Sitting of 15 July 1981

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  BRITISH RAILWAYS BILL
  Lords amendments agreed to.
  ULLAPOOL PIER ORDER CONFIRMATION BILL
  Considered; to be read the Third time tomorrow.
Oral Answers to Questions

  SCOTLAND
  Mr. Speaker: I appeal to hon. Members to ask a question and not to submit an argument when they put a supplementary question.
  Mr. Hugh D. Brown: On a point of order, Mr. Speaker. I do not wish unduly to detain the House and, as you know, Mr. Speaker, I shall accept your advice and guidance on the matter. It will not have escaped your attention that out of the total of 36 questions on today's Order Paper, 19 relate to one subject. In case you think that I have an axe to grind or a personal interest, in that my question is No. 20, I assure you that that is not so. Nine out of the first 16 questions relate to the same subject. I appeal to you in good faith. I have not taken the trouble to discover whether the Minister is linking even half a dozen of the questions, but I hope that you will call as many of my hon. Friends as possible rather than the usual divide between the two sides of the House. I am making a fair and reasonable point. I draw the matter to your attention, Mr. Speaker, in the light of the unusual circumstances of the 1981 Act.
  Mr. Canavan: On a point of order, Mr. Speaker.
  Mr. Speaker: Order. If the hon. Gentleman wishes to waste Question Time, he can do so by all means.
  Mr. Canavan: I shall wait until after Question Time to raise the point of order, Mr. Speaker.
  Mr. Speaker: May I say that, obviously, more hon. Members are called when questions are not grouped. I tend to call fewer hon. Members if more questions are taken together, but on this occasion there is little grouping.

  SCOTLAND

    Age Concern Scotland (Report)
    Mr. Foulkesasked the Secretary of State for Scotland what consideration he has given to the recommendations contained in the Age Concern Scotland working party report on retirement education in Scotland; and whether he proposes to implement any of the recommendations.
    The Under-Secretary of State for Scotland (Mr. Alexander Fletcher): The recommendations addressed to my right hon. Friend are being considered, and it would be premature for me to comment upon them at this stage.
    Mr. Foulkes: That is a disappointing reply. Does the Minister accept that in reality it will be extremely difficult either for the Government or, more important, local authorities and voluntary organisations to carry out any of the recommendations because of the cutbacks that We Government are imposing on the education budgets and community education budgets of regional councils and, above all, their effects on the voluntary organisations?
    Mr. Fletcher: The introduction to the report says:
    "We hope that all the organisations to whom the report is addressed will give it careful consideration".
    The report was published in May, and we are now giving it careful consideration.

    Local Authorities (Spending)
    Mr. Eadieasked the Secretary of State for Scotland how he proposes to respond to replies from local authorities as a result of his request to them to cut their spending; and when he intends to report to the House the action he intends to take.
    The Secretary of State for Scotland (Mr. George Younger): On 10 July I laid before the House reports proposing reductions in rate support grant of £47 million for Lothian regional council, £2 million for Dundee district council and £1 million for Stirling district council. I intend shortly to lay a further report proposing grant reductions in respect of Dumbarton, East Lothian and Renfrew district councils. I do not propose to lay a report in the case of Cumnock and Doon Valley district council. Replies from authorities to my general request for revised budgets are not yet complete, but I have indicated that it may also prove necessary to reduce grant generally if present budgets are not substantially reduced.
    Mr. Eadie: Does the right hon. Gentleman accept that that is a disappointing reply? It articulates the unyielding attitude of the Government towards the problem of local authorities. Does he accept that it is the responsibility of not only his Government but all Governments to subscribe to strengthening local democracy in local government? How can he reconcile the Government's determination, because they have a mandate, to implement their election manifesto with his and the Government's attitude of wishing to prohibit a Labour-controlled council in Lothian from implementing its manifesto?
    Mr. Younger: I do not agree with the hon. Gentleman, especially when he suggests that I have been unyielding. Throughout the controversy during the past two years I have, on every occasion, bent over backwards to try to moderate any difficulties for Scottish local authorities. The hon. Member will especially recall that I made some savings in my budget to reduce the abatement on local authorities. I am asking local authorities to contain their spending to a level that is higher than that approved by the Labour Government. That cannot be unreasonable.
    Mr. Ancram: Will my right hon. Friend confirm that he remains prepared to meet the Lothian regional council to discuss proper areas where savings can be made? Does

    1159
    he agree that its intransigence in refusing to see him simply underlines that its action is partly political and is working against the interests of those that it was elected to serve?
    Mr. Younger: I appreciate my hon. Friend's remarks. I wish to make it clear that I am only too willing to discuss expenditure and expenditure reductions with any local authorities. I have made that clear all along.
    Mr. Millan: Is it not now—
    Mr. Ron Brown: May I just put this on the Table, Mr. Speaker?
    Mr. Speaker: Order. I name Mr. Ron Brown for gross disorderly conduct. I call upon the Minister to move the appropriate motion.
    Mr. Younger: I beg to move, That Mr. Ron Brown be suspended from the service of the House.
    Mr. Brown rose—
    Mr. McQuarrie: Out.
    Mr. Brown: The point is valid.
    Mr. Speaker: I name the hon. Gentleman. The question is, That the hon. Member be suspended from the service of the House.
    Mr. Brown: The point is relevant, Mr. Speaker.
    Mr. Speaker: As many as are of that opinion say "Aye".
    Hon. Members: Aye.
    Mr. Speaker: To the contrary "No"—[Interruption.] Clear the Lobby. [Interruption.] Order. I am advised that there were no "Noes". I shall put the Question once more. The Question is, That the hon. Member be suspended from the service of the House. The "Ayes" have it.
    Question agreed to.
    The hon. Member, having stood before the Table, was directed by Mr. Speaker to withdraw from the House; and he withdrew accordingly.
    Mr. Millan: May I now put my question, Mr. Speaker? Is it not now absolutely clear that the way in which the Government have dealt with Scottish local authorities during the past couple of years, and the attitude that they have displayed towards them, has now produced—as we said it would—the inevitable confrontation? The hit list of authorities produced by the Secretary of State cannot possibly be sustained on the justice of the cases that the authorities have produced.
    Is the Secretary of State aware that we are now facing a crisis of unprecedented proportions, with the distinct possibility of a breakdown of essential services? In those circumstances, instead of proceeding with these orders, will he now do what he should have done before and hold discussions with all the authorities concerned, including Lothian regional council?
    Mr. Younger: I am afraid that I cannot agree with the right hon. Gentleman's description of the effect of the reductions. Perhaps, on reflection, he will agree that it is not strictly fair, because the level to which I am trying to reduce the authorities' budgets is above that which he thought was sufficient some years ago when he was in office.
    1160
    I shall certainly respond to the right hon. Gentleman's request to talk to the authorities. I am prepared to talk to any of them about their budgets and their reductions. [Interruption.]
    Mr. Millan: Will the Secretary of State talk to the authorities before proceeding with the orders?
    Mr. Younger: There is no time for me to do that. However, I am already arranging discussions with at least two of the authorities, and they will take place before the order is made. If others wish to see me before then, I shall be happy to arrange it.—[Interruption.]
    Mr. Harry Ewing: On a point of order, Mr. Speaker. Will you please call for some order in the House so that Scottish Question Time can proceed in an orderly fashion?
    Mr. Speaker: We have had enough disorder this afternoon, of a most unusual character.
    Mr. Gordon Wilson: Is the Secretary of State aware that his proposed cuts in rate support grant will hit areas of multiple deprivation? Does he dare risk the consequences in view of recent events in England?
    Mr. Younger: If I were in any local authority in Scotland and I were trying to implement these very reasonable reductions, I would not make any reduction in areas of multiple deprivation. I hope that local authorities will not do so either.
    Mr. Hugh D. Brown: On a point of order, Mr. Speaker. [HON. MEMBERS: "Oh!"] I have the right to raise a point of order. I object to Conservative Members trying to anticipate what I might say. Mr. Speaker, I drew your attention to the fact that there were many related questions. I condemn the action of my hon. Friend the Member for Edinburgh, Leith (Mr. Brown) because it was sheer gimmickry. It will not have escaped your attention that the Secretary of State has given the names of more local authorities. If questions had been linked, pertinent questions could have been asked. I know that it is for the Government to decide whether questions are linked. I beg you to understand why some of us are a bit annoyed this afternoon.
    Mr. Speaker: With every respect to the hon. Gentleman, I shall be able to call many more hon. Members whose local areas are affected if we are allowed to proceed. I hope to call as many hon. Members as possible from both sides.

    Poultry Industry
    Mr. Mylesasked the Secretary of State for Scotland if he will make a statement on the competitive position of the poultry sector of the agriculture industry in Scotland.
    Mr. Younger: In the free Community market which applies to eggs and poultry meat, I am concerned to ensure that the Scottish industry—which is undoubtedly efficient—is able to compete against imports on a fair and equitable basis.
    Mr. Myles: Does my right hon. Friend realise that although a poultry processing plant in my constituency received a FEOGA grant from Europe of £39,000 recently, it is finding it difficult to compete with the level and cost of imports?
    Mr. Younger: I appreciate the problem that my hon. Friend mentioned. We are concerned about reports that we

    1161
    have received about overseas subsidisation in this sector, which is affecting our home industry. We have raised the matter with the Commission and hope that it will look into it urgently.
    Mr. Robert Hughes: Is the Secretary of State aware that his right hon. Friend the Minister of Agriculture, Fisheries and Food maintains that there is no mechanism by which the Government can police imports of poultry meat? Not only poultry factories, but hatcheries, feed mills and everything else in the industry are closing. What action will he take, other than simply asking the Commission to investigate the matter?
    Mr. Younger: That is the first step open to us. We expect the Commission to take the point seriously and to take action. We operate within Community law, and we intend to continue to do so.

    Scottish Trades Union Congress
    Mr. Langasked the Secretary of State for Scotland if he has any plans to meet the general secretary of the Scottish Trades Union Congress to discuss the recovery of the Scottish economy.
    Mr. Alexander Fletcher: My right hon. Friend and I have met representatives of the STUC several times since taking office and have made it clear that we are prepared to meet them whenever that would be useful.
    Mr. Lang: When my hon. Friend mext meets them, will he emphasise that their Stone Age intransigence about the reform of apprenticeships and training schemes will be a major impediment to the creation of new employment when we emerge from the recession?
    Mr. Fletcher: There is no doubt that the apprenticeship system is obsolete. It restricts employment opportunities for youngsters, as do the wages that trade unions demand that youngsters should earn, which take no account of the fact that youngsters are inexperienced and require training. If those two matters could be tackled by the STUC and the CBI, there would be better prospects for youngsters in Scotland.
    Mr. James Hamilton: When the Minister meets the general secretary of the Scottish Trades Union Congress, will he remind him of the request that came from the Federation of Civil Engineering Contractors for more public expenditure? Will he also remind him that we require 20,000 houses in Scotland and that there is a need for a modernisation programme that will bring men back to work? Will he do something positive for Scotland for a change before the country goes into liquidation?
    Mr. Fletcher: Reflation would worsen inflation, and that would do nothing for the unemployed or for job prospects in Scotland or anywhere else.
    Mr. Henderson: When my hon. Friend next meets the general secretary of the STUC, will he congratulate him on the important contribution that the trade union movement has made to youth opportunities schemes in the widest sense and ask him to use what influence he has to encourage the unions to make available their valuable co-operation, which is greatly appreciated, in apprenticeship training and the payment of young people?
    Mr. Fletcher: I shall certainly do that. As I said earlier, real jobs are more valuable to young people than even the best efforts of the youth opportunities programme.
    Mr. Harry Ewing: The unemployment figures for Scotland will be published again on Tuesday of next week. How many more job opportunities will be denied not only to youngsters but to all working people in Scotland as a result of the Government's disastrous policies? When will the Minister and the Secretary of State stop being the Prime Minister's poodles and start trying to protect the interests of Scotland inside the Cabinet?
    Mr. Fletcher: I am happy to repeat that the priority given by the Government to reducing the rate of inflation is the most important thing that can be done to improve job prospects in Scotland and elsewhere in Britain.

    Glasgow (Population Decline)
    Mr. David Marshallasked the Secretary of State for Scotland if he will make additional resources available to Glasgow, as a special case, in order to reverse the present decline in its population.
    The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): The special needs of Glasgow are already being recognised by such measures as the assistance given through the urban programme, the particular priority accorded to the GEAR project, the distribution formulae for rate support grant and housing support grant, and its special development area status where maximum financial incentives to incoming or expanding industry may be available.
    Mr. Marshall: Is the Minister aware that his answer is most unsatisfactory? Does he appreciate the social consequences that will confront Glasgow? Will he agree to convene an early meeting between Glasgow district council, Strathclyde regional council and himself to tackle this problem, which cannot be solved without Government assistance, which is not forthcoming despite what the Government say because they are biased against Glasgow?
    Mr. Rifkind: The suggestion that the Government are biased against Glasgow does not tally with Glasgow having 20 per cent. of local authority housing and receiving 27 per cent. of total public expenditure on housing. In the current year it will receive 42 per cent. of the SSHA budget. In the last year for which figures are available it received 49 per cent. of the Housing Corporation's budget. The needs element of rate support grant now paid to the Glasgow district council is £42 per head, which is nearly twice the average sum received by all the other district councils.
    Mr. Allan Stewart: Does my hon. Friend agree that this and previous Governments have poured hundreds of millions of pounds into the East End of Glasgow, often with no obvious returns? Is it not time for a more balanced programme for the whole conurbation, with appropriate priority for areas such as Barrhead and Milton in my constituency?
    Mr. Rifkind: The House generally will recognise that Glasgow's problems deserve special attention. My hon. Friend is correct in saying that we must give even greater attention to the way in which available resources have

    1163
    been used over the years. Enormous resources have been poured in by successive Governments, but Glasgow's problems remain acute.
    Mr. Maxton: Is the Minister aware that, despite his great claims a few minutes ago, his capital allocation for Glasgow district council for the coming year will be insufficient for it to maintain its present stock of housing, which means disaster for those who live in council houses in Glasgow?
    Mr. Rifkind: I have already said that Glasgow receives a substantially greater proportion of housing resources than its population merits. I do not say that in criticism, because it is a justifiable allocation. However, it reveals that any suggestion that the Government are discriminating against Glasgow is at variance with all the available facts.

    Local Authorities (Spending)
    Mr. Craigenasked the Secretary of State for Scotland what effect he estimates that his request to local authorities to cut their spending commitments will have on employment and services within the areas concerned.
    Mr. Rifkind: If authorities complied fully with my right hon. Friend's request to revise budgets, the resultant levels of expenditure and staffing would be broadly in line with those which prevailed in 1977–78. Priorities among services are a matter for the individual authorities to resolve.
    Mr. Craigen: Has the Minister made no serious estimate of the number of job losses that will occur in local government and through natural wastage or redundancy? Is he saying that he has not made that calculation?
    Mr. Rifkind: I am saying that there is little doubt that in the authorities that have been identified by my right hon. Friend many millions of pounds could be saved without compulsory job redundancies or any significant effect on the vital services that are provided to the local community.
    Mr. Sproat: Does my hon. Friend agree that some of the claims about redundancies by Socialist spokesmen, especially by those representing the Lothian council, are ridiculously exaggerated and irresponsible? Will he remind the House that Tory councillors in Lothian have identified £28 million-worth of cuts that could be made without any job being lost?
    Mr. Rifkind: My hon. Friend is correct. I understand that the Conservative group on the Lothian district council announced this morning that, after discussions with the officials of the Lothian region, it can identify savings of £28 million that could be made without any compulsory job redundancies and without any effect on vital services.
    Mr. Home Robertson: The Secretary of State has announced that he will take punitive action against East Lothian district council as well as Lothian regional council, in spite of the assertion of East Lothian Tories, among others, that he is asking the impossible of them. As East Lothian will get a double dose of these mad cuts, will the Minister say exactly what effect the cuts will have on employment, services and everything else in the area that I represent?
    Mr. Rifkind: The Government are willing to have discussions with the East Lothian district council—
    Mr. Home Robertson: Horse trading.
    Mr. Rifkind: I acknowledge that it has already identified certain savings that could be made in its budget. If sufficient effort is made, considerably greater savings can be identified.
    Mr. Bill Walker: Does my hon. Friend agree that the behaviour that we saw earlier this afternoon is fairly typical of the far Left? Is he aware that if Dundee district council were to follow the example of Perth and Kinross district council there would be substantial cuts in its spending and a small reduction in manpower levels?
    Mr. Rifkind: I will not comment on the conduct earlier this afternoon. Dundee district council has requested a meeting with the Government. I am meeting a deputation from the council tomorrow morning. Stirling district council has also requested a meeting, the date for which has still to be arranged. Lothian regional council has not so far requested a meeting.
    Mr. Dewar: Does the hon. Gentleman accept that the bitter vendetta that he is waging against Scottish local government and local democracy is being conducted regardless of the social consequences? Will he comment specifically on the COSLA estimate that if the cuts were implemented in full there would be a loss of about 6,000 jobs in the teaching profession alone? Is it not a matter for regret that the Government are intent on creating not employment but misery?
    Mr. Rifkind: The hon. Gentleman is absurd in his accusations. He will be aware that when the previous Labour Government were in office his right hon. Friend the Member for Glasgow, Craigton (Mr. Millan), as Secretary of State for Scotland, presided over a substantial reduction in staffing in local authorities in Scotland without redundancies. If local authorities are prepared to co-operate with the Government, as in the past, the same achievements could be made.
    Mr. Millan rose—
    Mr. Speaker: Order. I have not called the right hon. Gentleman. I will call him, but it will be at the expense of his Back-Bench colleagues.
    Mr. Millan: Will the Minister say whether the figure of 6,000 teachers is correct? He knows that it is an accurate COSLA figure. Why does he not have the guts and decency to admit it?
    Mr. Rifkind: The right hon. Gentleman will not expect me to comment on education matters within the Scottish Office. We are well aware that if local authorities respond to the guidelines proposed by the Scottish Office in respect of staffing they will still be able to maintain a higher pupil-teacher ratio than has been possible in Scotland in the past.

    Local Government (Miscellaneous Provisions) (Scotland) Act 1981
    Mr. George Robertsonasked the Secretary of State for Scotland against how many local authorities in Scotland he intends to act under the terms of the Local Government (Miscellaneous Provisions) (Scotland) Act 1981.
    Mr. Rifkind: I refer the hon. Gentleman to my right hon. Friend's reply to the hon. Member for Midlothian

    1165
    (Mr. Eadie). My right hon. Friend is now considering whether action of this kind should be initiated against other authorities.
    Mr. Robertson: Is the Minister aware that, by acting and continuing to act in this unreasonable, dictatorial fashion, he and his Government are endangering the principle of local democracy and of local accountability and responsibility for local decisions? If the consequence of the Government's actions in this area is the damaging of local services and the sacking of thousands of staff, the blame will lie with him and the Government.
    Mr. Rifkind: The hon. Gentleman should appreciate that in every authority that my right hon. Friend has identified, it has already been proved possible to identify millions of pounds of savings which could be made without compulsory redundancies. If local authorities wish to discuss with my right hon. Friend the savings which can be made and if they are anxious to identify the savings which can be made without compulsory redundancies, we shall consider the matter closely. I have said that in the Lothian region alone £28 million has already been identified. The hon. Gentleman and his hon. Friends had better appreciate that, when savings and rate reductions can be made for ratepayers, it is bounden upon local authorities to make a response to the flexible attitude that my right hon. Friend has always taken on this matter.
    Mr. Peter Fraser: When my hon. Friend meets Dundee district council tomorrow, will he say that some of the extravagant claims that it has made about the number of redundancies that will be necessary are patently nonsense, as the number that has been mentioned would mean that it was operating with a staff smaller than that operated by the former Tory-controlled Dundee district council without having to impose a 150 per cent. rates rise?
    Mr. Rifkind: My hon. Friend is correct. Not only can the figures which have been given be the subject of discussions with the local authorities concerned, but in Dundee, as in Lothian, major savings can be made with no job losses. The allegations which have been made amount to little more than scaremongering in order to get support from employees where otherwise support would not be forthcoming.
    Mr. Cook: Has none of the hon. Gentleman's constituents told him that there will be local elections in Lothian region in barely nine months' time? Why is he not prepared to leave it to the judgment of the Lothian electorate whether services are excessive and unreasonable? Is he aware that, in seeking now to pre-empt that essential local democratic right, he is seeking powers which will lead us towards a much more centralised, authoritarian State than has been sought by any Government in peace time?
    Mr. Rifkind: The hon. Gentleman should appreciate that the £63 million by which Lothian is above the Government's guidelines is many millions greater than for any other local authority in the United Kingdom. That figure has national as well as local implications, which a Labour Government would not have ignored and which this Government will not ignore.
    Mr. Pollock: Now that the Secretary of State has tabled orders against a number of local authorities, is there any
    1166
    opportunity for the local authorities involved to avoid a reduction in rate support grant by further discussions with the Government?
    Mr. Rifkind: My right hon. Friend has already said to the local authorities concerned that, in the event of the House approving the report which has been tabled, he will allow a short period to ascertain whether the local authorities are willing to discuss with the Government what economies they can make. In the event of local authorities refusing to have discussions with my right hon. Friend, he would then have no option but to implement the report, if that report is approved by the House.
    Mr. Millan: Why does the Minister try to pretend something which he knows to be completely untrue—namely, that the cuts can be achieved without serious redundancies affecting tens of thousands of local authority employees in Scotland? Why will he not admit what he knows to be true: that in the teaching profession alone there will be a reduction in the number of teachers of no fewer than 6,000? Why does he not come clean with the House and with the local authorities?
    Mr. Rifkind: If the right hon. Gentleman believes that the figures proposed by my right hon. Friend could not in full be achieved without many redundancies, perhaps he and his hon. Friends will inform the House of a maximum figure that they believe can be achieved with no redundancies at all.

    Road Equivalent Tariff
    Mr. Grimondasked the Secretary of State for Scotland if he is now in a position to announce a decision on a road equivalent tariff or alternative methods of assistance over freight and transport to islands.
    Mr. Younger: My hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind), in the Scottish Grand Committee on 18 June 1981, said that we hoped to make an announcement before the Summer Recess.
    That remains the position.
    Mr. Grimond: I am grateful for the assistance offered to further companies trading with Orkney, but it is becoming urgent that the general policy should be made known so that it can be discussed. May I take it that there will be an opportunity for debate when the Secretary of State makes his announcement?
    Mr. Younger: I thank the right hon. Gentleman for what he said. The reason why this matter is taking rather longer to straighten out than we had hoped is that there are varying opinions about whether RET is desirable. I am anxious to take into account all representations before making a decision. I shall pass on to my right hon. Friend the Leader of the House the right hon. Gentleman's view that we must have some time to debate the matter. I support that view.
    Mr. Donald Stewart: Before rejecting the RET formula, if that is what is in the right hon. Gentleman's mind, will he bear in mind the suggestions from the Highlands and Islands Development Board that adjustments and variations within the formula are possible? Will he also bear in mind that the main thing is to extend the excellent start on assistance which has been made to ensure an economic transport system for the Scottish islands?
    Mr. Younger: I am taking into account all factors, including those which the right hon. Gentleman mentioned. As he suggested, our main contribution in the last two years has been to increase the grant to Caledonian MacBrayne from £3·7 million in 1979 to £5·8 million in 1981. I believe that that is real help for those in the islands.
    Mr. John MacKay: When my right hon. Friend announces his decision, will he consider adding some riders about what happens in Norway, where, contrary to the widely held belief, RET does not operate? Will he accept from me that the most important help that he can give is to commercial traffic from the islands? If we cannot have RET because of the various complications that all the bodies have pointed out to him, can we concentrate the help on commercial traffic?
    Mr. Younger: I note what my hon. Friend has said. I agree that it appears that there is not, as people thought there was, a uniform and neat system of RET in operation in Norway. We are trying to work out such considerations.

    Local Authorities (Rate Support Grant)
    Mr. Canavanasked the Secretary of State for Scotland what representations he has received from those local authorities whose rate support grant he has threatened to cut; and what action he intends to take.
    Mr. Younger: Representations by Lothian regional council, Dundee district council and Stirling district council are incorporated in reports under section 5 of the Local Government (Scotland) Act 1966, as amended by the Local Government (Miscellaneous Provisions) (Scotland) Act 1981, that I laid before the House on 10 July. Representations by Dunbarton, East Lothian and Renfrew district councils will be incorporated in a further report that I intend to lay shortly. Representations by Cumnock and Doon Valley district council clarified and revised the budget estimate, and I propose no further action under these provisions in that case.
    Mr. Canavan: Is the Secretary of State aware that every apprentice who finished his time last week with the property maintenance department in Stirling district council was paid off, including one young lad who won a national apprenticeship award? Is he further aware that the reason for the council being unable to afford to employ those young people is the cuts which the Tory Government have already imposed on the district council? How many more essential jobs and essential services will be destroyed as a result of the Secretary of State's proposal to go ahead and try to rob the people of Stirling district of another £1 million?
    Mr. Younger: If I were a member of Stirling district council, that is not the way that I would have chosen to make reductions. I would have looked for economies in the extra expenditure that that new council has been incurring since it came to office.
    Mr. Ancram: Will my right hon. Friend remind the House and the councils against which he is acting that one of the purposes of the 1981 Act was to allow them to reduce rates? Will he confirm that that option is still open to those against whom he has laid orders, and will he urge them to reduce rates for the sake of Scottish ratepayers?
    Mr. Younger: That option is open. I hope that all those authorities mentioned in the orders will feel that they have an open invitation to discuss the matters in the best possible way with me or my representatives in the Department. If they have a reduction in grant, it is open to them to return that in the form of a rates reduction to their ratepayers. I should have thought that that would have been the preferable option for them.
    Mr. Dewar: Will the Minister explain what happens if negotiations take place? If a concession is offered by the local authorities under threat but a sum less than the total is ultimately agreed, will the shortfall be deducted from the total that the Treasury is looking for, or will that saved sum be clawed back from the other local authorities which are not the subject of specific action under the 1981 Act? We need to know that if we are to have any idea of the prospects for realistic negotiations. Will the Secretary of State please answer?
    Mr. Younger: I appreciate the hon. Gentleman's point. Both rebudgeting—reducing budgets on reflection—and reductions negotiated by the authorities will make it easier to avoid taking the full £100 million, which I suggested was the sum that I needed. Reductions by either method should make it easier for everyone.
    Mr. Sproat: Is it not scandalous, untrue and grossly unfair to ratepayers in Lothian to say, for example, that no cuts can be made in local authority spending when this week literally hundreds of pounds are being spent flying Socialist councillors back from holiday in Spain and Greece and from cosy trade union jaunts in Czechoslovakia? Will my right hon. Friend look at the Local Government (Miscellaneous Provisions) (Scotland) Act to see whether it needs changing to prevent those scandalous abuses?
    Mr. Younger: I note what my hon. Friend says. If there are such abuses, it is open to ratepayers to raise them with the local authority accounts commission, and I have no doubt that they will do so. On general expenditure, one of the strangest things is that some authorities maintain that it is impossible to make reductions of any kind. I do not know of any business, commercial or local authority organisation that could straightforwardly say that. It simply is not realistic.
    Mr. Strang: Since the Under-Secretary of State has made repeated references to the cuts proposed by Conservative councillors in the Lothian region, will the right hon. Gentleman tell the House how many jobs on the Lothian regional council would be lost through natural wastage this year as a consequence of the package? Where does he believe that it is possible to cut an additional £19 million to make up the £47 million without compulsory redundancies?
    Mr. Younger: I have not had the opportunity to study the proposals that were announced this morning by the Conservative members of the Lothian regional council, but I understand that they reckon that they could make savings of about £5 million through natural wastage, which is something that I have been pressing on the authority for two years. The point is that it is much better to make economies without redundancies than to spread scare stories about redundancies that may never occur.

    Tenants' Rights, Etc. (Scotland) Act 1980
    Mr. Allan Stewartasked the Secretary of State for Scotland what is his latest estimate of the number of tenants who have applied to buy their homes under the Tenants' Rights, Etc. (Scotland) Act 1980.
    Mr. Rifkind: The latest available information about applications under the right to buy is that local authorities, the new towns and the SSHA have received more than 22,000 applications from tenants. This figure does not include the 10,000 or more applications made under voluntary arrangements.
    Mr. Stewart: I am grateful to my hon. Friend for that information. Will he comment on the recent opinion poll in Scotland that showed not only that 85 per cent. of tenants supported the right to buy but that 12 per cent. were extremely interested in buying? Does that not show how out of touch with the wishes and aspirations of ordinary working people the Labour Party is in its continuing doctrinaire opposition to the right to buy?
    Mr. Rifkind: My hon. Friend is correct. The opinion poll also showed that 75 per cent. of Labour voters believed in the right to buy.
    Mr. Maxton: Is the Minister aware that in Glasgow only about 2,500 people have applied to buy their houses, which is less than 3 per cent. of the total number of council tenants in Glasgow? Is he also aware that the other 97 per cent. are suffering from higher rents, poorer repairs and problems with dampness, which are not being helped by the lack of money as a result of the Government's policies?
    Mr. Rifkind: The whole purpose of the Tenants' Rights, Etc. (Scotland) Act is to allow those who wish to do so to buy their homes. We have no objection to tenants not wishing to purchase their homes. Indeed, through the tenants' charter, we have given tenants security of tenure and greater rights than they have had before.
    Mr. Henderson: Is my hon. Friend aware that Kirkcaldy district council carried out a detailed analysis of the results of its policy of selling council houses, which it carried forward until the council elections, and found that no particular kind of house was being sought, all were in demand, tenants wanted to buy and the council, tenants and ratepayers benefited substantially from the sales?
    Mr. Rifkind: My hon. Friend is correct. That is the experience not only in Kirkcaldy but in many other parts of Scotland.
    Mr. Dewar: Has the Minister read the unanimous report of the Select Committee on the Environment on the sale of council houses in England? If so, has he pondered its finding that the sale of council houses has increased the housing shortage in parts of England, put at risk future housing for the elderly and reduced choice in the public sector? Does he accept that the same is almost certainly happening but to an even greater extent in Scotland? Therefore, will he consider reversing the policy before too much damage is done?
    Mr. Rifkind: As the hon. Gentleman said, the report of the Select Committee on the Environment was based on English evidence. He asked whether I had read the report. I do not believe that he has read it, because he said that the conclusions were unanimous. The Committee has 11 members, and six either voted against or did not take part in the vote.

    Local Authorities (Spending)
    Mr. Harry Ewingasked the Secretary of State for Scotland what replies he has received from local authorities in response to his request to cut their spending; what action he intends to take; and if he will make a statement.
    Mr. McTaggartasked the Secretary of State for Scotland what response he has had from local authorities to his request that they should cut back their public expenditure still further.
    Mr. Rifkind: My right bon. Friend has had detailed representations from seven authorities which received notice that he proposed to reduce rate support grant. In reply to the hon. Member for Midlothian (Mr. Eadie), my right hon. Friend has indicated the conclusions reached on these representations. Since replies from authorities to my right hon. Friend's general request for revised budgets are not yet complete, it is premature to make a statement.
    Mr. McTaggart: In view of the Secretary of State's answer and his continued unbending attitude towards democratically elected local authorities, will he at least commit himself in a statement to the House that he intends to fight for the people of Scotland and to get more money for local authorities, so that we may open up the many facilities that are being closed, particularly for the unemployed, in an effort to stop the civil unrest that we are seeing throughout the country spreading further?
    Mr. Rifkind: Far from being unbending, my right hon. Friend constantly says that if local authorities are prepared to discuss their overspending with him that factor can be taken into account. Certain local authorities have not yet responded to the invitation, but we hope that they will.
    Mr. Peter Fraser: Instead of manipulating youngsters in apprenticeships, as has been mentioned, if there are to be redundancies, will my hon. Friend tell Labour authorities that are employing political advisers for the first time that those people could certainly go, in the ratepayers' interests?
    Mr. Rifkind: My hon. Friend is entitled to make that remark. It is extraordinary that a local authority, such as Dundee, which maintains that it is having an impossible time because of Government cuts, is still able to employ someone full-time purely as a political adviser to the: Labour group.
    Mr. Harry Ewing: Is the Minister aware that we cannot avoid noticing the pleasure that particularly the Secretary of State derives from causing suffering and hardship to countless numbers of people? In view of the: constant reference to conditions that prevailed in 1977, will the Minister reconsider his approach to the Stirling, problem against the background of the decision announced last week to slaughter Stirling university and the impact that that will have on employment prospects in Stirling?
    Mr. Rifkind: I am competent only to comment on local government spending in Stirling at the moment. The hon. Gentleman will appreciate that the greatest damage done to the local economy was the 150 per cent. rate increase imposed by the district council.
    Mr. Lang: May I assure my hon. Friend that the general thrust of the Government's policy to make spendthrift authorities face the consequences of their

    1171
    profligacy is warmly welcomed? Will he reassure the House that he will persist with the policy and, so far as possible, protect efficient and prudent authorities from the extravagances of others?
    Mr. Rifkind: First, I apologise to the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing). I did Stirling district council a disservice by saying that its rate increase was 150 per cent. In fact, it was merely 100 per cent. That should be made clear.
    I should tell my hon. Friend the Member for Galloway (Mr. Lang) that the reasons for the 1981 Act and the selective measures that my right hon. Friend is pursuing are to keep to an absolute minimum the problems that will be faced by Labour, Conservative and Independent-controlled authorities that have co-operated in the national interest and reduced their expenditure.
    Mr. Michael Martin: If the Minister is so worried about public spending, will he reconsider the Scottish Office decision to ask Strathclyde to become an agent to build the Step's bypass, which will cost several million pounds and require the local authority to take land from Ellenacre Ltd., which got it for a song in the first place? Is he aware that if the bypass goes through, good communities will be destroyed? Is that not an area where savings can be made?
    Mr. Rifkind: Before any road can be built, all the planning procedures must be completed, including a full public inquiry, where that is appropriate. I am not sure whether the hon. Gentleman has discussed this matter with the regional council. We would, of course, wish to take into account the views of Strathclyde region on the question of roads affecting its locality.

    Herring Fishing
    Mr. Donald Stewartasked the Secretary of State for Scotland what conditions he will lay down for resumption of herring fishing in the North-West.
    Mr. Younger: Although the International Council for the Exploration of the Sea has now decided to recommend a resumption of this fishery, no firm decisions on management arrangements can be taken until the timing and extent of any fishery have been discussed by the Council of Ministers.
    Mr. Stewart: Is the right hon. Gentleman aware that yesterday the masters of two West German vessels appeared in Stornoway sheriff court in connection with a catch of herring valued at £61,000? Local boats are not allowed to take a single fish. Does he agree that this pinpoints the necessity for the regulations, the rules and the control requested by fishermen's organisations if herring fishing is not to end up with the same chaos and illegal fishing as mackerel fishing?
    Mr. Younger: I agree with the right hon. Gentleman and express my congratulations to our fishery protection service on catching these vessels and bringing them into Stornoway to face British justice.

    Civil Service Dispute
    Mr. Gordon Wilsonasked the Solicitor-General for Scotland what effect the Civil Service dispute has had on prosecutions in Scotland; and what criteria will determine the introduction of emergency legislation.
    The Solicitor-General for Scotland (Mr. Nicholas Fairbairn): Strike action is confined to Edinburgh and Glasgow. Since its beginning, 42 High Court cases have been dealt with in Edinburgh and Glasgow, including 25 which had previously been delayed. In Glasgow, 189 sheriff and jury trials due to have been called or gone to trial have not been dealt with; some 204 cases are awaiting sheriff and jury dates; and approximately 6,000 summary cases have been delayed. In Edinburgh, 125 sheriff and jury trials have not been dealt with; some 68 cases are awaiting sheriff and jury dates; but the sheriff court is dealing with one-third to one-half of its summary criminal work load.
    The second part of the question should be directed to my right hon. Friend the Secretary of State for Scotland.
    Mr. Wilson: Does the Solicitor-General accept that he has read out a frightening catalogue? Does he agree that in the two biggest cities in Scotland there is likely to be a breakdown of law and order? In view of the effects that that would have in those cities, will he make representations to his right hon. Friend to take some action either to arrange for the settlement of the Civil Service dispute or to introduce emergency legislation? Does he also recognise that many people are now beginning to feel that, had this kind of juridical dislocation taken place at the Old Bailey, action would have been taken by now?
    The Solicitor-General for Scotland: I am not responsible for the Old Bailey. The situation does not result in a breakdown of law and order in Scotland. The result is that some summary cases are dropped rather than prosecuted.
    Mr. Bill Walker: Does my hon. and learned Friend agree that the problem is one of individuals not facing their responsibilities and that the Government should perhaps be looking at ways and means of ensuring in future that they are not able to strike?
    The Solicitor-General for Scotland: As I have said before, there are moral duties upon those involved in running the courts to do their duty and ensure that justice does not suffer.
    Mr. Millan: Does the hon. and learned Gentleman agree that there is also a moral duty on the Government to introduce the necessary emergency legislation? How can they justify their continued refusal to do that when, among other things, a large number of cases are not being proceeded with at all—and this from the party of law and order—and people who otherwise should be charged with serious offences, such as carrying offensive weapons, dangerous or drunken driving, will escape scot-free? Why do the Government not introduce emergency legislation?
    The Solicitor-General for Scotland: References to the party of law and order come ill from the party of the trade unions responsible for the present dispute. Those not being prosecuted are very few. Emergency legislation would have the same effect. It would merely postpone the results.

    Dr. Alan Clift
    Mr. Canavanasked the Solicitor-General for Scotland on how many occasions the Crown Office called on Dr. Alan Clift, senior forensic scientist at the Home Office, to give evidence at prosecutions in Scotland.
    The Solicitor-General for Scotland: Dr. Alan Clift has been called by the Crown to give evidence as a forensic scientist in Scotland in only one case: that of Her Majesty's Advocate v. John Preece.
    Mr. Canavan: In view of the recent case of John Preece and all the other cases, whether north or south of the border, in which Dr. Clift's evidence has been discredited, will the Solicitor-General for Scotland consult his legal friends the Law Officers south of the border with a view to an inquiry about all the cases in which this man's evidence was heard? Is it mere coincidence that Mr. Preece was wrongfully convicted of murder and that Paddy Meehan, for example, was also wrongfully convicted of murder and that both had as their defence counsel the Solicitor-General for Scotland, who is as fanatical a believer in capital punishment as the Ayatollah?
    Hon. Members: Answer.
    The Solicitor-General for Scotland: I am happy to answer, but I cannot answer for the Ayatollah, and I have consistently voted against capital punishment. If the hon. Member for West Stirlingshire (Mr. Canavan) ever requires, as he may, my services as a defence counsel, I shall probably not be in a position to supply them and he is unlikely to be in a position to afford them. Of those whom I have defended on murder charges, very few were convicted and both have been pardoned.

    Vandalism
    Mr. Pollockasked the Solicitor-General for Scotland how many prosecutions have been brought so far in 1981 involving charges of vandalism.
    The Solicitor-General for Scotland: When the Scottish Office computer is functioning again, I shall be in a position to give these figures; but I can say that section 78 of the Criminal Justice (Scotland) Act 1980 is being used quite extensively.
    Mr. Pollock: In spite of the rather thin information in that reply, does my hon. and learned Friend agree that it is nevertheless a useful criminal offence in the hands of the courts and, perhaps more particularly, in the hands of the police in their battle against criminal hooliganism?
    The Solicitor-General for Scotland: I certainly confirm that. Between the beginning of April and the end of May this year, 18 cases of vandalism were subject to compensation orders, in which the compensation ranged from £5 to £400.
    Mr. Peter Fraser: Despite the fact that when the Government introduced that crime it was heralded by the Opposition as being merely a cosmetic matter and of little value, has my hon. and learned Friend read an editorial in the Scottich Legal Action Group's magazine pointing out that the introduction of this crime in Scotland has made it clearer to petty hooligans and vandals precisely what they are doing?
    The Solicitor-General for Scotland: I have seen that report. I trust that the Opposition will now repent and understand that it is an important and useful category of crime.

    Civil Service Dispute
    Mr. Dewarasked the Solicitor-General for Scotland how many statutory offences he estimates have
    1174
    been time-barred by the six-months rule as a result of the disruption to Scottish courts resulting from the civil servants industrial action.
    The Solicitor-General for Scotland: It is estmiated that at the end of June 1981 the cases of some 6,000 persons accused of statutory offences had been time-barred as a result of the disruption to Scottish courts resulting from the industrial action of civil servants.
    Mr. Dewar: Do not those horrifying figures make the complacent answer given to my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) scandalous? Will the Solicitor-General explain to the House why the Government are living with a situation in which in the same week a person may be prosecuted for drunk driving in Aberdeen and, if he is found guilty, be banned and face a heavy monetary penalty, while in Glasgow the same person would get off scot-free because of the Government's failure to bring in emergency legislation? Does that not bring the whole fabric of law and order into disrepute, and, as a professional man, is not the Solicitor-General ashamed of himself?
    The Solicitor-General for Scotland: To answer the last part of the question first, no, I am not ashamed of myself. If there are any drunk drivers in Aberdeen, some are caught and acquitted, some are caught and convicted and some are not prosecuted. I greatly regret that the action of the civil servants results in a greater unevening of justice. That is a matter for which I should like them to have some moral responsibility and to return to work at once.
    Mr. Ancram: Will my hon. and learned Friend confirm that in the case of the most serious statutory offences, such as causing death by dangerous driving, it is possible to proceed by way of petition and that such serious crimes will not be allowed to go unpunished?
    The Solicitor-General for Scotland: I assure my hon Friend that no serious cases have been lost, although some have been delayed. In the High Court, I am glad to say that all the cases that were delayed in Glasgow have been, or are being, prosecuted.

    Travelling People
    Mr. John MacKayasked the Solicitor-General for Scotland if he will review the guidance given by Crown Office on the non-harassment of travelling people.
    The Solicitor-General for Scotland: I presume that my hon. Friend refers to the instruction which my right hon. and learned Friend the Lord Advocate issued in January 1980 requiring procurators fiscal to report to the Crown Office any case reported by the police involving unauthorised encamping by travelling people, so as to enable my right hon. and learned Friend to consider each case personally. That instruction remains in full force.
    Mr. MacKay: Will my hon. and learned Friend confirm that if a local authority provides a camp for the local people whom those of us from country areas prefer to call tinkers, others who come into the area and encamp by the roadside can be moved on, instead of riding on the back of a local authority that is doing its best by its travelling people but does not want to be burdened by outsiders?
    The Solicitor-General for Scotland: I confirm that that is so. My right hon. Friend the Secretary of State increased the grant for the provision of such sites to 100 per cent. If there are suitable sites, those who insist on parking in other places are prosecuted.
    Mr. Canavan: On a point of order, Mr. Speaker. I delayed raising this point of order until the end of Question Time, because I did not want to lessen the time available to my hon. Friends for raising supplementary questions. As you will have noticed, Mr. Speaker, more than half of the questions on the Order Paper concern one issue—namely, the savage cuts in local government expenditure that are being perpetrated by this Tory Government. All of those questions relate to Labour-controlled local authorities. It may have escaped your notice, Mr. Speaker, that more than half of the Scottish constituencies are represented by Labour Members. Many of us have had great difficulty in raising this question on the Floor of the House. When such orders are debated on
    1176
    the Floor of the House, will you bear in mind the Government's discriminatory attitude and the way in which they pick on Labour-controlled authorities—
    Mr. Speaker: Order. The hon. Gentleman knows that I have no intention of changing the long-established custom of calling hon. Members from alternate sides of the House. Any Speaker would be placed in an impossible situation if he were to respond to the hon. Gentleman's request.
    Mr. John Home Robertson: On a point of order, Mr. Speaker. I appeal to you again—
    Mr. Speaker: Order. I hope that the hon. Gentleman is not pursuing the same point, because I have finished with it and given a ruling.
    Mr. Home Robertson: The point that I wish to draw to your attention, Mr. Speaker, is that of the 36 questions tabled to the Secretary of State for Scotland, only seven were tabled by Scottish Conservative Back Benchers—
    Mr. Speaker: Order. Clearly, that is not a point of order.

