Sitting of 26 February 1981

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

PRIVATE BUSINESS
BRITISH RAILWAYS BILL (By Order)
Order for Third Reading read.
To be read the Third time upon Thursday 5 March.
BRITISH RAILWAYS (NO. 2) BILL (By Order)
BRITISH TRANSPORT DOCKS BILL (By Order)
GREATER LONDON COUNCIL (GENERAL POWERS) BILL (By Order)
LLOYD'S BILL (By Order)
COUNTY OF KENT BILL [Lords] (By Order)
HUMBERSIDE BILL [Lords] (By Order)
LONDON TRANSPORT BILL (By Order)
Orders for Second Reading read.
To be read a Second time upon Thursday 5 March.

Oral Answers to Questions
  National Finance

    Value Added Tax
    Mr. Hannamasked the Chancellor of the Exchequer if he will zero-rate ambulances and similar vehicles purchased by voluntary organisations for the transport of elderly and disabled people, in view of the large sums which now have to be raised by voluntary effort to pay the value added tax; and if he will make a statement.
    The Minister of State, Treasury (Mr. Peter Rees): I regret that I cannot anticipate the Budget Statement of my right hon. and learned Friend the Chancellor.
    Mr. Hannam: Will my hon. and learned Friend agree that it does not seem to make sense to all those engaged in voluntary organisations and charities that they should be asked by the Government to take on extra responsibilities during the recession when, at the same time, they face severe extra VAT burdens as a result of the increase in VAT? Will my hon. and learned Friend, in the approach to the Budget, bear in mind that ambulances are specialist vehicles and should not be subject to VAT?
    Mr. Rees: I take the general point that my hon. Friend makes. I shall look forward to talking to him and to the delegation that I know he is to bring to see me to discuss these subjects. He will appreciate that there is already a wide range of reliefs for medical requirements. I need only instance invalid chairs, wheelchairs, iron lungs, white sticks, artificial limbs and kidney machines. It is important to preserve a wide base for VAT.
    Mr. Ashley: Is the Minister aware that, in my correspondence with the Treasury, I have always found it fairly sympathetic about ambulances but always pedantic and unsympathetic about other vehicles used as ambulances for disabled people. Will he look at the regulations again with a view to widening the criteria?
    Mr. Rees: I am sorry that the right hon. Gentleman, whose deep interest in these matters is well known to the House, should have found the Treasury pedantic. He will appreciate that special reliefs and the frontiers of a tax like VAT pose definition problems of the kind that were so admirably exploited by the late Sir Gerald Nabarro. One therefore proceeds with caution in this area. I take note of what the right hon. Gentleman says. I shall look again at the problem.
    Mr. Paul Dean: Will my hon. and learned Friend take account of the fact that charities feel that they are working with one hand tied behind their backs owing to VAT when they are assisting the elderly, the disabled and other vulnerable groups? Will he at least give serious consideration to putting them on an equal footing with local authorities when they are providing services similar to those provided by local authorities?
    Mr. Rees: I take note of what my hon. Friend says. His deep knowledge of these matters is well known to the House. He will recognise, however, that local authorities provide a much wider range of services than those he instances. If we were led into the field of educational

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    charities, neither he nor I would probably carry the House. I take note of what he says, but I cannot anticipate what my right hon. and learned Friend may decide.
    Mr. Skinner: Is the Minister saying that one of the reasons why he is not able to give any indication of support for these voluntary organisations is that the Government are spending too much money keeping 2·5 million people out of work? Or is the reason that they have not any muscle?
    Mr. Rees: I am sure that the hon. Gentleman who, behind his rough exterior, conceals a heart of, if not pure gold, at least pure coal, will recognise that in the last Finance Bill a bigger package of reliefs for charitable giving was devised by my right hon. and learned Friend than has ever previously been encountered by the House.

    Widows
    Mr. Trippierasked the Chancellor of the Exchequer what representations he has received from the National Association of Widows concerning the forthcoming Budget.
    Mr. Peter Rees: I met representatives of the National Association of Widows on 17 February. At that meeting the association said that it welcomed the new widow's bereavement allowance, which we introduced last year, and explained its views on other matters affecting the tax position of widows.
    Mr. Trippier: Does my hon. and learned Friend agree that working widows have a strong case for tax relief on part of their pension? Acknowledging that the Government have been good enough to waive tax on war widows' pensions, does my hon. and learned Friend agree that many of the difficulties faced by war widows are exactly the same as those faced by all widows, especially those who work?
    Mr. Rees: I recognise that the point made by my hon. Friend on behalf of that group, for whom the whole House has sympathy, is felt with great force by it. In many cases working widows have a larger income—even though they assert, rightly, that they have considerable responsibilities—than many single women or working wives. I take note of the point that my hon. Friend makes, but once again I cannot anticipate my right hon. and learned Friend's Budget Statement.

    Unemployment Costs
    Mr. Leightonasked the Chancellor of the Exchequer what is the cost to the Exchequer of 2,400,000 unemployed, taking into account the loss of revenue from direct and indirect taxation, national insurance contributions and supplementary and other benefits.
    The Chief Secretary to the Treasury (Mr. Leon Brittan): I refer the hon. Member to February's economic progress report article. That notes that each increase of 100,000 in the level of unemployment in the private sector costs the Exchequer some £340 million in terms of direct tax forgone and increased benefit payments. If unemployment occurs in the public sector, there could be savings rather than costs.
    The hon. Member should also note the comment made in the article that such estimates cannot be grossed up to give an estimate for all those at present unemployed.
    Mr. Leighton: Is the Minister aware that his misguided efforts to cut public expenditure, because they increase unemployment, are self-defeating? Is he aware that the research done for me by the Library, using the Treasury model and the survey to which he has referred, shows that the current cost of the unemployment queues is about £8½ million? Does he agree that if he were to increase demand in the economy and take steps to see that at the same time that did not slacken imports, it would put the country back to work, increase wealth and cut the public sector borrowing requirement?
    Mr. Brittan: I am sure that the hon. Gentleman would not wish to ascribe to the Library the errors that he has made. The article made clear that it is utterly misleading to gross up the total and to arrive at the cost that way. Indeed, the reason is simply that the figure in question is that of a net addition to the total.
    On the more general point, simply to spend the large sums of money advocated by the hon. Gentleman would lead to higher taxation, higher borrowing, higher interest rates and damage to the economy.
    Mr. Haselhurst: Does my right hon. and learned Friend agree that it would make a difference to the question of these resources being used to ease unemployment among young people if 16 to 18-year-olds were taken out of the collective bargaining system and instead paid a standard allowance for whatever they were doing?
    Mr. Brittan: It is true that 16 to 18-year-olds are often employed on the same collective bargaining conditions as the rest of the population. That often leads to firms being more reluctant to employ them.
    Mr. Hardy: Does the Minister agree that while there may be enormous variations between different individuals who are unemployed, other research—the results of which are available in the Library—shows that the cost to the Exchequer of unemployment for an adult male is £4,500 a year? Is he aware that that does not allow for the enormous administrative costs nor for the recent increases in benefit or national insurance contributions? In view of that, is not the problem now so enormous that Government policy should be changed and earlier retirement for men introduced?
    Mr. Brittan: On average, the cost to the Exchequer is £3,500 for every additional unemployed person coming from the private sector. I do not believe that earlier retirement would solve the problem in the way the hon. Gentleman suggests.
    Dr. Adley: Has my right hon. and learned Friend estimated the cost to the Exchequer of each year's reduction in the age of early retirement, and the numbers of people presently unemployed who might gain employment if that were done? If he has not done that, will he do so and perhaps write to me?
    Mr. Brittan: I am always happy to enter into correspondence with my hon. Friend. However, I do not have the specific figure available. The cost of reducing the retirement age in the sense of making retirement pensions available at an earlier age would be very considerable. I know that my hon. Friend appreciates that.
    Mr. Shore: After all the obfuscation and stonewalling of recent weeks and months on this interesting question of

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    the cost of unemployment, is the Chief Secretary aware that we were glad to see the article in the economic progress report? Is that not patently an understatement of the true cost? Will the right hon. and learned Gentleman say why, for example, the cost to the Exchequer of the additional one-third who are unemployed for every 100,000 who are registered unemployed, is not added in terms of their failure to be able in future to contribute income tax payments? Is it not also true that indirect tax costs—certaintly those that are attributed to an inability to pay VAT and excise duties—could easily have been included in the figures? If the right hon. and learned Gentleman can produce figures for 100,000 unemployed, why cannot he give reasonable estimates for the total cost of the 2½ million unemployed?
    Mr. Speaker: Order. Long questions only cut out other speakers.
    Mr. Brittan: I shall give a short reply. The answer to the right hon. Gentleman would appear to be that when there is no estimate he complains, and when a serious article is published setting out the figures, he still complains.
    Much depends on the cause of the unemployment. One cannot take those indirect factors into account. If, for example, the cause of unemployment were an increase in productivity, the effect would be quite different from where the cause was a different one.

    Enterprise Zones
    Mr. Anthony Grantasked the Chancellor of the Exchequer if, in his forthcoming Budget, he will have regard to the need to provide additional financial incentives to enterprise zones in the larger cities.
    Mr. Steenasked the Chancellor of the Exchequer if, in his forthcoming Budget, he will have regard to the need to provide additional financial incentives to enterprise zones in the larger cities.
    Mr. Brittan: My hon. Friends would not expect me to anticipate my right hon. and learned Friend the Chancellor's Budget Statement.
    Mr. Grant: Does my right hon. and learned Friend agree that there is a danger that rate exemptions in those zones could be cancelled out by increases in business rents? In view of the importance of low overheads, particularly for small businesses, will he think carefully about that possibility?
    Mr. Brittan: If that were to happen it would have serious consequences. We shall look into that when the enterprise zones become active.
    Mr. Steen: Is the Minister aware that in Liverpool already there is a natural enterprise zone in the shape of about 60 small firms which are clustered together in man-made caves in the south docks, where they are paying £5 a week rent? Is my right hon. and learned Friend further aware that that will all be destroyed by the urban development corporation's grandiose plans? Will he ensure that there will be special places in the enterprise zone for one-man firms and starter firms at low rents so that those firms will be transferred and others can be started without being driven out of business permanently?
    Mr. Brittan: I shall look into the point raised by my hon. Friend. In Liverpool, there has been a delay in the
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    setting up of the enterprise zone, caused by the difficulty in reaching agreement with the Liverpool city council, which so far has not been able to agree to the sort of planning regime to which some of the other councils involved with enterprise zones have agreed.
    Mr. Robert C. Brown: Is the Minister aware that a prime industrial development site in the centre of Newcastle—Fenham barracks—has had many firm inquiries since the announcement about the enterprise zones? Those inquiries have now literally dried up, awaiting the introduction of the enterprise zone. Is it not a case of simply exporting unemployment from one area to another?
    Mr. Brittan: I do not think that that is so. During the build-up period for the enterprise zones, people will be waiting and anxious to participate, but the degree of interest in the enterprise zones is very considerable. It is most noticeable that local authorities of political complexions quite different from that of the Conservative Party have raced into the act of trying of get enterprise zones in their areas.
    Mr. Bill Walker: Will my right hon. and learned Friend and the Chancellor of the Exchequer, when giving consideration to enterprise zones, remember Scotland, and in particular the city of Dundee, where I am sure a scheme of this sort would be very welcome?
    Mr. Brittan: I shall take note of my hon. Friend's point.

    North Sea Oil (Business Expenses)
    Mr. Jesselasked the Chancellor of the Exchequer in what circumstances it is the practice of the Inland Revenue to treat the costs of transport of persons employed in North Sea oil rigs as allowable businesses expenses.
    Mr. Peter Rees: Where an employer meets the costs of transporting employees to their place of work, this is normally a deductible expense for tax purposes.
    Mr. Jessel: But where the person travelling to work pays the cost himself, and where such a person is working on an oil rig, perhaps requiring a journey of 700 or 800 miles—from, say, London to Aberdeen where he might have to spend the night, and then travel a further 200 miles to get to a North Sea oil rig the following day—does my hon. and learned Friend think that it is fair that such a person should be treated for tax purposes as though he were an ordinary commuter? Will my hon. and learned Friend have another look at this?
    Mr. Rees: I recognise that it is difficult to assimilate the case of an oil rig worker to that of an ordinary commuter, and I undertake to look at the matter again. My hon. Friend will be aware of the general principle that if an employee is reimbursed the cost of travel to work, that is generally taxable in his hands. But I recognise that, perhaps, oil rig workers present special difficulties, although the House will also recognise that the Revenue on the whole does not tax oil rig workers on the cost of travelling from Aberdeen or other points on the mainland to the rig. That cost is normally provided by the employer.
    Mr. Douglas: Will the Minister give us some indication of the progress being made in relation to the report by the Public Accounts Committee on tax evasion by people employed on North Sea oil rigs?
    Mr. Rees: Yes, we are aware of the problem. There is no very simple solution but we are pressing employers hard in this area to take account of their responsibility, particularly for PAYE.

    Interest Rates
    Mr. Sheermanasked the Chancellor of the Exchequer if he will consider taking immediate steps to reduce the high interest rates.
    Mr. Newensasked the Chancellor of the Exchequer if he will make a statement on the present level of interest rates.
    Mr. Lathamasked the Chancellor of the Exchequer if he will now take steps to lower the level of minimum lending rate.
    The Chancellor of the Exchequer(Sir Geoffrey Howe): I well understand the widespread desire, particularly in industry, to see interest rates come down. Since last summer, minimum lending rate has been reduced by 3 per cent. The Government will keep the level if interest rates under review, against the background of other developments in the economy.
    Mr. Sheerman: When the Chancellor of the Exchequer thinks about the interest rate, does he consider that the experiment for two years with monetarism has been worth while, in the light of the terrible cost in lost jobs, industrial decline and all the other horrors that we have seen in these two years? When he makes a sharp cut in interest rates in the next few days, will he also admit the total bankruptcy of the policies of the last two years?
    Sir Geoffrey Howe: I do not understand the reference by the hon. Member to the experiment in monetarism for the last two years, when monetary policy played a key part in the policies of the Labour Government and was constantly emphasised by the then Chancellor of the Exchequer.
    Mr. Newens: In view of the heavy burden of interest repayments on industry, the crippling difficulties imposed upon home buyers, and the effects on the level of sterling, does not the Chancellor think that it is an absolute disgrace that he has stood by and done nothing while British industry has been increasingly destroyed and damaged, and more and more hardship forced upon the people of our country as a direct result of his policy?
    Sir Geoffrey Howe: The hon. Member recites a number of the many reasons why lower interest rates are desirable. There are other reasons to be set alongside them as to why interest rates have to be maintained at a responsible level. As I have already pointed out, the rate has been cut by 3 per cent, since last summer.
    Mr. Latham: Will my right hon. and learned Friend confirm that MLR is now clearly in excess of the real, underlying rate of inflation, and that if he takes into account, as I am sure he will, all the underlying economic factors, they must point to an early and significant reduction?
    Sir Geoffrey Howe: It is true, as my hon. Friend points out, that measured against the substantial fall in inflation in recent months, interest rates have become more positive. That is one of the factors that we have to bear in
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    mind in considering future changes in minimum lending rate. As inflation has fallen, we have cut minimum lending rate, as I pointed out, by 3 per cent, since last summer.
    Mr. Shore: Minimum lending rate is still at 14 per cent. If the rate of inflation is running at somewhere below 10 per cent., that is a vast discrepancy. Surely the Chancellor understands that for every 1 per cent, on MLR, British industry has to pay £350 million a year extra in terms of interest payments. With results such as that declared by ICI today—when even that firm has been running at a loss in the last six months—surely it is time that he acted. Is not the real reason why the Chancellor is not acting now the fact that he is waiting until the Budget, so as to have something pleasant to say among all the disasters that he will be announcing?
    Sir Geoffrey Howe: I am grateful to the right hon. Gentleman for his tribute to the very substantial reduction in inflation. He puts the estimated inflation rate at substantially below the current year-on-year rate. As I have pointed out, that is one of the factors which have to be taken into account.
    Mr. Squire: Will my right hon. and learned Friend recognise that the totally speculative and imaginative article in The Observer last Sunday was read with a lot of pleasure by many of us—particularly the expectation that interest rates are to be cut by 3 per cent.—and that the pleasure will be even greater if the rate can be brought down even sooner?
    Sir Geoffrey Howe: I would not wish to diminish the pleasure that my hon. Friend derives from reading The Observer or any other newspaper.
    Mr. Joel Barnett: If the Chancellor accepts the case for a cut in interest rates, does he think that it is due to his economic success, or is it due to economic failure?
    Sir Geoffrey Howe: It has been clear from the outset that the reduction in the rate of inflation, along with the reduction in interest rates, is among the objectives that the Government are pursuing.
    Mr. Eggar: Does my right hon. and learned Friend accept that the move towards monetary based control will inevitably bring with it increased volatility in interest rates? Is he happy to lose control of interest rates?
    Sir Geoffrey Howe: That is one of the factors to be taken into account in considering the principle of moving to monetary based control, and the speed of such movement. It is undoubtedly the fact that interest rates which are more closely related to the market have something to be said for them.

    Public Sector Borrowing Requirement
    Mr. Chris Pattenasked the Chancellor of the Exchequer what is his latest estimate of the public sector borrowing requirement in the current financial year.
    Mr. Brittan: I ask my hon. Friend to await the Budget Statement of my right hon. and learned Friend the Chancellor.
    Mr. Patten: After the Government's experience of wrestling with the PSBR over the last couple of years, is my right hon. and learned Friend now rather more sympathetic to the argument, first, that we should remove the capital investment programme of the nationalised

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    industries from the PSBR calculation, and, secondly, that we should follow the Americans' example and take some account of the level of economic activity in determining the level of the Government's borrowing requirements?
    Mr. Brittan: On the second point, my right hon. and learned Friend has indicated that that is a relevant consideration. On the first point, I would not agree that it is realistic to remove nationalised industry investment from the public sector borrowing requirement, because the cost of the nationalised industries' investment is something that is borne by the public sector. If money has to be borrowed in order to do that, it is realistically reflected in the PSBR.
    Mr. Dubs: Should not the effect of nationalised industry borrowing have a different impact from that of private industry borrowing? Surely the total effect on the PSBR must be different in the two cases.
    Mr. Brittan: If the private sector borrows money, it has to finance it. If a nationalised industry has to borrow money, as it is within the public sector it is not in the least surprising that the borrowing should come from the public sector borrowing requirement.
    Mr. Budgen: Would my right hon. and learned Friend agree that the public sector borrowing requirement is intimately related to the rate of increase of monetary growth? In that connection, does he agree with the Financial Secretary, who said at page 11 of the report of his speech in Zurich that sterling M3 was and remains "the most useful guide" to the rate of monetary growth?
    Mr. Brittan: When the statement made by my right hon. Friend the Financial Secretary is read in the context of his speech as a whole it will stand up to any scrutiny.
    Mr. Robert Sheldon: Does the right hon. Gentleman realise that in the last public expenditure White Paper the amount of lending to nationalised industries was expected to reduce by £1,200 million in the present financial year, when we all know that it will increase, rather than reduce, by £1,200 million. Will he be more realistic in the next public expenditure White Paper, and understand that at a time of severe economic depression it makes good sense to lend more money to nationalised industries for investment purposes, because by so doing one can be a little more relaxed about the public expenditure limits?
    Mr. Brittan: I am sure that the right hon. Gentleman will find that the next public expenditure White Paper will be entirely realistic.

    Personal Allowances
    Mr. Wigleyasked the Chancellor of the Exchequer what would be the cost to the Exchequer of every 1 per cent, increase in the personal allowances against income tax.
    Mr. Peter Rees: About £140 million in a full year at 1980–81 income levels.
    Mr. Wigley: Is the Minister aware of the widespread concern that exists about the reports that the Government may be considering increasing personal allowances by less than the inflation rate, and that that hits those who are on low incomes and who should be kept outside the tax net? To pull them inside the net is counterproductive and something that the Government should avoid.
    Mr. Peter Rees: I note what the hon. Gentleman says. He will appreciate that I cannot anticipate the Budget Statement. He will recall that the first Budget of this Administration put up personal allowances by double the rate of inflation that we inherited.
    Mr. Peter Bottomley: Will my hon. and learned Friend accept that in that first Budget it was not possible to increase child benefit; because child benefit had overtaken child tax allowances? What the hon. Gentleman says about tax allowances and the lower paid does not apply to the lower paid with children. It is far more effective to raise child benefit in real terms, even if it means shaving a bit off personal tax allowances.
    Mr. Peter Rees: I take note of what my hon. Friend says, but he will realise that child benefits are primarily a matter for my right hon. Friend the Secretary of State for Social Services.
    Mr. Cook: Does the Minister recall the cry of despair of his right hon. and learned Friend last November that he was boxed in by election commitments? Has he forgotten that one of those commitments was that raising tax thresholds would take the low-paid out of the tax net? Will he, therefore, now have the decency to admit that if he now lowers the threshold by failing to index the levels, he will increase the tax on the low-paid most in order to pay for the handouts that have already been received by the extravagantly paid?
    Mr. Peter Rees: I am not aware of any handouts to the extravagantly paid that were not more than matched by decreases in the basic rate and increases in personal allowances in 1979.

    National Debt
    Mr. Richard Wainwrightasked the Chancellor of the Exchequer by how much the annual cost of servicing the national debt in 1980–81 has changed as a percentage of the cost in 1978–79.
    Mr. Brittan: There has been an increase of about 55 per cent, in money terms on the 1978–79 outturn of £6,458 million. In real terms, the increase is 12 per cent.
    Mr. Wainwright: Does the Chief Secretary realise that that large and rapid increase in the burden of servicing the national debt puts a wholly unjustified burden on the economy, and that generations well into the next century will be paying the cost of this perverse policy on interest rates? What will he do to reverse it?
    Mr. Brittan: My right hon. and learned Friend answered questions about interest rates. On the subject of the national debt, it is of course our intention gradually to reduce the size of the borrowing requirement, and that will have the effect of containing the growth in the total national debt.
    Mr. Dorrell: Does my right hon. and learned Friend recognise that the current cost of servicing the national debt could be significantly reduced if we continued the policy that we have already initiated of issuing Government debt instruments the capital value of which is index linked?
    Mr. Brittan: I appreciate that my hon. Friend has long supported that proposal.
    Mr. Straw: While the Chief Secretary is being re-educated in the facts of economic life by his hon. Friend the Member for Bath (Mr. Patten) and others, will he bear in mind that scaremongering about the size of the public sector debt, part of the Conservative attack on the Welfare State, has not only made financing of the public sector more difficult, but bears little relationship to the facts, and that, as a percentage of gross domestic product, this year's public sector borrowing requirement will still be at 6 per cent, historically? I accept that that is not as high as in previous years. Will he bear in mind, too, that the real value of the national debt, far from increasing, has declined by one-third since 1966.
    Mr. Brittan: I do not entirely accept that suggestion. The cost of servicing the national debt has risen considerably. There is a burden, and I do not think that any useful purpose is served by seeking to denounce it.
    Sir William Clark: Does not my right hon. and learned Friend agree that, up to 1974, the national debt had been in operation for about 300 years, and that the last Labour Government doubled it in five years?
    Mr. Brittan: It is right to say that between 1973–74 and 1978–79, the cost of servicing the national debt rose in real terms by 30·5 per cent.

    Budget
    Mr. Canavanasked the Chancellor of the Exchequer what representations he has received about his forthcoming Budget.
    Sir Geoffrey Howe: I have received a large number of representations about the Budget from various individuals and organisations.
    Mr. Canavan: In view of the appalling unemployment figures that were announced on Tuesday, will the Chancellor take steps to reflate the economy to provide more jobs and to regenerate industry? In view of the fact that his Government's monetarist policies have turned vast areas of the country into de-industrialised deserts, does he now realise that in the past 21 months he has caused more destruction to British industry than Chancellor Hitler managed in the whole of the Second World War?
    Sir Geoffrey Howe: The intemperance of the hon. Gentleman's point is matched only by the intemperance of his example. His first question relates to the next question that I shall be answering. On the main point, unemployment has been affected more by pay increases, pay settlements and rising unit labour costs than by anything else.
    Mr. John Townend: If my right hon. and learned Friend is looking for further ways in which to make cuts, will he follow the example of the Reagan Government and look hard at overseas aid?
    Sir Geoffrey Howe: Clearly, I shall scrutinise the example and the experience of the Reagan Administration—both the proposals and their outcome.
    Mr. Jay: As we read reports in the press almost every day of what the Budget is to contain, is there really any need to have a Budget speech?
    Sir Goffrey Howe: I should not wish to deprive the right hon. Gentleman of the exhilarating experience of listening to that address.
    Mr. Nicholas Winterton: Will my right hon. and learned Friend say whether he has received a lot of representations from smaller businesses? If so, do they include recommendations that interest rates should be reduced, that the Government should introduce an energy package, and that the value of the pound is very deleterious to the potential for our exports?
    Sir Geoffrey Howe: I have received a number of representations for, from and on behalf of small businesses. As I demonstrated in my Budget last year, we attach considerable importance to the part that can be played by small businesses. I am sure that the representations that I received have covered all that my hon. Friend said. Let me remind him, however, that the strength of the pound is one reason for the reduction in inflation.

    Economic Reflation
    Mr. Meacherasked the Chancellor of the Exchequer if he will now undertake a significant reflation of the economy.
    Sir Geoffrey Howe: No. To do so would undermine the substantial progress made in reducing inflation and achieve little or no lasting stimulus to output.
    Mr. Meacher: Does the right hon. and learned Gentleman believe that either the cut in interest rates, which he appears to be planning in the Budget, or the end of de-stocking, which is not yet in sight, can produce a significant fall in unemployment? If not, and if he refuses to reflate, what other measures consistent with the Government's economic strategy could ever produce sufficient demand to stop unemployment from rising to 3 million and, ultimately, to 4 million?
    Sir Geoffrey Howe: One of the most important reasons for expecting growth to resume and unemployment to fall in due course is the fall in inflation. If within a constant money supply inflation is falling, that in itself is likely to add substantially to activity in the economy. The second factor that makes a useful contribution is the continued maintenance of moderation in pay settlemants which has moved a long way in recent months. That will help to reduce the unit labour costs of British output and increase the chances of sales and therefore increase output and employment.
    Mr. Lyell: I recognise the danger of calling for a simplistic type of reflation, but will my right hon. and learned Friend consider in his Budget Statement the merits of drawing a distinction between capital and current spending and the relationship of the former to borrowing?
    Sir Geoffrey Howe: I am not sure that I wish to embark upon a debate on the difference between simplistic and non-simplistic reflation. I take the force of the point. Undoubtedly, an expansion in capital expenditure and investment is desirable. Most of our policies are directed to that.
    Mr. Flannery: Does the Chancellor of the Exchequer admit that the necessary moneys to be given to BSC are at least the beginnings of a U-turn and a partial reflation of the economy? Does he realise that so many people are unemployed that at least the whole of North Sea oil money has to be paid out in unemployment benefit since over £5,000 per year is necessary to keep one person unproductive? When will he reflate the economy to bring people back into work so that they can produce and so that we can compete in the world market?
    Sir Geoffrey Howe: The hon. Gentleman must understand that money given for the sustenance of nationalised industries, including the BSC, has to be raised either by taxation or by borrowing from the rest of the economy. It cannot, therefore, be regarded as a net gain. He must also understand that any attempt by reflation to generate growth and jobs is more likely to fail than succeed because that way lies higher borrowing, higher interest rates and higher unemployment.
    Mr. Forman: Does my right hon. and learned Friend agree that it would be unwise to have significant reflation now? May we at least have the prospect of a bit more constructive intervention from the Government?
    Sir Geoffrey Howe: The whole of the Government's fiscal policy and almost all the measures introduced in last year's Budget are good examples of constructive intervention.
    Mr. Shore: When about 90 per cent, of manufacturing industry is working well below capacity, does the Chancellor accept that the economy is deflated? If he accepts that, does he think that the Government have any part to play in stimulating the economy?
    Sir Geoffrey Howe: The Government's primary role remains the achievement of economic stability and the conquest of inflation. Earlier the right hon. Member was kind enough to pay tribute to our success in that direction. I am glad to have his support for that aspect of our policy.

    Budget Forecast
    Mr. James Hamiltonasked the Chancellor of the Exchequer if he is satisfied that his Budget forecast is on target; and if he will make a statement.
    Sir Geoffrey Howe: I refer the hon. Member to my statement of 24 November. A further assessment of the expected outturns for 1980–81 will be included in my Budget Statement.
    Mr. Hamilton: Does the right hon. and learned Gentleman concede that consumer prices have seriously overtaken the tax deductions which he purported to make in his last Budget Statement? Does he agree that all the talk about deflation bringing jobs has proved to be wrong since nearly 2½ million people are unemployed? In his next Budget, will he consider reflating to give the people the justice to which they are entitled?
    Sir Geoffrey Howe: The hon. Gentleman's question is directed to the accuracy of my Budget forecast. He complains about the level of consumer prices. He would do well to remember that the outturn for price inflation was 1 per cent, better than forecast in my Budget Statement.
    Mr. Stokes: Does the fact that ICI has cut its dividend by more tha half today mean that the Budget forecast is on target or not?
    Sir Geoffrey Howe: My hon. Friend is a robust defender of non-interventionist government. He will be the last person to expect me or any Chancellor of the Exchequer to make predictions about the outturn of particular company results. We are concerned when any company does less well than we hoped. Even in this case it is as well to remember an important factor affecting the balance of the economy—namely, that last year personal disposable income rose by 18 per cent, while the disposable income of industrial and commercial companies fell by nearly 20 per cent. Many of the difficulties faced by companies are the consequence of high pay settlements.
    Mr. Robert Sheldon: Before the right hon. and learned Gentleman continues to congratulate himself on the reduction in inflation does he recall the Treasury estimate that showed that three to five per centage points of the fall in inflation were due to increasing the exchange rate under the present Government? Will he remember that without that the inflation rate would be much higher? Will he also remember that the price paid for the high exchange rate is the £100 million reduction in the value of ICI and many other companies as a result of his policy?
    Sir Geoffrey Howe: Is the right hon. Gentleman suggesting that we should be encouraged to see the exchange rates falling indefinitely? He must appreciate that such a movement would itself raise the price of raw materials to companies and businesses of all kinds. There is no such thing as an evenly balanced economic benefit.

  Prime Minister

    Heads of Households (Work Incentives)
    Mr. Peter Bottomleyasked the Prime Minister what progress is being made in increasing incentives to work for heads of households.
    The Secretary of State for the Home Department (Mr. William Whitelaw): I have been asked to reply.
    Considerable progress has already been made within the resources available. However, it must be recognised that the only way to improve incentives in the long term is to control inflation, ensure rising living standards and establish sustained growth. Our policies aim at just that.
    Mr. Bottomley: Does my right hon. Friend agree that increasing child benefit will make a great deal of difference? I am grateful for his answer. Is it not odd that as a country collectively we go for pay claims when, if all are granted, conditions will be made worse for us all and there will be more inflation, more unemployment and greater hardship for people who look after children?
    Mr. Whitelaw: I entirely agree. Comparisons are made between different sectors of the economy facing different problems and one is entitled to say that some people will get more, some will get less and, I regret, some will get nothing at all.
    Mr. Richard Wainwright: In the light of the right hon. Gentleman's reply, how much longer will the Government tolerate a head of household being worse off earning £85 a week gross than one earning £40 a week gross?
    Mr. Whitelaw: These matters will be carefully considered by the House in the near future.
    Mr. Ian Lloyd: Does not the experience of most post-war industrial societies confirm that no incentive scheme long survives double-figure inflation? Will my right hon. Friend therefore suggest to his colleagues that reflation is the most dangerous and seductive word in the economics vocabulary? Does he agree that if reflation takes place, there will be little chance of effective incentive schemes ever again appearing in our economy?
    Mr. Whitelaw: I would not like to decide what is the most dangerous word used in contemporary politics. Certainly "reflation" is a dangerous word. But reflation appears to be the Opposition's policy.

    CBI
    Mr. Norman Atkinsonasked the Prime Minister when last she met the Confederation of British Industry.
    Mr. Whitelaw: I have been asked to reply. My right hon. Friend last met the Confederation of British Industry at NEDC on 4 February.
    Mr. Atkinson: Is the right hon. Gentleman aware that at that meeting the CBI called upon the Government to carry out mass sackings in local authorities? Is the right hon. Gentleman further aware that as a result of Government cuts Labour-controlled councils in London and the Midlands have been told to sack 110,000 workers or to impose rate increases which people cannot afford to pay? What does the right hon. Gentleman propose? Does he think it right that local authorities should sack 110,000 workers, or impose rate increases which will result in a reduction in ratepayers' standards of living?
    Mr. Whitelaw: Surely the CBI is saying—and it is a fair point—that industries in various parts of the country are having high rate increases inflicted upon them through the extravagance of many Labour-controlled authorities and that that inevitably leads to difficulties and a loss of jobs.
    Mr. Farr: When the Prime Minister meets the American President, will she raise the question of the unfair level of imports of American knitted goods and texiles occasioned by cheap energy policies in the United States?
    Mr. Whitelaw: My right hon. Friend is aware of those points. She is now at the White House and will shortly be having discussions with the President. It would be wrong for me to comment. My right hon. Friend will report to the House on her return.

    Engagements
    Mr. Leightonasked the Prime Minister if she will list her official engagements for 26 February.
    Mr. Whitelaw: I have been asked to reply.
    My right hon. Friend is visiting the United States of America.
    Mr. Leighton: Will the right hon. Gentleman consider the prevalence of cases of unscrupulous meat traders who have caused the introduction of unfit meat, horsemeat and even in some cases Kangaroo meat, for use in sausages, hamburgers and canned meat products? Does he think that the maximum fine of £100 on conviction by successful prosecution by environmental health officers is in any way adequate?
    Mr. Canavan: Answer.
    Mr. Whitelaw: I would not in any way wish to associate myself with the hon. Member's accusations. If they are true, he must substantiate them. As I do not associate myself with them, the rest of his question does not arise.
    Mr. Cormack: Can my right hon. Friend tell the House whether approval was sought for the takeover of The Observer? If not, why not?
    Mr. William Hamilton: The right hon. Gentleman has never heard of it.
    Mr. Whitelaw: I understand that Lonrho representatives met Department of Trade officials this morning. I am told that it was made clear at that meeting that the agreement to transfer The Observer is conditional on any necessary Government consents being obtained. On the information we now have, the Government believe that consent will be required. No application for consent to a transfer has yet been received in respect of either Lonrho's acquisition of The Observer or Atlantic Richfield's stake in George Outram. Any question of a reference to the Monopolies and Mergers Commission is therefore premature.
    Mr. Foot: On the question of the purchase of The Observer, does not the right hon. Gentleman think that approaches should have been made to the Government at an earlier date?
    Mr. Eggar: Why?
    Mr. Foot: Will the right hon. Gentleman promise to give a report to the House on the matter? Can I ask him a further question on what we regard as a matter of extreme urgency for this country and the world? Will the right hon. Gentleman send an urgent message to the Prime Minister, whether she is in the White House or not, expressing to her the rising concern in this country and elsewhere in Europe about the supply of arms to El Salvador?
    Will he take account of the fact that there are suggestions that huge extra supplies of military equipment are being prepared to be sent by the United States to El Salvador? Will he take account of the fact that many of us in this country and throughout Europe would regard it as deeply offensive if such supplies and American intervention were to go into El Salvador on the side of tyranny and reaction?
    Mr. Whitelaw: On the first point about The Observer, when this matter has been further clarified and when an application is made, my right hon. Friend the Secretary of State will consider these matters and will report to the House.
    On the question of El Salvador, my right hon. Friend the Prime Minister is fully aware of the extreme concern in this country and in the House. My right hon. Friend went to America well aware of those facts, which will be raised in her discussion with the President. The right hon. Gentleman would be the first to appreciate that for me to make any comment on what he has said about a tragic and difficult situation, at a time of such delicacy in the talks, would be most unwise. I do not intend to do so.
    Mr. Foot: Surely the right hon. Gentleman can undertake to convey to his right hon. Friend the feeling in the House that has been expressed and that most of us are concerned about freedom, even if some Conservative Members are not. Can the right hon. Gentleman tell us

    971
    whether the British Government will be supporting the proposal of the West German Government for forms of intervention or mediation which might assist in alleviating this tragedy?
    Mr. Whitelaw: On the right hon. Gentleman's first point, of course I shall make certain that my right hon. Friend the Prime Minister appreciates the concern of the House and what the right hon. Gentleman has said. I would be departing from my sensible previous position if I risked a response to what he said subsequently.
    Mr. Amery: Does my right hon. Friend agree that, whatever may be the shortcomings of the Government of El Salvador, the Cuban Government have been guilty of aggression in Angola and Ethiopia as well as in Nicaragua and now, on fairly good evidence, in El Salvador? Will he therefore, in any communication to my right hon. Friend the Prime Minister, explain that the balance of opinion in the House is in favour of supporting the Americans in this matter?
    Mr. Whitelaw: The points which my right hon. Friend has raised are well known. They are well known to the Prime Minister and they will of course be part of the discussions which she will have with the President.
    Mr. Dubsasked the Prime Minister if she will list her public engagements for 26 February.
    Mr. Whitelaw: I have been asked to reply.
    I refer the hon. Member to the reply which I have just given.
    Mr. Dubs: Is the Home Secretary aware of the increasing concern in this country about the activities of racists, Fascists, and Nazi organisations? Is he aware that they are provoking attacks on black and Asian people? Is he also aware that ordinary people are being put on "hit" lists by those organisations, with the result that they are receiving threatening and offensive letters and phone calls? Will he give the House his assurance that his present investigation into those racist organisations will be sufficiently authoritiative and wide-ranging so that in the near future he can come to the House with firm proposals for action?
    Mr. Whitelaw: I am aware of the concern expressed by the hon. Gentleman. I am aware of the troubles and of the evidence of these attacks, which all hon. Members would strongly condemn, no matter where those attacks came from. My investigations will be pursued vigorously and urgently. I add that everyone in the House would wish to condemn—
    Mr. Skinner: Everyone?
    Mr. Whitelaw: I hope that it would be everyone. If the hon. Gentleman will wait for what I shall say, he may find that it may not apply to him. I would not be surprised if it did not. However, what I shall say will apply to most other hon. Members. That is that we all condemn extremist actions, from wherever they come. They do not all come from one quarter.
    Mr. Teddy Taylor: While deputising for the Prime Minister, can my right hon. Friend find time to pay yet another visit to Southend, where an energetic Conservative council is saving its ratepayers £500,000 this year by implementing the first ever privately run municipal cleansing service, as a result of which the council has announced a reduction in its rates?
    Mr. Whitelaw: I well remember my last visit to Southend, which I do not suppose contributed to my hon. Friend's satisfactory election to the House. I hope that it did. If it did, I should like to congratulate him and his council on what they have done. It might be a lesson to some spendthrift Labour local authorities which like spending their ratepayers' money.
    Mr. James A. Dunn: Will the right hon. Gentleman convey to his right hon. Friend the grave anxiety over the reported threatened closure of the port of Liverpool? As a deputy to the Prime Minister, will he, as an immediate act of urgency, call a conference of those concerned to see what can be done to alleviate that threat?
    Mr. Whitelaw: I have seen some of the reports. I accept that these are matters of grave concern. Exactly what is happening is a matter for my right hon. Friend the Secretary of State for Transport. I shall make sure that I discuss that with him and I shall report to him the proper anxieties of the hon Gentleman.
    Mr. Robert Atkins: Is my right hon. Friend aware of the concern expressed by lovers of our summer game at the attitude of the Guyana Government over the possible selection of Robin Jackman to play for England? Will he accept that there is support on the Government Benches for the England selectors picking whoever they choose in the hope that we will win the Test match?
    Mr. Whitelaw: I am sure that there is widespread agreement in the House that the selectors should pick the best people for the tour. However, there may well be misunderstandings, which I hope current discussions on the spot will clear up. In the hope that the misunderstandings will be cleared up and the tour proceed in the best interests of the game of cricket, I believe that it would be wrong for me to comment.

Business of the House
Mr. Michael Foot: Does the Leader of the House have a statement to make about the business for next week?
The Chancellor of the Duchy of Lancaster, Paymaster General and Leader of the House of Commons (Mr. Francis Pym): Yes, Sir. The business for next week will be as follows:
MONDAY 2 MARCH—Second Reading of the Contempt of Court Bill [Lords].
TUESDAY 3 MARCH—Debate on a Government motion on the independent strategic deterrent.
Motions on the Town and Country Planning (Fees for Applications and Deemed Applications) Regulations.
WEDNESDAY 4 MARCH—Remaining stages of the Fisheries Bill.
Motion on the International Development Association (Sixth Replenishment: Interim Payment) Order.
THURSDAY 5 MARCH—Supply [11th Allotted Day]: Debate on an Opposition motion on the disastrous effects of cuts on the education service.
The Question will be put on all outstanding Votes and Supplementary Estimates.
FRIDAY 6 MARCH—Private Members' Bills.
MONDAY 9 MARCH—Motions on the Appropriation (Northern Ireland) Order and on the Local Government, Planning and Land (Northern Ireland) Order.
Mr. Foot: Is the right hon. Gentleman aware that if we do not have a satisfactory report from the Prime Minister on El Salvador we may need to ask for a debate? Will he tell us next week when we shall have a debate on the nuclear power problems and the critical report on the subject? I do not press for answers now, as the House wishes to proceed swiftly and allow as much time as possible for the debate on unemployment.
Mr. Pym: I am grateful to the right hon. Gentleman. I note what he says about El Salvador. As my right hon. Friend the Home Secretary said, the Prime Minister will report to the House on her return. The report from the Select Committee on Energy is important. The Government are considering it carefully and will in due course respond. Perhaps at a subsequent stage we should consider a debate.
Several Hon. Members rose—
Mr. Speaker: Order. I hope that the House will co-operate. Two important debates follow, in which over 50 right hon. and hon. Members hope to catch my eye because they have direct constituency interests. I hope that questions will be brief and to the point.
Mr. Robin Maxwell-Hyslop: Will my right hon. Friend provide a full day soon to debate the urgent problems facing British agriculture?
Mr. Pym: I note my hon. Friend's request. There may be an opportunity in the not-too-distant future at least for a half-day debate on agriculture, if not a full-day debate.
Mr. Jack Ashley: As a lover of our summer game, is the Leader of the House aware that the Lord Provost of Glasgow has offered the freedom of the city to Nelson Mandela? Will he comment on that splendid geature? May we have a debate on the matter next week?
Mr. Pym: It is not appropriate for me to comment; neither will it be possible to have a debate in Government time next week.
Mr. Ivan Lawrence: Is my right hon. Friend aware of the splendid performance of our diplomatic and political representatives at the European security conference in Madrid? Will he note that the moment that the conference is over hon. Members would like a debate on the subject in order to assess the results?
Mr. Pym: I note my hon. Friend's request. Good work is being done in Madrid, and we hope that progress can be made.
Mr. David Stoddart: Are we likely to have a statement next week from the Secretary of State for Education and Science about the implications of the High Court ruling by Mr. Justice Forbes yesterday that local authorities may not charge parents for musical tuition, as it has grave implications for the future of musical tuition and the legality of local authorities having charged fees in the past?
Mr. Pym: I am not aware that my right hon. and learned Friend intends to make a statement next week. I imagine that the subject may be relevant to the debate next Thursday.
Mr. Michael Latham: As a debate on the planning fees regulations has been set down for Tuesday, can my right hon. Friend tell us when the equally important and linked measures dealing with amendments to the general development order are to come forward, one of which was announced in last year's Budget?
Mr. Pym: No, but I shall let my hon. Friend know.
Dr. John Gilbert: What constitutional imperative requires the right hon. Gentleman to have a debate on Trident next week and so inflict discourtesy on the House, when the Select Committee on Defence has been studying the matter for many months, is proposing to take evidence from his successor as Secretary of State for Defence the day after the proposed debate, and expects to have its report ready in the next couple of months? Why do we have to have a debate now?
Mr. Pym: As the right hon. Gentleman knows, much discussion has taken place between the Government and the Select Committee about the timing of the debate and on the question why the Government consider it necessary to have it in the near future. It was never envisaged that an investigation by a Select Committee into any subject should inhibit the House from debating it.
Mr. Tony Marlow: As the water workers, whose jobs are secure, who are able to work a full week, and who sometimes work overtime, have been offered a 12·3 percent, pay increase, which will have to be paid for by industrial workers, some of whom have insecure jobs, some of whom are on short time, and some of whom have had no pay increase, may we have a debate on the management and administration of the water services, which patently are not effectively serving the nation at present?
Mr. Pym: I cannot see an appropriate opportunity for such a debate in the near future, but there may be other ways in which my hon. Friend can raise the matter.
Mr. Dick Douglas: Does the Leader of the House recall that I put down a private notice question

975
on the disappearance of radioactive material from the base at Rosyth? As the material has still not been located, will he impress on Defence Ministers the need to report progress to the House, especially as there is a strong view that the material is no longer on the base?
Mr. Pym: My right hon. Friend has the matter very much in mind. When a further statement to the House is appropriate, he will make one. I shall convey the hon. Gentleman's important comments to him.
Mr. John Bruce-Gardyne: My right hon. Friend said that the outstanding Supplementary Estimates would be taken later on Thursday. Will he confirm that they amount to £700 million of additional public expenditure, a significant part of which, alas, is outside existing cash limits? Before we are expected to vote, may we have an explanation not least of the £½ million which the Social Science Research Council seems to have managed to overspend?
Mr. Pym: We must deal with the matter in accordance with existing procedures. As my hon. Friend knows, the matter is under review by the Select Committee on Procedure. We cannot make a change in the arrangements for next week.
Mr. Jack Straw: Has the Leader of the House seen early-day motion 218 standing in my name and those of 120 other hon. Members about the right of 50 workers at the Roach Bridge paper mill to join a trade union without being sacked?
[That this House notes, that following the recruitment into membership of the Society of Graphical and Allied Trades (SOGAT) in early December 1980 of process workers at the Roach Bridge Paper Mill, Salmesbury, near Preston, the Father of the Chapel, Mr. Frank Brown, elected on 13th December, was dismissed by the company six days later for alleged poor timekeeping in breach of normally accepted procedures; that 50 process workers then struck in support of Mr. Brown, and that all 50 were then dismissed by the company on 5th January 1981, and have so remained; that the company have refused even to meet representatives of SOGAT to negotiate a resolution of this dispute; condemns the hostile nineteenth-century approach of the management of Roach Bridge towards union recognition, its dismissal of these workers effectively for joining a union, and its continued refusal even to meet union representatives; believes that Her Majesty's Government should show the same concern about the rights of individuals freely to join trade unions in the United Kingdom as they profess to those in Poland; calls upon the Secretary of State for Employment to intervene in the dispute to secure the reinstatement of the 50 employees and the recognition of the trade union; and calls upon the Press to give the same coverage to this clear denial of trade union rights as they have to the case of Miss Joanna Harris of Sandwell.]
Will the right hon. Gentleman arrange for the Secretary of State for Employment to intervene and for the House to have a debate?
Mr. Pym: I shall convey those views to my right hon. Friend. I cannot see an opportunity for a debate at present, but I shall bear the hon. Gentleman's request in mind.
Mr. John Stokes: In view of recent developments, can my hon. Friend find time next week for a debate on trade union power in the public sector?
Mr. Pym: No, Sir. I am afraid that there is no scope for such a debate next week.
Mr. Phillip Whitehead: Will the Leader of the House arrange for an early debate on the freedom and diversity of the press? Is he aware that since the Secretary of State's decision over Times Newspapers Limited the word is going round Fleet Street that any industrial group can pick up a great national newspaper as easily as buying a bag of crisps?
Mr. Pym: I note what the hon. Gentleman says. I think that that would be a matter suitable for an hon. Member to raise on a private Members' day or in some other way, because I think that it is not likely that Government time will be forthcoming in the near future. But I agree with the hon. Gentleman about the importance of the subject.
Mr. Richard Alexander: Will my right hon. Friend bear in mind the repeated requests that have been made for a debate on the problems of the Palestinian people in finding a homeland? In view of the fact that my right hon. Friend the Prime Minister is almost certainly discussing peace in the Middle East, probably today, does my right hon. Friend agree that it is appropriate that we should have an early debate on this issue?
Mr. Pym: Yes, Sir. I am looking for an opportunity for a debate on foreign affairs when that subject would clearly be appropriate. It will not be in the next week or two, but I hope that at some time around Easter we shall be able to find a day for it.
Mr. William Hamilton: With regard to Thursday's debate on education, does the Leader of the House appreciate the importance of making available to hon. Members Her Majesty's inspectors' report on the effects of the cuts on schools? Is he aware that I applied for a copy more than a week ago and was promised one by the Department, but that I am still waiting? Will the right hon. Gentleman give an assurance that abundant copies will be available in the Vote Office tomorrow, or at the earliest opportunity before Thursday?
Mr. Pym: I promise to make immediate inquiries about that.
Mr. Peter Temple-Morris: May I endorse my hon. Friend's request for a debate on foreign affairs, for many reasons, not least so that the House may consider the case of Mr. Andrew Pyke, who is destined to languish in Tehran, in order to face a trial of which this House cannot approve, after the hoped-for and expected release of the other three missionary detainees tomorrow?
Mr. Pym: I note what my hon. Friend says.
Mr. Christopher Price: May I press the Leader of the House for a statement about Mr. Justice Forbes' judgment from the Secretary of State for Education and Science before the debate next Thursday? Is he aware that it is a very important judgment, which goes far beyond the mere question of music tuition, which calls into question the legality of many of the charges at present being made by local authorities to parents, and

977
suggests that the law is being breached in almost every local education authority in Britain? May we have a statement from the Secretary of State on Monday?
Mr. Pym: I will, of course, convey those views to my hon. Friend. I cannot give an undertaking or promise about a statement, but I will convey those views to him.
Mr. Ivor Stanbrook: Has my right hon. Friend seen the recently tabled Government amendment to the British Nationality Bill concerning the transmission of nationality? Is he aware that it places indigenous Britons born abroad at a disadvantage compared with immigrant Britons? As this smacks of racial discrimination, which we all deplore, will he secure its withdrawal and reconsideration?
Mr. Pym: That matter is appropriate for the Standing Committee considering the Bill to deal with. I note my hon. Friend's request, but I think that it would be for the Committee to deal with that matter.
Mr. Greville Janner: May I draw the right hon. Gentleman's attention to early-day motion 143 on the audibility of the BBC World Service for United Kingdom listeners, which has been signed by about 80 Members from all parties?
[That this House, recognising the excellence of the BBC's World Service and viewing with concern the proposals to build a new transmitter, which will effectively cut off the majority of United Kingdom listeners from the World Service, calls upon Her Majesty' Government to reconsider its plans, so as to ensure that this service remains available to listeners throughout the United Kingdom.]
Is the right hon. Gentleman aware of the widespread concern in this country at the possible loss of this marvellous service? May we be assured that there will be a debate in the House before any adverse decision is taken.
Mr. Pym: I note what the hon. and learned Gentleman has said. I appreciate that a great many people enjoy that service. It is, of course, intended essentially for overseas listeners. The fact that parts of the United Kingdom have been able to receive it is, in a sense, a fortuitous byproduct of the transmissions. Nevertheless, I recognise that this is an important matter, and if there is an opportunity at some stage in a debate on broadcasting, perhaps the House can attend to it then. I do not think that I can undertake to find time for a specific debate on the matter at present.
Mr. Don Dixon: Will the right hon. Gentleman find time for a debate on the serious industrial crisis that we are facing in the North of England, bearing in mind that it is due mainly to the policies of the Government? Is he aware that we have the highest percentage unemployment in the country, that there are 50 unemployed for every vacancy, and that in my constituency, with only 117 vacancies, there are 5,200 people out of work, more than 50 per cent. of them having been unemployed for six months or more? Will he therefore find time to discuss the serious industrial crisis in the North of England?
Mr. Pym: I entirely agree with the hon. Gentleman about the seriousness of the situation in the North. We had a debate recently on the employment situation and the
978
economic situation on a national basis. Today we are spending part of the time debating unemployment in the South and the South-West. It may be that there will be a similar opportunity to deal with the situation in the North at a later stage.
Mr. Derek Foster: Will the Leader of the House take careful note of what my hon. Friend has just said about the problems of the North? Does he agree that there are inadequate opportunities in the House to draw attention to the problems of the Northern region? Is he aware that the unemployment rate there is 13·6 per cent.—higher than in any other English region, higher than in Scotland, and higher than in Wales? Is he aware that, as a result of this avalanche of job destruction, the people of the North feel completely abandoned by the Government? Will he give an assurance that there will be an early debate?
Mr. Pym: I can only tell the hon. Gentleman that I am indeed acutely aware of the serious position faced by many people in the North. We have attended to this in the past to the extent that we have arranged time to debate these matters. Clearly, as opportunity offers, we would wish to do so again. I wish to leave the hon. Gentleman in no doubt as to my awareness of the gravity of the situation in that region, which of course concerns every hon. Member.
Mr. D. N. Campbell-Savours: Is the Leader of the House aware that despite the statement made by the Secretary of State for Industry the other day that documents relating to the corporate plan of the British Steel Corporation would be made available in the Vote Office, the corporate plan is not in the Vote Office and is not freely available to hon. Members? Does he agree that if we are being invited to pass as much money as we are being requested to pass over the next few weeks, at the very least hon. Members should have access to the corporate plan of the British Steel Corporation, when information has now surfaced that the corporate plan may be in the possession of the Select Committee on Trade and Industry?
Mr. Pym: If I recall correctly, my right hon. Friend the Secretary of State for Industry said that he had placed copies in the Library. I will investigate what the hon. Gentleman said and see whether they can also be made available in the Vote Office.
Mr. Dennis Skinner: Has the Leader of the House any plans to bring forward a new coal borrowing powers Bill, in view of the meeting that took place yesterday, in the wake of the £6,000 million for the British Steel Corporation and the £1,000 million for British Leyland and various other items in what is apparently a belated attempt by the Tory Government to reflate the economy? Taking into account the fact that the Government have been accused of dithering on all these matters, would it not be sensible now to ensure that the massive investment programme that some of us envisaged for the railways in order to save them should be brought forward in a further attempt to reflate the economy?
Mr. Pym: No, Sir. The meeting that took place yesterday in relation to the coal industry will be followed by another meeting in about a fortnight's time and there may be further meetings after that. While these very

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important matters are being thought about and discussed, that procedure must obviously be gone through before any decision is taken.

