Sitting of 18 February 1981

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

    Rhodesia Oil Sanctions (Public Records)
    Mr. Dobsonasked the Lord Privy Seal if he will recommend to the Lord Chancellor that papers relating to the imposition of oil sanctions on Rhodesia during the period of illegal government should be released under section 5(1) of the Public Records Act 1958.
    The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Richard Luce): No, Sir. It is not the practice of the Foreign and Commonwealth Office to release official papers less than 30 years old.
    Mr. Dobson: The lamentable amnesty for sanction busters announced by the Attorney-General on 19 December 1979 makes it clear that no one risks prosecution if his traitorous and illegal activities are revealed. Why do the Government persist in covering up this information when it would be useful in future to know who was involved in these operations and what they were doing, bearing in mind that the Government are committed to the likelihood of mandatory sanctions against South Africa?
    Mr. Luce: I am surprised that the hon. Gentleman thinks that it was wrong to create an amnesty when it was right to create amnesties in so many other areas as part of the spirit of reconciliation in the new Zimbabwe. We decided that it was not in the public interest to disclose these documents.
    Mr. Stokes: Is my hon. Friend aware that the supplementary question of the hon. Member for Holborn and St. Pancras, South (Mr. Dobson) was, if not actually activated by malice, not meant to be helpful? Does he agree that the fiasco of oil sanctions should be left in a decent privacy and that no good purpose will be served by raking over these dead embers?
    Mr. Luce: I agree entirely with my hon. Friend that there is no point in raking over the past.

    Middle East
    Mr. Marlowasked the Lord Privy Seal if he will report on the progress of the European initiative in the Middle East.
    Mr. Waltersasked the Lord Privy Seal if he will make a statement on progress towards peace in the Middle East.
    The Lord Privy Seal (Sir Ian Gilmour): The Dutch Presidency of the 10 is about to undertake further contacts with all the parties to explore the practical implications of the principles set out in the Venice declaration and the possibilities for progress. The 10 remain determined to work actively for a comprehensive settlement providing justice for the Palestinians and security for Israel.
    Mr. Marlow: Is my right hon. Friend aware of the fact that earlier this month a delegation from both sides of the House visited the Lebanon, Jordan and the West Bank, and that we had three very distinct impressions—one was that the PLO is representative of the vast majority of Palestinians, secondly, that there is no such thing as a Jordanian option and the Jordanian Government and King believe that the Palestinians must negotiate their own future and, thirdly, there is great hope for the European initiative, and that the moderate elements in the PLO, who are certainly in the ascendency at the moment, will find their position weakened if there is a long delay in bringing forward the peace process?
    Sir Ian Gilmour: I am sure that the House will agree with my hon. Friend that the greater the speed the better. The Dutch President, Mr. van der Klaauw, will be shortly going to the Middle East. It is generally accepted that the PLO represents a great many Palestinians. I agree with my hon. Friend that the Jordanian option, as it is often called, is not an option. When I was in the Middle East at about the same time as my hon. Friend, King Hussein made that clear to me.
    Mr. Walters: Does my right hon. Friend agree that the welcome recently voiced by President Sadat to a greater European involvement in the peace-making process facilitates the speeding up of the European initiative? Does he accept that top level meetings with the PLO leadership soon would encourage the American Administration to follow suit?
    Sir Ian Gilmour: We welcomed greatly President Sadat's speech at Luxembourg, in which he welcomed the European initiative and called for mutual recognition of Palestinians and Israelis.
    As my hon. Friend knows, there have been contacts at official level with the PLO, but there have not yet been ministerial contacts. We have always said that contact would be made much easier if the PLO were to recognise the existence of Israel.
    Mr. Heffer: Will the right hon. Gentleman accept that many of us who have been closely associated over the years with supporting the rights of Israel to have secure borders feel that the time has come when Israel should be prepared to discuss the problems with the Palestinians? Will the right hon. Gentleman make it clear that the PLO must make a clear declaration that it accepts the security of Israel's borders and accepts that Israel is a State and is able to live in peace in the Middle East?
    Sir Ian Gilmour: I entirely agree with what the hon. Gentleman says. The recognition of the Palestinian rights of determination and withdrawal by the Israelis to the 1967 boundaries must be balanced by the Palestinians' recognition of Israel.
    Mr. William Shelton: Will my right hon. Friend agree that while the PLO refuses to recognise the existence of the State of Israel it is impossible for Her Majesty's Government to recognise the PLO?
    Sir Ian Gilmour: That is not the point. As I have said and as President Sadat said, we favour mutual recognition, and recognise States, not organisations. Therefore, there is no question of official recognition of the PLO.
    Mr. Roy Hughes: Does the right hon. Gentleman agree that a just peace in the Arab-Israeli conflict would be a major stabilising factor in the Middle East and would help towards the recovery of the whole of the Western world? Does he agree that the first major step in that direction would be a recognition of the PLO?
    Sir Ian Gilmour: I agree with everything but the last phrase of the hon. Gentleman. It would be a major step forward and a great force for stabilisation of the Middle East, but, for the reason that I have just given to my hon. Friend, we cannot recognise the PLO.
    Mr. Temple-Morris: Will my right hon. Friend agree that any effective European initiative must include strong representations from the United States Government over the Israeli Government's settlement policy? Will my right hon. Friend further agree that that policy is against international law and deserves to be condemned?
    Sir Ian Gilmour: As my hon. Friend knows we have always made our position clear. That does not differ from the position of the Labour Government that the Israeli settlements are illegal and an obstacle to peace. We regret particularly the speeding up of the settlement in the last month of that Government.
    Mr. Moyle: In connection with that, has the Lord Privy Seal made representations to the Israeli Government about the reports that in recent weeks they have seized 55,000 acres of land on the West Bank? Does he regard that as being not conducive to the compromises which are essential if peace is to be reached in the Middle East? If he has made representations, what has been the response from the Israeli Government?
    Sir Ian Gilmour: The Israeli Government well know our views on their settlement policy and, a fortiori, they know our views about the speeding up of settlement. When I was in Jordan, Prince Hassan said that the Israelis had taken legal title to about 38 per cent, of the West Bank. That is a frightening figure.

    Namibia
    Mr. Michael Morrisasked the Lord Privy Seal if he will ensure that the five Western nations play a more active role in bringing South-West Africa, Namibia, to independence.
    Mr. Luce: Following the pre-implementation meeting in Geneva last month, there is a need for a period of reflection by all the parties. We must not abandon the area of agreement already secured. Among other things, my right hon. Friend the Prime Minister and my right hon. and noble Friend the Secretary of State for Foreign and Commonwealth Affairs will discuss Namibia with the United States Administration in Washington next week.
    Mr. Morris: Is it not time that the Five showed more clearly that they are concerned about the future of the majority of citizens of Namibia and a little less concerned about the minority of SWAPO? To that end, will he and his colleagues do their best to ensure that no action is taken by any of the parties at the Geneva conference that will pre-empt a negotiated settlement in the area?
    Mr. Luce: On the last point, I endorse the views expressed by my hon. Friend that any action taken by any of the parties to the dispute that hinders or makes a negotiated settlement more difficult will be most destructive and unhelpful.
    On the first point, I do not think that my hon. Friend is being fair to the work of the group of Five, which has been committed all along to the holding of free and fair elections in which all the parties can play an equal part.
    Mr. Healey: Does the Minister agree that the deep penetration by South African forces into the territory of Angola and Mozambique is not conducive to prospects for a peaceful settlement? Will he confirm the report by the diplomatic correspondent of the Daily Telegraph that recently the Foreign Secretary, in discussions with Mr. Chissano—Mozambique's Foreign Minister—said that he did not exclude the possibility that, in certain circumstances, Britain might support sanctions against South Africa?
    Mr. Luce: Violence instigated from whatever source is not conducive to a settlement. I have already made that point. Our views on sanctions are already known and have been repeatedly made over many months, namely, that in general, we do not believe that sanctions will produce the result that we all wish to see—a peaceful settlement in Namibia.
    Mr. Nicholas Winterton: Does my hon. Friend agree that the Democratic Turnhalle Alliance came out of the Geneva conference with a greatly enhanced image of being genuinely concerned about the democratic evolution of the country? Will he agree further that, instead of the United Nations supervising free and fair elections in Namibia, it may be sensible for a number of other members of the United Nations separately to supervise and monitor free and fair elections in Namibia—for example, the United States, Kenya, Angola itself, the United Kingdom and Canada?
    Mr. Luce: If the British Government and the Five are to maintain the posture that all the parties should be treated equally, it would not be right for me to comment on the behaviour or standing of any party in Geneva. On the second point, we have continued fully to support the principles behind the United Nations plan that there must be an end to bloodshed, there must be free and fair elections and a settlement that is recognised internationally. As I said earlier, there must be a pause for reflection now that the new United States Administration has been established. My right hon. Friend the Prime Minister will be having discussions with the Reagan Administration next week. I am sure that all the parties, including the United States, will be anxious to find ways to move forward.
    Mr. Ford: Does the right hon. Gentleman agree that there is unlikely to be much movement by the Five until after the presidential elections in France have been completed? Will he say what representations have been made to Zambia and Angola to secure the release of the SWAPO and CANU dissidents who would like to return to play a full part in the political life of Namibia?
    Mr. Luce: The French elections may be a factor, but elections are also taking place elsewhere, including in

    261
    South Africa at the end of April. That must also be a factor. Regarding the hon. Gentleman's other point, if he gives me the details I shall look into the matter.

    East-West Relations
    Mr. Frank Allaunasked the Lord Privy Seal what representations he is making to President Reagan and General Haig regarding their statement on East-West relations and arms increases, so far as it affects the position of the United Kingdom.
    The Minister of State, Foreign and Commonwealth Office (Mr. Peter Blaker): None, Sir. The Government fully share the concern expressed by President Reagan and General Haig about the need for a strong and united Western Alliance.
    Mr. Allaun: Is the Minister aware of the growing view that every time Mr. Reagan opens his mouth the world trembles and that his "get tough" policy is putting Britain in increasing danger? Will he press Mr. Reagan and General Haig to ratify the SALT II agreement, to drop their bellicose talk, and to adopt a more sensible attitude towards East-West relations?
    Mr. Blaker: I believe that a robust posture by the West towards the Soviet Union is more likely to secure peace than a weak posture. President Reagan has made it clear that while he is not committed to a timetable concerning the SALT II agreement he is willing to enter into negotiations with the Russians on the basis of trying to effect a reduction in the number of nuclear weapons. We welcome that.
    Mr. Sproat: On the question of arms increases, what is the current state of play of the French and Polish proposals for a European disarmament conference, currently under discussion at Madrid? Is it not extraordinary that the Soviet Union appears to be so keen on endless disarmament conferences, and so reluctant to do anything about disarmament itself?
    Mr. Blaker: The French and Polish proposals are still under discussion at Madrid, but not much progress has been made in securing an agreement. As my hon. Friend knows, the French proposal—which we support—calls for mandatory and verifiable confidence-building measures up to the Urals, whereas the Polish proposals appear to call for declaratory statements in favour of peace and against war. We think that that is an odd position in the light of the recent Soviet invasion of Afghanistan.
    Mr. James Lamond: Does the Minister recall the special session of the United Nations on disarmament, and the brave words and solemn pledges given by the United Kingdom Government? Does he feel that this Government are bound in any way by those pledges? If so, how does he reconcile those promises with the boasts of the Secretary of State for Defence from the Dispatch Box yesterday that defence spending would be increased by 8 per cent, this year and next year? How does he reconcile those promises with the words uttered both in the United States and in Britain against the Soviet Union?
    Mr. Blaker: I am not sure that the hon. Gentleman has correctly quoted my right hon. Friend the Secretary of State. Perhaps he could verify that. We continue to favour arms control and disarmament. We are taking part in
    262
    negotiations in a number of forums. We do not believe that it helps to disarm unilaterally before arms control negotiations take place.

    Gibraltar
    Mr. Biggs-Davisonasked the Lord Privy Seal whether he will make a statement about the future of Gibraltar.
    Sir Ian Gilmour: The British Government's commitment to the people of Gibraltar, as set out in the preamble to the constitution, remains firm. It is our hope that the new Spanish Government will act on the agreement which my right hon. and noble Friend concluded with the Spanish Foreign Minister in Lisbon on 10 April 1980. It provides for the restoration of direct communications between Gibraltar and Spain and the opening of negotiations.
    Mr. Biggs-Davison: Having regard to the referendum—which shows that nearly every Gibraltarian wants his citizenship preserved—will my right hon. Friend consult the Home secretary and ensure that that small, but very loyal, group of British citizens is not done down by current nationality legislation?
    Sir Ian Gilmour: I shall bring my hon. Friend's remarks to the attention of my right hon. Friend the Home Secretary. I know that my hon. Friend takes a deep interest in the matter. The British Nationality Bill is presently before the House. It is a matter for the Home Office.
    Mr. Denzil Davies: Is it not time that the Lord Privy Seal stopped expressing hope about the Lisbon agreement and began to put pressure on the Spanish authorities? Why do not the Government say to the Spanish Government that, unless and until the Lisbon agreement is fulfilled, progress on the Spanish application to join the EEC will be very slow?
    Sir Ian Gilmour: I do not think that that would be a helpful way to proceed. As for bringing pressure to bear on the Spanish Government, the right hon. Gentleman knows that there has not been one recently, so his proposal would not be very sensible.
    Mr. Russell Johnston: If it is the Government's wish that Gibraltar should remain a dependency of the United Kingdom for as far ahead as we can see, what do the Government think about enabling Gibraltar to have some say in the institutions of the Community?
    Sir Ian Gilmour: That question is rather premature. In spite of what has been said, we are hoping for, and working towards, the implementation of the Lisbon agreement. Only after that agreement has been reached can we consider matters further ahead.

    South Africa
    Mr. Brothertonasked the Lord Privy Seal if he will make a statement on the current state of United Kingdom relations with South Africa.
    Mr. Luce: We have normal diplomatic relations with South Africa. The Government's view has always been that dialogue and contact provide a more constructive basis for our relations with South Africa than do ostracism and isolation. A significant element is the importance we attach to an internationally recognised settlement in Namibia and to peaceful change in South Africa towards a Government based on the consent of all their peoples.
    Mr. Brotherton: Can my hon. Friend confirm the impression held by most of us that the reported statement by the Foreign Secretary to the Foreign Minister of Mozambique that the Government had not ruled out sanctions against South Africa was only a diplomatic ploy? Will he confirm that, should the question of sanctions come before the United Nations, the Government would not hesitate to use the veto?
    Mr. Luce: I can only reiterate the view that the Government have taken from the time that they took office in May 1979. We do not think that the imposition of sanctions is a constructive way to tackle the problem. Neither independence for Namibia, nor the creation of a so-called just society in South Africa, would be advanced by measures designed to drive South Africa into isolation.
    Mr. Robert Hughes: Bearing in mind that the Government, with other Western Allies, have discouraged discussion of Namibia in the United Nations and have prevented sanctions resolutions from being passed, do not the Government feel let down by the South African Government because of the failure of the Geneva conference to reach agreement? Is it not clear that the Government trusted South Africa to deliver the goods and to achieve a ceasefire? What will the Government do now that their trust has been so badly misplaced?
    Mr. Luce: I have already tried to answer a number of questions about Namibia. I have made it absolutely plain that we must consider a number of factors. The Administrator-General for South Africa made it plain at the Geneva conference that he thought it premature to reach a final agreement. Elections are to be held in South Africa at the end of April. The American Administration must have time to assess the position in South Africa as a whole. The five Western nations will keep in touch. Therefore, this is a sensible time to pause and to reflect how best to move forward.
    Mr. Amery: As the United States, France and Britain are deploying forces in the Indian Ocean on what appears to be a long-term basis, and as the southern exit of the Red Sea is under Soviet control from both the Ethiopian and the Aden sides, is it not becoming urgent that we should re-establish relations with South Africa in respect of naval intelligence, access to South African ports, and the provision of security for the South African coastline? If we do not do so, we shall endanger the lives of both our men and our ships.
    Mr. Luce: There is no doubting the strategic importance of the South Atlantic, the Indian Ocean and the Cape route. My right hon. Friend is fully aware of our obligations under the mandatory United Nations arms embargo. We do not think that it is in the wider interest for Britain to have military collaboration with South Africa. Having said that, there are contingency arrangements whereby NATO nations could, and would, co-ordinate to provide naval control and protection of friendly merchant shipping outside the NATO area, including the South Atlantic, in times of tension and war.
    Mr. Denzil Davies: Is the Minister aware that the Opposition endorse the recent forthright condemnation of activities in South Africa by the Dutch Presidency of the EEC? When the Prime Minister and the Foreign Secretary visit Washington, will they make it clear to the new Administration that we expect a harder line to be taken
    264
    towards South Africa than has been apparent from statements made during the election campaign? Will they point out to President Reagan that it is not in the interests of the West to support tyranny and repression, whether in South Africa, El Salvador or anywhere else?
    Mr. Luce: I am sure that the minds of the Prime Minister, President Reagan and the Secretaries of State will, in a constructive sense, be looking at the picture of South Africa to see how Britain, the United States and the West can best contribute towards bringing about a peaceful settlement and stability in that part of the world. I am sure that their minds will be concentrated on that question.

    Turkey (Council of Europe Membership)
    Mr. Hardyasked the Lord Privy Seal if he expects Turkey to continue to be represented in the Parliamentary Assembly of the Council of Europe.
    Sir Ian Gilmour: It is for the Parliamentary Assembly to decide on the validity of the credentials of the parliamentary representatives of member countries of the Council of Europe.
    Mr. Hardy: Does the Lord Privy Seal agree that the resumption of the character of democracy, and the future of full international involvement of Turkey, would be assisted by Turkey's early withdrawal rather than the inevitable expulsion that would otherwise occur? Expulsion would be justified, but difficulties might occur as a result.
    Sir Ian Gilmour: It is not for me to judge that. However, with regard to the admittedly not very complicated matter of Greece, there was a long interval before expulsion. I understand that Turkey may withdraw from the Parliamentary Assembly, which is its right.
    Mr. Jim Spicer: Will my right hon. Friend confirm that the stability of Turkey is vital to the Western Alliance, that the Council of Europe has already accepted that Turkey should remain in the Council of Europe and that the European Parliament has agreed that links should be maintained until democracy has been restored?
    Sir Ian Gilmour: I agree with all that my hon. Friend has said. We welcome General Evren's announcement that a constituent assembly will be re-convened in the autumn. We note the virtual unanimity of Turkish opinion, which was reported in the delegation of the Council of Europe, but the process of restoring democracy cannot be pushed too fast.
    Mr. Norman Atkinson: What confidence can the Lord Privy Seal have in the restoration of the assembly and democracy in Turkey, in the light of recent events, particularly when members of the Council of Europe, and others, who are in prison at the moment, as well as leading democrats and leading trade union officials, are also being denied their basic rights? How can the Lord Privy Seal say with confidence that there is to be a return to the conditions which he says are likely to come into effect in the autumn?
    Sir Ian Gilmour: It is relevant to remember that on two previous occasions the Turkish Army have returned the Government to civilian democratic rule. We noted what General Evren has said and we have noted the character of the present Administration, which is not fairly portrayed by the hon. Member.

    Angola and Mozambique
    Miss Joan Lestorasked the Lord Privy Seal if he will raise in the United Nations as a threat to world peace the aggression by South Africa against Mozambique.
    Mr. Robert Hughesasked the Lord Privy Seal if he will raise in the United Nations as a threat to world peace the recent and continuing violations of the territorial integrity of Angola and Mozambique by South Africa.
    Mr. Luce: No, Sir. This is for the Governments directly concerned. We deplore violence from any quarter in the search for solutions to the problems of Southern Africa. Raids into Angola are a symptom of the Namibia conflict to the peaceful settlement of which we and other Governments continue to devote our efforts.
    Miss Lestor: Bearing in mind that there is a United Nations resolution on South African aggression in Angola, saying that if that aggression continued anywhere, it would take action, and bearing in mind that my question was about Mozambique and not Angola, does not the Minister believe that if the Government take the attitude that they would probably veto any suggested action by the United Nations, that is giving South Africa carte blanche to behave as it wishes?
    Mr. Luce: I can only reiterate that our minds must be constructive on how we can best bring about peace in that part of the world. I have already made it plain that the Government believe that the general imposition of sanctions does not and is not likely to contribute to a peaceful settlement. Our minds should be on that. With regard to raids into one country or another, we wholly condemn acts of violence, from whatever source they come.
    Mr. Robert Hughes: Is the hon. Gentleman aware that the invasions of both Angola and Mozambique are part of a sustained campaign against those countries? Is he not aware that it seems likely that the South African Prime Minister is trying to buy an election victory with the blood of innocent South African people in Mozambique and Angola? How can he say that the peace and stability of South Africa can be enhanced when it flouts all international opinion and carries on in the way it has done?
    Mr. Luce: I reiterate that it is argued, as the hon. Gentleman has done, that any acts of violence are not conducive to bringing about peace in that part of the world. We wholly and strongly condemn them.
    Mr. Wall: Is it not a fact that there have been continuous raids from Angola into Ovamboland, and from Mozambique to Kwa Zulu, including the murder of many prominent men in Ovamboland and people like Chief Kapuuo? Will he ask the hon. Lady if she will consult her friends in Havana and Moscow and ask them to desist from these threats to peace?
    Mr. Luce: Violence is coming from all sources. That is why it is urgent that we should work as hard as possible for a negotiated settlement.
    Mr. Maclennan: Does the Minister recognise that the issue is not simply that acts of violence are not conducive to peace but that incursions into Angola and Mozambique are a flagrant violation of the United Nations Charter? Does he recognise that as signatories and members of the Security Council we have a peculiar responsibility for ensuring that such violations do not occur?
    Mr. Luce: I agree with the hon. Gentleman that that sort of violence is to be deplored, but it is up to the countries concerned to decide. He referred to Angola and Mozambique. It is up to those countries to decide what measures they wish to take. Surely that is the point of having independent countries.
    Sir Anthony Kershaw: Would not the departure of many thousands of Cuban troops from Angola be a notable contribution to the peace of that area?
    Mr. Luce: I endorse what my hon. Friend has said. There is no shadow of doubt that whether we are talking about Southern Africa or the Horn of Africa, the intrusion of the Soviet Union and her satellites, from whatever source, is wholly destructive.

    Helsinki Agreements
    Mr. Chapmanasked the Lord Privy Seal if he will make a statement on any progress made at the re-convened Madrid conference set up to review the Helsinki agreements.
    Mr. Edward Lyonsasked the Lord Privy Seal what further steps he proposes to take to encourage observance of the provisions of the Helsinki accord.
    Mr. Blaker: At Madrid, we and our partners in the European Community have tabled proposals seeking commitments from participating States on human rights, European security, freedom of movement, information and family reunification. I hope that it will be possible to reach agreement on these and a limited number of other substantive measures of benefit to all.
    Mr. Chapman: I am grateful to my hon. Friend for that reply. Is it still the intention of Her Majesty's Government that the human rights issues, such as civil freedoms and the freedom of a citizen to leave a country, are to be linked to any matters concerning arms control or disarmament? Relevant to that, are the Russian Government still insisting upon the agreement for a disarmament conference as a precondition for any further review conference?
    Mr. Blaker: There is no direct link between the various matters mentioned by my hon. Friend. However, we believe that it would be right that progress should be made in all the baskets—on human rights, trade, family reunification and security. The Russians are still sticking to their proposal for a conference on detente and disarmament, but at present they are not linking that to a refusal to attend a further, follow-up conference. They are committed to a further conference by the arrangements made at the beginning of the Madrid conference.
    Mr. Edward Lyons: Does the Minister agree that an additional step that could be taken would be for British Ministers to harp persistently on the necessity to release members of the Soviet monitoring committee of the Helsinki agreement, including Professor Orlov? Does he not agree that the Russians should be incessantly reminded that when campaigners for human rights can speak at liberty, there will be a great improvement in international relations?
    Mr. Blaker: I agree with what the hon. and learned Gentleman has said. We have taken the lead in talking about that subject. One of the proposals of which we are joint sponsors relates to that matter.
    Sir Bernard Braine: Is my hon. Friend aware that at this moment Vaclav Havel, an internationally respected playwright, and others are in prison in Czechoslovakia for doing no more than criticising their Government for not observing the spirit and letter of the Helsinki accord, which that Government signed? What justification can there be for engaging in talks in Madrid, in the face of such contemptuous defiance of the Helsinki accord by Moscow's puppets?
    Mr. Blaker: I endorse what my hon. Friend has said. I know of the personal interest which he has taken in the important case of Vaclav Havel and of the efforts he has made, in conjunction with a number of distinguished people to draw that case to the attention of the world. We have expressly proposed at Madrid that there should be a new agreement, reaffirming the right of people to monitor the performance by their Government of the obligations which they assumed at Helsinki.
    Mr. McNally: Will the Minister take this opportunity, which he missed in reply to my hon. Friend the Member for Salford, East (Mr. Allaun), to confirm that the Government want SALT II to be ratified and want us to move on to a SALT III agreement?
    Mr. Blaker: We have not changed our position.
    Mr. David Atkinson: Does my hon. Friend agree that the West should not further discuss the possibility of undertaking solemn and binding promises on detente or disarmament until such time as the Soviet Union agrees to implement the original Helsinki accord?
    Mr. Blaker: Yes. That is why we take the view that for the Madrid conference to subscribe to declarations that are not binding, such as those which I understand are contemplated in the Polish proposal for a conference on detente and disarmament, would be unrealistic. They would be particularly unrealistic when only just over a year ago the Soviet Union, in breach of its obligations under the United Nations charter, invaded Afghanistan.

  European Community

    Foreign Policy
    Mr. Knoxasked the Lord Privy Seal what initiatives he is proposing to take to achieve closer co-operation with his European Economic Community colleagues in foreign policy; and if he will make a statement.
    Sir Ian Gilmour: My right hon. and noble Friend has made a number of suggestions for the strengthening of foreign policy co-operation. I refer my hon. Friend to the speech made at the Ubersee club in Hamburg, a copy of which has been placed in the Library of the House.
    Mr. Knox: What progress has been made towards setting up a permanent secretariat attached to the Council of Ministers? Does my right hon. Friend agree that such a secretariat would contribute to and facilitate Community foreign policies?
    Sir Ian Gilmour: As my hon. Friend knows, that suggestion has been made, but I do not want to anticipate any decisions of the Foreign Ministers. We favour additional support for the Presidency, possibly by a small
    268
    team of officers seconded from national diplomatic services, although we want to avoid creating a new bureaucracy. We are interested in our partners' views.
    Mr. Healey: Will Her Majesty's Government support the initiative of the Bonn Government to promote a broadly based conference of all parties in the civil war in El Salvador to try to bring that tragic conflict to an end? Is the right hon. Gentleman aware that there is some danger of the American Government pre-empting action, which would be greatly to the disadvantage of Europe and the Alliance as a whole?
    Sir Ian Gilmour: E1 Salvador was briefly discussed in our political co-operation yesterday. Ambassador Eagleburger is at present visiting several capitals in Europe to discuss the matter. He is coming to see me tomorrow. It was agreed yesterday that any decisions on action by the Community should wait until we have heard his views.
    Mr. Hal Miller: What is the outcome of the EEC-Japan trade discussions in the context of co-operation on foreign policy, as my right hon. Friend the Secretary of State for Trade told me that he would be in a position to give that reply today?
    Sir Ian Gilmour: We had a long and satisfactory discussion yesterday in which it was agreed that there should be surveillance of certain Japanese imports, namely, cars, television sets, tubes and certain machine tools. The unsatisfactory nature of the Japanese response to previous representations should be brought home to them. The Commission should not only monitor what is happening but should pursue the matter in further contact with the Japanese.
    Mr. Newens: In arriving at a decision on El Salvador to put before our EEC colleagues, will the Minister bear in mind that many people in this country are horrified by the moral and milittary support of the miliary junta with its appalling record of murder, political assassination and terror? Should we not be seen not to have double standards?
    Sir Ian Gilmour: None of us should have double standards. It is equally important for us to wait to hear what the American Government have to say. There has been disagreeable violence by both sides in E1 Salvador.

    Institutional Reform
    Mr. Gwilym Robertsasked the Lord Privy Seal what progress there has been towards reform of European Economic Community institutions.
    Sir Ian Gilmour: The committee of three wise men made a number of proposals calculated to improve the functioning of Community institutions in its report, which was submitted to the European Council. The report was broadly endorsed, and those proposals that were agreed will be implemented.
    Mr. Roberts: Does the Lord Privy Seal agree that many of those institutions are beyond reform and operate against the interests of Britain and the British people? As the overwhelming majority of the public have decided that enough is enough, will he begin the essential process of removing us from the clutches of the EEC?
    Sir Ian Gilmour: I do not agree with either point. The European institutions do not work against the interests of

    269
    this country or Europe. Neither do I agree that the British people have come to the conclusion that the hon. Gentleman alleges.
    Mr. Dykes: Does my right hon. Friend agree that the main institution that damages our interests is the Labour Party? Does he also agree that the institutions need improving and that if the CAP can be reformed and real co-operation established between the institutions to get the Community moving ahead on essential progress we should be getting somewhere?
    Sir Ian Gilmour: Reform of the CAP is one of our objectives. There are later questions down about the matter.

    United Kingdom Presidency
    Sir Anthony Meyerasked the Lord Privy Seal what objectives he has set for the United Kingdom Presidency of the European Community due to begin on 1 July.
    Sir Ian Gilmour: As my right hon. Friend the Prime Minister said on 12 February in reply to my hon. Friend the Member for Lincoln (Mr. Carlisle), the Government's general objective during our Presidency will be to manage business efficiently and to contribute to the development of practical and constructive policies in the Community. It is too early to say what specific objectives we shall have, but one of our main aims will be to ensure that the Community tackles effectively the restructuring of the Community budget under the agreement of May 1980.
    Sir Anthony Meyer: Since it can be taken for granted that the Foreign Secretary will continue the successful exploitation of British membership in order to strengthen the influence of British foreign policy in the world, can my right hon. Friend turn his attention to the importance of trying to evolve common policies to supplement the CAP, notably a common industrial policy to create new jobs in Europe along the lines set out in the excellent pamphlet recently produced by the European Democratic Group?
    Sir Ian Gilmour: I wholly agree with the first part of my hon. Friend's question. However industrial matters are for my right hon. Friend the Secretary of State for Industry. In conformity with what my hon. Friend says, it always has been one of our aims to redress the balance of Community expenditure away from agriculture and towards the non-agricultural sectors, which would be of great benefit to the United Kingdom. That was one drift of the report to which he refers.
    Mr. Denzil Davies: Is not the main duty of the Presidency in the Council of Ministers to seek a compromise between conflicting interests? Is there therefore not likely to be a conflict of interests between our Presidency and any attempt by the British Government to seek fundamental reforms? Therefore, does not the Minister agree that at the end of the day all that we shall have done is to sacrifice British interests in order to secure a spurious diplomatic victory?
    Sir Ian Gilmour: I do not believe that the right hon. Gentleman's prophesying is any better based than his logic. There is no reason why our Presidency should act against the interests of this country. He is right in one way—the Community proceeds by consensus. It is for the Presidency to lead and to seek consensus.
    Mr. Dorrell: In view of the problems for our manufacturing industry caused by the gyrations on the foreign exchanges in recent months, will my right hon. Friend suggest to the Chancellor of the Exchequer that one proposal that we should advance during our Presidency is that the pound should become a member of the EMS?
    Sir Ian Gilmour: I shall pass on my hon. Friend's view.
    Mr. FoulkesIs the Lord Privy Seal aware of the European Parliament venturing into debate and bilateral discussions on areas that are more properly within the competence of national Parliaments? What action will he take during his Presidency or elsewhere to indicate our displeasure?
    Sir Ian Gilmour: With all respect to the hon. Gentleman, I am not sure that I feel the displeasure that he ascribes to me. As parliamentarians, we are surely in favour of debate in Parliament. I do not know to which subject the hon. Gentleman refers, but I have not noticed the European Parliament going beyond its remit in this sphere.

    Passports (Standardisation)
    Mr. Colvinasked the Lord Privy Seal whether it is the policy of Her Majesty's Government to work towards a standardisation of passports for European Economic Community member States.
    Sir Ian Gilmour: In 1974, the European Community Heads of Government decided in principle that the national passports of the Nine—now Ten—should have a common format to demonstrate the links between them as members of the Community. Discussions on the implementation of this decision are continuing in Brussels.
    Mr. Colvin: Is my right hon. Friend saying that if a common format passport scheme were adopted the EEC would be responsible for issuing British passports? If he supports the adoption of such a scheme, does he also support the recommendation by the international civil aviation organisations that such passports should be in laminated form so as to be capable of being read by machines?
    Sir Ian Gilmour: The answer to the first part of my hon. Friend's question is "No". Passports in a common format will be national passports, not Community passports, and their issue will remain a national prerogative. On the second part of the question, we are very interested in machine readability. We are carrying out investigations into the most suitable system, and we shall then take a decision in the light of those investigations.
    Mr. Skinner: In view of the introduction of the detested Nationality Bill by the Tory Government, is the Minister happy about the idea that, with a common passport, all those other coloured people, not in the Commonwealth, but emanating from Africa, Algeria and various other areas associated with some of the Common Market countries, will more easily be able to enter this country? Is he quite satisfied with that?
    Sir Ian Gilmour: I do not think that I quite follow the drift of the hon. Gentleman's question. In so far as I followed it at all, I do not think that any of his premises were remotely correct.
    Mr. Stokes: Is my right hon. Friend aware that the vast majority of British people do not wish to abandon their British passport, which alone is able to defend them, and that the EEC does not have a Foreign Office, nor does it have any armed services, nor even a gunboat?
    Sir Ian Gilmour: I think that my hon. Friend has misunderstood what is proposed and what was agreed in 1974. It would still be a British passport, and would retain such well-known characteristic features as the Royal coat of arms on the front and the exhortation inside the front cover.

    Greece
    Mr. Cryerasked the Lord Privy Seal when next he expects to meet other European Economic Community Ministers to review the integration of Greece into the European Economic Community.
    Sir Ian Gilmour: It is, I think, a little soon to be reviewing progress. Integration will be a gradual process taking place over five years or more. But as members the Greeks play a full part in Council meetings and all Community work.
    Mr. Cryer: Can the Minister assure the House that during that five-year period the EEC will be poised to take rapid action, should there be economic disruption by exports, particularly of clothing and textiles, from Greece to this country? In view of the massive lobby last Monday by clothing, footwear and textile workers who are worried sick about the continued loss of jobs, does he realise that if the EEC does not take action, this will convince many workers that association with and membership of the EEC has meant for them a continuing loss of jobs?
    Sir Ian Gilmour: I think that the second part of the hon. Gentleman's question is not justified at all. As I believe I have assured him on more than one occasion before, Greece's Treaty of Accession contains adequate safeguard provisions on trade. If anything goes wrong, the Community will act. I have given the hon. Gentleman that assurance before.
    Mr. Squire: Will my right hon. Friend use the accession of Greece, combined with our Presidency later in the year, to take firm steps to resolve the multi-language problem, there now being seven languages, and to institute action to move to two languages, namely, French and English? Will he use that, in turn, as a possible way to influence the French to one siting of the Parliament as well?
    Sir Ian Gilmour: With respect to my hon. Friend, I do not think that the two things are connected. I should be very bold indeed if I undertook to the House to cut down the number of Community languages from seven to two.

    Structural and Policy Reforms
    Mr. Teddy Taylorasked the Lord Privy Seal what progress has been made in seeking to achieve reforms in the structure and policies of the European Economic Community.
    Mr. Leightonasked the Lord Privy Seal what progress Mer Majesty's Government has made in the reform of the European Economic Community.
    Sir Ian Gilmour: The agreement reached on 30 May 1980 which limited Britain's net contribution to the budget
    272
    was a first step towards more comprehensive changes. The commitment which we secured on 30 May was to an examination of Community policies, aimed at preventing the recurrence of unacceptable situations. This provides a major opportunity to achieve structural reforms. The Commission is to submit proposals by the end of June 1981 and in the meantime we have been continuing informal contacts with the Commission and with our Community partners.
    Mr. Taylor: On the subject of the agreement, is the Minister aware that, of the £470 million due to Britain in rebates for projects by 31 March, which is only six weeks away, by yesterday only £157 million had been paid, according to a Written Answer that I had from the Chancellor of the Exchequer? What action will the Government take if those rebates are delayed, as is threatened, by a senior minister in the German Government?
    Sir Ian Gilmour: We have recently received some £210 million under the financial mechanism in January and a further £60 million under the supplementary measures scheme. We had received £98 million in December. A further charge of some £300 million under the supplementary measures scheme is expected before 31 March. I have no reason whatever to believe that those refunds will not be here on time.
    Mr. Russell Johnston: Does the Minister agree that necessary reforms in European Community policies include the more effective development of such common policies as regional development and social development?
    Sir Ian Gilmour: I entirely agree with the hon. Gentleman. That has long been our policy.
    Mr. Jay: But have the British Government yet put forward specific proposals for the reform of the common agricultural policy?
    Sir Ian Gilmour: No, we have not, because I do not think that that is the right way to go about it. I am aware of the right hon. Gentleman's well-known views on this subject. The fact is that the Commission will put forward proposals. Clearly, we feed in our ideas to everybody concerned, but just to put forward comprehensive proposals would not be the right way to achieve our interest.
    Mr. Nicholas Winterton: Does my right hon. Friend agree that in seeking to review policies within the EEC it would be very helpful if the EEC as a whole could play a greater part in resolving the problems of the Middle East and the establishment of a Palestinian State? Will he ensure that the EEC and each country within it co-operate in order to bring pressure upon the United States, which is the linchpin in maintaining the State of Israel in occupation of territories that it took over in the 1967 war?
    Sir Ian Gilmour: We were discussing these matters earlier. My hon. Friend will be aware of the European initiative and the Venice declarations. The Dutch Presidency is pressing on with that initiative. Mr. van der Klaauw will be leaving for the Middle East in a few days' time. I entirely agree with my hon. Friend about the importance of this question.
    Mr. Denzil Davies: Does the Lord Privy Seal agree that the budget compromise of 30 May specifically rules out any basic change in the principles of the budget and

    273
    the common agricultural policy? Is he aware that the British Government have therefore lost any chance that they had of pressing for fundamental reforms and that at the end of the day, when the review is completed, all that we shall have will be another cosmetic compromise which does nothing to remove the harmful effects of British membership of the EEC?
    Sir Ian Gilmour: The right hon. Gentleman goes on saying these things and pays no attention at all to the facts. He must be well aware that the principles of the common agricultural policy are perfectly all right. It is to their application that we have objections. He will see from article 39 of the Treaty that the principles are totally unexceptionable. The 30 May agreement contained the undertaking or the agreement to avoid unacceptable situations recurring. Therefore, there will be a fundamental review and the Commission will be putting forward its proposals within a few months.
    Mr. Amery: While not dissenting at all from the need to reform the CAP, does my right hon. Friend accept that in a hungry world it is much better to have a surplus than a shortage? Will he bear that in mind in guiding our approach to the problem?
    Sir Ian Gilmour: I entirely agree with my right hon. Friend that a surplus is much better than a shortage. Certainly, Poland and the Soviet Union would be more pleased to have Common Market surpluses than the deficits from which they suffer.
    Mr. Spriggs: Will the right hon. Gentleman reconsider the reply that he gave in relation to proposed changes in the CAP, because when the referendum campaign was under way we, as opponents to entry into the Common Market, were told that it was better to change the CAP policy from within and that the sooner we joined the better? Why does the right hon. Gentleman now tell the House that that is not the way to change the CAP?
    Sir Ian Gilmour: I do not think that I said that. With respect, I think that the hon. Gentleman has misunderstood me. I said that I did not think the right way to proceed was for us to put forward publicly detailed proposals to reform the CAP. They would merely be picked to bits by other people. In any event, the initial proposals should come from the Commission.

Johnson and Firth Brown
Mr. A. E. P. Duffy: 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 Johnson and Firth Brown, the biggest private sector steel and engineering firm in Sheffield, that it is to sack at least 1,250 workers in a bid to ensure that it survives the slump and enormous energy bills."
I believe that the matter is specific. Mr, Arthur Hogg, the managing director, and Mr. Jack Illingworth, the chairman of the shop stewards, conveyed the announcement to me last night and pointed out that total cuts needed to keep the firm in business with a chance of survival could be as high as 1,400.
The matter is important, because the products of this blue-chip giant are technologically advanced. Its new plant is first class, its basic costs compare well with any of its international competitors, and relations between management and workers have long been exemplary. Yet in recent months it has been reduced to one-third of its working capacity. Its fate will have profound consequences, therefore, for similar private steel, wire and engineering activities, right across the economy.
The matter is urgent, because there appears to be no certainty that this drastic surgery will guarantee that the firm survives without further cuts. Much now depends upon the strength of the pound, the costs of borrowing money, energy prices, and the attitude of the Secretary of State for Industry to the floundering private sector. All are within the control of the Government, as has been pointed out again and again to Ministers.
I am pleased to see the Minister of State, Department of Industry on the Front Bench. The situation was pointed out to his predecessor and to Ministers in the Departments of Energy and Employment. It has also been pointed out in correspondence, as well on the Floor of the House, notably on 4 August last and more recently on 4 December, when I put forward Johnson and Firth Brown as an illustration of the severity of the impact of Government policies on British industry and the gamble being taken by the Government in allowing those policies to run their course.
I am advised by Johnson and Firth Brown that despite those pleas and warnings, energy pricing policy in particular continues to cause hardship, and that there is no sign of relief. I am advised that if it continues the consequences could be disastrous.
Mr. Speaker: The hon. Gentleman gave me notice before 12 o'clock today that he would seek leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"The announcement by Johnson and Firth Brown, the biggest private sector steel and engineering firm in Sheffield, that it is to sack at least 1,250 workers in a bid to ensure that it survives the slump and enormous energy bills."
The House will understand that I always read out the exact words of the application as it is submitted to me. The House 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.
The hon. Gentleman has directed our attention to what is undoubtedly an important problem in his
276
constituency—[HON. MEMBERS: "And elsewhere".]—and no doubt elsewhere. However, I have to rule that the hon. Gentleman's submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

BUSINESS OF THE HOUSE
Ordered,
That, in respect of the Redundancy Fund Bill and the Iron and Steel (Borrowing Powers) Bill, if either Bill be committed to a Committee of the whole House, further proceedings on that Bill shall stand postponed and that as soon as the proceedings on any Money Resolution come to by the House in relation to that Bill have been concluded, this House will immediately resolve itself into a Committee on that Bill.—[Mr. Wakeham.]

STATUTORY INSTRUMENTS, &c.
Ordered,
That the draft Export Guarantees (Extension of Period) (No. 3) Order 1981 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Wakeham.]

European Communities (Amendment)
3.36 pm
Mr. William Hamilton: I beg to move,
That leave be given to bring in a Bill to amend the European Communities Act 1972, so as to provide that matters relating to the expenditure of the European Parliament shall be directly accountable to the Council of Ministers.
This move is motivated by the widespread outrage inside and outside the House caused by the insensitive extravagance of the recent jaunt to Colombia, in South Africa—[HON. MEMBERS: "South America."]—of 36 Members of the European Parliament and their caravan of staff and interpreters numbering 67. They all travelled first class, and the estimated cost of the trip was £250,000. Six of the Members of the European Parliament were from the United Kingdom, five of whom were Conservatives and one of whom was Labour—Mr. Lomas—the well-known radical from London. They travelled return fare to Bogota from London at £1,600 per head.
That first-class travel was defended in moving terms by Dame Shelagh Roberts, a London Conservative, and by Mr. Chris Jackson, another Conservative Member of the European Parliament, who, in a letter to the Daily Telegraph dated 7 February, wrote that all criticism of that jaunting was Left-wing and "aimed at discrediting Europe."
In order to show my complete impartiality in these matters, I would point out that Lady Castle—I must give her her correct title—was due to embark on her own champagne trip to West Africa in a party of 60 European MPs, plus 100 staff. She claimed in a recent article in the New Standard that that trip would be
"of benefit to developing countries".
However, a few days later that particular lady was for turning. According to The Sunday Times last Sunday, she said that the West Africa trip should be boycotted or that the £38 daily allowance should be reduced.
This very week, a further party of Members of the European Parliament have winged their champagne way to Australia and New Zealand for a fortnight in the sun, and another delegation is already in Japan.
It is difficult for a Member of this House to get at the facts and at the cost and reason for going on such jaunts. It is even harder to get at the Foreign Office in respect of

277
these matters. Several of us tried to table parliamentary questions, but the Foreign Office declined to accept any responsibilty for the matter.
I set the House of Commons Library staff to work. I say here that there are no more efficient, competent, able and dedicated members of the staff than our Library staff. It was no fault of theirs that they drew blanks on the questions that I put to them.
Some information, of course, is publicly available. In the total budget of the European Parliament for 1979 the expenditure was £74·6 million. In 1980, the appropriation was £119·8 million. In 1981, the appropriation is £125·5 million. In 1980, £3 million of the amount went towards secretarial expenses of political groups and other political activities, and expenses for contacts with other Parliaments outside the EEC. The comparable figure in 1981 will rise to £3·6 million.
When I asked for details about forthcoming jaunts I was told that no information was directly available from Luxembourg but that if I contacted a gentleman in South Wales he would give me the facts, on condition that I gave him the details of all the overseas visits of all delegations from this Parliament. I quote the letter that I received from the Library:
"Unfortunately they"
—that is, Luxembourg—
"cannot supply you directly with the information you require but I was informed that if you were to get in touch with Mr. Allan Rogers, MEP for South-East Wales, he may be able to help you. In return he would apparently like to have similar information on proposed overseas visits by UK Parliamentary delegations."
I chose not to refer to the office boy but to go to the head of the European Parliament—the Secretary General, in Luxembourg. However, before doing so I sought to discover his salary. That was extremely difficult. I approached the Library, whose staff approached the Foreign Office, and the Foreign Office referred the Library to the European Office in London. The European Office passed the question to Luxembourg, and Luxembourg refused to answer it.
I therefore had recourse to a House of Commons written answer on 12 February 1979. It contained some information, but not the specific information that I wanted. According to that written answer, at column 442 of the Official Report, the highest grade of salaries in the European Parliament are the Al grades, which range from £42,173 to £52,529. That was two years ago. Taking into account inflation, the head of the European Parliament must be getting at least £60,000 a year plus perks, though we are not quite sure what those perks are.
Further facts may be of interest to the House. Before the direct elections, I was a member of that Assembly for three years.
Mr. Dennis Skinner: On the gravy train.
Mr. Hamilton: On the gravy train, as my hon. Friend the Member for Bolsover (Mr. Skinner) rightly says. Some of his best friends were on it, too.
Mr. Skinner: I was not on it. I was always here.
Mr. Hamilton: As a consequence, I obtained access to the accounts of the Socialist group. I shall not say how I did so, but I want to give some of the information that was contained in those accounts. The Socialist group was the largest group in the Parliament, having 67 members
278
out of 198—about one-third. The funds for our activities out of the EP budget were to employ and pay our own staff and to cover other matters. The total assets of that group on 31 December 1975 amounted to 3,210,480 Belgian francs. Assuming an exchange rate at the time of about 65 Belgian francs to the pound, it represented about £50,000. In addition, the group had investments of about £70,000 and had a subsidy from the European Parliament of 7,600,000 Belgian francs, which is about £117,000. Now it will be much more, but I cannot find out what the figure is.
Then there is the Conservative group. The Conservatives are smooth, silent and glib operators, and are probably the most grasping. According to a report in the Daily Mail of 7 February 1981, that group received a subsidy from the European Parliament of £228,000 in 1981. It has a surplus of £200,000. Cash is coming out of its ears. The group does not know what to do with it. That is what its leader said, according to the article:
"Britain's Euro Tories will not be taking any action over their own generous budget of £228,000 for 1981, even though they are still £200,000 in surplus".
Despite that surplus, their budget for this year is to be increased by 50 per cent. What do we intend to do about that? That, of course, is the purpose of the Bill. I see, Mr. Speaker, that you are getting impatient.
Mr. Speaker: I am sure that the House will be tolerant for another minute to hear what it is proposed we shall do. But the 10 minutes are up.
Mr. Hamilton: I carefully read the rule, Mr. Speaker, like you. A period of 10 minutes is not specified; there is reference only to a short speech. I promise that I shall fulfil that requirement.
I invite hon. Members to ask their own groups to make their accounts available to the House. The Foreign Office has a responsibility in connection with the EP budget, and it cannot shake off that responsibility. The overall parliamentary budget is a matter for the Council and the European Parliament. We are a member of the Council. In fact, we shall preside during the coming six months. Any member of the Council can question and challenge the European Parliamentary budget, although in the past, according to convention that has not been done. It should be done now. Whatever views are held by Members of this House, there must be some increase in the degree of our accountability.
I hope that we shall have a Division. If so, I hope that my proposition will receive massive support, as evidence of the distaste that the House feels for the gross extravagance that has been shown during the last two weeks. If there is no vote, it will be a measure of the unanimity of the House and its distaste of the extravagance of the European Assembly.
Mr. Speaker: The Question is, That the hon. Member have leave to bring in his Bill. As many of that opinion say "Aye". To the contrary "No". I think the—
Mr. Tony Marlow: I seek to oppose the Bill.
Mr. Speaker: I had already begun to put the Question.
Mr. Marlow Mr. Marlow rose—
Mr. Speaker: Order. The hon. Gentleman remained seated throughout.
Question put:—
The House divided: Ayes 138, Noes 0.

Division No.75]

[3.47 pm

AYES

Allaun, Frank

Grant, John (IslingtonC)

Alton, David

Grimond, Rt Hon J.

Archer, Rt Hon Peter

Hamilton, James(Bothwell)

Ashton, Joe

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

Atkinson, N.(H'gey,)

Hardy, Peter

Barnett, Rt Hon Joel (H'wd)

Harrison, Rt Hon Walter

Beaumont-Dark, Anthony

Hattersley, Rt Hon Roy

Beith, A. J.

Haynes, Frank

Boothroyd, MissBetty

Homewood, William

Brotherton, Michael

Hooley, Frank

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

Hughes, Mark (Durham)

Buchan, Norman

Hughes, Roy (Newport)

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

Jay, Rt Hon Douglas

Cant, R. B.

Jones, Barry (East Flint)

Carlisle, John (Luton West)

Jones, Dan (Burnley)

Carmichael, Neil

Kaufman, Rt Hon Gerald

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

Kilfedder, James A.

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

Kilroy-Silk, Robert

Colvin, Michael

Kinnock, Neil

Concannon, Rt Hon J. D.

Lambie, David

Cook, Robin F.

Lamborn,Harry

Craigen, J.M.

Lamond, James

Crowther, J.S.

Lestor, Miss Joan

Cryer, Bob

Lewis, Ron (Carlisle)

Cunliffe, Lawrence

Litherland, Robert

Cunningham, DrJ.(W'h'n)

Lofthouse, Geoffrey

Dalyell, Tam

Lyons, Edward (Bradf'dW)

Davies, Rt Hon Denzil (L'lli)

McGuire, Michael (Ince)

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

McKay, Allen(Penistone)

Dean, Joseph (Leeds West)

McNally, Thomas

Dixon, Donald

Marshall, DrEdmund (Goole)

Douglas, Dick

Maynard, MissJoan

Dubs, Alfred

Millan, Rt Hon Bruce

Duffy, A. E. P.

Mitchell, Austin(Grimsby)

Dunwoody, Hon Mrs G.

Moate, Roger

Durant, Tony

Molyneaux, James

Eadie, Alex

Morgan, Geraint

Eastham, Ken

Morris, Rt Hon A. (W'shawe)

Ellis, R. (NE D'bysh're)

Morris, Rt Hon C. (O'shaw)

English, Michael

Morton, George

Ennals, Rt Hon David

Moyle, Rt Hon Roland

Evans, loan (Aberdare)

Neubert, Michael

Evans, John (Newton)

Newens, Stanley

Ewing, Harry

O'Neill, Martin

Fletcher, Ted (Darlington)

Orme, Rt Hon Stanley

Forrester, John

Palmer, Arthur

Foulkes, George

Park, George

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

Parry, Robert

Garrett, John (NorwichS)

Pendry, Tom

George, Bruce

Penhaligon, David

Graham, Ted

Powell, Raymond (Ogmore)

280

Price, C. (Lewisham W)

Taylor, Teddy (S'end E)

Proctor, K. Harvey

Thomas, DrR.(Carmarthen)

Richardson, Jo

Thorne, Stan (Preston South)

Roberts, Gwilym(Cannock)

Tilley,John

Rooker, J.W.

Torney, Tom

Ross, Ernest (Dundee West)

Urwin, Rt Hon Tom

Ross, Stephen (Isle of Wight)

Varley, Rt Hon Eric G.

Sheerman, Barry

Wainwright, R. (ColneV)

Sheldon, Rt Hon R.

Weetch, Ken

Shepherd, Richard

Wigley, Dafydd

Short, Mrs Renée

Willey, RtHon Frederick

Skinner, Dennis

Wilson, William (C'try SE)

Smith,Cyril (Rochdale)

Winnick, David

Smith, Dudley

Winterton, Nicholas

Smith, Rt Hon J. (N Lanark)

Woodall, Alec

Spriggs, Leslie

Woolmer, Kenneth

Steel, Rt Hon David

Stoddart, David

Tellers for the Ayes:

Strang, Gavin

Mr. A. W. Stallard and

Taylor, Mrs Ann (Bolton W)

Mr. Norman Hogg

NOES

Nil

Tellers for the Noes:

Mr. Tony Marlow and

Mr. Michael Brown.

Question accordingly agreed to.
Bill ordered to be brought in by Mr. William Hamilton, Mr. David Stoddart, Mr. A. W. Stallard, Mr. Dick Douglas, Mr. Norman Hogg, Mr. James Lamond, Mr. Joseph Dean, Mr. George Park, Mr. John Maxton and Mr. Robert C. Brown.
EUROPEAN COMMUNITIES (AMENDMENT)
Mr. William Hamilton accordingly presented a Bill to amend the European Communities Act 1972, so as to provide that matters relating to the expenditure of the European Parliament shall be directly accountable to the Council of Ministers:
And the same was read the First time; and ordered to be read a Second time upon Friday 27 March and to be printed. [Bill 73.]
Mr. Hugh Dykes: On a point of order, Mr. Speaker. It might be for the convenience of the House if you were to guide the House about how we should respond when an artificial Division is set in train and when those who wish to put in Tellers against are obviously in favour of the Bill.
Mr. Speaker: That is a very old custom of the House. If hon. Members wish to force a Division, it is amazing how they can find Tellers.

Orders of the Day

  Redundancy Fund Bill
  Order for Second Reading read.
  4 pm
  The Under-Secretary of State for Employment (Mr. David Waddington): I beg to move, That the Bill be now read a Second time.
  This is a very short Bill, with a very clear purpose. It aims to raise the limits set by the Employment Protection (Consolidation) Act 1978 on the amount that can be borrowed by the redundancy fund from the national loans fund.
  At present, the redundancy fund can borrow up to £16 million, and this can be raised to £40 million by order approved by both Houses of Parliament. The Bill will enable the fund to borrow up to £200 million, and will provide for this limit to be raised to £300 million with parliamentary approval.
  As the House knows, the redundancy fund is used to pay rebates to employers who have made statutory redundancy payments to employees. At present the rate of rebate is 41 per cent. In addition, where an employer is insolvent, both redundancy payments and debts, such as arrears of pay or holiday pay, which are due under the insolvency provisions of the 1978 Act, are paid from the fund. The fund is financed by an allocation, currently 0·15 per cent. of salary, from employers' national insurance contributions.
  As the House will recall, there have been a number of occasions during the life of the fund when it has been in deficit and when its borrowing limits have had to be adjusted. It is a sobering thought that the original limit set by the Redundancy Payments Act 1965 was £8 million, with a power to raise that limit to £20 million with parliamentary approval. With the use of the power, the limit was raised in August 1967 to £12 million, in April 1968 to £15 million, and in August 1968 to the maximum of £20 million. That order raising the limit to £20 million lapsed after two years, but in 1972 the borrowing limit was again raised to that figure for a two-year period. In 1975, as part of the Employment Protection Act of that year, the limit was raised to £16 million, with provision for extension to £40 million with parliamentary approval. This provision for extension has not been used since 1975.
  I could not be accused of exaggeration if I were to say that over the past three or four years the fund has had a somewhat chequered history. The previous Government altered the rate of rebate in 1977 from 50 per cent. to 41 per cent. They had originally proposed to reduce it to 40 per cent., but the House took a poor view of that Bill and it was defeated on the Second Reading. I am told that that was the first time a Government had been defeated on the Second Reading of a Bill since 1888.
  Of course, the right hon. Member for Chesterfield (Mr. Varley) may be tactless enough to point out that that Bill was defeated by only one vote. However, I am entitled to remind the House that if there had not been an unfortunate occurrence in Nelson and Colne in October 1974 the Bill would have been lost by three votes. I have carried out a little research and I have not used information that I gained as a result of my time in the Whips' Office. I gather that
  282
  the Bill was defeated in 1977 because one or two Opposition Members were absent and unprepared. One of the absentees was the then Prime Minister, the right hon. Member for Cardiff, South-East (Mr. Callaghan). The other interesting thing about that 1977 Bill is that its purpose was to do that which Labour Members are constantly now telling us is tantamount to a heinous crime—to reduce public expenditure. At that time the fund was well in surplus.
  I now come to last April. The fund was then substantially in surplus, and because of that surplus we reduced the employers' contribution from 0·2 per cent. of salary to 0·15 per cent. The surplus in the fund, which at the end of April 1980 stood at £144 million, then of course began to fall, but, unhappily, as the number of redundancies grew through the second half of 1980 the decline accelerated, and it was obvious that some action had to be taken.
  Mr. Barry Jones: Does the Minister know that in my constituency thousands of steel workers have been made redundant alongside many hundreds of textile workers, some Vauxhall car workers and some paper mill workers? The latter groups feel that their redundancy payments are nowhere near as high as those of the steel workers. Can the Minister indicate whether this measure will help them in any way?
  Mr. Waddington: I am grateful to the hon. Gentleman for raising that point. In my constituency there is some misunderstanding about how the scheme works. We are discussing a statutory scheme that has been in existence since 1965. Under that scheme, redundancy payments are financed to a considerable extent by the Exchequer. It is always open to management to pursue an extra-statutory scheme. Indeed, that has occurred in many cases in both the public and private sectors. Schemes in the public sector have attracted most publicity in recent years, but it would be a mistake to imagine that such schemes have not existed in the private sector. One thinks immediately of the newspaper industry. I can only say that it is a matter for management. In the interests of the concern, management may decide to top up the statutory scheme with some extra-statutory action.
  I turn to the situation that faced us when the surplus began to decline in the second half of last year. There were various things that we could have done. First, we could have reduced the scale of redundancy payments; secondly, we could have reduced the level of rebate paid to employers; thirdly, we could have increased the level of employers' contributions. We shall have to see, but I do not think that Labour Members will be saying in this debate that we should have chosen the first of those options and reduced the scale of payment to those unfortunate enough to have been declared redundant, because in the debate on the Redundancy Rebates Bill in February 1977 the right hon. Member for Doncaster (Mr. Walker) described such a course as "unthinkable". I agree that it would be wrong to pursue that course today. I am not sure what the Opposition will say about the other two possibilities.
  In 1977 the Opposition were quite prepared to reduce the rate to employers to 40 per cent., and the Redundancy Rebates Bill, introduced later in 1977, which fixed the rebate at 41 per cent., actually contained powers to reduce the rate of rebate to 35 per cent. However, we do not think

  283
  that it is right or sensible, in the depths of a severe recession, to reduce help to those employers who, by definition, are in the greatest difficulties, because they are having to declare workers redundant. Nor do we think that it is right to increase the burden on employers generally by increasing the level of contributions.
  It is for that reason that we have decided to take the very different course of increasing the borrowing powers of the fund to carry it through this period of deficit, and, for the time being, to direct the whole of the employment protection allocation to the redundancy fund.
  That makes sense, because the maternity pay fund is in substantial surplus and is clearly in growing surplus and can easily finance expenditure from its surplus for some time to come. The switching of the allocation will not detract in any way from the rights of those entitled to maternity benefit, and no order is required to make this switch. The Secretary of State has power to do so under section 40(5) of the Employment Protection Act 1975. I should say that my noble Friend the Minister of State is meeting members of the Advisory Committee on Women's Employment this afternoon and is explaining fully to them that this step will not have an adverse effect on women in employment.
  I now turn to the clauses in the Bill. Clause 1 raises the lower limit on the amount which can be borrowed from the national loans fund from £16 million to £200 million, and the upper limit from £40 million to £300 million. Clause 2 contains the short title and restricts the Bill to Great Britain. This is because Northern Ireland has its own redundancy fund, and if any increase in its borrowing powers is required, it can be done by Order in Council.
  I make no apology for the size of the increase in the borrowing powers. The forecasting of future demands on the fund is always extremely difficult.
  "Many things can affect the number and the amount of individual payments from the fund over a given period of time. Levels of unemployment are an important factor, but only one. Many redundancies are caused by other factors, such as the long-term adjustment of industries to changes … in the industrial structure. Perhaps the most important factor of all affecting the amount paid from the fund is the level of individual payments, which depends in turn on the age, length of service and earnings of those made redundant.
  With all these variables, even although it is possible to draw heavily on previous experience over the life of the Act, it is impossible to do very much more than make rough-and-ready estimates of future demand. I say this without apology to the House. It is intended to be no more than a statement of fact."— [Official Report, 7 February 1977; Vol. 925, c. 1127.]
  Hon. Members will no doubt deduce from the length of that quotation that I have been using not my own words but those of the right hon. Member for Doncaster in the debate in 1977, when he explained fully the difficulties.
  As to the limits chosen, all that we are asking now is to have sufficient margin of flexibility in the administration of the fund. The history books will remind us not so much of the fact that a Division was lost by one vote in February 1977 but that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) came before the House on no fewer than three occasions in 1967–68 to seek further increases in the borrowing limits of the fund. That does not seem to show much wisdom or to provide a sensible precedent to follow. In short, we do not intend to repeat foolish mistakes.
  I therefore commend the Bill to the House.
  4.14 pm
  Mr. Eric G. Varley: I think that this is the first time that the hon. and learned Member for Clitheroe (Mr. Waddington) has addressed the House as a Minister on a major measure. By any standards, the Bill is a major measure, although we do not intend to divide the House upon it. I congratulate the hon. and learned Gentleman not only on his appointment but on the way in which he introduced the Bill and his clear explanation.
  In my judgment the need for the Bill is a final confirmation of the complete failure of the Government's economic policy. That is especially so when one considers the limits to which they have had to go. For example, on 8 December the then Under-Secretary of State for Employment—now the Minister of State, Home Office—told us that the fund was being depleted at the rate of £15 million per month. From a note that the Secretary of State kindly sent me last month I find that it is now being depleted at the rate of £20 million a month. The enormous increase in the borrowing powers of the redundancy fund is caused by the massive haemorrhage of jobs.
  The Under-Secretary indicated that the Bill was intended to increase the limit of the fund and had nothing to do with average earnings or with increasing the amount of redundancy payments under the scheme, but we all know that the Bill must be introduced in anticipation of the new redundancies, possibly on an unprecedented scale, which have driven the Government to bring it forward now.
  The explanatory and financial memorandum makes it all very clear when it talks about
  "expected claims on the Fund which have grown rapidly during the last year and are expected to be high also during 1981."
  This information, by itself, is not sufficient, I want to know, as will other hon. Members, how many redundancies this new borrowing limit is expected to cover. The Secretary of State and the Under-Secretary must have this information available in the Department. The Treasury would never have agreed to the Bill without it, nor would the Chief Secretary have put his name to it. We also want to know how long the new borrowing limit is expected to last, and when the Secretary of State anticipates having to present to the House further legislation to raise the limit again.
  This information must exist, since it would be required by the Department of Employment in discussions with the Treasury, if not for the Cabinet paper that the Secretary of State had to submit to get authority to proceed with the legislation.
  The House also has the right to know what overall levels of unemployment will accompany the redundancies for which the Bill makes provisions. Here again, the Department of Employment must have made calculations about the ratio of the number of redundancies to the total level of unemployment. The House has a right to this information before granting access to these very large sums of money.
  We need to know whether there has been a regional breakdown of the expected redundancies for which the Bill makes provision. We also wish to know in which industries these redundancies are expected. Does the Bill take into account, for example, the reductions in jobs that Mr. MacGregor is planning for the British Steel Corporation, or the reduction in jobs that the Secretary of State for Energy is planning in the coal mining industry?

  285
  This debate provides the opportunity for the Secretary of State to furnish the House with projections and calculations about redundancy and employment levels, which certainly exist in his Department but which so far have been concealed from Parliament and the country.
  We also want to know exactly what are the Government's calculations about the cost of unemployment to the public sector borrowing requirement. Every day it seems that we get a new figure. The Prime Minister offers one ludicrous statistic. The Secretary of State supplies another. Every written answer on the subject seems to conflict with the previous written answer. So, once and for all, we should like the Government's definitive answer on this question as well.
  An even bigger question than those that I have already asked and to which we must have answers is how and why the disastrous situation has come about that makes necessary the Bill and the high limits that are included in it. There have perhaps been three contributory factors. First, there is the high exchange rate of the £ sterling. Only weeks ago the Government were still claiming that this phenomenon, which is pricing so many of our efficient firms out of export markets, was some kind of uncontrollable act of nature, like a tidal wave or an earthquake. Now we are told that even the Prime Minister is nagging her advisers to find a way to bring down the exchange rate.
  Firms that are managing to survive the exchange rate are stricken by continuing excessively high interest rates. These have become not so much an economic imperative as a political pawn. The recent reduction, though far from sufficient, was brought about in complete defiance of all the criteria that the Government and the Chancellor of the Exchequer had laid down for cutting interest rates. Thursday after Thursday, we wait for another reduction.
  The general expectation is that the Chancellor is keeping a reduction of interest rates in reserve as a rabbit to pull out of the hat in the Budget, three weeks from now. There will be little else in the Budget, apart from a possible reduction of 2 percentage points in the minimum lending rate. No doubt the Chancellor will claim that the reduction is justified by the fall in the inflation rate while, practically in the same breath, he will announce measures that will push up the inflation rate again and possibly create even more redundancies.
  Then, of course, there are the expenditure cuts. Neither the Secretary of State nor members of the Cabinet seem able to make what some of us can make—the logical connection between their proud claims that they are reducing the manpower in the public sector and the resulting unemployment and redundancy caused by these manpower reductions. We are living in a crazy economy, in which people doing useful jobs—bus drivers, dustmen, home helps and school dinner ladies—are thrown out of work by cuts in the rate support grant and then have to be compensated, inadequately in some cases, and also inadequately maintained by public expenditure and public borrowing, brought about by these self-same cuts. That is what the Prime Minister regards as sound government.
  Excessive pay settlements or strikes are emphatically not responsible for increased redundancies. The Secretary of State told us in the Employment Gazette recently that the 1980 total of stoppages caused by industrial disputes was the lowest for 38 years. That is true. The redundancies that are taking place are not caused by strikes. Nor can pay settlements be blamed. The workers in the hosiery,
  286
  footwear, textile and clothing industries who came to the House this week are hard-working, productive, peaceable, and, in the main, low-paid—all things to gladden the Prime Minister's heart and to ensure that their jobs will not be at risk.
  Yet, with the possible exception of the construction industry, no group of workers has been harder hit by the Government's policies. They cannot even console themselves with the belief that their sacrifice and suffering are in a good cause. I shall have a word to say about the prospects for overcoming Britain's economic problems in a moment. Even if these economic problems are solved it will not be possible to claim that this is the result of the policies that have been pursued.
  The moment that pressure is removed from the brake and applied to the accelerator there is a great danger that inflation will go up again, taking redundancies to even higher levels—in fact, to intolerable levels. In my judgment the Government-produced inflation in the pipeline will be directly responsible for making the Chancellor apply the brake all over again.
  Mr. Barry Porter: Nonsense.
  Mr. Varley: The hon. Gentleman says "Nonsense". If he would like to intervene in the debate, we would be pleased to hear him.
  Mr. Gerald Kaufman: The hon. Member for Bebington and Ellesmere Port (Mr. Porter) should resign his seat and fight a by-election on the basis of that remark.
  Mr. Varley: My right hon. Friend says that the hon. Gentleman should resign his seat and stand in a byelection. I doubt whether the hon. Gentleman will take my right hon. Friend's advice. I would only refer the hon. Gentleman, who appears to want to intervene, to some of the price increases in the pipeline. As a result of what we already know we can prepare ourselves for some of the increases that the Chancellor will bring forward. There are, for example, the heavy rate increases. These will come about as a result of the inadequate rate support grant that the Secretary of State for the Environment has allowed.
  Mr. Porter: Will the right hon. Gentleman give way?
  Mr. Varley: I am glad that I have provoked the hon. Gentleman.
  Mr. Porter: I am sure that the right hon. Gentleman realises that in the constituency where the right hon. Member for Manchester, Ardwick (Mr. Kaufman) wishes me to have a by-election the rate increase will be only 3 per cent.
  Mr. Varley: That is an exception to the rule. I bet that some of the Tories in the Tory-controlled council there are frightened to death about the local elections and have deliberately arranged that rate increase. In the local authority where I live—also Tory-controlled—the increase will be much higher, and about the average throughout the country. These heavy rate increases will affect industry and those in work. They will create further redundancies.
  Other contributors to inflation will be the highest rent increases ever known, not to mention the gratuitous increase in gas prices for which no one understands the reason, the Secretary of State for Energy least of all. Even

  287
  by the Government's own criteria this economic policy is failing. Every time the Secretary of State for Industry rises in his place these days, the hon. Member for Knutsford (Mr. Bruce-Gardyne) sinks lower in his. Government borrowing seems completely out of control. The individual personal sacrifices that make up this increase in borrowing power for the redundancy fund will all have been in vain. What is more, the latest evidence suggests that the situation will get much worse.
  The Charterhouse group forecast this week that the fall in output is likely to be substantially greater than that during the 1929 to 1932 slump. It expects that production could be falling by 20 per cent. over the three years to 1982, compared with just under 12 per cent. 50 years ago. It points out that recovery in the 1930s was brought about by, among other things, expansion in house building, yet the house building market can expect no more than a modest increase at best, while the council house building programme has almost been wiped out. The Charterhouse group says:
  "The recession is broadening into a general slump and an end to stock reduction later in the year will be merely a false dawn."
  The Secretary of State should have included in the Bill proposals to strengthen employment and special employment measures for the unemployed, measures to bring about a stronger Manpower Services Commission, with adequate resources to aid those declared redundant, and measures to support employment and growth in the economy.
  A headline in The Times last Saturday read:
  "Manufacturing slump one of the worst this century".
  The article went on to say:
  "In the coming year, lower investment, weaker export performance and higher imports, encouraged by the strong pound, are likely to take over from destocking as the most important factors depressing output, with no early end to the recession in prospect".
  The Government's policies have lacerated and mangled Britain's economy. This, in some respects, pathetic Bill seeks to apply a poultice to these almost fatal wounds. We shall not vote against the Bill. We shall not table any amendments in Committee. The Bill, however, is simply a cure for a symptom of an awful disease that the Government are doing nothing to prevent.
  4.30 pm
  Mr. Hal Miller: The right hon. Member for Chesterfield (Mr. Varley) will forgive me if I do not follow his argument, as he hopped for a paragraph at a time on to every one of the bandwagons that are still in the dusty old garage of Labour policies. It is a bit ripe to be lectured by him about the exchange rate. If there was one Government who knew how to bring down the exchange rate it was certainly the one of whom the right hon. Gentleman was a member. My goodness, as he knows perfectly well, we had complaints from everyone about the results, so I take what he says on that matter with a large pinch of salt.
  I hope that my hon. and learned Friend the Undersecretary of State will forgive me if I proceed to test him slightly. I assure him that it is no mark of distrust of him personally. Indeed, I welcome him most warmly to the Dispatch Box. I congratulate him on his promotion and I am delighted to see him in this sensitive post, which I know he will fill with distinction.
  288
  I should be grateful if, in winding up the debate, my hon. and learned Friend would clarify one or two of his remarks. We are told in the explanatory and financial memorandum, and I understood my hon. and learned Friend to say, that there will be no direct effect on expenditure. But this will be achieved only by transferring money from the maternity fund to the redundancy fund. I hope that I understood him correctly. It seems to me that there has been a direct increase in expenditure, and that money that would otherwise not have been spent is to be spent.
  Mr. Waddington: Perhaps I can help my hon. Friend. I was trying to say that at the moment there is an employment protection allocation that is divided as to 0·15 per cent. to the redundancy fund and as to 0·05 per cent. to the maternity fund. It is merely a book-keeping exercise, in a sense, to see that the 0·05 per cent., which would in normal circumstances go into the maternity fund, goes straight into the redundancy fund. That is what I was saying in that regard.
  Mr. Miller: I am grateful to my hon. and learned Friend for clarifying the matter, but I must say that I do not think the point is quite answered, in that money that would not otherwise be spent because there is a surplus is now to be spent. I am grateful to my hon. and learned Friend for clarifying the way in which that extra expenditure is taking place.
  The point that I wish to come to in my brief remarks is the distinction in the minds of the public, and more particularly and much more painfully in the minds of those who are being made redundant, between the scales of redundancy payments available under the Act and those available on other terms. My hon. and learned Friend very fairly referred to the fact that some private employers were able to give more generous terms outside the statutory scheme. What is of great concern to myself, and, I think, to a number of my hon. Friends, is that in the nationalised industries there are more generous terms than there are under the statutory scheme, and that is a drain on the Exchequer.
  My hon. and learned Friend suggested that the more generous payments were not an Exchequer charge. I do not wish to anticipate the debate later today when we shall discuss iron and steel, but, if one could take an example from there, the scale of redundancy payments available to employees of the British Steel Corporation is very much more favourable than any that can be afforded in the private steel sector with which the nationalised British Steel Corporation is competing, at times most unfairly by cutting prices.
  We are faced with a situation in which there is excess capacity in both the public and private sectors. Therefore, it is necessary to reduce that capacity. Whereas British Steel is able to do that at the expense of the taxpayer, the private firms are having to fall back on their own resources for the purpose, plus the contributions from the Government through the fund, but the scale of payments is different. On inquiring of a private firm involved in this situation today I was told that its average redundancy payments are in the neighbourhood of £3,000, which compares very unfavourably with the £10,000, or even more, that we have heard about from the British Steel Corporation.
  I realise that there are differences in length of service, and in rates of pay perhaps, but I suspect that behind those

  289
  figures there is a great difference in the treatment of comparable employees in terms of service and skill. This is one matter that makes private sector steel firms so suspicious, I regret to say, of the Government's policy and intentions in respect of the steel industry, and it can be followed through into other industries, such as the car industry. Perhaps my hon. Friend the Member for Bebington and Ellesmere Port (Mr. Porter) will speak later about other industries with which he is familiar. This problem has to be faced. It is not clear from my hon. and learned Friend's comments today that the Government have taken any position on the issue.
  Perhaps I might put the matter into context. British Steel employees number roughly 140,000, compared with about 57,000 in the private sector, so we are not talking about a small number of people who have no cause to be worried or to feel aggrieved. There is a large body of people who are suffering severe discrimination. There is a suspicion—I put it no higher—in the minds of the private firms that there are no better terms available to the private sector to introduce these reductions in capacity and redundancies because the Government are anxious that the British Steel Corporation should take over some of these operations and that the money should be paid to the private firms by that route on an asset basis. That is no comfort to the workers who have been made redundant in those operations. It explains partly the great concern that is felt in many areas, in the West Midlands in particular, and the resistance that is building up to the Government's proposals.
  I want to go on briefly to ask my hon. and learned Friend whether he can give us any guidance on whether the Government attempt to make any comparison between the cost to the Exchequer of extending the temporary short-time working compensation scheme and redundancy. Is any consideration being given to keeping the industries involved in the making of defence material—or what I would describe as the strategic base of industry to guarantee our independence and to sustain our minimum national requirement—going on a temporary short-time working compensation scheme basis, rather than making those concerned redundant? Perhaps my hon. and learned Friend could tell us the comparative costs involved and whether any conscious decision is being taken on that matter, which is of concern to many Members.
  With those few remarks, I conclude by expressing the hope that my hon. and learned Friend will not tempt us, in any reply that he makes, to repeat the unfortunate events of 1977.
  4.40 pm
  Mr. Bob Cryer: It is not surprising that there should be some adjustment to the redundancy fund. In reply to a written question tabled by my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) the Undersecretary of State for Employment stated that he had been informed by the Manpower Services Commission
  "that the number of workers involved in redundancies of 10 or more so far confirmed as due to occur in England, Scotland and Wales from May 1979 to January 1981 is as follows:

  England—520,692

  Scotland—84,169

  Wales—55,209."