Police (Equipment)
The Secretary of State for the Home Department (Mr. William Whitelaw): With permission, Mr. Speaker, I shall make the short statement which was requested yesterday in advance of tomorrow's debate by the Leader of the Opposition and the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) on the equipment available to the police. Naturally, the whole House wants to see the police provided with sufficient means of protecting themselves and also of taking positive and effective action to deal with riotous behaviour.
To protect police officers, special helmets are being provided in increasing numbers; fire resistant overalls have been ordered; and so have more standard shields and new lighter shields. Better protection has assisted chief officers in adopting positive tactics to break up violent groups. It is firmly the view of the chief officers who have been most closely involved that their most effective approach lies in training their officers and developing their tactics for mobile and positive public order policing.
But there may be extreme circumstances in which further equipment might be required in dealing with riots. I have, therefore, decided to make available to chief officers, who alone are responsible for the conduct of operations, a range of alternatives.
Different types of water cannon are being looked at by police forces to see which might suit their needs. Additional protection is being provided for normal police vehicles, and the need for specially protected vehicles will be urgently examined.
This brings me to CS gas and plastic bullets. Neither I nor chief officers wish to see these used except in the very last resort and under strict control, but they should be available. Stocks of CS gas have therefore been reviewed, and appropriate groups of officers will be trained in the proper use of plastic bullets. They will be used only on the authority of the chief officer himself. I shall be talking to chief officers about the circumstances in which such authorisation might be given.
In opening tomorrow's debate, I shall be speaking on other aspects of these matters and about the implications for the penal system.
Mr. Roy Hattersley: Is the Home Secretary aware that the House asked for this statement today so that the response to it in tomorrow's debate could be considered rather than made impromptu? In the light of that, I at least accept that the Home Secretary may want to incorporate in his opening statement tomorrow the answers to the questions that I shall ask him. I shall ask him four specific questions.
First, will the right hon. Gentleman tell us, either now or tomorrow, the type of CS gas that is to be made available, the rules governing its use and the risks that using it entails? Secondly, may we be assured that the various proposals associated with the right hon. Gentleman after his meeting on Monday evening—but which are not included in the statement—have been abandoned? Thirdly, how, if at all, do "new proposals" for using CS gas and plastic bullets—as the Home Secretary says, in extreme circumstances—differ from the procedures that operate now, were operated at Toxteth and applied before then? Fourthly, will the right hon. Gentleman give a categorical assurance that the several
1178
chief constables who are opposed to the use of such materials and techniques will not be put under any pressure to adopt them?
Will the right hon. Gentleman prepare his speech for tomorrow's debate on the understanding that, although he is entirely correct to say that the whole House wishes the police to be provided with sufficient means of protecting themselves, some of us are deeply opposed to equipment and techniques that change the character of the British police force in a way that will break down their traditional relationship with those they serve and protect?
Mr. Whitelaw: It would be right to respond to some of the more detailed points in accordance with the reasonable proposal that the right hon. Gentleman has made. I shall, of course, take great care to reply in detail to the right hon. Gentleman's various points. However, there are two general points to which I should reply now.
The first concerns the position of the chief constables. I said in my statement that they alone are responsible for operations. That is crucial to the whole of policing in this country and will remain so. Nothing that I shall do at any time, in any circumstances, will put any pressure on chief constables in the conduct of their operations. That must go for all politicians at all levels in our society. It is extremely important. The equipment will be available. If chief constables do not want to use it, they will not. The decision will be entirely up to them.
Secondly, the House will know that the Government have stood firmly behind the normal community police service. It is vital that in that connection the role and position of the police should be preserved in our society. I strongly defend that. However, if we find ourselves faced with severe violence we are entitled to have the police ready and able to respond to it. I hope that overall we shall be able to make the conditions such that the traditional policing of this country will be preserved.
Several Hon. Members rose—
Mr. Speaker: Order. The House is aware that this subject is to be debated tomorrow. I want to give a fair opportunity for questioning but also to be fair to the House in view of all the business that is to follow. I suggest, therefore, that a quarter of an hour for questions, if they are brief and to the point, should cover many hon. Members.
Mr. Michael Hamilton: If my right hon. Friend decides to reopen Rollestone camp, will he appreciate that that decision will be well received locally? Does he remember that on the last occasion it was the prisoners who lived comfortably and those who looked after them—soldiers and police—who had to live rough?
Mr. Whitelaw: It will be necessary to reopen Rollestone camp because of the general overcrowding of the prison system, quite apart from what has happened. What has happened makes it all the more urgent and necessary. Rollestone camp will be staffed on this occasion by prison officers. I am grateful to them for the way in which they have coped in difficult circumstances in recent times. The camp will be staffed by prison officers and, therefore, the situation will be different from the previous occasions when it has been used. I should make it clear that prisoners of all sorts, not just those associated with the riots, will go to Rollestone. It will depend on the suitability of prisoners to go there. They will include all sorts of prisoners serving different sentences.
Mr. A. J. Beith: Does the Home Secretary recognise that the extremists who have been at work in the recent riots have as their objective the destruction of the relationship of trust between the British public and the police? We should not play into their hands. Therefore, chief constables must be cautious, especially about the use of such things as plastic bullets which pose a potential danger to innocent bystanders, and must make a great effort in building up the community policing on which the relationship has long been based.
Mr. Whitelaw: I shall refer to many of those matters and their implication in my speech tomorrow. This morning I had the opportunity of having a short talk with some of the chief officers of police from the areas particularly affected. They are strongly of the view that the hon. Gentleman has put forward.
Mr. Ivor Stanbrook: Is my right hon. Friend aware that his statement will be greeted with great satisfaction in the country as a whole, but will he confirm that if it is shown that a change in the law is needed he will have no hesitation in putting proposals to the House?
Mr. Whitelaw: Any new law is a matter which needs careful study to ensure that any proposals that are introduced will help the police and the public in dealing with such problems. In the last 10 days we have all faced entirely new problems in our national life.
Mr. S. C. Silkin: Does the Home Secretary accept that it is welcome to everyone that the most extreme weapons will be used only in the most extreme circumstances? Will he consider before tomorrow the possibility of going further than he went today and reserving to his authority the decision to use extreme weapons?
Mr. Whitelaw: I shall consider what the right hon. and learned Gentleman has said. I should like to discuss that carefully with my colleagues and listen to what right hon. and hon. Members say. Any of my predecessors would confirm that, although that is desirable in principle, circumstances can blow up on the spot very quickly, and even though the Home Secretary is constantly available he is not always in possession of the facts on the ground and it might put him in a difficult position if he had the final authorisation. But I shall consider it.
Mr. Eldon Griffiths: To keep matters in perspective, will my right hon. Friend confirm that the vast majority of policing in this country will continue to be traditional, based on consent and not power? Will he confirm that the police did not seek the use of such equipment but that it was forced on them by those who make war on our society? Will he also confirm that the police will receive the best available training not only in the anti-riot equipment but in tactics and deployment so that they will not remain sitting ducks for brickbats and fire-bombs?
Mr. Whitelaw: I am grateful to my hon. Friend. We must do everything we can. It is important, following what the hon. Member for Berwick-upon-Tweed (Mr. Beith) said, that we should seek to preserve the trust between the police and the community that they serve. Therefore, provisional policing methods are vital. If we have to rely, as we did, on the bravery of the young police officers, it
1180
is our duty in the House, and it is expected by the country, to ensure that they are properly equipped and protected for their dangerous task.
Mr. Eric S. Heffer: Is the right hon. Gentleman aware that many Opposition Members, while accepting completely the need for the police to have proper protection, are concerned that it would appear that the Government are concentrating on dealing with the riots rather than introducing positive proposals to deal with the causes in areas where there have been outbreaks of violence? Accepting that looters and others later took advantage of the situation, can he give us an assurance that urgent measures will be taken to deal with the real problems rather than taking repressive action that in the long run will solve nothing?
Mr. Whitelaw: I promised the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) that I would make this statement today. I am glad that he pressed me to do so because he has been proved correct. At the same time, I said that I and my right hon. Friend the Secretary of State for the Environment want to develop in the debate tomorrow our views and our plans on a wider basis. I shall, therefore, reserve those for tomorrow while accepting that we must enable the police to deal with the serious violence immediately and to restore public confidence. I accept and will develop tomorrow the other factors.
Sir John Biggs-Davison: What concern did the Opposition show about the use of plastic bullets in Northern Ireland? Although they may have had their views on the politics of Northern Ireland, they have never expressed concern. Do they think that the people of Northern Ireland are second-class citizens for whom plastic bullets are all right but that when a similar situation arises on this side of the water the appropriate measures should not be used?
Mr. Whitelaw: I am not responsible for what Opposition Members may say at any time. My hon. Friend's remark seemed to be addressed to them. In the interests of having a calm and constructive debate tomorrow, I should be wise not to be drawn further.
Mr. Neville Sandelson: I assure the Home Secretary of the firm support of my right hon. and hon. Friends for his measures and for any measures that will strengthen the hand of the police in these unprecedented times. Does he recognise—I heard what he said to the hon. Member for Liverpool, Walton (Mr. Heffer)— that the Government will ignore the social factors at their peril and at the peril of the nation? Under successive Governments those factors have given rise to the problems that we now face in Toxteth and Brixton.
Mr. Whitelaw: I give the same reply to the hon. Gentleman as I gave to the hon. Member for Liverpool, Walton (Mr. Heffer). These matters will be developed by myself and by my right hon. Friend the Secretary of State for the Environment in tomorrow's debate.
Mr. W. Benyon: As experience in Northern Ireland with the use of CS gas has shown that it requires special tactics and special equipment, can my right hon. Friend assure me that those are available to the police?
Mr. Whitelaw: I made it clear, and I emphasise, that these weapons will be used only as a last resort. That is

1181
the view of the chief constables. It is nevertheless important that there should be training in their use. The police will have that training.
Mr. Arthur Lewis: The Home Secretary, the Prime Minister and various Ministers have correctly paid tribute to the bravery of the police, but will some Minister pay tribute to the bravery of the ambulancemen who do not have the elementary protection afforded to the police? They have called off their industrial dispute because of the riots, even though they have been shabbily treated by Governments of both parties. Their pay structure used to follow that for police pay. As they are in the thick of it, will the right hon. Gentleman ensure that they are better treated from the point of view of pay? Will the right hon. Gentleman pay a tribute to them as they are just as important as the police?
Mr. Whitelaw: Without making any commitments of any sort, I gladly applaud the efforts of the fire service, the ambulance services, the law and order services, and many members of the general public, who have done a great deal, frequently in situations of great difficulty, to cool matters. I pay tribute to them all.
Mr. George Gardiner: I warmly welcome my right hon. Friend's statement, but is he satisfied that the present law gives police officers immunity against civil court actions brought by those who might suffer injury while anti-riot weapons are being used?
Mr. Whitelaw: That is one of the important legal matters that we are looking into.
Mr. Robert Kilroy-Silk: Does the Home Secretary realise that, whatever may be the truth of the matter, a large number of those engaged in the recent disturbances sincerely believed that they had previously been subjected to unfair and discriminatory tactics? In that context, has not the relationship between the police and the communities concerned clearly already broken down? The measures that the Home Secretary has proposed today will do nothing to restore it and may exacerbate the position. Will he now acknowledge that the relationship between the police and the community is likely to be forfeited if these measures are introduced?
Will the Home Secretary give an assurance that he will try to deal with the causes, not the symptoms, and at least adopt the suggestion of my right hon. and learned Friend the Member for Dulwich (Mr. Silkin) and allow these methods to be used only with his specific agreement?
Mr. Whitelaw: I am certainly not prepared to agree in any circumstances that there can be any excuse for the sort of violence that we have seen on the streets. The hon. Gentleman sought to propose that there was an excuse. [Interruption.] If he did not, I am glad to hear it, but it sounded like it. I do not believe that there can be any such excuse. I have already said that some of the other matters will be discussed tomorrow.
I agree very strongly with what the hon. Member for Berwick-upon-Tweed (Mr. Beith) and my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) said about trust between the police and the public. Every effort should be made in this House to cement that trust and not to make it more difficult to achieve. That effort must and will go on. Anyone who went to the areas concerned will know that many people in the communities were prepared to help the police all the time throughout the worst of the
1182
troubles. That should be said, too. Trust is, of course, very important, but in the final event it must be right to protect our police when they are protecting us.
Mr. Toby Jessel: In order to help maintain the morale of the police in Greater London, will my right hon. Friend not only repeat that the Government intend that the Home Secretary shall remain the Metropolitan Police authority but assure the House that the police committee that has been set up by the Greater London Council has no official status, power or authority whatever?
Mr. Whitelaw: The answer is "Yes" to both my hon. Friend's questions.
Mr. James A. Dunn: Is the Home Secretary aware that anything he may do to provide personal protection for the police will be welcomed and, indeed, supported on both sides of the House? Nevertheless, there are apprehensions, as he will know from his own experience in Northern Ireland. Does he recall that the use of water cannon and CS gas was rejected as operationally unpredictable and unsatisfactory? In those circumstances, will he cause those items to be reviewed as part of the equipment to be provided? Will he study more intently the need for one single authority to authorise the use of such weapons in any circumstances?
Mr. Whitelaw: I think that I am correct in saying that in Northern Ireland it was not so much a question that the authorities decided not to use CS gas and water cannon but that rubber bullets would be more satisfactory. It is my apprehension about rubber bullets—an apprehension that is shared by many hon. Members—that leads me to the belief that it is right to provide a wide variety of equipment such as I am proposing.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to call two more hon. Members from each side of the House.
Mr. Nigel Forman: Is it not preferable that my right hon. Friend should adopt a firm and measured approach to these very serious problems and should confine the special measures which are necessary to the regular police rather than to any riot police force on the Continental pattern?
Mr. Whitelaw: There is no intention in the Government's mind to have riot police on the Continental pattern, but it is important that the mobile groups which all forces must have should have proper training and equipment for riot control. This they will have. It is also important that a large number of police officers should have training in all these tactics in case they are required on the streets.
Mr. Norman Atkinson: Now that the Home Secretary has abdicated his responsibilities by handing full authority to chief constables, how can he give assurances, either to the House or to trade unionists outside, that these weapons will not be used against trade union picket lines or trade union demonstrators? In view of the record of the Government, as we proceed towards 3 million unemployed the Home Secretary should reconcile himself to the inevitability, as night follows day, of these weapons being used against peaceful demonstrators.
Mr. Whitelaw: It is in the nature of policing in this country—which I understood the Labour Party and its leaders supported strongly—that no politician, neither the Home Secretary nor any local politician, should have operational control of chief constables. There is no question of abdicating responsibility. It is a matter of carrying out the duties laid upon any Home Secretary by the Police Act 1964. That is very important.
With regard to the hon. Gentleman's remarks about picket lines, I believe that in this House there is great and proper belief and trust in our chief constables. That is an important factor.
Mr. John Stokes: Is my right hon. Friend aware that, in spite of some of the views expressed on the Labour Benches, the vast majority of the people want the police to have all the aids and weapons necessary to enable them to fulfil their duties and keep the peace?
Mr. Whitelaw: My hon. Friend is entirely correct, and I support his point of view.
Mr. Alexander W. Lyon: Does the Home Secretary recollect that yesterday the Prime Minister asked the Leader of the Opposition whether he supported the use of water cannon and CS gas? Is it not clear from the Home Secretary's statement today that he and, indeed, most chief officers of police do not support the use of CS gas and would wish to use it only in extreme circumstances? Does not that underline the point that partisan remarks on the issue of law and order do not advance one iota the cause of freedom or democracy?
Mr. Whitelaw: I do not accept what the hon. Gentleman has said. My statement about equipment for the police was perfectly plain. I made it clear—as my right hon. Friend the Prime Minister has always made it clear—that use of these weapons will be a matter of last resort. That is also the view of the chief constables, as I made clear to the House.

Representation of the People
3.58 pm
Mr. Dennis Canavan: I beg to move,
That leave be given to bring in a Bill to require any person who has given up membership of the House of Commons in order to take office as a member or employee of the European Economic Commission and who then seeks re-election to the House of Commons to declare on the ballot paper all the extra remuneration which he has received or is receiving as a result of his membership of or employment by the European Economic Commission; and for connected purposes.
It is just over six years since the Common Market referendum. It can now be seen as a gigantic con trick. The referendum campaign succeeded in conning millions of people. They were conned by the propaganda of the British Establishment, the forces of big business, the Tory Party, the Liberal Party, and those who have since left the Labour Party to join the so-called Social Democratic Party.
One of the slogans that the pro-Marketeers were using then was "Jobs for the boys". That can now be seen to be the lie that it is, because Common Market membership for Britain has been an unmitigated disaster in terms of jobs, industry, agriculture, fisheries, trade and the ability of the people of this country to determine their own affairs through parliamentary democracy.
Yet, in a sense, that same slogan "Jobs for the boys" has at least one ring of truth, because the president of the Britain in Europe referendum campaign at that time was a Mr. Roy Jenkins. Less than two years later, in January 1977, after failing to win the leadership of the Labour Party, he deserted the Parliamentary Labour Party and his constituents in Stechford in order to take up a better-paid job as President of the Common Market Commission. He took with him another Euro-fanatic, Mr. David Marquand, who deserted the Parliamentary Labour Party and his constituents in Ashfield in order to take up a better-paid job with the Commission.
Some of us predicted then that it would be only a matter of time before those traitors left the Labour Party altogether, the Labour Party that gave them their first chance in political life, the Labour Party that they used to get themselves elected to Parliament—
Mr. Speaker: Order. The hon. Gentleman must not make the speech that he would make if the House granted him permission to introduce the Bill. He must give the reasons why he wishes to introduce it.
Mr. Canavan: That same Labour Party enabled Mr. Jenkins to become a Cabinet Minister and President of the EEC Commission, which is relevant to the long title of the Bill.
In January of this year, sure enough, he returned, and within a matter of weeks he had set up a new outfit, the Social Democratic Party. In other words, having failed to destabilise the Labour Party—
Mr. Speaker: Order.
Mr. Canavan: —from within—
Mr. Speaker: Order. If the hon. Gentleman does not resume his seat when I stand up, next time, I shall request him to resume his seat instead of continuing, and I shall put the Question. When I stand up and say "Order", any hon. Member on his feet should resume his seat at once.

1185
The hon. Gentleman must realise that he is not free to make the speech that he would make if he were moving that his Bill be read a Second time. He must explain the terms of his Bill.
Mr. Canavan: This man did not receive much response from the rank and file of the Labour Party, although he managed to seduce a few Members of this House who are afraid to submit themselves for re-election under their new banner. They are now seeking to increase their representation in the House by putting up Mr. Roy Jenkins as a candidate in the Warrington by-election. It seems that he is now intent on using the good people of Warrington as a stepping stone between Brussels and Westminster—
Mr. Michael Neubert: On a point of order, Mr. Speaker. Is it not clear that not only is the hon. Member for West Stirlingshire (Mr. Canavan) reading his speech but that he is unable to deviate from his script when you ask him to give reasons for bringing in the Bill?
Mr. Speaker: It is an abuse of our rules for the hon. Gentleman not to do as I have asked—to explain what would be in his Bill—and to make a Second Reading speech. If he continues, I shall ask him to resume his seat.
Mr. Canavan: I am coming to the point about the money that Mr. Jenkins made, which is referred to in—
Mr. Speaker: Order. The hon. Gentleman will, without further delay, state the contents of his Bill. Otherwise, I must tell him that he will not proceed any further.
Mr. Canavan: The Bill would require people such as Mr. Roy Jenkins to state on the ballot paper at a general election or by-election in which they seek membership of the House the amount of money that they have made from the Common Market. In 1977, when Mr. Roy Jenkins became president of the Common Market Commission, his salary was £43,500 per annum, virtually tax-free, plus £14,000 per annum in various allowances. Four years later the salary had increased to over £60,000 a year and—[Interruption.]—the allowances to over £18,000 a year.
Mr. Bob Cryer: On a point of order, Mr. Speaker. I am trying to listen intently to my hon. Friend's speech, in which he is elaborating a very important point. Unfortunately, although you may not hear them, three members of the so-called Social Democratic Party sitting behind me are continually shouting, and I cannot hear.
Mr. Speaker: I notice from time to time that many hon. Members who themselves are given to interrupting will draw my attention to the fact that interruptions are taking place. If all hon. Members will observe the rule that the hon. Member for Keighley (Mr. Cryer) has so kindly outlined, our proceedings will be better.
Mr. Canavan: I did not complain about being interrupted, Mr. Speaker. I shall carry on regardless.
By the time Mr. Roy Jenkins lifted his books as President of the Common Market Commission, this man, who preaches excessive wage restraint for working-class people—
Mr. Speaker: Order. I shall now put the Question. The hon. Gentleman has declined—
Mr. Arthur Lewis: On a point of order, Mr. Speaker. I have been here long enough to
1186
know that Mr. Speaker can never be wrong, but it is possible that Mr. Speaker has not been acquainted with all the facts when he makes his remarks.
I was in the House only yesterday when my hon. Friend the Member for Berwick arid East Lothian (Mr. Home Robertson) moved that leave be given to bring in a Private Member's Bill and the hon. Member for Banff (Mr. Myles) opposed the motion. I listened to the hon. Gentleman's speech, understanding it as best I could, despite trouble with the hon. Gentleman's dialect. He rambled on about various matters, including who owned what, whether a certain chap had a big landed estate and whether he had his own farm. It was nothing to do with the Bill, yet the hon. Gentleman went on to explain—
Mr. Speaker: Order. In that case, I was sadly lacking. The Question is, That the hon. Gentleman have leave to bring in his Bill.
Mr. Patrick Cormack rose—
Mr. Speaker: Mr. Cormack—on a point of order?
Mr. Cormack: I do not want to make a long speech., Mr. Speaker, but I believe that the hon. Member for West Stirlingshire (Mr. Canavan) has abused the House.
Mr. Speaker: I thought that the hon. Gentleman was rising on a point of order.
Mr. Cormack: I rose to oppose the Bill, Mr. Speaker.
Mr. John Silkin: On a point of order, Mr. Speaker. I am sure that the House will regard the matter that has been raised as very important, because it affects both sides of the House, and the decision now will decide it for a long time.
I would not for one moment dispute your ruling, Mr Speaker, but I think that this is the first time that any of us have known a speech introducing a Ten-Minute Bill to be so narrowly confined. I can understand that that is true of a speech on a Standing Order No. 9 application, but it is often difficult if one is introducing a Bill under the Ten Minutes Rule to stick purely to the words of the Bill and an explanation of what the Bill does, without going into wider aspects of policy.
You are always very kind and considerate to the House, Mr. Speaker. Sometimes we undoubtedly overstep the rules of order. But I beg you to consider whether your ruling today might not be a little too narrow for us in the future.
Mr. Speaker: I was leaning over backwards to try to be fair. I gave the hon. Member for West Stirlingshire (Mr. Canavan) three or four chances. I have often had occasion before to draw hon. Members' attention to the fact that they are not supposed to make the speech that they would make if they were granted permission to introduce a Bill, but as a rule I have suggested that the hon. Member concerned should link his remarks to the Bill by saying that if it were introduced such and such a thing would happen. However, the hon. Gentleman seemed—to me, at least—to be bent on making the speech that he has prepared, whether or not it dealt with the content of the proposed Bill. The Ten Minutes Rule is not intended merely to allow hon. Members to make a speech on a favourite subject that happens to be topical.
I want to keep the House in as good a mood as I can and I will allow the hon. Member for West Stirlingshire

1187
to continue if he will relate his remarks to the content of his Bill. He must do that or I shall have to interrupt him, notwithstanding the request from the right hon. Member for Deptford (Mr. Silkin), who intervened from the Opposition Front Bench to try to help his hon. Friend. In view of the right hon. Gentleman's appeal, I will allow the hon. Member for West Stirlingshire to continue as long as he refers to the contents of the Bill. About seven minutes of the hon. Gentleman's time has gone.
Mr. Canavan: If my Bill were introduced and received its First, Second and Third Readings and, perhaps the Royal Assent today, the ballot paper at the Warrington by-election tomorrow would contain the words "This man, Roy Jenkins, has already made more than —¼ million out of the Common Market and stands to gain perhaps another £¼ million if he lives to the ripe old age of 80."
Let me explain that point in a couple of minutes. Despite the fact that Roy Jenkins has given up his Common Market job and is seeking election to the House, he is entitled to severance pay of more than £30,000 a year for three years—a golden handshake of more than £90,000.
Mr. Speaker: Order. Will the hon. Gentleman make his speech respectable by saying that his Bill will stop the severance pay, or will he link the severance pay with the provisions of the Bill?
Mr. Canavan: My Bill will, unfortunately, not stop the severance pay, but it will provide that ballot papers at Warrington will state clearly what this man has made out of the Common Market. If he lives to 65—and he might even manage that if he does not have too much claret and good living—he will get not a mere State pension of £27·50 a week but 18 per cent. of his retiring salary, totalling £11,000 per annum. If he manages to become an octogenarian he will be half-way to becoming a millionaire. The people of Warrington ought to be aware of that before they go to the polls tomorrow.
We hear much about opportunism and adventurism by politicians. This story seems to be straight out of the pages of the "Boys' Own" comic. When it comes to winning bonuses and European trophies, even Roy of the Rovers is no match for Roy of the Market. Of course, Roy of the Common Market has a distinct advantage. He will change his jersey at half-time if he thinks that he is not winning.
4.13 pm
Mr. Patrick Cormack rose—
Mr. Speaker: Is the hon. Gentleman rising to oppose the Bill?
Mr. Cormack: Yes, Mr. Speaker. If there were ever an example of opportunism, we have just seen it. The hon. Member for West Stirlingshire (Mr. Canavan) displays not only an ignorance of the postal votes system and what goes on ballot papers but a touching faith in the speed of the British printing industry. He has abused the procedures of the House, and that should go on record before we vote down his ridiculous measure.
Mr. James Lamond: On a point of order, Mr. Speaker. I do not know whether the hon. Member for Staffordshire, South-West (Mr. Cormack) has
1188
concluded his speech, but if he has I am surprised that you did not interrupt him, because he did not mention anything contained in the Bill.
Mr. Speaker: Order. We can have only one speech after the main speech.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—
The House divided: Ayes 119, Noes 203.

Division No. 271]

[4.15 pm

AYES

Adams, Allen

McDonald, Dr Oonagh

Ashton, Joe

McElhone, Frank

Atkinson, N. (H'gey,)

McKay, Allen (Penistone)

Barnett, Guy (Greenwich)

McKelvey, William

Bennett, Andrew (St'kp't N)

McMahon, Andrew

Booth, Rt Hon Albert

McNamara, Kevin

Bray, Dr Jeremy

McTaggart, Robert

Brown, Hugh D. (Proven)

McWilliam, John

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

Marshall, D (G'gow S'ton)

Canavan, Dennis

Marshall, Jim (Leicester S)

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

Martin, M (G'gow S'burn)

Clark, Dr David (S Shields)

Maxton, John

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

Meacher, Michael

Cook, Robin F.

Miller, Dr M. S. (E Kilbride)

Cowans, Harry

Morris, Rt Hon C. (O'shaw)

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

Morton, George

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

Moyle, Rt Hon Roland

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

Newens, Stanley

Deakins, Eric

O'Neill, Martin

Dean, Joseph (Leeds West)

Orme, Rt Hon Stanley

Dixon, Donald

Pavitt, Laurie

Dobson, Frank

Pendry, Tom

Dormand, Jack

Powell, Raymond (Ogmore)

Dubs, Alfred

Proctor, K. Harvey

Duffy, A. E. P.

Richardson, Jo

Eadie, Alex

Roberts, Ernest (Hackney N)

Eastham, Ken

Roberts, Gwilym (Cannock)

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

Robinson, G. (Coventry NW)

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

Rooker, J. W.

English, Michael

Sever, John

Evans, loan (Aberdare)

Sheldon, Rt Hon R.

Fletcher, Ted (Darlington)

Silkin, Rt Hon J. (Deptford)

Foulkes, George

Skinner, Dennis

Garrett, John (Norwich S)

Smith, Rt Hon J. (N Lanark)

Garrett, W. E. (Wallsend)

Snape, Peter

Graham, Ted

Soley, Clive

Grant, George (Morpeth)

Spearing, Nigel

Grant, John (Islington C)

Spriggs, Leslie

Hardy, Peter

Stallard, A. W.

Harrison, Rt Hon Walter

Stoddart, David

Haynes, Frank

Summerskill, Hon Dr Shirley

Heffer, Eric S.

Taylor, Mrs Ann (Bolton W)

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

Thomas, Dafydd (Merioneth)

Homewood, William

Thomas, Dr R. (Carmarthen)

Hooley, Frank

Tilley, John

Huckfield, Les

Tinn, James

Hughes, Roy (Newport)

Torney, Tom

Janner, Hon Greville

Urwin, Rt Hon Tom

Jay, Rt Hon Douglas

Varley, Rt Hon Eric G.

Johnson, James (Hull West)

Walker, Rt Hon H. (D'caster)

Johnson, Walter (Derby S)

Welsh, Michael

Jones, Barry (East Flint)

White, Frank R.

Jones, Dan (Burnley)

Whitehead, Phillip

Kilroy-Silk, Robert

Wilson, William (C'try SE)

Lamond, James

Winnick, David

Leighton, Ronald

Woolmer, Kenneth

Lestor, Miss Joan

Young, David (Bolton E)

Lewis, Arthur (N'ham NW)

Lewis, Ron (Carlisle)

Tellers for the Ayes:

Litherland, Robert

Mr. Bob Cryer and

Lofthouse, Geoffrey

Mr. Russell Ken

Lyon. Alexander (York)

1189

NOES

Adley, Robert

Fitch, Alan

Alison, Michael

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

Amery, Rt Hon Julian

Fletcher-Cooke, Sir Charles

Ancram, Michael

Forman, Nigel

Arnold, Tom

Fox, Marcus

Baker, Nicholas (N Dorset)

Fraser, Rt Hon Sir Hugh

Banks, Robert

Galbraith, Hon T. G. D.

Beaumont-Dark, Anthony

Garel-Jones, Tristan

Beith, A. J.

Glyn, Dr Alan

Bennett, Sir Frederic (T'bay)

Goodhew, Victor

Benyon, W. (Buckingham)

Goodlad, Alastair

Berry, Hon Anthony

Gorst, John

Best, Keith

Gower, Sir Raymond

Bevan, David Gilroy

Greenway, Harry

Biffen, Rt Hon John

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

Biggs-Davison, John

Griffiths, Peter Portsm'th N)

Body, Richard

Grimond, Rt Hon J.

Bonsor, Sir Nicholas

Grist, Ian

Boscawen, Hon Robert

Grylls, Michael

Boyson, Dr Rhodes

Gummer, John Selwyn

Braine, Sir Bernard

Hamilton, Hon A.

Bright, Graham

Hamilton, Michael (Salisbury)

Brinton, Tim

Hampson, Dr Keith

Brooke, Hon Peter

Hannam, John

Brown, Michael (Brigg & Sc'n)

Haselhurst, Alan

Browne, John (Winchester)

Havers, Rt Hon Sir Michael

Buck, Antony

Hayhoe, Barney

Bulmer, Esmond

Henderson, Barry

Burden, Sir Frederick

Higgins, Rt Hon Terence L.

Butcher, John

Hooson, Tom

Cadbury, Jocelyn

Horam, John

Cant, R. B.

Howe, Rt Hon Sir Geoffrey

Chapman, Sydney

Howell, Ralph (N Norfolk)

Clark, Sir W. (Croydon S)

Howells, Geraint

Colvin, Michael

Hunt, David (Wirral)

Cope, John

Hunt, John (Ravensbourne)

Cormack, Patrick

Irving, Charles (Cheltenham)

Corrie, John

Jenkin, Rt Hon Patrick

Cranborne, Viscount

Jessel, Toby

Crouch, David

Johnson Smith, Geoffrey

Douglas-Hamilton, Lord J.

Johnston, Russell (Inverness)

Dunn, Robert (Dartford)

Jopling, Rt Hon Michael

Durant, Tony

Kaberry, Sir Donald

Edwards, Rt Hon N. (P'broke)

Kellett-Bowman, Mrs Elaine

Eggar, Tim

Kilfedder, James A.

Emery, Peter

Knight, Mrs Jill

Eyre, Reginald

Knox, David

Fairbairn, Nicholas

Lamont, Norman

Fairgrieve, Russell

Lang, Ian

Farr, John

Langford-Holt, Sir John

Fell, Anthony

Lawson, Rt Hon Nigel

Fenner, Mrs Peggy

Le Marchant, Spencer

Fisher, Sir Nigel

Lester, Jim (Beeston)

1190

Lewis, Kenneth (Rutland)

Rossi, Hugh

Lloyd, Peter (Fareham)

Rost, Peter

Loveridge, John

Sainsbury, Hon Timothy

Luce, Richard

Sandelson, Neville

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

Shelton, William (Streatham)

McQuarrie, Albert

Shersby, Michael

Major, John

Sims, Roger

Marland, Paul

Skeet, T. H. H.

Marten, Neil (Banbury)

Speed, Keith

Maude, Rt Hon Sir Angus

Speller, Tony

Mawby, Ray

Spence, John

Mawhinney, Dr Brian

Spicer, Jim (West Dorset)

Mayhew, Patrick

Spicer, Michael (S Worcs)

Mellor, David

Stainton, Keith

Mills, Iain (Meriden)

Stanbrook, Ivor

Mitchell, David (Basingstoke)

Stanley, John

Mitchell, R. C. (Soton Itchen)

Stewart, Ian (Hitchin)

Monro, Hector

Stewart, A. (E Renfrewshire)

Montgomery, Fergus

Stokes, John

Morgan, Geraint

Stradling Thomas, J.

Morris, M. (N'hampton S)

Thomas, Rt Hon Peter

Morrison, Hon C. (Devizes)

Thompson, Donald

Mudd, David

Thorne, Neil (Ilford South)

Murphy, Christopher

Townend, John (Bridlington)

Myles, David

Townsend, Cyril D, (B'heath)

Neubert, Michael

Trippier, David

Newton, Tony

Trotter, Neville

Normanton, Tom

van Straubenzee, W. R.

Onslow, Cranley

Vaughan, Dr Gerard

Osborn, John

Viggers, Peter

Owen, Rt Hon Dr David

Waddington, David

Page, John (Harrow, West)

Wainwright, R. (Colne V)

Page, Rt Hon Sir G. (Crosby)

Wakeham, John

Page, Richard (SW Herts)

Ward, John

Parris, Matthew

Warren, Kenneth

Pawsey, James

Wells, John (Maidstone)

Penhaligon, David

Wells, Bowen

Percival, Sir Ian

Wheeler, John

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

Wickenden, Keith

Prentice, Rt Hon Reg

Wiggin, Jerry

Price, Sir David (Eastleigh)

Wigley, Dafydd

Raison, Timothy

Williams, D. (Montgomery)

Rees, Peter (Dover and Deal)

Wilson, Gordon (Dundee E)

Rhodes James, Robert

Winterton, Nicholas

Ridley, Hon Nicholas

Wrigglesworth, Ian

Rifkind, Malcolm

Younger, Rt Hon George

Roberts, M. (Cardiff NW)

Roberts, Wyn (Conway)

Tellers for the Noes:

Roper, John

Mr. Robert Atkins and

Ross, Stephen (Isle of Wight)

Mr. John MacKay.

Ross, Wm. (Londonderry)

Question accordingly negatived.

Orders of the Day
  Finance Bill
  As amended (in the Committee and in the Standing Committee), further considered.
  Finance Bill
    Clause 23

      PERSONAL RELIEFS
      4.25 pm
      Mr. Robert Sheldon: I beg to move amendment No. 21, in page 13, line 9, at end insert 'except for widows' bereavement allowance which shall be £800 for the year 1981–82'.
      Mr. Speaker: With this it will be convenient to take amendment No. 24, in page 13, line 9, at end insert—
      '(1A) In subsection (1A) of section 8 of the Taxes Act (personal relief) there shall be inserted after "upwards" the words "or that she was at any time within the year of assessment of the age of sixty and in receipt of a Category A retirement pension under subsection (1) of section 28 of the Social Security Act 1975.".'.
      Mr. Sheldon: We come now to the question of personal allowances. We are dealing once again, as we have done on many previous occasions, with the problems of indexation. Unquestionably, there has been a considerable change since the Government came to power, shown by the way in which their views are implemented in the Bill. I have been in favour of indexation on certain conditions. Given that inflation is continuous, large and persistent, I have always seen the case for indexation. I had hoped that it would be possible to wait to see whether the Government were successful in limiting the increase in inflation. If that had happened, it might have been possible to avoid indexation in many, and possibly most, particulars.
      The Government have shown that they are unable to limit inflation. It is therefore reasonable for them to consider further indexation and to act as they did in the Finance Act 1980. Under section 24 of that Act, the Government provided for indexation at the basic rates and at the higher rates. I must, however, say that when they introduced indexation they changed the pattern of taxation. They made sure that there were considerable reliefs for the higher incomes. Only after that had been done did they fix the indexation provisions. This is noted as one of the philosophies behind Government action in the matter.
      A number of allowances were settled as the basis of indexation, including the single allowance, the married allowance, the additional personal allowance, the age allowance, the higher rate threshold and the investment income surcharge. Also included, under section 24(6) of the 1980 Act, was the widow's bereavement allowance, which is the subject of the amendment now being discussed. It was agreed that there should be a rounding-up to the nearest £10 on each of the indexation provisions. The purpose was to bring about what the Financial Secretary, with his gift for a phrase, called "truth in taxation". One has only to recognise the considerable benefits that were given to the better-off to know that when this Government talk about truth in taxation it is time for ordinary people to look to their purses.
      1192
      The truth in taxation has benefited the better-off. It has not benefited the less-well-off. In this year's Finance Bill, the Government have not merely failed to revalorise completely. They have failed to make any increases whatever to take account of inflation. This is phenomenal coming from a Government who believe in truth in taxation.
      If the Government had said nothing about this matter and had not mentioned that taxation has to take account of inflation in the various complicated ways that they devised when in Opposition, we might have thought that the Government were trying to make use of inflation to finance the objectives that they had in mind. Among the most important of these objectives was to relieve taxation on the better-off. However, the Government made so much of the truth in taxation theory that the Opposition must be concerned when the practice no longer meets the theory. It is not as if we have reached a plateau where one could overlook one year's failure to revalorise. A failure to revalorise has continued over the years and the decades.
      I mention as an example the manner in which the threshold has declined over the years. In the 1950s, a married person with two children paid no income tax as long as he was earning about average pay. In the 1960s he was paying income tax if his pay was about 70 per cent. of the average. In the 1970s he was paying income tax if his earnings were about 50 per cent. of average pay. In November 1980 he was paying income tax if his income was about 38 per cent. of average pay.
      That is a staggering decline. As we know, this has accounted for the very large numbers of people corning into tax. One can continue in this way almost indefinitely, until one comes up against one particular problem—the interaction between the benefits paid by the Department of Health and Social Security and the tax thresholds at which one is asking people to pay. Once one starts bringing down the threshold at which tax starts, one finds oneself taxing people who are in receipt of benefits. We have had that before, so it is nothing new. However, when one gets so far down, obviously the problems increase—and they have increased spectacularly as a result of the failure to revalorise in this way.
      The Government have always held that they are a party of low taxation. [Interruption.] They are; my hon. Friend the Member for Edinburgh, Central (Mr. Cook) should not misjudge them. They are a party of low taxation for the wealthy, but they are also a party of high taxation for the poorer people, the ordinary people of Britain.
      Before the Government introduced all their indexation provisions, they made sure that the highest rate of income tax came down to 60 per cent. and that the thresholds and bands were restructured suitably. The quid pro quo—there was one—was a promise of a 25 per cent. rate of income tax, which promise, as we are all aware, has long since vanished from the scene.
      Last year there was a change. It concerns our amendment most directly. There was the introduction of the widow's bereavement allowance. I welcomed it. It was a valuable innovation. But—
      Mr. Tony Durant: Will the right hon. Gentleman give way?
      Mr. Sheldon: May I just finish this point? I shall be glad to give way then, because I know the hon. Gentleman's deep concern and interest in these matters,

      1193
      which he has pursued on behalf of widows for many years. When he speaks on these matters the House always listens to him with the greatest respect. He will be aware that that widow's bereavement allowance, which we see in legislative form now, was altered considerably under pressure in Committee. I shall refer to that matter shortly.
      Mr. Durant: Will the right hon. Gentleman concede that on many occasions when I discussed this matter with him when he was in office he put the point to me, as someone who was keenly concerned about widows' problems, that the blanket approach was much the better approach? The present Government have done something in relation to the widow's bereavement allowance. They have avoided the clawback, which has been one of the most difficult problems for widows in the early stages of bereavement. At least the Government have done that.
      Mr. Sheldon: I accept that. I thought that I had said so at the outset. I also said, however, that this was in the context of very large handouts to much wealthier people, so it should be seen in that context. I believe that there was much to be gained by a number of grants of various kinds, which we discussed at great length. The whole House benefits from the actions of the hon. Gentleman and others who have taken an interest in these matters over the years. As I mentioned, it was altered under pressure in Committee, and I think that it was improved and widened as a result.
      In Committee last year, the Financial Secretary talked about his concern about widows. He mentioned how much concern there was about widows and the tax system. He said that
      "that concern is particularly acute in the year of bereavement. That is the year when the emotional shock is greatest. It is also the year of an abrupt change from the married allowance to the single allowance. That is why we thought that, even in the context of an economic situation that called for very great stringency, we should do something this year for widows."—[Official Report, Standing Committee A, 10 June, 1980; c. 322–3.]
      I am not sure about the stringency part, because considerable assistance had been given to the better-off.
      As a result of that, the Government came under pressure to do something for those who were less advantaged. The widows were among them. Here I add my voice to the view that I have heard so frequently from the hon. Member for Reading, North (Mr. Durant). At our advice bureaux we frequently see widows. They are one of the sources of the greatest distress that we meet. Nothing can replace a husband and the position that he had in the home, and in the assistance in the transition to a newly altered life one cannot do very much with money, but, at any rate, it provides a cushion for that aspect of it.
      I suppose that all of us are to a certain extent social workers in these matters. We try to provide comfort and solace to the best of our inadequate ability. But if there is to be a standstill on the question of revalorisation, if we are to say that our economic position is such that nothing can be done, I should have thought that an exception could have been made for the widows. We are not dealing with all that many. We are dealing with people who are suddenly widowed in that year. If we do not do anything this year, it is no use doing anything next year, because this applies only to those who are newly widowed. That means that those who are widowed this year will not get that increase. The Financial Secretary should bear that in mind. Those who have failed to get the other allowances
      1194
      will be able to benefit next year and in subsequent years, as the Financial Secretary tries—I am sure that he realises that he must do so—to make good the damage done this year.
      However, as regards the widow's bereavement allowance, those people who are widowed in the year in which this applies will find themselves disadvantaged and will never receive the allowance as a result of what may be done in the future.
      This is the essential basis for our amendment. There are about 3 million widows, and about 330,000 of them are between the ages of 60 and 64. They are the subject of the next amendment. I believe that my hon. Friend the Member for Birmingham, Ferry Barr (Mr. Rooker) hopes to make a contribution to the debate if he catches your eye, Mr. Deputy Speaker. I do not think that any debate on indexation would ever be complete without my hon. Friend's presence, which is always an essential and welcome part of our debates on these matters.
      Amendment No. 24 deals with women between the ages of 60 and 64. They will be in receipt of a State pension, but they may also be in receipt of an earnings-related pension. That is their particular problem, because they will now be subject to tax. As I have illustrated, we have lowered the threshold to such a level that we are now not only interfering with any of these ordinary pensions but are at a level which interferes with the State pension.
      This can be dealt with by introducing what are called tolerance levels. When we get nonsense of this kind, the Inland Revenue comes to the Minister with the problem and the Minister makes a concession. He says "We shall forgo a certain amount of taxation because we cannot be involved in the nonsense of trying to get money from people who obviously have very limited means." Therefore, the tolerance levels are increased, and this absurdity is avoided.
      That is what has happened up to now. Now, for the first time, we are to tax these people. Taxing them is bad enough, but there is worse to come. These widows are in receipt of two pensions, and although the pensions can be as little as 52p a week—that is the average and very modest figure—that brings them above the level of the tolerance. Not only will they be charged tax because they are above the level of the tolerance, but the tolerance provisions will not apply to them. They will be taxed the whole amount. For example, if there is a £100 disregard, there will be £30 tax on that amount. If there is 1p more, not only is tax paid on that penny but the £30 has to be paid as well. That is what amendment No. 24 seeks to alter. It is the loss of the tax on the graduated pension, as well as the loss of the tolerance, that concerns us.
      The amendments seek to assist widows who we believe have been wronged, and we seek to remedy the wrong. The first wrong was the failure to uprate the bereavement allowance for widows, and the second was to bring into tax for the first time those whose circumstances had always made them exempt from taxation. If this is truth in taxation, it is a distortion of the truth, and the House should decide accordingly.
      Mr. A. J. Beith (Berwick-upon-Tweed): On a point of order, Mr. Deputy Speaker. I am sorry to intrude in the debate, but a matter has just come to my notice which can be sorted out only in the course of today if the arrangements in the Table Office are to be accommodated.

      1195
      The House has not yet passed a motion dealing with whether it is to sit on 29 July, and there has been no Business Statement by the Government on that subject. The Table Office—acting, I think, in good faith but, in my view, mistakenly—has taken the view that it should be assumed that the House will not sit on 29 July and that that day will, therefore, be ignored in the notice period for questions to the Chancellor of the Exchequer. The effect is that any hon. Member who expected to table a question to the Chancellor of the Exchequer tomorrow in the normal course of events cannot now do so because at 4 o'clock the Table Office dispatched all the questions on the assumption that Wednesday 29 July was not a sitting day.
      I ask you, Mr. Deputy Speaker, to consider the matter and rule on it later. Its effect is to deprive hon. Members of the normal opportunity to table questions, with the chance of being called to put a supplementary question, and that is based on no announcement and no indication from the Government. Clearly, you, or perhaps Mr. Speaker, will have to consider the matter. I bring the matter to your notice in time for alternative arrangements to be made, and perhaps for the sorting of questions—the ballot, so to speak—to be reopened in the light of what I have said.
      Mr. Deputy Speaker (Mr. Ernest Armstrong):I am grateful to the hon. Member for Berwick-upon-Tweed (Mr. Beith). I shall acquaint Mr. Speaker with the matter, and it will be considered.
      Mr. Durant: I wish to participate in this short debate about widows, because I wish to say one or two things on behalf of the all-party group on widows and single-parent families.
      I accept what the Opposition say in their amendment about the bereavement allowance. The Government did something in this regard, which I mentioned in my intervention, whereby clawback is avoided. However, that has been lost, as the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) said, owing to the change in the tax situation. He has asked for a greater increase in the bereavement allowance to allow for that. I agree with his valid point.
      The first period of widowhood is the most important time for widows. Widowhood is not prearranged. No matter how much husbands have thought about it and been persuaded by insurance companies, and so on, people do not suddenly arrange to die. It may be an unfortunate tragedy, but it is also true that people suddenly die, and widows are faced with this enormous problem. Many of them have never faced the problem of running a household, dealing with the bills and the whole business of running a home, which often the husbands have had entirely under their control. For that reason, the bereavement allowance is an important allowance, and society has accepted that fact.
      I am worried that the allowance has not kept pace with the cost of living. The right hon. Gentleman seeks to increase the allowance to take account of increases in costs. The Government, by avoiding the clawback, have helped in this regard. The Opposition want the amount to be increased, and the Government say that there should not be a clawback. So there is a double benefit in that there
      1196
      is no taxation and there is an increased benefit. I am not against that. I am simply pointing out that there is a double benefit.
      4.45 pm
      I discussed the matter many times with Labour Members when they were in Government. They always said "We understand your point of view on behalf of widows, but what about single women who look after households in which there are aged parents, and so on?" I do not deprecate that. I simply put it forward as part of the debate. There has to be a balance.
      As the House will know, I have fought the case for widows on many occasions. I am attacked by single people in my constituency who look after aged relations and who say to me "We accept your views about widows, but what about us? We are battling on behalf of aged parents and relations and looking after them, but there is no help for us." We have to strike a balance, as I am sure widows themselves agree, but that does not mean that I am not in favour of what the right hon. Gentleman said.
      I want to put my case on record. I shall vote with the Opposition on the amendment because I have no option. The Opposition have a valid case concerning widows. However, we must keep a balance between widows, single women and all the other aspects of society that involve dealing with aged parents and accepting responsibility for capital and expense problems when women are suddenly faced with widowhood.
      The right hon. Gentleman has said many times that the overall situation has to be considered. I do not disagree with him. He said that a balance has to be drawn between all the different pressures on society. I believe, because I fight the widows' cause, that they have a unique position in that they do not choose their environment. Even the single woman, to a certain extent, chooses her environment. Widowhood is sudden. There it is. Any of our wives could be left alone suddenly because of all the pressures on society, road accidents, and so on. In spite of all the provisions that we may make, widowhood is not prepared for, psychologically or otherwise.
      From the studies that I have made of widowhood, I believe that widows should have every opportunity to get out of their environment of sorrow, problems and difficulties and get back into society. We should do all that we can to make them full members of that society by giving them financial help during a short period. That is why I believe that the proposal is right, and I support it. However, the right hon. Gentleman should remember that a balance must be drawn. Indeed, when he was in Government he accepted the difficulty of striking a balance between the single woman looking after old people and all the other pressures on his Department. We have to keep a careful balance but I accept what the right hon. Member for Ashton-under-Lyne is trying to do. If he is doing it non-politically, I am prepared to go along with it.
      Mr. Richard Wainwright: The Liberal Bench supports the amendments. I do not wish to repeat the clear and lucid arguments advanced by the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) but I wish to make several comments.
      Last year the Government's original proposal in the Finance Bill was for the new allowance to be apportioned to widows on a monthly basis. That meant that anybody who had the misfortune to be widowed late in the tax year

      1197
      would receive only a fraction of the allowance. The House will not be surprised to hear that the right hon. Member for Crosby (Sir G. Page) tabled an amendment to give all widows the full allowance. Since I was the only hon. Member to speak in support of the right hon. Gentleman, I have a special interest in the allowance. To the Government's credit, they accepted the right hon. Gentleman's amendment.
      If we must distinguish between different items of misery and different forms of acute need—and I do not believe that we should have to do that—people who are widowed in the circumstances so eloquently described by the hon. Member for Reading, North (Mr. Durant) are the most vulnerable. They will be receiving pensions and income tax assessments.
      Income tax assessments are formidable. They are not always correct. Sometimes they are horrendous in the amounts that they involve. They are covered in small print. They engender panic in all types of people, as hon. Members know from their interview sessions.
      In my experience, widows are the most panic-stricken when they receive, out of the blue and often for the first time in their lives—because their husbands received the awful documents in the past—all the paraphernalia of an income tax assessment on their pension.
      The tolerance of £30 of taxable income a year, which the Revenue chooses not to collect, is not satisfactory for more than about one tax year when widowhood first occurs. I am glad that the Revenue exercises that humanity when there is no time for legislation to put proper authority behind it. But it is intolerable that the House should debate these tax matters year after year in confusion and that the Revenue has to decide whether to collect tax.
      Each year the Government's duty is to put statutory authority behind emergency tolerances which, rightly, have been adopted in the meantime. In my view, they should be adopted only temporarily. I fully support an amendment which at least has the effect of regularising the £30. I hope that on reflection the Government will be willing to go a little further. I am sure that the Government do not want the present situation to persist.
      It appears that the Chancellor of the Exchequer and his colleagues have said "No indexation this year." The word has gone out that not only are personal allowances not to be indexed but that there is to be no indexation even for the most needy and acute cases. That is an approach without compassion.
      The Government are saying sweepingly that they suspend indexation this year. To refuse to apply indexation to widows at a relatively trivial cost will reinforce the Government's image as a Government who go in for diktats and are not prepared to temper the wind to the shorn lamb. If ever there was a case for departing in a small way from a principle, however misguided, that a Government have decided to adopt in a Finance Bill, it is that of the widows. Unless the amendment is carried, widows will receive tax assessments, probably for the first time, and suffer a great deal of misery as well as financial hardship.
      Mr. John Horam: The hon. Member for Reading, North (Mr. Durant) has a longstanding interest in widows' rights. He made an interesting and knowledgeable speech. However, he might have misled the House in talking about a double benefit occurring partly from the Government's action on clawback and partly from the amendment. It will be a
      1198
      double advantage only if the amendment is carried. Otherwise, we shall be back in the situation which the Government created. I was delighted to hear that he will be voting for the amendment. I hope that other Government Members will vote for it. The Social Democrats and Liberals also intend to support it.
      We are talking not merely of a double benefit but of the rectification of a double wrong. That is a more appropriate way of describing the position. Once again we are dealing with something which I particularly deplore. The side effects of a general change in taxation and the failure to index are for widows the worst aspects of the Budget. That causes us concern.
      As the hon. Member for Colne Valley (Mr. Wainwright) said, widows are a cause for anxiety because they must face all the paraphernalia and anxiety associated with tax assessment forms at a particularly distressing time. That should be avoided if possible.
      Mr. Durant: I am sorry to interrupt the hon. Gentleman, but I wish to return to the question of double benefit. The Government have dealt with the clawback and, therefore, the allowance is tax-free, in a sense. That means that there is a double benefit. It is not only tax-free, but if the amendment is carried, which is the point I am making, widows will receive a double benefit because they are not involved with tax.
      Mr. Horam: The double benefit applies only if the amendment is passed. That is what I was saying. We are talking of a rectification of a double wrong rather than a double benefit.
      I agree with the hon. Member for Colne Valley that we are talking not merely about tax that is levied but about all the difficulty and anxiety associated with forms which people in stress have to tackle.
      We know from experience of the length to which pensioners go to avoid filling in forms. They do that by investing in building societies, for example, and receiving less money than they might otherwise receive simply to avoid being caught in a tax net and having to deal with tax forms. That is common and leads to people receiving lower incomes but less anxiety.
      The Government should pay attention to the lax philosophy about which they boast so much. The present policy has a serious effect on a disadvantaged group. If the Government do not seek to counter that by accepting the amendment, they will appear to be unwieldy and mean-minded in their approach to disadvantaged groups such as widows.
      5 pm
      I fully support the general propositions advanced in the widows' charter. I do not support all the details, but I support the general proposition behind it. I also support the general feeling that not only is the tax position of widows disadvantageous, but that they feel it to be so—rightly or wrongly. That comes across every time I speak to a widow. They feel at a disadvantage in comparison with a married woman, although that is not always so.
      We should pay careful attention to the feelings of widows, as well as to their position. I hope that the Government will look favourably on this amendment and that it will be passed by the House.
      Mr. J. W. Rooker: If there is a remote possibility that the Government will accept

      1199
      amendment No. 21, I suspect that there is no possibility that they will accept amendment No. 24. I wish to address my remarks to that amendment.
      Amendment No. 24 grants the age allowance—that is, the higher personal allowance—to women above the age of 60. The present age allowance is payable only when they reach the age of 65. That may be convenient for men, because they receive the higher personal tax allowance on reaching their statutory retirement age. However, women have to wait five years after they have reached their statutory retirement age.
      I am well aware that amendment No. 24 would not be cheap to implement. I wish to put part of the Financial Secretary's case before he even gets to the Dispatch Box. When talking about a greater use of resources, it may be argued that one would do other things, such as making a reduction in the retirement age for men. Nevertheless, there is a gross inequality for women in the operation of the age allowance in the tax system.
      I wish to put some questions to the Financial Secretary. Written parliamentary questions have not done the job that hon. Members desired. We wish to find out how many in that category are affected by the Government's major statement in the Budget about the freezing of the tax allowances. That was a major plank of the Budget. It raises about £2·5 billion in additional revenue.
      In answer to a parliamentary question on 20 March, I was informed that by the freezing of tax allowances 1¼ million additional people would pay tax this financial year than would otherwise have been the case—400,000 would be over the age of 65 and 850,000 below that age. I and other hon. Members have sought to find out how many of the 850,000 below the age of 65 are women over the age of 60. For some reason it has not been possible for the Treasury to give the detailed answers required.
      On 30 March, in reply to a question from the hon. Member for Anglesey (Mr. Best), the Minister said:
      "It is not known how many single women or widows age 60–64 in receipt of retirement pension have additions to their pension but no other income. The number is not thought to be large, but it is not possible to estimate the extra tax payable".—[Official Report, 30 March 1981; Vol. 2, c. 23.]
      If the Minister does not know how many single women are in that age range who have an addition to their pension but are without other income, what is the justification for saying that it is not thought to be a large number?
      My right hon. and learned Friend the Member for Aberavon (Mr. Morris) asked a question on 24 March of the Chancellor of the Exchequer, who said:
      "The basic retirement pension receivable in 1981–82 by a single woman under 65 will be higher than the single person's tax allowance, but those with no income apart from basic pension will in practice be kept out of tax by the Inland Revenue's administrative tolerances. Some of them who have additions to their basic pension may become liable to tax for the first time in 1981–82. The number is likely to be much less than the figure of 600,000 which has been referred to, but it is not possible to make a realistic estimate." — [Official Report, 24 March 1981; Vol. 1, c. 288.]
      Now that we are at the end of July, with the pressure of the announcement of the Budget over and the Finance Bill almost through the House, is it possible for the Financial Secretary to put firm figures on the two answers that I quoted? I used the figure of 600,000 erroneously because that happens to be the number of women aged 60 to 64 who have a retirement graduated pension under the
      1200
      old system. I did not infer that the 600,000 would be caught. From information given by the Treasury to the Press Gallery—but not to the House—it would seem that the figure is more likely to be 200,000. The House and the country need to know how many will be hit harder in a new way by the Budget measures.
      Mr. Durant: Because we have now moved into a new situation where more people are involved in pension schemes of varying sorts, that number is likely to increase over the years. We may be establishing a precedent for many more people. The hon. Gentleman quoted a figure for this year, and I am not challenging it. However, as time goes on we are moving to an increasing number in the area to which he referred.
      Mr. Rooker: The hon. Gentleman is correct. As it is not part of my plank when speaking to the amendment, I have not referred to the additional component to the retirement pension that will come out of what is now the present State pension system—the two parts, contracted in or out, to give every person two pensions. After three years of operation, that is becoming quite large for some people. It will take them straight into the tax net. It takes them out of the administrative tolerance of the Inland Revenue.
      My purpose is to try to achieve some equality for women because they are not treated fairly under the tax system. Many women over the age of 60, who are already retired but have not reached the age of 65, never paid into the new system which began in 1978. They paid into the Boyd-Carpenter graduated pension scheme, which most people in this country still remember. They occasionally receive a little chitty from the national insurance computer to tell them how many units they have. They all know that the scheme was a rip-off. That is why it was abandoned after several years. The amount of pension from the contributions will always be payable to those who paid the contributions.
      The average payments are not large. For a woman aged 60 to 64, in this year the average payment will be 57p a week. Because the Government froze the single person's tax allowance, which is also the tax allowance for widows, the minute they receive more than 33p a week of graduated pension in addition to their ordinary State retirement pension they are liable for a tax deduction of 57p a week. It is not possible to explain such matters in detail without an overhead projector or a blackboard.
      If a woman receives the basic State retirement pension—I refer to women aged 60 to 65—and an additional 32p a week of graduated pension, the tax liability is zero. If she is getting the basic retirement pension and graduated pension of 33p a week or more, the tax liability is 57p a week. It is clear that it pays her not to collect the graduated pension. She is receiving the graduated pension only because she has paid contributions. If she were receiving only 33p or some other small amount, it would pay her to say "Please do not pay me my graduated pension, because I am being crippled by tax." Some of these women are in receipt of supplementary benefit. However, they are paying income tax.
      When will the women aged 60 to 65 years to whom I have referred start to pay the increased tax liability? I acknowledge that there is a problem because many widows do not wish to complete tax forms. I think that everyone

