Sitting of 21 January 1981

Preamble
The House met at half-past Two o'clock

PRAYERS
[MR. SPEAKER in the Chair]
Mr. Speaker: I remind the House that supplementary questions have been getting longer and reducing the number of questions that can be called.

Oral Answers to Questions
  Foreign and Commonwealth Affairs

    Hong Kong
    Mr. Parryasked the Lord Privy Seal when he expects the Hong Kong Government to repeal the Public Order Ordinance.
    The Minister of State, Foreign and Commonwealth Office (Mr. Peter Blaker): There are no plans to repeal the Public Order Ordinance, but a review has been carried out of certain of its provisions. The Public Order (Amendment) Ordinance 1980 received the assent of the Legislative Council on 4 December and will be brought into operation soon.
    Mr. Parry: The Minister will be aware of the arrests under the statute that have taken place in recent years of housewives, school children, worker priests and social workers, and also of the criticism of the Hong Kong trade unions. Does he agree that it is now time to repeal this draconic measure?
    Mr. Blaker: I do not think that the hon. Gentleman is right. Hong Kong, just as any other country, including the United Kingdom, requires a statute about public order. In the light of one or two problems that have arisen in the past it is right to look at the existing ordinance and to repeal it where required. The new ordinance narrows the definition of a public meeting, narrows the definition of a public procession and changes the arrangements whereby one had to apply for permission in advance to hold a public meeting. That provision has been replaced by one that arranges for notice to be given of the intention to hold a procession. I think that the House will agree that that is an improvement.
    Mr. Canavan: Until such time as the Public Order Ordinance is repealed, will the Minister tell the Hong Kong Government to stop infiltrating and keeping secret files on organisations that are suspected of being subversive, especially when the list of suspects includes such innocuous bodies as the Education Action Group, the Heritage Society and the Hong Kong Christian Industrial Committee?
    Mr. Blaker: I have no information to confirm what the hon. Gentleman alleges.

    Cambodia
    Mr. Newensasked the Lord Privy Seal whether any new initiatives will be taken at the United Nations by Western nations on the representation of Kampuchea in the United Nations.
    Mr. Blaker: The question of representation of Cambodia is unlikely to arise at the United Nations until the next General Assembly. We are not aware of any plans for an initiative by a Western country at present.
    Mr. Newens: How can the hon. Gentleman defend the failure of the British Government to oppose the representation of the Pol Pot regime in the United Nations, when they have withdrawn recognition from that regime and when they accept that it was responsible for millions of deaths and for the mass suffering of ordinary people? Surely, that is an example of the Government's hyprocrisy in the conduct of foreign affairs?
    Mr. Blaker: As the hon. Gentleman knows, we withdrew recognition from the Pol Pot regime over a year ago. But, as we said at the time, there is no necessary connection between that withdrawal of recognition and the vote at the United Nations.
    Mr. Newens: Disgraceful.
    Mr. Blaker: We cast that vote in company with 72 other countries holding similar views, and it was carried by a substantial majority. We continue to abhor the Pol Pot regime. We do not believe that the vote that took place at the United Nations will help that regime to come back to power, nor do we wish that to happen.

    Information Services (North America)
    Mr. Biggs-Davisonasked the Lord Privy Seal whether he will make a statement about British information services in North America.
    Mr. Blaker: We give the highest priority to ensuring that North American leaders and public opinion are correctly informed of the facts about the United Kingdom and the Government's policies. At this moment I am confident that our information services will ensure that Congress and the people of the United States are made aware of the joy and relief of this House and of the British people that the American hostages have at last arrived safe and sound in the West after their terrible ordeal.
    Mr. Biggs-Davison: Is my hon. Friend aware that I appreciated the quality of the British information services when my hon. Friend the Member for Peterborough (Dr. Mawhinney) and I put our Ulster case before Irish America? Is he aware also that I welcome the decision not to let that case go by default across the Atlantic? Is he satisfied that the services have sufficient resources? Why was it thought necessary to downgrade the New York post in favour of Washington?
    Mr. Blaker: I agree with my hon. Friend about the importance of presenting to the United States people the true facts about Northern Ireland, and I congratulate him on the success of his recent tour. The numbers employed by the British information servicces in the United States have been reduced to some extent since 1977. However, we regard the organisation as effective. A total of 81 officers in 13 posts in the United States and Canada are engaged in information work. My hon. Friend asked about

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    the change in staffing in New York. The head of the services in New York has been moved to Washington because we believe that it is right that he should be in close contact with the ambassador and because Washington has become an increasingly important centre for news. A senior officer is still in charge in New York.
    Mr. J. Enoch Powell: Would it not be more effective than constantly chasing deliberate misrepresentations about Northern Ireland if we were to emphasise and document to the American public the overwhelming debt, both quantitative and qualitative, which that country, in its build-up, owes to Ulster?
    Mr. Blaker: That is certainly a point that we can consider. The information given to the American people and Congress by our information services covers a wide range of subjects relevant to Northern Ireland. Perhaps that is a topic that we could add.
    Dr. Mawhinney: Is my hon. Friend aware that my hon. Friend the Member for Epping Forest (Mr. Biggs-Davison) and I were most impressed by the officers of the information services in New York and Boston? Is he aware that American journalists to whom we spoke were concerned that by downgrading the senior post in the New York office, which is what has happened in the media centre of the United States, the British Government were giving less support to the information services than previously?
    Mr. Blaker: I am grateful for that tribute to the British information services in the United States. We are not downgrading the importance of the activities in New York. The head of the services has been moved to Washington for the reason that I have given. A senior officer will still be in charge in New York and the numbers in New York will not otherwise be reduced.
    Mr. McNamara: Have the British information services in North America put out a statement deploring the help given by the American Government to the Right-wing junta in E1 Salvador and its murderous campaign against the people there?
    Mr. Blaker: I cannot answer that question without notice.

    Gibraltar
    Mr. McQuarrieasked the Lord Privy Seal if he has had any discussions with member States of the European Economic Community on the restrictions imposed by the Spanish Government at the border between Spain and Gibraltar.
    The Lord Privy Seal (Sir Ian Gilmour): The Governments of Community countries are kept informed of developments and of our views.
    Mr. McQuarrie: I thank my right hon. Friend for that reply. Does he agree that as the Gibraltarians are United Kingdom nationals under the Treaty of Rome restrictions on the border should be clarified before there is any question of the accession of Spain to the Community?
    Sir Ian Gilmour: I agree with my hon. Friend. As he knows, the Lisbon agreement reached last April has not been implemented, but we hope that it will be implemented long before Spain joins the Community.
    Mr. Denzil Davies: Does the Lord Privy Seal agree that the failure of the Spanish Government to abide by the Lisbon agreement is unacceptable? Should not the Foreign Office use the opportunity of negotiation with the Spanish Government on the EEC to persuade the Spaniards that they must keep the promises made at Lisbon?
    Sir Ian Gilmour: Of course we hope that the Lisbon agreement will be implemented before long. We certainly hope that it will be implemented long before the EEC negotiations are completed.
    Sir John Langford-Holt: Will my right hon. Friend be specific? Are we to understand that so long as the restrictions are imposed by the Spanish Government the British Government will feel compelled to object to and resist the accession of Spain to the EEC?
    Sir Ian Gilmour: On many occasions I have said that the idea of two countries in the EEC with a closęd border is unthinkable. I am sure that it will not come to that.

    Namibia
    Mr Cyril D. Townsendasked the Lord Privy Seal if he will make a statement on the future of Namibia.
    Mr. Dobsonasked the Lord Privy Seal if he will make a statement on Namibia.
    The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Richard Luce): Her Majesty's Government are deeply disappointed by the failure to achieve agreement on a date for a ceasefire in March leading to independence for Namibia by the end of 1981. It proved impossible at the Geneva meeting to reach agreement in view of the statement of the delegation led by the South African Administrator General that it was "premature" to agree on an implementation date. This is an especially regrettable setback after the great efforts of the United Nations, the Western Five and the front-line States to meet the reasonable concerns of South Africa and the internal parties. We support the chairman's closing appeal to those concerned to reconsider their position. The Five will review the position with the other participants in the negotiations and we shall discuss the problem with the new American Administration. Meanwhile, the progress made so far in preparing the ground for a settlement should not be thrown away.
    Mr. Townsend: Does my hon. Friend appreciate that many hon. Members on both sides of the House are grateful to him and his officials for their sterling efforts in attempting to achieve a satisfactory conclusion at Geneva? Is he aware that the resulting failure at Geneva has encouraged the Soviet Union to continue to support Cuban forces in Angola?
    Mr. Luce: I am grateful to my hon. Friend for his first remark. I believe that any failure to reach an agreement is a setback for the people of Namibia and for all the surrounding States, including South Africa, and for the West. The only people who stand to gain from discontent and violence are the Soviet Union and its satellites.
    Mr. Dobson: What pressures are the British Government bringing to bear on the South African Government, particularly in view of their general soft approach to South Africa, epitomised by the Prime Minister's statement that her desire is to bring South Africa in out of the cold?
    Mr. Luce: The British Government have been working closely with the four Western Powers to persuade all the parties to compromise and reach an agreement. We should not underestimate the progress made over, admittedly, a long time. We should not underestimate the extent to which the gap was closed—until last week's setback.
    Mr. Amery: Is my hon. Friend aware that although, of course, there is disappointment at the failure to reach agreement, there would have been a great deal more disappointment among many if an agreement had been reached that led to a SWAPO Government taking over Namibia? Does he agree that the South African Government have made their position clear, namely, that they will not accept United Nations' sponsored elections until the impartiality of the United Nations has been established over a prolonged period? Does he accept that to suggest anything else is, to say the least, misleading?
    Mr. Luce: I am sure that my right hon. Friend shares our objective of stability in Southern Africa. I am sure, too, that he believes, as the Government do, that one of the best ways to achieve stability is by free and fair elections and that it is not for us but for the people of Namibia to choose their Government. That is the best way to achieve stability in that part of the world.
    My right hon. Friend asked about United Nations supervision of the elections. He is right. There has been genuine anxiety on the part of the internal parties and of the South African Government about whether the United Nations would supervise free and fair elections. One of the main objectives of last week's conference was to see whether there could be common ground with a view to reassuring the parties that the United Nations would be genuinely impartial. I believe that Mr. Urquhart has made a series of proposals which should be considered seriously and reflected upon by all the parties as a gesture in that direction.
    Mr. Healey: I offer my support to the hon. Gentleman, as he is supporting a bipartisan policy on Namibia. In answer to his right hon. Friend the Member for Brighton, Pavilion (Mr. Amery), does he agree that responsibility for this tragic breakdown rests unequivocally with the Government of South Africa, who clearly went to Geneva intending to wreck the conference and in bad faith, and that the SWAPO organisation, on the contrary, showed great flexibility and moderation in seeking to relieve the United Nations of its responsibility for recognising SWAPO as the only representative of the peope of Namibia?
    Can the hon. Gentleman assure the House that when the Prime Minister and the Foreign Secretary go to see President Reagan they will make it clear to him that the credibility of the West in Africa is now at stake and that it is essential that the five Western Powers should continue to stand shoulder to shoulder with the front-line States in finding a solution to this problem along lines that have already been agreed in principle by all concerned?
    Mr. Luce: If the right hon. Gentleman does not regard it as too patronising coming from me, may I first congratulate him on his new position?
    I come to South Africa and the role that she has played. Looking back on last week—as the right hon. Gentleman may know, I was able to attend the second half of the conference—I can say that it was the Administrator
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    General himself who said that he felt that it would be premature to reach an agreement at that stage, and therefore it was the South Africans' decision not to go ahead. Looking back over several months, or even several years, of negotiations, however, I think that the right hon. Gentleman will agree that it has required compromise from all the parties, and that it would not be right to cast the blame on one party solely. But with regard to last week, the position is plain.
    I should have thought that it would be only sensible, and that the right hon. Gentleman would agree, to say that the new United States Administration must have time to consider the situation in Southern Africa. I noticed that the new Secretary of State, in his evidence to the Senate, said that he wanted negotiations, a negotiated settlement and stability in Southern Africa.
    Mr. Jim Spicer: Given that we shall almost certainly see an increase in terrorism against the Ovambo people by SWAPO guerrilla forces, can my hon. Friend give us any indication of the support role played by the Cuban, Russian and East German forces in Angola in helping those SWAPO forces to train for such attacks?
    Mr. Luce: As my hon. Friend, who knows that area very well, will know, the Soviet Union and her satellites will always seek opportunities where they are available. The evidence is that a large number of Cuban troops, indeed thousands, are present in Angola. I believe that until we get a settlement that situation may well persist.
    Mr. Russell Johnston: Is the Minister aware that the constructive approach that he adopts in these matters would be strengthened if he responded more robustly to his right hon. Friend the Member for Brighton, Pavilion (Mr. Amery)? I should be very concerned indeed if the Government shared the right hon. Gentleman's objectives in these matters. Can the Minister say what the next stage is with regard to the five Western Powers sitting down together to consider what initiative they can next take?
    Mr. Luce: I believe that my right hon. Friend and I would both like to see stability in Southern Africa and would not like to see the Soviet Union and its satellites exploiting the situation there. However, we may have some disagreement on how we can best achieve that. I think that it is perfectly reasonable that we should debate this in the open.
    With regard to the next stage, Mr. Brian Urquhart, who was the chairman of the conference last week, and who commanded the respect of all the parties, said that he felt that there was now a need for a period of reflection by all the parties. The new American Administration will also clearly need time to reflect. We shall certainly be ready to do what we can to help.

    Falkland Islands
    Mr. William Sheltonasked the Lord Privy Seal whether he has received the views of the Falkland Islanders on the various alternatives that were placed before them recently; and whether he will make a statement.
    Sir Ian Gilmour: At a meeting on 7 January the Falkland Islands Legislative Council passed the following motion:
    "While this House does not like any of the ideas put forward by Mr. Ridley for a possible settlement of the sovereignty dispute

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    with Argentina, it agrees that Her Majesty's Government should hold further talks with the Argentines, at which this House should be represented and at which the British delegation should seek an agreement to freeze the dispute over sovereignty for a specified period of time."
    This motion represents the outcome of debate in the islands since the visit by my hon. Friend the Minister of State in November last year. We are now considering the next steps.
    Mr. Shelton: I thank my right hon. Friend for that answer, but in this new situation the probability is that no solution will be reached for some considerable time. If that is so, what plans has he to aid the Falkland Islands? Does he agree that if no such aid is forthcoming the situation might be resolved in Argentina's favour by the continuing economic problems at present facing the islanders?
    Sir Ian Gilmour: With respect to my hon. Friend, I do not altogether accept the premise of his question. I do not think that it is necessarily true that nothing will happen for a long time. Apart from anything else, the Argentines have been pressing for developments. I therefore think that it is premature to answer substantively my hon. Friend's question about aid, although he knows that we are committed to supporting the Falkland Islands in every practicable way.
    Mr. James Johnson: What plans do the Government have for the future of the islands? Are the people there—fewer than 2,000—to be condemned, like Muhammed's coffin, to be suspended between Heaven and Hell?
    Sir Ian Gilmour: The whole point of our talks with the Argentines is to provide a secure future for the Falkland Islanders.
    Mr. Nicholas Winterton: Will my right hon. Friend give an assurance that without the wholehearted support of the people of the Falkland Islands there will be no sell-out to Argentina? Does he agree that there is great potential in the Falkland Islands—possible oil and great fishing reserves? Will he consider aiding the Falkland Islands financially in regard to communications, particularly with the extension of their airport? If that were done, there would be no problem at all in dealing with Argentina.
    Sir Ian Gilmour: We have many times made it clear that the interests of the Falkland Islanders are paramount, so there can be no question of a sell-out. As my hon. Friend knows, extension of the airport will be very expensive, I have nothing to add to the answer that my hon. Friend the Minister of State gave.
    Mr. Maclennan: In the light of the resolution passed by the Falkland Islanders, will the Government withdraw the proposed lease-back suggestion from the agenda for any discussions that they may have with the Argentine Government?
    Sir Ian Gilmour: It is not on the agenda at the moment, so it does not have to be withdrawn. All that we shall be discussing for the moment is the freeze.

    Madrid Conference
    Mr. Chapmanasked the Lord Privy Seal if he will make a statement on the Madrid conference to review the Helsinki agreements.
    Mr. David Atkinsonasked the Lord Privy Seal if he will make a statement on the Helsinki review conference taking place in Madrid.
    Mr. Hooleyasked the Lord Privy Seal if he will make a statement on the progress of the CSCE discussion in Madrid.
    Mr. Blaker: During the first part of the Madrid meeting there was a thorough and frank review of the implementation of the Helsinki Final Act by all signatory States. Among the issues to which particular attention was paid were the Soviet invasion of Afghanistan, the repression of monitoring groups in the USSR and the deteriorating Soviet record on human rights. The Madrid meeting reconvenes on 27 January to discuss new proposals for improving the implementation of the final act, and to draft a final document.
    Mr. Chapman: I am grateful to my hon. Friend for that considered reply, but will he confirm that after the six-week session adjourned for Christmas, the senior United Kingdom representative at that conference was quoted as saying, with the greatest regret, that not the slightest step forward had been taken? If the USSR refuses to abide by the Helsinki declaration, which I understand includes a commitment to convene a further review conference in two years' time, will Her Majesty's Government seek a united response from Western countries, including EEC countries, which will not necessarily exclude using certain trade and economic measures?
    Mr. Blaker: We are already taking certain trade and economic measures vis-à-vis the Soviet Union in the context of the invasion of Afghanistan. I think that my hon. Friend has correctly quoted Mr. Wilberforce, who was at that time leading the British delegation. It is true that the Russian altitude, although it has not been very acrimonious, has not been very constructive about the prospects of the USSR fulfilling the agreement more effectively. We have already put forward new proposals, which will be discussed on the resumption of the conference on 27 January, and we hope that the Russians will show a more constructive attitude then.
    Mr. Atkinson: I congratulate my hon. Friend on his fine speech at Madrid and the firm stand that has enabled the Soviet Union and its allies to be held to account for their continued abuse of human rights. Will my hon. Friend pursue an agreement within the Helsinki process for the prevention of the abuse of psychiatry for political purposes?
    Mr. Blaker: I am grateful to my hon. Friend for his first remarks. The proposals that we have put forward, with our friends, include proposals on the better observance of human rights, and I have no doubt that the very important question of the abuse of psychiatry will come up.
    Mr. Hooley: Now that the Government have renewed negotiations with the Soviet Union for extended trade credits, does that mean that the process of détente and the CSCE will be continued? If so, will the Government take seriously the proposals tabled by France and the Soviet Union for a European disarmament conference?
    Mr. Blaker: I am not sure that we have proposed that credits in favour of the Soviet Union from the Government should be renewed. As the hon. Gentleman knows, we

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    discontinued them when the Labour Government's agreement expired. We have taken the view that the Soviet invasion of Afghanistan delivered a serious blow to detente, and if the Soviet Union continued to behave in that manner detente could not survive. The proposals by France and the Soviet Union for a conference on disarmament are different. We have supported the French proposal, which envisages the improvement of confidence-building measures over the whole of Europe. We shall examine the Soviet proposals, but they seem to us at present to involve declaratory statements rather than practical steps.
    Sir Bernard Braine: Why are the discussions taking place at all when so many brave souls, such as the distinguished Czech playwright, Vaclav Havel, and many others, are being persecuted and are in prison for accusing their Governments of not observing both the letter and the spirit of the Helsinki accord? What protests are we making in Madrid about the treatment of such people, who have committed no crime but are merely witnesses to the truth?
    Mr. Nicholas Winterton: Absolutely nothing.
    Mr. Blaker: The Government take the view that the Helsinki process inaugurated by the Helsinki Final Act is a useful one in the interests of the West. The evolution of events in Eastern Europe since then shows some confirmation of that. It is true that terrible abuses of human rights continue, but the continuation of the Helsinki process gives us the opportunity to draw attention to those abuses in a public manner. We have been doing that at Madrid, and we have received many letters of congratulation on the stand that the Government have taken. We should continue to draw attention to this matter when the conference resumes.
    Mr. McNally: Will the Minister confirm that that statement is very different from the posture of the Conservative Party at the time of the Helsinki Final Act; that the Madrid conference allowed him to raise matters of human rights, and has provided the opportunity for the Prime Minister's U-turn on trade; that his Department's policy follows Lord Trevelyan's dictum that we should continue the dialogue with the Soviet Union at all opportunities, on all issues and at all times; and that the Foreign Office has finally abandoned the cold war posturing of the Prime Minister?
    Mr. Blaker: I am sorry that the hon. Gentleman, who is normally fairly sensible, seems to have gone off the rails, especially towards the end of that question. There has been no U-turn on trade. What we said after the invasion of Afghanistan was that trade that was in the interests both of the United Kingdom and of the Soviet Union should continue, in spite of Afghanistan, but that we would support the measures that the United States Government were taking in relation to grain, that we would tighten the rules about the export of high technology to the Soviet Union, and that we would not renew the credit arrangements that the Labour Government made in favour of the Soviet Union.
    Viscount Cranborne: I congratulate my hon. Friend on his sterling performance in Madrid. Does he consider that perhaps one of the most effective ways in which to help the cause of human rights in Russia would be to increase Government expenditure on the overseas services provided by the BBC? There is considerable evidence of
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    the effectiveness of those services, as a function not only of defence, but of helping the cause of human rights, as my hon. Friend will see when he reads the recent reports, particularly in the Financial Times, to the effect that the Russians spend a large part of their resources every year on trying to jam those broadcasts.
    Mr. Blaker: I am grateful to my hon. Friend for his opening remarks. I agree with him about the importance of the overseas services of the BBC. We considered that in view of the need to cut public expenditure the BBC external services could not be entirely exempt from cuts, but we are spending a good deal more on them than was being spent two years ago. It is our intention to do the same next year. That will mean an improvement in the reception of those services in general.
    Mr. Frank Allaun: At Madrid, will the Government take the initiative over arms reduction? Will they respond to the proposals made by Mr. Brezhnev last month, or will they continue to dance the eternal minuet, in which each side retreats as the other side advances an offer?
    Mr. Blaker: The Helsinki forums have not so far been the forums in which we have discussed arms reduction. We have discussed confidence-building measures, and I think it right that we should continue to do that when the conference resumes. Whether at a subsequent stage we should go on to the question of arms reduction is an entirely different and important matter. We must bear in mind that there are many other forums in which arms control and arms reductions are being discussed.

    Palestine Liberation Organisation
    Dr M. S. Millerasked the Lord Privy Seal what recent discussions he has had with the Palestine Liberation Organisation.
    The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hurd): Ministers have not had discussions with the PLO. Sir John Graham, a deputy under-secretary in the Foreign and Commonwealth Office, met Yasser Arafat on 2 December in Beirut during a routine and fully authorized tour of the Middle East in order to hear at first hand the PLO's views and to explain our own.
    Dr. Miller: Did the hon. Gentleman make it clear to Sir John that the British Government could not expect much progress to be made in such talks unless and until the PLO renounced its oft-repeated intention to try to eliminate the State of Israel?
    Mr. Hurd: There are two basic facts. One is that the PLO enjoys a lot of support on the West Bank and in Gaza. Secondly, as the hon. Gentleman indicated, it will have to move a considerable distance in accepting the existence and right to security of Israel before there can be a peace settlement. That seems to us a good reason for having additional contacts with it.
    Mr. Donald Stewart: Does the Minister accept that the idea of constant consultation will be welcome to many hon. Members on both sides of the House, and that no final settlement is possible without the inclusion of the PLO in whatever agreement is arrived at?
    Mr. Hurd: I agree with the right hon. Gentleman that the PLO will need to be associated in one way or another

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    with discussions before there can be a durable settlement. That was the position taken by the Heads of Government of the Nine at Venice.
    Mr. Walters: Does my hon. Friend agree that there cannot be a lasting peace in the Middle East without the recognition of Palestinian as well as of Israeli rights? The PLO represents the great majority of Palestinian opinion. Therefore, is it not sensible and obvious that talks with the PLO should be speeded up?
    Mr. Hurd: My hon. Friend is really paraphrasing the two main principles of the Venice declaration. The Council of Ministers of the EEC yesterday gave the Dutch Foreign Minister a mandate to continue discussions based on those principles and on the analysis just put forward by my hon. Friend.
    Mr. Healey: Will the Minister accept that one great obstacle to negotiations over the Palestinian problem might be removed in July when a new Government take office in Israel, a Government who reject Mr. Begin's claim to the so-called biblical lands, and that it is desirable that the other great obstacle to negotiations should be removed by the PLO's renouncing its commitment to the annihilation of the State of Israel?
    Mr. Hurd: I have said that we see a need for the PLO to move a considerable distance. The right hon. Gentleman would not want the Government to take sides in Israeli politics. We pay attention to the views of all Israeli leaders.
    Mr. Farr: Will my hon. Friend confirm that while the aims of the PLO remain unchanged, there is a far greater readiness now to achieve them by negotiation rather than by force?
    Mr. Hurd: There have been negotiations, mainly in private conversations, to that effect. What is now needed is for the PLO to move some distance in public, and for the Israelis, in their turn, to accept that it will not be possible to settle the future of the West Bank and Gaza without the participation of the Palestinians.

  European Community

    Foreign Affairs Council
    Mr. Spearingasked the Lord Privy Seal when he intends to make a statement concerning the matters discussed at the European Economic Community Foreign Affairs Council held on 19 and 20 January.
    Sir Ian Gilmour: The member States agreed to the appointment of Mr. Poul Dalsager to take the place of the late Mr. Gundelach.
    The Council approved a flat rate increase of 1,030 Belgian francs per month for officials in Brussels and Luxembourg, which is 3·3 per cent. for the lowest paid, and much less for senior staff. It also agreed to decide on the new method for reviewing staff pay by 15 April.
    Ministers discussed arrangements for trade in baby beef between Greece and Yugoslavia, following Greece's accession to the Community; and also a draft regulation for the Community's programme of aid to non-associated developing countries.
    I am circulating a fuller account of yesterday's Council in the Official Report.
    Mr. Spearing: Will the Lord Privy Seal tell the House whether the British budget package was discussed? Can he go further than his written answer of 19 December, which says that the return package is to be distributed among a number of sewage works, telephone exchanges and bypasses throughout Britain? Does that package have to be approved by the Council, and when will the full programme be announced to the House and to the people of Britain?
    Sir Ian Gilmour: No, it was not discussed because things are moving satisfactorily at present. As the hon. Gentleman knows, we received the first advance of nearly £100 million last year, and the programmes that have been put forward by the Government are being considered. We expect to receive 80 per cent. of our refund under article 235 by the end of the financial year, and 75 per cent. by refund under the financial mechanism.
    Mr. Renton: Bearing in mind that there appear to be increasing tensions between the Polish Government and leaders of the Solidarity union, did the Council discuss yesterday what further measures the EEC might take to ease some of the immediate economic difficulties of the Polish people?
    Sir Ian Gilmour: I do not think that it did so yesterday, but, as my hon. Friend knows, there were discussions at the previous Council, and there have been discussions in between council meetings, whereby the programme of food aid to Poland was agreed. We have probably agreed—depending on how it is spent—on the sum of £15 million, and there have been other discussions about further aid to Poland.
    Mr. Moyle: Will the Lord Privy Seal tell the House whether the opportunity was taken to discuss the supply of arms to Iraq and Iran, since one of the Tehran Government's reasons for releasing the hostages was the hope that it might stimulate tha flow of arms and spare parts? Will the Government take every opportunity to persuade our EEC colleagues not to supply arms to either country in the present situation?
    Sir Ian Gilmour: The right hon. Gentleman will have seen the communiqué that was issued after the meeting on political co-operation, which referred to the hostages, but not to arms sales.
    Following is the statement:
    My right hon. and noble Friend represented the United Kingdom on 20 January at this first meeting of the Foreign Affairs Council under the Netherlands Presidency.
    The member States agreed to the appointment of Mr. Poul Dalsager to take the place of the late Mr. Gundelach.
    The Council accepted a Presidency compromise proposal awarding staff in Brussels and Luxembourg a flat rate increase of 1,030 Belgian francs per month from 1 July 1980. This is based on a 3·3 per cent. increase for staff on the lowest salary point, and so represents much less for more senior staff: it is a considerable reduction from the Commission proposal for an overall increase of 3·3 per cent.
    It was also agreed that the Council should discuss the method for reviewing staff pay on 17 February, and that it should reach decisions on the revision of the method by 15 April.
    The Council agreed on an autonomous regime for Greek imports of baby beef from Yugoslavia, to run for three months while a permanent protocol adapting the provisions of the European Commission—Yugoslavia Agreement to take account of Greece's accession to the Community is negotiated.
    The Council once again discussed a draft regulation to govern the Community's programme of aid to non-associated

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    developing countries, but no conclusions were reached. This programme has grown rapidly, from £12 million in 1976 to £95 million this year, and a proper regulation is overdue.

    Foreign Policy
    Mr. Hicksasked the Lord Privy Seal what initiatives he proposes taking to achieve closer co-operation with his European colleagues in foreign policy; and if he will make a statement.
    Sir Ian Gilmour: My right hon. and noble Friend has made a number of suggestions for the strengthening of foreign policy co-operation. I refer my hon. Friend to his speech at the Ubersee club in Hamburg on 17 November, a copy of which has been placed in the Library of the House.
    Mr. Hicks: In the context of the European initiative for the Middle East, is it not a fact that any possible solution will have to involve a settlement of the questions of Palestinian refugees and the occupied territiries? Is it not therefore sensible and logical for the European countries to recognise the PLO as the legitimate spokesman for the Palestinians, as has already been done by more than 100 countries?
    Sir Ian Gilmour: As my hon. Friend will have heard, my hon. Friend the Minister of State has just been dealing with questions of that sort. The Government recognise only States. We do not recognise organisations such as the PLO. However, we made it clear in the Venice declaration and since that we strongly believe that the PLO cannot be excluded from the peace process.
    Mr. Healey: Is the Lord Privy Seal aware that his reply to my right hon. Friend the Member for Lewisham, East (Mr. Moyle) was rather like saying that yesterday was Tuesday and the communiquésaid nothing about Wednesday? Will he answer the question that was put to him, particularly now that the hostages have been released? Will he assure the House that the Government will use their influence inside the Community to ensure that no Community countries supply arms to the combatants in Iran and Iraq until a lasting peace is established?
    Sir Ian Gilmour: I cannot speak for Community countries, but I can speak for us. There have been no sales to Iran, including the Kharg, since November 1979, and all sales will remain subject to customary licensing procedures. Future applications will be considered in the light of all the relevant circumstances, including the situation in the area that relates to war and our relations with Iran.
    Mr. Eldon Griffiths: Will my right hon. Friend be discussing with the European countries the removal of sanctions against Iran by all member countries? Before trade can be resumed, will he discuss with them the need for the return of the British citizens who are being held illegally in Iran? Does he agree that it is in the common interest of Europe and the West as a whole that our future relations with Iran should prevent that great and important country from slipping either into chaos or under the Iron Curtain?
    Sir Ian Gilmour: I am sure that the whole House will agree with the concluding words of my hon. Friend. He will appreciate that sanctions were imposed in the context
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    of the American hostages, and will be lifted immediately. Of course, like my hon. Friend, the Government attach the greatest importance to the release of the four British people who are detained in Iran. We hope that that will take place soon.
    Mr. Russell Johnston: Does the Lord Privy Seal agree that closer political co-operation would be facilitated if there were an effective permanent secretariat attached to the Council of Ministers? Are the Government still pressing that case, and if so, what response have they had to it?
    Sir Ian Gilmour: The hon. Gentleman knows that my right hon. and noble Friend has put forward that suggestion on one or two occasions, notably in his Hamburg speech. We think that it would improve political co-operation. There are different views about it in the Community, and a general view has not yet been formed.
    Mr. Peter Fraser: Even though, as my right hon. Friend said, it has now been agreed with our European partners that the sanctions that were imposed last year by this House and by other countries should be lifted, will he assure the House that not only this country, but other countries, too, will pay the greatest regard to the export of military hardware to Iran unless and until we get our four prisoners home?
    Sir Ian Gilmour: That is not particularly relevant to the release—[HON. MEMBERS: "Why not?"] There is a clear distinction between the position of our detainees and that of the American hostages. The common factor is that neither group should have been detained in the first place. Apart from that, the Americans have been engaged in a long bargain with the Iranians to get back their hostages. We do not believe that there should be a bargain. We believe that the detainees should be released forthwith.

    Community Policies
    Mr. Marlowasked the Lord Privy Seal what progress he expects to make in the next six months in achieving fundamental and substantial reforms in the European Economic Community.
    Sir Ian Gilmour: Under the agreement reached on 30 May 1980 the Commission is due to submit the results of its examination of Community policies, aimed at preventing the recurrence of unacceptable situations, by the end of June 1981, and the Council of Ministers will no doubt have a preliminary discussion on this shortly after it is submitted. Meanwhile, we are having informal contacts with the Commission and with our Community partners.
    Mr. Marlow: Since the British housewife is forced to pay about £ 1,500 million each year over and above the cost of supporting our own agriculture, and since, according to The Times, New Zealand could increase its agricultural production and produce goods at prices that would be half of those ruling under the CAP, without a single penny of capital expenditure, will my right hon. Friend take whatever measures are necessary to ensure that Britain can go back to a system whereby we can get food at world market prices, to the considerable benefit of the poor, the elderly and the disadvantaged in the country?
    Sir Ian Gilmour: I do not accept my hon. Friend's figures. As he realises, he is asking us to leave the Community. It is much better to say so than to put forward a demand that cannot conceivably be granted.
    Mr. Denzil Davies: When the Government consider these matters, will they look at the absurd arrangement whereby agricultural prices are fixed in green currencies and not in real money? Does the Foreign Office realise that the British consumer is paying not only an import tax on food imported from outside the EEC, such as New Zealand butter, but a 13½per cent. tax on food imported from the EEC? When will the Government revalue the green pound?
    Sir Ian Gilmour: The right hon. Gentleman talks about the absurd system. While he was at the Treasury he did nothing to change it. Under his Government the green pound went down to 45 per cent. less than its value, with great damage to our farmers. At the moment the positive MCAs that we have add about 2·25 per cent. to the food index and less than 0·5 per cent. to the whole retail price index.
    Mr. Dorrell: Will my right hon. Friend confirm that this country had a trade surplus with Europe last year and that, whatever negotiations he undertakes to reform the shortcomings of the Community, he will not endanger the substantial benefits that this country gains from membership of the Community?
    Sir Ian Gilmour: I agree with my hon. Friend. It is also the case, as I have several times emphasised to the House, that our performance in manufacturing, which has not been good all over the world, has been relatively better in our trade with the EEC than it has with the rest of the world.
    Mr. Arthur Lewis: As the Government are alleged to be united in making cuts in Government expenditure, will the right hon. Gentleman tell us what has been the extent of the cut in our EEC expenditure to date, and what cut he envisages in the future? Will he accept that this is a cut that the House and the country would like to see? People want that expenditure to be cut drastically.
    Sir Ian GilmourI do not know where the hon. Gentleman has been over the past nine months, but it was announced on 30 May that we had succeeded in cutting our contribution both this year and next by two-thirds respectively about £700 million and £800 million.

    Foreign Affairs Council
    Mr. Dormandasked the Lord Privy Seal where he expects to meet his European Economic Community counterparts to discuss the future development of the Community.
    Miss Richardsonasked the Lord Privy Seal what items Her Majesty's Government are seeking to have placed on the agenda of the next meeting of the European Economic Community Foreign Ministers.
    Mr. Cryerasked the Lord Privy Seal when he next expects to meet other European Economic Community Ministers to discuss harmonisation of European Economic Community affairs.
    Sir Ian Gilmour: I next expect to meet my Community colleagues at the Foreign Affairs Council on 16 and 17 February. It is too early to say what topics will be discussed.
    Mr. Dormand: When the right hon. Gentleman meets his counterparts, will he impress upon them the disenchantment of the British people with the political control imposed upon us by the Treaty of Rome? I make no mention of the disastrous economic consequences of our membership of the EEC, about which questions have been asked this afternoon. Will the right hon. Gentleman begin to move towards a fundamental change of the Treaty of Rome, so that we can have a much looser federation with Europe?
    Sir Ian Gilmour: We do not have a federation, either tight or loose, with Europe, and we are not aiming to have one. I do not know where the hon. Gentleman gets the word from. The EEC is a collection of nation States. We have accepted no greater controls on us than either France or Germany have accepted. Does the hon. Gentleman really think that France and Germany behave as if they have lost national control over their destiny? Of course they do not, and nor do we.
    Mr. Cryer: Is not harmonisation a none too subtle erosion of the powers of any United Kingdom Government? If, for example, a future Government wanted to take measures to reduce the level of unemloyment, would they be seriously inhibited or stopped by measures taken at Brussels under the Treaty of Rome? When one gets down to it, is not the only answer to follow Labour's policy and get out of the Market?
    Sir Ian Gilmour: No, because, first, harmonisation is not an erosion of sovereignty. In some cases it is sensible, and in others it is not, but it has nothing to do with sovereignty. Secondly, Governments are not inhibited by the EEC in general in taking steps to reduce unemloyment. Thirdly, if we left the EEC it would have a catastrophic effect on jobs.
    Mr. Moate: Does my right hon. Friend agree that one of the objectives of the Treaty of Rome is the free movement of labour? In view of the imminent or actual enlargement of the Community to include Greece, the very welcome possible inclusion of Spain and Portugal, and in view of the current agreement with Turkey, does he agree that this is an objective that should be re-examined, in the best interests of all the members of the Community, to avoid the possibility of damage being done to any member of the Community in years to come?
    Sir Ian Gilmour: I do not think that that is right. As my hon. Friend will appreciate, there are transitional arrangements with Greece, so that there will be no full movement until, I think, 1988. No doubt similar arrangements or provisions will be made in the Treaty of Accession for Spain and Portugal.
    Mr. Robert Hughes: Has the Lord Privy Seal kept his EEC counterparts advised of the part that the Government have been playing in trying to seek a settlement in Namibia? Will he confirm that, in the discussions before the Geneva conference, the South Africans accepted the principles for the agenda, and that the failure to sign an agreement is a massive breach of faith? Will he, therefore,

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    discuss with his European counterparts ways in which United Nations mandatory sanctions can be applied to South Africa?
    Sir Ian Gilmour: The answer to the hon. Gentleman's second question must be "No". It must be sensible to have a breathing space while the Reagan Administration consider their policies on Southern Africa.
    We had a quite extended discussion about Namibia—the hon. Gentleman probably was not present—and I do not think that there is anything that I can usefully add.
    Mr. Dykes: Does my right hon. Friend agree that the right kind of harmonisation for us to emphasise in the coming years is that which enables all countries and all industries, including British industries, to do more trade in the other member States? I am thinking here of the financial industries of Britain. Will the Government press, for instance, for better terms for harmonisation in the insurance industry?
    Sir Ian Gilmour: I agree with my hon. Friend. Insurance is a good case in point and, as he knows, we are particularly interested in it.
    Mr. Denzil Davies: Does the Lord Privy Seal agree that a Common Market of 12 members, including Spain, Greece, and Portugal, will be very different in character from the original Common Market of six members set up in the 1950s? Is there not now a case to repeal the Treaty of Rome, which is ever irrelevant and inflexible, and replace it with a much looser economic arrangement that takes fully into account the differing problems and needs of the different countries of Western Europe?
    Sir Ian Gilmour: No, I do not think so. I accept that a Community of 12 members is almost certain to be very different from a Community of six members. To suggest that we should repeal the Treaty of Rome is, if I may say so, frivolous. It would be an enormous undertaking and contrary to this country's national interests and those of the Community. We have no intention of doing so.

    Japan
    Mr. Hal Millerasked the Lord Privy Seal what discussion there has been amongst Foreign Ministers of the European Economic Community on Community relations with Japan.
    Sir Ian Gilmour: The Community's relations with Japan were most recently discussed by the Council of Ministers on 25 November 1980. The Council adopted a declaration calling for a wide-ranging dialogue between the European Community and Japan, but making it clear that in order to promote such a dialogue there should first be effective moderation in Japanese exports and a clear commitment by the Japanese Government to a substantial and early increase in imports of Community products.
    Mr. Miller: In view of the importance of our trading relationships with Japan, will my right hon. Friend report to the house on the outcome of the dialogue recently held by Sir Roy Denman under that directive? Will he ensure that if the process of that dialogue was perhaps not as harmonious as it might have been, care is taken on future occasions so that we do not lose valuable ground?
    Sir Ian Gilmour: We do not want to lose any valuable ground. My hon. Friend will appreciate that I should not
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    comment or report on particular meetings between officials of the Community and other countries. We hope that the Japanese will reply fairly soon to what was said in the autumn, and we look forward to a satisfactory dialogue with them.
    Mr. Douglas: Will the Lord Privy Seal assure the House that the Community will act as a community in relation to Japan, and that Japan will not pick off individual nation States? Will the Community hold a concerted policy on microelectronics and on energy in particular?
    Sir Ian Gilmour: That will be discussed. I agree that when the Community acts as a community it has greater strength. However, I have already made it clear that Britain could not accept any arrangements that were less effective than those already in our possession.

  National and Local Government

    Officers Association
    Mr. Keith Wickenden: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
    "the secondary effects of NALGO's industrial action against the London borough of Wandsworth".
    The facts are simple. As hon. Members know, there is a dispute between members of the National and Local Government Officers Association and the London borough of Wandsworth. The facts of the dispute are not known to me and are not relevant to this application. The dispute is partly political, because members of NALGO take exception to certain public expenditure cuts that the borough has put into effect.
    I am concerned about the secondary effect of that dispute, namely, that many sub-contractors are no longer being paid and have not been paid for many months. As a result, a major contractor in my constituency, which employs many painters and decorators, will have to lay off men this Friday because it has no money to pay them.
    Whatever the merits of the dispute may be, members of NALGO did not intend to cause financial hardship or stress to other trade union members. I believe that this matter should have consideration.
    Mr. Speaker: The hon. Member for Dorking (Mr. Wickenden) gave me notice this morning before 12 o'clock that he might seek to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
    "the secondary effects of NALGO's industrial action against the London borough of Wandsworth".
    I listened, as the House listened, with concern to what the hon. Gentleman said. I realise that it is a matter of considerable importance to his constituency and to the workers involved. However, as the House knows, under the revised Standing Order No. 9 I am directed to take account of the several factors set out in the Order but to give no reason for my decision.
    I have given careful consideration to all the representations that have been made, but I must rule that the hon. Gentleman's submission does not fall within the provisions of the revised Standing Order and, therefore, I cannot submit his application to the House.

Orders of the Day
  SUPPLY
  [5TH ALLOTTED DAY]—considered

  Energy Policy
  Mr. Speaker: I must inform the House that I have selected the amendment in the name of the Prime Minister. A considerable number of hon. Members from both sides of the House have indicated that they hope to participate in the debate. I hope that those who are fortunate enough to be called to speak will bear that in mind.
  3.33 pm
  Mr. Merlyn Rees: I beg to move,
  That this House deplores Her Majesty's Government's lack of overall energy policy; condemns the pricing policy which handicaps the competitiveness of British industry, and rejects a policy for coal which would lead to a reduction in the output projected in the 'Plan for Coal'.
  We have divided the motion into three parts. We are concerned about overall energy policy, pricing policy for industry and the "Plan for Coal." Our energy position is the one bright light in the economic firmament during a world depression that has been accompanied by a domestic economic policy that only exacerbates the position. The House does not pay enough consistent attention to energy. Every year a Budget Statement is made, from which legislation flows. There is discussion on the Government's economic policy, and such discussion spreads throughout the country. In our view, there should be an annual energy statement that should lead to debate and discussion. In addition, the Select Committee on Energy should be brought into that discussion.
  I am a new Front Bench Spokesman on this subject, and during the past month I have looked back in the records. In the past, the Government have—typically—issued written answers when they have wished to put on the record key decisions on energy policy. I hope that that will not be the case in future. Just before Christmas a written answer was issued on the gas-gathering pipeline. If my hon. Friend the Member for Dunfermline (Mr. Douglas) had not used his initiative and raised this matter during the Christmas Adjournment debates it would not have been discussed. It is of vital importance to the country.
  Similarly, a written answer was given on the postponement of the BNOC Clyde field. Such important matters should not be slipped in. There is room for more consistent discussion on energy policy. As a new spokesman, I have considered the Energy Commission, its work and its demise. Whatever form it may take, and whatever name it may be given, there is room for a forum in which those involved in the industry can discuss Government policy and become involved in its formulation. There is wide interest in the House on this subject, and many hon. Members have practical experience of it. No Government should think that they know best, particularly on energy policy.
  We must find ways of bringing into the discussion those involved in the various energy industries. I am against bureaucracy, wherever it may exist. I have no wish—as
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  seems to have been argued—to set up a bureaucratic pimple on the body politic. Nevertheless, open discussion of this subject is vital.
  We all know that not only is there a need for a general acceptance of policy; in addition, there must be a flexibility of approach. As a result of the long leads in investment, decisions taken in a short-term situation will almost certainly prove to be wrong in two or three years' time. Changes are constantly taking place.
  I should like this debate to be forward-looking. About 30 years ago I studied the report of the first commission on the coal industry in 1871. That was 110 years ago. Some of the most eminent men in the coal industry were members of that commission. The commission said:
  "Every hypothesis must be speculative,"—
  that shows good sense—
  "but it is certain that if the present rate of increase in the consumption of coal be indefinitely continued, even in an approximate degree, the progress towards the exhaustion of our coal will be very rapid."
  Professor Jevons, a very eminent economist at that time, was one of the leading proponents of the market approach to economics. He put the case even more firmly in the report. He said that coal supplies would run out within 110 years. Exactly 110 years later, we know that he was wrong.
  The commission's report raised another interesting point. It argued that much of the coal that we had could never be mined. It said that it knew of coal-bearing strata in North America that was almost untouched and that was about 70 times the area of our own strata. The commission speculated that in time we would import our coal from North America.
  The report went on to say—this is very revealing:
  "it may well be doubted whether the manufacturing supremacy of this kingdom can be maintained after the importation of coal has become a necessity".
  I want to return to the question of the importation of coal. The report was wrong. Wrong decisions were taken in the 1950s and the 1960s by both Labour and Conservative Governments. We on the Opposition side, know that wrong decisions on the coal industry were taken at that time. What we have to endeavour to do, in an uncertain field, where things that look right in the short term are shown to be wrong in the medium and long term, is to get it as right as possible but to be flexible, so that we can make changes when our belief of a year or six months before is proved wrong.
  One other change in recent years concerns the international dimension of energy. There are international effects from the discovery and development of oil in the Middle East. There are international decisions. There is the International Energy Agency. I have read the long report that came out of a ministerial meeting on 9 December, when fundamental decisions were taken. All that we were given in the House was a written answer on 16 December. The situation demanded a full statement to the House. I ask the Secretary of State to make sure that in future the quarterly meetings of the IEA—its decisions and what happened—should be reported in exactly the same manner as meetings in the EEC are reported to the House. If it is good enough to report what happens in agricultural arguments in the Community, since energy is of far greater importance hon. Members should be given a report.
  I have listed some of the issues that were decided. I hope that "decided" is the right word. One of these was

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  that there should be an extension of oil-sharing agreements. What does that mean in practice? Another was that there should be further restraint on oil consumption. What does that mean in practice? The report referred to lines of action—the word "action" was used—on energy switching. An important report was received on coal, with the Ministers recommitting themselves to a doubling of production by 1990. That dealt with a number of countries. In terms of the Opposition motion, it surely means a commitment to the "Plan for Coal", started seven years ago.
  What does acceptance mean if it is not translated into action? I shall return to the coal aspect, but there are other important matters connected with energy policy which no doubt will be raised. I give notice that, in any event, the Opposition will return to them in the future and as soon as possible. I touch briefly on one of these subjects.
  The question of oil revenues is, in general, a matter for the Treasury, but one aspect falls directly on to the desk of the Secretary of State. The oil revenues now coming into the Exchequer accounts give the United Kingdom more economic hope than anything else. They are the basic cause of the rise in the value of the pound which has other implications. What is the truth on the oil revenues? What is the truth, so far as one can get at it, about the output of oil?
  The official projections of future Government revenues from North Sea oil are substantially lower than the projections of independent forecasters. The Treasury forecast puts the figure for 1983, at 1980 prices, at up to £2·4 billion. Wood Mackenzie gives £4·8 billion; Phillips and Drew, £6·2 billion; and the National Institute of Economic and Social Research, £7·8 billion. The right hon. Gentleman should give some justification, if not today, at some time, of the output figures on which the Treasury carries out its political arithmetic. There should be a justification from the Department of Energy to the House to explain why this has been done in a certain fashion.
  Following the report in the Financial Times last Friday that the Department is reassessing the reserves, the House should know those who are carrying out the reassessment. Will a part be played by the BNOC? The figures on which the revenues are based are of the greatest importance. Far be it from me necessarily to agree with what is written in the New Statesman. Its view was that the figures were deliberately being underestimated so that they could be updated at a suitable political date. I am concerned only with the practicalities. We must know the basis on which this operation is conducted.
  We shall also need to consider the problems of consumers—particularly the lower income groups—and the termination of supplies in difficult economic circumstances. This is a personal matter. I represent a working-class area of Leeds. I know the problems that face people moving into new developments. It is not a matter of world-shattering importance compared with the public sector borrowing requirement, oil revenues, and the "Plan for Coal", but it is a matter to which hon. Members should apply their minds. It is a significant issue for a small but important proportion of the people.
  I should like to refer to nuclear power. I am not clear—although I accept that these are early days—about the progress made on the setting up of the public inquiry
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  into the pressurised water reactor. What form will it take? When will it start? I am aware of the great emotions that are quite properly engendered by this subject. Until we have the inquiry, until we are given the terms of reference, until we are told the date, and until people are able to gather the evidence to put to the inquiry, the emotion will remain pure emotion. There will not be the chance to translate it into proper discussion of the use of nuclear power.
  Following the priorities stated in the Opposition motion, I turn to the two main subjects under the general heading of energy. The first is industrial energy prices. As the CBI has stated, there is no doubt that concern has been mounting in recent years over the rate of increase in United Kingdom energy prices. There is even greater concern that our energy prices are higher than those enjoyed by our major international competitors. High energy costs can seriously threaten the viability of certain sectors of industry. The Under-Secretary of State for Energy—the hon. Member for Kingston upon Thames (Mr. Lamont)—made a speech at Manchester on 14 January. He said, in effect, that high energy prices act as an inducement to energy conservation and even more. His words were:
  "Over the last five years, it has become a cliché to refer to the fact that we are living in a world of high energy prices. There can be no expectation of a return to the days of cheap and plentiful fuel."
  Mr. John H. Osborn: Quite right.
  Mr. Rees: That is a statement of fact that only those who shout "Quite right" can ever have queried. The Under-Secretary of State went on to say:
  "High energy prices will mean that a quite different climate for investment decisions will develop, once the first signs of business confidence are restored. Consumers across all market sectors may then feel"—
  not now—
  "the necessity to invest in new energy efficient equipment—new assets, new processes. Those who jump first into this market could make a killing."
  The CBI's view, not necessarily referring to the hon. Gentleman's speech, was that conservation requires substantial investment, often showing returns over a relatively long period of time, and will not be enhanced by a high price energy policy at a time of tight squeeze on profit margins.
  I have an abiding interest. My father was a collier, as was my grandfather and my great-grandfather. My family has been involved in energy for many years. I have studied the history of this matter. It is always the same thing. At the bottom of a slump it is not profitable to do what is right in the long term; when it comes to the long term, everyone wants to do it but then the signs are that one should not do it.
  There are major problems in some industries—paper and board, chemicals and steel, for example—arising out of the high price of energy. That is another statement of fact. The Government have a view. They have put it to the National Economic Development Office. What is it? Is it that most parts of British industry are not generally disadvantaged by fuel prices as compared with European competition? Will the Government be prepared to look at this matter again? I am thinking about flexibility. What is right one year may be wrong the next year. Will the Government be prepared to look at the financial targets for the fuel and power industries and take steps to alleviate the burden?

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  Is it the case, as reported in The Economist—in very inelegant words—that the Department is cooking up a concession on gas prices and that there is to be a new sort of gas tariff, half-way between prices for firm supplies and the cheaper rate of supplies that can be shut off?
  On all of this matter, will the Secretary of State make available the paper that was sent to the NEDO? It so happens that I have a copy of it. Heaven only knows how I got it. In my previous job, no doubt it would have been a matter of great concern, but now I am free from my former trammels, and it is marvellous. I suppose that I have a copy that I should not have had. I do not know what my Government did about it, but if the Government's policy or view on this matter is freely available outside, why should not Opposition Members have a copy? I accept that at the beginning of a discussion we should move on the basis that the Government know what they are doing and that they may be right. My predilection may be the other way. Nevertheless, let us have a sight of this paper.
  I can have no complaint about using the NEDO as a sort of Energy Commission. That is what the Government are doing. They have now put people all together in a good corporate State way. They will all sit down and produce a paper in March. I congratulate the Government on doing this. But all the papers available to the NEDO should be available to this House, because we want to participate in the discussion as well.
  In any event, there should be speedy action. It is our view that there should at least be an alleviation of energy prices to intensive users—for example, as I have just said, steel, paper and board, and foundries. Perhaps some of my hon. Friends have other suggestions.
  Mr. Dick Douglas: Specific.
  Mr. Rees: Specific.
  Mr. David Winnick: I appreciate my right hon. Friend's remarks about the effect of high energy prices on industry. Many of us are receiving letters on that subject. However, does my right hon. Friend agree that it is also essential to have some kind of comprehensive scheme that would assist those on low incomes, and that the scheme that the present Government have introduced is totally inadequate?
  Mr. Rees: My hon. Friend does not normally miss things. I said that about 10 minutes ago. I agree with what he said.
  On many matters affecting the coal industry, apart from Blue Books, White Papers, Red Books, and so on, there are aspects that we in politics consider for other reasons. I am very worried about the coal industry, because grave mistakes may be about to be made.
  We expressed concern about the coal industry legislation last June. Our motion then asked for increasing national support. It said that the NCB was
  "under severe financial pressure to accelerate pit closures, putting at risk the planned indigenous coal output targets which are a vital part of the national energy policy of self-sufficiency".—[Official Report, 17 June 1980; Vol. 986, c. 1387.]
  In his winding-up speech in that debate the Minister gave a positive reply. Indeed, the key of what he, said was "Let us be positive. Let us look to the future." Those were his words—the same words as were in the Labour Party's manifesto some years ago. They are good phrases—"Look to the future; let us not look back."Apparently my hon.
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  Friends who work or have worked in the industry and who represent colliers were people who were looking to the past. They were reflecting the views of the people in the industry. We must look to the future, but unless we have a base on which we can move to the future, the worries and niggles, some of which have been put to me recently, will vitiate what we want to do.
  What is the present situation? Has it changed since last year? In The Times on Monday there were words that came, I think, from a well-known, important member of the National Union of Mineworkers. I think that The Times was reporting his view, but it matters not, because I am putting the matter generally. The article talked of plans for widespread colliery closures. It said that 25,000 coal miners were to be put out of work.
  Is this "rubbish"? I picked up the word that the Secretary of State used at the beginning of his speech in June. On some aspects of this kind he said that reports were rubbish. It is important, because people are believing this. Are the current reports rubbish?
  Mr. Gwilym Roberts: My right hon. Friend mentioned the lag in investment, in the sense that what one sows today in the coal industry one reaps in 15 years' time. Does he agree that there are serious fears in the mining communities on the question of mine closures and on the Government's restrictive financial policies, which are destroying the seedcorn of the development of our coal industry for the future?
  Mr. Rees: My hon. Friend has the Park colliery in his constituency. He is airing his constituents' views. One of the benefits of debate is that if there is nonsense, if what I have reported is nonsense—if it is "rubbish", to use the word from a previous debate—this is the place where we want the information that removes feelings of that kind.
  What is the Government's present view on "Plan for Coal"? It is a most remarkable story. As a result of investment, there are the most remarkable colliery outputs. The Other day my hon. Friend the Member for Penistone (Mr. McKay) took me down a colliery in the Wakefield constituency—the Royston drift mine. It gets world records. The stuff is spewing up out of that drift mine. On the very same day I heard the Prime Minister, on a women's programme, saying how dreadful the nationalised industries were, and that they ought to run themselves like Marks and Spencer and United Biscuits. I did not see much sign of biscuits in what I saw. It is a different field—a different set-up. It is not the distribution trade; it is the productive industry of Britain. It is a remarkable story.
  The Under-Secretary has always stuck to the "Plan for Coal". Because of that, in the few visits that I have made so far his role in this matter has been applauded. The congratulations that have come to the coal industry came from the chairman of the NCB at the NUM conference last year. Our congratulations ought to go to the NUM and the NCB on what they have done on the basis of the "Plan for Coal". In all those suburban political meetings at which attacking the nationalised industries is good stuff, I hope that we shall hear that the coal industry has served this country well after 20 years of being regarded as a declining industry. It has more work to do.
  Mr. T. H. H. Skeet: The right hon. Gentleman is talking about "Plan for Coal". Is he serious

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  in his view that by 1985 we could have a producive capacity of 135 million tonnes when we have not got a market?
  Mr. Rees: That is exactly what I am asking the Minister. That is exactly the point. We should work towards that. The hon. Gentleman is very interested in oil.
  Mr. Skeet: And in coal.
  Mr. Rees: I am interested in coal and oil. I also want both of them, and I want the coal industry to play a major part in the years to come. The hon. Member said, in effect, that "Plan for Coal" is a lot of old rubbish. Do the Government think that? Have they changed their mind since last June, when they said that "Plan for Coal" was what they stuck by? The hon. Member thinks that they have not done so. I shall be interested in what the Government say, because it is the Government who have the responsibility. Oppositions can do no more than nudge.
  It is the "Plan for Coal" that matters. Any abandonment of the figures will have major implications in other ways and will lead to colliery closures outside the "Plan for Coal". Coal miners do not object to the closures of pits. Why is the hon. Member for Bedford (Mr. Skeet) laughing? Colliers do not object to the closures of pits; they know that their life span ends. What they want are new pits and the expansion of existing pits.
  The figures that are given show that whenever there are pit closures, for good geological reasons, they concentrate in certain areas. It is the duty of the House to consider wider matters than just the coal industry itself.
  "Plan for Coal" matters in particular areas—for example, South Wales. I will not go into that subject at length, because there is a debate on Wales tomorrow. I am sure that that matter will be raised then. The tripartite sub-committee in Wales envisaged a reduction of uneconomic pits over a five-year period and recognised that that could be done only with help. In South Wales there has been a productivity increase of 5 per cent. Now it is faced with falling markets, with coal imports, and a falling demand for electricity. In that part of the country, in particular, feeling is strong and concern is strong. We may ask the people to look to the future, but in Wales they have a long memory, because they have seen it all before. They do not want it to happen again in exactly the same way.
  The time has come for a Government statement on that matter to remove the worries. In a remarkable speech, the Under-Secretary put forward a positive statement on behalf of "Plan for Coal". I echo that. What we and the coal mining industry want to know is whether that positive statement, firmly made by the Government in June last year on the "Plan for Coal" is still the case. If it is, it will make an enormous difference to the worries expressed in the coal mining areas.
  Mr. George Grant: My right hon. Friend referred to pit closures. There is already evidence that in certain areas the National Coal Board is restricting recruitment because at the moment mounting stocks on the ground stand at just under 38 million tonnes.
  The youngsters coming into the industry for recruitment and training are the seedcorn for the future. It is ridiculous that recruitment has been stopped in the coal industry, yet last year we imported 7½ million tons of coal.
  Mr. Rees: I agree about importation. I know also from practical experience that if one removes a young man from the immediate prospect of going into the coal industry—God willing, the economy will pick up—there is no going back once that line has been broken. It is a family line; entering mining is the thing to do. The suggestion does not come from careers officers as it does for other industries, although the careers officers play a part in guiding the people into the industry.
  Mr. Geoffrey Johnson Smith: I follow the right hon. Gentleman's argument, particularly in response to the genuine question of human concern put by his hon. Friend. However, we are in a dilemma. Does the right hon. Gentleman suggest that the Government should encourage the production of coal to put in ever-increasing reserves and stocks when there is no possibility of a market?
  Mr. Rees: That argument has been put before. Fifteen years ago, a Labour Minister of Power complained that coal stocks were so high that if one put them in Trafalgar Square they would cover Nelson's column, but three years later we were short of coal. Coal should be stored, unless the Government are saying that the market will never come back; that it has gone for ever. Then we would understand. However, the Government have committed themselves to "Plan for Coal".
  Mr. Nick Budgen: Will the right hon. Gentleman expand on what he said about the importation of coal? Is he saying that the Labour Party would bring forward legislation to prevent the importation of coal? If that is so, what competitive pressures would remain upon the NCB to produce coal at a proper price?
  Mr. Rees: It is possible, for people to rip coal from the surface 13,000 miles away and pay low rates for transportation because we are at the bottom of a recession, but that is a temporary situation. If the hon. Gentleman is arguing, like Professor Jevons 110 years ago, that we will import a great deal of coal for a long period, that is a different matter.
  When there are 38,000 million tonnes of coal on the surface—6 million tonnes in South Wales—which has been dug on the money that has been well invested, let us use that and not bring it from other parts of the world. There is no competitive effect. That is not the way in which the coal industry works. I am against the importation of coal. Legislation is not needed to stop it.
  In Venice the Prime Minister signed a statement that said that we would need to double the output of coal in Western countries. At the IEA meeting the Secretary of State said much the same thing. I labour this point because it is of such great importance. Otherwise, precipitate action will be taken. We wish to know whether the Government say one thing internationally and act in a different way nationally.
  The Government should help with coal stocks; they should help with investment for conversion to coal; they should recall tripartite meetings and bring those concerned together. They should do for our coal industry what West Germany does for its coal industry. West Germany is held up to us as the economic schoolmaster of Europe, as the Dutch were in the 17th century. If the West Germans have

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  much to tell us, let us follow that advice and carry out their policy, because it would be better for this country in the long run.
  Mr. Frank Haynes: On the question of productivity, we are told by the Prime Minister that if we want to increase our earnings we should increase our productivity. The coal mining industry has done just that. It has put more money in the workers' pockets, but if the Government carry out the pit closures policy referred to in the national press, which we want to know more about, it means that the workers will be increasing their productivity and increasing the earnings in their pockets to put themselves out of work. The Secretary of State and the Government must come clean on that matter.
  Mr. Rees: My hon. Friend has succinctly expressed what I have been saying for the last half hour. I fully agree with him. His last request to the Government is the one that I have been making.
  I understand that one of the considerations in the discussions of the NEDO task force on energy pricing—I do not say that it necessarily comes from the Government—is that the heavy fuel oil tax should be removed. That may be the right thing to do, but it goes against the general statements about spreading oil consumption over a longer period. I ask the Government to take into account the effect that this would have on the coal industry. I have been told that it would reduce the coal burn by over 2 million tonnes and that it could remove 5 million tonnes of prospective coal burn. I do not hold to those figures; I simply say that they must be taken into account.
  That is necessary for one other purpose. The coal industry, with its long gestation period of investment, will need something in return to protect it, because coal will be of the gravest and greatest importance in 20 years' time for gas supplies and, possibly, liquefaction.
  I say one last personal thing to the Prime Minister—I mean, to the Secretary of State: no doubt I speak a year or so too early. I read with interest a speech that he made called "The Path for 1981", on 4 January 1981. He talked about the recovery and the new prosperity that will flourish, but he also said:
  "Areas of former prosperity will be by-passed, with heavy social consequences."
  I hope that when the Secretary of State plays his role in the Department and talks in the sub-committees with his junior Ministers about decisions that have to be taken about coal, with all their regional implications, his own feeling that some areas will be bypassed will not rule. It is one thing to say what he said in Guildford or East Surrey, but it appears different in other areas. We should know what the right hon. Gentleman has in mind.
  Our motion speaks of an overall energy policy, practically, as well as in principle, and of a pricing policy for industrial users of energy. There is a fear in the coal industry. We want the industry to move and to be positive and forward-looking, with investment that will bring results in the years to come. Only the Government can tell us whether that will happen.
  4.11 pm
  The Secretary of State for Energy (Mr. David Howell): I beg to move, to leave out from "House" to the end of the Question and to add instead therof:
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  'recognises the realism of the Government's energy policy and welcomes the renewed vigour with which the nation's energy resources are being developed'.
  This is my first opportunity to welcome, as I do, the right hon. Member for Leeds, South (Mr. Rees) to his responsibilities as energy spokesman for the Opposition. I understand that he is not a member of the "gang of three" or the "gang of four" or any of the other gangs which roam the Labour hinterland, so he is all the more welcome for bringing his well-known fairness of mind to these subjects.
  I also thank the right hon. Gentleman for the opportunity which the choice of this subject for a Supply day debate gives us for a wide-ranging discussion of energy issues. What usually happens is that bits and pieces of energy policy come bubbling to the surface. At one time we deal with industrial energy prices and at other times with oil policy. We do not have enough opportunity for a really wide debate on the overall picture. I therefore welcome this opportunity.
  The right hon. Gentleman also mentioned the need for information. The papers put to NEDC by the Government were published and are freely available. I hope that that meets that need. Of course, I am always ready to provide more information for the House. I supported the development of Select Committees, which has been supported by my party over the years, and have taken the view that the House and its Committees are the places where these things should be debated. That is why I felt that the Energy Commission was not the right place to do these things.
  Mr. Peter Hardy: Just before the Christmas Recess, I asked the Secretary of State to publish his estimate of coal consumption in 1981. He did not publish, and said that he had no plans to do so. How does that fit in with what he just said?
  Mr. Howell: If the hon. Gentleman would like to table a question that I can answer, I will, but if he asks me to speculate on things which cannot be speculated on it will not help him or anyone else to offer mere generalisations about the future.
  In the context of this overall picture, I remind the House of the turbulent scene within which we must consider our energy policy and of some of the basic facts against which we are working. The first is obvious but so staggering that it is worth repeating—that since 1972 the price of crude oil has increased by 1,800 per cent. In fact, it has nearly tripled since early 1979, although, because of the effect of the appreciation of sterling, it has less than tripled—it has just about doubled—for the United Kingdom. That is the magnitude of the volcano, the price earthquake, against which we are operating.
  Those effects are rolling through every Western economy—we are not special in this respect—and are having a major impact on the energy scene in every Western economy. The first and most important thing to grasp is that, despite our North Sea oil, there is no escape for us from the price upheavals and the disruption that those colossal changes cause. Whether we take the impact on a higher exchange rate because we are an oil-producing country or on unemployment or on loss of overseas markets or on a mixture of the three, there is no escape from those terrific shocks.
  Of course, we can have debates about what we do as a major oil producer with the revenues which accrue, and there are different views in different parts of the

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  House—between those who say that we should use them to reduce Government borrowing and pave the way when we can for lower taxation and create a better climate for enterprise, and those who say that we should use the revenues to pick winners or back hopefuls or pay for losers, or whatever it is. I know which of those I prefer. But there is no escape from the disruption and the shock that quantum price leaps of this kind have on economies such as ours.
  That brings me to the first major point, and I am sorry if the House feels that it is a somewhat gloomy one. Much the worst danger facing the Western economies at the moment is of a further oil price explosion of the 1979 variety. That is why it is absolutely vital for there to be international work to prevent the sort of panic buying based on psychological fears which we saw in 1979 after the Iranian revolution, which led to the fantastic price increases of 1979 and 1980.
  It is essential to see what can be done, on both the demand and the supply sides, to prevent the same consequences flowing from the effects of the Iran-Iraq war, which overnight knocked 4 million barrels a day out of the world supply system. There has been some progress in recent months towards ensuring that stability is achieved.
  The right hon. Member for Leeds, South mentioned the International Energy Agency. There was a unified recognition in that body of the need to discourage panic buying and to see that countries on the whole drew down their very high stocks—they have been high because of the recession—rather than rush into markets and pay wild prices for term oil. That was an advantage, and informal arrangements were also agreed which I set out in my written answer to the House about measures which might be taken if one particular country, or indeed one particular company, found itself cornered and short of crude following a sudden interruption of supply such as followed the Iran-Iraq hostilities.
  That is on the demand side and that, combined with the effects of the recession, has meant that demand has remained well down. On the supply side, too, there has been some effective international co-operation. We should not just ignore that. The OPEC countries—the Saudis in particular—when that war took place were contemplating cutting production, but they changed their minds and decided instead not to cut production, which they could do as political acts, and the Saudis decided to increase it by, in effect, 2 million barrels a day. So the supply moved up to compensate for what was lost, and on the demand side there was the restraint that I have described.
  The net effect is that while prices have gone on pressing upwards there has been nothing approaching the sort of explosion of prices of 1979, which no sensitive modern economy can absorb without major social disruption. I have to warn the House that dangers remain. We are on a knife edge and will remain so as long as the West generally remains so heavily dependent on oil from the Middle East and through the Straits of Hormuz. Those are the broad considerations which are vital starting points for our endeavours.
  I turn to the effects on us of what has happened and is happening. The first effect of the enormous increases is that the price of oil in this country is dragged up. One hears it suggested that the price has been put up by the
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  Government, but that is not so. Some suggest that it has been put up by OPEC, but even that is not so, except in the sense that OPEC influences production levels.
  The high price of oil is determined by the laws of supply and demand. Anyone who doubts that should try to sell a barrel of oil on the Rotterdam market or anywhere else for more than the world market price or try to buy a barrel for less than that price. He will not succeed. We are constrained by the world market price. That is inescapable.
  The second effect that follows from the enormous price increases is the flight from oil into other fuels. When oil users face an enormous increase in price they turn rapidly and in large numbers to gas.
  Mr. Skeet: I am sure that my right hon. Friend is trying to put a fair interpretation on OPEC's actions, but surely only marginal quantities of oil pass over the Rotterdam market. Is not OPEC following the small sales on the Rotterdam market in order to interpret their price? It is the cartel which is laying down what the world will pay, and BNOC follows it, at least in part.
  Mr. Howell: Supply and demand determine the price. By influencing the production, OPEC countries can influence supply, which, in turn, influences the price. I do not think that there is much difference between me and my right hon. Friend on that point. There is a world market price at which the buying and selling of oil, including that of the United Kingdom continental shelf, takes place.
  As I said, the second effect of price increases is that there is a major flight of those using oil in industry into the use of gas, which has created a major excess demand for gas. That drags up the price of gas and all other energy prices. There were big increases last year, and, as the effects roll through, further increases in domestic and industrial gas and electricity prices are on the way this year. It would be wrong for me not to warn the House about that.
  The third effect of the price increases is that the enormous additional demand for gas that results from the flight from oil drags up the price that can be obtained by gas producers in the North Sea, whether on the Norwegian or the British side of the median line. Gas is being sold, and producers are seeking prices, at up to 10 times—1,000 per cent. higher—than the price established for contracts in the North Sea in the 1960s.
  Mr. Arthur Palmer: Why does the right hon. Gentleman put such stress on oil prices forcing up the price of electricity? Surely there are many other factors at work, including the borrowing costs of the electricity industry.
  Mr. Howell: We shall come to the nature of those costs. I am starting from the basic mechanism that has sent the enormous changes through the system, and that is the huge increase in the world market price of oil.
  There are some who say, in the face of everything that has happened—and there may be some hon. Members who share the view, though I do not think so—that we should step in and try to run a two-tier price for oil. After all, they say, we are an oil producer, so we could sell oil to ourselves on the cheap and have a subsidised oil price. I do not think that industry is asking for that, and I have not heard many hon. Members asking for it.
  I ask those who think in that way to ponder the implications of what they suggest. The first is obvious. We