  —[Official Report, 17 February 1981; Vol. 999, c. 93.]
  We know that small firms with fewer than 10 employees are going to the wall in increasing numbers.
  290
  That is an indication of the remarkable and saddening rate of unemployment and redundancies that has been caused by the Government's policies.
  I obtained figures quite recently of those in my constituency who are dependent on the temporary short-time working compensation scheme, which has been cut back by the Government. Over 1,400 of my constituents in the Keighley travel-to-work area are dependent on the scheme. That means that there are 1,400 jobs potentially at risk. Although the scheme was introduced by the Labour Government and was designed to rescue jobs, 1,400 jobs are potentially at risk in my area. Since May 1979 unemployment, and hence redundancies, in Keighley have increased by over 140 per cent.
  The Minister might say—this is the stock reply of Conservatives—that unemployment increased under the Labour Government. That is right. We accept that unemployment was too high under the Labour Government. We should have taken measures to reduce it. Nobody argues about that. However, I am talking about redundancies that have occurred under the Conservative Government. Redundancies in the Keighley travel-towork area have increased from slightly over 4 per cent. to over 10½ per cent. The increase in the number of redundancies amounts to over 140 per cent. It is a serious matter. The House was reminded of the issue last Monday when there was a demonstration of almost 3,000 textile, footwear and clothing workers, many of whom are covered by the scheme and who are worried sick about their jobs.
  I take the view that the creation of unemployment is a part of Conservative Party policy. It is part of its attack on the trade union movement. Conservatives say "That is nonsense. We are terribly sympathetic to the unemployed." That is not how it appears outside. Conservative Government policy is seen as deliberately creating unemployment, and the people cannot understand buckets of sympathy being expressed while more and more workers are joining the dole queue.
  I talked to some of those who took part in the demonstration. After a meeting in the House, one of the textile workers said to me "I am 60. I have been made redundant. I reckon that I will not get a job for the rest of my life." He is not the first to express that view to me.
  I attended the annual dinner of the Huddersfield cricket league. My abiding memory of that dinner is that at the end of it a 56-year-old Huddersfield man said "I am now too old to have much chance of getting a job." In the ordinary circumstances of life he would have nine further years of useful working life. However, he found himself redundant and arguing with his firm about redundancy payments. I told him to see his Member of Parliament to try to get the issue sorted out.
  There is a saddening and tragic picture of workers making calls on the redundancy fund. Those who are approaching middle age are horrified by the prospect of having no opportunity for work until they reach retirement age at 65 years. The Secretary of State has talked about his antagonism to closed shops. I remind the right hon. Gentleman of the dispute at Denbys, at Shipley, many years ago. The firm said that anyone who was in a union could not work for it. It exercised a lock-out against the trade unions. Some of the workers had to shift from the factory on their doorstep to Airedale Dyers in my constituency. They could not get a job a Denbys and they were locked out. Airedale Dyers has now closed and one

  291
  of the members of the delegation on Monday was made redundant several months ago when that factory closed. He says that he has little chance—he is in his late fifties—of getting a job. That is all too characteristic of the present industrial climate.
  What is the cost of redundancy? On 16 February 1981 I asked the Chancellor of the Exchequer
  "what is the cost of unemployment pay and loss of tax receipts for a married man earning £80 per week made redundant?"
  My hon. Friend the Member for Coventry, North-East (Mr. Park) asked a similar question. The Chief Secretary to the Treasury replied:
  "February's economic progress report gave estimates of the cost to the Exchequer of an increase in registered unemployment. The level of earnings assumed was £4,320, or slightly over £80 per week, and the cost to the Exchequer in 1980…81 was estimated at £3,500 per additional unemployed persons."
  That applies to benefits paid out and tax and national revenue forgone. The right hon. Gentleman added:
  "This figure excludes redundancy payments, but a note at the end of the article explained that the average payment from the redundancy fund for the first three quarters of 1980 was £400."— Official Report, 16 February 1981; Vol. 999, c. 46.]
  That means that if someone receives slightly more than the average redundancy payment he will equal the total cost of unemployment per individual as reckoned by the Treasury. The cost of unemployment is about equal to the level of earnings.
  It is absurd for the Department of the Environment to cut back on public expenditure through local authorities because all that that is doing is making a transfer payment of the same public expenditure to the Department of Employment for redundancy payments and dole payments. Those payments amount almost exactly—this is certainly so for a man earning £80 a week—to the cost of employing someone. We are taking money away from local authorities, putting people on the dole, and paying out almost the same amount of money. When it comes to higher redundancy payments, the sums are larger than those that have been made redundant would have been earning had they stayed in work.
  That is indefensible. Unemployment is growing like a canker through the nation. Conservative Members shake their heads, but I have quoted the figures given to me by the Treasury. It is clear that the public sector aborrowing requirement is growing, not because of increased public expenditure on measures to improve investment in industry, but because of the weight of unemployment resulting from the Government's policies.
  Monday's demonstration about unemployment in the textile industry was a measure of the concern felt by those in the industry. They do not want to receive a contribution from the redundancy fund. They want to stay in work. The Prime Minister says that industry has to be competitive and that we must have co-operation. The textile industry has co-operative trade unions. It has new working practices that have been accepted by the textile unions. Shift working has been accepted along with investment in the wool textile industry, for example. There has been a massive amount of investment aided by two successive wool textile industry schemes, which has largely modernised the industry. We are talking not about antique firms but high investment, high productivity, co-operative trade unions and a co-operative work force.
  What do the unions have for their co-operation and understanding? They have a lengthening dole queue and
  292
  claims on the redundancy fund, the Bill being designed to amend the fund. That is all that they have for their pains. It is a shameful and tragic reflection on the Government's policies.
  What about measures to avoid redundancies so that there is no necessity for any increased redundancy payment facilities? I have no doubt that the Secretary of State will talk about the youth opportunities programme, which by and large means short-term jobs. These are the sorts of job that the Conservative Party was saying before the general election were not proper jobs. It said that it would provide proper jobs. That was said in conjunction with the Saatchi and Saatchi advertising campaign that carried the claim that Labour was no longer working. That is what Conservatives said in 1979.
  When the Conservative Party took office, the Labour Government had only recently introduced the temporary short time working compensation scheme. It was designed to provide 75 per cent. of a person's earnings on the days when he was not working. It was to last for 12 months. The Conservative Government immediately cut it back to six months. They have now altered it and extended it to nine months. The scheme will provide 50 per cent. of the earnings of the person on short time.
  In many firms where there are low earnings those in receipt of unemployment payments are receiving more than would be offered to them from the temporary short-time working compensation scheme. A firm in my constituency drew my attention to this fact and explained that no one in its employ was earning more than £80 a week—that is the national average sometimes quoted—and indeed that the top earner was in receipt of about £75 a week. It informed me that some of its employees would be better off on the dole. That is absurd. I hope that Ministers will bend their minds to that, because we want to avoid calls on the redundancy fund. We want a scheme which is appreciated and which will generate jobs which can be retained.
  The Government, allegedly to save money—that has not happened, as I have amply demonstrated—cut back the job retirement scheme from 62 years of age, the age introduced by the Labour Government. That has now been increased to 64 years of age. Many people, especially in the onerous and heavy industries, looked forward to that retirement opportunity. Many hundreds of people in the Keighley travel-to-work area were taking advantage of the job retirement scheme. At a time when we have 2½ million unemployed, climbing to 3 million with a rapidity which has taken the Government's breath away—hence the Bill—the Government would be wise to think again about this matter.
  The suggestion has been made, not only by me but by Conservative Members, that the job retirement scheme should be extended. In a recent answer the Secretary of State said that that is being considered. I hope that it is because many people wish to take advantage of the scheme. The scheme would transfer people from the dole to full-time employment.
  The fourth employment measure of importance to manufacturing industry—the basis of our prosperity—was the small firms employment subsidy. It was a direct cash support from the Department of Employment. It helped to avoid redundancies and was directed to small firms in manufacturing industry employing fewer than 200. Over 50,000 people were taken from the dole queues as a result of that scheme. It was a success.

  293
  The Department of Employment did not introduce the scheme in a bald way. It ran a pilot survey in a special development area to see whether such a scheme would be cost-effective. After running the pilot survey and giving it close scrutiny, it was decided that it was cost-effective and the scheme was extended to all the assisted areas and even wider. It was progressively introduced. Small firms welcomed it. It was a direct inducement to small firms which both parties said that they wanted to encourage. But when the Conservatives came into office the scheme was scrapped. That measure produced 50,000 jobs. My guess is that the Government would give their right arm for a measure that would reduce the dole queues by that number of people.
  There are opportunities, if the Government will only take them, to reduce the lengthening dole queues. But of course—and the Secretary of State is only part of this—it is the Government's economic policies that are creating the unemployment.
  The hon. Member for Bromsgrove and Redditch (Mr. Miller) said that under the Labour Government the exchange rate has shrunk. That was right.
  Mr. Hal Miller: And the International Monetary Fund was brought in.
  Mr. Cryer: I agree that the IMF was brought in. We had a crisis, but we overcame it. We were moving towards an improved economic position. There is no question but that investment in manufacturing industry was increasing. There were not the numbers in the dole queues that there are now. We face a much bigger crisis. One of the aspects of the crisis is that the high exchange rate is inhibiting the ability of our firms to meet competition from abroad. Industrialist after industrialist will agree about that.
  Another factor is the high interest rates. Industrialists will comment that high interest rates are inhibiting investment. Stock levels are being reduced to the minimum necessary to survive so that industrialists do not have to finance anything over and above that which is necessary. But, in turn, that is reflected on other manufacturing concerns because they have to hold stocks so that the next manufacturer in the chain can call immediately upon that stock to keep production going. That problem is biting at each section of the manufacturing process. Many industrialists are deeply concerned, as are trade unionists, about the potential effects of increased redundancies and redundancy payments arising from the Bill.
  We should be discussing not a Redundancy Fund Bill but an investment fund Bill so that we can begin to invest in manufacturing industry, develop job opportunities and create jobs. Even those Conservative Members who support their Government avidly must have had it borne in upon them that the Government's policies are not working. The entrepreneurs who in June 1979, after the Budget, were promised incentives to get the country moving again and to create jobs, no longer exist. The jobs have not arrived; they have diminished.
  We are now talking about increasing and improving redundancy payment facilities. We should be talking about cutting interest rates to bring down the exchange rate. We should be talking about investment in manufacturing industry either through more industrial schemes or through some general investment scheme such as that which the Department of Industry introduced under the Labour
  294
  Government which produced many industrial investment opportunities for a small amount of priming money. We should be talking about increasing public expenditure, not cutting it.
  The reduction in the rate support grant announced by the Secretary of State for the Environment has meant that local authorities—
  Mr. Hal Miller: It is only 1 per cent.
  Mr. Cryer: The hon. Member says that it is only 1 per cent., but where local authorities are prepared to capitulate to Conservative diktat, that 1 per cent. can mean a loss of jobs and people on the dole. We should be talking about higher public expenditure. It is nonsense to cut back on local authority public expenditure on, for example, housing.
  This morning an excellent demonstration by Labour Members took place outside the Secretary of State's monolithic block to try to move his monolithic mind. We handed in letters about the various cuts in public expenditure. The cuts mean that in my area of Bradford 800 planned housing starts will not now take place in 1981–82, which in turn means that building workers will be joining the dole queues. It is a daft economic system that results in council house waiting lists in every local authority lengthening, and the demand for mortgages for house purchase not being met. Young couples want to buy or rent houses. Every week in my advice surgery I hear sad stories about, for example, married couples not being able to live together. They are under strain, but the local authority cannot help them because it is not being allocated money to begin its new housing programme.
  In some cases, the housing programmes are at workingdrawing stage, but the Government have cut back on the money that would allow local authorities to get cracking. As a consequence, building workers are on the dole. There are two large woodworking factories in my constituency. If there is a diminution in housing starts, there is a diminution in the demand for doors, window frames and the other wooden components for a house. That means that short-time working will be imposed in those factories. It does not make sense to continue such a policy.
  Conservative Members shake their heads and say that public expenditure will not solve the unemployment problem. They do not say that about defence expenditure. Instead, they say that defence expenditure helps both to keep and to create jobs. They are besotted with defence. They think that the Russians will invade Britain next week and that we shall be taken over. They say that we must have defence expenditure and that, in any case, thousands of jobs depend on it. I want to see a switch from expenditure on defence to expenditure on peaceful purposes. The argument for defence expenditure is the same as that for any other public expenditure. It creates, develops and expands jobs. I want to see less reliance on redundancy, and more hope and opportunities for employment both for youngsters and for the remainder of our nation.
  Unemployment is creeping across the length and breadth of Britain like a canker. The Government should not be considering this Elastoplast legislation to prop up the redundancy system. They should be introducing legislation for the creation, retention, and development of real job opportunities.
  5.3 pm
  Mr. Barry Porter: As I listened to the lengthy peroration of the hon. Member for Keighley (Mr. Cryer), I wondered what the Bill was all about. While I regret its necessity, I welcome its realism. Opposition Members have taken the opportunity to use this simple Bill as a substitute Opposition Supply day motion on the economic activities and strategies of the Government. I see lurking on the Opposition Benches the hon. Members for Huddersfield, East (Mr. Sheerman) and for Workington (Mr. Campbell-Savours), who will no doubt, at length, offer us their views on the economic strategy of the Government.
  It is sad that there is unemployment. It is sad, too, that there is a necessity for the Bill. It has been pointed out that it was necessary for the Labour Government to increase the borrowing capacity for the same purpose. It makes me slightly tired—I am being as reasonable as I can—to realise that the Opposition think that unemployment has been invented during the past two years. I could go back for many years, and spend many minutes—indeed, hours—talking about the way in which unemployment has arisen. However, I do not wish to bore the House, or those who come to listen to its deliberations, on that subject.
  When dealing with this sort of subject the Opposition always miss the point about what should be provided for those who are unemployed in the short term. They seem to think that if we use the money to prop up jobs that are no longer economic that will, in some way, cure the unemployment position. That is precisely what it will not do. It is better and more sensible to provide generous redundancy payments for people in uneconomic jobs. That is much more sensible than trying to pretend that the jobs should remain.
  I hope that it is obvious that I do not represent one of the plush and lush Home Counties seats—
  Mr. Barry Sheerman: The hon. Gentleman could have fooled me.
  Mr. Porter: I trust that I shall continue to fool Opposition Members for some time. I represent a constituency that has had more than its fair share of unemployment. My constituency gets unemployment not in dribs and drabs but in huge lumps. The constituency includes the Bowater factory, which laid off 1,500 or 1,600 workers, not because of the Government's policies but for other underlying reasons that are no part of this debate.
  Mr. Sheerman: It was the energy crisis.
  Mr. Porter: Not at all. Vauxhall will probably lay off 3,000 workers. Having listened to yesterday's debate, I do not feel that it is right for me to indicate whether 3,000 workers should be laid off during the next few months. My constituency also includes the firm of Lucas-Girling, which proposes to lay off 900 workers. Not many constituencies receive hammer blows such as that time and time again.
  If Vauxhall can remain competitive in Ellesmere Port if it employs 6,000 people but cannot remain competitive if it employs 9,000 people, is it not right, sensible and obvious that the 3,000 workers being asked to leave—I emphasise the word "asked"—should be provided with money under the powers of the Bill? Of course it is. I agree with my hon. Friend the Member for Bromsgrove and
  296
  Redditch (Mr. Miller) that Vauxhall can well afford—and will afford—to top up the statutory redundancy payments. I expect that Lucas-Girling will do the same. Bowaters can also afford to do so. But other workers, both in my constituency and throughout the country, feel extremely bitter that they did not receive anything more than the statutory redundancy payments.
  I do not know what can be done about that. We saw what happened in the steel industry—I should be grateful for clarification on this point—where top-ups for statutory redundancy payments were obtained from European sources. I understand from articles appearing in the newspapers that if the planned redundancies in the coal industry take place funds will be found magically from somewhere to top up the statutory redundancy payments. Someone asked me to explain that to him. I said that there were social consequences in the disappearance of pit villages and societies that were dependent on the coal industry. He said "I know what you mean—they have got muscle". I am afraid that one is driven to the conclusion that certain parts of industry have muscle, and that muscle means money.
  Mr. Roy Hughes: The hon. Gentleman is showing a fundamental misunderstanding both of coalmining and of coalmining communities. He should realise that coal must be mined where it is found. It was often found in the most inaccessible valleys. When a pit closes, the valleys are left derelict. That is the real social consequence that we are discussing, and which the Government, I presume, want to try to alleviate.
  Mr. Porter: That was the point that I was making to my constituent about the social consequences for a community that was dependent on one industry. My constituent accepted that to some extent. He also seemed to think that the National Union of Mineworkers had some industrial muscle. I am afraid that that must be right as well. I hope that the Government will consider the individuals involved who do not have either the social sympathy of the nation or the industrial muscle. These small people have to rely entirely on the statutory provisions. They are badly off in comparison with others, and they feel badly off.
  I am sorry that the right hon. Member for Chesterfield (Mr. Varley) has departed for his tea, because—
  Mr. James Hamilton: My right hon. Friend has left to attend another meeting.
  Mr. Porter: I withdraw that statement. Apparently the right hon. Gentleman is at a vital meeting, no doubt about the future policy of the Labour Party.
  The right hon. Gentleman was selective in his quotations from The Times—not a splendid organ to dictate economic forecasts. He also referred to the Charterhouse group. Had he been here I should have asked him to refer to the indications given by Professor Patrick Minford of Liverpool university in The Sunday Times last weekend, which disagree with his prognostications today. I should have asked him to refer also to the City column of The Daily Telegraph this morning—it was not an editorial. I make those points because it is easy to select for debate that quotation that happens to accord with one's political view.
  Mr. John Grant: We are not being unduly selective. Does the hon. Member recall the editorial of The Sunday Times two weeks ago, the headline of which was:
  "Wrong, Mrs. Thatcher, wrong, wrong, wrong"?
  Mr. Porter: I am glad that the hon. Member brought that to my attention. In The Sunday Times last weekend Professor Patrick Minford said:
  "Right, Mrs. Thatcher, right, right, right".
  The debate has strayed into wide economic issues, and we have dealt with high interest rates. It was suggested that high interest rates were a terrible thing. It is only recently that interest rates have become positive. It is only when they become positive that they mean anything. There has been much breast-beating, heart-searching and head scratching about high interest rates, but they have not had the consequences suggested by some Oppositon Members.
  The strength of the pound has also been referred to. Its effect depends on what one does. In my constituency, the firm of Van Den Berghs and Jurgens, which makes Stork Margarine and other products, is having a splendid time because of the strength of the pound. It is making more money than it has ever made before. It is keeping up its employment It would be upset if the value of the pound were to fall.
  Mr. James Hamilton: Does the hon. Gentleman recognise that it used to be said in my part of the country that if one could not get butter one had to buy margarine? That is appropriate to the point that he is making. Is he aware that there are now record liquidations of small companies, not only in Scotland, but throughout the United Kingdom? Is he also aware that the only people who enjoy the strength of the pound are the holidaymakers? Industrialists are finding it almost impossible to compete abroad because of the strong pound and high interest rates. The minimum lending rate is 14 per cent., but in many instances industry is paying as much as 17 and 17½ per cent. to borrow.
  Mr. Porter: I am obliged for the hon. Gentleman's economic lesson. I was making the point that interest rates matter only when they become positive. Certain industries which import their raw materials do well because of the strength of the pound. Those are facts. I suppose that if one chooses to ignore them it makes one sleep better because there is no possibility of doubt, but there must always be doubt.
  We are debating the Second Reading of a one-clause Bill with which everyone agrees. One might wonder why I am here. I am here because my hon. Friend the Member for Sowerby (Mr. Thompson), whose elevation to the Whips' Office I appreciate and applaud, found me and said that the Opposition might vote against the Second Reading, and therefore he was looking forward to a contribution from me in terms of length rather than quality. That is what he has got. I am sorry that he has gone for his tea and has not bothered to stay for my peroration. That will teach him never to ask me again.
  The hon. Member for Keighley, my hon. Friend the Member for Bromsgrove and Redditch and I will be followed by the lurking duo from the Opposition who will give their views on something that could have been disposed of in five minutes flat. Some people, whom I am not supposed to mention, who listen to our deliberations might think that we could treat this matter in a more
  298
  businesslike manner, rather than merely offer our views about everything in sight because we have a peg on which to hang our hats. I am now taking my hat off that peg. I am grateful for being given the opportunity to speak and for the interest that has been shown by Opposition Members.
  5.13 pm
  Mr. Stan Thorne: The previous speaker, the hon. Member for Wirral, I think—
  Mr. Porter: There is a slight difference in majority. Mine was 486 and that of my hon. Friend the Member for Wirral (Mr. Hunt) was 25,000.
  Mr. Thorne: Hon. Members will be aware that Bebington is in the Wirral. However, I accept the correction by the hon. Member for Bebington and Ellesmere Port (Mr. Porter).
  The hon. Member complained that my hon. Friend the Member for Keighley (Mr. Cryer) had staayed wide from the Bill. I assume that you did not intervene during the speech of my hon. Friend, Mr. Deputy Speaker, because you rightly believed that when the House is called upon to authorise an increase of this proportion—£16 million to £200 million and £40 million to £300 million—in a redundancy fund, it is possible and right that Opposition Members should ask whether the House would have its priorities right if it were to agree to the Bill.
  We have not heard much about public expenditure increases from the Government. My hon. Friend the Member for Keighley was right when he suggested that we should be discussing an investment fund Bill. Surely if the Government are opposed to public expenditure the last thing they want to do is to increase public expenditure which will create no productivity. It will not create employment. In certain circumstances, it is a response to their policy of cutting public expenditure.
  The House is faced with an amazing situation with regard to the Bill. Certain questions arise. What percentage of unemployment do the Government envisage in regard to the Bill? Workers do not want redundancy pay. They want work. Had the Bill concerned attracted work to various areas with borrowing powers of £300 million, it would have met with acclaim. We do not know how many unemployed people are likely to receive redundancy pay under the provisions of the Bill. When will it be necessary to present a further Bill to obtain more money to supplement the redundancy fund? A year ago it was forecast that 3 million people would be unemployed in 1981. The Government called that a gross exaggeration. However, it has come about. We are already hearing forecasts of 4 million to 5 million unemployed by 1984–85.
  The Government's ideology may not be relevant here, but I wonder whether a Bill to change the terms of the Employment Protection (Consolidation) Act 1978 and to provide improved redundancy payments can be far away. With the current rate of inflation and the general economic situation, in spite of its being said that several thousands of pounds may be paid in certain circumstances, the existing arrangements may be inadequate when we consider the period of unemployment of many skilled workers.
  Is another Bill being considered to reduce the rights under the Employment Protection (Consolidation) Act in

  299
  view of the Government's attitude to social security benefits and other public expenditure? I hope that the Minister will answer those questions.
  Over the past year unemployment in my constituency has doubled. A parade of small factories has closed and we have experienced major closures, such as 3,000 people being made unemployed by Courtaulds. British Leyland is trying to get voluntary redundancy agreements for 1,383 employees, which will involve large sums. Some speculate that in the months ahead another 2,000 BL employees are likely to become a drain on the redundancy fund, because of the fall in demand for trucks.
  Are we seeking to borrow money for the right purposes? The TUC put forward a £6,000 million reflationary package. That is a more realistic approach to our economic and employment problems. Is it the best solution to authorise borrowings up to £300 million to provide redundancy pay when we should be providing employment opportunities? In my constituency workers at Seddon Atkinson, Thorn Lighting and in engineering factories and textile mills would welcome a more positive contribution by the Government to halt the growing malaise that is felt more strongly in certain parts of the country, especially in the North-West.
  5.25 pm
  Mr. Kenneth Lewis: I apologise for leaving the Chamber for a minute or two. I expected to be away for longer than I was at a meeting in another part of the building that was to be addressed by Professor Alan Walters, the economic adviser to the Prime Minister. Unfortunately, he did not come. I hope that he has not already been made redundant. That would be expensive. I wanted to find out whether he had made a U-turn. I suspect that since arriving here he has somewhat modified the advice that he would have sent from across the Atlantic. He was born not far from my constituency and brought up in Leicester. He has only to visit Leicester and the East and West Midlands to concentrate his mind and to change some of his preconceived monetarist ideas.
  This is a small Bill, but it provides for a large amount of expenditure. The front cover states that the Bill will have no direct effect on expenditure. We should not need the Bill if it was not intended to have any effect at all. The expenditure proposals are considerable. We should all have been better pleased not to have needed a Bill. We do not like redundancy. When I first came to the House we had no redundancy payments. Both parties have helped to make redundancy payments available to those who, unfortunately, find themselves out of work. Any redundancy Bill could be said to be concerned with the price of putting people on the scrap heap.
  Mr. Sheer man: Nonsense. The Government have increased unemployment in my constituency by 180 per cent. We have no record of strikes. My constituents are hard-working and skilled people.
  Mr. Lewis: I did not mention strikes. I do not wish to be drawn, but the strikes in recent years will not have helped the situation. However, that is not the main reason for having to bring in such a Bill as this.
  The cost of the Bill is heavy both to the employers and to the Exchequer. In dealing with a Bill of this kind we must remember that the employer has a considerable
  300
  amount to pay. Employers today are worried about how many people they may have to make redundant, and how much it will cost them.
  By and large, few young people get any advantage out of redundancy. They have not been employed by the firms for very long and do not qualify for very high payments. A Bill of this nature, therefore, is really designed to provide assistance and support for middle-aged people, or older men approaching retirement.
  Governments and Ministers become rather immersed in the affairs of today or the day after and have not very much time to look ahead. Sometimes it is not easy for hon. Members to look ahead, let alone for Ministers to do so. Governments therefore have to introduce Bills of this kind in order to deal with situations that are already pressing upon them. While recognising the need for the Bill and the necessity for redundancy payments, we must look a good deal further ahead and consider what we shall have to do over the next 10 years to deal with redundancy in a quite different way from that which we now adopt and which is laid down in this legislation.
  At present, in their economic policy the Government have to have regard to the fact that we are suffering a world recession, which they did not expect would become so great when they came to office two years ago. Unemployment is high and is getting higher. We hope that when it passes 3 million it will start to fall. But I hazard a guess that, over the next 20 years unemployment will not fall back to the low level at which it has been in the past 20 years, since I have been in Parliament. This will happen whichever Government come to office, because something is now coming on stream in addition to the world recession.
  The hon. Member for Keighley (Mr. Cryer)—unknown to himself when he said it, perhaps—was almost encouraging this situation. He said that he wanted more and more investment. I cannot disagree with that. He spoke of new technology coming into industry. I suggest that at some time in the next five to 10 years, as we begin to get unemployment down when the world recession disappears, it will become more difficult to bring it down any further, and it may even rise, because of the new technology coming on stream.
  Mr. D. N. Campbell-Savours: The hon. Gentleman referred to escalating unemployment over the next 10 or 20 years. Can he tell the House what he would do about the people who will be displaced from work? Would he devote public expenditure to resolving their problems?
  Mr. Lewis: I am coming to that. On the hon. Gentleman's last point, I believe that a certain amount of public expenditure on capital works in certain situations is a good thing. But the effect would be minimal in terms of the number of people employed in relation to the amount of capital expenditure. An increase in capital work on the railways, in the nationalised industries, and so on, would be helpful, but the effect would be minimal. If the hon. Gentleman really thinks that even under a Labour Government large-scale unemployment could be cured by massive capital works, I must tell him that that is not so. Just as manufacturing industry has new technology, so have the contracting industries. The number employed in both areas is, therefore, smaller today than it was five years ago, and in five years' time it will be still smaller.

  301
  My right hon. Friend the Secretary of State and his hon. Friends—and Labour Members in due course—will have to bring their minds to bear on what we are to do about retirement in the age group to which I referred. People between 50 and 65 years of age are the most heavily affected by redundancy. It costs us more to pay the redundancy awards to those people than to any other group. Much of the capital sum that is thus paid out could be turned into an early pension.
  My right hon. Friend and the hon. Member for Keighley spoke of looking at the job retirement scheme again. I believe that we must go wider than that. On a number of occasions we have asked for and obtained figures from the Treasury. The Treasury will say, of course, that we cannot afford to retire everyone at 60. I accept that. Indeed, I go further. I believe that it would be quite wrong to retire everyone at the age of 60. There are certain people with skills whom one needs to keep beyond the age of 60. There are even some people with skills whom one needs to keep beyond the age of 65. I have to say that, as I am not sure that I shall not be in Parliament beyond that age myself. Nevertheless, there is a case for looking very soon at the whole question of the way in which we pay retirement pensions and how redundancy is dealt with, so that we can in some way marry up the redundancy fund with the payment of pensions. We may then selectively—not on a minimum scale, but on quite a large scale—pay pensions at an earlier age than 65.
  This is even more important when one considers the effect of new technology. We hear a great deal said by the Prime Minister, the Minister for Industry and Information Technology and others about the new industries, such as the micro-chip and computer industries, which will develop over the next few years. All of those industries are low labour-intensive. All of them employ the minimum number of people. Many of the big industries that are declining and that we are having to reduce in size are heavily labour-intensive. We are therefore exchanging industries that employ many people for industries that employ few people, and we must have regard to that fact.
  The Government must now turn their mind to what will happen in the next 10 years and thereafter, otherwise we shall run into a situation in which not only will unemployment escalate, but it will never be possible to bring it down.
  5.39 pm
  Mr. Barry Sheerman: I wish to make my short contribution to the debate not in a negative but in a positive spirit. In a situation in which the Government have to come to the House in order to raise the money to be paid out of the redundancy fund, it is surely in the best traditions of the House that we have the chance to debate that necessity in this Chamber.
  As my right hon. Friend the Member for Chesterfield (Mr. Varley) said in his opening remarks, the Bill treats the superficial aspects of a grave underlying problem. I am reminded of what a headmaster in my constituency said last Friday. He said that in West Yorkshire—one could generalise this for the rest of the country—people now go to school to learn a different kind of three "Rs"—redundancy, recession and redeployment. Often they must learn those facts of life early in their young lives.
  302
  Today we are talking about people whom we all meet. We all have the painful experience of talking to men and women in their mid-fifties who see themselves as being written off from the labour market.
  I apologise to the hon. Member for Rutland and Stamford (Mr. Lewis). I thought that he talked about a strike fund, but I think that he meant a scrapheap of human labour. There is one thing that we have in common. If we have any humanity at all, we all deplore the fact that men and women should psychologically be reduced to feeling that they are no longer of any use to the community. Today we are talking about a tragedy that derives partly from a lack of positive response by the Government to the problems that they face.
  Unemployment is a tragedy for my constituency. As I said earlier, voting for this Government has resulted in a 180 per cent. increase in unemployment in Huddersfield. That has meant an increase from 3·6 per cent. unemployment in May 1979 to 10·8 per cent. unemployment now. That is a vast increase in a town that is traditionally wealthy, that manufactures and sells goods abroad, and that has a tremendous dependence on the export markets that we have won during the last 100 years.
  I plead with the Secretary of State to think about unemployment in a different way. The Prime Minister constantly tells us that the Labour Government increased unemployment. Many marginal concepts are used in economics. I ask the right hon. Gentleman to use a marginal concept when considering unemployment. We all know that it is easy to achieve the first 500,000 unemployed. It is a little more difficult to reachmillion unemployed. As the process continues, the marginal effect becomes more and more decisive, and we start biting into the marrow, muscle and vital parts of our economic and social life. It is true that the most marginal worker is thrown out of work when the chill wind of recession comes along. The same applies to less skilled workers or to those with less marketable skills. That is a fact of economic life.
  In my constituency highly skilled first-class craftsmen are now without jobs. They have tremendous skills, which create exports and goods that people want all over the globe, be it Japan or the under-developed countries. We are now starting to bite in to the most highly skilled sector—those with the most marketable skills. No longer are we knocking off the marginal firm that was teetering along in the good times, making a profit, but when the chill wind came could not batten down the hatches and survive. Such firms have long gone. The firms now going out of business in West Yorkshire are those that have been there for generations. They are highly competitive. They should not be going to the wall. Those firms will never come back. The skills that they use will never be put together again.
  It is not a question of all being well in a few months or few years' time. Those skills will be gone for ever. The firms will be gone for ever. My hon. Friend the Member for Workington (Mr. Campbell-Savours) recently tabled an early day motion that pinpointed the dreadful scandal of up-to-date texile machinery being flogged off to Egypt, Italy and our other competitors. That machinery will not return. It represented new investment over the last few years.
  Indeed, one of the tiny bright spots in my own constituency relates to a firm that crates up the machinery and sends it abroad. It is doing quite well. I do not blame

  303
  that company. However, it is sad to think that mills are closing down and that great factories are experiencing redundancy problems.
  The Secretary of State may say "Oh, it is the textile industry again." I have the largest IC1 plant in the country in my constituency—the Dalton organic chemical works. I was astonished to learn last week that ICI will be offering no permanent jobs to any of the apprentices in the Dalton works. ICI is the premier employer in the country. People used to think of it as a blue-chip investment, and that they were set for life if they got a job there. It is a firm that has had good industrial relations and a good productivity record, yet that is the truth about ICI today.
  Of course we must pass the Bill. It is a necessity. It tackles at a rather superficial level the disease that has threatened to engulf our country. I believe that the Secretary of State and some Conservative Members understand the problem. I am sure that some of them would like to introduce imaginitive and bold plans to stop this terrible shame. People read of the oil coming from the North Sea and ask why the revenue from it is being poured into redundancy pay and unemployment benefit. Surely common sense tells us that that oil revenue should be used to create jobs, investment and new initiatives.
  The one great thing about the Labour Government of 1974–79 was that to deal with unemployment they introduced a whole range of initiatives in respect of which there is no reason to be ashamed. They were bold and far-reaching, and the right kind of initiatives for young people, the unemployed and those who wanted early retirement.
  Mr. Campbell-Savours: My hon. Friend was elected to this House at the same time as I was. Does he recall coming into the Chamber and listening to his first Employment Question Time and, indeed, Prime Minister's Question Time? Does he recall Conservative Members, when referring to the special measures of the Labour Government, talking in terms of "non-jobs"? I remember that phrase distinctly. It is significant that over the last 12 to 18 months Conservative Members have increasingly recognised that a major problem has arisen in terms of escalating unemployment. They have now rephrased the term "non-jobs" and have come to understand that such measures were vital if young people and others were to be provided with some form of occupation. I am sure that my hon. Friend will wish to comment on that, because it is a major change in the attitude of Conservative Members.
  Mr. Sheerman: I recall that dramatic period very well. The phrase "non-jobs" was soon dropped by the Government. In fact, they no longer use it.
  I come back to the argument. The time has come for a package of bold new initiatives. The Secretary of State will have to persuade some of his Cabinet colleagues, including the Prime Minister, of the merit of those initiatives. When the hon. Member for Beeston (Mr. Lester) was a member of the Government he was considering the implementation of some interesting initiatives. Unfortunately, he is no longer on the Front Bench. I do not know why. Many of us deplore the fact that a person with imagination and initiative should be dropped. Perhaps he was considered to be too wet. We
  304
  must take bold initiatives before it is too late, and before the process of what I describe as the biting into the vital organs of our economic and social life goes too far.
  My hon. Friend the Member for Keighley (Mr. Cryer) spoke about textiles, and I do not want to go over that subject at length. On Monday we had a demonstration and lobby by textile workers. I was surprised that many Conservative Members did not have the courage to be here on Monday. After all, the Government owe their existence to many of the marginal seats in Lancashire and Yorkshire. It was a shame that so few Conservative Members were either in the Chamber or in the Lobby to meet constituents who have lost their jobs since the Government took office.
  The textile workers who were here on Monday were not talking about redundancy. They accept redundancy if it is inevitable. They do not even believe that the textile industry should necessarily be kept alive. They were saying that if the textile industry is to be written off by this Government, if the Common Market, with the accession of Greece, Portugal and Spain, will mean the end of the industry, if there has been a secret agreement by the Government to write off the industry, the Government must say so. They want the Government to provide initiatives for replacement jobs in the prime centres of the textile industry. They are not asking for the textile industry to be maintained. They are asking for the Government to take an initiative to provide new jobs.
  There was one good thing to be said about the Roosevelt Administration in the 1930s—at the depth of a world depression, not recession. It has been argued by many historians, including economic historians, that Roosevelt did not do much in terms of getting the American economy back on its feet. What Roosevelt did was to give the ordinary working man in the United States the psychological impetus to believe that someone did care and that somebody would do something.
  I believe that that is what people need today. They do not believe that the Government have any direction, any answers, or any belief in themselves other than the barren and arid slogan of monetarism. I think that I am sophisticated enough to understand that there is a difference between monetarism as an economic policy and monetarism as a description of a Government. Perhaps one can take the parallel of the attitude towards Fascism and Nazism in the 1930s. Historians today suggest that there were two types of politicians at that time—those who wanted to act in a positive manner and to give away any concession to Germany and Italy and those who wanted to do the same thing but in a modified fashion.
  I suggest that the true monetarists in the Cabinet who believe in a doctrine that has been shown to be ineffective and unworkable should be the minority there, and that people like the Secretary of State should take their courage in their hands, give people hope, and assure them that there will be a better future. Redundancy is not what people want. They do not want redundancy payments. They want a future, they want to work and they want to work for the future of their children. I believe that the Government have a duty to see that they can do so.
  5.56 pm
  Mr. James Hamilton: I want to tell the Secretary of State for Employment that I shall not vote against the Bill. I realise that it is an absolute necessity. Nevertheless, it is a travesty of justice that a Bill of this kind should be required, bearing in mind that the

  305
  sophisticated word '"redundancy" means unemployment for many people in the United Kingdom as a whole, and especially in Scotland.
  We should bear in mind that it was a Labour Government who introduced the Employment Protection (Consolidation) Act 1978. I should have thought that we could make some progress, in that workers would wait 32 weeks instead of 104 weeks before receiving redundancy payments. My criticism is that workers are now accepting redundancy as a way of life. That is what I find in my constituency, where there have been many closures and so-called redundancies. The workers are at first prepared to fight against redundancy, but when they find out how juicy the carrots are they accept it. Consequently, jobs are lost, and those are jobs that will never again come to our part of the country. That is a matter to which the Government should give serious consideration.
  My hon. Friend the Member for Huddersfield, East (Mr. Sheerman) referred to North Sea Oil revenues. We in Scotland have our trials and tribulations with North Sea oil. The Scottish nationalists say that North Sea oil should be used to regenerate Scottish industry. I do not subscribe to that point of view, because I recognise that many of my brothers and sisters in the North-East and North-West of England and in Wales are in the same situation.
  I hope that the Secretary of State for Employment will pay particular attention to one matter. The Prime Minister said in a statement to the House that £2,300 million a year of the revenue from North Sea oil went to pay unemployment benefit. That is a sad reflection on the policy of the Government. That figure is not my figure; it is the figure that the Prime Minister herself gave at Question Time.
  Unemployment is a disease. It means that many people lose their self-respect and the respect that they have in their own locality. Their own children do not respect them any longer, and that for a reason that is beyond human comprehension.
  With more than a quarter of a million people in Scotland unemployed, and in my county of Lanarkshire 17·7 per cent. of the insurable population unemployed, I must express myself strongly. I do not intend to take the same line as the Minister of State, Department of Industry did last night, when he made one of the most disreputable speeches ever made from the Government Dispatch Box. We were debating the loss of 4,800 jobs at Linwood, in Scotland; something that is unforgivable.
  I have some respect for the Secretary of State for Employment. I congratulate him on the courage that he showed when he addressed the Young Conservatives last Saturday. What he said was very much in accord with what the trade union movement is saying. Anyone who is prepared to disregard the thoughts, desires and expressions of the trade union movement is doomed to failure. I hope that many more members of the Cabinet will express themselves as the right hon. Gentleman did.
  One of the burning problems of today is the steel industry, part of which is in my constituency. The Ian MacGregor corporate plan for steel will mean the loss of 640 jobs in Scotland. I have been with Mr. MacGregor, and to show that there is some truth in politics I can state that I have a high regard for him. I think that his intentions are honourable. What is wrong is that, whether we like it or not, the matter is not simply one for the British Steel Corporation; it is also a matter for the Government, who have a responsibility to the steel industry.
  306
  What we find nauseating and disgusting is that there is a difference of opinion about the redundancy payments to be made in the various regions. Unless we can achieve a proper balance, the rancour that prevails in the country at present is bound to continue.
  Redundancy seems to be the pattern—an accepted fact of life. Those of us who are trade unionists and are sponsored by trade unions cannot tolerate the present position. I accept that there is a world recession; we cannot get away from that. But the Government's policies were not adopted because of that recession. Many of the public expenditure cuts are unnecessary. If some of the Opposition's policies were adopted, the Bill would be unnecessary. Instead of our using North Sea oil revenues to pay unemployment benefit, we would find that many people would be at work and contributing to taxation and national insurance payments. More important to ail of us, they would retain their self-respect.
  I have said many times that there are Conservative Members who have honest and sincere intentions. Many will express themselves as I do tonight. We are not prepared to tolerate unemployment of 2,419,000 in the United Kingdom as a whole and over 250,000 in Scotland.
  I hope that the Opposition will support the Bill, for reasons that are honourable, because it is necessary. If we have a declaration from the Minister that it is his honest endeavour to eliminate the present scourge of unemployment, I am prepared to give my support.
  6.6 pm
  Mr. Ray Powell: We are considering a very small Bill, a one-page Bill, but it contains a number of matters that the House should consider.
  First, why do the Government want to increase the amount of money involved? I thought at first that the increase from £40 million to £300 million was quite large, but, having realised the extent of the redundancies created by the Government's policies, I appreciate that they need substantially more.
  I represent a constituency with four collieries. One, Coegnant in Maesteg, was the first to go on strike over the weekend. I read on the front page of the Daily Minor this morning that a secret document had been considered by the Secretary of State for Energy. It re ealed that the National Coal Board and others would like massive colliery closures within the very near future. It suggested a redundancy payments scheme to pay miners with long service about £28,000. Eighteen of the 34 pits in the South Wales coalfield were earmarked for closure. The Government have more or less devastated the steel industry. If they now close that number of pits in South Wales, 10 in Scotland, and 13 out of 24 in Durham and Northumberland, even the £300 million will be inadequate for compensation and redundancy payments for those who will be put out of work in the coalmining industry alone.
  I refer particularly to the mining industry because I represent a mining constituency. At the Coegnant colliery in Maesteg the National Union of Mineworkers' lodge secretary, Mr. Verdon Price, and his colleagues are very moderate miners. The decision to go on strike, which they took last Saturday, was not peculiar to that lodge.
  Coegnant colliery is one of the seven pits in Wales that are to be closed. In Maesteg that closure will cause great disruption and will mean that after 20 months and 11 days of this Tory Administration redundancies will have increased by 100 per cent. Last Saturday, at the meeting

  307
  in the colliery lodge, the chairman suggested that serious consideration should be given to the possibility of taking action. To a man, they decided to withdraw their labour. The workers are incensed, because only the other week the management of the National Coal Board praised colliery lodge officials for the work that had been accomplished in Coegnant colliery. Indeed, in the past 10 weeks a new seam has been opened that contains coal to the value of £1·6 million, and yet colliery closures have been suggested.
  I am the son of a miner. I was brought up in the Rhondda and lived in a mining community. I am well aware of the battles that miners have fought over the years. Last night I re-read the history of South Wales miners. It reminded me not only of my predecessor who represented Ogmore, the right hon. Vernon Hartshorn, and of the work that he did for miners, but of people such as Arthur Homer and A. J. Cook and their struggles.
  History is repeating itself. As a result of the Government's policies, unemployment in my constituency has reached a level that has not been seen since the 1930s. People are living from hand to mouth. Last Saturday the Prime Minister made a ridiculous suggestion to the effect that redundant workers should use their redundancy pay to set up businesses. I know business men in Ogmore who used their demobilisation money in 1945–46 to set up businesses. They have struggled and worked hard for 35 years, yet their businesses have crashed after 20 months and 11 days of a Tory Government. Their workers have lost their jobs and have had to claim redundancy and dole money. It would have been more appropriate if the Prime Minister had suggested a policy change that ensured the survival of those small businesses.
  During Welsh debates and at Welsh Question Time the Secretary of State for Wales has consistently told us that the Government are providing factories on the Bridgend industrial estate, which lies in my constituency. The mere provision of new factories is insufficient. We want work. Factories that have been established on the estate during the past 30 to 40 years now stand empty.
  I am particularly concerned about the NCB's announcement of the redundancies to be made both inside and outside Wales. Welsh miners have said that they are not prepared to sell out their jobs. They say that they want alternative work. Unemployment has doubled in the last 12 months. The jobcentre has no vacancies in Maesteg and Bridgend. Every week more unemployed workers are added to the register. Young men and young women cannot find jobs. The whole town has been desecrated and destroyed by the Government's policies.
  There are 428 miners in the Coegnant colliery. The average age is 39. That work force is one of the youngest in the South Wales' coalfield. The miners have suffered from several of the Government's policies. The BSC decided to cut the work force at Port Talbot, which is only 8 miles away. There have been redundancies at the Revlon factory. In Maesteg a clothing factory has closed, with the loss of 600 jobs. As a result, the miners have decided that it is time to fight. A 39-year old man may be given redundancy money, but it does not mean that he will find a job. It is no good offering jobs to 16 to 18-year-olds in Maesteg under the youth opportunities programme, because after six months they will not be able to continue in that employment. There is no possibility of finding a job
  308
  or of a new factory being created. As in the 1930s and afterwards, young people must look beyond Ogmore and the borders of Wales for new jobs.
  Jobs are not freely available. It is not worth going to Finchley, the Prime Minister's constituency, for work. Even in her constituency unemployment has reached 9 per cent. Therefore, the miners realise that if they sell their jobs there will be no work in the future. Some steel workers have been redundant for 12 months, and like them the miners realise that redundancy money soon disappears. In no time at all redundant workers find that they have only unemployment benefit to live on.
  I hope that a settlement will be reached at tonight's meeting between the Government, the NCB and the miners but I trust that—contrary to the suggestion in the Daily Mirror—there is no conspiracy between the NCB and the Government to bribe, or attempt to cajole, the miners into submission. The workers are more sophisticated than they were at the time of the Tonypandy riots. They are more prepared to fight, and in a different way.
  I warn the Prime Minister, the NCB, the press and the public that the miners are fighting for their jobs. They are fighting to work down mines, because that is the way of life that they have chosen. They are courageous, hardworking, and comradely. They are led by leaders who will go down in history as having been the soul and sanity that the country needed in the 1980s.
  This treacherous Government bribed their way to power. They bought off some of the trade union opposition with extra redundancy payments. But at last the miners—the cream of the free trade unions and the Labour movement—have called a halt. Twenty months and 11 days of butchering the industrial and economic base will come to a stop. The CBI, the TUC, economists, past Tory Prime Ministers, and die-hard Tory business men are all begging and pleading desperately for sanity, moderation and reason. But no, the lady is not for turning. The right hon. Lady stated defiantly and adamantly, in that sweet, likeable, adorable manner for which she is so well known:
  "You turn if you want to".
  The miners have turned. They will turn the right hon. Lady, her Government, and her mad monetarist policies. The public will back the miners. Even some of the right hon. Lady's Ministers will back them. Once again the miners will go down in history as having saved this country from the Prime Minister and her policies. I am proud that this move has started in my constituency. I hope that it will gather strength, and that it will not be prolonged.
  6.19 pm
  Mr. D. N. Campbell-Savours: I shall be particularly brief, Mr. Deputy Speaker, because I am hoping to catch your eye during a debate later this evening on the Iron and Steel (Borrowing Powers) Bill.
  I congratulate the Secretary of State on taking time off from his duties today to spend so much time in the House—if only to answer a couple of questions that I should like to put to him in my intervention and that arise from events in my constituency following the suggested closure of the Distington foundry.
  There was a report in the Financial Times of Saturday 7 February 1981 which suggested that the Government, in the forthcoming Budget, may well introduce taxation changes relating to the payment of redundancy payments.

  309
  I should like to quote the article, in the hope that the Secretary of State will reply directly to the statement made in it so as to allay the rumours that circulate in my constituency and, it appears from my conversations with other Opposition Members, in other constituencies. These may well stem not only from this article but from similar articles in other newspapers.
  Under the heading of "Family and Finance—Redundancy and Tax" the article says:
  "the rules are likely to be changed in the spring Finance Bill. Now that it has been confirmed that the Budget Day is to be March 10 it is possible that the new rules (whatever they may prove to be) will take effect from that day, and not merely from April 6. It is likely to be better (from the angle of tax on any ex gratia payment which your employers may decide to make—after you have left, of course), therefore, if your employment ceases before March 10."
  What is being implied in another article that I have seen in the same journal is that in the next Budget Statement the Government may be intending to introduce tax changes whereby people's redundancy pay will be taxed. I am told that at present the threshold on severance payments is £10,000. In other words, people do not pay tax on severance payments that are less than £10,000, although there were changes relating to social security benefit payments in the Social Security (No. 2) Act of last year.
  I hope that the Secretary of State will try to reply to that rumour and allay the anxieties of many people in this country, certainly in my constituency, who are now faced with the prospect of settling on the basis of redundancy payments. In the case of the British Steel Corporation's projected closure in my constituency, rumour is hot in Workington—although there may well be no foundation in it—that the BSC is using this article as a way of exerting pressure on people to come to terms with the need to negotiate with the BSC on the question of redundancy.
  I turn to another area in which there is disquiet. From my conversations today with a number of smaller companies, it seems that there are conditions in which smaller companies do not apply for the return that is available to them, they having contributed 0·15 per cent. of their national insurance employer's contribution to the fund that is under discussion this evening. In return for that 0·15 per cent., they receive 41 per cent. of the statutory redundancy payment, which is paid by the Department.
  My information is that due to the statutory 14-day requirement—perhaps the Secretary of State will clarify the position if I am wrong—whereby firms are required to inform the Department of employment 14 days in advance of their making redundancies that they are about to claim, where the trading and industrial activities of small companies fluctuate rather rapidly from day to day, and where they are required to take quick decisions on the question whether they are able to retain labour, some small firms are not applying for what is their statutory right.
  I think that I should resume my seat at this stage. I have asked a few questions simply for the sake of clarification. I have sought to do so in this debate because I felt that if I were to write to the Department and delay the reply by a week, or if I were to table a parliamentary question that would be replied to in the same way as many parliamentary questions are increasingly replied to by the present Government, it would delay the answer that is so precious to my constituents and to those of other Opposition Members.
  6.25 pm
  Mr. Roy Hughes: This is a little Bill with a big meaning. As I see it, it is essentially an indication of the difficult economic times in which we live. We all know that about 2½ million of our people are unemployed. Many thousands more have not even bothered to register as unemployed, because they know that there is no chance of obtaining work. We also know that all reliable forecasts point to the fact that the figure of 2½ million will increase shortly to about 3 million, and that it could escalate even further. There have even been suggestions that the figure could eventually reach about 5 million. The issue of unemployment is an indication of the difficulties that we are now experiencing.
  Charity begins at home. In their speeches this evening, many hon. Members pointed to their own constituencies and to the redundancies that they have experienced. In Newport, we have had our fair share. For instance, the Llanwern steelworks has lost 5,000 jobs recently, but smaller steelworks, such as Whiteheads, the Orb works, and the Alpha private steelworks, have also had major redundancies fairly recently. Engineering establishments in our area have been similarly affected.
  Redundancy on this scale casts a blight over the whole area. What we experience in practice and what we hear from our surgeries and postbags is that, essentially and very soon, redundancy payments become inadequate. They look rather large at the outset, but families soon find that their standard of living declines. They have difficulties over the payment of bills for essential services, such as gas and electricity. What I have noticed in Newport very recently is the trouble being experienced over the payment of rent. The borough treasurer has recently pointed out the huge debt that now obtains in Newport. All of this relates to the difficult industrial situation and the thousands of redundancies that have taken place.
  A particular matter that has affected many of my constituents concerns those who have been made redundant and who have then signed on for various retraining courses. In this instance, their pay was to be made up, apparently, from EEC funds, but there has been a long delay in the making up of these payments. Apparently there have been difficulties in Sheffield, from where they are administered.
  On a number of occasions I have written to Mr. Ian MacGregor, chairman of the British Steel Corporation, about the matter. I am, however, still receiving protests. The most recent came from the students union of Cardiff university, where certain workers have been taking courses. They have presumably protested through the students union. Those protests, in turn, have been directed to me.
  I understand from Mr. George Henderson, national secretary of the building and construction section of the Transport and General Workers Union, that an important member of the EEC Commission is arriving in London tomorrow to discuss payments in regard to readaptation schemes. I wonder whether the Government will make suitable representations to this gentleman to speed up the payments to many of my constituents who are getting into severe financial difficulties because of non-payment of moneys.
  I have also been asked to bring to the notice of the Minister the problem of these additional payments through

  311
  EEC funds as they apply to opencast coal workers. Representations should, and apparently will, be made to the EEC representative to ensure a square deal for this group of workers.
  To many people in industry, redundancy payments have been a sort of treacly inducement to sell their jobs. It has been found ultimately that these treacly payments leave a bitter taste in the mouth. For the Government to say that they can do nothing about present industrial difficulties would be to leave matters to the law of the jungle. Massive intervention is required by the Government, and the sooner the better. I have never accepted the inevitability of unemployment. People are entitled to a job by right.
  To stimulate the economy, the Government could start with the building and construction industry. Many schemes could be undertaken. The homeless could be rehoused by the building workers who now stand idle in the dole queues. New roads are badly needed, especially in South Wales. There is a need for power stations, hospitals, and so on. We shall be told that if money were pumped into the economy to the extent that I advocate, this, in turn, would suck in imports and knock the balance of payments out of alignment.
  Along with stimulation of the economy, I feel that we need import controls of a selective character. This would not restrict trade; it would increase it. The case has been argued comprehensively for several years by a distinguished group of Cambridge economists.
  My message is concerned not so much with the Bill that we are debating as with the need to get people out of the dole queues. That would be better than all redundancy Bills. This legislation is only an indication of the predicament in which the Government have got themselves.
  6.34 pm
  Mr. Robert C. Brown: My constituency and the Northern region from which I come have more than played their part in making it necessary for the Government to introduce the Bill. I think of major closures in my constituency such as those at Tress Engineering, involving over 500 workers, at Vickers Scotswood plant, involving over 750 workers, at Vickers armaments division, Elswick works, involving 350 workers and several hundred more in shipbuilding. In addition, there have been countless closures of small firms. My constituency, I am sorry to say, has played an important part in creating the need for the Bill.
  In the city of Newcastle there are well over 15,000 unemployed, many of them the victims of redundancy. Male unemployment is now in excess of 15 per cent. In parts of my constituency unemployment must be running at 30 to 40 per cent. among males. I think especially of the Low Scotswood area and the Cowgate and Blakelaw areas.
  I have in my hand a publication to which I intend to refer at some length. It is called "Roundabout". It is the Blakelaw, Cowgate and Fenham community newspaper. Much of the credit for its production must go to the Blakelaw school within my constituency. It is produced in the upper school of this comprehensive school in an area of my constituency with more than its share of problems.
  The journal states:
  312
  "Economic depression is nothing new in Newcastle."
  That is the understatement of the century.
  "Heavy industry upon which we have relied has been in decline for decades and high unemployment levels have been with us for just as long. The future looks bleak. In this edition of 'Roundabout', as well as the usual news and views of our community, we, with the assistance of 'people in the know', look at the distressing youth unemployment in this area. We've spoken to people in the community and in positions of authority and responsibility; we've spoken to those who, through their community groups, seek to alleviate the boredom of life of the young unemployed. We've spoken to Tish Murtha, a community photographer, who knows what it's like to be young and unemployed. She has produced a startling dossier of photographs which document youth unemployment in West Newcastle."
  The journal asks:
  "Do you feel discarded by society? How do you view the future? What do you think could be a solution to the problem? How can schools, churches and government depts help you?"
  I shall have something to say in the next issue of "Roundabout" in response to some of those questions.
  The journal contains a major feature, from which I wish to give some quotations, on youth unemployment. It states:
  "Tish recounts the case of Pat D., a 20 year old local girl, who worked on a temporary scheme painting and decorating with Community Industry. 'Since the scheme ended,' Tish reports, 'the struggle to support herself and her young child has forced her to take the one course of action open to females in her position—Prostitution.' Tish Murtha, who was for a while based in Blakelaw School Community Room while she prepared the photos for our Christmas Special, worked throughout 1980 on recording life on the dole for the young unemployed of the West End of Newcastle. Her photographs and accompanying text are all to be exhibited in Bristol for a month beginning 14 February."
  I hope that the citizens of Bristol will view that exhibition and reflect on the misery of so many of our young people in Newcastle and the North East generally.
  The article adds
  "For most of this century high levels of unemployment have been a feature of life in West Newcastle, but Tish identifies an alarming new feature—an increase in the level of youth unemployment. What is most disturbing about this is the lasting effect it has on these young lives."
  Last Friday evening I was talking to a youngster who has just turned 19. He has had the misery of receiving redundancy payments on no fewer than two occasions in his short working life. He is now unemployed for the third time since he left school. This is a youngster who is desperately keen to have a job to support himself..
  The article goes on:
  "She tells of many youngsters' experience on the Government's Youth Opportunities Programme, such as that of Carl M. who left school in 1979 with some qualifications and an excellent reference. He received a card which informed him that 'an exciting opportunity has arisen.' He was told 'to report to the City's Cleansing Department, where he was officially introduced to the joys of sweeping Newcastle's streets."
  Believe me, there are many thousands unemployed in my area of Newcastle who would only be too delighted to get such an opportunity.
  The article continues:
  "Few, if any, are fooled by the Youth Opportunities Programme. What the youngsters feel about it is often 'unprintable', says Tish, and is succinctly summed up in her photograph of the resigned expressions of the YOP street cleaners on the shopping centre bench."
  That is a reference to the photograph.
  "Tish feels that 'the Youth Opportunities Programme is a diversion from the real issue of permanent unemployment, creating long-term jobs for the 'officials', while forcing young people to participate in short-term, low-paid and futile labour, which keeps them temporarily out of the statistics'. Most of

  313
  them, she says, 'return to the realities of inflated dole queues, bleaker job prospects, and the severe financial strain of Social Security'."
  Unfortunately, that is abundantly true of the city and the area that I represent. The scheme is a palliative, but I am glad that we have it. At least it gives the young people something to do for the few months that they have the opportunity of participating in it, rather than hang around street corners.
  The article goes on to say:
  "Just as damaging is the attitude of people like ourselves who treat these youngsters as skivers and nag them to go out and get a job—when there aren't any. On the whole, reports Tish, the only generation who understand these youngsters are pensioners, perhaps because they remember the Depression years."
  That is a fair comment that there is a generation around today that has not suffered in the same way as our pensioners did. Although I have never experienced unemployment myself, I have suffered the misery of unemployment, because my father was unemployed for 12 years. I lived in a street of 24 terrace houses. When I was a youngster, I recall only two dads in that street having jobs, so it is nothing new in my part of the world.
  Finally, Tish gives a warning because she
  "reminds us that 'there are barbaric and reactionary forces in our society, who will not be slow to make political capital from an embittered youth. Unemployed, bored, embittered and angry young men and women are fuel for the fire'. The distressing fact is that many of today's young unemployed are tomorrow's adult unemployed. Ahead of them lies a life of boredom and deprivation."
  That is a warning that we must heed, because one has only to look at football grounds to see how the evils of extreme Right-wing groups are being preached to youngsters who seek some diversion from the misery of unemployment.
  Mr. Campbell-Savours: By reading that article my hon. Friend went to some pains to criticise to some extent the operation of the youth opportunities programme. He was not saying that it was wrong. What he was saying was that it did not resolve the long-term problem. Is not the real problem that many local authorities have failed to understand that they should be far more imaginative and adventurous in introducing these schemes? If they were more adventurous a strong lobby would develop among local authorities to put pressure on the Government to extend the schemes into areas into which to date they have not been willing to venture. If that were to happen we might well have a youth opportunities programme and a STEP programme—although it is the community enterprise programme that is being changed—which would be meaningful and which could aid greatly in solving the problems and helping those who are suffering unemployment.
  Mr. Brown: I am grateful to my hon. Friend for that intervention. I want to be more than fair to my local authority. Newcastle upon Tyne has endeavoured to make the youth opportunities programme a worthwhile scheme. As I said, I am extremely glad that we have got it. There is nothing else for the foreseeable future. As well as a Bill of this type, we need from the right hon. Gentleman, whom I am glad to see in his place on the Front Bench, a greater extension of opportunities for the youth who are unemployed, as my hon. Friend the Member for Workington (Mr. Campbell-Savours) has said.
  I was in the middle of making the point that it is at our peril that we ignore the final warning in this article in Roundabout, the Blakelaw School magazine, that young
  314
  idle hands are often easily captured. I should hate to think that any of my young unemployed constituents could end up marching around with the thugs of the National Front.
  6.47 pm
  Mr. Allen McKay: It is regrettable that such a Bill as this should have to be brought before the House. Redundancy is in all aspects unemployment; it is an extension of the unemployment that we have seen since this Government came into office. In my constituency, although I have not had the traumatic experience of some of my colleagues who have seen thousands in their areas made redundant at one time, nevertheless when the area is analysed and we see the number of redundancies which have taken place we realise that a creeping paralysis is going on throughout the constituency.
  Gradually over the last two years David Brown of Penistone has shed roughly two-thirds of its work force. Hepworths factory near at hand has shed hundreds of people a few at a time. In the same area British Rail is contemplating the closure of a line, again with about 100 or 200 people likely to be made redundant, although British Rail says that it can employ them elsewhere. What it does not say is that in a few years the effect of the closure of this line will flow down to the marshalling yards nearby, with employees there being made redundant.
  Ransomes and Rapier over a period has shed its employees in fifties or hundreds. I received a letter from the management of that firm outlining the problem which affects one of our industries. We have talked to this Government time and again about the results of unemployment which have been caused purely and simply by the high interest rates and the high pound about which the Government could have done something
  We have different standards in this country from those in Europe. In regard to the car industry, we have heard that France, rather than put on quotas, makes it difficult to import cars; they are left on the docks for a considerable time and then are sent back because they are not fit for sale.
  The management of Ransomes and Rapier writes to me saying:
  "British companies seeking to export cranes and lifting appliances to other EEC markets usually have to comply with national standards of the importing countries and documentation and calculations have to be provided to official organisations to demonstrate conformity, which is costly and time consuming".
  "In the case of a foreign manufacturer importing cranes or lifting appliances into the United Kingdom there is no such approval requirement".
  Ransomes and Rapier was facing unfair competition because of different standard requirements. The firm asked for help. It contacted the relevant federation, the Health and Safety Executive, and the Secretary of State for Trade.
  Shortly after I received the firm's letter I received a letter from the shop stewards. It informed me that 69 of the 250 hourly paid workers had been declared redundant. It is not 12 months since there were 50 redundancies in that sector. A short distance up the road from Ransomes and Rapier is a work force of 600, and 50 percent. of that work force has been informed that it must accept the benefits of the temporary employment subsidy or go. There is a paralysis creeping across the landscape that is bringing enormous problems.
  We now have the colliery closure programme. The sad feature of the programme is that it need not have been brought forward. If a colliery has been suffering from

  315
  exhaustion of reserves, the miners have created no problem about closure. If a colliery has become exhausted, the miners have accepted the facts presented to them. However, there has been an understanding for many years that no colliery will close because of economic reasons.
  That is the basis of the present trouble. It seems that 50 collieries were earmarked—they were supposed to have been earmarked, or that was the rumour—by the Government for closure arising from economic reasons. The collieries would have died out naturally over a period. The miners cannot understand why about 8 million tonnes of coal is being imported while about 8 million tonnes of British coal is being left in the ground. If the importation of coal were stopped, there would be some leeway. The Under-Secretary of State shakes his head to indicate his dissent. I contend that if the importation were stopped there would be some leeway while the collieries died out naturally. That is why I said that the present trouble need not have arisen.
  We warned the Government time and again in oral and written questions and especially during the passage of the Coal Industry Bill that the financial restrictions set out in that measure would bring about the trouble within the mining industry that we are now facing.
  When we talk about redundancies, it is the principle that is important and not so much the number of collieries. We can no longer trust the Government to keep their word on colliery closure programmes. They are now talking of redundancy payments of about £28,000 for a long-serving mineworker. We must remember that the coal industry has slimmed down drastically over the past four or five years due to its early retirement programme.
  Most of the men aged between 60 and 65 years have probably retired already. If the industry is to be slimmed down still further, we are talking about men aged between 45 and 55 years. Those men realise that if they become redundant they will possibly have no chance of working again.
  The Government must bear in mind the traumatic effect on a person who is made redundant. If a person is made redundant for the first time—he has probably worked all his life and has probably been a good worker—he thinks that he will soon get another job. After five, six or seven weeks have passed he realises that his first impression was wrong. He then realises for the first time that it will not be easy to get another job. After he has visited the employment exchange on numerous occasions and has made numerous calls on various firms in his area, he suddenly realises that someone of 50 or 55 years is put on the scrapheap through no fault of his own. That is the start of the depression stage.
  It has been proved by the medical profession that once that stage is reached a person will suffer from ill-health and traumatic experiences. This has an effect on the whole family and on the moral fabric of society. The Government are destroying not only the industrial side of society but the moral side.
  Recently the Government stopped paying the earnings-related supplement. The supplement was introduced by a Government who bore in mind the traumatic experience of a person made unemployed for the first time. It was an attempt to cushion the effects of unemployment. The Government have recently provided that a person cannot claim supplementary benefit until he has less than £2,000
  316
  in the bank. He is given a lump sum but he is told that he has to spend it before he can claim benefit. That must be set against the argument that those in receipt of redundancy payments should invest the money.
  A person aged under 65 years may claim unemployment for about 12 months. When 12 months have elapsed, those payments cease and he is entirely on his own. We must discuss not only redundancy payments but the way in which they are paid. As I have said, we are talking about £28,000 for long-serving mineworkers. In the event of redundancy, a young man will probably feel that he can cope with such a payment in the hope that he will obtain employment later. However, 50-year-olds are told point blank that they are too old to work. Are people in that age group ever to obtain employment again?
  Will the Government's policies work? The unemployment statistics tell us that about 2½ million are unemployed. We know that in fact there are about 3 million unemployed. We are also told that unemployment will increase. If the Government's present policies are continued, I think that we shall never see anything like full employment again. The Government realise this. It is time that they came clean. They have a duty to say what effect their policies will have on employment. If we are unlikely to see full employment again, it is time that we considered redundancy payments in the long term.
  It is all very well giving a person a large lump sum and saying "Goodbye, chum, that's it. You manage in the best way you can". The Government have taken away the earnings-related supplement and his unemployment pay. He will not be able to claim supplementary benefit because he will have more than £2,000. In other words, the Government have taken away his financial stability and his dignity and all that that means in family life.
  It was only recently that I saw a grown man cry. That happened because he had no work. He had to tell his son, who came from school asking for something, that he could no longer afford to buy the things that he used to buy for him. I ask the House to recognise the feelings of a person who has to tell his son for the first time that no longer is he able to support him in the manner that should be possible.
  For a long time the redundancy payment system within the mineworkers' pension scheme has provided a lump sum and for three years 90 per cent. of the worker's take home pay. That was fine for a man made redundant at 62 years of age. It meant that he would receive 90 per cent. of his take-home pay until 65, when he would receive retirement pay. The board made provision so that a man of 60 had no need to claim supplementary benefit. Unemployment benefit was equivalent to the pension scheme. If we are to have long-term redundancies—it is regrettable that the Government have caused them to be necessary—we should so devise schemes that a man may be assured of an income if he suffers compulsory redundancy.
  The Government should be looking at ways of providing meaningful employment. The way they are going about it will not work. Labour Members know that it will not work and Conservative Members also are beginning to realise that it will not work. The effects of high unemployment take up the public sector borrowing requirement.
  There is one way in which the Government could reintroduce employment. Local authorities have plenty of work to do provided that the Government give them the

  317
  money to do it. They could help to provide work along the lines of the idea suggested by the Sheffield city council which with other authorities could employ the youths unemployed with the unemployment benefit paid to the council and the remainder of the wages provided from the rates up to the wage for the job, providing the Government give the money to the council.
  The Government must stop their attack on local councils. They must stop cutting their requirements. Those matters must be considered. I want to hear the Government's answers.
  7 pm
  Mr. John Golding: I apologise to the Ministers for not hearing their speeches. I was chairing the Select Committee on Employment, and regret not being here
  The Bill is an irony. The fund was established because economists and statisticians thought that there would never be unemployment again. When it was introduced the assertion of politicians was that full employment had come to stay. The major problem facing society was that of workers not being sufficiently mobile in terms of moving from one job to another. They did not move, because there was full employment. The redundancy fund was established to encourage workers to transfer from one job to another. The fund was not designed as the life-line that it has now become. We have to take that into account in everything that we say.
  The optimism that existed at the time the fund was introduced has now turned to deep depression and demoralisation. I do not share that total demoralisation, and I take issue with one of my hon. Friends who suggested that full employment might not return. We have to return to full employment. In no way must we accept the idea that, as politicians, we cannot provide the conditions in which men, women and young people can find work if they want it. Full employment is not something over which we have no control. The question whether we have full employment will be determined by our skill as politicians in creating the conditions for full employment.
  Mr. Robert C. Brown: I take second place to no one in advocating a return to full employment. My hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) misunderstood me. I am sure that he would not wish to misquote me. I was talking about the foreseeable future. With the Government digging the pit deeper and deeper, there is no way in which we can return to full employment in the foreseeable future. That is why I suggested that it was vital to extend the youth opportunities programme to make it more meaningful and worthwhile for young people.
  Mr. Golding: I was referring to my hon. Friend the Member for Penistone (Mr. McKay).
  Mr. Alien McKay: I thought that my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) was referring to me. I said that under the Government's policies there was no way which we shall return to full employment. Under the: policies that we envisage, there will be a return to full employment.
  Mr. Golding: I agree with that. I apologise to my hon. Friend the Member for Newcastle upon Tyne, West (Mr. Brown).
  318
  I am distressed when I hear the Prime Minister at the Dispatch Box saying that the cause of unemployment is to be found in our failure to achieve lower unit costs of production. I am distressed when she blames management and unions for our present problems.
  As a member of the Labour Government, I spent much of my time as Under-Secretary of State for Employment travelling round the country. I went from one area to another seeing the terrible problems in Liverpool, the distress in Cornwall, the great problems in Hackney and the enormous problems faced in the North-East and Newcastle upon Tyne. I travelled from town to town and was faced with substantial problems. When returning on Friday nights to my constituency of Newcastle-under-Lyme, I was always glad to see a vacancy board on which many vacancies were advertised at RISTS, part of the Lucas complex. The problem with which I was faced in my constituency in 1978 and 1979 was that of the shortage of skills. The problem was how to find sufficient people to train, and not the level of unemployment. I remember when the unemployment level was 3·4 per cent. I was distressed when it reached 4·1 per cent. That was under the Labour Government.
  Not only my constituency but the Potteries were prosperous. The general level of unemployment was low, and there was a general air of contentment. Sometimes there would be arguments. The local union would argue for the diversification of the Potteries and the managers at Wedgwood would argue against it on the ground that there was already over-employment in the Potteries, and that to bring in further work would aggravate the problems of the employers.
  There are different problems today. One thing is certain. In North Staffordshire no one—neither management nor worker—is saying that the present recession is due to high pay, to industrial disputes, or to low productivity. In 1976, 1977, 1978, and 1979 the Potteries were prosperous. Wage levels were reasonable. The number of industrial disputes was low. Managements took great pride in the effort they put into selling British pottery abroad through special marketing schemes. We used to point to the Potteries as the ideal. The unions were reasonable and progressive. Management was imaginative and far-sighted, and was investing and selling. We had prosperity until May 1979.
  The current position is very different. The unemployment level is 9·7 per cent., and for men alone it is more than 10 per cent. That total devastation of an area has taken place since May 1979. When I talk to managements—not unions—about the problem, they blame only the Government. In an area where fuel costs are important, they point to the price of gas. In an area where exports are essential, they point to the value of the pound. In an area where investment and stock levels are important, they point to the level of the interest rate. They are now beginning to point to the cuts in public expenditure, which are harming many of our basic North Staffordshire industries.
  My hon. Friend the Member for Newcastle upon Tyne, West said that those were matters for which the Government must accept responsibility. In other parts of the country where unemployment existed before May 1979 the Government may be able to blame other people, but in North Staffordshire the unemployment is so demonstrably due to the Government's policies that they

  319
  can find no scapegoat. The unemployment position has been caused by the Government. The vacancy board has disappeared.
  When dealing with the unemployed in my constituency I call on the knowledge and experience that I gained in the Department of Employment. I am no longer preoccupied with skill shortages. I have to tell myself that I should still be interested in training and retraining to meet the future needs of employers. I have to face all the problems of the unemployed and those about to be declared redundant.
  I shall come later to the youth opportunities programme. I disagree strongly with many of the remarks about it made by my hon. Friend the Member for Newcastle upon Tyne, West. First, however, I want to say how sorry I am that the Secretary of State has lost his battle with the Treasury over the job release scheme. Whatever he may say from the Dispatch Box, I remember the reasonable—indeed, almost warm—reception that he gave to the job release scheme when it was introduced by the Labour Government. Even when he first came to office and had a sceptical approach to the youth opportunities programme—which he has since expanded—he spoke about the job release scheme as being the best available scheme.
  I regret the fact that the Secretary of State has so obviously lost his battle with the Treasury to restore the job release scheme to what it was under the Labour Government, and even to expand it. I speak sincerely. I do not think that the Secretary of State needs to come round to that idea. I think that he is already there. I wish him success in his battle with the Treasury. I wish him well when he tries to persuade the Treasury to do what he knows is right, namely, to reintroduce the job release scheme so that men can retire at 62, the disabled at 60, and women at 59. He should think of going beyond that.
  It does not make sense for older people who have worked hard all of their lives still to be working when they are tired from their physical exertions or are under mental stress because of pressures of work. It does not make sense to force them to work when youngsters are being condemned to total idleness. It does not make sense for people who can retire from work in dignity still to be working when, by 1983, there will be 600,000 people forced into unemployment for more than a year. Let the job release scheme be reintroduced.
  I hope that the Minister will achieve better results from the Treasury on the question of short-time working compensation. That is a good scheme. It was introduced not necessarily to deal with redundancy but to ensure that when orders for our factories dropped the pace of work was not lowered. It was based on the principle that if orders are reduced it is better for people to work at normal speed and, when they have done the available work, to go fishing—which I would prefer—to read books or to do gardening rather than to stay in the factory and reduce the tempo of work. The introduction of work-sharing because of reduced orders has proved to be one of the major contributory factors in the loss of productivity in Britain. There is good reason for retaining the short-time working compensation scheme, whether or not we are faced with redundancies. It is worth while having that scheme to cope with the present redundancy position.
  When the Minister came to office he succumbed to Treasury pressure. The scheme that we introduced
  320
  provided 75 per cent. of pay for 12 months. Under pressure from the Treasury, the Government cut the period from 12 months to six months. They are now having to increase the period from six months to nine months—but at the same time they are having to reduce the payment from 75 per cent. to 50 per cent.
  I understand partly why the Government have done that. They found that the cost of unemployment has rocketed. It costs more to support the unemployed than it costs to create work. Last week we examined the supplementary estimates for short-time working compensation. Last year, the Government expected to pay out £40 million. In the winter they had to come to the House and ask for an additional £200 million because they had underestimated the demand on the short-time working compensation scheme.
  I understand that there is to be another substantial increase in the estimate. Perhaps the Minister could tell us about that. That and the rising cost of unemployment—and now the additional cost of the Redundancy Fund Bill—are the reasons why the cost of unemployment is rocketing. I understand that a Treasury document show that the cost of unemployment is about £3,500 per person per year. With additional sums taken into account, some commentators believe that the cost is as high as £5,000. Should not the Government be thinking of using the £3,500 towards the creation of regular, ordinary work?
  I shall not fall into the trap of saying that all the special measures are a mere palliative and waste of time. I put a lot of effort into the youth opportunities programme. I spent a lot of time talking to youngsters and others in the YOP, which is a very good scheme. It has done much to build up the confidence of youngsters and to give them a better start in adult life than they would have had otherwise. In many areas, the YOP has made up for the deficiencies in the education system, and for the failure of schools to provide a meaningful education for many youngsters between the ages of 14 and 16, particularly those to whom I refer as the "rough-and-tumble". There is great merit in that scheme.
  I have spent much time in Newcastle upon Tyne. I bitterly regret any innuendo that the YOP is designed to provide jobs for officials, and that it is not useful for youngsters. Those officials are dedicated people. The Ministers who have put effort into the YOP have done so for honourable motives. I have attacked Ministers for ignoring other aspects of unemployment, but it only harms the youngsters to deride the YOP so much that it is brought into disrepute.
  There are two reasons why the media are producing programmes that knock the YOP. First the level of substitution has become too high. It is 30 per cent. We must tackle that problem. It is no reason to throw the baby out with the bath water. We should sit down with the CBI and the TUC to discuss how to avoid that substitution.
  The second reason why there is growing cynicism about the YOP is that the numbers of youngsters leaving the schemes and obtaining regular work are dropping fast. The Secretary of State should come clean and tell us how fast those numbers are dropping, because Ministers are still quoting figures from the Department of Employment which are more than 12 months out of date. It is anecdotal that the level is down to about 50 per cent., or even below that in certain areas.
  Failure to obtain regular work is distressing many careers officers. The answer to that is for the Government

  321
  seriously to consider the reintroduction into their armoury of the youth employment subsidy, which my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) and I ended. We got rid of it because we were persuaded by careers officers that in those circumstances YOP would be a better use of the money. They are now adamant that we need the return of a youth employment subsidy, so that youngsters from schemes can obtain regular work. If we are going to save money on unemployment benefit and on all the other benefits to which those youngsters are entitled, that would be money well spent.
  I apologise for the length of my speech. It is essential that the Department of Employment should assert itself more strongly than it is doing now. I wish that the Secretary of State had spent more time dealing with unemployment and in fighting off the hawks in the Government than he has spent on industrial relations. My criticism of him is that he has spent too much time on his Green Paper, the codes and the so-called Employment Act, which dealt only with industrial relations. He has so absorbed himself in those problems, which have come to be irrelevant, that he has not had the time, the will or the energy to devote to the central issue of unemployment. May he change course.
  7.27 pm
  Mr. J. W. Rooker: Like my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding), I apologise to both Front Benches for not being here to listen to the opening speeches. I have the honour—which is probably dubious, and I shall not volunteer to do so again—of serving my hon. Friend for Pontefract and Castleford (Mr. Lofthouse) on a Private Bill Committee for several hours a day, several days a week. Therefore, I was not present at the beginning of the debate. It is good experience to be on such a Committee, but once is enough.
  I wish to raise a constituency matter. I represent part of Birmingham. My constituency has less industry within its boundaries than has any other constituency in Birmingham, including the few seats represented by Conservative Members. The overwhelming majority of my constituents work in the city centre and on the large industrial sites around the city, but not in the constituency. They are suffering greatly. Birmingham is bewildered by the present rate of unemployment in that city, which is close to 12 per cent. It is worse in some parts of the city, such as Handsworth and particularly so in the inner parts of the city.
  Of those companies that are situated on the boundaries of my constituency, there is one which until last week employed about 270 people. It manufactures bicycle components. Those are not very exciting products to industrial commentators and supporters of the Government, but when people cannot sell bicycles because of the way the economy is run, they are thrown out of work. That is what has happened to T. D. Cross and Sons of Shady Lane in my constituency.
  That firm has had a period of short-time working, as have many companies in the West Midlands. The catastrophic increase in unemployment will continue. We know that because of the number of extra companies that have started a short-time working scheme since this time last year. The signals for the future are grave. This company went on short-time working in October or
  322
  November last year. That was probably a little too late. It tried by every means to search for orders and to be the entrepreneur that the Government wished it to be.
  The Government have put through massive tax cuts for the owners of industry. This is a family company of long standing, but without success, unfortunately, because one day last week 128 people were made redundant, leaving 143 employees. There were 128 redundancies, two of those concerned having served for over 40 years with (he company. Many of the people are between the ages of 45 and 55. What hope is there for people of that age, some of whom will have gone through a second redundancy because they had served for only a few years?
  Some hon. Members on the Government Benches talk about redundancy benefits as if the average worker who is made redundant leaves with a barrel full of money—tens of thousands of pounds in some cases. For the average person, it is not like that at all. Many people are experiencing their second or even third redundancy since the Government came to power. They have no chance to accrue length of service or job property rights that will allegedly be compensated by the redundancy fund. I hope that the public will not think that, because the House is debating the Redundancy Fund Bill, which seems to be putting more money into the system, those who are made redundant will receive greater benefits. That could not be further from the truth. As my hon. Friend the Member for Penistone (Mr. McKay) said, many of the other benefits have been cut by the Government. They are planning to cut them even further by a Bill that is to come before the House next week.
  In the explanatory and financial memorandum the Government state that the only reason why the Bill is needed is that claims on the fund have grown rapidly during the last year and are expected to be high. Did they not know that claims would grow rapidly as a result of the policies that they began in May-June 1979? Was it a surprise that the claims grew to such an extent that we needed the Bill? They knew from Day One what the result of their policies would be. When unemployment rose under the previous Government, the Secretary of State, then in Opposition, had all the answers. He has learnt a few lessons.
  The purpose of the massive increase in unemployment under the Government is to solve industrial relations problems. The Secretary of State does not need his Green Papers and Acts. It is ironic that we should be debating this Bill when the tripartite meeting of the mining industry is taking place. Seven years ago tonight we had no lights throughout the country and 3 million people were out of work because a Tory Government could not get their industrial relations policies right. This time they have found a new mechanism—jacking up the level of unemployment as quickly as possible. It is being done deliberately. It does not need legislation. The Government's whole economic policy has brought about the rise in unemployment.
  T. D. Cross is not known as a company that pays high wages. I am criticising the company, but I do not believe that it would claim to be a leader in the earnings stakes in North Birmingham. I have never heard any complaint about the company having an unco-operative work force that will not work shifts or is involved in demarcation disputes. Workers are constantly criticised by the Tories and made scapegoats for their economic policies. Most work forces are co-operative. T. D. Cross still has not sold

