Sitting of 11 February 1981

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
Oral Answers to Questions
    Scotland

      International Year of Disabled People
      Mr. Canavanasked the Secretary of State for Scotland what representations he has received urging further provision to mark the International Year of Disabled People.
      Mr. Fairgrieve: I have received letters from four hon. Members about the access sections of the Chronically Sick and Disabled Persons Act 1970 and a few letters from individuals making specific suggestions as regards possible activities during the Year.
      Mr. Canavan: Will the Minister take this opportunity to repudiate last month's statement by his callous boss, the Prime Minister, to the effect that the disabled ought to do more to help themselves instead of relying on the Tory Government? Instead of clobbering the disabled by, for example, reducing the real value of invalidity benefit, industrial injury benefit and sickness benefit and increasing prescription charges fivefold, will the Minister give us an assurance that he will give increased resources to the health boards and to the local authorities to maintain and improve services for the disabled, including the home help service and specialist housing needs, which are under threat as a result of the reactionary policies of this Government?
      Mr. Fairgrieve: I shall not refer to bosses. I have other adjectives than "callous" for the hon. Member's boss.
      The Government have been in touch with the Scottish Council on Disability, the Scottish Paraplegic Association, the Scottish Committee on Mobility for the
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      Disabled, the Scottish Committee on Access and the Disablement Income Group. We have given £25,000 for the International Year of Disabled People. We are in touch—
      Mr. Canavan: That is not even the Prime Minister's salary.
      Mr. Fairgrieve: We are in touch with all the local authorities, and the total commitment in this area is £4·7 million.
      Mr. Sproat: Will my hon. Friend draw to the attention of the hon. Member for West Stirlingshire (Mr. Canavan) the splendid example of Grampian regional council, which has managed to keep its domestic rates increase at 11·4 per cent, but has still managed to increase the amount of money given to the disabled and handicapped? Would it not be a good idea if the hon. Member's council behaved in the same way?
      Mr. Canavan: It does.
      Mr. Fairgrieve: My hon. Friend is right. When we meet—and when the last Administration met—representatives of the disabled, those representatives always ask that party politics be kept out of these matters.
      Mr. Harry Ewing: The Minister said that there was a commitment of £4·7 million in this International Year of Disabled People. Of that £4·7 million, he said that only £25,000 was coming from the Government. Surely that means that the balance will come from local authorities. Does the Minister approve of what the Lothian region is spending on the disabled? Does he understand that we fully support the expenditure of that region? Will he take this opportunity to praise the Lothian region for its record in this area?
      Mr. Fairgrieve: The less said about expenditure by Lothian region the better, but if I were responsible for spending money in that region, not only would I reduce it but I would spend it in different areas.
      Mr. Gordon Wilson: Since the Minister wishes to keep party politics out of the problems of the disabled, will he note that the Bill presented by the hon. Member for Caernarvon (Mr. Wigley) about the problems of the disabled would include Scotland? If that is so, will he assure us here and now that the Scottish Office will give that Bill full backing?
      Mr. Fairgrieve: I cannot say this afternoon what our position is on that Bill, which I read yesterday. It was not the Minister but the bodies that look after the disabled that asked for party politics to be kept out of this area.

      Public Inquiries (Malpractice)
      Mr. Ron Brownasked the Secretary of State for Scotland how many public inquiries authorised by him were held in Scotland during 1980 to examine alleged malpractices by local authorities.
      The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): None, Sir.
      Mr. Brown: Public inquiries always take place in special circumstances, but is not the time overdue for the Secretary of State to look into the well-known case of Mr. Walter Gunkel, a constituent of mine who suffered badly at the hands of Edinburgh district council? Is he not aware

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      that the council is challenging in the courts the findings of the independent arbiter, although that arbiter was agreed to by the council as well as by Mr. Gunkel? Is that not a disgrace? Surely a public inquiry is justified and the general public are entitled to know what has been going on, because at the end of the day they will surely foot the bill for the events in this part of the country under this district council, which, of course, as we knew—
      Mr. Speaker: Order. I have been very fair to the hon. Member but it will stop other hon. Members being called if long questions are asked.
      Mr. Rifkind: I am aware of the case to which the hon. Gentleman refers. He should appreciate that the Secretary of State's power to call for an inquiry arises only if a local authority fails to carry out its statutory duty. As yet, we have no evidence that that would apply in this case, but I understand that Edinburgh district council is actively considering what response it should make to the arbiter. We hope that this matter will be satisfactorily resolved.
      Mr. Ancram: Does not my hon. Friend agree that there should be a public inquiry into the decision last night by the Labour group on Lothian regional council to make a rates increase of 50 per cent? Does he not agree that that can only lead to thousands of job losses in the region?
      Mr. Rifkind: If that information is correct, it certainly represents an intolerable increase for the people of the Lothian region. I understand that there is a deep division on that recommendation within the Labour group in the region and I hope that more moderate counsel will prevail. However, I must warn the Lothian region that if my right hon. Friend the Secretary of State were to consider that a rates increase of that size suggested an excessive and unreasonable budget, it would inevitably result in the region losing a significant amount of rate support grant. Those concerned should bear that in mind.

      Pay Beds
      Mr. Adamsasked the Secretary of State for Scotland how many pay beds currently exist in National Health Service hospitals in Scotland; and what he intends to do about this facility in the future.
      Mr. Fairgrieve: There are 94 pay beds in Scotland. My right hon. Friend will consider any applications by health boards for his approval for changes in existing authorisations or for new authorisations for pay beds.
      Mr. Adams: Would not the Minister consider it unreasonable if there were even one pay bed in Scotland in National Health Service facilities when we have ever-growing queues for the use of life-saving equipment and for life-saving operations? Will he consider issuing a statement to the House condemning the use of NHS facilities—beds and equipment—by specialists and consultants when they could be dealing with the queue of people in the NHS more rapidly by using those facilities to help them?
      Mr. Fairgrieve: The answer to the last question is "No, Sir". On the hon. Member's claim that one pay bed is too many, this Government believe that, once people have paid their taxes, rents and rates, if they wish to spend their money on their own health, they are entitled so to do.
      Mr. Douglas: Will the Minister take note of the widespread reporting in the press of the incident in the area
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      of Fife health board last year when a Mr. Spence misused facilities—the facts are not in dispute—because he was under the misapprehension that a private patient was involved? Will he take immediate steps to allay fears that this practice might have been widespread in Fife and the surrounding area? Will he meet me and my hon. Friends the Members for Fife, Central (Mr. Hamilton) and Kirkcaldy (Mr. Gourlay) as soon as possible to discuss the matter?
      Mr. Fairgrieve: Yes. I have had a letter from those three hon. Members asking me to meet them to discuss this incident in Fife and I intend so to do. The General Medical Council is investigating the case. However, before hon. Members get too heated, I should like to draw their attention to the letter in The Scotsman today from the honorary secretary of the Fife BMA, which begins:
      "I protest in the strongest terms at the reported remarks of Fife Members concerning the medical profession. Would they not feel ill-treated were Parliament to be so abused?"
      Mr. Speaker: Order. It is unreasonable to read letters in answer to questions.

      Unemployment (Glasgow)
      Mr. David Marshallasked the Secretary of State for Scotland what are the latest numbers and percentage rates of unemployed (a) adults and (b) young people in the Parkhead area of Glasgow.
      The Under-Secretary of State for Scotland (Mr. Alexander Fletcher): On 15 January 8,614 people were registered as unemployed in the Parkhead employment office area and the unemployment percentage rate in the Glasgow travel-to-work area, which includes Parkhead, was 14·2 per cent. On 9 October 1980, the latest date for which an analysis by age is available, 8,315 people were registered as unemployed, of whom 1,544 were aged under 18. Percentage unemployment rates are not calculated for individual employment office areas which form part of a travel-to-work area, or for particular age groups.
      Mr. Marshall: Is the Minister aware that there are only two vacancies in the Parkhead careers office for those 1,544 unemployed youngsters and that his unbelievable complacency is a recipe for disaster unless he does something now as a matter of urgency? Will he consider making special provision for tackling the problems of youth unemployment in the east end of Glasgow?
      Mr. Fletcher: There is no complacency on these Benches. We have made special provision through the youth opportunities programme and the GEAR project in Glasgow. The hon. Gentleman will be pleased to learn that the Scottish Development Agency has built and let over 70 factories in GEAR and that another 44 are in this year's programme. In addition, 500 new jobs are being created at Clyde Workshops Ltd. and it is hoped to double the number before the end of the year.

      Scottish Exhibition Centre
      Mr. Ancramasked the Secretary of State for Scotland what consultations he has had on the siting of the Scottish Exhibition Centre; and if he will make a statement.
      Mr. Alexander Fletcher: My right hon. Friend has not yet received a detailed proposal from the Scottish

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      Development Agency, but when considering it he will take into account all relevant factors, including alternative sites and public expenditure implications.
      Mr. Ancram: Is my hon. Friend aware of the strong feeling in the city of Edinburgh that the choice of a site near the city would bring much needed business not only to the city but to the region? Will he use all his influence to make sure that it is decided to site the centre as near Edinburgh as possible?
      Mr. Fletcher: A number of hon. Members have made representations to my right hon. Friend about the siting of the exhibition centre and he will take them all into account before reaching a decision.
      Mr. Steel: Bearing in mind the limits of public expenditure, will the Government also consider extending the Royal Highland Show ground rather than putting money into a completely new site?
      Mr. Fletcher: As I am sure the right hon. Gentleman knows, there has been some lobbying on that project, quite fairly. In considering the expenditure implications to which the right hon. Gentleman has referred, my right hon. Friend will also take into account the possibility of attracting private funding.
      Dr. M. S. Miller: Although the House will not be against exhibition centres, what will be left to exhibit, other than our nakedness, once this Government have finished their hatcheting?
      Mr. Fletcher: I do not share the hon. Member's gloomy view of Scottish industry. He must know that, while there is unemployment in Scotland, new jobs have been created just in the last few weeks at a number of prominent Scottish businesses, including some in the West of Scotland.
      Mr. Peter Fraser: Before my hon. Friend gives in to the grandiose pretensions of some local authorities, which seem to wish to saddle their ratepayers with an expensive white elephant, will he take into account the views of users of exhibition centres, who have said, among other things, that they would probably prefer to see the Kelvin Hall expanded and improved rather than a new venture undertaken?
      Mr. Fletcher: My hon. Friend is absolutely correct. In engaging consultants to survey the prospects for an exhibition centre, the Scottish Development Agency has taken that fact into account.
      Mr. Harry Ewing: If the Minister does not share the gloomy prospect for Scottish industry, is he really not aware of his own record in closing down industry after industry in Scotland, of doubling unemployment in the short period of 18 months, and of the fact that there are fewer job vacancies for school leavers in the Parkhead area of Glasgow and in every other area of Glasgow? What is there to be cheerful about with that kind of record?
      Mr. Fletcher: The question relates to Government support for an exhibition centre in order to try to improve the prospects of Scottish industries, and that is typical of the view we take of the prospects for Scottish industry, rather than the gloomy view of the hon. Gentleman.

      Hamilton College of Education
      Mr. George Robertsonasked the Secretary of State for Scotland if he will make a statement on further progress regarding his intention to close Hamilton college of education.
      Mr. Alexander Fletcher: I very much hope that discussions will begin soon about arrangements for implementing our decisions.
      Mr. Robertson: Does the Minister realise how disappointed hon. Members in all parts of the House will be with his wholly predictable answer? Does he also realise that if he continues with his intention to close Hamilton college of education in June of this year, proceeding willy-nilly with this newly declared intention—disrupting severely, as it will, the studies of many young people in the college, and the livelihood of many staff there—it will be nothing less than a disgraceful act of wanton educational vandalism?
      Mr. Fletcher: I dispute the remarks made by the hon. Gentleman, but I agree with him on one important thing, and that is that the future of the students in mid-term and the future of the staff must be a prime consideration. With that in mind, I ask the hon. Gentleman to use his best offices to speak to the college authorities and encourage them to begin discussions. It is now almost mid-February, and it was on 6 August that my right hon. Friend announced his intention. In the interests of students and staff, surely the college should now begin to discuss their future.
      Mr. John MacKay: I welcome my hon. Friend's appeal. Will he reinforce it and underline the great need for the college people, despite their unwillingness to accept the decision, to talk to the Government about the move, in the interests of the students? Will he start those talks, whether the other side wishes to have them or not? It is not only the students who want to know what will happen to them after June. In addition, students from other colleges in West Central Scotland who are in residence at Hamilton wish to know what their position will be after the closure of Hamilton college of education.
      Mr. Fletcher: I agree with my hon. Friend that the people who are most concerned are the students. It is now high time that discussions began, to look after the interests of the students at the college and, as my hon. Friend has said, of the other students from other colleges and universities in Glasgow who use the residential accommodation at Hamilton.
      Mr. Maxton: Is the Minister aware that his handling of the whole affair has been such that in the Hamilton area and in the Hamilton college of education nobody now trusts him, and that that is why people will not speak to him and will not discuss things with him?
      Mr. Fletcher: There is no possible foundation for that remark. I can understand the disappointment of the authorities and others at Hamilton that their college has to be closed, but if anyone in this House should understand the reasons for that closure it is the hon. Member for Glasgow, Cathcart (Mr. Maxton.)
      Mr. O'Neill: Will the Minister concede that the problems which have arisen since 5 August have been largely of his creation? There was the unhelpful statement

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      which he made to the students prior to his Radio Clyde broadcast, when he said that it would be better if they had fewer teachers anyway. Will he concede that the betrayal of the teachers and the staff of the colleges has soured the atmosphere completely? If he is to close the colleges, will he undertake the responsibility for padlocking the gates himself, as the responsibility lies on his head and not on the officials of the colleges?
      Mr. Fletcher: The hon. Gentleman's remarks are totally unhelpful to the students and staff at Hamilton. The hon. Gentleman has some responsibility, as an Opposition Front Bench spokesman, to try to use his influence in the best interests of the students and in encouraging them to look after their own interests by asking the college authorities to discuss these matters with Ministers.

      Local Government Reorganisation
      Mr. Lambieasked the Secretary of State for Scotland, following the publication of the Stodart report, if he is now prepared to look again at local government reorganisation with a view to introducing a one-tier system.
      Mr. Rifkind: My right hon. Friend and I believe that the further unheaval, countervailing disadvantages, and the uncertain costs of further radical reorganisation would not be justified by any possible benefits.
      Mr. Lambie: Is the hon. Gentleman aware that his reply will be received with disappointment by the ratepayers of Ayrshire, including the Secretary of State's own supporters in Ayr and Prestwick, who remember his many pledges and promises before and during the last election to the effect that the Tories, if elected, would reorganise local government and break up such gigantic regions as Strathclyde? When will the right hon. Gentleman carry out his election promises and bring local democracy back into local government?
      Mr. Rifkind: If the hon. Gentleman will do himself a favour by consulting our election manifesto, he will see that there was no commitment to a further reorganisation of local government. There was a commitment to improve the existing system of local government, and we are at the moment considering the very constructive proposals of the Stodart committee, which are designed to suggest various ways in which the existing system could be significantly improved.
      Mr. Pollock: Is my hon. Friend aware that the Stodart committee accepted the contention that Moray district could go it alone on the basis of most-purpose status? Will the Minister therefore undertake to have a fresh look at that proposal?
      Mr. Rifkind: I assure my hon. Friend that we shall look with interest at all the reccomendations made by the Stodart committee. No decisions have yet been reached, but as soon as they are my right hon. Friend will announce them to the House.
      Mr. Gourlay: Is the Minister aware of the unsatisfactory road conditions and the frustration caused through the operation of the social work services in Scotland due to the wrong division of functions between the districts and the regional authorities? Will he agree that the minuscule report of the Stodart committee will in no way alter the position? Will he therefore consider the
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      appointment of a further Royal Commission to examine in depth the need for the reorganisation of local government in Scotland.
      Mr. Rifkind: The Stodart committee was able to look into the question whether a transfer of certain responsibilities from region to district or vice versa would be appropriate. As the hon. Gentleman will be aware, its main recommendations dealt with those functions for which there was a joint responsibility upon district and region. These are areas which the Stodart committee has recommended could be most sensibly rationalised.
      Mr. David Steel: Is it not surprising that the Undersecretary should slam the door so firmly in the face of any discussion of a one-tier system in Scotland? As he talked about countervailing disadvantages, would he care to set out a financial discussion paper showing what the supposed advantages would be?
      Mr. Rifkind: It goes without saying that if, after such a short period since the regional and district councils have been established, there were to be a further reorganisation, that would inevitably involve very substantial cost and effort for what would be, at best, hypothetical advantages. I do not think that the right hon. Gentleman would disagree with that assessment. My right hon. Friend has asked for comments on the Stodart committee's findings by the end of March, and would be very happy to look at any specific arguments or recommendations that the right hon. Gentleman might like to put.
      Mr. Lang: Will my hon. Friend give particular attention to the recommendations of the Stodart committee affecting tourism? Does he agree that any move to encourage tourists away from the South-East of England and up to Scotland is to be encouraged? May we look forward to Government encouragement to this important industry in Scotland?
      Mr. Rifkind: I agree with my hon. Friend's observation that anything that can be done further to attract tourism to Scotland is highly desirable. We shall give the particular matter that was referred to in the report of the Stodart committee the same consideration as is given to the other matters, and we shall let the House know our views in due course.
      Mr. Dewar: Will the Minister accept that one oral question is hardly an adequate opportunity to discuss these complicated issues? Will he guarantee that there will be a debate, or will he at least use his influence to ensure that there will be a debate upon the future structure of local government and on the Stodart committee recommendations in the very near future? Is he aware that the manifest discomfort with which his initial answer was received on the Conservative Back Benches illustrates the need for such discussion?
      Mr. Rifkind: I am certain that at some time it will be appropriate to have a discussion and a debate on these matters. Whether it should be done before or after my right hon. Friend has indicated the Government's response is a matter that can be considered. I am sure that the usual steps can be taken by the Opposition if they wish to ventilate the suggestion concerning a debate.

      Rating System
      Mr. Grimondasked the Secretary of State for Scotland whether it is the intention of Her Majesty's Government to introduce any amendments to the rating system in Scotland.
      Mr. Rifkind: The Local Government (Miscellaneous Provisions) (Scotland) Bill includes several proposals by the Government for amendments to the Scottish valuation and rating code.
      For the longer term, our review of the rating system is in progress, but I cannot say at present what its outcome will be.
      Mr. Grimond: Is it not part of Tory policy to abolish the rating system? Is it not extraordinary that after two and a half years of Tory Government no major suggestions have been made about helping local government finance, which is in the most intolerable muddle?
      Mr. Rifkind: The Conservative Party indicated that for the longer term it believed that the abolition of the rating system was desirable, but that in this Parliament the emphasis must be on reducing direct taxation. That was made clear in our election manifesto. An internal review of the rating system is at present taking place, and we hope that it will lead to substantial changes and improvements but that is a matter that I must ask the right hon. Gentleman to await.
      Mr. Bill Walker: Before considering any changes, will my hon. Friend confirm that one of the greatest deterrents to inward investment in Scotland is the level of rates? Does he agree that the projected level of rates over recent months has been enough to deter anyone from coming to Scotland?
      Mr. Rifkind: My hon. Friend is correct. An unjustifiably high level of rates will not only be unpopular with ratepayers but, perhaps even more important in the present climate, will undoubtedly destroy hundreds if not thousands of jobs.
      Mr. John Home Robertson: Will the hon. Gentleman explain by what authority he has set himself up as a non-elected third tier of local government in Scotland by reserving unto himself personally the power to fix rates and to engage in crucial local decision-making under the miscellaneous provisions Bill?
      Mr. Rifkind: I can assure the hon. Gentleman that I neither have nor will have any such power. Nor will my right hon. Friend have any such power to prevent a local authority from fixing its rate level. However, it is justifiable that the Government should be able to indicate how much financial support they give to a local authority. That is the basis of the provisions in the Bill to which the hon. Gentleman refers, and for that we need make no apology.
      Mr. Allan Stewart: Will my hon. Friend confirm that the Government's review covers the whole of the rating system? Is he aware that there is widespread concern that the Government might abolish domestic rates while leaving, or perhaps even increasing, the burden on industry and commerce?
      Mr. Rifkind: I can assure my hon. Friend that the review to which I have referred includes the issue of industrial rating.
      Mr. Dewar: Will the Minister accept that there is a great deal of anxiety in Scotland about high rates? Will he acknowledge that responsibility for high rates lies with an inadequate rate support grant settlement given by him and his colleagues to local government? Will he bear in mind that if there is to be any fundamental change in the rating review, it will be necessary to make an early announcement, after the enactment of the miscellaneous provisions Bill, about the next quinquennium? When will we hear definitely whether that it is going ahead, whether it is being postponed or whether it is being varied?
      Mr. Rifkind: The hon. Gentleman must await an announcement, which will be made as soon as possible. He has come up with a nonsensical suggestion about the rate support grant settlement. The hon. Gentleman must take into account the fact that only yesterday the Grampian regional council was able to indicate that its rates increase next year would be limited to 11·4 per cent., which is substantially below the present level of inflation. If a local authority such as the Grampian regional council can do that, there is no excuse for any other responsible local authority having a rates increase that is substantially greater.

      River Pollution
      Mr. Foulkesasked the Secretary of State for Scotland if, pursuant to section 1(1) of the Rivers (Prevention of Pollution) (Scotland) Act 1951, he will seek to prevent further pollution of Scottish rivers and of the River Girvan in particular.
      Mr. Rifkind: I am satisfied that river purification authorities take all the measures open to them to prevent pollution of Scottish rivers. On the specific question of the River Girvan, I am fully aware of the situation and am being kept in touch with developments. A solution to this problem is still being sought.
      Mr. Foulkes: Is the Minister not aware of the anger in Ayrshire because the Secretary of State has not only refused to take any action over the issue of the River Girvan but has also refused to meet a deputation of local people? In the light of the High Court's decision yesterday and in the light of his statutory responsibility, will the Minister agree to an early meeting with the National Coal Board to discuss action to deal with the poison in the River Girvan?
      Mr. Rifkind: The hon. Gentleman should be aware that my right hon. Friend's statutory responsibilities are confined to the promotion of river purification boards and other matters of that sort. He has no specific anti-pollution powers. These are the responsbilities of the regional council. I am aware of the decision yesterday of the High Court, which upheld an appeal by my right hon. and learned Friend the Lord Advoate against the National Coal Board. I hope that the board will be taking into account the judgment that has been made against it and will be considering its own responsibilities in the light of that judgment.
      Mr. Myles: Will my right hon. Friend and hon. Friend recognise the considerable co-operation that has been given by agriculture in Scotland towards preventing pollution of rivers, especially when one bears in mind the considerable cost to the private individuals concerned?
      Mr. Rifkind: Yes, I am happy to acknowledge that agriculture has made that contribution. It is much appreciated.
      Mr. John MacKay: Will my hon. Friend join me in welcoming the hon. Member for South Ayrshire (Mr. Foulkes) to the ranks of the hunting, shooting and fishing brigade? Does my hon. Friend realise that salmon, which represents an important economic factor in the countryside of Scotland as well as bringing pleasure to many in Scotland, is under considerable pressure both in British waters and abroad? Will he take every possible step to ensure that when it comes into our rivers it is not killed by pollution?
      Mr. Rifkind: The hon. Member for South Ayrshire (Mr. Foulkes) is known for his sympathy with the interests to which my hon. Friend refers. I acknowledge the force of my hon. Friend's supplementary question.

      Maternity Beds
      Mr. McTaggartasked the Secretary of State for Scotland if he will make a statement on plans for provision of extra maternity beds in Glasgow following the reduction in the number of beds which will be available at the Royal maternity hospital when necessary renovation work is carried out.
      Mr. Fairgrieve: The provision of maternity beds in Glasgow is a matter for the Greater Glasgow health board.
      Mr. McTaggart: Is the Minister aware that, due to the fact that there is no starting or completion date for the proposed Royal infirmary, over £1 million of public money will have to be spent on the present inadequate facilities at Rotten Row?
      Mr. Fairgrieve: I am aware of that position. The Greater Glasgow health board has not been in touch with my Department to say that there are not sufficient maternity beds available in the board's area. The hon. Gentleman is correct in what he says. Although phase 2 of the building of the Glasgow Royal infirmary is mooted, there are no plans for when it will be started. The hon. Gentleman knows that and so does the Glasgow health board.
      Mr. David Marshall: Is the Minister aware that he is being hypocritical about the whole project? Is he aware that on 3 February the Scottish Development Agency estimated unemployment as being about 26 per cent.? Will he not put his money where his mouth is and give the go-ahead to phase 2 and the new maternity block of the Royal infirmary, thereby creating many much needed jobs as well as a much needed facility?
      Mr. Fairgrieve: The GEAR project cannot be considered along with the plans of the health board of Greater Glasgow area or those of any other area.

      Unemployment
      Mr. Michael Martinasked the Secretary of State for Scotland if he will make a statement on the latest unemployment figures in Scotland.
      Mr. Alexander Fletcher: On 15 January 1981 seasonally adjusted unemployment in Scotland stood at 252,300 or 11·2 per cent. The problem of unemployment will be solved by keeping to our objectives of controlling
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      inflation and restoring industrial competitiveness. At the same time we are greatly expanding the help available under the special employment programmes.
      Mr. Martin: I thank the Minister for his reply. Is he prepared to come to my constituency, in which the only area of expansion is the employment exchange, and speak to the unemployed in my constituency and tell them that the Government's work is successful? Is he prepared to do that, or will he have the guts to resign?
      Mr. Fletcher: I have no objection to visiting the hon. Gentleman's constituency, meeting his constituents and explaining to them, if he does not, the real reason for the high level of unemployment in Britain.
      Mr. Henderson: There is widespread concern about unemployment in Scotland. The fact is that industrial help is particularly loaded in favour of Scotland generally. Will my hon. Friend take particular note of the dissentient view in the Stodart report, which would leave with district councils the duty and reponsibility of dealing with industrial matters?
      Mr. Fletcher: There is one thing of which I am aware in dealing with my present responsibilities and that is that there are too many who are in on the act of industrial development in Scotland.
      Mr. James Hamilton: Will the hon. Gentleman bear in mind that since he became a Minister there has been a catalogue of catastrophe all along the line? Does he realise that there is a factory in my constituency that will close in June? In addition, there is the Talbot catastrophe. Does he not think that it is a travesty of justice and a downright disgrace that the Secretary of State is not present to answer these questions from the Dispatch Box?
      Mr. Fletcher: I do not think that Scottish fishermen would agree with the hon. Gentleman's last comment. My right hon. Friend the Secretary of State for Scotland is in Brussels today defending the interests of Scottish fishermen, and he is doing that to the very best of his ability. The hon. Gentleman's complaints about unemployment in his area are well understood on this side of the House, but he should also know that the Government have given hundreds of millions of pounds to the British Steel Corporation and to British Leyland and are planning a gas pipeline into Scotland from the North Sea. There are 1,400 new jobs at Torness, and in recent weeks private enterprise in Scotland has been able to achieve a great number of orders against competition from overseas. Therefore, there is also good news with regard to Scottish business, and not just the appalling gloom suggested by the Opposition.
      Mr. Sproat: Does my hon. Friend agree that it is grossly misleading to paint a picture of unrelieved industrial gloom when exports are running at £1 billion per day and when more new companies are starting up than ever before? Certainly far more new companies are starting than there companies are closing down.
      Mr. Fletcher: My hon. Friend is absolutely correct. Anyone looking at the Scottish industrial scene today, while deploring the unemployment in traditional industries, must be encouraged by the new investment that is taking place in oil-related activities and electronics.
      Mr. Millan: Does the Minister realise how ridiculously complacent are his answers today, given that we have the

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      worst unemployment figures since the 1930s and we have had the calamitous announcement today about the closure of Linwood, which is another betrayal of the West of Scotland? Does he not realise that there is now an air of desperation in Scottish industry and that only a wholesale reversal of Government policies can hold out any hope at all for the people of Scotland who are desperately anxious and worried about the lack of effective action by the Government in relation to Scottish industry?
      Mr. Fletcher: The only desperation that I note is on the Opposition Benches. While I agree with the right hon. Gentleman that there is a great deal of worry and concern in Scotland, I find that the reasons for this, and the fact that the whole of the Western world is in recession, are better understood and accepted among the people of Scotland than by the Opposition.

      Fishing Industry
      Mr. Sproatasked the Secretary of State for Scotland if he will make a statement on the latest situation in the fishing industry.
      Mr. Fairgrieve: The Government recognise that the industry continues to face considerable difficulties. As my right hon. Friend the Secretary of State indicated in his reply to my hon. Friend on 5 February, we have brought forward the review of the industry's economic position which was due when the present aid scheme ends in March.
      As regards the fisheries negotiations, as hon. Members now know, the negotiations which began in Brussels on Monday continue today, and I assure the House that my right hon. Friends will report the outcome of these latest negotiations as soon as this is possible.
      I am also surprised that Opposition Members are surprised at the whereabouts of my right hon. Friend the Secretary of State today.
      Mr. Sproat: Does my hon. Friend accept that all reasonable people fully understand the importance of my right hon. Friend being in Brussels today to fight for Scottish and British fishermen? Does he further accept that all sides of the House will fully support the strong line that my right hon. Friends are taking in rejecting out of hand the French proposals and the Commission's so-called compromise proposals? Can he say how long the current talks are likely to continue?
      Mr. Fairgrieve: I thank my hon. Friend for drawing to the attention of the House what reasonable people feel on this matter. At the present moment the Council of Fisheries Ministers is still in session. The Ministers will be going out to meet their own delegations, the council will meet again later this afternoon, and there will possibly be a statement tomorrow. I assure my hon. Friend that my right hon. Friends are fighting extremely hard on behalf of the British fishing industry.
      Mr. Grimond: Have the Government received any information from the Dutch Government in response to the inquiries that we understand they are making there about the allegations that the Dutch are dumping fish in this country, contrary to Common Market regulations?
      Mr. Fairgrieve: As the right hon. Gentleman knows, I am, of course, an expert on the subject of fishing. These negotiations are still continuing, but until we settle the
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      CFP the only quotas are those being applied voluntarily by each country. There is, therefore, no action that the Government can take in this respect at this moment.
      Mr. Millan: Will the Minister take note that the reports coming out of Brussels so far are in no way reassuring about the nature of the settlement that the Government may be contemplating? Is he aware that the Opposition expect the Government to keep to the pledges that they have repeatedly made in the House and that, if they do not, any agreement reached will be completely unsatisfactory and, I believe, will be rejected not only by the fishing industry but by the House?
      Mr. Fairgrieve: I do not think that there is any evidence at all to suggest that the feelings coming out of Brussels at the moment are not reassuring. The right hon. Gentleman knows the position as well as any of us. He knows the political difficulty that we have with the French Government and their elections, but I assure him that the Government will not sell Britain's fishermen down the river—if I may put it in that way.
      Mr. McQuarrie: I am sure that the Minister, who is answering for my right hon. Friend today, will be aware that the real problem in the fishing industry, which has arisen in Fraserburgh and Peterhead in my constituency, concerns the import of certain fish as against the prices that are being obtained on the quay. Will he take active steps to ensure that the only fish imported is that which is required for the processing factories and ensure that any other white fish imports are banned completely?
      Mr. Fairgrieve: I accept what my hon. Friend says, up to a point. Investigations are taking place on this matter at this moment. With due respect, however, I do not think that the correct response is for our fishermen not to go out and fish.
      Mr. Donald Stewart: Is the Minister aware that there is great anger and concern in the fishing industry over the reported remarks of his right hon. Friend the Minister of Agriculture, Fisheries and Food to the effect that he was seeking to minimise the demands of the French within the 12-mile limit? Is he aware that if that was conceded in any way, apart from the other aspects of the settlement, it would be regarded by the fishermen—and their view would be shared by me—as sheer treachery?
      Mr. Fairgrieve: Some of those views would be shared by hon. Members on both sides of the House, but it would be wrong to anticipate negotiations that are going on at the moment and about which my right hon. Friends will probably be speaking to the House tomorrow.
      Mr. Strang: Is the Minister aware of the enormity of the disaster facing the Scottish inshore fishing industry? Will he make it clear to his right hon. Friends the Secretary of State for Scotland and the Minister of Agriculture, Fisheries and Food that if the talks break down we shall expect, not just a statement outlining the talks, but a plan of national measures to save our own industry?
      Mr. Fairgrieve: I am surprised that the hon. Member should make such a statement. The hon. Gentleman knows full well that as an earnest of the Government's intent towards the fishing industry in the present financial year we have given £17 million to the industry, over half of which went to Scotland.
      Mr. Myles: Despite some of the comments made by Opposition Members, I am sure that the whole House will wish my right hon. Friends success in the present talks in Brussels. Will my hon. Friend ensure that if, by chance, the talks break down, unilateral conservation measures will be undertaken to make certain that there are fish stocks to be fished in the future?
      Mr. Fairgrieve: Again, it is not for me to anticipate the decisions of my right hon. Friends in Brussels. May I say, however, that we are very fortunate, particularly in Scotland, in having two such competent Ministers arguing Britain's case. As regards the question of a breakdown in the talks, may I say that there will either be a breakdown or a satisfactory solution for Britain.
      Mr. John Home Robertson: The Minister seems to be implying that his right hon. Friend the Minister of Agriculture, Fisheries and Food is not competent, but perhaps we should not go into that. Will he comment on the allegations that fish which has been officially withdrawn from the market in the Netherlands is appearing on the market in the United Kingdom at throw-away prices? How does he propose to stop such illegal trade?
      Mr. Fairgrieve: As I have said, and as the hon. Member knows full well, the whole position is currently being investigated.

      Dundee
      Mr. Gordon Wilsonasked the Secretary of State for Scotland if he will make special provisions for the economic regeneration of the city of Dundee.
      Mr. Alexander Fletcher: We have already done so. Dundee receives the highest priority in terms of its special development area status, and the Scottish Development Agency is concentrating substantial resources there under its £6 million development scheme.
      Mr. Wilson: The Minister says that he has made special provision for Dundee. However, will he kindly explain to the citizens of Dundee why the Government's economic regeneration has led to 14,000 people being unemployed and an increase of 1 per cent, in unemployment in one month? Does he not accept that the Government's present arrangements for regional development are not working in the city and that something more is needed to break the cycle of decline that is now taking place? It is his responsibility to do something. When will he act?
      Mr. Fletcher: Every possible action is taking place with regard to Dundee. But, clearly, Dundee cannot be isolated from the economic situation which exists throughout the rest of Scotland and, indeed, the United Kingdom. The main recipe for the success of employment and other measures in Dundee is the revival of the British economy, which our policies are aimed at bringing about.

      High Court Sittings (Edinburgh)
      Mr. Peter Fraserasked the Solicitor-General for Scotland what increase there has been in the number of High Court sittings in Edinburgh in the last 12 months.
      The Solicitor-General for Scotland (Mr. Nicholas Fairbairn): In 1979, the High Court sat at Edinburgh on 19 occasions for the purpose of hearing criminal trials and
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      on 25 occasions as the Court of Criminal Appeal. The corresponding figures for 1980 were 22 and 29 respectively, but the court days in 1979 were only 74 and in 1980 were 108.
      Mr. Fraser: Does my hon. and learned Friend accept that that is a quite unacceptable increase in the number of days spent in the criminal courts in Scotland? On the Edinburgh side, is that not something of a failure to indicate how serious the problem is? Is he aware that if one looks at the figures for the Glasgow High Court one will see that the increase in the number of trials and days spent in court have been significantly greater?
      The Solicitor-General for Scotland: Yes, I agree. No one is more anxious than I am to demonstrate how serious the criminal situation is. In Glasgow, the number of court days in 1979 was 269, and it went up in 1980 to 338. There is a large increase in the incidence of crime and it is something that we are determined to master. I hope that as a result of the Criminal Justice (Scotland) Act we shall succeed.
      Mr. Dewar: I congratulate the Solicitor-General on answering the question which the hon. Member for South Angus (Mr. Fraser) meant to ask but did not ask. Is it not strange that the crime figures are rising so fast under a Conservative Government, who stood on such a blatant and shameless law and order platform? Will the hon. and learned Gentleman look not just at the number of sittings but at the organisation of High Court sittings to try to get away from the present ludicrous situation—with which he will be familiar—in which it is impossible to tell when a case will start, whether it will be delayed, or whether it will be brought forward, with the resultant inconvenience to solicitors, counsel, members of the public, witnesses and jurymen and at an enormous cost to the public purse in terms of legal aid and waiting days?
      The Solicitor-General for Scotland: No one is more anxious than I am to prevent inconvenience to witnesses, solicitors and judges. I think that I have reversed the order of inconvenience mentioned by the hon. Gentleman. I want to make it absolutely clear that under the Criminal Justice (Scotland) Act there are now provisions which enable those who are instructed to take instructions to act on those instructions and to give timeous pleas which will prevent the attendance of witnesses and inconvenience. If solicitors are responsible in that matter it will make a great difference and result in a great saving.

      Police (Establishment)
      Mr. Langasked the Solicitor-General for Scotland to what extent the increase in police strength has affected the reporting of crime to Procurators Fiscal.
      The Solicitor-General for Scotland: In 1979,288,203 cases were reported by the police to procurators fiscal. In 1980, this figure rose to 327,204. This was undoubtedly due in part to the increase in police strength.
      Mr. Lang: I thank my hon. and learned Friend for that answer. Does he not agree that as a result of the implementation of the Criminal Justice (Scotland) Act as it affects sports grounds, there has been less crime to report, as evidenced by last Saturday's events at

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      Murrayfield? Does not my hon. and learned Friend agree that that was the second most satisfactory outcome of those events last week?
      The Solicitor-General for Scotland: I am delighted to say that last Saturday was a great event, not only at Murrayfield but in Dundee. There were three reports from Murrayfield, one of an attempt to get drink into the ground and two of breach of the peace, which is the lowest that there have been for a long time. There was no trouble at Dundee and no missiles were taken into the ground.
      Mr. Maxton: Will the Solicitor-General explain why the designated area did not include the car park at Murrayfield, when assurances were given by his hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind), the Under-Secretary of State for Scotland, during the Committee proceedings on the Bill that it would be so designated?
      The Solicitor-General for Scotland: I know that the hon. Gentleman is always anxious to ensure that car parks are properly policed. However, that car park does not happen to be part of Murrayfield. Therefore, it was not relevant that it should have been so designated.
      Mr. Bill Walker: I am delighted with the results in Dundee, where there was peace on the day. Does not my hon. and learned Friend agree that the Criminal Justice (Scotland) Act can be effective only if we have adequate policing, which means police on the beat?
      The Solicitor-General for Scotland: I agree. Nothing is more effective than the policeman on the beat, who knows local people and local conditions.
      Mr. Michael Martin: Is the Solicitor-General aware that a constituent of mine was detained by the Strathclyde police for three days before he stood trial and was refused bail? If I submit the details of my constituent's problems to him, will he be prepared to investigate the matter?
      The Solicitor-General for Scotland: I would be delighted to investigate the matter. It is not competent for someone to he detained for three days.

      Crown Office (Staff)
      Mr. Ancramasked the Solicitor-General for Scotland what is the present number of administrative staff employed by the Crown Office.
      The Solicitor-General for Scotland: The total strength of the Crown Office and procurator fiscal service is 855. Of these, 315 are in grades within the administrative group.
      Mr. Ancram: Will my hon. and learned Friend confirm that this is an increase on the figure which he inherited at the general election? If that is so, will he explain why?
      The Solicitor-General for Scotland: Yes, I can explain exactly why this is so. It is an increase of 4½ per cent. The increase in the number of cases with which the staff have to deal is 13½ per cent. That is productivity.
      Mr. Dewar: I extend my sympathy to the Solicitor-General for that exhibition of disloyalty from the chairman of the Conservative Party in Scotland. May I ask about the rather strange situation which I understand exists in the
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      Court of Session administrative department, where Lord Cowie's recommendations on divorce law reform are not being implemented purely and simply because two administrative officers cannot be appointed? Is that true? If so, what will the Solicitor-General do about it?
      The Solicitor-General for Scotland: I doubt whether it is true. If it is, it is not my responsibility.

      Offensive Weapons
      Mr. Pollockasked the Solicitor-General for Scotland how many cases on indictment were pending in December 1980 involving the use of offensive weapons.
      The Solicitor-General for Scotland: In December 1980, 19 High Court indictments for crimes involving the use of offensive weapons were served pending trial. The weapons allegedly used included an axe, broken bottles and knives. In so far as indictment cases to be heard before a sheriff and jury are concerned, no separate records are kept.
      Mr. Pollock: Does my hon. and learned Friend accept that these figures are disturbingly high? Does he agree that they reinforce the wisdom of the Government in introducing special measures in last year's Criminal Justice (Scotland) Act to deal with that rising menace?
      The Solicitor-General for Scotland: I agree entirely. If that measure prevents one assault or one death it will have been worth it.

      Terrorism
      Mr. Ron Brownasked the Solicitor-General for Scotland how many of those people charged with an offence under the Prevention of Terrorism (Temporary Provisions) Act 1976 in Scotland during 1980 were subsequently convicted of an offence under a different Act.
      The Solicitor-General for Scotland: No one was so charged on indictment or complaint and convicted of a different offence.
      Mr. Brown: Is not it the case that the "Glasgow Two", namely, Michael Duffield and Kirsteen Crosbie, were charged under the Prevention of Terrorism (Temporary Provisions) Act and were later convicted under a different Act? Is that a sign that the Government intend to harass people on the Left such as those who sell newspapers at football grounds? That is patently obvious to me. The Solicitor-General must explain why this case came about in the first place.
      The Solicitor-General for Scotland: I mean no discourtesy to the hon. Gentleman, but I am afraid that I did not hear the end of his question. I welcome the fact that he is here today to listen to the answer to the question he tabled for our last Question Time, when he was present but did not care to ask it.
      The two persons in question were not charged under the Prevention of Terrorism (Temporary Provisions) Act 1976. They were arrested under that Act. The purpose of their activities was to obtain publicity, which the hon. Gentleman is giving them. They were members of the revolutionary Communist group sympathetic to the aims of the IRA, just as the hon. Member is sympathetic to a

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      revolutionary Communist group elsewhere which is sympathetic to the attitude of the Russians. The hon. Member should have better judgment than to suggest in these circumstances that there is prejudice on the part of the prosecuting authorities in Scotland against anyone of any political party.
      Mr. Speaker: Private notice question. Mr. Stewart.
      Mr. Canavan: On a point of order, Mr. Speaker. Is there a precedent for a private notice question to be put to
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      the Secretary of State for Scotland and for the Secretary of State to refuse to turn up to answer it? The question involves the loss of 5,000 jobs in Scotland. Therefore, is it right for him to use as an excuse the fact that he is away on business with the Common Market, an institution that has sold Scottish car workers and Scottish fishermen down the river?
      Mr. Speaker: There are such precedents.

Talbot (Linwood)
Mr. Allan Stewart(by private notice) asked the Secretary of State for Scotland whether he will make a statement about today's announcement that the Talbot factory at Linwood will be closed in June?
The Under-Secretary of State for Scotland (Mr. Alexander Fletcher): I am replying on behalf of my right hon. Friend the Secretary of State for Scotland, who has had to remain in Brussels to represent the Scottish interest in the vitally important discussions on the common fisheries policy which are now in train.
Mr. Norman Buchan: On a point of order, Mr. Speaker. While there is some understanding of the problem facing the Secretary of State for Scotland over his absence in Brussels, there is none whatsoever when the Secretary of State for Industry is here, and could answer but does not. It is a disgrace.
Mr. Speaker: The hon. Gentleman knows that I do not decide who answers questions.
Mr. Fletcher: As you will know, Mr. Speaker, the question was addressed to my right hon. Friend.
I very much regret the loss of jobs to West Central Scotland which will follow the closure of Linwood announced by the Talbot Motor Company earlier today. My right hon. Friends the Secretary of State for Scotland and the Secretary of State for Industry and I have been in close touch with the top management of PSA/Citroen and Talbot about future manufacturing operations in the United Kingdom, particularly at Linwood, for some time. We have explained in detail the Government assistance available for new investment projects in assisted areas, both through regional development grants and selective financial assistance under section 7 of the Industry Act. We have expressed the strong hope that PSA would maintain manufacturing in the United Kingdom to the full extent envisaged in the declaration of intent, to which the company subscribed in 1978. Despite a significant improvement in labour relations and productivity since PSA took over at Linwood, it was the company's decision, against the background of very severe market competition, serious financial losses in 1979 and 1980 and the high investment costs of introducing new models, that it could not maintain production at the plant.
It emerges clearly from the company's statement today that its productive capacity in the United Kingdom considerably exceeds its present and prospective market share and that concentration of its facilities, rather than expansion, was the only realistic course open to it.
Apart from the 4,800 jobs which will be lost at Linwood itself, there will be consequences for suppliers. Linwood has, however, been operating at a low level of production for many months and the local sourcing of components is limited.
The company has, however, made it clear that it intends to maintain a substantial presence in the United Kingdom, concentrated in the Midlands. An important investment proposal to introduce another model at its Ryton, Coventry plant is at an advanced stage of planning. The company is confident of the secure future of its plants at Stoke, Dunstable and Luton. My right hon. Friend and I are considering urgently, in advance of the shutdown at Linwood by the end of this year, what measures we can
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realistically take to generate new employment in the area. My right hon. Friend and I shall, for this purpose, be seeking urgent discussions with the local authorities concerned, the Scottish Development Agency, the Scottish TUC and the CBI in Scotland.
Mr. Stewart: In the light of this economic catastrophe, does my hon. Friend agree that it is tragic that the 1978 agreement with PSA has proved to be so full of loopholes as to be worthless? Will my hon. Friend broaden his discussions about new jobs with all the interested parties? Does he agree with me that the existence of a skilled, responsible work force in West Central Scotland ought to be of considerable attraction to Nissan?
Mr. Fletcher: I agree with my hon. Friend. We shall broaden our discussions in every way possible, including any prospects of persuading Nissan—if it finally decides to come to the United Kingdom—to take up the facilities available at Linwood. However, my hon. Friend will know that Nissan's specification is for an 800-acre green field site. My right hon. Friends are fully aware of the contents of the agreement between the Government and PSA/Talbot. That matter has already been raised with PSA.
Mr. Bruce Millan: With no personal disrespect to the Under-Secretary, who has been left to carry the can, and even taking account of the difficulties of the Secretary of State for Scotland, it is utterly deplorable that a statement of this seriousness should not be made by a senior Minister, particularly when the Secretary of State for Industry is present on the Treasury Bench. He should be making this statement.
Does the Minister realise how disastrous today's announcement is to the West of Scotland, which has already been devastated because of the effects of Government economic and industrial policies? Will he also note that we treat with great scepticism what is said in the statement about the Government's efforts to persuade Talbot to stay in the United Kingdom, specifically at Linwood? We also note the defeatist nature of the statement. Labour Members remember that the Conservative Party voted against the Labour Government's original rescue of the Chrysler operation in the United Kingdom.
The hon. Member for Renfrewshire, East (Mr. Stewart), only last week, in a question to the Prime Minister, told us how buoyant the Scottish economy was. He should tell that to the workers in Linwood now. Does the Minister note that the agreement with Chrysler, which was taken up by Peugeot when it took over the obligations in 1978, included the most specific pledges to keep Linwood as well as the other British manufacturing plants open? If it had not been for those pledges, the considerable sums of Government money given to the company would not have been given. We expect those pledges to be kept by the company now.
Does the Minister realise the sense of bitterness that there will be among the workers at Linwood who have co-operated in every way possible with higher productivity and so on during the past few years? They now see all their hopes and efforts dashed by the statement.
Is the Minister aware that if there is any feeling in Coventry that what has been said today is optimistic for those workers I should like to disabuse them of that, because if pledges about Linwood can be broken, pledges

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about Coventry can also be broken? We may be seeing today the first step towards the complete withdrawal of the Talbot operation from the United Kingdom.
Finally, talk about alternative jobs in the West of Scotland is so much hot air. In Scotland, we shall not accept today's announcement. We shall fight to see it reversed.
Mr. Fletcher: That was very much a rallying call from the right hon. Member for Glasgow, Craigton (Mr. Millan), but he has said nothing constructive or positive. I agree with him that this is disastrous news for the West of Scotland. That is fully appreciated on both sides of the House. The workers of Linwood, who have been on a tightrope, not just for the past few months but for the past few years, will be deeply disappointed at the decision that has been reached.
My right hon. Friends the Secretaries of State for Scotland and Industry have been fully involved in discussions with PSA over many months. There is no justification for the right hon. Gentleman, a former Secretary of State for Scotland, to criticise my right hon. Friend the Secretary of State for deciding to remain in Brussels and conduct negotiations on behalf of the Scottish fishing industry—negotiations that may well bring benefit to Scotland—instead of coming to the House today for presentational reasons or some other gimmickry. Most people in Scotland, examining the options facing my right hon. Friend, would agree that he made the right decision by deciding to stay in Brussels today.
The right hon. Gentleman's scepticism about the negotiations with PSA about the prospects of further investment in Scotland are unjustified. I was present at the discussions, and I do not believe that any offer of Government funds would have induced PSA to make a new and substantial investment at Linwood, for the simple reason that it is suffering from over-capacity.
Mr. David Steel: In view of the calamitous nature of the statement for Scotland, surely the Minister is under obligation to tell us more about the discussions between his colleagues and the company. In particular, will he say how much public money has gone into the company, and with what strings attached, over the past few years?
Mr. Fletcher: The conversations with the company were perfectly straightforward. It was very much a matter, on our part, of ensuring that the company was fully aware of the Government financial support that would be availabe to it in the event of its deciding to make a substantial investment in a new car at Linwood. For reasons of over-capacity however, it decided that it could not proceed along those lines. As for the extent of Government funding, apart from the usual Industry Act assistance for projects, the Government have met some £60 million of losses incurred in the United Kingdom business of Chrysler.
Several Hon. Members Several Hon. Members rose ߞ
Mr. Speaker: Order. Although this is an extension of Question Time, I propose to call two more hon. Members from either side before we move on.
Mr. Barry Henderson: As one who has always bought Linwood-produced cars as long as they
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have been available, may I ask whether this tragedy is accounted for, on the one hand, by the preference of our people to buy other types of cars and, on the other, by trade union militancy over many years which seriously affected the effectiveness of the Linwood plant in the early days and disgraced Scotland's generally excellent industrial relations record? Will my hon. Friend give an assurance that PSA will not be able to frustrate the occupation of that factory by any other organisation that might be able to give a fresh, new private enterprise start?
Mr. Fletcher: The question of the future ownership of the plant will be a matter for negotiation between the company, the Government and other parties. Clearly, PSA/Talbot is suffering from the highly competitive market. On productivity, the company has told us that since it took over the management of Linwood productivity has increased by 20 per cent.
Mr. Allen Adams: Does not the Minister agree that the central question to which we must now address ourselves is what the Government are going to do about this problem?
Mr. Buchan: Nothing.
Mr. Adams: You are sitting there like a rabbit that has been frightened by a stoat—
Mr. Speaker: Order. I do not think that the compliment was intended for me.
Mr. Adams: I apologise, Mr. Speaker; I was referring to the Minister. I shall repeat the question. Does the Minister agree that he and the Government are behaving like Pontius Pilate—they are washing their hands and walking away? They are in no way attempting to retain the company at Linwood or to put real and meaningful pressure on the company to stay. When will the Minister start to apply real pressure?
Mr. Fletcher: The hon. Member is well behind the times. For many months my right hon. Friends and I have been discussing with the company the prospect of major investment in a new model at Linwood. We have been making it clear to the company that Government assistance would be available for that purpose. We have now reached the stage where the company has decided, because of overcapacity that it has no commercial reasons for making such investment, and has decided to withdraw.
For the future I have already indicated that my right hon. Friend and I will pursue every possible avenue to find a new company and a new industry to take over the plant at Linwood.
Mr. Albert McQuarrie: The right hon. Member for Glasgow, Craigton (Mr. Millan), in his criticism of the Government, seemed to have forgotten the serious strike record of the employees under Chrysler which fortunately improved during the time of Talbot. In view of that improved productivity, does not my hon. Friend agree that there are adequate green field areas in and around Linwood to suit the requirements of Datsun which could take over the factory and retain the labour force that is threatened with redundancy?
M. Fletcher: That would be a matter for Nissan to decide, but we shall certainly bring the point to its attention. My hon. Friend is right to refer to the fact that in previous years productivity and labour relations at Linwood were bad. I am happy to repeat what the

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company said in the statement today. In the past couple of years there has been a 20 per cent. improvement in productivity and a good improvement in industrial relations. That will be helpful to the Government and others in trying to find new owners for the premises.
Mr. Buchan: Is the Minister aware that for 16 years I have fought to preserve that factory and the town of Linwood? His weak acceptance of the company's decision will spell the death of the town as surely as happened in Jarrow in the 1930s. Does the Minister have any sense of the bitterness and anger that exist? Does he know that male unemployment in Strathclyde is running at 17½ per cent., and that the closure will push that to 19 or 20 per cent. in the Paisley and Linwood travel-to-work area?
Does the hon. Gentleman recognise that the Government have a responsibility here because they were a co-signatory of the declaration of intent, although I admit that that did not come from the Conservative side. I have heard too much from the Conservatives indicating a willingness to destroy the factory. However, there was Government involvement in the declaration of intent, and that promised a continuation of manufacturing at Linwood. When in the name of God will the Government face their responsibility and do something?
Mr. Fletcher: We have been facing those responsibilities since we inherited the British economy from the Labour Government in May 1979. Let me remind the hon. Gentleman that the first company to go into the Linwood factory was Rootes, and it went bankrupt. The second was Chrysler. It has reduced its international business substantially. Now Talbot is pulling out. That is some measure of the difficulties of producing cars successfully at that plant. Across the river is the former John Brown yard. When John Brown pulled out, UCS took over. When UCS left, Marathon took over. Therefore, that yard had three lives as well. However, a fourth was added last year when we were able to negotiate the French company UIE into the yard. These matters are relevant in looking at the efforts of both Governments to find new owners for these businesses when, unhappily, a decision of this nature is made.
Mr. Gordon Wilson: On a point of order, Mr. Speaker. May I ask you to reconsider your earlier decision, which I know must be final if you do not reconsider it, about the contraction of Question Time—
Mr. Speaker: Order. I allowed extra time for this private notice question. If the hon. Gentleman had watched the clock as I did he would have seen that I allowed 16 minutes. Normally I allow 10 minutes, or less, on a private notice question, which is an extension of Question Time.
Mr. Donald Stewart: On a point of Order, Mr. Speaker. This matter, which is of desperate concern for Scottish employment, and which also reflects on employment in other parts of Britain, should not have been the subject of a private notice question. There should have been a statement from a Government Minister.
Mr. Speaker: The right hon. Gentleman knows that he has not raised a point of order but has expressed his point of view.