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  would do ourselves out of the high revenues. It may be less obvious, but others would collect the revenues, because subsidised oil would be sold at the market price. Secondly, we would drink up our North Sea resources, which are limited and will not last for ever, all the faster. Thirdly, we would kill North Sea investment stone dead. Fourthly, we would leave our industry totally unprepared for the high-cost-energy world which is inevitable and which involves major adjustments. In other words, we would be putting Britain in the worst possible position, instead of the best possible position, to face the stormy 1980s. I ask those who argue that line to put it aside when they realise the implications.
  There are those who ask why we do not step in to control other energy prices. It is not my impression that industry is asking for that. On the contrary, the most recent NEDC meeting made it clear that there is general agreement in industry and among all who have discussed the matter in NEDC that prices should be economic, by which is meant that they should reflect the cost of replacement on a long-term basis.
  Industry's complaint was that the outcome of pursuing economic pricing was to put Britain at a disadvantage to our competitors, particularly those on the Continent. If that were correct it would be extremely serious, and as soon as such suggestions were raised my Department and I looked at them closely. At first, the proposition was that Britain was generally at a disadvantage on energy prices. My Department did not accept that, and the subsequent debate and analysis culminated in a study by the NEDC, which concluded that British industry generally—I emphasise "generally"—does not suffer a disadvantage, but that bulk users in energy-intensive industries could be at a disadvantage. Chemicals, steel, foundries, and the paper and board industries were mentioned.
  The Government were concerned when they heard about the feelings and worries of the industries concerned. From early last year—long before the recent NEDC reports—a succession of measures were taken. I shall come to those later. However, despite some earlier doubts, there seems to be among those who have studied the matter general agreement that there is no case for overall general intervention to hold down energy prices in the face of the forces that I have described that are playing upon our affairs.
  There are two reasons why I believe that general intervention would be wrong. The first is that the industries that are energy-intensive and facing particular difficulties are, in some cases, facing structural problems that go far deeper than anything that can be solved by changes in energy prices.
  It would be misleading for me to suggest to hon. Members, or for them to suggest to their local manufacturers, that there is a wand to be waved on energy prices that would solve some of the deeper and much longer lasting structural problems of some industries, of which steel is an obvious example. In addition, the recession has made things much worse.
  Secondly, the problems of those industries include the threat of unfair trade. Chemicals and textiles are the obvious examples of industries in that position. There is no doubt that British industry, along with almost the whole of European industry, is being severely threatened by artificially low oil and gas prices in the United States. There is no doubt about that. My right hon. Friend the Secretary of State for Trade and I have taken, and will
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  continue to take, vigorous action both in the Community and at a bilateral level. Although we must move at Community level, there is no reason why we should not move at a bilateral level also.
  Under the new American Administration there may be a faster movement towards deregulaton of oil and gas prices. There is reason to hope that that will happen. When I see the Energy Secretary in the new Reagan Administration I shall make that point to him. I hope that deregulation will be recommended to the new Congress. That issue, however, lies outside the immediate problem of the competitiveness of British industry vis-a-vis the remainder of Europe.
  I must also reject the further proposition of general intervention in energy prices. Some suggest that the answer is to move more quickly towards loading fuel costs on to domestic prices. Indeed, industry has been pressing me quite hard, and also pressing other hon. Members, about the proposal that there should be a faster rise in domestic gas prices than that already envisaged. I ask industry, and those who argue that way, to reflect on whether that proposal would be in their best interests. The Government have already approved a 10 per cent. increase in domestic gas prices in real terms over a three-year period. I announced that measure a year ago. It is a gradual programme to allow prices to rise to the correct levels at which they cover the long-term cost of supply, which they do not cover at present. Even now, domestic costs are only just breaking even. Domestic costs in Britain are only half of those in France and Germany.
  Mr. Edward Rowlands: Did the Minister say 10 per cent.?
  Mr. Howell: That is right. I said 10 per cent. in real terms. Our domestic prices are only half those paid by the French and German housewives. Of course, the gas all comes from the same pool, namely, the North Sea. At the same time that we announced that measure the Government decided to accompany it and give extended support for fuel hardship. It was twice as much as anything previously produced. My right hon. Friend the Secretary of State for Social Services has set out a comprehensive programme. In those circumstances it would not be right to allow domestic prices to be corrected even faster. Industry should reflect on that and understand that it would be wrong to press that point.
  Mr. Arthur Lewis: I wish to question the Minister on that point because it affects every hon. Member. I appreciate his remarks about domestic prices. However, he will be aware that many old-age pensioners and sick and disabled people do not understand their bills when they receive them. Consequently, they find themselves in arrears and have their supplies cut off by either the gas or the electric companies. Could not the Minister make some arrangement to ensure that before they are cut off the companies concerned contact the social security department to determine how much harm and damage could be done? It is not fair to cut off the elderly, with all the kerfuffle that that entails, when they could first be contacted and warned by the companies concerned, which could then find out the real position.
  Mr. Howell: The hon. Gentleman follows these matters closely, and he knows that there is a disconnection code. Pensioners in the position that he has described

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  should not be cut off in winter. If they are, we obviously need closer policing of the code. The Under-Secretary, my hon. Friend the Member for Kingston upon Thames (Mr. Lamont), is actively involved in ensuring that some interim improvements are made in the code, pending a more thorough report about the whole code. He has discussed the matter with the chairman of the London Electricity Board and others involved to determine how we can ensure that the code is observed. If the hon. Gentleman has a particular instance in mind, we will examine it.
  I have already said what would be wrong and irresponsible for us to do in reply to the view that high energy prices—because of colossal increases—are causing difficulties both for industry and for society as a whole. I now turn to what can be done—
  Mr. Allen McKay: On two or three occasions the Secretary of State has said that industry is not concerned about the present position. At a recent meeting with the Sheffield chamber of trade representative in Sheffield, he said—and I wrote down the words so that I could quote them:
  "The biggest single factor of troubles in industry is the cost of energy."
  The Sheffield chamber of trade, together with the council, intend to write to the Minister to request a meeting to explain their position. I shall be grateful if the right hon. Gentleman will receive them.
  Mr. Howell: There have been a great many representations. That is why I have described the Government's reaction, how we see the position, and what we believe to be the best approach. I have argued the case against a general intervention, which would be utterly wrong. I must now ask the question—and I shall seek to reply to myself—what can be done? I wish to remind the House of what has been done since concern was first expressed—I refer not to recent weeks but to some time ago—about the high increases in energy prices that have rolled through our economy. In March, the British Gas Corporation—with the Government's approval—tempered for the bulk of its firm gas supplies, its long-established policy of relating its firm gas supply prices to gas oil, the nearest competing product. Instead of full equivalent relationship it moved to 75 per cent. of the gas oil price.
  In July, I asked the electricity industry to undertake a major study of the bulk supply tariff, and it will shortly make an interim report to me. In August, I brought these issues to the attention of the National Economic Development Council for the first time. In the light of allegations then being made that British industry was generally at a disadvantage, I asked the CBI to prepare a paper analysing the charges and allegations to determine precisely where the problems lay. It willingly undertook to do so. In November, I urged the electricity supply industry to seek new flexibility in its contract and tariff terms and to find ways to supply some of the major bulk users more cheaply through a better management of supply and load needs—although we recognise that, whatever we do, we are not in a position to match the very different cost structures of countries that have large sources of hydropower, which is by far the cheapest, or that have pricing policies that are closely related to the operating costs of nuclear plants.
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  When looking at the position on the nuclear power front among our competitors, it fills me with concern that during the 1970s we dithered about nuclear power. By the end of 1985 France will have 44 per cent. of its power coming from nuclear generation, and West Germany will have 25 per cent. There is no way on fossil fuels—coal, let alone oil—that we can compete with the cost structures being built up by other countries. I wish to put that fact on the record. I am prepared to take responsibility for many things, but not for the dithering indecision about nuclear power in the second half of the 1970s. However, I believe that we can take steps to put right that position in due course.
  In response to further requests from me in the autumn, the British Gas Corporation has agreed that new customers who, in their first year, pay a price about full equivalent to gas oil, will be charged at about the renewal price—the 75 per cent. rate—for the second and third years of their initial contracts. That should bring some alleviation of the problem. More recently, I asked the corporation to consider what further assistance it could justifiably give to the larger bulk users in energy intensive industries. I refer to those on firm contracts. There are not many, but the burden is heavy. The corporation has agreed to pursue that proposition.
  I have further discussed with the electricity industry the possibility of cost savings through load management, and the industry is actively considering that. Savings through that approach would benefit customers with appropriate load characteristics. They include some of the major bulk heavy continuous users. I put this proposal to the new chairman of the Electricity Council, Mr. Austin Bunch, whose appointment I am announcing today, and he has agreed to pursue it swiftly.
  These are some of the things that have been done over the past many months. We eventually received the CBI report, and now there is the NEDO task force, which has started from the point that generally British industry does not suffer but that larger bulk users, in particular in the energy-intensive industries, may do so. As I have explained, this is the view that the Department has taken over the months, to which I have responded. As all sides are represented on the task force, it will provide a unique opportunity to reach agreement on the facts, which will be very helpful. The Government will obviously consider carefully the facts established by the task force.
  In particular—the right hon. Member for Leeds, South mentioned this point—I know that one of the points made all along by the industry is that our heavy fuel oil duty is higher than that of other European countries and that that has put our oil prices to industry out of line. In fact, the latest available statistics show that in early January our oil prices to industry, including tax, were somewhat lower than those to Continental industry. Since then—even in the last few days—I know that United Kingdom prices have gone up again, but crude cost increases are also working their way into Continental prices. Therefore, it would be wrong to assume that the United Kingdom's favourable position will necessarily be altered again. I freely concede that these things swing round. I know that my right hon. and learned Friend the Chancellor of the Exchequer has heard the strong views of industry arguing for a reduction in heavy fuel oil duty to bring it more into line with the similar duties being charged by our Continental competitors.
  Mr. Tim Eggar: I am sure that the House is impressed by the various measures that my right hon. Friend has indicated today, but could he give some idea of how much revenue will be forgone by the nationalised industries as a result of those measures and whether that will have any impact on the public sector borrowing requirement in the coming financial year?
  Mr. Howell: No, I cannot. The simple reason is that the quantification of those who are in difficulties—particularly the bulk users—is still far from clear. One of the purposes of the NEDO task force will be to bring home more clearly what degree of shading and adjustment is needed to meet the particular worries of the bulk users which, after all the argument, was what the whole thing came down to.
  Those are the things that have been done. I repeat my view that it is no good applying general remedies—even if this kind of intervention were a remedy, which I do not think it is—to particular problems. As I said, it has been difficult, amidst the general expressions of concern, to identify the real problems. The appreciation of sterling has further distorted these international comparisons. I have heard it suggested that if we discount sterling appreciation over the past 18 months the overall slight advantage that British energy users have had would have been greater. Obviously, that makes all the comparisons more complicated.
  What more can be done to meet the problems of efficient energy supply and of easing the burdens on industry as it prepares for the move out of recession into recovery? First, there must be greater efficiency in the nationalised industries. [Interruption.] The Opposition should listen to what I have to say on this matter. The key weapon here is to have tight and demanding external financial limits or cash requirements. I have heard it suggested that the effect of tight and demanding EFLs is to put up prices, but that is not correct. The purpose of these challenging EFLs is not to put up prices, but to push down costs and to increase efficiency. The nationalised industries—which seem to have very few friends in the Opposition—and their chairmen recognise that these cash limits are a tough and effective discipline in reducing costs and increasing efficiency. That is the way in which the Government can ensure that industries take all possible steps to increase efficiency rather than to turn to their customers—who may be captive customers—and load it on to them or to resort to more borrowing.
  Although there is a long way to go in improving efficiency in the nationalised industries, it is a fact—if I can get this over to the hon. Member for Merthyr Tydfil (Mr. Rowlands) who seems to be getting excited—that labour costs per unit have been falling faster in the electricity and gas industries than the average for the whole of United Kingdom industry. Efficiency still needs to be increased. However, the EFLs are an effective weapon, and are recognised as such, for increasing efficiency in industry, not for raising prices or adding a tax as some people have suggested.
  The tariffs that emerge come not from the EFLs but from either competition—in the gas industry there is competition between oil and gas—or, in areas where there is a monopoly supply condition, from adhering to the principle of covering costs on a long-term basis, which everyone recognises is the only sensible principle.
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  The second thing that we can and must do is to increase competition. I have already told the House of our plan, when a suitable legislative opportunity arises, to introduce greater freedom for private electricity generation. I think that that will improve competition, and competition is healthy.
  The third thing that we can do is to encourage investment in new energy resources, including investment in conservation and equipment that will use energy more efficiently. In that respect, some major developments are going on. The gas, gathering pipeline—an enormous project—is going ahead and is on schedule. We have had the sixth round of oil licensing, which I inherited from my predecessor, and the seventh round is in process of going through now. There has been criticism from some, including the oil industry, that the petroleum production tax announced by my right hon. and learned Friend was over-burdening the industry and would slow down exploration. When the first part of the seventh round was announced—that was after the new tax regime had been made clear—every licence offered for exploration was eagerly taken up and paid for by the industry.
  The fourth thing that we can and must do is to sustain heavy investment in coal—I want to come to some of the points on that aspect made by the right hon. Member for Leeds, South—and in nuclear power. Frankly, the programme of nuclear power, if such it can be called, that I inherited when the Government came to office was in complete chaos. I think that we are now getting it straight and beginning to get some momentum and morale and confidence restored, but we had quite a mess to clear up.
  We can also encourage major investment in conservation. Conservation investment—if I may say a passing but not unimportant word on that aspect—primarily goes on through the decisions of industries and individuals. It is not publicly visible in the public spending figures. Therefore, people tend to compare what they see with the major investments which are visible in public spending and to conclude that there is no major investment in conservation. But there is evidence that it is continuing at a very high level in industry. The best way to promote conservation investment is not to throw more taxpayers' money at it but to see that the price signals are correct and stimulate the right new investment backed by research and demonstration projects which industry can use commercially and with confidence. That is what we can do on that front.
  I turn now to the coal industry, on which the right hon. Member for Leeds, South had a good deal to say. I know that the coal industry, like all industries, as the right hon. Gentleman reminded us, faces immediate short-term problems of falling demand in the recession. Of course it does. Also, because it is an extractive industry, closures and exhaustions are bound to lead to difficult decisions. No one has sought to disguise that fact, certainly not the realists in the industry. I do not share the defeatism or believe the allegations of low morale that have been expressed by some Labour Members. That is not the impression that I have of the industry. If morale is so low, why is productivity and output per manshift so high? Why are recruits queuing up to join the industry? It does not add up. The evidence is that people want to get into the industry. Morale is high, not low, as the hon. Gentlemen suggested.
  In spite of all the immediate difficulties, my long-term confidence in the coal industry as a successful and

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  profitable energy industry is complete. I believe that it can and will overcome the present problems and achieve financial viability.
  The right hon. Member for Leeds, South asked what we thought about "Plan for Coal". We have provided a financial strategy and framework. We have provided both the framework and the means for the National Coal Board and the industry to attain the "Plan for Coal". How that plan is maintained is a matter for the National Coal Board. We have provided the opportunity for it to be maintained, and it is for the NCB to see how that is done. I believe that it can be done.
  The right hon. Gentleman mentioned the growing revenues from North Sea oil and gas. People ask "Why not plough back the North Sea oil revenues?" The answer is simple: they are being ploughed back. They are being ploughed back through industrial and regional assistance and Government funding—some of which is not popular or to every hon. Member's liking—through research support, through reduced, downward pressure on Government borrowing, thus paying off the overdraft that we inherited, and through substantial tax reliefs to industry. In my view, those last two measures are the essential conditions for the new investment, because without them there will be no new investment. Industry must make, and in some instances increasingly is making, that investment—an investment which will be energy-saving and more energy-efficient. In Japan, firms are now tearing out oil-fired or inefficient high energy-consuming systems and replacing them with entirely new equipment in order to be competitive in the high-cost energy era ahead. Our industry must do the same, and must re-equip. Otherwise, we shall be unable to compete in the late 1980s.
  Contrary to the argument that we have no policy, we are in fact ending the shambles of subsidy and control, thus achieving two further vital aims which I want to outline. The first concerns security of supply. I reject again the proposition that we should behave like the United States in the 1970s and run an internal subsidised oil price, and intervene in that way. That would be utterly irresponsible. It was a catastrophic policy for the United States, as both the outgoing and new Administrations have recognised. It led to some of the highest international tensions that have occurred since the Second World War. That course I know to be wrong.
  People talk about lower gas prices. They wonder why we cannot have lower gas prices, like the French and Italians. Not only has the French gas price risen by 70 per cent. in the last year—something which is perhaps overlooked by those who favour lower gas prices—but there were major interruptions last spring and summer even for companies on firm gas contracts, not nominal interruptible contracts. Indeed, last winter in Italy companies, whether on firm contracts or provision for interruption, were cut off completely. Cheap gas is no good if there is no gas. People tend to overlook the value of security of supply until, of course, there is no supply; and then they change their view. That is something that our energy policy has been and is achieving.
  Secondly, we are paving the way for new investment in energy and energy-related industries on a massive scale. Indeed, it is happening now. That gives Britain an important advantage because all over the world major
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  projects and investment, the large export markets, are related to energy development and energy projects in the energy-producing countries. That is happening around the Pacific basin, in the Middle East, and everywhere where people think that they can tap new energy resources.
  The right hon. Member for Stepney and Poplar (Mr. Shore) moans, as he did during the economic debate, about the lack of effective demand, as though he had just read "General Theory" for the first time, but the effective demand in these industries is there. There is vast expansion across the world, and vast opportunities, and, as a result of our policies, these British industries are building up to the most advantageous position, from which they will be able to seize those opportunities.
  No one questions the difficulties of transition. Certainly I do not; nor do the Government. No one questions the need to allow and encourage industries that use a lot of energy to respond by bringing in the new less energy-intensive technologies. But that is not an argument for reversing the policy or plunging into a wilderness of subsidies.
  It is an argument for sensitive response by fuel supply industries. I have described what we have sought to do, and I shall continue to do everything possible to encourage that process. It is an argument for well focused transitional aid by the Government, and the whole thrust of our economic policy is in that direction. I must admit that some of the aid offered is not always taken up, as happened with Bowaters at Ellesmere Port, where the aid was offered but the closure decision still went ahead. Perhaps most important, it is an argument for waging war on unfair trade practices by other countries. Every Government Department is ready to take up any allegations or evidence of unfair trade practice wherever industry can provide the details.
  That has been and will continue to be our policy. If we stick to it, as we shall, I believe that it will provide—indeed, it is already providing—the foundation for an economic recovery which will be strong and sustained, rather that feeble or short-lived. That recovery itself will give us increasing resources to help the hardest hit. I believe that it would be an utter betrayal to try to cocoon our country against the reality of high priced energy only to have that reality hit us with typhoon ferocity later. Conversely, everything is to be gained for the British economy if we let it adapt now to the dangerous and stormy conditions ahead. If we have the determination and steadiness now to let that process go forward, in the years ahead there will be very few national economies stronger than the British. For all those reasons, I ask the House to reject the motion and support the amendment.
  4.59 pm
  Mr. Lawrence Cunliffe: I want to refer first to one or two matters raised by the Secretary of State for Energy, and particularly to the mining industry. He wondered why—in my opinion his remark will be interpreted by the British mining industry as a rather niggardly and grudging compliment—morale was low, as Opposition Members alleged, when productivity was so high. There is no single reason for high productivity. One reason is that the previous Government had the foresight and vision to produce a massive investment programme that was to put the British mining industry on a par with any great industry in Western Europe or, indeed, the world. A further reason is the sustained effort of the British

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  miner. He has operated in an atmosphere of good industrial relations, has accepted on many occasions maximum mechanisation of the pits, colliery closures, and reduced numbers of men employed within the industry.
  The Minister tried to appraise the situation in about 40 seconds. That will do nothing to boost the morale of employers and employees in the industry. The irony is that 1979, in terms of production, industrial relations and maximum effort, was a remarkable year. It is acknowledged, not only by my hon. Friends but by the CBI and other industries, that 1980 was another wonderful year of achievement.
  In the last few weeks results have improved steadily. British miners ended the year with a near all-time productivity record. Output per manshift in successive weeks in December was 2·46 tonnes. That is only one-hundredth of a tonne less than the record for production set seven years ago.
  Mr. Skeet: Will the hon. Gentleman give way?
  Mr. Cunliffe: It is too early. All that is against the background of 7,000 fewer miners in the industry and many colliery closures.
  Sir Derek Ezra, the chairman of the National Coal Board, said:
  "These improved results are coming at the right time—they are badly needed to help the industry to cope with major problems inflicted on us by the general recession in Britain."
  Who created the general recession? It was created by the Government and their crazy economic policies. Industries are no longer able to predict their productivity requirements.
  Mr. Skeet: I congratulate the miner on his increased productivity, but what will the country do with 50 million tonnes of stock?
  Mr. Cunliffe: I shall come to that later. I am sure that the hon. Member will be attentive. There are alternative formulas to the straitjacket of pure monetarism.
  Let us examine the current situation developing in the industry. The Secretary of State called for greater efficiency in industry. The British mining industry has nothing to fear in that respect. Its record is impeccable in comparison with other industries in Britain. By a wide margin it still has the lowest production costs in Western Europe. Coal will remain considerably cheaper than heavy fuel oil. That is one of our strongest bargaining weapons when we sell our coal in the European and world market.
  The recession is caused mainly by the Government's silly, doctrinaire policies. The Government have deliberately slowed down industry by insisting on a strong pound and a high interest rate. Those policies have had their effects on the mining industry. In 1980–81 we shall lose 6 million tonnes of business simply because of the industrial recession. The problems are intensified, for obvious reasons, by the importation of foreign coal. Coal imports are three times higher than they were under the previous Government.
  The argument is that coal imports act as a spur to the industry. It is argued that they cause a psychological fear about job security and opportunity. The whole of British industry suffers from that fear. The Government believe that they can use that old-fashioned technique to bring workers to heel and reduce wage demands. The board has to face a practical problem. Extra stocking costs will add seriously to the industry's financial problems. There are
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  physical limits to what can be put on the ground. We are talking of an extractive industry. Coal has to be physically deposited.
  I understand the Government's distaste for intervention. A philosophical conflict is involved, especially in financial intervention. The industry has met all the targets set by Government. It has been exhorted on many occasions and has filled the gap in British energy shortages. Surely there is now a case for selective help and intervention in that industry.
  The productivity agreement signed by the National Union of Mineworkers and the National Coal Board produced remarkable results. As stocks grow and productivity increases, the Government should recognise the need for sensible and prudent intervention. They should provide some form of subsidy on stockpiling so that we can live through the current problems caused by the industrial recession brought about by Government policies. Is that not fair? Does that not apply the Queensberry rules in relation to fair trading competition? The Government should take immediate action.
  Assurances have been given. At the Venice summit the Prime Minister and other leaders of the industrialised nations said that steps would be taken to encourage long-term commitments by coal producers and consumers; to improve infrastructures in both exporting and importing countries, as far as is economically justified, to ensure the required supply and use of coal. The Heads of Government agreed that the industrialised nations must rely on other fuels than oil to meet the energy needs of future economic growth.
  Will the British Government honour the commitment made at Venice? Are they still on the same wavelength? The call is for a doubling of coal production by 1990. Will the Government renege? Strong and persistent rumours are spreading throughout the British mining industry. At a recent meetimg of the NUM an area director said that he had been instructed to impose severe cutbacks in coal production in his area. A national executive member predicted that if the cut to be applied to the North-West were multiplied throughout the mining areas, 9 million tonnes and 20,000 mining jobs would be lost. Will the Minister confirm or deny that?
  I turn to European Community action. The European Coal and Steel Communities should assess the situation caused by the industrial recession. They should examine in particular our mining industry. I hope that the Community does not pay lip service to resolutions of its Consultative Committee. One such resolution urges the Community to assist in financing the production and use of coal. This gives the Council of Energy Ministers an opportunity to take action and end their longstanding deadlock on coal policy. I hope that the Government pressed that point at the European meetings. The Consultative Committee, which represents coal and steel producers, consumers, traders, trade union representatives and other interested parties, also calls on the European Commission to develop urgently fresh initiatives to implement positive policy for Community coal, in particular promoting investment in coal production by grants or, at least, reduced-interest loans.
  If the Secretary of State wants alternatives, we can point them out to him. He talks of the flight of British industry to gas. There could be a similar flight of British industry to coal. If industrialists were given some guarantee, loan help, a lowering of interest rates or any

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  financial help whatever, many of them would convert back to solid fuel tomorrow. That is what is called for. Help should be given to the many industries which desire to do these things. We also need more vigorous and intensified encouragement and support for research and development of mining techniques, coal utilisation and so on.
  If there is strong support for providing United Kingdom industrialists with incentives to convert from oil to coal and to use energy effectively in the years ahead, it is estimated that we could save approximately 14 million tonnes of oil a year and open up a market in industry for 23 million tonnes of coal. The Minister says that intervention is not generally appropriate. I remind him that several countries already offer financial assistance to encourage the move away from oil. Australia uses tax concessions; France offers a variety of incentives; Japan is introducing grants and subsidies at low interest rates; in the United States of America major industrialists are prohibited from building new oil or gas-burning boilers and receive tax credits for capital investment in coal-fired equipment. These possibilities should be considered sensibly.
  A realistic approach should be adopted to try to help in the great energy crisis which will undoubtedly engulf the world in the next decade or two. I hope that in this regard we shall accept the example of the United States, which has decided to convert more than half its electricity generating stations back to coal-fired plants. The Americans have made dramatic improvements. They forecast that the coal share in electricity generation will increase by 30 per cent. to 35 per cent. If we are to reach our target, set in Venice, by 1990 we should also be moving in that direction. Dramatic improvements can be made if we have the will and the determination and if the Government will act.
  The price differential between coal and oil is such that it is much more economic to build and operate a new base-load coal-fired plant than to build and operate a comparable oil-fired plant—those are the facts of life—even with full environmental controls adding 25 per cent. to the capital cost and 10 per cent. to the ultimate price of electricity.
  I should say a word of caution about a too-rapid development of nuclear energy. We all know of the American experience on Three Mile Island. The Americans already have 70 atomic plants, producing 12 per cent. of their electricity. Since that experience 15 nuclear projects have been cancelled and no nuclear complex of any kind will be built in the next two years. The simple reason is that there is still a great degree of uncertainty. No one can predict with any accuracy whether the kind of safety techniques being employed in the development of nuclear energy are first-class and absolute in view of the potential dangers that one normally associates with this form of power.
  The British public's greatest objections to, and their principal fears about, atomic energy are twofold. The first concerns the safe disposal of nuclear waste. Spent fuel rods containing radioactive isotopes remain potentially lethal for thousands of years. The British public must be convinced that there are proper safeguards. If nuclear energy is to be developed for consumer purposes, there must be absolute guarantees.
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  Secondly, when one has the benefit of electricity generation by gas, oil or coal, it can be turned off virtually immediately in an emergency. Nuclear plants, however, while they can be isolated to a degree, are absolutely perilous. There is no argument about that. Much more money will be needed for the training of staff and the development of far more stringent safety laws before we can be assured that nuclear energy can play a positive and permanent role in our society.
  I do not believe that anything that the Government have said so far will boost the confidence or the morale of the energy-producing industries or of the British people.
  5.18 pm
  Mr. T. H. H. Skeet: I listened with interest to the hon. Member for Leigh (Mr. Cunliffe). I wish to pursue a number of points that he made. I raised one in an intervention, namely, the question of the very large stocks. I said that they were 50 million tonnes. In fact, the figure is close to 40 million tonnes. I believe that that is a record figure. In 1979, it was 29 million tonnes. By October 1980, it was 36 million tonnes. It is now approaching 40 million tonnes.
  "Current Energy Trends" shows that production is up by 3 per cent. and consumption is down by 5·7 per cent. Stocks are excessive. This means very heavy commitments for the National Coal Board. In those circumstances, one needs to know what the National Coal Board intends to do.
  The Opposition motion refers to the "Plan for Coal". That was endorsed many years ago, of course. It had two facets. One was that the Government of the day would considerably increase investment. I understand that we are at present spending some £700 million per year on it, so the Government have kept to the commitment. But what about the National Coal Board and the miners? The other part of the commitment was to get rid of uneconomic capacity.
  I listened intently to the right hon. Member for Leeds, South (Mr. Rees) when he indicated that he was not against closures if the pits were not financially successful, provided that new ones were opened. That is precisely what the Government are doing. There is an inquiry on Belvoir now. Whether it will come into operation is another matter. Personally, I have been against it, but I can see certain arguments in its favour. Over the years, however, we have not had the closures that would make for an effective coal industry, and it is because of the extensive losses that the coal mines are in great difficulties today.
  I wonder whether the Opposition have recognised the force of what they are saying. The production of the coal mines by 1985 would be 135 million tonnes, and by the end of the century it would be 170 million tonnes. We have already been told that it will take 10 years to build a mine and bring it fully into operation. Selby will not be producing at full capacity by 1985. If production now, with opencast, is 120 million tonnes, the industry is likely to be well off target. Therefore, one can denounce the figures that the Opposition have given.
  Whose funds are we dealing with? Are they the National Coal Board's? My hon. Friend the Under-Secretary told me in a written answer last year
  "The sources of funds available to the NCB and its subsidiaries between April 1973 and March industry. [Official Report, 2 June 1980; Vol. 985, c. 571.]

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  I shall quote only "Internal resources" which provided 4 per cent.—no more. All the rest comes from the public. When the taxpayers are under great pressure, they will say that if there should be no more production than the country demands, and if there is a lot of coal about which cannot be sold—and which cannot be exported because it is a competitive market—there will probably have to be certain cutbacks. That is unanswerable.
  At a fairly early date we must find a method of making suitable but limited cuts in the capacity of the totally uneconomic pits. I have before me some of the NCB statistics, though not the most recent. They deal with South Wales, showing that a great number of pits there have an overall output per man-shift of under two tonnes. There are about 20. Many of them are loss-makers. Some should be closed down, because they will never be profitable and can never be modernised. It would probably help the Yorkshire and East Midlands pits and the board's overall position if some of them were closed and new capacity were opened up.
  However, a booklet has already been circulated by the triumvirate of steel, rail and coal—Mr. Sirs, Mr. Weighell and Mr. Daly. The interesting part is at the back, where we find the recommendation:
  "no closure of collieries on purely economic grounds."
  If the document's recommendations are fully carried out, there will be no possibility of ever having economic pits in the United Kingdom, and therefore no possibility of the 1980 Act ever working.
  There is another problem. If we have a limited market for coal, and we can persuade the CEGB to consume 75 million tonnes a year, and probably a little more if it can, provided that the price of coal remains competitive within a certain range, where do we place the coal in the rest of the market? I should like to say that it is in the domestic sector, but that has been taken away by gas. I should like to say that it is in the steel industry, but that has dwindled to between 3 million and 4 million tonnes, and there is a certain amount of importation. I should like to say that it is in industry and commerce, but unfortunately the fluidised bed combustor, which I fully supported, is about three years from being able to make a full impact on the market. Therefore, there are another three or four years to go before anything can be done to assist the coal mining industry.
  Before making what I think are some useful suggestions, I should like to read something that indicates the attitude that probably the right hon. Gentleman, and certainly other Opposition Members, will adopt. The booklet that I have already mentioned says:
  "The principle embodied in the 1979 TUC Congress Composite Resolution 15 that 'the CEGB and other nationalised industries must be compelled to provide an assured market for indigenous coal as a necessary guarantee of increased coal output', must be extended to a requirement that all nationalised industries should use each other's products and implemented forthwith. In particular the steel and coal industries must be compelled to make full use of rail transport."
  Heavens above! What are we coming to? If that happens, there will be a cosy arrangement worked out between the three unions concerned under which it is mandatory that the coal be used. There is no right to import from elsewhere; indigenous coal must be used in all circumstances, however uneconomic, whatever the costs of production. That seems to me to be utter madness.
  Mr. Allen McKay: The hon. Gentleman talked about over-producing, and asked what we should do with the
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  coal. Under the common agricultural policy we over-produce food, and yet we subsidise it to a vast extent and then sell it to Russia at a lower price. Could we not do something like that with coal? If we over-produce it, can we not sell it at a lower price or use it to help many old-age people who suffer from hypothermia, for example, when we have large stocks of coal?
  Mr. Skeet: That is an interesting argument. As the Opposition want to pull out of the Common Market, and as they do not like the CAP anyway, I do not see why such a policy should be extended to fuels.
  Why should the steel industry, for example, take British coking coal when there is such a differential between prices? In Australia coking coal costs £27·4 per tonne cif United Kingdom ports against the NCB's £45. If there is that differential, perhaps it is not unreasonable for the British Steel Corporation, even though it is a State corporation, to go abroad for coking coal.
  I should now like to make one or two recommendations, because I want to assist the NCB. I think that it will have to roll forward "Plan for Coal" and probably defer the Vale of Belvoir investment, which will be too costly at present.
  I recommend the closure of a limited number of pits which are perennial losers and are not open to modernisation.
  I should devote resources towards the marketing of coal, with special emphasis on the fluidised bed combustor. Too much money is being spent on the production end and too little on marketing. If I could get that one point into the heads of the Opposition they would be on the road to recovery.
  I shall now say something that my own Government may not support, but I think that I should say it, because I said it at the relevant time. I am prepared to consider that we may have to phase the working of the Coal Industry Act 1980 over two years from 1983–84. As the Government are to take a certain modicum of revenue from the British Gas Corporation, I see no reason why some of it should not be used by my right hon and learned Friend the Chancellor of the Exchequer for budgetary purposes in order to effect a transition from oil to coal. That may come about.
  I do not want to hog too much of the time available, but I wish to make one or two other points, particularly as my right hon. Friend the Secretary of State mentioned competitive industry and energy policies. There is no doubt in my mind that external financial limits determine prices, quite apart from the market. Therefore, the price that heavy industry must pay is to some extent dictated by them. I understand my right hon. Friend's point that they could be used for a reduction of costs, but in many cases they do not operate like that, and in fact increase prices.
  The tax on fuel oil, inaugurated in 1963 to benefit coal and later used as a revenue producer, is absurd today. I think that my right hon. Friend has acknowledged that. In West Germany the tax is £3·28 and in France it is 0·09p. In the United Kingdom it is £8·08. That is absurd.
  My right hon. Friend's point was that in the United Kingdom the fuel oil position was a little better than in the rest of the Common Market, but in 1980 as a whole prices, excluding tax, were higher here than in all other countries studied. We should recognise that there are energy policy differences between the United Kingdom and the rest of Western Europe. One is the external financial limits, which have a distorting influence. Another is the tax on

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  fuel oil. I have dealt with both these matters. I turn to the third, which is that different basic data are used for the establishment of gas prices.
  In the United Kingdom, gas oil is the factor. In Europe it is fuel oil. Gas prices for these industries should be assessed on a common basic oil product. If it is fuel oil, the United Kingdom should share with the EEC, and have a fuel-oil related gas price. That can be indicated as follows:
  "the pricing of natural gas in the United Kingdom is computed from a different base in the several countries in the EEC. Approximating the price of gas to gas oil which at current figures is 40·80p per therm would work out differently if fuel oil—the EEC base—at 27·80p per therm was employed. The price of petroleum products differs throughout Europe due in part to the proximity of the Rotterdam spot market and the consequent reductions of distribution costs."
  I should have thought that that was an easy way of approaching the matter. If we settle our gas prices by different data, there will be different results. I appreciate all the steps that my right hon. Friend has taken in that direction, but he has not gone far enough yet. He mentioned that he was not responsible for the cost structures of countries such as France, which have big nuclear and hydroelectric programmes. He may have amazed the House when he mentioned that by 1985, 44 per cent. of France's power would be nuclear power. That is what we have been saying for a long time. In 1985, we shall have no more than about 20 per cent. nuclear power.
  I agree that we cannot rival the hydro side, but we contemplate that France's energy costs will be very different from ours. That will be visited on the Government at the time. The Conservatives have been in Government for 18 months. Contracts have just gone out for Totnes. We are waiting for a further plant in Lancashire, and we are still waiting for the inquiry into the pressurised water reactor for Sizewell. We have not acted quickly in order to build more nuclear plants. If we want to match the French, we must get ahead with that.
  I should like to make two further recommendations. An electricity tariff structure should be modelled on the European system, favouring energy-intensive industries. I agree that there is no case for any special preference to industries generally, but energy-intensive industries are at a disadvantage compared with Europe. My right hon. Friend acknowledged that, and made one or two recommendations. But they are not sufficient. We are waiting for reports. We are waiting for the Chancellor of the Exchequer. We are waiting for certain things to be done. But if the French and Germans had had North Sea oil, they would have turned it to the advantage of their industries—much more than we have ever attempted to do. We have been acting as gentlemen all along the line. I am not suggesting that we should subsidise our industries. I suggest, that if there were harmonisation of the European and United Kingdom provisions, we would be better placed.
  Nevertheless, having made those comments, I will state my firm view that the proposals that have been put forward by the Opposition are absurd, and I intend to support the Government tonight.
  5.33 pm
  Mr. Frank R. White: I am grateful for the opportunity of participating in this debate.
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  First, I declare a double interest. I am sponsored as a Member of Parliament by the General and Municipal Workers Union, which has 75,000 members in the gas, electricity and nuclear industries. I am also chairman of the all-party paper group, which seeks to represent the interests of this vital high-energy-consuming industry. Within that industry my constituency has the heaviest concentration of paper mills, and hence we are very concerned with energy policy.
  I know from the discussions that I have had with my colleagues in the GMWU and with heads of industry in my constituency that there is deep concern that the Government have no clear coherent energy policy and are failing to co-ordinate the energy sources that are now at our disposal, with the inevitable result that today's lost opportunities and squandered resources will be paid for by future generations.
  I understand that the Government are reluctant to intervene in the free market. After all, that is their declared policy on which they won the election. But they must forgive Labour Members when they tend to look at the Government's hypocrisy. While worshipping at the altar of free market-ism for the private sector, they destructively intervene in the public sector. How else does one explain the Government's intervention that forced gas prices up to a level 10 per cent. higher than the rate of inflation, and electricity prices up to a level 5 per cent. higher than the rate of inflation? If that is the Prime Minister's idea of constructive intervention, I advise her that many of my constituents—the poorer members of our community—wish that she would direct her personal energies in another direction.
  That sort of price fixing on domestic heating attacks the weakest in our society. I am all for intervention, but this is an example of Conservative Party bigotry against these industries. The Conservatives have undermined nationalised industries, and they have attacked both management and unions in those industries. They have attacked and laid waste their investment plans and, like a pimp treats a prostitute, they have foced up consumer costs, using the extra revenues to finance their spending.
  I should like to point the Minister to a more worthwhile course of intervention that most fair-minded people would support. We as a nation happily enjoy a four-fuel economy—that of coal, gas, oil and nuclear generation. It is essential that these fuels should be used in the most efficient manner. To that end, the General and Municipal Workers Union recently published a pamphlet entitled "Energy Planning for the Future". I hope that Ministers have read that document, and if they do not have a copy I shall make sure that they receive one.
  Those of my hon. Friends who are waiting to speak in the debate will no doubt follow my hon. Friend the Member for Leigh (Mr. Cunliffe) in drawing the attention of the House to the position of the coal industry and coal reserves. At present, coal reserves are sufficient to support the current rate of production over the next 300 years. My union supports the view that coal, above any other fuel, should be used for bulk steam raising in industry and that industry should be encouraged to reconvert to coal burn by way of investment grants and a pricing policy that makes coal attractive for this purpose.
  Gas is a clean, controllable fuel, which presents the user with few storage problems. It is ideal for small-scale heating and for premium industrial use, where tight temperature control is required. However, its special

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  advantages are wasted if it is merely used as bulk heat. It should therefore be priced accordingly and withdrawn from the heavy industrial market as quickly as possible.
  On the question of oil, we need a well-defined policy on depletion to ensure that supplies last as long as possible. That cannot be achieved by the Government withdrawing from the market. It requires constructive intervention, and the Government should re-examine their policy towards the British National Oil Corporation. A depletion policy must be aimed at the point of use. As far as possible, oil use should be confined to non-substitutable uses.
  Electricity should not only provide light and heat. Other uses can and should be found for it, particularly in the electrification of transport—not only in mass transport schemes but in short-distance and local schemes, such as battery-operated buses and cars.
  In short, we have precious little time really to get to grips with the energy problem, and the Government must take positive initiatives in this area. Our abundance of energy sources places a responsibility on us to ensure a sensible use. That can come only from a willingness by the Government to intervene, both with legislation and with cash.
  Recently, the science policy research unit at Sussex university concluded that if over the next 20 years all industrial boilers now using oil were converted to coal burning it would cost the nation £150 million a year. That would be a positive step in energy conservation and in the correct utilisation of resources. It would also be of great benefit to the machinery and engineering supply industries.
  If hon. Members believe that there is no demand for this, I should like to quote from correspondence that I have received from the Elton Cop Dyeing Company, in my constituency. Mr. Herbert Hand, the managing director, recently wrote to me complaining about a circular that he had received from the Total oil company, informing him that the cost of heavy duty oil was to be increased by 1·20p per litre, to a price of 10p per litre. In January 1979, the cost to the company for that commodity was 4·79p per litre. Therefore there was an increase of over 100 per cent. in two years. The cost to the company this year will be £275,000 at the new price—an increase of £33,000.
  This is a company in a hard-pressed sector of British industry—the textile sector. It has a modern finishing plant, with a high degree of automation. It has an excellent record for controlling costs. It has first-class industrial relations. But it cannot control the cost of oil, electricity, water, effluent and rates. Oil is now accounting for 14 per cent. of its costs, while its direct materials—dyestuffs and chemicals—are costing less than that.
  The position is even more ludicrous when we consider that the company would now benefit—and would like to benefit—from conversion to coal. But, because of the increased cost of oil and its effect on cash flow, and the competitive edge of foreign competitors, with their subsidised energy, the company cannot generate the money it requires and is in a "Catch 22" situation. It is in circumstances such as these that the Government should act on behalf of this type of company.
  The question of foreign competitors leads me to my final point, which concerns the paper and board industry. Last year, that industry closed a paper mill every 22 days. It closed a paper machine every eight days. It lost 24 men every day during 1980.
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  During 1980, the bad economic climate was compounded by the Government's policies, and it gave our competitors a 25 per cent. price advantage in the paper and board industry. Energy costs, without doubt, played a serious part in creating this disadvantage. The fact that energy is increasing in price is worrying to all of us, and to no industry more than the paper and board industry. The fact that energy is priced higher, in an energy-rich country such as ours, than in the countries of the majority of our competitors, is totally unnecessary and is a major disadvantage to our industry imposed on us by the Government.
  Up to November 1980, heavy fuel oil in the United Kingdom cost up to 53 per cent. more than in most other countries—especially the United States of America and Canada. Industry has to pay between 6 per cent. and no less than 319 per cent. more than industry in other countries in Europe and North America for its natural gas.
  We have to pay between 3 per cent. and 238 per cent. more than other countries in Europe and north America for our electricity. This country pays between 16 per cent. and 34 per cent. more for diesel than other EEC countries have to pay.
  In this respect, the paper industry welcomes the NEDC initiative; indeed, paper was one of the major inputs into the NEDC study. But we need action and assistance now. The NEDC will not be receiving its next report until just before Budget day. Meanwhile, companies are daily at risk. We look now to the Chancellor of the Exchequer and to the Energy Ministers to alleviate our problems.
  Those of us who are involved in the paper industry ask the Government for a freeze on all increases in energy prices for industry until those of our European competitors catch up with our prices. We ask that the energy subsidies of North America be declared to be unfair trading, and that appropriate tariff action be taken against them.
  The Government must look again—the Minister referred to this—at the recent decision in the NEDC to agree to set up a task force on fuel costs. Is it true—I should like the Minister to deal with this question—that the task force has been given a remit only to compare EEC fuel costs with this country and not to bring into the comparisons the costs in Scandinavia and North America? The Minister seems to be confirming that by nodding his head. If that is so, the Energy Ministers are ignoring the disrupting force that is affecting much of British industry. They are ignoring the particular problems that Notth America and Scandinavia are creating in the paper industry and the textile industry. These problems are leading us along the road to disaster. We need firm action, and a comparison with costs in those countries should be included in the work of the task force.
  If the Minister is not to be regarded as a twentieth-century Nero, he needs to stop fiddling and to take some action now.
  5.46 pm
  Mr. David Crouch: The hon. Member for Bury and Radcliffe (Mr. White) declared a double interest. As the House knows, I have an interest in the chemical industry and also in the oil and gas industries.
  The hon. Member for Bury and Radcliffe expressed his concern flir the paper industry. My principal concern in speaking this afternoon arises from a representation made to me by a very profitable paper mill in my constituency. Out of an annual output of £13 million it exports £8

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  million. That company asked me to do something about the rise in the price of gas. This price rise has come not from the oil industry but from the British Gas Corporation. The company has had a rise in the price of gas for this year—I pause for effect—of 47 per cent. That is the increase from one year to another. I became very concerned about the prospects for industry under the weight burden of such remarkable changes in price from one year to the other. I can hardly believe my ears, and I have spent a lifetime in the chemical industry.
  Listening to the speech of the right hon. Member for Leeds, South (Mr. Rees) this afternoon, I felt that he was in some way unsure of his ground. He reminded me of a dismounted cavalry general who suddenly found himself in a major staff appointment—he did not like it, he was restless, and he wanted to get out into the field again. I thought that perhaps he had not given as much study to this vital question as he would have liked to give, but perhaps there are other things on his mind as he approaches this weekend. Just as I thought of the right hon. Member for Leeds, South as finding himself in a staff appointment and not liking it, dare I say also that my right hon. Friend the Secretary of State for Energy sometimes gives the impression of being a staff officer who does not give the greatest weight to the opinions of those of his field officers who are fighting the battle on the industrial front? I make those comments out of respect for each of the right hon. Gentlemen that I have mentioned.
  I welcome the Government's decision that there should be an urgent inquiry into the cost of energy to British industry and to see whether British industry is being seriously disadvantaged by our present pricing policies. By their decision the Government have acknowledged that there is a case to answer. The establishment of an energy task force in the NEDC—which has been asked to report in six weeks—shows that the Government appreciate the urgency with which the problem must be investigated and resolved. I hope that its findings will be published in time, so that any fiscal measures that may be recommended can be acted upon by the Chancellor of the Exchequer in his Budget.
  It has taken a long and very determined siege of the Department of Energy by the CBI, the Chemical Industries Association, and other industries in the intensive energy-consuming fields, to get this inquiry. They have had to batter at the doors for it.
  We do not merely want interesting thoughts from the task force on the problem that it studies, because there is an urgent need for it to point to areas of action. It will need to be both specific and courageous.
  There is no doubt that, to say the least, energy's present price structure for our industry is out of line with that of the rest of the world. British industry is paying through the nose for its energy. We pay much more than our industrial competitors on the other side of the Channel. As a result, we are losing business, and losing it fast. Foreign competitors have not been slow to jump into our established markets. As a result of their lower prices they take business from us. Manufacturers in France, West Germany, the Netherlands and Switzerland have led the way. Who can blame them? They have seen our weakness and have seized their chance.
  I shall not weary the House with a long catalogue of price comparisons. They are well known in general, and
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  well known in particular by the Government. Too often, the Department of Energy has brushed them aside. The Department has given the impression of having a self-righteous approach to industry's complaints. That has proved irritating during a trying time for British industry.
  Early this month the price of heavy fuel oil in the United Kingdom, excluding tax, was reported in the EEC oil bulletin as being $202 per tonne. Early this month the average price in the EEC was $212 per tonne. There would appear to be a slight advantage to Britain, which has a slightly lower price. However, there is a tax differential between the United Kingdom and the EEC countries of $12 per tonne. As a result, the United Kingdom is at a slight disadvantage. United Kingdom oil prices have just been increased by 13 per cent., which is equivalent to about $26 per tonne. Consequently, our prices are far higher than the EEC spot price.
  The position is much worse in relation to natural gas. In the United Kingdom the price of gas for a firm contract is between 29p and 29·5p per therm. In West Germany the price is between 19·7p and 21p per therm. In France it is 19·5p. For interruptable supplies in the United Kingdom there is a slightly lower price, of between 24·5p and 25·5p per therm. In October 1980 the price in Belgium for such supplies was 17·5p and in Italy 18p per therm. Such figures led and still lead to a demand for an inquiry.
  In recent months both the House and the public have complained that British industry is failing or having to struggle because of a variety of problems that could or should be corrected. Sometimes we have said that high wage costs have crippled our competitiveness. We have blamed management for inadequate investment and a failure to replace old plant and machine tools. We have said that productivity in British industry is too low. We have even heard business men—big and small—complain about the high cost of money and blame it for their uncompetitive position. British exporters had to jump a final hurdle in the industrial pentathlon, namely, the overvalued pound. They had to get over that hurdle before they could get into the market in Europe that we used to call the Common Market.
  With remarkable stoicism British business men have accepted such restraints, but not without complaints, bankruptcies, many closures, and an increasing number of lay-offs. They have accepted such restraints because they have accepted and still accept the paramount need dramatically to reduce the rate of inflation. The time will come when there will have to be some amelioration of the financial pressures on industry. We must be very near that time.
  We should be careful not to push industry too far. When a company falls, it finds it more difficult than it used to to recover lost business. When businesses fall and try to recover they are likely to find that their business has been taken by a foreign competitor. Business men know the danger and try to hold on to their export business at all costs. They do so by marginal costing, by selling at low profits, or by selling at a loss. They cannot go on like that for long. When they find that a major element in their costs—an element that is dependent on Government policy—is the artificially high price of energy in Britain compared with the prices found in other EEC countries, it sticks in their gullets.
  Why should Britain, which is self-sufficient in coal, oil and gas, find itself priced out of the market? It is not the result of free market forces; far from it. It is the result of

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  Government intervention. I understand the Government's strategic aim for energy. The Government say that we must think of the future. They say that we are running out of gas and oil and must not burn them up too fast. We must make them last as long as possible. Meanwhile, we must strive to find the best options. Therefore, the Government argue that we must raise the price in order to restrict demand. Such a policy would be all right in an ideal world, where everyone did the same thing, but we are not in an ideal world, and everyone is not doing the same thing. In the EEC there is no harmonisation on energy prices; far from it. Our European partners must be laughing at our high-minded policy. Their manufacturers are cashing in on it.
  The Government of the United States of America make no bones about it. They have deliberately held down oil prices to their industrial manufacturers. They have encouraged them to jump into the export markets of the world with a major price advantage. What does the EEC Commission have to say? It has quite a lot to say. A Commission statement that was issued a few months ago says:
  "Progress towards a Community energy policy is hampered today by wide national variations on pricing and fuel tax"
  The Commission states that consumers will have to face "higher realistic prices."
  In an even more controversial passage, the Commission makes the following suggestion:
  "an effort should be made to harmonise national taxation and domestic energy price systems."
  It mentions present differences and states that they were:
  "the root cause of a number of problems such as the deflection of trade between member countries."
  Amen to that.
  The world energy problem and its solution is the major issue facing the world. It involves all nations of the industrialised world and the Third world. We should give this subject top priority. It should certainly have top priority within the EEC. If we cannot agree among ourselves, what hope exists of trying to persuade or to bring pressure to bear on the United States or the OPEC countries? Could we even pretend to help Third world countries?
  Let us not lose our strategic objectives. Let us give a lead in Europe. Let us take a world stance in the energy crisis. Let us also remember, however, that we have to stay alive industrially in a world grown tougher in competition than at any time in history. We must not neglect the immediate tactical problems that we face at home. We should not seek to exploit our partners and allies as a result of our energy-rich base. We have not done so yet. I am not suggesting that we should do so now.
  My complaint is that our energy policy is a mixture of high endeavour and low experience—low experience of the facts of life in industrial Britain today. I am not so worried about our energy base. I am more concerned that our industrial lines of communication should not be broken and that our industrial front line should not be outflanked in the battle that we are fighting to keep alive. We have to win at least our share of that battle. Then, perhaps, we can lead the way to winning the war.
  6.1 pm
  Mr. Peter Hardy: If I have to disagree at all with the hon. Member for Canterbury (Mr. Crouch), my only regret is over the timing of his speech. I wish that he had made it six months ago—or, better still, 12 months
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  ago. The hon. Gentleman told the House that British business has been stoical. I prefer to regard it as meek. The New Testament may say that the meek are blessed and will inherit the earth, British business men, however will not inherit very much if present policies persist.
  Reference has been made to the paper industry. As a country that is 91 per cent. dependent on imported timber we are now in the ridiculous position of exporting raw timber to buy back paper and other timber products from other parts of the world where energy policies are pursued rather more sanely.
  I agree with the Secretary of State that this is an important debate. My right hon. Friend the Member for Leeds, South (Mr. Rees) suggested that we need regular opportunities of this kind. As energy will be a vital problem for the rest of the century, it would be a good idea if the House arranged regular opportunities to discuss matters of current energy concern. At the moment we could consider the gas-gathering pipeline to which my right hon. Friend referred. It is a pity that we did not debate this issue before Christmas rather than being presented with a written answer. I would like to have heard the views of my hon. Friend the Member for Dunfermline (Mr. Douglas) before the new year.
  Mr. Douglas: I did discuss the matter.
  Mr. Hardy: My hon. Friend has done so, but he did not have the opportunity that should have been accorded him at the time.
  We should be able to debate our concern over conservation and energy pricing. I hope to mention those matters briefly, but the main concern of Opposition Members at this time must be the mining industry. The Minister should know that there is no record of opposition to proposed closures where pits are exhausted. In my constituency in the last few years the Barley Hall and New Stubbin collieries have been closed without causing anything other than anxiety about what would happen to the people there.
  There is concern, however, about the proposed closure of Orgreave colliery, which has reserves. I recognise that there is an argument on the question whether those reserves, under the area of Aughton, where it is wet, should be mined. There cannot be argument that coal exists under the Tinsley marshalling yard, which is to be closed. We shall therefore lose a rail link as well as the coal underneath it. The closure of that pit should be approached with a great deal more caution than has so far been shown.
  The Minister should be aware that anxiety and anger in the coalfield is not restricted to one organisation. The National Union of Mineworkers is rightly concerned. I know that management is also worried. I spoke yesterday to leaders of the Yorkshire area of the National Association of Colliery Overmen, Deputies and Shotfirers, one of the most responsible trade unions in the country. They are extremely anxious. They want me to make it clear that they will resist proposals to close collieries other than on the ground of exhaustion. If a pit with reserves is closed, the opportunity presented by those reserves is locked away permanently and will never be realised.
  We hear rumours of the possible closure of between 15 and 25, or more, collieries, on the ground not of exhaustion but of short-term economic considerations. We should express not merely our anxiety but our anger. The

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  Government should know that if 25 pits are closed the cost of the unemployment that will directly result from the closures will amount to at least £140 million a year. It would be far better to keep people in employment than to incur the greater cost resulting from the wastefulness of an unnnecessary closure.
  Less than a year ago Opposition Members warned the Government of the consequences of recession and particularly of the likely vicious effect of the Coal Industry Bill. We are now seeing the conditions that we said would result a year earlier than we forecast at that time. It is foolish to allow what may amount to over 8 million tons of coal to be imported in 1981 when pits with coal beneath them are closed in the same period. It is right to point out to the Minister that 8 million tons of coal imported means an unemployment cost in this country, in 1981–1982, of £80 million. Importing coal at that level is a very bad bargain.
  The problem is that the National Coal Board is expected to break even. The board is also expected to maintain capacity, as well as its research and its ability to provide the oil, gas and feedstock that will be needed from coal in the 1990s. If the board is threatened today, this will destroy its capacity to meet the national need in 10 or 15 years' time. This is a fundamental consideration, which should be overrriding. It has not been given adequate recognition by the Government. Four years ago I suggested to the then Secretary of State for Energy and to the chairman of the National Coal Board that it would be worth their while to seek to increase the level of exports to Europe. At the time Sir Derek Ezra took the view that such exports would attract loss. That may have been the case, although just afterwards the Community introduced the coking coal intra-Community subsidy, which would have eased the burden.
  A situation occured in my constituency that will compel the very proposal that I made, but in extremely unfortunate circumstances. Just before Christmas I was astonished to learn that in his proposals for the steel industry Mr. MacGregor proposed the earliest possible closure of the Brookhouse and Orgreave coking plants, in my constituency. I had not anticipated that development at the time. I began deep consultations. I visited the works and met management and unions. I discovered that the British Steel Corporation had apparently forgotten that the Orgreave coking plant provided gas for the Sheffield steel industry and that there was no immediate alternative source of supply.
  Mr. MacGregor may wish to obtain North Sea gas for the Sheffield steel industry. As private owners, domestic occupiers and other industrial units in my constituency have been refused North Sea gas, I shall resist strongly and object strenuously to any proposal that renders my constituents unemployed in order to provide North Sea gas for the Sheffield steel industry. A good, sensible and viable plant already provides that gas. When North Sea gas runs out we shall need another plant in our area to provide the gas to replace it. That seems an odd situation.
  I wrote to Mr. MacGregor about these things. I was rather saddened by his reply, because I always took the view that as he was able to demonstrate a remarkable ability to look after himself he might be able to demonstrate a remarkable ability to look after the steel
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  industry. However, he replied saying that he did not think that it would be helpful to the National Coal Board to encourage or help it to keep open uneconomic pits.
  We must ask ourselves, what is an uneconomic pit? In the successful collieries in my constituency the vast majority of those mining the Swallowwood seam occasionally run into difficulties with the roof at the coalface. The seam is notorious for roofing conditions; nevertheless it is a very good quality coal. But if a pit happens to have difficult roofing conditions for three months or six months, shall we have Sir Derek Ezra, Mr. MacGregor or a Minister from the Department of Energy saying "That pit is uneconomic. Let us close it"?
  I believe that we are making too short-term a calculation in this matter. It may be all very well for the Minister to say to the NCB "Tighten up your finances, manage your accounting, improve your practices, and be economic in your arrangements," but what we are seeing now is not an insistence upon efficiency. We are telling the NCB not merely to trim its nails but to trim them by amputation at the elbow. That is the development that seems to be beginning.
  In the last 12 months we have heard repeated calls for improved production. The coal industry has provided that productivity. Over the years during which I have been a Member we have heard repeated calls for far better attendance in the mining industry. In the last two years, as the Minister knows, absenteeism has been halved. We have heard calls for British workers generally to improve their arrangements to co-operate and to work hard. In my constituency the coal miners and steel workers have been doing that for a long time. In steel we have seen a very poor reward. For example, partly because of the ridiculous energy pricing faced by the record breaking special steels industry in South Yorkshire, we are priced out of markets in which we were previously massively competitive. The result has been that activity has been reduced and demand for energy has fallen.
  Therefore, instead of supporting the use of our energy, in which we have a massive international advantage, and instead of encouraging competition and sustaining activity, we now see, at regular intervals, further burdens being placed upon business. I do not differentiate between those in the private sector and those in the public sector. I do not think that the hon. Member for Canterbury was differentiating between them, either. Each one of those groups in a wide variety of industries, and certainly the industries of South Yorkshire, is finding as each month passes that it is more and more difficult to survive.
  If we are to have additional unemployment above and beyond the 15 per cent. or 20 per cent. that many South Yorkshire areas are currently experiencing we shall not see merely a great waste of money but a greater anger. The Minister knows that in the 1960s the miners and mining communities were quite tame in their acceptance of a policy of contraction. But they learnt in the 1970s that the arguments that they advanced about the folly of closing pits in the 1960s were right and justified. They will not accept a repetition of the history of the 1960s by exhibiting the tame docility that was expressed at that time. The Minister must not expect docility in this situation. He will not receive it.
  Whilst I do not believe in violent demonstrations and responses of that kind to political arguments, I would join those in my constituency who would rather see public money spent in keeping people in successful production

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  than see it spent in paying them, their children and their grandchildren to waste their time on the dole. We do not want that situation. It is avoidable. It is easier and less costly to avoid that than it is to adopt the alternative. I beg the Government to listen to the voices not merely of the economists who may be employed in No. 10 Downing Street but of those who have long been concerned about the need to make industry successful in all our areas, and certainly to retain the necessary industrial activity in coal and steel.
  6.14 pm
  Mr. Patrick McNair-Wilson: Like other hon. Members. I welcome the right hon. Member for Leeds, South (Mr. Rees) to his new Front Bench job. However, I remind him and the hon. Member for Rother Valley (Mr. Hardy) that we on the Conservative Benches do not need lectures from the Opposition on energy policy. It was their policy, particularly in the 1960s, that led to the Coal Industry Act 1965—which some say tore the heart out of the industry—and to the 1967 White Paper, which carried such engaging comments as:
  "This reinforces the case for continuing to accept a degree of risk with oil supplies for those markets which it retains, so that we may benefit from its cheapness".
  The Labour Party is the party that is now lecturing the present Government on their energy policy. It is a party that has a very poor record of achievement when in office.
  The right hon. Member for Leeds, South is reading himself into his new job. As he does so I hope that he will take an early opportunity to look at the Coal Industry Act 1965—before he tells the present Government what they should be doing.
  Mr. Albert Roberts: The hon. Gentleman ought to have a better memory. He should go back to 1957, when we were stocking coal at 10s a ton. We are now stocking coal which is deteriorating in value, and with the crisis stock of 38 million tonnes, hordes of people are shivering in their homes.
  Mr. McNair-Wilson: The hon. Gentleman will recall that Lord Robens always said that if the coal production figure fell below 200 million tonnes, the industry could not be kept together. Many of these figures have now, regrettably, passed into history. All that I am saying to Labour Members is that no one has a monopoly of all the wisdom in terms of energy policy.
  I urge my hon. Friend the Under-Secretary to press on with all speed with the review of prices. I do not believe that we should be aiming to return to a cheap energy policy, because if we do that the miners' wages will reflect it. However, I want to see that we get as near fair competition as possible. I hope that my hon. Friend will recognise that as sterling increases in value so, inevitably, the difficulties for manufacturing industry become that much worse.
  I do not want to spend any time on the coal industry this evening because I made my views on the current situation clear on the Second Reading of the Coal Industry Bill, now the Act of 1980. However, I ask this question of my hon. Friend: if British coal is supposed to be as competitive as we are told it is, and if we are now part of an effective, expanding Common Market, what attitudes are being struck by the European coal cartel? If European countries such as France and Germany want to share in our oil, they
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  should take our coal to burn in their power stations. I should have thought that that was a perfectly reasonable deal that we could put to our colleagues.
  I very much hope that now that there has been a change of emphasis in Poland—one of the cheapest suppliers of coal to the North German power stations and elsewhere—we shall take advantage of that change and try to push our export market a litle more strongly.
  I declare my interest, in that I am employed by a company that makes graphite products. That interest will become clearer in a moment. I begin my remarks by asking my hon. Friend whether he could help me with a constituency problem. I share the view expressed by the Secretary of State about the looming oil crisis. I think that the present situation, when there appears to be a glut, will soon give way to a situation of shortage, worry and all the other things to which my right hon. Friend referred. Therefore it makes sense for us to determine as quickly as we can the extent of our indigenous resources.
  My hon. Friend the Under-Secretary will know that many parts of the South of England have been set aside for exploration. My constituency is one of them, Shell Exploration has plans to drill an exploration well of about 6,000 ft to determine whether there is oil there. When it is put in, that application will be decided on and determined by the county council.
  Accepting that the New Forest is a somewhat unusual area of natural beauty—if oil is found there, or in the national parks and other areas of outstanding natural beauty, can my hon. Friend give an assurance that we shall be able to have the same type of full open public planning inquiry as those that took place at Belvoir and Windscale? In an area of environmental importance it would only be reasonable to have such a planning inquiry—
  Mr. Skeet: There is a difference in size.
  Mr. McNair Wilson: —despite what my hon. Friend the Member for Bedford (Mr. Skeet) says. My main point relates to electricity. Electricity takes about 30 per cent. of all the fuel that we burn. It has certain applications where there is clearly no competition. Therefore, the method of generating electricity must be of central priority to any discussion on energy policy.
  I firmly believe that in energy terms, in 15 to 20 years' time we will effectively be talking about coal and nuclear energy, with oil perhaps being reserved more and more for transportation, coal taking on a whole new range of activities, and nuclear energy beginning to take up the base load for electricity generation.
  It has already been proved, at least to my satisfaction, that the nuclear power generating systems operating in this country are very safe. There have been no fatal accidents in nuclear power stations from nuclear causes. However, argument continues on the question how best electricity should be generated by nuclear means. If we are to understand that problem we must recognise that we are talking only about a nuclear furnace. It may be a coal furnace or an oil-fired station. It is a device to boil water to drive a turbine.
  Over the years there has been much discussion of the different systems that can be employed. In the 1950s this country led the world in nuclear generation technology. We opted to go for gas-cooled technology. In almost every respect it has proved that its performance capability is excellent. It has shown a fine safety record, and it enjoys the distinction of being British technology.

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  Under the Labour Government there was an attempt to find an alternative. The heavy water option was examined at great cost. It is an option that I have always found it difficult to understand, since we have no heavy water plant. Nevertheless, the steam generating heavy water reactor option has now closed. We are once again being asked to re-examine the pressurised water reactor. This system, according to its proponents, has many advantages, one of which is that it is an off-the-shelf form of generation. They say that it has a lower overall cost, and that if we were to opt for PWR we would begin to enjoy the opportunities of exporting the stations.
  I do not accept any of those arguments in favour of PWR. Although many of the AGRs have turned out to be more costly and have taken longer to build than was expected, if we are to build PWR stations to the safety standards that we must insist on we shall not find that we automatically have an off-the-shelf, cheap form of electricity generation. The early stations—the Magnox stations—are still, after all these years, turning out electricity as cheaply and efficiently as predicted—in many cases more so. We would be making a big mistake if we wasted another mass of taxpayers' money on examining the opportunities of placing orders for PWRs when we already have our own thermal reactors, which work perfectly well.
  We should now recognise that we have come to the end of the thermal programme as we know it. To waste further money on new designs at this stage would not be sensible. We should give urgent consideration to using the fast reactor.
  In 1959, the first Dounreay reactor—the small one—was brought into being. It has performed magnificently since then. In 1974, the prototype reactor—the larger demonstration model—was brought on stream. That is doing likewise.
  The fast breeder reactor has the advantage of a better utilisation of fuel—let us remember that uranium is just as finite as oil—and also has the advantage of being more efficient. Today, we should be making active plans for a commercial fast breeder reactor. If we do not, we shall be overtaken by our European colleagues. We shall find that when the shortages to which I referred earlier come upon us we shall still be very much in the second league.
  What time scale do the Government see for the building of a commercial fast reactor? Any energy policy for a period between now and the end of the century that does not include, for this country, the development of this technology will mean that Britain will have missed a magnificent opportunity to take advantage of her own technology. It is an opportunity that we cannot afford to miss.
  6.28 pm
  Mr. David Penhaligon: We have heard some interesting speeches, with some of which I would concur and with some of which I would not.
  The hon. Member for Canterbury (Mr. Crouch) said much with which I agree, although he has clearly met different business people from those that I have met. The business people in my constituency who have gone bankrupt see their life's work in shreds, as they have had to sack people who have worked for them for 20, 30 or 40
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  years. They have not said that that is their contribution to fighting inflation. There are more generous industrialists in the hon. Member's constituency than there are in mine.
  The theme of the hon. Gentleman's speech was very interesting, and I should like to continue part of it. The single most important contribution that energy has made to the British economy in the past five or six years is the effect of North Sea oil on our exchange rate. That is the major reason why Britain is in such difficulties on the job front.
  The Government slavishly follow each OPEC rise, which has three effects. First, it substantially increases Government revenue. Secondly, it pushes up the international value of the pound, as those countries that are not self-sufficient in oil can see that the gap between the real production costs of oil and the price at which it is being sold is, for Britain, increasing. The third effect, not long after the other two, is that every OPEC price rise makes our industry substantially less competitive with other countries because of the effect on the pound.
  The Government say—it seems a nice, simple, pat answer—that this all produces a great deal of revenue, which they will use to reduce the taxation of companies and the profits of our industrial enterprises. I have not seen the most recent figures, but the profits of our industrial enterprises are going through the floor. That is why they are closing. The hint that the Government might reduce the tax on the profits of a company which has just gone to the wall is an extremely cruel joke.
  In any case, it could be argued that the contribution that industry makes to the Government by way of taxes on profits has gone through the floor in the last 20 years anyway. I do not know what percentage of Government revenue comes from taxation on profits today, but it is a fraction of what it was 20 years ago.
  The Government have two options. The first is not to follow OPEC. I strongly refute the claim that this option would be a subsidy. A policy of subsidy means selling something for less than it costs to produce. North Sea oil production costs $4 a barrel—perhaps $6—which is so much less than the current price that we are not, by a mile, talking about a subsidy. If we had a lower internal oil price in the United Kingdom than those of other European countries that would not be a subsidy.
  The Government's second option is to put each increase in revenue that they receive from an OPEC price rise into a separate fund to compensate industry for the difficulties caused by that price rise. It could be used to reduce payroll tax or to provide major investment grants to industry.
  The choice between those two options is marginal. I do not worry which one the Government pursue. All I pray them to do, while we still have some industry left, is to pursue one of them.
  Mr. Skeet: Will the hon. Gentleman take into consideration the fact that if BNOC reduced the price below $39·25 to assist British industry we would have to sell the oil to the Europeans at that same lower price? Surely that would be a great disadvantage.
  Mr. Penhaligon: It remains to be proved that that is what we would have to do. I have offered two options. At the moment, we sell oil to Germany, where it is passed on to industry at a lower price than the price charged to our industry. There can be no rationale in that. As things stand I cannot agree that my suggested alternative is impossible.