  323
  its bicycle components, because bicycle manufacturers are suffering from the recession. One-third of the company's market has been taken by imports. Many of my hon. Friends also complain that firms in their constituencies have to face unfair competition from overseas. The company hoped to solve its problems with the Christmas boom, but the managing director told me this morning that his warehouses are chock-a-block with bicycles. That hope was the reason why the company did not go to short-time working or make redundancies earlier.
  The managing director also told me that the redundancies had chopped in half his family's company, which had been operating for a few generations. When redundancies occur, there are normally complaints about custom and practice not being followed, about a lack of consultation and about the wrong people being made redundant. In this firm the redundancies have run throughout the company, including directors and members of the family. Half of a viable company has gone almost without warning. The company was on short time and the statutory notice had been given. The payments in lieu were made, but no notice was worked out. Part of the factory will have to shut and be put into mothballs.
  The company has specialist gear-cutting machinery. When the upturn comes, which the Government tell us is round the corner because the recession is bottoming out, many of the partially closed factories will have no equipment left for the re-employed workers to use. The Government are trying to encourage redundant workers to set up on their own with their redundancy pay, but there will not be the equipment for them to buy to do that. It is being snapped up and moved out of the country at great speed. When the upturn comes we shall need to set a new trend in hand-made goods from Britain. The British machine tool industry will not be able to cope.
  My hon. Friend the Member for Newcastle-under-Lyme pleaded with the Government to change their policies. I ask them to revert to what was happening when they came to office. That is not being negative. Last week the Prime Minister was asked about new policies for the unemployed and about letting people retire early. She had the gall to say that the Government have a scheme for people to retire early so that someone can be taken off the unemployment register. When the Tories came to power, people nearing retirement could leave work at 62 years of age if someone could be taken off the register. Within weeks of coming to power the Government put the age up to 64. Almost every policy change that they have introduced has made matters worse.
  We had almost a mini-debate about whether we should ever get back to full employment. The labour force is growing annually by about 200,000 to 250,000, and that trend will continue for the next four or five years because of the age structure of the population. To stay where we are we have to find that number of additional jobs each year. We need a more radical policy to prevent further inroads being made into the redundancy payments fund, given only that one simple fact.
  There is no possibility of merely regenerating manufacturing industry to reduce unemployment substantially. Frankly, it is not the function of manufacturing industry to create jobs. Its function is to create wealth. It is the job of Parliament to ensure that the resources created by that wealth are devoted to providing meaningful
  324
  employment for all our citizens who want it. The Government must therefore adopt a more radical approach in order to reduce the dole queue and to make it unnecessary to have Redundancy Fund Bills each year.
  If, as my hon. Friend the Member for Newcastle-under-Lyme suggested, it means making radical changes at the end of people's working lives, we shall have to do that. If it means introducing a policy of sabbatical periods for all working people so be it. That is not wasted labour. That is building a society that is more alert, compassionate and informed, and not based on the old ethos of clocking on and off every day from the age of 15 to 65 and then retiring. We have to look for far more radical changes than the Government even consider.
  Britain cannot opt out of the technological race. It is just not possible to do so. Therefore, we must compete. There is no point in simply hoping that a regeneration of manufacturing industry will solve the problem. We need Labour-intensive public services and a highly labour-intensive construction programme—preferably not motorways, but hospitals, schools and houses. That is not wasted production. It means capital assets for this country which will be used by future generations.
  As my hon. Friend said, recent figures which were first handed out in another place and have since been published by the Treasury, show that the cost of unemployment would more than pay for such a public works programme—that is if one takes the full cost of unemployment and not just the cost of unemployment benefits. It is not beyond the bounds of possibility to raise such a radical programme, because the citizens of this country need it. The Government are turning rather more than a blind eye to the present position of the unemployed. The situation is frightening. It is no good the Government telling the House that the Select Committee on Welsh Affairs was scaremongering when it raised the question of what might happen in South Wales, given the increase in unemployment. Since that Committee reported, I believe that five mine closures have been announced in South Wales.
  My own constituency is normally very placid. No one could argue that the Birmingham or West Midlands area has a fantastic reputation for sending firebrands to this House, or a reputation such as that of Merseyside or the North of England. But I must tell the Government that the normal, moderate, resilient citizens of Birmingham, because they now see no hope either for themselves or for their children—and that is the factor that has made them change—are telling me in the privacy of my weekly surgeries or in the privacy of correspondence that, if a situation arises in which they have to go beyond the law to protect their families, they will do so. The Government have forced them into that position. It will be no good the Government saying to the police or the Army "Go up there and keep that lot quiet". There will not be enough police or soldiers to maintain public order if the present trends in unemployment are allowed to continue.
  Does not the Secretary of State have nightmares about the possibility of 4 million unemployed people in this country with time on their hands, with no hope and with bitterness in their hearts, seeing themselves forever at the bottom of the income heap, while at the same time seeing the good life painted before them? Does he not have nightmares about such a situation arising? If he does not, he should. I hope that the reality will never come to pass. But let him consider just one company in my constituency,

  325
  which has hardly any manufacturing industry within its boundaries. Having fought for as long as it could, that company has not just announced 10 or 20 redundancies. It has been chopped in half. My constituents employed there will have signed on by now, and they will add to the extra redundancy payments required by the Bill.
  Subject to what the Minister says in winding up the debate—and I shall, of course, do him the courtesy of reading his opening speech—I hope to be able to give those people some hope for the future. That remains to be seen. At least I shall give the Minister a fighting chance to give me some hope to take back to my constituents.
  7.45 pm
  Mr. John Grant: It is shameful that the Government have had to come rather wretchedly to the House with this pitiful little Bill. But it is a graphic first-hand example of the grotesque cost to the nation of the misguided, inappropriate and, I think one can say, callous policies that the Government have pursued, are pursuing and—if we are to accept the view of the Prime Minister rather than that of the new Leader of the House—will continue to pursue relentlessly, regardless of the irreparable damage that they are doing to the nation. One may perhaps hope that the Leader of the House will have some mitigating effect in view of his recent remarks. On the other hand, we all know what happened to the former Leader of the House when he ventured to step a little out of line.
  Many of my hon. Friends have spoken of the human costs of the Government's policies. All of those human costs are directly related to redundancy or, to put it less politely, "the sack". That is what we are really talking about. We know about the hardship, the strain and the tension caused to whole families and indeed to whole communities. We know of the hopelessness that the search for new jobs involves for sacked workers and for the thousands of young people seeking employment for the first time.
  We are talking about a scandal of immense and devastating proportions. On merit, the Bill deserves to be thrown out by the House as a censure upon the Government's performance in just 20 months, during which time they have been exposed completely, for their phoney election bribes and promises, but especially for the indignity and suffering that they have imposed upon more than 1 million people who have been thrown on to the industrial scrapheap in that relatively short time. But we know, too, that within a few months the redundancy scheme would be bankrupt without the assistance offered by the Bill. Clearly we cannot allow that to happen, because that would mean ratting on working people at a time when their need for the fund's resources is growing fast.
  It is not unusual for the fund to be in deficit. I certainly recognise, as the Under-Secretary of State said, that it is not simple to forecast the fund's needs very far ahead with any accuracy. The number of people made redundant is the major factor, but it is only one factor. It is hard to predict the age, length of service and take-home pay of those who will become redundant. I therefore accept the inevitable need for some temporary borrowing to cover deficit periods.
  The present situation, however, is unprecedented. At the end of the year, the fund was £69 million in surplus, but the pace of unemployment is increasing so rapidly that
  326
  we know that, without adequate borrowing powers, the fund would be in the red by Easter and that from then on the situation would be one of unmitigated disaster.
  It is, of course, possible to alter the situation in another way—the Under-Secretary of State made some reference to this—either by raising the amount financed by employer's national insurance contributions or by reducing the statutory payments made to employees. The House must be told unequivocally tonight—and, with respect to the Under-Secretary of State, his speech was a little less than unequivocal—whether the Bill is only the first instalment; whether the rising number of redundancies will be financed indefinitely by increased borrowing powers of the kind that we are discussing today; whether in due course industry's burden will be increased by higher contributions for employers, with all the additional implications of that, not least for employment itself; or whether, worst of all, redundant workers are to be hit directly by receiving less compensation to ease their hardship while they search, almost inevitably without success in most cases, for other jobs.
  The Under-Secretary talked about switching funds from maternity benefit payments—a sort of juggling of the books. We understand that, but he used the phrase "for the time being". He will have to pardon some suspicion on our part. Having asked the House to approve this measure, it will not be good enough for the Government to come along at a later stage with another set of proposals which, if we had them tonight, would probably affect the attitude of hon. Members to this Bill.
  We understand from what the Minister said that both higher contributions and lower payments have been rejected so far. But we are not unduly confident that that position will be maintained. We know the Government's attitude towards other benefit levels. We know that they will go ahead with their plan to cut the uprating of social security payments by 1 per cent. That will include unemployment benefit as well as pensions.
  Earnings-related benefit was always given priority over redundancy payments by the Conservative Party when in Opposition. The Conservatives used to say that earnings-related benefit was more important. We know that that benefit will be scrapped. They have made a great fuss about that order of priorities. We are entitled to firm assurances tonight, and I hope that when the Secretary of State replies he will go rather further than the Under-Secretary was able to go.
  In Opposition, the Conservative Party agreed—I think that there was general agreement on it at the time—that redundancy payments should aid labour mobility. The Prime Minister herself has recently expressed pious hopes about that subject, although we have not heard much about it tonight from Conservative Members. Perhaps they have at last got the message that the jobs are simply no longer there to move to, and that on those rare occasions when they can be found there is usually an acute shortage of places in which to live. Again, that has been acutely intensified as a result of Government policies.
  Incidentally, I noticed that when speaking during the statement on coal yesterday the hon. Member for Folkestone and Hythe (Sir A. Costain) suggested that unemployed Kent miners could perhaps be switched to digging the Channel tunnel.
  Mr. Cryer: Perhaps my hon. Friend will take note that the miners' militant action is preventing a lot of miners

  327
  from being unemployed. Clearly the miners have won game, set and match. According to the tapes, the pit closures have been withdrawn and more money is to be provided. Is not the real answer to Bills of this sort that the trade union movement should get organised so that we do not need any of these Bills?
  Mr. Grant: I have only just heard the same piece of news, and it is difficult to comment. However, my hon. Friend has made a fair point. If that is the case, it is a remarkable U-turn in a remarkably short time. It seems to illustrate the fact that sometimes a bit of muscle works with a Government who do not seem to have very much respect for those who do not have muscle.
  I mentioned the miners and the suggestion of the hon. Member for Folkestone and Hythe that the Kent miners should be switched to digging the Channel tunnel. The thought occurred to me that if we employed all the potentially unemployed miners on digging the tunnel it would probably come out in Casablanca instead of France. That is perhaps one way out. The truth is that the whole idea of labour mobility is now a sick joke. It is noticeable that the Prime Minister has stopped talking about it.
  The Government, when in opposition, also talked about coupling redundancy payments with a massive expansion of training. That was the sort of language they used in those days. They talked particularly about adult training. Yet we know that they are currently on course to wreck much of the training in British industry through their employment and training legislation, by scrapping training boards and by undermining industry's training efforts. Redundant workers can expect less help—not more—with training and retraining. It is essential that there should be no move to cut payments to redundant workers. At the very least, such payments should be maintained in real terms.
  It is right that we should look at the way in which the fund fits into the overall cost of unemployment. It is hardly surprising that Government borrowing jumped by nearly a half in the last 10 months and that the Chancellor of the Exchequer will be hopelessly above his borrowing limit of £11,500 million for the tax year.
  I should like to refer to a few of the key figures relating to unemployment. Notified redundancies of 10 or more employees made to the employment services division of the Manpower Services Commission in 1980 were two-and-a-half times the number in 1979. The rate of notification is still rising rapidly. Wales had the highest rate. It is no small wonder that the Welsh miners have been particularly angry in the present circumstances. The North-West and Scotland were also hard hit. However, we know that the plague of unemployment is spreading everywhere.
  The Secretary of State will correct me if any of my figures are wrong. If one calculates the cost of lost taxes, national insurance stoppages, the cost of unemployment and social security benefits, the increased eligibility for rent and rate rebates, and the additional cost of the unemployment benefit and social security offices handling the extra burden, there is no trouble at all in reaching a total bill of £8,500 million. But that is far from all.
  On top of that there is the cost of the MSC's extended special programmes. Like my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding), I do not begrudge
  328
  any of that money at all. However, like others of my hon. Friends, I well remember that when we introduced those schemes the Opposition sneered about the need to creat real jobs or, as my hon. Friend the Member for Workington (Mr. Campbell-Savours) put it, the need not to creat "non-jobs". The Government have been forced to expand those schemes. They are now spending millions more on them. Despite that, they will be nowhere near to matching the growing demand from Britain's workless.
  I want to touch briefly on some of the other things which are not usually thrown into the equation when talking about the cost of unemployment. What about the cost of short-time working? The temporary short-time working compensation scheme will have cost £400 million by the end of this financial year. There is also the enormous amount of tax loss from the vast number of people who are now on short time.
  In the week ended 5 May 1979—a reasonably significant political date—32,000 workers were on short time and 414,000 working hours were lost. By mid-February 1980, 119,000 workers were on short time and 1,726,000 hours were lost. The latest available figure from the Department of Employment is for mid-November, which shows that 528,000 workers were on short time and nearly 7,500,000 hours were lost in a week.
  We have gone from 414,000 working hours lost to 7,500,000 working hours lost—a staggering increase. I started to calculate it in percentage terms, but thought that it was not worth the bother because it was so huge as to be virtually meaningless. Clearly it has soared since then. I make the cautious estimate that at least another £250 million in tax will be lost this year as a consequence of the increase in short-time working. If the Secretary of State has a more accurate figure, I shall be happy to hear it.
  Precisely the same applies to the huge reduction in overtime working. In May 1979, 15,500,000 hours a week were worked. By February 1980, the figure was down to 14,200,000, hours. By mid-November—again the latest figure from the Department—the total was just over 9 million hours. It is still dropping month by month. One can certainly add another £200 million or so in lost taxes.
  I do not know whether comparable figures are available for losses in company taxation. I assume that the Treasury must have some figures. Whatever they are, they must add another huge whack to the tax loss to the Exchequer. One does not need to strain very much to see that the total bill to the nation in respect of unemployment and Government-created recession matches, and even outstrips, the borrowing limits which the Chancellor hopefully set for himself.
  The Chancellor is probably unique in his ability to talk in his sleep at the Dispatch Box, and probably to turn even a monumental crisis into a bore, but even he should be sufficiently awake to recognise that he is now trapped in a vicious circle of spending cuts, most of which are utterly false economies. He presides over the funeral of large parts of British industry, for which the Prime Minister is the enthusiastic assassin, and the Secretary of State for Employment, who seems unable to show the public courage of his private convictions these days, seems content to send a wreath and a sympathy note. I applaud the stand that the right hon. Gentleman took at the weekend on the closed shop, but he seems to have gone remarkably silent on economic policy. In his speech at the weekend he was beating his breast about the plight of the unemployed, but he shares fully in the collective

  329
  responsibility for what is happening. I wonder whether anyone can disagree with what was said in the recent editorial in The Sunday Times—perhaps it was just a last pre-Murdoch fling—which said:
  "Britain is experiencing the worst recession of the century".
  The headline was
  "Wrong Mrs. Thatcher, wrong, wrong, wrong".
  Everyone knows that the headline was right.
  I quote briefly from the TUC's "Plan for Growth" dealing with the causes of unemployment. It says in chapter 2:
  "There is no evidence to show that workers are pricing themselves out of jobs. Research carried out by the TUC shows that the main cause of unemployment is lack of orders and falls in sales (lower demand). The TUC analysed all the reports of redundancies in the Financial Times between October 1 and December 31 last year."
  It then gives a summary of the result, and continues:
  "The message is crystal clear: the biggest reason for declaring redundancies is low demand in the economy. Little mention of high wages or restrictive practices appeared in the reports during the period coveted. The TUC's survey—based on what industrialists are saying and doing—nails the Government's lie about high wage costs causing unemployment."
  Every hon. Member who has spoken to employers knows that that is true. We know the grim truth; so do Ministers. It is a question of when the Government will have the guts to do something about it.
  Perhaps the Secretary of State now shares the view of the Minister of State, Foreign and Commonwealth Office. Has he been converted to the view that a reserve of unemployed people is not just an inevitable consequence of the Government's policies but is actually desirable? Perhaps the Secretary of State can tell us whether the Minister of State, Foreign and Commonwealth Office cleared his speech with the Secretary of State for Employment, with 10 Downing Street, or with anyone. Surely that is normal Government practice.
  My hon. Friend the Member for Ogmore (Mr. Powell) referred to the article in this morning's Daily Mirror about additional pit closures. I do not know whether the Secretary of State can tell us whether there was anything in that story. I assume that he is aware of the situation, because there are obvious important employment implications. Of course, the story has been somewhat overtaken by events. However, the matter is not unimportant, and I hope that my hon. Friend will receive an answer to his question tonight.
  My hon. Friend the Member for Bothwell (Mr. Hamilton) raised the question of the great resentment that was caused last night, particularly to Scottish Members, by the attitude taken by the Minister of State, Department of Industry when he nonchalantly brushed aside the loss of nearly 5,000 jobs at Linwood. It is not surprising that my Scottish hon. Friends were incensed by his attitude. Every day there is a new blow on the employment front. Pits, steelworks, car factories and a multitude of small businesses that the Government pledged to protect and encourage are daily savaged. Then the Secretary of State comes to the House and asks us to swallow this kind of measure.
  The Government's policy is riddled with contradictions and irreconcilable aims, none more so than when they pour out money on unemployment instead of on jobs. Anyone who is not confused by their policies does not understand what is happening.
  I want to put a couple of final points to the Secretary of State. First, I underline the question asked earlier by my
  330
  right hon. Friend the Member for Chesterfield (Mr. Varley) from the Dispatch Box. The Bill raises the borrowing limit to £300 million—the estimated cost to the fund of statutory payments in 1980–81. I received a reply to my question last week about the estimated cost for 1981–82. The Under-Secretary of State said in that reply that the latest working assumption of the cost would be up to £400 million. I gather that that estimate is the top range figure.
  The hon. Gentleman's officials must have estimated the parallel level of unemployment overall related to the potential redundancy payout. What unemployment figure were they using at the maximum for 1981–82? They could not have picked a figure off the top of their heads, much as I respect the imaginative powers of the Department's officials. I hope that the Secretary of State will be able to tell us the unemployment figure that they are expecting during the period.
  Secondly, during 1980 the fund paid out £242 million. How much of that sum related to payments where employers were insolvent compared with the previous year? It is right that the House should know the extent to which the fund had to cope with bankruptcy. Managers as well as employees will be interested to know the figure, because it is not only the shop floor that has been hit by redundancy; management, too, has been hit.
  I shall quote from a management survey by MSL. The first paragraph reads:
  "Having already sunk to its lowest level for more than 20 years the number of job opportunities for executives in the UK fell still further during the final quarter of 1980. In fact the recruitment of managers as measured by the MSL index has now reached a point more than 9 per cent. below the lowest previously recorded level of 1971, the year in which executive redundancy reached a record peak."
  So redundancy affects all sides of industry.
  I repeat that it is scandalous that the Secretary of State should be obliged to come to the House tonight and seek public sector cushioning of the fund of this magnitude. It is quite without precedent. Before 1965, when the then Labour Government introduced the Redundancy Payments Act, employees with years of loyal service could be thrown out of work without a penny compensation.
  That act was the first in a major industrialised country to set up a central fund on a statutory basis to remedy what we all agreed was a long-standing social injustice. The present situation illustrates vividly how crucial that legislation is and will continue to be. Unemployment is at nearly 2½ million and is still increasing. The Government have broken the barrier of 10 per cent. out of work and will very soon break another barrier by increasing unemployment by 100 per cent. since they came to office.
  In my own area of Islington we have 11,500 people registered as unemployed—a rise of 49 per cent. in 12 months. Certainly there have been payments there under the redundancy legislation and sadly there will be many more. The Government are simply paying people not to work instead of paying them to work. Even the fall in the rate of inflation and the balance of payments surplus can give no pleasure to anyone. They are further indications of the depth of the recession into which we have sunk.
  We shall not oppose the Bill because it is intended to rescue the fund from near bankruptcy. However, we must make it absolutely clear that we see the Bill as one more piece of evidence that the real bankruptcy, both economic and moral, is that of the Government.
  8.9 pm
  The Secretary of State for Employment (Mr. James Prior): I am afraid that my voice is not as good as it might be. I hope that I shall be forgiven if I speak rather softly.
  The hon. Member for Islington, Central (Mr. Grant) and all those who have taken part in the debate recognise that the Government face a serious problem, which is not confined to this country but is worse in this country than in many others. We on the Government Benches are as aware as Opposition Members of the personal tragedies and the indignities that high unemployment is causing. As the hon. Member for Huddersfield, East (Mr. Sheerman) said, it is not what people want, and I can assure him that it is certainly not what the Government want.
  We are presenting the Bill in order to increase the borrowing powers of the redundancy fund so that we may continue to pay out from that fund the proportion of 41 per cent that has been set and that we have not altered, enabling payments to be made on exactly the same basis as before. I assure the hon. Member for Islington, Central that there is no indication that we shall make changes.
  The Bill is designed to deal with a deficit which it is expected will be temporary. Over a time it should right itself. This time last year we were building up resources in the redundancy fund, and therefore we changed the percentage. The fund has now been running down rapidly, so we need to enable it to borrow more money in order that the payments from it can be made.
  As my hon. Friend the Under-Secretary pointed out in his opening speech, maternity payments are not affected in any way. It is within the Secretary of State's discretion to use the combined fund in any way that he thinks desirable.
  The right hon. Member for Chesterfield (Mr. Varley) asked whether I could give an indication of the numbers of unemployed that we were working on, bearing in mind the future demands on the fund. There is no clear link with unemployment, and certainly no clear link with the cost of redundancy.
  Generally speaking, we have worked on three possible exercises—an optimistic, a medium and a pessimistic. On the optimistic exercise, by the first quarter of 1982 there would be a balance in the fund of minus £77·6 million. That does not include any further borrowing. On the medium exercise, the figure would be minus £168 million, and at the most pessimistic it could be minus £202·4 million.
  That assumes that in the five quarters between 1981 and the first quarter of 1982 the fund's income is £260 million. That is the figure that we are working on. Therefore, we have taken the precaution of saying that we shall borrow £200 million and if necessary return to the House to borrow further money up to £300 million.
  The hon. Member for Islington, Central also asked about the payments made under the insolvency provisions of the Act. In 1979 £10 million was paid out, involving 37,000 employees, and in 1980 the figure was £20·1 million, involving 61,000 employees.
  I turn to the questions asked by the hon. Member for Workington (Mr. Campbell-Savours). The Financial Times articles to which he referred based their speculation on the fact that a consultative document on payments on termination of employment was issued by the Inland Revenue in August 1979. There were about three articles altogether. They assumed that a decision to legislate to
  332
  make changes in taxation arrangements had been taken. I assure the hon. Gentleman that the speculation is unfounded. There are no proposals for changing the existing basis of taxation of redundancy benefits.
  It is necessary to give 14 days' notice of the intention to seek a payment from the fund. That is not an unreasonable period. It avoids frivolous claims being put in at any time, and it has not caused a great deal of trouble. If an employer does not give the 14 days' notice, the most that can happen is that 10 per cent will be knocked off, but that will happen only if there are exceptional reasons for his not having given a fortnight's notice. In any case, he has a right of appeal to an industrial tribunal if he is dissatisfied with the treatment that he receives.
  I shall examine the matter, in the light of the cases that the hon. Gentleman mentioned, and if we find that there is anything further that we can do by publicity and so on to bring the point home to small employers, we shall do it. But I do not think that it is serious matter.
  The cost of unemployment was raised by a number of right hon. and hon. Members, including the right hon. Member for Chesterfield and the hon. Members for Bothwell (Mr. Hamilton), for Huddersfield, East, for Newcastle-under-Lyme (Mr. Golding), for Birmingham, Perry Barr (Mr. Rooker), for Islington, Central, and for Keighley (Mr. Cryer). In the latest of the blue documents that it publishes from time to time, the Economic Progress Report for February, the Treasury gives a figure of £340 million for every additional 100,000 unemployed. It states in as clear and analytical language as it can how that figure is made up. It has a number of components, some of which the hon. Member for Islington, Central told us about.
  There is a tendency to think that if we merely spent the 340 million we should save 100,000 unemployed. The right hon. Member will know that that is not so. If it were, or if the figure were the £8·2 billion that some hon. Members have mentioned, or any other figure, any Government would spend the money, because in theory there would then be no unemployment. But, as Opposition Members will know from their period in office, it unfortunately does not work like that. If we were to put those 100,000 unemployed back into work, we should not be able to pay them £340 million, even supposing that no goods and services and other factors had to be taken into account in assessing what they were costing. It would be necessary to deduct from the £340 million, or from the £3,400 a year that might be the average payment, the national insurance and taxation involved, or there would be double counting.
  As the Labour Government found, as much as we have found, the actual figure that could be paid out would not be £3,400 a year, £70 a week, or whatever, but about £45 a week. As the Labour Government discovered, and as we know, if one tries to pay people £45 a week one destroys the whole basis of a wages structure. The unions would not allow it to happen. Even under the special temporary employment programme, the wages that have to be paid are those paid to similar workers in the district concerned. The payments made under the special temporary employment programme amounted to about £80 in each case; sometimes more, sometimes a little less. Regrettably, it is not simply a matter of saying that the costs of the unemployed could be transferred and that unemployment could be saved by spending more. Nor is it fair to say that one can simply use oil revenues. The

  333
  revenue that we receive from North Sea oil goes into the Exchequer and is used to finance Government expenditure of various kinds.
  The right hon. Member for Chesterfield and others criticised the Government because of the level of public expenditure. The TUC's document on the Budget suggested that we should spend £6,000 million more. Hon. Members have said that we should spend more, use our oil revenues and so on. The right hon. Member for Chesterfield said! that Government borrowing was out of control. He cannot have it both ways. He can either argue that the Government are spending too much—in which case Government borrowing is out of control—or that the Government are not spending enough. He cannot say in one breath that Government borrowing is out of control, and in the next that we should spend more.
  Mr. Varley: Perhaps I should explain the position more clearly. I am arguing that Government expenditure is out of control, according to the Government's standards. The Government set a medium-term economic strategy, which is out of control. It is not part of my case to suggest that the Government should increase public expenditure in order to discover how practicable it is to put people into proper jobs.
  Mr. Prior: The right hon. Gentleman is right if he is arguing that the Government's public sector borrowing requirement is greater than we estimated in the medium-term financial statement. It is greater for a number of reasons, the chief of which is that it has proved necessary to increase expenditure on the nationalised industries. Increased expenditure has been necessary in a number of areas, such as investment, redundancy payments and, in the case of British Leyland, British shipbuilders and British Steel, to meet losses.
  As the right hon. Gentleman said, the public sector borrowing requirement is running at about £11 billion or £12 billion. That is a factor in the high cost of money and in the high level of interest rates. The Government intend to lower interest rates at the earliest possible moment. There seems to be a contradictory thread in the Opposition's argument. One minute they ask us to spend more, without suggesting how that extra money will be paid for in terms of interest rates and so on, and in the next breath they tell us that the Government's public sector borrowing requirement is out of control. I do not accept that argument, any more than I accept the argument that were it possible to reflate on the scale suggested by the Opposition, and were we able to do that, it would necessarily have the impact on employment that both they and we might desire.
  The Opposition must know that although the public sector borrowing requirement doubled between 1977 and 1979, the real earnings of those in work increased by 14 per cent. In Britain, unemployment fell from its peak by only 150,000. There is a deep-seated problem. Were reflation an option open to us, it would not reduce unemployment by anything more than a comparatively small margin. That is why we must work to reduce the rate of inflation. That is the best method of ensuring that any future expansion of the economy has a firm base. More than anything else, that will enable us to become competitive once again.
  I stress that the problem is not the level of pay but unit labour costs. That is at the root of our problems. I am not
  334
  trying to read economic lectures to anyone. It is unit labour costs that are at the root of our problems, not just a high exchange rate, though that has had a part to play. Over a period of years we have become less competitive as a nation. The figures are available for everyone to see, and they are undeniable.
  The TUC and CBI documents contain tables that were presented at the NEDC meeting the other day. Perhaps we could combine some of those documents and tables. Perhaps, as a nation, we could make a concerted effort to convey the facts—in plain English—behind our poor competitive position. We must get across the message that our unit costs have increased when those of other nations have not. We are quite proud of our rate of inflation. We think that it will help. However, the rate of inflation in Japan and in Germany is about half that in Britain. We are still behind them. Those are the facts that will influence the level of employment or unemployment in the next few years.
  Mr. Golding: Can the Secretary of State tell us why the Potteries were so successful before May 1979, with the unit costs that they then had? Why do employers say that Government policies are giving rise to increasing overheads and to a reduction in orders which add to their unit costs. It is the Government's policies that driving up unit costs not increased pay or inefficient management.
  Mr. Prior: We could argue about this for a long time. However, those employers who say that the Government are adding to their costs are the very same people who tell me that they increased wages by about 20 per cent. last year. They tell me that they recognise that they could not afford that. I do not have the figures for the Potteries in front of me, but in 1979–80—until the summer of 1980—wage increases were running at 20 to 22 per cent. Some of that was again catching up with the incomes policy of three years of Labour Government which had compressed wages, as we know, and which resulted in the explosion that followed. That is certainly an added problem and an added cost that the country has had to bear.
  In addition to that, in the case of a number of industries the dramatic increase in the exchange rate has affected business. I think that that would be true of the Potteries. But what we would, in effect, be saying in countering that is that the only way in which Britain could ever be successful as a nation would be if every year we had a devaluation of our currency. That is what has happened ever since 1972, when we allowed the pound to float downwards. We have made up for our lack of competitiveness and productivity by allowing the pound to float down. This has caught up with us, and with a double vengeance, both because the impact of oil has helped to raise the exchange rate and to give confidence in Britain to people abroad and because we have allowed that situation of uncompetitiveness to be masked for a number of years by a falling exchange rate.
  Mr. John Grant Mr. John Grant rose—
  Mr. Prior: I do not want to read economic lectures tonight, but I give way.
  Mr. Grant: I am not looking for one, either. The right hon. Gentleman said that many hon. Members had referred to the cost of umemployment, but when he dealt with that he seemed to suggest that there was no link between the cost of unemployment and the public sector borrowing requirement. Is that what he really believes?
  Mr. Prior: Of course the level of unemployment affects the PSBR. I have said that the cost of 100,000 unemployed is £340 million. What I have tried to explain—I thought that I had explained it—is that one does not simply solve one's problem by saying "We shall spend that £340 million in extra public expenditure and save 100,000 unemployed." If it were as easy as that the Opposition would have done it when they were in Government, and we would be doing it now.
  The Government have to recognise—the Blue Paper to which I have referred makes it abundantly clear—that there is an increased cost to the country of high unemployment. The only mitigating factor that one can mention there is the number of schemes that the Government are running, whether it be this scheme, of having to top up the redundancy fund, or the virtual doubling of the youth opportuunities programme.
  We are trying the whole time to get a much greater element of training into the youth opportunities programme than we have done before. I think that there are some grounds for believing that we have been successful in this aim. We are getting more employers to take places under the YOP. It is our objective, over a period, to convert the YOP into a traineeship for every young person who at present does not get any form of training after he leaves school.
  As for the job release scheme, I think that hon. Members have glossed over things a bit. We still have a scheme. It is true that we had to put back the age at which it operates to 64—except for disabled people, for whom we kept the age at 60—but I must point out to the Opposition that they reduced the age to 62 only in March 1979 and that the scheme did not operate until May 1979. We had the costs of that scheme, at the 62-age rate, for that year.
  Of course, it is a very valuable scheme. When resources are available for the scheme to be improved, I should like the age range to be brought down. This is one of a number of ways in which we can help to get older people who would like to retire early out of the employment market, so that we can, perhaps, employ more younger people. The House has heard me say on other occasions tht we would like to expand this programme as and when an opportunity is available.
  The temporary short-time working compensation scheme is now helping 600,000 people. Its cost has risen to about £400 million. It is a further indication of what the Government are seeking to do to mitigate the worst effects of unemployment in every way open to them. Opposition Members try to give the impression that we do not care about unemployment. I would only say that for a Government who do not care about unemployment, according to the Opposition, we are spending vast sums
  336
  of money in a whole range of directions whether on these schemes, on aid for British Steel, British Shipbuilders, British Leyland, the National Coal Board or others. Many resources are being devoted to British industry to preserve employment. These are difficult days. They would be difficult days for any Government. They are certainly difficult days for anyone who has my position.
  I end by saying that we are aware of the shortcomings of the redundancy payments system. We believe that there ought to be opportunities, perhaps, for a further review of the whole system, and that we have to review our whole attitude to unemployment along the lines that my hon. Friend the Member for Rutland and Stamford (Mr. Lewis) and one or two other hon. Members, including the hon. Member for Perry Barr, have suggested. It will, perhaps, be necessary for more radical solutions to be considered and required. The Government do not turn their face against further radical re-examination of our attitudes to unemployment and the schemes through which we seek to deal with it.
  For the moment, I believe that the Government are right to seek the further loan to enable the redundancy funds to be continued. I believe that the redundancy payments themselves have an important part to play in helping to ease the problems of unemployment. Nothing that I have said should seek to diminish the view of the Government that only a firmly based economy, a low rate of inflation and a competitive industry will, in the end, produce the real jobs that all hon. Members wish to see.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Newton.]
  Further proceedings postponed, pursuant to order this day.

  REDUNDANCY FUND (MONEY)
  Queen's Recommendation having been signified—
  Resolved,
  That, for the purposes of any Act of the present Session to increase the limit imposed by section 109(2) of the Employment Protection (Consolidation) Act 1978 on the aggregate amount which may be borrowed by the Secretary of State for the purposes of the Redundancy Fund, it is expedient to authorise any increase in the sums to be paid into or out of the National Loans Fund in consequence of any provision of that Act providing that the limit imposed by that section may be increased to £300 million.—[Mr. Newton.]

  REDUNDANCY FUND BILL
  Bill immediately considered in Committee, pursuant to order this day; reported, without amendment.
  Motion made, and Question, That the Bill be now read the Third time, put and agreed to.
  Bill accordingly read the Third time and passed.

  Iron and Steel (Borrowing Powers) Bill
  Order for Second Reading read.
  8.40 pm
  The Minister of State, Department of Industry (Mr. Norman Tebbit): I beg to move, That the Bill be now read a Second time.
  The purpose of the Bill is to raise the statutory limit of the amount of finance which the British Steel Corporation and its wholly owned subsidiaries can raise by borrowing and by receipt of sums paid by the Secretary of State. The need for the Bill arises because the corporation's essential requirements for further finance will shortly take it over its present borrowing limit of £5,500 million. Under the Bill the corporation will be permitted to take an additional £500 million of finance. There is also a provision for the limit to be raised by order by a further £1,000 million. As I shall explain later, however, I hope that it will not be necessary to make use of that provision.
  As I said in my statement to the House on 11 February, the Bill is basically an interim measure. It is intended primarily to enable the corporation to continue in operation while we come to our decisions on the corporate plan and then while the House gives due consideration to our proposals arising out of the review.
  Nothing in the Bill empowers the Government to give or lend the British Steel Corporation any more money. That will require my right hon. Friend to set and announce new external financing limits for the corporation, which he expects to be able to do soon, and after proper provision has been made to provide the necessary finance. The Bill is an essential first step in the process of providing finance to the British Steel Corporation, but its immediate effect will be simply to permit the corporation to continue its short-term commercial borrowings from the banks and other financial institutions within the limits that are set for it.
  The Government's response to the MacGregor plan will be in two stages. First, there will be my hon. Friend's statement to the House announcing the Government's conclusion on the review of the plan. In that statement he will also announce a final external financing limit for the 1980–81 financial year and a limit for next year. The new provisions are bound to take the British Steel Corporation over the current borrowing limit of £5,500 million, and it is only proper that Parliament should have already given authority under the Bill for the Corporation to take up the borrowing inherent in the new provision.
  Secondly, the Government will introduce a further Bill which will deal with the future of the corporation and its financial reconstruction. This will seek to write off a substantial amount of the BSC's capital which presently counts towards the limit which is being raised by the Bill. If this capital is written off, the limit of £6,000 million provided for in the Bill will afford more than enough headroom to finance the British Steel Corporation for the foreseeable future. The further Bill will therefore contain a clause reducing the borrowing limit so that the BSC cannot accumulate an excessive amount of new borrowing without the House being given the opportunity to debate the issues. In these circumstances, and provided that the Royal Assent to the further Bill is given in good time, it will not be necessary to take up the provision in this Bill further to increase the borrowing limit by order.
  338
  The provisions in the Bill will therefore be short-lived. They will be overtaken very shortly by the second Bill to reconstruct the corporation's capital. It would, of course, have been preferable to deal in a single Bill with the problems of the British Steel Corporation running up against its borrowing limits and the longer-term reconstruction, too. However, I hope that the House will agree with me that it is better to deal with the urgent difficulties in this separate legislation, both for good reasons, of financial propriety and to avoid asking the House to legislate under the threat of an imminent deadline which would have to be met to avoid the British Steel Corporation simply running out of money.
  A Bill to deal with the increase in borrowing limits of the British Steel Corporation usually affords to the House an opportunity to debate the wider issues affecting the corporation and the steel industry generally. I hope that the House will recognise that it might not be appropriate to widen the debate too far on this occasion. There will be a full opportunity to consider the wider issues in the course of the passage through the House of the further Bill which will follow the decisions on the corporate plan.
  Since taking my present office I have been anxious about the problems of competition between the British Steel Corporation and the private sector. I know that that anxiety is shared by many hon. Members on both sides of the House. My right hon. Friend the Secretary of State has already made it clear to Mr. MacGregor that he should ensure that the corporation competes fairly with the private sector. He has also drawn Mr. MacGregor's attention to the increasing complaints that have been made that the corporation's pricing policy is unfairly undercutting private sector competitors.
  Mr. MacGregor has assured us that the corporation does not set price levels for steel below those of imports. However, it has to match them, as do private sector companies if they are to remain in business. What the corporation can no longer do, as it did before the steel strike last year, is to maintain prices at the level set out in its formal price list. That state of affairs no longer exists. The strike opened our market to our competitors and things will never be quite the same again.
  The corporation now finds that it must offer rebates on the list prices. However, its policy is to match lower prices from competition and not to lead in setting lower prices. Mr. MacGregor has further undertaken personally to investigate any specific allegations of unfair pricing that are put to him by companies or by members of Parliament and to keep me informed of the results.
  Mr. Barry Jones: May I tell the Minister of the consternation in my constituency on hearing that BSC Shotton works is to receive 20,000 tonnes of hot rolled coil from Holland, from Royal Dutch? Trade union leaders are somewhat flabbergasted, as the steel making was taken away from Shotton only 13 months ago on the basis that steel would be supplied to us from Scotland. I should be grateful if the Minister would give me some guarantee that supplies will be available for Shotton and that the remaining jobs at Shotton are safe for the foreseeable future.
  Mr. Tebbit: It would be a bad practice if I were to be tempted into getting involved in the corporation's business. Equally, it is only right for me to try to set the hon. Gentlemen's mind at rest, as well as to try to allay the anxiety of his constituents.

  339
  I know that there was a failure of part of the machinery at Ravenscraig after Christmas. It was therefore necessary to import from Holland to keep Shotton in production. I understand that all is now working well again and that there is no reason to believe that it will be necessary again to import in that way. It was the difficulty of restarting after Christmas that was the cause of the problem. Nobody can give absolute assurances, but I hope that what I have said will help the hon. Gentleman and his constituents.
  When allegations are made about unfair pricing, I hope that they will be made either through me, if they stem from Members of Parliament, or, if Members prefer, direct to Mr. MacGregor. I hope that they will be made promptly after the incident arises, and concisely, with supporting evidence. I shall follow closely the progress of the complaints.
  Mr. D. N. Campbell-Savours: Are the Government likely to promote market share agreements between the public and private sectors for any of the products to which he has been referring?
  Mr. Tebbit: I think that that would be going too far. There is a great difference between promoting market share agreements and monitoring to ensure that the corporation is not pricing its products unfairly. Almost every company in the steel business is suffering severely. They are all losing money. Financially, they are bleeding. It is extremely unfair that merely because the British Steel Corporation has access to virtually unlimited funds through the taxpayer it should put its competitors out of business. I do not think that that is the corporation's intention. We must be clear and make it plain to everyone that that is not happening.
  Mr. John H. Osborn: Will my hon. Friend give me some guidance? In Sheffield, Firth Brown has had to declare 1,250 redundancies, though not necessarily among those involved in the Phoenix I or Phoenix II operations. There is concern that there should be a dialogue between the British Steel Corporation and the private steel manufacturers. At the moment I have no evidence that such a dialogue exists. Will my hon. Friend assure me that such a dialogue is taking place?
  Mr. Tebbit: I believe that it is. I hope that my hon. Friend will take what I have said about the undertaking given by Mr. MacGregor as evidence of that. The effort being made to bring together parts of the public and private sector industries in new free-standing companies is also evidence of that.
  Mr. Frank Hooley: The Minister used the expression "free-standing". Those companies are already flat on their faces as a result of Government policies.
  Mr. Tebbit: I do not think that that is a helpful remark. I am not talking about being helpful to me or to my colleagues. I should have thought that there was common ground in seeking to be helpful towards the industry. That is the objective that we have in hand. When I say "free-standing companies" to be formed, what I mean, and what the House understands me to mean, is that any company formed which is jointly owned by the private and public sectors should not be dependent upon subsidy in the long run. The company should be capable of standing on its
  340
  own feet and should not have recourse permanently to injections of capital from the public sector. I hope that that is common ground between us. I believe that it is.
  Mr. David Penhaligon: I am fascinated by the idea of fair competition, an aim with which I have considerable sympathy. Is the British Steel Corporation's steel pricing to be considered fair only when it prices its steels at a price at which the private sector can afford to manufacture? Is that the new criterion?
  Mr. Tebbit: That is not the criterion. The criterion is that the corporation should not rebate its prices by more than is necessary to meet foreign competition or competition from the private sector. But it should not lead the market downwards by undercutting below what is necessary to maintain not only its share of the market, but an adequate British share of the British market. As I said earlier, that was not a problem in the past, but the access gained to our market by foreign competitors during the steel strike means, unhappily, that we no longer live in the rather helpful world that we did.
  Mr. John Bruce-Gardyne: I want to put what is perhaps a hypothetical case to my hon. Friend. If the British Steel Corporation is relating its prices to what is required to meet the imported price, and is using finance provided by the House for that purpose, but the private sector does not have access to that finance is not the ineluctable conclusion that the finance provided by the House will enable the corporation to eliminate the possibility of the private sector competing with imported steel?
  Mr. Tebbit: We are not providing any finance for the BSC. My hon. Friend must get it right. Essentially, we are providing a foundation upon which, if the House so wills, in the light of my right hon. Friend's statement, we can provide an increased external financing limit and increased financing for the BSC. Let us be sure that we know what we are doing tonight, and not imagine that we are doing something else. Perhaps my hon. Friend could consider the matter in a different light. If we prohibit the BSC from meeting the prices being offered by its foreign competitors, what are we doing to help the private sector? All that we would do would be to ensure the BSC would close steadily as imports flooded in. I am sure that our foreign competitors will not stand back and say politely "The British have been so terribly decent that we will no longer compete with their private sector companies"— [HON. MEMBERS: "Come to the point."] I shall indeed come to the point. The key issue is to restore some rationality to the European market. That will not be an easy task. It would be foolish to allow the major parts of our steel-making capacity to disappear before we got round to discussing and making decisions about the matter in Europe.
  I am well aware of the difficulties faced by the private sector. I hope that through some of the joint companies, and through a degree of reasonableness in the competition offered to the private sector by the BSC, it will be possible to ensure that we come through this period of over-capacity in Europe and return to a sensible market with the private sector still intact. As my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn) said, that will be extremely difficult.
  I understand that Firth Brown has withdrawn from part of the market, primarily because it felt that it was too small

  341
  to survive in that area. It intends to concentrate on the areas in which it is strong. It may be that others will have to do the same. I am anxious to retain a steel industry in Britain while we are negotiating for a more rational steel market in Europe.
  Mr. Peter Emery: My hon. Friend has been most generous in giving way. On the question of rationalisation, not only in Europe, but in the private and public sectors, is he able to add anything tonight to the considerable amount of rumour that has been abundant in the past three days about Phoenix I? Is that any nearer completion?
  Mr. Tebbit: The birth throes of Phoenix are somewhat difficult. If one attempts to act as midwife, it is easy to burn one's fingers. I can only say that I am optimistic—more optimistic than I have been in the past—about its prospect for success. It would be wrong of me to go further than that tonight. I hope that my right hon. Friend notices that I am looking relatively cheerful as I say that. There have been intensive negotiations. I hope that an announcement can be made before long. I ask my hon. Friends to take me on trust in that respect. I have no choice but to ask that of them.
  As I have already explained, it is appropriate to remember that this is not, and cannot be, a Bill to give more money to the BSC. But without the Bill money will not reach BSC in time for it to pay its wages. We need the Bill first, with other legislation to follow. There will be ample opportunity to discuss these matters again before the money is made available.
  In that light, I commend what is a modest Bill, except in terms of the sums of money involved, to the House.
  9 pm
  Dr. John Cunningham: I compliment the Minister of State on the fortitude he has displayed in moving the Second Reading of the Bill. It is a little surprising, to say the least, for him of all people to be bringing this measure before the House in these circumstances. He has performed with not a little skill in the way in which he has managed his tightrope act, balancing on the one hand or the one foot his party manifesto commitments, and being dragged down on the other side of the tightrope by some of his hon. Friends on the Back Benches.
  It is important that the Bill should be given a Second Reading now. There is a huge crisis in the steel industry, not only in the public sector but, as the Minister rightly says, in the private sector. The crisis exists not only in the United Kingdom but in most of Europe. That crisis has been tragically underlined by the news from Sheffield today of the loss of a further 1,200 jobs at Firth Brown.
  The British Steel Corporation is particularly badly off, being burdened with massive investment loan charges, overheads and rising unit costs. Those costs have been rising as capacity utilisation went down. Capital for redundancies must be a major charge for the industry. The industry is the biggest single consumer of energy in the British economy, so its energy costs are also enormous.
  The Bill proposes that a further £500 million of borrowing should be made available. The Minister was right to stress that it is to enable the corporation to increase its borrowing legally. I assume that hon. Members would not want to force the corporation into acting illegally. We welcome that proposal.
  342
  I am a little concerned at the further proposal to allow an increase by order of another £1,000 million. I listened carefully to the Minister's expressed hope that that provision would not be necessary. We firmly echo that because we cannot go on deferring indefinitely the grasping of the nettle with regard to the British Steel Corporation's capital reconstruction. It is already long overdue.
  Mr. Tebbit: I thank the hon. Gentleman for what he has said. I think he would agree that it would be wrong of me to assume that the House would give assent to the capital write-off. It would be a little off if I were to assume too much.
  Dr. Cunningham: I accept what the Minister has said, if it means that he is being prudent. He is giving himself a fall-back position. We would not criticise it on those grounds, but we sincerely hope that the provision will not be necessary.
  It is sad that the introduction of the Bill means a further postponement of the decision on the MacGregor proposals. Irrespective of whether we accept the proposals in detail, they cannot sensibly be postponed for much longer in the interests of the private sector and BSC. When he announced his proposals in December, Mr. MacGregor stated:
  "The timing of the Plan is vital. The measures it describes must be implemented immediately, without obstruction. No later than July, 1981, the results of the Plan will be reviewed."
  On the first day after the Christmas Recess the Secretary of State said that there would be a statement on the proposals before the end of the month. We should like an assurance tonight that we shall have a date for the announcement.
  Mr. Campbell-Savours: In many areas BSC is already introducing the plan. People are turning up at the plant in my constituency day by day to look at the equipment. The unions are being pushed into the position where they have to negotiate. We want a clear undertaking from the Government about whether BSC is correct in carrying out the activities before the Secretary of State tells us whether the corporate plan is to be accepted.
  Dr. Cunningham: I agree. I was coming to that point.
  Mr. Michael Brown: I echo the sentiments of the hon. Member for Workington (Mr. Campbell-Savours). In my constituency BSC is implementing the MacGregor plan to the letter. In about 10 weeks the Normanby Park steelworks will cease to produce steel.
  Dr. Cunningham: I do not know whether the hon. Gentleman considers that to be good or bad. When we debated the announcement of the proposals, the Secretary of State made it clear that BSC could go ahead with closures without reference to him, notwithstanding the fact that they were part of the plan. Regrettably, I assume that that is what Mr. MacGregor and his board are doing.
  The closures are serious, but they are only part of the plan. It also envisages capital reconstruction. It envisages the corporation taking a vigorous attitude to the market, and that aspect has given rise to some of the objections from the private sector. In announcing his plan, Mr. MacGregor said that the corporation would act aggressively to regain its share of the market, but he has made no attempt to take over the position occupied by the

  343
  private sector. The private sector is well represented on the Government Benches. Where is the evidence that the corporation is doing what it is accused of doing?
  It does not make sense, whichever side of the House we sit on—whether we are supporters of the public or the private sector—to see jobs disappear at the rate at which they are disappearing in this and indeed other industries because we are importing steel that we could just as well manufacture in our own factories in the United Kingdom. That is another very good reason for having as little further delay as possible.
  I recognise that the Government have to make some difficult decisions, and I hope that the Minister does not think that I am being too hard about this. Nevertheless, there should be as little further delay as possible in getting to grips with that aspect of the problem.
  I am bound to say—and here I am critical of the Government—that the Government must accept responsibility for this situation in significant measure. They were hopelessly implicated in the lead-up to the steel industry dispute. They appointed Mr. MacGregor, as an aggressive, competent business man with a good reputation, to reinvigorate the British Steel Corporation, to get back into the market place and fight for the corporation and to sell its products. They trumpeted that appointment with some flair, to not a little amazement from friend and foe alike. Yet they now seem to be asking him to fight with one arm tied behind his back—[HON. MEMBERS: "Oh, no".] I will rephrase that. Perhaps it is the Ministers' right hon. and hon. Friends who want Mr. MacGregor to fight with one arm tied behind his back.
  Why has the vacuum created by the disastrous strike not been filled by the private sector? Not all private sector companies were involved in the strike. As the Minister said, the major share of the market went to foreign steel producers. If we want a future for the manufacture of steel for the benefit of the public and private sectors, we must have arrangements to allow us to claw back the imports, which probably now equate more nearly to 30 per cent. than 20 per cent. of the steel being consumed in the United Kingdom.
  Mr. Tebbit: I think that the feeling among my hon. Friends is that they do not like being asked to pay for Mr. MacGregor's boxing gloves before he hits them on the nose. That is the problem.
  Dr. Cunningham: I think that what the Minister's hon. Friends are asking for is not so much that as for the Government to pay for some boxing gloves for them so that they can square up to Mr. MacGregor. I have no doubt that that is the kind of discussion that is taking place behind the scenes, and the Opposition would not necessarily dissent from that.
  We recognise that the Minister of State and the Secretary of State will be in some difficulty in producing a plan to assist private steel makers because it runs contrary to their whole philosophy, but there is no doubt that that is what they are currently involved in. [Interruption.] The hon. Member for Knutsford (Mr. Bruce-Gardyne) speaks of subsidies in the private sector.
  344
  That is exactly what the private steel manufacturers are asking for, and I have little doubt that we shall soon have an announcement to that effect.
  Mr. Bruce-Gardyne: I did not wish to interrupt the hon. Gentleman's flow, but I should put the record straight since he has referred to me. My sedentary observation was to the effect that he was saying that the Opposition would probably see nothing wrong with subsidies for everyone. They never do. That is the trouble. That is why we are in this mess today.
  Dr. Cunningham: I stand by the comment of the Minister of State. He asked just a few moments ago whether it was not in our interests to ensure that our steel industry in the public sector and the private sector survives in order to give it the opportunity to do what I and the hon. Gentleman would like to see it do—that is, not only to survive but to prosper. If, in the short term, that means assistance to the private sector, the Opposition make no apology for saying that we would welcome that. We also welcome the proposal for joint venture companies. There is nothing wrong with that proposal either. On the contrary, it could make a great deal of sense.
  I remind the hon. Gentleman and others who smile about support for the private sector that some private sector companies, including companies such as Firth Brown, are not in difficulties because of what the BSC is doing. They play, have played, and I hope will play, an important part in the general framework of steel making and steel production in the United Kingdom economy. Labour Members at any rate want to see them survive, and I hope that the hon. Gentleman will subscribe to that view.
  The Government also have some responsibility for other problems which the steel industry faces. Their policies towards energy in Britain have had a significant and deleterious effect on the financial situation of steel makers in Britain. I know the Government have agreed that, through NEDO, discussion should take place.
  I must say—and this is partly based on my experience in the previous Administration as an Energy Minister—that British Steel's case on energy costs stands on its own. It is an entirely different case, and probably a far better case, than the case of the generality of British industry where energy costs commonly are only about 5 per cent. or 6 per cent. of costs as a whole. Therefore, the situation in respect of steel is very different from the situation in the rest of British industry. It is a grave mistake to treat British Steel's energy problems in the context of industrial energy problems as a whole.
  One of the reasons why industry is asking the Government to look at energy costs is that it is one of the few items on which it thinks it can get some quick action, given the parlous state of the economy. They cannot do very much about other costs. I hope that the Government will at least think about treating British Steel and private steel makers separately from the rest of industry when they look at the problem of energy costs.
  I said that Mr. MacGregor had said that the timing of his plan was vital. We have lost two months. I hope that I do not over-tax the generosity of the House if I re-emphasise that point. He said that in December and we are now in the middle of February. Further delay in making

  345
  decisions will not give the corporation or its managers or work force much of a chance to get anywhere near meeting some of the targets which they were hoping to achieve.
  I read with interest in the Financial Times recently that the real cause of the delay in making an announcement was none other than the Prime Minister. I do not know whether that is so. The Financial Times of 13 February said that
  "This follows the delaying of the main BSC funding announcement earlier this week at the instigation of the Prime Minister. She acted when it was clear that a number of back bench Conservative MPs were lobbying hard on behalf of GKN and other private steel companies."
  I have some sympathy with the point made earlier by the hon. Member for Sheffield, Hallam (Mr. Osborn) that the House was entitled to know a lot more about what is being discussed, by whom, who is involved and who will give their blessing to whatever may emerge from Phoenix II as it is now commonly called.
  We are entitled to have more specific information on that, particularly as it may involve a public corporation, which has been massively supported by the taxpayer, divesting itself of assets. I urge the Government to be more open about exactly what is taking place.
  Dr. Jeremy Bray: I entirely agree with all that my hon. Friend has said about the probable reasons for the delay in the Government reaching a decision on the MacGregor plan. I am sure he will agree that Labour Members do not entertain any serious fear that the Government are ratting on their financial commitments to the BSC. We do not wish the Government to have to face the same difficulties in the steel industry as they are currently facing in the coal industry and having their plans so misunderstood.
  Dr. Cunningham: My hon. Friend the Member for Motherwell and Wishaw (Dr. Bray) makes a most timely intervention. I have a sneaking feeling that today's outcome in the coal industry, whereby the Prime Minister moved quickly to get her Ministers out of hot water, may be reflected, at least in part, in what is to be proposed for the steel industry, both private and public sectors. I certainly hope so.
  The Government's economic policies as a whole have damaged British Steel's chances and the opportunities of steel makers throughout the economy. Last year we had a 16 per cent. slump in manufacturing industry, a massive rundown in building and construction, punitive cash limits on the coal industry—now, apparently, to be changed in some way—British Rail and others, and a general collapse in manufacturing investment in Britain. All these events have damaged companies such as Firth Brown in the same way as they have damaged the British Steel Corporation.
  Mr. Bill Homewood: One of the reasons why the corporate plan should be debated as early as possible is that many of us feel that it contains faults. It may cater for the current situation, but it will not cater for an upturn of the position the hon. Gentleman is now describing.
  Dr. Cunningham: I agree. Nowhere is that more evident than in West Cumbria, where a foundry which last year invested £12 million and which was to be opened by
  346
  Her Majesty the Queen with a fanfare in March was to be closed before the end of the year. That was an astonishing decision. I agree that there are a number of points of detail in the corporate plan to which we take serious exception.
  The Secretary of State and the Minister of State have been drawn into a major exercise in replanning the future of both the public and private sectors of the steel industry. I welcome his baptism of fire in his new post. He is being battered by the realities of industrial life in this country. It is a pity that he comes reluctantly to the position that he has reached. It would be better for both public and private sector industries if the Government were to take a more positive attitude towards them. They should take a far more positive attitude to the planning of our industrial future and to have in mind some strategic aims for industry.
  At the moment the Minister of State is involved in planning the future of the steel industry in Europe. He cannot escape the reality of the situation. Interestingly enough, in spite of some reservations, even the chairman of Thyssen was recently quoted as saying that, if the present arrangements within the EEC were to end, it would only be sensible to end them if a voluntary agreement were put in their place. We have heard that before, particularly from the Federal Republic of Germany.
  Therefore, in regard not only to the need for decisions on the MacGregor plan but industrial strategy as a whole, we shall have no excuses if we again fall into the trap of taking people on trust and then finding to our cost that, because they are not as good as their word, our industries continue to be undermined. I do not necessarily refer to the chairman of Thyssen when I say this.
  The Secretary of State has had his views on cash limits for the corporation and his views on non-intervention blown sky high. I have received an interesting letter from an employee of Duport, in the constituency of my right hon. Friend the Member for Llanelli (Mr. Davies). The writer talks about the problem of the British Steel Corporation perhaps undercutting the private sector, but also about high interest rates undermining the investment that has taken place, the incomparably high energy costs, which are 40 per cent. more than those imposed on the Continent, and the strong pound, which has done so much to curtail overseas activities of the private sector of British steel making. So even within the private sector there is a realisation that the Government's policies have been very unhelpful.
  We want a decision on the MacGregor proposals to be announced as quickly as possible, in the interests not only of BSC and other steel makers but of our other industries that rely on steel, its use and steel products, and of the workers in those industries.
  We accept the Bill. We regret that a number of Government decisions and attitudes have not helped the steel industry. I repeat that the Government cannot escape a significant measure of responsibility for the problems.
  9.27 pm
  Mr. Edward du Cann: The hon. Member for Whitehaven (Dr. Cunningham) was right in a number of his statements—not all, but a number. He was wholly right to emphasise the need for a healthy and strong private sector. He was also right to remark, at the beginning of his speech, that there was some irony in a Conservative Minister demanding huge subventions for public industry.

  347
  By no means least, the hon. Gentleman was entirely right to pay tribute to the skills and undoubted capabilities of my hon. Friend the Minister of State, Department of Industry, whom we all wish very well in his heavy responsibilities. We are glad to see him in his post. He will have every encouragement and support that we can give him from the Conservative Benches.
  As my hon. Friend and my right hon. Friend the Secretary of State know, I have a personal interest to declare. I am the chairman of a company—and a director of its parent—that includes among its engineering subsidiaries a steel maker in the engineering steels sector—alloys, high-grade carbons, and the like. Every ounce of steel that we make the BSC also makes, so we are in competition. That is fine, provided that the competition is fair. The problem that my colleagues and I face is that the competition is not fair. Therefore, I cannot agree with my hon. Friend's request that we should not widen the debate. It is necessary to speak out now, before final decisions on the MacGregor plan and other matters are made.
  Let the whole House insist that, in the face of the foreign competition that we have heard something about, steel production is a vital British industry, and an industry to be preserved. I have the greatest admiration—as I am sure the whole House has—for the men who work in it. I admire their loyalty and I am proud to be associated with them, if only in a minor way. I am sure that the House will agree with my ambition, namely, that the industry should become viable, profitable and efficient in both the public and private sectors. We want both sectors to thrive.
  It is tragic and unsatisfactory that—alas—both sectors are on their backs. As my hon. Friend the Minister said, the market is difficult. In the area of steel making with which I am concerned excess capacity is said to total about 2 million tonnes a year. My right hon. Friend the Secretary of State was kind enough to apologise for his inability to hear the whole of the debate. As the hon. Member for Whitehaven properly acknowledged, my right hon. Friend, my hon. Friend and the Government face problems.
  Fortunately, at the 1980 annual general meeting of the British Independent Steel Producers Association a clear policy was enunciated. I shall remind the House of that policy. It was that:
  "The United Kingdom's steel industry should emerge as more independent with no operating subsidies and without any significant incursions of public ownership or use of public money to damage the interests of private companies."
  I strongly support that item of Government policy.
  Let us examine the matter. The House is being asked to vote an amount that seems to me—and no doubt to many of my right hon. and hon. Friends—to be large. We are being asked to vote £500 million now, and a potential further £1,000 million—which will bring the aggregate of borrowings by and investment in the BSC to the astounding total of £7,000 million. These are very great sums. Therefore, we should see how the position has developed in the last 13 years.
  Let us begin by taking the profit or loss, before tax, of the public and private industries. Over the past 13 years the BSC has clocked up a total loss of £1,528 million. The private sector has clocked up a profit of £700 million on which it has paid tax at full rates. That is nearly £¾ billion.
  348
  What a contrast! The BSC's borrowings have come to a cumulative total of £5,080 million in the past 13 years. Let us be plain about it. It is a Rake's Progress. Continually the numbers increase. Continually the scale increases.
  With great respect to my hon. Friend, it is the duty of the House to look carefully at the immediate position. Let us consider the amount of cash aid given to the BSC to date, in this financial year. Under the previous chairman of the BSC, cash aid amounted to £450 million. My hon. Friend's predecessor said that no more money would be voted. He said that the cash limits were inviolate. In June 1980 a further £400 million went in cash aid. In addition, £121 million was carried forward from the previous year, making a total of £971 million. We are now being asked to vote a further £500 million. I do not know, but I imagine that about £200 million of that will be used in the current financial year ending 31 March 1981.
  I do not know whether there was a trading loss in this financial year, because one cannot tell from the BSC's accounts. They are very uninformative on the question whether loans have been repaid and whether there have been payments for redundancies. Let us use a different term—the cash outflow. For this one financial year the cash outflow will be £1·2 billion.
  As to production, again one cannot tell. It is not stated. I estimate that the saleable tonnage is about 8 million tonnes, so the best estimate is that the loss on every tonne of steel produced by BSC is now about £150.
  I repeat a point that I have made previously in the House, and I hope that right hon. and Hon. Members on both sides of the House will think it right that I should make it again and again. It is proper—as we say in the West Country—and it is our duty, always to examine with care the purposes for which we are called upon to vote taxpayer's money. How appropriate it is that we have an opportunity to do that in this instance.
  I agree totally with the hon. Member for Whitehaven that it is profoundly unsatisfatory that we should be asked to vote this money while we in Parliament have not had the sight, whatever others may have had, of the corporate plan. Nor do we have any proper account of the purposes for which this money is to be voted.
  Mr. Tebbit: I emphasise that the House is not being asked to vote money tonight. It is being asked to take the step of allowing the corporation to be ready to receive moneys when the House votes them. These are two different things, because there is clearly another stage before the money can go to the corporation.
  Mr. du Cann: It seems to me that they are, as we would say in the West Country, truly Siamese twins, and one cannot differentiate one from the other. Perhaps my hon. Friend wants to split the processes, but in so doing he is splitting hairs.
  It is a very old principle in the House that we seek to remedy or, at least, to discuss grievance before Supply. That is what I now propose to do. A certain suggestion is being made. Let us be direct and plain about it. My hon. Friend the Minister of State is a very direct man, and I am sure that he will appreciate it if I am direct, in my turn. A suggestion is being made, especially in the engineering steel sector, that the BSC is using taxpayers' money to undercut private steel makers' prices. My hon. Friend was

  349
  good enough to refer to this suggestion. It is said that the purpose is to drive them to the wall and thus to inherit their business. It is said, further, that the BSC is delaying any agreed plans for phasing out surplus capacity in the industry until losses in the private sector force closures.
  What are the facts'? It is undoubtedly true that the BSC is cutting prices not just below but far below what the most efficient private steel makers can quote. In my view—to answer exactly the point made by my hon. Friend—the BSC is leading in this regard. I accept my hon. Friend's invitation to supply details to him or to Mr. MacGregor. I can only tell my hon. Friend that I am told that in the alloy field BSC is quoting 20 per cent. below BSC list prices, and for grade 5 carbon it is about 30 per cent. below. Therefore, BSC is selling at a loss and, there is unfair competition. If it were not for the taxpayers' cash, BSC would be in the hands of the receiver.
  I noted the point made by my hon. Friend the Minister when he appealed to us. He said that this money was necessary to pay the wages. Any company in the private sector that found itself in such difficulties would sell an asset in order to raise cash—it would not come to the taxpayer—and I think that that is the course that the BSC should adopt.
  It is undoubted that the various schemes for restructuring the industry—Phoenix I and Phoenix II—have not yet been announced. I noted the optimism of my hon. Friend the Minister of State about Phoenix I.I am sure that it will be justified. My hon. Friend is a wise man, who does not make predictions without good reason. It has, however, not yet been announced. I know that the discussions have been going on for at least 18 months, perhaps longer
  As to Phoenix II, I should like to tell the House of the experience of the company with which I am concerned. We sent in our submissions to the Department of Industry in October, four months ago. They have never been acknowledged. They have never been discussed with the Department. Although they were confidential, they were passed immediately to the British Steel Corporation. That is the sort of situation with which we are dealing.
  I said at the beginning of my speech that I felt obliged to widen the discussion. I know that my hon. Friend the Minister of State will understand why I feel that I have good reason for doing so. Why have we not yet had these schemes for restructuring the industry? There has been enough time. Mr. MacGregor has been quoted as saying:
  "Time is of the essence".
  I agree. Time is the one commodity in human existence that is invariably in short supply. With the problems faced by our great British steel industry, it behoves us all to act as rapidly as we can.
  It should be plainly stated that so long as the BSC's losses continue to be borne so handsomely by the taxpayer, BSC has no incentive to act. It is private industry that is closing. One has only to read the newspapers to see the predictions. I have not seen any announcements about BSC plants in this area closing. [HON. MEMBERS: "Oh".] My words were "in this area." I am talking about the engineering steel sector. There are no proposals in the engineering steel sector that have been announced.
  There are remedies for this situation. I would like to make some recommendations to my right hon. Friend the Secretary of State and to the Government—whom, I repeat, I strongly support—and also to my hon. Friend. I believe that it is wrong that the responsibility for
  350
  restructuring should be exclusively in the BSC's hands. It is an interested party. It is the judge. It is not fair that the responsibility should be put upon the BSC. There are, I believe, two alternatives. One is to appoint the Department of Industry. There are difficulties about that. I suggest arbitration, with instructions to be prompt. The solution has to be imposed. Time is running out. Everyone knows it.
  Secondly, undercutting by the British Steel Corporation, as a matter of policy, must stop forthwith. If there were dumping from foreign companies we could object and get it stopped. The same should apply to our big domestic producer. A lot of nonsense is talked about prices in relation to imports from the Continent. I have seen foreign exporters come into our markets with deliberately low prices, particularly in the textile world, smash British companies, and go on to charge whatever they feel is appropriate. That is the risk that we are running here. While we are restructuring the industry—never mind the rules of the game—let us stand up for our own country for a change. Let us keep the imports out, if we need to.
  I thought that the Minister of State put it very well in answer to questions in the House on 11 February, when he said:
  "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."— [Official Report, 11 February 1981; Vol. 998, col. 874.]
  How right that was. I repeat that undercutting by the BSC, as an aspect of policy, must stop forthwith.
  Thirdly, the acquisition of downstream activities on the part of the BSC should be prohibited. There is great nervousness among stockholders throughout the country, as one finds if one talks to them. The position in cold rolling is exactly as I have described it in relation to alloys, steel and high-grade carbons. The market is being undersold substantially.
  I hope that my hon. Friend will tell the chairman of the BSC—that very remarkable man, Mr. MacGregor—that the first task for the BSC is to produce steel at a lower cost per tonne. That is its job. It is its first and, at this moment, its only responsibility to make a viable business. Everywhere I go I am told—
  Dr. John Cunningham: I hesitate to intervene in this very eloquent defence of the interests of the private sector, but a moment ago the right hon. Member was talking about fairness. Is it fair to suggest that the British Steel Corporation should be forced back into bulk steel production and out of the added-value end of the market, such as stockholding. Is that what he describes as fair? If it is, that tells us why there has been failure to agree for so long between the corporation and the private sector—something that the right hon. Gentleman has just been complaining about.
  Mr. du Cann: If I did not make it entirely clear, I apologise to the hon. Member and to the House. I thought I said that at a time when so much public money—taxpayers' money, hard-earned money—is going into the BSC it is essential that it should concentrate on first things first. That is precisely what it is not doing. It should cease at once to compete unfairly with the private sector. That is what it is also doing.
  As I was saying, everywhere I go I am told that taxpayers' money—here is the irony of the point made by

  351
  the hon. Gentleman—is underwriting the aggrandisement of a nationalised industry at the expense of the existence of private business.
  It is the classic case of the big bullying the small. That is a charge which I at any rate wish to be able to refute, not simply out of philosophical prejudice—although I admit that I am a profound believer in private enterprise and in the smaller companies against the huge corporations, such as the BSC. There are practical reasons, too. Those who use steel in this country are always going to want a second source of supply. The way things are heading, if, in the future, there is only a nationalised corporation to buy from in the United Kingdom, it will buy steel from abroad, and 1 do not want to see that.
  Dr. Bray: The right hon. Member is making a powerful case, particularly on pricing. I wonder whether he has thought through the complaint that he is making. It is true that British Steel is undercutting, for example, specifically where a major engineering firm has a large export order for which it needs cheap steel to compete with engineering firms overseas. Would it not be better to suggest that where the private sector needs to match overseas competition it should receive the prices from the BSC on the same terms as the engineering industry receives prices from the BSC, namely, to be able to compete, in its markets, with overseas competition? I understand that the Minister of State was suggesting something like this in matching import prices, which is a different point from that which the right hon. Gentleman
  Mr. du Cann: I would be very happy to debate this in some depth with the hon. Gentleman, who has much experience of these matters, and has views that are always of significance and worth pursuing. There is a whole series of possibilities. What I refuse to accept is the excuse that is currently being given by the BSC that it has to pull down its prices below the cost of production in order to compete with foreign penetration of our market. It puts that forward as a universal excuse. It is simply not true on that scale, or anything like it. There is a whole series of possibilities to be explored if the private sector and the public sector are to live together.
  At the risk of incurring some unpopularity from my right hon. and hon. Friends in particular, I would say that huge penalties are imposed upon the steel industry because of the costs of some of its facilities of production, notably fuel, and the pricing policies of the nationalised industries.
  I must come to the end of my remarks. As my hon. Friend said, a further measure will be brought before us fairly shortly. I can speak only for myself, as a private Member of Parliament, but I would not feel able to support any proposals of that sort unless we had the opportunity to inspect and discuss the corporation's corporate plan. I would say "No more cash until we know where we are—until we know what is going to be done with it".If the House is to be called upon to vote additional sums in substantial measure, I should not be ready to entertain such a proposal unless I were entirely satisfied that we would have in future a genuine partnership between the private and public sectors, and that there would be an end to unfair competition.
  352
  This measure needs to be fully discussed. There is a limit to what those of us who are keen to see a flourishing private sector—including, as I understand it, all Opposition Members—can possibly accept in this over-friendly support of the public sector. Let us support the public sector by all means, but let us do so only on terms that are fair.
  9.51 pm
  Mr. Denzil Davies: As my hon. Friend the Member for Whitehaven (Dr. Cunningham) said, the Opposition support the Bill. Britain needs a steel industry and it needs to produce steel. Most of the steel will be produced by the British Steel Corporation, and the corporation, whether one likes it or not, needs the money that will be provided by the Bill. It has to have the money and the Government, whatever their views on these matters, have to be realistic and provide it with the money.
  However, there is a private steel sector. I have a constituency interest because there is a private steel works in my constituency called Duport, which has its headquarters in the Midlands. It has a large private steel making capacity in Llanelli. I make no apology for mentioning the plight of private steel manufacturers, and especially that of Duport in my constituency. By all means let us support BSC, but let us give similar support to the private steel industry. If we do not do so, the competition will be unfair and some of the private steel manufacturers will be put out of business.
  The Minister of State described this measure as a modest little Bill that provides for only £500 million of borrowing. The hon. Gentleman knows that we are talking about a friendly banker that is providing £500 million at a reasonable rate of interest through the national loans fund. I do not know the rate, but it is 14 per cent. or perhaps even less. It is a reasonable rate, given present rates. We are not talking about a modest little Bill. The corporation is enabled to borrow from a banker that will never put in the receiver or liquidator. That is the difference between the corporation's position and that of another steel maker going to his banker and finding that he applies different commercial yardsticks.
  Mr. Roger Moate: The right hon. Gentleman will recall that my hon. Friend the Minister of State described it as a modest little Bill except for the money that is involved.
  Mr. Davies: With respect, there is nothing else in the Bill. That is what the Bill is all about. It is about borrowing but not about commercial borrowing. The Bill is not a modest measure. It is an important Bill for the corporation and it is one that we welcome. The Bill provides for a great deal of money, and does so on the terms that a commercial banker could not possibly meet in the same situation.
  Mr. Hooley: I hope that my right hon. Friend is not giving the impression that 14 per cent. interest charges are modest and reasonable. They are lunatic charges that are heavily penalising British industry in general as well as the steel industry.
  Mr. Davies: Indeed, but they are reasonable in the context of what others may have to pay to their bankers. There are those who pay far more than 14 per cent. The corporation is borrowing at about the lowest rate at which one can borrow in the United Kingdom. Everybody knows that. I accept that interest rates are too high, but I was comparing the rates on this loan with the rates on other loans that are available to steel manufacturers.
  Duport would be happy to have its debt written off. It is not a large debt. If it were written off, the company could continue to trade without too much difficulty for some time. There is no equality of treatment. That applies to not only interest rates but to the next Bill to come before the House on this subject, which no doubt will write off some of the debts. We are asking for equality of treatment. We are saying not that the British Steel Corporation should have the benefits but that other companies should have similar benefits to provide a viable steel industry.
  We are not talking about what used to be called a lame duck company. I remind the Minister and his colleague the Under-Secretary, who was courteous enough to see us the other day and to listen to our arguments, that we are talking about a company and a work force who have done all the right things for the past six or seven years. An investment of £30 million has been made during the past seven years in the Llanelli plant. The work force has been reduced from 2,700 to 1,100 and the production and productivity of that steelworks are as high as any in Western Europe. We are talking about help not for a lame duck, but for a steel manufacturer. The work force has co-operated with management, improved productivity, accepted redundancy and done everything that successive Governments have asked of it. Despite that, it now finds itself in considerable difficulty.
  The Government have an obligation to help. The plight of the steelworks in my constituency and the plight of other steelworks has been caused by Government policy. I make no apology for saying that. My hon. Friend the Member for Whitehaven mentioned energy costs. The Duport steelworks in Llanelli, because of its processes, is heavily dependent on energy. It spends 70 per cent. on electricity and 30 per cent. on gas. The Government have raised the price of energy not because it was justified commercially, but to reduce the public sector borrowing requirement.
  In the four-year or five-year monetary plan the reductions that the Government hope to secure—the irony is that they will never secure them—will be secured to a considerable extent not by cutting public expenditure and thereby reducing the PSBR, but by putting up charges and costs, especially the charges of the nationalised industries. At a time of recession and depression, we have the irony that energy costs are raised by the Government not because they need to be increased but to reduce the public sector borrowing requirement. That has hit the British Steel Corporation as well as the private steel manufacturers because of their heavy reliance on energy. That is a specific instance of Government policy affecting the public and private steel industry.
  Now we are told that gas prices are going up yet again. Why? Not for commercial reasons, but because a gas tax is to be imposed as we need to reduce the public sector borrowing requirement even further. The irony is that we shall not reduce it because by raising energy costs the Government will put more people on the dole, who will have to be paid unemployment benefit, which pushes up public expenditure and the PSBR.
  354
  The second reason for these firms being in difficulty is also due to Government policy. My hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) chastised me for talking about reasonable interest rates. But the Government put up the minimum lending rate to 17 per cent. Why? Because they have increased the rate of inflation. Deliberate Government policy puts up the rate of inflation and interest rates follow, whatever policy any Government wish to pursue. The cost of servicing the large loans is considerable for Duport and the other steel-making companies.
  The third factor is the high value of the pound. I do not blame the Government entirely, because other factors are involved, but that is a secondary matter. It has affected the steel industry and steel manufacturers.
  Finally, the policy of deflation has caused further recession and depression, and that, too, has affected the steel industry. Time and again during the past two years policy after policy has affected the industry to ensure that it is in financial difficulty. The last straw is the pricing policy of the British Steel Corporation. I do not know the truth. I accept that BSC has to compete with imports, that the French and German manufacturers are bringing steel into this country, and that Mr. MacGregor has to compete with them. The Minister assured us that the BSC would not go below the prices charged by companies exporting to Britain. But the BSC cannot compete with them without the favourable terms that it receives from the Government. We do not object to that. It is the only way that the BSC can lower its prices to the level charged by exporters to Britain. It is no good saying that Mr. MacGregor has given an assurance on the matter. Unless the Government are prepared—
  It being Ten o'clock, the debate stood adjourned.
  Ordered,
  That, at this day's sitting, the Iron and Steel (Borrowing Powers) Bill may be proceeded with, though opposed, until any hour.—[Mr. Brooke.]
  Question again proposed, That the Bill be now read a Second time.
  Mr. Davies: Unless the Government are prepared to provide other steel manufacturers with the same favourable terms as those granted to the BSC, it is no assurance to say that the BSC will not cut its prices to
  below the level charged for imports. We are talking about costs. We are not comparing like with like. We are comparing commercial enterprises—often in the hands of private bankers—with a public enterprise that has a quite different banker in the shape of the Government. My plea to the Minister is to give Duport and the private steel manufacturers that are efficient, and which employ thousands of people, the same terms as those given to the BSC. We do not ask for any more than that. We do not want anything taken away from BSC because it is the major manufacturer in the market.
  I turn to the question of jobs. We are talking about steel, but that involves jobs. In my constituency 1,100 steel workers are already unemployed, and another 700 or 800 who work for the same group in the Midlands may also be affected. The unemployment level in my constituency is 15 per cent. If the steelworks closes, it will be 20 per cent. Some of those who work in the steelworks are aged between 35 and 40 years. They will never work again because there are no jobs for them, wherever they may go. They are highly skilled men who will be on the dole for