British Steel Corporation (Finance)
The Minister of State, Department of Industry (Mr. Norman Tebbit): With permission, Mr. Speaker, I will make a statement on borrowing powers of the British Steel Corporation. I will be introducing today the Iron and Steel (Borrowing Powers) Bill 1981, which will increase the British Steel Corporation's borrowing powers by £500 million. The Bill will enable the corporation to continue in operation on reaching the current statutory limit of its existing borrowing powers in the course of the next few weeks.
As the House will know, the Government received the British Steel Corporation's corporate plan shortly before Christmas. Decisions on the plan involve the consideration of very large sums of taxpayers' money, and will affect the position of a number of private sector companies whose areas of operation overlap those of the corporation. My right hon. Friend will be making a further statement to the House when the Government have reached their conclusions on the corporate plan. At that stage, as foreshadowed in the Queen's Speech, the Government will introduce a further Bill, which will deal with the future of the corporation and its financial reconstruction.
In view of the urgency of the corporation's need of increased borrowings, and the essentially interim nature of the Bill that I am introducing, I hope that the House will facilitate its swift passage.
Mr. Stanley Orme: Is the Minister aware that we are astonished that the Secretary of State is not making a statement today about the MacGregor plan? Is he further aware that the delay will create further uncertainty in the steel industry, which is already in a difficult position? What part have his Back Benchers played in the Secretary of State's withdrawal of his statement today? What pressure has been put on him to get him to change his mind when he had given a firm commitment that he would make a statement this week?
Does not the Minister agree that we need a plan for steel that includes the private sector? He should make the MacGregor plan and the private sector proposals the subjects of joint discussion. The trade unions and the management should be brought into the discussions. That is the way to proceed. Is the Minister aware that he could take action immediately, to help not only the BSC but the private sector? I refer to the need for action on energy costs. The Government should give support—as is the case in many other countries—to the steel industry. In view of the Minister of State's meagre statement, when will we have a full statement from the Secretary of State?
Mr. Tebbit: The House will receive a full statement from my right hon. Friend when we have completed consideration of the MacGregor plan and its implications. Energy costs and all other matters will be taken into account in the consideration of the plan. My right hon. Friend has not withdrawn his statement. I am making an interim statement today and my right hon. Friend will make his statement when the considerations are complete.
Sir John Eden: Will my hon. Friend assure the House that any discussions taking place with the private sector will lead to genuine joint venture and partnership arrangements, and that any funds that may

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be voted by the House for the British Steel Corporation will not be used by it to eliminate competition in the private sector?
Mr. Tebbit: My right hon. Friend has raised matters that are relevant to our consideration of the MacGregor plan. Where there are joint ventures, the aim is that they should be undertaken by viable campanies that can stand free both from their private sector parent and from the British Steel Corporation.
Mr. Roy Hughes: Does the Minister appreciate that this delay is causing concern among steel communities? Does he agree that the steel industry is too important to be left to the tender mercies of Tory Back Benchers, whether from Sussex or Bournemouth? May I draw his attention to the splendid performance of the Llanwern steelworks during recent months? Does he agree that those efforts need encouragement, and not the vindictive comments that they appear to be receiving from the Conservative side of the House?
Mr. Tebbit: I am delighted to join the hon. Gentleman in drawing attention to the great achievements of the management and the work force at works such as Llanwern. That is exactly what we intend should happen throughout the whole of the British Steel Corporation. There is no sense of vindictiveness. The hon. Gentleman and the House must recognise that huge sums of public money are involved. It would not be right to approve a plan without a thorough investigation of the way in which that money will be spent.
Mr. Michael Brown: Will my hon. Friend say for how long the additional £500 million borrowing power will enable the British Steel Corporation to continue trading? What is the cost of the MacGregor proposals? No figures have been mentioned so far for the price tag of the plan. When a full statement is made, will the Secretary of State say how much the British Steel Corporation is requesting?
Mr. Tebbit: When a full statement is made there will be a full account of the sums involved. My hon. friend is curious to know how long that money will last. It will be about six months, as matters stand at present. But circumstances can change, both for better and for worse, in such an industry during the present time.
Mr. Martin Flannery: Does the Minister realise that in cities such as Sheffield a great question mark is hanging over the entire steel industry? Does he recognise that the point made by my right hon. Friend the Member for Salford, West (Mr. Orme) about energy prices is especially relevant, because every firm in the Sheffield and Rotherham area is facing catastrophic energy prices as a result of the Government's policies? Following current events at Linwood, every steel worker is wondering whether, this week, or next week, the Government will shut down major parts of the steel industry. What does the hon. Gentleman intend to do about bringing forward the meagre £500 million, so that there is enough money for the British Steel Corporation to continue production?
Mr. Tebbit: The hon. Gentleman should remember that a meagre £500 million is lp on income tax. He should have some sense of proportion.
Mr. Peter Emery: Before passing a Bill to provide an additional £500 million for the British Steel Corporation, will not my hon. Friend consider what the final commitment will be? Is it not correct that the MacGregor plan is requesting a capital reorganisation which, in total, will cost £4·5 billion?
Mr. Tebbit: My hon. Friend should not confuse the capital reconstruction, which may involve writing off money that has already been spent, with the commitment of new moneys. It would be as well to keep the two matters separate. My right hon. Friend the Secretary of State and I would have preferred to bring forward a single Bill to cope with the problems of the BSC running against its borrowing limits and the longer-term reconstruction. However, it was not possible to bring forward the whole of that reconstruction plan quickly enough. Without this Bill, the BSC will run out of money. That is why I am introducing the Bill as an interim measure.
Mr. David Penhaligon: Is not the real problem that both the private and public sectors of the steel industry have reached the same conclusion about the sector in which maximum investment is required, and which, therefore, will produce maximum return on capital? How does the Minister hope to maintain a balance between a State-owned sector and a private sector and also maintain fair competition in that all-important part of the industry?
Mr. Tebbit: As always, with great skill and understanding.
Mr. A. E. P. Duffy: Will the hon. Gentleman confirm that some of the money must go to those joint ventures between private steel makers and the BSC that his right hon. Friend intends should come about? Given the chronic liquidity position of the private steel makers that have so far been mentioned in this connection, some of what the Minister himself described as taxpayers' money will go indirectly to them. I hope that his right hon. Friend is listening, because he told some of my hon. Friends, including my hon. Friend the Member for Sheffield, Hillsborough (Mr. Flannery), just before Christmas that it was his intention that the private steel makers should play a dominant role in the mergers. Will the hon. Gentleman now assure the House that in any such mergers it will be the BSC that fills the dominant role?
Mr. Tebbit: The mergers will be constructed in the best commercial interests of the companies and in the best interests of those who are employed by them. It is not necessary, therefore, that—as the hon. Gentleman implies—the public sector should have the dominant role. The record of the past 10 years suggests the opposite.
Mr. John H. Osborn: Will my hon. Friend bear in mind that the private sector has had to face severe competition from the BSC, which is moving into what has hitherto been the private sector's field? What discussions is he having with it to ensure that State money does not provide unfair competition with a struggling private sector, much of which is in Sheffield?
Mr. Tebbit: My hon. Friend raises one of the crucial points of difficulty in the steel industry, but to a large extent the difficulties in both the public and private sector are caused by the extremely low prices being set throughout Europe by the considerable over-capacity there. It would be possible for both sides to refuse to meet such low prices, but the consequence would be that they

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would lose volume of production, lose their customers, and run into even heavier losses. This is a wider issue than mere competition between the public and private sector in the United Kingdom.
Mr. John Morris: Why did not the Secretary of State make the statement? Is it because he is finding it difficult to reconcile his dogma, the needs of the public sector, and the pressures of the private sector? How many Conservative Back Benchers with private interests saw the right hon. Gentleman before the statement today? Should not areas such as mine, which have gone through the anguish of the slimdown and lost thousands and thousands of jobs, be given security of tenure now? Is it not time the public and the private steel industry were allowed to produce the steel that this country needs?
Mr. Tebbit: It would be singularly foolish if my right hon. Friend were to keep four other dogs in the Department and do all the barking himself, all the time. We share the labour between us, in good Socialist style.
There is no question of worries on the part of my right hon. Friend about dogma. These matters are being dealt with, as always, in accordance with the practical policies that we put forward at the general election.
Mr. Michael Grylls: Is my hon. Friend aware that in the 13 years since nationalisation the BSC has lost £1,500 billion in accumulated losses apart from investment? The private, independent steel companies have made a profit of £700 million over the same period. Therefore, will my hon. Friend make it a firm condition of the provision of the extra money for the corporation that it is put into a special account to be used only for redundancy and restructuring, and not for competition, which might well put the private sector companies out of business?
Mr. Tebbit: I entirely understand my hon. Friend's anxiety. He must also understand that in the present state of the market in Europe, and the wider world beyond, if we were to prohibit the BSC or, if we had the powers, any private sector company from selling at a loss, we should condemn it to closing down its capacity on a massive scale. The matter is not quite as simple as my hon. Friend suggests. But I am fully aware of his anxiety and am as anxious as he is that State money should not be used to undermine companies that have a long and successful record in the industry.
Mr. Gregor MacKenzie: Is the Minister aware of the oft-expressed view of senior officials of the BSC that the future of the steel industry in Scotland depended heavily on the Talbot car plant? In view of the announcement made by the Under-Secretary of State for Scotland a few minutes ago, precisely how does the hon. Gentleman propose to help the steel industry, and other industries, in view of the difficult situation in which we now find ourselves?
Mr. Tebbit: The right hon. Gentleman will understand that we heard the news of the proposed closure of the Linwood plant this morning. Therefore, this would be swift time in which to react to the problem of what will happen to the steel industry in Scotland. It is one of the matters that we must consider as we look at the corporate plan.
Mr. Peter Hordern: What does my hon. Friend propose to do for those private sector
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steel companies whose activities not only do not overlap with the BSC but are in direct competition with it, whose productivity has always been better than that of the BSC, whose profitability has never been in question, and whose ability to compete with European manufacturers of steel is not in question, but which now find their existence put in doubt by subsidised competition from the BSC?
Mr. Tebbit: I have been discussing the problems of a number of private sector companies with their representative in the past few weeks.
Mr. Russell Kerr: I am not surprised.
Mr. Tebbit: I am glad that the hon. Gentleman is not surprised, because a large number of jobs depend on those companies. I hope that he is as concerned about private sector jobs as he is about public sector jobs. Unhappily, although my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) says that some of the independent companies are well capable of meeting the competition from Europe, at present that can in many cases be only on the basis of making losses in the short term, and that adds to the difficulties.
Mr. Donald Coleman: Is the Minister aware that there will be keen disappointment in the steel industry that the statement on restructuring was not made this afternoon? Is he further aware that the Government's continual dilly-dallying on the issue will mean further indebtedness through rising interest charges on the debt already incurred?
Mr. Tebbit: The hon. Gentleman should cast his mind back to the disastrous consequences of the Beswick review, which was a political bodge job and damaged the steel industry. We are still picking up the bills for it. When sums of this sort are being asked for, and when we are dealing with an industry with as many problems, world-wide, as the steel industry has, I do not think it unreasonable that we should take more than a couple of months at the most to get the matter organised and get it right. We received the plan only shortly before Christmas.
Mr. Patrick McNair-Wilson: Given that there have been so many disastrous attempts to restructure the industry since nationalisation, does my hon. Friend accept that many of us on the Conservative Benches wish him to take a careful look at the plan and get it right? Will he please take some encouragement from today's announcement that steel export markets are beginning to pick up, and that if we can get the matter right agreat future lies ahead for the corporation?
Mr. Tebbit: I entirely agree with my hon. Friend. It is only proper that we should take enough time to get the matter right. I am greatly encouraged by the news today of the success that Mr. MacGregor is having in selling steel overseas. That is in no small measure due to the manner in which much of the work force has responded to his leadership—the manner that, as the hon. Member for Newport (Mr. Hughes) said, is typified—I hope—by what is happening at Llanwern.
Mr. D. N. Campbell-Savours: Is the hon. Gentleman aware of replies that I have received from the Under-Secretary in which he says that the Secretary of State will not use the powers available to him under section 5(3) of the Iron and Steel Act 1975? When there are

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arguments about actions taken by the corporation under the corporate plan, will the right hon. Gentleman intervene and use those powers to check that the corporation is taking the right route?
Mr. Tebbit: The answer to the first part of the hon. Gentleman's question is "Yes". The answer to the second part is "No".
Mr John Bruce-Gardyne: Does my hon, Friend recall that he expressed the hope that the House would give a speedy passage to these additional borrowing powers? Will my hon. Friend bear in mind, given his replies to my hon. Friends the Ministers for Sheffield, Hallam (Mr. Osborn) and Surrey, North-West (Mr. Grylls), that that speedy passage will be facilitated by whatever assurances my hon. Friend can give to the effect that the borrowing powers will not be used to enable BSC to underprice the private sector in a manner that the private sector—which has to rely on its own profitability—cannot challenge?
Mr. Tebbit: I shall do the best that I can to meet the proper concern of my hon. Friends and of the private steel companies, which are an important part of the industry.
Dr. Ifor Davies: Is the Minister aware that the British Steel plan—which he states the Government are still considering—involves more than 1,000 men being made redundant in the most efficient tinplate plant in South Wales, namely, Velindre? Is he further aware that the works committee has submitted a work-sharing scheme that will reduce the number of redundancies by at least 50 per cent.? Will the Government consider that, and investigate the scheme before any conclusion is reached, so that employment may be safeguarded in that area?
Mr. Tebbit: The hon. Gentleman has made the case that there should be deep and careful consideration of all the implications of the plan before it is approved by the Government and put before the House.
Mr. Roger Moate: My right hon. Friend refers to an overlap of interest between the public and private sectors. Is that what we used to call competition? Even if one accepts the BSC's need for massive support, and even if one accepts the difficulties of protecting the private sector against unfair competition, is it not incumbent on my hon. Friend to spell out, before the extra loan is approved, exactly how he intends to ensure that the money is not used for an aggressive under-pricing policy by the BSC against the private companies that remain outside the schemes under contemplation?
Mr. Tebbit: My hon. Friend has spoken about overlapping and competition. Competition arises in the areas of overlap between the two. There is no difference between us about the use of words. My hon. Friend asked for an undertaking. These matters are being considered in relation to the corporate plan. It might be wrong—or even impossible—to pull out bits of the corporate plan and to put them before the House before the whole plan is placed before the House. However, I understand my hon. Friend's concern. I am as concerned as he is.
Mr. Stan Crowther: Does not the Minister realise that his hon. Friends are trying to set up an artificial and unnecessary conflict because they wish to
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make debating points about the public and private sectors? Does not he accept that the Government are clearly neglecting their duty to safeguard the interests of both sectors of the steel industry and of the steel-using industries? Does he accept that the Government have failed to deal not only with energy pricing but with coking coal subsidies, rail freight subsidies, interest rates and, above all, the international rate of sterling? That neglect is damaging the whole of British manufacturing industry.
Mr. Tebbit: The hon. Gentleman seems a little out of sympathy with his colleagues. Some hon. Members want to rush the decision as if the sums of money were a matter of no import, and as if only trivial amounts were involved. Others seem not to care about the interests of private sector employees. They are clearly regarded as a lesser breed than employees in the public sector. The hon. Gentleman rightly pointed out that we had to consider the interests of the whole industry. We are doing that, and that is why a statement has not been made today. It is taking longer than we had hoped.
Mr. Hal Miller: Does my hon. Friend accept that many of us do not consider him a lucky dog to have new responsibilities, but are grateful that he has assumed them? Does he further accept that the private sector of the steel industry is glad that it has been given a further breathing space in which to submit an alternative plan? Does he agree that the private sector cannot accept that the BSC should compete with it on a subsidised basis and should be put in charge of negotiations on the future structure of steel, or that the taxpayer should enable the BSC to buy up those companies because they are in distress?
Mr. Tebbit: Whether extremely low market prices are, as some people say, caused by predatory pricing by the BSC, or whether they are caused primarily by the state of the market, it would be wrong to allow the private sector to die just because it does not have access to the same sort of funds as the BSC. It would not be right suddenly to start to subsidise the whole of the steel industry. We must consider how the two sides can conduct their affairs so that they both survive and become profitable.
Mr. Barry Jones: Will the statement include any reference to the attempts being made by the BSC to create new jobs in the run-down steel areas? Is the Minister aware that in my constituency 8,000 steel jobs have been lost in 11 months? Will he consider placing the Datsun-Nissan plant on the banks of the River Dee? Will he bear in mind that my area has suffered far too many job losses?
Mr. Tebbit: I entirely understand the hon. Gentleman's point. It is tragic that so many jobs should have been lost in such a short period in order to make the steel industry competitive in world terms. I know that the hon. Gentleman and those who represent constituencies in that area will not be found lacking in their efforts to bring the attractions of the area to the notice of the Nissan company. Ultimately, Nissan will make the decision. It is important that the company should have the best possible chance of the long-term success that others have failed to achieve.
Mr. Barry Porter: Given the previous statement made on the demise of Linwood, what will happen to Ravenscraig? My hon.

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Friend the Member for Flint, West (Sir A. Meyer) and others were told that it was necessary for Ravenscraig's survival that Shotton should go. Does my hon. Friend realise that if Ravenscraig goes now, I shall find it difficult to explain it to those who have lost their jobs in North Wales and Merseyside?
Mr. Tebbit: Those matters might well be explored during the debate on the larger issue of the corporate plan. That debate will give a better indication of what may happen to some of those plants.
Mr. Peter Hardy: Does the Minister agree that no matter what plans are prepared, or which poodle happens to come to the Dispatch Box to announce them, both the public and private steel sectors will be imperilled unless Government policy is changed? Does not he agree that there has been a great delay? Will he give an assurance that that delay did not take place in order to soften up the BSC, and that the little-subsidised, world-breaking and modern plant in my constituency will not be imperilled and will not lose its State majority shareholding?
Mr. Tebbit: If the hon. Gentleman imagines that one could ''soften up" Mr. MacGregor by taking a few extra days or weeks to consider the plan, I can only conclude that the hon. Gentleman has never met Mr. MacGregor.
Mr. Anthony Beaumont-Dark: Does my hon. Friend accept that we recognise the difficult tasks involved in any consideration of the steel industry? Does he further accept that we are glad that he pointed out that the private steel industry is as important as the nationalised sector? The House recognises that the waterfall must go on. However, is private industry to be placed in a two-pronged situation? Does my hon. Friend agree that if money is poured into British steel it will make it more difficult for the private steel industry to compete? If something is not done about phoenix 1 and phoenix 2 it will mean the death of private steel. Many of us would find it unacceptable if we ended up with the phoenix being burned and the albatross being left alive. It is wrong that private steel, which competes and has tried to be profitable, should suffer while the nationalised part of the industry gets away with it.
Mr. Tebbit: I followed my hon. Friend very carefully through his ornithological comparisons. I can only say to him what I have said to others of my hon. Friends and to a number of Opposition Members, some of whom I know have a considerable concern for the private sector. It is our intention that the British Steel Corporation should not use funds to destroy the independent sector of the British steel industry. Equally, my hon. Friends will have to understand that there will continue to be grave losses made by and grave dangers to all parts of the steel industry until the market is restored to some sort of sanity by the removal of excess capacity in Europe as a whole.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: I hope to call all those hon. Members who have been seeking to catch my eye, but I hope that their questions will brief.
Mr. Allen McKay: Does not the Minister realise that some of his replies and the attitudes of a number of those hon. Members sitting behind him lead Opposition Members to believe that the Government and their supporters wish only for the death of the British Steel
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Corporation? Will he now assure the House that that is not the intention? Will he also answer the question put to him by my hon. Friend the Member for Rotherham (Mr. Crowther), who suggested that Government policies of high interest rates and high energy costs had put the steel industry in this position? Does the Minister appreciate that the Opposition wish to see a thriving steel industry in both the public and the private sectors, and full employment, whereas the Government and their supporters seem to belong to a party of unemployment?
Mr. Tebbit: It is entirely unjust of the hon. Member for Penistone (Mr. McKay) to suggest that any of my hon. Friends is interested in the death of the British Steel Corporation. Certainly I am not. I should hardly be introducing a Bill requiring a further £500 million of public borrowing for the BSC if it were for its death. It would be one of the most expensive funerals on record at that price.
As for the general conduct of the economy in relation to the steel industry, I know that the Opposition cannot accept that the conquest of inflation should have priority over all other matters of policy. The plain fact is that however much inflation was increased in the time of the last Government, that only increased unemployment, as well. We have no intention of following those policies again.
Mr. Denzil Davies: Will the Minister now assure the House that the Government will provide the same kind of financial help as they are providing for British Steel to private steelworks, such as Duport Steel, in my constituency—steelworks that are efficient, productive and under considerable strain at the moment, through no fault of their own?
Mr. Tebbit: I must give the right hon. Gentleman exactly the same answer as that which I gave to my hon. Friends, who in large numbers put the same point to me. These are matters that must be considered in the context of the plan for British Steel and, indeed, for the industry as a whole. I am not sure that we can necessarily bind ourselves to support with public money every steelworks in the country.
Mr. David Ennals: When will the hon. Gentleman or his right hon. Friend the Secretary of State bring forward this statement? Is not the hon. Gentleman aware that in my constituency the firm of Boulton and Paul, which is more than 200 years old, and is recognised to be efficient and competent, has just had to declare several hundred redundancies? Does not the Minister agree with my right hon. Friend the Member for Salford, West (Mr. Orme) that he has to bring forward a plan covering the whole of the steel industry—public and private sectors? When will he come forward with a statement of policy?
Mr. Tebbit: I am not sure whether the right hon. Gentleman can have been listening earlier. I told the House that my right hon. Friend would bring forward the Government's response to the British Steel Corporation's plan when we had completed our consideration of it.
Mr. Orme: When?
Mr. Tebbit: The right hon. Gentleman asks me when. I have told him when. It will be brought forward when it is ready. He will have to exercise a little patience. It is not

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unreasonable to ask him to do that, bearing in mind the magnitude of the issues, which he emphasised, and the sums of money involved, which I have emphasised.
Mr. Michael Brotherton: Does not my hon. Friend agree that the amount of money poured by him and his colleagues into the British Steel Corporation and other nationalised industries is such that if no more than 0·1 per cent. had been given to our fishing industry only five years ago it would have remained a viable industry? Are not we betraying our pledges to the electorate in 1979?
Mr. Tebbit: No. I am sorry to say that I do not agree with my hon. Friend.
Mr. Dennis Skinner: I wonder whether the Minister can confirm into which area of the Tory Party's original policy this statement and the one in a fortnight's time will fit. Does he accept that the cold winds of monetarism, which have blown holes in the British Steel Corporation, are now beginning to shatter the private steel sector? Was it not thought originally that as a result of the ratchet being shifted away from the public sector the leaner and fitter private sector would benefit? What has happened to that? Will the Minister confirm also that the Government are launching these little lifeboats in answer to all the demands from the private sector? If he intends to make another statement, as undoubtedly he does, would not it be a good idea, to put the record straight, to make a statement about how much assistance is being given to the private sector, thereby contradicting Tory Party policy?
Mr. Tebbit: Perhaps I may say first to the hon. Member for Bolsover (Mr. Skinner), whom, sadly, we have missed for some time, how glad I am, personally, to see him back and how much we all enjoy his flow of smooth and urbane wit, to which we have become accustomed over the years.
Coming to the point of the hon. Member's question, the statement that my right hon. Friend is to make will fit, in every detail, into the policy on which we fought the general election.
Mr. Orme: May I press the Minister to tell us when we shall get the full statement? He must be aware that Mr. MacGregor, appointed by the Secretary of State for Industry, said before Christmas that it was essential to have an early reply. If he feels that it is important, why is it being delayed? Will it be days, or weeks? I believe that the House is entitled to know.
If the Minister wants to assist both the private and the public sectors he could take action about imports, not least those from West Germany, which has a heavily subsidised steel industry and heavily subsidised coking coal. Action could be taken in that regard.
Mr. Tebbit: The right hon. Member for Salford, West (Mr. Orme) keeps repeating questions to which I have already given the best answers that I can.
Mr. Orme: They are not good enough.
Mr. Tebbit: I can assure the right hon. Gentleman that Mr. MacGregor is perfectly happy about the course of events in the Government's consideration of the plan. I can assure him that he has no need to expect my right hon. Friend's statement this week. I cannot go further than that.
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As for imports from other parts of the Community, the right hon. Gentleman knows that his own Administration—although he was not concerned directly with these matters—faced similar demands during their five years in office. They also faced similar constraints on their freedom of action.

Anglo-Canadian Relations
4.30 pm
Mr. Bruce George: In view of the important business that is to follow, I shall be brief. I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the deteriorating relations between Britain and Canada."
The issue is specific because it relates to the relationship between Britain, on the one hand, and the Federal Government and the provincial Governments of Canada, on the other. The matter is of great importance in that it is essential to preserve good relations between the two countries. The issue has become increasingly urgent because relations have deteriorated during the past few weeks. Our high commissioner has been withdrawn from Canada—coincidentally perhaps, one week after he made a statement that caused something of a minor furore. We have a curious situation in which the Canadian high commissioner is apparently alleging that communications are being intercepted, and is offering advice on how to deal with the Leader of the Opposition and hon. Gentlemen.
The matter is becoming critical, and I hope that this House of Commons, which at the moment is very much an innocent bystander, will be involved. Decision-making in foreign affairs has historically been the prerogative of the Government. It is important, at a time when so many things are happening to the detriment of Anglo-Canadian relations, that the matter be debated in this Chamber so that the situation can be clarified. If that is not possible, I hope that the Prime Minister, the Leader of the House or the Lord Privy Seal will make an urgent statement to clarify the situation in the hope that such a statement will soothe the deteriorating relations between this country and our Canadian friends.
Mr. Speaker: The hon. Member gave me notice before noon today that he would seek to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the deteriorating relations between Britain and Canada."
The House will have listened with concern to what the hon. Gentleman said, but he knows that, under Standing Order No. 9, I am directed to take into account the several factors set out in the order but to give no reasons for my decision.
I listened carefully to what the hon. Gentleman said, and I do not doubt its importance, but I must rule that his submission does not fall within the provisions of the Standing Order. Therefore, I cannot submit his application to the House.

Talbot (Linwood)
4.33 pm
Mr. Norman Buchan: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the announcement by Talbot United Kingdom of its intention to close the motor car factory at Linwood."
I know the problems that face the House, so I shall be brief. I am more than aware that a state of anger is not necessarily the best atmosphere in which to approach the intricate rules of Standing Order No. 9. I plead guilty to being angry.
The earlier statements of the Minister of State, Department of Industry, and the Under-Secretary of State for Scotland are extremely relevant to this matter, particularly the fact that the Minister of State said that he learnt of the steel decision only this morning. Either he knew about it or he did not know about it. If he did not know, what must have happened is that on one day discussions took place with the company at the level of the Secretary of State for Industry and the Secretary of State for Scotland. The whole world was awaiting the outcome of those discussions. The following day, the Minister of State gave us a courtesy opportunity to report back on the discussions. He said that the board was to meet the parent company, that it would take on board what had been said by the Government, and that a decision would be made.
This morning I received from the company a letter which was posted yesterday, announcing the closure of Talbot. The timing is curious, because the company reached a decision before even reporting back to the board. It is a very curious set of events. Either the company was discussing the matter honestly with the Government or it was not. If the company was prepared to consider, how could it have reached the decision before it reported back to consider it? Or had the company already told the Government that it intended to ignore the representations? What a picture that gives of the British Government when a major company does not even listen to their views. That, surely, is what must have happened.
Three factors are involved in Standing Order No. 9. First, there is the matter of urgency. If my request is granted, it will presumably mean a debate tomorrow. Tomorrow's business is the Second Reading of the Education (Scotland) (No. 2) Bill which, among other things, will allow the Government to assist private education in Scotland and provide money for assisted places in Scottish education. There is not a single person in Scotland today who would not say that Linwood should have priority over that.
The issue is important to the whole of Scotland, not only to my town of Linwood. It is not just one motor car factory. It is the motor car industry in Scotland and it is the new kind of industry which Governments have sought over the past two decades to develop in the areas of heavy industry which are now being run down. It is ominious when a decision is taken as rapidly, brutally and brusquely as this decision has been taken.
I shall not comment on the absence of the Secretary of State for Industry and the Secretary of State for Scotland. The facts speak for themselves.
This town of mine was built for this factory. It was a small village 15 years ago. The village was developed into
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the town of Linwood precisely to provide homes for workers who were brought there to maintain the factory. It is the death of a town that we are considering.
We must view the situation against a background of 17·5 per cent. make unemployment in Strathclyde and of 14 per cent. male unemployment in the small travel-to-work area of Paisley and Linwood. If we are to lose two-thirds of the factory, and we assume that the two-thirds come from the travel-to-work area, the unemployment figure will be increased at a single stroke from 14 per cent. to 20 per cent. It is untinkable. We have had other closures in Scotland about which we fought bitterly. I have fought for 16 years on behalf of this factory and I do not intend to stop fighting now, neither do the people of Linwood.
In the declaration of intent which was signed by the company, there was one significant paragraph. It says that the parent company—that is, the PSA—
"will also ensure that plans to introduce a four-door derivative of the Alpine at Ryton are implemented and that future model programmes take particular account of the need to replace as soon as PSA and Chrysler United Kingdom consider feasible, the Avenger and Sunbeam cars at Linwood with models which offer the clear prospect of using the capacity of this facility to the fullest possible extent."
The pledge has been fulfilled to the extent of killing the factory.
We are discussing a major industry. It involved a specific factory of a new kind that we sought to bring to Scotland. It is a factory which was brought there by Government action and has been saved by Government action and Government investment. I now ask that the House makes a decision about it. If the Government will not accept the responsibility for the matter, we shall have to force the responsibility upon them.
Mr. Speaker: The hon. Gentleman gave me notice before noon today that he would seek leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the announcement by Talbot United Kingdom of its intention to close the motor car factory at Linwood."
I and the House listened carefully—[Interruption.] Order. If the hon. Member for Bolsover (Mr. Skinner) ever managed to control himself I should fall out of the Chair with surprise. He mistakes bad manners for wit. [Interruption.] Order. I am dealing with a very important matter which affects people's jobs. I have to give my decision. If the hon. Gentleman does not remain quiet he will drive me to take other drastic action.
I have listened with care to the disturbing statement made by the hon. Member for Renfrewshire, West (Mr. Buchan) about the closure of another industry in his area. I realised that he was speaking under some emotion and therefore allowed him to say several things that he normally would have been able to say only if I had granted the application.
Having listened carefully to the hon. Gentleman's representations, I have to rule that the matter does not fall within the provisions of Standing Order, and, therefore, I cannot submit his application to the House.

BILL PRESENTED
IRON AND STEEL(BORROWING POWERS)
Secretary Sir Keith Joseph, supported by Mr. Secretary Prior, Mr. Secretary Younger, Mr. Secretary Edwards, Mr. Leon Brittan, Mr. Norman Tebbit and Mr. Michael Marshall, presented a Bill to increase the limit on the aggregate of sums borrowed by, or paid by the Secretary of State to, the British Steel Corporation and sums borrowed by the publicly-owned companies: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 65].

Air Accidents (Compensation)
4.41 pm
Mr. Charles R. Morris: I beg to move,
That leave be given to bring in a Bill to remove limits on compensation payable to the dependants of those who lose their lives or are injured in accidents involving aircraft flying to or from the United Kingdom, established by the Warsaw Convention of 1929 and associated legislation.
The Bill seeks to right the injustice that confronts the dependants of those who lose their lives in air crashes. The injustice is in the limits on liability and compensation, under the 1929 Warsaw convention and the associated protocols and legislation enacted since that date, given to dependants of those who lose their lives in accidents involving aircraft.
Few, if any, air passengers, particularly package holiday-makers, when responding to the call that the aircraft is ready for boarding, think about the level of compensation that their dependants might receive if a terrible tragedy befell the aircraft, and rightly so. The British and international aviation industries have a proud safety record. However, because the public are unaware that there is a ceiling on liability and the amount of compensation available for loss of life in such circumstances, Parliament should be ever vigilant to ensure that dependants receive the justice that they are entitled to expect.
The Warsaw convention under which the ceiling on liability and compensation is imposed is a shambles. It reduces compensation to a lottery. It is a riddle. I need only record the multiplicity of maxima for compensation to justify that assertion.
Under the Warsaw convention and the Hague protocol of 1955 the maximum compensation available is £9,500. Under the 1966 Montreal IATA agreement, flights to and
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from the United States have a maximum compensation liability level of £34,000. British airlines have a maximum liability of £25,000. Those amounts are only a fraction of the damage that can be claimed under the British law of negligence if an individual loses his life in a bus or rail crash. If a man of about 30, earning about £10,000 a year, loses his life in a bus crash, his dependent wife and three children might expect to receive damages of about £100,000. A man recently lost his life, and in an action against British Rail his wife and dependent family received damages of about £170,000. Had those two individuals lost their lives in air crashes, the maximum that their dependants might have expected to receive would have been £25,000, £9,500 or, at the most, £34,000.
An even greater anomaly is that the dependants of an aircraft pilot and crew who are killed are in no way inhibited by the limits of the Warsaw convention and the associated protocols. The dependants of a pilot with a salary in excess of £20,000 a year might expect to receive compensation of around £200,000.
Successive Governments, both Labour and Conservative, have sought to raise the level of compensation, and legislation that comes into effect in April will raise the limit to £56,000—but that level is six years out of date. It comes from the Montreal protocol of 1975. Fifty-six thousand pounds might seem a reasonable level, but it in no way compares with the amount of damage that dependants might expect to receive under the British law of negligence.
The Bill seeks to restore the right of individuals to have damages determined by the British courts. Alternatively, I seek the re-establishment of the Warsaw convention, with realistic levels of compensation.
Question put and agreed to.
Bill ordered to be brought in by Mr. Charles R. Morris, Mr. Barry Sheerman, Mr. Bernard Conlan, Mr. Tom McNally, Mr. Jack Ashley, Mr. Alfred Morris, Mr. Kenneth Marks, Mr. Ken Eastham, Mr. Gerald Kaufman, Mr. George Morton, Sir Donald Kaberry and Mr. Stephen Ross.
AIR ACCIDENTS (COMPENSATION)
Mr. Charles R. Morris accordingly presented a Bill to remove limits on compensation payable to the dependants of those who lose their lives or are injured in accidents involving aircraft flying to or from the United Kingdom, established by the Warsaw Convention of 1929 and associated legislation: And the same was read the First time; and ordered to be read a Second time upon Friday 20 February and to be printed [Bill 67].

Orders of the Day
SUPPLY
[8TH ALLOTTED DAY]—considered

Housing and the Building industry
Mr. Deputy Speaker (Mr. Bernard Weatherill): Mr. Speaker has selected the amendment in the name of the Prime Minister.
4.48 pm
Mr. Gerald Kaufman: I beg to move,
That this House condemns Her Majesty's Government's housing and construction policies, which have made new homes for sale and to rent scarcer than for generations, have driven up the costs of buying and renting a home to higher levels than ever before, and have resulted in post-war record unemployment figures in the construction industry.
Britain today faces its gravest peace-time housing crisis for more than half a century. The construction industry is at its lowest ebb for many years. The Government seek to blame everyone but themselves for the ills that we are suffering. They seek to blame world conditions, oil prices, the wicked trade unions and anyone or anything that they can think of. However, for this crisis in housing and construction none of those excuses is available. The willing and active instigator of Britain's housing disaster now sits on the Government Front Bench. The cause of Britain's housing crisis is the Secretary of Stale for the Environment.
No doubt, when the Secretary of State speaks we shall be regaled with the formula to which the House is accustomed—fiddled figures that will not stand up to a moment's examination, phoney comparisons with the record of the Labour Government—all the paraphernalia of a shifty politician in a fix, which we have come to know so well, if not exactly to love. None of his usual strategems can dispose of the stark facts. No one has spelt out those facts in language so lurid as that employed by the building employers" organisations, the very bodies that campaigned so assiduously and expensively for the return of this Government. Those organisations are now horrified at what their lavishly financed propaganda has brought about.
The president of the House Builders Federation, Mr. Lynn Wilson, said the other day that the shortfall in new housing output in 1980 was disastrous and that a housing shortage of crisis proportions was developing. He went on:
"We are no longer talking about theoretical housing shortages or surpluses, but the danger of a real housing shortage beginning to affect society's conscience and comfort."
In its survey published the day before yesterday the Federation of Civil Engineering Contractors says that the smallest firms are faring the worst. It gives this warning:
"firms have been forced to break up skilled teams and to shed the operatives and staff they have tried to retain in anticipation of future orders… This is a situation which bodes ill for any future recovery of the economy as a whole. We would urge the Chancellor… and the rest of the Government…to consider how the money currently being paid to the industry's unemployed could be used positively."
The federation estimates that last year new public sector orders other than for housing were at their lowest for 21 years. It says that the proportion of firms reducing
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employment has doubled in the last three months to 82 per cent., and that more than half of the industry's plant is lying unused.
The National Federation of Building Trades Employers reported much the same thing in its survey published three weeks ago. Both federations, joining together in their Budget memorandum for the Chancellor of the Exchequer, state:
"All the indicators of construction workload and employment point to the worst post-war recession in the industry. This will severely and permanently damage the industry's long term capacity, both in skilled labour resources and specialist expertise …the present inadequacy of investment by both public and private sectors in new construction, renewal and maintenance will place our economy even further behind its competitors. The roots of this problem lie in (a) the apparent need for even this Government to resort to capital rather than current cutbacks to meet public expenditure targets, (b) the sudden imposition of disruptive capital moritoria on public capital spending, (c) the failure to provide adequate and balanced incentive for private sector investment in construction and (d) the disincentive to business investment of high interest rates …
This Government have particularly under-estimated the damage to the economy of their swingeing housing cuts, the crisis growing under the ground in our neglected sewerage system…"
The federations estimate that by next year total new work completed by all construction bodies will be at only 60 per cent. of the 1970 level, that public investment in roads, bridges, sewers, schools and hospitals will be only half of the 1970 level and that public new house building will be no more than a quarter of the 1970 level. They go on:
"Insofar as the decline in new work represents the deferral of essential investment in better factories, infrastructure and housing, then it only serves to increase their eventual cost and reduce efficiency."
That is what the right hon. Gentleman's friends are saying about him and his policies. It is different from the sort of material that those two federations, when they combined in the CABIN campaign, distributed before the last election. I have them here—the leaflets, the stickers and the carrier bags which mutely call "Keep Britain's Builders Free". Those carrier bags are now useful only as receptacles for Tory broken promises to the builders, who are now free—free to go bankrupt. I also have the balloons which proclaim the same message: "Keep Britain's Builders Free". I shall leave it to the Secretary of State to blow them up. He has more reserves of wind than the rest of us.
There were also posters in that campaign. One of them said that the results of the Labour Government's policies on the building industry would be more public intervention, less efficiency, higher costs, inevitable losses, more taxation and fewer jobs. Every one of those dire prophecies has been fulfilled, but by a Tory Government and a Tory Secretary of State. I shudder to think what CABIN will say on its posters, carrier bags and balloons at the next general election, when presumably it will be campaigning enthusiastically for the return of the Labour Government who will provide it with the work of which it is now so starved.
Not only the builders are facing a slump, but companies which produce the materials used by the building industry. Cement production is at its lowest since 1963. Brick production is at its lowest peace-time level since records were kept, almost certainly the lowest level this century.
A survey by the British Woodworking Federation reports that over half its firms showed a reduction in their labour force in 1980. One-third were on short-time

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working and over 40 per cent. were affected by the moratorium on public housing investment. One and all, the old CABIN mates agree that this damage to their industry has come about as a direct result of the policies deliberately pursued by the right hon. Gentleman.
Those policies have harmed others as well. Families buying or wanting to buy a house have been hit harder than ever before by the Government's interest rate policy. For more than a year, mortgage rates have been at levels far above those which used to spur the Secretary of State and the Prime Minister to paroxysms of synthetic fury when they were in Opposition.
Last week, the secretary-general designate of the Building Societies Association accused the Government of unfair competition amounting to almost an abuse of power in the battle to attract personal savings. He said that if the Government's rivalry with the societies continued, higher mortgage rates were the "only possible outcome", and that the Government's decision to raise large sums from personal savers would
"reverberate through every building society decision on interest rates and mortgage rates for some time to come."
The result has been a disastrous fall in the number of new mortgages. In 1978, the last full year of the Labour Government, the number of home loans granted was at an all-time record of 804,000. In 1980, the right hon. Gentleman's first full year in Government, home loans were down from 804,000 to 677,000, which is a reduction of 16 per cent.
Mr. John Heddle: While the right hon. Gentleman is examining under the microscope the last full year of the Labour Administration, will he tell the House how much house prices rose that year? Does he not agree that they rose by 26½ per cent.?
Mr. Kaufman: That is a fraction of the increase in house prices that took place when the right hon. Member for Sidcup (Mr. Heath) was Prime Minister.
The number of first-time buyers last year was down from 379,000 to 318,000.
In the light of that record on home ownership, the House must be baffled by the reference in the Government's amendment on the Order Paper to Government measures
"to extend home ownership more widely than ever before".
Possibly those who drafted the amendment were influenced by the leaflet that I have here, which has been distributed by a plush estate agency drumming up custom. It says:
"A marked increase in values was especially evident in the sales of property offered for sale in good to luxurious order."
That will no doubt come as a heartening comfort to the young couples who, two years ago, were bamboozled into voting Tory and who now find it impossible to break into the home ownership market.
But if home ownership has been severely damaged by the right hon. Gentleman's policies, even more devastating has been his attack on housing for rent. Of all the Government's expenditure cuts since 1979, no less than 75 per cent. have been in housing alone. When the right hon. Gentleman makes his announcements on housing investment for the public sector we always get two figures; first he gives the phoney figure and then he is forced under questioning to come clean. His behaviour
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pattern will be recognised by any criminologist as the hardened practice of the habitual offender—first deceive on the Floor of the House, then confess by written answer.
A year ago, the Secretary of State announced his first housing investment programme. In it he pretended that the cut compared with the Labour year was 27 per cent. A little later he was forced to own up to the true figure—not 27 per cent. but 33 per cent. In December 1980, a few weeks ago, he made his second HIP announcement and clothed the figures in fancy dress to try to show that this further cut was 15 per cent. But another question squeezed the true figure out of him—not 15 per cent. but 21 per cent.
The housing investment programme in the last year of the Labour Government was far from satisfactory, as my right hon. Friends who were then at the Department of the Environment will readily acknowledge, but in his first two years the right hon. Gentleman has slashed that final Labour figure by a devastating 51 per cent. The programme now is less than half what it was when Labour left office.
The result so far of the right hon. Gentleman's relentless attack on housing, for rent and for sale, was made known last week with the housing figures for 1980—the Secretary of State's first full year in office. They show that the number of new houses started for sale, at 98,400, was the lowest for 28 years. The number of public sector housing starts, at 53,600, was the lowest in peace-time since 1924-25. The number of new council house starts in England fell to the miserable dribble of 27,000. The total of private and public sector starts, at 152,000, was the lowest in peacetime since 1924–25.
The Secretary of State can reflect, with whatever satisfaction he may derive from the information, that the last Minister responsible for housing who had a record worse than his own was a right hon. Gentleman by the name of Neville Chamberlain.
One of the nasty little habits that the Secretary of State has developed is to pretend that the decline in the housing programme over which he is presiding is simply a continuation of a trend begun under the Labour Government. To carry out that act of statistical smash and grab, he has to start from the year 1975, which was Labour's peak year, when in particular we had increased the housing programme to a level well above that in any year during the previous Tory Government of 1970–74.
It is true that the Labour Government did not maintain its peak achievements of 1975 and 1976, but in 1978, Labour's last full year, the reduction in local authority starts in England was 17 per cent. on the previous year. The reduction between 1980, the right hon. Gentleman's first full year, and 1978, Labour's last full year, was an enormous 60 per cent. Such of the right hon. Gentleman's tenuous reputation for veracity as still survives will benefit from his abandonment of that form of deceit.
Mr. Robert Atkins: What happened to 1979?
Mr. Kaufman: The hon. Member, whose majority, without the thousands, is about as big as the Secretary of State's housing record for last year—we shall dispose of them both—wants to know what the change was from 1979 to 1980. The year 1979 was a mixed year, beginning with Labour and continuing with this Conservative Government. The fall that year to 1980 was 42 per cent.—more than double the fall in the Labour year which

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I have given. I hope that the hon. Member will find that satisfactory when he hires some small schoolroom in Preston in which to address his majority.
However, as I said, the right hon. Gentleman is not only presiding over the worst housing programme for half a century; he has also made housing more expensive than at any time in this country's history. When Labour left office, the mortgage rate stood at 11¾per cent. Throughout last year, it was 15 per cent. Now, at 14 per cent., it is still far above any level reached under Labour.
The mortgage rate increases under the Tories amount to a massive additional tax of £1 ½ billion on the country's 5¼ million mortgage payers. The right hon. Gentleman's rent increases are imposing a similarly enormous tax on the 5½ million council tenants—people whose average household income is 24 per cent. below the national average. The right hon. Gentleman's rent tax on council tenants is £1¼ billion.
Last year, the Secretary of State used his rate support grant guideline to induce local councils to increase rents by 28 per cent. Figures published last week show that, by last April, average council house rents had already risen by 20 per cent. over the previous year. But now the right hon. Gentleman is using his powers under the Housing Act 1980 and the new block grant system under the Local Government Act 1980 to force councils to put up their rents by an average of at least £3·25 a week. The right hon. Gentleman is cutting housing subsidy for each local authority equivalent to an average £2·95 a week rent increase. That could reduce subsidy by £1 billion this year and could wipe out housing subsidies almost completely within two years. What is more, the right hon. Gentleman is cutting rate support grant for housing revenue accounts by another £200 million.
Those turns of the screw will force even Labour councils to make huge rent increases. All over the country, Tory councils are mercilessly demonstrating that they need little encouragement to penalise their tenants. Last month, in company with my hon. Friends the Members for Stockport, North (Mr. Bennett) and Stockport, South (Mr. McNally) I toured the housing black spots of Stockport, of which that Tory council has generously made available an ample supply. Stockport has just announced its fourth rent increase in 19 months. Since this Government came to office, Stockport's rents have more than doubled.
Mr. Andrew F. Bennett: My right hon. Friend was helpful in coming to look at Stockport. Will he now challenge the Minister to come back with him to see the black spots of Stockport, especially the large number of pre-war houses on which no money has been spent for modernisation, which have had little or no opportunity to be modernised, and the rents for which have been doubled in 18 months?
Mr. Kaufman: My hon. Friend has issued the invitation. If the right hon. Gentleman cares to come to our area I shall be glad to join with both my hon. Friends in escorting him round some of the areas which I saw a few weeks ago.
In Basingstoke, rents charged by the Tory-controlled council are already well above the national average. Last week, Basingstoke council voted to raise rents by another £5·76 a week—an increase of 66·5 per cent.
In Tory-controlled Elmbridge, in Surrey, the council has got up to an even more squalid dodge. Rents in
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Elmbridge are even higher than those in Basingstoke. They are now to be increased by a furher 39 per cent., or £3·60 a week. But a memorandum circulated to the Elmbridge housing committee points to a further refinement which is being practiced by Tory councils in Surrey.
Under section 117 of the right hon. Gentleman's new Housing Act, councils are now allowed not only to make a profit on their council house rents—a reversal of the Labour Government's no-profit rule. They are allowed, in addition, to transfer that profit to the general rate fund. The Elmbridge memorandum shows that this is being done. This is what it says, in suitably elegant phraseology:
"Some authorities in Surrey…are taking remedial steps by raising rents and transferring some of the moneys raised to the General Rate Fund to redress the loss of block grant in 1981–82."
So Surrey council tenants, with incomes well below average, are having their rents raised in order to subsidise the rate bills of their better-off neighbours.
But Elmbridge has taken this a further step, for 70p of the rent increase in Elmbridge is being specifically imposed to make council tenants alone, and not the general ratepayer, pay for the cost of bed and breakfast accommodation for the homeless, for the council's share of the cost of rent rebates, and for the cost of administering the rent rebate scheme. This is the kind of monstrous practice that is being fostered by the right hon. Gentleman.
When faced with the indictment which arises from a simple recital of the facts of his policy, the Secretary of State generally offers four replies. His first reply is to say that anyhow there is a tremendous amount of house improvement going on, and to imply that this somehow makes up for the lack of new dwellings being built. But improvements, however welcome they may be, do not provide a homeless family or a newly married couple with a house they did not have before. In any case, even if we add new local authority starts and improvements together—however invalid such a calculation may be—1980 still provided the worst figures for 22 years.
What is more, the cuts in housing investment programmes will mean that many local authorities will not have money to spare for improvements. The National Federation of Building Trades Employers' survey makes this very clear. It says:
"Even the repair and maintenance sector is continuing to decline, with over half the firms reporting a fall back in orders."
So that little get-out will not work.
Another defence employed by the Secretary of State is to mouth platitudes about his intention to foster the private rented sector. The Government amendment refers to that as well. Reviving the private rented sector is, of course, a euphemism for raising rents and reducing security of tenure, and the most notorious manifestation is the new shorthold tenancy.
No information has so far been made available about the progress of this venture—perhaps we shall get some today—but any success achieved by shorthold will be at the expense of the tenants, who after a year will be at the landlord's mercy, liable to eviction at three months' notice with no reason given, and in no position to disagree with any rent which it suits the landlord to dictate.
These unpleasant characteristics, together with the opportunities given to unscrupulous landlords to winkle unsuspecting or gullible tenants out of protected tenancies and into vulnerable shorthold tenancies, mean that the Government are not only signalling the end of rent control

889
and security of tenure but sponsoring by statute the return of Rachmanism. That is why I firmly repeat today that the next Labour Government will repeal shorthold tenancies.
The Secretary of State's next line of defence is to resort to another of his less pleasant practices—publishing a list of scapegoats. A little while ago, in response to a planted question from the hon. Member for Melton (Mr. Latham), the Minister provided a list of local authorities—all Labour, of course—which had held dwellings vacant for more than a year.
Mr. Michael Latham: What does the right hon. Gentleman mean by a planted question? If he means that I was asked to put that question down or that somebody else drafted it for me, the answer is that that is not true.
Mr. Kaufman: If the hon. Gentleman put it down on his own initiative, he is an even bigger creep than I thought he was.
I join with any hon. Member in condemning any local authority which needlessly keeps vacant properties which could house those in want of a home. But before the Minister published that particular hit-list of his—which in any case was nearly a year out of date when he published it—he would have done well to inquire into the reasons why some of those dwellings were vacant.
For example, Islington's total of 1,401 vacancies included 1,000 dwellings in process of construction, major works of rehabilitation. Islington now has 100 such dwellings awaiting rehabilitation vacant today because of the Secretary of State's moratorium.
Camden's total of 1,080 included 378 dwellings awaiting improvement, 544 with contractors and 119 completed and available for letting. Camden also today has more than 100 dwellings awaiting rehabilitation vacant because of the moratorium.
In Manchester, no fewer than 600 dwellings were left empty for seven months. They were vacant because they were awaiting approval by the Secretary of State for sale to local housing associations. After that period of vacancy, the Secretary of State refused permission. Yet he has the nerve to make accusations against these councils.
The Secretary of State's list of excuses is completed by that feather in his cap, the compulsory sale of council houses. A year ago we were told that this policy would provide an unparalleled social revolution, equivalent to the liberation of the serfs from the feudal barons. These days we do not hear quite so much about it. I have been trying to get progress reports from the battlefront since the first barricades were erected on 3 October last. But the Minister tells us that the first figures will not be available until April. Meanwhile, we have to rely on what information we can obtain.
One recent report was far from encouraging. This is what The Daily Telegraph reported a few weeks ago:
"A psychologist was called in to examine staff of a department of the GLC who were suspected to be lacking enthusiasm for selling council houses, it was confirmed yesterday. The psychologist … was called in to the recently formed Directorate of Home Ownership after a prominent figure at County Hall became worried about the slow rate of council house sales…. The exercise to psychoanalyse the whole Directorate of Home Ownership was launched in December… But there were protests when it was learned that copies of the…files had been left on the coffee table of a personnel officer. The GLC Senior Officers Association objected to the exercise and staff
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were ordered to shred the files. But the exercise … led to several unexpected results. Mr. John Mitchell, a former chairman and managing director of Cunard, who had been recruited to be the 'super-salesman' at the head of the department, at a salary of up to £35,000 a year, resigned …the £12,000 a year psychologist was dismissed … after being convicted of fare dodging on the Underground."
The article was written by John Grigsby, the local government correspondent.
That is a sorry state of affairs. However, there is an even more depressing aspect than that of compulsory council house sales. Even if sales fall far below the Government's declared expectation of 120,000 in the next financial year, they are still likely to exceed the number of new houses being built now that the building programme has been almost wiped out. For the first time in the history of public sector housing there will be fewer houses available for letting at the end of each year than at the beginning.
The prospects are even worse for the future. Soon after the Secretary of State came to office he made a speech praising housing associations for their programme of 40,000 new homes a year, but his cuts have reduced the associations' programme in the coming financial year from 40,000 to 12,000.
Last week the right hon. Gentleman told the House that when local authorities in England made their housing investment submissions in August 1980 they were planning to start 29,600 dwellings in this financial year, a lamentable programme by any standards. However, a couple of months after that came the moratorium on new contracts, which has lasted nearly four months and shows no sign of ending. The Secretary of State admitted to me this week that the moratorium has not only damaged the building programme but involves a loss in subsidy to the local authorities, through no fault of their own, both this year and next year.
The Minister did not tell the House that the same local authorities with such low performance expectations this year received from him permission to spend only 47 per cent. of the money that they require to meet their needs in the coming financial year.
This attack on the housing problem is a tragedy not only for those in need of homes but for the workers who want to build those homes and who instead are being thrown on the dole. In the year ending November 1980, unemployment in the construction industry nearly doubled to almost 300,000. That is the highest level recorded since the Second World War.
The increase in construction unemployment, at a moderate estimate, involves additional cost to the public sector borrowing requirement of £600 million. Statisticians in the industry have calculated that to invest that £600 million in public construction projects could create 90,000 new jobs. Surely it makes sense to use that money productively, to give men the dignity of working instead of queueing for the dole and to provide new homes for those who desperately need them.
In January 1932 the then Tory-dominated Government issued circular 1238 on housing, priced 1d. It stated:
"The outstanding need at the present time is for the building of houses which can be let at rents within the means of the poorer members of the working classes."
The language of that circular is dated and so, unfortunately, are the sentiments. It seems that 49 years ago one of the hardest-hearted Governments of this century showed by that circular and the number of council

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houses that they were building—more than double the present—that they cared more about housing those in need in 1932 than this Secretary of State does in 1981. That is the indictment against him and that is why we shall vote against him and his policies.
5.22 pm
The Secretary of State for the Environment (Mr. Michael Heseltine): I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
'this House welcomes the measures the Government are taking to restore a sound economy, to make better use of the existing housing stock, to revive the private rented sector, to provide a new charter of rights for public sector tenants, and to extend home ownership more widely than ever before.'
I confess that as I tried to anticipate what the right hon. Member for Manchester, Ardwick (Mr. Kaufman) might say that was new—we have heard what he had to say so many times before—I assumed that he might try to indicate where the policies in which he shared and supported when in Government had changed to bring about an improvement in the circumstances for which he would criticise the present Government. I was disappointed to find that every alternative proposal that I thought he might advance was absent from his analysis. He managed to go through his entire speech without making one constructive proposal. I dare say that: that is a practice that he learnt from his experience in office, because that is precisely the way in which the Labour Government treated the housing programme.
It is not my intention to spend a great deal of time on what the right hon. Gentleman had to say. I doubt very much whether it serves the purpose of housing policy to have an endless repetition of misleading and inaccurate statements from the right hon. Gentleman. I shall take two examples. The first example is indicative of the trivial personal abuse in which he specialises. The right hon. Gentleman sought to suggest that my hon. Friend the Member for Melton (Mr. Latham) has indulged in planting a question. There is no justificaton lor that allegation.
The right hon. Gentleman then tried to suggest that improving houses did not provide homes for the homeless. If there are houses that local authorities cannot use because they are in an inadequate state of repair, to divert money to improve and make them usable is to make available homes that can be used by the homeless. The right hon. Gentleman said that during the past year the number of home improvements had increased significantly. It is extraordinary that he does not realise that improving an empty house so that it can be occupied is of as much benefit to the homeless as building a new home that similarly can be occupied.
Mr. Eric S. Heffer: How many are there?
Mr. Heseltine: I shall provide the figures to indicate how many extra improvements have been made during the past year. There has been a significant switch, but one hears not a word about that from the right hon. Gentleman. That is because it does not suit the catalogue of rubbish that he sees fit to produce on occasions such as this.
I do not intend to weary the House with a repetition of all the figures that indicate clearly the catastrophic housing results that we saw when the Labour Government were in office. I have produced them on numerous occasions and
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they are well documented. As the Minister responsible for housing, it is unsatisfactory for me to have to point out that the previous Government had an appalling record. However, the facts do not change as time goes on. Between 1974–75 and 1978–79 the Labour Government halved investment in capital spending. Over five years Labour Ministers brought about the most rapid reduction in capital expenditure on housing that we had ever seen up to that time. At the same time—
Mr. Reginald Freeson Mr. Reginald Freeson (Brent, East) rose—
Mr. Heseltine: No. The right hon. Gentleman can make his own speech. It is his record, and he can defend it.
Mr. Freeson Mr. Freeson rose—
Mr. Deputy Speaker: Order. The Secretary of State is not giving way.
Mr. Heseltine: I am prepared to give way to the right hon. Gentleman.
Mr. Freeson: This is the first time that I have taken the opportunity to put the record straight, although I have heard the right hon. Gentleman talk on many occasions about the reduction in capital expenditure that he claims was created by the Labour Government. I do not intend to bandy figures with him. Will he bear in mind—I put it as politely as possible—that the figures that he has been quoting, which suggest that there was a halving of the investment programme, are inaccurate? Over the years to which he referred he participated in housing debates, and he knows that much larger capital sums were made available and that during the latter years of the Labour Government councils under the control of his party, and with his support, cut their housing programmes and underspent by hundreds of millions of pounds. That is the truth that needs to be repeated. There was no halving of the programme. There was underspending by his party, which he endorsed.
Mr. Heseltine: I think that the House is enabled to make progress. It is apparent that the man who had prime responsibility when the Labour Government were in office now agrees that there was a significant underspend on the housing programme. The right hon. Gentleman's defence of the fact that there was underspending is that it was done by Conservative authorities.
Mr. Freeson: Mainly.
Mr. Heseltine: That is slightly different from what the right hon. Gentleman said when I gave way to him, but the figures do not support his case—[HON. MEMBERS: "The right hon. Gentleman is misleading the House."]—Every time I produce the facts and they do not conform with the conventional wisdom that the Opposition seek to advance, they say that I am misleading the House. The only people who believe that I am misleading the House are Opposition Members, who are determined to try to pretend that what happened under the Labour Government never actually happened. I must say this to the former Minister for Housing and Construction. I shall be nice to the right hon. Gentleman, and I steel myself to the effort that that requires. I do not believe that he wanted the housing programme to collapse. I believe that he was simply so completely incompetent that he did not know how to stop it. Any analysis of public expenditure records under the Labour Government shows that the levels of

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investment in public expenditure on housing and, indeed, all other local authority investment, slumped dramatically. That is the fact of the matter.
Several Hon. Members rose—
Mr. Heseltine: I like giving way to Labour Members, but it takes an inordinate amount of time. To allow as many of them as possible to produce figures and advance their views, it is only fair that I should ask for their tolerance. [HON. MEMBERS: "Give us the figures."] I have the figures. I am about to produce them.
Let us take the housing capital programme for England. All these figurs are at 1980 survey prices. In 1975–76 the figure was £4.259 billion. In 1979 it was £2.664 billion. Every year it went down. I shall put the figures on record again if it helps the Opposition, but the one incontrovertible fact is that year by year under the Labour Government there was a decline in the investment programme in public sector housing.
It is against that background that the Government had to start, and our record will have to be judged from the point at which we started. I do not wish in any way to minimise the difficulties or the hardships that are brought about by trying to reverse the trends that we saw under the Labour Government, but nobody can ignore the hypocrisy of the right hon. Member for Brent, East (Mr. Freeson), who has become one of the leading exponents of this in the House, in trying to pretend that it never happened.
We must first get the priorities right. The single most important priority is to bring down the level of inflation. The Opposition cannot escape the fact that month by month the levels of inflation are falling, faster than perhaps even the most optimistic supporters of the Government dared to believe.
That is the first priority that the Government are determined to pursue. Underlying that are all the hopes of redressing the balance and improving the national situation.
We have to reach an economic situation in which we create wealth before we spend it. Then we must redress the balance in favour of capital rather than current expenditure. In the process of arriving at that position we have to make a difficult and harsh judgment about what the nation can afford. To judge what we can afford we must recognise that there is a significant difference in the availability of housing and in housing conditions today compared with the situation even 10 and certainly 20 years ago.
We must also recognise, as I have heard previous Secretaries of State tell the House, that the problems of housing are different in different parts of the country. In some areas there is a significant surplus in crude terms. In others there is a shortage. In yet others there is suitable stock which is under-repaired. In others again there is a higher demand for renting and a lower demand for ownership. There are various patterns.
The first priority that we pursued was, therefore, to give to local authorities and to the Housing Corporation and associations the discretion to use such resources as we felt that we could afford in a way that they felt was most likely to meet the individual housing needs of their own areas. We did not believe that it was possible for the Government to plan with the precision that was assumed by the Labour Government, only to find that they had it wrong. Indeed,
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they got it wrong in as many Labour as in Conservative authorities. We therefore decided that within what the nation could afford we would give to local government a degree of responsibility in this matter that it had never dreamt of being able to achieve. As part of that exercise, Parker Mofris is to go, the yardstick is to go and there will be discretion for local authorities to allocate their priorities—whether for improvement, new building or aiding the private sector—because they know much better than we do how to deal with the problems that they face.
Mr. Clinton Davis Mr. Clinton Davis (Hackney, Central) rose—
Mr. Heseltine: No, I shall not give way.
We are trying to work in partnership with the local authorities and the private building industry in order to make the widest range and flexibility of schemes available to those wishing to buy to allow them to get their feet on the first rungs of home ownership. There is no doubt that my hon. Friend the Minister for Housing and Construction has brought to this area the most imaginative range of new initiatives to be seen since the war. He has perhaps been aided in that by the total bankruptcy of the Labour Party, which let this area fester.
Mr. Davis Mr. Davis rose—
Mr. Heseltine: No, I shall not give way.
The Under-Secretary of State for the Environment (Mr. Geoffrey Finsberg): On a point of order, Mr. Deputy Speaker. Is it in order for an hon. Member to accuse my right hon. Friend of telling lies?
Mr. Deputy Speaker: It would be out of order if an hon. Member were to do that, but I confess that I did not hear the comment, or whence it came.
Mr. Davis: Having regard to what the Minister was saying about local authorities, I admit that I referred to his statement as being one of lies. If that is unparliamentary, I withdraw it.
Mr. Heseltine: I am most grateful for the hon. Member's assistance in that matter.
The right hon. Member for Brent, East makes great play of the decline in the level of new building. As I said earlier, he failed completely to make the point that we are making much more efficient use of resources because of the switch to improvement that is taking place in Labour as well as Conservative authorities. That, of course, is being met in part by reductions in the capital programme and in new construction. In the year ended September 1980 about 83,500 dwellings were renovated by local authorities. That compares with 36,000 in 1975–76. That is a marked shift of priorities. Nearly one-third of local authority capital spending, at the authorities' own choice, now goes on improvements.
We have made many changes to help authorities to improve the quality of their existing stock, at little or no charge to the HIP allocation. Councils are being encouraged to improve and to sell property. They can retain the proceeds from such sales, in addition to their HIP allocations. Homesteading is now being taken up on a wide scale across the country. That is an excellent example of public and private sector co-operation. We have made the right to improvement grants available to tenants as well as to owners of properties. Grants of up to 75 per cent. are available for houses in poor condition, and