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  Nuclear power has had scant attention tonight. Yet the Government's projected expenditure on their newer nuclear building programme is between £12,000 million and £15,000 million. Such a sum deserves a day's debate in itself. One of the major functions of the House, if it has any real purpose at all, is closely to examine Government expenditure plans. For the Government to slip through such a sum as this without using any of the time available to them for debate is a disgrace.
  The public perceive this building programme as representing a substantial risk. I am by training a professional engineer and I must tell the House that I find it difficult to quantify the risks. The Three Mile Island incident, some say, proves that the risks are small. Others say—I would be in this camp—that we were so near a desperate and monumental accident at Three Mile Island that it is a warning written on the wall for all of us.
  As a Member for a rural seat, I am amazed that the Government should claim to have confidence in nuclear power stations while still insisting on building them in remote areas. On the day that they have the courage to build one in London, my constituents in the far South-West will be more impressed with their safety. Correspondence with the Government clearly shows that the real reason why these stations are built in areas with sparse population is that, if—I do not over-emphasise the "if"—there were an accident, evacuation would be much easier than in urban areas. That is not exactly an admission which will greatly increase confidence in an area where Governments have spent no other money at all yet which they suddenly wish to bless with a nuclear power station costing £1,000 million.
  Mr. Palmer: I hope that the hon. Gentleman is aware that there are three nuclear stations within easy reach of Bristol. Does he think that we are in danger?
  Mr. Penhaligon: Candidly, yes. As I have said, I find it difficult to quantify the risks, but if an accident should occur on any of those sites, the good people of Bristol are at risk. They are less at risk than the people in some of the villages in my constituency are from the possible nuclear power station in their area, because those in Bristol at least have the advantage of a few miles between them and a nearby station, but the risk undoubtedly exists.
  I have some questions about the PWR inquiry. When will it start? What will be the terms of reference? Will the Government fund or help to fund those who want to use the inquiry to present an alternative case?
  I say this with no malice, but if the public perceive those arguing against the PWR to be less well funded and less able, because of lack of money, to present their arguments than those arguing for it, they will take no notice of the inquiry's report. What are the Government doing to ensure that those with doubts about the PWR are not restricted by lack of money from fully and articulately presenting their case?
  If the inquiry decides that it is no go—that the PWR is not safe enough—what will happen to all the sites in Britain which are currently being investigated for PWR stations if the system is approved? Do the Government intend simply to go back to AGRs and to build them on the sites?
  Conservation also has had scant attention tonight. I believe that 10 or 20 per cent. of our energy could be saved
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  by a massive conservation programme. Insulation, draught proofing and more efficient machines all come immediately to mind.
  A particular interest of mine is district heating systems. I hope that the Minister will let the House know where we are in this saga. I see faces around me that are familiar in energy debates. I do not know how many times hon. Members have raised the subject of district heating schemes, but their potential is enormous.
  The average thermal efficiency of British power stations is not more than about one-third. Until a new generation of materials can be discovered, that figure is not likely to increase. We use one-third of our energy to produce electricity and waste two-thirds to heat rivers, birds and fish. If we could save only one-half of the two-thirds that we waste, the contribution of useful energy to Britain's energy supplies would be equivalent to the total current output of the Central Electricity Generating Board. We shall take a long time to reach such a day, but I should like to see the Government start on the plan to establish massive district heating schemes.
  6.42 pm
  Mr. Edwin Wainwright: My purpose is to keep the debate as wide as possible, but as I represent the coal industry I hope that the House will forgive me if I dwell on that industry.
  I am sorry that the hon. Member for New Forest (Mr. McNair-Wilson) has left the Chamber. He spoke about nuclear power, which is still a comparatively new industry. We are not yet aware of all its dangers. Throughout the world, especially after the Three Mile Island incident, people are afraid of the dangers that may arise from the burning down of the core. There must be ways of controlling nuclear power and making it safe for the future.
  We must not move too easily and too quickly, especially with the fast breeder reactor, because that could leave in its wake great dangers to mankind for a long time. I hope that before the Government do anything about the fast breeder reactor and the siting of any pressurised water reactor they will call a large public meeting to discuss where reactors should be sited and whether they should be allowed to proceed. We have heard a great deal about Three Mile Island. Some of us know that there was human error in the control room. Two panels were sited damned stupidly. They were at the back of the control panel and could not be seen. One of those panels was essential and should have been visible. If it had been, the operator would have been aware of what was happening and the danger could have been avoided. We have to ensure that operators in the control rooms of nuclear power stations are sufficiently well educated and professionally minded to deal with the problems. The Government must always be careful that the building and running of nuclear power stations are as safe as possible.
  In the midst of social and industrial decline, our standards, like those of other developed nations, are bound to be affected. No sector of British industry can remain unaffected. That applies to the energy industries as well as to manufacturing industry and all forms of commerce. We must take into account the present economic climate and must prepare for the future, when, I hope, that climate becomes brighter and the economy starts soaring.
  We are more fortunate than many other countries, because we are self-supporting in energy. I hope that we

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  do not become too complacent, because energy and energy prices are of great importance to our industry. We must prepare to use our energy supplies in the best possible way so that the self-supporting period may be extended beyond the estimates. It is estimated that our oil will last for two decades, coal for about 300 years and gas for four to five decades. By careful conservation we can extend those periods.
  I shall confine the rest of my speech to the coal mining industry, because it is essential that we get that industry right. There is great danger in what may happen to the industry. What is to be done to keep energy costs to our industry similar to those charged to industry on the Continent? The costs of energy to our industry are far greater than those on the Continent, despite what is said.
  Let us look at the subsidies to the coal mining industry. In Belgium the subsidy to the coal mining industry, though the industry is small, is £58 per tonne; in France it is £45 per tonne; in West Germany it is £41 per tonne; and in the United Kingdom it is £29 per tonne. Direct aid to productivity to the industry in Belgium is £207·7 million, costing £34·05 per tonne; in France it is £334·1 million, costing £17·96 per tonne; in West Germany it is £1,385·7 million, costing £14·85 per tonne and in the United Kingdom it is £195·4 million, costing £1·62 per tonne. We expect our coal mining industry to produce the coal as cheaply as coal is supplied on the Continent.
  The income from North Sea oil should produce subsidies for the coal industry so that the cost of coal to our consumers is cheaper. Why should we import nearly 8 million tonnes of coal? Why do we allow that when we have coal here? I know that some of the imported coal is coking coal, but the NCB can satisfactorily blend our coal for our coke oven plants. We allow imported coal to come in because it is cheaper. I remember that we allowed oil to be imported, because we depended on oil. As a result, we nearly decimated our coal industry. All Governments were guilty because they allowed cheap oil to come in from OPEC countries. But we have been taught a lesson. The Secretary of State gave us a new price today. He said that there had been a 1,800 per cent. increase in the price of oil since 1973. That is a terrific increase.
  I remember when we started to import coal from America shortly after the war. It was to be supplied to the NCB at a cheap rate, but as soon as the contracts were fixed the cost of transporting the coal went up and the NCB had to pay £70 million for that coal.
  There has been low investment in the coal mining industry. We shall require coal when the oil has run out and we cannot close a pit and expect to recover in 10 years' time. It is essential to retain a coal mining industry.
  I look forward to the day when we have co-ordination among our energy industries. One would expect such co-ordination if they were part of a multinational corporation, but the Government expect them to work separately, and their attitude is that if one industry is facing difficulties it should be allowed to lose. We cannot allow that, because the coal mining industry must be maintained to be able to produce the increased tonnages that we shall need in 20 or 30 years' time.
  We must not allow market forces to operate in energy and industry generally. We have to cater for the needs of our people and we need to export large quantities of our goods in order to pay for imports. It is essential that we
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  make certain that our industries work as efficiently and productively as possible. The coal mining industry has done that. Miners have produced almost everything that has been asked of them, but because there is now a large stock of coal we hear talk of pit closures.
  The Government will try to close pits, and that will cause conflict in the industry. We hear that the NCB plans to close 25 pits; but no evidence has been given to the NUM. Where is the co-ordination between the management and the union? Why is there no openness? Why do we have to rely on a mole leaking the fact that pits are to be closed? Even now, we have not been given the list, but everybody says that there is a list. It ought to be divulged to the miners.
  The Govenment must make sure that their policies are wide and prudent enough to ensure that our energy industries work together and achieve greater co-ordination. We must not allow one to fall by the wayside when we know that in 20 or 30 years' time we shall have to build it up into perhaps the most important industry for the nation.
  I hope that the Government will think more deeply about the future of the coal industry. If they carry on as we expect there is bound to be conflict. I fought in many struggles in my younger days. I have had a tough life fighting for the rights of miners, but if everybody works as he should in a nationalised industry and we make sure that we are planning with the best co-operative methods and co-ordination, strikes should not be necessary. The nation, workmen, and the whole economy lose when a strike takes place.
  I hope that the Government will have second and third thoughts before allowing the National Coal Board to close any pits against the wishes of the NUM.
  6.56 pm
  Mr. Geoffrey Johnson Smith: It is always a pleasure to follow the hon. Member for Dearne Valley (Mr. Wainwright), who speaks with great knowledge of the coal mining industry. His memory goes back a long way. He reminded us of the many battles that he has fought. Mine is not such a long memory and I have no personal experience of the coal industry.
  However, having surveyed the scene at Westminster for a number of years, I think that there has never been a time when there was so much agreement between the two sides of the House about the value and long-term importance of the coal industry. We are all agreed about that. An Opposition Front Bench spokesman agreed on the radio this morning that the "Plan for Coal" published by the previous Government in 1974 was the policy of the present Government.
  The hon. Member for Dearne Valley referred to subsidies. Of course Continental countries subsidise their small coal industries. The German coal industry is declining, and because the Germans depend so much on coal they have to get every scrap that they can. The picture in this country is entirely different. I hope that I am not looking at it through rose-tinted spectacles, but the hon. Gentleman knows that the Government have pledged to spend between £600 million and £800 million, not so much on subsidies as on investment for modernisation, so that we are able to compete with other fuels and have a prosperous coal industry.
  Mr. Edwin Wainwright: The hon. Gentleman is saying things which he knows have not been accepted by

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  the NUM. He talks about investment, but what about investment in liquefaction? Has not that been neglected? Have we not lost coal because we have not spent the money needed to modernise more pits?
  I know that there is a surplus of coal, but I remember—
  Mr Speaker: Order. I am sure that the hon. Gentleman remembers, but he has already made his speech.
  Mr. Johnson Smith: I shall not follow the hon. Member in too much detail, but there is a tremendous amount of investment in the coal industry. I do not know of any Government who have greater good will or could spend more money than the present Government, bearing in mind their responsibilities in other directions. The Government are trying to improve the investment record of the industry, and productivity is increasing. The industry suffers high cost elements, because there are many uneconomic pits still in existence. Any Government, even a Labour Government, would have to pay attention to the fact that such costs are uneconomic and that the industry must put its house in order. That is a discipline to which it, like any other industry, must be subjected.
  My purpose is not so much to talk about the coal industry as to examine the relationship of energy prices to industry generally. I understand the difficulties that the Government got into with the CBI and other organisations in industry in respect of their energy pricing policy. It is generally agreed that, overall, our energy prices are not out of line with those of our competitors. However, there are problems, though they are difficult to quantify, and that is why the Government have agreed to sit down with the CBI and other interested parties—they were a bit slow about agreeing to do so, but I make no complaint about that—to discover in what areas we are out of line.
  I am glad that during the past year the Government did not yield to the temptation artificially to hold down the prices of indigenous oil and gas. General subsidies for energy are bad for efficiency, for conservation and for innovation. We must carry the Opposition Front Bench on that point. I have not heard it argue that point. Subsidies only postpone the day when we shall be less dependent on the vulnerable oil supplies from that area of tremendous political instability, the Middle East. Surely that is agreed on both sides of the House. The Government's policy of market pricing for fuel is not simply an ideological aberration of a Right-wing Thatcher Government.
  At the international Venice summit our friends and allies supported our policy and agreed on the need for Governments to ensure the market pricing of fuel. Equally, we all agreed that there should be some market stability. The sudden increases in the price of oil do not lie within our hands. The OPEC strategic committee said that that was not to its advantage either, but we have yet to have as good a track record from that committee as we should like to see. From time to time the various OPEC Governments seem not to follow the policy of their strategic committee. In those circumstances we shall need, on a European basis, to use every bit of muscle that we have to persuade the OPEC Governments that it is as much in their interest as it is in our interest and the world's interest to have a stable market.
  I understand that there is no quarrel between British industry and the Government about the fundamental approach to what I believe is a sound energy policy. The
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  CBI is not asking for subsidies but, as my hon. Friend the Member for New Forest (Mr. McNair-Wilson) said, it is asking for fairness. That is right. We reject subsidies as a way out of our difficulties in an era which marks the end of cheap energy. That must mean that we reject the need for Government interference with the pricing policies of our nationalised fuel industries. They have been mucked about by Ministers for too long. That is one reason why the chairmen of nationalised fuel industries have a most unenviable task—and I do not refer only to fuel industries. How can we have a sustained policy if Governments yield to consumer pressures and interfere with the pricing and marketing policies of those who were set up by Parliament to run the industry as proper managers?
  Mr. Allen McKay: Will the hon. Gentleman give way?
  Mr. Johnson Smith: I would rather not, but I will.
  Mr. McKay: The hon. Gentleman is missing the vital point about the coal industry. It has been in a position of under-investment from private enterprise for many years. Because various Governments have put money into the coal industry—for which we are grateful—it is now on the fringe of coming into its own. But the short period that the Government are giving it to achieve that will ruin the industry.
  Mr. Johnson Smith: We can argue whether it is too short a period for the coal indstry to come into its own and make a profit, but it is not a matter of principle that divides us; it is only a matter of emphasis and timing. Given the general good will on both sides of the House towards this tremendously important industry, we should be sensible enough to agree on a timetable that suits most people. There will always be some who will argue that it is too fast or too slow, but I have never known any policy that does not attract that sort of argument. That is of no importance in the end.
  If we reject price controls—and I am glad that the Government do so—it is not the same as saying that the British Government or British industry should reject ways and means to reduce energy costs and use. It is to that aspect of the Government's policy that I now turn. I see no point in paying more for energy than necessary, and thereby putting ourselves at a cost disadvantage compared with our competitors. There is evidence that that happens. It is clear that the tariff arrangements of the Central Electricity Generating Board are insufficiently flexible. I understand that that matter is under consideration. However, the facts have been known for some time. The Government were right to refer the electricity supply industry to the Monopolies and Mergers Commission. I hope that the Government's discussions with the CBI will speedily result in the conclusion that the power to be more flexible should be vested in the CEGB.
  In general, the concept is that the CEGB may not offer a special favourable tariff to one customer in case that results in the placing of a burden on other customers—even if the CEGB regards the new load to be used by the new customer as ideal for its network. Because of that inflexible arrangement, the new intensive demand industries wanting special tariff arrangements that can be obtained in other countries are unable to obtain them in Britain, even though Britain has generating capacity lying

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  idle. In the United States there is competition between public power utilities to attract industries to a specific state.
  If the Government think that it is wise to give money to industries in certain parts of Britain—for example, to help with start-up costs because the Government believe that it is important to encourage the expansion of new industries in certain areas and even, in some instances, to ensure their survival—surely the same holds good when trying to strengthen industries that depend on having power costs equal to those available to their competitors in Europe, Japan or North America.
  There is nothing in the CEGB arrangements to convince me that we have that right. Similarly, there are other major processing and metallurgical industries that require gas either for energy or for chemical feed stock at the prices paid by international competitors. I understand that that is now beginning to happen. There should be some mechanism to make possible a more flexible tariff arrangement. That is one reason why our costs in some companies and industries have proved to be out of line with those in other countries.
  The second reason why our energy costs are too high is that manufacturing industry does not have a good record in reducing energy costs. The figures since 1974 show that energy consumed per unit output by manufacturing industry has hardly altered. The Germans achieved a 17 per cent. improvement between 1974 and 1978. The Americans, whom we regard as squanderbugs in energy, achieved a 14 per cent. increase in efficiency; France achieved an increase of 9 per cent.; and the Japanese industrial energy efficiency rate improved by 10 per cent. between 1976 and 1978. Industry must put its house in order. It cannot expect the Government to help it with grants. If it knows that energy is costly it has every incentive to introduce the technology that is now available, based on the microchip, to improve its use of energy. I was once involved in trying to sell that. The conservatism of some managers in British industry was appalling. Some companies have a good record, but the remainder lag far behind.
  The third reason why our costs are higher has much to do with the structure of British nationalised industries. The steel industry must take a leaf out of the book of the Japanese steel industry. That applies whether it is in private or public ownership. There is no ideological babble about that. We are talking sheer market economics. The great iron ore developments in Western Australia and other parts of the world to a large extent took place with Japanese purchasing contracts. Australia was one source, the development in Africa another, and there were many other sources all over the world. They went to the source of supply for their steel industries. If they could buy their way in they entered into a long-range purchase contract, which often included the sale of their steel goods. It was a good deal.
  Following the second nationalisation of the British Steel Corporation, the British steel industry could have entered into joint ventures or partnerships to develop iron ore or—this is more delicate ground because some hon. Members represent coal constituencies—even to develop coking coal mines. That would have achieved a secure supply at a cost well below the world price. Yet it did nothing in that respect. British Steel's ability to offer
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  major long-term contracts to a new mining venture in which it wished to become a partner could have been financed not through the taxpayer but by bank loans to the new venture with only a modest equity investment from BSC. We now have a corporation, probably the largest single consumer of raw materials in Britain, without any integrated source of materials. I am informed that no other steel producer of comparable size, anywhere in the world, is so lucky in that respect. I doubt whether any steel producer anywhere else in the world has received and is continuing to receive so much assistance from the taxpayer. Something is wrong with the way that we capitalise on the advantages that should be available to us.
  The Central Electricity Generating Board is another example of an industry which could have benefited from a mineral procurement policy, but I realise that that is delicate ground because it is virtually tied to coal. Therefore, I shall skate hastily over that thin ice in case I encourage interventions from hon. Members representing constituencies with coal interests. However, I think that the electricity industry could benefit from integrated supplies.
  If it is delicate for the British Steel Corporation and the CEGB to enter into arrangements for investment in overseas sources of coal supplies, I can only say that I am somewhat disturbed that neither of these industries is as involved as I should like it to be in North Sea oil. Both industries are large consumers of oil.
  The Government have encouraged a wide variety of companies—some of them unlikely companies—to participate in North Sea oil exploitation. I should have thought that it would do a great deal for the strength of these two national corporations, on which so much of our industrial well-being rests, if they were encouraged to take part in North Sea oil. I do not suggest that they should develop it. If they were given blocks, many people with the expertise would come in to do the development. But there is not much of a record of the BSC or the CEGB having access in that respect. If they were allocated favoured areas I believe that that would do a great deal to generate funds to help them to face the future with greater confidence.
  Perhaps one of the first steps to which we should give greater attention in terms of energy resources is that those resources should become an integrated part of our overall industrial structure. Several hon. Members have either said or implied that our energy industries appear to be somewhat remote from national industrial strategy. Each seems to be concerned with its own affairs.
  No one knows from one year to the next—or from one miners' conference to another, because that has a significant effect—what the price of coal will be. No one can be sure what the price of oil will be, because that is generally set by OPEC. Gas follows in train, because that is related to oil prices. Then along comes electricity in the rear, following willy-nilly according to what prices the industry's fuel suppliers charge.
  If we were able to develop an energy-industrial strategy that aimed at creating the greatest overall added value from the conversion of energy to competitive industrial products we should obtain the maximum benefit from our energy sources. We would then be concerned not with what prices we could get for coal, oil or gas, per se, but with the benefits that the nation could achieve by using those

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  energy sources, combined with an imaginative and long-overdue raw materials procurement policy, to make our industries more competitive—in fact, the most competitive in Europe.
  In making these comments, I draw heavily on the views expressed to me over some weeks by a constituent who has a deep and long-term knowledge of materials procurement in a well-known international company. As hon. Members know, I take a very keen interest in energy problems. Therefore, I hope that the Government will comment on my suggestions.
  7.13 pm
  Mr. Harold McCusker: When I spoke in an energy debate last year, I said that Members of Parliament representing Northern Ireland constituencies contributing to debates such as this could be likened to underprivileged children with their noses pressed against the window of a wealthy neighbour's house admiring the fire in the hearth, because it is cheaper to have a fire in the hearth in any region of Great Britain than in Northern Ireland: envying the gas-fired central heating, because gas in Northern Ireland costs four times more than in the rest of the United Kingdom; and wondering at the galaxy of electrical appliances, because electricity in Northern Ireland costs 25 per cent. more than in the United Kingdom in general. If anyone disputes those figures, I should point out that they are to be found in the columns of Hansard, having been given by the Minister of State, Northern Ireland Office. I ask hon. Members to add those figures to the figures that have already been given when they talk of the consequences for their constituents of the energy crisis that faces us.
  I shall not bore the House with the catalogue of underprivilege which is suffered in Northern Ireland and is reiterated almost every week in this Chamber. However, I propose to emphasise the disadvantages experienced by those in Northern Ireland because there is no coherent energy policy for the whole of the United Kingdom.
  This Government, and to a lesser extent their predecessors—who in their latter days were beginning to move towards a common energy policy for the whole of the United Kingdom—appear to want two energy policies for the United Kingdom; one for Great Britain and one for Northern Ireland. One, of course, is 40 times bigger than the other. One has all the natural resources; the other has none.
  If Northern Ireland had all the natural resources there would be no problem. I would support the Government in exploiting and using those natural resources for the benefit of the whole kingdom, just as the Government are doing with what can be urged to be Scotland's natural resources. The consequence of Government policy, which I described in my opening comments, is inevitable. The part of the United Kingdom which can least afford it is being asked to pay the maximum for its energy. It is impossible for Northern Ireland any longer to have a viable and separate energy policy. That might have been possible when Stormont existed. I am sure that many former Ministers in the last Stormont Administration were relieved that it was prorogued in 1972, because it almost coincided with the 1,800 per cent. increase in the cost of oil. Today they would be faced with the problem of trying to explain to the people of Northern Ireland why they were having to pay exorbitant rates for their electricity. Indeed, they could not have done anything to change that situation.
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  Recently, at some political disadvantage to myself, I worked very hard to co-ordinate energy resources on the whole island of Ireland, and to see that they were shared. The dangers inherent in the isolation of the Irish Republic are best seen in its approaches to the Department of Energy here to obtain a link with the United Kingdom system or, as the Republic would argue, the greater European system.
  Northern Ireland is underprivileged in another way. This is the Parliament of the whole United Kingdom, from which operate the Government of the whole United Kingdom, and sitting on the Government Front Bench is the Secretary of State for Energy of the whole United Kingdom. I am allowed to speak in the debate and to vote tonight. However, I am a second-class Member of Parliament because I shall not get a response to my remarks. I shall be told by the Minister, whom I hold responsible for energy policy for the whole United Kingdom, that he is not responsible for energy policy in Northern Ireland. That is scandalous. I wish that hon. Members on both sides of the House who were so devoted to the cause of devolution were here to experience it. It is very frustrating. I hope that the Secretary of State will change his mind, but I have no doubt that he will say what was said last time—that he cannot make any comments about energy policy for Northern Ireland because it is a matter for the Secretary of State for Northern Ireland. Nevertheless, having said that, perhaps he will think again.
  This deplorable situation arises not because of the disparity in domestic energy prices between one region and another in the United Kingdom but because of the crippling effects of the differentials in industrial and commercial tariffs.
  There is one difference between the situation now and the situation eight months ago. Eight months ago, when I first spoke on the subject, 60,000 people were unemployed in Northern Ireland; now there are 100,000. We are told that during the next 12 months the figure will rise to 125,000. Yet, with unemployment totals in Northern Ireland rising to 20 per cent. and above, light engineering tariffs in the Province are 34 per cent. higher than in the North-East of England—a comparable region. Commercial tariffs in Northern Ireland are 32 per cent. higher than in the North-East of England. Heavy engineering tariffs in Northern Ireland are also about 30 per cent. higher than in a comparable region of the United Kingdom. Northern Ireland has the worst unemployment rate. With that penalty on top of the other penalties which have been described earlier today, I do not know how some of our industries manage to survive. For that reason alone I shall support the Opposition motion tonight, as, I am sure, will my colleagues. We believe that the United Kingdom needs an overall energy policy which includes Northern Ireland. The Province must become another electricity or gas region within the appropriate United Kingdom structure. That is the only way to reduce the unacceptable differentials which currently exist.
  The last Government, in equally difficult times, did a lot to help. The former Secretary of State for Northern Ireland—the right hon. Member for Barnsley (Mr. Mason)—obtained£350 million from the Treasury in an attempt to put Northern Ireland's electricity industry on its feet. Let me put that £350 million into perspective; it is equivalent to the total cost of terrorist damage done in Northern Ireland up to the date on which that money was obtained.

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  I believe that the previous Government were about to take the steps that we have now suggested. The process must begin with the construction of electricity and gas interconnectors across the North Channel. That is not a Unionist political ploy. In fact, the Government of the Irish Republic want electricity interconnectors between Holyhead and Dun Laoghaire, and also a gas interconnector from the northern gas fields to Dublin. I do not imagine that the Irish Government are thinking in terms of political unity, nor am I thinking in those terms.
  The arguments are best put in a report of the Northern Ireland Economic Council entitled "Recommendations on Energy Policy in Northern Ireland". I wonder whether anyone in the Department has read that report or, indeed, any of the excellent reports produced by this body on the subject of energy problems in Northern Ireland. The report says:
  "we question whether it is realistic to expect an entirely separate and self-contained electricity supply industry in Northern Ireland to be able to provide electricity at charges and at a standard of service which match those prevailing in Great Britain. Since costs, relative to Great Britain, are of great importance to the economic viability of the Province, the Council is led to the conclusion that the interests of Northern Ireland might be well served by some form of amalgamation between the electricity supply industry in the Province and the main body of the industry in Great Britain."
  In another part of the report the council argues exactly the same case for the gas industry.
  At a time when there are 100,000 unemployed in the Province, rising by another 25,000, I can think of no better way of boosting the whole economy of Northern Ireland than to allow its citizens and manufacturing industry to have parity of energy costs with their fellow citizens in the rest of the country. Because the Government resist that proposition, I shall vote against them tonight.
  7.25 pm
  Mr. Tim Renton: Speaking after the hon. Member for Armagh (Mr. McCusker), it is easier than usual to say that I listened to his remarks closely but that I do not propose to comment on them. I leave that to the Minister. There is one matter that I should like to raise with the hon. Member. I understand that the Irish Government are considering the possibility of extending the new gas pipeline to take gas from the Kinsale field from Dublin to Ulster. I hope that that will happen, and that the proposition will be given serious consideration. If it comes about, it will provide a good example of cross-border co-operation, and it will have the effect of lowering gas prices in Ulster.
  I shall confine my remarks primarily to oil and gas. I declare two interests; first, in the search for energy, as a director of an oil exploration company, and secondly, in the conservation of energy, as a director of a company making replacement double-glazed windows and doors. I shall say more about that company in a moment.
  Unlike my hon. Friend the Member for Canterbury (Mr. Crouch), I congratulate my right hon. Friend the Secretary of State and his ministerial team on their solid achievements over the past 18 months. They inherited a tangled skein of energy policies from the previous Administration and have tried, in what I believe to be the second most exciting and exacting job in Government, to draw from that an orderly energy policy. I say "second"
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  advisedly, because the problem of monetary aggregates and sorting out sterling M3 must remain the most exciting and exacting job of all.
  The Secretary of State and his team have a tremendous task to perform. In three areas they have done well. First, they have done well in the decisions that they have taken about nuclear power plants. It must be a great help to the heavy engineering industry to know where it stands. As my right hon. Friend said in his opening remarks, we shall slowly and belatedly get into the position of having more cheap, nuclear-produced electricity. The second area in which the Government have done well is in their decision to go ahead with the gas-gathering pipeline. Thirdly, they have done well in the encouragement that they gave to the smaller British company in the seventh round of North Sea licensing. The BNOC is no longer in as predominant a position in this round as it was in previous rounds. Those are three important steps forward.
  The production of energy is now as important for any industrialised nation as that of steam or iron and steel was in the first Industrial Revolution. Every industrial nation will now be judged on its control over energy resources, its energy consumption and energy conservation. But what worries me is that as we enter the great period of energy independence for this country, for which we are so much envied by other EEC countries, that independence lies almost entirely within the control of three 100 per cent. nationalised industries—the Coal Board, British Gas and the BNOC. That in itself is a paradox for this Conservative Government.
  We in the Conservative Party are very concerned about the overall record of nationalised industries—their losses, their poor industrial relations, the discontent of the unions and of the management within them. In my view, it is then totally illogical to leave energy, by and large, within the orbit of nationalisation.
  Mr. Alex Eadie rose—
  Mr. Renton: With respect to the hon. Gentleman, I shall not give way because we have been asked to keep our speeches brief. For that reason alone I shall not give way to him, because I know his deep knowledge of the coal industry.
  Nationalisation tends to lead to monopoly and, almost inevitably, monopoly leads to abuse of monopoly. I see signs of that already in British Gas. I have the greatest respect for the technical achievements of British Gas and for what Sir Denis Rooke, its chairman, has done to make it such a competent and internationally respected organisation. But there are signs in that organisation of abuse of monopoly power, not only in its control over gas heating appliances but in its approach to industrial consumers who, once they have installed gas and are dependent on it, are treated as members of a closed shop in which British Gas holds all the union cards.
  I refer the Minister to the double glazing company that I mentioned earlier and to a copy of the contract in which Eastern Gas asks the company to move to a special offer and special supply arrangements. If the company signs the contract the price per therm will be 26·1p. If it does not sign, the general tariff rate of 42p per therm will apply. Obviously the company is encouraged to sign.
  However, if the company signs the contract it will be penalised heavily for any excess use. When it takes in excess of the maximum agreed it will be charged 40p per

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  therm per month and £4·50 per therm per day. Furthermore, the corporation does not believe its own meter reading. All bills will be increased by 1 per cent. in respect of temperature and by 2 per cent. in respect of pressure. In layman's language that is a straight uplift of 3 per cent. in the meter reading.
  The contract contains many other objectionable clauses. One involves the payment terms. At present the company pays its gas bills quarterly. If it signs the special contract, it must pay monthly. That is not so bad in itself, since it is acceptable as normal practice. However, condition 4 of the contract states that payment must be made within 12 days of the corporation dispatching the invoice. That is completely unacceptable. Any efficient commercial concern operates a monthly bought ledger which allows the use of computers and payments by a single cheque for supplies for the whole month. However, if the company does not pay on time, interest is charged at 4 per cent. above the Midland base rate. There is a simple word to describe that contract—"blackmail." It is not tolerable whether it is operated by a nationalised industry or by the private sector. The only remedy is competition wherever feasible.
  I therefore welcome the steps that the Secretary of State is taking to introduce freedom to import coal, to encourage private electricity generation, and to help towards the break-up of the monopoly on the distribution of onshore gas. But in many cases competition is not feasible. Therefore, I urge my right hon. Friend to allow employees and British consumers to own some of the equity—some of the action—in the energy producers—the BNOC and the British Gas Corporation. There are many reasons for that. One is the profitability of the two organisations. It is likely that within a year or two the two organisations combined will be making between £1,000 million and £1,500 million profit, pre-tax, per year. If we do not introduce private equity capital and private shareholders that profit will be available to be frittered away by the next Labour Administration.
  A second reason is involvement by employees and consumers in ownership of the company for which they work and of their own national assets. Shareholders are certainly far better watchdogs than any Select Committee. In any nationalised industry only one shareholder is allowed to attend the AGM—the sponsoring Minister. That is hardly industrial democracy.
  But the most important reason is that the last 30 years have shown the inefficiency of nationalisation as a means of running large industrial corporations and of organising and motivating the work force and management in such corporations. I have no doubt that, just as the British Steel Corporation started as an amalgam of 14 steel companies, some of them successful, and has turned into a Moloch of bad industrial relations, low productivity and depressed management, so in time the BGC and the BNOC, if left without any element of inquisitive private capital and of, at times, querulous and assertive private and employee shareholders, will lose their edge. They will lose some of their international competitiveness and their ability to lead the field. It is vital to our industry that the two major corporations should remain ahead in productivity and technology.
  The development of the North Sea and the continental shelf is one of the finest engineering achievements in the world. In the years ahead we shall have the ability to sell to the rest of the world the engineering skills that have
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  come from North Sea development. We shall have the ability to sell the geological knowledge. Much of that knowledge could be used in the exploitation of sea bed minerals, for example. But I do not believe that that can or will be done successfully by nationalised industries if they remain 100 per cent. State controlled. We must have mixed share ownership, which brings the private and public sector together.
  A common objection from the Opposition is that if that happens we shall lose control of our national assets. However, do we lose control of the family jewellery if we hand it on to members of the family? Is that not exactly where it should go? The articles of association of the two industries, once in mixed share ownership, could be so arranged that control could not pass to an overseas company. Britain could still retain full control of the direction in which the oil and gas production flowed.
  Let us examine other international oil companies. BP is a tremendous example of an oil company in which the Government have a 25 per cent. interest. The Bank of England has a 19·6 per cent. interest and the rest is held by private shareholders. Many other companies are similar. The Norwegian Government have a 51 per cent. interest in Norsk Hydro. The French Government have a 35 per cent. interest in Companie Francaise des Petroles, which controls Total. The French Government have a 67 per cent. interest in Elf Aquitaine. The German Government have a 54 per cent. interest in Deminex and a 40 per cent. interest in Veba. Those companies are highly successful. They have all shown that the private and public sector can work together in partnership and share ownership.
  I urge the Secretary of State to ensure that a firm start is made on the process of involving private capital and employees in the ownership of the equity of the BGC and the BNOC. The ideal split could be 40 per cent. State, 10 per cent. employees and 50 per cent. private sector, including the pension funds and the life assurance companies. That would be a fulfilment of our belief that employees should participate in the ownership of their own organisations. It would be a fulfilment of our belief that people are much better able than politicians to look after their own savings.
  I realise the difficulties involved if all the cash from the organisation does not flow back into the public sector, but there should be a firm commitment to have this process well under way by the autumn of 1982. If we do not do that, I fear that in 10 years, in the 1990s, we shall look back and say, as the founders of British Steel say today, "We had our chance. We could have brought in private and employee ownership of these great national assets as a balance to politicial misjudgment but we failed. Now we have once again let Labour, with direction of funds and State intervention, turn golden geese into dead ducks."
  7.40 pm
  Mr. Gordon Wilson: The debate has ranged fairly far and wide, as one would expect with such a general subject. I am glad that the hon. Member for Armagh (Mr. McCusker) has blazed a trail that is different from the normal United Kingdom approach to energy problems. I intend to do something similar in relation to Scotland.
  In debates of this kind it is my practice to begin by re-emphasising that the United Kingdom is reliant upon Scottish sources for its domestically owned oil supplies

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  and will be increasingly so for gas. I make that statement not to suggest that Scotland has so far benefited very much from the oil industry, except in jobs related to development, but to point out to the hon. Member for Armagh that although one may indeed possess large resources, in the neo-colonial situation that sometimes exists in the United Kingdom one does not always get the advantage from them.
  Scotland is in the front line in oil. I had great sympathy for the late Dr. Mossadeq of Iran, when he had to face the Anglo-Iranian Oil Company, and for many of the Arab countries that were faced with a similar situation, in which their natural resources were relentlessly and ruthlessly taken over.
  My remarks this evening will relate particularly to the electricity industry in Scotland. Although the nuclear industry has not featured over-largely in the debate it is clear that the United Kingdom, having started out very strongly in that sphere, has succeeded in spreading its resources over so many forms of nuclear power that it has ended up with a very messy situation. On my calculations, there has been investment in about six different types of reactor—the Magnox, the AGR, the SGHWR, the AGR Type 2—the AGR being hardly ever completed and seeming to be designed and redesigned all the time—the PWR and the FBR. The generation of electricity by nuclear means has therefore left much to be desired, whether one agrees or disagrees with nuclear generation as such.
  This evening I wish to deal with the situation in respect of the electricity boards in Scotland. In my youth I was brought up to admire the enterprise of the Scottish electricity boards, and in particular the North of Scotland Hydro-Electricity Board. In its early days, under the dynamic leadership of the late Tom Johnson, the hydro-board operated with social and economic purposes akin to those of the Tennessee Valley Authority, and brought social and economic developments as well as power to many parts of my country.
  There is clear evidence that that situation has changed. A number of years ago there was a joint generation arrangement between the hydro-board and the South of Scotland Electricity Board in which they shared generating facilities and operated on a joint accounting basis. Unfortunately, that seems to have sapped a great deal of the enterprise and vigour previously exhibited by the hydro-board. It was almost as though the greater body had absorbed the lesser. In that context—I refer here to the remarks of the hon. Member for Armagh—there would indeed be a danger for Scotland if our electricity systems were to come into any wider European arrangement. I am well aware of the Channel line that has been proposed. A CEGB document estimates that a fair proportion—up to 40 per cent.—of the power required could come from Scotland. That seems an extraordinarily high proportion. The same would apply if there were stronger links in generation with the CEGB in England.
  Last summer, far from trying to encourage development in remote areas the hydro-board turned its back on its traditions and sought to impose an additional charge for electricity supplied to island communities. That plan was abandoned only after a great deal of protest by my right hon. Friend the Member for Western Isles (Mr. Stewart), the right hon. Member for Orkney and Shetland (Mr. Grimond)
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  and the hon. Member for Argyll (Mr. MacKay). It is hardly surprising that it was changed. Nevertheless, it was what the hydro-board had set out to do, completely at variance with its own tradition.
  I am particularly worried about the situation that is developing in Scotland in relation to generation over-capacity. The situation is something of a mess to begin with. The hon. Member for Armagh referred to the situation obtaining between Northern Ireland and the Department of Energy. In Scotland, the electricity industry is under the control of the Secretary of State for Scotland. When decisions are taken on nuclear power, however, the evidence seems to suggest that the Secretary of State for Scotland does not play a leading role, and that United Kingdom decisions are taken which have ramifications in Scotland well beyond those that the Secretary of State for Scotland may have considered—if, indeed, he had turned his mind towards them.
  The Department of Energy has oversight of coal, 70 per cent. of whose market is to the South of Scotland Electricity Board. It also has control over oil, gas, and research and development into nuclear power and renewable sources. I believe that we also have to share the Select Committee on Energy, since although the Select Committee on Scottish Affairs has parallel jurisdiction it has to cover an area equivalent to seven or eight United Kingdom Ministries amd therefore has not sufficient time to do that kind of job in relation to energy matters in Scotland. I hope that it will give it a try, but so far it has not set out to do so.
  There are certainly problems about the attitude of the South of Scotland Electricity Board. I may say that one problem is that it tends to have a pro-nuclear mania. Leaving that aside, however, over a considerable period it has overestimated the demand for electricity. It probably had a very good record in the 1950s and early 1960s, based largely upon the fact that so many houses in Scotland were all-electric that demand could be expected to grow indefinitely. The board therefore followed that course through. From the late 1960s onwards, however, steps were taken—for which the House must take a good deal of blame—that led to the waste of large amounts of public money.
  Every year there is a debate on a statutory instrument seeking to give money as a subsidy to the Invergordon smelter. It is not that one minds subsidising industrial activities in an area such as Ross and Cromarty, but about £200 million has been set aside for this purpose over a long period, and already £70 million has been paid out—all based upon a miscalculation in the commissioning of the nuclear reactor at Hunterston B and the cost of electricity that would be generated by that reactor. In anyone's language, that is a fair amount of money to be set aside because of wrong calculations, yet no witch hunt seems to have followed, and there has been no attempt to assert some kind of discipline over the Civil Service, which had made the mistake.
  Throughout the 1970s grossly inflated demand growth forecasts were rarely reached. Between 1970 and 1975, the South of Scotland Electricity Board estimated an annual growth of 6 per cent. Yet only once, in 1972–73, did the figure go beyond that, to 6·5 per cent. The next highest was 2·8 per cent. In 1975, after considerable urging, the board reduced its estimate to 5 per cent. annual

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  growth. In 1978 it was reduced to 4 per cent. In 1979, it was reduced to between 3 per cent. and 3½per cent., but the actual figure achieved in 1979 was 2·5 per cent.
  Mr. Palmer: Is it not possible that the reason for that overestimating of electricity demand in Scotland is simply that the Scottish electricity authorities will persist in estimating their needs on their own, on a Scottish national basis? If they shared demand with the rest of the United Kingdom, without giving up their identity, they would need to overestimate.
  Mr. Wilson: I do not agree at all. I think that the boards' duty should be to estimate demand accurately for Scotland. One could take that example further and say that if the CEGB made the same mistakes' in miscalculation, and there were the Scottish and Northern Irish miscalculations in addition, there would be a bigger blunder at the end.
  I think that the problem arises because the electricity boards in Scotland have been super-optimistic in two ways. One was that electricity, despite the increases in cost, would still be the main form of fuel to be used in Scotland. That was not true, because gas came in later in Scotland and began to have an impact on the market. The second was in their estimation of the economy. In the Electrical Review of March 1979 the chairman of the South of Scotland Electricity Board admitted a plant margin of both boards of 40 per cent. He declared:
  "We take an optimistic view of the economy",
  adding that not to do so was a policy of defeat. It might have been a defeat for what I call the madcap nuclear expansionists in the SSEB, but it would have been a damned sight cheaper than building all the new power stations.
  Inverkip, an oil-fired station that may well he mothballed, cost £170 million. Peterhead cost £220 million. Torness, in which the Government have a degree of complicity, will cost £1,097 million.
  By May last year growth expectation had dropped to 1¾per cent., and there was a 63 per cent. overcapacity at maximum demand, but in that month the first set came into existence in the area of the hydro-electric board, at Peterhead power station. A second set will be commissioned this year, bringing another 1,250 megawatts on to the Scottish scene. That shows that the whole business of forecasting power demand in Scotland has gone mad.
  I am very disappointed that the Select Committee on Energy has not produced its report. Only last month the South of Scotland board rushed ahead and placed orders for £500 million or £600 million worth of machinery for Torness. I do not see how that can be justified in any language. I await with great interest the Select Committee's report. I sat in as an observer last May, when evidence was given by the chairman of the SSEB and a representative of the Scottish Economic Planning Department. As a Scot, I was ashamed by the low quality of the evidence given and the inability to justify the course of action that the board had adopted.
  We have overcapacity and the mothballing of stations. It is a disgrace that this has happened. I am surprised that it has, in view of all the concern about the expenditure of public money and the 63 per cent. over-capacity, especially if we add in the Peterhead output and the fact that the Torness station is going ahead. This will, in my view, lead to the closure of power stations. Kincardine
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  must be at risk. Carolina Port B, in Dundee, is already having redundancies, and there are other examples, with modern plant rather than old plant being taken out of commission. In 1978 I was told by the SSEB that:
  "No existing plant will be phased out specifically to allow the introduction of Torness. We expect that some 400 MW of old plant will have reached the end of its useful life and will be retired in the normal way between now and the time when Torness first comes into service."
  Inverkip—which is an oil-fired station, and is admittedly expensive to run—was envisaged for peak load and what the board nicely describe as
  "variable output, depending on price".
  Some of the coal-fired power stations may now begin to drift into the danger zone. If they do, that could lead to problems for the coal industry in Scotland.
  I have a number of suggestions. The use of oil revenues for energy purposes is a good use. We should give resources to industry to install more efficient energy-using equipment and to use heat recovery. There is a lovely story that the SSEB now taps heat from its computer system. It finds it cheaper to heat its head office in that way rather than by using its own electricity. Fluidised bed furnaces and better insulation should also be installed in the industrial sector.
  Secondly, it would be very useful, despite the over-capacity that I have mentioned, to have a combined heat and power system. I admit that the overcapacity may be an argument against it, but it would be appropriate for reasons of climate.
  Thirdly, we should insulate every house to North European standards. Our present standards are abysmal, resulting in economic hardship, physical discomfort and illness as well as dampness and condensation, which have now reached epidemic proportions in the public sector.
  Fourthly, additional investment should be given to the Scottish coal industry to make sure that it is not forced out, although the policy that the boards have adopted will make that very difficult. The National Union of Mineworkers should be very wary about what is happening.
  Fifthly, we should try to convert the somewhat dozy and reactionary hydro-board into the board responsible for developing and using renewable energy resources, including wave and wind power. There is also an improving potential for small-scale or low-fall hydro schemes.
  All of those proposals would in addition make us more efficient, provide jobs in construction, give relief from higher prices and provide better health and comfort.
  Lastly, in Scotland there is a great injustice to be rectified. The hon. Member for Armagh had a fair number of injustices of his own to mention. The Scottish injustice to which I refer is that the flat-rate social security fuel allowance is applied to England and northern areas, including Scotland, at the same rate. Coincidentally, I yesterday received a letter dated 14 January from the electricity consultative councils for the north and south of Scotland districts. It said that the scheme should be improved by providing assistance in different ways with energy vouchers, and should take account of different climatic conditions in Scotland. It went on:
  "For example, the over-all average Domestic consumption of electricity in England and Wales in the year to 31 March 1980 was 4,020 units per annum with consumers in one Board Area averaging 3,373 units. The comparable average Domestic consumption of electricity in the South of Scotland Area was 5,328 units, and in the North of Scotland Area 6,678 units or just about twice the number of units consumed in the Area of the

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  lowest usage of the supply in any Board area outside of Scotland. It hardly seems reasonable therefore that for those who qualify for Fuel Allowances, the level of assistance is identical."
  It is one of the facts of life in Scotland that, with many of the benefits of scenery, space, other environmental qualities, and so on, the climate is colder and that many people—the sick, the old, the disabled, those short of money because they are unemployed and have children—suffer considerably.
  An energy policy is not simply a question of the ordering of priorities for the assessment of forecasts. It should relate to the supply of fuel at prices that ordinary people can afford to pay.
  8 pm
  Mr. John H. Osborn: I cannot support the wording of the motion, which asks the House to condemn
  "the pricing policy which handicaps the competitiveness of British industry",
  but I accept the amendment, which refers to:
  "the realism of the Government's energy policy and…the renewed vigour"
  of our policies. I praise my right hon. Friend the Secretary of State for the lucid way in which he outlined the problem that faces him as Secretary of State and this country when he replied to the questions of the right hon. Member for Leeds, South (Mr. Rees). It has already been mentioned in the debate, but the local branch of the CBI in Sheffield the steel industry, the British Independent Steel Producers' Association, the chamber of trade and the chamber of commerce have pressed me to condemn the pricing policies of the Government, particularly the pricing policy of the British Gas Corporation.
  As the Secretary of State said, energy—even energy in Yorkshire—is costly. That poses a challenge to industry in our country, but it also poses challenges to industry throughout the world. I accept the comments of the Secretary of State on the NEDC meeting and on the task force. If our competitors in Germany and France enjoy cheaper gas, oil and coal, and if it is due to a distortion, we should know more about it. He said that in general British prices to industry are comparable to those in the Community. I welcome the fact—it was mentioned by my hon. Friend the Member for Mid-Sussex (Mr. Renton)—that these monopolies have been invited to look at their tariffs. When the right hon. Member for Leeds, South was pressed on this matter, he said that he was not prepared to raise domestic prices in order to benefit industry. I do not think that many hon. Members would do so. Therefore, the principle that my right hon. Friend has put forward on pricing electricity and other sources of energy at economic levels is a policy that I endorse.
  In Sheffield, in December, I welcomed the coal miners' settlement, but since then a problem has been posed to me. I have had meetings even this weekend, and it has been put to me that British coal is too expensive for the housewife. Between 60 and 65 per cent. of our electricity is dependent on coal-fired generation, and it is therefore also possible that our electricity is too costly for the housewife. While that responsible settlement is to be welcomed it is natural to be disturbed and vexed that energy may be more expensive in this country. I welcome a reassessment of the situation jointly with the trade unions, industry and the Government.
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  This is one of those difficulties that must be resolved. I have had the privilege of looking at the problem for many years from a wider point of view. I am delighted that my hon. Friend the Member for Lancaster (Mrs Kellett-Bowman) is present. In a European context, she looked at this problem with me when I was a nominated Member with her in the European Parliament. During the debate on steel, I mentioned that I had just returned from a meeting of the Western European Union in Paris. We had studied the question of the security of supply on the initiative of a German Social Democrat, Herr Flamig. Since then, I have had the privilege of having meetings with the OECD on economic, rather than energy matters, and there will be a debate in the Council of Europe on this subject, in so far as it affects our European neighbours as it does us. There had been the debate earlier this month in the Europe Parliament, too.
  There is a priority in Europe that there should be greater independence from oil. I accept the Secretary of State's warning that oil is a material that we expect but cannot guarantee. Therefore, all the steps to reduce to consumption—a modern energy-saving programme, energy-saving concepts—are essential. But if the EEC was 60 per cent. dependent on oil eight years ago, Western Europe is now 63 per cent. to 65 per cent. dependent on it. It is possible that Europe will not get down to that level in time.
  The Venice summit took place last summer, and all the alternatives are being examined on a European and international basis. I hope that in his reply my hon. Friend will refer to what has followed after Venice.
  I return to the problem of coal. During the debate on steel it emerged that perhaps the more prosperous pits—not the Selby of tomorrow, but perhaps those in Yorkshire, Derbyshire and Nottingham—could, because of average coal—pricing policy, be carrying the high cost of mining in Wales and Scotland. There has been talk in this debate about further closures. If there were further closures, the high-cost pits would be closed, and the cost of British coal would be cheaper. This is a balancing operation that the Coal Board and the Government have carried out for years. I share the views of my right hon. Friend the Secretary of State that the "Plan for Coal" should be pursued. But by keeping these pits open we have a controversy in our steel works. They are aware that our coal is more expensive than it need be in order to keep miners in jobs.
  It has been suggested that we should have subsidies, particularly for coking coal, on the scale of those in Germany. But it must be borne in mind that the Germans, with all their subsidies, produce a more expensive coal than we produce. There have been discussions on imported coal. The EEC concept is that in about 10 years there would be a demand for about 300 million tonnes of coal, of which 100 million tonnes would be imported. I discussed that in British Columbia; I saw it in Queensland, and even in Melbourne last year I saw opencast mining, where the coal extract in process is bound to be cheaper and safer than the deep mining that is encountered in this country. In the past, and even now, I would favour a levy on all imported coal, and an evening-out of prices. I remember that when I raised this matter last year as part of a common energy policy, in contrast to a common agricultural policy, my hon. Friend the Member for

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  Bedford (Mr. Skeet) asked which countries would support it. He said that a common energy policy was only in the interest of Britain.
  I welcome the fact that the Minister spoke about the competitive advantage of the United States in chemical feed stocks and synthetic fibres because of its slowness in deregulation. There has been pressure on the United States, and I hope that the pressure will continue under its new Administration. It must be borne in mind that the United States has invoked anti-dumping legislation on steel and other products from Europe and the United Kingdom, but it has an unfair advantage in subsidising its energy.
  I return to another point that the Under-Secretary of State for Energy made in letters to industry. We do not have the advantage of hydro-electricity which, to a certain extent, Switzerland, Austria and France have in Europe. Certainly, Canada has vast sources of hydro-electricity, which is bound to give the smelting industries of that country an advantage. I mentioned in the debate on steel that part of the Indian energy policy is to put dams in the Himalayas and make up its energy deficit by an expanded hydro-electric programme, thereby reducing the price of electricity for their industries. This solution is not available to Great Britain.
  I turn again to coal. One question that I cannot answer is why we have a fuel oil tax to protect our coal industry at this time. It may have made sense 10 or 20 years ago, when it was introduced. I hope that the Secretary of State will ask the Chancellor of the Exchequer to look at that.
  The problem facing Britain in the European context is that we have the energy, but at a price. We have the coal, but at a price. We have the gas and oil, but at a high cost of extraction compared with Middle East sources—say, 10 to 12 times the cost of extraction.
  On top of that, in talking to politicians from Germany and France, I find it disturbing to hear them say that they look upon Britain as a high-cost energy supplier. Germany is getting out of the difficulty—this emerged from Herr Flamig's report—by using gas from Eastern bloc countries. On existing pipelines, Germany has 17 per cent. imported natural gas from Eastern bloc countries. It could well reach 30 per cent. when new pipelines are in use.
  I discussed this matter in a committee meeting in the Council of Europe only last week and learnt that the Austrians were not getting regular supplies. They rather feared that the supplies were going to Germany, for some reason. Dependence on one source of external supply is, therefore, risky. The Italians and the French are developing links across the Mediterranean for gas and oil. That will be yet another source of supply.
  Britain ought to sell to its European colleagues the fact that it has energy in the North Sea and that it is economically secure—in a military situation it may not be so secure—and I hope that the Secretary of State will emphasise this in talking to his ministerial colleagues when the Council of Ministers meets in the EEC.
  It has to be borne in mind that France and Germany have embarked on an ambitious nuclear programme. This fact has been brought to my attention continuously. They will have cheap nuclear energy, at probably 60 to 70 per cent. of our cost. But this is a speculation and there is no information available on it.
  Finally. I should like to mention a small matter which may seem irrelevant in the debate. The French have announced that they have a product called Carburol—a
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  mixture of alcohol and petrol. It is possible that the liquefaction of coal will be our answer, but I hope that within the Community there will be some standardisation. I should hate to take my car—dependent on petrol from refined North Sea oil—to countries just across the Channel, only to find that there are different grades of Carburol on sale there. This is a question that we should pursue closely. Certainly it must be pursued within the Community.
  8.12 pm
  Mr. Arthur Palmer: I hope that the hon. Member for Sheffield, Hallarn (Mr. Osborn) will forgive me if I do not follow him in his remarks. He painted a fairly wide European canvas and I want to confine myself to two points that are very important to our own domestic electricity supply industry. The House knows my interest in that direction.
  Five or six years ago a high-powered committee, made up of all the talents, with Lord Plowden—who chairs many such committees—in the chair, looked into the desirability or otherwise of the present structure of the electricity supply industry. I am sure that the Under-Secretary of State is familar with the report of that committee. A vast amount of evidence was taken; indeed, I gave evidence myself. It was confidently expected that action would follow.
  The former Secretary of State for Energy, my right hon. Friend the Member for Bristol, South-East (Mr. Benn), prepared a Bill, which was later published as a White Paper. However, because of the parliamentary difficulties that existed at that time for the Labour Party, with the need to reach agreement with the Liberal Party, the Bill did not reach Parliament. I say frankly—I said it at the time—that I do not think that the matter was particularly well handled, but certainly there was much life and activity then.
  What did the incoming Secretary of State for Energy do? The answer is: simply nothing. The problems that were outlined at great length by Plowden remain, but the Secretary of State for Energy dismissed the whole question in a written answer that was given towards the end of the Summer Recess. The usual inspired question was tabled and the Secretary of State called on those in the industry to work together more closely. He set out six principles on which they should work together, rather as if he were an executive director. I am sure that the electricity boards will undertake to do their best to work together and that they will do so in good faith. But, given the nature of their statutory responsibilities—which ultimately are to the Secretary of State for Energy and not to the Electricity Council—it is inevitably these that will be uppermost.
  The board chairman—whether of the CEGB or the area boards—really cannot escape, their statutory responsibilities. When difficulties arise from time to time, as they are bound to do, the first consideration that any chairman has to give—he will be advised by his lawyers to this effect—is to the legal obligations. So it is the statutory responsibilities in the electricity supply industry that must be changed if there is to be any new way of doing things.
  I say very strongly that the Secretary of State should not have ducked his responsibilities in these matters. His ministerial inaction led to the resignation of Sir Francis Tombs, the chairman of the Electricity Council. He is a very well-regarded man, of great experience in the

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  electricity supply industry and in electrical manufacturing, and his resignation has attracted, quite naturally, a fair amount of publicity.
  Sir Francis was invited to become the chairman of the Electricity Council on the plain understanding that the organisational framework of the industry would be changed. He made it clear at the time that he accepted the appointment on that basis and had no wish to become chairman of the boneless wonder, the Electricity Council, as set up under the Conservative Government's Electricity Act of 1957.
  It was announced today—we have been waiting for this for some time—that the new chairman of the Electricity Council has been appointed—Mr. Austin Bunch. I am sure that we all wish him well. I am glad that the promotion came from within the electricity supply industry—Mr. Bunch was previously deputy chairman of the Electricity Council—and that someone was not brought in from elsewhere, as in the case of the British Steel Corporation and the BNOC. I am glad that we have not had someone from across the Atlantic, or a merchant banker.
  The new chairman is a man who knows something about the industry that he is asked to supervise. But Mr. Bunch will be lucky if he escapes the doleful experience of Sir Francis—to sit in the chair of a body that cannot take a decision unless it is agreed to by a multiplicity of area boards and the CEGB, which bodies, being separately on the distribution and the generation side, are often at odds with each other.
  Since Sir Francis left he has said some rather unkind things about the Secretary of State, but as he said equally unkind things about the former Secretary of State we can allow these comments to cancel each other out. Appropriately, Sir Francis recently addressed the Institute of Bankers in Bristol. I am sure that the Department will have a copy of the address in its archives. He said:
  "I have shown that the nationalised industries occupy a major place in the industrial affairs of this country; that the country cannot achieve economic prosperity unless these industries are prosperous; and that the planning horizons of many nationalised industries extend well beyond the lifetime of a Parliament, let alone the short-term preoccupations of Ministers. How can we be expected to be successful when we are forced to spend so much management time in attempting to cope with the fundamental differences of approach produced by the political see-saw?"
  That was a cry from the heart. No one is more insistent than I on the proper differences of principle between political parties. Without those differences of belief and outlook politics would have little meaning. Sir Francis gives facts and figures to show how successful the electricity supply industry is. It achieves a higher return on capital than the majority of private industries do at present in Britain. If nationalised industries are to be fully successful, he says, there must be some continuity of policy between Governments. I agree with him but I do not think that the present Administration do, judged by their actions.
  The Secretary of State should also face up to his responsibility for the steep rises in electricity prices. No one has been a stauncher defender than I of the need for a strong nuclear contribution to our fuel economy. However, we should leave the size of that contribution, in terms of extra generating capacity, to the electricity industry to decide. One must bear in mind the fall in
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  demand that has resulted from the general depression both at home and abroad, and the consequent swift rise in the margin of available capacity. Despite the replacement of old plant, the margin of spare capacity is likely to eat its head off in interest charges that will be passed on to the consumer in the form of higher price.
  Whether the method of firing is nuclear energy, coal or oil is immaterial. The argument would be the same whether we were building extra Drax B coal-fired power stations or oil-fired stations. I have always argued that the use of nuclear power or coal-fired energy is primarily a matter of economics, although safety is also involved. Power supply engineers would be just as happy to burn kitchen refuse or manure if they thought that it would produce a better and cheaper result.
  Once the pressurised water reactor is under way and has completed its inquiry stage, it is said that one new reactor will be built every year. One may not necessarily desire that outcome, but it will prove difficult for the electricity supply industry to carry the burden of interest charges on them. I must be careful because the hon. Member for Skipton (Mr. Watson) is on the same Committee as I and I do not wish to anticipate the Select Committee's nuclear report, which will soon be published. Those who followed the evidence given to the Committee in public will agree that capital charges have become so high that they are putting a break not only on nuclear development but on the general development of the electricity supply industry in terms of the improvement of load factors and efficiency.
  The real culprit is the inclusion of investment within the straitjacket of the public sector borrowing requirement. Earlier, the Secretary of State said that the chairmen of the nationalised industries were content with cash limits. Sir Francis Tombs was not content. Sir Francis' address at Bristol is a fine textbook on the running of nationalised industries, I hope that the Minister will listen carefully to his words, because they contradict the earlier remarks made. Sir Francis said:
  "Government's interest in net borrowing arises from the fact that nationalised industry borrowing appears in the public sector borrowing requirement, undistinguished from revenue borrowing, for local authorities, social services or the National Health Service. This is patently nonsense. No private industry would confuse revenue and capital expenditure in this way. What, one might ask, is the fundamental difference between borrowing to build a power station and borrowing to build a new factory in Lancashire? Both contribute to the national welfare, both give an adequate return which services and repays the capital."
  After all, a power station is simply a factory for producing electricity.
  The Government are preoccupied—certainly the Prime Minister is—with the need to complete a big nuclear power programme. Indeed, the Prime Minister went to France and came back converted to the need to adopt in Britain the French programme. However, France faces a different energy situation. There is hardly any coal worth having in France, and no oil. If the Government, however, want to complete the British nuclear power programme as it stands, and if they wish to replace old plant that is becoming more and more worn, they must revise their narrow ideas about cash limits.
  What does the present financial system mean to the consumer? It means that the present generation of electricity consumers—hard-pressed as they are—are paying to provide electricity for their children. If there is no change, very soon they will be paying to provide their grandchildren with electricity.
  8.25 pm
  Mr. John Watson: I hope that it will not be regarded as impertinent if I add my personal congratulations to the right hon. Member for Leeds, South (Mr. Rees) on the way he has mastered his brief on this complicated subject. The motion before the House states
  "That this House deplores Her Majesty's Government's lack of overall energy policy"
  and
  "condemns the pricing policy which handicaps the competitiveness of British industry".
  It was, therefore, with some concentration that I listened to the right hon. Member for Leeds, South in the hope that I could glean from his speech some indication of what would be Government energy pricing policy in the event of his becoming Secretary of State for Energy. It must be a reflection on my powers of concentration that, at the end of his speech, I found myself substantially unilluminated. From what I can see, the policy of many Opposition Members is, first, that British industry is paying too much for its energy and, secondly, that, even if it is not, it should be paying less. Both those contentions are highly arguable.
  Even though I listened with great respect to my hon. Friend the Member for Canterbury (Mr. Crouch), I have yet to be convinced that British industry is paying over the odds for its energy. For every convincing speech that I hear to the effect that it is, I read a convincing document to the effect that it is not. I was personally unimpressed by the CBI case, presented to the Select Committee, to the effect that British industry, across the board, was paying too much for energy. It seems that the initial glitter of all the claims of unfair competition may not turn out to be the purest gold on closer inspection.
  Is there a case for some form of Government assistance towards energy pricing? I should like to advance four reasons why I believe that there is not. First, if we are expecting people in British industry to take sensible decisions about their use of energy, we need to provide them with a sensible base of information on which those decisions can be taken. As soon as the Government start interfering in some artificial way in energy pricing, a degree of artificiality creeps in, which makes the reality of the decisions to be taken all the more difficult to achieve.
  Secondly, there is now a refreshing degree of international agreement that energy should be based upon actual prices and market demand. That is entirely good. In conjunction with many other hon. Members who have textile interests, I join occasionally in the fulminations against the energy price policies of North America. We say that it is terrible that their industry should be subsidised to such an extent. I would feel the worst kind of hypocrite if, at one and the same time, I was to advocate that their policies should be changed to ours but that we should somehow be subsidising and, in that direction, changing our policies to theirs.
  Thirdly, I do not believe that energy is so significant to the majority of British industry as has sometimes been made out in the debate. There are only six-industries where the total energy bill represents more than 10 per cent. of their added value—steel, aluminium, chemicals, glass, paper and cement. For all the rest, average energy costs are about 3 per cent. or 4 per cent. Even in those six industries I have mentioned, I submit that energy prices are not the biggest problem that they have to bear. Other
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  problems of overmanning, overcapacity or simply shortage of demand would be presented, I believe, by each of those industries as being a bigger problem than the price they are having to pay for energy.
  This brings me to my final point. If the resources are available, is some form of energy subsidy the most worthwhile use of those resources? I shall not trot out the familiar PSBR argument. I do not completely agree with it. In a time of natural world recession, there is a case for a greater degree of flexibility in the amount of money that the Government may borrow. I note that total Government borrowing at the moment is 45 per cent. of our gross national product. In 1965, it was 80 per cent. of our gross national product. We could have a responsible degree of flexibility on the PSBR without any deleterious effect on interest rates or anything else.
  Having made the assumption that some cash resources may be available, I fail to see that they should be put straight away into some form of energy pricing subsidy. I have two reasons. I do not see why, if a subsidy is available, the greatest part of that subsidy should go simply to those who use the greatest amount of energy. I refer to the industries I have mentioned. It has to be asked "Is any one of those industries so important and of such strategic or employment significance that it needs this specific degree of assistance?" My conclusion is that, important though they are, none attains that level.
  I have a nagging doubt that if we were to use resources to subsidise energy prices, we would be treating the symptoms rather than the disease. If we are to use our scarce resources to bolster profitability in times of low natural demand, it has to be asked whether those scarce resources could not better be employed bolstering demand itself.
  People have different suggestions. My hon. Friend the Member for Bath (Mr. Patten) would say that the PSBR should be increased and we should do something to reduce national insurance contributions. If some funds are available and we want to give some assistance, why not give something towards a conservation campaign in British industry which might conceivably save more than the assistance could buy in industry in the first place?
  Finally, having read a great deal about this issue and having heard a great many expert people make long speeches upon it, I remain unconvinced that British industry is paying an unfairly high price for its energy. I cannot dispel from my mind the lasting suspicion that this idea that we are paying unfairly is advanced not because of the intrinsic common sense that it possesses but because it happens to represent the most convenient common ground for some kind of agreement amongst all the parties represented.
  8.35 pm
  Dr. Oonagh McDonald: I am glad to be able to speak after the hon. Member for Skipton (Mr. Watson), because I disagree with virtually all his speech. I shall spend most of my speech disagreeing with almost all of the points he made.
  I take the hon. Gentleman's last remarks as a convenient starting point. He said that the concentration upon the difficulties faced by industry over energy pricing was a convenient common ground—even, one may say, between both sides of the House, as well as between unions and management in industry, and as well as between the CBI, the NEDO and independent research

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  bodies. Does this mean, therefore, that this is a convenient stick that we can all use, for our various reasons, to beat the much beleaguered—and understandably beleaguered—Government? I do not think so.
  Surely the point is that this is one of the problems which industry currently faces. For many industries, particularly medium and larger users of energy, their problems over high energy costs add to all their other difficulties, many of which, but not all, arise from the present Government's policies. It is not simply that we have found a convenient source of agreement between us. It is simply that this is one area, among others, in which changes in Government policy are urgently needed if our manufacturing base is not to disappear completely by the time that the present Government have finished their period of office.
  Let us look at a few different aspects of this matter. I shall pick out as a convenient starting point some of the main points made in the NEDO report. Industrial users of electricity find that larger tariff discounts are available on the Continent, and that large users on the Continent can negotiate special further reductions, amounting in total to a cost advantage of up to 40 per cent. over United Kingdom users. American and Canadian users pay only one-quarter or one-third of the United Kingdom rate—although in those two cases there are special reasons for that, apart from matters of pure policy.
  We find the same sort of problems in relation to gas prices. The large industrial users of gas on the Continent have a cost advantage over the United Kingdom users of up to about 20 per cent. That is an enormous advantage. Taking the average prices of gas identified in November-December by the National Utility Service, which is part of an international research conglomerate, we find that it is claimed that in a survey of 550,000 energy-using locations in eight countries around the world, British gas prices were found to be 18 per cent. more than German prices, 47 per cent. more than French prices, 108 per cent. more than American prices, and 200 per cent. more than Australian prices—although I would think that the Australian example is one that we should not use. Australian policy was quite successful in encouraging individual domestic consumers to use electricity, leaving vast amounts of gas available to industrial users, so perhaps that would not be the fairest comparison to consider.
  The problem of fuel duty on heavy fuel oil has already been referred to. I do not want to concentrate on that issue.
  The NEDO survey and other evidence supports what industrialists have been saying to the Government for the past year, that for industrial users, particularly heavy industrial users, the prices have been much too high.
  The hon. Member for Skipton referred to the paper industry. The paper and board industry is well represented in my constituency. The energy costs for that industry are by no means an inconsiderable cost of production. Overall energy costs are rising above labour costs, and amount to about 30 per cent. of its total costs.
  It may be thought that the board industry is not that important, but two features must be mentioned. First, it employs large numbers of people and, secondly, it supplies about 75 per cent. of the domestic market. If it were to vanish entirely—one feels that the industry as a whole is greatly at risk—what would happen? Immediately, the costs in terms of the balance of trade
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  would be about £100 million a year. More than that, in future those costs would rise, because we would have to import packaging products which would be more expensive because we use raw materials rather than waste products from abroad.
  The hon. Gentleman may not consider such matters to be important, but I do, not only out of constituency interest but out of national interest. The same sort of points can be made about the other major industries to which he referred.
  In addition to the CBI and the NEDO document, we have had the Department of Energy's reponse to it, which was more elegantly reiterated by the Secretary of State in his opening remarks. The response of the Department of Energy makes three basic points. It suggests that under-pricing of energy would encourage the wasteful use of energy. However, it fails to take account of two points. The first is that for the smaller and medium users of energy resources, the prices are an insufficient trigger to encourage energy conservation, which should be an important part of Government policy.
  For the larger users, the high price of energy is not serving solely to encourage energy conservation. It is encouraging conservation, but at an enormously high price and at the cost of the loss of export markets and the loss of jobs. When considering policies, one should take one policy in relation to the other. If the high price of energy is destroying some of our basic industries and adding endlessly to the loss of jobs, it is high time that the Department of Energy got together with the Department of Employment which at least, under its Secretary of State, seems to recognise the seriousness of unemployment, if the recent remarks of the Secretary of State are anything to go by.
  I particularly like the second point made in the response of the Department of Energy—
  "Energy prices are not fixed at a particular level for PSBR reasons."
  The next sentence says:
  "But they are taken into account in framing the Government strategy. Reducing energy prices would affect the PSBR and even a small reduction would be expensive."
  That is a wonderful piece of Civil Service jargon because it is an example of having one's cake and eating it.
  It tries to pretend that the Government's pricing policy has nothing to do with their financial policies and their attitudes towards the PSBR. However, it plainly has. Some of my hon. Friends, particularly my hon. Friend the Member for Bristol, North-East (Mr. Palmer), have pointed out exactly what the impact of that policy is on the nationalised industries and on their attempts to invest properly and to supply energy properly in the future.
  While I am on that topic, it would be interesting to know what the Secretary of State will do about the possible problems facing the British Gas Corporation. It is possible that the corporation has miscalculated the effect of the recession on demand for gas and also the effects of raising gas prices as much as has already taken place, and that it will therefore fail to sell enough gas this winter. What will be the consequences of that, both for the PSBR and for future gas pricing policy? It would be interesting to know whether the Secretary of State considers that the corporation has made such a calculation and what consequences he foresees for both domestic and industrial consumers.

