities jobs and into social activity which will help the Welsh people and those who are especially deprived and burdened. Therefore I assume that it will be widely welcomed by the whole House.
Time is moving on, and I run the risk of not being able to deal with the specific subject of Margam. That being so, I shall not comment on the steel industry. Instead, I shall move straight to the subject of coal.
Here is an industry which in the 1950s provided directly more than 100,000 jobs in South Wales. Over the decade since then, the figures have reduced from 80,000 in 1960, to 61,000 in 1965, to 32,000 in 1975 and now to 25,000. Hon. Members will remember the difficulties of the 1960s. Since 1979, the National Coal Board has found it necessary to close six collieries which at the time of closure employed more than 1,800 men. These were closures of pits where the geology made it impossible to envisage any longer an effective life.
There will still be cases of that kind, which the board and the unions will have to consider. But there are also pits which are doing well and which give encouragement for the future. They will justify further investment. The hon. Member for Ogmore pressed the case for completely fresh investment in a new deep mine at Margam, and this was echoed by other hon. Members, including the hon. Member for Neath (Mr. Coleman).
I understand the attractiveness and importance of the proposal and the local interest in it for the hon. Member for Ogmore. But this would be a major project and has to be considered within the national context. The South Wales coalfield is part of the national coal scene, and decisions on investment and production have to be taken in that light.
Let us be clear that there is no difference between the two sides of the House about the need to maintain an
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effective and viable industry. This Administration believe that the coal industry has an important future, and we hold to the aim that it should return to financial viability as soon as that can be achieved.
I am pleased to acknowledge the real improvements in performance achieved by both sides of the industry in Wales and in other parts of the United Kingdom. Productivity and output per man-shift have seen significant improvements. The news that the South Wales coalfield recently achieved the lowest ever absentee rate for the area is welcome. The losses in South Wales would be greater were it not for the closure of some of the heaviest loss-making collieries such as Coegnant. But these losses remain very high. The South Wales coalfield loses more per tonne of coal produced than any other coalfield in the United Kingdom. A great deal still needs to he done to reduce these losses.
Let there be no misunderstanding. We believe that the industry has a vital part to play in our current and future energy requirements, but that future and the good Longterm employment opportunities that go with it rest squarely on attaining the efficient and competitive production of coal.
My right hon. Friend the Secretary of State has discussed the Margam project with the chairman of the NCB on a number of occasions, and most recently last month. The enthusiasm for this project of the hon. Member for Ogmore is such that, when he addressed the nation on radio last Friday morning, he rather overstated the facts in saying that the NCB had already spent vast sums of money on survey work, and he quoted a figure of £20 million. He may like to know that the NCB puts the cost of surveying at nearer £2·5 million. But I do not quarrel with the hon. Gentleman. At least we can agree that a full survey has been carried out. It shows that Margam would inevitably be a high-cost operation. It is a very deep mine. The geology is difficult. The seams are relatively costly to mine. If the project is to have a future, it is important that these costs should be reduced as far as possible.
The NCB also wants to assess very carefully the expected market and price for the high quality coking coal reserves in Margam. United Kingdom usage of coal for coke production has fallen substantially in recent years. In 1977, 17·41 million tonnes of coal was used for coke. By 1980 that was down to 11·61 million tonnes. The contraction of the steel industry during the past decade, which I should have mentioned earlier, obviously contributed significantly to the decline in the market, but so, too, has the reduction in foundry coke usage.
Because of recessionary influences and technological improvements, the number of companies using foundry coke fell from 745 in 1975 to 590 by the end of 1980. Therefore, the NCB could proceed with the Margam project only if the costs were right, if the market were right and if it made sense within its overall investment plans. It is misleading to think otherwise and thereby encourage expectations that may be too great.
It being Seven o'clock, the Proceedings on the Motion lapsed, pursuant to Standing Order No. 6 (Precedence of Government Business).

Orders of the Day

  Civil Aviation (Amendment) Bill
  As amended (in the Standing Committee), considered.
  Mr. Deputy Speaker (Mr. Ernest Armstrong): No amendments have been selected.
  Mr. George Foulkes: On a point of order, Mr. Deputy Speaker. I am concerned about Mr. Speaker's provisional selection of amendments and the fact that he has selected no amendments, particularly with regard to amendment No. 2, which is in, the name of myself and my hon. Friend the Member for Central Ayrshire (Mr. Lambie).
  The amendment deals with a matter that was not raised in Committee and relates specifically to the Scottish airports division of the British Airports Authority. I ask for further consideration to be given to the possibility of the amendment being considered, because the topic has not been properly considered at any stage during discussion of the Bill. No detailed consideration has been given to any amendment that would require the British Airports Authority to spend a part—
  Mr. Deputy Speaker: Order. The amendments that were submitted have been considered very carefully. Mr. Speaker is not required to give reasons for any decision and no amendment has been selected.
  7.1 pm
  The Under-Secretary of State for Trade (Mr. Iain Sproat): I beg to move, That the Bill be now read the Third time.
  I can move the Third Reading fairly briefly, since the Bill was given a fairly good going over not only on Second Reading, but in Committee. When my right hon. Friend the Secretary of State introduced the Second Reading debate, he remarked that it was a straightforward Bill that contained only five clauses. It is exactly that—brief and straightforward—and it aims simply to increase the borrowing power of the British Airports Authority and British Airways to cover their investments and other needs for at least the next five years. It also enacts some overdue preconsolidation amendments.
  The urgency behind the Bill arises because British Airways has come close to its limit, mainly as a result of exchange rate movements affecting the value of its foreign borrowings, which the Bill will stop. Otherwise, the Bill does not diminish parliamentary scrutiny or governmental control over the borrowings of British Airways or the British Airports Authority. It does not reduce the Government's determination to ensure that both bodies operate in the most efficient and commercial manner. Therefore, the implications of the Bill are no wider than the straightforward but necessary provisions that it contains.
  Nevertheless, on Second Reading and in Committee there were rightly several wide-ranging debates that covered many topics of general interest in civil aviation. That was useful and refreshing and provided the Government with a welcome opportunity to hear and note the many views expressed on both sides of the House towards maintaining and improving a healthy civil
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  aviation sector in the United Kingdom. The Government will continue to work towards that end and I therefore commend the Bill to the House.
  7.3 pm
  Mr. K. J. Woolmer: The Opposition recognise the urgency behind the Bill, as the Government have sought to increase with particular dispatch the British Airways' borrowing limits. For that reason, the Committee stage took only three sittings. However, that resulted in a less than satisfactory discussion on many issues concerning the British Airports Authority and British Airways and left the Opposition unhappy with many aspects of the Government's policies in those important areas.
  A feature in Committee was the long time taken up by Conservative Members developing their views of the state of the civil aviation industry. Currently, in Conservative circles, "developing their views" is the parliamentary term for disagreeing deeply. The Under-Secretary was often as lonely as is the Chancellor of the Exchequer when he stands at the Dispatch Box defending his economic policies.
  Hearing the hon. Member for Brentwood and Ongar (Mr. McCrindle)—who I do not see in the Chamber—developing the finer points of civil aviation economics and airline policy was similar to seeing the Minister being stabbed by a telegraph post. An unsatisfactory aspect of the debates was the Minister's unwillingness to respond to many important issues because of the current litigation about the British Airports Authority's landing charges and the recent discussions about air fares across the Atlantic. I understand the Minister's difficulties, but the House will feel that a Bill that lays down the legislative framework for an increase of £775 million worth of borrowing limits by two major nationalised businesses should have had the closest scrutiny of policy in financial terms.
  The Secretary of State opened the Second Reading debate on 16 November by saying that the Bill
  "is not a legislative earthquake, but a straightforward Bill with only five clauses which should not be the subject of major controversy." [Official Report, 16 November 1981; Vol. 13, c. 41.]
  With £775 million of borrowing being involved, the Secretary of State has clearly changed his style since his days on the Treasury Bench.
  Although there are many points that the Opposition are unhappy about concerning the British Airports Authority's increased borrowing limits—by up to £175 million in due course—I shall deal with only two. The first concerns the Government's financial policy towards the British Airports Authority and its effects on landing charges. As I understand it, the Government have set the BAA the target of a real rate of return on its assets in current cost accounting terms of 6 per cent. per year to be achieved on average over a three-year period. The twentieth report of the Public Accounts Committee in July 1980 said in paragraph 5:
  "These changes were responsible for the substantial increases in the authority's charges effective from 1 April 1980".
  Does the Minister still accept that that was the case? This is a classic case of the manner in which the Government have dealt with nationalised industries. The gas industry is another good example of the same trick.
  First, the Government insist that the charges or prices are raised as a means of cutting the PSBR. The idea was

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  that we would all pay lower taxes, but pay higher prices instead. However, all except the wealthiest now pay both higher taxes and prices. That more fundamental failing of the Government's strategy is now so well recognised that I suspect that even the Minister will not try to defend it.
  Having forced the British Airports Authority to raise its charges sharply to its customers, the Government have found their own Back Benchers blaming the nationalised business for being a monopoly and charging what it—or rather the Government—sees fit. Therefore, the nationalised industry gets the blame for the Tory Government policy. Tory backwoodsmen come out of their woods calling for privatisation, which is the new "in" word for denationalisation, or rather, as I suspect is more often the case, calling for the creation of a private monopoly that will benefit private individuals rather than the nation.
  Mr. Robert Atkins: What objections do the Opposition have to the freedom and the choice that is given to employees of the British Airports Authority to buy shares in the industry in which they work, which has proved successful in British Aerospace? I do not think that any trade union leader or any Opposition Member can be opposed to that policy. If there is such opposition, I should like to know why.
  Mr. Deputy Speaker: Order. I decided to allow the hon. Member for Preston, North (Mr. Atkins) to complete his intervention, but I remind hon. Members that we are confined to discussing the contents of the Bill. We must not widen the discussion.
  Mr. Woolmer: I well understand that, Mr. Deputy Speaker. I shall deal only briefly with the intervention. If the important bodies to which the hon. Gentleman has referred were to be denationalised, employees would have as much right as anyone else to have a share in the undertakings. However, even if 50,000 put £1,000 each in an organisation of the sort that we are discussing, that would provide only a tiny fraction of the capital that would be required to buy it. The Government are attempting to line the pockets of individuals in the City with the cheap sale of a profitable nationalised industry. Their purpose is not to assist the workers in the industry.
  The pressures upon the BAA and its charges to the users of its services are increased by the target of a 6 per cent. real rate of return and by the pressure to have a large part of its capital investment programme financed from internally generated revenues. In broad terms, the larger the proportion of external borrowing to internally generated revenues, the lower can be the charges to present consumers. There is considerable logic in that proposition because present consumers might reasonably be expected not to have to pay for future benefits. Almost every owner occupier has bought his or her house on that principle. They have borrowed to buy the asset that will provide benefits over the years ahead.
  The BAA investment programme is expected to be over £700 million over the next six or seven years. We are being asked to approve an increase in borrowing limits of about £175 million or about 25 per cent.—that is an external financing ratio of about 25 per cent. That means that 75 per cent. of a large investment programme has to be financed by raising charges to consumers to a level that is higher than is necessary to run the present services. These considerations are always determined by applying the test
  70
  of balance, but the Minister has been completely unforthcoming about his reasons for striking the balance that we are being asked to accept as an implication of the Bill.
  There appears to be no' doubt about the ability of the BAA to finance its investment by external borrowing. It has a low debt-to-assets ratio, a good profits record and good profits prospects. If the Government want to hold down unnecessary price increases, there appears to be a sufficiently good case for them to find some room for manoeuvre.
  The second unsatisfactory feature is the Minister's response to the Public Accounts Committee's twentieth report of July 1980, which called for the development of more clearly measurable performance criteria. I always treat allegedly precise and quantified measurements of non-financial performance with the greatest care. In my experience, a careful selection of criteria together with a judicious choice of the means of measurement and definition can usually produce whatever answer one wants. However, measures of performance there are, and the PAC specifically drew attention to them.
  The Minister is responsible ultimately for the performance of the BAA and for the justification of the borrowing limits that we are being asked to approve. No doubt the Minister has studied the present measurements carefully and has considered what further aids to assessment he feels are necessary. We want to know ultimately whether he is satisfied with the performance of the BAA as it is revealed to him through his measurements, or where he considers any improvements are necessary on the part of the authority. When the Minister replies I hope that he will give the House his current assessment of the performance of the authority and what improvements, if any, he is still seeking.
  I turn to the part of the Bill that deals with British Airways. We recognise the urgency of increasing British Airways' financial powers, and it is primarily for that reason that we have accepted the haste that has accompanied the Bill's progress. However, the Minister has failed to satisfy us on a number of issues. In Committee Conservative Members treated us to a display of mental gymnastics as they sought to decide among themselves whether the airline industry had too little or too much competition. Whether too little or too much, they then argued whether that was good, bad, inconvenient or contradictory or otherwise to their political aims.
  When the discarded or disillusioned free enterprise economic advisers to the Government finally returned to their academic offices to play with their models and theories instead of inflicting them upon us, they could do much worse than turning up the speech of the hon. Member for Brentwood and Ongar in Committee. He mused on whether competition between airlines is always a good thing for all, for some, sometimes for some or for all. His advice to the Minister was as follows:
  "Either we"—
  that is the Government—
  "build up British Airways ready for the sale that surely is preeminent in Government policy or we encourage maximum competition from independent airlines. The Minister must turn his attention again to whether we can continue with both sides simultaneously in the way that we have been trying to do since the passage of the Civil Aviation Act 1980."
  Worse was still to come, because after pointing out in his view that none of the three major British associated carriers on the Hong Kong route is making much, if any,

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  profit, the hon. Gentleman uttered what sounded like a text from a Yorkshire manufacturer's business philosophy or part of a first-year university examination paper in economics. He said:
  "Competition is grand, but we must be realistic about it"— [Official Report, Standing Committee A; 10 December 1981, c. 77–8.]
  That sums up the view of many Conservative Members about the problems that are facing the airline industry. The truth is that the Government do not know what they want. In any event, they do not know how to reconcile conflicting policies. The result is a real danger that British Airways may be made further to suffer in their own business and profitability as a result of the Government's pursuit of unfettered competition and conflicting aims.
  Of course, we want low fares across the Atlantic, to the Far East, within Europe and within the United Kingdom, but in an industry in which overhead costs and lead times on investment decisions are high and long care is required to develop policies that can be sustained to the lasting benefit of consumers and to the country.
  Many would say that too many risks have been taken in using British Airways as something of a moveable giant pawn as the Government have fumbled their way through an aviation policy. We could reasonably ask the Minister tonight for a firm assurance that he will condone no further significant change of routes that would adversely affect British Airways. This is a crucial period of recovery from the recession facing the world airline industry.
  In Committee we touched upon the International Air Transport Association conference in Geneva dealing with the question of North Atlantic air fares. Now that the conference has apparently made some progress in the matter, could the Minister give the House his assessment of the position reached so far and its effects upon the finances of British Airways and other major British carriers? If he cannot go into detail tonight—the House will understand if he cannot—will he give an assurance that he will publish his views on this important matter when he has had time to appraise the position?
  I come to the question of the pensions of British Airways employees. When this matter was raised in Committee the Under-Secretary said that the matter was currently under discussion—that is, between British Airways and the employees—but that it had nothing to do with the Government. I think that that strikes strangely against the kind of assurances given at the time of the Civil Aviation Bill Committee stage in 1980. At that time my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) put it this way to the present Secretary of State for Employment who was then the Minister taking the Bill through Committee:
  "can the Government assure the employees of British Airways that as a result of this operation their pensions will not be adversely affected?"
  The present Secretary of State for Employment replied then that
  "possibly what would be most likely to damage industrial relations and the prospects of profitable operations of the company would be to interfere in some arbitrary manner to worsen the conditions of the pension fund."—[Official Report, Standing Committee B; 31 January 1980, c. 259–260.]
  We have come a long way in just a few months. When further pressed at that time in Committee by myself and by my right hon. Friend the then Minister concerned gave repeated assurances that this was not under threat. He went
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  so far as to say that the fund was in sound condition and he could see no reason why there should be any change in the pension scheme.
  I raise this matter because the financial limits and the financing of British Airways are one reason why, apparently, British Airways have seen fit now to seek to change drastically the conditions of the pension scheme of their employees. It is no part of our policy, I well recognise, to get involved in details of negotiations between employer and employee, but equally it is our duty to bring matters to the attention of the House when assurances are given to Committees of the House that turn out not to be worth the paper on which they are written. When employees are given to believe that their pension rights are not under threat but in due course they turn out to be under threat, the Minister owes the House an explanation of what has changed in the meantime.
  I ask again that the Minister give an assurance that there is no connection between the Government's wish to privatise British Airways and the moves of British Airways adversely to affect the working conditions of their employees.
  Similar dissatisfaction was aired in Committee with the explanation given by the Minister on the financing of the redundancy and severance pay scheme, which is currently being implemented by British Airways. I pay credit, as I am sure will hon. Members on both sides of the House, to the way in which the trade unions have responded to the grave difficulties facing their members in the massive rundown of the work force at British Airways in recent months and which will face them in the coming months. About 15,000 jobs will have gone in well under three years.
  We must ask tonight, however, as we did in Committee, what this scheme will cost and how it is to be financed. Is it £70 million or £100 million? Surely the Minister has asked about figures of this magnitude and will know the answer. How is the scheme to be financed? Will some part of the financial loan limit that we are being asked to approve go towards paying for this severance and redundancy pay scheme?
  I come finally to the financial position of British Airways. During the passage of the Civil Aviation Act last year, we warned that the Government's wish to privatise British Airways was doomed to failure in the light of the severe problems facing the airline industry. Nevertheless, despite the fact that the Government had no mandate and it was no part of their election manifesto, they pressed ahead in a foolhardy fashion, trying to put British Airways into a postion where they could be denationalised.
  Does the Minister agree with Sir John King, the chairman of British Airways, that he still expects British Airways to be making a profit at the end of the financial year 1982–83? If the answer is "Yes", can he tell us what is meant by "profit"? Is it an operating profit, or profit after offsetting interest payments and the like?
  British Airways have a very substantial amount of external debt. At the moment they are seeking, along with many other airlines, to recover from a truly deep recession in the airline business. Is it credible that British Airways can or should be forced into a position of being sold off at what can only be a dangerously low price before the next general election?
  In the journal Aviation Week and Space Technology of 19 October, Sir John King made clear that the Government have had—as one of their primary goals—turning British

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  Airways into a private enterprise company before the next general election. Is it still the Government's intention to do that and, if so, how do they intend to overcome the financial problems of British Airways? What do the Government intend to do as regards the profit track record that would be required for going to the market? What do the Government intend to do, if anything, about the capital reconstruction of British Airways? If we are being asked to approve new high borrowing limits only to find in a few months' time that, in order to sell off British Airways cheaply, the Government come to the House yet again to seek a capital reconstruction programme, that would, in effect, give public money to private individuals, this House would have every right to be gravely concerned.
  Mr. Michael Colvin: I detect an inconsistency between what the hon. Member is saying now and what he said in Committee. I was not a member of the Committee, but I have read the Official Report. In Committee the hon. Member said that he was in large measure in agreement with what was proposed in the Bill. He has already said that obviously part of what is proposed is to get British Airways over a very severe hump and bring it into a fit state to privatise. Would it not be appropriate for the hon. Member to state the Opposition's policy towards privatisation and say whether they would, if perchance they became a future Government of Britain, do what they have said they would do with regard to British Aerospace, which is to return it to the public sector without any fair compensation to the shareholders?
  Mr. Deputy Speaker: Order. Interventions should be short and relevant, and confined to the contents of the Bill.
  Mr. Woolmer: Thank you, Mr. Deputy Speaker. I am happy to respond to that part of the intervention which was relevant to the contents of the Bill, which seeks to increase the borrowing of British Airways by about £600 million. The Labour Party believes that if such large sums are to be put into a nationalised industry by the taxpayer, the taxpayer has every right to see the benefit and return on that investment in due course. We object to hundreds of millions of pounds of public money being put into industries, only to see them flogged off at cut-price terms because of political ideology rather than in the true interests of the nation or the taxpayer.
  Although the official Opposition do not oppose the Bill, we regard the Government's policies in relation to the British Airports Authority and British Airways as an increasing shambles. The Government are trying to point in several directions at once, and in the end they face the grave danger of satisfying no one.
  If the Government attempt to privatise British Airways—although I do not expect that to happen—they will face opposition. Tonight, I do not ask my hon. Friends to oppose the Bill, but the Labour Party will oppose the Government vigorously if they try to sell off a national asset—British Airways.
  7.32 pm
  Mr. John Wilkinson (Ruislip-Northwood): I congratulate my hon. Friend the Under-Secretary of State on an exemplary first solo. He has piloted the Bill with great skill through to Third Reading, and he showed sympathy and understanding in dealing with the points raised in Committee and on the Floor of the House. I hope that it is the last Civil Aviation (Amendment) Bill that we
  74
  shall have to debate in this Parliament. If we have to debate another Bill, I hope that it will be to enact the denationalisation of the British Airports Authority.
  I say "denationalisation" advisedly, because the hon. Member for Batley and Morely (Mr. Woolmer) suggested that the Conservative Party had advocated the privatisation of the British Airports Authority. I did not do so, either in Committee or the Second Reading of the Bill. I have always advocated the break-up of the British Airports Authority into constituent profit centres. That would be attractive to investors and prove the best means of bringing landing charges down and improving the service to customers and airlines.
  The borrowing of the British Airports Authority will constitute about 30 per cent. of its finances for development, whereas 70 per cent. will come from charges, and that worries us. I know that we cannot go into the matter raised by the Transworld Airlines legal action. Nevertheless, we have learnt enough from this measure to realise that it is wrong for a nationalised industry such as the British Airports Authority to have to come to the House to increase its borrowing powers to fund its capital development programme. That is particularly so if the industry is one that could be denationalised and raise its capital on the market.
  Mr. FoulkesDoes the hon. Gentleman agree that, while his proposal could fairly be described as denationalisation, there was an alternative suggestion from Conservative Members in Committee that could more properly be described as privatisation?
  Mr. Wilkinson: The hon. Member is right, but, as was mentioned earlier, it would be a matter of substituting one kind of monopoly—albeit a monopoly with private equity participation—for what is at present a pure State monopoly. That would not necessarily be a great improvement for the travelling public or the airline.
  With regard to the proposed increase in the borrowing powers of British Airways, I have advocated that if Her Majesty's Government are in doubt, as they must inevitably be, about the timing of the flotation of the stock of British Airways on the market in order to achieve privatisation, they should float earlier rather than later, because the political considerations and the benefits to the corporation inherent in an earlier flotation outweigh the possibility—it must be a judgment—of raising more money by postponing the sale of the equity.
  I am aware of the great sacrifices that have been made by the employees of British Airways in their valiant attempt to turn the corporation round to profitability—not least in my own constituency, where three major office complexes are to close. The hon. Member for Batley and Morley referred to the loss of jobs. It is interesting to note that a high proportion of the people who opted for voluntary redundancy under the scheme proposed by British Airways have been able to find other gainful employment.
  Nevertheless, unless British Airways are able to restructure themselves and get their debt—equity ratio better balanced, they will require more capital, and it would be wrong, in the current economic climate, for there to be more public dividend capital. There should be flotation and the raising of capital through the market.

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  This is a useful Bill. It has enabled us to air one or two important civil aviation and air transport issues, and I shall support it. I particularly congratulate my hon. Friend the Under-Secretary of State on his part in it.
  7.38 pm
  Mr. Ken Eastham: I thought the Minister was rather casual in his opening remarks when he said that it would be a brief and straightforward debate. Labour Members do not feel that the Bill is as straightforward as the Minister seems to be suggesting to the House. On Second Reading and in Committee, we said that we would not oppose the Bill, but that does not mean that we have no reservations about it. We are not entirely confident about the Government's intentions.
  The Minister will agree that on numerous occasions reference has been made to selling off. That is a very strange way in which to administer taxpayers' funds. There have been big handouts to make the operations profitable, but then the Government seem to be hell-bent on giving away the assets to the private sector. I cannot imagine any private business in which the owners of the shares and those enjoying the profit would suddenly decide to give everything away to strangers.
  I have a great deal of sympathy with the British Airports Authority, because it is constantly being harassed to make more profits. The emphasis seems always to be on more profits rather than a better service. Pressure is constantly being exerted to reduce the labour force, but if, one day, there were to be a huge mishap, suddenly everyone would be running for cover and saying that he was not to blame because it was an act of God. There may be all kinds of consequences when there is extensive demanning.
  The hon. Member for Preston, North (Mr. Atkins) said on Second Reading that if the London airports did not expand the business would go to Europe. I take issue with him on that. I realise that hundreds of millions of pounds are being pumped into the southern airports and that an inquiry is taking place. I feel compelled to draw special attention in this context to Manchester international airport, which has great potential and is indeed a money-spinner for the nation. I wish to add some flesh to the bones of this matter, as the Minister seems to believe that hundreds of millions still have to be spent down south.
  In a letter to me the chief executive of Manchester airport, Mr. Gil Thompson, stated in relation to profits at Manchester airport:
  "you will note that in every year except one since 1959, a surplus has been achieved. In the early years the Airport was supported by rate contributions, but in recent years there has been substantial contributions to the City and County rates."
  In relation to the capital programme, Mr. Thompson says:
  "In the current financial year £8·472 million will be financed from loan. Borrowing powers are available for this amount because it was the main part of the expenditure required for three major schemes which were designated by the Government as being of National/Regional importance. However, in 1982–83, the borrowing powers granted are only £4·7 million (at outturn prices) for the same three schemes, as no new schemes have been approved. This is only a small part of the total capital programme of £12·5 million and most of the remainder of the programme will have to be financed directly from revenue resources. This puts a severe strain on the revenue budget and pushes up charges to the airlines more than would otherwise be necessary."
  In relation to Manchester international airport, I also briefly draw the Minister's attention to a document
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  published in November this year on behalf of the North-West Development Association, referring to the economic problems of the North-West of England, in the form of a memorandum to the Prime Minister. With regard to airports and investment, the following statement is highly significant:
  "Moreover, the British Airports Authority's proposals to expand Stansted as London's third international airport would, if implemented, add substantially to the imbalance of investment already evident between the South East and North West England and pose a substantial threat to the future of Manchester International Airport, one of the key growth points of the North West economy, yet still awaiting a direct rail link."
  The Minister will recall that I said in Committee that we should be most grateful if he would consider sympathetically this very small link to the main line railway system, which would bring greater profitability not just to Manchester but to the whole North-West region extending as far as the Scottish coast.
  I sincerely hope that the Government have no sinister intentions with regard to Manchester international airport. I give notice at once, so that the Minister understands clearly, that we say "Hands off Manchester airport". What the ratepayers have paid for, the ratepayers intend to keep. I assure the Minister that I should certainly find support among his Back Benchers if the Government had any ideas about capitalising upon something that has been so dearly paid for and nurtured over the years.
  The Government are trying to give a respectable face to privatisation, but it seems to us to mean that taxpayers can keep the loss while private investors join in the looting.
  Mr. Robert Atkins: What about the employees?
  Mr. Eastham: I trust and hope that the employees will receive security and a decent wage, as in other industries. I do not necessarily believe that the employees of the British Airports Authority or British Airways are different from those of any other company such as ICI or GEC. One trusts that they are entitled to the best conditions, wages and prospects, but I do not believe that we need some kind of gimmick to keep them sweet by offering them assets being taken from taxpayers. Not all taxpayers can work for the British Airports Authority or British Airways, so that must be taken into account when considering the justice or injustice of the idea. The hon. Member for Preston, North constantly puts that forward as a solution, but I understand that the trade unions are very uneasy about the position. Nowadays there is less concern about buying interest in companies and more interest in keeping jobs.
  The Government would gain greater credibility if they applied themselves to the task of keeping workers rather than killing them off in their thousands. They are managing the entire industry in a brutal and unwise fashion, and it will be no better for their interference. The Opposition are suspicious—and I believe that in due course we shall be proved right—that that is not in the interests of the industry or the airports, but only in the interests of Conservative Members' friends who hope to make some quick profits that they have not necessarily paid for. We believe that the taxpayers should reap the benefits of their investments, just as the ratepayers of the Greater Manchester area should reap the benefits of their investment. That is why we give notice that the Government should not get any sinister ideas about taking over Manchester international airport. If they do, there will be a real showdown in the House.
  7.49 pm
  Mr. Robert Atkins: I do not wish to delay the House, because I know that that would not be popular. I join by hon. Friend for Ruislip-Northwood (Mr. Wilkinson) in congratulating the Minister, who, to use a phrase close to both our hearts, opened the batting extremely well. At the other wicket the hon. Member for Batley and Morley (Mr. Woolmer) made his maiden appearance in Committee as spokesman on these matters. Those of us who are interested in aviation matters were thus able to discuss this subject in a way that we had not done for some time and to have an informed debate that was unique in my experience of these matters.
  It also brought out some differences in attitude to the matter referred to by the hon. Member for Manchester, Blackley (Mr. Eastham) and by my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle), which is how we should continue to fund the British Airports Authority, and also British Airways. Hon. Members were united in their concern about the charges levied by the BAA, not necessarily in a critical or hostile fashion, but rather because the airlines, including British Airways, were experiencing great difficulties in a recession. It was felt that increased charges would not help.
  As a result of that concern, two responses were made. Conservative Members expressed an interest in the provision of some sort of altered position for the BAA, based on our experience of British Aerospace—in other words, 54,000 people subscribing to the gimmick referred to earlier. The same can be said of other companies, such as British Telecom and the National Freight Company. There are examples of how we can provide an alternative financial structure for the BAA.
  I strongly believe in the excellence of the people working within the BAA, from the chairman downwards, and am confident that they are well suited to meet this challenge. Such a challenge would create a new area of activity, and I am satisfied—
  Mr. Eastham: We heard the same arguments when parts of ICL were sold off, and we now know what a disaster that was. Will the hon. Gentleman reflect on some of the sentiments now being expressed by thousands of ICL workers who suddenly find themselves with no jobs?
  Mr. Atkins: I suspect that I should be ruled out of order if I were to take up that challenge. Perhaps we can discuss this matter outside the Chamber at some other time. Much as I should like to accept the challenge, I am sure that the Chair would rule me out of order.
  There have been some misunderstandings about what Conservative Members have suggested, and the debate has provided an opportunity to spell out our interests. I hope that the Minister will consider the representations from Conservative Members about the privatisation of the BAA. As I said earlier this afternoon, I believe that the BAA is well run, and I am sure that the challenge laid down by Conservative Members will be met.
  Finally, I believe that the difficulties experienced by British Airways as a result of the recession and overmanning have come about because of the pressure imposed on them by Conservative Members, who have invited them to submit a prospectus to the general public to buy shares, both within and without the company. To that extent I congratulate the management of British
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  Airways on what it is doing and on the skilled and compassionate way in which it has appreciated the problems of its staff, not to mention the way in which it has got to grips with the managerial problems experienced by the airline.
  In conclusion, although I referred to Schiphol and the loss to Europe if British airports were not expanded, like the hon. Member for Blackley I support the development of Manchester international airport. It has great potential and ought to be expanded in whatever way possible. I should not like the hon. Gentleman to be under any misapprehension in that regard.
  Finally, I support the Bill, but, as my hon. Friend the Member for Ruislip-Northwood said, our wish is that it was not needed. Having said that, it has enabled us to discuss these matters, which we do all too rarely. I congratulate the Minister on the manner in which he has piloted the Bill through Committee and the House, and I ask him to consider urgently the suggestions made by my hon. Friends about privatisation. With those remarks, I wish the Bill a fair passage.
  7.54 pm
  Mr. David Ginsburg: Like the hon. Member for Preston, North (Mr. Atkins), I do not propose to detain the House for too long. The Bill is necessary because the Government are both the banker and owner of British Airways and the BAA. We are dealing with large sums of money—£175 million in the case of the BAA and £600 million in the case of British Airways.
  As has already been said, British Airways face major financial, economic and social problems, but if we are to have an adequate presence in the North of England, the financial infrastructure must be satisfactory. Nevertheless, when looking at nationalised industries as a whole, one must conclude that some of the arrangements for parliamentary accountability are far from satisfactory.
  Much of our legislation, although not necessarily this Bill, goes into too much managerial detail and does not give enough thought to financial priorities. Therefore, while I support the Bill because it is financially necessary, I hope that the Government will think about interposing a State holding company into which many of the nationalised industries could be absorbed so that our debates can concentrate on the major priorities.
  I think in particular of financial matters. We should view this in the round, not merely in terms of the financial involvement of British Airways or the BAA, but the financial problems of the other industries as well. As it is, our piecemeal debates often interfere with the managerial discretion of the industries concerned. Having said that, I have no doubt that British Airways in particular now face a major financial crisis. It would, therefore, be wrong and churlish of the House to deny the Bill its passage.
  7.58 pm
  Mr. George Foulkes: I underline what my hon. Friend the Member for Batley and Morley (Mr. Woolmer) said about the Government rushing the Bill through the House. We did not have much time to deal with many of the important issues in Committee. The third sitting was truncated, and my hon. Friend did not have an opportunity to make many of his points in criticism of the Government's policies. It is a pity that we have not had a greater opportunity to do so this evening.

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  It has been a pleasure to listen to a brief intervention from one of these new-fangled Social Democrat chappies. They seem just about able to creep in and interpose a few thoughtful words at this stage of a Bill. However, they do not seem all that enthusiastic about undertaking the hard grind in Committee. I understand from my hon. Friends that the SDP was recently offered places on several Committees but refused to accept them. It ought to be made clear that the SDP is not that enthusiastic about undertaking the day-to-day work carried out by other hon. Members.
  Mr. John Roper: The hon. Gentleman has made some rather general accusations. It would be more helpful if he would make particular ones.
  Mr. Foulkes: I understand that they were offered—
  Mr. Deputy Speaker: Order. The hon. Gentleman must confine himself to the Bill rather than comment on interventions that go wider than its Third Reading.
  Mr. Foulkes: Thank you, Mr. Deputy Speaker. I assure the hon. Gentleman that later outside the Chamber I shall give him a specific example.
  One of the matters discussed in Committee—my hon. Friend the Member for Manchester, Blackley (Mr. Eastham) touched upon it today—was the question of the imbalance of British Airports Authority expenditure. There is an amazing amount of expenditure in the South-East of England but only a relatively small amount in Scotland. Reference to Manchester and other provincial airports, in terms of general Government spending, is valid but those airports are not directly affected by British Airports Authority expenditure because they are not controlled by the authority. It is the case, however, that the authority owns and controls four Scottish airports.
  Over the next five years, the authority plans to spend only £11 million in Scotland, compared to £600 million in the South-East of England. It is not as though projects and plans for Scottish airports did not exist. I put a number of specific suggestions to the Minister in Committee. To his credit, the Under-Secretary of State took them on board and asked the British Airports Authority to investigate. I suggested a major link between Prestwick airport and Prestwick town station to enable passengers and their baggage to move easily from one to the other. It will be found, however, that money is not available to spend on Prestwick airport because so much has been allocated to the South-East of England.
  I should also like to mention the imbalance that exists between the South-East of England and Scotland in relation to landing charges. I asked the Minister if he would give a positive boost to Prestwick airport. Such a boost could be provided if the British Airports Authority gave priority to lower charges at Prestwick to encourage flights to switch to Prestwick from the South-East of England. I had not realised the extent of the imbalance. I had the opportunity on Friday to visit Prestwick and to talk to Mr. Gilbert Gray, manager of the airport, and Mr. Graham Wylie, chairman of the airport consultative committee. I ask the Minister to investigate the information they gave me that landing charges at Prestwick airport are five times as great as the charges for an equivalent aircraft at Gatwick. This is quite the opposite
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  to a policy of giving positive discrimination in favour of Prestwick. It discriminates against Prestwick and encourages more airlines to use Gatwick.
  I was chided by the Minister and warned against being unrealistic about the possibilities for Prestwick airport. I agree that suggestions should not be unrealistic. I hope, however, that the Minister will be able to enter into discussions with the airlines and British Airports Authority to break the dangerous downward spiral in which landing charges lead to decreased use of the airport only to be followed by a further increase in charges and a still greater decrease in use of the airport. This vicious downward spiral needs to be broken.
  As fewer airlines use the airport and the airlines that are using it do so to a lesser extent, the effect, combined with the break-even policy imposed on individual airports by the Government and the British Airports Authority is that charges can only go up. The spiral might be broken if the Government were able to reach some agreement with the airlines and the British Airports Authority leading to a commitment by airlines to use the airport for a new series of flights in return for reduced charges. I hope that the Minister will consider this a positive suggestion.
  I should like to turn now to the issue of denationalisation or privatisation. This began to sound in Committee like an orchestrated chorus from the Conservative Benches. Time and again, there was the clarion cry from Conservative Members about privatisation or denationalisation. This causes great difficulties in relation to morale. Indeed, it leads to lowering of morale in all nationalised industries. The industries feel that they cannot win. If they make a loss, they are criticised by Conservative Members for being inefficient. Hon. Members throw back their arms and say that nationalised industries cannot make a profit.
  When the screws are applied or, perhaps more importantly, when nationalised industries themselves see ways to improve efficiency, whether through demanning or other means, and make a profit in one sector or another, then the greedy eyes of Conservative Members and their friends are cast upon the nationalised industry concerned or a sector of it. The industry is immediately seen as ripe for plucking. It is suggested that it should be hived off, privatised or denationalised so that some person—some friend, in general terms, of Conservative Members—will make a profit out of it instead of that profit going to the taxpayer, who made the investment.
  The Under-Secretary of State is an author of some repute. That brought a chorus of "Hear, hear" from the Government Front Bench that I would like put on record. The hon. Gentleman should go into the field of writing television thrillers like "Dallas" where, at the end of one episode, Sue Ellen is left with her lips quivering or J.R. is left in a state of absolute shock about what is to happen to him and his assets in the next episode. The same situation was seen in the Civil Aviation (Amendment) Bill Standing Committee. Believe it or not, drama does take place in Committees of the House of Commons. At the end of the first sitting, the Under-Secretary of State said:
  "I shall leave the Committee on a cliffhanger. When we return to our deliberations on Tuesday, I shall reveal the Government's attitude to the very important question of the privatisation of the British Airports Authority".—[Official Report, Standing Committee A, 3 December 1981; c. 36.]
  The hon. Gentleman built up this amazing tension. Until the next Tuesday morning, I could hardly bear the

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  excitement. I am afraid that, like many cliffhangers, it turned out to be a disappointment. Whether, like the new Under-Secretary of State for Scotland responsible for health matters, whom I see on the Government Front Bench, officials told him that he should not say what he had intended to say or what he had said he should not have said, I am not sure. When hon. Members returned on Tuesday the Under-Secretary of State said:
  "I am strictly constrained in what I can say".
  The hon. Gentleman then referred to what his right hon. Friend had said on Second Reading, which, by that time, was old news. The only new development was the hon. Gentleman's remark:
  "I shall study with the greatest attention the novel, important and constructive proposals put forward in Committee by my hon. Friends on that subject".—[Official Report, Standing Committee A, 8 December 1981; c. 37.]
  When my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) used to say that to me in my local government days, I knew that I had had it. That was it—finished. I hope that that is what it means to the Under-Secretary of State. I make light of the matter but it is important.
  The suggestion, which has been made again today by Government Members, is that each airport should be packaged, wrapped and sold to private enterprise. The hon. Member for Ruislip-Northwood (Mr. Wilkinson) made that suggestion today. He was talking about Heathrow Ltd. competing against Gatwick Ltd. and perhaps Stansted Ltd. I reject the concept of privatisation, but in the context of the South-East of England, and bearing in mind the philosophy of Government Members, that suggestion has some logic. For Scotland privatisation would be disaster. It is inconceivable that Aberdeen competes with any other airport. Stornoway cannot compete with Sumburgh. There is no alternative to Sumburgh if one wants to fly to the Shetlands.
  In Committee it was said that Prestwick would compete with Glasgow. That is the danger. The Under-Secretary of State was equivocal in the extreme in Committee. I ask him to give an unequivocal statement today. If he does not, the Secretary of State, who should have a greater interest in Prestwick than I have—although sometimes I doubt whether he has—will be worried about the implications. I hope that we shall have an unequivocal declaration from the Under-Secretary, if not today, soon.
  I hesitate to say this, but the example used by Government Members in favour of privatisation was the John F. Kennedy airport in the United States. Government Members have suggested that airlines should be able to run their own terminals, as they do at John F. Kennedy airport. I recently arrived at the British Airways terminal there and had to transfer to Eastern Airlines. The Eastern Airlines terminal was next to the British Airways terminal, but in an anti-clockwise direction. Unfortunately the buses operated in a clockwise direction so I had to go to Trans World Airlines, Pan-Am and Western Airlines terminals. It took an hour. When I returned to Heathrow I experienced a new-found appreciation, sympathy and feeling of commendation for Heathrow.
  It is appalling and sometimes sinister when hon. Members praise the British Airports Authority and its management and then say "Although it might be doing a good job we, for our doctrine and dogma, will sell it off and let someone make a private profit out of it".
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  A recent incident at Prestwick causes the grave concern and I urge the Under-Secretary to look into it. Many of us have, for a number of reasons, expressed doubts about British Airways' borrowing consent. For some time we have been concerned about the negative attitude that British Airways adopts towards Scotland, and, in particular, towards Prestwick airport. Last night a British Airways jumbo jet from North America was diverted because it could not land in the South-East of England. It was due to land at Prestwick after permission had been requested for that. The British Airports Authority and air traffic controllers said that it was possible and, indeed, desirable for it to land at Prestwick. It did nor land at Prestwick but was diverted to Glasgow airport, causing annoyance to people in Glasgow. It was diverted to an airport—one which is unsuitable for jumbo jets—away from Prestwick which could have handled it properly. The reason was that British Airways staff were having an office party. The Under-Secretary draws a sharp intake of breath. For those of us who day in and day out, night in and night out are pushing for Prestwick and trying to provide a positive incentive for people to use the airport to be undermined by British Airways and its staff is a galling experience. The Under-Secretary has been very good. I have said that before and I have to swallow hard when I say it, but he has always taken up our points in Committee and I hope that he will take that up.
  Finally—and I shall say that only once, unlike the hon. Member for Preston, North (Mr. Atkins) who said it on three occasions—I underline what my hon. Friend the Member for Batley and Morley said about the Government's aviation policy. I mean no disrespect to the Under-Secretary who took over only recently. I hope that he is able to sort out what ray hon. Friend described as a shambles. We do not know what is happening to British Airways and it does not know. In spite of requests by hon. Members, there is no information about the intended date of privatisation, what form it will take or about any other aspect. That we are considering this Bill shows that the Government have no immediate plans. Whatever hopes we had, I am sure that there will be another Civil Aviation (Amendment) Bill because British Airways is not ready for privatisation and will stumble through another year of uncertainty.
  The Government are in a muddle over their airports policy. Two nationalised bodies, British Airways and the British Airports Authority, are locked in mortal combat about whether there should be a new airport at Stansted or a fifth terminal. That will cost thousands of pounds of taxpayers' money in addition to the cost of the inquiry. The Government have no clear policy.
  The Government have a policy of laissez-faire, of free enterprise and of allowing the airlines to do exactly what they want, instead of the policy suggested by my hon. Friends the Members for Blackley, Central Ayshire (Mr. Lambie)—in Committee—and others of encouraging the maximum use of existing airports, some of which are underused. The Government prefer to spend millions of pounds on building in the South-East of England an extra airport which is unnecessary. When airports in the provinces and Scotland are underused the Government should positively encourage their use.
  The Government's airports policy is in a shambles. I hope that we shall have the opportunity in the near future