  355
  the remainder of their lives. No Government should countenance that.
  I ask again for help. If we are not given that help, the
  356
  anger, distress and cynicism that will be created will last not only through this generation but for many generations to come.
  10.2 pm
  Mr. Patrick McNair-Wilson: If nothing else, the debate has demonstrated clearly that the mixed economy is a mixed-up economy and that we are getting the worst of all worlds. I am profoundly uneasy about the future of the private sector. I am equally uneasy about the future of the public sector. Those of us who have studied these matters throughout the years will not be unfamiliar with the previous attempts to restructure the finances of the BSC. Some of us with sufficiently long memories can even remember that rather bizarre attempt at public dividend capital, upon which dividends were never paid.
  I want my hon. Friend the Minister to tell us in more detail—although I know that he cannot do so tonight—for what purposes the new facility that we are debating and voting for tonight will be used. Can we be sure that, even at this moment, the corporation is not shopping around in what remains of the private sector to pick up bargins so that eventually it can rub out competition altogether? My hon. Friend and I know that that is exactly what is happening. We must recognise that the steel business has never been played by Queensberry rules. Anybody sitting here tonight who thinks that as the result of a pleasant discussion both parties will sit down and behave like good boys has something else coming to him. It has always been a cut-throat business. I hope to show how it may be possible to redefine the areas of activity.
  My hon. Friend is a modest man. He does not appear to realise quite how significant is his presence here, promoting this sort of legislation. The private steel companies do not have the ability to rub the magic lamp and to produce a genie at the Dispatch Box who can clear credit lines for them. The private companies realise only too well that in competition with them is someone with his hand deep in the taxpayer's pocket and for whom Government money is tuppence a bucket. Until that situation changes there can never be fair competiton between the two sectors of this great industry. It does not matter how we dress it up with any words that we may use in the House. By our activities here tonight we are placing colossal power in the hands of the British Steel Corporation in its dealings with the private sector. Nothing else is the fact of what we are doing here.
  There is a danger that the so-called rationalisation which we are promised will turn out to be a form of nationalisation. I regret that for a number of reasons. If the private companies cannot perform satisfactorily under private ownership I am certain that they will not do well under public ownership. All that one is doing is giving Mr. MacGregor and his colleagues the pleasure of paying out redundancy money to the businesses that they take over. The fact is—my hon. Friend knows it well—that many people in the private steel business want out of it, and out of it completely. Unfortunately, nothing has been said in the debate which would lead them to change their minds.
  What is required is a total redefinition of the position of the British Steel Corporation as it was defined in the first Iron and Steel Act in 1967. It was as a result of the definition in that Act that the private sector sprang into being. It consisted of the companies which because of their output, did not qualify to be nationalised.
  After 13 years, it is not unreasonable to redefine the position. As my right hon. Friend the Member for Taunton (Mr. du Cann) said so lucidly, the British Steel
  358
  Corporation must be about bulk steel making. The special steel business is the only part of the business in which the private steel maker can operate. We must make that separation. I accept the point made by the hon. Member for Whitehaven (Dr. Cunningham), but if we are to keep these two businesses together and not merge them totally into one nationalised concern something like that redefinition will be required.
  Over the last few years the corporation has faced the problem that, regrettably, the technology in which we are now involved is the technology upon which we embarked late in the day. I make no apology for the fact that under the Conservative Government of 1970 the British Steel Corporation, on the advice of the chairman, thought that we were talking about a production target of 35 million tonnes a year and then embarked on massive investment. In those days it was fashionable to talk about the large, integrated plants. Therefore, there is now in being something like what we promised ourselves.
  That technology has been overtaken by events. The energy crisis of 1973 is but one of those events. We do not know whether it makes sense in an industry of such a size, which has perhaps a saleable quantity of between about 8 million and 12 million tonnes of liquid metal to be sold, to be building huge blast furnaces at a time when we are in difficulties in respect of the provision of coking coal for the blast furnaces, not to mention the bringing of iron ore from the other side of the world. It is difficult to know whether we have created enormous leviathans which are already white elephants.
  My one plea—I must make it tonight before the final die is cast— is that once again the British Steel Corporation should consider its direct reduction plant in Scotland. I hear encouraging rumours, but no more. Here is a new technology, a technology which for us with our plentiful supplies of natural gas, could put us back in the pound seats.
  We are all familiar with the story of the Hunterston project, so I shall not weary hon. Members with it. The plants were opened and closed on the same day. They have never made an ounce of metal, which is a tragedy. They lie in that beautiful part of the mouth of the Clyde waiting for someone to buy them. They were built originally by the BSC to stop the private sector moving in and doing it instead. The tragedy is that that technology of using direct reduction rather than the blast furnace route and then on to electric melting is probably the future that should lie ahead for the BSC. My hon. Friend is skilled in these matters. I should like to think that he will urge Mr. MacGregor to look again not at the white elephants on the Clyde but at what could be the key to success in our steel making in the future.
  We in the House have seen money lavished on the British Steel Corporation in the 13 years that it has been around. They have not been happy years. The companies were making more steel when they were nationalised than they have ever made since, and they are now without landmarks. We no longer have the option of restoring the industry to the position that existed before it was put into Government hands. However, through the House we at least have the opportunity to demand of the Government a redefinition of the role of the BSC.
  In supporting what my right hon. Friend the Member for Taunton said about wishing to see the corporate plan, I should also like to see a definition of what the role is to

  359
  be and what is to be its relationship with the private sector. Without that definition, the future of private sector steel making is bleak in the extreme.
  10.11 pm
  Mr. Frank Hooley: The Bill is a good example of the inherent contradiction in the Government's economic policy. They set out with the objective of cutting the PSBR, but are constantly forced back into the position that the result of their policy is gigantic and increasing expenditure in every possible area. The classic example is the expenditure on unemployment and social security benefits, which is running at about £10 billion because of the increased unemployment resulting from their policies. Not only are they not reducing the PSBR; they are creating gigantic bills for the Exchequer to compensate for the social consequences of their policies.
  We are now seeing the same backlash effects in industry. Industries such as coal, cars and steel are being forced into the ground by the Government's monetary policies and are now having to be compensated by public-funds, because even this Government do not have the temerity to destroy industry on the scale that would be necessary if they did not provide from the Exchequer the funds needed to maintain steel, British Leyland and coal, and soon there will be others. We have the absurd downward spiral of their self-defeating inflationary policies, which, even by the Government's own standards, do not produce the objectives that they profess to want to achieve. The Bill is an excellent example.
  The Minister has rightly said that he is not setting out to spend the money that he is having to provide, but there is every likelihood that it will be spent unless he comes along with another rescue Bill that does some financial juggling with the capital structure of BSC and probably provides more money to carry it through another two or three years. Not long ago the present Secretary of State for Trade was honest enough to say that we had three years of famine and misery to put up with before the Government's policies were likely to succeed.
  Mr. Bruce-Gardyne: Unparalleled austerity.
  Mr. Hooley: I prefer to use ordinary words, such as "misery", which my constituents understand. If the hon. Gentleman prefers "unparalleled austerity", we will stick to that.
  I am not sure how far we are through the three years, but it is absolutely clear that the impact of those policies on a fundamental industry such as steel has been, and will continue to be, appalling. Quite a lot has been said about steel production, capacity and tonnage. My right hon. Friend the Member for Llanelli (Mr. Davies) pointed out that we are also talking about jobs and about the livelihood of men and their families who depend upon a flourishing steel industry.
  In this respect, I refer to the appalling headline in the Sheffield Morning Telegraph today that Firth Brown, one of the great private sector steel and engineering firms in Sheffield, is to cut 1,250 jobs—one-quarter of its work force. The article suggests that that may not be all, and that the figure may rise to 1,400 or more as a result of the recession through which we are passing. As my right hon. Friend the Member for Llanelli said of the Duport firm in
  360
  his constituency, Firth Brown is not a lame duck firm. It is not an imcompetent, backward firm. It has put massive investment into new products and techniques in recent years. It is technologically advanced and priduces technologically advanced products, but its efforts have been totally cancelled out by the absurdities of Government policy over the past two years.
  My right hon. Friend refered to energy proces. As a result of Government policies, Firth Brown is landed with energy bills running at about £10 million or £12 million per year. That is an increase of £4 million or £5 million on what it was paying not long ago. As my right hon. Friend correctly said, this does not derive from some arbitrary pricing policy on the nationalised industries. It derives directly from the fact that the Government are using electricity and gas as commodities on which to raise taxes for the purpose of their monetary policies and to reduce the borrowing requirement.
  The result is that intolerable burdens are being imposed on industries such as the steel industry, for which energy costs are a vital ingredient of overall costs, which simply cannot escape these enormous charges and this extra taxation. Consequently Firth Brown is now suffering the penalty.
  Again, it is not a question of strikes or of bad industrial relations. Industrial relations at Firth Brown have been excellent. There has been full co-operation with the shop stewards there. Indeed, the stop stewards committee at Firth Brown is famous in Sheffield for the forward-looking and constructive attitude that it has always taken in dealings with the management, both before and during the present crisis. Only recently a special agreement was reached with the management about working practices. That agreement was designed to avoid exactly the kind of tragedy that has now hit that firm and is likely to destroy the jobs of 1,400 of its workers.
  I wonder when the Government will realise the kind of industrial devastation that their policies are causing. Their overall deflationary policies are destroying demand in this country, with the soaring interest rates that have already been mentioned, the energy costs to which I have referred and the effect of an over-valued pound.
  The Government have argued that all those problems are common to Europe as a whole and that there is a steel crisis in Europe as a whole. There are certainly difficulties. But I draw the attention of the Minister and the Government to an OECD report on steel, published a little while ago. It states that during 1980
  "Italy's output rose by 9.1 per cent. to 26.5 million tonnes"—
  that is considerably higher than own production—
  "and that of Spain by 4.1 per cent. to 12.7 million tonnes."
  It is fairly clear that there are some countries in Europe which are not massacring their steel capacity and, indeed, are not cutting down on their output. They are successfully producing, and they are now beginning to produce at levels which 10 years ago we regarded as perfectly normal. In fact, about 11 or 12 years ago, this country was producing 28 million tonnes of steel, but we have now slumped to the miserable level of 10 million of 12 million tonnes.
  Mr. Tebbit: The hon. Gentleman makes an extremely interesting point. He blames the Government's policies for all the ills but then makes the valid point that this decline has been going on for about 10 years. Therefore, it cannot all be due to the Government's polices, can it?
  Mr. Hooley: I did not say that the declines had been going on for 10 years. In fact, the decline on the scale that we have just seen set in two years ago. I think that I am right in saying, although I quote the figures from memory, that in 1978 the BSC crossed over and exported more steel than was imported. In terms of both tonnage and value, this country moved into an export surplus by about 1978, which it has now lost.
  It is also true to say that up to 1978—certainly in 1977–78—the BSC successfully held on to between 56 and 57 per cent. of the home market despite all its reconstruction difficulties and the difficulties associated with new plant and investment.
  The Sheffield area is unique in that it has important plants both in the private and public sectors. It is not my view that we should enter into an argument tonight about the relative importance of the one or the other, because it is of vital importance that both should survive. What characterises the plants in the Sheffield area is new investment, good industrial relations and high productivity. In fact, in recent weeks the productivity of the famous Thrybergh bar-rolling mills, in the constituency of my hon. Friend the Member for Rother Valley (Mr. Hardy), has broken world records for output. The stainless steel plant, which was completed not long ago, is also doing extremely well.
  The capacity is there. We have the skills and the technology, both in Firth Brown and in the BSC plant. What is wrecking both is the Government's policies, which are placing intolerable and impossible burdens on the steel industry both in the private sector and in the BSC.
  Of course I welcome the Bill, which provides the financial leeway to make the BSC operate legally and properly within the financial limits until there is a decision on the MacGregor plan.
  However, I can hardly do better than to quote the comment of the Morning Telegraph this morning on the Firth Brown tragedy. The Morning Telegraph has never been anything remotely approaching a Socialist newspaper. This is what it says about the Government's current economic policy:
  "Is the Government able to lift its weary eyes north of Watford? Can it not see the immeasurable damage now being wreaked in Britain's industrial heartland—the source of the nation's wealth which so many are so anxious to spend?
  Sir Keith Joseph, that fountainhead of strong and free enterprise, the man who would make British industry a place for the efficient, unsubsidised entrepreneur, seems unaware of, or incapable of visualising the damage being done to private-sector steel, either through monstrous energy prices, compared with foreign competition, or the money he is pumping into BSC's ever-open but never accountable pocket.
  If he needs proof, indeed, if he is willing to face stark facts, he can now find them in Sheffield."
  That is a condemnation not from the Daily Worker but from a local Conservative newspaper in Sheffield. The people of Sheffield and the country are getting fed up with the Government's economic policies because they are driving our basic industries into the ground.
  10.25 pm
  Mr. Peter Emery: While it is fair to say that there have been major falls in the demand for steel during the past two years, it is not correct to suggest that all the problems of the steel industry have happened within the past 18 months. Many of the figures that I shall give will bear out what I say.
  362
  It needs to be said loudly and strongly by Members on both sides of the House that the British Steel Corporation is a national asset, just as much as the private steel-making firms that have served British industry for many years such as GKN, Hadfields and Duport are national assets. Both sides of the industry should be made successful and profitable.
  Today must be difficult for my hon. Friend the Minister of State. It cannot be a pleasant task for him to have to bring forward this Bill. I am certain that he would have preferred the corporate plan. It would have been preferable if the finances of the British Steel Corporation had lasted long enough for the House to have all the information before being asked for borrowing requirements of this nature.
  None the less, it is right that the House should have certain figures and assurances before it votes those amounts. It is not just a matter of £500 million. We dismiss that sum today as though it is a small amount. We are approving a £1·5 billion borrowing power. Once that has happened, there is little that we can do to stop it—other than in a 90-minute debate on a statutory instrument which we cannot amend.
  It is therefore worth while to look at the short history of how the borrowing has grown. In 1975 the Labour Government, in their Iron and Steel Bill set a borrowing requirement for BSC of £2 billion. After 18 months, it had to be increased by 50 per cent. immediately, with a right to draw £4 billion. Two years later the sum was upped to £4·75 billion, with a drawing right of £5·5 billion. Now, in 1981, we are increasing the figure yet again to £6 billion, with the possibility of drawing up to £7 billion.
  It is hardly an encouraging record in just over five years to have an increase of over 350 per cent. in the borrowing requirements of the industry. It does not say much for the management concept of the industry's requirements, for the financial understanding of the financial advisers of the corporation, or for the Government's financial supervision of this nationalised industry.
  It was suggested in the Select Committee on Industry and Trade earlier today that British Leyland was becoming the permanent pensioner. The BSC seems to be the constant money drain on the economy. It is for us to begin questioning how that money should be spent. In view of the losses sustained by the corporation over five years, when it is suggested that we should vote money that could turn the profitable private sector into a loss-making structure hon. Members must begin to consider very carefully whether it is right that this extra money should be used.
  Let us look at the cost of the corporation to the taxpayer over the five-year period from 1975–76. The total operating losses are £1,647 million. The closure costs in addition are £226 million, and there are other special items that increase the extraordinary costs to £1,067 million. The total loss of the corporation over the period is £2,714 million. Those are telephone numbers in finance. Let us express them in such a way that ordinary people can understand them. They mean that every family in the land over the past five years has had to pay £23 a year to the BSC to keep it in business.
  My hon. Friend the Minister made it clear that the external financing limits had not been set for the coming 12 months. Therefore, the amount that can be borrowed once the Bill has been passed is not yet absolutely clear. Will he estimate what loss the corporation will make in the

  363
  next 12 months? He must have some figures. If he has not, we should not be voting the money; nobody should be in that position.
  We are not asking for the whole BSC plan to be revealed, but how much does my hon. Friend estimate will be the cash requirement in the next 12 months? These figures are important, and the House has a right to have them when we are considering the amount of money that is having to be loaned.
  From 1975 to the end of 1979–80, about £4,700 million has been extended in total. How much of that is short-term money? How much of that finance has been revolved? How much has been paid back? I cannot believe that that is the outstanding debt. If it is not, what is? If we are funding possibly another £1,500 million, we should know how that compares with the present indebtedness.
  When he made his statement about the Bill last week, my hon. Friend told me that one should not compare the past capital when dealing with a restructuring of the capital as opposed to a new borrowing. But if he had borrowed £4,700 from his bank manager and then said to the manager "Lend me another £500. Forget about the £4,700. I cannot pay that back", I can tell him what the reply would be. These figures are relevant to the discussion of a Bill such as this.
  I turn to two points that I urge my hon. Friend to deal with. If this money is not voted, BSC will probably become bankrupt within six, eight or 10 weeks. The receivers will have to be called in. If we are to back the MacGregor reorganisation, the Bill, however much we may dislike it, must be enacted. However, we have a right to ask my hon. Friend and the Department to spend a reasonable amount of time considering the rationalisation and specialisation of activities—I think that that is the in phrase, although I am never certain whether I like such phrases—in the private sector and in the BSC. Unless we achieve some form of structured rationalisation, the future of the private steel sector will become non est. It will come to an end.
  My hon. Friend gave the impression that Phoenix I will come into operation. GKN has spent much time and effort trying to bring that about. Perhaps it could set a pattern. However, we should get on with Phoenix II. If my right hon. Friend the Member for Taunton (Mr. du Cann) is correct, as no doubt he is, it is shocking that that matter should have been left for so long.
  Will my hon. Friend try to drum some sense into the German, French, Italian and Belgian steel industries? We do not want a permanent merry-go-round, with every Government subsidising every steel industry so that they can compete with each other. It is like the ramp of export subsidies. Somebody has it and, therefore, somebody else has to have it. The system goes round and round and the public sector commitment from Europe ever increases so that artificial prices can be structured. That does not benefit the steel industry. The Secretary of State should try to take a major lead in rationalising that area.
  I hope that my hon. Friend the Minister will pay attention to a certain factor that affects all sectors of the steel industry. The Select Commitee on Industry and Trade published its first report this year on imports and exports. In paragraph 71, the Committee had a number of things to say about energy prices. It is an all-party report.
  364
  Representatives of the Committee range from some of the more extreme Tribunites to some of the more Right-wing members of the Conservative Party. The report states:
  "the BSC … submitted to us a copy of a study they had produced jointly with the British Independent Steel Producers' Association (BISPA). The conclusion of the study was that in the United Kingdom the monopoly position of the energy supply utilities effectively made it possible for Government to impose on them pricing policies unrelated to the requirements of the market place with detrimental and near disastrous consequences to manufacturing industry. The British steel industry is being increasingly handicapped vis-à-vis its competitors as a result of UK energy policies."
  In the memorandum to which that refers, BSC suggests that it has a cost penalty of between £50 million and £70 million per annum. If that argument is correct—serious people have looked at it and could not find any fallacy in it—surely the Government ought to attend to it to see whether action could be taken.
  There cannot be any sense in the Government imposing a policy which is so hindering the major steel industries, both private and public, against our European competitors. All I ask of the Minister is an assurance that the Government will look at that report with particular care in relation to the steel industry. I believe that that is one of the ways in which perhaps we could get some benefit to both sides of the industry out of this debate.
  I shall support the Government, but with a heavy heart. However, I hope that the rationalisation that we might be able to get from the Minister will be carried out quickly.
  10.40 pm
  Mr. Bill Homewood: The debate has been of great interest to me because some 15 months ago in the House, on at least three occasions, I think, I called for an investigation into the British Steel Corporation, and Conservative Members showed no interest whatsoever. Tonight, however, we have heard a number of suggestions that come close to that, and we have had reams of statistics criticising the BSC thrown at us in support of that very careful watch which should now be placed on the BSC.
  What has happened is that in the past 12 months the private sector of the steel industry has run into serious trouble, which did not exist 12 months ago. Nothing concentrates the minds of Conservative Members more than private enterprise getting into trouble. With public enterprises, that has no effect on them. The hon. Member for Brigg and Scunthorpe (Mr. Brown) intervened in a mildly apathetic way, if not a pathetic way, on behalf of his constituents in Scunthorpe, but apart from that we have heard scarcely a peep from Conservative Members.
  Basically, as has been said by some of my hon. Friends, the problem for both sectors of the industry stems largely from the Government's economic policies. I cannot criticise the right hon. Member for Taunton (Mr. du Cann) on that score, because I have listened to him on a number of occasions when he has been critical of his right hon. and hon. Friends in respect of their economic policies. However, it is true to say that we have heard little of this in general from the Conservative Benches, which is basically where the steel industry's problems come from.
  In 1980, usable tonnes of steel produced in Britain amounted to only half of what was produced in 1979, and only three months of 1980 were affected by the strike about which we have heard so much. If we are to believe the production figures for January this year, from both the public and the private sectors combined, and if the year's

  365
  production follows the pattern of last year, in combining both public and private sector tonnages we shall not get anywhere near the 14·2 million tonnes that Mr. MacGregor posits in his corporate plan.
  The restructuring of the BSC's finances is being further delayed. The corporate plan poses the prospect of a further 20,000 job losses in the BSC. As already stated from both sides of the House, the embryo of that policy is already effective and these things are happening in some areas. Yet the Government cannot at this time produce their attitude to the full corporate plan. I wonder why. The plan has been before them for months. I understand that, apart from my own trade union, there is no union opposition. Yet we are told that the plan cannot be brought before the House. Instead, we have this messy, little Bill to tide the BSC over for the next few weeks until, as I understand the matter, some reconciliation can be made between Conservative Back Benchers and the Government and we can get the facts.
  The problems of the private sector stem, apparently, from Mr. MacGregor's aggressiveness. This has been music to my ears. On every occasion when Conservative Members discuss public enterprise, I begin to feel that it is so weak, so unenterprising and so deplorable in its attitude to commercialism that it would not be competitive with anyone. It must be remembered that an enormous amount of money was paid for Mr. MacGregor. The Opposition did not want to pay it. The Government wanted to pay it. Having paid that large amount, it would be wholly wrong for them now to expect public enterprise to live up to the image they portray of it.
  We are told that there is an overlap between the private and public sectors. I am sure that this is true in some instances. I am sure that it is true that the BSC, through Mr. MacGregor's aggressiveness, is undercutting the private sector in some areas. It seems to me, however, that Phoenix I and Phoenix II—that is not what they were called many months ago, when I first heard of them—are taking so long to get off the ground because of a fear in the private sector of the industry that it will be asked to conjoin with the public sector. Conservative Members should get together as quickly as possible. I am sure that the private sector of the industry will be coming to the House for subsidies. The quickest way to get them is through this plan.
  Although these discussions have been proceeding for months, there has not been a single word of consultation with the trade unions in the industry. We have heard about them through the back door. We know most of what has been going on. Not once, however, has either sector of the industry approached the trade unions to consult them on projects. There is a requirement within the nationalisation Act that consultation shall take place on matters of this kind. As usual, we shall be told in the House that such and such an activity has been agreed and will be enacted. Public money will be involved in the transaction.
  The main reason for the problems of the private sector is the high value of the pound. That is quoted in relation to most of economic problems linked with exports. It is probable that the private company which I intend to mention has no director in the House or an hon. Member who supports its activities.
  Sheerness, one of the most efficient, highly capitalised private companies in the steel industry is in dire difficulties because it has almost lost its export trade. I see the hon. Member for Lancaster (Mrs. Kellett-Bowman) pointing,
  366
  so I understand that there is an hon. Member on the Government side who will speak on behalf of Sheerness. As I understand it, 70 per cent. of its production 12 months ago was going to export, and that has been practically destroyed. Very few exports are now being dispatched from those works.
  Mr. Moate: Will the hon. Member give way? I am grateful to him. As he rightly surmises, Sheerness Steel is in my constituency. I concede something of what he says about the loss of its export market. May I also make the point that that company can still produce steel for the home market without subsidy but it cannot expand its activities, which would be of great benefit to the taxpayer, because of the massive subsidies going to the British Steel Corporation? If it were to compete even more in the domestic market, the BSC would simply bring down its prices at the expense of the taxpayer, i ask the hon. Member seriously which is better for the taxpayer and for the country—Sheerness Steel producing steel without subsidy and expanding its sales, or the British Steel Corporation carrying on as it is, losing perhaps £100 a tonne on every tonne it produces?
  Mr. Homewood: It is a moot point in the current situation in the domestic steel market, in that if the hon. Gentleman had his way and Sheerness were enabled to take over what he claims to be the section that the British Steel Corporation is now supplying by subsidy, obviously British Steel would be thinking in terms of more jobs being lost. Quite bluntly, this has never been any gain to the Government in their public sector borrowing requirement arrangements. Indeed, I said in the House when Corby was being closed that there would be no gain to the Government on the public sector borrowing requirement argument. I proved to be right.
  When I said that, the Secretary of State said that I obviously believed that nobody would ever get a job. The fact is that nobody has ever got a job. In Corby, 22·1 per cent. of my people are out of work. If there was any gain in that when the British Steel Corporation in Corby was losing only £10 million, I am afraid I cannot see it. I think that the same thing is relevant to the hon. Member for Faversham (Mr. Moate), who represents Sheerness.
  The other thing that worries me about the MacGregor plan is that the sharp rundown in capacity which obviously will be part of it appears to indicate that there will be no possibility of the steel industry being ale to cater for our domestic demands, as I mentioned in an intervention, if there should be even the mildest upturn in economic activity.
  It was mentioned that Shotton was importing some 20,000 tonnes of sheet steel coils simply because there had been a hiccup in the Ravenscraig output because of a breakdown. What sort of situation does this suggest that we are getting ourselves into where one breakdown of limited duration in a major mill means that we immediately have to start importing steel from the Continent to make up for it? What would be the situation for members of the Government who spend enormous sums of money on defence if we got into the situation that they are catering for? What would they do with a steel industry that was capable of producing only 14·2 million tonnes of steel? I do not believe strongly in that argument, but I believe in the argument that the steel industry is being

  367
  run down to such an extent that it will not be capable of taking on board any increase in economic activity in this country.
  One of the reasons for the steel industry's difficulties in both the public and the private sectors is energy costs. The electric furnace is used to produce much of our steel, especially by the small companies. I understand that energy costs represent 25 to 30 per cent. of the cost per tonne of producing steel from the electric furnace. Our electricity costs are about 30 per cent. higher than those of our EEC competitors. Gas prices have risen rapidly, and the gap between our energy costs is probably not as great as many of us imagine. It is about 10 per cent. Heavy fuel and gas-oil are more expensive in the United Kingdom than anywhere else in Europe.
  Productivity is increasing daily. Competitiveness in wage costs must compare favourably with anywhere else in Europe. There has been a substantial increase in output per man, and the wages paid to our steel workers are much below those paid in other Common Market countries. Since the strike, there has been no question whether industrial relations have been good. Most of the members of the union that sponsors me would say that since the strike the scales have been tipped heavily in favour of management and against the workers.
  There are still some tube works at Corby. The corporate plan means increased unemployment. I am told that BSC (Industry), which is a charge on the funds that we are discussing and is responsible for aid in the provision of jobs in areas where there are steel closures, has decided that Corby and South Wales no longer have a job creation problem and that that problem has been solved. It is justifying that decision on the naive assumption that exclusion will enable more aid to be given to other areas. More aid will be needed in other areas, but neither I nor my constituents would accept that the Corby problem has been solved with 22 per cent. of the work force being out of work.
  I should like to see an investigation into the BSC's affairs. I do not believe that the strategy has ever been right. Mistakes were made in the beginning, but they could have been corrected long before now. If there were an extensive in-depth investigation into the corporation's activities, there would still be an opportunity to correct deficiencies that are proving to be inordinately expensive to the country.
  11 pm
  Mr. John H. Osborn: If I were in the Minister's shoes, I should be in a real and intolerable dilemma. To that extent, I am sympathetic towards him, and wish him good luck—despite the fact that I shall not help him or my right hon. Friend the Secretary of State tonight.
  From 1965 to 1967 many Conservative Members could forsee the dilemma in which any Government could find themselves if British steel was nationalised, and if bureaucrats and others were given their heads. The BSC is a monster that has caught successive Governments, Socialist as well as Conservative, by the ears. No one can control it.
  My hon. Friend the Minister asked his colleagues to trust him. I know my hon. Friend, and also the Minister who is to reply, but I have to meet leaders of the private
  368
  sector of the steel industry this weekend and early next week, and they do not trust any Minister. They are struggling for their lives. We must bear in mind that the Government are asking for a blank cheque for £500 miillion, possibly rising to £1,500 million. That is no small sum. A portion of that would keep the private sector on its feet.
  The Bill is presented on the day that one of the stalwarts of the private sector, Firth Brown, has announced redundancies. Reference has been made to quotations in the Sheffield Morning Telegraph. I had intended to quote the words that were quoted by the hon. Member for Sheffield, Heeley (Mr. Hooley). The article talked of
  "the money he is pumping into BSC's ever-open but never accountable pocket."
  I did not hear those last lines quoted by the hon. Member for Heeley.
  Foreign competition is involved in Sheffield. Warehouses are packed with Austrian, Swedish, German, Korean and Japanese steel. Anyone operating a warehouse can write off excess stocks. That provides the competition that sets the low selling prices in the heart of Sheffield where the British steel is manufactured. I mention that because not only have I continually urged Members of the European Parliament to raise that matter with the Commission, but yesterday in Geneva, with the Council of Europe, I pressed EFTA about the matter, especially in relation to Sweden and Austria. I hope that the Secretary-General of EFTA and Austrian Members now know our concern about the unfair competition that has put BSC on the run, and which is also affecting the private sector.
  I hope that when my hon. Friend replies he will give us his impression of the Davignon pressures on the steel industry of Europe. Is the restricted production being carried out in practice? Why are we in this country faced with unfair competition from without, as well as from within, the EEC?
  Hon. Members have referred to the scale of the money for which we are asking namely, £500 million. It is not the full £1,000 million mentioned before the statement last week, with a possible write-off of £3,000 million or £4,000 million. Since nationalisation, the BSC has had £1,500 billion worth of accumulated losses, quite apart from capital investment. During the same period the private sector made a profit of £700 million. We are asking for fair treatment for the private sector as against the public sector. We would like both to survive and do well. However, there is the inescapable fact of over-capacity in Western Europe, although it is alarming to learn that in other parts of the world, perhaps with cheaper raw materials and newer factories, there is some expansion.
  The impact of taxation on industry generally, to a limited extent on the private sector in the steel industry, is being diverted to pump money into the BSC, which is now setting up in severe competition. I relate that to a David and Goliath situation. David, the private sector of the steel industry, has had to provide sustenance for a Goliath which is out of control. I should go a stage further. The BSC, the Goliath, should not be given a dominant control. The hon. Member for Sheffield, Attercliffe (Mr. Duffy) asked the Minister of State on 11 February:
  "Will the hon. Gentleman now assure the House that in any such mergers it will be the BSC that fills the dominant role?"—[Official Report, 11 February; Vol. 998, c. 870.]

  369
  Firth Brown is in his constituency. The hon. Gentleman's views of last week might be tempered by the experience of that factory in his constituency.
  We are faced with a dilemma. We want both the private and the public sectors to succeed, because they provide employment and wealth for our country. I am certain that my right hon. and hon. Friends are aware of that.
  However, we want more information about Phoenix I and Phoenix II. We are asking for the reorganisation of middle companies, such as Roundoaks, which is a balanced 50:50 TI BSC operation, Du Pont, which has subsidiary companies in Sheffield, Hadfields and GKN-BRYMBO. They should be one part. The rest of the companies are mainly in Sheffield—Thrybergh, Aldwarke, Tinsley Park, Stocksbridge and Templeborough. There should be an assurance that Ian MacGregor, with his blank cheque, will show a responsibility towards those other companies, and will not allow them to go into liquidation and then pick up the parts he wants for a sop. Such treatment could never be tolerated by the House. As a Member for Sheffield I would not be able to support a Government who allowed that to happen. That is a real fear, not only of the managers of the private sector industry, but of those in the trade unions in that part of the industry.
  The independent steel producers have suggested that section 41 of the Iron and Steel Act 1975 be used so that the Minister might bear in mind what is in the public interest. There are powers in the Industry Act, perhaps to take the two sectors out and form a compromise body. The French example might be followed. Those are all possibilities.
  The hon. Member for Heeley and other hon. Members blamed Government policies for the dilemma facing the BSC. We must bear in mind that the BSC has failed to realise the opportunities of 15 years ago, with targets of 35 million to 38 million tonnes. They talk about monetary policies, but many of the dilemmas facing the BSC are dilemmas of incompetence and unnecessary Government interference over the past decade.
  There is also the energy problem. In France, Germany and elsewhere energy costs apparently are much cheaper than those facing our steel industry.
  There are two aspects to the matter—the cost of electricity, and the cost of gas. So-called subsidies are provided for our European competitors. Within a few days the task force initiated by NEDO may prove that some of the bulk tariffs have gone against Sheffield particularly. When electric arc melting was proposed, there was a good presentation, particularly for Templeborough. In the neighbourhood there were coal and coal-fired power stations and the grid was not very long. It was, therefore, natural to give special bulk tariffs for electric arc melting in Sheffield. With nationalisaton both industries have averaged their prices. The local advantage for arc melting in Sheffield has gone out of the window. That was as much the fault of Socialist Governments as of a Conservative Government.
  I have to check my figures, but between 65 and 80 per cent. of electricity generated in this country is coal-fired from deep-mined coal. Gas is another ingredient that must be charged at the correct price if the extractors are to take the gas from the more difficult fields in the North Sea and elsewhere. Electricity depends on coal. Cheaper coal would enhance the competitiveness of electricity. Cheaper electricity would mean that the electric processing of steel
  370
  would be carried out more cheaply. If the pits in Scotland and Wales, particularly those that are costing possibly £200 million in subsidies, were ruled out, we should have cheaper steel, particularly from the plants with electric arc furnaces.
  The problem facing the trade unions in South Yorkshire is to decide how many steel workers to keep in jobs by not keeping people in employment in out-of-date and inefficient pits. As a country and particularly as a Parliament, we must face the problem boldly.
  Mr. Roy Hughes: What about the huge coking coal subsidies in West Germany, a country which makes considerable steel exports to Britain?
  Mr. Osborn: In spite of the subsidies, German coal is much more expensive than the coal available in this country. The cost of extraction there is about 40 per cent. higher. British coal is still the cheapest in Europe. However, as I have said many times before, Danish electricity producers are buying coal not from Britain or Europe but from opencast mines in America, Australia or Poland, where it is cheaper.
  Previous chairmen of BSC have asked why we, too, cannot import cheap coal. I believe that the demand for coal in Europe at present is about 300 million tonnes a year. About 70 million tonnes are imported. I should like to have the figures checked.
  Mr. Allen McKay: The hon Gentleman's argument is that if the BSC is allowed to import coal at a cheaper rate steel costs will drop. That is in the short term. When that coal ceases to be cheap, the steel industry will be destroyed.
  Mr. Osborn: That is a problem, of course. Our coal is deep-mined, and it is bought at immense price in human endeavour, even in the best pits in Nottinghamshire, Derbyshire and Yorkshire. As I have said many times, coal which comes in from the United States, and which could come in from Canada but for difficult shipping problems at the present time, is opencast coal. Some of the seams are hundreds of feet thick, with small overburden, so that coal can be extracted more cheaply there than in this country.
  That is the kind of problem that the Community has been considering boldly and squarely, particularly as the other member States have had no coal worth having for a long time. The Community countries have considered purchasing British coal. I do not wish to talk about the coal industry in this debate, but it is a deplorable tragedy that with the present high stocks we cannot export our coal.
  I come to my final point. Management of the British Steel Corporation presents a challenge. I believe that in Mr. Ian MacGregor—I have been asked about this many times—my right hon. Friend has chosen an excellent man. He knows how to look after the BSC and its interests, but he presents a challenge to those who are not in the BSC. I think that my hon. Friends find Mr. MacGregor a very headstrong horse. I am convinced that he has his hands on the reins. I hope that my hon. Friends will ensure that he goes in the right direction and does not trample too many people, particularly in the private sector, underfoot in his progress.
  11.17 pm
  Mr. John Bruce-Gardyne: My hon. Friend the Member for Sheffield, Hallam (Mr. Osborn)

  371
  touched upon a point of some relevance to some of the comments that we have heard from the Opposition. A number of Opposition Members have spoken of the impact of energy costs on the steel industry. As my hon. Friend rightly pointed out, one of the prime reasons for the high energy costs faced by the steel industry is the dependence of the CEGB on domestically produced coal. He pointed out that if there were greater access to, and use of, imported coal, the cost of energy to the steel industry could be brought down.
  It goes further than that. In recent days we have heard from the National Coal Board and the National Union of Mineworkers insistent demands—which, from all that we read tonight, may even have been acquiesced in—that, far from any increase in availability of imported coal, there should be a very substantial reduction. I am sure that that would be greeted with great enthusiasm by the Opposition, yet they have the nerve to talk at the same time about energy costs driving the steel industry into a corner.
  I wish that we could have heard from some Labour Member—perhaps we shall hear it during the winding-up speech—exactly how the Opposition reconcile enthusiastic support for the determination of the NCB and NUM to eliminate coal imports with the insistent demand that energy costs to the steel industry should somehow be reduced. If they can square that circle, they are better logicians that I took them for.
  Mr. Emery: Lower wages.
  Mr. Bruce-Gardyne: My hon. Friend says "Lower wages". I do not think that proposition will be advanced by the Opposition.
  A number of my hon. Friends rightly paid tribute to the skill and ingenuity with which my hon. Friend the Minister of State introduced what has been described by the Opposition as a miserable little Bill. I am not sure at what stage a Bill ceases to be miserable. I suppose that it would have to be reckoned in billions rather than hundreds of millions of pounds.
  The tributes that have been paid to my hon. Friend the Minister of State are entirely justified. All Conservative Members sympathise with him in the dilemma that he faces. He asked us to take him on trust. I am quite sure that we would all do that with enthusiasm. We know my hon. Friend. We have the greatest possible respect for him. Of course, we would take him on trust.
  Our anxieties relate to this splendid, new, entrepreneurial chief of the steel industry, Mr. MacGregor. How far do we take him on trust? The hon. Member for Kettering (Mr. Homewood) berated Conservative Members because we started complaining at the BSC being aggressive in its marketing tactics. He remarked how agreeable it was to find a nationalised industry being attacked for aggressive marketing and not for being a sort of clapped-out deadbeat on the floor. Of course, anyone can indulge in aggressive marketing if he does not have to pick up the bills. That is what concerns us.
  My hon. Friend told us that the Government had made it clear to Mr. MacGregor that he should ensure that he did not indulge in unfair competition with domestic producers. We were led to understand that Mr. MacGregor had given such an assurance. But, at the same time, he had to point out that he had to match import prices. That is his
  372
  privilege. That is what the Bill is designed to enable him to do. But it is not a privilege that is open to the private sector, because the private sector does not have Bills such as this to bridge the gap between the cost of its production and the price that it realises for its products.
  I know that we must not talk about the Bill providing money for the BSC. My hon. Friend assured us, and repeated the assurance, that there is no money in it. I was somewhat bemused when he went on to say that this legislation was urgently needed, otherwise the BSC might not be able to pay its wage bills. In that case, I am not sure what it pays its wage bills in. I do not know whether one can pay wage bills in clauses of a Bill or schedules thereto, but I doubt whether they would be accepted as speci of currency of the realm with which those employed by the BSC would be entirely satisfied.
  Mr. Tebbit: I am sorry if I did not make myself entirely clear. The point is that without the Bill the corporation would not be legally empowered to receive the money which may be granted to it following my right hon. Friend's statement, following his approval of a new EFL and following the Supplementary Estimates which would be required.
  Mr. Bruce-Gardyne: I do not want to labour the point, because we are really arguing about a distinction without a difference. However we look at it, the Bill is part of the process by which the BSC is enabled to meet its bills regardless of the relationship between its production costs and the price that it receives for its products. The anxiety of Conservative Members is that that sort of availability is just not there for the private sector.
  The hon. Member for Whitehaven (Dr. Cunningham) said that he would like to have evidence of the conduct of the pricing behaviour of the BSC to which exception was taken. I should like, therefore, to detain the House for a few minutes with an account which I received from a constituent who is engaged in the bright drawn bar industry.
  This is one small example. The information may now be out of date, because it relates to three or four months ago. Nevertheless, it is relevant to today's experience which the private sector has to meet.
  My constituent tells me that the British Steel Corporation at that time—three or four months ago—was supplying East German companies with billets which were rerolled in East Germany, supplied to West Germany as semis, bright drawn by Besse, in West Germany, and sold in Britain at a price which compared almost precisely at that time with the price at which the bright drawn bar industry in this country had to buy its semis from British Steel.
  That is a clear example of how the private sector cannot match the marketing behaviour of British Steel. It is hard to believe that British Steel could act in this manner unless it had fairly open-ended access to the taxpayer's money.
  We shall have to see what proposals are laid before the House when the Government come forward with the BSC's plans and the consequential legislation. I suggest to my hon. Friends and to my right hon. Friend the Secretary of State, who, with his usual courtesy, has listened to so much of the debate, that we are in danger of creating the impression, not only in the steel industry but on a wider scale, that there is one law for those great corporations of State in which the taxpayer is the only

  373
  shareholder and another for the private sector which has to earn its bread in world markets. It would be unfortunate if a Conservative Government were to give much more of the impression that there was virtually an open-ended cheque book for those in the public domain and a wall for those in the private sector.
  11.28 pm
  Mr. D. N. Campbell-Savours: I think that the British Steel Corporation is out not to undermine the private sector but to protect itself from the ravages of heavy imports which have traditionally put great numbers of people out of work in the public sector over the years.
  Before I venture to make my somewhat extended contribution to the debate, Mr. Deputy Speaker, I should refer you to a letter which I wrote to Mr. Speaker yesterday evening pointing out that I had outstanding with the Committee of Privileges a matter in relation to Mr. MacGregor and that I felt that I should seek his approval before speaking in the debate on matters relating to
  "the closure of Distington Foundry, the evaluation of Foundry capacity within the corporation and the effects of such matters on the borrowing arrangements."
  I also asked to be allowed to
  "comment on the British Steel Corporation management's decision taking procedures, my attempts to gain access to information on the background to BSC closure and redundancy decisions and the failure of the Secretary of State for Industry to gain access to information within BSC by using powers available to him under the 1976 Iron and Steel (Amendment) Act."
  In his reply to me yesterday Mr. Speaker said that he had taken advice on the matter and was able to assure me that there was no reason why, if I was called in the debate, I could not refer to the matters set out in the third paragraph of my letter, which is the paragraph to which I have just referred.
  I draw that to the attention of the House because I wish to make a number of comments which may well invite the response from hon. Members, not only on my own Benches but on the Government Benches, that in speaking in the debate I was doing so without understanding my position in relation to the complaint.
  I wish also to express my gratitude to a number of my hon. Friends who have given way to me this evening to allow me to make my speech. I know that they also would wish to speak, but, of course, they know that the matter which I wish to raise is of major importance to me not only in my constituency but in a far wider context. I refer to the whole decision-taking machinery within the British Steel Corporation, the working of which I have been able to witness at first hand during the past nine months, not particularly because of the appointment of Mr. MacGregor but because of the historic decision-taking process in the corporation.
  The British Steel Corporation is a major employer in my constituency, and during the past 12 months, taking into account also the constituency of my hon. Friend the Member for Whitehaven (Dr. Cunningham), we have lost over 2,000 jobs in the industry. The impact on the sub-economy of West Cumbria has been considerable.
  As I understand the Bill, as it has been explained from the Government Front Bench, it is about extending to the corporation power to borrow further money to enable it to pay its immediate bills and to preserve it against the possibility of going into liquidation, if I may loosely use that term. In other words, it is to avoid the bankruptcy of the corporation. However, although I support the Bill,
  374
  since I understand that the unions and the management of the corporation recognise that it is important to its future, I have to express considerable reservations about the way that the British Steel Corporation uses the moneys which are made available to it.
  When I express those reservations, I have in mind, speaking from my own experience, the decisions surrounding the closure of the Distington foundry. In many ways, this underwrites the comments of the right hon. Member for Taunton (Mr. du Cann), who, in what I thought an excellent speech, appearing to spell out to the Government the essential requirements of the corporation, especially in regard to protection against unfair imports, added—perhaps the right hon. Gentleman will tell me if I misinterpreted what he said—that he believed that it was time that the Department of Industry was brought into certain areas of decision taking within the corporation, if only to monitor decisions being taken by Mr. MacGregor and the board.
  I wish to prove that the right hon. Gentleman is absolutely right. In the case of the Distington foundry in Workington, I submit to the House that if the Secretary of State for Industry had used the powers available to him under the 1975 Act and he had done his homework, that foundry in my constituency would not have been closing. I am referring to a foundry which, at a cost of £10½ million, was to open on 21 March 1980, with the Queen in attendance. Unfortunately, she was not able to attend the opening, due to some industrial action which had the effect of making it impossible for arrangements to be made for her to meet people on the site, but, certainly, the intention was to open the foundry, with a Royal opening, on 21 March last year.
  In the glossy literature produced by the British Steel Corporation, the foundry was described as the most advanced and one of the finest foundries on earth. It was certainly termed the most advanced foundry in Western Europe, and throughout the period of its construction it was regarded by the corporation as a jewel in the diadem of foundry capacity within the corporation. After it should have been opened, on 21 March, and throughout the summer months of last year, further works were carried out to the foundry, and it was not until the end of August—a vital date—that the final installations were carried out and the foundry was put on to an operational basis.
  On 7 November, within two months of that development, the corporation issued the following press release:
  "Management, staff and the work force of BSC Cumbria were informed earlier today that, due to continuing and depressed trading levels affecting certain of the businesses within the group, a further 826 redundancies must be implemented in order to help restore financial viability by the end of the current financial year.
  The two businesses most affected by this announcement are … The Distington Foundry: due to a heavy reduction in demand on the three main ingot mould and bottomplate foundries of the BSC which is likely to continue as the corporation's investment in continuous casting proceeds, an ongoing study of the BSC's future foundry capacity needs is under way. At this stage and under present demand circumstances, the interim decision has been made that the Distington foundry will deman to provide a capacity of 58,000 tonnes per annum."
  The impact of that announcement on Workington was, devastating, because the foundry, with this major investment, had been regarded as a major opportunity for the future, and it was seen as a commitment by the

  375
  corporation to the future. The response of the local authorities and a number of other bodies in Workington was to protest. The statement that this was being done
  "to help restore financial viability by the end of the current financial year",
  more than anything else, was regarded by the trade unions in Workington as a commitment to the future, and it was on that basis that they were willing to enter into negotiations with the corporation with a view to a demanning of the foundry.
  The distress in Workington and the anxiety over the retention of the foundry were also relieved by an article in the corporation's Cumbria News of November 1980, which said:
  "General Manager Langton Highton stated at meetings with the unions during the day and with the media and press, that though this had been a regrettable decision it was essential …
  We are now in the position where we have been forced to accept a lower level of operation in both the blast furnace and Distington foundry businesses and work out the cost basis from which we can, in the future, operate successfully in profit."
  The general manager went on to say:
  "So I think it is essential to be flexible in how we approach the finding of solutions to become viable again. I am still as confident and sure as I ever was that a substantial core of business will remain in Cumbria."
  Under the heading
  "Recovery"
  we read:
  "He continued: 'What we are endeavouring to do in Management at Cumbria is to provide a core survival kit in each of the business areas concerned. If we can do that—and our plan is to do exactly that—then we have a basis for the future recovery of a country (our country) in the product areas in which we are involved.' He added grimly: "If we fail to do that then we have no basis from which to expand.'"
  It was such statements that led to an acknowledgment by the work force at the Distington foundry that the BSC was committed to the future of the foundry in Workington, and it was on that basis that it entered into meaningful negotiations with the corporation and accepted the principle of demanning.
  The redundancies were presented as a plan for survival. It was said that at 57,500 tonnes capacity the foundry could operate at a profit. The statement, which the work force accepted and which led to the negotiations on demanning, was seen by the shop floor at Distington foundry as a declaration of intent by the corporation, a promise and a commitment to the future of its operations in Workington. It was called "Operation Slimline", and shop stewards on that basis willingly participated in persuading people in the plant to give up jobs in an area of particularly high unemployment, an area that until only last August was a special development area. I make that point because I want to impress upon hon. Members that in areas of high unemployment, particularly in the development areas, it is not with great ease that people give up jobs in such industries.
  Those who rejected that analysis—I can proudly say that I was one, because I did not give credit to the commercial assumptions behind the corporation's statement—were dismissed in the same publication under the concluding heading
  "Who really understands:—?"
  My comments were treated with derision in that document, as were the comments of the trustee mayor of Workington, who also objected and was not willing to accept the corporation's commercial assumptions.
  376
  The corporation sought in that document to quote a man who subsequently maintains that he was misquoted, the chairman of the joint crafts shop stewards and deputy-chairman of the Workington bench, which is how he was there described. It reported him as saying:
  "Mr. Highton has kept the options open; that I admire in the serious circumstances. A sensible man must understand. Now it is up to us. It truly is not a Government involvement. We must be our own men. If we do not accept the challenge, then God help us …"
  That was the statement of a man who was used by the corporation in the foundry to sell the principle of a document, a statement, a slimdown operation, that was to be discredited within a short time.
  The BSC was playing cheap politics and was subsequently to be found out. Its objective was to squash debate and any local rejection of its proposals. As I have said, despite the assurances that had been given, I was not convinced of the need for the slimdown operation. I was curious about the commercial arguments and assumptions. I appealed for information locally to try to gather together, if only slim amounts of information, at least sufficient for me to be able to challenge the corporation's assumptions. I wrote to Mr. MacGregor asking for a meeting. I wrote to the general manager of British Steel (Cumbria).
  I am going through this exercise in order to draw the attention of the House to what happens when the BSC takes a decision that involves public money. Indeed, we have heard much argument this evening about such money. In my letter to Mr. Highton, general manager of the BSC (Cumbria), I said:
  "I must say that from my part it is impossible for me to meet with Trade Unions to discuss in an informed reasonable way, the background reasons and implications of the announcement, and I would ask you again as a matter of urgency, to provide me with a detailed statement, perhaps even some of the discussion documents that must have circulated inside the Corporation prior to decisions being taken.
  As I have on a number of occasions said in my conversations with you; in publicly owned Industries there is in my view a right in the hands of Trade Unions to have access to information that has a direct bearing on the future employment prospects of their members. Although at the meeting that was convened on the Plant, according to a number of people I have spoken to, you ventured in some detail into the area of discussions surrounding the decisions."
  That is a reference to the meeting about the announcement. The letter continues:
  "I am also informed that no written submissions were made to the Unions, detailing much of the information I am now seeking".
  Indeed, I think that the right hon. Member for Taunton wanted such information to be made available to the Secretary of State so that the Department of Industry could monitor decisions made by the BSC.
  The letter continued:
  "I do hope that you will respond to my written request, as this week-end I am convening a meeting in Workington and I would hope that the Corporation would wish to ensure that at such a meeting any discussions that take place are based on an informed analysis of the Corporation's difficulties in Workington".
  Mr. Highton's reply made it clear that much of the information could not be made available to me. He wrote: "There is absolutely no way in which I could let you have any Corporation documents and hope that you will accept that I have done my best as I see it to keep you as posted as possible." The truth was that no one had any information. I submit that not even the general manager of BSC (Cumbria) had information.
  Following the original slim down statement, the trade unions replied to the management of the BSC as follows:

  377
  "We criticise Management for not supplying the information in a proper written presentation, giving full details, which would have enabled us to present our case against the size of manpower reduction, and alternative proposals for producing the new tonnage factor."
  All this is a gross misrepresentation of the type of social control envisaged by those who supported public ownership of the BSC in the mid 1960s. They never dreamt that trade unions and key individuals in the management of the BSC would be denied access to precious information that related to their future. They never dreamt that such decisions would be taken without consulting them in a fair and reasonable way.
  I can only quote the comments made by the right hon. Member for Henley (Mr. Heseltine)—now Secretary of State for the Environment—which I have quoted before in this House. During debate on the Iron and Steel (Amendment) Bill 1976, the right hon. Gentleman said:
  "It is a classic example of why the debate about industrial policy is so artificial. How can one expect to attract any sympathy from the men working on the shop floor in the steel industry, who are expected to bear the brunt of social and human change, when they are not told the whole story."—[Official Report, Standing Committee G, 26 April 1976, c. 48.]
  That was the response not of an Opposition Member but of a Conservative Member. He clearly understood the need to provide adequate information to those working in the industry.
  I then wrote to Mr. MacGregor. I shall not quote from the letter as it would be improper to do so. I sought information from the corporation on all the matters on which I had sought information before, when I had been refused access. By 1 December, with no reply from the BSC on any of these questions, the position became quite desperate, so I contacted the BSC's offices in London to delay my meeting with Mr. MacGregor pending the possibility of receipt of information from the corporation; and yet still no information was forthcoming. The trade unions had no information; according to what I had been told, local management had no information; and I had no information. We were in the hands of senior managers within the BSC.
  Meanwhile, the corporate plan was looming in the background. The Secretary of State or the Minister of State will be aware that on a number of occasions I or my secretary telephoned the offices of the Department of Industry to find out when the corporate plan announcement was due, because many of us in Workington were battling for time against the possibility of an early announcement of the corporate plan.
  On the morning of Friday 12 December, I finally received a letter from Mr. MacGregor—at 9.30 am—telling me that we would meet next week in a meeting to which I am not in a position to refer. But I can say that within five hours of receiving that letter the BSC announced in Workington the closure of the foundry to which we have been referring. In other words, the BSC denied us access to any information on its evaluation. It deliberately prevented trade unions and local management from participating in a meaningful way in this decision. Then, finally, the BSC took a decision within hours of my being informed of the confirmation of my meeting. That was the announcement which shook Workington.
  I cannot describe the feelings of myself and my constituents when that announcement was made. Over that weekend there were a number of hurried meetings with the trade unions and other interested parties, but they all culminated with a meeting I had on the Monday morning
  378
  with the trade unions on the foundry in Workington. It was at one of these meetings that I was handed documents which were subsequently to be referred to in a number of newspaper articles, inaccurately, as documents which had been referred to the Director of Public Prosecutions.
  One of the documents which were brought to my attention was entitled
  "Ingot mould foundry rationalisation review—"
  a document which I have been told I never had but which I have. I have it here in my hand. This is the document that I was handed by an employee of the BSC. It relates to the original evaluation that was carried out by the BSC. The remarkable thing about this document is not that it was dated December, or even November, or perhaps even October, it was dated 26 September.
  In other words, within 26 weeks of the Queen being due to open the foundry in Workington, the BSC had published internally a secret document which was being used as the reason why the foundry in Workington was to be closed Furthermore, this evaluation was produced within four weeks of the final stages in the installation of new equipment in the foundry in Workington.
  Conservative Members have been wondering where their money goes. I am telling them tonight. It is wasted when there is an overlap of decision taking within the BSC that shows up inconsistencies of this startling measure.
  This document, as I have said, was internal—a secret document to the corporation. Its circulation was limited. Having proposed three options, it did not recommend the closure of Distington. It grossly misrepresented statistics relating to the operations of Distington. I have to say that I regard page 5 of the document as a lie. I use the word with great care. Whatever happens as a result of the decision taken by the corporation, I will always remember that the BSC tried to prove to my constituents in Workington and to the people who work in the foundry at Workington that the decision that it had taken was based on real and valid figures. Those figures, as I shall prove, have been totally discredited over the two months since the announcement by the BSC of the closure.
  It made cost-per-ton assumptions on the basis of hypothetical mould sizes. Those sizes simply do not exist. They have no bearing on real evaluation of foundry products. It got the manning wrong in Workington. It got the energy costs wrong in Workington. It got the service cost reductions wrong in Workington. It got the industrial grant repayment liability wrong in Workington. It ignored criticially the whole question of quality of product in the foundries of the BSC.
  Statistically, it can be proved that other foundries have to provide three ingot moulds to every two from the Distington foundry. That alone is worth £2 million a year to the BSC. That money was not taken into account by the BSC in its evaluation.
  I have yet another document that I should not have. I can say no more except to quote from it and put to hon. Members that I should not be pressed as to what it is and whence it cometh. The document compares moulds from different foundries. It says:
  "Using the figures for 1979–80 … had all the moulds purchased during that period been from"
  another foundry within the corporation other than Distington,
  "a further 247 moulds at a net cost of £647,780 would have been required for the same number of ingots."

  379
  Despite the other foundry
  "maintaining that performance would approach that of Distington foundry during the year 1980–81, the first six months indicate that for the full financial year had all moulds been purchased from"
  the other foundry
  "a further 246 moulds at a net cost of £687,257 would have been required. The additional net cost to Teeside for moulds for the year 1981–82 assuming the same level of improvement, if all of these moulds derive from"
  this other unnamed foundry
  "will be in the order of £550,000. It is also evident that whereas in 1979–80, a settlement of £71,000 was obtained from"
  another
  "foundry for a part acknowledgment of loss of average mould life compared with Distington Foundry, this type of claim will not be feasible with the demise of Distington Foundry."
  That is evidence—I have other documentation—that vital areas that should have been considered by the BSC in its evaluation were not taken into account, at direct cost to my constituents.
  The document ignored the need to spend additional moneys on other foundries within the British Steel Corporation, irrespective of capacity and the need to increase capacity in those foundries, if only to bring them up to the essential standards required by the Health and
  Why did it misrepresent the foundry in my constituency? We have to go back to the reorganisation of foundries—something that I commented on briefly in my intervention in the debate on 16 December. Until 1978, Distington had been part of the Forges, Foundries and Engineering group of the British Steel Corporation. Whilst it was part of FFE, it was protected and its case was heard because it took its place at the table where decisions were taken in the BSC on the future of foundries.
  The reorganisation of Distington foundry in 1978 was deeply resented locally. Many people felt that the future of the foundry would be undermined following that evaluation. Those who made that accusation maintain that in 1972 and in 1975 rationalisation studies carried out by the BSC on foundry capacity always showed the future of Distington to be secure. Whilst we were with FFE, our future was secure. The £10½ million was invested because we were part of FFE and FFE believed that the future of foundry capacity within the BSC should be based on Distington, even if it meant a unitary foundry at some time in the future. Even capacity updates within the corporation in 1976 and 1978 preserved the future of the Distington foundry.
  Then, in 1978, it all went to the wind. We came out of Forges, Foundries and Engineering and went into BSC (Cumbria). I have mentioned the objection in Workington. That was the beginning of the trouble. Suddenly, all the figures changed. Suddenly, we were not the glossy foundry in the spectrum of foundry activities of the British Steel Corporation. Distington foundry lost its seat at the evaluation table where decisions were taken on the future of foundry capacity. Statistically, we suddenly slipped down the league because our case was not being put.
  Perhaps I should refer finally on this area to the reason why the so-called statistics which I referred to as a lie managed to arrive in this document, the rationalisation review. I had a few brief years in business. When one is in business, one does one's homework properly and does not take quick decisions. One sits down, evaluates, thinks out the position and then takes the decision. The
  380
  consultations as part of the evaluation that took place in Workington to get the vital information which was used against the BSC's foundry were done in a most unspectacular manner.
  I am told that there was the odd letter and a few telephone calls and that a few junior managers were put on the job and told to go out and bring in some figures. Even the people who provided those figures denounce today the procedure that was used to produce them. At open meetings that have taken place in Workington in front of senior managers of the corporation, these same people have said that they were not given the opportunity to provide real information and that if they had known that the information they were providing was to lead to the kind of decisions that were taken by the corporation in Workington they would have done their homework far more effectively. They were not given that opportunity. There was no checking of that information and no interdepartmental consultation in Workington about the value and the accuracy of the information that was given to FFE evaluators.
  Another document was given to me at the meeting. It was entitled
  "The Ingot Mould Foundry Rationalisation Synopsis".
  It was not a formal document of the BSC. It was a "private" document. It stemmed from the initiative of a couple of managers, who sensed that something was wrong and that there might be a decision in the offing to close the corporation's foundry activities in Workington. They and some trade unionists hurriedly assembled a case against what they sensed was coming out of the offices of FFE, Sheffield.
  On 10 December they published their document. It arrived on the desk of the general manager of Workington only two days before BSC announced the closure. I make no criticism of them. What they did they did without the formal sanction of the corporation. They took it upon themselves as a last move of desperation to produce a case to challenge the commercial assumptions being made by FFE. They sought totally to re-evaluate the assumptions on the basis of the other document which I was to ascertain subsequently they had already seen, the other document to which I have referred. That document was not formally sponsored by the corporation and, therefore, I was not able to use it as I wished during the debate on 16 December.
  Following my intervention on 16 December and my meeting with Mr. MacGregor, to which I am unable to refer, Mr. Bray, the Managing Director of British Steel Holdings Ltd., came to Workington. There was considerable activity in Workington and there was public resentment at the decision that had been taken. Mr. Bray came to discuss with local workers at the foundry and management the implications of the decision. The assumptions in the document to which I have referred were challenged. As the trade unions still had not seen the document, it was agreed to publish the September evaluation and it was agreed by the managers of British Steel Holdings Ltd. to accept a reply from the work force. That was the birth of the new re-evaluation that was to be undertaken by the joint working party set up by trade unionists and managers in Workington.
  On 6 January, the document dated 26 September was published. It was not quite the same as the one that was published and distributed with a limited circulation on 28 September. It was missing a vital front page. They produced selective statistics from the September document

  381
  to prove that the decision that had been taken was the correct one. It was a subtle move but it did not fool the BSC found y re-evaluation working party, the new action committee that had been set up.
  That document had been produced 16 weeks too late. It is my firm belief that if we had seen the document that had been produced in September, and if it had been fully published and made available to the trade unions, the foundry in Workington would never have been included in the corporate plan announcement for closure. We would have challenged the assumptions in late September and Mr. MacGregor would have been convinced, as would have been the entire board, that the recommendation to close Distington was the wrong one.
  On 4 February, the action committee that had been set up to re-evaluate replied to the corporate plan announcement. It re-established the truth. It identified fundamental errors by the corporation in estimating costs at the Distington foundry. It identified important omissions in grant repayment liability. It identified important omissions in evaluation of Distington quality. It identified a major error in estimating output—so much so that there could be an £8 million error in the costings of the BSC. A £2. million saving could, under the new evaluation, become an £8 million loss. Furthermore, it sought a further evaluation of the closure. It required that in any new evaluation all the foundries should be represented, including Distington, that the chairman should be independent of the BSC and that there should be a fuller evaluation of the through costs to the consumers of ingot moulds and bottom plates. It asked for a serious study of export potential.
  The response of the BSC at a meeting convened to discuss the report was cool. BSC representatives refused to reply in detail to the case put by the evaluating team in Workington. Many at the meeting were deeply distressed. I shall go further. From my inquiries, I am satisfied that the whole exercise was a deliberate deception to enable the BSC to play for time. It had no intention of responding to new information that challenged its decision. Its intent was to deceive foundry workers in Workington, which it did, whatever the cost to FFE credibility. The representatives lacked the guts to return to Mr. MacGregor and tell him that the evaluation was wrong and that the decision was a mistake.
  Some may ask "Why?" I have a view, but it is an appalling view to express to the House. Despite statements by the BSC that discussions about the corporate plan excluded any political considerations, I believe that that was not the case. The punch and the clout of the Welsh and the Scots are such that there is a natural inclination in the Cabinet—perhaps proved only tonight—to respond and influence events accordingly, even if that proves detrimental to the English regions. It is significant that the Secretary of State for Wales is to accompany the Welsh team in the negotiation with the Japanese on the Nissan car deal. We in the Northern region must, as a matter of urgency, develop the same clout.
  I have witnessed a grave injustice in my constituency durng the past three months. It is a betrayal of my town—despite statements by the BSC that it retains a commitment to certain parts of its activities in Workington. I have approached the Government, and it is only in desperation that I have risen tonight to put the case in greater detail. I have tabled questions asking the Government to use the powers available to them under
  382
  section 5(3) of the Iron and Steel Act 1975—the same section to which the right hon. Member for Taunton indirectly referred when he sought further information from the BSC about its plans, especially in relation to how they affected the private sector.
  But the Secretary of State has refused to use those powers. He said that the determination of day-to-day policy by the BSC is a matter for that company. I put it to him, to the Minister and to the Under-Secretary that when such blatant mistakes are made by the BSC it is incumbent upon them to intervene. We are elected to the House by people in the constituencies to protect their rights. If the corporation makes mistakes of that nature, the Government, in a democracy, should intervene to ensure that those decisions are not implemented.
  I do not profess to presume that I shall one day stand at the Dispatch Box, but if I were ever to do so and an hon. Member came to the House with such a blatent example of abuse of managerial power, I should respond. The Secretary of State and his colleagues should respond to the affair of Distington foundry, if only to assure my constituents in Workington that justice is done and is seen to be done.
  I have made a long intervention in the debate. I do not abuse the procedures and privileges of the House. I thought long before I made this intervention and I consulted many of my hon. Friends. I had no option, because I found no response to my representations to the Government. If I was to carry out my electoral function, it was incumbent upon me to place before the House the facts as they relate to Workington.
  This is our last chance for justice. The Ministers know that they can go back to the BSC and tell it to reconsider the decision that has been taken in Workington. They should ask it whether it has made a mistake. If it has, they should tell the management that that mistake should be reversed. A proper evaluation should take place in line with the recommendation in the final evaluation produced by the action team from Workington. That team said that all foundries should be kept open on the reduced profit-making capacity basis—as declared by the BSC—proposed in the September evaluation, pending a further evaluation. When that evaluation has taken place, a decision about reduction in capacity can be taken by the corporation.
  I wrote to the Prime Minister following her announcement last Thursday. I sought a meeting to put my case on behalf of my constituents. We have a real case. I implore the Minister to ask his officials to check carefully the statement that I have made this evening and to intervene, if only in the name of justice.
  12.18 am
  Mr. Michael Grylls: It would be difficult to follow the hon. Member for Workington (Mr. Campbell-Savours) down the avenue that he has followed for the last three-quarters of an hour or more. We might reflect that his speech—I shall not comment on the merits or demerits of his case—might not have been made if there had been no nationalised steel industry. It vividly demonstrates the total absurdity of nationalisation involving the House of Commons in such decisions. That example illustrates that absurdity more dramatically than ever before.

  383
  Looking back over the debate on Second Reading of the Iron and Steel Bill in 1966, I chanced on a phrase used by the then Minister, Sir Richard Marsh. It seems wise in retrospect. He said:
  "I do not believe that nationalisation of itself necessarily solves anything."
  Sir Richard Marsh is a friend of all hon. Members now. We congratulate him on his long-sightedness, and on how he hit the target in the middle, as he frequently does now. How right he was to say that.
  In that debate, Lord Barber said something that turned out to be more serious and prophetic. He said that the nationalisation of the steel industry
  "will give comfort to our overseas competitors."—[Official Report, 25 July 1966; Vol. 732, c. 1228-41.]
  When one considers the consequences of the BSC strike in allowing in increasing imports, one realises that that is absolutely right.
  My right hon. Friend the Member for Taunton (Mr. du Cann) described vividly the traumas of one private sector company. Others have had similar experiences. The difficulties are real. If we do not include legislation in this Bill to cope with the problems, we must do so in a future Bill incorporating the long-term plans of the BSC.
  The EEC decision of 1 February 1980 clearly stated:
  "when assessing aid no discrimination must be practised between undertakings, notably on account of their ownership, whether public or private."
  The Government must be and must be seen to be even-handed between the public and private sectors. There should not be too much difference between both sides of the House. We want to see the BSC succeed and become profitable under the fine leadership of Mr. MacGregor, but in the process we do not want to destroy the 70,000 jobs in the private sector. I ask my hon. Friend to consider carefully the Commission decision.
  The decision further states:
  "Criteria must be drawn up for investment aids, aids to cover expenses arising from closures, aid to continued operation and emergency rescue aid."
  The Government should stick to that decision and not allow the aid to be used to further unfair competition which will put private sector companies out of business. Mr. MacGregor is known as a fine marketing man with a great reputation. He is right to pursue a policy of aggressive marketing. It is necessary for the corporation to succeed. However, it should not be a licence to kill the private sector.
  The principal problem is in the overlap areas. Is it necessary to cut prices so severely in the overlap areas of the special steel sector? No one wants to restrict aggressive selling by the BSC in order to improve its financial position. However, if it cuts in areas in which it does not need to cut, its financial position will become worse.
  Mr. Hal Miller: The overlap is not only in steel making; it is downstream in drawing, stockholding, tubes and forgings, where competition is continuing at rates of up to 25 per cent, below what the private sector has to charge to remain viable.
  Mr. Grylls: That is right. I mentioned only one area in order to be brief. There may be much less need to cut in the special areas, where the competition comes far less from imports.
  384
  My hon. Friend's problem is to protect the private sector. He is trying to get the first Phoenix combination between the private and public sectors off the ground. We should see the operation moving ahead in a matter of days, if not hours. That is certainly a good sign in a sensible and practical way which I am sure both sides of the House welcome.
  Under the 1967 Act, brought up to date by the 1975 Act, the Secretary of State has considerable powers of direction. Section 4 of the 1975 Act provides that
  "The Secretary of State may, after consultation … give … directions of a general character as to the exercise and performance by the Corporation of their functions".
  Perhaps the Government will consider giving some form of direction, which I believe would give comfort to many people in the private sector and to those in the House of Commons who are concerned about the private sector, to the effect that the money voted by Parliament may be used for redundancy or for restructuring but not for subsidising competition. Section 4 concludes by providing that the Secretary of State may use that power of direction if it is in "the national interest'". I believe that the case has been overwhelmingly made out tonight for something to be done along those lines. I believe that Mr. MacGregor would respond to a general direction not to use the money in that way.
  The sum of money provided for in the Bill, which the British Steel Corporation will be allowed to borrow in addition to its present borrowing requirement, is very large. If this is a holding Bill, one wonders why the sum needs to be so large. If we are to have another Bill very shortly which will incorporate the main corporate plan of the corporation, why do we need to give so much money now? I understand that originally there was to be an increase of about £100 million in the borrowing. That would have kept the corporation going until the end of March or early April, by which time the Government would have reached a decision on the corporate plan. Surely that ought to be possible now.
  It does not seem right—and many of my hon. Friends made this point strongly in the debate—to give this blanket borrowing right. It is a very large sum. Indeed, it is more than British Leyland is to have this year, and we talked about that enough. My hon. Friend may say that increasing the borrowing limit by £500 million does not actually give the money to the BSC. Technically, that is true. But this is the last moment at which any of us in the House can comment upon it. As I understand it, there is no other way in which we may comment once the Bill becomes an Act. We lose all control over that £500 million the moment the Bill receives Royal Assent. We may or may not wish to do that, but it is no use pretending that we have any other control or that there is any other parliamentary process through which we can comment upon it.
  It therefore seems to me to be an extraordinarily large sum. I do not believe that the case has been made out for such a very large sum at this time. We accept that eventually there will have to be a massive write-off for the corporate plan, and that there will have to be a very large amount of money for this year and next year. But why does there have to be such a large sum in an emergency Bill which is intended as a stop-gap? It seems a very large amount of petty cash, if that is really what it is.
  I therefore hope that when my hon. Friend replies to the debate he will say something about that. I hope that he will give us some indication of what control he intends to put

  385
  on in order to protect the private sector, and will also say whether he is satisfied that the criteria in the EEC document that I mentioned will be met.
  12.29 am
  Mr. Matthew Parris: I shall be very brief, as so much of what I wished to say has already been said by my right hon. and hon. Friends, many of whom have a broader and deeper knowledge of the steel industry than I have. I pay particular tribute to what was said earlier by my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn). His presence as my constituent, and as the Member for a neighbouring constituency usually discourages me from saying anything at all on the subject of the steel industry because he knows so much more about it than I do.
  I wish to make one point, however. I am afraid that again it relates to the private sector. A great many people in the private sector of the steel industry are my constituents, and I know enough about their problems to know that those problems are real and in some cases very urgent indeed. That is why I cannot entirely accept what my hon. Friend the Minister of State said about being able to avoid the wider issues in this debate. For some steel makers and their employees, this may be the last chance to look at the wider issues.
  He explained chat this was not a Bill to give the BSC more money. I remember that at the time, the reasons he gave were very clear. I am afraid that during this long debate they have escaped me. However, I must accept that this is not a Bill to give the BSC more money, although it seems to have something to do with money. It is at least a Bill to allow the BSC to carry on spending money which by ordinary standards it could be said it does not possess.
  I was encouraged by what my hon. Friend said about Mr. MacGregor being under instructions, so to speak, not to undercut domestic steel producers in the private sector but at best only to match competition from abroad. What then is the money for? Is the subsidy needed in order to match competition from abroad, mainly from Europe? If so, does that mean that the steel coming from Europe has been subsidised? If that is the case, are not we in a rather unfortunate position with our European arrangements where one country subsidises and other countries also subsidise so that they can match?
  Gradually, and not through any desire to do so, we unwittingly get what the Trotskyites would call statism whereby corporations supported by the State are able to advance whereas the private sector, not just here but in other European countries, is squeezed out because those subsidies are not available to it.
  Are those subsidies designed to enable the corporation to meet foreign competition, or are they for other purposes? For instance, are they to help with the reorganisation or with the many redundancies that will have to be made? If so, there is a good case for providing a subsidy to help the BSC with redundancies. However, what is the case for giving this money when it is not available to the private sector which also has to face the necessity to make redundancies, as the news from Firth Brown this morning makes clear?
  My hon. Friend also said that it was not the intention of the BSC to put domestic producers out of business. Why not? What is Mr. MacGregor's brief? If it is to run a company and to turn it into a profitable company which can compete in an essentially capitalist market place,
  386
  surely his brief must be to try to put domestic competition out of business if he can. That, among other things, is what any business man is supposed to do.
  I am not saying that that is desirable, but if Mr. MacGregor has the healthy instincts for which he was purchased surely that must be what he wants to do. While I applaud my hon. Friend's determination to stop him from doing that, it seems to me to indicate the essentially cliff-hanging nature of the sort of mixed economy which social democracy is likely to give us. I would pursue that argument further if I were not aware that it might be as embarrassing to my own Front Bench as it would be to Labour Members.
  My hon. Friend the Member for Surrey, North-West (Mr. Grylls) talked about overlap areas in the marketing of steel. I am not quite sure what he meant by that, but I had the impression that by "overlap" he meant someone producing something which was produced by someone else. That is also called competition and I had not realised that we were against it, or that it was necessarily an undesirable state of affairs in the market place.
  Like many of my hon. Friends, I have listened to many of these debates, not just in this Chamber but in that perhaps even greater debating chamber, the Members' Tea Room. I have debated in particular with my hon. Friend the Minister of State. On many occasion he has put to me the arguments that in a faltering way I am trying to put to him. I wish that he were in my place now making the speech which I am trying to make, because he would be making it much better, in a much more hard-hitting way, than I am.
  Mr. Tebbit: I should tell my hon. Friend that there have been many occasions this evening when I wished that anybody except me was in my position. I fancy that a number of hon. Members felt the same kind of emotion. None of us wanted to be here at that time. My views have not changed. I am glad that my hon. Friend is expressing them in such a forceful manner. I am pleased to hear them. They emphasise, as always, and as I have said on many occasions during the passage of nationalisation Bills, that it is difficult, if not impossible, to achieve fair competition between public and private sector organisations. It is extremely difficult. One is almost bound to be unfair either to the one or to the other.
  Mr. Parris: I accept what my hon. Friend has said. I suspect that it is impossible to achieve fair competition between the public and private sectors. It can only ever be a transitional sort of arrangement.
  I do not think that many Conservative Members would welcome subsidies to the private sector. On the whole, we do not like subsidies at all. But subsidies for the private sector may be announced. If there are to be continuing subsidies to the public sector—and there clearly are—I shall have to welcome subsidies for the private sector. They are becoming urgent in parts of the private sector of the steel industry, and I look forward to an announcement on that aspect in the near future.
  My hon. Friend said that we would have to take him on trust. I certainly take him on trust. This has been a helpful debate in many ways. I understand the difficult position of the Government Front Bench. I do not know what any of us would have done were we in a similar position. However, I hope that many of us have succeeded in putting across to the Government the urgency of the problems of the private steel sector in Britain.
  12.37 am
  Mrs. Elaine Kellett-Bowman: It is a great pleasure to follow that most refreshing speech by my hon. Friend the Member for Derbyshire, West (Mr. Parris), because it lightened a rather gloomy Chamber.
  I appreciate that the Bill is limited. As my hon. Friend the Minister so endearingly put it, it is modest—except where the cash is concerned. At best, it is a holding operation. The Minister suggested that we should limit, not widen, the debate on the Bill. That is all very well, but, however limited the Bill, it must be looked at in the slightly wider context of the needs of the industry.
  As the House knows only too well, last autumn the European Community declared a state of manifest crisis in the steel industry. Indeed, the traumatic crisis in the steel industry of every member State of the Community has in no way abated since then. One of the measures introduced under article 56 was to impose production quotas and minimum prices for the European steel industry. That is only one side of the picture.
  But, as many hon. Members, including my right hon. Friend the Secretary of State for Employment, pointed out in the debate on the Redundancy Fund Bill earlier today, though many people desperately want to keep their jobs or to obtain jobs, there are many who would like to retire early. A proposal to assist this process which has been before the Council of Ministers for many months has, I understand, been blocked in the Council by one member, or possibly two members. We cannot find out exactly who, short of bugging the Chamber, but I know that it is not the United Kingdom Minister. This measure will be particularly valuable to the United Kingdom's steel industry because of the very high proportion of workers who are in the upper age bracket. In fact, it could reduce the British Steel Corporation's requirement to borrow.
  Frankly, the committee on social affairs of the European Parliament, having pressed that measure since its inception, has finally lost all patience. All that is required is for the Council of Ministers to authorise a transfer of funds from the EEC budget to the ECSC budget, but all sorts of legal obstacles have been put in the way of this helpful and sensible measure.
  I am sure that my hon. Friend the Minister of State will agree that the task of the British Steel Corporation would be greatly facilitated if the Council of Ministers could manage to agree on the special temporary allowances for social aspects of the steel sector and help in particular with voluntary early retirement.
  So strongly did the social affairs committee feel yesterday that, instead of merely forwarding a resolution to the Council of Ministers, which is the normal way of going through the process, it took the unprecedented step—I do not believe that any committee has ever done it before—of issuing a press statement, bypassing the Ministers altogether, urging the Council of Ministers to shoulder its responsibility to the workers in the iron and steel industry.
  That statement was supported unanimously by all parties and by all nationalities in the committee. I very much hope that my hon. Friend and his colleagues will put all possible pressure on the reluctant Council member, or members, so that this eminently sensible and humanitarian scheme can be brought in as soon as possible, for the benefit of everyone—for the benefit of the industry and benefit of the men working in it.
  Dr. John Cunningham: Before the hon. Lady concludes, may I put a point to her so that it may be on record? I am sure that she is aware that one of the Governments objecting on legal grounds to that transfer is this Government, her own Government.
  Mrs. Kellett-Bowman: It is not.
  Dr. Cunningham: Yes, it is.
  12.41 am
  Mr. Michael Brown: If my hon. Friend the Minister of State finds himself in an unenviable position, I have to say that there is another Member on these Benches who finds himself similarly placed, for I confess that there are times when it is with a heavy heart that I rise to speak in steel debates or consider the state of the British Steel Corporation. I need not remind the House that I have the honour and the privilege to represent a constituency in which the steel industry—and, sadly, the British Steel Corporation—is the lifeblood of the community.
  I suppose that I should be throwing my cap in the air with delight at the prospect of yet another infusion of cash to keep the wolf from the door, to pay the wages of my constituents and to pay the Yorkshire electricity board's bill. But, as I have said on a number of occasions, I derive no pleasure from representing a constituency which depends upon the begging-bowl approach, which depends on my hon. Friend the Minister coming to the House for a billion or two here or a billion or two there to keep the British Steel Corporation going. I find it a very unsatisfactory prospect for the long-term future of the steel industry in my constituency that we have to depend on Bills and other packages of this kind which come before us.
  I shall not rest happy until such time as the steel industry in my constituency is actually selling steel at a price which enables it to cover its costs and make a profit at the end of the day. Until we reach that position, I shall remain unhappy. I find no delight in these infusions of cash having to be put into the British Steel Corporation.
  I understand and appreciate the arguments advanced tonight by many of my hon. Friends who have private sector steel works in their constituencies. They fear for the jobs of their constituents, and I have much sympathy for them. My hon. Friend the Member for Derbyshire, West (Mr. Parris), for example, told us that he has a number of constituents who work in the private sector steel industry in Sheffield. Understandably, he and others of my hon. Friends are concerned at the possible job losses which could flow from unfair subsidies.
  As one who, during the last 18 months that he has been a Member of this House, has had to face the prospect of about 8,000 of his constituents losing their jobs in the steel industry, I readily accept and understand the fears and worries of my hon. Friends who see job losses in their constituencies. I do not think that we should create some kind of two-rule society in the steel industry, where a steel worker's job in the BSC is any more important than a steel worker's job in the private steel industry.
  The futures of the public and private steel industries are inextricably bound together, and what has come out of the debate is the fact that no longer can we try to isolate the problems of the private sector from those of the public sector. I say that as one who represents a steel