      1201
      finds that there are problems when completing a tax form. When it is being done for the first time in the circumstances of the women whom we are discussing, it is an extremely difficult task. It is not generally known outside the House that since the Government took office they have taken two major steps to change the rules about collecting tax on State benefits when the benefits are computable in the annual return for tax.
      I ask the Financial Secretary again to tell us when the extra tax will be liable. I asked the Financial Secretary on 14 April:
      "if retirement pensions liable to income tax due to pension increases in November"—
      that is when the new arrangement will come into effect. It is necessary to take so many weeks of the pension that pensioners receive from April to November and to take account of the pension increase in November to the next April. The tax year is not the same as the pension year. One has to be careful to calculate so many weeks of one pension and so many weeks of another pension to compare like with like.
      My question continued:
      "are required to pay the increased income tax before the pension increase is actually received"—
      namely, from the beginning of the tax year, which begins in April—
      "or whether the annual tax due is collected between the date of the increase"—
      that is, in the pension in November—
      "and the end of the tax year."
      The end of the tax year is April. There is a problem. A year's tax liability is triggered off when the pension is increased in the November. There is only five months in which to collect a year's tax liability.
      The right hon. Gentleman replied:
      "Pensioners who have another source of income subject to deduction of tax under PAYE are given an amended code number at the time of the pension increase which has the effect of collecting the additional tax between the date of the increase and the end of the tax year. Those whose tax is collected directly by instalments pay the tax on a pension increase in those instalments which remain to be paid." — [Official Report, 14 April 1981; Vol. 3, c. 106]
      The second part does not matter. The effect of the right hon. Gentleman's answer is that there will be an amended tax code near November, which will be shortly before the date of the increase.
      We know that there has been a slight hiccup in the administration of the Inland Revenue due to the Civil Service dispute. That is one of the reasons why hon. Members have not been chased up. At this stage in the past I have received reminders, which have not come from the Cardiff tax office. I know that that has happened to others.
      Shortly before November, many women over the age of 60 years who have not been paying tax to date merely because their income has not been above the Inland Revenue's assessing tolerance, or above the personal allowance, will find themselves paying tax for the first time. That is because the Government have frozen the personal allowances and increased the pension in line with inflation. These women may be in receipt of an average graduated pension.
      5.15 pm
      The women who will be asked to pay tax for the first time will be requested to complete a tax form. They may be 61 or 62 years of age and they may have only recently retired. Those in that position will be receiving the ordinary State retirement pension. They may be married
      1202
      or single. If they are married, they will be receiving the pension in their own right, having paid the contributions. We have not been inundated with mail from our constituents because the tax forms will be not amended forms but initiations in the tax system. The forms have not been sent out. It is not close enough to November for the Inland Revenue to have started doing so. Bearing in mind the dispute that is taking place, it is not possible to say when the system will come into operation.
      Mr. Durant: I am not defending the system when I say that the situation that the hon. Gentleman has outlined is not unique. It has happened before under other Governments. Widows have been included on previous occasions. That has happened when there have been increases in the widow's pension. That which the hon. Gentleman has described is nothing new. It is something that happens regularly and we must try to prevent it from happening in future.
      Mr. Rooker: The hon. Gentleman is both right and wrong. It is correct to say that what I have described occurs annually for pensioners and newly bereaved widows. However, this year, for the first time, a woman aged between 60 and 65 years, whose only source of income is the State retirement pension and average graduate pension, will be called upon to pay income tax. That has never happened before.
      In the past the single person's tax allowance has not been frozen. In the late 1960s, when it was frozen on one occasion, inflation was only 3 or 4 per cent. and the pension was never increased by a large amount. Therefore, women in the position of those whom we are discussing were never taken into the tax net. I stand to be corrected by the Treasury, but this year about 200,000 women aged between 60 and 65 will be called upon to pay tax for the first time. I shall accept any figure that the Treasury cares to submit. So far it has not been able to provide a figure.
      The system is computerised and the Treasury should know. It is aware of the age distribution of women and the distribution of graduated pension payments. This information appears annually in "Social Security Statistics".
      The Inland Revenue must know about the tax liability for these women. It should be able to provide a figure. These women have not been paying tax since they became 60. Their only source of income is that which. I have described. That income was not taxable because it fell below the allowance, or below the assessing tolerance on top of the allowance.
      That will not be the position from the beginning of this tax year. That is my argument. Something will happen this year that has not happened before. Am I correct in assuming that the system will be triggered off and that these women will receive tax forms through their Letter boxes in the course of being asked to pay tax for the first time?
      On 26 July 1979 the hon. Member for Welwyn and Hatfield (Mr. Murphy) asked the Chancellor of die Exchequer whether he was
      "aware of the difficulties which pensioners have in understanding their tax affairs; and whether he has any proposals for simplification."
      That was a straightforward question but it is not the type of question that is to be asked out of the blue. It is clear that the hon. Gentleman had been tipped a nod and a wink. The Minister of State replied "Yes." The answer added

      1203
      that he thought that one of the main problems was that the tax liability was dependent upon pensioners notifying details of their pensions to the Inland Revenue. He added that with his right hon. Friend the Secretary of State for Social Services he had
      "agreed to introduce an arrangement which will reduce the need for pensioners to make returns of their income to the Revenue, and will result in significant administrative savings."
      The Minister added that with effect from next year—at the time of the answer that was 1980—
      "the DHSS will notify the Inland Revenue of the new rates of pension payable so that the Revenue can proceed with its annual pension recording without having to ask for this information from pensioners themselves".— [Official Report, 26 July 1979; Vol. 971, c. 423–24.]
      That would save £1 million, even before Sir Derek Rayner got to work.
      I am not sure what the connection is between that arrangement and the question which was asked by the hon. Member for Bedford (Mr. Skeet) on 18 January 1980. He asked the Chancellor of the Exchequer
      "whether he has any plan to deal with the difficulties which arise from the present arrangements for taxing national insurance pensions; and if he will make a statement."
      The reply in Hansard takes up about eight column inches, so clearly it was not thought up on the spur of the moment. The Minister of State said:
      "My right hon. Friend the Secretary of State for Social Services and I have therefore decided to introduce with effect from April 1982 a system under which, in appropriate cases, tax may be deducted through PAYE from national insurance pensions."
      Therefore, in the pension book which pensioners receive to take to the post office every once in a while—usually weekly—from the financial year 1982, in appropriate cases, tax may be deducted. That is what the Government are planning from next year. The Minister of State went on to say:
      "The net staff saving once the scheme is established will be about 800, representing a net administrative saving of £5·2 million per annum."—[Official Report, 18 January 1980; Vol. 976, c. 892.]
      The Minister of State also said that there would be some talks about the matter.
      I followed that up on 21 January this year and asked whether the talks which had been referred to the previous year had been concluded. I was told by the Minister for Social Security:
      "The Inland Revenue wrote to a number of representative organisations shortly after the proposals were announced, and it will be contacting them again later this year."—[Official Report, 21 January 1981; Vol. 997, c. 181.]
      Has that been done yet? If so, with what result? As it is now July, can the Financial Secretary confirm that from the tax year starting in April 1982 the process which the Ministers' answers outline will begin?
      Hon. Members can see what has happened. There is no fear of tax any more for the bereaved widow or the woman of 60 to 65 who is caught in the tax net. Everything will be done for her. She will not have to worry about tax returns and form filling. The DHSS will tell the Inland Revenue and the Inland Revenue will then tell the DHSS what the tax is. The DHSS will print it on the pension book, and the woman concerned will be able to go down to the post office and collect her pension like any other pensioner. She will not have to fill in forms or bother herself reading the explanatory memorandum or going to Members of Parliament or to the citizens advice bureau.
      1204
      It is as if she did not even know about it. Tax matters have been taken well out of her hands. The Government have saved much money on administrative chores—800 jobs in one Department—and have saved the widow the job of filling in a tax return, as everything is done by computer.
      One can see the Treasury's argument. It wishes to bring more people into the tax net and widen the tax base. That makes it easier to raise the revenue with small change in the rates, because there will be more people in the tax net. We know now that there were 1¼ million more this year. The Treasury could pull the same trick next year, because the easiest way to raise revenue is to freeze or not to raise allowances in line with inflation. In amendment No. 24 we seek at least to protect women of between 60 and 65 who we believe are discriminated against.
      Mr. Durant: I am sorry to interrupt the hon. Gentleman again, but I am following his argument closely. There is an interesting argument on both sides of the House. On the Conservative Benches we are tending to economise on administration, but from the Labour Benches the hon. Gentleman is asking for a tax return and for all the evidence to be shown. To be honest, are we not talking about small sums of money? Would it not be better to look at some sort of marginal benefit to those on low incomes who should be outside the tax net? It could be done by a tax return or by altering the benefits—which is the Government's view. I put that to the hon. Gentleman as part of the argument.
      Mr. Rooker: I do not wish to fall out with the hon. Gentleman, particularly as he has already more or less said that he will vote with the Opposition. Earlier he said that we should not be political in the House of Commons. I am being party political, and I am not ashamed to say so.
      The hon. Gentleman had a golden opportunity in Committee—for all I know, he may have voted with us, although I suspect that he did not—to put up the allowance for women of 60 to 64 and not to give them the full amount of the age allowance. However, we worked out an amendment to raise the allowance, so that it would cost the Government the minimum amount in lost resources. It would have been an extra new allowance to take those women over the assessing tolerance. It would have caught almost 95 per cent. of women affected. It would have lifted the allowance for a single person from £1,375 per annum to £1,425. The sum of £50 added to the allowance—which is £150 in taxable income, plus the assessing tolerance, which is another £100 in taxable income—would have solved the problem. We had a debate and a vote on it and the Government turned it down. They could have solved the problem cheaply. I completely accept that it would have solved the problem only for women aged 64 and not the problem which the Government have created for themselves for widows aged between 50 and 60.
      Of course, the sums of money are small to Members of Parliament on £300 a week. That is not a cheap debating point. They are relatively small to Fleet Street editors and journalists. However, they are not small for the recipients or someone who, for getting the extra 30p a week on a graduated pension, will lose up to 57p a week, which is the equivalent of an annual television licence or a quarter's electricity or gas bill. They are not insignificant amounts to the people we are talking about. As I have said, there was an amendment that would have got the Government out of this problem in the cheapest way.
      Mr. Durant: I do not disagree with the hon. Gentleman, but I am saying that those sums are small, and, therefore, the Treasury should not be so concerned about them. I am taking the hon. Gentleman's view. I am arguing that they are small amounts, so need we collect them?
      Mr. Rooker: That brings us to the use of the assessing tolerance. The Inland Revenue has no statutory authority for the £30 of assessing tolerance off £100 of taxable income. It is not in statute; it is part of extra-statutory concessions—the little book which has the list of the giveaway tax reliefs that affect the well-off. However, perhaps we should put it in statute and bring about a change every year.
      Mr. Richard Wainwright: The hon. Gentleman's careful researches are greatly helping the House. From his researches, can he say how the following case will be dealt with under the new anaesthetic arrangement of automatically deducting the tax on the pension books? Let us suppose that such a pensioner as he has described takes into her home a dependent relative and becomes entitled to the dependent relative allowance. What will happen to the automatic deduction of tax from that pension?
      5.30 pm
      Mr. Rooker: I do not know the answer, but I should be pleased if a Minister from the Treasury or the Department of Health and Social Security could tell us. We shall have to pursue the matter before the beginning of the next financial year. We have not yet passed the operating orders for the social security benefits or pension increases. I presume that we shall do that next week or the week after. They will take effect in November and carry the beneficiaries half-way through the next financial year. I shall be speaking from the Opposition Front Bench, and we shall raise the matter and make time available to discuss it.
      The Government did not necessarily plan some of the things that I and my hon. Friends dealt with during previous stages of the Bill. I may get into trouble for this, but I genuinely believe that when they planned the Budget they did not foresee the consequences of freezing tax allowances for the women above the age of 60. If they did, they should have said so. It has never been admitted in correspondence or in parliamentary exchanges that that was part of Tory planning.
      On page 27 the Tory manifesto complained:
      "Income tax starts at such a low level that many poor people are being taxed to pay for their own benefits."
      If the women we are discussing are not poor, I do not know who is. They are being taxed to pay for their benefits under the Tories but they were not under a Labour Government, so what did the Tory manifesto commitment mean? I, therefore, give the Government the benefit of the doubt and assume that they did not understand the interaction of the tax and social security systems for those women who, when they reach retirement age, do not get a retirement tax allowance—most of us think of it as a retirement tax allowance and not an age allowance. The Minister shakes his head. If he wishes to say that it was all part of Tory planning, let us have it on the record. It is not what the Prime Minister said before the election.
      The Financial Secretary to the Treasury (Mr. Nigel Lawson): I was shaking my head at the hon. Gentleman's
      1206
      assertion that it was a retirement tax allowance and not an age allowance. That is incorrect. We are talking about an age allowance.
      Mr. Rooker: I shall come to the argument about whether it is a retirement tax allowance or an age allowance.
      I see the hon. Member for Braintree (Mr. Newton) in the Chamber. It is unfortunate that he is a Whip. In case he intends to leave the Chamber, I tell him that I shall refer to him shortly.
      If before the election, on 17 April 1979 at Gravesend, the Prime Minister was not referring to the people we are discussing, I do not know to whom she was referring. The press release begins:
      "My first Ministerial job in government was at the Ministry of Pensions and National Insurance and I want to set out some of the very good things Conservatives have done for pensioners and those on other benefits."
      She listed a few measures, and I do not knock them. They included assistance to the disabled. The statement concludes:
      "Those pensioners who have another little pension of their own or some savings and who therefore pay tax will benefit from our Income Tax reductions."
      Mr. D. N. Campbell-Savours: My hon. Friend needs the special voice.
      Mr. Rooker: Yes—the haircut, the lot.
      The speech was glossed up. It was widely reported in the press the following day. To pin it down, it was at Gordon school, Lower Higham Road, Gravesend.
      That pledge has clearly been broken in the Budget. The Government and the Prime Minister stand condemned. The right hon. Lady gave a pledge before the election that people with a small pension of their own would benefit from Tory tax reduction, but the reverse has happened.
      I turn briefly to the age and retirement allowance. On 26 March I wrote to the Prime Minister—I was not aware of the speech that I quoted at the time—about the problem of single or married women with a pension of their own. I said that I believed that the Government's action was unintentional—but I am beginning to think that I may have been wrong. I gave examples of the massive marginal tax rate that they would have to pay, and I gave four examples of how the Government could avoid them, some of which cost more than others.
      The right hon. Lady replied on 13 April:
      "As you will appreciate, the proposals which you make in your third paragraph to deal with this problem raise wider issues about the structure of personal income tax reliefs."
      In effect, she said, "I have, therefore, passed the buck to
      the Chancellor and his colleagues", although she did not quite put it like that. She said that she would ask them to consider the proposals. I heard part and read other parts of the Financial Secretary's speech on 5 May. It dealt almost entirely with widows. I accept that there is a problem there, but I am dealing with all women between the ages of 60 and 64 who have a State retirement pension paid for through their own contributions.
      I had heard nothing else by 10 May, so I asked the Prime Minister to find out what was going on and look into the matter herself. My letter was acknowledged promptly, and on 24 June I received a massive three-page reply from the Chancellor of the Exchequer stating:
      "The justification for age allowance has always been that the taxable capacity of people declines as they get older, because of the extra expenses they incur, and that an additional allowance is justified on this account."

      1207
      One may or may not agree with that assertion, but, in any case, why pick on the age of 65? There are more women than men, and there are more women pensioners than men, so more than half the population reaches retirement age at 60. Why not make it 60 for everyone, although that may rightly be seen as an unfair advantage for the majority of men who are still at work?
      I do not accept that it is an age allowance. I believe that it was a Labour Government who introduced the allowance not many years ago. I do not know whether they intended later to give women a different allowance.
      However, on 14 June 1977 we debated the matter at length in Standing Committee D. Mrs. Audrey Wise and I tabled certain amendments and voted for certain amendments of the hon. Member for Braintree, who did not get all the credit that he was entitled to. We put down an amendment which was the same as today's amendment No. 24. I warn my hon. Friends and Conservative Members, therefore, that if one is on to a good thing one should keep to it and not draw back. After Mrs. Wise and I had caused all that trouble and won those victories, we decided not to press to a Division the very point that we are now debating. We thought that we had achieved enough and caused enough problems for our own Government. We therefore decided to hold back on that amendment.
      Nevertheless, in a discourse with the hon. Member for Braintree, we were all agreed. The hon. Member for Braintree said:
      "I cannot say what would happen in those circumstances"—
      the circumstances that had described about the reduction in the retirement age for men and whether if that went down to 63, we would bring the age allowance down to 63—
      "but my view is that the age allowance should be reduced in step with the pension age. It is almost inconceivable that if we were to reduce the retirement age there would not be overwhelming pressure to reduce the threshold for the age allowance."
      I then said:
      "So it is a retirement allowance."
      The hon. Member for Braintree replied:
      "I am grateful to the hon. Gentleman for his implicit support. I, too, see it as a retirement allowance, and that is how the Committee should see it."—[Official Report, Standing Committee D, 14 June 1977; c. 534.]
      With all due respect to the Government, the hon. Member for Braintree has a far better record and knows far more about the social security system than the Financial Secretary, who has been wrapped up in tax policy for the past few years. The hon. Member for Braintree and I both regard this as a retirement allowance.
      I believe that extra expenses are placed upon women when they retire as compared with when they are at work. It is therefore indefensible to have this discrimination between men and women. I shall not go into the arguments about the retirement age for men, Mr. Deputy Speaker, as you would rightly rule me out of order. Nevertheless, this is clearly a retirement allowance. If the Financial Secretary says that it is an age allowance, I ask him to defend the age of 65.
      I draw the attention of the House to the ludicrous position which now obtains. I shall give the examples of two women. For obvious reasons, I shall not disclose the exact circumstances or the names and addresses.
      1208
      Mrs. R. of Sutton Coldfield is not a constituent of mine, but, like many others, she wrote to me after I had raised this matter. She has a basic rate retirement pension of £27·15 and a 91p graduated pension—so she is in real trouble. She also happens to have a pension of £5·28 per month which, as a widow, she receives from her late husband's former employer. She is 62 years of age. She pays income tax. She also receives £7·15 per week in supplementary benefit because, when her housing expenses are taken into account, her net income after tax is below what we in this country consider to be the poverty line below which no person should be required to live.
      5.45 pm
      Mr. Durant: I apologise to the hon. Gentleman. This must be about the fourth time that I have intervened. In fairness, it should be pointed out that this was not dealt with by the Labour Government. I understand the hon. Gentleman's argument and I have sympathy with it. Nevertheless, the Labour Government did not deal with it.
      Mr. Rooker: The Labour Government went a considerable way towards dealing with the problem by accepting the amendments in Committee. They therefore improved matters. The Conservative Government have made the problem far worse than it has ever been before, for the reasons that I have given.
      Mr. Robin F. Cook: On 11 May this year, when we were debating the taxation of unemployment benefit and supplementary benefit to strikers, the Chief Secretary said:
      "It would not make sense for a person to be paid supplementary benefit or unemployment benefit and to have tax deducted from that benefit."—[Official Report, 11 May 1981; Vol. 4, c. 563.]
      Precisely that situation, which the Chief Secretary himself said would not make sense, will occur for tens of thousands of women between the ages of 60 and 65 as a result of the Budget.
      Mr. Rooker: My hon. Friend is perfectly correct.
      I take the further example of Miss D of Harlow in Essex. The papers have been forwarded to me by the Child Poverty Action Group, which has given permission for me to raise the matter.
      Miss D also gave permission for her case to be used as an example. She went to the welfare rights service to see whether she was better off on supplementary benefit or with a rebate. As hon. Members know, one cannot have both. She receives the basic retirement pension of £27·15. Her rent is £10 per week, her rates are £4 a week and there is a further addition for central heating. She is not well off, but she has limited savings of £314 in a building society. Miss D has tax liabilities of £210 for 1981–82—£4 per week. I have before me two sets of calculations to show whether she is better off on supplementary benefit or on a rebate. It is a good job that she went to that office, as she had previously had a rebate. The net effect of the two calculations, however, is as follows:
      "So your income after paying out for rent/rates is"
      under the supplementary benefit heading £28·55 and under the rebate heading £27·34.
      "This means you are 'better off' on supplementary benefit by £1·21 per week."
      She should therefore claim supplementary benefit. She is paying £4·06 per week in income tax, yet the calculation of her outgoings under the complexities of the social

      1209
      security system, with housing expenses, needs, and so on, to which any other citizen is entitled, shows that she is better off on supplementary benefit. But the tax liability is not wiped out because she has gone on to supplementary benefit.
      The thrust of the Government's argument, therefore, cannot be that they have made things better for the women to whom amendment No. 24 relates. There was one way for the Government to escape the problem, which they have now made worse for themselves. I concede immediately that the amendment is expensive, but it is chickenfeed compared with the Budget judgment of several thousand million pounds a year. However, the sum involved is not insignificant. It must be a few hundred million pounds. A way out was open to the Government in Committee, when they could have accepted the Opposition amendment to raise the single person's allowance by £50 for these women—not for the other 20 million people who are at work. They could have got themselves oat of the problem in that way.
      The facts that I have given about what has been agreed among the Treasury, the Inland Revenue and the DHSS are not yet apparent to those on the receiving end of the problem. The hundreds who will be affected in each of our constituencies do not yet know about this. Towards the end of October, after party conference time and towards the end of the recess, however, when, according to the Minister's answer that I have mentioned, the tax returns and amended code numbers will start popping through the letter boxes—subject to the Civil Service dispute being over, I assume that this will happen—I believe that all hell will be let loose. Hon. Members will then be called to account. Constituents will ask "What did you do? Did you vote for this" Did you know about it? Did you make a speech? Did you ask a question? Did you write to a Minister? Is it too late to do anything about it?"
      I hope that constituents throughout the country will ensure that when they ask those questions they are given the Division list for today, 15 July. Those who do not get it should write to my hon. Friends, who will ensure that they receive it.
      Mr. Andrew F. Bennett: I came into the Chamber primarily to listen, in the hope that I should be better informed. As a result of the speech made by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker), I certainly am. However, unfortunately he did not quite give me the answers that I wanted. I am concerned to give my constituents the advice that my hon. Friend also seeks. Many of my constituents still remember the Tory Party's promise to reduce the tax burden and to simplify government. Clearly, the Government have done neither. The Conservative Party has made government far more complicated, and the Government can now impose themselves on a group of people who did not previously have to put up with the problems of the taxation system.
      I hope that I shall receive answers to the questions that I shall ask. What happens to those whose graduated pension—the old Boyd-Carpenter scheme—is in a muddle? Indeed, many of my constituents find that their graduated pensions are in a muddle. One of my constituents recently received a letter that said that those involved were sorry for not having paid him the money that he was entitled to for the past three years. He was delighted to receive the back payments.
      1210
      Let us suppose that that case had involved a woman who received back payments. If those back payments were less than the crucial figure of 33p and were received in one year, would they push that person over the tax threshold or would they be spread over the previous years? That is important for the individual. concerned. If a woman retires at 64 and receives her graduated pension straight away, she will cross the tax threshold. However, if she leaves everything to bureaucracy and her pension comes through slowly so that she does not receive it until she has passed the age of 65, or the tax year in which she is 65—at which point she becomes eligible for the age allowance—is she all right? Alternatively, is it deemed that she received the money in the previous year despite the fact that she did not? Would she then be taxed on it? If people just exceed the 33p they will be considerably worse off. What happens if people decide not to collect the money? Are they still taxed on it because it is there to be collected, or are they entitled not to be taxed on the money because it has not been claimed? What happens if the money is clained in two or three years' time?
      My hon. Friend the Member for Perry Barr mentioned the way in which the Government are excluding the individual and allowing the Treasury and pension computers to talk to each other without involving the individual. Do constituents have a choice about whether to collect their graduated pensions? Is it assumed that the graduated pension must be collected? There are many questions that we should like answers to so that we can give our constituents the right advice. Should they collect their graduated pensions even if they become worse off as a result? Can they defer collecting the money until they are over the age of 65 and then collect it as a lump sum? What happens if, through no fault of their own, graduated pension is not paid at the right time and is eventually paid in a larger amount that puts them over the tax threshold?
      I hope that we shall receive answers to those questions. Indeed, it would save the Treasury much time in the long term if it issued hon. Members with a booklet giving them guidance so that they can give the right information to those in this age group. If the Treasury does not issue such a booklet, some Treasury Ministers will have to answer many letters in the next month or two and will have to sort out a lot of anomalies. The answer is for the Government to accept the amendments, to remove the anomaly and to fulfil their election pledge to reduce taxation and bureaucracy.
      6 pm
      Mr. Lawson: As tends to happen year after year when we discuss Finance Bills, we have had a long debate on the taxation of widows. That is understandable. From our experience of our constituencies we all know the concern that exists among widows about the way in which the tax system affects them.
      As the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) said, in many cases the grievance is imagined. When he was a Treasury Minister I heard him say that many times. Nevertheless the grievance is deeply felt. I shall do my best to answer most of the points that have been made. Both the amendments stand in the name of the official Opposition. Amendment No. 21 seeks to increase the widows' bereavement allowance by £30 and is not an expensive amendment in itself. As the hon. Member for Birmingham, Perry Barr (Mr. Rooker) conceded, amendment No. 24 would be very expensive. It seeks to

      1211
      give the full age allowance to women aged between 60 and 64 who have retired and who are in receipt of category A retirement pensions.
      I turn to the subject of widows' bereavement allowance. I am grateful to my hon. Friend the Member for Reading, North (Mr. Durant) for his remarks on the subject. I pay tribute to him for the consistent work that he has done for widows through the all-party widows' group, and in other ways. He pointed out that for years the Labour Government had been pressed to introduce something like the widows' bereavement allowance. All of us who deal with the problems of widows understand that they have problems that will last for years. However, the problems, psychological hardships and difficulties of coping are at their greatest in the year of bereavement. The Labour Government were continually pressed, but did nothing. We did something and introduced the widows' bereavement allowance in the last Budget. Although it is a modest step, it is an important one for widows.
      My hon. Friend made another point that we should bear in mind. A balance needs to be struck between the undoubted case that widows have and the other hard cases that involve people in different circumstances who nevertheless have financial difficulties and problems with the taxation system. We must always keep the matter in perspective. It must be borne in mind not only that this year we were unfortunately obliged to decide not to increase any of the personal tax allowances or thresholds but that the widows' bereavement allowance is not specified as a particular sum in the legislation. In effect, it is tied to the other allowances and is the difference between the single allowance and the married allowance.
      In the year of bereavement, the widow continues to receive the full married allowance. If she has a child, she also receives the one-parent family allowance, the additional personal allowance. It follows that if, regrettably, the single and married allowances cannot be raised this year, the difference between them will remain the same and the widows' bereavement allowance will not increase. The right hon. Member for Ashton-under-Lyne said that somehow that was harder on the widow receiving the widows' bereavement allowance, even though that allowance did not exist when he was a Minister. He said that it was harder because it was for one year only, whereas with other allowances it might be possible to catch up in subsequent years. If that is an argument for anything, it must be an argument for extending the widows' bereavement allowance for a further year beyond the year of bereavement. That does not seem to be an argument for the increase that he suggested.
      Mr. Robert Sheldon: I am rather surprised by that comment of the right hon. Gentleman because if it is his intention to introduce an extra year for the bereavement allowance, that is another matter. If that is not his intention, the failure to give the widow a bereavement allowance in the year of her bereavement means that that has gone for ever, because she has it only for that year.
      Mr. Lawson: The right hon. Gentleman is getting carried away when he speaks of the failure to give the widow a bereavement allowance. There is no failure to give her a bereavement allowance. She receives it in full, whereas there was no bereavement allowance previously. However, she will not receive an increase.
      1212
      The hon. Member for Gateshead, West (Mr. Horam) exaggerated the difficulties by understating the effect that a bereavement allowance would have. He spoke of the difficulties for a widow on a pension receiving a tax bill in the year of bereavement. There are difficulties in the cases that the hon. Member for Perry Barr mentioned of people being brought into the tax net—single women and widows between the ages of 60 and 64—as a result of the pension increases this year, while the personal allowance is not being increased. For the year of bereavement, that does not apply because of the existence of the widow's bereavement allowance. That is the one case where it does not apply and where the relatively new allowance introduced last year is of great benefit.
      The right hon. Member for Ashton-under-Lyne said that the right solution might have been to increase the assessing tolerances. That would have been the wrong solution. The assessing tolerances are not meant to be an extra threshold. They are an administrative convenience. There is a high administrative cost in collecting small amounts of tax. The assessing tolerances should be at the right level for administrative purposes. If we wish to increase and can afford to increase the thresholds, we shall do that, but not by the back-door method of increasing the tolerances.
      Another reason that the right hon. Gentleman gave for increasing the tolerances was to do with the way they operate. It is true that if the taxable income is £100 the tax liability would be £30 or less and no tax is raised because it is below the level of tolerance. If, however, it is slightly above that, the full taxable amount is raised. However, raising the tolerances would not alter that effect but it would happen at a higher level, at £120 or £130. Up to that point, no tax would be levied, but above it the full amount of tax liable is raised. I do not think that there is a case for either of the arguments that the right hon. Gentleman put for an increase in the tolerances.
      Mr. Durant: I accept my right hon. Friend's general premise but when a small income is concerned the tolerance level is important. I do not think he should say that it does not matter in the sense that if it is moved to that point the full amount comes into operation. If the figure is small, what matters to those concerned is that it will assist them if the tolerance level is raised.
      Mr. Lawson: Nevertheless, there will always be cases where small amounts of taxation are levied. My hon. Friend must accept that. If the tolerance levels are raised, the small amounts will be that bit larger. I accept that, but small amounts of tax must still be levied. In some cases, it is reasonable to strike the assessing tolerances at a level where the administrative costs and the trouble of raising the money are greater than it is worth. The hon. Member for Perry Barr suggested that the Inland Revenue had no statutory authority for the assessing tolerances. [Interruption.] If he did not make that point, I shall not bother to reply to it.
      Mr. Rooker: I am not saying that what is being done is illegal. I said that I did not think that it was in an Act, but it was in what is presumably delegated authority to the Inland Revenue, which I know concerns extra-statutory concessions. There are about 40 of those and I understand that this is one of them.
      Mr. Lawson: The hon. Gentleman is not correct on this occasion. He is usually accurate, though not always.

      1213
      In some of his statements in other spheres he has not been so accurate. On this occasion, he has conducted his researches diligently and for a long time. Assessing tolerances are administrative arrangements that the Revenue makes under its powers. That has gone on for years under many Governments, as the hon. Gentleman well knows. The powers are contained in section 1 of the Taxes Management Act 1970 and its predecessors for the care and management of income tax. There is the power under that Act, so that it is not an extra-statutory concession. However, I am not saying that there are not a number of extra-statutory concessions in existence. That situation has existed for a long time.
      Mr. Horam: Is the amount of the tolerance a matter for the discretion of the Revenue or is it in the Act? Has it been indexed?
      Mr. Lawson: The amount is not in the Act.
      The hon. Member for Perry Barr asked a number of searching and penetrating questions. First, he asked how many women were affected in the way that he outlined. Our best guess—we do not have the precise figure—is that there are probably about 50,000. He also asked when the system would come into effect. As he pointed out, I have already answered that.
      Mr. Rooker: Is the right hon. Gentleman confirming what he said in that written answer—that is, that it is only when the pension increases take effect in November, halfway through the tax year, that the amended codes will be sent out from the Revenue?
      Mr. Lawson: I am sure that the hon. Gentleman will not be surprised to know that my written answers are correct. The fact is that the first request for payment will probably be in November, but the tax is paid in quarterly instalments in arrears. Thus it follows that part of the 1981–82 tax will not be collected until 1982–83.
      The hon. Gentleman asked me about the new system of direct deduction of PAYE from national insurance pensions. He asked when that would come into effect. Would it be from April 1982 as we had hoped? I am afraid the answer to that is that I cannot say at present. We do not know when it will come in. April was our original hope.
      Mr. Richard Wainwright: Further to the point about automatic deduction at source of tax from pensions, will the right hon. Gentleman answer the question that I put to the hon. Member for Birmingham, Perry Barr (Mr. Rooker) about what happens if a pensioner becomes entitled to another income tax allowance in the course of one tax year?
      Mr. Lawson: I am not sure whether the hon. Member for Colne Valley (Mr. Wainwright) is referring to the dependent relative allowance and asking how that will be dealt with. A person's total allowances for the year will be estimated in the usual way, and the PAYE coding will also be worked out in the usual way, whatever allowances a person may have.
      The hon. Member for Perry Barr got terribly worked up—
      Mr. Robert Sheldon: The House would be grateful if the Minister would give a proper reply to the hon. Member for Colne Valley (Mr. Wainwright). What would happen
      1214
      if a person's circumstances changed during the course of the year? How would that be recorded on the pension book?
      Mr. Lawson: I shall be happy to write to the right hon. Member about that. [Interruption.] I am not sure whether the right hon. Member is opposing the change, but it is a good question and I shall be happy to write to him about it.
      Sir William Clark: If the allowances of any taxpayer change during the course of the fiscal year, on application to the inspector of taxes the code number is automatically changed.
      Mr. Lawson: The reason why I said that I would write to the right hon. Gentleman is that it is a new system that has not yet come into effect:. It is primarily done through the DHSS, as the hon. Member for Perry Barr explicitly stated. I shall be happy to do my best to answer the question. I shall, as I said, write to the right hon. Gentleman, and also, of course, to the hon. Member for Colne Valley, who raised the question. I shall, indeed, make sure that the letters are despatched on the same day, so that no distinction will be made between the Liberal Party and the Labour Party. Far be it for me to wish to make such invidious distinctions.
      The hon. Member for Perry Barr got terribly worked up in giving the examples of people who were liable to tax on various parts of their income and were also drawing supplementary benefit. This is one of the complexities of our tax and social security system, but there is nothing new about it, as the hon. Gentleman surely knows. It has been happening for years under Governments of both major parties. There have always been individuals who were both liable to tax and eligible for supplementary benefit.
      Perhaps I might turn briefly—before I forget it entirely by concentrating too much on the points made by the hon. Member for Perry Barr—to the question asked by the hon. Member for Stockport, North (Mr. Bennett). He asked whether a person could decide not to draw his Boyd—Carpenter graduated pension. The answer is that he can do so.
      That leads to the more important question raised by the hon. Member for Perry Ban. The position at the moment is that no one who has simply the basic State retirement pension is liable to tax. The assessing tolerance takes care of that. The hon. Gentleman's point, however, is that there are a number of people who have the Boyd-Carpenter addition as well, and that some of them will be drawn into the tax net. As I said in Committee, they are really no different from any other people with extra income, particularly where there is an occupational pension. The new second State pension is, in a sense, an alternative to an occupational pension, and it draws people into the tax net. Over a period that will get larger and larger. The suggestion that it should not be liable to tax is, therefore, absurd and is wholly contrary to the thinking of those who were responsible for the scheme. There is no reason in equity why a substantial second State pension for the contracted-in employee should not be caught for tax whereas an occupation pension is caught for tax.
      6.15 pm
      Mr. Rooker: I do not think, with respect, that I sought to base my argument on the new pension scheme, because I accept that that is, in effect, an occupational scheme

      1215
      organised by the State to provide people with a proper pension, to avoid their having to go on to supplementary benefit or means-tested benefit on retirement. No one ever construed the graduated pension scheme started by Boyd-Carpenter as an occupational pension scheme, and no one can say that the average payment that all women will get this year—57p a week—is a substantial pension.
      The graduated pension is part and parcel of the retirement system and is not separate from it, like the new system that was started in 1978. This is the first year that it has ever been caught in the tax net. I accept that the new system has to be treated wholly as an occupational pension. But that is no excuse for having the tax threshold so low that people who are on means-tested benefit are paying tax at the same time.
      Mr. Lawson: I note what the hon. Gentleman says about the second State pension. It is the Government's contention that the Boyd-Carpenter addition is analogous to that and should be treated in precisely the same way. The hon. Gentleman is absolutely right in saying that this is the first time that that addition has been liable to tax, in a small number of cases. The root of the problem is .a state of affairs in which we were unable—without allowing Government borrowing to become wholly excessive, with grave consequences for the economy—to increase the personal allowances. That is where the difficulty arises.
      Hon. Members in all parts of the House should bear that in mind when they are calling for increases in public expenditure, because increases in public expenditure have to be paid for. There is no such thing as a free lunch. It is the cost of those increases in public expenditure that we are debating today.
      Mr. Deputy Speaker: It might help the House if at this point I were to give a ruling on the important matter raised by the hon. Member for Berwick-upon-Tweed (Mr. Beith) relating to the application of the rules for notice of oral questions. As 29 July will be a public holiday and the House may not sit on that day, and as a genuine misunderstanding has arisen over the application of the rules, Mr. Speaker has decided that the random selection process for questions for Thursday 30 July will not take place until tomorrow at 4 pm.
      Mr. Beith: I thank you, Mr. Deputy Speaker, and Mr. Speaker, for the trouble that you have taken in giving the ruling and for the arrangement that you have made. Perhaps I may express the hope that the Leader of the House will put us all out of our misery tomorrow by stating clearly that the House will not sit on that day.
      Mr. Robert Sheldon: I am sure that we all are grateful to you for your intervention, Mr. Deputy Speaker.
      I should like to make one or two points in reply to the comments of the Financial Secretary. He failed to answer the major question that concerns those women—single, married or widowed—between the ages of 60 to 64, who, as a result of this legislation, will lose their tolerance of income tax, which can amount to about £30, just because they get a few coppers in the way of State-related pension. For that reason they will lose substantial sums of money. It could have been prevented either by revalorising—the method that we prefer—or by a greater application of the
      1216
      tolerance levels. The right hon. Gentleman sought to avoid either of those two possible escape routes, and because of that we shall divide on amendment No. 24.
      Amendment No. 21 deals with the widows' bereavement allowance. We know full well that the allowance was brought in last year, but we also know that those widows who become widowed in this current year will fail to benefit from any uprating, which they had regarded as their due. The right hon. Gentleman's response was wholly inadequate. In fact, he gave no answer except to say that it was related to the personal allowance. Of course it is, but he could have accepted the amendment, which seeks to make a special exception for widows who are bereaved this year. The others can all catch up on the allowances that are forgone this year and on the failure to increase them. The one category of people who cannot so gain is the widows who are bereaved this year.
      The right hon. Gentleman accepts that the costs entailed in the amendment are very small, but he is still unable to accept it. We shall therefore divide the House on both issues.
      Question put,,That the amendment be made:—
      The House divided: Ayes 209, Noes 275.

      Division No. 272]

      [6.20 pm

      AYES

      Abse, Leo

      Dixon, Donald

      Adams, Allen

      Dobson, Frank

      Alton, David

      Dormand, Jack

      Anderson, Donald

      Douglas-Mann, Bruce

      Archer, Rt Hon Peter

      Dubs, Alfred

      Ashley, Rt Hon Jack

      Duffy, A. E. P.

      Ashton, Joe

      Dunn, James A.

      Atkinson, N. (H'gey,)

      Dunwoody, Hon Mrs G.

      Barnett, Guy (Greenwich)

      Durant, Tony

      Beith, A. J.

      Eadie, Alex

      Bennett, Andrew (St'kp't N)

      Eastham, Ken

      Bidwell, Sydney

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

      Booth, Rt Hon Albert

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

      Boothroyd, Miss Betty

      English, Michael

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

      Ennals, Rt Hon David

      Bray, Dr Jeremy

      Evans, loan (Aberdare)

      Brown, Hugh D. (Provan)

      Faulds, Andrew

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

      Field, Frank

      Callaghan, Rt Hon J.

      Fitch, Alan

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

      Fletcher, Ted (Darlington)

      Campbell, Ian

      Ford, Ben

      Campbell-Savours, Dale

      Forrester, John

      Canavan, Dennis

      Foster, Derek

      Cant, R. B.

      Foulkes, George

      Carter-Jones, Lewis

      Garrett, John (Norwich S)

      Clark, Dr David (S Shields)

      George, Bruce

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

      Ginsburg, David

      Cohen, Stanley

      Golding, John

      Coleman, Donald

      Graham, Ted

      Concannon, Rt Hon J. D.

      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)

      Hardy, Peter

      Craigen, J. M.

      Harrison, Rt Hon Walter

      Crowther, J. S.

      Hart, Rt Hon Dame Judith

      Cryer, Bob

      Hattersley, Rt Hon Roy

      Cunningham, G. (Islington S)

      Heffer, Eric S.

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

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

      Dalyell, Tam

      Home Robertson, John

      Davies, Rt Hon Denzil (L'lli)

      Homewood, William

      Davies, Ifor (Gower)

      Hooley, Frank

      Davis, Clinton (Hackney C)

      Horam, John

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

      Howell, Rt Hon D.

      Deakins, Eric

      Howells, Geraint

      Dean, Joseph (Leeds West)

      Huckfield, Les

      Dempsey, James

      Hughes, Robert (Aberdeen N)

      Dewar, Donald

      Janner, Hon Greville

      1217

      Jay, Rt Hon Douglas

      Robinson, G. (Coventry NW)

      John, Brynmor

      Rooker, J. W.

      Johnson, James (Hull West)

      Roper, John

      Johnson, Walter (Derby S)

      Ross, Stephen (Isle of Wight)

      Johnston, Russell (Inverness)

      Rowlands, Ted

      Jones, Rt Hon Alec (Rh'dda)

      Ryman, John

      Jones, Dan (Burnley)

      Sandelson, Neville

      Kaufman, Rt Hon Gerald

      Sever, John

      Kerr, Russell

      Sheldon, Rt Hon R.

      Kilroy-Silk, Robert

      Shore, Rt Hon Peter

      Lambie, David

      Short, Mrs Renée

      Leadbitter, Ted

      Silkin, Rt Hon J. (Deptford)

      Leighton, Ronald

      Silkin, Rt Hon S. C. (Dulwich)

      Lestor, Miss Joan

      Silverman, Julius

      Lewis, Arthur (N'ham NW)

      Skinner, Dennis

      Lewis, Ron (Carlisle)

      Smith, Rt Hon J. (N Lanark)

      Litherland, Robert

      Snape, Peter

      Lofthouse, Geoffrey

      Soley, Clive

      McDonald, Dr Oonagh

      Spearing, Nigel

      McElhone, Frank

      Spriggs, Leslie

      McKay, Allen (Penistone)

      Stallard, A. W.

      McKelvey, William

      Steel, Rt Hon David

      McMahon, Andrew

      Stewart, Rt Hon D. (W Isles)

      McNally, Thomas

      Stoddart, David

      McNamara, Kevin

      Summerskill, Hon Dr Shirley

      McTaggart, Robert

      Taylor, Mrs Ann (Bolton W)

      McWilliam, John

      Thomas, Dafydd (Merioneth)

      Magee, Bryan

      Thomas, Jeffrey (Abertillery)

      Marshall, D (G'gow S'ton)

      Thomas, Dr R. (Carmarthen)

      Marshall, Dr Edmund (Goole)

      Tilley, John

      Martin, M (G'gow S'burn)

      Tinn, James

      Mason, Rt Hon Roy

      Torney, Tom

      Maxton, John

      Urwin, Rt Hon Tom

      Meacher, Michael

      Varley, Rt Hon Eric G.

      Mellish, Rt Hon Robert

      Wainwright, E. (Dearne V)

      Millan, Rt Hon Bruce

      Wainwright, R. (Colne V)

      Miller, Dr M. S. (E Kilbride)

      Walker, Rt Hon H. (D'caster)

      Mitchell, Austin (Grimsby)

      Watkins, David

      Mitchell, R. C. (Soton Itchen)

      Weetch, Ken

      Morris, Rt Hon A. (W'shawe)

      Welsh, Michael

      Morris, Rt Hon C. (O'shaw)

      White, Frank R.

      Morris, Rt Hon J. (Aberavon)

      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

      Wilson, Gordon (Dundee E)

      Palmer, Arthur

      Wilson, William (C'try SE)

      Parker, John

      Winnick, David

      Pavitt, Laurie

      Woodall, Alec

      Pendry, Tom

      Woolmer, Kenneth

      Rees, Rt Hon M (Leeds S)

      Wright, Sheila

      Richardson, Jo

      Young, David (Bolton E)

      Roberts, Albert (Normanton)

      Roberts, Ernest (Hackney N)

      Tellers for the Ayes:

      Roberts, Gwilym (Cannock)

      Mr. George Morton and

      Robertson, George

      Mr. Frank Haynes

      NOES

      Adley, Robert

      Blackburn, John

      Alexander, Richard

      Blaker, Peter

      Alison, Michael

      Body, Richard

      Amery, Rt Hon Julian

      Bonsor, Sir Nicholas

      Ancram, Michael

      Bottomley, Peter (W'wich W)

      Arnold, Tom

      Bowden, Andrew

      Aspinwall, Jack

      Boyson, Dr Rhodes

      Atkins, Rt Hon H. (S'thorne)

      Braine, Sir Bernard

      Atkins, Robert (Preston N)

      Bright, Graham

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

      Brinton, Tim

      Baker, Kenneth (St.M'bone)

      Brittan, Leon

      Baker, Nicholas (N Dorset)

      Brooke, Hon Peter

      Banks, Robert

      Brotherton, Michael

      Beaumont-Dark, Anthony

      Brown, Michael (Brigg & Sc'n)

      Benyon, Thomas (A'don)

      Browne, John (Winchester)

      Benyon, W. (Buckingham)

      Bruce-Gardyne, John

      Best, Keith

      Buchanan-Smith, Alick

      Bevan, David Gilroy

      Buck, Antony

      Biffen, Rt Hon John

      Bulmer, Esmond

      Biggs-Davison, John

      Burden, Sir Frederick

      1218

      Butcher, John

      Hunt, David (Wirral)

      Cadbury, Jocelyn

      Hunt, John (Ravensbourne)

      Carlisle, John (Luton West)

      Irving, Charles (Cheltenham)

      Carlisle, Kenneth (Lincoln)

      Jessel, Toby

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

      Johnson Smith, Geoffrey

      Chapman, Sydney

      Jopling, Rt Hon Michael

      Churchill, W. S.

      Joseph, Rt Hon Sir Keith

      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

      Kimball, Marcus

      Cockeram, Eric

      King, Rt Hon Tom

      Colvin, Michael

      Knight, Mrs Jill

      Cope, John

      Knox, David

      Cormack, Patrick

      Lamont, Norman

      Corrie, John

      Lang, Ian

      Cranborne, Viscount

      Langford-Holt, Sir John

      Critchley, Julian

      Latham, Michael

      Crouch, David

      Lawrence, Ivan

      Dean, Paul (North Somerset)

      Lawson, Rt Hon Nigel

      Dickens, Geoffrey

      Le Merchant, Spencer

      Douglas-Hamilton, Lord J.

      Lester, Jim (Beeston)

      du Cann, Rt Hon Edward

      Lewis, Kenneth (Rutland)

      Dunn, Robert (Dartford)

      Lloyd, Ian (Havant & W'loo)

      Dykes, Hugh

      Lloyd, Peter (Fareham)

      Eden, Rt Hon Sir John

      Loveridge, John

      Edwards, Rt Hon N. (P'broke)

      Luce, Richard

      Eggar, Tim

      Lyell, Nicholas

      Emery, Peter

      MacKay, John (Argyll)

      Eyre, Reginald

      Macmillan, Rt Hon M.

      Fairbairn, Nicholas

      McNair-Wilson, M. (N'bury)

      Fairgrieve, Russell

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

      Farr, John

      McQuarrie, Albert

      Fell, Anthony

      Madel, David

      Fenner, Mrs Peggy

      Major, John

      Fisher, Sir Nigel

      Marland, Paul

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

      Marlow, Tony

      Fletcher-Cooke, Sir Charles

      Marshall, Michael (Arundel)

      Fookes, Miss Janet

      Marten, Neil (Banbury)

      Forman, Nigel

      Mates, Michael

      Fowler, Rt Hon Norman

      Mather, Carol

      Fox, Marcus

      Maude, Rt Hon Sir Angus

      Fraser, Rt Hon Sir Hugh

      Mawby, Ray

      Fraser, Peter (South Angus)

      Mawhinney, Dr Brian

      Gardiner, George (Reigate)

      Maxwell-Hyslop, Robin

      Gardner, Edward (S Fylde)

      Mayhew, Patrick

      Garel-Jones, Tristan

      Mellor, David

      Gilmour, Rt Hon Sir Ian

      Miller, Hal (B'grove)

      Glyn, Dr Alan

      Mills, Iain (Meriden)

      Goodhew, Victor

      Mills, Peter (West Devon)

      Goodlad, Alastair

      Miscampbell, Norman

      Gorst, John

      Mitchell, David (Basingstoke)

      Gow, Ian

      Moate, Roger

      Gower, Sir Raymond

      Monro, Hector

      Grant, Anthony (Harrow C)

      Montgomery, Fergus

      Gray, Hamish

      Morris, M. (N'hampton S)

      Greenway, Harry

      Morrison, Hon C. (Devizes)

      Grieve, Percy

      Morrison, Hon P. (Chester)

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

      Murphy, Christopher

      Griffiths, Peter Portsm'th N)

      Neale, Gerrard

      Grist, Ian

      Needham, Richard

      Grylls, Michael

      Neubert, Michael

      Gummer, John Selwyn

      Newton, Tony

      Hamilton, Hon A.