Orders of the Day
  SUPPLY
  [10th ALLOTTED DAY] —considered.

  Textile, Clothing and Footwear Industries
  Mr. Speaker: I have selected the amendment in the name of the Prime Minister.
  Before I call upon the right hon. Member for Lanarkshire, North (Mr. Smith), I remind the House that, as I have indicated, there are two important debates. There will be eight Front Bench speakers in the course of the two debates. At least one hon. Member who has the status of the Front Bench is seeking to catch my eye, but three others who intended so to do have withdrawn. I must tell the hon. Member who is seeking to catch my eye he is very unlikely to do so because I propose to recognise or to call, first of all, only hon. Members who are Back Benchers with direct constituency interests, apart from those Front Benchers who are taking part in the debate.
  3.49
  Mr. John Smith: I beg to move,
  That this House deplores the worsening crisis in the textile, clothing and footwear industries which is caused by Government economics, industrial and trading policies.
  I shall seek to be brief so that a number of hon. Members on both sides of the House may take part in the debate.
  Manufacturing industry in this country is in a terrible crisis. The year 1980 saw the most rapid fall in output since the Second World War, and, as 2,400,000 of our fellow citizens are painfully aware, we are returning to the unemployment levels of the inter-war years. That is bad enough. But perhaps the most depressed sector of our depressed manufacturing industry is that of the textile, clothing and footwear industries. It looks as though well over 100,000 jobs have been lost in those industries in the course of 1980— 40,000 jobs in the clothing industry alone. Therefore, in one year about 10 per cent. of the work force of those industries has gone. In recent months, and over the last year, we have seen a spate of large closures, with firms such as ICI and Courtaulds shedding labour at an alarming rate.
  There can be no doubt, therefore, that these industries are in deep crisis. I regret to say that there appears to be no sign of improvement. Indeed, the fear and despondency running throughout those industries were evident in the large lobby of Parliament which the TUC organised last week. I am sure that many hon. Members will know at first hand, either from their constituents or from their constituency interests, of the worry which the management and work force in those industries feel about their immediate economic future.
  There is also no doubt that the sharp acceleration in the decline of those industries has been caused by the Government's economic and industrial policies. First, the over-valued pound has hit exports particularly badly. I believe that that situation will get worse in the months to come. It has also had the effect of cheapening and stimulating imports, which is a recurrent problem in those industries.

  981
  Regrettably, a large amount of distress borrowing has also taken place, and that has been badly affected by the chronically high interest rates from which we are suffering as a result of the Government's monetarist policies. In those industries we also see the effect of depressed demand. Those industries are particularly sensitive to cycles of consumer demand, and at present they are being hard hit. We should not forget the retreat from an effective regional development policy—again, one of the strands of Government policy. That has particularly hit industries that are located in many of our older industrial areas.
  Mr. Robert Kilroy-Silk: Does not my right hon. Friend agree that it is not just the Government's economic policy which has done positive harm to the textile industry, but also their appallling complacency in the face of often-repeated complaints from firms such as Courtaulds, in my own constituency, where 150,000 men and women were made redundant last week? They have repeatedly told the Government that they were suffering from a high exchange rate, artificially high interest rates and a disastrous artificial energy policy. It has been the Government's failure to act in the face of those repeated protestations of distress from the industry which places more of a responsibility on the Government.
  Mr. Smith: I am grateful to my hon. Friend for drawing that matter to our attention, and also for reminding us of the effects of the Governments energy policy and the lack of any form of assistance to industry in the shape of relief from high energy prices. Some of those industries are suffering particularly in that regard.
  In what I think will be the Secretary of State's first textile debate since he took office, I hope that he will show some of that flexibility which he was urging others to adopt in a recent television interview. I hope that we shall see some "constructive pragmatism", and examples of all the other phrases which are flying about the Conservative Party at the present time. I hope that the right hon. Gentleman will take on board some of the serious problems which the industries are facing.
  I turn to the question of trading policies. I should like to mention briefly the multi-fibre arrangement. Some of my hon. Friends and some Conservative Members may wish to debate the details of that. We know that it takes a fairly long time to work up to the multi-fibre arrangement negotiations. I do not expect the Government to make explicit statements about their attitude or negotiating position today, but I hope that they will listen to the House. In particular, I hope that they will study carefully the possibility of getting some form of recession clause in the new multi-fibre arrangement.
  Above all, we ought to seek to have the levels of imports related to the circumstances of the domestic market. I hope that the Government will take that matter on board and seek to pursue it in the negotiations.
  As to trading, the main disruptive effect over the last year or two, particularly for the textile and clothing industries, has come not from the traditional low-cost producers, but from a large surge of imports from the United States. That has caused a sharp) turn-round in our trade balance.
  Mr. Robin Maxwell-Hyslop: Does the right hon Gentleman agree that one of the MFA's greatest weaknesses is that each new country brought in is given
  982
  a quota on top of the existing quotas rather than a percentage within a global limit, and that that has proved to be the greatest hole in the bucket?
  Mr. Smith: There are many problems associated with the multi-fibre arrangement of which that is one. There is also the problem of outward processing as well as the problem of free circulation. Many difficulties are involved in what is basically a good framework agreement. We ought to learn from our experience of the difficulties, encountered under successive Governments, of enforcing some aspects of the MFA. The Government should seek to try to block some of those loopholes if they can in the forthcoming negotiations.
  I do not underplay the importance of the MFA at all. However, in this debate we ought to turn our attention to the problem of the United States. We have seen a sharp acceleration in imports from the United States. Of course, the benefit of the relationship between the pound and the dollar is itself the result of the Government's economic and financial policy. However, the sharp stimulus to American exports to the United Kingdom, particularly in bed linen and articles such as that, has derived from America's cheap energy pricing policies and from the unfair advantage which America has conferred on itself as a result of its energy pricing policies.
  That was recognised some time ago. During the negotiations on the Tokyo round the Council of Ministers, at the instance of the United Kingdom Government, was persuaded to pass a resolution about this problem. It was linked to the conclusion of the multilateral trade negotiations. The Council resolution of 3 April 1979—only a month or so before the general election—was as follows:
  "In the event that artificial differences in the price of energy and petroleum raw materials available to certain world synthetic fibre producers lead to, or threaten to lead to, a disruption of the Community textile market, the Community will have recourse, without delay, to the appropriate provisions of GATT."
  The present Government did not follow up that resolution, which was a wise precaution taken by the previous Government. It was reported to the House on 4 April 1979, and we made clear the importance that we attached to some action being taken by the Community to deal with the rapidly emerging problem posed by American exports.
  For months after that, the Government did nothing in the Council of Ministers or elsewhere. Finally, in 1980, we got some quotas on some of the sensitive items. Quotas were imposed on polyester filament yarn and nylon carpet yarn, but not on tufted carpets. We argued at the time that those quotas were too high and that it was largely a case of shutting the door after the horse had bolted from the stable.
  On the other hand, at the end of the year we found that the Government were not renewing the quotas at all for 1981, thus leaving the industry without any protection whatever. The Government said that we need not worry so much about that because a new initiative was being taken by the European Commission with the United States Administration which they thought would lead to a resolution of the problem. Those consultations have taken place, but I am afraid that from the report given to the February meeting of the Council of Ministers it now looks as if that initiative is a total failure and that the Community has made no impact whatever on the United States Administration.

  983
  I draw the attention of the House briefly to what was said at the meeting of the Council of Ministers. The Commission drew attention to the American intention to decontrol oil prices. That was nothing new. It had existed before and it took a long time coming. It drew attention to the American Administration's decision to decontrol gas prices over a long time. However, we know the difficulty there—the President proposes but Congress disposes. Some effective lobbying will take place in the United States, and it will be surprising if we see any rapid movement on gas prices. I think that that advantage will remain with the United States. Reference was made to an intention to remove restrictions on naphtha exports, but they are of little relevance to the textile industry.
  The worst part of all was when the Commission solemnly reported to the Council of Ministers that the United States Administration undertook to convey the concern of the European textile industry to the American industry. All that it is doing is conveying concern.
  It is interesting to note what was said in the European press about that and what was said in the American press. "Europe", a journal in the EEC said:
  "Council notes encouraging results of textiles consultations".
  An article in an American newspaper, the Daily News Record, of 11 February 1981, states:
  "The Reagan Administration has told the European Economic Community that it won't press U.S. textile and apparel firms to restrict exports to Europe despite European pressure for such crackdown.
  After two days of meetings here, top trade negotiators from the EEC left Tuesday without achieving their main goal: winning assurances from the White House that European-bound exports would be curtailed.
  The European team, headed by Sir Roy Denman, the EEC's director general for external relations, was told politely that the U.S. couldn't 'under any circumstances' ask for such restraints at this time … The Europeans were equally unsuccessful in winning Administration assurances on another contentious issue: U.S. deregulation of natural gas."
  It is clear that the United States has not paid the slightest attention to the representations made by the European Commission. It is equally clear that the problem of unfair trading will continue into the foreseeable future.
  Sir Frederick Burden: Does not the right hon. Gentleman accept that there is room for negotiation with the United States? In 1978, the flow of knitted fabric was a mere trickle. In the next year its value rose to £17 million. There is a duty on English worsteds and woollens of 45 per cent. in addition to a strict quota. There should be room for manoeuvre between the Governments so that our products have greater opportunities when it comes to penetrating the American market.
  Mr. Smith: I hope that the Government will achieve something along those lines. Indeed, the hon. Gentleman has drawn our attention to the fact that the United States has a protected textile market. Anybody who believes that there is international free trade in textiles is living in cloud-cuckoo-land. All the major consumers of textiles are protected in one way or another. The United States is not slow when it comes to seeking protection for its industry. Nor is it slow to seek export markets. The American textile industry is making a determined export drive. That drive has proved far too successful and has obtained a large share of the British market.
  When the Minister told us that the Government were not pursuing quotas, he was asked what would happen if the initiative failed. My hon. Friend the Member for
  984
  Norwood (Mr. Fraser) asked what would happen if the Government did not get anywhere with the American Administration. The Minister replied:
  "If the initiative fails, we have open to us a range of options under article XIX of GATT and elsewhere. We would consider those in the light of any failure."—[Official Report, 15 December 1980; vol. 996, c. 49–50.]
  The Secretary of State might as well be honest with the House. He can tell us that the initiative has failed and that the United States will not budge. There is ample evidence to show that. Unfortunately, the Minister of State was not in the Chamber when I quoted an American newspaper article, but his right hon. Friend the Secretary of State for Trade heard me. Will the Secretary of State tell us precisely what is happening about the negotiations? What does the right hon. Gentleman propose to do if they end in failure, as I believe they will? The Government must spell out their position. They must tell us what action they intend to take to defend the interests of our industry. After all, the quotas were not replaced on the understanding that this initiative would take place.
  As the hon. Member for Gillingham (Sir F. Burden) reminded us, there is no international free trade for textiles. Countries must look robustly towards the protection of their own interests. The Government should bear in mind that if they are weak about dealing with imports that flood in from the United States they will gravely weaken their hand when they negotiate with the low-cost producers from less prosperous parts of the world. Why should there be any restrictions on their products, they will say, when the richest nation in the world is allowed such free and ready access to our markets? It is in the interests of the Government's trading policies that they should take a firmer and more robust line with the United States.
  Mr. Robert Atkins: I do not necessarily dissent from the right hon. Gentleman's view. However, if we take action against the United States of America over textiles, is the right hon. Gentleman worried or concerned about any backlash that might affect, for example, British Aerospace? We already have some difficulty breaking into the American market and the Americans might take action against successful industries, such as British Aerospace, and prevent them from intervening in their market.
  Mr. Smith: I had not noticed such a connection, but under the multilateral trade negotiations I believe the Americans have entered into certain agreements about aerospace products. One would expect them to adhere to them. However, one must have an effective policy and one must make judgments. We cannot lie down every time the United States vigorously asserts its interests.
  This year is important, because we are approaching the renegotiation of the MFA. the Government must start to lobby opinion within Europe. They must take a strong and determined line, because the problem is serious.
  With regret, we feel obliged to highlight the sad state of the textile, clothing and footwear industries. However, we have a duty to draw the attention of Parliament and of the nation to the rapid and accelerating decline in employment, business opportunities and confidence. Those businesses constitute one of the worst hit sectors of manufacturing industry. It is vital that the Goverment should reverse their economic and industrial policies,

  985
  which are aggravating the problem. They should follow a robust trading policy that protects the interests of these important industries, which are also large employers.
  I hope that the Secretary of State will take his own medicine. Following the interview that he gave on Sunday and the advice that he gave to his colleagues to be flexible, I hope that he will announce some changes in the Government's policy, the difficulty is that at the time the Secretary of State said that he advised people not to listen to what the Government said but to watch their actions. I am prepared to make an exception in the right hon. Gentleman's case. We shall listen to what he says this afternoon, and we might even believe it.

  Royal Assent
  Mr. Deputy Speaker (Mr. Bryant-Godman Irvine): I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:

  1. Iron and Steel (Borrowing Powers) Act 1981

  2. Felixstowe Dock and Railway Act 1981

  Textile, Clothing and Footwear Industries
  Question again proposed.
  4.6pm
  The Secretary of State for Trade (Mr. John Biffen): I beg to move, to leave out from "That'' to the end of the Question and to add instead thereof:
  "this House acknowledges the difficult trading conditions facing the textile, clothing and footwear industries; notes the measures which the Government has taken to give these industries a wide range of protection; and believes their future is best assured by these measures and the pursuit of realistic policies designed to lower the rate of inflation and maintain access to export markets.
  At the outset of the debate there was a call for brevity, and above all for brevity from the Front Benches. The right hon. Member for Lanarkshire, North (Mr. Smith) made a commendably brief speech, which lost nothing on that account. I hope that I shall emulate his example. The right hon. Gentleman understandably said that part of the problem derived from the Government's general economic policy and that another part derived from the specific trading situation that faces the footwear, textile and clothing industries.
  I turn to the general economic background. The hon. Member for Ormskirk (Mr. Kilroy-Silk) intervened earlier and reinforced the right hon. Gentleman's observation that there was anxiety about the minimum lending rate and about the exchange rate. Clearly no comments that I make can in any way indicate the next moves, but it is worth placing on record that the minimum lending rate has come down by three percentage points from its previous high level. It now stands at 14 per cent. There is real concern and anxiety that it should be reduced further in so far as that is consistent with the prudent financing of the public sector borrowing requirement. The House should take note that the minimum lending rate now stands above the retail price index. In so far as the minimum lending rate is an anticipatory figure, it is interesting to note that the retail price index is on a declining path, and the Treasury
  986
  forecast that it will stand at 11 per cent. by the autumn of this year. That evidence can be reinforced by the fact that the current inter-bank lending rate is less than 13 per cent. Although no comments, commitments or hints can be given, the evidence speaks for itself.
  Mr. Joel Barnett: May I try to decipher what the Secretary of State said? Is he saying that the Government's policy on the minimum lending rate is to ensure that the exchange rate falls?
  Mr. Biffen: What I said was absolutely clear. I do not need to trespass upon the time of the House by elaborating further.
  I am happy to turn now to the question of the exchange rate, because that has featured more in our debates than has MLR. In the 22 months since we took office there has been a tremendous increase in the exchange rate. However, the extent to which that position has adjusted in the recent past is not quite realised. The exchange rate of sterling against the dollar rose from May 1979 to a peak in October 1980, and showed an increase of 17 per cent. Since then, it has fallen back by 8 per cent. Therefore, half of the increase has now been adjusted.
  The same is not necessarily true of the exchange rate against a basket of currencies. It rose 19 per cent. between May 1979 and February this year. There has been some fall-back, but nothing as dramatic as that against the dollar. I quote the dollar because on the evidence of the right hon. Gentleman, a great deal of debate has been about the American position relative to British textiles.
  Oil is a major factor in determining our exchange rate. A number of hon. Members have observed that it is widely believed that MLR also contributes. The position that I have outlined for MLR can also be taken in the context of the exchange rate. We all know, and have experienced, the difficulties caused by an appreciating exchange rate. But let us never conceal from ourselves that there are also problems for industry in a depreciating exchange rate. We have only to look across the Channel to see the present German experience with the deutschemark. On 20 February the Financial Times quoted Count Lambsdorff as saying to the German Bundestag:
  "However a survey of 14,000 companies by the Chamber of Commerce makes clear that the weaker mark has not necessarily brought across-the-board competitive advantages. The currency's weakness had led to increased energy and raw material import costs, squeezing profit margins."
  I make that point because it must be set in the balance so that we do not proceed with too exaggerated ideas about the consequences of alterations in the exchange rate.
  Mr. Robert Sheldon: Is it not a fact that price disadvantage does not affect capital exports as much as it affects textile exports? The textile industry is more sensitive to the consequences of cheaper imports and dearer exports.
  Mr. Biffen: I am not denying that. I am trying to put the matter into a wider context than it normally secured. I turn to the industries themselves.
  Mr. Eric S. Heffer: Does not the right hon. Gentleman have a good brief?
  Mr. Biffen: Yes. I am discarding many of the departmental pearls in the interest of brevity, as many hon. Members wish to speak. I hope that the hon. Gentleman is not too disturbed by that. He will have his opportunity to speak later.
  Mr. Heffer: Before the Minister discards too much of his speech, will he outline exactly what he means in the amendment, which refers to the wide range of protection that the Government have given to the industry? How has that so-called protection helped the 1,500 workers at Courtaulds in Aintree who are about to lose their jobs? How is it helping the Dunlop workers in Walton, some of whom are also facing redundancy? What help is being given by the Government? Is it not the Government's overall policy that has led to the position where consumers are unable to buy the product, resulting in wholesale redundancies and a reduction in the work force?
  Mr. Biffen: I am a good-natured person, and I have accommodated a fair speech within my speech. I shall try to deal with those points as I discuss the industries themselves. I hope that the hon. Gentleman will not think me discourteous if, in the interests of the House, I quite reasonably try to limit myself in time and make my speech in my way.
  I turn to the industries identified in the motion. In all parts of the House there is an understanding of the difficulties that have confronted the footwear industry, partly relating to the exchange rate and interest rates, partly to the level of domestic demand, and partly to the challenge of imports. The question of imports has featured largely in industry debates. About 50 per cent. of the low-cost imports are under various restraints, either formal quotas, Government-to-Government voluntary restraint arrangements, or inter-industry agreements. The Department of Trade's anti-dumping unit is ready to advise the footwear and textile industries whenever they feel that a case can be made, and that there needs to be representations to the European Commission, which has authority in these matters. I wish to emphasise what has been emphasised by my predecessors, namely, that we believe that the European Commission anti-dumping staff should be expanded to enable them to operate more effectively.
  Yesterday I had the opportunity to meet the footwear economic development committee. Its chairman, Mr. Spencer Crookenden, and several members of his committee pressed upon me the importance that they attached to both the minimum lending rate and the sterling exchange rate. I am sure that they are valid arguments. I have taken them on board.
  Mr. Michael Morris: Is the Department doing any preparatory work, for a change, especially in relation to India and Pakistan, whose exports to Britain rose to more than 60 per cent. last year?
  Mr. Biffen: We should be happy to entertain any representations from the industry on that point. If my hon. Friend wants to contact me about it, I shall see what can be arranged.
  I turn to the textiles and clothing industries. In a sense, they inevitably dominate such debates. The difficulties for those industries are similar to those that I outlined for the footwear industry—a low level of domestic demand, problems of exchange rate and minimum lending rate, and imports. The textile industry is not homogeneous. Very often the import controls can cause problems for certain aspects of the industry. There is not a united and singularly identifiable view of the interests of the textile and clothing industries in relation to trade regulations.
  988
  I shall give an example of that so that the House can take it into its judgment. I am not doing any more than that. There was much discussion about the necessity of imposing quotas on polyester filament yarn and nylon carpet yarn, and temporary quotas were introduced in February 1980. We should bear two points in mind. First, those quotas created problems for United Kingdom manufacturers who use those products as raw materials. Secondly, and perhaps more significant, former President Carter, in September 1980, threatened to double almost United States tariffs on wool textiles if the quotas were maintained. That is one of the facts of international trade life. If we are not prepared to acknowledge that, we are taking a dangerously narrow view. I am glad that I have the nodding acquiescence of the hon. Member for Colne Valley (Mr. Wainwright). I am sure that he will agree that, notwithstanding that we share that anxiety, there is no doubt that there is a widespread concern in the House about the role that imports have played in causing acute disruption in the British market in the past.
  Mr. Kilroy-Silk Mr. Kilroy-Silk rose—
  Mr. Bob Cryer Mr. Bob Cryer (Keighley)rose—
  Mr. Jack Straw Mr. Jack Straw (Blackburn)rose—
  Mr. Barry Sheerman Mr. Barry Sheerman (Huddersfield, East)rose—
  Mr. Biffen: If I have a choice, I give way to the hon. Member for Huddersfield, East (Mr. Sheerman).
  Mr. Cryer: The softest touch.
  Mr. Sheerman: Given that we face an American policy that allows the import of crude oil at $35 a barrel and then sends it out as man-made fibres at $15 a barrel, should not the new President be confronted by the Government in the strongest terms in their opposition to that policy and in opposition to the policies that go right against the American ethic of free trade, including the export of oil?
  Mr. Biffen: First, I find it extremely odious that the hon. Member for Keighley (Mr. Cryer) should refer to his hon. Friend the Member for Huddersfield, East as the softest touch. That was a quite unnecessarily offensive comment and the hon. Member for Huddersfield, East falsified it by the argument that he advanced. With a new American Administration, one has the chance of making fresh representations. However, the word "confront" is not necessarily the most useful one when negotiating to try to secure a change in pattern and a change in behaviour.
  I shall say a few words about the United States, a few words about the European Community and, finally, a few words about the multi-fibre arrangement.
  Mr. Kilroy-Silk Mr. Kilroy-Silk rose—
  Mr. Biffen: No, I shall not give way. The new United States position is that oil prices have been deregulated. That is something for which we are grateful. It is a move in the direction that is generally congenial to sensible and balanced trade between our two countries.
  Mr. David Lambie: What about gas prices?
  Mr. Biffen: The next area for movement must be in respect of natural gas. The position not merely of the United Kingdom Government but of our sister nation Governments within the community is well-known in Washington. On 24 February, in The Times, the United

  989
  States trade representative, Mr. Brock, was reported as saying that he was fully aware and "most sympathetic" to Britain's fibre import problems. He continued:
  "We intend to work in the direction of decontrol of natural gas and we hope to take other steps that might prove to have greater short-term benefits."
  This is an issue that is in the grip of Congress and does not lie within Presidential authority. Nevertheless, our position is clear. We are able to use such advantages as are conferred by a new Administration to persuade them, as the hon. Member for Huddersfield, East says, of the inherent logic of what we are suggesting.
  The Department of Trade anti-dumping unit is cooperating with the industry in preparing for the Commission a case on bed linen. Relations with the United States are causing more anxiety in the textile world than traditional arguments concerning the multi-fibre arrangement and many of the low-cost producers. The motion refers to the textile and clothing industries, yet 40 per cent. of our imports come from the European Community.
  I am aware that there is anxiety that certain national aid schemes are being proposed within the European Community that might add to the competitive disadvantage for British manufacturers. That is true of Belgium, France and Holland. I am sure that the House will be gratified to know that under article 93 of the Treaty of Rome action is being taken against the Dutch proposals. I am sure that those who watch these developments as vigilantly as the right hon. Member for Salford, West (Mr. Orme) will be keen to maintain our national position.
  Mr. Tony Marlow Mr. Tony Marlow (Northampton, North) rose—
  Mr. Cryer Mr. Cryer rose—
  Mr. Straw Mr. Straw rose—
  Mr. Biffen: I give way to my hon. Friend the Member for Northampton, North (Mr. Marlow).
  Mr. Marlow: Does my right hon. Friend agree with me that one of the underlying problems that industry generally, and particularly both these industries, suffers from is our membership of the Common Market? Having a stronger currency because of our North Sea oil, we have a completely different trading environment from that of other countries in the EEC. We are locked into this institution. Their objectives may be different from ours. We have no trading policy of our own and we are unable to look after our own industries so long as we combine in that institution in the way that we do at the moment.
  Mr. Biffen: My hon. Friend argues with great force and persuasiveness on these issues. If the Opposition wanted to use a Supply day to question the basis of our membership of the Community they would have made that explicit in the motion. It is a substantial side-wind that my hon. Friend is bringing into the debate and I shall not be buffeted by it.
  Mr. Cryer Mr. Cryer rose—
  Mr. Biffen: No, I shall not give way. I have been tolerably fair by the House, in the interests of those who wish to contribute to the debate.
  We are proceeding to the enlargement of the European Community. It is important to have satisfactory transitional arrangements for textiles during the negotiations for Spanish and Portuguese membership. This would
  990
  be preferable to depending purely on the general safeguard article in the Treaty of Accession, as in the arrangements concluded for Greece by the Labour Government.
  I turn to the renewal of the multi-fibre arrangement. The right hon. Member for Lanarkshire, North said that this was not an occasion when he expected detailed consideration of the current arrangements or the prospective replacement arrangements. The Government have received many representations about what the new arrangements should contain. Some have been from the industry and its spokesmen, such as the British Textile Confederation and the British Clothing Industry Association. Others have been from groups with quite different interests but which have a right to be heard, such as the Consumers Association, the Retail Consortium and organisations committed to Third world economic development. Many of these submissions have been very valuable, and we hope that they will continue.
  We have received a good many inquiries about the British Government's objectives in the negotiations. The Government's position on their broad aims is perfectly clear. My right hon. Friend the Prime Minister has said that we want an effective and vigorous arrangement, and that is what we intend to get.
  When we come to specific issues—there are many of them—we must not lose sight of the fact that the United Kingdom is one party of many to the negotiations. The first stage will be to establish a common position within the European Community. In these complicated negotiations, we must, if we are to get the best possible deal for the United Kingdom, be prepared to negotiate flexibly, taking advantage of opportunities as and when they occur. I do not believe that the House will wish me to lay down rigid and detailed negotiating objectives, still less to reveal them publicly. However, the House has made clear on a number of occasions the major areas of interest. Today's debate is but one of several occasions when the problems of the textile industry and the multi-fibre arrangement have been discussed.
  Views have been expressed about the working of the basket extractor mechanism, about the distribution of quotas between low-cost supplying nations and, perhaps most clearly of all, about the desirability of a recession clause.
  Mrs. Elaine Kellett-Bowman: Hear, hear.
  Mr. Biffen: There are certainly substantial technical difficulties in devising an effective recession clause. My predecessor observed to the House in July 1980, when answering a question from my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman), that a recession clause in MFA III would be a central matter for negotiation. Nothing in the intervening months diminishes the force of his remarks.
  There are many more specific matters to which our negotiators will have to address themselves in the coming months. I do not propose to take any more of the time of the House. We shall go into the negotiations determined to secure a good and effective arrangement and to obtain the best possible deal for the United Kingdom as a whole.
  The House has before it an Opposition motion. It is the privilege and the obligation of the Opposition to oppose and to raise the level of controversy. However, for all the complaints about the trading arrangements that are central to the debate, the multi-fibre arrangement is an inheritance

  991
  that the Opposition provided when in Government. The measures of unilateral control that could be sought under article 19 of the General Agreement on Tariffs and Trade were used but once by the Opposition when they were in power for four years. Let us be under no illusion. The difficult problems in this industry are being used for shameless opportunism, which is the hallmark of the hon. Member for Norwich, South (Mr. Garrett) and his colleagues on the Front Bench.
  4.31 pm
  Mr. James Molyneaux: During 1980 about 4,000 jobs were lost in the textile, clothing and footwear industries in Northern Ireland, and a large number of employees are now on short-time working. Employers feel that the short-time working compensation scheme is of very little assistance to them in providing real jobs as opposed to phoney jobs. It is regarded as an alternative form of payment of dole money by the Government. Employers and employees would favour a return to the temporary employment subsidy, which they say was of real value in avoiding both redundancies and closures.
  Those same employers, employees and, indeed, former employees, cannot be blamed for asking, when vast sums of money are being made available to British Leyland, British Steel and De Lorean, whether it is too much to expect that very limited assistance might be given to traditional and relatively small industries in Northern Ireland to assist them in their temporary difficulties. At the risk of embarrassing the Government Front Bench, perhaps I might add that in the changed circumstances, and in the light of some fresh thinking in the past week, they might take this point on board. If I might make a simple request to them, perhaps we might be allowed to have sight of the new spring guide.
  On 30 July 1980 I entered a plea on behalf of the textile industry in Northern Ireland. Since then the giants—Courtaulds, ICI and British Enkalon—together with many smaller companies, have slipped badly, some of them, I am afraid, past the point of no return. In that debate I stressed the urgency and importance of shaking ourselves free of the EEC restrictions on our ability to defend our national interests.
  As one who has always been opposed to the Common Market, I might give a gentle fan to that side wind to which the Secretary of State referred earlier. It is true that the very limited February 1980 restriction permitted by the EEC Commission has proved to be inadequate. The right hon. Member for Lanarkshire, North (Mr. Smith), the spokesman for the Opposition, rightly said that the more recent approach to the American Administration has also been abortive. As he further said, the up-to-date position with regard to the American Administration is also very unsatisfactory because it is clear to all of us that they have no intention of limiting their exports—dumping might be a better term.
  We on this Bench have consistently reminded the House, and I hope hon. Members will forgive me for devoting not more that two minutes to this topic, that the greatest single burden on the Northern Ireland economy as a whole is the high cost of energy. On 15 January 1981, at column 1524, my hon. Friend the Member for Armagh (Mr. McCusker) reminded the House that the cost differential between the two parts of the kingdom was between 25 and 35 per cent. I must put again to every right
  992
  hon. and hon Member this question: how would they feel if energy costs in their constituencies were 30 per cent. higher than those in neighbouring counties?
  The House will be accustomed to Ministers seeking to justify the denial to Northern Ireland of one very important United Kingdom asset, namely, North Sea gas. Hitherto the excuse has been that the remit of the British Gas Corporation did not extend to Northern Ireland and therefore the corporation was under no obligation to provide supplies there. That may have been regarded as sufficient excuse for successive Governments and successive Ministers who were determined to pursue a do-nothing policy. Admittedly they were motivated in that do-nothing attitude, an attitude which perhaps requires very little motivation, by the belief that there would be great difficulty in finding the financial resources to meet the cost of a pipeline to Northern Ireland.
  After the passage yesterday of the Gas Levy Bill that feeble excuse has been blown out of the water by a member of the Government, the Under-Secretary of State for Energy, who rejected an Opposition amendment on the ground that it would have the effect of permitting the British Gas Corporation to retain £130 million profit which it did not really need. He reinforced the point by saying that the corporation would be investing no less than £4,000 million, presumably in the three years covered by the Gas Levy Bill.
  All that raises the question why the British Gas Corporation, with all this money at its disposal, could not in the past have found the trivial sum required for a gas pipeline to Northern Ireland. However, we are at the point today where the attitude of the British Gas Corporation is no longer our concern. The ball is now firmly in the court of the Treasury. It is widely known that some Whitehall Departments disclaim any responsibility for Northern Ireland affairs, for understandable reasons. The Treasury is not among them. Like the Foreign Office, the Treasury keeps its finger in the Northern Ireland pie.
  Like the citizens of Great Britain, we are all forced to join the Inland Revenue club, and we are denied the right to resign if our subscriptions are thought to be out of all proportion to the benefits derived. In the matter of North Sea gas, the Treasury will benefit to the tune £1,300 million during the three years covered by the Gas Levy Bill.
  I promised to be brief, and I end by making a simple plea to the Secretary of State. I put to him the not unreasonable request that he will put to his friends—and he is not without friends and contacts in the Treasury—the simple request that we should not be denied one-thirteenth of that vast sum for the provision of a pipeline to enable industry and the citizens of Northern Ireland to have access to energy on the same terms and at the same cost as the rest of the United Kingdom. If the Secretary of State cannot give us some real hope in that regard tonight I shall have to advise my right hon. and hon. Friends to vote, for quite separate reasons, for the motion put forward by the official Opposition.
  4.38 pm
  Mr. Nicholas Winterton: I am profoundly sad, because we are debating the plight of industries that are of strategic importance to this country. I am also profoundly sad because successive Governments have ignored the appeals and requests of industries that have invested when Governments have asked them to

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  invest, have always had an excellent history of industrial relations and have a work force that is loyal to their respective industries, unlike practically any other industry in the country. I am also profoundly sad because tonight I shall be voting against my Government on their amendment; if the amendment is carried and if there is a second vote, I shall then vote against the Government again.
  The Government fail to appreciate the problems of the textile, clothing and footwear industries in certain regions. Need I remind my right hon. Friend that the textile and clothing industry is still one of the major industries of the country, despite the massive redundancies of recent years? Need I remind my right hon. Friend—whose speech gave me a slight glimmer of hope, but not enough to persuade me to change my decision—that the industry employs approximately 650,000 people? The cotton and allied sector, with which I am particularly concerned as chairman of the cotton and allied group in the House of Commons, employs 44,000 people.
  I ask my right hon. Friend to compare those statistics with the statistics of the coal mining industry, which is to benefit from a substantial Government handout in the near future. That industry employs 230,000 people and is receiving special Government consideration. I understand that it is likely that the package could involve a reduction in coal imports. I hope that the British Government—not the English, Welsh, Irish or Scottish Government—will give the same consideration to the British textile and clothing industry.
  May I remind my right hon. Friend that more than 100,000 jobs were lost in 1980 in the textile and clothing industry, and 20,000 jobs were lost in the cotton and allied sector? That is 30 per cent. of the total employed in that sector.
  Most of the remaining mills are working well below capacity. Many are on a three-day or four-day working week, while others which previously worked multi-shifts have cut out weekend and night shifts. These are all capital-intensive units which need maximum throughput to spread their overhead costs. A major overhead in the most recently equipped mills is the interest charge on capital borrowed to buy new plant and equipment. That is why I was delighted that the right hon. Member for Lanarkshire, North (Mr. Smith) raised so forcefully the subject of interest rates.
  The most recently equipped mills and those which have bought the most costly automated equipment are the most vulnerable if, because of a severe decline in demand, they cannot run their plant to maximum capacity. If, because of the recession and the shortage of cash in people's pockets, there is no demand, these mills can get no return on the massive investment that has been made. Textiles are second only to chemicals in the amount of investment that has been made in them in recent years. The record of employers in the textile and clothing industry is something of which the industry can be proud.
  All mills have standing charges which are so high that they are making substantial losses whenever they cut out shifts or work less than a full week, which is the order of the day at present. It follows, therefore, that if there is no change in Government policy many more factories and mills in the North-West, Yorkshire, the Northern region
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  and Northern Ireland—here I follow the remarks made by the hon. Member for Antrim, South (Mr. Molyneaux)—will be forced to close.
  I cannot emphasise too strongly that the most efficient mills in the world are included in the list of those that are now on a reduced working week. I refer to the Majestic mill in Oldham and Unit 1 in Atherton, which was visited by my right hon. Friend the Prime Minister before she bacame Prime Minister. In my capacity as chairman of the all-party group I seek to acquaint myself at first hand with what is going on. I went to Lancashire in the Christmas recess and visited Holdsworth Brothers at Bolton, Highams at Royton, Caledonian Textile Engineering Co. at Burnley and William Reed and Co. Ltd. in Nelson, in the constituency of my hon. Friend the Member for Nelson and Colne (Mr. Lee). All those mills have invested huge sums of money at the request of the Government; they have shed their work force without industrial dispute; and now, because the Government refuse to act in the national interest to provide fair competition for a strategic and important industry, thousands of people are being put out of work. I find that unacceptable.
  Moving on to the temporary short-time working compensation scheme, I follow again the remarks made by the hon. Member for Antrim, South. I believe, sadly, that the scheme is of little value. It has done nothing to preserve business, since the main beneficiaries are the operatives and the Government. Firms lay out money for as long as 12 weeks to pay compensation to operatives. They save the cost to the Government of unemployment benefits and the administration of those benefits which employees would claim if there were no such schemes. Employers have used the scheme so far because it has helped them to keep their labour force together in the hope that trade would soon improve. I regret to say that this is now seen as a forlorn hope, both by me and by the industry. In any case, the modified scheme introduced by my Government of 50 per cent. of wages for stopped days is now of doubtful value to many employees because they can receive more when they are out of work than they can by remaining in work. That is a very sad state of affairs.
  It surely should be possible for the Government to speed up payments to firms so as to do less damage to their cash flow. More importantly, they should devise a better scheme, but, best of all, they should go back to 75 per cent. which was the percentage prior to the new scheme.
  In the end, nothing but increased production will save the industry, and I am sure this will be taken on board by my right hon. Friend. I see an increase in production as one of the ways in which the country can regain its economic greatness. This can be brought about, first, by an improvement in the general economy. Secondly, effective control is needed to protect the textile, clothing and footwear industries from unfair competition. If necessary we should use non-tariff barriers. There is no point in my right hon. Friends on the Front Bench, telling me that we are members of the EEC and must abide by the Treaty of Rome. Look at what the French, the Germans and the Dutch are doing. My right hon. Friend said that we were likely to take the Dutch to the European Court for what they are doing, but how long will it take to progress that case and how much damage will be done in the interim?
  Thirdly, there must be a decrease in interest rates and in the value of the pound so that our highly efficient textile exporters have a reasonable and fair chance to trade on the

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  world markets. Finally, I propose that the Government should introduce an energy package so that the industry and people of our country can have the advantage of our great natural resources.
  It is nonsense for my right hon. Friend to keep on claiming that we have a massive array of import controls. The controls are there on paper, but they are set at too high a level; they are not being tightened during a period of recession, and many of them are exceeded. In 1980 over 70 ceilings or trigger levels were exceeded, some of them, I accept, only marginally, but many of them substantially.
  It is not without much consideration that I shall vote against my Government tonight in the Division Lobby. I believe that hon. Members do themselves no service if they lack credibility with the people whom they seek to serve and to represent. I have long believed that the textile and clothing industry has received less than justice from successive Governments. I shall not, in fact, be voting for the Opposition. I shall be voting against my Government. I deplore the fact that the Leader of the Opposition was seen strutting at the head of a large demonstration in Glasgow at the weekend. The right hon. Gentleman, when Secretary of State for Employment, presided over a more than doubling of unemployment in this country.
  Sadly, it is perhaps a reflection on all political parties that we seek to use the unemployed for political purposes. I deeply regret it. This is something that has been gnawing inside me for some time. I am not prepared to be party to it any longer. For that reason I am going into the Division Lobby against my Government and for the Opposition motion. If the substantive motion as amended, is then voted on, I shall vote against it. [Interruption.] I say with some respect to my hon. Friend the Member for Preston, North (Mr. Atkins) that he may consider this a laughing matter. If, however, he was one of the 100,000 in the clothing and textile industry put out of a job, I am sure that he would not be smiling on either side of his face—
  Mr. Robert Atkins Mr. Robert Atkins rose—
  Mr. Winterton: I am not giving way. My hon. Friend is a prize interventionist from a sedentary position. I feel deeply about this matter. It is wrong that either side of the House should have chosen on this subject to apply a three-line Whip. We represent the regions of this country and the constituencies in the regions. I believe that such a general debate as we are now holding should enable hon. Members to express their views forcefully to the Government of the day and then to be able to carry their views into the appropriate Division Lobby, rather than be carried into the Division Lobby dragoon-like, as a party like sheep and goats to the slaughter. I am concerned that we should be seen in the House to represent those who elected us. For that reason, I have made my decision.
  4.53 pm
  Mr. Ben Ford: It is right that I should compliment the hon. Member for Macclesfield (Mr. Winterton) on the resolve that he has expressed. It is difficult to go against one's party. In the end, however, one's constituents must be properly represented.
  From my vantage point as chairman of the all-party group for the wool textile industry, I can confirm to the Government and the public the deep anxiety, even anger, that is felt in all parts of the House over the steadily deteriorating position of textiles in the British economy. I took the chair at a series of meetings held in the Grand
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  Committee Room of textile, clothing and footwear workers, where a deep feeling of hurt and frustration was evident. "What" they asked "do we do if we lose this job? There are no others to turn to". I warn the Government that the ground is growing increasingly fertile for those wishing to sow the seeds of dissent and social unrest.
  Earlier this week I received from the Secretary of State for Industry a reply to a parliamentary question in which I asked why Government funding in the textile industry had not been at the level of funding of the steel and motor industries in the light of the greater job loss in textiles between 1970 and 1930. The reply was:
  "The Government cannot be held responsible for the policies of the previous Administration or for their results. Our policy is to create an economic climate in which all industry can succeed without assistance from the taxpayer."
  It went on to say:
  "In the case of both public and private sector businesses, loss of jobs is not a yardstick for determining whether the taxpayer should be asked to provide assistance".—[Official Report, 24 February 1981; Vol. 999, c. 346.]
  I regard that answer as unworthy. It tries to blame the previous Administration. I blame all Administrations, over many years, for ignoring the textile industry in favour of the powerful battalions. The workers in textiles have done everything possible to co-operate in creating a viable situation. They have been among the lowest paid for many years. They have joined in with rationalisation schemes, alterations in hours of work and so on. Yet they have one of the best records regarding loss of time due to industrial disputes. How have they been rewarded? The answer is, by the loss of 262,000 jobs between 1970 and 1980—as many as in steel, coal and motor vehicles put together. I took those figures from The Sunday Times of 15 February 1981.
  When we consider the amount of money that has been available to these industries for enhanced redundancy payments alone, is it any wonder that the textile workers are bitter? Let us hear something from the Government about unilateral action in the interests of maintaining a viable industry, along similar lines to France, Italy and the Federal Republic of Germany. Let us hear something about the price of energy to industry, and also about the price of water, which has increased by 72 per cent. in two years to the wool textile industry.
  How can large users of water, such as top makers, remain competitive in those circumstances? Interest rates should be brought down to help save smaller firms such as the one which, it was announced yesterday, is closing in a township in my constituency. It has taken a Conservative Government to suit the condition to the name of the town—Idle.
  Mr. Thomas Torney: Does my hon. Friend agree that such is the situation in his city and mine, Bradford, and throughout those parts of West Yorkshire where wool textiles is the main industry, that if the Government do not take some action, instead of simply making the excuses that we have heard from the Minister today, the area will be a ghost area for employment? Mills are closing regularly. Thousands of workers are being thrown on to the scrap heap of unemployment with no hope of getting alternative work.
  Mr. Ford: I thank my hon. Friend for underlining the point that I am attempting to make. My colleagues on the Opposition Benches have been, and will be, illustrating in detail the local effects of the Government's policies. I shall

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  be content with quoting from the leading article in the February issue of "Wool Record and Textile World", which states:
  "The Budget will show once and for all whether Mrs. Thatcher and her Government have grasped the realities of Britain's industrial situation or whether their many critics are right in their more frequent and more vehement contentions that the Thatcher policies will prove disastrous and result in the destruction of our whole industrial base. It is astonishing that this Government's actions should have been so inimical to the interests of private industry because it claims to stand for all the principles which private industry incorporates—enterprise, initiative, independence and so on. Their treatment of the textile industry has been appalling in its inadequacy and there is every justification for the chairman of Allied Textiles saying in his annual review that 'We see no evidence of the political will necessary to secure the future of any significant capacity for the production of textiles and clothing in the United Kingdom'."
  It is unnecessary for me to add any further comment. I had intended to make a detailed case for national economic planning and to urge the Government to consider it. I have never considered the Treasury a suitable instrument for economic planning. It is necessary for us to know where we are going if the Government are pretending that they will bring about industrial reconstruction. We must know what they mean, what they intend and where the textile industry will lie in that industrial reconstruction.
  I address myself to the Opposition Front Bench. I call on the Leader of the Opposition to appoint a senior Front Bench spokesman on national economic planning and to ensure that he has the facilities to gather around him the best brains in the country so that when we take over the Government we have a plan to work to. It is no longer feasible to carry on in Government on an ad hoc basis. Resources are finite and we have to identify and allocate them according to priorities. It is equally important that if we have a plan for progress it is communicated to and understood by the people that it covers such things as rent, profits, and interest as well as incomes, because then we are much more likely to produce a consensus where all are working towards the same end—a fair, just and humane society.
  5 pm
  Sir Frederick Burden: For most of my business life I was engaged in the clothing and textile industry. Therefore, I may have an advantage over some of my right hon. and hon. Friends. I do not think that rhetoric or exaggeration will help the textile industry in any way. We must accept—I have seen it for many years—that the textile and clothing industry has experienced increasing difficulties. Those of us who have been engaged in the industry know that among the bankruptcies and closures in this country, clothing firms are high on the list.
  We must accept that for many years Britain had advantages in markets throughout the world, through imperial preference. We controlled the industries in those countries and our products were able to enter with great advantages over products from many other countries. Unfortunately, that has ended and imperial preference no longer exists. The clothing industry is labour-intensive and is not an industry in which high capital resources are required. It lends itself to production in emerging countries and we find it difficult to compete with countries with low
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  labour costs. The prime example is Hong Kong. A wide range of exports from that country have spread throughout the world because Hong Kong has become efficient in manufacturing clothing right across the board. It is extremely difficult for us to compete with low-cost countries except in high quality garments, for which there has been a falling demand. The clothing industry will have continuing difficulties.
  Since the war there have been increasing lower priced imports—especially since synthetics were introduced—from eastern European countries and other areas such as Portugal. Those imports have imposed considerable difficulties on our industry. Recently there have been considerable increases in imports from America—carpets are an illustration. American carpets have been sponsored throughout the United Kingdom by the large and powerful retail groups. The Americans have produced keenly priced high fashion carpets. We recognise that fashion is an important factor. I pointed out in an intervention that since 1978 the Americans have radically increased their trade in knitted fabrics. It was a trickle then, but it was worth £17 million in 1979, and it is growing at an alarming rate.
  Fashion changes have added to the difficulties of the textile trade. The traditional dress of the British man was a tailored suit, and he kept quite a few of them in his wardrobe. Now it is unusual to find more than one suit, or perhaps two, in the average man's wardrobe. The remainder is made up of casual wear, which has not helped the woollen industry, and must have reduced considerably the demand for men's woollens throughout the world. I emphasise that woollen textiles from this country are still of high quality. The Government can help. We must remember that the woollen textile industry has relied in the past to a considerable extent upon stock holders and distributors. They buy from the mills and hold heavy stocks, very often of fashion woollens. The fact that they have to hold large stocks means that the high rate of interest has reduced the size of the orders that they would normally place. I ask my right hon. Friend to consider that carefully. In piece goods, especially, many factories require a stock holder, and in fashion stock holding the rate of interest is an important factor to be taken into consideration. The Chancellor of the Exchequer could help the whole of the textile industry by making a reduction in the interest rate in the Budget.
  Some of the highest tariffs against British woollens are, surprisingly, in countries with which we have traditionally had great trade relations. It is discomfiting to find that the tariff on British woollens going into Australia is 35 per cent., with a severe quota. In New Zealand the duty is 45 per cent. with a quota in addition. In the United States, the import duty on woollens is 45·5 per cent. Although we may have had no lever in the past to bring a more reasonable attitude to our exports of textiles to America, the fact that the Americans are increasing their exports to us should give us an opportunity to open negotiations with them to give us better opportunities to sell our textiles and clothing in the United States.
  Those are countries in which we are at a disadvantage. But there are other countries that penalise our exports of textiles, especially woollens, with duties as high as 100 per cent., yet they sell their textiles, finished and unfinished, to this country without any comparable restriction.
  My right hon. Friend could do the textile industry in this country a great deal of good if he would consider the

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  instances in which other countries, by exporting on a very large scale to this country, are also giving us opportunities of the sort that I have suggested.
  I have one comment to make on the speech of my hon. Friend the Member for Macclesfield (Mr. Winterton). It is easy to talk about giving the textile industry and the clothing manufacturers the sort of handout that has been given to the miners.
  Mr. Nicholas Winterton: They are not looking for that.
  Sir Frederick Burden: That was the implication of my hon. Friend's remarks.
  Mr. Winterton: Absolute rubbish.
  Sir Frederick Burden: My hon. Friend would serve his purpose much better if he would use less rhetoric and less exaggeration. If I misunderstood him, I apologise, but certainly I thought that that was what he meant. I have been in the industry nearly all my life. If he had been in the industry for as long as I have, he would realise that it would be impossible to subsidise hundreds of small factories manufacturing clothing and also to subsidise to the same extent those engaged in the textile industry.
  I hope that my right hon. Friend the Secretary of State will look at the position in the textile manufacturing industry, where we are competing with overseas countries that are exporting to this country on a considerable scale. The position is not quite the same in the clothing industry, because of the conditions to which I have referred. Given the right opportunity, I am sure that our woollen manufacturers can hold their own, but we have also to take into consideration the fact that there have been changing fashions and that the overall demand for men's traditional wool textiles is not as great as it was several years ago.
  5.11 pm
  Mr. Cyril Smith: The hon. Member for Gillingham (Sir F. Burden) will, I hope, forgive me if I do not take up his remarks. I hope he will also forgive me if I say that I found the speech of his hon. Friend the Member for Macclesfield (Mr. Winterton) more entertaining than his speech, if only because I agreed more with the hon. Member for Macclesfield than with him.
  Last week, with many other hon. Members, particularly Opposition Members, I met deputations of textile workers—perhaps ex-workers would be a better word—from the North of England. Those from my constituency were certainly ex-workers. When I met them here in the House, I had to tell them that in my view the Government had virtually written off the textile industry, certainly in terms of being willing to give practical assistance to it. I had to tell them that in my view the present Government are as pathetic as the Labour Government in regard to willingness to help the industry. I also told them that, while I was quite sure that we would continue to receive from this Government—as from the Labour Government—a great deal of noise in support of the industry, it was not likely to materialise in real help.
  As I listened to the Minister's speech this afternoon, it seemed to me that we were being given all sorts of reasons or excuses as why nothing could be done but little indication as to what was to be done or what the Government thought they might be able to do.
  I shall not rehearse all the problems of the industry. Suffice it to say that in the past 12 months we have lost
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  over 100,000 jobs. In my constituency of Rochdale, unemployment has risen from under 6 per cent. to over 14 per cent. in 12 months. In the cotton industry and the allied textile industry we have lost 20,000 jobs in one year—a 33 per cent. reduction in the labour force in one year. We have had all the usual closures, bankruptcies and liquidations. I am sure that the House has heard about them before and will continue to hear about them.
  The latest closures are those in Courtaulds, especially in the city of Liverpool, and in Northern Ireland. I understand that many of those closures are due to an energy policy that is not particularly helpful to the industry or conducive to its success. In short, what the House is talking about is a pathetic mess. One hopes—although with little optimism—that the debate will produce a promise of Government action rather than the crocodile tears that we often get in these debates.
  I have not missed a textile debate in this House since I was elected in 1972. In 1966, when I was the mayor of Rochdale, I led a deputation of Lancashire mayors to the then President of the Board of Trade, the right hon. Member for Battersea, North (Mr. Jay), so the problem has obviously existed for 10 or 15 years, and we have not made a great deal of progress in that time.
  The reasons for contraction are well known to the Government. To be fair, some of them, quite properly, were mentioned by the Minister in his opening speech. There is the general world-wide economic depression. There are also the high interest rates in the United Kingdom.
  Perhaps I might at this point urge the Government to look at some of the special interest rates that other countries in the EEC are offering people at the present time. I can produce evidence to the Government, for example, to prove that the Belgian Government, in an attempt to attract one company, recently offered capital loans at 2 per cent., not only for buildings and plant but also for working capital. That example shows the difference between two countries in the EEC in the way in which they deal with interest rates.
  Mr. Richard Wainwright: My hon. Friend has mentioned subsidised industry in the Common Market which is working to the detriment of our own textile industry. Is he aware that woollen manufacturers in the Prato district in Italy are given substantial capital subsidies to enable them to compete directly with their Common Market partners, ourselves?
  Mr. Smith: I am grateful to my hon. Friend for that intervention, which substantiates the point that I was making. I know of his deep concern about the woollen industry, especially in the woollen mills of Yorkshire. I am sure that note will have been taken of his point.
  A further reason for contraction is the high value of the pound, which has affected the margins of some of the most efficient and aggressive exporters. There is also the high level of imports, to which reference has been made. We know the problems and we know the causes of them. We want to hear what the Government propose to do about them.
  The same story is absolutely true of the footwear industry. In the Rossendale Valley alone—close to my constituency geographically—three factories and 1,000 jobs have been lost in the last 12 months. I know that that is a source of great concern to the hon. Member for