  389
  constituency, where all the steel making is carried out by the corporation. I readily concede that those who represent constituencies in which the corporation operates cannot ignore the plight of the private sector.
  I suspect that Phoenix I will have implications for my constituency. I do not want to take issue too much with my hon. Friend this evening. I should have liked some clarification of what is to happen about Phoenix I. I suspect that the fact that a private sector company, GKN, is producing a product similar to that produced by the corporation's rod mill at Scunthorpe will involve GKN and the BSC No. 2 rod mill.
  I should like the future of the BSC to be clarified as soon as possible. The House will recall that when I last spoke on this matter I endorsed the MacGregor plan because, even though it involved about 4,000 redundancies for my constituency I saw in it—and still see in it—the prospect of a profitable, viable steel industry. I hope that it will not be too long before we have some clarification of the Government's intention, because, as the hon. Member for Whitehaven (Dr. Cunningham) said, the action required to back up the MacGregor plan is already being taken. As I said in an intervention, even though the Government have not expressed their view on the plan, within a few weeks the Normanby Park steelworks at Scunthorpe will be closed and steel will no longer be made there.
  I hope that it will not be very long before my right hon. Friend comes to the House with proposals to deal with this matter, because, after all the uncertainties of the previous years—and no one was more condemning than were my hon. Friends when they were in Opposition for the delays engaged in by the Labour Administration in the mid-1970s—there is nothing worse than delay in announcing decisions. I appreciate that there have been problems recently. I appreciate also the need to get this right, but we cannot wait much longer. The private steel industry cannot wait much longer to know where it is going, just as the BSC cannot wait much longer for a decision so that it knows where it is going.
  I have considerable sympathy for many of my hon. Friends and for the arguments that they have advanced this evening. As I have said before, and as I have said to my constituents, steel workers in Scunthorpe and in the BSC do not have a God-given right to unending subsidies. I repeat that here this evening. I have repeated it consistently in my constituency. My head has been on the chopping block, so I have been told, but the body still walks around head there or not. It is very important for all of us whose constituencies would have been bust long ago if we had been placed in the same position as the private steel industry, and we should recognise that. I hope that it will not be long before we have a decision on the Government's intentions towards the MacGregor plan, for the benefit of the whole industry.
  12.50 am
  Mr. Roger Moate: My hon. Friend the Member for Brigg and Scunthorpe (Mr. Brown) and other hon. Members have said that a decision is urgently needed. Clearly, an early decision would be welcomed, but I would rather the Government took more time over making these decisions than plunge into some of the decisions that in recent weeks have been rumoured to be likely. Therefore,
  390
  I urge Ministers not to heed too much the cries for urgent action. It is more important to get the right answers than to get them speedily.
  I was glad that my hon. Friend the Member for Derbyshire, West (Mr. Parris) cast some doubt upon the use of the word "overlap" in relation to manufacturing interests. That word, which seems to have found favour, particularly on the Front Bench, implies that we disapprove of duplication of resources of manufacturing interests. That is the language of State planning. Overlap can only mean, basically, competition, of which we used to be in favour.
  I fully accept that, in a market that has been distorted by massive State subsidies, to talk about fair competition is perhaps unrealistic. But we must be careful to ensure that if we are restructuring an industry, which seems to be what we are about in both the private and the public sectors, we find a way of emerging from that with the facilities for competition and ensure that we do not create a structure that prevents competition from developing. Therefore, I hope that we shall be more careful about our phraseology.
  When we look at the whole industry, we must have regard to both the public and the private sectors. Oppositon Members have asserted tonight that it is only because the private sector has suddenly been threatened that Conservative Members have taken an interest in the subject. Nothing could be further from the truth. When one looks at the massive sums that this Government, backed by their Back Benchers, have voted for the public sector of steel in the past 12 months, one sees that we can hardly be accused of neglecting the public sector.
  Certainly, it is true that when the consequences of those massive subsidies started to threaten the very existence of the highly successful private sector we on the Conservative Benches, and many Opposition hon. Members, have awoken to the threat. It is alarming to hear from many people in the private sector that the manufacturing side of private steel could disappear altogether within a short time if matters are allowed to proceed as it appears they are now.
  Naturally, that is of concern to all those of us who have steel companies in our constituencies, but it is much more than that. I hope that my hon. Friend the Minister of State understands this. I am sure that he does. The rebirth of private enterprise steel after nationalisation and its expansion and continued growth under successive Governments of both parties in recent years have been a great success story and a testimony to capitalism, to capitalism's vitality and strength.
  If under a Conservative Government we saw the virtual elimination of private enterprise steel, that would remain on our conscience for many years. My hon. Friend the Member for Derbyshire, West used the word "statism", quite properly, to describe what is developing. It would be ironic if, under a Conservative Government, that trend was allowed to continue or develop.
  I have no doubt that all the Ministers at the Department of Industry completely share the sentiments expressed on the Conservative Benches tonight. Nor do I in any way underestimate their immense difficulties in trying to find a solution.
  There is immense danger in the way most things are developing. The very fact that Mr. MacGregor was engaged at a price in excess of the 6 per cent, cash limits that now apply in the public sector means that there is a

  391
  Government commitment to his success. It almost commits us to backing him to the hilt in everything that he does. Mr. MacGregor's failure could well be seen as the failure of this Conservative Government's appointment. It is noticeable that more doubt has been cast on Mr. MacGregor's position by Conservative Members than by Opposition Members. More support has been given to Mr. MacGregor's aggressive marketing philosophy by Opposition Members. That is a distinct reversal of the positions adopted when Mr. MacGregor was appointed.
  We are all in favour of Mr. MacGregor's aggressive marketing philosophy as long as it does not have to be backed up by billions of pounds worth of taxpayers' money and at the expense of the private sector. We may have a commitment to him, but our commitment to the private and public sectors of the steel industry is greater. If the price of giving him full backing and of not tying one of his hands behind his back while we pump billions of pounds into the other is too high, Mr. MacGregor should go back to the United States of America. In that case he should return, because we should not sacrifice the private steel sector.
  When my hon. Friend the Minister volunteered the point that Mr. MacGregor had said that he would study any accusations of price-cutting, he did so with a little less than his usual conviction. It sounded like one of those ministerial replies from the Dispatch Box which goes "I shall look into the matter if my hon. Friend will write to me." It sounded like a placatory remark. Mr. MacGregor is undercutting. My right hon. Friend the Member for Taunton (Mr. du Cann) said that he was producing steel at a loss of £150 per tonne, and I have heard that steel is being produced at a loss of £100 per tonne.
  It is suggested that Mr. MacGregor should be judge and jury of whether the BSC is pursuing a predatory pricing policy and whether it is undercutting in major areas. My right hon. and hon. Friends cannot expect the private sector to regard that as a satisfactory formula. Before these moneys are voted to the BSC, we are entitled to an absolute assurance from the Government that they will demand "transparent accounting" from the BSC. The private sector could then see how the subsidies were being dispensed and could ensure that they were being used for restructuring and for redundancies rather than for predatory pricing policies. At present, such transparency of accounting does not exist. My hon. Friend the Minister should give us that assurance. That is the very least that we can demand to ensure that Mr. MacGregor does not use those resources to undercut private sector steel companies.
  In an intervention, I pointed out that it was illogical that we should put out of business companies that could produce steel for the home market without subsidy when BSC was being heavily subsidised, perhaps to the tune of £100 per tonne. As a result of the subsidies, private companies cannot expand because British Steel can simply bring its prices down at our expense. All hon. Members have an equal interest in the survival of the private and public sectors. Therefore, there is no ideological difference between us on that point.
  I wish to put two further points to my hon. Friends. First, it was suggested by the hon. Member for Whitehaven (Dr. Cunningham) that one of the things on which the Government could act quickly is the question of energy. I think that there is a bit of wishful thinking there,
  392
  because the one thing that the Government have not done—I am sorry to express this criticism, but it is valid—is to act quickly with regard to complaints on industrial energy costs. I am not criticising my hon. Friends on the Front Bench tonight, because I think that if they could do so they would probably express the feeling that they, too, have felt a lack of response from the Department of Energy on this vital question.
  In the case of which I know something, it is alleged that the electricity costs are 50 per cent, higher than those paid on the Continent. In this case, that means a burden on the steel company of £3 million a year. If those facts are correct, it is incumbent upon the Government to act quickly. They could act quickly. It would make a major contribution to the survival of steel companies and other intensive users of energy if we could get some lightening of the burden of electricity costs in particular.
  My last point concerns import controls. This matter was raised by my right hon. Friend the Member for Taunton. I recognise that this is a very difficult subject to raise in the context of imports from the European Coal and Steel Community, and I shall not go into it at great length. However, when we are talking about quotas on production—whether it be a statutory scheme, as we now have, or wherher we go into voluntary scheme, as is possible after June or July—I cannot see why we cannot also talk about voluntary quotas on imports decided by the ECSC.
  This is a critical area, particularly if the BSC is using imports as the determining factor on prices rather than any other factor. It seems to me that if this is such a crucial factor my right hon. and hon. Friends should be raising in the Community the possibility of very rigorous quotas on imports, agreed within the Community, in order to protect our industry for a limited period during the very definite crisis that clearly exists.
  Before my right hon. and hon. Friends come back with the scheme, I hope that they will give to the House far more assurances than they have been able to give so far. I know how difficult that will be for them. I am convinced that the delays in putting the scheme before the House arise because they are seeking the right solution. I have that confidence in them. Therefore, I give to my hon. Friend the Minister of State the trust that he asked us to repose in him, but that can be tested only when we see the final proposal put to the House, whenever it should come.
  1.2 am
  Mr. Hal Miller: I apologise to the House for rising to speak when I have not been able to be present throughout the debate. I have a very close constituency interest in this subject. I also seek to represent the views of private steel makers throughout the West Midlands.
  I do not wish to go into the political argument. I rehearsed that quite plainly during questions on the statement the other day. I wish to make two perfectly practical points, which I should be very grateful if my hon. Friend would consider, although they may not be able to answer them tonight. They relate to the hybrid forms of company which have been much canvassed in the financial press—Phoenix I and Phoenix II.
  We need, first, to establish whether customers regard these hybrid companies as sufficiently different from the BSC to be willing to buy from them. In other words, I detect a great resistance among downstream custometrs to

  393
  being tied to BSC as a sole supplier, and I still have grave doubt whether they would accept these birds as being of a sufficiently different plumage from the BSC to be willing to be tied to them as a source of supply. My hon. Friend should inquire into that matter.
  Apart from that commercial point, there is the extremely practical point about the redundancy terms. Earlier this evening, in the debate on the Redundancy Fund Bill, I spoke about the difference in redundancy terms available to the public and the private sectors, but what are the terms for the employees of these hybrid companies? Are they public or private so far as redundancy terms are concerned? This is an important factor to establish to secure the consent of the workforce. It is all very well talking of rearrangements. Hon. Members paint with a broad brush on occasion. However, to have the consent of those who will do the work means that their conditions of employment need to be clearly established.
  Those are the two practical points that I have not so far heard made. I leave them with the Government.
  1.5 am
  Dr. John Cunningham: With the leave of the House, Mr. Deputy Speaker, I should like briefly to wind up the debate from the Opposition side.
  Almost all hon. Members taking part in the debate have stressed the urgency of the situation, whether they have spoken principally about the private sector or the public sector. I stress the importance now for the Government to come to decisions about the British Steel Corporation, its capital reconstruction, Phoenix I and Phoenix II and whatever aid, comfort and assistance they may intend to bring to the private sector. There is widespread agreement, I believe, on the need for urgent decisions in these matters.
  I am tempted to say, as the hon. Member for Derbyshire, West (Mr. Parris) said, that we are almost all interventionists now, but there were one or two honourable exceptions on the Government Front Bench below the Gangway. I am sorry that the hon. Member for Knutsford (Mr. Bruce-Gardyne) wanted us to import more coal and close more coal mines. The same argument could be used for steel. We could close more of the private sector as well as the public sector of steel and import more steel. To close the industry altogether is perhaps the logical conclusion of that argument. It is not a rational position for the House to adopt. It would lead to further massive unemployment in areas that have already been heavily devastated.
  I feel some sympathy for the Secretary of State in his dilemma over Mr. MacGregor. Having made this marvellously imaginative appointment, he has a tiger by the tail. Mr. MacGregor was urged to be aggressive, to fight and to compete to get the corporation back on its feet. Now he is told "Compete, but, please, not too much. Don't be as aggressive as we wanted you to be. Don't really bring all your talents and experience to bear." [Interruption.] If the hon. Member for Rochester and Chatham (Mrs. Fenner), who has intervened a number of times from a sedentary position, wants the taxpayers' interest to be safeguarded, she should allow Mr. MacGregor to get on with the job that he is trying to do. The Secretary of State, referring to the appointment, said:
  "I both believe in, and adhere to, the philosophy that Ministers appoint chairmen to carry out the management function."
  394
  —[Official Report, 16 December 1980; Vol. 996, c. 262.] It will be interesting to see whether he lives up to his words. We heard from the Minister of State, in his opening remarks, that Mr. MacGregor has already been subjected to a little arm twisting on pricing policy. How does that fit in with what the Secretary of State was saying about steel matters in that debate?
  I have no doubt that the private sector will come up with a solution. It may offer Mr. MacGregor a job. It would be interesting to see the response. Whatever else has emerged from this debate, there is, I believe, broad agreement, with one or two exceptions, on the need to maintain a sensible organisation of our affairs in steel in both the public and private sectors. It is for the Government to ensure we get as quickly as possible to that state of affairs. I urge upon them the necessity now to make fundamental and important decisions for the long-term future of both sectors of the steel industry.
  1.10 am
  The Under-Secretary of State for Industry (Mr. Michael Marshall): This has been an interesting and, I think I may say, a timely debate. My hon. Friend the Minister of State, in opening, perhaps with that generous nature of his, sought to protect me slightly by suggesting that the terms of the debate might usefully be not too wide because of the other measures which may follow. Although he hoped to achieve that, we have had some very interesting contributions from both sides of the House. I make no complaint, because I suggest to the House that it has been a timely debate and both sides of the House have put down a number of markers which will be helpful to us as we look at these matters over the coming weeks.
  I apologise in advance to right hon. and hon. Members if I cannot meet in all particulars a number of the questions that have been put to me. There are obvious difficulties, which the House will recognise. Indeed, in addressing these matters the House has shown a certain commendable restraint in trying to strike a balance. For example, we have tonight discussed competition at great length. If we think only for a moment about competition between the British Steel Corporation and the private sector, we can all agree in principle that in the case of competition with imports we want to see our manufacturers, whether public or private, competing with imports. Indeed, it is necessary for them to do so if they are to maintain their level of business. The grey area which comes up in the process has been widely spelt out.
  I should like to reiterate the point that my hon. Friend made in opening that Mr. MacGregor has made it plain that he is anxious to look specifically at any detailed instances which hon. Members put to him and to keep my hon. Friend and the Department advised. My hon. Friend expressed his interest in being involved in that process. That is something whch I urge hon. Members to consider carefully, because it is evidence of some good will which ought to be acted upon in many of the instances which have been referred to tonight.
  I shall come back to this, but there is perhaps another difficulty in trying to look at the whole question tonight—that is, the very nature of the public and private mix and the degree to which there are at present negotiations in hand, as is known to the House, to evolve mixed companies. Obviously, this has a very important effect on the future of the BSC's corporate plan.

  395
  Therefore, I make no apology for the fact that it has been necessary for us to bring forward this measure as a holding measure with further measures to follow.
  We should think for a moment about the importance of that kind of development. One of my hon. Friends said that Pheonix I would be the precursor to Pheonix II. We must hope so. These are very important initiatives. My right hon. Friend the Member for Taunton (Mr. du Cann) suggested that this had been a matter that had gone on for a very long time. There is some truth in that. It has to be made plain that the initiative for these discussions lies with the participants. The hon. Member for Whitehaven (Dr. Cunningham) was in rather mischievous form tonight, and I shall return to him later. When we speak of interventionism, we must define what we expect of the Department of Industry.
  It has been urged upon me by some hon. Gentlemen tonight that we should move in a very detailed way. The hon. Member for Workington (Mr. Campbell-Savours) very much wanted us to go down the path of looking at every ingot mould in the Distington foundry. I understand the arguments that he is seeking to carry. He has been particularly active in this matter. I have to say to him that what he is urging upon the Government is not something that we can accept. Indeed, I suggest that it would not have been accepted by the previous Government. It has to be the case that in trying to strike a balance, as I would see it, Governments are looking at the overall picture of the financing needs. They cannot take a detailed marketing view or detailed views on questions such as productivity.
  On the general question of what the Department of Industry should do in relation to the private sector, our role there is more that of the honest broker. I hope that that is a function that we can usefully perform. I re-emphasise that the initiative for many of the matters that have been raised during the debate lies in the hands of both the BSC and the private sector companies. There is a strict limit to the Department's role.
  I turn to some of the specific issues that my right hon. Friend the Member for Taunton raised in a powerful speech—
  Dr. John Cunningham: Do I take it from what the hon. Gentleman has said that the Secretary of State or the Government are unwilling even to ask Mr. MacGregor to consider the circumstances surrounding the Workington foundry?
  Mr. Marshall: What I have said is what the Government have consistently said and what the Labour Government said—namely, that decisions on the commercial viability of individual plants are a matter for the corporation. That is a view that we hold strongly, and any other view would make the running of the corporation well nigh impossible.
  In the light of the statements that are likely to be made in the next week or two, there are matters that I cannot refer to in detail. However, in reply to my right hon. Friend the Member for Taunton, I am concerned that the examples that he gave should be tested. I am given to understand that the corporation disputes strongly the basic argument that he has advanced, especially on engineering steels. It is no use my right hon. Friend and I bandying these arguments. I know that he will wish to pursue these matters separately. When he says that the views of
  396
  Hadfields were put to us in October and made available to the corporation, I have taken advice on that and I assure him that that is not the case. That advice was not made available by my Department.
  Mr. Campbell-Savours: The Minister said in reply to the right hon. Member for Taunton (Mr. du Cann) that he put it to the corporation and that it was not as he had had it put to him. Does that mean that there are some matters on which he will consult the corporation—namely, the relationship with the private sector—and other matters on which he will not, such as the future of the Distington foundry? Where is the consistency?
  Mr. Marshall: I think that the hon. Gentleman misunderstood me. I said that the references that were made by the private sector company to the Department—anyone is free to put his views to the Department—were not passed on to the corporation. There is no question of acting in any differential sense between the corporation and the private sector.
  I turn to arbitration—
  Mr. du Cann: I intervene concerning the memorandum to which I referred as being made available to the corporation. I assure my hon. Friend that I know that it was made available to the corporation. Perhaps my hon. Friend has forgotten—it may be that the House should be reminded—that a former member of his Department who was responsible in this area and a present member of his Department are both directors of the corporation.
  Mr. Marshall: I am glad that my right hon. Friend has raised that. I know that some of my hon. Friends have been anxious to explore this area. With a considerable stake in the future of the corporation, the view has been under successive Governments that it is sensible to have directors on the board. The directors are non-executive. They are not concerned with the day-to-day management of the corporation. I need hardly emphasise that they are people of the highest integrity.
  My right hon. Friend talked about arbitration. We shall want to weigh his suggestion carefully. I am sure he will want to consider the obvious problems that such a procedure might raise. If we consider for only a moment the sheer problem of commercial partnerships and of trying to bring people together to agreement under the terms of arbitration rather than voluntary agreement, we will recognise that there are immediate difficulties. My right hon. Friend was able to convey to the House that some of the negotiations that have been proceeding for some time have been moving strongly of late. They would not be applicable to his suggestion. If all goes as we hope, we shall have to consider how that leads us into wider issues. I note my right hon. Friend's remarks.
  The right hon. Member for Llanelli (Mr. Davies) was concerned about Duport. My right hon. Friend, my hon. Friend and I have met him, some of his constituents and the management of Duport. I pay tribute to the vigilance with which he has sought to carry to us the arguments about the Llanelli steelworks. I had to tell him recently that I could add nothing tonight to the story that he already knows. The Government are fully aware of the concern felt by the right hon. Member and his constituents. He knows about the current delicate negotiations that apply to the whole of the group.
  The right hon. Member also discussed energy costs—a theme taken up by both sides of the House. I can only

  397
  repeat something that is well known to the House, namely, the NEDC decision on 7 January to consider the whole range of energy costs and to consult those especially concerned in the steel industry in addition to all sides of industry generally. That study will be important. It is due by the end of next month. I hope that it will help us to see our way ahead.
  My hon. Friend the Member for New Forest (Mr. McNair-Wilson) was one of many who asked me to explain a little more about the present position on borrowing. My hon. Friends the Members for Honiton (Mr. Emery) and for Surrey, North-West (Mr. Grylls) were among those who referred to that issue. I know that my hon. Friend the Member for Honiton is well informed about these matters. Expenditure against the external financing limit in 1980–81 is, to date, £815 million, against a £971 million limit. On unaudited figures, the BSC is about £146 million below the £5,500 million limit.
  My hon. Friend the Member for Surrey, North-West asked why £500 million, rather than a lower figure, was required. It is to see the corporation through not only to the end of the financial year but until the next—and, we assume, larger—Bill reaches the statute book. That is unlikely to be for some time. During that time, the BSC may face heavy closure and redundancy costs. A significantly smaller sum than £500 million would not, therefore, be appropriate.
  My hon. Friend the Member for Sheffield, Hallam (Mr. Osborn) was one of a number of hon. Members concerned about steel imports. The House recognises that that is a difficult area. We must look, within the Community, at a free-trading position. Indeed, we must look at a position in which our exports are of vital significance. It is especially significant that the somewhat slightly more optimistic pattern of the overall sales of the BSC is related in part to an increase in exports.
  As to the balance between public and private sectors, there is a danger of getting the matter a little out of perspective. We must remember that the measures before us relating to the BSC in turn relate to about 80 per cent. of its steel-making activity, which does not compete with the private sector. There is bulk steel-making of that order, and there is also the more difficult area of the interface of the public and private sectors. That is where imports have proved to be a problem, with all the complications that we have discussed about pricing.
  My hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne) made his usual pungent contribution about the cost position. He may wish to pursue his bright bar case with Mr. MacGregor On the question of competition, it is fair to remind the House that if there were no competition from the private sector impacting on the public sector—if it were all one way—it is strange that the BSC should be facing redundancies and closures on the current scale. There have been 50,000 redundancies in the current year, with another 20,000 envisaged in the corporate plan.
  My right hon. Friend the Member for Taunton mentioned engineering steel. We have seen the cutback in capacity in Templeborough. A reduction in the work force by 20 per cent. is now planned in special steel in Sheffield. The closure of the foundry in Workington in a sense reflects over-capacity in the foundry industry for the private sector as well as the public sector. I need hardly remind the House that much of that over-capacity was specifically built up as a result of the activities of the
  398
  Labour Party when in Government, through the ferrous foundry scheme. Therefore, alas, we are beginning to pay for many of the decisions which stemmed from the Labour Party.
  My hon. Friend the Member for Derbyshire, West (Mr. Parris) made an entertaining and perhaps too modest contribution. He raised some of the difficulties of trying to establish what is fair competition. I appreciated his thoughtfulness in allowing the Front Bench to answer his points on another day.
  My hon. Friend the Member for Faversham (Mr. Moate) is another diligent man in seeking that difficult and challenging balance which is fair competition. He made a useful suggestion when he referred to transparent accounting. We should consider that carefully.
  My hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) asked me specific questions about Phoenix. I am sure he will appreciate that those questions must await further decisions in those areas.
  My hon. Friends the Members for Lancaster (Mrs. Kellett-Bowman) and for Hallam and other hon. Members were interested in the situation in the Community. My hon. Friend the Member for Lancaster is fully aware of the debates regarding the proposals covering social measures. There is considerable support in the Government for the broad line that she urged upon us, although she must be aware of some of the legal complications that must be overcome.
  On the question of production quotas, we must consider the situation beyond June. It is clear that we shall need to continue with a more orderly regime than in the past. Underlying much of the difficulty that the Government, the House, the BSC and the private sector face is the fact that we are now into the fifth year of a world steel recession. In Europe alone, there is estimated to be about 35 million tonnes of excess steel-making capacity. That is the background. Those are some of the major problems that make it so difficult to see one's way ahead. Those problems suggest that it is wrong for Governments to try to make detailed judgments about the market place. Even those who are in the market place find it exceptionally difficult now.
  The question was raised about what might be done to assist the private sector. In the last week or so we have announced assistance to Aurora, in Sheffield, with a loan of about £836,000 on preferential terms from the European Coal and Steel Community and a grant of £450,000 from the Department of Industry under section 7 of the Industry Act. That loan is related to the rationalisation of its operation in Sheffield.
  I remind hon. Members, particularly those who have taken such a close interest in the problems of the private sector, that the Government can give financial assistance to steel-making enterprises, under sections 7 and 8 of the Industry Act, with approval from the EEC. That approval was forthcoming for Aurora because there was no increase in capacity, and a substantial element of rationalisation was involved.
  The hon. Member for Whitehaven was trying to tweak our tail on timing. I thought that that was typical of his elegant, bare-faced effrontery. He was a member of a Government who kept us waiting for 18 months for the Beswick review to grind its way through and come up with conclusions that said in the end that nothing would be different from the Conservative Government's White Paper of 1973, except that developments might be slower

  399
  with regard to closure. With the state of the market and with all the problems that I have outlined tonight, it is typical of the hon. Gentleman to try to hustle us into action. If he thought seriously about the positon, I do not believe that he would wish for one moment to uphold his argument. It is impractical.
  Mr MacGregor said that he wished to get on with a whole range of activities. The financial aspect is not the whole picture. I hope that the House will applaud what Mr. MacGregor has been able to do. He has carried with him the majority of his work force in beginning to achieve what is widely recognised as necessary if his steel organisation is to survive.
  The Member for Workington must appreciate that the timing must be got right. The many partners in the current negotiations have to reach their agreements. They are not there to be told when to reach agreements so that we can make announcements to suit the hon. Gentleman's convenience.
  Dr. John Cunningham: Mr. MacGregor used the word "vital" in connection with the timing. The right hon. Member for Taunton (Mr. du Cann) urged urgent action, as did several other hon. Members on the Government Benches. If the hon. Gentleman criticises me, he should include almost everyone who has spoken from the Government Benches.
  Mr. Marshall: As ever, my hon. Friends took a much more balanced view than did the hon. Gentleman. They are naturally anxious, as are the Government. We want to make the statement at the first possible moment. The hon. Gentleman rather went to town on the matter. He seemed to imply that decisions that a Labour Government were not able to deliver on the future of the industry should come from us now.
  On 16 December my right hon. Friend made plain that the BSC did not need authority to reduce manpower or to close plants. It has been happening already, as presaged in the corporate plan.
  400
  I have mentioned the complexity of the competitive situation. We are on the brink of a number of important developments for the future of the public and private sectors of the steel industry. I am greatly heartened by the fact that there is so much general support for seeking to maintain the maximum degree of British steel-making capacity in whatever public or and private mix can best be determined. We should like it to be in the private sector as much as possible, but we recognise the coexistence of the two parts of a great industry. We have to sustain the industry. The debate will contribute to the further deliberations that may help to bring that about.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.— [Lord James Douglas-Hamilton.]
  Further proceedings stood adjourned pursuant to the order of the House this day.

  IRON AND STEEL (BORROWING POWERS) [MONEY]
  Queen's Recommendation having been signified—
  Resolved,
  That it is expedient to authorise all such increased payments—

  (a) out of the National Loans Fund, the Consolidated Fund and money provided by Parliament, and

  (b) into the National Loans Fund and the Consolidated Fund, as may result from any Act of this Sesion increasing to £6,000 million, or such greater sum not exceeding £7,000 million as the Secretary of State may by order specify, the sum specified in section 19 of the Iron and Steel Act 1975 as the aggregate of the amount which the British Steel Corporation and the publicly-owned companies may borrow and the amount which the Secretary of State may under section 18 of the 1975 Act pay to the Corporation.—[Mr. Tebbit.]

  IRON AND STEEL (BORROWING POWERS) BILL
  Considered in Committee pursuant to the order of the House this day: reported, without amendment; read the Third time and passed.

  Northern Ireland (Agricultural Trust)
  1.35 am
  The Minister of State, Northern Ireland Office (Mr. Adam Butler): I beg to move,
  "That the draft Agricultural Trust (Abolition) (Northern Ireland) Order 1981, which was laid before this House on 3 February, be approved.
  The purpose of this order is formally to abolish the Northern Ireland Agricultural Trust by repealing the Agricultural Trust Act (Northern Ireland) 1966. The order seeks to effect the dissolution of the trust by repealing the Agricultural Trust Act (Northern Ireland) 1966 under which the trust was set up and operates; providing for the repeals to take effect from an appointed day to be determined by order; vesting all outstanding rights and obligations of the trust, including the payment of compensation to staff for loss of employment, in the Department of Agriculture in order to ensure that the affairs of the trust may be completely and properly wound up.
  The order does not transfer the trust's statutory functions to the Department; it transfers only residual rights and obligations.
  The order provides for the trust to pay such compensation as it considers appropriate to employees of the trust who suffer loss by virtue of the order, and the Department is also empowered to fill this obligation if necessary.
  The abolition of the trust was announced by the Government in December 1979, that is to say, more than a year ago, and has been the subject of debate in this house on two occasions. Therefore, many of the arguments are known to those who might wish to speak in the debate. Perhaps it would still be helpful if I were to repeat some of the arguments which have been used before.
  The Government have decided to abolish the trust for the following reasons. In the first place, opportunities for the trust to fulfil its original role of pioneering new commercial developments in agricultural production and processing have declined significantly in recent years. Secondly, duplication of effort will be minimised, administration simplified and costs reduced. Thirdly, it is declared Government policy to reduce, where possible, the number of quasi-autonomous non-governmental organisations—or quangos.
  The decision to wind up the trust was announced after discussions with the Ulster Farmers Union and representatives of the trust. Its position had been under review as part of the overall review of quangos and public expenditure, and also under a special review of the institutions for industrial promotion in Northern Ireland.
  Perhaps I may remind the House briefly of the history of the trust. It was set up in 1967 to pioneer new commercial developments in the production and processing of agricultural produce. It subsequently assumed a major role in the marketing of such produce. Over the years, the trust had been involved in a large number of pioneering projects, ranging from the fairly ambitious to the strictly limited. But recently the pioneering side of its role had accounted for as little as one-fifth of its activity and could be judged generally to have achieved its primary object.
  In the marketing field, the role of the trust had been to identify and promote marketing opportunities for Northern
  402
  Ireland food processors in Great Britain and overseas. To this end, the trust encouraged firms to participate in marketing seminars, food fairs and trade promotions in Great Britain and abroad. The financing of the trust has been carried out by the Department of Agriculture at a current cost of £400,000 per annum.
  In fact, since the Government's announcement more than a year ago, the trust has been run down. All outstanding commitments have been met. With no new projects being undertaken during the year, the staff have become redundant. I am glad to be able to tell the House that the 15 members of the staff have now all found other jobs. I should like to repeat what previous Northern Ireland Ministers have said and pay a late but well-deserved tribute to the work of the staff and to the chairman and eight other members of the trust who have served the agriculture industry in Northern Ireland so well.
  The important question for us, and particularly for the industry, is whether the former role of the trust is being, or can be, fulfilled in other ways. I believe that the answer is undoubtedly "Yes". The Government are satisfied that at farm level the more important activities of the trust can be absorbed by the Department of Agriculture at less cost to the taxpayer. The education, research and advisory services of the Department of Agriculture will continue to be available to help farmers. Food processors will be able to make use of the continuing aids to industrial development, and seek the advice and assistance of the development institutions such as the Local Enterprise Development Unit, the Northern Ireland Development Agency and the Department of Commerce.
  The Central Council for Agricultural and Horticultural Co-operation will continue to encourage the formation of agricultural co-operatives and to help in marketing activities. Food processors and manufacturers will be able to participate at international food fairs under the aegis of the British Food Export Council. That is important because it is claimed, with some justification, that in the past the trust has played an important role in this respect. I do not believe that there is any reason to doubt that effective overseas marketing can be carried out by the export council on behalf of Northern Ireland fanners. Of course, it is up to them to make use of its services.
  Mr. James Kilfedder: What will be the saving to public funds as a result of the abolition of the trust, and what is the additional cost as a result of the Department of Agriculture taking on some of its functions?
  Mr. Butler: The hon. Gentleman will not expect me to give him an exact figure. However, one can assume that all, or the greater part, of the salary costs will constitute a saving because this role will be taken on by those who are already engaged in some of the functions which the staff previously performed. For example, with regard to export marketing activity, the export council is already involved in this work. I judge that a relatively low extra cost will be involved in the council extending its services, as it is already doing, to those who wish to market Northern Ireland produce overseas.
  It is correct to say that not all the £400,000 will be saved. That is a gross cost. However, I anticipate that at the end of the day the greater part will be saved.
  There was a worry about export marketing. I believe that there are no grounds for worry because of the excellent

  403
  work which the British Food Export Council does. I think that there was also some concern about domestic promotions in Great Britain. Again, help is available from both the Department of Agriculture and the Ulster Office in this respect. There is no reason why the Ulster Office should not continue to provide an excellent service for food producers in the Province in the same way as it does for other manufacturers. Here is an example where costs can be saved. The Ulster Office is used for promotional work and displays from time to time.
  The Government's view is that the industry will not suffer from the abolition of the trust because there are alternative and satisfactory means of serving the agriculture industry. On the contrary, the previous duplication may have been harmful. It certainly became unnecessary, and it was costly. The cutting of unnecessary and costly public expenditure must, at the end of the day, be of benefit to farmers and to the agriculture industry as to the rest of the community. It is for that reason particularly that I commend the order to the House.
  1.46 am
  Mr. Tom Pendry: The debate on the order to abolish the Agricultural Trust in Northern Ireland is largely academic, for in truth the trust exists in name only. The decimation of the trust's powers and functions began in May last year, and in January the last of the staff were made redundant. If one were to ring the trust today, one would find only one person manning the telephone, and the office in which he works will soon pass into new ownership. According to the press office of the Northern Ireland Office, the trust no longer exists.
  Despite the now incorporeal nature of the trust, and partly because of it, the Opposition do not intend to allow the order to abolish the trust to go through the House without restressing the reasons why we have opposed its abolition all along. We have opposed it because, although it is a small cut in public expenditure—according to the Government it is a significant cut—the trust is worthy of support.
  The trust has made a valuable contribution to Northern Ireland agriculture in regard to the marketing of produce. Its help in that respect will be and indeed is being sorely missed. If that is not so, perhaps the Minister will tell us when he replies.
  A number of questions on this score need to be answered tonight. We need some positive answers from the Minister if those who have lost out through the abolition of the trust are to have any hope of help in future.
  The Minister referred to the treatment of former staff of the trust. Here, too, is an area of confusion which is in need of clarification. I hope that the Minister will see fit to clear the air on this matter tonight. I hope that he will make it clearer than he did in his opening speech. I shall return to this important point later.
  The abolition of the trust must be seen in the context of the agriculture and food processing industries in Northern Ireland, not in the context of public expenditure savings. Agriculture is the most important industry in Northern Ireland. The House knows that not only because I have said it on many occasions, but because hon. Members representing Northern Ireland constituencies are for ever saying it. It contributes 6 per cent. of the gross domestic product of the Province and, together with the
  404
  agricultural processing industries, employs just over 14 per cent. of Northern Ireland's work force. In proportion agriculture in Northern Ireland is five times more important than that same industry is to the rest of the United Kingdom.
  After the meeting of representatives of the Ulster Farmers Union with the Secretary of State for Northern Ireland and his colleague the Minister of Agriculture, Fisheries and Food last month, all Northern Ireland Ministers must now be fully acquainted with the unfortunate state of the agriculture industry in the Province. EEC policies fail to recognise the unique nature of the Northern Ireland economy and the role of agriculture within that economy. Most Northern Ireland fanners work on a very narrow profit margin, which has inhibited the introduction of technology and those production techniques which require high investment. Net farm incomes dropped by 60 per cent. in the two years up to 1979, and at the end of January the Government gave their estimate of the fall in net income between 1979 and 1980 as about 60 per cent. in money terms. Translated into real terms, that means that the Northern Ireland farmer will have taken an 80 per cent. fall in net income over the last year.
  As yet, there is no indication that action will be taken by the Government to correct or remedy the position, despite, I may add, the kind words which were echoed many times during the meeting between the Secretary of State and members of the Ulster Farmers Union. Instead, we are spending time tonight discussing the abolition of the trust, which has in the past made a positive and direct contribution to the marketing of agricultural produce around the world. It is difficult to escape the irony of the situation. One could coin a new phrase to sum it up—what the Government take away with one hand they have not the slightest intention of giving back with the other.
  At a most inauspicious time for agriculture in Northern Ireland, the Government are asking the House to give formal recognition to action which they have already taken in abolishing the trust. The trust has an impressive record, despite the adverse conditions facing any business venture in Northern Ireland today.
  I must now comment on the fact that the trust's most recent report is dated January 1980 but the report for 1980–81 is not yet published. It will not be published until after this order is passed—if it is passed—tonight. Why is that so? The report was submitted in September of last year. In my view, it can only mean that when the report is published it will show the good work of the trust, and that would have been inconvenient for the Government tonight if it had been available tonight.
  However, in the most recent report which we have, the trust listed 14 production projects, six processing projects, and widespread success in marketing exhibitions in London, Paris and Berlin. Last year one operation in Bahrein secured over £500,000 in exports, and as recently as May the trust held a marketing exhibition in London which was acclaimed as one of the most successful trade exhibitions ever.
  Since 75 per cent., or £300 million worth, of agricultural produce in Northern Ireland is exported in one form or another, I repeat the question which I asked during an Adjournment debate on 7 May last year: How can Northern Ireland afford not to have the Agricultural Trust?
  In their explanatory memorandum on the order, the Government refer to the trust as a body whose work has

  405
  come to overlap with that of other industrial development agencies and whose role in the marketing of agricultural produce has merely become a duplicate of the work done by agricultural marketing boards and livestock commissions.
  That is nonsense. I suspect that the Minister who was formerly responsible for agriculture, the hon. Member for Pudsey (Mr. Shaw), who was a marketing man before he became a Member of the House, did not look into the situation as carefully as he might have done. He had to deliver his quango to the Prime Minister as quickly as possible, and he received few thanks for that. His prize was his movement to be Under-Secretary of State to the biggest quango hunter of them all—the Secretary of State for the Environment. I bet that, in truth, if the hon. Gentleman had his time over again he would not begin this crazy exercise.
  I have the greatest respect for the work done by the Pig Marketing Board, the Milk Marketing Board and the Livestock Marketing Commission in selling the produce of Northern Ireland farms, but my view is that the trust complemented and indeed enhanced their efforts rather tham duplicated them. At food fairs throughout Europe the trust provided an image of Northern Ireland agriculture, which no one on these boards is able to do alone. In other words, the trust waved the flag for Northern Ireland and the boards participated in and benefited from this coordinated effort. So I do not consider it fair of the Minister to suggest that the functions of the trust can simply be passed on to the boards, because what the marketing efforts of the trust brought to agriculture was unique, and we shall soon see that it is irreplaceable.
  The marketing boards can individually take over where the trust left off in the marketing of their own specific products. Most of them were involved in marketing at international fairs before the trust was set up in 1967, and I am relieved to hear that their overseas effort will not be diminished by the abolition of the trust, although I am sure that it will lose some of its force.
  The people who really stand to lose from the abolition of the trust are those engaged in small food processsing operations. Here I am referring specifically to the pet food processors, fish and trout farms, the manufacturers of jam and conserves, as well as small meat processing factories and specialist cereal and bakery firms. These companies do not have the staff or the financial resources of the large marketing boards, and under the aegis of the Agricultural Trust they were developing good European and world export trade links.
  It would be no exaggeration to say that they relied on the trust to get their chance to exhibit at international food fairs. The trust organised transportation and the booking and arranging of stands, as well as dealing with Customs and hygiene requirements—all of that quite apart from providing an appealing marketing framework within which these firms could operate. They will be the real sufferers from the abolition of the trust, because I fail to see how they are to find the resources or the manpower to exhibit at these fairs in future. I say "in future", but already there are indications that these small firms are being pushed right off the scene, and perhaps the Minister will tell us something about that.
  In view of the repeated statements by the Minister of Agriculture, Fisheries and Food on the paramount importance of marketing, I find the attitude of the Government towards the trust contradictory, to say the
  406
  least. It would also appear to be directly at variance with the innumerable statements made by just about every Minister on the necessity to help small firms to grow. How on earth are small firms to grow if the organisation for marketing their products is swept from under their feet? I should like the Minister to direct his closing remarks to that question.
  No doubt it will be argued that the Departmant of Commerce will come to the rescue of these small firms. I am glad that the marketing of agricultural produce is now within the ambit of the promotional work of that Department. That is to be welcomed. However, I have grave doubts whether the Department can ever fill the gap left by the trust. I understand that at the forthcoming Olympia food fair there will be eight sections on the Northern Ireland stand, but this year not one of them will be a small firm of the kind to which I referred earlier. At the last SIAL food fair in Paris last November there was only one exhibitor from Northern Ireland. Perhaps the Minister can tell us more about that.
  These examples do not bode well for agriculture in Northern Ireland. Without the catalytic effect of the trust and the specialist knowledge of the staff, there will be a serious depletion in the marketing opportunities for small firms which cannot be replaced. No longer will the image of Northern Ireland agriculture be promoted abroad in the way that it has been in the past. Instead, it will be in the hands of civil servants who by and large do not understand the problems, or it will be under the aegis of the British Food Export Council.
  Where agriculture constitutes such a significant part of the gross domestic product, I view such a change with apprehension and dismay. The decision to disband the trust was made for the wrong reasons. It was a neat amputation operation, but the effects for the patient—Northern Ireland agriculture—are critical.
  I have given examples of the disadvantage to Northern Ireland agriculture since the trust was operationally disbanded late last summer. I should like to hear from the Minister what progress has been made in the profitability and marketability of Northern Ireland agriculture in the past sixe months. That is a fair question. In short, will he give us a progress report? I believe that he would find it hard to do so, because I believe that there has been no progress but only regression in that period.
  I turn to the treatment of the former staff. I hope that the Minister will not gloss over it, as he did when he opened the debate. I am angry because the trust was wound down and the staff were made redundant well before the order came before the House. That is a reflection on the Government's arrogant view of the House, which has been demonstrated many times before.
  I had always understood that the staff worked under conditions of service broadly in line with those of civil servants, and I should therefore expect to hear that redundancy payments were made in accordance with those normally paid to civil servants. Last May, when the Minister replied to my Adjournment debate, I was perturbed, but not unduly worried, to hear him say that the staff would be treated as local government officers. He said that that scheme
  "in certain cases can be better than the Civil Service scheme itself."—[Official Report, 7 May 1980; Vol. 984, c. 498.]
  However, it would seem from the severance pay received by the former staff that that is not so.

  407
  Why were not the former staff treated as mobile civil servants when it came to determining redundancy payments? If they had been, most of them would have received 50 per cent. more money than they have received under the scheme devised by the Minister's Department, a scheme that is a hotchpotch of the local government officers scheme and the mobile civil servants scheme. Within the Civil Service the terms "mobile" and "non-mobile" apply to grade. Why did the Department concerned disregard grade when it determined whether severance pay for the staff in the Agricultural Trust were in this category or that? In short, will the Minister tell the House exactly what the staff of the trust were? Were they local government officers, low-grade, non-mobile civil servants or civil servants?
  The Government have demonstrated their characteristic meanness in paying off the trust's staff. They should all have got the best terms possible, regardless of whether their work was carried out in one place. Of those who subsequently found employment, some have had to take a drop in salary and job status due to redundancy. At the very least, the Government could have ensured that each member of staff received the best possible payments.
  I call on the Government, even at this late hour, to reconsider their decision and to take note of the harm being caused to the agriculture industry in Northern Ireland by the abolition of the trust. In Northern Ireland, all the marketing boards regret the passing of the trust. It is clear that the industry as a whole will suffer because of the lack of co-ordination in marketing efforts. The Northern Ireland committee of the Irish Congress of Trade Unions has joined many others in this protest. We endorse that opposition. We shall listen to the Minister very carefully when he replies to the debate. However, he will have to be most forthcoming. If he is not, I shall invite my colleagues to oppose the order.
  2.6 am
  Mr. James Kilfedder: The Northern Ireland Agricultural Trust was strangled by the Government in pursuit of their ruthless policy of public expenditure cuts, without any regard being paid to the special conditions that exist in Northern Ireland. Help is needed, yet not enough is being given to meet the desperate situation.
  In the early hours of the morning, we attend the wake of the Northern Ireland Agricultural Trust. We have often pointed out, but must point out again, that it is ridiculous and unfair that we should discuss the first of two Northern Ireland orders after 2 o'clock in the morning. There can be no joy on this occasion for anyone, particularly when the depressed condition of Northern Ireland's agriculture is borne in mind. Farm incomes have been greatly reduced and they are well below those of English farmers, who also complain about the level of their incomes.
  The Government put an end to the Northern Ireland Agricultural Trust in order to add to the number of quangos that they have abolished. When the Minister opened the debate, he specifically mentioned quangos. That uncaring attitude to the economic and industrial problems of Northern Ireland has exacerbated unemployment in the Province.
  In May 1980, when the hon. Member for Stalybridge and Hyde (Mr. Pendry) raised an Adjournment debate on
  408
  the phasing out of the trust, I pointed out that agriculture was the largest industry in Ulster and employed—directly or in ancillary industries—a considerable percentage of the employed population. At a time when, despite hard work, careful management and keen efficiency, the Ulster farmer is suffering severely, the Government should attempt to assist him. Instead of that, they make life more difficult for the farmer and for the food processor in Northern Ireland.
  I shall not repeat what the hon. Member for Stalybridge and Hyde said. He spoke eloquently about the Northern Ireland Agricultural Trust. He made an overwhelming case for its retention. If the Government had been thoughtful and caring about Northern Ireland's problems, the one way open to them would have been to improve the food processing and marketing for the industry by putting more funds at the disposal of the Agricultural Trust. Instead, the Government have axed this organisation, which has done valuable work for the agriculture and food processing industries in Northern Ireland.
  Northern Ireland farmers have worked hard to meet competition abroad. It is a credit to the Ulster farmer and food processor—this is one point made by the hon. Member for Stalybridge and Hyde which I shall repeat—that the proportion of production which is exported is three-quarters of the output, amounting to £300 million.
  Yesterday—we have not been to bed yet, so it is really the same day—the Government capitulated to the miners because the miners intended to shut down all the coal mines. The Government, who took a very firm stand with regard to the miners a few days ago—although the miners had a good case—have now made a complete U-turn, which they said they would not do. It is not too late for the Government to reverse their decision with regard to the trust.
  The amount of cash involved would be less than what the Government will now provide for the coal mines, and agriculture is as important to Northern Ireland as coal mining is to Britain. As the hon. Member for Stalybridge and Hyde pointed out, small firms in Ulster are in jeopardy, and food processing firms are no exception. Every assistance must be given to help them to survive. But it seems that the present Government are treating them with a degree of indifference which would not have been shown by a Stormont Parliament and Government if such a devolved Assembly and Executive were in existence.
  I ask the Government to think again. If they will not change their minds at this late hour, I intend to support the hon. Member for Stalybridge and Hyde if he puts this matter to a Division.
  2.13 am
  Mr. Wm. Ross: When the Northern Ireland Agricultural Trust was set up in 1966, Northern Ireland was a place of considerable hope. It appeared to be facing a fairly bright future. A great deal has happened since then, and I do not think that the same description would apply to Northern Ireland today.
  This organisation was set up to try to bridge the gap between a bright idea and the reality that could, with the help provided by the Agricultural Trust, result from that idea. In the Act which set up the trust, it was given a considerable range of functions. They are all set out in detail in the Agricultural Trust Act (Northern Ireland) 1966. They were

  409
  "to supplement the activities of the Ministry of Agriculture … in securing, and to encourage and assist other persons to secure, improvements in, and the development and expansion of, agricultural production, and the processing and marketing of agricultural produce".
  There are a couple of pages of such sentiments expressed in one way or another.
  As the hon. Member for Stalybridge and Hyde (Mr. Pendry) said, a considerable amount of work was done in the early years, as it has been done until recently. The reports produced in 1975 and 1979—two that I happen to have to hand—show about 20 projects in each year. Some were minor but some were major. I shall mention two that, in the event, were unsuccessful. One was the effort to bring back the linen industry and the growing of flax to Northern Ireland. I had an interest in that project. My father was among those who grew flax for the experiment. The crop grew. The only difficulty was that the fancy idea dreamed up for retting the scutched fibre did not work out. After some considerable expense, the other end of the experiment failed. That was not any fault of the trust, which did an excellent job.
  The other major item that failed was the "Richgrass" experiment of dried grass to make a feed for livestock at Limavady. It was very successful. It was a very large business. However, with the rise in oil prices in 1973, it simply went to the wall. I regret that. It was not the fault of the trust. At a certain energy cost, the project was viable. It was useful and provided a lot of employment.
  In relating my remarks to those two failures, I illustrate the vast gap that exists between a bright idea and the reality of a viable function and business at the end of it. That gap exists in any body that is trying to project into the future something that is, at best, marginal in its economic application and promise.
  A quango such as the Agricultural Trust will come out badly when judged against a business operation. As someone remarked in the Northern Ireland Parliament at the time, the trust was set up as an act of faith. That faith was supported by the Ulster Farmers' Union. It did not raise any objection when £250,000, needed in the first year, was taken out of the remoteness grant. I should like to hear from the Minister a history of the trust from that date and how the money was provided in latter years. I am curious to know whether it always came out of the remoteness grant.
  The trust was severely limited in the sums of money that could be spent on any project. It was tied tightly to the Department of Industry and then to the Department of Agriculture in Northern Ireland. When the Minister says that the opportunity for pioneering work was reduced, he might address his mind to the problem of attempting pioneering work when tied to a small sum of money. Such work, by its nature, is fairly costly. One wonders whether the trust did not become so circumscribed in regard to money and red tape that it was not able to carry out the function originally envisaged.
  The explanatory memorandum accompanying the order states:
  "Farmers are now more able and willing to assume the risks in new techniques for themselves and to make their commercial decisions accordingly. Food processors also are now more aware of marketing requirements, more able to decide what they need to do "
  in order to make a success of their business. That sounds much better in a period of prosperity, but we are not in
  410
  such a period. I wonder whether farmers and food processors are as willing to take risks in 1981 as they were in 1979. I suspect that they are not.
  The hon. Member for Stalybridge and Hyde referred to the savings of £400,000, or perhaps rather less, that were to arise from the abolition of the trust. He referred to duplication and overlapping. It is strange that there was reference to duplication and overlapping in a different context in a previous debate. This body was not set up to duplicate or overlap the efforts of others. It was set up as the grease between the joints to complement the work of others. I wonder whether it actually did that. If it was overlapping or duplicating, where did the fault lie? Did it lie in the Department of Agriculture or in the Trust? In any case, if a mistake was being made, why was it not corrected? Why were the duplication and overlapping allowed to persist where they were not needed?
  I should also like the Minister to tell us what the net saving will be as a result of the abolition of the trust. We are told the gross saving, but we need to know what the net saving will be. For instance, have posts been created in the Department of Agriculture in Northern Ireland or in other departments of the Civil Service as a result of the trust vanishing? If so, what is the cost to those departments?
  The danger in withdrawing the trust is that through saving a small sum of money we may find that someone with a bright idea now lacks the vehicle to carry that idea into reality. Some of the things which the trust supported succeeded. There may well be other bright ideas which will never bear full fruit because the vehicle is not there to help them happen. If that were to be the case, the hoped-for saving might turn out at the end of the day to be a very heavy cost.
  There were criticisms and an enormous number of grumbles about the trust, and one would be unwise to conceal them. I have a little grumble. It is a fear that the gap which the trust was originally set up to bridge still exists. The question is how far the functions that it was supposed to carry out have been met by other bodies and in other ways. If we find that there is a function, albeit a limited one, that is not being carried out, will the Government look at this matter again and try to cover the gap?
  I turn back to section 2 of the Agricultural Trust Act (Northern Ireland) 1966. The first sentence states:
  "The functions of the Trust shall be exerciseable for the benefit (whether direct or indirect) of agricultural producers in Northern Ireland".
  Negotiations are taking place within the EEC for structural aids for Northern Ireland, and something like the trust might be the vehicle to adminster the cash whenever we get it, if we get it. If we had the trust, it could direct attention to projects that are very much needed. It might have been funded by EEC moneys without any cost to the national Government.
  I take up one of the matters raised by the hon. Member for Stalybridge and Hyde—namely, the meeting that the Ulster Farmers' Union had with the Minister of Agriculture, Fisheries and Food and his ministerial colleagues in the Northern Ireland Office. We were assured afterwards by the Ulster Farmers' Union that it would bring good and speedy results. There has been a deathly silence since the meeting. There seems to be no progress being made. If there is any help coming for Northern Ireland agriculture, it appears that it will not

  411
  come in the current financial year. I strongly suspect that there will be none this year. There may be something next year.
  Mr. James Molyneaux: Will my hon. Friend refresh our memories and confirm in the account and minute of the meeting with the Minister of Agriculture, Fisheries and Food, the Secretary of State for Northern Ireland and Lord Elton it was stated that the solution to some of the problems would be found in a matter of weeks rather than months?
  Mr. Ross: My hon. Friend draws attention to the crucial phrase in the communique that emerged from the meeting. It referred to weeks rather than months. Those weeks have passed. If it is not already one month, it soon will be. No doubt the delay will run into two months, into three months and into another year and there will still be no cash.
  Circular No. 35, which was issued by the Ulster Farmers' Union on 14 December 1979, refers to the abolition of the trust. I was rather surprised by the cool regrets that were expressed by the union on that occasion. I suspect that there were many people in all sorts of queer places who saw the trust as a competitor and as something with which they were not happy.
  The trust may not have been all that its detractors said it was. It probably was not all that those who loved it said it was. However, I believe that it performed a useful but limited function in Northern Ireland. I fear that with its passing we may find a gap which may be hard to fill and which may yet do us fairly severe damage.
  2.30 am
  Mr. Adam Butler: I shall try to answer as fully as I can the points which have been raised. I hope that my remarks will allay some of the anxieties that have been expressed. I may find that difficult because some of the remarks were repeated in the House on two previous occasions, and the theme has hardly changed.
  I shall begin with an important subject, namely, the staff of the trust. I think that the hon. Member for Stalybridge and Hyde (Mr. Pendry) knows the position because he referred to some of the points to which I shall refer. The staff contributed to the Northern Ireland local government officers superannuation scheme, and as such their only entitlement would have been preserved pensions under that scheme, with exceptions for officers aged 50 and above, and also statutory compensation under the Contracts of Employment and Redundancy Payments Act (Northern Ireland) 1965.
  Following various representations, it was decided that it would be proper to treat the trust staff as if they were civil servants. There then arose the question whether they should be treated as mobile or non-mobile. Because the trust is a single location organisation, it was judged that they fell into the non-mobile category. That is the position relating to the staff. It is interesting to note that in October 1980 the trust was given approval to supplement the payments to which the staff were entitled to bring them up to an amount equivalent to the redundancy compensation payments that would be payable under the Civil Service scheme. Therefore, the staff will be treated as civil servants, but as non-mobile because of the single nature of the location.
  412
  The hon. Gentleman referred to the current year's report. I am mystified by his suggestion that the report has already been made. The report outstanding is that for the current year of 1980–81, which is not due for publication until after 31 March.
  Mr. Pendry: My point is that generally the report is published in January of each year. My understanding is that the report is ready for publication, and was ready for publication at the appropriate time. We are waiting for it. I wonder why we are waiting. Is it because it is such a good report?
  Mr. Butler: I assure the hon. Gentleman that I have not seen the report. I do not expect a report that deals with 1980–81 to be on my desk at this stage. The report will show the position as I reported it to the House, namely, that during the past year the trust's activities have been run down. The commitments that it had in hand at the time of the Government's announcement have been fulfilled. I am sure that they have been fulfilled to the utmost ability of the trust. No new commitments have been undertaken, and compared with previous years, therefore, the level of activity will have declined considerably.
  The hon. Member for Stalybridge and Hyde said that food processors stood most to lose from the abolition of the trust. In his remarks about the food processors and in other remarks about the future marketing of agricultural produce, he and others were doing an ill service to the marketing boards, an ill service to the British Food Export Council and an ill service to the other organisations involved either in marketing or in helping the food processors and others.
  All food processors can participate at international food fairs under the aegis of the British Food Export Council. The services of the council have been offered to any firm in Northern Ireland which needs advice and assistance, irrespective of size. Many firms in Northern Ireland have been and continue to be members of the council. The same applies to domestic promotions in Great Britain under the aegis of the Department of Commerce and the Ulster Office. Support would be available for food processors, as appropriate, from the Local Enterprise Development Unit, the Northern Ireland Development Agency and the Department of Commerce.
  The hon. Gentleman also referred to small businesses. It is significnt that in the case of the Ballymoney Food Co. the Local Enterprise Development Unit was already involved. That was good evidence of unnecessary duplication.
  The hon. Member for Londonderry (Mr. Ross) asked whether any additional staff posts had been created in the public service to take on the redundant staff of the trust. I assure him that there have been no additional posts. Any functions have been absorbed without an increase of staff.

  413
  Concern has been expressed, properly and understandably, on behalf of the farmers in the Province. Whether one chooses to talk to the farmers or to read the White Paper statistics, it is clear that the Province has suffered a severe drop in farm income in the past year. That drop has been greater than in the rest of the United Kingdom. It is a serious matter. Undoubtedly the points made tonight were made strongly by the Ulster Farmers Union on 15 January when its representatives met some of my ministerial colleagues, including the Secretary of State, who was impressed by the case that was put to him. He is seriously considering what, if anything, it may be possible to do with the resources that are available. I cannot say more on that matter now, but the urgency of the situation demands a decision one way or the other as soon as possible.
  Mr. Wm Ross: When the Minister referred to the resources available, did he mean the money which has been allocated already to Northern Ireland?
  Mr. Butler: We come back all the time to the question of resources, and whether they will be borrowed or taxed from other people in order to meet the needs of one section of the community. That was the context in which I was using the phrase.
  Therefore, the anxieties of the industry are understandable. One should perhaps not be too critical of the attitudes which have been expressed in regard to the winding up of the trust. If such a winding up might damage the industry, it would be right to draw the fact to the attention of the Government.
  Mr. Pendry: Will the Minister give a progress report? I gave him an impressive catalogue of moneys that had accrued to the Exchequer as a result of the expertise of the trust. I was hoping that we could know what has been done by the bodies taking the place of the trust in the six months that it has no longer been doing the job.
  Mr. Butler: I shall not give the hon. Gentleman a list of activities and promotions in recent times. I am confident that effective promotion is being carried by the various marketing boards and other organisations that have been referred to so many times this evening.
  The point at issue is the one that I referred to in my opening remarks—whether the industry will suffer. It is too easy to clamour for more and more funds. It is too easy to argue that an organisation that is once in being should continue ad infinitum. The decision should surely be based on whether the work that the organisation is doing is valuable or whether it is unnecessary because it can be done or is being done by other bodies. The Government argue that the work of the trust meets those two specifics. It is no longer necessary because it is being done by the other bodies and it can successfully be done by them. I have no reason to suppose that any project carried out under the auspices of the trust cannot be carried out under the auspices of some of the other bodies.
  Mr. Kilfedder: Surely if that argument applies now it applied when the Conservatives were in power previously, when they praised the work of the Northern Ireland Agricultural Trust. What has changed, apart from the situation in Northern Ireland now being worse?
  Mr. Butler: It is acknowledged that when the trust was set up in 1966 there was a purpose for its existence, particularly in pioneering. However, its pioneering role has declined considerably as a proportion of its activity. It has seen a greater need for a marketing role. It has undertaken only a limited number of pioneering projects in recent times. That is one answer.
  The second is that this Government are perhaps a little more conscious of the need for prudent housekeeping—the need for examining where money may be being wasted. In this House we should concern ourselves above all with whether taxpayers' money is being properly used. We believe that it is no longer necessary to put taxpayers' money behind the trust. It has been run down over the past year. That is why be wish to abolish it and ask the House to support the order.
  Question put:—
  The House divided: Ayes 64, Noes 6.

  Division No. 76]

  [2.43 am

  AYES

  Baker, Nicholas (N Dorset)

  Molyneaux, James

  Benyon, Thomas(A'don)

  Murphy, Christopher

  Berry, HonAnthony

  Neubert, Michael

  Best, Keith

  Newton, Tony

  Boscawen, Hon Robert

  Page, Richard (SW Herts)

  Braine, SirBernard

  Parris, Matthew

  Bright, Graham

  Patten, John (Oxford)

  Brinton, Tim

  Pollock, Alexander

  Brooke, Hon Peter

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

  Browne, John(Winchester)

  Proctor, K. Harvey

  Butler, Hon Adam

  Ross, Wm. (Londonderry)

  Carlisle, John(Luton West)

  Rossi, Hugh

  Colvin, Michael

  Shepherd, Colin(Hereford)

  Cope, John

  Shersby, Michael

  Cranborne, Viscount

  Speed, Keith

  Dorrell, Stephen

  Speller, Tony

  Fairgrieve, Russell

  Stainton, Keith

  Faith, MrsSheila

  Stevens, Martin

  Garel-Jones, Tristan

  Stradling Thomas, J.

  Goodlad, Alastair

  Thompson, Donald

  Griffiths, Peter Portsm'thN)

  Thorne, Neil(Ilford South)

  Grist, Ian

  Townend, John(Bridlington)

  Gummer, JohnSelwyn

  Waddington, David

  Hawksley, Warren

  Wakeham, John

  Hogg, Hon Douglas (Gr'th'm)

  Wall, Patrick

  Jessel, Toby

  Waller, Gary

  Jopling, Rt Hon Michael

  Wells, Bowen

  LeMarchant, Spencer

  Wheeler, John

  Lloyd, Peter (Fareham)

  Wickenden, Keith

  Major, John

  Wolfson, Mark

  Marlow, Tony

  Maxwell-Hyslop, Robin

  Tellers for the Ayes:

  Miller,Hal(B'grove)

  Mr. Carol Mather and

  Mills, Iain(Meriden)

  Lord James Douglas-Hamilton.

  NOES

  Concannon, Rt Hon J. D.

  Pendry, Tom

  Cryer, Bob

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

  Tellers for the Noes:

  Fletcher, Ted(Darlington)

  Mr. A. W. Stallard and

  Kilfedder, James A.

  Mr. D. N. Campbell-Savours

  Qustion accordingly agreed to.
  Resolved,
  That the draft Agricultural Trust (Abolition) (Northern Ireland) Order 1981, which was laid before this House on 3 February, be approved.

  Northern Ireland (Museums)
  2.54 am
  The Under-Secretary of State for Northern Ireland (Mr. John Patten): I beg to move,
  That the draft Museums (Northern Ireland) Order 1981, which was laid before this House on 3 February, be approved.
  This order brings together and updates Northern Ireland law relating to museums and art galleries. It re-enacts, with some amendments, the statutes under which the Province's two national museums exist—the Ulster Museum and the Ulster Folk and Transport Museum. It replaces, again with some amendments, the fragmented legislation, some of which dates back to the mid-nineteenth century, under which district councils may provide and maintain museums and art galleries.
  Before I deal with matters of detail, hon. Members might find it helpful if I were to say a few words about Northern Ireland's two museums. The Ulster Museum has a long and distinguished history. It dates back to a private collection founded in 1831 which came under the control of Belfast corporation before becoming, in its turn, a national trustee museum in 1962. A major extension was completed in the 1970s. It is concerned primarily with the arts and antiquities which one would associate with a museum of the traditional sort.
  The Ulster Folk and Transport Museum, by contrast, has a somewhat different remit. It is concerned with illustrating the way of life of the people of Northern Ireland, past and present, together with their traditions. It has a shorter but no less illustrious history. It dates from the time that a folk park was created at Cultra, County Down, in the early 1960s. The Ulster Folk Museum (Amendment) Act 1967 provided for the amalgamation of the folk park with the existing Belfast Corporation Transport Museum. This supplemented the folk element with a valuable and expanding transport collection. In the short period of its history, the Ulster Folk and Transport Museum has established itself as one of the leading museums of its type in Europe. Both museums naturally have strong research and educational elements. Their popularity with the Northern Ireland public and with tourists is illustrated by the fact that during the last year they attracted more than 350,000 visitors.
  That background to the order having been given, it is now necessary to turn to the details. Part I is introductory. In part II, which concerns the Ulster Folk and Transport Museum and the Ulster Museum, articles 3 and 4 confirm the continued existence of the trustee bodies of those institutions. These articles also detail the composition of the two bodies and clearly define their duties. The only change of any consequence in these two articles is to make some adjustments to the composition of the two bodies of trustees. This has been done in response to representations that were received during the consultation period. As a result, the Ulster polytechnic is given the right to nominate a trustee to each institution.
  In the case of the Ulster Museum, for the first time district councils other than Belfast have been given the right to make nominations to the board of trustees. This is in recognition of the fact that the museum clearly serves the whole of the Province, not just Belfast. However, the Belfast city council, as the original transferor of the museum, still nominates three trustees of its own. As a
  416
  consequence of these changes, the number of trustees appointed by the Minister to the Ulster Museum has been reduced from nine to seven.
  Article 5 deals with the powers of the trustees. It applies to both museums. The article represents a drawing together of the separate but very similar provisions in the existing statutes, with some minor changes. For example, the maximum fines imposed for the infringement of byelaws are increased to a more realistic level.
  Articles 6, 7 and 8 contain no new provisions. Part III of the order is concerned with museums and art galleries provided by district councils. Article 9 empowers a district council to provide museums and art galleries. As a result of the comments received during the consultation period, it has been decided that district councils need not seek the Department's approval to make provision, except where they are seeking grant aid.
  Paragraph (2) of article 9 permits district councils to acquire land compulsorily for museum purposes, but subject to the normal safeguards. The article also allows a district council to contribute to a museum or art gallery provided by another district council or, subject to conditions approved by the Department of Education, to one provided by any other person.
  Mr. Matthew Parris: Does my hon. Friend have any reason to believe that district councils plan to use the powers thus given to them, or are these simply notional powers which may be used in the future?
  Mr. Patten: I am grateful to my hon. Friend for raising that point. He will be aware that the 26 district councils in Northern Ireland have as one of their major roles the maintenance and development of cultural and social provision in their area, and a number of district councils undoubtedly would, severally or singly, like the opportunity at some stage in the future to contribute to museums and the development of museums. This article recognises that.
  Article 10 re-enacts the existing provisions about byelaws. These provisions attract the general provisions for byelaws in the Local Government Act 1972, which, among other things, means that any byelaw must be approved by the Department of Education.
  I draw article 11 particularly to the attention of my hon. Friend the Member for Derbyshire, West (Mr. Parris) because this is an important new provision dealing with precisely the point which he was kind enough to raise. The existing legislation does not provide power for the Government to make grants towards the provision of museums and art galleries by district councils. This article confers a grant-aiding power for this purpose on the Department of Education. I must say, however, that the payment of such grants is not contemplated in the immediate future.
  Articles 12 and 13 repeal legislation which is obsolete or unnecessary. Article 13 also makes a minor amendment to the legislation which provides for grants to Armagh observatory by bringing it into line with the more usual form of Northern Ireland legislation. In other words, it now provides for grants to be determined by "the Department" rather than by "the Minister".
  Mr. Wm. Ross: The Minister said a moment ago that there is no present intention to make a grant towards a museum. At one time or another, there

  417
  have in my constituency been a number of very valuable finds, including the Broighter gold hoard, which went, I think, to Dublin Museum. If another such find were to be made, would that be treated as an exceptional case?
  Mr. Patten: The present position is that we would wish to provide an adequate regional museum service in Northern Ireland. The hon. Gentleman is undoubtedly aware of the recommendations of the Malcolm working party on the museum service, which were published in 1978. That working party suggested that there might be up to five regional museums in the Province. It is the Government's intention to promote a better museum service, but while our financial circumstances remain so constrained it is not the Government's intention to make a grant for any new museums. On the specific case of the finds which have been made in the Londonderry area, I understand that the ones to which the hon. Gentleman referred are satisfactorily housed and displayed. I suppose that we must wait to see whether any more turn up before suitable provision has to be considered for any future finds.
  Mr. James Kilfedder: The Minister has been speaking about new museums. What about existing museums, such as the Armagh Museum, the Enniskillen Military Museum and some other museums which are far below standard and desperately in need of money? Will the Government provide money for them, or is this all just hot air that we are getting from them?
  Mr. Patten: At the moment, the Government are not in a position to provide extra funds for these institutions, and we look to commerce, business and voluntary organisations in the Province to support these museums.
  Mr. Kilfedder: The hon. Gentleman is expecting businesses to provide the money. The trouble in Northern Ireland is that many of these businesses are being closed because of Government policy.
  Mr. Patten: I do not wish to be drawn into a wide economic discussion during what I hope will be a short debate on the order. The Government intend to provide as much money as they can for the museum service. They have taken the power in article 11 to emable them to make provision for further grants to new and existing museums provided by district councils when and where they can, but at the moment they are not in a position to make such grants.
  The order has two schedules that are worthy of perhaps brief attention. Schedule 1 sets out the detailed provisions applying to the trustees of the two national museums. It represents almost a complete restatement of existing provisions that apply to the trustees of the Ulster Museum and the Ulster Folk and Transport Museum, with minor amendments to bring the two sets of largely similar provisions into conformity. Schedule 2 lists the repeals consequent upon the making of the order.
  Mr. Tristan-Garel Jones: I am grateful to my hon. Friend for giving way, not least because it gives me the opportunity of being the first person in the House to congratulate him on his first appearance at the Dispatch Box. The Ulster Folk and Transport Museum is in the process of transition. Can my hon. Friend say how much money will be needed to complete the museum, to bring the scheme to fruition as it were?
  Mr. Patten: I thank my hon. Friend for his kind good wishes. I welcome him to our debate this evening and hope that we shall have the pleasure of his company on many more such occasions. I look forward to his playing an active part in them.
  Over the last 20 years, the Ulster Folk and Transport Museum has proved to be the launching pad for two important developments in the Province. The first is the development of an integrated transport museum, which I visited recently, and the second is the ethnological museum, which has proved to be a focus for the scholarly study and display of ethnological materials of both material and non-material culture consequent upon the development of Northern Irish history. There is no doubt but that this is an institution of world standing, and a substantial sum of money has been spent on it in recent years. Is it a modern and up-to-date museum in a folk park.
  Mr. Kilfedder: On a point of order, Mr. Deputy Speaker. It is possible to get the Conservatives to restrain themselves? They are celebrating the Government's U-turn over the miners' strike and are in an exuberant mood. I do not wish to hear them ridiculing the Ulster Folk and Transport Museum, which is in my constituency.
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. All that I have been hearing are the observations of the Minister about the Ulster Folk and Transport Museum.
  Mr. Patten: Schedule 2 lists the repeals consequent upon the making of the order. It is a not inconsiderable list of orders dating back to the mid-nineteenth century—no mean achievement.
  The order regularises the activities of two most important museums in the setting of Northern Ireland. I commend it to the House.
  3.10 am
  Mr. J. D. Concannon: I welcome the Under-Secretary, the hon. Member for Oxford (Mr. Patten), to our debates, and to the unsocial hours club. He will have to get used to this kind of thing in the early hours of the morning. Some of us have been at it for some time. I hope that some of the Conservative Back Benchers present will turn up again for some of our future debates.
  Orders such as this one are not debated at this hour of the morning at the request of Northern Ireland Members or Ministers. There are times when the Opposition must show their opposition, and the only way is to go into the Division Lobbies. The numbers do not reflect anything. The Minister should be grateful for the fact that I kept an audience for him. I welcome the hon. Gentleman's description of the history of the museums. I hope that he will have a chance to visit them. He has been in his office for only a short time. I can assure him that when he is on weekend duty they are well worth a visit.
  I can tell my hon. Friend the Member for Darlington (Mr. Fletcher), who has sat here diligently all night waiting for his Adjournment debate, that I do not intend to be long on the order. The stampede of Conservative Back Benchers from the Chamber can now start, because I can tell them that the Opposition generally welcome the order, which updates and clarifies the law relating to the Province's two national museums.
  The order reflects the growing interest in museums, antiquities and the arts in Northern Ireland. I hope that the

  419
  Government will match their words with additional funds for artistic and cultural activities in the coming financial year.
  Over the past few years the Ulster Museum and the Ulster Folk and Transport Museum have become increasingly popular with the people of Northern Ireland and with the tourists who annually visit the Province. I understand that there has been an increase in the numbers visiting both museums to match the increase of 1979. We welcome the fact that the Government have recognised the importance of these two institutions by tidying up the law through the order.
  My few comments coincide with the principal parts of the order. I turn first to the appointment by the Department of Education of trustees to the museums. In the past month, at long last, the Department has appointed a trade union representative to sit on the board of trustees of the Ulster Museum. We welcome the Government's foresight on this matter, and tonight ask the Minister for an undertaking that the Department will also appoint a trade union representative to sit as a trustee of the Ulster Folk and Transport Museum. Further, will he give an assurance that in future at least one seat will be filled by a trade unionist on both of the boards of trustees? Clearly the principle has been accepted. We therefore seek a word from the Minister to clarify the position for the future.
  Also on the appointment of trustees, but this time referring specifically to the Ulster Museum, I should like to ask the Minister whether he or the Department concerned has considered the appointment of one or two art specialists to take special care of the art collection in the museum. This is a very important part of the provincial heritage and it needs trustees who have a background in the art world.
  Turning to article 11, I note that the Department is now empowered to make grants to district councils towards the provision and maintenance of local museums and art galleries. This is definitely a step forward, and I know that it is welcomed by the Northern Ireland Arts Council as likely to increase the provision of cultural facilities. When does the Minister envisage the Department will begin to make such grants? Only the Irish could have an order like this, contemplating giving powers of all sorts to local councils but in the same breath telling them "We shall not give you the grants to carry on the work or exercise the powers that we are giving you." I hope that it will be at the earliest possible date, so that the people of Northern Ireland and prospective tourists can look forward to an even richer and wider choice of museums and galleries than they have at present.
  I should like to emphasise the great social value of the museums and art galleries in Northern Ireland and to express the hope that the Government will recognise it by making the money available to match their actions. The value of the order depends on the will to make it succeed, and I await the actions of the Minister to see just how much will and determination lie behind this legislation.
  3.14am
  Mr. James Kilfedder: I also welcome the Minister to his new post. Indeed I am sorry that I was not informed of his visit in time. If I had been, I should
  420
  have met him at the Ulster Folk and Transport Museum where he made a short but, I am sure, instructive visit. Indeed, the museum lies in my constituency.
  One cannot emphasise too often that that museum is one of the most outstanding museums of its kind in Europe. The folk museum has made a tremendous contribution towards an understanding of local history. One has only to walk round the 170 acres to understand the care that goes into the selection and display of exhibits. The items range from a water-powered mill that manufactured spades, to cottages, a church, a schoolhouse and vehicles that illustrate the evolution of transport in Ireland by land, water and air.
  The museum is quite different from other museums, because it is concerned just as much with ideas as with objects. It is concerned with interpreting the traditional Ulster attitudes, values and way of life. In addition, it preserves the evidence of its material culture, The Ulster folk museum has become the focus for everyone interested in or concerned about the cultural heritage of the Ulster people.
  It should be emphasised that the courses that are run by the folk museum are of enormous value to crafts such as weaving, and they enable young people to appreciate the total culture of Ulster in bygone years. It has been said by some commentators that the average Ulster man has a crisis of identity because he is neither Irish nor English. Sadly, I believe that confusion exists where there need be none.
  There is a quite distinct Ulster character, which was apparent long before the more recent Scots' plantation in the seventeenth century. Anyone who doubts that there is a genuine Ulster identity—compounded of people from Scotland, North-East England and the native population—should go and see the folk museum. A visit there would certainly persuade someone of the existence of an Ulster identity. The rich and varied cultural history of Ulster is fully captured by the museum. It is not surprising that the folk museum is the foremost in the United Kingdom and is of the highest international repute.
  It must be emphasised that the mainspring of Ulster culture is not found in the superficiality of latter-day political leaders or would-be political leaders of the Province. It is to be found in the architectural, literary and agricultural foundations that are so aptly illustrated by the folk museum, which set out to make Ulster people more conscious of the heritage that they share in common, regardless of religion and of politics.
  It is almost an essential requirement that the ordinary Ulster man and woman, and the young people of the Province, should spend some time at the museum at Cultra to refresh their spiritual heritage, to obtain a proper comprehension of Ulster's past, and to gain a better understanding of the Ulster present and some essential confidence in its future.
  Lately, a very biased picture of Northern Ireland has been shown on television. The programmes convey hate, bitterness and bloodshed as well as poverty and hardship. Hardship and poverty have never throughout the centuries destroyed or undermined the Ulster character. On the contrary, each fresh tribulation has strengthened it. But hate has never been the hallmark of the Ulster people, until recent times when politicians have used it to whip up fervour in order to gain more votes.