      Normanton, Tom

      Hamilton, Michael (Salisbury)

      Onslow, Cranley

      Hampson, Dr Keith

      Oppenheim, Rt Hon Mrs S.

      Hannam, John

      Osborn, John

      Haselhurst, Alan

      Page, John (Harrow, West)

      Hastings, Stephen

      Page, Richard (SW Herts)

      Havers, Rt Hon Sir Michael

      Parkinson, Cecil

      Hawksley, Warren

      Parris, Matthew

      Hayhoe, Barney

      Patten, Christopher (Bath)

      Heath, Rt Hon Edward

      Pattie, Geoffrey

      Heddle, John

      Pawsey, James

      Heseltine, Rt Hon Michael

      Percival, Sir Ian

      Hicks, Robert

      Peyton, Rt Hon John

      Higgins, Rt Hon Terence L.

      Pollock, Alexander

      Hogg, Hon Douglas (Gr'th'm)

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

      Holland, Philip (Carlton)

      Prentice, Rt Hon Reg

      Hooson, Tom

      Prior, Rt Hon James

      1219

      Proctor, K. Harvey

      Stokes, John

      Pym, Rt Hon Francis

      Stradling Thomas, J.

      Raison, Timothy

      Tapsell, Peter

      Rathbone, Tim

      Taylor, Robert (Croydon NW)

      Rees, Peter (Dover and Deal)

      Taylor, Teddy (S'end E)

      Renton, Tim

      Tebbit, Norman

      Rhodes James, Robert

      Temple-Morris, Peter

      Rhys Williams, Sir Brandon

      Thomas, Rt Hon Peter

      Ridley, Hon Nicholas

      Thompson, Donald

      Ridsdale, Sir Julian

      Thorne, Neil (Ilford South)

      Rifkind, Malcolm

      Thornton, Malcolm

      Roberts, M. (Cardiff NW)

      Townend, John (Bridlington)

      Roberts, Wyn (Conway)

      Townsend, Cyril D, (B'heath)

      Rossi, Hugh

      Trippier, David

      Rost, Peter

      Trotter, Neville

      Sainsbury, Hon Timothy

      van Straubenzee, W. R.

      St. John-Stevas, Rt Hon N.

      Viggers, Peter

      Scott, Nicholas

      Wakeham, John

      Shaw, Giles (Pudsey)

      Waldegrave, Hon William

      Shelton, William (Streatham)

      Walker, B. (Perth )

      Shepherd, Colin (Hereford)

      Wall, Patrick

      Shepherd, Richard

      Walters, Dennis

      Shersby, Michael

      Ward, John

      Silvester, Fred

      Warren, Kenneth

      Sims, Roger

      Watson, John

      Skeet, T. H. H.

      Wells, John (Maidstone)

      Speed, Keith

      Wells, Bowen

      Speller, Tony

      Wheeler, John

      Spence, John

      Whitney, Raymond

      Spicer, Jim (West Dorset)

      Wickenden, Keith

      Spicer, Michael (S Worcs)

      Wiggin, Jerry

      Sproat, Iain

      Williams, D. (Montgomery)

      Squire, Robin

      Winterton, Nicholas

      Stainton, Keith

      Wolfson, Mark

      Stanbrook, Ivor

      Young, Sir George (Acton)

      Stanley, John

      Younger, Rt Hon George

      Steen, Anthony

      Stevens, Martin

      Tellers for the Noes:

      Stewart, Ian (Hitchin)

      Mr. Robert Boscawen and

      Stewart, A. (E Renfrewshire)

      Mr. Anthony Berry.

      Question accordingly negatived.
      Mr. Cook: I beg to move amendment No. 23, in page 13, line 9, at end insert—
      '(1A) Section 8 of the Taxes Act (personal relief) shall apply for 1982–83 as if each amount specified in that section were increased by an amount equal to the aggregate of the increases that would be otherwise payable under the said section 24(5) in respect of the years 1981–82 and 1982–83.'.
      The amendment seeks to oblige the Government to make good in the next financial year the amount by which they have failed to uprate personal allowances in the current financial year. I admit straight away that we recognise that it is not possible for the House to bind the hands of the House when it meets to consider next year's Finance Bill. However, it is possible for us to bias the judgment of the Government, as they approach next year's Bill, in the direction of carrying out the uprating of personal allowances that they have ducked in this financial year.
      I hope that the Financial Secretary will not take exception to the way in which I phrased our amendment. I recollect that when the matter was debated on the Report stage of the 1977 Bill the Financial Secretary took exception to the idea that the Rooker-Wise amendment, which he supported and was involved in drafting, would bias the judgment of future Governments.
      On the contrary, the right hon. Gentleman said that, instead of biasing judgment, the amendment would remove the bias by which Governments find it possible to forget about inflation and to forget to index personal allowances in line with inflation, thereby increasing their tax revenue without doing the slightest thing.
      1220
      If the Rooker-Wise amendment was prudent because it removed that bias from Governments' attitudes and judgments, it would be prudent of the House similarly to provide for a removal of the bias in the Government's judgment next year. We should thus not find the Chancellor of the Exchequer producing, with a sense of triumph, an uprating of personal allowances next year in line with the inflation of the preceding year, conveniently forgetting both that there has been no uprating this year and that, even if he indexes for this year's inflation, personal allowances will be lower in real terms than they were at the start of the past financial year.
      The amendment takes us to the heart of the major element of the Budget package. The overall tenor of the package, boiled down in the Bill, is to increase taxation. The Bill provides for a new tax on the banks and for an increase in the vehicle excise duty, although the Government inherited from the previous Labour Government, who, they told us, put an oppressive and onerous tax burden on the nation, a commitment to abolish the duty. Instead of carrying out that commitment, the Government have increased the duty so that it is 40 per cent. higher than the level they inherited from a Government who proposed to abolish it.
      We found in Committee signs of increasing desperation on the part of the Treasury to find the money. It even rediscovered a tax on matches, which no one had touched since 1949, and doubled it. We look forward to next year's Budget with trepidation, expecting that the Treasury may rediscover the window tax or another forgotten, mouldering tax that will be included in the Finance Bill to find next year's money.
      Nowhere in the Bill do we find a provision for so much increased revenue as the failure to uprate personal allowances. One would not guess that from the Red Book, which includes a column providing for the amount of revenue affected by the provisions of the Budget. The first line of that table is:
      "Retention of 1980–81 main personal allowances and thresholds".
      The forecast change in taxation provided in the column against that entry is nil.
      The Financial Secretary knows that that is not the case. There will be a substantial effect on revenue.
      Mr. Lawson: Will the hon. Gentleman give way?
      Mr. Cook: If the right hon. Gentleman wishes to refer to the footnote, I should tell him that I am about to come to that.
      Mr. Lawson: It is printed in black and white.
      Mr. Cook: I shall come to the footnote, but it is equally misleading. The right hon. Gentleman knows that there is a change and it is referred to in the footnote, which states:
      "If these had been increased by 15·1 per cent. as specified … the revenue cost would have been … £2,510 million in a full year."
      The Financial Secretary went into the matter in great depth in 1977, and he knows that if the tax allowances were uprated that would not reduce the tax revenue of the Treasury from income tax by £2,510 million. It would not reduce the revenue received last year by a single penny.
      The change means that instead of an uprating, which would cost the Treasury money, the failure to carry out the uprating gains the Treasury £2,510 million more in income tax than it received last year. It provides another £2½ billion of revenue for the Treasury.

      1221
      The Financial Secretary knows that an element of dishonesty is involved in the failure to uprate the tax thresholds. He praised the Rooker-Wise principle in 1977 because it brought truth into taxation. In the same debate, on the Report stage of the 1977 Bill, the right hon. and learned Gentleman the present Chancellor of the Exchequer repeatedly referred to the need for truth in taxation. He said:
      "we are angry because, due to the Treasury's failure to change the tax system in line with inflation, the Treasury itself becomes the main body to profit from the inflation that it has failed to check".—[Official Report, 25 July, 1977; Vol. 936, c. 70.]
      Neither I nor any of my right hon. or hon. Friends could express more succinctly, accurately or pertinently our reaction to the right hon. and learned Gentleman's failure to uprate personal allowances. He is seeking to profit from, as he put it, the inflation that the Government have "failed to check". As a result of the failure to uprate in line with the amendment which he was supporting, he will gain and profit to the extent of £2½ billion of additional revenue.
      The Financial Secretary to the Treasury also intervened in the debate. I commend his speech to hon. Members who may be short of reading matter in the course of tonight's debate. They will find that the report of the proceedings on 25 July 1977 makes entertaining reading. The right hon. Gentleman, speaking in support of the principle of indexing tax thresholds, said:
      "Without doubt it is the most important legislative achievement of this Session".
      That was the Rooker-Wise amendment which the right hon. Gentleman was then supporting. In this Bill, he provides for the Government to get out of the obligation that the amendment imposed on future Governments. The right hon. Gentleman was diffident about the extent to which he had supported the principle in the past. He recognised, in one passage, that he had possibly been expressing his support with too much repetition.
      Mr. Lawson: It was an excellent speech.
      Mr. Cook: I agree that it was an excellent speech. I wish only that in 1981 the right hon. Gentleman had reached the same conclusion as he reached in 1977 when he said:
      "I have beer pressing this case"—
      that is, the case for indexation of the thresholds—
      "ever since I entered the House a little more than three years ago, and I apologise to my right hon. and hon. Friends and to some extent to right hon. and hon. Gentlemen opposite if I have become something of an indexation bore in the process. However, no one gets anywhere in this House unless he is persistent, and I have been just as bored in going on and on with my argument as right hon. and hon. Gentlemen on both sides of the House" .—[Official Report, 25 July 1977; Vol. 396, c. 89–90.]
      I assure the Financial Secretary, in case he feels the same diffidence, that the House is not at all bored with him going on and on about indexation. On the contrary, we yearn to hear from him the same arguments about indexation as he put in 1977 and in the preceding three years. We hark with a sense of nostalgia to hear those arguments about the importance of uprating the tax thresholds in line with inflation, about the need to inject truth in taxation and the need for Governments to avoid the dishonest device of increasing their revenue by failing to uprate the threshold in line with the extent to which they have tolerated a level of inflation.
      The right hon. Gentleman knows that one of the strongest grounds for his urging indexation is that failure
      1222
      to uprate tax thresholds does not fall equally on all income earners. Those who suffer the highest increase in tax burdens are those who previously paid no tax until inflation carried them across the tax threshold. As my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) indicated in the previous debate, it is known how many such taxpayers will be carried over the tax threshold.
      There are 700,000 who would have been let out of the tax net, had there been an uprating in line with Rooker-Wise, who will now remain within the tax net, and another 500,000 who, for the first time, will be brought into the tax net as a result of the failure to uprate in line with inflation. All of them, by definition, are low-paid. It is now necessary to have an income of only one-third of average income to find oneself carried beyond the tax allowances.
      Virtually all the 1¼ million taxpayers who now find themselves for the first time within the tax net earn less than half average income. They are in the bottom quarter of the pile. Many of them are pensioners. This is not surprising. This year, both the single pensioner and the married couple will receive in pension more than the tax allowance for a single person or the tax allowance for a married couple. The results are bizarre.
      6.45 pm
      There has been reference to the case of Miss D from Harlow. I have also been sent details of the case. I spoke to the Harlow social work department earlier this week. I can confirm that Miss D of Harlow has now applied for £9·06 in supplementary pension and will simultaneously, after receiving the benefit, be paying to the Inland Revenue £4·06 in tax revenue. That is bizarre and lunatic. It is so lunatic that the £9·06 she will receive in supplmentary pension is based on her net, not her gross, income. In other words, it includes an allowance for the £4 that she has to pay to the Inland Revenue. She is to receive £4 from the DHSS in order to make a payment to the Inland Revenue. This shows the lunacy of the position at which we have arrived.
      This case is particularly relevant to the amendment before the House. Such occurrences are likely to get worse and more frequent unless the amendment is carried. In his Budget judgment, the Chancellor announced that he estimated that inflation in the year from November of last year to November of this year would be 10 per cent. That estimate was made four months ago. There are very few forecasters who now agree that inflation in the year from November 1980 to November 1981 will be 10 per cent. The mean estimate for inflation over that 12-month period is working out at 12 per cent. Whether it is 12 per cent. or 11½ per cent., it is obvious that inflation for that year will be higher than estimated at the time of the Budget, because one of the consequences of the Budget was to push up the rate of inflation.
      It will be recalled that last year the Government overestimated the amount of inflation for the purposes of uprating the State pension. As a result, this year he Government are knocking 1 per cent. off the State pension with meticulous precision on the allegation of an overpayment. It can therefore confidently be assumed that if this year the Chancellor has underestimated the rate of inflation and has under-provided for the increase in the State pension, he will add on next year the 2 per cent. by which he has underestimated the rate of inflation. I am

      1223
      taking at face value the logic of the Financial Secretary. The Chancellor has given an assurance that he will do precisely that.
      If next March the Chancellor comes to the House and increases pensions in line with inflation, plus 2 per cent. to restore his underestimate for the current year, but increases tax allowances only by the rate of inflation and no more, he will have carried pensions even further beyond the tax allowance than at present. At that stage, the married couple receiving even an age allowance will find that they receive over the financial year 1982–83 a pension payment that exceeds the combined personal allowance with the age allowance. This means that tens of thousands of people will find themselves in the position of Miss D, and literally hundreds of thousands of pensioners will be simultaneously eligible for supplementary pension from the DHSS and liable to pay income tax to the Treasury out of it.
      That imposition on the low-paid is offensive against any sense of fairness and decency. It is doubly offensive when such treatment of the low-paid is compared with the treatment that the Government have initiated with respect to the higher income groups.
      This matter was debated when hon. Members considered this clause in the Committee of the whole House. I got into hot water with the Financial Secretary at the time for suggesting that those earning five times average income had received a net reduction in income tax over the life of the Government. The right hon. Gentleman will recall that, initially, he interrupted me from a sedentary position, saying "Rubbish", and then intervened from a standing position to say that the figures were merely speculative.
      There is a wide enough gulf in the House between the two Front Benches on fiscal policy without our seeking to find a gulf over our data base. I am happy to try to find a common data base on which to erect our differences over fiscal policy. I am happy to accept the Treasury's figures about what has happened to income tax liability of households over the life of this Government. I refer to the figures submitted by the Treasury to the Select Committee on the Treasury and Civil Service when it considered the public expenditure consequences of the 1981 Budget.
      I know that the Financial Secretary differs often enough from his advisers that he may well consider that the figures that they tendered to that Committee are rubbish. But, for the rest of us who approach the Treasury with a due attitude of reverence, we shall treat the figures with cautious respect, and they command that cautious respect. If the Financial Secretary consults the tables on pages 122 and 123 of the Select Committee report, he will find that the following picture emerges.
      Between 1978–79—the last full financial year of the Labour Government—and the current financial year, the income tax burden of a married man on average income with two children increased by £2·30 per week. If the Financial Secretary then looks at the column for the married man with two children who is earning twice the average earnings, he will find that his income tax burden has risen by £3·06. That is more, but my hon. Friends will at once notice that it is not pro rata with income. It is only 50 per cent. more than for the man on average income, although the couple to whom I have just referred have doubled the income.
      1224
      But if we then turn to the column for the married man with two children earning five times the average income, we find that his tax burden has changed more dramatically than that of either of the other two. Whilst the other two are paying more in income tax, that household is paying £16·44 a week less in income tax that it did in the last year of the Labour Goverment.
      The Opposition disagree with the Government on the necessity for increasing the tax burden. We do not think that the Government have made their case. We would prefer to see an element of reflation in the Budget judgment. But, if the increased tax burden is necessary, it is an outrage that the Government, who find and finance that increased tax burden by taxing the pensioners and the unemployed, should nevertheless be able to tolerate a reduced tax burden on those who earn more than five times the national average.
      The Financial Secretary shakes his head. I quote figures provided by the Treasury. If he wishes to describe the figures provided by his own Department as "rubbish" or "speculative", I shall happily give way to him. But those are the figures that he and his Department supplied to the Select Committee. They are on the record. It is perfectly clear that that is the consequence of the right hon. Gentleman's financial and fiscal policy. The right hon. Gentleman may be prepared to justify it. He may try to do so. But he cannot evade the fact that that is the consequence of the sum of his decisions of the last two and a half years.
      That is not what the Conservative Party promised us in the last election campaign. I have with me the Conservative campaign guide. I can commend it to my hon. Friends for spare-time study. The guide contains no fewer than 50 pages on taxation. The full flavour of those 50 pages is caught in the first paragraph. Writing about the result of Labour government, it says:
      "The result is a level of taxation which puts Britain in a class apart from other developed countries. The tax system is being strained to breaking point. Anomalies and injustice abound."
      Anomalies? What richer anomaly could one find than the case of Miss D from Harlow? Injustice? What worse injustice could one find than those with five times the average income getting an income tax cut whilst pensioners and the unemployed get an income tax increase? That is the consequence of two years of government by the party which put that prospectus before the nation at the election.
      If my hon. Friends get hold of this valuable and entertaining publication, I urge them to press on beyond the first paragraph and not to be put off by the obvious irrelevance of the commentary in the first paragraph. I suggest that they turn to some of the interesting tables contained in this document. Let us uncork the real vinegar and see how the figures that the Conservatives quoted in those tables compare with their record in office.
      On page 75 there is a table expressing tax and national insurance contributions as a percentage of gross domestic product. The latest year for which figures are provided in the guide is 1975. According to the guide, in 1975 the percentage of tax and national insurance of GDP was 39·8. It is now 42·7 per cent. , after two years of the right hon. Gentleman at the Treasury and three successive Conservative Budgets.
      On page 86 there is another table giving the percentage of income that the average household pays in tax. In 1976, the latest year included in the table, apparently the average

      1225
      household paid 20 per cent. of its income in tax. Now, after two years of the right hon. Gentleman at the Treasury and after three successive Conservative Budgets, the average household will pay 21·3 per cent. of its income in tax.
      On page 86 there is another table—perhaps the most fascinating table of them all. It compares the level of the tax threshold with the level of supplementary benefit to which a man with three children would be entitled. In January 1977, that supplementary benefit level stood at £43·30 and the tax threshold stood at £37·50. I would entirely agree with the right hon. Gentleman if he wished to condemn that. It is plainly preposterous that we have a supplementary benefit level which is above the tax threshold. The tax threshold, plainly, should be raised so that it is well above supplementary benefit level. I would not dispute with the right hon. Gentleman that that ought to be our objective.
      But what will the figure be after two years of the present Government and after three Conservative Budgets? The respective figures will now be: for supplementary benefit level, £81·70; for the tax threshold, £57. The gulf in the intervening five years has moved from £6 to £25. For the household which the Conservatives themselves chose for illustrative purposes, there is now an entitlement to supplementary benefit £25 in excess of the tax threshold for the same household.
      The fact is that after the first three Budgets of the present Government the nation is paying more in income tax than before. There are more people paying income tax than before. They are paying it on a larger proportion of their income than before. They commence paying it at a higher marginal rate than they did before. There are also 40 per cent. more people in the poverty trap than before the right hon. Gentleman took office.
      Only one final point rests with me to make. I am aware that the Government persist in treating with contempt the suggestion that there is anything that they can do to stimulate the economy. In a speech made shortly after the Budget, the Financial Secretary poured scorn on Keynesian demand management on the basis that the Keynesians could not explain how man succeeded in evolving from the caves. In fairness to Keynes, I must confess that I do not recall his attempting to explain how it was that man managed to evolve from the caves, but if he had attempted an explanation no doubt it would have been mistaken. No doubt the Financial Secretary will explain that the evolution from the cave dwellers was all the result of strict and prudent controls on monetary aggregates.
      I shall make a prediction. It is obvious from all the economic forecasts with which we have been deluged in the last three months that there will be no economic revival before the next Budget in the spring of next year. When that time arrives, the great final judgment day of the general election will be less than two years away. I predict that we shall suddenly discover that the Treasury Benches will then have found that it is open to the Government to stimulate the economy, that it is possible for the Government to find ways of reflating and that their reflation will no longer be a threat to inflation. The Financial Secretary will disappear to the back of the cave, juggle with the bones again, and will come to the conclusion that he is getting a different message from the spirit of economists past. He will be advised to reflate.
      1226
      Having shared that prediction with the House, let me also share with the House a fear. I have a fear that when the Government come to that decision, that next year, suddenly, it will be possible to reflate the economy and that they ought to do so, they will then attempt that reflation by cutting the standard rate of tax. If they do that, they will benefit most those who have already benefited most from their previous tax cuts for the wealthy.
      It is therefore prudent for the House to pass this amendment. Then, when the Financial Secretary and his colleagues decide to reflate next year, they will be obliged to do so by putting back into the pockets of the pensioners and the low-paid the money that they have filched from those pockets by failing to protect tax allowances against the inflation that they have created.
      7 pm
      Mr. Richard Wainwright: It is accepted in most parts of the House that failure to raise the personal allowances for income tax to compensate for inflation is the most sneaky and unfair way of raising large sums in taxation. Whether that sneaky way is adopted by Conservative or Labour Governments, it is equally objectionable. This time, however, the Government's failure to raise the personal allowances is aggravated by the fact that last year they also abolished the reduced rate of income tax. So, although the offence was grave, this time the offence is even more grevious. It means that people who are entering the income tax net at absurdly low incomes—poverty incomes—enter it not at the reduced rate of 25 per cent. that formerly applied but at the full 30 per cent. rate.
      It is beyond my comprehension how Ministers can sit on the Treasury Bench—incidentally, it is no wonder that the Chancellor of the Exchequer has not even paid us a passing visit as we toil through the Finance Bill; I did not see him in Committee, nor has he visited us on Report—knowing that they are introducing people on poverty incomes to the income tax system at 30 per cent., and doing so in the light of what they were saying only a couple of years ago. At Solihull, on 24 March 1979, the Prime Minister said:
      "Less than 30 years ago, a family man with a couple of children didn't start paying income tax until he was more or less earning the average industrial wage. Today the tax man calls before he has even got half-way there … Is it any wonder that people ask 'Why work?"
      She went on to develop her party's promise to reduce taxation on low wages and incomes. Now, with this Bill, the level of income at which the typical family starts to pay tax has fallen from 44·7 per cent. of average male earnings in 1979, when the right hon. Lady made those remarks, to a mere 38 per cent. in the coming year. Anyone on 38 per cent. of average male earnings is now introduced to the tax system, and without the benefit of a reduced rate.
      It has already been said that the proportion of income paid in tax and national insurance by a typical low-paid family has risen from 21·9 per cent. early in 1979 to 23·6 per cent. now. The result, of course, is that not only do we have the misery of people paying tax out of incomes which are not sufficient to maintain them at a tolerable standard of life but we have the enormous administrative expense of taking money through an elaborate process out of one citizen's pocket and putting it into another pocket through a different elaborate system. That is odd, coming from a Government who never cease to boast about how they are streamlining our Administration and taking the

      1227
      advice of Sir Derek Rayner about how to save money by closing sub-post offices, when in fact they have created the largest and most expensive administrative absurdity of all times.
      All this serves to sap the morale of our people and to make them question whether government under our system can ever again provide a fair, equitable and sensibly managed system of taxation and benefits. It is no wonder that some people, under the combined burden of poverty and taxation, are beginning to lose patience.
      In 1979 the Tory manifesto said:
      "Raising tax thresholds will let the low-paid out of the tax net altogether".
      What has happened? As a result of this Bill, more and more of the low-paid will come within the tax net. Moreover, the injustice does not stop there. Under this Government, income tax paying had become more and more of a voluntary club. One joins it just like one signs up for tennis. Piled on top of the injustices that I have outlined there is now the other injustice that a neighbour in the same street" by taking advantage of our lax arrangements and the fact that we do not even bother to send an income tax form to people more than once every five years, on average, may be moonlighting and getting away with a tolerably good living, perhaps from the black economy.
      The combination of all those factors is seriously menacing the cohesion of the nation. As we know from the history of the Roman Empire, it is ill-administered and oppressive taxes which can bring down even the most rigorous governmental system. Treasury Ministers should ask the Prime Minister whether, in the light of what is happening in our country today, she really wishes them to press the Bill in its present form to a Third Reading next week. Certainly it would be considerably improved if the amendments, on which I congratulate the official Opposition, were passed. They are the least that we ought to do if we intend to keep our taxation system within the tolerable bounds of justice.
      Mr. Horam: This group of amendments ingeniously draws to the attention of the House the failure to raise personal allowances during the course of this year. I and the Social Democratic Party support the amendments.
      The steady fall of the tax threshold to lower and lower levels of income is the worst aspect of tax policy as we have known it under successive Governments of both major parties over the past 10 to 15 years. The further massive fall this year, as a result of the Government's failure to index at all, is quite the worst aspect of the Budget—a point that has already been made in the debate today.
      The situation was best summarised, ironically enough, by the Chancellor of the Exchequer last year, when he was talking about the real value of personal tax allowances. He argued that a failure to index last year
      "would have a number of undesirable effects. It would lower the starting point of income tax in real terms, compared with a year ago. It would increase the number of taxpayers. It would narrow the gap between tax thresholds and the main social security benefits, and it would impose particularly heavy burdens on those with the smallest incomes."—[Official Report, 26 March 1980; Vol 981, c. 1474.]
      1228
      That is treasury prose, but it is specific and accurate Treasury prose, and on this occasion I do not argue with the Treasury prose or with the speech writer who may have turned it into that accurate account of the situation.
      Tax policy in the last 10 to 15 years has been devastating. In 1955 people started to pay income tax on average male earnings. Perhaps that was what the hon. Member for Colne Valley (Mr. Wainwright) was talking about when he quoted the Prime Minister. Today, 25 years later, people start to pay income tax on 38 per cent. of average earnings. In addition, in 1955 people were paying income tax at the bottom rate, which was 9 per cent. Today people start to pay income tax at 38 per cent. of average earnings but at the full 30 per cent. rate. That is how the position has deteriorated under all Governments in the last 25 years.
      Let us examine the position of the poorer person. In 1971–72, when the family income supplement was introduced, the tax-free income, as a percentage of family income supplement for a married man with two children, was 90 per cent. As a result of this Government's measures, that figure has fallen to 63 per cent. of family income supplement, which was designed for people in real need.
      The Financial Secretary has been asked about the number of people affected by the failure to index personal allowances. I should like to draw him on another matter in relation to the poverty trap. About 1¼ million more taxpayers than last year are drawn into the net as a result of the failure to index. The Secretary of State for Social Services made an estimate before the Budget. He said that the number would be 500,000. On that basis he said that an additional 10,000 people who were drawing family income supplement would be drawn into the tax net. Has that figure changed? Will 10,000 people in receipt of family income supplement now pay tax when they did not pay it before? Has that figure increased since the Budget and the details of the Finance Bill were worked out? That is a worthwhile question since we have had a different estimate from the Government about the effect of the failure to index on people between the ages of 60 to 64 who are subject to tax for the first time as a result.
      The important effect is not so much on the person with an average income but on the poor and the very poor. That is the real indictment of the Government's taxation policy. That and the level of unemployment are the real causes for concern.
      The hon. Member for Edinburgh, Central (Mr. Cook) said that the cost of full indexation this year would be great. It is clear that the Government have saved a great deal of money by failing to index personal allowances. I argue that we need, and could afford, an increase in the public sector borrowing requirement. We need not fully offset a decision to index personal allowances. Even if we did, I would rather have an increase in the standard rate of income tax than a failure to raise personal allowances. I have no doubt that the arguments of equity and fairness lie in the direction of increasing the standard rate of tax rather than in failing to increase the tax threshold.
      Like the hon. Member for Edinburgh, Central, I fear that if, in due course, in spite of the arguments in the last few months, the Government have to introduce a measure of reflation, the standard rate of income tax will be lowered once again. That will increase the inequity of our

      1229
      tax system and increase the burden on people who are least able to afford it. That is the Government's illogical position and it leads to their false choice of priorities.
      If we are really concerned about decreasing poverty, our first priority should be to raise personal allowances whenever we can. That is a greater priority than lowering the standard rate of income tax.
      7.15 pm
      I wish that we could evolve over a longer period a more consistent approach to taxation policy. However, it behoves us to reach a point where the Treasury can consider the effects of its taxation policy in relation to benefit policy. When I was on the Back Benches in the last Labour Administration, I used to ask what research unit existed in the Treasury for examining the effect of benefits and tax policy in a co-ordinated way. That was when the right hon. Member for Leeds, East (Mr. Healey) was Chancellor of the Exchequer. I was told that there was little research effort in that direction.
      The matter is one of great complexity, as the hon. Member for Birmingham, Perry Barr (Mr. Rooker) explained. The way in which the two issues interact is enormously complicated, but it has amazing effects on the lives of the poorer people. By and large, the effects are side effects of other decisions taken for other reasons. It is high time that a Government examined the two elements of policy together. A Government with a commitment to attack taxation policy should regard this as a high priority.
      The Government have failed to live up to their election pledges. They have failed to come up even with the elements of a c o-ordinated approach. All that I am asking them to do is to examine the taxation and benefits systems from the point of view of the poorer person, or the person on average income, with the same degree of sensitivity as they have examined them from the view of the rich person. That is my fundamental point.
      Mr. Albert Roberts: I am surprised that the hon. Member has not mentioned that if the same people about whom he has been talking were natives of France, Belgium or Germany they would not pay tax at all, because the tax ceiling is so much higher there than in Britain.
      Mr. Horam: I take that point. I was trying to draw my remarks to a close. I was concentrating on Britain. The circumstances here are wholly within the Government's control. They have failed abysmally to live up to their pledges and to the expectations that people rightly have of a concerned Government.
      Mr. David Stoddart: The Financial Secretary has much to answer for. I remember those dark days in 1977 on the Finance Bill Committee when the present Financial Secretary, with great oratory and much persuasion, declared his undying belief in the indexation of allowances. He said that that was the way forward. He said that that was what we must do for people. He said that we must ensure that allowances kept pace with earnings and inflation. He said that if that did not happen people would be disadvantaged and brought into the tax net who should not be there.
      I listened to the right hon. Gentleman with awe because he was silvery tongued at that time. He was very persuasive indeed. He was so persuasive that against the will of the then Government he and his colleagues,
      1230
      together with some of my hon. Friends, brought into law the principle of indexation of allowances. As a result, the then Government's Budget judgment went for a Burton. But, of course, that did not worry the Minister or his right hon. and hon. Friends in any sense at all. They had brought off a political coup. No matter about the effect of £350 million being lost—that did not matter because they had pulled off a political coup.
      I felt that the hon. Gentleman—is he an hon. Gentleman? Perhaps he is a right hon. Gentleman. I see that he is nodding. I am sorry for my mistake. He deserves to be a right hon. Gentleman on that one issue alone lie defeated the then Labour Government, so he deserves some reward from his Government. He was very silvery tongued. He persuaded the Committee that it should do what the Government did not want it to do. I felt that he believed in that policy very deeply indeed and that when he had the opportunity he would not only retain that principle but would extend it to other areas. If I am not mistaken, he spoke eloquently about indexing all taxes. He wanted to extend it to VAT and other taxes. He believed very much in that principle. I expected that in Government he would remain faithful to what he had said and done in Opposition. Instead, we find that, having gained the opportunity and the power, far from retaining indexation of direct taxation, that has been thrown aside in every Budget since the Conservative Government took office.
      The hon. Member for Colne Valley (Mr. Wainwright), who has now left the Chamber, accused both Labour and Conservative Governments of not adhering to Parliament's will on the indexation of tax allowances. I must correct him. Not only did the Labour Chancellor in 1977 not seek to recoup that £350 million, but he obeyed the will of Parliament in 1978 and 1979 and indexed tax allowances. The Labour Government obeyed the will of Parliament. It was left to a Conservative Government, almost as soon as they took office, to overthrow the principle for which they had argued, voted and, indeed, won against the opposition of the Labour Government.
      This year, for the first time in 13 years, since 1968, the Government have failed to increase tax allowances at all, let alone index them. There is no doubt that that failure has caused great hardship to many sections of our population, not only to older women between the ages of 60 and 65 but to every working-class family in Britain. They have been disadvantaged for the simple reason that, as inflation has continued to rise, their ability to spend and to keep their families has diminished. That has happened because the Government, who before the election were demanding less taxation, have imposed a greater level of taxation upon ordinary people than has ever been imposed by any other Government.
      That policy has come from Conservative right hon. and hon. Members who, before the election, were promising my constituents and other people up and down the country—in factories, offices, shops and in the streets—that the Conservatives would cut direct taxation. They said "We want you to have more money in your pockets so that you can spend it as you wish." They did not say how they would achieve that, although they did deny that there would be cuts in the National Health Service. The Conservatives did not, as the Labour Party suggested they would, double prescription charges: they increased them fivefold. They said that they would not raise VAT to 12 per cent. as Labour had suggested. They did not: they doubled it to 15 per cent.

      1231
      Those promises were made by the Conservatives before the election. They promised that people would have more money in their pockets to spend as they wished. Far from that happening, people now have less money in their pockets. They have to pay more for the goods that they buy and for the services upon which they rely—services which have been slashed to the bone, and will be slashed even further.
      Mr. Clive Soley: Will my hon. Friend, in his accurate description, also comment on the other justification put forward by the Conservatives? They said that they would regenerate the British economy because the taxes would go into bolstering industry. In fact, we have witnessed a rapid collapse in industry and more bankruptcies than ever before.
      Mr. Stoddart: I am obliged to my hon. Friend. That was to be my next point.
      The idea of the Conservatives—they have enunciated it for a long time—is that if they release tax, especially to the already rich, the already rich will embark upon entrepreneurial enterprise. They would invest the tax handouts in British industry, new enterprise and new plant and machinery. They would revive and resuscitate the British economy, which would then provide greater employment opportunities and better living standards for our people. Of course, none of that has happened. We knew that it would not happen.
      Much of that money has been salted abroad. Far from going into our industries, it has gone into building offices in Brussels or buying Watergates in New York. That is where the additional tax relief given to the rich has gone. It has not gone into British industry, which is collapsing all around us.
      Because of the Government's failure to increase, let alone to index, tax allowances, money has been taken out of the pockets of ordinary people who buy the goods that industry produces, thereby causing a slump and exacerbating the recession. The Government say that they are not responsible for unemployment. Nothing ever seems to be their fault. They fought an election to become the Government, and everything that has gone wrong appears to be someone else's fault. It is either the fault of the working people or, more often, the fault of the Opposition. We do not have any say any more, but the Government cannot seem to get to grips with the fact that we are no longer in power. They blame us for things that are going wrong.
      Although one accepts that there has been a world recession, the Government, by their failure to index tax allowances or to increase them, have piled home recession upon world recession and thereby caused the slump that has brought about the enormous unemployment problem which is leading to some of the other problems on our streets. Those problems will be exacerbated unless the Government deal with them. Indexation of tax allowances is one way to deal with them. That is why the Government should consider seriously the Opposition's amendment.
      The Government will say that the money is not available. In fact, money is slopping around the British economy with nothing to do. It should be used for investment, but it is doing nothing. The public sector borrowing requirement was £1,000 million below the Government's estimate. They have something in reserve.
      1232
      It would be in the interests of the country and in the Government's own interests if they accepted the amendment, which would lead to restoration next year and help to right some of the wrongs that the Government have committed by failing to do what they should have done and what they promised to do in Opposition.
      7.30 pm
      Mr. Lawson: We have just heard an impassioned speech from the hon. Member for Swindon (Mr. Stoddart). I have great affection for the hon. Gentleman. There was a certain special quality of passion in his speech. We all know from where that came. The hon. Gentleman was the Government Whip in the Standing Committee that considered the 1977 Finance Bill, when the Labour Government were defeated and the indexation provisions were instituted. I understand entirely how the hon. Gentleman feels.
      The hon. Gentleman has misunderstood the position that I took in 1977. He will be able to check the reports in Hansard if he wishes, both in Committee and on Report. I said that there should be no such thing as automatic indexation because it was absurd. Governments have to have certain freedom. They must have whatever tax regime they see fit to introduce at the time. Rightly or wrongly, they have to have that freedon for political reasons and for reasons of the state of the economy. I maintain that Governments should be open and above board in what they are doing and that the presumption should be that the datum line is a similar level of personal allowances in real terms and not in money terms. I argued that any change should be made from that datum line. That is what we have done.
      Opposition Members have indulged in a great deal of exaggeration. It has been implied that personal allowances in real terms have been reduced dramatically. That is not so. Since we have been in office the reduction in the level of personal allowances for a married man has been 4 per cent. in real terms. That is not a dramatic reduction but it is one that I regret.
      Mr. Stoddart: The right hon. Gentleman will remember that there was some indexation of tax allowances in 1980, but to a large degree that was nullified by the removal of the 25 per cent. rate and its replacement with a threshold of 30 per cent.
      Mr. Lawson: That was a separate matter. We consistently criticised the reduced rate band when it was introduced by the Labour Government as being an unwise element in our tax system. When we came to office it was natural that we should get rid of it.
      Mr. Cook: I fear that the right hon. Gentleman's recent memory is playing him tricks. The Government did not abolish the reduced rate band immediately on taking office. They did so during their second year, in their second Budget. The Chancellor said explicitly in his second Budget Statement that he was abolishing the reduced rate band to recoup part of the cost of the full uprating. He created the linkage between the abolition of the reduced rate band and finding the money to carry out the full terms of the Rooker-Wise amendment for that year. It is legitimate for my hon. Friend the Member for Swindon (Mr. Stoddart) to say that the poor lost the reduced rate band so that the tax thresholds could be protected. Having lost the reduced rate band, the poor find that the thresholds are not being protected.
      Mr. Lawson: As my right hon. and learned Friend the Chancellor of the Exchequer said at the time, the beneficiaries of the reduced rate band were conspicuously juveniles and working wives. The change made no great difference to the position of the typically married man or the typical family. There was no trade-off. It was merely a measure to achieve a more sensible structure for the income tax system.
      Since we have been in office, the reduction in the threshold of taxation for the married man has been 4 per cent. I deeply regret that. The reduction has occurred because we have introduced no increase in money terms. We have proceeded in the most open way possible. That has been done as a result of the legislation that we introduced. The hon. Member for Colne Valley (Mr. Wainwright), who is something of an agreeable absurdity in our debates, excelled himself when he described the Government's actions as sneaky. No actions could have been less sneaky. In the previous year's Finance Act we introduced a requirement to lay before the House an order stating what the full index figures would be. We ensured that they would be made available openly and that the entire issue would be above board. That provision was designed to make it clear that any reduction would be a reduction in real terms. There was nothing sneaky about that.
      Clause 23(1) of the Bill states that section 24(5) of the Finance Act 1980—the indexation provision—shall not apply for 1981–82. That appears in the Bill for hon. Members to debate. It is there for hon. Members to amend. In effect, it is the amendment that we are discussing. Nothing could be more open and above board. To call it sneaky is absurd. Under the old regime of the Labour Government, nothing needed to appear in the Finance Bill in this respect. There was no possibility of amendment. If nothing had been done, the same money allowances and personal allowances would have been retained.
      Mr. Richard Wainwright: The right hon. Gentleman knows that I was careful equally to condemn the previous Labour Government, except in the sense that they introduced the reduced rate band. Is he saying that the issue is as plain as the open sky to the common man in the street in Oldham, Huddersfield or Warrington?
      Mr. Lawson: Yes. The hon. Gentleman greatly underestimates the intelligence of the man in the street in Warrington, Oldham or Huddersfield.
      I have always maintained that automatic indexation is nonsense. That is why I was unable to accept the original so-called Rooker-Wise formulation. That was why I added my amendment in Committee, which was eventually carried, to provide that the Government of the day would have power by order to prescribe a lesser sum. Any Government must have that freedom. That freedom is now in a slightly different legislative form because a change was enacted in the Finance Bill 1980.
      I maintained that the issue to which I referred must be open and above board. That is what we have persisted in, and there has been no inconsistency or falling away from the proposition that my right hon. and hon. Friends and I advanced in 1977. The hon. Member said that we had not extended it further, but we have. We have extended it throughout the whole range of income tax bands, the higher rates and the investment income surcharge as
      1234
      well—the main elements of the income tax system. We have not been able to improve on any of them this year, but the provision is there.
      The hon. Member for Edinburgh, Central (Mr. Cook) played the old class-war record. He made a great deal of the fact that during our period of office we had made significant reductions in the top rates of income tax. He is right. We have never denied that. We have said that it was essential. Our top rates of income tax were the highest in the civilised world when we came to office. They were absurd. Lord Lever openly said so on a television programme during the Labour Government's period of office. He said that something should be done and that those rates should be reduced. Many other Opposition Members knew that and said so in private conversation, although they would not say so publicly. They did not have the guts of Lord Lever. They had problems with some of their colleagues, but they did nothing about it. We made that change and it was right that we did so. Those taxes were of a purely political nature. They were damaging the economy. The amount of revenue which they brought in was negligible.
      The hon. Member for Edinburgh, Central and others made great play of the fact that taxation has risen. They felt that it should fall. I believe that there was a general feeling in the Chamber today that it would be a good idea if income tax were lower. I share that view and so do the Government. We would all like lower taxation. The question is how to pay for it. No answer came from any Opposition Members who were calling for it. Their request was dishonest.
      Mr. Robert Sheldon: The right hon. Gentleman cannot get away with that. Surely he remembers that we had amendments to increase the allowances.
      Mr. Lawson: The amendment which we are now debating is slightly curious. It is ingenious and I congratulate the hon. Member for Edinburgh, Central on thinking it up. However, it would have no practical effect, as the hon. Gentleman knows. His concern is to bias the judgment of the House in favour of increasing the allowances. We need no such amendment to prejudge us in favour of that. However, the question remains of how that is to be paid for.
      The right hon. Member for Ashton-under-Lyne (Mr. Sheldon), a former Cabinet Minister, said that it is easy. All we have to do is troop through the Lobbies, pass the amendment and all our problems will be solved. That is the height of absurdity. I am sure that when he was a Treasury Minister the right hon. Gentleman frequently told the House that he would like to cut taxation instead of increasing it. However, the money has to be found through reductions in public expenditure.
      One finds that sometimes on the Conservative Benches there is a certain ambivalence. Some of my hon. Friends favour cutting public expenditure. Others may call for increases in particular areas, which is understandable, human and natural. However, from Opposition Members we hear only calls for more and more public expenditure. For them to call for ever more public expenditure across the board and, at the same time, lower taxation is the height of hypocrisy. On those grounds, if on no others, I ask the House to reject the amendment.
      7.45 pm
      Mr. Cook: Some points made by the Financial Secretary deserve an answer. I am sure that he would not want to go away from the debate without having received that answer.
      With regard to his last point, the right hon. Gentleman knows well that he has succeeded in increasing public expenditure as a percentage of GNP. It is higher under the present Government than it was under the Labour Government. What has happened is that he has simultaneously increased public expenditure and cut public services. The reason why we now have higher public expenditure is to meet the cost of the recession, which was partly induced by the cuts in public services. When we demand higher public expenditure, we are demanding an increase in those public services which would contribute to a recovery from the recession which the Government have engineered.
      The Financial Secretary said earlier that there was a reduction in the tax threshold of the married couple of 4 per cent. over the lifetime of the Government. He regretted that cut, which I acknowledge. He also said that it was not dramatic. I accept that a 4 per cent. cut over two years is not dramatic. It is significant and noticeable. However, when the Government put out their manifesto in 1979 they did not say that the reduction in the tax threshold over their period in Government would not be dramatic. They said that they would raise the tax thresholds. Instead of raising those tax thresholds, in three Budgets by this Administration those thresholds have been reduced by 4 per cent. on the Government's calculations.
      As my hon. Friend the Member for Swindon (Mr. Stoddart) said in an intervention, the story does not end there. Along the road, in order to pay originally for an increase in tax thresholds, we have had the abolition of the reduced rate band. There is no point in the Financial Secretary saying that that is something which we should have done anyway because it was a desirable idea. The fact is that as a result of the abolition of the reduced rate band he is receiving in tax revenue £1·1 billion more than he would have received if the reduced rate band had not been abolished. As he knows, a proportion of that £1·1 billion is coming from low income earners.
      There is also another debit to be entered on the balance sheet—the increase in VAT. My hon. Friends who were present during the Chancellor of the Exchequer's first Budget Statement will remember what he said when he increased VAT:
      "the increase I make must be sufficient to provide for substantial and worthwhile reductions in income tax."—[Official Report, 12 June 1979; Vol. 968, c. 250.]
      In other words, there was a linkage in the right hon. and learned Gentleman's mind between an increase in VAT and a reduction in income tax. That is why he asked the nation to pay an increase in VAT.
      However, the facts submitted by the Treasury to the Treasury and Civil Service Select Committee show that most households—including households on average income, all households below average income and households on up to double average income—are now paying more in income tax than when the Government took office and are also paying an increase in VAT which was supposed to provide for a worthwhile reduction in income tax.
      1236
      Therefore, on the balance sheet we have the 4 per cent. reduction in thresholds, plus the abolition of the reduced rate band and the doubling of the standard rate of VAT, all within two years. God help us over the next three years.
      The Financial Secretary asked how we would pay for the reductions. If the right hon. Gentleman has any doubts about this, I shall make it clear to him again that we believe that, at a time of unparalleled recession and when industrial output has fallen by a larger amount than on any previous occasion since records of industrial output were kept, it is lunacy to seek to cut the PSBR in real terms. If the Government were not so bent on doing that, they could afford to uprate tax thresholds.
      However, even if we accept the Government's Budget judgment—their conclusion that they cannot risk a penny more on the PSBR and that they desperately require this £2½ billion extra in income tax revenue—the honest and equitable way to proceed is plain. It is to put up the standard rate of income tax to where it was when they took office and to increase tax thresholds. That would ensure that the tax burden was shared equitably and that the poorest people did not have to provide the largest proportion of the new tax revenue—which is what will happen now. The 1¼ million taxpayers who will find themselves in the tax net as a result of the failure to uprate will have to provide the highest proportion of the £2½ billion extra revenue.
      The Financial Secretary accused me of playing the old record of the class war. I did not refer to class. I contrasted the effects of the Government's fiscal policy on different income groups. The right hon. Gentleman attempted to defend the fact that the Government have reduced the rate of tax on the highest income earners on the basis that we had the highest rate of tax in the world on high income earners. I do not quarrel with that, and he will not quarrel with me over the fact that we also have the highest rate of income tax at the bottom of the tax league. Those who come across the threshold and start paying tax for the first time start paying it at a marginal rate higher than anywhere else in the world. His Government made that rate higher by abolishing the reduced rate band.
      If the right hon. Gentleman founds his defence on what the Government have done with rates of tax, the contrast is even clearer than the contrast that I unfolded earlier. They reduced the rate of tax for the highest income earners paying the highest tax rates, but for the poorest taxpayers they have increased the marginal rate of tax. That is not a contrast of my invention. I am not dreaming up spectres of the class war. It is a contrast that the right hon. Gentleman created and continues to flaunt in defence of the Government's tax record.
      I have never regarded myself as a Marxist, but the Communist manifesto states:
      "The history of all hitherto existing society is the history of class struggles."
      Until the Government took office, I did not believe that, but the more that we see their policy unfold, and the more that they pile the penal burden of taxation on the lower-paid while continuing to exempt the high-paid, the more I begin to wonder whether there was more truth in the assertion than I had previously supposed.
      It is high time that the House moved to a Division and made it plain that the Government's fiscal policy is not one that the Labour Party is prepared to sanction. If the

      1237
      Government wish to run a high-tax policy, they must at least provide protection for the poorest members of our community.
      Question put, That the amendment be made:—
      The House divided: Ayes 193, Noes 273.

      Division No. 273]

      [7.55 pm

      AYES

      Abse, Leo

      Hardy, Peter

      Adams, Allen

      Harrison, Rt Hon Walter

      Alton, David

      Hart, Rt Hon Dame Judith

      Anderson, Donald

      Haynes, Frank

      Archer, Rt Hon Peter

      Heffer, Eric S.

      Ashley, Rt Hon Jack

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

      Beith, A. J.

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

      Bennett, Andrew (St'kp't N)

      Home Robertson, John

      Booth, Rt Hon Albert

      Homewood, William

      Boothroyd, Miss Betty

      Hooley, Frank

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

      Horam, John

      Bray, Dr Jeremy

      Howell, Rt Hon D.

      Brown, Hugh D. (Provan)

      Howells, Geraint

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

      Hughes, Robert (Aberdeen N)

      Callaghan, Rt Hon J.

      Janner, Hon Greville

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

      Jay, Rt Hon Douglas

      Campbell, Ian

      John, Brynmor

      Campbell-Savours, Dale

      Johnson, James (Hull West)

      Canavan, Dennis

      Johnson, Walter (Derby S)

      Cant, R. B.

      Jones, Rt Hon Alec (Rh'dda)

      Carter-Jones, Lewis

      Jones, Barry (East Flint)

      Clark, Dr David (S Shields)

      Jones, Dan (Burnley)

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

      Kaufman, Rt Hon Gerald

      Cohen, Stanley

      Kerr, Russell

      Coleman, Donald

      Lambie, David

      Concannon, Rt Hon J. D.

      Leadbitter, Ted

      Conlan, Bernard

      Leighton, Ronald

      Cook, Robin F.

      Lestor, Miss Joan

      Cowans, Harry

      Lewis, Arthur (N'ham NW)

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

      Lewis, Ron (Carlisle)

      Craigen, J. M.

      Litherland, Robert

      Crowther, J. S.

      Lofthouse, Geoffrey

      Cryer, Bob

      McDonald, Dr Oonagh

      Cunningham, G. (Islington S)

      McElhone, Frank

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

      McKay, Allen (Penistone)

      Davies, Rt Hon Denzil (L'lli)

      McKelvey, William

      Davies, Ifor (Gower)

      McNally, Thomas

      Davis, Clinton (Hackney C)

      McNamara, Kevin

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

      McTaggart, Robert

      Deakins, Eric

      McWilliam, John

      Dean, Joseph (Leeds West)

      Magee, Bryan

      Dempsey, James

      Marshall, D (G'gow S'ton)

      Dewar, Donald

      Marshall, Dr Edmund (Goole)

      Dixon, Donald

      Martin, M (G'gow S'burn)

      Dobson, Frank

      Mason, Rt Hon Roy

      Dormand, Jack

      Maxton, John

      Douglas-Mann, Bruce

      Meacher, Michael

      Dubs, Alfred

      Mellish, Rt Hon Robert

      Duffy, A. E. P.