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applicants in real hardship can apply for a further 15 per cent. grant. A new repairs grant is available for structural repairs on houses built before 1919.
I should like to announce today that I shall be commissioning a new English house condition survey to be undertaken on the same pattern as that which took place in 1976.
Mr. David Alton: I welcome the Secretary of State's announcement that a survey is to be conducted and I am pleased to see the switch to more improvements. However, can he confirm that although I sent him a photograph before Christmas of an unimproved house in my constituency, that house will not now be improved until his moratorium is lifted? It is one of many homes for which people cannot get improvement grants because of another policy that he has implemented, whereby people cannot get improvement grants until later this year. The house to which I have referred would have been improved by now.
Mr. Heseltine: The hon. Gentleman will know that I have lifted the moratorium on improvements in respect of all those authorities that are below their capital allocations.
Mr. Alton: Not on mine.
Mr. Heseltine: No, because it is an overspending authority. I am sure that Opposition Members are not arguing that I should allow overspending authorities to continue to spend at the expense of the underspending authorities, which many of them represent.
In addition to the actual housing statistics, the Government have taken a range of initiatives to remove, wherever they reasonably can, the constraints that inhibit industrial development, and particularly housing development. As the House knows, we have repealed the Community Land Act. We are encouraging local authorities to co-operate with builders in studies to ensure that land is available for development—[Interruption.] One cannot build houses without land. I think that even the right hon. Member for Brent, East might have got round to that simple conclusion. Many other things escaped him, but I should have thought that that would have got through to him.
I have already designated 21 authorities—largely the inner city authorities—where I have established land registers so that we can get under-used or misused publicly-owned land, which is the vast bulk of under-used land in the inner cities, on to the market so that it can be put to profitable use. I shall shortly announce a further 12 districts that will be added to the registers.
I think that that initiative carries the overwhelming support of hon. Members on both sides of the House. I shall not hesitate to use the powers with which the House has entrusted me to give directions to public undertakings and local authorities to dispose of their land, unless I am satisfied that there is a very good case for their holding on to it. I cannot believe that there is anything to be gained by unused land in the public sector.
I am also increasing the provision of housing land in structure plans. We have dramatically speeded up the rate at which these structure plans are being processed.
Mr. Dudley Smith: I am listening to my right hon. Friend with interest and I support what he is saying. He knows that county structure plans are now coming before him. Has there been any analysis
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by his Department of the provisions that are needed, and has he any rough idea of the kind of housing that will be required as a result?
Mr. Heseltine: The most detailed analysis is going on in my Department, in conjunction with the house builders—we are also involving local government—to discover exactly what the constraints on land supply could turn out to be under the structure plans. The most detailed analysis is being carried out. When we have the result, which will be very soon now, we shall draw whatever conclusions are appropriate in order to ensure that there is no hold up through lack of appropriate development land.
We have overhauled the appeals mechanism and planning application procedures. There is no doubt that a considerable improvement in productivity has been achieved by the improvements that we have brought about. Not only have we coped with a 40 per cent, increase in the number of appeals coming into the Department, but we are processing the overall number of appeals in a shorter period of time.
I do not pretend for a minute that this has been anything but a difficult year for the private house building sector. But—and this is the important point that the House will want to note—funds are now flowing into the building societies on an encouraging scale. The advice that I am receiving from the private sector builders is that the signs are that the market is beginning to improve. The estimate that I have is that we might expect to see about 20,000 additional homes completed in the year that is just starting. In fact, in the last quarter of 1980 private sector starts were up 8 per cent. on the third quarter seasonally adjusted. While I do not pretend that that solves our problems, it is at least an indication that events are beginning to move in a more encouraging direction.
I now turn to the rented sector, both public and private. There are two points that I want to make. First, the Labour Party well knows that during its period in Government it was responsible for presiding over a significant reduction in the proportion of income paid in council house rents. As earnings rose, council house rents rose more slowly.
Mr. Frank Allaun: Quite right.
Mr. Heseltine: The hon. Gentleman thinks that that is quite right. In an inflationary society, the consequences were, first, that local authorities needed more subsidy; secondly, that they felt an increasing squeeze on the standards of maintenance of their homes; and thirdly, because of the subsidy factors that emerged, they stopped building houses on anything like the scale of earlier years. I must now either cut the capital programmes further to meet what we can afford, or try to catch up the areas of declining relative contribution that rent caused as a result of the previous Government's policy.
I have looked carefully at the figures involved. I make no apology for the fact that I have had to ask council tenants to assume an increase in weekly rental payments of £3·25 in the course of the coming year. From what I have read, that is what council tenants across the country are paying.
I have had to realise that a significant number of council tenants are protected as a result of the measures introduced under the rent rebate scheme by an earlier Conservative Government. All those in most need on supplementary benefit pay no rent increase at all, because they are fully protected. About 40 per cent, of those on the lowest

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incomes are protected to some extent or other, depending entirely upon their income and family circumstances. There is a real degree of protection for people in council houses at the lower income levels.
At the other end of the scale, a significant proportion—approximately one-quarter of council tenants—have an income of £7,000 to £8,000 a year, as against a rental of about £11 a week. I see no justification whatever for reducing the level of capital allocations for the construction or improvement of homes in order to meet subsidies that are created by people on average industrial earnings who are devoting something like a quarter of their income to pay for the homes that they are trying to buy. I do not see why at the same time, through their rate contributions, they should help to keep down council rents for people who work alongside them—in the same factories, on the same shop floors and on the same building sites—and who enjoy the subsidies paid through rates by people in identical economic circumstances. That is the issue which Labour Members ran away from year after year. That is why their housing programmes collapsed under them. I will have no part of it.
Mr. Allaun: The right hon. Gentleman is ignoring the fact that this year the subsidy to owner-occupiers—I am in favour of that subsidy, just as I am in favour of a subsidy to tenants—went up by £500 million to a total of £1,600 million because the interest went up, and therefore the subsidy went up. Is it not unfair to increase rents by £5·30 over two years by reducing the subsidy, while at the same time increasing the subsidy to owner-occupiers?
Mr. Heseltine: All these issues must be carefully weighed in the balance. Labour Members must understand—it is their constituencies as much as ours that are involved—that people getting the benefit of mortgage interest relief are buying their homes and contributing perhaps a quarter of their incomes in order to do so, whereas the subsidies going into council houses are to keep council rents down to levels of £7 or £8 a week, when many people in council houses have the same income as people buying their homes. I do not believe that we have made an unfair allocation.
I shall say more about rents in the private sector. I was fascinated to read an article by Mr. David Lipsey in The Sunday Times. The House will be familiar with Mr. Lipsey, who worked for my predecessors in office in the Labour Government as a research assistant in the Department of the Environment. He has a great deal of experience. He knew what the former Minister for Housing and Construction was up to or not up to, and he knew why the Rent Acts review never took place or was always being promised for tomorrow. I read with interest that he praised our changes in the Rent Acts as
"sensible initiatives… which removed some of the worst rigidities of the Rent Acts."
In that statement he made a more encouraging noise and a more positive contribution in one week on one page of The Sunday Times than he managed to persuade the Secretary of State in a Labour Government to say in the whole time that he worked in the Department.
We have heard the right hon. Member for Ardwick, full of compassion, care and concern, trying to get homes for people, but making certain that anyone who has a home to let will not let if he has anything to do with it. We have
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introduced the concept of shorthold, which is intended to try to edge forward from the rigidities of the rent control system that has done so much to diminish the availability of rented accommodation. We have provided a system with plenty of safeguards and which, as the right hon. Gentleman knows, I was only too happy to discuss with the Labour Party to see whether there was any meeting ground.
What is the right hon. Gentleman now doing? He is hawking himself around the country giving every conceivable deterrent to anyone who has a home to let by threatening that the security will be restored to that home. The consequences will be that the home will be sold and not let. The people who will suffer will not be the owners of those homes—because they will gain the capital proceeds—but all those we have heard about who have nowhere else to live and whom Labour Members treat as political pawns. I make no apology for trying to move forward and break away from some of the rigidities of the Rent Acts which have done so much harm to those in greatest need.
I reject absolutely the total misrepresentation of what I have done on the moratorium. I have not cut a penny piece from the initial allocations. All that I have done is to say that the cash limit discipline that the Labour Party invented has to be maintained, even though that party is in Opposition. We cannot allow overspending authorities to think that they can pre-empt the resources of those authorities, both Labour and Conservative, which run their affairs properly. That cannot be done. We shall not allow it. I have said that we shall stick to the cash limit this year. All authorities which overspend this year will have their overspend deducted next year, but all authorities which underspend this year will be able to add the underspend to next year's allocations. That is the only fair method by which I can meet the obligations of the cash limit system which the Labour Party introduced and which I believe is necessary.
I have no doubt that because of the economic difficulties that have haunted this country since the early 1960s there are no easy or soft options in housing or in any other sphere. The Labour Party tried them all and ended in humiliating retreat because it could not sustain the easy policies which it implies that it would return to. It is not a question of not caring, but of knowing that the only way to achieve improvement in housing and the capital expenditure that is necessary in this and other spheres is to create the wealth and to be able to pay the bills without lurching into the difficulties that existed under the Labour Government.
I spent much of this morning—as I have done earlier occasions at other meetings—discussing either with the Group of Eight or the building EDC the problems of the construction industry. They want to make three points: first, that the industry is declining and undergoing so deep and prolonged a decline that it is probable that it will never be restored to its former strength; secondly, that it is almost as cheap to employ people in gainful employment as it is to keep them on the unemployment register; thirdly, that the industry is about investment and not consumption, and so we should give a greater degree of priority to the industry because it is investing in the future. I am not unsympathetic to any of those attitudes, although I have had to explain my view about them.
I have tried, as Secretary of State for the Environment, to pursue any specific policy that I think will help the

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construction industry or the investment in it that I should like to see. The stabilisation of development land tax which was announced earlier, the land release programmes, the speeding up of the planning procedures, the establishment of enterprise zones, the substantially increased capital expenditure that I announced on Monday for the urban development corporations to deal with some of the worst problems of inner city dereliction in Liverpool and inner London are all part of a range of initiatives that we are pursuing to bring private sector money in to finance new house building schemes, advance factory building and the reorientation of urban programmes.
However, I have had to say to members of the EDC, both employers and unionists who argue the case with me, that simply spending more Government money—which is what they are suggesting—does not have the wholly benign effects that they so easily assume. The extra borrowing for which they call, the extra interest rates to which that will inexorably lead, will destroy as many jobs, if not more, in the private sector as would be created by the use of that money in the public sector. Governments cannot create wealth. If the Labour Party did not discover that in its six years in office, it discovered nothing. All that the Government can do is to allocate the existing wealth differently within the economic climate, which we can greatly influence.
It is here that I am much closer to the arguments advanced by the EDC and the construction industry. The critical priority is to create a climate where spontaneous profitable investment is self-generating. That demands that the Government borrow less and not more. It demands lower and not higher interest charges. But even at the lower levels of public spending, to which I am committed, it is possible for the Government to reorder the priorities between current and capital expenditure. But every time one proposes cuts in consumption in order to make way for improvements in capital, the Labour Party fights it all the way. No clearer example of that is to be found than, for example, in its policy in local government. I read that the national executive committee of the Labour Party had advised local government to keep up its spending, to put up the rates if necessary and to do anything reasonable to stop the cuts. That was before Shirley Williams left. Lord knows what it is up to now.
When at last some sanity seems to be entering into pay settlements which are sensible in the national economic context, Labour-influenced unions are fighting to raise the wage claims, the consequence of which will be an even more prolonged depression than we have. They are determined to resist the cuts that could help to finance capital expenditure. The message from the National Union of Public Employees is clear. It says about providing the economies in consumption that could lead to improvements in capital:
"refuse to do extra work or accept changes in working arrangements when employers are trying to make cuts.
Work to rule and refuse to co-operate with employers who are making cuts.
Refuse to work with private contractors.
Hold meetings, demonstrations or token strikes at times when it will hurt the employers most."
What NUPE cannot understand is that its employers in the public sector are all of us. It is arguing to damage the country. As long as it pursues those attitudes, the problems of reducing public consumption in order to benefit the
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capital side of the economy will be made more difficult. Nothing gives a better indication of the irresponsibility of the Labour Party than attitudes such as that.
Mr. Heffer: I am fascinated by the right hon. Gentleman's references to NUPE. I understood that the debate was about the housing and construction industry. Will he explain how many NUPE members work in that industry?
Mr. Heseltine: The hon. Gentleman, who now speaks for a major part of the Labour Party, understands that public expenditure on consumption—
Mr. Heffer: Answer the question.
Mr. Heseltine: I shall answer it. There is a direct decision to be made by the Government about the level of current public expenditure and how that relates to the competing priority of capital expenditure. The hon. Gentleman had to make those judgments when he was in Government. The higher the level of current expenditure in local government, the lower the level of capital expenditure. If the Labour Party does not understand that, why did the Labour Government halve the level of capital expenditure in local government when they were in power? They did so because of the enormous pressure on current expenditure. That was the beginning of the construction industry's problems in the 1970s.
Mr. William Shelton: Is my right hon. Friend aware that there was a strike in Lambeth last week, in which NUPE was involved? Does he know that it was supported by the Lambeth council, and that the cost of cleaning up the resulting rubbish, for instance, is falling on the Lambeth ratepayers?
Mr. Heseltine: I am well aware of that. The leader of Lambeth council advised workers to go on strike in order to prevent cuts in current consumption. That was a deliberate decision to ensure that less money was available for capital expenditure.
Wherever one looks in the Labour Party one sees this rigid and doctrinal resistance to reductions in the level of consumption, whatever the cost of that consumption for the ratepayers.
I have seen a report from the director of finance in Camden on the effects of spending policies on housing and local government generally. The implications for the rates are clearly spelt out for the members of the controlling Labour group. He explained the risks that the group was taking and the number of jobs that might go because companies might leave the borough if the rate increases that were being discussed materialised. He went on, rather charmingly, to point out that the CBI, which is a ratepayer in the borough of Camden, would face a rise in its rates bill of over £250,000 if the Camden council were persuaded to implement the proposed rate increases.
It might be acceptable to increase the levy on Britain's industrialists if that is the prejudice of the Labour Party, but the Opposition should understand that a few hundred yards down the road is NALGO. It will have to find another £200,000. Further down the road still is the TUC, which will have to pay another £125,000. In other words, the Camden councillors are saying that they want the levy on union members all over Britain to be increased so that the unions can pay higher rates to Camden in order that Camden can preserve more jobs in its area, jobs which the officers of that authority regard as inefficient.

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The report about the direct labour organisation of that authority says that
"in order to win contracts and trade profitably, the Department's productivity must be almost doubled."
What conceivable justification is there for trade unionists having to pay an enhanced levy to keep in operation a direct labour organisation, the productivity of which is half that to be found in efficient diirect labour organisations or the private sector? On the basis of that, are we to believe that the Opposition are genuinely seeking responsibly to reduce expenditure in line with the nation's needs? We all know that the Labour Party is in the most desperate difficulty in trying to find its way forward either to moderate, sensible and practical policies based on what its members have learnt, or out into the dreamy world in which so many of them now seen determined to live their lives.
The right hon. Member for Ardwick does not have a view about which way he should go. He wants only to cause the maximum possible disruption and to make the most misleading statements. Now he has the final triumph of his period as Shadow Secretary of State for the Environment. He is to have a housing action week. It starts on Friday, when he will be off for a quick trip to Blackpool to see how to run a good Tory local authority. After that, it is feet up until Wednesday. After a leisurely breakfast he plans at 10 o'clock to lead a placard-waving mob of Members of Parliament to picket my Department. The first over the barricades will be the hon. Member for Bolton, West (Mrs. Taylor) followed by the hon. Member for Salford, East (Mr. Allaun), with the rather shamefaced Chairman of the Select Committee on the Environment—the hon. Member for Mitcham and Morden (Mr. Douglas-Mann)—probably some way behind.
After all the breathless activity this warrior figure, this samurai of the Shadow Cabinet, will have time to wander down memory lane. Some of us are a little surprised that the right hon. Gentleman should have chosen to picket my Department. It is hardly a return to the scene of his former triumphs. He will be going back to the Department in which he halved the housing programme in three years, back to memories of council house starts that dropped from 110,000 to 47,000 in four years. He will be going back to the heady days of his time in Government when he helped to increase consumption by 20 per cent. at the expense of a 50 per cent. drop in housing capital investment. Then he can return to the House and start the whole weary record of hypocrisy all over aain.
I ask the House to reject the motion and vote for the amendment in the names of my right hon. Friends and myself.
6.6 pm
Mr. Bruce Douglas-Mann: I shall in no way be shamefaced as I try to reveal, outside the Department in Marsham Street next Wednesday, some of the facts of life about housing and some of the fallacies with which the Secretary of State is regaling the public and the House. We have just listened to a characteristic speech from the right hon. Gentleman. It was filled with half-truths, misleading statements, and a vast amount of irrelevance. Practically all the second half of the right hon. Gentleman's lengthy speech was devoted to issues that
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were irrelevant to the motion. We experienced his usual enthusiasm for the economic policies of the Prime Minister in respect of which The Sunday Times this week stated
"Wrong, Mrs Thatcher, wrong, wrong, wrong."
It was a headline over a detailed destruction of the Government's policies by a newspaper that is not customarily regarded as a Labour Party supporter.
Even more characteristic of the Secretary of State was the way in which the right hon. Gentleman quoted from the article by Mr. David Lipsey in that issue of The Sunday Times.He did not quote the passage immediately preceding the part that he read out. In his article Mr. Lipsey referred to:
"the bare bones of the housing crisis that is inevitable in the mid-Eighties.
It means council waiting lists of 2 million compared with 1 ·2 million now—a wait for the average family on the list of 21·4 years.
It means a continued deterioration of existing homes. The Association of Metropolitan Authorities estimates there is a £14 billion backlog of housing maintenance and improvement—at a time when we are clearing houses at a rate that means each one must last on average 500 years. In inner London, no less than one property in seven is reckoned unfit for habitation.
It means—as Shelter's director, Neil McIntosh, puts it—this, in human terms: "In the Seventies we could house people normally at the point of their lives when they could reasonably expect to be housed—when they got married, for example. Now, if you cannot afford to buy, you will be provided for only when you have been projected into a crisis—like battering your child."
Because in housing there is a lag between cause and effect—this year's starts are 1982/3's completions—the full crisis has not yet hit us. But already Housing Minister John Stanley"—
Mr. Deputy Speaker: Order. I am most reluctant to interrupt the hon. Gentleman, but many hon. Members wish to speak in the debate. Long quotations are not really in order.
Mr. Douglas-Mann: I am on the last sentence, which is especially relevant to the point that I am making, Mr. Deputy Speaker. It states:
"But already Housing Minister John Stanley has the air of a Nero drawing attention to the dexterity of his trills as the fire draws nearer."
The article continues with the sentence quoted by the Secretary of State.
That is characteristic of the Secretary of State. It is characteristic of the arguments with which he defends his housing record. It is characteristic of the arguments that he used when refusing to supply certain information to the Select Committee. It is characteristic of the manner in which he presented his policy on council house sales, when he used misleading and selective arguments.
I wish to refer to paragraphs 50 and 51 of the Government's "Appraisal of the Financial Effects of Council House Sales". I shall not quote the whole of the passage. It is good for a laugh, but to quote it would attract your censure, Mr. Deputy Speaker. It refers to a "representative" council house purchaser, who would, for the most part, be between 30 and 60, and have an expectation of living for over 30 years. It goes on:
"Given that most married men are survived by their widows, who normally succeed to the tenancy, some 30–40 years would typically elapse before there is an effect on the number of houses vacant and available for letting to new tenants."
It concludes:
"So no provision is made in this Appraisal for replacement building"
The Secretary of State argues that because in a typical case the sale of a council house will not cause the loss of a relet for 30 years, the sale of council houses will cause no loss of relets for that time. That is similar to arguing

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that because a typical car journey does not involve an accident there is no need to make provision to cope with any accidents, because none will occur. That is the sort of fallacious argument with which the Secretary of State is always regaling the House. I do not look forward with enthusiasm to reading the Hansard report of the Secretary of State's speech this afternoon but I shall do so because one needs to read and check his speeches to cut through the windy oratory to the fallacies and misleading ingredients, of which there are always many.
In the peroration to the Secretary of State's speech he said that my right hon. Friend the Member for Brent, East (Mr. Freeson) had cut by half the number of houses built during the period of the Labour Government. I ask your indulgence, Mr. Deputy Speaker, to quote from the first report of the Select Committee, which states:
"Your Committee accepts that housing investment has been declining since 1975/76, but notes that the rate of reduction in expenditure proposed at £645 million a year for a four-year period is substantially greater than that of the average of £475 million a year seen between 1974/75 and 1978/79 and would draw attention to the fact that the proposed reduction represents an overall decline over the four-year period under review of 48 per cent. compared with an overall figure of 25 per cent. between 1974/75 and 1978/79."
I accept—although I am not proud of the fact—that the figure was 25 per cent. under the Labour Government, but it will be 48 per cent. over a shorter period under the Conservative Government.
I am conscious of the pressure of time in the debate. A number of my colleagues wish to speak. I wish to refer briefly to other conclusions of the Select Committee. This is the first housing debate since the Select Committee produced its report. It did a vast amount of work on the analysis of the implications of the Government's expenditure plans. This is the first opportunity for the House to debate that report. The Committee heard the usual non-reply from the Secretary of State. He suggested that its members had misunderstood the functions of the 1977 Green Paper but informed press comment was that it was insulting to a Committee of the calibre of the Environment Committee, and also to its advisers, to suggest that its members were incapable of understanding the housing policy review. As a consequence of the proposed measures—which were considered before the moratorium was announced—the Committee concluded:
"The Committee considers that it is unlikely that new housing starts in the public sector in England will exceed a figure of 31,000 in 1983–84 and could be well below it in the period to 1983–84."
The Green Paper, which the right hon. Gentleman suggested the Committee misunderstood, considered housing needs. Indeed, table III.28 is headed "Demand/ Need". It assessed the public sector housing need in the light of demographic changes, moves to different sectors, and so on, at 290,000 dwellings per annum. It assessed that about 170,000 houses would become available through relets of local authority houses. For the reasons that I have given, that figure of 170,000 will probably not be achieved.
There is no evidence available to the right hon. Gentleman's Department—certainly none that he has been willing to disclose—nor was any evidence discovered by the Select Committee or those who gave evidence before it, to suggest that the 1977 estimate for public sector housing needs was not accurate. There is no evidence to suggest that any alternative estimate is available. It is true that the estimate took account of a projected assessment
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of what was likely to be built in the private sector, and assumed that by 1981 it would build between 170,000 and 190,000 houses. In the Secretary of State's reply to the Committee, he said:
"The Committtee appear to have misunderstood the Green Paper. It did not provide any target for building houses with which any other figure can be compared. It simply attempted to give some indication about what might happen if trends in the recent past were continued over the next 10 years."
I urge the Secretary of State to read some of the criticisms that appeared in the specialist press of his reply to the Committee's report.
The figures in the quotation from The Sunday Times article summarised a good deal of what I wished to refer to, had time permitted, by quoting certain passages from the Select Committee's report. Any detailed analysis of the Government's housing programme will show that it is creating a massive housing disaster for the next generation. Our children will face appalling difficulties when they enter the housing market. They will find great difficulty in obtaining any house at all. Not only will the public sector fall to disaster levels; the private sector is unlikely to achieve anything like the levels that have been set.
The figures of estimated housing need that I quoted from the 1977 Green Paper were based on the assumption of 170,000 starts in the private sector. The house building figures for the private sector published by the Secretary of State last week show that in 1980 only 98,000 houses were started—in the private sector—half the figure on which the Green Paper was based—and the seasonally-adjusted figures for the public sector in the last quarter of 1980, when only 9,700 houses were started, suggest an annual rate of starts of little over 38,000, when the Green Paper estimated a need for 120,000. That is a disastrous record. In both housing sectors that record carries disastrous implications of what is likely to happen to anybody seeking housing in the foreseeable future.
The Select Committee predicted a shortfall of 500,000 dwellings by 1983–84. Every figure that has been published since then, and every informed opinion that has appeared, support our analysis. It is probable that the Committee was over-optimistic, because it did not know about the moratorium.
My right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) referred to what that policy was doing not only to those in housing need but to the construction industry. I shall not repeat it. Instead, I urge the Secretary of State to reconsider his views and to read with great care the devastating criticisms of his Government's economic policies, which were neatly summarised in The Sunday Times issue from which he quoted so selectively. I hope that he will reform and change his policies while there is still time.
6.20 pm
Mr. W. Benyon: Viewing the serried ranks on the Opposition Benches, one would not think that this was a major debate of criticism and censure of the Government for their housing policy. I had to leave the Chamber during the speech of the right hon. Member for Manchester, Ardwick (Mr. Kaufman), but I heard enough to know that it set the tone of the debate—a yah-boo debate, which gets us nowhere.
I do not deny the Opposition's right to criticise the Government's housing policy. I have done it myself from

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time to time. But should there not be just a touch of humility, a passing reference to past responsibilities, when so much has gone before? After all, the right hon. Gentleman, as the Opposition's spokesman, could release overnight, at a stroke, literally millions of dwellings. I listened to the broadcast at lunchtime. "Are you sitting comfortably?" he asked. I wonder how he goes to bed comfortably at night when he is responsible for that.
The right hon. Gentleman need not say that he supports shorthold. All that he needs to say is "This is an experiment. We think that it is wrong. We do not agree with it. But if we came to power we shall not alter tenancies with less than five years to run." That would give the experiment a chance; everyone could judge whether it was working. People could judge whether it was as the right hon. Gentleman says, the start of Rachmanism, which none of us believe it is, because the restrictions to it are great enough. If the right hon. Gentleman did that, the matter would be proved one way or another. It would give shorthold a chance, but he is not prepared to do that.
Of course, the figures quoted by the Select Committee and in the article in The Sunday Times do not make good reading. I do not deny that. But they should be taken as a whole. As my right hon. Friend the Secretary of State said, they should be taken in conjunction with the figures for renovation. It is the whole that we are talking about.
However, I must tell my right hon. and hon. Friends frankly that I think that housing has had an unfair share of the reduction in Government expenditure. I fully support the main thrust of their economic policy, but the housing sector has had rather too much to bear compared with other parts of Government expenditure.
Last April I warned the Government that demand was running far in excess of supply, and that unless the position was altered we should get further and further behind. Events have proved that that is happening. All the factors in housing today are combining to create this.
The recession has meant that fewer people can buy. We estimate that in my own relatively prosperous area a minimum of 30 per cent. of those coming to the new city of Milton Keynes cannot afford a starter home, and are therefore entirely dependent on the rented sector.
The demographic bulge is leaving the schools and going to work. Therefore, the demand there is much greater. There will be more people looking for housing in the next few years then there were previously. There is also the general break-up of the structure of the family.
As I have said, I strongly support the main thrust of the Government's economic policy. So what can be done within the restraints of Government spending? The Government can forget the private rented sector as a means of producing any more dwellings, as long as the Opposition's policy on that matter continues.
Owner-occupation is limited by the general level of prosperity. Although we are not likely to see any great advance there, I strongly support the measures that my right hon. Friend has taken in this respect. However, I believe that the time has come to consider the general level of income tax and capital tax advantages for those who buy their own houses in step with the reductions that should also be made in the level of housing subsidies to the public sector.
That brings me to the public sector, in which I include the whole local authority rented sector and the housing
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associations. In these difficult times the approach should be one of great selectivity, selective as to the type of housing—housing for the elderly, single people, and so on—and area. The effort should be concentrated on those areas where the need is acute. We need not worry about areas with housing surplus. The problems of, say, Hackney, are totally different from those of Harrogate. As my right hon. Friend acknowledged this afternoon, decisions on them can be made best by the local authorities.
I have two suggestions. First, when money is limited it is surely right to encourage those who can afford to do so to seek accommodation outside the public sector, in the private sector. I am sure that it comes as no surprise to my right hon. Friends when I say that this is where the right to buy hangs like an albatross around the Government's neck, in exactly the same way as municipalisation hung round the neck of the Labour Party when it was in power.
If the cost of a new council house is £20,000, which is, give or take a little, what it is now, it must be right to offer substantial inducements to those who can afford to do so to move into the private sector. The use of £20,000 in that way must be far more cost-effective than simply building a new house. But a council tenant of long standing has a far bigger inducement, under the right-to-buy provisions, to buy his own house. This is where the difficulty arises.
We shall hear a great deal tonight about higher rents, but I entirely agree with what my right hon. Friend said about the matter. They are inevitable if we are to get more money into housing generally.
Mr. Tony Durant: I am interested in my hon. Friend's view about mortgage relief, but he says at the same time that we need inducements to people to move into the private sector. Can he reconcile those two views?
Mr. Benyon: I was speaking of phased reduction of facilities available to owner-occupiers. What I am really saying is that if we divided the £20,000 that makes one house into inducements—bribery, if one likes to call it that—to the private tenant, that would enable him to start off his bid for his own house with a substantial capital sum and thereby assist the process. Therefore, I believe that the two suggestions are complementary.
If we could complement the stick of higher rents with the carrot of a grant to move into the private sector, everyone would benefit. But under the present housing investment programme allocation the money can be used only for three purposes: new building, mortgages and renovation. I urge the Government to consider this additional option, which would give local authorities more freedom to consider every possibility in a period of very tight money. There would have to be restrictions. The grant could not go to every tenant, or it would be a channel into a relatively cheap form of owner-occupation. Therefore, it must go to tenants of long standing, and it must be circumscribed in other ways as well.
I turn now to the areas of worst housing stress, which, by and large, are controlled by Labour authorities. Here we are in a "punch-on-the-nose" situation. The Government ask "Why are all these houses standing empty?" They are right to ask, for we have had the figures in reply to a question, and they are a disgrace. The council replies "You give us no money. We cannot make them habitable." So the stalemate continues.

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Why not try a new approach—perhaps an experiment on a selective basis in the areas of one or two of the worst authorities?
For every untenanted house sold the council should be offered a substantial addition to their HIP allocation. I know that councils can keep a proportion of the amount for which the houses are sold. It would be cost-effective to offer councils a substantial addition to their HIP allocation. The addition could be made dependent on gaining a response within a certain period. It is worth trying to break the present stalemate.
We need a constructive and imaginative approach to housing. We do not need invective, because that will not get us anywhere. As my right hon. Friend said, there are no soft options in housing, particularly at the moment. We want not party politics but practical solutions.
6.30 pm
Mr. David Winnick: As he has done before, the hon. Member for Buckingham (Mr. Benyon) criticised certain aspects of the Housing Act. We share that criticism. On average, the Government have imposed rent increases of £3.25 on many of our constituents. Those increases are most unfair. There is no justification for them. There might be some justification if it could be shown that the Government were building and improving dwellings at a great rate. Nevertheless, the imposition would still be unjust for our constituents.
As my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) pointed out, the Government have an appalling record. There is nothing to show for the rent increases. Indeed, I consider them highly provocative, particularly as the Government have placed a 6 per cent. limitation on wage increases, which is, in effect, an incomes policy. Many of my constituents will have to pay rent increases of between 20 and 25 per cent.
Mr. Robin Squire: Does not the hon. Gentleman accept that the justification for those rent increases depends not on the Government's building programme—whether or not that is good—but on whether the rent paid by tenants represents a legitimate proportion of their net wage in comparison with former proportions?
Mr. Winnick: Council tenants are now paying a fair share without further substantial rent increases. There is a link between the substantial rent increases and the right to buy. In effect, tenants are being told that it is better to buy. There are provisions in the Housing Act for discounts and so on. Many council tenants do not particularly want to buy their houses, but as a result of these rent increases, they may decide to do so. The Government hope that they will do that. That is another and important reason why we oppose those rent increases.
Before and during the general election campaign the Conservative Party said that matters should be left to local authorities to decide. Conservatives said that Whitehall should not impose a diktat, and so on. What has happened? The Government have imposed rent increases. They have told local authorities that regardless of their wishes and of local circumstances they must sell council dwellings.
The Secretary of State put up the best argument that he could to back up his very shoddy record. He pointed out that many tenants receive rent rebates. In earlier exchanges at Question Time I pointed out that councils would have
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to give rebates on the new, higher rents. Some tenants may not have to pay £3.25, but they will have to pay a substantial increase all the same.
I am a member of the Select Committee on the Environment. It is understandable that it should believe that a reduced number of dwellings will be built in the public sector. It believes that 30,000 council dwellings, or fewer, will be built in the next two or three years. In England there were about 44,000 public sector housing starts last year. That is a disgraceful record, and will only increase the tremendous amount of hardship that already exists.
As was pointed out by my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann), who is Chairman of the Select Committee, the Committee estimates that there will be a shortage of about 500,000 dwellings within a few years. We are heading towards the severest housing crisis that we have seen for a long time. The Secretary of State can be accused of not having put up a fight in the Cabinet. The hon. Member for Buckingham said that as a result of cuts in public expenditure, housing had suffered disproportionately. We agree. The Secretary of State put up no defence in the Cabinet. The Cabinet is very leaky, and if the right hon. Gentleman had put up a fight we would have known about it.
The Secretary of State was a willing and enthusiastic partner to the housing cuts. He is the Secretary of State against housing. No comparison can be drawn between when the Labour Party was in office and now. Under the Labour Government there were cuts that I did not agree with. I made my position clear at the time. I considered that those cuts in public expenditure were unfortunate. Those of us who disagreed made our position clear. Those cuts were not, however, carried out as part of a deliberate housing policy.
The Government are trying to reduce the rented public sector to a minimum. They are encouraging council tenants to buy their own houses. As a result, they are reducing the number of council dwellings. They are not carrying out anything like an adequate building programme. The Government believe that the rented public sector should consist of "welfare housing". Many Tories believe that. They believe that the poorest and some of the elderly should receive council accommodation but that the rest should not.
I take a completely different view. Many people require council accommodation. I am certainly not against owneroccupation. The Labour Government introduced the option mortgage scheme. When the Labour Party was in office it took other measures to encourage owneroccupation. We believe that it is desirable. Nevertheless, we recognise that many—not just the poorest in our society—including semi-professional people such as teachers, are not in a position to get a mortgage. They rely on the local authority to house them. I do not see anything wrong in that, but the Government do.
The Government seem to be running a vendetta against council houses. They imply that it is shameful to be a council tenant unless one is elderly or poor. It is said that rented dwellings could be found in the private sector. Like my right hon. and hon. Friends, I believe that the pledge that we made about shortholds was right and proper.
I look upon the shorthold provision in the Housing Act as a charter for property spivs. I want people to be rehoused. I want them to have adequate and secure

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accommodation. How can such accommodation exist if, after 12 months, the tenant does not know whether the tenancy will be renewed? We have almost returned to the provisions of the Tory Rent Act 1957. That is why we are against the provisions. We do not oppose them because of dogma or because of an obsession about private landlords. [Interruption.] Conservative Members may not agree. However, owner-occupiers have security. If, as a result of certain leasehold provisions, they did not have security of tenure, the Labour Government put that right. We gave added security to owner-occupiers.
Similarly, when tenants are rehoused they should be given security and protection. When tenants bring up families they should not have to worry, month after month, about what will happen to them, or about where they can find other accommodation. They should not have to worry about whether they will be put out on to the streets. Government supporters may disagree passionately with us, but that is our view, and that is why we are against shorthold tenancies. We do not believe that they provide an answer to the housing crisis.
In the West Midlands, the waiting list totals about 100,000. In my borough, the list is more than 7,000, whereas in 1979 it was less than 4,000. In Walsall, 115 houses are under construction as a result of contracts made prior to April 1979. No new housing contracts have been placed since then. That is the position in a part of the country that has been designated a housing stress area, and where there is tremendous hardship. I have a constant number of people coming to my surgeries and writing to me imploring me to help them get houses. They are quite genuine cases. I repeat that, despite this, there are only 115 houses under construction, and no new housing contracts have been made since April 1979.
The Secretary of State spoke about improvements. He emphasised the need to carry out improvements and modernisations. The Minister of Housing and Construction is listening to this debate. I can tell him that there are many pre-war council dwellings in my borough that need modernising. We have a programme of 1,400. As a result of the reduction in the housing investment programme it is estimated that in the next financial year it is likely that the total number of dwellings modernised will be 100. What about those tenants who have been waiting year after year for their homes to be modernised and who now face substantial rent increases? They will still be required to pay those higher rents. As a result of the housing programme reduction, and the rest, they have to suffer. That is our accusation against the Government.
We understand that there are profound differences between the two sides of the House. It would be foolish to pretend otherwise. However, I remind Government supporters that, apart from the most private details of a person's life, two factors matter to him most. They are employment and housing. Millions of ordinary people without substantial wealth, and who are not likely to inherit money, want two things, apart from personal happness. They want employment and to be able to remain in employment during their working lives, and they want decent, adequate accommodation, where they can live and bring up their families. Those are the two most essential things for millions of ordinary people, because achieving them will mean that they can live with dignity.
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This Government have undermined both. Unemployment is at a level that has not been seen since the 1930s, and fewer council dwellings are being built today than at any time since the 1920s.
If the Government were to modify their policy—if they took building and construction workers out of the dole queues and allowed them to do their job of building and modernising homes—they would provide employment for those people so that they did not have to rot away their lives in dole queues, and in so doing they would provide the accommodation that our constituents need so desperately.
We ask the Government, perhaps without any chance of success, to change their housing policy and, by doing so, provide the essential homes that our people need.
6.45 pm
Mr. John Heddle (Lichfield and Tarnworth): I begin by declaring an interest as a consultant to a firm of chartered surveyors which probably, although I take no active part in the business, has members of the construction industry amongst its clients.
I congratulate the Opposition on the timing of this debate. Public housing has reached the crossroads. Taxpayers can no longer afford to provide vast subsidies indiscriminately. It is now time for everyone directly or indirectly involved—in this House and in the local authorities—to take a step back, to endeavour to cast aside dogma and prejudice, and to see precisely how we can house our people with pride and with dignity to which the hon. Member for Walsall, North (Mr. Winnick) referred on a more sensible, prudent and realistic basis.
I hope he will forgive me if I do not take up any of the remarks of the hon. Member for Walsall, North. His constituency adjoins my own, and that is why I was on the point of intervening when he referred to the waiting list in the West Midlands. The House always listens to the hon. Gentleman with interest, but I think that I speak for all my hon. Friends when I say that I cannot agree with anything that he said other than his remark that everyone seeks to have a job and a home. Of course the argument is whether the majority of people look to the Government to provide the jobs and the homes or the private sector.
My hon. Friend the Member for Buckingham (Mr. Benyon) speaks most eloquently about housing matters, and I found myself agreeing with him when he called for a bipartisan approach with the public and private sectors working hand in hand to provide the accommodation which is needed so desperately.
I also congratulate the Opposition on proposing this motion today because it coincides with the recent announcement by the Building Societies Association that the rate of increase in house prices declined sharply in 1980. That must be very important to those who have to make their pay packets cover their mortgage interest. The same Building Societies Association report reminded us that during the last year of the Labour Government the average prices of houses, new and second hand, rose by 26½ per cent. In the following 12 months, the first year of this Administration, they rose by only 7 per cent. The report goes on to say that prices are now more or less static, and the majority of home owners must be grateful to the Government for that.
The Opposition motion also comes at a time when the majority of the major banks have entered the market for providing mortgage finance. I hope that the greater

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competition which the banks will provide to the building societies, especially at the lower end of the market—I am sure that they will lower their sights from £20,000 mortgages down to £5,000 mortgages—will mean a constant flow of funds to first-time young married buyers and help them to obtain homes more quickly. I hope also that that constant flow of funds which the banks will provide will eliminate for all time the risk of the house prices spiral which has always occurred with the peaks and troughs of building society finance.
I also believe that the greater competition which the banks will provide to the building societies will encourage building societies to be much more flexible about the types of property on which they are willing to lend, especially to first-time buyers. I have in mind the sort of house in which many hon. Members on both sides of the House started—an unimproved urban terrace property with two reception rooms, three bedrooms and no bathroom—and which some building societies do not consider to be eligible for a mortgage. If the increase in the available funds provided by the intervention of banks in the mortgage market makes properties of that kind mortgageable and saleable, that must help the construction industry.
This debate also coincides with the tragic case of Mrs. Jean Lawrence of Basingstoke. Hon. Members will recall that she let her house on a short tenancy and now finds, having returned from visiting relatives abroad, that she cannot regain possession. Her home is no longer her castle, despite the fact that the tenancy has expired.
In the Housing Act 1980, my right hon. Friend has moved a long way to encourage owners to increase the number of homes available for those who deserve the right to rent. The hon. Member for Walsall, North, referred especially to teachers. What he failed to say was that teachers and others who need to move around the country in their job do not necessarily want to rent from the local council. They do not mind from whom they rent. In fact, they would probably rather rent from a private owner whose property was likely to be more individual and more attractive than many council houses. My right hon. Friend has encouraged private owners to make property available to let by reducing the rent registration period from three years to two years. But there is still a long way to go before an owner will feel absolutely certain of a fair and realistic return on his investment, a return that keeps pace with inflation.
The law should be drawn tighter still to protect honest and respectable citizens, like Mrs. Lawrence, from the indignity, humiliation and utter absurdity of having to become a squatter in her own home. These laws are an utter disgrace and require immediate overhaul.
Mr. D. N. Campbell-Savours: Hear, hear.
Mr. Heddle: The hon. Member for Workington (Mr. Campbell-Savours) says "Hear, hear". I remind him that the Act to which I am referring, the Protection from Eviction Act 1977, was enacted by his Party.
This debate coincides with the reports of local authorities, mostly Labour-controlled authorities, which are "foot-dragging" in processing applications from tenants who wish to exercise the right to buy their own homes. This debate coincides with the decision just three weeks ago of the Lambeth county court which rightly
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determined that a tenant who wished to exercise his right to buy was made to wait three months while his application was shuffled from one in-tray to another bureaucratic out-tray into one red-taped pending tray—a denial of the right of the individual to exercise his rights enacted in this place.
The debate coincides with the decision of one Labour-controlled local authority in the West Midlands, Sandwell, which at the moment is contemplating spending £20,000 of its ratepayers' money on printing a leaflet specifically designed to dissuade council tenants from exercising their democratic right to buy. I ask my right hon. Friend to investigate the activities of Lambeth and Sandwell and local authorities such as Gateshead metropolitan borough council, which has threatened tenants who wish to buy by putting problem tenants in homes next door to them.
Mr. Campbell-Savours: The hon. Gentleman says that a local authority has spent money trying to convince tenants not to buy. Perhaps he will tell the House how much money the Government have spent trying to get tenants to buy.
Mr. Heddle: The hon. Gentleman need only refer to the Official Report of the Committee proceedings on the Housing Bill to find an answer to his question. Is it not reasonable that a Government should spend a certain amount of taxpayers' money on telling the public what their rights are under the law?
Mr. Bernard Conlan: I think that the hon. Gentleman, on reflection, will regret the slur that he has made on the Gateshead council. The hon. Gentleman is mistaken. When he checks the facts—and I shall assist him in doing that—he will find that the threat he alleges has not been made.
Mr. Heddle: I thank the hon. Member for his kind offer. I declare an interest here. I first met the hon. Gentleman when I was a candidate in February 1974 for Gateshead, West, and I have held him in the highest possible esteem ever since. I must apologise because I did not drop him a note, as is the custom of the House, to tell him that I intended to refer to Gateshead. I apologise on that score. I mentioned the subject merely because I participated in a BBC "News-night" programme some three weeks ago when Gateshead council was given as an example of coercion. So I have merely quoted an authoritative source, the BBC. If the hon. Gentleman is correct and I am incorrect, I apologise both on my own behalf and on behalf of the BBC.
I ask my right hon. Friend to ensure, if possible, that no member of NALGO is found negligent in the discharge of his duty in processing applications for the right to buy as swiftly, speedily and efficently as possible. The Government should try to create a balanced community in every town in the land by mixing owner-occupation with council tenancies, private tenancies and housing association tenancies. The right to buy one's own home—and here I depart from the philosophy of the Labour Party—is as fundamental as the right to buy one's own food and clothes. Anyone who seeks to deny that light is no friend of liberty and should be brought to book.
This debate comes at a time, too, when more and more councillors and housing officers are calling for a review of the housing waiting lists procedure with a view to removing the many distortions and duplications which are responsible for figures which distort the real picture of

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housing need. Bogus housing demand leads to real hardship for cases of genuine need. That is why I sought to intervene in the speech of the hon. Member for Walsall, North. He said that in his borough, which is almost adjacent to mine, there are 7,000 people on the council waiting list. After he has checked the facts with his chief executive, perhaps he will be kind enough to write to me and confirm categorically that those 7,000 people are presently without a home.
I can tell the hon. Gentleman now that that will not be so. Only a small proportion of those 7,000 need to be housed by the local authority. A considerable number of those people are on the housing waiting list because if a suitable property became available they would like to exchange a two-bedroomed house for a for a threebedroomed house a three-bedroom house for a twobedroom house, perhaps a bungalow for a flat, perhaps a high-rise flat for a cottage. Those people are still on the housing waiting lists and are included in the figure of 7,000 quoted by the hon. Member for Walsall, North.
The debate comes at a time when one major building society at least has declared its involvement in providing finance for new house building and its dedication to extending its influence in the rented sector and the application of more concentrated muscle in urban renewal schemes. That must be right and good for the construction industry. I welcome the decision of the Abbey Housing Association to build homes to let at cost rents on a noprofit basis in my own constituency under the assured tenancy provisions of the Housing Act 1980.
The building societies are used to being treated like a political football. They are used to being attacked from both sides of the political fence. They are used to being accused of being improvident in their mortgage lending and, at the same time, being too conservative in their lending policy. But if more building societies took the initiative now provided for them in the Housing Act to build homes to rent and homes at cost for sale, and if more building societies took the initiative that has been taken by the Abbey to participate in housing action areas, the greater still would be their contribution to solving the housing problem and providing work for the construction industry.
This debate is timely, too, because it comes just four weeks before the Budget. I ask my right hon. Friend the Secretary of State to agree that house buyers abound aplenty, that mortgage finance is readily and steadily available, and that the steady supply of land for building is cruicial to the construction industry if it is to continue to play its vital part in being the principal and prime provider of homes to rent and for sale—and, of course, the largest employer of skilled labour. A healthy construction industry breathes life, health, vitality and activity into a number of other coincident industries—for example, the domestic appliance industry, the furniture industry, and so on. I invite my right hon. Friend to agree that the last Administration's punitive Development Land Tax Act 1976, despite two significant improvements made by this Administration in the last two Budgets, still cries out for a radical overhaul. The Act fails to distinguish between windfall or speculative gains made in the perfect pursuit of construction and earned profits. It is a tax that becomes
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payable even before it is due and irrespective of whether any profit is made on a development as a consequence of a deemed disposal.
The Act is a tax on inflation. It conflicts with the general acceptance—at least since the introduction of stock appreciation relief—of the need to avoid tax inflationary gains in the value of land held as stock in trade.
The Development Land Tax Act will eventually destroy the asset structure of the house building industry and will continue to put pressure on the demand for bank credit, unless it is radically altered and altered soon. The tax does not allow for development profits to be offset against development losses. It is, I believe, the only form of tax in this country where one cannot offset a loss against a profit. There are inadequate allowances for the cost of developments to be offset against the tax on gains—for example, the interest on the cost of holding land.
It is a tax that is so bureaucratic that it involves many senior managers in the construction industry spending a great deal of time unprofitably and unproductively wading through a plethora of some 28 forms sent to them from the development land tax office in Darlington.
I ask my right hon. Friend to have discussions with my right hon. and learned Friend the Chancellor of the Exchequer to see whether the worst excesses and anomalies of the hideous inheritance of this Act, which is bugging the prosperity of the construction industry, cannot be eliminated in the forthcoming Budget or the next one.
The only way that the nation can put its own house in order is by adopting a bipartisan, undogmatic approach, without prejudice, where the public sector can walk hand in hand with the private sector. The distortion and homelessness created by generations of rent control and security of tenure will only cause council house waiting lists to grow longer and longer. The Labour Party should adopt the policy put forward by my hon. Friend the Member for Buckingham. For goodness sake, let us give shorthold a try. If the Labour Party ever returns to government, it can then have the satisfaction of saying "We told you so." For the benefit of the homeless, who really would like the right to rent—those for whom Labour Members today shed crocodile tears—I ask them to give shorthold an opportunity to succeed. Millions upon millions crave the right and the responsibility to own their own homes. I ask the Labour Party to give them a chance.
Councils can build homes for those in genuine need only if the money locked up in bricks and mortar is released. The Opposition should encourage Labourcontrolled authorities to sell as many of their council houses as possible in order to recycle the taxpayers' money to provide homes for those in genuine need.
Building societies and the private sector have a constructive part to play in providing homes to rent. I prophesy that the construction industry will rise to the challenge, as it has done before, and meet the demand that undoubtedly exists in the private sector if it is freed from petty bureaucracy and excessive taxation.
7.2 pm
Mr. Frank Allaun: I hope that the hon. Member for Lichfield and Tamworth (Mr. Heddle) will forgive me if I do not follow him.
I shall try to show that the Secretary of State is mainly responsible for the disastrous housing situation. He would be more truly known as the "Anti-Housing Minister" or the

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"No-Housing Minister." I do not know how he has the effrontery to come to the House. He should resign. He has already halved the public and private housing programme. Last year's total was the worst since the 1920s.
I go further. Although I have not checked, I believe that last year's programme was the worst this century, with the exception of one year in the 1920s. This year's will be lower still.
The right hon. Gentleman is using a five-barelled gun to kill housing. He has used five brutal shots to halve the programme: a six-month halt to all building improvement and loans to private buyers from local authorities; a compulsory rent increase of £3·25 a week plus huge rate rises; extremely high interest rates for mortgagors; a 51 per cent. cut in all housing expenditure by 1983; and finally, he has compelled local authorities to sell their best houses.
The £3·25 average rent rise was caused by slashing the housing subsidy. It follows a £2·10 increase last year. However, as was clear from the right hon. Gentleman's speech, at the same time he is increasing the subsidy to owner-occupiers by £500 million a year. There are about 6 million council tenants and about 6 million mortgagors. The total subsidies that they receive are also about equal.
May I make it clear that the Labour Party is not in favour of reducing tax relief for owner-occupiers, except for the very rich, who get a 60 per cent. reduction on their mortgage interest payments? That rate should be reduced to the standard rate of 30 per cent. We say "Hands off the subsidy for both sections". It is the Tory Party leaders who are attempting to set owner-occupiers against council tenants. Both sections are suffering the same burden—inordinate interest charges—and they should unite against them.
However, I repeat that it is grossly unfair to cut a tenant's subsidy by £5·35 a week over two years, while increasing the subsidy to owner-occupiers by £500 million.
Mr. Latham: Does the hon. Gentleman agree that if the mortgage interest rate goes down again, as I am sure that it will shortly, the subsidy to owner-occupiers will fall?
Mr. Allaun: Yes, but the mortgage interest rate has been very high since this Government came to office. If it goes up, the subsidy also goes up. I do not blame the building societies for the very high interest rates. They are even greater victims of the high mimimum lending rate than the remainder of us.
Housing expenditure has been cut by 51 per cent. There are 22 months to go before we reach 1983, when the colossal arms programme will have been increased by no less than 14 per cent. in real terms. There is no shortage of money. It is being put to the wrong use.
The Government's housing cuts have been condemned by almost everyone with the exception of the Cabinet and hon. Members on the Government Benches. The Opposition comes from non-political organisations and other organisations which are normally pro-Conservative such as the National Federation of Building Trade Employers, which through CABIN has contributed millions to the Tory election fund.
There is a long list of those who oppose this Government's housing policy: the Royal Institute of British Architects, the National Federation of Building
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Trades Employers, the Group of Eight, the NEDC, Shelter, the Association of Municipal authorities, most other local authorities, the TUC, the building trade unions, the housing societies and the National Federation of Tenants Associations. I need not add that the Labour Party even more strongly condemns that policy.
Local authorities have been put in an impossible position. The men and women in the Cabinet cause the misery, but some people mistakenly blame the town hall, since it is nearest at hand. It has to put the rents up and the local authority cannot react. It is bound by Government decisions and cuts in its money supply. It is in a straightjacket. All the councillors can do is make it unmistakeably clear that the blame lies on the Ministers in Westminster.
What is the solution to Britain's problem? I believe that it is to dash for growth and to spend our way out of the slump. It is to set the 300,000 unemployed building operatives building houses for the 1.2 million families on the waiting list. By 1984 that number will have grown to 2 million.
The hon. Member for Lichfield and Tamworth referred to bogus waiting lists. Most local authorities check the waiting list every year. Moreover, he should know that thousands of tenants do not bother to put their names on the waiting list because they know that it is a waste of time and that their situation is hopeless.
The cost to the Chancellor of keeping a man on average pay on the dole, if he has a wife and two children, is £120 a week including loss of income tax. For that sum the man could be fully employed and could be simultaneously adding more than that sum in production for the country's good.
Far from killing the housing industry, the Government should be massively increasing it. It is clear that they will not. That is one reason why the Government should be put out.
The Secretary of State talked about inflation. However, Government expenditure is as much when those men are unemployed as when they are working. If they were working, there would be products to balance their wages and therefore there would be less inflation.
Apart from the financial loss, one must consider the human cost. Last Sunday a father and mother who have two children, one aged 3 years and the other aged 10 months, came to my advice bureau. They live in a twobedroomed flat, but they cannot use either of the bedrooms because of excessive damp and mould. That is the curse of the working classes. Oscar Wilde once said it was not drink that was the curse of the working classes but that work was the curse of the drinking classes. I believe that today, damp is the curse of the working classes.
All four of that family sleep in the living-room. The 10-months-old baby is in Pendlebury children's hospital. The other little girl has skin and lung complaints, which is not unnatural in those circumstances. The mother is taking tablets for her nerves and has recently lost 2 stones in weight. They have been in that accommodation for three years, since the first baby was bora. Thousands of families are in such circumstances. The Government are doing little to help but are worsening their chances. What hope is there for that family unless the Secretary of State takes the locks off housing and gives the councils the go-ahead and the subsidy?
If the Secretary of State wants to see how the shortage can break up families and cause domestic unhappiness, I suggest that he watches the Labour Party political

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broadcast on television at 9 o'clock tonight. I conclude as I began—let the Secretary of State resign and let us get the Government out as soon as possible.
7.4 pm
Mr. Tony Durant: As usual, the same hon. Members are here for the housing debate. The only difference is that they have changed sides. The same arguments are repeated each time. Opposition Members defend their Government, saying that they were doing their best—with the exception of the hon. Members for Liverpool, Walton (Mr. Heffer) and Salford, East (Mr. Allaun), both of whom attacked the housing record of their Government. The rest simply changed positions and put forward different arguments.
We must agree that in recent times the story of housing has not been a good one, whichever party has been in power. The nation has overspent beyond its wildest imagination. During the period of office of the Labour Government the national debt rose from £40 billion to £80 billion. They borrowed more money than all the Governments before them, since the Crimean war. That is not a bad record of borrowing. It has to be paid for by someone—probably my children.
Mr. Arthur Lewis: Who to?
Mr. Durant: Probably to the National Union of Mineworkers' investment in Government stock. It is involved in the national debt. The answer to the hon. Gentleman's question is that it is paid to everyone.
The construction industry is a key industry. We have talked less about it so far than about housing. One of the problems of the construction industry is that it became too orientated to the public sector. Much of British industry has gone through that phase of constant dependence on the public sector for its business and activity. It is going through a traumatic time in shifting from the public to the private sector. It is uncomfortable, but it has to be done.
One of the industry's key problems is lack of land. With respect to my Government, I do not believe that they are getting on with this matter fast enough. They are not kicking the nationalised industries hard enough, or looking at their Departments hard enough. The Ministry of Defence is a good example. Much could be done to release land. More must be done at ministerial level to release land that could be used for development. Developers and the construction industry need land.
We have heard that planning is being speeded up, but it is too slow. I heard about a company that put up a plant in Scotland. It took two and a half years to obtain permission to build the darned thing. That is barmy, by anyone's standards. We must speed up planning. We must be more active and virile about it. I should like to run a competition between local authorities to see how many plans they could pass and not how many they could stop, so that councillors could say that they had passed X number of plans and not that they had stopped them. That is one of the main handicaps in getting things going.
We have also agreed that there are different needs for housing in different parts of the country. It has become more of a regional argument than a national one. We must understand that in all our debates on housing. The House Builders Federation has made a list of things that it would like to see done. I support some of them. It says that the
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minimum lending rate should be reduced. That is also my belief. It is too high, and it ought to come down now. I am not convinced by the Government's arguments about it. It is time for a movement on this front.
There should also be capital tax allowances for factory development. There are allowances for the equipment inside factories, but not for the structure. The construction industry would receive tremendous help if capital allowances were more liberal for the buildings, and not only for the equipment inside. There should be an uplift of the exemption on stamp duty, to £30,000. The level is too low for the first-time buyer and the small purchaser. An examination of VAT on repairs and maintenance might be considered.
Local government often causes difficulties for the construction industry because it does not take the moratorium seriously. It goes ahead on the assumption that it can spend more, and puts things out to contract. The contractors make estimates and spend a great deal of money, then the moratorium applies, and they are left holding the baby. That is entirely due to local government assuming that the Government will not be tough with the moratorium. I hope that that lesson has now been learnt and that there will be a more cautious approach.
The budget of the housing associations was reduced by 11 per cent. in 1979–80, but the Government have this year maintained it, in real terms, at the new figure. I welcome the ending of the double scrutiny of plans, by the DOE and the Housing Corporation, which caused confusion for housing associations. I urge the Minister for Housing and Construction to consider co-operatives. I am not convinced that the Housing Corporation takes the cooperative movement seriously enough. Most co-operatives are the result of pressure, either from the threat of being taken over by developers or many other pressures. Much depends on the good will of the people in those properties. I urge the Minister to ask the chairman of the corporation not to exclude the movement from the corporation's work.
It is a pity that the Labour Party did not give shorthold a chance. It took a dogmatic view, instead of simply reserving its position and letting the thing run. Shorthold was, after all, an attempt to do something.
Mrs. Jean Lawrence has been mentioned. Since she lives near my constituency, I should like to read from an editorial that appeared in my local paper. I assure the right hon. Member for Manchester, Ardwick (Mr. Kaufman), whose tendency to quote had to be curbed, that it is only a short quotation. Under the heading "Homeless", it said:
"The plight of widow Mrs. Jean Lawrence highlights once again the urgent need for action in the law relating to tenants.
When her husband died Mrs. Lawrence went away to America for three months, letting her home to a family of three. In the leasing agreement a period of three months was specifically stated. But when Mrs. Lawrence returned home the family refused to move. She was left homeless herself until she was able to enter her own home when the family was out and she exerted squatters' rights.
Mrs. Lawrence has shown the law to be an absolute nonsense in this respect. The agreement was specific. It is her home. She always intended returning. The true rights of the homeless must be preserved, of course, but in the name of justice the stupidities of the law must be changed."
The local authority, rightly, has to take action against that woman. It is not the council's fault—it is the current law of the land—but it is nonsense that this should happen.
Mr. Douglas-Mann: Does the hon. Gentleman not accept that when there are disputed rights it is essential for the law to provide that disputes must be resolved by the