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  Thirdly—this relates to what the Secretary of State said about setting up a task force, which is unfortunately much too restricted in looking only at energy prices in the EEC and not more widely—this response referred to the NEDO document and to comparisons of energy costs, for industrial users in particular, between one country and another. Quite rightly, the document says that it is difficult to make such comparisons, and describes the difficulties of comparing like with like and of taking into account the changes in the range of prices in force, and so on.
  I agree that those are problems which must be taken into account if one is making a careful comparison. As an ex-academic, I know the importance of making sure that such comparisons are thoroughly worked out and that one's research is carried out as carefully and as properly as possible. Of course—but what a wonderful example of delaying tactics. Once one has written difficulties such as that into one's project, I can quite see—again, as an ex-academic—that one can spend five years ensuring that the comparisons between countries are thoroughly worked out.
  That is what concerns me about the task force. For at least a year now the major industrial energy users—not people represented on these benches—have been crying out for the Government to do something urgently about energy prices before some of our basic industries are utterly destroyed.
  In reponse, we get a document such as this, which has thoroughly built into it—as will, no doubt, be reiterated in the ground rules for the task force examining it—endless delaying tactics. We shall be told that the studies are being carried out and comparisons carefully worked out, and by the end of this Government's period of office we shall not only see no change in their energy policy but we shall not have much of an industrial base left either.
  What I do not want to see is one of the policy recommendations in the NEDO document. That points out correctly that in other EEC countries domestic consumers pay more for energy than industrial users do. I do not necessarily want that kind of switch in this country. We all know that many domestic consumers in our constituencies already face a crippling burden of energy prices.
  Instead, I should like to see what the Secretary of State referred to. He rightly pointed out that many industrialists are trying to conserve energy. They are looking at ways of cutting back energy costs. That is happening in my constituency. I should like to see positive interventionist policies—I am talking not about the Eastern bloc but about the examples of Japan and Sweden.
  Japan is extremely vulnerable in energy supplies. With its high dependence on external energy sources it passed in 1979 a law on the rationalisation of the use of energy. It obliges factories to improve fuel utilisation to prevent heat losses and to look at heat recovery. A better standard has been developed by the Government. It is the function of the Ministry of International Trade and Industry to judge progress. Plants with high fuel consumption have been designated energy control factories. They have to appoint energy controllers whose brief is to cut fuel use. The Government insist not only that such people are employed but that they are properly qualified and, with Japanese thoroughness, the Government impose a two-day annual examination on each of the energy controllers to ensure that they know their job, are up to date, and are carrying the work out as thoroughly as possible.
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  Low-interest finance is available to companies to ensure energy conservation. That is serious intervention. It is not sitting back and hoping that if the prices are shoved up far enough the sort of conservation wanted will be achieved.
  Sweden's scheme is less rigid than that imposed by the Japanese. It depends more on voluntary co-operation. But Japan has made more than £7 million available in low-interest finance for companies and large grants are made available in Sweden to assist high-energy users to conserve energy. Among those high-energy users—this is interesting from the point of view of the industries referred to by the hon. Member for Slcipton—almost half the total grants are to the pulp and paper industries to ensure that these high energy users make proper use of energy.
  I should like to see not simply a review of the artificially high prices of energy resources, particularly gas, of which we have enormous supplies, and coal, but a serious interventionist policy by the Government to conserve energy and to provide finance for industry. That would be a rational policy for the Government to pursue. It is essential for the Government to pursue that policy as quickly as possible, before jobs and industry disappear by the end of their tern of office.
  8.53 pm
  Mr. Nick Budgen: It is often my pleasure in general debates on the economy to follow the hon. Member for Thurrock (Dr. McDonald). She refers often to learned debates with great charm and thoroughness. I suspect that my approach to these problems is different from hers. The only common ground that she and I have is that both of us are primarily concerned with the grave problems faced by British manufacturing industry.
  I start from the prejudice of representing a primarily suburban seat, but a seat where almost all my constituents work in heavy manufacturing industry. The few shares that I have are in a family company which has foundries, so my interests and affections are intimately tied up with heavy industry.
  In the last 18 months I have had the very great privilege, under the arrangements made by the Industry and Parliament Trust, to spend much time with BP. I have come to admire the very intelligent but extremely discreet people who run BP. Anything that I say about oil pricing has nothing to do with any views that have been suggested to me by anyone in BP, as I hope will become clear.
  My right hon. Friend the Secretary of State did not set out the Government's overall energy policy. May I suggest what it should be? This matter arises from my right hon. Friend's slightly evasive answer to the intervention of my hon. Friend the Member for Bedford (Mr. Skeet). The Government's energy policy must be the policy of OPEC. If OPEC forces up the real value of one form of energy, it follows, unhappily but inevitably, that other forms of energy will have to be priced at much the same sort of level, because otherwise there will be the sort of distortion that we saw in relation to gas when domestic consumers found that they got such an infinitely better deal from gas that they made enormous demands on the British Gas Corporation for the installation of gas heating, which could not be met by the corporation. Indeed, the corporation took the view that it would be dangerous to

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  meet that demand, because it knew that the price of gas was only temporarily significantly lower than the prices of other forms of energy.
  My right hon. Friend the Secretary of State is as much a follower of OPEC as is Sheikh Yamani. Indeed, every producer of energy, from Sir David Steel down to Joe Bloggs in the Cannock pit, owes a great debt of gratitude to the cartel, but that cartel is having an appalling effect on British heavy manufacturing industry.
  The three principal complaints made to hon. Members who represent manufacturing areas are that interest rates are too high, energy prices are too high, and the sterling exchange rate is too high. On the first point, I disagree with my hon. Friend the Member for Skipton (Mr. Watson). We have a public sector borrowing requirement of about £12 billion and every prospect that, for the reasons that my hon. Friend spelt out, the PSBR will be even larger in the next financial year. If we wish to finance a large PSBR and do not wish to cut it by cutting public expenditure significantly or increasing taxation, the corollary, if we wish to keep to monetary targets—and although we have not kept to them, I understand that they are still important—is high interest rates. That is disagreeable, but it is the logic of our professed, if not activated, monetarism.
  On energy prices, I appreciate that we live in a world in which we have to accept world market prices for energy. I do not say that there is any such thing as a totally rigged market or a totally free market. We have what the Secretary of State describes as a free market price for energy but what is actually a partially rigged price.
  I want us to ensure that if the cartel breaks in future the British Government have not got so hooked on high energy prices that they become the most active participant in supporting the cartel. That could easily happen. If the cartel broke it would have an appalling effect, especially on some of the small oil companies that have come riding in on the back of the oil boom. There will be great pressure on them. But it will be splendid for my constituents. Not only will they obtain cheaper energy; they will also find that one of the factors that hold up the sterling exchange rate has disappeared. They will find that the rapid process of change, which has been so much welcomed by so many of my hon. Friends, does not have to take place.
  My right hon. Friend the Secretary of State, in his speech on 4 January, seemed to be rather forgetful of the electors of Dudley, whose votes he once canvassed. He spoke instead of the new prosperity bypassing the old manufacturing areas such as Wolverhampton and Dudley. No doubt the new prosperity will be strong in Guildford. On the other hand, the Governor of the Bank of England, in his speech of 20 November, appeared to say something very different. In paragraph 27 he said:
  "The adaptations that will ultimately be required to a high relative price for oil and gas are hard to foresee with precision. I very much doubt, however, that they will involve a process of de-industrialisation".
  I do not know, and no one can know, what will happen to OPEC. I want to see some element of detachment between the Government and the oil industry.
  Time is short, and I shall be brief. It is vital that the Government now raise funds by selling their remaining shares in BP. I agree entirely with Mr. Ivan Fallan's argument about that. I understand that the price tag is £1·7
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  billion. I much regret that the Government have not decided to reduce the activities of BNOC. I accept that there may be an argument for some Government activity in oil, principally to find out the real incidence of tax upon those companies which—I shall put this carefully—are discreetly and intelligently run. I believe that Mr. Peter Lilley's arguments about the auctioning of licences ar correct. I wish to see both the Government and the Department of Energy become less wedded to the producer, and more mindful of the appalling effects being felt by the consumer.
  9.3 pm
  Mr. Alex Eadie: What has characterised the debate, especially on the question of pricing, bas been the different points of view of Conservative Members. There was no unanimity of agreement with the Secretary of State's opening remarks. The right Gentleman spoke for 50 minutes. I am entitled to press him on some of the main points made by my right hon. Friend the Member for Leeds, South (Mr. Rees). The right hon. Gentleman could have responded to them in his speech. When my right hon. Friend pointed out that it was time that we had a full-scale energy debate in the House there was general acclamation from both sides of the House. Yet this full-scale energy debate has been initiated by the Opposition, in Opposition time. It would have been lovely if the Secretary of State had said "I shall see my right hon. Friends and we shall have more energy debates". But the right hon. Gentleman had a brief, and he stuck to it. He never lifted his head. He did not respond to my right hon. Friend's points.
  It was reasonable for my right hon. Friend to say that if the Secretary of State is going to Europe to attend Energy Council meetings of great import for energy decisions, energy policies and energy impact, he should come to the House and make a statement. Indeed, it is already established procedure. It is done for agriculture and all matters relating to Europe. I thought that the right hon. Gentleman would respond. Even if he had said "No", one would have gained the impression that he had listened to what was a reasonable proposition.
  We can have all the Select Committees under the sun and all the various bodies outside the House of Commons, but this is the place where discussions should take place. It is in the House of Commons where we should have great discussions and information about energy. I am disappointed that the Secretary of State did not respond, not to a party political point but to a matter relating to the stature and structure of the House of Commons. I hope that the right hon. Gentleman will reflect on this matter and ask his hon. Friend the Under-Secretary of State when he replies to the debate to comment on it.
  I understand the predicament of the Under-Secretary in replying to the debate. He will not have time to reply to all the points that were made. That is all the more reason for having more energy debates. The Minister will then have the opportunity of putting the Government's view and of trying to rally support from his hon. Friends who are very much divided on, for example, pricing policy.
  I note that the hon. Member for Dundee, East (Mr. Wilson) has returned to the Chamber. The hon. Gentleman made a point which I do not really think he meant. The Minister will appreciate the point that I am about to make. The reference of the hon. Member for Dundee, East to the dozy North of Scotland Hydro-electric Board was unfortunate. It may be that he has some conflict with

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  individuals on the board. The Hydro-electric Board brought power to the Highlands and Islands. Tom Johnston was referred to in glowing terms. But the record must be made clear. I know many people who work for the Hydro-electric Board. They are very good public servants. Those people, even in terrible winter weather, maintain the electricity supply to the Highlands and Islands. We owe them a debt of gratitude. The hydro-electric system was one of the greatest pieces of public enterprise introduced by any Government. Therefore, I do not think that the hon. Member for Dundee, East meant what he said and it is necessary that the record should be put straight.
  Mr. Gordon Wilson: I am grateful to the hon. Gentleman for putting the record right. I was not in any way impugning the services given by linesmen and others; I was attacking the policy makers and board members of the Hydro-electric Board who are not living up to the principles that were established on the formation of that excellent body.
  Mr. Eadie: I thought I heard somebody say that "dozy" was not a good description. It may be of a football team. I do not know. I do not think that there are many dozy football teams in Scotland. Some may be indifferent. The hon. Gentleman's phraseology was not a precise description. I think that we can leave it at that.
  I do not want to deal with pricing policy for very long, but various points of view have been put forward. I say that I do not want to deal with it for very long, because I bear in mind that the task force has been appointed. We wish it well in trying to give accurate information. One Conservative Member said that it was a question of industries looking not for subsidies but for fairness. Will the Under-Secretary of State clarify the precise terms of reference of the task force? Do the terms of reference of the task force cover only the EEC or is a more comprehensive examination envisaged? That is important, because we are speaking of Scandinavia and other countries.
  All hon. Members welcome the task force examination. However, we have heard that electricity prices are to be increased. Will that price increase take place before the task force examination? Will the Government wait for the objective analysis before electricity prices are increased? Will they hold their hand a little in anything that affects industry? I ask that because I have received information from the Chemical Industries Association Limited. It claims that it is disadvantaged to the extent of £200 million compared with France and West Germany. That is a substantial amount. If that is true we are entitled to say that blatant discrimination exists.
  I listened to the doctrinaire, anti-nationalisation, anti-trade union speeches by Government Members. I do not chastise hon. Members for holding a view but I am entitled to express the contrary view. It is ironic that the Government, not the trade unions, are causing unemployment because industry is paying a higher price for energy than it should.
  Mr. Eggar: Will the hon. Gentleman give way?
  Mr. Eadie: No. The hon. Gentleman's hon. Friends would not give way to me so I shall not give way to him. It is no good saying that energy represents about 6 or 10 per cent. of costs and that that does not matter much. Of course it matters, to industry. It can make the difference
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  between an industry surviving and going to the wall. We should not try to play the issue dowm. By all means, let us try to get the information. However, if the task force reveals that we are disadvantaged compared with our main competitors in Europe—and there is evidence of that—the Government must accept responsibility.
  I have some sympathy with the argument about improper price cycles which can defeat attempts at a conservation policy. That is a fair argument. I have listened to the contributions from the Government side. The Government are being hoist with their own petard. The Secretary of State confessed that the main thrust of the energy conservation policy is based on pricing. The Government base their conservation policy on the market. That is a lazy, inefficient way to run a conservation policy. None of the bodies involved in conservation have suggested that pricing can be viewed in isolation. None of them ever suggested that pricing alone was an excuse for a Government pursuing an energy conservation policy.
  I hope that as a result of the contributions made by both Conservative and Labour Members the Government will look afresh at the whole question of conservation policies and will able to produce a far more imaginative conservation policy than their present policy. What has happened to the concept that energy conservation should be a fifth source of energy, in the sense that one identifies oil, gas, coal, nuclear power and alternative sources of energy? The Secretary of State's argument on conservation was not convincing.
  The hon. Member for New Forest (Mr. McNair-Wilson) expressed some misgivings about the Government's nuclear power policy. The Secretary of State suggested that the Government had inherited a shambles of a nuclear power policy. I do not know whether that is so, but it was the Secretary of State and the Government who announced the commencement of 12 nuclear reactors in 1982. I have here a press report in which the Under-Secretary of State is reported to have given a funeral oration for the Government's nuclear power programme. Have the Government reversed their policy on nuclear power? Do they find themselves unable to carry out the policy that they announced to the House? We are entitled to know.
  I turn to the PWR. If the Government are running into difficulty with their nuclear power policy, it is of their own making. To have chosen the PWR and to have been associated with the Three Mile Island concept damaged the image of nuclear power in this country. I am not arguing from a Friends of the Earth point of view. I am simply saying that we had a nuclear power reactor that was associated with the Three Mile Island incident. It was a reactor of foreign make. The right hon. Gentleman knows from his own experience that the idea of a British PWR just will not materialise. The Nuclear Installations Inspectorate will insist that a British PWR meets the standards prescribed by it, so we are really talking about another brand-new, virgin reactor. The experience with brand-new, virgin nuclear reactors is that there have been problems and faults. I predict that the Government's policy on nuclear power will founder as a result of the technology upon which they have based it. If they wished to pursue a tested nuclear power policy, they should have backed British equipment. The AGRs should have predominated in that policy.

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  I wished to make those points because I think that the hon. Member for New Forest was the only person to try to bring that argument into the debate—
  Mr. Eggar: Will the hon. Gentleman give way?
  Mr. Eadie: No. I have already told the hon. Gentleman that I shall not give way.
  What is the Government's policy on the fast breeder reactor? The hon. Member for New Forest expressed doubt about its future and its credibility. We are entitled to know. We must take advantage of these energy debates to obtain information from the Government. This is an important matter. It is no accident that we included in our motion the reference to "Plan for Coal", about which the Secretary of State made little comment. For the Government to stand aside, watching, or aiding and abetting, the plan's failure, will have serious consequences for those who work in the coal industry; for industry in general, which is dependent on supplying goods and services; and for the nation as a whole, because it is dependent on safe, secure supplies of indigenous energy with a long lifespan, to meet the appetite of the country's industry and provide for the people their creature comfort in the shape of light and warmth.
  Without energy provision, our industry collapses and our people freeze. It has been said before, but it is well worth repeating, that a nation that wishes to be an industrial country must have access to energy, and preferably indigenous energy. It is not a question of facing relegation in the industrial league of nations. If one does not have the energy, one is just not in the league at all.
  It is partly in this setting that the Opposition approached this debate when we incorporated the reference to "Plan for Coal". It is an established fact that, of all the energy riches that we possess in fossil fuels, coal is the one that we have in abundance. We have hundreds of years' supply of that fuel—50 years forward of identified, planned reserves. No other fossil fuel in this country can match that time span. Indeed, by the end of the century our other fossil fuels—oil and gas—will start to be a diminishing factor in our energy provisions. What is certain is that compared with coal they are finite.
  As a raw material, coal has a flexibility in its use that other fossil fuels cannot match. It took the Yom Kippur war and the election of a new Government to reverse the trend and follies of previous Governments. The stupidity of the contraction of the coal industry was replaced by a policy of expansion and more investment. "Plan for Coal" was adopted as the industry's target and motivation: a deep-mined output of 120 million tonnes by 1985, with a later longer-term plan for 150 million tonnes by the end of the century.
  I was asked to give evidence to a Select Committee of the House of Lords, whose main complaint was that our target should be higher, based on the forward studies and evidence that the Committee had taken.
  It is worth while to refer to the table of National Coal Board capital expenditure for the years 1974–80. In 1974 capital expenditure stood at the disgraceful figure of £68 million. Then it raced to £112 million in 1975, £211 million in 1976, £266 million in 1977, £334 million in 1978, £454 million in 1979 and £617 million in 1980. I refer to those figures because doing so gives me the opportunity to mention the financial problen that we have
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  piled on the NCB. The Government make the capital available; they do not give the money to industry. The NCB is now paying £250 million a year in interest charges on that roll call of investment.
  We starved the industry of investment previously and then we asked it to go like the hammers of hell in six years, knowing full well that it takes a long time for such investment to pay off. It takes 10 years to bring a new mine into production. The Government should look at that anomaly more constructively than they have done in the past. I refer to the Coal Industry Act 1980, which must be seen as the most extravagant piece of irrelevance that any Government ever presented to the House. The Government should withdraw that Act now. We should also ask the National Coal Board about the question of breaking even in three years. That is also irrelevant nonsense. When the hon. Member for East Grinstead (Mr. Johnson Smith) spoke earlier he said that the difference in the timing did not matter. But it matters to the extent of £200 million, which is very important to the industry. If the Coal Industry Act is applied it will cost the National Coal Board another £200 million.
  The Secretary of State's comments about the 1980 Act are more related to political dogma than to reason. I support part of the case that the Government will advance about the difficulties of the energy industry at present. We have a mother-and-father of a world recession, in which most of the Western world is dipped at present. The irony of that is that it makes the Government's actions more inexcusable. Other Governments support their coal industries. In Belgium, Government support is worth £33·90 a tonne; in France, £18; Western Germany £14·90, and in Britain, £1·50 a tonne. Conservative Members talk about fair competition. What sort of competition is that, when our competitors receive those subsidies? What have the Government to say about that? Do the Government think that it is fair that our competitors should operate like that?
  Britain's coal is the cheapest in Western Europe. I do not think that Conservative Members would deny it. Many factories are waiting to switch over from oil to coal, but because of the recession and lack of capital they are force to delay the switch. At present, coal has a 30 per cent. price advantage over oil. The figures for the costs of producing one tonne of coal in other countries are available. It costs £58 in Belgium, £45 in France, £41 in West Germany and £29 in Britain. Who says that the British coal industry is not competitive? Of course, the price of British coal has been undercut by Poland, the United States and Australia. Opencast mining, compared to deep mining, is part of the reason for that.
  Mr. Eggar rose—
  Mr. Eadie: I stand by the statement that was made by the Under-Secretary of State for Energy, which I quoted during the debate on the Coal Industry Bill on 17 June 1980. He said:
  "we cannot necessarily rely on long-term continued availability and low price of imported coal. We in Britain are not alone in taking this line. As recent International Energy Agency studies have shown, the potential importance of coal is increasingly recognised everywhere."
  I could not do better than that myself. Why should we import coal now? This year we shall import about 8 million tonnes of coal. That could be supplied by our industry. At present, there are about 39 million tonnes of

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  coal in stock, lying in the ground. The demand this year for coal is likely to drop by 6 million tonnes, therefore it makes sense to look at the whole question of coal importation. What about the promise made to the industry to protect it against short-term fluctuations in the price and availability of competing fuels?
  It is clear, when we look at the cost in which the National Coal Board is involved, that an increase in stocks of 1 million tonnes costs it £30 million, and the cash limits with which the NCB is involved at present are in no way adjusted to take account of these rising stocks.
  The Coal Industry Act 1980, to which I referred earlier, imposes severe additional restrictions on National Coal Board finances. All regional and operating grants are to be withdrawn over the next three years. It has been estimated, as I said previously, that this legislation will cost the coal industry £200 million.
  With regard to coking coal, the position is a most serious one for most of the coalfields in Britain, even taking into consideration the severe contraction of the steel industry. We know what one of our competitors, West Germany, has done about its coking coal. Its coking coal industry received £418·3 million in direct aid, compared with the aid that our industry received of £8·4 million in 1979. Even when social grants are taken into consideration, the German subsidy was more than £35 per tonne. The right hon. Gentleman made some reference to the United States of America, but even there indirect subsidies and assistance are given to the coal industry.
  Taking all these facts into consideration, I cannot put the case any better than it is put in the triple alliance "Steel-Rail-Coal" document, "What is the future?", which I hope the Minster has read. It says:
  "Coal—Because of the Government's refusal to grant the same support to the UK coking coal industry as is provided elsewhere in Europe, BSC in an effort to reduce its costs and improve its competitive position, has begun importing substantial quantities of coking coal which could be supplied from NCB collieries. At the same time the cut-back in steel production has reduced the total BSC demand…Initially, the Corporation defended its imports by claiming that there was a shortage in the UK of rank 301 coal."
  There is no shortage now. The National Coal Board is involved in price rebate payments of £22 million in order to get the allocation from the British Steel Corporation at the present time. This will increase to £47 million.
  The case that the Opposition have advanced tonight in support of their motion is a substantial one. The right hon. Gentleman, in the course of his remarks, talked about betrayal. If the Government pursue their policy in relation to the "Plan for Coal" and there are wholesale closures in the country, 27,000 jobs will be at stake. It will be an act of betrayal by the Government. The miners will be betrayed and the people will be betrayed. That is why my hon. Friends and I will go into the Opposition Lobby tonight and vote against the policy of the Government, who not only do not understand the position but handle it with amazing incompetence.
  9.34 pm
  The Under-Secretary of State for Energy (Mr. Norman Lamont): I am grateful to the hon. Member for Midlothian (Mr. Eadie), because he said that it would be difficult for me to reply to the debate owing to its wide-ranging nature. Many different points have been raised and I shall do my best to reply to them.
  The hon. Member for Midlothian concentrated on coal. We well understand some of the anxieties expressed.
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  Obviously, the recession has had a considerable impact on the coal industry, just as it has had a considerable impact on other parts of the public and private sectors. During this Administration it has often been said from the Dispatch Box that the Government believe—as I do—in a strong coal industry, and that it has a bright future. We believe that the industry has the ability to take advantage of the opportunities open to it. Great opportunities are open to it.
  In the long term, for example, there are significant opportunities in liquefaction and gasification. If all transport fuel were to be produced from liquefied petroleum based on coal it would use 100 million tonnes of coal per annum. If all our gas were substiute natural gas it would use up 120 million tonnes of coal per annum. In the long term and the short term the outlook is very bright.
  The hon. Member for Leigh (Mr. Cunliffe) and the hon. Member for Rother Valley (Mr. Hardy)—who is always very assiduous in speaking up for the coal industry—stressed the necessity to lessen our dependence on oil. They stressed the opportunities available to industry because coal has a relative price advantage over oil—to substitute coal-fired boilers for oil-fired boilers.
  Despite the recession many of the pay-back periods for investment projects are short, and profitable investments can be made. Indeed, despite the recession this is a good time to make such investments. We hope that as much of manufacturing industry as possible will switch from oil to coal. It is right to be confident about the coal industry, but anxieties have been expressed, particularly about closures. The coal industry will not become like the steel industry. It will expand. New mines and new coal faces will be opened up. There will be a new coal industry.
  Itis in the very nature of an extractive industry that some old mines close when new faces and mines are opened up. I was pleased that the right hon. Member for Leeds, South (Mr. Rees) accepted that. He said that there would have to be some closures, as had been accepted in the "Plan for Coal". It is for the management of the NCB to decide about the closure of individual pits. The industry has a good record of co-operation and consultation and I am sure that the unions will be consulted at an early stage about any closures.
  The right hon. Member for Leeds, South also referred to the absence of a production target and the fact that no production targets had been specified for the longer term. It is for the industry to produce what the market will bear in the long term. The opportunities exist. The existence of a figure does not make any great difference. It is the market, and the need to satisfy that market, that is crucial.
  Opposition Members have suggested that too onerous a turn about is being demanded. We are not so gloomy as the Opposition. As recently as 1976–77 the NCB achieved a break-even, before operating grants. Productivity is rising sharply. We have seen the first increase in deep-mined output since 1963. This turnabout is not impossible. It is a relatively small turnabout in relation to the overall turnover of the NCB. It is about £200 million, or 5 per cent. of turnover over a period of three years.
  The question was raised of imports from, and subsidies in, other countries. Our imports, which are very small in relation to the total market—we expect a decline next year—do not come from those countries that subsidise their coal industries. They come overwhelmingly from the United States and from Australia where the industries are unsubsidised. It is true that in France, Germany and Belgium the industry gets, per tonne of coal, a higher

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  subsidy than in this country but it is a totally different sort of industry from this country's. It is much smaller in relation to the total energy market and the total demand for energy from industry in those countries. Those countries are importing much more than we import. Furthermore, they intend to expand their imports in the future. It is precisely because we believe that the industry can be competitive that we have set it a financial strategy.
  I was asked why the Government insist so much that the industry should be competitive. The reason why we insist and want the industry to be competitive is one that is in the best interests of the industry itself. The future expanded market for coal will occur in the industrial sector, not in the Government-dominated electricity generation. In the industrial market, coal will be in competition with other fuels. One cannot dictate to industry which fuel it is going to use. That is why we owe it to those in the industry and to the miners that this should be a competitive industry. Only in that way will the future of the industry be assured. Only in that way will it be able to capture a significant part of the industrial market.
  Mr. Skeet rose—
  Mr. Lamont: This leads me naturally to the other great concern expressed in the debate about industrial energy pricing. I want to deal with the points that have been raised, particularly by my hon. Friend the Member for Canterbury (Mr. Crouch), who made a powerful speech—
  Mr. Rees: We are pleased to hear what the Under-Secretary of State says about the future of the coal industry, which means that we can say to those leaders of the NUM who are talking about a loss of 25,000 jobs this year that they have got it wrong.
  Mr. Lamont: No such proposal has been put to us. The comments in the newspapers are pure speculation. It is not a matter on which we have received any indication from the National Coal Board.
  I should like to return to the question of industrial energy pricing and the speech of my hon. Friend the Member for Canterbury. There has been considerable controversy, not just over the principles of policy, but also over the facts of the situation. That is why the task force to be set up by NEDO is a major step forward, not because, as the hon. Member for Thurrock (Dr. McDonald) suggested, it is merely going to be a talking shop or because it is going to shelve the problem. It is a major step forward because the differences about the facts and the differences of interpretation of the facts have been narrowed considerably.
  At the NEDO meeting it was accepted, first, that the pricing of energy must be on an economic basis. Secondly, it was accepted that in general our energy prices are not out of line with those in Europe, although there was clearly a great difference in energy prices between ourselves and the United States.
  Thirdly, it was agreed that there are some specific problems mainly relating to the large energy users, the energy-intensive industries, mainly on the electricity side but also, possibly, on the gas side. The hon. Members for Midlothian and for Bury and Radcliffe (Mr. White) asked whether the task force would be able to deal with energy
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  prices outside the EEC—in Europe, America and Scandinavia. The answer is that it can, although in those areas I think there is substantial agreement about the problems that already exist.
  My right hon. Friend announced today the changes that we are asking the electricity and gas industries to investigate—the review of the bulk supply tariff and the possibility of larger discounts for bulk users of both electricity and gas. We hope that those things will bring substantial relief to industry. I ought, however, to be realistic about what is proposed for electricity. In electricity costs there is a difference between Britain and some other countries, but in some cases that may well reflect fundamental cost differences. The fact that a country such as France has a higher proportion of hydro-electricity and nuclear electricity is one of the reasons why it has a substantial advantage over us in the cost of electricity.
  My hon. Friends the Members for Bedford (Mr. Skeet) and for Canterbury, and the right hon. Member for Leeds, South raised the question of the heavy fuel oil duty. That is a matter for the Chancellor of the Exchequer, who was at the meeting at the NEDO and is well aware of the strength of feeling from the representations that have been made.
  Our heavy fuel oil duty is higher than that in other European countries, although our duty on other oil products may be lower. One has to look at the matter as a whole. The question of heavy fuel oil duty has many ramifications. It affects the price of industrial gas, because that is tied to the price of oil. Also, as the right hon. Gentleman clearly showed, it affects the price of electricity. That was why he had some reservations about reducing or abolishing that duty—which just goes to show the sort of conflicting considerations and the box that one is in when considering this problem.
  At present, our heavy fuel oil prices are among the very cheapest in Europe. For much of 1980 they were higher, but it is a changing situation and probably over a five-year period our prices have not been much out of line with those in countries such as Germany. However, because they affect gas prices, as my hon. Friend the Member for Canterbury said, this is a problem that we shall consider very seriously.
  My hon. Friend the Member for New Forest (Mr. McNair-Wilson) raised the question of the exchange rate and comparisons of energy prices. One point that tends to be overlooked when people ask why we cannot have cheaper energy is that a strong and rising pound gives cheaper energy in sterling terms. Because oil is priced in dollars, the price of North Sea oil is converted back into sterling, and thus, when the pound rises, the price of North Sea oil is cheaper to United Kingdom users than it would otherwise have been.
  I give an example. A $39½barrel of oil would, at an exchange rate of $1·57 to the pound, cost £25·16 instead of the £16·46 that it now costs. So a strong pound helps energy users; it helps purchasers of oil; and it also affects the price of gas. That is one reason why, when looking at the price of gas in local currency terms, and looking at the price in sterling and comparing it with the price in francs or deutschemarks and comparing the increase in each of those countries in their local currencies, we find that British gas prices, as measured in individual national currencies, have risen very much less than have gas prices

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  in other European countries. That point was acknowledged in the Independent Market Research consultants' report, which was carried out for the steel producers.
  The Government's view, which has been accepted by the CBI and by the Labour Party, is that our energy should be priced so as to ensure adequate and secure supplies iver the medium term. That does not mean pricing at yesterday's cost; it means taking account of the trend of future costs of energy. That policy was accepted and endorsed by the Green Paper of the right hon. Member for Bristol, South-East (Mr. Benn) when he was Secretary of State for Energy.
  A number of my hon. Friends, including my hon. Friend the Member for Bedford, raised the question of the influence of cash limits on energy prices. I repeat what my right hon. Friend said, that energy prices are not determined by cash limits. They are set in order to cover the medium-term marginal costs. The external financing limit is worked out after that, and is not the determinant of energy prices.
  A number of hon. Members asked why a country such as ours, which is energy-rich, should not subsidise it or have cheap energy, as in the United States. A few hon. Members—I am glad that there were only a few—suggested that we should follow the United States practice. I believe that to follow the United States energy pricing policy would be a great folly. It is often forgotten that before 1973 the United States priced its energy above word levels in order to protect its domestic producers. After the oil price hike in 1973 it changed its policy and decided to price below world market levels. The result was disastrous. Consumption was stimulated, and imports that were only 20 per cent. in 1973 soared, in a few years, to over half the energy requirements of the United States. Thus, to follow the example of the United States would be disastrous.
  Another question raised in the date was why the price of oil should affect the price of gas. People have translated that question as "Why should our gas prices be determined by OPEC?" There are strong reasons, when the price of oil goes up, why those of gas and other fossil fuels are bound to follow. In many uses the two products are interchangeable. As my right hon. Friend said, the world is consuming more oil and gas than it is discovering. There is an imbalance between the world's demand for oil and its supply.
  As some hon. Members argued, all these estimates of reserves and finite resources may prove to be grossly over-pessimistic. Some hon. Members argued that the answer to the oil problem might be oil itself—that more oil will be discovered under the sea, offshore, from coal and from shale. All these new sources of oil will come on stream only if we have the right pricing policy.
  A number of hon. Members raised specific points relating to nuclear power. The right hon. Member for Leeds, South asked when the inquiry into the PWR would be held. It is expected to be held in 1982. I cannot say what the precise form of the inquiry will be, except that it will be as wide as possible. We want maximum discussion, and it is hoped that the construction of a PWR can be started in 1983.
  My hon. Friend the Member for Bedford suggested that the nuclear programme was not going fast enough. But when we have been through a decade when the industry has had no inquiries and is run down, I do not believe that we can go quicker than we are just now. I do not believe
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  that we could build more stations, and build them to time. Heavens knows, we have had enough problems building them in time in the past. We have of course discussed with the industry what the scale of the programme should be.
  The hon. Member for Truro (Mr. Penhaligon) criticised us because nuclear power stations were being sited in rural areas. This, he thought, implied that they were being acknowledged by Governments as unsafe; otherwise they would be located in the middle of city centres. The nuclear industry and Government simply cannot win. To satisfy public opinion and allay anxieties, they do not build nuclear power stations in the middle of cities, but they are then accused of doing so precisely because they know that they are unsafe. It a ridiculous argument.
  My hon. Friend the Member for Mid-Sussex (Mr. Renton) asked about mixed finance for some of the energy industries. My right hon. Friend the Secretary of State has said that we shall be taking powers to inject private equity into BNOC. I hope that that will meet my hon. Friend's point.
  Listening to the arguments from some Opposition Members tonight—to be fair, only some of them—one wonders whether they are aware of the world beyond this country, whether news has reached them of the revolution in Iran or the war between Iran and Iraq. While that war continues, the danger is that vital supplies of oil will be interrupted and that the world will face another price explosion.
  Even after the world returns to calm on the oil markets, we shall still be using our supplies faster than we discover new ones. In those circumstances, we cannot expect to live quiet lives and enjoy low energy prices.
  As my hon Friend the Member for Skipton (Mr. Watson) said in an admirable speech, this country, like every other, needs to adapt to higher energy prices. We shall be in a better position than countries with no energy resources, for whom the rise in energy prices has been nothing short of calamitious. High prices bring problems for our energy-intensive industries and my right hon. Friend has announced some measures today to deal with them. But the fact that this country is rich in energy resources also brings opportunities.
  That is why this Government have overthrown the policies of the last Government, which worked against greater investment in the North Sea. That is why we have insisted that the National Coal Board should be profitable again. Do the Opposition really suggest that, in an era of high energy prices, one of our major energy industries should be a loss maker? That is surely ridiculous. It is only by maintaining realistic prices that we can maximise our advantages as an energy-rich country.
  To reverse our policies will mean that many of the jobs which have been created in the industries that supply the energy industries will not come into being. Many of the changes and adaptations in industry towards economising on energy use will not occur without proper economic prices—again, as my hon. Friend the Member for Skipton said in his excellent speech.
  The route suggested by the Opposition will bring this country certainly not prosperity but great problems. Under the last Government, we tried to hide from falling demand for the products of some of our traditional industries. We hit competition from the low labour cost countries. we turned a blind eye to overmanning and overspending. We indulged restrictive practices. As a result, this country is

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  now chronically uncompetitive. The road back, the one along which we are leading the country, is difficult enough without repeating the follies of the last Government.
  The time to pretend that our industries could hide and remain embedded in the past has gone. If we do not face reality, reality will face us with some very unpleasant consequences. The challenges to this country are great, but we can turn the transient advantage of energy into a permanent competitive gain. I urge the House to reject the motion and to support the Government amendment.
  Question put, That the original words stand part of the Question:-
  The House divided: Ayes 255, Noes 309.

  Division No. 48]

  [10 pm

  AYES

  Abse, Leo

  Dunn, James A.

  Adams, Allen

  Dunnett, Jack

  Allaun, Frank

  Dunwoody, Hon Mrs G.

  Alton, David

  Eadie, Alex

  Anderson, Donald

  Eastham, Ken

  Archer, Rt Hon Peter

  Edwards, R. (W'hampt'n S E)

  Armstrong, Rt Hon Ernest

  Ellis, R. (NED'bysh're)

  Atkinson, N. (H'gey,)

  Ellis, Tom (Wrexham)

  Bagier, Gordon A. T.

  English, Michael

  Barnett, Guy (Greenwich)

  Ennals, Rt Hon David

  Barnett, Rt Hon Joel (H'wd)

  Evans, Ioan (Aberdare)

  Beith, A. J.

  Evans, John (Newton)

  Bennett, Andrew (St'kp'tN)

  Ewing, Harry

  Bidwell, Sydney

  Faulds, Andrew

  Booth, Rt Hon Albert

  Field, Frank

  Boothroyd, Miss Betty

  Fitt, Gerard

  Bottomley, Rt Hon A. (M'b'ro)

  Flannery, Martin

  Bradley, Tom

  Fletcher, Raymond (Ilkeston)

  Bray, Dr Jeremy

  Fletcher, Ted (Darlington)

  Brown, Hugh D. (Provan)

  Foot, Rt Hon Michael

  Brown, Ron (E'burgh, Leith)

  Ford, Ben

  Brown, Ronald W. (H'ckn'y S)

  Forrester, John

  Buchan, Norman

  Foster, Derek

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

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

  Campbell, Ian

  Freeson, Rt Hon Reginald

  Canavan, Dennis

  Garrett, John (Norwich S)

  Cant, R. B.

  Garrett, W. E. (Wallsend)

  Carmichael, Neil

  George, Bruce

  Carter-Jones, Lewis

  Gilbert, Rt Hon Dr John

  Cartwright, John

  Ginsburg, David

  Clark, Dr David (S Shields)

  Golding, John

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

  Gourlay, Harry

  Cohen, Stanley

  Graham, Ted

  Coleman, Donald

  Grant, George (Morpeth)

  Conlan, Bernard

  Grant, John (Islington C)

  Cook, Robin F.

  Grimond, Rt Hon J.

  Cowans, Harry

  Hamilton, James (Bothwell)

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

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

  Craigen, J. M.

  Hardy, Peter

  Crowther, J. S.

  Harrison, Rt Hon Walter

  Cryer, Bob

  Hart, Rt Hon Dame Judith

  Cunliffe, Lawrence

  Hattersley, Rt Hon Roy

  Cunningham, G. (Islington S)

  Haynes, Frank

  Cunningham, Dr J. (W'h'n)

  Healey, Rt Hon Denis

  Dalyell, Tam

  Heffer, Eric S.

  Davidson, Arthur

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

  Davies, Rt Hon Denzil (L'lli)

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

  Davies, Ifor (Gower)

  Home Robertson, John

  Davis, Clinton (Hackney C)

  Homewood, William

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

  Hooley, Frank

  Deakins, Eric

  Horam, John

  Dewar, Donald

  Howell, Rt Hon D.

  Dixon, Donald

  Howells, Geraint

  Dobson, Frank

  Huckfield, Les

  Dormand, Jack

  Hudson Davies, Gwilym E.

  Douglas, Dick

  Hughes, Mark (Durham)

  Douglas-Mann, Bruce

  Hughes, Robert (Aberdeen N)

  Dubs, Alfred

  Hughes, Roy (Newport)

  Dunlop, John

  Jay, Rt Hon Douglas

  344

  John, Brynmor

  Race, Reg

  Johnson, James (Hull West)

  Radice, Giles

  Johnson, Walter (Derby S)

  Rees, Rt Hon M (Leeds S)

  Johnston, Russell (Inverness)

  Richardson, Jo

  Jones, Rt Hon Alec (Rh'dda)

  Roberts, Albert (Normanton)

  Jones, Barry (East Flint)

  Roberts, Allan (Bootle)

  Jones, Dan (Burnley)

  Roberts, Gwilym (Cannock)

  Kaufman, Rt Hon Gerald

  Robertson, George

  Kerr, Russell

  Robinson, G. (Coventry NW)

  Kilfedder, James A.

  Rooker, J. W.

  Kilroy-Silk, Robert

  Roper, John

  Lambie, David

  Ross, Ernest (Dundee West)

  Lamborn, Harry

  Ross, Stephen (Isle of Wight)

  Lamond, James

  Rowlands, Ted

  Leadbitter, Ted

  Ryman, John

  Leighton, Ronald

  Sandelson, Neville

  Lewis, Arthur (N'ham NW)

  Sever, John

  Lewis, Ron (Carlisle)

  Sheerman, Barry

  Litherland, Robert

  Sheldon, Rt Hon R.

  Lofthouse, Geoffrey

  Shore, Rt Hon Peter

  Mabon, Rt Hon Dr J. Dickson

  Short, Mrs Renée

  McCusker, H.

  Silkin, Rt HonJ. (Deptford)

  McDonald, Dr Oonagh

  Silkin, Rt Hon S. C. (Dulwich)

  McElhone, Frank

  Silverman, Julius

  McGuire, Michael (Ince)

  Skinner, Dennis

  McKay, Allen (Penistone)

  Smith, Rt Hon J. (N Lanark)

  McKelvey, William

  Snape, Peter

  Maclennan, Robert

  Soley, Clive

  McNally, Thomas

  Spearing, Nigel

  McNamara, Kevin

  Spriggs, Leslie

  McTaggart, Robert

  Stallard, A. W.

  McWilliam, John

  Steel, Rt Hon David

  Magee, Bryan

  Stewart, Rt Hon D. (W Isles)

  Marks, Kenneth

  Stoddart, David

  Marshall, Dr Edmund (Goole)

  Stott, Roger

  Marshall, Jim (Leicester S)

  Strang, Gavin

  Martin, M (G'gowS'burn)

  Straw, Jack

  Mason, Rt Hon Roy

  Summerskill, Hon Dr Shirley

  Maxton, John

  Taylor, Mrs Ann (Bolton W)

  Maynard, Miss Joan

  Thomas, Jeffrey (Abertillery)

  Meacher, Michael

  Thomas, Mike (Newcastle E)

  Mellish, Rt Hon Robert

  Thomas, Dr R. (Carmarthen)

  Mikardo, Ian

  Thorne, Stan (Preston South)

  Millan, Rt Hon Bruce

  Tilley, John

  Miller, Dr M. S. (E Kilbride)

  Tinn, James

  Mitchell, Austin (Grimsby)

  Torney, Tom

  Molyneaux, James

  Urwin, Rt Hon Tom

  Morris, Rt Hon A. (W'shawe)

  Varley, Rt Hon Eric G.

  Morris, Rt Hon C. (O'shaw)

  Wainwright, E. (Dearne V)

  Morris, Rt Hon J. (Aberavon)

  Walker, Rt Hon H. (D'caster)

  Morton, George

  Watkins, David

  Moyle, Rt Hon Roland

  Welsh, Michael

  Mulley, Rt Hon Frederick

  White, J. (G'gow Pollok)

  Newens, Stanley

  Whitehead, Phillip

  Oakes, Rt Hon Gordon

  Whitlock, William

  Ogden, Eric

  Wigley, Dafydd

  O'Halloran, Michael

  Willey, Rt Hon Frederick

  O'Neill, Martin

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

  Orme, Rt Hon Stanley

  Williams, Sir T. (W'ton)

  Palmer, Arthur

  Wilson, Gordon (Dundee E)

  Park, George

  Wilson, Rt Hon Sir H. (H'ton)

  Parker, John

  Wilson, William (C'try SE)

  Parry, Robert

  Winnick, David

  Pavitt, Laurie

  Woodall, Alec

  Pendry, Tom

  Woolmer, Kenneth

  Penhaligon, David

  Wrigglesworth, Ian

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

  Young, David (Bolton E)

  Powell, Raymond (Ogmore)

  Tellers for the Ayes:

  Prescott, John

  Mr. Frank R. White and

  Price, C. (Lewisham W)

  Mr. Hugh McCartney

  NOES

  Adley, Robert

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

  Aitken, Jonathan

  Baker, Kenneth (St. M'bone)

  Alexander, Richard

  Backer, Nicholas (N Dorset)

  Amery, Rt Hon Julian

  Banks, Robert

  Ancram, Michael

  Beaumont-Dark, Anthony

  Arnold, Tom

  Bell, Sir Ronald

  Atkins, Rt Hon H. (S'thorne)

  Bendall, Vivian

  Atkins, Robert (Preston N)

  Bennett, Sir Frederic (T'bay)

  345

  Benyon, Thomas (A'don)

  Garel-Jones, Tristan

  Benyon, W. (Buckingham)

  Gilmour, Rt Hon Sir Ian

  Bevan, David Gilroy

  Glyn, Dr Alan

  Biggs-Davison, John

  Goodhart, Philip

  Blackburn, John

  Goodlad, Alastair

  Blaker, Peter

  Gorst, John

  Body, Richard

  Gow, Ian

  Bonsor, Sir Nicholas

  Gower, Sir Raymond

  Boscawen, Hon Robert

  Gray, Hamish

  Bottomley, Peter (W'wich W)

  Greenway, Harry

  Bowden, Andrew

  Grieve, Percy

  Boyson, Dr Rhodes

  Griffiths, E. (B'y St. Edm'ds)

  Braine, Sir Bernard

  Griffiths, Peter Portsm'th N)

  Bright, Graham

  Grist, Ian

  Brinton, Tim

  Grylls, Michael

  Brittan, Leon

  Gummer, Selwyn

  Brocklebank-Fowler, C.

  Hamilton, Hon A.

  Brooke, Hon Peter

  Hamilton, Michael (Salisbury)

  Brotherton, Michael

  Hampson, Dr Keith

  Brown, M. (Brigg and Scun)

  Hannam, John

  Browne, John (Winchester)

  Haselhurst, Alan

  Bruce-Gardyne, John

  Hastings, Stephen

  Bryan, Sir Paul

  Havers, Rt Hon Sir Michael

  Buchanan-Smith, Hon Alick

  Hawkins, Paul

  Buck, Antony

  Hawksley, Warren

  Budgen, Nick

  Hayhoe, Barney

  Bulmer, Esmond

  Heath, Rt Hon Edward

  Burden, Sir Frederick

  Heddle, John

  Butcher, John

  Henderson, Barry

  Carlisle, John (Luton West)

  Heseltine, Rt Hon Michael

  Carlisle, Kenneth (Lincoln)

  Hicks, Robert

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

  Higgins, Rt Hon Terence L.

  Chalker, Mrs. Lynda

  Hill, James

  Channon, Rt. Hon. Paul

  Hogg, Hon Douglas (Gr'th'm)

  Chapman, Sydney

  Holland, Philip (Carlton)

  Churchill, W. S.

  Hooson, Tom

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

  Hordern, Peter

  Clark, Sir W. (Croydon S)

  Howe, Rt Hon Sir Geoffrey

  Clarke, Kenneth (Rushcliffe)

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

  Clegg, Sir Walter

  Howell, Ralph (N Norfolk)

  Cockeram, Eric

  Hunt, David (Wirral)

  Colvin, Michael

  Hunt, John (Ravensbourne)

  Cope, John

  Hurd, Hon Douglas

  Cormack, Patrick

  Irving, Charles (Cheltenham)

  Corrie, John

  Jenkin, Rt Hon Patrick

  Costain, Sir Albert

  Jessel, Toby

  Cranborne, Viscount

  Johnson Smith, Geoffrey

  Critchley, Julian

  Jopling, Rt Hon Michael

  Crouch, David

  Joseph, Rt Hon Sir Keith

  Dean, Paul (North Somerset)

  Kaberry, Sir Donald

  Dickens, Geoffrey

  Kellett-Bowman, Mrs Elaine

  Dorrell, Stephen

  Kershaw, Anthony

  Dover, Denshore

  Kimball, Marcus

  Dunn, Robert (Dartford)

  King, Rt Hon Tom

  Durant, Tony

  Kitson, Sir Timothy

  Dykes, Hugh

  Knight, Mrs Jill

  Eden, Rt Hon Sir John

  Knox, David

  Edwards, Rt Hon N. (P'broke)

  Lamont, Norman

  Eggar, Tim

  Lang, Ian

  Elliott, Sir William

  Langford-Holt, Sir John

  Emery, Peter

  Latham, Michael

  Eyre, Reginald

  Lawson, Nigel

  Fairgrieve, Russell

  Lee, John

  Faith, Mrs Sheila

  Lennox-Boyd, Hon Mark

  Farr, John

  Lester Jim (Beeston)

  Fell, Anthony

  Lewis, Kenneth (Rutland

  Fenner, Mrs Peggy

  Lloyd, Ian (Havant & W'loo)

  Finsberg, Geoffrey

  >Lloyd, Peter (Fareham)

  Fisher, Sir Nigel

  Loveridge, John

  Fletcher, A. (Ed'nb'gh N)

  Luce, Richard

  Fletcher-Cooke, Sir Charles

  Lyell, Nicholas

  Fookes, Miss Janet

  McCrindle, Robert

  Fowler, Rt Hon Norman

  Macfarlane, Neil

  Fox, Marcus

  MacGregor, John

  Fraser, Rt Hon Sir Hugh

  MacKay, John (Argyll)

  Fraser, Peter (South Angus)

  Macmillan, Rt Hon M.

  Fry, Peter

  McNair-Wilson, M. (N'bury)

  Galbraith, Hon T. G. D.

  McNair-Wilson, P. (New F'st)

  Gardiner, George (Reigate)

  McQuarrie, Albert

  Gardner, Edward (S Fylde)

  Madel, David

  346

  Major, John

  Scott, Nicholas

  Marland, Paul

  Shaw, Giles (Pudsey)

  Marlow, Tony

  Shaw, Michael (Scarborough)

  Marshall Michael (Arundel)

  Shelton, William (Streatham)

  Mates, Michael

  Shepherd, Colin (Hereford)

  Mather, Carol

  Shepherd, Richard

  Maude, Rt Hon Sir Angus

  Shersby, Michael

  Mawby, Ray

  Silvester, Fred

  Mawhinney, Dr Brian

  Sims, Roger

  Maxwell-Hyslop, Robin

  Skeet, T. H. H.

  Mayhew, Patrick

  Smith, Dudley

  Meyer, Sir Anthony

  Spence, John

  Miller, Hal (B'grove)

  Spicer, Jim (West Dorset)

  Mills, Iain (Meriden)

  Spicer, Michael (S Worcs)

  Mills, Peter (West Devon)

  Sproat, Ian

  Miscampbell, Norman

  Squire, Robin

  Mitchell, David (Basingstoke)

  Stainton, Keith

  Moate, Roger

  Stanbrook, Ivor

  Monro, Hector

  Stanley, John

  Montgomery, Fergus

  Steen, Anthony

  Moore, John

  Stevens, Martin

  Morgan, Geraint

  Stewart, Ian (Hitchin)

  Morris, M. (N'hampton S)

  Stewart, A. (E Renfrewshire)

  Morrison, Hon C. (Devizes)

  Stokes, John

  Mudd, David

  Stradling Thomas, J.

  Murphy, Christopher

  Taylor, Teddy (S'end E)

  Myles, David

  Tebbit, Norman

  Neale, Gerrard

  Temple-Morris, Peter

  Needham, Richard

  Thatcher, Rt Hon Mrs M.

  Nelson, Anthony

  Thomas, Rt Hon Peter

  Neubert, Michael

  Thompson, Donald

  Newton, Tony

  Thorne, Neil (Ilford South)

  Nott, Rt Hon John

  Thornton, Malcolm

  Onslow, Cranley

  Townend, John (Bridlington)

  Oppenheim, Rt Hon Mrs S.

  Townsend, Cyril D, (B'heath)

  Osborn, John

  Trippier, David

  Page, John (Harrow, West)

  Trotter, Neville

  Page, Rt Hon Sir G. (Crosby)

  van Straubenzee, W. R.

  Page, Richard (SW Herts)

  Vaughan, Dr Gerard

  Parris, Matthew

  Viggers, Peter

  Patten, Chirstopher (Bath)

  Waddington, David

  Patten, John (Oxford)

  Wakeham, John

  Pattie, Geoffrey

  Waldegrave, Hon William

  Pawsey, James

  Walker, Rt Hon P. (W'cester)

  Percival, Sir Ian

  Walker, B. (Perth)

  Peyton, Rt Hon John

  Walker-Smith, Rt Hon Sir D.

  Pink, R. Bonner

  Waller, Gary

  Pollock, Alexander

  Walters, Dennis

  Porter, Barry

  Ward, John

  Prentice, Rt Hon Reg

  Warren, Kenneth

  Price, Sir David (Eastleigh)

  Watson, John

  Prior, Rt Hon James

  Wells, John (Maidstone)

  Proctor, K. Harvey

  Wells, Bowen

  Pym, Rt Hon Francis

  Wheeler, John

  Raison, Timothy

  Whitelaw, Rt Hon William

  Rathbone, Tim

  Whitney, Raymond

  Rees, Peter (Dover and Deal)

  Wickenden, Keith

  Rees-Davies, W. R.

  Wiggin, Jerry

  Renton, Tim

  Wilkinson, John

  Rhodes James, Robert

  Williams, D. (Montgomery)

  Rhys Williams, Sir Brandon

  Winterton, Nicholas

  Ridsdale, Sir Julian

  Wolfson, Mark

  Rifkind, Malcolm

  Young, Sir George (Action)

  Roberts, M. (Cardiff NW)

  Younger, Rt Hon George

  Roberts, Wyn (Conway)

  Rossi, Hugh

  Tellers for the Noes:

  Rost, Peter

  Mr. Spencer Le Marchant

  Royle, Sir Anthony

  and Mr. Anthony Berry

  Sainsbury, Hon Timothy

  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 forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  That this House recognises the realism of the Government's energy policy and welcomes the renewed vigour with which the nation's energy resources are being developed.

  Rate Support Grant (Scotland)
  10.14 pm
  The Secretary of State for Scotland (Mr. George Younger): I beg to move,
  That the Rate Support Grant (Scotland) Order 1980, a copy of which was laid before this House on 18 December. be approved.
  As the House knows, it is essential in the national interest that public expenditure should be reduced. Local authority expenditure is a large and important component of this. Indeed, local authority current expenditure in Scotland represents some 40 per cent. of public expenditure for which I am responsible. The upward trend in local authority current expenditure is a matter of acute concern, especially the prospect of substantial increases in some local authority spending plans. Once again I commend the wise counsel offered by the right hon. Member for Glasgow, Craigton (Mr. Millan) in December 1976 to the effect that local authority staff numbers should not have increased and that such increases in expenditure on particular services as local authorities desired should have been offset by expenditure reductions elsewhere. Of course we all want more services in many fields, but to produce these, however desirable they may be, at the expense of ruining national or local finances would be irresponsible folly.
  It is quite ridiculous to suggest that the reductions that I am calling for will decimate local services. If only what I have asked for is achieved, it could bring spending under this order only to little above the level actually spent in the year 1977–78. I might be mistaken but I do not recall the right hon. Member for Craigton telling us in that year that the level of spending which he was allowing was in any way inadequate.
  Moreover, my proposals allow for improvements, for example in education—the largest single service in this context. My proposals for 1981–82 allow for pupil teacher ratios falling from 23·3:1 to 21·9:1 in primary schools, and from 15·4:1 to 14·7:1 in secondary schools compared with the settlement in 1977–78. What I am asking local authorities to do is to cut back on the growth since 1977–78. That means this year a reduction in aggregate expenditure to a level 2·7 per cent. lower than that on which the 1980–81 settlement was based. The reduction in local authority expenditure for Great Britain as a whole is 3 per cent.
  I have been able to ask for a lower reduction in the current expenditure of Scottish local authorities by contributing some savings from my own expenditure within the Scottish block to ease the burden on them. The Convention of Scottish Local Authorities has been comparing this reduction, not with last year's expenditure but with its own initial budgets for 1980–81. As the House knows, these were far higher than could possibly be afforded, and I have asked local authorities to contain their expenditure this year to a level consistent with the settlement. I am glad to say that authorities responsible for the bulk of the expenditure are taking active steps to do so, and I urge all others to do so without delay.
  At this point I pay tribute to all authorities which have been doing everything in their power to follow the Government's advice since we assumed office and which
  348
  have planned for moderate levels of expenditure in the current financial year. I warmly commend their sense of responsibility, their clear perception of the public interest and the difficult task that they are taking on. Some have produced 1980–81 budgets within the indicative guidelines which we produced. Many others exceeded the guidelines only marginally and have conducted themselves with great good sense. I trust that in the outturn their expenditure will demonstrate this.
  There is another side to the coin. Some authorities chose, in 1980–81, to ignore the Government's advice and planned for significant growth in services which, however desirable in benign economic circumstances, is unjustifiable at the present time. Thus, total expenditure planned by authorities was initially about 4·9 per cent. above the level proposed in the 1980–81 grant settlement. After consultations with the convention I understand that the prospective excess has been moderated since many authorities appear to have heeded my advice in the course of the year. But any authority which fails to do so will face a commensurately more difficult task in reducing expenditure in 1981–82. It will have only itself to blame for that problem if it meets it.
  The Government will not flinch from taking measures to bring the expenditure of such authorities into line with national economic requirements. My proposals to reduce grant progressively to authorities which plan for an excessive and unreasonable level of expenditure are currently subject to debate in proceedings on the Local Government (Miscellaneous Provisions) (Scotland) Bill. I would add only this: subject to parliamentary approval, will, if it should prove necessary, use those powers to reduce grant selectively with resolution and with vigour. Besides, I already have powers to act on outturn expenditure if it is excessive and unreasonable.
  The Government's main concern is with the aggregate level of expenditure planned and incurred by authorities. But I must also pay close attention to staff costs, which account for nearly 70 per cent. of total current expenditure. Recent trends must give everyone considerable cause for concern. In September 1980, authorities as a whole were employing some 2,000 staff more than in September 1979, 4,000 more than when this Government assumed office and no fewer than 15,000 more than in December 1977. These are overall totals. I am glad to say that some authorities are acting more reasonably. For instance, Strathclyde regional council has effected manpower reductions since last year, although there is still a net increase since the Government first sought staff economies.
  On the other hand, it is noteworthy that nearly half the total increase between September 1979 and 1980 is attributable, by its own public statements—if nothing else—to the eccentric policies followed by one particular authority. At a time when the private sector as a whole, and virtually every individual, is having to exercise restraint and good sense in expenditure matters, a continuing increase in the local authority payroll, the costs of which are met entirely by the taxpayer and the ratepayer, cannot be justified, and cannot fail to cause severe damage to businesses and loss of jobs, not to mention the unacceptable burden that it will place on individual ratepayers.
  Mr. Dennis Canavan: On the matter of loss of jobs, does the Secretary of State realise

  349
  that there are already more than ¼ million people unemployed in Scotland? What effect will the rate support grant have upon unemployment arising from local government redundancies? Has he any estimate of that? Does he not realise that this niggardly rate support grant order will lead to further unemployment in Scotland?
  Mr. Younger: Further increases in staff on the lines of what has taken place, let alone any decreases, will result in literally thousands more redundancies in the private sector, which is the only thing that pays the cost of all these expenditures. The hon. Gentleman must face the fact that every job in the public sector is paid for by someone in the private sector. That is what is putting jobs in his and other Members' constituencies out of being at the present time.
  Mr. John Maxton: Does the right hon. Gentleman accept that it is not only in the public sector and local authorities that redundancies will take place as a result of this rate support grant? If local authorities have to cut back their expenditure, many small private companies, which this Government were elected to support, will go to the wall, with further redundancies, because they rely almost entirely upon local authority business to continue?
  Mr. Younger: With respect, the hon. Gentleman ought to speak to some small companies. What is worrying them more than anything else at the moment is the rising level of rates being forced upon them by irresponsible authorities. If the hon. Gentleman has not discovered that, he had better discover it quickly, because many businesses of that kind will be put out of business unless rate increases are kept at a reasonable level.
  I turn to the main provisions of the order. The rate support grant for 1981–82 will be derived from a total of relevant expenditure 2·7 per cent. less than the corresponding figure in 1980–81—£2,458·5 million at November 1980 prices. Before determining that figure I undertook a painstaking review, after consultation with the Convention of Scottish Local Authorities, of the scope for reductions in individual services. My conclusions on individual services are not binding on authorities which may incur current expenditure in accordance with local priorities. My overriding concern is that the aggregate of expenditure should not exceed the overall provision on which the settlement is based. Nevertheless, I hope that the proposals in paragraphs 7–17 and in appendix C to the report on the order will help authorities to determine expenditure levels for individual services and to contain the aggregate level.
  The Government propose that a substantial part of the overall reduction should be found in provision for education. But it would be wrong to infer from that that I envisage a reduction in standards. As noted in paragraph 8, the expenditure reduction is less than the reduction indicated by falling rolls, to which it is mainly attributable. Thus we will be making considerable savings in total expenditure but actually spending more per pupil and still further improving the pupil-teacher ratio, as I described a few minutes ago.
  Otherwise, substantial reductions are concentrated in less essential services, such as leisure and recreation, and in provision for miscellaneous services. A substantial reduction in planning expenditure is attributable mainly to the introduction of charges. Provision for law, order and protective services is maintained at the 1980–81 level,
  350
  reflecting the high priority that this Government accord to this important factor. Provision for social work is increased by 1 per cent.
  The underlying theme may be summarised in this way. The overall reduction is vital in the national interest at a time when our national resources are declining, and both private individuals and the private sector are all having to face up to saving money wherever they can. It would be absurd and most unfair for local authorities to be exempted from making savings similar to those which everyone else is having to make. But within this it is perfectly possible—and this is what we have done—to concentrate savings on the less essential and preserve spending on the essential services to a very great extent. I have no doubt that this general order of priorities will have widespread public support.
  The percentage by which grant is calculated for relevant expenditure reflects an actual reduction compared with 1980–81 of 1 per cent. A further adjustment of 0·8 per cent replaces an ad hoc abatement made since 1978 in respect of rates on local authority properties. This is COSLA's preferred solution. It will have no effect on the grant received by local authorities. That gives a grant percentage of 66·7 per cent. and aggregate grants for 1981–82, based on expenditure at November 1980 prices, will be £1,639·8 million. Of this total, rate support grant will account for £1,503·1 million and specific grants for £136·7 million.
  As in previous years, there will be a cash limit on additional grant for 1981–82 towards pay and price increases beyond November 1980 prices. The cash limit figure of £94 million includes provision for increases of no more than 6 per cent. on average in pay settlements in this round and provisionally for the next round, and for price increases of no more than an average of 11 per cent. between 1980–81 and 1981–82. Total grant payable through increase orders may be above or below the figure of £94 million to take account of variations in expenditure due to changes in interest rates, which are not subject to cash limits. Provision is also made for the payment of additional grant towards cost increases for 1979–80, amounting to £24·5 million, and for 1980–81, amounting to £203·1 million.
  Mr. John Home Robertson: The Secretary of State referred to the wage increases being allowed in the public sector under the present policy, increases of 6 per cent. Would he care to comment on the fact that one of the local authorities that he would term reasonable, though I would disagree—the Borders regional council—has already announced that a rate increase of 18 per cent. is likely, which is three times the percentage of the pay policy that he is applying in the public sector?
  Mr. Younger: The hon. Gentleman is magnificently confused on all matters contained in his question. First, the 6 per cent. is the amount that the Government can contribute towards local authorities' pay bills. It is the amount that the public can afford to spend in assisting local authorities towards that expenditure. Local authorities have the discretion to decide what they pay and what they provide from their own resources if they wish to do so. Secondly, I am extremely surprised that the hon. Gentleman, of all people, is complaining that the Borders region has announced a tentative rate increase of about 18 per cent. when the other local authority within his

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  constituency is talking today about positively staggering rate increases of 40 per cent. or more. If the hon. Gentleman wants to exercise his undoubted debating skills on anyone, he might try them on his local friends before he tries them on anyone else.
  My arrangements for distributing grant in 1981–82 are generally similar to those adopted in 1980–81. Domestic relief will remain at 3p in the pound, and the scheme for special assistance to authorities affected by oil-related development will continue with a first payment in 1981–82 of £10·8 million. I have decided again, as for 1980–81, to reduce the resources element entitlement, which is affected by individual decisions on rating levels, to reduce any possible disincentive to economy within the grant arrangements.
  The formula for distribution of the needs element—that is the general portion—will be as endorsed by the convention during my consultations with it, subject to minor adjustments consistent with the agreed objective of stability.
  The estimated effect of my proposals on the relative position of individual authorities and of whole regions is, with a few exceptions, not substantial provided that the present pattern of relative rate levels is maintained. Thus an authority which budgets for substantial increases in expenditure and which rates accordingly will receive less resources than it would have received under an unchanged ratio, so that a lower percentage of its total expenditure will be met by grant.
  As previously, I do not propose to offer a firm prediction of the average level of rate increases in 1981–82, a custom followed by my predecessor as well. The level will depend entirely on decisions reached by individual authorities when they complete their budgets in the course of the next few weeks.
  Dame Judith Hart: How does the right hon. Gentleman reconcile philosophically the Government's monetarist policies and commitments with their commitment to individual democracy and the freedom of local government? The two approaches are totally in conflict.
  Mr. Younger: If I may say to the right hon. Lady—
  Mr. John Home Robertson: Answer the question.
  Mr. Younger: Indeed, I propose to do so. I am grateful to the hon. Gentleman for his advice. I am not quite sure what the right hon. Lady means when she refers to monetarist policies. However, it is clear that it is the role—it will remain the role under all Administrations—of the central Government to decide how much the central Government and the taxpayer can afford to spend in assisting local authorities to do their job. That is what I am doing. That is our job. That is our responsibility. It is the local authorities' responsibility to decide beyond that what they think their ratepayers can afford to provide. Although I do not agree with the decisions that many authorities take, they must stand by their decisions and they must take the consequences if they rate so excessively that their ratepayers reject them, as I am sure that many of them will.
  Mr. Robert Hughes: I have listened to the right hon. Gentleman with great care. No one would disagree that the central Government have a
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  responsibility to make available whatever they can afford and to leave the rest to local authorities' judgment. However, I understand that he is changing the formula of the needs element so that if authorities go beyond the guidelines and cash limits he will be able to penalise them for exercising their judgment. How does he square that settlement?
  Mr. Younger: First, it is nothing to do with the needs element. I am changing the formula because I cannot see why the public purse should subsidise directly those authorities that spend the greatest amounts at the expense of prudent authorities that take care not to over-spend and not to put excessive strain on their ratepayers. It would, indeed, be a Gilbert and Sullivan operation if we were to give extra help to those which were the most extravagant, and I do not think that anyone would want that.
  Mr. Ernie Ross: The Secretary of State says that he wants to help those local and regional councils which have carried out his policies. I quote from the Dundee Courier and Advertiser of last Monday:
  "Mr. Ian Mackie, the Tory council's leader of the administration, was in an angry mood last night about what he termed the 'completely inadequate' allocation of £103·5 million from the Government."
  That is a Tory-controlled region, having carried out the right hon. Gentleman's policies, saying that his allocation is totally—
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. Interventions should be brief.
  Mr. Younger: I am not quite sure what the hon. Gentleman is saying, but if he has overnight suddenly become a great supporter of the policies of Tayside regional council I shall be extremely pleased, because it is one of the best and most responsible local authorities in its expenditure. That is not just my view. I am pretty certain that it is the view of the right hon. Member for Craigton, because that authority gave him more help than did half the Labour-controlled authorities in Scotland when he was in my position.
  As for what the hon. Gentleman's reference to what was said in the newspapers this week, as I understand it Tayside regional council has not yet finalised its budgets, and the remarks reported in the newspaper referred to guidelines. Tayside's guidelines are in the same position as everyone else's: they are merely guidelines, and they are not anything that anyone has to achieve or stick by. They are guidelines intended to help. As I say, if the hon. Gentleman is now paying tribute to Tayside for its responsible attitude to local spending, I am glad that he is at last doing so. It is about time.
  Expenditure is the main key to the rate levels that we expect to see in the coming year. I have given authorities a positive lead in this matter in the terms of the grant settlement embodied in the order. Provided that authorities budget reasonably in line with the volume of expenditure assumed in the settlement and pursue a moderate policy towards wage settlements, there will be no need for undue rate increases, and the average level of increase should be considerably below that imposed by authorities in 1980–81. But if authorities plan for a substantially higher volume of expenditure and contemplate average increases in the earnings of local authority employees substantially beyond 6 per cent., higher rate increases will be inevitable. It is accordingly for authorities as employers

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  to reach their own decisions on the level of individual settlements with a clear understanding of the Government's position, and how much the Government can afford to give them in the way of help. If they adopt the easy option of higher overall settlements, they will have to accept full responsibility for the consequences which will fall upon their ratepayers.
  The general theme of what I have said has been that the settlement embodied in the order is fair and realistic, striking a good balance between the interests of the recipients of local authority services on the one side, and the national economic interest, on the other. It envisages a generous, although reduced, level of expenditure by authorities. It proposes a judicious disposition of reductions between services. It offers a realistic level of support by the taxpayer. It features a carefully balanced system of distributing grant, taking due account of the views advanced by the Convention of Scottish Local Authorities. It enjoins authorities to accept a due measure of responsibility for controlling costs—
  Mr. Robin F. Cook: Will the right hon. Gentlemen give way?
  Mr. Younger: Yes, of course.
  Mr. Cook: I am much obliged. The right hon. Gentleman will recall that in his answer to my hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson) he said that it was for the local authorities to decide how much they could pay in wage settlements with their employees, and he added that that was a matter for them to resolve, taking into account their rate settlement.
  The right hon. Gentleman cannot have it both ways, saying that it is a matter for the local authorities themselves, and them insisting, as he was obviously doing in the most recent passage of his speech, on a 6 per cent. settlement. Will he come clean and give the House—we are entitled to it—his own view on whether the local authorities should have settled on an 18 per cent. increase for the firemen or whether they should have settled, as appears to have been the drift of his last paragraph, for 6 per cent? The House must—
  Mr. Deputy Speaker: Order.
  Mr. Younger: I shall try once more to explain the precise position to the hon. Gentleman and to others who are obviously confused. It is my duty and my task to make clear what the public purse can afford to pay to help local authorities with their wage settlements. That is my responsibility, and I have laid down that the public purse can afford to pay for wage increases of 6 per cent. It is for local authorities to decide whether they wish to choose that figure, a figure below that or a figure above it. It is for them to provide the resources that are necessary, taking into account how much the Government can afford to pay to help them.
  Whatever else one may say, and whether or not one agrees with it, that is a perfectly clear statement. I do not think that anyone could be in any doubt that it is the Government's contribution about which I am talking, and it is my responsibility—and only mine—to say what the Government can afford to do to help local authorities.
  Mr. Dick Douglas rose—
  Dr. M. S. Miller rose—
  Mr. Younger: I have to choose between Scylla and Charybdis I shall choose Scylla.
  Mr. Douglas: I am not sure whether I should be flattered by the Secretary of State's remark.
  Is he saying that in the light of the expertise that is available to him, he is entitled to take a view of the national economic resources that inhibits a growth of wages and salaries to 6 per cent., and that the local authorities are entitled to take an entirely different view on the basis of their resources? Through an accident of this Parliament, he wills the end of the services that can be provided in many cases by the local authorities. Why is he inhibited from willing the means also?
  Mr. Younger: I am not certain where that question started and finished. The hon. Gentleman will appreciate more easily than most that two different components make up the total amount of what it will cost local authorities to pay their employees. All I am obliged to do is to give a clear indication in good time of how much the Government can afford to pay to help local authorities. I have done that. They know what it is, and they can make their decisions with that in mind.
  Dr. M. S. Miller rose—
  Mr. Younger: I am sorry, I must finish my remarks. [HON. MEMBERS: "Give way."] If I give way, it will prevent other hon. Members from speaking. [Interruption.] I give way.
  Dr. Miller: Does not the Secretary of State appreciate that, cutting through all the rhetoric and the fine phrases, whatever happens there will be a cutback in the essential services that local authorities provide? Does not the right hon. Gentleman appreciate that that is despicable on a matter to which the Government should be contributing in this International Year of Disabled People?
  Mr. Younger: As I have explained, there is no reason why any essential services should be abolished or removed because of this settlement. If local authorities decide in their priorities that essential services should suffer it is their decision. I have made it perfectly clear, and it is clear from the fact that the amount of money is the same or rather more in real terms than the Secretary of State provided in 1977–78. No one can say that local authorities must cut essential services. A properly organised local authority will be able to make the necessary economies by cutting the less essential services.
  Of course this settlement involves a saving of money. Of course it involves cuts on some of the activities of local authorities. They are in no different a position from that of everyone else in the country—individuals, businesses, everyone who is going through a period of economic difficulty. I see no reason whatever why local authorities should be exempted. The good and efficient local authorities are having no difficulty in making cuts.
  I hope that the House will now approve the order.
  10.45 pm
  Mr. Bruce Millan: This is a short debate and, therefore, I shall not take time by complaining at length about the timing of it. It is, however, highly unsatisfactory that we should be having first the rate support grant debate and then, following that, the housing support grant debate at this time of night. We have complained about that, we consider it to be highly unsatisfactory and, speaking for the Opposition, I am

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  absolutely determined that we shall not have another year in which we shall debate these extremely important matters at this ridiculous time of night.
  As it is a short debate, I shall try to confine my remarks as much as I can, but I want to deal with the question in which every ratepayer, whether he is a householder or an industrial or commercial ratepayer, is most interested—namely, what is to be the increase of rates in 1981–82.
  When we debated last year's rate support grant order, about a year ago, the Secretary of State, as he has done tonight, tried to convince the House that increases in rates would be at comparatively modest levels, but he refused to give a specific forecast. I gave forecasts a year ago. I said that I could not see how rates in Scotland as a whole could come out with an average increase of anything less than between 25 and 30 per cent. and that I believed that in many authorities it would be considerably more. In the current year, the average rate increases in Scotland have been no less than 32 per cent.
  I put on record now that it is my view that the ratepayers of Scotland, because of this rate support grant settlement, and directly on the responsibility of the Government, are facing in 1981–82 rate increases which will again certainly approach the 32 per cent. that they have already borne in the current year. The responsibility is absolutely that of the Government. The Secretary of State can try as he will to place the responsibility on profligate local authorities, but the average increase in Scotland as a whole in 1981–82 will be a savage increase, and that will severely affect not only domestic ratepayers but industrial and commercial ratepayers.
  Why is there to be this massive increase in the next year? First, there is the cut in the percentage grant of only 1 per cent. That seems modest, but it will mean a 3 per cent. increase at least in rates in Scotland.
  Secondly, there is the normal inflation rate—because, whatever the rate of inflation, other things being equal, the rates will go up by something like the same percentage—and my estimate is that that will be at least another 10 per cent. increase, a very modest estimate, in the forthcoming year. It may well be a good deal more than that.
  Thirdly, and even more important, the rate increases will be very substantial because the relevant expenditure on which the rate support grant is being paid is completely unrealistic. What is more, the Secretary of State, despite all his blustering tonight, knows that it is completely unrealistic. He talks about a decrease in relevant expenditure of only 2·7 per cent., but that is, of course a decrease on what he was told last year would prove a completely unrealistic figure. It is a reduction of 2·7 per cent. on the artificial figure that was in last year's rate support grant order. We know, however, that if we compare the relevant expenditure on which grant is being paid for 1981–82 with the actual local authority budgets of the current year, the reduction is not 2·7 per cent.; it is 7·2 per cent.
  I state now absolutely categorically that there is not the slightest chance of the local authorities in Scotland reducing their relevant expenditure in 1981–82 by 7·2 per cent. or anything like it, compared with the figures for which they have budgeted in the current year. In so far as they are not able to make that reduction—there is not the
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  slightest chance that they will come anywhere near that, as the Secretary of State knows perfectly well—the burden will fall exclusively on the ratepayers and will mean very considerable increases in rates.
  The Secretary of State would like to pretend that the problem has been caused by a lot of profligate authorities. He would like to pretend that if they made a little effort they could reduce their expenditure to the figures that he has provided for in the order. I do not believe that for one minute. What is more, the Convention of Scottish Local Authorities, which includes Conservative-controlled local authorities, does not believe that.
  Local authorities have a much better record than the Government—including this Government—of keeping public expenditure under control. There is a lot of humbug and hypocrisy when the Secretary of State talks about the manpower figures. He is fond of boasting in a self-righteous way that the Scottish Office has kept down its manpower figures. However, the right hon. Gentleman always excludes the prison service and State hospital, which are the only departments within the Scottish Office that are directly involved in providing services to Scottish ratepayers
  It would be very nice if local authorities could, for example, exclude from their manpower figures teachers, firemen, social workers and those who repair council houses. Local authority manpower figures would be very different if such direct services were excluded from the calculations. Since 1 April 1979, manpower for direct services in the Scottish Office has increased. There has been a minimal reduction in overall manpower in the Scottish Office. If the bureaucrats, administrators and those who sit in offices are excluded, manpower in the direct services for which the right hon. Gentleman is responsible—the prison service and State hospital—has increased since May 1979. The Secretary of State does not seem to know that. He is asking for figures to be supplied from the Box.
  I am complaining not about that increase but about the self-righteous way in which the Secretary of State criticises local authorities. They also provide direct services to ratepayers. They supply teachers, policemen, firemen, social workers and so on. In principle, I do not disagree with keeping public expenditure under control, but the record of Scottish local authorities is much better than that of the Government.
  These major rate increases have been imposed not only—as the right hon. Gentleman knows—because the expenditure on which the grant is based is unrealistic but because the inflation factors for 1981–82 are as dishonest as they were for 1980–81. Indeed, the situation in 1980–81 was a major item in the debate on last year's rate support grant order. Local authorities tend to overbudget and to underspend, but those authorities that took the right hon. Gentleman's inflation factors for the current year into account when fixing the rates will face massive deficits at the end of the year. Those deficits will have to be carried forward into 1981–82. That is a disaster for Scottish ratepayers.
  In 1980–81, the cash limit amounted to £194 million. If COSLA's figures are in dispute or are inaccurate, the Secretary of State can let us know at the end of the debate; but he will not say that they are inaccurate, because they are beyond dispute. According to COSLA's figures, the underlyig increases for inflation represented by the cash limits fixed for 1980–81 amounted to about £307 million.