      Millan, Rt Hon Bruce

      Dunn, James A.

      Miller, Dr M. S. (E Kilbride)

      Dunwoody, Hon Mrs G.

      Mitchell, Austin (Grimsby)

      Eadie, Alex

      Mitchell, R. C. (Soton Itchen)

      Eastham, Ken

      Morris, Rt Hon A. (W'shawe)

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

      Morris, Rt Hon J. (Aberavon)

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

      Morton, George

      English, Michael

      Newens, Stanley

      Ennals, Rt Hon David

      Oakes, Rt Hon Gordon

      Evans, loan (Aberdare)

      Ogden, Eric

      Field, Frank

      O'Halloran, Michael

      Fitch, Alan

      O'Neill, Martin

      Fletcher, Ted (Darlington)

      Orme, Rt Hon Stanley

      Ford, Ben

      Palmer, Arthur

      Forrester, John

      Parker, John

      Foster, Derek

      Pavitt, Laurie

      Foulkes, George

      Pendry, Tom

      Garrett, John (Norwich S)

      Powell, Raymond (Ogmore)

      George, Bruce

      Rees, Rt Hon M (Leeds S)

      Gilbert, Rt Hon Dr John

      Roberts, Albert (Normanton)

      Ginsburg, David

      Roberts, Gwilym (Cannock)

      Grant, George (Morpeth)

      Robertson, George

      Grant, John (Islington C)

      Robinson, G. (Coventry NW)

      1238

      Rooker, J. W.

      Tilley, John

      Roper, John

      Tinn, James

      Ross, Ernest (Dundee West)

      Torney, Tom

      Ross, Stephen (Isle of Wight)

      Urwin, Rt Hon Tom

      Rowlands, Ted

      Varley, Rt Hon Eric G.

      Ryman, John

      Wainwright, E. (Dearne V)

      Sandelson, Neville

      Wainwright, R. (Colne V)

      Sever, John

      Walker, Rt Hon H. (D'caster)

      Sheldon, Rt Hon R.

      Watkins, David

      Shore, Rt Hon Peter

      Weetch, Ken

      Short, Mrs Renée

      Welsh, Michael

      Silkin, Rt Hon J. (Deptford)

      White, J. (G'gow Pollok)

      Silkin, Rt Hon S. C. (Dulwich)

      Whitehead, Phillip

      Silverman, Julius

      Whitlock, William

      Skinner, Dennis

      Willey, Rt Hon Frederick

      Smith, Rt Hon J. (N Lanark)

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

      Snape, Peter

      Wilson, Gordon (Dundee E)

      Soley, Clive

      Wilson, William (C'try SE)

      Spearing, Nigel

      Winnick, David

      Spriggs, Leslie

      Woodall, Alec

      Stallard, A. W.

      Woolmer, Kenneth

      Steel, Rt Hon David

      Wright, Sheila

      Stewart, Rt Hon D. (W Isles)

      Young, David (Bolton E)

      Stoddart, David

      Summerskill, Hon Dr Shirley

      Tellers for the Ayes:

      Taylor, Mrs Ann (Bolton W)

      Mr. James Hamilton and

      Thomas, Jeffrey (Abertillery)

      Mr. Frank White.

      Thomas, Dr R. (Carmarthen)

      NOES

      Adley, Robert

      Clegg, Sir Walter

      Aitken, Jonathan

      Cockeram, Eric

      Alexander, Richard

      Colvin, Michael

      Alison, Michael

      Cope, John

      Ancram, Michael

      Cormack, Patrick

      Arnold, Tom

      Corrie, John

      Aspinwall, Jack

      Cranborne, Viscount

      Atkins, Robert (Preston N)

      Critchley, Julian

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

      Dean, Paul (North Somerset)

      Baker, Nicholas (N Dorset)

      Dickens, Geoffrey

      Banks, Robert

      Douglas-Hamilton, Lord J.

      Beaumont-Dark, Anthony

      du Cann, Rt Hon Edward

      Bendall, Vivian

      Dunn, Robert (Dartford)

      Benyon, W. (Buckingham)

      Durant, Tony

      Best, Keith

      Dykes, Hugh

      Bevan, David Gilroy

      Eden, Rt Hon Sir John

      Biffen, Rt Hon John

      Edwards, Rt Hon N. (P'broke)

      Biggs-Davison, John

      Eggar, Tim

      Blackburn, John

      Emery, Peter

      Blaker, Peter

      Eyre, Reginald

      Body, Richard

      Fairbairn, Nicholas

      Bonsor, Sir Nicholas

      Fairgrieve, Russell

      Boscawen, Hon Robert

      Faith, Mrs Sheila

      Bottomley, Peter (W'wich W)

      Farr, John

      Bowden, Andrew

      Fell, Anthony

      Boyson, Dr Rhodes

      Fenner, Mrs Peggy

      Braine, Sir Bernard

      Fisher, Sir Nigel

      Bright, Graham

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

      Brinton, Tim

      Fletcher-Cooke, Sir Charles

      Brittan, Leon

      Fookes, Miss Janet

      Brooke, Hon Peter

      Forman, Nigel

      Brotherton, Michael

      Fowler, Rt Hon Norman

      Brown, Michael (Brigg & Sc'n)

      Fox, Marcus

      Browne, John (Winchester)

      Fraser, Rt Hon Sir Hugh

      Bruce-Gardyne, John

      Fraser, Peter (South Angus)

      Buchanan-Smith, Alick

      Gardiner, George (Reigate)

      Buck, Antony

      Gardner, Edward (S Fylde)

      Bulmer, Esmond

      Garel-Jones, Tristan

      Butcher, John

      Glyn, Dr Alan

      Butler, Hon Adam

      Goodhew, Victor

      Cadbury, Jocelyn

      Goodlad, Alastair

      Carlisle, John (Luton West)

      Gorst, John

      Carlisle, Kenneth (Lincoln)

      Gow, Ian

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

      Gower, Sir Raymond

      Chalker, Mrs. Lynda

      Grant, Anthony (Harrow C)

      Chapman, Sydney

      Gray, Hamish

      Churchill, W. S.

      Greenway, Harry

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

      Grieve, Percy

      Clark, Sir W. (Croydon S)

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

      Clarke, Kenneth (Rushcliffe)

      Griffiths, Peter Portsm'th N)

      1239

      Grist, Ian

      Newton, Tony

      Grylls, Michael

      Normanton, Tom

      Gummer, John Selwyn

      Nott, Rt Hon John

      Hamilton, Hon A.

      Onslow, Cranley

      Hamilton, Michael (Salisbury)

      Oppenheim, Rt Hon Mrs S.

      Hampson, Dr Keith

      Osborn, John

      Hannam,John

      Page, John (Harrow, West)

      Haselhurst, Alan

      Page, Rt Hon Sir G. (Crosby)

      Hastings, Stephen

      Page, Richard (SW Herts)

      Havers, Rt Hon Sir Michael

      Parkinson, Cecil

      Hawksley, Warren

      Parris, Matthew

      Hayhoe, Barney

      Patten, Christopher (Bath)

      Heddle, John

      Pattie, Geoffrey

      Henderson, Barry

      Pawsey, James

      Heseltine, Rt Hon Michael

      Percival, Sir Ian

      Hicks, Robert

      Peyton, Rt Hon John

      Higgins, Rt Hon Terence L.

      Pollock, Alexander

      Hogg, Hon Douglas (Gr'th'm)

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

      Holland, Philip (Carlton)

      Prentice, Rt Hon Reg

      Hooson, Tom

      Prior, Rt Hon James

      Hunt, David (Wirral)

      Proctor, K. Harvey

      Hunt, John (Ravensbourne)

      Pym, Rt Hon Francis

      Irving, Charles (Cheltenham)

      Raison, Timothy

      Jessel, Toby

      Rathbone, Tim

      Johnson Smith, Geoffrey

      Rees, Peter (Dover and Deal)

      Jopling, Rt Hon Michael

      Renton, Tim

      Joseph, Rt Hon Sir Keith

      Rhodes James, Robert

      Kaberry, Sir Donald

      Rhys Williams, Sir Brandon

      Kellett-Bowman, Mrs Elaine

      Ridley, Hon Nicholas

      Kimball, Marcus

      Ridsdale, Sir Julian

      King, Rt Hon Tom

      Rifkind, Malcolm

      Knight, Mrs Jill

      Roberts, M. (Cardiff NW)

      Knox, David

      Roberts, Wyn (Conway)

      Lamont, Norman

      Ross, Wm. (Londonderry)

      Lang, Ian

      Rossi, Hugh

      Langford-Holt, Sir John

      Rost, Peter

      Latham, Michael

      Sainsbury, Hon Timothy

      Lawrence, Ivan

      St. John-Stevas, Rt Hon N.

      Lawson, Rt Hon Nigel

      Scott, Nicholas

      Lester, Jim (Beeston)

      Shaw, Giles (Pudsey)

      Lewis, Kenneth (Rutland)

      Shelton, William (Streatham)

      Lloyd, Ian (Havant & W'loo)

      Shepherd, Colin (Hereford)

      Lloyd, Peter (Fareham)

      Shepherd, Richard

      Loveridge, John

      Silvester, Fred

      Luce, Richard

      Skeet, T. H. H.

      Lyell, Nicholas

      Speed, Keith

      Macfarlane, Neil

      Speller, Tony

      MacKay, John (Argyll)

      Spence, John

      Macmillan, Rt Hon M.

      Spicer, Jim (West Dorset)

      McNair-Wilson, M. (N'bury)

      Spicer, Michael (S Worcs)

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

      Sproat, Iain

      McQuarrie, Albert

      Squire, Robin

      Madel, David

      Stainton, Keith

      Major, John

      Stanbrook, Ivor

      Marland, Paul

      Stanley, John

      Marshall, Michael (Arundel)

      Stevens, Martin

      Marten, Neil (Banbury)

      Stewart, Ian (Hitchin)

      Maude, Rt Hon Sir Angus

      Stewart, A. (E Renfrewshire)

      Mawby, Ray

      Stokes, John

      Mawhinney, Dr Brian

      Stradling Thomas, J.

      Maxwell-Hyslop, Robin

      Tapsell, Peter

      Mayhew, Patrick

      Taylor, Teddy (S'end E)

      Mellor, David

      Tebbit, Norman

      Miller, Hal (B'grove)

      Temple-Morris, Peter

      Mills, Iain (Meriden)

      Thomas, Rt Hon Peter

      Mills, Peter (West Devon)

      Thompson, Donald

      Miscampbell, Norman

      Thorne, Neil (Ilford South)

      Mitchell, David (Basingstoke)

      Thornton, Malcolm

      Moate, Roger

      Townend, John (Bridlington)

      Molyneaux, James

      Townsend, Cyril D, (B'heath)

      Monro, Hector

      Trippier, David

      Morgan, Geraint

      Trotter, Neville

      Morris, M. (N'hampton S)

      van Straubenzee, W. R.

      Morrison, Hon C. (Devizes)

      Vaughan, Dr Gerard

      Morrison, Hon P. (Chester)

      Viggers, Peter

      Murphy, Christopher

      Wakeham, John

      Myles, David

      Waldegrave, Hon William

      Neale, Gerrard

      Walker, B. (Perth)

      Needham, Richard

      Wall, Patrick

      Neubert, Michael

      Ward, John

      1240

      Warren, Kenneth

      Winterton, Nicholas

      Watson, John

      Wolfson, Mark

      Wells, John (Maidstone)

      Young, Sir George (Acton)

      Wells, Bowen

      Younger, Rt Hon George

      Whitelaw, Rt Hon William

      Whitney, Raymond

      Tellers for the Noes:

      Wickenden, Keith

      Mr. Anthony Berry and

      Wiggin, Jerry

      Mr. Carol Mather.

      Williams, D. (Montgomery)

      Question accordingly negatived.
      Amendment proposed: No. 24, in page 13, line 9, at end insert—
      '(1A) In subsection (1A) of section 8 of the Taxes Act (personal relief) there shall be inserted after "upwards" the words "or that she was at any time within the year of assessment of the age of sixty and in receipt of a Category A retirement pension under Subsection (1) of section 28 of the Social Security Act 1975.".'.—[Mr. Robert Sheldon.]
      Question put, That the amendment be made:—
      The House divided: Ayes 195, Noes 276.

      Division No. 274]

      [8.05 pm

      AYES

      Abse, Leo

      Field, Frank

      Adams, Allen

      Fitch, Alan

      Alton, David

      Fletcher, Ted (Darlington)

      Anderson, Donald

      Ford, Ben

      Archer, Rt Hon Peter

      Forrester, John

      Ashley, Rt Hon Jack

      Foster, Derek

      Beith, A. J.

      Foulkes, George

      Bennett, Andrew (St'kp't N)

      Garrett, John (Norwich S)

      Bidwell, Sydney

      George, Bruce

      Booth, Rt Hon Albert

      Gilbert, Rt Hon Dr John

      Boothroyd, Miss Betty

      Ginsburg, David

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

      Golding, John

      Bray, Dr Jeremy

      Grant, George (Morpeth)

      Brown, Hugh D. (Provan)

      Grant, John (Islington C)

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

      Hamilton, James (Bothwell)

      Callaghan, Rt Hon J.

      Hardy, Peter

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

      Harrison, Rt Hon Walter

      Campbell, Ian

      Hart, Rt Hon Dame Judith

      Campbell-Savours, Dale

      Haynes, Frank

      Canavan, Dennis

      Heffer, Eric S.

      Cant, R. B.

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

      Clark, Dr David (S Shields)

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

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

      Home Robertson, John

      Cohen, Stanley

      Homewood, William

      Concannon, Rt Hon J. D.

      Hooley, Frank

      Conlan, Bernard

      Horam, John

      Cook, Robin F.

      Howell, Rt Hon D.

      Cowans, Harry

      Howells, Geraint

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

      Huckfield, Les

      Craigen, J. M,

      Hughes, Robert (Aberdeen N)

      Crowther, J. S.

      Janner, Hon Greville

      Cryer, Bob

      Jay, Rt Hon Douglas

      Cunningham, G. (Islington S)

      John, Brynmor

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

      Johnson, James (Hull West)

      Davies, Rt Hon Denzil (L'lli)

      Johnson, Walter (Derby S)

      Davies, Ifor (Gower)

      Jones, Rt Hon Alec (Rh'dda)

      Davis, Clinton (Hackney C)

      Jones, Barry (East Flint)

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

      Jones, Dan (Burnley)

      Deakins, Eric

      Kaufman, Rt Hon Gerald

      Dempsey, James

      Kerr, Russell

      Dewar, Donald

      Lambie, David

      Dixon, Donald

      Leadbitter, Ted

      Dobson, Frank

      Leighton, Ronald

      Dormand, Jack

      Lestor, Miss Joan

      Douglas-Mann, Bruce

      Lewis, Arthur (N'ham NW)

      Dubs, Alfred

      Lewis, Ron (Carlisle)

      Duffy, A. E. P.

      Litherland, Robert

      Dunn, James A.

      Lofthouse, Geoffrey

      Dunwoody, Hon Mrs G.

      McDonald, Dr Oonagh

      Eadie, Alex

      McElhone, Frank

      Eastham, Ken

      McKay, Allen (Penistone)

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

      McKelvey, William

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

      McNally, Thomas

      Ennals, Rt Hon David

      McNamara, Kevin

      Evans, loan (Aberdare)

      McTaggart, Robert

      1241

      McWilliam, John

      Silkin, Rt Hon S. C. (Dulwich)

      Magee, Bryan

      Silverman, Julius

      Marshall, D (G'gow S'ton)

      Skinner, Dennis

      Marshall, Dr Edmund (Goole)

      Smith, Rt Hon J. (N Lanark)

      Martin, M (G'gow S'burn)

      Snape, Peter

      Mason, Rt Hon Roy

      Soley, Clive

      Maxton, John

      Spearing, Nigel

      Meacher, Michael

      Spriggs, Leslie

      Mellish, Rt Hon Robert

      Stallard, A. W.

      Millan, Rt Hon Bruce

      Steel, Rt Hon David

      Miller, Dr M. S. (E Kilbride)

      Stewart, Rt Hon D. (W Isles)

      Mitchell, Austin (Grimsby)

      Stoddart, David

      Mitchell, R. C. (Soton Itchen)

      Summerskill, Hon Dr Shirley

      Morris, Rt Hon A. (W'shawe)

      Taylor, Mrs Ann (Bolton W)

      Morris, Rt Hon J. (Aberavon)

      Thomas, Jeffrey (Abertillery)

      Morton, George

      Thomas, Dr R. (Carmarthen)

      Newens, Stanley

      Tilley, John

      Oakes, Rt Hon Gordon

      Tinn, James

      Ogden, Eric

      Torney, Tom

      O'Halloran, Michael

      Urwin, Rt Hon Tom

      O'Neill, Martin

      Varley, Rt Hon Eric G.

      Orme, Rt Hon Stanley

      Wainwright, E. (Dearne V)

      Palmer, Arthur

      Wainwright, R. (Colne V)

      Parker, John

      Walker, Rt Hon H. (D'caster)

      Pavitt, Laurie

      Watkins, David

      Pendry, Tom

      Weetch, Ken

      Penhaligon, David

      Welsh, Michael

      Powell, Raymond (Ogmore)

      White, Frank R.

      Rees, Rt Hon M (Leeds S)

      White, J. (G'gow Pollok)

      Roberts, Albert (Normanton)

      Whitehead, Phillip

      Roberts, Gwilym (Cannock)

      Whitlock, William

      Robertson, George

      Willey, Rt Hon Frederick

      Robinson, G. (Coventry NW)

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

      Rooker, J. W.

      Wilson, Gordon (Dundee E)

      Roper, John

      Wilson, William (C'try SE)

      Ross, Ernest (Dundee West)

      Winnick, David

      Ross, Stephen (Isle of Wight)

      Woodall, Alec

      Rowlands, Ted

      Woolmer, Kenneth

      Sandelson, Neville

      Wright, Sheila

      Sever, John

      Young, David (Bolton E)

      Sheldon, Rt Hon R.

      Shore, Rt Hon Peter

      Tellers for the Ayes:

      Short, Mrs Renée

      Mr. Donald Coleman and

      Silkin, Rt Hon J. (Deptford)

      Mr. Joe Dean.

      NOES

      Adley, Robert

      Browne, John (Winchester)

      Aitken, Jonathan

      Bruce-Gardyne, John

      Alexander, Richard

      Buchanan-Smith, Alick

      Alison, Michael

      Buck, Antony

      Ancram, Michael

      Bulmer, Esmond

      Arnold, Tom

      Butcher, John

      Aspinwall, Jack

      Butler, Hon Adam

      Atkins, Rt Hon H. (S'thorne)

      Cadbury, Jocelyn

      Atkins, Robert (Preston N)

      Carlisle, John (Luton West)

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

      Carlisle, Kenneth (Lincoln)

      Baker, Nicholas (N Dorset)

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

      Banks, Robert

      Chalker, Mrs. Lynda

      Beaumont-Dark, Anthony

      Chapman, Sydney

      Bendall, Vivian

      Churchill, W. S.

      Benyon, W. (Buckingham)

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

      Best, Keith

      Clark, Sir W. (Croydon S)

      Bevan, David Gilroy

      Clarke, Kenneth (Rushcliffe)

      Biffen, Rt Hon John

      Clegg, Sir Walter

      Biggs-Davison, John

      Cockeram, Eric

      Blackburn, John

      Colvin, Michael

      Blaker, Peter

      Cope, John

      Body, Richard

      Cormack, Patrick

      Bonsor, Sir Nicholas

      Corrie, John

      Bosocawen, Hon Robert

      Cranborne, Viscount

      Bottomley, Peter (W'wich W)

      Critchley, Julian

      Bowden, Andrew

      Crouch, David

      Boyson, Dr Rhodes

      Dean, Paul (North Somerset)

      Braine, Sir Bernard

      Dickens, Geoffrey

      Bright, Graham

      Douglas-Hamilton, Lord J.

      Brinton, Tim

      du Cann, Rt Hon Edward

      Brittan, Leon

      Dunn, Robert (Dartford)

      Brooke, Hon Peter

      Durant, Tony

      Brotherton, Michael

      Dykes, Hugh

      Brown, Michael (Brigg & Sc'n)

      Eden, Rt Hon Sir John

      1242

      Edwards, Rt Hon N. (P'broke)

      Lyell, Nicholas

      Eggar, Tim

      Macfarlane, Neil

      Emery, Peter

      MacKay, John (Argyll)

      Eyre, Reginald

      Macmillan, Rt Hon M.

      Fairbairn, Nicholas

      McNair-Wilson, M. (N'bury)

      Fairgrieve, Russell

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

      Faith, Mrs Sheila

      McQuarrie, Albert

      Farr, John

      Madel, David

      Fell, Anthony

      Major, John

      Fenner, Mrs Peggy

      Marland, Paul

      Fisher, Sir Nigel

      Marshall, Michael (Arundel)

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

      Marten, Neil (Banbury)

      Fletcher-Cooke, Sir Charles

      Mates, Michael

      Fookes, Miss Janet

      Maude, Rt Hon Sir Angus

      Forman, Nigel

      Mawby, Ray

      Fowler, Rt Hon Norman

      Mawhinney, Dr Brian

      Fox, Marcus

      Maxwell-Hyslop, Robin

      Fraser, Rt Hon Sir Hugh

      Mayhew, Patrick

      Fraser, Peter (South Angus)

      Mellor, David

      Gardiner, George (Reigate)

      Miller, Hal (B'grove)

      Gardner, Edward (S Fylde)

      Mills, Iain (Meriden)

      Garel-Jones, Tristan

      Mills, Peter (West Devon)

      Glyn, Dr Alan

      Miscampbell, Norman

      Goodhew, Victor

      Mitchell, David (Basingstoke)

      Goodlad, Alastair

      Moate, Roger

      Gorst, John

      Molyneaux, James

      Gow, Ian

      Monro, Hector

      Gower, Sir Raymond

      Morgan, Geraint

      Grant, Anthony (Harrow C)

      Morris, M. (N'hampton S)

      Gray, Hamish

      Morrison, Hon P. (Chester)

      Greenway, Harry

      Murphy, Christopher

      Grieve, Percy

      Myles, David

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

      Neale, Gerrard

      Griffiths, Peter Portsm'th N)

      Needham, Richard

      Grist, Ian

      Neubert, Michael

      Grylls, Michael

      Newton, Tony

      Gummer, John Selwyn

      Normanton, Tom

      Hamilton, Hon A.

      Nott, Rt Hon John

      Hamilton, Michael (Salisbury)

      Onslow, Cranley

      Hampson, Dr Keith

      Oppenheim, Rt Hon Mrs S.

      Hannam,John

      Osborn, John

      Haselhurst, Alan

      Page, John (Harrow, West)

      Hastings, Stephen

      Page, Rt Hon Sir G. (Crosby)

      Havers, Rt Hon Sir Michael

      Page, Richard (SW Herts)

      Hawksley, Warren

      Parkinson, Cecil

      Hayhoe, Barney

      Parris, Matthew

      Heddle, John

      Patten, Christopher (Bath)

      Henderson, Barry

      Pattie, Geoffrey

      Heseltine, Rt Hon Michael

      Pawsey, James

      Hicks, Robert

      Percival, Sir Ian

      Higgins, Rt Hon Terence L.

      Peyton, Rt Hon John

      Hogg, Hon Douglas (Gr'th'm)

      Pollock, Alexander

      Holland, Philip (Carlton)

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

      Hooson, Tom

      Prentice, Rt Hon Reg

      Hunt, David (Wirral)

      Prior, Rt Hon James

      Hunt, John (Ravensbourne)

      Proctor, K. Harvey

      Irving, Charles (Cheltenham)

      Pym, Rt Hon Francis

      Jenkin, Rt Hon Patrick

      Raison, Timothy

      Jessel, Toby

      Rathbone, Tim

      Johnson Smith, Geoffrey

      Rees, Peter (Dover and Deal)

      Jopling, Rt Hon Michael

      Rees-Davies, W. R.

      Joseph, Rt Hon Sir Keith

      Renton, Tim

      Kaberry, Sir Donald

      Rhodes James, Robert

      Kellett-Bowman, Mrs Elaine

      Rhys Williams, Sir Brandon

      Kimball, Marcus

      Ridley, Hon Nicholas

      King, Rt Hon Tom

      Ridsdale, Sir Julian

      Knight, Mrs Jill

      Rifkind, Malcolm

      Knox, David

      Roberts, M. (Cardiff NW)

      Lamont, Norman

      Roberts, Wyn (Conway)

      Lang, Ian

      Rossi, Hugh

      Langford-Holt, Sir John

      Rost, Peter

      Latham, Michael

      Royle, Sir Anthony

      Lawrence, Ivan

      Sainsbury, Hon Timothy

      Lawson, Rt Hon Nigel

      St. John-Stevas, Rt Hon N.

      Lester, Jim (Beeston)

      Scott, Nicholas

      Lewis, Kenneth (Rutland)

      Shaw, Giles (Pudsey)

      Lloyd, Ian (Havant & W'loo)

      Shelton, William (Streatham)

      Lloyd, Peter (Fareham)

      Shepherd, Colin (Hereford)

      Loveridge, John

      Shepherd, Richard

      Luce, Richard

      Silvester, Fred

      1243

      Skeet, T. H. H.

      Trotter, Neville

      Speed, Keith

      van Straubenzee, W. R.

      Speller, Tony

      Vaughan, Dr Gerard

      Spence, John

      Viggers, Peter

      Spicer, Jim (West Dorset)

      Wakeham, John

      Spicer, Michael (S Worcs)

      Waldegrave, Hon William

      Sproat, Iain

      Walker, B. (Perth)

      Squire, Robin

      Wall, Patrick

      Stainton, Keith

      Ward, John

      Stanbrook, Ivor

      Warren, Kenneth

      Stanley, John

      Watson, John

      Stewart, Ian (Hitchin)

      Wells, John (Maidstone)

      Stewart, A. (E Renfrewshire)

      Wells, Bowen

      Stokes, John

      Whitelaw, Rt Hon William

      Stradling Thomas, J.

      Whitney, Raymond

      Tapsell, Peter

      Wickenden, Keith

      Taylor, Teddy (S'end E)

      Wiggin, Jerry

      Tebbit, Norman

      Williams, D. (Montgomery)

      Temple-Morris, Peter

      Winterton, Nicholas

      Thomas, Rt Hon Peter

      Wolfson, Mark

      Thompson, Donald

      Young, Sir George (Acton)

      Thorne, Neil (Ilford South)

      Younger, Rt Hon George

      Thornton, Malcolm

      Townend, John (Bridlington)

      Tellers for the Noes:

      Townsend, Cyril D, (B'heath)

      Mr. Anthony Berry and

      Trippier, David

      Mr. Carol Mather.

    Clause 27

      SOCIAL SECURITY BENEFITS
      Mr. Cook: I beg to move amendment No. 27, in page 15, line 42, at end insert
      "less any sum deducted under subsection (1)(b) of section 6 of the Social Security (No. 2) Act 1980."
      Mr. Deputy Speaker (Mr. Bryant Godman Irvine): With this it will be convenient to take the following amendments:
      No. 28, in page 16, line 10, after 'of' , insert 'six-sevenths of.
      No. 29, in page 16, line 15, after `to', insert 'six-sevenths of.
      Mr. Cook: It is perhaps appropriate that, after a debate in which we looked at the effect of the Government's fiscal policy on low-income groups in general, we turn to a debate on the effect of that fiscal policy on two particular groups of low income holders. I refer to those who are on strike and who are, therefore, deprived of any income from their work and to those who are unemployed and, therefore, largely dependent on the benefits that they receive.
      I am sure that the Financial Secretary will not object if I once again refer to that bible, the Conservative campaign guide. In a separate section that deals with health and social security the guide contains the following observation about the Labour Government:
      "The heavy taxation of the poor is among the most discreditable features of the Labour Government."
      In our last debate we established that the income tax burden on the poor had increased under this Government beyond a level that the Conservative Party regarded as discreditable when the Labour Party was in office. The amendments concern specific proposals that the Government have introduced in order to impose a novel tax burden on the incomes of two groups which are, at the time of the tax levy, by definition, living in poverty.
      Amendment No. 27 deals with the method of assessment for the tax liability of the striker and his family.
      1244
      Hon. Members will be aware that, when the Finance Bill was published, assurances were given that the tax to be levied would be confined to the amount payable in benefit for an adult dependant, and that the additions that were paid, for instance, in respect of children, would not be liable to tax. Hon. Members will also recollect that when this was debated in Committee, I demonstrated that that assurance—at least in respect of the striker and his family—was pure humbug.
      The striker's benefit is subject to a deduction of £12. If he has a wife and no children, he is left with a net benefit of about £6 and he is taxed on that. If, however, he receives the child addition, his total amount of supplementary benefit returns to the adult dependant rate and he is taxed at the full adult dependant rate, although patently the sum being taxed is the child's addition being paid to top up the original sum. If the Financial Secretary and the Treasury Bench wish to avoid that the result and tax being levied on the child addition, they will have to provide that the maximum amount taxable is the adult dependant rate less the deduction levied under the Act introduced last year. That would be the effect of amendment No. 27. Anything else will have the most unfortunate effect—which I regard as repugnant and I hope the House regards as repugnant—that we would be levying a tax on the child additions which are calculated as the sums necessary to support, feed and clothe the children of a striker to ensure that he continues to send them to school.
      There is another way to demonstrate the effect of taxing the child additions. Let us take two families—one with children and one without. Let us assume that they receive £12 from a trade union—which was the justification for docking £12 under the 1980 Act—and that both families declare that £12. The result would be that the married man with no children would receive a portion of the adult dependant rate of £6. When he adds his £12 received from the union, he will return to the adult dependant rate and it is at that rate that he will be taxed when he returns to work.
      However, the married man with two children will receive the full adult dependant rate and more because he is receiving child additions and will also have to declare the £12 he receives from the union. He will be taxed at the full adult dependant rate plus £12. The only difference in income between the two families is the child additions. It is therefore logically inescapable that the child additions are taxed. That is the only additional income that the second family has and it must be that income that is being taxed in one case and not in the other.
      The Financial Secretary knows that that arrangement is indefensible, because it was debated in Committee. In Committee he denied that that was so, but plainly that is the effect. If he wants to avoid that effect he should accept amendment No. 27. If he will not accept it, he must justify why he feels able to ask the House to tax the child additions which the House has set at a level necessary for the subsistence of a child.
      Mr. John Silkin: On a point of order, Mr. Deputy Speaker. I am loath to interrupt the proceedings on the Finance Bill, but I understand that there has been a rather serious incursion by the police in the heart of Brixton today. There are serious possibilities of riots resulting from that this evening. I hope that the Home Secretary might be prepared to consider the matter, to ask

      1245
      for a report arid perhaps to make a statement to the House later. I understand that he could not possibly make a statement at such short notice, but I hope that my point of order will be listened to and understood by the Government.
      Mr. Deputy Speaker: The right hon. Gentleman is well aware that such matters are not arranged by the Chair. I am sure that his words will have been listened to.
      Mr. Cook: Amendments Nos. 28 and 29 deal with the taxation of the unemployment benefit which is provided for in the clause. The effect of the amendments would be to exempt one-seventh of unemployment benefit from tax. As will be immediately apprehended by numerate hon. Members, one-seventh is 15 per cent. The effect of exempting 15 per cent. will be to leave in the hands of the claimants 5 per cent. of the total benefit. That is the amount that was deducted last year from the unemployment benefit on the basis that unemployment benefit is not liable to tax. Our amendments are a device, albeit a clumsy device, to make good the 5 per cent. abatement that was applied to unemployment benefit by the Government on the pretext that it was in lieu of taxation.
      I admit at once that this is a clumsy and inelegant—albeit an ingenious—device, and we should much prefer not to have to press these amendments to a Division. We should like the Financial Secretary instead to give us an assurance that he will restore the full rate of unemployment benefit, and restore the 5 per cent. abatement that has been taken from the unemployed in the last two years. But if we are unable to achieve a greater assurance and with more confidence than we had in Committee, we shall feel obliged to press the amendments to a Division.
      Since we debated these matters in Committee two things have developed which have coloured our debate on the taxation of unemployment benefit. First, there are even more unemployed than when we last debated the matter in Committee. Indeed, it is now evident—it is agreed in all parts of the House—that unemployment will shortly top 3 million. That is an inescapable figure. The CBI has put forward its own forecast of unemployment for early next year of 3¼ million, and the CBI's estimates have tended to lag behind the rate of increase in unemployment.
      The second thing that we have seen—as the intervention on the point of order has reminded the House—is the effects in our streets of the social stress that arises from mass unemployment. In particular, we see it in the pockets of our inner urban areas where we now have youth unemployment in excess of 50 per cent. It need surprise no one that that rate of unemployment in a single generation gives rise to intolerable social stress which has the kinds of results that we have been obliged to discuss over the past fortnight.
      It is also evident—we have seen it in the last fortnight and discussed the consequences of that rate of unemployment—that Conservative Members do not understand why we protest so much and are so concerned at the mass outrage of unemployment. How else are we to explain our feelings when, having achieved a level of unemployment that is higher than any level of unemployment since records have been kept, the Government have the nerve to respond to that novel and unique situation by bringing in a new tax on the same people that they themselves have put out of work?
      1246
      While we have demanded the creation of new jobs in manufacturing industry or in the public services, what is contained in the clause is a proposal to create another 3,500 jobs in order to tax all the other people who are out of work. We find that proposal paradoxical. But if Conservative Members are bent on taxing unemployment benefit, at least let them give us a guarantee that they will restore the 5 per cent. abatement that they removed from the unemployed on the basis that they were not liable to taxation.
      During our debate in Committee, I got into hot water because I was rash enough to suggest that that 5 per cent. abatement had been stolen from the unemployed. The Financial Secretary corrected me by saying that what is legally enacted and approved by the House of Commons cannot be construed as theft. I would assent to that proposition technically and legally. What is passed by the House cannot be construed as legal theft. But in judging the propriety of what the House passed two years ago we are surely entitled to have regard to what the House was told at the time that it passed the measure providing for the 5 per cent. abatement. I have before me some quotations from the speeches of the Secretary of State for Social Services when he introduced the measure. On Second Reading, he said:
      "taxation in 1982 is two years away, and the Government have decided that we must start … with an interim scheme in lieu of taxation."
      Indeed, for the avoidance of doubt, he repeated it later in the same speech. He said:
      "The right hon. Gentleman accused me of using the words 'This is a form of taxation.' I never said that. I said that it was an interim measure in lieu of taxation."—[Official Report, 15 April 1980; Vol. 982, c. 1040–59.]
      Then again, for good measure, he said in Committee:
      "I made it abundantly clear on Second Reading … that we recognised that this is not proper taxation. This is an interim scheme in lieu of taxation."—[Official Report, Standing Committee B, 29 April 1980; c. 358.]
      So, on three successive occasions, on Second Reading and in Committee the Secretary of State assured both the House and the Committee that the 5 per cent. abatement was an interim scheme in lieu of taxation. I shall not go so far as to challenge the authority of the Chair by suggesting that the Chair had allowed the Secretary of State to be tedious and repetitive, but he has persisted and put on record several times his assertion that this was an interim scheme in lieu of taxation.
      8.30 pm
      In Committee, the Secretary of State was asked what he meant when he suggested that the 5 per cent. abatement would be restored, subject to the availability of resources. He replied:
      "I shall not be drawn on that. However, the yield from proper taxation will be three times what will be saved by clause 1. One is perfectly capable of looking at the accounts as a whole, at both revenue and expenditure. I do not therefore anticipate any difficulty in meeting the obligation to restore the benefits and fulfilling the pledge that I have given. When the benefits come into tax, the revenue will be there.".—[Official Report, Standing Committee B, 1 May 1980; c. 684.]
      There we have it. The Secretary of State plainly said that when the benefits were taxed the resources would be there to restore the 5 per cent. abatement.
      I can go further than the Secretary of State. I can advise the House that he understated the amount by which the revenue from taxation would exceed the 5 per cent. abatement. He said that it was three times. We know from the figures that we obtained in Committee that the revenue

      1247
      that the Treasury will receive as a result of taxing unemployment benefit will be five times the amount necessary to restore the 5 per cent. abatement.
      The Financial Secretary has the resources, and with them he should restore the 5 per cent. abatement. I know why he and the Government are reluctant to do so. It is true that they want the money, but there is another reason. It is what they are pleased to call the "Why work?" syndrome. Despite the startling rise in unemployment since they came into office, despite the obscene, tragic contrast between the number of vacancies and the number of people unemployed, those who are seeking work now exceed the number of vacancies in most regions 15 to 20 times. Despite that, the Government nurse a secret suspicion that they are unemployed not because they have been thrown out of work but because they are better off unemployed.
      I concede that there are many more people for whom it is financially better to be unemployed than in work under this Government than under the previous Government, because the number of people in the poverty trap has increased by 40 per cent. under this Government on the Government's own estimates. It has increased because the Government have failed to uprate the tax allowances. Those at the bottom end of the spectrum are paying more taxes, and to that extent the Secretary of State has widened the poverty trap.
      The solution to the poverty trap is to raise the tax thresholds to let people out. The solution that the Government seem bent on is, having penalised those in work with a higher tax burden, equally to penalise those who are out of work by retaining the 5 per cent. abatement on their benefit. I do not believe that the House can be prepared to accept that. If it does accept it, the unemployed will be liable to double taxation—the 5 per cent. deduction, which we were told was being levied in lieu of taxation, and the proper taxation that is being introduced in the Bill.
      My hon. Friends who sat through the last debate will recall the passion with which the Financial Secretary came to the defence of the higher income earners who pay the higher tax rates. My hon. Friends who were present yesterday will recall that when we debated tax avoidance and evasion there were a number of interventions from hon. Members below the Gangway who defended with passion the cuts made by their Government in the higher rates of tax, cuts made on the basis that the previous rate of tax levied by the Labour Government had been confiscatory, to use the word used by one of them.
      I invite my hon. Friends to contemplate with what passion, anger and indignation Conservative hon. Members would rise if it were proposed to apply a double taxation penalty to the high income earners. We should be lucky if we concluded the Report stage in time to save tomorrow's business if such a proposal were before us. Yet that is precisely what is proposed for the taxation of the unemployed, who from 1982 onwards are liable to be taxed by the 5 per cent. abatement levied in lieu of taxation and taxed properly on the unemployment benefit that they receive net of that 5 per cent. abatement.
      That would be intolerable. I hope that the Government do not intend to allow it to happen. We tabled the amendments to give the Financial Secretary an opportunity
      1248
      to assure the House that that is not the Government's intention, that they will give a guarantee to restore the 5 per cent. abatement to the unemployed next year.
      If we are unable to obtain that assurance, we shall be failing in our duty to those whom we represent, too many of whom are now, sadly, unemployed, if we do not press the amendments to a Division.
      Mr. Ronald W. Brown: I endorse what my hon. Friend the Member for Edinburgh, Central (Mr. Cook) has said, and particularly his argument about the unemployment benefit being liable to double taxation. In my constituency the Department of Employment is unable to pay the unemployment benefit that it should pay. In addition, the Department of Health and Social Security is unable to keep its offices open to pay social security benefit to my people who are entitled to unemployment benefit, and the local authority is unable to make any emergency payment.
      In Hackney tonight families are starving. There are now threats of looting, of people doing things to obtain food. Yet the Financial Secretary sits on the Treasury Bench as though nothing has happened. Double taxation may or may not be all right, just so long as those concerned are ever paid the unemployment benefit. What right has the Financial Secretary to sit there in the full knowledge that people are not being paid their due? I urge him to say what he will do about it. Who will pay the unemployment benefit to which my families are entitled?
      I have seen the Secretary of State for Employment and the Secretary of State for Social Services. It is true that one of them is giving me an interview next Tuesday. But what will the right hon. Gentleman do about those in my constituency—news of this is on the tape tonight—who will line up tomorrow for money that they will not receive?
      I hope that the Financial Secretary will take advice and tell me how his Government can reduce our country to its present state, with people starving because there is no means of their obtaining food. Do the Government intend to set up workhouses and soup kitchens? How are my people to be paid? They have no money and they have had none since last Friday. I want an undertaking from the Treasury, since it is responsible, about what it intends to do so that families in my area will be told tomorrow how they can get money to buy food for their babies.
      No money is available. The social services department of Hackney borough council has no money. The council was put in the penalty box by the Government and had £15 million withdrawn. We are in a disastrous state. I urge the Financial Secretary to tell me how I can help my constituents to get what is rightly theirs—unemployment benefit, or, if they cannot get that, supplementary benefit. If they cannot get supplementary benefit, no other help is available.
      Mr. Horam: The hon. Member for Hackney, South and Shoreditch (Mr. Brown) has put, with his customary sincerity, an important point which I hope the Government will answer. The Government should feel responsible for the hardship that they are causing in many parts of the country. Their handling of the Civil Service dispute has made worse problems that are having serious effects on many people who draw benefit.
      That is not the first incursion, to use the word employed by the right hon. Member for Deptford (Mr. Silkin) earlier, of events outside the Chamber. We know that there

      1249
      is further trouble down in Brixton, which shows the extent to which the country is under stress as a result of the Government's economic and social policies.
      The general theme of our debate bears on all those problems. The Social Democrats support the principle that social security benefits should be treated as taxable income. The Child Poverty Action Group also supports that general principle, and we believe that it is right to treat social security benefits as income, just as earnings are treated as income.
      Equally, it is right to help with the problem of work incentive by taxing social security benefits. In addition, the money that the Government gain by taxing benefits is available to improve the level of benefits. That was brought out well by the hon. Member for Edinburgh, Central (Mr. Cook) who quoted figures obtained in Committee. The money that the Government gain from taxing benefits is about five times what they would need to make good the real cut in benefit made last year in lieu of taxation.
      We are asking for very little and for something which is compatible with the Government's general stand on work incentives. The Social Democrats agree that it is right in principle that all income should be taxed. However, we also support higher levels of benefits and we believe that the Government should restore the cuts that they made on the ground that they could not at that time bring in measures to tax benefits.
      In case the Government fall back on the argument that higher benefits would affect the work incentive, I should point out that a recent survey by the Institute of Policy Studies, financed by the Department of Employment and the Manpower Services Commission, found that only 3 per cent. of white men and 5 per cent. of men in any minority group received more in benefits than they had previously earned.
      An astonishing aspect of that survey was that the average incomes of those men had declined by 46 per cent. since they had become unemployed. There can be no problem of work incentives when the gap between what is received in benefits and what is received in incomes is so great. The study also showed—and this relates to a point by the hon. Member for Hackney, South and Shoreditch—that there is real hardship for people living on the present level of unemployment benefit, particularly if they live on that benefit for a long time.
      8.45 pm
      My constituents in Gateshead are just as much at risk in this respect as are the citizens of Hackney. Indeed, unemployment in Gateshead, I suspect, is higher than, or a least as high as, the unemployment rate in parts of inner London. I know that parts of inner London are suffering an increasing level of unemployment. This is an issue about which those hon. Members who represent inner city areas feel concern. It is evident in the present, real troubles that the country faces.
      The pat argument that the Government and the Prime Minister tend to evoke does not stand up. The way to increase benefits, in the short term, is to use the money that the Government have gained by taxing benefits not simply to restore cuts but to make substantial increases, for example in the long-term supplementary benefit grade as it applies to the unemployed. The unemployed are the only group outside it. The cost would be about £75 million to be added to the £45 million entailed in what the
      1250
      amendment seeks. This would make a direct contribution to lessening the tensions and the difficulties that are evident in the country and that must cause the Government the utmost concern.
      The Prime Minister said only recently that this has been the most difficult period of her premiership. The right hon. Lady recognised the sense of responsibility that she must feel for the riots that have occurred across the country. If she is to do anything about them—there are many aspects to the problem—she must pay attention to the plight of the unemployed. This is the central fact to which the amendment seeks to direct the mind of the Government.
      Mr. Soley: Today, as on other occasions during the progress of the Finance Bill, much has been heard about the Government's economic policy. This is an appropriate time to say that underlying that policy is what amounts almost to a desire to punish people who go on strike or who are seen as scroungers. They are put in the firing line. It is unique to this Government that, both at the time of the election and since, they have chosen to blame the failures of British economic policy on some moral failing of the British people. No one can believe that. The failings have much deeper causes. Clearly, however, the people in the front line are those on low incomes and those who might have been on strike.
      I acknowledge to some extent the Minister's argument that higher rates of tax were absurdly high. The problem that arises is that if tax levels are increased on people at the lower end of the scale at the same time as reliefs are granted at the higher end, our people, who are not stupid and who understand what is happening, become angry. Their anger is understandable. They are aware that there is no effective tax on wealth. Yet they are told that those at the lower end of the income scale must make extra sacrifices for the good of the country. People know that that cannot be fair.
      My hon. Friend the Member for Hackney, South arid Shoreditch (Mr. Brown) has drawn attention to a matter of terrifying significance. I received a letter recently, the contents of which I was inclined to doubt although it came from a good source, stating that in my constituency the supply of Girocheques to pay benefit was becoming exhausted. I have taken steps to check whether that is so. It is clear from what my hon. Friend says that it must be. It is terrifying to think that, at a time when law and order is already in a shaky state, not least because of the Government's policies, people might be denied benefit. On top of all the other sufferings, that must impose yet greater strains on the fabric of society.
      There is a fundamental fault in the Government's approach when they can continue increasing the burdens on the lower income groups, on the unemployed and on those on strike while they continue to give relief to those at the higher end of the spectrum. It is that flaunting of privilege in the face of deprivation that so damages people's trust and confidence in the system.
      Unless the Government change and show some recognition of the needs of those at the lower end of the income scale, we are in for much more serious trouble than Britain has seen for many years.
      Mr. Lawson: This debate has been briefer than the previous debate, but it has ranged no less widely. It has touched on many areas of deep concern. All of us are concerned about the level of unemployment. All of us are

      1251
      particularly concerned about the recent examples of riots, some of which have tended to be imitative, in some of our cities. We are also deeply concerned about the effects of the Civil Service strike on innocent victims such as the constituents of the hon. Member for Hackney, South and Shoreditch (Mr. Brown).
      The Government deplore the fact not merely that the Civil Service unions should have called this strike but, in particular, that they should be causing hardship to some of the weakest members of our society through the failure to pay unemployment benefit in the way that the hon. Gentleman described. It is astonishing that a group of people who, over the past two years, have had an increase of 50 per cent. in their pay and who now have offered to them a further increase of 7 per cent., and who have a higher degree of security of employment than any other group in our society, should now be on strike and causing the sort of consequences to which the hon. Gentleman has alluded.
      Mr. K. J. Woolmer: Will the right hon. Gentleman give way?
      Mr. Soley rose—
      Mr. Lawson: I shall continue.
      I have every sympathy with the constituents of the hon. Member for Hackney, South and Shoreditch. He has taken up the matter with my right hon. Friends the Secretary of State for Employment and the Secretary of State for Social Services. They are the Ministers who have a direct responsibility. It is not a Treasury responsibility. I am glad that the hon. Gentleman has done that. I understand that he felt moved to ventilate the difficulty in this debate. I would be the last person to criticise him for having done
      SO.
      Mr. Soley: It is totally unacceptable that the right hon. Gentleman simply blames this on the civil servants, as though the Government have no responsibility. The Government are party to the negotiations. Everyone knows that if the Pay Research Unit had not been abolished, or that if the Government had set up some other negotiating machinery, they could have carried on the normal trade union negotiations in this respect. It is not enough to say, as the Government say over and again, "This is nothing to do with the Government; it is not our fault."
      Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. I did not intervene previously, but we had a major debate on this subject yesterday. The Financial Secretary was answering a question put by the hon. Member for Hackney, South and Shoreditch (Mr. Brown), and I allowed that to continue. However, we must now return to the subject of the clause.
      Mr. Lawson: I shall certainly do that, Mr. Deputy Speaker. If at any moment I strayed out of order, I regret that. I did so only because of the intervention of the hon. Member for Hackney, South and Shoreditch, who felt very strongly about the subject, and understandably so. I felt that I owed him a reply and that I should not ignore what he said by seeking to shelter around a narrow construction of the rules of order.
      The main matter under debate is the question of the taxation of unemployment benefit and supplementary benefit paid in respect of unemployment—because the
      1252
      two, obviously, in all equity, must be treated in the same way. When we discussed the matter in Committee, both the spokesmen for the official Opposition, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) and the hon. Member for Edinburgh, Central (Mr. Cook), conceded that it was right to subject unemployment benefit and supplementary benefit for the unemployed to tax. They argued about the method, but they agreed that those benefits should be taxed. However, in his most recent intervention, the hon. Member for Edinburgh, Central seems to have shifted away from that, and suggests that it is disgraceful that unemployment benefit should be taxed. I note his opportunism, but in all logic, equity and common sense, the people of this country recognise that the principle he enunciated in Committee was sounder than the one he now enunciates on Report. Indeed, that latter principle was also enunciated today by the hon. Member for Gateshead, West (Mr. Horam) on behalf of the Social Democratic Party.
      I was asked to give an assurance that the 5 per cent. abatement of unemployment benefit would be made good when unemployment benefit and supplementary benefit in respect of unemployment come into tax in April 1982. I am afraid that I can add nothing to the statement that I made on this matter when we discussed it in Committee. I understand all the arguments that have been adduced by Opposition Members today, but we are discussing a public expenditure matter, and the decision will be taken in the normal way in the course of the annual public expenditure review which takes place during the summer and autumn of this year. The decision whether to make good the abatement will be announced publicly well before April 1982, when the benefits are due to come into tax.
      The decision will be made not just, as was suggested by the hon. Members for Gateshead, West and Edinburgh, Central, in the light of the narrow question of how much is being collected in taxation and how much it would cost to pay the abatement—that may be relevant, but the decision will not be taken in that limited context—but in the context of the overall total public expenditure and the priorities within that total. That is the way that Governments of any political colour would address public expenditure matters, and that is the way that we shall do it. The matter remains to be decided, and therefore I cannot make a statement today. However, I have noted what has been said.
      It is most unwise of hon. Members, however strongly they feel about unemployment and the suffering and hardship that it involves, to get carried away by the headlines and imply that it is responsible for the riots that have occurred in many of our cities recently. There is no evidence for that connection. We must take a serious view of the civil disturbances, and to explain them away glibly as automatic consequences of unemployment is irresponsible and regrettable.
      Mr. Robert Sheldon: Perhaps the right hon. Gentleman did not hear the Prime Minister say that unemployment was a factor.
      Mr. Lawson: My right hon. Friend went on to say that it was certainly not the main factor. I associate myself with what my right hon. Friend the Prime Minister said. I am glad that the Opposition agree with the Prime Minister's words. On that happy and harmonious note I ask the House to reject the amendment.
      Question put, That the amendment be made:—
      The House divided:Ayes 178, Noes 271.