  421
  Perhaps a leading article in The Irish Times, a Dublin newspaper, last year succinctly summed up the value and the meaning of the Ulster Folk and Transport Museum when it stated:
  "History lives at Cultra. There may be a certain unavoidable justice in the fact that in Ulster, the region where man first landed on the island of Ireland, there exists one of the most heartwarming and homely and scholarly records of Irish life."
  Tributes to the excellence of the Ulster Folk and Transport Museum have been paid by people from all over the world. We have had compliments paid by leading people from Europe. I shall not quote from them at this hour of the morning. However, it is proper to pay tribute to certain people involved in the museum. It is not the first time that I have paid tribute to a Welshman, Professor Estyn Evans, who, though Welsh in name, is an Ulster man by adoption. He is one of Ulster's great sons. His distinguished career, spanning more than 40 years in the school of geography at Queen's university, is well known and admired. But perhaps he deserves the undying gratitude of the Ulster people for being the driving force behind the creation of the Ulster Folk and Transport Museum, of which he is still one of the trustees.
  Then there is the director of the museum, Mr. George Thompson, who has occupied that post with distinction for 22 years. He has proved to be a wise, steady administrator, a man of ability, dedication and fair-mindedness, who has gained the respect of all those who wish well for the museum.
  Then there is Dr. Alan Gailey, who is in effect the deputy director. His scholarly work has won international prestige for himself and for the museum.
  There are others who should be mentioned, but that is not possible in this debate. Their splendid work should be recognised and praised by this House.
  They have achieved much with the financial and other resources available to them. However, the museum is only about one-third developed. The staff are still moulding, shaping, building and extending it. When fully established, it will have few, if any, equals anywhere else, taking both form and function into account. Money will be needed from the Government to enable the work to continue. I trust that the Government will respond to the need to preserve Ulster's past and to encourage research into its roots.
  3.23 am
  Mr. James Molyneaux: I join with the official Opposition spokesman in offering congratulations and best wishes to the Under-Secretary. Those of us who in times past have been involved in the world of the Department of Health and Social Security are very well aware that he has already made an impact in that sphere. We wish him well in the future.
  I am sure that the Minister has appreciated all the assistance which he received from his hon. Friends below the Gangway. Like them, we particularly welcomed his praise and his tribute to the 26 district councils. We trust that he and his colleagues will, in the not-too-distant future, give added scope to the councillors concerned to enable them to exercise their undoubted abilities.
  It is common knowledge that my hon. Friend the Member for Belfast, South (Mr. Bradford) has been critical in the past of the apparent neglect of trolleybuses and other such vehicles which have been entrusted to the care of the museum. However, I understand that my hon.
  422
  Friend had a two-hour discussion with the board quite recently and that the board undertook to consider carefully the points he raised and promised to let him have a detailed written report. It would appear that at least some of the complaints made by my hon. Friend are now being dealt with. We are confident that a satisfactory solution can be found at no great expense to the public purse, at least for the time being.
  It has been predicted that the order might be criticised on the grounds that—
  Mr. Kilfedder: The hon. Gentleman referred to vehicles at the Ulster Folk and Transport Museum. I think I know the case that he has in mind. Three double-decker buses were removed from Witham Street because the premises were no longer available to the museum and had to be placed in the open at Cultra. They will be renovated when the Government provide the money, which I hope will not be long delayed, for an attractive location where the buses can be displayed for tourists.
  Mr. Molyneaux: The hon. Member for Down, North (Mr. Kilfedder) has a great deal of knowledge because the location is in his constituency. I understand that accommodation is likely to be made available as a result of some exhibits being moved around and that the vehicles will be accommodated in the not-too-distant future.
  Mr. Kilfedder: There is no change.
  Mr. Molyneaux: There were fears that the order might be criticised on the ground that it made no provision for a regional museum service. I would not offer any such criticism. The fact that the order brings together Northern Ireland laws relating to museums and art galleries is not an argument for centralisation. A unified service might look impressive on paper. I fear that it would do little to encourage interest in local history, which has been greatly neglected in Ulster Society.
  As the Minister says, articles 9 and 11 are designed to remedy that deficiency. The former article confirms the powers of the district councils to acquire land for museum purposes. The latter provides for the payment of grants to district councils for the provision and maintenance of museums. There is a sting in the tail of the note on article 11 in the shape of a warning, repeated by the Minister, that no such finance will be available for these purposes in the foreseeable future. We on this Bench, with a vigilant eye on the public sector borrowing requirement, cannot quarrel with that view. The order at least provides the mechanism, if not the means. It provides the power to give such assistance when the nation is restored to a firmer financial condition.
  3.27 am
  Mr. J. Enoch Powell: I should like to associate with the remarks made about the Ministers, a tribute to the skill of the managers of Government business that they have contrived to put on these two orders in circumstances that have ensured a much fuller attendance than is commonly experienced at this hour of the morning.
  On the subject of the so-called national museums, there are two observations that I should like to add to the excellent remarks of my colleague in the representation of County Down, the hon. Member for Down, North (Mr. Kilfedder), in reference particularly to the Folk and Transport Museum. The first is that I think that the Minister owes the House some indication of the present

  423
  volume and the intended volume of the Government's financial support for the two Ulster museums. Whatever we may say about the others, it is clear that those require substantial and continuing support from public funds. We should have some facts during the debate about what is going into them and what is intended.
  Secondly, in more direct reference to the remarks of the hon. Member for Down, North, a special feature of the folk museum is its continual growth. However frequently one visits the museum—I confess that I visit it frequently—there always seems to be some addition that has been made, some improvement and some monument of the past of Ulster from somewhere in the Province that has been saved and placed in a setting where it will be of constant instruction and enjoyment. The vitality of that museum is one of its attractive and unique qualities, and it deserved to be mentioned.
  I come to the district councils and their function within the scope of the order. I do not think that we ought at all to underestimate the importance of the museum functions which have been given and are now being confirmed to district councils. For Northern Ireland particularly, local museums are of great importance. In answer to a question which was asked earlier by an hon. Member who, I think has departed, yes, indeed, local museums are being created and are springing up throughout the Province. In my own constituency a local museum has recently been started in the old county town of Downpatrick. This is of special importance in Ulster, not merely because of the educational value of museums in their own areas but because by their existence they attract from private ownership into public care monuments of a past which might otherwise easily be destroyed. Locally they provide focuses for the preservation of material which can too easily be lost.
  My hon. Friend the Member for Antrim, South (Mr. Molyneaux) was indeed right when he said that in recent periods Ulster has been guilty of neglecting its local history. The time when that accusation could be levelled at it is very rapidly passing. There is now an immense interest in preserving, while they still can be preserved, the records of local history. Certainly, the local museum will be a focus of that interest and a physical means of assisting in the work.
  I personally make no complaint at this stage about the fact that the powers to grant-aid district museums are not to be implemented immediately. The district councils have few enough functions, and this is the sort of function which they could very well develop, at any rate at first, entirely upon their own resources and their own initiative. It will be time enough in years to come, when the special contribution that national funds can make has become clearer, but certainly we on this side and in this party welcome the confirmation of yet another function which district councils can and ought to discharge. [Interruption.]
  The House need not be unduly alarmed by the appearance of this volume of the Statutes at Large which I have here. When one looks at the older statutes repealed in the course of the consolidation which is embodied in the order, one notices how in the middle of the last century, when local museum powers were first given, I think, by an Act of 1855, this was associated with powers to provide libraries. Incidentally, it is interesting to note that in the
  424
  order we make provision for the district councils to charge for admission to their museums, whereas it was specifically provided in the original statutes that admission should be without charge. Perhaps second thoughts in this respect have been wiser.
  I was observing that the original conferment of museum powers upon local bodies—they were not yet district councils—was associated with powers to provide libraries. Indeed, the growth of local libraries and of local museums has been closely associated.
  Mr. Bowen Wells: I am grateful to the right hon. Member for giving way. He may understand my mounting resentment during the course of this debate when I say that in my constituency in Hertford, an ancient town of Great Britain, in the interests of economy we are closing our museum and restricting our library service. Therefore, I am particularly anxious to learn from the right hon. Gentleman whether these museums and libraries are now to be self-financing in his constituency, he having referred to their financing in the nineteenth century.
  Mr.Powell: Under the terms of the order—I have no doubt that this is how it will be—there will be some finance derived from charges. However, the major charge will fall, as it properly should, upon the local authority, which will levy a rate for the purpose.
  In the statutes to which I referred, it is clear that from the beginning of the service it was a local service that was locally financed through rating. Even in the present times, we find that the district councils are facing the responsibilities that they still have. When they believe that services are needed in their areas, they do not hesitate to provide them and to take the consequences in terms of the district rate. The answer is that initially it will be primarily the district rate that will support the provision and expansion of these museums.
  I return to the link between the museums and libraries. I am assisted by the intervention of the hon. Member for Hertford and Stevenage (Mr. Wells). There is in Belfast a quite exceptional library. It is a library of fame which certainly extends beyond the boundaries of the island of Ireland. I refer to the Linehall library, Belfast. It is a private library that is almost 200 years old. It contains a unique literary collection. It has been the means of preserving documents of Ulster and Irish history that would otherwise have been lost. It contains copies of periodicals, for example, which are the sole copies.
  For reasons that the House will well understand, that institution, though it is generously supported by its own members, encounters current financial difficulties. The question has arisen how those difficulties should be surmounted. The point that I wish to make is germane to the order. I believe that the natural source of support for a library of that sort is from the city council of Belfast. That is the first public source to which one should look, and it is the source that is most likely to preserve, despite the addition of a modicum of public money, the natural independence and ancient character of the institution. It is a cause that I believe will be engaging the attention of the Government of Northern Ireland in future. However, I take this opportunity to refer to it as an illustration of the way in which local authorities can and should support, both in the form of libraries and in the form of museums, this part of the Ulster heritage.
  3.38 am
  Mr. John Patten: With the leave of the House, Mr. Deputy Speaker, I should like to thank the right hon. Member for Mansfield (Mr. Concannon) for his kind remarks. He asked two specific questions, on the role of trustees and on when funding might be available to district councils to enable them to spend money on the provision of museums. The Government set great store by ensuring that those who represent the trustees have a wide range of skills. The Government will always bear in mind the need for specialists such as art specialists. We want on a board of trustees people who will disinterestedly attempt to serve the museum or museums to the best of their abilities. Certainly the Government value the range of experience that nominees from the trade union movement can add to such bodies.
  Some time ago, in the case of the museum to which the right hon. Member for Down, South (Mr. Powell) referred, we asked for three nominations. Only one was forthcoming. The problem with the nomination was that there appeared to be some conflict of interest between the nominee in his official capacity as a trade unionist, and in his disinterested capacity as a trustee of the museum. Happily for all concerned, suitable guarantees have been given about his role, and Lord Elton has recently written to express the Governments, intention to appoint that nominee as a trustee.
  Future finance of regional museums, including those already in existence, must await the availability of further finance. It is not possible for me to comment tonight on timing. Museums must take their place with other priorities. With that in mind, I greatly welcome the support for my view that was forthcoming from the hon. Member for Antrim, South (Mr. Molyneaux) and the right hon. Member for Down, South. I hope that I have answered the right hon. Gentleman's two points satisfactorily.
  I welcome very much the remarks of the hon. Member for Down, North (Mr. Kilfedder), who referred to the extraordinary achievement of the Ulster Folk and Transport Museum. It is a remarkable achievement for such a young institution. One can pick out the contributions to scholarly journals, the successful conferences in 1968 and 1978, and the role not only of the director and the others named by the hon. Gentleman, but of all the staff. I do not for one moment want the equal contributions of the staff of the Ulster museum to go
  426
  without being noticed in the House. Their contribution, especially in the areas of art and antiquities, is equally substantial.
  I am grateful to the hon. Member for Antrim, South for his kind remarks. I noted with interest the note that he took of my factual statement on the present role and relations of the district councils in Northern Ireland. I want to reassure him about the three buses to which he referred, which are presently at the Ulster Folk and Transport Museum. They have been there since 1969. They are all standing on concrete, and the trolley buses have been covered with a temporary cover. The bus is presently being moved under a permanent cover—although that will mean other exhibits being moved to other parts of the museum. In the professional judgment of the director and his staff, all three buses can be restored adequately. I am sure that we all look forward to a time when it is possible for that to happen, and for them to be displayed.
  I was grateful to the hon. Gentleman for his remarks about the regional museum service, which was a recommendation of the Malcolm working party. An interesting idea though that may have been, a regional museum service involves a large staff and considerable public expenditure. I believe that at 1978 survey prices it would cost £300,000 to establish the service, with no executive responsibilities, and it would cost about £150,000 a year to operate. It is better to concentrate our limited resources at the sharp end of the museum service.
  I shall provide for the right hon. Member for Down, South the figures that he requested. If he feels that the figures are not adequate, I shall be happy to write to him and amplify them. The grant made available to the Ulster Folk and Transport Museum in respect of its recurrent expenditure in 1980–81 is £1,182,000 and to the Ulster Museum it is £ 1,421,000. Capital grants to the Ulster Folk and Transport Museum in the year will be £516,000 and to the Ulster Museum £52,000.
  I welcomed the remarks which the right hon. Gentleman made about the vitality of local museums. I noticed with interest his remarks about the library to which he referred in Belfast. I shall draw them to the attention of my noble Friend Lord Elton.
  I hope that in answering the various questions of right hon. and hon. Gentlemen I have been able adequateley to substantiate the remarks I made in introducing the order, which should be commended to the House.
  Question put and agreed to.
  Resolved,
  That the draft Museums (Northern Ireland) Order 1981, which was laid before this House on 3 February, be approved.

  Social Security Claimants (Requests for Information)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooke.]
  3.52 am
  Mr. Ted Fletcher: Opposition Members have often complained that many Government Departments deliberately withhold information from Members of Parliament, particularly if that information is likely to become embarrassing. At least there is a motive in this procedure, although it is to be deplored, but we have now reached the stage when Ministers are impeding Members of Parliament from fulfilling their obligations to their constituents and are withholding information which could not by any stretch of the imagination be called private, confidential or even embarrassing.
  I shall give an example of the case that has prompted me to raise this matter in an Adjournment debate. A constituent who was divorced has married again. She obtained a court order against her former husband for the maintenance of the children of the marriage. None has been paid, however, as the former husband, who now lives in South Wales, claims that his only income is from social security benefit. However, his former wife claims that while drawing social security benefits he is also working and earning more than £100 per week. She names the firm which she claims employs him.
  My constituent wrote a number of times to the local office of the DHSS in South Wales and did not receive a reply. She then asked me to take up the matter. I wrote to the manager of the DHSS in South Wales, asking him whether he had received a letter from my constituent and what steps he proposed to take to deal with that communication. I received a reply from the manager. He said:
  "The department cannot enter into correspondence with a third party"—
  I presume that I am the third party that he means—
  "about the affairs of a person with whom it has had dealings. Therefore, I am unable to divulge the outcome of our recent enquiries."
  I was astonished to receive such a reply. In this case, an accusation has been made that someone is obtaining money under false pretences. As no replies have been received by my constituent, one can only presume that that case was being ignored.
  I have never had the slightest difficulty with my local office of the DHSS in Darlington. I approached its staff on numerous occasions. They are always courteous and supply me with the information that I want.
  I fondly imagined that possibly the management of the office in South Wales was being a little officious, so I wrote to the then Minister, the right hon. Member for Daventry (Mr. Prentice). Much to my surprise, he confirmed what the management had said. He repeated that social security registers are strictly confidential and are not disclosed, save in the most exceptional circumstances, without the consent of the individual concerned, even to Members of Parliament. No one should have the right of access to confidential registers without a good reason. However, we are not dealing with the privacy of recipients of social security. We are concerned with the attitude of DHSS officers. When advised of an accusation of malpractice, they refused to say whether they intended to act.
  428
  I then wrote to the Minister who is to reply tonight. He said that he had nothing to add to what his predecessor had indicated. I put down a question, and he stated that he had nothing to add to his letter. He was adding nothing to nothing. I made no further progress, and therefore I applied for an Adjournment debate.
  I hope that the Minister will not shelter behind the plea that what his officers might or might not do is confidential. As a Member of Parliament what I say is privileged. I could name my constituent, her former husband, and the firm for which he is alleged to be working, and state the accusations being made against him. The Minister could do nothing to safeguard his officials from public scrutiny. The matter would be reported in the press. However, I shall not do that. I do not know, and the Department will not tell me, whether the accusations are true or false. I might be doing someone a grave injustice by publicising the matter. How am I to discover whether my constituent has a real or imagined grievance unless the Department advises me of the outcome of its inquiries, if it has carried out any inquiries?
  The case raises the fundamental question of the relationship between a civil servant and a Member of Parliament. In common with most other hon. Members, I write to many Government offices, local government officers and social services departments on cases arising from interviews with my constituents. Sometimes the information that I receive is sensitive. It may be at variance with the information that I get from constituents. Sometimes the letters are marked "Strictly private and confidential". I cannot think of a single case of privileged correspondence having been abused. It is necessary for hon. Members to hear two sides of an argument before proceeding. If my constituent has what I consider to be a real grievance, I shall fight to get it rectified. If, on the other hand, having considered the view of Ministers or civil servants, I believe that there is no case, I will be frank with my constituent.
  A Member of Parliament is often regarded as a buffer between the bureaucracy of the Civil Service and the rights of the individual. A Member of Parliament has the ability to cut through red tape, and collectively Members of Parliament have resolved tens of thousands of cases that would have led to conflict and acrimony. If, however, a Member is denied access to information on a simple query by some high-handed official and such officials are then backed by the Minister, things have come to a pretty pass. All that I want to know from the Minister is whether his office has received letters from my constituent and what it proposes to do about the charges made in those letters.
  It seems a great pity that an Adjournment debate has to be used for this purpose. There are many problems in my constituency, such as high unemployment, cuts in public expenditure and a general lowering of the standard of living, that I should have liked to ventilate instead of this topic. Nevertheless, it is an important issue that concerns not only myself but my fellow Members of Parliament.
  I hope that I shall get a satisfactory answer from the Minister tonight. If not, I shall continue to pursue the matter through the Parliamentary Commissioner. The Minister should know that my constituent wrote to the Parliamentary Commissioner about her problems, but he says, quite rightly in my view, that he cannot investigate allegations by a third party. But the Parliamentary Commissioner adds:

  429
  "There is no reason, however, why you should not approach your Member of Parliament who may himself be prepared to make the appropriate inquiries on your behalf."
  That is exactly what I have done, and it is precisely what I am doing at this moment. If I fail to get a satisfactory answer, I shall report the matter back to the Parliamentary Commissioner on the ground of maladministration in the Department of Health and Social Security, because in my view the Department is deliberately withholding information, and that is hindering me in my efforts to help my constituent.
  All that I am asking for in this Adjournment debate is a simple "Yes" or "No" answer. Does the Department intend to take action arising from the information that has been forwarded to the South Wales local office? If the answer is "Yes", I presume that I shall be advised of the action that is to be taken. If the answer is "No", I shall conclude that, after investigation, the Department has found that there is no substance in the allegations that have been made.
  I hope that I shall get a clear and unambiguous answer to the questions that I have raised.
  3.58 am
  The Minister for Social Security(Mr. Hugh Rossi): I am grateful to the hon. Member for Darlington (Mr. Fletcher) for raising this matter, but in view of the lateness of the hour he will forgive me if I say that I do so with very mixed feelings. Nevertheless, it is a token of the great diligence with which he has pursued, and rightly pursued, the interests of his constituents in a matter of this kind. I should like to be able to help the hon. Gentleman, but perhaps when I have explained to him the conflicting principles that arise in the issues that he has raised he will understand why that is not possible.
  On the one hand, we are all concerned that confidential information given to my Department by claimants in connection with their claims for social security benefits is used only for the purposes of those claims. On the other hand, of course, we are concerned that social security funds should be safeguarded against fraudulent claims and abuse in general.
  It has always been accepted that information which my Department necessarily obtains for the purpose of determining benefit claims is used only for that purpose and is made available to third parties only in the most exceptional circumstances. This means, in practice, that we will not disclose such information as addresses, details of the composition of families, causes of incapacity for work or earnings and other details of employment. Those are private. They belong to individuals. They are in our possession for the specific purpose of enabling us to decide whether their true owners are entitled to benefit.
  In normal circumstances we do not disclose this information to third parties, however well intentioned they may be. But there are special circumstances in which this concern for the rights of the individual must take second place even to more important rights. It has, for example, always been accepted that it is right that our records should be used to help in the detection of serious crimes.
  Another area in which it has always been accepted that we may pass on information in our possession is where another Government Department is involved in the payment of money to the same individual or in some circumstances concerned with the payment of contributions through the PAYE system.
  430
  In addition, there is a long-standing arrangement, described in a statement in the House by the then Home Secretary on 6 June 1957, by which my Department supplies certain addresses to the courts in connection with proceedings under the Summary Jurisdiction (Separation and Maintenance) Act, the Guardianship of Infants Act or the Bastardy Laws Amendment Act. These arrangements also have their counterpart in Scotland.
  Of course, these restrictions on the giving of information do not apply in cases where an hon. Member is making inquiries on behalf of a constituent who is himself or herself a claimant. In such cases, the Member is given any information that would be given to the claimant—the Member's constituent—personally.
  Here, I repeat the request which my right hon. Friend the Secretary of State addressed to all right hon. and hon. Members in a letter last December in which he asked that such inquiries should ordinarily be addressed to the managers of our local offices. I am grateful to the hon. Member that he did so in this case and in all other cases that he has had occasion to raise with his local office. I am glad to hear that he has received the fullest co-operation from the Darlington office. Such local inquiries will provide the information needed much more quickly and easily than Ministers can hope to do.
  I turn to the second principle. The suppression of fraud against the social security system is a subject which rightly attracts the attention and concern of many right hon. and hon. Members. It is obviously in everyone's interest that fraud is detected and stopped. We are doing all that we reasonably can to achieve that purpose, and we therefore certainly act upon any information which reasonably tends to show that fraud has taken place. If anything, the criticism raised against us recently is that we are doing this too effectively. That was raised at great length during the recent debate on poverty.
  The hon. Member first raised this case in November last with the Department's local office. The manager declined to give any information as to the result of the Department's action. He was perfectly correct in doing so, because, as I have explained, that is the long-standing policy within which all Administrations have acted.
  My predecessor, my right hon. Friend the Member for Daventry (Mr. Prentice), assured the hon. Member in reply to a letter he wrote later in November that appropriate inquiries into the allegations were made, but the information as to their outcome could not be passed on. I myself repeated that information in a letter I wrote to the hon. Member on 19 January in reply to his letter of 18 December. I must now repeat that that is still the position, as I did in a written answer to the hon. Member on 2 February.
  All that I can do is to assure the hon. Member that the fullest inquiries have been made into the allegations by his constituent about her former husband. However, for the reasons that I have given, I cannot infringe our duty to respect the privacy of those who claim social security benefits by disclosing the results of those inquiries.
  I can well understand that this reply will be disappointing to the hon. Member, but I am sure that he will realise that our rightful concern that fraud should not take place must also recognise the rights of individuals to privacy. We cannot disclose to third parties, even to right hon. and hon. Members, the results of our investigations in to allegations of fraud against persons. This applies to

  431
  the giving of information in cases in which the allegations have been found to be justified and in those in which they have not.
  It is easy to see why we cannot disclose information where inquiries show allegations against claimants to be justified. To do so would clearly involve the giving of private information, albeit information which may sometimes be of public interest, too.
  It is, perhaps, less easy to see why we cannot say that inquiries have shown allegations to be unjustified. But if that information were given it would be obvious in cases where we declined to disclose that allegations had been found to be justified. So it is in everyone's interest that we do not disclose the results of our inquiries.
  Unless those who claim benefit can feel that their confidences will be respected by the Department, it is our conviction that many deserving people would be deterred
  432
  from claiming. That should be the most important consideration in our minds. But let no one doubt that appropriate inquiries will be made into allegations of fraud.
  Perhaps I may add a final word that may be of help to the hon. Gentleman because he is concerned about what he can best do for his constituent. She is concerned because certain payments are not being received from her husband. She has a remedy in the courts. In the courts, by means of cross-examination or subpoena of those whom she feels may be employing her husband, she can discover the truth of what she believes to be the case. However, for the reasons that I have given, I cannot hand over to that lady, through the hon. Gentleman, the results of the inquiries that we have made as a result of her allegations.
  Question put and agreed to.
  Adjourned accordingly at seven minutes past Four o'clock am.

Trade
  Education Equipment (Exports)
  Education Equipment (Exports)
  Price Marking (Bargain Offers) Order 1979
  Price Marking (Bargain Offers) Order 1979
Education and Science
  University Students
  University Students
  Dyslectic Children
  Dyslectic Children
  Overseas Educational Projects
  Overseas Educational Projects
  Overseas Students
  Overseas Students
  Handicapped Children
  Handicapped Children
  Overseas Students
  Overseas Students
  Law Graduates
  Law Graduates
  Nursery Education
  Nursery Education
  Schoolchildren (Suspensions)
  Schoolchildren (Suspensions)
Civil Service
  Statistical Service Publications
  Statistical Service Publications
  Cleaning Staff
  Cleaning Staff
Foreign and Commonwealth Affairs
  United Kingdom-United States (Political Cooperation)
  United Kingdom-United States (Political Cooperation)
  Middle East
  Middle East
  Vanuatu (British High Commission)
  Vanuatu (British High Commission)
  South Africa
  South Africa
  Namibia
  Namibia
  Middle East
  Middle East
  Belize
  Belize
  President Reagan
  President Reagan
  Madrid Review Conference
  Madrid Review Conference
  Afghan Refugee Camps (Pakistan)
  Afghan Refugee Camps (Pakistan)
  Libya
  Libya
  Mr. Yasser Arafat
  Mr. Yasser Arafat
  Zimbabwe (Blocked Funds)
  Zimbabwe (Blocked Funds)
  American Visit (Support Staff)
  American Visit (Support Staff)
  Israel
  Israel
  Iran
  Iran
European Community
  Member States (Co-operation)
  Member States (Co-operation)
  Community Institutions (Powers)
  Community Institutions (Powers)
  Sugar
  Sugar
  Redundancy Payments
  Redundancy Payments
Home Department
  Pentonville Prison (Remanded Persons)
  Pentonville Prison (Remanded Persons)
  Prisons (Domestic Visits)
  Prisons (Domestic Visits)
  Prisoners (Use of Telephone)
  Prisoners (Use of Telephone)
  Civil Defence
  Civil Defence
  Crowd Control (Police Powers)
  Crowd Control (Police Powers)
  IRA Prisoners (Parole)
  IRA Prisoners (Parole)
  Parliamentary Constituencies (Hampshire and Dorset)
  Parliamentary Constituencies (Hampshire and Dorset)
  Prison Establishments (Facilities)
  Prison Establishments (Facilities)
  Deportations
  Deportations
  British Nationality Bill
  British Nationality Bill
  Police Officers (Personal Accident Insurance)
  Police Officers (Personal Accident Insurance)
  Prisoners (Kidney Donation)
  Prisoners (Kidney Donation)
  Overseas Residents
  Overseas Residents
  Sunday Trading
  Sunday Trading
  Local Government Elections (Manchester)
  Local Government Elections (Manchester)
Energy
  Gas-gathering Pipeline
  Gas-gathering Pipeline
  Gas Flaring
  Gas Flaring
  Ethane
  Ethane
  Coal
  Coal
  Pit Closures
  Pit Closures
  Gross National Product (International Comparisons)
  Gross National Product (International Comparisons)
  Severn Barrage
  Severn Barrage
House of Commons
  Committee of Selection
  Committee of Selection
Employment
  Engineering Industry
  Engineering Industry
  Unemployed Persons
  Unemployed Persons
  Health and Safety at Work
  Health and Safety at Work
  Aid to Industry
  Aid to Industry
  Employment Statistics
  Employment Statistics
  Industrial Training Boards
  Industrial Training Boards
  Disabled Persons
  Disabled Persons
Industry
  British Steel (Redundancy Payments)
  British Steel (Redundancy Payments)
  Aid to Industry
  Aid to Industry
  Technological Change (Report)
  Technological Change (Report)
Foreign and Commonwealth Affairs
  President Reagan (Meeting)
  President Reagan (Meeting)
  Gibraltarian Status
  Gibraltarian Status
  Disarmament (Madrid Conference)
  Disarmament (Madrid Conference)
  South Africa (Oil Embargo)
  South Africa (Oil Embargo)
  Foreign Affairs Council
  Foreign Affairs Council
  Israel
  Israel
National Finance
  Earned Income and Inflation
  Earned Income and Inflation
  Profits (Outflow Controls)
  Profits (Outflow Controls)
  Company Taxation
  Company Taxation
  Value Added Tax
  Value Added Tax
  Unemployment Costs
  Unemployment Costs
  Currency (Disabled Persons)
  Currency (Disabled Persons)
  Cash Limits
  Cash Limits
  Inspectors of Taxes
  Inspectors of Taxes
  Investment Income Surcharge
  Investment Income Surcharge
Northern Ireland
  Lear Fan Aircraft
  Lear Fan Aircraft
  Prisoners (Special Category Status)
  Prisoners (Special Category Status)
Wales
  Dyslexia
  Dyslexia
  Government Training Centres
  Government Training Centres
  Skillcentres
  Skillcentres
  Homes Insulation
  Homes Insulation
  Steel Industry
  Steel Industry
  Development Board for Rural Wales
  Development Board for Rural Wales
  Housing Starts
  Housing Starts
  Disabled Persons (Job Training Grants)
  Disabled Persons (Job Training Grants)
  Area Health Authorities (Bilingual Forms)
  Area Health Authorities (Bilingual Forms)
  Welsh Development Agency
  Welsh Development Agency
  Home Improvements
  Home Improvements
  Road Schemes
  Road Schemes
  Council House Sales
  Council House Sales
  Housing Starts
  Housing Starts
  Housing Investment Programmes
  Housing Investment Programmes
  Employment Exchange Areas
  Employment Exchange Areas
  Perinatal and Infant Mortality
  Perinatal and Infant Mortality
  Council House Rents
  Council House Rents
  Vacant Council Houses
  Vacant Council Houses
  Local Government Expenditure
  Local Government Expenditure
Scotland
  Agricultural Research
  Agricultural Research
  Barlinnie Special Unit
  Barlinnie Special Unit
  Scottish Crop Research Institute
  Scottish Crop Research Institute
  Land Management (Croft Tenure)
  Land Management (Croft Tenure)
  Dundee
  Dundee
  School Closures
  School Closures
  Post Mortems
  Post Mortems
Social Services
  Social Security Claim (Member's Correspondence)
  Social Security Claim (Member's Correspondence)
  Abortion Services
  Abortion Services
  Overseas Doctors
  Overseas Doctors
  Spectacles
  Spectacles
  Poliomyelitis
  Poliomyelitis
  Regional Secure Units
  Regional Secure Units
  National Health Service (Expenditure)
  National Health Service (Expenditure)
  Hypothermia
  Hypothermia
  Pharmacists
  Pharmacists
  Earnings-related Supplement
  Earnings-related Supplement
  Unemployed Persons (Supplementary Allowances)
  Unemployed Persons (Supplementary Allowances)
  Secure Accommodation
  Secure Accommodation
  Perinatal and Infant Mortality Rates
  Perinatal and Infant Mortality Rates
  Blood Supplies
  Blood Supplies
  Drugs (Side Effects)
  Drugs (Side Effects)
  New-born Infants
  New-born Infants
  London Hospitals (Acute Beds)
  London Hospitals (Acute Beds)
  Chelsea Flower Show (Disabled Persons)
  Chelsea Flower Show (Disabled Persons)
  Members of Parliament (Public Appointments)
  Members of Parliament (Public Appointments)
  Magistrates (Religious and Political Opinions)
  Magistrates (Religious and Political Opinions)
Agriculture, Fisheries and Food
  Forestry Housing
  Forestry Housing
  Dutch Chrysanthemums
  Dutch Chrysanthemums
Environment
  Disabled Persons
  Disabled Persons
  Council House Sales (Sheffield)
  Council House Sales (Sheffield)
  Lambeth
  Lambeth
  Insulation Grants
  Insulation Grants
  Rate Support Grant
  Rate Support Grant
  Aid to Industry
  Aid to Industry
  Domestic Properties (Insulation)
  Domestic Properties (Insulation)
  Local Authorities (Expenditure)
  Local Authorities (Expenditure)
  Enterprise Zone (Tyne and Wear)
  Enterprise Zone (Tyne and Wear)
Transport
  Traffic Census Data
  Traffic Census Data
  Shrivenham Bypass
  Shrivenham Bypass
  M4 (Exit 10)
  M4 (Exit 10)

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

Armed Forces: Training and Cash Limits
Lord Hill-Norton: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question wsa as follows:
To ask Her Majesty's Government what proportions of operational front-line training for each of the three Services have so far been lost through the application of cash limits in the current financial year, and what is the corresponding forecast for 1981–82.
The Minister of State, Ministry of Defence (Viscount Trenchard): My Lords, it is not our practice to give details of this kind, nor is it possible to calculate meaningful proportions. Activity in all three Services has been reduced, leading to some loss of operational training. In some areas activity has been cut; in others it has been maintained at or about normal. Levels of training will not be cut below those required for essential operational efficiency.
Lord Hill-Norton: My Lords, I am grateful to the noble Viscount the Minister for that unsatisfactory and incomplete reply. Might I ask the Minister further what is now regarded as a reasonable minimum number of flying hours for front-line pilots in both the Royal Air Force and the Royal Navy, and, secondly, to what extent has our participation in both national and NATO exercises been curtailed for the reasons given in my Question?
Viscount Trenchard: My Lords, I am sorry that the noble and gallant Lord believes that that was an unsatisfactory reply; I have indeed had detailed discussions with the Services to see whether I could make it a more informed one. The fact is that the policy of trying to curtail the over-expenditure on the defence budget means that only after the event will one be able to work out details of the kind that the noble Lord asks for. So far as the flying hours are concerned, I think it is well known that the NATO guide on minimum hours is an average 15 hours a month, and we shall maintain that level as an absolute minimum. So far as exercises generally are concerned, some lower priority exercises have been curtailed, but major exercises, which as the noble Lord knows include "Crusader", have been maintained at normal level.
Earl Cathcart: My Lords, would not my noble friend the Minister agree that the most important
680
conclusion from the United Kingdom air defence exercise nicknamed "Elder Forest", held last year, was the need for such exercises to take place more frequently, not only to practise the defence of the United Kingdom base but also to co-ordinate all the elements of the NATO air defence environment known as NADGE? Can the Minister say to what extent this vital training programme will now be curtailed?
Viscount Trenchard: My Lords, I cannot answer the detail of my noble friend's question without notice, but I will write to him on that detail. I think that in general all I can say once again is that there is a difference between what we acknowledge is a thoroughly desirable level for operational training and a minimum which one has, with some reluctance, been forced to adopt in order to curtail within reasonable bounds—and "reasonable" may be a slightly unwise word—the over-expenditure on an already increased defence budget.
Lord Shinwell: My Lords, may I ask the noble Viscount whether he would agree with me that the manoeuvres that were undertaken about 12 months ago in Europe disclosed inadequacies in operational training, and why have they never been revealed?
Viscount Trenchard: My Lords, if the noble Lord is referring to "Crusader", I believe that this exercise was in effect thoroughly successful; it showed that in the main we were able to increase the effective defence in Europe roughly according to plan. Yes, the purpose of the exercise was to highlight shortcomings. Some shortcomings were highlighted and some of them have a training application, and where these are a priority they will still be included.
Lord Harvey of Prestbury: My Lords, is my noble friend aware, as regards the figure he gave for a pilot in training—I think it was 16 hours a month—that taking into account leave periods and all the things that could go wrong, it is barely enough for a man to keep in flying training, let alone the flying equipment that is worth many millions of pounds?
Viscount Trenchard: My Lords, I am not one to argue with my noble friend as to the exact correctness of a NATO guide, advised, I think, by all experts in this area, that 15 hours a month should be the minimum. That is what is advised as the minimum and we shall not drop below it, and as soon as we possibly can we shall increase it.
Lord Clifford of Chudleigh: My Lords, will the noble Viscount bear in mind a bit of history—that in the early 'thirties the same sort of stupidity was carried on by the Government of the day? Will he remember what was said at the outbreak of war: that if it had not been for the Navy being called out on patrol for the Spanish Civil War they would have forgotten how to navigate and signal?
Viscount Trenchard: My Lords, I take note of the noble Lord's historical lesson.

Immigration: Age Estimation by X-rays
2.43 p.m.
Lord Avebury: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the accuracy attainable in estimating the age of children by X-rays for Immigration Act purposes.
The Minister of State, Department of Education and Science (Baroness Young): My Lords, Sir Henry Yellowlees has reported that these estimates are fairly accurate. The accuracy falls with increasing age. For example, at three years of age 68 per cent. of the children examined would be expected to have a bone age within about five months above or below their chronological age, and 95 per cent, within about 10 months; at 16 years the respective figures would be about 13 months and about 26 months either way. However, bone X-rays are not the sole determining factor in a medical opinion of age, and a doctor would normally only use them to verify an assessment based on his clinical examination.
Lord Avebury: My Lords, while thanking the noble Baroness for that reply, may I ask whether she can explain why her colleague, the noble Lord, Lord Belstead, told me in an Answer to a Question on 20th January that, in estimating the age of children by X-rays, the accuracy attainable was of the order of plus or minus six months, when on the noble Baroness's own admission it can be as much as plus or minus 23 months? Is she aware that Dr. Cameron of the Institute of Child Health at the University of London has said that chronological age varies by as much as two years on either side of skeletal age and that variations of as much as three years can exist if one is looking at populations of children who are malnourished or under-nourished, such as those who are likely to be found in the Indian sub-continent?
Baroness Young: My Lords, as the noble Lord will be aware, this is a highly technical matter. I am quite prepared to give him the evidence upon which my Answer is based. It is based on the most accurate information that we have to date.
Lord Segal: My Lords, can the noble Baroness say why it is necessary to X-ray children for Immigration Act purposes?
Baroness Young: My Lords, as I have indicated, it is sometimes necessary, for Immigration Act purposes, to identify an applicant's age as accurately as possible, and in the course of that X-rays are sometimes used.
Lord Elwyn-Jones: My Lords, is there any risk to the health of the children concerned in this apparently rather meticulous process?
Baroness Young: My Lords, the whole question of safety is again a highly technical matter. However, I understand that calculations by the National Radiological
682
Protection Board show that the radiation risk associated with the single hand or wrist X-ray, using the accepted precautions to avoid the scatter of radiation, is extremely small.
Lord Avebury: My Lords, in that case why do the Government refuse to give an undertaking that X-rays will be confined to the wrist and hand which are the parts of the body which are commonly used in the Tanner-Whitehouse method of age estimation? If the noble Baroness is ready to give me the information for which I asked in my first supplementary, how is it that I am still awaiting an Answer which was promised to my Question of an earlier date as to how the Government correlate the bone ages of children in the Indian sub-continent with the sample of British children on which the Tanner-Whitehouse method is based?
Baroness Young: My Lords, it is true that the noble Lord did put down a Question to my noble friend Lord Cullen of Ashbourne and I can assure him that there will be no delay in his getting an Answer. I hope that he will get it within the next two weeks.
Lord Avebury: My Lords, will the noble Baroness answer the first part of my question?
Baroness Young: My Lords, on the first part of the noble Lord's supplementary question, I point out that the Government are naturally studying the report of Sir Henry Yellowlees and, of course, will take into account the results of the consideration of that report and any other considerations, such as questions like the ones which have been raised today.
Lord Avebury: My Lords, that was not what we asked. The noble and learned Lord asked about whether there were any considerations of safety and the noble Baroness correctly replied that the risks to children are minimal if they confine themselves to X-rays of the wrist and hand. But since the Yellowlees Report has been published has there not been a demand made of the Government that no X-rays other than of the wrist and hand should be carried out on children, and have not the Government refused to comply with that request?
Baroness Young: My Lords, once again the whole question of safety is a very technical matter. If the noble Lord wishes a reply to that specific question, he must put down a separate Question and I will do my best to answer it.
Lord Elwyn-Jones: But, my Lords, surely that question is highly relevant to the concern of the House about this matter? If the Minister is temporarily waiting for an answer from a certain place, we shall give her a moment or two while I continue to address the House, if that will be of assistance.
Baroness Young: My Lords, I am not waiting for an answer from the Box; but I think that the noble Lord will appreciate that questions of safety with regard to X-rays are very technical subjects. I have given an answer to the best of my ability and I am quite prepared to give an answer to any Question that either the noble

683
and learned Lord or the noble Lord, Lord Avebury, may care to table. However, it is a matter which is slightly wide again of the highly technical Question that the noble Lord has asked.
Viscount Thurso: My Lords, would the noble Baroness agree that, if there is a question of danger to the health of children, the Government should err on the side of the children rather than on the side of technicalities?
Baroness Young: My Lords, I should like to make it quite clear, in any case where a child is going to be subject to an X-ray, that when deciding whether or not to ask for a bone X-ray the doctor will balance three factors: first, the accuracy to be expected from the estimation; secondly, the extent of the risk of radiation; and thirdly, the degree of importance to the applicant or to the immigration service of having an estimate of bone age.
Baroness Llewelyn-Davies of Hastoe: My Lords, I should like to ask a non-technical question. Is there any risk of a child being exposed to X-ray both in the country of origin and on this side when he or she arrives?
Baroness Young: My Lords, the X-rays take place in the country of origin; they do not take place in this country. My understanding is that the precautions that I have identified would take place in the country of origin because, of course, the risks are known to all those who would be responsible for taking the X-ray.

Commonwealth Students: Engineering and Science
2.50 p.m.
Lord Gladwyn: 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 how many new engineering and science students from Commonwealth countries had been admitted for their first year to United Kingdom universities and polytechnics, whether at undergraduate or at post-graduate level, as at 1st November 1980 compared with the numbers admitted in 1978 and 1979.
Baroness Young: My Lords, in United Kingdom universities 2,739 new first-year engineering and science students from Commonwealth countries were admitted at undergraduate level in 1978 and 2,245 in 1979; at post-graduate level the numbers were 1,436 and 1,393 respectively. In polytechnics the corresponding numbers at undergraduate level were 942 and 906, and at postgraduate level 17 and 39 respectively. The polytechnic figures for undergraduate level students are solely in respect of those commencing first degree courses; there were an additional 539 students in 1978 and 456 students in 1979 starting non-advanced or advanced courses other than of first degree level. I regret that corresponding
684
information for 1980 will not be available for several months.
Lord Gladwyn: My Lords, I thank the Minister for that reply and appreciate the evident trouble which the department has taken in producing these complicated statistics. Does she realise that from my point of view the significant period is not the two years 1978 and 1979, which she quoted, but the year starting 1st November 1979 and ending 1st November 1980, the figures for which I understand are not yet available but hopefully will soon be available?
Are the Government aware that the Association of Commonwealth Universities' Vice-Chancellors will shortly be meeting in Hong Kong to consider proposals for mitigating some of the more dangerous results of the recent very heavy increases in overseas students fees upon student mobility within the Commonwealth? Will the noble Baroness give an undertaking that when these proposals are available they will be given very serious consideration by the Government?
Baroness Young: My Lords, I regret that the information for 1980 is not yet available, but as the noble Lord, Lord Gladwyn, will appreciate, it is very difficult to get the information for this current academic year. We expect it to be available from the universities within the next few months and from the public sector at the end of the academic year. On the noble Lord's second point, we shall of course consider the findings of the conference of Commonwealth Universities' Vice-Chancellors.
The Earl of Selkirk: My Lords, do the Government recognise that the success and proper working of almost all aid schemes depend directly on the availability of competent engineers and technologists in developing countries?
Baroness Young: Yes, my Lords, I appreciate that point, and my noble friend will recognise the very high numbers of overseas students taking engineering courses.
Lord Kilmarnock: My Lords, can the noble Baroness say whether it is not the case that the Government undertook to monitor the results of their policy on fees? Can we expect a report on this at some time in the near future? Further, when the noble Baroness gives us this information, will it be possible for it to be broken down between the countries of origin of the students attending British institutions of higher education, so that we may see how many come from the oil-rich states and how many come from the poorer Commonwealth countries?
Baroness Young: My Lords, the Government published a statistical bulletin, a copy of which is in your Lordships' Library, giving the effects of the figures that we have so far relating to the 1980–81 entry. That information is, of course, available to any noble Lord. This forms part of our monitoring of the numbers of overseas students which we accepted we would have. As for the other statistical information, I shall certainly take note of the point raised. I think that it will be available, as it has been available in the past.
Lord Goronwy-Roberts: My Lords, is the Minister aware that there is considerable concern in the Commonwealth, and in the third world, which is not necessarily included in the Commonwealth, about the great disparity in fees between those charged to Commonwealth students and those charged to students from Europe or, indeed, from very poor countries in the third world? Is not this grossly unfair and also very shortsighted in view of the fact that the more Commonwealth students we train and influence in this country, the better is the reception to both our commerce and our diplomacy in their home countries?
Baroness Young: Yes, my Lords, this is of course a matter that we have discussed and debated in your Lordships' House on many occasions. Much as we all wish that more money was available for overseas students, the fact is that the education budget has to make its share of the economies for which the Government have asked, and under these circumstances the Government believe that it is right that these students from overseas should pay the full cost of their education here. The Government still believe that it is very good value for money to be able to get a first degree course in three years. Of course, we value and appreciate the need to have internationally recognised universities, and the advantage of overseas students being educated in this country, but we are still educating many thousands of them–2,000 more this year than were proposed under the former Labour Government's scheme.
Lord Gladwyn: My Lords, I should like to ask one further supplementary question. Is the noble Baroness aware that the Commonwealth Secretariat has appointed a committee to make constructive proposals regarding the fees paid by overseas students generally, and will she be in touch with the Commonwealth Secretariat in this regard?
Baroness Young: My Lords, I am quite sure that my right honourable friend will be happy to look at any constructive proposals about this problem, but the noble Lord must recognise that the Government's commitments to making the savings are not something on which we can go back.
Lord Goronwy-Roberts: My Lords, is the term "overseas countries" deemed to include Europe?—because Commonwealth students pay substantially more than students from Europe do for the same tuition.
Baroness Young: My Lords, no; the home rates of tuition fees apply to students from the EEC.
Lord Gridley: My Lords, is it not a fact that many independent countries within the Commonwealth are well able to pay the fees of overseas students? We should not lose sight of that fact. Has my noble friend any information as to where difficulties with regard to the payment of students' fees by overseas Governments are being experienced?
Baroness Young: My Lords, I thank my noble friend for that question. The fees of many students from the developing countries of the Commonwealth are in
686
fact paid by the Overseas Development Agency, which to the Government seems the right way of helping poorer students from the Commonwealth. We have also established a special scholarship fund for oustanding post-graduate students, which has been fully taken up.

Legislation: Textual Amendment
2.57 p.m.
Lord Renton: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether the will instruct parliamentary counsel that Statutes in Force and recently consolidated legislation should be amended by the textual method as envisaged and recommended by the Committee on the Preparation of Legislation (Cmnd. 6053) in paragraphs 13.23 and 13.24 of their report.
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, partly as a result of the report by the committee chaired by my noble friend, textual amendment has become the prevailing practice, not merely in recently consolidated legislation, but generally, and the Government accept and encourage this attitude, Nevertheless, in the last resort the matter is one for the discretion of parliamentary counsel and in the view of the Government a formal instruction would be inappropriate.
Lord Renton: My Lords, I thank my noble and learned friend for that mainly encouraging reply. Nevertheless, may I again take the liberty of reminding him that there are occasions when parliamentary counsel are not infallible, and that it would be far better if it were made abundantly plain that there is scarcely ever any occasion which justifies the use of the non-textual method.
The Lord Chancellor: My Lords, I think it is possible that none of us is infallible, but it is likely that parliamentary counsel know their own business better than I do.

Business
Lord Denham: My Lords, it might be for the convenience of those of your Lordships who are taking part in the Wildlife and Countryside Bill if I announce that the Government very much hope that it will be possible to complete the Committee stage in the course of tomorrow, Thursday, 19th February, and therefore to avoid the necessity for the House to sit on Friday, 20th February. I am sure that the whole House would welcome this. If in the course of the Committee stage tomorrow it becomes clear that the Committee stage cannot comfortably be concluded on that day, and that a Friday Sitting is therefore essential, I shall make a further Business Statement.
Baroness Llewelyn-Davies of Hastoe: My Lords, the House will wish to thank the noble Lord for that announcement and his usual courtesy. Owing to the remarkable character of this Bill, and, if I may say so, the indecisiveness of the Government in dealing with it, we must just hope for the best. Those noble Lords who were in the Chamber late last night will have heard the noble Lord, Lord Winstanley, say that he thought that the noble Lord, Lord Denham, was getting twitchy, and offered him a prescription to cure his twitchiness. I just wonder whether the prescription has arrived?
Lord Denham: My Lords, I only hope that it will not be necessary on Friday.
Lord Avebury: My Lords, while entirely accepting that the Committee should seek to make as good progress as possible with the Wildlife and Countryside Bill, may I ask whether the noble Lord is aware that yesterday I imposed a self-denying ordinance on myself by not speaking for the whole of the day, as I mentioned to him, and that it is unfortunate that he should make this announcement just at the point when my two amendments are first on the list?
Lord Denham: My Lords, I thought that Lord Avebury's amendment would be a very happy one to start off the next day with.

The Civil Aviation Industry
3.1 p.m.
Lord Glenkinglas Lord Glenkinglas rose to call attention to the state of the British civil aviation industry with special reference to the condition and situation of British Airways and of the airports operated by the British Airports Authority; and to move for Papers.
The noble Lord said: My Lords, it was with some trepidation that I viewed the possibility today of moving this Motion knowing my love for short speeches and realising the great width of this particular debate. But I was then considerably comforted by the thought that almost all of your Lordships are experts in the field of airports and airways, and so on, and that any shortcomings in my speech would be immediately and most adequately filled by speeches from other noble Lords.
It is just over 10 years since I was responsible for a short period, a year or two, for civil aviation, and I thought it might be of some interest to your Lordships—it certainly was to me, and I hope not too boring—if I look back to 10 years ago and think of some of the things that we found acute problems then and see how we have got on since. May I start by saying a few words about what I call the day-to-day problems which existed at that period. The first and most horrible problem that landed partly on my plate was the hijacking by Leila Khaled and her friends of a couple of aircraft on to what I believe is known as Dawson's Field. We had all the traumatic and appalling problems which immediately result from a situation of that sort.
It is a great comfort to all the airlines in the world to realise that since then the amount of hijacking in the
688
world has decreased enormously, and not least I hope to my noble and learned friend the Lord Chancellor, who at that time suggested that the only way of safety for air travellers was for everybody to be stripped before they went on board at London Heathrow airport. This was the moment when Oh! Calcutta! was first promoted in London. Because there were no suitable rooms, or anything of that sort at London Airport, I had the most appalling vision of what London Airport was going to look like if we were forced into that ultimate solution. But thank goodness that at least seems to have passed, if one may touch wood, and hope that it will be a continuing success.
My second day-to-day problem in those days was aircraft noise. There was hardly a single day when I did not have letters, petitions, and problems about noise around our main airfields; Heathrow, Gatwick, Luton, and to some extent later on at Edinburgh, Glasgow, and so on. It was an acute problem. Your Lordships will perhaps remember that a few years earlier we produced that wonderful aircraft the VC.10, which was advertised as, "The aircraft that leaves its noise behind it". This may have been entirely satisfactory for those people who were lucky enough to get on to that excellent aircraft, but it produced a few problems for the people on the ground. But with the arrival of the RB1–11 and now the RB2–11—of which I see the thousandth model was on its test bed this week—the noise problem has at least been, if not solved, very much mitigated.
Then there was the great controversy at the time about the third London airport. If it had been agreed to go ahead with Maplin at that time, which was thought to be the right solution by some, although not by all, Maplin would have been in existence today. Now once more we are looking for a possible third airport. I am told, though I do not move in those circles any more, that the most likely contender is Stansted, which was the one that was thrown out some 15 years ago and then we had to look for an alternative. We are more or less right back where we started. I recall that in those days I was assured by several people that by this time almost all aircraft would be vertical take-off aircraft and that one did not need long runways or anything of the sort. I just notice that for the first time this week British Airways have bought a number of vertical take-off helicopters to operate in a slightly different field, but otherwise aircraft still seem to be trundling up and down runways at rather greater speed but in very much the same way they did ten years ago.
Another of the day-to-day problems at that time was the procurement of aircraft. There were great arguments about Concorde. I think the first moment that I got into my office I was presented with a bill for a sort of facial operation to the Concorde. I think it was called "a redesigned nozzle" which cost £52 million, which seemed to me at the time to be the most expensive facelift I had ever heard of. At least Concorde is now flying. People may argue, and I am sure will for a long time, whether it was a good or bad investment of money but it is certainly flying, and flying successfully on the routes where it can at the moment operate.
Then there were what you might call the longer-term problems which crowded in, so that one's day

689
was never anything but absolutely full with civil aviation problems, and they were mainly set off by a comprehensive and extremely good report by the Edwards Committee. They suggested the setting up of the Civil Aviation Authority; an authority which would combine a lot of regulatory affairs which has previously been dealt with by the Ministry, and which included things like the Air Transport Licensing Board and the Air Registration Board. My noble friend Lord Kings Norton saw me pretty regularly because he was very worried at the time whether the new set-up would adequately protect the safety of British aircraft, a safety about which he was extremely knowledgeable and competent. At his request we changed into some rather odd name, the purpose of which was to maintain the initials ARB. I had his assurance a minute or two ago in the Lobby that not only have the initials remained satisfactory but so has the work, so I am glad that that worked all right.
The Civil Aviation Authority, as you would expect, has worked on the whole with remarkable success since its inception, not least—and I think he probably would agree with me about this—because my noble friend Lord Boyd-Carpenter was appointed chairman and looked after it in the early days. But of course not everybody agrees with their decisions. How could they, when often they have to decide whether somebody should have a route and somebody else should not, and the person who does not get the route is inevitably upset that he has lost his case? By and large, however, it has worked extremely well and has certainly worked to the advantage of civil aviation as a whole and to the British section of it in particular.
Another of the Edwards Committee recommendations was the amalgamation of BEA and BOAC. Those two great parts of British aviation were a little like those families in Boston; the Lowells spoke to the Cabots and the Cabots spoke only to God. So far as I was concerned, BOAC were the Cabots and I was God, but I was God in a totally unsatisfactory situation because the Cabots insisted that they wrote the Ten Commandments and that often made it extremely difficult to achieve what one wanted by way of a smooth merger.
However, in the next year or two that was done. The purpose of the merger was largely to save a great number of jobs which were reduplicated by having the two separate corporations. That was not achieved. In 1971 there were about 26,000 people employed by BEA and the same number by BOAC. Last year there were 60,000, so not only was there not a reduction in jobs but there was an increase. The present new management are determined to get the figures down to well below the original figure of 52,000. They believe they can do it and I hope they can, because it is that more than anything else that has caused the great loss of money which has been only too obvious in the last year or two.
The third Edwards Committee recommendation was the setting up of British Caledonian. That was politically controversial at the time, and it was my job to see it through the House of Commons almost exactly 10 years ago. It is fair to say that British Caledonian, who had their own particular problems in 1974, met the problem of overmanning, dealt with it toughly and sensible and are now a much stronger
690
and better airline than they were then. If only BEA and BOAC could have done the same we would not now have the financial problems we have.
I am occasionally worried by the proliferation of routes, which is now under consideration. The problems which I find still needing a good deal of thought are the whole of the problems concerning what are called multiple designations, and I am sure the House mostly understands what that means; it means allowing several different airlines to operate the same route. It was clear and I think sensible that where one was thinking in terms of the very heavily used routes—London/New York, London/Los Angeles, London/Paris and so on—it was possible to have more than one British airline operating scheduled services, apart from charters or anything else, and in so doing to increase the total amount of traffic carried by British airlines. But if it is true that competition is a good thing, I do not think it is true that total competition is totally satisfactory. I do not believe—there is an argument going on about it now—that giving everybody routes into Hong Kong and on to Australia is necessarily for the good of British aviation as a whole.
Another problem about which I should like the Government to think concerns the pooling of airlines. This is really the negation of competition in any real sense because if a pooling operation is done—this is a Government-to-Government arrangement and is not generally done, if at all, by airlines—then if 100 people want to travel by Swissair from Zurich to London and one person wants to travel by British Airways, it does not matter because they are each charged one-half. They each get half of the fares, so there is really no sensible way in which competition works to improve a service when those services are pooled.
I should also like the Government to think seriously about the problem of getting private investment in one form or another into British Airways—and I hope we can avoid that ghastly word "privatisation". The Government want to get private money into the corporation and, if that is what they want, they must be careful about the number of profitable lines that British Airways are operating which they are giving to other people. If they are not careful, nobody will want to put money in.
A brief comment about IATA. There is no sensible justification that I or any other sensible person believes in for remaining a member of IATA. There is an important job to be done, but it is done by ICAO, the people who organise the international arrangement of these things, and IATA is just an expensive nonsense, a non-tariff barrier to trade which should be quickly removed.
On the question of air traffic control, I will only say that in America to move aircraft from one part of the country to another is enormously easier, cheaper and on the whole far more successful than is the task of moving them around Europe. We pride ourselves on trying to make Europe into a community, and I hope somebody will be able to do something about the air traffic control problems which cause British aviation great delays.
I must make a brief comment on British airports. They are very expensive compared with those of most other countries, though they provide slightly different

691
facilities. It is possible to price oneself out of a business, and if one studies what Schipol are trying to do now by way of advertising the marvellous facilities of Schipol, one can see what might happen; I do not say would happen because London is a much bigger draw than Amsterdam for most people. However, an airport like Sumburgh, which is not part of the British Airports Authority, because they were charging enormous sums, has perhaps been a major factor in British Airways buying Boeing helicopters, which now have sufficient range to avoid going into Sumburgh at all; and that cannot be satisfactory for those who spent a great deal of money developing it.
My final points about airports are some very old and well-worn ones. I picked up my British Airways News and read that they were having a splendid new promotion of whisky at £2·99 abottle. Whisky costs under £1 a bottle and I cannot see why they should be allowed to charge three times that amount and soak those of us who drink and travel at the expense of others.
Then the question of luggage trolleys. They breed, and I know where they breed because I watch them almost every week when I go to Scotland. In a corner near Gate No. 3, where the shuttle goes from, there are never fewer than 300 or 400 trolleys. The trolleys are desperately needed all over the airport by people who arrive with luggage and cannot find them. If any of your Lordships are in that position, let me assure you that if you go to the shuttle desk and pick up a little card, you will be allowed through into the shuttle area where you can collect and then come back with a trolley. There does not seem to be any other way to get one, at least in Terminal 1.
I have tried to keep my speech to under 20 minutes and I have only just done so. I am sorry that I could not be quicker. There are so many people who have done so much in this House for British Aviation; and I am looking at the noble Baroness, Lady Burton of Coventry, who I think has done more than anyone else in this House or the other House to try to get a really good deal for the consumer. I am very much looking forward to listening to the rest of the debate. My Lords, I beg to move for Papers.
3.21 p.m.
Lord Ponsonby of Shulbrede: I am sure that the House would like to thank the noble Lord, Lord Glenkinglas, for introducing this debate this afternoon, so enabling your Lordships to have a comprehensive discussion on the aviation industry. Over the past year or two we have had a number of debates on different aspects of the industry, but the Motion before us today enables us to look at the aviation industry as a whole. As the noble Lord said in his final remarks, your Lordships' House has in particular excelled itself in acting as a watchdog for the consumer interest—travellers' interest—and that work has been spearheaded by the noble Baronesses, Lady Burton of Coventry and Lady Trumpington, on many occasions in this Chamber.
I was sorry that I was not present last week when the House debated Concorde, to which the noble Lord, Lord Glenkinglas, referred in his speech. Unfortunately I had to be in Geneva, performing some of my duties as chairman of the London Convention Bureau,
692
which exists to attract conferences to London. However that engagement gave me the opportunity to lunch with Mr. Hammarskjold, the Director-General of IATA, for whose views on the industry I have respect.
The noble Lord, Lord Glenkinglas, spoke in particular of the history of the industry over the past 10 years and reminded us of some of the problems that it has had to face during that time. On the whole I want to look at the situation as it is now and to consider what problems lie in the future. The most obvious, stark problem which we see is that of the grave financial trouble which British Airways is in at present, though there must be considered side by side with that the general overall state of the industry throughout the world. British Airways' revenue last year was £300 million down on expectations, and the indications are that the situation is worsening. The bottom line loss for British Airways as at the end of December was over £40 million, and the remaining three months of the financial year, which are traditionally loss-making months, are unlikely to show any improvement.
It should be emphasised that no European airline is prospering at the present time, and for the first time ever 1980 was a zero growth year in passenger traffic for IATA member airlines. For British Airways it was a year in which it saw a drop in its traffic of 10 per cent., compared with an annual growth rate of 10 per cent. throughout the 1970s.
As a consequence of that situation, airlines have filed negative sets of operating results, which means that there is no profit to bank to compensate for depreciation and to buy the next generation of aircraft that are vital for greater productivity and fuel economy. For IATA members 1980 can be assessed in stark terms: costs up 27 per cent.; revenues up only 19 per cent. Whereas British Airways had expected to fund about half of its capital expenditure programme this year from internally-generated funds, it is now found that this is impossible and all capital expenditure will have to be financed from external sources. The Government have recently given approval to further external borrowing by British Airways of £85 million beyond that originally set as a part of the public sector's external financing limits.
In the next few years we shall see a number of European carriers in serious trouble, and they are already reacting in different ways. They will be cutting back on staff, routes and facilities, and I believe that the industry needs a fuller understanding of the cost problems—both fuel and non-fuel—that it faces.
I think it helpful to remind ourselves that six of the top 10 airlines in Europe are British, and that there is a situation which might not be widely realised, in that a British airline such as Dan-Air is in fact a larger airline than Swissair.
As was said by the noble Lord, Lord Glenkinglas, in speaking about the multiple usage of particular routes, the Hong Kong situation which has developed over the past year means that there are airlines offering below-cost fares on long routes such as this. It is quite clear that such a situation cannot continue and that the honeymoon which the airlines at first thought they enjoyed when deregulation was taking effect is fast coming to an end. That inevitably means that

693
there will be commercial airlines that will go to the wall during the coming years. But it should be added that one cannot see that happening to national airlines.
One of the problems which the committee so ably chaired by the noble Lord, Lord Boyd-Carpenter, was looking at concerned the question of why European air fares are so much higher per mile than air fares in the States. The committee came up with a number of different reasons for that. Undoubtedly one reason lies in the fact that there are too many airlines in Europe, all with their establishment costs, and that is a situation which I think will be very difficult to resolve. If there is, as there is bound to be, continued national support—which one thinks is only right—for national airlines, it will create an artificial situation for competition in the industry. However, one should say that the airlines are more fortunate than the operators of airports, because if an airline finds it is in trouble it can switch its capital from route to route, or it can divest itself of its capital by selling off surplus aircraft; but, of course, an airport authority cannot take that particular action.
The year 1980 showed very starkly for the first time in the United Kingdom the link between prices and costs. The Government's policy on the future financing of airport development could be seen as directly affecting current airport charges, and thus the airlines' non-fuel costs. The industry has questioned the British Government's support for the campaign for lower European airfares in the context of its domestic policies on charges, which affect all major European airlines. The noble Lord, Lord Glenkinglas, mentioned the question of airport charges. The particular remark made to me last week by Mr. Hammarskjöld was that he felt that British airports were non-competitive; and one can understand what he meant by that. Lord Glenkinglas referred to them as being expensive.
Airlines have reacted to greater competition in different ways. Some are concentrating on the top end of the market and are limiting their capacity and sales in the lower yield sectors, like Swissair. Others are making a clear distinction between business and leisure traffic and are offering sharply defined products to both ends of the market, like Air France. A third group is down-grading its first-class service and relying on the emergence of a new, middle-market product, like British Airways. Innumerable promotional fares are now available to the public, and fewer than 25 per cent. of European air travellers buy a normal economy ticket. These evolutionary steps have the encouragement of the EEC Commission, the European Parliament and the Government. As to the ways that these particular airlines are adopting to solve their problems, one does not know, until one has hindsight, whether or not these will in fact prove to be the right solutions.
In the lengthy debates we had on the Civil Aviation Bill last year we discussed the case of airport charges, but this continues to be a sub judice matter, I assume. However, one can say on airport charges that the security levy has been held for the forthcoming year. However, a general point remains, which is that as the Airports Authority enters on to a period of intensive capital expenditure it needs to attract external finance, and it is up to the Government to provide support and to act as a broker in encouraging private investment and the underwriting of future programmes.
694
So far as airport siting is concerned, the endless Maplin-Stansted-larger Heathrow debate always fails to mention the user. There is, as I have said on many occasions previously, no God-given guarantee of the continued high-level involvement of British airports with the airline industry, and we must continue to make it attractive for airlines to use our major British airports. We must ensure that our London airports continue to be a major gateway for the airlines, and in particular the No. 1 gateway for airlines coming from North America into London.
Over the years there have been in this House continual criticisms of the facilities offered at Heathrow, of over-crowding there, and of lack of space. One should say that a lot of this has been caused by the need for the British Airports Authority to continue to manage at Heathrow, in many cases erecting more expensive buildings than they need erect because of the contraints of the site; because of the need to build down into the ground and of the need to build up. And the continued vacillation by many Governments of different complexions over the ultimate siting of a third London airport should be recognised. I think we know only too well (and I spoke previously about this) of the ability of airlines to switch their capital and of the inability of airports to do that.
Of course, the building of an airport which is found to be not commercially useful is a wasted expense. One can think of airports which were built on the assumption that aeroplanes would have to refuel before they landed in Europe, followed by the development of aircraft which did not have to refuel in the same way, as airports which were in fact in the wrong places at the wrong times. However, I feel that we have a fair assurance that the London airports will continue to be—and I hope the Government fully support this—the No. 1 gateway, and that the continued need of additional space in the area is one which will have all encouragement.
Having referred, on the one hand, to the poor financial results for British Airways, I think one should recall that during the most recent financial year Gatwick showed an increase of 12 per cent. in the number of passengers using that airport and Heathrow an increase of 1 per cent., whereas Amsterdam showed a decrease of 7 per cent. This, I think, shows a satisfactory situation for the British Airports Authority in their desire to switch an increasing amount of traffic to Gatwick.
There is one other aspect of the problem which I do not think has been mentioned so far, and that is the question of cargo. This is an area where British Airways have made considerable advances in the handling of air cargo in the last year, and this is obviously an area where one can see very considerable growth in the future. I was not expecting to speak for as long as Lord Glenkinglas but I see that it is almost coming up to 20 minutes. I have tried to touch on some of the problems concerning the different aspects of the industry. These are obviously problems which will have to be discussed again and again in the future and it is very difficult to focus one's telescope absolutely clearly on what the state of the industry will be 10 years from now.
The Parliamentary Under-Secretary of State, Department of Trade (Lord Trefgarne): My Lords, before the noble Lord sits down, may I intervene for a moment on his reference to the question of British Airports Authority charges? He will know that there are legal proceedings on this matter at present, and I should like to refer to the second paragraph of page 84 in the Companion on this matter. It reads:
"Matters awaiting or under adjudication in a civil court should not be referred to in any Motion or debate on a Motion or in any Question, including any supplementary question, from the time that the case has been set down for trial or otherwise brought before the court".
I have to say the matter has now been set down for trial in January 1982, and I am advised that it is strictly sub judice.
3.42 p.m.
Earl Amherst: My Lords, I, too, should like to thank the noble Lord, Lord Glenkinglas, for raising this Motion but he has raised it in such wide terms that, in the interests of brevity, I think I shall confine myself to drawing attention to some of the more salient points. British Airways is the first "special mention" on the Motion and, like most airlines in the West, this airline is now suffering from a monumental slump in traffic. This condition is not helped by the current rises in fuel and airport charges; but as the noble Lord, Lord Trefgarne, has said that this matter is sub judice I had better say no more on that except that I hope that an examination will be made of this, with particular reference to how these charges impinge upon the very high fares charged within the United Kingdom for local services which are sometimes short- and sometimes very short-haul services. Compared with the passengers carried in 1979, in the first nine months of the current financial year the figures have dropped by something like one million passengers, which has resulted in a cut in British Airways' revenue of something like £3 million. I think that this was mentioned by the noble Lord, Lord Ponsonby of Shulbrede.
There is a considerable outcry over the high fares now charged for scheduled services in Europe. I am told that at a recent meeting in Geneva, British Airways was reported as having been successful in obtaining agreement with some of its opposite numbers in Europe to reduce some of these fares. Presumably, such reductions will have to be referred to the appropriate governments under the bilateral agreements affecting fares and rates. I wonder if the time has not come when we should seek to have these agreements revised, at least so far as they affect fares and rates, if only to bring an end to those airlines who sometimes oppose reductions for reasons of their own finance or prestige and then get their governments to exercise a veto by not approving the proposed fares. Perhaps the noble Lord may have something to say about this when he comes to reply.
I do not propose to go into the vexed question of bucket shop discounted tickets as to do so might preempt the discussions on this subject on a Motion that the courageous and (if I may say so) indefatigable noble Baroness, Lady Burton, is going to raise in a short time. On retrenchment to adjust capacity and costs to the traffic situation brought about by the slump,
696
British Airways have undertaken massive replanning to cover this winter season which has involved the following cuts. The service from Gatwick to Düsseldorf, Frankfurt and Zurich has been cancelled and so has the service to Georgetown as well as the Concorde service to Singapore. The services to Stockholm and Copenhagen from Gatwick have been combined and frequencies on some 40 routes and 80 services have been reduced. British Airways have recently sold off some £20 million-worth of aircraft. They are examining the possibility of leasing or selling one or two of the 747s now on order and have been able to arrange for a postponement of delivery of these.
In the past 18 months, British Airways has been able to reduce its work force by 4,000—and this by normal wastage, without having to resort to enforced compulsory redundancy. In each of the last two years, British Airways have increased their productivity by 10 per cent. on average which, I am told is a considerably higher increase than obtains generally in the industry. In the last two months of 1980, a 90 per cent. punctuality for departures and a 100 per cent. regularity was achieved—which are even better figures than that given last Monday by the noble Lord, Lord Lyell. We discussed the Concorde operations last week, so there is no point in discussing that again today.
To turn to airports, the second of the special references made in the Motion, I understand that the public inquiry concerning the provision of a fourth terminal at Heathrow has been completed, planning permission is now awaited and, if there is no delay in obtaining this, the building will be complete by 1985. The completion of the extention of the Piccadilly Tube from the central area to the new terminal is awaiting the outcome of negotiations as to who is to be responsible for the funding of what is known as the "station box", which is the structure which will house the tracks, platforms and other ancillary equipment required for the station which will lie under the new terminal. Can the noble Lord give any information about these negotiations and their progress? As I have told your Lordships before, while the operators welcome the provision of the fourth terminal, many of them (notably British Airways) regard it as a stop-gap and better than nothing and hope that the present policies will be reversed and that eventually the Perry Oaks site will be developed as a fifth terminal.
In regard to improvements, Pier No. 3 in Terminal One, which is a very long one, if not the longest in Heathrow, is now to be widened so that a travelator can be installed. This was originally asked for by BEA before that corporation took over the buildings, but the pundits of Whithall said no. It is good news to hear that the airport authorities have grasped the nettle so that in due course elderly travellers such as myself and others will not have to trudge its dreary length. A central control is also being installed, so that if a travelator or a moving staircase does not move, its location will be recorded immediately and engineers can be sent to make repairs. Some new model carousels have been installed where the cubic capacity allows, and this, it is hoped, will alleviate some of the delays that passengers have to endure and the long wait that they have had to put up with before they could claim their heavy baggage. It seems that much effort is being made to get rid of the causes of so

697
many delays and inconveniences that have long been complained about.
It was estimated before the slump that a ceiling of 30 million passengers would be the order of the day at Heathrow; but only the figure of 27 million was actually reached. The slump and, it is likely, the move to Gatwick of British Airways' Spanish services may account for this. However, until the fourth terminal comes it is probable that the continued passenger congestion will remain. As regards Stansted, it is reported that the public inquiry concerning its development will not start before next September. It will probably take some time, so, in the meantime, presumably no actual development work can start, apart from some planning.
From the report of the British Airports Authority which was recently published, it seems there are plans for British Rail to run a spur into the airport building from the Bishop s Stortford/Cambridge line. There are to be four special trains an hour going to and from St. Pancras which is a much more convenient London terminal for most passengers than Liverpool Street station. Special passenger facilities are to be installed at St. Pancras. Even so there will be considerable problems in effective, quick interlinking with services using Heathrow and Gatwick. The road running from the south end of the M.11 to the centre of London, even if you use the North Circular Road, will be lengthy and tiresome, especially at peak times. I wonder whether the noble Lord, Lord Trefgarne, can tell us whether there are yet any plans for transferring services from Heathrow and Gatwick, and, if so, which airlines and what services will be affected?
Last December, in his declaration of airport policy, the Minister expressed a hope that the congestion in the London and South-East area could be eased if more services could be dispersed to provincial airports and more services from those airports to Continental destinations could be developed. I wonder whether the noble Lord can tell us whether any progress has been made in the matter. I seem to have asked a great many questions of the noble Lord; but, as I have given him some prior notice, I hope that he will be able to answer some of them.
3.52 p.m.
The Earl of Kimberley: My Lords, I should like to ask for your Lordships' dispensation as unfortunately I shall probably not be able to be here for the last speeches, because I have an appointment with the Under-Secretary of State for Defence and the All-Party Defence Study Group. I hope that I may be forgiven. I shall read Hansard tomorrow with great interest. Last Monday, when I raised the matter of British Airways' punctuality, it was said that it was very much improved. I have already mentioned two figures—that is to say, on the short-haul the punctuality percentage has improved from 45 per cent. two years ago to 82 per cent. this January; the long-haul figures from Heathrow are that about 70 per cent. of the flights are punctual, and that compares with the figures of 54 per cent. for Pan Am and 65 per cent. for TWA. I should like to reiterate that this can only reflect great credit on the management and staff of British Airways
698
and, in particular on Sir Ross Stainton, who has just retired.
However, not everything is rosy in Britsh Airways. There appeared to be inconsistencies between public policy in attracting a private sector shareholding in British Airways and the effects of licensing policy in British Airways' principal asset: its route structure. My noble friend Lord Glenkinglas referred to that. To enlarge briefly on this, a previous Conservative Government and a subsequent Labour Government thought that Britain would achieve and maintain its maximum share of global air transport if dual designation of British carriers were, at the very least, severely limited. As has been mentioned this afternoon, this policy was beginning to show some success, but of late it has begun to erode slightly. An excess of new competition on international routes in conjunction with the world recession makes it nearly impossible for British Airways to keep a balance between profitability and the maintenance of its market share, and Hong Kong has already been mentioned as a good example.
Many think that the negotiation of the so-called Bermuda 2A Agreement with the United States has produced a very unfavourable result for the United Kingdom. The British Government's exercise of choice in the new route options, which were ostensibly to help Laker and British Caledonian, may well have helped them but it has also given a considerable advantage to American operators; and so Laker's and British Caledonian's traffic to Hong Kong has no doubt, wrongly or rightly, hived quite a considerable amount of Gulf traffic away from British Airways. Of course, the same principles and arguments will apply to the Australian route.
Perhaps I could mention here that other carrries, not unnaturally, show a great interest in the "fattest" routes because these routes have been developed by British Airways with British Airways' money and expertise. We do not seem to see many applications for the less popular routes on which there are at present no scheduled services. Many, if not most, of the countries which run principal airports see it as their duty to help and give preferential treatment and exposure to their national carriers, but this does not appear to be the policy in this country. I was going to say something else about this, but in view of what my noble friend said about the British Airports Authority I shall remain silent.
I should like briefly to mention the security service which currently, in a full year, costs British Airways about £16 million, which is not an inconsiderable burden. I am led to believe that the security fund is already significantly oversubscribed. When my noble friend answers for the Government perhaps he could mention this. May I also mention helicopters? I know that my noble friend Lord Glenarthur is very much more expert than I am and will probably go into it in far greater detail, but if we look at the United Kingdom, over a period of years we have been virtually non-existent in helicopter development, despite that fact that geographically our country is one of the most suited for this type of air transport.
It must give us a lot of satisfaction that the only British manufacturer of helicopters—namely, Westlands—have at last realised the tremendous

699
potential that the civil helicopter has. Perhaps it should be brought home that we ought to export our high technology projects such as this. Westlands would be more than capable of doing this, particularly with the assistace of British Airways. Each Westland WG30 helicopter is worth about £1¼ million on the world market. I believe that we should really try for this because I am told that there is a market for at least 400 of these helicopters and it is an opportunity we cannot ignore.
That brings me to what appears to be reluctance on the part of the Civil Aviation Authority and the British Airports Authority to allow the helicopter service to link Milton Keynes with London Airport. I believe that progress is being made but the wheels are still turning very slowly. While on the subject we must remember that the Westland helicopter is full of British steel and British avionics and has a British Rolls-Royce engine. As the Government are well aware, there has been a lot of talk about a London international heliport. It has been discussed, I believe, between the Government and the Opposition, and there does not appear to be any objection to siting such a heliport down in the docks. Of course, this would again be a further way of alleviating the present depression being felt in the East London area. It would appear that if we had a heliport, there it could comfortably accommodate sometwhere between 6 million and 8 million passengers a year. I wonder whether the British Airports Authority have taken this into consideration when they have been considering Stansted.
I think it must be appreciated over the years that fixed-wing aircraft cannot always make profits over short sectors, and this is where the helicopter proves its worth. One has only to examine the successful service between Penzance and the Scilly Isles, which has been operating for something like 17 years highly successfully and highly profitably.
Let us hope that the Concorde operations, which were so ably debated the other night in connection with the Unstarred Question of my noble friend Lord Glenarthur, will continue. Let us hope that the punctuality will continue to improve even further and that the policies so well started by Sir Ross Stainton w ill continue. Sir John King, whom I personally know and who has a great expertise in the nuts and bolts as well as in the pursuit of the uneatable, will, I am sure, devote his considerable charismatic leadership as the new chairman to seeing that British Airways will be able to improve its performance in every sector, so that when we fly the flag every passenger will not cost the company £6 per head, as is reported in one of the newspapers today.
4.2 p.m.
Lord Orr-Ewing: My Lords, before I start I should like to apologise because I also have to slip out at a quarter to five to discuss with the Minister for Air, defence matters which we are to debate shortly, but I shall be back in my place very soon thereafter. Therefore the Front Bench need not wag their heads in disapproval: I am just apologising because I shall not be here for one and a half hours.
I should like to join with others in congratulating the noble Lord, Lord Glenkinglas, for initiating this
700
debate. It is one with very widespread interests among the taxpayers of this country and among nearly 50 million travellers who travel by air every year. It is of interest, I think, to all those who wish to see Britain prosper through our invisible exports which foreign travellers earn for us and, above all perhaps, through our export trade. I hope to deal with those points in my speech.
First, the taxpayers. Among our nationalised industries which come up for quite a lot of debate in your Lordships' House, British Airways and British airports until very recently have been somewhat unique in that they have been profitable. It is sad, though, that possibly as a result of, or accentuated by, the world economic downturn or recession, British Airways, who in 1978–9 were making £90 million profit, only just broke even last year; and in the current year it is now forecast that there will probably be a loss of some £100 million.
The British Airports Authority, which is also included in this Motion, is expected to continue to make some small profits. Certainly these two corporations are not the voracious consumers of taxpayers' money which we have discussed when debating British Steel, British Rail or British Leyland. Until recently they have had a near monopoly position, and I would suggest that competition has too often been very restricted through licensing, through the pooling agreements to which my noble friend has referred and, to some extent, because of the IATA fare-fixing rules. I believe the time has come to amend these restrictions.
Until recent years, the growth of air travel has really been sensational. I am a believer in regional airports so that we are not centralised around the London area, but I shall concentrate on the performance of London's two main airports at Heathrow and Gatwick, since they handle so many more passengers than any other airport in this country or in Scotland or Ulster. Last year 27,500,000 went through Heathrow and nearly 10 million through Gatwick. Therefore in the period 1979–80 those two airports handled some 37 million passengers. At Heathrow on eight days during last August—many of us experienced this and thought there were even more—there were 100,000 passengers a day. That is a pretty formidable task to cope with. What is also significant is that of the 37 million travelling through Heathrow and Gatwick, 17 million were foreign visitors; not only travellers for holiday purposes, but also businessmen coming to this country.
The impression which these 17 million annual visitors get is absolutely vital. If a bad impression is created it may take years to rectify. If a good impression is created it will make a lot of difference to whether they start subsidiaries in this country, whether they buy our goods when they are back in their own countries and whether they decide to create jobs by the creation of businesses here—and we all want to see more jobs created. So part of the impression which is given when you come to this country, perhaps for the first time, is the way you are treated at London Airport or Gatwick. That is why I want to accentuate their importance.
What else does the traveller want? He wants first, perhaps, courtesy; secondly, efficiency; and thirdly,