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  to return a Government with a more sensible, direct, positive and planned policy. In case there is any doubt, I refer to a Labour Government.
  8.18 pm
  Mr. Sproat: I congratulate the hon. Member for Batley and Morley (Mr. Woolmer) on his first appearance at the Dispatch Box. He and I have faced each other in Committee for a number of weeks. I said that I was astounded at how quickly he had grasped the intricate details of this business. I am now astounded at the apparent confidence with which he delivers himself. On this occasion I wish that I could feel that confidence, or at least masquerade in it.
  We are grateful to the hon. Gentleman for the manner and the speed with which he dealt with the Bill in Committee. As he said, the matter is urgent, at least for British Airways. It is vital to get the Bill through because otherwise British Airways would be in breach of the law by exceeding their statutory borrowing limits. We are under no misapprehensions about the fact that there are parts of our policies of which the Opposition do not approve. Nevertheless, we are extremely grateful for the general attitude and manner that the Opposition have displayed.
  The hon. Member for Batley and Morley raised the vexed question—it should not be a vexed question—of the 6 per cent. CCA return. It has not been imposed on the British Airports Authority; the British Airports Authority has agreed to it. For some reason, hon. Members on the Opposition Benches seem to object to the whole concept of the British Airports Authority making a proper return. What is so extraordinary is that they enunciated it first. The 1978 Labour White Paper referred to:
  "the principle that air transport facilities should not in general be subsidised by the taxpayer or ratepayer."
  The official Opposition having enunciated the principle, the Government have gone a little further by putting flesh on the bones and saying that the taxpayer should not subsidise the ordinary airline or air traveller. We have said that a 6 per cent. CCA rate of return is the proper way to go about it. I would go further and defend that step in gross and in detail, but, unfortunately, as the House knows, I am constrained because the matter is currently before the courts. Otherwise, I assure the Opposition that we would explain in the tiniest of detail exactly why the policy is necessary and why it conforms exactly with the principles enunciated in the 1978 Labour White Paper.
  My hon. Friend the Member for Hertfordshire, South-West (Mr. Page) and I heard time and again in Committee complaints from the Opposition about the BAA not being allowed to borrow more. We became weary of listening to them. However, the only Government ever to put a zero cash limit on the BAA's borrowing were the previous Government, when in 1979 the right hon. Member for Lanarkshire, North (Mr. Smith), who is now the Shadow Secretary of State for Trade, refused to allow it to borrow a single penny. It comes ill from the Opposition to say that we should be criticised because we have an EFL of only £14 million. That matter should be placed on the record.
  The hon. Member for Batley and Morley has a good point about the performance criteria, and we agree 100 per cent. It is not necessary merely to give a nationalized
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  industry a rate of return to achieve. It is necessary to have other performance criteria. We have imposed certain performance criteria that have been agreed by the British Airports Authority—for example, the ratio of employees to passengers and the ratio of operating costs to passengers. There are various other standards, which I explained in Committee. The question of the speed at which baggage is reclaimed and the volume of customer complaints are closely monitored by the BAA.
  The hon. Gentleman switched his attention from the British Airports Authority to British Airways. Having lavished compliments on him earlier, I cannot continue in that happy vein. The first thing that he said was that the Government did not know what they were doing about competition policy. If there is one direction that the Government know 100 per cent. where they are going it is on competition policy. We are in favour of it. We removed specific guidelines currently imposed on the CAA. We are doing everything that we can to see that fair and free competition for our airlines is the order of the day.
  The hon. Gentleman chose an unfortunate example in Hong Kong. In Committee I believed that I had made it clear that, although we had introduced competition on the Hong Kong route, the two airlines—Cathay Pacific and British Caledonian—are making profits on the route. Not only does the customer benefit by lower fares and an increased number of flights, but airlines benefit in their profits.
  The hon. Gentleman asked for an assurance that we would not allow more competition that might adversely affect British Airways, but I can give him no such assurance. If necessary, through the good offices of the CAA, the Government are certainly prepared to grant further competitive routes.
  The hon. Gentleman fairly made the point about pensions. It is not a matter for the House but for the management of British Airways. I give him the specific assurance for which he asks. Any changes that may be made in the pensions plan have absolutely nothing to do with our plans for the privatisation of British Airways.
  Mr. Woolmer: In Committee on 31 January 1980 the then Minister stated:
  "The investments have been well made and wisely placed, and if the Board had thought that there was any inadequacy in the fund I am sure that it would have brought it to the attention of Ministers."—[Official Report, Standing Committee B, 31 January 1980; c. 267.]
  Was that done before British Airways started to reduce the scheme for its employees?
  Mr. Sproat: The management told the Government exactly what it was fitting for the Government to know about the detail of the plan. It said that it was going to retrench, and retrench it certainly has. It is only fair to compliment Sir John King and Mr. Roy Watts on their successful retrenchment.
  My hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) made another powerful speech in favour of privatisation and/or denationalisation. He courteously told me that he would not be able to stay for the debate but I pay tribute to the part that he played in Committee. I shall take careful note of the arguments that he and my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) put forward, although there might be a slight nuance of difference in the speed at which our privatisation goes ahead. [Interruption.] The hon. Member for

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  Glasgow, Garscadden (Mr. Dewar) need not laugh. He will be laughing on the other side of his face when we begin to privatise British Airways. I hope that he will find it as amusing then as we shall.
  Mr. Woolmer: Bearing in mind that the hon. Gentleman pressed not for privatisation but for denationalisation, will the Minister assure us that if he proceeds with the folly it will be to sell off only a minority of the shareholding and not 100 per cent.?
  Mr. Sproat: I am not sure whether the hon. Gentleman is talking about British Airways, but my mind is entirely open. I certainly do not rule out the chance of selling off more than a minority shareholding. As my hon. Friend said on 16 November 1981 at column 42, we are entirely open-minded about the British Airports Authority. That open-mindedness extends over all Conservative policy. We are extremely open-minded over all these matters.
  The hon. Member for Manchester, Blackley (Mr. Eastham) made a valuable contribution in Committee, but I wish to take him up on a little semantic slip this evening. He said that he could not be confident of the Government. He can be absolutely confident that we shall privatise and/ or denationalise British Airways. There is no question about it. He can rest his confidence on us in that matter.
  I go along with the hon. Gentleman in saying that Manchester is an excellent airport. Unfortunately, it is not a BAA airport, so I feel constrained from saying other than that I have taken note of what he says. As I said in Committee, I shall do all that I can to allow Manchester to develop as an extremely important and valuable international gateway for this country.
  The hon. Member for Dewsbury (Mr. Ginsburg) welcomed the Bill on behalf of the Social Democratic Party—with the party's usual broad brush as opposed to a pointillist technique. The hon. Gentleman has now left the Chamber but I suppose that we should be grateful for the broad brush approval that the Social Democrats give to the Bill. Finally—
  Mr. Donald Dewar: Finally?
  Mr. Sproat: For the hon. Gentleman to say "Finally" like that is like being accused of lying by the former United States President, Richard Nixon. The hon. Gentleman probably speaks longer on almost every subject than any hon. Member.
  The hon. Member for South Ayrshire (Mr. Foulkes) spoke a little unfairly about the imbalance of the British Airports Authority's spending between Prestwick and the London airports. He knows that I am anxious to do everything that is reasonably possible to promote the prosperity of Prestwick airport, but it is no use burldng the fact that Prestwick has about 360,000 passengers a year whereas the London airports have 36 million passengers a year. To ignore the sheer weight of passenger traffic and to say that the expenditure should not be related to it is to do little service to Prestwick. However, we have been over that ground fairly frequently in the past and I hope that the hon. Gentleman will accept that I am determined to do everything that can reasonably be done for Prestwick.
  I commend the Bill to the House.
  Question put and agreed to.
  Bill accordingly read the Third time and passed.

  Housing (Amendment) (Scotland) Bill
  Not amended (in the Standing Committee), considered.
  8.32 pm
  The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): I beg to move, That the Bill be now read the Third time.
  As the House will be aware, this is a small, two-clause Bill and has only one basic provision—to raise the borrowing limits of the Scottish Special Housing Association from the present maximum of £500 million to £600 million, with provision for a further increase of £150 million by order of the Secretary of State.
  It is expected that the Scottish Special Housing Association will reach its present limit by early next year, and it is therefore desirable to allow this increased borrowing facility to enable it to continue its work. The Opposition have approached the Bill in a constructive spirit, both on Second Reading and in Committee, for which I congratulate and thank them. On that basis, am confident that the House will be anxious to give the Bill its Third Reading.
  8.33 pm
  Mr. Donald Dewar: I thank the Under-Secretary of State for his congratulations. I know that he means them. I assure him that I shall not live up to the reputation that was a little unkindly foisted upon me by the Under-Secretary of State for Trade. Obviously taking his own words seriously, he fled the Chamber as I rose.
  I accept that this is a non-controversial Bill, in one strict sense. No opposition Member objects to the raising of the financial limits for the Scottish Special Housing Association.
  It is common ground that housing finance is never noncontroversial in a political sense. We in Scotland are rightly worried about the effect of the Government's policies on housing. Local authorities and the SSHA are starved of the funds that we believe should be available to them. The Minister will be aware of the fundamental difference between a nominal borrowing limit and the consent and authorisation to borrow or to spend, which the SSHA, like any other public service agency, needs from Government. The fact that we are raising the financial limits from £500 million to £600 million, with a possible further £150 million, is of little consolation if the Government are to cut the resources that are in reality available to the SSHA.
  In this week of very severe weather it is not a bad time to consider the state of housing in Scotland and the condition of the SSHA's own stock. Nothing affects the quality of life so fundamentally as the houses in which people live. In the 92,000 houses owned by the SSHA—and the same applies to local authority housing stock—we have seen under this Government's financial policies a steady and lamentable deterioration in the quality and choice of housing available.
  I look at the SSHA's record, bearing in mind that it will be affected by the Bill, and I see that it is one of steady decline, not in the competence of the organisation, but in the range of activities that it has been able to undertake because of the financial limitations imposed upon it by the Government. It is a tragedy that we see a new build programme for the SSHA that is less than one-third of

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  what it was in the mid-1970s. We see the necessity to update and upgrade the facilities available. According to the last annual report of the SSHA, it was possible to improve only half the number that was managed in 1979 and barely one-quarter of the number managed in 1977.
  The Minister claimed credit, rather coyly, for not suggesting that there had been an increase in real terms of the finance available to the SSHA. If that is a matter for congratulation, it is one for very modest congratulation. In real terms the finance made available to the SSHA has been declining dramatically, and if the Minister came clean he would have to say that the real resources available to the SSHA would decline further at a time when the needs were as great as ever.
  I feel very strongly about many of the Government's actions in their housing policy. The SSHA itself perhaps has not been in the eye of the storm. It has not been involved in the argument about the shabby manoeuvres of the Government in linking housing capital allowances to rent levels, where, for the first time, we see an allocation on the basis of need cut back in a form of administrative blackmail to force local authorities to push up their rents to levels that are seen to be acceptable by the Secretary of State but which have no reality in terms of the social hardship and the difficulties that many tenants experience.
  Directly relevant to the financial limits is the fact that the Secretary of State has forced the SSHA—because its rent levels are a matter for the right hon. Gentleman's diktat—to increase average rents to £9·12 a week. That may sound modest, but in Scottish terms it is a substantial rise of 26·5 per cent. in the last financial year, and of almost 50 per cent. in the last two years.
  If people are to be subjected to ever-increasing rents with a decrease in the service provided and with modernisation and new build programmes grinding to a halt, tenants and electors will be entitled to say that they are getting a very bad deal from the Government. During the last Scottish Question Time the Under-Secretary of State remarked that he had
  "recently announced that an extra £38 million would be available to housing authorities in Scotland for house building and improvement in the current year."—[Official Report, 9 December 1981; Vol. 14, c. 853.]
  I confess that I was surprised by that figure, because I had heard a number of others—£22 million and £23 million—and £38 million was a new figure to me. Perhaps the Minister will say what proportion of that will go to the SSHA, or whether it is included and will be part of the new financial ceilings being considered in the Bill.
  It is clear—the Minister said this—that we do not yet know what the capital allocation will be for 1982. However, he stated clearly on Second Reading that the sale of council houses would have a considerable impact on the finances of the SSHA and on local authorities. For example, the Under-Secretary suggested that in the current year he expected about £17 million to come in through the sale of SSHA houses. As 55 per cent. of that figure would be financed by private resources or building societies, he expected that
  "there will be a net revenue to the SSHA of about £9 million or £10 million. That reduces the SSHA's borrowing requirement from the national loans fund and is beneficial to the association. Next year and in future years, if the revenue from sales is greater than the figure estimated, increased power will thus be given to the SSHA to incur extra expenditure in a way that will be perfectly acceptable to the Government."
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  I want to be clear about what that statement means. The Minister stated that the figures for the capital expenditure programme for the current year would be £45 million. Let us suppose that the SSHA borrows £35 million and the rest comes in from the net revenue and proceeds of housing sales. If that sales figure increases, the association will clearly have lower interest charges to meet. However, the suggestion that seems to be coming from the Minister is that it is rather more than that. He used the phrase
  "if the revenue from sales is greater than the figure estimated, increased power will thus be given to the SSHA to incur extra expenditure".—[Official Report, Scottish Grand Committee, 24 November 1981; c. 31.]
  Does that mean that the ceiling that may be agreed for the current year—whether it be £45 million or another figure—can be exceeded if the sales are more extensive than the Minister expects? I wish to know that, because it will be of interest to the House when considering what the future holds.
  It is an important point because, as the Minister appreciates, if he is still saying what he appeared to say on Second Reading, the areas where sales will be more frequent will benefit financially. We will be in a rather strange position. We all know, and it is self-evidently true from our experiences in Scotland, that the areas where sales are more common are those of higher amenity, more attractive socially and where the financial situation is a little easier.
  If that is a way of ecaping from the stringent housing financial dictates of the Government, the areas without serious problems will benefit. The Minister shakes his head in an adamant way and I am glad to see that, because the consequence that I have suggested is not one which I would approve of or desire, but it is something that could be read into the words that he has used on many occasions. It would be useful if the Minister took this opportunity of explaining exactly where he stands on that matter.
  If the Under-Secretary is right when he says that a high concentration of council house sales will bring financial advantages to the local authority concerned, he is self-evidently saying that the areas that do not have serious housing problems—or less serious housing problems—are those that will be advantaged by the new policy, while deprived areas that have multiple problems will be disadvantaged. That almost inevitably flows from the first proposition that the Minister has so proudly proclaimed in housing debate after housing debate.
  I promised that I would not delay the House and I know that many of my hon. Friends want to contribute at least briefly to the debate. However, let me conclude by repeating the bold point—the real crux of the matter—that no one objects to raising the financial limits of the SSHA, but that is only a preliminary to the real decision about the resources that will be made available and the borrowing limits that will be allowed to the authority in the coming year.
  We will want to hear from the Minister—perhaps not today, because I accept that there is a time table—that he is prepared to allow the SSHA and its staff to get on with the job that we know they can do. They have had an admirable record over the years, but they have been caught in the financial holocaust started by the Treasury.
  The ability of the association to build and improve has been reduced, and that can be seen in its employment figures. There was, rightly, adverse comment on Second Reading about the fact that the last annual report of the

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  SSHA stated that the association had not taken on one apprentice in the previous two years. A major public agency that ought to have a direct interest in producing training opportunities for young people has had to opt out because of what the Government have done to its financial parameters. That is the sort of sad message that comes through.
  Even more important, the SSHA has not been able to carry out improvements and modemisations and to upgrade services for its tenants. That general decline has been part of the housing picture in Scotland. Under the Government the new build totals in the private sector are the lowest for a decade, and in the public sector they are the lowest since the war. That is a record of which the Under-Secretary should be thoroughly ashamed. To do him credit, he probably worries about it in private, however bravely he tries to dissimulate in public.
  We should make a start on putting things right, and a generous allocation to the SSHA would be one part of a much-needed attack on housing deprivation in Scotland.
  8.46 pm
  Mr. George Robertson: We have the opportunity to assess again the work and role of the SSHA, especially in relation to the new borrowing limits proposed in the Bill.
  Eighteen months ago, when I occupied the Front Bench post now held by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), I warned the Government that this form of primary legislation should be considered well before we reached the brink of the borrowing limits being achieved. I said that if there were a need for increased limits the Government should take quick action rather than delay the legislation.
  It is important to underline the Opposition's support for the work that has been done and is being done by the SSHA, even in the difficult circumstances laid down by the Government—especially the financial arrangements provided for the association.
  In Opposition, Conservative Members were loud in their praise of the interventionist role of the SSHA. Indeed, the hon. Member for Southend, East (Mr. Taylor), who was the principal spokesman on Scottish affairs at that time, and who is a notable absentee from our deliberations, said in the Committee considering the statutory instrument on this subject:
  "The Minister will be well aware that the Conservative Party has always given great support to the Scottish Special Housing Association and regards it as an organisation making a useful contribution to Scottish housing, which we fully support."—[Official Report, Second Standing Committee on Statutory Instruments &c., 22 February 1978; c. 6–7.]
  The Conservatives' record since they came to power, which was so well catalogued by my hon. Friend the Member for Garscadden, shows that their words in Opposition gave no flavour of the message given to the SSHA since they came to power.
  In paying tribute to the association, I should like to deal with one of its activities in my constituency. Like many people in Scotland, the Minister will be aware of the association's work in the Laighstonehall area of Hamilton. The Laighstonehall project is one of the major projects undertaken by the SSHA in an area of multiple deprivation in the West of Scotland, and an area which has more than the average number of characteristics of decline. The association took on the problems of the area in an
  90
  imaginative and hard-headed manner. The record of the Laighstonehall project has been one of which those responsible can be justly proud.
  The only fly in the ointment is that the conclusion of the project has been delayed by the overall cutback in resources that has been experienced by the SSHA. It is a matter for profound regret that the success of the project has been placed in the balance because the association, despite its good intentions, does not have the resources to conclude the work that was so ambitiously started only a few years ago. If we are ever to get to the root of some of the serious problems that confront inner urban areas in Scotland, England and Wales, the type of project that was embarked upon at Laighstonehall must be seen through to success.
  I read with care the debate on the Scarman report, which was confined to the problems and difficulties that arose in the summer in England. Happily, Scotland was spared the problems that were experienced in some parts of the inner cities of England. That was due in no small part to the work that has been done over the years by agencies such as the SSHA. The problems which have been experienced in some parts of Scotland, which were being tackled imaginatively, have been the subjects of experiments that we dare not allow to fail. If the experiments are allowed to go into decline, Scotland will experience some of the problems that have afflicted other parts of the United Kingdom.
  I plead with the Minister to look afresh at the background to the Laighstonehall experiment. I ask him again to consider those areas where there is still a continuing demand for funds. The last phase of the modernisation project, which is so crucial to the overall completion of Laighstonehall, requires funds. We must find the extra funds that will enable the project to be completed.
  I repeat the invitation that has been extended by the Laighstonehall tenants' association, by councillor Peter Grenfell, who is responsible for the area, by regional councillor Jim Irvine, by the regional council for the area and by myself as the local Member of Parliament, to come to see the successes of the Laighstonehall project, the achievements in the area, and the areas in which completion is being prejudiced by the continuing uncertainty about the timetable for the last phase of modernisation. I believe that the Minister will be impressed by the success of the project so far and may be convinced about the need to complete the experiment so that we may see the real success of an attempt at revitalising an area of multiple deprivation.
  Another issue that needs to be considered on Third Reading is that of rents, which was taken up by my hon. Friend the Member for, Garscadden. We are seeing serious problems experienced in areas in which there is a mix of SSHA houses and local authority houses. Different approaches and attitudes are being taken by the two areas of the public sector. There is a growing disparity between the rent levels imposed by the SSHA on the immediate and direct diktat of the Government and rent levels in other parts of the public sector. That is causing dismay and distress, especially because in the SSHA area—this is for reasons totally outwith the association's control but for reasons that lie in the Government's lap—repairs and modernisation programmes are being delayed and tenants are being asked to pay greater and greater rents while they suffer real reductions in their standard of living. They are

  91
  not getting the concomitant returns that they would normally except in the way of a natural repair programme and the natural progress in the modernisation programme that was promised in many areas. That is in an area that the Government should look at. The Bill fails to take it into account.
  As has been said, the Bill is a fairly uncontroversial measure. It adds to the borrowing limits of an agency that most hon. Members regard as having a fine record. It still has a substantial job to do. If we have any reservation, it is about the amount of money that the Government are allocating. If the SSHA is to do its job properly in the future there is a need for even more primary legislation. The SSHA deserves commendation for the job that it is doing, but it is also a job that requires future resources if it is to be done as the people of Scotland expect.
  8.56 pm
  Mr. Norman Buchan: It is rare for me to take part in a housing debate, as hon. Members know, but I felt that I had to use this opportunity to congratulate the SSHA on the work that it has done and, above all, congratulate it on the way that it handled its relationship with elected representatives and on the help that it has given. I refer to two areas—there are others in my area and that of Renfrew district council—Linwood and Erskine. I hope that the Minister is aware of the careful and deep report that has just been prepared by Renfrew district council on the high incidence of lead tanks and lead pipes in that area. The report has been described as alarming, and certainly it is very serious. Renfrew district council takes the report seriously. The problem it faces, given the medical consequences of the high incidence of lead pipes and tanks, is that if it is to do the job that is required it will need all the assistance it can get in housing, housing support grant, capital allocation and, for that matter, rate support grant.
  The district council has had the problem of the new town at Erskine without normal new town financing. Given the figures that we see here, we must ask whether that assistance is sufficient. Perhaps, as my hon. Friend says, the Bill is not controversial, but any increase from this Government, whether' or not it keeps pace with inflation, must be welcome. It is doubtful, however, whether it is anywhere near enough to meet the sort of problem with which we are faced. Therefore, I must ask the Minister to say whether he is to seek methods of assistance for the SSHA, or for Renfrew district council, which has taken on many of the tenancy allocations of the SSHA buildings in places such as Erskine, and whether the money necessary to implement the recommendations in that serious report will be forthcoming. Renfrew district council will be seeking that assistance. It will be right to do so, and I shall support it in its endeavours.
  It will be useful, therefore, if the Minister, in talking of housing finance, even if it is limited to the SSHA, will say that he will treat the report seriously and give all possible assistance to Renfrew district council in its efforts to deal with the serious medical problem of lead pollution that the report has highlighted.
  8.59 pm
  Mr. Neil Carmichael: I am pleased that we have this opportunity of debating the Scottish Special Housing Association and the work it has done and, we hope, will do in future.
  Like most hon. Members, I have a fair representation of Scottish Special Housing Association type houses in my area and we are very grateful for them. I am worried that the balance of the finance for the SSHA has, perhaps, not been used as I would like. For example, while in my area we want new houses to be built, we also want the existing houses maintained at a level and at a standard that will allow them to continue as dwellings for the people in them for many years to come.
  I find a niggling attitude towards repairs, particularly in some of the blocks that have flat roofs. We have never been able to conquer their problems in any part of Britain. We have never been able to build a flat roof that does not let in dampness, no matter what techniques the architects use.
  In my area the tenants of some perfectly good houses are put to great inconvenience. In some cases they are decanted and moved because of repairs being delayed, or not carried out properly when they are done. That is largely due to the fact that inadequate money has been available for repairs.
  In one part of my constituency, Fortrose Street, a model block was built many years ago. It was a good idea, although it turned out to be far too expensive. The general idea was that the SSHA, the local authority and the Scottish Office would get together and build a special block that would be easily adaptable for sites all over the country. It was seven or eight storeys high. It was thoroughly studied while it was being built. It was basically a well designed and well built block. However, it turned out that the standard was just too high for it to be profitable or practical to build such blocks all over the country.
  It is a very good block. The people living there are concerned about penny-pinching in some of the repairs. Perhaps the Minister will tell the SSHA that there seems to be an inadequacy of supervision. There is provision for a caretaker in the block, but none is available because of shortage of money.
  I can understand that the SSHA has a decision to make. If it is a choice of spending money on housing or on caretakers, obviously most people would want it spent on housing. But the difference in cost is not so very great. It would be a great pity if the homes in that block deteriorated for want of a proper caretaker to look after the building full time.
  That leads me to the other thing that worries me about the way in which the SSHA has been squeezed for money. There have been criticisms throughout SSHA's existence, partly because of the point raised by my hon. Friend the Member for Hamilton (Mr. Robertson) about the disparity in rents between local authorities and the SSHA. I have experienced both sides of this matter, and no doubt my hon. Friend has done so. For a period the SSHA rents are much higher than council rents, and some people grumble, and then there is a change and the other tenants grumble.
  One thing for which the SSHA had a good reputation was apprentice training. I understand that, partly because of the cuts in money to the SSHA, training has fallen to almost nil. That is dreadful. When I heard about this Bill

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  for the first time, I hoped that it would be the beginning of a U-turn and that we would be starting something in the building industry. That is obviously the place to start—building sucks in very little in the way of imports. It is a place to start a U-turn or a capital advance in building. The Scottish Building Federation is desperate for a start to be made. Many more firms will go under if it is not made.
  Will the Minister use his influence to persuade the SSHA to have a look at its apprenticeship schemes? The SSHA has produced many good apprentices of a very high standard, who have already taken jobs in the building industry when it was on the up. They were invaluable in building houses in Scotland. Will the Minister ask the SSHA to earmark at least a part of the £100 million and, later, the £250 million for this very valuable work?
  The order is well worth while. We should like to have a great deal more, but with the help that the Minister is getting from the Opposition Benches, I hope that he will have some ideas to take to the SSHA the next time he meets its representatives to discuss finances.
  9.5 pm
  Mr. John Maxton: I, too, welcome the opportunity to say a few words about the Scottish Special Housing Association, partly because some of the points that I made in the Scottish Grand Committee were not answered by the Minister, and partly because the SSHA plays an important, and good, role in housing in Scotland.
  My hon. Friends the Members for Hamilton (Mr. Robertson), for Renfrewshire, West (Mr. Buchan) and for Glasgow, Kelvingrove (Mr. Carmichael) all have SSHA houses in their constituencies. I have not, but I have the new chairman of the SSHA as a constituent. I could not say that he voted for me; in fact, he is far more likely to have campaigned actively against me. However, he is a constituent, and that gives me some interest.
  My hon. Friend the Member for Hamilton reminded the House of what the hon. Member for Southend, East (Mr. Taylor) said when he was the shadow spokesman for Scotland and was demanding extra money for the SSHA. I hope that his close personal friend, Mr. Derek Mason, who is the chairman of the SSHA, will follow that up and demand from the Government the sort of money that the hon. Member was asking the Labour Government to provide. That is the role that the new chairman should play, and he should not accept all the Conservative Government policies.
  The hon. Member for Hamilton also raised the matter of the Laighstonehall scheme, which is very worth while. Over the past three years there has been a decrease in the incidence of vandalism—which was a serious problem—because of the environmental improvements in that area. However, if improvements are not continued and the environment once more begins to decline, the money required to put right the vandalism will probably be greater than the money that could now be spent to ensure that the scheme is properly carried out. The Government should bear that in mind.
  As the Minister said, this is a two-clause Bill, although on Second Reading he said that it was a one-clause Bill. I accept the Minister's correction, and I agree that the Bill is not controversial. However, somehow or other, the impression is being given that the Government are giving
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  extra money to the SSHA. They are not doing so—there is not one extra penny in teens of what the SSHA will be able to do next year or the following year.
  All that the Government are doing is increasing the SSHA's borrowing power. However, it has to come to the Government for permission to use the borrowing power and to spend the extra money if it so wishes. The Government have not shown that they intend to allow that increase in SSHA spending. Over the past two years while the Government have been in power the amount of money available to the SSHA and the amount of money that it has been able to spend on such things as repairs and improvements, and the rehabilitation of housing stock, has declined dramatically.
  The figure for repairs and maintenance expenditure in 1979–1980, which was not a particularly good year, was £14,966,000. Between 1980 and 1981 the figure dropped to £12,846,000. There is a clear reduction in the amount of money being made available for repairs and maintenance of housing. Over the 12 months the tenants have faced a 50 per cent. increase in their rents. Those who happen to be old-age pensioners, or to be unemployed or on supplementary benefit, have not been allowed increases even to the level of inflation. yet they are having to face rent increases that are way above the rate of inflation.
  The Government seem to be hoping that if the rents continue to increase more people will be forced to buy their houses rather than continue to pay higher and higher rents. The hon. Member for Edinburgh, South (Mr. Ancram) shakes his head. It is very interesting that on this occasion not even the hon. Member for Argyll (Mr. MacKay) has contributed to the debate. He is usually the one Conservative Member who has some sort of conscience about the part played by Conservative Back Benchers, and often makes a speech—
  Mr. Rifkind: Do not tempt him.
  Mr. Maxton: I apologise. I shall not tempt the hon. Gentleman too far, because I know that there are hon. Members who wish to speak on other matters later this evening.
  Conservative Members seemed to be dissenting from what I was saying about high rents, but many tenants in local authority and SSHA housing believe that rents are being forced up by the Government to persuade them to purchase their houses.
  On Second Reading the Minister made great play of the number of houses that the SSHA had sold. It has carried out a much more active selling policy than have many local authorities. Even so, it has managed to sell only about 4 per cent. of the total housing stock, although the Minister will probably say that this year the figures will rise to 6 or 7 per cent.
  Our concern is for those—well over 90 per cent.—who will remain tenants of the SSHA and of local authority housing, and who will not purchase their houses. They are facing lower standards in regard to the time betwen repairs being reported and the work being done. Repairs considered not to be essential are not being done and modernisation programmes are being cut back, yet SSHA rents are rising by over 50 per cent. It is these tenants who are the concern of Labour Members, not the very small percentage who are purchasing their properties. The Government ought to be concerned with the people who are remaining tenants of local authority and SSHA, properties.

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  I hope that the Minister will say what extra money is to be spent by the SSHA, rather than simply giving it borrowing power. Let us be told there is to be an expansion of the SSHA programme to give the tenants a better deal and to increase the prospects of employment in the building industry, which is so desperately needed in Scotland.
  Mr. Gordon Wilson: I am impressed by the sudden interest that the official Opposition are taking in the Bill. In the debate it has been possible to go over some of the territory that should have been covered in Committee. The Bill is an important one, because it gives an opportunity for the Government to expand the resources available to the SSHA.
  Mr. Maxton: Some Labour Members spoke on Second Reading and our interest is not at all sudden.
  Mr. Wilson: I, too, spoke on Second Reading, but I do not think that it is necessary to go into that. There was a stage in between that does not seem to have been canvassed with the same degree of intensity.
  The Government should look at the position of the SSHA because, despite what I have said, there is a real interest in the amount of work that it could and should be able to carry out. One of the prime functions of the SSHA was to build houses in areas of economic growth. It is sad indeed that one can now scan the country, with the possible exception of the Aberdeen area, and have great difficulty finding any economic growth requiring building for that purpose.
  I wish to concentrate the Minister's attention on the role of the SSHA with regard to modernisation. Many of its tenants have been disappointed with the way in which modernisation schemes planned for two, three or four years ago have become more and more elongated and seem to be receding into the distance. I know of cases in which phase 1 has been carried out and plans laid for phase 2, when phase 2 seemed suddenly to disappear and phase 3 to vanish completely into outer space. Perhaps the Under-Secretary will tell the House how he sees the role of the SSHA in relation to modernisation.
  The House should realise that a substantial number of SSHA houses suffer from very poor standards of insulation. I received a reply from the Minister today concerning the number of public sector houses falling below accepted standards of insulation, in which he stated:
  "Approximately 400,000 public sector houses with loft spaces have less loft insulation than the current Building Standards (Scotland) Regulations requirement of 50 mm (2 inches). The average cost of providing loft insulation in a typical four-apartment house is about £100."
  In another reply, he stated that some 236,000 public sector houses had been insulated since April 1978. Buried among the 400,000, there must be a good number of houses built by the SSHA that have deficient standards. It takes only some general surveillance of the work carried out by the SSHA to realise the improvement in living conditions that could be given to the tenants of those houses.
  In view of the recent savage weather, many people—particularly the elderly—must find it difficult to live in comfort in unmodernised SSHA houses due to the inability of those houses to retain heat. The severe weather conditions should prompt the Minister to reconsider his attitude towards providing funds for the SSHA to go ahead
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  with such modernisation. If he were prepared to live up to the expansion limit provided for in the Bill and to grant the wherewithal for the SSHA to carry out that work, substantially improved living conditions could be offered to many long-standing SSHA tenants who badly need a better deal.
  9.18 pm
  Mr. Dennis Canavan: Like other hon. Members, I briefly pay tribute to the Scottish Special Housing Association and the work that it has done in Scotland since its inception in 1937. It is no exaggeration to say that it has probably been one of the most successful examples of public enterprise in Scotland. The fact that, through the growth of public sector housing in Scotland, we have managed to solve some of Scotland's housing problems over the years has been due not only to the efforts of local authorities but to the excellent work of the SSHA.
  Unfortunately, for the first time in the history of public sector housing in Scotland, we are now in danger of seeing not just the end of expansion in public sector housing but a reduction in the number of houses in the public sector. That reduction will be the result of Government policy on two fronts. The first is the dictatorial powers taken by the Secretary of State to instruct local authorities and the SSHA to sell off their houses, irrespective of the needs of the local community and the demand for public sector housing in particular areas. The Secretary of State thinks that he knows best, and has given a general command to the local authorities and the SSHA to sell off their housing stock.
  At the same time, he is not giving them enough money to replace the housing stock with new build. Despite the Bill's title and the explanatory and financial memorandum, the truth is that the Secretary of State is not giving the SSHA nearly enough money to do the job that it should be doing—in other words, to build more public sector housing in Scotland to cater for the needs of the thousands of people, including many young newly married couples, whose only chance of getting a house lies in obtaining one in the public sector.
  The Government have jacked up the mortgage rate and will throw these young couples into the hands of the money lenders. Many of them have no chance at all of getting a house unless they get some form of Government help, but the Government are selling off houses and not giving the local authorities or the SSHA enough money to replace them with new stock.
  My constituency is virtually unique, in that it contains five different housing authorities—Stirling district council, Falkirk district council, Cumbernauld and Kilsyth district council, Strathkelvin district council and the SSHA. The advantage of district councils as housing authorities compared with the SSHA is that if somthing goes wrong administratively or bureaucratically—be it house allocation, housing repairs or whatever—there are elected district councillors to whom the tenants can turn.
  It is a pity that in this legislation the Government are losing a tremendous opportunity to bring about a greater degree of accountability on the part of the SSHA. I am not saying that we should dismantle the SSHA completely, but perhaps its role has changed. It may be that its role should be concentrated within the dynamics of housing construction, especially in areas of need or areas of economic growth—if there are any such areas left in Scotland. We should be looking at areas where there is

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  demand for public sector housing. If the local authorities are not getting the resources because of Government cuts, perhaps the SSHA should be the appropriate authority to work in liaison with the local authority to achieve development in the house building programme.
  In the longer term, after the houses have been constructed, there may well come a time when they should be handed over to the local authorities. In other words, we should be thinking of a more decentralised and democractic style of management. I would not stop there, because I believe that there should be greater decentralisation and devolution through tenant control. I should like to hear the Government's views on how that can be achieved, either by encouraging tenants' cooperatives or other forms of communal housing management.
  The SSHA has grown over the years until it has become a little too over-centralised, bureaucratic and non-accountable. An SSHA tenant looking for an elected representative to try to sort out a mess in which he finds himself may decide that the only answer is to turn to his Member of Parliament. A council tenant, who has a complaint about housing repairs, management or allocation, has his own elected district councillor at grass roots level to whom he can turn to try to solve the problem.
  I should like to see the SSHA given a vastly increased budget as opposed to the paltry increase proposed in this legislation. It should be given the task of tackling the problems of housing and the lack of public sector housing. If the SSHA were decentralised through the district councils that already have statutory powers, as local authorities, this would produce a more democratic system of housing management that was in the best interests of SSHA tenants and council tenants.
  9.26 pm
  The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): A number of excellent speeches have been made by Opposition Back Benchers. It is most unfortunate that none of those Members happened to be selected for the Committee that considered the Bill. There would have been opportunity to consider these matters in greater detail, with a greater amount of time available. It is unfortunate that those hon. Members selected for the Committee not only failed to turn up but have also not even thought it proper, with the honourable exception of the Opposition Front Bench spokesman, the hon. Member for Glasgow Garscadden (Mr. Dewar), to turn up for the Report and Third Reading stages.
  The hon. Member for Glasgow, Cathcart (Mr. Maxton) suggested that pensioners, the unemployed and others on supplementary benefit would suffer hardship as a result of the SSHA rent levels that were proposed or might be proposed. The hon. Gentleman is clearly unaware that almost all those receiving supplementary benefit pay no rent at all. They are not affected by 1p of any increase in rents of whatever level. The hon. Gentleman might have checked his facts before making serious allegations.
  Mr. Maxton: The hon. Gentleman did not include old-age pensioners, many of whom do not take up rent and rate rebates which they are allowed and who, as a result, will suffer hardship, because they are often too proud to take rebates.
  Mr. Rifkind: The hon. Gentleman cannot legitimately put forward that explanation. If successive Governments
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  have rightly provided a rent rebate scheme to deal with people who cannot afford rent levels, whatever those levels are, the hon. Gentleman cannot argue that the Government must keep down rent levels because certain people entitled to rebates do not apply for them. I hope that the hon. Gentleman, like everyone else, would urge that everyone entitled to a rent rebate should apply for it. The vast majority do apply. It is desirable that the small minority who, for whatever reason, do not apply should do so. The hon. Gentleman suggests that rent levels cause hardship for pensioners and those receiving supplementary benefit. That is untrue, as I think he now recognises.
  The hon. Member for Dundee, East (Mr. Wilson) made an interesting comment about the need for home insulation in houses owned by the SSHA and other organisations. It is a curious feature of Scottish housing over the last few years that the home insulation resources have not been fully taken up. While there has been no difficulty over the resources being utilised in England and Wales, there has not been sufficient interest in Scotland, although there is a need for insulation and many people would benefit if they used the grants available.
  Mr. Gordon Wilson: Is it not possible that the installation of insulation could be kept back through the inability of the SSHA to go ahead with general modernisation? If the Under-Secretary cannot guarantee that the modernisation work will go ahead, will he give an assurance that ample funds will be available to the SSHA to insulate all its houses?
  Mr. Rifkind: We give a general allocation to the SSHA but we do not dictate how it should use it. If it wishes to use part of its resources for that purpose, that is for its discretion.
  The hon. Member for West Stirlingshire (Mr. Canavan) made three curious remarks. He said that for the first time under this Government we were seeing a reduction in expenditure on housing. That is wrong. The reduction 3n housing expenditure began under the Labour Government. The hon. Gentleman suggested that the SSHA might have an exciting new role in dealing with areas of economic growth and liaising with local authorities. The SSHA already has that role and has had it for a number of years.
  Mr. Canavan: Where is the economic growth?
  Mr. Rifkind: I shall come to that later. The hon. Gentleman is right to say that that is a desirable role for the SSHA. It has that role in Aberdeenshire, the city of Aberdeen and in other areas. Areas of economic expansion are the main priorities for the SSHA. It has a good record of providing assistance to individual local authorities in that respect.
  The hon. Member also made a passionate call for decentralisation of control of SSHA houses to tenants. We are all in favour of that. For some reason, the hon. Gentleman wishes to stop that decentralisation to groups of tenants. We wish to take decentralisation further so that it reaches the individual tenant and gives him control over the house in which he lives by giving him the opportunity to buy his home. Why the hon. Gentleman should seek to prevent, prohibit or limit that form of tenant control is a mystery to most of us.
  Mr. Canavan: There is a big difference. Even the Minister is capable of appreciating the difference between decentralisation of management and privatisation of