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courts? There is now an expedited procedure, which the lady could have used to obtain a court order in a matter of days. Does the hon. Gentleman not also accept the point made in a letter to The Times, I think yesterday, by Professor Martin Partington, that the Rent Acts should be reviewed, but on the basis of what the law is and not what the media pretend it to be?
Mr. Durant: The problem is that that lady has no confidence in the courts, because the general experience is that such families are given time. I am not criticising the courts, but she took that action because she felt—wrongly, I accept—that there was no assurance that she would get her rights. I quote that only to show what stupidities we create when we pass laws.
It was this Government who gave security of tenure to council tenants. The Labour Government produced a Green Paper on the Rent Acts that was useful and helpful but —I wonder whether it is symbolic that the document had a yellow cover—they ran away from implementing it. The proposals if the document could have done something about the Rent Acts.
I urge the Government to work hard on the Treasury for an increase in the money available for improvement grants. This is a better part of the housing record, but it is still the right place for the money. It will provide work for many small builders and opportunities for ancillary trades, such as those who make window frames, pipes and toilets. Such action would help the construction industry during a difficult time and provide work, particularly for skilled men. It would keep the industry alive.
There are some signs of an uplift in industrial building, which is always a sign of confidence in the future, and there are signs of an increase in house building. The improvement is marginal and we must not get carried away, but there are some glimmers of light. If the Government take seriously some of the points made in this debate the housing picture may improve.
7.26 pm
Mr. Roy Hughes: My overriding thought in this debate is about the level of unemployment. The figure is nearly 2½ million, with reliable forecasts that it will rise to 3 million soon and to 3½ million by the middle of next year. There have even been astronomical forecasts by some influential bodies that the figure will eventually rise to 5 million. To accept this situation and do little about it means adhering to the law of the jungle. That is what the Secretary of State seemed to be doing today. He talked as if it was "back to the 1930s" with a vengeance.
Many school leavers are condemned to the scrap heap before they have been employed at all. The economy is certainly suffering from a lack of effective demand. The classic Keynesian analysis now applies. The capacity is available, the plant is lying idle and builders' yards are becoming almost ancient monuments. Modern Government must intervene to regulate things and create demand. This is where the building and construction industry has such a vital part to play in stimulating the economy and providing jobs for building workers on the dole. The economy generally would benefit from the spinoff.
Housing, both public and private, has been run down to desperate levels. A housing drive at the present time, apart from the beneficial employment factors, could also supply a basic human need. We are facing a rapidly
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deteriorating housing situation. Many hon. Members could speak from their experience in their surgeries and from their postbags of young couples, perhaps living with in-laws, seeking a home for the first time; of others living in a rented flat, in some cases in only one room, with inadequate facilities. Often the premises are damp. There may be a young child with a chest complaint. Often, too, those young couples are paying a prohibitive rent.
The hon. Member for Lichfield and Tamworth (Mr. Heddle) mentioned housing waiting lists. In my constituency there are over 5,000 applicants on the waiting list, but the housing manager assures me that 3,500 of that number are what are known as active applicants—in other words, people who are urgently seeking a home. Likewise, he assures me that many young couples, clue to this deteriorating situation, will now have to wait several years for a home of their own.
All over the country, too, housing maintenance is being neglected. This is merely building up a legacy of unfit houses for future generations to deal with.
Mr. W. R. Rees-Davies: Does the hon. Gentleman agree that the scheme for improvement and renovation grants introduced on 15 December was the largest and most imaginative ever produced? It will enable the sub-standard houses to which he is referring to be put into good repair. Whatever is done about new starts or new housing, this is a really magnificent Government policy which can ensure that many of the sub-standard houses can be brought to a condition in which his constituents will be able to have a home.
Mr. Hughes: My impression is a little different from that of the hon. and learned Gentleman. When we have looked at the question of the unfitness of older properties, we have found that there has been little incentive for owners to improve those properties. The grants are still insufficient to keep up with the level of inflation, and the ball is certainly in the Government's court. If no action is taken over those properties, eventually they will be sacrificed to the bulldozer. The cost then will be not only the financial one of providing new homes; there will also be the tremendous social cost involved in breaking up communities.
In Newport there has been much redevelopment work, with the clearance of older areas. Many of the properties were built in the last century. This work has been going on for the past 16 or 17 years. The situation in Newport has recently come to the attention of the Daily Mail, which on 5 February made some sarcastic references to it. Such references do not help, because the work that is going ahead is essential. It is up to the Government to provide the money so that the work can be carried out as expeditiously as possible. As on many other issues, the Daily Mail was again tending to mislead its readers.
It is worth pointing out that even in these difficult economic times Newport is still attracting important sections of industry. For instance, there has been the recent Inmos project for the microchip industry, which will eventually provide about 3,000 jobs. Work has started on that establishment. Likewise, Newport is a strong candidate for the new Nissan car plant, which would provide considerable work for the building and construction industry.
Newport is geographically well situated, with motorway links to the Midlands and to the South-East of

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England, high speed trains, and also an efficient port. Given a favourable boost to the economy—and particualarly the stimulation of the building and construction industry—Newport can again emerge as a key industrial town, helping to provide the wealth of the nation, and with a pleasant environment for people to live in.
What we need now are modern homes as well. The building and construction industry has a major role to play in stimulating demand and boosting the economy. Housing is vital in this respect, in addition to providing a basic and crying social need. Employers and trade unions agree that this need is not being met by the Government. The Government could make a start by introducing a dramatic reduction in the level of interest rates. That would help mortgage payers—particularly young couples who have undertaken the venture of going in for their own homes. But the tragedy is that the Government are bound to their liblind dogma, which is leading to the wholesale destruction of industry and to a rapidly deteriorating housing position. The result of their policy is mass unemployment.
7.37 pm
Mr. W. R. Rees-Davies: I do not intend to be long, I propose, subject to one thing, to deal with the private rented sector. I apologise, Mr. Deputy Speaker, for having been absent from the Chamber between 6 pm and 7 pm. I was serving on the Select Committee on Social Services. That was the reason for my absence.
It is a very sad fact that for the private rented sector the Labour Party shows a hysteria almost like that shown during the Spanish Civil War. It was the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) who, speaking from the Opposition Front Bench in January 1980, said that the private landlord was an anachronism in the modern age. It was the present Opposition Front Bench spokesman—the right hon. Member for Manchester, Ardwick (Mr. Kaufman)—who said quite recently that he subscribed entirely to that view, and that the Labour Party proposed the abolition of shorthold tenancies.
I should like to deal briefly with one or two matters of great importance in relation to the policy of the Government. The Under-Secretary of State for the Environment—my right hon. Friend the Member for Hampstead (Mr. Finsberg)—was largely responsible for the drafting of circular 21/80, beyond doubt one of the finest circulars ever sent out by his Department. It deals with the Government's policy for carrying out an immense extension of the capacity that exists for grants to be given to people in the private sector, whether landlord, tenant, or owner-occupier, on a scale far greater than anything put forward by any Government hitherto. The hon. Member for Liverpool, Edge Hill (Mr. Alton) referred to this aspect in an intervention. If we proceed to restore many thousands of sub-standard houses to enable them to be purchased by owner-occupiers, including tenants who are already in them, we can extend improvement grants and raise standards. In that way we can maintain the old stock of houses, both pre-1900 and post-1900.
The Government have realised that. They have further realised that although only 13 per cent. of our housing
922
supply is in the private rented sector, it is plain that not only housing associations but private landlords can play a real part in restoring to decent standards houses that can provide many homes in constituencies such as the one represented by the hon. Member for Newport (Mr. Hughes).
Labour Members seem to have the crazy idea that a rented house must be a council house. I accept that in this context it must be a rented house, but the controls that the Government have retained mean that if a person is to obtain an improvement grant or a renovation grant to bring the property to standards that are first-class, he has to guarantee that the property will be rented for five years. It is necessary to give an undertaking so to do, and if that is not done there is an obligation to return the grant that is outstanding.
The Government have increased the grants to 75 per cent., and in cases of hardship it is possible to obtain a 90 per cent. grant. They have increased the standards so that properties can be brought to the standards expected of a modern home. This will enable estates throughout the country, but especially in the Midlands, the North and the North-East—where properties in some areas have been declining for many years—to be brought to decent standards with effective control over the period of the letting.
It is most unfortunate that Labour Members do not give a fair wind to shorthold tenancies. I have an interest to declare. I was one of two hon. Members responsible for inventing the idea of shorthold tenancies. My hon. Friend the Under-Secretary of State may remember that I wrote to him a year ago asking for certain alterations in the present structure of shorthold tenancies. I ventured to observe that the scheme would fail because the rent officers would fix rents on the old criteria—for example, fair rents and rent-regulated tenancies. If that is done for vacant property, which is the prerequisite of the shorthold tenancy, the rent cannot be fixed at such a low level. That is because no one will accept such a tenancy.
I decided to find two concrete examples in the London area and to go to the rent officer to ask him to inspect the properties. I found one such property, which was inspected by a rent officer. Two other properties were found by two of my friends and they, too, were inspected. The rent officers were extremely efficient, courteous and quick in carrying out their inspections. They found in each instance that the premises would qualify for a shorthold tenancy. However, on each occasion they suggested a rent that was 25 per cent. below what the landlord and tenant were prepared to agree.
The result is that in the London area and in many other areas no one is making use of shorthold tenancies. If it gives any contentment to Labour Members, I do not think that they will need to bother to abolish the scheme. If it continues as at present it will be totally ineffective. I always said that it would be ineffective unless we provided for freely negotiable rents.
My right hon. and hon. Friends argue that it is better to have a considerable volume of property in our major cities that is available for letting to the youth of the country—it is wanted largely by young people, including young executives, who work in our major cities—at rents that may be considered too high than to have no such property available for letting.
There are, for example, nearly 2,000 empty council properties in Manchester. As in London, there are

923
thousands of houses that could come on to the market and provide satisfactory tenancies, both furnished and unfurnished, for young people in London and throughout the rest of the country, but it seems that rent officers are arriving at rents that are far below those that would result from the application of reasonable criteria.
What can be done about it? Valuations should be made by district valuers. They have the necessary experience and know-how. It is their task, and they can do it very well. The rent officers have never been given any new criteria to use in their assessment of the appropriate rents for shorthold tenancies. It is necessary for my right hon. Friend the Secretary of State to send out criteria to rent officers under the 1980 Act. The guidelines should provide that rent officers consult district valuers in fixing rents that are fair and that they must do so on the basis that it is an empty property when arriving at a fair and reasonable rent between the parties. If they pursue that line, we shall be proceeding along the right road and we shall be able to make shorthold tenancies useful in at leat some estates.
Mr. Campbell-Savours: The hon. and learned Gentleman has undertaken a survey at great effort and expense, and he is repudiating the suggestion made by the Secretary of State and Conservative Members that the party position that has been taken on shorthold tenancies is preventing the success of the scheme. He is arguing that the real reason for the lack of success of these tenancies is that rents are being set at levels that are lower than those that would apply if the free market were operating. If he is saying that, will he make it clear to the House that that is his argument, so that we may quote him in future?
Mr. Rees-Davies: I am saying that the opposition of Labour Members to shorthold tenancies led the Department to advise Ministers to make certain alterations to the scheme which are not in accord with the proposals of my hon. Friend the Member for Hornsey (Mr. Rossi), who is now the Minister for Social Security, and myself. I refer to the recommendations that we published on shorthold tenancies. That change of policy, which was made largely under pressure from Labour Members, has meant that the rent officers, having no different criteria for shorthold tenancies than for rent-resricted tenancies, are fixing rents that would be in line with rents for rent-controlled or rent-resricted tenancies.
The consequence is that shorthold tenancy rents are ludicrously low. On average, they should be 25 per cent. higher. If they were 5 per cent. higher, there would be an availability of immediate accommodation for all those who want it at rents that they would be happy to pay.
I am agreeing with the attitude of Labour Members in one respect. I agree that we cannot have it both ways. We cannot have low rents and availability. People must be able to modernise their premises, and that is extremely expensive. They must do that if they are to get a fair return on their investment. If that is to be achieved, they must be able to charge a rent that is along the lines of a rent that could be perfectly properly fixed by a district valuer. If that were done we could make shortholds effective, and if a Labour Government ever came to office again they would find that by then we should have all the private rented accommodation required to meet the needs of those in the major cities of this country.
We must continue the Government's policy to encourage everybody to repair sub-standard houses by
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means of maintenance grants and other grants that are now readily available. Let us not forget that these include home insulation grants for the elderly and other special grants for those who suffer hardship, all of which are now available as a result of the Govenment's policy.
7.51 pm
Mr. Eric S. Heffer: First, I congratulate my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) on his speech in opening the debate. He scored a whole series of bullseyes, and the Opposition should be grateful to him. He set the tone of the debate—a tone that is very much required in the present situation.
I must declare an interest. Apart for the fact that I think I have spoken in just about every construction debate since I came to the House, I happen to be a member of the Union of Construction, Allied Trades and Technicians. Prior to becoming a member of UCATT, I was a member of the Amalgamated Society of Woodworkers, one of the bodies that came together with other unions to make UCATT.
I also declare another interest, if I may be forgiven a personal reminiscence. When I got married in 1945, on coming out of the Forces at the end of the war, I lived for 12 years in rooms. I was a building worker, building houses on construction sites of all kinds. My wife was a highly skilled secretary working in the hospital service. We could not get a house. Finally, after scraping money together for 12 years, we managed to get a mortgage and we bought a house, or at least put some money down on a house. I mention that personal reminiscence because, if the Government's policy is continued, working people such as my wife and I will be—indeed, they are being—faced with that kind of problem once again.
When constituents come to me they say "Of course, Mr. Heffer, you do not understand our housing problems", because they think of me living in a house of my own, but I do understand. I know the tensions and problems that are caused by living in restricted rooms and the difficulties that occur for people living with in-laws. Even if they are not living with in-laws, when the first child comes along the people from whom they rent the room or rooms no longer want them there.
Although we never solved those problems entirely, we were gradually beginning to ease people out of that situation. For thousands, the problems were not yet solved. Nevertheless, one could see some light at the end of the tunnel. With the Government's policies we are returning to those problems, and that, in itself, is an indictment of what the Government are doing.
The hon. Member for Reading, North (Mr. Durant) was generous enough to admit that I was very critical of my own Government's housing programme. I was indeed, and I am in no way ashamed of that. In my view, we did not build enough houses and we did not tackle the problem as we should have done. But when I consider what the Conservative Government are doing, I realise that the Labour Government's cuts that we criticised were chicken-feed compared with the situation that is now developing.
I wish to say a few words about the construction industry and the effect of Government policy upon the workers and the employers in that industry. I am becoming somewhat embarrassed of late, because I remember what happened during the run-up to the last general election. I was one of the prime targets for the employers. I was the architect of "Building for Britain" and the individual who,

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with our committee, worked out the idea of extending public ownership in the construction industry and devising a scheme for building workers to get rid of casualisation. Clearly, in those days I was a prime target and I never received a brief from the building employers, or if I did it was not one that I could support in the House or read with any interest. Now, however, it is becoming embarrassing, because all of my hon. Friends who are interested in the construction industry receive briefs from employers in the industry. They are sent particularly to Labour Members.
I cite the example of a brief dated 6 February—just a few days ago. It starts with a speech by Mr. Morrison Dunbar, president of the National Federation of Building Trades Employers. He says:
"NFBTE has increasingly come to feel that the way certain aspects of the Government's policies are being managed is having a quite disproportionately damaging effect on the construction industry."
He continues:
"In particular its management of public sector housing programmes and its bias towards cuts in capital, rather than current, expenditure show a degree of inconsistency and expediency which must give us grounds for serious concern."
Mr. Dunbar then gives the figures and says:
"Construction jobless figures have increased from 157,000 to 280,000 in the 12 months between November 1979 and November 1980. These extra 120,000-odd unemployed construction workers will cost at least £600 million."
It is no wonder that public expenditure is cut in one direction and increased in another. The idea that the Government have actually brought down the public sector borrowing requirement is ludicrous. Their public borrowing is greater than any previous Government as a result of the increase in unemployment.
Mr. Dunbar makes the point:
"I do not claim that £600 million of public money invested in construction projects this year would absorb all of those extra unemployed construction workers …
But at least we would be talking about productive investment rather than the waste of dole money and if some such expenditure went into heavily labour-intensive repair and maintenance work then more jobless per pounds of investment would be soaked up."
That is good common sense. I do not know the gentleman, but if he wishes to join the Labour Party, we shall be happy to have him. [HON. MEMBERS: "Which one?"]. I am talking about the only Labour Party. I did not know that there was any other Labour Party.
Let us consider the effect of unemployment upon the future of the industry. Our industry helps young people to acquire skills. They are no longer getting that opportunity. When the recession finally ends—when the Government are out of office and we have sensible policies once again—we shall find that we do not have the trained youngsters to do the jobs. All those young people are not getting the chance to acquire skills. The biggest crime of all is that young people should leave school with no opportunity to learn a trade or obtain a job. That is another indictment of the Government.
I do not intend to make a long speech, because I realise that other hon. Members wish to intervene. I wanted to emphasise those two points—the effect that unemployment is having on the future of the industry and on youth because of no opportunities, and the effect of the cuts in the housing programme. They are the worse housing levels that we have ever had, certainly since well before the end of the Second World War. They take us back even before the 1930s.
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There must be a more positive attitude towards the construction industry. There must be a reversal of Government policy. Public expenditure for the construction industry is a necessity. I worked once for the firm of the hon. Member for Folkestone and Hythe (Sir A. Costain). Had he known that I worked in it, he would probably have sacked me. As a construction employer, he must admit that over the years well over half of the work that his company has undertaken has been carried out for public authorities. Most construction work is in the public sector, be it the local government sector or the central Government sector. That is why the Government must reverse their policy and return to developing public expenditure to help the construction industry.
In addition, we must pursue policies of the sort that have been laid down by the Labour Party in its programme "Building for the Future". I hope that this time the employers' federation will adopt a more reasonable attitude towards us and read the documents, instead of attacking us for some things that we have never said.
8.2 pm
Mr. Michael Latham: I count it a privilege to follow the hon. Member for Liverpool, Walton (Mr. Heffer) because I know that he speaks with great experience of the construction industry. In the seven years that I have been a Member of the House, we have both taken part in many debates on housing and construction. The hon. Gentleman is always listened to with great attention, particularly by those hon. Members who are concerned about the industry. By definition, that is virtually everyone who is presently in the Chamber, otherwise they would not be here.
The hon. Gentleman declared an interest. As the House knows, I also have an interest as a director of house building company. I am also a member of the board of management of Shelter, although that is not a paid position.
I had not intended to intervene, but as I listened to the debate I felt that I would do so in order to make two points. My first relates to the work of the Select Committee. My second relates to land and planning,, which has hardly been referred to at all except by my hon. Friend the Member for Reading, North (Mr. Durant). I hope that I do not have to justify talking about land and planning, because obviously it is central to our housing policy that there should be an adequate supply of land.
I first want to deal with the report of the Select Committee on the Environment. The hon. Member for Mitcham and Morden (Mr. Douglas-Mann) is, of course, the Chairman of that Select Committee. I must tell my hon. Friend the Minister for Housing and Construction that I was not satisfied with the Government's reply to the report of that Select Committee. Although I was not a member of the Select Committee, I read its proceedings. It did a great deal of work in producing projections of housing output, given a number of possible assumptions about the level of council house rents and sales geared to the forecasts put forward in last year's White Paper on public expenditure.
It was perfectly open to the Government when they went before the Select Committee to say, as they did, "We do not know what the outturn will be, because this depends on a great many different decisions—first, on whether private individuals want to buy their houses or improve them and, secondly, on how much land and houses local

927
authorities sell". However, I do not think that is was right, reasonable or fair for the Government to say "We do not know", but when the Select Committee itself produced alternative figures after a considerable amount of work to suggest that it had not understood the Green Paper published by the previous Government.
Mrs. Renée Short: I remind the hon. Gentleman that all Ministers seem to be saying that in response to Select Committe reports.
Mr. Latham: This is not a wholly partisan criticism, because for the whole of the previous Parliament I served on the Environment Sub-Committee of the Expenditure Committee. We were not always wholly satisfied with the replies that we received from Ministers.
There is always some degree of tension, which is perhaps desirable, between a Select Committee and the Department at which it is looking. On the whole that is quite a good thing. However, in his reply to the Select Committee, my hon. Friend failed to deal with the proper issue. He said that the Select Committee had produced figures which in his view misunderstood the 1977 Green Paper. That is not good enough.
If my hon. Friend feels that the Select Committee's estimates were wrong, he ought to say so and state why. In addition, he ought to produce his alternative projections. One thing which the Select Committee is perfectly entitled to do—just as the Environment Sub-Committee of the Expenditure Committee did with the Labour Government in 1976–77—is to probe the assumptions behind the public expenditure White Paper as to how many houses will be produced and what the outturn will be. That is the job of a Select Committee. When my hon. Friend next replies to a Select Committee report, I hope that he will not do it in so dismissive a way as he did on this occasion.
It gives me no pleasure to say that, because I have great personal respect for my hon. Friend. However, it is the duty of Back Benchers on whichever side of the House to stand up for the rights of the Select Committees which are important to our processes of government.
I now turn to the question of land. As I said earlier, I hope that I do not need to apologise for discussing this extremely important issue. Certainly, with regard to the private housing sector, which is central to the Government's housing strategy, there is a need for an adequate supply of building land. However, my hon. Friend and Ministers at the Department of the Environment are to some extent faced with conflicting pressures. On the one hand there is the pressure of builders to have more land for development and to have it now. On the other hand there is the perfectly proper pressure of farmers, agriculturists and conservationists to defend good agricultural land and to ensure that it is not released unnecessarily. It is not easy to achieve a proper balance.
We should also look carefully at the structure plans which are now coming forward and consider their contents. I was pleased at the speed with which the Department of the Environment cleared the number of structure plans which came forward. When we inherited this from the previous Administration, the whole procedure had got totally stuck. Many structure plans were just sitting in the Department and had been there for far too long. My right hon. Friend the Secretary of State gave decisions quickly and he has continued to do so. That is entirely to the good.
928
He has also taken a number of extremely constructive steps to improve the situation, which ought to be welcomed. The circular on land produced last year is one of the most constructive documents to appear for some time. It emphasised the need for a five-year supply of building land. However, it also emphasised the need for consultations between local authorities and builders to ensure that that five-year supply is achieved.
I hope that my hon. Friend, either in his reply tonight or subsequently in correspondence, will be able to assure me that the decisions on structure plans which have been taken by Ministers are directed towards two things. The first to ensure that there really is a five-year supply of land in structure plans and at realistic rates for building, not those of the past six to 12 months. The second is to ensure that the structure plan which he is approving, and which is now monitored in discussions and consultations between house builders and local authorities are realistic. He will know that the House Builders Federation has, on several occasions recently, produced reports of its joint studies with local authorities which have found that the five-year structure plan targets did not provide a realistic assessment of the amount of land which is available or which is needed to meet housing demand. If we are not to have a serious shortage of land ready for building, with planning permission, with services and all the necessary equipment needed for getting on with the job by the middle of this decade, it is essential that the right decisions are taken now. Let us get that right.
Sir Albert Costain: Does my hon. Friend agree that one of the most important factors is that the land should be available where people want to live? Too many planning authorities say that they have enough land but that people want to live in the wrong place. They are not God. They must allow people to live where they want to live.
Mr. Latham: My right hon. Friend the Member for Folkestone and Hythe (Sir A. Costain) has put his finger on an important point which is dealt with in the Government circular—the question of the marketing considerations. That was also alluded to in the circular produced by the right hon. Member for Stepney and Poplar (Mr. Shore) for the Labour Government. However, when he is approving structure plans I hope that my right hon. Friend will look carefully at the use made of spoilt and derelict and marginal land. That land is important. The Civic Trust produced some disturbing figures in a report last year which suggested that up to 500,000 acres of land might be available for development. It is spoilt or marginal but not good agricultural land. I hope that my right hon. Friend will take the opportunity when he brings the Countryside and Wildlife Bill before the House to introduce another clause to ensure that the protection of agricultural land and the use of spoilt land will become an important consideration for local planning authorities in carrying out their duties. A declaratory clause of that sort in the Bill would be useful.
In dealing with land it is important that we try to overcome problems of land ownership, and the relationship of the State towards land ownership. That should be settled once and for all. We have made considerable changes over the years.
Since 1945 the House has done a great deal to the law on land and betterment. In 1947 development land was

929
nationalised and so were development values, subject to the £300 million compensation fund. In 1953 and 1954 that was unscrambled by a Conservative Government, and the public-sector owned land changed hands at current use value and the private sector land changed hands at market value. In 1959 the concept of total market value was adopted.
In 1962, a short-term capital gains tax was introduced, and in 1965 a long-term capital gains tax. In 1967 we had a land commission with a 40 per cent. betterment levy, intended to increase to 50 per cent. In 1971 that was abolished and capital gains tax was reintroduced. In 1973 a development gains tax at income tax rates was introduced and a first lettings charge. In 1976 we had a Community Land Act, with development land tax at rate of 80 per cent. which it was intended to increase to 100 per cent.
Mr. Campbell-Savours: We will get it right some time.
Mr. Latham: The hon. Member for Workington (Mr. Campbell-Savours) says that the Labour Party will get it right some time, but it is plain that that is no way to have a housing programme.
I suggest three pillars on which land policy should be based to my right hon. Friend and to the Labour Party. I believe the Labour Party is reconsidering its policy on this subject.
First, there should be a high but not a penal rate of tax on betterment. I think the correct rate should be 60 per cent. I do not agree with the House Builders Federation that that figure should be reduced. I believe that 60 per cent. is the correct rate because it is high but not penal. Secondly, the basic assumption on land is that it should come forward in accordance with market forces—that is, that the builder should identify the land, buy the land, seek planning permission and develop. Thirdly, there should be a role for the local authority, joining the developer in helping to assemble the land. That should be done preferably by voluntary means, but if necessary by compulsory acquisition. That power is now included in the Local Government, Planning and Land Act 1980. Those three pillars represent a reasonable balance between the rights and needs of the community to ensure that some of the betterment goes to it, that the development is properly carried out, and the need for the land to come forward in accordance with market forces. My suggestions will enable us to get rid of this land hassle which has been befogging politics for the last 150 years.
8.14 pm
Mr. David Alton: The hon. Member for Melton (Mr. Latham) made an interesting point when he talked about the rotation of policies and the need for a national land policy. He is right when he says, as other Members have said, that there is a need to end the way in which housing has been used as a football, tossing it from side to side depending on who has to take the decision.
The hon. and learned Member for Thanet, West (Mr. Rees-Davies) spoke about a shift in Government policy away from new house building towards improvement grants. I support the pensioning off of the bulldozer, the reduction of demolition and the increase in improvement
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grants. I am a great believer in and supporter of renovation and renewal. But in an article in The Guardian by John Carvel on Saturday is was pointed out:
"The question is whether the amounts of money are so low that too little will be done".
All those to whom I have spoken who are concerned with housing matters, and the Secretary of State, admit that because of the moratorium that he has imposed, where an authority has overspent, no one can get an improvement grant. In my own city of Liverpool we have enormous housing problems, and there is a great need to improve property. In the places were improvement grants are needed they are not being made available. The hon. and learned Member for Thanet, West also spoke about the shorthold experiment. During the debates on the Housing Bill many Opposition Members shared the view that there was a desperate need to tackle the problem of housing.
I am not one of those who support the immediate repeal of the shorthold provisions. But the Government were unwise not to listen to Opposition Members and to Members of their own party when the suggestion was made that shorthold should have been tried on an experimental basis in some areas of the country. In that way we could have ensured that the worries that many of us have about the possible misuse of the procedures and the possibility of Rachmanism could have been overcome the threat which bedevils the whole of question of shorthold and threatens the possibility of using shorthold to put empty properties back into use.
Mr. Martin Stevens: In commenting on the Government's attitude to shorthold and the attitude of the Opposition to the proposals, does the hon. Member for Liverpool, Edge Hill (Mr. Alton) reject, as Conservative Members do with some indignation, the statement from the right hon. Member for Manchester, Ardwick (Mr. Kaufman) that if a Labour Government came to power they would enfranchise the shortholders? To many of us that is an unscrupulous method of keeping empty houses empty.
Mr. Alton: I agree with the hon. Member for Fulham (Mr. Stevens). I do not like what the right hon. Member for Manchester, Ardwick (Mr. Kaufman) said and I do not support that view. It is interesting that in the House and in politics generally we hear threats from one side or the other—the "Annie-get-your-gun" style of politics—"Anything you can do, we can do better" and "Once you have done it, we will do our best to undo it". One side is nationalising and the other denationalising or renationalising. One lot sells off the council houses and the others say that they will buy them back again. That is what bedevils politics in this country. It has been interesting to hear whose record has been worse.
I took the opportunity to look up some of the Secretary of State's speeches, which I cannot say made scintillating reading. I went through them and I shall use quotations from his speeches in my contribution in order to point out the folly of this rotation of policy without looking at the fundamental problems. During the two years for which the Secretary of State has held that office he has done his best to alienate local government representatives and employees and his traditional supporters in the building industry. His policies of stop-start building have far more to do with panic than with planning. His moratorium had been condemned as a haphazard and naive attempt to achieve what his speeches and statements have failed to

931
do. Its effects have been disastrous, not only for those employed in the industry but for those whose families have to go on living in wretched conditions.
The right hon. Gentleman will be remembered as the man who mutilated local government, who allowed the building programme to collapse, and who accelerated the decline of run-down, unimproved homes that were desperately in need of improvement. There can rarely have been a Secretary of State for the Environment who has been more disliked than the present incumbent. He has chopped and changed policies to suit his political fortunes. It is said of him that he tells his civil servants "These are my principles; if you do not like them I will change them".
In the 1979 manifesto in the section dealing with housing, to which the right hon. Gentleman presumably made a contribution, it stated:
"The prospect of a very high mortgage rate deters some people from buying their homes. Mortgage rates have risen steeply because of the Government's financial mismanagement."
Quite so. The Government should tell that to home buyers now who are paying almost twice as much as they were during the period of the Liberal agreement with the Labour Government. My party was trying to co-operate with that Government and stopped the nationalisation of the building industry by exerting a moderating influence. It was trying to bring an end to the stop-go policies that have dominated events in this House.
Far more significant are the comments of the Secretary of State on 5 March 1979. He said:
"The conclusion of five years of this Labour Government has produced the worst new building record, the lowest number of private rented homes, a collapsed level of improvement grants, record-breaking interest rates, soaring land prices and rocketing house prices … 1978 has been a disastrous year for housing. Wherever there has been a slight glimmer of improvement in any field it has not been as a consequence of Government policy but despite it."
If the Labour Government manage to achieve that in five years, the right hon. Gentleman will be remembered for having taken only two years to achieve the same results. He complained that
"Mortgage interest rates are now at 11¾ per cent., a higher level than under any previous Government."
He scolded the then Government, saying that
"their overall management of the economy has involved both decisions and measures that have worsened the housing situation."
He chided the then Government, saying
"they have done many things to aggravate the situation in addition to their general preoccupation with the levels of public expenditure and the consequential effects of inflation."— [Official Report, 5 March 1979; Vol. 963, c. 912–4.]
That came from a Secretary of State who has allowed his Department to be sacrificed on the altar of monetarism. It is no wonder that people are cynical about politicians whose words have become so devalued and meaningless, and who say one thing in Opposition and another in Government.
Mr. Latham: Are these remarks an example of the way in which the Liberal Party gets away from "Annie-get-your-gun" politics?
Mr, Alton: I was replying to the hon. Member for Fulham, saying that I supported his view on shortholds. I have tried to look at the subjects on their merits. I agree with the hon. Member for Melton about the need for a land policy. Sometimes, however, Conservative Members should be more critical of the record of their Government. I represent an area in which about half the homes—more
932
than in any other constituency in England—were shown in the last census to have no inside toilets or bathrooms. Many of those homes do not have hot running water. Many of them are about to collapse on the occupants. Surely those people are entitled to better than they are being given by the Government.
I return to the house building figures and to the achievements of the Government. They lead me to ask Conservative Members to show more humility than they have shown so far. The latest figures show that Britain started fewer houses in 1980 than in any year since 1924. Housing has borne three quarters of the Government's savage expenditure cuts. In my area on Merseyside, 25 per cent. of the people who are out of work are building workers. The percentage decline in housing starts on Merseyside this year is 45 per cent.—higher than in any area outside Greater London. Even so, Merseyside has more people on the dole than anywhere else in the country—more than the whole of Ulster or Wales.
I try to explain to the people who come to my weekly advice centre and tell me about their unimproved houses what the Government are trying to do and what their policies are all about. I sometimes wish, however, that the Secretary of State would spend some time in a two-up, two-down house with an outside toilet, without hot water, and with a leaking roof. That is a far cry from a mansion in Oxfordshire, or from the offices of Marsham Street.
The right hon. Gentleman has acquired a knack of offending local authorities by his arrogant and highhanded treatment of their affairs. Only yesterday the AMA had cause to write to me again, protesting at the way in which the Secretary of State had dealt with local government housing. Earlier this week the ACC and the AMA had to complain at the Government's crazy decision to water down the control of pollution regulations. Last year they complained at the way in which the Housing Bill and the Local Government, Planning and Land (No. 2) Bill were being introduced. A few weeks ago they were further embittered by the deplorable way in which the rate support grant settlement was announced.
What a sorry saga of blundering and bungling. The Secretary of State described himself as feeling like Wellington before the Battle of Waterloo. Watching his deteriorating relations with local government we might be forgiven for comparing him and the Minister for Housing and Construction with Lucan and Cardigan before the charge of the Light Brigade into the Valley of Death. It seems that they are totally oblivious to reality, and care not about the consequences of their actions.
The Secretary of State should listen to the wise words of the AMA, which warn that with the potential shortfall on new building of over 400,000 dwellings by 1986, an accelerated rate of deterioration of our older housing stock, a housing situation is being built up that will require many years of effort and expenditure to put right. The Secretary of State should listen to the building industry. In November 1980, 279,000 people in that industry were out of work—a 30 per cent. increase on the May 1980 figure. Vacancies have fallen by 81 percent. in 15 months, from 27,000 in August 1979 to 5,000 in November 1980.
The Secretary of State should also remember his words when he said, in June 1977:
"does not the present level of unemployment in the construction industry, which is the worst since 1931, make a mockery of the

933
Government's claim in their last General Election manifesto that they would create a permanent and stable work force?"— [Official Report, 29 June 1979; Vol. 934, c. 408.]
Does the right hon. Gentleman believe that the measure to which he has referred will achieve a lower level of unemployment in the construction industry? Does not every Member of Parliament have the right to ask the right hon. Gentleman the same question today? How can the right hon. Gentleman merely dismiss the warnings of the AMA that the rate of deterioration of our older housing stock is continuing at an alarming rate? Does he not see that the private sector is being just as badly damaged as the public sector? Is he aware that 84,000 new homes were started in the private sector and 44,000 in the public sector? Apart from the war years, that is the lowest figure for the public sector since 1920 and for the private sector since 1953. The National Council of Building Material Producers said this week:
"The consequences of a low house building and renovation work will be an increasing number of homes in poor condition and an increase in multi-occupation, overcrowding and sharing. There may still be a rise in the number of vacant properties—simply because they are unfit or in places where people do not wish to live."
The Minister for Housing and Construction is right to hang his head in shame.
I turn to the effects on my constituents of such a penny-wise, pound-foolish policy. As queues lengthen in our housing offices, so tempers shorten. Officials who are unable to help people in great need are being placed under mounting pressure. I know of examples of such utter exasperation that applicants and tenants have erupted in anger. Every day I see examples of people's needs being ignored. The hon. Member for Lichfield and Tamworth (Mr. Heddle) said that 7,000 people were on his local waiting list but that most of them were already living in council houses and simply wanted to transfer to another house or area. That is all that he thought of them—people who wanted a transfer.
I must tell the hon. Member about a deaf and dumb lady who came to see me a couple of weeks ago. She lives in a three-bedroomed house, but needs to move to a one-bedroomed flat near to her relatives, so that she will no longer be isolated. But, as a result of the Government's cuts in housing expenditure, no sheltered accommodation is available. No one-bedroomed houses are available. People such as that lady are not being rehoused. She is one of the hon. Gentleman's statistics on the housing waiting list. She is not irrelevant. The couple who wrote to me recently are similarly not irrelevant. They have a special medical priority and have been awaiting rehousing for about nine months. The wife wrote to me a couple of weeks ago to say that her husband had died and that the medical priority was no longer required. How many more people are there in similar positions?
I cannot believe that the Secretary of State fully understands the misery that his ill-judged and misconceived policies are causing. If he does understand that, I cannot forgive him for the damage that his policies are causing. I shall support the motion in the Lobbies tonight.
8.30 pm
Sir Albert Costain: The hon. Member for Salford, East (Mr. Allaun) said that there would be a party political broadcast on behalf of the
934
Labour Party at 9 o'clock this evening and that we should all watch it. We have just heard a party political broadcast on behalf of the Liberal Party. It was a typical party political broadcast, because it slammed everybody, made false accusations against individuals and did not offer a single idea of how to obtain more housing.
I informed the hon. Member for Liverpool, Walton (Mr. Heffer) that I intended to refer to him in my speech. He may yet return to the Chamber. I listened to his speech with special interest. He and I have taken part in most of the many housing debates. I congratulate him, because he has learnt that he needs to read the literature of the House Builders Federation and the National Federation of Building Trades Employers, and consequently he now talks a great deal of sense. He declared two interests, but forgot to declare a third. I told him that I intended to criticise him. He forgot his most important interest, namely, that he is living in a block of flats built before the introduction of Rent Acts, and he is enjoying his occupation. I told the House 20 years ago that if the Labour Party would only abandon stupid rent controls, more houses would be built.
Let us get down to the principles. I see that some Opposition Members are sneering. I say with some modesty that I have been in the building industry for longer than has anyone in the House. I was responsible for building up a large organisation. Be that as it may, I now want to get down to fundamentals.
We all agree that there is a housing shortage. We all agree that it is a great tragedy that people are not being properly housed. We all want to see that tragedy overcome. The problem that faces us is how to do that. Which policies are right? Nobody can deny that the only commodity that is in short supply is housing, or that the only commodity that has been controlled for 40 years is housing. Cannot the House draw the proper conclusion from that? Cannot the House appreciate that the only way to overcome the problem is to remove control and rationing, and to abolish the black market, which will result in increased supply?
Rachmanism was a type of black market, because it involved rationing. Rachmanism came about because of a housing shortage, and some people without consciences took advantage of it—in exactly the same way as black marketeers peddled sugar and butter.
Mr. Freeson: The hon. Gentleman has overlooked an important point of history. The era of Rachmanism grew up in the wake of the 1957 Rent Act, which removed controls and security of tenure. It badly damaged the inner areas of cities such as London and Liverpool. I refer to the period between 1957 and 1963. Rachmanism was the product of the decontrols provided by the 1957 Act.
Sir Albert Costain: The right hon. Gentleman opened both jaws and put both hands down. He has proved my case conclusively. The hon. Member for Thurrock (Dr. McDonald) laughs, but I am talking with the benefit of some experience.
The right hon. Gentleman said that Rachmanism started because controls were lifted. He overlooks the fact that the Opposition threatened to bring the controls back immediately. The controls were not lifted, but were temporarily abandoned. The right hon. Gentleman makes ugly faces. Unless we can get away from controls, we shall not obtain the houses that we want and cure unemployment.

935
I am sorry that the hon. Member for Walton is not present. Dolphin Square, where he lives, was built during the biggest depression that the industry has known. It was started in 1933, because my little group had a bunch of very efficient workmen whom we did not want to make unemployed. We decided to put everything that we had into building a block of flats where we could employ them and thus produce accommodation. That is just what we did.
That little team was the foundation on which that little company was built up into about the third biggest of its kind in the world. That is not possible today, because controls are such that no one can speculate, except on office blocks—and they are overdone anyway. If we had free enterprise, if we has no controls on building, a number of firms would be happy to build housing to let.
I own houses in the right hon. Gentleman's constituency. I should gladly build more to rent if he would only persuade the Opposition that controls should be abolished. That is what it is all about. Hon. Members can bandy figures about, saying that they built so many dwellings and somebody else built a different number. The fact remains that in the early part of the century 92 per cent. of our houses had private landlords. They were not such a bad lot. They included the Cadbury Trust, the Rowntree Trust and the Peabody Trust, all of which were generations ahead. At that time even the trade unions were prepared to invest money in rented property, something that they should do again. Because of rent control, they are now buying antiques and paintings, when they should be putting their cash resources into providing accommodation for the workers.
My group works in Germany. Immediately after the war the Germans—
Mr. Freeson: In Germany there have been strong property and rent controls for many years, to such a degree that whilst I was Minister deputations came from Germany to discuss their problems with us. The problems still exist.
Sir Albert Costain: The right hon. Gentleman overlooks the fact that in Germany employers are encouraged to build houses, and if one builds a new house in Germany it is not subject to control. The first thing that we need in order to resolve the housing problem is for the Opposition simply to say that any new houses built shall not be subject to rent control. What can be wrong about that?
One house in 30 is now empty. The House should be ashamed of that. Houses are empty because people are afraid to let, afraid of not being able to get their property back. The Basingstoke case has done more harm to the provision of rented property than could be done by four or five hours' debate here. People are afraid that they will not be able to get back their own accommodation if they let it.
Many people buy houses for their retirement. They are often very nice places. Some of those people ask me "How can I be sure that if I let my house now I shall be able to get it back in three years' time, when I retire?" I point out that if they make the right arrangements with their solicitors, and if they get the lease right, they will be able to take up occupation. They say "Tell us that again". They say that although, according to the law, that is possible it will take a long time.
The hon. Member for Liverpool, Edge Hill (Mr. Alton) referred to some shameful cases. There are plenty of cases
936
like that. We could reduce the number of such cases. One house in 30 could become available if only the hon. Member for Bolton, West (Mr. Taylor) would get up—as I have asked so often—and say that the Labour Party does not want empty houses. At present, houses stand empty because of the controls.
The Labour Party is frightened to take any action because there are more tenants than landlords and they want the votes. The only time that I agreed with the hon. Member for Edge Hill was when he said that politics should be taken out of housing. Of course both sides of the House should agree to do that. The Opposition believe that the only way to solve the housing problem is to build more and more council houses.
We have seen how local authorities have failed. They built high-rise flats. No private investor would have done that. I thoroughly agree with my hon. Friend the Member for Melton (Mr. Latham) about land. The Government could take some positive action. They have begun on the right lines, and they should continue. I have seen three similar depressions. After a depression it is immediately suggested that people in the construction industry should be employed. People say "Let us give them some work. Let us get the men working." Whenever that has been said, others have said "Good Heavens, we have no plans". When the Treasury turns on the tap the plans are not available. There is a ghastly nine-month gestation period and everything starts prematurely.
I hope that my hon. Friend the Minister will take my next suggestion seriously. Cannot my hon. Friend twist the Treasury's arm a little? Cannot he get the Treasury to agree that architects should get together to prepare plans and drawings? Builders and house developers should be told that they can get on even when the tap is off. If they do that, they will make a real contribution.
Several Hon. Members rose—
Mr. Deputy Speaker: Order. I know that most of those sitting in the Chamber have been here all afternoon and are anxious to take part in the debate. I understand that the winding-up speeches will begin at 9.10 pm. There are nine hon. Members who wish to speak. Therefore, brief contributions would be welcome.
8.43 pm
Mr. David Stoddart: I congratulate my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) on his brilliant and devastating attack on Government policy. When the Secretary of State replied, I felt a certain admiration for his cheek. He had the cheek of Old Nick. The right hon. Gentleman tried to turn the attack made on him to his advantage by attacking the Labour Government.
That simply is not on. The Secretary of State criticised the Labour Government for making a cut in housing expenditure which was in fact made by Tory local authorities at his behest. Having said that that programme was too low, he proceeded to cut it in such a swingeing manner as has never been done before. The right hon. Gentleman has a great deal of cheek.
Bearing in mind the Tories' housing policy, there is no way that they can turn away the criticism made of them that they are deliberately causing slump and unemployment. Undoubtedly their housing policy has caused just that, and since that policy has been deliberate, it is they

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who have caused the slump in the building industry which, of course, has had effects, very much wider than the building industry itself, on the building supplies industry and on the professions as well, as we heard this morning from the Royal Institute of British Architects.
By the mid-1980s the policies of this Government will cause the greatest housing crisis that we have ever known. That has been said already, but it is worth repeating, and it is important to warn people what is to come. Not only will there be housing shortages. Prices will escalate in the way that they did in the days of the Tory Government led by the right hon. Member for Sidcup (Mr. Heath) in 1972 and 1973. We see prices shooting up, and soon that old word "gazump" will be with us again. Just when increasing house prices and shortages in the private sector are with us, we shall find that the public sector—the only way in which the shortage can be relieved—is building virtually no houses, and, because of this Government's policy of forcing councils to sell houses, local authorities will be left with a greatly reduced housing stock. That is the position that we shall have reached by the middle of this decade.
Local councils such as my own find already that they are getting greater and greater numbers of people applying for houses to rent. In my constituency, the waiting list has more than doubled since the Government came into office, and the waiting time has more than trebled. That is the position which local authorities face, even before the Government's policies have their full effect.
My own constituency is one of the most progressive housing authorities in the country. My right hon. Friend the Member for Manchester, Ardwick will vouch for this, as will Ministers, including the Secretary of State, because they have been there and seen the forward-looking policies that Swindon borough council and Thamesdown borough council have implemented. In partnership with private enterprise, they have had a balanced housing programme in being over a long period of time. They have built houses to let. They have planned in advance. They have built for sale. They have carried out improvements. They have done all that a local authority should do. It is a growth area, and one would expect the Government to wish to support to the hilt an area of that kind which has done its job and which is a Government-planned growth area.
Far from doing that, the Government have reduced Swindon's housing investment programme by just about half. In real terms, the programme has been reduced by 26 per cent., and that is mostly in respect of programmes which are already committed, leaving very little for new building.
The strategy in Swindon was to start 634 houses. Only 122 starts will be made in 1981, and they are being made only because they were delayed from 1980 by the moratorium placed on building projects by the Government last November. It is also expected that next year there will be a further reduction of 15 per cent. in the housing investment programme.
It means that they will make no housing starts for general needs until 1983, at the earliest.
The area has great housing problems, and the housing authority has done its job well over a long period. Next year in Swindon there will be no housing advances for owner-occupation, which surely the Government want to encourage. The Government have allocated only
938
£150,000, although the council applied for £2·5 million. That sum will allow for only a modest number of second mortgages to provide improvements to houses already mortgaged to the council. So much for the Government's claim that improvements will take priority. The Thamesdown borough council hardly has enough money to lend to those who want to improve their property.
My constituents are badly hit, as are all council tenants, by the Government's decision, in reducing the housing subsidy, to impose swingeing rent increases upon them. My council tenants will have to bear average increases of about £4.40 per week. It is little use the Secretary of State saying that my council tenants pay only £8 to £ 11 a week in rent. People in Swindon will be paying between £20 and £22 a week in rent, once the increases are imposed. Furthermore, many of my constituents will have only a 6 per cent. rise in incomes, whereas they will have a 25 per cent. rise in rents. In fact, many will have no increase in wages or salaries. The Government's housing policy is baleful in every respect. It will give me the greatest pleasure to support my right hon. Friend in the Lobby tonight.
8.52 pm
Mr. D. E. Thomas: I shall direct my remarks entirely to the housing policy of the Welsh Office. I start with the cuts being made in housing expenditure in Wales from £303 million in 1974–75 to £110 million in 1983–84. The housing investment programmes details of which have just been made available indicate that during the period up to 1984, 64,000 new houses are necessary to meet the needs submitted in the bids by the housing authorities. That means a new bill of £21,500 per year.
The bids presented for the current year are for over £95 million, but the allocations are down to £79 million. Whatever we may think of waiting lists as an indicator, a substantial increase of 19 per cent. in waiting lists during 1979–80 must indicate the way in which cuts are causing substantial housing stress.
The results of that cut are clear from the local authority housing starts in Wales. The starts in the local authority sector in 1980 were 2,340, and completions were 3,493. Similarly, private sector starts were down to 5,027 and completions down to 5,727. Those are the lowest figures for the local authority sector since the winter of 1936, and the lowest figures since 1958 in the private sector.
I wonder whether the Welsh Office Minister has spoken to the housing officers of his own authority of Aberconwy, who made the statement in a survey by Shelter:
"all newbuild postponed, including one elderly persons' sheltered development of 38 flats, five adapted for handicapped tenants."
The same applies to the bids of other authorities in Wales. I have here a copy of the bid of the Carmarthen district council, which for 1980–81 states simply "No new build starts". I highlight particularly the position in the Cynon Valley, an area of major housing stress, where the number of required local authority completions is 1,989 and the number of local authority planned completions is as low as 70. The Merioneth district, which is not a valley or urban authority but a rural authority, is facing similar substantial problems of increased waiting lists.
The other arm of the Government's housing policy—the Housing Corporation in Wales—has had its real budget reduced. The allocaton to the Housing

939
Corporation has declined by 25 per cent., which will result in the allocation to individual housing authorities being reduced.
I have only one question for the Minister. The Department of the Environment is about to launch a housing condition survey for England. Will the Welsh Office launch a similar survey? The existing figures are appalling. Taking into account housing stock and population, the situation is worse in Wales than in any other part of the United Kingdom. Has that fact deterred the Welsh Office from launching a survey?
8.56 pm
Mr. Tristan Garel-Jones: I shall try to be brief, as other hon. Members wish to contribute to the debate.
I make no attempt to minimise the problems that we face. However, just after the war we had a surplus of 700,000 households over dwellings; by 1977, the surplus was of 400,000 dwellings over households. In 1951, 7 million homes were regarded as unfit to live in and as lacking basic amenities; by 1977, the figure had reduced to 250,000. In 1951, 600,000 homes were overcrowded; by 1977, the figure was 73,000. We have one of the highest proportions of dwellings equipped with basic amenities in the whole of Western Europe. In England and Wales about 55 per cent. of our people live in their own homes. For young couples in their early thirties, it is 70 per cent.
The House does not have a great deal to be proud of when it comes to housing, but it is worth giving the background. The right hon. Member for Manchester, Ardwick (Mr. Kaufman) is well known for his use of hyperbole, but the tone of his attack on the Government was inappropriate. It was symbolic of the conflictive politics that we see from Labour Members. I was particularly upset to see the right hon. Member for Brent, East (Mr. Freeson) smirking and to hear him shouting to my right hon. Friend "You don't care." That is a shocking accusation for any hon. Member to make. It is small wonder that, when we conduct debates on housing, social policy, and so on, in such a manner, the public ask themselves what is going on.
The Government are operating against the background of world-wide recession and restraint.
Mrs. Renée Short: It is a home-produced recession.
Mr. Garel-Jones: As the hon. Lady knows, perhaps the most important factor in bringing about a revival in world trade is the recirculation of the Arab petrodollars, which this year will take $150 billion out of circulation. That is vastly more important than any small thing that we may do here. The hon. Lady knows that that is true. I do not wish to pursue the point because I know that some of her hon. Friends wish to make a contribution to the debate.
The Government have taken a view about the economy. We accept that Opposition Members disagree with that view. However, they know that, broadly speaking, that view was sanctioned by the electorate in the general election of 1979. I suggest that they would do themselves more credit as a party and that they would do the House more credit if they were a little more constructive in their approach to the legitimate criticisms which they may have about the Government.
Given the restraint in expenditure and given the recession that they are facing, the Government have tried
940
to do two important things. First, they have introduced the right to buy for council tenants. In my constituency, hundreds of potential buyers have been subject to delay, anxiety and even anguish on this account, because of what I regard as a dogmatic objection to that right by the Labour-controlled council. The council is entitled to fight it up to the last minute, but to go on spinning it out when the battle is over simply inflicts a party political argument on innocent members of the public who are not following party politics day by day. They are kept waiting until they can buy their council houses.
The second proposal introduced by my hon. Friend was the shorthold tenure scheme. I am sorry to say that we have had a dogmatic objection to that. The Opposition have done everything possible to torpedo the scheme. The right hon. Member for Brent, East (Mr. Freeson) was smirking at my hon. Friend the Member for Folkestone and Hythe (Sir A. Costain), who probably has more experience of the building industry than any other hon. Member. He said that one in 30 houses is empty. The Opposition do not seem willing to allow a scheme to get off the ground which might put some of those properties back into circulation.
I could make many other points, but I shall not pursue them because I know that many Opposition Members wish to speak.
9.2 pm
Mr. Ernie Roberts: The Opposition have called for this debate because of the criminal negligence and indifference of the Government to the housing problems that face ordinary people, certainly those who live in the East End of London and in the sort of constituency that I represent.
The right to a home of one's own, like the right to work or the right to health, is a fundamental human right. There are two philosophies on this matter. One is described by the Hackney borough council, which says:
"Good housing is a basic right of all people and it is our aim as a Socialist party to fulfil this right. The Labour Party will identify priority needs and meet them—be they the basic need for roofs over heads or a need for drastic improvement in present housing conditions. All citizens—in council and private property—can look to a Labour Council to take a direct interest in their housing conditions and to involve the people in decision making by increased participation."
That is precisely what we do in Hackney.
On the other hand, there is this philosophy:
"I hope you will not think me too blunt if I say that it may well be that your council accommodation is unsatisfactory, but concerning the fact that you have been unable to buy your own accommodation, you are lucky enough to be given something which the rest of us are paying for out of our taxes."
That is the philosophy of the Government.
Tory Members involved in housing seem to think that it should be an area for speculation and private profit. It should be no such thing. The need for housing is far too great. The Government have made, and intent to make, cuts from 1979 to 1982 of £600 million, £1,500 million, £2,500 million, £3,200 million, and so on. They are all cuts in the previous Government's plans.
Production levels are now equal to those of the 1930s. I remember the conditions of the 1930s—seven in a bed. Hon. Members can smile because they probably have never had that experience. People come to see me to complain that they have to live seven in one room. I have had to sleep seven in a bed and I know what it is like to

941
live under such conditions. Yet the Government can give £1 million to a young single man buying his second home, while others have no home at all.
The Prime Minister has asked the Minister for Housing and Construction to produce a black list. Hackney is included on the list because, it is said, it has nearly 300,000 empty houses. I took that matter up with Hackney council. The Minister knows its reply, because I have forwarded it to his Department. The council said:
"Since the Government took office, they have adopted a variety of measures to stop properties being improved or rehabilitated to save public sector money. They have scrutinised individual projects closely, and delayed the preparation of agreed schemes, while at the same time promising more freedom to local authorities to spend money as they wish. This delayed many projects in Hackney. Then they imposed a moratorium probably to last six months, which prevented even agreed schemes from proceeding, and then they made a radically reduced allocation of HIP money—in Hackney reduced from 1980–81 by 42 per cent. leaving authorities to decide which schemes to proceed with, and which schemes to stop for 1981–82. Thus everything the Government has done has encouraged the growth in the number of empty properties."
That was the council's reply to the Minister about the voids.
The reply went on to specify some of the properties:
"Powell House, which the Council wants to demolish amounts to 200 units. The DoE delayed evaluation of the proposals, by asking for a cost-benefit analysis, the first of its kind only to ignore its results. We are now trying to get an agreed scheme, but it is doubtful with the reduced HIP whether the Council could go ahead for several years.
Morley House is awaiting approval of tender and is held up by the moratorium.
Banister II has been delayed by the moratorium and being considered by the DoE.
Lordship II has been delayed by the moratorium and being considered by the DoE.
At the DoE also are 105 ordinary houses requiring improvement also delayed by the moratorium."
That is a total of 690 units delayed by Government action. That is why there are voids in places such as Hackney.
The national dwelling and housing survey shows Hackney to have among the highest proportions of lone parents, non-whites overcrowding, unemployed persons and unsatisfactory accommodation. People are dissatisfied with the area. London is divided into two cities, just as this country is divided into two nations—the Hackneys, Brents and Ealings on the one hand, and the Bexleys, Harrows and Kingstons on the other. The Government give them completely different treatment when it comes to housing.
Over 5,000 single persons have applied for dwellings in Hackney. The Minister says that there is to be major research into the accommodation problems of disadvan-taged single persons. When is that to take place? There are 2 million families in homes in serious disrepair or without amenities. There are over 1 million on housing waiting lists, and those lists are growing. There are 200,000 children living in cramped conditions in tower blocks. There are 50,000 homeless every year and 100,000 without any shelter whatever, sleeping rough.
In London alone, another 100,000 have joined the 200,000 households already on the waiting lists. There are nearly 200,000 living in overcrowded conditions in the London area. There are about 15,000 single-parent families forced to live with relatives, with no home of their own. There are over 2,000 people sleeping rough in London, while over 100,000 homes remain empty in the area, awaiting sale or repair.
942
What stands in the way of 1 million families having a home of their own? There are 300,000 construction workers unemployed. There are millions of bricks lying idle in the brickyards. There are thousands of tons of cement awaiting use. Land is available on which to build. Only the Government stand in the way, and until they are removed the housing problem will never be solved in Britain.
9.11 pm
Mr. Peter Bottomley: The housing issue that concerns my constituents most—half way between the Bromleys and the Hackneys—is the decision, apparently, by NALGO not to process applications for the sale of council homes. It would appear that this decision has been taken without much consultation with the broad mass of membership. I ask any of my constituents in NALGO to let me know what decision was taken by them, whether they were consulted, and whether there was political interference in a non-political union.
9.12 pm
Mrs. Ann Taylor: Nothing that has been said in this House today by the Secretary of State will have done anything to convince anyone inside the House, let alone anyone outside it, that either he or his colleagues in the Department have any real understanding either of the effects of the policies that they are pursuing or of the real housing needs of the people of this country.
We have heard yet again of the blanket approach of the Secretary of State, who simply believes in measuring need in terms of public expenditure. If it costs money it cannot be needed; if it does not cost money, it must be essential and therefore it can go ahead. Having looked back over the speeches of the Secreatry of State, over some of his recent statements and over some of his frequently corrected answers, I can find very little evidence in any of them that identifies the Sectetary of State as the Minister who is responsible for looking after the housing needs of this country. Nothing that we have heard today does anything to change that impression.
Indeed, I wonder why the Govenment have not gone the whole way and decided to save a few ministerial salaries into the bargain by absorbing the housing division of the Department of the Environment into the Treasury, because that is where the Government believe it belongs.
When the Government first came to office they found time for an early debate on housing when the House debated the Queen's Speech. That was perhaps a hopeful sign, some people might have naively thought, indicating tha the Government would treat housing seriously. At that time the Secretary of State was still quite keen on his pastime of saying that Labour's housing record was not good enough. He said that he would reverse it and then improve on it. We have certainly seen the reversal, but when are we to see the improvement?
I hope that the Minister for Housing and Construction will tell us when he expects to see an improvement in either the quantity or the quality of the genetal housing stock of this country. One of the reasons for the debate is that last year there were 152,000 housing starts, the lowest figure since 1925. In about 18 months' time when current starts become completions, completions will be running at half the rate that was established during the worst year of the Labour Government, unless by that time the Secretary