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  Rossendale (Mr. Trippier), who will no doubt be hoping to catch your eye, Mr. Deputy Speaker, in order to say something about it.
  Mr. D. A. Trippier: I am grateful to the hon. Member for mentioning my constituency and for the context in which he has mentioned it. There is not only the problem of the unemployment which has arisen in my constituency. There is also the problem of potential unemployment arising from the fact that so many people are on short-time working. The temporary short-time working compensation scheme is totally inadequate to deal with the problem.
  Mr. Smith: I am grateful to the hon. Gentleman for his intervention. I was about to say that 43 per cent. of textile mills in the North of England are now using the temporary short-time working compensation scheme. That scheme is less attractive than it was, now that it is related to 50 per cent. as opposed to 75 per cent. As the hon. Member for Macclesfield has indicated, it is even less attractive to companies.
  I declare an interest, Mr. Deputy-Speaker, in that my company in Rochdale has been waiting for approval under the scheme since 5 December. During those three months, my company has been financing the money that the Government promised to repay to us. I have tabled a question as to the reason for the delay. I have also asked how many companies in the North-West are waiting for approval. There are scores of them. I was told recently by Ministry officials that the queue for approvals is so great that they cannot cope with the numbers. It is taking weeks and even months to get them through.
  That is some indication of the state of trade, but it is also an indication that the Government are not giving sufficient attention to the problem. They have made a mess of the scheme by reducing the figure to 50 per cent. But even if they will not increase it above 50 per cent., they can at least try to ensure that the scheme is being administered efficiently, so that it does not take so long to arrive at conclusions, and so that companies can get back the money that they are paying out. Incidentally, while the firms are paying out the money it is saving the Government from having to find the money for unemployment pay.
  I hope that the Minister will tell us whether the 50 per cent. can be increased, whether the period to which the scheme applies can be lengthened, and whether there can be a speeding up, particularly in the North-West, of the time that is being taken to deal with applications.
  The footwear and textile industries do much for exports, and have tried to help themselves by exporting. The footwear industry in Lancashire exported £2 million worth of goods to North Africa in recent months. The textile industry has sold £2,000 million worth of exports. So we are not just talking about saving industries and jobs; we are talking about saving exports too.
  The hon. Member for Macclesfield referred to Unit 1 at Atherton. That company invested £6 million. Yet it is companies like that which are now facing closure or short-time working as a consequence of the Government's policies. We are not talking about inefficient mills or mills that have failed to invest. We are not talking about an industry with a long record of bad labour relations. We are
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  talking about companies that have invested and exported, and an industry that has a superb record in industrial relations.
  The hon. Member for Macclesfield rightly said that we tend to be a soft touch for imports. Every year ceilings are exceeded. Indonesia is an example. Last year, over 5 million garments came into this country from Indonesia. The Minister agreed a quota of 2 million, but that was twice the 1979 amount from that country which four years previously sent nothing to the United Kingdom.
  As the hon. Member for Macclesfield said, it is worth noting that in 1980 over 70 ceilings, or trigger levers, were exceeded. We want to know what the Government are doing about that. May we have an assurance that the amount by which they were exceeded in 1980 will be deducted from the quotas of those countries in 1981 so that what they sent in last year over the levels will be deducted from what they are allowed to send in this year? That would be perfectly proper, and it is the way that I am sure other Governments would react. Some of the excesses were minor; some of them were not. But together they have a major effect on the industry as a whole.
  It has been said that the textile and clothing industries employ 650,000 people. The coal industry employs 230,000 people. I see that a Minister from the Department of Industry is present, so perhaps he will perform the same sort of U-turn for the clothing and textile industries that he performed for the coal industry. Even though we employ three times more people, we are prepared to settle for one-third of the help. That is surely a fair basis on which to seek Government intervention. Textile workers are upset when they read of people in other industries—car, coal, and steel—getting redundancy payments of £15,000, £16,000 or £20,000. Yet textile workers, with the same length of service in an industry which has the same health dangers as the mining industry—a lot of textile workers suffer from byssinosis—are being declared redundant and receiving redundancy payments of £2,000, £3,000 or even less.
  I understand the Government's problem, and I understand, too, that some industries are publicly financed and others are privately financed. But the workers are entitled to demand and expect fair play from any Government. There is nothing fair about a situation in which one redundant worker gets £15,000 and another with the same length of service in another industry with less muscle gets about one-fifth or one-sixth of the amount.
  We therefore await with eager anticipation the Government's U-turn on economic policies. We need lower interest rates. We need short-term finance help to keep the industry going. We need a curb on imports. We need a control of energy charges—not a deliberate increase, as this Government perpetrated through athe gas industry. We need the EEC's import controls on low-wage countries to be fully enforced. We need new quotas at lower levels as soon as possible, and we want to ensure that those quotas, when renegotiated, are negotiated in relation to domestic demand.
  The industry welcomes the origin marking order, but we believe that it should be much tighter. I hope that the Government will consider the possibility of tightening it up to cover such things as the origin of the main fabric to be used, forcing mail order catalogues to show the country

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  of origin, and stronger enforcement, including marking the source of origin at the time of manufacture and not at the time of retail sales.
  I hope that, even at this eleventh hour, the Government will make sure that the industry has fair play. That is all that the textile industry has ever sought. It has never sought protection or to be treated in a better or more generous manner than any other industry. All that it has ever sought, in the 15 years during which I have been associated with it, is to have fair play and justice. That is what we seek from the Government today, and that is what we hope to hear from the Minister tonight.
  5.27 pm
  Mr. D. A. Trippier: It is a pleasure for me to follow the hon. Member for Rochdale (Mr. Smith). I spent many happy and interesting hours with him on the town council in Rochdale, the town where we were both born. I also had the doubtful privilege of fighting him in 1972 in the Rochdale by-election, when he did not just beat me but metaphorically sat on me. which was the most painful experience of my political career. I agree with everyting that he said today.
  I remind the House that approximately 50 per cent. of the work force in my constituency is employed in the textile and footwear industries. That makes it unique—certainly in the North-West, and, as far as I know, in the rest of the country. The decline in the textile and footwear industries did not begin in May 1979. There has been a steady erosion over a long time, certainly since the last war. Indeed, many people would say that it was a longer period. Both industries have suffered from unfair import penetration, and both have been the recipients of Government largesses in the form of subsidies or compensation schemes.
  Mr. Straw: It is true that there has been a long-term decline in output and employment in the industry, but does not the hon. Gentleman agree that what has happened in the past 15 months is on a quite different scale from the gentle decline that the industry suffered earlier? By way of illustration, I would point out that the output of the textile industry remained stable—an index of 100—during the period of the Labor Government, while it has collapsed by 25 per cent. during the 18 months of this Government.
  Mr. Trippier: I do not deny for one moment that the situation has deteriorated during the 21 months that this Government have been in office, but it is a little hypocritical for Labour Members to attack the Government when they were instrumental in negotiating the multi-fibre arrangement under which we are currently operating. Opposition Members often say that the then Opposition—the Conservative Party—supported the negotiations. The fact remains that the people who negotiated the multi-fibre arrangement were Ministers of the Crown. Only Ministers of the Crown—members of the Government of the day—sit round the table at the time.
  Mr. Cryer: The hon. Gentleman must understand that all MFA negotiations are done second hand in the EEC. Ministers are not directly involved. That is one of the grave drawbacks of the system.
  Mr. Trippier: The hon. Gentleman must appreciate that Ministers of the day have a responsibility to persuade the European Parliament and the Council of Ministers to
  1004
  negotiate on their behalf. Successive Governments have a lot to answer for for the way in which they have let down the textile and footwear industries since the war.
  I emphasise that the textile industry is twice as big as the coal industry. It is more than twice as big as the car industry. It accounts for 10 per cent. of all manufacturing employment.
  Many in the industry say that the renewal of the multifibre arrangement after 1981 is academic because the industry may not survive until then. That is not right. The renewal of the MFA and the bilaterals is crucial for the textile industry after this year. More to the point, a commitment to strengthen the MFA, which we did not have from the Secretary of State for Trade today, is essential. A recession clause must be built in in order to restore confidence. That is not just a central point for discussion; it is vital. We must fight tooth and nail for it in the Council of Europe.
  Britain has the largest textile industry in Europe. It is under the most pressure. There is no confidence in the industry. One of the major reasons is the dithering attitude of the present Government. Early on, Ministers from the Departments of Trade and Industry failed to give a firm commitment that we would right for a tough successor. Eventually it came from the Prime Minister herself. We are grateful for that.
  Debates such as this place hon. Members like myself in a dilemma. I despair of the Government's attitude and I deplore the Opposition's hypocrisy. The textile industry has been in decline for more than 20 years. Opposition Members would do well to remember that Labour Governments have been in power for two-thirds of that time. Textile mills in my constituency closed under Labour Governments just as they are closing under a Conservative Government. Both parties have a lot to answer for.
  The current position is disastrous. Production has fallen dramatically. The fall accelerated in 1980. Output in textiles for the last quarter of 1980 was 22·1 per cent. down on the same period of 1979. That is certainly disastrous. At least 200 mill closures occurred in 1980 and others have occurred since.
  Hon. Members who have spoken with such passion, including my hon. Friend the Member for Macclesfield (Mr. Winterton) and the hon. Member for Rochdale, do not really know what it is like to lose a job, as many of the textile workers in Lancashire, Greater Manchester and Yorkshire have lost theirs. They must feel as if their world is caving in. Opposition Members should not laugh at that. They should encourage us. They recognise that they do not have a monopoly on compassion.
  Many textile workers suffer double injury when they lose their jobs, because frequently both husband and wife are employed in the same mill. Sometimes their daughter will also work in the same mill—on the switchboard, for instance. That applies particularly in Greater Manchester and Lancashire. They must be wondering what they did wrong. They have not been on strike within living memory. They have not negotiated irresponsible wage settlements. They have worked hard in a noisy and often unpleasant environment, and yet they are proud to work in an industry manufacturing essential goods.
  Many textile workers in my constituency are suffering the indignity of short-time working. The potential unemployment figures are disastrous. What needs to be done? The Government must introduce an entirely new

  1005
  scheme of temporary compensation for short-time working—a scheme that will last for 12 months. No one would be happy with such a scheme, but in the absence of a constructive alternative it would be a means of holding the work force together. It would also make economic sense. It is better to pay for shor-time working than to pay unemployment benefit.
  The Government must reduce the minimum lending rate by at least two points as quickly as possible. Faced with diminished demand and high interest rates, how can companies be encouraged to invest in new machinery and sustain high stocks?
  The Government must recognise that there is a minimum base that must be preserved and protected under a recession clause. It should not be assumed that an annihilated textile industry would allow the British consumer to continue to enjoy cheap textiles at the low prices operating today.
  Members of the Lancashire Footwear Manufacturers Association, the headquarters of which is in my constituency, produce about 25 million pairs of footwear per annum. The employee strength is about 7,000. About 4,000 people are employed in the vicinity of Rossendale, in 21 factories. A year ago over 5,000 people were employed in 24 factories in the same area. That means that there has been a loss of 1,000 jobs and three mills in the last year.
  The footwear industry in North-East Lancashire is in danger of collapse if there is a further contraction in the number of factories. Further contraction will mean that suppliers of components such as leather and heels will not be viable. The Government should take dramatic and urgent steps to rectify the high imbalance in footwear imports. Efforts should be made to stimulate home trade by reducing interest rates and stabilising the pound.
  It is suggested that in order to keep the footwear industry at its present level and strength the Government should impose immediately across-the-board import controls on footwear from all sources, amounting to 50 per cent. of current estimated imports either in terms of value or pairs.
  I have always been fascinated by the skilful footwork of Ministers whenever textiles and footwear are mentioned at Question Time. Every time I press for a commitment for the textile or footwear industries Ministers bob and weave. They talk about "orderly marketing arrangements" and "effective restraints". We have been told that Ministers would try to make an effort to persuade the Italians to stop using child labour in the manufacture of shoes. Ministers are brilliant at not being specific, as my right hon. Friend the Secretary of State was in his opening speech today. He said nothing. My right hon. Friend is a skilled politician.
  When asked for an opinion on a book that had just been published, Abraham Lincoln, an equally skilled politician, once said
  "People who like this sort of thing will find this the sort of thing they like".
  I am still in the dark about the Government's view on the textile and footwear industries. Worse, those industries themselves are still in the dark. I look to the Secretary of State to shed some light when he replies,. Otherwise, I shall be unable to support the Government in the Lobby tonight.
  5.39 pm
  Mr. James Lamond: The debate is already settling into a fairly well-worn pattern. A cautious attack on the Government is made from the Opposition Front Bench. It was cautious because my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) is always mindful that the day will come when positions will be reserved and he will be on the Government Front Bench facing a similar debate. Back Benchers on both sides of the House then proclaim the need for assistance to the textile industry. Hardly one, if there ever is one, has a kind word to say about the Government's policy, whether it is a Labour or a Tory Government.
  Will we go through that again today, or are we considering something a little more different? I think that there is a difference, and the Government would be well advised to note it. The motion that we are debating says:
  "This House deplores the worsening crisis in the textile, clothing and footwear industries".
  The crisis is worsening and its effects are being felt throughout the North-West, for example. The number of unemployed in the North-West region, announced earlier this week, was 338,000 men and women, the second largest number in any region in the United Kingdom.
  The crisis in the textile industry is taking place mainly in an area that is already heavily hit. In other words, there is a crisis within a crisis, because there has been a continuing crisis in textiles not for 20 years, but for 50 years. The number of people employed in textiles has been falling for 50 years. That number is now one-tenth of what if was 50 years ago. Because of the gradualness of that decline an opportunity has been available to take up the people who are being made unemployed, but now the speed of the crisis is overtaking the ability of people in that region to find new employment.
  The Secretary of State for Trade tried to support the Government's amendment, which says that:
  "this House acknowledges the difficult trading conditions facing the textile, clothing and footwear industries".
  That is acceptable enough. Of course the Government must acknowledge those conditions. They are as plain as plain could be. There is nothing objectionable in that part of the amendment, but it then says that the House
  "notes the measures which the Government has taken to give these industries a wide range of protection".
  That is more questionable. I know that the Government can say that protection has been afforded to the textile industry, and Ministers have said that it is well protected, but the crisis is such that as soon as the debate was announced I was deluged by briefs—as I am sure other hon. Members have been—from employers' organisations, trade unions and many others. Many of them have been read out today. There is no harm in that, because it is good that opinions that have been received are reinforced in the House. I am sure that the Minister has received them. That is an indication that there is much concern that there is not sufficient protection for the industry.
  I do not blame the Government for that. The multi-fibre arrangement was negotiated when there was a Labour Government, but we objected to it then. We are entitled to continue that objection. Two years may be a long time, but the Government must recognise their responsibilities in view of the dreadful situation facing the industry. If the debate helps to sharpen their minds on that point, it will have been valuable.

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  The Minister talked about the anti-dumping legislation. It was bad enough when it was operated from this country, because there were many complaints about the delays. Speed is of the essence when one is concerned with dumping operations. If there is some delay in dealing with dumping, the damage is done before it is revealed for what it is. That has been made worse because the matter is now dealt with at Common Market level. The industry is again complaining that that is not good enough for it. Therefore, the second part of the amendment falls on the ground that there is not sufficient protection either by the anti-dumping legislation or through the multi-fibre arrangement.
  I should have liked to dwell for some time on the Government's policies, the effects of which are falling particularly hard on the textile industry. One point is particularly applicable to textiles that are sold in shops. The destocking in this industry is directly attributable to the high interest rates charged in this country, because no shop, no matter how large or small, can afford to carry stocks for which it must borrow money and pay high interest rates. Stocks in shops may sound a small matter. They are not normally considered to be all that important unless the clothing industry is directly concerned, but when one realises the many millions of pounds worth of goods that are normally held in stock, one realises that when those are run down that represents a long period during which there is no demand for fresh supplies. The industry has felt that strongly.
  The hon. Member for Macclesfield (Mr. Winterton) said that he would vote against the Government. I have looked at the motion and at the amendment. I do not think that it makes any difference to the textile industry which of them is carried tonight. I recognise the bravery of the hon. Gentleman. It is always brave to vote against one's own Government. However, the Government should not judge the seriousness of our feelings on whether we vote for or against their amendment.
  The Government should take into account what has been said by all hon. Members, never mind the vote, and carry it into the new negotiations. They should not set aside the textile industry because it happens to be less militant than some others. They should not reward its loyalty by giving it unfair treatment compared with that given to other industries which may be more militant. It is not a good lesson to teach workers that the more militant they are, the more attention they will get and the more help they will receive from the Government. If the Government want to pursue a policy that will unite this country they must demonstrate to these workers who have never taken an aggressive attitude to the community as a whole that that will pay off for them.
  5.48 pm
  Mr. John Farr: I shall take up some of the points mentioned on both sides of the House. I am speaking as joint chairman of the all-party knitting industries group. The East Midlands region, which I represent, has the highest concentration of employees dependent on the clothing, textile and footwear industries. It is 10 per cent., or 150,000 out of a total work force of 1·5 million.
  I am concerned about the wholesale decline in employment in hosiery and knitwear. Since June 1979 the number employed in hosiery and knitwear has declined from 110,000 to 94,000 in November 1980, a decline of 14 per cent., coupled with a tripling of short-time working.
  1008
  Hand in hand with that decline in jobs has gone rising import penetration, from 15 per cent. in 1968 to 34 per cent. now for textiles, to 39 per cent. for knitted outerwear and no less than 84 per cent. for knitted shirts.
  There has been a combination of circumstances, many of which the Government can remedy. If I receive a meaningful undertaking from the Minister tonight I shall support the Government, but unless I receive a meaningful reply to the points that I shall raise I shall not be in the Lobby with the Government tonight.
  I have the greatest confidence in the ability of the hosiery and knitwear industries to survive and thrive if overseas competition is fair. I recently visited various firms in Leicestershire. I was impressed by the speed and efficiency of the workers and the 100 per cent. co-operation between management and workers. I am not prepared to accept a situation in which our home industries continue to be undermined by unfair foreign competition; nor am I prepared to accept a Government who do not make it crystal clear that there will be a continuing, large and permanent hosiery and knitwear industry in Britain.
  Regrettably, on 3 February my hon. Friend the Member for Loughborough (Mr. Dorrell) stated:
  "When I came to the House I was a director and shareholder in a clothing company manufacturing in Britain. I am convinced that there is no future for most of the British textile and clothing industry."
  No fewer than 650,000 people are employed in that industry in the United Kingdom, out of only 3 million in the whole of the EEC. I am not prepared to see such an investment written off.
  Mr. Stephen Dorrell: May I add my next sentence but one:
  "I find it difficult to support a policy that undertakes the negative part of that job"—
  by which I meant the job of restructuring British industry—
  "and insists that imports come in if they are more competitive hut does not provide the prospect of alternative jobs for the people and assets that are made redundant."—[Official Report, 3 February 1981; Vol. 993, c. 455.]
  My speech has been widely reported in Leicestershire. I have a great deal of sympathy with the points made on both sides of the House about interest and exchange rates. However, it is pointless to have an industrial policy that does not recognise the need to concentrate investment in those industries that provide the best prospect of secure jobs, the highest wages and the highest return.
  Mr. Farr: I am grateful to my hon. Friend for his lengthy intervention. Most of us recognise that such a future lies with the textile and knitting industries, given a proper Government attitude.
  I said earlier that we were suffering from a combination of circumstances, such as the high level of MLR, which in turn has given us a high value of sterling. The Government must reduce MLR, which will have the tandem effect of reducing the value of sterling. Both are artificially high. The high level of MLR has made companies shed jobs and machines. Companies are now disappearing, and the decline must be halted. The lobby that came to the House a few days ago gave me a list of no fewer than five companies in the Leicester area that have either substantially reduced the number of their employees or gone out of business since 1 January.
  I briefly mention the other points on which the Government should tonight make a robust statement. I am

  1009
  not satisfied with the way that negotiations are being conducted by the EEC over United States imports. Through the availability of cheap energy, American imports are coming into Britain in much greater proportion than to other EEC countries. Other member States do not feel the same need for urgent action.
  I want the Government to take a positive attitude in the multi-fibre negotiations. In the new MFA there must be recognition of the change in economic circumstances. We also need proper transitional arrangements over the enlargement of the EEC. The origin marking order shortly to be considered by the House should also be amended to include the origin marking of the contents of mail order catalogues.
  The Government can take action. They have the power to arrest the decline of an old industry of which we are proud. The problems come partly from the world recession, but the Government can and should help in many ways. I hope that they will assure us of their help tonight.
  5.56 pm
  Mr. William Whitlock: I am pleased to speak after the hon. Member for Harborough (Mr. Farr). We are joint chairman of the knitting and hosiery industries group.
  I echo the sadness expressed by the hon. Member for Macclesfield (Mr. Winterton) about what is happening to the textile industry. The industry has been established in the East Midlands for over 400 years and employs one in eight of every worker in productive employment, yet every day factories are closing and jobs disappearing. The feeling is growing that the Government are happy to see the industry disappear.
  I shall not deal with such esoteric matters as the exchange rate and MLR. Apart from the consequences of Government policies, one could talk for hours about the many other unfairnesses that the industry has to face—fiddling, the bending of international rules, quota dodging, fraudulent labelling, the protection and subsidisation of textile industries in other countries, and dumping. There is a need to secure a fair deal for Britain in the renewal of the MFA. Additional problems will face us with the enlargement of the EEC. Because the Government appear not to see the need for urgent action over such matters there is great despondency, particularly in the East Midlands. That despondency was heightened when the Secretary of State for Industry told us on 10 July that our competitors were not competing unfairly.
  In December the hon. Member for Harborough and I visited two Ministers with representatives of the knitting and hosiery industries to discuss the growing threat from America. The Americans subsidise and protect their industry by artificial energy prices and by lowering their import quotas. They are therefore able to send goods here at prices lower than those for goods from Hong Kong, Korea and Portugal. That behaviour is unfair, and the Americans should be dealt with under the appropriate MFA and GATT provisions. The Minister for Trade conceded that there was identifiable unfairness. However, he told us that if these suggestions were implemented it would be the first occasion on which a developed country had been so treated and that he therefore could not contemplate such action.
  The Minister for Trade (Mr. Cecil Parkinson): I said that if we were to try to have an MFA-type arrangement with America it would be the first arrangement under the MFA with developed countries and the first step towards a managed world trade in textiles.
  The Reagan Administration have been in power for barely a month. They have deregulated oil and have said that they regard the deregulation of gas as an important priority and that they will make other proposals that will be of more immediate assistance to the United Kingdom textile industry. To get an Administration to say that in their first month in office is quite an achievement. I hope that the hon. Gentleman agrees.
  Mr. Whitlock: It does not
  seem to me to be a very great achievement. Instead of a forthright denunciation of American unfairness there has been a nice cosy chat between representatives of the EEC and the American Administration, at the end of which the Americans have agreed to pass on our fears to their own industry. The American industry already knows about our concern in these matters. Last year, representatives of the Knitwear Industries Federation went to America and saw their counterparts and told them all about it. The American producers said that they believed that they were making progress in our markets because they had better production methods and their goods were of better quality. The people from the federation were astonished and annoyed, because they knew perfectly well that, in the main, our production methods were better than those of the American textile industry and that the goods that we produce were better than those produced by the Americans. When the American textile producers hear of our polite approach to the Administration there will undoubtedly be complete indifference to what we have to say.
  The Government must stop pussyfooting around and, instead, fight for a fair deal for the industry. Nothing less than a declaration today of the Government's intention to do just that will satisfy the Opposition at the end of the debate. Let us not have yet one more debate that brings no hope to the industry.
  6.1 pm
  Mr. Peter Fry: As chairman of the all-party footwear group, I am delighted to be able to take part in the debate, not least because even in this debate the footwear industry tends to think of itself as the forgotten industry which not too many people get worked up about. The reason may be that it is not a militant industry. It is not always going on strike, demanding more and more, or trying to hold anybody to ransom. It is an industry which, over the years, has put in good solid work and made a great contribution to our national economy.
  As was mentioned earlier, the footwear industry, too, is in a state of crisis. The county of Northamptonshire is probably the home of the men's footwear industry in this country. Since January 1980, 20 per cent. of the jobs in that industry have disappeared. This means that for the first time—I include the time of the Depression—the vision of very high unemployment is stalking my constituency and those of my colleagues. Those of us who represent that part of the world are entitled to say that we do not believe that any Government have really done all that they can to assist this industry.
  The problems that have arisen have certainly not been due to high prices and high inflation. In the past year prices

  1011
  in the footwear industry have increased by some 7·9 per cent., compared with public sector increases of 20 per cent. to 30 per cent., which these firms have had to pay. That says something about the efficiency of the footwear industry, and rather more about the efficiency of the public sector, particularly over the past 18 months.
  We have not heard much tonight about one major problem confronting the industry, namely, the fact that although we have a Government who believe in fair trade and believe that the best thing to do is to reduce the barriers, our footwear exporters find that 75 per cent. of the world's markets are closed or partly closed to them. That is something that they should expect the Government to do something about.
  Sir Frederick Burden: Will my hon. Friend be more specific about the position with regard to the export of shoes to America? Northampton used to do a great deal of business in exporting shoes to America.
  Mr. Fry: One of the major problems in relation to the whole of North America is, of course, the high value of the pound. I was attempting not to go over ground that other hon. Members had covered. I accept that the high value of the pound and high interest rates are factors in this matter. I was trying to pick out one or two aspects that are peculiar to this industry for the Government to do something about.
  One of the great strengths of the industry is that its trade union has always been a responsible one. I saw the union delegation when it came to see us last week and I accepted its four-point programme, which I shall put to the Government tonight. First, it asks for a further reduction in minimum lending rate. We have been into that already. Secondly, it, too, would like a review of the temporary short-time working compensation scheme, and particularly a restoration of the 75 per cent. payment for a 12-month period. Thirdly—and this is very important indeed—it wants the Government to influence the EEC so that the Commission moves for the removal of barriers to United Kingdom exports. Fourthly, it asks for incentives to companies pursuing export markets.
  What is significant about those four points is that they have no reference to imports. It is a very responsible trade union. If we are to try to respond to the work force of this country and to get its co-operation, let us put on record how responsible these people have been and let us respond to what they say. I say bluntly to the Government that I believe that those demands are modest. Indeed, they are too modest. I reiterate the cry of my hon. Friend the Member for Rossendale (Mr. Trippier), who asked for a degree of control on imports.
  Even more, I remind my right hon. Friends that there is a footwear EDC, which is putting forward proposals to assist the industry in this difficult period of transition. Help is needed to increase productivity, to improve marketing techniques, to improve design, and to encourage exports, but a degree of financial backing will be required if the development council's plans are to be achieved. The question that we must ask ourselves tonight is whether this can and should be done.
  When the Government had an economic and industrial policy that I could understand I had some doubts whether that kind of policy could be pursued. I must tell my right hon. Friend the Secretary of State for Trade that after his interview last Sunday morning I am not sure what the
  1012
  Government's industrial and economic policy is. I believe that we are in new territory and that some of the things that could not be done a month or so ago are perhaps more possible today.
  Mr. Marlow Mr. Marlow rose—
  Mr. Fry: If my hon. Friend does not mind, I shall not give way, as other hon. Members wish to speak.
  I believe that my constituents are entitled to ask certain questions. If the Government are pouring out massive help to bankrupt industries such as British Steel, what about a bit of modest help to the footwear industry? If its employees are to be made redundant, can they not have some of the generous payments that are made to those in the public sector? Above all, if we are to cut back on imports of coal, what about imports of footwear and textiles?
  I do not believe that those are excessive demands. They are the reasonable requests of people who are worried about their jobs and who see no reason why they should be threatened.
  I must say that I, too, am in something of a dilemma in terms of how I should vote tonight. I do not like the Opposition motion, because I do not believe that all of the problems are due to the Government. On the other hand, I do not agree with the Government amendment. I believe that this is one of those occasions on which hon. Members have to look into their hearts and decide whom they represent. I believe that my first responsibility today is to my constituents. They have kept faith with me through four or five very tough elections, and I intend to keep faith with them tonight. I must tell my right hon. and hon. Friends that unless I get some assurance that the points that some of my hon. Friends and I have raised will be pursued by the Government, I shall follow my hon. Friend the Member for Macclesfield (Mr. Winterton) into the Opposition Lobby tonight.
  6.10 pm
  Mr. Edward Lyons: I shall be brief, because I appreciate the demands of my colleagues.
  First, I should like to refer to Bradford. There, unemployment is up by 82·2 per cent. since May 1979. In West Yorkshire and Humberside unemployment has doubled in the same period. One can visit a block of flats, and the only people who are working will say that they expect to be made redundant any time. Asian workers are particularly numerous in the textile industry. Therefore, they suffer particularly heavy casualties from the holocaust that is hitting the textile industry in my area.
  It is against that background that I wish to make my remarks. It should also be borne in mind that while the water workers and the miners have received wage increases well above double figures, the General and Municipal Workers Union in the textile industry in my area has just agreed a 5 per cent. increase and the work force there has a good work record.
  I want to confine my general remarks to the question of the United States. The United States is undertaking, and has done so over the last two or three years, a determined export drive into European markets. The damage is enormous. America is not subject to quotas, or really to the MFA. The developing countries are entitled to ask, as indeed they do "Why should we restrict our exports to

  1013
  Britain and to the EEC, not for the sake of the domestic industries, but to make a holiday for the United States?" That is what is being said.
  Why is it a holiday? It is not only because of the low value of the dollar in relation to the pound but because American industry is highly protected. It is a result of energy policies that are unfair compared with what happens in Europe. It is also because America has economies of scale.
  America, which is the richest nation in the world, is keeping out imports from underdeveloped countries by tariffs that are far higher than ours. It is not taking its fair share of imports from developing countries. It is leaving us to do that. That is not fair to the developing countries, nor is it fair to us. Therefore, the Americans must do more.
  I know that in the Tokyo round America agreed that from 1982 it would cut those high tariffs by about 5 per cent. In fact, the American Customs and Excise have now come up with a wonderful proposal in respect of many categories of clothing, namely, to change their classification from non-ornamental to ornamental clothing, whatever that means. The effect will be to double the tariff. That proposal will come up for discussion in March and April. If America succeeds with that proposal to reclassify clothing imports, it will mean that American tariffs will be far higher than they are now. The degree of protection will thus be far greater.
  It therefore follows that the EEC and Britain must take a more determined attitude to the United States than they have taken so far. That is one matter that the Prime Minister ought to raise today and tomorrow in America in her talks with President Reagan. It is not consistent with the attitude of the United States as a world leader or as a country that is supposed to care for other countries and their problems or for its allies in Europe that it should adopt the harsh attitude that it is now adopting.
  In those circumstances, the message from the Government tonight ought to be—loud and clear—that they will have a bash at America in order to make it fully aware of the damage that its policies are causing. America should be told that it should seek to remedy that damage.
  6.13 pm
  Mr. Michael Morris: I have been in the House for seven years. During that time I have tried to stress the importance of the footwear industry to this country. I recognise that we are not winners, but, equally, we are not losers. The footwear industry is one that this country needs.
  I want to put three or four points to my right hon. Friend. First, I want to re-emphasise the fact that 75 per cent. of export markets are in one way or another restricted to us. Frankly, I find it laughable when the Japanese tell us that for religious reasons they will not allow shoe imports, while at the same time they proceed to dump roller bearings on to our market, with an adverse effect on Northampton and the other towns that are central to that market.
  Secondly, some of my hon. Friends have mentioned Europe. Most of us who over the years have been involved in anti-dumping work know that the time that the Department of Trade took in the past was a great deal longer than the EEC takes today, certainly in respect of footwear. None of us should now forget that 53 per cent.
  1014
  of footwear exports go to the EEC and that if we pull out of the EEC, as some of my hon. Friends suggest, the footwear industry will suffer.
  I do not believe that any Government have ever had a proper strategy to meet the import problem. We have had a series of ad hoc arrangements as the problems appeared over the horizon. I want to look at one particular market—Poland and COMECON, particularly Poland. Have we not done enough for the Polish economy, when we built 24 ships at a cost of £40 million to the taxpayer and all that Poland put in was £25,000? That is all that Poland put in up front.
  Is it not incredible that, imports having gone down by 4 per cent. in volume last year, blow me down, we find that Poland has increased its exports to Britain by 12 per cent.? Yet we are supposed to have some restrictive agreement with Poland and the rest of COMECON. That increase is not even compensated for by other members of COMECON. For example, exports from Czechoslovakia are up by 6 per cent. If, as reported, the Poles could do better selling their leather, why do we not advise them to sell it on the open market and not dump their shoes on us?
  Earlier on, in an intervention, I mentioned the situation in India. That problem is coming over the horizon. Today, India's exports are up by 69 per cent. to more than 3 million pair. That is the next problem. My right hon. Friend, who is new in office, should begin to look at that problem now rather than wait for two or three years.
  Mr. Marlow Mr. Marlow rose—
  Hon. Members: Oh, no.
  Mr. Marlow: I am grateful to my hon. Friend for giving way. I am happy to agree with virtually everything that he has said, apart from the small point on Europe, where, of course, our imports from Italy are greater than our total exports throughout the world. Whatever the reasons for our present problems, does not my hon. Friend agree that the problem is not one of industrial relations, as the footwear industry has consistently been league champion in the labour relations first division—[HON. MEMBERS: "Reading".]—and where our union NUFLAT is an example to all as a modern, moderate and effective union, doughty fighters on behalf of the membership, while at the same time strike-free, responsive and co-operative—
  Mr. Speaker: Order. This is an extremely long intervention.
  Mr. Morris: Northamptonshire has lost 20 per cent. of its employment. We understand the Government's macro-policy. Indeed, I believe that the industry supports it. The industry understands the fight against inflation and wants to support the Government. What it does not understand is the Government's energy pricing policy. It believes that it has a role to play. If it is to succeed, it needs to be unshackled. It needs to know that the Government will support it, particularly in regard to import penetration. It wants to believe that it forms a part of the Government's industrial strategy.
  6.18 pm
  Mr. Lawrence Cunliffe: I shall speak as rapidly as possible. The House will agree that the position of the textile industry as a whole is lamentable. The industry has declined over the last 20 to 25 years. It has been totally ignored by successive Governments, who

  1015
  have treated its problems with no urgency, even though that was absolutely imperative if the industry was to survive over that period. Ultimately we have seen—I am sure that it is a matter of great concern to all of us—the decline about which I have spoken.
  The real issue which divides the House this evening is that the Government's indifference and inaction, along with their ruinous economic policies and impotent industrial strategy, have played a positive role in accelerating the decline of the industry. That is our major point.
  It is no use the Minister lecturing us today about strong exchange rates and so on. My constituents think not about exchange controls but about their inability to get away from the numbers of people outside the labour exchange. That is the exchange that they understand. When I became a Member of this House, 13 textile mills were open and flourishing. Since then, five have closed, six are on short time and two are struggling and have been forced to consider taking immediate action to stave off further bankruptcy and decline.
  For many years, a dedicated and loyal labour force has accepted the technical innovation that is imperative if the industry is to progress. The amount of investment has been tremendous. Textile industrialists have invested £2,000 million. The industry has an impeccable industrial relations record. I could dot the i's and cross the t's, but I wish to be brief. Political parties and Governments must realise that these industries are fighting for their very lives. It would be a gross betrayal and an act of criminal folly if the Government were to fail to recognise the industry's plight and if they were to ignore the pleas for help and for constructive intervention.
  The Prime Minister now says that she is in favour of constructive intervention. Such intervention could be used to help these industries, which have not had a fair crack of the whip in the post-war period.
  6.21 pm
  Mrs. Elaine Kellett-Bowman: There can be no workers in the world who less deserve to be thrown out of work than the textile and shoe workers. Throughout the years their conduct has been a model which should have ensured not only their survival but their prosperity. Shoe factories and mills have steadily modernised and brought themselves up not only to European standards but to the best world standards. The men and women in those factories and mills have adopted every possible improvement in manning practices and technology in order to keep them up to date. As Spencer Crookenden said, they are suffering badly from the exchange rate and the high level of the minimum lending rate. Textiles also suffer from those two things. Despite their fantastic efforts to modernise and adapt, no fewer than 200 mills closed inl980. Between January and November, 97,000 jobs were lost.
  Yesterday's results from Carrington Viyella—which has modernised to an extraordinary degree—throw the textile industry into even deeper gloom. As many of my hon. Friends have said, 43 per cent. of those working in the industry are on short time. However, short-time working does not by any means work smoothly in every case.
  On Monday a firm in my constituency wrote to me and said that it had experienced delays of up to three months in securing approval for a short-time working scheme and
  1016
  delays of over five weeks in receiving the money after approval had been granted. Admittedly, I received a letter today which said that it had received some of the money, but part of the amount remains outstanding from October. That is clearly of extreme importance when one considers the industry's cash flow position and the high level of interest rates. I should be grateful if my right hon. Friend would exert pressure on his colleagues to improve matters substantially.
  Despite all these difficulties, the industry still employs 630,000 people and has an output worth £9 billion. However, output fell by no less than 20 per cent. in the final quarter of the year compared with 1979. Despite the world recession and the strong pound, textile and clothing exports exceeded £2,000 million in 1980. That is a very creditable record.
  Within the figures there are worrying signs. Although for 1980 as a whole the volume of textile and clothing exports fell by only 5 per cent. compared with the pevious year, the fall accelerated alarmingly in the last quarter of the year, to 20 per cent. Some of the factors involved in that fall are common to all exporting industries, namely, high interest rates, the high rate of sterling and the high cost of energy, which many hon. Members have mentioned.
  Some factors are peculiar to the textile industry and affect both exports and the import penetration of the home market. In particular, there has been a great upsurge in the number of imports from the United States of America. I agree with my hon. Friend the Member for Macclesfield (Mr. Winterton) that textiles are getting a jolly sight worse deal than coal. It is aggravating for those of us who come from the areas of the textile and shoe industries to see that coal miners are managing to keep coal out when we cannot keep textiles and shoes out. No one would complain if imports were fair, but they are not. The American home market is greatly protected by high tariffs which give the Americans a much larger share of the market than they would have on merit. It means that they can take full advantage of the economies of scale that are denied to us.
  By far the most serious problem has been the artificially low price of energy to American textile producers. That has enabled them to seize an unduly large share of the United Kingdom market. Even if that advantage were to cease today, the enervating effect of squeezed margins and accumulated losses in the United Kingdom's textile industry would have a continuing effect, since once factories such as the Courtaulds' Lansil factory in my constituency close—which closed with a loss of 665 jobs,—they are unlikely to reopen. Those that remain open are weakened thereby. Unfortunately, there is no chance of the unfair energy pricing for gas changing immediately in the United States of America, because that would require legislation, which would take months to achieve.
  There is no chance that the American textile industry will voluntarily—I stress that word—curb its exports to the United Kingdom unless it can be frightened into doing so. We are about to embark on renegotiation of the MFA, which the United States wants just as badly as we do. However, the developing countries rightly say that their restraints on exports to the EEC have not benefited European producers, since the slack has simply been filled by imports from the United States. That is the last thing desired by Britain or by the developing countries. The United States has a clear interest in seeing that the agreement is negotiated. Unless the United States

  1017
  moderates its present cut-throat policies, the renewal of the MFA and its bilaterals could be put at risk. At present imports from the United States are the main threat, but that must not lead the Government to overlook for a moment the importance of renewing the MFA this year.
  I hope that my right hon. Friend has read the booklet "Textiles into the 80's", which some colleagues and I put before him as a policy for the textile industry. Low-cost countries are by no means always genuinely developing countries. That point is made in the booklet. They have taken almost 30 per cent. in volume of the United Kingdom's textile and clothing market.
  If the market were growing, that would not be so serious. However, the market is not growing. Indeed, sales in this sector fell by 4 per cent. during the last quarter. It is only fair that, if developing countries wish to have an increasing share of our home market when it is expanding, they should be prepared to accept a decrease when our market is contracting.
  A growth recession clause, relating imports from the developing countries to the state of the home market, should be included in the MFA. I was slightly reassured when I heard the Secretary of State say that nothing had changed since July, when his predecessor promised to make this a central matter for negotiation. I agree with my hon. Friend the Member for Rossendale (Mr. Trippier) that this is not only central but vital. The situation has worsened considerably since July.
  I believe that the Secretary of State has a genuine interest in the problems of the textile industry. However, he did not entirely show that interest today. He knows that the damage done in the course of many years cannot be undone overnight. I beg him to take the toughest stand possible with the United States of America about the MFA. When there is an upturn in demand there will then be an industry that is still capable of taking advantage of it.
  Some factors relating to the origin marking scheme have been worrying the textile industry. It is important that the material should also be marked with the country of origin and not just the garment. I do not like the Government's amendment to the motion. The first and last parts of the amendment make sense. However, I do not like the words
  "notes the measures which the Government has taken to give these industries a wide range of protection".
  Not nearly enough protection has been given. Far tougher action needs to be taken.
  However, I agree that the pursuit of realistic policies that are designed to lower the rate of inflation and to maintain access to export markets is important. For that reason alone, I shall give the Government one more chance. However, the next time that we debate the textiles industry I shall go into the Opposition Lobby if we are not faced with a much more satisfactory position.
  6.30 pm
  Mr. Stanley Orme: The debate is a direct response to the TUC-organised lobby of workers from the textile, clothing and footwear industries. It has once again shown the House the importance of the issue. It has highlighted the fact that the Government's policies are completely bankrupt.
  1018
  During the short debate we heard criticisms of the Government from both sides of the House. My hon. Friends the Members for Kettering (Mr. Homewood), Stockport, South (Mr. McNally), Batley and Morley (Mr. Woolmer), Ince (Mr. McGuire) and Keighley (Mr. Cryer) have sat here throughout the debate. Only time has prevented them from making a contribution in support of the Opposition motion.
  In his opening remarks the Minister referred to high interest rates and the strength of the pound, but he did not say what he intended to do about them. Those factors, together with high energy costs, on top of a depressed home market, have led to redundancies and closures on a massive scale. Investment in those industries has been reduced. During the 1970s all three industries invested heavily to meet the challenge of the 1980s. That financial and human capital is being steadily destroyed as a direct result of monetarism.
  Major companies are making savage cuts. Total employment in the textile and clothing industry is more than 700,000, compared with 420,000 in chemicals, 389,000 in metal manufacture and 695,000 in vehicles. Reference was made to short-time working and redundancies. In the list of the level of short-time working, textiles is fourth and clothing and footwear fifth. For redundancies in 1980, unfortunately, the textile industry is top of the league—an unfortunate league indeed.
  Between January and November 1980, 97,000 jobs were lost in textiles and clothing alone. Courtaulds has just announced the loss of 1,550 jobs at Aintree, and more than 300 jobs are to be lost at Carrickfergus. The blame for that has been laid firmly at the feet of the Government. Last year, 200 mills closed. The clothing industry has been equally hard hit, spelling the end of the small clothing manufacturer and opening the door to imports.
  There are 66,000 workers in the footwear industry of whom 6,000 lost their job in 1980 alone. There were 800 redundancies in January this year. This month 17,000 workers in the footwear industry are on short-time, and 1,200 jobs at Norvic were recently saved by the intervention of my hon. Friend the Member for Norwich, South (Mr.Garrett) and my right hon. Friend the Member for Mansfield (Mr. Concannon).
  The previous Labour Government was the first Government to take the footwear industry seriously. They set up the footwear study group—a committee of Labour and Conservative Members, manufacturers, traders, trade unions and civil servants. The group proposed a scheme of assistance to which the Labour Government responded immediately by making an initial £4·5 million available. That was fully taken up and led to many modernisation projects in the industry. The present Government have made no further funds available. We have heard the pleas from the Minister's hon. Friends this afternoon for more assistance for the footwear industry. That industry has been scaled down. What is the Government's current position in relation to the industry demand for more capital? Will they provide a small sum to help the industry survive and, not least, to improve design? The footwear economic development committee says that it will now concentrate on improving productivity, marketing, design and exports. What help will the Government give to its efforts?
  I turn to imports in the textile industry. It is worth noting that in 1980, in volume terms imports from the developed countries exceeded those from under-developed

  1019
  countries for the first time in our history. That answers the claim that Britain is being flooded with imports from the Third world. It shows clearly that the major problem is imports from the EEC and, not least, the United States.
  The problem of United States imports has dominated the debate. It was the only major country to increase its exports of textiles to Britain in 1980. Yet it has a highly protected home market, and is subsidising industry through artificial pricing of natural gas and feedstock. We acknowledge that the Government have raised the control of American imports with the EEC Council of Ministers. Their attempts to obtain an agreement have failed dismally. The matter will be raised again—we assume, at the meeting of the Council next month. It is imperative for the future of our textile industry that a satisfactory conclusion is reached at that meeting, and that we are not fobbed off with promises of more discussions.
  If the Council of Ministers once again fails to agree EEC-wide controls of textile imports from the United States, the Government must take unilateral action immediately to secure a future for our textile industry. The Government must ensure that the multi-fibre arrangement works in the interests of British industry, and that a recession agreement is negotiated at the earliest opportunity.
  Investment is a key factor. Other Governments in Europe—for example, Belgium and France—have recognised that and are investing heavily to save their industries. That is direct Government intervention by EEC countries. The Government must not allow the investment of the 1970s to go to waste, as it will if the trends of the past two years continue. The future of our industries can be secured only be a high and continuing level of investment. The Government must act now to prevent any further cuts in equipment and manpower and to stimulate innovation.
  The Government should ensure that the trade unions are involved in the planning and use of Government aid. The guidelines for aid must be strengthened so that, wherever possible, British machinery and equipment are purchased. An immediate step that the Government could take to prevent a further decline would be to strengthen the temporary short-time working compensation scheme, which would at least prevent the departure of skilled labour from the industry in the way that is happening now.
  Textiles, clothing and footwear have been among the worst affected by the Government's decision to reduce regional aid and to remove areas in the North-West and Yorkshire from assisted area status. That is absolutely criminal. It is clear that regional aid must be extended, with a greater input of funds and the restoration of assisted area status to those areas in which the industries operate. It is obvious from the debate that urgent action is needed to save the textile, clothing and footwear industries.
  We have heard this afternoon about other industries, such as the coal, steel and motor industries, which are vital to the economy of the nation, but the wide debate that has taken place in the House this afternoon, reflecting a large number of constituencies represented by Members on both sides of the House, has underlined the importance of our textile, clothing and footwear industries.
  What we are asking the Government, what we are saying to the Minister, and what my right hon. and hon. Friends have said clearly during this short debate, is that we want action. We want a clear commitment from the Government to maintain viable textile, clothing and
  1020
  footwear industries. My right hon. and hon. Friends have advanced constructive proposals. We want to see Government action. We want to see action on behalf of the three industries. If the Government do not take action, and if nothing is done at the March meeting of the EEC Ministers, it could spell disaster for the industries. I ask my right hon. and hon. Friends to vote against the Government.
  We want to hear from the Secretary of State some clear policies and an outline of the way in which the Government will deal with the issue. If the Government are changing course, they must do so for the textile, footwear and clothing industries.
  6.40 pm
  The Secretary of State for Industry (Sir Keith Joseph): I rebut straight away the allegation that runs as follows: if only Ministers were better informed about the clothing, textile and footwear industries. That is one allegation that can be rebutted. Ministers are intensely and acutely aware of the industries' problems.
  Mr. Cryer: No one has made that allegation.
  Sir Keith Joseph: It was made by my hon. Friend the Member for Macclesfield (Mr. Winterton), who explained to me that he had to go elsewhere.
  Ministers are constantly and legitimately bombarded by the industries, their managements, their work forces and by the trade unions concerned. Hon. Members on both sides of the House art: validly and constantly emphasising the problems of these industries. I pay tribute to the sincerity and passion with which the case is made for better treatment for the industries. The one thing that we are not short of is information.
  I hope that the House will understand that in a debate covering no fewer than three major industries and with only 17 minutes in which to reply I shall not be able to answer every issue that has been raised. However, I undertake to write to all those whose points I shall not have time to answer.
  Secondly, I shall have to generalise in meeting the main arguments. I shall refer to all those who have spoken, but I shall not refer specifically to the arguments advanced by the hon. Member for Bradford, North (Mr. Ford) and by the hon. and learned Member for Bradford, West (Mr. Lyons). I recognise the force of their feelings and general arguments. Equally, I shall not refer specifically to the strong, brief but none the less effective speech of the hon. Member for Leigh (Mr. Cunliffe). I acknowledge the value of the speech of my hon. Friend the Member for Gillingham (Sir F. Burden), who has great experience.
  Ministers working on this range of subjects are helped because the Parliamentary Private Secretary to my hon. Friend the Minister of State, Department of Industry happens to be my hon. Friend the Member for Nelson and Colne (Mr. Lee), who is an extremely articulate representative of that constituency and leaves Ministers in no doubt about the problems of the industries in Nelson and Colne.
  Before taking up the general argument I turn to the questions asked at the beginning of the debate by the hon. Member for Antrim, South (Mr. Molyneaux), who spoke of energy prices in Northern Ireland. The Government recognise that there are problems. Electricity prices in Northern Ireland are already subsidised by the taxpayer.