      Division No. 275]

      [8.55 pm

      AYES

      Abse, Leo

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

      Adams, Allen

      Home Robertson, John

      Anderson, Donald

      Homewood, William

      Archer, Rt Hon Peter

      Hooley, Frank

      Ashley, Rt Hon Jack

      Howell, Rt Hon D.

      Ashton, Joe

      Huckfield, Les

      Bennett, Andrew (St'kp't N)

      Hughes, Robert (Aberdeen N)

      Bidwell, Sydney

      Jay, Rt Hon Douglas

      Booth, Rt Hon Albert

      John, Brynmor

      Boothroyd, Miss Betty

      Johnson, James (Hull West)

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

      Johnson, Walter (Derby S)

      Bray, Dr Jeremy

      Jones, Rt Hon Alec (Rh'dda)

      Brown, Hugh D. (Provan)

      Jones, Barry (East Flint)

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

      Jones, Dan (Burnley)

      Callaghan, Rt Hon J.

      Kaufman, Rt Hon Gerald

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

      Kerr, Russell

      Campbell, Ian

      Lambie, David

      Campbell-Savours, Dale

      Leadbitter, Ted

      Canavan, Dennis

      Lestor, Miss Joan

      Cant, R. B.

      Lewis, Arthur (N'ham NW)

      Clark, Dr David (S Shields)

      Lewis, Ron (Carlisle)

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

      Lofthouse, Geoffrey

      Cohen, Stanley

      McDonald, Dr Oonagh

      Coleman, Donald

      McElhone, Frank

      Concannon, Rt Hon J. D.

      McKay, Allen (Penistone)

      Conlan, Bernard

      McNally, Thomas

      Cook, Robin P,

      McNamara, Kevin

      Cowans, Harry

      McWilliam, John

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

      Magee, Bryan

      Craigen, J. M.

      Marshall, D (G'gow S'ton)

      Crowther, J. S.

      Marshall, Dr Edmund (Goole)

      Cryer, Bob

      Martin, M (G'gow S'burn)

      Cunningham, G. (Islington S)

      Mason, Rt Hon Roy

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

      Maxton, John

      Davies, Rt Hon Denzil (L'lli)

      Meacher, Michael

      Davies, Ifor (Gower)

      Mellish, Rt Hon Robert

      Davis, Clinton (Hackney C)

      Millan, Rt Hon Bruce

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

      Miller, Dr M. S. (E Kilbride)

      Deakins, Eric

      Mitchell, Austin (Grimsby)

      Dempsey, James

      Mitchell, R. C. (Soton Itchen)

      Dewar, Donald

      Morris, Rt Hon A. (W'shawe)

      Dixon, Donald

      Morris, Rt Hon C. (O'shaw)

      Dobson, Frank

      Morris, Rt Hon J. (Aberavon)

      Dormand, Jack

      Newens, Stanley

      Douglas-Mann, Bruce

      Oakes, Rt Hon Gordon

      Dubs, Alfred

      Ogden, Eric

      Duffy, A. E. P.

      O'Halloran, Michael

      Dunn, James A.

      O'Neill, Martin

      Dunwoody, Hon Mrs G.

      Orme, Rt Hon Stanley

      Eadie Alex

      Paisley, Rev Ian

      Eastham, Ken

      Palmer, Arthur

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

      Parker, John

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

      Pavitt, Laurie

      English, Michael

      Pendry, Tom

      Evans, loan (Aberdare)

      Powell, Raymond (Ogmore)

      Faulds, Andrew

      Rees, Rt Hon M (Leeds S)

      Field, Frank

      Roberts, Albert (Normanton)

      Fitch, Alan

      Roberts, Gwilym (Cannock)

      Fletcher, Ted (Darlington)

      Robertson, George

      Ford, Ben

      Robinson, G. (Coventry NW)

      Forrester, John

      Rooker, J. W.

      Foster, Derek

      Rowlands, Ted

      Foulkes, George

      Sever, John

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

      Sheldon, Rt Hon R.

      Garrett, John (Norwich S)

      Shore, Rt Hon Peter

      George, Bruce

      Short, Mrs Renée

      Gilbert, Rt Hon Dr John

      Silkin, Rt Hon J. (Deptford)

      Golding, John

      Silkin, Rt Hon S. C. (Dulwich)

      Grant, George (Morpeth)

      Silverman, Julius

      Hamilton, James (Bothwell)

      Skinner, Dennis

      Hardy, Peter

      Smith, Rt Hon J. (N Lanark)

      Harrison, Rt Hon Walter

      Snape, Peter

      Hart, Rt Hon Dame Judith

      Soley, Clive

      Haynes, Frank

      Spearing, Nigel

      Heffer, Eric S.

      Spriggs, Leslie

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

      Stallard, A. W.

      1254

      Stewart, Rt Hon D. (W Isles)

      White, J. (G'gow Pollok)

      Stoddart, David

      Whitlock, William

      Taylor, Mrs Ann (Bolton W)

      Wigley, Dafydd

      Thomas, Jeffrey (Abertillery)

      Willey, Rt Hon Frederick

      Thomas, Dr R. (Carmarthen)

      Wilson, Gordon (Dundee E)

      Tilley, John

      Wilson, William (C'try SE)

      Tinn, James

      Winnick, David

      Torney, Tom

      Woodall, Alec

      Urwin, Rt Hon Tom

      Woolmer, Kenneth

      Varley, Rt Hon Eric G.

      Wright, Sheila

      Wainwright, E. (Dearne V)

      Young, David (Bolton E)

      Walker, Rt Hon H. (D'caster)

      Watkins, David

      Tellers for the Ayes:

      Weetch, Ken

      Mr. George Morton and

      Welsh. Michael

      Mr. Frank White.

      NOES

      Adley, Robert

      Eggar, Tim

      Aitken, Jonathan

      Emery, Peter

      Alexander, Richard

      Eyre, Reginald

      Alison, Michael

      Fairgrieve, Russell

      Ancram, Michael

      Faith, Mrs Sheila

      Atkins, Robert (Preston N)

      Farr, John

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

      Fell, Anthony

      Baker, Nicholas (N Dorset)

      Fenner, Mrs Peggy

      Beaumont-Dark, Anthony

      Fisher, Sir Nigel

      Bendall, Vivian

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

      Benyon, W. (Buckingham)

      Fletcher-Cooke, Sir Charles

      Best, Keith

      Fookes, Miss Janet

      Bevan, David Gilroy

      Forman, Nigel

      Biffen, Rt Hon John

      Fowler, Rt Hon Norman

      Biggs-Davison, John

      Fraser, Rt Hon Sir Hugh

      Blackburn, John

      Fraser, Peter (South Angus)

      Blaker, Peter

      Gardiner, George (Reigate)

      Body, Richard

      Gardner, Edward (S Fylde)

      Bonsor, Sir Nicholas

      Garel-Jones, Tristan

      Bowden, Andrew

      Glyn, Dr Alan

      Boyson, Dr Rhodes

      Goodhew, Victor

      Braine, Sir Bernard

      Goodlad, Alastair

      Bright, Graham

      Gorst, John

      Brinton, Tim

      Gow, Ian

      Brittan, Leon

      Gower, Sir Raymond

      Brooke, Hon Peter

      Grant, Anthony (Harrow C)

      Brotherton, Michael

      Gray, Hamish

      Brown, Michael (Brigg & Sc'n)

      Greenway, Harry

      Browne, John (Winchester)

      Grieve, Percy

      Bruce-Gardyne, John

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

      Buchanan-Smith, Alick

      Griffiths, Peter Portsm'th N)

      Buck, Antony

      Grist, Ian

      Bulmer, Esmond

      Grylls, Michael

      Butcher, John

      Gummer, John Selwyn

      Butler, Hon Adam

      Hamilton, Hon A.

      Cadbury, Jocelyn

      Hamilton, Michael (Salisbury)

      Carlisle, John (Luton West)

      Hampson, Dr Keith

      Carlisle, Kenneth (Lincoln)

      Hannam, John

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

      Haselhurst, Alan

      Chalker, Mrs. Lynda

      Hastings, Stephen

      Chapman, Sydney

      Havers, Rt Hon Sir Michael

      Churchill, W. S.

      Hawksley, Warren

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

      Hayhoe, Barney

      Clark, Sir W. (Croydon S)

      Heddle, John

      Clarke, Kenneth (Rushcliffe)

      Henderson, Barry

      Clegg, Sir Walter

      Heseltine, Rt Hon Michael

      Cockeram, Eric

      Hicks, Robert

      Colvin, Michael

      Higgins, Rt Hon Terence L.

      Cope, John

      Hogg, Hon Douglas (Gr'th'm)

      Cormack, Patrick

      Holland, Philip (Carlton)

      Come, John

      Hooson, Tom

      Cranborne, Viscount

      Howell, Ralph (N Norfolk)

      Critchley, Julian

      Hunt, David (Wirral)

      Crouch, David

      Hunt, John (Ravensbourne)

      Dean, Paul (North Somerset)

      Irving, Charles (Cheltenham)

      Dickens, Geoffrey

      Jenkin, Rt Hon Patrick

      Douglas-Hamilton, Lord J.

      Jessel, Toby

      du Cann, Rt Hon Edward

      Johnson Smith, Geoffrey

      Dunn, Robert (Dartford)

      Jopling, Rt Hon Michael

      Durant, Tony

      Joseph, Rt Hon Sir Keith

      Dykes, Hugh

      Kaberry, Sir Donald

      Eden, Rt Hon Sir John

      Kellett-Bowman, Mrs Elaine

      Edwards, Rt Hon N. (P'broke)

      King, Rt Hon Tom

      1255

      Knight, Mrs Jill

      Rees, Peter (Dover and Deal)

      Knox, David

      Rees-Davies, W. R.

      Lamont, Norman

      Renton, Tim

      Lang, Ian

      Rhodes James, Robert

      Langford-Holt, Sir John

      Ridley, Hon Nicholas

      Latham, Michael

      Ridsdale, Sir Julian

      Lawrence, Ivan

      Rifkind, Malcolm

      Lawson, Rt Hon Nigel

      Roberts, M. (Cardiff NW)

      Lennox-Boyd, Hon Mark

      Roberts, Wyn (Conway)

      Lester, Jim (Beeston)

      Rossi, Hugh

      Lewis, Kenneth (Rutland)

      Rost, Peter

      Lloyd, Ian (Havant & W'loo)

      Royle, Sir Anthony

      Lloyd, Peter (Fareham)

      Sainsbury, Hon Timothy

      Loveridge, John

      St. John-Stevas, Rt Hon N.

      Luce, Richard

      Scott, Nicholas

      Lyell, Nicholas

      Shaw, Giles (Pudsey)

      Macfarlane, Neil

      Shelton, William (Streatham)

      MacKay, John (Argyll)

      Shepherd, Colin (Hereford)

      Macmillan, Rt Hon M.

      Shepherd, Richard

      McNair-Wilson, M. (N'bury)

      Silvester, Fred

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

      Skeet, T. H. H.

      McQuarrie, Albert

      Speed, Keith

      Major, John

      Speller, Tony

      Marland, Paul

      Spence, John

      Marlow, Tony

      Spicer, Jim (West Dorset)

      Marshall, Michael (Arundel)

      Spicer, Michael (S Worcs)

      Marten, Neil (Banbury)

      Sproat, Iain

      Mates, Michael

      Squire, Robin

      Mather, Carol

      Stainton, Keith

      Maude, Rt Hon Sir Angus

      Stanbrook, Ivor

      Mawby, Ray

      Stanley, John

      Mawhinney, Dr Brian

      Steen, Anthony

      Maxwell-Hyslop, Robin

      Stevens, Martin

      Mayhew, Patrick

      Stewart, Ian (Hitchin)

      Mellor, David

      Stewart, A. (E Renfrewshire)

      Miller, Hal (B'grove)

      Stokes, John

      Mills, Iain (Meriden)

      Stradling Thomas, J.

      Mills, Peter (West Devon)

      Tapsell, Peter

      Miscampbell, Norman

      Taylor, Teddy (S'end E)

      Mitchell, David (Basingstoke)

      Tebbit, Norman

      Moate, Roger

      Temple-Morris, Peter

      Molyneaux, James

      Thatcher, Rt Hon Mrs M.

      Monro, Hector

      Thomas, Rt Hon Peter

      Moore, John

      Thompson, Donald

      Morgan, Geraint

      Thorne, Neil (Ilford South)

      Morris, M. (N'hampton S)

      Thornton, Malcolm

      Morrison, Hon P. (Chester)

      Townend, John (Bridlington)

      Myles, David

      Townsend, Cyril D, (B'heath)

      Neale, Gerrard

      Trippier, David

      Needham, Richard

      Trotter, Neville

      Neubert, Michael

      van Straubenzee, W. R.

      Newton, Tony

      Vaughan, Dr Gerard

      Normanton, Tom

      Viggers, Peter

      Nott, Rt Hon John

      Wakeham, John

      Onslow, Cranley

      Waldegrave, Hon William

      Oppenheim, Rt Hon Mrs S.

      Wall, Patrick

      Osborn, John

      Walters, Dennis

      Page, John (Harrow, West)

      Ward, John

      Page, Rt Hon Sir G. (Crosby)

      Warren, Kenneth

      Page, Richard (SW Herts)

      Watson, John

      Parris, Matthew

      Wells, John (Maidstone)

      Patten, Christopher (Bath)

      Wells, Bowen

      Pattie, Geoffrey

      Whitelaw, Rt Hon William

      Pawsey, James

      Whitney, Raymond

      Percival, Sir Ian

      Wickenden, Keith

      Pollock, Alexander

      Williams, D. (Montgomery)

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

      Winterton, Nicholas

      Prentice, Rt Hon Reg

      Wolfson, Mark

      Price, Sir David (Eastleigh)

      Young, Sir George (Acton)

      Prior, Rt Hon James

      Younger, Rt Hon George

      Proctor, K. Harvey

      Pym, Rt Hon Francis

      Tellers for the Noes:

      Raison, Timothy

      Mr. Anthony Berry and

      Rathbone, Tim

      Mr. Robert Boscawen.

      Question accordingly negatived.
      Amendment proposed: No. 28, in page 16, line 10, after 'of, insert 'six-sevenths of.—[Mr. Robert Sheldon.]
      Question put, That the amendment be made:—
      The House divided:Ayes 189,Noes 279.

      Division No. 276]

      [9.10 pm

      AYES

      Abse, Leo

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

      Adams, Allen

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

      Alton, David

      Home Robertson, John

      Anderson, Donald

      Homewood, William

      Archer, Rt Hon Peter

      Hooley, Frank

      Ashley, Rt Hon Jack

      Horam, John

      Ashton, Joe

      Howell, Rt Hon D.

      Beith, A. J.

      Howells, Geraint

      Bennett, Andrew (St'kp't N)

      Huckfield, Les

      Bidwell, Sydney

      Hughes, Robert (Aberdeen N)

      Booth, Rt Hon Albert

      Hughes, Roy (Newport)

      Boothroyd, Miss Betty

      Janner, Hon Greville

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

      Jay, Rt Hon Douglas

      Bray, Dr Jeremy

      John, Brynmor

      Brown, Hugh D. (Provan)

      Johnson, James (Hull West)

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

      Johnson, Walter (Derby S)

      Callaghan, Rt Hon J.

      Jones, Rt Hon Alec (Rh'dda)

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

      Jones, Barry (East Flint)

      Campbell, Ian

      Jones, Dan (Burnley)

      Campbell-Savours, Dale

      Kaufman, Rt Hon Gerald

      Canavan, Dennis

      Kerr, Russell

      Cant, R. B.

      Lambie, David

      Clark, Dr David (S Shields)

      Leadbitter, Ted

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

      Lestor, Miss Joan

      Cohen, Stanley

      Lewis, Arthur (N'ham NW)

      Coleman, Donald

      Lewis, Ron (Carlisle)

      Concannon, Rt Hon J. D.

      Lofthouse, Geoffrey

      Conlan, Bernard

      McDonald, Dr Oonagh

      Cook, Robin F.

      McElhone, Frank

      Cowans, Harry

      McKay, Allen (Penistone)

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

      McNally, Thomas

      Craigen, J. M.

      McNamara, Kevin

      Crowther, J. S.

      McWilliam, John

      Cryer, Bob

      Magee, Bryan

      Cunningham, G. (Islington S)

      Marshall, D (G'gow S'ton)

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

      Marshall, Dr Edmund (Goole)

      Davies, Rt Hon Denzil (L'lli)

      Martin, M (G'gow S'burn)

      Davies, Ifor (Gower)

      Mason, Rt Hon Roy

      Davis, Clinton (Hackney C)

      Maxton, John

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

      Meacher, Michael

      Deakins, Eric

      Mellish, Rt Hon Robert

      Dempsey, James

      Millan, Rt Hon Bruce

      Dewar, Donald

      Miller, Dr M. S. (E Kilbride)

      Dixon, Donald

      Mitchell, Austin (Grimsby)

      Dobson, Frank

      Mitchell, R. C. (Soton Itchen)

      Dormand, Jack

      Morris, Rt Hon A. (W'shawe)

      Douglas-Mann, Bruce

      Morris, Rt Hon C. (O'shaw)

      Dubs, Alfred

      Morris, Rt Hon J. (Aberavon)

      Duffy, A. E. P.

      Morton, George

      Dunn, James A.

      Newens, Stanley

      Dunwoody, Hon Mrs G.

      Oakes, Rt Hon Gordon

      Eadie, Alex

      O'Halloran, Michael

      Eastham, Ken

      O'Neill, Martin

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

      Orme, Rt Hon Stanley

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

      Paisley, Rev Ian

      English, Michael

      Palmer, Arthur

      Evans, loan (Aberdare)

      Parker, John

      Faulds, Andrew

      Pavitt, Laurie

      Field, Frank

      Pendry, Tom

      Fitch, Alan

      Powell, Raymond (Ogmore)

      Fletcher, Ted (Darlington)

      Rees, Rt Hon M (Leeds S)

      Ford, Ben

      Roberts, Albert (Normanton)

      Forrester, John

      Roberts, Gwilym (Cannock)

      Foster, Derek

      Robertson, George

      Foulkes, George

      Robinson, G. (Coventry NW)

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

      Rooker, J. W.

      Garrett, John (Norwich S)

      Roper, John

      George, Bruce

      Ross, Stephen (Isle of Wight)

      Gilbert, Rt Hon Dr John

      Rowlands, Ted

      Golding, John

      Ryman, John

      Grant, George (Morpeth)

      Sandelson, Neville

      Hardy, Peter

      Sever, John

      Harrison, Rt Hon Walter

      Sheldon, Rt Hon R.

      Hart, Rt Hon Dame Judith

      Shore, Rt Hon Peter

      Haynes, Frank

      Short, Mrs Renée

      Heffer, Eric S.

      Silkin, Rt Hon J. (Deptford)

      1257

      Silkin, Rt Hon S. C. (Dulwich)

      Walker, Rt Hon H. (D'caster)

      Silverman, Julius

      Watkins, David

      Skinner, Dennis

      Weetch, Ken

      Smith, Rt Hon J. (N Lanark)

      Welsh, Michael

      Snape, Peter

      White, Frank R.

      Soley, Clive

      White, J. (G'gow Pollok)

      Spearing, Nigel

      Whitlock, William

      Spriggs, Leslie

      Wigley, Dafydd

      Stallard, A. W.

      Willey, Rt Hon Frederick

      Steel, Rt Hon David

      Wilson, Gordon (Dundee E)

      Stewart, Rt Hon D. (W Isles)

      Wilson, William (C'try SE)

      Stoddart, David

      Winnick, David

      Taylor, Mrs Ann (Bolton W)

      Woodall, Alec

      Thomas, Jeffrey (Abertillery)

      Woolmer, Kenneth

      Thomas, Dr R. (Carmarthen)

      Wright, Sheila

      Tilley, John

      Young, David (Bolton E)

      Torney, Tom

      Urwin, Rt Hon Tom

      Tellers for the Ayes:

      Varley, Rt Hon Eric G.

      Mr. James Hamilton and

      Wainwright, E. (Dearne V)

      Mr. James Tinn.

      Wainwright, R. (Colne V)

      NOES

      Adley, Robert

      Crouch, David

      Aitken, Jonathan

      Dean, Paul (North Somerset)

      Alexander, Richard

      Dickens, Geoffrey

      Alison, Michael

      Douglas-Hamilton, Lord J.

      Ancram, Michael

      du Cann, Rt Hon Edward

      Arnold, Tom

      Dunn, Robert (Dartford)

      Aspinwall, Jack

      Durant, Tony

      Atkins, Robert (Preston N)

      Dykes, Hugh

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

      Eden, Rt Hon Sir John

      Baker, Nicholas (N Dorset)

      Edwards, Rt Hon N. (P'broke)

      Banks, Robert

      Eggar, Tim

      Beaumont-Dark, Anthony

      Emery, Peter

      Bendall, Vivian

      Eyre, Reginald

      Benyon, W. (Buckingham)

      Fairbairn, Nicholas

      Best, Keith

      Fairgrieve, Russell

      Bevan, David Gilroy

      Faith, Mrs Sheila

      Biffen, Rt Hon John

      Farr, John

      Biggs-Davison, John

      Fell, Anthony

      Blackburn, John

      Fenner, Mrs Peggy

      Blaker, Peter

      Fisher, Sir Nigel

      Body, Richard

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

      Bonsor, Sir Nicholas

      Fletcher-Cooke, Sir Charles

      Bottomley, Peter (W'wich W)

      Fookes, Miss Janet

      Bowden, Andrew

      Forman, Nigel

      Boyson, Dr Rhodes

      Fowler, Rt Hon Norman

      Braine, Sir Bernard

      Fraser, Rt Hon Sir Hugh

      Bright, Graham

      Fraser, Peter (South Angus)

      Brinton, Tim

      Gardiner, George (Reigate)

      Brittan, Leon

      Gardner, Edward (S Fylde)

      Brooke, Hon Peter

      Garel-Jones, Tristan

      Brotherton, Michael

      Glyn, Dr Alan

      Brown, Michael (Brigg & Sc'n)

      Goodhew, Victor

      Browne, John (Winchester)

      Goodlad, Alastair

      Bruce-Gardyne, John

      Gorst, John

      Buchanan-Smith, Alick

      Gow, Ian

      Buck, Antony

      Gower, Sir Raymond

      Bulmer, Esmond

      Grant, Anthony (Harrow C)

      Butcher, John

      Gray, Hamish

      Butler, Hon Adam

      Greenway, Harry

      Cadbury, Jocelyn

      Grieve, Percy

      Carlisle, John (Luton West)

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

      Carlisle, Kenneth (Lincoln)

      Griffiths, Peter Portsm'th N)

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

      Grist, Ian

      Chalker, Mrs. Lynda

      Grylls, Michael

      Chapman, Sydney

      Gummer, John Selwyn

      Churchill, W. S.

      Hamilton, Hon A.

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

      Hamilton, Michael (Salisbury)

      Clark, Sir W. (Croydon S)

      Hampson, Dr Keith

      Clarke, Kenneth (Rushcliffe)

      Hannam, John

      Clegg, Sir Walter

      Haselhurst, Alan

      Cockeram, Eric

      Hastings, Stephen

      Colvin, Michael

      Havers, Rt Hon Sir Michael

      Cope, John

      Hawksley, Warren

      Cormack, Patrick

      Hayhoe, Barney

      Corrie, John

      Heddle, John

      Cranborne, Viscount

      Henderson, Barry

      Critchley, Julian

      Heseltine, Rt Hon Michael

      1258

      Hicks, Robert

      Patten, Christopher (Bath)

      Higgins, Rt Hon Terence L.

      Pattie, Geoffrey

      Hogg, Hon Douglas (Gr'th'm)

      Pawsey, James

      Holland, Philip (Carlton)

      Percival, Sir Ian

      Hooson, Tom

      Pollock, Alexander

      Howell, Ralph (N Norfolk)

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

      Hunt, David (Wirral)

      Prentice, Rt Hon Reg

      Hunt, John (Ravensbourne)

      Price, Sir David (Eastleigh)

      Irving, Charles (Cheltenham)

      Prior, Rt Hon James

      Jenkin, Rt Hon Patrick

      Proctor, K. Harvey

      Jessel, Toby

      Pym, Rt Hon Francis

      Johnson Smith, Geoffrey

      Raison, Timothy

      Jopling, Rt Hon Michael

      Rathbone, Tim

      Joseph, Rt Hon Sir Keith

      Rees, Peter (Dover and Deal)

      Kaberry, Sir Donald

      Rees-Davies, W. R.

      Kellett-Bowman, Mrs Elaine

      Renton, Tim

      King, Rt Hon Tom

      Rhodes James, Robert

      Knight, Mrs Jill

      Ridley, Hon Nicholas

      Knox, David

      Ridsdale, Sir Julian

      Lamont, Norman

      Rifkind, Malcolm

      Lang, Ian

      Roberts, M. (Cardiff NW)

      Langford-Holt, Sir John

      Roberts, Wyn (Conway)

      Latham, Michael

      Rossi, Hugh

      Lawrence, Ivan

      Rost, Peter

      Lawson, Rt Hon Nigel

      Royle, Sir Anthony

      Lennox-Boyd, Hon Mark

      Sainsbury, Hon Timothy

      Lester, Jim (Beeston)

      St. John-Stevas, Rt Hon N.

      Lewis, Kenneth (Rutland)

      Scott, Nicholas

      Lloyd, Ian (Havant & W'loo)

      Shaw, Giles (Pudsey)

      Lloyd, Peter (Fareham)

      Shelton, William (Streatham)

      Loveridge, John

      Shepherd, Colin (Hereford)

      Luce, Richard

      Shepherd, Richard

      Lyell, Nicholas

      Silvester, Fred

      Macfarlane, Neil

      Skeet, T. H. H.

      MacKay, John (Argyll)

      Speed, Keith

      Macmillan, Rt Hon M.

      Speller, Tony

      McNair-Wilson, M. (N'bury)

      Spence, John

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

      Spicer, Jim (West Dorset)

      McQuarrie, Albert

      Spicer, Michael (S Worcs)

      Major, John

      Sproat, Iain

      Marland, Paul

      Squire, Robin

      Marlow, Tony

      Stainton, Keith

      Marshall, Michael (Arundel)

      Stanbrook, Ivor

      Marten, Neil (Banbury)

      Stanley, John

      Mates, Michael

      Steen, Anthony

      Mather, Carol

      Stevens, Martin

      Maude, Rt Hon Sir Angus

      Stewart, Ian (Hitchin)

      Mawby, Ray

      Stewart, A. (E Renfrewshire)

      Mawhinney, Dr Brian

      Stokes, John

      Maxwell-Hyslop, Robin

      Stradling Thomas, J.

      Mayhew, Patrick

      Tapsell, Peter

      Mellor, David

      Taylor, Teddy (S'end E)

      Miller, Hal (B'grove)

      Tebbit, Norman

      Mills, Iain (Meriden)

      Temple-Morris, Peter

      Mills, Peter (West Devon)

      Thatcher, Rt Hon Mrs M.

      Miscampbell, Norman

      Thomas, Rt Hon Peter

      Mitchell, David (Basingstoke)

      Thompson, Donald

      Moate, Roger

      Thorne, Neil (Ilford South)

      Molyneaux, James

      Thornton, Malcolm

      Monro, Hector

      Townend, John (Bridlington)

      Moore, John

      Townsend, Cyril D, (B'heath)

      Morgan, Geraint

      Trippier, David

      Morris, M. (N'hampton S)

      Trotter, Neville

      Morrison, Hon P. (Chester)

      van Straubenzee, W. R.

      Mudd, David

      Vaughan, Dr Gerard

      Murphy, Christopher

      Viggers, Peter

      Myles, David

      Wakeham, John

      Neale, Gerrard

      Waldegrave, Hon William

      Needham, Richard

      Walker, B. (Perth)

      Neubert, Michael

      Wall, Patrick

      Newton, Tony

      Walters, Dennis

      Normanton, Tom

      Ward, John

      Nott, Rt Hon John

      Warren, Kenneth

      Onslow, Cranley

      Watson, John

      Oppenheim, Rt Hon Mrs S.

      Wells, John (Maidstone)

      Osborn, John

      Wells, Bowen

      Page, John (Harrow, West)

      Whitelaw, Rt Hon William

      Page, Rt Hon Sir G. (Crosby)

      Whitney, Raymond

      Page, Richard (SW Herts)

      Wickenden, Keith

      Parris, Matthew

      Wiggin, Jerry

      1259

      Williams, D. (Montgomery)

      Winterton, Nicholas

      Tellers for the Noes:

      Wolfson, Mark

      Mr. Anthony Berry and

      Young, Sir George (Acton)

      Mr. Robert Boscawen.

      Younger, Rt Hon George

      Question accordingly negatived.

    Clause 28

      NOTIFICATION OF AMOUNT TAXABLE UNDER SECTION 27
      Mr. Robert Sheldon: I beg to move amendment No. 32, in page 17, line 33, after 'assessment', insert 'less than £50'.
      Mr. Deputy Speaker: With this it will be convenient to take amendment No. 35, in clause 29, page 18, line 32, after 'tax', insert 'less than £50'.
      Mr. Sheldon: We are concerned with the administrative arrangements by which short-term benefits are to be taxed. Such matters have been considered on and off over the past 30 years or more. The Government have made a fresh attempt to tax short-term benefits in a way that short-circuits past cumbersome procedures.
      We are talking about the trade-off between simplification and equity—whether it is possible to achieve a simplified structure to tax short-term benefits without dispensing with the equity that we have always believed to be an essential part of a taxation system. This is a matter that the House is peculiarly well equipped to deal with, particularly in Finance Bills. We are used to trade-offs between simplicity and equity, and our normal preference is for equity.
      An hon. Member may have representations made to him by a constituent or an interested body and discover an aspect of the tax law that is unfair. He immediately puts down an amendment, and, if it has merit, it finds its way into the Finance Bill. So Finance Bills increase in size year by year, becoming weightier and weightier. The main reason for that is that we try to remedy unfairness. This has activated our policies on all the Finance Bills that we have debated.
      The advantages of simplicity are recognised. It is well known that the present Bill could be cut by half and still meet most of the requirements, but the result would be a much less fair Finance Bill. That is something that we have known, accepted and come to live with.
      When it comes to the taxation of short-term benefits, however, rather than have a mass of legislation and administrative complexity, the Minister has sought to cut out all the extra parts which would cover the problems of dealing fairly with people who will find their benefits taxed. The Government have instead sought to ensure that there is a simplified method, which of course means fewer civil servants. Whereas in the past it has been thought that as many as 10,000 civil servants might be required to inaugurate the kind of fair and equitable scheme that has always been regarded as the type of scheme required, under the Minister's administrative arrangements the number would be reduced to 3,000. The increase in civil servants will be kept down to 3,000 at the expense of a considerable amount of unfairness which I shall attempt to set out.
      Under the scheme devised by the Government, the benefit officer from, say, the DHSS will inform the
      1260
      claimant of the amount of benefit that has been received and the amount that is taxable. In the original proposal, the claimant had to reply within 30 days. As a result of the debates in Committee, however, an amendment to which we shall come later extends the period to 60 days.
      If no objection is made within that period, no appeal is possible on the amount of taxable benefit. The problem is that the benefit officer may be the person to whom the claimant applies, for example, for supplementary benefit. He will decide how much of the benefit paid to the claimant is taxable. We all know that the relationship between the claimant and the supplementary benefit officer, for example, is a delicate one. The claimant very often appears as a supplicant. He then receives the money and the same person may well lay down the amount of benefit that will be taxable. The claimant must then appeal against that decision.
      We are not here dealing with sophisticated people, knowledgeable in the ways of taxation and used to filling in returns and forms. We are dealing with people at a strong disadvantage vis-à-vis the person to whom they make application for supplementary benefit. The claimant is then required to complete a form saying that he does not agree with the figure. If he does not do so within 60 days, that is the end of it. It is not even open to Members of Parliament to do anything. Our function then ceases. Within the 60-day period, the claimant may come to his Member of Parliament saying that he believes that the figure is wrong. The Member of Parliament may then advise him how to make out a statement denying that that was the amount received. After 60 days, however, we are of no use to him at all.
      This is a novelty in our legislation. Moreover, the gross unfairness being introduced for this section of the community is without precedent. One has only to consider the extent of our attempts to remedy injustices to the well-off, the subsections and paragraphs and the mass of legislation to ensure that fairness applies to every citizen. We are now excluding from that the most deserving, hard-pressed people at a time when they face some of the greatest emotional and economic difficulties that they are ever likely to face. We have objected strongly to that and we shall continue to do so.
      The difficulty for the right hon. Gentleman is that a fair scheme would be very complicated because it would depend on a relationship between four sets of people, namely, the person applying for supplementary benefit or unemployment pay, the Inland Revenue, the Department—whether it is the DHSS or the Department of Employment—and the employer. Each of them would have to communicate with the other three. That would require a great amount of paper work and many civil servants.
      9.30 pm
      That situation led several people to believe that that was not a sensible way to proceed. As a result, there was little movement until the Government sought to cut this Gordian knot by an unparalled example of unfairness in dealing with the taxation of underprivileged people. The report of the Public Accounts Committee was printed on 7 August 1980. It deals with the Board of Inland Revenue. Paragraph 14 concentrates on the standards of accuracy achieved by district taxation offices. It makes the following observation:
      "A small representative sample of the cases is re-examined within each District to detect arithmetical and transcription

      1261
      errors. In 1977–78, these checks disclosed an error rate of 2·5 per cent. in the cases where no end-of-year assessment had been considered necessary and 3·6 per cent. in the assessment cases."
      Paragraph 15 covers more complex cases and states:
      "error rates…ranged up to 21 per cent. for cases involving PAYE taxpayers."
      We are dealing with Inland Revenue officers whose job involves handling tax matters. I suspect that they had a higher morale before than they have now. Nevertheless, errors were discovered in that proportion of cases. If such errors are found in the notices that are sent to claimants and if the claimants do not contest the figures, there is no possible form of appeal. If the Inland Revenue, which is used to such matters, makes such mistakes, it is logical to assume that benefits officers, who are quite unused to taxation matters, would make several more mistakes. In addition, the advantage that the ordinary taxpayer has in being able to appeal to the Inland Revenue would not be available. That is grossly unjust and unfair.
      We dealt with this subject in Committee, but it must be re-examined. We are throwing a lifeline to the Financial Secretary. We should prefer a proper system of taxation as regards short-term benefits. If the Government will not agree to that we should at least limit the unfairness and also keep some of the advantages of administrative simplicity that the Government—unlike us—seem so wedded to. If the assessment is less than £50, the absence of appeal could more easily be accepted. In other words, the many cases in which small sums are involved could go through. If more substantial sums are involved, the right of appeal should continue to exist. The amendment seeks to ameliorate some of the legislation's most unpleasant features. I hope that the Financial Secretary will accept the amendment.
      Mr. Soley: I am aware of the many amendments we have to consider, so I shall not detain the House for long. It will be remembered that in Committee I tried to identify certain groups of people who would be vulnerable if they were not allowed to appeal. After a full debate, the Minister went some way towards recognising the difficulty by extending the period of appeal from 30 days to 60 days. I welcome that.
      It is important that we should now take the next logical step along the road, although I should prefer to handle it in other ways. That next logical step is to impose a limit. The groups that I identified were those who move frequently, those who, during a year, are in and out of institutions such as psychiatric hospital or prison, those living in flats or lodging houses, those who have difficulty with reading and writing and those whose letters have gone astray either in the postal system or after delivery to a block of flats in which many people live. Those are the vulnerable groups who discover that they have been asked to pay tax on a sum of money the size of which they dispute.
      The person who moves frequently is a person who moves around the country seeking casual employment. He may return to his base area occasionally. He might work on an oil rig or for the oil industry in Scotland for several months. He might work on a construction site or on a motorway and return to the town or the area where he normally lives. At that point, he may go on to supplementary benefit for a while. If, by the time he is told the amount of money on which he must pay tax he disagrees, he cannot appeal because he has run out of time.
      1262
      The same applies to a person who is in and out of an institution. The classic example is of a person who spends some months in a psychiatric hospital. When he leaves hospital he takes a long time to reorder his affairs because recovering from that experience is not easy. He may discover that he has an additional financial burden of which he was not aware and against which there is no appeal.
      My right hon. Friend has made a good case for limiting the amount so that, economically, it is not too painful. A reasonable cut-off point would be £50, and our amendment would ensure that people are not presented with unreasonably high bills against which they cannot appeal. No matter how many times they go to advice centres, Members of Parliament or anyone else, they cannot change it. I hope that the Minister will be able to accept the amendment.
      Mr. Lawson: We have been over this ground, as both the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) and the hon. Member for Hammersmith, North (Mr. Soley) said. In Committee representations were made to me about the method to be used for bringing short-term benefits into the tax net, by which the benefit officer notifies a beneficiary of the amount of taxable benefit. The beneficiary has a time in which to appeal against that and may lodge an objection.
      Those procedures may work harshly or unreasonably for the sort of people mentioned by the hon. Member for Hammersmith, North and other people who find such matters difficult to grasp. That is why I agreed after a full debate in Committee that the time scale should be extended from 30 days to 60 days. That is a longer time than anywhere else in our tax or social security systems. It is on the borderline of the two.
      I felt that that met the points that had been made. I feel that we should now let the system begin to operate and assess it when it is operating, as we hope it will be, from April 1982.
      The right hon. Gentleman said that he was throwing me a lifeline, but the amendment as drafted would make it impossible to work the arrangements. It would never be possible, at the time when the person's taxable benefit was being computed, to know what might be the amount of any subsequent tax assessment in which the benefit would be included. The benefit might be small but the assessment might include other income, in which case it would take it above the level of £50, so that in every case the benefit officer would be unable to assume, after the 60-day period had expired, that the figure of taxable benefit had been agreed and was final for the purposes of the subsequent assessment. It would mean that records would have to be kept indefinitely in the benefit offices.
      I concede that the purpose of the system is to make the procedure administratively simple and workable. If the amendment were passed, all that gain would be lost and we should be back in the position where we should require an excessive number of staff to operate the procedure. It was that which led the Labour Government to reject a similar proposal when they considered it.
      The effect of the amendment, therefore, would be to prevent the system being workable. The right way to approach the matter is as we have suggested, but with the doubling of the period in which a person may lodge an objection or contest the assessment from 30 to 60 days.
      Mr. Soley: One of the cases put to me since I spoke in Committee was that of the person admitted under a section of the Mental Health Act to a psychiatric hospital, and who may be held for a month, which may be extended by a further month in certain circumstances. That would mean that the 60 days would expire. Will the Minister give an undertaking that he will review the matter in the light of cases of that nature?
      Mr. Lawson: As I explained in Committee, there is scope for the consideration of that sort of case. It is not our intention that the safety net in the Bill should be abused. But the hon. Member will be aware that clause 28(6) states:
      "Where a benefit officer has notified an amount to a person under subsection (1) above, he may by another notice in writing notify the person of an alteration in the amount previously notified and, if he does so, the original notification shall be cancelled".
      The 60 days would then run from the new notification. So there is scope there for special cases that are brought to the attention of the authorities where clearly an injustice has been done. There is no intention whatever that any injustice should be done to anyone as a result of the legislation.
      Mr. Robert Sheldon: The right hon. Gentleman says that if the amendment were carried benefit officers would have to keep the assessment in case further amounts were subsequently added. I hope that they keep the assessments, because if there is any error and the assessment is not kept to the end of the year, what is the use of subsection (6)? They would have no authority to do anything, because there would be no records. That is what is worrying me very much. The idea is that as soon as the 60 days are over all the records go into the wastepaper basket.
      Mr. Lawson indicated dissent.
      9.45 pm
      Mr. Sheldon: I am glad to receive the right hon. Gentleman's assurance that that is not so. In that case, his first point does not hold. If the records are still there and there are further assessments, they are there to be added to. This ensures that we shall be able to deal with the larger cases alone.
      The opening words of clause 28 are:
      "A benefit officer may by notice in writing notify a person"
      of his liability. In Committee on 4 June we asked whether "may" could be replaced by "shall". I should have thought that there was no question about that, but the right hon. Gentleman said at the end of the debate:
      "Two valid points have been raised…The first is the question of 'may' and 'shall', which was raised by both the hon. Member for Sheffield, Heeley (Mr. Hooley) and the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). I have not the faintest idea why the clause says 'may' instead of 'shall'. I shall look into the matter and, if it would improve the Bill to substitute 'shall', I shall ensure that it is done."—[Official Report, Standing Committee E, 4 June 1981; c. 368.]
      I should like some reaction from the right hon. Gentleman now.
      There is the question of assessments being kept by the benefit officer so that subsequent appeals may be allowed if there is a change, and the question of certain assessments being able to be added, under certain circumstances, to the original assessments to deal with those who have, for them, substantial sums. To us, £50 may not appear a vast sum, but to somebody on supplementary benefit living on
      1264
      the poverty line all his years it is substantial. I hope that the right hon. Gentleman will relate the size of the sums to the position of the individuals making claims.
      Mr. Lawson: I was not sure whether the Opposition had satisfied themselves independently on the question of the use of "may" or "shall", because they did not table an amendment on Report. There is good reason why the Bill says "may" rather than "shall". It is not to give an arbitrary discretion to the benefit officer. There is one class of claimant who will not be notified by the benefit officer of the amount of taxable benefit. That class consists of the so-called quarterly attenders, who number 60,000 or 70,000 at any one time. These are people over the age of 50 who have been unemployed for two years or more and who are not obliged to go fortnightly to the benefit office. Instead, they go quarterly. They are paid through a DHSS order book, as are retirement pensioners, rather than being issued with individual fortnightly cheques.
      Liability to tax for those people, who are long-term unemployed, will arise considerably less often than among the normal unemployed population. Usually their normal income for the year will be benefit, which will be fully covered by their personal tax allowances, and there will be no tax liability. For such cases it would be wasteful to go through the normal notification procedure.
      In those infrequent cases where liability arises for those people—for example, when a claimant returns to work and therefore has benefit and earnings in the same year—liability will be agreed in the usual way between the person concerned and the Revenue. In those few cases, the normal tax appeal procedures, and not the clause 28 procedures, will apply if required. We would not want to go through all the clause 28 procedure for the quarterly attenders, and that is why "may" rather than "shall" appears in the Bill. However, there is not intended to be any arbitrary or capricious discretion on the part of a benefit officer in normal cases.
      Mr. Robert Sheldon: Will the right hon. Gentleman deal with the question of errors found by the Inland Revenue and made by those who are well trained and qualified in tax matters, and will he compare that with the errors that we should expect from benefit officers dealing with an unfamiliar area? Will the right hon. Gentleman also deal with the keeping of records and the lack of difficulty in adding to them so that the £50 can be of some help to those for whom it is a large sum?
      Mr. Lawson: Records are kept for, on average, a little more than 12 months. That gets round the problem that the right hon. Gentleman is concerned about, but it does not get round the problem to which I alluded.
      The right hon. Gentleman compared the errors likely to be made by benefit officers with the errors made from time to time by Inland Revenue officials who, he said, are more expert in these matters. They may be more expert, but they are also dealing with much more complex matters and the errors tend to occur in such matters. We are concerned with a relatively simple matter and there are ways in which errors can be put right. I suggested one to the hon. Member for Hammersmith, North (Mr. Soley).
      We certainly hope that if there are errors they will be put right. There is no perfection on this earth, but there is no reason to believe that there will be more errors in these

      1265
      cases. Indeed, because of their relative simplicity, I suspect that there will be fewer errors than there are in the complex world inhabited by the Inland Revenue.
      Mr. Sheldon: I quarrel with what the Financial Secretary said about the limited number of errors. We were talking about arithmetic and transcription errors in matters in which the Inland Revenue is knowledgeable and of which it has long experience. A substantial proportion of errors were made in those matters. Newer and less qualified staff will be dealing with the matters that we are discussing. The right hon. Gentleman has not dealt with the points that we made and we shall vote for the amendment.
      Question put, That the amendment be made:—
      The House divided: Ayes 195, Noes 276.

      Division No. 277]

      [9.55 pm

      AYES

      Abse, Leo

      Field, Frank

      Adams, Allen

      Fitch, Alan

      Alton, David

      Fletcher, Ted (Darlington)

      Anderson, Donald

      Forrester, John

      Archer, Rt Hon Peter

      Foster, Derek

      Ashley, Rt Hon Jack

      Foulkes, George

      Ashton, Joe

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

      Beith, A. J.

      Freeson, Rt Hon Reginald

      Bennett, Andrew (St'kp't N)

      Garrett, John (Norwich S)

      Bidwell, Sydney

      George, Bruce

      Booth, Rt Hon Albert

      Gilbert, Rt Hon Dr John

      Boothroyd, Miss Betty

      Golding, John

      Bray, Dr Jeremy

      Grant, George (Morpeth)

      Brown, Hugh D. (Provan)

      Grant, John (Islington C)

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

      Hamilton, James (Bothwell)

      Callaghan, Rt Hon J.

      Hardy, Peter

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

      Harrison, Rt Hon Walter

      Campbell, Ian

      Hart, Rt Hon Dame Judith

      Campbell-Savours, Dale

      Haynes, Frank

      Canavan, Dennis

      Heffer, Eric S.

      Cant, R. B.

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

      Clark, Dr David (S Shields)

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

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

      Home Robertson, John

      Cohen, Stanley

      Homewood, William

      Coleman, Donald

      Hooley, Frank

      Concannon, Rt Hon J. D.

      Horam, John

      Conlan, Bernard

      Howell, Rt Hon D.

      Cook, Robin F.

      Howells, Geraint

      Cowans, Harry

      Huckfield, Les

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

      Hughes, Robert (Aberdeen N)

      Craigen, J. M.

      Hughes, Roy (Newport)

      Crowther, J. S.

      Janner, Hon Greville

      Cryer, Bob

      Jay, Rt Hon Douglas

      Cunningham, G. (Islington S)

      John, Brynmor

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

      Johnson, James (Hull West)

      Davies, Rt Hon Denzil (L'lli)

      Johnson, Walter (Derby S)

      Davies, Ifor (Gower)

      Jones, Rt Hon Alec (Rh'dda)

      Davis, Clinton (Hackney C)

      Jones, Barry (East Flint)

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

      Jones, Dan (Burnley)

      Deakins, Eric

      Kaufman, Rt Hon Gerald

      Dempsey, James

      Kerr, Russell

      Dewar, Donald

      Lambie, David

      Dixon, Donald

      Leadbitter, Ted

      Dobson, Frank

      Lestor, Miss Joan

      Dormand, Jack

      Lewis, Arthur (N'ham NW)

      Douglas-Mann, Bruce

      Lewis, Ron (Carlisle)

      Dubs, Alfred

      Litherland, Robert

      Duffy, A. E. P.

      Lofthouse, Geoffrey

      Dunn, James A.

      McDonald, Dr Oonagh

      Dunwoody, Hon Mrs G.

      McElhone, Frank

      Eadie, Alex

      McKelvey, William

      Eastham, Ken

      McNally, Thomas

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

      McNamara, Kevin

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

      McTaggart, Robert

      English, Michael

      McWilliam, John

      Ennals, Rt Hon David

      Magee, Bryan

      Evans, Ioan (Aberdare)

      Marshall, D (G'gow S'ton)

      Faulds, Andrew

      Marshall, Dr Edmund (Goole)

      1266

      Martin, M (G'gow S'burn)

      Silverman, Julius

      Mason, Rt Hon Roy

      Skinner, Dennis

      Maxton, John

      Smith, Rt Hon J. (N Lanark)

      Meacher, Michael

      Snape, Peter

      Millan, Rt Hon Bruce

      Soley, Clive

      Miller, Dr M. S. (E Kilbride)

      Spearing, Nigel

      Mitchell, Austin (Grimsby)

      Spriggs, Leslie

      Mitchell, R. C. (Soton Itchen)

      Stallard, A. W.

      Morris, Rt Hon A. (W'shawe)

      Steel, Rt Hon David

      Morris, Rt Hon C. (O'shaw)

      Stewart, Rt Hon D. (W Isles)

      Morris, Rt Hon J. (Aberavon)

      Stoddart, David

      Morton, George

      Taylor, Mrs Ann (Bolton W)

      Moyle, Rt Hon Roland

      Thomas, Jeffrey (Abertillery)

      Newens, Stanley

      Thomas, Dr R. (Carmarthen)

      Oakes, Rt Hon Gordon

      Tilley, John

      Ogden, Eric

      Tinn, James

      O'Halloran, Michael

      Torney, Tom

      O'Neill, Martin

      Urwin, Rt Hon Tom

      Orme, Rt Hon Stanley

      Varley, Rt Hon Eric G.

      Paisley, Rev Ian

      Wainwright, E. (Dearne V)

      Palmer, Arthur

      Wainwright, H. (Colne V)

      Parker, John

      Walker, Rt Hon H. (D'caster)

      Pavitt, Laurie

      Watkins, David

      Pendry, Tom

      Weetch, Ken

      Powell, Raymond (Ogmore)

      Welsh, Michael

      Price, C. (Lewisham W)

      White, Frank R.

      Rees, Rt Hon M (Leeds S)

      White, J. (G'gow Pollok)

      Richardson, Jo

      Whitlock, William

      Roberts, Albert (Normanton)

      Wigley, Dafydd

      Roberts, Gwilym (Cannock)

      Willey, Rt Hon Frederick

      Robertson, George

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

      Robinson, G. (Coventry NW)

      Wilson, Gordon (Dundee E)

      Rooker, J. W.

      Wilson, William (C'try SE)

      Ross, Ernest (Dundee West)

      Winnick, David

      Ross, Stephen (Isle of Wight)

      Woodall, Alec

      Rowlands, Ted

      Woolmer, Kenneth

      Ryman, John

      Wright, Sheila

      Sandelson, Neville

      Young, David (Bolton E)

      Sever, John

      Sheldon, Rt Hon R.

      Tellers for the Ayes:

      Shore, Rt Hon Peter

      Mr. Joseph Dean and

      Short, Mrs Renée

      Mr. Allen McKay

      Silkin, Rt Hon J. (Deptford)

      NOES

      Adley, Robert

      Buck, Antony

      Aitken, Jonathan

      Bulmer, Esmond

      Alexander, Richard

      Butcher, John

      Alison, Michael

      Butler, Hon Adam

      Ancram, Michael

      Cadbury, Jocelyn

      Arnold, Tom

      Carlisle, John (Luton West)

      Aspinwall, Jack

      Carlisle, Kenneth (Lincoln)

      Atkins, Robert (Preston N)

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

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

      Chalker, Mrs. Lynda

      Baker, Nicholas (N Dorset)

      Chapman, Sydney

      Banks, Robert

      Churchill, W. S.