943
of State, with his individual approach to arithmetic, devises a system whereby there can be more completions that starts.
Mr. Ted Graham: He can do it.
Mrs. Taylor: We shall see. My right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) referred to the Labour Government's record. The Secretary of State took him up on some details. I hope that the Minister of State will continue some of the comparisons. I hope that he will acknowledge what I am sure is true, namely, that he would like to be able to say that any one year of his Administration will provide either public or total housing starts at a level that matches the average level achieved by the Labour Government. Even our worst year for public sector starts was twice as good as the figure that the Secretary of State has produced for his full year.
One of the reasons for the difference in performance is that our starting point in housing policy was completely different from that adopted by the right hon. Gentleman. Our starting point was the assessment of need. We published figures so that everybody could understand to what extent our aims were being fulfilled. The Government's starting point is totally different. They make cuts in public expenditure as a matter of principle and refuse point blank to make any assessment of housing priorities and housing needs.
My right hon. and hon. Friends have shown repeatedly the ridiculous nature of the position in which the right hon. Gentleman has placed himself. However, the best evidence of what he is doing comes from the time when he gave evidence to the Select Committee, when one of his colleagues asked him whether he was seriously telling the Committee that he would reduce expenditure on housing by 50 per cent. and that he had given no serious thought to the consequences that were likely to follow that reduction. That question sums up exactly what the right hon. Gentleman is doing. He is pursuing policies without making any basic assessment of the impact on housing.
I can understand why the Secretary of State may not want to establish targets or to make forecasts. However, his refusal to respond to the great weight of information on housing and the needs that will be coming up in future disqualify him from carrying out the job that the Government have given him. It is his disregard of housing need—the needs of young people, of the elderly and of families—that has put us into the present position.
We have had 20 months of Conservative Government who are committed, so we are told, to freedom of choice. We can choose to pay more for our mortgages if we are house buyers. We can choose to pay more in rent if we are council tenants. Let us consider some categories of household and the way in which the Government have affected them. The Conservative Party often assumes that owner-occupiers form the basis of its support. What has happened to them under this Government? They have been given the choice of paying record interest rates. When the Government came to power the mortgage rate was 11¾ per cent. It is now 14 per cent., but for much of the Government's term in office it was 15 per cent. Thanks to the Government, mortgage holders have had to pay an extra £1½ billion. If that is how the Government look after people they call their supporters, it is perhaps not surprising that other groups have come out even worse.
Let us consider council house tenants. During the last election campaign, we heard a lot about the new deal that
944
the new Tory Government would give to council house tenants. What has that meant? As my hon. Friend the Member for Walsall, North (Mr. Winnick) pointed out, council rents rose by 28 per cent. last year. This year, the Secretary of State himself has determined that average increases in rents will be £3·25, which is a further 33 per cent.—an increase so great that some people are wondering whether the Government are trying to push people into buying their council houses because rent levels are now so bad.
That is not the end of the story. The rent increases so far are not the final word. To give an idea of what will happen to rents in the future, I shall mention what is now happening in Basingstoke. The housing revenue account there is in balance, but because rents in the town are below the regional average which the Department of the Environment has devised, Basingstoke is to lose rate support grant. It will therefore have to raise its rents 66 per cent. this year. The housing revenue account will therefore be forced into surplus because of the way in which regional rents will work and will subsidise the town's general rate fund because the Secretary of State is withdrawing rate support grant. That is happening simply because the Minister's priority is not assessing what rents should be or even allowing local authorities to do so. His policy is to put rents up as high and as quickly as possible, so there is not much prospect for improvement for those people.
Is there perhaps more hope for people on the waiting lists? Apart from disputing the existence of such people, the Secretary of State has succeeded in finding one of the few growth areas of Tory policy. The Minister, and indeed most Conservative Members, do not seem to like to talk about waiting lists. But Shelter's recent survey and the figures of the local authorities themselves show that the number of people on waiting lists has increased to 1·2 million, and Shelter predicts that the figure will be 2 million by 1984. The figures for London show that waiting lists have passed their previous peak of 1974. That is happening all over the country.
So long as the Government continue with their present policies, waiting lists will remain at peak levels and the people on them will have little prospect of an early allocation, whatever their medical priority or other problems.
Even for a disabled person awaiting rehousing, with every possible degree of priority, the chances are not good. Pressure on local authorities from the Government means that even such high priority cases cannot be dealt with because the money simply is not there for necessary adaptations. At the last parliamentary Question Time to the Department of the Environment, my hon. Friend the Member for Eccles (Mr. Carter-Jones) asked the Undersecretary of State what he intended to do for handicapped people during the International Year of Disabled People. Did he intend to make more resources available for conversions? The Under-Secretary of State expressed great sympathy and tremendous concern. He then revealed that he would not actually be able to help to build or to convert property for disabled persons, but that his Department would be able to show a film so that they could see exactly what they were missing. I am sure that that kind of help will be greatly appreciated by all those who are being hit by the Government's cuts.
The Under-Secretary of State for the Environment (Mr. Geoffrey Finsberg): That is a travesty of what I said.
Mrs. Taylor: The Minister says that it is a travesty, but I shall gladly give way if he will say that he will provide resources.
Mr. Finsberg: What I said was that the film would enable people to see what could be done—[HON. MEMBERS: "Ah."]—which is precisely what the Labour Party totally failed to do during the years that it was in office.
Mrs. Taylor: I am sure that the disabled of this country will be pleased to know that they will be allowed to see what they are missing. They and the whole House would have supported the hon. Gentleman if only he had said that he would do something concrete about this.
Even if one is in the private rented sector, the prospects are just as grim. Those people are facing higher rents, less security and very little chance of getting into better accommodation.
The Government are very fond of talking about the shorthold provisions. Indeed, today the Secretary of State again blamed, or perhaps praised, my right hon. Friend the Member for Ardwick for provoking a lack of interest in the shorthold scheme. When Conservative Members talk about the private rented sector and the empty units that are available, they always seem to fail to mention the 1977 vacant property survey which showed that the vast majority of private empty property was not empty because of the Rent Acts. Indeed, an assessment was made of the number of units that were empty because of the Rent Acts, and it revealed that the figure might be as low as 8,000. The vast majority of those properties were empty simply because they were in extremely poor condition.
Even if the Secretary of State is right and all that evidence is wrong, even if he is right and my right hon. Friend has such tremendous power as to wreck the Government's proposals on shorthold provision, Labour Members are proud to work alongside him, especially if the Secretary of State criticises him for hawking himself around the country and promising security of tenure. If that is what my right hon. Friend is doing, he has the support of every Labour Member and the support of the vast majority of people in the private rented sector.
Given that the Government have not done much for all those groups; given that perhaps owner-occupiers are not the best of friends of the Tory Party after all; given that council tenants can be forgotten now that their votes are in; given that those on the waiting lists should stand on their own two feet; and given that the handicapped should, as the Prime Minister said, help themselves first, what has the Tory Party done for its undoubted friends in the building and construction industry—those who devoted so much of their scarce investment resources to invest in a Tory election victory? How have they been rewarded? We saw a little of their investment earlier in the shape of the carrier bags and balloons which they bought. If those firms ran their businesses expecting the same rate of return on investment that they got from investing in a Tory victory, they would all have been bankrupt a long time ago. To put it politely, those firms are not exactly delighted with the Secretary of State's performance.
Total investment in housing is planned to be cut in half by 1984, which means that the prospects are bleak even
946
for those firms which have managed to survive 20 months of Tory Government. It is not just the public sector that has been hit, but the whole of the house building industry. All the warnings and dire statements which came from CABIN and its friends just before the election, look very strange now. As my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) said, it seems strange to us to have building companies coming to us to cry on our shoulders after they have put so much money into Tory Party funds.
Mr. Den Dover: Will the hon. Lady accept from me—I have declared my interest as parliamentary consultant for George Wimpey—that the builders of this country are a prime example of private enterprise at work? They realise that the market place is of paramount importance. Private house builders will build the houses that the country requires. They realise that the Secretary of State and this Government have inherited a bad economic situation and that the country cannot afford the large housing subsidies which we have seen in the past.
Mrs. Taylor: The simple truth is that building companies, like everyone else, are not at work under this Government, and that is what they as well as we, are complaining about. Indeed, the National Federation of Building Trades Employers is now extremely concerned about what will happen over the next year. The Secretary of State said earlier that he could detect some optimism in possible private sector starts. That optimism is not shared by the National Federation of Building Trades Employers, which said about 10 days ago that
"the vast majority of firms are now reporting further reductions in inquiries and anticipating severe downturns this year."
As I have said, building companies are worried about what has happened already, and they are even more concerned about what will happen in the future.
The Government have not helped their friends in the construction industry, and those friends are right to complain that they have been badly treated by the Government. But there is just one sector of the construction industry which is doing well under this Government. Having done a good deal of research to find out what is happening to building firms throughout the country, I find that the only sector of the industry which is doing well at the moment is that which deals with the construction of fall-out shelters. So much for confidence in this Government.
The Government are not particularly concerned about building workers, and the Secretary of State said very little about them. But even building employers are concerned that it is costing so much to keep people out of work when, with some sensible public investment, real housing starts could be higher and the housing situation could be considerably eased.
The Secretary of State had a chance today to make some defence of his policies, but we heard little of that. In fact, it was somewhat difficult to follow what he said, as he switched from talking about NUPE to talking about Shirley Williams—he seemed to be willing to talk about anything but housing—but what I think he was trying to tell us was that everything will be all right in the end. The trouble is that we do not know what "all right" means for him.
The right hon. Gentleman has not said whether he thinks that the figure of 152,000 starts is adequate, He has not said that the figure should be higher. He has not said

947
that he regrets the current low level of building starts. All that he said was that improvements last year were much higher than many people might have thought. But the reason why improvements were so much higher last year than some of us might have thought was that those improvements were completions and, by and large, they were completions which were started under HIP allocations from the Labour Government. By the time we see the completions which have been started under this Government, the improvement figures will be revealed as just as disastrous, I fear, as the house building figures which we have already seen.
The Secretary of State gave us nothing to justify his amendment. In fact, the Conservative Party is finding it difficult to defend its housing policies. I have here a document isued by the Conservative research department. It is called a "Summary of Housing Measures since May 1979". As one would imagine, it is not a very comprehensive document. The interesting point about the document is that nowhere does it mention any assessment of housing need or any assessment of the investment necessary to bring housing standards in this country to the proper level.
The booklet simply concludes by saying that many detailed booklets and films have been produced by the Department. Judging from the list of them, the Department is more successful at producing them than it is at producing houses. It is, therefore, strange that the Secretary of State should recently attack the information services of his Department. According to The Guardian, the right hon. Gentleman is concerned about this matter and has written a note to the Cabinet complaining that the existing officials do not meet his publicity needs. It seems that he believes that the Government should bring in some new blood from Fleet Street. One can imagine the advertisements used to recruit such people—"Wanted. Someone to make a silk purse out of a sow's ear."
No matter how much the Secretary of State may yearn for the days of Saatchi and Saatchi, however many newsmen he may try to get, however brash he may be, however much he may shout, and no matter how much window dressing he may use, he cannot hide the fact that the Government have the worst housing record since 1925, and that is why we shall press the matter to a Division tonight.
9.37 pm
The Minister for Housing and Construction (Mr. John Stanley): I cannot say that I agreed with every word that the hon. Member for Bolton, West (Mrs. Taylor) uttered, but I certainly wish to congratulate her on her first appearance at the Opposition Dispatch Box in a housing debate.
The Opposition chose to entitle this debate
"The Government's attack on housing".
I shall not dwell at any great length on the record of the previous Administration, but the right hon. Member for Manchester, Ardwick (Mr. Kaufman) was trying to rewrite history when he began his speech this afternoon. Much as the Labour Party may want it otherwise, the so-called attack on housing was begun not by this Government, but by the Labour Government—in 1976 under the right hon. Members for Stepney and Poplar (Mr. Shore) and Brent, East (Mr. Freeson). They sustained the so-called attack with unswerving consistency for four
948
successive years. If the Opposition want the debate to be about the attack on housing, it is time that they acknowledged their consistent contribution to that attack.
That is not merely the view of the Conservative Benches. I listened with interest to the hon. Member for Mitcham and Morden (Mr. Douglas-Mann), who is also Chairman of the Select Committee on the Environment. Mr. Alan Murie, one of the specialist advisers to that Committee, is in no doubt about the origins of the present housing position. Recently he wrote:
"Whatever view is taken of the extent of progress and the nature of remaining problems, the previous Government went a long way to lower the rate of success."
Mr. Murie is correct in that view.
The right hon. Member for Ardwick and the hon. Lady sought not merely to draw a veil over what had happened before 1979 but to ignore one of the most important changes in the public sector—the change from new building to improvement—
Mr. Freeson: Not again.
Mr. Stanley: The right hon. Gentleman cannot ignore this. I shall tell him what he was doing when he had my job in the Labour Government. Local authorities—Conservative and Labour—have been deliberately and consciously switching their expenditure from new building to improvement over the past few years. While new building has been decreasing, improvement has been increasing. Local authorities' expenditure on improvement has been increasing in real terms year by year. The figures, at 1980 survey prices, show that in 1976 expenditure on improvements was £482 million, in 1977 it rose to £509 million, in 1978 it rose again to £563 million, in 1979 it rose to £718 million and for 1980 our estimate is that it will once again be about £700 million.
Mr. Freeson: Do those figures include work carried out by housing associations? If so, and bearing in mind the pipeline effect of expenditure and activity in that area in recent years, will the Minister say whether he expects the high level now reached to continue in real terms during 1981, 1982 and 1983? Will he put the facts on the record?
Mr. Stanley: I shall have to check the exact position, but I understand that the figures refer solely to local authorities' improvement expenditure on their dwellings and do not include housing association expenditure funded by the Housing Corporation. I am sure that the right hon. Gentleman will be glad to know that in the first full year of this Government there has been more expenditure on improvement than during any year when he was Minister. In relation to future levels, we shall have to consider what local authorities do with their single block capital allocation and their use of receipts. I shall come to that later.
I wish to emphasise the considerable progress in improvements to dwellings. Figures are available up to 30 September 1980. I am glad to say that in the 12-month period to that date the number of improvements to private houses was the highest since 1975. The number of improvements to council houses was the highest since 1973, and the number of improvements to housing association dwellings was the second highest ever. The hon. Member for Bolton, West referred to the disabled. I am glad to tell her that the number of improvements to dwellings for the disabled carried out in both the public

949
and private sectors was higher in the first nine months of 1980 than in any complete 12-month period previously reported.
Mrs. Ann Taylor: Will the Minister confirm that the improvements completed to September last year were, by and large, within the HIP allocations approved by the Labour Government?
Mr. Stanley: They cover a wide range of improvements. If the hon. Lady thinks that such levels of improvement in the private sector and elsewhere were a result of Labour allocations, I have to tell her that it would have to be a very inefficient Labour-controlled authority to take 18 months to bring those improvements to a conclusion.
Throughout the debate we have considered the question of expenditure. A great deal of attention has been paid to the levels of public expenditure, but no attention has been focused on the significant ways in which the Government have managed to offset some of the reductions in public expenditure by the additional availability of private finance.
I want to draw the attention of the House to two important developments that have taken place during the past week. Last Wednesday I announced that the Building Societies Association had endorsed clauses for shared ownership leases under which building society mortgages can now be made available for the first time to those buying houses and flats under the various types of shared ownership schemes being carried out by local authorities, new towns and housing associations.
That is an important development, because it will open the way for many millions of pounds of building society finance to be made available to shared ownership schemes, which previously could be financed only by local authority mortgages, which counted as public expenditure. That change will probably enable between three and four times as many shared ownership houses or flats to be constructed for a given amount of public expenditure than would previously have been the case.
I am glad to be able to announce a second and equally significant development. I think that it will meet some of the proposals made by my hon. Friend the Member for Buckingham (Mr. Benyon). As I indicated in an answer today to my hon. Friend the Member for Reading, North (Mr. Durant), agreement has now been reached with representatives of the Building Societies Association on a new scheme under the 1980 Housing Act, under which building societies will for the first time be able to advance mortgages on the strength of a guarantee from a local authority or from the Housing Corporation. This will enable building societies to provide mortgages on homes in need of improvement which previously could be mortgaged only to a local authority, and therefore would have fallen on the authority's HIP expenditure. These guarantees will be able to be used on all schemes within our low-cost home ownership programme—in other words, for building for sale, improvement for sale, shared ownership and homesteading.
A key financial point is that the local authority's guarantee will not—I stress this—score as public expenditure unless the guarantee is invoked, which will happen in only a small minority of cases. Both schemes hold out the prospect of extending home ownership to
950
many new, first-time buyers, by using private mortgage finance rather than public mortgage finance. Both mean additional low-cost homes for people who want to buy, without requiring additional public expenditure, and both show that the Government are successful and positively bringing in private finance to offset the reductions in public expenditure.
Mr. Heffer: How many of the 2½ million unemployed will be in that category?
Mr. Stanley: This provides a means of bringing back into use some of the low-cost homes, far too many of which are empty, not least in the hon. Gentleman's city.
Before I leave the question of public expenditure I should like to say a few words about capital receipts. We have heard a number of complaints from hon. Members about insufficient HIP allocations for their own authorities. I remind the House that from 1 April new rules apply, under which local authorities will be able to supplement their HIP allocations with the use of capital receipts.
Opposition Members have a simple remedy in their own hands if they think that their allocation is not sufficient. They should urge their councils to maximise their capital receipts, to get on with the sale of the many acres of local authority land that have been lying idle for far too long, and to get on with the sale of council houses to tenants, who are bursting to buy them and who are becoming increasingly frustrated by the delay.
Yet, surprisingly, the advice from the Opposition Front Bench has been very different. Far from encouraging local authorities to maximise capital receipts, the Opposition Front Bench has suggested that they should try to go slow. The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said at the Labour Party local government conference last year:
"I hope that no Labour councils will anticipate its"—the Housing Bills—
"passage by preparing to sell council houses before the Bill receives Royal Assent."
That was the worst possible advice. In effect, the right hon. Gentleman was telling local authorities "Delay selling council houses, even if it means that you will have less to spend on housing next year as a result of that delay".
Mr. Douglas-Mann Mr. Douglas-Mann rose—
Mr. Clinton Davis Mr. Clinton Davis rose—
Mr. Stanley: We have heard a great deal about Government spending cuts. We heard far too little in the debate about self-imposed cuts by Labour councils that have not got on with maximising capital receipts.
I give way to the hon. Member for Mitcham and Morden.
Mr. Douglas-Mann: To what extent do the HIP allocations assume capital receipts? To what extent do they assume a level of council house sales of 120,000, which the hon. Gentleman knows perfectly well will not be achieved? Does the hon. Gentleman accept the assessment of the Association of Metropolitan Authorities that instead of £413 million, which he had assumed, the most that is likely to be achieved is £300 million, so that his own figures are completely false?
Mr. Stanley: I do not accept that at all. The HIP allocations were made only on an assumption about the

951
receipts that would arise in the course of the financial year 1981–82. In addition, local authorities can use their accumulated unspent capital receipts as at 1 April. If hon. Members want to know what the possibilities are they should look at those authorities that have understood the new situation and that have taken advantage of it. I shall use the example of Eastbourne district council. [Interruption.] I do not know why hon. Members should greet "Eastbourne" with such derision. It is one of the focal points of our national life. Eastbourne has the great good fortune to be represented by my hon. Friend the Member for Eastbourne (Mr. Gow). As is well known, my hon. Friend has a most healthy distaste for the retention of unwanted assets in the public sector. It will come as no great surprise to those on the Government Benches to know that Eastbourne district council will be able to make some addition to housing expenditure next year. That addition will be represented by a sum based on its accumulated gross capital receipts, which total £7,696.000. Many Labour-controlled councils must wish that they had followed the advice of my hon. Friend the Member for Eastbourne rather than that of the right hon. Member for Sparkbrook.
I turn to what the Government are doing to assist those who want to purchase at a low cost. There is no doubt that a great many of those in rented accommodation, or who are waiting for such accommodation, are willing and able to buy if low-cost home ownership opportunities can be made available to them.
I am glad to be able to tell the House that the response to our low-cost home ownership programme is very encouraging. About 60 councils are making land sales to private builders for starter home schemes. There are 96 councils with starter homes schemes on their own land and 23 councils with shared ownership schemes. There are 47 councils with improvement for sale schemes, and 51 councils are making sales of unimproved homes for first-time buyers. I am glad to say that the message of our low-cost home ownership programme is beginning to spread into some pretty strange quarters.
For example, I never thought that I would live to see the day when Manchester city council would come to embrace homesteading, but it has happened. Recently, we invited bills from local authorities that wished to take part in our homesteading programme. That programme was pioneered by the Conservative-controlled GLC. We received a bid from Manchester. That bid was very necessary if Manchester was to deal with the 1,869 dwellings that had been vacant for more than a year. We have been able to make an allocation to Manchester for homesteading. I can think of no better way for Manchester city council to celebrate the promotion of the right hon. Member for Ardwick to the Shadow Cabinet than by adopting some thorough-going Conservative housing policies. They are much needed.
Several of my hon. Friends, particularly my hon. Friends the Members for Lichfield and Tamworth (Mr. Heddle) and for Watford (Mr. Garel-Jones) raised the subject of the right to buy. I corrobate what my hon. Friends have said. Delays in certain local authorities give rise to concern. I remind the House that if a tenant submits an application to buy his house, he is entitled by law to receive a response from the council within either four or eight weeks. In some Labour-controlled authorities tenants have not received a response within the statutory period.
952
I hope that the right hon. Member for Ardwick will make his position unambiguously clear. Almost exactly a year ago, the right hon. Gentleman gave a clear public undertaking. In the Standing Committee he said:
"We have made clear—our party conference passed a resolution to this effect—that any opposition to the Act must be conducted within the law."
I now ask the right hon. Member for Ardwick to confirm that it is still the view of the Opposition that any opposition to the right to buy should be within the law, and to repudiate those Labour authorities which clearly are in breach of their statutory obligations to their tenants.
Mr. Kaufman: If the Minister has any evidence that Labour authorities or other authorities are not carrying out their statutory duty, he has the opportunity to use section 23 of the Act to deal with them. Therefore, let him say whether he has any examples of the use of section 23 that he wants to employ.
Mr. Stanley: It is very significant that the right hon. Gentleman ducks the question. He has given a clear undertaking that the Labour Party will countenance opposition to the right to buy only if it is within the law. We shall hold him to that statement.
I now say a word about the private rented sector. We have heard a great deal about the shortage of rented accommodation. I agree with my hon. Friend the Member for Folkestone and Hythe (Sir A. Costain) that it is entirely possible to make significantly greater use of the private rented sector than we have been able to do up to now. The private sector can make a significantly greater contribution and would have been making it had it not been for the fact that for years and years the Labour Party has been insufficiently concerned about the availability of rented accommodation and far too concerned about carrying on its vendetta against the private landlord.
The Government have now taken some significant steps in the Housing Act. We have made it much easier for home owners to sublet, and it is significant that we have had a very substantial response. Certainly I do not dismiss the booklets which my Department has published to explain people's very important new rights in the legislation. The demand we have had for those booklets on the right to buy, the tenant's charter and the other aspects of the Housing Act are indicative of the very real interest that individuals have in exercising their new rights under the legislation.
We have made it much easier for people to let their homes when they have to leave them temporarily, for example, to go abroad. I can assure my hon. Friend the Member for Folkestone and Hythe that we have made it easier for those with retirement homes to let their homes temporarily. We have made it much easier for Servicemen to let their homes temporarily if they are serving overseas. We have given all public sector tenants a statutory right to sublet and to take in lodgers. We have created the new system of assured tenancies.
I am looking forward next month to opening the first assured tenancy in Tower Hamlets, carried out by the Abbey National building society. I take this opportunity to announce that my right hon. Friend has just approved an application from a leading national house builder, Wates Limited, to carry out assured tenancies as well. In a variety of ways we have sought materially to improve the availability of rented accommodation in the private sector.
I also want to refer to shorthold. The right hon. Member for Ardwick should be aware that we are begining to get

953
clear evidence that shorthold tenancies are being withheld simply on the strength of the repeal commitment which has been made by the Opposition.
The right hon. Member for Ardwick has been totally consistent. He made it clear during the Standing Committee proceedings on the Housing Bill that he would rather dwellings were left empty than let on shorthold. I can assure him that dwellings are now being left empty rather than being let on shorthold, and they are being left empty because of him.
I want to read to the House a letter which we have received from a solicitor in the West Country. I think that this is all too characteristic:
"Under the Housing Act 1980 'shorthold' tenancies may now be created, giving the landlord the right to obtain possession on the expiration of the term of the tenancy. The trouble is that Her Majesty's Opposition has already said that if it returns to power at the next General Election it will repeal this part of the Act. What do landlords do in such cases and how is one supposed to advise them? It seems that the best advice is still 'Don't'."
Mr. Walter Harrison Mr. Walter Harrison (Wakefield) rose—
Mr. Deputy Speaker: Order. We cannot have two people at the Dispatch Box at once.
Mr. Walter Harrison Mr. Walter Harrison rose in his place and claimed to move, That the Question be now put.
Question, That the Question be now put, put and agreed to.
Question put accordingly, That the original words stand part of the Question:—
The House divided: Ayes 257, Noes 311.

Division No. 68]

[10. pm

AYES

Abse, Leo

Conlan, Bernard

Adams, Allen

Cook, Robin F.

Allaun, Frank

Cowans, Harry

Alton, David

Cox,T. (W'dsw'th, Toot'g)

Anderson, Donald

Craigen,J. M.

Archer, Rt Hon Peter

Crowther, J.S.

Armstrong, Rt Hon Ernest

Cryer, Bob

Ashley, Rt Hon Jack

Cunliffe, Lawrence

Ashton, Joe

Cunningham, G.(lslingtonS)

Atkinson,N.(H'gey,)

Cunningham, DrJ.(W'h'n)

Bagier, Gordon A.T.

Dalyell, Tam

Barnett,Guy(Greenwich)

Davidson, Arthur

Barnett, Rt Hon Joel (H'wd)

Davies, Rt Hon Denzil (L'lli)

Beith, A. J.

Davies, Ifor (Gower)

Bennett, Andrew (St'kp'tN)

Davis, Clinton (HackneyC)

Bidwell, Sydney

Davis, T. (B 'ham, Stechf'd)

Booth, Rt Hon Albert

Deakins, Eric

Boothroyd, MissBetty

Dean, Joseph (Leeds West)

Bradley, Tom

Dewar, Donald

Bray, Dr Jeremy

Dixon, Donald

Brown, Hugh D.(Provan)

Dobson, Frank

Brown, R. C. (N'castle W)

Dormand, Jack

Brown, Ron (E'burgh,Leith)

Douglas, Dick

Brown, Ronald W. (H'ckn'yS)

Douglas-Mann, Bruce

Buchan, Norman

Dubs, Alfred

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

Duffy, A. E. P.

Campbell, Ian

Dunn, James A.

Campbell-Savours, Dale

Dunnett, Jack

Canavan, Dennis

Dunwoody, Hon Mrs G.

Cant, R. B.

Eastham, Ken

Carmichael, Neil

Edwards, R.(W'hampt'nSE)

Carter-Jones, Lewis

Ellis, R. (NED'bysh're)

Cartwright, John

Ellis,Tom (Wrexham)

Clark, Dr David (S Shields)

English, Michael

Cocks, Rt Hon M. (B'stolS)

Ennals, Rt Hon David

Cohen, Stanley

Evans, loan (Aberdare)

Coleman,Donald

Evans, John (Newton)

Concannon, Rt Hon J.D.

Ewing, Harry

954

Field, Frank

Marshall, DrEdmund (Goole)

Fitch, Alan

Marshall, Jim (LeicesterS)

Fitt, Gerard

Martin, M (G'gowS'burn)

Flannery, Martin

Mason, Rt Hon Roy

Fletcher,Raymond (llkesfon)

Maxton, John

Fletcher,Ted (Darlington)

Mellish, Rt Hon Robert

Foot, Rt Hon Michael

Meyer, Sir Anthony

Ford, Ben

Mikardo, lan

Forrester, John

Millan, Rt Hon Bruce

Foster, Derek

Miller, Dr M.S. (EKilbride)

Foulkes, George

Mitchell, Austin(Grimsby)

Fraser, J.(Lamb'th,N'w'd)

Mitchell, R.C.(Sotonltchen)

Freeson, Rt Hon Reginald

Morris, Rt Hon A. (W'shawe)

Freud, Clement

Morris, Rt Hon C. (O'shaw)

Garrett, John(NorwichS)

Morris, Rt Hon J. (Aberavon)

Garrett, W. E. (Wallsend)

Moyle, Rt Hon Roland

George, Bruce

Mulley, Rt Hon Frederick

Gilbert, Rt Hon Dr John

Newens, Stanley

Ginsburg, David

Oakes, Rt Hon Gordon

Golding, John

Ogden, Eric

Gourlay, Harry

O'Halloran, Michael

Graham, Ted

O'Neill, Martin

Grant, George (Morpeth)

Orme, Rt Hon Stanley

Grant, John (IslingtonC)

Owen, Rt Hon Dr David

Hamilton,James (Bothwell)

Palmer, Arthur

Hamilton, W. W. (C'tral Fife)

Park, George

Hardy, Peter

Parker, John

Harrison, Rt Hon Walter

Parry, Robert

Hart, Rt Hon Dame Judith

Pavitt, Laurie

Hattersley, Rt Hon Roy

Pendry, Tom

Haynes, Frank

Penhaligon, David

Healey, Rt Hon Denis

Powell, Raymond (Ogmore)

Heffer, Eric S.

Prescott, John

Hogg, N. (E Dunb't'nshire)

Price, C. (Lewisham W)

Holland, S.(L'b'th,Vauxh'll)

Race, Reg

HomeRobertson, John

Radice, Giles

Homewood, William

Rees, Rt Hon M (Leeds S)

Hooley, Frank

Richardson, Jo

Howell, Rt Hon D.

Roberts, Albert (Normanton)

Huckfield, Les

Roberts, Allan (Bootle)

Hughes, Mark (Durham)

Roberts, Ernest (Hackney N)

Hughes, Robert (Aberdeen N)

Roberts, Gwilym (Cannock)

Hughes, Roy (Newport)

Robertson, George

Janner, HonGreville

Robinson, G. (Coventry NW)

Jay, Rt Hon Douglas

Rodgers, Rt Hon William

John, Brynmor

Rooker, J.W.

Johnson, James (Hull West)

Roper, John

Johnson, Walter (Derby S)

Ross, Ernest (Dundee West)

Jones, Rt Hon Alec (Rh'dda)

Ross, Stephen (Isle of Wight)

Jones, Barry (East Flint)

Rowlands, Ted

Jones, Dan (Burnley)

Ryman, John

Kaufman, Rt Hon Gerald

Sandelson, Neville

Kerr, Russell

Sever, John

Kilfedder, James A.

Sheerman, Barry

Kilroy-Silk, Robert

Sheldon, Rt Hon R.

Kinnock, Neil

Shore, Rt Hon Peter

Lambie, David

Short, Mrs Renée

Lamborn, Harry

Silkin, Rt Hon J. (Deptford)

Lamond, James

Silkin, Rt Hon S. C. (Dulwich)

Leadbitter, Ted

Silverman, Julius

Leighton, Ronald

Skinner, Dennis

Lestor, MissJoan

Snape, Peter

Lewis,Arthur(N'ham NW)

Soley, Clive

Lewis, Ron (Carlisle)

Spriggs, Leslie

Litherland, Robert

Stallard, A. W.

Lofthouse, Geoffrey

Steel, Rt Hon David

Lyon, Alexander (York)

Stewart, Rt Hon D. (W Isles)

Mabon, Rt Hon DrJ. Dickson

Stoddart, David

McCartney, Hugh

Stott, Roger

McDonald, DrOonagh

Strang, Gavin

McElhone, Frank

Straw, Jack

McGuire, Michael (lnce)

Summerskill, HonDrShirley

McKay, Allen (Penistone)

Taylor, Mrs Ann (Bolton W)

McKelvey, William

Thomas, Dafydd(Merioneth)

MacKenzie, Rt Hon Gregor

Thomas, Jeffrey(Abertillery)

Maclennan, Robert

Thomas, Mike (Newcastle E)

McNally, Thomas

Thomas, DrR. (Carmarthen)

Magee, Bryan

Thorne, Stan (PrestonSouth)

Marks, Kenneth

Tilley, John

Marshall, D (G'gowS'ton)

Varley, Rt Hon Eric G.

955

Wainwright, E.(DearneV)

Williams, SirT.(W'ton)

Walker, Rt Hon H.(D'caster)

Wilson, Gordon (DundeeE)

Watkins.David

Wilson, Rt Hon SirH.(H'ton)

Weetch.Ken

Wilson, William (C'trySE)

Wellbeloved,James

Winnick, David

Welsh, Michael

Woolmer.Kenneth

White, Frank R.

Wrigglesworth, lan

White, J.(G'gow Pollok)

Young, David (BoltonE)

Whitehead.Phillip

Whitlock, William

Tellers for the Ayes:

Willey, Rt Hon Frederick

Mr. James Tinn and

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

Mr. George Morton.

NOES

Adley, Robert

duCann, Rt Hon Edward

Aitken, Jonathan

Dunn, Robert (Dartford)

Alexander, Richard

Durant, Tony

Alison, Michael

Dykes, Hugh

Amery, Rt Hon Julian

Eden, Rt Hon Sir John

Ancram, Michael

Edwards, Rt Hon N.(P'broke)

Arnold, Tom

Eggar, Tim

Atkins, Rt Hon H.(S'thorne)

Emery, Peter

Atkins, Robert (PrestonN)

Eyre, Reginald

Atkinson, David (B'm'th, E)

Fairbairn, Nicholas

Baker, Kenneth(St.M'bone)

Fairgrieve, Russell

Baker, Nicholas (NDorset)

Faith, MrsSheila

Banks, Robert

Farr, John

Beaumont-Dark, Anthony

Fenner, Mrs Peggy

Bell, Sir Ronald

Finsberg, Geoffrey

Bendall, Vivian

Fisher, SirNigel

Benyon, Thomas(A'don)

Fletcher, A. (Ed'nb'ghN)

Benyon, W. (Buckingham)

Fletcher-Cooke, SirCharles

Best.Keith

Fookes, Miss Janet

Bevan, DavidGilroy

Forman, Nigel

Biffen, RtHon John

Fowler, Rt Hon Norman

Biggs-Davison.John

Fox, Marcus

Blackburn, John

Fraser, Rt Hon Sir Hugh

Bonsor, SirNicholas

Fraser, Peter (South Angus)

Boscawen, HonRobert

Fry, Peter

Bottomley, Peter (W'wichW)

Galbraith, Hon T. G. D.

Bowden, Andrew

Gardiner, George (Reigate)

Boyson, Dr Rhodes

Gardner, Edward (S Fylde)

Braine, SirBernard

Garel-Jones, Tristan

Bright, Graham

Gilmour, Rt Hon Sir lan

Brinton, Tim

Glyn, Dr Alan

Brittan, Leon

Goodhart, Philip

Brooke, Hon Peter

Goodlad, Alastair

Brotherton, Michael

Gorst, John

Brown, M.(Briggand Scun)

Gow, Ian

Browne, John (Winchester)

Gower, Sir Raymond

Bruce-Gardyne, John

Grant, Anthony (HarrowC)

Bryan, Sir Paul

Gray, Hamish

Buck, Antony

Greenway, Harry

Budgen, Nick

Grieve, Percy

Bulmer, Esmond

Griffiths, E.(B'ySt.Edm'ds)

Burden, Sir Frederick

Griffiths, Peter (Portsm'thN)

Butcher, John

Grist, Ian

Carlisle, John (LutonWest)

Grylls, Michael

Carlisle, Kenneth (Lincoln)

Gummer, JohnSelwyn

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

Hamilton, HonA.

Chalker, Mrs. Lynda

Hamilton, Michael(sailbury)

Channon, Rt. Hon. Paul

Hampson, DrKeith

Chapman, Sydney

Hannam, John

Churchil, W.S.

Haselhurst, Alan

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

Hastings, Stephen

Clark, SirW. (CroydonS)

Havers, Rt Hon Sir Michael

Clarke, Kenneth(Rushcliffe)

Hawkins, Paul

Clegg, SirWalter

Hawksley, Warren

Colvin, Michael

Hayhoe, Barney

Cope, John

Heath, Rt Hon Edward

Cormack, Patrick

Heddle, John

Corrie, John

Henderson, Barry

Costain, SirAlbert

Heseltine, Rt Hon Michael

Cranborne, Viscount

Hicks, Robert

Critchley, Julian

Higgins, Rt Hon Terence L.

Crouch, David

Hill, James

Dean, Paul (North Somerset)

Holland, Philip(Carlton)

Dorrell, Stephen

Hooson, Tom

Douglas-Hamilton, LordJ.

Hordern, Peter

Dover, Denshore

Howe, Rt Hon Sir Geoffrey

956

Howell, Rt Hon D. (G'ldf'd)

Page, John (Harrow, West)

Howell, Ralph(NNorfolk)

Page, Rt Hon Sir G.(Crosby)

Hunt, David (Wirral)

Page, Richard (SW Herts)

Hunt, John(Ravensbourne)

Parkinson, Cecil

Hurd, Hon Douglas

Parris, Matthew

Irving, Charles(Cheltenham)

Patten, Christopher(Bath)

Jenkin, Rt Hon Patrick

Patten, John(Oxford)

Jessel, Toby

Pattie, Geoffrey

JohnsonSmith, Geoffrey

Pawsey, James

Jopling, Rt HonMichael

Percival, Sirlan

Joseph, Rt Hon Sir Keith

Peyton, Rt Hon John

Kaberry, SirDonald

Pink, R.Bonner

Kellett-Bowman, MrsElaine

Pollock, Alexander

Kershaw, Anthony

Porter, Barry

Kimball, Marcus

Powell, Rt Hon J.E. (S Down)

King, Rt Hon Tom

Prentice, Rt Hon Reg

Kitson, SirTimothy

Price, SirDavid(Eastleigh)

Knight, Mrs Jill

Proctor, K. Harvey

Knox, David

Pym, Rt Hon Francs

Lamont, Norman

Raison, Timothy

Lang, Ian

Rathbone, Tim

Langford-Holt, SirJohn

Rees, Peter (Dover and Deal)

Latham, Michael

Rees-Davies, W. R.

Lawrence, Ivan

Renton, Tim

Lawson, Rt Hon Nigel

Rhodes James, Robert

Lee, John

Ridley, Hon Nicholas

Lennox-Boyd, Hon Mark

Ridsdale, Julian

Lester Jim (Beeston)

Rifkind, Malcolm

Lewis, Kenneth(Rutland)

Rippon, Rt Hon Geoffrey

Lloyd, Ian (Havant & W'loo)

Roberts, M. (Cardiff NW)

Loveridge, John

Roberts, Wyn (Conway)

Lyell, Nicholas

Ross, Wm. (Londonderry)

McCrindle, Robert

Rossi, Hugh

McCusker, H.

Rost, Peter

Macfarlane, Neil

Sainsbury, Hon Timothy

MacKay, John (Argyll)

St. John-Stevas, Rt Hon N.

Macmillan, Rt Hon M.

Scott, Nicholas

McNair-Wilson, M. (N'bury)

Shaw, Giles (Pudsey)

McNair-Wilson, P. (NewF'st)

Shaw, Michael (Scarborough)

McQuarrie, Albert

Shelton, William(Streatham)

Madel, David

Shepherd, Colin(Hereford)

Major, John

Shepherd, Richard

Marland, Paul

Shersby, Michael

Marlow, Tony

Silvester, Fred

MarshallMichael(Arundel)

Sims, Roger

Marten, Neil (Banbury)

Skeet, T. H. H.

Mates, Michael

Smith, Dudley

Mather, Carol

Speller, Tony

Maude, Rt Hon Sir Angus

Spence, John

Mawby, Ray

Spicer, Jim (WestDorset)

Mawhinney, DrBrian

Spicer, Michael (SWorcs)

Maxwell-Hyslop, Robin

Sproat, lam

Mayhew, Patrick

Squire, Robin

Mellor, David

Stainton, Keith

Meyer, SirAnthony

Stanbrook, lvor

Miller, Hal (B'grove)

Stanley, John

Mills, lain (Meriden)

Steen, Anthony

Mills, Peter (WestDevon)

Stevens, Martin

Miscampbell, Norman

Stewart, Ian (Hitchin)

Mitchell, David (Basingstoke)

Stewart, A. (ERenfrewshire)

Moate, Roger

Stokes, John

Molyneaux, James

Stradling Thomas, J.

Monro, Hector

Tapsell, Peter

Montgomery, Fergus

Taylor, Robert(CroydonNW)

Moore, John

Taylor, Teddy(S'end E)

Morgan, Geraint

Tebbit, Norman

Morris, M.(N'hamptonS)

Temple-Morris, Peter

Morrison, Hon C. (Devizes)

Thatcher, Rt Hon Mrs M.

Morrison, Hon P. (Chester)

Thomas, Rt Hon Peter

Mudd, David

Thompson, Donald

Murphy, Christopher

Thorne, Neil(llfordSouth)

Myles, David

Thornton, Malcolm

Needham, Richard

Townend, John (Bridlington)

Nelson, Anthony

Townsend, CyrilD, (B'heath)

Neubert, Michael

Trotter, Neville

Newton, Tony

van Straubenzee, W. R.

Nott, RtHon John

Vaughan, DrGerard

Onslow, Cranley

Viggers, Peter

Oppenheim, Rt Hon Mrs S.

Waddington, David

Osborn, John

Wakeham, John

957

Walker, B. (Perth)

Wickenden, Keith

Walker-Smith, Rt Hon Sir D.

Wiggin, Jerry

Wall, Patrick

Wilkinson, John

Waller, Gary

Williams,D. (Montgomery)

Walters, Dennis

Winterton, Nicholas

Ward, John

Wolfson, Mark

Warren, Kenneth

Young, SirGeorge (Acton)

Watson, John

Wells, John(Maidstone)

Tellers for the Noes:

Wells, Bowen

Mr. Spencer Le Marchant and

Wheeler, John

Mr. Anthony Berry.

Whitelaw, RtHon William

Question accordingly negatived.
Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments), and agreed to.
MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.
Resolved,
That this House welcomes the measures the Government are taking to restore a sound economy, to make better use of the existing housing stock, to revive the private rented sector, to provide a new charter of rights for public sector tenants, and to extend home ownership more widely than ever before."

Northern Ireland (Legal Aid)
10.13 pm
The Minister of State, Northern Ireland Office (Mr. Michael Alison): I beg to move,
That the draft Legal Aid, Advice and Assistance (Northern Ireland) Order 1981, which was laid before this House on 28 January, be approved.
The order consolidates the law relating to legal aid, advice and assistance. The Joint Committee on Consolidation Bills considered the matter on 4 February and reported its opinion that it is pure consolidation and that there is no point to which the attention of Parliament should be drawn. I commend it to the House.
Question put and agreed to.

Northern Ireland (Weights and Measures)
10.14 pm
The Minister of State, Northern Ireland Office (Mr. Michael Alison): I beg to move,
That the draft Weights and Measures (Northern Ireland) Order 1981, which was laid before this House on 13 January, be approved.
The purpose of the order is to consolidate the enactments relating to weights and measures. It reproduces the existing laws without change. It may help the House to know that the Joint Committee on Consolidation Bills considered the order on 4 February and reported its opinion that it is pure consolidation and that there is no point to which the attention of Parliament should be drawn. I commend it to the House.
Question put and agreed to.

All-night Parties
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Le Marchant.]
10.15 pm
Mrs. Jill Knight: I have sought this debate because of a West Indian party which took place in my constituency over the Christmas holidays. It began on 22 December, the Sunday before Christmas, and continued until 2 January, a period of 11 days. During that time, the harassment, noise and fear that my constituents had to endure was utterly intolerable. The nights were the worst.
The form was that people would start to arrive at about 9 pm from all parts of Birmingham but also from London, Bristol and the North. They came in cars and in vans, usually with hi-fi equipment blasting out reggae music from their transport, horns blaring as they cruised up and down the road looking for parking places. That went on all night, until 7.30 in the morning, and it went on every night.
I have visited that street many times and have seen the house at which these parties took place. It is a very small house. On the ground floor is just one window and the front door. Above is just one large window and a very tiny window over the door. It is a terraced inner-city house. Inside that house were crammed 200 people at any one time, although there was a good deal of coming and going.
Those who attended paid £2 to go in. There is plenty of evidence from people who saw the money changing

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hands. I do not think that much alcohol was drunk, although one West Indian who was at the party said that some was drunk. However, many observers say that marijuana was being smoked—and quite a quantity, because the smell outside was unmistakable.
The noise of the disco troubled the near-neighbours, as well it might, because the sound was turned up very high, but it was the rowdy behaviour in the street that was the main problem. There was a seething mass of people, 99 per cent. of whom were of the Rastafarian type, who can look a little frightening. Certainly their numbers were frightening.
The noise these people made was terrifying. They shouted at each other. One resident who tried to park his car in a space which was apparently reserved for a party-goer was intimidated and very frightened. Another of my constituents who went to ask whether the noise could please be turned down a little had a knife pulled on him. No doubt thinking that discretion was the better part of valour, he ran away with the man with the knife after him and only just got inside his house in time, where he slammed and bolted the door. He was very frightened.
Unfortunately, throughout all this time—11 days—nothing at all was done for my constituents.
The police were contacted many times, but they would do nothing. A petition signed by 40 of the residents of the street was taken to the police station. Both black and white people signed the petition because they wanted a bit of peace and quiet. But the police refused to accept the petition, so it was sent to them by recorded mail delivery.
The police were technically right. The law gives them no powers to stop noisy parties in private houses. In this case there was clear evidence of cannabis smoking and of the fact that people were paying to go in, and there was no licence to run such a party in the house. There were also knife threats being made. One might have thought that all this would be sufficient to get the police interested. Unfortunately, they stuck to their view that it was not their job. They stated that the law says that it is the job of the environment health officer of the local council to deal with such parties.
Sir Ronald Bell: If there is no music and dancing licence for the house, and money is being paid for admission, is it not a matter for the police rather than for the Department of the Environment?
Mrs. Knight: I am describing exactly what happened on this disastrous occasion for my constituents. My hon. and learned Friend has a great knowledge of the law and I am sure that he is right.
It is all very well to say that the environmental health officer is the person who should deal with the matter, but the local council offices were shut tighter than a drum throughout Christmas and on to the new year. I have found out since that there was an Ansafone service technically operating which possibly might have been able to produce the right answer for my constituents, but unfortunately they did not know that. West Indian leaders were contacted. It should be stated that sometimes they are extremely helpful in stopping these parties, but on this occasion it did not work.
Finally, the police came, with fairly disastrous results. They came in some force, with police cars. The police cars were attacked by mobs of West Indian youths and stoned very severely. Several of the police were slightly injured.
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One policeman had to be taken to hospital with a serious head injury. He had to have 12 stitches in his head. In view of this fearsome attack on the police, it is no wonder that my poor constituents were so frightened.
It is because I believe that such incidents are totally intolerable that I have sought this debate. I have since discovered that such parties are by no means confined to my area. Since the case was publicised, I have received scores of letters indicating that the problem of all-night parties, sometimes continuing over many days or over the whole weekend, is common all over the country. Hon. Members will be well aware of the tragic consequences of a similar party at Deptford only two or three weeks ago.
I gather that these parties are called shebeens, and I understand that they are very common. I had a letter from the environmental health officer of Southampton. He tells me that shebeens are not merely unlicensed houses selling drink but are also associated with prostitution and drugs as well as amplified music and general revelry. Residents are disturbed, mainly at weekends, by shebeens starting about 11 pm and not ending until 5 am or 6 am. Stories of alarm clocks being vibrated off bedside tables in contiguous houses, of people having to go to relatives to sleep, and of elderly people in tears, are not uncommon, according to that environmental health officer.
I must be frank and voice my fears that because of the race connotation these parties are not treated as they would be if the persons concerned were of a different race. If we tried to cram 200 people into a very small house, charged them £2 a head for entry, smoked marijuana and played music all night, the authorities would be down on us like a ton of bricks.
Sir Ronald Bell: Quite right.
Mrs. Knight: Of course. I have no doubt that anyone who complains as I am doing runs the risk of being called a racist. My contention has nothing to do with race. All persons living in this land have a right to equal blame or equal protection under the law. No one, whatever his colour, has a right to make life unbearable for his neighbours. That is why I am asking my hon. Friend for action.
I do not seek to censure all parties. There are many parties that we all enjoy and to which neighbours do not object. I have in mind the ordinary birthday parties, 21st birthday celebrations and Christmas parties. Surely it is clear that there is a definable line between that sort of party and parties that go on and on with no consideration for the neighbours. I am asking for more co-operation between the police and the environmental departments of local authorities.
Mr. John Carlisle: My hon. Friend need not be too worried about being classified as a racist. Part of the tragedy of these sorts of party is that they take place in an environment in which a large mass of the working population lives. There are some who have to get up extremely early each morning to go to work. They are being prevented from getting a good night's sleep. What may be in place in the sunny Caribbean may not be in place in my hon. Friend's constituency or in Deptford. This is a tragedy for the British people and for those whom I have mentioned specifically. My hon. Friend need have no fear that anyone will classify her or any of her colleagues as racist.
Mrs. Knight: My hon. Friend displays a real understanding of exactly what I am talking about. I had no idea of the spread of the problem. It is untenable that the situation should be allowed to continue when we bear in mind, for example, those who have to get up early in the morning to go to work.
There are some authorities—the London borough of Brent is one example—that have regular party patrols by environmental health officers. They have to have back-up from the police. If that can be done in Brent, why cannot it be done in other places where a similar problem exists? Why cannot there be uniformity of protection?
A prohibition order was placed on the house in Stirling Road, Edgbaston, where the party took place. That will give peace for a time. However, the process of serving enforcement orders in these cases is far from simple. If one has managed to serve such a notice, revisits and finds that there is non-compliance although the details on the notice are still valid, I am told that there is a tremendous problem in getting supportive evidence at the magistrates' court hearing. I am told that for shebeens it is invariably impossible to find witnesses to give court evidence.
Witnesses will not come forward because they are afraid—I consider this to be unacceptable—of retaliation in the form of having their cars scratched, their windscreens broken, their tyres slashed, or worse. It horrifies me that people should be in fear in our land.
I hope that the Minister will agree that this situation cannot be allowed to continue. There are other penalties that spring to mind. There are, for instance, powers to seize disco equipment. That might be possible on the authority of the environmental officer or perhaps that of a justice of the peace if either is satisfied that the noise amounted to a nuisance under the law, and after giving those running the equipment a warning.
I remind my hon. Friend that there is a legal precedent for that sort of action. Fishing gear is impounded if there has been illegal fishing in Britain's coastal waters. Of course, it would be much more dangerous to try to move the disco equipment than to try to move the fishing equipment. This is where I think that there is a real need for the police to be involved.
I had a great deal of trouble finding out exactly what happened during that terrible party in my constituency. The reason why I had such a job to find out was that people were afraid. They would not come forward to talk to me when I was first in the street and others could see that I was there. The doors were shut tight. But I received little messages asking me to call when nobody was there or to come back after dark, and bit by bit, I found out exactly what happened.
Is it not a terrible thing that in our country people should be afraid to come forward and defend themselves with evidence? Such a situation cannot be allowed to continue.
It must be stated that there will be a serious decline in race relations if that situation continues, because people are beginning to think "It is all right for that group, because nobody will touch them". That must have a very bad effect upon race relations, and eventually it will have a knock-on effect which could be very dangerous indeed.
Whether we should be talking about greater cooperation between the Home Office and the Department of the Environment, about greater involvement of the West Indian leaders themselves, asking them for their help, or about wider use of party patrols or any of the other
962
possibilities that come to mind is for the Minister to decide. But I hope that he will agree that the case I have made cries out for action.
Mr. John Carlisle: My hon. Friend talked quite rightly about fear of the law, and of knifing or of intimidation, by neighbours. Does she agree that much of the fear is that people are afraid to come forward because they may be reported to the Commission for Racial Equality? This shows how society has gone completely out of balance. One of the greatest fears of people who will not come forward to give evidence is, as she has found, the fear of being cast in the role that she mentioned—that of a racist. They are frightened about the law, biased as it is in favour of the Commission for Racial Equality.
Mrs. Knight: That may well be another reason for such people being apprehensive and indeed fearful. I may add that I myself received an unsigned threatening letter from the West Indian community that if I took the matter any further I should be very sorry. None the less, it seems to me to be my duty to do so on behalf of my constituents. I hope that my hon. Friend the Minister will feel that I have made a case for action.
10.33 pm
Sir Ronald Bell: I shall take just one minute or so from my hon. Friend the Minister, as I am sure he has enough time. My hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight) has done a great service in raising this matter, because it is one which causes great anxiety. I wish to say briefly to the Minister that there seems to be a great gap here. He has come to answer the debate tonight because there are clearly environmental considerations. But it should not be so difficult to get some kind of redress when these things happen. One should not have to try to chase around some kind of departmental responsibility. This is becoming rather frequent. Other kinds of harassment and interference in people's lives are also becoming far more common as a result of the massive immigration that has taken place. There really ought to be some kind of Government responsibility beyond what my hon. Friend the Under-Secretary of State, with the best will in the world, typifies here tonight.
10.34 pm
The Under-Secretary of State for the Environment (Mr. Giles Shaw): I echo the comments of my hon. and leaned Friend the Member for Beaconsfield (Sir R. Bell) in thanking my hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight) for raising this matter,, because I know that it has caused concern to a great many people, probably on both sides of the House, as it was clearly an incident of considerable scale.
In the course of her remarks, my hon. Friend rightly covered the various elements which go to make this particular incident. She will be the first to appreciate that the terms in which she has framed this Adjournment motion refer primarily to
"departmental advice to local authorities on control of nuisance arising from all-night parties."
I hope that my hon. Friend will not be too disappointed if I say that it is not really within my compass to comment on aspects of, say, the responsibility of the Home Office for actions in connection with the police or, indeed, actions in connection with racial equality and local community services. As she will know, there are certain

963
aspects of this case which, I believe, will shortly come before the courts. Therefore, there is a difficulty about proceeding too far into the details of what took place.
What my hon. Friend has raised, and what I must address myself to, is the question of the nuisance caused within those terms which apply to the Department of the Environment. Primarily, it was the night noise nuisance over this considerable time which gave rise to such an unpleasant experience for my hon. Friend's constituents.
Obviously, we in the Department of the Environment have policies on noise as a source of nuisance. We recognise that at worst it can cause great distress and extreme annoyance. While I, like every other hon. Member present, enjoy a good party, I also value sleep. A party of the kind described by my hon. Friend must have been a most substantial and persistent nuisance. That was a fair point for her to make.
It is generally a matter—I hope that my hon. Friend will accept this—for local authorities. That is why the motion correctly refers to what local authorities can or cannot do about this aspect of the nuisance.
We are considering issuing codes of practice under section 71 of the Control of Pollution Act 1974—which is the basis for taking action in relation to noise as a source of pollution—which would offer guidance on minimising noise. As these codes are in preparation, and as they cover a number of subjects including some things which are intrusive, such as ice cream van chimes, we shall consider whether we can give useful advice in relation to all-night parties. My hon. Friend has raised this matter at an appropriate point. It is right that we should look at it to see whether we can produce some guidance on how to deal with it.
I am conscious of the difficulties of offering advice on a subject such as this, on which there are so many variable factors—the type of party, the extent, the type of house, the character of the neighbourhood, and so on. I am sure that my hon. Friend will be among the first, as she suggested, to avoid the implication that it is the task of the Government to be a killjoy in respect of the regulation of parties. But the nuisance which is so clearly established in this kind of persistent intrusion is something on which we ought to take some specific action.
The powers to deal with this are within the Control of Pollution Act, and they rest with the local authority. Some authorities such as Brent, Haringey and Lewisham operate party patrols. I understand that one authority—I think that it is Lewisham—has extremely close and good working relations with the police in the handling of all-night parties. Under agreed arrangements, the local authority has an environmental health officer on duty every Saturday night from 10 pm to 6 am on Sunday morning. Complaints are usually first received by the police who themselves investigate to see whether they can deal with the problem under their own powers which cover, for example, unruly behaviour, the possibility of a breach of the peace or, indeed, unlicensed drinking. If the nuisance is solely a noise one, the police will accompany the local authority duty officer to the party in question. From there onwards, the matter can be handled within the terms and provisions of the Control of Pollution Act. If the nuisance continues, they can return after an hour or so and serve an instant notice to ensure that it is contained.
Another local authority, Brent, also operates a party patrol system in close liaison with the police. That has also worked most successfully. There again, duty officers from
964
the local authority are there every Saturday to Sunday, 11 pm to 5 am, and likewise they carry out a patrol in areas where there have been difficulties. On the whole, local authorities in those areas are able to respond quickly and efficiently to a local problem by using their wisdom and good sense.
Mr. John Carlisle: Is my hon. Friend saying that the police cannot act without first some nuisance being reported to them by the environmental health officer concerned, and that they have no power to act unless they hear from him or her in the first place?
Mr. Shaw: The usual procedure is for a complaint to be made to the police from individual citizens. There is a course in law for the citizen to take a person to court under common law to establish that a nuisance has been created. But in terms of getting action, the report is investigated by the police with the environmental health officer concerned if the question of noise is the matter of the offence. That is where the law lies.
Mrs. Knight: Will my hon. Friend bear in mind that there is an element of fear in these matters, and that it is a growing fear? It arises partly from what my hon. and learned Friend the Member for Beaconsfield, (Sir R. Bell) said about being taken to the Commission for Racial Equality, but also from the fear of retaliation. Regulations formulated without taking account of the new dimension into which we have moved are not always as effective as they should be, for the reasons that I have adduced.
Mr. Shaw: My hon. Friend must recognise that what I cannot do in my response to this debate is to give her considered advice to the effect that the element of fear, which she suggests is part of the problem of obtaining evidence, and even of obtaining action, is something within the Department's control. It is not. We are dealing here with a social situation. I am prepared to believe that in certain circumstances fear becomes an element, but in terms of the law on noise abatement, the pollution to which my hon. Friend referred, and the action that local authorities can take—that is the basis of her Adjournment debate—the element of fear is not the matter for discussion. She has suggested that there are other elements, apart from the nuisance of noise which create and exacerbate the situation. That I understand. That is not what I am dealing with at the moment. I am concentrating on the power local authorities have to deal with the noise nuisance.
Mr. Michael Brotherton: Will my hon. Friend make representations to my right hon. Friend the Home Secretary that this question of fear should lead to an alteration of the law? I know that that is not within my hon. Friend's sphere, but will he make clear to my right hon. Friend that the people of England fear very much what is happening to them?
Mr. Shaw: I accept my hon. Friend's last point. I shall draw the attention of my right hon. Friend to that.
In my discussions on this matter I discussed with the Home Office the elements involved here. Certainly, in the Birmingham case, as my hon. Friends made clear, the police were obviously substantially involved at the end of the proceedings. In some areas the individual local authorities have good relations with the community councils which provide voluntary assistance, for example,

965
in helping to monitor parties and activities of that kind. I was emphasising the position of the local authority in relation to the law.
Let me turn from the general to the specific and come to the position in Birmingham. The local authority there says that it liaises closely with the police and has an established set of procedures which operates between them and works very well. They suggest that parties of this kind are not as frequent as they may have been in other areas, and that this one in Stirling Road was very much an exception to the general pattern of behaviour. But in regard to the procedure in Birmingham, I am advised that when the police receive a complaint they will investigate and send a detailed report to the local authority on a special form that has been drawn up. A notice is never served during a party, because no party patrol is operating. There was some years ago. Nor is one served after the first such party held by an occupier. But when a second complaint and report about the same address is received from the police the local authority is prepared to serve a notice if necessary. All notices are authorised by the city environmental health officer, and officers have no delegated powers to issue notices.
966
Birmingham operates an Ansafone system—my hon. Friend referred to this—with officers on duty at weekends and throughout holiday periods. Birmingham has now altered its system of trying to identify the main occupier, and where there is multiple occupation it will attempt to serve notices on landlords and tenants and everyone who might be involved and have a responsibility. I accept that that does not provide my hon. Friend with the assurances that she wants in relation to this nuisance, but I am suggesting there has been some change in the procedures in Birmingham, and I have no doubt that the case she has raised here tonight will make it even more certain that action will be taken in the future.
Let me explain further where the individal member of the public stands in this. It is open to an individual member of the public to take up a case direct with the magistrates' court and complain to the magistrate as the occupier of premises affected by noise nuisance. A civil action for noise nuisance can be taken at common law.
The Queston having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at fifteen minutes to Eleven o'clock.