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  ownership. The latter would mean that the future occupation of that house would for ever depend upon free market forces rather than need. That is why I am against privatisation of houses that are already in public ownership.
  Mr. Rifkind: It remains the case that if one wants to give people the maximum control over their environment, for the vast majority of the human race the opportunity to own the homes in which they live is a satisfactory way of achieving that. The hon. Gentleman may not share that view but in that respect he is in the minority among those who support his party as well as of those who have other political views.
  The hon. Member for Renfrewshire, West (Mr. Buchan) referred to problems caused in Renfrewshire by lead in water. We have received the report submitted by the district council and we shall examine it. Lead in water is a serious matter. It is a health problem and therefore it is right and desirable that the maximum assistance is given to local authorities throughout Scotland. It is also a matter for local authorities, which must judge whether to give it priority in their expenditure. We accept that we have a responsibility. We shall examine the issue in relation to capital allocations to local authorities in the weeks to come.
  The hon. Member for Glasgow, Kelvingrove (Mr. Carmichael) referred to the SSHA being able to take on apprenticeship schemes. I shall refer the hon. Gentleman's remarks to the SSHA. It is a matter for its discretion but I shall ensure that it is made aware of the hon. Gentleman's comments.
  The hon. Member for Hamilton (Mr. Robertson) referred to the discrepancy between rent levels of SSHA houses and some local authority houses adjacent to SSHA houses. He must appreciate that the main difference between the two groups, as applied under successive Governments, is that, because SSHA rents have always been under central Government control, rent increases have been reasonable over the years. That is not always so in the case of individual local authorities. Some local authorities have deliberately pursued a policy of unreasonably low rents. The discrepancy between their rent levels and SSHA rents is most obvious and wide in such areas. No one could seriously argue that in United Kingdom terms SSHA rent levels are unduly high. The hon. Gentleman should recognise that.
  Mr. George Robertson: I hope that the Minister will deal with the major issue that I raised with him. The SSHA is having directly imposed on it the full swingeing rent increases that the Government would like all local authorities to implement, but they are also making sure that the SSHA is starved of the resources to allow it to undertake the modernisation programmes that it has in many cases promised its tenants and the repairs that they should expect for the rent that the Government dictate that it should force them to pay.
  Mr. Rifkind: The hon. Gentleman is wrong. I may be one or two pence out, but in the current year the Government reccommended to local authorities average rent increases of £2·33. Because in the previous year the SSHA had made reasonable rent increases, unlike the vast majority of local authorities, the figure for the SSHA was
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  £1·90, which is close to the rent increases ultimately imposed by local authorities, on average, throughout Scotland. In this year, at the end of the day, the SSHA tenants' rent increase will not be significantly different from that of local authority tenants as a whole, although it may be different from certain increases in individual localities.
  Mr. Dewar: The Minister will be well aware of the fact that over the past two years SSHA rents have increased by a total of 50 per cent. Does he consider that that is reasonable?
  Mr. Rifkind: The hon. Gentleman must appreciate that the rent base from which the increases were made was extraordinarily low, and that is so even at present. For example, local authority average rents in Scotland are £7·40, which is dramatically small. That fact must be taken into account. Even the SSHA rent level, although higher than that, is not particularly high by the standards of many other parts of the country. The hon. Gentleman should take account of that factor.
  The hon. Member for Hamilton asked about Laighstonehall. He will be aware that of the original 518 houses in the scheme 75 have been rebuilt and the conversion of 32 large flats into 64 smaller flats has also been completed. The modernisation of 188 houses has been completed. I am aware of the concern of the hon. Gentleman and some of his constituents at the delay in the modernisation of the remainder of the stock, but he will appreciate that the Government's responsibilty is to give the overall allocation to the SSHA, and we do not tell it how it must use the allocation, so representations on the priority that should be given to the project should be directed to the SSHA. No doubt the hon. Gentleman has made such representations, but he must appreciate that it is a matter of the SSHA's detailed responsibility and it is not something on which the Government, either in respect of this or any other individual project, take a particular position.
  In his usual helpful and constructive fashion the hon. Member for Garscadden raised two basic points. He expressed great concern at the level of capital allocations for the SSHA. It is true that they have declined over the past couple of years, but the hon. Gentleman has a tendency to exaggerate these matters.
  Mr. George Foulkes: Rubbish. Not at all.
  Mr. Rifkind: Compared with the hon. Member for South Ayrshire (Mr. Foulkes), the hon. Gentleman does not exaggerate these matters. Nevertheless, viewed in isolation, there is an element of exaggeration from which I cannot entirely exempt the hon. Gentleman.
  In the current year the SSHA's allocation is £45 million, which is a substantial sum and which in cash terms is close to previous years, although I appreciate that it is a difference in real terms.
  The hon. Member for Garscadden also expressed confusion about the effect of the net allocations system so far as the sale of houses is concerned. His interpretation is that, because the Government would be making an estimate of sales of SSHA houses, in practice the system would be of benefit to areas with high amenity housing and against the interests of those with low amenity housing

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  which might be expected to sell less houses. The hon. Gentleman seemed to misunderstand the scheme both in respect of the SSHA and the local authorities.
  In each case—let us look at any individual local authority—we shall be looking at a reasonable estimate, given the number of applications that authorities have received from their tenants, as to what their expected income from the sale of houses should be in a given year. That estimate will obviously be a lot less in an area where, for whatever reason, there have been fewer applications than in an area where, for whatever reason, the applications have been far greater. In both cases—having made a reasonable estimate—if at the end of the day a local authority or the Scottish Special Housing Association has sold more houses than estimated, it will have the free use of the extra receipts from the sales. Therefore, it will be in its interests to maximise sales.
  Mr. Dewar: The Minister's statements are open to many interpretations. Is he saying that if we take a capital allocation of, say, £45 million for the local authority or the SSHA and it is assumed that included in that figure is a sum of £10 million, which will be found from the net proceeds of sales, and if, by means of sales drives, caravans and so on, the local authorities or the SSHA persuade more people to buy their homes so that the £10 million becomes £13 million, the resources available for new build will be £48 million rather than £45 million?
  Mr. Rifkind: The difference between what we have estimated and the net receipts will be available to the local authorities or the SSHA to use as an extra capital allocation for whatever purpose they consider appropriate. It will be in their control, since the estimate will not be a vague figure plucked out of the air, but will be based on the number of applications received. We are now in a position to know the number of applications that a local authority or the SSHA has before it and we know the normal time that the processing of an application should take until the ultimate completion of the sale. Therefore, barring the unexpected, we are in a reasonably good position to be
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  able to predict the likely minimum income that the local authority or the SSHA will receive from sales. If, in order to boost its resources it is able to encourage more of its tenants to purchase, it will benefit from that, and it is right and proper that it should do so. It is precisely because, in the current year, the estimates were much lower than had been expected that we were able to boost the allocations by the figure to which the hon. Gentleman referred.
  Mr. Dewar: I do not wish to detain the Minister, but it should be put on record that we challenge his statement that it should be "right and proper" for local authorities or the SSHA to encourage more tenants to purchase. We do not accept that it is "right and proper" that there should be a built-in incentive to sell council houses in order to obtain more resources on the capital side. We believe that the inadequate capital resources that are available should be allocated on the basis of the need of the people who live in the area.
  Mr. Rifkind: Those comments could be described as good Committee points, which, unfortunately, the Committee did not have the benefit of hearing. They could have been expanded in greater detail in Committee. If the hon. Gentleman were to speak with the local authorities and the SSHA he would find that they realise that this is an opportunity from which they can benefit, and it is right and proper that they should be able to do so.
  The Bill has had a fair passage throughout its stages, although this stage has been slightly longer than the others. Nevertheless, it has been equally constructive.
  Mr. Foulkes: The Under-Secretary is lucky. I was not on the Committee.
  Mr. Rifkind: The hon. Gentleman could at least have turned up.
  The debate today, although slightly longer than previous stages, has been just as constructive, and I therefore commend the Bill to the House.
  Question put and agreed to.
  Bill accordingly read the Third time and passed.

  Welsh Water Supply
  9.43 pm
  The Secretary of State for Wales (Mr. Nicholas Edwards): I beg to move,
  That the draft Welsh Water Authority (Constitution) (Variation) Order 1981, which was laid before this House on 1st December, be approved.
  The order gives effect to the proposals for varying the constitution of the Welsh water authority, which I announced to the House on 30 November. The draft is laid for Parliament in exercise of the powers conferred by sections 2(4), 3(10) and 36(2) of the Water Act 1973.
  The House already has a good deal of information about my reasons for laying the order. I set them out in the consultative document published in July. I explained them in my statement to the House on 30 November, and my hon. Friend the Under-Secretary of State, the hon. Member for Conway (Mr. Roberts), discussed them with the Welsh Select Committee on Wednesday 2 December. Paragraph 8 of the consultative document explained the drawbacks of the present large and cumbersome structure.
  The Monopolies and Mergers Commission report on the Severn-Trent authority explained the unsuitability of the local government committee system for the administration of the water industry. It said:
  "The size of the authority has resulted in a complex committee structure requiring extensive administrative and other support services … despite its historical origins the authority is not an instrument of local government and does not therefore have to be controlled by a body which is largely composed of people who derive their membership from the electoral process of local government. Its policies and activities are in no way dependent on political issues within its particular boundaries. It is one of ten similar bodies which are virtually nationalised industries organised on a regional basis, responsible to Ministers and co-ordinated by the NWC. We recommend that the size of the authority should be substantially reduced and that its membership should not be based predominantly on local government representation".
  Those comments apply as much to the Welsh water authority as they do to Severn-Trent.
  I have to tell the House that in addition I had become increasingly concerned by the views expressed to me by those serving on the authority and by those whom I had invited to serve in the past. It was becoming very clear that we should find it increasingly difficult to recruit people of the calibre that we needed if they felt that their time was being wasted and their performance limited by a structure unsuitable for managing any kind of industrial enterprise.
  Nor were consumer interests being properly represented under this system. Few people were aware that this was supposed to be the role of the local authority representatives, fewer still knew which local authority members from their own areas served on the authority, and the members themselves, not directly answerable to the electorate, even in their own parts of the country, were often placed in an unenviable position as they sought to act as consumer watchdogs, while at the same time they participated collectively in the decisions of the authority as a whole, and often in connection with local issues which were far outside their own immediate area of knowledge.
  Dr. Roger Thomas: Does the Minister agree that it is a case not of a lack of expertise among local authority representatives but of a rapid turnover among those representatives? If the rapid turnover could be coped with, we could still have a fair local authority representation even on the new body.
  Mr. Edwards: I did not suggest that there was any lack of expertise among the local authority representatives. I am sure that they were all expert in their respective areas. They had great knowledge of the areas which they directly represented in their own local authorities. But that is not the position in which they found themselves in the Welsh water authority, where there were a handful from each part of the country, where their responsibilities were not related directly to those who immediately elected them, and where they were having to act as consumer representatives in connection with proposals, plans and suggestions from different parts of the country. It was not about their lack of expertise in their own areas that I was speaking, but they were placed and still are placed in an extremely difficult position if they are to carry out an effective watchdog role on behalf of the consumer.
  I am sure that the hon. Member for Carmarthen (Dr. Thomas) will agree that very few of his constituents know that local authority representatives are members of the authority, and even fewer can identify the local authority representatives serving on the Welsh water authority.
  Mr. Ioan Evans: Is the right hon. Gentleman making a valid point? On the old boards there were 10 representatives from the counties and 10 from the districts. Those figures will now be reduced to two from the districts and two from the counties. The 20 representatives, who constituted the majority on the old boards, had contact with all the local authorities of which they were members, and all the councillors on those authorities knew who were their representatives on the Welsh water authority. Therefore, there was a contact with the whole of the local authority organisation in Wales.
  Mr. Edwards: They may have had contact with the whole of the local authority organisation in Wales, but that is not contact with the consumers. If anyone believes that it is, he must have an odd view of events both in local government and in the water authority. However, I shall deal later with my proposals for increasing the local authority involvement in the decisions that most affect their own constituents and those taken in their immediate localities.
  My original proposals contained in the consultation document were that county and district councils should no longer appoint members to the Welsh water authority and that the size of the authority should be reduced to about 10 members, including the chairman and land drainage and fisheries members, all to be appointed by the Secretary of State. I set out three options for alternative and more effective representation of consumer interests.
  Taking account of the responses to that document and especially the points put to me at a meeting I had with the local authority organisations involved in October, I concluded that the new authority should be increased in size to 13 members including the chairman and land drainage and fisheries members with four members being appointed by me to represent the interests of county and district councils. The remaining six members would provide the widest possible management and business expertise. I decided also that the consumer interest should be catered for by five local consumer advisory committees approximating to the various Welsh water authority divisions or combinations of them, but with their boundaries coinciding with the district council boundaries.
  As I told the House on 30 November, the six general members will provide the widest possible expertise,

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  including expertise in management, finance, business—including agriculture—industrial relations and personnel matters. After listening to the local authorities, I was convinced that their interest should be directly represented, and that by having four members there was scope for adequately covering both county and district interests and the geographical interests of the whole area covered by the Welsh water authority, including the English districts. I emphasise that I will be consulting the appropriate local government associations before making these appointments and that I fully recognise that the interest of the English authorities has to be taken into account.
  In my statement, I said that the chief executive would normally attend meetings of the board. Under existing legislation, he cannot serve as a board member and no payment can be made to the board other than to the chairman and to the member who is the chairman of the land drainage committee.
  Some have seen that as a halfway house and have argued that if we want to move we should go the whole way to a fully paid board meeting in private. That may well be sensible in the longer term, but it would require primary legislation and, in the meantime, I think it right to move as swiftly as possible to a streamlined and more effective organisation that does not require a large number of headquarters committees—many of them consisting of about 25 people and costing in total, quite unnecessarily, about £130,000 a year to run.
  I believe that the need for an improved organisation is urgent and that is why I felt right to lay the order on 1 December despite the fact that the Select Committee on Welsh Affairs had decided to include consideration of my proposals within the terms of reference of its current investigation of water in Wales. I have already explained that I want the new constitution to take effect in readiness for the appointment of a new chairman when the present chairman of the authority retires at the end of May. The two months between 1 April, when the new constitution is to become operative, and 1 June will provide an opportunity for the existing chairman, who knows the authority well and who has done very valuable public service since he succeeded Lord Brecon, to hand over to the new chairman and assist in smoothing the passage of the new arrangements.
  Having come to those conclusions, and having completed the consultative process, it would have been extraordinary and wrong to have kept my decision from the Select Committee. Having a clear view of what I was to do, it would have been a gross discourtesy not to have told the Committee what that view was at the earliest possible opportunity. That was another factor that I took into account.
  Mr. Ioan Evans: I ask the Secretary of State to recall the occasion when the Select Committee decided to investigate the fourth channel for Wales. He will remember that within a week the Government changed their policy. They said that there was not to be a fourth channel. As the right hon. Gentleman had issued a consultative document, the Select Committee decided to consider the reorganisation of the Welsh water authority. It has asked various organisations to submit evidence to it. At the same time, the right hon. Gentleman has acted in haste and brought forward the proposals that are now before us. If this reorganisation is being introduced
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  because the chairmanship is ending in May, why cannot the right hon. Gentleman extend the chairmanship for 12 months and enable proper consultation to take place?
  Mr. Edwards: We are not discussing the Welsh fourth channel today. I published the consultative document in July and I made clear my intentions and the timetable for the consultation. It was not until 28 October that the Select Committee decided that it would include this issue as a subject for investigation. Once the Government have announced a proposal, have entered a consultative process for which they have set a time limit, and when they believe that the proposals are urgent and important, affecting as in this instance many people in Wales, surely they should not be obliged to delay the proposals for an indefinite and indeterminate period because subsequently the Select Committee says that it would like to examine the proposals and take evidence.
  If the Select Committee has some suggestions to make on behalf of consumers, I shall welcome them because we are in the middle of a consultative process, but it has always been the system and the convention—this must be right—that the Government, having decided on their programme and priorities, must be free to seek the approval of the House and not necessarily delay until a Select Committee has investigated, especially if they believe that the priorities are urgent.
  Mr. Tom Hooson: Will my right hon. Friend confirm that a Select Committee has no executive responsibilities and that the process of government cannot always wait for opinions to be expressed by a Select Committee?
  Mr. Edwards: I agree. I have executive responsibilities, and if I believe that urgent action is needed to improve arrangements it is my responsibility to present proposals to the House at the earliest possible moment., and that is what I have done.
  I come to the arrangements for ensuring that consumers in the area of the authority are given full opportunity to express their views about the services and charges of the authority in an effective manner. These arrangements do not form part of the constitution order, because I am advised that the powers of section 3(10) of the Water Act 1973 do not extend to enable me to provide constitutionally for consumer advisory committees.
  The position is that the water authority has power under section 68 of the 1973 Act to appoint committees to advise on any matter relating to the discharge of its functions, and after taking account of the views that have been expressed to me I have decided that the most effective way in which consumers' rights may be heard effectively is to establish five local consumer advisory committees based on local authority districts approximating to the areas covered by the Welsh water authority divisions.
  I have decided that it should not be necessary to establish as many as seven divisions, having regard to the fact that the three Glamorgaris make up a concise area and that the boundary between the Wye and Usk divisions cannot be reconciled with local authority boundaries. I have decided to establish a single committee for Glamorgan and another single committee for Wye and Usk. The other three committees would cover the Dee and Clwyd, Gwynedd and the West Wales divisions.
  I am preparing draft guidelines to the Welsh water authority relating to the constitution, functions and

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  operation of the five committees and I am consulting about these guidelines. I have written to Welsh Members and those English Members with a direct interest, explaining that because I am engaged in that consultation process I can make available at present only the basic framework for the guidelines. A copy of that letter is in the Library.
  Among the principal points that I make in it are these. First, I would welcome comments on the draft guidelines from hon. Members and, as I have said to the hon. Member for Aberdare (Mr. Evans), from the Select Committee on Welsh Affairs, and I shall take their comments into account. [Interruption.] Yes, I shall even take the comments of the hon. Member for Merthyr Tydfil (Mr. Rowlands) into account if he cares to make them in a more constructive and helpful fashion than sitting in his usual noisy, ill-mannered way, mouthing imprecations from the Opposition Benches. If he wants to say anything, I shall give way to him.
  Mr. Edward Rowlands: The whole of this order is irrelevant nonsense given the fact that the vast majority of the people of Wales are interested in Welsh water charges. When will the right hon. Gentleman come to the issue of Welsh water charges?
  Mr. Edwards: If the hon. Gentleman believes that the efficient organisation and management of an industry has no relevance to charges, it is hardly any surprise—
  Mr. Rowlands: Marginal.
  Mr. Edwards: —that the Government of which he was a member proved such a disaster.
  Mr. Rowlands: No, it is marginal.
  Mr. Edwards: I return—
  Mr. Rowlands rose—
  Mr. Edwards: I think that we have heard enough from the hon. Member. Clearly he does not have much to say.
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. Perhaps I might help. The order has nothing to do with charges.
  Mr. Edwards: Far be it from me to argue with you, Mr. Deputy Speaker.
  I went on in the letter to make it clear that every district or county local authority would be represented on the consultative bodies. It is desirable that the committees should not be too large, but the numbers will be dictated by the number of local authority representatives, to which I have referred, and the need for consumer, agricultural, industrial, commercial and amenity interests to be represented.
  The numbers represented on community health councils vary between 16 and 32, with the majority between 18 and 25. I see no difficulty in following a similar pattern for the consumer advisory committees, which would mean having a majority of local authority representatives in some cases.
  Another point that I bring out in my letter is that the guidelines will make provision for the appointment of members and the election of chairmen, together with the essential practical arrangements such as travel and subsistence allowance and the provisions of secretarial support.
  In these guidelines, clear advice will be given on the arrangements for access to the water authority and for
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  liaison between the chairmen of committees and the authority, including the frequency and timing of their meetings. It would seem right for the five chairmen of the committees to meet together with the Welsh water authority, say, twice a year, or as frequently as they may think appropriate. There could also be provision for the five chairmen to meet together and for them to meet the chairman of the Welsh water authority, if that were thought desirable. These, again, are all points about which I shall welcome comments during the consultation process.
  In laying the order, which deals only with the board appointments, I am not seeking to criticise the existing members. On the contrary, I should like to take this opportunity to thank the chairman, Mr. Haydn Rees, and all his colleagues for the immense amount of work that they have done. That should be on the record.
  Mr. Rowlands: Sheer pomposity.
  Mr. Edwards: At the moment when I thank the chairman and the members for their hard work and their contribution to running the authority, the hon. Member for Merthyr Tydfil shouts "Sheer pomposity". I hope that the chairman and the members will note that the only constructive contribution that the hon. Member has made to the debate is to deride the people who have given so much by way of public service to the authority in Wales.
  When the Welsh water authority was set up in 1974 it took over functions which for many years had been exercised by local authorities. It is understandable that the decision was taken to draw on the experience of local authority members and that the new management arrangements, particularly the committee structure, should have been based on the conventional local authority practice. As time has passed, this structure has increasingly come to be a handicap rather than a help. It is that handicap that the order seeks to remove, and I commend it to the House.
  10.7 pm
  Mr. Alec Jones: The first question that the House ought to consider is whether there is any case for reorganisation. The second question is whether this is the right sort of reorganisation.
  Paragraph 8 of the consultative document stated that it was the Secretary of State's view that there was a strong case for reorganisation, but neither in his consultative document nor in his speech this evening has he made out a case, let alone a strong case.
  Mr. Rowlands: Pomposity.
  Mr. Jones: The Secretary of State makes a series of assertions about the weaknesses—or apparent weaknesses, in his eyes—of the present structure. He talks in the consultative document of management having difficulty about exercising tight financial control. There is no mention of that tonight. He does not talk about the present structure not enabling local government to play an effective part, yet he now proposes that local government should play a less effective part.
  In the consultative document the right hon. Gentleman referred to the present structure as inhibiting quick decision-making and blurring the responsibility of officials and board members. It is no good his making those assertions unless they are backed up by facts, and those

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  facts have been singularly lacking, not only in the consultative document but in the right hon. Gentleman's speech tonight.
  There may be some evidence of the need for reorganisation, but so far the Secretary of State has completely failed to produce it to the House. He mentioned some matters concerning the Severn-Trent water authority and added "I think they apply as much to the Welsh water authority as to Severn-Trent". Everything he said tonight started with the word "I". It was all "I", "I", "I". The right hon. Gentleman might be God's gift to the Conservative Party, but he is certainly not God's gift to the people of Wales.
  I refer the right hon. Gentleman to the speeches made by him and by his hon. Friends smiling so smugly behind him. When the Welsh Grand Committee discussed the matter, the hon. Member for Anglesey (Mr. Best) said:
  "I think that the Welsh Water Authority is, in general, doing a very good job."
  Yet today he will vote to reorganise it. The hon. Member for Brecon and Radnor (Mr. Hooson) said:
  "There is no question but that the authority is doing a great deal of worthwhile work".
  Mr. Hooson: Is the right hon. Gentleman maintaining that because people say that an authority is working on the whole in a reasonable way it is impossible to improve its workings?
  Mr. Jones: Not at all, but the Secretary of State has given not one reason for reorganisation except his determination to weaken local authority representation.
  Mr. Keith Best: The right hon. Gentleman should read the rest of my speech.
  Mr. Jones: The hon. Gentleman need not worry. I shall come back to him later. There are more beautiful quotations to come.
  In the same debate, the Secretary of State said of the Welsh water authority:
  "In short, it has completed an immense job of reorganisation and rationalisation and is now in a position to exploit to the full the advantages of the water reorganisation which the previous Conservative Government promoted in 1973."—[Official Report, Welsh Grand Committee, 18 July 1979, c. 13–23.]
  If the 1973 Act was so wonderful, why do we now need this reorganisation without any explanation?
  Not only is the case not made out. The Secretary of State is bulldozing his proposals through the House not with almost indecent haste but with genuinely indecent haste. The consultative period lasted 46 days, including the whole month of August when anyone in his right senses knows that most organisations are involved in holidays.
  Mr. Ioan Evans: That applies especially to local authorities which, as is generally known, do not meet in August. The document was sent out on 28 July. Originally, replies had to be back by 11 September. Most local authorities in Wales would not have met during that time.
  Mr. Jones: My hon. Friend emphasises my point. When this was raised in the House the Secretary of State said that the period had been extended for a large number of organisations and that late representations were taken into account, but organisations intimately concerned with the water authority in Wales were rushed into making their observations by 11 September and did not even know that late observations would be taken into account.
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  When the Secretary of State made his statement to the House on 30 November, he said:
  "There will be a further opportunity for consideration before we debate the proposals."—[Official Report, 30 November 1981; Vol. 13, c. 32.]
  Yet less than two weeks later we are asked to approve, without amendment, this major reorganisation of the water authority in Wales.
  When I asked the Secretary of State on that occasion about the guidelines, he said that for the help and guidance of the House he would seek to publish the guidelines regarding the membership and function of the local consumer advisory committees.
  It is not reasonable that hon. Members should have received notes on the guidelines today when the matter is being debated this evening. The Government are considering reorganisation of other water authorities, but I see no reason why we should rush into the reorganisation of the water authority in Wales when everyone knows that the fundamental principle of the 1973 Act was that the water industry was a United Kingdom industry and the two matters should therefore be intimately linked.
  Be that as it may, the major change proposed by the right hon. Gentleman is a considerable reduction in local authority representation on the water authority. If the Secretary of State's original views had prevailed, that representation would have been eliminated. Instead of that, the order cuts their membership from 20 to four. On that basis, I suppose that it is slightly better than the original proposals, but those proposals regarding local authority representation were completely inadequate and do not meet the traditional and necessary involvement in the administration of water services that local authorities ought to have.
  I agree with the Under-Secretary of State, who in the Welsh Grand Committee debate said that local authority members on the Welsh authority should have a knowledge and experience gained on either the water authority or the council likely to be of benefit to the other.
  The hon. Member for Anglesey advocated that all district councils should have representation on the water authority. The Under-Secretary referred to
  "membership of the authority—
  not of any sub-committee—
  "and the participation of local authority members".
  He urged his hon. Friend the Member for Anglesey
  "to consider their value as being indirectly elected people on the authority, and also the fact that they are familiar, as councillors, with local problems."—[Official Report, Welsh Grand Committee, 18 July 1979; c. 35.]
  If local councils had that importance when this matter was discussed in the Welsh Grand Committee, they have that importance today.
  The 1973 Act, which the Secretary of State extolled, specifically required certain criteria for membership of that committee. Members were required to have experience of fisheries, land drainage and agriculture. The order reserves the position on fisheries and land drainage but makes no mention of agriculture.
  The Secretary of State's statement used the word "business" and added in brackets "including agriculture" as one of the qualifications necessary for membership, but there is no reference to agriculture in the order. Will agriculture have any sort of reserve position in the water authority? If not, why not? If it will, why on earth do the Government not say so? Now that we have a change in

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  local authority representation, there is a significant shift towards centralisation at the expense of any form of local democracy.
  Whatever our differences over the size of the water authority and the specialised interests that ought to be represented on it, I cannot believe that anyone can justify the proposal that every appointment shall be solely at the disposal of the Secretary of State for Wales.
  I shall quote the hon. Member for Anglesey again so that he will have good value for money.
  Mr. Rowlands: Ask him to intervene.
  Mr. Jones: He said—
  Mr. Best: That is very naughty.
  Mr. Jones: I know that it is naughty. The trouble is that your words are taken down and used in evidence against you—
  Mr. Deputy Speaker: Order.
  Mr. Jones: I apologise, Mr. Deputy Speaker. The hon. Member for Anglesey said that the Welsh water authority was a quango which did not have the degree of direct accountability which people want to see. The order will make the water authority the biggest quango of all time. Why not reserve specific places on the water authority for a range of people? Why not reserve places for the CBI and the Welsh TUC? Why not allow, above all, the local authority associations to nominate their members? If necessary, the Secretary of State could select his chosen four from, say, eight that the associations would nominate. This was the pattern laid down in the Land Authority for Wales which has worked, so far as I am aware, extremely well. This would make some move towards the restoration of a degree of accountability.
  When the Secretary of State was in opposition he gave the impression on numerous occasions that he was opposed 'to the idea of quangos whose appointment should be at the discretion of the Secretary of State. Now, in government, he is the strongest supporter of a quango and making it even tougher than before.
  Consumer interests are the major issue in relation to the order. We are asked to pass the order without seeing the guidelines relating to local consumer bodies. All we have heard is the Secretary of State's thinking on the matter. I accept that individual complaints or complaints affecting one or two Welsh water authority divisions can be dealt with by the proposed five local consumer advisory committees that the Secretary of State proposes.
  I would like the Secretary of State to show some evidence that he will save £130,000 as a consequence. The right hon. Gentleman is to set up five new consumer organisations. He is to give them secretarial assistance, which is right, but he believes that he will save £130,000. Irrespective of that argument, I believe that there are, and will be, consumer problems that affect all water consumers in the area of the Welsh water authority. There will not simply be localised problems. The major problem will be the pricing policy. I do not believe that local committees, five in number, will adequately express the view of consumers in Wales and those parts of England covered by the authority in relation to pricing. This is an issue that affects all consumers throughout the area covered by the water authority.
  Mr. Rowlands: Apart from pricing policy the issue of direct billing will also arise. The method of collection is increasingly the issue that will affect consumers. It is vital to the whole argument on water charges.
  Mr. Jones: I agree with my hon. Friend. I used pricing policy as my first example. My second is direct billing. I know from experience in my own constituency and from what I have heard in many parts of Wales that this has become a major issue with consumers. There are also sewerage charges and recreational problems that are not purely localised.
  There is clear need for a strong consumer council able to play an effective role on these major issues that affect not simply small localities—for instance, Mid-Glamorgan or Glamorgan—but the whole of the water industry in Wales. It should be formally recognised that representatives of local consumer advisory councils can be indentified as a water consumer council with the duty—not the option or choice—to raise with the chairman and the water authority those consumer problems which are matters greater than those of local concern.
  The hon. Member for Anglesey has moved further to the back of the Chamber where he is probably scanning as quickly as possible what he said in the speech to which I have referred. I can tell him that what he said is what I read out. In that debate the Secretary of State said that there was no question but that water charges were an issue of major current importance in Wales.
  If that was true in 1979, it is even more true today. In 1979 at least the non-meter domestic consumer had the benefit of the Water Charges Equalisation Act which was passed when we were in government. Between 1975–76 and 1978–79 the average domestic water bill in Wales rose by 35·6 per cent. In the same period the average domestic water bill in England rose by 54·7 per cent. That shows that the Bill was having the effect of narrowing the gap. We had difficulty in passing that Bill because of the Conservatives' opposition to it.
  Sir Anthony Meyer: Will the right hon. Gentleman give way?
  Mr. Jones: When I have finished this argument the hon. Member for Flint, West (Sir A. Meyer) can read to me something given to him by the Minister's PPS because he cannot read it out himself.
  In 1979 the hon. Member for Conway (Mr. Roberts) said:
  "in principle we recognise that a system of equalisation is the right way to achieve a balance between water authorities, and the Government will be giving their consideration to the best way in which this can continue to be achieved."—[Official Report, Welsh Grand Committee, 18 July 1981, c. 23.]
  When the hon. Member for Conway said that, I thought that he had been to Damascus. I thought that he had seen the light. We have had no recognition from the Government since then. The principle of equalisation which the hon. Member for Conway thought so essential in 1979 is of no consequence now that 1981 is here.
  Sir Anthony Meyer: The right hon. Gentleman knows of the high esteem in which I hold him, and always have. He will therefore be aware of the feeling of disappointment and dismay with which I heard him attack my hon. Friend the Member for Anglesey (Mr. Best). The right hon. Gentleman knows, because he has had experience of a PPS sitting behind him, that my hon. Friend, whose

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  championship of his constituents is the envy of us all, cannot possibly reply. I have checked what my hon. Friend said in those debates. I am satisfied that the right hon. Gentleman has grossly misrepresented what my hon. Friend said. I am sure that with his reputation he would not wish to mislead the House. I am sure that the right hon. Gentleman will wish to withdraw his misleading allegations.
  Mr. Jones: If the hon. Member for Flint, West can say that I have misquoted what the hon. Member for Anglesey said, I should be willing to withdraw my remarks, but I read from Hansard. I believe that in general the Welsh water authority is doing a good job. The hon. Member for Anglesey advocated that all district councils should be represented. The hon. Member for Conway had to deal with the problem. In dealing with it the hon. Gentleman said how important it was that the expertise of local councillors should be used, and was being used, for the
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  benefit of the water authority in Wales. That is why I am surprised that the hon. Member for Anglesey, who was such a great advocate of the principle of equalisation, should be willing to rush to the Lobbies to get the order through.
  In 1979 the Conservatives were keen on equalisation. I remind the House that the annual report of the Welsh water authority for the year ending March 1981 states:
  "The termination by the Government of payment of our £3 million a year under the Water Charges Equalisation Act and the absence of any long-term substitute for it adds 5 per cent. to the water service charges of our domestic customers."
  If the order attempted to tackle the major problem of the charges and the unfair burden that we bear in Wales it would be of greater significance and value. However, it does not. Nor have the Government made out a case for the order. They will use it to move towards more centralised control of water and ignore local democracy, so I ask my hon. Friends to vote against it.
  10.30 pm
  Mr. Tom Hooson: We have heard much ado about very little. One might have expected the right hon. Member for Rhondda (Mr. Jones) to study the facts on which my right hon. Friend has brought the proposal forward.
  The Monopolies and Mergers Commission undertook an extensive study of the Severn-Trent authority and reached a conclusion which last week in the Welsh Select Committee we heard commended by the chairman of the National Water Council for its excellence. The only dissent from that distinguished spokesman of the water industry was in challenging whether there was a case for local authority representation.
  We also know of the experience of Mr. Haydn Rees, to whom a tribute is due for his excellent service on the authority. I am sorry that my right hon. Friend's tribute to him should have been cheapened by seated interjections from the Labour Benches. Mr. Rees has a distinguished record in Welsh local government. With his knowledge of the Welsh water authority and local government, it is particularly impressive that he commends the proposal.
  The Minister has circulated a document which gives considerably more information on the situation than is acknowledged by the right hon. Gentleman. For all those reasons, I am astonished by the sheer ignorance of his attack on my right hon. Friend.
  The right hon. Gentleman also seemed to believe that direct billing should be attacked. Is he aware that the Welsh water authority makes a clear saving of over £1 million by direct billing instead of making payments to the local authorities?
  Mr. Alec Jones: I did not attack direct billing. I merely said that it was of concern not only to small local groups of consumers but across the whole range.
  Mr. Hooson: I accept the right hon. Gentleman's explanation.
  It is clear that there is considerable resentment at the sheer cost of water bills. A responsible Government should take every possible step to achieve greater efficiency. We hear of savings in the administration of the authority, but a much more difficult benefit to measure is that which comes from getting people of managerial quality to serve on the authority.
  That is basic to the concept of this slimmed-down authority. There is no question in my mind but that the people of Wales and the areas touching on Wales that are served by the Welsh water authority are more interested in securing efficiency in the operation of the authority than they are in whether they are theoretically represented by people who are virtually unknown to them and of whose names and identities they are probably unaware.
  Inefficiency invariably starts at the top in any large organisation, and the best way to start slimming down the Welsh water authority is at the director level of the members of the authority. To bring the number down from three dozen to a little over a dozen is a sensible step, which, in the words of the chairman,
  "will lead to much more incisive discussion in the authority".
  It is astonishing that such an obvious improvement in efficiency is opposed by the Opposition.
  Mr. D. E. Thomas: Would the hon. Gentleman apply the same principle to the House?
  Mr. Hooson: I have often thought that there would be a considerable gain in quality in the House if the number of Members was halved. I find that a highly seductive subject to pursue. However, it is not the subject that we are debating tonight.
  Whatever one assumes on the absolute value of the local government representatives, the question then arises "Are they cut off from giving helpful advice to the authority?" The answer is that they are not. They are organised in five groups that include representatives of every district and county. For that reason, I am astonished that such an obvious step in improving efficiency should be opposed with a great deal of sound and fury, but very little sense.
  10.37 pm
  Mr. Ioan Evans: My right hon. Friend the Member for Rhondda (Mr. Jones) has demolished the argument put forward by the Government. When I tried earlier to illicit from the Minister an explanation of why the Government were reorganising the water authority in Wales, he said that it was because the chairman was to retire in May. Not only is the content of the order deplorable but its presentation is bad. The way in which the Secretary of State is treating the Select Committee on Welsh Affairs—a Select Committee of the House of Commons—is also deplorable.
  My right hon. Friend referred to the fact that a consultative document was sent out to local authorities on 28 July and they were asked to respond by 11 September. Local authorities meet often every month, but they do not meet in August. The Secretary of State had the political impertinence to ask them to return their representations by 11 September. He extended the deadline later because he realised the stupidity of his action. What did the local authorities tell the Secretary of State? We should know their comments before this order is placed on the statute book.
  I am surprised at some of the Conservative Members who served on the Select Committee. They have a Jekyll and Hyde attitude to politics in the House. Upstairs they seek to represent the people of Wales, but downstairs they are like puppets behind the Minister. On every occasion they fall in line with what the Minister says.
  It was one of those who felt that perhaps we should not look at the water industry because the Secretary of State might be on the verge of taking a decision. But so informed are Conservative hon. Members in Wales that they have not a clue about what the Secretary of State will do next. They agreed to set up an inquiry into the reorganisation of the water industry and, of course, they are in the majority on the Select Committee, so we set about looking into the reorganisation.
  Once the news got out that the Select Committee was to embark on that task, it received a flood of information. Every local authority in Wales wrote telling the Committee how bad it thought the consultative document was. But I want to be fair to the Secretary of State. One local authority said that he had at least made provision for four representatives, making the local authorities better off than they were. But they still—the Welsh counties, the Council for the Principality, the Association of District Councils and a wide range of organisations—deplore the action taken by the Secretary of State.
  Sir Anthony Meyer: It would not be appropriate to enter into the discussions that preceded the decision of the

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  Select Committee to embark on this inquiry, especially in view of the absence of the former Chairman of the Committee, but it is only natural, when an inquiry such as this is announced, that every local authority will write clamouring that it has been done out of its rights. The hon. Member for Aberdare (Mr. Evans) is carrying out his duty of representing the views of the local authorities, but do not let him pretend that he is giving a balanced view. He is merely echoing the views of one group of interests.
  Mr. Evans: I was referring to the local authorities in Wales, and only to those local authorities. The way that the Government dismiss local democracy—
  Mr. D. E. Thomas: An interest group.
  Mr. Evans: These are the democratically elected representatives of the districts and counties in the whole of Wales. I shall be happy to give way to the hon. Member for Flint, West (Sir A. Meyer) again if he can say what organisation has written to the Select Committee praising the Secretary of State. Can the hon. Gentleman name one body?
  Mr. Hooson rose—
  Mr. Evans: No. The hon. Gentleman has made his speech. I am prepared to give way to the hon. Member for Flint, West.
  Sir Anthony Meyer: The National Water Council is all in favour.
  Mr. Evans: I must concede that the hon. Gentleman has named one organisation which supports the Secretary of State out of 40 which have written to the Committee.
  This debate is about the creation of a quango. In fact, it is an aqua-quango. But it is a quango with a difference. It is a quango with a quirk, and the quirk is that the Government cannot reorganise the regional water authorities in England unless we have legislation. It is a quirk—it is almost queer—that the Secretary of State is able to do this by means of a statutory instrument, because some time ago we were talking about the reorganisation of government in Wales and certain powers were taken by the Welsh Office to deal with the Welsh water authority. The Secretary of State has seized upon that device, and he is bringing about the reorganisation of the water industry in Wales.
  When things get bad and Tory Governments find that their policies are not working, they turn to reorganisation. The previous Tory Government reorganised local government and the NHS, and they made a botch of both. The present Government have introduced a Bill to deal with local government. They are having another go at making a mess of it, but they have already had to withdraw the Bill before it has had a Second Reading.
  The previous Tory Government also reorganised the water industry in 1973 and made a mess of the job. Why are the present Government acting so hastily, when English water authorities are not being dealt with in the same way?
  The Select Committee is taking evidence and examining the question of reorganisation, but as soon as the Committee decided to consider the matter the Secretary of State prejudged the issue and decided to go ahead with his reorganisation. Why is Wales being treated differently from the rest of the United Kingdom? Why are
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  we being treated as a guinea pig while the Government experiment to see whether they can hit on a method that can be adopted for the rest of the United Kingdom?
  It is proposed that the new authority should have 13 members—all appointed by the Secretary of State. Even the two representatives of the 37 districts and the two for the eight counties will not be elected by those councils. There is to be a substantial reduction in the number of members from local authorities.
  I do not say that the authority is perfect or that we cannot make changes, but we must ensure that we do not get the sort of reorganisation of the water industry that we got in 1973. The present authority has 10 representatives of county councils and 10 members from district councils, with the other 14 members and the chairman being appointed by the Secretary of State. It has 15 members appointed by the Secretary of State, but 20 from local authorities. That is better than having the authority under the control of the Secretary of State.
  When we consider the future of the industry, why do we not introduce an element of industrial democracy, as the Labour Government did in some industries, so that the workers have an opportunity to be represented on the new authority?
  There has been inadequate consultation. Conservative Members accuse me of referring constantly to local authorities, but they are not the only bodies that feel aggrieved. The Wales TUC says that it
  "has been unable to properly consult with its affiliated membership and we would argue that the issuing of such a document with an extremely limited consultation period effectively undermines the consultative process and causes us to doubt whether the Government is truly interested in receiving the considered views of those within the principality."
  What an indictment from the trade union movement in Wales! The local authorities would have difficulty in assembling their opinions between the end of July and early September. The trade union movement would also have difficulty in ensuring that all its various affiliated organisations had a "feed-in" to a consultative document during August and be in a position to present its considered views on what the Government were doing by the beginning of September.
  I return to the local authorities. The Association of District Councils—the 37 councils in Wales—said:
  "The association is opposed to the order, which very substantially reduces local authority representation on the Welsh Water Authority."
  It has issued a memorandum, which the Select Committee will discuss, although the die will be cast on the Floor of the House if the Government proceed with the order and put it on the statute book. As my right hon. Friend the Member for Rhondda said, we shall vote against it. But let us give the Government the opportunity to withdraw it. Let them take it back and not commit the folly of presenting it to the House for it to turn down. I hope that Conservative Members will not troop into the Lobby for the Ayes and vote for the order when no case had been made out for it.
  The Secretary of State is empowered to act to alter the membership of the Welsh water authority by order. That applies only to the Welsh authority. English water authorities' membership can be altered only by legislation. This is a quirk of legislation. There is no factor that makes Wales unique. The Association of District Councils

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  believes that the proper course is to proceed on an England-Wales basis as the membership issue is equally applicable in England. Instead, the Secretary of State has chosen to proceed unilaterally and in haste.
  We talk about unilateral action, and sometimes Conservative Members condemn it, but on this occasion their Government are taking it. The Secretary of State is saying "We are going to do this". The Minister for Local Government and Environmental Services has received a report from the Monopolies and Mergers Commission on the Severn-Trent authority, which contains certain criticisms of the authority. The right hon. Gentleman's reaction is to say "We shall not rush into taking precipitate action. We must have a consultative process. Discussions will take place throughout England to find the best remedy." But for Wales the Secretary of State intends to go his own way. When the consultative process has come to an end in England, we may find that it is wished to increase local representation.
  We must await the findings of the Select Committee. There is no urgency, save for tackling the problem of water charges. Ministers talk about administration, but they know that they will not deal with the serious problem in Wales, which is equalisation. The Labour Government introduced that concept, and this Government have abandoned it. They have imposed a water bill on the Welsh people that is much higher than they have had before. The Government propose to move the chairs around in the belief that they are making a radical change.
  We should not take a decision until the Select Committee has deliberated. The Department of the Environment, which is responsible for local government in England, is issuing a consultative paper and we should know what that contains before we go ahead.
  What do the Welsh counties have to say? Sometimes the districts go one way and the counties go another. That is not so on this occasion. There is unanimity among the districts and the counties. The counties have been "utterly dismayed" by what the Tory Government are doing. Local authority associations in Wales have expressed their unanimous opposition to the Government's proposals. One does not always get unanimity among local authorities, but—almost in the words of St. Francis of Assisi—the Government have united the people of Wales against the order. We did not have from the Secretary of State a mention of what the local authorities are saying.
  Mr. Hooson: The hon. Gentleman speaks about the unanimity of the people of Wales. Would he care to add that, apart from the local authorities, the majority of representations to the Secretary of State have been in favour of these proposals?
  Mr. Evans: That is not my reading of a flood of correspondence. I challenge the hon. Member to name any responsible organisation in Wales that has given evidence that supports the Secretary of State. Why did the Secretary of State not mention it if there is such tremendous support for these measures? There is unanimity on the part of the local authorities.
  The Welsh counties committee summarises matters thus:
  "The Government's proposal represents a retrograde step of considerable significance to local government. It is an erosion of local democracy and accountability, and the creation of a
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  nominated body along the lines proposed is deeply resented. There is no evidence that the consumer interest will be better served under the new proposal."
  We were issued with a document containing guidelines for consumer representation. We knew that the debate was to take place today. The document was sent out by the Welsh Office on Friday. The Secretary of State undertook to send us the information. It is only today that we have received it. It is dated 11 December. It is now 14 December. There has been no consultation, although the document talks about consultation.
  The Welsh counties committee does not say that the present arrangements are perfect. It welcomes the opportunity to participate in an examination. Some of the people who have served on these bodies have had long links with them. One can argue whether there should be quangos. I believe that there is a place for the quasi-autonomous non-governmental organisation in our governmental structure. The weakness arises when these nominated bodies are nominated entirely by the Secretary of State. Bodies to which local authorities nominate members represent a democratic expression.
  The Welsh counties committee was strongly opposed to the chief executive becoming a board member, because that goes against the whole basis of local government and the way in which matters are handled, yet the Government are to give the chief executive a place on the board. The committee is dismayed that the Government are pressing ahead with their proposals, which are closely in line with those in the consultative document. That has been put to the people of Wales. There may not have been an initial reaction to that document, because people did not have time to consider it, but the more that they consider it, the more they dislike it.
  The Secretary of State is in a peculiar position, because other Ministers can claim that they represent the people. We had a general election and the people elected a Conservative Government, but the people of Wales did not elect a Conservative Government. The people of Wales would never have elected the Secretary of State. Therefore, before he takes action he should realise that the majority of hon. Members in Wales are not of his party. He has put himself in the position of determining who is to serve on the new body.
  We must seek a more democratic form of accountability in determining who serves on the various bodies in Wales. It could be done by bringing district councillors, county councillors and Members of Parliament together in Wales and determining the matter together, rather than having merely people who are appointed by the Secretary of State.
  The Secretary of State has made no case for bringing the order before the House, and I shall vote against it this evening. The Government may win the vote tonight, but they will not win the argument. The argument will not end here tonight. Local government representatives of all political persuasions in Wales will oppose the order, and the time will soon come when we shall reverse what the Government are doing this evening.
  11 pm
  Mr. Colin Shepherd: I feel something of an interloper on a peculiarly Welsh occasion, but the subject of hydrographics knows no boundaries. My constituency—and, indeed, most of Herefordshire and much of Cheshire—falls within the area covered by the Welsh water authority, and tonight's proceedings are very important to the citizens in my part of the country.