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  In 1980–81, actual inreased costs which are completely outside the control of local authorities were £390 million, even if increased loan charges are not taken into account. Every penny of that additional expenditure has fallen directly on the ratepayers. The Government have swindled local authorities out of their share of that increased expenditure.
  One does not have to rely on the COSLA figures. One can look at the Secretary of State's own figures in the rate support grant order. I invite Conservative Members, if they are sceptical, to look at page 11 of the report on the order. They will see that the figures for 1981–82, when compared at November 1979 and November 1980 prices, show inflation that local authorities have had to pay over the current year of rather more than 25 per cent. The factor for which allowance was made in the rate support grant settlement last year was only 13 per cent. plus an undisclosed figure for comparability settlements in pay.
  This massively increased inflation is the responsibility of the Government. It is not the responsibility of the local authorities. Yet it has been paid by the local authorities and, therefore, by the ratepayers of Scotland in 1980–81. What has happened in 1980–81 will happen again in 1981–82 because of the unrealistic cash limit figures written into the order for 1981–82. The Secretary of State gave the figures. For wages and salaries, the figure is 6 per cent. For other expenditure, the figure is about 11 per cent.
  I should like to examine the figure for wages and salaries to see what it means in reality. The commitments that the local authorities already have to take on board following the fire service settlement, the manual workers's settlement and other settlements—
  Mr. Canavan: And the police.
  Mr. Millan: No, not the police. I am coming to the police. My hon. Friend should be patient. The commitments already taken on by the local authorities for 1981–82 for the fire service and for manual workers mean that the money left available in this rate support grant for additional wages and salaries for 1981–82 amounts, on average, to only 4½ per cent. That takes account only of the settlements already made. Does the Secretary of State honestly believe that on 1 April 1981 the teachers will settle for 4½ per cent.?
  Mr. Canavan: No chance.
  Mr. Millan: Does the right hon. Gentleman believe that the policemen, in the autumn of 1981, will settle for 4½ per cent.? Will he answer the question? Will his Under-Secretary of State answer the question? There is not the slightest chance of either the teachers or the policemen settling later this year in their annual settlements for salary increases of anything like 4½ per cent.
  Mr. Younger: Will the right hon. Gentleman remind the House what was the cash limit for pay in his last settlement? How nearly accurate did it turn out to be?
  Mr. Millan: There were no cash limits under the Labour Government that ever left local authorities with a massive burden placed on the ratepayers. Will the Secretary of State answer the question I have put? Does he expect the teachers and the policemen to settle in 1981 for a 4½ per cent. salary increase? I will give way again. I have given way once. Will he give the answer?
  Mr. Younger: The right hon. Gentleman knows that I do not take part in these negotiations. I have tried to
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  explain several times that the local authorities negotiate in these matters. I have let them know, as the right hon. Gentleman did before me, how much the Government can afford to pay to help them with this.
  Mr. Millan: That is an absolutely appallingly dishonest answer. [HON. MEMBERS: "Oh."] First, the Secretary of State takes part in the teachers' negotiations. He is part of the management side in them. Does he expect the teachers or the police to settle for 4½ per cent? Of course not. The result of whatever these settlements are beyond 4½ per cent. will be a further burden on the ratepayers. That is his direct responsibility. That is the reality of the situation. The Secretary of State may wriggle as much as he wishes, but the responsibility is his.
  Mr. Barry Henderson rose—
  Mr. Millan: It is not the responsibility of the hon. Member for Fife, East (Mr. Henderson). The Secretary of State will not answer these questions, but he knows that, as the result of the cash limits in this RSG settlement, these additional salary settlements which will be reached in 1980–81 will mean that vast sums will fall directly on the ratepayers and will be an important contributory factor in the very large increases in rates that we shall see in 1981–82.
  Mr. Henderson: Will the right hon. Gentleman give way?
  Mr. Millan: No. I have great regard for the hon. Member for Fife, East.
  Mr. Henderson: Well, give way then.
  Mr. Millan: No. The hon. Member is not yet the Secretary of State—not that he would not be an improvement.
  We are having artificial figure piled on artificial figure. The figures in this order for 1981–82 bear no relation whatsoever to the reality of the situation facing local authorities and ratepayers in Scotland, and they bear no relation to the burdens that will be placed on the ratepayers of Scotland in 1981–82.
  I shall not deal in detail with the commentary on particular services outlined in the report on this settlement. I dare say that some of my hon. Friends will want to deal with education and a number of other services. However, looking at the commentary and at what the Secretary of State asks us to believe he expects will happen with regard to these services in 1981–82, the unreality and artificiality are evident.
  The result for 1981–82 will be as it has been for 1980–81. I repeat: the responsibility is the Government's. It is that we shall have massive rate increases in the forthcoming year. They will vary between areas and between regions. I believe that the biggest increases in the current year will be at regional rather than district level. I dare say that the Secretary of State and his cohorts will take what little comfort they can from the particular authorities at regional or district level which manage to keep rate increases next year down to a reasonable level. But the fact is that the overall Scottish position in the forthcoming year, taken as a whole, will be a very considerable increase in rates, to something approaching the massive and savage increases of more than 30 per cent. that we have had in the current year.

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  That will be accompanied by poorer services in education, for the elderly, for the disabled and so on. [Interruption.] We can have it both ways. That is the problem. We are having higher rates and poorer services.
  To add insult to injury, we have the provisions in the Local Government (Miscellaneous Provisions) (Scotland) Bill, which will put penalties on local authorities which try to preserve services at a reasonable level. Local authorities will be acting perfectly legitimaately, because there is no economic or other reason for the kind of reductions in public expenditure for which the Secretary of State is asking. The local authorities will be faced with penalties under that Bill.
  I am glad to see that the Convention of Scottish Local Authorities, including Conservative-controlled authorities, is unanimously against the Bill's provisions. They rightly see it as an attack on local democracy and local decision-making. If the Secretary of State thinks that the penalty powers will be a boon to ratepayers or if the ratepayers think that the powers will produce anything good for them, they could not be more wrong. If the penalties are applied—I sincerely hope that they will not be—they will increase rates by even greater amounts than they will go up in any case as a result of the order. The penalty will fall directly on the unfortunate ratepayers.
  Mr. David Myles: Will the right hon. Gentleman give way?
  Mr. Millan: I am about to finish.
  Mr. Myles: On a point of order, Mr. Deputy Speaker—
  Mr. Deputy Speaker: The right hon. Gentleman is refusing to give way, and I fail to see how there can be a point of order in that.
  Mr. Myles: On a point of order, Mr. Deputy Speaker. I accept your ruling, but the right hon. Member for Glasgow, Craigton (Mr. Millan) is misleading the House.
  Mr. Deputy Speaker: That is not a point of order.
  Mr. Millan: If misleading the House were out of order, the Secretary of State would not have been allowed to speak at all.
  For domestic ratepayers the order is another burden placed on their shoulders. The ordinary householder has seen the tax concessions of the first Budget of 1979—if he was fortunate enough to receive any of them—disappear, as the Government now admit. If he is a council tenant, he has seen his rents forced up by unprecedented amounts. If he is an owner-occupier, he has seen his mortgage increased to unprecedented levels. He has seen the inflation rate maintained at 15 per cent. and gas and electricity prices pushed up and he faces, for the second year running, massive increases in rates.
  If he is a commercial or industrial ratepayer, he is already suffering from high interest rates, overvalued sterling and the deflationary policies of the Government. Indeed, he is lucky if he has escaped bankruptcy and unemployment. Now, he will be faced with massive increases in his rates. I am not surprised that he is worried about the prospects for 1981–82. The order will add to the havoc of bankruptcies and unemployment that we are already suffering in Scotland.
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  I say to every domestic ratepayer and to the House that the disaster has been created by the Government, and, typically, the order has been brought forward, as was last year's order, with the duplicity and dishonesty which is characteristic of the Secretary of State. That is why we shall vote against it.
  11.8 pm
  Mr. Allan Stewart: The right hon. Member for Glasgow, Craigton (Mr. Millan) complained about the timing of the debate. His memory seems to be rather short and I remind him that the 1977–78 order was considered on 22 December 1976 at 11.40 pm and the rate support grant orders for England, Scotland and Wales for 1979–80 were put together after a four-hour debate on a Thursday night—14 December 1978. The first speech on the Scottish rate support grant order was by the hon. Member for Glasgow, Maryhill (Mr. Craigen), who began at eight minutes past midnight on the Friday morning. So let us knock that piece of hypocrisy on the head.
  We have heard a predictable speech by the right hon. Member for Craigton. He said that cuts were impossible without cutting services, and so on.
  Mr. Harry Ewing: What about the new clause to the Local Government Bill?
  Mr. Stewart: I will tell the hon. Gentleman about the new clause to the Bill whenever he wants a discussion on it, but it is not relevant to this debate.
  The right hon. Member for Craigton and I have one thing in common—we live in the same area of Glasgow, in Dumbreck. A few streets away from my modest semidetached and the right hon. Gentleman's luxury flat lives the Lord Provost of Glasgow. I am sure that the right hon. Gentleman will agree that Dumbreck and Pollokshields are an attractive area in which to live. It is quiet, it is desirable, it is near the city centre, with many nice respectable people, most of whom vote Tory. It has one disadvantage—it is very difficult to get one's Sunday newspapers delivered. The House will hope that that is not too much of a nuisance for the right hon. Gentleman. It is certainly not too much of a nuisance for me. And it is no nuisance at all for the Lord Provost of Glasgow, because he has his newspaper delivered by the council chauffeur. I will start believing all this stuff and nonsense about a financial crisis in Scottish local government when the Lord Provost of Glasgow has to get his own Sunday paper.—[Interruption.]
  Mr. Deputy Speaker: Order. The hon. Gentleman must realise that sedentary observations are not permitted. This debate must finish at 11·44 and the more time that is taken up by noise, the less we shall have for debate.
  Mr. Stewart: Thank you, Sir.
  I turn now to the comrades of Renfrew district council. It seems that they have trouble with their Sunday newspapers as well, but they are adopting a different solution. They propose a scheme under which they personally get cheap loans at the expense of the ratepayers to buy motor cars. That is outrageous, and I ask my right hon. Friend whether it is legal.
  On more general points, my right hon. Friend has already mentioned manpower. Scottish local authorities have increased their manpower by 2,000 in one year,

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  whereas English local authorities have cut theirs by 35,000 or 40,000. This is not due to an increase in police manpower, as is sometimes said. The increases have been, for example, in social services. In the past year, Scottish local authorities have added 400 people in recreation and leisure. I have nothing against recreation and leisure: I like it myself. But one must ask what these people are doing. Why has employment in technical services increased by 20 per cent. over the past year? Why have direct works departments increased their employees by 200 in the last year?
  The local authorities complain that the base for calculation is wrong. They say that the Government should not have continued with their original base, their estimates for 1981, but should have taken the local authorities' budgets instead. If local authorities had listened to Ministers when we came to power and responded properly and responsibly, they would not have the problems that they now claim they have.
  The 6 per cent. figure that has been much criticised by the hon. Member for West Stirlingshire (Mr. Canavan) from a sedentary position—I do not wish to tempt him to rise—is entirely reasonable. Given the difficulties faced by the private sector, many people working in it will settle for less than 4 ½to 6 per cent. in the forthcoming year. In the light of national economic circumstances—
  Mr. Norman Hogg rose—
  Mr. Stewart: I have to listen to the hon. Member for Dunbartonshire, East (Mr. Hogg) every Tuesday and Thursday morning. I shall forgo the pleasure of allowing him to intervene now. The settlement is reasonable and fair. The sacrifices, such as they are, are not the maximum possible, but the minimum necessary, if local government in Scotland is to make a reasonable contribution to the national recovery that we all wish to see.
  11.16 pm
  Mr. Donald Stewart: I am glad of the opportunity to make a short contribution. I do not think that the Secretary of State will regard any Opposition Member who is not called as consenting through his silence. The first part of the speech of the hon. Member for Renfrewshire, East (Mr. Stewart)—it later became a serious contribution—made me worry whether I should stand up in case Hansard attributed the speech to the wrong Stewart when reporting the debate.
  The net result of the order is that Scottish local authorities will be faced with incredible difficulties in trying to maintain services—including housing—and far more so in being able to improve them. It is all very well for the Secretary of State to talk about not cutting essential services. There is no way round that. Authorities will be obliged to do so, and in many cases the services will fall back severely.
  Mr. Alex Pollock: I know that the right hon. Gentleman wishes to put the whole picture before the House. Is he aware that Grampian region's social committee last week voted to increase the home help service and certain other aspects of social care by £231,600?
  Mr. Stewart: I am prepared to accept that. Grampian region is in a more fortunate position than many other parts of the country. If the hon. Gentleman wishes, I can give the other side—criticism of the Scottish office and the
  362
  Government—but that would be unfair to other hon. Members who are waiting to speak. I am keeping my speech as brief as possible.
  However, the Government may try to disguise it, the net effect of tonight's orders, in conjunction with the Local Government (Miscellaneous Provisions) (Scotland) Bill, is seriously to weaken the concept of local autonomy. the Government are imposing their ideas and their determination of rents on local authorities. It is traditional for the Conservative Party to have scant regard for the idea of local determination. Not only did it set its face against any devolution of power to Scotland; it forced on Scotland the so-called reform of local government that removed its very definition. By the imposition of local government reform, the Government foisted on Scotland one of the most disliked and resented constitutional changes ever. It does not become the Secretary of State to complain about increases in staff and workers. That was inevitable. No doubt, at the time the old myth about economies of scale was trotted out, but it was inevitable in that sort of reform.
  Behind the orders lies the Tory resentment of the big-spending authorities such as Strathclyde and Lothian, which, the Government say, are determined to wreck the Tory economic strategy to reduce public spending. Leaving aside the fact that the present Administration have no mandate whatsoever from Scotland, it is despicable that their party political disputes should be used in such a way that the innocent Scottish public suffer even more. Scotland has suffered enough from the shortsightedness of all Westminster Adminstrations—and this Administration is no different from the rest. Unemployment has risen steadily both under this Government and under the Labour Government. The manufacturing base of the country is being destroyed. Society is being torn apart. These petty squabbles between Labour-controlled local authorities and the Conservative Scottish Office merely add injury to the injustice.
  The orders, no matter what buckets of whitewash the Secretary of State may bring along to cover them, represent mean aggression against the Scottish people and they will be seen in that light.
  11.20 pm
  Mr. Jim Craigen: I am glad to have been called a little earlier in this debate than I was on that last occasion. I was going to begin by congratulating the Government's business managers on their skill in introducing the order at this hour of the night, because it is immensely important. Indeed, the Secretary of State pointed out that it constituted 40 per cent. of the Scottish Office expenditure.
  The awakening is coming, because people are beginning to realise the deterioration that is taking place in the quality and range of services provided by local authorities. It is all very well for Members of Parliament to snipe at local government, but Parliament passes laws which impose more and more responsibilities on local authorities.
  Many local authorities now find increasing difficulty in undertaking their statutory duties. One example is the Government supported Concessionary Travel for Handicapped Persons (Scotland) Act 1980, introduced by my hon. Friend the Member for Dunbartonshire, West (Mr. Campbell) last Session. Strathclyde region found that it did not have enough money in its budget to implement that discretionary legislation. Such problems will increase.

  363
  If the Government are looking for quangos to axe, I suggest the Stodart Committee which is supposedly looking into the inter-relationships of local government. I foresee experienced councillors getting fed up with the kind of role that is being assigned to local government. Whereas it has traditionally been accepted that local authorities act as the agents of the Government, the Secretary of State now expects them to act as the instruments of the Government.
  Local authorities cannot be held responsible for the mismanagement of the Government's economic policies. A considerable conflict will develop between local and central Government democracy. We cannot expect elected local authorities to pursue the kind of economic policies that the Government are seeking to force on them.
  The message is clear. The Secretary of State, in his press release announcing the rate support grant order, indicated that he expected local authorities to sack staff. Is he going to introduce a new element into the rate support grant whereby local authorities will be reimbursed for part of the cost of sacking staff? Redundancy involves heafty initial costs.
  Conservative Members often complain about staffing levels in local authorities. I wish that they would show more concern about the unemployment level in Scotland. We are debating a rate support grant order involving £1·5 billion. Does the Secretary of State realise that the cost of keeping a quarter of a million Scots out of work for a year equals £1·5 billion? This loss in taxation, rent and rates and the need to pay out unemployment and supplementary benefits is equivalent to the Government funding of Scottish local authorities. The busiest offices will be those which deal with rent and rate rebates. I wonder how many extra staff local authorities will have to take on to meet savage increases in rents and rates in Scotland. Rent and rate arrears will increase considerably.
  About 70 per cent. of local authority expenditure is on wages and salaries. The Government lay down guidelines about the numbers of teachers, firemen and policemen that should be employed. Central Government might as well employ such people themselves. Then the Secretary of State would be directly responsible for his actions. He could not blame the local authorities.
  Conservatives talk about freedom, especially when in Opposition. In government they centralise the powers available to the the Government over the local authorities. One could almost say that they seek to nationalise local authorities. The Gaullists in France could learn from this Government about centralisation. The Secretary of State might as well appoint his own prefects to the local authorities. He believes that the men from St. Andrew's House know best. For a decade in the 1960s we examined the need for reform in local government. For a decade in the 1970s we implemented the reform of local government structure and sought to translate it into action. Now we face a decade in the 1980s when the local authorities will go into decline, if not into eclipse, The message of the order is that the local authorities will be the scapegoats for the Government's economic mismanagement.
  11.28 pm
  Mr. Bill Walker: The right hon. Member for Glasgow, Craigton (Mr. Millan) mentioned a bogus Government figure. We have listened
  364
  to suggestions about the wages and salaries of local government employees. It would be wise to remember that the bill must be paid by taxpayers and ratepayers and that the Government have no magic pot of gold. We ask local authorities to act sensibly.
  I was delighted by the comments of my right hon. Friend the Secretary of State about Tayside. I am sure that when the guidelines materialise and action is taken Tayside can look forward to obtaining its proper reward for having behaved responsibly for many years. I look forward to its gaining benefit from the needs element.
  I turn to the question of manning levels. That local authorities behave differently from industry in these difficult times causes anxiety. Between March 1979 and September 1980, there was an increase in the number of full-time equivalent architects and people employed in management and computer services which is dfficult to justify. What I find most interesting is that the cost of internal transport increased cubstantially. I imagine that this is because they now all require to have their papers delivered.
  I also look to the fact that the cost of central services has risen substantially. Contrary to some comments—particularly those of the fisherman below the Gangway, the hon. Member for West Stirlingshire (Mr. Canavan), who spoke from a sedentary position about the effect on teaching of Government policies—between March 1979 and September 1980 there was an increase of 454 teachers. That hardly bears out the comments about savagely destroying services and the removal of services.
  One of my own district authorities assures me that its rate increase will be just into double figures, possibly, whilst another of my district authorities is talking about a three-figure increase. That shows the difference between authorities that behave prudently, sensibly and wisely in the interests of all those who live in their areas and the authorities with spendthrift policies.
  Mr. George Foulkes rose—
  Mr. William McKelvey rose—
  Mr. Walker: I shall not give way. I am following the example of the right hon. Member for Craigton, who was not prepared to give way to Conservative Members. The people of Scotland are not interested in bogus figures or rhetoric. [Interruption.]
  Mr. Deputy Speaker: Order. I again remind the House that the debate ends at 11.44 pm. If time is taken up with noise, we shall not get one more speaker in.
  Mr. Walker: The people of Perth and Kinross are delighted to live there. My constituents who live in Longforgan and Invergowrie are not at all happy, because they know that Dundee district council does not behave responsibly. Consequently, they will largely foot the bill of that spendthrift authority.
  In conclusion, I remind the House that much of the cost borne by the local authorities was to pick up the Clegg post-dated cheques left by the outgoing Administration.
  11.33 pm
  Mr. George Foulkes: It is appropriate that I follow the hon. Member for Perth and East Perthshire (Mr. Walker), because earlier this week I had the opportunity to read the Daily Record, which reported that the Tayside regional council—not a Labour-controlled authority, but an authority controlled by the

  365
  Conservative Party—had said that the Conservative Government were mean and despicable. When that comes from a Tory-controlled authority, the Labour-controlled authorities can find no better words with which to express their feelings. That council finds that the rate support grant that the Government are giving to all the regional councils is such that it will presently find it difficult to carry out its statutory responsibilities.
  I said on a previous occasion, and I say again with great seriousness, that all the regional councils, given the money that they will receive from the central Government, given the amount that they can raise through the rates, will find it difficult to carry out their statutory responsibilities. Some regional councils will be unable to provide the number of home helps that they consider necessary to deal with the elderly, and expectant mothers, and to carry out all the range of responsibilities imposed on them by legislation introduced by the Conservative Government.
  Mr. Michael Ancram: Under what statute is there a requirement for a number of Labour councillors from Lothian region to go to Denmark on a beanfeast?
  Mr. Foulkes: There are a number of statutes under which Governments of all complexions have placed responsibilies upon local authorities, involving expenditure upon such things as visits to other countries. Such sums are minuscule in comparison with the amount of money needed to provide vital services.
  Mr. John Home Robertson: Since this is the International Year of Disabled People would my hon. Friend care to reflect upon whether it will be possible for local authorities to carry out their obligations under the Chronically Sick and Disabled Persons Act on the basis of this rate support grant allocation?
  Mr. Foulkes: I am glad my hon. Friend raised that point because the disabled persons I have spoken to, including those in wheelchairs, find it sickening that the Secretary of State for Scotland is able to launch the International Year of Disabled People in Scotland. It is hypocrisy on his part, when the Government are making things more difficult for disabled people and making it harder for local authorities to provide services for them by way of capital building programmes. It is despicable of the right hon. Gentleman to behave in this way, so that he is able to receive approval and approbation for his alleged sympathy with the disabled while refusing to allow programmes aimed at helping the disabled put forward in good faith by, for example, Lothian regional council.
  The disabled are beginning to realise how hypocritical the right hon Gentleman is. I had the unfortunate experience of attending the last annual general meeting of the Disablement Income Group when the Secretary of State spoke. The meeting was held in Ayr and the right hon. Gentleman was received in respectful silence. The people there knew that what he was saying was absolutely untrue. He was saying that the Government were sympathetic and understanding towards the disabled. Those at that meeting who were disabled knew that that was untrue. But they did not boo or hiss or shout, because they are understanding people. They did not boo and hiss—
  The Under-Secretary of State for Scotland (Mr. Alexander Fletcher): Unlike the hon. Gentleman.
  Mr. Foulkes: The hon. Gentleman is right. The Secretary of State was condemned much more by the silence of these people than anything I could have said. It is clear, in the International Year of Disabled People, that the Government are unsympathetic towards the disabled. It is clear that the rate support grant will make it increasingly impossible for local authorities to provide for them. That is one more reason why we should vote against the order.
  11.34 pm
  Mr. Younger: By leave of the House, I shall reply to some of the points that have been made during the debate. The hon. Member for South Ayshire (Mr. Foulkes) may not have had time to read the report properly. He will notice, if he reads it later, that there is a 1 per cent. increase allowed for in guidelines on the social work side. No doubt that is something that can be used to help disabled people and I hope that it will be. I look forward to meeting the hon. Gentleman as often as I can at these functions because, like him, I have a great interest in the disabled, and always have had. There has been a galaxy of speeches. The right hon. Member for Glasgow, Craigton (Mr. Millan) did his best to make a speech and the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) has made a speech from a sedentary position throughout the debate, as has the hon. Member for West Stirlingshire (Mr. Canavan). I do not know what it is about Stirling that causes that to happen, but we greatly enjoyed all their contributions.
  The right hon. Gentleman's contribution did not hold water on any of his main arguments. He was shot down in flames by my hon. Friend the Member for Renfrewshire, East (Mr. Stewart). The right hon. Gentleman's complaint that the debate began at the wrong time of day was absurd. On every occasion that the debate took place during his tenure of office it began at a similar time, and on one occasion the starting time was considerably worse.
  Secondly, we were supposed to believe from the right hon. Gentleman and other Opposition Members that it is awful that the Government should be telling local authorities not to spend so much. They suggested that it was a dreadful Tory plot and something which should never be done by any Government and which could be done only by a wicked Tory Government. I remember the right hon. Gentleman's speech in December 1976 during the debate on the Rate Support Grant Order (Scotland) for that year. He said:
  "For example, the February 1976 White Paper on public expenditure stated that the substantial rate of expansion in recent years in local authority manpower and in local spending could not continue and that any increases in individual services had to be offset by reduced levels of provision in other services."—[Official Report, 22 December 1976; Vol. 923, c. 850.]
  The right hon. Gentleman is now telling us that it is a scandal and a disgrace that the Government are telling authorities to reduce their spending. That is humbug and the right hon. Gentleman knows it.
  The right hon. Gentleman produced a great farrago of indignation about the theory that local authority manpower is being unfairly treated because central Government manpower in Scotland has increased, which it has not. He is totally incorrect. Central Government manpower in Scotland has decreased irrespective of whether the State

  367
  hospital and the prisons are included. It has decreased considerably and the right hon. Gentleman should know that.
  Finally, the right hon. Gentleman gave us a great spiel about cash limits. He described their dreadful effect and the squeeze that authorities suffer. He said that authorities had to reduce spending because of cash limits. Who invented cash limits? Who was the first Minister to produce cash limits on local authorities in Scotland? It was the right hon. Gentleman.
  There was never during his time as Secretary of State any occasion when cash limits turned out to be sufficient for the expenditure that actually took place. On every occasion that the right hon. Gentleman produced a cash limit it did not produce enough cash to recompense local authorities for their actual expenditure. He knows that and I know that. He also knows that he introduced cash limits in the first place. It is nonsense to suggest that cash limits are new or that they should not be produced. He knows that they were introduced by his Government and that they are an indispensible part of keeping local authority expenditure within some limits.
  Mr. Millan: What the right hon. Gentleman has said about the previous Labour Government is completely untrue. Will he tell the House what the rate increases next year will be?
  Mr. Younger: I was about to turn to rate increase. The right hon. Gentleman spent a long time talking about rate increases. He said specifically and categorically, as did some others, that such increases are solely the responsibility of the Government. He did not address himself on this occasion, although he did at length in December 1976, to the effect of expenditure. If there are excessive rate increases—I am glad that many of the good authorities are not going to introduce them—they are due to one factor and one only, namely, irresponsible and excessive expenditure by local authorities that are not prepared to keep their spending under control. The right hon. Gentleman knows that. He said it himself on many occasions. Indeed, he preached that message to local authorities time and time again during his tenure of office.
  If we are to have discussions on the rate support grant, let us at least agree that the system that we are operating—
  It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted business):—
  The House divided: Ayes 282, Noes 231.

  Division No. 49]

  [11.45 pm

  AYES

  Adley, Robert

  Bendall, Vivian

  Aitken, Jonathan

  Bennett, Sir Frederic (T'bay)

  Alexander, Richard

  Benyon, Thomas (A'don)

  Ancram, Michael

  Benyon, W. (Buckingham)

  Arnold, Tom

  Bevan, David Gilroy

  Atkins, Rt Hon H. (S'thorne)

  Biggs-Davidson, John

  Atkins, Robert (Preston N)

  Blackburn, John

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

  Blaker, Peter

  Baker, Kenneth (St. M'bone)

  Body, Richard

  Baker, Nicholas (N Dorset)

  Bonsor, Sir Nicholas

  Banks, Robert

  Boscawen, Hon Robert

  Beaumont-Dark, Anthony

  Bottomley, Peter (W'wich W)

  Bell, Sir Ronald

  Bowden, Andrew

  Boyson, Dr Rhodes

  Braine, sir Bernard

  368

  Bright, Graham

  Havers, Rt Hon Sir Michael

  Brinton, Tim

  Hawkins, Paul

  Brittan, Leon

  Hawksley, Warren

  Brooke, Hon Peter

  Hayhoe, Barney

  Brotherton, Michael

  Heddle, John

  Brown, M. (BriggandScun)

  Henderson, Barry

  Browne, John (Winchester)

  Heseltine, Rt Hon Michael

  Bruce-Gardyne, John

  Hicks, Robert

  Bryan, Sir Paul

  Hill, James

  Buchanan-Smith, Hon Alick

  Hogg, Hon Douglas (Gr'th'm)

  Buck, Antony

  Holland, Philip (Carlton)

  Bulmer, Esmond

  Hooson, Tom

  Burden, Sir Frederick

  Hordern, Peter

  Butcher, John

  Howell, Ralph (N Norfolk)

  Carlisle, John (Luton West)

  Hunt, David (Wirral)

  Carlisle, Kenneth (Lincoln)

  Hunt, John (Ravensbourne)

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

  Hurd, Hon Douglas

  Chalker, Mrs. Lynda

  Jenkin, Rt Hon Patrick

  Channon, Rt. Hon. Paul

  Jessel, Toby

  Chapman, Sydney

  Johnson Smith, Geoffrey

  Churchill, W. S.

  Jopling, Rt Hon Michael

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

  Kaberry, Sir Donald

  Clark, Sir W. (Croydon S)

  Kellett-Bowman, Mrs Elaine

  Clarke, Kenneth (Rushcliffe)

  Kershaw, Anthony

  Clegg, Sir Walter

  King, Rt Hon Tom

  Cockeram, Eric

  Kitson, Sir Timothy

  Colvin, Michael

  Knight, Mrs Jill

  Cope, John

  Knox, David

  Corrie, John

  Lamont, Norman

  Costain, Sir Albert

  Lang, Ian

  Cranborne, Viscount

  Langford-Holt, Sir John

  Critchley, Julian

  Latham, Michael

  Crouch, David

  Lawson, Nigel

  Dean, Paul (North Somerset)

  Lee, John

  Dickens, Geoffrey

  Lennox-Boyd, Hon Mark

  Dorrell, Stephen

  Lester Jim (Beeston)

  Dover, Denshore

  Lewis, Kenneth (Rutland)

  Dunn, Robert (Dartford)

  Lloyd, Ian (Havant & W'loo)

  Durant, Tony

  Lloyd, Peter (Fareham)

  Dykes, Hugh

  Luce, Richard

  Edwards, Rt Hon N. (P'broke)

  Lyell, Nicholas

  Eggar, Tim

  McCrindle, Robert

  Elliott, Sir William

  Macfarlane, Neil

  Emery, Peter

  MacGregor, John

  Eyre, Reginald

  Mackay, John (Argyll)

  Fairgrieve, Russell

  Macmillan, Rt Hon M.

  Faith, Mrs Sheila

  McNair-Wilson, M. (N'bury)

  Farr, John

  McNair-Wilson, P. (New F'st)

  Fell, Anthony

  McQuarrie, Albert

  Fenner, Mrs Peggy

  Madel, David

  Finsberg, Geoffrey

  Major, John

  Fisher, Sir Nigel

  Marland, Paul

  Fletcher, A. (Ed'nb'gh N)

  Marlow, Tony

  Fletcher-Cooke, Charles

  Mates, Michael

  Fowler, Rt Hon Norman

  Mather, Carol

  Fox, Marcus

  Maude, Rt Hon Angus

  Fraser, Peter (South Angus)

  Mawby, Ray

  Fry, Peter

  Mawhinney, Dr Brian

  Galbraith, Hon T. G. D.

  Maxwell-Hyslop, Robin

  Gardiner, George (Reigate)

  Meyer, Sir Anthony

  Gardner, Edward (S Fylde)

  Miller, Hal (B'grove)

  Garel-Jones, Tristan

  Mills, Iain (Meriden)

  Gilmour, Rt Hon Sir Ian

  Mills, Peter (West Devon)

  Glyn, Dr Alan

  Miscampbell, Norman

  Goodhart, Philip

  Mitchell, David (Basingstoke)

  Goodlad, Alastair

  Moate, Roger

  Gow, Ian

  Monro, Hector

  Gray, Hamish

  Montgomery, Fergus

  Greenway, Harry

  Moore, John

  Grieve, Percy

  Morris, M. (N'hampton S)

  Griffiths, E. (B'y St. Edm'ds)

  Morrison, Hon C. (Devizes)

  Griffiths, Peter Portsm'th N)

  Mudd, David

  Grist, Ian

  Murphy, Christopher

  Grylls, Michael

  Myles, David

  Gummer, John Selwyn

  Needham, Richard

  Hamilton, Hon A.

  Needham, Richard

  Hamilton, Michael (Salisbury)

  Nelson, Anthony

  Hampson, Dr Keith

  Neubert, Michael

  Hannam, John

  Newton, Tony

  Haselhurst, Alan

  Nott, Rt Hon John

  369

  Onslow, Cranley

  Squire, Robin

  Oppenheim, Rt Hon Mrs S.

  Stanbrook, Ivor

  Osborn, John

  Stanley, John

  Page, John (Harrow, West)

  Steen, Anthony

  Page, Rt Hon Sir G. (Crosby)

  Stevens, Martin

  Page, Richard (SW Herts)

  Stewart, Ian (Hitchin)

  Parris, Matthew

  Stewart, A. (E Renfrewshire)

  Patten, Christopher (Bath)

  Stokes, John

  Patten, John (Oxford)

  Stradling Thomas, J.

  Pattie, Geoffrey

  Taylor, Teddy (S'end E)

  Pawsey, James

  Temple-Morris, Peter

  Pink, R. Bonner

  Thatcher, Rt Hon Mrs M.

  Pollock, Alexander

  Thomas, Rt Hon Peter

  Porter, Barry

  Thompson, Donald

  Prentice, Rt Hon Reg

  Thorne, Neil (Ilford South)

  Price, Sir David (Eastleigh)

  Thornton, Malcolm

  Prior, Rt Hon James

  Townend, John (Bridlington)

  Proctor, K. Harvey

  Townsend, Cyril D, (B'heath)

  Pym, Rt Hon Francis

  Trippier, David

  Raison, Timothy

  Trotter, Neville

  Rathbone, Tim

  van Straubenzee, W. R.

  Rees, Peter (Dover and Deal)

  Vaughan, Dr Gerard

  Rees-Davies, W. R.

  Viggers, Peter

  Renton, Tim

  Waddington, David

  Rhodes James, Robert

  Wakeham, John

  Rhys Williams, Sir Brandon

  Waldegrave, Hon William

  Ridsdale, Julian

  Walker, Rt Hon P. (W'cester)

  Rifkind, Malcolm

  Walker, B. (Perth)

  Roberts, M. (Cardiff NW)

  Waller, Gary

  Roberts, Wyn (Conway)

  Ward, John

  Rossi, Hugh

  Warren, Kenneth

  Rost, Peter

  Watson, John

  Royle, Sir Anthony

  Wells, John (Maidstone)

  Sainsbury, Hon Timothy

  Wells, Bowen

  Scott, Nicholas

  Wheeler, John

  Shaw, Giles (Pudsey)

  Whitney, Raymond

  Shaw, Michael (Scarborough)

  Wickenden, Keith

  Shelton, William (Streatham)

  Wiggin, Jerry

  Shepherd, Colin (Hereford)

  Wilkinson, John

  Shersby, Michael

  Williams, D. (Montgomery)

  Silvester, Fred

  Winterton, Nicholas

  Sims, Roger

  Wolfson, Mark

  Skeet, T. H. H.

  Young, Sir George (Acton)

  Smith, Dudley

  Younger, Rt Hon George

  Spence, John

  Tellers for the Ayes:

  Spicer, Jim (West Dorset)

  Mr. Spencer Le Marchant

  Spicer, Michael (S Worcs)

  and Mr. Anthony Berry.

  Sproat, Ian

  NOES

  Abse, Leo

  Cohen, Stanley

  Adams, Allen

  Coleman, Donald

  Allaun, Frank

  Conlan, Bernard

  Alton, David

  Cook, Robin F.

  Anderson, Donald

  Cowans, Harry

  Archer, Rt Hon Peter

  Craigen, J. M.

  Armstrong, Rt Hon Ernest

  Crowther, J. S.

  Atkinson, N. (H'gey,)

  Cryer, Bob

  Barnett, Guy (Greenwich)

  Cunliffe, Lawrence

  Barnett, Rt Hon Joel (H'wd)

  Cunningham, G. (Islington S)

  Beith, A. J.

  Cunningham, Dr J. (W'h'n)

  Bennett, Andrew (St'kp'tN)

  Dalyell, Tam

  Bidwell, Sydney

  Davies, Rt Hon Denzil (L'Ili)

  Booth, Rt Hon Albert

  Davies, Ifor (Gower)

  Boothroyd, Miss Betty

  Davis, Clinton (Hackney C)

  Bradley, Tom

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

  Bray, Dr Jeremy

  Deakins, Eric

  Brown, Hugh D. (Provan)

  Dewar, Donald

  Brown, Ron (E'burgh, Leith)

  Dixon, Donald

  Brown, Ronald W. (H'ckn'y S)

  Dobson, Frank

  Buchan, Norman

  Dormand, Jack

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

  Douglas, Dick

  Campbell, Ian

  Douglas-Mann, Bruce

  Canavan, Dennis

  Dubs, Alfred

  Cant, R. B.

  Dunnett, Jack

  Carmichael, Neil

  Dunwoody, Hon Mrs G.

  Carter-Jones, Lewis

  Eadie, Alex

  Cartwright, John

  Eastham, Ken

  Clark, Dr David (S Shields)

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

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

  Ellis, Tom (Wrexham)

  370

  English, Michael

  Mason, Rt Hon Roy

  Ennals, Rt Hon David

  Maxton, John

  Evans, Ioan (Aberdare)

  Meacher, Michael

  Evans, John (Newton)

  Mikardo, Ian

  Ewing, Harry

  Millan, At Hon Bruce

  Faulds, Andrew

  Miller, Dr M. S. (E Kilbride)

  Field, Frank

  Mitchell, Austin (Grimsby)

  Flannery, Martin

  Morris, Rt Hon A. (W'shawe)

  Fletcher, Ted (Darlington)

  Morris, Rt Hon C. (O'shaw)

  Ford, Ben

  Morris, Rt Hon J. (Aberavon)

  Forrester, John

  Morton, George

  Foster, Derek

  Moyle, Rt Hon Roland

  Foulkes, George

  Mulley, Rt Hon Frederick

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

  Newens, Stanley

  Freeson, Rt Hon Reginald

  Oakes, Rt Hon Gordon

  Garrett, John (Norwich S)

  Ogden, Eric

  Garrett, W. E. (Wallsend)

  O'Halloran, Michael

  George, Bruce

  O'Neill, Martin

  Gilbert, Rt Hon Dr John

  Orme, Rt Hon Stanley

  Gourlay, Harry

  Palmer, Arthur

  Graham, Ted

  Park, George

  Grant, George (Morpeth)

  Parker, John

  Grant, John (Islington C)

  Parry, Robert

  Hamilton, James (Bothwell)

  Pavitt, Laurie

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

  Penhaligon, David

  Hardy, Peter

  Powell, Raymond (Ogmore)

  Harrison, Rt Hon Walter

  Prescott, John

  Hart, Rt Hon Dame Judith

  Price, C. (Lewisham W)

  Hattersley, Rt Hon Roy

  Race, Reg

  Haynes, Frank

  Radice, Giles

  Healey, Rt Hon Denis

  Rees, Rt Hon M (Leeds S)

  Heffer, Eric S.

  Richardson, Jo

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

  Roberts, Allan (Bootle)

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

  Roberts, Ernest (Hackney N)

  Home Robertson, John

  Roberts, Gwilym (Cannock)

  Homewood, William

  Robertson, George

  Hooley, Frank

  Robinson, G. (Coventry NW)

  Horam, John

  Rooker, J. W.

  Howell, Rt Hon D.

  Roper, John

  Howells, Geraint

  Ross, Ernest (Dundee West)

  Huckfield, Les

  Ross, Stephen (Isle of Wight)

  Hudson Davies, Gwilym E.

  Rowlands, Ted

  Hughes, Mark (Durham)

  Sandelson, Neville

  Hughes, Robert (Aberdeen N)

  Sever, John

  Hughes, Roy (Newport)

  Sheerman, Barry

  Jay, Rt Hon Douglas

  Sheldon, Rt Hon R.

  John, Brynmor

  Shore, Rt Hon Peter

  Johnson, James (Hull West)

  Silkin, Rt Hon J. (Deptford)

  Johnston, Russell (Inverness)

  Silkin, Rt Hon S. C. (Dulwich)

  Jones, Rt Hon Alec (Rh'dda)

  Silverman, Julius

  Jones, Barry (East Flint)

  Skinner, Dennis

  Jones, Dan (Burnley)

  Smith, Rt Hon J. (N Lanark)

  Kaufman, Rt Hon Gerald

  Snape, Peter

  Kerr, Russell

  Soley, Clive

  Kilroy-Silk, Robert

  Spearing, Nigel

  Lambie, David

  Spriggs, Leslie

  Lamborn, Harry

  Stallard, A. W.

  Lamond, James

  Steel, Rt Hon David

  Leadbitter, Ted

  Stewart, Rt Hon D. (W Isles)

  Leighton, Ronald

  Stoddart, David

  Lewis, Arthur (N'ham NW)

  Stott, Roger

  Lewis, Ron (Carlisle)

  Strang, Gavin

  Litherland, Robert

  Straw, Jack

  Lofthouse, Geoffrey

  Summerskill, Hon Dr Shirley

  Mabon, Rt Hon Dr J. Dickson

  Taylor, Mrs Ann (Bolton W)

  McDonald, Dr Oonagh

  Thomas, Jeffrey (Abertillery)

  McElhone, Frank

  Thomas, Mike (Newcastle E)

  McGuire, Michael (Ince)

  Thomas, Dr R. (Carmarthen)

  McKay, Allen (Penistone)

  Thorne, Stan (Preston South)

  McKelvey, William

  Tilley, John

  Maclennan, Robert

  Torney, Tom

  McNally, Thomas

  Urwin, Rt Hon Tom

  McNamara, Kevin

  Varley, Rt Hon Eric G.

  McTaggart, Robert

  Wainwright, E. (Dearne V)

  McWilliam, John

  Walker, Rt Hon H. (D'caster)

  Magee, Bryan

  Watkins, David

  Marks, Kenneth

  Welsh, Michael

  Marshall, Dr Edmund (Goole)

  White, Frank R.

  Marshall, Jim (Leicester S)

  White, J. (G'gow Pollok)

  Martin, M (G'gow S'burn)

  Whitehead, Phillip

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  Whitlock, William

  Woodall, Alec

  Willey, Rt Hon Frederick

  Woolmer, Kenneth

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

  Wrigglesworth, Ian

  Wilson, Gordon (Dundee E)

  Young, David (Bolton E)

  Wilson, Rt Hon Sir H. (H'ton)

  Tellers for the Noes:

  Wilson, William (C'try SE)

  Mr. Hugh McCartney and

  Winnick, David

  Mr. James Tinn.

  Question accordingly agreed to.
  Resolved,
  That the Rate Support Grant (Scotland) Order 1980, a copy of which was laid before this House on 18 December, be approved.

  Housing Support Grant (Scotland)
  11.58 pm
  The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): I beg to move,
  That the draft Housing Support Grant (Scotland) Order 1981, which was laid before this House on 12 January, be approved.
  It may be for the convenience of the House if I also speak at this time to the two variation orders.
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Is that for the convenience of the House? The three orders will be taken together.
  Mr. Rifkind: Before I say more about the orders, I should like to acknowledge the very helpful and constructive way in which the Convention of Scottish Local Authorities took part in the annual discussions that the convention has with the Secretary of State. While it is undoubtedly the case that there was disagreement on the expenditure and income implications of the grant, it is equally the case that in all other matters, including the very important distribution area, there was total accord between the Secretary of State and the convention, and we were happy to be able to accept a signficant number of requests and recommendations that the convention put to the Secretary of State.
  I shall deal first with the second variation order for the year 1979–80. Hon. Members will recall that at about this time last year the House approved a substantial variation order for the 1979–80 settlement, to compensate for changes which had occurred in interest rates, costs and prices. The year being complete, it is now possible to consider whether a further variation order is justified to take account of increased expenditure almost entirely as a consequence of the level of interest rates. My right hon. Friend has considered this matter and, in accordance with the normal rules that are applied, has concluded that a further increase in grant of £14·7 million would be justified for the 1979–80 year.
  I turn now to the variation order for 1980–81. In the light of the most recent information on the level of interest rates, remuneration, costs and prices, we have decided to increase the estimate of eligible expenditure, and hence the aggregate of housing support grants, by a total of £43·4 million. This is a very substantial sum, representing as it does about 23 per cent. over the main order, and it fulfils the pledge given by the Government tolocal authorities last January that authorities would not suffer from increases in expenditure as a result of changes in the general economy over which they had no control.
  I turn to the main order for the year 1981–82 and I begin by dealing with the question of how the total housing support grant will be shared among local authorities. With
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  the full agreement of the Convention of Scottish Local Authorities, the order prescribes a method which is simpler and, I believe, fairer than that used for past years.
  Hostels will continue to be supported fully in respect of their assessed operational deficits, and this will absorb £1·3 million. The rest of the grant will be distributed by a method in accordance with the factors shown in the schedule to the order. For the first time, the distribution of housing support grant is entirely unaffected by historic levels of subsidies under earlier systems. That has the support of the convention.
  The most important item is loan charges. Grant distribution this year will proceed from an estimate of authorities' loan charges for 1980–81 rather than—as would have been the effect under the formula in previous years—by reference to the actual loan charges returned by authorities for 1979–80. This request was put to the Government by the convention last year. We promised to consider the matter. We have done so, and we have agreed to accede to the approach that the convention desired.
  The rest of the expenditure side of the formula relates to management and maintenance expenditure. As in past years, this expenditure is expressed as a standard amount per house subject to weightings to meet the needs of authorities with high-rise housing stock and areas that are sparsely populated. In the first two years of housing support grant, the formula incorporated a special factor to protect the entitlements of authorities with small proportions of council houses per head of population. This arrangement has been dropped, with the agreement of the convention.
  There is one aspect of distribution which is somewhat technical, but I must endeavour to explain it. The formula introduced by our predecessors in office provided for a distribution which was not directly proportional to the calculated local deficit. The result was that authorities with above-average expenditure were obliged to find more money out of their own resources. We followed this method last year, but discussions with the convention led us to conclude that the device operates harshly for some authorities, particularly those with active building programmes or high unit costs of building.
  It was not an easy matter to decide, because a change in the distribution pattern means losers as well as gainers. But we decided that the device had outlived its usefulness, and it is accordingly being phased out. Hitherto, grant has been proportionate to 85 per cent. of net assessed expenditure. With the agreement of the convention, it will be 90 per cent. for 1981–82, and within two years thereafter distribution will be directly proportional.
  I have said that formula changes bring gains and losses. So that the impact of losses should not be too severe, the formula includes a cushioning mechanism, which will ensure that no authority will suffer a loss of grant in excess of £145 per house compared with 1980–81.
  The amounts of housing support grant to be received by authorities in 1981–82 are listed in annex C to the report. The sums have been calculated to the nearest thousand pounds but, before payment, will be calculated to the nearest pound.
  I turn to eligible expenditure and income as regards the main order. Eligible expenditure has been estimated at £600·1 million, relevant income at £459·4 million and housing support garant—being the difference—has been set at £140·7 million. I shall explain how those estimates have been made.

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  On the expenditure side, loan charges account for just under 70 per cent. of the total. The estimates of capital expenditure included in this calculation accord with the government's public expenditure estimates. Authorities have, of course, been advised that their capital allocations for 1981–82 may be reduced if their levels of rateborne expenditure on the housing revenue account exceed planned limits. Nevertheless, the estimate of housing debt for 1981–82 reflects the full total of allocations which authorities may receive if they respond constructively to the Government's guidelines on rate fund contribution levels.
  The other main area of current expenditure is on management and maintenance. In the current financial climate, we cannot afford to increase spending under these heads. Accordingly, the level of expenditure assumed for 1981–82 will he the level allowed for in the 1980–81 settlement, adjusted to take account of the increase in the housing stock and uprated by a factor of 9 per cent. This factor reflects the Government's view that local authority pay settlements next year should not on average exceed 6 per cent. As regards supervision and management, the factor incorporates a modest allowance in recognition of the extra costs which authorities may have to incur under the provisions of the Tenants' Rights, Etc. (Scotland) Act 1980.
  Apart from Government subsidies, local authority revenue expenditure on housing is financed mainly out of rents and rates. Local authorities have been asked to hold their rate fund contribution to the housing revenue account in real terms at the figure which I recommended last year and to increase rents on average by about £2·33 per week, bringing the average Scottish rent to about £8·20 per house per week.
  The rent increases reflect our judgment of what is reasonable. They would have been lower but for the failure of authorities generally to achieve the guideline rent increase figure for 1980–81, which was £1·40. Had authorities met this target, public expenditure targets for next year could have been met with rent increases of less than £2 per week.
  I am well aware that some Opposition Members may not agree that £8 or so is a reasonable rent. I will give them a reasoned argument. First, the increases will not be borne by 25 per cent. of local authority tenants in Scotland who pay no rent and who will continue to pay no rent because of their low incomes. Secondly, there is a further 25 per cent. of local authority tenants who receive rent rebates. They will continue to be rebated. They will not pay a rent increase, on average, of more than £1 a week.
  Mr. John Maxton: I am following the hon. Gentleman's argument, which I appreciate. All that the Minister is doing, surely, is to cut local authority expenditure and to put up public expenditure elsewhere. That seems totally against the concept of what he is trying to do.
  Mr. Rifkind: If the hon. Gentleman was really following the argument, he would appreciate that the Government are protecting those on low incomes from rent increases that those with larger incomes can reasonably afford. The Government have emphasised that they have not the slightest desire to penalise people who would genuinely suffer hardship through unreasonable rent increases. Fifty per cent. of Scotland's council tenants will
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  not have to pay the average rent increase that is proposed. One-quarter will pay no increase at all. One-quarter will pay, on average, a rent increase of no more than £1 a week.
  Half of the remaining 50 per cent. of Scotland's council tenants have a household income of more than £8,000 a year. It is not unreasonable to suggest that an average rent of £8 a week is a meaningful and responsible contribution to make towards housing costs. I do not think that any Opposition Member could seriously put an argument to the contrary.
  Mr. Robin F. Cook: I am following the argument with care. Will the hon. Gentleman extend his argument to tax relief extended to owner-occupiers, who, on average, have a higher income than those to whom he has just referred? The tax relief for owner-occupiers has the same effect on public expenditure and the PSBR as a reduction in subsidy for which he makes his case.
  Mr. Rifkind: The hon. Gentleman may not agree. I believe, however, that most reasonable people would draw a distinction between what one pays to the Government out of one's income and what one receives from other members of the public to subsidise one's expenditure. That is a reasonable distinction to draw. The hon. Gentleman should also appreciate that many owner-occupiers have, incomes of considerably less than £8,000 a year, which is the income of one-quarter of the households in public sector housing. It is wrong to suggest that council tenants are overwhelmingly the poorer members of the community and that those in the private sector are overwhelmingly wealthy. It is a meaningless comparison, as the hon. Gentleman knows.
  If Opposition Members consider that the amount traditionally paid in Scotland for rent is at a reasonable level and that any increase can only bring about hardship, they might like to consider some comparisons. In 1979, the latest year for which we have figures, the average Scottish rent was £4·46 a week. In the same year, the average amount spent by a household per week on alcoholic drink was £4·73. On tobacco it was £3·61. I do not criticise anyone for the amount he spends on these items. I am sure that the hon. Member for West Stirlingshire (Mr. Canavan) would not wish to criticise people for the amount they spend on these items. It is an absurd proposition to suggest that while £4·70 on alcohol is a reasonable amount of expenditure, the sum of £4·46 spent on one's home is a gross imposition on the average member of the public.
  Mr. Donald Dewar: Will the hon. Gentleman say whether he believes that it is an unfortunate financial necessity that rents have to rise or, as he now seems to argue, that he wants them to rise as an act of social justice?
  Mr. Rifkind: No. If the hon. Gentleman has read the housing support order and the comments that have been made, he will be aware that the figure of rent increase proposed is the minimum figure that would be required to ensure that the rate fund contribution—that is, the contribution made by other members of the public—is maintained in real terms. That is the basis of the rent decision that has been reached, and it is on that basis alone that the figure is required. That is the figure that has been used.

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  But we are perfectly entitled to go on from that, when we are examining the figure of rent that will arise as a result of that calculation, if it is being suggested by Opposition Members that that is an unreasonable amount, and compare that sum with the sums traditionally used on what most people would consider to be luxuries, such as drink and tobacco. If we find that the sum spent on both of these items is almost identical to the sum traditionally spent on housing, I think that most reasonable people would conclude that that was a somewhat disproportionate situation.
  Dr. M. S. Miller: The hon. Gentleman talks about averages, but when it suits him he picks out certain specific instances which are not averages; they are aberrations or anomalies in the situation. Secondly, the hon. Gentleman cannot specifically pick out housing as one item for which people have to find an increase. Added to all the other matters which the Government have piled on to people, this is an iniquitous increase which people ought not to have to bear.
  Mr. Rifkind: The hon. Gentleman simply fails to understand the situation. If local authorities do not implement rent increases of that kind, they will be demanding an equivalant amount from the ratepayers. Some members of the public will be paying for these services. The question is whether the people who are receiving the services should make a slightly higher contribution towards the cost or whether an unreasonable burden should be put on the general ratepayers.
  This is a short debate. I do not intend to detain the House any longer. I simply commend the order to the House on the basis that is fair to the tenant, to the ratepayer and to the responsible local authority. All those who come within those categories cannot, in any fairness or in any sense of an objective judgment on the matter, do other than recognise that the order is acceptable from any reasonable standpoint.
  Mr. Deputy Speaker: I remind the House that we are also debating the two subsequent variation orders.
  12.12 am
  Mr. Donald Dewar: I always admire the practised ease with which the Under-Secretary works hard to mask the stark and unpalatable facts which lie behind his Government's policy. He has become very practised at denying what evidently is. We had a splendid example at the beginning of his speech when he said, almost casually, that perfect harmony had reigned between the Government and the Convention of Scottish Local Authorities; they had agreed on almost everything, except what was relevant income and what was eligible expenditure. If they could not agree on that—the foundations of the whole system—the hon. Gentleman's definition of "agreement" is very strange indeed.
  I want fairly briefly to try to explain to the House why we regard this housing support grant as such thoroughly bad news for the whole of Scotland. The first reason is the very simple one that resources that are being made available to housing authorities in Scotland are being very sharply reduced in this support grant. It was £228 million last year. It is £140 million this year. That is a drop of 34 per cent. Putting it another way, the loss equals a reduction
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  in subsidy per house of about £100. That is a very substantial amount on every local authority house in Scotland. Indeed, in 11 authorities it is above £145 per house, although they have been stabilised at that quite scandalous figure at the expense of other authorities.
  What we are saying, very simply, is that to decrease in this dramatic way the real resources that are available for housing need in Scotland, at a time when the housing crisis is deepening and when authorities are struggling to maintain properties and standards, is a criminal misuse of priorities by the present Government.
  We are entitled to ask what the future holds, because the White Paper on public expenditure shows that housing expenditure will be reduced by 42 per cent. by 1984, and that this year it runs at £603 million and by 1984 it will be down to £410 million. That kind of drop would easily accommodate the virtual abolition of the housing support grant by 1984.
  If that is what is happening, if that is the road which we are to be taken down right to the end, the consequences for housing in Scotland will be very serious. Perhaps we could hear something of this in the wind-up speech.
  Our objection is that the whole housing support system is artificial and contrived. I suspect that we start with the result that the Minister has a figure in his mind and he slots in the figures which allow him artificially to arrive at the conclusion he wants. I cannot go into it but we all know—it was referred to in the last debate—the appalling artificiality of the 6 per cent. expectation on wages and 11 per cent. on general cost inflation. No one believes in those figures, which show just what a totally artificial system we are now trying to operate.
  But apart from the cut in the HSG itself, to appreciate the full impact, one must also consider what the Government are doing on the rate fund contribution in the individual authorities. The aggregate for the rate fund contribution for the whole of Scotland, the Government suggest, is £62 million. Last year it was £88 million. If that were updated for inflation, it would be about £102 million or £103 million. So the £62 million is very low. It cannot be achieved and I do not believe that any hon. Member believes that it can be achieved. It is a determined disregard for reality by the Government and they put it forward for a reason which is good to them but sinister to us.
  It is a superbly simple strategy. One cuts the housing support grant, because that is within the Government's control; then one restricts the rate fund contribution, and one has a yawning gap between those totals and the income needed to meet expenditure. One is then forced either to massive redundancies and cuts in services or to what I suspect the Government really want—massive increases in rents. That is achieved by shamelessly manipulating the artificial formula for designating the individual rate fund contributions of local authorities.
  The Government have taken a straight population multiplier of £8. Let me illustrate the idiocy and artificiality of that approach. It means that areas with the same population get the same notional rate fund contribution. One example which has been used often in the debate is that of Eastwood and Clydebank. They are on a par because each has a population of just over 50,000. But Eastwood has 2,000 public sector houses and Clydebank has 11,000. The rate fund contribution, as a contribution or subsidy per house, comes to a figure of £308 in Eastwood and only £52 in Clydebank.

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  So the system at the end of the day militates strongly and shamelessly against authorities with big public sector housing inputs. That is a distortion which cannot be defended by any sane or reasonable person. If there is to be this kind of allocation of RFC, the formula should at least take some account of historic fact or of the housing needs of individual authorities.
  This may sound very dry and academic, but the result is totally devastating. In my own local authority, Glasgow, last year the RFC was just over £27 million. This year, the Secretary of State has said, "It must be restricted to £9 million, and by the way we are docking £7½ million of your housing support grant as well". As a result, when Glasgow considers its expenditure and its reduced HSG and the ludicrous RFC, it finds a shortfall of £42 million, which has to be made up by increases in rents, if it is done as the Secretary of State implies, of almost 70 per cent.
  Even if we take the Shelter figures that have been circulated to all hon. Members, which make a simpler calculation and leave out expenditure variations, and merely take the HSG plus the RFC for 1980–81 and subtract the similar figures for 1981–82, it is clear that there was a startling assumed rent increase in the mind of the Secretary of State when he fixed his figures.
  It is not only the big, wicked Socialist authorities which are penalised. Caithness, Skye and Lochalsh, Nithsdale and similar authorities will be expected to find 50 per cent. increases if the figures are to be taken seriously, as the Secretary of State apparently intends. I listened with care to the Under-Secretary. He started by implying that the rent increases were unfortunate. He said that if we had held to certain financial targets in the previous year they would not have been necessary. I thought that he was bringing forward an argument of financial expediency—no one likes it, but it is necessary unpleasant medicine and for the good of the country we must swallow it. The cliches flow easily.
  But the hon. Gentleman appeared to argue that rents in Scotland are too low when set against certain social criteria—we spend more on drink and tobacco and so on. The overwhelming impression left by the Under-Secretary—and we want to know whether it is a correct impression—is that he wants rents to go up because he feels that that is socially desirable. If that is the Government position, and I suspect that it is—not just because of what the Under-Secretary said, but because it is the logic of the fraudulent system that the Government are operating—the people of Scotland are entitled to know that.
  The point made by my hon. Friend for Glasgow, Cathcart (Mr. Maxton) is valid. There will be some offsetting increases in other sectors of public expenditure. If the 50 per cent. or 55 per cent. of council tenants who are already eligible for rent rebates, though many may not take up their entitlement, is to be increased, the cost of the rebates will largely be borne by the Exchequer and there is bound to be an offsetting advantage.
  The morality of the Government's saying that they want average rent increases in Scotland of 40 per cent. while the wage rises of those who will be paying the increases should be held down to about 6 per cent. is wrong. But not only is the morality wrong. The sanity and the political philosophy from a Tory point of view are wrong, because we shall be drawing thousands of families into the poverty trap with these ill-conceived measures.
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  All that is depressing enough, but there is a final refinement which I find the most objectionable feature of the housing scene. It is the Government's intention to link housing capital allowances to the level of rents. That is a monstrous proposition—I use those words advisedly—and essentially objectionable. People's expectations and perhaps their real needs will always outrun what we can supply in the short term, but at least there ought to be an equitable principle of distribution—which must be the need of the local authorities that are putting in bids for the available resources.
  The Government have said that there is £267 million to be distributed in housing capital allowances this year, presumably according to need, and every local authority will be given its dollop. But the Government added that the £267 million may become £200 million, because they may dock up to £67 million, not because the needs disappear and not even because of financial necessity, but because authorities have not forced up rents artificially to the levels pre-determined by the Secretary of State.
  Let us take Glasgow as an example. In its third housing plan, the council reckoned that its capital requirements for 1981–82 would be £79 million. It was allotted £66 million and I do not complain about that. The council probably did not expect to get everything that it asked for. Presumably the Scottish Development Department and the Minister thought that Glasgow ought to get £66 million on merit and on need. The council has now been told that that will be cut to £55 million—a drop of £11 million—unless it forces up its council house rents by at least 50 per cent., and that it will not receive the whole £66 million unless council house rents rise by something approaching 70 per cent. That is an offensive and monstrous sanction of the most crude and immoral sort. I do not want to give any encouragement to such a proposition. To break the concept of need in the housing capital allowance, and tie it artificially to an arbitrary rent policy—an unjust and inequitable policy to boot—is something that no Ministry worth its salt should contemplate.
  On Monday evening the Minister drew my attention to an item on the Press Association tape, for which I was grateful. I thought it worth sharing with the House. It stated:
  "Britain could he heading for a disastrous housing shortage, a leading builder has warned…house building had dropped to the lowest level since 1053"
  I do not know in detail the housing policy that existed in 1053, but at that the equivalent of the Secretary of State was Macbeth. I do not think that he was noted for his housing management record. If I remember rightly he laid waste to the land with pillage and pestilence. I am considering tabling a parliamentary question to discover any other similarities between his housing record and that of the Government.
  We are facing a desperate prospect. Rents and rates will soar, and at the same time the Government's prescription is "You will pay more, but you will receive less". We shall see new building grinding to a halt. We shall see rehabilitation and modernisation programmes and the building of sheltered and special purpose housing, almost disappearing. To be fair to the Minister, I am sure that he has the same problems in his constituency as I have in mine. It is difficult to talk sympathetically and hold out much hope to someone living in a house that was built long before the war, and who is genuinely worried not only about inadequate, but about positively dangerous wiring

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  when our message must be "Your rent and rates will rise massively, but the re-wiring work that you have been waiting for for so many years must be postponed indefinitely because of the capital allowance cuts introduced by the Minister". We have to say that the cash which our constituents had hoped for to modernise their homes has been filched by the Govenment as a sanction measure because their councillors have not been beastly enough to their tenants. That is a cock-eyed and ludicrous position for any councillor or housing Minister to be in.
  We are facing a real crisis. I have been around in Western Scotland and involved in Scottish politics for a considerable number of years. For the first time I am now meeting responsible and reasonable councillors who are asking "What is the point of continuing? If we are to be tied, as a sort of mute, executive arm, to policies that we abhor and cannot influence, there is a limit to how far and how long we can go". I am trying to argue that we have not yet reached that stage. But when I look at this sort of housing support grant, and at clause 13 of the Local Government (Miscellaneous Provisions) (Scotland) Bill which is in Committee—it allows the Secretary of State to deem to be excessive and unreasonable any estimated expenditure of a local authority, on grounds so wide and ill-defined as to provide no significant check against prejudiced, arbitrary and insensitive administrations of the sort that I begin to fear we are now facing—I have some genuine sympathy with the worries and the anxieties of those councillors. It is a bad, bad thing for the whole of the local government system when such a mood of defeatism and resigned anger is abroad.
  My local authority has been agonising over the apportionment of the massive increase beween rates and rents. In a sense, although it is theoretically important, for many of my constituents—and no doubt those of other hon. Members—in the outturn it does not really matter very much. Whether it is 31 per cent. on rents and 31 per cent. on rates, or 15 per cent. on rents and 47 on rates, if one lives in a three-apartment flat in my constituency at the end of the day the difference between the two is only a few pennies. Because of this housing support grant, no matter how ingenious the councillors, no matter how they may turn and twist, that family will have to find about £12 or £13 a month at a time of economic distress and high unemployment.
  I say to the Minister in all seriousness—
  Mr. Rifkind: Will the hon. Gentleman give way?
  Mr. Dewar: I am just finishing—this is seriously flawed in principle and wretched in result. I hope that we shall all register our protest in the Lobby at the end of the debate.
  12.30 am
  Mr. John MacKay: The two variation orders basically reflect the changes in both outturn prices and interest charges over the past two years. These orders are a feature of the way that the central Government help to finance local authority housing, and I am sure that that will continue to be so.
  This year's main order will be subject to variation orders if that proves justified in the light of inflation and interest rates during the year. I am sure that my hon.
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  Friend will be happy to give me and the Convention of Scottish Local Authorities an assurance that that will continue to be so, as it always has been.
  I turn from those two orders to the order for this year. There is a relationship between the orders. The Government's 1980–81 calculations were based on average rents in Scottish local authorities of £6·25—an increase of £1·40 over the 1979–80 figure. However, rent increases were 95p per house. This shortfall has had to be made up by taking £21 million extra out of the rate fund contribution. The failure to raise the average by another 45p per week in the last financial year not only results in an added rate fund contribution—indeed, I suspect that in some cases it results in an even larger housing revenue account deficit—but distorts this year's figure.
  It is not an artificial figure on which my hon. Friend is working. It is the actual figure, and it is in the order. It is the cost of local authority housing compounded by interest charges and maintenance, repairs and factoring fees. That is a real, not an artificial, figure that has to be covered. The formula as to how it is covered from rates, rents or central Government support may be artificial, but the total that has to be raised from those three sources is in no way artificial. It is realistic, it exists, and it has to be paid by somebody.
  Because last year the local authorities did not put up rents as high as they were asked to put them up by the Government, this year's rents will have to be that much more on average. In fact, this year's rents will on average have to be £2·33 more than last year. If the local authorities had been responsible and realistic last year, the figure for this year would have needed to be only £1·92.
  Listening to Labour Members, one would think that there had been no rent increases during the Labour Government's administration, that they took the view that rents should be frozen at some existing totally artificial level, that any new money that needed to be found for the housing revenue account could come from either ratepayers or taxpayers and that, frankly, rates could be kept at a constant level. That was not the situation under the Labour Government. They put up rents. If they had put them up a little more and put more into the housing revenue account by way of income, they might have been able to devote more to the expenditure side, thereby preventing many council houses from needing dramatic modernisation. If there had been a proper maintenance programme, perhaps we would not have so many council houses needing modernisation.
  Mr. Cook: The hon. Gentleman may be willing to mislead himself, but I am sure that he does not want to mislead the House. Modernisation expenditure in the majority of housing authorities is met out of the capital allocation. But the Government are slashing the capital allocation to local authorities at the same time as they are cutting the subsidy on the housing revenue account. The hon. Gentleman cannot argue that there is a trade-off here. The Government are having it both ways.
  Mr. MacKay: The hon. Member assumes that I am talking only about the current situation. I am talking historically. I accept that some of the present modernisation has to be of a capital nature, but I suggest that if a proper maintenance programme had operated over the years, using money in the housing revenue account,

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  not as many council houses would need drastic and expensive modernisation to make up for years of neglect, to window paintwork, for example.
  The argument is not that a person who spends a certain amount on drink and tobacco should pay a comparable rent. The figures are not arrived at in that way. The housing revenue account and expenditure must be met. Levels of rent were suggested by the previous Government, as they are by this Government, to help cover the housing revenue account. The levels are said to be similar to the expenditure by the average household on drink or tobacco, but that is simply because an attempt has been made to put housing expenditure in context. To hear some hon. Members, one would think that a council house rent is so exorbitant that people cannot afford it. If that was so, the average expenditure on other items would not be at their present levels. If people can afford to spend that amount on drink and tobacco, it is reasonable to assume that they are prepared to spend as much, if not more, on providing housing for their families. Of course, people who cannot genuinely afford to pay the rent because of a variety of circumstances are protected by rent rebates and supplementary benefit. That is right.
  I draw the Minister's attention to a major anomaly which gives rise to much argument between the Government and local authorities. The two sectors of housing are financed in different ways. The private sector is financed by the Chancellor of the Exchequer through taxation allowances and mortages. The public sector is helped by housing support grants. In addition, local authorities can take money from the rates in the form of the rate fund contribution and put that into the housing revenue account. Local contributions include both rent and rates. The 1979–80 figure is £301·5 million. How much of that was rent and how much rates? The Minister might like to examine the estimated figure for 1981–82. How much of that will be rent and how much rates? The Minister is realistic. He might like to hazard a guess at the reality, given the policies that some local authorities favour.
  I believe that local authorities have an option which they should not have. I accept that the Government would have to pay more in housing support grant if they were the only source of help to the public sector, as they are the only source of help to the private sector. However, if local authorities did not have the option, the amazing position in Glasgow and elsewhere would be prevented. In every council there is an argument about whether rents or rates should be increased.
  I accept that if rates are increased, people living in council houses have to pay a little as well. But they have to shoulder a good deal less if the rates are increased than the people who do not live in council houses but are in the private rented sector or paying mortgages, because such people shoulder part of the housing burden of others.
  Even this week we have seen in the city of Glasgow the sort of fight that I am mentioning. The elected council leaders on the district council decided to go for a bit on both; they decided to put up both the rents and the rates, with a 31 per cent. increase in the rents. Along came another body, called the general management committee of the city of Glasgow Labour Party—not elected by anyone in the city, and not responsible to the electorate or anyone else—which told the elected councillors "You cannot do that. You will put only 15 per cent. on the rents." At a guess, that means 45 per cent. on the rates.
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  That is an example of the sort of gerrymandering that can go on because local authorities can take the option of loading some of their contribution on to the ratepayers, not the payers of rent. [Interruption.]
  Before Labour hon. Members take leave of their senses too much—
  Mr. Bill WalkerToo late.
  Mr. MacKay: Far too late. I remind the Opposition that I said that the Government might well have to increase the rate support grant provided by the taxpayer, but at least we should get out of one part of this annual squabble if public sector housing were supported entirely by the Exchequer, in the same way as private sector housing bought on mortgages is, so that the ratepayer makes no contribution towards local authority housing.
  12.42 pm
  Mr. Ernie Ross: The figures announced in the grants to Scottish councils, particularly in the housing support grant, are woefully inadequate. They reflect the views not of the Secretary of State or the Under-Secretary but of their master—or, rather, their mistress. in her obsessive attacks upon public expenditure.
  As with many other Labour-controlled councils, Dundee district council is having its housing support grant cut by the Secretary of State, who is telling it to make up the deficit on its housing revenue account by an increase in rents or rates, or a combination of both. Whether a district council increases rents, rates or both, the blame for these increases lies firmly with the Tory Governent and not with the council. I hope that every Labour-controlled authority in Scotland will make that point perfectly clear to its electorate. Certainly, Dundee district council will.
  Mr. Rifkind: The hon. Gentleman is suggesting that the Government are requiring Dundee to make an intolerable increase in its rents. Is he aware that, as a result of the very sensible policies of Dundee while it was under Conservative administration, the rent increase that it will be required to make now amounts to no more than 99p?
  Mr. Ross: I am glad of that intervention, and I shall come to it a little later,
  The message that I bring from the people of Dundee to the Tory Government in 1981 is that they will not allow them to turn Dundee into an industrial ghost town. With 13,000 people already unemployed, and with the city reeling from blow alter blow in an unemployment crisis without equal since the 1930s, what help does the Secretary of State offer Dundee? He slashes its district council's housing support grant by half and tells it to regain that money from the pockets of the people of Dundee. He is holding a gun to the district council's head and saying "If you do not cut your throat, I shall blow your head off."
  The hon. Members for Perth and East Perthshire (Mr. Walker) and for South Angus (Mr. Fraser) have been busy spreading dark, wild tales about the evil doings of the wicked Labour-controlled Dundee district council, which will be doubling its rates next year. The culprits in their eyes, of course, and in the eyes of the hon. Member for Argyll (Mr. MacKay) are the Labour Party. However, if they have read the letter in the Dundee Courier and Advertiser from the council's non-political director of finance on 12 January, they will have discovered who the real villains are. The director of finance said:

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  "as I explained in my annual report on the 1979–80 financial accounts, a fairly substantial increase in the district rate for 1981–82 is unavoidable because of the use of reserve balances to balance the current year's budget and to offset the amounts lost to the district council in government grants.
  These factors alone could double the district rate without altering in any way the current year's level of expenditure or taking any account of the alleged rate of inflation."
  I certainly hope that hon. Members will use these reasons when explaining to their consituents why it is necessary for the rates to be increased. The previous minority Tory administration of Dundee district council plundered £3½ million from the reserve balances in a desperate election gimmick to cut the rate to its present level of 14p in the pound. However, that gimmick failed and the Tory Party was incapable, despite that cut, of winning power in the city of Dundee. It managed to cobble together only a ragged minority administration, with the support of three Tory councillors from the constituencies of the hon. Members for South Angus and for Perth and East Perthshire.
  To restore the reserve balances will require an increase in the rates of at least 7p in the pound. Thus, 50 per cent. of any rate increase in Dundee district is due entirely to the actions of Tory councillors. I am sure that Tory Members will take great delight in telling their constituents exactly who is responsible for at least half of any rate increase.
  The other accomplices in all of this, hand in hand with the "dynamic duo", were the Tory Government, with their ruthless pruning of housing expenditure. If my colleagues on Dundee district council agree not to raise the rents, I shall certainly support them in the House and outside. At a time when the Prime Minister is demanding that workers settle for 6 per cent., when unemployment in Dundee is above the disastrous level in Scotland generally and when rents in Dundee are above the Scottish average, there is clearly a good case for freezing the rents in Dundee.
  I am sure that the hon. Members for South Angus and for Perth and East Perthshire will drag out the ancient tales about the ratepayers featherbedding council house tenants. The Tory Party consistently forgets that council house tenants are ratepayers. I have some figures which I hope Government Members will take back to their constituents. The average contribution towards rates from rents collected by Scottish district councils is around £98 a year. In Dundee district council it is only £18 a year. There is a clear case for a more equitable contribution. It is a case which we shall certainly use to ensure that rents in Dundee are frozen, following a review of council rents. I emphasise that the increases that Dundee district council and other local authorities are forced to apply, in either rents or rates, are a result of the Government's policy
  I come now to a point which will interest the hon. Members for Perth and East Perthshire and for South Angus. They have made their position clear over Dundee district council's rents and rates in the coming year, as I have. The same cannot be said of the hon. Member for Dundee, East (Mr. Wilson)—the silent man of Dundee politics. I am afraid that "the greatest member of Parliament Dundee has ever had", as he loves to hear himself described by the remains of his local party, still
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  cannot understand why he received such a humiliating vote of no confidence in the Dundee district council elections last year, along with the rest of his party.
  The answer is simple. The hon. Gentleman voted with the Tories to bring down the Labour Government. After a little over one year of this Tory Government, whom he helped to bring into office, and after the awful consequences that that has had for Dundee, the working-class electorate in Dundee, East have given the hon. Member his just rewards. I am prepared to give way to the hon. Member so that he can make crystal clear his position over the support grants and how they affect Dundee. Does he favour a rent increase? Does he favour a rates increase? I realise that he is in some difficulty. He has at the back of his mind the thousands of Tory voters who supported him, and he cannot afford to offend them too much. Let the hon. Gentleman come clean on this issue without referring to oil, independence or any of the other tired language that he uses in his press releases. Let him tell us now whether he wants rent increases or rate increases.
  Mr. Dennis Canavan: Will my hon. Friend remind the House and the hon. Member for Dundee, East (Mr. Wilson) that it was not a Tory council that took the initiative in the lifetime of this Parliament in implementing a 40 per cent. rent increase? The initiative was taken by the SNP-controlled council in Cumbernauld and Kilsyth, which covers part of my constituency. The Tories aided and abetted the SNP to increase rents by 40 per cent.
  Mr. Ross: Even the comments of my hon. Friend fail to draw the hon. Member for Dundee, East to his feet, despite the fact that he is the chairman of the party to which my hon. Friend referred.
  There have been many comments about what local authorities that behave themselves might do. I refer to a comment made by Ian Mackie, the leader of the Tory-controlled Tayside regional council. No one in Dundee is fooled by the squeaks of protest from Tayside Tories that they are not being given enough money to provide and run services in the region. They brought the situation upon themselves by persistent spending. They underspent by a massive £2½ million below the level that even Margaret-the-milk-snatcher Thatcher was prepared to give them last year.
  Mr. Deputy Speaker (Mr. Bernard Weatherill): This has been a good natured debate. I understand that it follows a party earlier in the evening. We cannot have phrases of that sort.
  Mr. Ross: I did not attend the party, Mr. Deputy Speaker. It is important to tell the House that the electorate in Dundee elected a Labour-controlled council to ensure that rents and rates would be kept to minimum levels within what it believed was necessary to ensure the provision of services to the people of Dundee. I am certain that when my colleagues on the local authority carry out the review, as is their responsibility, they will decide that rents in Dundee should not be increased this year. I shall support them if they come to that decision.
  12.53 am
  Mr. Peter Fraser: The hon. Member for Dundee, West (Mr. Ross) has referred to my hon. Friend the Member for Perth and East Perthshire (Mr.