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

Lord Benson
Sir Henry Alexander Benson, GBE, having been created Baron Benson, of Drovers in the County of West Sussex, for life—Was, in his robes, introduced between the Lord Chorley and the Lord Greenhill of Harrow.

Telephone Service: West Country-London
2.45 p.m.
Lord Gridley: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government, in view of the heavy investment projected for the British telecommunications system, what plans exist to improve the invariably difficult telephone communication between the West Country and London by public telephones.
The Minister of State, Department of Employment (The Earl of Gowrie): My Lords, this is a matter for the Post Office. However, I understand that although the quality of service between London and the West Country is generally good, difficulties in communications may arise on certain lines during busy periods as a result of congestion. Work nearing completion on the trunk route between Yeovil and London should lead to an early improvement in service on that route.
Lord Gridley: My Lords, while thanking my noble friend for that Answer, may I ask him whether the Government are satisfied that the heavy investment earmarked for British Telecoms is being, or will be, used by them to the best advantage? Is he aware that early in January on four different occasions when dialling London from four different telephone booths I got the engaged signal, not from the number dialled itself but from the point of entry into London? May I also tell him that when I telephoned the operator she confirmed that she, too, was unable to get London for the same reason, in spite of giving me every assistance in the difficulties that I experienced?
The Earl of Gowrie: My Lords, I was not personally aware of the difficulties experienced by the noble Lord, but the point of these very large sums for investment is to ensure improvement, and British Telecommunications is engaged in a major replacement and modernisation programme with that money. Therefore, I would have thought that that would give the noble Lord a better service in the future.
Lord Gridley: My Lords, in view of reports in the press today that 77,000 red telephone boxes are to be repainted yellow, may I ask whether it would not be better to use the money to be spent in that connection for improvement of the service?
The Earl of Gowrie: My Lords, I agree with my noble friend, and I earnestly implore the Post Office to abandon this ridiculous scheme.

Armed Forces: Cost of Manpower Increase
2.48 p.m.
Lord Shinwell: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the estimated cost of increasing the manpower of the Navy, Army and Air Force for combatant purposes in the event of further tension in international affairs as compared with the cost of increasing our nuclear capability, unilaterally or in conjunction with the United States or other NATO countries.
The Minister of State, Ministry of Defence (Viscount Trenchard): My Lords, I am afraid that without details of the numbers of men, their roles and equipment and the additional nuclear capability which the noble Lord envisages, it is very difficult to answer the Question in specific terms. In order to deter the Russians from starting a war we need to possess a range of capabilities, from conventional forces the theatre nuclear weapons and ultimately to our strategic deterrent. Our aim is to provide balanced forces capable of meeting the threat at every level. I should like to stress that I regard the planned replacement of our Polaris force with the Trident system as a highly cost-effective way of maintaining deterrence. But I also agree with the noble Lord about the importance of our manpower resources, and we have increased the size of the regular armed forces by 20,000 and the volunteer reserves by 7,000 since we came into office.
Lord Shinwell: My Lords, I am very grateful to the Minister for that information. Would it not incline the Minister to agree that it disposes of the belief in certain quarters that conventional forces are likely to be less costly than forces based on nuclear provision and that, therefore, we should focus attention on what is regarded as less costly, when, in point of fact, the increase in manpower in the three services would prove to be far more costly than the provision of the Trident or any other missile that can be conceived of? Is it not time that we furnished more accurate information about the two kinds of military equipment and manpower that we require?
Viscount Trenchard: My Lords, I am sorry that the noble Lord feels that we have not furnished that information. I think it comes clearly through the White Papers, which we have published and will publish again, and I think it came clearly through the Statement that my right honourable friend the Secretary of State for Defence made on 20th January. For instance, we

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have made entirely clear—and here I thank the noble Lord for the points that he has made—that, over the period of its development and production, Trident is likely to cost us in capital costs some 3 per cent. only of our defence budget, and that is roughly in line with what Polaris has cost us in the past. Whereas if we were to make a major increase in our conventional forces, with all the equipment that they need—and we still would not equal Russian manpower on the western front—it would cost very much more.
Lord Shinwell: My Lords, I am very grateful to the Minister for disposing of one myth which has been current in certain quarters. On the subject of further information—because I recognise it is impossible for the Minister to provide detailed and accurate information on every item—is he aware that, according to a report in the Daily Telegraph recently, there was an Anglo-American seminar which was attended by military experts from both sides and Ministers, and also, I understand, by some Members of your Lordships' House and some senior Members of Parliament? If they can be provided with strategic information, some of it of a secretive character, why cannot we in the House of Lords, and even Members in another place, also be furnished with such information? Why should it be confined to a certain number of people? My final question is: Had these people been vetted? It is very important that we should be informed on that point.
Viscount Trenchard: My Lords, to deal with the last, and important, point first, we do not give highly secret information—I am still sufficient of a new boy not to have the classifications fully clear—to people who have not been vetted. On the general point of whether we can do better in providing both Houses of Parliament with more information, I will take the noble Lord's point. I already have it in mind to see whether we can do better in relation to this House. There will, of course, be opportunities for debates and I will do my best to ensure that the maximum information is available for those debates.

The Nuclear Deterrent
2.54 p.m.
Lord Glenarthur: 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 confirm that their decision to maintain the effectiveness of the United Kingdom's strategic nuclear deterrent will be achieved without detriment to other areas of our defence capabilities.
Viscount Trenchard: My Lords, the Government are determined to maintain both our nuclear and conventional capabilities.
Lord Glenarthur: My Lords, I thank the noble Viscount for that short reply. Will he consider the
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implications that the financing of Trident could have on other high technology areas of our defence capabilities? Would he not agree that leads in technology are very hard won, and that it would be a tragedy if, through concentrating particularly on the Trident aspect, we were to lose the advantage that we now have in certain weapon systems by being unable to fund continued research and development on other projects?
Viscount Trenchard: My Lords, I would certainly agree with the noble Lord that keeping leads in technology is of vital importance, both to our defence effort and to some of our more advanced industries. As your Lordships know very well, it is also true that in the industrial and defence world of the size that it is today, against the size of Britain within that world, it is a struggle to keep leads in certain areas, and we cannot possibly maintain leads in each and every area. Having said that, I do not think, for the reasons that I have really given in my Answer to the noble Lord, Lord Shinwell, that my noble friend is right in suggesting that the Trident expenditure can be regarded as expenditure which is likely to make it harder to keep leads in high technology. The programme is, as I have said—and it will take some while to work up to it—only 3 per cent. of the defence budget. That is the capital cost of Trident over the period until the mid-1990s. In any event, there is considerable high technology in the building of the submarines for the Trident missiles, and an estimated 70 per cent. of the work that will go into the four-boat force will be produced in this country.
Lord Avebury: My Lords, would the Minister not agree that, if defence spending were maintained at the levels which are planned in any case, but the Trident programme was not included, as a matter of simple arithmetic there would be £5 billion available to spend on improving our conventional forces that will not now be available? Would the Minister not agree, furthermore, that one of the options, as given to me in a Written Answer last Session, would be greatly to improve the effectiveness of our anti-tank force by purchasing another 300,000 infantry-borne anti-tank missiles, which would constitute an extremely effective deterrent against a Russian armoured invasion of Europe?
Viscount Trenchard: My Lords, of course, if we removed any part of our defence programme, we should have more within a given budget to spend on other things. Over the period, we shall have spent on the Tornado programme, in total capital costs, more than we plan to spend on Trident. So, as I tried to indicate in my Answer to the noble Lord, Lord Shinwell, at 3 per cent. of our defence budget there is, I suggest, an undue focus on Trident. It is to maintain our strategic nuclear deterrent. The costs are in line with the Polaris costs, and we believe that it is absolutely vital to maintain the deterrent in the strategic area and our own contribution to the American deterrent in that area.
Lord Gladwyn: My Lords, would it not be better to have this discussion not in relation to an Answer

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to a parliamentary Question, but in relation to the debate which we are to have next week?
Lord Shinwell: My Lords, may I ask the Minister a further question? Would he not agree that we ought not to dispose of any part of Her Majesty's forces, whether conventional or nuclear until, at least—and I emphasise that—the Russians decide to get out of Afghanistan?
Viscount Trenchard: My Lords, I agree with the noble Lord, Lord Shinwell. We must keep a balanced force, and we will continue to increase our spend in real terms in the way that we have done since we came to office. May I say to the noble Lord, Lord Gladwyn, that indeed there are these opportunities. The only reason why I did not rise to answer his question was that I agree with him that they will provide a longer opportunity.
Lord Monson: My Lords, is it not the case that as a result of technological advances the noble Viscount cannot be absolutely confident that within the next 10 years the Soviet Union will not have devised some means of locating and destroying submarines on the seabed? Should this transpire, would not hundreds of millions of pounds have been poured down the drain?
Viscount Trenchard: My Lords, the noble Lord's question is ever present in the minds of all our experts at the head of the services, and of the technical advisers in the Ministry of Defence and elsewhere. We believe that the Trident is the best choice and the most likely to be invulnerable for a very long while to come.
Lord Davies of Leek: My Lords—
The Lord President of the Council (Lord Soames): My Lords, I hope that the House will agree that we should move on to the next Question.
Lord Davies of Leek: Does that cut my question?
Lord Soames: Yes.
Lord Davies of Leek: I thank the noble Lord.

Warships: Building Programme
3.1 p.m.
Lord Gisborough: 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 place orders for small general-purpose warships to be ready for sale "off the peg" to overseas customers in two years' time.
Viscount Trenchard: My Lords, there are no plans to place such orders. The speculative construction of warships is a matter for the commercial judgment of the shipbuilders concerned.
Lord Gisborough: My Lords, I thank the noble Viscount for his Answer. Can he say whether there are any other plans for increasing orders through the warship builders?
Viscount Trenchard: My Lords, as my right honourable friend the Secretary of State for Defence made clear in his Statement on 20th January, there is a substantial warship building programme under way at British Shipbuilders, with 28 warships under construction or on order, including the eight ordered by the present Government. The number of orders beyond the present period and the workload for British Shipbuilders in the future are under constant study, both by British Shipbuilders and by my right honourable friend at the Department of Industry.
Lord Hill-Norton: My Lords, does the noble Viscount the Minister agree that the reason why we have sold no warships abroad for something like 10 years (I think I am right in saying) is that the capital costs of building them in this country grossly exceed the capital costs of building similar ships anywhere else in the world?
Viscount Trenchard: My Lords, the noble and gallant Lord is of course correct; the lack of competitiveness of British Shipbuilders has made it very hard for them to get a fair share of world trade. Part of their problem has been the depressed state of the shipbuilding industry all over the world, but part of it undoubtedly has been loss of a share of the market through lack of competitiveness. It is not quite true to say that no ships have been sold, but certainly far too few ships have been sold.

Statements
Lord Ross of Marnock: My Lords, I beg to ask Her Majesty's Government a Question of which I have given Private Notice. The Question is as follows:
To ask Her Majesty's Government whether they will make a statement about the proposed closure of the Talbot factory at Linwood.
Lord Denham: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m., my noble friend Lord Mansfield will answer this Question in the form of a Statement.
This will be followed by a Statement on the British Steel Corporation's borrowing powers which will be repeated, again with the leave of the House, by my noble friend Lord Gowrie.

Economic Recovery: A 10-Point Programme
3.4 p.m.
Lord Banks Lord Banks rose to call attention to the need for action based upon the right honourable David Steel's A 10-Point Programme for Economic Recovery as a framework within which new policies may be developed to encourage investment, control inflation and reduce unemployment; and to move for Papers.
The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. I begin by thanking those noble Lords who have indicated their intention of taking part in the debate this afternoon. Their interest in this Motion is much appreciated, whatever their views about it may be.
My right honourable friend Mr. David Steel was led to put forward the 10-point programme because he was very conscious of the need for an alternative national economic strategy to that now being followed. He felt, too, that there was a need for a widely agreed national economic strategy. The 10-point programme was prompted by alarm at the effects of the Government's economic policy and by concern about the possibility of a reaction against it: a swing of the pendulum which might take us further towards the nationalisation of all the means of production, distribution and exchange.
It may well be that a political realignment is necessary to secure maximum support for such an alternative economic strategy. That is certainly a very topical subject; we read about it in the newspapers every day. However, I do not intend to pursue that subject this afternoon, though I am very much tempted to do so. Today I am concerned principally with the 10-point programme itself.
I said that it was prompted by alarm at the effects of Government policy. When we consider the Government's economic policy we find ourselves in something of a dilemma. We have to decide whether we are going to criticise what they say they will do, or whether we are going to criticise what they actually do. The Government said that they would cut taxation, reduce the growth of the money supply, reduce the public sector borrowing requirement, cut public expenditure and allow the private sector to expand. Yet in practice they have done the very opposite. They have increased the burden of taxes. There has been a rise in the real burden of taxation overall.
Two simple examples will perhaps help to illustrate that. In this year, 1980–81, a married couple with two children will find that if they are on half average earnings, 14·4 per cent. of their income will be taken in tax and national insurance. Last year the figure was 12·6 per cent. If they are on twice average earnings, the figures are 28·5 per cent. this year as against 27·7 per cent. last year. If you compare those two sets of figures, you will see that not only has the burden of tax risen but that it has become more unfairly distributed.
The money supply has been growing at about 21 per cent. The Government's target was between 7 per cent. and 11 per cent. The public sector borrowing requirement this year will be some 50 per cent. more than originally predicted. Despite harmful expenditure cuts, expenditure from the consolidated fund for the 10 months to January of this year is 24 per cent. higher than last year, as against the Government's prediction of 20 per cent. Those were the figures in the newspapers this morning. Far from expanding, the private sector has been allowed to contract, with bankruptcies and a frightening level of unemployment.
In their medium term strategy which was published almost a year ago the Government said that there was a link between money supply and inflation, but they
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pointed out that it was erratic from year to year. They can say that again! They said that there was a time lag before the effect was felt. Can we then expect, as a result of what has happened to the money supply this year, to see higher inflation in, say, 1982–83? Despite everything, it is true that the inflation rate has come down, but at what a cost. The private sector has contracted. Output is down. The manufacturing base has been reduced and unemployment is up. High interest rates and a high exchange rate, plus world recession, plus the Government's deflationary policies, have brought this about.
It may be questioned whether I am right to speak of "deflationary policies" in view of what I said a minute ago about the Government's failure to control the monetary supply, to cut expenditure or to restrain the public sector borrowing requirement. I believe that I am fully justified. Melvyn Westlake set out the position very lucidly, I thought, in The Times on 22nd January. This is what he wrote:
" According to OECD calculations, the cumulative impact, between 1979 and 1981, of the restrictive fiscal measures deliberately adopted by the Thatcher Government are equivalent to some three per cent. of Britain's nominal gross domestic product. Against this, the recession has had a counter-effect, pushing up Government spending and borrowing and thereby causing some matching relaxation in the budgetary balance. This expansionary effect is reckoned to be equivalent to about 2½ per cent. of nominal gross domestic product by 1981, compared to 1979 ".
So there is an overall deflationary effect, and Melvyn Westlake went on to say:
" But, while the relaxation in the budget balance, caused by the recession, is tending to offset the deliberate tightening in fiscal policy, this is happening at a lower level of income and employment than would have been the case had policy not been tightened. This is why attention should focus on the Government's fiscal stance. It is this that is the instrument of policy, not the actual budget outcome ".
My argument is that the overall restrictive effect of what Melvyn Westlake describes as the Government's "fiscal stance" has produced, together with world conditions, a reduction in the rate of inflation at an unacceptable cost in lost manufacturing capacity and high unemployment. Hence the need for Mr. David Steel's alternative strategy set out in the 10 points.
The Times on 3rd January said of the 10-point programme:
" It amounts to a policy of economic intervention without significantly increased public ownership and of modified reflation. Mr. Steel argues for close co-operation between Government and industry along the lines practised in France, Germany and Japan; for a long-term incomes policy which relates wage increases to economic success, for partnership in industry and greater help for small businesses ".
I think that is a fair description of the kernel of the programme. The first item in the programme is a modest expansion of the economy. I see that the Trades Union Congress is arguing for an expansion in the economy of £6,200 million. The CBI have put forward a package of measures which they think the Government should adopt, which would cost £1,300 million. I have no doubt that the right figure is probably somewhere between those two. If I suggested £3,000 million, I have no doubt that the Government would say that that would be very inflationary and that if it were put into practice prices would be pushed up. But what about the £3,000 million-plus, by which the public sector borrowing requirement has exceeded

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the Government target in this year? That does not appear to have sent inflation soaring.
I should like to suggest three ways in which we might apply this modest reflation of the economy—this modest expansion of the economy. First, I would do it by means of reducing the national insurance charge, which has nothing to do with national insurance, but is just a tax on employers. Secondly, I would seek to restore the cuts in social security benefits which have been made. Thirdly, I should want to see an increase in investment in the capital infrastructure of this country, and tremendous stress is laid in the 10-point programme on the capital infrastructure, because there has been a continuous decline over recent years. The spending of the Government on our national infrastructure, which in 1974 was 5·2 per cent. of the gross domestic product, is now down to 2·1 per cent. The fall in Government investment in 1974 was 6·5 per cent.; in 1981 it was 19·3 per cent. Britain suffers from ageing capital stock, particularly its industrial equipment and communications structure. The 10-point programme calls for North Sea oil surpluses to be routed to the recreation of our capital assets, thus providing employment now and protecting the future.
So a modest expansion of the economy is the first point in the 10-point programme. The second is lower interest rates. An immediate drop of three points in the minimum lending rate is suggested and, of course, high interest rates have been a potent factor in wreaking havoc upon productive industry. The programme calls for lower interest rate loans for new businesses and an extension of the "Granny Bond" principle through a new index-linked savings bond by means of which the British people could invest in Britain's industrial future. I would hope that it would be possible to arrange that such a bond would give a yield in addition to maintaining the value of the basic capital. I would hope that it might be an index-linked bond with a 2 per cent. real return.
Lower interest rates would of course help to bring down the exchange rate which at its present high level is another burden upon exporting industry. The United Kingdom's industry in the last three years has had its biggest effective loss ever, and the full effects of that have not yet been seen. A reduction in the exchange rate would create a suitable opportunity for the United Kingdom to join the European monetary system. I should like to stress that we see this 10-point programme very much in a European context and we would very much hope that common European policies on these economic matters could be devised.
Perhaps this is the moment to say, too, that we see the situation very much in an internationalist context, and that is why we oppose restrictive measures and protectionist measures and it is also why we support the implementation of the Brandt Report. With a modest expansion of the economy, lower interest rates and a lower exchange rate, incomes would no longer be held down by the threat of bankruptcy and unemployment and a lower exchange rate would tend to push up prices. Therefore, a long-term incomes policy is an essential part of the strategy. This would not be a hasty, temporary expedient produced on the brink of disaster, but an incomes policy with an institutional framework laid down by Parliament, with the machinery
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to provide for Government, unions and employers to arrive at a consensus on the general level of pay increases for the ensuing year, and that they would submit to Parliament.
Then there should be a monitoring body to watch how the general guidelines are applied and to deal with special cases. There is also the question of sanctions. What sanctions would there be behind the policy? There are many possibilities in that area. For example, there is Professor Meade's suggestion of compulsory arbitration; there is Mr. Aubrey Jones's suggestion of giving the power to the monitoring body to deny in a price increase an unjustified excess over the standard pay. But we regard a system of industrial partnership as an essential part of the incomes policy; we believe it to be the necessary background. We should like to see the introduction of a statutory system of employee representation, as other industrial countries, such as the Federal Republic of Germany, have; not necessarily on precisely the same lines but something similar.
We regard profit-sharing as an essential element of incomes policy, as one means of helping to identify the interests of capital and labour. There will be, I am sure, widespread support for the emphasis which the 10-point programme puts on the expansion of the small business sector. Among many other things a Cabinet Minister for small business is called for. I am sure that the CBI were right when they called this week for a rationalisation and co-ordination of all Government agencies providing help for small business.
I think I have said enough to give you the essence of the 10-point programme put forward by my honourable friend Mr. David Steel. A number of the specific proposals—I have not attempted to cover them all—will commend themselves to people in all parties. The underlying economic strategy may not secure quite such widespread support, but I believe that there may well be a majority in the country who would rally to such an economic strategy. With a different voting system we could be sure that a majority in the country would in an election secure a majority in another place. Political developments at the moment open up interesting possibilities. It may well be that even under our unfair and distorting electoral system a way will be found before very long to translate a majority in the country for a programme on the general lines of the 10-point programme into a majority in Parliament. My Lords, I beg to move for Papers.
3.22 p.m.
Lord Glenamara: My Lords, as a relative newcomer here, I must confess that I thought it rather odd that the rules of procedure can be used to debate a Motion of this kind. Nevertheless, I live and learn. Could I say to the noble Lord, Lord Banks, that we are grateful for this opportunity to debate the economy again. Could I say at the outset that I regard the Leader of the Liberal Party as one of the most engaging people in politics today, but at the same time I have to say that his new deal for Britain, in my view, contributes not a single original idea to the debate on Britain's future. The themes—and they are no more than themes, though we are grateful to the noble Lord for filling in a few of the details—appear to have been culled straight from Labour's Manifesto for 1980

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published a year ago, and as such, with a few divergencies such as joining the European monetary system, they are quite acceptable to me and my colleagues; we make no complaint about them at all, or about most of them. It is as though the Leader of the Liberal Party had jotted down a few inoccuous headings for the chapters of a book, but of course the publisher would require very much more detail than that, and so I believe would the electorate.
The Leader of the Liberal Party, I think, has fallen for the old thing that political managers used to believe in; that too much policy is a handicap in winning elections, as well as being a hostage to fortune. Not that that need trouble the Liberal Party, of course. I take the view that this view is out-of-date. Certainly the situation today demands that coherent, well-thought-out, rigorously costed policies should be put forward, not simply pious generalities. The Leader of the Liberal Party's proposals range from bigger and better Select Committees to a Bill of Rights.
Predictably, of course, the whole thing is topped, or rather tailed, by proportional representaion. The bit about proportional representation is preceded by the words "above all"—above dealing with unemployment, above all the other things, alter the system so that we can get elected, change the rules, elect a Liberal Government and you will get a national approach. I have never understood why you can only get a national approach with a Liberal Government. Why not with a Labour Government? Why not with a Conservative Government? I suppose I have sat in hundreds of Cabinet meetings. I quite honestly do not recollect a single occasion when, faced with a problem to which there were two answers, one of which was good for the country and bad for the party and the other of which was good for the party and bad for the country, the Cabinet did not decide without hesitation in the national interest. So, I am quite sure, does a Conservative Government. I really must say that I find this self-righteous assertion that only the Liberals would follow a national strategy insufferable. I think self-righteousness is probably the worst sin in a politician or in a political party.
The points the Leader of the Liberal Party has made, divorced as they are from any context of solid, carefully worked-out, carefully costed policy, such as the Labour Party has put forward in the document I have just quoted, the manifesto for 1980, are really utterly inadequate in the face of the dark and dangerous situation which is gathering in Britain today. There is nothing about how they would deal with the appalling problem of unemployment. There is no word about how they would reverse the downward spiral in the economy created by the Government. The document is simplistic and indeed naive. However, we can agree about Mr. Steel's initial premises: first, that
" Our economy is now desperately weak and vulnerable ",
and, secondly, that
" Monetarist dogma has converted recession into an outright slump ".
I take the view that the present situation is 80 per cent. Government induced and 20 per cent. due to world recession. I do not want to bore the House with a lot of figures, but there are some indices which should be emblazoned before the nation because they
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point to a truly horrendous situation, maybe to disaster. First, one or two in the real economy, and then three in the money economy. First, in the real economy: the most striking statistic of all is the unemployment figure, 2·42 million. Every forecast points to 3 million next winter. The Cambridge Economic Policy Group estimates that in 1985 it will be 4·4 million. At a meeting of NEDC last week, 4th February, Mr. Michael Shanks, chairman of the Consumer Association, forecast 5 million. At that meeting the Prime Minister was present with a Government team. According to the Financial Times, not a single one of the Government team rebutted the estimate of Mr. Shanks.
We are still getting the rather pathetic apologia from Mrs. Thatcher when she says "I regret"—and of course, like all of us, she does sincerely regret the unemployment; nevertheless she goes on to say that in a way it is not really a bad thing because industry is being made slimmer. I heard her say this on television recently; industry is being slimmed down; it is being made leaner. This is the theory of the "shakeout". It is being made fitter to compete when the turnround comes and the dark clouds roll away. This thing about the turnround is acquiring a sort of spiritual, almost messianic, meaning, something in the future, the turnround, when it comes. The 2½ million unemployed merely represent cutting out the fat. Mr. Nicholas Ridley, a Minister in the Government, said recently:
" The 2½ million are a useful reserve ".
What arrant, what demonstrably untrue nonsense! But, my Lords, it is cruel nonsense.
When the Prime Minister sees—and she will have read about this in the paper this week—machine tools from British factories being auctioned and purchased by foreign buyers, including buyers from the United States, where they will be used to compete against British firms; when she sees the Consett Ironworks, on which that town has depended for generations for 90 per cent. of its labour, and other great industrial complexes being torn down and razed to the ground, even she must comprehend that what she is doing is cutting out our industrial muscle and not our industrial fat.
Manufacturing capacity, both human and physical, is not merely being massively under-used: it is being dissipated; it is being demolished; it is being sold off; it is being bulldozed and its foreign and domestic markets are being lost, probably irretrievably. I am very keen on history. After the harrying of the North by William I, the Anglo-Saxon Chronicle recorded that in the area between York and the Border "all was desolation". I think that a future historian writing about the industrial scene in Britain after the harrying of industry by Mrs. Thatcher will probably point out that from John O'Groats to Lands End all was desolation.
What did Mrs. Thatcher herself say when unemployment was a million lower than it is today? I quote her words:
" You "—
referring to the unemployed—
" have no self-respect. You haven't even got the respect of your family if you somehow cannot earn yourself a living and them a living too. Sometimes I have heard it said that Conservatives have been associated with unemployment; well, that is absolutely

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wrong. We would be drummed out of office if we had this level of unemployment ".
Now unemployment is a million higher than it was when she said those words. There is also the human problem too. So that is the first index.
The second index is industrial output, and the noble Lord, Lord Banks, has qouted some of the figures. In a country which by and large earns its living by manufacturing and selling abroad this is perhaps the most important and significant index of all. In 1980 industrial output fell by 7 per cent. over the previous year, and manufacturing output fell by 9 per cent. Industrial output is contracting more quickly—it is contracting faster than it did between 1929 and 1931. In those two years it fell by 10 per cent.—a slower rate than that at which it is falling now. As a result of that catastrophic fall, manufacturing investment is falling at the rate of 10 per cent. a year. The Department of Industry's own survey of the intentions of manufacturing industry estimated that there would be a fall of almost 20 per cent. in these two years.
As regards the real economy I should like to quote only three figures. First, let me deal with inflation. In May last year it was 21.9 per cent. It is now about 15 per cent., which is still 50 per cent. above what it was when the Government came into office because at the time of the general election it was 10.3 per cent. Everybody wants to see a fall in inflation, but not at any price. The fall in inflation from 21.9 per cent. to 15 per cent. does not reflect any improvement in the economy: it is due entirely to two facts: (a) to the fact that we have 2½ million unemployed; and (b) to the fact that the Government have put enormous pressure on company profitability. It represents no improvement in productivity and no improvement in production, both of which are plummeting. Secondly, we have the minimum lending rate. It is still at 14 per cent. and a crippling burden which industry has to bear. Nearly all firms have to borrow in order to survive. Without survival there is nothing. The first rule of all is to survive. With the drop in inflation the real cost of borrowing is, of course, rising. Thirdly, there is the level of sterling. It is 17 per cent. above the level when the Government came to office and quite out of line with movements in relative costs. Minister after Minister has in terms ruled out any initiative to try to bring the rate down.
Every index, every forecast of every index, and every trend of every index etches another line in the deeply disturbing picture of our country. There is no glimmer of light anywhere in spite of the contortions that Government spokesmen go to in their efforts to prove that there is. A visitor from outer space would certainly say to us, "How on earth have you got yourselves into this ghastly mess in two short years?" The answer, of course, is quite simple; and it is that we have a Government, and a Prime Minister in particular, who in 1979 looked at Britain and said, "The patient is suffering from some malady or other". Then they went off and consulted their professor friends and diagnosed the wrong illness, the wrong disease.
The Prime Minister believes—and we must assume that all her Ministers believe it or they still would not be there—that Britain has suffered from demand
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inflation throughout the 1970s; and all their policies are based upon that wrong diagnosis. For example, there have been the most draconian and self-defeating public spending cuts which, as the noble Lord said, do not distinguish between asset-creating capital expenditure by publicly-owned industries and, for example, money which is needed to pay the salaries of the Civil Service. They are all lumped together, as I pointed out in the debate last week. We have had savage increases in fuel charges, which go far beyond increases warranted by the costs of the fuel industries, which also are self-defeating. There are increases in the tax burden. The noble Lord mentioned this point and I can give the figures: the tax burden has increased by just over 10 per cent. since this Government came to office. We have very high and sustained interest rates which have imposed an intolerable burden on industry. That is the medicine which the Government have been administering since the general election.
But, of course, the malady was not that at all; the malady was not demand inflation. As Mr. Douglas Jay pointed out in a recent debate in the other place, if that had been the malady we should have enjoyed a period of high profits, high employment and high production throughout the 1970s. Of course, exactly the opposite was the case. The malady was very largely not demand inflation but cost inflation, and during the general election the Prime Minister specifically excluded any action on what is by far the biggest cost of all: wages and incomes. She said, "We shall restore free collective bargaining", and, apart from the misuse of cash limits to impose a norm in the public sector, she and the Government are still sticking to that.
Mrs. Thatcher got it wrong—a fact which is now all too obvious—but, of course, she is too entrammelled in her own theology ever to admit it. As a result she has, with all the energy, the considerable energy, of which she is capable, administered the wrong medicine ever since, and the medicine that she has administered is a very old-fashioned nostrum called "deflation". The label on the bottle is "deflation". It deserves a place in an economic Culpepper's herbal, if ever there is one. She has put all her energies into deflating demand instead of into holding and reducing costs. It was as certain as day follows night that this would cause unemployment and would cause falling production, which in its turn would produce falling investment. As those of us who remember the 1920s and 1930s know too well, deflation has a momentum of its own. It feeds on itself; it is cumulative; it is a downward spiral; it is a kind of nuclear reactor which generates its own fuel.
Of course, this medicine called deflation has reduced the rate of inflation—of course it has. But the logic of the Government's theory is that the inflation rate could be brought down to zero by putting everybody out of work, and that is rather like saying that to eat rather less improves your health, therefore to eat nothing at all would make you perfectly healthy—reductio ad absurdum. But somewhere between reductio ad absurdum and the situation as of today there must be a point at which even the Prime Minister would have to stop the downward spiral. Today unemployment is 2.4 million, and that has produced an inflation rate of 15 per cent., and there is a close correlation between

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the two. Somewhere between that and my reductio ad absurdum there must be a point at which she or her colleagues, if necessary, must call "enough". What is it? May I ask the Minister who will follow me, what is it? Is it 3 million, 3½ million, 4 million or 4½ million? Could I have the Minister's attention?—because this is the core of what I am saying. Is it 3 million, 3½ million, 4 million—
The Ministry of State, Treasury (Lord Cockfield): My Lords, as the noble Lord addressed himself to me, may I say that he had my attention throughout.
Lord Glenamara: My Lords, I am very glad. Those unemployment figures will produce inflation rates of 12 per cent., 11 per cent., 10 per cent., 9 percent., 8 per cent., or what? Somewhere even the Prime Minister must call a halt to deflation. But the 64,000 dollar question is: what happens then? What happens when she, or someone else, pulls the lever and stops the spiral? Do the Government really believe and do the Liberal Party really believe that when she calls "stop" the rate of inflation can be kept at that point by adopting the old classical laissez-faire doctrine of free markets and free collective bargaining?—which failed in the 1930s and which will fail again in the 1980s. Do they really believe that all the auctioned machine tools will mysteriously fly through the air and return to British factories? Do they really believe that the bulldozed bricks of Consett Ironworks will fly up and that the workers will reconstitute themselves? Do they believe that 1,000 other demolished plants will come together again? Do they believe that our lost customers will suddenly return to the old firms which they used to patronise? Do they believe that once the inflation rate has reached their secret figure, the bits of Humpty Dumpty—shells, yoke, white, the lot—will fly together and Humpty Dumpty will fly back on top of the wall and sit there waving his Union Jack? Do they believe that?
So what happens when they stop the spiral? Monetarism has nothing to say about that, and that is the 64,000 dollar question. It will take more—very much more—than a Sunday afternoon exercise on the back of an envelope by the Leader of the Liberal Party to cope with that situation. It will take 10 or 15 years of resolute, courageous Labour Government, comparable with that of 1945 or 1951.
Several Noble Lords: Oh!
Lord Glenamara: My Lords, I thought that I would get that reaction from noble Lords opposite. Perhaps I could remind them of what Winston Churchill said in 1945. He said:
"The country is bankrupt and a Labour Government will never be able to run the economy ".
It was, in fact, the most successful Government of the century.
Several noble Lords: Hear, hear!
Lord Glenamara: My Lords, it laid the foundations of post-war economic prosperity. An almost inexorable law has emerged in British politics since the war: whenever the country is in dire trouble—as it was
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in 1945, in 1964, with all the trauma of the end of the Macmillan era, and in 1974 with the three-day week and all that—it elects a Labour Government to get it out of the mess. However, this time the mess will be of gargantuan proportions. It will take at least a decade, maybe a generation, to clear up the mess left by this Government.
However, has it occurred to your Lordships—and I say this in all seriousness and I am not exaggerating—that it may be too late? If you want a really depressing half hour, take a large sheet of paper, and plot on it all the indices I have mentioned (and there are others) and their trends. They point to at least the possibility of the roof falling in, of economic collapse in this country. For example, how much longer can we sustain the utter folly of an annual payment of £l0 billion, and rising rapidly, to keep 2½ million people in enforced idleness when our factories are closing and our markets are being closed? How much longer can that continue?
The economic and financial consequences of the Government's policy are assuming the proportions of a nightmare, and the prospect is too horrible and too dreadful to contemplate. But whatever the situation, and I heard the late husband of my noble friend Lady Gaitskell say this, Labour stands ready and poised to take on the burden—and we are all proud to be members of the Labour Party and so are tens of thousands of people throughout the country—as it did in 1945 (and noble Lords opposite can whistle in the dark if they like) in 1964 and in 1974. Once more the Labour Party will serve the nation as it did then.
My final word is to the Conservative Party. If the Prime Minister is unwilling or unable radically to change her policies, and if she is so ensnared in her own theories and theology that it is unlikely that she can, the Conservative Party must change the Prime Minister. It has long experience in this kind of thing. It knows exactly how to do it. If it does not do so, it will be failing Britain, and the people of Britain will never forgive it.

The Talbot Factory, Linwood: Closure
3.48 p.m.
The Minister of State, Scottish Office (The Earl of Mansfield): My Lord, with the leave of the House, I shall repeat a Statement being made in another place to a Private Notice Question on the closure of the Talbot factory at Linwood. It reads as follows:
" I very much regret the loss of jobs to West Central Scotland which will follow the closure of Linwood announced by the Talbot Motor Company earlier today. My right honourable friends the Secretary of State for Scotland and the Secretary of State for Industry, and I have been in close touch with the top management of PSA/Citroen and Talbot about future manufacturing operations in the United Kingdom, particularly at Linwood, for some time. We have explained in detail the Government assistance available for new investment projects in Assisted Areas, both through Regional Development Grants and selective financial assistance under

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Section 7 of the Industry Act, and expressed the strong hope that PSA would maintain manufacturing in the United Kingdom to the full extent envisaged in the Declaration of Intent, to which the company subscribed in 1978. Despite a significant improvement in labour relations and productivity since PSA took over at Linwood, it was the company's decision, against the background of very severe market competition, serious financial losses in 1979 and 1980 and the high investment costs of introducing new models, that it could not maintain production at the plant.
" It emerges clearly from the Company's statement today that its productive capacity in the United Kingdom considerably exceeds its present and prospective market share and that concentration of its facilities, rather than expansion, was the only realistic course open to it.
" Apart from the 4,800 jobs which will be lost at Linwood itself, there will be consequences for suppliers. Linwood has however been operating at a low level of production for many months and the local sourcing of components is limited.
" I am considering urgently, in advance of the shut-down by the end of this year, what measures we can realistically take to generate new employment in the area. My right honourable friend and I shall for this purpose be seeking urgent discussions with the local authorities concerned, the SDA, the STUC and the CBI ".
My Lords, that concludes the Statement.
Lord Ross of Marnock: My Lords, I think we are grateful to the noble Earl for his making this Statement. He probably will agree with me that the gravity of the Statement for West-Central Scotland and the Glasgow-Paisley area in particular is no less heavy because it has been trailed over recent weeks. It means that, in an area where there is already 14 per cent. unemployment, the 4,800, plus probably another 1,200 in supply jobs, industry and services making it about 6,000 will drag this up probably to about 20 to 25 per cent. unemployment, and that is serious indeed, particularly in this area.
Is the Minister aware that it is disappointing to read the language of this Statement? "I have been in close touch". "We have explained". "We have expressed the strong hope". Will he not remember that this is not just an ordinary closure? That the Government were involved in very serious negotiations with Chrysler in 1975–76? That obligations were accepted by the company? That these obligations were carried on and further accepted by Peugeot in 1978-that is, two years ago? There is nothing in their statement, or in what the Government say they have done, that gives us any great confidence that we can rely on what they now say in relation to concentration and carrying on in Coventry and Stoke.
Can the noble Earl tell us what face-to-face negotiations there have been between the Government and Peugeot? Have there been any at all? Have Ministers been involved? I understand the difficulty of the Secretary of State being in Brussels when this kind of thing is going on, but it will not be good enough just to have these words given to the people of Scotland,
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that we "have been in close touch"; that "we have explained", and that "we expressed the strong hope". Pledges were given and they should be kept. Can the noble Earl tell us how they can justify using the reduction in the size of the UK market to pull out at the same time as the Japanese are coming in? It shows a confidence on the one side that is not shared by another company.
I am sure in view of what has been said that they will also go on to explain that there has been a big fall in exports caused by the high level of sterling. So this comes down to Government policy; and there is nothing in the Talbot statement, or in the Government Statement, that gives us any room for satisfaction. Can the noble Earl tell us just exactly what he hopes to do? He will remember that there is an enterprise zone just a few miles away on the other side of the Clyde at Clydebank, and in the last ten months or so I do not think there has been a single job provided there. So let us not deceive the House or the people of Scotland. We are not the kind of people who are easily softsoaped anyway.
Lord Mackie of Benshie: My Lords, I think that the Statement just repeated by the Minister is unbelievably apt to the debate that we are now having. I am glad to see that the company do not maintain that it is labour relations or productivity that has caused them to close down the plant. It is an important point and one that the Minister should stress, because a tremendous amount of work will now have to be done to replace this appalling loss of jobs, and, worse than the appalling loss of jobs, the loss of an industry which had been lost to Scotland for some years, and which at the time was greeted as bringing Scotland at least back into the automobile age. I hope that the Minister will be able to give us now some more specific news of what he is going to do.
I personally have always thought the SDA an excellent body. Is the noble Earl going to give it more support? How is he going to try to replace this, and to use the undoubted new spirit which is in Clydebank and in the workers of this factory and who are willing to produce, in order to replace and expand employment? It is not good enough to say that he is going to "consider urgently". He must have some thoughts, and in view of the serious position, I hope he will give them to the House.
3.55 p.m.
The Earl of Mansfield: My Lords, I must thank both noble Lords for receiving this Statement. Of course nobody would pretend other than that this news has the gravest implications for West-Central Scotland. I think that both noble Lords have said that this has been the one car-making assembly line which has existed in Scotland up till now.
The noble Lord, Lord Ross, asked who has been involved. My right honourable friend, who is in Brussels fighting on behalf of Scottish fishermen today, has been involved for some weeks; my honourable friend the Parliamentary Under-Secretary, Mr. Fletcher, who is specifically responsible for industry in Scotland, has had a great many talks with the firm, and other departments of Government have also

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been involved. They have met Monsieur Parayre, who heads PSA, on several occasions; most recently last Monday. There have been frequent contacts with PSA and with Talbot UK at the highest level, and I mean the highest level at both company and Government level.
It is of course extraordinary, if one looks at it in isolation, that PSA should be, as it were, retrenching, whereas apparently another foreign firm wish to come in to make motor cars. I think the fact of the matter is that PSA have been making enormous losses for a long time in relation to a model which was out of date, and they have been considering actively whether, with Government assistance—which, I may say, has been on offer if the right proposal had been put forward —they could in fact redesign their assembly line and produce a front-wheel drive model which could capture a more satisfactory market share in Britain than they have previously enjoyed. In spite of the fact that every inducement under the Industry Act, and so on, was held out to them if this could be done, the company have concluded that there is no way in which they can make their operation at Linwood viable, the Government having in the last few years given them over £60 million in respect of their losses, and reluctantly they have been forced to this decision which they have made.
All the various ways in which the state can help an assisted area such as this are open, and I do not think I can go any further in what I say; that is to say, my right honourable friend and my honourable friend are having discussions with the various bodies that I have already set out to see how, as quickly as possible, the deplorable rate of unemployment can be ameliorated.
Lord Campbell of Croy: My Lords, while it must be accepted that the motor car industry is passing through a very difficult time at present, can my noble friend clarify for the benefit of the House whether, as is widely reported in the press, the French company are under any obligation, or were under any obligation until today, to retain the operations at Linwood as part of the agreement upon the money which they have received?
Is my noble friend aware that this is a very depressing announcement, particularly as it was my noble friend Lord Muirshiel who was largely responsible for moving motor car manufacture and establishing it in Scotland in the early 'sixties at Linwood and Bathgate? Is my noble friend further aware that what some of us would like to know is whether this decision is now entirely a matter for the French company, or whether it is something under which they still have obligations?
The Earl of Mansfield: My Lords, I think it right that I should remind the House of the particular paragraph in the Declaration of Intent which was made in 1978 under which the company undertook to continue and strengthen Chrysler's programme of modernisation and facilities and investment in order
"… to ensure that Chrysler UK grows and prospers as part of the PSA group and thus specifically to provide, to the extent consistent with prevailing economic conditions "—
and I stress those words—
" continued employment at all Chrysler's UK facilities, including the principal plants at Ryton, Stoke, Luton, Dunstable and Linwood ".
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In view of the way in which the company have comported themselves since 1978 and the very real efforts they have made to make this plant viable and productive—which, I would add, have been considerably aided by the attitude and indeed performance of the workforce, which is much appreciated—I do not believe the Government, or anybody else for that matter, could possibly say that the company are in breach of that particular part, or indeed of any part, of the undertakings which formed the Declaration of Intent in 1978.
Lord Pargiter: My Lords, would the Minister agree that this case highlights the grave dangers that exist all the time in permitting British companies to go out of business or to be taken over by foreign companies who regard their operations here as only peripheral and who, whenever they run into trouble, close those places which are on the periphery?
The Earl of Mansfield: My Lords, I do not agree with the noble Lord. There are many cases where foreign firms have come in with new ideas and capital and have provided new and very much needed employment in Scotland. This is something where we could join in with, for instance, the citizens of Ireland who have done extremely well out of foreign investment in their country.
4.5 p.m.
Lord Glenkinglas: My Lords, at the risk of being the third ex-Secretary of State to say something about a firm with which we were all very deeply involved, may I ask whether my noble friend would consider—I do not expect an answer to this today—that while the Government are providing many hundreds, if not thousands, of millions of pounds for British Leyland, we should not consider some part of that money perhaps coming to Scotland where, with bad luck perhaps, Billy Rootes started the original factory and, with a little bit less than good luck, Citroen and Peugeot took it on? The workforce has done particularly well there and there is a very much better degree of co-operation between management and workforce than I think is true of any factory in the Birmingham-Coventry area. Will my noble friend bear that in mind in seeking to put more money behind the motor manufacturing industry in Britain?
The Earl of Mansfield: My Lords, I think we should keep apart the taxpayers' money which is being devoted to British Leyland and any rescue operation which might have been contemplated and implemented at Linwood. What I can tell my noble friend is that if a scheme had been and could have been produced, the Government were ready and willing to play their part with the taxpayers' money to help it on. That goes for any future scheme or ideas which may be put forward for assistance under the Industry Act; the money, as it were, can be made available if a scheme is produced and is viable.
Lord Shinwell: My Lords, did the Government expect this to happen? Had they no indication, no impression of any sort, that this was likely to happen? If they did, did they take any steps at all? May I ask the noble Earl a question which is worrying not only

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noble Lords on this side but, I am sure, noble Lords opposite: When is this going to stop? It is all very well the Government talking about having the matter in hand and considering this and that—and we would not question their sincerity—but is the Minister aware that that is not enough? We want to know for how long it is to go on. Are the Government anticipating an unemployment situation of, say, 5 million, or do they consider that at some stage it is likely to stop, that we can turn and begin to recover? Do they have any ideas at all about it and, if so, will they tell us about them?
The Earl of Mansfield: My Lords, the factory at Linwood, as I understand it, has never been profitable and therefore no doubt this has been in the minds of many people for about 17 years. It certainly occupied the last Government and it has occupied this Government in turn. There has been the payment of losses, as I said, amounting to £60 million incurred in the United Kingdom business of Chrysler, and there is an outstanding debt in relation to that of £28 million payable to the Government. Perhaps I can best answer the noble Lord in this way: Yes, there will continue to be closures unless and until British factories can produce the right goods at the right time at the right price for customers who are prepared to pay for them. There is, luckily, in Scotland, particularly in the new electronic industry, a growing realisation that that must happen if we are to remain a trading nation and be competitive, and I am glad to say that there are more and more factories in Scotland now producing goods which are exciting the attention of worldwide customers and I have no doubt they will succeed.
Lord Galpern: My Lords, may I ask the noble Earl whether, in view of the catastrophic situation which is about to occur on Clydeside, the Scottish Ministers are prepared to take any steps to try to influence by some economic advantages the Datsun company to consider establishing their company in the Linwood area?
The Earl of Mansfield: My Lords, the trouble is that Nissan have said they want 800 acres in a greenfield site. I do not know the acreage of Linwood, but I think it is about one-tenth, and it is certainly not green-field; but we shall certainly bear these points in mind.
Lord Ross of Marnock: My Lords, I wonder whether the noble Earl saw an article in the Economist this week in which they suggest many further developments along the lines of centralisation, and that is centralisation of production back to France? That must be causing very considerable concern elsewhere than at Linwood. Were the Government actually involved in the examination of all the options that Peugeot say were considered and then discarded for the present suggestion that they get rid of Linwood and concentrate, on a slimline probably, at Coventry and Ryton?
The Earl of Mansfield: My Lords, the Government have been privy to the thoughts and difficulties of PSA for some time. Various schemes were put up or various ideas were rehearsed to try to prevent
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closures at all. Unfortunately, in the particular circumstances which obtain at Linwood, it has not been possible to devise a scheme which would restore profitability or even viability to the operation at Linwood.
Lord Hankey: My Lords, to what degree is the closure of Linwood a function of the general recession? Is it, for instance, on all fours with the closure of BL production in Belgium and Spain?
The Earl of Mansfield: My Lords, I cannot answer that directly because I am not conversant with what has happened in those countries. The prime reasons for the difficulties at Linwood were out-of-date models, out-of-date machinery, a world recession with a reducing demand and a heavy pound.

British Steel Corporation: Borrowing Powers
4.10 p.m.
The Earl of Gowrie: My Lords, I hope that it will be to the convenience of your Lordships if I now repeat a Statement, which has been made in another place by my honourable friend the Minister of State for Industry, on the British Steel Corporation's borrowing powers. My honourable friend's Statement reads as follows:
" With permission, I will make a Statement on the borrowing powers of BSC. I will be introducing today the Iron and Steel (Borrowing Powers) Bill 1981, which will increase the British Steel Corporation's borrowing powers by £500 million. This Bill will enable the corporation to continue in operation on reaching the current statutory limit of its existing borrowing powers in the course of the next few weeks.
" As the House will know, the Government received the British Steel Corporation's corporate plan shortly before Christmas. Decisions on the plan involve the consideration of very large sums of taxpayers' money, and will affect the position of a number of private sector companies whose areas of operation overlap those of the corporation. My right honourable friend will be making a further Statement to the House when the Government have reached their conclusion on the corporate plan. At that stage, as foreshadowed in the Queen's Speech, the Government will introduce a further Bill, which will deal with the future of the corporation and its financial reconstruction.
" In view of the urgency of the corporation's need of increased borrowings and the essentially interim nature of the Bill which I am introducing, I hope that the House will facilitate its swift passage ".
My Lords, that concludes my honourable friend's Statement.
Lord Beswick: My Lords, in thanking the noble Earl for repeating that Statement, I should like to make the obvious point that rather more had been expected. It is really a holding Statement. Can the noble Earl

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say anything about the timing of the major Statement on the Government's decisions on the corporate plan? Will the noble Earl make it absolutely clear that the delay in making the major policy Statement is not due to some discussion about the line between the private sector and the public sector? Judging by what one reads in the newspapers, it would seem that there has been quite an organised campaign to try to show that the BSC fight-back has damaged the private sector, whereas I hope the noble Earl will be able to confirm that in fact the fight has really been against the manufacturer of imported steel. I ask him in particular to confirm that the delay in making the policy Statement is not due to any fresh decision about the area which it had been intended to allocate to the public sector.
Baroness Seear: My Lords, we on these Benches also wish to thank the Minister for repeating the Statement. I am sure he will agree that it is so much an interim Statement, there is so little flesh on the bones, that it is virtually impossible to pick the bones with him. However, we are glad to hear that some further information will be forthcoming shortly. We must wish the MacGregor reorganisation well, and since this is part of that reorganisation, we therefore welcome it. But at the same time we very much hope that it means that there will be a limit to the additional amount of taxpayers' money going into this enormously loss-creating enterprise.
The Earl of Gowrie: My Lords, I am grateful to the noble Lord and the noble Baroness for the way in which they have received the Statement. The point made by the noble Baroness, with which I am altogether in agreement, illustrates—and aptly, in view of the speeches of the debate which the Statements have interrupted—how very large and very problematic are these structural shifts in high-employing industries and how the problems that they are causing, as well as the solutions to them, are not new.
With regard to the question put to me by the noble Lord, Lord Beswick, about when the decisions will be made on the corporate plan, as the Statement said, decisions on the plan involve very large sums of taxpayers' money, and of course they will also affect the position of the private sector steel companies. Those are both matters that we shall need to consider very carefully. So I cannot say to the noble Lord exactly when the announcement will be made and when the new overriding Bill will be published, but obviously we shall treat this matter as being of the greatest urgency.
Lord Beswick: My Lords, in the meantime, may I repeat the question that I put to the noble Earl? Will he make it absolutely clear that the efforts that are now being made by the British Steel Corporation to withstand the penetration of the foreign steel manufacturer are not damaging the private sector? Will the noble Earl say that, although there has been cost cutting by the British Steel Corporation, the private sector in fact now has a little more of the total British market than it had a year ago?
The Earl of Gowrie: My Lords, I think that that is really a matter for Mr. MacGregor; and the Government have every confidence in the management of
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British Steel. But as I have said, very large public concerns, in employment terms, financial terms, and economic policy terms, are involved here and that is why we need some time to consider them.
Lord Peart: My Lords, I should like to say to the noble Earl that, whatever emerges, there must be a prosperous steel industry. So far the Government have done irreparable harm all over. I am rather surprised at that. After all, from the point of view of defence—which is dear to the hearts of some noble Lords opposite—if we have a run-down of steel, thus affecting industries involved in defence, that would be a tragedy.
The Earl of Gowrie: My Lords, with the greatest respect I must repudiate unconditionally what the noble Lord has said. He is well aware that one of the reasons why steel is in deep trouble all over the Western industrialised nations is that it employs a great many people—a great many more people than its productivity or the new technology warrants. All over the Western world we are engaged in a structural alteration of the labour market which will be with us for 20 years, and it does no good to sling mud at one side or the other while we are caught in this situation.