  1021
  Subsidies have been applied to keep industrial electricity prices to within 7 per cent. of the level in the rest of the United Kingdom, and a working party has been considering electricity prices in Northern Ireland. Energy prices in Northern Ireland are the responsibility of my right hon. Friend the Secretary of State for Northern Ireland.
  In the 15 minutes that remain I shall try, while recognising the intensely strong feelings on both sides of the House and the impact of all the factors that have been identified upon the jobs and lives of those who work in the industries and on their households, to put the arguments in a slighly different framework, without in any way flinching from the Government's share of responsibility.
  Mr. Straw: What is the right hon. Gentleman going to do?
  Sir Keith Joseph: That is what I shall try to set in a proper framework.
  In these industrial matters there is a division of responsibility. The Government have general and particular responsibilities. The general responsibility is to reduce inflation—which we are seeking to do with some success—and to reduce interest rates. The Government dearly want to reduce interest rates. We want to create conditions in which interest rates come down, and come down sharply. However, we inherited a runaway spending momentum from the Labour Government. Until we achieve a better proportion in terms of what we spend, and therefore what we have to tax and borrow, interest rates will not come down as much as we all want.
  There may even be a connection, though experts argue with each other about it, between interest rates and the exchange rate, which hon. Members on both sides of the House have correctly identified as a crucial factor in current trading conditions. We recognise that the Government have a responsibility for creating conditions in which inflation and interest rates fall. We recognise that we must get energy prices right. The House knows that at the NEDC meeting next week there will be presented the task force's report on energy prices, to which the Government will have to react.
  As I have said, the Government have a responsibility to create the right framework for industry, and that could lead me to talk about nationalised industry charges. The Government have responsibilities for all these general pressures upon industry, upon the economy and upon individuals, but we cannot control the world recession, which is one of the important factors affecting the three industries that we are discussing.
  In addition to the Government's responsibility to the economy in general—the pressures that I have mentioned have an effect on every other industry, as well as on clothing, textiles and footwear—there are special responsibilities that successive Governments, including this one, have accepted towards these three internationally highly competitive industries. These include the responsibility to open doors for our exports. As my hon. Friends the Members for Wellingborough (Mr. Fry) and for Northampton, South (Mr. Morris) have emphasised, our footwear industry is desperately blocked by so many of our natural export markets being closed. My hon. Friends have no reason to doubt that Ministers are trying as hard as they can to negotiate, in private discussion and
  1022
  in public negotiation, to open the closed markets. We want to open them, and I recognise the strength of feeling in the industry until we succeed.
  The Government have a special responsibility to negotiate and to operate as well as they can the inherited regulatory framework. The industries are protected to a greater extent than any other industry in our economy. The Government are a free but fair trade Government. We recognise that we do not have a fair trading world, but it is in our interests to make it as fair as possible and to trade as much as possible in the philosophy of free but fair trade. I do not think that anybody can question the vigour with which my hon. Friend the Minister for Trade has sought, first under the guidance of my right hon. Friend who is now the Secretary of State for Defence, and now under that of the new Secretary of State for Trade, to protect the network of protective arrangements that we inherited from our predecessors, and which we have greatly expanded. The textile, clothing and footwear industries, so far as they come from State trading or developing countries, are massively protected, though not always 100 per cent. effectively.
  It is against that background of Government responsibility, general and special, that I come to the next factor in the argument. Home demand for clothing, textiles and footwear has been pretty stable over the last 18 months, surprisingly enough. We do not have the latest figures. The consumption of footwear has increased. Textiles sales have fallen, but sales of clothing are stable. Exports have gone up, rather than down. Imports have not risen significantly. What has caused output to slump so sharply is the massive destocking that has taken place under general economic pressures—interest rates, inflation and the other factors of world recession to which I have referred.
  Mr. John Smith: The right hon. Gentleman knows that there has been a huge increase in imports of certain products from the United States. In the event that the United States refuses to do anything about it, as seems likely, what will the Government do to assist British industry?
  Sir Keith Joseph: In general, imports in these industries have been stable. Some have fallen, while some, including those from the United States, have risen, but, overall, imports have been stable.
  Our clothing, textile and footwear industries are still by far the largest suppliers of our home market—70 per cent. of the home market is supplied by our own manufacturers. Two-thirds of imports come from developed countries. I identify in particular the United States because it has featured a great deal in the debate. There is no doubt that American energy prices provide the background for what is unfair competition. Labour Members, with great braggadocio, demand that we confront the new President, President Reagan, and insist upon a change in energy prices. May I ask the House whether that is a more likely way to get results than the negotiations that we have initiated through the EEC with the new Administration and which have already resulted in a fairly hopeful response from the new American trade secretary? That will be followed up.
  Only one-ninth of our market is supplied from developing countries. Although the vast bulk of the exports from developing countries are subject to restraint,

  1023
  I accept that these exports can have a devastating affect upon narrow sectors and individual firms in our markets. Yet the House cannot doubt that there is now a much more massive and comprehensive system of regulation than the Government inherited, thanks to the activities of my right hon. and hon. Friends at the Department of Trade.
  The House should remember that these exports are from developing countries which are our markets as well as our competitors. They are the very countries to which the Opposition want us to give more help but the very countries which they wish to stop from trading with us. There are firms and work forces in many parts of the country that rely upon the earnings of those developing countries, which have to export clothing, textiles and footwear to us in order to buy the products of other parts of this country.
  Mr. Straw: Will the right hon. Member give way?
  Sir Keith Joseph: No, I do not have time to do so.
  I want to emphasise not only how widespread the network of protection is but also that it is effective. My hon. Friend the Member for Macclesfield made the charge that the Dutch will be able to introduce massive aid for their textile industry and that it will take this country three years to block it. I should like to tell the House, in the absence of my hon. Friend who has to be away, that that is utterly untrue. The EEC has already blocked the Dutch proposed trade support scheme.
  The hon. Member for Rochdale (Mr. Smith) and my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) showed understandable chagrin because coal miners are seeking higher redundancy pay or because steel workers get higher redundancy pay than textile workers, but I fear that the logic goes the other way. If the industry cannot afford higher redundancy payments than it is paying already, and if any extra redundancy pay has to come from the taxpayer, the more that is paid out by the taxpayer in, say, steel and coal, the less there is for any other public spending.
  I have spoken openly and without denial of the responsibility of the Government. I turn now to the industry—
  Mr. Gary Waller: Among those things for which the Government have no responsibility, does my right hon. Friend agree that one of the heaviest hammer blows to the industry has been the high rates that local authorities have imposed on companies in the textile industry, particularly in West Yorkshire, bearing in mind that many areas in West Yorkshire went Labour at the last election, imposed supplementary rates and are now imposing higher rates for next year?
  Sir Keith Joseph: That is absolutely true. I am glad I gave way to one hon. Member opposite and to one on my own side.
  I accept that industrial relations in the industries concerned are excellent and that there has been massive investment in many parts of these industries. Nevertheless, I note, and I hope the House will note too, that the contrasts within these three industries are vivid. Firms are closing next door to firms that are booming.
  Several hon. Members rose—
  Mr. Speaker: Order. The Minister is not giving way. He must be allowed to continue.
  Sir Keith Joseph: How can that be, against the background of the conditions that have been described? The answer is that a combination of design skills, marketing flair, management flair and modern technology can produce triumphant success. In all the gloom, there are dramatic success stories.
  I was asked whether the Government cared. Of course the Government cart: about these three industries. We would be mad not to care.—[HON. MEMBERS: "YOU are".]—but we cannot guarantee the size of the industry. The coal industry, to which many hon. Members have referred, has shrunk over the past 20 years to one-third of its former size. Textiles, clothing and footwear are not the only industries that are having to adjust to changing conditions. We cannot guarantee the size of the industries, because so much depends on their management.
  The Opposition's motion is opportunistic and hypocritical. They negotiated the framework which we are administering far more vigorously than they ever did. I ask my right hon. and hon. Friends to reject the motion and to support the amendment.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 239, Noes 299.

  Division No. 87]

  [10.00 pm

  AYES

  Alton, David

  Beith, A. J.

  Tellers for the Ayes:

  Sandelson, Neville

  Mr. Stephen Ross and

  Steel, Rt Hon David

  Mr. David Penhaligon.

  NOES

  Aitken, Jonathan

  Kilfedder, James A.

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

  Lloyd, Peter (Fareham)

  Baker, Nicholas (NDorset)

  McNair-Wilson,M.(N'bury)

  Bennett, Sir Frederic (T'bay)

  Major,John

  Best, Keith

  Mather,Carol

  Brown,Michael(Brigg&Sc'n)

  Mawby, Ray

  Buchanan-Smith, Alick

  Maxwell-Hyslop,Robin

  Butler, Hon Adam

  Mills,lain (Mericden)

  Chapman,Sydney

  Mills, Peter (WestDevon)

  Clarke, Kenneth (Rushcliffe)

  Moate, Roger

  Clegg, Sir Walter

  Morrison, Hon P. (Chester)

  Colvin,Michael

  Mudd, David

  Cope,John

  Newton,Tony

  Dean, Paul (North Somerset)

  Nott, Rt Hon John

  du Cann, Rt Hon Edward

  Page, John (Harrow, West)

  Dunn,Robert(Dartford)

  Page, Rt Hon Sir G. (Crosby)

  Emery, Peter

  Patten, Christopher (Bath)

  Fenner, Mrs Peggy

  Pawsey, James

  Fookes, Miss Janet

  Pink, R.Bonner

  Fowler, Rt Hon Norman

  Price, SirDavid (Eastleigh)

  Gow, Ian

  Silvester,Fred

  Gummer,JohnSelwyn

  Stevens,Martin

  Hannam,John

  StradlingThomas,J.

  Hawkins,Paul

  Tebbit, Norman

  1067

  Temple-Morris,Peter

  Wheeler,John

  Thompson,Donald

  Young, SirGeorge(Acton)

  Thorne, Neil (llfordSouth)

  Townsend,CyrilD, (B'heath)

  Tellers for the Noes:

  Wakeham,John

  Lord James Douglas-Hamilton

  Waller, Gary

  and Mr. Robert Boscawen.

  Wells, Bowen

  Question accordingly negatived.
  Question,That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments), and agreed to.
  Mr. Speaker Mr. Speaker forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  That this House acknowledges the difficult trading conditions facing the textile, clothing and footwear industries; notes the measures which the Government has taken to give these industries a wide range of protection; and believes their future is best assured by these measures and the pursuit of realistic policies designed to lower the rate of inflation and maintain access to export markets.

  Employment and the Economy (Southern England)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Boscawen.]
  7.14 pm
  Mr. John Grant: It is somewhat unusual, I know, for the House to debate the economic and unemployment situation in the South-West. It last did so in 1977. It is without precedent for the House to debate unemployment in the South. The affluent South, as it was once known, is now suffering severely from the same economic situation that affects the rest of the country. I do not pretend that the South, even with the inclusion of the South-West, is in the dire economic position of the worst hit parts of the country. All things, however, are relative. We are talking of a grave and fast deteriorating situation which should be fully exposed in this debate.
  I do not want to take too long in my remarks. I recognise that there are many hon. Members who wish to make constituency points. Although this is an Opposition Supply day, we can thank the Prime Minister and the Government for this debate. The Prime Minister's policies have spread the misery of grievously high unemployment so that no area of the country can escape its tragic consequences. The fortunes of any region are inevitably dependent largely on national trends.
  At the moment, we are slap in the middle of the worst recession since the 1930s. The fall in output last year was the biggest since those grim years. The trend is continuing unabated. Only last week the Confederation of British Industry warned that no one should think that there is an upturn round the corner. Even the Institute of Directors is saying that the Government's economic policies are in a shambles. I believe that even the Minister of State, who, I understand, is to follow me in the debate, has been forced to become a wet alongside the Secretary of State for Employment. I suspect that he is probably dripping with chagrin.
  The output of manufacturing industry last year fell by 13½ per cent., and industry was reducing stocks at an unprecedented rate. Investment by manufacturing industry was 7 per cent. down in the second half of the year. We are talking of an appalling mess. When we discuss unemployment, a nightmare turns into a full scale horror story.
  During the debate on the Redundancy Fund Bill last week, I drew attention to the staggering financial cost to the nation of unemployment. The Secretary of State for Employment played a little with the figures, but nothing that he said refutes the fact that the Government are needlessly paying people not to work instead of helping to create employment and jobs. They are pursuing the economic theories of the madhouse. Only industrial brute strength frightens them into listening to reason. That is the meaning of the pragmatic interventionism of the last few days in the coal mining industry and in the water industry.
  The unemployment figure nationally is 2,463,000—or 10·2 per cent.—a rise of 974,000 in a year. It is a damning indictment of Government policy. I should like to examine the situation regionally. In the South-East region, excluding Greater London, unemployment went up by 59 per cent. between October 1979 and October 1980 compared with a national rise of 51 per cent. The figure
  1030
  since that time has steadily increased. There are almost 300,000 people out of work in the region. Vacancies number only about 16,000 and have dropped appreciably this month. People tend to forget that the South-East is this country's largest manufacturing centre. If its prosperity falls away, it can only be the hallmark of national decline.
  In the South-West, there are almost 155,000 people out of work—9·3 per cent. There are only 6,500 vacancies. There are 24 people chasing every vacancy, which, measured in those terms, represents as bad a situation as exists in Scotland. In 1980, unemployment in the South-West was up by more than 50 per cent.
  A debate of this sort will obviously cover contrasting ground. Employment conditions are different in Cornwall and Devon from those in Bristol or those in the Home Counties. Hon. Members will be making their own constituency points. Their speeches, I am sure, will reflect the extraordinarly diverse nature of industrial development that we are considering. Whether we are talking of major factory closures in Hertfordshire, Kent or Essex, of the effect on office jobs, which make up 40 per cent. of employment in the South-East, or on the hundreds of small engineering and printing firms that have gone bust or are deep in trouble, of building and construction, which is regarded as crucial in the South-West, of the contraction of work in the great ports of Portsmouth, Southampton or Bristol, or of agriculture and tourism, wherever we look, the picture is equally grim.
  There are large pockets of unemployment in the South and South-West that well match many of the problems further north. Some places, specially in Devon and Cornwall, have jobless rates of two or three times the national average. In those areas the smaller firms in the private sector tend to be the hardest hit. Many of the workers in these firms who are thrown on the scrap-heap are less well provided for. They do not have the special payments and treatment provided when there are large-scale redundancies in parts of the public sector. For a Government who were supposedly dedicated to helping small firms, particularly the self-employed, their record is nothing short of an unmitigated disaster.
  Earlier I mentioned the 1977 debate on the South-West. I have re-read what some right hon. and hon. Gentlemen, who were then in opposition, said. They were calling the unemployment position in that area "unacceptable" and "disgraceful". I wonder what they will call it tonight when over 1 million more are out of work. At that time they demanded remedial measures. The Labour Government introduced a good many remedial measures. I am thinking especially of the special employment measures which were sneered at by the then Opposition. They spoke then about the need for "real jobs". That was a favourite phrase.
  Now the Government are being forced to expand those remedial measures—for the most part inadequately. Unemployment fell steadily during the latter days of the Labour Government. It went down month by month in the South and the South-West as it did in the rest of the country. At that time inflation, too, was going down. At that time we were not using unemployment as a weapon, and the figures prove it.
  One subject to which I draw the attention of the Minister of State is the Youth Aid report published yesterday about the youth opportunities programme. That applies to many young people in the areas we are debating. The report warns starkly that the youth opportunities programme faces the danger of breakdown if it is enlarged

  1031
  to cope with the increased numbers of young unemployed without offering the right quality of education and training. I do not have time to go into the details of that report. I am not attacking the increased spending on the youth opportunities programme, but I ask the Secretary of State to consider carefully the message contained in the report and to take it seriously.
  I looked at the report of what the right hon. Member for Taunton (Mr. du Cann) said in 1977. He called for a great public works programme to build roads and hospitals. I hope he will repeat his call tonight. If such works were needed then, they would be a godsend to such areas now. I hope to see the right hon. Gentleman and all his hon. Friends joining the queue outside No. 10. I understand that the Prime Minister said that she would see any Members who had major redundancy problems in their localities. If they queued up outside No. 10, they would be a rather more honest assembly than the Saatchi and Saatchi rent-a-crowd queue that we saw in the infamous pre-election dole queue poster.
  The way to revive the flagging economy of the South and South-West and to get people back to work must be for the Government to change course but primarily to eject a Government who by any standards are dragging the nation deeper and deeper into a morass.
  The Secretary of State for Employment—I am sorry he has had to leave—said in Eastbourne recently that it was all very well
  "in the South-East of England, the relatively prosperous South-East, the pretty smug South-East, to be patronising about the North and the North-East but by God if you live there it is tough, it is hard.
  If we talk about a united nation, one nation, do not let it just be words, let us try to understand the problems they face in places like Sunderland."
  I agree with the right hon. Gentleman entirely, but he was talking to that smug, self-satisfied Young Conservatives audience—the same people who gave the Prime Minister a standing ovation not long before.
  A week before that speech I was in Eastbourne speaking at a public meeting on unemployment. I had with me on the platform a representative of the local unemployed workers' organisation. There was nothing smug about that meeting. It is a sign of the times that one can be invited to speak at meetings on unemployment in such places as Eastbourne.
  The Secretary of State should face the facts. The policies of his Government, especially those of the Prime Minister, have succeeded in achieving the one nation of which they speak, because there is nowhere else for the unemployed to go. Labour mobility—something else that the Prime Minister was fond of talking about—is now a very sick joke. The Government have united the nation, including the South and the South-West, in economic misery. We are suffering a level of unemployment that is a scandal in a civilised society.
  I quote the Prime Minister's words in 1977. It is not the first time that the House will have heard this comment. I have no doubt that we shall hear it again form time to time. She said:
  "Sometimes I've heard it said that Conservatives have been associated with unemployment. That's absolutely wrong. We'd have been drummed out of office if we'd had this level of unemployment".
  That was at a time when there were 1 million fewer unemployed than there are today. The Prime Minister is condemned out of her own mouth.
  1032
  Only last week the Secretary of State for Employment made what I thought was an amazing U-turn. He publicly recorded what he called his unstinted admiration for the Prime Minister. I do not think that added to his public credibility. If he can find even an echo of that unbelievable sentiment among the 2½ million people now unemployed, especially among those in the South and South-West, he will deserve a medal. What he really deserves is the sack, along with the rest of the Government.
  7.26 pm
  The Minister of State, Department of Industry (Mr. Norman Tebbit): I thought that it came oddly from the hon. Member for Islington, Central (Mr. Grant) to remind us of hon. Members who have said that the level of unemployment was unacceptable. He remembers, as well as I do, that time after time the right hon. Gentleman who is now the Leader of some of the Opposition-gradually, day by day, they desert him, two, three, four, five; is it a gang of 11, 15, 30 these days?—came to the Dispatch Box, wrung his hands and said "The level of unemployment is unacceptable". That is one of those things that Secretaries of State, faced with such difficulties, very often say.
  Mr. John Grant: There is only 1 million in it.
  Mr. Tebbit: There may only be 1 million in it, but the hon. Gentleman forgets that when the right hon. Gentleman came into office he inherited a level of unemployment of about 600,000. He more than doubled that level of unemployment. It does not do for the hon. Member for Islington, Central to shed tears over the unemployment level when he knows that the record of his Government was quite disgraceful.
  Then, when the hon. Gentleman takes some credit for the fact that unemployment was falling in the last days of that Government, he has a sauce He knows why unemployment was falling then. It was falling because, first, the economy had been turned round from the disaster when his right hon. Friend the then Chancellor of the Exchequer came running back from Heathrow and called for the International Monetary Fund to bail him out. He had taken that measure with all the expenditure cuts that were involved. Secondly, even the former Prime Minister was able to muster just enough vision of the future to see that a general election was coming, although he did not even control the date of it. Having seen that it was coming, he stoked up the fires of future inflation by Government spending, in one programme after another, leaving us to clear up the mess that we inherited.
  I agree with the hon. Member for Islington, Central on one thing—that it is unusual for the House to discuss problems in the South and the South-West of Britain. As a Southerner myself. I find that perfectly welcome.
  The House hears often enough about the obvious widespread problems in traditional manufacturing areas. It is important to recollect why those problems are so much worse in the old manufacturing areas. It is because past resistance to change prevented the solution of industrial problems when they were still sufficiently small to be easily handled.
  Now, as always happens when the dam bursts—and it always bursts when it is built up to try to stop progress—we get a flood of problems. They are problems that have submerged many firms and threatened whole

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  industries. The South and the South-West, in contrast, have not suffered to anything like the same extent, because they have never had the same rigidities of structure that have so damaged the North of England and the Lowlands of Scotland.
  No one would deny that we have our problems in the South, and in the South-West in particular. In London the local economy is usually very overheated. Even today, although the hon. Gentleman says that there are no jobs, the evening newspapers show that there are jobs aplenty being offered in a way that can only evoke envy among less fortunate, unemployed workers in the other regions of the country.
  Mr. John Grant: I did not say that there were no jobs. I pointed to the ratio between unemployment and the vacancies. If it is said that many people do not register their vacancies, it is equally true to say that many people do not register for unemployment.
  Mr. Tebbit: I do not think that anyone has suggested that the ratios are anywhere near the same. They are nowhere near the same. The hon. Gentleman has only to look at the evening papers around London to know that that is true. Many skills are still in short supply in the South and South-East. All too often the poor levels of educational qualifications damage the chance of youngsters, especially in inner London, of finding employment. High commercial and industrial rents, expensive transport, and high rates—I emphasise high rates to the hon. Gentleman, remembering which borough he represents in London—together with traffic congestion, and the prospect of regional grants elsewhere, tend to drive or lure manufacturing away from the South and the South-East, and particularly away from the capital.
  To some degree the same problems exist in other parts of the South. Despite the availability elsewhere of regional aids, however, new towns such as Crawley, Hemel Hempstead, Harlow and Basildon—and growing centres such as Reading and the areas that are prominent in the electronics industry all along the Thames Valley—remain attractive to industry. There are abounding instances of successes scored at home and abroad by companies in those areas.
  Mr. Stanley Newens: Does the hon. Gentleman agree that even in new towns such as Harlow, which he previously represented, many firms are being driven out and are under very great pressure? Many people are becoming unemployed there because of the policies of the hon. Gentleman's Government. Will he say something about the effects of high interest rates, about the present overvaluation of the pound, and about many other issues that undoubtedly are producing unemployment in the South-East, in precisely the areas to which he has referred?
  Mr. Tebbit: I shall be willing to give way again to the hon. Gentleman if he wants to welcome, for example, some of the new firms that are coming to Harlow and increasing employment opportunities, such as Merck Sharp and Dohme, the pharmaceutical company. I am sure that the hon. Gentleman, who is a very fair-minded man, would want to make that point in order to get the record straight.
  Sometimes the projects that we are talking about are run-of-the-mill projects, but sometimes—indeed, very
  1034
  often in the South—they are well up in the forefront of technology. I have in mind such firms as Redifon, of Crawley, and its rivals in flight and other simulation, Link Miles at Shoreham—world leaders and well capable of taking on competition from anywhere in the world, despite the high level of the pound and despite high interest rates and all the other problems of which hon. Members are so aware.
  Mr. Stephen Ross: The Minister has great knowledge of the aircraft industry. He may agree that the Isle of Wight is a very good place to be for those in the civil aviation and light aircraft industry; indeed, it is probably the home of the industry now. But he must be aware that, in spite of the fact that we have very modern industry on the Isle of Wight, we have 10½ per cent. unemployment. The unemployment figure in Ventnor is 20 per cent. That is not the fault of the people there. Firms such as Ronson are closing down, due largely to the high interest rates and the overvalued pound.
  Mr. Tebbit: I shall not duck these points. I prefer to come to them in my own time.
  It is perfectly easy to turn to the South-West and to assume that it is still all tourism, agriculture and fishing, but that is very far from the case. When we talk about the South-West, it is wise to remember that Bristol and Severnside, and the industry there, present a very different picture from that in the far South-West of the country. Places such as Plymouth are different again, with the historical dependence on the Royal Naval dockyard.
  I am not sure whether the hon. Member for Islington, Central is in favour of defence spending or against it. No doubt he is against it if it is defence spending and for it if it creates employment. But there are problems that are totally different from those of the traditional South-West—the rural and small towns of Cornwall and Devon.
  It should be remembered that the distance from Bristol to London is hardly any greater than the distance from Bristol to Plymouth, and that it takes rather less time to get to London from Bristol than to get to Bristol from Plymouth. So the South-West region is one in which there are great differences between places, although we tend to talk about them in the same way.
  Mr. Peter Emery: The Minister has wisely hit on the difficulties that exist. Will he say something about the pressures being brought by many hon. Members from Devon and Cornwall for the regional headquarters to be moved from Bristol to somewhere such as Taunton, Exeter or Plymouth? There are many places in the area that are further from Bristol than Bristol is from London. It really is nonsense to have the headquarters in Bristol.
  Mr. Tebbit: I entirely understand my hon. Friend's point of view. It is one of the matters that we have to look at all the time. We have to consider whether these centres are in the best place. In the past, because most of the work has been in the Bristol and Severnside area, that is where the centre has been. It is because of the weight of population as well as the distance factor.
  Mr. David Penhaligon: The Government have just closed down the regional employment headquarters in Exeter, which is 100 miles from where I live, in order to concentrate the facilities on Bristol. That is exactly the sort of thing about which there is mutual complaint in the South-West.
  Mr. Tebbit: It may well be that in the interests of the control of Government expenditure—which at least half the House has in mind—it is right to concentrate the facilities in the areas where most of the business is done, as opposed to meeting the other desirable criteria mentioned by hon. Members.
  The unemployment rate in the South-West is now 9½1 per cent. That is the fourth lowest regional rate in the United Kingdom. None the less, we are aware that it conceals areas of acute local difficulties, as well as areas of considerable prosperity. The tourist business has a short seasonal peak and long winter troughs. It has had a hard fight to remain competitive against overseas holidays, but it has done remarkably well in recent times.
  This is a debate about the regions, so it is right to refer to regional policy as such, and how it aims to assist areas such as the far South-West in coping with present problems. When we came to office in May 1979 we inherited a quite extraordinary regional policy. It had started back in the 1930s as a system for selectively aiding the most hard-pressed areas—Merseyside, the North-East, and South Wales. But it had been allowed to grow, until 40 per cent. of the working population of the country was in assisted areas.
  The key to any regional aid policy is that it must be discriminatory. One could not hold with a system offering aid so widely spread that it redressed the disadvantages of the most needy areas. So, following a review of that policy we decided that we had to enhance the attractiveness of the worst-off areas—the special development areas—by increasing the differential between regional development grant paid there and in the development areas. We increased that differential from 2 per cent. to 7 per cent. We concluded that it would be possible to reduce over three years the coverage of regional policy to 25 per cent. of the country.
  We are now in the second of the three phases of changes implementing that conclusion. We are on the way to a concentrated and more cost-effective policy aimed at the areas most in need of help. More help is being brought to the extreme areas of the South-West, the special development areas and the other assisted areas—relative to the rest of the country, which is what counts—than they received previously.
  Mr. Tony Speller: Does my hon. Friend agree that there is a certain illogicality in an exercise whereby the excellent city of Plymouth gains the benefit of development area status—an area with good roads, excellent rail services and some air traffic—whereas an area such as North Devon, which has none of those advantages, loses development area status?
  Mr. Tebbit: It is always possible to put a case by deploying the favourable aspects—if that is the right word—of a particular area in its quest for special treatment. We have to take a balance of all the factors that are involved—unemployment levels, the question whether unemployment has been persistent, communications, and whether the area is cut off from other travel-to-work areas. Moreover, we keep the areas under review.
  Regional policy is not only about grants; it includes infrastructure improvements. Much benefit has come from improved communications. For example, the Gloucester northern bypass will start this summer. That represents another £12½5 million of road building. I am glad, too, that
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  the M5-Tiverton link—another £12½8 million of road building—will start at the end of the year. These are useful schemes of road development.
  The other characteristic of the South, as opposed to the North, is that it is probably far more dependent than is the North upon employment in small firms, which nationally employ about 25 per cent of our work force. The SouthWest, without heavy or capital-intensive industry, is even more dependent on small firms than is the rest of the South.
  We have set out to create conditions that are more favourable to small firms. Since his appointment in January my hon. Friend the Under-Secretary has been seeking new ways to build on the successes of his predecessor, who had become identified with the cause of small firms. In particular, he is interested in the work of COSIRA and the Development Commission, which have given much support to small firms, not only by offering advisory training and financial services but by factory building in the South-West. The hon. Member for Southampton, Itchen (Mr. Mitchell) seems to find something amusing or derisory in assisting firms with advisory and financial services, or with small factory building, but these matters are of considerable assistance to smaller firms in the South-West, apart from the general changes in the last Budget that benefited small firms in other ways.
  Sir Frederic Bennett: I agree entirely with what my hon. Friend is saying about help for small firms. Does he accept that the present facilities are very limited in time—limited to about six months? He said that the South-West can no longer be dependent on fishing, agriculture and tourism. So additional help is needed to extend the periods of training to enable people to take jobs in small firms which at present are not there. I hope that either he or his hon. Friend will be able to comment on that matter.
  Mr. Tebbit: I am sure that my hon. Friend will wish to say something about training of that sort because it is rather different from the work of COSIRA and the Development Commission.
  I know that Opposition Members are specialists in gloom tonight, but there are a number of bright spots in that gloom. Let me give some of them: J. I. Case Limited, at Redruth—another 500 jobs over the next two to three years; Becton Dickinson, at Plymouth—another 340 jobs over the next two to three years; Marconi Avionics, at Bristol—850 jobs over the next two to three years; Lee Cooper, at Helston—220 jobs over the next two to three years; Intel, at Swindon—500 jobs over the next two to three years; Racal Milgo, at Swindon—another 500; Tectonic Electronics at Swindon—300 more.
  In the Reading area, Digital Electronics is recruiting for another 700 to 1,000 new jobs; Ferranti Computer Systems—400 new jobs; Racal—300 new jobs; and Mitel Telecommunications—250 new jobs.
  In Essex, to please the hon. Member for Harlow (Mr. Newens), there are 500 new jobs at Marconi Avionics, at Basildon and Rochester. I have mentioned Merck Sharp and Dohme and Trebor Mints, at Colchester—400 new jobs; and Gordon's Gin, at Basildon—150 new jobs. I know that the hon. Gentleman wants to recite all the bad news. I understand that he wants to tell us about the

  1037
  closures and to keep telling us that everything is bad, but I want, to impress upon him the fact that there is another side to the story.
  The new jobs that are created in the hard times of a recession are jobs that are viable in the long term, whereas many of the jobs that have gone to the wall during the past few years—less in the South and South-West than in the rest of the country—are jobs that have been hanging on by the skin of their teeth for many years past. They are jobs that would have had to go before long if British industry was to become sufficiently competitive to live in the competitive world of exports, where it has to face the challenge of the Germans and the Japanese.
  There is good news, too, in the broader view. The Government have set as their prime objective the reduction of the level of inflation. Inflation is coming down fast. The underlying level of inflation is probably well under 10 per cent. But the hon. Gentleman does not want to talk about inflation now, though a year ago that was all that he wanted to talk about. Opposition Members do not want to discuss good news. It reminds me of a broadcast that I heard on the BBC yesterday morning, when it appeared that a football team had won a match against another football team that had been losing a lot. The Opposition always refer not to somebody winning a match but to somebody else losing.
  Miss Joan Lestor: Will the hon. Gentleman give way?
  Mr. Tebbit: No. I want to leave time for others to speak.
  The balance of payments is now far more favourable than Opposition Members are willing to admit is possible. We are exporting £1 billion worth of goods a month despite all the problems. There is much better news of pay settlements generally in industry. Pay settlements in the engineering industry are reported to be well down to single figures. That must be good news for the future. Industrial relations are better in terms of days lost and strikes. The Opposition wanted to talk about that in the past.
  All that has been achieved without the rigidities of statutory pay and price control. All that will ensure that as the recession eases British industry and commerce will be better equipped than before to take advantage of it and less likely to run back into the familiar cycle of high inflation and another round of high unemployment.
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Before I call the first Back Bench speaker, I remind the House that 19 right hon. and hon. Gentlemen have indicated their wish to speak in this important debate.
  7.52 pm
  Mr. Arthur Palmer: As usual, the Minister gave his party knockabout, at which he is always good. However, he then drifted into the realms of fantasy. I shall be, I hope, short, but many hon. Members from the South-West sit on the Government Benches, whereas only a few sit on the Opposition Benches. They are many; we are few.
  I propose to keep my remarks practical and to confine them to the Bristol area. Bristol has a fair mix of industry and commerce. It contains some advanced industries. It is also a commercial city. In the past, in times of depression,
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  one aspect has balanced the other and Bristol has not suffered as much as, say, the North or South Wales. I am not talking of course, about the far West. But the situation in Bristol today is different. Our unemployment figures are all too close to the national average.
  The Minister spoke of gloom and suggested that we on the Labour Benches are merchants of gloom. Some gloomy Bristol people are probably closer to the Minister, politically, than we are. I received a memorandum from Mr. John West, the director and chief executive of the Engineering Employers' West of England Association. The Association's head office is in Bristol. The memorandum was sent to all hon. Members representing constituencies in the South-West. He stated:
  "A few companies have been pushed so hard that they will never recover. Many more are having to close parts of their business with little hope that they will ever be able to start up again. A large proportion of our members have been shedding staff and/or working short-time. Many are reporting declining profits and some are eating into their financial reserves. Not since the War has there been such a picture of immense industrial change nor such worrying unemployment trends."
  I do not know anything about Mr. West's politics, but I guess that his members support the Conservative Party more than the Labour Party.
  Business men seem to be torn now between their political allegiance and their practical experience. In spite of their theoretical principles at a general election, they are often now near to bankruptcy, and that concentrates their minds. They want cuts in public expenditure and reductions in the public sector borrowing requirement. At the same time, they praise those who maintain useful capital expenditure. Much capital expenditure these days is bound to emanate from the nationalised industries within the public sector. That is particularly true of firms in the Bristol area. I refer to the electricity, gas, nuclear energy and railway industries.
  I do not blame firms for being confused, because clearly the Government are divided and confused. They do not know whether they are coming or going. Business men want both public expenditure to stimulate growth and public economies to keep down taxation. That is the impression that I gained also from a weekend ministerial television programme. So if the employers in Bristol are divided and confused, we should forgive them, for so are the Government.
  But my present intention is not to go over the Government's general policy. I wish to make some short observations about the special difficulties of the Bristol area. Bristol is not a development area, and therefore receives no special assistance. It receives no encouragement from the Government to stimulate new industries. New industries often find fertile soil in the Bristol area, but the city receives no help from outside to provide additional stimulus.
  Two bad decisions affecting Bristol were made by the Government recently. The first was the Government's decision to send the Inmos production development to South Wales. As a result, the development has slowed down. It is a loss to Bristol's economy and to that of the country as a whole. So far as I can judge, no great further progress has been made and no employment has been created in Wales. That was a bad decision about which there is strong feeling in Bristol.
  Mr. Paul Dean: On the other side of that coin, Marconi Avionics has come to our area and it will create a substantial number of new jobs.
  Mr. Palmer: I admit that there is good and bad in everything, but the loss of Inmos to Bristol, when it wished to be in Bristol, was the result of a mistaken decision.
  The other grievance involves the refusal to make the area around the new Portbury dock an enterprise zone. The city council has been energetic and it applied for enterprise zone status for that land. We all know the history of Portbury. It was a venture of faith by the old Bristol corporation when Bristol had the resources of a county. It was constructed at ratepayers' expense, with no assistance from national funds. Potentially it is a tremendous national asset, being at a key point in the motorway system. It could be one of the most up-to-date ports of a new type in Europe. However, the city council and the port of Bristol are now going through heavy financial difficulties with the burden of Portbury. Therefore, it would be reasonable if the Government could give assistance by making the area around the port of Bristol, particularly on the western side of the Avon, an enterprise zone. Although it involved no cash subsidy, the enterprise zone was refused.
  Bristol has lost again. Because if it is not a special area of one kind or another it does not rank for any help from EEC funds. Similarly, it fails to get the advantage of low interest rates. The Government's decision was conveyed to me and other Bristol Members in a short letter from a Minister, with no further explanation. By taking that decision, the Government have not just hit Bristol in one direction; several other consequent blows have flowed from it, against Bristol and its port.
  Mr. William Waldegrave: I sympathise with a great deal of what the hon. Member says. However, in all honesty, he must make it clear that it would have been extremely unlikely for his party to start to give privileges of this kind, much as we might want them, to an area such as Bristol, whose unemployment rate is still two points below the national average. This is not a party point. It would be almost inconceivable for a Labour Government to give such privileges to Bristol.
  Mr. Palmer: I should have thought that the same was obviously true of the present Conservative Government, but I am speaking here for Bristol and I hope that the hon. Gentleman will do the same.
  These adverse factors have entirely distorted the competitive position of Royal Portbury, and are significant to Bristol in the present economic situation. I am sure that the hon. Member for Bristol, West (Mr. Waldegrave) would agree with me at least on this point. The Bristol city council has made tremendous efforts to attract industry to the Bristol area. It has not been asleep on this matter, as the hon. Member knows.
  An additional suggestion from Bristol is that we should have some overall good sense and planning in the port facilities for the Severn as a whole, because the nationalised ports on the other side of the river have advantages because of the special status of South Wales. Those advantages are lacking for the port of Bristol.
  The port of Bristol is the largest municipal trading undertaking left in this country. Its finances need reorganisation. We would be helped if private funds were available. They are badly needed. But it will not be possible to attract private funds to the port, unless the
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  Government make a gesture to Bristol. I hope that we shall have a public response on this matter from the Minister, rather than private correspondence.
  Finally, I turn to the possible Severn barrage. As the Minister knows—he is a man of all wisdom—a special committee has sat for some time, appointed by my right hon. Friend the Member for Bristol, South-East (Mr. Benn), when he was Secretary of State for Energy, following a report by the Select Committee on Science and Technology, of which the Minister was a member. That report suggested that there should be a new look at the possibilities of a Severn barrage for electricity production. If constructed, it would be a public work of great size and immense potential, not just for the present but for well into the future. It would stimulate engineering work, not only civil and mechanical but electrical, on an enormous scale. That would last for many years to come.
  The barrage would be a power producer. It would be remunerative and would give an adequate return on capital for if it did not it would not be constructed at all. I have the privilege of serving on that special committee. Our report will be out soon. I think that I can say, without giving away any secrets, that the report will be in favour of proceeding with the barrage, subject to a further feasibility study. If built, the barrage will take the place of about three large modern power stations, whether nuclear or coal-fired. Therefore, the report should be taken seriously in the energy context.
  There has been much talk over the years, going back before the First World War, about a Severn barrage but if one constructs a barrage it must be related to the electrical demand of the country. For this reason, today a barrage can be placed economically at the best point across the Severn Estuary to give maximum output.
  I hope that when that report appears there will be some political will on the part of the Government and the Cabinet, to go further, because the construction of the Severn barrage is not just a question of reports, or of engineering capacity, but of political will.
  8.6 pm
  Mr. Edward du Cann: The hon. Member for Bristol, North-East (Mr. Palmer) is right. The context in which we are having this debate is one of a depression in our country. I regret that we have so short a time in which to discuss the matter.
  I shall make a suggestion which I hope will be of help to the House, particularly to my hon. Friends, when too many Members wish to speak on important subjects with too short a time in which to fit in those speeches. It is always agreeable to listen to the hon. Member for Islington, Central (Mr. Grant) and especially to my hon. Friend the Minister of State who has many qualities which I admire. However, perhaps it would be better if we did not have opening speeches from the Front Bench but merely had the motion moved formally. We could then have a series of more important winding-up speeches in answer to the debate.
  On the face of it, it is surprising that we are discussing the economies of the South and the South-West together, because they are wholly different areas. They are as different as the Scilly Isles are from the Shetlands. However, there is a certain amount of logic in what we are doing. The economic health of the United Kingdom is

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  indivisible. In terms of economic prosperity, the nations and regions of the United Kingdom are wholly interdependent.
  In our part of the world, we have special problems. We have an older than average population and we have less industry. I could quote statistics at some length, but I shall forbear to do so, for obvious reasons which we have already discussed. I quote one example:
  "The South-West grew more slowly between 1971 and 1975 than any other region, and by 1975 the GDP per head in the South West was the lowest of any English region at just over 90 per cent. of the United Kingdom average."
  That example comes from Economic Trends, published at the end of last year.
  Although, remarkably, more people are employed than there were five or six years ago, too many people are on short-time working. There are 150,000 or more out of work. In my area the unemployment percentage rate has increased by 50 per cent. in the last five years. The reality is that not only are we in the South-West growing more slowly than is the remainder of the United Kingdom but, alas, we are getting poorer in comparison with the remainder of the nation. If I have an ambition—and I declare this plainly to the House, and I do not doubt that the feeling is shared by many other hon. Members—it is to see a greater level of economic health in the South-West and a better opportunity in particular for our young people.
  How can we help? This is my third and last point, and it is the major issue to which we should address ourselves. We heard a great deal about regional aid. Regional aid has a part to play, but, as a rule, only a small one. From my experience as a Minister at the old Board of Trade and with the Public Accounts Committee, I am convinced that if industries wish to move to a particular place they will go there irrespective of regional aid. If the whole country is prosperous, such aid is unnecessary.
  Advance factories can help, as can bodies such as COSIRA. However, what matters much more is the attitude of the Government to the regions. It should be a prime aim of policy to do everything possible to maintain local interest and amenities. That has not always been the case. For example, we have not always nurtured local patriotism. We have destroyed some of the ethic of really local government. In my part of the world we have taken the Army away completely. We no longer have a local regiment. We have moved it to a ghetto on Salisbury Plain. The catalogue could continue with village schools. Hardly one substantial business in the South-West is now locally owned. It is the duty of the Government in every way possible to foster local amenities and interest.
  We must strive to increase the general level of economic activity. It was once remarked that we had only tourism and agriculture in the South-West. If that were the truth, we should not be ashamed of it. However, it is not true. In 1979, domestic tourists spent £650 million, and overseas visitors over £100 million. Last year in the SouthWest they were spending on average £2 million a day. About 170,000 jobs are involved. We must endorse the strategy of the West Country tourist board. Why did I begin by saying that prosperity was indivisible? If people in the remainder of the United Kingdom are prosperous, tourism will benefit and so shall we in the South-West.
  Then we come to agriculture. In the six counties there are 40,000 farms and 50,000 workers. From 4¼million
  1042
  acres our regional output is £1,000 million a year, onethird of it from dairying. However, what arrangements do we make as Members of this House and within the EEC? Farm incomes last year fell by 24 per cent. If the Common Market proposals go through in their present form there will be a further fall of 30 per cent. No wonder bank borrowing for agriculture rose by 30 per cent. last year, which is in any case, a rise on the previous year. If fanning is prosperous, more machinery will be bought. Prosperity is truly indivisible.
  The general level of economic health is important to the South-West, but there are also special points. We must see that our communications are good. We have never paid proper tribute to my right hon. Friend the Member for Yeovil (Mr. Peyton) for the work that was done on the A303 when he was Minister of Transport, for the dualling of the A38 to Plymouth and for the building of the M5 motorway—incidentally, in response to a campaign led from the Conservative Benches some years before. We must press on with roads and keep the rail link to Penzance.
  I was challenged to repeat the remarks that I made in 1979. I shall do so. This has been a constant theme of mine. We must launch a strong public works programme, preferably privately funded. The hon. Member for Bristol North-East (Mr. Palmer) quoted the Severn barrage, which is an admirable case in point. The Department of Industry should set up a task force to identify all over the United Kingdom a series of projects like the Severn barrage. Let us put together a group of people to see what is practicable, what can be done and what can be funded. Let us do something constructive. In such a way let us bring a little more prosperity to those parts of the world in which we live, in which our children are growing up and which we love.
  My hon. Friend the Minister was right. The theme should be success. Here is an ideal opportunity for the Department of Industry to give a lead, which would transform at any rate our part of the world.
  8.18 pm
  Mr. David Penhaligon: I am a West Countryman and sound like one. I was born and brought up in Cornwall and am proud of it. Cornwall has a tremendous problem, although I do not underestimate the problems of other areas.
  Percentage male unemployment registered at the employment exchanges in Cornwall is as follows: Penzance 18·1, St. Ives 29·7, Redruth-Camborne-Hayle 17·2, Falmouth 23·5, Helston 20.1, Truro 13·9, Newquay 19·2, St. Austell 10·6, Bodmin 12·1, Wadebridge 18·6 and Camelford 18·3. That is a district average of 16·5 per cent. A recent parliamentary reply that I received revealed that Cornwall had two out of the six worst exchanges for unemployment figures in Britain. The figures say it all. The area is only 80 or l00 miles long. Not one employment exchange shows male unemployment at less than 10 per cent. Not one employment exchange has figures less than the national average.
  In mid-summer we can look to a marginal improvement, but it will be nothing like as good as those outside assume that it will be. Some of our detailed employment legislation precludes local people having a regular pattern of summer-time only employment. In the third year some people may end up receiving no unemployment benefit.

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  The figures for the South-West—or at least the Government's version of the South-West—are better than the national average. I have never been able to work out how Bristol is part of the South-West. I know that by saying that I shall upset Bristol Members, but from the great community in which I live Bristol seems more like a suburb of Birmingham. The figure for the South-West overall is 9·3 per cent. and for the South-East 7 per cent., and the national average is 10·2 per cent. The area has seen a substantial increase in unemployment in the past few months, which is a reflection of the general decline in employment. I firmly believe that most of it is a direct result of deliberate Government economic policy.
  Currently the Government—I do not say wrongly, given the situation in which they find themselves—are pouring money into British Steel and British Leyland. That is no help at all to regions as far away as mine. To say that it is no help is perhaps an exaggeration, but it is certainly very little help. I regard that money as a tax on monetarism—a penalty that the Government are being forced to pay to try to prop up the formerly prosperous Midlands because of their own economic policy. The Government are probably now spending more money on propping up those industries than they are spending in all the development areas in the country.
  I am firmly of the view that the only real economic hope for Britain now is that the Prime Minister, during her current travels, will persuade the President of the United States to pursue an even more insane economic policy than her own, thus driving the hot money out of Britain and into the United States, and returning to a more sensible exchange rate.
  Let us consider the individual industries which are important to our region. In the building industry, unemployment among building workers in Plymouth is 27 per cent., and I have no doubt that the figure for Cornwall is very much the same. Part of that is certainly the result of deliberate Government cuts in financing public housing—in an area in which massive housing queues are the norm, not the exception. In the building industry in the South-West, what the Government have not succeeded in damaging through cuts in public expenditure has been slaughtered by interest rates. Private house building has virtually terminated in my area. That is not surprising when one analyses the reality. For a modest £17,000 house, the first-time purchaser is required to make monthly mortgage repayments of almost £200. In an area in which wages are substantially below the national average, such mortgages are beyond reality and possibility of repayment.
  I strongly believe that areas with an essentially weak economy are more dependent upon a regular supply of Government investment than the more prosperous areas of the country. My own county council, probably above all in Britain, could not be accused of overspending. The argument is constantly rolled out in the House that we must keep the rates down and business will pour in. That hardly follows in my county, where I believe that we have the lowest rates of any county in the country.
  The Inner London Education Authority spends 92 per cent. more per head on educating primary school students than the county council in Cornwall spends. I give that illustration to show that the county cannot be accused of any ludicrous waste of public money. Nevertheless, in
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  order to maintain a reasonable background of employment, the county requires a steady level of Government investment. Tragically, that level is currently being reduced.
  It is in the industrial sector, however, that the real mayhem is being created. The South-West has lost Rank Toshiba, which was mostly in Plymouth but some of it also in the far South-West. There are massive cuts in employment in many of our industrial companies. The China Clay group in my constituency, a prosperous company which last year made £42 million in profits—if we had a few more like it in Britain we should not be in our present difficulties—has reduced employment by 800 in the past nine months. There have been no redundancies. It has been done very nicely and very skilfully. Nevertheless, it now offers 800 fewer jobs in my constituency than it did a while ago.
  The county has a peripheral economy. There is no doubt about that. We encourage people to come to our county because the alternative of telling them to stay away would cause even more problems. But there is no doubt that if there is a general reduction in the economy it will further affect some of the peripheral satellite companies in my county.
  Mr. Peter Mills: I am listening very carefully and I have considerable sympathy with what the hon. Gentleman says, but he has not mentioned the fact that, particularly in an industry such as china clay, there is the problem of world recession. If there is no demand, it is very difficult to export clay.
  Mr. Penhaligon: Whether it is the peripheral economy, ECLP, Rank Toshiba or the tourist industry, when asked what the problem is, the reason they all give is the exchange rate. Whether it is china clay, tourism, manufacturing springs or any other business that I can think of, all of them blame the exchange rate. Most of them tell me that they are losing their share of the world market and that, over and above the world slump, the exchange rate is one of the reasons why Britain is performing a great deal worse in the current situation than most of our industrial competitors abroad, and this is affecting the South-West as much as anywhere else.
  If it is not the exchange rate, it is interest rates. I regard small businesses as one of the most hopeful areas for development. But one has only to meet the people running those companies to know that interest rates are crippling them as nothing has ever done before. I cite the example of tourism, which is a useful part of the West Country's economy. I do not know what kind of season we shall have this year. What with the internal slump and the high exchange rate, we may be in for a very rough time.
  The farming industry, in which the hon. Member for Devon, West (Mr. Mills) is respected in the West Country, is experiencing a very difficult time. There is no doubt that the current price review in Europe is very important, because the industry could be swamped with debts—I do not say bankrupted—which will take a very long time to clear.
  These are the important parts of West Country employment patterns. All of them are suffering from reversal and decline, which are a direct result of current Government policies, high interest rates and a massive exchange rate.
  If I were to recommend a strategy for the South-West, certainly for the far South-West, it would be to encourage

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  what is natural. Farming, fishing, mining and tourism are the natural industries that come to mind. It is true that in the southern half of my constituency there is an engineering tradition which is more substantial than most people believe. I am a product of it. Whether that is a recommendation or not, I do not know. A combination of that with a massive long-term effort to expand telecommunications—to be fair, I believe that the Government are, by legislation, doing some good work on that—could enable the South-West to offer clerical and office services far more cheaply because of cheap office space and, to be honest, a relatively low-wage economy. Such services could be offered for some of the businesses in our big cities.
  I therefore argue for an encouragement of what is natural. I am delighted to see the Minister nodding his head. Perhaps he will find out why mining, which is the backbone of Cornwall's industrial development, is excluded from development and special development area help. I have never understood why the industry which is most likely to grow in the far South-West of Cornwall is excluded from help afforded to development and special development areas.
  It is true that if we want the tin mined we shall have to persuade people to go there. However, if the idea of such aid is to build up such an industry, it is logical that mining should be included.
  Mr. Tebbit: I do not think that the hon. Gentleman hit the issue on the head. The special and selective aids are supposed to be for mobile investment, and by definition the mines are not mobile.
  Mr. Penhaligon: That just shows how stupid the scheme is. It seems far more logical to encourage what is natural and what may actually grow than to force something to come in from outside which does not even know where the great county of Cornwall is. Perhaps we can debate that matter in some detail on another occasion.
  I accept that there is no way in which the regional problems of Cornwall will be solved in a general slump. We must look to an improvement in our infrastructure. The right hon. Member for Taunton (Mr. du Cann) mentioned roads. I would not argue with what he said about that. It is time that our rail links were improved. There are great fears in the county that the railway line through Cornwall will one day be totally chopped.
  It is said that there are no votes in sewage. However, Cornwall is coming to an economic halt because of lack of sensible sewerage investment. There are few areas where industrial or domestic development can take place if there is a lack of sewerage investment.
  My final point relates to industrial sites. Surprisingly, despite the slump, relatively few industrial factories that have been built over the years are empty. That shows what a success that policy has been. Now is the time to build further factories so that when the great recovery comes, about which the Government have more confidence than I, the infrastructure will exist to take advantage of it.
  I beg the Government to consider giving the far SouthWest a larger responsibility to administer itself. I am constantly writing letters to Bristol, Cardiff, Gateshead and Salisbury—Salisbury is the centre for COSIRA, one of the more successful enterprises—but I fail to understand why so many of the real decisions affecting Cornwall are
  1046
  taken outside the county. If the global sum currently given by the Government to the far peninsula of Cornwall to help it out of its economic difficulties were given to the county itself instead of being administered by all these other bodies, the people living in the county could make better use of it than people sitting in Gateshead, Cardiff, Bristol or Salisbury. A transfer of responsibility to the people who are affected by wrong decisions would help a great deal.
  The figures that I quoted earlier are figures of tragedy. People in Cornwall are used to leaving the county to look for a job. Many a Cornish lad has gone to what is locally regarded as England in order to look for employment. The Government's failure is reflected in the fact that that lad no longer looks to England for employment because the situation is not much better there. The people in my county are born and brought up there and they are proud of their Cornishness. Outsiders may not understand that. Cornish people want an opportunity to earn their living, to raise families and to carry on their traditions.
  The Government are, to a significant extent, responsible for the current slump. It has caused a breakdown in Cornwall's economy. I doubt whether we shall see a recovery within the next decade.
  8.30 pm
  Miss Janet Fookes: I warmly welcome the opportunity to debate the affairs of the SouthWest. Rightly or wrongly, we feel that, in the national context, we are often overlooked and forgotten. Unconsciously, that was borne out by the note that I received from the Library. I applied to the Library for some additional information for the debate. The Library wrote:
  "There have been a good many articles about the impact of the recession on other regions, particularly the West Midlands … but practically nothing in the national papers on the South-West."
  Other hon. Members have already intimated that the South-West has its own serious problems. I have been very worried by the increase in unemployment that has taken place even in areas such as Plymouth, where unemployment has risen to 12·6 per cent.
  The hon. Member for Truro (Mr. Penhaligon) indicated that in Cornwall there are even worse problems of unemployment. However, it is a mistake to assume that all is gloom and doom, or that all is the Government's fault. Clearly, the world recession must affect every part of the United Kingdom. No one can escape entirely from that. I welcome the fact that, early in their career, the Government gave the city of Plymouth the development status that had been asked for throughout the period of the Labour Government but which had not been granted. That is an earnest of the Government's good will towards that part of the world.
  My hon. Friend the Minister rightly drew attention to the number of new firms and new jobs that are being attracted into the South-West generally. He mentioned some, including Becton Dickinson, by name. That firm is now building on a site in my constituency. Recently I had a discussion with the managing director, and I particularly asked him why that international firm had chosen the West Country, and Plymouth in particular. The answer that he gave was instructive. He said that the choice had largely been made because there was an excellent work force, with a reputation for good industrial relations, good humour and skill, and because there were good communications—particularly with the