  121
  I am very grateful for the presence this evening of my hon. Friend the Member fo Pudsey (Mr. Shaw), the Under-Secretary of State for the Environment who has responsibility for English water affairs. It is important that English water should be looked after. In Hereford we fall within the aegis of the Department of the Environment for most things except water, although we fall under it partially for water.
  The question of the structure of the water industry has been occupying the minds of hon. Members during the debate. The hon. Member for Aberdare (Mr. Evans) has been waxing lyrical about the status quo. I do not think that his eloquence and ecstasy will be matched by my constituents when they get their water rate demands. My mail is seasonally burdened by water rate correspondence, and there are expressions of anguish from all over my constituency at the steady increase in the demands.
  I look upon the reorganisation of the Welsh water authority as an attempt to come to terms with the type of structure that is necessary to provide a more economical and efficient service. To a large extent, it will have to be judged by result and not by prejudice.
  Dr. Roger Thomas: I remind the hon. Member that Herefordshire may not have the water falling on the county, even though it has to pay the bills.
  Mr. Shepherd: If the hon. Gentleman can find some other way of storing the water we shall not charge him for transporting it to the sea.
  It is absolutely right that we should look upon water as an industry and not as a service. It provides a basic utility, in the same way as the coal industry, the electricity industry and the steel industry. That is how we should look at water, and that should be our objective in considering how best to organise the water industry.
  Hitherto in Herefordshire we have had some very good representatives on the water authority, and I should like to pay tribute briefly to their work. They have not necessarily been in political agreement with me, but we have together produced some good results from time to time for our constituents. We have not perpetually had good results. Nevertheless, we have in the tradition of Herefordians stood our corner over the generations and often done quite well.
  I have one small complaint to make to my right hon. Friend concerning the manner in which the statement was made to the House on 30 November. He very kindly arranged for English Members with interests to be sent a letter saying that there was to be a statement. It was date-timed 2.15 pm for a statement at 3.30. It is not normally my practice to participate in Welsh questions, because that is a peculiarly Welsh affair, and, although I live only a mile outside Wales, I do not interfere too much in Welsh affairs or in Welsh questions. At that time, I had an important, long-standing constituency engagement which I would have had a chance of rescheduling if I had known the previous week that a statement was likely. I make that complaint, as it is somewhat galling to arrive at 4.15 to find a statement just winding up.
  I wish to make some basic points about the way in which I must consider the cost of water and the way in which water is organised in Hereford. First, the average domestic rateable value is disproportionately higher in Herefordshire that that in Welsh districts. Consequently, average water charges are at least one-third higher. We pay more for water in relation to equivalent property.
  122
  The rate support grant domestic element for England is 18p in the pound, compared with 36p in Wales. When the difference was made by the former right hon. Member for Grimsby, the late Mr. Anthony Crosland, it was said that there was an element of rough justice in it. In Herefordshire, we felt that it was very rough justice. It was designed at that time to reflect the differences in the cost of providing water, and we do not benefit. It has been denied ever since, but that was said in the House. it is very difficult to get the point across.
  In Herefordshire, there is a marked absence of the various industrial grants available in many parts of Wales.
  Finally, every bit of trade effluent in Herefordshire must be treated in the sewage works. Most trade effluents in Wales go to sea outlets, producing a marked difference in industrial costs related to the cost of handling industrial trade effluents.
  Those four points make Herefordshire very different from the West of England. I therefore ask my right hon. Friend to bear those points in mind when considering the structure of the board. I wonder, first, why he reserves the right to appoint the local authority members concerned. [HON. MEMBERS: "Hear, hear."] I am somewhat disappointed to hear cries of "Hear, hear" from the Opposition, but it is a fair question. Will there be a specifically English presence on the board to reflect the difference in requirements of England compared with Wales?
  The draft order states in article 3(2):
  "In appointing the members of the Welsh authority the Secretary of State shall have regard to the desirability of members of the authority being familiar with the requirements and circumstances of the authority's area."
  The very big difference between England and Wales makes it important that there should be an English presence on the board.
  In his consultations concerning appointments, will the Secretary of State reiterate loudly his assurance that English-based organisations and authorities will be consulted when local authority representatives for the board are being sought? It is also important that he take steps to ensure that, local authority members having been appointed to the board, the ordinary consumer may with the greatest possible ease and the minimum possible inquiry find out who is his representative on the authority? The Association of District Councils' submission, which most hon. Members will have received, states in subparagraph (e) on page 4 that the association wishes to
  "Ensure that the name of the local district representative on the Water Authority is known to the district councils, parish and community councils, citizens advice bureaux, consumer advice centres, chambers of trade and commerce and libraries",
  and so on. That is very important.
  The community health councils have provided a valuable input into the operation of the health services in Hereford. If that kind of input can be translated to the water industry, I welcome the setting up of consumer advisory committees. It would be nicer if we called them consumer water councils, but I appreciate the point in the legislation.
  Once again, the English differences must be taken into account. The requirements of Herefordshire and Cheshire are different from those of Wales. Although the hydrographical basin takes in the Wye and the one next door the Usk, it may be convenient from the Welsh point of view to run the Wye and Usk divisions together. On the other hand, it might be for the convenience of consumers

  123
  in Herefordshire and Cheshire if there was a CAC based upon the English districts represented. That would recognise the difference between England and Wales in the provision of water.
  Does my right hon. Friend's anticipated £100,000 saving on this organisation allow for the costs of the CACs? I was not certain whether it did.
  Mr. Nicholas Edwards indicated assent.
  Mr. Shepherd: That is good to know. We now have the firm knowledge that at least there will be a £100,000 saving if this reorganisation goes ahead. That is welcome.
  I have tried to outline the points that make Herefordshire different from Wales. There is no doubt that it is different. I hope that the Minister will assure me that my fears about the proper representation of England on the new organisation are groundless.
  I am confident that in the longer term the function of the Welsh water authority in relation to English consumers will be one of understanding.
  Several Hon. Members rose—
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. Before I call the next hon. Member, I remind the House that the debate finishes at half-past eleven and I understand that the Minister would like 10 minutes in which to reply.
  11.12 pm
  Mr. D. E. Thomas: I assure the hon. Member for Hereford (Mr. Shepherd) that he has the full support of Plaid Cymru Members in arguing the case for English minority on the Welsh water authority. Perhaps that is some consolation to him.
  I am not so sure that I agree with the rest of the hon. Gentleman's analysis, in particular his emphasis on water as an industry rather than a service. In a sense, the order represents the final, logical conclusion of the 1973 Act, because the Welsh water industry is removed from any semblance of democratic accountability and becomes another piece of corporate centralist management.
  There is no time to go through the whole history of the development of water as a public utility in the United Kingdom, but it is a significant history. The development of the water service, its place in public health and housing policy, and their close integration with local government is finally destroyed. Water is now seen as a saleable commodity, with no democratic accountability and with little or no consumer consultation.
  The whole exercise is cosmetic so as not to tackle the basic issue of the cost of water and where the burden of that increased cost falls. This exercise increases the charge on the consumer. Under the previous system, water charges were rebatable, but under this system the low income consumer bears a relatively higher burden, particularly the low income consumer in Wales.
  The order does not quite take us back to the days prior to the Public Health Act 1875, when water was purchased from private water company stand-pipes at a cost of a farthing for every five gallons. The stand-pipe supply was available only at times convenient to the company. We are, however, going back to increasing privatisation in Government thinking as it relates to water as a basic utility.
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  Water supply and sewage disposal are essentials of life. In this sphere, as in so many, the Government are ensuring that the essential things of life are more expensive for the majority of working people. The 1973 Act and this logical conclusion of it are typical of the manner in which the Government now operate. I was saying to the right hon. Member for Cardiff, South-East (Mr. Callaghan), if I may quote a private conversation without going out of order, that, had his devolution proposals been successful, hon. Members would not have been wasting the time of the House tonight.
  The 1973 Act, as put into effect, provided for a regional structure for the water industry in England and a national structure for Wales. It took the water service out of local government, turned it into an industry and under-funded it. I am sure that the social consumption expenditure by the State on the water service was reduced. This is confirmed by the withdrawal of rate support grant and the new capital investment ceilings introduced for the water service.
  Within two years of the new water structure introduced in 1974, there were massive increases in water charges—as high as 56 per cent. for water supply and a staggering 90 per cent. for the general service charge in Wales. This has been the real cost of reorganisation. Whatever the Secretary of State says about the savings that he will make in the administration of the water service, this is nothing as compared with the loss borne by the consumers of Wales through his decision not to continue the equalisation policy of the previous Government. That is what concerns the people of Wales—not the cosmetic exercise of producing a new corporate structure for the water industry.
  The order must be opposed. A serious point arises that the Secretary of State shrugs aside the manner in which the order has been introduced. As a member of another Select Committee, it is not for me to defend the Select Committee on Welsh Affairs. In my view, however, it demonstrates a contempt for Select Committee procedure if Governments take executive decisions when they know that a Select Committee is deliberating in that same area. If the Secretary of State is so sold on consultation, he should at least consult hon. Members as well as local authorities before coming to a decision.
  I turn to the structure that the right hon. Gentleman proposes for his consultative committees. I ask him to spell out, by letter, if not in reply to the debate—provided that time is allowed to study the letter—what the consumer advisory committees will do. They strike me as similar to the consumer advisory committees in other nationalised industries and public utilities that are not among the most effective organs to defend consumers.
  The right hon. Gentleman says in his guidelines or his thoughts about possible guidelines—the thoughts of our Chairman Secretary of State—that the consumer advisory committees will be able to consider various issues in their area including the variation of charges. Will he spell out whether the CACs will be able to make specific recommendations to the water authority in Wales about the charge it makes internally and any charge that it will make for water that is extracted from reservours such as Llyn Lelyn in my constituency and used outside the Welsh Water Authority area?
  In the Secretary of State's thoughts about guidelines he tells us that

  125
  "the Committees are provided with technical and professional advice required for consideration of the matters in hand."
  Can the Secretary of State spell that out in greater detail? If the advisory committees are to be effective they need to have expertise to respond and analyse proposals by the water authority. If they are to scrutinise the work of the authority on behalf of the consumer, they will need effective and technical advice.
  The Secretary of State adds that it would be sensible for
  " the guidelines to clarify the scope for Committees to be given information about the Authority's plans."
  What type of information is involved? In what sense will it be an exercise in open government and in what sense will it be a cosmetic effort?
  The order is typical of the conservative Government in Wales. It it the unacceptable face of corporatism yet again. It avoids the real issue—the cost of water to a country which over-produces water.
  11.21 pm
  The Secretary of State for Wales (Mr. Nicholas Edwards): I hope that when the hon. Member for Aberdare (Mr. Evans) listened to the speech of the hon. Member for Merioneth (Mr. Thomas) he was comforted by the reminder that if he had not helped to win a famous victory on devolution the issue might have been transferred elsewhere and he could not have made his valuable contribution to our affairs tonight or made his comments in this place about the proposals.
  The hon. Member for Merioneth and the right hon. Member for Rhondda (Mr. Jones) spoke about water charges being the major issue and about the water equalisation measure. The trouble with the water equalisation measure that we inherited was that it was eccentric in its consequences and indefensible in its result. A Bill that takes resources from authorities that most need them and hands them to authorities that need them least cannot stand up for long. It was not possible for the previous Government, nor is it for us, to produce an equalisation Bill that does not have those unfortunate and eccentric consequences.
  Mr. Alec Jones: Will the right hon. Gentleman give way?
  Mr. Edwards: No. I want to respond to the debate. I wish to deal with the uncharacteristic, monstrously unfair attack by the right hon. Member for Rhondda on my hon. Friend the Member for Anglesey (Mr. Best), who is not in a position to defend himself.
  My hon. Friend, in drawing attention to the possible representation of district authority interests, said that he hoped that some consideration would be given to trying to enable district councils to have a degree of representation, other than direct representation.
  Mr. Alec Jones: Will the right hon. Gentleman give way?
  Mr. Edwards: No. I have much more to say. Our proposals for consumer bodies enable district councils to have a degree of representation other than direct representation. It has been pointed out that it is difficult for councillors to discharge their functions efficiently and effectively on both local authorities and on the Welsh water authority.
  My hon. Friend the Member for Hereford (Mr. Shepherd) spoke about the interests of the English authorities. I apologise to my hon. Friend for the late
  126
  arrival of the notice of the statement. I can only say that the letter to him went out at the same time as those to all the other hon. Members to whom notice was given, and I am sorry if those letters arrived later than was desirable.
  Mr. Ray Powell: Why is the right hon. Gentleman apologising to his hon. Friend when we on this side were in the same position of not having received the document?
  Mr. Edwards: I gave notice to my hon. Friend—and I did so because he would not necessarily have been in the House for Welsh questions or have known that we were dealing with this Welsh matter—at the same time as I gave that notice to the right hon. Member for Rhondda and to the representatives of Plaid Cymru and the other parties in the House.
  My hon. Friend spoke of the need—and he was right—to provide a more economical and efficient service, and that is the object of these proposals. He spoke of the need for the English authorities to be represented. I am not sure whether he was here for my opening speech. I emphasised particularly the fact that I would consult all the relevant local authorities to ensure that English interests were properly taken into account. He asked why I should make the appointments. By asking the question he identified one of the reasons for my doing so.
  There are a number of local authority associations. Indeed, there is a split in the local authority association in Wales—
  Mr. Rowlands: They are all against the order.
  Mr. Edwards: —which makes it extremely difficult to get a direct nomination from those authorities, and particularly to take account of the interests of the authorities. That is one of the reasons why I want to consult fully—
  Mr. Alec Jones: Will the right hon. Gentleman give way?
  Mr. Edwards: —with the authorities before dealing with this point.
  Mr. Alec Jones: I want to ask the right hon. Gentleman about that.
  Mr. Edwards: I want to move on to the other points raised by the right hon. Member for Rhondda. He said that no case had been made for reorganisation. A large majority of those, other than the local authorities, who responded made it clear that they generally favoured the moves that we are proposing. Of course, so did the Monopolies and Mergers Commission in its detailed study, to which my hon. Friend the Member for Brecon and Radnor (Mr. Hooson) drew attention—
  Mr. Rowlands: It had nothing to do with the Welsh water authority.
  Mr. Ioan Evans: Severn-Trent.
  Mr. Edwards: —and the chairman of the National Water Council in his recent evidence to the Select Committee. There is no doubt about the serious concern among users about the need for more efficient organisation.
  The right hon. Member for Rhondda spoke about what he called my indecent haste. We gave the local authority organisations the opportunity to make representations. We responded to those representations and we altered our proposals so that their interests should be defended—
  Mr. Alec Jones: Will the right hon. Gentleman now give way?
  Mr. Edwards: As I listened to the hon. Member for Aberdare describing why it was impossible for local authority representatives to make any contribution during two and a half months of the summer—
  Mr. Rowlands: August.
  Mr. Edwards: —it seemed to me that the two and a half months that they had—
  Mr. Ioan Evans: It was August.
  Mr. Edwards: It seemed to me—
  Mr. Alec Jones rose—
  Hon. Members: Give way.
  Mr. Deputy Speaker: Order. The right hon. Member for Rhondda (Mr. Jones) knows that if the Minister does not give way he must resume his seat.
  Hon. Members: Give way.
  Mr. Alec Jones: Withdraw.
  Mr. Edwards: Between July and the end of October I continued to listen to representations. The right hon. Gentleman might well have judged that perhaps it was not a terribly good idea to have them dominating the organisation of a major industry of this kind.
  Mr. Ioan Evans: Oh, no.
  Mr. Alec Jones: Scandalous.
  Mr. Rowlands: That is scandalous.
  Mr. Edwards: Then we had the right hon. Member for Rhondda pleading that agriculture was not properly represented, and that a number of other bodies did not have direct representation. The object of this reorganisation is to create a board that does not directly represent individual interests but provides the best possible service for water users as a whole; and it is on that basis that I commend the order to the House.
  Question put:—
  The House divided: Ayes 104, Noes 46.

  [Division No. 24]

  [11.30pm

  AYES

  Alexander,Richard

  Clark, Hon A. (Plym'th, S'n)

  Ancram,Michael

  Cockeram.Eric

  Beaumont-Dark.Anthony

  Cope,John

  Beith.A. J.

  Cranborne, Viscount

  Bendall,Vivian

  Dean, Paul (North Somerset)

  Benyon.Thomas (A'don,)

  Dover,Denshore

  Benyon.W. (Buckingham)

  Dunn.Robert(Darfford)

  Berry, Hon Anthony

  Edwards, Rt Hon N. (P'broke)

  Best, Keith

  Ellis, Tom (Wrexham)

  Biggs-Davison,SirJohn

  Faith, MrsSheila

  Blackburn,John

  Fenner, Mrs Peggy

  Bottomley, Peter (W'wichW)

  Fletcher-Cooke.SirCharles

  Brinton.Tim

  Garel-Jones,Tristan

  Brittan.Rt. Hon. Leon

  Goodhew.Victor

  Brooke, Hon Peter

  Goodlad,Alastair

  Brotherton,Michael

  Griffiths,Peter Portsm'thN)

  Brown,Michael(Brigg&Sc'n)

  Grist, Ian

  Buck.Antony

  Gummer.JohnSelwyn

  Budgen,Nick

  Hawkins, Paul

  Butcher,John

  Higgins, RtHon Terence L.

  Cadbury,Jocelyn

  Hogg, HonDouglas(Gr'th'm)

  Carlisle, John (Luton West)

  Hooson,Tom

  Carlisle,Kenneth (Lincoln)

  Hunt,John (Ravensbourne)

  Carlisle, Rt Hon M. (R'c'n)

  Jopling, RtHon Michael

  128

  Kershaw,SirAnthony

  Rossi, Hugh

  Lang, Ian

  Sainsbury.HonTimothy

  Lawrence, Ivan

  Shaw, Giles (Pudsey)

  Lennox-Boyd.HonMark

  Shepherd,Colin(Hereford)

  Lester, Jim (Beeston)

  Skeet, T. H. H.

  Lloyd, Peter (Fareham)

  Speed, Keith

  Lyell, Nicholas

  Speller.Tony

  MacGregor,John

  Stanbrook.lvor

  Major,John

  Steel, Rt Hon David

  Marland,Paul

  Stevens, Martin

  Marlow,Antony

  Stewart, A. (ERenfrewshire)

  Marten, Rt Hon Neil

  Stradling Thomas.J.

  Mather.Carol

  Taylor, Teddy (S'end E)

  Mellor, David

  Tebbit, Rt Hon Norman

  Meyer.SirAnthony

  Thompson,Donald

  Moate, Roger

  Thorne,Neil(IlfordSouth)

  Morgan,Geraint

  Trippier, David

  Murphy,Christopher

  Waddington,David

  Neale.Gerrard

  Waldegrave.HonWilliam

  Needham,Richard

  Waller, Gary

  Nelson,Anthony

  Ward,John

  Neubert.Michael

  Watson,John

  Newton,Tony

  Wells, Bowen

  Onslow,Cranley

  Wells.John(Maidstone)

  Osborn,John

  Williams.D.(Montgomery)

  Page, Richard (SW Herts)

  Wolfson.Mark

  Patten,Christopher(Bath)

  Percival. Sir Ian

  Tellers for the Ayes:

  Roberts, M. (Cardiff NW)

  Mr. David Hunt and Mr. Robert Boscawen.

  Roberts, Wyn (Conway)

  NOES

  Anderson,Donald

  John,Brynmor

  Atkinson, N.(H'gey,)

  Jones, Rt Hon Alec (Rh 'dda)

  Bennett.Andrew(St'kp'tN)

  Kerr, Russell

  Booth, RtHon Albert

  Lamond, James

  Bray, Dr Jeremy

  Leighton,Ronald

  Callaghan, Rt Hon J.

  McCartney.Hugh

  Callaghan, Jim (Midd't 'n& P)

  McNamara,Kevin

  Campbell-Savours, Dale

  Miller, Dr M. S. (E Kilbride)

  Canavan,Dennis

  Morris, Rt Hon J. (Aberavon)

  Cocks, Rt Hon M. (B'stol S)

  Powell, Raymond(Ogmore)

  Coleman,Donald

  Rowlands,Ted

  Cowans, Harry

  Skinner.Dennis

  Cryer,Bob

  Snape, Peter

  Cunliffe,Lawrence

  Spearing,Nigel

  Davidson,Arthur

  Thomas.Dafydd(Merioneth)

  Davies, Rt Hon Denzil (L'lli)

  Thomas, DrR.(Carmarthen)

  Dixon,Donald

  Tinn,James

  Dormand.Jack

  Wainwright,E. (DearneV)

  Eastham.Ken

  Welsh,Michael

  Evans, Ioan (Aberdare)

  White, Frank R.

  Foulkes, George

  Williams, Rt Hon A.(S'sea W)

  G rant, George (Morpeth)

  Hardy, Peter

  Tellers for the Noes:

  Haynes, Frank

  Mr. George Morton and Mr. Allen McKay.

  Hogg, N. (EDunb't'nshire)

  Question accordingly agreed to.
  Resolved,
  That the draft Welsh Water Authority (Constitution) (Variation) Order 1981, which was laid before this House on 1st December, be approved.

  EUROPEAN COMMUNITY DOCUMENT
  Motion made, and Question put forthwith pursuant to Standing Order No. 73B (Standing Committees on European Community documents).

  STOCK EXCHANGE LISTING: INTERIM REPORTS
  That this House takes note of European Community Documents Nos. 4356/79 and 8286/80: Draft Directive on Information to be published on a regular basis by companies whose shares are admitted to official stock exchange listing, together with Department of Trade explanatory memoranda of 16th February 1979, 16th July 1980, 23rd February 1981 and 4th

  129
  December 1981; and notes with approval the Government's policy of broadly maintaining the existing role and requirements of the Stock Exchange.—[Mr. Budgen.]
  Question agreed to.

  SOCIAL SECURITY (CONTRIBUTIONS) BILL
  Ordered,
  That, in respect of the Social Security (Contributions) Bill, notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time.—[Mr. Budgen.]

  Industrial Deafness
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bud gen.]
  11.40 pm
  Mr. Michael Welsh: I do not think that there is a great difference of opinion between the Minister and I on this important issue. The matter has been debated before, and I have raised it again to see whether more can be done for these unfortunate people.
  This is the International Year of Disabled People, and deafness is a soul-destroying disability. Many individuals have been made deaf because of the conditions in which they work, but if they are not in the occupations laid down by the Industrial Injuries Advisory Council they cannot claim disablement benefit. Those poor individuals do not even come under starter's orders. They cannot be considered for disablement, due to that anomaly.
  In the Industrial Diseases Review, Cmnd. 8393, October 1981, the Industrial Injuries Advisory Council states:
  "We recommend that the council also regularly review the terms of prescription of diseases already on the schedule so that restrictive conditions can be removed and the terms simplified as soon as there is justification of evidence".
  There are many restrictive conditions covering deafness and I hope that they will be removed. If some are removed, many more people will be able to claim disablement benefit, which is to be welcomed.
  The case of one of my constituents was brought before the Commissioners before 1975. If the case had been brought after 1975 it would have made no difference because the disability was not on the prescribed list. I shall not mention the name of my constituent, but the Commissioners' report stated:
  "In the light of the medical evidence, I see no reason to doubt that the claimant's ear condition and his subsequent deafness and also the operation which he underwent are a tribute to his work. Accordingly, I have every sympathy with his claim to benefit".
  Nevertheless, the claim could not be allowed because the disability was not on the prescribed list. The list should be reviewed and more industries and disabilities should be included in the schedule. My constituent's deafness was caused by his work; and that was accepted by the Commissioner, but because of the rules of the game he was not allowed to claim industrial disablement benefit.
  I do not wish to deal with cases of industrial deafness that are before the courts. The Minister will agree that this is not the time or place. I am interested only in the disablement benefit that comes from the State.
  I desire to bring to the notice of the Minister the shortcomings of the present scheme of disablement benefit for occupational deafness. The scheme came into being in 1975, when occupational deafness was added to the list of prescribed industrial diseases. The shortcomings are that many restrictions were made at the same time.
  There are a number of restrictions, but I intend to confine myself to two of them, because it is necessary to make a start somewhere.
  The outstanding restriction is the one known as the 20-year rule. It provides that a person must have worked for a period of no less than 20 years in one or more of the prescribed occupations. I want to spell out the bad effect that this 20-year rule has on workers.
  No other country has this restriction of 20 years. Most other countries have schemes which have no requirement

  131
  of specified minimum periods of work in a noisy occupation. There are a few exceptions which provide for 90 days, and there is a further country which has a longer period of two years. But we are the only country with a 20-year rule, and the result is terrible for the individuals suffering from industrial deafness. These men will be deaf for the remainder of their lives, but, because they have not worked for 20 years in that occupation, there is no way that they can claim benefit.
  We live in an age when we are told by politicians of all political complexions that people may have to change jobs three, four, five and six times in their working lives. Progress and new technology means that that will be necessary. Yet the rule governing benefit for industrial deafness provides that a claimant must have worked in the same occupation for 20 years. There is something radically wrong about that. In a country that prides itself on fair play it cannot be right, and I ask the Minister to do away with this unjustifiable 20-year rule.
  There have been 10,511 claims for industrial deafness benefit in the 25 months up to 29 September 1981. Only 1,850 have been allowed. It means that there were 8,661 cases disallowed. I assume that some of them were affected by the infamous 20-year rule. The number of disappointed claimants suffering from industrial deafness cannot be equalled by the numbers suffering from any other industrial injury. The magnitude is too great.
  If a person is sent to a noisy occupation by his local jobcentre and he is, say, 50 years of age, no matter how deaf he becomes through his working conditions, there is no way that he will be able to claim industrial benefit. This injustice must be ended. If we believe in fair play and social justice, the 20-year rule must go, and I am sure that the Minister is sympathetic to my view.
  There is also another rule that is unacceptable to those who wish to see justice done. It is the rule that a person must claim within 12 months of having developed a disability. It was introduced to limit the number of claims, and of course it did so. I appreciate the difficulties that existed at the time, but why should an individual who suffers the same disability as another not receive the same benefit? Is it not justice that two individuals who work together and suffer the same disability should get the same disablement benefit? I do not believe that any hon. Member would disagree with that.
  Can the 12-month rule be brought into line with the 36-month rule that applies to other benefits? That would be a move in the right direction and it would help many people. It might mean more claims being allowed, but is it not better that people see that justice is done, even if it costs more?
  It may be said that such a move would increase the demands on the aurological service. I concede that, but if we are to treat people with equity that will have to be done. Equity is involved in many issues and, if we will the end, we must will the means.
  We could reach the terrible position of a person having worked in noisy employment for 18 years but not getting disablement benefit because he had not completed 20 years' service. If he has to finish that work because of his disability and is transferred to another job in the same undertaking, where he completes the 20 years, the 12-month rule would then prevent him from claiming. Such people are in a Catch—22 situation, they cannot win. There
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  is something immoral about that. I do not blame any particular Government, but methods of working out benefits may have to be altered in the light of progress, and it is the duty of the Government of the day to help those who are affected.
  I am sure that the Minister is as concerned as I am about the two rules. I now that the Industrial Injuries Advisory Council is keeping the scheme under review, but in its latest report in October this year, it did not go into the question of industrial deafness—I appreciate that it had to deal with a number of other issues related to the Common Market—and I should be grateful if the Minister would request the council to look into the various aspects of industrial deafness.
  There are many shortcomings in this area, but it would be a start in the right direction if the Minister would request the council to consider the two vital issues that I have raised. I am sure that, like me, the Minister wishes to help the unfortunate individuals concerned and if he will meet my request and ask the council to report back in good time I shall be satisfied.
  11.53 pm
  The Minister for Social Security (Mr. Hugh Rossi): I am grateful to the hon. Member for Don Valley (Mr. Welsh) for raising this subject and for the manner in which he has done so. His interest on behalf of those suffering from occupational diseases is well known to the House and there is little, if any, difference between us on the subject.
  Because the loss of hearing is not fatal and does not cause physical disfigurement, the disability that it produces has not received as much attention as other causes of disablement. Noise at work, resulting in partial or total loss of hearing, has been a problem since the earliest days of the Industrial Revolution. Despite this, it was not until 1975 that occupational deafness became a prescribed disease attracting preferential benefits under the industrial injuries scheme. This is partly because the research that demonstrated clear connections between high noise levels at work and irreversible hearing loss is of comparatively recent date.
  An important piece of research was Commissioned by the Industrial Injuries Advisory Council, after a preliminary investigation in 1961. It was carried out jointly by the Medical Research Council and the National Physical Laboratory and a report based on its findings was published by the council in 1969. It concluded that
  "it is now possible to estimate the hearing loss that can be expected to result from exposure to a known noise level for a given length of time".
  Working from that base, the council went on to consider in greater detail how an occupational deafness scheme might work. The result was its report, published in 1973, recommending the prescription of occupational deafness, and in consequence disablement benefit became available for occupational deafness from 3 February 1975.
  The terms under which the disease was prescribed covered a comparatively small number of noisy processes—principally in the metal-working and shipbuilding industries and involving the use of pneumatic tools on metal or work in the vicinity of drop-forging machines. In 1979, following a review of the scheme by the Industrial Injuries Advisory Council, published in 1978, occupational cover was extended to workers using pneumatic percussive tools on coal or rock as well as metal, and to those supervising or assisting in the use of

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  pneumatic percussive tools. In addition, those working in weaving sheds, in some parts of nail manufacture and those using plasma guns in metal spraying were newly covered.
  As the hon. Gentleman knows, and as he has mentioned, entitlement to benefit is subject to three further conditions: first, employment in one of these occupations for at least 20 years; secondly, a claim for benefit to be made within 12 months of leaving the occupation; and, thirdly, a minimum hearing loss of at least 50 dB in each ear, being due to occupational noise in at least one ear. The complete terms of prescription, which I have attempted to summarise, can be found at item 48 in part I of schedule 1 to the Social Security (Industrial Injuries) (Prescribed Diseases) Regulations 1980, a copy of which is in the Library.
  The hon. Gentleman has set out some of the difficulties and resentment that these conditions cause in practice. In particular, he has cited the two time limits. As I ant sure he knows, he is not alone in his concern. My Department has received criticism of the harshness of these limitations from a number of quarters. Indeed, it has always been recognised—and the Government fully accept—that the coverage provided falls far short of the ideal—that everyone whose hearing has been significantly damaged by his job should be eligible for compensation.
  But, in order to set these criticisms in context, I should like to explain why the Industrial Injuries Advisory Council recommended the initial imposition of restrictions in 1973 and the retention of most of them following its review of the scheme in 1978. I shall then go on to look at the prospects for improvements in the scheme.
  As regards the 12-months rule, part of the difficulty arises from the nature of occupational deafness and its diagnosis. To have to deal with claims from people who had worked in prescribed occupations and subsequently left them as long ago, perhaps, as 1948 when the industrial injuries scheme started, would clearly cause considerable administrative problems. There would also be problems of diagnosis, in relation to people who had retired for many years, especially since it would be very difficult to distinguish occupationally caused hearing loss from that which occurs naturally because of the ageing process.
  As I am sure the hon. Gentleman knows, the diagnosis and assessment of deafness requires specialist skills—those of a consultant otologist and, in most cases, of a technician to carry out hearing tests. Unfortunately, such skills are in short supply. The council's main purpose in recommending restrictions on the scheme was therefore to limit its impact on the NHS audiological services which were, and are, under considerable pressure.
  The council wished to produce a scheme that was workable and would not be too disruptive to the main functions of those services—the diagnosis and treatment of all hearing impaired people. To quote from the 1973 report,
  "it became clear to us that, if noise deafness was prescribed for all noisy processes, the necessary technical, and medical resources to deal with the number of claims which could be expected at the outset would not be available now and could not be made available in the forseeable future. To get a compensation scheme off the ground it would therefore be necessary to impose severe limitations initially."
  The council, on the advice of those in the Department of Health and Social Security concerned with the audiological services and of the major professional body involved, the British Association of Otolaryngologists,
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  made an estimate of the available capacity. From the evidence, it was reckoned that it would be possible to carry out about 10,000 examinations annually in connection with the occupational deafness claims without diverting the audiological services from their primary task. The restrictions recommended—and accepted by the then Government in introducing the scheme—were designed to keep the number of examinations within that limit.
  In practice, however, as the hon. Member knows the number of examinations carried out in connection with the occupational deafness scheme never exceeded a third of that figure in the early years. But I should stress that in practical terms the shortfall was not as large as it might appear, because claims tend to show a very uneven geographical distribution. Indeed, about 85 per cent. of all examinations are carried out in five of my Department's social security regions. As is only to be expected, they are those where heavy industry is concentrated, as it is in the area represented by the hon. Member.
  Nevertheless, the striking difference between the actual number of claims and those expected was a major factor that led the Industrial Injuries Advisory Council to propose extensions to the scheme in 1978. The council, however, concluded that the maximum possible number of audiological examinations for occupational deafness purposes should remain at about 10,000 a year, and added
  "it seems unlikely to increase significantly for a number of years to come."
  It therefore recommended a fairly cautious extension, leaving the 20 years and 12 months rules untouched. But it said that it should be possible to make further extensions at
  "regular and fairly frequent intervals"
  and recommended that it should keep the scheme under continuous review.
  The latest figures in relation to occupational deafness claims show that in the year ending 1 September 1981, 4,931 claims were received and 3,468 claimants were referred for examination. This figure compromises those new claimants who had met the occupational tests and a number of reassessment cases.
  I accept that these figures show that the scheme is still not giving rise to as many examinations as was originally estimated and that this must give added weight to the criticisms of the present restrictions, such as those the hon. Member has very forcefully put to us tonight. As I hope I have made clear, I have considerable sympathy with his views, although I hope I have also made clear the reasons why these restrictions were imposed.
  I understand especially the resentment caused by the fact that the specified period is as short as 12 months. I accept that its effect is particularly harsh when it bars claims from people who have been made redundant or have been retired for many years before their occupation became prescribed, and I have made this known to the Industrial Injuries Advisory Council. I have said that the council recommended in 1978 that it should keep the operation of the occupational deafness scheme under continuous review. This suggestion was accepted by the then Government and a year was allowed to elapse to give time for the extensions made in 1979 to take effect. The council then began to collect and consider evidence for its future review. I understand that it will be submitting a report to my right hon. Friend next year.
  The council is, as the hon. Gentleman knows, an entirely independent body and he will understand that I

  135
  cannot predict what recommendations it will make. However, I know that the sub-committee undertaking the review has sought evidence from a wide range of interested bodies and individuals, and that it has set up a working party, with expert advice from the technical inspectorate of the Health and Safety Executive, specifically to look into various noisy occupations which have been proposed as suitable for addition to those prescribed. It has also taken evidence on the present capacity of the audiological services.
  The sub-committee is, I understand, also looking at the 20 years and 12 months restrictions. I shall be very glad to pass on to it the comments the hon. Member has made this evening, and I know that it will give them the most careful and sympathetic consideration.
  I should like to take this opportunity to express my gratitude to the council for the patient and painstaking way it has carried out its duties. It has an endless task. It involves not only the regular examination of new processes and substances but the constant need to go back over old ground as new evidence of risks to health becomes available.
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  The Government and their predecessors have been fortunate indeed in being able to secure as members of the council distinguished medical and legal experts, as well as representatives of both sides of industry, who approach their work on the council in a non-partisan and constructive spirit. I am sure that I speak for the whole House in wishing the council well in its future endeavours.
  I assure the hon. Gentleman that the recommendations that the council makes when its review is completed will be looked at with care and sympathy by the Government. As he, I hope, recognises, while it is not at present likely to be possible to remove or relax all the restrictions on the scheme, I share his concern about those who, in contributing to the nation's wealth—whether in the mines, in heavy industry or elsewhere—have paid the terrible price of losing their hearing. As this International Year of Disabled People draws to its close, I am glad that we have been so vividly reminded this evening of the plight of disabled persons.
  Question put and agreed to.
  Adjourned accordingly at six minutes past Twelve o' clock.

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Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Carlisle.

COSIRA: Incentives for New Businesses
Baroness Vickers: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what encouragement they have given to the Council for Small Industries in Rural Areas to create new business and employment.
The Earl of Avon: My Lords, assistance in the establishment of new businesses and opportunities for employment in rural England is central to the functions of the council and of its parent body, the Development Commission. Her Majesty's Government provide the funds for these activities, which have their wholehearted support and encouragement.
Baroness Vickers: My Lords, in thanking the noble Earl for that reply, may I ask him this. In view of the fact that, from 3rd February 1981, COSIRA has been able to act as lender of last resort to small firms in manufacturing and service industries, can he also say how many they have been able to advise and how many have been successful?
The Earl of Avon: My Lords, as my noble friend has asked the question, this information is not readily available, but I can say that COSIRA is in contact
2
with some 12,000 small firms employing about 74,000 people.
Lord Northfield: My Lords, have the Government completed their review of the work of the parent Development Commission, and would the noble Earl and the Government welcome a debate on the outcome of that review, since these matters of rural development are of great concern to your Lordships' House?
The Earl of Avon: My Lords, indeed I agree with the noble Lord that these are matters which concern this House very much. Decisions on the main recommendations have been delayed for a number of reasons. However, some review recommendations, such as those mentioned by my noble friend, have already been implemented. So far as a debate is concerned, of course that would be dealt with through the normal channels.
Lord Oram: My Lords, since it is widely agreed that COSIRA is cost-effective in its work, and over the years has built up a valuable fund of expertise, is there not a case for it to have more resources than at present, and for it to be relieved of its present geographical constraints so that it could operate in larger towns and perhaps even in collaboration with local authorities in inner city areas?
The Earl of Avon: My Lords, the Government have provided, and will continue to provide, adequate resources for both the bodies. So far as the regional question is concerned, I am sure that when the review comes out that will be taken into account.