701
the maximum of punctuality and the minimum of frustration. Who would say there is not one of those categories in which we could not do better? Could we not, as a race, be rather more courteous to our visitors? Could we not be rather more efficient in every facet of handling air travellers? And could we not reward punctuality? I shall develop these points very briefly.
I have to travel, as probably many of your Lordships have, once a month or more, sometimes to the United States and sometimes within Europe. When you arrive at London Airport—and incidentally you now, for security reasons, have to report one and a half hours before take-off, so it is probably 2½ hours at least after you have left your home—you have to consider the following things. Can you quickly find a baggage trolley? Most of you will find it is not all that easy. Do you have to queue for check-in, taking your heavy luggage along as you edge up the queue? Are all the desks fully manned? Is passport control, both for overseas visitors and for United Kingdom passport-holders fully manned? My personal experience is that they are generally restricted and that there is a queue.
Too often the lounges are grossly overcrowded and sometimes, when I have tried to get into the Executive Lounge, I have noticed very considerable criticism when the door is locked or there is no room. That airport has been there now for 35 years, and surely it is possible to enlarge the facilities for first-class passengers, who very often are business people and who expect a little more comfort and courtesy. They do not expect to be locked out if they are entitled to go there on their first-class ticket.
Is our punctuality beyond criticism? It may be Sod's Law, but one of the things I always seem to find with my particular aircraft—and I have realied that other travellers find the same—is that it is always in the very last position along those "fingers". You walk past the first one, which has always got meal wagons, petrol wagons, baggage wagons and everything else by it; you walk past the second, the third and the fourth. For those who are elderly it really is a long drag with your hand-luggage to walk half a mile without a travelator, right to the end of a finger where the aircraft always seems to be parked. In addition, en route you have generally to queue for security, though I think it has got better since the X-ray machines have been installed.
Inside the aircraft, is your seat as comfortable as it might be? Do you get a drink promptly offered to you?—because that seems to be something one needs amid the frustrations of air travel, and it seems to me that very seldom does it come within the first 45 minutes. When you arrive at the other end do you immediately get a bus, a taxi or your rail connection? The trouble is that this is a complicated chain and any single weak link of efficiency in that chain reacts back along the chain, and everyone is blamed. So I come back to the fact that people want efficiency, courtesy and punctuality.
I should now like to say something about British Airways in general. Your Lordships may have seen in Flight International a series of tables showing airline efficiency. In that article, which was published on 3rd January, there are eight sets of comparative tables which show how 12 different airlines use their
702
capital, their personnel and their aircraft. It is difficult to make sure that you are always comparing apples with apples and pears with pears, but if one airline is consistently at the bottom, or nearly at the bottom, of all those tables there must be something wrong with it. If you study that article you will find that, sadly—for every one of us is loyal and patriotic—British Airways are near the bottom of every single one of those tables.
My noble friend Lord Glenkinglas mentioned overmanning. When those two great organisations were put together—I am afraid that it was done in the era when biggest was best—it was believed that it would save manpower. But instead of saving manpower, the numbers have actually gone up and peaked recently at 59,000. I am sure that the new management, under Sir John King and the chief executive, Roy Watts, are doing their damnedest to bring those figures quietly and painstakingly down. I believe that the aim is to get them down to 50,000, but my own guess is that they ought to be nearer 40,000, if they are to compare in efficiency and make reasonable profits for future investment.
I should now like to say a word about punctuality. Two years ago on international flights, 80 per cent. of British Airways flights were more than 15 minutes late on departure or arrival; that is to say, only 20 per cent. took off punctually. I am delighted to see that there has been a campaign and that those figures have improved. I always try to travel by British Airways, while some of my friends travel by the alternative route. I have to go to Switzerland quite often, and my friends seem to get off on time and to arrive on time.
Some of your Lordships were part of the Lords and Commons ski club, which went across to compete against the Swiss parliamentarians in January. I am sad to say that we had 20 on one flight and 20 on the other, because you cannot put all your eggs in one basket when you have a majority of only 40. So we shared the risk between two aircraft, and both were over half an hour late leaving. Coming back, there was the usual announcement: "We are sorry to announce that owing to a late incoming aircraft from London, British Airways flight 000 is delayed for 30 minutes." We were actually 40 minutes late on that occasion. But when I travel by Swissair, I seem to take off on time and arrive on time.
So I suggest to the Front Bench that this has something to do with the pooling agreement. At the moment, as my noble friend pointed out, if 50 people go from London to Geneva by British Airways and 150 are attracted by the punctuality and service of Swissair, they chop the revenue right down the centre, after adjusting for the seat capacity. I am sure that this is a restriction of competition which cannot be in the interests of the traveller, so I ask my noble friend to examine this most carefully.
In the USA, where I have to go once or twice a year and travel around a number of centres for business purposes, I fly by a number of different airlines. I see there the intense competition to get the aircraft door closed absolutely on time. Even if there is only one minute's delay, they start to ask questions about it. There is not that drive here. There is no such pooling agreement there, and on most routes they have competition

703
between two airlines in order to attract the traffic.
I suggest that the time has come when we really must abolish the pooling agreement, in the interests of passengers as well as in the interests of improved cabin service. I do not say that cabin service is bad on British Airways, but I say that it has deteriorated over the last 10 years. I am sure that we must do our best to put that right. There is no substitute for competition in this field. I would also urge my noble friend to get out of IATA. It is a restrictive, fare-fixing cartel. The USA airlines left it some time ago and it has done them no harm. It has increased the competition and the efficiency of their airlines.
Heathrow and Gatwick are now the main gateways to Britain. I hope that this debate will encourage the authorities, and particularly the British Airports Authority and British Airways, to redouble their efforts to improve and to compete with their rivals. Thereby, they will benefit the 40 million or 50 million air travellers every year and, above all, help Britain's reputation.
4.16 p.m.
Lord Hayter: My Lords, in the days of ancient Rome, Cato the Elder used to end up every speech with the phrase "Delenda est Carthago", which reminded his hearers that Carthage must be destroyed. Whenever we have a debate on the civil aviation industry, I hope your Lordships will allow me to remind you that cargo must not be forgotten. It is on that subject of air cargo that I should like to make a contribution.
Last time we had a debate here, in November 1979, on British Airways' future strategy, all the speakers and the Minister concerned concentrated on the passenger element and assumed, I suppose, that cargo looks after itself. But it does not. The situation is highly complicated. It needs the collaboration of many bodies—the unions, the customs, the International Trade Procedures Board, the Civil Aviation Authority, British Airways, the British Airports Authority, the freight forwarders industry and—as the noble Baroness, Lady Burton, will doubtless be reminding us in her own context—industry itself, which pays for all these things. That is, perhaps, why the task of looking after international freight movement was pushed over to Neddy, as being a neutral forum.
I remember reporting in that debate how the little Neddy for international freight movement, of which I had the honour of being chairman, had just been disbanded. However, I am glad to be able to tell the House that the Air Cargo Committee, which was perhaps one of its most important elements, has a new lease of life. The valuable work of comparing our situation with rival airports on the Continent has already brought signs of astonishing contrast, particularly on the transshipment of air cargo. When the little Neddy was closed down in October 1979, this very committee was examining how we could increase the United Kingdom's share of transit air freight which, as many of your Lordships may know, is the long-distance cargo which is arriving to go on to other European countries, or long-distance cargo coming from other European countries for further destination. There is open competition in this very important business with all the
704
European air freight gateways.
My own little Neddy made a contribution at the time, by helping to set up at Heathrow the freight forwarders' bond, which at least allowed the freight forwarders the opportunity of helping in this work. We initiated at the same time this study, about which I have been talking, of the five European transit air freight gateways; that is, of course, including ourselves. Now, as a result of one or two minor problems on this freight forwarders' bond, the British Transport and General Workers' Union, British Airways and the freight forwarders have got together and have asked for a general agreement to see how they can increase the growth in transit air freight.
Already it is clear that the proportion is lower, or much lower, than at competitor airports, and yet the goal is a tremendous one: possibly, 65,000 tonnes annually, which will mean an income to this country of £70 million. Incidentally, of course, we should be helping the passenger trade because, as many of your Lordships know, air cargo is not always carried in air freight carriers. The biggest passenger plane of today can carry 22 tonnes of cargo in its hold.
Our other advantage which has not been touched on yet, but it is an advantage, is that we have the biggest number of flights of any airport in this continent of ours, so there is a golden opportunity to be grasped if we can tackle the problem. Incidentally, how intriguing and in some ways romantic is the air cargo aspect of Heathrow. On one day last week they had, side by side, the Grand Prix racing cars coming back from South Africa and going on, I fancy, to the States and cartons of live tropical fish from Hong Kong.
But it is already apparent that there is a startling contrast between what goes on in our airports and what goes on in Europe. This is perhaps excusable because it is due partly to history and geography. We have been so used to being an offshore island. Now we have become part of Europe. Therefore, some of the philosophies of the past may have to be changed.
One can think of an example in the customs area, and also in the airport itself. The extraordinary position at Heathrow is that there are no less than 17 foreign airlines with depots there. These have grown up over the years. You do not see those depots at the continental airports we have been talking about. Therefore, I am hoping that the Air Cargo Committee will steer this project through. It will involve all the principal interests which I have mentioned and I hope it will come forward with some conclusions and recommendations.
I can see that at the end of the day the persuasion of Government may well be needed to resolve some of the differences among the parties concerned. I do not think that this will involve the Government in more money other than that dictated by the airports themselves as growth in their own industry expands. I hope that there may be an indication from the Minister that he approves of this enterprise and wishes it well. If we clearly define the objectives and the way to achieve them, we shall have done something for which I hope this country will be grateful.
4.23 p.m.
Baroness Trumpington: My Lords, as for the first time I am not speaker No. 27, or thereabouts, I hope

705
that I might have something original to add to this excellent debate which has been initiated by my noble friend Lord Glenkinglas. Although not entirely original, it may be worth accentuating certain aspects which have been touched on both by my noble friend and the noble Lord, Lord Ponsonby of Shulbrede. May I thank the latter for his very kind remark.
I should like to direct my few words to the question of the uncontrollable costs which are incurred by the British Airports Authority. Airport charges in Britain are exceptionally high and those for the British Airports Authority airports are among the highest in the world. Some alleviation of the present high costs could be achieved by alternative methods of financing. I shall be interested to hear the Minister's reply on why bond financing, successful elsewhere, cannot be undertaken by the British Airports Authority. Foreign airlines feel aggrieved by our high airport costs, and so do passengers. It seems ironic—
Lord Trefgarne: My Lords, I hesitate to intervene during my noble friend's speech but I mentioned earlier that this matter is now very much sub judice. I hope my noble friend will take care as to what she says.
Lord Ponsonby of Shulbrede: My Lords, will the noble Lord tell us exactly what the matter is which is sub judice? I think that the matter which is sub judice is the right of the British Airports Authority to increase charges rather than what the charges are.
Lord Trefgarne: My Lords, I cannot immediately spot the difference between the two things which the noble Lord has put to me. Perhaps I may read a short sentence, with your Lordships' permission, which I was planning to use later in winding-up. I understand that in open court this morning Mr. Justice Parker granted an injunction to the British Airports Authority against Air Canada and the other airlines which have been withholding a proportion of the landing charges for the use of Heathrow Airport, pending trial of the main legal action which has now been fixed for January 1982. Therefore, I am advised that it would not be appropriate for me or other Members of your Lordships' House to comment in any way on this decision, or the contents of the main legal case to be heard next January.
Baroness Trumpington: My Lords, may I say to the Minister that I think I am all right but that he must stop me if I am not. If he will not mind me continuing my Tallulah-like intervention before my voice finally goes, I shall make it as quickly as possible. It seems ironic, to say the least, that today's passengers are paying through the nose to finance the provision of facilities for tomorrow's. Why should you or I, if we take an aeroplane flight this week, finance the capital expenditure of the British Airports Authority?
Lord Trefgarne: My Lords, I am sorry to intervene again, but that is the core of the case which is to be put before the court next January.
Baroness Phillips: My Lords, if nobody is going to be able to comment for a whole year, surely it is a totally ridiculous situation which the Minister cannot substantiate in this House.
Lord Harvey of Prestbury: My Lords, is my noble friend saying that no aspect of the British Airports Authority can be discussed until January 1982? It cannot be so clearly defined as that.
Lord Bernstein: My Lords, I wonder whether we should have the advice of the noble and learned Lord the Lord Chancellor on this matter.
Lord Trefgarne: My Lords, he is not here. I hope noble Lords will forgive me for intervening once more. I apologise for pressing this point. I want to emphasise that I have no desire to stifle the discussion of this or any other matter in your Lordships' House, unless there is a clear danger under the sub judice rule. The matter which is to come before the court in January of next year is the question of the charges of the British Airports Authority. Both the British Airports Authority and my right honourable friend the Secretary of State for Trade are defendants in the case. As I understand it, the case is that the charges are too high and that the British Airports Authority is not complying with its duty in laying charges at the rate that it does. Questions therefore which may fall to be considered by the court following that action seem to me to be sub judice and not therefore proper to be discussed in your Lordships' House at the moment.
Lord Ponsonby of Shulbrede: My Lords, we all appreciate very much this standing order of the House and we all want fully to comply with it. I attempted, I believe, to comply with it fully in the speech which I made. However, it seems to me that the matter before the court is primarily the right of the British Airports Authority to increase its charges. That is the issue in dispute. I should have thought a comment on the level of charges was quite different from the matter which is to be taken before the court. Neither I nor the noble Lord are lawyers, so it may be that we should seek advice elsewhere.
Baroness Trumpington: My Lords, may I ask a question before I continue with my remarks? What happens to how far I have gone with regard to Hansard?
Lord Trefgarne: My Lords, it is all there.
Baroness Trumpington: My Lords, it is not going to make any sense unless I am allowed to continue.
Lord Campbell of Croy: My Lords, while my noble friend is having consultations, for which I see he needs a little time, I may be able to assist by suggesting that what he has said so far is that the question of landing charges, if referred to, might (because none of us really knows what was said in court this morning and we are not all familiar with the case which is being put) lead us to stumble, without meaning to, into the sub judice area if we were to talk about the policies of the British Airports Authority concerning landing charges. However, I do not see why some of us should not talk about those charges which are not landing charges, but quite different kinds of charges. I have risen not only to give my noble friend time to receive messages on this technical point but also because I am due to speak shortly. I intend to speak

707
in my capacity as the chairman for Scotland of the International Year of Disabled People and therefore to talk about a specific charge on the handling of a disabled passenger. That has nothing to do with landing charges.
Lord Trefgarne: My Lords, I apologise yet again for intervening. If I may say so, I think my noble friend has got it just right; the level of landing fees ought not to be discussed. I feel certain that the risk of straying into the area of the legal proceedings if we do discuss the level of landing charges is very great indeed. Therefore, I hope your Lordships will agree that it would not be appropriate to discuss the level of charges in your Lordships' House this afternoon. Another matter that is to come before the court is whether my right honourable friend the Secretary of State has the power to impose certain financial duties upon the British Airports Authority, and thus comment upon that matter, too, might be inappropriate.
Baroness Trumpington: My Lords, the noble Lord has made me very nervous!
Lord Trefgarne: Quite right, too! This is very dangerous ground.
Baroness Trumpington: My Lords, I am still worried, but I will press on until I am told to sit down. I still cannot see why the general public should finance the British Airports Authority's capital expenditure or the development of Stansted. Is that also part of the case?
A noble Lord: Yes.
Baroness Trumpington: I will leave that, then, in order not to cause any more embarrassment. Am I allowed to talk about the security levy?
A noble Lord: Yes.
Baroness Trumpington: I am?—right. My Lords, my final point, on which I know the noble Baroness, Lady Burton of Coventry, and I fully agree, concerns the cost of security at airports. Naturally I am in total favour of the best and most efficient methods of security. Equally, I am certainly against the appeal made by my noble friend the Lord Chancellor, as related by the noble Lord, Lord Glenkinglas, for strippers in pursuance of this aim; but unless the cost of security at airports is funded nationally, as it is in most other countries, then I fear that airline passengers may well be down to their last shirts to pay for the ever-rising costs of the matters about which I have spoken and had hoped to speak. At present domestic passengers are paying an extra £4 on a round trip for security, and both airlines and passengers are constantly complaining about the seemingly unrestrained growth of the brown army of uniformed security personnel employed by the British Airports Authority.
At other airports where private enterprise security firms fulfil the same function the actual cost per passenger can be as little as 85p, although he is still charged at
708
the standard rate of £2, £1.60 of which has to go to the Government-controlled security fund and 40p to the airline for administering the complex system involved. There is still a certain amount of difficulty when user representatives seek to obtain information regarding the breakdown of cost and revenue. I really apologise to the Minister for causing him any embarrassment. I shall look forward to his reply with eager anticipation and I shall now hurry off and take a course in law!
4.34 p.m.
Baroness Burton of Coventry: My Lords, luckily I do not want to talk about either landing charges or security charges. I think the views of this House on both those matters are well known and have remarkable unanimity right across party lines. I should like to move on from there and I should like to thank the noble Lord, Lord Glenkinglas, for giving us this opportunity today and for drawing his Motion so wide. I should also like to thank him for his kind remarks and to emphasise that such progress as we have been able to make in this House, particularly in connection with the users of air transport, I think has been due to the support given by this House on these matters, quite irrespective of party. I believe we all feel that very strongly.
Given such a wide choice in the Motion before us today, it seems ungrateful that although there are several areas with which I should have liked to deal I intend to confine myself to one particular aspect. I want to talk about the marketing policy of British Airways in relation to the bucket shop and discounted air fares. Obviously this affects the state of the British civil aviation industry, which has always been held in high repute throughout the world.
Perhaps I may say straight away that I should have preferred to deal with this subject in a debate specifically so entitled, but having been unlucky in the ballot for short debates it did not seem to me to be desirable, nor indeed advisable, to wait until late March for another possible opportunity. Indeed I would say that in 29 years in both Houses of Parliament I have never once been fortunate in even the smallest of ballots. Waiting seemed to me to be neither desirable nor advisable because of the considerable public interest both concerned and involved. I would suggest that the existence of a widespread market in such tickets shows not only the absurdity and the inefficiency of the existing price-fixing system but also the level of public demand for low-cost air transport. My regret is that I have to use British Airways as an example, because many scheduled airlines are involved but, under the terms of the Motion today, I really have no alternative but to select them and to hope that they will understand. I must say that, nuisance though I am, they have usually been kind enough to do so.
I believe, as stated in the Travel Trade Gazette on 28th November last, that scheduled airlines and their agents realise that there must be give and take on both sides to achieve a solution to the bucket shop problem. I think that agents realise that a deal will have to be done with British Airways and the other scheduled carriers and, for their part, the carriers now know that they have to find legal channels to sell off their cut-price tickets. That is why I pursued the noble Lord, Lord

709
Trefgarne, on 27th January concerning the proposed meeting of the Retail Agents' Council and British Airways in an effort to find out not only the attitude of those two organisations but also that of the Government. That is at columns 624 and 625. We did not get very far. We often do not get very far; we have to make very slow progress, but the noble Lord did say that he would welcome a debate to give him an opportunity to expand in more detail on Government policy. I cannot give him a debate but I can give him the necessary details in a speech, which is a better vehicle than Question Time. I have of course informed him that I should be raising this today in connection with the marketing policy of British Airways.
Many people, in this House and elsewhere, alarmed at the possibility, have asked me several times during the past three months whether I was trying to stop cheaper air fares. I am glad that they did so because it gives me the opportunity of stating once again what perhaps I did not make clear on other occasions, that my aim is that cheaper and/or discounted air tickets shall be on sale at all retail outlets and available to all travellers.
I think perhaps I had better start by quoting from an article in the Sunday Times Business News of 4th January by a Mr. Andrew Cornelius, whom I do not know. Mr. Cornelius opened by saying:
"The scramble for passengers among the world's airlines has become so tough that the officially regulated fares structure is near collapse. On many flights out of the UK, after a year in which IATA's member airlines lost more than £1bn, tickets are being sold through unlicensed sales agents or 'bucket shops' at discounts up to 60%.
"Racked by falling profits, increasing fuel costs and a projected downturn in traffic on many of its routes, British Airways, once regarded as a bastion of the airline establishment, has shocked discounters by beating them at their own game. One foreign airline's manager says BA's sales drive has intensified 'in the last two to three weeks to the point where they have hit my marketing activity by 10%'. The travel trade now widely confirms that BA's tactics include:
"Turning a blind eye to the sale of 'instant' APEX tickets by bucket shop. Normally these must be booked at least 30 days in advance to qualify for a cheap fare. At a 'bucket shop' they can be written out on the day of a flight by back-dating the validator date stamp…
"Ticket sales staff can gain authority within minutes to match, or beat any rival fare.
"BA is actively seeking more 'bucket shop' custom by closely watching discounted prices and then undercutting other airlines."
Fourthly, and lastly:
"BA has admitted that its tickets do reach 'bucket shops' but will not go into details about its marketing policy".
My Lords, in this House on 10th December, at column 724, I told the Minister that on 30th September British Airways had admitted on television that they sold tickets to bucket shops. At least they were honest. May I make clear to the House that I am not seeking prosecutions, nor am I condemning practices that are certainly not confined to British Airways? I merely think it is time that the whole affair was brought out into the open for the benefit of travellers, agents and airlines. And that commonsense is allowed to prevail.
The figure may or may not be correct, but I am informed that some 40 major airlines discount to their own bucket shop operators. The other day one of your Lordships asked me a very simple question, what is a bucket shop? Well, I offered him the definition of the noble Lord, Lord Trefgarne, at column 725 on
710
10th December—namely, that it was one of those places where you can buy a ticket at other than the correct fare.
This practice of discounted air tickets goes back a long time. Indeed, Lord Glenkinglas, whose Motion we are discussing today, did tell us in the House on 20th January at Question Time that he had tried to deal with the matter in 1970 and 1972. Well, if we go back to 1967, BARUK, which is the Board of Airline Representatives in the United Kingdom, initiated a clean-up campaign. It soon faded out. Why? I think it faded out because it really was a quite ridiculous situation. Here you had a collection of national carriers, the majority of whom were discounting to their own bucket shop operators, sitting round a table laying down the law, or presumably discussing the possibility of laying down the law, to stamp out these very practices. At the moment I understand the so-called bucket shops sell an estimated five million tickets a year in Britain at prices up to 60 per cent. lower than the Government-approved fares as airlines try to fill seats which would otherwise be empty.
The Minister will correct me if I am wrong, but, as I understand it, Section 21(5) of the Civil Aviation Act 1971 and the amended Section 11 of the 1978 Act make it quite clear that if an airline or a charterer sells a ticket to a passenger who has not paid the full approved fare set by the Civil Aviation Authority it is committing an offence, although the person who buys the ticket is in the clear. The noble Lord, Lord Trefgarne, was very firm about all this at column 343 on 20th January. Indeed he even went on, at column 344, to say:
"there may be steps I can take which fall short of prosecution, and I shall consider what might be done".
As I have just said, although not wanting prosecutions and holding no brief for IATA on this matter, these facts do give substance to their statement that I mentioned to the House on 27th January—namely, that Mr. Hammarskjöld had said that IATA were powerless to stop the bucket shop trade in illegally discounted air tickets while Britain was lax in applying the law.
If we move on from IATA to ABTA, which is the Association of British Travel Agents, their chief executive, Mr. Michael Elton, has just said that the ABTA policy is that the Government should either enforce the law over the sale of airline tickets or change it. It does seem to me that it is nonsense to have a law that people, and the Government, ignore. In this respect, particularly to the despair of travellers, I would contend that both IATA and the Government have been so busy passing the buck one to the other that progress has been absolutely nil. I am glad the noble Lord shakes his head, and I hope he will prove me wrong when he comes to answer. Perhaps now we shall at last get some action on this.
On 14th January, Mr. David Hewson wrote an article in The Times headed, "Why the travel trade is angry about air fares". This article has considerable bearing on what I have just said about the law, and I would like to quote a section from it. Mr. Hewson says:
"With a few notable exceptions, the last place to find the cheapest international air fares available in Britain at present is a travel agency"—
the last place—
"That more than anything explains the travel trade's anger with the price-cutting campaign now being waged by the airlines.

711
The bargains on offer may be riddled with restrictions but they are undoubtedly bargains and available to anyone—anyone, that is, except a travel agent. The diligent traveller, for instance, by following up newspaper and magazine advertisements can find himself a reserved return London to Bombay with Gulf Air for about £290. If he went to a travel agent or booked direct with the airline the price would be £800…
"ABTA's position, not unnaturally, is that its members should also be able to avail themselves of bucket shop prices and pass them on to their customers.
"BA, and the other airlines who decide to go down the mass discount road would no doubt be happy to do so, but it is difficult to see how such widespread flouting of the law could be sanctioned without a lead from the Government. If the Government is convinced of BA's strategy of seeking volume above all else, it may give that lead".
On 20th January the noble Lord, Lord Trefgarne, did tell us, at column 343, that this problem was one which he proposed to pursue with the utmost vigour. On 27th January, at column 625, he told us of his determination to see that the law in this matter was properly upheld. I am sure that, in common with everyone in the House, I doubt neither the determination nor the honesty of the noble Lord, Lord Trefgarne. I am hoping that when he comes to wind up today he can tell us just where we have got to on this matter.
In conclusion, I should just like to say that all sorts of information comes my way from people who are kind enough to help, including airlines, agents, bucket shop operators, and, of course, passengers. Information comes even from "moles" and I do not think we need explain to anybody that the moles are the underground guerrilla operation of the British civil aviation industry. Some of this information is prejudiced, some is incorrect, but much is true.
I end as I began. I hope that British Airways will understand why they have been cast as the villains, but I would emphasise that it is as only one villain among some 40 others. Perhaps if we succeed in all this they will be glad to have helped, even unwittingly, in what I have had to say and they will not overbook me or refuse me passage on their airplanes as a result! I want to help and I want our House to be instrumental once more in putting right something which is so obviously unfair.
4.51 p.m.
Lord Harvey of Prestbury: My Lords, I am sure that the whole House is grateful to my noble friend Lord Glenkinglas for initiating this debate. I hope that the noble Baroness, Lady Burton of Coventry, will forgive me if I do not follow her line, although I think that she has raised a very valid point which requires looking into.
The general theme of the debate today has been that most airlines are having a very rough time, but some are doing rather better than others. As has been said, when BOAC merged with BEA one expected very real economies. They had a very able Chairman at the time, Sir David Nicholson, but those economies have not been forthcoming. As has been said, the number of those employed in the British Airways Corporation has increased by 5,000 or 6,000. That has happened throughout British industry, not just in British aviation. We are seeing it every day. The fat is being taken off by people who are employed by companies which cannot possibly afford to employ
712
them. We are now paying the price as a nation.
In 1971 the Corporation employed 52,500. That figure has increased to 59,000. We are told that much has been done about it. But it should never have been allowed to happen. It would only happen to that extent in a nationalised industry. It may be said that the services have expanded. Yes, they have of course expanded, but so have the traffic and the number of passengers carried. My noble friend Lord Orr-Ewing referred to Flight International, which gave eight charts. It is very difficult to determine what is an efficient airline except by the final balance sheet of profit or loss. As regards Flight International, on eight different charts which it gave British Airways was bottom of the league. There must be something radically wrong to get into that position.
I would say with great respect to British Airways that most international airlines are more efficient than British Airways. Let us take as an example what happened three weeks ago. I think that it was a Friday and all the ground staff of British Airways—an airline that is losing about £100 million a year—went on strike. Those people endangered their own jobs and those of all their fellow workers. As a consequence thousands of would-be passengers had to be transferred to other airlines, and many of those passengers will not go back to British Airways. However, when it comes to inconvenience it is the passengers who pay the price. I do not understand what is going on as regards the personnel relationship between the management and the workers of British Airways. They are even threatening action again. Any time we shall have another one-day strike, turning tens of thousands of people away and losing millions of pounds in revenue.
Punctuality has improved, but not very much. I frequently travel between Malta and London and invariably I am late if I travel by British Airways. They are courteous and give very efficient service, but a small airline—Air Malta—admittedly operating from its own terminal, invariably arrives on time. This must be looked into. My noble friend Lord Orr-Ewing said that most airlines in America leave on the dot because there is competition. It is clear from the charts referred to that the most efficient airlines are Delta, Scandinavian Air Services, Lufthansa and, I think, Swissair.
But, of course, it is difficult to compare European operations with those in the United States. In Europe for the last three summers we have had air traffic control causing delays either in Spain or France and we have had aeroplanes ticking over or shut off and waiting for anything up to one or two hours. That causes great delay to the services generally and costs a great deal of money. I think that it should be looked into. We now have the EEC to co-ordinate all these matters. Vast sums are spent and I hope that something will be done about it.
As I have said, British Airways operates a good service and their safety is as good as any other airline. But what about the procurement of aircraft? I read recently that they have now sold two 747s and they are probably trying to sell more. Why have they over-ordered? I have noticed that they have abandoned the routes that did not pay—routes to the Channel Islands and the Isle of Man. The independents had

713
to take them on because they did not make a profit. I am not surprised that they did not make a profit. There are too many people hanging around. One sees all the girls and young men in uniform with their gold braid. They all have to be paid and they are in the pension scheme. The whole thing wants skinning down very rapidly indeed.
I should be very careful what I say about the British Airports Authority, which has already been mentioned by my noble friend the Minister. I shall not refer to landing fees although I suppose that the rents of cubicles and desks come into it as well. I shall not refer to those matters. Heathrow is a terrible mess, and that goes back to 1945 when the late Lord Winster, then Minister of Aviation, dug up the first sod of soil on 1st January 1946. The Labour Government of the day rushed the airport through, determined to get it up in the lifetime of the Attlee Government—I mean no disrespect, but this is what happened—and they put everything into a triangle and it was obvious then that there would be little room for expansion. Every bag of cement had to go through the tunnels. The tunnels became flooded or something went wrong. I know that in the early 1950s when a Conservative Government were in office I begged them to start again, to scrap the lot and to build the terminals round the airport like any normal international airport. Now we are paying the price. I met an American recenty who said that when he arrives at Heathrow he either falls down a hole or trips over a sleeper. He is not far out, because that is what happens.
Gatwick has great potential. One can get there in 33 minutes by rail from Victoria. It has one runway. Nobody likes an airport near their home. Millions of people want to fly but nobody wants an airport within 20 or 30 miles of their home. When Gatwick went up there was an outcry from all the residents of Surrey and Sussex. At the time I lived in Surrey. I was in the take-off path. Why is there only one runway at Gatwick? Vast sums are being spent on the buildings. It is the second airport and, to make matters worse, a second runway can now never be built. They have put the large cargo freight sheds where the second runway would have gone. I think that it was probably done deliberately by some planners or somebody involved. It is a monstrous situation. All that I shall say about the British Airports Authority is that from October 1975 to February 1980 they would not set a financial target, though that was remedied later.
Nothing in today's debate has been said about Manchester Airport. I have watched Manchester Airport grow up because it is next door to what was my own constituency 35 years ago. Of course it is run by the Manchester Corporation and, if I may say so, it is run far better than any of the airports of the British Airports Authority. They have planned ahead and got the runways organised and they are doing extremely well. One never hears much criticism about Manchester.
In conclusion, I think that British aviation should be all right, but there are too many meddlers. It wants skinning down rapidly because there are too many controls. As I have said, I despair of Heathrow. I dread going there and arriving there. One either loses one's bag or it takes 45 or 55 minutes to arrive. I hope that the Government, who believe in free enterprise,
714
will get really busy and tackle the problem, because an international airport is the shop window of a country. I beg the Government to get on with the job.
5 p.m.
Lord Campbell of Croy: My Lords, I congratulate my noble friend Lord Glenkinglas on having initiated this debate and for having introduced it in such an effective and agreeable way. I was a colleague with him in the Cabinet between 1970 and 1972 and well remember the problems with which he had to deal, particularly the amalgamation to form British Airways and his help in organising a British private enterprise sector internationally. Air travellers and the British public should be very grateful to him for what he did, which resulted in British Caledonian. In particular some of the British leaders in the private enterprise sector—and I think particularly of Mr. Adam Thomson and Sir Freddie Laker—have played leading parts in keeping the costs of air travel from becoming prohibitive for ordinary people. My noble friend's policies also led to the expansion and competitive success of British private airlines. This was illustrated by the noble Lord, Lord Ponsonby of Shulbrede, when he told us that six out of the 10 largest European airlines are British airlines.
My noble friend and others have drawn attention to several of the most important issues and problems. I propose to address myself simply to one subject. This year is the International Year of Disabled People and I am the chairman for Scotland of the International Year. Now, of all times, we should endeavour, where improvement is needed, to improve arrangements in air travel for very severely handicapped people.
I start by saying that on the whole British airports and British airlines take a great deal of trouble over assisting severely disabled people, particularly if reasonable notice is given before travelling. Wheelchair passengers can be catered for and can be well looked after. There are lifts and ramps—in fact, British airports and airlines set an example to many other public buildings where such assistance does not exist, though it should—and there are special vehicles and lifting devices. British Airways has a medical unit at Terminal 3 at Heathrow which seems well-equipped for various types of physical handicap. Good organisation and communications between ground and cabin staff are needed in order to make the best use of that equipment.
However, I regret to say that there is a serious flaw in the system, to which I now draw attention. Forklift vehicles are now being used, and used effectively, for raising a wheelchair with a passenger to the door of an aircraft. They belong to the British Airports Authority. I understand that the authority is imposing a financial penalty on an individual airline amounting to £15 for each disabled passenger so assisted. Hitherto, the airlines have not been passing on that penalty to the passengers. I believe that one airline has been an exception, but in general the airlines have not.
But, I ask, why should an airline be subjected to this penalty for carrying a severely handicapped person? How long will the airlines feel that they can carry this penalty themselves?—for there is a built-in financial disincentive here to airlines to fly such disabled passengers.

715
To me this is a monstrous and offensive state of affairs. What about the airline which finds itself asked to take a wheelchair team to a session of paraplegic games, either at home or abroad? It will be landed with a penalty for every wheelchair.
Severely handicapped people do not travel unnecessarily. If there were to be any wealthy, disabled eccentric who indulged in whims to be flown around the world unreasonably, I can assure the Government and the authority that those of us involved with disabled organisations and in this International Year would express our disapproval, publicly, of that action by a disabled person. But I think that just to consider that indicates that it is unlikely. Such people do not travel by air for fun. A change must be made. To have a financial penalty on flying wheelchair passengers must be wrong. In 1981, the International Year, this is surely the time for change.
My noble friend Lord Orr-Ewing pointed out that there are very long walks to departure gates at British airports, and he was talking about the able-bodied. There are few travelators, like those in some modern European airports—and I give Schipol and Brussels as examples. This leads to wheelchairs and men to push them having to be provided for people who normally never need to use a wheelchair. They are the partially handicapped who normally can walk short distances in ordinary life but who cannot walk the hundreds of metres which some of these corridors involve. There is also usually nowhere to sit and the long passages provide a vista, for those who cannot walk very far in one go, with nowhere to perch or to have the rest which in many cases is required by their doctors. There has recently been an improvement which I was shown at Gatwick a few weeks ago: an electric jeep, which is how I can best describe it. It can go through all the small entrances and can take such passengers some of the long distances. But I would point out that it is really the elderly who mostly fall into this category of partially handicapped persons, and there are quite a number of elderly people who have to travel. Therefore, I suggest that more must be done to find methods between using the wheelchair, for people who do not really need it, and assisting people who are not completely able-bodied to pass through airports and on to aircraft.
My last point on this concerns the shuttles operating in the United Kingdom. Again, there are shortcomings here for those people who can walk only short distances and cannot stand for long. Your Lordships who have experienced the shuttles will know that when the announcement is made, there is an ugly rush for the small, single-file gap. Moreover, those involved are herded through this gap, and those of us who need only a small tap on one hip to be knocked over and then have some difficulty getting up again find this quite impossible. I can tell your Lordships that British Airways is very good at helping those who cannot cope with the "shuttle herd". I would ask British Airways to do more to make this known, because if someone taking the shuttle says that they need to be dealt with separately, British Airways takes the trouble and does it; but I have seen elderly ladies in great distress and, as I say, people being knocked over. I simply suggest that more needs
716
to be done, especially in the way of encouraging those who cannot survive the stampede to speak up beforehand and so be allowed to proceed separately.
There are three principles which I have been promoting in this International Year in order to assist very severely disabled persons. I call them the three As: Access, Awareness and Adaptation. There is nowhere where these three principles are more relevant than in air travel for the severely disabled.
5.10 p.m.
Lord Glenarthur: My Lords, I should like to confine my remarks exclusively to the commercial use of helicopters, which play an increasingly significant and important part in aviation in this country and indeed throughout the world. The subject was last discussed in your Lordships' House almost exactly three years ago. There have been some impressive developments since then to which it is right to draw attention. Here, not for the first time, I must declare an interest. As many of your Lordships know, I fly helicopters for British Airways, specifically on the North Sea.
The offshore oil industry has certainly been the area of greatest activity, and it is as true to say now as it was three years ago that the development of our North Sea oil resources would have been quite impossible without the very extensive use which has been made of helicopters. Increased sophistication, refined operating techniques, particularly under instrument flight rules, and our ever-increasing experience have combined to qualify the helicopter as a means of transport in a fairly hostile environment which is second to none in safety and reliability. Twin engines, duplicated essential systems, advanced avionics and automatic flight control systems have enabled helicopters and their operators to demonstrate completely the integrity and reliability of the aircraft they use.
The offshore population at present is about 15,000. Some 100 helicopters operate in the United Kingdom sector of the North Sea, moving about 2,000 people a day to and from oil rigs, production platforms, diving support vessels, crane barges, pipelaying barges, et cetera. Between 1970 and 1980 some 10 million passengers have been flown in this way and only one life has been lost because of a helicopter accident. I believe that this is a startling statistic and one which is better than some comparable fixed wing operations can claim. It demonstrates that the helicopter has come of age, that it has adequately exhibited the special characteristics its design allows, and for those reasons it is important that we now actively pursue the other roles for which it is eminently suitable in the transport field.
Currently three ordinary commercial routes are operated by helicopters in this country: Penzance to the Scilly Isles; Gatwick to Heathrow; and a small one between Glasgow and Fort William. Each of these is profitable, and in the case of the first two, which I know rather more about, achieve 98 per cent. or so regularity using only one aircraft in each case. A further route is in the melting pot and has been for some time. It was referred to by my noble friend Lord Kimberley. That is Milton Keynes to Heathrow, which is an imaginative route with a known market for passengers and, as my noble friend said, is a particularly good platform for the introduction of the first British civil

717
helicopter, to which I shall come later.
This route has been beset however by difficulties at the Heathrow end associated with the arrangement of approaches to and from the airport from the North; problems of air traffic control sequencing, and "traffic slot" times, as they are called, and so on. I am afraid that these have been problems which have been caused to a large extent by the reluctance I think, without being unfair, almost amounting to intransigence on the part of the Civil Aviation Authority (including National Air Traffic Services), and the British Airports Authority, to identify and latch on to the key characteristics of the helicopter which allow it to be used in a much more flexible manner than fixed-wing aircraft.
Instead modified principles applying to fixed wing are adopted for helicopters which have effectively negated many of the helicopters' considerable advantages, although should it be necessary to conform on special occasions helicopters can of course still fully conform with standard fixed-wing practices. I understand that progress is being made but at the expense of an additional seven minutes flying on what is only a 22 minute leg in order to approach Heathrow from the South in the same way that the Gatwick to Heathrow helicopter link does at present.
There is no properly valid reason in my mind for not allowing helicopters to approach and depart from the airport using the North side, especially since it is acceptable to do it from the South, particularly when sophisticated modern specialist helicopter precision approach aids are available to operators. I detect a reluctance on the part of conventional fixed-wing theorists in the Civil Aviation Authority to appreciate the fundamental differences between fixed wing and helicopter operations, and fully to capitalise on the opportunities which the latter affords, and also realistically to appraise the way in which the special flight characteristics of the helicopter can be used to best advantage.
There have been two recent developments in this country which are milestones in the use of helicopters. One, which was referred to by my noble friend Lord Glenkinglas, was the arrival of the first Boeing Vertol 234, which is the civil derivative of the well-known twin rotored Chinook helicopter of military distinction, which will carry 44 passengers in airline comfort and which starts operations on the North Sea in July of this year, and will operate directly from Aberdeen to oil rigs to the North East of the Shetland Islands, thereby removing the need to operate through Sumburgh.
The second has been the announcement a couple of weeks ago, to which my noble friend Lord Kimberley also referred, that Westland are at last entering the commercial helicopter scene with the introduction of the WG30, which is a private derivative of the military Lynx. This is going to come into British Airways Helicopters' service later this year. Personally I am delighted that a British civil helicopter venture has come about. I have every confidence that it will be a success internationally. I have in your Lordships' House criticised Westland in the past for failing to get into the civil market. I now congratulate them on seizing the initiative, and I hope that they will maintain it.
I would also urge the Government to give every support and encouragement to the aerospace industry
718
generally in this country to think not only of pure helicopters and the need to develop and refine them but also to consider the logical extension of vertical flight through helicopters; compound aircraft which can take off and land vertically, but with the ability to cruise at high speed. The Americans are developing these now with various technical innovations—counter-rotating rotors, tilting pods on the ends of the wings with large diameter propellers—and I think particularly of Bell and their XV15 which is being developed into a possible commercial venture in due course.
We ought to remember that we once led in this field in the late 1950s and early 1960s with the Rotordyne project, which was dropped for technical as well as financial reasons. We must not allow the state of the art to be lost completely. Entry of any of these current ideas into commercial service is 10 to 15 years ahead anyway; but I do implore the industry to pick up the lead which we once had, taking advantage of collaborative arrangements to get back in on the act.
If I may return to the introduction of the BV234, the civil Chinook, we have here the basis for a type of helicopter which makes inter-city, particularly cross-Channel, helicopter operations much more viable economically than has been the case hitherto. Seat mile costs are already a distinct improvement on existing types, and projected developments to capacities of 70 seats in the near future and heavy-lift helicopters capable of carrying in excess of 200 passengers in about 10 years' time all point towards commercial viability in this respect, provided that they can be operated from sites close to city centres. Once airports have to be used, the advantage is lost.
To give just one example: last year a modern helicopter, an S76, flew from Battersea to central Paris where it landed, took off again and flew back to Battersea, all in two hours and 18 minutes. This speaks for itself. With suitable sites near city centres—and, as we heard earlier, parts of London dockland have been mooted as possibilities—and adequate surface links, it will be possible to halve the time it takes a businessman to get from the city of London to the centre of Paris, or to central Brussels or central Amsterdam, this without the need to use colossally extravagant airfields and the considerable infrastructure necessary to operate them.
Here I must add a note of caution. As I hinted earlier, it seems that at present the advantages of vertical flight are being undermined by the rather illogical and outdated thinking of part of the regulatory authorities. I am told that in the case of the United States, the FAA have imposed conditions which almost certainly will result in the loss of many of the advantages of vertical flight. I know that a reviewed code of practice in relation to operating techniques of helicopters in this country is under active consideration by the Civil Aviation Authority. I sincerely hope they do not follow the disadvantageous course which the FAA seem to have adopted.
It increasingly concerns me that twin-engined helicopters, which are supposed to be safer, are more restricted in the sites from which they can operate than single-engined machines. Again, this stems from views which go back to applying fixed-wing criteria to those of helicopters in the case of one power unit

719
failing. The point I wish to emphasise, notwithstanding the safety implications, which in my professional life I am only too well aware of, is that rigid adherence to modified fixed-wing principles is beginning to diminish the useful properties of helicopters.
Of course, to some extent the manufacturers have a role to play here. They must develop helicopters with such reserves of power that twin-engined machines have a true single-engined performance in all parts of the flight envelope. In a sense, too, some double standards are applied because by no means all twinengined fixed-wing aircraft have guaranteed singleengined performance throughout all phases of flight; and if they have to make a forced landing they can do so only at much greater risk to passengers and people on the ground than is the case with helicopters.
In summary, therefore, what I look forward to in this specialist field is for us to capitalise on the wealth of experience we have so far gained in a realm of civil aviation which is still comparatively immature, for every support and encouragement to be given to the manufacturing industry, not only to refine pure helicopters but to look ahead to what comes next, and to encourage a much more enlightened and far-sighted approach by the regulatory authorities.
Even railway engines and motor cars were not for long preceded by a man waving a red flag. But that, to me, seems very much the case with the CAA so far as helicopters today are concerned. Helicopters have proved themselves, they are different, and people must think differently about them so that the civil aviation industry can make the best use of the potential they offer.
The Earl of Longford: My Lords, before the noble Lord sits down, may I ask him a question which I hope he will not think is absolutely frivolous? Being such an expert on helicopters, he may be able to answer it. Over 30 years ago, when I was Minister of Civil Aviation, I inaugurated a helicopter flight from North to South Wales. Can the noble Lord tell me what has happened to it and why there is not a service of that kind 30 years afterwards?
Lord Glenarthur: That was in the fairly early days of helicopter operations, my Lords, when they were not so economically viable as they have become. I entirely support the noble Earl's view and should be delighted to see an operation between North and South Wales.
5.24 p.m.
The Earl of Cork and Orrery: My Lords, I hope that anyone who considers at all seriously taking steps to abolish your Lordships' House will pause for a moment to reflect on the extraordinary characteristic, so familiar to us, of having in our midst not only experts but actual professional experts in almost anything one can think of, from beetles to bombers, and, in this connection, helicopters; where else could one hear a speech such as the one to which we have just listened from my noble friend Lord Glenarthur? He made a great contribution to this debate.
For myself, I have attracted a certain amount of criticism before now for referring to the way in which
720
the airport system round about London has grown, if that is not too strong a word to use; it has come into being by a series of planned or unplanned environmental disasters, such as the fourth terminal at Heathrow. Nobody planned it until they suddenly found they wanted it, and then they told an engineer to draw up some plans. That is not planning for an airport, but the whole thing has grown in that way. This is a pure truism and if anybody doubts the truth of what I say they need only take a look round the airport system that we have to serve the capital, and ask whether anyone but a lunatic would plan what we have now.
It makes a change, therefore, though not a particularly attractive one, to realise how much planning is going on—again, if "planning" is not too strong a word—in connection with the airport at Stansted. It is slightly ironical that there have been no fewer than three promises that no such planning would take place, but here we are and it is going ahead, not only in the British Airports Authority but in the Government. A spin-off from that is that I do not suppose anybody will ever again believe any undertaking given publicly by a British Government, certainly not in the field of aviation.
Lord Glenkinglas: Oh?
The Earl of Cork and Orrery: That is my opinion, my Lords, and it is probably not without foundation. I say that in connection with Stansted for a particular reason, especially in relation to the magnitude of the planning. The planning which is now the subject of an application which is coming up for inquiry in September of this year is for an expansion to an airport capable of handling 15 million passengers a year. But beyond that the possibility is envisaged—this is where I speak with some admiration for the new idea of planning in advance—of expanding the same airport to a capacity of 50 million passengers a year. We must remember that 50 million passengers a year is more than all the passengers handled in one year by all the London airports now.
That should give pause for thought to anybody who is interested in the future in the countryside round about Stansted. It means an expansion to a total area of 5,000 acres and a town of about the size which Sir Colin Buchanan estimated some time ago—about 200,000 people. As for the statement of the case which the British Airports Authority will be putting before the inquiry in September, I do not know how much it weighs but it is about three-quarters of an inch thick. So far as I can discover, it does not in any way mention the people living at Stansted now, except in one case on page one, and then it refers to them in connection with what will happen when the area—the big, far out area which may never be taken into use but which is part of the overall forecast plan—is taken into use; the blight that will fall on the land, the houses and the people who live there.
To avoid that blight, the British Airports Authority, it is said, are prepared to buy that property now at a fair market price. One way of looking at it is to say that that is a fair and reasonable offer. Looking at it another way, one might say that, as in places like Soho, it is a protection racket: "You may take your choice.

721
Sell to us now and do not have your house or land taken away from you in the future". It is a fearful prospect. It goes with what Sir Colin Buchanan, who is well worth quoting in this connection, describes as,
"the largest single deliberate act of urban-industrial development ever to be thrust upon rural England, and in a particularly important sector into the bargain".
I hope the Minister will not be too put out by my strictures about government; I assure him that nothing personal is meant. About a year ago I asked whether there had ever been an inquiry into or project for the building of a new bridge over the Severn—the point of my question will become clear in a moment—or a tunnel in order to get across the Severn estuary. My noble friend informed me then that he would try to discover the answer. He never has let me know, and, although I am raising the matter now, I assure him that I am not complaining. There was such a project in about 1973, but we need not go back so far as that.
I believe that there is now sitting a committee or interdepartmental commission—I am not sure of its correct description—consisting of civil servants from the Welsh Office and the Department of Trade, considering the possibility of either a new or another crossing of the Severn estuary. One of the projects that is being considered, I believe, is an enlargement of an existing crossing, or perhaps a new bridge at Gloucester. I should like to ask my noble friend whether he can tell me when we can expect a report from that committee, since the local authorities in South Wales are being thrown into some doubt and confusion while awaiting it.
In the past the objection to building a new airport not at Stansted but at Severnside has been based on the expense of constructing a new bridge to carry the road and a new tunnel for the trains. The question is, is a new bridge going to be needed? It appears that in any case in a few years' time there will have to be a new bridge in connection with the M.4 crossing the Severn; this is accepted. If the crossing is to be higher up, at Gloucester, there will have to be a new road to reach it. So regardless of whether an airport is built there, new bridges or crossings will have to be devised. There is no reason why they should not incorporate a motorway which would lead, by means of a spur of no more than a mile long, to a site where there could be an offshore airfield at Severnside. When may we hear about this?
With regard to the building of a new tunnel, which the Government say is necessary, at a cost of, I think, £650 million—I am not exactly sure about the cost—I am advised by railway experts that the existing tunnel is perfectly adequate to carry the traffic. Perhaps my noble friend will comment on that point, if he cares. Reverting to Stansted, according to the case which has been prepared, the rail connections would involve the railway running from St. Pancras to Cambridge. Frankly, I do not believe that the railway could carry 50 million passengers, though at the moment that figure is not envisaged; it is only 15 million. However, let us suppose that it could do that. That would be very handy and agreeable for people who wanted to go to London, but if they wanted to go to anywhere else, they would have to travel to Cambridge and change, which would not be the best way to enter England.
722
On the other hand, if one wanted to go to Severnside one could board a high-speed train and travel directly to the airport, without interruption. Customs and Excise procedures could be carried out on the train, which would travel at 120 miles an hour and the journey would take, I think, 1 hour 40 mins., which is as quick as one could travel from touchdown at Stansted to city centre.
On both sides of the Severn estuary there are tank farms fed by pipeline, and so there would be piped fuel within easy reach of the airport. I should like to ask my noble friend whether in fact there is a pipeline to Stansted, since it is quite clear that it would not be possible to carry by road adequate aviation fuel to a major airport. This point involves an item of expenditure that I do not find mentioned in the British Airports Authority's case. Nor do I find any mention of who is to pay for the railway. A vast amount of railway construction work and alterations would have to be carried out, in particular in the North-East of London, which is the longest way into London. It is suggested that an Act of Parliament would be sought by British Rail. Is British Rail to pay for this work? I should not think so. May we have from the Minister a forecast of how much this is likely to cost?
I wish once more to quote Sir Colin Buchanan. He ends by saying:
"There is no place inland in the whole kingdom where an airport would not be bitterly opposed by local people".
Now just for once Homer nods; Sir Colin is in error. There is one such place: at Severnside not only would an airport not be opposed, it would also be heartily welcomed by the county council and the people of Gwent. Here is the possibility of an enormous brand-new gateway international airport, with runways in the sea, disturbing almost no one, with road and rail communications already passing within a mile, and with very high-speed transit to London, Birmingham, the North of England and all the great centres of population. The people there want it to happen. Yet so far as I can tell, the Government are proposing to go ahead with a vast development which nobody wants, at everybody's expense, in the worst possible place.
The only real problem that I believe would be encountered in siting an airport at Severnside rather than at Stansted would arise from the extreme difficulty of persuading the airline operators to use it. That would be a difficulty, I agree. However, it is a difficulty which the Government might face if they consider what otherwise could be the consequences for our nation, with the benefit going to those airline operators and nobody else.
5.36 p.m.
Lord Gisborough: My Lords, there are always problems between the British Airports Authority and the aviation industry and the airlines. First and foremost is the lack of adequate consultation by the British Airports Authority regarding the needs and limitation of needs by airlines operating the authority's airfields. In the past there has been inadequate response and reaction to the needs of airlines at local executive level and often there has been too ambitious local investment beyond the needs of the airlines. There

723
are cases where capital has been invested in airfields to create desirable new facilities, but facilities which have been far above the needs of operating airlines and which have jacked up unnecessarily the ever-increasing airport charges.
It is therefore a good development that the BAA has at last agreed that changes should be made to the present procedure for consultation with its air transport customers and that a council is to be set up, and will meet for the first time in April. The proposed consultation co-ordinating council will allow consultation in excess of that required by statutory obligation, but the success of the council, which should benefit both authority and user, will depend on the willingness of the different representative airline associations to participate together in one consultative form. Of airlines themselves, only British Airways will be represented, in view of its massive use of BAA facilities. One wonders whether it would not be right for there to be a seat on the council for the Board of Airline Representatives representing the needs of all foreign airlines, with their rather different problems to those of our own home-based airline.
The next problem is that of landing charges and parking fees in general, and I am sorry not to be able to discuss them. An article in the Sunday Telegraph, which may or may not be true, states:
"A row has been growing since last year when the authority issued what it described as a discussion document on increased airport charges. Although the increases averaged only 35 per cent."—
I do not know whether I am allowed to quote.
Lord Sandys: My Lords, I think it would be appropriate to remind my noble friend that this item is sub judice—a point to which my noble friend Lord Trefgarne drew attention earlier in the debate.
Lord Gisborough: My Lords, I thank the noble Lord for that intervention. I felt that perhaps it was in order to quote something which existed; I was not really producing anything new.
According to press reports, security costs are a further worry—and I do not think that this point is subject to the sub judice rule. BAA airports have far higher charges than private airports. For example, Heathrow's charges were doubled from 83p in 1979 to 160p in 1980. That is peculiar because the high traffic flow could be thought to maximise the use of security personnel per passenger, and it seems to be another case where the public authority charges so much more for its services than the private company under greater competitive pressures. According to press reports, high charges have not appealed much to foreign operators, and now that this point is sub judice I must say no more about it. To say no more than the Minister himself remarked, the present situation is that the fees are going into a holding account and some airlines are talking about leaving London airport and flying to Amsterdam instead.
The cold wind of competition is blowing even on to Heathrow, and if airlines leave it the position there can only get worse. It seems necessary that, whatever the result of the court decision, the BAA should strive urgently and immediately for efficiency and economy,
724
going from the very top to the very bottom of the authority, rather than just demanding higher charges. Further, airlines fear that in the future—not the present, the future—interest on the cost of developing Stansted may be spread overall by the authority and will result in further charges at Heathrow for operators who will not even benefit by using Stansted. I think I am all right there, because it deals with the future.
Further afield, and in particular at Aberdeen—which, again, I do not think is the subject of the court case—the parking rate rose for one operator from a monthly rate of £828 in 1979 to £2,217 in 1980.
Lord Sandys: My Lords, I think we are touching upon an area which is sub judice. I speak without reference to this particular case, but I think my noble friend should be very wary of what he says in this regard.
Lord Ponsonby of Shulbrede: My Lords, in supporting the noble Lord, Lord Sandys, the point of the sub judice rule is that the outcome of the case shall not be affected one way or the other. Therefore, though certain areas may be commented on, anything which is commenting on the propriety or otherwise of certain actions of the British Airports Authority could be said possibly to have an influence on the case.
Lord Gisborough: My Lords, I apologise, and I will leave out all about Aberdeen. With regard to Stansted—again, this is in the future—would it be possible for the authority, when it comes to consider it, to consider raising its funds for capital development by way of loans in the money market, as other commercial enterprises are obliged to do, rather than doing it by raising charges, violently and often? With regard to the Stansted of the future it might be desirable to make of it a separate company owned wholly or partly by BAA, with its own profit centre to create good management policies and discipline. If the private sector could own 51 per cent. and the authority 49 per cent., the loan would no longer fall within the PSBR. The problem would be to design an adequately attractive and guaranteed investment to attract the public. Perhaps this could be achieved by novel and imaginative tax incentives on the eventual and inevitably delayed dividends to attract both private and institutional investments.
There is almost certainly large scope for economy within the British Airports Authority. There is no reason to suppose that it does not suffer from overmanning, along with all other public bodies; and there is equally no reason to suppose that its attempts to become more efficient have not been thwarted or at least slowed down by union resistance.
But looking ahead, there is nothing to stop the authority from increasing its charges year by year to cover these mounting costs, where any private company would long since have had to raise its own efficiency to contain its price rises and to retain its customers. It is, in practice, impossible for a monopoly to become competitive as there is no competition (period). This has been recognised in the case of the Post Office, as a result of which the Government have recently taken some steps to open up the Post Office monopoly to competition from private industry. Would it not be possible to move the BAA into a more competitive

725
position? In particular, would it not often be cheaper for the authority to subcontract many of its activities to private firms in competition with one another?—and, in particular, one would refer to security.
Finally, my Lords, there is the small but locally important question of the use of MOGAS as against AVGAS. The requirement to use AVGAS for even light aircraft involves a very high cost for recreational flying, both for fuel and for delivery and handling, particularly on smaller airfields. While the use of AVGAS is mandatory by the Airworthiness Board, the supply is a near monopoly by Shell and BP, and the recreational flying movement in the United Kingdom consider they are being "ripped off" by its excessive and unnecessary cost. In practice, MOGAS is being used clandestinely, and this is particularly so in certain types of engine where flight manuals do not specify 100 LL or other grades.
Aviation insurers are happy with the use of MOGAS, and experience of its use has proved satisfactory. There is therefore no reason why the Airworthiness Board should not permit the use of MOGAS for certain groups of engines and for certain categories of flying, such as non-public transport, unsupercharged and low-compression engines, and other conditions, thereby reducing the cost to light aircraft. An example of this would be the towing of gliders, where a tug, even with engine failure, could always glide to an open field or back to its base. Many sports get subsidies, but this is no request for a subsidy for recreational flying. It is a request that this particular recreation should not be unnecessarily penalised.
5.46 p.m.
Lord Trefgarne: My Lords, I want to start, if I may, by apologising to my noble friend Lord Gisborough and to my noble friend Lady Trumpington for the repeated interruptions of myself and my noble friend Lord Sandys on the vexed sub judice question. It is a matter which clarified itself only this morning, and I am not surprised that my noble friends were not aware of the precise position. I deeply regret that I was obliged to interrupt the calm flow of their oratory on more than one occasion while they were speaking, and I apologise to them for the rudeness that that appeared to be; but I was intervening in what I thought, and what I still think, were the best interests of the House and of your Lordships.
My Lords, there have been a number of occasions in recent weeks when we have debated specific matters concerning civil aviation. This is a useful opportunity to stand a little further back from such detailed questions (although I shall deal with some of them later) and consider the situation of the United Kingdom aviation industry as a whole. It is entirely appropriate that this opportunity should have been given us by my noble friend Lord Glenkinglas, who, as we have heard, was closely involved with the industry in the early 1970s and whose knowledge and experience is therefore invaluable to our debate.
Civil Aviation is one of this country's success stories. Throughout the world it is an industry with considerable potential for growth and in which the United Kingdom has been a major force. The industry is also at the forefront of technological progress, and is constantly changing. Governments must be prepared
726
to change their policies towards the industry accordingly. My noble friend himself presided over one such period of change, which was reflected in the Civil Aviation Act 1971 and the policy towards United Kingdom airlines which followed that legislation. Since then I think it is no exaggeration to say that further changes in the industry worldwide have been fast and furious, and that process of change continues unabated.
In addition to change, the international aviation industry has had to cope with two periods of severely adverse market conditions since the early 1970s. The first of these followed the massive and unprecedented rise in oil prices in 1973. It has become something of a cliche, but is none the less true, that fuel is the lifeblood of all airlines. The 1973 price increases placed a gigantic strain on airline costs as well as depressing demand for air travel, and the poor financial results of airlines in 1974–75 and 1975–76 bear witness to these effects.
The industry nevertheless recovered, and there followed a period of growth and relatively healthy profits. But in 1979–80 worldwide economic factors began to lead to a second trough in airline fortunes. Again, the problems began with much higher oil price rises than the industry had assumed. The significance of this factor was well illustrated by the chairman of British Airways, who said in the airline's 1979–80 annual report:
"Our total fuel bill was £413 million compared with £240 million in the previous year—a 72 per cent. increase".
He went on to add:
"The average cost of aviation fuel is now nearly eight times higher than it was nine years ago".
But the problems caused by fuel prices were compounded in 1980 by the effects of the world economic recession, and the state of the airline market last year, and now, can only be described as grim. In 1980 airline capacity grew by 8 per cent., but scheduled international passenger traffic showed no growth at all. During the year, the 108 member airlines of the International Air Transport Association are estimated to have lost between them over £1 billion—equivalent to 7·6 per cent. of their collective revenues—after depreciation and interest. It is therefore not surprising that the Director General of IATA has described 1980 as the worst year in civil aviation history. Nor do the immediate prospects look much brighter—to quote IATA again:
"1981 will be better than 1980 only because 1980 was such a deep and unprecedented trough".
That is the general background against which we must consider the United Kingdom civil aviation industry, which has, of course, not been sheltered from these problems. Before speaking about British Airways, to which the Motion before us makes particular reference, I think it only right to pay tribute to the United Kingdom airline industry as a whole. Although British Airways tends to dominate debates of this nature, and I would not for one moment seek to undermine its importance in the structure of the United Kingdom industry, our independent airlines have come a long way over the past decade and now represent a significant proportion of our total airline capacity. My noble friend Lord Glenkinglas was involved as a Minister of the day in the establishment

727
of British Caledonian and, since then, a number of other independent United Kingdom airlines have developed and flourished. I also think it true to say that all our airlines—whether in the public or private sector—exhibit the spirit of innovation necessary to succeed in such a rapidly changing and increasingly competitive international industry.
I turn now to the particular situation of British Airways. This year is the tenth anniversary of the legislation which preceded the merger of BEA and BOAC into the British Airways Board and to which my noble friend Lord Glenkinglas referred in his own speech. There are those who argue that the two corporations should have been left separate and, indeed, it is argued in some quarters that they should now be separated again. In the Government's view it would be folly to reverse the process when so much has been done, and in any case we do not believe that a return to the previous structure would provide any answer to British Airways' current problems. The merger was undoubtedly a mammoth task and none of us should underestimate the problems involved, not least in respect of individual loyalties of employees who had spent long careers with either of the erstwhile air corporations. It would be foolish to deny that such loyalties are still held by some, even though the British Airways Board has now been in existence for almost nine years. That is a matter of human nature which no amount of efficient management can fully overcome, although I know that the board has made every effort to fuse British Airways into a single airline which maintains the best aspects of each of the old corporations.
Equally, the board has had the task of achieving economies of scale and rationalising labour resources following the merger. I have already referred to the problems suffered by all airlines in the mid-1970s. British Airways had to contend with those problems at a time when management was still heavily engaged in implementation of the merger and it is to the credit of all concerned that the airline weathered that particular storm and returned to net profit in 1976–77 after two very difficult years. Relatively healthy profits continued in 1977–78 and 1978–79, and I would remind your Lordships that, to make profits, British Airways has to compete with many other airlines both at home and abroad. It is anything but a monopoly and the market is highly competitive, so profits cannot be made merely by increasing fares.
As we all know, British Airways' financial performance after 1978–79 has been less satisfactory. The airline managed a small net profit in 1979–80, but made no secret of the fact that it had planned a much better result. Fuel prices and the strength of sterling were part of the problem, but there were already signs of the effects on the market of the world economic recession which has since made 1980–81 an unprecedented difficult year.
At present, the revenues and profits of all major international airlines are being hit by the recession in the market, and many operators are making large losses. British Airways has forecast that during 1980–81 it will earn around £400 million less revenue than originally planned for the year. Much of this has been made up by savings both in capital expenditure
728
and operating costs, together with proceeds from sales of assets, but it has not been possible to meet the anticipated revenue shortfall in full. Your Lordships will recall that the Government have agreed that British Airways may borrow an additional £85 million to assist the airline in meeting its immediate financial commitments to the end of the current financial year.
I will take this opportunity, if I may, to correct some misinformed comment that there has been about that decision. The additional £85 million is not a subsidy, and, indeed, is not being provided from Government funds. We have simply agreed that British Airways may borrow £85 million more in 1980–81 than we had previously been prepared to allow. The money itself will be borrowed by British Airways from banks—as are all the airline's loans—and will be charged at commercial rates of interest. So it is not a "soft option" by any means.
As I have indicated, the current problems are not unique to British Airways and in the short term there has been little that airlines, including British Airways, can do to escape from the effects of the depressed market. But any business must have a long-term strategy and it is right that we should also examine British Airways' plans in this respect.
I have mentioned that the international aviation market is increasingly competitive, and your Lordships will be aware that there has been an established trend in recent years towards lower air fares. British Airways' long-term strategy takes those two facts as its starting point and assumes that heavy competition on routes and fares will continue and probably grow. The airline has also assumed that over the next few years an increasing proportion of the airline market will be represented by leisure travel at low fares. I shall have more to say about the Government attitude towards air fares generally in a few moments.
There are basically two main elements in British Airways' long-term plans to meet these developments successfully and profitably. The first is to offer the whole range of airline users the products they want. Because British Airways intends to continue to serve all sectors of the market, this means recognising and meeting the needs of business and leisure travellers. With the move towards lower fares aimed primarily at the leisure market, there has naturally been a degree of resentment by business travellers and others paying the full fares that they are getting an unfair deal from airlines. British Airways has therefore examined the nature of services offered to full-fare and discount-fare passengers respectively and made changes to meet the interests of each group. The results are already to be seen in what British Airways call their new European product, which comprises only two classes—club, catering for passengers paying full fares with a higher standard of service to match and tourist class for those who pay considerably below the club-class rates. I understand that these changes are proving a commercial success. The same general principles are being applied to all British Airways' international services but with first class being retained outside Europe.
Of at least equal importance to offering the right product for the market is the ability to do so at the right price, and this is the second element in British Airways' strategy. Profits can only be made from low fares if an

729
airline's costs are contained within commensurate levels and the airlines which succeed in the future will be those who maximise efficiency in the use of both capital assets and labour.
A significant contribution towards cost reduction will be made by the rationalisation of British Airways' fleet which is at present under way. This is mainly concerned with replacing old aircraft with new models which will consume less fuel and reduce operating costs as well as meeting more stringent noise regulations due to be applied in the United Kingdom from 1st January 1986. These fleet changes involve a very large capital investment programme, of which the funding has contributed to British Airways' present cash flow problems, but they are essential to the airline's cost reduction targets.
But more efficient equipment alone will not be enough to enable British Airways to compete profitably, and must be accompanied by significant improvements in labour productivity. One of the main criticisms made of British Airways is that it is overmanned and its productivity is poor compared to its international competitors; and these points have been raised by previous speakers in our debate today. I accept that there is substance in these criticisms but, more important, British Airways' own management acknowledge that they are valid and that improvements must be made.
That is not to say that productivity has been stagnant. In 1979–80, the number of available tonne kilometres produced per employee rose by 7 per cent. compared to 1978–79, which itself had shown an improvement of 10 per cent. over the previous year. That is commendable but there has until recently been no reduction in staff numbers and it is impossible to achieve sufficient productivity improvements without reducing manning levels, particularly when there is no traffic growth. British Airways have therefore begun to make such reductions: manpower will have been reduced by 4,000 in the current financial year and there are plans for this process to continue thereafter at the rate of 2,500 a year.
Having described the present problems and future plans of British Airways, I should complete the picture by referring to the Government's own proposals to give the airline private sector status and offer shares for sale to the public. Because of present difficulties in the market, it has not been possible for us to implement that policy as soon as we would have wished, and we have already announced that there will be no flotation this year. The fact that we are prepared to wait until the time is right does I think prove the validity of the assurances, given when Parliament debated the Civil Aviation Bill—not least by me to the noble Lord, Lord Ponsonby, that we would not rush into a sale of shares at the wrong time for the wrong reasons. But I should make it clear that the Government maintain firmly the belief that privatisation offers the best chances for British Airways' future success; that the right time to make the change will come and that we shall implement the policy as soon as it does.
Before I move on to the matter of the British Airports Authority, I turn to some of the points which have been made in connection with British Airways during the course of the debate. I fear that I am going to take them in a somewhat random order. The noble
730
Lords, Lord Orr-Ewing and Lord Glenkinglas, referred to the question of pooling. I have noted what my noble friends said about these arrangements. The vast majority of pooling arrangements are essentially commercial agreements made between airlines, to which the Government are not a party. In the uncompetitive environment in which they often find themselves operating, they are in many ways a rational, if admittedly self-interested, response. They can promote sensible solutions to a variety of problems such as the need for capacity to be provided at the right times of the day which suit the convenience of the passenger. I shall, if I may, reflect upon what my noble friends have said in the light of the words that they put to me.
My noble friend Lady Trumpington and at least one noble Lord referred to the question of aviation security arrangements. My noble friend proposed that we should change the system so that security is funded nationally. The previous administration decided to pass the cost of aviation security measures from the taxpayer to the industry in the 1978 Civil Aviation Act. The present Government do not wish to change that policy. We believe it right that those who benefit from aviation security should pay for it. The noble Baroness also suggested that details of the costs and revenues of the aviation security fund are difficult to obtain. In fact a great deal of financial information is given to the working group on the fund twice a year. A representative of the Airline Transport Users' Committee attends these meetings. Such information includes, for example, total income and expenditure for the previous year; an estimate of income and expenditure for up to two years ahead; costs at individual airports, any significant variation in manning levels and major wage awards in the previous year. It is my department's intention, whenever it is necessary to revise the levy rate, to put a report containing such information in the Library of both Houses of Parliament.
Lord Orr-Ewing: Before the noble Lord leaves that point, since they are recruiting staff for security and presumably at a certain maturity—that is to say, 35 years of age, when they have the experience and level-headedness—are they not going to have a shorter working life and will not the future taxpayers be saddled after that short period is over with paying them fully-indexed pensions for the rest of their lifetime? Is not this unproductive as compared with hiring persons to do the job for a limited time?
Lord Trefgarne: My Lords, the costs of the security operations at both BAA airports and indeed at some others have been kept under review for a long time. I can assure my noble friend that the present arrangements, of which of course future pensions play a part, are kept under consideration and we are convinced that the present arrangements are the most cost-effective that can be devised. It is necessary of course for us to ensure that the effectiveness of the security arrangements remains unimpaired. That is one of the reasons why we have the arrangements which are presently in force.

731
The noble Lord, Lord Hayter, referred to air cargo. I can assure the noble Lord that the importance of that industry is not forgotten, if only for the fact that I have spent most of my working life in it. I certainly welcome and appreciate the work in which the noble Lord is personally involved in this important area. If he will allow me, I shall study more carefully the words he used today and see if there is anything further that I can say to him, and if so, I shall write to him.
May I now turn to the question of air fares? This has interested several noble Lords and Baronesses, not least the noble Baroness, Lady Burton, the noble Earl, Lord Amherst and my noble friend Lord Orr-Ewing. The noble Baroness, Lady Burton, mentioned the subject of air fares again and although it is not immediately within the compass of today's debate perhaps I may mention it briefly. It is in Europe that the level of air fares gives me the most concern. Here we have a number of developed democratic companies with a sophisticated air transport system which can no longer be considered an infant industry. Yet, nevertheless, we see a tightly regulated system which prevents airlines from offering fares to their consumers at price levels and on conditions which they believe that their customers want. This is not only against the interests of consumers, but I believe in the longer term it is against the interests of the airline concerned and it is certainly contrary to the whole philosophical background of the European Community, which envisage a wide measure of free trading conditions in goods and services.
We are not looking for revolution in the air transport system which could bring chaotic conditions with it and we do not seek the kind of overnight United States-style deregulation which some of our partners fear. We are however pressing them very hard indeed—and was in Amsterdam earlier this week doing just that—to accept some sensible liberalising steps which could allow new innovative fares and some new services to be introduced. At our initiative there are now three aviation issues under discussion in the European Community, including the one of air fares. The Commission is currently studying this with national experts with a remit to report back to the Council, and we very much hope that the Council will be able to take action on this during the course of the year.
Baroness Burton of Coventry: My Lords, I am sorry to interrupt. Is that the answer on bucket shops or is the noble Lord going to tell us a little more?
Lord Trefgarne: My Lords, I have not finished yet.
Baroness Burton of Coventry: My Lords, if the noble Lord has finished it, may I ask him whether he thinks that what he has said constitutes any answer to a case which I think has—
Lord Trefgarne: My Lords, I said, "I have not finished yet". On the bilateral side, we cannot unilaterally introduce lower fares but we can and do disapprove fare increases where we believe that they are unreasonable. For example, the normal economy return fare to Rome would be over £70 higher now if we had not taken such action, and to Stockholm nearly £100
732
higher. In our bilateral negotiations with other European countries, we shall continue to negotiate vigorously for the introduction of fares which our airlines wish to charge and which we believe are entirely reasonable in relation to the terms and conditions and the costs of operations.
It is encouraging that British Airways have now secured agreement for the introduction of its new and somewhat lower fares structure extensively throughout Western Europe. Our experience with other innovative fare types has been less encouraging. I was acutely disappointed, for example, by the unwillingness of the Austrian Government at talks last month to accept the new low Mini-prix fares proposed by British Caledonian. But we shall persevere with determination, and I believe that other European Governments will come in due course to accept that a balance needs to be struck between the interests of the traveller and the interests of airlines which is rather different from that in the past.
I do not pretend that this is going to be an easy task, because other governments take a very different view of this matter from us, and many give pre-eminence to the legitimate commercial objectives of their national airlines without, in our view, paying enough attention to the equally legitimate needs of their citizens as consumers in the air travel and the air freight markets. I believe it is quite wrong that the market should be restricted in this highly regulated way, and it also leads to the kind of abuses and illegalities which we have discussed in this House recently in connection with bucket shops. It is a matter which I and my department intend to pursue with the utmost vigour.
The noble Baroness mentioned the views of Mr. Elton, the chairman of ABTA, who suggests that we should either enforce the law or change it. I am sorry to have to tell the noble Baroness what she knows already: that there are difficulties in both of those courses. To enforce the law to secure a prosecution we need to have adequate evidence, and to persuade the court that a breach of the law has occurred and indeed who has done it, which is far from easy. To change the law, we have to persuade our international partners. That too is proving difficult, but is likely I think in the end to be the best course along which to proceed.
Baroness Burton of Coventry: My Lords, I do not want to make this into another debate, but is the Minister really saying that the sale of 5 million tickets in a year in this country through bucket shops is something which can just be left? I am glad the noble Lord indicates that is not so. Is the noble Lord telling the House, then, that the Government intend to take this matter to IATA, because it is IATA which is concerned also with this problem? Could he give us an assurance that that will be done?
Lord Trefgarne: My Lords, Britain is not a member of IATA; IATA is an organisation of airlines. The British airlines—British Airways and British Caledonian—are themselves members of IATA and they are as aware of this problem as we are and as the noble Baroness is. IATA, like other bodies, has to proceed with some form of consensus and it is some of the other airlines in IATA which are obstructing what we think

733
to be proper progress in this direction. I want the noble Baroness to understand quite clearly that I attach the greatest importance to this matter. It is something I have been considering almost every day since I took over the post that I now occupy, and I am determined to see that something is done as soon as possible.
My noble friend calls attention also to the condition and situation of the airports operated by the British Airports Authority. He and others have raised a number of matters which bear on this. Therefore, it may be helpful if, before replying to these points, I speak briefly about the responsibilities of the authority, about its success and about its plans for the future so that my replies are seen in the proper context.
As your Lordships will recall, the authority was established on 1st April 1966 to own and manage four major airports—Heathrow, Gatwick, Stansted and Prestwick—formerly under the direct control of the Government. It has since acquired Glasgow, Edinburgh and Aberdeen airports which, together with Prestwick, are now managed by the Scottish Airports Division of the authority. The authority therefore now owns and manages seven major airports in the United Kingdom which during 1979–80 together handled 78 per cent. of all passengers and 84 per cent. of air cargo traffic in the United Kingdom.
The authority's primary task is to plan, develop and operate those airports to meet the present and future needs of the international and domestic air transport system. Since 1966 the annual total aircraft movements through BAA airports have doubled, while the annual total number of passengers has increased threefold. That difference reflects the introduction of wide-bodied jets in the early 1970s. Indeed, it is the continued development of aircraft capacity which has changed the nature of the business to the extent that passenger-handling capacity rather than runway capacity is now the main limiting factor.
I see that I have gone on for longer than I had hoped on this matter. I shall delete a number of paragraphs which I have still before me. However, can I say that a number of points that have been raised by a number of speakers dealing with the British Airports Authority are very valid ones and, if I may, I will write to noble Lords on them. Can I now bring my remarks to a close by saying that this has been a timely and constructive debate and we have been fortunate to hear from a number of speakers who either have direct experience or a considerable knowledge of aviation matters. I conclude by repeating a remark I made at the beginning of my speech: the British aviation industry, in all its forms, is a success story and one in which we can take genuine pride. It is right that parts of our debate should have concentrated on certain problems which face the industry at present and it would be quite wrong to pretend that those problems do not exist or can be easily overcome. But I think all sides of your Lordships' House would agree that the problems should not overshadow the achievements, and would join me in wishing future success to all those involved in our civil aviation industry.
6.15 p.m.
Lord Glenkinglas: My Lords, when I opened this debate I said I was confident that there were enough
734
people in this House who would fill up any gaps in my rather hasty opening with a great deal of useful flesh—if one can actually do that; I am not quite sure! But that has happened and we have had some most helpful and useful speeches on all sorts of specialist topics. The noble Lord, Lord Hayter, referred to cargo and my noble friend Lord Glenarthur spoke on the helicopter side of it. We also heard some more general and very useful comments from other noble Lords on every side of the House. Two of my noble kinsmen spoke. My noble friend Lord Campbell spoke very ably about the disabled, and I could not help feeling a certain sympathy as he spoke about the partially disabled, because I find the walk from one end of London Airport to the other almost feels as though one were walking to Glasgow in order to get to the beginning of it, and I have to stop pretty regularly on that way myself. I also have great sympathy with my other noble kinsman, Lord Cork and Orrery, when he talked about wanting to plant an airport on Severnside.
But the person who really has my deepest sympathy is the noble Lord, Lord Trefgarne. He has all the worries that I had 10 years ago. I think some of them are a little less. For example, I do not think he gets woken up by the telephone at 2.30 every morning by somebody ringing to say that they have just been woken up by an aircraft and what is he going to do about it. That happened so regularly with me that in the end the Post Office had to cut off my telephone from 10.30 until four. I knew perfectly well how to deal with the situation, of course. That was merely to ask the caller for his telephone number and ring him back the next night at 2.30 and say: "I was just going to bed and I hope you were sleeping well!" But for some reason my civil servants did not think that was a proper way for a Minister to behave.
In asking leave to withdraw my Motion, I would thank all those who have taken part in what I believe has been an interesting and useful debate. As the noble Baroness, Lady Burton, said, we all want to help. We know that British Airways are improving daily. We have great confidence in their new management and we hope very much that, as a result of our debate, a little greater speed in some of the improvements referred to will come about. I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Trees (Replanting and Replacement) Bill [H.L.]
6.19 p.m.
Lord Somers: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Somers.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ALPORT in the Chair.]
Clause 1 [Obligation to plant new trees]:
Lord Somers Lord Somers moved Amendment No. 1:
Page 1, line 7, after ("trees") insert ("of a species set out in the Schedule to this Act").
The noble Lord said: With your Lordships' permission, I should like to speak to Amendments Nos. 1, 2 and 3 together because they all deal with the same point. Your Lordships may have been slightly amazed at the number of amendments that have been put down to this small Bill, but perhaps I can quieten anxieties by pointing out that what they do is to narrow the application of the Bill rather than to enlarge it. Amendment No. 1 makes this Bill the same as the original Bill. It protects the species which the Bill is designed to protect, but it does not force a local authority to do anything about replacement if they destroy other trees that are not mentioned. There is one point about Amendment No. 2. It is slightly different from the original Bill, in that it does not force a local authority to replant exactly the same species, but merely one of the species that are named in the schedule. Amendment No. 3 is merely the schedule as it was originally. I beg to move.
Lord Peart: May I support the noble Lord? We had a good discussion earlier and I welcome the Bill. I know that others took a different view, but I believe that what the noble Lord has now done will help considerably. So I hope that the Bill will get a speedy passage through the House.
The Earl of Cork and Orrery: May I agree with the noble Lord, Lord Peart? I feel that this Bill is becoming something of an old friend—small, but an old friend none the less. This is an improvement and I shall support the noble Lord's amendment.
Lord Skelmersdale: I am afraid that I have some rather bad news to impart from this Bench. I think it is an open secret by now that the Government have very little enthusiasm at all for this Bill. As my noble friend Lord Avon said on Second Reading on 29th January, at column 87 of the Official Report:
"Our main objection … is that it runs counter to our policy of reducing the statutory duties of local authorities"—
and a little later on:
"We believe that this Bill is unnecessary because most local authorities already plant a substantial number of trees each year".
However, we recognise the great efforts that the noble Lord, Lord Somers, is making to change our minds.
We know that the noble Lord's intention is to ensure that local authorities plant more hardwood trees. But, unfortunately, the effect of these amendments to the Bill now before us would be to force local authorities to plant only those trees which are currently in the schedule, which is the subject of Amendment No. 3. These are, of course, mixed hardwood and softwood trees and we consider it totally inappropriate for local authorities to be constricted in this matter as to what they should plant.
Regretfully, we still feel that even if the Bill were amended in this way, it would remain unsatisfactory and unnecessary for the reasons that I quoted earlier. Indeed, this series of numbered amendments falls far
736
short of anything that is needed for a change of heart on our part, and it is difficult to envisage any amendments which would bring about such a change. I hope, therefore, that the noble Lord will be prepared to reconsider his ideas and at this stage I must urge him to withdraw the amendment.
Lord Somers: I am not prepared to withdraw this amendment, because I must point out to the noble Lord, Lord Skelmersdale, that there is an amendment later which withdraws the clause which forces local authorities to take any action at all. That clause was introduced merely because I felt that unenforceable law was undesirable, and that was the nearest I could get to what was needed. But I am about to withdraw that. As regards forcing local authorities to have a narrow choice, they really have quite a wide choice in this schedule, and if we are to preserve the hardwood trees and the slow growing trees I cannot see any other way of doing it.
6.25 p.m.
The Deputy Chairman of Committees (Lord Alport): The Question is that Amendment No. 1 be agreed to? As many as are of that opinion will say Content; to the contrary, Not-Content.
The Contents will go to the right by the Throne; the Not-Contents to the left by the Bar.
Lord Lyell: Did I hear anybody say "Content"?
The Deputy Chairman of Committees: I am afraid that the Chair heard a "Content" from that side, and therefore I took the necessary action.
On Question Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 76; Not-Content, 37.