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  Continent—through the operation of Brittany Ferries. That is important for the attraction of new industries, and I am pleased to be able to trumpet that tonight.
  It is important that industrialists who might consider coming to the West Country should know that we have an excellent work force and good communications. Of course, those communications could be improved. I hope that nothing will be allowed to stand in the way of the development of the A38 bypass round Plymouth, which links up with Cornwall and the development of the North Devon link road. That is vital for the development of North Devon. No doubt my hon. Friend will wish to expatiate on that at greater length. Those are two incomparable assets and they offer enormous hope for the future.
  There has been a renewal in the old industry of mining. I notice that the hon. Member for Truro did not make that point. More than £9 million is being spent on the Wheal Jane and Mount Wellington mines. If that is wrong, no doubt the hon. Member for Truro will tell me.
  Mr. Penhaligon: I am familiar with the activities of the Wheal Jane. If I had not blackmailed the Labour Government into running the pumps for about 12 months, the mine would have been flooded and dead years ago.
  Miss Fookes: That does not invalidate my point. Those mines now have a new lease of life, and I am delighted. There is a scheme—which I hope will be successful—to dredge for tin off North Cornwall. If that scheme comes to fruition it will prove vital to an area that has been hard hit by the recession. I am astonished that no one has mentioned the prospect of offshore oil exploration. Oil finds would provide a magnificent opportunity for Falmouth and Plymouth to act as bases for such a major new industry. That would give an enormous boost and incentive to the South-West.
  I am in no position to say whether such exploration will be successful. However, those to whom I have spoken—who know more about the matter than I—are sure that it is not a question of if, but of when, it will come about. I know that the city of Plymouth and its commercial organisations are anxious to give every assistance. Even now they are trying to work out schemes so that when the oil comes they will be able to offer every facility. They have visited Scotland to see how things work there and how to avoid the pitfalls.
  I hope that the Government will bear in mind that, whatever the new industries may bring, the South-West still relies heavily on a number of small firms—some very small indeed, with fewer than 10 employees. Any assistance that the Government can give, either directly or indirectly, to those small firms will do more to assist the South-West than anything else. I hope that there is a real prospect of future prosperity for the South-West.
  8.37 pm
  Miss Joan Lestor: We are debating the interests and problems of a large region. There was a time when I spent my holidays in North Devon in Noss Mayo and Newton Ferrers. I thought that I was getting away from the position in Slough. I was seeking a change. I have listened to the speeches that have been made, and it may be that the problems confronting my area are very different from some of the problems confronting the areas to which I have referred.
  One thing that many Conservative Members and some Labour Members have in common is that traditionally
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  many of their constituents have come to Slough to find work. Until comparatively recently Slough, with its huge trading estate, was a magnet for labour from many parts of England, Wales and, indeed, the world. That is not so today.
  When the Prime Minister made the extraordinary statement that people should move to where there was work, she was probably thinking of the traditional pattern of people seeking work in Slough. But its present unemployment rate, including Windsor and Maidenhead—which are served largely by the huge trading estate in Slough—is now more than 6 per cent. I accept that that is only half of what it is in Plymouth, but it is the highest that it has ever been in the history of the area. It is especially important that that point should be made because, historically, whatever recessions hit Britain in the 1930s, before and since, Slough's multiplicity of industries, its bouyancy and its willingness to experiment in many different industries have always enabled it to escape the effects of a recession. That is not so today.
  The Minister spoke about gloom and said that we wanted only to be gloomy. Nobody wants to be gloomy. The fact is that things are gloomy. I tried to interrupt the Minister, but he would not give way to me. He spoke about jobs being created in certain areas, but the question to which he should address himself is whether unemployment is still rising. In my area it is rising more rapidly than ever before. That is the crucial issue. It is no answer to say that in one area some jobs are being created and that in another area other jobs are being created.
  There is another question that I put to the hon. Gentleman. I asked the same question during Prime Minister's questions a few weeks ago but received no reply. Is the unemployment that we are now experiencing accidental or intentional? There must be an answer to that somewhere. Is it accidental? Is it unfortunate? Did not the Government intend it? Is it intentional to enable the Government to reduce inflation?
  I know of no confident long-term projections that the rate of inflation will continue to fall. However, there are many long-term predictions that unemployment will increase. How can it be said that there is no reason to be gloomy and that we can all be buoyant because things are improving and inflation has begun to decrease? It is not fair to put that argument to those who are now experiencing the loss of their jobs.
  Mr. Chris Patten: Does the hon. Lady think that unemployment of 1½ million under the Labour Government was accidental or intentional?
  Miss Lestor: Unemployment under the Labour Government was wrong and indefensible. I do not defend it. The hon. Gentleman should not try to be clever. Unemployment under any Government is either accidental or intentional. One of the reasons why the Labour Government were unable to tackle rising unemployment was that, unfortunately, they did not have sufficient support in the House for the measures that they wanted to carry through. They were a minority Government. Is unemployment accidental or is it intentional? An answer must be given to the question tonight.
  Mr. Tebbit: Will the hon. Lady give way?
  Miss Lestor: No. The Minister would not give way when I asked him to do so. He should not expect me to be more ladylike than he was gentlemanly.
  Mr. Tebbit: I give way too often; that is the trouble.
  Miss Lestor: The hon. Gentleman would have given way once too often if he had given way to me, I can assure him of that.
  Slough has always been a magnet for labour. Workers have travelled to Slough from Wales, Scotland, Ireland, the Indian sub-continent and the West Indies. One of the contributory factors to the good race relations that we have always enjoyed in Slough has been the existence of full employment. Slough has a good solid base and experience of working and living with all sorts of different groups. That will stand it in good stead.
  It is my fear that one of the consequences of growing unemployment in many of our large cities will be a deterioration in race relations. The Government are not really taking that on board, any more than they are taking on board the deleterious effect that it is having on many young people in our society who find themselves with no prospects of getting a job and the prospect of a nuclear war facing them.
  The Government came to power on two important propositions. We all saw the posters that stated that Labour was not working. Presumably the implication was that Conservatives would get people back to work. Secondly, they promised that they would do something for small businesses. There are many small businesses and small firms in my area. Indeed, it has been characterised by those undertakings. What has happened to them? I have a list of small businesses that have closed down. They have given a variety of reasons that led them to close. Interest rates are high on the list.
  We have a higher degree of short-time working than at any other time in our history. Since November 1979, 31 firms have gone on to short-time working. In the same period, in 80 firms there have been redundancies of from 12 to 240 people. This is in prosperous Slough, an area people have looked to for developnent and opportunities.
  Mr. Newens: Does my hon. Friend recognise that the problems which she is pointing to as applying to small businesses in Slough apply generally throughout the country? Certainly they apply in Harlow. Is it not a fact that this Government, far from masquerading, as they have managed to do for a period, as the Government who defend small businesses, ought to be recognised by small businesses generally in the country as being absolutely a disaster for them? Ought not this to be recognised to be the case throughout the country as well as in our areas?
  Miss Lestor: My hon. Friend has made the point that I was coming to—that this characterises almost every area of the country.
  In the last two or three weeks, starting with the coal dispute and going on to the announcement of the increase in gas prices, there have been letters in my postbag from small businesses in my constituency pointing out how the increase in gas prices will affect them adversely and saying that the Government had said that they would help them. I have had letters from others saying that, when they wished to switch to coal in the interests of economy and also to help stimulate the coal industry, they were refused assistance that had previously been available to those who wished to make the switch. So the argument that small firms would be helped was nonsense from beginning to end.
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  I was amazed to hear the Minister say that one of the reasons why we have had a shortage of skilled labour was that people were coming out of school with poor educational qualifications, which meant that there was a lack of skilled people available for jobs. That is amazing to me. Here we have a Government who are doing everything in their power to undermine the education system at almost every level and who are denying young people opportunities to train in skills that would be appropriate to the environment in which they will find themselves, yet we are told that the shortage of skilled labour is due to the fact that skilled people are not coming out of schools ready to take on these occupations.
  Firms in my constituency say, quite rightly, that in Slough there has always been a shortage of skilled labour because of the particular types of skills that we have been looking for. That is true. But what the firms are telling me now, and what is obvious to anybody who cares to look, is that many of the firms who form the basis of the training and apprenticeship opportunities for the skills we need are closing. Those which have not closed are not taking on the young people because of financial restrictions and because they are afraid that they will not exist to continue the training.
  Therefore, it is nonsense to say, as is true, that we have a shortage of skilled labour in certain industries and, at the same time, undermine the firms and the education system that will provide the training that we so desperately need. This is what I find so extraordinary in the Government's reasoning.
  Earlier this week I talked to the secretary of the industrial engineers in my area, who said that, if there was a change in the fortunes of the country and we got a Labour Government, my area would be unable to meet the demand for the skills that would be necessary to take advantage of the upturn in the economy, because the process of learning skills was being undermined and destroyed. That has been said by almost every area of management concerned with training. The Minister should be considering this aspect very closely.
  The Minister said that we were all too despondent, that we should be looking buoyantly towards the future. But even if there is an upturn in the economy in the next two or three years, skilled labour will not be forthcoming in industries that have traditionally demanded it, and they will have to look elsewhere for it. That is why many of us are depressed and feeling far from buoyant about the future of the areas we represent.
  It is not sufficient for the Minister to say that certain jobs are being created when unemployment is rising to an unprecedentedly high level in my area and in others which in the past have managed to escape the full blast of economic recession. Unemployment will go on rising, as every economist predicts, because it is out of hand.
  During the election campaign the Tories said that Labour was not working and spoke of helping small businesses. They raised hope in the minds of many owners of small businesses in my constituency and throughout the country. Those people have been sorely disappointed, they have been pulled down, and in their wake the opportunities for thousands of people have been destroyed.
  8.52 pm
  Mr. Peter Mills: I welcome the opportunity of saying a few words in the debate, but I shall not follow the arguments adduced by the hon. Member for

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  Eton and Slough (Miss Lestor). I do not shy away from them, but I want to concentrate on the problems of the South-West, and particularly those in my constituency.
  I wish to report to the Minister a serious problem that has arisen in North Devon, which my hon. Friend the Member for Devon, North (Mr. Speller) and I represent. The development area status that we had was taken away. We were told that our employment position did not warrant development area status. We warned the Minister concerned at the time that this was an unwise decision. Now our fears have come true and the problems in North Devon are growing fast, just as they are in other parts of the country. The loss of development area status has increased our problems. Firms have reduced their staff, some have gone out of business, unemployment is rising fast and we need the development area status to be reinstated.
  Although we work hard and attract new firms into the area—we have been successful, it is not all gloom—the problem is that they are being attracted back into Plymouth and other areas with development area status. It is difficult to convince small companies that they should start up their factories in North Devon.
  This is a growing problem, and I should be grateful if the Minister would reconsider the position of Bideford, Barnstaple, Torrington, and Okehampton, all of which have lost development area status. Our case is sound. If development area status is taken away because the level of unemployment is low, when the level of unemployment rises above the cut-off point development area status should be given back.
  The problems of retired people in the South-West, particularly in the rural areas, are becoming increasingly distressing. Naturally, we welcome retired people into our small villages, but they face extremely high costs, especially in rural transport. I recognise that the Government have made kinds of efforts to help to ease the problem, but there are still extreme difficulties!. Many concessionary fares are disappearing. The motor car is becoming extremely expensive. I believe that attention must be given to these matters particularly as the economy improves. I am not arguing that it is possible to do much at present. When the economy improves, we should turn our attention seriously to these matters.
  One worry for retired people was the possibility of the disappearance of sub post offices. It is probably true that we have won that battle, or at least gone a long way towards winning it. The problem could be very serious. Coupled with the tremendous loss of village shops up and down the land, it becomes difficult for elderly and retired people to obtain the services that they want and the provisions and goods that they need. I understand the Government's attitude. I can see that they want to reduce public expenditure, and the number of civil servants, by switching to modern methods, but I must say that those of us who live in the rural areas are concerned about any further movement in this area. We must hang on to our sub post offices. They give immense help and benefit to those living in the area.
  I should also mention the cost of fuel in rural areas. I say, frankly, that I do not agree with my Government and party on energy policy. The criticisms levelled at this policy are justified. It is extremely difficult to explain the policy to people. I get bogged down myself if I try to do so. I realise that I do not possess all that much intelligence, but it is extremely difficult to explain the policy to a retired
  1052
  person living in a small village in the South-West. These people do not have the opportunities of those in the towns to obtain alternative supplies of energy. I hope that the Government will look carefully at the problem. I hope that they will readjust their energy policy. It is not right at the moment.
  Another factor is the cost of water. It is true that the Government have taken action recently to ease the problem. All Governments make mistakes, but I believe that we made a real mistake on the issue of democratic representation on water authorities. If the representation was more democratic, some of the changes that are necessary could be introduced, and insisted upon, to the benefit of those living in rural areas. Water is an extremely expensive item, as I believe it is also in the towns.
  I should also like to refer to the cost of living. The Government have to be congratulated. To reduce the cost of living has been one of their main planks. It has become a fact of life. I have every faith that this progress will continue. I must say, however, that it is a fallacy to believe that because one lives in a village or the countryside the cost of living is much cheaper than in the towns. That is not so. For the retired and the elderly, this is a real burden.
  I should like to describe to the Minister the difficult position that they face. Those who are retired and come to live in a small village bring with them a certain amount of capital and cash and their pension. As they get older, these funds start to dry up. The cost of living rises, but their income does not increase very much. They have to sell their car. This means that they cannot get into the towns to take advantage of cheaper prices or cheaper food in some of the big supermarkets. That is something we need to watch carefully, because a growing number of people feel frustrated and angry at what is happening. I fully realise that the Government cannot do much about it, but I ask them not to add to the burden in any way. It is not on.
  I know that many other hon. Members wish to speak about agriculture, transport and many other subjects. But I want to bring two matters to the attention of the Minister. First, the Government should look again at the matter of development area status. Secondly, they should watch carefully what is happening in the rural areas, especially our small villages, and try to deal with the problems and difficulties that are facing retired people because of the cost of living.
  9 pm
  Mr. David Stoddart: I express my appreciation to the Shadow Cabinet and to my right hon. and hon. Friends on the Front Bench for giving the House the opportunity to discuss the problems of the South and the South-West. It shows that the Labour Party is concerned about the whole of the country and not just one part of it. The problems which beset the northern part of the country through Government policies of monetarism, high interest rates and the high value of the pound abroad affect the South just as much. Firms are going out of business and many are being put out of work. When I was first elected to my constituency in 1970 we had an unemployment rate of 2 per cent. At the last count, it was 9·7 per cent.—the highest in Swindon's history. That is a direct result of the policies pursued by the Government.
  The Minister mentioned my constituency and pointed to a number of firms that would be moving there. I am glad to say that they are, but that is no thanks to him. Some of

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  the moves are due to the efforts of the Labour Government, but most are due to the efforts of a very progressive local council, which has done its job without Government assistance.
  However, in 1980 we lost 3,600 other jobs. The jobs we are gaining will in no way make up for the jobs that we have lost. The depressing march of redundancies goes on from day to day. Day by day we hear of new redundancies here and there. Today, we heard of sackings by Emerson Electric, a modern forward-looking firm manufacturing products of the present and the future. The resistors division of Plessey Electronics has laid off 92. Another branch of the firm is laying of 72. That is all in a week, and the depressing march goes on. Yorkshire Imperial plastics, a firm which provides water pipes, is closing down in Swindon because the Government have slashed the housing programme and cut the amount of money available to water authorities. That firm is going out of business in Swindon as a direct result of Government policy.
  The number of vacancies, too, is depressingly low. At the last count there were only 12 vacancies notified for people under the age of 19 years. The young people in my constituency, who are being helped through the youth opportunities programme, do not think that that is good enough. They want to get out and do a good job of work. They want to have apprenticeships. They want to be trained in a proper manner and to feel that they are doing a worthwhile job, but as long as the Government pursue their present policy there is little hope of their being able to do that.
  I do not suggest for one moment that Swindon is a depressed area; nevertheless, it is suffering very badly under this Government. It is not only industrial firms that are making things difficult; it is the Tory-controlled county council, which seems to cut services with great alacrity, sacking teachers here, caretakers there, and dinner ladies somewhere else. The council does it with alacrity. Indeed, the local Tories on the borough council have been advocating the sacking of 200 people, just like that, without any investigation. The Government are joined in the local sense by their friends who want to make a bad situation worse by sacking more people in the public sector.
  This policy also affects the surrounding areas of Swindon. Swindon is a little red spot in a great ocean of blue. [Interruption.] Hon. Members can say "Yah, yah", but there are a lot more red spots appearing now. After the elections it will be seen that there are a lot more people who are sick and tired of the Government for whom they themselves voted.
  I am glad to say that people are now joining the Labour Party in large numbers in those areas. They want to do everything they possibly can to help get the Tories out. But it is not only the Labour Party, my hon. Friends and the Leader of the Opposition, who are talking about the Government and criticising them. Industrialists are also criticising the Government. One of them—a Mr. Turley—made a speech in my constituency. The report, which I shall quote to the House, shows exactly what industrialists feel about the Government. The newspaper report states:
  "The boss of two Swindon engineering firms has hammered the Tory Government's economic policy—as one of his factories
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  has been forced on to a three-day week. Instead of sacking 60 workers at the Auto Precision factory in Blunsdon, John Turley has put 156 on short time … 'We are just slipping into a black hole, and I can't see any end to it. It is the worst situation I have ever come across', said Mr. Turley, who is chairman of the Blunsdon factory and Kembrey Engineering … 'I am so depressed as I really can't see any answer. It is only going to get worse. Engineering is on the slide. The only growth industries are law and order, the armed forces, banks, and the labour exchanges.'"
  That is not from a Labour politician; it is not from the hon. Member for Swindon; it is not from my right hon. Friend the Member for Bristol, South-East (Mr. Benn). It is from an industrialist who was good enough to take over some firms in my constituency and save 400 or 500 jobs. So the criticism of the Government and the policies that they have pursued for far too long is coming from all quarters.
  Fortunately, Swindon has been a forward-looking authority. It has planned its housing and its population as a whole. As a result, we are very fortunate that the position is not worse than it is, since the British Rail workshops were run down from about 13,000 jobs to the present number of about 3,500. Swindon has planned its future, but the Government's policy is making that continued planning very difficult indeed. The Government's housing investment programme cuts, for example, are hindering the policy of job expansion.
  One of the policies of Swindon is to house key personnel and to provide housing for firms coming into the area. Its ability to do that has been badly hit by the restriction in the housing investment programme. I hope that the Government will give further consideration to the cuts that they have imposed, particularly on housing, because they are affecting employment.
  Swindon is still a railway town. It still has all the facilities for rebuilding and refurbishing rolling stock and locomotives. If the Government really want to tackle unemployment, in Swindon and elsewhere, they should do something to refurbish and rebuild railways and the other public services that are in decline. There is no doubt that our railways are an utter disgrace. Many of the carriages still in use are 30 and 40 years old. They need modernising and renewing. We have the skills and the resources to do that, if only the Government would use those skills and resources.
  We have 2½ million people unemployed. It would be far better if those people were used to refurbish our public services, which are in a state of squalor and decline that has never been seen before in this country. I therefore urge the Government to use the money that they are now spending in large amounts on keeping unemployed people on the dole for the purposes that I have mentioned. If they do that they will reduce unemployment, and they might even earn a little gratitude.
  9.12 pm
  Mr. Robin Maxwell-Hyslop: If one is to attract new enterprises to an area of unemployment, and if local authorities and, indeed, Members of Parliament are to be as effective as they can, it is absolutely essential that the Department of Employment should be able to provide accurate and relevant statistics.
  Although we live in a computer age, it is astonishing to find that the Department of Employment is still in a quill pen age. I should like to give some specific examples. Crediton, in my constituency, is nearly eight miles from

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  Exeter. It is impossible to get from the Department of Employment the unemployment figures for Crediton, because they are lumped in with Exeter. Ten years ago, before the labour exchange at Cullompton closed, there were separate unemployment figures for Cullompton and Tiverton. Now all that one can find out from the Department of Employment is that there are 1,091 people unemployed in an area covering both, but that is not the information that is needed if a firm is to locate itself accurately.
  At the south end of my constituency, Teignmouth and Dawlish together have 1,038 unemployed people. But the Department of Employment cannot tell me what percentage that is of the normally employed population. It can only give a percentage figure for the whole of Torbay, spanning three different constituencies.
  It is grossly past time that the expensive and enormous Department of Employment pulled up its socks and produced accurate figures of local unemployment so that any mobile industry or enterprise that might be attracted can know the precise situation—where sites are available, but where the labour that they require may not be available.
  Today we have been discussing employment primarily in terms of industry and, to a lesser extent, the service industries. Let us remember that between 1976 and 1980 net farm incomes decreased by 21 per cent., assuming a constant value of the pound which does not exist. Interest payments went up by 230 per cent. and borrowing by 186 per cent. That is not only why direct employment of farm workers has shrunk and continues to shrink but why we have avoidable unemployment in the Midlands in the traditional engineering supply industries which used to depend for a large part of their sales on an agriculture industry which is now squeezed desperately.
  We heard the Opposition spokesman on agriculture on Tuesday pressing the Government to revalue the green pound so that more and more agriculture enterprises will make a loss without any net income. It is incomprehensible why the Opposition do not realise that they are condemning not only the rural areas but industrial areas to poverty as well.
  Mr. Newens: Will the hon. Gentleman give way?
  Mr. MaxwelJ-Hyslop: I shall not give way because I am trying to confine my remarks to five minutes so that other Members may speak.
  I conclude with the plea that my hon. Friend the Member for Honiton (Mr. Emery) made, namely, that Government services should be situated in the centre of the area that they are supposed to serve, not in one extreme corner. Bristol is nearer to Dover than it is to Penzance. That is sometimes overlooked. If the so-called regional headquarters of the various Government Departments were located in the Exeter-Plymouth-Torbay area, they would be more accessible and therefore much more efficient. In addition, in an area where there is tremendous seasonal unemployment as well as unemployment in the summer, that would provide an outlet for employment, particularly for women, which is desperately needed and which will be needed in the foreseeable future.
  9.17 pm
  Dr. David Owen: This is not the time to savage the Government's overall economic
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  policies, although the effect of them in the West Country has been more devastating than at any time in my life. We must urge the Government to take measures that will help us in the far South-West.
  I take up what the right hon. Member for Taunton (Mr. du Cann) said, namely, that there is a vital and urgent need for public investment in certain key areas. The first is the Severn barrage. That should be brought forward at the earliest possible moment. Some further planning has to be done, but an early decision is needed. It would help in the far South-West because English China Clay would be a major supplier of some of the essential elements of the construction work.
  The construction industry is one of the worst hit. In Plymouth the situation is bad. The Government could make selective investment decisions. For example, the construction at Deriford hospital has ceased simply because the regional health authority does not have sufficient money to fund its completion. That could and should be brought forward. It would ease the situation in the construction industry, and it is an investment that it would pay us to make.
  We need better roads, particularly in Cornwall. There is a strong case for increasing the road building programme and continuing the extension of the motorway through Plymouth. I hope that that will continue, because it will provide jobs in the construction industry and generally in Plymouth. I refer to the plan to link the existing road with the Tamar bridge.
  Something must also be done about the extractive industry. It is an indigenous industry and needs extra aid. The Minister said that it was not a mobile industry. That attitude must be revised. There is abundant evidence that, with a little more help, the tin mining industry, which is marginally economic, could be tipped towards being economic in Cornwall. There is also the possibility of mining at Hemerdon. That is an interesting prospect which could be tipped towards being worth while. There is a strategic need for the extractive industries of this country to be safeguarded at the first opportunity.
  The Royal Navy is vital to Plymouth. If there are to be cuts in the Ministry of Defence, there must be certain safeguards, and they must have a regional emphasis. We have lost 1,000 jobs at the Naval base in Plymouth. Those jobs should not be lost. The Navy must consider Bath. I know that unemployment may be a problem there, but it is by no means as bad as that in Plymouth. I realise that there are also problems in Portsmouth and Chatham. The effects of the rundown of jobs at the Naval base in Plymouth are extremely serious.
  The Minister knows that we face a serious problem with the Rank-Toshiba redundancies that are about to be made. It looks as if Toshiba will stay but with a much reduced capacity. There is a large partly empty plant at Rank, which will need to be filled. We shall expect every help in trying to persuade Toshiba to put a semi-conductor factory in the United Kingdom if it decides to build one in Europe. We must put forward a convincing case for the South-West, particularly Plymouth. I know that there are serious problems in Cornwall, particularly in Redruth. I hope that something can be done about the employment problems in Helston, which will certainly be affected by the Rank-Toshiba closure.
  I have given some practical suggestions which the Goverment can carry out without changing their other policies. Major areas must be covered. We cannot afford

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  to have another year in which Devonport dockyard is preferentially cut back, as opposed to Chatham and Portsmouth. There were higher percentage reductions in employment in Devonport and in the naval base. That cannot be right with any regional policy.
  The problems in the South-West are devastating and are getting worse. If we do not take action now the situation will be far worse next winter. Action that is taken in the next few months might help to shield us from worse consequences next winter. There is not much time. I beg the Government to look at investment programmes that will have merit in five or 10 years' time. Sewerage programmes, sensible public works building programmes and the injection of a little money into local authorities, such as Plymouth, for their house building programmes should be considered. Plymouth has a homeless problem and bad housing. There should be an extra financial allocation for public housing in Plymouth, which would help the construction industry.
  Those are positive suggestions, and I hope that when the Minister replies to the debate he will say that they will be considered seriously.
  9.23 pm
  Mr. David Mudd: I hope that the right hon. Member for Plymouth, Devonport (Dr. Owen) will forgive me for not taking up his comments, although I am most grateful for the concern which he continually and genuinely shows for the problems which are related to his constituency and to mine.
  I shall first deal with the problems of incoming international firms wishing to come to Cornwall and trying to create jobs. When they come into Cornwall, they unlock a veritable Pandora's box with a proliferation of advisory bodies and organisations, each scuttling hither and thither and falling over each other in an attempt genuinely to help.
  There should be one advisory body which is able to answer five main questions which any incoming industrialist wishes to be answered: "Can you provide me with a site and, if so, at what cost? Does your area have the type of people I want to employ and can you train them for me? Are all the main services available, which I want, and can you guarantee that I will not have to face a hassle with energy or environmental services, and how soon and at what price can you connect me to those services? Can I get the support services which I need from subcontractors and suppliers? How in terms of communications and distribution does your area measure up to my needs to move raw materials, people and finished products?"
  Those are five simple and basic questions that are asked over and over again. However, instead of there being a simple answer the responsibility spills over to the district council, the county council, the English Industrial Estates Corporation, industrial estate officers, district valuers, public utilities, the Department of Energy, the Department of the Environment, the Ministry of Agriculture, Fisheries and Food, the Department of Employment, the Manpower Services Commission, gas, electricity, water and telecommunications authorities and local chambers of commerce. If we want to see industry generated in special development areas, why on earth cannot we have a simple, well advised, well equipped and representative task force able to deal with the questions of incoming industrialists?
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  The second part of my speech concerns two problems particularly associated with the recession that has hit Cornwall. First, too little thought and encoragement are coming from the Government and industry over the continuation and creation of industrial apprenticeships. The folly of that neglect will seriously hit us in the mid-1980s, when we shall find ourselves deprived of the skilled nucleus that we need and, ultimately, of middle-line management.
  Secondly, I fear the social consequences of our failure to consider the long-term effect of redundancy on men in their late forties and early fifties. One town in my constituency has an unemployment rate of 23 per cent. I am increasingly meeting unemployed men in that age group, and I find them resigned to living off their redundancy payments but eagerly reading every economic forecast in the belief that as things get better they will be re-engaged. We must be honest with those men, with ourselves, with industry and with the country. The majority of those men will never see the inside of a work place again. If they do, it will be an immediate step back into over-manning and will set off another crazy cycle of lack of competitiveness.
  However distasteful and politically unacceptable in the short term, we must spell out the fact that for many men there is no way back, but for goodness sake let us not be negative. Let us try to find ways to occupy their energy and leisure time in a dignified and useful manner. What I am about to say may be considered pure heresy by some of my hon. Friends, but let us educate ourselves and the public to realise once and for all that the man who, by becoming redundant, has helped to save a firm and the jobs of his colleagues for the future is not an idle scrounger and is perhaps contributing a great deal more to the future prosperity of the nation than the man who insists on turning up day after day for the job that makes his firm uncompetitive.
  Several Hon. Members Several Hon. Members rose—
  Mr, Speaker: Order. I understand that the Front Bench is co-operating and is not seeking to wind up until 9.35 pm. Two other hon. Members may therefore be able to speak.
  9.27 pm
  Mr. Stephen Ross: My speech is the second Liberal contribution, and I shall keep my remarks short. However, I make no excuse for speaking. My constituency has the highest rate of unemployment in the South of England, and mine is one of the few contributions from that area. Unemployment in my constituency stands at 10½ per cent., and is increasing.
  The Minister expected speeches of gloom from the Opposition Benches, but my speech will not be all gloom, although we need a bit of help. I have tried to get assisted area status. The application has been turned down, and I do not intend to press the matter unless the situation gets very much worse. We have modern industry in the Isle of Wight, but we have many problems. Many hon. Members may not know that the cost of our petrol is at least 10p a gallon higher than the national average. We have 50 private stations and no company-owned ones. That is an additional burden that everyone living on the Isle of Wight has to bear.
  Secondly, we do not get the advantage of certain heavy duty oils. I am thinking particularly of the horticulture

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  industry. We have a modern horticulture industry, with a great deal of glass. It is a tragedy that horticulturists are virtually bankrupt. One of the largest companies, which used to employ over 60 people, has already finished business. On Monday night I met some of the growers. I do not know how they have survived thus far. One problem is that the industry cannot get gas or some of the cheaper types of heavy duty oil. First, the companies will not supply the oil and, secondly, it would have to come to the island on a boat, and there is argument about whether it is safe to bring it across. The industry is up against that, in addition to the fact that in Western Europe it is competing with the Dutch, the Germans and the rest, all of whom are subsidised.
  I plead, as I have tried to do time and again with the Minister of Agriculture, Fisheries and Food, that at least some pressure should be brought to bear by the Department of Industry to see whether help can be given towards energy costs in offshore islands such as mine. Some tax relief on heavy duty oil in the Budget would be helpful.
  Secondly, the roads on the Isle of Wight are absolutely deplorable. We need a 10-year programme. Other hon. Members have pleaded for the infrastructure. Certainly, it would be an enormous boost if we could have a promise that the money available through the transportation grant, or whatever grant now applies, will be considered and maintained.
  Thirdly, in the tourist industry, there has not, I think been a new hotel built on the Isle of Wight since the war, although there has been some modernisation. Frankly, we are losing out. There is a great need for investment. When I look at other parts of the country that happen to be in assisted areas [am envious of the money that they have received through EEC grants. I believe that Rhyl received a sizeable sum and that Cardiff was given more than £1 million towards its opera house. Those are the sort of grants that we, too, could desperately do with at this time.
  Finally—this has not been mentioned so far, although I am sure that other hon. Members encounter similar cases—one of my greatest problems, arise from small firms coming to me because they are in trouble with VAT or PAYE I am often on my knees pleading with VAT officers and collectors of taxes to be reasonable, as, on the whole, they are. Nevertheless, I am sure that the Government could do something about this. It is tragic to see firms going further and further down because they have got themselves into trouble with the Inland Revenue. Of course they have to pay their debts, but there must be some way in which those debts could be laid over for a while without penal interest rates being charged. Otherwise, we simply put the firms into bankruptcy and wind them up. The chaps are then on the dole and cost the Government just as much money in other ways, when they could be in business.
  We have some very modern industries on the island. I am constantly surprised at how well they are doing. We have the light aircraft industry. We have probably the best boat designer in Britain, although, unfortunately, the Navy does not want to build his boats and therefore he has to go abroad. We have Plessey, BHC and a number of companies of that kind, all doing very well.
  Nevertheless, we still have a 10½ per cent. unemployment rate, and the figure is rising. The hardest
  1060
  letter that I have to answer is that in which a youngster thanks me for sending him a birthday card but asks when I am going to do something about getting him a job.
  Help can be obtained from some multiple companies and from the banks through enterprise agencies. I am doing my best with that. But we need a little more help from the Government. That is my plea tonight.
  9.33 pm
  Mr. Chris Patten: I should like to put a couple of points to Ministers which I believe would not only help industrialists and firms in my constituency to survive the recession but would help to stimulate recovery in due course.
  The first concerns the temporary short-time working compensation scheme. A number of firms in Bath and in the surrounding area have used the scheme as a breathing space. It has given them a valuable chance to retain during the recession skilled labour which they hope then to use in the upturn. One thing that bothers me a little is when the upturn will come. Many firms in my constituency joined the scheme last autumn. Several hundred jobs are involved. They come out of the scheme next summer. I am not sure that we shall have seen much sign of even an incipient recovery by that time.
  I therefore ask my right hon. and hon. Friends—and I hope that an answer can be given on this today—although I know that the scheme is expensive—to consider the possibility of extending it for three or six months next summer, even if it is at a lower level of subsidy. That is a very important factor in retaining skilled jobs until the level of economic activity in this country begins to rise once again.
  The second point concerns that iniquitous tax on jobs and exploits—the national insurance surcharge on employers. I have already used up most of my adjectives in talking about that tax in the past. I remind my hon. Friend that the CBI, in its pre-Budget memorandum to the Chancellor of the Exchequer, pointed out that it would be almost impossible to imagine how one could devise a more damaging tax on business. I believe that that is correct. It is absurd that, on the one hand, we are subsidising labour costs and, on the other, increasing them through the national insurance surcharge.
  We are told that nothing can be done about the matter because it would be too expensive. In other words, the argument is that, because the burden on the shoulders of industry is so great, nothing can be done to relieve industry of it. That is a ridiculous proposition, particularly from a Conservative Government. I realise that a solution would be expensive. Therefore, if we cannot abolish the tax completely, we should look at ways of cutting it selectively, for example, in order to help those areas or industries that have been hardest hit by the recession.
  It is perfectly possible to do that administratively. For example, charities are at present exempt from the tax. I therefore hope that the Government will look positively at ways of reducing the tax, or removing it entirely, in respect of manufacturing industry at the least.
  In the remaining few minutes available to me, I should like to touch on a point made by the right hon. Member for Plymouth, Devonport (Dr. Owen). When one looks at documents such as the Manser report which was produced for the Federation of Civil Engineering Contractors last

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  year, it is obvious that throughout the 1970s there has been a decline in capital investment in the public sector and an increase in current spending in the public sector.
  Four years ago, the Estimates Committee said that that was a damaging trend which should be reversed. I understand the constraints on the Chancellor this year, even though I do not entirely share his views about the PSBR and how it should be assessed. Nevertheless, he has real difficulties. Even so, I hope that we can find some way of using capital programmes in the coming year in order to give a modest boost to the British private sector. I emphasise that, because there are one or two outrageous examples of public procurement policy in my constituency where local firms have found themselves elbowed aside by foreign competition in going for public sector contracts for no very good or discernible reason. By nudging and shoving, it may be possible to deal with that sort of problem.
  I am not suggesting that the Government should publish guidelines or issue instructions, which are the sort of actions that would annoy foreign competitors.
  Ministers are there to do that sort of thing in a more discreet way. That is more important than understanding the case for monetary-based control. That may be a rather old-fashioned view of politics, but it is a more realistic one, particularly in the present climate.
  9.37 pm
  Mr. R. C. Mitchell: This is a unique occasion. It is the first time since the war that the House of Commons has had a debate on unemployment in the South and South-East. We have had debates on the South-West, but never before on the South and South-East. The reason is obvious. It is only in the last year that we have really needed to have such a debate.
  The Prime Minister often goes around saying that unemployment doubled under the Labour Administration, but in many parts of the South and South-East unemployment has doubled in the 18 months that this Government have been in office. We now have the worst unemployment rate in many parts of the South and South-East since the 1930s.
  One thing of importance that it has shown—here I agree with the right hon. Member for Taunton (Mr. du Cann)—is that unemployment is a national problem and not just a regional problem. It is ironic that the South, which voted Conservative in large numbers in the general election, is now being sacrificed on the altar of monetarism.
  The Prime Minister tries to blame excessive wages. Has she heard of the factory in Weymouth, in the constituency of the hon. Member for Dorset, South (Viscount Cranborne)—who is not present today—where the workers on low earnings agreed to take a reduction of £10 a week, but still the factory closed? I had hoped that the Minister would tell us something new. However, he said nothing and took a long time to do so. I noticed a certain degree of scepticism on the faces of those of his hon. Friends who sit behind him when he read out a list of promises. It must have taken the Department months to dig them up.
  As several of my hon. Friends have pointed out, the problem in the South is that the small business man has been hit. The South does not have the great concentration
  1062
  of industry that is found in the North and in the Midlands. It relies far more on small businesses. Every day we read in newspapers, hear on the television or receive letters in our postbags, about bankruptcies and about firms in the South that have had to go into voluntary liquidation. They cannot cope with excessive interest rates, or with having to borrow money at interest rates of 20 per cent. plus. Before they can start to make a profit they have to bear that tremendous overhead, and they cannot cope with the other burdens that the Government have placed on them.
  When I canvassed during the last general election I knocked on a certain door, and when the man answered my knock I told him who I was and he said "Oh no, I must vote Conservative". I asked him why, and he said "I am a small business man". The other day he came back to me and apologised for what he had said. He is now on the dole, along with thousands of other small business men.
  Can we see any hope for the future? At every management seminar the question is asked "Can you see a light at the end of the tunnel?" At a management seminar in Southampton a leading industrialist said:
  "No, I cannot see a light. I cannot even see a tunnel. All I can see is a bloody great hole."
  Many people in the South have a similar feeling of no hope.
  In addition to the unemployment that is shown in the statistics, there is a mass of disguised unemployment. Many firms are working only part time. Industrialists say that when the upturn begins they will be able to increase production, in many cases by 25 per cent., without taking on any extra men. The position is becoming increasingly serious. That is why I beg the Government to take note of some of the remarks made by the right hon. Member for Taunton and by others, who have asked for selective public works programmes for the region.
  It is criminal that there should be an urgent need for houses and that there should be people on waiting lists when building workers are unemployed. It is criminal that we should be short of hospital beds and hospitals at such a time. We should get on with the electrification of the Southampton to Portsmouth line. That would provide employment.
  Mr. Michael Colvin Mr. Michael Colvin (Bristol, North-West)rose—
  Mr. Mitchell: The hon. Member for Truro (Mr. Penhaligon) gave us some appalling unemployment figures. Like me, he will know of the tragic stories that lie behind those statistics. Unemployment affects not statistics but people. Unemployment affects the man of 54, the former manager of a small firm, who sees no hope of employment. He thinks that he will have to spend the next 10 years on the dole despite the fact that he has a lot to offer society. Unemployment concerns the man who leaves home at 8.30 am, wanders about the town all day and returns home at 5.30 pm because he does not want his neighbours to know that he is unemployed in case they think that he is a scrounger.
  Even more, unemployment affects the youngsters of 15 or 16 who argue that it is not worth getting O-levels or CSEs because there is no hope of finding a job. If Parliament deserts the young people of this country, they will desert us. They will turn to various forms of extremism. For a person of my generation, who remembers the last war, it was frightening to see—as I did recently—a parade through London of young people who carried and wore swastikas. That frightened me.

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  Unemployment and lack of hope are contributory factors. I seriously believe that if unemployment continues to rise at its present rate the whole basis of parliamentary democracy in Britain will be threatened.
  I propose to quote from a speech made in the House on 27 November by the right hon. Member for Sidcup (Mr. Heath), who knows the South of England very well. He said:
  "I find that I am not entirely alone among those in the Conservative Party who worked for its victory who are worried about the present situation. One of our intentions after the 1930s was to ensure that the Conservative Party was never again considered to be the party of unemployment. I ask my hon. Friends to think seriously about that in our present circumstances."—[Official Report, 27 November 1980; Vol. 994, c. 918]
  I assure the House that throughout the South and South-West the Conservative Party is once against known as the party of unemployment.
  I hope that the Government will listen to what has been said from both sides of the House. I hope that they will change direction before it is too late. If that happens, the debate today will have been worth while.
  9.46 pm
  The Under-Secretary of State for Employment (Mr. Peter Morrison): If I were to answer the debate properly I would have to be the Chancellor of the Exchequer, the Minister of Agriculture, Fisheries and Food, the Secretaries of State for Defence, the Environment, Industry, Employment, Transport, and for Foreign Affairs. I am not, and I have only 14 minutes available to me. I shall try to answer most of the points raised as best I can.
  I grew up in the South of England and know the area well, although I now represent a constituency in the North. It is only fair to say that we Northerners—I am a Northerner by adoption—have rather greater problems than do the Southerners, although I accept that there are pockets in the South where unemployment levels are especially high. The constituencies of the hon. Member for Truro (Mr. Penhaligon), my hon. Friend the Member for Falmouth and Camborne (Mr. Mudd) and my right hon. Friend the Secretary of State for Defence, as well as other Cornish constituencies, have employment levels as bad as those in the North. I appreciate that that is the case. But, overall, the problems in the South are not as great as the problems in the North, in Wales and in Scotland.
  I do not think that the position is as gloomy as some hon. Members would have us believe. During the course of the last year, through the employment services division of the Manpower Services Commission, 121,000 people were placed in new jobs in the South-West. That is only about one-third of the total new vacancies filled during the course of the year, so we are talking about 360,000 engagements. The equivalent figures for the South-East are 575,000, and 1·5 million in all.
  Vacancies come on to the market, and are filled. However, it should not be thought that I am in any way complacent about the position either in the South-West or in the South-East. So much so am I nor complacent—nor is my right hon. Friend the Secretary of State for Employment—that a considerable amount of resources have been devoted to helping those without a job, to those whose jobs are in jeopardy, through the temporary short-time working scheme. There are 11,329 in the South-West and 24,930 in the South-East currently benefiting from
  1064
  that scheme. We are helping as much as we can. The job release scheme benefits almost 5,500 in the South-West, and 8,398 in the South-East. All that costs Government money—taxpayers' money. We are doing what we can, in limited circumstances, to help overcome the difficulties.
  I apologise for bashing on, but it is the only way to get through all the points that were raised. One of the themes that ran through the debate was the concern mentioned by several hon. Members about training and skilled shortages. The hon. Member for Eton and Slough (Miss Lestor), my hon. Friend the Member for Torbay (Sir F. Bennett), my hon. Friend the Member for Falmouth and Camborne and the hon. Member for Southampton, Itchen (Mr. Mitchell) were concerned about youth and the skill shortages that might take place as and when the economic upturn comes. It is an issue that very much concerns the Department of Employment. That is why we put it in the melting pot. I know that Labour Members are not especially happy about the approach that we are adopting, but we believe that we have to get things right for the 1980s and 1990s.
  There is common ground that if young people and the middle-aged have to be retrained for new jobs they must have the right training. If those are not available, retraining will be no good for them and no good for Britain. There is common ground in that respect, although perhaps there is a difference of opinion between the two Front Benches about the way in which we should act.
  Another theme running through the debate was the importance of small firms. I have personal knowledge of the area, especially of Wiltshire, Dorset, Devon, Cornwall and Somerset—and I entirely agree with my hon. Friends who said that in future it will be small firms more than any other firms that will bring employment to the South-West.
  I had a hunch that small firms were being born at a rather greater rate than Labour Members have been suggesting. I asked what inquiries were being made of the small firms service in the South-West region. Rather amazingly, the number of inquiries has increased by 40 per cent. over the past year. I am told that 40 per cent. of the inquiries concern start-ups. I accept that not all these inquiries come to fruition. However, there is the entrepreneurial activity in the South-West that I expected. Over some years that activity, provided that it is properly supported by a Government who want to promote activity and enterprise, should provide more jobs and more prosperity in the area.
  In one respect the hon. Member for Islington, Central (Mr. Grant) was contradicted by the hon. Member for Southampton, Itchen The hon. Member for Islington, Central said that the South-East is now the largest manufacturing centre. We in the North-West think of ourselves as the big industry area.
  Mr. John Grant: I was talking in terms of population.
  Mr. Morrison: Yes, I understand that. The hon. Gentleman talked about pockets of unemployment that are two or three times higher than the national average. I do not think that that is true, but we can split hairs about that later.
  The hon. Gentleman referred to the Youth Aid report. He said that he was worried about the 440,000 places that the Government have guaranteed for the youth opportunities programme, and whether they could be filled or properly administered. I have been asking the same question, and I gather that everything is under control.
  Mr. Grant Mr. Grant indicated dissent.
  Mr. Morrison: I have been assured that that is so. I am sorry that the hon. Gentleman does not believe everything that he is told. I was concerned, I made enquiries, and I have told the House what I was told.
  The hon. Member for Bristol, North-East (Mr. Palmer)' raised several important issues. He spoke about the Severn barrage. I gather that a report is shortly to be sent to my right hon. Friend the Secretary of State for Energy. I am sure that my right hon. Friend will consider it carefully. The hon. Gentleman asked whether the port area of Bristol could be an enterprise zone. As he knows, the Conservative Party is in favour of enterprise zones and the Labour Party is against them. It seems that he is somewhat at variance with his party.
  Mr. Palmer: We must take advantage of any offer that is open to us.
  Mr. Morrison: It is interesting that the hon. Gentleman is at such variance with his Front Bench colleagues. I cannot say what view my right hon. Friend the Secretary of State for the Environment will take. I am glad to have the hon. Gentleman's support in principle for enterprise zones.
  In regard to the remarks of the hon. Member for Bristol, North-East about the decision to send Inmos to South Wales, has he talked to his right hon. Friend the Leader of the Opposition to find out whether he approves of the idea of bringing it back from South Wales to Bristol? I assure the hon. Member that I know Bristol. I grew up 30 miles from it and I accept everything that he says about the city. It is a remarkable city, with merchant venturers and so on. It has an unemployment level of 8·4 per cent., which is high, but as compared with other areas is not that high.
  My right hon. Friend the Member for Taunton (Mr. du Cann) made what was to me the most important point of the whole debate when he talked about patriotism. I agree with him entirely that if any area, town or city that is fiercely proud of itself goes out to sell itself and all the facilities in its area it is much more likely to attract business and industry.
  I also noticed my right hon. Friend's recommendation that there should be no Front Bench opening speeches and only winding-up speeches. I am sure that my right hon. Friend the Chief Whip has paid attention to that.
  As the hon. Member for Truro knows, I visited Cornwall. It was the second regional visit that I made. I went to Merseyside first and them to Cornwall, because I was more than aware that the levels of unemployment were incredibly high and I wanted to see for myself. I had a very interesting and, one might say, depressing time.
  Mr. Penhaligon: We are always delighted to see visitors. In the case of the hon. Gentleman can he say what he decided to do as a result of that visit?
  Mr. Morrison: I went to have a look for myself just after I was appointed. It is reasonable to go and look for oneself. What I discovered were jobs that had not existed two or three years ago. I noticed that the hon. Member did not talk about the further jobs in J. I. Case or in Lee Cooper. To a certain extent he undermined the Comishmen. I saw them, as I met them, and they were
  1066
  very proud of their county. They followed exactly the line that my right hon. Friend the Member for Taunton was putting. They were not sitting there being gloomy. I can assure the hon. Member that I am more than aware of the problem.
  My hon. Friend the Member for Falmouth and Camborne talked about an advisory body. As he developed his argument one saw more and more the point of what he was saying. I would have thought that in the initial stages this work could be co-ordinated by the county council, but that would be a matter for the county council rather than for my hon. Friend or myself.
  I was interested to hear what my hon. Friend the Member for Plymouth, Drake (Miss Fookes) said about the work force in part of Plymouth getting new industry. I also agree with her that, over a period, if there is successful oil exploration Plymouth and Falmouth are bound to benefit substantially.
  The hon. Member for Eton and Slough talked about what sounded like the devastation of Slough. As the hon. Member admitted, the unemployment rate is just over 6 per cent. Of course that is bad, but as compared with other parts of the country it is relatively not too bad. The hon. Lady did not remind us that there was some good news from Slough, too. Being a good constituency Member she will know that last year McMichael Radio took on 119 new employees, including 24 school leavers. The company hopes to expand its work force again this year by 15 per cent. It has fuller order books than ever before. That is backing success, and I am sure that the hon. Lady would want to back success as much as I would—
  Mr. Penhaligon Mr. Penhaligon rose in his place and claimed to move, That the Question be now put.
  Question put.That the Question be now put:—
  The House divided:Ayes 4, Noes 56.
  Question accordingly negatived.

  Baby Milk Products (Developing Countries)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Gummer.]
  10.10 pm
  Mr. Jack Ashley: I quote:
  "Can a product which requires clean water, good sanitation, adequate family income and a literate parent to follow printed instruction be properly and safely used in areas where water is contaminated, sewage runs in the streets, poverty is severe and illiteracy is high?"
  That penetrating question was asked by Senator Edward Kennedy in 1978 when he chaired Senate hearings on the use and promotion of artificial baby formulas in developing countries. He was focusing on the issue I want to put before the House tonight—whether familiar commercial activities such as promotion, advertising and marketing can be justified in developing countries if they result in illness or death for children.
  The issue is an important aspect of hunger and suffering in the world. It affects the health and, indeed, the lives of millions of children. If we fail to cope with this problem, more children will die unnecessarily in each year of this decade than the approximate 700,000 who are born each year in Britain.
  In fact, James Grant, the executive director of UNICEF, said in a speech at the United Nations on 15 January of this year:
  "If we in the international community are successful in our efforts to promote and protect the practice of breast feeding, we can save one million infant deaths each year in the 1980s."
  Why should so eminent a man feel it necessary to promote and protect a human process that has evolved and supported mankind for 200 million years? It is because there has been a great social revolution. Breast milk substitutes which have been widely available for only 50 years or so have been sweeping on a tide of marketing into poor developing countries during the last: few decades. The effect, amid poverty and polluted water, has been disastrous.
  It is an unchallengeable fact that a mother's natural milk meets all a baby's nutritional requirements and gives resistance against disease. It is readily available, hygienic and free. Although there is some dispute as to the exact percentage of women who are unable to breast-feed, it is very low. Some companies claim that it is 5 per cent., the medical profession says 2 to 3 per cent., while the head of nutrition at the World Health Organisation believes it to be less than 1 per cent.
  In this small percentage of cases where breast feeding is not possible or is rejected, an artifical product may, if properly used, be a satisfactory substitute. But when misused, because the instructions cannot be understood, or germ-ridden because of water contamination and unhygienic conditions, or over-diluted because of poverty, it becomes an instrument of ill-health. The baby's bottle becomes the poisoned chalice.
  One of the most important reasons why mothers in under-developed countries have rushed to use products more suited to Western ways has been described by the Jelliffes, two eminent professors, as the
  "ill effects of exploitive commercial advertising and promotion".
  Thousands of loving parents, anxious that their babies should be as healthy as the blooming ones adorning the

  1069
  baby food tins, have been gulled and lulled by high-pressure advertising and aggressive salesmanship. It was a case of the despicable exploiting the gullible. Some companies were better than others, but the unscrupulous ones wrought havoc. There has been some considerable improvement in recent years, but there is still a long way to go.
  Of course, malnutrition is part of the wider problems of poverty, lack of resources and social justice. But questionable promotional methods of artificial substitutes have exacerbated rather than mitigated the problems.
  The success of these promotional methods has been stiking. In Brazil, for example, one study showed that the percentage of breast-fed babies fell catastrophically from 96 per cent. in 1940 to 39 per cent. in 1974. Although there were other factors, the impact of promotional methods cannot be doubted. They included the use of newspapers, magazines, billboardings, posters and radio. In addition, there were free samples, gifts for doctors, and sales personnel dressed as nurses.
  In Africa, Asia and South America, the use of breast-milk substitutes has spread rapidly. It is spreading still, and is a cause for continuing concern That is why the World Health Organisation and UNICEF have become so deeply involved. Their actions are due in part to the efforts of Governments involved, but a special debt is owed to those who have drawn the attention of Governments and citizens to what is happpening as baby milk powders flood into the underdeveloped world. The detailed research of Mike Muller, Andy Chetley, John Clark and others in the various organisations has illuminated the problem.
  In October 1979, at a meeting in Geneva called by WHO and UNICEF, a series of recommendations was agreed by representatives of Governments, international agencies, non-governmental organisations, the baby food industry and its critics. There was also a call for an international code of marketing which has now been drafted by the executive board of WHO. It is to be discussed at the World Health Assembly in May—and that is where the British Government can play a very important role indeed. It is because we are approaching that important deadline that we are having this debate tonight.
  There has been an acrimonious dispute between the industry and its critics about the recommendations agreed in 1979. When the first 117 allegations of violations were made by the critics, the industry sought to refute most of them, although the complainants stood by their strictures and offered photographic evidence. Since then, over 500 further charges of unfair marketing practices have been made, and no doubt these will be the subject of further dispute.
  There has been a change in the companies' promotional activities in response to the pressure. Some of the firms' spokesmen say that they are convinced that breast milk is best, and many say so in their adverstisements and on their tins of powdered milk. However, it is reasonable to ask why they do not all make that message the main one rather than, as often happens, giving it a minimal mention which is insignificant compared with the textual and pictorial presentation of the product.
  These are not merely issues of interpreting recommendations. These are questions of attitudes of companies and of corporate responsibility on matters of life and death. The concern about the health of the babies will
  1070
  diminish only if there is a significant return to breast feeding. That means a very considerable reduction in the use of tinned baby food.
  The draft code, unanimously agreed by the executive board of WHO, is to be proposed as the minimum necessary. The code will ban all forms of of media advertising to the public in developing countries. It will place the responsibility for producing educational information in the hands of local health authorities and ban all forms sampling to the public. It will also establish a monitoring system and oblige the director general of WHO to report on the workings of the code at the assembly.
  The industry's attitude to the code is mixed. Some welcome it, while simultaneously expressing reservations which would undermine it. The president of the International Council of Infant Food Industries, Mr. E. W. Saunders, appears to be in no doubt. He says that the code would be irrelevant and unworkable and could have a megative effect on child health by restricting the flow of factual and objective information. I hope that one will be influenced by this selective response—especially the Government.
  It is the Government's response which is really important. That is why over 150 Members of the House have signed the early-day motion on this subject, and I would appreciate it if the Minister would clarify the Government's attitude to some vital qustions—and I pay tribute to him as a man who has accomplished much with the tobacco industry.
  Can the Minister assure the House that the Government will not seek to weaken in any way the draft code agreed by the executive board of WHO? It would reduce Britain's moral and political standing in the world if we fell out of step now on an issue of such crucial importance to developing countries.
  Does the Minister agree with the WHO executive board's view that the draft code should be regarded as an absolute minimum and that it should be reviewed in two years? Without detailed monitoring, this code can become just another piece of paper, especially as it covers such a wide area. Does the Minister agree that monitoring is crucial to its effective implementation and will he support the recommendation on monitoring? Does he agree that the code will be more effective if it is a regulation? Will he accept that this is an objective to be pursued, and is one for which the Government will press now?
  Personally, I was concerned at the reply that I received to a parliamentary question asking if the Government would make the health and welfare of infants the sole consideration when considering the code. The Minister of State said it would be a prime consideration which, since we are dealing with issues of life and death, is a disturbingly different thing. It is possible that delicate and complex legal matters of trade relations have to be taken into account. However, may we have an assurance that no political or commercial considerations will be allowed to hold sway on this one specific and unique issue?
  This country has a good record in the past and co-sponsored two resolutions at WHO in 1974–78. If the Government intend to put the health and welfare of children in developing countries above all other considerations, I believe that they will have the support of the whole House—apart, of course, from the few eccentrics who lurk around. Furthermore, I believe that a positive and constructive role by the Government will win the wholehearted consent of the people of Britain. It will

  1071
  increase our moral stature in the world. Above all, it will help to improve the health and save the lives of millions of children throughout the developing countries.
  10.26 pm
  The Undersecretary of State for Health and Social Security (Sir George Young): I congratulate the right hon. Member for Stoke-on-Trent, South (Mr. Ashley) on once again identifying an important issue which has far-reaching effects upon the health and well-being of children and on championing an important cause which is of great interest to many hon. Members. I am grateful to the right hon. Gentleman for letting me see an advance copy of the text of his speech.
  The right hon. Member has placed on the record his concern; it is a concern which is shared not only by this Government but by the Governments of a large number of countries throughout the world. I welcome this opportunity to outline the positive role played so far by the United Kingdom and to talk about the way in which we hope to be able to influence future developments.
  It is all too easy for those of us living in developed countries to convince ourselves that, because we can see little adverse effects of the promotion of manufactured breast milk substitutes, the problem does not exist. It does exist, as the right hon. Gentleman has so graphically described, although I acknowledge that the scale and cause of the problem are the subject of disagreement between interested parties.
  This Government continue to support all efforts to promote breast feeding both at home and overseas, being convinced that it is the natural and ideal way of feeding babies and of helping to secure their healthy development. While we of course recognise that in certain circumstances breast milk substitutes are necessary, there is a need to ensure that nothing is done to suggest to mothers that such substitutes are preferable to breast milk itself. Mother's milk is the perfect food for babies. Not only is it free but it has all the nourishment a baby needs, and provides protection against common illnesses and allergies. I speak as a beneficiary.
  Despite the obvious advantages of breast milk, however, millions of mothers in poor countries are turning to manufactured substitutes. In many cases, mothers are too poor to be able to buy sufficient quantities of these substitutes to feed their children. Attempts to eke out the food which they do buy by over-diluting it or reducing the number of daily feeds recommended by the manufacturers results in malnutrition.
  An even more alarming situation stems from the absence of a ready access to a clean water supply—a situation which unhappily exists in large parts of the developing world. This can result in feeds being prepared with unsafe water unless the most scrupulous precautions are taken to sterilise both the water and the utensils used. In both cases the results can be that babies become seriously ill and even die. Both situations may arise either because mothers are unable to understand, or because they are unable to comply with, the manufacturer's instructions as printed on the labels of the food containers.
  Because we are conscious of this whole problem, our country has for many years supported measures designed
  1072
  to improve the standard of child nutrition. It is, therefore, hardly surprising that we should have a very close interest in the initiatives recently taken by the World Health Organisation and UNICEF. Officials from both the DHSS and the ODA took part in the WHO/UNICEF jointly sponsored meeting on infant and young child feeding which was held in Geneva in the autumn of 1979. They gave their full support to the recommendations which included the proposal that a code of marketing should be drawn up to cover the promotion and sale of breast milk substitutes. We believed then, and continue to believe, that such a code could play an important part in securing improvements in the standards of child feeding, particularly in developing countries.
  The recommendations of that meeting were endorsed last May by the World Health Assembly, which is the governing body of the WHO. During the course of the assembly the United Kingdom delegation took an active part in the discussions. The assembly supported the idea of a code of the kind suggested, and instructed its secretariat to put forward proposals for consideration by the WHO's executive board. In the months that followed, the WHO sought the views of its 155 member States on the format of the code. As far as this country was concerned, close consultation was already being maintained between a number of Government Departments with specific interest in the subject.
  The WHO produced a draft code which was discussed in detail with representatives of a number of member States, non-governmental organisations, the industry and organisations with a particular interest in the welfare of children in the developing world. Officials from the DHSS and MAFF took the opportunity to put forward the United Kingdom's views during that stage of the code's development.
  I apologise to the right hon. Gentleman for recounting the earlier stages of the code's production in some detail, particularly as I am sure that the history is already known to him. However, I feel that it is important to emphasise that the United Kingdom has played a very active part in the development of the code.
  Last month, the results of all these efforts were brought before the executive board of the World Health Organisation. Each member of that board is nominated to serve in a personal capacity as an expert in health care. The significance of this is that, in common with the other 29 members, our own nominee was not mandated to speak as a national representative. The board was presented with draft versions of the code together with a paper detailing its development. It was asked to submit the code to the next World Health Assembly, together with proposals for its promotion and implementation. The options for consideration were that the code be adopted either as a recommendation to member States under article 23 of the WHO constitution or by means of a regulation under articles 21 and 22.
  I realise that for some months conflicting opinions have been expressed as to whether the code's adoption as a recommendation or as a regulation would be the more effective way of proceeding. Not surprisingly, there has been widespread feeling that by the very meaning of the word, a "regulation" must be a stronger form of adoption than a "recommendation".