Economic Recovery: A 10-Point Programme
Debate resumed.
4.17 p.m.
Lord Cockfield: My Lords, the Motion which has been tabled by the noble Lord, Lord Banks, and which is the subject of our debate, calls attention to the document recently published by Mr. David Steel, setting out his 10-point programme. I have no intention of intervening in the bitter dispute which has broken out between the Labour Party and the Liberal Party. The spectacle of the two former brothers—I think that "brothers" is the correct Labour Party phrase for somebody you bitterly disagree with—of the Lib-Lab pact falling out in public in this way is a most unedifying one. However, having tabled the Motion, the Liberal Party is entitled to have its policy debated, and it is to that that I propose to direct my speech.
But having said that, I must say, quite frankly, that I find Mr. Steel's document a most disappointing one. It is really quite extraordinary that nowhere does the document even mention the greatest scourge of our time: inflation. Unemployment, the tragedy of our times, is mentioned only in passing. The world recession might just as well not exist so far as Mr. Steel is concerned. It might just as well not exist so far as the noble Lord, Lord Glenamara, is concerned; he has not heard about it, either.
Now, it is true that the Motion on the Order Paper—
Lord Glenamara: The noble Lord was asleep, after all.
Lord Cockfield: My Lords, the noble Lord accused me of being asleep, but he was making accusations about the present Government, which I shall refute in detail in a few minutes' time. The accusations were

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totally untrue and were without any foundation, or intellectual basis. But we can return to that in due time.
Meantime, the Motion on the Order Paper very sensibly does not claim very much for Mr. Steel's programme. It merely describes it—and I quote—
" as a framework within which new policies may be developed …".
Very wisely, too, the Motion does not claim that the document itself contains any policies, new or otherwise. What emerges most clearly from the document is a belief, almost an obsessive belief, that the cure for all of our ills lies in proportional representation. Of course, there are great political attractions to the Liberal Party in proportional representation. I do not blame them for that. There are powerful philosophical arguments in favour of proportional representation. I do not agree with them; nevertheless, they are reputable arguments, and they are views which are held by many men of good will. But the one thing to which proportional representation has no relevance whatever is the solution of our economic problems.
Indeed, what proportional representation would do is lead to the proliferation of small parties, to political manoeuvering and to weak government. The disastrous consequences for the nation of the Lib-Lab pact should at least have taught us that lesson; and if I may say this to the noble Lord, Lord Glenamara, the appalling state to which this country had been reduced by 1979 was largely the responsibility of the partners to that pact. The Labour Party had been in office for most of the 15 years after 1964. Most problems they had failed to deal with; those that they had attempted to deal with they had only made worse. At the time of the 1979 election, inflation measured on a six-month basis (which is a much better measure of the underlying trend) was 13 per cent. and rising. On a six-month basis the rate of inflation is now below 10 per cent. and falling. It is much healthier to have a falling rate of inflation, as it is at present, than to have a rising rate of inflation of the kind that existed in May 1979.
Now, perhaps, we may leave aside the obsession of the Liberal Party with proportional representation and turn our attention to the rest of the document. What is said in that document can be divided into three groups. There are first of all statements of a generalised nature with which we as Government would agree; and, indeed, we have taken positive action on many of them. Obviously—and here I quote from what appears in Item 1—we would want,
" to make the public sector more efficient and the private sector more profitable ".
Of course we would, and to this end we are allowing the refreshing winds of competition to blow through the public sector where that is feasible; we are returning industries to the private sector wherever possible; we are subjecting the nationalised industries to the scrutiny of the Mergers and Monopolies Commission, a step of immense importance where the industries enjoy a monopoly position; we have imposed firm financial discipline through the external financing limits; and we have given the fullest support—including, I may say, a very great deal of money—to these publicly-owned industries to improve their efficiency.
I greatly welcome, of course, the Liberal Party's support for making private industry more profitable.
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This is an essential aim, and one which we have consistently emphasised over the years. But profitability cannot be created by Governments: it is the job of management. What Government can do is to lift the burden of government from the shoulders of industry; to remove controls and to leave the market free to operate properly and efficiently. This is precisely the policy we have been following. We have removed price controls, dividend controls and exchange controls. We have reduced the number and complexity of planning controls and regulations. We are reducing the burden of bureaucracy generally. We have reduced the rates of income tax, and particularly the higher rates, to provide both motivation and incentive for management. We have introduced the new enterprise zones. In addition to the original list, two more, in Wakefield and Hartlepool, have just been designated, bringing the total up to 11. This was an imaginative development which was welcomed on all sides of your Lordships' House when it first appeared. I am sorry that it does not have the support of Lord Glenamara, because it offers a great opportunity for the creation of new business and new employment in areas of particular difficulty.
Equally, we welcome the emphasis, which appears in Item 4 of Mr. Steel's document, on the small business sector. Here again, the Government have taken positive action. Apart from the reductions in income tax—a matter of great importance to small businesses—last year's Budget contained an enterprise package specifically directed to the small business sector. The rate of corporation tax on small businesses was reduced; a new venture capital scheme was introduced; capital taxation, and particularly the capital transfer tax, was eased in a way specifically angled towards the small business; 100 per cent. capital allowances were extended to small industrial buildings built for letting; the apportionment of the trading income of close companies was ended; and tax treatment of pension arrangements for the self-employed was greatly improved. We therefore have a record of real progress so far as the small business sector is concerned.
In the case of the expansion of youth training, which is dealt with in Item 9 in Mr. Steel's document, we have already taken vigorous steps. Under the expanded Youth Opportunities Programme all unemployed school-leavers in 1981 will be offered a training or work experience place by Christmas. Other 16- and 17-year olds who have been unemployed for three months should be offered places within a further three months. In all, 440,000 opportunities will be available in the coming year. In this connection I pay tribute to the fact that we are building on a foundation laid by the party opposite, and I therefore hope that the party opposite will support us in the measures that we are taking in this field. We are now giving urgent consideration to what further measures might be taken, and we are doing this in consultation with the Manpower Services Commission.
I come now to the section on international cooperation. This is Item 10. I imagine that this was included by way of reproof for their erstwhile partners in the Labour Party. So far as we are concerned, we entirely support the objectives of international cooperation. We are committed to Europe; and while there is more than ample scope for improvement, particularly

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in relation to the Common Agricultural Policy, it is essential to bear in mind that Europe is our largest export market. The share by value of our total exports going to the EEC has risen from about one-third in the early 1970s to 42 per cent. in 1980. Europe offers us great opportunities. We must take advantage of them; we must turn our backs on the past and not on the future.
There are other aspects of Mr. Steel's proposals which we do not view with the same degree of favour. First, the National Enterprise Board, which makes its appearance in Item 1. The document proposes "a strengthened National Enterprise Board". This, we think, is entirely wrong. There is a place for a National Enterprise Board operating on a very modest scale and we have reconstructed the Naitonal Enterprise Board to that end. But the saga of British Leyland illustrates with great clarity where the kind of "strategic intervention" through a strengthened National Enterprise Board leads us. It is not conducive to efficiency; it is not conducive to proper financial control. It leads to a heavy drain on public funds; it adds to the Government borrowing requirement, thereby pushing up interest rates and pushing up taxes. This kind of intervention is no good to anybody. Mr. Steel's proposals in this regard are a recipe for getting into trouble and not for extricating ourselves from it.
We now come to the question of a "long-term incomes policy". In their 1979 election manifesto, the Liberal Party proposed that this should have the backing of law. This has disappeared in Mr. Steel's present proposals. I do not know whether this is a change of heart or simply an oversight. I was most interested to hear the vigorous support given by the noble Lord, Lord Glenamara, for the concept of an incomes policy. We are entitled to know whether this is now the official policy of the Labour Party—if there remains such a thing as a Labour Party, and if it still has any official policy. But we are entitled to know whether it is the official policy of the Labour Party and I think we are entitled to know whether they propose to enforce it by law or not; and, if they do not propose enforcing it by law, how they do propose enforcing it, particularly having regard to the massive opposition by the unions, and bearing in mind also that the unions have now made a successful take-over bid for the leadership of the Labour Party and, no doubt, propose making a take-over bid in due course for the party as a whole? Are WC to understand that this policy now has the whole-hearted and undivided support of the Labour Party?
Having said that, let me make this comment. There is, of course, a considerable intellectual appeal in the idea of an incomes policy. Such policies appeal to people's sense of fairness and to their sense of orderliness. Above all, they seem to provide an answer to the popular resentment when workers in a strategic position succeed in obtaining excessive wage increases by imposing hardship on the public at large. Be that as it may, experience shows that incomes policies simply do not work. There is no question of them having been introduced in a hurry, on the brink of crisis. One can see the origin of incomes policies in the 1944 paper on full employment policy written by Lord Keynes. We have gone round this field
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again and again and again—and every time an incomes policy has failed. They introduce a serious element of inflexibility into the economy, they prevent necessary and proper adjustments in relativities being made, and they contain immediate pressures only at the expense of an ultimate wages explosion. The apparent short-term gains which an incomes policy offers are bought only at the expense of long-term loss. Both previous Governments, the Conservative Government in 1974 and the Labour Government in 1979, were swept away as a result of the forces unleashed by the breakdown of their incomes policies. One admires the bravery of the Liberal Party in wishing to charge for the third time into the jaws of death. One admires their courage but not their political or economic understanding; and I might almost say that I am relieved to see the noble Lord, Lord Glenamara, tagging on behind them in this foolish and fatal charge.
The third group of proposals in Mr.Steel's programme consists of a number of currently popular aspirations which will be supported by most people; but no consistent policies are put forward for their achievement, let alone policies which would actually lead to their achievement. In short, in the context in which they appear in Mr. Steel's document, they are, frankly, little more than catch-phrases. Of course, we all agree that interest rates should be lower. There is no disagreement on this point. We, as much as anybody else, regret the present level of interest rates. In fact, we have already reduced the MLR by three percentage points compared to the peak which was reached last summer and we have made it clear that, as circumstances permit, MLR will be reduced further. But one of the necessary conditions for bringing down interest rates is to contain the Government's borrowing requirement within acceptable limits.
The measures announced by my right honourable friend the Chancellor of the Exchequer on 24th November were directed to this end: by reducing expenditure on the one hand and increasing revenue on the other. In contrast to this determined attempt by the Government to bring matters under proper control, Mr. Steel's document proposes substantial increases in expenditure: more spending by the National Enterprise Board, more spending by the nationalised industries, massive spending—and the word "massive" appears in the document—on energy conservation, a Severn barrage and so on. The effect of all these proposals on the public sector borrowing requirement would be substantial . Their effect would be to push up interest rates and not to enable them to be reduced. In short, the policies which are put forward in detail are completely inconsistent with the objectives sought to be achieved.
Then, we have in Item 6 a proposition to reduce the exchange rate. I know that industry would be a great deal more competitive if we had a lower exchange rate. It would also be a great deal more competitive if we had lower labour costs—a matter for which industry must share some of the responsibility. In fact, three-fifths of the deterioration in our competitiveness over the last two years is due to the rise in labour costs rather than the rise in the exchange rate.
But however difficult the present position is, what this Government, or indeed any Government, can do to influence the exchange rate is limited. It is arguable

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that to leave North Sea oil in the ground—and this is what the Liberal Party propose—is more likely to push the value of sterling up rather than to push it down. Nor in the light of the other pressures which exist can there be any confidence that lower interest rates would necessarily bring the exchange rate down, either.
Recent experience has shown that quite dramatic changes in the interest rate differential between London and New York have not reduced the value of the pound. On the contrary, sterling has tended to strengthen not to fall. Nor would in-flow controls solve the problem. Experience elsewhere shows that they have a temporary effect but that soon wears off.
Lord Kaldor: My Lords, could the noble Lord explain how we managed for over a century to peg our exchange rate on the gold standard and, after the war, under the Bretton Woods agreement? If his general statement were right, it would be impossible, at least for oil-producing countries, to run fixed exchanges.
Lord Cockfield: My Lords, the noble Lord seems to be unaware of the fact that that system broke down, and it is a situation which has been created by the final collapse of the Bretton Woods system which is one of the major problems that we have to face. There is very little point in going back to the early years of the 19th century and debating what happened then. We have to live in the 1980s and solve the problems of the 1980s. The Government's efforts are directed towards this.
I realise that what I am saying can be interpreted as saying that industry must just put up with a high exchange rate. But what I am really saying is this: we must all face up to the facts—sometimes the unpalatable facts—of life. It is no good service to anybody to pretend that easy solutions exist to problems when they do not; to lead people to believe that they can lean upon Government when it is not within the power of Government to provide help. The fact that industry's problems can only be solved by industry, that management's problems can only be solved by management, is being learned and learned rapidly. Our export industries have coped with a very difficult situation with much more success than most people would have expected. They deserve great credit for this.
I now want to leave the world of David Steel and return to the real world in which we have to live and earn our living; where we have to face real problems and find real answers to them. There is of course no doubt thst the problem which worries people most at the present time is unemployment. I entirely reject as totally without foundation the allegation by the noble Lord, Lord Glenamara, that the present Government are deliberately creating unemployment as a weapon of policy and that they are expecting unemployment to escalate to levels which he quoted. The Government are not in any way using unemployment as a weapon of policy. The Government have not created the unemployment. I reject these charges totally.
The causes of unemployment rest in the following factors: first of all, in the world of recession. Secondly, in inflation—a matter to which I shall return. Thirdly,
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in the growing uncompetitiveness of British industry over a very long period of time—a situation which has been greatly exacerbated by the failure not only of managements but Governments to tackle this problem, particularly the problems of overmanning and restrictive practices and out-of-date working practices. No Government has a worse record in that regard than the previous Labour Government. Finally, a proportion of the present unemployment is due to the excessive rise in earnings which took place in the wage round 1979–80. We repeatedly warned both sides of industry about the effect of this. The effect of these excessive rises in earnings was to make British industry more and more uncompetitive, both at home and abroad.
Of all these causes, the most deep-seated and important is inflation. This is why we have directed our policies to the root of the problems and to dealing with inflation. In no other way can we secure the long-term future of the British economy. In no other way can we provide long-term employment prospects for our people. It is for this reason that, when we came into office and throughout the period that we have been in office, we have throughout, in looking forward to the years ahead, been determined to stamp out inflation; and that determination remains. It is far from easy; it involves painful decisions on both expenditure and revenue; it involves not insignificant transitional costs.
But we are at last beginning to see the clear signs of success. The rate of inflation has come down from nearly 22 per cent. at the peak to 15 per cent. in December, and it will go on coming down. There has been a sharp deceleration in the rate of increase in earnings. The CBI's data on settlements in manufacturing industry show that the majority of recent settlements have been below 10 per cent. Realism has returned to wage bargaining with a speed which would have been beyond belief even a few months ago. The paramount need of the moment is for Government to manage their affairs so that the demands they impose on the community—including the demands imposed by the local authorities and the nationalised industries, which contribute so heavily to the public sector borrowing requirement—are reduced. This will pave the way to progressive reductions in the rate of interest and, in the medium term, to a lower level of taxation which will provide the incentives for business and for the individual as a whole.
These developments will provide the basis on which industry can continue to improve its efficiency; to reduce overmanning; to increase productivity; to lower costs and thereby increase its competitive cutting edge in both home and export markets. There is also a heavy responsibility on all those who work in industry not to demand more than their companies can pay and to co-operate actively in improving efficiency and reducing costs.
It is only in this way that employment can be safeguarded and the basis built for future expansion.
" The only thing we have to fear is fear itself ".
Those words were spoken in the depths of the great depression of the 1930s. They are equally true in our present conjuncture. We face great problems; if we face them unflinchingly, with the determination to succeed, we shall solve them.
4.50 p.m.
Lord Perry of Walton: My Lords, I am grateful to the noble Lord, Lord Banks, for putting down this Motion. I share the view of Mr. David Steel that what we need is a shared national strategy and I should like to say a word or two about the Motion, which stresses the need for action. I confess that I have little expectation that this call for action will be heeded by the Government. When I took my seat in this House I chose to occupy a Cross-Bench. 1 had never been a member of any political party and in the last general election I confess that I almost welcomed the fact of being, in common with criminals, lunatics and your Lordships, disenfranchised. However, I was not proud of my indecision and indeed was rather shamefaced about it.
I am shamefaced no longer because the fears I had at the time about both major parties have, I think, been justified. I need not spell out the horrors of the present Government's policy—the noble Lord, Lord Glenamara, has done so with far greater dramatic effect than I could ever achieve—but his party is promising me withdrawal from the Common Market and from NATO. It is also advocating policies which would mean that this country's policies would be determined by his party and not by Parliament. I find this just as unacceptable and just as horrifying a prospect as the effects of the current Government's policies. I believe that we are now in a situation where most voters would have to give their vote, like me if I had one, against both parties because there is nothing in their policies they would want to vote for.
Mr. Steel's national strategy proposes a 10-point programme and I, like others who have already spoken, find these points quite unexceptionable, if naive. I wish that I could see them all adopted and acted upon now, but I suspect it would need an election to achieve that. To vote against both the extreme Right and the extreme Left requires an upheaval in our political system. I fear I did not believe that the Liberal Party, acting alone, could provoke that upheaval: it required that the public should see politicians they admire changing their minds in public and willing openly to support a more moderate national strategy.
That was why I signed the Declaration of the Council for Social Democracy. Here were people who thought as I thought and who advocated policies that I could vote for. I hope that the council becomes a new party, that an alliance with the Liberal Party is achieved and that the alliance wins the next election, as the opinion polls predict it could do. That is how we are most likely to get the action which the noble Lord, Lord Banks, has called for.
4.53 p.m.
Lord Boardman: My Lords, I will not now follow the noble Lord, Lord Perry, in the points he makes, but perhaps I might touch upon one or two of them a little later. Nor will I join issue with the noble Lord, Lord Glenamara, whose speech was so effectively responded to by my noble friend. Like other noble Lords, I welcome this debate which has been initiated by the noble Lord, Lord Banks. Any Government that thought it knew all the answers would be complacent. Certainly the 10-point plan of Mr. Steel contains many points with which most of your Lordships on all sides
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of the House would agree. The noble Lord, Lord Glenamara did, and so did the noble Lord, Lord Perry, and also my noble friend Lord Cockfield. Indeed, who could not agree with them? If we were to look at a menu, where you could select the dishes you want and reject the others we would have a quite excellent meal, particularly as in the case of a guests' menu in a club where they do not put the price down alongside the particular dish you have selected. There is also the further advantage that you do not have to pick up the bill at the end of the day.
But of course that is not what the Liberal 10-point policy is all about. It represents a full meal to be consumed in full, as I understand it, at one sitting. Perhaps I should correct myself—and the noble Lord, Lord Perry, has reminded me that I should so do—because that menu does not cater for the diet of their fellow-hosts, the Council for Social Democracy, so that it will no doubt have to be extended to cater for that.
I can see all sort of problems arising. For instance, one host may prefer claret, while the other prefers burgundy and in such cases I would ask whether the menu would give a choice or whether one will have to take the one allotted to the area in which one lives; that is assuming the alliance of which we read should ever take off. I must, however, also admire the flexibility of the Liberal Party. Only quite recently we had the Lib-Lab pact to which my noble friend referred. The Labour Party at that time were giving support and comfort to a Cabinet that included Mr. Benn and others who were advocating similar policies to his. Today they are—
Lord Mackie of Benshie: My Lords, with the noble Lord's permission, perhaps I might say that Mr. Benn may have been advocating those policies at that time , but the whole point of the Lib-Lab Pact was that he was not able to carry them out.
Lord Boardman: My Lords, the policies that were being pursued and advocated by the party in Government in those days, which was supported by the Liberal Party, are not the policies of the people whom they are now supporting. They are now giving their support to those who have condemned the party with whom they were previously in alliance—
Baroness Seear: My Lords, I am sorry to interrupt, but the support we were giving was to the Social Democrats inside the Labour Party, and that is why the Lib-Lab Pact was such a huge success.
Lord Boardman: My Lords, the noble Baroness will have the opportunity to make her points later. I think the record is fairly clear as to the terms on which that pact operated. I do not wish to go back too far into the past, but I must warn my noble friend that, in view of the flirtations which the Liberal Party have carried on, he should be wary so that at some future date he is not beguiled by their somewhat fickle attitude towards partners with whom they have operated.
Of course, I recognise their problem; they are seeking their elusive mirage which is known as the middle ground. I am sorry to disappoint them, but that is already firmly occupied by the Conservative Party, as was made clear by my noble friend Lord Thorney

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croft in a speech last week. Just because the Left moves further Left does not mean that the middle ground has to shift with it. I believe, despite the merriment from the Benches opposite, as will those who get around the country, as I try to do, that, despite the pain, discomfort and the costs which are having to be borne by many sections of the public today, the unemployed and so on, most people recognise that the present policies are right, fair and necessary. Therefore, I believe that the ground which is occupied by Government today is still, and I hope will long remain, the middle ground. The Liberal Party arc also faced with something of a dilemma. I think it was Sir Winston Churchill who said:
" One of the problems is that the inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of Socialism is the equal sharing of miseries ".
The party which is claiming equality must decide whether it is the equality of miseries that it wishes to endorse and support. The dilemma is where they stand between those areas.
May I turn briefly to some of the points that have not already been mentioned by my noble friend? I am sorry to say this, but the document is rather badly informed on many grounds. To take an easy example, it states on page 4 that:
" Development should also start on a Severn Barrage as a pilot scheme in the use of wave power ".
I felt sure that the Liberal Party, who have made a great study of energy matters,would know that the Severn Barrage scheme has nothing to do with wave power. It is entirely related to the use of tides and, furthermore, it is complicated by the Severn Bore. The Government have a study going on to investigate the potential. But to put forward a pilot scheme, which would cost many millions, shows a lack of understanding of the real world, to which my noble friend referred.
On the incomes policy point, I shall not add to what my noble friend Lord Cockfield has said, except that I hope he will get a direct answer from the noble Lord, Lord Glenamara, as to whether or not support for a statutory incomes policy is now the official policy of the Labour Party.
The 10-point programme makes reference, quite rightly, to energy and energy conservation, but criticises the operation of the price mechanism. The document states:
" It is wrong to rely simply on the price mechanism to reduce energy consumption ",
and it goes on to refer to plans that are not spelt out in the programme, but which would produce a saving of at least 20 per cent. per annum in energy consumption. The pamphlet states that the plan could be implemented tomorrow. I believe that that is quite unrealistic, and I should have thought that discarding the price mechanism was contrary to the philosophy of many noble Lords on the Liberal Benches.
Indeed, in my experience, and, I dare say, in the experience of most noble Lords, there is nothing more effective in making me and my family switch off lights and so on than the price in the bills that come in. Furthermore, in my industrial capacity I can say that there is nothing which has made us invest more heavily in energy conservation methods than the high cost of energy today. I would perhaps criticise some of that
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pricing policy in its impact on high energy users, but that is not for this occasion.
The paper contains a rather strange phrase. It states:
" Elective dictatorship is a crude and increasingly inefficient way for a complex society to govern itself ".
I fail to understand what that means, and perhaps noble Lords opposite will say more about it later. Does it mean something like the outcome of the recent Wembley conference, or something like the NEC of the Labour Party'? It is lost upon me.
The pamphlet goes on to deal with electoral reform, on which my noble friend spoke. I realise that this is something which finds support in many quarters, but it is something which I myself am quite unable to support. I believe that it must lead, inevitably, to a coalition, with deals being done after the election, behind stairs or whatever is the right term, and to that extent it is less democratic. I believe that electors will not know for what they are voting until after the election results when the parties have done a package deal and decided on the way they will form a government, which may well result in policies which have not had the support of any of the electors.
Finally, may I refer briefly to what the paper does not contain? I believe that the duty of a government and of a party putting itself forward in the euphoria of public opinion polls and claiming to be a future government, is to deal with some of the issues which are the major responsibility of government. There is no reference to defence. There is no reference to law and order. There is no direct reference to maintaining the value of the pound—to honest money, Those are three of the central responsibilities of any government, but there is complete silence about them. I would sum up the pamphlet by saying that, as a thesis, I accept its sincerity and I have read it with considerable interest. But, like my noble friend Lord Cockfield, I believe that it is remote from the real world in which we have to operate today.
Viscount Barrington: My Lords, before the noble Lord sits down, could he explain, not to this party or to the House because it would take too long, but at some future time, how one occupies a mirage of the middle ground? Does it mean occupying the mirage or the middle ground and, apart from how it is done, which is the stress on—the mirage or the middle ground?
Lord Boardman: My Lords, perhaps I may consider the point and let the noble Viscount know how that should he interpreted.
4.57 p.m.
Lord McNair: My Lords, when my noble friends were drawing up this Motion I was in Strasbourg and my feeble Back-Bench voice could not carry from there. But if I had been present, though it would probably have made no difference, I should have urged them to cast the net a little wider and perhaps to draw attention to the political events of the last three months, including the publication of the 10-point programme—something like that.
I wonder how many noble Lords will be surprised when I remind them that the Labour Party's Wembley

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conference took place only 18 days ago today. So much has happened that I suspect we may be going through a period of seismic activity in our political life—a series of tremors which have not yet reached their peak. The political seismograph works very slowly, and only history will show us the Richter scale reading of the Wembley conference. But it may well come to be seen that these events have brought about a radical and permanenent alteration in the political landscape.
One feature of that landscape, as far back as any of our memories go, has been a rigid and seemingly unbreakable pattern in which two large, and, in our eyes, somewhat bogus, coalitions, one called the Conservative Party and the other the Labour Party, relying—in fact, depending—upon an electoral system which obliges people to vote negatively against that which they find the more repulsive, have been quite happy to take in in turns to blight the inarticulate hopes of the electorate (inarticulate, I may say, through no fault of the voters) simply because of the crude and unresponsive way in which our curious system distorts and misinterprets what people are trying to say and denies them any chance of saying it more clearly. No one who has done any ordinary grass-roots canvassing, would deny that at least four out of every five votes are cast against something or somebody, rather than for anything. This is how we have to behave under an electoral system which was described yesterday by The Times as "a lethal gamble ".
This rough, oafish game depends essentially upon fear. You have to frighten people into believing that the other lot are going to be even worse than you have already shown yourselves to be, and in order to pull off this propaganda trick you need bugaboos or bogeymen. You need a name to make the flesh creep. The late and very much respected Aneurin Bevan served the party opposite in that capacity very well for some time. Once, noble Lords may remember, in a lean year they had to make do with Harold Laski. But look what the Wembley conference has given them now: a brand new, shining weapon in their arsenal, the enhanced credibility Benn. That small, well-disciplined force of professionals in the Tory apparat over which the noble Lord, Lord Thorneycroft, presides with such skill and authority must be rubbing their hands with glee. They think they have got the best bogeyman since Zinoviev, and up to a point they are probably right.
That is the warning which I want to give to Liberals and Social Democrats alike. It is a warning which, I respectfully suggest, might be heeded by people in the Labour Party who are not quite sure whether they are Social Democrats or not, or, if they are, what they are going to do about it. And it might even be worth a passing thought for supporters of the Conservative Party, many of whom are beginning to wonder whether Milton Friedman really is quite the Messiah he was cracked up to be.
I give that warning for this reason. If at the next election people are faced with nothing better than the sadly familiar search for the lesser of two evils, and if one of those evils is the sort of manifesto with which the new-style Labour Party looks likely to encumber itself, they will reject it overwhelmingly. And you can hardly blame them, though it would not do them
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very much good. We must offer them a better choice, which of course is where this 10-point programme becomes so highly relevant. It is a brief statement of our beliefs and proposals. As many noble Lords have taken pleasure in pointing out, it is not, and was never meant to be, worked out in the detail which would be required for an election manifesto. I see it as a working paper, on the basis of which a programme could be worked out which would win the overwhelming support of the sensible, non-extremist majority of our people, which hitherto has been artificially divided, held apart and forced into futile conflict by the rigidities of the two-party system. The evidence of many recent polls, all of which agree, tells us clearly that this is what the country wants. Are we to disappoint them?
We do not expect it to be easy to negotiate this alliance. Clearly, a broad agreement on policy must precede any discussion of electoral tactics. Generosity, realism and perhaps even a little humility will have to be shown by all concerned. But I cannot believe that we shall fail. Frankly, as I see it, the only alternative to an electoral alliance is a suicide pact. What a curious time to choose for that. When the first quick look at your coupon suggests that you have got those eight elusive draws all lined up in one column, is that the time to turn to your would-be partner and say, "Come on, let's go out and walk under a bus"? No. There is a tide in the affairs of men. Why do we not take it at the flood and, using this timely document as a basis, get down to the difficult and serious work?
5.15 p.m.
Lord Balogh: My Lords, two debates which were held in another place on the economic situation, and now in this House, show the desperate urgency of the economic problem facing the country. It has also enabled the noble Lord the Minister to display his fund of goodwill and intellectual modesty. I congratulate him on his performance.
Mr. Steel's list of agenda would be accepted by most people of goodwill. However, it does not quite add up to a programme, as it does not contain a timetable nor lay down priorities. Moreover it contains short-term policies, mixed with more far-reaching changes. What needs to be done is a thorough investigation of these missing considerations. Of course, this cannot proceed in a hurry. The point upon which Mr. Steel seems most hesitant is his treatment of the transitional period as we try to kill pessimism by injecting optimism. Very often, of course, one overdoes it. Then one accumulates problems rather than solves them.
Unlike some of her predecessors, Mrs. Thatcher is a true believer in what she preaches. She once more reaffirmed her belief in the self-adjusting mechanism of the market and therefore the pattern of the economy which she prefers. The experiment of stabilising the economy by limiting the growth of the money supply, helped by a deflationist, high-interest policy, is palpably not working. Instead of reconsidering her policy, she is driven by her faith to high interest rates and ever more extreme cuts in public expenditure. While she protests verbally her dismay at the mounting level of unemployment, her deeds tell a very different story.

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How could one rely on the stabilisation of the economy by manipulating the money supply when we cannot even obtain a straightforward definition of the concept? There are a variety of potential money substitutes in the wings, even if we disregard those which figure under the pseudo-mathematical labelling of M 1 to M7. No sooner are effective restrictive measures taken against one of these monies than a new substitute is evolved. This one could see in the last two years when, as a result of the corset, deposit certificates were invented.
Even more perilous is to disregard the changes in the velocity of circulation offsetting policy measures to control its volume. One of these changes is due to the fact that "money" is not a homogeneous entity. It can act as a means of exchange, in which case it has a higher velocity, or it can act as a store of value, where it has no velocity whatsoever; it is dormant. Changing from one to the other will affect the velocity of circulation. The influx of colossal amounts of hot money in the last years will inevitably have increased its role as a store of value. Thus, even if the total volume of money remains constant, domestic demand will shrink and depress the velocity of money. Striving after monetary "stability" will then increase the rate of interest and aggravate an already taut banking situation. Week after week City people encourage each other with the news that the MLR will surely be cut and some upward adjustment permitted, and every Thursday afternoon they are disappointed.
The tragic aspect of these developments is that the growing tension between labour and the employers creates an atmosphere in which inflation seems manageable only by weakening the unions and frightening their membership by mass unemployment—that is, by a democratically unacceptable price. It is not only the present but the future that is imperilled. Investment in high technology equipment will be inferior to that of our competitors, and our relative decline in skilled manpower will continue because of the cuts in social services, especially education and health.
Mrs. Thatcher's destruction of physical capacities, and even more of our human quality, is horrifying to contemplate. Should she continue on the present tack —and one must admire, with the Tories, her tenacity and tactical ability—the losses might become so grave that a revival will be difficult and the process of shrinkage irreversible.
The threat of an irreversible downward spiral is much aggravated by the Government's determination to use—with a few exceptions like steel and BL—as its tactical monetary means a (wrongly applied) system of monetary and fiscal policies. The result will inevitably increase militancy in the longer run. Whenever the Government attain their aim of stopping inflation and try to reverse their policies and to expand the economy, this basic bitterness will surface and we shall once more be plunged into inflation. A permanent reserve army will have to be maintained, slashing standards. A situation of permanent depression will have been produced. The Marxist prediction of a "reserve army" will have been fulfilled by the Tories. Our material ill-success will increase and with it general backwardness and militancy will further rise.
What is the alternative? One could envisage what is now called in polite trade union language" systematic
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adjustments ". Some of my colleagues in a longish letter to The Times on 24th November 1980 suggested that what is needed is a,
" modification of our present pay fixing arrangements or in plain English an incomes policy ".
Unfortunately, neither Mrs. Thatcher nor the TUC and its general secretary Len Murray, nor the noble Lord believe this, despite the torrentially increasing evidence. We are always told that there is not an incomes policy in a successful country. I would not say that Austria, Sweden, Norway and Germany were particularly unsuccessful. But of course the political difficulties are enormous. No incomes policy would be acceptable to the lower brackets if it were not accompanied by other far-reaching reforms.
The great problem is the refusal of the Establishment —officials, universities and the City—to recognise the change in the structure and the functioning of the economy in all industrialised countries, but perhaps it is more obvious in this country than elsewhere. My colleagues talk about "market forces", implying that no single producer or consumer can influence the price which the market dictates to all and produces an optimum situation. That has irrevocably changed. We have not got that sort of market, and therefore what we suffer from is a contradiction between the formidable increase in the bargaining power—at full-ish employment—of workers organised in unions and the distribution of national income as conventionally determined. We need a social contract going far beyond "new pay-fixing arrangements".
There is no indication that the Government are aware of the need for a change. I think the Minister's speech proves this beyond any doubt whatever. Without a direct system of controls, a programme of measures not merely for restarting the economy but deliberately biased towards the poorer classes, we shall not be able to conquer the crisis. We need a planning and co-ordinating machinery, which has been largely destroyed. We need organisations whose investment could and should both stop the deflationary catastrophe and restart the economy at a juncture in which the private sector cannot do it because of the losses which we suffer during the slump.
What is never said by opponents of the incomes policy is that "free" collective bargaining leads either to unemployment or to an inflationary spiral. There has been no British Government in the past 20 years which have not been forced to adopt an incomes policy. They failed to deal with the basic problems and were obliged in the end to deflate and to increase unemployment. That is true of Labour Governments as much as of Tory Governments. In fact, an incomes policy, as the example of Austria shows, is a necessary permanent adaptation of economic management and structure to the needs of the modern economy. With an increase in concentration of economic power on both sides of industry, the balancing mechanism of a world perfect market has ceased. Oligopoly enables the employer to shift the rise in wage cost on to the consumer. In the process many firms go under and the industrial base on which our existence depends is eroded. It has been clear in the last score years, if not since 1945, that free collective bargaining is in reality a monopolistic exploitation of the public by the most powerful, leaving the rest

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dissatisfied and dependent on social security.
The dozen or so crises which have occurred have not taught this country any lessons. The pound seems to be either too high (as it often is) or too low—and sometimes both in the eyes of the beholder. Speculative attacks on the pound alternate with torrential inward movement of loose balances. These capricious fluctuations might cause an industrial collapse which could be aggravated by the possible unwinding of the international credit system. And there are the Government exemplified by the noble Lord the Minister. Like the Bourbons, they have forgotten everything and learned nothing. Still there is a slight flicker of light at the end of the tunnel: Professor von Hayek has accused Milton Friedmann of being the cause of Mrs. Thatcher's failures.
5.30 p.m.
Lord Mackie of Benshie: My Lords, I am rather amazed at some of the speeches we have heard, particularly the ones from the Front Benches, and more particularly, if I may say so, the one from the Front Bench of the Labour Party. It is quite extraordinary to me that the noble Lord, Lord Glenamara, with all his experience, can make a speech like that, in view of the present torment the party is in and the total lack it has shown of any coherent policy whatever. I must say the speech of the noble Lord from the other side was not quite so euphoric; perhaps the cares of Government have made him much more realistic. But both of them appear to me to neglect the whole point of David Steel's declaration.
Like many noble Lords here, I came back from the last war a young man still, full of pride in my country, belonging to a country which was a victorious one, which had the highest standard of living in Europe outside Sweden, which had most of its factories intact. I thought it would be all go from then on, that Britain was to go ahead and give a lead and continue in prosperity and influence in the modern world. I must say that even noble Lords on both sides must admit that that has not happened. We arc at the bottom of the league in Europe now, or we just about share it with Italy, and other countries have surpassed us in influence, in earning power and in general efficiency.
Noble Lords on both sides of this House cannot escape responsibility for that state of affairs, because since the war they have governed alternately. The last coalition Government was the war-time coalition Government, and since then two-party politics have served this country very ill. If we are going to have a consensus or a coalition of opinion and of power in this country, it should be a consensus or a coalition within Parliament and not within parties. Noble Lords cannot tell me that this is wrong. They have only to look at the history of the decline of this country since the end of the war.
The two-party system is a very different one today from the one which obtained when everyone was born "a little Liberal or a little Conservative". In those days Members of Parliament were financially independent, and with that financial independence also went a great deal of political independence. There was a great deal of cross-voting. The Government of the day had always to consider first and foremost the representatives of the people. They did not have to
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hark back the whole time to the manifesto and the party and the perilous coalition they were trying to maintain.
Today Members of Parliament are dependent on the party not only for their seats but in many cases for their very living. Discipline is so tight that at the moment the proper working of parliamentary democracy is a farce. It is party government we have, and that is what is meant by elective dictatorship, because that is what it is. I trust that everyone now understands it. That is the state we are in today and that is the state which is responsible for a great many of our troubles. We have a divided nation.
It is quite extraordinary, in this time when everyone from all parties tells us that we need to work together, that our whole system of Government is based on confrontation, and the party battle is fought not on points of policy but on the stirring up of bogeymen, as my noble friend said, and on a revival or rejuvenation of class hatred. This is absolute nonsense in the present time and nobody can tell me that this sytem of election has nothing to do with it. That is why I think David Steel was quite right to say that above all PR has a very great deal to do with the state of the country.
I should like to go on to the particular. The noble Lord, Lord Cockfield, has explained many times and at great length, and with that lovely dry throwaway manner which we all so much enjoy, that it is absolutely essential to keep interest rates high and to keep down public spending. But I must say that I understand—with my imperfect understanding, I admit—that you keep interest rates high to stop the runaway activity which will fodder inflation. I never understand what the people who get the enormous rates of interest do with the money they get from the hardpressed manufacturing section. It must have an inflationary effect in their direction. The noble Lord said with great pride that he had brought it down from 17 per cent. to 14 per cent. Big deal! It means that you borrow money, if you are a decent, sound person, at 16½ per cent. My God! when I started in business after the war you borrowed money at 4½ per cent. and thought that was pretty steep.
All over the country we have the extraordinary sight of the most enterprising firms being hit by the present enormous interest rates. All the tax cuts have not had anything like the effect of the high interest rates. If you borrow money to put in new plant, as many friends of mine have done, and then suddenly within a year your interest rate doubles, you are in a position where you are paying compound interest at a rate of 20 per cent. I do not know what it compounds at, but at 20 per cent. or thereabouts it does not take very long to double the debt. That is happening to enterprising firms in this country.
It is not much wonder that many of my friends in the Tory Party in manufacturing, at the sharp end of the business, are wondering what the devil the Tory Party is doing by taking the money away from the manufacturing section and handing it over to the rentiers, the bankers and whoever is fortunate enough to receive these enormous interest rates. This, up and down the country, is ruining not the incompetent; not the canny fellows who tucked away money and never improved anything and are sitting on it; it is ruining the people who are trying to export, who are putting in new plant

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and who in many cases are in the lead in new techniques. This cannot be right.
It is certainly having an appalling effect on farming. I see that the farmers today are to seek an interview with the Prime Minister in order that something can be done about the enormous rate they are paying for money. I cannot believe that it is necessary to maintain these high interest rates. Certainly I cannot believe that it has no effect on the high value of the pound, which again has been absolutely disastrous for a number of people exporting good products, of high standards of design—exporting, for instance, to the United States, where they have suddenly found a movement of over 50 per cent. in price against them. It is an extremely difficult situation and not one the Government should try to shrug off. It is a point of immense difficulty. While I do not believe they should deliberately lower the value to a false rate, there is a fine point at which they should try to stabilise it.
As regards the 10-point plan, one of the matters that David Steel has mentioned—and it is a point of old Liberal policy—is the effect on employees of the attitude of companies towards production payments, profit-sharing or (call it what you will) payment by results. That is an extremely important point. One thing that is true—and the noble Lord mentioned it—is that there has been a tremendous revival of common sense in the country. Faced with the hard facts of unemployment and this enormous recession—and I doubt whether it has anything to do with the Government—people have seen that their interests lie together and workers have taken a drop in pay. Indeed, there have been decreases in pay because of the inflationary factor.
That is an immense step forward from the appalling thinking we have had in the trade union movement in recent years, encouraged by the party beside me, and that step forward must not be lost. It must not turn into a stop-go situation with the employees saying, "When this is finished we shall kick you in the pants in the same way as you are kicking us now". It is up to the employers to say, "Right, you have shown great good sense. We shall install machinery which will give you a proper share of a rise in productivity through profit-sharing and consultation ". I think that that is a vital point and it is one which nobody has mentioned. The opportunity should be taken with the present realistic attitude to push forward with these profit-sharing and production-sharing schemes.
The only way in which many of the things that need to be done—and which I know the noble Lord would like to do—can be done is by having a Government which carry the goodwill of the mass of the people of this country. I have already said that the two main parties as they are constituted do not carry that goodwill at present. They are branded as class parties one way or the other. I find that the thinking of the large masses of the Labour Party and the large masses of the Conservative Party does not differ in any way from my own thinking and even from that of some of my noble friends. I notice, too, that time after time there are large sections of our Administration which are administered by Ministers who are thought little of, and that our party system has for long under-valued the administrative value of a Minister simply because
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we have to pick the Government of this country from a small section.
As I have said, the last time I was really proud of my country and proud of myself was at the end of the war when we had a coalition Government. They commanded respect and, in spite of all the troubles, I am perfectly certain that a coalition inside the Houses of Parliament is far, far better than a coalition inside the parties.
5.44 p.m.
Lord Kennet: My Lords, "pious generalities", "self-righteous", "simplistic", "naïve", "not in the real world", "disappointing"—I think that I am quoting even-handedly from the epithets bestowed by the two Front Benches on David Steel's paper. I am not among those who have always believed that whenever the Liberal Party puts its head above the parapet it is right to dot it, with a ton and a half weight if one is in Government and a ton weight if one is in Opposition.
I do not think that this is a bad, a contemptible or an ill thought out paper and set of proposals. Of course one cannot deny that the noble Lord, Lord Boardman, has a point. There are slips in it. I thought the part about the Severn Barrage might almost have been a misprint. We all have our own preconceptions which we would like to see reflected in a paper which we would like to praise and take to our hearts. Mine is that it is disappointing to see international affairs still at Point 10 out of 10 instead of Point 1 out of 10, given that we must all admit the justice of the claim of the noble Lord, Lord Cockfield—however little else we may admit of what he said—that a large part of our present distress is generated beyond these shores, which is not to say that a large part of it is not generated within these shores. I would indeed disagree with his claim of 80/20 and perhaps put it the other way round.
"Incomes policy" is by now a pair of words which falls into shadow and obloquy because of the recent history of attempts in this direction by Governments of both parties. The noble Lord, Lord Cockfield, spoke most spiritedly about the way in which the last couple of incomes policies which have been tried—one by them and one by us—have blown up in our faces. However, they were income policies of a certain kind. They were different from each other—and I shall not bore the House by reminding noble Lords what the differences were—but they were by no means the only type of incomes policy which could be imagined or which has been imagined; or could be tried, or which has been tried, in other countries.
I think that the Liberal paper has this to say for it. It hints or suggests in some way that a thought has been given to experience in Scandinavia, Germany and particularly the Netherlands. I would like to find another pair of words, which will call to mind not the bad winters—the last one in 1978–79 which blew up after two or three years of success—but a possibility for the future, an arrangement for settling pay differentials between this sort of person and that sort of person which should have majority support by the people. Obviously, one can never hope for universal support for any such arrangement or structure. I am thinking of a kind of arrangement which would be aerated by

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public discussion over a long period and in great depth, so that Parliament at the end of the day could have some idea of what most people really thought a nurse was worth compared to, let us say, a director of a bank. If one could look forward to that day then perhaps it would be wrong to turn our backs on all such attempts because the last two have not worked.
The noble Lord, Lord Cockfield, described proportional representation as a Liberal obsession. It is, and with good reason. But we all know that there are a good many people within both major parties now who share that view not obsessively, I hope, but who believe that coming to such a situation would help British political life.
We are at the moment in very bad days economically and the effect of that has been rather surprising. In bad days one would expect a mature democracy to close ranks and converge upon the middle ground, but the reverse has happened. The reverse has been happening over some years now—even perhaps a decade. As the situation has become very bad in the last year or two, so the reverse has been happening very fast. The two great parties are moving away from each other almost at the speed of light. There is a prodigious elasticity in the British body politic. The Labour Party is going further Left and the Conservative Party under the leadership of Mrs. Thatcher is going further Right. Such a situation, though surprising, is not likely to be durable. In fact, we are already seeing the natural result of this atypical reaction. As the poles draw apart, so gaps are disclosed towards the centre.
I suppose that all our thoughts are rather busy these weeks wondering what will happen about the prospects of filling the gap between the Labour Party and the Liberal Party. I recognise that the Liberal Party is in roughly the same place as it has been in for the last two or three generations—namely, in the centre —and that the action of being in the centre must be largely defined by what is done around you by the other parties. An uncomfortable gap has opened between the Labour Party and the Liberal Party. I think that an uncomfortable gap has also opened between the Liberal Party and the Conservative Party.
There always were these two gaps. Hitherto they have not been uncomfortable, but the natural is happening and there are moves to fill at least one of them; I would not totally exclude that there should be moves to fill the other at the same time, perhaps after the next election, perhaps before—who knows? But the move to fill the" left-centre "gap, if I may so describe it, is indeed a" seismic "one. I think that the noble Lord, Lord McNair, had the right word; or was it the noble Lord, Lord Perry?—I think perhaps it was. It is a fact that, at the moment, the public interest in this move is so great that it is impeding the move itself. I think that noble Lords will know what I mean.
The Earl of Longford: My Lords, may I ask the noble Lord what he means, because it is quite unclear to me.
Lord Kennet: My Lords, I think that it ought to be clear. I would rather not enlarge upon that formulation. If it is cloudy, let us leave it cloudy. No doubt
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public interest will become of manageable proportions in time, and there will be more time to think quite soon. The arguments for proportional representation are pretty familiar. Indeed, so far as I know there is only one argument against it that one hears, which is that stability of government is in some way linked to the first-past-the-post system—the two-party system; we hear people say, "Oh, but if we have proportional representation we should have unstable government ". Of course, we have unstable government now. The lifetime of British Governments is not particularly short compared with those of like countries, for instance, Italy. We do much better in the number of years that we give one party to constitute the Government.
But what is bad compared with other countries—and this is another form of instability—is the comparative contest of legislation; there is a kind of "machismo about it, which is well reflected in David Steel's paper: "I can pass more laws than you and they have more trenchant effects". In that instability of government we compare very badly with countries which have proportional representation. It is indeed absurd to say that we, being the only country in the European Community, the only country in democratic Europe, to adhere to the old first-past-the-post system, have more stable government than Germany, Denmark, Sweden and Norway. The claim should no longer be heard. I wonder what argument remains, except the argument that if you have a large majority in the House of Commons—even if you do not have one in the country —it is nice to keep it as long as you can.
Lord Monson: My Lords, will the noble Lord not agree that proportional representation gave small extremist religious parties undue influence and hence instability in both Israel and Turkey prior to the coup?
Lord Kennet: My Lords, I would. The examples are far afield and the form of proportional representation which did so is not the one which I would advocate for this country. I would go far closer to the Scandinavian or German type where they do not seem to have been troubled to any great extent—with the minor exception of the old Norwegian party—by small religious parties. I have gone rather far from the paper attached to the Motion that we are discussing. I consider it not at all inappropriate to the present political juncture and I can save the House and myself a great deal of time by saying that I found the speech of the noble Lord, Lord McNair, extremely constructive, well-thought and well-judged.
5.55 p.m.
Lord Hankey: My Lords, I support a great deal of what was said in Mr. David Steel's 10 points. I note that the noble Lord, Lord Cockfield, also agrees with a good deal of what is written there. I was greatly impressed by the noble Lord's speech and thought that on this occasion he did very well. I am moved to take part in this debate—I earnestly hope that it will be a constructive part—because I have been alarmed by the statistics recently issued by OECD on the economies of the free world. I used to be accredited as the United Kingdom delegate to OECD and I am distressed to see that the United Kingdom does not

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show up at all well—in fact it shows up very badly—in these statistics and forecasts. But they are all based on present policies and present trends and I believe that they arc a very valuable study to see some of the ways in which we might better ourselves.
Of course, inflation is shown by OECD to be a pretty general problem, except in countries which have maintained a high growth of productivity, such as Germany and Japan. But the United Kingdom inflation rate of 15½per cent. in 1980 compares with a general OECD figure of about 11 per cent., and the forecast for 1981 is 12 per cent. for us and 9¾ per cent. for the rest of OECD. Our growth rates have been bad and are expected to be absolutely abysmal. I think that this poor showing of the United Kingdom is a very serious problem indeed.
I am sure that the Government are right to make the combating of inflation their first priority. I entirely support most of the efforts that they are making to get the monetary equations right. Unless the monetary equations are right, I do not believe that the rest of the economy can be made to work. However, I believe that supply economics and particular attention to keep industry going are absolutely essential. I accept that a relatively high rate of interest is required to discourage excessive borrowing in the economy. But if the rate is allowed to get too high—as I think ours has been for some time past—several things happen. First, a great deal of hot money comes in, much encouraged by our new strength in oil, and in one way and another it increases inflationary pressure in the economy and raises the exchange rates.
All this is counter-productive and undoes what the Government are trying to do by keeping up the interest rate. So I think that we ought to discourage such inflows, as various other countries have done, notably Germany and Switzerland. They have not continued it for a long time; I believe that both of them have now dropped it. But I do not think that that is any reason why we should not copy what they have done in the past.
I think that we should encourage only inward capital flows which are devoted to real investment and which bring with them new technology and industrial know-how. We ought to have that sort of money and I hope that we shall encourage it to come. I think that the Government, the City and the banks ought to get together to see whether they cannot find some means of distinguishing between these two flows. I know that it is difficult. Also, I know that it is difficult to keep the interest rate down when the borrowing requirements are going up and the Government need to borrow so heavily. The high interest rate is very largely the result of that. But do not forget that when the interest rate is so high the cost of all this borrowing is absolutely enormous and is a great burden on the country.
There is another point I want to make. Not only high interest rates but unstable interest rates and unstable tax rates, both of them subject to constant change, are very discouraging indeed to business investment both in the public and private sectors. Businesses, public and private, need fairly stable conditions if they are to invest in new plant, raise productivity, and increase output and employment.
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They cannot otherwise make reasonably reliable and profitable plans. It is simply impossible. This interest rate "yo-yo" business, which I am afraid the monetarists in America seem to favour, is really discouraging to business improvement.
I have received a most telling memorandum from a distinguished United States economist and banker who used to be a colleague of mine on the Economic Policy Committee of OECD. Among other things, he shows that when the United States' interest rates rocket upwards, as they seem to do now every few months, the commercial community draw the conclusion that inflation is getting worse and they rush to borrow more, which is exactly the opposite of what the US Government want to happen. So rising interest rates tend, or it may be argued that they tend, to be counter-productive. I wonder whether the same does not happen here. I believe it is hard to control the rate of borrowing and the money supply, because the City of London has so many flexible institutions and methods of borrowing and raising credit that it is extremely hard to deal with the whole lot of them. That is quite a major problem. So I do not believe that it would be right to make that sort of policy our only hope for setting up our economy.
One of the main components of inflation, of course, is the large deficit in the budget and in the public sector generally. I am very sorry that the Government have not succeeded in keeping the public sector borrowing requirement and domestic credit expansion within better limits, even though it has fallen as a proportion of GDP. This is really a most difficult problem because a large fall in industrial production and profits and a large rise in unemployment is bound to cause a fall in Government revenue and a simultaneous rise in the cost of the social sector, and thus increase the PSBR. This is what 1 meant in one of the recent speeches I made on this general subject when I said that I was not sure that many people here realised how very hard, how difficult, it is to correct an inflation on the scale that we saw last year and the year before. It is very difficult. It takes time, and the OECD have much experience in helping countries to overcome these difficulties.
I am really alarmed by the OECD statistics on unemployment. In 1980 the United Kingdom had an unemployment rate of 7·4 per cent. against the average of 5·8 per cent. for the seven largest countries of OECD. The United States, Canada and Italy also were slightly worse than us. But in 1981 and 1982 OECD foresees a rise in the United Kingdom rate to 10 per cent., 11 per cent., and even 12 per cent., while the others are expected to do very much better. I imagine that every Member of your Lordships' House would share my view that such a rise of unemployment here would be a really unparalleled disaster both politically and economically, and especially socially. The Government absolutely must try to do better in the light of these OECD forecasts, which I am sure they have studied in much more detail than I have been able to.
This brings me to my last and main point. It is essential that the Government should do even more to help industry keep going in spite of the current recession. The noble Lord, Lord Cockfield, gave us a most encouraging account, and a very interesting one,

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of all the measures which the Government are taking. The Government are entirely right to help British Steel and British Leyland, and especially many small businesses. Let us use the inevitable recession—it is no good just blaming the Government for the recession as the Labour Party have done—by all means to get greater productivity and to eliminate wasteful inefficiencies and bad monopolistic or restrictive practices. But when the recession passes let us make sure that we have a good modern steel industry and efficient vehicle production on which to base a real industrial expansion.
We must welcome any inflow of foreign capital which brings in new ideas and modern technologies. I am very sorry about the failure at Linwood. Personally, I greatly welcome the French and Japanese participation in the motor industry. After all, the French produce three times as many cars as we do and the Japanese produce six times as many, so we must really have a good deal to learn on both sides of industry from them.
I am not pressing the Government for a U-turn of policy. They are doing a great deal already to help industry. I am not urging them to spend thousands of millions of pounds propping up inefficient industries. Mrs. Thatcher is entirely right. That would be a really big disaster and would worsen inflation. We need to give selective help to the growing points—and I think I saw this idea in Mr. David Steel's paper. We need to train people in the new skills that will be needed when the recession passes and the growing points get real importance.
I am told that there are real shortages of skilled men in many industries even now. Let there be financial incentive to encourage our workers to use redundancy money to help finance their retraining. My impression is that redundancy payments are at present very often being wasted and really squandered in ways which are not helpful in a time of inflation. Let there be even more help for small businesses, especially in the new fields which science is opening up on every hand. Let the Chancellor encourage the private investor to do this. It is really inexcusable to impose extra unearned income tax on the return on that sort of investment. Surely the Chancellor could lend the private investor a hand there. Let there be much more supply economics and not only monetary economics.
I should like to see the Government consult both sides of industry in some detail about further reducing or removing the mass of small regulations and petty restrictions local and national, ecological and social, which at present discourage or prevent business being set up or expanded. Almost every businessman has suggestions to make about this. I am sure that the trade unions have, also. I hope that the Government will listen to them and take heed.
If the Government took a really hard look at the terrible, appalling costs of unemployment I think they would find that a good deal of expenditure on real investment, which we absolutely must have soon, would be quite acceptable if you deduct the cost of unemployment and social assistance for those involved. We have to pay the men anyway. A small example. Take the dreadful, crowded, inefficient road to Tilbury, London's main port. Take the deplorable shortage of
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ships and aircraft and other needed supplies for our armed forces. I know we are building ships—many more, according to the noble Lord, Lord Cockfield, than I had thought, and I am glad to hear about it. Much is being done, but is it not better to get these things now, when the economy is so slack and when you have to pay the men anyway, than to wait until the economy is under pressure again? Or are we really to wait and order those things that are essential, and increase the pressure on the economy and make it harder to resist the onset of inflation? A real hard look at the cost-effectiveness of certain types of expenditure of that kind might pay handsome dividends. We also desperately need housing to facilitate the flexible movement of our workforce without which we cannot expect the economy to expand efficiently.
In short, let the Government take a new and even harder look at what they can do for industry, both positively and by knocking away the present obstacles to progress. Let them in effect go into partnership with both sides of industry. Perhaps Neddy could even now provide a forum; it is deplorably becoming a scene of confrontation. I do not believe that is the fault of the Government, but I believe kindness and diplomacy and the careful preparation of meetings would pay off well in that forum.
To sum up, I want to see a regime of intelligent exceptions—I emphasise "intelligent exceptions"—and I do not want a lot of public expenditure. In the end we can get this country going again only if we can replace confrontation with co-operation. Most of our countrymen want that and are heartily sick of confrontation politics and policies in Parliament and industry. Speaking strictly from these Benches, I must express the deepest regret that the Labour Party and important elements in the trade unions seem to be moving the other way. I do not think that it will pay them in the end to defy the needs and heartfelt wishes of the vast majority of our countrymen.
Finally, a study of OECD statistics has shown for a number of years that the United States are going the same way as we have, with too little investment, periodic large outflows of capital, fairly high inflation and unemployment. Since 1960, their share of total OECD GNP has fallen from 50 per cent. to 35 per cent. They have done brilliantly, though, in developing new technology and new industries and we must hope that President Reagan can set the United States on a good road once more, because that is essential for our survival in the long run and also for the third world. OECD expects an upturn in the United States economy starting in the second half of this year. We must under no circumstances encourage protectionist or other trends here or in the rest of the EEC or OECD which would delay the United States recovery or the passing of the recession. That is another major reason why I support the Government in combating inflation and putting the development of our productivity and competitiveness first.
6.13 p.m.
Baroness Seear: My Lords, it was I suppose inevitable in discussing so sensible a document as my right honourable friend's 10-point programme that a great deal of the criticism should have been beside the point, because it is criticising my right honourable friend for

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not producing the kind of document he never set out to produce. The purpose of the 10 points is to make it clear—not to your Lordships' House but to those elusive people the man and woman in the street—the kind of objectives that the Liberal Party has and the kind of issues to which it would give priority.
The document has been criticised because it does not tell in detail how these things would be done. If we took all the 10 points and if my right honourable friend had spelled out in detail how they were to be done, we should be told that nobody (on the Clapham omnibus or anywhere else) would even begin to read it, and I doubt whether many of your Lordships would either, and it would certainly not fulfil the objectives for which it was written. I always understood that it was the mark of a bad reviewer to criticise the author for not producing the book the reviewer wanted to read, rather than the hook the author wanted to write. And after all, the Ten Commandments are even shorter, and they do not set out to tell you how not to commit adultery.
It has also been said that certain things are left out. The noble Lord, Lord Cockfield, criticised my right honourable friend because he had not mentioned inflation and unemployment. That was unworthy of the noble Lord. The whole document is shot through with a realisation of the horror of both inflation and unemployment. And if, as I am sure is the case, the noble Lord has read anything that my right honourable friend has said and has listened to any of his speeches—and I know he courteously listens to speeches—he will be fully aware that the Liberal Party is deeply concerned with the questions of inflation and unemployment, and my right honourable friend simply did not think it was necessary to underline the fact that those are the major problems with which he is concerned.
Not only that; it has been criticised because it contains much with which both parties agree. But that is the burden of my right honourable friend's case; he is maintaining that there is in this country a great degree of consensus running through all parties about the things that need to be done. That is what he is saying. He is urging that we should mobilise this degree of consent and understanding, and that is reflected of course in the document he has produced. It is not meant to be a confrontation with either the Conservative or Labour Parties. It is an attempt to say, "These are the really important things" and then to find, as has been shown in this debate, that in fact there is a broad basis of agreement that these are the matters with which we should be concerned and the directions of policy which we should be pursuing.
To look in slightly more detail at the criticisms that have been made, the noble Lord, Lord Glenamara, will not misunderstand me when I say that I found his speech headmasterly rather than masterly. He patted my right honourable friend on the head saying he found him engaging. It is, I know, a great trial to my right honourable friend that he still retains the looks of youth, despite the burdens he carries with such ability.
The noble Lord went on to criticise him because, he said, it was a naïve document and because we should find that nearly everything he had said in it—in fact I
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think the noble Lord said "everything"—would be found in the Labour Party manifesto. He took time out in headmasterly style to tell the noble Lord, Lord Cockfield, to attend to what was being said. He returned to his headmasterly attack on my right honourable friend and made the claim that it was all to be found in the Labour Party manifesto. That was interesting. The commitment to the EEC; is that to he found in the Labour Party manifesto? The commitment to the kind of industrial democracy which we advocate, with direct elections from all employees and not industrial democracy dominated by trade unions; is that to be found in the Labour Party manifesto? If so, that surprises me.
The point is not how much of this will be found in the Labour Party manifesto, or for that matter in the Conservative Party manifesto, and I have already dealt with that. The point is what else will be found in the Labour Party manifesto along with the other matters on which we have common agreement. Shall we find in the Labour Party manifesto a determination to increase the degree of nationalisation, a determination to pull out of the EEC, and shall we find that their paymasters, now their masters—the trade unions—will dictate into their manifesto a great many items which would not appear here? That is what the country will ask; not how much overlap there is but what are the other items, far less acceptable and carrying far less general support, which will also find their way into the Labour Party manifesto.
The noble Lord, Lord Cockfield, also attacked my right honourable friend regarding the points which were not included in the programme. I would say to the noble Lord, Lord Cockfield, that he criticises us for our loyalty to the idea of incomes policy. I was interested that on this occasion—and I think it was the first occasion it has happened—the noble Lord, Lord Cockfield, admitted the intellectual case for incomes policy. Indeed, so humble and intellectually honest a man as the noble Lord, Lord Cockfield, could surely hardly do otherwise in face of the fact that incomes policy has had the support of Lord Keynes, of the Nobel prize winner, Sir James Meade, and of the leading academic authority on pay in this country, Professor Sir Henry Phelps Brown. The noble Lord was, I am sure, paying a tribute to the intellectual calibre of the people who give support to incomes policy.
The noble Lord, Lord Cockfield, told us—as he has told us on a number of previous occasions, if he will forgive me for saying so, and he may well retort that I, too, have said the same things on a number of previous occasions—that the trouble with incomes policies is that they come to an end, and that at the end there is a ghastly price to be paid for the period during which the incomes policies have been in operation. I would very much underline the point made by the noble Lord, Lord Kennet: that there are incomes policies and incomes policies. And the world is still young in attempting to find answers to the question of how to get an adequate incomes policy.
It was the party of the noble Lord, Lord Cockfield, which I think made the best attempt at establishing a workable and enduring incomes policy, but it was also the noble Lord's party which removed it, when it shut down the prices and incomes policy led by Mr. Aubrey Jones. I think that for a moment I am