      Beaumont-Dark, Anthony

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

      Bendall, Vivian

      Clark, Sir W. (Croydon S)

      Benyon, W. (Buckingham)

      Clarke, Kenneth (Rushcliffe)

      Best, Keith

      Clegg, Sir Walter

      Bevan, David Gilroy

      Cockeram, Eric

      Biffen, Rt Hon John

      Colvin, Michael

      Biggs-Davison, John

      Cope, John

      Blackburn, John

      Cormack, Patrick

      Blaker, Peter

      Corrie, John

      Body, Richard

      Cranborne, Viscount

      Boscawen, Hon Robert

      Critchley, Julian

      Bottomley, Peter (W'wich W)

      Crouch, David

      Bowden, Andrew

      Dean, Paul (North Somerset)

      Boyson, Dr Rhodes

      Dickens, Geoffrey

      Braine, Sir Bernard

      Douglas-Hamilton, Lord J.

      Bright, Graham

      du Cann, Rt Hon Edward

      Brinton, Tim

      Dunn, Robert (Dartford)

      Brittan, Leon

      Durant, Tony

      Brooke, Hon Peter

      Dykes, Hugh

      Brotherton, Michael

      Eden, Rt Hon Sir John

      Brown, Michael (Brigg & Sc'n)

      Edwards, Rt Hon N. (P'broke)

      Browne, John (Winchester)

      Eggar, Tim

      Bruce-Gardyne, John

      Emery, Peter

      Buchanan-Smith, Alick

      Eyre, Reginald

      1267

      Fairbairn, Nicholas

      McNair-Wilson, M. (N'bury)

      Fairgrieve, Russell

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

      Faith, Mrs Sheila

      McQuarrie, Albert

      Farr, John

      Major, John

      Fell, Anthony

      Marland, Paul

      Fenner, Mrs Peggy

      Marlow, Tony

      Fisher, Sir Nigel

      Marshall, Michael (Arundel)

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

      Marten, Neil (Banbury)

      Fletcher-Cooke, Sir Charles

      Mates, Michael

      Fookes, Miss Janet

      Maude, Rt Hon Sir Angus

      Forman, Nigel

      Mawby, Ray

      Fowler, Rt Hon Norman

      Mawhinney, Dr Brian

      Fox, Marcus

      Maxwell-Hyslop, Robin

      Fraser, Peter (South Angus)

      Mayhew, Patrick

      Gardiner, George (Reigate)

      Mellor, David

      Gardner, Edward (S Fylde)

      Miller, Hal (B'grove)

      Garel-Jones, Tristan

      Mills, Iain (Meriden)

      Glyn, Dr Alan

      Mills, Peter (West Devon)

      Goodhew, Victor

      Miscampbell, Norman

      Goodlad, Alastair

      Mitchell, David (Basingstoke)

      Gorst, John

      Moate, Roger

      Gow, Ian

      Molyneaux, James

      Gower, Sir Raymond

      Monro, Hector

      Grant, Anthony (Harrow C)

      Moore, John

      Gray, Hamish

      Morgan, Geraint

      Greenway, Harry

      Morris, M. (N'hampton S)

      Grieve, Percy

      Morrison, Hon P. (Chester)

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

      Mudd, David

      Griffiths, Peter Portsm'th N)

      Murphy, Christopher

      Grist, Ian

      Myles, David

      Grylls, Michael

      Neale, Gerrard

      Gummer, John Selwyn

      Needham, Richard

      Hamilton, Hon A.

      Neubert, Michael

      Hamilton, Michael (Salisbury)

      Normanton, Tom

      Hampson, Dr Keith

      Nott, Rt Hon John

      Hannam, John

      Onslow, Cranley

      Haselhurst, Alan

      Oppenheim, Rt Hon Mrs S.

      Hastings, Stephen

      Osborn, John

      Havers, Rt Hon Sir Michael

      Page, John (Harrow, West)

      Hawksley, Warren

      Page, Rt Hon Sir G. (Crosby)

      Hayhoe, Barney

      Page, Richard (SW Herts)

      Heddle, John

      Parris, Matthew

      Henderson, Barry

      Patten, Christopher (Bath)

      Heseltine, Rt Hon Michael

      Pattie, Geoffrey

      Hicks, Robert

      Pawsey, James

      Higgins, Rt Hon Terence L.

      Percival, Sir Ian

      Hogg, Hon Douglas (Gr'th'm)

      Peyton, Rt Hon John

      Holland, Philip (Carlton)

      Pollock, Alexander

      Hooson, Tom

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

      Howell, Ralph (N Norfolk)

      Prentice, Rt Hon Reg

      Hunt, David (Wirral)

      Price, Sir David (Eastleigh)

      Hunt, John (Ravensbourne)

      Prior, Rt Hon James

      Irving, Charles (Cheltenham)

      Proctor, K. Harvey

      Jenkin, Rt Hon Patrick

      Pym, Rt Hon Francis

      Jessel, Toby

      Raison, Timothy

      Johnson Smith, Geoffrey

      Rathbone, Tim

      Jopling, Rt Hon Michael

      Rees, Peter (Dover and Deal)

      Joseph, Rt Hon Sir Keith

      Renton, Tim

      Kaberry, Sir Donald

      Rhodes James, Robert

      Kellett-Bowman, Mrs Elaine

      Rhys Williams, Sir Brandon

      King, Rt Hon Tom

      Ridley, Hon Nicholas

      Knight, Mrs Jill

      Ridsdale, Sir Julian

      Knox, David

      Rifkind, Malcolm

      Lamont, Norman

      Roberts, M. (Cardiff NW)

      Lang, Ian

      Roberts, Wyn (Conway)

      Langford-Holt, Sir John

      Rossi, Hugh

      Latham, Michael

      Rost, Peter

      Lawrence, Ivan

      Royle, Sir Anthony

      Lawson, Rt Hon Nigel

      Sainsbury, Hon Timothy

      Lennox-Boyd, Hon Mark

      St. John-Stevas, Rt Hon N.

      Lester, Jim (Beeston)

      Shaw, Giles (Pudsey)

      Lewis, Kenneth (Rutland)

      Shelton, William (Streatham)

      Lloyd, Ian (Havant & W'loo)

      Shepherd, Colin (Hereford)

      Lloyd, Peter (Fareham)

      Shepherd, Richard

      Loveridge, John

      Silvester, Fred

      Luce, Richard

      Skeet, T. H. H.

      Lyell, Nicholas

      Speed, Keith

      Macfarlane, Neil

      Speller, Tony

      MacKay, John (Argyll)

      Spence, John

      Macmillan, Rt Hon M.

      Spicer, Jim (West Dorset)

      1268

      Spicer, Michael (S Worcs)

      Vaughan, Dr Gerard

      Sproat, Iain

      Viggers, Peter

      Squire, Robin

      Wakeham,John

      Stainton, Keith

      Waldegrave, Hon William

      Stanbrook, Ivor

      Walker, B. (Perth)

      Stanley, John

      Wall, Patrick

      Stevens, Martin

      Walters, Dennis

      Stewart, Ian (Hitchin)

      Ward, John

      Stewart, A. (E Renfrewshire)

      Warren, Kenneth

      Stokes, John

      Watson, John

      Stradling Thomas, J.

      Wells, John (Maidstone)

      Tapsell, Peter

      Wells, Bowen

      Taylor, Teddy (S'end E)

      Whitelaw, Rt Hon William

      Tebbit, Norman

      Whitney, Raymond

      Temple-Morris, Peter

      Wickenden, Keith

      Thatcher, Rt Hon Mrs M.

      Williams, D. (Montgomery)

      Thomas, Rt Hon Peter

      Winterton, Nicholas

      Thompson, Donald

      Wolfson, Mark

      Thorne, Neil (Ilford South)

      Young, Sir George (Acton)

      Thornton, Malcolm

      Younger, Rt Hon George

      Townend, John (Bridlington)

      Townsend, Cyril D, (B'heath)

      Tellers for the Noes:

      Trippier, David

      Mr. Anthony Berry and

      Trotter, Neville

      Mr. Carol Mather.

      van Straubenzee, W. R.

      Question accordingly negatived.
      It being after Ten o'clock, further consideration of the Bill stood adjourned.

    BUSINESS OF THE HOUSE
    Ordered,
    That, at this day's sitting, consideration of Lords Amendments to the Iron and Steel Bill and consideration of Lords Amendments to the Criminal Attempts Bill may be proceeded with, though opposed, until any hour.—[Mr. Thompson.]

  Finance Bill
  Bill, as amended (in the Committee and in the Standing Committee), again considered.
  Mr. Lawson: I beg to move amendment No. 33, in page 18, line 1, leave out 'thirty' and insert 'sixty'.
  As I said in Committee, the Opposition put forward two amendments, which the Government accepted, to change from 30 days to 60 days the period after the issue of the notification during which the claimant could object to it. Those amendments altered the period mentioned in subsections (1) and (5) of the clause. The resiling provision in subsection (4) was not mentioned in Committee. This, like the others, was modelled on a similar provision in section 54(2) of the Taxes Management Act 1970, which specifies a period of 30 days. However, in the light of the concessions that I made in Committee we felt that as a matter of fairness and consistency it would be as well for both the periods mentioned in the clause to be changed to 60 days. The amendment achieves that.
  Mr. Robert Sheldon: As the right hon. Gentleman said, the original legislation allowed only 30 days for consideration of the tax assessment, within which period an objection had to be made, otherwise there was no question of appeal. We found those matters quite objectionable, but we tabled an amendment to extend the period within which objections might be made from 30 days to 60 days. We are pleased that the right hon. Gentleman has seen fit to table this amendment, which we welcome.
  Amendment agreed to.

  Finance Bill
    Clause 29

      PAY AS YOU EARN REPAYMENTS
      The Minister of State, Treasury (Mr. Peter Rees): I beg to move amendment No. 36, in page 18 line 34, leave out 'or' and insert:
      'in respect of a period including that time; or
      (aa) he has claimed'.
      Mr. Deputy Speaker: With this we may take the following amendments:
      No. 38, in page 18, line 37, after '1977', insert:
      'which is taxable by virute of section 27 above'.
      Government amendment No. 39,
      No. 40, in page 18, line 39, leave out:
      'he is disqualified at the time'
      and insert:
      'he has been disqualified for a period of not less than four weeks'.
      Mr. Rees: Amendment No. 36, taken with amendment No. 39, restricts the power to withhold tax refunds, so that the order-making power will apply only in the case of claimants whose benefit is taxable. It meets precisely the purpose of amendment No. 38, which stands in the names of the right hon. Member for Stepney and Poplar (Mr. Shore) and the hon. Member for Edinburgh, Central (Mr. Cook). The matter was ventilated in Committee, and I hope that the hon. Gentleman will feel that ample justice has been done. He knows the ways of parliamentary draftsmen. For some obscure reason, the amendment that I moved is slightly superior—purely on technical grounds—to his amendment. I hope that the basic principle is the same.
      Mr. Cook: I do not know whether it is appropriate for me to welcome the Minister of State to our deliberations today, because I am tempted to complain that it is unfair of the Treasury Bench to throw fresh troops at us after we have been battling all the afternoon. However, we are grateful to him for moving the amendment, and we welcome it.
      The amendments meet the purpose of an amendment that we moved in Committee. Without the amendments, the effect of the clause as drafted would be to provide for the withholding of refunds for any person who claimed supplementary benefit, for whatever reason, when he was entitled to a refund. The clause would therefore bite on pensioners claiming supplementary pensions, on sick people claiming supplementary benefit, and on single-parent families claiming supplementary benefit. Plainly, the intention was not to catch these people, because they could not conceivably have a supplementary benefit that was taxable under the Bill. I entirely accept that the Treasury never intended it to have that effect. I therefore welcome the fact that the Treasury has accepted our observation and put it into less defective language than that of our amendment.
      I am tempted to take up the point made earlier by the hon. Member for Gateshead, West (Mr. Horam), and say that this may illustrate the lack of joint study and joint consultation between the DHSS and the Treasury on the interaction between the tax regime of our State and the social security system. This is a case where a Bill, put forward in all good faith—I do not challenge the intention of the Bill—had the effect of going much wider than the Treasury draftsmen had envisaged. That might demonstrate what the hon. Member for Gateshead, West said
      1270
      about there being a strong case for more consultation and a joint study between the Treasury and the DHSS to ensure that the growing complexity and interaction of the social security system and tax regime are catered for adequately.
      Amendment No. 38 is redundant. We tried to move a similar amendment in Committee and we tabled amendment No. 38 in case the commitment had slipped Ministers' minds. We are delighted that it has not. We accept that amendment No. 38 is defective.
      Amendment No. 40 is on a slightly different tack. It attempts to achieve the same purpose. Amendments Nos. 36, 38 and 39 relate to the unemployed person. Amendment No. 40 relates to the person on strike. As the clause stands, there is no provision to limit the right to withhold the tax refund from strikers who have made a claim for benefit. The right to withhold refund will be applied to all strikers, whether or not they have claimed benefit.
      Our view is that that provision is unreasonably wide. Only a small proportion of workers on strike claim benefit. For instance, a single man cannot claim any benefit when on strike, because a striker is entitled to benefit only in respect of a wife or other dependant. A man who does not have a wife or dependant does not qualify for benefit. However, tax refunds to which that person might be entitled will be withheld on the basis that when he returns to work a calculation will be made between the taxable benefit and the refund. In the case that I have described such a calculation cannot apply. There is no taxable benefit and therefore there is no reason for withholding the refund.
      In Committee we moved an amendment which was intended to deal with that position. The amendment was rejected. Instead of tabling that amendment again we have tabled a different amendment to provide that the right to withhold benefit from all strikers will run only from the fifth week of the strike. We may have approached the problem at a tangent, but we chose the method because of one of the arguments by the Chief Secretary when responding to the debate in Committee.
      In support of our amendment I referred to the small proportion of strikers who claim benefit. I said that in the last year only 7 per cent. of strikers claimed benefit and that in none of the preceding five years had more than 5 per cent. of strikers claimed benefit. The implication that I drew was that as a result of the clause 100 per cent. of strikers would have refunds withheld, although only 5 per cent. had any benefit that could be taxable under the terms of the clause. It is unreasonable that 100 per cent. of strikers should have their refunds withheld to facilitate the taxation of the 5 per cent. who claim benefit.
      To rebut my argument the Minister said that I was working out the percentage from all those on strike and thereby biasing my sample. He said that I should have looked at those involved in long strikes, although they are not defined. The Chief Secretary argued that those on long strikes had a higher uptake of benefits. He put the figure at one-third—still a minority, but a substantial minority.
      If the purpose of the regime ushered in in the clauses is to tax those who claim benefit because they are involved in longer strikes, let us incorporate in the Bill a provision that will limit the mechanism to those involved in longer strikes. That is why we proposed the amendment. It would allow those involved in a short strike to claim their first tax refund, which would normally be paid at the end of

      1271
      four weeks. It would catch those involved in a longer strike, who would be unable to obtain any tax refund beyond the first four weeks.
      10.15 pm
      I apprehend that that proposal might commend itself to the Treasury Minister because, as well as having the effect of allowing those on short strikes to claim their first refund, which would be of benefit to them, it would also be of benefit to the Treasury, because it would exclude from the operation of the mechanism the administrative burden of stopping refunds and calculating benefits for those on strike for a short time, and the revenue to be gained from taxing their benefits must be modest. It would also ensure that at least in those cases where refunds were withheld there was a sporting chance—one in three—that the person having his refund withheld was claiming benefit that was taxable under the Act.
      As the legislation stands, in all those cases where refund is withheld only in one in 20 will there be a benefit that is taxable. I cannot believe that that is what the Treasury meant to happen. I understand the Minister's difficulty. I hope that he will see his way to accept the amendment, which seeks to provide for the striker a similar protection to that which we have already accepted for the unemployed. If it is not possible for him to accept the amendment, I hope that he will bend his mind to the difficulty and tell the House that it is not the Treasury's intention that we should end up with a position in which a large number of people who are not claiming benefit—who are not eligible to claim benefit—are simultaneously having their refunds withheld to facilitate the taxation of the few strikers who do claim benefit.
      Mr. Peter Rees: I wish to respond to the persuasive case advanced by the hon. Gentleman in support of amendment No. 40. The difficulty is that it would have the consequence of excluding about 85 per cent. or more of all strikers. That may be the hon. Gentleman's intention. I do not entirely follow his argument that that would reduce the administrative burden, because by not paying tax refunds there would be an automatic alleviation of the administrative burden.
      I find it difficult to meet the hon. Gentleman's argument head on because the Government propose to withhold refunds from all strikers not because some of them are benefit claimants but because the large majority of the unemployed are claimants and will have their refunds withheld. That point is not affected by the question whether only 5 per cent. of strikers in a particular strike are claimants, or whether, in a longer strike, 25 or 30 per cent. are claimants. The Government's intention is to achieve a broad, practical equivalence of position between strikers and unemployed. Refunds, therefore, are to be deferred from strikers as a whole, and from the beginning of the strike.
      I listened carefully to the hon. Gentleman. It may be that a certain confusion crept into our debates in Committee. I hope that the hon. Gentleman was not misled into thinking that the Government were advancing these provisions on some basis that I could no longer support. Right from the beginning this was the Government's position on that point.
      Mr. Cook: The Minister made a point that was also made by the Chief Secretary when we debated the matter
      1272
      in Committee of the whole House. I wish to draw his attention to the point that I put then to the Chief Secretary. If the argument is that it is necessary to achieve equity and balance between the unemployed and the strikers, I invite the Minister to refer to paragraph (a) of the clause, which makes it perfectly plain that refunds can be withheld only when the unemployed person has made a claim for benefit. In other words, the right to withhold refund does not apply where the person has become unemployed and there is no benefit which is taxable within the terms of the Bill.
      However, if the hon. and learned Gentleman refers to paragraph (b), which deals with the striker, he will see that the right to withhold refund applies to all strikers even though in the majority of cases there will not be any benefit that is taxable. Far from it being the purpose of the Treasury to achieve broad equivalence between the unemployed and the striker, it is the Opposition who are seeking to achieve that parallel by providing that the striker shall have his refund withheld only if there is at least a reasonable probability of a benefit being claimed, whereas only the unemployed who claim benefit will have their refund withheld. I accept that that is the appropriate approach.
      Mr. Rees: I follow the theme of the hon. Gentleman's intervention. It was thought to be a pointless exercise that the unemployed should claim a tax refund when they became unemployed, whereas at the same time they were claiming unemployment benefit that was taxable but that would be taxed at the year end. That was an absurd position. It was thought to be equally absurd that strikers should be able to claim their tax refunds immediately and, to the outward eye at least, be in a more favoured position than the unemployed. I understand the Opposition's reservations about the whole system of taxing benefits. I understand the broad division of principle. As for the equivalence between strikers and the unemployed, I had hoped that there was a certain identity of view between the two sides of the Committee and the two sides of the House.
      Mr. Cook: I ask for the leave of the House, Mr. Deputy Speaker. The hon. and learned Gentleman referred to the Opposition's reservations about the regime and mechanism of taxation that is being created in the part of the Bill that we are discussing. I shall not be tempted into giving him my observations. If he has any doubt about them, I am sure that the Financial Secretary, who has recently heard them, will be happy to refresh the hon. and learned Gentleman's mind.
      Leaving aside general prejudices, we find it unsatisfactory that we have ended up with a mechanism that, in providing primarily for the taxation of the 5 per cent. who will claim a taxable benefit, will stop the refund to all strikers. I cannot accept that there is broad equivalence between the striker and the unemployed. An unemployed person's right to withhold his refund is dependent on a claim for benefit. The striker's right to withhold his refund is not dependent on a claim for benefit. In the great bulk of cases the mechanism will be applied where there is no claim for benefit. In many instances, no claim for benefit will be possible.
      I appreciate that the amendment is a roundabout way of meeting our argument. The Minister said that we would let out of the right to withhold refund 85 per cent. of all strikers. I am prepared to accept that figure. We would hope for a high degree of correlation between that 85 per

      1273
      cent. and the 95 per cent. who make no claim for benefit. I appreciate that the amendment is not a direct way of addressing ourselves to the problem. We do not propose to press the amendment to a Division. However, I think that it was right to record our own dissatisfaction with a mechanism that when applied will mean that those who are not claiming a taxable benefit will have withheld from them tax refunds to which they are otherwise entitled. We shall not press amendment No. 40.
      Amendment agreed to
      Amendment made: No. 39, in page 18, line 38, after 'time', insert:
      'and his right to the allowance is subject to the condition mentioned in section 5 of the said Act of 1976 or Article 7 of the said Order (registration and availability for employment' .—[Mr. Peter Rees.]

    Clause 30

      SICK PAY
      Mr. Lawson: I beg to move amendment No. 42, in page 19, line 14, leave out 'either by his employer or'.
      Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments:
      No. 43, in page 19, line 20, at end insert—
      'and the amour t of the said sums liable to charge under this section shall be such proportion of them as is not attributable to any contribution towards the cost of their provision made by the person above referred to.'.
      Government amendments No. 44 and 45
      No. 46, in page 19, line 31, leave out '1982–83' and insert '1983–84'.
      Mr. Lawson: This clause, which concerns the taxation of sick pay paid through insurance schemes, is one which, in principle, was agreed as being right and equitable on both sides of the Committee when we discussed it. However, certain difficulties were pointed out, in particular by my hon. Friend the Member for Croydon, South (Sir W. Clark). I undertook to bring forward on Report amendments to deal with those difficulties.
      Amendment No. 42 is a straightforward amendment that takes out some words that we believe are no longer necessary. The more substantial amendments are Nos. 44 and 45. Amendment No. 44 deals with the point that was rightly raised about jointly funded schemes, in which the employer and employee contribute to the sick pay benefit that is being provided. In those cases it is desirable that only that proportion of the benefit financed by the employer which is a benefit to the employee should be taxed. The employee should not be taxed on the benefit that he is providing himself. Amendment No. 44 meets that point in the most sensible and appropriate way.
      Amendment No. 45 meets perhaps a more difficult point, which was raised in Committee. Although the Bill provides that those benefits should come into the tax net only in 1982, it was represented to me—I had meetings with the companies that were particularly affected—that many companies that had those schemes would have to go through a complicated process of renegotiation with the trade unions. It would have been difficult to sort out everything in time for 1982. Therefore, in Committee I undertook that the schemes and arrangements that already exist would not be brought into the tax net until 1983, but the 1982 date would apply otherwise. That is the sense and meaning of amendment No. 45, which meets that point. I commend it to the House.
      Sir William Clark: I am grateful to my right hon. Friend for accepting the amendments. As he rightly said, the two amendments that are in my name are covered by Government amendments.
      It is right that if an employee pays for sickness insurance out of taxed income, whatever he gets for the proportion of the insurance should not be taxed, because that would be double taxation. I believe that the House agreed with my right hon. Friend when he acknowledged the fact that sickness benefit should eventually be brought into the tax bracket. With the State scheme coming in in 1983–84, since the Bill provided that the sickness benefit under insurance scheme would come in in 1982–83 it would have meant two separate negotiations for employers. I am delighted that the Government have accepted the spirit of my amendment. Consequently, I should like to thank my right hon. Friend and his colleagues. I trust that we shall receive the same sort of co-operation from the Government in future amendments.
      Mr. Cook: The Financial Secretary said that this was not a clause in which there was any division in principle between the two Front Benches. The Government were right to act to deal with the situation in which an increasing number of schemes were being formed to take advantage of a tax advantage. Therefore, there is no dispute between us over the principle of the clause.
      We warmly welcome amendments Nos. 44 and 45, which improve the form of the clause. Amendment No. 44 will be of benefit to the schemes where there is part contribution by employee and employer—in particular the forward benefit scheme, which is perhaps the largest, in which the costs are shared almost equally between the two parties to the agreement and in which it would be wrong that the tax would be levied on the whole of the benefit paid out under that agreement. That position will be very much improved by amendment No. 44.
      10.30 pm
      I particularly welcome amendment No. 45, which will provide added time for negotiation and rearrangement to those affected by existing schemes who have perhaps unfortunately been caught. A number of the schemes were set up many years ago, and there is no suggestion that they were created to take advantage of the tax advantage conferred. However, those involved may be caught in the net because others, on their backs, sought to take advantage of the position. In many cases there can be no suggestion that a tax device was arranged, and it is right that those people should have an additional year to negotiate new arrangements, particularly if the House, in its wisdom, decides to give the Treasury powers to tax sickness benefit and particularly as there will be a further set of negotiations for the subsequent year starting in April 1983.
      For those reasons, I warmly welcome the amendments, which will improve the clause.
      Amendment agreed to.
      Amendments made: No. 44, in page 19, line 20, at end insert—
      '(1A) Where the funds fox making payments under any arrangements are attributable partly to contributions made by the employer and partly to contributions made by the persons employed by him subsection (1) above shall apply only to such part of the sums paid as a result of the arrangements as it is just and reasonable to regard as attributable to the employer's contributions.'.

      1275
      No. 45, in page 19, line 31, leave out subsection (4) and insert—
      '(4) This section has effect—

      (a) in the case of sums not falling within paragraph (b) below, for the year 1982–83 and subsequent years of assessment;

      (b) in the case of sums paid as a result of arrangements in force on 4th June 1981, for the year 1983–84 and subsequent years of assessment.'.—[Mr. Lawson.]

    Clause 31

      PAYMENTS FOR LOSS OF EMPLOYMENT ETC.
      Sir William Clark: I beg to move amendment No. 47, in page 20, line 26, at end insert
      '(9)(a) Where a payment is made to an employee which, on the application of the person making or receiving the payment or both of them, is determined by the Commissioners of Inland Revenue to be a payment made upon a redundancy but not one which falls within section 412 of the Income and Corporation Taxes Act 1970 the payment shall not be chargeable to income tax under Schedule E except under the provisions of section 187 of the said Income and Corporation Taxes Act.
      (b) In determining under paragraph (a) above whether or not a payment is a payment upon a redundancy the Commissioners shall have regard to all the circumstances surrounding the making of the payment.
      (c) A person who has made an application under paragraph (a) above and who is dissatisfied with the decision of the Commissioners may appeal to the General or Special Commissioners to determine whether or not the payment in question is a payment upon a redundancy.'.
      It is not necessary for me to rehearse the arguments made in Committee. The amendment concerns redundancy payments. It would take out of the extrastatutory concession list the discretion given to the Revenue to deal with the payments under the income tax legislation. I am sure that I carry the whole House with me in this. One thing that I do not like about extrastatutory concessions is that there is no right of appeal, and that omission should be remedied, which is the objective of the amendment.
      My hon. and learned Friend the Minister of State may not accept my amendment, but I hope that he will say that, if cases are put to him in the next year, he will consider them sympathetically.
      Mr. Peter Rees: I share my hon. Friend's reservations about the undesirability of proceeding too far and too often by extrastatutory concessions. Indeed, in Committee my right hon. and learned Friend the Chief Secretary said that he would endeavour to see whether the statement of practice put out by the Inland Revenue on 10 March on non-statutory redundancy payments could be translated into law. It can be done, but we felt, on consideration, that it would deprive the Revenue of a certain measure of flexibility, which, on the whole, would be exercised in favour of the taxpayer.
      However, I recognise the force of my hon. Friend's constitutional objections, but I hope that he will allow the matter to rest on the basis of the statement of practice for the time being. I am happy to give him and the House the assurance that, should hard evidence be brought to our attention that the Revenue is exercising its discretion in a way which does not do full justice to the needs of individual taxpayers, we shall be happy to come back on another occasion with a statutory provision that the House can consider in detail.
      1276
      I hope that on that basis my hon. Friend will feel able to withdraw his amendment.
      Sir William Clark: In view of my hon. and learned Friend's explanation and assurance, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

  Schedule 9

    STOCK RELIEF
    Sir William Clark: I beg to move amendment No. 49, in page 148, line 38, leave out from 'is' to the end of line 40 and insert:
    'negligible in comparison with their scale for previous periods of account beginning not more than six years before the first mentioned period and continues to be so negligible during subsequent periods of account beginning not more than six years after the first mentioned period.'.
    Mr. Deputy Speaker (Mr. Bryant Godman Irvine): With this it will be convenient to take Government amendment No. 50.
    No. 51, in page 155, line 2, leave out from 'is' to end of line 4 and insert
    'negligible in comparison with their scale for previous periods of account beginning not more than six years before the first mentioned period and continues to be so negligible during subsequent periods of account beginning not more than six years after the first mentioned period.'.
    Government amendment No. 52.
    Sir William Clark: I am sorry to bore the House with another amendment. This is a small point in relation to stock relief. In fact, my amendment No. 49 is covered by Government amendment No. 50 and my amendment No. 51 is covered by Government amendment No. 52. As the Government have agreed with both the points that I sought to cover, there is no need for me to say more.
    Mr. Lawson: As my hon. Friend has said, the valid points that he raised have been met in Government amendments Nos. 50 and 52. If he wishes to ask any questions, I shall, with the leave of the House, be happy to do my best to answer them. If he is satisfied, however, he may care to withdraw his amendment and yield to the Government amendments.
    Sir William Clark: As the Government and I seem to be in unison on both matters, there is no point in my asking questions. Knowing that the Government amendments cover both points, I shall be delighted to seek leave to withdraw my amendment.
    Mr. Lawson: There is one question which I thought that my hon. Friend might ask me. As he has not asked it, with the leave of the House, I shall answer it anyway.
    As I indicated earlier, the Revenue will issue a statement of practice as to how it proposes to interpret these provisions. Broadly, it will adopt the approach that a recovery charge will not normally arise unless turnover has fallen to 2½ per cent. or less of its level during the period of account in which it was at its highest during the previous six years. Reductions in turnover due to temporary factors will be ignored. I hope that the statement of practice, which will be issued very soon, in conjunction with the Government amendments will remove any remaining fears about the threat of clawback for the normal continuing business.
    Sir William Clark: I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Amendments made: No. 50, in page 148, line 38, leave out 'small' arid insert 'negligible'.
    No. 52, in page 155, line 2, leave out 'small' and insert 'negligible'.—[Mr. Lawson.]
    Mr. Lawson: I beg to move amendment No. 53, in page 159, line 3, leave out 'referred to in' and insert:
    'of his trading stock at the end of that period, as reduced in accordance with'.
    Mr. Deputy Speaker: With this it will be convenient to take Government amendments Nos. 54, 55 and 58.
    Mr. Lawson: The purposes of these amendments is to increase the amount of relief for new businesses in the first year of trading, while at the same time simplifying the calculation of relief for the same period.
    Under the old scheme, relief was based on the difference between the opening and closing stocks of the year, that is to say, ignoring the profit restriction. The Act provides that in the case of new business the figure for opening stocks is deemed to be such value as is reasonable and just in the circumstances, and the legislation contains some guidance as to how that value is to be arrived at. In practice, it proved to be a rather contentious area and there were a number of requests for the provisions to be made more precise.
    In framing the rules for the new scheme, therefore, we decided to try to meet that point. The Bill provides that relief is to be based, broadly speaking, on the average value of the business's trading stock over the first year. On reflection, although the point was not made when we discussed the matter in the Standing Committee, we feel that we can go further and at the same time increase the amount of relief to help a new business to become established.
    In many cases there will be no figure for monthly stock levels and so we have decided that, exceptionally in these cases, the relief for the first year will be based on the value of closing stocks at the end of the year discounted by the increase in the all stocks index over that period. Perhaps that is sufficient. My hon. Friend the Member for Fife, East (Mr. Henderson) appears to be a little bemused by this. However, an Inland Revenue press notice on this subject was issued last week. As a result of a busy July, my hon. Friend will not have had time to look at it. However, those who have a deep interest in such matters will have read the press release. I notice that the hon. Member for Colne Valley (Mr. Wainwright) is nodding his head. Clearly he has read it.
    Therefore, I hope that the House is satisfied that the amendments represent modest but important improvements in the stock relief scheme as regards new businesses. They conform with the spirit of the Bill, which is designed to help new businesses in many ways.
    Mr. Richard Wainwright: I am sure that all hon. Members will agree that Inland Revenue press notices are no substitute for advocacy from the Treasury Bench. It will be a poor day if, in an atmosphere of levity, we reach the pitch when hon. Members are referred to an Inland Revenue press notice. I have not read it. I am the Liberal spokesman on the economy, for what that is worth, but I do not wish to overemphasise that. I have tried in vain to get a regular supply of those press notices. Even if a
    1278
    Minister has been eclipsed by a large photograph in The Times Business Supplement showing one of his Treasury colleagues standing against the background of the door of No. 11 Downing Street, I do not expect to be asked to swallow Inland Revenue press notices. I have not read the Inland Revenue press notice, and I am damned if I see why I should.
    Whatever the easy appetite of other hon. Members, Liberal Members cannot swallow amendment No. 54.
    Mr. David Crouch: Where are they?
    Mr. Wainwright: Liberal Members will come into the Chamber in time. We are as well drilled in our voluntary way as any of the parties that are under the lash of the Whip. Further evidence of that will arrive with every moment that passes. My hon. Friend the Member for Liverpool, Edge Hill (Mr. Alton) is not the Chief Whip. He will arrive later.
    We are not prepared to swallow amendment No. 54 and we intend to divide the House unless the Financial Secretary sees sense in his reply. The amendment refers to the "all stocks index". A few lines further on there is reference to "that index". That is the term that I should apply to it. I shall rely not on my rather out-of-date judgment as a former practising accountant but on the up-to-date information of the Consultative Committee of Accountancy Bodies. That committee consists of the Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants of Scotland—I promised that Liberal Members would appear at the right moment, and I am glad to see my right hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel)—the Institute of Chartered Accountants in Ireland—[Interruption]—and the Association of Certified Accountants—[Interruption.]. I hope that no hon. Member will suggest that this levity has been induced by my remarks.
    The committee also consists of the Institute of Cost and Management Accountants and the Chartered Institute of Public Finance and Accountancy. Those separate financial bodies—all of whose examinations are known to be rigorous and which require experience before membership is granted—united in the Consultative Committee of Accountancy Bodies, wrote to me on 13 July. I quote one sentence but I am happy to make the letter available to anyone who wants further particulars. It states:
    "The Consultative Committee of Accountancy Bodies believes that the application of a general stock index is fundamentally wrong."
    This is why we oppose the amendment.
    10.45 pm
    There is available a more scientific, fair and equitable alternative, which is that instead of the all stocks index, which, in certain cases, will lose revenue for the Government, there should be applied the stocks index for that trade. If a highly diversified company or group of companies is occupied in a variety of trades, each of its separate subsidiaries, divisions or sections must apply the index for that trade. Those are available from the Department of Industry and there is no obstacle to their regular appearance.
    As I argued in Committee, the effect of applying the all stocks index is that in a number of trades, such as the hoot and shoe trade, the Government will lose revenue. A Government who go to the length of taxing widows' pensions and single women's pensions, the pensions of

    1279
    people who have no other income corning in to their pockets, are deliberately losing revenue from companies by insisting on an all stocks index that would enable companies in some trades to deflate their profits far more than is necessary. Such professional bodies are performing a strictly professional duty—not one that will be popular with some of their members—pointing out that an unscientific alliance on an all stocks index, which I suggest is purely for ease of administration, in aid of this absurd business of playing the numbers game in the Civil Service and taking a sadistic delight in reducing the number of tax inspectors, will lose revenue for the Government, who go to the most appalling lengths to try to scrape up money from widows and single retired people.
    There is a sensible alternative, namely, that the appropriate stocks index of inflation in each trade should be applied. I was glad that in Committee I had the support of the hon. Member for Edinburgh, Central (Mr. Cook)—who, as we all know applies himself meticulously to these matters—and the hon. Member for Gosport (Mr. Viggers).
    I quoted one compelling sentence from the observations of the Consultative Committee of Accountancy Bodies, but I hope that I shall not bore the House intolerably if I expand a little on that damning sentence. In its submission to the Government the committee suggested that in terms of current cost accounting, which has now been adopted by the profession, it did not agree that any one prescribed method of calculating the effect of price changes on the current replacement cost of stock could be capable of universal application. That is the principle at which it has arrived after, admittedly, too many years of professional deliberation. I wish that it had got on with it more quickly, but it cannot be accused of rushing the matter.
    The various accountancy bodies have taken an enormous amount of care, trouble and time in arriving at the view that there is no single index that can be capable of universal application. The submission to the Government goes on to show how the application of a single index would be very appropriate in the case of many businesses. The conclusion is arrived at after arguing the case, and the Government have had seven months in which to consider it. The submission states:
    "We are, however, in no doubt that the application of a general stock index is fundamentally wrong".
    Can it be proper that the House should pass an amendment that contains the use of an all stocks index that all the leading accountancy bodies, without exception, told the Government seven months ago was fundamentally wrong?
    I hope that this will not be regarded as some arcane technical matter, that hon. Members not versed in accountancy cannot be expected to follow, because that is not so. The all stocks index—I say this to those hon. Members who may be tempted to opt out because they did not serve articles in an accountant's office, which shows how very wise they were in their choice of a career—is based on a basket of goods.
    The all stocks index is meant for the convenience of shoppers and housewives. The basket of goods is a very appropriate concept for a housewife wanting to measure the effect of inflation or to claim an increased pension because her shopping bill week by week has increased as a result of inflation.
    1280
    That is a splendid concept for the consumer, but of what use is a basket of goods to people whose sole occupation is making clogs in Hebden Bridge, universal joints in Coventry, or aeroplane parts in Weybridge? They do not trade in a basket of goods. They do not instruct their purchasing officers to go out into the commercial world and come back with a basket of goods. Each of them in his own specialist way buys in specialist supplies for the making of specialist goods, be they clogs, universal joints for vehicles, parts for aircraft, or any other specialist product that any hon. Member cares to conjure up in his mind.
    I make the simple submission that to judge trading profits—especially for a small and new business that is very vulnerable to taxation and has not a lot of fat on its back—on the basis of the increase in price of a basket of goods that is meant to apply to consumers is wholly inappropriate when so many small businesses thrive on the basis of a specialist product.
    There is an alternative available, because the Department of Industry—God bless it—produces and is perfectly able to produce stock indices for various trades. The Liberal alternative—I hope that it is not just the Liberal alternative—is that instead of referring to the all stocks index the Government should refer to the index for the appropriate trade. We had no adequate answer to this point in Committee, and in the absence of any answer this evening it will be our intention to divide the House.
    Mr. Cook: The Opposition Front Bench has considerable sympathy with the hon. Member for Colne Valley (Mr. Wainwright). There is substance in his argument.
    The hon. Gentleman referred to a number of the bodies that have condemned the idea of an all stocks index and called for a plural index system. One could go further and say that no reputable body in the accountancy profession, or in industry, commerce or the academic world, has defended the concept of a single all stocks index. The reason is simple: an all stocks index will be perfectly satisfactory for those companies that trade in a basket of goods—and for nobody else. Since the great majority of commercial companies engage in business trade not in a basket of goods but in particular commodities and products, it follows that most of them will find them, to varying degrees, out of line with the all stocks index.
    They irony is that the matter cuts both ways. Some companies will be disadvantaged by the index, finding that the commodities that they hold in stock rise in value faster than the index. They therefore suffer a tax penalty, because they cannot claim the full amount of stock relief to which they would be entitled under the present arrangements, the full rise in the value of their commodities being reflected in the amount of relief that they can claim. But other companies will find that their commodities do not rise in value with inflation to the same degree as the index, and therefore, without their doing anything to achieve that result, they will be entitled to more relief than is reflected in the rise in value of the commodity that they stock, giving them a windfall tax gain.
    That is why we find it particularly perverse that the Treasury should have resisted our attempts to get it to see the folly of its ways and accept a plural number of indices, which would not necessarily be more expensive. If a number of indices resulted in more tax being recouped

    1281
    from those whose commodities rose by less than the all stocks index, as well as giving additional benefits to those whose commodities rose faster in value, the broad effect on the Treasury's revenue would be neutral. Therefore, it is not because of the cost that the Treasury resisted this proposal. It was resisted on the old ground of administrative simplicity. This is a classic instance of administrative simplicity triumphing over common sense.
    In Committee we took the line that there should be a plural number of indices and that the all stocks index was an unfortunate idea that the Treasury, if it is misguided enough to insist upon it, will live to regret in the very near future as industry starts to complain about the unjust anomalies that will flow from having a single all-purpose index across the board of commercial and industrial activity. Therefore, in Committee we tabled our amendments and the hon. Member for Colne Valley tabled his, and we bad a joint vote in favour of them.
    Were there such amendments before the House tonight, we would vole for them. If there were a proposal for the first time to create an all stocks index, we would vote against it. But I must tell the hon. Gentleman, in all fairness and candour, that we do not see what purpose would be served by dividing on amendment No. 54, as it seeks to make a modest improvement in an all stocks index that is already in the Bill. By voting against it we should not strike at the heart of the all stocks index, nor vote for a plural number of indices. In effect, we should be seeking to prevent a modest improvement to a concept that we accept is faulty. Therefore, we shall not join the hon. Gentleman in the Lobby, although we appreciate that his opposition and that of many others to the all stocks index—opposition that we share—might well impel him to vote against that amendment as a gesture.
    I wish that the Treasury had listened to the views that we expressed in Committee. That would have prevented the unfortunate fact that for the next few years British industry will have to wrestle with an all stocks index that may bear not the slightest relation to its experience of inflation and what it does to the value of the stocks held.
    Mr. Lawson: The hon. Member for Edinburgh, Central (Mr. Cook) said that he wished that the Treasury had listened to what was said in Committee. The reason why I introduced the amendments rather perfunctorily was that I was under the misapprehension that Opposition Members, particularly the hon. Member for Colne Valley (Mr. Wainwright), had listened to what was said in Committee. However, the contribution of the hon. Member for Colne Valley showed that nothing had penetrated his skull.
    The hon. Gentleman said that the all stocks index was a consumer index. It is not. He also seemed to have no concept between changes in the general price level—inflation which the hon. Member for Edinburgh, Central also mentioned; and we would not be discussing the schedule if it were not for the effect of inflation on companies and the way that it ravages their liability for taxation if nothing is done through stock relief—and changes in relative prices.
    11 pm
    We propose the new index on grounds of principle and not simply for administrative convenience, though there is some such convenience for the Inland Revenue and for individual companies. It is significant that the complaints that the hon. Gentleman voiced and that come from certain
    1282
    accountancy and other bodies are not echoed by individual companies. It is on grounds of principle that the clause and the schedule are framed in this way.
    We are anxious to find a means of dealing with the consequences of inflation increasing the value of stocks and, therefore, increasing the tax liability. We are not concerned with changes in relative prices. The all stocks index will give a general indication of the rise in prices for stocks as a whole.
    If we were to make a change for relative prices, as the hon. Member for Colne Valley suggests, a company that made substantial dealing profits because it had the wit to, say, buy a metal when it was rising in price would be held to have made no taxable profit, because its index would have gone up by the same amount. That would be a palpable absurdity.
    What may be right for accounting purposes may not be right for taxation purposes, and we are talking about taxation and adjusting taxation for the effects of inflation. That is why we have the all stocks index.
    The hon. Gentleman may, by all means, vote against the amendment. In conformity with the rest of the schedule, it is based on the all stocks index. It is a relief for new businesses and if the hon. Gentleman votes against the amendment he will be voting against relief for new businesses. That would be consistent with the Alice-in-Wonderland logic with which he has plagued the House on this matter, upstairs and down.
    Mr. Richard Wainwright: By leave of the House, I should like to make a brief comment on the Financial Secretary's remarks. The House will have observed that he addressed his abuse to me personally. I do not complain about that, but it is not my judgment that I am asking the House to accept. It is the judgment not of certain accountancy bodies, as the right hon. Gentleman described them, but of the whole collection of the accepted, reputable, long-established accountancy bodies in private practice and in public finance in all parts of the United Kingdom.
    It was a parody for the right hon. Gentleman to describe those organisations as "certain accountancy bodies", as though I had selected a particular group of accountancy bodies and ignored representations from others. I challenge the right hon. Gentleman to mention a single reputable accountancy body admitting people by examination that accepts his view rather than the one that I have tried to put.
    The right hon. Gentleman tries to defend the basket of goods. I was endeavouring to give an illustration when I used the concept of a shopping expedition. I was not suggesting that this is literally a housewife's basket of goods. I should like to explain the basket of goods represented by this mistaken all stocks index. It contains stone and slate quarrying goods for sale, mineral oil, refining goods for sale, tractors for sale, footwear goods for sale, the building materials industry and the electricity industry's non-fuel stocks. What kind of a basket is that to be applied to those making clogs, universal joints for motor vehicles, or parts for aircraft? It is a basket concept. None of the right hon. Gentleman's levity enables him to get away from the fact that the Government are applying to all kinds of specialised industries an all-purpose index that is widely inappropriate and will lose them revenue.
    It is notable that the right hon. Gentleman did not refer to the fact that the Treasury, through the concept of the all

    1283
    stocks index, is voluntarily, deliberately and wilfully giving away revenue at the same time as it is scraping it up from every poor household in the country. We are driven to vote against the Government to express our view. There are occasions when, in order to get across a point, it is necessary to cause some temporary deprivation.
    It is often stated by what I am glad to say is only a small minority in the House that nothing must be done to upset trade with South Africa in case temporary hardship is caused to some of the indigenous South African people. It has never been an argument that the bulk of hon. Members have been willing to accept. In order to establish a principle it is sometimes necessary to cause temporary hardship.
    So great is the Government's concern for small businesses that if they were defeated Ministers would quickly return to the House with a reputable way of dealing with inflation in profits in place of the easy, sloppy and slipshod proposal that they are now attempting to pass.
    Amendment agreed to.
    Amendment proposed: No. 54, in page 159, line 10, leave out sub-paragraph (3) and insert—
    '(3) For the purposes of sub-paragraph (2)(a) above the value of the person's trading stock at the end of the period of account in respect of which the relief is given shall be reduced by multiplying it by the fraction of which—

    (a) the numerator is the figure given by the all stocks index for the month containing the last day before the beginning of that period; and

    (b) the denominator is the figure given by that index for the month containing the last day of that period.'.—[Mr. Lawson.]

    Question put, That the amendment be made:—
    The House divided: Ayes 260, Noes 12.

    Division No. 278]

    [11.10 pm

    AYES

    Adley, Robert

    Butcher, John

    Aitken, Jonathan

    Butler, Hon Adam

    Alexander, Richard

    Cadbury, Jocelyn

    Alison, Michael

    Carlisle, John (Luton West)

    Ancram, Michael

    Carlisle, Kenneth (Lincoln)

    Arnold, Tom

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

    Aspinwall, Jack

    Chalker, Mrs. Lynda

    Atkins, Rt Hon H. (S'thorne)

    Chapman, Sydney

    Atkins, Robert (Preston N)

    Churchill, W. S.

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

    Clark, Sir W. (Croydon S)

    Baker, Kenneth (St.M'bone)

    Clarke, Kenneth (Rushcliffe)

    Baker, Nicholas (N Dorset)

    Clegg, Sir Walter

    Banks, Robert

    Cockeram, Eric

    Beaumont-Dark, Anthony

    Colvin, Michael

    Bendall, Vivian

    Cope, John

    Benyon, W. (Buckingham)

    Corrie, John

    Best, Keith

    Cranborne, Viscount

    Bevan, David Gilroy

    Critchley, Julian

    Biffen, Rt Hon John

    Crouch, David

    Biggs-Davison, John

    Douglas-Hamilton, Lord J.

    Blackburn, John

    du Cann, Rt Hon Edward

    Blaker, Peter

    Dunn, Robert (Dartford)

    Bonsor, Sir Nicholas

    Durant, Tony

    Boscawen, Hon Robert

    Dykes, Hugh

    Bowden, Andrew

    Eden, Rt Hon Sir John

    Braine, Sir Bernard

    Edwards, Rt Hon N. (P'broke)

    Bright, Graham

    Eggar, Tim

    Brinton, Tim

    Emery, Peter

    Brittan, Leon

    Eyre, Reginald

    Brooke, Hon Peter

    Fairbairn, Nicholas

    Brotherton, Michael

    Fairgrieve, Russell

    Brown, Michael (Brigg & Sc'n)

    Faith, Mrs Sheila

    Browne, John (Winchester)

    Fenner, Mrs Peggy

    Bruce-Gardyne, John

    Fisher, Sir Nigel

    Buchanan-Smith, Alick

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

    Buck, Antony

    Fletcher-Cooke, Sir Charles

    1284

    Fookes, Miss Janet

    Miscampbell, Norman

    Forman, Nigel

    Mitchell, David (Basingstoke)

    Fowler, Rt Hon Norman

    Moate, Roger

    Fox, Marcus

    Monro, Hector

    Fraser, Peter (South Angus)

    Morris, M. (N'hampton S)

    Gardiner, George (Reigate)

    Morrison, Hon P. (Chester)

    Gardner, Edward (S Fylde)

    Mudd, David

    Garel-Jones, Tristan

    Murphy, Christopher

    Glyn, Dr Alan

    Myles, David

    Goodlad, Alastair

    Neale, Gerrard

    Gorst, John

    Needham, Richard

    Gow, Ian

    Neubert, Michael

    Gower, Sir Raymond

    Newton, Tony

    Grant, Anthony (Harrow C)

    Normanton, Tom

    Gray, Hamish

    Onslow, Cranley

    Greenway, Harry

    Osborn, John

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

    Page, John (Harrow, West)

    Griffiths, Peter Portsm'th N)

    Page, Rt Hon Sir G. (Crosby)

    Grist, Ian

    Page, Richard (SW Herts)

    Grylls, Michael

    Parris, Matthew

    Gummer, John Selwyn

    Patten, Christopher (Bath)

    Hamilton, Hon A.

    Pattie, Geoffrey

    Hampson, Dr Keith

    Pawsey, James

    Hannam, John

    Percival, Sir Ian

    Hastings, Stephen

    Pollock, Alexander

    Havers, Rt Hon Sir Michael

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

    Hawksley, Warren

    Price, Sir David (Eastleigh)

    Henderson, Barry

    Prior, Rt Hon James

    Heseltine, Rt Hon Michael

    Proctor, K. Harvey

    Hicks, Robert

    Pym, Rt Hon Francis

    Higgins, Rt Hon Terence L.

    Raison, Timothy

    Hogg, Hon Douglas (Gr'th'm)

    Rathbone, Tim

    Holland, Philip (Carlton)

    Rees, Peter (Dover and Deal)

    Hooson, Tom

    Rees-Davies, W. R.

    Howell, Ralph (N Norfolk)

    Renton, Tim

    Hunt, David (Wirral)

    Rhodes James, Robert

    Hunt, John (Ravensbourne)

    Ridley, Hon Nicholas

    Jenkin, Rt Hon Patrick

    Rifkind, Malcolm

    Jessel, Toby

    Roberts, M. (Cardiff NW)

    Johnson Smith, Geoffrey

    Roberts, Wyn (Conway)

    Jopling, Rt Hon Michael

    Rossi, Hugh

    Joseph, Rt Hon Sir Keith

    Royle, Sir Anthony

    Kaberry, Sir Donald

    Sainsbury, Hon Timothy

    Kellett-Bowman, Mrs Elaine

    St. John-Stevas, Rt Hon N.