CONTENTS

Airedale L.

Greenwood of Rossendale, L.

Alport, L.

Gregson, L.

Amherst, E.

Hale, L.

Ardwick, L.

Hanworth, V.

Aylestone, L.

Houghton of Sowerby, L.

Baker, L.

Howie of Troon, L.

Balogh, L.

Irving of Dartford, L.

Bernstein, L.

Jacques, L.

Beswick, L.

Janner, L

Birk, B.

Kennet, L.

Blease, L.

Lee of Newton, L.

Boston of Faversham, L.

Leonard, L.

Broadbridge, L.

Listowel, E.

Brockway, L.

Llewelyn-Davies, L.

Brooks of Tremorfa, L.

Llewelyn-Davies of Hastoe, B.

Byers, L.

Lockwood, B.

Chitnis, L.

Longford, E.

Cledwyn of Penrhos, L.

Lovell-Davis, L.

Collison, L.

McCarthy, L.

Cork and Orrery, E. [Teller.]

McNair, L.

Maelor, L.

David, B.

Milner of Leeds, L.

Davies of Leek, L.

Monson, L.

Donnet of Balgay, L.

Napier and Ettrick, L.

Elwyn-Jones, L.

Ogmore, L.

Fisher of Rednal, B.

Pargiter, L.

Galpern, L.

Parry, L.

Glenamara, L.

Peart, L.

Goronwy-Roberts, L.

Phillips, B.

Granville of Eye, L.

Pitt of Hampstead, L.

Greenway, L.

Ponsonby of Shulbrede, L.

737

Richardson, L.

Stone, L.

Ritchie-Calder, L.

Strabolgi, L.

Rochester, L.

Underhill, L.

Ross of Marnock, L.

Wallace of Coslany, L.

Seear, B.

Wells-Pestell, L.

Shackleton, L.

Whaddon, L.

Somers, L. [Teller.]

Wootton of Abinger, B.

Spens, L.

NOT-CONTENTS

Auckland, L.

Inglewood, L.

Avon, E.

Killearn, L.

Campbell of Croy, L.

Kimberley, E.

Carr of Hadley, L.

Kinnoull, E.

Cathcart, E.

Lauderdale, E.

Colyton, L.

Long, V.

Craigavon, V.

Lyell, L. [Teller.]

Cromartie, E.

Mancroft, L.

Cullen of Ashbourne, L.

Mansfield, E.

de Clifford, L.

Middleton, L.

De La Warr, E.

Orkney, E.

Denham, L.

Orr-Ewing, L.

Drumalbyn, L.

Rochdale, V.

Elliot of Harwood, B.

Sandys, L. [Teller.]

Forester, L.

Sieff of Brimpton, L.

Glenarthur, L.

Skelmersdale, L.

Hailsham of Saint Marylebone, L.

Strathclyde, L.

Tenby, V.

Home of the Hirsel, L.

Trefgarne, L.

Resolved in the affirmative, and amendment agreed to accordingly.
Lord Somers Lord Somers moved Amendment No. 2:
Page 1, line 9, leave out from ("trees") to end of line and insert ("each of which shall be one of those species named in the said Schedule.").
On Question, amendment agreed to.
Clause 1, as amended, agreed to.
Clauses 2 and 3 agreed to.
Clause 4 [Enforcement of duty as to replacement of trees]:
On Question, Whether Clause 4 shall stand part of the Bill?
Lord Somers: I had a great deal of heart-searching over this clause and thought of various ways in which it might be possible to make this Bill enforceable, but there has been so much opposition to this particular clause, owing to the fact that it would mean a lot of extra paperwork and a certain amount of bureaucracy, that I decided in the end to withdraw it and to leave the Bill to the judgment of local authorities, which I think on the whole is very sound. Therefore I think that Clause 4 should be left out.
Lord Skelmersdale: The noble Lord has obviously taken great note of the remarks of my noble friend Lord Avon, and others, at Second Reading. On that occasion my noble friend was extremely critical of the proposed enforcement duties to be imposed on the Secretary of State. Their removal will certainly improve the Bill to this extent. The Government therefore support the noble Lord.
Clause 4 disagreed to.
Remaining clauses agreed to.
Lord Somers Lord Somers moved Amendment No. 3:
After Clause 9, insert the following new schedule—

("SCHEDULE

SPECIES AND VARIETY OF TREES TO WHICH SECTION 1 APPLIES

Species

Variety

English Name

Cedrus … … …

Libani … …

Cedar of Lebanon

Atlantica …

Atlas Cedar

Deodara …

Deodar

Sequoiadendron …

Wellingtonia …

Wellingtonia

Sempervirens …

Redwood

Taxus … … …

Baccata …

Yew

Cupressus … …

All varieties

Cypress

Populus … … …

Tremula …

Aspen

Castanea … …

Sativa … …

Sweet Chestnut

Quercus … … …

All varieties …

Oak

Fagus … … …

All varieties …

Beech

Carpinus … …

Betulus …

Hornbeam

Betula … … …

Pendula …

Silver Birch

Juglans … …

Regia … …

Walnut

Tilia … … …

Europea …

Lime

Prunus … … …

Avium … …

Wild Cherry

Sorbus … … …

Aucuparia…

Rowan

Fraxinus … …

Excelsior …

Ash").

The noble Lord said: This is the schedule which I spoke about before. Its purpose is entirely obvious. Therefore I beg to move.
On Question, amendment agreed to.
House resumed: Bill reported with amendments.

The Middle East: EEC Initiatives
6.37 p.m.
Lord Byers Lord Byers rose to ask Her Majesty's Government whether they are satisfied that the EEC initiatives in the Middle East will add to the progress being made under the Camp David arrangements and not undermine its achievements, strain relationships with the USA, Israel and Egypt, and create serious problems for a new Israeli Government.
The noble Lord said: My Lords, in asking this Unstarred Question I should first offer apologies to the noble Lord, Lord Trefgarne, for causing him an overlong parliamentary day. I am very sorry for that. I think the whole House will be grateful to him for undertaking the task of replying to this Unstarred Question. Secondly, I should like to make it clear that in asking this Unstarred Question I am speaking on my personal responsibility. I do not want anyone to think that my views are those of the Liberal Party, although many Liberals share them with me. Like all parties, we have people with differing viewpoints on controversial matters such as this. On the other hand, I can claim to have had a good deal of firsthand knowledge of the Middle East and the Israel-Arab problem in particular.
I first went to Egypt 41 years ago and I went to Palestine, as it then was, one year later. During part of the 'sixties and early 'seventies I was chairman of the visiting committee of the business school at Tel Aviv University, together with the noble Lord, Lord Sieff. I am chairman of the Anglo-Israel Association, but again I want to make it clear that it is not in any way in that capacity that I am speaking tonight. However, I am president of the Liberal Friends of

739
Israel. I think therefore I have a claim to put forward a particular view on the Arab-Israel dispute. I am reinforced in what I propose to say tonight by discussions which some of us had last week—last Wednesday, in fact—in Luxembourg with Members of the European Parliament.
I have put down this Unstarred Question to Her Majesty's Government to find out where exactly Britain and the EEC stand on the Middle East question on the eve of the departure for Washington of the Prime Minister and the Foreign Secretary, and to express some concern at the effect which the European initiative may have on the prospects of peace in that area. I want to deal with the concern I feel that the EEC initiative will undermine what has been, and is being, achieved under the Camp David arrangements, and secondly, I want to challenge the idea that the terrorist organisation, the PLO, is the right vehicle to use in any solution of the Palestinian problem.
First, Camp David. A great deal has already been achieved, but the concept of Camp David was a longterm one and the relations between Israel and Egypt must be treated with the sensitivity which they deserve. As I understand it, Camp David had two main objectives—first, to complete a peace settlement between Israel and Egypt. A treaty has in fact been signed and a settlement is well on the way to being achieved. The second objective, as I understand it, was to create a structure in which the rights of the Palestinians could be safeguarded. Limited autonomy for the Palestinians was to be attained over five years from the election of a self-governing authority for the West Bank and Gaza, and at the end of the first three years negotiations would begin on modifying and developing that autonomy. In the meantime, as part of these arrangements, Israel has handed over the Sinai, handed over its oilfields, is dismantling its military installations and has pulled back many of its troops. My fear, therefore, is that the European initiative will strive to produce an instant solution which will cut across the Camp David long-term concept and, in the process, will undermine both the achievements and the initial confidence which is being built up daily between Israel and Egypt.
My second and more specific concern about an EEC initiative, and one on which I have not so far been able to elicit assurances, is the conviction that peace in the Middle East will only be achieved by creating an independent Palestinian state on the borders of Israel, and that this must be achieved by associating the PLO with the negotiations, as was referred to in the Venice declaration. There are, I think, two legitimate fears on this aspect. The first is the nature of the PLO itself and its declared public intentions concerning the destruction of Israel.
I hope I am wrong, but I am afraid that the Foreign Secretary, in espousing the PLO as a party to the negotiations, is being affected by what one might call the Lancaster House syndrome. The idea is that if Mugabe and Nkomo can be brought to the conference table, just as Kenyatta was, one should forget that they are terrorists and negotiate with them. But what is overlooked in these cases is that Mr. Mugabe and Mr. Kenyatta were struggling to put an end to foreign colonial rule. They did not seek the destruction of
740
the United Kingdom, but Yasser Arafat seeks the destruction of Israel and its replacement by an independent Palestinian state. In my mind there simply is no parallel between the two cases. Furthermore, I have no time for the sort of naïvety which believes that one should ignore the public declarations by the PLO that Israel must be destroyed, which are well documented, and instead rely on assurances which are offered in private conversations. Neville Chamberlain made that mistake over Mein Kampf and over Munich. Many of us remember the hollow claim of "peace in our time".
The second objection to associating the PLO with the new state is that it will inevitably control and dominate it. The new state, controlled by the PLO, supported as it will be (and there is much evidence on this) by Libya and Russia, can never be anything but hostile to Israel and to its existence as an independent democratic entity.
It is now nearly 40 years since I spent five months at the Haifa staff college, at a time, incidentally, when Rommel's drive through the desert had gathered such momentum that we had seriously to look at the defence of Egypt, the Canal and Palestine itself. Anyone who went through that period before Alamein realises the tremendous task it is to provide secure frontiers for a state in Israel's vulnerable geographical situation, even without the setting up of a blatantly hostile state on its borders. I think it is significant that on Tuesday of last week, when President Sadat was addressing the European Parliament in Luxembourg, he did not refer to the Palestinian state; he referred to a Palestinian entity—something quite different. Associating the PLO with the negotiations would, I believe, be a severely retrograde step. The Camp David agreement is quite clear on how the Palestinian issue should be handled. It says:
"The Israeli military government and its civil administration will be withdrawn as soon as a self-governing authority has been freely elected by the inhabitants of these areas"—
that is the West Bank and Gaza—
"to replace the existing military government".
It was envisaged in the agreement that among the parties to the negotiations to define the powers and responsibilities of the self-governing authority there would be:
"Palestinians from the West Bank and Gaza or other Palestinians as mutually agreed".
There was no specific reference to the PLO, and certainly mutual agreement on their inclusion would not be possible unless the PLO withdraw, in an effective public way, their intention to destroy the state of Israel. The idea that Israel might rely for its security on a United Nations peace-keeping force after the experience of 1956, when the first force was told to clear off by Nasser, is, to my mind, quite ridiculous. We also have the case of UNIFIL in Southern Lebanon, which admits that it cannot or will not dislodge some hundreds of PLO terrorists deployed in its territory.
I believe that the EEC route, with all the goodwill that there is behind it, could end in disaster; at the very least I am sure that it is going to cause considerable confusion. Therefore I welcome this opportunity of being able to express the concerns which many of us have, and I ask the Government to realise that this initiative should be dropped and that our best plan is

741
to work in the closest harmony with the United States Administration to support Camp David and what was agreed there.
6.48 p.m.
Lord Goronwy-Roberts: My Lords, we are all grateful to the noble Lord, Lord Byers, for the constructive and balanced speech with which he has opened this debate. The Middle East is indeed a vast area of instability and a constant threat to its own peace and the peace of the world, and in recent years the factors of instability have increased instead of diminishing. In the Islamic revolution we have a new accession of Muslim consciousness and power, much of it understandable but some of it, as in Iran, capable of unleashing new and disturbing forces. The Soviet invasion and occupation of Afghanistan is related to all this and has given an added dimension of instability in the area.
Then there is the cost and the availability of oil seriously affecting the economy of the western world, of Japan and indeed of the Third World, perhaps more vulnerable than any to the abrupt changes in oil prices. Then there are the antagonisms within the Arab world itself, leading, in the case of Iraq and Iran, to actual war, and that, too, is an increased factor in the difficulties and dangers which beset the region. It is against the background of increasing instability and danger to peace that the Arab-Israeli dispute presents an especial urgency.
The noble Lord was quite right in concentrating the attention of the House on the Arab-Israeli scene, which is more than ever the heart and centre of the instability of the whole area, from which has flowed since 1973, the series of acute oil crises which continue to distort our exchanges and the economy of the western world, The new aggressive oil pricing policy, however, was not solely dictated by considerations of finance and conservation, important as those were in the calculations of OPEC, but also in part by a vehement reaction to the continuing plight of the Palestinian and Arab refugees. They see 1½ million Arabs still without roots or rights, a fertile ground for the extremists and the men of violence and a source of deepening despair for the men who counsel moderation, and they include Arabs and Jews.
Conversely, a just and durable solution of the Arab-Israeli dispute would have a far-reaching and beneficial impact on the whole Middle East scene, helping perhaps to stabilise oil policy, taking some of the politics out of that policy, and turning the Arab mind from the obsession with the West Bank and Gaza to wider regional problems and the undoubted role which a free, secure Israel could play in their solution.
There are two main approaches to the solution of this problem; the Camp David procedures and the Venice Statement of the Heads of Governments and States of the European Community. I think it is essential that the two should be regarded as complementary and not conflicting. They have a common objective, a just and lasting settlement based on the resolutions of the United Nations, notably Resolution 242 and Resolution 338, which still stand the test of commonsense and practicality, and which establish the two-fold basis for a settlement; namely, security for the State of Israel and justice for the Palestinians and the refugees. Neither is possible without the other. We
742
can spend the rest of this century and more contemplating in the Middle East murder, destruction and despair, without a solution of this problem, and creating there the possibility of an even wider conflagration than we fear may be possible in the area at the present time.
Israel can never attain real security so long as 1½ million Arabs cherish a deepening bitterness about their lot. Nor can the Palestinians hope to secure a role and a home, however defined, next door to Israel unless they finally, firmly and publicly renounce the destruction of Israel as their fundamental aim. Many of us feel that now is the time to effect a conjunction of the two approaches. My noble friend has quite rightly pointed to the dangers of inserting the Venice Statement into the procedures of the Camp David talks. But it is possible to effect a conjunction of the two approaches, Camp David and Venice, avoiding the dangers which the Question sets out and which my noble friend's speech so clearly defined.
Camp David, as he said, has very considerable achievements to its credit, the actual return—not a blueprint, but the actual return—of occupied territory to Egypt by the Israelis; they handed over the Peninsular of Sinai together with its oil wells. That was an actual act of renunciation and restoration, something we have talked about since 1949. That has been done. It is a practical example of how the two-fold basis of lasting peace can be achieved. It has happened in part of the disputed territoties already, in Sinai. That is a negotiated restoration of Arab land balanced by the recognition of Israel and its security. That has been done in regard to Sinai.
I believe that what proved successful in Sinai can be applied to the West Bank, and this is why I support my noble friend in calling on the Government to be very careful indeed that the techniques which succeeded in Sinai shall not be jeopardised or impaired by the intrusion in an untimely way of other proposals and other techniques, however well-meant and however well endorsed. Nothing could be more highly endorsed than a summit meeting in Venice putting forward a declaration on any subject. I repeat I do not myself see that the Camp David procedures and the Venice objectives are incompatible. But there is a question of timing, as to how far the Camp David procedures and agenda, which includes the points made by my noble friend, should proceed before the Venice techniques are added. This is a point of reservation which my party generally feels. We wish to see the achievements of Camp David built on, and at the appropriate times the perceptions of Venice added to that process. It is a question of timing, Indeed, I understand that the Israeli Labour Party, which is likely to form the next Government of Israel, shares this view.
The Venice Statement does have this advantage—and I am quite sure my noble friend would defer to this: it pays particular attention to the all-important matter of guarantees once a settlement is reached. No one is going to a conference table without the question of guarantees that will stick being ever-present in his mind before he begins to talk about terms. He is going to look to the end before he starts talking about the means.
I believe we are in a position now to move forward decisively towards a solution of the problem of the

743
West Bank and of Gaza. I, too, am familiar with the area and dealt with these matters for years in the Foreign Office. I know that the problems in those parts of the disputed territories are ten times more complex and difficult than they were in Sinai. Nevertheless, the principle is the same and the techniques of solution could be the same, and the sooner we move the better.
I started by reminding the House and myself of the added dimensions of instability in the Middle East in the last few years. Fifteen years ago, 20 years ago, the Arab Israeli dispute stood pretty much on its own. Look what has been added to it, feeding its rancours and in turn deriving a new strength of hatred and antagonism from the continuation of that dispute. So the sooner we move the better. Now the Iran-Iraq war; yesterday Afghanistan; tomorrow, what new disturbance which will further emphasise the urgency of a solution to what I call the heart and centre of this problem?
But whatever form the negotiations take—and I am sure that the Government will have listened with very great care to my noble friend Lord Byers who spoke about the danger of confusing, of muddying, the waters by mixing the two prematurely—there are, I think, a number of preconditions which all who aspire to a place at the table must accept beforehand. There are conferences which are best started without preconditions, but there are conferences—and this is one such situation—where there are bound to be preconditions before we get any kind of meaningful conference.
The first precondition is, of course, that while all who have a genuine interest in the solution should be represented, no individual or organisation can possibly qualify unless it unreservedly, publicly and irreversibly renounces the destruction of the State of Israel as a political aim. The Palestinians should have a voice, but only on that condition. Secondly, all parties must accept that a settlement will mean a readjustment of boundaries. That is a very difficult thing to do, as my noble friend reminded us, in conditions of this sort and in territory of this kind. There must be a readiness to compromise territorially before anybody enters the conference room. At the very least, what the Arabs see as an Israeli encroachment on Arab land should stop, and recent advances—which as a friend of Israel I must say have done very great damage to the Israeli case—should be abandoned. There is a growing feeling in this country, and I believe a growing feeling in Israel too, that these settlements have been pushed too far and too hard and have overcast the Israeli case for security with something else which the more unscrupulous and violent of their critics are not slow to use.
Thirdly, the parties must accept a demilitarised zone. Here I speak entirely for myself, although, like my noble friend, no doubt some people may agree with me. The parties must accept a demilitarised zone because that is the nature of the terrain. They must accept a demilitarised zone internationally policed and guaranteed. I believe that the United Nations is capable of a thorough and adequate action of surveillance and of defence. Its record in various parts of the world is not simply confined to the examples that my noble
744
friend gave. It has been most successful in other parts of the world. But, having created a demilitarised zone between the new Palestinian entity and to the West of the Israeli State, then surely the Israelis should, in addition, have the line on the West of the demilitarised zone placed in such a way that it adds effectively to their possibilities of defence. I believe that the Israelis would respond to a suggestion somewhat on those lines; namely, that there is the buffer of demilitarisation, but, on the West, the actuality of Israeli capacity to defend itself.
In conclusion, I hope that this debate will stimulate the Government to promote a fresh initiative but not in challenge of any sort to the Camp David talks, but in support of them, using the perceptions of the Venice Statement to strengthen what is already proved to be effective in the Camp David procedures. We must grasp the virtues of both approaches to the solution of this problem if we are to conquer the necessity of the immediate future and so, hopefully, move into a stage when the constant instability in the area fed by hatred, murder and destruction, can be converted into stability and co-operation in which both Arab and Jew—who belong to the same family, ultimately—co-operate together to develop the Middle East, as they well can if they co-operate, and restore to it stability and peace, and thereby ensure the peace of the world as well.
7.7 p.m.
Lord Sieff of Brimpton: My Lords, I am indebted to the noble Lord, Lord Byers, for the Question he has raised with Her Majesty's Government. I have listened with careful attention to the noble Lord, Lord Goronwy-Roberts. In the conclusions of the EEC's council meeting at Venice last June the statement referring to the Middle East includes the following:
"All of the countries in the area are entitled to live in peace within secure, recognised and guaranteed borders … A just solution must finally be found to the Palestinian problem, which is not simply one of refugees".
The communiqué continued:
"The achievement of these objectives requires the involvement and support of all the parties concerned in the peace settlement which the Nine are endeavouring to promote. These principles apply to all the parties concerned, and thus the Palestinian people, and to the PLO which will have to be associated with the negotiations".
That is what the Venice Statement said. I appreciate that the Secretary of State for Foreign Affairs the noble Lord, Lord Carrington, whenever he refers to the need for a settlement of hostilities in the Middle East says that a pre-condition is that all countries, including Israel, are entitled to live in peace within secure, recognised and guaranteed borders. He is, of course, right. This is what he said in your Lordships' House on 1st December 1976, at column 299:
"Those of us who know that part of the world or who have been there will realise how militarily indefensible would be the position of Israel if the West Bank were returned to the Palestinians … no settlement of this problem is possible if the Israelis believe that the terms that they are asked to accept are worse than the alternative of sitting it out or fighting it out".
I should like to ask the noble Lord, Lord Trefgarne, what Her Majesty's Government understand now by "secure boundaries" and whether they fully appreciate the nature of PLO terrorism today.
I hope that your Lordships will forgive me for refer

745
ring to some family experiences. My mother lived in Israel six months of each year. In the late 1950s terrorists came in from the West Bank to murder her, mistook the gardener's house for her house, blew it up, murdered the gardener, and were back across the border within 15 minutes. Telmond, where the house was located, is eight miles from the sea and one mile from the West Bank. This incident took place when Israel existed within the pre-1967 boundaries before the Six Day War. What is security for the State of Israel where at a vital point in one of her most populous areas the country is nine miles wide?
In 1973 the Popular Front for the Liberation of Palestine, an arm of the PLO, was nearly successful in murdering Edward Sieff in his home in London because he was Zionist and helped Israel with her social problems. He was grievously wounded but survived because the gun jammed after the first bullet had been fired into his head.
One can, of course, say that these incidents occurred one over 20 years ago and the other seven years ago, and that the PLO is more moderate today; that we should not take seriously what its leaders say publicly, but what we are told they say in private—namely, that they desire a peaceful settlement. Let us briefly examine that. In March 1977 the Thirteenth Palestine National Committee, which formed the PLO, reaffirmed that:
"The liberation of Palestine, from an Arab viewpoint, is a national duty, and it attempts to repel the Zionist and Imperialist aggression against the Arab homeland, and aims at the elimination of Zionism in Palestine".
So less than four years ago the PLO again called for the destruction of the State of Israel, but we are to forget that.
But what has happened since? There has been a continuing stream of assassinations of Arabs and Palestinians, never mind Jews or Israelis, for which the PLO claim credit. Mr. Kadi, the district education officer of Nablus, and Mr. Janhu, perhaps the most prominent businessman of Romallah, were both murdered by the PLO in 1978. In 1979 the Imam of Gaza, Sheikh Khuzendar, after a visit to Cairo to congratulate President Sadat on his peace initiative, was murdered on his return by the PLO. In the last three months 12 Arabs in the Gaza strip have been murdered by the PLO, the most prominent being Mr. Wardah, deputy head of the municipal council of the town of Jabaliah, who supported the Egyptian-Israeli peace treaty. The PLO claimed credit for those murders. A PLO spokesman in Beirut threatened a similar fate for other West Bank Arabs who collaborate in any way with the Israelis.
I suggest to your Lordships that the reason many Palestinians on the West Bank agree that the PLO should represent them is not due to any democratic or voluntary form of election, but is due more to fear of assassination if they do not support the PLO. I do not agree with all the policies and activities of the present Israeli Government, but I ask Her Majesty's Government whether, if they were in the Israeli Government's shoes, they would be prepared to negotiate with a group which publicly declares to this day that its objective is the destruction of the State of Israel, its continued method of operation the murder of any
746
prominent Arab who works with the Israeli authorities or who supports the Egyptian-Israeli peace treaty.
Like the noble Lord, Lord Byers, I believe that it is essential that whatever action Her Majesty's Government propose or take, or we support as a member of the EEC, we ensure that this does not in any way undermine the progress already made under the Egyptian-Israeli peace treaty. And progress is being made, as I learned when I recently visited Egypt and had discussions with President Sadat and his Ministers, and even more recently this morning when I had discussions with the Deputy Prime Minister of Egypt.
We should build on what has been achieved. It is impossible for any Israeli Government to negotiate or to enter into negotiations with the PLO until that organisation and the Palestine National Committee publicly renounce their policy of eliminating Israel and murdering any Palestinian or Arab who cooperates with the Israelis. Only in this way will we in the end achieve peace between Israel and her immediate neighbours, and see a fair and satisfactory solution for the Palestinians.
7.15 p.m.
Lord Segal: My Lords, I, too, should like to thank the noble Lord, Lord Byers, for initiating this debate. It is the latest but by no means the least of the many valuable contributions that he has already made towards the cause of peace in the Middle East. It was a bold stroke on the part of the noble Lord the Foreign Secretary to persuade President Sadat to attend the meeting of the European Parliament at Luxembourg, and one that paid off handsomely. It added still further to President Sadat's stature as a world statesman and endorsed the European initiative on the Middle East taken at Venice last June.
But, according to The Times report of his address at Luxembourg, there were two notable omissions in the President of Egypt's speech, which nevertheless earned him a standing ovation from all the assembled delegates. One was the omission of all reference to the PLO. There can be little doubt that his attitude to the PLO is at least somewhat lukewarm, as he confirmed by his later remarks in Paris. This fact is indeed hardly surprising. Ever since Camp David the PLO, as has already been said, has been responsible for waging a campaign of murder and terrorism in the occupied territories of Gaza and the West Bank against those Arabs who showed the slightest signs of approving President Sadat's policy of moderation and acceptance of peace with Israel.
The PLO, moreover, is not short of funds. It has been liberally subsidised from the Gulf and it is determined to crush out of existence all opposition to the creation of a Palestinian state. That is why the Arabs of Palestine have been compelled to accept, willy nilly, the PLO as their sole representative; and this, despite the wishes of the vast majority of the Arab moderates in Palestine who, in their heart of hearts, long for peace with Israel and who know that another war can only bring them disaster.
How much wiser would the Declaration of Venice have been if, like President Sadat at Luxembourg, it has omitted all reference to the PLO. Yet we brought the PLO quite unnecessarily into the Venice Declaration, to the surprise and consternation of both President

747
Sadat and our American allies. This was surely somewhat gratuitous, unless it had been demanded of Venice by the Arab powers of the Gulf. For not once, but again and again, Britain has committed herself to guarantee, not only absolute recognition, but also safe and secure boundaries for the state of Israel. Why do we fail so abysmally to convince the Arab states that we mean what we say, and persuade them to accept with good grace the stark reality of Israel's existence, instead of continuing their futile vendetta? Surely President Sadat's formula, so powerfully declared at Luxembourg, to proclaim a mutual and simultaneous recognition between Israelis and Palestinians, is the only logical solution. All the efforts of the EEC should now be concentrated in convincing the moderate Arab states to accept this formula, and emphasise that the continued use of oil as a political weapon will not make us budge from our position.
In passing, may I add a word about the position of Jerusalem. Peace in Jerusalem can never be achieved, whatever well-intentioned theorists may say, by stationing there an international force of hired, timeserving mercenaries. Peace in the Holy City can only be achieved by a force of those who love the city and who are prepared to dedicate their lives to the cause of peace within her walls: not a force of arms, not even arms of self-defence, but a force of men and women of goodwill from all over the globe who are refugees from religious persecution. That is the best way of ensuring peace in the Holy City.
An international force, on the other hand, sponsored by the United Nations as we know it today is foredoomed to failure, as it has already failed to bring peace to the Lebanon. A similar failure in Jerusalem would be a tragedy for the whole civilised world, infinitely worse than the present uneasy peace that now hangs over the city. Yet even amid this uneasy peace there are signs of hope, thanks to the wise, conciliatory approach of the Mayor of Jerusalem, Mr. Teddy Kolleck, and the spirit of justice that pervades the Israeli courts. At least all religious and all denominations now have access to their holy sites, a state of affairs which did not exist during the period of Jordanian occupation.
So I ask the Government now, if the price of oil is raised further and further above its present height, will they ultimately yield to Arab pressure and agree to the annihilation of Israel? If so, they had better declare their intention here and now. That would resolve a lot of doubts in the minds of the Arab rulers in the Gulf, and might possibly achieve some stability in the price of oil which is now impoverishing the whole world.
Why can we not declare openly to the Arab states that however much they raise the price of oil it would still be cheaper for us to pay that price than to be involved in another Middle East war, with all the horrors that it would create for the whole of humanity? A war between Iran and Iraq is bad enough. At least it can be localised. But a war again in the Holy Land is unthinkable. We should all share in the blame if the EEC and Russia and the United States became involved. Here President Sadat has shown the way. He already has some notable achievements to his credit. The first was his complete break with
748
Soviet Russia. If other Middle East states had followed his lead the whole world would know today where the Arabs stand, and the journeys to and from the Kremlin would cease. The minds of the EEC and the United States would be set at rest. But any Arab stand against Russia seems as far off today as ever, despite the bitter lesson of Afghanistan.
The second great achievement of President Sadat is that without openly adopting the Christian ethic of "love thy neighbour" he has demonstrated to the whole world that he believes sincerely in Israel's desire for peace, and by his dramatic act in visiting Jerusalem in November 1977 dispelled at once the atmosphere of suspicion and mistrust that hung over these two neighbouring states. Let us be in no doubt whatever that these two states hold the key to eventual peace in the Middle East. Without them neither oil nor wealth can hope to prevail.
The pity is that the one great leader who understands the true needs of the Arabs still remains an isolated figure. If only one of the moderate Arab states, say Jordan, or Lebanon, or Saudi Arabia were to rally to his side a great step forward towards peace will have been achieved; but, thanks to the activities of the PLO, an atmosphere of terror still hangs over Lebanon, Syria and Jordan, though mercifully it has now been cleared from Egypt. Here we in Britain, in concert with the EEC and our American allies, should reaffirm our attitude again and again to leave the Arabs in no uncertainty as to where we stand.
But let us have no doubts whatever; the liquidation of the state of Israel will never bring peace to the Middle East. On the contrary, it will only exacerbate the warring elements in that region. There would still remain the war between Iran and Iraq; the emnity between Syria and Jordan; the wiles of Colonel Gaddafi, and the horrors in the Horn of Africa. In the end still remains the PLO with its rival factions and all its discordant voices. In the end still remains Russia, waiting in the wings ready to stir up the muddy waters in Afghanistan and its restless surrounding regions. At least with Egypt and Israel we can no longer have any doubts about their attitude towards Russia. We know they will always stand solidly behind the West.
The other notable feature of President Sadat's Luxembourg speech was that according to The Times report he omitted all reference to a Palestinian state, but spoke repeatedly, as we have already heard, of a Palestinian entity. In this he was fully in accord with the agreement reached at Camp David: Absolute autonomy; autonomy to the freeest and fullest extent. But to campaign for the creation of yet another, 22nd, Arab state on top of all the existing ones would be as illogical as campaigning for an independent Italian state in Switzerland—and who would campaign for that?
Surely the cause of peace is deserving of some sacrifice. The great tragedy of the post-war world is that it has become polarised into the peace-loving states and the states that still believe in war as an instrument of national policy. After Afghanistan we can no longer harbour any illusions as to where Russia stands, and until the last Russian soldier is withdrawn from Afghanistan no one can hope to believe in Russia as a peace-loving state. But in the

749
Middle East we have no doubt about Israel as a peace-loving state since peace is essential to her continued progress.
President Sadat's third and perhaps greatest achievement is to have allied Egypt with the ranks of the world's peace-loving states. No one seems to have fully recognised the sacrifices that Egypt has already made for the Palestinian cause, sacrifices far greater than those of any other Arab nation, certainly far greater than those of Saudi Arabia and all the Gulf states put together; at least 80,000 of her sons killed and wounded in five Middle East wars and countless families bereaved of their breadwinners.
Now at last peace reigns over Israel's western frontiers. The great Islamic state of Egypt, with its 40 million inhabitants, with the largest and most powerful of all the Arab armies, has determined to live in peace with its eastern neighbour; and with Israel's western border now neutralised, to the inestimable benefit of both nations, no Arab state or combination of Arab states can hope to defeat Israel by war. Their only remaining hope is by a diplomatic victory with oil as their weapon.
Let Britain once again, through the EEC, declare to the world that, however high the price of oil, we stand committed to the survival of Israel and that, however astronomical the price of oil becomes, it will always be lower than the price of human lives and human suffering that another war would entail. The Middle East, alas! has been the graveyard of many reputations in the past. Our hope now is that this short debate may herald the ultimate closure of this graveyard and give a new lease of life and added strength to those who are striving for peace.
7.32 p.m.
Lord McNair: My Lords, in asking his Question, my noble friend and Leader, Lord Byers, said he spoke on his own personal responsibility. So do I, because on a matter of this importance I do not know any other way to speak. I have listened with interest and admiration to all that has been said so far and I agreed with nearly everything the noble Lord, Lord Goronwy-Roberts, said, as has often hitherto been the case. In listening to the other speeches I have at times had the strong feeling that I was listening to a very able exposition of one side of this essentially two-sided question.
I am as totally and immovably committed to the continued existence in peace and prosperity of Israel as any other noble Lord in this House. But having been obliged fortuitously to study the Arab-Israeli complex in some detail this past year, I have been driven to the conviction that it is not a black and white affair, that it is not a matter of right and wrong. What we have is one of those tragic cases of two good causes in conflict. It often saddens me that so many men and women of goodwill in the Liberal Party, in other parties and in no party, and indeed in other countries, are so blinded by their fervent attachment to one side or the other, whichever it be, that they are unable to see the strength and justice of the other side's case.
I find this not only sad but strange because both emotions—admiration for the Israelis and sympathy for the Palestinians—spring from the same source, which is a recognition of the need in every man and woman for somewhere to call home, somewhere where you can live if you want to, go home to if you are away, somewhere where you incontestibly belong. Israel
750
has magnificently provided a home for the survivors of the ghastly events of the 'thirties and 'forties, and for thousands of others of her scattered sons and daughters. The Palestinians have lost their home and they yearn and ache to retrieve it. Does it not require almost some defect of the imagination for an outsider not to be able to accommodate both those emotions? That is my first assertion, that it is a two-sided question and that supporters of either side, if they want peace—and who does not?—must recognise that the other side also has a good case.
My second assertion is simply that the status quo is not an option. It is not tolerable that babies should be born in the camps in which their grandparents took refuge a third of a century ago. It is not tolerable, but it is happening every day. It was an Arab mayor who said to me, "We are paying for our past mistakes, and our first big mistake was in not taking what was offered in 1947". That was a terrible mistake. It was one of those historic mistakes which the leaders of all peoples make from time to time; the leaders make the mistakes and posterity pays the price, and that would almost serve as a pessimistic definition of history. But in this enlightened twentieth century it is surely our aim not to punish people for the mistakes made by their ancestors' leaders but, on the contrary, to relieve them wherever possible of the hardship to which those errors have led.
Just as it would be inhuman to opt for the status quo, it would also be politically impractical and foolish The lid simply will not stay on the kettle much longer. Hence, both the Camp David and EEC initiatives. Both surely sprang from the realisation that something had to be done and that things could not be left as they were. One of the standard clichés in the Middle East is, "No war without Egypt. No peace without the Palestinians". And it is of course the shining achievement of Camp David that at least it seems to have taken care of the first half of that saying, "No war without Egypt".
But what of the second half? I suspect—this is where some noble Lords will disagree with me—that we should perhaps amend the second half to read, "No peace without the Palestinians, including the PLO". I do not particularly like it, but I believe it is a true statement of the facts. Like it or not, I believe the PLO now has an effective power of veto at any rate on any settlement. It was of course the recognition of this fact in the Venice Declaration which displeased the Government of Israel and dismayed many of the friends of Israel in many countries. I believe a lot of that displeasure and dismay amounted to over-reaction, though I find it very easy to understand.
There are all too many people in Western Europe who seem determined on every possible occasion to unroll the red carpet in front of Mr. Arafat, without even asking him to leave his gun in the ante-room, and shower concessions on him without asking anything in return. That is the very antithesis of negotiation and the height of folly, and I suspect that it may have been an unfounded fear that the EEC Foreign Ministers were jumping on that bandwagon which gave rise to the displeasure and dismay to which I have referred.
In support of my contention that those fears were unfounded and did constitute over-reaction I should like to read to your Lordships two quotations. The

751
first is from a speech made by our own Foreign Secretary at a dinner given by the Arab community in London on 21st January. Just before the part of the speech that I propose to quote he had made a number of statements which must have been extremely acceptable to his Arab hosts. The Foreign Secretary ended that part of his speech by saying:
"I have made myself rather unpopular in some places by spelling all this out".
He then went on:
"At the risk of making myself unpopular here as well, I must spell out some facts on the other side.
"Israel too exists, not merely on the map but as a member of the family of nations. Her future must be secure. A peaceful solution to the Middle East problem must mean that Israelis and Arabs—Palestinians—find a way of living in peace side by side.
"I think many, or perhaps most of you, accept this in your hearts. I want to emphasise the importance of facing the facts.
"Talk of expelling Israel from the UN, or 'liquidating the Zionist entity' does no service to the Arab cause. The only result of saying them is to convince the Israelis that there is no point in trying to negotiate with the Arabs.
"And negotiations and a just peace settlement without the Israelis are impossible. Each side must accept the rights of the other.
"It is precisely in this area of reconciling the rights and interests of the two sides that the European Community believe they can play an important role".
Remember, my Lords, that that was said to a gathering of no doubt very distinguished Arabs here in London.
I should like to follow it with a much shorter quotation from what Mr. Sadat said to the European Parliament on the 10th of this month. He said:
"We should like you to participate with us in persuading Palestinians and Israelis to accept mutual and simultaneous recognition. That should be the start of any initiative."
I should like to repeat the four key words from that quotation: "mutual and simultaneous recognition".
I have been involved in many discussions and arguments about the PLO and I have often thought that the question of whether X ought or ought not to meet Mr. Arafat is really less important than the question of what X ought to say to Mr. Arafat if, and when, he does meet him. If some spokesman for the EEC—Mr. Van Der Klaauw—or anyone else could really get it through to Mr. Arafat that he will never find himself seated at a conference table with any conceivable Israeli Government until he has sincerely, openly, and irrevocably repudiated the obnoxious clauses of his charter, would we not all feel that that journey had been well worth making?
It is time that I gave my answer to the question posed by my noble friend. It seems to me that the EEC initiative is neither good nor bad in itself. It all depends on how it is conducted. If it were designed to upstage or scupper, or, as my noble friend more elegantly puts it, to undermine the achievements of the Camp David arrangements, then it would be a disaster. But remember, my Lords, the passage that I read from the Foreign Secretary's speech. If it is conducted in that spirit, as I believe it will be, if we work with, and not against, the USA, if it is to complement rather than to frustrate Camp David, then I do not see that it will do any harm, and it just might do a great deal of good. It is a long shot because the problem is terribly difficult, but for the sake of our friends in Israel and in the Arab countries, and for the sake of world peace we must not give up hope.
7.44 p.m.
Lord Janner: My Lords, I have listened with very careful attention to the speeches which have been made, and I should like to compliment the noble Lord on having introduced this subject for discussion. I think that it is tremendously important from the point of view of peace, not only for us, but for the very many countries involved. I am very anxious that the matter should be considered in its proper perspective. We are talking about a very small state. If one looks at the map one sees how easy it is for an attack to be made upon Israel in so many different orders. Already the Arab states have a vast number of entities which can, and should, be described as Arab states or as Arab existencies.
Egypt contains half of the world's population of Arabs, and Egypt has taken a step which we would do well not only to follow, but to encourage with all our skill and ability, particularly in conjunction with the United States of America, which has done something which perhaps is incredible in our time. The Camp David arrangement was outstanding in the diplomatic field. Certainly Egypt itself cannot complain about the result of the Camp David negotiations.
I am not going to cover much ground that has already been covered. Your Lordships will understand that naturally I agree with the noble Lord. It would only be repetition if I pursued matters that have already been raised, particularly with regard to the question of security and the question of an undertaking. And let me deal with that. I refer to an undertaking to be given by all the parties concerned that the attack on Israel as a state should stop. Where on earth will the whole situation end up unless—and until—in the course of negotiations that principle is observed? How can one possibly expect any state at all to enter into negotiations with another entity or with another state or set of states unless—and until—that state is assured of the security situation from its point of view and is assured that its existence shall be recognised?
I have listened carefully to the speeches that have been made and with due respect to the noble Lord who has just spoken, I would say that it is not a question of negotiating with people who are expected to recognise a state. The United Nations is supposed to be a body consisting of national existencies, but that is not the question. There has been the Camp David agreement, which has avoided the attempts by violence. After all, it was a diplomatic achievement of a tremendous nature, and I think that—
Lord Trefgarne: My Lords, if the noble Lord could face this way we would be able to hear him a little better. His voice is not reaching the microphone.
Lord Janner: My Lords, I am terribly sorry, but I have had some difficulty. I have just had an operation, as the House knows, and am just recovering from it. Let me go back to the point that I was endeavouring to make. A meeting is to be held in the United States. My view, and the view of many thousands of people throughout the world, is that that meeting is one which should be based upon the continuation of the Camp David agreement; that every effort should be made to see to it that that is pursued with vigour; and that the undertakings which had to be

753
given before any other entity was brought into the talks should be found by the meeting which is to be held to be of a nature which cannot be broken. It is all very well; we carry on stating that we accept the situation provided an undertaking is given that Israel will be recognised. But how on earth can anyone expect people to go into consultation with those who have not yet accepted that particular point of view and that promise which the other people participating in the negotiations have put forward?
I do not intend to repeat the very strong arguments that have already been used in the course of this debate with regard to the situation, but I want your Lordships, in dealing with the question of the meeting that is to be held in the United States, to realise that the security of a state like Israel, a small state, should not be regarded as being just a detail, but should be right at the heart of any negotiations that take place; and that the action taken at the Camp David negotiations shall continue and shall be fortified by all the action that can possibly be taken by the parties when they meet.
7.55 p.m.
Baroness Elliot of Harwood: My Lords, we are much indebted to the noble Lord, Lord Byers, for putting down this Question, which is of passionate interest to all of us. It is now quite a while since we had a debate in your Lordships' House on this subject, and I think the situation has changed dramatically since that time. To begin with, there are quarrels and wars between Arab countries—between, as we know, Iran and Iraq—and they have nothing to do with Israel; Israel is not involved with them. The Arab states are conducting, most unwisely, wars against each other, and Israel is outside it. The production of oil is suffering, which also affects the whole world.
I think these are the problems that the United Nations should deal with, and that the questions of Israel and Mr. Sadat should be left to be dealt with, as they have been dealt with very happily and successfully, I think, under the Camp David agreement. Israel has signed a peace treaty with Egypt; there have been many sacrifices on the part of Israel to carry out what was agreed at Camp David; and she is prepared to continue on this course. The European invitation comes at a time when the Arab wars are causing a crisis in oil and when Israel is living in comparative peace. The mix-up of the oil crisis with the Camp David policy for peace is doing things in the wrong way and at the wrong time. To call on Israel to recognise the PLO as having territorial rights, and the PLO refusing to recognise the state of Israel, is no basis for negotiation.
The noble Lord, Lord Sieff, has told us of things that happened (some years ago, it is true, but not very long ago) which are of a terrifying kind, and it is impossible to ask a nation like Israel, a member of the United Nations and a recognised state, as are all the other United Nations states, to enter into negotiations with a group of avowed and declared enemies, with no status at all—simply known as the PLO—in order to discuss proposals with which they totally disagree and which in my opinion would probably lead to active war, since many other nations of the United Nations would be involved. Such prospects are alarming
754
beyond all imagination, and must not be allowed to take place.
The whole world knows that in recent years UN countries have been selling arms to Arab countries. So far these arms have been used in Arab state wars. That is bad enough, but if inter-state quarrels should turn into war against Israel then the whole world would be involved, and God forbid that that should ever happen! I believe that there is only one hope, and that is to keep the conditions in the Middle East as low-key as possible, and to support the initiative of Camp David, and Mr. Sadat and the Israeli Government. Should there be a change in Israel after the next election, I feel sure the new Government will be as anxious to keep the peace and the negotiations going on under the Camp David agreement as any other Government, and, my Lords, these can be carried on better outside the EEC countries and directly between the two countries. That is my strong view, and I feel that that is the way to deal with it.
7.59 p.m.
Lord Weidenfeld: My Lords, for the past three years the Middle East has been subjected to a chain reaction of turbulence. The power vacuum left by the Shah's demise has brought forth reverberations and reopened latent feuds from the Western Sahara to the Eritrean Desert, from Kurdistan to the Gulf, and from the Lebanon to the Sudan. Old power struggles, temporal and religious, have flared up, with probably graver feuds and threats to come. Amid this darkness the solitary shaft of light is the settlement between Israel and Egypt. Imperfect, open-ended, equivocal, it may well be, but it has already been an enormous achievement—constructive and positive. It has been achieved through American mediation and through the courage of the leaders of Egypt and Israel, with only faint applause and very little help from Europe. For underneath its lip-service and diplomatic nicety, Europe's attitude has been ambiguous from the start, and America has been, to be absolutely frank, puzzled by Europe's reaction, crystallized in the Venice Declaration, and apprehensive about its motives, its thrust and its possible consequences.
What are these motives? In the eyes of many observers in Washington and elsewhere, it is perhaps Europe's search for a role in the world, a search which is as old as the European Community, which is born of a desire to play a part which would lift its image above the mundane trading rivalries and financial squabbles of everyday life. Europe has, of course, a vital interest in the Middle East and has a vital role to play. But for reasons which are complex to explain though simple to demonstrate, Europe has allowed herself, through faint-heartedness and discord, to be held to ransom, to turn client rather than partner of that part of the third world which lubricates its industries and daily life with oil. Hence, there are many elements in Europe's initiative which reflect more a desire to appease than to pacify.
A distinguished American, who speaks for quite an influential section of Republican opinion, went so far as to accuse many Europeans of what psychologists nowadays call the Stockholm syndrome, which is the tendency of a kidnapped victim to identify with his abductors and, in consequence, it is argued that such

755
a state of mind is not ideally suited for the task of mediation. Bluntly, many people see in the Venice Declaration an attempt at ingratiation with one side—the Arab States—and a concerted effort to lean on America, to lean in her turn on Israel, in order to extract maximal concessions which I understand, the European "position papers" spell out with great precision and clarity, in exchange for minimal assurances and compensations which are expressed in a nebulous and open-ended way. Enough has leaked from the consultations of the Nine or Ten to know that these precise and concrete plans or options drafted and circulated, allow for substantive suggestions of procedure, time-tables, negotiating goals, peace aims, deviating from the Camp David Accord.
Of course, it is perfectly true that in the Washington of Jimmy Carter there were some voices—in the State Department or the White House—which whispered more or less discreetly to the Europeans that some sort of initiative to help to speed the momentum, to curb the recalcitrance of the negotiators, might not be unwelcome, but those voices did not come from the highest level and they are certainly not likely to come from the new incumbent in the White House and his team. The European initiative, lacks even-handedness and a sense of symmetry—political, military and psychological symmetry; for it contains elements that spell danger to the peace process. These, I submit in all diffidence, might be summarised as follows:
First, anyone who pronounces Camp David as either stagnant or doomed to failure unless it is significantly changing its whole procedures, time frames, negotiating partners and new final objectives, throws dangerous doubt into the minds of many Arabs, Governments and individuals, who might have stood for moderate policies. That doubt is immediately contagious and tends to make the moderate immoderate, and the immoderate intractable. Furthermore, Europe's plea for a decisive role for the PLO legitimises a terrorist organisation which, already condemned by the Carter régime, is anathema to the Reagan administration.
Europe's espousal of the PLO is particularly offensive, because there is nothing which leads one to assume that the European leaders have even begun to dent that organisation's fundamental rejection of Israel and its covenant of total intransigence. The opposite is the case. The latest full reunion of the PLO Executive in Damascus last year reiterated the call for the "extinction of the Zionist entity". Arafat's most recent interview in The Times, while confirming that the PLO would accept any part of Palestine vacated by Israel as a spring-board, reaffirmed that the PLO's ultimate aim remains the secular and democratic state of Palestine, where Jews, Christians and Moslems may live in peace together—which is the well-known euphemistic shorthand symbol for the obliteration of the State of Israel.
Of course, among some of the whispers in the wings, you can also hear some more sophisticated arguments in favour of PLO association. European statesmen, involved in the initiative, are wont to tell their friends that if Arafat were to have his flag, his uniforms and his foreign embassies, with Saudi backing, he would soon make short shrift of his own extremists. Moreover, so runs the argument, the Israelis would greatly
756
benefit. For of each billion dollars of Saudi or Kuwaiti aid, a few hundred millions would be sure to find their way into Israeli coffers, since the two neighbouring economies would be bound to be inextricably linked. But, my Lords, what if the scenario is reversed, and, as is more likely, the radicals gain the upper hand, funded, fuelled and armed by kindred spirits or a mischievous super-power? Who takes the risk? Not the European Community, nor even the Arab League, but the people on the ground, and especially the Israelis.
Among supporters of PLO involvement, especially in Britain, it is now fashionable, as the noble Lord, Lord Byers, so aptly indicated, to compare the PLO and Arafat to Kenyatta and his Mau Mau, or Mugabe and the various freedom movements in the Third World. Apart from the absurdity of the analogy, which was pointed out by the noble Lord, Lord Byers, does the world realise that today at Israel's borders the front-line and second-line Arab states—excluding Egypt—now possess nearly 10,000 tanks, a larger concentration of armour than was massed at any time during World War II and probably larger than the whole armoured arsenal of NATO? We in Britain, for instance, pride ourselves of a tank force numbering hundreds, not thousands; but on Israel's borders the rejectionist Arabs have all the aircraft, rocketry and sophisticated arms that money can buy: to be precise, all that 50 billion dollars could buy between 1974 and the end of 1980.
Europe's implicit endorsement of an independent state on the West Bank and Gaza, wedged between Israel and Jordan, is known to be wholly unacceptable to all shades of Israeli opinion, for it is incompatible with her security. Such a state is economically not viable, it cannot absorb more than a fraction of the Palestinian disapora, it leaves unresolved, for instance, the bulk of the refugee problem in Lebanon and creates a security problem for itself, as well as for Israel, which is desperately serious. In this context, the noble Lord, Lord McNair, drew a very moving picture of the plight of the wretched people of the three generations of refugees in huts, camps and tents—a great dishonour to humanity. But may I point out to the noble Lord, Lord McNair, and to your Lordships that each successive Government of Israel from David Ben-Gurion to Menachem Begin has begged, urged and implored the Arabs on the grounds of the West Bank, the Arab States, the Arab League, to sit down at the conference table without precondition in humility to negotiate every single aspect of this wretched problem, and the reaction, the answer, has been invariably and monotonously negative?
We are talking of the security problem. How do you create security for an independent Arab state? On the one hand, as some have suggested, to demilitarise an entire state is incompatible with its self-respect. On the other hand, to look for a system of demilitarised zones both on the West Bank and across the border in Israel, as some Europeans suggest, would create a totally false sense of symmetry. You see, my Lords, an Arab Palestinian state, however small, will in an emergency always have as its hinterland the huge resources and the vast expanses of its Arab neighbours, whereas Israel stands with her back to the sea. Israel's security in any peace plan must be set against that of its

757
neighbours—in the plural—not its neighbour. Hence many Israeli leaders, and notably the leaders of the Opposition, Shimon Peres and Abba Eban, prefer the involvement of Jordan because a possible Arab commonwealth linking most of the West Bank with Jordan is paradoxically less of a security risk than a small West Bank state. For it is clear that such a larger commonwealth would be able to absorb people and investment and allow the kind of flexible security arrangements and territorial adjustments which could lead to the ultimate pacification of the region.
We are told that there is not such a thing as a such Jordanian "option". Perhaps there is not as yet a Jordanian option in the dictionary meaning of the word; namely, that an option is a choice freely available to the parties. But as a concept it still holds out by far the best prospect for a peaceful solution. Just as Israel's withdrawal from Arab territory is as yet no "option", but a goal achievable only through far-reaching penetrating negotiations without pre-conditions and in good faith.
Now what about Egypt? From the outset she has not been enthusiastic about the Venice Declaration. For, prima facie, it undermines President Sadat's unique role as peace-maker who has recovered lost ground through negotiation, recognition and normalisation. Of course, he is a consummately skilled statesman and if he could turn the sympathies of Europe to good account for Egypt's sake, he would be foolish not to do so. But he has in all his pronouncements, in Luxembourg and Paris, adhered most loyally to the letter and spirit of Camp David, played down the PLO, avoided prejudging the shape and scope of a future Arab entity and upheld the role of the United States.
President Sadat is, let us remember, first and foremost on Egyptian nationalist and a patriot, and there are certain nuances in his attitude which primarily reflect the interest of the Egyptian State, especially in respect of Jordan. Each Arab state has its own views of what the political complexion, future direction and allegiance of an Arab state in Palestine might be. Egypt would, of course, like to see neighbouring Gaza and the West Bank—that strategic highway linking the northern and southern tiers of the Arab world—under her own protection rather than attached to Jordan. Syria has not abandoned the dream of Greater Syria ruled from Damascus. Iraq has her own ambitions of regional hegemony; and Saudi Arabia—while we may have forgotten it—has not herself forgotten that King Hussein's great-grandfather was driven out of Mecca by King Khaled's forebear, Ibn Saud.
Nothing would be more helpful to the cause of peace if the Prime Minister and the Foreign Secretary were to come back with a consensus of thought and action, an agreement on strategy and goals, which would, in the phrasing of Lord Byers' Question, add to the agreement of Camp David and not strain relations between the Western allies, Egypt and Israel, and bring back a policy utterly untenable or incapable of being accepted by a new Government of Israel.
That Europe has a role to play has recently been acknowledged both by President Sadat and Mr. Shimon Peres. It is not too late for Europe to change its course and balance its tone of voice. A constructive European initiative should strive, first of all, fully to
758
acknowledge the primary role of the United States and allow her to determine the pace and procedure of further talks.
America's faith in "step by step" diplomacy inherent in Camp David has borne fruit. European attempts at an immediate "widening" of the talks, the notion of "comprehensiveness", can only mean that Europeans would willingly or inadvertently bring the Soviets sooner or later to the conference table and into the arena. In fact, let us admit it, there are some European statesmen today who would like to do so. Is this really the moment to even contemplate such a contingency? The moment when Afghanistan is infested, and Poland ringed round with Soviet divisions in full war kit—is this the moment to inflict this prospect on an American Administration which is bent on stemming the tide of fresh Soviet advances into the region?
Europe should use all her persuasive powers with the Saudis, and all those bent on peace, to support a Palestinian Arab representation weighted with Arabs living on the West Bank and Gaza which should be either freely elected or at any rate recognise Resolutions 242 or 338 without new substantive alterations. Europe should use its sincere influence with those Arab régimes to make it clear, now that at the end of a negotiation and as an incentive for a settlement all the Arab states would join in recognition, normalisation and real peace.
If Europe wishes Israel, and especially a new Isreali Government, to respond positively and flexibly to new suggestions for security, she should play down United Nations involvement. Isreal has had traumatic memories throughout her history of the lack of efficacy and impartiality of the United Nations; and as to allusions to a European military force, these are not too reassuring, either. Surely there are tremendous problems of raising, and maintaining a European contingent for service abroad at a time when Europe is beset with so much agonising doubt and argument about her own defences.
There is something which is very important that Europe can do: it can endeavour to create a better climate while the parties negotiate. Europe should come out more strongly than before against the Arab boycott which not only represents a state of economic warfare but humiliates the western world, undermining its moral standards and business ethics.
Europe has a historic responsibility and hence a deep complex commitment to Arab and Jew. Many-faceted, tragic, delicate are the links that tie each and every one of Europe's Ten with the Jewish people and the state which, for Jews, both is centre as well as outpost. Complexity quite often breeds ambivalence. In fact one might, in borrowing and adapting the title of a famous modern classic of English literary criticism, describe Europe's relations with Israel as Ten Types of Ambiguity.
When we look at the Ten, what do we see?—the Germans still self-absorbed with the horrific heritage of Hitler's holocaust; the French partly swayed by recent memories of comradeship of arms, yet propelled by what they perceive to be their national interest; Catholic Belgium, Ireland and Italy, their historic attitudes quite subtly different from those of Protestant Holland or Denmark; and even Greece, in spite of

759
warm popular support, reluctant to offend the Arabs and hesitant about sending an ambassador to Tel Aviv.
Of all the Ten, the British people and Britain's political establishment reflect, in my view, the widest spectrum of feeling as well as articulated opinion about the issue: Arab versus Jew. There is a tradition of deepseated friendship and profound affection and understanding for the Israeli cause, including, still, a certain pride in having helped to sow the seed of modern Israel. Within the square mile bounded by Westminster and Whitehall, Pall Mall and St. James's Square, there is perhaps more expert knowledge as well as prejudice and there is more benevolence as well as bile and bias where Israel is concerned than almost anywhere in the world.
Side by side with profound sympathies for Israel is much dismissive scepticism. There are still those who have not forgotten the years 1945 to 1948 and are immovable in their reserve and implacable in their resentment. There is still that feeling that Israel may be a nine-day wonder, a 99-year leasehold on Arab ground, a latter-day crusader kingdom, as bloodied by war and as transient in history.
It is the historic duty and opportunity of European policy-makers and of the British Government to ensure that a true balance is restored. Let us hope that in Washington and on the return home the British Ministers will try to readjust the scale, restore evenhandedness and speak up for Camp David and for a settlement which would be worthy of Britain, worthy of Europe and worthy of the professed ideals of the free world.
8.21 p.m.
Baroness Gaitskell: My Lords, I should first like to thank the noble Lord, Lord Byers, for initiating this debate, and I hope I shall be as brief as he was when he spoke. This is not a debate which is conducive to a detached view, but I shall try to be as detached as I can. Regarding the speech of the noble Lord, Lord McNair, from the Liberal Benches, I should like to repeat something that I have said before in this Chamber. I was the United Kingdom delegate in the Human Rights Committee of the United Nations seven times, and I was there when Arafat made his spectacular debut. I also heard a New York television interview which an American television interviewer had with him. The interviewer asked Arafat: "Are you really intent on the destruction of Israel?" and Arafat replied in ringing tones: "This is the first step". That is just a little homily for the noble Lord, Lord McNair.
I have also, in the Human Rights Committee, had to listen to and endure the battles and debates between the Israeli and Arab delegates and I agree with the noble Lord that there are two rights to be considered. I absolutely agree with him about that. All the same, we have to take into account all the many things that have happened.
I confess, as a Jew, that I cannot hide a certain sympathy for the Israelis but I believe, as I said, that the two rights keep one on a fairly even keel and that in the Middle East the Arabs and Israelis simply have to live together. But I certainly think that the European 760
initiative which appeared in The Times on 13th June 1980 was set out very clearly in an article by Mr. Abba Eban, the former Israeli Foreign Minister, and I would rely heavily on his judgment because I have not been seduced at all by the idea of the European initiative. I believe it has been too much inspired by the European need at this time for Arab money and Arab oil, and we should not dismiss that summarily.
I can quite understand why the Israelis are apprehensive and even suspicious about this European initiative. The Europeans made no noises at all at the time when President Sadat made his wonderful intervention on world affairs. It was an absolute miracle when he put forward his proposal, and no one should ever forget how much he has done to try to get peace between Israel and the Arabs.
I am trying to be as brief as possible, my Lords. The PLO, at its Damascus meeting, swore eternal war against Israel while, as I say, President Sadat was not only praying for peace but acting for peace. He achieved an enormous amount, and I really must repeat again that one can understand that no European influence was suggested at that time. The European did not come in and praise Sadat in a way that one might have expected. Many of us, and I am one of them, are critical of Israeli policies but at the same time have no confidence in Europe's good intentions. They are totally obsessed with Arab oil and Arab money.
8.27 p.m.
Lord Trefgarne: My Lords, the Question tabled by the noble Lord, Lord Byers, refers to the impact of the "EEC initiatives" on other peace efforts and relationships. Before addressing his Question directly, it may be helpful if I say something about the background to current European diplomatic efforts, a description which I believe applies more accurately to the current state of play than the word "initiatives".
There is nothing very new about European attempts to formulate a common policy towards resolving the Arab-Israel dispute. They have been going on since at least 1971, when the six original members of the Community accepted a report of the then Political Committee setting out a common position. We have been closely involved ourselves since 1973. Since then the members of the Community have made a succession of statements of principle about the search for peace in the Middle East, clarifying and refining their position. Notable among them for its scope and balance was the Declaration of the European Council issued in London on 29th June, 1977. This set out the view of the Nine that a peace settlement should be based on Security Council Resolutions 242 and 338 and on the principles of the inadmissibility of the acquisition of territory by force, the need for Israel to end the territorial occupation she had maintained since 1967, respect for the sovereignty, territorial integrity and independence of every state in the area and their right to live in peace within secure and recognised boundaries, and recognition that account must be taken of the legitimate rights of the Palestinians. The declaration also spoke of the need for a homeland for the Palestinian people and for representatives of the Palestinians to participate in negotiations. It called on Israel to recognise the legitimate rights of the Palestinian people and the Arabs to recognise the right of Israel to live in peace

761
within secure and recognised boundaries. It signalled the then Nine's readiness to contribute to the search for a settlement and to consider participating in guarantees within the framework of the United Nations.
I quote this at such length not only to illustrate the consistent interest which the members of the Community have shown in efforts to promote a peaceful solution but also to demonstrate the consistently evenhanded and careful approach which has characterised European thinking.
Subsequent to the declaration of June 1977, the Nine welcomed President Sadat's historic trip to Jerusalem in November, congratulated President Carter on the historic achievement of Camp David in September of the next year, and in March 1979 expressed their belief that the Egypt-Israel peace treaty, signed shortly before, represented a correct application of the principles of Resolution 242 to Egyptian-Israeli relations. But in all this they constantly reiterated their commitment to a comprehensive settlement and to the principles of the declaration to which I have referred.
The background to the next major step of the Nine, the issue of the Venice Declaration, was the failure of of the tripartite autonomy talks based on the Camp David framework, on the future of the West Bank and Gaza Strip to reach a conclusion by the date which had been set by the parties. That date was 26th May 1980. The Nine, who had hitherto believed that the best contribution they could make was to set out the principles on which, in their view, a settlement should be based, and to offer such support to the efforts of others as individual member countries felt able to give, came to the conclusion that progress towards a settlement was more urgently required than ever, and that a more active collective European role could be helpful to the prospects for peace. The Venice Declaration of the European Council on 13th June, 1980 was the result.
The Nine decided at Venice to engage in consultations with all the parties concerned and, in the light of the results of these consultations, to consider what form an initiative on their part might take. The declaration also spelled out, in clearer and more specific terms than ever before, the balanced principles at the heart of European thinking. If I test your Lordships' patience by repeating them now, it is because so much of the criticism of the Venice Declaration has focused on only one side of what it had to say.
The declaration said,
"the time has come to promote the recognition and implementation of the two principles universally accepted by the international community: the right to existence and to security of all the states in the region, including Israel, and justice for all the peoples, which implies the recognition of the legitimate rights of the Palestinian people".
The declaration went on to make clear what these principles mean: the first means that,
"all of the countries in the area are entitled to live in peace within secure, recognised and guaranteed borders".
The second means that,
"the Palestinian people … must be placed in a position, by an appropriate process defined within the framework of the comprehensive peace settlement, to exercise fully its right to self-determination".
A later paragraph states that,
"these principles must be respected by all the parties concerned,
762
and thus by the Palestinian people, and by the PLO, which will have to be associated with negotiations".
We believe that this is a scrupulously fair and reasonable approach to a settlement, and we reject accusations that we are biased towards one side or the other.
The careful phrase about the PLO has attracted particular attention. It is criticised by the Arabs, because it does not give the PLO the status which they believe the PLO deserves. Some of the claims made for the PLO go so far that they seem to make the very concept of self-determination for the Palestinians redundant. The same phrase is criticised by Israel, because it so much as mentions the PLO in connection with the peace process. But there is a growing awareness that there is no substitute for involving the Palestinians directly in the settlement of the ArabIsrael dispute. And it is increasingly accepted that the PLO, which has widespread support both in the occupied territories and eslewhere among the Palestinian people, cannot be ignored.
Officials have for some years maintained informal contacts with the PLO. We make no apology for this. It is clearly in our interests, and in the interests of peace, that we should seek its views and explain our own, and that we should urge on it the abandonment of the path of violence, on the one hand, and public and explicit acceptance of the principle of a comprehensive settlement freely negotiated with Israel on the other. Such contacts will therefore continue. They will be stepped up, if we believe this to be helpful to the cause of peace. The PLO will have to change; we will not help it to do so by pretending that it does not count, or by leaving to others, whose views may not be so balanced as ours, a monopoly of advice to the PLO.
The issue of the Venice Declaration marked the beginning of an active and practical process on which the members of the Community remain engaged. There should be nothing surprising to anyone about Europe's desire to play a more active diplomatic role in this vital area. It is natural that the members of the Community should seek a concerted foreign policy, particularly in areas of vital concern such as the Middle East. Stability in this region is crucial to world peace and the countries of the area are, of course, of enormous economic importance to us as trading partners. It is right that we should maximise our diplomatic weight, in order to influence developments towards a just and lasting peace. In the interdependent world of today, we cannot afford to stand back from important world problems and leave all the running to others.
The Venice Declaration was followed up by a series of visits to the interested parties by M. Gaston Thorn, the then president of the Council of Ministers, in order to explore reactions to the Venice principles and seek out common ground wherever possible. Reactions were, of course, mixed; but he was received with interest everywhere and established that Europe was, indeed, regarded by the vast majority of those concerned as having an important part to play in Middle East peace efforts.
The results of M. Thorn's contacts were used as a basis for further work in political co-operation on the practical implications of the Venice principles. This work concentrated on the four key areas of Israeli withdrawal from occupied territories, Palestinian self-determination, security guarantees in the context

763
of settlement and Jerusalem. The European Council meeting at Luxembourg last December decided that the presidency, held by the Dutch for the first half of this year, should undertake further contacts with all the parties to discuss these key issues with them, as well as urging mutual recognition of rights as called for at Venice. The Dutch Foreign Minister will be taking a lead in this task. He will begin his visits to the parties very soon.
This is where European efforts now stand. It is clear, I hope, from what I have said, that Europe has not so far put forward any plan for peace: rather we have been engaged in the essential groundwork designed to prepare the way for the necessary practical steps towards a settlement. I cannot predict now what the next stage in our efforts will be; much will depend on the results of the Dutch presidency's efforts. But I can assure your Lordships that we intend to press on with our efforts with vigour and determination, so that we, in our presidency in the second half of this year, will be prepared to take up the reins of this activity with a view to making a concrete contribution. If there are any opportunities for real progress, we shall not hesitate to take them.
This is the background against which I now turn to the specific questions raised by the noble Lord, Lord Byers. We and our partners in the Community have made clear from the beginning that we are not in the business of cutting across or undermining the efforts of others, notably the Camp David process embarked upon by the Americans, Egyptians and Israelis. I do not think we can be fairly accused of having done so. The Camp David process is still in being; the autonomy talks have continued. The fact that progress has been slow, and that many substantial issues remain to be resolved, cannot be attributed to the existence of European determination also to contribute to peace, if at all possible.
The achievements of Camp David are there for all to see; peace between Israel and Egypt, Israeli agreement to withdraw from the whole of occupied Sinai and dismantle the settlements there and the progressive normalisation of relations between the two countries. It was an outstanding feat on the part of the three leaders involved and we pay unreserved tribute to them. It is vital to preserve these achievements; they are an essential element in the comprehensive peace to which we are committed. It is also vital to build upon them.
If the Camp David arrangements could lead to further progress in this direction, we should be the first to applaud. An interim arrangement acceptable to, and workable by, the Palestinians could be a valuable step forward. But we are bound to ask whether the present negotiating framework can lead to such progress. Is there not rather a need to take a fresh look at the problem? At the very least we cannot ignore the fact that the vast majority of the Arab world, including Jordan and the Palestinians, have made clear their rejection of this framework and their inability to join it. We see little if any chance that this opposition can now be reversed. We also believe that attempts to produce fresh progress must take fully into account the Palestinian dimension of the problem.
But our efforts do not in any sense contradict efforts under the Camp David framework. Rather we see
764
them as complementary. Should the fact that the Ten have decided to intensify diplomatic efforts in this area give rise to concern on the part of our American allies? Does it lead, as has been suggested, to damaging rivalry and diversion of effort? I do not believe so. We and the Americans are working towards the same goal: the achievement of a comprehensive peace settlement which will give to all the countries and peoples of the area a secure and dignified future. We and the Americans must undoubtedly work together. But our efforts do not need to be identical. The Americans have a position in the area which gives them a unique ability to exercise influence. We in the Ten can call upon a depth of experience and a network of relationships which enable us, too, to make a distinctive contribution.
Are European efforts likely to upset the Egyptians? Again I do not believe so. President Sadat welcomed the Venice Declaration as balanced and constructive. Moreover, he recently made clear to my noble friend the Foreigh and Commonwealth Secretary that he regards a European role as useful, and even essential. And in his address to the European Parliament on 10th February he called the Luxembourg Declaration by the Nine of 2nd December 1980 which reaffirmed the principles stated at Venice:
"a turning point which is likely to have a constructive impact on the peace process in the near future."
We for our part attach the greatest importance to co-operation with Egypt in the search for peace.
The present Israeli Government have rejected the Venice Declaration as a basis for peace efforts. They have said that they cannot accept references to the Palestinian right to self-determination or to the PLO. They have made clear that they do not regard our efforts as helpful. We regret this and believe that they have paid insufficient attention to the balance of the ideas contained in the Venice Declaration. But they received M. Thorn with interest and have been at all times ready to talk to the Ten about the problems involved in a settlement. We have every intention of continuing to work with Israel. We shall continue to take full account of her interests and concerns, as we have always done, and to defend her right not only to exist but to be a full and accepted member of the international community. There can of course be no question of imposing a settlement on Israel or, for that matter, on any of the parties.
Our task must be to persuade the Israelis of our goodwill and commitment to a secure and independent future for Israel as part of a comprehensive settlement. But we cannot allow Israel or any of the other parties to dictate what form our ideas about a just and reasonable settlement should take. We do not expect our views to be instantly acceptable to either side. We have been much criticised on the Arab side, too.
I cannot properly comment on the prospects for a new Israeli Government, as the Question we are discussing invites me to do. We are of course prepared to work with whatever Government is in power in Israel. But I do not believe that our efforts need cause difficulties for whatever Government emerges from the Israeli elections in June. We are advocating a balanced approach which we believe to be in Israel's interest. We are prepared to support all reasonable efforts aimed at a comprehensive settlement, but these must be based on a realistic assessment of the situation.

765
I turn now to just a very few of the points which have been raised during the debate this evening. First, the noble Lord, Lord Goronwy-Roberts, referred to the problem of the Israeli settlement. I should like to endorse what he said about the damage done to the Israeli position by their continuing policy of establishing and expanding settlements in the occupied territories. We have repeated on many occasions our view that the settlements are not only illegal but an obstacle to peace. We appeal once again for an end to this policy which has, to our great regret, even been stepped up in recent weeks.
The noble Lord, Lord Sieff, referred to the "defensibility" of Israel's borders if she chose to withdraw from the West Bank. Clearly, the pre-1967 boundaries of Israel in this area do not form ideal international boundaries, but it is our belief that there will be no peace in the Middle East unless Israel ends her occupation, subject to such minor territorial adjustments as can be negotiated. We believe that a genuine and lasting peace with her neighbours will be a better assurance for Israel's future than any borders can be.
The noble Lord, Lord Byers, referred during his speech, among other things, to the UNIFIL force in Southern Lebanon and criticised her for her impartiality. We think that the UNIFIL force does a commendable job in the most difficult circumstances. This job would be much easier, I agree, if the force received the co-operation it deserves from all the parties concerned in the area, including some of the Israeli irregular forces which are abroad in that part of the world.
The noble Lord, Lord Weidenfeld, referred to the Jordanian option,and I think at least one other noble Lord referred to it, too. We agree that Jordan has a key role to play in efforts to reach a settlement, but we do not believe that the Palestinians themselves can simply be by-passed. King Hussein has made it very clear that he accepts that the PLO represents the Palestinians and that he will not try to usurp this role. This cannot simply be disregarded.
The noble Lord, Lord Segal, referred to the concept of a Palestinian state. Some of the references to the dangers of such a state have suggested that we, the United Kingdom, or the Ten have offered our support to a Palestinian state. We believe, with President Sadat, that a settlement must involve the establishment of a Palestinian entity. We have not attempted to say what form this entity should take. What we have said is that the Palestinians themselves have the right to make this choice. This view is shared by President Sadat who made it clear to the European Parliament that he, too, supports self-determination for the Palestinians.
In conclusion, can I emphasise again that we aim to make a real contribution to peace efforts. If peace is to be possible, both sides will have to move a long way from their present public positions. Israel will have to accept that there can be no peace unless the legitimate rights of the Palestinians, including the right to determine their future, are met. The Arabs, including the Palestinians and the PLO, must grasp the nettle of recognition of Israel's right to a secure and independent future. Nothing less will suffice. Without these commitments on both sides, there will be no peace.
We are of course aware that if our efforts are to achieve any success, we must work with all the parties
766
concerned, and we fully intend to do so. If difficulties in relations arise, they will not be of our choosing. The importance for us of a close and constructive relationship with the United States needs no emphasis from me. And if I may quote from a speech given to the Arab community recently by my noble friend the Foreign and Commonwealth Secretary—I think that speech has been referred to earlier this evening—he said:
"We wish to maintain good relations with the Arab world and with Israel. I see no reason whatsoever why our friendship with one side should give rise to suspicions on the other. But it gives added point to our efforts to achieve a settlement acceptable to both".

National Film Finance Corporation Bill [H.L.]
Film Levy Finance Bill [H.L.]
Public Passenger Vehicles Bill [H.L.]
Reported from the Joint Committee without amendment, and recommitted to a Committee of the Whole House.

  AID TO DEVELOPING COUNTRIES
  AID TO DEVELOPING COUNTRIES
  UGANDA: INCREASE IN RELIEF FOOD
  UGANDA: INCREASE IN RELIEF FOOD
  UK CITIZENS IN EEC COUNTRIES
  UK CITIZENS IN EEC COUNTRIES