  1073
  The board members discussed the issue at some length. One of the board's longest serving members said that in the 30 years of his association with the WHO he had never received so much correspondence on a single agenda item. Board members were clearly concerned that a number of member States thought that there would be difficulties in applying the code as a regulation in their national, legislative and constitutional frameworks. The result of such difficulties could be that at best long delays would take place before the effects of the code came into operation and that at worst, its implementation would become impossible. The executive board was concerned that in this case, as far as many babies were concerned, delay could literally be fatal. Furthermore, lack of unanimity among member States could persuade some countries to delay decisions still further. The code's adoption as a recommendation would introduce a degree of flexibility, enabling member States to avoid unnecessary delays of this nature.
  In those circumstances, the board decided that on balance, the adoption of the code as a recommendation to the WHO member States would be the more effective course of action. In making its proposal, the board added two important recommendations. Firstly, it has proposed that the operation of the code should be reviewed after two years to establish the degree of compliance with its recommendations at country, regional and global levels. Secondly, it has proposed that the World Health Assembly should reserve the right to make future proposals, if necessary, for the revision of the code, including further measures for its effective application.
  In its present form, the code seeks to achieve its objective by banning the advertising of breast-milk substitutes. It also seeks to ban the use of sale inducements such as free samples, gifts and discounts, either directly to mothers or to hospitals and clinics. It contains provisions to prevent manufacturers making financial inducements to health workers to promote breast-milk substitutes and paying their own employees bonuses based on the volume of sales of these products.
  The code also calls for appropriate information on infant feeding to be provided by the health care system. In addition, it recommends action to govern the production and storage of infant feeding products and proposes that such products should meet international standards of quality and presentation, in particular those developed by the Codex Alimentarius Commission, and that their labels should clearly inform the public of the superiority of breast feeding.
  The right hon. Gentleman will appreciate that the final decision on all aspects of the code rests with the World Health Assembly, which meets in May. Between now and May the code, as approved by the board, will be examined in detail by officials of the interested Government Departments who will continue to consult those with an interest in the matter. Our prime objective will be to press for the code that I have described to be adopted in the most effective form and manner, and the United Kingdom delegation will be briefed accordingly. I understand the right hon. Gentleman's concern that the code should be worded in such a way as to avoid loopholes that would enable its aims to be thwarted. I shall give careful
  1074
  consideration to the points that he has made during these final stages of the code's examination in order to see whether we can block the loopholes.
  I should, however, like to reply to the specific questions raised by the right hon. Gentleman. I reassure him that it was not the Government's intention to try to weaken the code at any stage in its development. It is now generally accepted by all concerned that the earlier drafts of the code were impractical and inoperable, and in common with other Governments we took the opportunity to point out those difficulties. The United Kingdom delegation in May will have to use its discretion in considering proposals for further drafting changes in the light of discussions.
  Turning to some of the other points that the right hon. Gentleman made about the proposal being the minimum, the final preambular paragraph of the executive board's proposed resolution for the assembly's consideration reads as follows:
  "Stressing that the adoption of and adherence to the International Code of Marketing of Breastmilk Substitutes is a minimum requirement and only one of several important actions required in order to protect healthy practices in respect of infant and young child feeding."
  I believe that statement to be true. We also support the proposals that the code should be subject to a review in two years' time.
  I am sorry if my hon. Friend the Minister of State's reply to the right hon. Gentleman's earlier question caused some doubt in his mind. There was no intention to suggest other than that the health and welfare of infants is of paramount importance in consideration of the code, more important than some of the other factors that the right hon. Gentleman mentioned towards the end of his speech. The other consideration which the Government had in mind was the vital one of getting the code adopted and operational without delay.
  The question of monitoring is one that we shall have to consider in the light of the final version of the code. I have, however, taken on board the right hon. Gentleman's views on the matter.
  I should perhaps also point out to the right hon. Gentleman that responsibility for controlling the advertising and marketing of breast milk substitutes within any country lies with the Government of that country. The code does not require individual countries to control the overseas marketing facilities of their baby food manufacturers. Any such action would trespass on the sovereignty of importing countries to manage their own markets. Within the United Kingdom, I am happy to say, British manufacturers already take a responsible attitude towards advertising and marketing their breast-milk substitutes, voluntarily confining their advertisements solely to specialist publications. Furthermore, unless they have been approved by MAFF and on my Department, certain foods which might be used as breast-milk substitutes are required by law to bear a warning statement that they are not fit for babies. That responsible attitude on the part of manufacturers towards advertising and quality standards is what is required in the developing world.
  The WHO's 155 member States are clearly of the opinion that urgent action needs to be taken. Those who have devoted their lives to studying child nutrition know that there are quite sufficient problems to be faced in combating it throughout the world without adding problems of our own making.

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  Finally, in thanking the right hon. Gentleman once again for his constructive comments, I give him an assurance that we shall continue to take account of the views expressed by all those with an interest in the subject before we finally brief the United Kingdom delegation to the World Health Assembly in May. I look forward to discussing the whole subject in more detail when I meettheright hon. Gentleman in the near future.
  Question put and agreed to.
  Adjourned accordingly at twenty-two minutes to Eleven o'clock.

Attorney-General
  European Court of Justice (United Kingdom Submissions)
  European Court of Justice (United Kingdom Submissions)
Trade
  Samuel Williams (Dagenham Dock) Limited
  Samuel Williams (Dagenham Dock) Limited
  Timber Imports
  Timber Imports
Employment
  Samuel Williams (Dagenham Dock) Limited
  Samuel Williams (Dagenham Dock) Limited
  Redundancies
  Redundancies
  Health and Safety at Work
  Health and Safety at Work
  Unemployment Benefit Offices
  Unemployment Benefit Offices
  Job Release Scheme
  Job Release Scheme
Prime Minister
  Engagements
  Engagements
  Walton-le-dale
  Walton-le-dale
  International Year of Disabled People
  International Year of Disabled People
  House Building
  House Building
  Rating System
  Rating System
  Regional Water Authorities
  Regional Water Authorities
  Electronic Research Laboratories, Baldock
  Electronic Research Laboratories, Baldock
  Namibia
  Namibia
  Strikes and Unemployment
  Strikes and Unemployment
  Factory Closures
  Factory Closures
Civil Service
  Word Processors
  Word Processors
Home Department
  Young Offenders
  Young Offenders
  Citizens Band Radio
  Citizens Band Radio
  Penal Establishments (Escapes)
  Penal Establishments (Escapes)
  Prison Population
  Prison Population
  Helen Smith
  Helen Smith
  Prostitution
  Prostitution
  Voluntary Services Unit
  Voluntary Services Unit
  Imprisonment (Temporary Provisions) Act 1980
  Imprisonment (Temporary Provisions) Act 1980
Education and Science
  Museum and Galleries (Staff)
  Museum and Galleries (Staff)
  Works of Art (Capital Transfer Tax)
  Works of Art (Capital Transfer Tax)
National Finance
  Stamp Duty
  Stamp Duty
  Inflation
  Inflation
  Amusement Machines
  Amusement Machines
  Economic Policy
  Economic Policy
  Oil and Gas Taxation
  Oil and Gas Taxation
  Child Benefit
  Child Benefit
  Money Supply
  Money Supply
  Exchange Rate
  Exchange Rate
  Unemployment Costs
  Unemployment Costs
  Value Added Tax
  Value Added Tax
  North Sea Oil
  North Sea Oil
  Multinational Companies
  Multinational Companies
  Enterprise Zones
  Enterprise Zones
  Liverpool Airport (Duty-free Shop)
  Liverpool Airport (Duty-free Shop)
  Bank Profits
  Bank Profits
  Seafarers
  Seafarers
  Public Sector Borrowing Requirement
  Public Sector Borrowing Requirement
  West Cumbria
  West Cumbria
  Tax Yield
  Tax Yield
  Charities
  Charities
  Black Economy
  Black Economy
  Joint Ventures
  Joint Ventures
  North Sea Oil and Gas Revenues
  North Sea Oil and Gas Revenues
  North Sea Oil Revenues
  North Sea Oil Revenues
  Budget Representations
  Budget Representations
  Economic Recovery
  Economic Recovery
Defence
  Non-departmental Public Bodies
  Non-departmental Public Bodies
  RB44 Vehicle
  RB44 Vehicle
Industry
  Krypton Gas
  Krypton Gas
  Optical Fibres
  Optical Fibres
  Monarch Airlines
  Monarch Airlines
Energy
  Domestic Gas and Electricity Supplies (Disconnections)
  Domestic Gas and Electricity Supplies (Disconnections)
  Coal Imports
  Coal Imports
  Coal Mines (Efficiency)
  Coal Mines (Efficiency)
  North Sea Oil and Gas
  North Sea Oil and Gas
European Community
  European Assembly (Competence)
  European Assembly (Competence)
Foreign and Commonwealth Affairs
  India Office Library
  India Office Library
  Malta
  Malta
  Nigeria (Secretary of State's Visit)
  Nigeria (Secretary of State's Visit)
Social Services
  Area Health Authorities (Cash Limits)
  Area Health Authorities (Cash Limits)
  Regional Health Authorities
  Regional Health Authorities
  Departmental Staff
  Departmental Staff
  Psychosurgery
  Psychosurgery
  Smear Tests and Breast Examinations
  Smear Tests and Breast Examinations
  Prescription Charges (Glaucoma)
  Prescription Charges (Glaucoma)
  Community Services
  Community Services
  Health Authorities (Fund Raising)
  Health Authorities (Fund Raising)
  Occupational Pensioners
  Occupational Pensioners
  Community Homes (Secure Accommodation)
  Community Homes (Secure Accommodation)
  Tobacco Advertisements
  Tobacco Advertisements
Wales
  Family Planning
  Family Planning
SCOTLAND
  Hill Farmers
  Hill Farmers
  Hill Farm Land
  Hill Farm Land
  Nursery Schools
  Nursery Schools
  Prescriptions
  Prescriptions
  Domestic Insulation Improvement Grants
  Domestic Insulation Improvement Grants
  Indecent and Obscene Material (Prosecutions)
  Indecent and Obscene Material (Prosecutions)
  Torness Power Station
  Torness Power Station
  Emigration
  Emigration
  Suicides
  Suicides
Agriculture, Fisheries and Food
  France (Scotch Whisky Imports)
  France (Scotch Whisky Imports)
  Common Fisheries Policy
  Common Fisheries Policy
  Herring Fishery
  Herring Fishery
  Fishing Industry
  Fishing Industry
  Foodstuffs (Flavourings)
  Foodstuffs (Flavourings)
  Land Draining (Norfolk Broads)
  Land Draining (Norfolk Broads)
  European Community (Farm Price Review)
  European Community (Farm Price Review)
  Pig Industry
  Pig Industry
  Sheepmeat
  Sheepmeat
Environment
  Housing Capital Expenditure
  Housing Capital Expenditure
  Rates
  Rates
  Intermediate Treatment Centres
  Intermediate Treatment Centres
  Part-time Local Government Staff (Pensions)
  Part-time Local Government Staff (Pensions)
  Council House Sales (Hull)
  Council House Sales (Hull)
  Building Control System
  Building Control System
Transport
  Trunk Roads (Lighting)
  Trunk Roads (Lighting)
  A45 (Weedon—MI)
  A45 (Weedon—MI)
National Finance
  Cigarettes and Liquor (Prices)
  Cigarettes and Liquor (Prices)
  Inflation
  Inflation
  Farming and Market Gardening (Tax Relief)
  Farming and Market Gardening (Tax Relief)
  Minimum Lending Rate
  Minimum Lending Rate
  Mobility Allowance
  Mobility Allowance
  Ex-European Commission Members (Transitional Allowances)
  Ex-European Commission Members (Transitional Allowances)
  European Community Budget
  European Community Budget
  Tax Evasion
  Tax Evasion
  Charities
  Charities

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Rochester.

Councillor Trevor Brown: TV Interview
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 which of the three short answers given by Councillor Trevor Brown in the "Newsnight" programme of 11th March 1980 contained information which was not already published.
The Minister of State, Ministry of Defence (Viscount Trenchard): My Lords, Mr. Brown did not disclose any official information which was not already public knowledge. He took part in the programme, having been refused official permission to do so.
Lord Avebury: My Lords, when the councillor first notified the authority that he was proposing to take part in the programme, was he not told that the reason why he could not do so was that it might constitute a contempt of court? Did he not write to the authority four days before the programme was due to be transmitted, giving the advice that he had received from the county solicitor: that in no circumstances could it possibly have been held to be a contempt of court? Is it not a fact that now the Atomic Energy Authority is offering to put Councillor Brown out to grass seven years before he would otherwise have been due to retire, on half the salary that he is at present receiving, forfeiting any pension rights to which he might become entitled, as well as any promotion and regrading? Is this not an extremely severe penalty to impose on a man for three short answers on a television programme which did not contravene any Official Secrets Act?
Viscount Trenchard: My Lords, on 3rd March Mr. Brown's chief administrative officer wrote to him and refused him permission to appear on the programme. Under the Civil Service Pay and Conditions of Service Code, which applies to all civil servants, Mr. Brown is required to obtain permission. It is true that the letter refusing him permission mentioned the point that, since there were legal cases still in midstream, there was a risk of contempt of court; but the fact is that the permission was refused. As apparently is widely known, Mr. Brown has been severely reprimanded. So far as I am aware—and I believe this to be the case—no other action has been taken against Mr. Brown, whose rank and position in the service and the department are unaltered.
Lord Avebury: My Lords, is the noble Viscount denying that the opportunities for promotion and
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regrading which apply to other persons of similar competence and efficiency to Councillor Brown have been denied to him? With regard to the letter of 3rd March, was that not overtaken by his reply giving the authority the information that I mentioned in my first supplementary question? The noble Viscount said that the code is applied to all civil servants. Therefore can he explain why three of the shop stewards at Aldermaston took part in the programme, without there being any retaliation, and without their having been granted the permission of their superiors?
Viscount Trenchard: My Lords, I am sorry that I did not deal with the noble Lord's supplementary question about Mr. Brown's reply, which was dated 5th March, to his chief administrative officer. It was received on 10th March, by which time the programme had been recorded. But the position remains unaltered: all civil servants are not allowed to take part in public programmes involving the disclosure or the use of information obtained through their official duties without having permission; and in this case permission was not granted. So far as Mr. Brown's personal position is concerned, I cannot go further than my earlier answer. There is nothing in the penalty that forbids Mr. Brown being promoted, if that were recommended in respect of any particular post.
Lord Brimelow: My Lords, looking to the future, would the Government be willing to use the machinery of the National Whitley Council, as recommended by the Armitage Committee, to set up an independent review body, so that when a civil servant feels that he has been unreasonably refused permission he may appeal to a body distinct from and independent of his own department, so that the department will not be in the invidious position of being judge in its own cause?
Viscount Trenchard: My Lords, Her Majesty's Government do not believe that this case is in any way the kind of case that the Armitage Committee mentioned in its recommendations. The reason I say that is indeed because the Armitage Committee made it clear that they would expect civil servants who had been granted permission to serve as local councillors, or in other political appointments, to continue to follow the rules in the code of conduct. The procedures for appeal are open to Mr. Brown, as they are to the whole of the rest of the Civil Service; and since in fact the right of appeal against his reprimand is still open at this present time I would much prefer not to make any further comments.
I did not answer the point made by the noble Lord, Lord Avebury, on the comparison with the trade union officials and their position. Their position is that they have an exemption from the Civil Service Pay and Conditions of Service Code in this respect, but that exemption applies only where the matter under discussion directly affects the conditions of service of union members as employees, and where the spokesman is not himself officially concerned with the matter in question.
Lord Paget of Northampton: My Lords, is not the noble Viscount's Answer a little alarming? Here we have a body as delicate as the Atomic Energy Commission;

1147
we hear that one of its servants deliberately and publicly defies its orders, and he gets away with a mere reprimand. Surely that is rather alarming.
Viscount Trenchard: My Lords, I entirely agree with the noble Lord, particularly as I have to say that Mr. Brown's department has had occasion in the past to warn Mr. Brown that he must comply strictly with the rules on the disclosure of official information and on dealings with the media.
Lord Derwent: My Lords, as there may be an appeal, is it not rather wrong to go on discussing this matter until we know whether there is in fact going to be one, anyhow?
Lord Avebury: My Lords, while some noble Lords opposite may want to sweep this matter under the carpet, is it not fundamentally wrong that a councillor representing his constituents should be in a position inferior to that of a shop steward representing the interests of his members?
Viscount Trenchard: My Lords, the Government have no intention of sweeping any matter under the carpet. The Government—the previous Government, in fact—appointed Sir Edward Pochin and his committee in connection with the whole subject-matter upon which Mr. Brown has been commenting, so there is no intention to sweep anything under the carpet at all. The two cases are entirely different. Not only would I agree with the previous supplementary question, but every civilian organisation that I have ever known—and I have been in business all my life—makes it very clear that its managers do not appear on public programmes or write to newspapers on matters in relation to which they have obtained the information from their official duties.

Small Businesses
3.17 p.m.
Lord Orr-Ewing: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many new businesses were started in 1980 and whether they are satisfied with this rate as part of their overall economic and industrial policy.
The Minister of State, Department of Employment (The Earl of Gowrie): My Lords, until the statistical work is much further advanced there are no reliable official figures of small business births and deaths. The Government recognise the importance of having reliable information about business formation, and work is proceeding on existing data, mainly VAT records. Where overall policy is concerned it remains as important as ever to contain public expenditure in order to release resources for business, large and small.
Lord Orr-Ewing: My Lords, would my noble friend
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bear in mind that, whereas no one would wish to put further paperwork on the shoulders of small business, the VAT returns would not in fact show up small businesses in their earlier years, which may well have a sales turnover of less than £10,000 a year? Secondly, in view of the very substantial redundancy payments that have been made—for example, £300 million last year by British Steel—would my noble friend consider the Manpower Services Commission making their facilities available to advise those in areas where there has been redundancy as to how they might form small businesses, using their redundancy payments?
The Earl of Gowrie: My Lords, this service does exist. The Department of Industry, under my honourable friend the Parliamentary Under-Secretary, runs the small firms service, which counsels on the formation of small businesses; and the staffing of this service is businessmen, not officials. Joint ventures between the MSC and this service do take place.
Lord Strabolgi: My Lords, although the Government have not got any exact statistical evidence, would they tell the House if they have any idea whether the births are keeping pace with the deaths?
The Earl of Gowrie: My Lords, the provisional information that I have is that the balance is about even; but, as I say, the information is not reliable and I prefer more work to be done on it.
The Lord Bishop of Peterborough: My Lords, would the Minister not agree that the founding of new businesses, especially small ones, would do much to restore morale and confidence in the economy of this country; and if he so agrees, is he able to indicate what steps the Government are going to take now or in the near future to make this possible?
The Earl of Gowrie: My Lords, I entirely agree with the right reverend Prelate. Of course, the problem is that businesses, large and small, public or private, are short of funds. There are many appeals to the Government for funds, or for help with funds; and that inevitably drives up interest rates, which of course also damage business. So it is very important to get the balance right.
Lord Leatherland: My Lords, may I ask the Minister, as he cannot tell us how many new businesses have been started during the year, whether he can tell us how many businesses have gone bankrupt during the year as a result of the Government's economic policy?
The Earl of Gowrie: My Lords, while not for a moment accepting the sting in the tail of that particular supplementary question, because trading conditions and other things are much more influential than economic policies, right or wrong, I rest on the answer I gave to the noble Lord on the Front Bench opposite, which is that the provisional information I have is that the figure is in balance, but I am not happy with the method of reaching this figure and I therefore want it looked at again.
Baroness Wootton of Abinger: My Lords, are the

1149
Government not aware of the growing practice with large and well-known businesses bringing pressure to bear on small businesses for prompt delivery and then refusing payment for very long periods? Could not the Government take some action to stop this?
The Earl of Gowrie: My Lords, I was aware that there have been complaints on this score and the Department of Industry have made representations that there should be prompt payment of contracts. We have also tried to put our own house in order to see that Government pay their contractual bills more rapidly than they have been prone to do, which also affects business.
Lord Northfield: My Lords, is the noble Lord aware that the Government recently allowed the Development Commission in the rural areas to give half the costs—something like 50 per cent.—of building small industrial units to local authorities? It is a partnership system of encouraging local authorities to build the small units in which small businesses can make a start. Would the noble Earl have a look at whether this policy—which I applaud and greatly welcome—of helping local authorities to have a useful role in this way could be spread to the urban areas in some way as well as the rural ones? That is where most of the small businesses are going to make a start.
The Earl of Gowrie: My Lords, I think in urban areas the ratio is 75 per cent., and I shall check that. I shall look at this aspect and I am most grateful to the noble Lord for making my bull points for me.
Lord Oram: My Lords, in seeking to improve the statistical information, as the noble Lord indicated, will the Government ensure that the information points to those businesses which are registered as companies under the Companies Act, and the encouraging number of new businesses which are being registered as co-operative societies under the Industrial and Provident Societies Act? Will that distinction be borne in mind?
The Earl of Gowrie: My Lords, I shall bring this to the attention of my right honourable friend the Secretary of State for Trade as it affects the Companies Act, and of course we shall be debating this Act this very afternoon in the House. I am sure that point can be fed in.
Lord Whaddon: My Lords, is the noble Lord aware that one of the great stumbling blocks in the establishment of new small businesses in urban areas is the difficulty of obtaining small amounts of risk capital? There are available vast amounts of capital from institutions such as banks and the ICFC but it usually costs them far more to examine proposals than the amount of money requested. Will the Government therefore look urgently into the need for setting up an organisation in the towns to vet such applications at little or no cost?
The Earl of Gowrie: My Lords, one cannot set up an organisation, large or small, at little or no cost. One must be careful about going down the road of setting up organisations, but I take the point that the
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noble Lord has said seriously. I have had meetings with banks to discuss how smaller amounts of investments or equity capital might be generated.

Luncheon Vouchers: Value
3.24 p.m.
The Earl of Kinnoull: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will consider updating the pecunious value of luncheon vouchers.
The Minister of State, Treasury (Lord Cockfield): My Lords, I assume that my noble friend has in mind the income tax concession relating to luncheon vouchers. I have noted his suggestion, but successive Governments have taken the view, with which I concur, that there are strong arguments against extending selective reliefs of this kind.
The Earl of Kinnoull: My Lords, may I thank my noble friend for that reply? In the hope that he might have warmed to this Question since last year, may I ask him this. If his department thought it right in 1959 to update the luncheon voucher value, could my noble friend say why it is not considered relevant now? Secondly, would it not be more appropriate to rename the luncheon voucher the "tea cup" voucher, as it no longer purchases even one sandwich?
Lord Cockfield: My Lords, I realise, as my noble friend says, that the value of the luncheon voucher exempted from tax has not changed for many years. Nevertheless, there is nothing to prevent an employer giving luncheon vouchers to a higher value than 15p; indeed, last year no fewer than 53 per cent. of all vouchers issued were for more than that sum. If a voucher is issued for more than 15p, the first 15p still remains exempted from tax.
Lord Segal: My Lords, would not this Question have been more accurately worded if it had referred to the impecunious value of luncheon vouchers?
Lord Cockfield: My Lords, I note the point that the noble Lord makes. I had some difficulty with the word. According to the Oxford English Dictionary is is Middle English. It is now rare, if not obsolete. My noble friend is to be congratulated on rescuing it from oblivion.
The Earl of Onslow: My Lords, will my noble friend put the luncheon voucher into oblivion, because presumably the cost of working out tax reliefs, et cetera, outweighs any possible benefit that there is?
Lord Cockfield: My Lords, while I note my noble friend's suggestion, the exemption of the 15p does not itself involve any great administrative burden. Indeed, the problem comes where one has to bring benefits of this kind into the tax net.

Gatwick Airport: Terminal 2
3.27 p.m.
The Earl of Kinnoull: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether the inspector has now reported to the Secretary of State following the public inquiry concerning Terminal 2 at Gatwick Airport.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin): My Lords, the Answer is, not yet. The inspector hopes to present his report to my right honourable friends the Secretaries of State for the Environment and Trade very shortly.
The Earl of Kinnoull: My Lords, I thank my noble friend for that reply. I note the words "very shortly". Is my noble friend aware that there is the Stansted public inquiry coming up in September, and it is clearly important that a decision is made before then?
Lord Bellwin: Yes, my Lords, we are indeed aware of that very point. I am hoping my right honourable friends will be able to ensure that those who are interested in the Stansted inquiry will have information as to the decision on the Gatwick proposals on their hands.
Lord Boyd-Carpenter: My Lords, can my noble friend do anything to expedite these public inquiries into airport matters? Is he aware that, in a judicial phrase, many of them go beyond time and encroach upon eternity?
Lord Bellwin: Indeed, my Lords. I am grateful to my noble friend for saying that in that way. It obviously is a matter of much concern. On the other hand, I think it must be recognised that, whereas in this particular instance the inquiry has had to take in so many far-reaching matters of such concern to so many people to ensure that everyone has the opportunity to make his point, that is one of the prices that we have to pay in the system that we have. Nevertheless, a quicker outcome of these inquiries would be desirable. Clearly no one would quarrel with that.

Iron and Steel (Borrowing Powers) Bill
Read 3a, and passed.

Deep Sea Mining (Temporary Provisions) Bill [H.L.]
3.30 p.m.
Read 3a.
Clause 2 [Exploration and exploitation licences]:
The Earl of Gowrie The Earl of Gowrie moved the following amendment:
Page 3, line 17, at end insert (" and in determining whether to grant a licence in any case he shall have regard to any relevant
1152
factors including in particular the desirability of keeping an area or areas of the deep sea bed free from deep sea bed mining operations so as to provide an area or areas for comparison with licensed areas in assessing the effects of such operations.").
The noble Earl said: My Lords, when he introduced the discussion on the merits of what are called stable reference areas in a very interesting debate at the Report stage, the noble Lord, Lord Ritchie-Calder, suggested that it would be a sign of grace and enlightenment if the Government would concede the point that he was trying to make. At that stage I was able to do no more than say I would consider the matter with a view to moving a Government amendment at Third Reading. I stand before you today therefore in a rather unaccustomed guise—that of the Minister of Grace and Enlightenment.
The amendment to Clause 2 seeks to meet the noble Lord's concern. It differs from his own suggestion of requiring the Secretary of State to seek to negotiate these arrangements with reciprocating countries, because he does not need specific authority to do that. Indeed, we know from corresponding legislation in the United States that they are committed to negotiate on this topic with reciprocating states, which definition of course should include the United Kingdom.
This amendment differs, too, in that it goes much further than the original suggestion by the noble Lord, Lord Ritchie-Calder, in that it requires the Secretary of State, when considering licence applications, to have regard among other things to the desirability of keeping an area of the deep seabed free from deep sea mining operations to provide a stable reference area. For the reasons I gave at Report stage, it would be difficult to be too precise at present when so very little is known about the qualities of different areas of the deep seabed; but I can repeat that the Government fully accept the merit of the case for stable reference areas and I recommend to the House the amendment which stands in my name. I beg to move.
On Question, amendment agreed to.
The Earl of Gowrie: My Lords, I beg to move the privilege Amendment.
Moved, That the privilege Amendment be agreed to.—(The Earl of Gowrie.)
On Question, an Amendment (privilege) made.
The Earl of Gowrie: My Lords, I beg to move that the Bill do now pass.
Moved, That this Bill do now pass.—(The Earl of Gowrie.)
Lord Kennet: My Lords, before we say goodbye to the Bill, could I make two or three remarks to the Government about it? This is a Bill which many people think the Government will have to watch with unusual closeness as regards its operation. It is striking out into completely new legislative territory; there has never been any national legislation which purported to do anything like this before. We already have the case of a citizen of Texas called Grimm, who has staked a claim, no less—he has not sought anybody's permission—to an area of the North Atlantic deep seabed. The nearest country is Canada but he is not Canadian; he is American. What is going to happen? Presumably somebody will pursue him.

1153
Will it be the American Government or the Canadian Government? I hope that the British Government, at any rate, will take the trouble to have the case very closely followed, in whichever judicature it comes up. They will be making law.
Is there any forum for conversation with the Soviet Union about these provisions? The Soviet Union has been researching and developing the kinds of ships which can bring up nodules from great depths and it also has a strong interest in the Indian Ocean: it is likely to operate there. It hardly needs pointing out that, if Siberia turns out to be impossibly hard frozen so that minerals cannot be got there cheaply, its interest in the Indian Ocean is going to increase and increase. Technology might force it that way. Does it need national legislation like this? Probably it would say: "All our ships are state owned so we do not need to get anybody's permission: we are a sovereign Government operating on the high seas".
Is this acceptable to democratic states such as America and ourselves, and so on? Poland is introducing legislation. What is the need for legislation in a communist country? These things, I think, might even justify a specific charge being given to somebody somewhere in Whitehall to keep a very close eye on its development, and the Government should not just stand back and hope that our own mining consortia are able to report everything that is relevant to the Government, because they will not be able to do that. They will report many interesting and relevant things, but not everything.
Finally, on behalf of my noble friends on this side of the House, perhaps I could say how glad we are that the stable reference zones have been carried into the Bill, and that one or two other minor improvements have been achieved.
Lord Lloyd of Kilgerran: My Lords, the Government are to be congratulated in bringing in this Bill at this stage. It will certainly show to the developing countries that this Government, like the American Government, are prepared to share the commercial results of this kind of deep sea mining. The second count on which the Government are to be congratulated is that they have accepted the general theme of the amendments that I proposed regarding the safety of personnel. It brings to notice the great dangers to personnel arising from new industries which require individuals to go well below the sea level in their business activities. I am very grateful to the Government for accepting that amendment.
The Earl of Gowrie: My Lords, I can do no more than thank both noble Lords for the way in which they have received the proceedings on this Bill. It is of course uncharted territory, and we are in deep water, literally as well as metaphorically, here. I think it might be worth pointing out to the House that it seems an admirable idea to introduce more Bills in this Chamber because more amendments find themselves to be acceptable to the Government, being introduced in sensible and non-doctrinaire ways. I hope that we can keep up this good record.
On Question, Bill passed, and sent to the Commons.

Redundancy Fund Bill
3.38 p.m.
The Earl of Gowrie: My Lords, 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 which 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. This 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 your Lordships know, 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, those 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 in the life of the fund when it has been in deficit and when its borrowing limits have had to be adjusted. I think 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 sum 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. The order raising the limit to £20 million lapsed after two years, but in 1972 the borrowing limit was again raised to £20 million for a two-year period. In 1975, as part of the Employment Protection Act, the limit was increased to £16 million with provision for extension to £40 million with parliamentary approval. This provision for extension has not been used since 1975.
Last April the fund was substantially in surplus and because of that surplus the employers' contribution was reduced from 0·2 per cent. of salary to 0.15 per cent. The surplus in the fund, which at the end of April stood at £144 million, then began to fall but, unhappily, as the number of redundancies grew during the second half of 1980 the decline accelerated and it was obvious that action had to be taken.
There were various things we could have done. We could have reduced the scale of redundancy payments or reduced the level of rebate to employers. We could also have increased the level of employers' contributions. We do not think it right or sensible, in the depths of a severe recession, either to reduce help to those employers in the greatest difficulties or to increase the burden on employers generally by increasing the level of contributions. We have therefore decided to take the very different course of increasing the borrowing powers of the fund to carry it through the period of deficit and, for the time being, to direct the whole of the employment protection allocation to the Redundancy Fund. This makes sense, because the Maternity

1155
Pay Fund is in substantial and growing surplus and can easily finance expenditure from its surplus for some time to come. But I hasten to say that of course the switching of the allocation will not detract in any way from the rights of those entitled to maternity benefit, and no order is, in any case, required to make this switch. I have met and explained this fully to members of the Advisory Committee on Women's Employment, which I chair.
To turn now to the actual wording of 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 needed, this will 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 very difficult.
The House may be interested in the following quotation:
"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, Commons, 7/2/77; col. 1127.]
I am using not my own words, but those used in another place by my predecessor, the then Minister of State for Employment, the right honourable Member for Doncaster, in February 1977.
As to the new limits chosen, all we are asking for is that there should be a sufficient margin of flexibility in administering the fund. The history books will remind us that in 1967–68 the Labour Government came before this House no less than three times in 12 months to seek further increases in the borrowing limits of the fund, and that does not seem to be the right kind of precedent to follow. My Lords, I therefore commend the Bill to the House.
Moved, That the Bill be now read 2a.—(The Earl of Gowrie.)
3.43 p.m.
Lord Davies of Leek: My Lords, it would be churlish if we on this side of the House did not welcome the increases that have been suggested and, as usual, the noble Earl dealt with the issue in a constructive manner. I have taken the trouble to trace the history of this matter since the 1965 Act. Books were written about this subject by Members on this side of the House, by Fabians and by others and, originally, there was a sad belief that we had seen the end of unemployment. I shall not mention the name of one famous Fabian who has now passed away; it would be unlovely of me
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to do that. But there was a thought that we had solved the problem of unemployment.
As much as anything, the 1965 Act was intended to deal with the possibility of mobility. "Mobility" is an ugly word today. Mobility is not an easy thing. Nevertheless, we on this side of the House welcome this step, and I am quite sure that if the noble Earl has to come back again he will be welcomed. Unfortunately, the word "redundancy" is an ugly euphemism—that is a paradox—for the sack. I emphasise that the purpose of this short Bill is to raise the limits set by the Employment Protection (Consolidation) Act 1978, which is a broad Act—and I have gone through it—with many purposes. The Bill increases the amount that can be borrowed by the Redundancy Fund and the necessary order has to be approved by both Houses.
But on looking through the Act, I have worked out that the Treasury still has quite a power. In Section 40(5)(b) of the 1975 Act, we get the expression:
"'that Fund' substitute the words 'the Redundancy Fund and the Maternity Pay Fund in such shares as the Secretary of State may'"—
and here is the 64,000 dollar point of power—
"'with the consent of the Treasury determine'".
Always in these financial issues, the consent and the determination of the Treasury are of paramount importance. Those of us who have had the experience in difficult times, and in less difficult times, of needing money at periods when either side of the House has been in power, know that often the Treasury can be the bête noire of what I would call kindly and necessary legislation. I shall be very brief, as the noble Earl would naturally expect. My other point is that the Bill is a recognition of the truth of the existence of massive unemployment, and I believe that bovine bigotry and an obstinate belief in the efficacy of monetarism have landed us in this position. It is turning Britain's manufacturing, textile and engineering areas into industrial deserts—deserts of unemployment and indifferent listlessness which, if we are not careful, may ultimately become explosive pockets of uncontrolled reaction. This has to be faced on both sides of the House, without trying to make any specific point about it.
How long is this likely to last? Rightly, the noble Earl told us a moment or two ago that this cannot be calculated. But we ask how long is this likely to last, and what caveat, limitation or warning has the Treasury demanded? Has it demanded any warning? Will it use the powers under the Act? Section 40(5)(b) of the Employment Protection Act 1975 lays down that the Treasury has to give consent. The Minister acknowledges that forecasting is very difficult, and we must all acknowledge that. I do not want to be too nasty about this, but we were told that the lady was not for turning and we now have a maelstrom of social and economic disorder and, I regret to say, overspending. The Government have lost their strategy. Their tactics are difficult enough to understand, but what strategy are the Government now taking up?
On 12th February, The Times reported that the Government have overspent this year by £233 million on unemployment and related schemes, primarily because the Department of Employment underestimated

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the level of unemployment by £233 million. That was revealed in a committee by departmental officials who were answering MP's questions on supplementary estimates; and on both sides of the House there are many noble Lords who have had experience on such committees. The scheme's original budget was for £39·9 million, but it was overspent by just over £200 million.
We had a Question today about small businesses and I have the figures. Small businesses are failing, and falling apart, more rapidly than larger businesses. A written reply in another place showed that, between May 1979 and January 1981, the number of redundant workers in firms of 10 or more in England was 520,692; in Scotland, 84,169 and in Wales 55,209. The Official Report gave those figures on 17th February 1981; vol. 999, col. 93. We had that Answer in the other place. I want this place to be treated with the same courtesy. When we ask for answers, we want answers. We do not want half answers sent to this House. The cost of redundancy to a man or woman—we are grateful to the Government for having done this—is measured not only in pounds, shillings and pence. Worklessness over a period eats into a man's soul, into the dignity of a man or woman, into a human being's being. We know that the listlessness and the apathy which it causes is terrifying. One shrinks into an inferiority complex that could easily lead to violence and crime.
That brings me to a philosophical point which is to be found on page 118 of Nye Bevan's book Freedom From Fear. The canard that has been put abroad that my party wants to nationalise everthing is sheer rubbish. We believe that some type of mixed economy is bound to come. There are certain sections of the economy which have to be publicly owned. The tragedy of the deterioration in the National Health Service should not be measured in terms of its cost but in terms of those who today are four inches taller than their fathers because they have had 20 or 30 years' of good feeding, good nutrition and good places in good schools. God forbid that that system should be undermined by the sheer rush for profits. Our profits are as Ruskin expressed it. Ruskin said: "There is no wealth but life". And the finest life we have is that of our children. The great Sir Winston Churchill himself made that very point. Consequently, let us on both sides of the House get rid of measuring unemployment, the health service and the mixed economy in terms of pounds, shilling and pence.
I shall not bore the House—I have been speaking for nine minutes—with many more points or statistics but I should like to deal with a philosophical point. The House can stand it. Keynes himself—never mind Milton Friedman—said:
"The decadent international but individualistic capitalism in whose hands we find ourselves is not a success. It is not intelligent; it isn't beautiful; it is not just; it is not virtuous and doesn't deliver the goods. In short, we dislike it [and want to get rid of it]. But when we consider"—
here is the point—
"what to put in its place we are extremely perplexed".
It is time mankind tried to get together to destroy some of that perplexity. One thing which both sides of the House ought to accept—whatever may happen at the next election—is that we must not destroy every
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social service that builds a good life for the children we shall need in the future.
Missing out some of the other marvellous quotations I have here, much to my regret, but I have been speaking for 10 minutes now and the House has been tolerant, I would say that of course it would be indulging in schadenfreude, a wicked thing, to make capital out of this, because the day may come when we on this side of the House are in office and facing the same problem. But I would point out one phenomenon which the Government should now face. The phenomenon of crisis after crisis since the days of the Industrial Revolution should by now have taught us a lesson, but it seems to lie outside the scope of modern economic theory or so-called economic science. All over the world the business system is in decline or collapsing. Even Schumpeter, a capitalist economist in America a generation ago, said that the civilisation which we name capitalism was already beginning to wither away. Between us we must find an answer to these problems including, in the transition, redundancy payments.
3.54 p.m.
Lord Rochester: My Lords, I am afraid I shall not be able to match the rhetoric of the noble Lord, Lord Davies of Leek, but from these Benches I should like to make a brief contribution to the Second Reading of the Bill.
I am glad, first, to join in thanking the noble Earl, Lord Gowrie, for the way in which he has explained its purpose. It seems plain from the fact that the employers' contribution to the Redundancy Fund was reduced last April from 0·2 per cent. to 0·15 per cent. of salary that the Government failed to foresee the extent to which the surplus in the fund, then standing at £144 million, would fall because of the great increase in the number of redundancies that has occurred since that time.
In the present perilous state of British industry I am glad that the Government have not sought to balance the books by restoring the level of employer contributions to what it was earlier. I am also glad that they are reducing neither the scale of redundancy payments nor the level of rebate to employers. The course of action they have chosen of increasing the borrowing powers of the Redundancy Fund seems to us to be the right one to have taken in the circumstances in which they now find themselves.
We have noted that it is being done by directing the whole of the employment protection allocation to the Redundancy Fund. The Government are able to act in this way because the Maternity Pay Fund, which would in normal circumstances absorb 0·05 per cent. of salary, is in substantial surplus, as the noble Earl told us, and is likely to remain so for some time to come. The Explanatory and Financial Memorandum to the Bill states that there will thus be no direct effect on public expenditure overall, but it surely cannot be denied that money is now being spent on financing redundancies which would not have been spent if unemployment had not increased as sharply as it has in recent months.
I do not want on this occasion to make too much of a meal of this in criticising the present Government. In order to achieve the necessary restructuring of some

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of our most basic industries and to improve productivity in them, there now have, sadly, to be these redundancies. And what is more, in my view there would be fewer of them now if the last Labour Government had had the courage to take the action—for example, in the steel industry—that should have been taken long ago. It is also true that whatever Government were now in power—even, my Lords, a Liberal one—we as a nation could not escape from the recession which has struck other countries besides our own. I think, however, that it is fair for me to take this opportunity to reiterate the view of my party that the recession in this country has bitten more deeply into employment than in other countries in part at least because of the Government's economic policy.
In particular we feel that the time is long overdue when part of the revenue from North Sea oil might be used to renew some of our capital assets—I have in mind particularly as an example our railway system—in a way which we should all benefit from later on. The effect of this, I suggest, would be to bring back a little hope to our despairing building and construction industries and, more to the point in relation to the Bill we are now discussing, it might put a stop to redundancies in those industries and instead enable more people, including in particular skilled workers, to find employment in them.
The noble Earl, Lord Gowrie, may be relieved to know that I do not intend to take the chance afforded by this Bill to give the House another little homily on the virtues of an income policy or of electoral reform. But, for all that, I strongly adhere to the view that redundancies in this country will not be substantially reduced until there is a sufficiently widespread understanding that increases in pay cannot continue grossly to outstrip improvements in productivity, and until agreed action is taken to achieve that objective. Having ventured to make these few general observations, I am happy, on behalf of my noble friend, to agree to this Bill being read a second time.
4 p.m.
Lord Drumalbyn: My Lords, I wonder whether I might make a short intervention and make a suggestion, because there is a point here which worries me. We are dealing with a Money Bill and this is really a money point so that we could not in any way amend the Bill to put this right. I accept entirely the advantages that the redundancy legislation has afforded. One of the objects of redundancy payments in cutting down the number of persons employed in a particular industry was to improve productivity at a time when there were opportunities in other industries to absorb those made redundant. However, the immediate prospects have changed. Firms are now having to slim down in order to survive at all. To the extent that firms have to make redundancy payments their chances of survival may be imperilled.
As I understand it, under the existing legislation if a firm is unable to meet its redundancy commitments at all the Government will assume those commitments. There must be a point at which the mere fact that firms have to make these redundancy payments may put them into liquidation. Their working capital will disappear, they may not be able to obtain loans
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and so forth. Would it not be practicable for the Government to advance the money in those narrow circumstances in order to be able to meet the redundancy payments at the point where the rundown is such that the capacity for the firm to carry on at all, if it met its full commitments, would be imperilled?
I wonder whether the noble Earl would have that point considered because it seems to me that it might be of help to an industry in these marginal circumstances. It would not involve very much. It might perhaps marginally increase the public sector borrowing requirement. But let us be quite clear that redundancy payments can be very great indeed—sometimes they run into tens, if not hundreds of millions of pounds—and might be just the factor to put a firm out of business altogether, whereas if money could be advanced to enable the firm to make those redundancy payments it might be able to survive.
Viscount Massereene and Ferrard: My Lords, before the noble Earl replies, may I remark on something said by the noble Lord, Lord Rochester. As I understood it, he asked why the Government could not take some of the revenue from North Sea oil to re-equip the railways, but I understand that all the revenue from North Sea oil is now going to pay for social security. You cannot have your cake and eat it.
4.5 p.m.
The Earl of Gowrie: My Lords, we are going to have an opportunity to debate unemployment and employment generally next Wednesday, so I hope the House will forgive me if I do not follow all the points that were made this afternoon,and I think it is fair to say that some of them were not directly connected with the Redundancy Fund Bill. I should like to congratulate the noble Lord, Lord Davies of Leek, on what is, to me at any rate, his first appearance at the Front Bench—but perhaps I have not been here when he has appeared there before—and on, as we would expect of him, an interesting and entertaining and fiery speech. I think it was perhaps a speech that started by being delivered by Dr. Jekyll and there may have been a change of gear to Mr. Hyde, but it ended with Dr. Jekyll again and for that of course we must be grateful. In this somewhat schizophrenic role the noble Lord got into a bit of a tangle between savage monetarism, on the one hand, and handing out money generously, on the other, and I think that is a circle that perhaps he will have to square next Wednesday.
One of the important points to get over in connection with this Bill is that, while unemployment as a total phenomenon quite rightly causes the deepest anxiety to those who suffer it, or may suffer it, and to Governments who at the very lowest level of their interest find it extremely expensive, there are circumstances in which unemployment is both necessary and good if people are to come out of industries in order that those industries should become profitable and thereby generate the wealth which will pay for the social services and the service industries and the other types of employment that people want. In those circumstances it is important that the individuals who come out of such industries are thoroughly compensated and, one might say, rewarded for their consent so to do.

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It is important that we do not treat unemployment as a kind of monolithic black cloud, and recognise that it has positive aspects and that the important thing for a civilised society to do is to recognise that transitional structural changes bear heavily on individuals and that a civilised society picks up the bill for that. That is fundamentally what this kind of redundancy payment legislation is about, and that is why I commend it to the House.
On Question, Bill read 2a; Committee negatived.

Royal Assent
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

Iron and Steel (Borrowing Powers) Act,

Felixstowe Dock and Railway Act.