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  Walker) and myself as the dynamic duo. He has kept me sitting on the edge of my seat wondering which of us he considers to be Batman and which of us is Robin.
  As for the level of rates in Dundee, it will not need a 40 per cent. rule—this might attract the hon. Member for Dundee, East (Mr. Wilson)—to take Monifieth or Invergowrie out of Dundee district, in view of the way in which the Labour administration has acted, and to take them back into Angus and Perthshire.
  If the hon. Gentleman is so concerned for the citizens of Dundee district council and if he feels that the financial burden that they will have to tolerate will be too great, he should urge the district council to tell my right hon. Friend the Secretary of State that he is to be relieved of the cost of imposing upon them a public inquiry to ascertain what they are to do about the sales of council houses. At the end of the day, the ratepayers will have to face the cost of litigation and the public inquiry if there is no change of attitude.
  Those of us who have argued that the Government should constantly be asserting a distinction between revenue expenditure and capital expenditure might be expected to resist the approach that the Government have taken to link local authority housing expenditure on both the capital and revenue sides. I said on an earlier occasion, in our proceedings on the Local Government, Planning and Land Bill, that I sometimes have a sense of despair that we are not achieving that. But, having looked into the matter in relation to housing support grant at present, I have no doubt that my right hon. Friend and my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind), who has responsibility in this context, have no opportunity to do anything other than make this regrettable link between the capital side and the revenue side of housing expenditure.
  The reason is that, for the crudest of electoral reasons, with total disregard for the burden that both industry and commerce will have to pay in supporting housing in Scotland, any attempt to move council rents upwards will be resisted. If the hon. Member for Glasgow, Garscadden (Mr. Dewar), who is speaking for the Opposition Front Bench now on this aspect of local government, were to act with any constructive honesty, he would at least tell us what he would have done in his approach to the matter.
  The hon. Gentleman told us in moving terms of a sum of about £12 per month as the expected increase which, as he put it, council tenants in his constituency would have to pay. The first small inaccuracy there is that, on average, only one in two of his council tenant constituents will be paying anything like that. But what he failed totally to tell us is what he would regard as anything like a reasonable increase in council rents.
  Mr. Canavan: No more than 6 per cent.
  Mr. Fraser: All the hon. Member for Garscadden did was to say that it is objectionable and leave it at that.
  We know that earlier in the day representatives of the Labour Party met representatives of COSLA. While this matter of the link between the capital side of housing expenditure and the revenue side was discussed by them, what came out clearly to us was that it did not matter what my hon. Friend the Member for Pentlands did—any technique which he deployed in an attempt to persuade local authorities to move rents upwards would have been resisted as objectionable. That is, I suppose, what one
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  would expect, but I regret that the hon. Member for Garscadden has not addressed himself to this question. Although he regards as objectionable—even in a moral sense, he seemed to suggest—the technique which the Government have adopted over the link between the capital and revenue side, he has given no indication of the alternative technique that he suggests should be deployed. I listened carefully to the hon. Gentleman, and he made no proposals whatever for an alternative line.
  Mr. Dewar: It is difficult for me in my position to pick a rent figure which I think reasonable, but as a general principle I believe that it is not wrong to suggest that rents should keep pace with earnings but should not eat into people's living standards by exceeding the average earnings level.
  On the other point, I think that it is a perfectly reasonable proposition, which was clearly expressed in my speech, that housing capital allowances should be decided upon need and only upon need. On that I would stand.
  Mr. Fraser: I am afraid that the hon. Gentleman is still not taking the point that I am putting to him. It is not about the extent to which there is an appropriate level. We could argue about that, and possibly disagree, all night. What he has failed to present is what technique ought to be deployed to achieve an increase of any sort whatever. Frankly, that is a regrettable omission.
  I come finally to a technical point on which I hope to be given some illumination by my hon. Friend. As I understand the order, it proceeds upon a number of assumptions, and one of the assumptions in the calculation is a figure of about £55 per house included for 1981–82 in respect of supervision and management alone. I understand that the figure per house allowed for repairs and maintenance so £160. Can my hon. Friend comment on the £55 per house to be allowed in 1981–82? It seems to me to be an extraordinarily large amount. If we are now moving into an era in which, we are told, there are tremendously improved techniques of management in local government, that figure should not be increasing year by year, as it appears to be from the information that I have. If the techniques of rent collection and so on are improving, far from increasing year by year, the figure should be decreasing. I hope that the Under-Secretary of State will be able to provide some information on that.
  1 am
  Mr. Dennis Canavan: I wish to confine my remarks to the Housing Support Grant (Scotland) Order 1981. It is a recipe for increased rents, a reduction in housing standards and a reduction in the living standards of the thousands of council house tenants throughout Scotland, which many hon. Members—supposedly on both sides of the House—represent.
  In the financial year 1981–82, the Government propose a cut in the housing support grant amounting to £72·5 million. Compared with last year, that is a reduction of 34 per cent. Combined with the alteration in the rate fund contribution and the Government issuing new guidelines on the rate fund contribution that represents a cut of £39·2 million, or about 39 per cent., compared with last year's arrangements for the rate fund contribution.
  The Government seem to expect an average rent increase of £2·33, or 40 per cent. Many local authorities

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  will face extreme pressures from the Government to increase rents by even more than 40 per cent. If they are to meet the Government guidelines, 17 of the councils in Scotland will have to increase rents by over 50 per cent. and eight will have to increase rents by over 60 per cent. I do not know whether I am unique—[HON. MEMBERS: "Yes."]—but I have within my constituency six different housing authorities, including the Scottich Special Housing Association. I say that there are six, but there is also the Milngavie and Bearsden district council but it does not have any council houses in my constituency that I know of, so I shall stick to the four district councils.
  The rent increase assumptions used by the Government in their calculation of the rate fund contribution guidelines and the housing support grant reductions amount to an increase in Falkirk of 54 per cent., in Stirling an increase of 54 per cent; in Cumbernauld and Kilsyth district an increase of 40 per cent., but as I said earlier, that is over and above a 40 per cent. increase that the previous SNP-controlled district council levied. Almost the moment that this Tory Government took power it got permission from the Secretary of State to do so. Strathkelvin district council will have a rent increase of 45 per cent.
  I am sure that all those local authorities—they are all Labour-controlled because the people in my constituency are sick to the teeth of this Tory Government and they all voted for Labour-controlled councils at the last elections in May 1979—will do their utmost to keep rent increases far below the figures that I have suggested.
  Mr. Ian Lang rose—
  Mr. Canavan: It is incumbent upon the Minister to give some indication to those councils as to the alternatives.
  Mr. Lang: I thank the hon. Gentleman for his courtesy. He gave some interesting figures in relation to some district councils. Does he agree that the House should have the full picture, and would he not like to add that the Wigtown district council in my constituency would have to increase rents by only 11 per cent., the Stewartry district council would have to increase rents by only 2 per cent., and East Kilbride district council would have an assumed nil increase?
  Mr. Canavan: I do not think that the hon. Member for Galloway (Mr. Lang) can compare the proportion of council houses in his constituency with the proportion of council houses in my constituency. I have four different housing authorities in my constituency and I am probably the only hon. Member who can say that. I have given the figures from my own constituency, which is typical, bearing in mind that in Scotland more than 50 per cent. of the people live in council housing. If there is anything untypical, it may be the proportion of council housing in the hon. Member's constituency, which certainly is not anywhere near the Scottish average.
  Several Conservative Members have asked what would be a reasonable rent increase. If the Government are so centralised and so dictatorial that they are telling local authorities that the cash limit on wages should be only 6 per cent., why do they not at least give the local authorities the money so that they can limit the rent increases to 6 per cent? Surely that would be logical.
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  Combined with the Government's policy of a massive rent increase, we have the effects which are now beginning to be felt of the Tenants' Rights, Etc. (Scotland) Act 1980. That is the biggest possible misnomer, because it gives no extra rights to tenants. It is forcing local authorities to sell off their housing stock at a time when thousands of families are on the waiting list. It is a typical piece of doctrinaire Tory asset-stripping policy that is doing absolutely nothing either to build an additional house in Scotland or to see that the allocation of housing is done on a fair basis.
  Now, as well as exerting pressure on the housing authorities, the Government are exerting pressure on the tenants. By means of their high rent policy, the Government are trying to force the tenants into a position in which they feel pressurised to buy their own house and go for a mortgage rather than continuing to pay excessively high rent.
  As well as the new legislation, there is the massive reduction in capital allocation for new building programmes and improvements and modernisation programmes. Probably for the first time in the history of public sector housing in Scotland we are seeing a danger of a reduction taking place in the amount of public sector housing stock. As well as this reduction in capital expenditure—which means a virtual standstill for the house building programme—the Government are forcing local authorities to sell off the housing stock which already exists. This policy will have devastating effects not just on people in council houses but also on the people on the waiting list. It will have devastating effects on employment prospects in the construction industry, particularly in Scotland, where the industry is very dependnt on public sector housing contracts.
  I should like to pick up a point that was made by the hon. Member for Argyll (Mr. MacKay). He seemed to be denigrating the record of certain Labour-controlled local authorities such as Glasgow. He did not seem to realise that Glasgow historically has had to implement housing policies under tremendous inherited difficulties and also difficulties imposed upon it by Tory Governments such as the present one.
  I should like to point out to the hon. Member some statistics which his hon. Friend the Under-Secretary of State, the hon. Member for Edinburgh, Pentlands (Mr. Rifkind), gave in answer to my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen). These statistics are very relevant to the whole business of capital allocations and the need to encourage local authorities to improve their existing stock and to replace it by better housing stock. I do not think that the hon. Member for Argyll can hold his head up high when he looks at these statistics about the numbers and percentages of houses falling below the minimum tolerable standards. In Argyll, the figure is 17·6 per cent. That is an absolute disgrace. With the exception of Skye and Lochalsh district council, it is the worst in Scotland.
  The hon. Member for Argyll was a member of that Argyll council.
  Mr. John MacKay: Does not the hon. Gentleman agree that given a choice and despite the statistics, people prefer to live in Argyll than in Glasgow?
  Mr. Canavan: Given a choice, people do not want to live in sub-standard houses in Argyll, or anywhere else.

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  The hon. Gentleman should be ashamed of himself, and ashamed to represent a constituency with the second worst record in Scotland. I repeat, 17·6 per cent. of houses are sub-standard. In Labour-controlled Glasgow, which inherited terrible social difficulties, the figure is only 10·4 per cent. In Aberdeen, which is also Labour-controlled, the figure is as small as 6·4 per cent. The hon. Gentleman should bear that in mind.
  Mr. David Lambie: My hon. Friend has been very unfair to the hon. Member for Argyll (Mr. MacKay). Does not my hon. Friend realise that for the greater part of his life the hon. Gentleman has been a member of the Liberal Party and has stood as a Liberal candidate. He fought the Tories in Argyll as well as Tory landlords.
  Several Hon. Members rose—
  Mr. Deputy Speaker: Order. The debate is about the housing support grant. It is not about who is a member of the Liberal Party.
  Mr. Canavan: Given the hon. Gentleman's chequered political career, I should not be surprised if he joined Roy Jenkins next week. The order is a savage attack on the living standards of thousands of council tenants in Scotland. I hope that district councils, particularly Labour-controlled district councils, will use every means at their disposal to fight the Government's high rents policy. I hope that they will fight this policy to reduce living and housing standards. In addition, I hope that all my right hon. and hon. Friends—even some enlightened Tories—will vote against the order.
  1.13 am
  Mr. Russell Johnston: I shall not be as generous as the hon. Member for West Stirlingshire (Mr. Canavan) about giving way. The Government's policy, in terms of the cut in the housing grant and the guidelines for the rate fund contribution means that there will be arbitrary rent increases throughout Scotland. In Skye and Lochalsh rents will increase by 64 per cent. Skye is not well off. Those who live there do not generally earn high incomes. Again, in Lochaber, where the pulp mill has just been closed, there will be a 64 per cent. increase in the rent levels. Other areas in the Highlands will fare even worse.
  In Western Isles the increase will be 66 per cent. and in Caithness it will be 74 per cent. ft is not enough for the Minister to say that there will be rent rebates. That does not take account of a generally low level of incomes. Nor does it take account of the fact that the increases occur arbitrarily. In all the districts of my constituency, including Inverness and Badenoch, the housing construction programme will be cut savagely. I have never had so many people coming to my clinic saying that they need a house but knowing that they will not get one. The SSHA programme of modernisation is being cut back and put off into the far distant future.
  These late hour debates are seldom reflective, but they often throw into relief especially bad consequences of formulas devised by Governments. I hope that following the vote—the Whip system will ensure that there is a majority for the Government whatever arguments have been deployed—the Minister will go back and think about the consequences and the bad effects and take some action.
  1.16 am
  Mr. Rifkind: The hon. Member for Inverness (Mr. Johnston) suggested that the rent increases proposed by individual authorities were arbitrary and had no rational basis. The hon. Gentleman is incorrect in that assumption. The particular figure determined for each local authority is based on the minimum rent increase that would be required to ensure that there was no increase in real terms in the rate fund contribution compared with the figure used for the rate fund contribution last year. It is not an arbitrary figure. It is for that reason that there are significant differences between authorities.
  The hon. Member for Dundee, West (Mr. Ross) made a passionate plea for a rent freeze in Dundee and implied that any increase of the type that the Government propose would be an intolerable burden on the people of Dundee. The hon. Gentleman should have pointed out—it should not be for me to point out to him—that, although the Scottish average of £2·32 exists, it is the case that in Dundee, because of the sensible policies of the previous Conservative Administration, a rent increase of only 99p is required to ensure a reasonable response.
  Mr. Ernie Ross: The hon. Gentleman seeks to mislead the House. I suggested that even with a rent freeze in Dundee the rate fund contribution to the housing account would, at the end of the day, be only, the average of what the Secretary of State for Scotland proposes for rents in Scotland.
  Mr. Rifkind: The hon. Gentleman has not checked his facts. There was no rent increase in Dundee last year under the Conservative administration because the authority was dealt with in such a responsible and sensible fashion that the resources and finances of the local authority enabled it not to make a rent increase at all. It is a meaningless proposition for the hon. Gentleman to suggest that following no rent increase last year a rent increase of 99p in the current year is excessive.
  The hon. Member for West Stirlingshire (Mr. Canavan) put forward a similar passionate plea on behalf of his local authorities. He pointed out, without emphasising the point, that in the case of Cumbernauld and Kilsyth, because of the sensible rent increases imposed some time ago, the increase now required is only 96p, a relatively small amount. The hon. Gentleman chose to ignore that factor.
  My hon. Friend the Member for Argyll (Mr. MacKay) asked for an assurance that if a further variation order is required the sum involved will be based on procedure applied in the past and that any changes due to interest rates and normal factors included in these matters will be taken into account. I am happy to give the assurance that this will be the policy we shall pursue. My hon. Friend also asked what was the rate fund contribution in various years to which he referred. In the current year, 1980–81, the figures budgeted by local authorities, significantly higher than the Government requested, amounted to £88 million. The figure for next year, based on the figure that is required to maintain, in real teens, the rate fund contribution compared with the sum proposed a year ago, is £62 million.
  A number of basic inaccuracies were reflected in the observations of the hon. Member for Glasgow, Garscadden (Mr. Dewar). The hon. Gentleman started by saying that to use a single figure as an average per capita

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  rate fund contribution around the various authorities in Scotland was an illogical formula and an illogical procedure. If the hon. Gentleman thought that it was illogical, he might have pointed out that it was exactly the approach introduced by the previous Government when they introduced the housing support grant system. They used a per capita basis. They had decided, sensibly, that the contribution to the rate fund contribution should vary from local authority to local authority depending on the number of ratepayers and, therefore, their ability to contribute towards this matter.
  Mr. Bruce Milan: That is absolute rubbish. Under the Labour Government there was never any question of applying a particular rate fund contribution without any discrimination at all to every local authority in Scotland. That simply did not happen. This is a completely new element which has been introduced by the Government this year. What is more, the Labour Government never at any time tried to force rent increases by saying that unless rents rose by figures which were laid down arbitrarily by the Government there would be a reduction in local authorities' housing capital allocations. That, too, is completely new. The Minister knows it, but, even more important, the local authorities know it, and they complained bitterly to us today about it.
  Mr. Rifkind: I am not questioning that the link with capital allocations is a completely new policy. I am about to turn to that. But the right hon. Gentleman is quite wrong, because, if he had listened to his hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), he would know that the point made by his hon. Friend was that it was illogical to talk in terms of a per capita figure for establishing a rate fund contribution. As the right hon. Gentleman disagrees with that, he had better check his own practice when he was in Government.
  The hon. Member for Garscadden spent most of his time attacking the linkage we have made between rent levels and capital allocation. We have made this linkage for a very simple reason. We were anxious to maintain the capital allocations that might be available to local authorities at the highest possible level. There is a maximum sum available for public expenditure on housing. In so far as local authorities failed last year to make reasonable rent increases and put the burden on the ratepayer, that has absorbed part of the funds available for housing expenditure in Scotland.
  We could have responded in a crude and indiscriminate fashion. We could simply have made a reduction in the capital allocation for local authorities next year compared with this year in order to ensure that the total public expenditure on housing was maintained at the level that the Government felt appropriate. [Interruption.] I must ask the right hon. Member for Glasgow, Craigton (Mr. Millan) to stop muttering from a sedentary position—which is his normal contribution to these debates.
  Mr. Millan: The present Government have brought the whole of housing in Scotland to ruination.
  Mr. Rifkind: That was a particularly original contribution from the right hon. Gentleman.
  I should like to continue explaining the system that we have applied. If we had not linked it with capital
  392
  allocation, the total sum available for capital expenditure would have had to be reduced accordingly. That would have been a crude and indiscriminate system, which would have made no difference between the local authorities that had responded sensibly and those that had failed to do so. Instead, we have chosen, quite rightly and without any apology whatsoever, to introduce a system that will enable a local authority ultimately to decide whether it wishes to give greater priority to its decision on rent, knowing that it will thereby lose its capital allocation, or, alternatively, whether it will make a reasonable decision on rents in order to preserve the capital allocation to which it would be entitled.
  I say to the hon. Member for Garscadden that, if local authorities respond reasonably on rents, the capital sums available on their housing revenue accounts for the forthcoming year will be exactly the same in real terms as for the current year. That was the Government's objective. It will be entirely a matter for local authorities to decide whether that objective can be realised.
  Mr. Dewar: The hon. Member said that the purpose was to encourage reasonable rent increases. Presumably, the carrot was that an authority would save something which otherwise would be cut off its housing capital allowance. To take Glasgow as an example, in order to save a penny over the lower figure, to get into the tapering tranche of the housing capital allowance at all, the rent increase would have to be above 50 per cent. Is that reasonable in Tory terms?
  Mr. Rifkind: If we had not recognised Glasgow's special needs and applied an exact arithmetical formula, the provisional allocation to Glasgow would have been considerably less than the figure it has been given. Therefore, the hon. Gentleman cannot suggest that our attitude towards the city of Glasgow has been anything but eminently reasonable.
  Opposition Members must come to terms with the fact that, if they wish to see capital expenditure on housing maintained in Scotland, the only way in which that can be done is by a responsible attitude on the part of local authorities towards rent decisions.
  When the hon. Member for Garscadden concluded his oration with a passionate plea on behalf of the unemployed and the poor, he could at least have pointed out that the unemployed and the poor will not be paying these rent increases. He and his hon. Friends know that. They know, because it has been said numerous times, that one-quarter of tenants pay no rent and that another quarter pay a highly subsidised rent through the rent rebate system and will continue to do so.
  If the hon. Gentleman is concerned with those people, he should realise when he refers to the unemployed that that is totally irrelevant to a rent system, because the vast majority of the unemployed will benefit from the rent rebate system and pay either no rent at all or a minimal rent. He is intelligent enough to know that. To introduce the subject into the debate can be considered only a deliberate desire to deceive the House into misunderstanding the effects of the order.
  The Government are in no way ashamed of, and feel no need to apologise for, the order. It is a responsible order. It will enable local authorities to make a reasonable contribution to their capital spending and at the same time

  393
  will impose no intolerable burden upon the tenants whom they represent. We are proud of the order and commend it to the House.
  Question put:—
  The House divided: Ayes 269, Noes 219.

  Division No. 50]

  [00.00

  AYES

  Adley, Robert

  Fell, Anthony

  Aitken, Jonathan

  Fenner, Mrs Peggy

  Alexander, Richard

  Fisher, Sir Nigel

  Ancram, Michael

  Fletcher, A (Ed'nb'gh N)

  Arnold, Tom

  Fletcher-Cooke, Charles

  Atkins, Robert (Preston N)

  Fowler, Rt Hon Norman

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

  Fox, Marcus

  Baker, Kenneth (St. M'bone)

  Fraser, Peter (South Angus)

  Baker, Nicholas (N Dorset)

  Fry, Peter

  Banks, Robert

  Gardiner, George (Reigate

  Beaumont-Dark, Anthony

  Gardner, Edward (S Fylde)

  Bendall, Vivian

  Garel-Jones, Tristan

  Bennett, Sir Frederic (T'bay)

  Glyn, Dr Alan

  Benyon, Thomas (A'don)

  Goodhart, Philip

  Benyon, W. (Buckingham)

  Goodlad, Alastair

  Bevan, David Gilroy

  Gow, Ian

  Biggs-Davison, John

  Gray, Hamish

  Blackburn, John

  Greenway, Harry

  Blaker, Peter

  Grieve, Percy

  Body, Richard

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

  Bonsor, Sir Nicholas

  Griffiths, Peter Portsm'th N)

  Boscawen, Hon Robert

  Grist, Ian

  Bottomley, peter (W'wich W)

  Grylls, Michael

  Bowden, Andrew

  Gummer, John Selwyn

  Boyson, Dr Rhodes

  Hamilton, Hon A.

  Braine, sir Bernard

  Hamilton, Michael (Salisbury)

  Bright, Graham

  Hampson, Dr Keith

  Brinton, Leon

  Hannam, John

  Brittan, Leon

  Haselhurst, Alan

  Brooke, Hon Peter

  Havers, Rt Hon Sir Michael

  Brotherton, Michael

  Hawkins, Paul

  Brown, M. (Brigg and Scun)

  Hawksley, Warren

  Browne, John (Winchester)

  Hayhoe, Barney

  Bruce-Gardyne, John

  Heddle, John

  Bryan, Sir Paul

  Henderson, Barry

  Buck, Antony

  Heseltine, Rt Hon Michael

  Bulmer, Esmond

  Hicks, Robert

  Burden, Sir Frederick

  Higgins, Rt Hon Terence L.

  Butcher, John

  Hill, James

  Carlisle, John (Luton West)

  Hogg, Hon Douglas (Gr'th'm)

  Carlisle, Kenneth (Lincoln)

  Holland, Philip (Carlton)

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

  Hooson, Tom

  Channon, Rt Hon. Paul

  Hordern, peter

  Chapman, Sydney

  Howell, Ralph (N Norfolk)

  Churchill, W. S.

  Hunt, David (Wirral,)

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

  Hunt, John (Revensbourne)

  Clark, Sir W. (Croydon S)

  Hurd, Hon Douglas

  Clarke, Kenneth (Rushcliffe)

  Jenkin, Rt Hon Patrick

  Clegg, Sir Walter

  Jessel, Toby

  Cockeram, Eric

  Johnson Smith, Geoffrey

  Colvin, Michael

  Jopling, Rt Hon Michael

  Cope, John

  Kaberry, Sir Donald

  Corrie, John

  Kellett-Bowman, Mrs Elaine

  Costain, Sir Albert

  Kershaw, Anthony

  Cranborne, Viscount

  King, Rt Hon Tom

  Critchley, Julian

  Kitson, Sir Timothy

  Crouch, David

  Knight, Mrs Jill

  Dean, Paul (North Somerset)

  Knox, David

  Dickens, Geoffrey

  Lamont, Norman

  Dorrell, Stephen

  Lang, Ian

  Dover, Denshore

  Langford-Holt, Sir John

  Dunn, Robert (Dartford)

  Latham, Michael

  Durant, Tony

  Lawson, Nigel

  Dykes, Hugh

  Lee, John

  Edwards, Rt Hon N. (P'broke)

  Lennox-Boyd, Hon Mark

  Eggar, Tim

  Lester Jim (Beeston)

  Elliott, Sir William

  Lewis, Kenneth (Rutland)

  Emery, Peter

  Lloyd, Peter (Fareham)

  Eyre, Reginald

  Loveridge, John

  Fairgrieve, Russell

  Luce, Richard

  Faith, Mrs Sheila

  Lyell, Nicholas

  Farr, John

  McCrindle, Robert

  394

  Macfarlane, Neil

  Rossi, Hugh

  MacGregor, John

  Rost, Peter

  MacKay, John (Argyll)

  Royle, Sir Anthony

  McNair-Wilson, M. (N bury)

  Sainsbury, Hon Timothy

  McNair-Wilson, P. (New F'st)

  Scott, Nicholas

  McQuarrie, Albert

  Shaw, Giles (Pudsey)

  Madel, David

  Shaw, Michael (Scarborough)

  Major, John

  Shelton, William (Streatham)

  Marland, Paul

  Shepherd, Colin (Hereford)

  Marlow, Tony

  Shersby, Michael

  Marshall Michael (Arundel)

  Silvester, Fred

  Mather, Carol

  Sims, Roger

  Maude, Rt Hon Angus

  Skeet, T. H. H.

  Mawby, Ray

  Smith, Dudley

  Mawhinney, Dr Brian

  Spence, John

  Maxwell-Hyslop, Robin

  Spicer, Jim (West Dorset)

  Meyer, Sir Anthony

  Spicer, Michael (S Worcs)

  Miller, Hal (B'grove)

  Sproat, Ian

  Mills, Iain (Meriden)

  Squire, Robin

  Mills, Peter (West Devon)

  Stanbrook, Ivor

  Miscampbell, Norman

  Stanley, John

  Mitchell, David (Basingstoke)

  Steen, Anthony

  Moate, Roger

  Stevens, Martin

  Monro, Hector

  Stewart, Ian (Hitchin)

  Montgomery, Fergus

  Stewart, A. (E Renfrewshire)

  Moore, John

  Stokes, John

  Morris, M. (N'hampton S)

  Stradling Thomas, J.

  Morrison, Hon C. (Devizes)

  Taylor, Teddy (S'end E)

  Mudd, David

  Temple-Morris, Peter

  Murphy, Christopher

  Thatcher, Rt Hon Mrs M.

  Myles, David

  Thomas, Rt Hon Peter

  Neale, Gerrard

  Thomas, Donald

  Needham, Richard

  Thorne, Neil (Ilford South)

  Nelson, Anthony

  Thornton, Malcolm

  Neubert, Michael

  Townend, John (Bridlington)

  Newton, Tony

  Townsend, Cyril D, (B'heath)

  Nott, Rt Hon John

  Trippier, David

  Onslow, Cranley

  Trotter, Neville

  Oppenheim, Rt Hon Mrs S.

  van Straubenzee, W. R.

  Osborn, John

  Vaughan, Peter

  Page, John (Harrow, West)

  Viggers, Peter

  Page, Rt Hon Sir G. (Crosby)

  Waddington, David

  Page, Richard (SW Herts)

  Wakeham, John

  Parris, Matthew

  Waldegrave, Hon William

  Patten, Christopher (Bath)

  Walker, Rt Hon P. (W'cester)

  Patten, John (Oxford)

  Walker, B. (Perth)

  Pattie, Geoffrey

  Waller, Gary

  Pawsey, James

  Ward, John

  Pink, R. Bonner

  Warren, Kenneth

  Pollock, Alexander

  Watson, John

  Porter, Barry

  Wells, John (Maidstone)

  Prentice, Rt Hon Reg

  Wells, Bowen

  Price, Sir David (Eastleigh)

  Wheeler, John

  Prior, Rt Hon James

  Whitney, Raymond

  Proctor, K Harvey

  Wickenden, Keith

  Raison, Timothy

  Wiggin, Jerry

  Rathbone, Tim

  Wilkinson, John

  Rees, Peter (Dover and Deal)

  Williams, D. (Montgomery)

  Renton, Tim

  Wolfson, Mark

  Rhodes James, Robert

  Young, Sir George (Acton)

  Rhys Williams, Sir Brandon

  Younger, Rt Hon George

  Rifkind, Malcolm

  Tellers for the Ayes:

  Roberts, M. (Cardiff NW)

  Mr. Spencer Le Marchant

  Roberts, Wyn (Conway)

  and Mr. Anthony Berry

  NOES

  Abse, Leo

  Bray, Dr Jeremy

  Adams, Allen

  Brown, Hugh D. (Provan)

  Allaun, Frank

  Brown, Ron (E'burugh, Leith)

  Alton, David

  Brown, Ronald W. (H'ckn'y S)

  Anderson, Donald

  Buchan, Norman

  Archer, Rt Hon Peter

  Callaghan, Jim (Midd't n & P)

  Armstrong, Rt Hon Ernest

  Campbell, Ian

  Atkinson, N. (H'gey,)

  Canavan, Dennis

  Barnett, Guy (Greenwich)

  Cant, R. B.

  Beith, A. J.

  Carmichael, Neil

  Bennett, Andrew (St'kp't N)

  Carter-Jones, Lewis

  Booth, Rt Hon Albert

  Cartwright, John

  Boothroyd, Miss Betty

  Clark, Dr David (S Shields)

  Bradley, Tom

  Cocks, Rt Hon M (B'stol S

  395

  Cohen, Stanley

  Lambie, David

  Coleman, Donald

  Lamborn, Harry

  Conlan, Bernard

  Lamond, James

  Cook, Robin F.

  Leadbitter, Ted

  Cowans, Harry

  Leighton, Ronald

  Craigen, J. M.

  Lewis, Arthur (N'ham NW)

  Crowther, J. S.

  Lewis, Ron (Carlisle)

  Cryer, Bob

  Litherland, Robert

  Cunliffe, Lawrence

  Lofthouse, Geoffrey

  Cunningham, G. (Islington S)

  McDonald, Dr Oonagh

  Cunningham, Dr J. (W'h'n)

  McElhone, Frank

  Dalyell, Tam

  McGuire, Michael (Ince)

  Davies, Rt Hon Denzil (L'Ili)

  McKay, Allen (Penistone)

  Davis, Clinton (Hackney C)

  McKelvey, William

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

  Maclennan, Robert

  Deakins, Eric

  McNally, Thomas

  Dewar, Donald

  McNamara, Kevin

  Dixon, Donald

  McTaggart, Robert

  Dobson, Frank

  McWilliam, John

  Dormand, Jack

  Magee, Bryan

  Douglas, Dick

  Marks, Kenneth

  Douglas-Mann, Bruce

  Marshall, Dr Edmund (Goole)

  Dubs, Alfred

  Marshall, Jim (Leicester S)

  Dunnett, Jack

  Martin, M (G'gow S'burn)

  Dunwoody, Hon Mrs G.

  Mason, Rt Hon Roy

  Eadie, Alex

  Maxton, John

  Eastham, Ken

  Meacher, Michael

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

  Mikardo, Ian

  Ellis, Tom (Wrexham)

  Millan, At Hon Bruce

  English, Michael

  Miller, Dr M. S. (E Kilbride)

  Evans, Ioan (Aberdare)

  Mitchell, Austin (Grimsby)

  Evans, John (Newton)

  Morris, Rt Hon C. (O'shaw)

  Ewing, Harry

  Morris, Rt Hon J. (Aberavon)

  Faulds, Andrew

  Moyle, Rt Hon Roland

  Field, Frank

  Newens, Stanley

  Flannery, Martin

  Oakes, Rt Hon Gordon

  Fletcher, Ted (Darlington)

  Ogden, Eric

  Ford, Ben

  O'Halloran, Michael

  Forrester, John

  O'Neill, Martin

  Foster, Derek

  Orme, Rt Hon Stanley

  Foulkes, George

  Palmer, Arthur

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

  Park, George

  Freeson, Rt Hon Reginald

  Parker, John

  Garrett, John (Norwich S)

  Parry, Robert

  Garrett, W. E. (Wallsend)

  Pavitt, Laurie

  George, Bruce

  Penhaligon, David

  Gilbert, Rt Hon Dr John

  Powell, Raymond (Ogmore)

  Graham, Ted

  Prescott, John

  Grant, George (Morpeth)

  Price, C. (Lewisham W)

  Grant, John (Islington C)

  Race, Reg

  Hamilton, James (Bothwell)

  Radice, Giles

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

  Rees, Rt Hon M (Leeds S)

  Hardy, Peter

  Richardson, Jo

  Harrison, Rt Hon Walter

  Roberts, Allan (Bootle)

  Hart, Rt Hon Dame Judith

  Roberts, Ernest (Hackney N)

  Hattersley, Rt Hon Roy

  Roberts, Gwilym (Cannock)

  Haynes, Frank

  Robertson, George

  Healey, Rt Hon Denis

  Robinson, G. (Coventry NW)

  Heffer, Eric S.

  Rooker, J. W.

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

  Roper, John

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

  Ross, Ernest (Dundee West)

  Home Robertson, John

  Ross, Stephen (Isle of Wight)

  Homewood, William

  Rowlands, Ted

  Hooley, Frank

  Sever, John

  Horam, John

  Sheerman, Barry

  Howell, Rt Hon D.

  Sheldon, Rt Hon R.

  Howells, Geraint

  Shore, Rt Hon Peter

  Hudson Davies, Gwilym E.

  Silkin, Rt Hon J. (Deptford)

  Hughes, Mark (Durham)

  Silkin, Rt Hon S. C. (Dulwich)

  Hughes, Robert (Aberdeen N)

  Silverman, Julius

  Hughes, Roy (Newport)

  Skinner, Dennis

  John, Brynmor

  Smith, Rt Hon J. (N Lanark)

  Johnson, James (Hull West)

  Soley, Clive

  Johnston, Russell (Inverness)

  Spearing, Nigel

  Jones, Rt Hon Alec (Rh'dda)

  Spriggs, Leslie

  Jones, Barry (East Flint)

  Stallard, A. W.

  Jones, Dan (Burnley)

  Steel, Rt Hon David

  Kaufman, Rt Hon Gerald

  Stewart, Rt Hon D. (W Isles)

  Kerr, Russell

  Stoddart, David

  Kilroy-Silk, Robert

  Stott, Roger

  396

  Strang, Gavin

  White, Frank R.

  Straw, Jack

  White, J. (G'gow Pollok)

  Summerskill, Hon Dr Shirley

  Whitehead, Phillip

  Taylor, Mrs Ann (Bolton W)

  Whitlock, William

  Thomas, Jeffrey (Abertillery)

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

  Thomas, Mike (Newcastle E)

  Wilson, Gordon (Dundee E)

  Thomas, Dr R. (Carmarthen)

  Wilson, Rt Hon Sir H. (H'ton)

  Thorne, Stan (Preston South)

  Wilson, William (C'try SE)

  Tilley, John

  Winnick, David

  Tinn, James

  Woodall, Kenneth

  Torney, Tom

  Woolmer, Kenneth

  Urwin, Rt Hon Tom

  Wrigglesworth, Ian

  Varley, Rt Hon Eric G.

  Young, David (Bolton E)

  Wainwright, E. (Dearne V)

  Tellers for the Noes:

  Walker, Rt Hon H. (D'caster)

  Mr. Hugh McCartney and

  Watkins, David

  Mr. George Morton

  Welsh, Michael

  Question accordingly agreed to.
  Resolved,
  That the draft Housing Support Grant (Scotland) Order 1981, which was laid before this House on 12 January, be approved.
  Resolved,
  That the draft Housing Support Grant (Scotland) Variation Order 1981, which was laid before this House on 12 January, be approved.
  That the draft Housing Support Grant (Scotland) Variation (No. 2) Order 1981, which was laid before this House on 12 January, be approved.—[Mr. Rifkind.]

  Criminal Procedure (Royal Commission's Report)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Berry.]
  1.37 am
  Mr. John Ryman: I wish to raise the question of the report of the Royal Commission on criminal procedure, under the chairmanship of Sir Cyril Philips, which reported in January. I am indebted to the Minister of State, Home Office, for being here to reply to the debate and to express the views of the Government on this subject. The report has only recently been published. There has not yet been sufficient time to absorb all the recommendations, or for any public or parliamentary debate to take place. I believe that this is the first occasion for the House to have the opportunity, albeit a short one, to consider these important recommendations.
  I wish to take this opportunity to congratulate the commission on its recommendations, on its hard work, and on the painstaking way in which it accumulated a mass of evidence and gave careful consideration to a difficult subject. I believe that it is the first time that there has been a comprehensive review of the history and practice of the investigation of offences and the prosecution of offenders.
  In view of the size of the subject, I ask only: what is the Government's reaction to the report; may we have an opportunity to debate the report in the near future; and what is the likely cost of implementing some of the recommendations in the report?
  The thread that appears to run through the report is the difficult balance that has to be achieved between strengthening the powers of the police to prevent crime, detect, apprehend and successfully prosecute criminals and protecting civil liberties and the rights of a person in custody.
  On the whole, that difficult question has been sensibly and well analysed by the commission, and I suggest that a fair balance has been achieved. The commission has

  397
  undoubtedly made a large number of recommendations, on the one hand, to strengthen the powers of police officers—for example, in respect of searches of persons, vehicles and so on—and, on the other hand, to increase the rights and protection afforded to persons detained in police custody.
  I suggest that the criterion set in chapter 5—
  "Summary and conclusions of Part I: the investigation of offences"—
  is fair. Basically, the Commission recommends that, in order for the public to have confidence in the police, the criterion should be one of fairness, openness and workability as a means of evaluating existing procedures and proposals for change.
  The Government must grasp the nettle and decide whether, in effect, to introduce legislation in due course to increase police powers. I think that some of the comments in the press, when the report was originally published, were extremely irresponsible. I suggest that the powers of the police should be substantially increased in respect of matters such as search. If the police are to perform their task properly, they must have greater powers.
  On the other hand, I agree with the tenor of the commission's recommendations that if we give the police greater powers, at the same time we must increase protection for the individual who may be taken into custody to ensure that he is not kept in custody any longer than is absolutely essential.
  To this end the commission has recommended that an outside force should exist to supervise how long a person can be kept in police custody either by being brought before a magistrate within a specified period or by ensuring that a solicitor visits the detained person. I think that is a sensible compromise. The commission obviously considered whether somebody should be in a police station to keep watch on what happens but rightly rejected that proposal as being unrealistic.
  The commission is to be congratulated on rejecting a number of other unrealistic and distasteful proposals—for example, the mass finger printing of the whole population.
  I ask the Minister to deal wih a number of specific matters when he replies to the debate. First, will the government consider embarking on consultations with the legal profession and other interested bodies regarding the implementation of the recommendations set out in chapter 9 relating to the prosecution of offenders? Those proposals concern the legal profession and the organisation of the courts. Could these be implemented without great public expense?
  Secondly, will the Government consider urgently implementing the proposals to improve the system whereby records of police questioning are kept, particularly in relation to the phased introduction of tape recorders for interviews? That is urgent because there appears to be agreement on all sides that the present system is unsatisfactory and that something must be done. The sooner something is done the more helpful it will be.
  Thirdly, will the Government consider asking the Law Commission to examine the judges rules and the suggested amendment to them by the introduction of a code of practice for regulation of interviews? The Commission recommends that and that a breach of the rules should not render any evidence adduced in breach of those rules as inadmissible but that the breach should go only to the weight of the evidence. Will the Government consider
  398
  referring that matter to the Law Commission in order to obtain the Commission's views on the practicability of introducing legislation? It is unsatisfactory that, if evidence is obtained in breach of certain rules, whether it be the judges rules, or a code of practice, nevertheless the evidence is admitted and the jury is simply directed that it should pay less attention to that evidence or that it goes to weight of evidence rather than admissibility.
  A number of other proposals are sensible and capable of implementation soon. Many other recommendations would take much longer to consider and require much consultation.
  I do not dwell further on the subject because time is short. The Minister will have much to say about the Government's views. However, I have several questions to ask. Do the Government—and I suggest that they should—in general terms, welcome the Commissions's report? Do they agree with the tenor of the report and believe that it strikes a fair balance between increasing the powers of the police and increasing the safeguards of people in custody?
  Will the Government undertake to begin the detailed process of consultation as quickly as possible with the legal professions and other interested parties so that specific recommendations can be implemented as soon as possible? Will the Minister indicate when there will be an opportunity for a full parliamentary debate on the topic? Will he consider issuing a discussion paper setting out the Government's views of the recommendations?
  The report is important. It was published only a year or so after the Royal Commission's report on legal services. The legal profession has already taken steps to implement that report and is to be congratulated. The profession has taken steps to improve criminal procedure in the courts. I speak, for example, of the question of summons for directions in criminal cases which saves an enormous amount of time and public money. Another example is the question of admissions under section 10, which saves the time of witnesses. That is a further step in a healthy procedure of improving the quality of justice. I ask the Minister to give the issue urgent consideration.
  1.49 am
  Mr. George Cunningham: My hon. Friend the Member for Blyth (Mr. Ryman) and the Minister have kindly allowed me a minute in the middle of the debate, and I want to use it only to put one point to the Minister.
  The question is how the House will deal with the consideration of this important and valuable report. It would be possible for the Government to delay until they had made up their own mind on all or most of the recommendations in the report. I suggest to the Minister that that would not be a desirable way of proceeding and that it would be better—after the Government have had time to digest the proposals, of course—for us to have a trot-over-the-ground-type debate on either an Adjournment motion or on a take-note motion, so that before the Government finally make up their own mind on the recommendations that have been made they can have the benefit of hearing the views of as many Members as possible.
  1.50 am
  The Minister of State, Home Office (Mr. Patrick Mayhew): I congratulate the hon. Member for Blyth (Mr.

  399
  Ryman) upon his choice of subject and on securing our Adjournment debate tonight. I entirely agree with him when, in his closing sentences, he described the report of the Royal Commission on criminal procedure as a most important report and one which takes its place in a series of reports, recommendations and measures which the legal profession has itself initiated, with a view to bringing its procedures up to date and providing a better service for those who depend upon the law for their rights.
  The questions that the hon. Gentleman asks are very relevant. The Government indeed want to be told what the profession and all other interested parties think about this very comprehensive report. As my right hon. Friend the Home Secretary said when the report was published, it is our hope that a very wide-ranging body of opinion will make itself felt, so that the Government can come to their conclusions.
  I hear what the hon. Member for Islington, South and Finsbury (Mr. Cunningham) has asked me. These matters do not rest with me, but I would judge it very helpful for the Government to have at an appropriate time the kind of debate that he suggests, as part of the process by which they can be informed of general views about the contents of the report.
  This represents the first opportunity that the House has had to debate and consider the Royal Commission's report. It must be a very brief debate, naturally, a somewhat superficial one, but I have carefully noted the points that the hon. Member for Blyth has made. I know that he will not expect me to give a full exposition of the Government's response now. Indeed, it would be quite wrong to do so until we have had the benefit of other people's views. But I entirely share what I take to be the hon. Gentleman's wish to devote this occasion to drawing attention to some of the main features of the commission's report, at which we shall all, I hope, be looking in closer detail in the coming months, and to suggest some of the questions that I believe we shall have to ask ourselves about it. The House may well decide that it wishes to have a debate.
  Even before the report was published, speculation on its possible contents provoked some comment and criticism. I rather agree with what the hon. Gentleman said about some of the instant criticism that greeted the report's publication. Any sensible consideration of the report leads one to agree with his description of it as striking a fair balance between the opposing interests—those of the public in seeing that the police are adequately equipped for the tasks that we place upon them and those of seeing that the liberties of the subject are not unnecessarily constrained. It was astonishing to find campaigns against the report being launched before hon. Members could have had time to read it, let alone to meditate on its contents.
  The commission observed that this was the first thorough-going review of criminal procedure for more than a century. As it stands, the law is often confused and uncertain. It has developed over a long period without any notable logic or consistency in some respects. There are many anomalies. Much of it was originally enacted in social circumstances quite different from those of today. For example, existing powers to stop and search vehicles date from a time before the invention of the internal combustion engine and the vast social changes that have accompanied it.
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  Both the police and the suspect are hampered by this state of affairs—the police because they may be obliged to operate in areas of doubtful or ambiguous legal authority and the suspect because his rights at any particular moment may be so unclear that he lacks any prope or practical legal protection.
  Clearly, therefore, there was a case for rationalisation. To do that for its own sake would be a very doubtful reason for the establishment of a Royal Commission. It reminds us that in the period before it was set up there had been a good deal of concern about the operation of police powers and procedures—the eleventh report of the Criminal Law Revision Committee on evidence, the Confait case and so on. It was necessary, therefore, to look at the way in which suspects were brought to trial to ensure that justice was done and seen to be done.
  Whatever view one takes of its recommendations, including, for example, the point to which the hon. Member referred—the consideration which the commission gave to tape recording police interviews, for which thereis, in my opinion, much to be said, although, equally, there are powerful considerations against it—the commission is to be congratulated on rising to this challenge. Its report is very full. I should like to associate myself with the tribute that the hon. Member very properly paid to it.
  The report covers every aspect of pre-trial procedures, from arrest to trial, dealing also with powers of search, bringing cases to trial and the possible organisation of a new prosecuting system. In pursuing its arguments, the commission makes use of a series of specially conducted research studies, all of which have been published separately. The report is complemented by a companion volume setting out in a useful form a digest of the present arrangements. In the same way as the commission evidently saw its recommendations, whether on police powers or the prosecution process as interrelated, so I am sure the commission would hope that its report would be read in conjunction with the research and law and procedure volumes. I commend them to hon. Members because they are, like the report, lively and readable, which, again, distinguishes this report from many others.
  The hon. Member asked whether the Government would consult the Bar, in particular on the proposals relating to prosecutions in chapter 9. We very much hope that all who prosecute, prosecuting solicitors and prosecuting members of the Bar, as well as those who defend, will give us the benefit of their views on those topics.
  When the Royal Commission was established, the then Prime Minister referred to the balance which was to be struck
  "between the interests of the whole community and the rights and liberties of the individual citizens."
  The commission has adopted this concept of a fundamental balance and it provides the foundation of its work. It observes that debate tends to be polarised between those to whom the interests of justice are paramount and those with an absolute belief in the rights of the suspect or individual members of the public.
  To some extent, the commission continues, it is possible to reconcile these points of view by balancing any increase in the powers of the police with compensating safeguards in the rights of the suspect. But the commission did not find this approach universally helpful. In many instances, the commission found that views were being

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  advanced in areas in which there was a good deal of ignorance about the effects of existing procedures, and it was here that research had a vital part to play. It was not just a question of arbitrating between two extremes.
  Here I might interpose that I have carefully noted what the hon. Gentleman said about asking the Law Commission to look at the proposals relating to the judges' rules. We shall certainly take that proposal into account. I have heard what the hon. Member said about whether it is just for evidence that has been obtained in breach of the judges' rules, or whatever code of practice might replace them, to be heard and whether that should be adbmissible. At the moment, there is a discretion, as the hon. Gentleman knows, for a judge to determine whether to admit the timed note—the point that he makes in that regard.
  In putting forward its recommendations, the commission strove to maintain the balance to which the then Prime Minister referred. There have been those who have argued that it is not for a Royal Commission to deal with the balance but to deal only with the questions which need to be resolved before the balance can be struck. It may help here to repeat the commission's words that
  "It is for Parliament to decide how the fundamental balance in pre-trial procedures is to be defined and maintained".
  That is from paragraph 10.13. Again, the commission says:
  "Our proposal for regulating in a comprehensive statutory framework arrangements for the investigation of offences and the prosecution of offenders affirms that Parliament has the duty of striking the fundamental balance and of keeping it under regular review."
  That is paragraph 10.16. I do not think the commission could have been more explicit in setting down the exact limitation of its responsibilities and in reminding this House of ours in reading the report and taking stock of its arguments.
  The report is in two parts, dealing respectively with the investigation and the prosecution of offences, and it is on the former that argument so far has tended to concentrate. If implemented, the commission's proposals would cut through the haphazard entanglements of existing procedures which I have already mentioned and replace them with a quite new procedure in which the respective positions of the police and the suspect would be clearly and systematically defined for the first time. Existing powers of stop and search would be placed on a single footing. The powers of arrest without warrant, which at present derive with no consistency from a number of different statutes, would be similarly brought into line. Clear limitations would be placed on the powers of the police to detain after arrest. The procedures contained in the judges' rules would be brought up to date and given statutory force, and so on.
  Some critics have been quick to select and condemn these and other recommendations as unwarrantable extensions of police powers. But I wonder whether this does justice to either the commission's intentions or what, on closer inspection, it actually says. Is it enough, for example, to compare such recommendations with the existing arrangements without setting them in the wider context of the commission's proposals as a whole?
  It is true, for example, that in the commission's system the police would have wider powers of arrest without warrant than at present. The existing position is that there is a power of arrest for any offence punishable with at least five years' imprisonment and, in addition, for a number
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  of other offences. Under the commission's proposals, this would be extended to any imprisonable offence. But the commission argues that, since it also proposes that a suspect should not be detained after arrest except in carefully defined circumstances—rather like the circumstances in which a person may be refused bail under the Bail Act—the extension of powers of arrest without warrant would not in fact lead to their wider use.
  The commission proposes that there should be a code of practice for the regulation of interviews. The criticism has been made that the commission does not go on to propose—apart from certain limited and rather extreme circumstances—that evidence put forward at the trial in breach of the code of practice should be made inadmissible. Instead, the commission believes that the court should merely be empowered to make an assessment of the reliability of such evidence.
  It should be emphasised that this recommendation—with which I do not for the moment record my agreement or dissent—does not reflect any degree of satisfaction with the existing state of affairs. But, after a careful study of the jurisdictions in which an "exclusionary" rule was practised, the commission came to the conclusion that it could not recommend it. If introduced in this country, it maintains, it could only
  "give rise to an increase of disputes about the admissibility of evidence",
  resulting in
  "an increase in court time spent on matters which are not concerned with the innocence or guilt of the accused".
  And this
  "would risk a diminution of public respect for the institutions of criminal justice".
  That is set out in paragraph 4·128.
  I say this not by way of defending—I do not think they need defending—the commission's recommendations. That is not my business this morning. I wish merely to elucidate its approach to the problem.
  I set out at least two of the ways in which the Government will wish to address themselves to the first part of the report. First, there is the question of balance. We should need to make sure that in any new scheme of pre-trial procedure the power of the police would be matched by adequate safeguards for the suspect. Secondly, we shall need to be satisfied that the available information really supports any changes that are contemplated in present arrangements. Crucial recommendations, including those on the admissibility of evidence, which I have just mentioned, on the right of silence and on the tape-recording of interviews, depend on an assessment of existing procedures and of research material, on which we shall have to take a view, together with the opinions of those who we hope will inform us, before taking a decision on the commission's proposals themselves.
  I find that the second part of the report has been much less widely discussed. I hope that this will be put right in the coming months, because the questions at issue in the second part are arguably at least as important as those in the first. Who should take charge of the prosecution of offences? Should it be the police, as it is at present, or should there be a new prosecuting authority independent of the police? What should be the role of the police prosecuting solicitor's departments, and upon what criteria should they or the new authorities operate? Here the

  403
  commission seems to have left some of its recommendations perhaps open-ended, partly, no doubt, because the problems are less concrete and there is, accordingly, more room for manoeuvre on points of detail.
  At present, the responsibility for the police decision to prosecute generally speaking rests with the chief constable concerned. Under the commission's proposals, the Crown prosecutor would be accountable in terms of management to what is at present the local police authority, but his prosecution policy would be accountable to either the Home Secretary or the Attorney-General, who is in turn accountable to Parliament. The choice of one or the other of these raises intriguing constitutional questions which we cannot enter upon tonight.
  Any movement in the direction suggested by the commission on prosecutions would have unavoidable and direct public expenditure implications. The extension as a first step of prosecuting solicitor's departments to all police areas and the creation of a prosecution inspectorate cannot be done without increases in public expenditure, increases which we should have to measure very carefully against possible benefits.
  These, then, are some of the questions to which the Government will be addressing themselves in future months. In our consideration of the report, we shall, of course, be anxious to take into account, as I have said, the comments of everyone concerned with the subject, and, of
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  course, the comments and opinions of the House. We attach high value to a full public discussion of the commission's proposals. Indeed, anything less would not do them justice. So I welcome this debate in that spirit.
  In conclusion, I refer to the hon. Gentleman's last question as to whether the Government welcome the report. Yes, indeed, we do, and wholeheartedly. I take this opportunity to repeat once again our thanks to the commission and its chairman, Sir Cyril Philips. At a time when some have sought to discredit the role of the Royal Commission in the formulation of public policy, this Royal Commission has demonstrated how such a body can bring fresh insights to what have been found to be intractable problems. In its painstaking analysis of arguments, its imaginative use of research and the comprehensive scope of its recommendations, no one who discusses criminal procedure in future years will be able to dismiss the commission's work.
  I give an assurance that the Government will be looking at the commission's findings in the same reasoned and constructive spirit as they have been put forward. We very much hope that this will be an ambition which we can all share and act upon so that we can as a community create a new and enduring balance in a vital area of our criminal law.
  Question put and agreed to.
  Adjourned accordingly at seven minutes past Two o' clock.

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

The Electoral System and Government
Lord Aylestone: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will set up a Royal Commission to consider the electoral system used for election to the House of Commons in relation to the principle of one vote, one value and to consider the advantages or otherwise of a single chamber form of Government.
The Parliamentary Under-Secretary of State, Home Office (Lord Belstead): My Lords, as the Government are firmly committed both to a bicameral form of government and to the present system of elections to another place, they do not think that any useful purpose would be served by setting up a Royal Commission to examine these matters.
Lord Aylestone: My Lords, while thanking the noble Lord for his somewhat disappointing reply, may I ask him two questions? First, would the Government agree that the dual principles of "one man, one vote" and "one vote, one value" are essential to our parliamentary democracy? Secondly, would there not be an advantage in setting up a Royal Commission to look at the question of unicameral government, in view of the possibility that it may be an issue at the next general election and the electorate would then have in front of them the learned comments of a Royal Commission in addition to party political propaganda?
Lord Belstead: My Lords, the Government believe that our present simple majority system is most appropriate to the elections to another place. It is well understood by the electorate and provides close and correct constituency representation. Regarding the noble Lord's second supplementary question, I really think that the work of your Lordships' House speaks for itself. We revise, but we also initiate. I think that anyone who listened to the debate held on Wednesday of last week which was initiated by the noble Baroness, Lady Masham, would agree that important matters can be discussed here, giving rise to independent views being voiced. Doubtless a Royal Commission would draw attention to these advantages as well as warning against the dangers of single chamber government, but I suggest to the noble Lord that the electorate is very well seized of these points already.
Lord Balfour of Inchrye: My Lords, may I ask the Minister whether he does not consider it to our
418
country's advantage to have Members of your Lordships' House of great experience such as the late Lord Amory, whose presence we shall miss a great deal and who was appreciated and thought of with great affection by Members on all sides of your Lordships' House?
Several noble Lords: Hear, hear!
Lord Belstead: My Lords, I am sure the whole House would want to join with my noble friend Lord Balfour in what he has just said. Lord Amory was distinguished not only for the achievements of his career but also for the regard and affection in which he was held by all who knew him. Many of us believe that his gentle manner, his sense of humour and also his support for this House are now going to be very sorely missed.
Lord Beswick: My Lords, while all Members of this House might think that this House is a good thing, is it not also a fact that all parties have said that some measure of reform is required? Would there not be some considerable advantage in having the issues involved considered in the sort of atmosphere which a Royal Commission could generate?
Lord Belstead: My Lords, I am not quite sure what sort of reform the noble Lord has in mind. The Government are carefully considering various proposals for legislation designed to protect the constitutional powers of this House, but so far as the general question of House of Lords reform is concerned the Government have not yet made up their minds.
The Lord Bishop of Derby: My Lords, in view of the fact that the present Government are likely to be succeeded at some unpredictable date in the future by another elected dictatorship given over to the abolition of this House, does the Minister not consider that the surest way to preserve dual chamber government and a reformed House here is to have election to the House of Commons by some sort of proportional representation?
Lord Belstead: My Lords, I have already made it clear that I do not follow the right reverend Prelate down that particular path.
Lord Elwyn-Jones: My Lords, the reference to "elected dictatorship" does not bear much resemblance to the experience of this country of very successful Labour Governments which have done nothing but good to the country.
Lord Rochester: My Lords, will the noble Lord not agree that a Royal Commission such as that proposed by the noble Lord, Lord Aylestone, would be well placed to consider the merits of the view that in the long run an electoral system based on the principle of "one vote, one value" would contribute greatly to an improvement in our industrial relations and performance?
Lord Belstead: My Lords, the question is about the method of election to another place, and we must each have our point of view. The Government's view is that the present system of election to another place is the one which has the greatest advantages. Therefore,

419
we would not support the setting up of a Royal Commission to inquire into this particular subject.
Lord Derwent: My Lords, as no Royal Commission ever reports for several years, would not a Royal Commission perhaps stop all the discussion on these subjects, to everyone's satisfaction?
Lord Belstead: It might, my Lords. But there are some people who will not leave this subject alone.
Lord Mackie of Benshie: My Lords, it might be agreed that the present electoral system has great advantages for the two major parties. Would the Minister not agree that electoral reform might benefit the country a great deal more?
Lord Belstead: My Lords, I can well understand that beauty is in the eye of the beholder, and that to the Liberal Party there are certain reasons why proportional representation is desirable. This does not necessarily mean, though, that proportional representation in the system of elections to another place is in the best interests of that House.
The Lord President of the Council (Lord Soames): My Lords, although I see the point of my noble friend Lord Derwent, I think perhaps we should impose upon ourselves a self-denying ordinance.

Canada: Amendment of Acts and Statute
2.44 p.m.
The Earl of Selkirk: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a statement in respect of the Canadian proposal to amend the British North America Acts and the Statute of Westminster.
The Secretary of State for Foreign and Commonwealth Affairs (Lord Carrington): My Lords, no request to amend the British North America Acts and the Statute of Westminster has been received. The matter is before a Joint Committee of both Houses of the Canadian Parliament. This is, therefore, not the moment to make a statement.
The Earl of Selkirk: My Lords, would my noble friend not agree that there are certain matters pending, and that it is of prime importance that the intimate and close personal relations existing between this country and Canada should be maintained? Could we not, therefore, seek to let the Canadians resolve their own internal problems and, for instance, wait until their courts have decided the constitutional issue themselves? Would it not be utterly ridiculous if we came to one decision and the courts in Canada came to a different decision?
Lord Carrington: My Lords, I agree wholeheartedly with the first part of my noble friend's supplementary question. I think it very important that we should have good relations with the Canadian Government. As for the second part, I have no doubt that the Canadian Government will read what he has said.

Spectacle Frame Prices
2.45 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 what action they now propose to encourage the reduction in the price of spectacle frames and to allow the sale over the counter of straightforward reading glasses.
Lord Cullen of Ashbourne: My Lords, as noble Lords may already know, the optical profession's ruling body, the General Optical Council, decided in November to amend their statutory rules on publicity so that opticians may be allowed to display prices in their windows. Under the established procedure, revised regulations to bring the proposed amendments into force cannot be laid before Parliament until the approval of the Privy Council has been obtained. The General Optical Council expect to seek formal approval early in March. The Government consider that to allow the sale of reading glasses by unqualified persons without an eye examination would not be in the best interests of patients.
Lord Orr-Ewing: My Lords, will my noble friend bear in mind that that Answer will be a great disappointment to a million people who buy simple reading glasses in this country, and who now pay an average of £40 or more per pair, whereas in America and other advanced countries the price is £5 or less? It will be remembered that this Government were elected to encourage competition and that for a third of a century the General Optical Council, through restrictive practices, has forbidden dispensing opticians to display prices. It is good news that this is now to be rescinded, belatedly. But could my noble friend not do more to encourage competition, and allow people who have collected their prescription from a qualified tester to take that prescription to any shop which could make up the glasses to meet their requirements?
Lord Cullen of Ashbourne: My Lords, we have been into this matter on several occasions in the past, and the Government still stand by their view that they do not think that people should be able to buy glasses without an eye examination. I would say, however, that any sensible person who is liable to break his glasses has a spare pair and, if you do break your glasses, you can always go back within 12 months to your optician who has your prescription and get another pair of glasses.
Lord Northfield: My Lords, is it not the case that this Government were elected to further competition, and made very sympathetic noises on this matter when

421
we all first raised it? Why are they now in retreat on this matter? Is it not possible that great savings would be made to the National Health Service, or, at least, significant savings, if people who have simple failing eyesight with age, as my own is, were able to buy off the peg, instead of having to buy through the Health Service? Would this not save a significant amount of money? Secondly, what will now happen if reputable companies put on sale glasses from Hong Kong over the counter? Are the Government going to prosecute them?
Lord Cullen of Ashbourne: My Lords, to answer the first part of the noble Lord's question, competition will be helped by the display of prices. That will undoubtedly be helpful. My honourable friend the Minister of Health is engaged at the moment in discussing increasing the range of NHS glasses, which would also help. Although we are, of course, in favour of further competition, we have also to take into account the views of the medical profession.
Lord Northfield: My Lords, would the noble Lord answer me on prosecution? Is he actually going to prosecute firms who put these on sale?
Lord Cullen of Ashbourne: My Lords, the position on that is that if somebody goes against the regulations of the General Optical Council and the Government, he would be likely to be prosecuted by the General Optical Council—not by the Government.
Lord Wells-Pestell: My Lords, can the Minister give the House any indication of when the Government are likely to be able to say when and in what way National Health Service spectacles will be improved? This is important. Several Governments, I admit, have said this over the years. In view of what the private practice sector is going to do, it is desirable that we should bring our own frames up to a much better quality and offer a wider choice.
Lord Cullen of Ashbourne: My Lords, the noble Lord is quite right. This has been gone into for a very long time. It may be of interest to the House to know that yesterday my honourable friend the Minister of Health had meetings with opticians and the Ministry.
Lord Leatherland: My Lords, in view of the fact that many people who wear glasses have one good eye and one defective eye, would it be possible for monocles to be prescribed on the National Health Service?
Lord Rugby: My Lords, do not the sheer force of logic and the highest medical opinion accept that there are two categories of optical aids: simple reading glasses or magnifiers for normal, healthy vision and, secondly, appliances for correcting, remedying and relieving defective vision? Any confusion or ambiguity between these two categories is at present leading to the wholesale exploitation of the nation's eyesight.
Lord Cullen of Ashbourne: My Lords, the noble Lord appears to have made a statement rather than to have asked a question.
Lord Jacques: My Lords, why are the Government so short-sighted?
Lord Segal: My Lords, would the noble Lord consider making available on the National Health Service a simple hand magnifying glass for reading which would obviate altogether the need for an optical examination and for spectacle frames?
Lord Cullen of Ashbourne: My Lords, I will with pleasure pass on that suggestion to my right honourable friend.
Lord Orr-Ewing: My Lords, will my noble friend hear in mind that I was a member of an all-party delegation, led by Lord Rugby, which went to see the Minister? We had with us in that delegation Mr. Trevor-Roper, senior consultant at Moorfields Eye Hospital. It was made clear by him that no possible damage could be done to the eyesight of those people requiring reading glasses—and those are 95 per cent. of the glasses sold in this country. As this system operates for the 220 million people in the United States, who are very careful of their health, why cannot we have a little more liberty and prices a little lower?
Lord Cullen of Ashbourne: My Lords, I had the pleasure of attending that meeting and I know perfectly well what Mr. Trevor-Roper had to say. However, I do not believe that everybody in his profession would agree with him.