Glue Sniffing
2.41 p.m.
Baroness Phillips: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will introduce regulations to control the sale of "glue-sniffing" solvents to young people.
Lord Lyell: My Lords, there are no powers under consumer safety legislation to control the sale of glue-sniffing solvents to young people, but even if there were the Government would consider their use unjustified. There is a very wide range of products containing what we call "sniffable" solvents, and of shops that sell them. Enforcement of a ban or other controls would probably prove ineffective, and it would be hard to justify any particular age limit.
Baroness Phillips: My Lords, while I thank the Minister for that reply, I would like to point out to him—or rather to ask whether he is aware—that the regulations on the sale of alcohol and cigarettes, and indeed the sale of fireworks, have contributed greatly, in the case of fireworks, to the prevention of accidents, and, in the case of alcohol and cigarettes, to preventing young people buying them. It cannot be beyond the wit of the Government to devise some way in which regulations can control this very serious matter, from which young people have suffered not only brain damage but other ill effects.
Lord Lyell: My Lords, the noble Baroness is perfectly right to point out that fireworks, alcohol and cigarettes are all readily identifiable. But, as I am sure she and noble Lords will appreciate, the solvents which give rise to these sniffable products are, I understand—not having tried the practice myself yet—from the Government's inquiries very widely distributed indeed. We believe that it would not be in the best interests of the young people, first of all, to publicise the dangers of solvent sniffing, and, secondly, to try to make sniffing illegal.
Baroness Trumpington: My Lords, bearing in mind that other forms of medicine have eliminated the noxious contents of the medicine, is it not possible for glue to be made without containing the troublesome constituent, if that is the right word?
Lord Lyell: My Lords, I, too, was interested in this proposition, but I was informed that so wide is the band of products which can give rise to sniffing or other forms of inhalation that even if foul-smelling or other noxious additives were added to these products the substitution effect would be readily in evidence.
Lord Campbell of Alloway: My Lords, is my noble friend the Minister aware that if the Government were to seek to control this practice of glue sniffing young people would only turn to sniffing something else?
Baroness Phillips: My Lords, I should like to suggest to the noble Lord that perhaps that is the discipline of despair. I would ask the Minister whether he is aware that, despite the information he has received, there are in fact certain very popular solvents, and, while the range may be great, it cannot be impossible at least to limit it.
Lord Lyell: My Lords, we believe that any limitation upon the sale of what the noble Baroness describes as popular solvents is best left to the individual trader, or, far better, education by police, parents, teachers and others taking a much more personal line with the possible young sniffers.
Lord Leatherland: My Lords, when the Minister takes some steps to control sniffing, by order, will he leave people free, as they are now, to sniff at the present
Government?
The Earl of Selkirk: My Lords, is it not possible to give some warning notice as regards those sniffable substances which may have adverse effects?
Lord Lyell: My Lords, we believe that that would tend to exacerbate the problem, since to young and fertile minds it would indicate, first, a form of dare and, secondly, the products which put them most at risk.
Lord Harris of Greenwich: My Lords, is the noble Lord aware that, although recognising that there are problems in terms of administering any controls that might be introduced, there is grave anxiety among many chief officers of police about the misuse of glue in the circumstances outlined in the noble Baroness's Question? Is the Home Office involved in discussions within Government on this matter?
Lord Lyell: My Lords, while accepting that there may be and, indeed, is grave anxiety on the part of many others besides chief officers of police as regards this problem, I would stress to the noble Lord and, indeed, to the House, that we take the problem very seriously, and, as a first step, the Government have been a co-sponsor of a recent seminar and conference of researchers and practitioners into this very problem at Guy's Hospital.
Lord Balfour of Inchrye: My Lords, does the noble Lord agree that the best way of dealing with this problem is not by prohibition but by parental example and education showing the results of glue sniffing and making the young realise the evils of the substance which they are tempted to use?
Lord Lyell: My Lords, my noble friend has encapsulated everything that the Government would wish to see. Quite apart from parental example, I hope that the noble Lord and parents around your Lordships will not be seen sniffing the solvents themselves, because it can have a deleterious effect upon adults as well.
Lord Molloy: My Lords, is the noble Lord aware that young people do not necessarily have to purchase the glue that they sniff? In my experience of being involved with this matter when I was in another place —and I am bound to say to the noble Lord that if he has seen young people who have been glue sniffing he will realise that it is hardly a laughing matter—the trouble is that far too often we never arrive at the frontiers of understanding until we ourselves are personally involved and can see these things. However, is the noble Lord aware that young people can get

5
hold of industrial glue from tips and such areas near large industry where the stuff is dumped? They do not even have to purchase it. I should have thought that perhaps an appeal could be sent to industrialists asking them not to tip used glue containers but to destroy them in another way.
Lord Lyell: My Lords, I would stress again that the Government believe that the sniffing of these solvents is best dealt with throughout the community by education and by the persuasion of parents and teachers and health, youth and social workers and, indeed, the police.
Lord Bruce of Donington: My Lords, would the noble Lord agree that it would be a fair summary of his replies to my noble friend Baroness Phillips that the Government are not going to do anything about it?
Lord Lyell: My Lords, one day in the very distant future perhaps the noble Lord may have an opportunity to express a view on behalf of a Government, but until then I would hope that he would be able to read what I have said and allow me to answer the Question.
Lord Swinfen: My Lords, would my noble friend consider the possibility of controlling the sale of instant glues to small children, because they also are extremely dangerous?
Lord Lyell: My Lords, I shall have to take advice on the question of instant glue and the purposes to which instant glue is put. I just wonder whether it is definitely connected with the Question on the Order Paper.

Southern Thule: Argentinian Presence
2.48 p.m.
Lord Mottistonc: 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 the Argentinians are still in occupation of British territory in Southern Thule and what action has been taken to expel them since a similar Question, put to the previous Government, was answered in this House on 10th May 1978 [Col. 976].
The Secretary of State for Foreign and Common wealth Affairs (Lord Carrington): My Lords, I can confirm that there is still an Argentine scientific station on Southern Thule. The Government have repeatedly protested to the Argentine Government about this illegal presence. I can assure your Lordships that Britain's legal position is fully protected. This is one of the matters which my honourable friend the Minister of State intends to take up again at his discussions with the Argentine representatives on 18th and 19th December.
Lord Mottistone: My Lords, while I thank my noble friend very much for his full Answer, would he not agree that something rather more positive and robust, as was indicated some three and a half years ago, would be appropriate, particularly to allay the fears of the people in the Falkland Islands, in whose vicinity this particular place is?
Lord Carrington: My Lords, if my noble friend is suggesting the use of force, he will recollect that international law and the United Nations Charter require disputes to be settled by peaceful means. That is what we have been trying to do, but there should be no misunderstanding by the people of the Falkland Islands about what we think of this occupation, this presence, on Southern Thule or of our pledge to the people of the Falkland Islands.
Lord Morris: My Lords, I should like to ask my noble friend the Foreign Secretary whether the scientific personnel on the island of Southern Thule are properly equipped to fulfil their scientific role to a normal standard and, in addition, whether there are any military personnel or personnel in uniform on Southern Thule?
Lord Carrington: My Lords, according to the Argentines, there are 11 people on Southern Thule —seven naval scientists and four civilians, three of whom are radio technicians and one a meteorologist.
Lord Mottistone: My Lords, will my noble friend not agree that there is a need to reassure the people of the Falkland Islands, and could he perhaps give me some pointer on that?
Lord Carrington: My Lords, I do not know what my noble friend wants to reassure the Falkland Islands about. I thought I said in my answer to his original supplementary question that the Falkland Islanders should be in no doubt about the commitment of this country to them and the pledge that we have made to them on a number of occasions.

Wheel Clamps: Use by the Police
2.51 p.m.
Lord Morris: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whom they propose to consult before coming to a decision on the use by the police of wheel clamps on illegally parked cars.
The Earl of Avon: My Lords, my right honourable friend the Secretary of State for Transport has invited views on this proposal from the public generally; from local authority associations and others with an interest in the enforcement of traffic regulations; and from a wide range of representative organisations of road users, including motorists and freight and public transport operators.
Lord Morris: My Lords, I thank my noble friend for that Answer. Are Her Majesty's Government considering consulting the Parisian authorities, who have had a great deal of experience in the use of these particular wheel braces before they actually abandoned their use? Furthermore, is my noble friend aware that the attachment of what most normal people regard as their second most valuable asset would be seen as a repugnant erosion of the freedom of the individual?
The Earl of Avon:My Lords, as I said in my original response, we shall be consulting widely and I shall take note of what my noble friend has said.
Lord Nugent of Guildford:My Lords, is my noble friend aware that at the present time the major traffic arteries in central London are so badly choked by illegally parked cars on yellow lines and double-yellow lines that they are becoming a serious handicap for movement of traffic? Is he aware that some additional measure is now urgently needed in order to check this very high degree of illegal parking?
The Earl of Avon:My Lords, I am, indeed, aware of what my noble friend says, and I am sure that this is one of the considerations which will be taken into account.
Lord Underhill:My Lords, does the noble Earl recall the debate on this matter during the Committee stage of the Transport Bill only this year, when his noble friend Lord Bellwin said he believed that the Metropolitan Police consider that this would be a very useful means of dealing with illegal parking? Is there any possibility of this matter being dealt with in time for inclusion in the forthcoming Transport Bill?
The Earl of Avon:My Lords, indeed I recall the debate on 11th June last during which I think the noble Lord's noble friend Lady Denington raised this question. This is one of the matters which has stimulated the review which is now taking place. As regards whether we can get this in time for the next Bill, that will depend on whether or not it is acceptable to the various parties.
The Earl of Onslow:My Lords, can my noble friend advise the House whether it is true that the number of traffic wardens in central London has diminished? At the moment it is practically impossible to find even a double yellow line on which to park, let alone a parking space. Is my noble friend also aware that the vast majority of people who illegally park do not get tickets, and that unless they get tickets people will continue to park illegally? I am afraid to say that sometimes I have even been known to be guilty myself.
The Earl of Avon:My Lords, I am very sorry to hear of my noble friend's confession in this matter. Of course, I never do so myself. The Metropolitan Police are trying to recruit more wardens, but I am afraid that far too many motorists simply ignore parking tickets. If the police were allowed to use wheel clamps, they would try them out first in areas
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where most of the illegal parking is by persistent offenders.
Lord Paget of Northampton:My Lords, do you not have both through traffic, where a city is used as a through road, which requires no parking, and internal traffic which requires parking? The traffic regulations are not for absolute obedience; they would be an intolerable nuisance if they were. We have zigzag marks which mean no parking. We have yellow lines which mean, park, but it may cost you something. Is the noble Earl aware that, if he included me among those who were consulted, I should immediately go into business to provide a "cutter-off" as a useful accessory to the car, and would use it?
The Earl of Avon:My Lords, I am most grateful for the noble Lord's comments. I am sure that they will be borne much in mind.
Baroness Denington:My Lords, will the noble Earl agree that there is the utmost resistance to road-widening in London? I think that this is perhaps a matter to which every noble Lord in this House would subscribe, because this is an ancient city of great character and we do not want it destroyed, nor do we want houses pulled down. But the traffic problem in London is very serious and some people just do not—perhaps they are not London residents—seem to care for the communal weal. Something must be done about it, even if it means putting a harmless clamp on their wheels.
The Earl of Avon:My Lords, I think that everything would be greatly eased if everyone actually obeyed the laws.
Lord John-Mackie:My Lords, would it not be much simpler and more effective if the police had powers just to let the air out of the tyres of these cars? It is the best immobilisation that I know of.
The Earl of Avon:My Lords, again, I shall bear the noble Lord's comments in mind.

Steel: Assistance to Private Sector
Lord Skelmersdale: My Lords, with the leave of the House, at a convenient moment after 3.30 this afternoon my noble friend Lord Bellwin will repeat a Statement that is to be made in another place on assistance for the private sector steel industry.

Poland: Martial Law
2.56 p.m.
Lord Carrington:My Lords, with your Lordships' permission, I should like to make a Statement about events in Poland.
Martial law was declared in Poland from midnight on 12th/13th December. A Military Council for National Salavation, consisting of military leaders, has been set up under the Prime Minister and Party Secretary, General Jaruzelski. Military commissars

9
have been appointed to oversee central and local government. Other steps taken include sealing of the borders, severing of telex and telephone links, imposition of a curfew, suspension of civil liberties, a ban on strikes and gatherings other than religious ceremonies, a takeover of the broadcasting system and suspension of regional broadcasts.
General Jaruzelski announced these measures in a speech broadcast to the Polish people early on 13th December. He stressed that they were intended to be of short duration and would be rescinded when calm and order were restored. He said the measures were intended to preserve the fundamentals of the Polish "Renewal" and that reforms would be continued. We regard these commitments as very important.
There are no reports of danger to the safety of members of the British community in Poland. The British Embassy is in touch with British nationals and as a precautionary measure has advised them to stay at home. This advice has also been broadcast, at the Government's request, on the BBC World Service.
Her Majesty's Government are following developments with the closest attention and with great concern We are, and shall remain, in close consultation with our partners in the Ten and in the North Atlantic Alliance. The next few days would appear to be of critical importance to the future of Poland. We sincerely hope that the Polish Government and people will be able to resolve their problems without bloodshed, by compromise and consensus. We shall observe a policy of strict non-intervention and we expect the same of all signatories of the Helsinki Final Act.
2.59 p.m.
Baroness Llewelyn-Davies of Hastoe: My Lords, the House will be most grateful to the noble Lord the Foreign Secretary for his Statement, because the whole House and indeed the whole country are deeply concerned at the very grave situation in Poland today, and none of us would wish to say anything which could contribute to the dangers of the situation.
We very much welcome what the noble Lord has said about strict non-intervention from all sides, from anywhere in the world. The gallant Polish nation must decide their own destiny. Equally, we in this country cannot be indifferent to their fate. We very much welcome what the noble Lord quoted from General Jaruzelski, that reforms would be continued, which is obviously of great importance.
I do not propose to ask many questions in such a grave situation, but I think the House will regret a little that the noble Lord made no reference to the financial position, which is of the greatest possible importance. As the Financial Times said last week, the negotiations which are taking place about this with the Polish authorities are proceeding with painful slowness, and we surely cannot afford to let that continue. We should be grateful for some observation by the noble Lord on that. May we also ask him about the position of Polish refugees in other countries? Of course, we understand that the frontiers are now sealed, but can something be done to help the other countries who are looking after the Polish refugees?
Lord Gladwyn:My Lords, we, too, should like to thank the Foreign Secretary for this important Statement
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on this grave situation. For my part, I cannot see how the Government could possibly act otherwise than is suggested in the Statement. Is it not a fact that the present desperate economic situation in Poland —against which Solidarity not unnaturally revolted, claiming, no doubt rightly, that the Communist Government was largely responsible—is also largely due to the world recession and to the consequent failure of the programme of industrial development, which has now been financed by western banks to the tune of, I think, 27 billion dollars or £15 billion? The repudiation of this debt would obviously be a world calamity and we must all hope that it can still be averted, but it comes nearer and nearer as the crisis in Poland worsens.
The present choice is apparently between some kind of military dictatorship and anarchy, or even civil war. Should we not therefore all hope that Solidarity will still be able to come to some agreement with General Jaruzelski—who seems on the whole, from what one hears, to be a reasonable man—enabling therefore the debt to be eventually rescheduled, and incidentally all danger of Russian intervention to be avoided, even if on the face of it this would not, from our point of view, be a particularly democratic solution to a grave crisis?
Lord Carrington: My Lords, I am grateful to both the noble Baroness and the noble Lord, and I agree entirely with what the noble Baroness has said. I did not mention the financial position, although I think that all of us—and it was certainly evident in the remarks made by the noble Lord, Lord Gladwyn— recognise that the economic position of Poland is extremely serious indeed. I think we shall all have to think and wait and see what happens in Poland before we make up our minds what it is desirable or possible to do.
With regard to the world recession, this of course has had some effect upon the Polish economic position; but if you look at the situation in Poland it stems to a very large extent from the enormous drop in coal production in Poland itself, which has meant that the earnings in foreign currency of Poland abroad have dropped, and have been mainly the cause of the economic problems which Poland is faced with. The noble Baroness asked me about Polish refugees. I know of no Polish refugees in this sort of circumstance, but if the noble Baroness will let me know exactly what she has in mind I shall certainly look into it.
3.4 p.m.
Lord Kennet:My Lords, while thanking the noble Lord the Foreign Secretary for this Statement and welcoming also the closing remarks in it, at a moment when this is happening in Poland the only way one can restrain one's horror and despair about it is to remember that it is probably an alternative to something worse, and therefore we must join the Foreign Secretary in his hopes that the Poles work out their destiny by themselves.
We also welcome the reported statement from Moscow that this is an internal Polish affair. Could the Foreign Secretary tell the House something else about the 27 billion dollar debt to the West which

11
Poland has incurred? Are the Government satisfied with the arrangement they have for liaison with British banks and institutions? Are they satisfied with the arrangements they have for liaison with other western Governments with regard to their banks and institutions which have contributed to these loans which are now in such a questionable condition?
Lord Carrington:My Lords, with regard to what the noble Lord said, and indeed to what the noble Lord, Lord Gladwyn, said about hoping that Solidarity will be able to come to some compromise with the Government, I think we would all hope that that were possible and that the gains that have been made over these last years are maintained. With regard to the rescheduling of debts, of course what happens is primarily for the commercial banks themselves, but we do have very good liaison with them. I think before we make any statement about that, or give any indication of how we think private banks should proceed, or give them any advice, we had better wait and see what happens in Poland.
Lord Derwent: My Lords, may I ask my noble friend one question: Are we having any difficulties from the fact that our ambassador is seriously ill in hospital in Warsaw? As I understand it, as he is in Warsaw, no other member of the embassy has right of access to the Polish Government.
Lord Carrington:My Lords, it is extremely unfortunate and sad that the ambassador should have had a serious heart attack. I am happy to say that he is getting better, but he is in hospital and of course we are deprived of his judgment and his advice. But I am glad to say, too, that there is a very efficient second-in-command there, and he had an hour's talk with the deputy Foreign Minister yesterday, so I do not think there is any question of being deprived of access to the Polish Government.
Lord Oram:My Lords, on the question of refugees to which the noble Lord referred, has not the Austrian Government indicated that the burden that it is bearing in relation to the refugees now in Austria has become more than it can bear? Has it not said that other countries ought to help? Have the British Government received any request in this respect and, if so, what response do they propose to make?
Lord Carrington:No, my Lords, there has been no request.
Lord Campbell of Croy:My Lords, can my noble friend yet tell the House whether the closing of the frontiers to foreigners has had the effect of stopping food and other essential supplies from voluntary international sources? If that is the case, will the Government do their best to maintain essential supplies to Poland during the winter, because this could not possibly be regarded as intervention in the internal affairs of the country?
Lord Carrington:My Lords, I think it is far too soon to say whether or not the restrictions have prevented
12
food coming into Poland. I would imagine that these would be very temporary restrictions in the form of ships not being allowed to berth at Polish ports, for obvious reasons. I think we have to examine all of these things, but I have never thought it a good idea to try to starve people out, and if food is to go to a country to help the people, it seems to me that it should go.
Lord Harris of Greenwich:My Lords, is the noble Lord aware that in the debate we had on this matter in this House last week the noble Lord, Lord Home, and the noble Lord, Lord Stewart, and others pressed the Government to take some action to assist British voluntary organisations, Church bodies, and that sort of organisation, in the present difficulties which they are encountering in getting desperately needed food and medical supplies through to Poland? Is he aware that many of us would be extremely reassured were he able to take a personal interest in this matter?
Lord Carrington:My Lords, I really do not think that this is the moment to do that. I think we must wait and see what is going to happen.
Lord Molloy:My Lords, in the situation that exists at the moment, which could be almost disastrous if there were any foolhardy statements, is the noble Lord the Foreign Secretary aware that thinking people, certainly in this country, will approve wholeheartedly of his cool, sensible Statement in this House today? Would the noble Lord use his influence to see that other people that he might be engaged with in other countries copy his example, so that we can with patience perhaps make a contribution to having this situation resolved without any foolhardiness which might, rather than resolve it, only exacerbate it?
Lord Carrington:My Lords, to use the slang phrase, the noble Lord seems to have "wrapped it up
Baroness Llewelyn-Davies of Hastoe:My Lords, after that I am sorry to rise again, but may I ask the noble Lord a final question? One entirely understands his hesitation—nobody quite understands what is going on at the moment. But about the financial position, would it not be prudent for the Ten, including ourselves, with the Americans, to be considering what we might do, provided that the Polish Government can still negotiate with us, on this financial point? Surely it should not be left to the banks alone but should be a matter for Government assistance.
Lord Carrington:The noble Baroness misunderstands the position, my Lords. The private banks have to make up their own minds, but there is a lot of debt which is Government debt which we have agreed to reschedule; it has been agreed over a period of time to reschedule it. I shall be meeting this evening the other Foreign Ministers of the Community over dinner, when we shall be discussing other matters, but we shall be talking about this matter and will have an opportunity then to discuss all these things. Of course, all this has been going on over a period of time and it is only a question whether we go on as we were going to go on or whether events in Poland will make it difficult for us to do so.
Lord Brockway: My Lords, while I welcome the Minister's Statement and the suggestions which have been made from all parts of the House, may I ask whether he will be available to keep us in touch with the changing situation while the House is meeting?
Lord Carrington: I shall be available, my Lords, so long as the noble Lord is available and the House is in Session.

British Railways (No. 2) Bill
The Bill was read a third time, with the amendments, and passed, and returned to the Commons

Nuclear Industry (Finance) Bill
3.12 p.m.
Lord Skelmersdale: My Lords, I beg to move that the Bill be now read a second time. The object of this Money Bill is to raise the financial limit of British Nuclear Fuels Limited. The limit was set out at £300 million by the Nuclear Industry (Finance) Act 1977, with powers to raise this to £500 million. These powers were exercised by statutory instrument, which came up for discussion in another place on 25th March last. On that occasion the Opposition view that we should put BNFL's financial limit much higher in order to avoid the need for frequent return to Parliament for further authority weighed heavily with us. The Bill therefore raises the limit further to £1,000 million with powers to increase this to £1,500 million, again, by order.
The financial limit on BNFL comprises the amount paid for shares since the company's formation, the amount of outstanding loans to the company by the Government and the company's outstanding loans from non-Government sources which are guaranteed by the Government. I wish to stress that the purpose of the Bill is to increase the amount of BNFL's borrowing from non-Government sources which the Government may guarantee.
It would be appropriate if at this stage I spoke a little about British Nuclear Fuels Limited. Formed in 1971 out of the production group of the United Kingdom Atomic Energy Authority, BNFL has become in the space of 10 years a major company in its own right. It offers services in all aspects of the nuclear fuel cycle, from the conversion of uranium into gaseous uranium hexafluoride to the reprocessing of irradiated fuel. These services are provided principally for the home generating boards. BNFL is also a successful exporter. Sales last year totalled £349 million, of which exports accounted for nearly £41 million.
BNFL is at present engaged in a major expansion programme. Over the next 10 years, the company is planning capital expenditure of about $3.5 billion in constant money values. On the company's own inflation forecast, capital expenditure could total about £6 billion. These are large sums of money, so your Lordships will rightly wish to know how this capital programme is to be financed. Like any industrial company, BNFL is proposing to do it with funds
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generated internally, largely from profit and depreciation—about 70 per cent, of the capital expenditure programme over the next 10 years will be financed from internal sources—and by borrowing. The company expects to borrow about £800 million in 1981 money values, or about £1.5 billion, again according to its own inflation forecast.
The previous Administration agreed that BNFL could and should borrow in the open market rather than from Government sources. It also recognised that BNFL would require the support of a Government guarantee if it was to do that. The 1977 Act provided the necessary powers. We entirely share the view that was taken here: there is no need to emphasise the desirability that BNFL should seek its funds from non-Government sources. But it may be helpful if I explain the need for the guarantee. This is required because of the political risks to which BNFL is exposed —for example, the possibility that some future Government might, for political reasons, close our nuclear power stations or in some other way take action which affected BNFL's business. There is also the regulatory risk—for example, if it proved necessary on public safety grounds to close down some of our nuclear stations, BNFL's business would similarly be affected. For those factors, quite beyond the company's control and indeed peculiar to the nuclear industry, we consider the guarantee to be necessary.
The guarantee is, however, permissive. For each specific loan for which a guarantee is required, BNFL must approach the Secretary of State for Energy. He and his colleagues at the Treasury must agree to the terms and conditions of each loan before a guarantee may be extended. Further, the Secretary of State for Energy must lay before each House of Parliament a statement showing the extent and character of the guarantee issued and the circumstances in which it came to be given. There is, therefore, ample opportunity at this point for the Government to satisfy themselves as to the liability they are taking on, and for Members of this House or the other place to ask questions about a particular guarantee.
There is the further important question of the soundness of the company's business, and particularly its investments, with which the guarantee is concerned. I wish to point out in this context that BNFL is not engaged in major speculative investment. The company is confident that about 86 per cent, of the investment contained in the current programme is covered by secure contracts which provide, at the least, for the recovery of its costs. I also wish to point out that the investment programme is also primarily concerned with services for nuclear power stations already operating or under construction. Against this background, of course, the Government take all the steps which a prudent banker would take to satisfy themselves as to the soundness of the company's business. This is important, given the size of that business and the amount of borrowing which the Government are likely to be asked to guarantee.
This increase in BNFL's guarantee is related to the company's own borrowing requirement, which I have described, and to the need for regular parliamentary scrutiny of the company's affairs. BNFL expect to reach the present limit of £500 million somewhere towards the end of 1982. Depending on inflation, the

15
new limit of £1000 million will be reached probably between 1984 and 1986. At that point, the Government must lay an order in draft before the other place, which must approve it. This occasion provides, clearly, an opportunity for debate of the company's affairs certainly within about four years of the Bill becoming law. That seems reasonable. There is of course a balance to be struck between the necessity of proper scrutiny and the freedom of the company to proceed with plans that are otherwise approved. I believe that the Bill strikes this balance.
BNFL is a successful Companies Act company with plans for a major expansion programme which the Government support. The investments concerned will enable BNFL to continue to provide the fuel cycle services which are essential to our present nuclear programme. I must stress that without those services our nuclear power stations would be in grave difficulty. This is a high technology industry, making profits, and a major employer in the North-West region of England. I therefore commend the Bill to the House.
Moved, That the Bill be now read 2a.—(Lord Skelmersdale.)
3.20 p.m.
Lord Strabolgi:My Lords, we are grateful to the noble Lord, Lord Skelmersdale, for explaining the provisions of this short Bill. As the Order Paper makes clear, this is a money Bill, to alter the financial limit imposed by the Act, and I do not, therefore, propose to make a long speech on general nuclear energy policy, nor indeed to follow the noble Lord in some of the hypothetical questions that he raised today about what a future Government may or may not do. Important as the subject of nuclear energy is, I suggest that a general debate would not be appropriate today.
As the noble Lord has said, British Nuclear Fuels Limited has been a successful public company, with a good export record. Export figures for its fuel cycle services have risen over the last decade from £6 million to £41 million. I am glad to note that all the activities of BNFL are subject to the necessary safety standards, and are carried out with regard to the protection of the environment and to the guidelines on non-proliferation.
BNFL is a good example of a successful nationalised concern—and one of which we can be proud. In view of the Government's all too familiar attitude to nationalisation, will the noble Lord confirm that BNFL is not a company destined to be sold off in the same way that Amersham International was sold off? That was of course another successful state-owned company, but alas! it did not fit in with the Government's ideology for precisely that reason. Will the noble Lord confirm that there will be no privatisation of BNFL? I am concerned about this, not only because of the Government's past record and the declared intentions over privatisation in general, but also because the noble Lord's honourable friend, when dealing with this point, said in another place on 16th November, at column 111 of the Official Report, that,
" there is no present intention, but it would be wrong to rule out such an intention in future ".
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Can the noble Lord give the House a more specific assurance on this point?
3.23 p.m.
Lord Beaumont of Whitley: My Lords, as the noble Lord, Lord Strabolgi, has said, this is a money Bill and a small Bill, and, as he suggested, perhaps a general debate is not entirely appropriate. However, I think that there are one or two points to be raised on this matter. Although of course the actual finance raising is none of our business in this House, the method that the Government have chosen is a rather peculiar one, though also a very useful one from their point of view. After all, the two main ways in which the Government raise money for nationalised industries and other matters are through Government funding or commercially, and in this particular case we have an unfortunate hybrid of the two—the third method of a Government guarantee. This has a considerable advantage for the Government, in that they are let off the hook of including the money in the PSBR. Furthermore they do not have to persuade the financial institutions that the schemes for which they are raising money are financially sound, because the loans for the purpose will have Government guarantees behind them.
As I say, for the Government this is a very convenient way of raising money, but it gives rise to a number of questions. It raises the question of whether it is right that the Government should be let off the hook regarding the PSBR in this particular case. Presumably in monetary terms some effects will arise from this situation, and indeed if the matter had fallen within the PSBR the Government would not themselves have authorised such money raising in the particular situation. So merely by the accident that by custom, as I certainly admit, and for historical reasons, this particular corporation is excluded from the PSBR, the Government are let off that hook.
Secondly, there is the matter of Government guarantees. I accept some of the special circumstances that the noble Lord, Lord Skelmersdale, mentioned, but I still think that on the whole it is undesirable to multiply the number of instances where the Government guarantee the finance. The noble Lord said that there was the possibility of a future Government reversing the situation as regards this particular industry, and that is certainly a very fair point.
However, he went on to mention some matters that were outside the control of British Nuclear Fuels Limited which to me should not at all be outside its control. If I caught accurately what the noble Lord said, I understand that the safety factors, which at any particular time might lead to power stations being closed down, are beyond the control of British Nuclear Fuels Limited. If that is so, it is the most hair-raising, scaring remark that we have heard about the whole nuclear industry for years and years either in America or here. We have always been told that the safety records were absolutely right, that safety precautions were first-class, that everything was under the control of BNFL. If it is the case merely that that matter is not under BNFL's particular control but is under the control of the rest of the nuclear industry, then I see that there is a technical problem between the two sides.

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But perhaps the noble Lord will clarify that issue when he replies.
I now wish to move on from the money aspect and take only two minutes at the most merely to reiterate the policy of noble Lords on these Benches. We think that this way forward through nuclear means is not the best method by which to produce power to meet the needs of the country. Bearing in mind the forecasts regarding energy production, even in the present cold weather, it appears that in the future not nearly as much power will be needed as was thought to be likely two, three or four years ago. The steps that should be taken to conserve energy and to find different methods of producing power have certainly not been explored or exploited nearly as much as they should have been. It is a very short time since the report of the House of Commons Select Committee on Energy stated:
" We were dismayed to find that, seven years after the first major oil increases, the Department of Energy has no clear idea of whether investing around £1,300 million in a single nuclear plant… is as cost effective as spending a similar sum to promote energy conservation ".
The amount of money that we are authorising here is about half the amount that would be needed to insulate all the buildings of the United Kingdom housing stock for their lifetime. It is our view that considerably more investment in investigations into, and development of, alternative energy sources would be a much more sensible way ahead. However, since the Government have chosen to proceed to raise money in this particular way, I believe that we should pay some attention to the method that they propose. But I hope that in future they will be able to find a way that appears rather more justifiable than the one they have chosen this time.
There is extreme cost in the development of a nuclear programme. It is costly; it is centralising; it is in many ways dangerous. We need a society which is more human and more devolved. We need to pursue alternative energy policies; and, above all, we need to practise fuel conservation. Not nearly enough is being done in either of those fields. My Lords, we do not need nuclear power and we do not need this Bill.
3.30 p.m.
Lord Skelmersdale: My Lords, I am grateful to both noble Lords for the very moderate way in which they have greeted this Bill. My last excursion onto the nuclear front was in June and July of this year, when the Liberal Party (represented on that occasion, not by the noble Lord, Lord Beaumont, but by the noble Lord, Lord Lloyd of Kilgerran) was somewhat more forthright than the noble Lord has been this afternoon. In fact, I must confess that a rather wicked thought went through my mind. I wondered whether the Liberal Party had not (to misquote Portia)" turned a manly stride into two mincing steps". However, we shall see.
The noble Lord, Lord Strabolgi, asked whether we intend to privatise BNFL. My Lords, I like to be consistent. On 9th July of this year, at column 896, I said:
"the Government have no such plans at present".
Before that, on 23rd June of this year, at column 969, I said:
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"They"—
that is, the Government—
"have at present no plans to do so".
The position remains exactly the same today. However, having said that, I would add this. In his speech the noble Lord was referring to the Atomic Energy (Miscellaneous Provisions) Bill, and he is quite right in saying that the Secretary of State has now been allowed to transfer to himself all the shares in BNFL which were previously held by the Atomic Energy Authority. This means that should an occasion arise it would be possible for him to sell, again according to the Act I have just mentioned, 49 per cent. But I continue to say that there are no plans at present to do anything of the sort, and I hope the noble Lord will understand that that really is as far as I can go on this occasion.
The noble Lord, Lord Beaumont, referred to a couple of things. "This peculiar way of raising money", I think he said; I hope I have his words right. I do not see why it is peculiar at all. We are here talking about a Companies Act company which, as I have said and the noble Lord, Lord Strabolgi, has reaffirmed, is very successful indeed at doing its job. Any Companies Act company outside the public sector would be expected to go to the money markets to finance that part of their borrowing, if you like, for capital projects that they cannot do from internal sources; and where, as on this occasion, we have this very successful company inside the public sector, why should it be any different?
" The Government do not have to persuade financial institutions of the rightness of the company's borrowing", the noble Lord said. But the company has to convince the Government of it, and the company also has to convince the financial institutions. So I really cannot see why this should be such a damnation.
Lord Beaumont of Whitley: My Lords, the company, surely, does not have to convince the financial institutions once it has a Government guarantee. That is quite enough. It does not have to say another word.
Lord Skelmersdale: That misses the point completely, my Lords. The company does not get a Government guarantee until it has convinced the financial institutions. That is a fact.
The noble Lord also spoke about the safety factors, and, of course, the noble Lord is quite right. I am again going to be consistent. On numerous occasions I and other Ministers in the Department of Energy have said that during nearly 20 years of commercial operation of nuclear power stations in this country no accident has occurred which has given rise to significant public hazard. This is because successive Governments and the nuclear industry have attached paramount importance to safety from the earliest days of nuclear power, and we intend to maintain that excellent record. The nuclear industry as an industry is a very safe one. Any other power industry just would not measure up to the standards of safety that both Parliament and the industry itself have set, and I am absolutely sure that this is the right way to proceed.
The noble Lord again criticised me because in my speech I referred to matters outside the control of

19
BNFL. In fact, he saw me shaking my head and nodding it at various moments, and he ended up by answering his own question. So, if I may take it as a rhetorical question to which he has given the answer, I would agree with him in the answer and the conclusion to which he came.
As to whether nuclear power is or is not the way forward, we have developed this programme over 20 years and we are, of course, investigating various ways in which alternative sources and the more conventional fossil fuel sources can be used. But the fact is that we have it, and the guarantee (to go back to the guarantee) is necessary because in the two fields of the fuel fabrication part and the reprocessing of fuel by the company the company has not got overall control. If there are no nuclear power stations, of course, there will be no fuel to be reprocessed or, indeed, to be created in the first place. So I do not think it is fair to blame the company in respect of this one. My Lords, I hope T have said enough to convince the House that this is a soundly based Bill and that it should receive your Lordships' approval.
On Question, Bill read a second time; Committee negatived.

Constitutional Referendum Bill [H.L.]
3.38 p.m.
Lord Alport: My Lords, I beg to move that the Constitutional Referendum Bill be now read a second time. Your Lordships will remember that I introduced a Bill with the same Title at the same time last year. In the debate which followed a number of criticisms were made, but your Lordships were good enough to give it a Second Reading without a Division.
I did not subsequently seek to take the Bill through any further stages in this House, for two reasons. First, in view of the criticisms of the then Leader of the House, Lord Soames, I felt that it would be right to give the Government an opportunity to introduce in this Session a Bill of their own which was more to their liking. Secondly, I felt that it would not be right to ask your Lordships to give time and thought to a Bill which the Government clearly intended to use their influence to defeat in another place when the volume of business inflicted on your Lordships by the Government's own legislation was already making exhorbitant demands on our energies and patience.
However, while awaiting some indication in the recent gracious Speech from the Throne of the Government's intentions for this Session, I took the precaution of asking those who had been kind enough to help me with the drafting of my Bill to advise me as to how it should be redrafted to meet the criticisms levelled at it during last year's Second Reading debate. I therefore present to your Lordships the Constitutional Referendum Bill, Mark 2, which I believe to be a much better Bill than its predecessor.
Before I try to explain it in detail, may I attempt to answer some of the general criticisms which were and may again be made against it? The first criticism is the use of the referendum as a constitutional expedient. The precedents represented by the EEC referendum and the Scottish and Welsh devolution referenda are already very powerful. Since then, the whole question of the
20
use of the referendum, it seems to me, has become a matter of somewhat confused thinking. The Labour Party which thought it eminently desirable for the membership of the EEC issue now considers, apparently, that it should not be used to decide the issue of Britain's possible withdrawal from the EEC. The present Conservative Government, whose predecessors had very mixed feelings about the use of the referendum, within the last few weeks have proposed that a referendum should be used not in the a case of some major constitutional issue but to decide the purely local matter of the relevant level of rates as against the provision of local public services—although I understand that this idea has now been abandoned.
I recognise fully the importance of maintaining the powers of decision of Parliament in general and of the elected Chamber in particular in all matters which affect the security and good government of the country. The exception, in my view, is where the issue directly affects the structure and powers of Parliament itself. This was the real issue in the case of both the EEC and the devolution referenda. This would be the issue in the event of a proposal to abolish the Second Chamber or so to emasculate its powers as to produce the same result.
Your Lordships will remember the noble and learned Lord the Lord Chancellor's striking description of our constitution as being an "elective dictatorship". We accept that a Government with a secure majority in the House of Commons can do almost anything, except change a woman into a man; although I am not sure that that disability has not been overcome by recent legislation. But all Governments govern at their peril and retribution can be exacted on them by the voters at the next election. What they cannot do is to prolong their elective dictatorship beyond the five-year life of a Parliament because of the powers which are reserved to your Lordships' House.
This brings me to what I regard as the "myth of the manifesto". There is a general belief that Governments which are elected to power are entitled, and, indeed, obliged, to give effect to everything in their election manifesto. Therefore, if, for the sake of argument, at some future election a party won an overwhelming majority by promising to end unemployment, halve the income tax and double the standard of living and, in the small print of the manifesto, had undertaken to abolish the Second Chamber, they would, according to present theory, be entitled to do so; although your Lordships might kick up a bit of a fuss when the relevant legislation reached your Lordships' House.
I suggest that at elections those who determine the outcome vote, first of all, for people; and, secondly, they vote against parties, and particularly against the party which formed the previous Government if by any unhappy chance their period of administration has not fulfilled their expectations or their leaders are unpopular; and thirdly, they vote in accordance with an amalgam of considerations of self-interest, inherited loyalties and an instinct as to where, for the time being, the national interest lies. What they do not vote for is the small print of election manifestos.
But let me take my argument a stage further. If, at a future election, a Government come to power with the abolition of the Second Chamber as an item in their

21
manifesto, they then would be entitled to introduce a Bill in the House of Commons to carry out what they would regard as their election pledge. When that Bill came to this House, your Lordships would have to decide whether to let it go through and open the road to an "elective dictatorship" of a potentially permanent nature or to chuck it out and let the Parliament Act operate. In the latter case, your Lordships' action could be, and certainly would be, portrayed as a last-ditch effort to defend the privileges of a largely hereditary, partly nominated, completely unrepresentative and unreformed Chamber against a House of Commons elected by a majority of the nation. It would be the "Peers against the people", literally with a vengeance.
Whatever may be the criticisms levelled at the composition and character of your Lordships' House, we carry out, as the Second Chamber of the British Parliament, a number of important and, indeed, essential functions. We bring to legislation both the opportunity for second thoughts and a variety of personal experience. We are able to initiate and to help refine public discussion on moral and social issues; and, even if, under the benign guidance of our party Whips, we sometimes tend to reflect too closely the party pattern of the House of Commons, there is among the members of all parties in this House a consciousness of personal independence which is unique among the Senates of the democratic world. Above all, we are entrusted with the power to prevent a party dictatorship elected to the House of Commons for the span of a single Parliament of five years from becoming a party dictatorship in perpetuity.
All these functions and responsibilities are vested in this House as the Second Chamber of the British Parliament; they are not derived from our individual right to sit here as Peers of the Realm. However composed, I believe that the Second Chamber should have and would have, powers very little different from or fewer than we have today. It might have more— but that is a different matter.
If your Lordships look at the text of this Bill, you will see that it refers throughout to the retention and powers of a Second Chamber within the structure of the British parliamentary system, not to its composition. Your Lordships will remember very well that a few years ago we in this House voted overwhelmingly for reform—only to be frustrated by the combined efforts of the present Leader of the Labour Party in the House of Commons and the right honourable Member for the Ulster constituency of South Down. This Bill does not seek to entrench the powers and composition of the present House of Lords; it deals exclusively with the powers and continuance of a Second Chamber in the parliamentary system.
If some future Government, fortified by a pledge in its election manifesto, were to introduce a Bill into the House of Commons to abolish the Second Chamber or to emasculate its powers and if this Bill now before us was on the statute book, the Speaker would be required, after the "Abolition Bill" had received Third Reading in another place, to endorse it under Section 1(2) of the Constitutional Referendum Act —if this Bill should become an Act. It could then go no further without a referendum. If such an "Abolition Bill" was introduced, improbably, into this House
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or if the Speaker, for some reason best known to him, omitted to endorse such a Bill or if, as a preliminary to introducing a Bill to abolish the Second Chamber, some future Government were to introduce a Bill to repeal this Constitutional Referendum Act (if it became an Act) then I think it probable that your Lordships would reject such a Bill on Second Reading.
But the grounds for doing so would not be easily portrayed as an attempt to frustrate the will of the elected majority in the House of Commons or to protect the undoubted privileges which we enjoy. On the contrary, our action would be designed to give the people an opportunity, by means of a referendum, to decide whether the only effective constitutional barrier against the perpetuation of a single party in power or a one-party state was to be swept away. It would be the "Peers for the people", and, even if the result of the referendum went against a Second Chamber, it would not be a bad note on which your Lordships' House ended its historic role within the British democratic parliamentary constitution.
When under the leadership of the late Sir Winston Churchill the Conservative Party was struggling to recover from the defeat of 1945, one of the things we did was to organise an exhibition in London to illustrate our ideas. It was entitled: "Trust the People". In our ignorance and conceit we imagined that we had invented the slogan ourselves. Your Lordships will of course know that in his great speech in Birmingham in April 1884, Lord Randolph Churchill said:
"'Trust the people'—I have long tried to make that my motto …"
He went on:
"You who are ambitious and rightly ambitious of being the guardians of the British constitution, trust the people and they will trust you…
That is precisely what this Bill is all about. By a curious coincidence in the second leader of The Times today that slogan, "Trust the People", makes its appearance once again.
You will not wish me to weary you with a repetition of the detailed explanation that I gave of the Bill on the last occasion. Clause 1 enables a Bill designed to abolish or emasculate the powers of a Second Chamber (however composed) to go through all its stages in another place before the Speaker endorses it. This is in response to a number of criticisms of last year's Bill which provided that the endorsement should be made after Second Reading in the House of Commons.
The schedule lays down that the referendum should be held not less than three months' after making the order for it to be held. This will give plenty of time both for your Lordships to debate the principle enshrined in the Bill in a normal debate here and for the electorate to be fully siezed of the nature of the constitutional issues at stake. Clause 2 follows the provisions of the Scottish and Welsh Devolution Acts, as does the schedule.
Clause 3 excludes any Bill intended to amend this Bill—if it becomes an Act—from the operation of the provisions of the Parliament Act of 1911, if the former is rejected by the House of Lords. There is however one part of the Bill which is now before your Lordships and about which I have had further thoughts. If it reaches Committee stage, I should like to take the advantage of your Lordships' advice on this. That is