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doing the Labour Party an injustice. Is it not right that the Labour Party in fact set up the incomes policy which was led by Mr. Aubrey Jones?—Mr. Aubrey Jones who, as your Lordships may recall, has now had the wisdom to join the Liberal Party.
But—and here I am speculating—if the institution set up by the Labour Party under Mr. Aubrey Jones had been allowed to continue by the predecessors of the noble Lord, Lord Cockfield, it is possible at least that by now it would have established a standing, a credibility and a respect that would have enabled it to make effective the kind of incomes policy that many of us for a long time have wanted. Surely the one way in which you cannot get incomes policies to work is by adopting a stop-go approach: when the going is tough you take off the policy, and then of course explosion follows. So we would say that you have to try again; and we are not committed, we are not wedded, to any one fixed pattern, as is implied in the words that my right honourable friend uses in describing the sort of approach to an incomes policy that he would adopt.
But what is the alternative to experimenting further with incomes policy? The noble Lord, Lord Cockfield, is telling us, I think, that leaving pay to the operation of market forces is the right way in which to determine how much should be paid. But as the noble Lord, Lord Balogh, said—and he is so transparently right in this regard—market forces simply do not operate in relation to pay. We have a monopoly of trade unions. There is no question of market forces really operating in relation to pay. In the bargaining the strong have the power; the strong get the pickings, and the weak go to the wall. That is not a true market. If we had a true market in labour, perhaps there would be something to be said for leaving that market to operate to determine the price of labour. But we are so transparently light years away from a free market in labour that it is nonsense to say you can leave it in that way.
Of course, at the present time we are seeing what looks like an effective operation of the labour market in reducing the settlements that we have seen in recent months. I agree that it is highly satisfactory that pay settlements are coming down to the extent that they are. But that is under the pressure of the most brutal facts which arc confronting people at company level. The shop stewards know full well what is the cash flow position and what the trading books look like, and when it comes to settlements at company level then for the time being they settle for the kind of limited success that we are getting.
But what happens in the upturn? I am an optimist in these matters, and I believe that recovery will come, though I also believe that we are set to do everything that we can to retard it as long as possible, so foolishly do we conduct our affairs. On the past record there is every reason to suppose that when recovery comes there will be the pressure of inflationary wage claims coming back at once, as soon as the going is good. The only two ways in which we can stop that are through the development of a flexible incomes policy on the one hand, and through the Liberal-type of participation of the labour force on the other. When the labour force see that their real prosperity turns on how successful the business is, and when we get away
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from the idea that the job is always to try to make the best killing that we can out of the employer as soon as profits start to be big, we may be able to have recovery without a return to wage inflation.
But just as we have never had a successful aftermath to an incomes policy, so we have never had in the country economic success which has not been accompanied by inflationary pay claims and inflationary pay settlements. It is up to the noble Lord, Lord Cockfield, who is so confident that one can leave pay to market forces, to tell us what is to happen to pay at the end of the recession, which he confidently expects, as I do. He has not answered that question.
In addition to the noble Lord's reaction to our approach to incomes policy, I would challenge him on one aspect of his attitude towards the PSBR. Government policy is—the noble Lord, Lord Cockfield, is an ardent supporter of Government policy; at least he is an ardent exponent of Government policy in this regard—that public expenditure must be kept down willy-nilly, regardless of the type of expenditure that we are talking about. My noble friends and I, and certainly my right honourable friend in another place, are entirely in support of cutting out wasteful consumption. We are not in the least in the business of believing that one can merely spend one's way out of the troubles with which one is confronted.
However, there is a world of difference between controlling Government expenditure on current consumption and controlling Government expenditure on investment—investment for the future. And it is not just the Liberal Party speaking in this way. I am sure that the noble Lord, Lord Cockfield, read the leading article in the Sunday Times last Sunday. The heading was:
" Wrong Mrs. Thatcher, wrong, wrong, wrong ";
and it might have been:
" Wrong, Lord Cockfield, wrong, wrong, wrong ".
The whole burden of the article was that the Government fail to make the distinction between investment expenditure and consumption expenditure. Not to invest now is to build up troubles of enormous dimensions for the future. We must invest in infrastructure, not in the loss-making industries. Here I point out to the Labour Party the complacent attitude of the noble Lord, Lord Glenamara—just as if Labour had contributed nothing to the present state of affairs, whereas it has been in Government again and again while the steady decline of British industry went on. What did the Labour Party do about the need to restructure industry?
However, my Lords, it is that restructuring which we need to do now, and into that restructuring we need to put resources, whatever it does to the PSBR. We need to put resources into the new industries, the high-technology industries, the industries which can meet and take the markets in the newly-developing countries —because there are markets there. If we do not do this, as the noble Lord, Lord Cockfield, knows, if we do not get really strongly into the high-technology markets, the Americans and the Japanese will be there and we shall not get those markets when times are better. Now is the time to gamble on that and to invest, even if it means some risk of inflation. That is where primarily we criticise the Government's attitude

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towards inflation, and that is the burden of the theme of my right honourable friend.
One further point alone, because time is getting on. The noble Lord, Lord Cockfield, said that he could not understand the relevance of proportional representation to our economic plight. Now I am going to be schoolmasterish. I am sorry that he cannot understand, and I shall do my best to explain it to him, for the relevance is crystal clear, my Lords. We are in a time (on this we are all agreed) of serious, threatening economic peril. I believe we shall pull out, but there is no certainty. We need to make drastic changes—and I know the noble Lord believes this, too—in our country and in our industry. When times are good, it does not matter if a Government have not got the support of the great mass of people in this country. Do not forget that every single Government since the war except the 1945 Government—and I shall be corrected if I am wrong on that—has been elected on a minority vote in the country; and the proportion of support by votes in the country for Governments has got lower and lower.
My Lords, that means that Governments are resting on a very narrow base of consent. When you have not got to make painful changes, that does not matter; when you have got to make painful changes, it is of the essence that you must have a broad basis of consent. The present system of election will not now give you that broad basis of consent. The noble Lord, Lord Boardman, is back with us. He wondered about the relevance of proportional representation, and he expressed his fears of coalitions. He thought that coalitions are undemocratic. The whole point about proportional representation in relation to economic recovery is that when you get an agreement between two parties to a plan of action then, because of that, you are getting the support of a very broad band of the country as a whole. That is the great strength of coalitions; and that, indeed, has been the great strength of the Socialist and Free Democratic Government in Germany, that they have been able to command a very broad basis of consent.
In a coalition, if either of the parties, democratically elected, feels that there is an element in the policies of the other which is totally unacceptable to their supporters, then those policies cannot be pursued; and I would maintain that that is far more democratic, because you hold up the highly controversial issues on which you cannot get agreement and you go ahead on the matters on which you have got agreement. Let me say that if we had had that kind of system in our country we should not, for example, have had the zigzag politics in the case of the steel industry, because we would not have got agreement between enough parties to have, first, nationalisation, then denationalisation, then nationalisation again and then whatever it is that is going on at the present time. So what coalitions can give you—and proportional representation, not inevitably but very probably, does lead to coalitions—is a broad basis of support, and in difficult and harsh times, and in times of painful change, there is no way that Governments can do what needs to be done unless they have a broad basis of support.
What is more, coalitions can give you continuity and stability. Ask any industrialist you know and he
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will tell you, "I would rather have a Government policy that I do not approve and know that it is going to be continued for 10 years than a policy that I approve more with the risk that it will be put into reverse in three years' time". This is so because the lead times in industry are not the lead times in politics, and industrialists need to make plans. They will adjust their plans to the policy, but they want to know that the investment that they have made is made in an environment which will be held stable, and not in conditions which will change.
That is the relevance of proportional representation and the possibilities of coalition to our economic circumstances. It has the relevance, also, that it gives support. It gives people the feeling that they can vote for what they really want instead of against what they do not want. Before I had the good fortune to come to your Lordships' House I fought seven elections, and I can tell your Lordships—because I did a great deal of the door-knocking stuff—that my noble friend was right when we said that five votes out of six (was it?) are against the party you do not like rather than for the party you do like. That is no way to get support. People are now longing to back a policy and to back a party which will give them what they really want. My Lords, we have untapped resources in the North Sea, but we have far more important untapped resources north, south, east and west in the country, among people who want to collaborate with a Government, on a broad front, which will give them a lead in the direction in which they truly want to go.
6.37 p.m.
Lord Cockfield: My Lords, if I might have the permission of your Lordships to speak for a second time, I shall endeavour to do so very briefly and, I hope, largely uncontroversially. May I start by saying that I particularly enjoyed the speech of the noble Lord, Lord Hankey, with most of which I agreed; the speech of the noble Lord, Lord Mackie of Benshie, with most of which I disagreed; and the speech of my noble friend Lord Boardman, who analysed the document produced by Mr. David Steel with great care and in great depth.
The subject-matter of this debate is really of much greater importance, perhaps, than appears on the surface. We have always said that there is no viable alternative to the Government's present policy. We have had an alternative presented to us in Mr. Steel's document, and that is why it was important to discuss it, which we have endeavoured to do in a responsible and, to some degree, a helpful fashion. We have drawn attention to the fact that a lot of the points it raises are common ground. Some of them are points with which we disagree very strongly; others are points which most people would accept but where the document takes us very little further forward.
The noble Baroness, Lady Seear, said that we were criticising a document which Mr. Steel did not set out to produce; that the document was directed to the man in the street. I do not know whether she has in mind that there is some difference in intelligence or capacity to understand between Members of your Lordships' House and the man in the street, but I would have thought that if a document was the kind of document

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which the man in the street would take seriously and study, and agree or disagree with, it was precisely the sort of document that the Members of your Lordships' House ought to examine and on which they ought to express their views. I would have thought that many of the comments made would indeed have been helpful to the noble Lord, Lord Banks, and his colleagues in enabling them to produce a better document next time. We in fact have no fears if they do so. As far as the policy is concerned, we will beat them every time on the merits, but we are only too willing to extend a helping hand to them.
May I take two specific points mentioned by the noble Baroness, Lady Seear. First, she said that it was the view, or appeared to be the view, of the present Government that public expenditure must be kept down regardless of the kind of expenditure; that is, whether it were income or capital. She went on to say that the Liberal Party believed in cutting out waste. So do we, and we have taken specific steps in this direction. I might mention, among other things, the studies carried out under the aegis of Sir Derek Rayner, which have been of great help. But then she went on to say that she did not believe in cutting capital expenditure. The simple, and perhaps unfortunate, fact of the matter is that all expenditure, whether capital or income, has to come out of the same pocket. If the aggregate of expenditure is more than the country can bear without creating excessive rates of interest, the level of that expenditure needs to be cut. Of course, we devote the utmost care to ensure that the cuts are made in the least damaging places. But it is quite impossible to reduce the planned level of Government expenditure—which was far too high—in a way which preserves all capital expenditure.
Another point needs to be borne in mind. This may be thought a technical point, but it is an important one. It is that capital expenditure very often generates a flow of income expenditure in the future. Before you embark upon capital expenditure you have to be satisfied that you can afford the subsequent revenue expenditure that that capital expenditure entails. We do our best to ensure a proper balance in the cuts we make in public expenditure. We do not start from any feeling that there is a soft option by way of cutting capital expenditure. This is not our approach at all.
The second point is that she spoke—and I hope that she will forgive my using such a phrase—with Old Testament fervour about proportional representation. I realise that this is a matter on which the Liberal Party hold very strong views. The matter was dealt with at some length by my noble friend Lord Boardman. I agree entirely with what he said. One of the major problems with which the noble Baroness did not deal is that the existence of proportional representation encourages the creation and proliferation of parties, so that you end up with a very large number of parties all representing a very small constituency in the country.
Baroness Seear: My Lords, the noble Lord himself must know that this depends upon the kind of proportional representation that you have and whether you put on a limit, as in West Germany.
Lord Cockfield: My Lords, I agree that the noble Baroness would doubtless seek to tailor the form of
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proportional representation in a way which ensured that the Liberal Party got representation and nobody else did.
Several noble Lords: Oh!
Lord Cockfield: Just a moment, my Lords. That is perfectly valid. Just as we stand in favour of the present system of first past the post, it is perfectly valid and honourable for the Liberal Party to stand for a form of proportional representation which will result in a very limited number of minor parties. I imagine that one of the limited number of parties that the noble Baroness would hope to see represented would be the Liberal Party. I cannot see anything objectionable in that. It leads to this kind of proliferation. It leads to political bargaining. I do not accept that the results of some of these coalitions that we see in countries where they have proportional representation are representative of the views of the people of those countries as a whole. The big danger is that you end up in a situation where, in fact, instead of having a clear-cut policy, you have fudging and compromise and a failure to tackle important issues that must be tackled—
Lord Mackie of Benshie: My Lords, is the noble Lord saying that the Conservative Party is wholly at one; that no fudging and compromising goes on in the production of the manifesto of the Conservative Party?
Lord Cockfield: My Lords, the noble Lord is now getting on to an entirely different point. The Conservative Party has always been very free in discussing its policy. It does not suffer, as do certain other parties, from a diktat over the conscience or the views of its members. It produces policies which have great appeal to the people of this country, as is evidenced by the number of elections that the Conservative Party has won and the number of elections that it will continue to win at least until the end of this century.
My Lords, I am sorry to have been diverted by the noble Lord in that way. Perhaps I might go on to pick up another point. It is that the noble Lord said that both Front Benches had missed the point of Mr. David Steel's declaration. Obviously, I cannot speak on behalf of the noble Lord, Lord Glenamara. If I did so, I have no doubt that the noble Lord, Lord Balogh, might find his sensitivities offended; so I shall speak solely on my own behalf. I did not miss the point of Mr. David Steel's declaration. In fact, I regarded it as a most important move because I believe that if in a few years hence we were to look back on the present period from an historical point of view we would see it (as was said by the noble Lords, Lord McNair, Lord Perry of Walton and Lord Kennet) as a period in which many of the old political groupings were breaking up.
Just as in the 18th century we had the War of the Spanish Succession and the War of the Austrian Succession, and the War of the Polish Succession, what we are now seeing is the "War of the Labour Party Succession". The Labour Party is breaking up and there is now a battle as to who is to take over the dominion which used to be occupied by the Labour

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Party. I do not in any way criticise Mr. Steel for coming in at this juncture and making his bid for part of the inheritance. But the one thing that I am absolutely clear about is this: the ground vacated by the Labour Party is not the middle ground at all. It is part of the ground of the Left and, in moving into that ground, the Liberal Party pose no threat to the Conservative Party. The Conservative Party occupies the very broad centre of politics in this country. We have policies which appeal to the great mass of the people. We have the only policies which will put the economy of this country back on to its feet, and we intend to pursue those policies to a successful conclusion.
6.48 p.m.
Lord Banks: My Lords, I do not think that the noble Lord, Lord Cockfield, succeeded in his aim to speak non-controversially. In his opening remarks he said that he hoped that the debate would enable us to produce a better document next time. Of course, it is always our aim to improve as we go on, but we have provided the noble Lord and the Government with the opportunity to produce a better policy now. The noble Lord dealt with public expenditure. I will not pursue that at this stage. But I think that it is one of the matters which was dealt with cogently in the Sunday Times leading article last week, to which my noble friend Lady Seear has referred. The noble Lord, Lord Cockfield, said that under proportional representation you have a multiplicity of parties. Well, that is not necessarily true at all. If you look at Ireland, which has one system of proportional representation, you will find that there is no multiplicity of parties. If you look at West Germany, which has another system of proportional representation, you will find no multiplicity of parties.
Great objection has been expressed in the last remarks, and earlier in the debate, about the fact that there is a certain amount of manoeuvring as a result of an election held under proportional representation and bargaining between the parties. My noble friend Lord Mackie of Benshie raised an important and relevant point when he said that this is not unknown within the boundaries of the existing parties. After all, one of the arguments made against having coalitions is that the existing parties arc supposed to be great coalitions. This is what we are told. We are coalitions; we are a very broad church. If the existing parties are coalitions, then there must be a good deal of manoeuvring and bargaining within them in order to arrive at their position; but they end up getting into power under our present voting system without a majority of votes in support of them. They are coalitions, no doubt, as they claim, but they are coalitions based on a minority of votes in the country. If we are to have coalitions at all, surely it would be better to have a coalition which was based on a majority of votes in the country.
I should like to thank all noble Lords who have taken part in this debate today. We have had a stimulating and interesting discussion. I am tempted to try to answer every point in detail, but that would be inappropriate at this stage and quite unnecessary since it has already been done so excellently by my noble friend Lady Seear. Much support has been
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expressed during the course of the debate for the 10-point programme put forward by my right honourable friend Mr. David Steel. I join with those who see it as a most important contribution to the new and encouraging developments which are now taking place in British politics. My Lords, I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Concorde: Operational Support
6.51 p.m.
Lord Glenarthur Lord Glenarthur rose to ask Her Majesty's Government whether they will give an assurance that they will support continued operation of Concorde aircraft.
The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. My reasons for asking for this assurance from the Government are threefold. First, Concorde has now been in commercial operation for just over five years and many commentators have thought it a suitable moment to review its preformance during that time. Secondly, there is considerable public interest in Concorde. There is a wealth of enthusiasm and support for it but, at the same time, there are those who argue for the cancellation of any Government involvement in financially unrewarding projects. Thirdly, in this country Concorde is operated by British Airways which overall is forecasting a large deficit in this financial year with a rather gloomy outlook on next year. Concorde does, I am afraid, represent at present a small part of that loss, although not every individual aspect of the Concorde operation is loss-making.
I am also aware that a Select Committee in another place is looking critically at the continued cost to the Government of Concorde. Evidence, both written and oral, has been or will be given to this committee by interested parties. I hope that when the Government come to consider the report which will no doubt follow they will also take into account views that I expect will be expressed in your Lordships' House this evening. May I also say that I am delighted that so many noble Lords have indicated their intention to speak on the subject this evening. I find this most encouraging and I am very grateful to them.
Before going any further, I must declare an interest. I am employed by British Airways Helicopters, which is a wholly owned subsidiary of British Airways. Other than being one who subsidises British Airways in the same way that any taxpayer does, the financial results of the Concorde operation do not affect me in any particularly special way other than being aggregated with all the other parts of the concern to produce an overall financial result.
I do not propose to dwell on the development history of the Concorde project. Development and production costs together, less manufacturers' receipts from aircraft sales and sales of associated spares, amount, as far as I can tell, to something like £800 million in this country; and my view is that the taxpayer is entitled to have something really worthwhile to show for his investment at the end of the day. I believe, contrary to the views expressed by the pedlars of unrelieved economic gloom, that the taxpayer has got in Concorde something worth while and which he can

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be justifiably proud of: an aircraft which no other country—other than France—has; one which is between 10 and 15 years ahead of its time; the envy of many nations, I have no doubt; and one of a type which we must develop for the future.
I hope that when he comes to reply my noble friend the Minister will be able to give a detailed up-to-date breakdown of exactly what the costs of development and production and of receipts from sales is. May I also say how grateful I am that the noble Lord, Lord Trefgarne, is here to reply tonight. I know he was to be abroad and I am sure that we are all very grateful that he is able to answer the Question.
I believe that the decision taken in 1978 effectively to give Concorde to British Airways was entirely right. The whole concept is so special and different that it justifies an unusual financial approach by the Government in order to make its operation financially feasible. When it comes to profit, however, the British Government take 80 per cent. of any operating surplus, leaving 20 per cent. to British Airways, no doubt as a stimulus to do their best. In France, however, as I understand it, the Government underwrite 90 per cent. of any loss which the airline makes in its Concorde operation. I assume that there are inter-governmental contacts over the operation of the aircraft because of the technical support required of British Aerospace and Rolls-Royce. I doubt whether the Minister will be able to go into any detail about the French Government's views on the operation of Concorde, but I hope that he will be able to reassure the House that there are indeed close contacts and a cross-fertilisation of ideas between the two Governments and their two national airlines, mutually pooling ideas on how best to continue to finance the operation and to increase utilisation and revenue.
The operation of Concorde as a sound financial venture was made difficult by three factors: the increase in the price of fuel; limited range and consequent limitations on routes; the latter compounded by the third problem: sonic boom. The aircraft cannot be flown at supersonic speeds over anywhere but the least densely populated parts of the world—over the sea and over the desert—and is inefficient when it is flying subsonically. It does not have the range to overcome these problems by extended routing.
Methods must he found of mitigating the effects of these factors. Fuel consumption has been cut by the most assiduous and careful planning by the operators and by the designers. No opportunity is missed to minimise consumption. I saw clear evidence of this when I flew in the aircraft the other day. It was one of the prime concerns of the crew operating it. Additionally, I understand that development of a new combustion chamber in the engines will improve fuel efficiency further as well as enhancing the integrity of that part of the engine which has been giving some trouble.
Looking at the existing route structure of Concorde, as operated by British Airways, I believe that there is much to be done to improve it. British Airways have seven aircraft but at present operate only two routes. This is done using three aircraft, with one on standby, one on maintenance and one undergoing modification. So there is one spare. Once the modification programme is complete, under this existing structure route
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there will be two spare aircraft at least. This is not a healthy situation. It represents gross under-utilisation, removes the opportunity for much needed revenue, and in no way would be acceptable in conventional subsonic aircraft.
I know that British Airways are looking at other routes: Miami through Washington, Lagos and Toronto have all been and are being examined. But it is my belief that, notwithstanding their desire not to interfere, the Government must get together with British Airways over this problem. A far more positive and aggressive attempt must be made, coupled with a much more flexible and speedy response to changing markets and changes in complementary routes, to work out ways of improving the route structure and building upon the sound core provided by the North Atlantic routes, which carried nearly 100,000 people last year and, in the case of New York alone, should produce a profit of over £4 million, although the entire operation looks as though it will go down by about £6 million. I should like to know from the Minister whether the Government will consider this approach so that they and the airline can use all their powers of imagination and diplomacy to develop a worthwhile route structure and a timetable to meet demand.
I should be the first to agree that making technical stops for fuel in an aircraft such as Concorde makes it less efficient. But with 70 per cent. of the earth's surface being covered by water, there are I believe opportunities to stretch the range of the aircraft in this way, and it could open up routes to Japan, Australia and even South Africa. I see no reason why there should not be a market for Concorde to each of these. I should also like to ask the Minister about other opportunities for increasing revenue through charters and leasing. I hope that any opportunities in these respects will be given every assistance by the Government.
Turning to the question of continuing Government costs in supporting the operation, I hope that my noble friend will be able to give your Lordships' House a good idea of what the costs are going to be over the next few years. I have a fairly sound idea myself of what they are going to be, but, although I fully support all the Government's attempts to bring down public spending, I think they must be very careful in their judgments on advanced technology in this respect. One simply cannot measure the success or failure of every enterprise in this area just by looking at a balance-sheet or a profit and loss account. There are much wider implications involved, and nowhere is this more true than over Concorde, which has captured the imagination of thousands, if not millions, of people in this country and abroad.
I would go so far as to say that, despite any economic misgivings they might have, there is a certain amount of jealousy on the part of the United States and the Soviet Union—both technical innovators on a grand scale—that Europe has pulled off a technical achievement in passenger transport which they have not. It is one which really works and which is in service, and whose realiability and punctuality is outstandingly good. Let no one under-estimate that.
The achievement in engineering and operation is huge. Added to that there is a considerable "rub-off"

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or what British Airways call a "halo effect on the rest of their operations. The fact that they are seen to operate Concorde brings them additional customers for their subsonic routes, amounting in their view to something between 10 and 15 per cent. In arguing the merits of Concorde, this may not be a theme which British Airways are keen to overplay. Using Concorde as a loss leader, so to speak, is unsufficient reason by itself for continuing to operate it. However, it is a considerable bonus in its favour.
Much more important, to my mind, is the huge prestige value which the country gets from Concorde. It turns heads wherever it goes and attracts thousands to air shows, which are the shop windows of aviation. Everyone stops to watch it; even our traffic controllers stop to watch it. It is an achievement in aviation which is available to the public and which matches that of space flight. I believe it is highly desirable, at a time of economic upheaval, that Britain is able to bask in a certain amount of pride at something so highly prized as Concorde.
Looking to the future, it seems to me there are bound to be financial penalties which would be invoked if Concorde operations were stopped, either unilaterally or bilaterally. Perhaps the Minister will be able to confirm that this is the case and say how these figures compare with the cost of continuing the operation. However, I doubt very much whether he or anybody else can measure the damage that would be done to the national spirit and prestige, as seen both here and abroad, by cancellation. That is a much harder problem to work out. It cannot be quantified; one can only take an educated guess at it. My guess is that it would be positively damaging to this country's image, nationally and internationally, at a time when I believe there is international acceptance that our affairs are taking a turn for the better and that we are once again on the right course. I believe it would demonstrate that we do not have the courage of our convictions in the highly technological age in which we live. Advanced technology of all sorts is one part of our industrial life which we must build on and in which we must maintain pre-eminence.
Man is innovative; he will always strive to improve on what exists and to do what has not been done before, to go faster. In supersonic passenger transport aircraft, we and the French have achieved a world lead second to none. We must develop the theme and I hope that the Minister will be able to assure the House that research is being carried on, perhaps with partners overseas in addition to the French, to enable us to develop it.
In summary, I hope that the Government will recognise the need for a far more positive approach to the problem of improving Concorde's revenue and although I understand the difficulties of asking them to commit themselves to years ahead, I hope that in conjunction with the operators and manufacturers they will be forceful in seeking improvements in operating techniques, route structure and technological innovation, and that they will not allow the enterprise to drift, as I detect it is beginning to do at present. Concorde is a technological marvel. Its development has done much to enhance the reputation of British engineering in aerospace, and although it may not be a great
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financial success it is by no means a huge financial disaster. It is a mighty good first effort. It has done, and is doing, untold good to this country and to abandon it now would do considerable harm. That is why I ask the Minister for this assurance tonight.
7.5 p.m.
Lord Beswick: My Lords, I am sure we are very grateful to the noble Lord, Lord Glenarthur, for raising this matter and for the informative and balanced way in which he made his speech. I was particularly glad to follow him when he reminded us again that he was a pilot in the service of British Airways. I am bound to say I wondered whether he was a member of the pilots' association of which I still have the privilege of being president. I will not go over the ground covered by the noble Lord, but as far as the very practical questions which he posed are concerned, I look forward to the answers which he will in due course get; and I hope that they are satisfactory.
If any message is to go out from here, I hope it will be quite clear that in our view the Concorde operation should continue, that a degree of development of supersonic transport should be funded and that the necessary project support will be maintained. To throw away the knowledge we have now assembled both in the manufacture and operation of supersonic transport—and assembled at such enormous cost in terms of money, man-hours and skills—to throw that away now would be nothing short of criminal. It has become almost trite and boring to say that Britain is good at invention and innovation but bad at exploitation. Surely we have now learned something of the lesson and I hope that in this particular case, at any rate, we are not going to commit the sort of mistake we have made in times past.
The noble Lord himself said a good deal about the "halo effect" to British Airways of the Concorde operation. I hope that will not be written off as some sort of romantic aviation enthusiasm. It seems to me that British Airways are now exercising sound commercial judgment when they declare their wish to continue and indeed to expand their current operations. I am not sure why the noble Lord said the operation was likely to bring a net loss under next year's operations. My understanding is that with the £4 million profit on the New York route, even with the £2 million loss on the Washington route, there is a net gain.
I find this wish of British Airways to continue the operation all the more impressive because I have reason to remember very clearly that at any rate some people in British Airways were once very much against the Concorde project. Looking back and assessing some of the cost factors, it is fair to say that their arguments at that time—I am thinking of six or more years ago—were probably deserving of more respect than I was inclined to give them in the discussions we then had. However, the capital costs have now been incurred and as far as British Airways is concerned they have been written off. Given those facts, it seems to me inconceivable that present operational plans and programmes should be cut out and that Britain should quit the one technical and industrial field in which, with their French partners, they are now supreme.
I should like to consider for a moment the question

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of the future and the possibility of keeping Britain in the SST business. Without any doubt at all, supersonic transport over certain routes will be commonplace in the future. The question is whether they will be operated with aircraft which we have had a share in making.
I gather that there were recently some rather silly remarks about the snob appeal of the Concorde. If it is snobbish to travel quickly and comfortably from A to B, then I confess to being snobbish. But few who have actually travelled from Europe to the United States by Concorde, or, for that matter, from London to Bahrain, will deny that it is a superior form of travel. It is not only quicker; it is less tiring in kind as well as in time. If I am told that it is a form of transport that is reserved for the few, then I can only say that when I first crossed the Atlantic in a converted Liberator that was considered a little eccentric, and other people were said to be practical if they took four or five days on the sea trip. But times have changed and they will go on changing, and I hope that the Minister will be able to give us some assurances that Britain will be kept abreast of those changes.
Some little time ago, I had discussions with Mr Sandy McDonnell of McDonnell Douglas, about collaboration with them on the SST. I believe that a certain amount of work has been done together on noise reduction, and I should be glad if the Minister could tell us whether this working together will be encouraged. At some point, there will need to be decisions about a larger SST, with longer range and a quieter power plant. It has always seemed to me that this will best be done on a tripartite basis—the United Kingdom, France and the United States of America. Again, it will be good to hear from the Minister who is to reply that there will be active encouragement from the present Government of any practical moves in that direction.
I make one further point. The so-called halo effect has been mentioned by the noble Lord and by myself. I agree with him that it is not easy, or indeed possible, to quantify the additional commercial value to British Airways; that is to say, the additional revenue earned by the airline which has an enhanced reputation springing from its supersonic experience. But there is also an additional spin-off for the manufacturers—for the component manufacturer as well as for the airframe and aero-engine manufacturer. I can think of more than one example of skills learned on the Concorde being applied to other projects, and at least one other major maintenance contract was on the back of the Concorde experience.
But in addition to the value to the operator and to the manufacturer, we should not, as the noble Lord, Lord Glenarthur, said, underrate its value to Britain itself and our reputation in the world. As the noble Lord said, it has captured the imagination of people throughout the world. I recall landing at Mexico City in the Concorde. It was estimated that there were 500,000 people at the airport—a most remarkable reception.
The noble Lord said that it turns the head of everyone who hears it passing by. I can remember one seasoned old reporter at the Washington Inaugural, telling me how it was not simply a matter of heads turning, but of some ladies bursting into tears when they first saw this aircraft coming out of the sky and landing at Washington
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It was not just that it is a beautiful aircraft—and it is a supremely beautiful aircraft—coming in to land. It was the feeling that the New World and the Old World were being brought closer together.
We heard earlier today of one more industrial failure in this country and the general economic outlook is bleak, almost without relief. But many in the world see this great Anglo-French technical achievement of Concorde as something which is immensely to our credit, and I hope that we can keep the picture that has been created of Britain and France, by the technical achievement there, as bright as is possible. I hope that the answer we shall get later will be an encouraging one.
7.15 p.m.
Earl Amherst: My Lords, I, too, should like to thank the noble Lord, Lord Glenarthur, for giving us the opportunity to discuss this matter, and I strongly support him in his request to the Government for an assurance that they will continue their support of the Concorde services, for the following reasons, which I should like to give quite briefly.
Although the New York service had a very rough start, which was in no way the fault of British Airways, in the present financial year, 1980–81—and British Airways' financial year goes from April to March—the New York service has shown a cash surplus of some £4 million. Over the same period, the Washington service showed a cash loss of £2 million. As your Lordships know, the service to Singapore ran into a great many difficulties and made great losses, so it was withdrawn. For the 1981–82 period, it is anticipated that the New York service will again make a cash surplus of some £4 million, but again, too, the Washington service is likely to show a cash loss of £2 million, leaving a surplus of about £2 million.
In the period 1982–83, an overall cash surplus of about £5 million is anticipated, but this relies to a certain extent on British Airways being able to extend its Washington service through to Miami. I understand that there are also plans for new services to Japan, South Africa and Canada, as the noble Lord has already mentioned. But a lot must depend on there being no serious increases in fuel costs and airport charges, and a cessation of our industrial difficulties and disputes, any one of which can play havoc with the present services and plans. It should be noted that if the existing services are to be cancelled or withdrawn, there will probably be a loss of about 600 jobs, which I should have thought was a totally unacceptable prospect at any time, especially at the present moment.
An analysis of the track record of the Concorde service to the States shows that business travel accounts for something like 86 per cent. The reason for this is that time is now of the essence in so many contracts, agreements and regulations and that, and the saving of other travel costs, such as hotels, more than compensates for the extra cost of the flight. With time being very much of the essence, it is also important to note that very expensive airmail services, with their heavy delays of delivery on both sides of the Atlantic, no longer meet the needs of the average business man.

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Apparently, this business traffic goes from all over the United States to New York in order to catch the Concorde service, and, indeed it comes from a great many points in Europe to London for the same reason. I think I am right in saying that we know the French Government support their Concorde service mainly in the interests of national prestige, but British Airways operate mainly on a commercial basis. There can be no doubt that the Concorde is a unique technological achievement and a forceful commercial power. So I hope we shall hear from the noble Lord, Lord Trefgarne, that the Government will give the assurance for which the noble Lord, Lord Glenarthur, has asked.
7.20 p.m.
The Earl of Bessborough: My Lords, like other noble Lords, I am most grateful to my noble friend Lord Glenarthur for raising this Question this evening and I am happy to support him in his general argument, as well as the remarks of the noble Lord, Lord Beswick, and the noble Earl, Lord Amherst. Having visited oil rigs in the North Sea by helicopter, I know some of the problems with which my noble friend has been faced. I once got lost in the fog there. It reminded me of the times, before the war, when I used to fly to the Arctic.
Being half French, I have been interested in the development of Concorde ever since its conception. During five and a half years at our Embassy in Paris immediately after the war, I was concerned to encourage joint Anglo-French projects in advanced technology—civil nuclear power, electronics and aerospace. For many reasons, not all potential co-operative projects were successfully achieved. We both went our own way on television standards and we never co-operated as fully as I think we should have done in atomic energy for electricity generation. Nor, indeed, in aviation, over the Viscount, the Comet, the VC10 or the Caravelle did we effectively co-operate.
However, despite all the differences arising out of working in two languages, on different standards and from two bases, Bristol and Toulouse, Concorde became and still is the tremendously impressive joint technological achievement which other noble Lords have already mentioned. I am glad that more general European technological co-operation in aerospace has also been successful in so far as the European airbus is concerned, the multi-range combat aircraft, the Tornado, and more than one Anglo-French helicopter. As my noble friend knows full well, they have been successes; so it can be done.
In 1962–63 I was involved as a Minister for Science with my noble and learned friend, now the Lord Chancellor, and with my right honourable friend Mr. Julian Amery, then Minister for Aviation, in the decision finally to go ahead with Concorde. Later, as an Opposition spokesman on these questions from 1964 to 1970, I continued to take a close interest in the SST project, and even attended technical working parties in Toulouse which were conducted in the two languages. As the noble Lord, Lord Beswick, knows, it was slow work. None the less, it produced what is technically this quite remarkable aircraft.
During the later 'sixties, I also visited the American aircraft industry on the West Coast. As a result—I
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want to admit this to your Lordships, perhaps for the first time—and partly because of the then already escalating costs, I became in favour of France and Britain bringing in an American partner. At that time when the United States Government had given their SST contract to Boeing, I thought that Lockheed, who had designed a somewhat similar supersonic transport to Concorde, would be our best partners. I still believe that I was right and that the aircraft would have been more successful, especially in the United States and indeed in other parts of the world, if the project had then been tripartite. But in those days my friends in both the British Aircraft Corporation and Sud-Aviation, the predecessor of Aerospatiale, feared that if the Americans were brought in they would dominate the whole project. However, I still regret that this never happened. As we know, the Boeing design never got off the ground and was cancelled by the United States Government.
Then in 1970, as Minister of State (Aviation) at the Ministry of Technology, I was concerned with supersonic operational problems and the cost-effectiveness of the aircraft at that time. That was before the energy crisis hit us and the cost of aviation fuel exploded, if I may put it like that. Then again, in the mid- 1970s, as a spokesman on advanced technology in the European Parliament, I continued to support the project and flew on a proving flight to Newfoundland, leaving at nine o'clock in the morning, attending a three-hour meeting in Gander and getting back to London very early in the afternoon of the same day—I may say as fresh as a daisy—to find, if this is not irrelevant, that my daughter had produced a grandson just at the moment when I was going through the sound barrier. I need hardly say that the grandson's middle name is now, unofficially, "Concorde". I hope noble Lords will forgive me for this irrelevant interpolation, but that was a remarkable experience. Having gone through the sound barrier of all these development phases and had the good fortune to travel on recent scheduled Concorde services, I would regret it if commercial supersonic flying was stopped from this country, especially if the French continued to fly.
However, I feel now, even more strongly than in the 'sixties, that the next generation of supersonic aircraft must be developed in conjunction with the United States and, maybe, even other countries. I think now that McDonnell Douglas—I saw their representative this afternoon and he authorised me to say this—would be the most appropriate partner with whom we should now co-operate, although perhaps it might be a wider United States consortium. In these circumstances I am certain, from what I have heard from my American friends, that British Aerospace and Aerospatiale would be assured of full participation in such a tripartite project.
I am also interested in the possibility—I do not know whether my noble friend Lord Trefgarne could say anything on this; I am sorry that I have not warned him—that we might offer to the National Aeronautics and Space Administration in the United States a Concorde as a gift or on hire, on condition that Britain and France have a full share in any commercial SST developed in the United States. I hope that the new Republican Administration under President Reagan may be well disposed to Britain and

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France participating in the development and returns in respect of such an aircraft. Having pioneered in commercial supersonic transport, Europe must in my view retain its foothold in a project which in some respects is, I think, more practically significant and important to mankind than landing on the moon. That was a message which my noble friend implied in his remarks introducing this Question.
Technically, Concorde has demonstrated that supersonic transport is feasible and can operate safely and consistently within the present framework of airways and airports. The two airlines, British Airways and Air France, have had no significant problems in absorbing Concorde into their operating and maintenance procedures, as I am sure the noble Lord, Lord Beswick, knows. Exceptional levels of product support have not been required.
I should like to add that British Aerospace and Rolls-Royce have also derived, as has already been mentioned, "spin-off" benefits from the project. I am glad to learn that continuing technical advantages are seen from future in-service experience. Moreover, cancellation of Concorde services would enable competitors to claim that Concorde was technically not supportable. Commercially, the prime route is of course the North Atlantic where a small but steady increase in passengers is evident. I might add—I am not certain whether another noble Lord has already mentioned this—that Concorde is the only daylight service from Kennedy to Heathrow; that is to say, eastbound. Despite the dramatic increase in fuel costs and predicted future increases, British Airways, I gather, forecast a £2 million surplus on existing routes in 1981, rising to £5 million by 1985.
I feel that I ought also to emphasise here that contractually unilateral cancellation has not been catered for in the constructors' inter-company agreements. British Aerospace and Rolls-Royce have technical airworthiness and product support responsibilities for 50 per cent. of the aircraft's elements. Withdrawal of their support, as I think my noble friends would agree, would make it impossible for either airline or the French manufacturers to continue to operate. Claims for breach of contract could be made against British Aerospace and Rolls-Royce, who would seek to recover any damages from Her Majesty's Government under an indemnity clause in their contracts with the Government. Such an event would certainly affect our status as collaborators with our European partners at a time when I believe European technological co-operation should be intensified.
As I understand it, the social consequences of cancellation would involve an estimated 2,145 redundancies at British Aerospace and Rolls-Royce and their sub-contractors; some redundancies, as noble Lords know, at the Royal Aircraft Establishment and sub-contractors and suppliers. Some 564 redundancies is the figure that I have been given for British Airways. Therefore, let us hope and pray that Her Majesty's Government will, in their wisdom, give some kind of assurance. I am not asking them, any more than the noble Lord, Lord Glenarthur, for an unqualified assurance, but for some optimistic noises that support of the present Concordes will be continued, even if perhaps no more are built, and also that some consideration will be given to possible military uses
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of the aircraft. I will not go into details of that this evening, although 1 imagine it would be useful for the Chief of the Defence Staff and his staff, if they felt it necessary, to get from here to Washington or Ottawa, or let us say Singapore or Canberra in an emergency.
I hope, too, that Her Majesty's Government will also support Anglo-French collaboration with a United States consortium when the time is ripe and appropriate negotiations have been concluded. I know that we must control Government expenditure, but in this field we and France are ahead of the whole of the rest of the world and I think we should invest in it. The prestige element has been mentioned by all noble Lords. It is not insignificant. I think we should continue to invest in this great supersonic aircraft.
I am grateful to the noble Lord, Lord Glenarthur, for having raised this matter, which in my view is of very great importance to the Western World. We have to wait and hear what my noble friend says, and perhaps this plea may not necessarily be very well received by Her Majesty's Government; but I do think that my noble friend was right to make it.
7.35 p.m.
Lord Gore-Booth: My Lords, as I have very little technical knowledge of this great enterprise which we are in a sense developing from debating into celebrating —and quite rightly—I will be very short indeed. But I should like it to be felt that there is some particular exhilaration in being here at this time as a retired member of the Diplomatic Service. All the people engaged in this tremendous profession perhaps owe quite a lot to our service for the collection of fares, even if they are payments from one Government to another !
As autobiography is apparently just allowable on this occasion, perhaps I may join other noble Lords in a slight personal reminiscence. In my official duties, I have had the privilege of being present at the first landing ever of the Concorde in Kenya, arranged for me by my late friend Malcolm MacDonald, who was a great supporter of all your acts and inventions. Also, I saw the first descent of this aircraft in India, at a horrible time in the middle of a cold night; but there it was. There was one of the earlier "births", if we can fairly say that, of the extension of the Concorde services, and its appreciation elsewhere. One waits hopefully, particularly in view of the tone of so many of these speeches, for a rapid expansion of, particularly, the earning power of this wonderful aircraft. But I must express my satisfaction at being here at this time.
Obviously, I am not going to try to make suggestions to this extremely distinguished and technically learned company; I am going to make only one suggestion, and that is about something which did not start too well but about which I think those handling the flights have now learned a great deal. On those occasions which I mentioned, which should have been very splendid occasions, we were still in an era of being rather shy about public relations, and I should like to congratulate all those who have been engaged in the work on this side; to express congratulations on the improvement of that arm, which quite frankly at the early stage was almost amateur in what it did not do. I am sure that lesson has now been learned, but I

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have no shame in mentioning it, so that it shall be understood that this will remain, for a country which is still apt to be a bit diffident about itself, not of the standard which a great enterprise like this needs and deserves.
I should like very much to express, again in my former capacity, the greatest pleasure which it gives all people in my kind of occupation to know that this has all been accomplished in partnership with our great French allies. People in my profession certainly know that sometimes we and our French friends get a bit across each other, although not for long, and it is wonderful to have an unparalleled form of partnership which we have developed as a result of this great aircraft. It is wonderful to know and it has enriched the performance and the character of this great enterprise that it has been performed as an international partnership.
I would just express a hope en passant that our political relations in general with our French friends should be inspired by the spirit which animated those brilliant engineers and others who brought the Concorde aircraft into existence. It has been an immense accomplishment which will never be forgotten, an accomplishment which will live in the lives and thoughts of all of us here, and will, as I say, continue to animate the memories of those of us who have in our time, or are even now like Lord Trefgarne, dealing with each other as individuals, as members of organisations, knowing that we have as a pair of nations something unique to live up to. In other walks of life we should always have in mind what we could do together; we have done many other great things together before, but this is something so conspicuous.
I think from the way noble Lords have spoken this evening it will remain not only part of the common accomplishment which will exist in the lives of our two peoples. To others who have helped and worked with us, who go on increasing, that will be part of what one might call la vie Anglo-Francais. That is really what one has to say. But, once again, I would simply like to emphasise the privilege which it is to be here on this occasion and to wish—even if this has become a different kind of speech—all those with whom I have worked, and my successors in the business of diplomacy, a happy co-existence of an active and useful kind to all the rest of the world.
7.42 p.m.
The Earl of Kinnoull: My Lords, I should like to echo the praise of other noble Lords to my noble friend for introducing this debate tonight, and indeed for attracting and maintaining here the presence of such heavyweight pilots as the President of the British Airline Pilots Association, sitting, I am delighted to see, in his increasingly rightful position on the Front Bench of the Opposition, and long may it last on the Front Bench of the Opposition. It is a pleasure to hear my noble friend combining his professional knowledge as a pilot with now the persuasive tongue of a practising advocate, very much in the mould and style of my noble friend who will reply.
My Lords, the timing of my noble friend's Question is extremely opportune because even the most loyal supporters of Concorde, and there are many here tonight, must feel a certain apprehension, in the economic
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climate in which we move, for its future; the fear that some hard-nosed, narrow, blinkered accountant will try to persuade either British Airways or Her Majesty's Government to pull the plug and so end an era of Concorde and of supersonic commercial flight, and indeed, as other speakers have said, leave Air France to operate alone. The economic conditions, with the cost of fuel and the apparently increasingly high cost of engine maintenance of the aircraft, together with the recession in air travel, are fairly daunting conditions. But even more so, of course, are the daunting problems of British Airways with their cutbacks in staff and in aircraft and in services.
It is therefore immensely encouraging to hear from British Airways that this small operation, part of their very large international service and network, does have, in their unemotional and clinical view, a commercial and prestigious value which they have no wish to lose. Perhaps my noble friend may feel that the most important contribution of this debate tonight is that it has emphasised in one way or another the points that should be hammered home, the inestimable value of Concorde, not only its prestigious commercial value but also its value to British industry, as the noble Lord, Lord Beswick, mentioned. The value to our aerospace industry of the experience drawn from five years' service of Concorde, a reason to keep a test bed operation, a reason to keep a team together at British Aerospace, and to keep the hope alive of a future supersonic development programme.
These are the sort of arguments that no doubt do not persuade hard-nosed accountants, or those who throw jibes at Concorde, that it is only fit to fly pop stars. But my noble friend Lord Trefgarne, is I am sure, inside —and we shall see whether his brief allows him to be—a supporter of Concorde. I hope he will be positive tonight on the value of continuing the Concorde service, positive on the examination of other routes for Concorde, to Singapore and Australia as one and New York and Miami as another. It does require Government support to assist the operators to achieve these routes. I hope he will be positive on future collaboration on the next Concorde, as Lord Bessborough said.
My noble friend Lord Glenarthur reiterated the British Airways' view: their confidence in moving from operating losses to operating profits on the North Atlantic routes; their determination to find an increased market with the decision on the standby services they are planning to introduce; the possibility of their freight service, and the value they see in retaining Condorde as a supreme service. Those who have witnessed the pride which those who operate Concorde show to the passengers, or who see this great big beautiful bird take off from Heathrow and disappear into the sky—even they forgive the noise. They see indeed that here is the British crown jewel of achievement, of pride, and yet of great commercial value. I hope my noble friend will say from his brief that Her Majesty's Government should not abandon this, but will endorse my noble friend's plea tonight.
7.48 p.m.
The Parliamentary Under-Secretary of State, Department of Trade (Lord Trefgarne): My Lords, the agreement between the British and French Governments for

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the development and production of the Concorde supersonic transport aircraft was signed on 29th November 1962. Indeed, as one noble Lord reminded me, I think it was my right honourable friend Mr. Julian Amery who affixed his signature for the British Government. Some 13 years later, on 21st January 1976, the aircraft entered commercial airline service with British Airways and Air France on inaugural flights to Bahrain and Rio de Janeiro. During 1979 the last Concorde was completed, ending a production run of only 16 aircraft. Of these 16, two were retained by the manufacturers for development testing and seven each have been placed with British Airways and Air France. My noble friend's Question therefore comes at a time when development and production of the aircraft have been completed, and when the two airlines have just passed the fifth anniversary of Concorde's introduction into service.
It may, therefore, come as somewhat of a surprise to some of your Lordships that there is still a substantial programme of Government support for Concorde. I shall, therefore, if I may, take a little time to describe the nature of this support and the policy that has underlain it. As your Lordships will know, an aircraft manufacturer's responsibilities do not end when his product has been delivered to the customer. Indeed, as my honourable friend the then Minister of State for Industry, Mr. Adam Butler, and the French Minister for Transport noted when they met to consider these matters in September 1979, continuing technical support for the aircraft and engines by the manufacturers will be necessary so long as Concorde remains in service with either airline.
The manufacturer is obliged by the contract of sale to provide a continuing supply of spares, to replace under warranty parts which fail during the period specified, to undertake continuing development work required for airworthiness and operating reliability, to provide a technical back-up to the aircraft and analyse incidents which occur, to provide updated technical literature, and a number of other matters. In addition to these manufacturers' tasks, the British Government are responsible for the cost of continuing work on the major fatigue test specimen at the Royal Aircraft Establishment at Farnborough.
These commitments to support Concorde are therefore very broad ranging; and the cost has been considerable. In the five years 1976 to 1980, the British Government, whether directly or through the manufacturers, have spent about £250 million at historic prices on the support of Concorde, which includes post certificate of airworthiness development of the aircraft and engine. This is additional to amounts spent on production during the same period. Expenditures in France have been the equivalent of somewhat in excess of £200 million. Offsetting this the British manufacturers have sold to British Airways and Air France some £75 million of spare parts and other support services, and the French manufacturers about £50 million worth.
To cover the substantial differences between expenditures and receipts—some £175 million in Britain and about £150 million in France—the manufacturers have understandably had to look to their respective Governments. It was indeed inherent in the decision taken by the two heads of Government in July 1974
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to continue only the 16 aircraft programme already authorised, that such Government financial support would be provided. In Britain the arrangement is that the Government, under contracts with the manufacturers, meet all agreed and verified expenditures (including an amount for a non-risk rate of profit) and take all receipts. Though no time limit has been set for these arrangements—which incidentally remain unaffected by the impending infusion of private capital into British Aerospace the Government have the right, as with all Government contracts, to give three months' notice of termination. Additionally the Government finance directly work undertaken in Government research and development establishments, notably, as I have already mentioned, for the major fatigue test specimen at Farnborough. It is essentially a continuation of these financial commitments that my noble friend seeks in the Question that he has asked this evening.
If allowance is made for price changes and account taken of rising receipts, the net cost to the two Governments of Concorde support has fallen sharply over the past five years, and it is still falling. However, even now not inconsiderable sums are involved. Financial Estimates that will shortly be laid before Parliament envisage gross expenditures in 1981–82 at forecast outturn prices of some £65 million, covered as to £33 million by expected receipts, leaving a balance of net expenditures of some £32 million.
It is consequently perhaps not surprising that the House of Commons Select Committee on Industry and Trade should have decided last July to call for evidence on the operating and associated costs of Concorde, and subsequently to have decided to inquire into these matters with a view to reporting to Parliament. This is the first substantive inquiry by a parliamentary body into the in-service support phase of Concorde, just as the debate we are having tonight is the first occasion on which either House of Parliament has discussed Concorde support, as distinct of course from the development and production of the aircraft.
The Departments of Industry and Trade have been co-operating fully with the committee in their inquiry, as have British Airways, British Aerospace and Rolls-Royce. Three departmental memoranda have been submitted; and on 4th February my honourable friend the Minister of State for Industry Mr. Tebbit appeared before the committee in public session. The matters into which the committee are inquiring are of some complexity, and none more so than the question of the relative costs of continuing Her Majesty's Government's contracts with the manufacturers for Concorde support—as my noble friend advocates—or of cancelling them. The Department of Industry has submitted both written and oral evidence on this topic, so closely linked to tonight's debate. As my honourable friend indicated in his oral evidence, it is now beginning to look as if cancellation, even if agreed by all the parties after consultations with them, would result in there being no significant net savings to public funds over the next few years.
This assessment was based on estimated costs of cancellation in the 15-month period beginning 1st October 1981 of some £36 million, as compared with net costs to public funds of continued support of somewhat under £2 million a month. The estimated

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costs of cancellation assume cancellation on an agreed basis and after consultation with interested parties. The costs of unilateral withdrawal could well be higher. However, a definitive picture has yet to emerge; and this will remain the case until the department can re-work the estimates on the one hand to take account of the on-going social costs of cancellation beyond the 15-month period, and on the other hand to update the costs of continued support using the 1981 Public Expenditure Survey forecasts as a basis.
Meanwhile, I think that it is generally accepted that any assessments as to whether it would be cheaper to cancel Government support for Concorde than to continue it are necessarily tentative, not to say hazardous. Indeed, it is just because the position is so uncertain that the committee has asked for further calculations to be submitted. These are in hand. Your Lordships will therefore understand if, on behalf of the Government, I am unable to give tonight the clear-cut and unqualified assurance which my noble friend seeks in his Question.
Lord Beswick: My Lords, I hope that the noble Lord will allow me to intervene for a moment. He said, or he gave the impression at any rate, that the decision would be made on examination of the cash-in, cash-out basis. Who is making the assessment of the incidental advantages of this continuation?
Lord Trefgarne: My Lords, if the noble Lord is referring to the advantages, other than the purely financial considerations to which I have referred, then I feel sure that those will in the first instance, in any event, be matters which the Select Committee, which is currently considering the matter, will want to take very carefully into consideration. I wish to say quite clearly that the Government will not reach any premature decision in this matter, and certainly not before they have had a chance to consider and study the report being prepared by the Select Committee in the other place.
What I can, however, say—and this, I hope, will provide some assurance to my noble friend and to others who have spoken for the continuation of Government support to Concorde—is that the Government have no plans to terminate arrangements of a contractual nature for the project's continued support. This is inherent in the request that the Government will shortly be making to Parliament for funding to meet the full costs of support in the financial year 1981–82, and to which I have referred earlier in my reply.
I should now like to turn to some of the points that have been made in the debate tonight.
Lord Davies of Leek: My Lords, I do not wish to delay the House because I did not take part in the debate, but I presume there is some sense of urgency in the Select Committee getting down to work in order to get an early answer to this problem?
Lord Trefgarne: My Lords, it is not for me to suggest how the Select Committee should conduct its affairs, but I understand that we expect to receive a report from it in about three months' time.
I shall now turn to some of the points which have
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been made. I should like to start on a personal note. This year, as in previous years, I went to the Farnborough Air Show and for the first time I took my two small sons. I recall—surprisingly, as I thought at the time—that the two things that really thrilled them were the Lancaster of some 40 years of age, I imagine—older than I am, I think—and the Concorde. They seemed not in the least interested in the modern jet fighters which whistled by with such regularity at Farnborough. But the Concorde coming over and suddenly applying its power and climbing away into the sky was something which they talked about for at least a whole day afterwards.
I return now specifically to the points which have been raised in this debate. In addition to referring to the costs of in-service support, my noble friend Lord Glenarthur has spoken of the costs of developing the Concorde aircraft and engine, of the costs of production, and of production receipts. It has been the practice of successive Governments to report periodically to Parliament on these matters and to give figures for the French contribution as well as those for Britain.
The most recent such statement was contained in an answer which my honourable friend the Parliamentary Under-Secretary of State for Industry, Mr. Marshall, gave to the House of Commons on 16th June last year. This showed the British manufacturers estimated total development costs as £580 million, their total production costs to the end of 1979 as £366 million, and their receipts from the sale of aircraft, and from the sale or lease of engines and spares, also to the end of 1979, as £146 million.
My noble friend also referred to the financial assistance which the French Government gives to Air France. This is of two kinds. The Government meets 100 per cent. of Air France's capital expenditures on Concorde, this being almost entirely to enable Air France to repay monies which they borrowed to acquire their original fleet of four Concordes and spares. This accounts for about two-thirds of the total financial assistance, or about £20 million equivalent annually.
The other form of assistance is that the French Government now meets 90 per cent. of Air France's Concorde operating deficits, which is about £10 million equivalent annually. Until the end of 1980 the figure was 70 per cent., and, as the price of obtaining a higher contribution from the state, Air France has surrendered to the Government the right to determine on which routes Concorde should be operated and at what frequencies.
These arrangements are tailor-made to the particular circumstances of Air France, namely, the continued reliance on outside capital and the fact that, with the marginal exception of New York, none of Air France's Concorde services returns an operating surplus, even if no allowance is made for amortisation or return on capital employed.
The circumstances of British Airways are very different. The airline have been relieved of the capital debt associated with the purchase of Concorde by the decision to write off £160 million of public dividend capital under the provisions of the Civil Aviation Act 1980. The airline receive no subsidy to cover any Concorde operating losses; and, under arrangements made following a review of the airline's

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finances and announced by the then Secretary of State for Trade to Parliament on 22nd February 1979, 80 per cent. of any accumulated operating surpluses are to be paid over to the Government.
These arrangements were agreed with the airline against the background, first, that British Airways set high store on retaining commercial freedom to decide whether to operate Concorde and, if so, on which routes and at which frequencies; and, secondly, that the airline at that time foresaw a rising trend of operating surpluses. In the event, as noble Lords will be aware, there have been substantial operating deficits; and the cumulative effect of these will delay any return to the Government under the 80 per cent. arrangements.
The airline are now hopeful that, with the suspension of the heavily loss-making route between London and Singapore and with revenues on their remaining services to North America having caught up with the sharp rises in fuel and other costs of the last two years, they have turned the corner financially. In this connection they recently advised the Select Committee on Industry and Trade that in 1981–82 the airline expect to earn a surplus of some £2 million overall on their Concorde operations, and significantly larger amounts in ensuing years. This is in contrast with the continued operating deficits expected by Air France with its much less profitable route structure.
Given the very heavy investment which the Government have made in providing Concordes and associated spares to British Airways without charge, it is only right—as I am sure your Lordships would agree—that the Government should have the major share of any future operating surpluses.
My noble friend Lord Glenarthur also outlined various ways in which there might be closer collaboration between the Government and British Airways to improve the profitability of the airline's Concorde operation. His specific suggestions, as I recall them, were that the Government and the airline should get together to devise a better route structure for the airline's Concordes, which was mentioned by at least one other noble Lord, and that the Government should support such non-scheduled activities as charter flights and so on.
The Government, as the major beneficiary of any accumulated operating surpluses earned by British Airways' Concordes, have a direct interest in seeing that the airline turns in the best possible financial performance. To this end, as well as undertaking such services as negotiating to secure landing and overflying rights, the Departments of Trade and of Industry maintain a close dialogue with the airline about their Concorde operations and how these might be improved. Several years ago, for example, the Department of Industry, which was then concerned with placing the remaining unsold British-assembled Concordes, took the initiative in establishing a Concorde Potential Routes Committee, This brought into one forum British Airways, the various interested departments, British Aerospace and Rolls-Royce. Shortly afterwards, the department formulated the concept of the maximum profitable utilisation of Concorde, rather than its maximum utilisation, as being the objective towards which it seemed right to aim. This is now very much the British Airways Concorde operating philosophy.
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In maintaining this dialogue, the department have no wish to seem either to be trying to teach the airline their business, or to be formulating British Airways' commercial policy towards Concorde. As I mentioned when speaking about the Air France arrangements, British Airways set high store by retaining their commercial freedom on Concorde, no less than in their subsonic operations.
Within these limits, I accept, however, my noble friends view that the Government have a role to play in the cross-fertilisation of ideas that is so necessary for the commercial and financial success of this aircraft to the mutual advantage of the airline and ourselves. As is to be expected in a collaborative project, this cross-fertilisation does not stop short in Britain. Thus there are regular exchanges of view between the British and French officials who constitute the Concorde Management Board established under the 1962 Treaty, and also directly between British Airways and Air France on the support and operating aspects of Concorde.
As part of the new financial arrangements for British Airways' Concorde operations announced in 1979, it was agreed that from the year 1978–79 onwards surpluses from such operations would, as I have already said, be shared, with 80 per cent. being paid to the Government and 20 per cent. retained by British Airways. The airline are, however, entitled to set off any accumulated Concorde operating losses before such surpluses are shared in this way. In the years 1978–79 and 1979–80 British Airways' Concorde operations made a total loss of £8.5 million on the basis of the new financial arrangements. The forecast for 1980–81 is a further loss of around £6 million, but, as I indicated earlier, British Airways expect Concorde services to begin to generate surpluses from 1981–82 onwards.
My noble friend Lord Glenarthur also asked me about expenditure on developing an advanced supersonic aircraft. The continuing operation of the aircraft in airline service and support of the manufacturers are themselves valuable contributions to the development of supersonic technology. They will add to the potential contribution that the United Kingdom and France could make to the development of an advanced supersonic transport aircraft. But I have to say, regretfully, that most observers put such development many years in the future.
My noble friend Lord Bessborough suggested that we should give a Concorde aircraft to the National Aeronautics and Space Administration in the United States in return for a share for the United Kingdom and France in a future SST programme. I understand that British Aerospace has, in fact, been holding discussions with NASA about the possible use of a Concorde aircraft in its supersonic cruise research programme. If and when a firm proposal is made by NASA, it will be carefully considered by the British and French authorities.
My noble friend has raised issues of very considerable public importance. Your Lordships will be grateful to him for the opportunity that he has given for these to be debated and, indeed, for the contributions that other noble Lords have made to the debate tonight. The Government will naturally take careful note of these sentiments in the months to come.

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