The Money Supply and Inflation
2.54 p.m.
Lord Jacques: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, as a consequence of the increase in the money supply in 1980, they now anticipate higher inflation in 1982.
The Minister of State, Treasury (Lord Cockfield): My Lords, as the medium term financial strategy made clear, control of the money supply over a period of years will reduce the rate of inflation. But while the link between the money supply and inflation over time is clear it would not be right to assume that a short period of rapid growth, such as occurred in the second half of 1980, will necessarily feed through directly to inflation at some point in the future. If we maintain the thrust of the medium term financial strategy, then we can expect to maintain the downward momentum in inflation established in 1980.
Lord Jacques: My Lords, would the Minister agree that that is a little bit of a U-turn? Ever since they took office the noble Lord and his colleagues have been telling us that the changes in the money supply would be reflected in the changes in inflation after a period of 18 months to two years. Are they now departing from that philosophy?
Lord Cockfield: No, my Lords, No U-turn is involved here. If I may quote the speech that I delivered in your Lordships' House a year ago, what I then said was this:
"There is general agreement that there is a considerable time lag between changes in the growth of money supply and changes in the rate of inflation. There is some dispute as to how long the time lag is but the noble Lord's right honourable friend Mr. Denis Healey claimed that it was considerable. He suggested a period of the order of two years".
Lord Kaldor: My Lords, in view of the fact that for the first nine months of this financial year the public sector borrowing requirement is £3 billion higher than in the last financial year and that that part of it which is financed by domestic credit expansion, or by printing money as it is sometimes called, is 60 per cent. higher than the year before, would not the noble Lord agree that this Government are pursuing an increasingly inflationary policy which far exceeds, on their own criteria, any degree of inflation brought about by the previous Government?
Lord Cockfield: My Lords, the excess growth both in the money supply and in the public sector borrowing requirement are matters of real concern. This is why my right honourable friend the Chancellor of the Exchequer announced on 24th November a series of measures both to reduce the level of public expenditure and to increase revenue. So far as the rate of inflation is concerned, I would draw the noble Lord's attention to the fact that after reaching a peak of 21·9 per cent. it has come down every month since then and has now been reduced to 15·1 per cent.
Lord Mackie of Benshie: My Lords, in that case it appears to show a certain logic: an increase in the money supply. If inflation has come down 6 per cent., then the money supply has gone up far beyond the Government's target.
Lord Cockfield: My Lords, the noble Lord is assuming an instantaneous connection between changes in the money supply and changes in the rate of inflation. This is a matter which I have also dealt with at length in debates in your Lordships' House.
The Earl of Onslow: My Lords, is it not true that inflation has come down very markedly and that we should congratulate the present Government upon bringing this about? Is it not also true that there are several methods of measuring the money supply, some of which are at direct variance with other methods? I believe that sterling M1 points to a totally different view from sterling M3.
Lord Cockfield: My Lords, I am most grateful to my noble friend. In looking at the money supply the Government pay attention not only to M3, in terms of which the targets are announced, but also to other measures of the monetary aggregates. So far as the rate of inflation is concerned, it has come down very markedly and will continue to come down.
Viscount St. Davids: My Lords, would not the noble Lord agree that in fact the Government do not expect any such troubles in 1982, for the simple reason that
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they are now taking counter-measures to anticipate them?
Lord Cockfield: My Lords, I am equally grateful to the noble Viscount. On 24th November the Government took vigorous measures, and they will continue to take measures to ensure that on both fronts we keep within the desired range.
Lord Bruce of Donington: My Lords, is the noble Lord aware, however, that the annual rate of inflation is still running 50 per cent. above the annual rate of inflation that was in existence when the noble Lord's party took office? Will he inform the House whether he intends to maintain a very close liaison indeed with Professor Alan Walters, the Prime Minister's new economic adviser, who predicts that there is a five-year time lag between the increase in the money supply and the development of the rate of inflation? When the noble Lord next addresses the House on this subject, upon which he is expert, will he pin himself down on the matter of time lags—and they have varied—which he has progessively expounded to the House during the last 18 months and let the House have fairly before it his own position?
Lord Cockfield: My Lords, the noble Lord will find my own views on this matter, which coincide with those of the Government, set out in detail in a number of speeches that I have delivered.
So far as his first supplementary question is concerned, the position is that the rate of inflation at 15·1 per cent. at present is measured over a 12-month period. If one looks at the underlying trend, which is better measured by the six-months figure, that is below 10 per cent., and falling. At the end of the life of the Labour Government the underlying rate of inflation was 13 per cent., and rising. The position therefore is that matters were deteriorating under the Labour Government but they are improving under the Conservative Government. I am most grateful to the noble Lord for drawing attention to the matter.
Baroness Gaitskell: My Lords, can the noble Lord explain to a non-expert why it is that every time the rate of inflation goes down one point we get 1 million unemployed? We do not understand why that is, and it is no good trying to convince us that it means anything at all.
Lord Cockfield: My Lords, the two factors are not connected in that way.
Baroness Gaitskell: Why not?
Lord Cockfield: My Lords, a lot of things are not connected, and the unfortunate fact is that excessive wage increases lead to unemployment as people price themselves out of jobs. The present level of unemployment is due partly to the world recession; it is also due to the exceptionally high level of wage settlements last year. Therefore it is a matter of particular encouragement that the figures released this morning show a sharp reduction in the rate of increase of earnings.
Lord Beswick: My Lords, if the underlying trends are so encouraging, as the noble Lord pointed out,

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can he say why there has been no further reduction in the interest rate?
Lord Cockfield: My Lords, the noble Lord is always, very rightly, greatly concerned about the rate of interest. We share his concern. There have been two reductions in the minimum lending rate and we look forward to further reductions as the economic conditions improve.
Lord Gladwyn: My Lords, are the Government satisfied that their present attitude is in strict accordance with the doctrines promulgated by that great guru, Dr. Friedman?
Lord Cockfield: My Lords, I am quite certain that the noble Lord is a great expert on gurus in the economic field and elsewhere. We always pay great attention to views expressed by distinguished people in the academic field, but it does not follow that we necessarily slavishly follow them in every respect.
Lord Jacques: My Lords, would the noble Lord agree, after his experience of the last 18 months, that every Government have to spend their way out of a depression? The only choice they have is whether they spend it on unemployment benefit or on aids to industry and thus increase the supply of goods and services.
Lord Cockfield: No, my Lords, I do not agree with that proposition. It is of course true that in a period of recession expenditure tends to rise and revenue tends to fall, with the result that one has an increase in the public sector borrowing requirement over the desired long-term trend. That is precisely what has happened in the last few months.
Lord Kaldor: My Lords, does the noble Lord attribute the welcome reduction of inflation, which he mentioned, to a reduction in the growth of money supply in the last year of the Labour Government, which is only just two years ago, or if not, why not?
Lord Cockfield: No, my Lords, we do not adhere to a mechanistic view that there is a precise two-year time lag between changes in the money supply and changes in the rate of inflation. That again I have made clear in a number of speeches that I have delivered; I would suggest that the noble Lord should read them again.
Baroness Llewelyn-Davies of Hastoe: My Lords, may we ask the noble Lord whether he is aware that the greatest time lag of all is that between Government promises and their fulfilment?
Lord Cockfield: No, my Lords, that is not so. The Government are already succeeding in improving the underlying state of the economy, and as time goes by we shall put the economy on a sound footing, which has not been so for many years past.
Lord Soames: My Lords, I think the House will agree that it has (a) had a good run and (b) had some good answers, and perhaps we should move on.

Transport Policy
3.6 p.m.
Viscount Sidmouth Viscount Sidmouth rose to call attention to the need for a transport policy, with particular reference to long-term investment; and to move for Papers.
The noble Viscount said: My Lords, in thanking those noble Lords who are to speak in this debate, may I refer in particular to the noble Lord, Lord Underhill, who was successful in the ballot for the debate next Wednesday with a Motion on somewhat similar lines to today's Motion. I am sure the House will appreciate his action in withdrawing his Motion in order to prevent duplication of the subject.
In keeping with the times, my Lords, this debate will be primarily about money. Last Thursday, in a television programme which was dealing with the subject of investment in the railways, the right honourable gentleman the Home Secretary stated—and indeed repeated several times in forceful manner—that we must first make the money before we can spend it. That is clearly excellent advice to the great majority of us in our private capacities, and was so even before it was enunciated by Mr. Micawber; but I submit that it is too simple a view when one is dealing with private or national business. If we are seeking an authority in this context I believe that the parable of the man who received one talent is more appropriate. The hard fact is that in business it is sometimes necessary to spend money in order to make money, however convenient it might be the other way round. Today, we are all aware of being in a severe worldwide recession, but so long as we are looking to a more prosperous future this is not necessarily a time to cut back on investment, provided it is productive or is seen to lead to productivity.
In a private industrial business I believe there would be nothing inconsistent in the chairman, in order to meet hard times, cutting back on his dividend or asking the staff to accept reduced wages settlements, while at the same time announcing heavy investment in some new factory or process on which the future prosperity of the company could be based. This would apply even more so to some national businesses because the public sector happens to provide a number of the essential services or infrastructure for the economy as a whole.
I am aware that the public sector is at all times a sensitive area, particularly at present when the public sector borrowing requirement appears as the touchstone of national success. Without doubt, there is a strong measure of support throughout the country for this to be contained, and indeed reduced; but most people would believe, as I do, that we should steer towards a reduction in current expenditure. Unfortunately, that is a vessel very slow to answer the helm—more of a supertanker than a yacht. But as a number of noble Lords will be aware, in order to show some reductions in the public sector it is quite common to achieve them by deferring, or even cancelling, approved expenditure on capital account.
I do not suggest that even such expenditure should be sacrosanct, merely that the productive parts of it should be given the highest priority. For example, we might say "yes" to railway electrification, even if this meant saying "no" to sonic new town halls or offices.
Certainly strong distinction should be drawn between capital and current expenditure if only because, as I have endeavoured to show, very different criteria can apply as between the one and the other.
Indeed, it has been suggested that investment expenditure of this sort should properly be excluded from the PSBR entirely. It might be that this would savour too much of changing the rules in the middle of the game, but at least it could be drawn out into a separate heading so that it could be recognised for what it is. I seem to recall that some years ago, when the balance of payments was the focus of interest, it was important to know how much of the deficit was caused by hardware for the North Sea as opposed to Japanese television sets or motor-cars. As the Financial Times pointed out in a recent article:
"It is necessary to abandon a political illusion, that profitable investment undertaken by the public sector is somehow less productive than profitable private investment. This idea is particularly damaging in Britain at the moment because several of the 1980s most dynamic industries, which in other countries are investing heavily despite recession, happen in Britain to be wholly or partly in the public sector".
The wording of the Motion at least implies that the Government may not have a transport policy, at least in a positive long-term sense, though I hope that the Minister when he comes to reply will be able to refute that. Obviously they are in that business, in that at regular intervals road construction programmes are introduced into Parliament, running into billions of pounds. Quite right too, because in this country by far the greatest part of all traffic, whether passenger or freight, moves by road. Indeed, the proportion of freight moving by road in Britain is easily the highest of any major country in Europe, probably in the world. In the case of passenger traffic, only West Germany has a fractionally higher proportion on its roads, but in that country car ownership per head is much higher than it is here. Or, again, a major policy decision still to be taken is in respect of the maximum permitted weight of lorries, on which the Armitage Report, recommending the highest possible limit of 44 tonnes, was laid before the Minister last month. Quite apart from the environmental disadvantages, which are very great, such a decision would inevitably involve very substantial expenditure on roads and bridges.
These are policy decisions, but to what extent are the prospects of other modes of transport—railways, waterways, coastal shipping—taken into account when they are made? Questions in Parliament or elsewhere about railways or waterways are usually deflected to the British Railways Board or the Waterways Board, on the ground that decisions rest with them. This is fair enough so long as they refer to commercial or operating subjects, because the boards are set up and are fully competent to deal with such matters. But when it comes to investment they are very much in the hands of Government, which is and must be their banker of first resort.
Noble Lords will be aware that institutions in this country, especially perhaps the clearing banks, have been criticised for their failure to become more involved in the affairs of the companies they are financing. This is compared with successful Germany, where the institutions are very much involved. I cannot believe
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that the policy of the Government is so laissez-faire that they would allow the railways and waterways to sink or swim regardless of long-term policy considerations. Yet that is the impression they often give.
Now that we are really launched into the 1980s, it is high time—some would say overdue—that decisions are taken about the transport pattern for the end of the century and beyond. Very substantial projects and expenditure are involved, and they will of necessity have to be spread over a comparatively long period of time. First and foremost, can or should the almost total commitment to road transport be maintained? Already 93·5 per cent. of all passenger kilometres, and 83·2 per cent. of all tonne kilometres (in 1976 figures) are moving by road. Is it wise to have so many of our eggs in one basket? And what about environmental and energy considerations? Again, noble Lords will have heard from Government spokesmen on transport the view that it is no good seeking to transfer any traffic from road to rail, or waterways, because the latter have not got sufficient locomotives and rolling stock, barges and locks to handle it. Naturally, if they do not obtain the investment finance they need even to maintain their present services, then they will wither on the vine, and eventually phase out altogether.
Other speakers will no doubt develop this point further. I will draw attention to just two areas in which rail transport can be seen to have a continuing, and increasing, role to play. On the passenger side, there is the need to relieve the ever-increasing dependence on the motor-car, and particularly to improve and extend the suburban services. In most places, the commuter has faced a deteriorating service at increasing cost. Twenty-five years ago passengers on the electrified routes of Southern Region enjoyed a service which was outstanding for punctuality and reliability—so much so in fact that their performance figures were, to my knowledge, quoted overseas as an example of what could be done. Unfortunately, with deteriorating rolling stock, track, and signalling, this is no longer the case; but the potential is still there, given the will and the finance.
On the freight side, it is possible to identify several traffic-flows at present passing by road which are suitable for rail transport, and of which perhaps the most outstanding is international traffic between this country and Europe. This has, of course, increased greatly since we joined the European Community, and being long-haul traffic it is particularly suitable for rail. Yet at present, British Rail has only a 2 per cent. share, which compares with 22.3 per cent. in Germany, 62.8 per cent. in Italy, and 20.9 per cent. in France. It would, I think, be widely agreed, not only by those who happen to live in Kent, that this traffic could, and should, be transported by rail.
I believe that there are several good arguments for a cross-Channel rail link, which would bring not only British Rail, but the country as a whole, into physical contact with our partners in the Community. For this reason, I hope that the current scheme for a Channel tunnel will soon come before Parliament as a viable and urgent project. The accretion of both passenger and freight traffic it could bring to British Rail would go a long way towards solving its financial problems.
In the last century it was said that the situation in Schleswig-Holstein was understood by only two men, one of whom at the relevant time was dead. It may well be that only two men understand the capital investment position of British Rail, and I am certainly not one. But it is possible to see some of the problems. The Government of course fix an overall ceiling figure, and within this limit a sum to be allocated to investment is determined annually, taking into account the amount to be contributed by Government. In arriving at this figure, allowance is made for anticipated revenue, and also for any contribution expected during the year from increased productivity. Unfortunately, revenue may fall short, as it has this year, and increases in productivity all too often fail to materialise. When this happens, either investment has to be cut down, or the Government are faced with what must seem to the Treasury a dangerously open-ended commitment. This has led some authorities to comment that the Government dare not advance any more to British Rail, for fear it would simply be used to pay next week's wages. It is hard to believe that a more effective way for earmarking specific investment funds cannot be found, as has been done, I believe, in France.
Much needs to be done, and the active co-operation of the unions is an essential ingredient. No doubt this was made clear by Sir Peter Parker in his meeting with ASLEF last week. The present investment figure for British Rail is some £250 million per year, and, as I understand, this will not enable them even to maintain their present level of activity. Indeed, by their calculations it falls short by some £100 million per year at mid-1979 prices—and it is important to specify what date one is referring to with all these up-dated figures—from attaining a so-called "steady state" situation. It certainly does not provide adequately for a major project such as the electricfiation of the system.
As it happens, the final report on British Railways electrification by the Joint Steering Group of the Department of Transport and British Railways Board, is in print, and about to be published. Leaking, of course, is out of order, but it is reasonable to presume that, in addition to the many practical advantages of electric traction, the group has been able to perceive a considerable improvement in the straight financial case. This arises from current thinking about the price of oil, which is expected to rise more sharply at the end of the century than the cost of electricity, as the latter becomes increasingly generated from coal and nuclear power. I believe that this programme should be undertaken, and soon.
In conclusion, may I call you Lordships' attention to numerous debates, both in this House and the other place, on the use of revenue derived from North Sea oil? It was, I believe, common ground among all parties that it should not be squandered on, for example, imported consumer goods, but should be invested in building up a solid infrastructure for our industry and commerce going into the 21st century. As I understand it, this non-renewable source of revenue will soon be approaching its peak, so that now is the time for those undertakings to be fulfilled. My Lords, I beg to move for Papers.
3.24 p.m.
Lord Underhill: My Lords, I am certain that noble Lords will be most grateful to the noble Viscount, Lord Sidmouth, for placing this Motion on the Order Paper, and also for the lucid arguments that he has put forward for the case for an investment policy for our transport system. I am grateful to him for his kind remarks about the withdrawal of my own Motion which was to do with British Rail.
The subject is very wide-ranging, dealing with the whole question of transport policy for the carriage of freight to meet the needs of industry and passenger transport to meet the social needs of the public. It is a policy which must take account of environmental considerations—congestion, pollution and noise—and safety standards; and energy conservation.
Although the county councils have responsibility for transportation policies at local level, a national transport policy is absolutely essential. That requires an integrated and co-ordinated transport system taking in the various modes of transport. It cannot be looked at piecemeal, arising from the urgings of the various pressure groups. We on this side of the House believe that it would require a national transport authority, but undoubtedly that would need to await the election of a new Administration. Each mode of transport has a part to play and, as the noble Viscount, Lord Sidmouth, has said, road haulage takes the overwhelming proportion of the movement of freight.
The Armitage Report has stressed the benefit to industry of the development of fast-moving lorries, with door-to-door service. It is not my intention to deal with the Armitage Report, for I understand that the Government have not yet made up their mind on the recommendations. But I hope that the noble Lord, Lord Bellwin, who is to reply, will be able to give an assurance that there can be a full debate in this House on the whole subject of the Armitage Report.
However, it has been stated that a gallon of diesel fuel would move 190 tonnes of freight one mile by rail. but at best only 60 tonnes could be moved by road—that is a third. British Rail told the Armitage review that there are 40 million tonnes of long-distance freight going by road which is suitable for rail. That would represent only 2.5 per cent. of all present road freight. But, as the noble Viscount has said, that would be significant if transferred to rail, because it would add a fifth to existing rail freight which at the moment is only 10 per cent. of all freight movement. If the railway was used to its full capacity for the movement of freight there would still be the major place for road haulage.
Increased freight traffic by rail would be energy-saving and there would be obvious environmental considerations. There is need for further development by British Rail of its door-to-door Freightliner system and its fast moving Speedlink wagon system. It is encouraging to note that in 1979 road haulage was among Speedlink's best customers. The co-ordination between road feeders and long-distance rail is to be encouraged. As has been mentioned, the 5 per cent. carriage of freight by inland waterways must not be overlooked.
Transport is the lifeblood of the nation and there must be a planned road programme when we are considering the whole question of transport. Trunk

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roads must not be allowed to deteriorate for that would bring serious problems for the future. The emphasis must be on developments which meet the needs of industry and those which would remove serious congestions and which have important environmental considerations.
But what is the Government's attitude? Is that reflected in the answer given by the Minister of Transport on 5th November, when he was asked whether he was satisfied with the co-ordination of policy of transport by road, rail and water? Mr. Fowler replied:
"… my policy is to create conditions in which full and fair competition between those different modes of transport can flourish ".—(Official Report, Commons, 5/11/80; col. 1264.)
He was asked in a supplementary question to give one concrete example of those conditions, and he said:
"The conditions that we have created in relation to new coach services on motorways is a dramatic and pleasing example of what can happen not by the introduction of some enormous national plan…but by the removal of restrictions to allow competition to take place ".—(Col. 1265.)
As welcome as that may be, the new increased express road traffic represents only 1 per cent. of all the passenger carrying buses. There is nothing in that reply to those two questions about co-ordination. There is nothing about energy saving; nothing about environmental considerations and nothing about meeting social needs. The difference between these Benches and the Government was evidenced in the debates on the Transport Act 1980 when we were dealing with road passenger transport.
Of course, as the noble Viscount has said, there must be efficiency in all forms of transport. There must be, wherever possible, increased productivity. But to some extent it is now generally accepted that market forces and the profit incentive cannot be the sole means of achieving a transport system which meets the national needs. That is recognised by the public service obligation, through which British Rail receives a substantial grant towards the cost of socially needed rail routes, and also by the transport supplementary grant by which the counties and the GLC may make payments to bus operators in revenue support. We also have the recent example of the decision of P & O to cut off, without warning, the essential boat ferry between Liverpool and Belfast, which has happily now been replaced. But that was a problem for the community, not just with regard to the market considerations.
I want now to deal with bus and rail transport. Despite the Minister's optimism, I am sure that serious problems will arise on bus transport as a result of the 1980 Act. The recession is already leading to a drastic drop in the number of bus passengers, with fewer people travelling to work by bus and with other journeys being cut as household incomes shrink. I understand that in 1980 the National Bus Company had a drop of 8 per cent. in the number of passengers it carried, which was a loss of £40 million to the National Bus Company. We read report after report of operators, both public and private, who face a serious drop in revenue. Without adequate revenue support, operators will be forced to cut out some unremunerative routes and reduce the frequency of
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service on other routes. Some operators are being compelled to increase fares, and this will lead to a vicious circle, with the loss of still further passengers.
The counties are finding it difficult to give additional public support because of the financial pressures which are now being placed upon local authorities. As I said during the debate on the order relating to the decrease in new bus grants and their eventual phasing out in 1984, that will be an added burden to be carried by bus operators, which can only lead to a further decline in bus services. We must also consider that any drastic curtailment in new bus building will be an obvious problem to be faced by the manufacturers.
In particular, the outlook for many of the rural areas is very bleak indeed. There are still some half of British households without cars, and often the cars that are in the households are not available during the daytime for those who wish to travel. Of course, there must be experiments; more experiments with the post bus service and the development of the rail-bus, which is a distinct possibility. But for many the only satisfactory means of travel in rural areas is that which should be provided by the bus. Despite the Government's optimism, car-sharing will not be the answer to this question. In the conurbations cuts in services and higher fares tend to force more people to use cars. This adds to traffic congestion and environmental problems.
The noble Viscount, Lord Sidmouth, referred to British Rail in particular. British Rail faces problems. It is generally agreed that British Rail has made some excellent progress in recent years. In 1979 nearly 20 billion passenger miles were travelled, which was last exceeded in 1961 when the rail network was 30 per cent. greater and when there were only 7 million cars on the road—half the number that there are today.
However, as with bus operators, the recession is causing a setback both in passengers and freight carried by rail. Some say that the answer must be to cut out some routes, increase fares and have the possible closure of some stations at weekends and in the evenings. That is shortsighted and only tinkering with the issue, and does not face the essential needs of the future.
Lord Hawke: My Lords, if the noble Lord will give way and before he leaves that point, I have been listening to such speeches for over 30 years and there have been several opportunities for Governments to set up this wonderful body that will co-ordinate everything and tell everyone how to do it, but no one has succeeded in doing so. How does the noble Lord think that he will do it?
Lord Underhill: My Lords, the noble Lord has not been listening to speeches from me for 30 years. I am explaining the policy of the Labour Party. There are reasons why certain things have not been achieved, but I hope that this will not be a party political issue. We are concerned with the needs of the nation for a transport policy, and we must all try to ensure that such a policy is worked out.
The noble Viscount, Lord Sidmouth, referred to the problems of British Rail. Let us take a look at them. Most of the rolling stock was replaced in the late 1950s and early 1960s under the rail modernisation plan;

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but most of it is now becoming out-of-date. Of the nearly 11,000 diesel and electric motor units, some 7,000 were built between 16 and 25 years ago, and some 13 per cent. are between 25 and 40 years old. British Rail stated that in one week in December no fewer than one in four of their units were awaiting repair. Nearly 4,000 passenger coaches—about two-thirds of the total—are over 16 years old, half of them being built before 1960.
Signalling on 7,000 miles of track is now 40 years old and Sir Peter Parker, the chairman of British Rail, said as recently as 19th November that some 3,000 miles of track are at risk because there is insufficient money for maintenance and repair. In this connection we had the report of the Department of Transport on Safety on Railways, which must give us cause for concern. But we must keep in mind by and large how safe rail travelling is compared with the 6,300 odd killed on the roads and about 328,000 who are injured in road accidents each year.
Then there is the Monopolies Commission report on the conditions on the railways of London and the South-East. British Rail is absolutely indispensable to this part of the country, and the commission described the rail network as the social railway. That rail network is said to be the most complex in the whole world. Each weekday over 1 million passengers are carried in London and the South-East in 8,000 train journeys. In the rush hour each weekday morning some 250,000 passengers arrive at London termini. In fact, London and the South-East provide a good example of what public transport means. Each day no fewer than nearly 900,000 passengers are carried during the rush hour period into central London by British Rail, and by London Transport's rail and bus services.
In 1979 the revenue of British Rail was £800 million, but only 42 per cent. was derived from full fares; 22 per cent. was contributed by season tickets, and no less than 35 per cent. was obtained from the various types of reduced fares. I think that most noble Lords will applaud the innovations of British Rail as regards reduced tickets. This indicates what might be achieved if there were maximum flexibility in fares.
Britain needs the further development of the highspeed train and the advanced passenger train, and, as the noble Viscount has said, the extension of rail electrification. We hope that the Government will give serious attention to the interim report of the joint working party when it is published at the end of this month and also the British Rail development plan; because Britain has only 21 per cent. of its rail routes under electrification—the lowest of most European countries.
Public transport—bus, coach and rail—cannot be looked at only from the commercial and market attitude. Public transport is not, as one of the Ministers of Transport in the present Government said, just another business; it is of vital importance to the nation. Many people will use public transport, particularly for journeys to work, if the services are there, if they are efficient and frequent. More and more countries are now recognising the need for investment in all forms of public transport, particularly the United States, which is carrying out a reversal of its previous policies. Why must Britain lag behind?
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Emphasis has been laid on the need for investment. British Rail has the lowest Government support of all but one of 10 European countries and, with the exception of Sweden, British Rail earns a higher proportion of revenue than any one of those countries. But British Rail also has the lowest capital expenditure of those European countries, and it is that low investment and inadequate Government support which is the major problem facing British Rail.
There must be a firm basis for future investment for future years so that British Rail can plan track renewal, rolling stock replacement, modernisation of signalling and, I hope, planned electrification. All this would arouse demand for manufactured goods, which would have the effect of giving much-needed employment and leading to a reduction of benefit payments, and the losses of taxation which there are now would also be avoided. This is the time for decision making for transport as a whole. If we neglect to move today then it may be too late to improve and make a great benefit to our public transport system, particularly the railways. I hope that noble Lords will support the plea that public transport must not be looked at just as a nationalised industry. It is a national undertaking which is vital to the needs of this country.
3.41 p.m.
Lord Tanlaw: My Lords, first I must regret that my noble friend Lord Simon, who is temporarily indisposed, is unable to take part in this debate, which is about a subject dear to his heart. We on these Benches are most grateful to the noble Viscount, Lord Sid-mouth, for introducing the Motion at this time. The fact that the terms of this debate call for a transport policy implies that it is far from clear what Her Majesty's Government's intentions are with regard to a current transport policy and, more particularly, their objectives for long-term investment. But it should be made quite clear that for some time we, from these Benches, have called upon successive Governments to outline and implement an integrated transport system, and that Government transport policy should be directed towards achieving an energy-efficient society by the year 2000.
I should like to put before the House today just one area where I believe clarification is needed of the intentions of the Minister of Transport. It is, without any surprise, the same area which has been chosen by the previous two speakers, the long-term investment programme for British Rail—and I assure the House that there has been no collusion between us so far—and in particular the main-line electrification and essential capital replacements discussed by the noble Lord, Lord Underhill. The total for these investments is approximately £2,000 million, to be spent over a 25-year period.
I ask the noble Minister in his reply to take up the point made by the noble Viscount, Lord Sidmouth, that he is not merely going to say that there is not enough money out of income to justify long-term capital investment. That is the schoolboy howler of confusing revenue with capital, and I am sure that he is not going to follow that particular line in his reply. The answer the Minister gives the House for this example will be equally applicable to the other sectors of the transport industry. Therefore, it may be worth while

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just to touch on a bit of back history of the working report that has been mentioned by the noble Lord, Lord Underhill.
The noble Minister will no doubt be aware that as far back as May 1977 the Select Committee on Nationalised Industries recommended that consideration should be given to further electrification of the main-line routes of British Rail, taking all relevant benefits into account. Later on that year the Government of the day responded by agreeing to review with the British Rail Board the general case for main line electrification. As a result of that, a booklet, Railway Electrification, which is a sort of preamble to the working party's report, was produced in May 1978. Since then the steering group has undertaken a very full review, including a financial assessment which considered energy savings, environmental effects, the balance of payments and export opportunities for the whole of the rail industry.
Phase I of that report was accepted and has justified further study for implementation of main line electrification. The details contained in Phase II included a deep financial appraisal, with full implications for resource and revenue as well as the wider effects of electrification. All these facts have been before the right honourable gentleman the Minister of Transport for some considerable time and are still awaiting his decision. Furthermore, my right honourable friend Mr. David Steel called earlier on this year for an immediate go-ahead upon these recommendations by the British Rail Board even before the working party has made its report.
The conclusions that I believe will be reached in this report will clearly show the benefits of electrification, including that of fuel oil substitution. Forecasts indicate that the real cost of electricity may rise between 20 per cent. and 110 per cent. in the years between 1978 and the turn of the century, while diesel oil costs for the same period could rise by as much as 90 per cent. to 170 per cent. However, for most of the calculations agreed figures of 130 per cent. increase in diesel fuel and 65 per cent. increase in electricity costs were used respectively.
It is interesting to note that diesel oil prices have already risen by more than 40 per cent. in the last three years. If the electrification scheme as outlined in Option V of the report were adopted, 120 million gallons of diesel fuel oil could be saved each year. In straight energy terms 30 per cent. more energy is consumed by diesel traction to achieve the same performance as an electric system. There are many other good reasons to justify this particular capital programme scheduled under Option V of the Rail Board's recommendations. I do not want to go into them now, but this full electrification programme of 5,810 miles would achieve electrification of 79 per cent. of the total rail system by the year 2005.
The cost of this long-term investment programme has been estimated at £960 million, but this sum is less than half of the total long-term capital requirements for British Rail spanning the next 25 years. I shall suggest later to the noble Minister how these sums can be raised without upsetting further the current imbalance of the Government's public borrowing requirements, as mentioned by the noble Viscount in his opening
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speech. There would be no point in the British Rail Board putting forward the electrification programme unless it was in conjunction with the pressing need for the implementation of its capital replacement programme of locomotives and rolling stock. Again, these facts have been before the Minister in another place for some time and await his decision.
It is because of this lack of response by the Ministry that I should remind the House, as the noble Lord, Lord Underhill, has done, that the present locomotives and rolling stock of British Rail have already exceeded, for the greater part, their written-down life of 25 years. It must, therefore, in terms of extra running costs and the need to maintain a scheduled timetable, be a false economy to maintain this old stock. The massive capital replacement cost of £1,100 million must be sanctioned and implemented without delay if serious breakdowns over the entire rail system are not to be experienced in the next decade.
To put this in another way, many rail travellers feel that they are paying second class fares for third class travelling conditions. What I am saying is that in five or six years' time they will, if this programme is not implemented now, be paying the equivalent of first class fares for fourth class travelling conditions. I feel that the Government will have to live with this decision unless they decide within, I would say, a matter of months rather than years to put this programme into effect.
I have spent some time on presenting the details of these programmes to the House because it may be said by the Minister that in the present economic circumstances expenditure on this huge scale cannot possibly be justified. I am suggesting, that this argument cannot be accepted when the capital markets of the private sector have already indicated that these sums could be raised without much difficulty for cost-effective investments of the kind that the British Rail Board has specified.
Raising funds in this manner would not cost the taxpayer one single penny, and would require only the signature of the right honourable Minister to underwrite the repayment of the funds at the end of the 25-year period. It would be most helpful if the noble Lord in his reply could tell the House why this method is not acceptable to this Government, which has indicated a clear desire for the private sector to assist and participate in the nationalised industries.
Another point relevant to this is that once it has been recognised that long-term capital requirements of this nature are not related to the day-to-day cash flow problems the Government are experiencing, and can be funded without cost to the taxpayer, there must be a very clear reason why they cannot be activated now. So far, we have not heard anything to alter our view on this matter and I hope the pleas that there are no funds will be seen to be simply not valid. In fact, we on these Benches cannot see what justification there is for holding back on these programmes at the present time.
It is a mistake to look on a decision for a long-term investment programme as something that can be put off for the future simply because the lead times are so extended. There is a real danger that if programmes of this nature are delayed much further, many parts of them may not be capable of being fulfilled by

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British engineering companies because they may not be in existence at the time when they are called to submit their tenders. In my view and in that of many others, this would entail needless unemployment and more purchasing from abroad if and when the Government are prepared to put forward contracts of this kind.
It would be nice at this stage for me to be able to declare an interest, in that I run perhaps one of the smallest companies that does work for British Rail, but, like many other engineering companies large and small, we have no work to look forward to, not only from British Rail but from other parts of British industry. We are still awaiting this great move from the Government to keep our machines and men at work. The result of what is happening is that we must seek work abroad, and what kind of work is that? It is for long-term capital rail programmes put forward in America, Australia and Sweden. If the Minister in his reply talks about there being a world recession, very well; and we go outside this country to other parts of the world where we find that, in spite of the world recession, other more enlightened countries and Governments are spending money on their public transport systems and in particular on their railways. I hope the Minister will explain why we in this country are in such a happy position that it would seem, from what was said in answer to Questions earlier today, we can afford to ignore our railways for some years in the future.
It may not be fully appreciated that there are other attractions, besides stimulating the British engineering industry, for this method of funding long-term investments through the private sector. First, unless programmes were cost-effective and soundly based, private sector money would not be there in the first place. Secondly, once the loan terms have been agreed, these funds will become dedicated to the projects for which they were raised and will therefore remain unaffected by changes of Government or Government policy during the whole of the 25-year period. It is perhaps this aspect of long-term funding which has not received proper attention in the past and has created piecemeal programmes which have been interrupted or altered during their implementation. This in turn has resulted in increased cost to the taxpayer coupled with unsatisfactory schemes on completion or, in many cases, incompletion.
Lord Hawke: My Lords, may I ask the noble Lord to illustrate one point? I am all in favour of his thesis, and the money is to be provided by private persons who presumably will provide it at the interest rates of the day. Is the noble Lord satisfied that a capital programme can make such savings today as will pay for the enormous rates of interest extant in the market today?
Lord Tanlaw: My Lords, if the noble Lord reads the papers he will see that the merchant banks have already offered complete private finance for the Channel tunnel, and that is one project. Secondly, regarding interest rates, if these are the interest rates under the present Government, then if this Government are allowed to remain in power much longer, I do not know what they will be in five years time; I am not
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entirely sure whether they will be as low as they are today, so who can say what interest rates will be in the future? A capital programme is worked out on a long-term discounted cash flow basis and once the funds have been provided for that capital, the revenue coming from it will automatically increase if the interest rates are increased because inflation will also have been increased. Therefore, any business which looks at a long-term capital project cannot start siting it on the interest rates of today or tomorrow, especially when it is a programme covering 25 years.
My remarks prior to the intervention of the noble Lord, Lord Hawke, are relevant to the Transport Bill which will come before us shortly and in which the British Rail Board will be empowered to sell off some of its non-rail and fixed assets. I sincerely hope it is not the Government's intention to raise capital for long-term investment programmes such as I have mentioned by this method. First, the capital raised may be quite inadequate for the purpose and, secondly, it is bound to be available only as and when assets are sold, which may not be at the time when the capital is required. We shall, however, be looking at this aspect of the Transport Bill more closely at an appropriate time in this House.
Meanwhile, it is also relevant to ask the Minister if it is the Government's intention to provide an integrated transport system for this country, a question which was asked earlier. And will the Minister give an assurance that it is the Government's policy to provide an integrated railway and bus terminal system wherever possible? I have a fear that governmental pressures on the British Rail Board to raise capital funds in this way may result in the sale of property adjacent to railway stations throughout the country which could be suitable for combined use as bus or trolley bus stations. It would therefore be extremely helpful if the Minister could indicate to the House that that is not the Government's intention and that it is intended to look closely at this aspect of public transport. We as a party have received complaints from all over the country that many bus schedules are not properly synchronised with railway timetables, and indeed in some places they would appear purposely designed not to connect up at all; and that might explain some of the falling off in passenger loading as mentioned by the noble Lord, Lord Underhill.
It is possible that in his reply the Minister will say that the property in railway station areas is really a matter between the Railway Board and the local authorities, and of course I shall accept that, though at the same time I shall be apprehensive lest the current financial pressures on local government could well put a very low priority on projects of this kind. Therefore, will the Minister concede that some direction, as well as financial incentives, may be needed from central Government to encourage local authorities and the British Rail Board to put aside or protect suitable properties of this kind for bus and trolley bus terminals? In those areas where the Public Transport Executive has certain powers I would be more hopeful that a sensible solution will be found. However, there are large numbers of areas affecting many millions of people which are not covered by these bodies, and I imagine that this needs to be rectified if such an integrated transport policy is to be successfully implemented.

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To sum up, it is not my intention to put forward a brief for the British Railways Board. Their chairman is more than qualified in business matters to do that. I have used British Rail's long-term investment programme merely as an example in an attempt to discover the attitude of Her Majesty's Government with regard to funding any cost-effective long-term transport programme through the private sector. The Minister's answer to this will be eagerly awaited not just by the transport industry but by all those men and women who make use of it and earn their living from supplying its equipment.
Lord Kaldor: My Lords, before the noble Lord sits down, may I draw his attention to a point following his remark that other European countries such as France, Germany and Sweden have extended capital investment programmes in spite of the recession? Would it not be more accurate to say that they have done it because of the recession rather than in spite of it, because in all those countries the Governments are conscious of the real side, as distinct from the financial side, and wish to be sure of being able to make use of unutilised resources when they are available? Further, is the noble Lord—
Several noble Lords: Order!
Lord Sandys: My Lords, I hope the noble Lord, Lord Kaldor, will not extend his remarks too long. Interventions are very acceptable, but not speeches.
Lord Tanlaw: It was a very welcome intervention, my Lords, and I entirely agree with what the noble Lord has said.
4 p.m.
Lord Inglewood: My Lords, I want to speak about one point only. It involves tens of millions, rather than hundreds or thousands of millions, but none the less I submit that it is important because it affects the general public, as well as passengers, staff and customers. I refer to the policing of road and rail systems in this country—something that affects us all. The road network is policed by the county forces, with 50 per cent. of the cost recovered from the central Government. The railway network, docks and harbours, were policed traditionally by a number of different forces that are now formed into one highly efficient force, the British Transport Police, with the cost borne wholly by the British Railways Board, with contributions from Docks and from London Transport. I saw in a paper the other day that it is estimated that in 1981—this year—the cost will be £27 million. It is of course still rising, and it would rise faster if the establishment were increased.
Policing today is a very expensive service, but none the less a very important one. Last May that fact was recognised by a conference that was chaired by two members of the Government, the Home Secretary and the Minister of Transport, following trouble on London's Underground. I believe that at that conference it was accepted that the strength of the British Transport Police was too low to provide the cover which passengers and staff would think adequate.
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The Ministers' statements have referred to what they might one day do, but as yet we have had very little detailed information—and eight months have already gone by. I hope that it will not be long before we can be told more. I do not expect the Minister who is to reply this evening to tell us all, but I hope that he will inform his right honourable friend that it would be very welcome if we could soon be told more.
I should like to think that the total cost of the service was shared 50 per cent. from British Transport funds and 50 per cent. from the central Government, just as county forces are funded. That would relieve British Rail of a charge which in my view is today unfair, however justified it may have been 100 years ago.
All too little is known by the general public about the British Transport Police. It operates to the same standards as our other forces. It has the same pay scales, and I would submit has more comprehensive initial training because it is a more specialised job. I would go further and base my plea not just on what ought to be clear to every passenger—and I have noticed a number of heads nodding in your Lordships' Chamber while I have been speaking—but also on my experience when serving for a short time, and serving proudly, as a special constable with the British Transport Police. It was not for long, but long enough to show clearly to anyone so serving that the duties today are for the greater part normal police responsibility, not least duty concerned with public order, and are only in small part specialised duties arising from the running of major transport undertakings.
To draw a line between those two would be extremely difficult. I suggest that your Lordships apply your minds as to how to split the cost between the railways and the public after an operation combating disorder on London's Underground. That is virtually impossible. I would therefore submit that to split the cost in the same proportion as the county police costs are split is only fair. We have already had one precedent referred to during the debate: the railways already receive a subsidy for socially necessary lines. If that applies, I should have thought that there is an even stronger case for trying to ensure that the police cover on the transport system, which is good today but is none the less too thin, is where possible made better, and this in the interests of us all.
4.4 p.m.
Lord Greenhill of Harrow: My Lords, this is not a subject on which I would normally consider myself in any way qualified to speak, but the noble Viscount, Lord Sidmouth, reminded me recently that together more than 40 years ago we served an apprenticeship on the North-Eastern Railway, and he seemed to think that that experience would entitle me to speak and to express some views. My recollection of a brief railway career in the 1930s is of an industry which, despite the depression, consisted of a dedicated and even enthusiastic work force who had a great sense of loyalty to their individual company and to the public. They were not very commercially-minded, and were more interested in playing trains than in making money. I do not know how far those attitudes have persisted, though I guess they have now been eroded.
At that time British manufacturers supplied almost all the railways in the world with their equipment, and

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set standards which all followed. I have no doubt that today British Rail still has more experience and expertise than almost any other national railway company, but our equipment manufacturers no longer dominate the world. In taking part in the debate I must declare an interest in that I am now associated with one British company which manufactures railway equipment and with another British company which manufactures road vehicles; but any views that express in the debate are entirely personal.
In entering into this discussion I start from the following basic and I believe indisputable facts—and there are five of them. The first is that no significant industrial or agricultural country can prosper without a first-class railway system. It is necessary economically and it is necessary socially. The priority given by any Government to the transport industry should reflect that indusputable fact. Secondly, the United Kingdom was a pioneer in transport industry—rail, road and air—and in those industries it is at no technological disadvantage. It is not a question of an industry which has been overtaken by competition.
Thirdly, our overall energy supplies are adequate, but economy in fossil fuels is of course nevertheless essential. Fourthly, investment in both rail and road transport is now manifestly not keeping up with present, let alone future, requirements. That fact can be demonstrated statistically, as it was by the noble Lord, Lord Underhill, as well as by the unsatisfactory service which is now being offered to the public in certain areas. For example, on the basis of present plans, the planned availability of locomotives is totally inadequate, and if it remains unchanged, it will require massive importation of locomotives in the mid-1980s. The situation in regard to electric cars in South-East England will be especially serious in the next few years.
Fifthly, worldwide there is a vast expansion of railway development occasioned not only by the high price and shortage of oil for road vehicles, but also by the vast development in the third world of mineral resources. This year, according to the Financial Times, the market for railway development in the world is £14 billion, and we must have a share of that market.
Those five factors, if one accepts them as true—and I think that they are true—demand certain action. First, they require a bigger programme of long-term investment in British Rail. The expanded programme should be co-ordinated with private industry so that our domestic and export requirements can be simultaneously met. Secondly, such an investment programme would require strong Government initiative, intervention, and subsidy. It would involve private British companies co-operating in areas where they had previously competed. It would involve co-operation between nationalised workshops and private manufacturing companies, and in the export field a degree of united effort between Government, industry and finance, which has not always been forthcoming in the past.
Thirdly, it would require looking at the transport problem as a whole from a domestic and global point of view, and I know of no organisation in this country doing that adequately at the moment. It is a good thing that the Minister of Transport is now a member of the Cabinet, but the transport industry spans several important departments of state, the nationalised
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industries and powerful independent companies. Does anyone really see their right hands knowing what their left hands are doing?
What conclusion do I draw from all this? First and foremost, that the transport industry should be accorded its deserved priority. This would of course be hotly contested by other industries, by the social services and so on, but I believe that the transport case is undeniably strong. From the correct priority would follow the necessary finance and the necessary governmental and industrial organisation. This would of course involve a sharp change in Government policy, and I know how difficult that is; but failure to change must inevitably be costly and will, with certainty, impede our recovery when the upturn comes. Indeed, a new policy would surely advance the advent of the upturn.
I should have liked to deal with other aspects of transport policy, but there are many speakers this afternoon. I should have liked to speak about the road programme, which clearly must be maintained and expanded; and I should have liked to deal with the possibility, which I do not think is very great in spite of what the noble Viscount, Lord Sidmouth, said, of transferring large amounts of traffic from road to rail. I should also have liked to speak of the Channel tunnel and the desirability of British road transport operators buying British road transport vehicles. But there is not time.
Lastly, nobody who is based in London can take part in this debate without a plea for the London commuters. Trouble arises from lack of investment, from out-of-date equipment, from staff selfishness and indiscipline, and from public violence, to which the noble Lord, Lord Inglewood, referred. All these contribute. Nothing would make a greater contribution to the morale of this capital city than the improvement of its public transport. For the majority of London travellers the day starts and ends in misery, and it is an intolerable situation which those responsible must remedy.
4.13 p.m.
Lord Granville of Eye: My Lords, we are grateful to the noble Viscount, Lord Sidmouth, for introducing this debate, and also for his very interesting speech, with most of which I heartily agreed. I have to apologise to the Minister for the fact that, owing to a previous engagement which I cannot cancel, I shall not be able to stay to hear his reply, because I always like to hear his speeches in this House. I agree with the noble Viscount that the Government may have to look at the Channel tunnel again in the near future, if only to relieve Heathrow and other forms of transport. I agree with the noble Lord, Lord Greenhill, who has just spoken, that it is a hopeful sign that the Minister of Transport is now in the Cabinet, and, as the noble Lord, Lord Tanlaw, said, that we are going to get a Transport Bill.
With regard to the noble Lord's interjection, I think that when, in your Lordships' House, we are discussing expenditure or paying our way out of a crisis, and are comparing the present with the 1931 crisis, we are apt to forget that 1931 was a crisis of deflation, where expenditure on public works and so on was

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vitally important, whereas today it is a crisis of inflation.
My Lords, the noble Viscount said that this debate was mainly about long-term investment in transport. I believe that when we emerge from the Victorianism of Marx and Engels to the silicone chip society, we are going to have to take a fresh look at long-term transport investment problems. With the great industries languishing, particularly in the North of England, we claim that service and consumer goods industries are going to take up the slack. If they do not, we shall not be able to maintain our present standard of life. But this changeover to what is called the silicone chip society, will, however it is planned, in all probability mean extensive unemployment in some of the larger industries which have not been modernised. Realising how much this problem is going to cost this country, ought not the Government to have a forward planning team for this and similar problems which will arise in the great changeover which is coming perhaps far sooner than we really imagine? I hope that they will certainly not, as has been suggested, appoint another Royal Commission to go into the whole problem of investment and the development of our transport system.
So, if this changeover from our great exporting industries—steel, and all the rest—to service and consumer goods industries happens, in all probability long-distance loads will decrease and the shorter deliveries will be very much increased. I must say that I always marvel that in this overcrowded island of (what is it?) 56 million people, the transport system conveys the means of life to almost every doorstep every morning. It is a fantastic piece of transport organisation.
Of course, if this change is going to take place all this is going very greatly to affect railway investment. I should like to ask the Minister this question. Do we know whether, in the many debates on inflation which we have had in your Lordships' House and in the other place, it has been said that transport costs have greatly increased inflation and the cost of production of our goods? I have never heard it referred to, and I do not think I have ever seen a figure given. I am not talking about the "cowboys" who are earning £180 to £200 a week driving lorries around the place at breakneck speed; I mean the whole transport industry. Have we any idea that the cost of this may be adding to our inflation problems far more than we realise?
Then there is this other problem which has been referred to: in a consumer society, if that is what we are going to become—service and consumer goods industries taking the place of the great national industries which maintain us—are we going to be choked on the roads, certainly south of the Trent, in what is now called a four-wheeled democracy, in which everybody runs a motor car? How far is this going to involve Government estimates and planning in relation to the cost of maintaining the roads at the present time? We are not able to deal with speeding cars, either on the motorways or in the urban areas. We are not able to deal with lorries which roar by with faulty exhausts and tear up the roads because the drivers are
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probably on piece-work; nor with motorcycles which roar by without any exhausts at all.
I live in an urban area where there is a 30 m.p.h. speed limit. It is not a road; it is a race track. Nothing is done by any of the authorities to enable old people to cross the road in safety. This is one of the problems. The noble Lord asked what it is costing now to subsidise the railways. I should like to ask what it is costing to subsidise the Black and White and National coach systems. How much was it last year?—£300 million! The railways give some kind of help to senior citizens but the National coaches give none. I agree with the noble Viscount. I think we are going to have to look again at the Channel tunnel.
My Lords, we are perhaps now living in an age when no one cares a lot about overcrowding on the road, the accidents, the traffic chaos and the bad roads we have to put up with. I wonder sometimes whether we are even worried about air and railway accident prevention at all. Hostages—52 American hostages—are world news; but 390 people are killed in an airliner crash and it is taken off the newspapers the next morning. In conclusion, I would say that the Government really have got to look at this now and consider whether it needs a forward-planning team—not to worry about what is happening at the present time; but to plan for the future, so that we can realise that transport has now become a vital thing in our way of life.
4.22 p.m.
Baroness Elliot of Harwood: My Lords, I have listened with great interest to all the very interesting speeches and I want to speak not about transport policy in general but about the railways, about transport by rail, about British Rail. I do so because in company with others of your Lordships I use the railways almost as much as, or perhaps more than, anybody in this House. I do so because I travel every weekend of my life back to Scotland and come down to London: and always on the railway, and I like it. I like the railways; I like the services they give us. I think the railways are a great asset to this country. But I think there are a lot of things we could do to help the railways. I hope that this debate, which has been so ably opened by the noble Viscount, will give some ideas which will be of help to the Government and also to the railways.
The recent developments which have been most successful that I know of are the Inter-City trains, which have made long-distance travel so very much faster and so very convenient. The fact that they are so often very full, packed in fact, shows how much the British public appreciate them. I realise that there is a tremendous problem of commuter services into London; and while I know nothing about this—I have never been a commuter—I was amazed to hear that over 900,000 people travel on the railways into London every day. This is a terrible problem. Again, the fact that it is catered for and managed by the railways is very much to their credit
The railways suffer more wear and tear from the public than does almost any other service. I wish the public would care more for the equipment, carriages and coaches that they use every day. After all, they provide the most important part of the traveller's

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life. Nothing hurts me more than to read of vandalism and the way the public misuse the equipment on the railways. That must be a very expensive item for the railway in endeavouring to keep up the standard.
Speaking as a taxpayer, I feel I would rather contribute to the upkeep of the railways in the best way than almost any other thing I can think of. No railway system makes money. They are all subsidised. All the European systems are subsidised the American railways are subsidised. We subsidise our railways slightly less than any other nation. But still, I think it is a responsibility which we taxpayers must accept. Obviously, there is some capital investment which will pay very much better than others.
I was sent by the Railways Board a memorandum for this debate and one or two things in that memorandum I should like to note. First, I think we are all agreed that electrification has been enormously successful, and the more electrification we can adopt the better. It provides better performance for the trains, they carry heavier loads, they go faster, they are less liable to break down, the maintenance costs are lower than with the old trains, the diesel trains, and the crew costs and the vehicle refuelling and so on is much less expensive. The cost of fuel is lower.
I was horrified to read in this note that taking the cost of diesel oil in 1978 (which is the figure I have here) and carrying it on to the year 2000, the difference in the cost of diesel 20 years hence would be from 100 to something between, at its lowest, 190 and at its highest 270. The cost of electricity judged on the same basis and taking 1978 as 100, would be 120 at the lowest and 210 at the highest 20 years hence. This is very much less expensive than diesel oil, and it means that diesel oil can be used for other things for which possibly it would be more valuable.
With our recent experience so fresh in our memories about oil and the countries dealing in oil, I think it would be an excellent thing for us if we could run as much of our transport as possible independent of oil; and if electricity is cheaper than oil then let it be electricity. This means that we could sell more abroad of our own North Sea oil, which is very valuable, because we would be more self-sufficient here. Equally, when we are thinking of replacing our engines and our equipment, that will, as I think one noble Lord has said, provide employment in the steel industry because the steel industry is essential to the making of equipment on the railways.
I think another speaker also said that there is quite a considerable demand for investment in railways in the world to-day. We could export our own engines or make engines for other countries. This would be of great assistance in the development of the steel industry, and would also be of help to our own railways. I think that for all those reasons, continuing investment in electrifying our railways will be something of benefit not only to the railway system but to other sections of our industrial development.
Speaking again from one's own experience of the railways, one can criticise them. There are moments when one sees things which could be better done. I am thinking particularly of when I get on one of the long distance trains and suddenly find that the buffet service is not being manned. Somebody tells you over the loudspeaker that there is no one to man it,
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but you know there are people although they are not on your particular train. That is a bit irritating. On the whole, the services which are given to passengers on the trains are extremely good. From my own experience, the staff in the railway stations, particularly in the big centres from which I travel if I am going on long distances, are extremely obliging and very nice.
I travel twice a week on night sleepers. Very often I am in what I call my rolling room, since it is all arranged and so well heated before I get into it. I now know all the attendants and they are extremely obliging and always anxious to help in any way. All those things are a great asset and I should like to pay tribute to that. I hope that this debate will be read by railway people and certainly by the nationalised Railways Board.
I suppose I cannot complain now about one experience that I had. Your Lordships will remember that some years ago we had a tremendous railwayman in Lord Popplewell. He and I got together on one occasion when a railway which he knew very well and had worked on, and I lived on—namely, the Waverley line—was done away with under the economies of Lord Beeching's report. I still think that a railway of that kind could have been run far more economically by closing down a great many of the stations, and by running it on the basis of a diesel coach which stopped when it was asked to stop and otherwise went straight between Carlisle and Edinburgh—the only railway that goes across the Borders. It could have been run more economically. However, in spite of the fact that he did what he could on his side, and I did what I could on my side, that line was done away with.
Now there is not a single railway line within 50 miles in the Borders unless one goes up the West coast, Carlisle to Glasgow, or up the East coast to Berwick and Edinburgh. I realise that probably it had to be done, but I still think that there are many economies and simplifications on rural railway lines which could be carried out by far less manning and much simpler organisations. They would serve the rural areas.
Possibly I may be wrong because rural areas are now covered by buses. Buses can be very convenient, but they can also be extremely inconvenient. They are very slow compared to the railways. I would always back a railway system before I supported any other form of transport. Once a railway goes you cannot put it back. I hope that British Rail will not take away any more lines unless they absolutely have to. I am quite sure that this is a real service to the community.
I should like to congratulate the Railways Board on the many imaginative things they have done to popularise and to improve the railways. I have spoken about the long distance lines, and I do not know how many of your Lordships travelled or saw the travellers on the lines before Christmas when a £1 ticket for old-age pensioners was the order of the day. The trains were packed. The £1 ticket was a roaring success. I hope that the people who travelled on those days will travel on the half price ticket which we can all travel on if we are old-age pensioners, as I am. That may popularise the railways. However, I should like to congratulate the Railways Board on the way they organised that, and also for the family tickets which are extremely important and enable

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families to use the railways. These show that we have an imaginative group of people at the head of our nationalised railways, and I should like to pay tribute to them.
I have spoken about the vandalism on the railways. It is absolutely intolerable to read about the football specials, and so on. I would not blame the railways at all if they withdrew the football specials, if the trains are going to be as damaged as they are by football supporters. They certainly do not help the railways.
One query which possibly I ought to know the answer to but do not is why it is that we have three railway unions? I have made some inquiries about railways in other countries. Usually there is one large railway union. I am entirely in favour of that—there must be a railway union. But it seems so difficult to have three unions. One does not want to go out on strike but the other two do, or two do not want to go on strike but one does. It must make it extremely difficult both for the unions and for those who manage the railways. I wonder why we cannot have one railway union which would work very closely with the Railways Board. That would be very valuable indeed.
Freight is very important. I am highly prejudiced. I always fear these vast motor vehicles and diesel vehicles which are on the roads. We are being told that we have to have larger ones because that is what is required within the EEC. Why can we not have freight on the railways? I should like to see more freight on the railways and less on the roads. I know that certain types of freight must go from door to door and must be carried on the roads—animals, for instance. For taking animals from farm to market, or from a market to somewhere else, it is far better to use a motor vehicle. But I think one should take other freight, such as timber and things which do not spoil, on the railways. I advocate more freight to be taken on the railways.
I have made one or two suggestions and I should like to congratulate those responsible for the way the railways are developing. The Government could count on the support of the public if they invested more money in the railways. It is an investment which is going to pay. It must be done before the rolling stock and the lines become too worn out; it will thereby be far less expensive and far more valuable. In spite of the economic situation, I should like to urge the Government to realise that this is an investment which is going to pay off. If it is not done, then we are going to be in a very bad way indeed.
4.40 p.m.
The Countess of Loudoun: My Lords, it astonishes me that at a time when construction and expenditure on roads is at a minimum there appears to be a policy encouraging an increase in road transport. Despite all protests, our roads remain the same size but the volume of traffic increases in the carrying capacity of lorries and in the competition that is being encouraged between long-distance bus services and the train. When there are, say, 20 or so trains a day going from London to Glasgow, there is still an enormous volume of traffic roaring northwards up the MI, floated there on a river of oil.
Surely, in the national interest, we must have a
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co-ordinated policy that will eliminate waste. I cannot believe that the only criterion for judging a nationalised industry is financial. An efficient and reliable railway service is essential to our society. How could this City of London work without well-organised public transport? Do I need to say that the flow of commuters into working centres is the lifeblood of the nation?
I do not believe that the functioning of the railway system, so vital to the nation and to so many of us who have travelled here by train today, should depend on such fund-raising efforts as the recent £1 concessionary fare for senior citizens, though it did fill the trains and enabled many to visit families and friends in other parts of the country. But the actual value of the exercise in relation to the financial demands of the railways must surely be nominal.
So much money is spent by the railways in collecting money that is insufficient for its needs that in the long-term I should hope to see a more logical approach to fund-raising. The first thing we have to do is to use the railway system to its fullest capacity. I see no advantage to the nation in a fully-charged lorry or a loaded bus chasing an empty train. Yet the railway system can operate efficiently only if it is related to a road system capable of feeding custom into or out of it, without becoming liable to the imposition of heavy economic penalties on industry and commerce should this inter-action fail in any way.
I should also like to see more schemes for transferring heavy bulk transport from land altogether and put on to water, by developments such as reopening the Trent—at least as far as Nottingham—to coastal vessels and large barges. Our system of waterways has, in my opinion, great potential but at the moment it is under-used.
I live at Ashby-de-la-Zouch in Leicestershire, where the main direct Birmingham to Nottingham road, A453, crosses the A50 from Leicester to Burton-on-Trent and the Potteries. That the traffic on these roads required a by-pass round the town was recognised 50 years ago. The war, of course, delayed action, but since then there have been many schemes. These public inquiries and private discussions as to whether we should have the blue route or the red route have become such a permanent feature of life in the area where I live that it has become a latter-day "Jarndyce v. Jarndyce" in the Court of Chancery, as in Dickens' Bleak House: only the mad Miss Flite expects judgment. The inhabitants of such places as Tamworth, Measham, Ashby-de-la-Zouch and Castle Donington—all on the route from Birmingham to Nottingham—apart from damage to their properties, are being subjected daily to the noise, filth and danger of an enormous flow of industrial traffic down streets that were built for country folk, sheep and horses.
We must not exclude from our consideration here the man behind the wheel, with a good job. We might want him out of our streets but not out of work. In the last three years the employment situation in Ashby and Coalville, my home area, has gone from a shortage of workers to an unemployment figure in December last of 1,946. It is an area of tremendous industrial activity and change, bounded by Nottingham, Derby, Birmingham and Leicester. Some of the older coal seams are nearly worked out. There are open-cast

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mines in the area, involving changing volumes of heavy traffic, and there is the prospect of the new seam in the Vale of Belvoir. To add to this, there is the proposed enlargement and development of the East Midlands Airport at Castle Donington. These roads, the M42 and the A50 by-pass, are needed not just to relieve human misery, which cries out to heaven for relief, but in vain to the Ministers who have been in office for the last 30 years, to give new impetus to the flow of goods and the growth of industry.
Finally, I should like to prod the Minister very firmly with the three points made by the noble Lord, Lord Howie of Troon, in his recent article in the New Civil Engineer. The first is that the construction industry is labour-intensive. Secondly, any expense does not affect the balance of payments, in that it is not dependent on international trade. Thirdly, there are some 224,000 unemployed construction workers who are suffering the miseries of unemployment when they could be earning their living and working in the national interest.
In the long term we must avoid wastage of national resources, but this will be achieved only if a better relationship between the different elements in our transport system is established and the maintenance of the transport system is kept at a high standard: otherwise the whole system will collapse in chaos. Long-term planning and the day-to-day execution of plans are not independent factors; we must improve the latter if we are ever to enjoy the former.
4.47 p.m.
Lord Lucas of Chilvvorth: My Lords, I must say to the noble countess, Lady Loudon, how much I enjoyed the latter part of what she had to say. I nearly leapt to my feet in dismay at her opening remarks, which I think might well remain for me to argue with her on another occasion on another day.
When the noble Viscount, Lord Sidmouth, opened the debate, he said he thought it was perhaps more in the realm of a money debate but, as he closed, it seemed to me that he raised three main points. The first was: Have the Government got a policy? The second was: The Government have to make decisions on transport patterns. The third point he raised was: Should roads continue to dominate? Of course, it will he for my noble friend Lord Bellwin to answer in detail the first part of that; but certainly I would have suggested that the Government do indeed have a policy and, in essence, it is a policy that transport should he the free choice of the user and should be self-paying.
In no way do I think there can be a case argued that Government's role is to divert and direct the areas of transportation. In fact my noble friend will probably recall that laws have in the past been made in an attempt to direct and divert modes of transport. The first one was the 1933 Act, which was essentially a rail protectionist Act and which failed completely. It came about because of the unemployment situation, with the return of soldiers who had learned the new craft of using lorries and motor transport. In later years we have had the ill-fated 1968 Transport Act, introduced by a Labour Government, which had in it special authorisation clauses which were designed to divert traffic from road to rail. That itself failed, and failed miserably. I do not think that the special
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authorisations were ever used and it was the Conservative Government's Transport Act 1980 that abandoned that particular matter.
The noble Lord, Lord Underhill, started by saying (I paraphrase) that he believed we needed an integrated and co-ordinated policy, probably under a national transport authority. That may illustrate the fundamental difference between his outlook and mine. God preserve us from a transport overlord, with the bureaucracy and dictation as to modes and ways that that would bring! I cannot think of anything worse. There is no doubt that we have an integrated system now, and he would be the very first to admit that rail cannot work without road.
He demonstrated during the course of his speech that, in fact, the road haulage industry is one of the biggest users of the railway system. At the end of the day, it is the customers who choose and it is the customers who pay for their choice of transport. There is no denying that the individual will not forgo the convenience of personal transport, and that is why we have so many motor-cars per mile of road in this country.
It may be argued that the freight mover, who prefers road, is not paying a fair share. That I would not deny, and nor indeed has my right honourable friend the Minister denied that. In the proposals which are currently before the other House, he sets out quite plainly who is to pay—for instance, the heavy lorry—and who will not pay. There will be increases. The haulage industry will undoubtedly howl with rage at this, because in this recession they are as hard pressed as any other industry. But at the back of their minds they know full well that they must pay their fair share, in both cash and environmental terms.
The railways were praised by my noble friend Lady Elliot, but I think that she perhaps got hold of the wrong end of the stick, when she was talking in terms of energy saving. In fact, transport uses about 22 per cent. of the total energy consumed in this country, though, admittedly, road transport will take up the majority of it. But in the event of even more passengers or freight being transferred there will be no great savings in pure energy terms.
The railways have made huge improvements in their productivity, and I must confess that I wonder just how much further they can go in reducing their labour force. An instance came to my notice only a short while ago, which indicated to me that perhaps the Railways Board are hammering labour productivity a little too hard. I believe that in the S and T division at King's Cross and Finsbury Park, there are 50-plus Indians and some nine chiefs; that is, nine supervisory staff for 50-plus productive labour. I should have thought, if the railways were looking for greater areas of saving in labour costs, they might look at supervisory levels rather than at productive levels.
While on the subject of the railways, Sir Peter Parker was reported in the Daily Telegraph yesterday in this way:
"On freight, Sir Peter believes that by far the most urgent need is to win back between 40 million and 50 million tons of manufactured and semi-finished goods now moving distances of at least 200 miles by road".
I can remember our having a debate of this nature when Mr. Marsh (as he then was) was the Minister.