23
the appendix which contains the two questions to be asked in the referendum. It may be all right. However, on the other hand, I have come to the conclusion that it might be better if the questions to be asked in the referendum were not included in the Bill. Instead, it might be better if they were formulated by an impartial committee consisting of, say, the Lord Chancellor, the Speaker of the House of Commons and the senior Lord of Appeal-in-Ordinary or the Master of the Rolls.
There will be other matters on which your Lordships' views and advice will, as always, be of the greatest value. I would of course resist to the best of my ability thing which appeared at a later stage to be a wrecking amendment; but I hope that your Lordships will give this Bill a Second Reading and let it go to Committee so that your advice can be made available. What may happen to it subsequently here or in the House of Commons is a matter again this year for consultation and further thought.
I am, of course, well aware that the Government consider that a Bill of some constitutional significance should not originate from the initiative of a Private Member. As I made clear last year, I am more than willing to hand over this Bill to the Government or, if Ministers prefer to introduce their own legislation along these lines in this session, to withdraw this Bill after Second Reading, if your Lordships approve it.
However, it seems to me to be clear from the speech of my noble friend Lady Young at this year's Conservative Party Conference that the Government have set their mind against the initiative in this matter. In these circumstances, I believe that any Member of your Lordships' House has the right and the duty to promote the enactment of legislation which he believes profoundly will assist in preserving the integrity of the British parliamentary constitution.
My Lords, it is therefore in that belief that I move that the Constitutional Referendum Bill be now read a second time.
Moved, That the Bill be now read 2a—[Lord Alport.)
3.55 p.m.
Lord Jacques: My Lords, may I first congratulate the noble Lord on his tenacity in bringing back an amended version of his Bill and on the lucid way in which he has explained it. He is a man of considerable independence of thought and he pursues those thoughts with courage. I think that meets with admiration on all sides of the House.
I want to deal first of all with a sentence in the preamble:
"whereas it is expedient that the present Second Chamber should be reformed
All history shows that the institutions which cannot adapt themselves to ever-changing circumstances eventually become merely part of history. Adaptability is absolutely essential. If this House were abolished, I have no doubt that it would be said by some people that it was because it was unable to adapt itself to changing circumstances. But what could not be said is that this House has been unwilling to adapt itself to changing circumstances.
There have been three occasions in the post-war
24
period when the House showed quite remarkable adaptability. First of all, this House was faced for the first time in 1945 with a Labour Government which had a majority. It immediately came forward with what has become known as the Salisbury doctrine: that it would not oppose in principle legislation for which a Government with a majority in the other place has a mandate. The House has acted in accordance with that doctrine since 1945.
The second occasion when it showed adaptability was in 1968, largely due to the excellent work of the noble Earl, Lord Jellicoe, and the noble Lords, Lord Shackle-ton and Lord Byers, who produced a report setting forth radical changes which the House approved by an overwhelming majority—and that was at least in part due to the eloquence and persuasive powers of the noble Lord, Lord Carrington. We all know that the Bill was talked out in the other place. The reason why it was talked out was quite simple: the abolitionists know as well as anybody else the lessons of history, and because they know the lessons of history and because they want to abolish, they do not want this House to reform itself.
Lord Boyd-Carpenter: My Lords, would the noble Lord allow me to intervene? As I was a little involved in the transaction to which he has just referred, is he aware that so far from this Bill being talked out after a considerable body of discussion had taken place, it was withdrawn by the Government of the day?
Lord Jacques: My Lords, I am aware that it was withdrawn because the talking was going on for ever and other things were being held up in the meantime. If that is not "talking out", I do not know what "talking out" is. The third occasion when this House showed a great willingness to change was in the early 'seventies when we joined the EEC. The House immediately set about changing its methods and making provision for the consideration of directives from the Commission, and it did it so well that the way in which it did it and the work which is being done by the committee concerned have been admired throughout the whole of Europe.
The greatest change which has been made in the postwar period was by Mr. Harold Macmillan when, in 1958, we had the Life Peerages Act. That was the greatest change, but it was one of those changes which was outside this House.
This House is a House of persuasion rather than House of decision. It has no power to decide but it has the power to delay, to give it time to persuade the elected Chamber to make changes which it thinks advisable. So it is essentially a House of persuasion. Some of the most influential leaders of the party opposite have recently advocated that we should have an elected Second Chamber, elected on the principle of PR and, as I understand it, leaving the House of Commons elected, as it is now, on the first-past-the-post principle. I hope they will forgive my bluntness, but if ever there was a recipe for conflict that is it. With two Houses elected on entirely different principles, we would have great conflict and we would do nothing other than fall out with each other. I, for my part, have been looking for remedies which would reduce rather than increase conflict,

25
because I think we have enough conflict within our nation without sowing the seeds of further conflict.
A Second Chamber has most obvious advantages which can be stated quite simply and quite quickly. It not only gives an opportunity for fresh minds to be brought to bear upon the issues involved but a Second Chamber also enables consideration of those parts of legislation which may have been neglected by the First Chamber for any reason whatever, guillotine or anything else. But, above all, it allows the Government of the day, no matter what its colour, to have the opportunity of second thoughts in the light of the discussion in both Houses. That, I think, is of paramount importance and also, in the absence of a written constitution, it is a check on the abuse of power.
So long as this House remains a House of persuasion, a considerable case can be stated in favour of its Members being appointed rather than elected. First, it enables us to bring in expertise from outside politics which my experience here has shown me is vital, even when I was a member of the Government. It also enables us to retain the services of those wise and long-experienced ex-statesmen who are past fighting elections. We can retain their services and get their advice within this House.
My own party has had two committees considering this question over the past decade. I have been a member of both and have taken a great deal of interest in the matter. The second committee of two years ago made a number of recommendations. I need only mention the four most important ones. First, it recommended that there should be a Select Committee in the House of Commons with the Prime Minister as chairman, and that it should be responsible for considering and listing those people it thought suitable for a place in this House. Any recommendation to the Sovereign by the Prime Minister would be taken from the lists of that Select Committee.
Secondly, in keeping with the proposals of 1968 we recommended that the hereditary principle should go, that it was now out of date but that the parties could nominate to become life Peers those hereditary Peers who were taking an active part in the affairs of the House, if they so wished. Thirdly, we recommended that there should be 250 voting Peers and that broadly at any point of time they should reflect the balance of voting in the House of Commons because we believe that every Government must have ways and means of getting their legislation through.
Fourthly, on the question of delay, we felt that when there was a difference between the two Houses and the matter had gone back to the Commons a second time, the Commons ought to be able to resolve the matter by a simple resolution, unless it was a proposal to extend the life of Parliament. That, we felt, should continue as at present. The report, with those being the principal recommendations—not the only ones—received the approval of the Peers on this side of the House at their usual meeting.
I come finally to the question of referenda. The referendum, like most things, is all right if it is used with a bit of moderation and a bit of care. I believe we were right in using referenda in the case of the EEC and as regards devolution for England, Scotland and Wales. I believe that referenda should be restricted to those constitutional changes where the parties are
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not in agreement. I am in favour of that because I do not want a constitutional change to be hidden in a manifesto among all the normal day-to-day policy issues which are under consideration. I will therefore support this Bill and I know of no good reason and no formal statement by the party of which I am a member which would prevent any of my colleagues following me into the Division Lobby in support of the Bill; and I hope they will do so.

Steel: Assistance to Private Sector
4.7 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin): My Lords, with the leave of the House, I should like to repeat a Statement being made by my right honourable friend the Secretary of State for Industry in another place. The Statement reads as follows:
" With permission, Mr. Speaker, I should like to make a Statement about the private sector of the steel industry.
" When the 14 major companies in the United Kingdom steel industry were nationalised in 1967 it was recognised by the Government of the day that special measures were needed to ensure fair competition between the public sector, which was expected to represent well over two-thirds of the industry, and the private sector, which would consist of about 100 firms covering the remainder of the industry. Accordingly, the 1967 Iron and Steel Act contained provisions to this end.
" When Britain joined the European Community on 1st January 1973 the steel industry in this country came under the regime of the Treaty of Paris— —the European Coal and Steel Community—and, in so far as products fell outside that treaty, within the industrial articles of the Treaty of Rome.
"Since the competition provisions of the 1967 Act were inconsistent with those treaties, they were repealed by the European Communities Act 1972. Accordingly since then competition between BSC and the private sector has been governed by the provisions of those treaties.
" As the House well knows, the period since 1974 has been one of continuing, indeed intensifying decline for the whole European steel industry. Production in Europe which in 1974 was 156 million tonnes of liquid steel had fallen by 1980 to 128 million tonnes, leaving substantial spare capacity.
" Price competition became increasingly intense. Prices today are lower in money terms than they were two years ago. At the same time, costs— particularly energy costs—have continued to in. By mid-1980, there was hardly a steel company in Europe operating profitably. These difficulties were so great that, although the Treaty of Paris prohibits state subsidies to the steel industry, the Council gave its assent to a decision of February 1980 which allowed the Commission to give temporary approval to state aids linked with restructuring. Towards the end of 1980, mandatory production quotas were introduced by the Commission with the approval of the Council.

27
" Despite these measures, by mid-1981 the Community steel industry faced crisis conditions. Prices were well below any possible break-even point for the industry and severe disruption through massive over-capacity and unrestricted competition threatened
" Accordingly, a further crisis package of measures was agreed, comprising the extension of mandatory production quotas for some products, voluntary industry restraint agreements, monitored by the Commission, for others, and strict enforcement of the ECSC rules on pricing transparency by both producers and the larger distributors.
" The measures to stabilise prices and to increase them so that firms may once again move into profitability will, of course, help the private sector along with the rest. But, by itself, this will not be enough. In other Community countries, various forms of aid are available from Governments both to public and privately owned companies. In Britain, help has been confined to the British Steel Corporation. The private sector has received no assistance, apart from regional aids which are also available to BSC. Since 1975, successive Governments have made available to the British Steel Corporation a total sum approaching £5,000 million, partly to fund operating losses, partly to finance investment in the modernisation of plant and partly to meet the costs of closures and rationalisation—mainly redundancy and resettlement costs.
" The British Independent Steel Producers' Association have for some time been making representations to the Government about the extreme unfairness of the system under which they are expected to operate. They have pointed out that steel is unique in that it has its own régime under the Treaty of Paris—something which is not applicable to any other industry. They have pointed out that in no other European country have massive sums of aid been given to the public sector while nothing has been given to the private sector. They have pointed out that the effect of this is that even where Community aid is available it has gone exclusively to the BSC.
" I have been giving urgent consideration to this powerful case. I am pleased to tell the House that I have decided to introduce a scheme under Section 8 of the Industry Act 1972 to help the private sector steel companies in Britain with rationalisation and restructuring projects and with the costs of redundancies. The scheme will offer up to £22 million of assistance to the industry by the end of 1984. Eligible projects will attract grant at the rate of 25 per cent. The scheme will also guarantee 85 per cent of the cost of statutory redundancy payments and provide a maximum contribution of £500 per person to the employers' costs of any ex gratia or severance payments.
" This scheme is intended to cover steel products as defined by the Treaty of Paris with the addition of the drawing, cold rolling and cold forming of steel (excluding the drawing and manufacture of steel wire and wire products). I will publish details of the eligible sectors of the industry in the Official Report, and they are available in the Vote Office. Full details of the scheme will be available very shortly from my department.
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" The scheme has, of course, to conform with the obligations we have undertaken when we agreed to the ECSC decision on state aids promulgated in August of this year. As such, it has to be confined to assisting restructuring, rationalisation and redundancies. Applications for help with restructuring projects must be made by September 1982; No payments can be made after 31st December 1984. As required by the treaty, the scheme is being notified to the Commission for approval, but I do not anticipate difficulties in this regard.
" Quite separately, the steel casting sector has drawn up a scheme to allow the rationalisation of that part of the industry whereby firms reducing capacity would be compensated by a voluntary levy paid by companies remaining in production. To work, the scheme requires front end loading, and I am giving urgent consideration to making a grant under Section 8 of the Industry Act 1972. Any payment would be conditional on a substantial majority of this industry agreeing to fund a significant reduction in capacity, thus fulfilling the requirements of Section 406 of the Income and Corporation Taxes Act 1970.
" Mr. Speaker, the Government are determined to secure the survival of a healthy, profitable and, hopefully, expanding private sector in steel. I believe the measures I have announced are fair and responsible. They can be accommodated without any increase in the allocations to my department. I commend them to the House."
My Lords, that is the end of the Statement.
Following is the information referred to in the Statement:
ELIGIBLE ACTIVITIES
Assistance will only be considered in respect of establishments in the private sector primarily engaged in the following activities:

SIC

Activity ex 2210

Manufacture of the following products, described in Annex 1 of the ECSC Treaty, from ordinary or special steel:

(i) Crude and semi-finished products, including products for re-use and re-rolling (liquid steel for casting; ingots for remelting and forging; semi-finished products such as blooms, billets, slabs and bars; and hot-rolled wide coils other than finished products);

(ii) not-finished products such as rails, sleepers, soleplates, joists, heavy sections of 80mm and over, sheet piling, bars and sections of less than 80mm and fiats of less than 150mm, wire rod, tube rounds and squares, hot-rolled hoop and strip hot-rolled sheets under 3mm, plates and sheets of 3mm thickness and over, and universal plates of 150mm and over; and

(iii) certain steel sheets and strip: namely, tinplate, terneplate, blackplate, galvanized sheets and other coated sheets; cold-rolled sheets under 3mm; electrical sheets; and strip for tinplate.

2235

Drawing, cold rolling and cold forming of steel(excluding the drawing and manufacture of steel wire and wire products). This covers units engaged in cold rolling steel hoop, strip or sheet (over 3mm) from purchased or transferred hot rolled sheet; cold drawing steel bars and shapes from purchased or transferred hot rolled steel bars; and the manufacture of other cold finished products (except wire and wire products) not specified in the ECSC Treaty.

Assistance will not be considered in respect of establishments primarily engaged in the manufacture of raw materials for iron and steel production, pig iron and ferro-alloys, iron products, or steel products other than those listed above.
4.15 p.m.
Lord Bruce of Donington: My Lords, the House will wish to thank the noble Lord for the very lengthy and comprehensive Statement that he has made. I have said "lengthy", but we make no complaint about that. The steel industry in the United Kingdom is one of the sinews of its productive power and we should not cavil, therefore, when some considerable effort is made to help it. Indeed, it may well be thought that the issues raised not only by this Statement, but also by the preparation of the BSC's own report, might provide a convenient opportunity for the House to debate the steel industry as a whole on some future occasion.
We on this side of the House support the measures that have been announced by the noble Lord, even though they amount to some £22 million, which is not a very considerable sum when measured against the real need. At the same time, the noble Lord cannot complain if we say to him that this, of course, represents a reversal of the policy of non-intervention in private industry which, in political terms, the Government are so assiduous in pursuing. He will understand when we say, without complaint, that it represents a minor U-turn. In so far as the penetration of logic has convinced the Government in this instance to abandon a somewhat more rigid instance, we on this side of the House support it.
The noble Lord gave some account of the miseries and the uncomfortableness, generally, of the steel industry in Europe. We now learn, although we were not told before within the political context, that most steel companies in Europe have been making a loss. The general public in the United Kingdom is sometimes given the impression that it is only nationalised industries in the United Kingdom that make a loss. But we are now reassured that all, or practically all, of the steel-producing companies in Europe are making losses or, in the words of the Statement, are failing to reach "break-even point".
The noble Lord has given some reasons as to why the British industry and, in particular, its private sector has suffered. In his Statement, he gave as an example rising energy costs. Yes, my Lords, he can say that again. Up until 31st March 1981, there had been a 20 per cent, increase in electricity prices, a 36 per cent, increase in gas prices—and more are still in the pipeline since that time—and those price increases have been dictated by the Government themselves. In so far as it is dependent on exports, the steel industry has also suffered from a high exchange rate, which, of course, has meant, once again, that European steels have been more competitive. But more serious than that, one of the basic reasons for the decline in the fortunes of the steel industry—and I am talking in terms of the private sector producing some 1 million tonnes less for the year 1980–81 than for 1979–80— has been the fall-off of domestic steel by ordinary manufacturing industry. This is part of the consequences of the general policy of deflation which has been followed by the Government in pursuit of their
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monetary doctrine. We support therefore the grant which is going to be made and the extra percentage of support which is going to be given for redundancy payments.
We are, however, a little anxious to know what is meant by that portion of the Statement which says:
" Any payment will be conditional on a substantial majority of this industry agreeing to fund a significant reduction in capacity, thus fulfilling the requirements of Section 406 of the Income and Corporation Taxes Act 1970 "
Could the noble Lord tell the House what is meant by "a significant reduction"? Is it anticipated that the domestic demand will remain as low as it is now? And is it anticipated that overseas markets will be restricted even more than they are now, bearing in mind the observation of the noble Lord's right honourable friend that a slight increase in manufacturing production (dare I mention it?) of 1 per cent, is anticipated in 1982? When are these projected or promised increases in production going to filter their way through to the steel industry?
In one part of the Statement mention is made of an increase in steel prices as, no doubt, part of the task of restructuring the European steel industry as a whole. Away with the price declines that come inevitably from the practice, acceptable to the Government economists, of free competition in its purest form! Has the noble Lord formed any assessment of how much prices are going to rise? And could he give some indication of the ultimate effect of that price rise on the retail price index? With those few words and apologising to some extent for the critical note that one is forced to adopt on these occasions, we are very grateful for even this small amount of aid which the Government have decided to give by way of intervention in private enterprise.
Baroness Seear: My Lords, we on these Benches would also like to thank the Minister for repeating the Statement. Obviously the objective must be, with our partners in Europe, to move towards a smaller, more efficient, more competitive steel industry. But given the state of the steel industry throughout the Community at present it is, sadly, inevitable that this means assistance to the industry in order to be able to reduce capacity to the state at which it will be possible to build up that more efficient and competitive industry. Therefore, we very much welcome the fact that the Government have decided to take this step.
In the development of the steel industry of the future, to us it is obvious that the private sector should play a considerable—we would hope an increasing role. It is clear also that in the past the private sector in relation to the British Steel Corporation has had a pretty raw deal. We are glad therefore that the Government are intervening in order to help the private sector. We believe that from that part of the steel industry (as well as, we hope, from the public sector) will come the steel industry of the future that we wish to see. Therefore, far from jeering at the Government for a small U-turn, if that is what it is, we welcome the fact that the Government are taking a pragmatic line. We only wish that they would do so on a great many other occasions. I can assure the Government that every time they do we shall applaud rather than scorn them for their second thoughts in this manner. We

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are very glad that this is the line they are taking at present.
May I add just two comments. Surely this is an example of the way in which it is highly desirable that in economic development we should work with our partners in Europe. It would be ridiculous for the steel industry of this country to attempt to plan its future without regard to what is happening in Europe. If, indeed, the Labour Party had its way and we had to operate in isolation from Europe, the position of the steel industry would be a great deal more unfortunate than it is at present.
We should also like to suggest that in the private sector steps ought to be taken to encourage a higher degree of employee involvement. We hope that in the future these companies will be profit-making. Would it not be appropriate to suggest the development of schemes so that employees can share directly, through profit-sharing schemes of one kind or another and through greater employee participation, in the well-being, to which we look forward, of this section of the industry?
Lord Bellwin: My Lords, I am grateful to the noble Lord, Lord Bruce of Donington, and the noble Baroness, Lady Seear, for their support. I appreciate their reluctance in some ways. Nevertheless, I think I understand why. The noble Lord, Lord Bruce of Donington, referred to this as a reversal of the policy of non-intervention. I do not think anybody would quarrel with the statement that the private sector of the steel industry faces very special difficulties in as much as it competes both with a subsidised European industry and also with the British Steel Corporation which is substantially supported by the taxpayer. It is true to say that this applies to no other industry in this country.
The fall-off in domestic turnover is due, the noble Lord, Lord Bruce of Donington, said, to our deflation and monetary policies. This hardly fits with his other observation: his pleasure that I had emphasised that this is the situation in other countries. Not all of these other countries have adopted the same policies, yet they seem to be in the same situation. Therefore we must accept that the reasons for this fall-off are not those which the noble Lord gave.
The noble Lord also asked me what is meant by "a significant reduction"? Well, how long is a piece of string? This will depend upon the part of the industry concerned, the latest demand prospects and so on. It is very hard to do other than to generalise and express, as I have tried to do, the expectations. The noble Lord also asked me how much the increases in steel prices would be and what effect these would have. I am sure he will appreciate that I cannot give him this information now. Indeed, I doubt whether I could even write to him about it, because this is something which will develop as events follow through.
I was appreciative of the remarks made by the noble Baroness, Lady Seear. She said that she hoped that in future there would be encouragement of a high degree of employee involvement in the private sector of the steel industry. I imagine that during the last few years the employees in the private sector have been very glad that they did not participate in shareholding schemes,
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because there are always losses as well as profits. One of the great fears regarding that type of involvement is what you do when there are losses. It is fine when one talks about sharing out profits. But here it is not just a question of profits; it is a matter of losses as well.
I do not think I can add further to what the noble Lord and the noble Baroness have said, but I repeat that I am very grateful for their support.
Lord Beswick:My Lords, is it not a fact that these sums of money which are being distributed through the Brussels organisation are being made available only on condition that there is a reduction in the total capacity in Western Europe at a time when capacity is being increased in other parts of the world? What agreement on this has been reached in Brussels? What is the proportion of the United Kingdom reduction as compared with the agreed reduction in France, Germany and Belgium?
Lord Bellwin:My Lords, at this time I certainly cannot give the noble Lord that information. I will be glad to write to him with that information so far as it is available. I suspect, however, that it is not readily available as such, because I would imagine that the general policy of assisting in the way that is being done in other countries, and which we are now trying to follow, is something which they have done for a while. But I would say again that they do not have the situation which we have here, where their taxpayers subsidise a nationalised sector of an industry in competition with the private sector. I do not believe that it will not be easy to draw exact comparisons, but, if the noble Lord would like me to do so, I would be very glad to give him such additional statistical information as I can obtain.
Viscount Hanworth:My Lords, I welcome this Statement. Some noble Lords may remember that a few months ago I raised the very difficult situation of one company and the most unsatisfactory method which the Government had pursued in relation to them. Would the Minister not agree that at least a large proportion of the trouble with our steel industry has been due to adversary politics between the two parties; nationalise steel, denationalise steel and renationalise steel? How can any firm look ahead when its future has been as uncertain as that? That is one reason— the fact that adversary politics of that nature are no longer tolerable—why I sit where I do today, on the SDP Benches.
Lord Bellwin: My Lords, I really do not think that what the noble Viscount refers to as "adversary politics" is connected with it at all. The fact is that a Government of a certain complexion set out to follow a policy which they believe the right way to help the industry concerned. If events prove to be that, in the opinion of a successive Government, that is not the right way, then they will follow their policy. But I do not think that it is a matter of adversary politics as described by the noble Lord at all. The fact that this situation applies all over Europe means that one simply cannot say, "This is brought about by one Government or another", because one would then have to go to all

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the other Governments of all the other countries and try to apply the same. Clearly, I do not think that I can agree with what the noble Viscount said as to that.

Constitutional Referendum Bill [H.L.]
4.33 p.m.
Second Reading debate Resumed.
Lord Boyd-Carpenter: My Lords, as the debate on the Bill of my noble friend Lord Alport has been interrupted, I believe I can best serve your Lordships if I first of all make two points in reply to the noble Lord, Lord Jacques, before returning to discuss the major issues of policy which my noble friend Lord Alport raised in his speech.
The noble Lord, Lord Jacques, was good enough to give way to me when, inadvertently I am sure, he misrepresented history. He referred to the debates in another place on the Parliament (No. 2) Bill introduced in 1968 and withdrawn in 1969. He used the expression, which as an old House of Commons man he knows has a precise significance, that the Bill was "talked out". The noble Lord will know that a major Government Bill is never talked out because in another place the Government command the time of the House, and he will know as a matter of history that after considerable debate but not, I suggest to your Lordships, debate excessive in view of the importance of the issue, the Government of the day withdrew the Bill.
There was no obstruction. If there had been, it stands to reason that the Government, with a majority of 100 in another place, would, if a Bill they really wanted was being obstructed, have introduced a guillotine. There was no mention of a guillotine. Indeed, the then Prime Minister—the now right honourable Gentleman the Member for Huyton— told the House that the Bill was being withdrawn— and here there is a certain irony in the matter— in order to make parliamentary time available to legislate the effect of the White Paper, In Place of Strife. The noble Lord, Lord Jacques, will remember what happened to that proposed legislation.
Lord Peart: My Lords, may I intervene? It just so happens that at that time I was Leader of the House of Commons and the issue of a guillotine, I can assure the noble Lord, was very important. The difficulty was that if we had put it to the House and had a vote, probably we would have lost because of the filibustering tactics of certain Members whom I will not name.
Lord Boyd-Carpenter:My Lords, I find that intervention one of intense interest because what the noble Lord has said—and I do not think that he has quite realised it—is that, despite their majority of 100, there was so little support on the Government's side in the House of Commons for this Bill that he could not have got a guillotine through in the face of what he describes as obstruction. This is an extremely interesting admission, albeit 13 years late. Does the noble Lord want to add to it?
Lord Peart:My Lords, if the noble Lord, Lord Boyd-Carpenter, reads Hansard he will know that I
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mentioned this when we had our last debate on this subject.
Lord Boyd-Carpenter:Yes, my Lords, and the noble Lord will know that he did not do anything, even though he had a majority of 100. Of course, he knows, with respect, that he did not do anything because he knew he did not have support, even among his own large majority in another place, for a guillotine, because it was generally understood in his party, as in mine, that this was a rotten, bad proposition for a Bill and it was better dropped.
Lord Beswick:My Lords—
Lord Boyd-Carpenter: I am so sorry, my Lords, but I have given way twice. I am dealing at the moment with the noble Lord, Lord Jacques, but if the noble Lord, Lord Beswick, wishes to intervene on something that I say later, then perhaps he would so indicate. The noble Lord, Lord Jacques, said something that astonished me. He said not only that he personally proposed to support this Bill—which, of course, he is perfectly entitled to do as a Member of this place— but that he knew of nothing in it inconsistent with the policy of his party in his so doing. My Lords, it is common knowledge that the policy of the party of which he is an ornament is to abolish this House. This has been affirmed by his party's conference, which I understand is now sovereign in these matters, and repeated by the Leader of his party, whose services on the 1968 and 1969 occasions I would at this point gratefully acknowledge.
My noble friend Lord Alport said specifically on the last occasion that the purpose of this Bill was to prevent this House from being swept away. It is a little difficult to see how the noble Lord, Lord Jacques, reconciles these two things. It is perhaps significant that he did not speak from the Despatch Box, although he opened the debate from that side. He spoke from the second Bench and it may well be that this is an indication that he will shortly be moving three Benches further back.
Lord Jacques:My Lords, there are several points to which I wish to reply. First of all, why am I speaking from the second Bench? It is not customary for a Deputy Chairman to speak from the Front Bench and so I speak from one Bench behind. Secondly, as far as "talking out" is concerned, I used the phrase "talking out" in quite a literal way and in quite a loose sort of way. I was not referring to any particular standing orders, and to all intents and purposes the Bill was talked out. Incidentally, I believe that the leader of the House of Commons on that day was polically wise not to put the guillotine question; to have done that would have been silly. I now come to my final point: how do I reconcile my party's decision to abolish with my support of the Bill? That is quite easy. This Bill is not saying, "Abolish" or, "Don't abolish". This Bill is saying, "Have a referendum". My party has made no decision on that issue and therefore I am quite free to follow the noble Lord, Lord Alport, into the Division Lobby.
Lord Boyd-Carpenter:My Lords, I am sure that the noble Lord, Lord Jacques, will always be free to follow

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his conscience, as we all would. But he must recognise that the noble Lord, Lord Alport, takes a different view of the effect of his Bill because he said last year that its purpose was to prevent this place from being swept away; to prevent precisely the thing which the noble Lord, Lord Jacques, knows perfectly well is the policy of his party. But I will leave him to discuss that with his colleagues.
I turn now to my noble friend Lord Alport. There are three basic considerations which I think your Lordships will wish to weigh in deciding your attitude to this Bill. First of all, is it light and sensible at this time to propose a constitutional amendment of this kind? Secondly, if it is, is it appropriate for this to be done by a private Peer? And, thirdly, if the answer to both those questions be "Yes", does this Bill effectively do it? I will not take up much of your Lordships' time on the first two points. They are very much matters of opinion and of judgment, on which noble Lords will form their own views.
My view, for what it is worth, is that this is not an appropriate moment to start seeking to alter the constitution. And I feel even more emphatically that, if this is to be done, it should be done on the responsibility of the Government of the day and after that consultation with all parties which, in my view, is a basic necessity of constitutional change, and which can in practice only of course be undertaken by a Government speaking for the party in power. My noble friend Lord Alport said, quite fairly, that he had invited Her Majesty's Government to do this last year and they had fairly clearly indicated that they were not going to do so, and therefore he felt free—he is, of course, perfectly free—to bring it forward.
My Lords, that does not get out of the practical difficulty that if the constitution is to be altered in a serious matter of this sort an attempt to get inter-party consensus and agreement is really essential. We cannot have a situation in which the constitution is altered from Parliament to Parliament in accordance with the varying ascendency or departure of particular Governments. I do therefore suggest to your Lordships that, praiseworthy though my noble friend's initiative is in putting this matter before your Lordships, there is a very real difficulty in his path, and that is that he does not speak for, nor, as far as I know, represent the opinions of, the Government of the day. I was going to seek to pay him a tribute for the way in which he introduced his speech. Then I looked at last year s debate, and I see that, in winding up, in a reference to me he said that whenever I paid a generous tribute this aroused in him the timeo Danaos syndrome and that he was pretty certain that if I said nice things about his speech I was going to introduce something unpleasant afterwards. As I should hate to say anything unpleasant to my noble friend, I do, therefore, feel inhibited from praising his speech today. I hope that that will quieten his apprehensions.
The third point of substance to which I desire to relate my remarks is whether this particular proposal does in fact make sense. First of all, as I have already mentioned, it is intended, according to my noble friend's words last year, to prevent this place being swept away. But it does nothing about the only direct threat which has been uttered. That is the swamping
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of this House by the creation of 1,000 Peers. It does nothing whatever about that. That is the only specific threat that has yet been issued. As a defence, therefore, of this House, it rather resembles the defences before the war of Singapore Island, with all the great guns facing out to sea and the enemy coming up from behind. It is not in fact an effective defence of this House.
And, it does introduce the referendum. I have, as I said last year, grave doubts about the wisdom of a referendum. My noble friend, in a splendid outburst of rhetoric—perhaps he will allow me to say that—in his winding-up speech last year, said that those who did not want a referendum failed to trust the people, and he referred today to trust in the people. But, my Lords, it is a question of trusting the people to do what? We do trust the people under our constitution, at a general election, to judge between the parties. They there have as material for judgment not only the records and programmes of the parties, they have the personalities of the leaders, the personalities of the local candidates, which I still firmly believe is of very great significance in a great many constituencies. They have a broad spectrum on which to apply their judgment. It is quite a different thing to introduce "the people" in this sense in the middle of the legislative process, to take a vote on one particular day, regardless of what else may be happening on that day, whatever else may be distracting the attention of the people on that day, to take a decision as part of the legislative process, which historically, and I think for good reason, has been the prerogative of Parliament.
It is no indication of lack of trust in the people to suggest that not all the 35 million—or whatever it is— electors will actually have read the Bill to abolish or emasculate this House, or studied with anxiety the Committee stage debates in another place. It is at least possible that some of them might not be able to pass an examination on its detail. Therefore, the task they have is totally different from that which they face at a general election, difficult though that can sometimes indeed be, and wrong though their decisions, as all of us in this House would agree, have sometimes been in the past, though we may differ as to which occasions. It is totally different. It indicates no lack of trust in that sense of the people to say that the referendum as a part of the legislative process is a very inappropriate and dangerous thing.
It is dangerous because it is not clear where it stops. The abolition or weakening of this House is certainly an important matter. So are many others. And, if we accept this as part of the process of legislation and reform of this House, why should it not apply to the Budget, which is very important, or the rates, indeed? They do not seem to have aroused enormous enthusiasm, even in my noble friend, and certainly not with me. What about the levels of national insurance benefit, or half a dozen matters of major import, many of them, let us face it, of even greater import to the people of this country in their own judgment than the future of this House? So I think we must be very wary of introducing the referendum.
Even if we are to introduce it, it is, with respect, in the wrong place—after Third Reading in the Commons, in effect—because the Bill we are talking about will not have passed this House. We are talking

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about doing this after Third Reading in the Commons. This means that the electorate will be called upon to pronounce before the Bill is finalised. It will still, if the vote is favourable, come to this House. It will certainly be amended. It is more than possible that the amendments or some of them may be accepted in another place. Yet the people's judgment will have been taken at the stage when the measure is not complete. It will also have been taken at a stage when this House will not have debated it as a Bill. My noble friend sought to avoid that by saying that we could during the three months' standstill debate the issue. There is all the difference in the world, as everybody knows, between debating an issue and debating a Bill. And it is the Bill which the people will be asked to approve; they will be asked to approve it before this House has had an opportunity of debating it and expressing its views. In these days, when the media treat this House, I am glad to say, very well, when debates here are well reported on the air and in the press, it could well be that debates in this House would influence the people very much. Surely to take the referendum before this House has debated the matter is really to condemn us before we have been heard. Therefore, this does seem to me a very wrong place in which to put it.
There is another difficulty. The Bill will come here only if it gets 40 per cent, on the referendum, plus having got a majority in the Commons. If it comes to us on this basis, may not many of us feel that this measure has the assent of the elected Chamber and has the express consent of the sovereign people at a referendum, and who are we to seek even to amend it? There will be a very strong moral feeling that the whole issue is settled and that we should not exercise our remaining powers in order to seek to modify it or to delay it. Therefore, if we are to have a referendum —and I suggest that it is too dangerous and too bad a precedent to have at all—then my noble friend has certainly put it in the wrong place.
I wish to make two other brief comments, and am sorry to have detained your Lordships. Last year I drew attention to the fact that paragraph 11 of the schedule seeks to exclude the courts from examining whether the vote on the referendum has been properly taken. I asked my noble friend last year why he sought to exclude the courts. He did not, in fact, find time to answer that question. I therefore repeat the question this year because we are assuming a vote taken on a matter of intense party feelings, intense excitment, and it is just in those circumstances that those of us who have fought elections know very well that irregularities, personation and loss of votes take part. And, in advance, to deny to the courts of this land the right to examine whether the vote has been properly taken seems to me a very dangerous error indeed.
Finally, there is the point in the recital to which the noble Lord, Lord Jacques, referred, that it is assumed that this House shall be reformed. Until I know what sort of reform is contemplated I would feel great difficulty in giving support to a statutory statement, on the authority of this House, that it is expedient that we be reformed. It is easy in a woolly sort of way to say that by "reform" we mean the type of reform that we, individually, would like. This is a little ducking the issue. For this House to put on record that it is
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expedient that we be reformed, without the slightest indication of what shape that reform would take, seems to me a very dangerous thing to do. Although, as my noble friend knows perfectly well, his Bill has no chance whatever of passing on to the statute book, it would still, I suggest, be dangerous for your Lordships to affirm this.
4.52 p.m.
Baroness Burton of Coventry: My Lords, a few minutes ago it seemed to me that we might never reach this next speech, but if the time taken has settled the difference between the noble Lord, Lord Boyd-Carpenter, and the noble Lord, Lord Jacques, it probably was time well spent. I should like to return to that point a little later but possibly with a little less erudition on actual principles.
We have, indeed, been here before. It was practically a year ago to the day—Monday, 8th December— when we had the Second Reading of Lord Alport's previous Bill. I should like first of all to renew the appreciation I then expressed for what the noble Lord, Lord Alport, has done. It seems to me that it gives us an opportunity of discussing something which is very important to that overworked word today, "democracy" and parliamentary democracy. I welcome it and I thank him very much for the opportunity that he has given us.
In common, probably, with other noble Lords— because I think there is not a lot of disagreement in this House on this matter—I am not particularly in favour of a referendum and I do not believe that perhaps that is the best possible way of dealing with the matter. But I am entirely convinced that we should look again at the future of this House and I personally would hope that we could do so during this present Parliament.
We on these Benches believe in the reform of a Second Chamber and that is the one plank on which I wish to speak today. I agree with, I think it was, Mr. Macmillan, who said that there were advantages in a speech which dealt only with one point, particularly if one hoped to make progress. One can hope and one does not always make progress, but it seemed to me sensible to try to follow that out.
Today I very much wish to stress that the aim of my remarks is the retention of a Second Chamber, but I am not going to be led astray into saying how I think it should be composed or what should be done about it. In common with the noble Lord, Lord Jacques—I nearly said with my noble friend Lord Jacques, but I expect he will bear with that—he and I were both members of the two groups which merged into one which was set up by the Labour Peers in recent years. We considered the whole question of the future of a Second Chamber and we made certain recommendations. The first group was chaired by the noble Lord, Lord Champion, whom we remember with much affection and who we were very sorry was not able to continue any longer coming to this House. The second group was chaired by the noble Lord, Lord Lee of Newton, who did a first-class job and to whom we all paid tribute at the debate of a year ago. I thought that we produced a good report and one which we hoped would prove a reasonable basis for discussion. Personally, I hoped that it would be discussed by the whole House, quite irrespective of political divisions.