Companies (No. 2) Bill [H.L.]
4.9 p.m.
The Parliamentary Under-Secretary of State, Department of Trade (Lord Trefgarne): My Lords, I beg to move that this Bill be now read a second time. The Bill deals with a number of separate but important matters in the field of company law. It implements a European Community directive on company accounts. It changes the law on the registration of company and business names. It reinforces the company inspection system and the legal sanctions against fraud and misbehaviour. It includes a number of modest but valuable reforms of company law. The origins of these varied strands are very different—it is perhaps characteristic of Companies Bills that they deal with a number of apparently disparate issues in the field of company law. But underlying the provisions of this Bill are certain themes, themes which are characteristic of this Government's overall policies—their commitment to help small firms; to eliminate unnecessary administrative burdens on companies; to streamline their own administration; to strengthen the weapons available to counter crime and misconduct. The Bill makes significant contributions within the field of company law to each of these broad policy objectives and it is against those objectives that the Government are happy to be judged. This is particularly the case with a Bill which appears, as this one does, to contain a mass of technical and apparently complex provisions.
I turn straightaway to the contents of the Bill itself. Part I, together with Schedules 1 and 2, deals with company accounting and disclosure. To a large extent these parts of the Bill are required to implement the European Community's Fourth Directive on company accounts. Like the Second Directive, which, as your Lordships will recall, was implemented by the Companies Act 1980, the Fourth Directive is part of the programme for the harmonisation of company law within the Community. The Government have made it clear on a number of occasions that they believe that the case has not been made for action on a Community
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basis on some of the matters which are the subject of draft or proposed directives.
We have also expressed our concern at the burden which the existing programme imposes on national administrations, parliaments and those affected. However, as my right honourable friend the Secretary of State said recently, the Government are not opposed to the principle of the harmonisation of company law; and in the case of the Fourth Directive the Government consider that the harmonisation of accounting requirements will bring about a greater comparability of company accounts within the Community. This should be to the benefit of users of accounts, including shareholders, potential investors, creditors, companies themselves, commentators and others. The directive has also provided us with an opportunity to introduce greater flexibility into our own company law requirements for accounts, and in particular to reduce the demands made on small firms. It is against that background that the changes to our statutory requirements for accounts contained in this Bill should be considered.
Clauses 1 and 2 replace the provisions of the Companies Act 1948 and lay down the basic rules for the contents of company or group accounts. The Bill introduces new sections dealing with that central accounting concept of "true and fair view". The new sections represent a change of emphasis and give more explicit guidance to directors on how a true and fair view should be achieved. But the crucial point is that the concept, and overriding character, of a true and fair view has been retained. This is, of course, fundamental to the principles and practice of accounting in this country. In line with the view expressed by the report on the draft directive by your Lordships' Select Committee, the clauses make the true and fair view an overriding requirement; this reflects a major British contribution to the negotiations on the directive.
If I may digress for a moment, it is perhaps appropriate at this point to explain a particular feature of the structure of this legislation. The directive permits member states not to apply its provisions to banks and other financial institutions, or to insurance companies, pending forthcoming co-ordination, and to defer the date at which shipping companies are required to adopt the new requirements. For all these companies, therefore, we intend to keep virtually the status quo on the statute book for the time being. Hence the retention, renumbered, of existing sections of the 1948 Act, and Schedule 8. Under Clauses 1 and 2 accounts must, subject to the overriding "true and fair" requirement, comply with what is Schedule 1 to this Bill which will be the new Schedule 8 to the 1948 Act.
It is therefore appropriate if I say something at this point about Schedule 1, which contains the bulk of the accounting provisions of the directive. As was inevitable in any harmonisation of accounts, the Fourth Directive necessitates a more detailed and prescriptive approach than our existing legislation. In future, accounts will have to comply with statutory rules as to their form and content, including set formats. Some of your Lordships may regard Schedule 1 as formidably detailed and uncomfortably akin to an accounting textbook. I would, however, emphasise two points. First, the actual changes in accounting practice that Schedule 1 will require will be relatively modest. What

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is involved is primarily a shift from non-statutory to statutory regulation. For example, the accounting principles laid down in paragraphs 10 to 14 follow very closely what is already required by existing accounting standards. Secondly, the Government have sought to make the maximum use of the flexibility offered by the directive so that directors will be able to draw up accounts in the manner most appropriate to their particular circumstances within the overall framework. For example, the schedule provides for both historical cost and current cost accounting.
I referred just now to a shift to statutory from non-statutory regulation. When this Bill is enacted there will certainly be much more on the statute book concerning company accounts than is the case now. But in the Government's view the major and vital role in the developing of good accounting standards and practice will remain with the profession itself. In recent years admirable and effective self-regulatory arrangements, such as the Consultative Committee of Accountancy Bodies, the Accounting Standards Committee and the Auditing Practices Committee, have been developed by the profession, and I would like to take this opportunity to pay tribute to all those who devote so much time and energy to this activity. These arrangements are continuously evolving, as are the problems and questions to be tackled. The Government have sought in the Bill to ensure that so far as possible the legislation will not be an inhibiting factor in the continued evolution of accounting standards and practice, or detract from the authority of the profession in these matters. Clauses 5 to 10 deal with the exemptions from the accounting requirements and include the major structural innovations in this part of the Bill.
As permitted by the directive, the Bill creates two new classes of company for the purposes of accounts, medium-sized companies and small companies, and provides exemptions from the full accounting requirements for each class. In setting the size thresholds in Clause 8, the Government have gone virtually to the maximum levels permitted by the directive. This will enable as many companies as possible to take advantage of the exemptions. Under Clause 5 certain companies are not permitted to take advantage of the exemptions, even if they qualify under the size criteria.
Clause 6 sets out the exemptions for the accounts of small and medium-sized companies. The Government consider it right to retain full requirements for accounts prepared for shareholders, who are entitled to the fullest information about their company. Moreover, it would be doing no service to small companies to discourage the preparation by them of full accounts. The exemptions available accordingly apply only to accounts required to be filed with the registrar. In essence, small companies will need only to file an abridged balance-sheet; that is, they will not be required to file a profit and loss account or a directors' report. This represents a major reduction in the filing obligations of small companies. And medium-sized companies will be permitted to withhold information of their turnover and trading margins, thus preserving their competitive position, for example, vis-à-vis large groups.
In the Government's view, this combination of full
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information for shareholders and substantial exemptions for disclosure strikes a reasonable balance between the various interests of those for whom accounts are prepared and published. The Fourth Directive would permit us to end the statutory audit of the annual accounts of small companies. Views on this possibility were divided, but the weight of the comments sent to the Government was that continued audit was necessary for the protection of shareholders and creditors (who are often indeed small companies themselves). Even among those who are prepared to contemplate dispensing with audit, there is a strong feeling that something ought to take its place, for example, an independent review of the accounts. Yet there is no agreement among industry or the accountancy profession on the form or content of such a review, and indeed none seems likely. The Bill will, therefore, continue the audit requirement for small companies. But it will make an exception for dormant companies, where there is general agreement that the existing audit requirement is inappropriate. I believe that this will be generally welcomed.
Clauses 9 and 10 deal with holding companies and group accounts and allow small and medium-sized groups of private companies to take advantage of the accounting exemptions. Clause 11 introduces new requirements in respect of the publication of accounts to ensure that accounts are not published in a misleading form. Clauses 13 to 16 deal with the directors' report. They bring the legal requirements into line with the provisions of the directive, including a new requirement for auditors to verify the report for consistency with the accounts. They also remove one existing requirement, which has proved of little practical value; namely, that companies with a turnover exceeding a given amount give particulars of exports. Clause 18 widens the existing power in Section 454 of the 1948 Act under which the Secretary of State may make regulations to alter or add to certain of the requirements of the Act. The remaining clauses of Part I contain appropriate provisions for overseas and unregistered companies, and for the interpretation of Part I.
I turn now to Part II of the Bill which amends the law relating to the registration of companies and business names. The principle of company registration rests on the generally accepted proposition that, when persons join together to form a company and obtain the privileges which attend corporate personality, particularly limited liability, they accept certain minimum obligations, including the provision of certain basic information to the public by delivering documents to the Registrar of Companies for public inspection. The company law system that has evolved in this country has enabled businesses to develop within a relatively simple corporate structure with the minimum of control and regulation. Nevertheless, the relative ease with which companies may be incorporated within this system and the consequential growth of the register has posed increasing problems of administration for successive Governments.
The number of companies on the register has grown from about 530,000 to 800,000 between 1970 and 1980. Searches at the Companies Registration Office increased from 1·4 million in 1970 to 2·6 million in 1980.

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These functions are now a substantial call on the resources of the Department of Trade and it is right that this Government should have undertaken a searching look at company and business name registration when they took office. The proposals in this Bill will simplify some of those functions and thus enable the office to operate more efficiently. They will complement the steps that are being taken to improve public access to the information held by the registrar, which we consider to be a vital part of the regulatory system.
Clauses 22 to 27 deal with company names. Clause 22 provides that a company shall not be registered or re-registered by a name which includes certain statutory expressions elsewhere than at the end; which is the same as the one appearing on a statutory index to be maintained by the registrar; or which is, in the opinion of the Secretary of State, offensive or the use of which would in his opinion constitute a criminal offence. It also provides that a company should not, without the Secretary of State's approval, be registered or re-registered by a name which would be likely to give the impression that the company was connected with the Government or any local authority, or which includes any word or expression specified in regulations. These regulations, which will be subject to the approval of each House of Parliament, will list those words or expressions the inclusion of which in a name will require the Secretary of State's consent. In some cases, a preliminary approach by the company, or its promoters, to a designated Government department or other body will be required.
Subject to the above conditions, any name proposed by a company will be accepted by the regitsrar and it will be for the promoters of that company to ensure that their choice does not conflict with any prior rights to such a name by a previously registered body, whether in respect of trade marks (as at present) or for any other reason. These proposals will remove most of the present uncertainty that faces promoters as to whether the chosen name will be acceptable. Persons forming companies will be able to determine their choice of name by objective tests. This in turn will reduce the timescale for the actual registration of companies and remove the double-checking that in practice results from the present arrangements.
Clause 25 provides that private companies limited by guarantee, whose memoranda or articles of association include certain strict conditions, and which provide evidence in a statutory declaration of that fact, shall be exempt from the requirement to use "limited" as part of their name. This continues a privilege available under the 1948 Act and to which I know many charitable organisations attach value.
I turn now to Clauses 28 to 30, which deal with business names. The Bill repeals an Act originally passed to ensure that enemy nationals did not conceal their business activities in this country—the Registration of Business Names Act 1916. It thus abolishes the Registry of Business Names. This decision was taken not just on pure resource grounds, but because it is not, and cannot be, efficient on its own terms. It has neen estimated that between 35 and 40 per cent. of businesses do not comply with the Act by, for example, failing to notify the registrar of changes after their initial registration. But an effective, comprehensive
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system of registration would require not only a major change in the legislation affecting small businesses, but a considerable number of extra staff, not to mention the imposition of considerably higher registration charges upon the whole range of small businesses. In return for all that, a high proportion of businesses would see no advantage whatsoever. The fact is, and there appears to be considerable misunderstanding about this, that registration does not confer any of the benefits of incorporation that I referred to in relation to companies. Nor does it confer proprietorial rights to a particular name. The effect of registration is simply to put on public record the details of the proprietors of certain classes of businesses.
In the Government's view, therefore, the question is not whether or not the RBN should be abolished. It is—what is it now appropriate to require of businesses with regard to their names and disclosure of ownership? The basic need, which the Bill seeks to meet, is for provisions whereby persons dealing with businesses can find out details of their ownership. For the reasons I have given, a central register is not a practical option. The Bill therefore establishes a system under which businesses themselves will be required to make the information available, whether to their customers or suppliers or other interested persons, by display at places of business and on business letters and demands for payment.
Thus, under Clause 29, all businesses carried on under names other than the surnames or corporate names of their proprietors will be required to state on all business letters and written demands for payment of debts arising in the course of business, the name of each proprietor and an address at which service of any document will be accepted by or on behalf of each person so named. The same information will be required to be displayed prominently in any premises where the business is carried on and to which its customers have access. The proprietors of such businesses will also be required to ensure that the same information is made available, if requested, to any person with whom business is carried out otherwise than on the premises of the business concerned.
In response to representations made to the department, Clause 29 enables partnerships of more than 20 persons to omit all the partners' names provided the stationery states where a list of the partners' may be inspected. The Bill provides that businesses which seek to use names containing those words or expressions which will be subject to control if used by incorporated companies should obtain the Secretary of State's consent before using the name in question. Clause 30 enables the Secretary of State to sell or otherwise transfer any of the documents filed under the Registration of Business Names Act, or any information contained in them.
It is perhaps convenient if I refer briefly at this point to Clauses 50 to 53 in Part III. A prime function of the Registrar of Companies is to provide a public search service. As I mentioned earlier, demand for information relating to registered companies has grown considerably. It has only been possible to satisfy this increase in demand by the introduction, and very successful introduction, of a microfiche system from 1973 onwards. This microfiche record

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now comprises over 100 million photographs of documents delivered by companies and a number of the proposals in these clauses are designed to enable full advantage to be taken of this new technology. For example, Clause 53 permits the registrar to destroy the original documents comprising annual returns and accounts, once they have been reproduced in microfiche form, when they have been kept for over 10 years.
I turn now to Part III of the Bill. Clauses 35 to 41 deal with a problem which has arisen in the last year or so in relation to Section 56 of the 1948 Act. Following a judgment in the High Court in February 1980, representations were made to the Government that in the light of the judgment it appeared that a number of mergers and acquisitions in the past had been accounted for, in good faith, in a way which did not reflect the requirements of Section 56 as interpreted by the judgment. This raised questions as to the compilation of companies accounts and in some cases as to the propriety of distributions over many years in the past. So the sheer practical and commercial difficulties of restoring the position to what, in the light of the judgment, it should have been at the time and subsequently, were immense. Concern was also expressed that, in the light of the judgment, the requirements of Section 56 were inappropriate for certain classes of transaction.
It is against that background that, exceptionally, these clauses provide some retrospective relief from Section 56 as from the date of publication of the Bill, 4th February 1981, and certain prospective reliefs also as from that date. In the Government's view these reliefs should deal with most if not all of the cases in which some relief from Section 56 can be considered appropriate. However, the Government are fully aware that the application of the principles of Section 56 to merger situations is a matter of debate. Moreover, we have to take into account that relevant negotiations on the Seventh Directive are still in train. Here, therefore, as with the main accounting provisions in the Bill, the Government consider it appropriate to allow for developments on this subject. Clause 41, therefore, allows the Secretary of State to make regulations providing for further reliefs.
Clauses 43 to 47, with which it is appropriate to consider Clause 55, will contribute to the greater effectiveness of the companies inspection system. These proposals flow from the review of the inspection system put in hand when the Government took office. The clauses, while introducing no fundamental change in the system, are a necessary contribution to more rapid and more cost-effective investigations while still retaining the principles of fairness with which they must be conducted.
Clauses 43, 45 and 47 revise procedures relating to investigations. Clauses 44 and 46 extend the classes of persons who may be required to give evidence in the course of investigations. Clause 44 also gives inspectors power to examine directors' bank accounts where they have reason to believe that such accounts have been used in connection with certain offences under the Companies Acts, or with misconduct towards the company or its members. Clause 55 extends the circumstances in which, and the purposes for which,
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information obtained under Section 109 of the 1967 Act may be disclosed without the written authority of the company concerned. This will, for example, strengthen the powers available to fight organised fraud, as well as permit the provision of information to the police which might enable them to call off fruitless inquiries.
Coupled with the clauses that I have just described, Clauses 48 and 49 demonstrate the Government's commitment to search out and deal with company fraud and misbehaviour. Clause 48 simplifies and strengthens the existing provisions enabling persons to be disqualified from taking part in the management of companies. The clause will, for example, remove the present anomaly whereby for the more serious offences the maximum period of disqualification is less than the maximum period of imprisonment. Clause 49 extends the criminal remedy for fraudulent trading to situations other than windings-up. This will, for example, enable the department to present evidence of fraudulent trading in circumstances such as receivership. Other aspects of fraudulent trading are of course under consideration by the Insolvency Law Review Committee, under the chairmanship of Sir Kenneth Cork.
I have described the main provisions of this Bill. Much of it is technical; much of it is, I believe, noncontroversial. It contains much of real commercial benefit, particularly to small companies. These will be reinforced by clauses which the Government will be tabling very shortly to enable companies to purchase their own shares. The Government's Green Paper on this subject met with a very enthusiastic response and we are confident that legislation to remove the present company law restrictions will be widely welcomed.
Experience, correspondence received by Ministers, debates in your Lordships' House and in another place, all suggest that the scope for amending, reforming and extending company law is inexhaustible—certainly if we were to add together the candidates for action to which those with an interest in the subject, including certain noble Lords, attach importance. Some of these, in the Government's view, are quite inappropriate. The Companies Acts provide a framework of law in which management, employees and members can get on with the job of production, profit and enterprise. Some enthusiasts are inclined to forget that you cannot make people do that job more efficiently or sensibly by enacting more company law.
In any event, I am sure that your Lordships will agree that the Bill before us today is already a substantial Bill. The Government look forward to the constructive comment on what is in it, which I am confident will emerge as the Bill progresses. I very much hope that those of your Lordships who are tempted to bring us to account for sins of omission rather than commission will, before pressing us too hard, have regard to the already substantial scale and scope of the Bill. My Lords, I beg to move.
Moved, That the Bill be now read 2a—(Lord Trefgarne.)
4.35 p.m.
Lord Ponsonby of Shulbrede: My Lords, first, I should like to thank the noble Lord, Lord Trefgarne,

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for his almost marathon effort in introducing this Bill and for explaining the complexities of the Bill, particularly those in Part I, which are of a technical and complex nature. But I should tell him at the outset that we are not happy with this Bill. Although it is basically aimed at enacting the EEC Fourth Directive on Company Accounts, as the noble Lord said, it has tacked onto it a series of clauses dealing with other matters. Some of these clauses are controversial; some are highly controversial and widely opposed.
The Bill is also notable for the absence of clauses on other matters on which legislation is needed. I understand that the Government—as, indeed, the noble Lord said—intend to remedy some of these matters as the Bill goes through its Committee and Report stages. But other matters are likely to be omitted altogether, despite Government promises in the past to tighten up the law in certain areas.
From what the noble Lord has said, it is clear that this Bill—as with other Bills introduced by the Government during this Session and the last Session—has come to the House in a fairly raw state in certain respects, and it will need considerable time and attention by your Lordships in order to get it into a fully-fledged state. I can tell your Lordships that, if this were an elected House of Parliament, we should today be registering our vote against the Second Reading.
At the outset of my comments on the Bill, I should like to apologise for the absence today of both my noble friends Lord Bruce of Donington and Lord Wedderburn of Charlton, who, for various reasons, are unable to be with us. I know that they have much interest in the content of this Bill and will be fully involved in the Committee and Report stages.
The noble Lord, Lord Trefgarne, explained the Bill in great detail and, first, I should like to refer to a number of retrograde proposals in the Bill. These include the virtual cessation of the process of screening company names, the abolition of the Business Names Registry, and the exemptions regarding the delivery of accounts to certain definitions of companies. My noble friend Lord Mishcon will be dealing with some of these proposals, so I should like to concentrate my remarks on the proposals to abolish the Business Names Registry.
The possibility of abolishing the Business Names Registry was first put forward by the previous Government in 1976, but was dropped in May 1977 when the then Parliamentary Under-Secretary of State, in reply to a Parliamentary Question, said that the Government had been persuaded by the arguments of those consulted to continue the register and promised that amending legislation would be introduced to enable fees to be charged to cover fully its costs of administration. The registry was first established in 1916 to ensure that aliens divulged their true identiy behind the name under which they were trading at that time. A provision in that Act was that fees to be paid to the registrar under it did not exceed the sum of five shillings for the registration of any one statement. The fees have been increased once since then to £1. I have been trying to ascertain what the value of a five shilling registration fee would be in current terms. I think it would be around £7·50.
Curiously, the Company Law Committee, under the chairmanship of Lord Jenkins, in June 1962 recommended
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a substantial increase in the fees charged to the public for the use of the Registry of Business Names and that a small annual registration fee should be imposed. This committee also recommended that the registry should be reorganised so as to provide more reliable information, and that more publicity should be given to the statutory requirements imposed by the 1916 Act, and that these should be more vigorously enforced. Ideally, these are the proposals which we should be discussing now and not the ones which the Government have placed in the Bill.
Your Lordships may ask why we need a registry. It provides a useful source of information for potential creditors, for those proposing to register new names, and for those who wish to avoid the risk of a passing off action. It is essential for consumers to have adequate information about the identity and status of those who provide them with goods and services. Consumers should be able to do business on the basis of reasonable trust, and it would be in no one's interest if consumers had to make a point of obtaining at the outset of a deal the names and addresses of the proprietors of a trading firm. The lack of trust that this process would imply would be wholly detrimental. It is when things go wrong, when a complaint or dispute arises, that it becomes really important for consumers to be able to find out the precise identity of the trader.
Why should the Government want to abolish the registry? The Government have suggested, although the noble Lord, Lord Trefgarne, said that this was not the primary reason, the deficit of some £350,000 arising out of the operation of the registry. This deficit is entirely due to the absurdly low level of fees charged at the present time, and it could be eliminated at a stroke if the fees were increased to £5 for a registration and £1 for a search. I cannot see that there would be any objection to fees of that size from small businesses. Indeed, there is great objection to the proposal to abolish the registry from small businesses.
The disclosure of names provisions in the Bill viewed as a whole are quite inadequate to protect potential creditors. Although we support the requirements for business letters, the names of proprietors of the firm, and that a notice to this effect should be displayed in a prominent place on the premises, these provisions should be complementary to and not in substitution for an effective system of the registration of business names. As a general comment it can be said that as presently drafted the proposals are quite inadequate particularly when a consumer needs to find out about a trader after things have gone wrong.
It can also be asked: who is going to police the new arrangements? How are those who evade them going to be traced? The existing law, as the noble Lord pointed out, does not have a very high level of compliance. However, I understand that the level of compliance is now approximately 80 per cent., up from some 50 per cent. a few years ago, since such time as the Department of Trade has had the assistance of the banking community in requiring the production of certificates of registration whenever banking facilities were being required by a firm. This substantial increase in the level of compliance over the last few years is something one would have thought would have persuaded the Government to put their shoulder towards improving the present registry rather than

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doing away with it. I must confess that it seems that taken on all counts this proposal is primarily designed to reduce the size of the civil service rather than to put forward an improved system.
Another major objection should be taken to Clause 30, which provides for the disposal of the records kept in the registry. Quite apart from the fact that there is no obligation imposed on the transferee to disclose information transferred on the request of a member of the public, there is a fundamental objection to a service of this kind being hived off to private enterprise, which presumably is the purpose of this particular clause.
May I now pass on from the question of business names. I said in my opening remarks that the Bill is deficient as it fails to deal with a number of problems. I take as one of the problems it fails to deal with the Consolidated Goldfields type of situation, where there are secret purchases through nominee holdings of shares in unsuspecting companies. This is left out despite a plea by the Stock Exchange for action, and despite the fact that the Government have previously said that they would look at ways of tightening up the law.
There is no provision for an employment statement within the scope of Section 18 of the 1967 Act, and in particular for divulging employment practices relating to disabled persons. Under the terms of the Employment Protection Act we have seen the growth of an obligation upon companies to give information, for example, for the purposes of collective bargaining. In other countries much more general information is required, and I understand that in France, as from 1984 onwards, employees can demand a social balance sheet from the company. It would seem that this Bill should be used for more information to be provided.
Another omission is that the Bill does not deal with the problem of the liability of a holding company for a defaulting subsidiary. The basis of current company law establishes that a holding company and its subsidiaries must be regarded as separate entities. That can be a difficult concept when translated into practice. It ignores the fact that a group of companies is often a single economic unit, and that profits can be transferred from one company to another. It can lead to misleading information being given and to creditors in a subsidiary being effectively defrauded. The Government have offered no solution to that problem, preferring to rely, as the Minister said, on the argument that the Court Committee on Insolvency had not yet finally reported. That argument is somewhat flawed by the Government having introduced proposals by consultative document to emasculate the Official Receiver's services in advance of the Court Committee report and in known defiance of the committee's opposition to the proposals.
The other omission from the Bill are provisions dealing with the right of companies to buy their own shares. That would give more flexibility to small companies requiring to raise capital and could help investment trusts. I understand the Government intend to introduce amendments on that matter during later stages of the Bill, or perhaps it would be truer to say I understand the Government are arranging for amendments to be introduced. I have dealt with
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some aspects of this very complex Bill. I know the House will want to scrutinise the measure in great detail in Committee because the Bill as it stands is not as satisfactory as it might be.
4.52 p.m.
Lord Lloyd of Kilgerran: My Lords, I join the noble Lord, Lord Ponsonby, in congratulating the Minister on the comprehensive and lucid way in which he introduced this difficult Bill. I am looking forward to the maiden speech of the noble Lord, Lord Noel-Buxton, who has a family name which is extremely well-known in the history of politics and industry over the last century.
I am sure all noble Lords will agree with me on one proposition; namely, that it is essential sometimes to be very blunt about the law. Company law in this country is now so smudged and fudged that it is appallingly difficult for the average practitioner to see his way through the jungle of company laws, let alone the problems employees of companies have in deciding what to do about their actions. This Government have introduced rapidly a series of Bills making the difficulties of practitioners throughout the country a real disgrace and a profound hindrance and expense to commercial activities.
Yesterday I had the privilege of hearing the brilliant speech made by the Prime Minister to a luncheon given by the Parliamentary Scientific Committee in which she emphasised, as was emphasised in this House this afternoon, the desirability of innovation and encouraging the growth of new companies. The cost of dealing competently with the requirements under company law is now often prohibitive to the commercial development of new companies, particularly smaller ones.
At one time there was a civilised tradition in company law; major company Bills came only every 20 years, followed by a period of decent silence. Thus we had the 1929 Act, followed by the 1947 Act, which were consolidated in the 1948 Act and which remains the basic statute to this day. The complexity of present statute law is apparent from Clause 62 of this Bill, which lists eight Acts all or part of which, together with this measure when enacted, will cumulatively constitute the statute law on companies in Great Britain. Then in the schedules one finds other references to company law measures and business names Acts which are to be repealed in whole or in part. Then this Bill itself contains, if my arithmetic is correct, 17 amendments to the Companies Act 1980. Not the least plea of any practitioner on the subject must now be for a consolidating Act at the earliest possible opportunity, and I hope the Government will turn their mind to that immediately following the enactment of this measure.
This Bill, like its predecessor—now the Companies Act 1980—is largely spurred on by a directive of the European Economic Community; just as Parts I to III of the 1980 Act gave legislative effect to the EEC Second Directive on Company Law, so Part I of this Bill gives effect to the fourth such directive, particularly on company accounts. I welcome Clauses 5 to 10 of the Bill, which include, as the Minister indicated, an innovation in that at last a statute law recognises that there are small and medium-sized companies which have to be treated differently from the very large multinational type of company.

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These clauses include some accounting exemptions. They are intended, as the Minister explained, to reduce the amount of information which small companies must at present include in their accounts for filing with the Registrar of Companies. At present, an intolerable burden is placed on small companies in that regard. In my view, the burden of paper work has not been cut far enough by this measure, particularly in relation to the unnecessarily stringent rules relating to the auditing of small companies.
I shall also be considering amendments later asking the Government to relax the far too stringent limitations of Section 161 of the Companies Act 1980 in respect of the auditing of small and medium-sized companies. There are many professional bodies of high standing which should not be disqualified from acting as auditors for small and medium-sized companies now that those categories of companies have been recognised, and noble Lords may remember that I put forward a number of amendments to the Companies Act 1980 on that point.
As with the 1980 Act and as the noble Lord, Lord Ponsonby, indicated, the Government have taken the opportunity of dealing with a number of other matters apart from the harmonisation of laws with the EEC directive. My criticism of the Bill concerns those other parts in relation both to their contents and omissions. Part II of the Bill is innocently entitled "Company Names and Business Names ". In fact, it disguises yet another piece of alleged cost-saving by the Government which in my view will be detrimental to the wider interests of United Kingdom business. The noble Lord, Lord Ponsonby, elaborated on that point and I do not propose to deal with it in detail. But in my experience as a member of the Patent Bar, the Registry of Business Names was a very useful source of information for people doing business in various fields.
The second main objection we have to Part II, apart from the question of the closing of the Registry of Business Names, is the abolition of the present vetting procedures for new names of companies. This really is a serious matter. It is extremely undesirable and will almost inevitably lead to delays, chaos and confusion where companies adopt names which are extremely similar, though not quite the same, as those of existing companies.
In particular I would ask the Minister once again to take some account of the representations that have been made on behalf of the Institute of Trade Mark Agents, especially submissions that I believe have been made by the president, Mr. Havelock, indicating from a practical point of view the serious difficulties that could arise, notably in relation to the development of new companies.
I come now to Part III of the Bill. This is discreetly entitled "Miscellaneous and Supplemental", and it deals, first, with the difficulties on share premium accounts which seem to have arisen from the recent case of Shearer v. Bercain. These provisions are to be welcomed. I note with interest a significant and helpful administrative power that the Government have introduced in Clause 41. I ask noble Lords to note this interesting discretionary power that is to be given to the Secretary of State. Clause 41 empowers the Secretary of State, by statutory instrument, in effect to give relief in any situation which has not been
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anticipated by the substantive provisions of Clauses 35 to 40. I shall allude to the precedent contained in Clause 41 when later I refer to the abuses which arise from what are known euphemistically as "concert parties".
The remainder of the Bill deals with a number of minor matters on which I do not think I need detain your Lordships further, save to say once again that, not surprisingly, there are 17 minor amendments to the 1980 Act. I should perhaps apologise at this stage because I shall be troubling your Lordships later with an additional amendment to the 1980 Act on the point that the issue of shares under employee share option schemes is outside the ambit not only of the requirement to seek shareholders' authority under Section 14 of the 1980 Act, but also of the pre-emption provisions contained in Sections 17 and 18.
I now turn, as I earlier threatened, to matters omitted from the Bill. First, we do not yet have—although the noble Lord the Minister has given an indication in this regard—the Government's proposals for enabling a company to purchase its own shares. Such proposals flow from the Green Paper on this subject published in June of last year, and we shall look forward to seeing them. I should like to make a plea that they be available in good time for us to be able to consider them carefully before the Committee stage.
I turn next to another major omission from the Bill. There has been considerable concern recently about what are known as "concert parties". As your Lordships will be aware, it is at present required that any person or company whose equity shareholding in any listed company rises to 5 per cent. or more must notify the company concerned. However there is no statutory provision applying that limit to the aggregate holdings of persons who, while not being "connected" in a narrow, legalistic sense, are nevertheless partners in an enterprise to build up a strategic stake in a company, with a view to carrying out one of those "dawn raids" which we have seen develop over the last year. That means the sudden buying of a large quantity of shares, as happened in the case of Consolidated Gold Fields, as referred to by the noble Lord, Lord Ponsonby of Shulbrede, and in the Dunlop Holdings instance.
I recognise that, as the noble Lord the Minister indicated, the Stock Exchange is concerned to end the particular abuses of "dawn raids". Indeed last December the Council for the Securities Industry published formal rules on the matter. Nevertheless, the City of London seems almost unanimous in saying that legislation is required to extend the disclosure provisions to "concert parties", being parties acting with a common purpose to build up shareholdings above the 5 per cent. disclosure threshold while ensuring that no single individual, by crossing that threshold, is caught by the present disclosure provisions.
The Government may seek to excuse their failure to include appropriate provisions in this Bill by the usual argument about parliamentary time. Therefore, it might be helpful if I now indicate that at the Committee stage we shall be moving a new clause on this matter. The amendment will not contain detailed rules on disclosure as applied to "concert parties", because I recognise that that would be difficult. The

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new clause would give the Secretary of State power, by statutory instrument, to deal with the problem, very much in the way that Clause 41 (to which I referred earlier) gives power to the Secretary of State to deal with difficulties arising over share premium accounts.
I should also like to draw attention to what I understand will be interesting amendments, which we shall support, to establish a class of companies in effect owned only by those who work in them. The aim of such amendments would be to make available a simple form of business organisation, sometimes known as co-operative schemes, or job ownership companies. These organisations can have several important advantages. They would avoid in some areas the traditional, and often crippling, confrontation between capital and labour. They could also provide a vehicle for the conversion of family firms to worker ownership, as well as enabling former employees with redundancy money more readily to pool their resources in new enterprises.
I thought it appropriate at this stage to draw to the attention of the Government what we consider to be important omissions from the Bill, and, finally, I should like to say that my remarks should not be taken as in any way approving of the way in which the Government—and, to be fair, previous Governments of all parties—have shown themselves unable, and I suspect unwilling, to effect any radical change in company law to bring it into line with the commercial requirements of the last quarter of the 20th century. Included in such reforms we should of course wish to see a massive extension of employee participation in the running of their companies. However my criticisms of the Bill do not I think justify my recommending my colleagues to vote against it on Second Reading, although we reserve our position to vote against it when it comes back from Committee, depending in particular on the question of whether the Government are prepared to meet the very real concern that exists on the matter of company names and business names.
5.8 p.m.
Lord Robertson of Oakridge: My Lords, I, too, look forward with interest to the maiden speech of the noble Lord, Lord Noel-Buxton. In his very clear introduction of the Bill the noble Lord, Lord Trefgarne, drew attention to the length of the Bill and to the undesirability of making further additions to it; and I appreciate that. However, I would crave the indulgence of your Lordships for a few minutes while I refer to one matter that has already been raised by the noble Lords, Lord Ponsonby of Shulbrede and Lord Lloyd of Kilgerran. I had hoped to see provisions to deal with the problems and the uncertainties that can be caused to companies when strategic stakes are built up in their share capital, in particular by parties acting in concert, when the company is not kept fully informed as to what is going on. As a stockbroker, I have a special interest in this matter, since uncertainties of this kind lead to disorderly markets and make it harder for me to advise my clients and to act for them to their best advantage.
I know that Her Majesty's Government are concerned about the matter, for in their consultative
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document The Disclosure of Interests in Shares, published last year, it was stated:
"The policy underlining the present provisions of company law is that a company, its members and the public at large should be entitled to be informed promptly of the acquisition of a significant holding in its voting shares …",
and it goes on:
"… in order that existing members may protect their interests and that the conduct of the affairs of the company is not prejudiced by uncertainty over those who may be in a position to influence or control the company".
Your Lordships may wish to be reminded of the two main legal provisions in this area. First, as the noble Lord, Lord Lloyd of Kilgerran, mentioned, there is the requirement under Section 33 of the 1967 Companies Act, as amended by the 1976 Act, for anyone who buys a stake of 5 per cent. or more in a company's share capital to declare himself publicly within five business days. Curiously—and I shall return to this point later—he does not have to say in whose name or names the shares are to be registered. The registrar may well therefore be unable to identify the holding on his share register.
The second provision is that under Section 27 of the 1976 Act a company may require any shareholder who is holding shares on behalf of other persons—for example, a nominee company—to declare within a reasonable time the names of the beneficial owners. What may not be fully realised, even by those who perhaps ought to know, is that this provision can be applied to overseas shareholders as well as to United Kingdom shareholders, and the sanctions apply to them equally.
The problem of the build-up of strategic stakes is understandably the subject of considerable press comment, especially since the acquisition by South African interests of a large stake in Consolidated Gold Fields last year. One of the unsatisfactory aspects of that affair was that it demonstrated that it was possible, in a case where apparently no 5 per cent. stake had built up, for a number of parties acting in concert to acquire shares amounting in all to some 12 per cent. without the company's knowledge; and more recently, of course, there has been the disconcerting build up of large stakes in Dunlop.
I understand that these problems have been the subject of discussions among the Department of Trade, the City Panel of Takeovers and Mergers and the Stock Exchange, but that it has not yet been possible to frame legislation. In the first place, there has been difficulty in producing a satisfactory definition to cover "parties acting, in association or concert"; and, secondly, there are obvious difficulties in enforcement—and, one would emphasise, prompt enforcement, because time is of the essence in these matters, especially in relation to persons outside this country.
Against this one would hope that the new Talisman computerised settlement system should facilitate the implementation of at least any new laws or administrative procedures. It would be helpful if the Minister were able to assure the House that discussions were continuing with the relevant authorities with a view to framing legislation and to tightening up administrative procedures where possible. Since clearly it may be some time before the next Companies Bill, I feel it is important that any legislation should be drawn up in time to be incorporated in this Bill before it completes

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its passage through your Lordships' House, and I believe that this is too important a matter for us merely to say that the Bill is already too long. I look forward with interest to seeing the proposed amendment on this subject by the noble Lord, Lord Lloyd of Kilgerran.
Meanwhile, there is one minor change in the law that could possibly be made to reduce uncertainty in this area, and this would be to require the buyer of a stake of 5 per cent. or more, not only to declare that he has acquired such a shareholding but also to give the details of how the shares are to be registered. As a registrar would then be able to identify holdings of 5 per cent. or more on the share register (rather than as at present, when they can be hidden, as it were, in perhaps several nominee companies) a company would be able to keep a closer watch on strategic shareholdings. My Lords, this is a question of detail, to which I may return at Committee stage.
5.15 p.m.
Lord Noel-Buxton: My Lords, I rise to address your Lordships for the first time, and in adhering to the traditions of the House I would crave your Lordships' indulgence. I understand that when making your maiden speech you should not in fact speak on something which is too close to your heart. Although I am in fact a solicitor in private practice dealing largely with company and commercial matters, I cannot say that company law is that close to my heart. It is something that I must, as it were, live with and know something about in order to advise clients.
Following on, I think, from what the noble Lord, Lord Lloyd of Kilgerran, was saying, "Companies Bills", somebody once said, "are no longer as rare as coronations". The earliest Companies Act on the statute book, if we ignore the 1947 Act, or what is left of it, is the 1948 Act; 19 years later there comes the 1967 Act; then, nine years later, there is the 1976 Act; and then, four years later, there is the 1980 Act. Now we have the Companies (No. 2) Bill 1981. I think it is No. 2 because another Bill is emanating from another place. Goodness knows what it says; nobody seems to know. The hard-pressed company lawyer is beginning to have to gear himself up to new legislation nearly as highly as his tax specialist colleagues with annual (if not more frequent) Finance Acts. I appreciate the need to keep company law up to date. I also recognise the United Kingdom's obligation to implement Community directives, in this case the Fourth Directive on Company Accounts. However, as has been said, the Bill before your Lordships does not deal only with company accounts.
What concerns me is that what will, no doubt, in due course become the Companies Acts 1948 to 1981 will, even more so than now, be a principal Act, the 1948 Act, substantially altered and amended by subsequent Acts which, taken as a whole, is or are difficult to follow, apply and give advice upon. An additional difficulty is that considerations of company law often run counter, in particular, to considerations of tax law, never mind employment law. A client comes to me with reasoned and reasonable proposals for a commercial transaction. Usually the proposals have to be modified against the background of what can and cannot be done in compliance with company law, on the one hand, and, on the other hand, particularly,
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of what can best be done to pay as little tax as possible. The factors to be considered from a tax point of view often conflict with those from a company law point of view. The form of the resultant transaction often appears strained and artificial, and often is strained and artificial.
With regard to company law, I, too, joining with other noble Lords, should like to see the enactment of a consolidating Companies Bill. Such a Bill, in my view, should not simply consolidate extant provisions of the current statutes, but should also seek, by appropriate amendment and redrafting, to bring company law even more up-to-date and more closely in line with the taxing and other relevant statutes enacted years after 1948.
I would mention one section in particular of the Companies Act 1948—the dreaded Section 54—which prohibits the provision of financial assistance by a company in connection with the purchase of or subscription for its shares or the shares of its holding company. I should dearly like to see this section looked at again very closely in the light of the present day and current practice. This may have been done or may now be being done. After all, the Government will be putting down amendments to enable a company to purchase its own shares. I shall study these amendments with great interest.
In any event, I should like to record another plea for consolidation. I am confident that the vast majority of practitioners—never mind others—would welcome consolidation with open arms. I am of course well aware of the constraints of time placed on Parliament and on the parliamentary draftsmen. Even pure consolidation of the Companies Acts will prove no mean task. It will take a great deal of time, I suspect.
I am no accountant (even if I am a solicitor) and I do not think that I can therefore usefully comment on Part I of the Bill. Nor do I propose to say anything about Part III. I would however note that with regard to Part I the concessions for small and medium-sized companies and accounts relate to filing with the registrar of companies. The right of members and debenture holders to receive complete sets of audited accounts will not be affected except in the case of dormant companies—a useful exception I think.
With regard to Part II of the Bill, I was at first against the abolition of the Register of Business Names. Now having thought more, I am in favour of abolition in the circumstances contemplated by the Bill before your Lordships. I am convinced that businessmen and others have had scant regard to the Register of Business Names. Even if a businessman bothered to furnish particulars under the Act of 1916—which, after all, was passed in fear of the enemy trading in the United Kingdom under British names—he did not necessarily bother to keep the particulars filed up-to-date.
Further, what I think can be described as an inadequacy of the legislation is that the Registrar of Companies is not bound—and, no doubt, does not—to have regard to any name on the Register of Business Names when approving or refusing a proposed name for a company. The abolition of the Register of Business Names will mean, of course, that there will be no central index of business names under which

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individuals, partnerships or unincorporated associations carry on business.
It is proposed however that if a person carries on business in a name other than his own (and I use the word "person" almost in a taxing statute way) his name must be stated, together with an address for service, on all business letters and written demands for payment of debts. There is also a proposed requirement for display in premises where the business is carried on. I am of the view that these proposals are indeed an acceptable alternative to the Register of Business Names, having regard to the fact that the register has to a large extent been disregarded. Unless substantial funds are poured into the Registry, there is no hope that it will become an accurate and really useful record of business names in use from time to time and the users of such names. I would however take issue on one point. Why do the proposed requirements extend only to
"business letters and written demands for payments of debts"?
That is Clause 29. Should not at least the wording of Section 201(1) of the Companies Act 1948 be incorporated? Although this wording is surely out of date, should not the requirements extend also to
"trade catalogues, trade circulars and showcards"?
Personally, I should like to see both Clause 29 and Section 201(1) extended to all promotional material so far as practicable, and I should like to see the words used brought up to date and expanded.
Turning now to companies and their names, I see at Clause 22 of the Bill that certain things are proposed to be disregarded in determining whether one name is the same as another. This seems fine; but I was taught that, for example, "John Smith & Co. Limited" was a different company from "John Smith and Company Limited". It had to be, it had a different name. I hope it will follow that it will no longer be necessary formally to pass a special resolution to change the name of a company from "John Smith & Co. Limited" to "John Smith and Company Limited". I am pleased to see noble Lords on the Government Front Bench nodding. I once had to insist that a public company client had to go through all the formalities of board meetings, an extraordinary general meeting, and so on, just to add a comma to its name.
What concerns me somewhat however is that the Secretary of State's discretion with regard to refusal of names or discretion to change a name will not, it is proposed, extend to names which are colourable imitations of names already on the register and which are likely to cause confusion. The Government have taken the view, as I understand it, that similar names, even colourable imitations likely to confuse, should not be the concern of the Secretary of State (except of course such names as "Royal", for example) or the Registrar of Companies. The parties aggrieved will have to rely on civil proceedings in passing off, trade mark or copyright infringement, or whatever. After all, a main object of the Bill is to reduce the functions of the Registrar of Companies.
I acknowledge two advantages in particular, however, of the proposal that a company should be registered (subject to certain considerations) in a name not already on the register even if the proposed name is similar to
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one on the register. First, new companies or changes of name of companies should be registered more speedily, and applicants should be more confident that the chosen name will be accepted. It is proposed that there will be only one search, not one for preliminary approval and a second on filing of the relevant documents. Secondly, the very real difficulty currently experienced on finding an acceptable and desirable name to the applicant for a company should be alleviated. My Lords, I give general support to the Bill.
5.29 p.m.
Lord Boyd-Carpenter: My Lords, I am very happy that those mysterious forces that shape our order of speaking have produced a result which gives me the first opportunity of offering the congratulations which I know the whole House thinks are very merited to my noble friend Lord Noel-Buxton on a really very remarkable maiden speech. It is sometimes felt that to be, as he is, the bearer of a most distinguished name and the heir to a very considerable tradition, is something of a handicap on these occasions because so much is expected of one. Be that as it may, my noble friend has discharged the difficult performance of a maiden speech in such circumstances with such skill and authority that he can be assured it is one of those maiden speeches which will be very long remembered. He spoke with an expert grasp of a highly technical and very difficult subject, with complete authority and with what, if he will allow me to say so, is in his profession less frequent—that is, with very great clarity. The House certainly is indebted to him for this speech and I know that it hopes to be indebted to him for many more speeches in the near future.
I thought at the beginning of this debate that there was something of a contrast between the admirable speech with which my noble friend Lord Trefgarne presented this Bill and the physical presentation of the Bill itself. My noble friend's opening, if I may say so without presumption, was perfect in that he covered the whole area with great clarity. But the actual physical handling of this Bill I do not think is being done in a way which is fair to the House. It was accompanied by no fewer than three erratum slips covering five of its clauses and the Title, and even one of those erratum slips has a patent error in it; namely, an idiosyncratic rendering of the word "read". If one may make a comment on this, it is quite obvious that a proof reader in my noble friend's department finds that a difficult word.
It is now to be followed, we are told, by a string of further clauses on the extremely important issue of the right of companies to purchase their own shares. I wonder whether my noble friend's department understands—I am sure that my noble friend does—the problems which these methods of presentation bring, particularly in respect of a Bill of this character, to those people outside this House who have a very proper interest in this kind of legislation. As my noble friend knows, I have certain industrial and commercial interests and, like most noble Lords so placed, I have wished to consult those with whom I work and who have, like the noble Lord, Lord Noel-Buxton, a direct concern with the handling of these matters. This is made extraordinarily difficult if we

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are presented on Second Reading with a Bill followed by a string of erratum slips, then to be followed after Second Reading by a string of amendments.
No doubt this kind of thing could be justified if this were a matter of great urgency. My noble friend did not argue (and I am sure he would not do so because he never argues a bad point, at least not very often and only when it is in the departmental brief) that there is any urgency about this matter. I can assure him that, certainly in the industrial and commercial community, there is no excessive craving at the moment for further company legislation. We really have had quite a lot of it. As the noble Lord, Lord Noel-Buxton, reminded us, we have had the 1948 Companies Act, the 1967 Companies Act, the 1976 Companies Act, the 1980 Companies Act, and now we shall have at least two in 1981. It is perhaps a little sinister that the interval between them appears to be diminishing with rather alarming rapidity.
For those who have to handle these things, whether professionally like my noble friend or in connection with the administration of companies, this continual flow of alteration in the relevant legislation imposes a very real burden. I need hardly say to the House that those who are running companies at this moment have quite enough problems as it is in maintaining the viability and success of their companies, without having a steady flow of additional work of this kind.
This is made the worse by the method of legislation used in this Bill. If your Lordships look at the text of the Bill you will see it very largely consists of amendments to parts of clauses in earlier legislation. Take, for example, Clause 3, which simply puts a number of additional bits into Clause 4 of the 1947 Act. That method of legislation means that one has to piece the whole thing together to try to get any idea of what is the law that one is assumed to know.
I would remind your Lordships that all of us are presumed to know the law—except, as I understand it, the Court of Appeal, which can be put right by this House. This really does make things difficult, and I support strongly the plea made by my noble friend Lord Noel-Buxton for very early consolidation. This is not just the normal plea of the ordinary citizen for virtual simplicity in the law; it is a plea by those engaged in the economic life of this country to be given an opportunity to operate under a law which can be found clearly and in one place.
I wonder whether my noble friend Lord Lyell, when he replies, will tell us why it was not possible in these cases to repeal the clauses of earlier Acts and replace them fully amended, or why, if that were not possible, it was not possible to adopt the device sometimes used in statutory instruments of inserting what are called Keeling schedules—that is to say, schedules setting out an earlier Act, as it will be amended when this measure is passed. Anything of that kind would really be of the very greatest assistance.
I must say also that I had a great deal of sympathy with the noble Lord, Lord Ponsonby of Shulbrede, when he said that this Bill was presented in a raw state. There is surely something to be said, particularly with new clauses coming, for its being withdrawn and reintroduced, properly corrected where the erratum slips apply, and with the promised new clauses inserted. It would make for a very much more effective way of
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debating what I venture to suggest to the House, unless my noble friend contradicts me, is not a particularly urgent measure.
I want only to refer now to two other matters, because this kind of Bill does not lend itself to very effective Second Reading debate. That is because, despite what my noble friend Lord Trefgarne said, this Bill has no theme. It is a series of provisions—some very good, some very bad, some doubtful and not very closely related to each other—and it recalls to me the observation made by the late Sir Winston Churchill, who was once confronted at his dinner table with a pudding which he looked at with some distaste, and then said, "I do not like this pudding; it has no theme". I suggest that if we substitute this measure for that pudding, that observation would apply.
May I come, on the individual items, straight away to what seems to me a very unfortunate aspect of the measure, which was in fact referred to by my noble friend Lord Noel-Buxton: that is, the provisions of Clause 22 in respect of the Registry of Companies. Section 17 of the Act of 1948 provides that registration should be refused if there is a real risk, by reason of similarity, of confusion between the company sought to be registered and a company already on the register, and I have no reason to believe that that provision has worked badly. As I read the Bill, however, Section 17 of the 1948 Act is repealed and in lieu there is a provision that in order for registration to be refused the new name must be the same as the old.
I should be very grateful if my noble friend Lord Lyell would explain a little more fully how that works. If it is really the same—and I think that the words used in the statute have to be construed fairly strictly—does it mean that if I want to register a company as "Fortnam and Mason" or "Marks and Spence", I shall be able so to do without registration being refused because in neither case are they the same? Registrations of that kind would obviously be caught by Section 17 of the 1948 Act. Will they be caught by this provision if it goes unamended into the statute? I should be most grateful for a little elucidation on that.
I must admit that I am not at all happy either, although I am a little reassured by my noble friend Lord Noel-Buxton, by the provision dispensing with the Registry of Business Names in Clause 29. As my noble friend Lord Trefgarne must know very well, the consumer organisations in this country are very alarmed about this. Noble Lords are receiving very frequent representations on this and I think that some reassurance is required if this clause is to stand in its present form.
The only other specific point about which I feel very considerable doubt arises on Clause 18, which once again inserts substantially new provisions—in this case into Section 454 of the 1948 Act—instead of provisions standing on their own. This clause seems to give the Secretary of State very considerable powers to be exercised by statutory instrument. As I read it, it gives him power to add new classes of documents, both to those which must accompany company accounts and those which must be filed with the registrar; and, also in a following subsection, similarly by regulations, it gives the right to impose an obligation to add further items to those documents.
Those seem very sweeping powers indeed to be

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exercised by regulation. They are the kind of powers which have normally had to be sought by legislation. Although I have complete confidence, at the moment, that my noble friend and his Secretary of State would not abuse those powers, when legislating and conferring powers on one of Her Majesty's Ministers we always have to think that on some other day there may be some other Minister of a less benign and kindly nature. These are powers which, in all seriousness, a Government of extreme Left-wing tendencies could use very brutally indeed to upset the working of the free enterprise system.
I wonder whether, in the light of that consideration, my noble friend has some doubts and hesitations as to whether it is wise to take these powers in this measure. The history of tyranny throughout the ages is that oppressive Governments begin by, happily, operating the powers which have been taken by moderate Governments at an earlier stage, and which have been granted because everyone has known that those nice, kind, moderate Governments would not abuse them. But it is the function of Parliament, and perhaps particularly of this House, to scrutinise very carefully the details of legislation to make quite sure that we are holding the balance right—and it is, of course, the balance about which one can argue—between the powers of Ministers and the powers of the Legislature. So I ask my noble friend, during the later stages of this measure, to consider very carefully whether it is really wise to take such sweeping powers as Clause 18 would give him.
I have ventured to indicate to your Lordships a certain lack of excessive enthusiasm for this measure. I can assure my noble friend that in the areas of our life in which this legislation will have a direct effect there is no very great demand and no undue craving for companies legislation. We really have had a good deal of it. Therefore, if further changes are to be made there is a very heavy onus on the Government that seeks to make them to prove to the satisfaction of all concerned that there really is a need to make those changes.
Of course, I know about the European directive and I know, too, that the Government are not following it with any degree of completeness; on the contrary, they are making fewer relaxations, particularly for middle-size companies, than the directive would permit. But I ask my noble friend, in all seriousness, to be very careful of what further additional burdens, by way of the assimilation and application of new companies legislation, he imposes on an economy which really has quite enough to do at present in actually running its business.
5.46 p.m.
Baroness Elliot of Harwood: My Lords, I speak in this debate with some diffidence, but I have been, and still am, chairman of a fairly large agricultural auction market and have had 20 or more years' experience of that. But I speak today more as the first chairman of the first Consumer Council. I have had a long association with consumer organisations, and it is really on their behalf that I should like to make a very few remarks in this debate.
I should like to support all that my noble friend Lord Boyd-Carpenter has said. He is very wise, he has had
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great experience in another place, and he has had great experience of legislation as a Minister. I entirely agree with all he has said about the way in which the Bill has been constructed, and I think that the Government should pay some very serious attention to what he said with regard to clauses which are not available to us at the Second Reading. The Second Reading of a Bill is the one opportunity for everybody to say in a general way what they think about the Bill. If three or four clauses are still to come, that is not a very good augury for the Bill.
Also, I should like to say that in your Lordships' House we very often have Bills which we do not treat as party political Bills, and this could qualify as one of them. I certainly agreed with all that the noble Lord, Lord Ponsonby of Shulbrede, said at the beginning of the debate, and if I say anything which repeats what he said it is only because I think that many of his remarks were very wise and very sensible. So on this occasion we are dealing with a Bill which we can treat on a practical basis, rather than on a party political basis.
I shall speak on only two matters, the first of which is the question of abolishing the Registry of Companies. I speak as—
Lord Mishcon: My Lords, I interrupt the noble Baroness for only one reason. The House always delights to hear her and she has just mentioned the abolition of the Registry of Companies. I know that she meant the Registry of Business Names and I do not want the House to misunderstand her.
Baroness Elliot of Harwood: I apologise, my Lords. The Registry of Business Names is what I meant. This proposal has caused alarm and despondency among many consumer organisations. The National Consumer Council, which is the consumer organisation that succeeded the council of which I was chairman, is a Government body which took the place of the first Consumer Council; the Consumers' Association, which has a large membership and of which I have the honour to be a vice-president, and which publishes admirable documents such as Which?, and the National Federation of Consumer Groups, representing voluntary consumer groups all over the country, are all very much alarmed at the abolition of the Registry of Business Names. The principal objection of these groups is to the restriction of the powers of the Department of Trade, which now prevent companies from registering under misleading or unsuitable names. This is extremely important, because it is something which should not be done. A company name would be refused if it was too like the name of an existing company or if it described the company as a large trading company when in fact it was a one-man show. This point has been mentioned by other Members of your Lordships' House in this debate. To prevent or to restrict the Department of Trade in controlling these names is very wrong.
The Government argue that to leave the powers as they are requires so much work and requires so many people to be engaged upon registration. That is why they want to economise and to have fewer people. However, I believe that the CBI and other organisations agree with the noble Lord, Lord Ponsonby of Shulbrede,