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The railways said, quite clearly, that there was only one additional type of traffic that they could carry in terms of freight, and they were talking in terms of a tonnage and distance factor. That they may have lost more is very largely their own fault. If, indeed, Sir Peter and his colleagues arc able to recover these 40 million or 50 million tons, it will make but 2½ per cent. difference to road freight. It will not, in fact, make a huge difference to the number of lorries or to the distances that they travel. We have to recognise that the main modes of transport—road and rail—must have complementary positions. Each is absolutely dependent upon the other.
It is rather surprising that one of the most successful areas of British Rail's operations is road transport, through Speedlink, Freightliners, National Carriers, Roadliners and, until disbanded by the 1980 Act, the National Freight Corporation. Each is dependent one upon the other, and each is very dependent upon the private haulage industry. Moreover, each is dependent on the choice of those who use and buy the services, whether they are passengers or movers of finished produced goods. They will take the best value for money. That is not price and price alone; that is service, convenience and all the other factors. So, it is up to each industry to provide. The fact that the road industry has happened over the past 30 years to be the least expensive to operate—of course, the railways are more expensive—does not hold much water now.
I think it was the noble Lord, Lord Tanlaw, who drew our attention to a common factor between road and rail; that is, the terminal. It is surprising to me that we have allowed road transport to use the terminal of the street and the housing estate, from which it can operate its vehicles. We have allowed railway land to be used for all kinds of purposes associated with transport, other than those associated with the railways. It seems to me that, probably, this is largely the fault of the planning authorities who allow bus and coach depots, transport depots and so on to pop up in the most odd and obscure places, where a deal with the railways would be mutually rewarding. As to the environmental arguments between one and the other, there is not a great deal to choose. Railways go thundering through cities and most of them stop pretty well in the middle, where road transport takes over. I cannot see any way of altering that.
The overriding factor in this afternoon's debate is that we must determine that transport is an integral part of living and working. There has been—and this is still continuing—an absolute decline in investment in the whole field of transport. I should not like this evening to choose between the various modes. But in the Government's programme, transport accounted for 5·4 per cent. of total expenditure in 1974–75, while in 1980–81 the figure is down to 4·2 per cent. It was the noble Lord, Lord Underhill, who asked why, in terms of investment, Britain must lag behind the United States. Why indeed, my Lords? it is probably because the priorities for public expenditure have been thought to be different. For example, in the period from 1974–75 to 1980–81, social security expenditure rose from 20·2 per cent. of the total to 27·6 per cent. In Northern Ireland the figure increased from 2·7 to 3 per cent.; health and personal social
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services rose from 11·9 to 13·1 per cent. I take these figures from the official Command Paper. I repeat: expenditure on transport is down from only 5·4 to 4·2 per cent.
If we want to spend money on education, health, social services and the other very justifiable claims, then we have to create more wealth. In so many debates on the economy, on trade, on all sorts of subjects it has been said that transport is an important part of the wealth creating process. It cannot be ignored. It should not be denied its fair share—and who is to say what is fair: this side or that, you or I?—of the money that is available for investment in the public services. I close by saying to my noble friend that we cannot afford the continuing erosion of the proportion of resources devoted to transport.
5.1 p.m.
Lord Noel-Baker: My Lords, I do not follow the noble Lord who has just sat down in his most interesting speech except to support his conclusion that we cannot afford the erosion of the resources given to transport. May I begin by paying tribute to the admirable speeches of the noble Viscount, Lord Sidmouth, and my noble friend Lord Underhill who spoke from the Opposition Front Bench. I want to support their plea for new and larger investment in the railways system.
I support what other noble Lords have said about the Channel tunnel. I first spoke in another place in favour of the Channel tunnel in 1929. I reflect today what enormous benefits our nation would have had if the Channel tunnel had been constructed then. I support what noble Lords and noble Baronesses have said in favour of more investment in railways and also in waterways. I believe that our inland waterways could carry a much larger traffic, as they did during the Second World War. Every diversion from road to water is a national gain.
I want particularly to talk about two reasons why investment in railways and in water would pay a handsome dividend: about two heavy burdens on the national economy, two sources of colossal waste for the nation as a whole. The first, to which other noble Lords have already referred, is road congestion. As noble Lords have sat in their motor cars—five minutes, 10 minutes, or longer, standing still in a traffic jam, moving forward slowly, by yards, with their engines running, along with scores, perhaps hundreds, sometimes thousands of vehicles with their engines running, exuding evil fumes, wasting petrol, diesel, lubricating oil and involving the deterioration of the engines and wasted time—have they thought about what is the cost to the nation of this appalling waste?
During the last war I served in Sir Winston Churchill's Coalition as Parliamentary Secretary in the Ministry of War Transport. In that capacity I asked the London Passenger Transport Board to make an estimate of what they lost by traffic jams, by road congestion. They carried through a striking operation. They estimated the average speed of all the vehicles under their control: omnibuses, vans, lorries, Green Line coaches serving destinations far outside the city. They calculated the average speed of all the vehicles under their control on all the routes they served. It came out at precisely 10 miles per hour. They said that if they could raise the average speed by one mile

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per hour, from 10 to 11, that would give them a saving of £3 million. I have no means of using that figure to calculate what traffic congestion costs us today but, with the vastly increased number of vehicles on the road and with congestion covering the country as a whole and not just a small part of London's wartime traffic, the figure, in cash, must be in hundreds of millions of pounds. It is a figure which we should try by every means radically to reduce.
I pass to the second reason why railway and water investment will handsomely repay the sums invested: the far graver question of road accidents to which one of my noble friends referred. Road accidents have been, for long, one of the gravest, if not the gravest, social evils of our time: worse than alcohol, worse than tobacco, worse than drugs—worse, even, than slums. Let the stark figures tell their black story. I give the figures for 1978 but today the picture is roughly the same.
In 1978, 6,900 people—men, women, little children—were killed upon the roads. That is almost 20 a day. What would happen if 20 people a day were killed upon the railways? There was a regular furore a year or two ago when 10 men and women were burned in a sleeping car which had been unwisely locked. It was the gravest rail accident for many years—10 dead. But every day there are 20 dead upon the roads. As we sit here now, a death is happening somewhere in the country.
Far worse than the deaths is the figure of the seriously injured. Would you believe it?—83,000 in 1978; 83,000–1,300 a week—almost 200 a day. Serious injury can be worse than death: broken backs, broken necks, broken legs and arms, damage to the head, facial disfigurement, injury to the brain. Every such injury can be a human tragedy.
I had a friend at Cambridge, a very able man. When he came down he married and had three children. He supported them by self-employed work which involved his moving from place to place every day. He could never stay at home. When the children were seven and five and two years old, his wife was knocked down by a car. Thereafter she could only lie helpless on a bed. He had no relative to come and help; he had to stay at home and nurse his family. His work collapsed and he was soon in dire financial straits, in which, alas! I could not help him. That human tragedy is being repeated 200 times a day.
My Lords, have you thought what is the cash cost of road accidents? The loss of the wealth of the victim who is killed or mutilated; the wreck of the vehicles involved; the work of the mechanics who do the repairs; the work of the doctors and hospitals who nurse the victims; the work of the police, who give far too great a share of their total time to road accidents instead of working otherwise to uphold the law. There is also the cost of the law courts who decide who is to blame for the accident and who assess the damages, if any.
In 1943, I tried to get an answer. I asked two sets of independent experts to assess the cost of road accidents over a year: A party of economists under the Professor of Political Economy in the University of Leeds, and His Majesty's Chief Accountant. The Leeds party brought out the cost—this was in wartime traffic in 1943, when vehicles were relatively very few—
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at £70 million a year. His Majesty's Chief Accountant made an estimate of £80 million. Broadly, the two exercises supported each other and as vehicles increased after the war, as accidents increased, so the cost went up. I think it was in 1971 that the Road Research Bureau said that the cost was approximately £450 million. Should I go seriously wrong, if I said that 10 years later—now—with many more vehicles on the road, with inflation, the cost is probably almost a thousand million pounds a year?
Two special causes of road accidents can be identified. One is drink. I believe it to be true that a very high proportion of fatal and serious injury accidents is due to the bad driving of people who have taken alcohol before they set out upon their journey. Scandinavia deals with this problem far better than we do. I believe our laws should be much stricter. I believe that a man who drives and has an accident when he is drunk should serve a long term of imprisonment. That would teach him not to do it again. The second special cause of serious accidents is the heavy lorry. In a report by the road safety officer (I think in 1978) he said that in proportion to their numbers heavy lorries of 1½ ton net deadweight caused almost twice as many fatal accidents as light vans and cars. The Road Research Bureau, I believe, has shown that 40 per cent. of deaths on the motorways result from collisions with heavy lorries.
These are reasons why we should invest in railways and I want to urge most strongly that the Government should listen to the noble Lords who have appealed to them this afternoon, that they should restore our railways to their former greatness, when they were the best in all the world. The Government should now re-lay the branch lines that they destroyed. That was always an economic error of a most serious kind. They should reopen the local stations and the goods depôts, placing the goods depôts at points around the towns where they will have the best advantage for transport now. I believe we should start the manufacture of special lorries that can drive their loads on to a railway truck so that there would be door-to-door delivery of the goods, the long haul taking place on rail. I believe that policy would help to reduce the number of road accidents and also road congestion.
There is something else that the railways might be encouraged to do. In the last three years, Sweden has carried through an experiment of the highest interest. In 1978 they reduced their railway fares by 40 per cent. In three years they have gained an increase of passenger traffic of 38 per cent. Inquiry has shown that those who travel by rail have done so instead of travelling by coach and by car, and that many of the new rail passengers have begun to travel although they never travelled before. Family reunions and family holidays have increased. For many Swedes the quality of life has been improved.
By way of contrast, in a recent year British Railways twice increased the passenger fares, and by an odd coincidence the percentage decrease in passengers was 38 per cent, the same as the percentage increase in passenger traffic in Sweden when the fares were reduced by 40 per cent. I believe a low fare policy in this country would handsomely succeed, as it has succeeded in Sweden in the last three years. I believe that our railways and our waterways can play a splendid part

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in the economic and the social life of our nation if we give them the investment they urgently require. And looking back again at the annual holocaust of death and mutilation the roads, surely we must conclude that the time is now.
5.22 p.m.
Viscount Mountgarret: My Lords, thanks to the initiative of the noble Viscount, Lord Sidmouth, we have had an opportunity this afternoon of listening to some really splendid speeches, and I think your Lordships will agree, with particular reference to the last one, to some moving speeches. I should like to add my voice to that of the noble Countess, Lady Loudoun, and the noble Lord, Lord Noel-Baker, in giving further encouragement to the use and the bringing back into use of our neglected inland waterways system. I was not going to touch on this subject, but it seems to me that this afternoon there has been a predominance of support for the railways. I myself am extremely keen about the railways, but I feel this emphasis has been slightly at the expense of the inland waterways system. I very much hope that the Government will be able to see their way, if there is money available to invest in a transport policy, to direct it towards the renewal of some of our neglected canals.
Many of these canals are filled with rubble, broken bottles, glass and what will you; other canals have no water in them at all and are a haven for rats and create a health hazard. I am sure that many of your Lordships will have had the pleasure of going on a holiday on the waterways and canals in France and will readily realise that our inland waterways in this country could be just as beautiful and attractive as those in France. They would provide not only a means of transporting more freight but also a further amenity for the people who wished to usethem. So much for the canals.
I really wanted to confine my remarks purely to the interests of our sometimes much maligned and always under-used railway system. I hope very much that at the end of this debate the seeds that have been sown to encourage further investment in our railways will not fall on stony ground but will blossom in the fullness of time and bring forth fruit. I am not at all embarrassed to confess that I am a complete railway enthusiast. Any reasonable suggestions put forward, not only for the maintenance or improvement of our existing railway system but preferably for the extension and further use thereof, would have my wholehearted support.
I should like to see a substantial reduction in the use of bigger and heavier lorries for the conveyance of goods, and a climate introduced which would make further use of the motor-car for long-distance travel less attractive. The reason why I say that is this: if any investment policy is going to succeed it must have the maximum amount of help it can get. Therefore, the greater the incentive and encouragement given to the public to use their public transport and their railways more, the better. One of the ways in which this might be done is to make the use of motor-cars rather less attractive. I have two suggestions that I should like to put forward which I feel merit a certain amount of consideration and which might go some
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way to achieving that end. I also think they follow on well from what the noble Lord, Lord Noel-Baker, was saying and perhaps they might help to achieve what he is wanting.
The first idea I should like to suggest is this: would it perhaps be practical to think in terms of having a sliding scale of motor car taxation? With the ever-increasing need for conservation of fuel, and with the ever-increasing amount of pollution generated into the atmosphere by exhaust fumes from motor cars, it seems to me very unfair that people who go out of their way to try to buy cars which are smaller and less expensive to run and maintain, and which in turn use less fuel, should have to bear the same rate of taxation on their car as the person who chooses to buy a large car. By "large" car, I mean one with a large cylinder capacity, in litres or whatever it is. There is already a sliding rate of taxation on lorries; that is, the larger the lorry the more tax it pays. On the Continent large cars bear a higher rate of tax than smaller cars. I feel that those in this country who choose to buy large cars should pay a greater rate of tax, and those who choose, because of the limit of their own pocket or because of considerations of fuel saving, or for whatever other reason, to purchase a smaller car should benefit by paying a lower rate of tax.
There is an additional spin-off, in that there are many thousands of people who are obliged to run some form of transport, usually small and therefore more conservative in the use of fuel, who live in outlying rural areas, and who depend upon their car for their livelihood because at present the public transport provided is not adequate or is probably non-existent in many places. Contrary to popular belief, it is sometimes much more expensive to live in outlying places in the country, because of poor communications, than it is to live in the cities. To have the added burden of high motor taxation makes matters worse. Obviously this is not the moment to go into detail, but at present levels of taxation I should have thought that, say, £25 a year for a car like the Metro ranging up to £150 a year for, say, a Rolls Royce would perhaps be equitable. I realise that this sort of suggestion would be pretty unpopular with the manufacturers of Rolls Royces and other large cars, but I think it is rather more important to get our investment policy right than to have regard to other considerations. It is, of course, the larger car that is generally used for long distance travel. Therefore, if we penalise the larger car by heavier taxation it could be that more people would be encouraged to use an improved railway system.
The other point that I should like to put forward for consideration is that some action should be taken to discourage people from bringing their cars into our major cities. Traffic congestion, as your Lordships all know, is getting continually worse year by year, not only in London but also in other large urban areas. Already those who live in such areas, particularly London, are obliged to pay more for their cars, in that they have to purchase the right to park their car outside their front door. That, I feel, is perfectly iniquitous and quite wrong, because a person who has by choice, or even of necessity, to live in a city, has as much right to park his car outside his front door—that is assuming, that he can ever get anywhere near his front door—as those who live anywhere else and

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park on the public highway or in the street. The idea of residents' parking areas arose only because over the years more and more people have brought their cars into the cities for day-to-day commuting, shopping, visiting friends or any reason except necessity.
Therefore, I feel that residents' parking places should be reserved free for those who actually make their home in large cities. Those who wish to use their car to visit these places should be required to pay a substantial sum for the privilege of so doing. That would not be difficult to implement. For instance, if a motorist knew that he wanted to use his car on a fairly regular basis in, shall we say, London, and he lived outside, he would, on applying for his motor tax disc also apply for a 12-month licence for the parking of his car in London. He would then be issued with a suitable coloured disc indicating that he had paid the required amount. If it were another city that he wished to enter on a frequent basis, then it would not be difficult to have different colours for different cities and there are not all that number of different cities to which this scheme need perhaps apply.
On the other hand, if a motorist wished to bring his car into one of those cities only occasionally, then it would be up to him to purchase a day or a week ticket, or whatever system might be devised, at, say, a post office. If a traffic warden found a car parked in a city without the necessary entrance tax having been paid, then that car would get a ticket in the same way as it is supposed to get a parking ticket these days. The boundaries of the cities could be easily defined. For instance, in London anything found inside the inner ring road would be for the high jump. Owners who live in the cities would be issued with their annual tax disc and an exemption disc for their car to indicate that they were residents in that particular city.
I know that that is only a broad outline of the type of idea that I have in mind. Obviously a good deal more thought would have to be put into it before it could be implemented. Obviously there would be people who would certainly qualify for exemption, such as doctors or disabled people. But I feel that the two ideas that I have put forward could go a long way towards relieving the congestion in our cities and, at the same time, encouraging further use of public transport in which one hopes very much that further investment will be made to co-ordinate a successful transport policy.
5.34 p.m.
Viscount St. Davids: My Lords, I wish to address the House this evening on the subject of the waterways. Therefore, I wish to support the noble Lord who has just spoken and the noble Lord, Lord Noel-Baker, in their pleas for the waterways and the railways. However, as regards the waterways I should like to make some slight changes to their remarks.
To begin with, I wish to talk about the narrow waterways owned by the British Waterways Board, not because I believe them to be the most important part of the subject, but simply to get them out of the way of my main argument. The narrow waterways have many purposes and there are many reasons why they should continue to exist. But serious cargo carrying is no longer possible on them and no attempt to revive it will have any major success. They are, however,
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used for so many other purposes and so very difficult to get rid of, except at enormous cost, that there is every reason why we should keep them. However, there seems no reason why we should spend vast sums on them and all that I should like to say about them this evening is that there seem to me to be one or two ways in which they could actually be made to run more cheaply.
The Government have cut down very severely on the monies provided for the British Waterways Board to keep its system working, although I observe with pleasure that I believe they are increasing the board's borrowing powers. But, in doing so, in some cases they have forced the board to leave undone various serious works and those works are not only becoming in a dangerous state and will have to be done some day, but some of those works when they are done will be far more expensive because nothing is being done now. It would be worth the Government's while to go into the matter with the British Waterways Board and ask them which works it would be an economy to carry out soon rather than leaving them for a later period. I do not say that it includes much of the works of the board, but there are a number of points where this is important and which could be looked at with advantage. It is a minor point, but I think that the Government should look at it.
There is another matter. The board is keeping a large part of the system open for pleasure craft, and that I applaud. However, it has always puzzled me and I have never understood why anything capable of actually going along the waters of the canals is, in fact, permitted to use them. In the first place, these canals were not built for powered craft at all: they were built for horsedrawn traffic. When the canal proprietors in the very earliest days found themselves faced with powered craft they, in many cases, denied them the use of the canals, not because they had any enmity towards them as vessels, but simply because they would damage the waterway.
In fact, some of them do damage the waterways The modern motor cruiser is not deliberately designed to travel at low speed and many of them are, I regret to say, driven at considerably in excess of the speed which they ought to be going along our waterways and causing bank damage. And, of course, the material from the banks goes into the centre of the channel and silts up the channel. There is a great deal more wear and tear taking place on the waterways than there should be if the British Waterways Board took more care over what navigates the waterways.
My feeling is that we ought to switch to electric craft. In fact I am putting my own money where my mouth is by having my own motor cruiser converted to electric drive for the deliberate purpose of sticking my neck out in the way in which I so often do and getting something done about it. I believe that it might be a very good move on the part of the British Waterways Board if I say—having said what my own interests are—that possibly they offered reduced licence fees or something like that either for electrically driven craft or for craft of suitably approved shapes which did not damage the waterway. This is a minor matter and I throw it out simply as a suggestion for the smaller waterways. However, in spite of the remarks of the noble Lord, Lord Noel-Baker, and the previous speaker, I do not

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think that these minor waterways will carry much cargo, whatever we may do about it. They cannot be enlarged, for the simple reason that the reservoir space fed by small streams would not be enough to provide water for the locks and we could not make the system work.
A completely different argument applies to the bigger and river-fed canals. They are in the same technical position as the major canals of the rest of Europe, where there is an ample supply of water to work their locks. As it comes fresh down a river, you do not have to pay to impound it in reservoirs. The whole business is cheaper and easier. There are considerable arguments in favour of enlarging our system in the same way as is being done over the rest of Europe.
I am glad to see that at last the present Government have done what needed doing; they have provided money for the expansion of the Sheffield and South Yorkshire waterway, which is already showing itself to be a considerable success. When we have had a little more experience of that and can show that expansion of the waterways can, indeed, bring more traffic—and more economic traffic—I think that we could go ahead with much more confidence and do what is being done over the rest of Europe. It is no good saying that our waterways are fairly short. That is true, but they are not detached from the rest of Europe. The North Sea is comparatively narrow. A number of inland waterways craft can actually make the crossing on their own bottoms.
Lord Davies of Leek: My Lords, if the noble Viscount will give way, I know that he is an authority on canals, but the transport policy report does not say that the Government will give help to the Sheffield and South Yorkshire navigation. It says here that after an exhaustive study they failed to identify traffic likely to use the improved waterway. At the moment the Government are saying that they are unable to approve the proposal to improve the Sheffield and South Yorkshire navigation. Does the noble Viscount have later information than that which is contained in this White Paper?
Viscount St. Davids: My Lords, can the noble Lord give the date of that White Paper?
Lord Davies of Leek: My Lords, it says that the Government were unable to approve the proposal to improve the Sheffield and South Yorkshire navigation. There is much more, but I do not want to delay the House. This is Command Paper No. 6836.
Viscount St. Davids: My Lords, I have not seen it, but I can assure the noble Lord—
Lord Davies of Leek: It is dated 1977. I want to know whether the noble Viscount has more up-to-date information.
Viscount St. Davids: My Lords, money has, indeed, been provided for this work, which in some cases is well advanced. I understand that there is already an increase in traffic.
Lord Davies of Leek: My Lords, I am not contradicting the noble Viscount; I am asking for information.
Viscount St. Davids: My Lords, if this brings an increase in traffic, we shall know the answer because, as the noble Lord has said, it has been controversial as to whether any fresh traffic would be generated. Some have said "Yes" and some have said "No". It appears as though fresh traffic is coming.
What is more, our waterways are not detached from Europe; they are, in fact, attached by the North Sea. Craft able to navigate inland waterways can cross the North Sea on their own bottoms. In addition, there are barges which can be carried across the sea by various forms of barge-carrying craft. Those craft can be carried across and, with suitable sized waterways, they can carry cargo not only throughout Europe but as far as Asiatic Russia, so it is a fair distance.
Apart from that development, which looks as though it will be a success, there is one strange stumbling block, which I cannot understand. The figures that, in company with all our European partners, we submit for cargo carried are totally wrong. All our European partners give figures for tonnage carried on their inland waterways, which include all their waterways. For some extraordinary reason our figures encompass only the tonnages carried by the British Waterways Board. The British Waterways Board has the largest mileage of waterways, which are mostly the narrow canals which mainly carry pleasure craft. Nevertheless, it has some waterways which carry a fair tonnage, but even those are greatly outweighed by waterways in other hands which carry much larger tonnages and which do not seem to be counted in the figure.
I should like to take a few absurd examples. The Grand Union Canal, which is owned by the British Waterways Board, carries no great tonnage, whereas the Manchester Ship Canal, which is not owned by the board, carries enormous tonnage and its tonnage is not included in the figures. The River Severn, which is controlled by the British Waterways Board, carries a small tonnage; the River Trent, worked by the British Waterways Board, carries a fair tonnage; but both are enormously outweighed by the River Humber, which carries a vast tonnage, which is not included in the figures. The River Thames, which still carries quite a large tonnage in its lower reaches, is not counted in the figures; nor is the River Medway.
The effect of these extraordinary omissions—and one cannot understand it—is that the figure that we give to our European partners is understated by about two-thirds. This must make it extremely difficult to assess what sort of transport policy should be carried out. I am glad to see that the noble Lord, Lord Underhill, has just returned to his seat, because I was about to quote something that he said. He quoted a figure for tonnage as a percentage of the cargo carried which is the official figure and which gravely under-estimates the amount that is carried because, for some reason, we give only the figures for the tonnages carried by the British Waterways Board. There seems to be no reason for this. One cannot understand why the other figures are omitted. The other countries do not leave out any tonnage figures for any conceivable reason. Why on earth should we?
It looks as though it is merely a bad habit, and

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if we are to have any serious integration policy we must get these figures right before we can understand what we are doing. These figures can be dug out; they are not difficult to find. It would not take any Government Minister very long simply to add the figures for the Manchester Ship Canal and the major rivers to the figure of the British Waterways Board. This ought to be done and is an easy problem to solve.
With the success of the expansion of the waterways in Yorkshire, which I think we shall see, we ought to go ahead, as other noble Lords have suggested. I believe that that is the real way in which to save money, at least on the heavier side of our national transport.
Lord Noel-Baker: My Lords, before the noble Lord sits down, I should like to ask him two questions. First, would he favour modest investment in the narrow waterways in order to improve them for recreational purposes? They might serve the most important interests of those who like to be on water. Secondly, would the noble Viscount think it still practical and advantageous to do what we used to urge during the war: link the Trent to the Severn by a wide "narrow" canal bypassing Birmingham, and link the Severn to the Mersey by a new wide canal which would join up the North-Western traffic centres to Birmingham and Nottingham and the East?
Viscount St. Davids: My Lords, I must thank the noble Lord for these remarks. To begin with, I do not think that at this moment, as we stand with the country's economy in its present state, we ought to spend much more money on work on the pleasure waterways. I should like to see it done myself. I would say a personal "hurrah", but I am afraid my answer to that at this stage must be no.
On the other matter, I would have encouraged those improvements at an earlier date when they were first suggested, but I think we can now say that cross links like that do not in fact produce much extra traffic in the way of cargo. They would certainly carry pleasure craft, but I cannot see that they would have much value for cargo. Therefore, regrettably, and as a great friend of the waterways, I must tell the noble Lord that my answer to that one also is no. I regret it, but there it is.
5.52 p.m.
Lord Gainford: My Lords, it also gives me great pleasure to join in this debate initiated by the noble Viscount, Lord Sidmouth, particularly as he is my successor as president of the National Council of Inland Transport. As may be expected, I am going to speak in support of the railways. I agree particularly with British Rail's advertisement, "This is the Age of the Train". Given the choice, I would always choose rail travel, unless some other form of transport was definitely more convenient for a particular occasion.
Because of my Scottish connections I have had to travel north of the Border a lot over many years from London or the South of England, although not as often as my noble friend Lady Elliot. Sometimes I have to go to Edinburgh, but usually to the west side. The electrification of the main line from Euston to Glasgow has been a particular blessing to me. True, I enjoy nostalgia for the days of steam, but in those
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days the journey to Argyll from London was one of a certain apprehension. Would the night train from Euston get to Glasgow Central in time to make the connection in the morning by bus or steamer to Argyll? The noble Lord, Lord Tanlaw, mentioned the difficulties with buses connecting with trains. Of course, with the coming of diesels the journey was speeded up, but now with the 5½ hour journey by modern electric train all that apprehension of the journey beyond has been removed.
On a personal basis as well as on the facts I am in favour of any policy to increase electrification. We have had the facts given to us again by my noble friend Lady Elliot about performance, the economy of maintenance, and lower fuel costs. In addition to reliability, the servicing of the locomotives is easier, and the turn round requirements at each terminus do not take nearly as long. The saving of oil has been mentioned, and the cost of that.
A matter that has not been mentioned is that by planning ahead for further electrification there is going to be a considerable demand for steel for the pylons to carry the overhead cables, and that demand will assist in more employment for the steel industry. I have been informed, and I have no evidence to the contrary—but if there is, please correct me—that if more pylons for overhead electric cables can be manufactured in advance they can be easily stored for their future use.
There has been mention of rolling stock. I agree that at present the Inter-City trains are very comfortable. Perhaps I have been lucky in my journeys, but I have found little to complain about. Some of the suburban services are good and some need helping a little. I should like to say a word about a very good service I have recently used when I was in Scotland in Argyll for the New Year. Coming back I travelled on a train I had not travelled on before from Balloch at the south end of Loch Lomond to Glasgow Queen Street, where there is an electrified suburban service of British Rail known as Trans-Clyde. The timetable showed a very adequate service, and the trains were smooth and comfortable. This is another example of what can be done.
Only two days ago I asked a Question in your Lordships' House about commuter services, and received quite an adequate reply. Further on commuter services, I do not know whether my noble friend the Minister who is to reply will have any information about the possible use of one-man trains on suburban services. It seems that the crews of trains in the future may need only one man; the driver, with all his electrical equipment to tell him that the doors are shut, the platforms clear. The one-man train could possibly provide an increased and faster service.
The noble Lord, Lord Underhill, mentioned the need for new rolling stock. I certainly support that. I had the good fortune a little while ago to see the department at Swindon where rolling stock is both manufactured and repaired. It was quite impressive. There was, as the noble Lord pointed out, a great boom in production at the end of the 1950s, but that is now over 20 years ago and in a few years' time these carriages are going to show their age. If we are not careful, the feast period will be over and we shall find ourselves in a period of famine.
As regards raising money, mention has been made of

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the fact that the best and most obvious source of income is the user. Mention has been made of the interesting results of that £1 ticket for old age pensioners, and the trains being crammed with people. We have heard that commuters could not get a seat on their usual train because so many of these old age pensioners were taking advantage of their £1 ticket and they were literally buying up all the space available. Now British Rail cannot afford to give everybody such economy, but once they can convince future passengers of value for money, and with any encouragement from reduction of fares, they are going to find their income coming in.
I now turn to features which worry many people. First, the closure of certain lines. It seems that whenever a line has to be closed, or the Government think it has to be closed, everybody always thinks that it is their particular line that is going to be affected. I mention again my concern about Scotland, and I am constantly concerned about the future of some of the lines there. I have with me a photostat of an article in a magazine called The New Civil Engineer dated 27th November 1980 containing a map of possible line closures. It seems to suggest that if one drew a line from Glasgow to Aberdeen, every line north and west of that is in danger of closure. I certainly hope that is not true. I know something of the lines north of Inverness, but also the Glasgow to Fort William line and on to Mallaig. These lines must be considered not just on the basis of facts and figures—how few people might be using them—because for the few people who use them, these railways are an absolute lifeline. Remove them and the areas they serve are affected dreadfully because the line is not only the means of communication across, say, the lonely expanse of Rannoch Moor, but the Highlands could be in great danger of becoming a desert.
I hope the Minister can allay my fears over another suggestion regarding the closure of any further lines through the Pennines. Some time ago I tabled a Question about the Sheffield to Manchester line through the Woodhead Tunnel. There are three other lines as well; they take passenger services, while the Wood-head Tunnel takes freight, and that freight is dwindling. There was once a line which went over the Pennines—Darlington via Barnard Castle to Kirkby Stephen and Penrith—but that was closed some years ago; it was difficult to keep up in the winter months. However, if it must be closed, let it just be a case of mothballing because in the future there might be a need to re-activate it.
I have in the past been able to travel abroad a great deal and I have seen many railways. The Swiss railways made a great impression on me. In the United States I travelled on Amtrak, which is becoming very successful, and I travelled on one of their special trains on what was called the Metroline between New York and Washington. I have seen how much other countries invest in their railways. In this country we grumble a lot about our railway services, and I think one reason for that is that we know the high standard they can maintain and we want that standard to be kept up.
I am of course prejudiced for railways. As some of your Lordships will know, it is my privilege to be a member of the Pease family, who put George Stephen
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son on the tracks, as it were, with the Stockton-Darlington Railway, and therefore it is in my blood. However, the time has come when we must make sure that the standards we are proud of are not only maintained but improved.
6.4 p.m.
Lord Davies of Leek: My Lords, this has been a very interesting debate. One of the problems with a discussion of this sort is that we can reiterate time and again what is wrong with everything. In fact, we are after investment and the question is: From where are we to get it? I am grateful to the noble Viscount, Lord Sidmouth, for initiating the debate and for his constructive speech, if I may say that without condescension, because he gave a good guide to the House. I also wish at the outset to say how much I thought the noble Lord who spoke from the Liberal Benches, Lord Tanlaw, put forward a constructive point of view.
When I was a youngster one of my favourite books was Moleskin Joe—I do not know if any of your Lord-ships have read it—who helped to build the Woodhead Tunnel about which the noble Lord, Lord Gainford, spoke. It was built by him and men like him and the women who followed the navvies from one end of Britain to the other. Indeed, that job was greater in terms of shifting cubic yards of earth than the building of all the pyramids. Unfortunately, Beechingitis de-stroyed it without a treble thought; they may have had a second thought, but they had no courage to take a third look at it. Some of the railways could have been put in mothballs, instead of tearing up the embankments and sidings.
One such line that was torn up ran alongside an old Welsh farm that my grandfather had. The train would chug along at night and I could look out of the window of my little Welsh bedroom hoping the fireman would open the firebox, whereupon the little cottage would be lit up. I would sometimes lie in bed listening to the whistle as the train made its way along the line. Marvellous sounds they were, sounds that made life worth living. What do we have now? We have grim-faced drivers making their way along the tracks to the House of Lords—traffic looking ugly and making ugly signs—and we see daft notices here and there: "Honk if you want to funk". Somebody is going mad because of the tensions in the society in which we live. Let us slow it down a bit and start living. I want in the six or seven minutes I intend to delay your Lordships—I will try to restrain myself to that—to try to spike down some of the problems.
My noble friend Lord Noel-Baker made a marvellous speech full of reality, but let me give him one figure concerning traffic in London in 1938; noble Lords can look the statistics up for themselves because they are all in an interesting book entitled Metropolitan Man. Traffic jams alone cost London £38 million in wasted petrol, oil and other fuels back in 1938. I mention that to illustrate the fact that when we talk about future investment we must not forget an important lost calculation, which is the cost in real worth of the thousands of deaths and tens of thousands of injuries on the roads of Britain every year. That is wealth lost to the nation. If we had fewer accidents, there would be a pool wherein we could dip for future

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investment. The modern accountant produces his slide-rule and does not allow for the human factor and the reality of effort in the world today. That involves much more than slide-rule calculations; one must look at the social health of the nation.
That leads directly to another sad aspect of the matter affecting rural England, Wales and Scotland. There are lonely people in villages and rural areas throughout the country. Indeed, in many ways they are more remote now than they were in the days of my great great grandfather. If they cannot afford a car and they are in hospital or have a relative in hospital, they can either beg a lift from a local farmer or wait for the local bus, which may come only once a week. That is not living. I am not accusing the present Government of being the cause of this state of affairs; it has been going on for a long time because all governments have neglected the reality, but it is time we gave attention to it.
Earlier I quoted to the noble Viscount, Lord St. Davids, the White Paper on Transport Policy, Command No. 6836, and I do not intend to bore the House by quoting chunks from it. It cites on page 217 three objectives of economic growth. It says transport policy is needed for economic growth, and that is axiomatic; secondly, that it increases prosperity and meets social needs, and I am sure that is agreed; and thirdly, that it minimises the damage to the environment, and that is a difficult one in view of the size of lorries we have today. Do not get worried, my Lords, I have only two more sheets of notes here—
A noble Lord: Three!
Lord Davies of Leek: "Three", said he in dolorous tones. I want to point out that the axle weight, the 44 tonnes, may in fact be less if it is spread over more axles; but unless we do something in this regard the sewage system in the cities of this country will be destroyed. In Manchester and in Stoke-on-Trent road surfaces are continuously upset by the weight of traffic, all traffic. Something must be done about it. People are talking about a nuclear war and defence. What is the matter with people? I believe that transport should be part of a policy of defence.
Like others in this Chamber, I was involved in various activities during the war. One was helping to get children out of London to remote areas. We had to move people, we had to house refugees from Hitler's Europe, and we needed transport. We needed roads and rolling stock. What are we doing now? If we now had to defend ourselves against nuclear attack, we could not move the people out of London in two or three days; it would take weeks. The roads would be jammed; we would not have the necessary railways and rolling stock.
Your Lordships might ask what is the point of the argument that I have just made. The point is that transport should be classed as part of the expenditure on civil defence and national defence. In other words, a good transport system would also be a system of security for Britain if we had to face a war. Consequently, instead of spending money on missiles that may go the wrong way because they have not been properly tested, while we have the opportunity let us
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ensure that we are able to move people from the urban and city areas to the rural areas, by roads and railways. At the moment we have not the rolling stock.
It is no good blaming the chairman of the railways board, or the national road system, if the money is not there. That is the problem that we should be facing in this House. That is the problem for which we want answers not only from the present Government but also from any future Government, of whatever political colour. The problem is not of 12 months' duration. It took 10 years to get over the 1931 crisis. I consider that, despite what might be said by all the boys who bring out their slide rules, it will take us six to eight years to get anywhere. I hate the word "normalcy", which I think was invented by Hoover; it is a terrible word. It will take us between eight and 10 years to get back to normal so far as economics are concerned.
We should look at transport as part of our civil and national defence. Whatever politics we may have on either side of the House, we should impress on the present Government that money must be found for the essentials involved in moving people if necessary. The doctor will know about this. I want to refer to the misfortunes of this systalitic economy. It is as though the heart were not palpitating properly. The body politic is unable to think clearly because the heart is not pumping blood to the top of the party in power.
I come now to my last point. I have been speaking for nine minutes and I am sorry to continue, but I must complete what I want to say. The other day in a supplementary question I asked what is to be done with manpower, such as that which I saw in Wales: lads who went to the sixth form of the grammar school, who had better IQs than mine, who finished up beating their brains out, and who lost all interest. They were destroyed as human beings because of years of unemployment. What can we do at present when we are looking for capital. Capital without labour is not much use. Instead of merely paying out dole money, let us have a muscles and shovels policy. Get these people to work on road building and railway track laying, and so give them dignity and the joy of living, as they help to rebuild Britain. I come now to my last sentence. If we are looking for investment, those are the areas to consider because transport is essential; to use Kiplings phrase, "Transport is civilisation".
Viscount St. Davids: My Lords, before the noble Lord sits down, I should like to say that I was not sure whether I had made myself quite clear when he intervened during my speech. The paper that he quoted is thoroughly out of date. The investment mentioned was made in the Sheffield and South Yorkshire waterway. It was this Government who did it, after many previous Governments had failed to do so. That did not quite make me a Tory, but it confirmed my belief that in some ways their hearts were very much in the right place.
Lord Davies of Leek: As I said when I interrupted earlier, I was not contradicting, I was asking for information; and I have now received it.
6.16 p.m.
Lord Teviot: My Lords, it is always absolutely delightful to follow the noble Lord who has just sat down, even though he goes at a rate of three thousand revs to the minute with the choke out. If one tried to follow him, one would fall on one's face very quickly, and so I was grateful to the noble Viscount, Lord St. Davids, for providing a slight pause. To turn to my own speech, like other noble Lords, I am very grateful to the noble Viscount, Lord Sidmouth, for putting down this Motion. We need a transport policy. We also need a clear-cut Motion—such as he has given us—to get our teeth into. It is most refreshing to be able to let one's thoughts and emotions go in a debate like this when we are discussing transport policy and we are not being ruled by the narrow confines of proposed legislation, such as the transport Bills of recent sessions. We do not want to discuss those arguments again in any shape or form.
I enjoyed the noble Viscount's speech. I believe that he mentioned Southern railways' timekeeping, and as a regular traveller on that railway may I say that I think he will probably find that the timekeeping is being improved by means of new signal boxes at London Bridge and Victoria. There is an extensive programme in hand, and I think that it is pointing in the right direction. It is delightful to join in a debate introduced by a noble Lord who is descended from such a distinguished Prime Minister, who served his country at a very difficult time in its history.
Because transport is a service industry, we perhaps tend to underestimate its significance compared with manufacturing industries. Transport is a field where so many people think themselves experts, but most see only the petty points which they perceive to affect their convenience, which is at best a restricted view. In transport, apart from self-motion—that is, walking from one place to another on one's two feet—we have to be conveyed by means of a combustion engine or whatever. Likewise, everything that we eat or use has to be moved—transported. So transport is vital to us all, and it is for your Lordships today to see the true complexity of this many-sided industry and approach its diverse problems in a positive manner.
Governments—and this point has been dealt with by many previous speakers—too often have had transport policies ruled by conflicting political doctrines, rather than realities. Therefore, I feel that if there is any message that one can try to give from this debate, it is that of the need for a stable approach to transport. Remember, that whatever policy one wishes to adopt, some years are likely to go by before it shows its true effect. So, in the past 13 years, to my knowledge we have seen a great deal of "Boxing and Coxing", but these changes have achieved little beyond confusion and instability.
That leads me to my personal interest, which, as your Lordships will know, is the public road transport industry. A great deal has been said about railways and inland waterways—a lot of what might be called nostalgia has been indulged in with regard to the railways—so it is quite apt for me now to discuss road transport. Like many Members of your Lordships' House, I recognise the importance of rural transport; the needs of those who, for one reason or another, cannot have the use of a car. In humanity we must
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consider, and respond to, their problem. When we consider the also-important economic arguments, our thoughts turn to the towns and cities, where the great majority of the population live and, consequently, the great majority of passenger journeys, not to mention goods deliveries, are made.
The problems of traffic congestion, et cetera, must be tackled. Here, I agree with my noble friend Lord Mountgarret, who mentioned that matter. A lot of us have private cars, and there are these splendid people who think that private cars are the be all and end all. But I think that as a nation we have got to act responsibly in this matter. If I can digress from my speech—like noble Lords who have spoken previously, I am very conscious of the time at this hour of the day, and I am probably not going to go much more than about nine or 10 minutes, five of which I have had already—we can cast our minds back to one or two particular situations. One does not want to regard the time of Suez with any great excitement, though it was an excitement—in some ways, it was the time of our lives—but that was the last time, I believe, we had petrol rationing and I can remember that London was almost empty of traffic apart from public transport and buses were able to move around. They were very full, and they were dragging the road because they had so much time. One does not want a national disaster, or an international disaster, as that was, to make us look at this matter, and we must discuss it responsibly.
Here I note with satisfaction—and this is a point that follows on—that the Transport Select Committee in another place is launching an inquiry into urban transport. These new Select Committees are to be welcomed on two counts. First, they introduce a bipartisan element into policy-making. Secondly, speaking as one who tries to keep in touch with as many practical operators as possible, this is something I particularly welcome. They bring into consultation the professionals from industry—the men at the sharp end, when all is said and done. Sometimes these professional views may require a pinch of salt, but they must not be ignored by we amateurs in most industrial fields.
I would stress the importance of urban transport and, as an aside, following a recent discussion with the managing director of London's buses, say that I would be glad to introduce a short debate on this subject if noble Lords support this idea. Here, I should like to mention another point for if and when one debates this matter. My noble friend Lady Trumpington came and asked me a few minutes ago about the idea of introducing a system of, let us say, discs and standard fares. Of course, that is a subject to be dealt with in another debate, but there are so many innovations that one can bring into the realms of transport to make things very much easier, and to encourage people. At the moment, all I shall say about this is that, with all its implications, it needs greater investigation.
Reverting to the Select Committees, it seems to me that they have followed the approach in other countries to the formation of policies. That shows that we can and must be prepared to learn from others. Transport is a good example of this. Take France. In Paris, the authorities have taken what was an aged and decrepit system and made a success of it, leading the

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public to choose to leave their cars at home and travel by bus, Metro and RER. Other western countries have also come to see the benefits of public transport to their people. They see the positive value of investing their national resources in improvements to their transport systems.
Some Presidents take a personal interest in what they must see to be a vital subject. Fifteen months ago the immediate past-President of the United States said:
"Public transport is one of the keys to the future of the United States of America. We can no longer afford to think of public transportation as something that we might some day get around to developing adequately once all the super highways and cloverleafs have been completed. We must address the problems of public transportation now".
I do not say for one minute that we in this country have let our public transport system go as have the United States of America. Also, we are a small and highly-populated country; but that is a very good example to follow. In so many ways we lead the world. As to whether we lead it in the forms of public transport, we should like to think we do but it is a very good case in point.
This is a practical problem because there must be a policy framework—and that is what this debate is all about—which will state the objectives for private and public transport. For the busmen there must be stable financial guidelines which will help them to know where they stand for the foreseeable future in drawing up their own plans for levels of services and fares. The way in which the fare scale is drawn up—and this depends on the level of central and local government support—will decide whether fares revenue can be maximised. A finely graduated scale is more effective than a coarse one, or flat fares.
The fares system enables decisions to be made about ticketing, one-person or driver-conductor operation and other procedures. Ticketing equipment is now expensive and needs to be seen as at least a medium-term investment. These factors also affect vehicle layout and design specification, which involve related considerations of speed over the route, time taken at stops and so on. These in turn influence decisions on maintenance requirements, labour and staffing generally. Without a stable transport policy the bus industry cannot adopt any policy. It must hedge its options, and its efficiency is reduced by things outside its control. But who gets the blame? It is the busmen, of course—and, ironically, he is even be-laboured by the Government, of whichever persuasion, who have actually set the scene for this debacle.
There is need for a review of transport policy, and I sincerely hope that the noble Viscount's initiative will lead to positive and ongoing action. That must of course embrace all modes and aspects of transport. I trust that I have not seemed too narrow in concentrating on one particular line of transport. I recognise the role of other fields and the need for freedom of choice, which must not exclude co-ordination. I think co-ordination is rather more important than integration. Integration is a word which can be misused, but co-ordination is very important. So we need a national transport policy based on practical realities—but, also, do let us avoid gimmicks.
6.29 p.m.
Lord Somers: My Lords, this has been a most interesting debate, and I am very grateful indeed to my noble friend for having introduced it. In forming any transport policy, one must of course take all forms of transport into consideration—road, rail, waterway, air and sea—always being careful to apportion to each particular form the traffic which is most suited to it. Let me say from the beginning that I entirely agree with the noble Lord, Lord Lucas, that road transport and rail transport are dependent one upon the other. But what he meant, I think, was that rail transport is dependent on road transport. I would point out to him that the way he put it also means that road transport is dependent on rail transport, which I personally think it is. For long distances there can be no doubt that rail transport is far and away the best, and, what is more, the most economical, since it is a scientific fact that steel wheels on steel rails giving a minimum of friction are the least consuming of energy.
That is why I am going to concentrate tonight chiefly on the railways because I feel that so much traffic has gone over to the roads which ought really to be taken back to the railways. We have a marvellous railway network in this country. So far as I can remember, the noble Lord, Lord Underhill, described it as the most complex in the world. So it is. It is an extremely efficient network and it is well worth making use of. But, of course, at the moment we are up against the fact that British Rail are running constantly at a loss. I am not pretending to be one who can probe into all the sources of that failure, but I am going to try to suggest of a few of them.
I am very much in favour of total electrification. It can start on the main lines and be extended later. There is no doubt that British Rail have done some adventurous things in their introduction of high-speed trains, but I am afraid that I cannot share the enthusiasm of the noble Baroness, Lady Elliot, for the Inter-City trains. I once travelled on one as far as Ledbury in Herefordshire. It was over the lunch hour and there was no restaurant car nor even a buffet. I do not think that that sort of thing makes for a very outstanding service.
As far as high-speed trains are concerned, I have not yet travelled on one; but a friend of mine did so a short while ago and he tells me that the vibration at certain points was so frightful that he could hardly remain seated. But that may be due either to bad condition of the permanent way or perhaps to old rolling stock that has not got the proper suspension. That, I dare say, can be solved. But I do not think that what the average person wants when travelling by rail is nearly so much high speed as comfort.
Whenever I attend your Lordships' House I travel up to London for quite a short distance from Epsom. Some of the things that I can complain about I am sure your Lordships have encountered in other places. For one thing, in smoking compartments, there are no ashtrays; in other compartments, there are no litter bins so that one can see empty beer cans and various articles rolling about on the floor. The rolling stock is always filthy so that one cannot see out of the windows. We stop at every station on the way up—that is, to Victoria. They have recently introduced some semi-fast trains to Waterloo (which I now always take)

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which stop at only two stations and then at Waterloo. Why cannot we have some of those to Victoria? Then there are the waiting rooms in most stations. The one at Epsom is smallish, of course, with hard wooden benches, whitewashed walls with no decoration at all—except decorations from some supporters of some football club or another. There is a fire only when it is so cold that one cannot bear to stay outside and, even then, it is scarcely visible. There is altogether a total lack of any kind of comfort.
As to the terminal stations, Victoria is one of the most disagreeable places I have ever been in. You have to look down to see that you are not treading on a piece of orange peel or something. It is absolutely appalling. And if you want information, there is never anybody to ask. The men sitting at the ticket inspectors' box very often simply do not look at you when you go through. If you ask them a question—and you have to repeat it—they usually say, "Dunno. Look at the board. "That sort of thing is not good enough. What people want to make them travel by train is some comfort and some feeling of being looked after. I am sure that many people who at present travel to London by car could be encouraged to travel by train—because driving on the roads today, particularly in London, is no fun.
There is a strong case for transferring some of the heavy goods traffic from the roads to rail. I was most interested to hear the noble Lord, Lord Noel-Baker, mention something which I have been thinking about for a very long time; that is, the possibility of a roll-on, roll-off service. That would be quite possible if one constructed lorries which were suited to the loading gauge of the railways; it would save an enormous amount of labour in loading and unloading, and it would be extremely efficient. Another point is this. Why cannot factories which are close to the railway have their own sidings as they used to? They would be very useful to them and I cannot see why it should not be worked. The potential is there. We have only to get down to it, to think a little bit, to try to make improvements and it will pay us a thousand-fold.
Lord Lucas of Chilworth: My Lords, I wonder whether the noble Lord would be prepared to list those goods that he so confidently thinks can be transferred from road to rail with perhaps the generosity with which he listed the faults of the railways. Would he not agree that there is no professional traffic manager who does not look at all the options open to him whether carrying cement, oil, motor-cars, parcels or anything else? If one system is not suitable, for one reason or another, then he chooses the other system. It is not just a question of listing a certain number of goods that ought to, or could, or might be transferred.
Lord Somers: My Lords, is there no such thing as co-operation left? I should have thought the two could get together and form a perfectly good policy.
6.40 p.m.
Lord Ferrier: My Lords, my noble friend Lord Hawke spoke to the noble Lord, Lord Underhill, and said to your Lordships, "I have heard speeches of this kind for 30 years". I had just said to my noble friend
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Lady Faithfull, "I heard this speech by the late lamented Lord Stonham in 1964". The fact is that Lord Underbill's dream and mine have not come true. It seems to me, hearing the exchanges this morning between the noble Lord, Lord Jacques, and the noble Lord, Lord Cockfield, one could say, "Well, it looks as if Socialism has failed". I say it like that because one of the things that grew out of the policy which was enunciated by Lord Stonham in those days was the depot at Didcot. At Didcot the grass is growing up through the sidings. Why, my Lords? Because the dockers refused to load the containers that were packed there, and because the car delivery people from Coventry would not take the cars a few miles to Didcot unless they were paid the rate to go to Liverpool.
I feel that this is a challenge to this Government. If I am right in saying that Socialism has failed, do not let this Government fail; let us have a policy. As my noble friend Lord Teviot said, this debate is about policy—the policy that should follow. Therefore I make no excuses for intervening in this debate in place of the noble Lord, Lord Auckland, because I feel duty-bound to your Lordships' House to make these two points: first, the failure of all these dreams for 30 years is a challenge to the Government today to get on with it and have a plan. The second point—which may be equally disputable—is that I am one of those who take the view that a Channel tunnel is simply not on. It is a nonsense, in my view. We are planning to spend hundreds of millions of pounds; bankers say that they are going to finance the hundreds of millions of pounds needed to dig this tunnel under the Channel. The railways say that they have to spend hundreds of millions of pounds to put a railway tunnel under London in order to feed it. That policy is going to concentrate Britain's continental traffic in one area. One malicious bomber could knock the whole thing out. My noble friend Lord Inglewood talked about policing the tunnel. What railway police will patrol it when 50 per cent. of the traffic is coming from the Continent?
I feel very strongly about this. The reason why I say that I am not making an excuse for taking part is that I feel this debate would not be complete if I did not express the view, which I know is held by a large number of Peers, that the Channel tunnel would be a most dreadful mistake. I shall not go on about trivia; but, in terms of policy, it is to be remembered—and as a Scotsman I am side by side with my noble friend Lady Elliot—that traffic to the Continent via Dover is not really much help. I talk of goods traffic entirely, because air traffic is taking the passengers. Therefore, there is a high on-cost when taking goods from Scotland to Europe if the route has to be channelled through the south of England.
Another point arises in terms of policy: the authorities have said for years that various rail systems in Scotland which have been referred to already have to be closed because they do not pay. The losses are fractional compared with the losses on London commuter traffic. The load factor on London commuter traffic is so low; millions of pounds worth of stock has to lie idle for hours each day. In terms of policy I wonder whether, when my noble friend replies, he will indicate whether, in calculating the profitability or otherwise of our railway system, we

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should not take a leaf out of Lord Lucas of Chilworth's book and say that, whereas road transport bears such a very high measure of costs which the railways do not have, why should we not use the losses on commuter traffic and charge them to the existing overall cost of railways? There should be an even spread.
My two points are these: I believe this debate is a challenge to the Government and I believe that it is proper at this juncture to declare without equivocation that the idea of a Channel tunnel is not a workable affair. I grudge every pound spent on even planning it.
6.46 p.m.
The Parliamentary Under-Secretary of State, Department of the Evironment (Lord Bellwin): My Lords, may I too first of all congratulate the noble Viscount, Lord Sidmouth, on tabling this Motion and on his interesting and constructive speech in introducing this debate. I should also like to congratulate the other noble Lords who have contributed to the very high standard of the debate. It is over four years since transport policy generally was last debated in your Lordships' House, in response to the previous Government's consultation document in 1976. We have of course considered various aspects of transport policy in detail since then, not least in the Transport Bill last session, but much has changed since 1976. I therefore welcome the opportunity which this debate affords to describe the Government's transport policy and the philosophy on which it is based. I shall also attempt, in the course of so doing, to deal with some at least of the specific points which noble Lords have raised.
Transport, of course, as has been said, affects all of us and in different ways. So it is obviously of great importance that the Government should have a sensible and enlightened transport policy and, contrary to the implication of the terms of the Motion, I hope to illustrate that we have a clear and distinctive one. The principles which underlie our policy were set out three years ago by my right honourable friend the Secretary of State for Transport, while in Opposition, in a pamphlet entitled The Right Track. Those principles still hold good today. They are the principles which my right honourable friend has sought to implement since this Government came into office. They are perhaps best summed up by saying that we are concerned first to ensure that all types of transport are run as efficiently as possible, taking account in addition of the need for energy conservation; secondly, that the role of Government should be restricted to those areas where it needs to be involved; thirdly, that no unnecessary restrictions are placed by Government on individual choice in transport; fourthly, and most important of all, that the needs of the user should be put first.
I should like to point to some of the ways in which we have made those objectives reality in the time since we came into office, and to the initiatives we have announced for the future. I take as my starting-point the Transport Act 1980. That Act contains important provisions to remove restrictions on the bus industry, and to allow private operators to compete for a bigger share of the market. We have seen an immediate and dramatic effect on long-distance express services. The public now has a much wider choice of services, many
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at much lower fares. The Act also removes irksome restrictions on car sharing. We want to encourage car sharing as a means of conserving fuel and reducing traffic congestion, because it can give individuals greater choice in transport, and, particularly in rural areas, because it can provide mobility for people who would otherwise be unable to get about. The same principles are reflected in the initiatives which we have taken to introduce private capital into the transport nationalised industries.
The Transport Act provided powers to return the National Freight Corporation—now the National Freight Company Limited—completely to the private sector. My right honourable friend the Secretary of State for Transport will take steps to do so as soon as practicable. The current Transport Bill, which received its Second Reading in another place last Tuesday, contains provisions to allow the introduction of private capital into the British Transport Docks Board and into British Rail's subsidiary businesses. The British Transport Docks Board has a good track record and should prosper in the private sector. British Rail's subsidiaries, Sealink, British Transport Hotels and British Rail's Hovercraft, have for too long been starved of the investment funds for expansion.
I am sure that your Lordships would want me to say something about British Rail's current problems. Therefore let me first reiterate what my right honourable friend the Secretary of State for Transport has made clear so often: there is no question of further "Beeching-style cuts", if I may so call them. I cannot immediately assuage all the concerns of my noble friend Lord Gainford, nor cover the specific cases to which he referred; but I can and do say—and I hope it will make him and perhaps others of your Lordships feel happier on this point—that the passenger network will for the foreseeable future remain broadly the same size as at present, with no substantial closures. British Rail has responded positively to this commitment by producing ideas for low-cost renewal and operation of services. So I hope we shall not have to hear more talk about the wholesale closure of passenger services.
For the Government's part, I believe we have shown a flexible and realistic attitude to the question of finance. Last September my right honourable friend increased the Board's external finance limit for the current year by £40 million to £790 million. The limit for 1981–82 is £920 million—again an increase above previous plans and an increase in real terms. In December my right honourable friend announced that the ceiling on the public service obligation grant—that is, the Government's grant to the railways for passenger services—had been increased for 1981 by £23 million, to £678 million. This was specifically to avoid another fares increase in less than 12 months. So the Government are playing their part. The financial targets which the board has been set are tough but also realistic, and they have been ack-knowledged as such by the board's chairman. The answer to the railway's problems does not lie in ever-increasing subsidy. The railways themselves have an important—indeed the most important—part to play. Sir Peter Parker recognises this and has already taken action—firm but necessary—to cut costs by tailoring services more closely to demand.
Perhaps I might at this point refer to something said

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by the noble Lords, Lord Tanlaw and Lord Underhill, on the subject of the railway inspectorate's report on traffic deterioration. It is a slight digression but the point is important and I want to respond to it because I should like at once to allay any safety fears. Safety is not in question. It is the responsibility of British Rail to operate with due regard to safety, and they have given an assurance that their standards, which are very high, will not be allowed to slip.
My right honourable friend has done two things: first, he has freed all track renewal from control through the investment ceiling. The board still have to find the money but they no longer have to fit it into a separate ceiling on investment. Secondly, in increasing the board's external finance limit this year he had particularly in mind the need to avoid cuts in essential maintenance.
Let me turn now to investment in transport in general. In some ways this is at the very centre of the noble Viscount's Motion. Of course, the Government recognise the need and the importance of long-term investment, and especially the need for consistency in investment levels. I know that consistency is particularly important to those industries which in turn supply our nationalised industries, to enable them too to plan ahead. It is because we recognise those points that we have sought to stabilise the investment levels on both road and rail. Total public investment in inland transport in 1980–81 will amount to £1.3 billion. Several noble Lords today have in effect made bids for extra investment which would increase that total. My right honourable friend has made it clear that he will do all he can to preserve transport investment, but at a time when public expenditure generally is under severe constraints I cannot hold out any realistic prospect of an increase in that total.
I would not quarrel with the following quotation from the Transport Policy White Paper which was published by the last Labour Government:
"Those who wish to see a significant increase in transport expenditure have a duty to say where the additional money should come from. Those who want to spend more in one area or another of transport must show where, within the budget for transport, compensating savings can be found".
As regards investment in the railways, we have maintained the Railway Board's investment ceiling in real terms at exactly the same level as that set by the previous Government. I stress that point—exactly the same level in real terms—because in recent weeks it has been frequently misrepresented in some of the media. The ceiling is currently £384 million estimated out-turn prices. I submit that is a significant amount. The fact that we have maintained the ceiling at a time of severe cuts elsewhere is a direct reflection of our commitment to the railways. We believe that this ceiling is adequate at present to meet the board's needs. Priorities for investment within the ceiling are a matter for the board itself. Within the existing investment ceiling the board have managed to achieve substantial modernisation of the railways. My noble friend Lady Elliot referred to the excellence of the board's Inter-City services. The noble Lord, Lord Somers, was perhaps slightly less convinced. Might I say, from my own not inconsiderable experience of using those services, that on the whole I tend to side
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with my noble friend in the light of experience. I want to say that, and am glad to have the opportunity to do so.
I think it is fair to say that speed and comfort have increased considerably with the introduction of high-speed trains, of which over 60 are now in service. A total of 95 have now been authorised. For the noncommercial railway there is a rolling programme of electrical multiple units of 220 a year. These will be mainly deployed on the London commuter services. These are already benefiting or will benefit from improvements to rail infrastructure; for example, re-signalling the lines into Victoria (at a cost of £50 million) and re-signalling the London to Brighton Line (also at a cost of £50 million). The London Bridge services have been re-signalled at a cost of £45 million. Electrification of the Great Northern services out of King's Cross cost £90 million and electrification of the Bedford-St. Pancras-Moorgate line cost £100 million. All these major investments should considerably improve the service and, hopefully, reliability. Perhaps it will also give encouragement to the noble Viscount, Lord Sidmouth, and others, who are quite properly so concerned about investment in transport.
The noble Viscount, Lord Sidmouth, urged the Government to take account of the long-term objectives in determining their investment priorities. He and others talked about electrification. The noble Lord, Lord Tanlaw, also mentioned this point. I think I should say that the Department of Transport has for some time been engaged with British Rail in a joint review of the case for a main-line electricfiation programme. An interim report was published in September 1979 which showed promising signs that a case for electrification could be made. I am pleased to say that the study is now complete and the final report will be published very soon. The study has concentrated on a financial appraisal of the case for electrification, as befits an investment which would benefit primarily the commercial rail businesses—passenger, Inter-City and freight.
It has also looked at wider effects, including possible savings in oil consumption which would follow from reducing the extent of diesel traction and the effects of an electrification programme on the railway manufacturing industry. Because electrification would involve a very substantial investment, primarily in businesses operating under commercial remits, my colleague the Secretary of State for Transport will wish to consider the findings of the electrification review in the context of the prospects for the development of these businesses. The outlook for the economy as a whole will also have to be taken into account.
The noble Lord, Lord Underhill, referred to trunk roads and I should say on that that our policies for investment in trunk roads, for which the Government are directly responsible, were set out in the Roads White Paper published last June. We fully recognise the importance of investment in the road system, but we acknowledge, too, that the programme cannot be exempt from the measures necessary to bring public expenditure under firm control. We have stabilised expenditure plans at roughly the level we inherited when we came to office. Indeed, despite all the national economic constraints, the Government have considered this to be a priority which has resulted in our actually

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spending more in our first year in office, than did our predecessors in either of their last two years.
Within the resources available, our first priority is schemes which will help economic recovery. A prime example is the M.25 London Orbital Motorway. This will provide a quicker, more convenient and safer route around London, for through traffic, and will improve the environment of many towns and villages on the outskirts of London. Over half the road is now either open to traffic, or under construction, and planning of the rest is well advanced.
The second priority is roads which will take traffic out of towns and villages which were never designed with cars and lorries in mind, and particularly historic towns. Such roads are often major industrial routes. The M.40, for example, will take traffic out of several historic towns, including Banbury, Woodstock, and Stratford-on-Avon. In many cases, the right answer is a by-pass. I give a few examples of by-passes, which will greatly improve the environment of the towns concerned. Construction is currently taking place on by-passes for Colchester, Canterbury and Wimborne. Tenders have been, or will shortly be, invited for by-passes of Bowes and Gloucester North. And, looking further ahead, the programme includes by-passes for Lincoln, Okehampton and Leominster.
Our third priority is to protect existing investment. One of the striking features of road traffic during the last 20 years, has been the success of the motorways and trunk roads in attracting traffic, and particularly freight traffic. They have been more heavily used than was anticipated when they were designed and built. Although motorways account for less than 1 per cent. of all road mileage, they carry some 10 per cent. of all traffic—and up to 25 per cent. of the heaviest lorries. Inevitably, this success has been accompanied by heavy wear on some of our older and most heavily-trafficked motorways. A comprehensive programme of maintenance is essential, if they are to be able to cope with traffic in the future. The Government are therefore spending over £100 million a year on motorway and trunk road maintenance, and this amount is likely to increase. My right honourable friend has emphasised that he will continue to keep the balance of expenditure on new construction and maintenance under review, so as to obtain the best overall value for money.
I wonder whether I may just refer briefly to what I thought was a particularly splendid speech from the noble Lord, Lord Noel-Baker. He spoke most movingly of the impact of road accidents. No debate on transport could be complete without discussion of road safety and road accidents, and the Government are deeply aware of the enormity of what I would call—and I go even further than he did—a nightmare situation. However, I do not intend today—because I know that there will be an opportunity when we come to the Transport Bill—to go into detail or to say other than that the Government are deeply concerned to reduce accidents and injuries on the roads.
The Transport Bill, which has already received its Second Reading in another place, contains important provisions to tackle two of our most important road safety problems—the contribution of drink to road casualties, and the very high injury rate associated with motor-cycling. These proposals will come to your Lordships' House for consideration in due course,
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and the whole road safety situation will continue to exercise the Government's mind.
The noble Lord, Lord Noel-Baker, my noble friend Lord Mountgarret and the noble Viscount, Lord St. Davids, stressed the importance of inland waterways for freight transport. They pleaded for more investment in those waterways, although I was most impressed by the very kind way in which the noble Viscount, Lord St. Davids, touched on that point. Let me make it quite clear that the Government are very well aware of the importance of this mode of transport.
The British Waterways Board is currently investing upwards of £10 million in improving the South Yorkshire canal. I am glad that the noble Viscount was able to put us in the picture on that. Coming as I do from Yorkshire, it is something of which I was not unaware. I suggest that this represents a major opportunity for the inland waterways to show their current potential for attracting and carrying freight. I do not think we should get that out of proportion in the context of the totality. Nevertheless, there is a part to play.
I was intrigued to listen to the fascinating suggestions and comments made by the noble Viscount, Lord St. Davids. As he will know, inland waterways are a matter for my right honourable friend the Secretary of State for the Environment. I will certainly draw my right honourable friend's attention to the points which the noble Viscount made.
Finally, reference was made to the Armitage inquiry. It would not be appropriate for me today—nor is there time—to go into this issue in any depth. The Government are considering Sir Arthur Armitage's report very carefully. One recommendation, on which we are already acting, is the restructuring of vehicle excise duty, so as to reflect more accurately the damage done to roads by particular axle weights and configurations. We are taking powers to do this in the current Transport Bill. My right honourable friend has made it clear that the Government will not reach decisions on the other recommendations in the report, until it has been debated in Parliament. I can only repeat, therefore, that it would not be appropriate for me to say more at this stage. But I again assure your Lordships that it is being considered very carefully—
Lord Underhill: My Lords, will the noble Lord give way? When he gives an assurance that it will be debated in Parliament, will that include a debate in this House?
Lord Bellwin: My Lords, I am sure that there will be an opportunity to debate it in this House. I am not sure of the procedural priorities or ways, but I am quite sure that in one way or another someone will ensure that it is debated in your Lordships' House. I have every confidence in that. I hope that I have been able in the short time available to set out, at least, the key principles of the Government's transport policy. The Motion of the noble Viscount, Lord Sidmouth, implies that there is no transport policy. May I respectfully suggest that that might be said by many who would disagree with the policy. A transport policy we certainly have, and it is clear and coherent. Furthermore, I submit that it is an enlightened and progressive policy.

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The old policies, so beloved of the Labour Opposition, of greater and greater State involvement and regulation, have been tried and found wanting. Our transport policies involve a significant reduction in the role of the state. We have a policy which will enable transport to play its full part in the Government's overall objective of regenerating the economy. It is a policy which, once implemented, will help to lead to more efficient transport industries, responsive to the needs of the user, and providing the right services at the least cost in terms of resources, for both industry and the public. The success already of the Transport Act 1980 in changing the face of long distance bus services is proof that this way works—a way based on removing restrictions and setting people free, not on planning and controlling, nor on dunning the taxpayer for more and more subsidies.
I have not covered all the points which were raised, and I am sure it was not expected that I would do so. However, I assure all who have spoken in this most fascinating debate that I and my colleagues will read very carefully everything that has been said. If nothing else, the debate has brought out how enormously wide-ranging this topic is. It has so many facets which concern our everyday lives. Heaven knows! the Government are anything but complacent. We are well aware of the problems with which we have to deal.
I hope I have said enough at least to illustrate that a policy we do have, and that we are putting it into effect. It is a policy which I hope most of your Lordships will be proud of, as I am.
7.12 p.m.
Viscount Sidmouth: My Lords, we have had a most interesting and, as has just been said, wide-ranging debate. That is usual in this House. I am truly grateful to all noble Lords who have spoken, and who have spoken so well. The hour is late and I do not think it would be appropriate for me to prolong the debate beyond making two points before sitting down.
The first is about road transport and the suggestion that there should be no restriction of individual choice. Both the noble Lord, Lord Lucas of Chilworth, and the Minister referred to this point. Of course this is right. There is no suggestion that there should be any return to the restrictive situation which prevailed before the war. Indeed, I think it is agreed that in the last two decades road transport has won the largest share, fair and square, in competition with rail. But it has been won at a considerable cost. In many cases, the basic cost of road transport is higher than the cost of rail transport. The reason why people use it to an increasing extent is the convenience and flexibility which road transport can provide. It is a quantifiable benefit. However, we are just beginning to count the cost in terms of energy and the damage to the environment and, as the noble Lord, Lord Noel-Baker, has very rightly pointed out, in terms of road accidents. This is beginning to tip the scales and will increasingly do so.
My second point is about safety. I was glad to hear, as I expected to hear, that safety considerations on the railways will not be lowered. However, there
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is one consideration to be borne in mind. Already, because of the financial limits, British Rail are falling behind on track maintenance. At present the figure is over 1,000 kilometres. Various figures have been quoted projecting this into the future at the present rate of shortfall. These lines will not be used if they fall below the very high safety standards which have always prevailed on British Rail. But what will happen if standards continue to fall to such an extent that lines can no longer be used? This is another form of the withering on the vine to which I referred in my speech and which should not be overlooked. It is not a direct closing down, but the situation might very well be reached when lines are not safe to use, first at the required speeds and later because they are not safe at all. That is all I wish to say. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

European Assembly Elections Bill
Brought from the Commons; read 1a, and to be printed.

Criminal Justice (Amendment) Bill [H.L.]
7.15 p.m.
Lord Wigoder: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, that the House do now resolve itself into Committee.—(Lord Wigoder.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD SEGAL in the Chair.]
Clause 1 [Circumstances in which reporting restrictions may be lifted]:
On Question, Whether Clause I shall stand part of the Bill?
Lord Wigoder: I beg to move that this clause be left out of the Bill and do not stand part of it. I hope your Lordships will allow me at the same time to speak to Amendment No. 1 which proposes a substitute new Clause 1 to replace the Clause 1 that if the first amendment is carried, will not stand part of the Bill.
This is entirely a drafting matter. It arises in this way. The existing Clause 1 was drafted by me, somewhat amateurishly. The Home Office has been kind enough to express an interest in the Bill. The parliamentary draftsman has therefore redrafted the existing Clause 1 in terms that are both more elegant and more effective than the original. I am most grateful to the Minister, the noble Lord, Lord Belstead, and to his staff and to the parliamentary draftsman for all the assistance that they have given.
Perhaps I should make it quite clear that the new Clause I retains precisely the same criterion and precisely the same procedures as were envisaged by the existing Clause 1. Nothing of any substance is altered. The only matters to which I should draw attention are these.

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First, the new Clause 1 refers to the Magistrates' Courts Act 1980 whereas the existing Clause 1 refers to the Criminal Justice Act 1967. The reason is that since the Bill was first drafted the 1967 Act has been consolidated into the 1980 Act. The 1980 Act has been enacted but has not yet taken effect. For that reason it is necessary first to refer in the new clause to the Magistrates' Courts Act 1980 and secondly, by subsection (3), to provide for the somewhat unlikely possibility that the Bill now before the Committee will be passed through both Houses and come into force before the 1980 Act itself comes into force. If that is so, then that position is provided for in subsection (3).
The only other matter which I should mention is that subsection (4) is a transitional provision which was not contained in the original clause and quite clearly should have been. In those circumstances I invite your Lordships to agree that Clause 1 shall not stand part of the Bill.
Clause 1 disagreed to.
Lord Wigoder Lord Wigoder moved Amendment No. 1:
After Clause 1, insert the following new clause:
(" Restriction on reports of committal proceedings.
.—(1) At the beginning of subsection (2) of section 8 of the Magistrates' Courts Act 1980 (application for lifting restrictions on reports of committal proceedings) there shall be inserted the words "Subject to subsection (2A) below".
(2) After that subsection there shall be inserted the following subsections—
"(2A) Where in the case of two or more accused one of them objects to the making of an order under subsection (2) above, the court shall make the order if, and only if, it is satisfied, after hearing the representations of the accused, that it is in the interests of justice to do so.
(2B) An order under subsection (2) above shall not apply to reports of proceedings under subsection (2A) above, but any decision of the court to make or not to make such an order may be contained in reports published or broadcast before the time authorised by subsection (3) below."
(3) In relation to any time before the coming into force of the said Act of 1980, the same amendments as are made by subsections (1) and (2) above in section 8 of that Act shall be made in section 3 of the Criminal Justice Act 1967 except that the word "defendants" shall be substituted for the word "accused" wherever it occurs.
(4) The foregoing provisions of this section shall not apply in relation to committal proceedings begun before the commencement of this Act.").
Lord Boston of Faversham: I do not propose to detain the Committee for more than a moment or two. I should like to thank the noble Lord, Lord Wigoder, for having explained the purpose of these amendments. The only observation I wish to add to his remarks is this. I am very glad indeed and warmly welcome the fact that in the proposed amendment he has retained the criterion to which he has referred, and in particular the use of the words "in the interests of justice". That is a phrase which appealed to a number of your Lordships when on an earlier occasion a similar Bill was being debated. It is a well-known phrase which has stood the test of a considerable amount of time. Everybody perfectly understands it it was in the original Bill that was proposed and I am very glad that it is retained in the amendment as well.
Lord Belstead: May I just add my support for these amendments? The noble Lord, Lord Wigoder, has explained to the Committee that the new clause does
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not change the sense of the provisions of Clause 1 as it was originally drafted in the Bill, and I should like to join with the noble Lord, Lord Boston, and the noble Lord, Lord Wigoder, by saying that, despite the fact that from, I think, all sides of the House we attempted to, as we saw it, improve the Bill when it was going through in the last Session, as regards the expression "the interests of justice", the Government believe the test of the interests of justice is one that magistrates' courts will find it possible to apply and that we would not wish to raise objection to that formula if it receives general support.
There is only one other thing that I think I should say. The noble Lord, Lord Wigoder, has explained very clearly the reason why the reference to the Magistrates' Courts Act 1980 is now imported into Clause 1, and I think I should make it clear that it is still the intention of the Government that the Magistrates' Courts Act 1980 should come into force during the spring of this year. However, I am sure that the Committee will understand that unforeseen hitches can occur and I am glad that the noble Lord, Lord Wigoder, has judged it prudent to provide for the possibility of his Bill being enacted and coming into force before the Magistrates' Courts Act has itself taken effect. I am sure that the Committee would not wish the noble Lord's Bill to be prevented from coming into operation if it were to pass through both Houses—by a pure technicality in drafting. This amendment ensures that no delay of that kind would occur. With those few remarks I support the passage of Amendment No. 1.
Lord Wigoder: I am most grateful to both noble Lords for their support.
On Question, amendment agreed to.
Clause 2 [Interpretation, short title and extent]:
7.22 p.m.
Lord Wigoder Lord Wigoder moved Amendment No. 2:
Page 1, line 23, leave out subsection (1).
The noble Lord said: This is a purely technical amendment. It omits subsection (1) of Clause 2 of the original Bill because it is entirely unnecessary, being catered for by other provisions of the 1980 Act. I beg to move.
On Question, amendment agreed to.
Lord Wigoder Lord Wigoder moved Amendment No. 3:
Page 2, line 2, at end insert—
"( ) This Act shall come into force at the expiration of a period of three months beginning with the date on which it is passed.".
The noble Lord said: This is a commencement provision which was not in the original Bill, and clearly it should have been. I beg to move.
On Question, amendment agreed to.
Clause 2, as amended, agreed to.
In the Title:
Lord Wigoder Lord Wigoder moved Amendment No. 4:
Line 1, leave out ("Criminal Justice Act 1967 to restrict") and insert ("law relating to the restriction of").
The noble Lord said: In moving Amendment No. 4 perhaps I might speak also to Amendment No. 5.
The amendments to the Title are necessitated by the fact that the Magistrates' Courts Act of 1980 has now been passed and it is therefore desirable not to include in the Title any specific reference to the particular Act which is being amended, in view of the uncertainty as to whether it will be the 1967 Act or the 1980 Act that might be amended should this Bill go through all its stages. Amendment No. 5 refers to the "accused" rather than the "defendant", that in fact being the terminology of the 1980 Act but not of the 1967 Act. I beg to move Amendment No. 4.
On Question, amendment agreed to.
Lord Wigoder Lord Wigoder moved Amendment No. 5:
Line 3, leave out ("defendant") and insert ("accused").
The noble Lord said: I beg to move Amendment No. 5 formally.
On Question, amendment agreed to.
Title, as amended, agreed to.
House resumed: Bill reported with the amendments.

  HERRING: DISPOSAL OF ACCIDENT CATCHES
  HERRING: DISPOSAL OF ACCIDENT CATCHES
  THE EEC SHEEP MEAT RÉGIME
  THE EEC SHEEP MEAT RÉGIME
  AIRPORT EXPANSION IN THE SOUTH-WEST
  AIRPORT EXPANSION IN THE SOUTH-WEST
  AIR TRAFFIC CONTROL IN SCOTLAND
  AIR TRAFFIC CONTROL IN SCOTLAND
  AFGHANISTAN: RED CROSS ACCESS
  AFGHANISTAN: RED CROSS ACCESS
  ZIMBABWEAN STUDENTS IN THE UK: GRANTS
  ZIMBABWEAN STUDENTS IN THE UK: GRANTS
  MEDICAL RECORDS OF PRISONERS
  MEDICAL RECORDS OF PRISONERS
  SKELETAL MATURATION TABLES
  SKELETAL MATURATION TABLES