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We worked under the considerable disadvantage— and the noble Lord, Lord Boyd-Carpenter, has referred to this—of knowing that it was, and is, Labour policy to abolish this Chamber and install single chamber government. That is the official policy of the Labour Party at present. The great majority of my noble friends—and I hope that my past noble friends will not mind being referred to in this category when I am making this speech, because I believe we feel alike on this matter—the vast majority of the Labour Peers in this House, wished to see reform and not abolition of this House. I took note of the remarks of the noble Lord, Lord Jacques, earlier today when he said that if this matter went to a Division he would support the Bill. He hoped that it would receive a Second Reading and I took it as meaning that he was not in support of the abolition of a Second Chamber.
I have read once more the speech of the noble Lord, Lord Peart, of a year ago and it was obvious, I venture to suggest, that he was no supporter of single chamber government, either. I do not want to go into who withdrew what or why it was withdrawn, but I think it was withdrawn because the votes were not there. I have gone back to 1968, and the noble Lord, Lord Peart, gave us the actual voting figures in 1968 when the White Paper was debated in another place. Those voting for reform and in support of the White Paper numbered 159, and those against, 270. In this House approval was given by 251 votes to 56. I think that those figures speak for themselves.
A year ago the noble Lord, Lord Soames, as Leader of the House, told us that this Government—this present Government—were totally committed to the maintenance of a Second Chamber. Indeed, at column 628 in our debate on 8th December, speaking of the noble and learned Lord the Lord Chancellor and of himself, he said:
" he and I, and of course our predecessors before us and those who will come after us, are bound to have a constitutional bias in favour of the independence of a Second Chamber. If the House of Lords is under threat, if that be true, it is not simply a threat to this House but to what this House represents; something of a guarantee of constitutional government in this country ".
That is exactly what I, from a much less exalted position, tried to express in our original debate, and it expresses what I feel today.
Is it under threat today? I am quite sure that the great majority, I would think the overwhelming majority, of your Lordships' House believe in the existence of a Second Chamber. That must apply to the Government Benches, to the official Opposition Benches, to the Liberal and to the Independent Benches, and to our new party, to which I am proud to belong, the Social Democrats.
Where, then, is the threat? The threat, of course, comes from the extremists in another place, which of course means—and I regret the remark being made here—from the present official Opposition. They have no room for parliamentary democracy as most of us understand it, and this is being underlined day by day, not only by what they say but is being made evident by the steady drift away of so many of us who served the Labour Party for many years and who left it with great sadness. This extremist attitude and the refusal over many years to fight against it, is the reason for the existence of we Social Democrats,
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and it is the reason, I believe, why we offer hope today to so many disillusioned people.
Reverting to my question of whether or not this House is under threat today—is it? If the main thrust comes from an extremist minority, should we leave it and just hope that it will go away, or be defeated? Other noble Lords may have had longer in Parliament, but I have had 30 years in both Houses of Parliament and I know this extremist element. Rest assured, it will not go away. Then, if it will not go away, will it be defeated? Yes, I think that it will be defeated at the next election; but one never knows, and what you and I mean by parliamentary democracy must, I suggest, be maintained until both Houses of Parliament and all Members of both Houses can look at the reform not only of this House but of procedure in general.
So what is the attitude of the Government? I hope and believe that it is what was expressed by the noble Lord, Lord Soames, in my quotation from 8th December. But, of course, we did not get the action for which the noble Lord, Lord Alport, was asking. On the other hand, when the noble Lord pressed his Bill to a Division, the Government did not appoint Tellers and the noble Lord, Lord Alport, won by default.
So I repeat, what is the attitude of the Government today? Speaking in advance of the final speech from the noble Baroness, Lady Young, the Leader of the House, I do not doubt that their attitude remains the same; that is, a total commitment to the maintenance of a Second Chamber. But I want to be sure. We want reform but, speaking for myself and I am sure for my noble friends on these Benches, we do not want to run the slightest risk of abolition before constitutional reform can be discussed in the detail which is necessary for so important a step in this Parliament.
I have not heard the noble Baroness, Lady Young, speak on this issue, but I have a copy of the report in The Times of 17th October stating what she said in reply to a Motion calling for reform of the House of Lords made at the conference of the Conservative Party. If I may quote—and I trust that the report is accurate—the present Leader of our House said:
" that reforms could not be achieved in the lifetime of the present Parliament…that major constitutional reform, which was far-reaching and fundamental, could only proceed on the basis of all-party talks. Those would need in turn to be on the basis of agreement on the type of reform which might take place, and there was no sign of that agreement ".
The noble Baroness, Lady Young, went on to remind the conference:
" that, in case she sounded too pessimistic, when there had been all-party agreement for reform in 1968 it foundered on an unlikely alliance of Michael Foot and Enoch Powell, who objected for totally different reasons ".
Many of us will remember that disappointment— successful largely because of considerable skill on points of order and procedure permitted in another place which made progress impossible. I think that the vote was not there, but that the points of procedure contributed very greatly to that defeat. I know that the noble Baroness concluded by saying that the Government would continue to search for changes in the House of Lords which could be widely acceptable to all parties.
But I come back to the point where I started: the

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one point that I am after. And here I use the same word as I used a year ago—despotism—and I use it deliberately. I am firmly convinced, as are my noble friends, that single Chamber government would spell the end of parliamentary democracy in this country, irrespective of whichever party was in power. Because of that belief we on these Benches support the Bill put forward today by the noble Lord, Lord Alport. As I said at the beginning, a referendum may not be the best way, or the only way, of maintaining the existence of a Second Chamber, but at least it is a practical proposal and the only one which we have had before us up to now.
Apart from anything else, I see considerable difficulty in framing the right question to be asked in the referendum. The noble Lord, Lord Alport asked those of us who were speaking today to say whether we felt that it would be wiser—he definitely used the term "wiser" —not to include the appendix as set out in the Bill with the suggested questions. My humble opinion is that it would be much better not to include them, and I do that for a cowardly reason: that I do not like either of those questions and I cannot think of a better one. I think that it would be very difficult to ask a question which the public really understood—and I am not being insulting to the public—for they would not have a clue as to what type of work we do in the House of Lords. I think that to do so would be pointless. So I would suggest that we do not include any questions in that respect.
For many of us who do not want a referendum the giving of a Second Reading to this Bill would mean an opportunity for further discussion, and that we would welcome. I was very glad to hear the noble Lord, Lord Jacques, make a point that I had not heard made before; namely, how willing we in this House had shown ourselves to adapt ourselves when possibilities came forward. I hope the majority of people will not believe—but some will say it—that we are speaking here simply to preserve our own existence, but rather because we really believe that we have a job of work to do and that it would be useful if we were here to do it.
I should like to put one further suggestion to the noble Baroness the Leader of the House. Would the Government feel able to offer all-party constitutional talks to take place during the lifetime of this Parliament? Included in such talks could be the future of the House of Lords and also—something very important—the improving of relations between our two Chambers. My noble friends on these Benches believe that this constitutional problem should not just be left in abeyance. I hope that the Government will agree.
Perhaps I may end oh a strongly held conviction. I believe that the British people do not want a Government of extremists, either from Right or Left. We are not an extremist country and single Chamber government would open the way to such extremism. We on these Benches, and I believe the whole House, would oppose the destruction or the erosion of our parliamentary democracy. But I would beg the Government to realise that goodwill is not enough, not with the people who are lined up against us. We have all seen what inaction has done to the Labour Party, and I would not want that to happen here.
5.8 p.m.
Lord Reigate:My Lords, I congratulate my noble friend on having shown a degree of persistence in, again, bringing forward the Bill, a slightly different Bill from that which he brought forward last year. I supported him last time and I shall support him again this time in, I hope, the Division Lobby. If he is slightly despondent at having to go through this more than once, he can take some comfort from my own experience when I introduced the Bill to establish what is now known as the National Heritage Fund. It was rejected twice by Governments, it was subsequently adopted by a Government, which gave, I thought, singularly little credit to your Lordships' House for its initiative.
It is a year since we last debated this subject, and much of the debate then related to reform rather than to the referendum, and some of the debate has today. I do not propose to discuss reform myself. I think that it is quite right that my noble friend's Bill should include the expediency of reform in the preamble; but, if I may say so, I think that he is copying the precedent —not a very good precedent—of the Parliament Act 1910, which also includes a reference but that, of course, would make one rather depressed about the prospects for reform. I think it would allay some of the suspicions of my noble friend Lord Boyd-Carpenter.
The majority of speakers last time and I think today, with one notable exception, favoured the Bill. Even last time there were only two who were wholeheartedly against. There were one or two speeches—I re-read them the other day—where I am not certain on which side they came down, but I think on the whole they were in favour. In fact, there was clearly a general consensus throughout the House and across the parties in favour of the Bill.
A number of objections have been raised to the Bill, and I shall deal with one or two, and with my noble friend Lord Boyd-Carpenter. Is a Bill of constitutional significance appropriate for the initiative of a Private Member. I am tempted to repeat what my noble friend Lord Alport said, "Yes, of course, if the Government will not do it". I hope the Government will take the Bill over. But if they are not prepared to do it in this House we shall have to persist until we persuade them to.
Secondly, and the much more cogent argument, is the one raised in the words of my noble friend Lord Boyd-Carpenter on the last debate.
"… no attempt yet to obtain the measure of inter-party consensus which is so enormously desirable when you start amending the constitution? "—[Official Report, 8/12/80, col. 603.]
It is enormously desirable, but it is not absolutely essential. There is nearly a consensus in this House, and that consensus should be the authority for this House to proceed further with the Bill. And anyhow I can hardly think that the Parliament Act of 1910 or 1911 was passed as a result of consensus, if my memory is right. Even the Life Peerages Act of 1957–58 was divided on in another place. The House may be interested to know that—and I looked it up today— there was a Division on that. There was no consensus. What was fascinating was to find that, of those who voted against the Second Reading of the Life Peerages Act, no fewer than 45 are at present

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Members of your Lordships' House. I am sure there is a moral in that, but I am not sure what it is exactly.
Another argument I have heard quoted is that this Bill would entrench an unreformed House. I should have thought that that would have commended itself to my noble friend Lord Boyd-Carpenter, who does not seem very enthusiastic about reform at any stage. But I do not accept that that really is an argument. The Bill contains a preamble about reform. Reform will come, if it is going to come, regardless of whether this Bill is passed or not. What we are seeking to do in this Bill is to prevent its summary abolition. The Bill would add an extra stage to the process of enactment, but if it justifies being described as an amendment of the constitution it is certainly not of any great permanent substance.
My noble friend Lord Boyd-Carpenter gave us his interesting views on referenda. I should have thought that it was by now fairly well accepted that referenda are only acceptable on constitutional matters. Most of us do not want to have a referendum for the sake of having one. If you have a difficult constitutional position it seems wise to go back to the people of the country and ask for them to confirm it. I do not think it is a matter on which the people should not be consulted because they have not read the Bill as it stands.
Another argument was put forward in the debate last year that abolition of the House was not very likely, to which I comment I have not been burgled but I still have an insurance policy. My noble friend Lord Eccles said that it does not look as though abolition of your Lordships' House is a winning political card. I hope that my noble friend is right. I hope I am not buigled, but I still maintain my insurance policy.
If this optimism is justified, then at worst what is the result if this Bill becomes law? At the worst you have yet another piece of obsolete legislation which ultimately has to be removed from the statute book. There are plenty of examples of that, as I found once when I was defending a Bill. But if our worst prognostications are true, the Act would at least be an impediment and a tripwire to the summary abolition of this House.
My noble friend Lord Boyd-Carpenter, in his exceptionally able speech—and I am always reluctant to cross swords with him because he is such a good arguer—said that it does not solve the problem of the House being swamped with Peers. Of course it is true. If my noble friend can bring in a Bill to prevent that happening without the people being consulted, I am sure he would get warm support from the country and from this House, but that does not dismiss this Bill as an important step forward.
I appreciate the dilemma of the Government. I can almost visualise the traumatic feelings of my noble friend the Leader of the House at having to deal with this matter. Their reservations and hesitations in this respect were well expressed last time by my noble friend Lord Soames. I hope that my noble friend the Leader will be able to give us more encouragement on this particular occasion. I hope she will be more encouraging and forthcoming than we have had previously from the Government.
I should like to put one small point forward for
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consideration. I was going to say that I do not put it forward with any great enthusiasm, but I should not mind if it was rejected by my noble friend in particular; that is that instead of going to a Committee of the whole House in the ordinary way after Second Reading consideration might be given to its going to a Select Committee. A Select Committee has the power to call witnesses, and can deal with what you might call the side issues which have been brought in during the debate. It would be interesting to have a Committee representing a consensus of opinion in the House, one hopes, which could deal with the matter of the question to be put into the referendum, although I find the present question acceptable.
If such a Committee achieved agreement it would demonstrate the required consensus of opinion in the House. I offer this as a tentative suggestion for consideration but not necessarily for decision at this stage. Meanwhile, we have to come to a decision. I shall support my noble friend warmly and with enthusiasm, but I hope that those who oppose the Bill will on this occasion choose not only to voice their opinions but to stand up and be counted, as will those who support the Bill. In short, I look forward to supporting my noble friend Lord Alport in the Lobby.
5.18 p.m.
Viscount Mountgarret: My Lords, I too wish to add my support to Lord Alport's underlying theme and principle behind the Bill, which he has done so well to bring to your Lordships today. The principle and attitude I feel must surely be right, but I have reservations over the means that might be used in justifying the end. The noble Baroness, Lady Burton, rightly said, "Have a point, and stick to it", and her point was the justification of the second Chamber. My point this afternoon is the question of referenda as a whole.
I have severe reservations about the real dangers of allowing referenda to govern our lives on matters which are admittedly of the widest and possibly the most far-reaching importance. I realise that it can be argued that it is only right and proper that the country as a whole should have the right to consider what action should be taken in relation to matters of supreme national importance. It is partly for this reason that general elections are held, and various political parties put their manifestoes forward on principles to the people to allow them to judge whether they will give their respective political parties a mandate to carry out that which they say they have every intention of so doing. Once a political party has gained the necessary majority, it should be left to that party in Parliament to carry out the undertakings, insofar as it is possible or indeed desirable, having regard to change of circumstances during their tenure of office, and I am doubtful that it is right for any government from time to time to decide quite arbitrarily that they should go back to the people to ask their views on what they propose to do, presumably having told them already in their manifesto.
There is, however, one major snag to this theory. Let us consider a hypothetical situation. Suppose the time is the present and a general election is due to be held, and the state of the political parties as they stand today is the same. Let us suppose that the opposition

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parties combined all decided to fight an election on the basis of the issue of proportional representation, which, again let us suppose, all the opposition parties strongly supported but which the Government opposed. A situation could develop whereby, say, 20 million people in the country were very much in favour of a change of selection of Members of Parliament, and were strongly in favour of PR. While I would agree that a fair proportion of those 20 million might be supporters of one or other of the opposition parties, some might well wish to subscribe to many other policies for which the opposition parties might stand. Those electors would then be placed in a most invidious position whereby they either had to choose to vote for a major constitutional change, and vote for a party or parties with whom they did not in broad principle agree, or they would have to support the party that they have traditionally supported but knowing full well that they would not achieve what they would like to see. And, of course, this works the other way round; namely, a large number of people might not support the principle of proportional representation, and yet did not support the Conservative Party either. This would make it very difficult for the electors to come to any satisfactory choice on election day and is the strongest argument against what I have always generally felt; namely, that decisions by the people should be made at election time and not by referenda.
Let us now consider the effects of allowing referenda to become increasingly more part and parcel of our political way of life. At present, there is no laid down guideline on specific areas and matters when referenda might be held. In the past, over the question of the European Common Market and devolution for Scotland and Wales, it was decided to hold a referendum on each of those issues, and rightly so. It suited the Government to do so and it helped them to carry out what they themselves believed was the right thing to do in the one case, and not in the other.
On this subject, I suspect that the majority of people in this country would vote in favour of leaving the composition of our House largely alone, leaving things as they stand—that they would let sleeping dogs lie, although that possibly is not parliamentary language. Change for the sake of change is not popular—like, for instance, the change in county boundaries—and I have heard no argument of any substance to justify a substantial change in the composition or functions of your Lordships' House. There are, however, other areas and matters on which the people should perhaps be consulted by referenda, if the principle of such activity is to be accepted and used more frequently in the future, which is a tendency which might come; one might call it the thin end of the wedge in that we have had two referenda, we might then have a third and that would lead to a fourth, and so on.
Sometimes these matters may not be to any Government's liking because they may feel that if a referendum was held, the decision of the people might go against what the Government would wish to see. I refer in particular to the issue of capital punishment. I am sure that if a referendum was held on the issue of whether capital punishment should be restored for most types of murder—and corporal punishment, for that matter, for thugs and bullies, so that a stick across the backside might do a good deal more good than a spell
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in an overcrowded prison—there is little doubt that such a referendum would be carried overwhelmingly in favour of such restoration. But on any occasion when these issues have been considered in Parliament they have, for one obscure reason or another, been turned down. In other words, all Governments of recent years have frankly funked this particular issue of referring back to the people, because the result is highly likely to go against the grain of what most Members of Parliament have, in their own Houses, decided upon.
To turn to this Bill and this issue, I am sure that such a major possible constitutional change must receive the overwhelming support of the country as a whole, and it would be quite wrong to leave the decision to either a small committee from both Houses or indeed a decision of MPs alone. One major problem, though, is that if a referendum was held on such issues, for people in the country who have not had the benefit of hearing the arguments for and against put forward—the deliberations which we in Parliament have—it might occasionally be unfair to expect the people to reach a decision on a matter about which they have not had the opportunity of hearing all the arguments thrashed out.
While I feel the Bill should receive a Second Reading, I feel that serious consideration should be given to whether we should accept that on certain issues referenda should be held, but that it should not be left to the Government of the day to decide whether or not to call such a referendum. I wonder if it is perhaps possible for a working party to study various issues of major national importance on which it would be mandatory for the Government in power to hold a referendum, or alternatively there might be a suitable body of representatives from all political parties to consider applications made either by the people through their MPs, rather like applications to the Ombudsman, for the Government to hold a referendum on a particular subject, and then, if they so decided that it was a suitable matter, the Government would then be bound by that decision. I therefore feel that, while we should give the Bill a Second Reading, the whole aspect of holding referenda should be more thoroughly investigated and not used just as and when the Government feel so inclined.
5.28 p.m.
The Earl of Selkirk: My Lords, two words will stand out in my memory of this debate. One is "integrity" as used by one of my noble friends when he referred to "the integrity of the constitution". The other is "adaptability" as used by the noble Lord, Lord Jacques, adaptability which we are quite willing to undertake. We have prided ourselves on being the Mother of Parliaments and on having had a form of parliamentary government for 700 years. We have tried to copy that form of constitution and send it to 40 or 50 countries all over the world. They have adapted it in many ways and, on the whole, they have wanted to copy the way in which we conduct our affairs. Indeed I would say that we are still regarded with envy. Yet here we are worrying about how we should govern ourselves. It might therefore be worth casting our minds back rather further than even the Government of Lord Attlee when he formed it in 1945

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Looking at the English genius, perhaps particularly from north of this island, one notices the ability of England to have strong government without dictatorship and to do that without ever bothering to write down the constitution on a piece of paper. Why has that happened and how have we succeeded in doing that? My answer is that we have had in this country a sort of tripartite government, the Monarch and two Chambers of government. They are quite independent of each other and that is why I would regret a House nominated by the other Chamber. The independence of the House, however it is formed, is of the greatest importance, and the noble Baroness, Lady Burton, made that point with absolute force.
We have had in England a number of insurrections— the Peasants Revolt, the War of the Roses, the Chartists —but each time the country has come back to its basic structure, It might have been the Monarch, the Commons, or the Lords, but this tripartite structure has always continued. I believe that the importance of this situation has never been better stated than in the well-known words, which I venture to quote, of John Stuart Mill, when he spoke of:
" The evil effect produced upon the mind of any holder of power, whether an individual or an assembly, by the consciousness of having only themselves to consult".
Richard Crossman was a man of very powerful intellect, with an extremely curious mind, trying to open up passages. From reading his examination of our constitution, it appears that he was always looking somewhere or other for a power house, somewhere where somebody could make a decision which would be carried into effect. Of course he never succeeded in finding it. The reason for that is that power is diversified over a wide sphere.
The noble Lord, Lord Jacques, emphasised the importance of consultation and persuasion, and I am sure that that is the basis on which we have been able to govern in this country. Today that is being challenged. We are living in a world of fluid ideas. Indeed, I think we can say that it is full of ill-digested theories, many of which would not work in the least in practice. If we are to gain a leadership from Parliament, we must also reckon that outside Parliament there are very powerful influences which might well gain the upper hand. I do not want to make too much of this, but take television, for instance. It provides probably the most important, formative influence on ideas in this country. It is very colourful, very exciting, but I cannot say that it is full of mature ideas and thoughts.
I should like to go back to the one occasion on which the situation of which I speak has been broken— that was of course at the time of Cromwell. Cromwell's case is an extremely interesting one because once his period was over, the country immediately bounced back into exactly the same form of Government that it had had previously, with a Monarch and two Chambers, and, so far as I know, there was no question at all about that.
What is even more interesting is to examine what Lord Morley said in his very interesting life of Oliver Cromwell. He said:
" There is no branch of the political industry that men approach with hearts so light and yet that leaves them so dubious and melancholy as the concoction of a second Chamber. Cromwell
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and his Parliament set foot on this pons asinorum of democracy without suspicion of its dangers ".
That is a warning to us to go on—Morely knew fairly well what he was talking about.
We of this generation have a duty to maintain the quality of our constitution in this country. There is never a simple solution. No Government are ever wholly successful. There is no Government in the world of unqualified excellence. But we can try to see that our structure remains intact. It is essential to see that we have a system of consultation and of structure which enables political change to take place, but which seeks to provide Government by consent, strong enough, but without undue weight of either party or political ambition. Those I believe are the principles for us to proceed on, and if we can find a way of adapting a Second Chamber to them, we will do well. It will not be an easy task.
5.34 p.m.
Viscount Eccles:My Lords, I welcome very much what my noble friend Lord Selkirk has just said. I, too, think that our institutions should change, and I am wholly behind what the noble Baroness, Lady Burton of Coventry, said: namely, that we are now in a situation where inter-party talks are badly needed in order to discover whether we should reform—and, if so, in what way—or not reform, the Second Chamber.
I am rather astonished that so far the debate seems to have been something of a re-run of what we had a year ago. The subject is the same, but the background has changed dramatically. In December 1980 inside and outside Parliament it was widely believed that the Labour Party might win a big majority at the next election and come to power mandated, and eager, to abolish your Lordships' House. Your Lordships may remember that Labour had a substantial lead in the opinion polls, and, despite the gallant efforts of the noble Baroness, Lady Llewelyn-Davies of Hastoe, to which I pay tribute, the Labour Party voted with enthusiasm for abolition.
How unpredictable and fascinating is the course of politics! Here we are, only 12 months later, watching the Labour Party destroy itself with astonishing rapidity—
Baroness Llewelyn-Davies of Hastoe:And the Tory Party.
Viscount Eccles: The Social Democrats and the Liberals are now on the crest of the wave. We cannot tell what will happen when they begin to slide down the other side, but at least we know that, apart from the Left-Wing Labour Party, all of us are committed to two-Chamber Government. The fear, which reverberated around this Chamber a year ago, that abolition was a real threat in the next Parliament has disappeared. So 1981 is very different from 1980. Today we are free to consider the composition and powers of the Second Chamber as problems which should be solved before we attempt to entrench the House more firmly in the constitution.
My noble friend Lord Alport made an excellent parliamentary speech, and I think that he must have had these changes in mind in the recital part of the Bill, where it is stated that it is expedient to reform

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the Second Chamber. Is it expedient? We do not know; it is a matter of opinion. It is hardly suitable to put that opinion in a Private Member's Bill, the purpose of which is to strengthen the position of the House of Lords as it is. It can hardly help us in our search for agreement on reforms for the Second Chamber.
Look, my Lords, for example, at Clause 1(2)(b). The Speaker of the House of Commons is to call for a referendum if a measure which provides for any diminution of our present legislative powers has been read a third time in another place. That prejudices the issue of reform. That is not the way to start inter-party discussions. It puts the other place on notice that we in this House are against any reduction of our powers. I do not believe that the other place would vote for a Bill that contained such a proposition.
I do not propose to comment further on the text of the Bill itself, which my noble friend Lord Boyd-Carpenter dealt with, and which no doubt the Leader of the House will mention later. In my opinion it has several other defects. I want, instead—
Lord Elwyn-Jones:My Lords, would the noble Viscount forgive me for interrupting him? Will he indicate where in the Bill there is reference to a proposal to strengthen the powers of your Lordships' House?
Viscount Eccles:Not the powers, no, my Lords; the noble and learned Lord has got it wrong. It is to strengthen the position of the House within the legal framework of the constitution. That is something quite different.
I do want, though, to ask this question. Whether your Lordships favour some kind of reform or whether you think things should be left pretty well as they are now, having in mind the changes that have followed from the introduction of life Peers (a revolution in this House), having in mind the growing appreciation by the public of the work we do and having in mind the undoubted difficulty of getting any major reform of this House through another place when embodied in a Bill—whether, that is to say, you are for reform, for modest reform or for no reform at all—ought not a matter of such importance to be considered between the parties before Parliament is asked (and I hope the noble and learned Lord will appreciate my use of the words) to strengthen the legal position of the House within the constitution? Are we not fortunate that the threat of abolition has so far receded that we now have time to undertake all-party discussions?—and the discussions must be all-party, since no reform Bill would be permanently acceptable to another place unless there had been agreement beforehand.
It is said that so many and so various are the opinions about whether or how to reform your Lordships' House that agreement between the parties, or most of them, is impossible. I do not believe that. We cannot know until we try. We have not yet tried; and now we can try in the knowledge that the abolitionists are a dwindling minority. We should try again, because there is in the country a fairly widespread feeling that some changes, at least in the composition of your Lordships' House, are overdue. It is therefore our duty to show, either that the desire for change is not
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justified, taking into consideration the role of your Lordships' House at present—that is to say, that it is not in the best interests of parliamentary government to make any major changes—or that it is justified, and that we are searching for agreement on what to do about it. Let us decide first, before we ask another place to consider a referendum Bill.
In conclusion, I should like to make two further short points. What chance would this Bill have of acceptance in another place? None at all, my Lords, unless the Government were willing to take it over and make it official policy. My right honourable friends tell me that they have not any intention of doing that. They do not believe that a referendum should be enacted before the problem of reform (as the noble Baroness, Lady Burton, has said) has been much more carefully considered. I completely agree with that.
So if this Bill were sent by your Lordships to another place, it would have to be moved by a Back Bencher. What kind of reception would it get? I ask this question most especially of noble Lords sitting on the Labour Benches. Do they think that the speeches that their right honourable and honourable friends would make on this Bill in another place would help to create the climate in which we could search for an all-party or most-party agreement on the reform of this House? Of course they would not. Much predictable abuse would be thrown, and many people who might have been willing to come into those conversations would probably hold back. So if we send this Bill to another place it will be killed in confusion, and there will be many speeches which will do nobody any good. We now have the opportunity to get things in their right order: first to see if we can agree on any reforms, and afterwards to strengthen the legal position of the House in the constitution.
Last year I hoped that my noble friend would withdraw his Bill because I thought it offered the abolitionists exactly the platform they needed. This year I hope he will withdraw it for a very much better reason. We can now discuss reform in the knowledge that abolition at the hands of the next Parliament is not a serious threat.
5.46 p.m.
Lord Peart:My Lords, I believe we have had as equally a good debate as we had on the previous occasion—a debate which was outstanding and was referred to earlier in the House by the noble Lord, Lord Boyd-Carpenter. I shall never forget him because he generally likes to put the barb into others as well, and today he scored a political point. But I tell him sincerely that the consideration that I had to face when that other Bill was going through the House of Commons was a very difficult one for the reasons I mentioned. However, there it is; one can argue about it.
I think we have had an excellent debate, but may I make my first point? I think this is too important a matter to be dealt with by means of a Private Member's Bill. However, we welcome the opportunity to debate the issue. After all, debates are still going on in many places. I have just read today that
" Labour Left-wing urges Benn to fight again for deputy leadership ".

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At one of the meetings at which this was mentioned there was a call by Mr. Benn for extra parliamentary action, and Labour Peers, including the Front Bench, were urged to pull out of the House of Lords. Then it goes on to say (thank goodness!)
" His speech infuriated some of his colleagues at Westminster ".
Mr. Anthony Wedgwood Benn, when he was a noble Lord, had some wonderful things to say about us. I have quoted this on many occasions:
" I ask noble Lords to read a fine Fabian tract, The Privy Council as a Second Chamber, which goes on to argue against the abolitionists' point of view. May I use this passage: 'To sum up, the case for a Second Chamber rests on the fact that the Commons alone simply could not cope with all the work now done by the Lords. This would be particularly important when there is a really heavy legislative programme. Paradoxically, therefore, a Labour Government needs a Second Chamber more than does a Conservative Government' ".—(Official Report, 8/12/80, col. 627.)
Who was the author of this? It was Mr. Anthony Wedgwood Benn. I say to my colleagues who are interested in this matter that they should read this pamphlet very carefully.
As I have said, this, I think, is too important a matter to be dealt with in a Private Member's Bill. However, we welcome the opportunity to debate it. Why does the Bill come into operation, I should like to know, from the Third Reading of a proscribed Bill rather than from the arrival of the Bill in the Lords? The Labour Party, broadly speaking, is generally in favour of referenda on constitutional issues; for example, the Welsh and Scottish devolution and our continuing membership of the EEC. It would not be sufficient simply to put the abolition of the Lords in any manifesto. This, I believe, would put the Sovereign in an invidious position, and would provoke a constitutional crisis.
There is another point. We must not be unmindful of the fact that these issues have implications for the Monarchy, and none of us would wish to deal with them without very long and careful study. This is why I have always been in favour of a Royal Commission to enable expert evidence as well as the views of leaders in our society to be presented and discussed by an important body of that kind. I think that that is the sort of approach which would be better than the approach which is now proposed.
There are problems, no doubt, in relation to what I said earlier. There are constitutional precedents for this: For example, when the Lords refused consent to the Reform Bill of 1832, William IV asked for a general election prior to granting Earl Grey's request to create 50 new Peers. Similarly, in 1910 King Edward VII informed the Prime Minister that he could not contemplate the creation of new Peers until a general election had been held. A Bill of this kind is therefore unnecessary and could foster resentment to no good purpose; so that I believe we must be careful. Broadly I support the referendum. I think it worked well in relation to the EEC. I remember making my way there to see the count, but unfortunately I was involved in a train crash and never got there; but that is a minor point. My Lords, all I would say is that the Bill is a good Bill. I believe that the mover of the Bill, the noble Lord, Lord Alport, deserves to be supported, but I still think we must be careful in our approach. There are various approaches. Long
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before this Bill has a major effect in shifting political opinion in your Lordships' House I believe the time will come when inevitably we will have to make a final decision; but I think we should be cautious. In principle, I believe in the referendum; it has worked and I must regard that as a guideline. For that reason, most noble Lords who have spoken have broadly supported it. My noble friends have produced a very good White Paper—if I may call it that— and I should like to congratulate my noble friend Lord Lee. He has not been well and I am sure we all wish him a quick recovery. He spent so much time with Lord Champion on working out positive proposals for the reform of the House of Lords and for us to put them to the electorate, and also for the House to debate them properly in Parliament. I believe this has been a very fine debate and, looking at the issue, I think that the noble Lord, Lord Alport, deserves to have his Bill.
5.53 p.m.
The Chancellor of the Duchy of Lancaster (Baroness Young): My Lords, at the beginning of my remarks I should like to thank my noble friend Lord Alport for giving us a further opportunity to debate this important matter. I am sure the House listened with great interest to the way in which he introduced his Bill and the care with which he put his arguments. More particularly, I thank him because he has enabled me to take part for the first time as Leader of your Lordships' House in a debate touching on the House of Lords as a whole and the role it plays in our constitution. I can assure my noble friend that I listened carefully to what he and other noble Lords have said; and if what I have to say about the Bill from the Government Front Bench is not as encouraging as he would wish, this does not mean that we consider the wider constitutional issues raised to be anything but of the most fundamental importance. Indeed, the Government have given a good deal of thought to these issues since the Bill was debated a year ago.
I must begin by echoing the views of all speakers today in stressing once again the Government's total commitment to the maintenance of a Second Chamber. The noble Baroness, Lady Burton, was good enough to quote at least part of what I said at the Conservative Party Conference in reply to a debate on the House of Lords; but perhaps I may quote what I said then about a Second Chamber and the House of Lords in particular.
" The House of Lords is an essential safeguard for individual liberty. The House of Lords is the only constitutional guarantee that general elections must be held at intervals of not more than five years. We have in our country no written Constitution so that the majority party in a single-chamber House of Commons could so easily become, as Quintin Hailsham so aptly put it, the elective dictatorship. The House of Commons could extend its life indefinitely, the classic route to tyranny throughout the ages ".
I believe that, above all, that is the justification for the House of Lords and, in particular, for a Second Chamber, although there are many other reasons, which have been advanced this afternoon and on other occasions.
In case what I have said might sound as if I am repeating great constitutional arguments and am not

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speaking from any personal experience, I should like to say that, as a Member of your Lordships' House for just 10 years I have come to recognise its value. It is true that I have spent almost all of those 10 years on one or other of the Front Benches, but I am bound to say that the time has been exceedingly full, interesting and rewarding. I prefer not to think of how many Bills I have taken through this House or opposed. I fear that I may have played far too active a part in at least three all-night Sittings; and although I am a relative newcomer I can say that I have become devoted to this House, to its customs, to its experience, to its remarkable ability to regulate itself, to its tolerance and to its friendliness. And to these must be added the powers which the House of Lords possesses and which have been referred to.
My Lords, there are two specific points about the House of Lords which strike me as particularly important. The first is that it is simply not true to say, although the belief is still widely held, that Governments of my own political persuasion cannot be defeated from time to time in your Lordships' House. I have the dubious distinction of having secured the biggest defeat of all. Secondly, the House has changed out of all recognition, certainly since the Parliament Act 1911. We should not forget that. Early reform of the Second Chamber was proposed then as it has been now in my noble friend's Bill. As the noble Lord, Lord Jacques, so aptly said, the House of Lords has adapted itself as times have gone by.
The House of Lords has changed most dramatically since the Life Peerage Act 1958, but I have discerned further changes since 1971 when I came to this House; and the increased daily attendance figures speak for themselves. In 1957–58 the average daily attendance was 124 and the total number of Peers eligible to sit was 885; in 1970–71 the average daily attendance was 265 and the total number of Peers eligible to sit was 1,078. Ten years later, 1980–81, the average daily attendance is 290 and the total number of Peers eligible to sit has risen to 1,179. But I think the significant figures are the average daily attendance which shows a marked increase and shows that the House of Lords is changing all the time.
I would not necessarily suggest that all the changes have been for the best. When noble Lords rise and talk of "this late hour" they mean, these days, some time between 10 p.m. and 3 a.m. Twenty years ago, I understand, they would have meant 6.30 in the evening. But I believe that the two points that I have made— the myth of the House of Lords dominated by one party and the concept of gradual change from within— are points which both a small minority of abolitionists and those who favour wholesale and speedy reform would do well to reflect upon. There is one further point that I would add. It is at least arguable—I put it no higher—that if this Bill were enacted at the present time it could be interpreted by some as weakening rather than as strengthening our total commitment to bicameral Parliament. Whatever result from the referendum that we in this House would hope for and expect, it cannot be denied that my noble friend's Bill would hang a permanent question mark over the existence of your Lordships' House.
My Lords, I turn now to the Bill itself. First, may I compliment my noble friend on introducing a number
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of changes to last Session's Bill. The omission of any certification procedure in the Lords, the introduction of two alternative questions rather than one for the referendum, and the fact that the whole referendum exercise will now be triggered off after Third Reading in the Commons instead of after Second Reading, are all changes which take account of criticisms voiced during the Second Reading debate last Session. It would be churlish of me not to say that these changes make it a better Bill.
There are, as some of my noble friends—particularly my noble friend Lord Boyd-Carpenter—have pointed out, still defects. I shall confine my remarks to the more general difficulties, some of which perhaps inevitably arise in any attempt to impose a referendum procedure during the passage of a Bill through Parliament. It is surely wrong that the referendum verdict on an abolition Bill introduced in another place should be received before any consideration of the Bill at all in this House—a point well made, I believe, by my noble friend Lord Boyd-Carpenter. I can think of few Bills on which noble Lords would be more entitled to express their views; and to hold a referendum before the Bill even arrived here would, in my view, be both misleading and premature.
It would—as my noble friend Lord Boyd-Carpenter said—mean that the country was making judgments about a Bill before the measure was complete; and, in any event, before your Lordships had had an opportunity to express a view about it. As my noble friend Lord Soames said a year ago, even if a referendum procedure were to be introduced, it should surely be held after all the parliamentary stages of the Bill had been concluded.
I should also make two points on the question posed for the referendum in the schedule to the Bill, although I recognise that the noble Lord, Lord Alport, in the course of his remarks, suggested that the appendix should not be included in its present form and went on to suggest another procedure.
I have considerable doubts as to whether the questions could possibly be understood in a way which would lead to a decisive result at a referendum. Let us take the second question, which reads:
" Do you want the legislative powers of the Second Chamber to be diminished? "
I must say that even I would have some difficulty in explaining accurately and concisely to a layman what are the precise powers of the House. I wonder whether we could really expect a high turn out were such a question to be asked at a referendum. It was the late Lord Esher, in a debate in this House in 1963, who said that we were fortunate to have inherited an institution which we should certainly never have had the intelligence to create. I feel sure that he would be the first to agree that the work and significance of the House of Lords cannot be reduced to a single question. Then, my noble friend's second question provides no opportunity for the expression of a view in favour of a limited change in powers or composition. At the very least, a voter who believed in the Second Chamber but who also believed in the need for reform would face a dilemma.
Lastly, under the Bill the Speaker must certify whether a Bill in any way diminishes the powers of this House. He would have to do so and the referendum

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procedure would automatically have to follow even if a very minor limitation of powers was proposed. I offer these points not because I wish in any sense to score debating points on a Bill but to elucidate some of the practical problems which arise and which I hope will be of help to the House. They do, I believe, reflect the very real difficulties involved in superimposing a referendum procedure upon parliamentary consideration.
As to the general Government reaction to proposals for statutory protection for the House of Lords, the House will know that in reply to a Starred Question by my noble friend Lord Alport in May of this year we announced our decision not to come forward at that time with proposals of our own. I regret that I can go no further today, and I must say that the Government do not now propose to pursue any form of protection or entrenchment legislation, whether by referendum or otherwise, during the present Parliament. I am sure that my noble friend Lord Alport will accept that legislation dealing with constitutional matters of such importance cannot make progress on the basis of a Private Member's Bill. It would only be right for me to tell the House that I cannot extend any Government support to him.
On the wider question of the Government's attitude towards House of Lords reform, which was raised by several speakers today, I can say that we shall continue to search for changes which would be widely acceptable to all parties. But such changes can only proceed on the basis of all-party talks which must in turn depend upon some measure of agreement on the type of reform which might take place. At present there is no sign of this agreement and I would go so far as to say that this has been reflected in the debate in your Lordships' House this afternoon. I listened with great care to the speech of the noble Lord, Lord Jacques, who set out— I thought very fairly and clearly—the proposals from his own group of Labour Peers on a possible reform for the House of Lords. I have myself read the document and I understand the sincerity and strength of the feeling behind those proposals.
But the noble Baroness, Lady Burton, carefully prefaced her remarks by saying that she was going to concentrate on the principle of a bicameral legislature. I do not wish to be unfair to the Social Democratic Party, but perhaps she was somewhat more coy about saying what her proposals or her party's proposals for a Second Chamber actually are. So we did not hear —
Baroness Burton of Coventry:My Lords, I do not wish to interrupt the noble Baroness. I do not mind being drawn on that. I think the noble Baroness may have forgotten that I said that I was copying what was said by Mr. Harold Macmillan: that it was better to keep only to one plank and concentrate on that.
Baroness Young:Yes, my Lords, I did hear what the noble Baroness said very carefully, and of course the plank that she has kept to is a plank on which we can all agree that there should be a Second Chamber. The argument at the moment is: What form should reform take? It is not meant, again, simply as a debating point. It would be helpful to know what view
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the Social Democratic Party actually take on the kind of reform that they would like to see. I must tell the noble Baroness that she did not enlighten us this afternoon on what is her party's view about this important subject.
My noble friend Lord Reigate argued in favour of Lord Alport's Bill and he, if I understood him correctly, said that he believed that there was sufficient agreement in your Lordships' House to the principle of reform. But he knows—because, after all he was a Member of another place—that it is essential to get some measure of agreement of Members of another place if we are to proceed with a major reform of this sort.
My noble friend Lord Mountgarret also supported the Bill, although, if I understood him correctly, he was against this particular form of referendum, feeling that it should not be left to another place to determine when there should be a referendum, but that there should be some other mechanism for deciding when this should take place. Here—if I may put it in these terms—on a relatively smaller issue of reform we have a wide variety of opinions expressed and it is, I believe, very difficult indeed for a Government to proceed where there is so much diversity of opinion, particularly when it comes to any kind of major reform of the House of Lords.
I should like to conclude by saying again that I believe that we have had a most valuable debate this afternoon, and that the House of Lords have discussed a most important issue—an issue which I believe is not just important to your Lordships' House but important to the country as a whole.
I am afraid that I have not been very forthcoming to my noble friend Lord Alport and I hope he will realise that his two Bills, this Session and last, have given us an opportunity in this House to consider the possibility of some form of protection for the House of Lords. I hope he will also realise from what I have said that his Bill stands virtually no chance of reaching the statute book. In these circumstances, I hope he will feel able to withdraw the Bill, or at least not to proceed with it further, after Second Reading. But of course, as usual with Private Member's Bills, ultimately this must rest with your Lordships' House.
6.10 p.m.
Lord Alport:My Lords, I should like to start by saying how very grateful I am to all those noble Lords and Baronesses who have taken part in a debate of this sort in climatic conditions which arouse great apprehension among all of us as to how we are going to get back tonight. Therefore, I do not want to be very long in trying to reply to the many points which have been put forward. I should like to say first, if I may, that I had a message from the noble Lord, Lord Wade, from the Liberal Party, to say that unfortunately he was unable to take part in this debate although he would like to have done so on behalf of his party, because he is deep in snow in Yorkshire at the present time. I am grateful to the noble Lord, Lord Jacques, for his contribution and for his support.
This Bill has nothing whatever to do with reform. The Preamble refers to "reform" in the sense that the importance of the reform of this House, as has been twice pointed out during this debate, has already been agreed by your Lordships by an overwhelming majority

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of your Lordships a few years ago. It would be very interesting to find whether there were any of your Lordships who, if the question had to be voted on as to whether or not this House had to be reformed, would vote that it should not be reformed.
I was somewhat interested in the point made by my noble friend Lord Eccles. I thought it was a very encouraging speech from the point of view of the Social Democratic Party. My noble friend seemed to be saying that whereas a year ago there was a fear that the abolitionists, represented by the official Labour Party, possibly would be able to form a Government in the not far distant future, now that fear, from our point of view here, has receded. If there is going to be no alternative to a Conservative Government, are we to assume that a Conservative Government will go on indefinitely? That may be the case, for all I know; but if there is to be an alternative to it, it must, I should have thought, be the alliance, the Liberals and the Social Democrats. I must say that if that is my noble friend's view it is an interesting one and we shall see whether it works out in practice when the time comes.
But I also remember a leading article in The Times in 1945—and here I would like to encourage my noble friends on that side of the House—which said, according to that editorial, that they did not think there would be another Conservative Government at Westminster within the confines of the twentieth century. Six years later we were back in power and it is quite possible that the party opposite may be back in power, and although I do not imagine that many of your Lordships on that side are abolitionists, we must remember that in fact the official policy of the Labour Party is the abolition of the House of Lords, and that is a policy which is being strongly supported by a powerful element in that party at the present time.
I do not want to be in any way offensive to my noble friend, but I do not think we can afford complacency in this matter. The object of this Bill is simply to provide a fail-safe procedure in the event of a government getting into power which, without having put it specifically, except in the small print of a manifesto at an election, finds itself committed to abolishing the second Chamber and converting our Parliament into a unicarmeral Parliament. They must go to the people first of all.
My noble friend Lord Boyd-Carpenter, in one of his usual very eloquent speeches, made a number of points, most of which were replied to by my noble friend Lord Reigate. There was one point which he did not reply to and one which I did not reply to last year, but I do so now. That was the question as to why the results of the referendum, according to the schedule, should not be referred to the courts. The fact is that it was in the Scottish and Welsh referenda. I merely put it in because I thought there was a good precedent. If we go to Committee stage it would be quite possible, if the House thought it advisable, to take it out. The whole object of taking this Bill to the Committee stage is to get your Lordships' views on certain details of the Bill.
My noble friend Lady Young, who is always very gracious and kind on these occasions, has indicated that the Government are not going to let this Bill through. Frankly, I did not expect they would; but that should
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not inhibit a Private Member from asking your Lordships to support a Second Reading of the Bill and I do not think it should inhibit a Private Member from introducing such a Bill into the House. My personal view is that if, by any unhappy chance, there is not a Conservative Government after the next election then there will not be another opportunity of providing our constitution and this Chamber with the fail-safe device which is proposed. So what I would ask you to do this evening—and I will not keep you any longer— is to give this Bill a Second Reading and to take it through Committee. I will undertake one thing, which is to try to ensure that any further stages do not place an unbearable burden on the proceedings of this House or on your Lordships' energy and time; but I should be very sorry if this Bill were defeated on the Second Reading because I am quite certain that that fact would be very seriously misunderstood in the country at large. I beg to move that this Bill be now read a second time.
On Question, Bill read a second time and committed to a Committee of the Whole House.