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that they should pay for the registration. This would mean only a very small sum of money and would make this into a perfectly economic proposition. Nobody wants to make money out of registration. On the other hand, why should it not be paid for by the people who apply for registration? Therefore it would be perfectly fair to invite companies which apply for registration to pay for the services which they require from the Department of Trade.
Schedule 46 to the Companies Act 1967 would enable the Secretary of State to intervene if a company name was misleading or would mislead the public. If the company disagreed, it would have to argue its case in the law courts. This would be very costly and would not have any advantage over the simple method of registration which exists today. Therefore, as both sides of the House are deeply concerned about this matter, I hope that the Government will consider what we are proposing.
May I say one word about unincorporated bodies? At present, unincorporated bodies have to register their trading names in the Registry of Business Names. They are, as we know, not companies. They are individuals and partnerships dealing with the public. If one of these businesses changed its name or went out of business, a client who had been dealing with it—getting it to do some work or to pay some money to him—would find it impossible to pursue his claim against that business or to track it down, because it would have disappeared. Therefore, the consumer, about whom I am concerned, could lose quite a lot of money. No longer would it be possible to track down these people. I consider this to be very unfair and very unwise. I do not think we should allow it to take place.
Turning to Clauses 11 and 13 which have already been mentioned, I should like to ask the Minister whether it will be obligatory to publish the full audited accounts and to hold a public annual general meeting of a company. I feel very strongly about this. In the interests of the shareholders and of the consumers of the product of a company, this rule should certainly continue to be enforced. It would be a very retrograde step to do away with it. It may be that under the Bill it will still be obligatory to do this, but having read the clauses it is a little obscure to me. I hope this matter can be cleared up and that there will be no relinquishment of a very sound principle, which I think has the support of everybody. More particularly, I think that the question of consumers' interests and of registering businesses is very important. I believe that we should make quite certain that what is proposed is not carried through in this Bill.
5.55 p.m.
Lord Energlyn: My Lords, may I from these Benches extend our praise and congratulations to the noble Lord, Lord Noel Buxton, on a remarkable maiden speech? He gave me a lot of interesting side thoughts, especially concerning the names of companies. This was one of two items regarding the Bill that I wished to comment upon.
Changing the name of a company can have very serious implications in the world of inventors in which I live. I know of a case where an inventive idea was put forward which was incapable of being formulated into a rigid patent but which was viable under a trade
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name or a trade mark. This idea was communicated and the name of a non-trading sort of company was changed immediately to the system implied by this invention. Consequentially, the inventor lost the only commercial advantage he had of protecting his long and expensive episode of research. Therefore, I shall look with great care at the amendments which are to be put down concerning the names and the naming of companies. May I ask the Minister whether he can render me some assurance that my fellow inventors will derive from this Bill a greater measure of protection than they have at the moment?
My second point echoes one or two of the remarks made by the noble Lord, Lord Boyd-Carpenter, concerning the powers that are to be assumed by the Secretary of State. With some timidity and lack of knowledge I should like to bring to the attention of your Lordships the difficulty which people like myself have in reading company accounts. In reading the Fourth Directive it was interesting to find that after 10 years of trying to achieve some kind of harmonisation, as they call it, among the million odd companies they are dealing with, all they could do was to produce a kind of questionnaire which has to be filled up and signed.
Those standards are not acceptable in this country. We have a long tradition of institutes and bodies which have built up a reputation of integrity and which have tried, with great clarity, to project the accounts of a company honestly and simply to the people concerned. I understand that the Institute of Chartered Accountants is about to celebrate its centenary. Its antiquity and status give it its position in the world. Then there is the Association of Certified Accountants, which is recognised by the Secretary of State. Another body is called the Association of International Accountants. Apparently they are not recognised by the Secretary of State. Therefore, as an academic exercise, I took on the task of answering the question: why is it that this institution, which has been in existence from the early 1930s and which incorporates, I understand, over 1,000 accountants who operate all over the world, is not recognised by him? As I understand the history of the Association it emerged from the days of the Empire. That is the origin of the term "international".
I carried out an investigation, so far as I was able, into the criteria concerning membership of these bodies, which are referred to in the Bill as "relevant bodies" or "approved bodies". I found to my satisfaction that the examination papers set by these four bodies differ only in minor aspects. Therefore it seems to me to be odd that one of these bodies, which has this international characteristic, should be left out. Presumably we have gone international if we have entered the EEC.
I should like to ask the Minister whether it would be possible in this Bill to extend the definition under Clause 13 of the 1976 Act to include the Association of International Accountants. It seems to me that they have a very strong case. I am not, I declare, acquainted with or associated with them. I am not an accountant. I am just a plain, straight-down-the-middle scientist. However, it seems to me, looking at it from that point of view, that they have a claim for recognition in this Bill and that, by giving it, the ability of the Department of Trade to impose its will upon any accountant

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wishing to operate from the EEC inside this country would be strengthened, because the Department of Trade could say definitively, "If you do not match up to the standards of our four bodies, I am sorry, but you cannot operate with certification in Britain". May I ask the noble Lord, Lord Lyell, whether he can comment on that aspect of the Bill?
6 p.m.
Viscount Caldecote: My Lords, I should like to make two points on this Bill. First, may I add my congratulations to the noble Lord, Lord Noel-Buxton, on his very authoritative and instructive maiden speech. I agreed with the great majority of it but on one point, which I shall mention in a moment, I very much prefer to support the noble Baroness, Lady Elliot of Harwood, in her opposition to the abolition of the registration of business names. This seems to me to be a retrograde step which will return to us the law of the jungle so far as business names are concerned. There will be no possibility of search, to see whether a new company name is appropriate, or indeed whether somebody else is starting a new company the name of which is so close to an existing company as to mislead the people who deal with it. It will make things much more difficult in every respect, and I understand from what the noble Lord, Lord Trefgarne, said in his opening speech that the abolition is mainly to save money.
Lord Trefgarne: Partly, my Lords.
Viscount Caldecote: All right, my Lords, partly to save money. Surely, as the noble Baroness made clear, it could be made to pay. I am told that the fees for searches are absurdly low. I believe they are only a few pence and have not been altered for years. If the fee was £5 for every search made it could be made to pay and surely, with the advent of micro-processors and data retrieval systems, it really would not be very difficult. I should have thought this problem would have been relatively easy to deal with as a result of modern techniques of that kind. It could easily be made a paying proposition of value to industry, as indeed it has been of value to industry for many years. I very much hope that the Government will look at the proposal to abolish the registration of business names completely and will see whether, at least for a trial period of a few years, it could not be made a paying proposition.
My second point relates to small companies. I very much welcome the proposal for a simplification of accounts. I submit that the Government have struck the right balance between making the accounts very much more simple and avoiding abuse, and I am glad that the annual audit requirement for small companies will be retained, otherwise again this could lead to a difficult and misleading situation.
Much attention has been paid recently, and is still being paid, to the formation and growth of small companies. I think I should declare an interest here as chairman of the Industrial and Commercial Finance Corporation, which is very much involved in investment in small companies. We have a very successful record of investment and particularly in one form of investment—in management buy-out. I am glad to say that
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these schemes are now being copied by many other investment companies. There is one quite substantial impediment to these successful operations and that is the prohibition on companies on buying their own shares, to which other noble Lords have already referred, under, I think, Section 54 of the present Companies Act. If this were allowed—and I very much agree with the noble Lord, Lord Noel-Buxton, on this—it would make it possible for entrepreneurs controlling and managing their companies who have sold off some of the equity in the early stages (which is very often highly desirable) to use the funds of their companies to buy back those shares and to recover 100 per cent. control of the company.
This is quite important because at the moment there is a tendency for entrepreneurs of this kind to resent any investing company which comes in to help them in the early stages; they resent those companies taking any share at all of the equity. Rather naturally, they want to have their cake and eat it. They want the investment company to give loans and to share in the risks, but they do not want them to share in the success. That is quite natural, and if I were an entrepreneur I think I should take exactly the same line. But an equity investment is a very good investment in the early stages of a small company because it is capital which does not require servicing until profits are made, whereas of course a loan does require servicing right from the outset. So I am glad to know that it is the intention of the Government to introduce amendments which will enable companies to buy their own shares. I welcome that and hope it is true.
With regard to the so-called management buy-outs, they have been successful and they have enabled new companies to arise from the ashes of failed, old, worn-out businesses, but they concern only a relatively few people in the management. The managers put up money, it may be by mortgaging their houses or something of that sort, and an investing company such as the Industrial Finance Corporation provides the balance of money required to enable those managers to buy the business and to retain a majority interest in it and to run it. That has been extremely valuable but it concerns only relatively few people—perhaps half a dozen of the managers.
There is another desirable variation, that these buy-outs should be extended to the whole workforce—a type of co-operative. The objective would be to establish a class of company owned by those who work in it and, in effect, only by those who work in it, and to enable such companies to purchase their own shares. The aim of any amendments that might be moved (as I hope they will be) would be to make available a simple form of business organisation which can be owned and directed by those who work in it.
There would be many advantages to such an organisation. It would have the advantage that it would escape the traditional confrontation between capital and labour, which sadly sometimes exists; it would assist in the spread of wealth and would avoid the disadvantages of absentee ownership. It would provide a vehicle for the conversion of family firms with problems of succession from the family to employee ownership, and that would be a kind of extension of the present schemes of management buy-outs. It would provide a convenient vehicle, similar to a partnership but with

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limited liability, for former employees with redundancy money to pool their resources in new enterprises. It would offer another practical solution when a big company decides to hive off a peripheral activity which can stand on its own feet as a profitable enterprise. Under present legislation, which provides for cooperative enterprises, I understand that all the capital must be held collectively and it cannot be held by the individual employees of a company in a way which would enable them to sell the shares for cash, if they so wished.
There are other practical difficulties (with which I will not bore the House tonight) to arranging the kind of businesses to which I have referred. So I very much hope that it may be possible to move amendments at the Committee stage for what might be called "employee buy-out schemes" rather than "management buy-outs" or, as some people have called it, "job ownership companies". This Bill seems to give an excellent opportunity to remove those obstructions to this kind of new company, and I hope that those amendments will be moved and that the Government will support them. Surely they should, for it has long been Conservative policy to have a property-owning democracy. Would it not be a very good thing to extend that to a company-owning democracy?
6.10 p.m.
Viscount Hanworth: My Lords, there are two matters on which I should like to speak today: first, approval of company names, and, secondly, the abolition of the Registry of Business Names. These two matters have been dealt with already by a great number of speakers, and I am therefore faced with cutting down a fairly tight-drawn speech; otherwise I shall simply repeat what they said. But there are a few additional points I think I might make. May I first say that I agree with everything that has already been said on this subject. Approval of company names is a valuable Government service, and its abolition would mean that we would have to rely on the Secretary of State's power to direct a company to change its name, from which there is an appeal to the courts or an action under common law by anyone who is prejudiced.
Maybe in today's economic climate some sacrifice in the services to the public has to be made, but, of course, as has already been said, there is the alternative of making this a financially self-supporting registry and charging a larger fee. I gather that is the CBI's view. Surely with efficient organisation and the use of a computer it should take much less than a hour to consider and deal with the average case. Let us face it; the present system is a strong deterrent against the use of unacceptable names. Once again we find the Government off-loading a responsibility which, if effectively enforced in the courts, and I repeat "effectively", where there is a right of appeal, would cost far more. Most certainly many small concerns could not afford the cost of a court action, and the delay in getting the action heard is another deterrent. Even a company which has no intention of offending may well do so simply because they are unaware that another company with a rather similar name exists.
The second matter, in my view, is far more serious. It surely must be a principle that any consumer, or, for the matter of that, any member of the public or
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enforcement authority, should easily be able to find out the people responsible for any business, whether or not they have dealt with it. Nuisance could be one reason for someone not trading with the company wanting the information, but I am sure your Lordships can think of many other reasons. The Bill as it stands makes all sorts of restrictions and difficulties in the way in which persons can obtain the information. In this context do not let us forget that in the majority of cases, where the information will be needed to pursue agreements or a claim, it relates to a sharp practice trader who frequently moves his business address, and where legal action against the company is impossible or profitless. I simply cannot understand the present Government's thinking about putting restrictions on this information. Nothing said tonight has explained that. Even with amendments to make the information more readily available the position would still be unsatisfactory. In spite of what the noble Lord the Minister has said, I would urge the Government to continue with the present register, and if necessary make it financially self-supporting and more efficient.
Finally, I would ask that if the Government sincerely believe in promoting free enterprise and the success of our industry and economy, they will concentrate their efforts in simplifying legislation built up over the years, and not in producing the mass of undigested legislation which this House has already had to deal with.
6.14 p.m.
The Earl of Onslow: My Lords, I believe it was said by Bertie Wooster that Jeeves was always fed on fish and was an extremely clever man. Listening to what my noble friend Lord Noel-Buxton has said, I suspect that he was never out of a fishmonger's. I welcome this Bill because I hope it will give us a chance to introduce some necessary provision in law, to ensure that member companies of associations with disciplinary powers can report fraud to those disciplinary bodies. This has been shown necessary by the Fisher Report on Lloyd's, and here obviously I must declare an interest because I am an underwriting name at Lloyd's. In the Lloyd's Bill, which will be read a second time in another place in March, it is hoped to introduce a duty on agents, brokers, and members of the Lloyd's community and their staffs, to report to the Committee of Lloyd's, and to enable them to investigate and discipline any knowing presentation of fraudulent claims or fraudulent introduction of business. There is agreement that a provision should be there. Whether it should be a duty or a permission is still to be agreed upon. It is something, however, that is necessary.
If it is necessary—I think the Fisher Report made sure it was necessary certainly to the Lloyd's community—should it not, therefore, be necessary to members of all other self-regulating bodies? Of those we have estate agents, doctors, accountants, solicitors, the Bar, the British Veterinary Association, the Baltic Exchange, the London Metal Exchange and the Stock Exchange. Of course, I am not saying that all these are riddled up to their ankles in corruption; I am not saying that. What I am suggesting is that fraud is now rather easier, with the volume of modern business, with computers, and with the complexity of modern life. It is essential,

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above all, that the reputations of these institutions be like Caesar's wife, which I think on the whole most of them are. I think this would be a necessary addition to their powers. It would make it reasonable for this to apply to all disciplinary bodies as opposed to a power confined only to one disciplinary body in the form of the Lloyd's community. I suspect that it is possible to put a clause or clauses to this effect between Clauses 48 and 49 of this Bill. I am sure my noble friend Lord Lyell will tell me extremely quickly if that is not so.
Lord Trefgarne: It is not.
The Earl of Onslow: If it is not, perhaps my noble friends can go away and think about it, to see what other methods could be used to cover this point. The noble Lord, Lord Boyd-Carpenter, said that it was a Bill without form, and void, I think he said. Therefore, perhaps the noble Lord, Lord Trefgarne, may not be quite as right as he thought he was as he burbled from the Front Bench. So perhaps something like that would not be out of place.
6.19 p.m.
Lord Mottistone: My Lords, I must start by adding my own congratulations to those extended to my noble friend Lord Noel-Buxton. He was, of course, very fully and expertly praised, and nicely praised, by my noble friend Lord Boyd-Carpenter; but there is one particular point, while endorsing all that, that I should like to make. Again it is somewhat unusual for somebody in his profession; the lightness of touch. With the greatest respect to any other solicitors who might be in the Chamber—if the noble Lord, Lord Mishcon, thinks I am referring to him, he, too, of course, has this delightful lightness of touch—it is relatively rare in their profession, if I may say so. I, too, say how we hope to hear our noble friend speaking to us many more times and giving us the benefit of his great wisdom and experience.
I should also like to congratulate my noble friend the Minister for his introductory speech, although I find in my notes: "This is not clear" written against the notes that I have on company and business names. With the greatest possible respect to my noble friend the Minister, it is the one area in which he was not his usual very clear self. It is not without significance that practically everyone in the Chamber has criticised that particular part of the Bill in one way or another. Therefore, I suggest to my noble friend the Minister that this is an area which requires much further study by him and his department in the very short space of time that we have before we reach the Committee stage.
But, of course, as has been pointed out, as this is a Bill which has come to us in an incomplete state at this stage—and Heaven knows why! because the Fourth Directive was agreed a long time ago and the Green Paper was issued last summer—one rather gets the impression that some people have been very dilatory about their labours. It seems to me to be quite disgraceful of the Government to produce a Bill which is incomplete on a subject which, as has been pointed out, is not that urgent. I think that we deserve more in
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your Lordships' House—particularly when we are the first people to receive the Bill—than being brushed off with something that is incomplete and, "We shall add a few amendments later". The least that the Government can do to put the situation right is to give us the amendments before we need to complete our amendments, if they be necessary. I think that the Government can recover lost ground, but quite frankly, as much as I support my Government, I am ashamed of them in this respect.
I shall turn quickly to other matters because practically all the ground has been covered. I very much endorse the point made by those of your Lordships who said that we must have a consolidating Act as soon as is practicable. Perhaps, I may add to what my noble friend Lord Noel-Buxton said. I remember that when I left the Navy in 1967 I did a business acquaintanceship course. The lecturer in company law—and this was 1967, which was significant—said, "There is a Companies Bill on the way", which was the 1967 Bill. He then said, "They only come up every 20 years. There was one in 1948 and there was one in 1929", which was not quoted but one can see that it was totally repealed in 1948, and he went on to say that there was one in, I think, 1909. He said, "Therefore, they are rare events and companies get a lot of time to study the law and learn about it." I remember the very phrases. That, as has been pointed out, is no longer the case.
In fairness to the Government, I should point out that that has been partially due to the EEC legislation which has had to be embodied in our legislation, and which is coming through in repeated directives on this sort of subject which come at rather awkward intervals of about a couple of years apiece, and there are some more in the pipeline. I am very fearful lest my noble friend Lord Lyell when he comes to reply will say, in answer to the point that I am making and which others have made before me, "We should love to consolidate the Bill but there are the 'X' and 'Y' directives to come and we must incorporate them, and it will take us a long time to do so". Have I hit the nail on the head?
Lord Lyell: My Lords, not yet.
Lord Mottistone: My Lords, my noble friend has another argument. If that be so—and I think it might be—I rather feel, from having studied what people have told me and from looking at the Bill and doing this terrible thing that my noble friend Lord Boyd-Carpenter mentioned (namely, trailing through I do not know how many different Acts of Parliament to get at the solution of what is actually intended by the Government) that it would be worth consolidating this now, regardless of what is to come in the future; to hell with that, consolidate it again in, shall we say, four years' time or whatever. I know that that means a lot of extra work for a lot of no doubt very clever lawyers—and I am sure that they have not got lightness of touch—who would resist that to the umpteenth degree. However, I really think the Government have got to take this bull by the horns, be firm with the people who provide a service to them and make sure that this particular point is dealt with, and dealt with quickly.

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I turn now to Part I of the Bill. I should like to make only one major point, and that is to endorse the comment that my noble friend Lord Boyd-Carpenter made; namely, that the Government have not really taken advantage of as many of the derogations open to them as perhaps they should do in the interests of small and medium firms. I know that my noble friend the Minister claimed to take advantage of several derogations, but I understand that there are others which could usefully be taken up. Therefore, I would hope that the Government would look favourably at any amendments that may come before them at a later stage to cover those points.
I should also like to refer briefly to the point made by my noble friend Lord Boyd-Carpenter regarding the really very wide powers that the Secretary of State is proposing to give himself under legislation by statutory instrument in Clauses 18 and 19. I think that it is extremely difficult for Governments to get the balance right as regards that. I recollect very strongly hearing splendid speeches from the Front Bench, when we had the misfortune to be sitting on the other side of the Chamber, criticising the then Government for the disgraceful totalitarian power that they were taking to themselves; and they were doing so, and the noble Lords on the Front Bench were right. However, what is sad is that we find it coming up again and we do not really find a diminution in the extensiveness of the powers given.
I honestly believe that we need to consider two matters. I shall not waste your Lordships' time, but I wish to float this idea for general consideration. I think that we need to have guidelines for departments about the desirability of fundamental rules coming into the Bill. Judgment will be needed as to how they are exercised in detail, but they need guidelines to encourage them to put more guidelines in primary legislation through the draftsmen of the statutory instruments.
The second matter that I think we should give thought to, although I am sure that it will be resisted by all sorts of people including Chief Whips, especially Government Chief Whips, is the proposal that we ought to have a third type of statutory instrument—not just an affirmative and a negative instrument, but an amendable one. Perhaps it would be used only rarely—perhaps it would be used in specific types of cases. But when one considers the matter one realises that a statutory instrument which appears before your Lordships in this House cannot be amended and by tradition is practically never rejected. Even in another place they are very reluctant to reject them. I should have thought that there was room for a procedure of a third type of statutory instrument, and I think that the Government might give thought to that matter. However, as to whether my noble friend Lord Lyell will comment upon the matter, I have my doubts.
I had a great deal to say about company names and, indeed, business names, but I shall not weary your Lordships with repeating it all except to mention two matters. The first is that I implore the Government—and I would not expect an immediate answer except perhaps a welcome comment—to consider charging. If their problem is to save money they should do the job and charge for it, as has been suggested. Secondly, I ask them to give consideration as my noble friend Lord Caldecote said—although I know that this means
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capital expenditure and I know that the Government are hard up—to a greater use of computers in order to be able to keep this information in a modern form which can be obtained at a charge when required. From reading the Bill and from hearing what my noble friend the Minister had to say, it sounds as though they had chaps with quill pens running this outfit, and that the problem was that they did not have enough quill pens—they probably had enough chaps! Therefore, I think that this is an area where the Government need to think again.
To be serious, the points raised by my noble friend Lord Boyd-Carpenter with regard to company names and the points raised by my noble friend Lady Elliot of Harwood with regard to business names, quite apart from the repetition of these by many other noble Lords in the House, must make the Government think again. I hope that when amendments are tabled the Government will give them the very best of a fair wind.
Finally, I should like to endorse the point made by my noble friend Lord Caldecote about the reluctance of entrepreneurial small companies to share control of their companies at all, let alone on the understanding that they can, as it were, get the shares back at a later stage; they might be prepared to take it on if that was the case. On a number of occasions I have had to talk to small companies with which I have been associated, which will not expand because they are fearful that to take just that next step, they must have Auntie Bank breathing down the back of their necks. I very much hope that the possible further amendments to the Bill which would cover this point are indeed brought forward, and brought forward quickly.
Having said all that, and having said how disgracefully the Government have behaved in presenting this inadequate—perhaps I should say "incomplete" rather than "inadequate"—Bill to us, I still, in the broad sense, commend it to the House as being worthy of progressing further through the parliamentary machine.
6.32 p.m.
Lord Mishcon: My Lords, having heard the debate tonight, I do not think that the Government need any Opposition in this House. Therefore, out of sheer mercy, I shall try to use as kindly language as I can when dealing with this Bill. It is such a pleasure to be able to congratulate a professional colleague like the noble Lord, Lord Noel-Buxton, on his maiden speech. The noble Lord, Lord Boyd-Carpenter, said that it was a rare characteristic of the legal profession to have the clarity of speech—
Lord Boyd-Carpenter: My Lords, if the noble Lord will allow me, I did not say the "legal" profession; I said the "solicitors'" profession.
Lord Mishcon: My Lords, it is precisely that to which I wish to refer, because I listened to the noble Lord very carefully. He said that he belongs to a profession where clarity is not always the main characteristic; and the noble Lord, Lord Boyd-Carpenter, with his usual speed, has spoilt the whole purpose of my next comment, which was to refer to the fact that the noble Lord, Lord Noel-Buxton, belongs to a different branch of the profession from the one

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which the noble Lord, Lord Boyd-Carpenter, graces; and it is the pride of my branch that we are always clear and simple in our speech.
I believe it to be a fact that this is the first time that the noble Lord, Lord Trefgarne—who is so popular in this House—has moved the Second Reading of a Bill which is sponsored by his department when he is a Minister of that department. I think that all of us would want to congratulate him. He learned his diplomacy, with which he moved this Bill—and he must have had much trepidation in moving it—from the times when he has spoken so often and with such ability on behalf of the Foreign Office. As I said, we all find him a most agreeable Member of this House.
I should now like to deal with the Bill itself on its Second Reading. I believe that it must be the language of the Wildlife and Countryside Bill, which has almost filled this Chamber day after day, that prompted my noble friend Lord Ponsonby to say that one would have to exercise great care at the Committee stage in order to ensure that the fledgling came out properly. The noble Lord, Lord Boyd-Carpenter, seemed to wish that the egg, had never been created at all, and I can only say—carrying on this metaphor of the aviary—that it is certainly a legislative curate's egg that has been produced and, as has been said by other noble Lords, it is good in parts and had in parts.
I should like in my Second Reading speech quickly to refer to the parts of the Bill. Part I presents no real difficulty. I am not an accountant but I have an idea that some accountants are a little apprehensive about some of the aspects of this Bill, including in particular the way in which goodwill is written off by the requirements in this part of the Bill. However, quite obviously, these are matters with which we shall deal in Committee, and I have no doubt that those much more learned in accountancy matters will be moving amendments and discussing them in your Lordships' House.
Therefore, speedily, I pass to Part II. Without any question of doubt the Opposition welcome any set of provisions, especially in these economic times, which assist small businesses. If they can be assisted by the removal of unnecessary red tape and regulation, so be it; it must be welcomed. The only slightly cautious note that I want to sound is that on looking at the language of Part II and the definition of medium-sized and small companies in this three-tier set-up, one wonders whether the limitations and the definitions are adequately spelt out in order to ensure that we really are protecting those whom we mean to protect. I think that we may have to look at that during the Committee stage, especially where one notices that one of the ways of defining the medium and small-sized company is by reference to the number of employees. I think that that may be a little difficult from the point of view of such a definition, and again it is something that we may have to examine in Committee. However, there is no doubt that the principle is correct and from the point of view of principle we, on this side, welcome these exemptions.
On Part II of the Bill, I have an idea that the best way in which I can describe the reactions not only of my noble friends, but of so many of those who I like to call my friends but to whom in the language of this
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House, I have to refer as "noble Lords opposite", is to say that so much has been said already in regard to these matters that I do not think it would be becoming of me at this hour to repeat speeches that have already been made and which were much more able than any I could deliver. However, in the matter of the Registry of Business Names, for example, it is a case of being penny-wise and pound-foolish. There is no doubt that the real reason here is the economic reason, for there is not the slightest doubt that we could make the Registry of Business Names very much more effective and make it pay for itself by having proper charges. There is also no doubt—we just have to look at those who are up in arms about this—that no politics is involved here; because the Consumer Council, retail associations and my own Law Society (which has not yet been captured by the Left) have objected to this proposal in the strongest possible terms; so have the accountancy professions, and so on. Therefore, I very much hope that the Government will think again.
One has only to look at what the Government have tried to put in its place by way of a self-regulating system for finding out, if you are a consumer, exactly who is in charge of a business, who are the principals, and what are their names and addresses. I have an idea that if the parliamentary draftsman who was responsible for Clause 29(2)—to which I must refer if only for fun, but really it is a serious matter—were to compete for a prize in order that his clause might enter into the everlastingly glorious Alice in Wonderland, for sheer impracticability I assure your Lordships that in my judgment he would win that prize.
May I just refer your Lordships to Clause 29(2) only so that your Lordships will realise what a self-regulating system will do. This is the clause which says, "Well, you know, what you can do is, in certain circumstances, to call upon the business to reveal what are the particulars of the principals of the business and their addresses, and so on". The only persons who can do this are these—and I am going to read from Clause 29(2):
"Any person to whom section 28 of this Act applies shall secure that the names and addresses required by subsection (1)(a) above"—
incidentally, there is no time limit with which one has to comply in order to do it—
"to be stated on his business letters are given, by written notice, to any person"—
now you have to come within this category before you can get these particulars—
"(a) with whom anything is done or discussed in the course of the business hellip;".
I am only, as the noble Lord, Lord Mottistone, was good enough to say, a humble and somewhat light-hearted, and at times I hope clear, as the noble Lord, Lord Boyd-Carpenter, would say, lawyer. But I am trying really to see who it is that is going to be entitled to ask for these particulars. It is,
"with whom anything is done or discussed in the course of the business …".
Whether just a peremptory telephone call which says, "Please, do you sell tennis rackets or don't you?" is a discussion in the course of the business, I would not know.

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Now go on:
"elsewhere than on such premises …".
So once you put a foot on the doorstep of the premises, no longer can you require to know who the principals are because you have made your inquiry on the premises, but not elsewhere than on the premises. I am not yet done. You look at (b):
"and (b) who, at the time that thing was done or discussed,"—
that is the famous question: "Do you sell tennis rackets or cricket bats?"
"had neither visited any such premises …"
Stop there for a moment. What does that mean, "visited any such premises"? If he stood outside, has he visited? If he rang the bell and there was no answer, has he visited? If he just put a letter through the letter-box, has he visited? I could not tell you. I wish that the noble Lord who delivered that excellent maiden speech would now answer these rhetorical questions, because I know of nobody who could do it more ably.
Then,
"nor received any business letter or demand stating those names and addresses."
What happens if he has received it and lost it? What happens if he once received it and destroyed it because he did not know that he wanted to have these particulars? Once he has received it, whether he has lost it or destroyed it, he can never avail himself of this section and ask for these particulars.
If the Government are trying to put something in the place of the Registry of Business Names, quite apart from the points that have been raised about who is going to regulate this and who is going to enforce it, how will anybody know, and all the rest of it? Really, something has to be done about this clause. I hope that the answer to the whole problem is that we get back to a stronger Registry of Business Names, properly paid for and with proper enforcement provisions in regard to it.
I go to the next point. The noble Lord, Lord Boyd-Carpenter, was, as he usually is, so eloquent on this matter in giving examples of what is Marks and Spence. I am thinking now of the companies registry and the removal under this Bill of the requirement that the name should be not an objectionable name. We all know that one of the objectionable characteristics would be if it were a similar name. Some pertinent questions were asked in the course of the debate. It has to be, before there can be a refusal, the same name. Properly defined in this Bill, the same name. Questions of punctuation, and if you put a little squiggle for "and" or write "a-n-d", have to count as the same name.
Really this is dreadful. Unfortunately, we do not live in times when everyone in this country can say that the consumer is properly protected. You have only to listen to what I regard as a very useful programme like "Checkpoint" on Radio 4, with the rather brave Mr. Cook and the rather brave BBC who, week after week, investigate and tell of consumers who have been defrauded by people who pretend to be what they are not.
Now most people will realise, unless Marks and Spencer have got into a state of impecuniousness (which I think was a word used earlier today) or
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possibly some of the lettering has fallen off the front of their shops, that Marks and Spence is not Marks and Spencer. But with medium-sized firms, and so on, the attempt that could be made quite fraudulently to pretend that they are the same firm by advertisements, by literature, by people calling, and so on, constitutes in my humble submission literally a licence to confidence tricksters.
What does this Bill say? If you happen to have the same name, do you know what you can do if you apply to the registrar and say, "Look, this is quite dreadful. You have registered a name which is the same name"? Forget the question of whether it is a confusing name; then he can do nothing at all. You are thrown up to the courts and a passing-off action, about which I have a word to say in a moment. The registrar, under this Bill, has 12 months from the time when the registration takes place. If he does not catch then, or nobody else does, that there is the same name on the register, he will be out of time. He has 12 months, and then he can require within another six months, or such further time as he may decide is just, that the same name be removed. That is a great deal of time for some naughty people to make a nice, handsome kill from using the same name as a reputable firm that has built up goodwill and has a decent name for trading. Are we protecting the public properly in this way? Is it sensible to give up the jurisdiction which the registrar had and exercised—maybe he took rather a long time over it, some of us thought—with great care to see that there was no name that would confuse? These are grave defects in the Bill.
May I move on to talk in terms of the only remedy that is left; the remedy about which it will be lightly said by the noble Lord, Lord Lyell, "Well, you know, if there is this confusion, you can bring a passing-off action". Here I look at my colleagues in the House and say to them, and possibly to others who have had some experience of passing-off actions (whether they be inventors, or others, such as the noble Lord, Lord Lloyd of Kilgerran, who advise people with inventions in such an expert way, or people who pride themselves on the names they have managed to register, and so on) that the requirements of a passing-off action were dealt with as recently as 1979 in Erven Warnick BV v. J. Townend and Sons.
To create a valid action for passing-off, your Lordships will be interested to know that one has to show first a misrepresentation; secondly, that it was made by a trader in the course of trade; thirdly, that it was made to prospective customers or ultimate customers of goods or services supplied by the trader; fourthly, that it is calculated to injure the business or goodwill of another trader in the sense that that is a reasonably foreseeable consequence; and fifthly, that it causes actual damage to a business or goodwill of the trader by whom the action is brought, or, in a quae timet action, will probably do so. That is quite a heavy onus, especially on small people, and a heavy cost is involved, and quite often there is a long delay before the remedy is obtained. We cannot leave the public, the consumer, in this way.
I have spoken for too long already. Earlier, my noble friend Lord Ponsonby mentioned that I would be dealing with an omission and he took it for granted—underestimating, as he seldom does, the ingenuity of

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other noble Lords—that I alone would be dealing with the question of "concert parties". In fact, that has been dealt with during the debate. Some of us expressed apprehension about the subject when we discussed the 1980 measure, when we talked about Consolidated Gold Fields, and now we have had Dunlop and an even more recent case. The financial community and the decent people in the City are crying out for legislation on this. I will give only one quotation because, as I say, the point has already been made. It is from the Financial Times, which said in the gentle language it always employs to the Conservative Government:
"Ducking the issue. One of the most striking things about the 1981 Companies Bill, which had its first reading in the Lords yesterday, is the absence of legislation outlawing 'concert parties'. There is wide agreement that disclosure rules need tightening to prevent anonymous parties secretly amassing a large stake in an unsuspecting company, as De Beers did in Consolidated Gold Fields. The Government's failure to introduce legislation in this Bill is unfortunate because the next opportunity may be a long way off".
The Government must not duck this issue. They must have the courage to come forward with a legislative proposal, once we have this Bill, and I noticed what other noble Lords said about whether there is any necessity for a Bill of this kind at this stage. If we are to have another Companies Bill, we must not ourselves duck this issue and we must see that the Government provide for this omission.
There are others I could mention but the House would weary of me if I did. I conclude by saying "Yes" to inspectors' powers, to looking after the little trader and to some of the accountancy provisions; on those it is a sensible Bill. But as to an awful lot of the other provisions which have been dealt with by noble Lords in all parts of the House, I must call them silly provisions which have not been thought out properly, so that without doubt we shall have a very busy and onerous time in Committee if the Bill is to come out of the legislative process as of any use at all to the commercial community and the consumer public of this country.
6.55 p.m.
Lord Lyell: My Lords, after the lengthy debate we have had today it falls to me to open my remarks by expressing my personal congratulations, and I believe I express them on behalf of the whole House, to my noble friend Lord Noel-Buxton on his outstanding maiden speech. I well remember my maiden speech. I was tempted to speak not on anything that was close to my heart or anything I had studied or dared look at, so I spoke about chemical warfare. Having spoken for five minutes, I discovered I had been speaking in a debate about biological warfare. My noble friend, seeing where such a speech got me, may feel that in due time he will be able to give us the benefit of his experience and advice from a similarly lofty position to that which I am occupying tonight.
Bringing forward the proposals for the reform of company law embodied in the Bill, the Government have had to do many things. First they have had to decide what it would be realistic to include in the measure, bearing in mind, as always, the constraint of time available to your Lordships. In doing that, the Government have had to apply a rigorous sense of
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priorities, reflecting their overall policies, including in particular commitments to help small firms—and we were particularly gratified to receive the eloquent support of the noble Lord, Lord Mishcon, in his belief that we were attempting to help small firms—and the resulting package of measures, including the clauses we have yet to introduce to enable companies to buy their own shares, makes up a very substantial Bill in which there is more than sufficient content to challenge fully the considerable resources of your Lordships' House.
The Bill does not—this will come as a surprise to some noble Lords—set out to reform the whole of company law, which would be a very ambitious task for one Bill. Rather, it seeks to amend important parts of company law. The Government accept that other parts of the Companies Acts could be improved, and noble Lords have referred to a need to reform other provisions not covered by the Bill. There is need to set about any improvements in a considered and deliberate manner because an apparently simple proposal, we always find—and I am sure our predecessors found this—can involve considerable unforeseen ramifications in terms of both commercial practice and consequential legislative provisions.
I would not want any noble Lord to infer from the remarks I have made that the Government are in any sense on the defensive in bringing forward this Bill. On the contrary, we attach great importance to its provisions. The fact that its content has already been subject to examination in the light of priorities reflecting the Government's overall policies has, in our view, ensured the importance of the initiatives in the Bill. Each of these initiatives has different objectives and implictaions for companies and commercial practice; the noble Lord, Lord Lloyd of Kilgerran, called them "commercial practitioners". Thus, while the Bill may not be characterised as fulfilling one overall policy objective, I hope its complexity will not dazzle your Lordships or obscure the importance of each of its provisions.
I should now like to turn to various points that have been raised, both in general and by individual noble Lords on all sides of the House. Perhaps I should start with one of the most contentious matters, that relating to what are known as "concert parties". I understand that the term has nothing to do with going to see Iolanthe or anything of that kind. The matter has a very gloomy term within the department; we call it "disclosure of interests". Nevertheless this problem has reared its head—
Lord Mishcon: My Lords, if the noble Lord wishes to continue his most elegant simile, may I say that it has to do with fiddling.
Lord Lyell: My Lords, at the operas or concerts which I attend the fiddlers remain somewhere in the pit, and are not in elevated positions—certainly not in your Lordships' House. But I take the legal point so eloquently put by the noble Lord, Lord Mishcon.
A number of your Lordships have referred to the very complicated questions which concern the disclosure of interests. As I have already explained, given the constraints regarding time in your Lordships' House, the Government do not believe that they should include in this already large Bill very complex and wide-ranging

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subjects that are candidates, even urgent candidates, for a Companies Bill.
The present law on disclosure of interests is effective in the vast majority of circumstances. The existing law is already complex and is certainly not capable of amendment on any piecemeal basis. However, I would not deny that there is scope for improvement in these particular laws, as in many other provisions of the Companies Acts.
The Government have already recognised that the Consolidated Gold Fields episode last year raised questions about the adequacy of the law, as indeed did the difficulty more recently encountered in establishing the beneficial ownership of Dunlop shares; and indeed in this regard the noble Lord, Lord Mishcon, today raised the question of another company. But your Lordships will recognise that there is a limit to what can be included in the Bill in the provisions on disclosure, in particular if an attempt were made in any legislation to deal with the so-called "concert parties". Any provisions to deal with them would be extremely complex and lengthy. However, the Government hope that the Council for the Securities Industry, and indeed the Stock Exchange, will consider the scope for strengthening the self-regulatory arrangements.
The second major point that has been raised this evening—
Lord Mishcon: My Lords, I apologise for interrupting the noble Lord again, and I promise not to keep on doing so, but this is an important point. Is the noble Lord saying that the Government are relying upon the self-regulatory procedure and that they have no intention whatsoever of coming forward with legislation?
Lord Lyell: My Lords, may I be brief and say, not yet. Certainly the Government have all these implications in mind. The Government's thought processes will be familiar to the noble Lord, Lord Mishcon. The Government do not wish to include such legislation in the Bill now before your Lordships because we believe that there remain many points to be discussed, certainly in relation to the Consolidated Gold Fields case. The Dunlop instance raises some of the same issues, as well as some different ones. The Government certainly recognise that these cases will not go away, and they are considering them. However, I can give no promise or undertaking that the Government will include in this Bill any provision to deal with these abuses.
The second major point that was raised in the debate —in all parts of the House, I think—was that regarding the Registry of Business Names. At no time have the Government advanced the problem of a financial deficit as a reason for closing the Registry of Business Names. Various Members of your Lordships' House have voiced their opposition to the varying fees. I understand that the fee for registration is £5 and that for a search it is £1, and various noble Lords pointed out that those fees would cover the estimated cost of the operation in the coming financial year. Well, we understand that that is in no way the case, because greater enforcement has been sought in respect of business names, trade marks, patents and other things, and certainly the existing fees of £5 and £1 would
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in no way cover the cost of such an operation. However, the Government accept that banks have helped with particular enforcement in this field. The level of compliance is still far too low and no Government, including previous Administrations, have been able to provide the resources that are needed to ensure a greater, more satisfactory level of enforcement—
Lord Ponsonby of Shulbrede: My Lords, may I interrupt the noble Lord? He referred to the fees for the registration of business names as currently being £5 and £1, but my proposal was that they should be increased to those figures. The present fees, which are quite inadequate, are £1 and I think 50p for a search.
Lord Lyell: I am sorry, my Lords; it was a slip of the tongue. I think that the noble Lord proposed those levels. What I should have said is that even the noble Lord's excellent and practical proposals would not cover the cost of greater enforcement. I apologise—
Lord Ponsonby of Shulbrede: My Lords, I wonder whether by the time we reach the Committee stage the noble Lord will be able to say what level of fees would cover the cost?
Lord Lyell: My Lords, perhaps the noble Lord would care to put down an amendment or possibly even challenge me at the Committee stage. I am sure that that would be the wish of your Lordships.
My noble friend Lady Elliot of Harwood raised a point about the Registry of Business Names in relation to consumer interests. I am given to understand that a detailed memorandum commenting on the proposed abolition of the Registry of Business Names has been received within the last few days from the National Consumer Council. I assure my noble friend that this is being very carefully considered, and I hope she will accept that the Government cannot make any detailed comments or put forward firm proposals after a period of only a week.
The noble Lord, Lord Lloyd of Kilgerran, raised a particular point regarding the Registry of Business Names. As he will be aware, many representations have been made in this regard. I can assure him, and indeed all your Lordships, that all the representations have been very carefully considered, including the representations from the Institute of Trademark Agents, and—the noble Lord will be glad to know, as I am—from the Institute of Patent Agents. That takes the noble Lord, Lord Lloyd, and myself back a mere four years to when we discussed at length the problems of patents, registration and trademarks.
Although many of your Lordships, as well as many of the representations, have been in favour of retaining the present system of business names, I would point out that all the opponents of the Government system overlook, perhaps naturally, the deficiencies of the existing system. The many decisions that are inherent in the present process inevitably cannot entirely avoid confusion, which many people fear will result from the changes that are now proposed. However, the Government's proposals recognise the reality of confusion in the current situation, and we seek to establish a simple framework in the terms of company law,

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beyond which companies should exercise a greater degree of caution to safeguard their own interests. We believe that that is also apposite to small businesses.
The noble Lord, Lord Lloyd, and my noble friend Lord Caldecote raised the question of employees' shares, and the noble Lord, Lord Lloyd, in particular referred to the question of job ownership companies. I appreciate the wish expressed by the noble Lord, Lord Lloyd, and my noble friend Lord Caldecote for a specific legal status for producer co-operatives of the type which we believe has been advocated by Job Ownership Limited. But such co-operatives can be formed and registered under the Companies Acts as they now stand. As a result there is no need, certainly in our view, for an amendment of the Acts at the moment, but we would certainly consider any amendments which might be tabled by the noble Lord, Lord Lloyd, or, indeed, any points that my noble friend Lord Caldecote may wish to raise at a later stage.
Then there were several points which were raised by my noble friend Lord Noel-Buxton. My noble friend, in the course of his outstanding speech, raised many points. He said, first of all, that he was a lawyer. I am only a quasi-lawyer, but some 20 years ago I had to read vast tracts of commercial law, and it is one of the sad things in my life that I no longer have the original copy of the 1948 Companies Act which enabled me to pass many of my exams as an apprentice accountant. But I am sure that my noble friend and the House will appreciate that it is still in force today; and there is a very great deal of literature, including these Acts, which I have had to bring with me in order to have everything here to deal with this matter.
My noble friend Lord Noel-Buxton raised one particular point initially. He suggested that the Bill should adopt the wording of Section 201 of the 1948 Act. I understand that the wording of Section 201 is out of date by reference to (to take one example) show cards. The wording in the Bill which we have before us today is designed to cover all practicable situations, but if my noble friend wishes to raise any more practical points at Committee stage we shall of course be very happy and very willing to consider anything that he might wish to put forward.
Lord Mishcon: My Lords, I wonder whether the noble Lord the Minister will forgive me for a moment, only because he has made the very proud claim that all practical documents are in fact covered, whereas the 1948 Act is out of date. Does he realise that the one thing of terrific interest to a supplier is an order form? When a supplier receives an order he wants to know who it is who is ordering, and whether he ought really to deal with the person. Does he know that an order form is not included in the Bill?
Lord Lyell: The Bill or the Act, my Lords?
Lord Mishcon: I said the Bill.
Lord Lyell: The 1948 Act, I said, was out of date. I am rather frightened that the noble Lord, Lord Mishcon, believes that the Bill is out of date already, but I was not aware of this. If the noble Lord will forgive me, indeed I shall look at this and I am sure we shall return to it on Report, if not even sooner.
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My noble friend Lord Noel-Buxton continued with a query about Section 54 of the 1948 Act. My noble friend mentioned the need for reconsideration of Section 54. As your Lordships will be aware, this relates to a company's provision of financial assistance in connection with purchasing its own shares. The Government, and indeed our department, are actively examining the need for amendment in this area, and we hope to be able to bring forward amendments, together with new clauses on the purchase of a company's own shares, at a later stage. We hope it may even be at Committee stage.
The noble Lord, Lord Lloyd of Kilgerran, referred to the problem of the cost of an audit, particularly so far as this concerns small companies. My noble friend the Minister explained in his speech earlier this afternoon the reasons why the Government are retaining the audit requirement. So far as the cost element is concerned, the little information which is available to the Government, and indeed to the general public, about the cost of the audit of small companies does not suggest that it is excessive in relation to its benefit to shareholders, to creditors and, indeed, to the small companies and small businesses themselves, which often benefit from the professional advice of the auditors. In one case, where audit might represent all the outgoings—that of dormant companies—we are indeed ending the audit requirement.
My noble friend Lord Boyd-Carpenter opened his very eloquent remarks by chastising the Whips and the Government with scorpions. Indeed, he criticised the printing of the Bill. My Lords, it is part of my duty to stand before your Lordships both as a spokesman for my noble friend at the Ministry and, indeed, as a Lord-in-Waiting. So I suppose that I have to accept the criticism from my noble friend, because I am given to understand that the errata slips are the responsibility of your Lordships' House, which indeed printed the Bill. I understand that this cannot be held against the department. Nevertheless, I would apologise, first of all to my noble friend and, indeed, to the whole House.
Lord Boyd-Carpenter: My Lords, in thanking my noble friend for that handsome apology, may I ask him whether it is not the duty of somebody in a department which is promoting complex legislation of this sort to read the proofs and be sure that the material laid before this House represents what the department accurately wants laid before it?
Lord Lyell: My Lords, assuming that the department is able to read and spell, I am sure that it will somehow obtain all the information which has been given so eloquently in that brief intervention by my noble friend. But certainly I will convey his feelings to the department, if need be personally.
My noble friend Lord Boyd-Carpenter raised a particularlystrong query on the purchase of a company's own shares. My noble friend expressed concern at the tabling at a subsequent stage of the Bill of new clauses on the purchase of a company's own shares, and he questioned the urgency for a new Companies Bill. I would express great sympathy with all your Lordships and, indeed, with those outside your Lordships' House who find it difficult to keep up with the recent flow of legislation; but I hope my noble friend will accept that

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to a large extent this legislation reflects the volume of activity in harmonising company law within the European Community. Indeed, that is the underlying basis of the Bill which is before your Lordships today.
My noble friend the Minister said earlier that the Government are concerned about the scale of this activity, and certainly my noble friend expressed their concern. But the Government hope that the speech of my noble friend Lord Boyd-Carpenter will be read in our department and elsewhere, and certainly it will be noted well beyond the confines of your Lordships' House.
The noble Lord, Lord Robertson of Oakridge, mentioned his fears about the possibility of requiring those who have to notify substantial shareholdings to identify the shares in the share register. I can see that this would have very considerable attraction, but I would repeat that these matters are very complex and very lengthy, and we believe the Bill is already very substantial. I hope the noble Lord would accept the point that I made to the noble Lord, Lord Mishcon, that certainly the Government recognise the great concern that is felt as to the malpractices that he and others of your Lordships have explained, but we feel that this particular Bill is not the best vehicle by which to legislate to stop these particular abuses.
My noble friend Lord Boyd-Carpenter, and indeed my noble friend Lord Mottistone, referred to Clause 18 of the Bill that is before us this evening. Clause 18 amends Section 454 of the 1948 Companies Act. All of us would share my noble friend's concern, but we hope that it is misplaced in this particular case. The reasons for taking the powers as expressed in Section 454 as it would be amended by Clause 18 of the Bill are fairly simple, but I wonder whether both my noble friends would be content if I were to write to them, since the explanations are fairly lengthy and I see that I have delayed your Lordships considerably already.
The noble Lord, Lord Energlyn, raised one interesting point about the recognition of varying bodies who carried out statutory audits. I would hasten to tell him that my institute, the Institute of Chartered Accountants, is not just 100 years old; we are 127 years old. Certainly one aspect that I would not wish to raise this evening is that of financial qualifications. Above all, the one factor that would cause me to duck, if need be, is war between varying accountancy bodies. Certainly the noble Lord, Lord Energlyn, and members of the professions—and I include the noble Lords, Lord Mishcon and Lord Noel-Buxton—will appreciate that matters concerning the statutory auditing bodies and other professions raise considerable feeling.
The noble Lord, Lord Energlyn, asked about one particular body, the Association of International Accountants, and why they were not recognised under Section 161 of the Companies Act 1948. The Department has received representations over the years from a very large number of bodies who seek recognition. These have all been very carefully considered. The criteria have to be very, very strict and as yet the Secretary of State has not been satisfied that anybody is of a particular standard to add to the present list of four recognised associations. The noble Lord, Lord Energlyn, and I am sure your Lordships, will appreciate that they are the Institutes of Chartered Accountants in England and Wales, in Scotland and in
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Ireland, together with the Association of Certified Accountants. The power to add to these bodies is already available, and certainly there is no need for further provision in the present Bill which is before us tonight.
My noble friend Lady Elliot of Harwood asked a very relevant question about whether the Bill affected the current company law relating to annual general meetings and information which has to be laid before them. I think she was speaking of public companies. I am very happy to assure my noble friend, and indeed the whole House, that the Bill does not affect these matters in any way subject to one exception which relates to dormant companies. These are dealt with under Clause 12 of the Bill. There are small companies which have not traded throughout the financial years in question or indeed since, and these are what we regard as dormant companies and they are dealt with in the Bill. I hope that my noble friend will be reassured on this particular point.
We have had a lengthy and very interesting debate on the Bill this evening. I entirely agree with the noble Lord, Lord Lloyd of Kilgerran, and my noble friend Lord Noel-Buxton, that there is a very great need for a consolidation Bill on company law. When the Bill which is before your Lordships' House this evening is enacted, there will be five main Acts of Parliament: the Acts of 1948, 1967, 1976, 1980 and 1981. These five Acts will comprise over 700 pages of legislation with a multitude of cross-references. We, above all, recognise that this has become a very severe problem for everybody who is affected and concerned. Therefore, I am pleased to report that work is already in hand on this particular matter with an experienced draftsman working under the auspices of the Law Commission. But the task is immense and we must recognise that it will be some time before we can be ready for a consolidation Bill. But the Government take pride in having embarked on this particular task. I am indeed advised that a substantial number of clauses have been drafted towards the start of this consolidation Bill, so I hope your Lordships will appreciate that this is a continuous process.
At last I should like to conclude and make very clear that the Government have considered the scope of this Bill thoroughly, with the availability of your Lordships' time and indeed parliamentary time especially in our minds. Given the Government's intention to introduce new clauses and provisions shortly to permit companies to purchase their own shares—these will be a substantial addition to the Bill—I am not able to hold out much hope that the Government can look sympathetically upon other attempts to extend the scope of the Bill. Instead, I urge your Lordships to use the considerable experience in your Lordships' House, together with the expertise that we have heard tonight—and we heard from the noble Lord, Lord Ponsonby, that he will be returning to us at later stages and indeed we have (I must not say our "first team") our legal experts returning to us, I understand, at the later stages—to ensure that the provisions which are in the Bill, and which we have discussed this evening, are subject to the most rigorous and thorough examination. This is the most valuable contribution which your Lordships can make at this time to the reform of company law. For that reason,

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I commend to the House the Second Reading of this Bill.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

Gas Levy Bill
Brought from the Commons endorsed with a certificate from the Speaker that the Bill is a Money Bill within the meaning of the Parliament Act 1911; read 1a, and to be printed.
  MAGISTRATES' COURTS: SENTENCING POLICY
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  MR. GRÉGOIRE SALMANOWITZ
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  THE IMPRISONMENT (TEMPORARY PROVISIONS) ACT 1980
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  CITIZENS' BAND SERVICE
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