ECC 39th Report: Water Pollution by Cadmium Discharges
6.18 p.m.
The Earl of Cranbrook The Earl of Cranbrook rose to move, That this House take note of the Report of the European Communities Committee on water pollution by cadmium discharges (39th Report 1980–81, H.L. 257)
The noble Earl said: My Lords, I beg to move the Motion standing in my name on the Order Paper. The 39th Report of 1980–81 of the Select Committee on the European Communities deals with the problem of cadmium in the aquatic environment. This report was prepared by Sub-Committee G of the committee, and I am grateful for support in this debate of other members of the sub-committee, notably the noble Baroness, Lady White, and the noble Lord, Lord Ashby, both of whom are former chairmen of the committee and whose profound experience lends great weight to their words. I shall also listen with interest to the contributions of other noble Lords who speak and, in particular, the reply of the noble Earl, Lord Avon, on behalf of Her Majesty's Government.
I should like, too, to take this opportunity to thank the specialist adviser to the committee on this occasion, Professor Ron Edwards, and also to thank the Clerk, David Beamish, who has now been transferred to another office in this House on a progressive step— whether sideways or upwards I am not altogether sure. We miss him and we wish him luck in his career. We are also grateful to witnesses from the Department of the Environment, the National Water Council, the Water Research Centre, the CBI and the Institute for European Environmental Policy who came before us or submitted written evidence to us.
This report deals with a proposal from the Commission for a third directive in the series which devolves from Directive 76/464 on pollution of the aquatic environment, which is often known in a familiar way as ENV. 131. The first of this family dealt with the "drins". This has not yet been accepted by council, but is working its way slowly through the procedural system. The second in the family dealt with mercury,

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and I understand that this was agreed with certain amendments at the Environmental Council on 3rd December. Because that directive on mercury is very relevant to the directive on cadmium, I hope that the noble Earl, Lord Avon, will find time to give us details of the agreement that was reached in the Environmental Council.
The third, as I said, is concerned with the pollution of water by the heavy metal element, cadmium. Cadmium is a comparatively rare element, but it is widely distributed in the earth's crust. It tends to be concentrated in association with other metallic ores, notably those of zinc and lead and, to some extent, copper. It is also present in other rocks. If is present in coal and in oil and, as I said, is very widely distributed. Cadmium can be taken up by many kinds of living organisms, both plants and animals, but it serves no known biological function and is, in fact, poisonous to many creatures at concentrations that are really very low.
Where man is concerned, cadmium can be absorbed through the alimentary tract or the respiratory system and it is excreted principally in the urine. With healthy kidneys, the rate of excretion is generally less than two millionths of a gramme per day, so that any intake which exceeds this very microscopic amount can lead to an accumulation in the body. This accumulation occurs progressively from birth onwards and peaks at an age around 50—a somewhat critical age as I approach it—at levels of about 10 to 55 mg. concentrated in the kidney cortex. It is higher in smokers and therefore, I hope, lower in non-smokers, on average. But this level of accumulation in the kidney cortex is something like one-twentieth to one-quarter of the load at which medically adverse symptoms begin to appear. So your Lordships will see that the balance in the human body can be very critical.
The symptoms of cadmium poisoning are generalised and very unpleasant. So it must be agreed by all of us that it is very right that industrial emissions should be closely controlled and that the European Community, like successive administrations in this country, have been concerned to prevent pollution of the aquatic environment by this substance and its derivatives. There is, therefore, widespread and general support among your Lordships' Select Committee for the draft directive.
The report also welcomes certain new features in this directive which did not appear in its predecessors. First, this directive is non-sectoral. With one exception —and this, admittedly, is a very significant exception— the draft directive deals with all direct industrial discharges of cadmium to water. Secondly, within the compass of one directive, it permits alternative approaches. These alternative approaches are, first, that favoured in general by Continental states of the Community—the approach that takes fixed limit values. The alternative is that generally favoured in this country of setting environmental quality objectives which are related to the use to which the receiving water is to be put.
Thirdly, your Lordships' committee found this directive realistic in terms of the water chemistry, both in analysis of sampling results and with reference to the various forms in which cadmium can occur, sometimes
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in soluble form and sometimes insoluble. Fourthly, it was gratifying to note that in this directive the re-commendations are backed by references to scientific and research literature which could, therefore, be consulted.
Nonetheless, the committee still saw problems which it is hoped that the representatives of the United Kingdom will pursue in negotiation on this draft directive. The first problem to which I wish to draw your Lordships' attention is the stipulation that for all new plant cadmium emission levels should be set in accordance with the best technical means. This stipulation raises several problems, not least of all the definition of "new plant". It is also objectionable to insist on the highest of high technology if the results are, in environmental terms, unnecessary. It is objectionable, because it is expensive, and it puts unnecessary demands and unnecessary costs on the industry concerned.
Thirdly, of course, this stipulation is objectionable, because in effect, in time, it would phase out the environmental quality objective alternative which the directive asserts is offered. This same stipulation in respect of new plant also appeared in the draft directive on mercury. I understand that an acceptable compromise was reached in discussion, and I shall listen with interest to whatever the noble Earl, Lord Avon, is able to say to us on this matter this evening.
A second point of concern to the committee is the omission of cadmium as related by the rock phosphate industry from any form of control under this directive. The excuse that is offered is that of technological difficulties, and it is clear that there are problems. One of the problems is the great variation in the cadmium content of rock phosphate from different sources. For instance, that from the Soviet Union can be very low, whereas rock phosphate from Senegal can be two orders of magnitude higher in its burden of cadmium. There is also a problem in separating cadmium from the bulk waste that is produced in the treatment of rock phosphate: that is, from phosphogypsum. It is not impossible to separate it, but it is technically difficult and very expensive.
On the other hand, it appeared to us on the committee that there are solutions to this problem. One solution is to dispose of the phosphogypsum in an environmentally non-harmful fashion by effectively preventing it from leaching into the aquatic environment. Moreover, where it is disposed to water, if it is disposed to sufficiently large bodies of water and if the environmental quality objective approach is adopted, it can be shown that such disposal does not raise cadmium levels to an unsafe degree. In fact, I have been in contact with a major industrial producer of phosphate in north-western England, and I have been assured that the discharges which are made to sea over the year average only 0.4 parts per million, which is within, or close to, the most stringent 1986 limit values that are proposed in the draft directive.
A third issue is that limit values set on discharges to sewers are no different from those set for direct discharge to the enviroment. Here again there are clearly arguments on both sides. On the one hand it is necessary to control discharges to sewers. On the other hand it is the general experience in the United Kingdom that treatment works can effectively remove most cadmium and can yield an acceptable discharge from sewage works. Discussion is needed on this

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point, but some recognition must be made of the role of sewage treatment in reducing the cadmium load of discharges.
Fourthly, I draw your Lordships' attention to paragraph 26, where the Committee pass observations on proposals related to the environmental quality standards for fish. The main difficulty here is the scarcity of sound information based on field research among wild fish populations. It is to be hoped that this research can be supported and that in due course it will provide sound guidance to realistic quality standards in these waters.
As a fifth issue, the salt water standard that is proposed is on the one hand unnecessarily stringent; on the other hand, it is somewhat ludicrous in the permitted exceptions. It is proposed that, where naturally occurring cadmium is found, the standard shall be in effect a margin above the naturally occurring concentration. Without any basis whatsoever, it therefore appears that this regulation implies that natural cadmium is in some way safe and non-poisonous, whereas only added cadmium is toxic.
The final point in this report to which I should like to draw the attention of your Lordships is that concerning monitoring and analysis. Monitoring is obviously an essential part of any series of regulations. This is not merely from the legal aspect, to ensure compliance; it is also necessary because cadmium is a nasty poison and we must strive to limit its circulation in soluble form in the aquatic environment. But it was clear to members of the committee that reliable analysis of chemical substances such as cadmium, or cadmium derivatives, at low concentrations in water, particularly if that water is already contaminated with other related substances can be both difficult and expensive. It is certain that there will be arguments about where and on whom the burden in terms of manpower and finance should fall. I feel that support for this directive will be stronger if analytical targets are seen to be realistic and if the monitoring requirements are seen to be reasonable in view of the potential hazards, which are recognised.
In closing, I must draw your Lordships' attention to paragraph 13 of the report, which is headed Legal Implications At present in the United Kingdom, emissions of cadmium to water are fully controlled in respect of fresh water—that is, inland waters—and to sewers. Discharges to estuaries are controlled if these discharges are new, since a relevant handful of Acts of the 1950s and 1960s apply, or if the discharge is covered by a tidal waters order. Our coverage of discharges to the estuarine environment is not therefore all-embracing. Discharges to sea, which will also be covered by this directive, will only come under legislative control if or when Part II of the Control of Pollution Act 1974 is implemented. The noble Lord, Lord Ashby, has given notice that he will pick up this lead. However, I must point out to your Lordships that, although the legislation exists on the books, as it were, it does not yet exist in fact to permit the United Kingdom to accede to this directive, were it to be implemented now. I beg to move.
Moved, That this House take note of the Report of the European Communities Committee on water pollution by cadmium discharges (39th Report 1980–81, H.L. 267).—(The Earl of Cranbrook.)
6.35 p.m.
Baroness White: My Lords, first I should like most warmly to thank the noble Earl, Lord Cranbrook, for his, as always, lucid and comprehensive exposition of the matter which is before us. I am also delighted to know that the noble Lord, Lord Ashby, has struggled from Cambridge to be present. But I much regret that my noble friend Lord Wynne-Jones has found the climatic conditions so adverse that he, alas! is not with us. Therefore the scientific input into our debate is thereby diminished, which I am sure we all greatly regret.
As the noble Earl, Lord Cranbrook, said, I hope the Minister will be able to enlighten us a little further as to the situation arising from the recent discussions at the environment Ministers' meeting on the cognate directive relating to mercury. Some of your Lordships are aware that we had originally intended to debate this report, which appeared last July, a little sooner than today. We restrained ourselves because it was felt that until the mercury directive had been satisfactorily disposed of it did not make very much sense to proceed with discussing the directive on cadmium, which is closely related to it and which comes under the same framework directive.
My understanding of the position is that after considerable disputation, but more particularly with our French colleagues, a compromise has been reached, partly by redrafting Article 3(3) of the draft directive on mercury and partly by the addition of two Council declarations on the interpretation to be put on the term "best technical means available". These declarations are not in any way legally binding in the way that a directive is. Nor, of course, is there anything binding in the statement made by the French delegation, as I understand it, that the compromise reached on mercury should not be regarded as setting a precedent for other substances dealt with under the parent directive. Nevertheless, one must warmly hope that our French and other colleagues will accept the compromise which has now been reached, and will not expect their colleagues to go through the same kind of hassle over every other substance in the parent directive as we have experienced over the directive on mercury.
The other point I wish to make is that when one has what one might call glosses on directives contained in a declaration or even in Council minutes, it is extremely important that they should be made freely available to those who are concerned. I say this because my attention has been drawn to two earlier environmental directives, where it appears that non-binding but important conditions referring to the subject were embodied in Council records but were not published in a manner readily available to those concerned. I refer in particular to the Plant Protection Products Directive, about which a Question was recenty asked by my noble friend Lord Melchett, and the directive dealing with emissions of S02 and smoke to the atmosphere. In this instance a condition was included in the Council minutes, so I understand, which was not, of course, legally binding but which was directly relevant. I believe that it was inadvertently published in the United Kingdom in a departmental circular but was not so published in many other member states.
The point of all this is that where mercury and, very likely, cadmium are concerned, agreement on a binding

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directive simply has not been possible without accepting some ancillary conditions. We must realistically recognise this situation. Nevertheless, it is very important that the terms of any such additional conditions should be fully, accurately and properly known. I very much hope that the Minister will be able to give us an assurance that Her Majesty's Government will endeavour to ensure that this will be the case. This is, perhaps, merely a procedural point, but it does seem to me to be important that, having reached the situation on the mercury directive, we should know exactly where we stand in relation to what will no doubt be a series of comparable directives on other substances.
If I may revert to the more general position, as the noble Earl, Lord Cranbrook, said, cadmium has come to the centre of the stage only in the past few decades. I think he would agree that we still do not know fully the effects of cadmium on human health beyond knowing that it is cumulative and damaging to the kidneys. As with mercury, the classic instance of a major health disaster through cadmium pollution took place in Japan where it was shown that the worst sufferers were likely not to be men over 50 but women, which gives me a particular interest in the matter. However, the disaster of 1935 is most unlikely to be repeated anywhere in the world and I do not believe that one should allow it to influence one unduly. Notwithstanding this, there is no doubt whatsoever that cadmium is a substance which has to be taken very seriously, and as a lay person I was particularly grateful to the Department of the Environment—a department towards which I do not always have feelings of gratitude—for what seemed to me to be an admirable description of the nature and effects of cadmium on the environment and its significance to man in their Pollution Paper No. 17, which was published last year and which I warmly recommend to other lay Members of your Lordships' House.
In the EEC context it is noteworthy that, as I understand it, since 1970 the European Community has overtaken the United States as the biggest global consumer and producer of cadmium. I believe it is true to say that West Germany is, relatively speaking, by far the heaviest user of cadmium, but within the Community Denmark is notable for making virtually negligible use of it, and the United Kingdom comes somewhere in the middle. It is encouraging that within the past few years in the United Kingdom we have a record of steady progress towards the diminution of cadmium pollution. I should like in a moment to give a couple of examples of the recent efforts made by water authorities in the United Kingdom to deal with the problem.
In doing so one must note that, as is customary with pollution directives which are based primarily on fixed emission levels—although after much arguing and persuasion, not least by the noble Lord, Lord Ashby, the European Commission has agreed to include the alternative of environmental quality objectives—this directive deals with only one part of the problem. As the noble Earl, Lord Cranbrook, pointed out, it is not as restrictive as the mercury directive, which confined itself to pollution by one industry only—the chloralkali industry—and ignored all other sources. The cadmium directive does deal
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with the full industrial spectrum, other than phosphate rock, but it does so only in the aquatic environment.
It seems to me that, leaving aside airborne cadmium, it is confusing to deal in this directive only with direct discharges of industrial effluent, when one of the main sources of pollution by cadmium is through the deposition of sewage sludge on land, or by the dumping of sewage sludge at sea, when these are alternatives with an element of choice. I understand that work is in progress on a further directive on the disposal of sludge to land and there are the Oslo Convention controls already extant on dumping sludge at sea. In the context of the European Community, we seem to have no guarantee that those concerned will look at this problem "in the round", considering the environmental effects synoptically instead of adopting the fragmentary approach which is encouraged by the use of fixed limit values. This difficulty goes to the roots of our environmental quality objective philosophy. We believe that one should study the total effect of a polluting substance and not take it in isolation.
I do not intend to pursue this argument further, but I should like to refer to another matter which was touched upon by the noble Earl, Lord Cranbrook, and that is the discussion we had with our witnesses on the provision in the present document requiring that industrial discharges to sewers should be regulated at the point of discharge into the sewer and not at the point of discharge into the receiving water, when the sewer was connected to a treatment plant; the latter seeming to some of our witnesses to be more logical.
I was interested in this point and made some further inquiries. It seems to me that opinions vary with the circumstances. In a heavily industrialised area such as the West Midlands, it pays the water authority to process the effluent at its own sewage works and charge for so doing, whereas in an area with perhaps only one or two sources of such polluted effluent, it is much more practicable to insist upon the industry undertaking its own clean-up before discharging into a sewer. It seems to me that the sensible way of dealing with this puzzling problem is that the directive should allow for both situations, which it does not do at the moment.
If one examines recent experience in the United Kingdom, it is encouraging to find that we have already adopted practices whereby contamination by water-borne cadmium has been to a very considerable extent brought under control. If I may quote from a note which I have received from one of the more industrialised divisions of our Welsh Water Authority,
" Considerable improvements have been achieved in this area during the past six years; the result of pursuing a determined trade effluent control policy. The only remaining discharge of cadmium…",
that is, in the district concerned,
" is a company engaged on Ministry of Defence contracts which continue to require cadmium plating ".
Maybe the noble Earl who is to reply could take that up with one of his colleagues and see whether it is really necessary. The note goes on:
" In plants which used to discharge, new processes are now in use which enable cadmium to be isolated and re-used or sold to a metal refining company ".
I am told that levels of cadmium in what used to be one of our badly polluted Welsh rivers now appear to be

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within the proposed EEC quality objective, and in disposal to sewers the level has been reduced to around one-tenth of that which prevailed as recently as four or five years ago. This is evidence, I believe, that we are taking this problem of cadmium pollution seriously and dealing with it successfully. Similarly, the Thames Water Authority has published figures indicating that between 1973 and 1979–80 the amount of cadmium in the digestive sewage sludge at one of its main works has been reduced by well over one half— surely a very good record for such a period.
I would next draw attention to the River Quality Survey for 1980 which was published last week by the National Water Council, which does not deal directly with cadmium pollution but which does indicate the general improvement in the quality of our rivers, which I believe to be encouraging in itself and an indication that in practical term0, the methods which we adopt, based on our philosphy of environmental quality objectives, are by and large successful. It is quite true that the report on river quality also makes it clear that unless the resources are available some of our rivers where improvements have been made may revert to their less satisfactory conditions, because it will not be possible to deal adequately with out of date sewerage plant and treatment. We cannot in any sense be complacent, in spite of our recent good record. A great deal will depend on how much in the way of finance and other resources are permitted to be used to maintain the progress which we have already made and to seek further improvements.
I would like to say just one further word about the report itself. I can do so, although I am a member of Sub-committee G, because the credit for this particular report is undoubtedly due to the chairman, Lord Cranbrook, and to the specialist adviser and clerk to whom he very properly indicated our gratitude and appreciation. I believe there is a great deal in this report which is of considerable interest to those concerned. It is critical on a number of points which will have to be negotiated by our representatives in Brussels, but I hope and believe that the work done on this rather abstruse subject may be of very great value in our pollution control policy in this country.
6.52 p.m.
Lord Ashby: My Lords, the noble Earl, Lord Cranbrook, has given your Lordships a very clear and complete account of the material in the report, and the noble Baroness has put it in its European setting. There is nothing that I need to do except add a few crumbs of opinion, and at this time of night not many crumbs. But it is a topic which is worth keeping your Lordships here for a few minutes to talk about. All of us today have asborbed between 25 and 60 microgrammes of cadmium, and we do that every day. It is 10 times more toxic than arsenic or lead. About 1500 tonnes of it are used every year in Britain. The recovery rate of cadmium is less than 1 per cent., and being a metal it cannot be destroyed; it accumulates.
Therefore, it is important for us to consider whether this directive is meeting the problem. I believe it is but I think it is a directive that must be taken seriously. One should welcome it, and it is absolutely right that the Commission should put out some directive which will stringently limit the consumption of cadmium. As
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the noble Baroness has pointed out, fortunately, Her Majesty's Government have had the very best advice they could have about the problems of cadmium. That report to which the noble Baroness referred is a masterly account of the present state of understanding of cadmium, and it is in some ways a pity that the Commission did not take more note of it when they were preparing their report.
Finally, I think it is worth quoting one sentence from the Department of Environment monograph. It says at the end, about the use and disposal of cadmium, that it should be
" based on the philosophy that man's intake should be kept as low as possible ".
So we all welcome this directive, but there are still problems which remain even after eight years—I think this is the 25th environment directive from the Commission—of discussion, argument and negotiation between Britain and the other European countries. It is worth perhaps pausing for a moment to see just how far we have got in resolving this difference of philosophy which emerged, and which your Lordships who follow these debates on environmental directives will have noticed, the differences of policy that have emerged between the countries, and to ask to what extent we have now reached a stage of some reconciliation. My feeling is that, yes, we have made some progress, but not enough, and that there are faults on both sides which are holding up progress.
There have been three main criticisms of the environmental directives. One comes from the noble and learned Lords who are on the Committee that deals with the legal aspects of Community regulations, who regard some of these as ultra vires altogether. The noble and learned Lord, Lord Diplock, put the matter very clearly when he said that he feared that if we did not take some note of this point that the noble and learned Lords were making it would be the beginning of the emergence of a federal constitution for Europe under which all legislative power is potentially exercisable by the federation. That is a matter which I think must be left to the noble and learned Lords within the House to keep an eye on. The main contribution that your Sub-Committee G can make is to look at the contents of these directives and if possible try to improve them.
During the last eight years your sub-committee has had two main criticisms of these directives. The first is that many of them have been founded either on bad scientific evidence or on good scientific advice which has not been taken. There is in fact an example in this report. The scientist who was engaged as consultant to the Commission to advise on the toxicity of cadmium recommended a quality objective of 10 microgrammes per litre—that is 10 parts per million —in sea water. The directive disregards this advice from its own expert and prescribes a quality objective of only one part per million, a level ten times more stringent than the expert advised.
This rejection of expert advice has happened several times. It happened over sulphur dioxide in the air. It happened over the oxygen content of water for fish. There are, of course, occasions—and your Lordships, I am sure, would wish to recognise this and be sympathetic about it—where for policital reasons the directives have to disregard some of the scientific

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advice given or overrule it. But when they do that we have pleaded with them, so far not successfully, to say that they have departed from scientific advice and if possible give the reasons why they have done so. I feel that these directives would be more welcome in your Lordships' House if more respect was given to some of the scientific advice which the Commission now gets. There have been great improvements in the quality of the directives and to this extent there has been some reconciliation of the difference in philosophy between our practice in Britain and the Commission's practice. Scientific advice is better, and sources are quoted.
The other technical criticism is one your Lordships have heard so often that I wonder sometimes whether we should not ask the editors of Hansard to keep the quotations set in type for regular use. It is the Commission's own definition of pollution in water, and then their apparent disregard of their own definition when they come to write the directive. I must bore your Lordships for a moment by reading the turgid definition so that we have it on record once again. It is the discharge by man:
" of substances or energy into the acquatic environment, the results of which are such as to cause hazards to human health, harm to living resources and to aquatic ecosystems, damage to amenities or interference with other legitimate uses of water ".
The rationale which should follow that mouthful of a definition is that unless substances are present in such quantities as to cause harm or be liable to cause harm then, by definition, they are not pollutants—they are just contaminants and the directives, therefore, should not apply to them.
In Britain we are still having to repair the damage done by the Industrial Revolution and, to that extent, it is impossible to clean up the environment in the wholesale way in which all of us, I suppose, would like to see it cleaned up. So it has been the policy of Her Majesty's Government—and I am certain a correct one—to take account of the use to which a river is being put. For instance, if we were to take all the cadmium out of the Mersey—and it has more than it ought to have in it—that would not benefit the environment greatly if all the other pollutants are left in the Mersey. Therefore, the use to which the Mersey is at present being put becomes enormously important.
That is a point of view which the Commission has not yet felt able to accept. As the noble Earl has pointed out, and as the noble Baroness also explained to your Lordships, we did manage to get one concession, an important one, from the Commission—namely, that instead of relying upon fixed emission standards we could choose instead to base our policies on environmental objectives. We were therefore offered that choice and have, in fact, been offered it in the present directive on cadmium. But when we come to compare the standards which are required in this choice we are driven to the conclusion that either the Commission has got its arithmetic wrong or it is deliberately weighting the choice heavily in favour of what it likes— fixed emission standards.
The fixed emission standard for cadmium, for the factories which are using it like, for example, factories doing electro-plating or making batteries, yellow plastics, pigments and so on, is two milligrams per litre; that is, two parts per million in waste discharged
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from the sewer. But that discharge has to be diluted by something like a thousand times in order to reach the environmental quality standard which it is British policy to take as a basis. That thousand times dilution certainly does not occur in a great many rivers. So there is a miss-match, as there has been before, between the fixed emission standard, which the Commission would certainly like us to have, and the environmental quality standard which is the very basis of the philosophy of environmental control in Britain.
However, we can in fact, as we look back over these eight years, sum up the prolonged negotiations by saying that there have been some successes. The scientific advice is better, the sources are quoted and there has been the offer of an option although we have not yet managed to persuade the Commission to regard it as a satisfactory option. In fact, twice in the preamble to this directive on cadmium they only admit grudgingly that environmental quality objectives should be used. Twice they say "as an exception" environmental quality objectives may be used as a basis of control.
I said that there were faults on both sides in this unreconciled difference in policy between the Commission and Britain. On our side we have made a great deal of fuss about the need to match the degree of pollution control with the use to which the river has been put, and I think rightly so. But when the Commission said to us, "Let us see a schedule of the uses to which you are putting your rivers", we have not been able to give more than a very evasive answer until, as the noble Baroness mentioned, last Friday when fortunately the National Water Council's 1980 Survey of British Rivers was published with the reclassification of them which does take account of their present potential uses.
As the noble Baroness mentioned, the report makes very encouraging reading. Roughly 69 per cent, of our rivers are suitable for the provision of drinking water, carry game fish and have high amenity value; and only 9 per cent, of our rivers are of poor and bad quality, suitable only for low grade industrial use.
I think that it is a measure of the deficiencies in the Commission's control of the statistics from its member states that to get comparative figures for other states is extremely difficult. The Chemical Industries' Association recently published one comparison that they were able to make between the British rivers and those in Germany and the Netherlands. Whereas only 9 per cent, of the British rivers are of poor or bad quality, 27 per cent, of the rivers in Germany and Holland are of poor quality. So, despite our economic plight, there is evidence that a great deal of trouble has been spent on the quality of rivers and we are now at last, I do not think well enough or clearly enough, backing-up our policy of making use a basis of our classification of rivers by beginning to have schedules of what those classifications are. But I think that more is needed. I think that the Commission want to know what final intentions we have about the 3,600 kilometres of rivers in Britain which are still of poor or grossly polluted quality.
The other fault on our side is the pretence—and I do not hestitate to call it a pretence, because it is becoming that—that we have a comprehensive Control of Pollution Act. The Minister sent Sub-Committee

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G a memorandum on the cadmium directive and there was a heading in that memorandum, "Impact on UK Law". The statement made was that no additional legislation would be required. Our colleagues in Brussels read that and they rgeard that as an act of sheer hypocrisy because they know that, although we have a comprehensive Control of Pollution Act, we have not yet brought in—and show no signs of bringing in—certain sections of that Act. Until Section 2 of that Act is brought in, it simply is not correct to say that the law is at present adequate. A law which has not been implemented is not an adequate law, at least to a Frenchman.
I come back again to the point which the noble Earl made at the very beginning. Cadmium is a very nasty and dangerous poison. It is about in the world in quantities which, in local places, can be quite alarming. It has not yet been shown to have any serious effects on health in Britain, but then the same is true in other countries—in Japan and in Sweden some years ago. Therefore, if there is a case for being overcautious in environmental legislation it is the case when we are dealing with heavy metals like lead, mercury and cadmium, because they are indestructible and because there may be a 30-year delay before the effects turn out to be edited.
I think that it would be a great pity if the slight shortcomings in this directive were to hold it up and I hope that three things can be done to hurry the reconciliation of the British and the Commission's points of view and in particular to get this directive through. The first is to insist on mandatory quality objective levels which really are consistent with the fixed emission standards— not utterly different as they are at present. The second —and this is a very important point which the noble Earl made—is to make sure that something is done to take account of the main discharge of cadmium which is 11 tons a year going into the sea from the manufacture of phosphate rock. The third is to do something at last about the Control of Pollution Act. I am sure that the noble Earl when he replies will have to explain to us that there would be very great financial implications if Part II of the Control of Pollution Act were brought in, and that it is in the present circumstances lack of money which is holding up that implementation. If that is true, I think that we owe it to our Common Market partners, and we certainly owe it to the growing number of critics in Britain who are getting very dis-stressed about this, to have from the noble Earl, or his honourable friend in the other place, a very clear statement as to what the cost will be, in pounds, of implementing those parts of the Control of Pollution Act which are not implemented. If the cost runs to hundreds of millions, then our partners will understand and will probably be patient; if it is a trivial amount, they may press us even harder to do something about it. I know that, if we were to ask the noble Earl to give some undertaking that the Control of Pollution Act would be fully implemented, he would be unable to do so. I am asking him for something much more modest. Will he tell us what it would cost to do it if the Government intended to do it?
7.11 p.m.
Lord Mottistone: My Lords, in what I have to say to your Lordships, I am advised by the CBI. My
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only earlier contact with this splendid report was as a member of the Select Committee, and I assisted our noble chairman, Lady White, in agreeing to it being published. Therefore, it is with great pleasure that I can tell your Lordships that the CBI were not only most grateful to be given the opportunity to give evidence, both oral and written, to Sub-Committee G, but that they also wish to congratulate the Select Committee and its sub-committee on its comprehensive and detailed report. In fact, they say that industry has no criticism of the report's findings and conclusions and believes the report has highlighted all the major points of concern to industry, although the CBI does not share the belief that the exclusion of the manufacture of phosphoric acid from the directive is an omission. It believes that it is simply a realistic appreciation of the difficulties associated with controlling these discharges. If I heard him aright, my noble friend Lord Cranbrook made that point; I think that he is at variance with the CBI in that he thinks that the difficulties can be overcome, whereas I think that the CBI believes that they cannot.
Industry supports, and continues to support, the Government's agreed policy that discharges to the aquatic environment should be controlled on the basis of environmental quality objectives, and not on the alternative limit value approach. The CBI believes that there is still an area of conflict with other member states, and considers that the Government should continue to impress on our overseas counterparts the validity and justification for our approach. Other noble Lords have said much the same thing. I was heartened by the figures which the noble Baroness, Lady White, gave us about the high quality of our rivers as compared with Continental rivers and, indeed, by the remarks of the noble Lord, Lord Ashby, in the same area. It would be helpful if my noble friend on the Front Bench could give us some sort of encouragement that they are still seeking to persuade other member states that our approach to these matters is perhaps worth looking at.
As your Lordships are aware and as my noble friend Lord Cranbrook said, the first "daughter" directive— as I believe it is called, and I do like this phrase—of the parent Aquatic Environment Directive relating to the discharge of mercury has already been agreed. It will be interesting to hear what my noble friend Lord Avon has to say about that. The only point that the CBI would make is that, being the first daughter directive, it could set a precedent for future directives such as cadmium, and I think that they have slight misgivings about that, though the noble Baroness, Lady White, did rather indicate to us that she does not believe so.
Baroness White: My Lords, if I may interrupt the noble Lord, there was an elder daughter called "drins".
Lord Mottistone: My Lords, I gather, if I may put it this way, that she is so far stillborn. The United Kingdom's environmental quality objective approach controls all sources of the substance under consideration and hence industry has opposed, in these directives, a specific reference to discharges from "new plant". However, it has been recognised that, if a complete impasse is to be avoided, some compromise

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will be necessary, and, at the recent Council of Environment Ministers' meeting, this took the form of specifying controls of discharges from "new plant" which will include a reference to the "best technical means" of reducing that discharge. The "best technical means" concept can be misconstrued— and from what he said I think that my noble friend Lord Cranbrook will agree with that—so as not to give adequate regard to local environmental circumstances or to financial/economic factors. The CBI is, therefore, worried that the compromise agreed in relation to the chloralkali directive—where application is limited—could, despite Government assurance, set an unfortunate precedent.
The worry is compounded by the fact that under the compromise the member state has to explain to the Commission, before granting authorisation to discharge, why the best technical means will not be applied in any particular circumstances. The new plant provisions, as now contained in the chloralkali directive, could create considerable practical problems if extended to control over the more widespread discharges of cadmium, imposing substantial financial and administrative burdens. It would be most helpful if my noble friend Lord Avon could reassure us that, whatever erosion of the United Kingdom's environmental quality objective philosophy has occured in relation to the recently adopted chloralkali directive, it will not be repeated in subsequent directives.
I trust that that is clear to my noble friend. It is only just clear to me. I thank your Lordships for allowing me to put some points of view from the CBI, who, on the whole, were extremely pleased with what they saw. I hope that the Government will be able to take note of those points that I have passed on from them.
7.17 p.m.
The Earl ofAvon: My Lords, I am pleased to be speaking this evening for the Government in this debate on the 39th Report from Sub-Committee G of the Select Committee on the European Communities. I think that the highest praise which I can bestow on the 39th Report of the Select Committee, concerning the draft directive on the discharge of cadmium, is to say that it is up to the committee's usual standard. And as you are well aware, that standard is one of excellence. The authority and quality of Sub-Committee G's opinions on European Community proposals for environmental legislation is, as I have said before in your Lordships' House, well-established not only in this country, but also through the Community, and particularly in Brussels.
The Government fully expect the 39th Report of the Select Committee to have a strong and rightful influence on the negotiations concerning the draft cadmium directive. The Government welcome this report, so admirably prepared by my noble friend Lord Cranbrook, and his sub-committee, and so eloquently and clearly presented by my noble friend this evening. The Government thank the Select Committee for its report. They agree with it.
The Select Committee's report mentions four respects in which the draft cadmium directive is an improvement on the two previous proposals (on the 'drins and mercury)
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born from the 1976 framework directive on the discharge of dangerous substances. The improvements, with which the Government concur and which, therefore, I stress, are: first, an attempt to treat all sources of discharge of a dangerous substance in one and the same instrument—I say "attempt" because the Commission have found themselves unable to set limit-values for one major source; that is, of course, the manufacture of phosphoric acid from phosphate rock. I, like the Select Committee, regret this lacuna, but fear that it may be a deficiency which is endemic to a system based entirely on limit-values. The second improvement is the incorporation into one text of both the limit-value and quality objective approaches. Thirdly, the Select Committee endorses the specific nature of some of the technical requirements. By and large, the Government agree but will need to look further at how compliance is judged—an average might be better than a 95 percentile. Fourthly, the references to scientific literature are, indeed, welcome but a more rigorous interpretation of the evidence—for example in setting a quality standard for sea-water—would have been even more welcome.
I now turn to those features of the draft directive which the Select Committee found unsatisfactory. The first of these was the obligation concerning new plant. Article 3(4) of the proposal stipulates that all new plant discharging cadmium shall have emission standards set in accordance with the best technical means available. The Select Committee rightly sees such a provision as wrong for a water pollution control régime based on quality objectives, such as we operate in the United Kingdom.
Here, I should like to refer your Lordships to another directive born from the same mother directive—we are getting into a family way—as the cadmium proposal; I am speaking of the directive on mercury discharges from the chloralkali electrolysis industry.
Now, as my noble friend Lord Cranbrook has asked me, I turn to what happened on 3rd December when this directive was agreed by the European Communities' Environmental Council, subject to formal adoption. The issue which had held up agreement until then was this very same question of new plant. Certain member states were very firmly of the view demonstrated by the Commission in the cadmium proposal— namely, that new plant must be controlled exclusively by limit-values, or something tantamount to them. However, I am pleased to report that those member states did not get their way. Some 10 days ago we were successful in persuading them to agree to a provision which fell short of imposing a binding limit-value or indeed a binding obligation to apply the best technical means available.
The obligation for mercury is to ensure that authorisations for discharges from new plant contain a reference to standards corresponding to the best technical means available. Under such an obligation, our prime control under a system based on quality objectives will continue to be dictated by the quality required in the receiving waters.
There is good reason to presume that something along the lines of the mercury solution will be incorporated into the cadmium proposal, and indeed into subsequent directives. Nonetheless—and I hope this will satisfy my noble friend Lord Mottistone—we

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shall need to look at the detail with some care, because there is no guarantee that what is apt for mercury discharges from the chloralkali industry is equally apt for the various industries discharging cadmium.
All the signs in Brussels are that the Commission would be prepared to see their cadmium proposal aligned with what was agreed for mercury—not only on the new plant issue but on other contentious points as well. I hope that to a degree this will satisfy some of the fears of the noble Baroness, Lady White.
I have already said that the Government shared the Select Committee's views about not setting limit-values for the manufacture of phosphoric acid from phosphate rock. We also share the committee's views that the "greylist" rules of framework Directive 76/464/EEC should in any case apply throughout the Community; namely, control by quality objectives. That is our approach in this country.
The Select Committee's point about sewers is also well made and one with which the Government agree. It is unreasonable for the draft directive to impose the same emission standard for a discharge going for effluent treatment at a sewage works as for a discharge going directly to the aquatic environment. This takes no account of the purification effected by the sewage treatment plant. We shall attempt to get this amended during negotiations.
As to the report's comments about the annexes to the draft directive, the Department of the Environment cannot but concur with the views of such an emminent body of scientists. I can assure your Lordships that we shall press the Commission to explain the illogicalities which the Select Committee has noted among the figures which appear in the Commission's proposal, with the aim of shaping the annexes into provisions which are scientifically based and, especially in the case of quality objectives, environmentally justifiable. As to the structure of Annex II (the one pertaining to quality objectives), we look forward here, as for new plant, to the propitious influence of the now agreed mercury directive.
I should like now to turn to one or two of the points raised during the course of the discussion, and, first, to express my personal regrets that the noble Lord, Lord Wynne-Jones, was unable to be here. I am sure that he would have asked me some searching questions which would have me on my mettle. However, the noble Baroness, Lady White, certainly competed very well on his behalf.
The first point that she raised that I should like to take was about the availability of the text and declarations agreed for mercury, and I think that this is a good point. The Official Journal of the Community will in due course publish a text and at least one of the declarations. The Government will undertake to make available in this country any part of the agreement— that is, any other declarations which may not be published in this way.
The noble Baroness said that she wished that the Commission had taken a more global approach to combat cadmium pollution instead of concentrating on just one medium and on the limited number of potential sources. Indeed, we have a great deal of sympathy for the views of the noble Baroness on this point. I hope that her words will be heeded by the relevant officials in
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Brussels when they read the report of our debate tonight, as I am sure they will.
The noble Baroness mentioned the control of cadmium in sewage sludge. There are two aspects to this problem. First, to restrict the amount of cadmium getting into the sludge, and, secondly, to control the disposal of the sludge. Neither of the two aspects, in the Government's view, falls within the ambit of the draft directive that we are considering tonight. Nor, indeed, do we regard sludge control as a priority task for the Community as distinct from individual member states. We know that the Commission have in preparation a proposal on the use of sludge in agriculture. We have already expressed our doubts to the Commission about the wisdom of their approach, since we do not think that rigid Community rules are appropriate for this kind of control. Our thinking on this point coincides with that of the World Health Organisation's working group on sewage sludge.
To underline something else that the noble Baroness said, we do treat the problem seriously and act accordingly, and regional water authorities imposed restrictions on cadmium-bearing discharges going for treatment at their sewage works, and cadmium levels in sludge have fallen accordingly. The dumping of sludge at sea, as the noble Baroness said, is strictly controlled by the international rules of the Oslo Convention under licence issued by the Ministry of Agriculture, Fisheries and Food. For the disposal of sewage to land there are formal guidelines from my department agreed with the Ministry of Agriculture and the water authorities. Following the publication by the DoE of the Pollution Paper No. 17, Cadmium in the Environment and Its Significance to Man, the department concluded that environmental concentration of cadmium should not be allowed to increase. Working groups have been set up to consider how the use of cadmium can be reduced. One is dealing with cadmium plating and the other with the manufacture of cadmium pigments and stabilisers for plastics and the uses of these compounds. The groups contain representatives of Government departments, but the majority of the members are from the cadmium-handling industries, and the CBI are also represented. They have been meeting throughout 1981, but neither has finalised its work. I am sure that this progress will show that the Government are interested in the amount of cadmium we have around.
The noble Baroness, Lady White, and the noble Lord, Lord Ashby, referred to the river quality report. I should like, also, to make my comment about it and to repeat what my right honourable friend the Minister said. He said:
" It is encouraging to see the continuing improvement in river quality in England and Wales ".
It was providential that this paper came out so recently. The noble Lord, Lord Ashby, asked what are our final intentions about the 3,000-odd kilometres of rivers still classed as poor or grossly polluted. The water authorities have published in the last year or two longer-term objectives showing plans, first, to eliminate all grossly polluted river lengths and, secondly, to upgrade many poor lengths unless physical problems —for example, urban run-off—would make this prohibitively expensive.

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In response to some of the points made by the noble Lord, Lord Ashby, I can say that the Government will press in negotiations for the mandatory environmental quality objective levels annexed to the draft directive to be amended in line with the scientific evidence. As for the disposal of cadmium from phosphate rock, I would certainly expect the Commission to make every effort to fill this obvious gap in their proposal. I accept the noble Lord's view that river classification alone is not enough to be the base of the quality objectives system. Use of the waters in question is the essential here. To this end the Department of the Environment and others are working with the Water Research Centre to produce certain use-based quality standards which would eventually allow the production of a schedule on the lines indicated by the noble Lord.
I have taken careful note this evening of the wishes forcefully expressed about the implementation of Part II of the Control of Pollution Act. Indeed, this is becoming almost a regular occurrence when I am speaking at the Dispatch Box, and I am only sorry that my noble friend Lord Craigton is not here to needle me as well. I hope the noble Lord, Lord Ashby, will be pleased when I say that I do not think it is necessary to produce the financial figures to which he referred; I can give him a personal assurance to transmit the strength of feeling to my right honourable friend the Minister of State, who I know is already giving the matter serious and urgent consideration, and I hope the noble Lord will take that as a step forward compared with having to produce the financial figures.
The essence of the Government's response to the report of the Select Committee is clear; it is one of thanks and general agreement. Now that the mercury directive has been agreed, negotiations on the cadmium proposal can be expected to begin in earnest. I have no doubt that the report of which we are asked to take note tonight will have an important influence on those negotiations.
On Question, Motion agreed to.

Greater London Council(General Powers) Bill
The Bill was reported from the Unopposed Bill Committee, with amendments.
Derbyshire Bill [H.L.]
The Bill was returned from the Commons agreed to, with amendments; the amendments were considered and agreed to.
  POLISH NATIONALS: ASYLUM
  POLISH NATIONALS: ASYLUM
  H.M. PRISON VISITORS: GUIDANCE NOTES
  H.M. PRISON VISITORS: GUIDANCE NOTES
  MR. R. J. MAWDSLEY: SEGREGATION UNDER RULE 43
  MR. R. J. MAWDSLEY: SEGREGATION UNDER RULE 43
  MR. D. J. CHEESMAN: SEGREGATION UNDER RULE 43
  MR. D. J. CHEESMAN: SEGREGATION UNDER RULE 43
  MR. MICHAEL WRIGHT: SEGREGATION UNDER RULE 43
  MR. MICHAEL WRIGHT: SEGREGATION UNDER RULE 43
  PRISON RULES 1964: RULE 37A(1)
  PRISON RULES 1964: RULE 37A(1)
  UK CONSUMPTION OF LIQUID FUELS
  UK CONSUMPTION OF LIQUID FUELS
  CAPITAL TRANSFER TAX: EXEMPTION ON PRIVATE TREATY SALE
  CAPITAL TRANSFER TAX: EXEMPTION ON PRIVATE TREATY SALE
  VEHICLE BREAKDOWN: WARNING TRIANGLE
  VEHICLE BREAKDOWN: WARNING TRIANGLE
  ALBANIA: GOLD
  ALBANIA: GOLD