    King, Rt Hon Tom

    Shaw, Giles (Pudsey)

    Knight, Mrs Jill

    Shelton, William (Streatham)

    Knox, David

    Shepherd, Colin (Hereford)

    Lamont, Norman

    Shepherd, Richard

    Lang, Ian

    Shersby, Michael

    Lawrence, Ivan

    Silvester, Fred

    Lawson, Rt Hon Nigel

    Sims, Roger

    Lennox-Boyd, Hon Mark

    Skeet, T. H. H.

    Lester, Jim (Beeston)

    Speed, Keith

    Lewis, Kenneth (Rutland)

    Speller, Tony

    Lloyd, Ian (Havant & W'loo)

    Spence, John

    Lloyd, Peter (Fareham)

    Spicer, Jim (West Dorset)

    Loveridge, John

    Spicer, Michael (S Worcs)

    Luce, Richard

    Squire, Robin

    Lyell, Nicholas

    Stainton, Keith

    Macfarlane, Neil

    Stanbrook, Ivor

    MacKay, John (Argyll)

    Stanley, John

    Macmillan, Rt Hon M.

    Stevens, Martin

    McNair-Wilson, M. (N'bury)

    Stewart, Ian (Hitchin)

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

    Stewart, A. (E Renfrewshire)

    McQuarrie, Albert

    Stradling Thomas, J.

    Madel, David

    Taylor, Teddy (S'end E)

    Major, John

    Tebbit, Norman

    Marland, Paul

    Temple-Morris, Peter

    Marlow, Tony

    Thomas, Rt Hon Peter

    Marshall, Michael (Arundel)

    Thompson, Donald

    Marten, Neil (Banbury)

    Thorne, Neil (Word South)

    Mates, Michael

    Thornton, Malcolm

    Maude, Rt Hon Sir Angus

    Townend, John (Bridlington)

    Mawby, Ray

    Townsend, Cyril D, (B'heath)

    Mawhinney, Dr Brian

    Trippier, David

    Maxwell-Hyslop, Robin

    Trotter, Neville

    Mayhew, Patrick

    van Straubenzee, W. R.

    Mellor, David

    Vaughan, Dr Gerard

    Mills, Iain (Meriden)

    Viggers, Peter

    Mills, Peter (West Devon)

    Wakeham, John

    1285

    Waldegrave, Hon William

    Wiggin, Jerry

    Walker, B. (Perth )

    Williams, D. (Montgomery)

    Wall, Patrick

    Winterton, Nicholas

    Ward, John

    Wolfson, Mark

    Warren, Kenneth

    Young, Sir George (Acton)

    Watson, John

    Younger, Rt Hon George

    Wells, John (Maidstone)

    Wells, Bowen

    Tellers for the Ayes:

    Wheeler, John

    Mr. Anthony Berry and

    Whitney, Raymond

    Mr. Carol Mather.

    Wickenden, Keith

    NOES

    Alton, David

    Penhaligon, David

    Bennett, Andrew ('St'kp't N)

    Roper, John

    Campbell-Savours, Dale

    Ross, Stephen (Isle of Wight)

    Cryer, Bob

    Steel, Rt Hon David

    Grimond, Rt Hon J.

    Horam, John

    Tellers for the Noes:

    Howells, Geraint

    Mr. A. J. Beith and

    Paisley, Rev Ian

    Mr. Richard Wainwright

    Question accordingly agreed to.
    Amendment made: No. 55, in page 159, line 16, after '(3)', insert '(a)'.—[Mr. Lawson.]
    Mr. Lawson: I beg to move amendment No. 56, in page 162, line 22, leave out 'the Board may direct that'.
    Mr. Deputy Speaker: With this we shall discuss Government amendment No. 57.
    Mr. Lawson: For the benefit of the hon. Member for Colne Valley (Mr. Wainwright), I shall take this amendment with due deliberation. When we discussed stock relief in Committee questions were asked about long periods of account and how they were to be dealt with. Schedule 9 provides that if a period of account exceeds 18 months the Revenue may direct—and I repeat "may direct"—that it be split into different parts of not less than 12 months plus any remainder.
    As I said in Committee, the Revenue will interpret that as requiring it to split long periods into periods of 12 months plus any balance. However, during our discussions in Committee my right hon. Friend the Member for Crosby (Sir G. Page) questioned the wording and proposed an amendment to make the split explicitly mandatory. I undertook to consider what he said. I have met his point in these amendments, which I hope he will agree achieve the result which he desired.
    Sir Graham Page: The amendments meet the point which I raised.
    Amendment agreed to.
    Amendments made: No. 57, in page 162, line 27, leave out sub-paragraph (2) and insert—
    '(2) Each of the separate parts of the period shall (so far as length of the period permits) consist of twelve months, any remaining months being used to form the last part.'.
    No. 58, in page 162, line 30, leave out 'other than paragraph 19 above.'.—[Mr. Lawson.]

  Clause 41

    SUMS PAID TO SETTLOR OTHERWISE THAN AS INCOME
    Sir Graham Page: I beg to move amendment No. 59, in page 28, line 13, at end insert—
    '(c) in paragraph (b) for the words "the next following year" there shall be inserted the words "the next following eleven years.".
    Clause 41 amends section 451 of the Taxes Act, or is a rewrite of that magician's provision which converts capital
    1286
    payments into income in certain cases, provided that there is some income in the settlement fund from which the payment was said to be a payment of capital.
    Let us suppose that the settlor transfers some of his invested savings to trustees and settles them so that he might become a beneficiary under that trust. When he needs some capital there might be an advance of capital of £10,000 to the settlor. If there is £1,000 of income in the fund, that money could be advanced to him as £9,000 capital and £1,000 income. On that basis he is assessed on the £1,000 income. As time passes and further income accrues, he is assessed up to the £10,000 advance.
    However, let us suppose that after the first advance and the calculation of income in the fund at that time no furl her income goes into the fund for a considerable time. It may be 15 or 20 years before one has any income to set against the capital payments and to assess the tax on it.
    I submit that anything more than 12 years is too long. We must draw the line somewhere to reach a settlement of assessments that would convert the capital payment into an income payment. The amendment seeks to limit that period to 12 years. I think that that is fairly generous to the Inland Revenue.
    Mr. Peter Rees: As one would expect, my right hon. Friend the Member for Crosby (Sir G. Page) has fastened on a good point. There must be a limit at some time when a capital payment made to the settlor can no longer be matched with accumulations of income. Perhaps 12 years strikes a reasonable balance. I therefore recommend the amendment to the House.
    Amendment agreed to.

  Clause 42

    SUMS PAID TO SETTLOR OTHERWISE THAN AS INCOME: CONNECTED COMPANIES
    Sir Graham Page: I beg to move amendment No. 71, in page 31, line 9, leave out from beginning to 'corporate' in line 10 and insert
    'that body corporate has control of, or is controlled by, another body corporate or both are under the control of the same per son or persons within the meaning of section 534 below'.
    Mr. Deputy Speaker: With this we may take the following amendments: No. 72, in page 31, line 30, leave out 'five years' and insert 'two years'.
    No. 73, in page 31, line 37, at end add—
    '(8) subsection (1) above does not apply to any sum paid the settor by way of loan or repayment of a loan if it appears that the loan and the repayment were effected for bona fide commercial reasons and did not form part of a scheme or arrangements of which the main purpose, or one of the main purposes was the avoidance of liability to income tax;'.
    Sir Graham Page: Amendment No. 71 is an amendment to clause 43, which makes an addition to section 451 to the Taxes Act, which will be known as section 451A. The effect of subsection (1) of the new section is that if the trustees of a settlement make a payment to a company connected with the settlement, and that company then pays the settlor, that payment is treated as a payment by the trustees direct to the settlor. If it is a capital payment, it can become income and subject to assessment for income tax. Under clause 42, if the trustees pay to an unconnected company, but that company is associated with a connected company, it pays to the connected company which pays to the settlor. I am sorry

    1287
    if I am using many technical phrases about a complicated process of payment. When it goes through the two processes from unconnected company to connected company and then to the settlor, it can still be treated as a payment direct to the settlor.
    It is reasonable to treat that apparently indirect payment as a direct payment if the two intermediate companies are controlled by the same person. However, that is not quite what the clause says. It refers to associated companies. An associated company, as defined by section 302 of the Taxes Act—which is referred to in the clause—is a company that has at one time, in the past 12 months, been a controlled company. An associated company is not necessarily under the control of the same person at the time when the payment process takes place.
    The mischief against which the clause is aimed is when the two companies are controlled by the same person. The amendment proposes that only when the companies are controlled by the same person, not if they have been controlled in the past by the same person, should the clause apply.
    11.30 pm
    Amendment No. 72 deals with the repayment of a loan by the process that I have described in dealing with amendment No. 71. It makes it a capital payment which is to be taxable as income. By the new subsection (6)(a) there is recognition that payment by way of loan, or repayment of a loan, shall not be affected by the provision if it is only a temporary loan, that is, if
    "the whole of the loan is repaid within twelve months".
    There is the proviso of similar loans made to or by the settlor that are outstanding for over 12 months at any time in five years. I am not sure what the reference to five years means. Does it mean before, after or both when applied to the loan in question? It seems that it is five years before or five years after. I submit that five years is far too long. These are anti-tax avoidance provisions. However, it is necessary only to go so far as is reasonable in finding instances in which there could be tax avoidance. In amendment No. 72 I propose that the five years in the clause be reduced to two years.
    I shall deal briefly with amendment No. 73. The new section 451A of the Taxes Act, which is introduced by the clause, is in common with all its subsections an anti-tax avoidance section. As such it assumes too readily that every transaction that involves the sort of payment that is described in subsection (1) is made for the purpose of avoiding tax. That is not a fact. There may be loans to trading companies that are bona fide commercial transactions. Even if those involved in such transactions can prove that they are genuine transactions, they will have no relief under the section. I suggest in amendment No. 73 a defence for those who are carrying on genuine commercial transactions to enable them to prove that they are genuine and thereby get out of the difficulty of having the repayment of a loan taxed as an income payment to the lender.
    Mr. Peter Rees: Section 451 of the Taxes Act, to which the amendments of my right hon. Friend the Member for Crosby (Sir G. Page) are directed, has a long and inglorious history and has been much criticised by the courts in not only the past decade but, I should think, over the past three decades. This Government, for the first time
    1288
    for many years, have bent their mind to trying to rationalise the provision. My right hon. Friend, will, I am sure, be the first to recognise and appreciate what has been done in the Bill to make the section a rather more human provision. However, I think that the House will recognise that there is a problem to be countered by section 451. A balance must be struck.
    Amendment 71 suggests that my right hon. Friend would prefer that the test of association between the company and the settlor should be applied at the moment that the transaction of the capital sum by loan or repayment of loan is made. I understand the argument. However, I am sure that my right hon. Friend will recognise on reflection that if it were to be applied only at that moment it would be possible to circumvent the section almost in its entirety by ensuring that the financial movements took place earlier or later.
    It is for that reason that the Government prefer that the test should be applied not only when the financial movements take place, but during the preceding year. I recognise my right hon. Friend's point, but it would make it a little too easy—as I am sure he will agree on reflection—if the test had to be applied only at one single instant of time.
    On amendment No. 72, again we wish to ensure that the settlor does not make any permanent loans or receive any repayment of permanent loans from a body corporate connected with himself. I lapse into technical jargon only because my right hon. Friend, with his commendable lucidity, has explained the loans procedure so clearly to the House. Therefore, I do not believe that I need explain it myself.
    The reason we have made a two-year test is to ensure that a senior does not make a series of loans over a period which are, in effect, a continuous method of funding a company. Therefore, we say that the loans should be repaid within 12 months and that that should not be repeated during a period of five years. It is a matter for legitimate debate as to whether five years is too long. I would say with all respect to my right hon. Friend's powerful argument that two years is too short. I hope, however, that because the Government have taken some fairly considerable steps to liberalise section 451, my right hon. Friend will allow us to judge a little by experience. If it should be found that this provision has been too tightly drawn, I hope that there will be opportunities in subsequent Finance Bills to deal with it. I would be the last to pretend that section 451, even after the amendments which commended themselves in Committee, will remain the most perfect example of the legislator's art—if it is an art rather than a science, or something of a rather lower order altogether.
    I see entirely the force of my right hon. Friend's arguments on amendment No. 73. We hoped that it would be for the convenience of taxpayers and their advisers as well as for the convenience of the Revenue to lay down some fairly precise tests which have to be satisfied. If they are satisfied, a payment to a settlor will escape tax. If I understood the drift of my right hon. Friend's remarks, I think that he would prefer the section to be more imprecisely drawn, but that there should be a motive test so that the taxpayer may escape the charge if he can demonstrate that his motives were of the purest.
    With his considerable experience, my right hon. Friend will know that, although motive tests serve a purpose, they serve also to complicate legislation for the taxpayer, the

    1289
    Revenue and the taxpayer's advisers. Often it must be a matter of fine debate as to precisely what the taxpayer's motives were in any given situation. Although I may be searching for the Holy Grail, I hope that in this instance we can define the tests with sufficent precision that the taxpayer will know whether he is within or without the section and we shall not have to have recourse to the sort of tests which my right hon. Friend proposes in amendment No. 73.
    Therefore, I hope that my right hon. Friend will feel that he has initiated a useful debate and that, with the assurance that, of course, we shall be happy to look at the further developments in this area in the light of the amendments which have been approved by the Committee, he will feel able to withdraw the amendment.
    Sir Graham Page: I am grateful to my hon. and learned Friend for going into these matters so carefully. I should like to leave these amendments as markers in looking at the developments of the amendments to section 451 which the Bill contains. I beg to ask leave to withdraw the amendment.
    Amendment, by leave withdrawn.

  Clause 44

    TRANSFER OF ASSETS ABROAD: LIABILITY OF NON- TRANSFERORS
    Sir Graham Page: I beg to move amendment No. 221, in page 33, line 2, after 'year', insert
    'nor by virtue of section 76 of this Act been treated as his chargeable gains'.
    Mr. Deputy Speaker: With this we may also discuss the following amendments:
    No. 220, in page 33, line 17 at end insert
    'but excluding income which has already borne the like charge to income tax as such income would have borne had it arisen to a person resident or domiciled in the United Kingdom'.
    Government amendment No. 224.
    Amendment No. 222, in page 33, line 31, at end insert—
    '(5) After sub-paragraph (7) of paragraph 11 of Schedule 5 to the Finance Act 1975 there shall be inserted the following sub-paragraph:—
    "(7A) Any amount treated as the income of an individual by virtue of the provisions of section 44 of the Finance Act 1981 shall be treated as reducing the amount of a distribution payment and in a case where income tax assessed under that section on an individual who has received in an earlier year of assessment a capital benefit paid out of settled property is paid on behalf of that individual out of the property comprised in the settlement such payment shall not be a distribution payment.".'.
    Amendment No. 223, in page 34, line 2, at end insert—
    '(9) In computing the amount of any relevant income, a deduction shall be allowed for foreign taxes and for administration and other expenses necessarily incurred and in computing the .:ax liability of the beneficiary, credit shall be given for any UK tax suffered on the relevant income.'.
    Government amendment No. 225.
    Sir Graham Page: The position is that under the clause an individual who is ordinarily resident in the United Kingdom and who has no liability to tax under section 478 of the Taxes Act 1970, and who receives a capital benefit from a non-resident or non-domiciled person after 10 March 1981, will be assessed to schedule D, Case VI income tax on the amount or value of such benefit by
    1290
    reference to the relevant income—defined in the clause—of the non-resident or non-domiciled person arising on or after 10 March 1981.
    So long as the capital benefit does not exceed the amount of the relevant income for years of assessment up to and including the year in which it is received, the capital benefit is to be treated for income purposes as part of the individual's income for the year of receipt. To the extent that the capital benefit exceeds the amount of the previous relevant income the excess of the capital benefit is carried forward to subsequent years and matched with the relevant income of those parts and treated as the individual's income for income tax purposes until the capital benefit equals the amount of relevant income.
    In my view there should be a proviso in that part of the clause so as to avoid the taxation of the same sum twice. Any capital payment that is treated as a capital payment for the purposes of clause 76 and is therefore charged to capital gains tax for the purpose of that clause should not be part of the capital convened into income for the purpose of clause 44. It is amendment No. 221 that endeavours to remedy that position of a possible double taxation of the same sum.
    There is another possibility of a double charge to tax as a result of the clause. The clause would apply, I think, to a case in which one of the trustees of a settlement is resident in the United Kingdom. The whole of the settlement income would then be assessed in his name, with the consequence that the income might suffer exactly the same rate of United Kingdom tax as it would have done as income arising wholly to resident United Kingdom trustees. If a beneficiary of such a settlement is chargeable under the clause on the balance of the settlement income the effect would be a charge to tax twice over on the same amount.
    This situation can be remedied for the purposes of the clause and the definition of relevant income if that definition were stated not to include income that has already been assessed to United Kingdom tax in the name of a United Kingdom resident trustee. It is amendment No. 220 that seeks to put that right.
    The clause requires also to be considered in the capital transfer tax context, in particular, paragraphs 11(7) and (8) of schedule 5 of the Finance Act 1975. As my hon. and learned Friend will know, the effect of those paragraphs is that distribution payments, which are income of a person for any of the purposes of income tax, are not within the charge to capital transfer tax.
    11.45 pm
    If the clause remains in its present form it appears that in some cases it will be impossible to determine the capital transfer tax liability arising on an appointment of capital to a beneficiary. The amount of such capital sum ultimately to be treated as income for income tax purpose under this clause cannot be determined either at the date when the appointment was made or even at the later time when capital transfer tax becomes due and payable.
    If capital transfer tax is assessed and paid on the basis of the situation existing at the date of the capital appointment, it appears to me that in some cases the Revenue will be required to make annual repayments of capital transfer tax where the clause bites on future relevant income. In order to meet that capital transfer tax difficulty, amendment No. 222 makes an addition to paragraph 11 of schedule 5 of the Finance Act 1975,

    1291
    which, briefly, provides that any amount treated as the income of an individual by virtue of the provisions of clause 44 should be treated as reducing the amount of the distribution payment.
    Those are the first three amendments in my name. The fourth, amendment No. 223, is of a different kind, but still in reference to clause 44. It is noticeable that clause 44 allows no relief for expenses incurred by overseas trustees. The full gross amount of the relevant income can form the basis of assessment under the clause. That is quite unreasonable. It should be recognised that the income may be reduced by necessary expenses. This amendment endeavours to take that into account.
    Mr. Peter Rees: If I may, I shall respond to the points so ably argued by my right hon. Friend the Member for Crosby (Sir G. Page) and also speak to Government amendments Nos. 224 and 225.
    The principal point underlying amendment No. 221 was raised in Committee by my right hon. Friend and also raised at an earlier stage in correspondence by my hon. Friend the Member for Eastleigh (Sir D. Price), whom I am happy to see in the Chamber. The point is a good one, as one would expect coming from two such notable sources. It is to prevent a double charge to capital gains tax and income tax under section 478 in respect of the same payments.
    We have been seized of the point, and I hope that I may say, without immodesty, that we feel that amendments Nos. 224 and 225 marginally deal with the point a little more effectively than the amendment in my right hon. Friend's name. I hope that the House will feel able to accept them in place of amendment No. 221.
    In a different sense, amendment No. 220 gives added force to an old principle that income should not be subject to tax twice. In practice, it is extremely unlikely that that would arise in the circumstances likely to be affected by section 478 in other than a case of avoidance. My right hon. Friend may well cite back to me the words that I uttered in respect of the previous group of amendments, but there is a motive test in section 478(3). It will therefore always be possible for a taxpayer to establish that there is no hint of tax avoidance in the particular complex of circumstances in which the charge might be raised. Therefore, at least one set of assessments would fall by the wayside.
    Just in case my right hon. Friend's fears should be justified, however, we should like to reconsider the position to see whether an amendment could possibly be introduced next year—I say "possibly" because, as my right hon. Friend will be the first to realise, it may be very difficult to link the underlying income on which one charge to tax in the United Kingdom may have been raised with the sum paid to the beneficiary or person resident in the United Kingdom. There are considerable tactical problems here, but we shall certainly address our minds to his to see whether we can introduce something taut and accurate in a later Finance Bill. I hope that with that assurance my right hon. Friend will not press amendment No. 220.
    I must also tell my right hon. Friend that I think, again, that it is most unlikely that under the existing legislation a payment charged to income tax under section 478 could possibly be charged to capital transfer tax, because, as he
    1292
    knows, there is a specific exemption in capital transfer tax legislation in respect of sums transferred that have been subject to income tax. I hope that I can reassure my right hon. Friend on that point also.
    Finally, on amendment No. 223, my right hon. Friend very persuasively argues for some kind of deduction in computing relevant income for foreign taxes, administration and other expenses. I certainly have sympathy with the reasons underlying that amendment, but it would be difficult for me to recommend its acceptance, certainly as it now stands, as it would be extremely difficult to operate and might produce rather capricious results. It is not always easy to determine what are legitimate expenses abroad; nor will it always be easy to link any foreign taxes that may be charged on the underlying income of the trust or company with the particular tranche of income or assets that may be paid to United Kingdom residents.
    I think that in a sense this point was ventilated by my hon. Friend the Member for Croydon, South (Sir W. Clark) in Committee. We have applied our minds to this, but the precise correlation between the income that has borne foreign tax and the payment that might be made to United Kingdom resident beneficiaries has defeated us. I must therefore advise the House that that amendment No. 223 would not achieve the object that my right hon. Friend has in mind. Again, however, as this is clearly a real problem we should like to return to it next year, although I cannot assure the House that we shall find a perfect solution.
    On that basis, I hope that the House will feel able to accept Government amendments Nos. 224 and 225 and that my right hon. Friend will feel that ample justice has been done to the important points that he has raised in his amendments.
    Sir Graham Page: I am grateful to my hon. and learned Friend for dealing with the amendments in that way. I am, of course, happy with the Government amendments, which cover a considerable number of the points that I raised. I am a little disappointed about amendment No. 223, with regard to expenses. Nevertheless, I shall not seek to press any of my amendments.
    I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Amendment made: No. 224, in page 33, line 31, at end insert—
    '(5A) Where—

    (a) the whole or part of the benefit received by an individual in a year of assessment is a capital payment within the meaning of section 77 or 78(2) below (because not falling within the amount of relevant income referred to in paragraph (a) of sub-section (2) above); and

    (b) chargeable gains are by reason of that payment treated under either of those sections as accruing to him in that or a subsequent year,

    paragraph (b) of that subsection shall apply in relation to any year of assessment ("a year of charge") after one in which chargeable gains have been so treated as accruing to him as of a part of the amount or value of the benefit corresponding to the amount of those gains had been treated under the subsection as his income for a year of assessment before the year of charge. '—[Mr. Peter Rees.]

  Clause 45

    TRANSFER OF ASSETS ABROAD: OTHER PROVISIONS
    Sir Graham Page: I beg to move amendment No. 213, in page 34, line 38, after 'him', insert

    1293
    'on or after 10th March 1981'.
    Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 76.
    Sir Graham Page: My amendment is covered by Government amendment No. 76, and therefore I do not wish to speak to it.
    Mr. Peter Rees: My right hon. Friend the Member for Crosby (Sir G . Page) has been good enough to indicate that his point is amply covered by amendment No. 76. Indeed, amendment No. 76 goes a little further because it makes the provision operative from 6 April 1981, while my right hon. Friend's amendment would have made it operative from Budget day. This is to the taxpayer's advantage.
    Amendment negatived.
    Mr. Peter Rees: I beg to move amendment No. 75, in page 34, line 39, leave out from 'it' to end of line 43.
    The amendment is designed to remove two possible sources of misunderstanding from the new rules proposed in clause 45(3) relating to the receipt of capital sums. I hope that the House will approve it.
    Amendment agreed to.
    Amendment made: No. 76, in page 35, line 3, at end insert—
    '(3A) Subsection (2A) of the said section 478 as inserted by subsection (3) above shall not apply to any direction or assignment given or made before 6 April 1981.'—[Mr. Peter Rees.]

  Clause 50

    THE RELIEF
    Mr. Peter Rees: I beg to move amendment No. 77, in page 39, line 7, at end insert
    'or within such further period (not exceeding twelve months) as the Board may allow'.
    We have moved to the business start-up schemes, which were extensively debated in Committee. Indeed, considerable care was given to this subject in Committee. In the light of the debates and of the representations made before and after our debates in Committee, it was felt that there was still room for improvements in the provisions. I regret to say that many Government amendments are the result of our deliberations.
    The amendment is designed to ensure that a company whose shares are acquired—and payment for which will attract tax relief for an individual taxpayer—must have started to trade within two years of the issue of the shares. This is a liberalisation of the existing rules and is designed to cover cases such as companies that are involved in high technology. In such cases, a little time is needed before the full merits of the company's trade become manifest. I commend the amendment.
    Amendment agreed to.
    Mr. Peter Rees: I beg to move amendment No. 78, in page 39, leave out line 18 and insert
    'beginning with the incorporation of the company (or, if the company was incorporated more than two years before the date on which the shares were issued, beginning two years before that date) and ending'.
    Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 89.
    Mr. Rees: The amendments are designed to shorten to not more than two years before the issue of the shares the period during which the conditions for the grant of relief
    1294
    must be satisfied, except that since commencing business the company must always have existed to carry on a new qualifying trade wholly or mainly in the United Kingdom. I am sure that the good sense and liberality of the amendment will commend it to hon. Members.
    Amendment agreed to.

  Clause 51

    LIMITS ON RELIEF
    Amendment made: No. 79, in page 40, line 5, after '(1)', insert
    'Subject to section (Nominees and appoved investment funds) below,'.—[Mr. Peter Rees.]
    12 midnight
    Mr. Peter Rees: I beg to move amendment No. 80, in page 40, line 9, leave out '£1,000' and insert '£500'.
    Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 108.
    Mr. Rees: This amendment is of considerable importance. As the House will know, there is an upper limit of £10,000 on the moneys that can be invested in shares of start-up companies. The lower limit originally was £1,000. That was for administrative reasons. I say that with candour, although I appreciate that that sort of explanation is not likely to commend the limit to the House. There will be pressures on the Inland Revenue in administering a scheme of that sort. However, I was strongly impressed by the powerful arguments directed to me in Committee both from my hon. Friends and from the corporation.
    Notwithstanding the administrative burdens that that undoubtedly will put on the Inland Revenue in administering the scheme, we thought it right to table an amendment reducing the lower limit from £1,000 to £500, thus, as it was strongly urged. on me in Committee, making it easier for the smaller investor to participate in such schemes.
    I hope that the amendments will find favour with the House.
    Mr. Robert Sheldon: I thank the hon. and learned Member for introducing the amendments on Report. As he knows, we welcome the start-up scheme even though we feel that it is being oversold. We are anxious about some of the possibilities of fraudulent operation about which I am sure the hon. and learned Gentleman knows a great deal because of the debates we had in Committee.
    I accept that whenever one lowers the limit there is bound to be an increase in the administrative burden, but it is equally wrong that £1,000 should be the amount that the investor requires to raise for the purpose. We are pleased that the hon. and learned Gentleman has accepted our proposal for a limit of £500. We shall watch to see what effect that will have on the start-up schemes that we look forward to observing with interest.
    Amendment agreed to.

  Clause 52

    INDIVIDUALS QUALIFYING FOR RELIEF
    Mr. John Browne: I beg to move amendment No. 82, in page 41, line 20, leave out from 'issued' to end of line 13 on page 43.
    Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments:
    No. 83, in page 41, line 25, after '(a)',
    insert 'subject to subsection (3) below'.
    No. 84, in page 41, line 32, after 'director', insert 'or employee'.
    No. 85, in page 41, line 42, after 'director', insert 'or employee'.
    No. 86, in page 42, line 4, leave out 'and'.
    No. 87, hi page 42, line 14, at end insert
    ; and

    (f) any reasonable and necessary remuneration paid to him as a director or employee of the company in respect of his duties performed in that capacity. ' .

    Government amendment No. 88.
    Amendment No. 107, in clause 57, page 50, line 21, at end insert—
    '(9) For the avoidance of doubt it is hereby declared that, insofar as any payments made to a director or employee of a company do not constitute reasonable and necessary remuneration for the purposes of section 52 (3) (f), the same shall not be deducted in computing for the purposes of Schedule D the profits or gains of a trade carried on by the company making such payments'.
    Mr. Browne: The aim of this wide-sweeping amendment in cutting out pages is to urge my right hon. Friend and my hon. and learned Friend to lay much more open the qualifying conditions for individuals investing in the scheme that my right hon. Friend has initiated.
    We know that the technological revolution and the need for repairing the structural imbalance in our economy requires a dramatic start in new businesses and in the growth of small and medium-sized businesses. The Wilson report states clearly that there is plenty of capital for such enterprises, but it is the wrong type of capital. It is nearly all loan capital, and what is drastically needed is high-risk equity capital.
    The Government have done some work in allowing Treasury stock to be purchased by companies and the loan guarantee scheme is good, but only at the margin. Much work must be done in abolishing the discrimination in the over-the-counter market between licensed dealers and those dealing on the Stock Exchange and in reducing or abolishing the fiscal bias in favour of the insurance companies and the pension funds. They are siphoning off vast amounts of personal savings to the institutions that are, first, risk averse; secondly, out of contact with entrepreneurs and uncontactable by most entrepreneurs; and, thirdly, have few staff to manage their funds and are, therefore, the wrong vehicles to be managing small investments in small companies.
    The economy needs a bombshell of incentive for individuals to steer their savings into high-risk equity investments in new and small businesses. I looked with great expectation at the scheme when it was announced in the Budget and I thought that what was to come really would be a bombshell, in clear and simple terms. I am afraid to have to say to my hon. and learned Friend that I find it very complex and unclear, so much so that it discriminates positively against the smaller investor who cannot afford an accountant to look through all the rigmarole of the investment to get the best advantage. Much more should be done to make it much clearer and simpler. I realise that much has been done in Committee, and I thank my hon. Friends who have urged these changes
    1296
    on the Government. I also thank my hon. and learned Friend for accepting a number of them, some of which have already been introduced tonight.
    I urge my hon. and learned Friend to admit consultants as qualifying individuals, and also relations and employees, because these are the people who know the company and know the quality of the management. They will not risk their money unless they feel that it will bring a reward. I strongly urge my hon. and learned Friend to open the qualifications to them. I realise that it opens up a possible tax loophole and that it is a very complex area of tax, but I ask him to accept the offset of the tax loophole cost to the Exchequer against the increased revenues that he should be getting by reducing the fiscal bias that is now in favour of the pension funds and the insurance companies, which will be much larger than the loss of revenue that he may get by people abusing the system at the edges.
    As I said, I realise that it is a difficult and complex area. I urge my hon. and learned Friend, when the Bill becomes an Act, to publish the present scheme in clear and simple form as a new system, because many people were disillusioned by the one that they read in the Bill after the Budget. Secondly, will he re-examine the whole area to make sure that we have the bombshell that is needed to revive investment in companies of this sort and is so necessary for our survival?
    Mr. David Steel: I am fully in sympathy with the amendment moved by the hon. Member for Winchester (Mr. Browne), although he admitted that it is a wide-ranging amendment and does not hold high hopes that the Government will accept it. His analysis is correct.
    When the business start-up scheme was first announced to the House, it was met with considerable enthusiasm on the Opposition Benches, in my party and no doubt elsewhere. It was also met with considerable enthusiasm among the small business community and in the country at large. That initial enthusiasm was dissipated when it was discovered that the original excellent concept was hemmed around by restriction, qualification and complication. I am therefore greatly in sympathy with the general tone of the proposal.
    I wish to draw the attention of the House to amendments Nos. 83 to 87, which are far more limited and specific in their purpose than the hon. Member's amendment. The purpose of the amendments is to remove the disqualification from employees in benefiting from the scheme. The matter was debated in Committee and I have read very carefully what the Minister of State said on the matter. I am grateful to our Treasury spokesman, my hon. Friend the Member for Colne Valley (Mr. Wainwright), who served on the Committee and who, with his advisers, has tried genuinely to meet the objections which the Minister of State raised in Committee. The attempt to meet the objections is set out in detail in the amendments.
    In what the Minister of State said in Committee, I detected once again the general line from Conservative Ministers that if the Liberals wanted to pester them again with their theories of employee participation they were wholly sympathetic and willing to offer all assistance, short of actual help. He was very sympathetic and polite to my hon. Friend but was unable to accept the proposition, for a series of specific reasons. The main reason that the hon. and learned Gentleman gave was that

    1297
    the Government were worried that the inclusion of employees in the scheme could lead to tax avoidance. Like the hon. Member for Winchester, I think that this has become an almost ludicrous obsession. I do not dispute the Minister's argument, but it raises a technical and exceptional objection to a laudable principle. I ask him to reconsider the matter.
    The Minister's specific objection was that a company would be able to deduct the employee's salary for corporation tax purposes and that if, therefore the employee could set part of his income against tax by taking advantage of this scheme the salary would be relieved a second time. This was a principle that the Treasury did not like. In fact, there are already instances in the tax system of a particular payment being relieved twice. For example, that part of an employee's salary on which he receives income tax relief because he is paying a mortgage is already relieved twice, in the Treasury jargon. In any case, there could be tax avoidance only if an employer paid an artificially high salary that was then reinvested in the new business under this scheme.
    For that reason, our amendment provides, in effect, that if an individual who seeks relief has been artificially overpaid, the extent of the overpayment will be non-deductible against corporation tax by the company. The amendment defines the overpayment as anything over and above
    "any reasonable and necessary remuneration".
    The Minister may say that that is an imprecise definition, but we are using the same device as the Government have used in relation to directors. The Bill already provides, in clause 52(3)(e), that a director is excluded from the scheme unless any payment that he receives is, inter alia,
    "any reasonable and necessary remuneration which—
    (i) is paid for services rendered to the company".
    In any case, I am advised that as a matter of law section 54 of the Companies Act 1948 already decrees that any excessive payments made to an employee or a director in connection with his subscription of shares would be unlawful.
    Our amendment is workable. If the Government resist it, we are entitled to take that objection as an excuse and not a reason. This is a sensible and workmanlike improvement to a scheme that we want to see made into a success. We believe it right that employees should be encouraged to have a stake in a new business and that they should not be excluded from the benefits of what is a bold and innovative scheme.
    Mr. Richard Page: I wish to speak to amendments Nos. 276 to 280, in the names of my hon. Friends on our Back-Bench committee concerned with smaller businesses and in the name of my hon. Friend the Member for Surrey, North-West (Mr. Grylls).
    The amendments are an attempt to meet the request—I shall not say "the challenge"—of my hon. and learned Friend the Minister of State when in Committee he replied to a debate on a similar amendment, moved by my hon. Friend the Member for Luton, East (Mr. Bright). That amendment would have enabled employees and working directors to participate and invest in the company with which they were connected.
    12.15 am
    My hon. and learned Friend the Minister of State rejected the amendment on the ground that it would enable an employee to obtain income tax relief on a salary which
    1298
    would also attract corporation tax relief for the company. Commercially, it is unlikely that existing controlling shareholders will pay inflated salaries to employees to avoid corporation tax simply to attract a little more .risk capital, unless they are seeking to encourage greater employee participation in their business. However, I appreciate the validity of the point made by my hon. and learned Friend if the full £10,000 under the scheme were allowed to existing employees and working directors, and I appreciate that abuses could have followed from that amendment if it had been implemented in full.
    The amendments proposed by my hon. Friends and myself are deliberately limited in order to gain acceptance. They restrict the annual investment by an employee or working director, for which relief will be available, to an amount not exceeding £1,000. Now that the minimum relief has been set at £500, the amendments would give a bracket from £500 to £1,000 that could be invested by an employee. The concept of the working director, which is already recognised in some tax legislation, is being repeated so that such employees claiming the proposed relief will not be allowed to own more than 5 per cent. of the company's ordinary share capital.
    The amendments are important because relief for employees and working directors is essential if we are to encourage wider ownership of wealth and greater participation in companies' activities. The present disqualification of employees and working directors removes not only a valuable source of finance but the opportunity for employees to take part in the growth, enterprise and expansion of their companies.
    I hope that my hon. and learned Friend the Minister of State will recognise that the amendments are a genuine attempt to get investment by a section of the working population and that they will boost the enterprise that the country needs so badly.
    Mr. Richard Wainwright: As my right hon. Friend the leader of the Liberal Party made clear, all hon. Members who have tabled amendments to the clause, including Liberal Members and several Conservative Members, have the same aim, which we believe to be particularly important at this juncture in British industrial relations. I hope that the Minister of State has noted that many of his hon. Friends have tabled amendments with .a purpose similar to that of the Liberal amendment. So noble is the aim of Conservative Members that I was almost led into congratulating the hon. Member for Luton, East (Mr. Bright) on his knighthood. He is referred to as a knight three times on the Amendment Paper. I hope that that is an indication of the reward that awaits him for pursuing this splendid cause.
    All that remains to be said about the amendments is that we stick by that in my name because we believe that ii: meets the difficulties that the Minister of State repeated so firmly in Committee. The hon. Member for Winchester. (Mr. Browne) has already made clear, frankly, that hit, amendment makes a point but he does not expect it to become law. The amendments spoken to by the hon Member for Hertfordshire, South-West (Mr. Page) have a laudable purpose, but they seem to us to make employees second-class shareholders.
    In order to try to meet the difficulties that the Treasury Bench presses so hard—we think unreasonably hard—the hon. Member for Hertfordshire, South-West suggests that employees and directors should be limited to investments

    1299
    of £1,000 a year or less. That is better than nothing. However, in our view, it is unacceptable that the maximum for employees should be less than—indeed, only one-tenth of—the maximum for other shareholders. On those grounds, we feel reluctantly unable to support the amendments to which the hon. Gentleman has spoken.
    Hon. Members will have realised that many people today receive redundancy payments running to several thousand pounds. They may have been lucky on the pools. They may have had a legacy from Aunt Agatha, who is the patron saint of the whole start-up scheme. [Interruption.] I confine myself to saying that Aunt Agatha is reasonably well off but that this does not make her a Tory. I speak from some experience in my own constituency.
    It is not reasonable that an employee who has come into some money should be limited to an investment in his own job to keep his company in being of only £1,000 a year. I believe that the limit disqualifies the amendments in the name of the hon. Member for Hertfordshire, South-West and others. We intend to divide the House and to invite support from all hon. Members who have put their names to amendments with the same purpose as ours.
    I should like to explain why, at 20 minutes past midnight on this summer evening, we take this matter so seriously. It was as far back as 1928 that the Liberal programme, colloquially known as the Yellow Book, from Lord Keynes, Lord Layton, Henderson, Seebohm Rowntree and many others stated:
    "The real purpose of profit-sharing is to show that the worker is treated as a partner, and that the division of the proceeds of industry is not a mystery concealed from him, but is based upon known and established rules to which he is a party."
    More recently, Lord Wade and others have made clear that the Liberal aim is either that labour should hire capital or, at the very least, that labour and capital should meet each other in a mutually satisfactory bargain, as it were, to employ each other. Because we believe that the Government have hit upon the germ of a way of giving some effect to this approach, at any rate, in new businesses, we support the business start-up scheme but wish to remedy the serious defect at present within it. We shall therefore invite the House to divide on the amendment.
    Mr. Michael Grylls: I wish to add my support to the amendments to which my name is attached. My hon. and learned Friend the Minister of State and his Treasury colleagues have been most forthcoming with changes introduced to the initial scheme. They have acted swiftly and with understanding. The scheme is now very good. All hon. Members, particularly those on the Liberal Benches, wish it well and hope to see a maximum take-up leading to the creation of the maximum possible number of new businesses and the encouragement of existing businesses.
    I believe that the whole House would wish to encourage wider share ownership by employees and employees to take a stake in their own business. There is no difference between Back Benchers and my hon. and learned Friend the Minister of State. My hon. and learned Friend was perhaps more forthcoming than is the case normally with Treasury Ministers in responding to the amendment tabled in Committee when he said:
    1300
    "I regret very much that we have had to exclude employees and working directors, but I hope that the Committee will recognise the difficulties that we have encountered."
    Those were obviously drafting difficulties.
    "Dare I throw out this challenge? If an amendment is put down on Report which faces squarely the difficulties that have defeated us, I shall approach it with an open mind."—[Official Report, Standing Committee E, 11 June 1981; c. 596.]
    From reading the report on that debate, it is perfectly clear that the Minister of State very much wanted to succeed in this, but he was defeated, understandably, through drafting.
    A number of us have put forward these amendments in an endeavour to respond to the Minister of State's very generous suggestion—that if we tabled amendments he would consider them carefully. This is the reason—and this, perhaps, is the answer to the hon. Member for Colne Valley (Mr. Wainwright)—why the maximum that is being proposed in these amendments is £1,000. We wanted to be modest because we recognise that there is a potential problem of tax evasion. We wanted to help the Treasury to put a much lower ceiling than that on the generality of the start-up scheme of £10,000 a very modest ceiling to encourage the Treasury to say "Yes"—my hon. and learned Friend is saying "Yes"—and to give it a go.
    I would much rather see it start—and Ministers accept this—at a modest level of £1,000 and gain confidence over the years ahead that there will not be a great deal of abuse, and then gradually raise it to £10,000 over two or three years, in two or three Finance Bills. We have approached this matter in a modest and sensible way. I hope that the bracket for employees and working directors will now be between the new minimum of £500—about which I am delighted—and the special maximum for the employees' stake of £1,000.
    I emphasise that we must not lose this new potential for investment in start-ups which can come particularly from middle managers in some small companies. They are not necessarily minnow companies. They may be medium-sized companies. We must remember that we are going back five years. These may be companies that are on the ascendancy but may need extra capital to grow and to undertake the next stage of expansion. Why on earth should not that capital come from people who work in the business? Both sides of the House want this provision.
    I beg my hon. and learned Friend the Minister—I say this in all friendliness—to respond to this debate in the way that he responded in Committee, with an open mind. I hope that he will accept the amendments, with the new maximum of £1,000. That will not lose the Revenue very much, even if there is the odd person who goes in for some form of abuse. We are talking about a maximum tax loss per employee per year of £600 if the employee is on the top rate of earned income tax, which is probably rather unlikely. We are talking about minute figures.
    We want to see the principle established. I ask my hon. and learned Friend to look at the amendments as favourably as he can, for reasons which have the support of the whole House.
    Mr. Peter Rees: I congratulate my hon. Friend the Member for Winchester (Mr. Browne) on his amendment. It has triggered off an extremely interesting debate. He did not have the privilege of serving with us in Standing Committee but obviously he has got the flavour of our debates and has added considerably to them tonight. We have had contributions from both sides of the House.

    1301
    I was interested to note that my hon. Friend was anxious that there should be a bombshell in the investment field. I do not know whether I quite envisage that kind of outcome to the proposals that we have devised and refined in Standing Committee, but I would be very happy if it showed the dynamism that he and I want of it.
    The amendments are designed to refine one small part of the scheme, but it is none the less an important part. I notice that the Liberal Party always endeavours to stake out a particular claim in respect of share incentives. Now Liberal Members are endeavouring to stake out a particular claim to the affection and loyalty of Aunt Agatha. Perhaps we should leave each hon. Member to his or her constituency, to compete for the favours of Aunt Agatha. I am confident that when Aunt Agatha has considered what we have devised for her portfolio of investments in business start-ups she will recognise where her essential interests are best safeguarded.
    Mr. Austin Mitchell: An interest in tax fiddling.
    12.30 am
    Mr. Rees: I am sure that Aunt Agatha will have listened to the intervention of the hon. Member for Grimsby (Mr. Mitchell), which was singularly out of key with other interventions from the Opposition Benches in this debate. However, he is right to remind us that these provisions could be subject to abuse unless we strike the right balance.
    Clearly, it has to be the concern of any person who is charged with my responsibilities to see that any worthwhile scheme, whether or not it be an investment bombshell—however one chooses to describe it—does not forfeit the confidence of the country because it is too susceptible to abuse. I may be encouraged at the margin by hon. Gentlemen on both sides to take a few risks. I am delighted to be encouraged by the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) not to be obsessed with tax avoidance, because all too often I receive charges of a different kind from different quarters of the House. On this occasion it is pleasant to be encouraged to discard any lingering inhibitions that I may still have.
    I take up one small matter that was raised by my hon. Friend the Member for Winchester. I see no reason why consultants should not invest in companies of this kind. My hon. Friend will notice that it is possible for an unpaid director to be remunerated for professional services. I hope that that will reassure him.
    Then there is the question of relations. Only those who are in direct line—great-grandparents, grandparents, parents and children—are regarded as connected and therefore debarred from participating in these attractive ventures. Wider degrees of relationship are not excluded. I hope that my hon. Friend will feel that the problem is not quite as pressing as he may at first have thought.
    In answer to my hon. Friend's suggestion that we should publish the present scheme, we have endeavoured to publicise it. Indeed, I was criticised—only mildly—by the Opposition in Committee Room 10, but I said then and I shall say now that we want the maximum take-up of the scheme. We hope that the greater the take-up, the greater the activity that will be generated and the more jobs that will be created. I am sure that the whole House hopes that the charms of the scheme will be publicised widely outside the House.
    1302
    A delicate balance is needed in a technical Revenue handout. All too often laymen outside the House regard books of this kind as having the force of law. We are anxious that such people should not be misled in any particular. I foresee that a handbook of that nature might end up almost as complex as the provisions themselves. As I said in Committee, I regret the complexity of the provisions, but we are dealing with complex industrial investment situations.
    I come to the issue that has caused most agitation among right hon. and hon. Gentlemen—the question of employees and their investments. Let me say in, I hope, ringing terms that the Liberal Party has no monopoly of concern for employee participation and share incentive schemes. The Conservative Party is happy to stand on its record. It looks back to the Finance Bills of 1972 and 1973, the considerable support given in 1978 to the measures then introduced, and the refinements introduced in last year's Finance Bill. I am sure that that will not be the end of the Conservative contribution to an important subject. We yield to none in the House in our concern for that objective.
    However, on this occasion we should not confuse too many objectives. The main purpose of these provisions is to ensure a flow of fresh capital into business start-ups. It does not detract from that objective that, in the first instance, for the reasons that I outlined, we thought it right to exclude paid directors and employees. I said—and I am sure that the Committee accepted the sincerity of what I said—that if we could have devised a reasonably watertight solution to the problem we should have done so.
    The difficulty that I outlined then and that I outline now is that it would be all too possible—not, of course, in every case, but in possibly enough cases—to excite the indignation and ruffle the susceptibilities of people like the hon. Member for Grimsby. He is the custodian of fiscal morality. None the less, we must take account of his susceptibility. We had an interesting debate last night. I did not notice that there was much to separate the hon. Member and myself on that issue. The Liberal Party might be engineering another Lib-Lab pact, but Liberal Members must have regard for the hon. Member's susceptibility.
    If paid employees and directors were, without any constraint, permitted to invest, a double relief might be achieved. My hon. Friend the Member for Surrey, North-West (Mr. Grylls) has laboured long and hard, and my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) has contributed much to the refinement of the scheme. They say that we must take risks and that we could limit investment to £1,000.
    We have considered various monetary limits. We have considered the Liberal suggestion that there might be a limit on the remuneration paid to an employee. However, if we fixed remuneration too low we would probably debar the people who are entitled to participate. Their remuneration would probably be less than the average industrial wage, so they would not be able to participate. If we imposed a high limit, abuse would be a possibility. I hope that I am not being obsessive.
    Mr. Richard Wainwright: The hon. and learned Gentleman is in error in implying that we suppose that employees will derive their investment funds from earnings. I was at pains to point out that we have in mind the employee of a new business who has been made redundant by his former employer and has redundancy

    1303
    money. Alternatively, he may have a legacy, or a gift from Aunt Agatha, or he might have won on the pools. We are not suggesting that the opportunity should involve what the man can afford out of his earnings.
    Mr. Rees: I appreciate that. We could envisage a whole range of situations in which employees or directors were anxious to invest. There is no reason why they should not invest. However, the argument is that they should not attract the generous tax relief that gilds the scheme.
    It might have escaped the hon. Gentleman's keen accountant's eye that it would be possible for companies to set up a share incentive scheme and reward their employees in that way. I am not sure whether the hon. Gentleman is more concerned to ensure employee participation or whether he wishes to tap a fresh source of capital. I suspect that my hon. Friends want to tap a fresh source of capital. They want the widest possible reservoir. I have explained the possible dangers. It is for the House to judge. It may feel that I have been over-oppressive.
    We are setting up a novel scheme. There is no precedent in Western Europe or even the United States for tax relief of such staggering generosity. That being so, it would be better to proceed with modesty and caution in the first instance. As the scheme develops, I hope that we shall be able to decide whether it should be broadened in scope.
    I have not set my face in principle against participation by employees and directors. I want to avoid the consequences that may tarnish the scheme in the eyes of keen observers such as the hon. Member for Grimsby.
    Mr. Grylls: May I press my hon. and learned Friend about the limited reliefs on the special ceiling of £1,000 instead of £10,000, in the amendments? The risk is so small that it is surely worth establishing a principle. We have tried to meet the point made in Committee and to ensure that the risks to the Treasury are minimal. At least the principle should be encouraged. An outside investor with £1,000 is allowed tax relief, but the employee with £1,000 is not allowed tax relief. That does not make sense. I beg my hon. and learned Friend to consider the matter again.
    Mr. Rees: I took very careful account, as I always do, of what my hon. Friend said. He knows that during the past six weeks I have taken careful account of everything that he has said. He was generous enough to pay tribute to that. He will see in the Bill a response to points made not only by himself but by my hon. Friend the Member for Hertfordshire, South-West and a whole range of people from both inside and outside the House. There has been no question of a closed mind. We are now fastening on one particular point. I know that it is of importance.
    All that my hon. Friend is doing by imposing a £1,000 limit is saying that there may be a risk but the damage will be so limited that we can afford to carry it. He is not saying that he has devised a waterproof solution. He is saying that if the water does seep in, it will not be considerable and the Treasury can paddle around in its gumboots. That may be so, but I should prefer to remain dry, at least for the first year or so of the scheme.
    I wish to make a more fundamental point, which may have missed my hon. Friend's keen eye. The point of the scheme is to attract outside capital investment. The close member of the family, perhaps even the employee and
    1304
    certainly the working director, will in any case have an incentive to invest, because his livelihood is involved. The scheme was devised to fill a gap that was perceived even by a Royal Commission presided over by the right hon. Member for Huyton (Sir H. Wilson). If my hon. Friends want a point of principle on which to fasten, that is it. It is a scheme for outside investors.
    Mr. John Browne: This is a crucial point. Of course we want outside capital, but surely giving the tax deduction facility is taking Revenue money from the Government along for the ride. Surely one of the aims is to get the equivalent of Government funding into the investments, which have contact with the entrepreneur. I cannot understand the objection to having a father, who would otherwise invest in the company, being encouraged to invest more in high-risk operations with which he is connected and taking the Government along for the tax-deducted part.
    Mr. Rees: My hon. Friend makes my point. If the father will invest in any event, is there any reason why the general body of taxpayers should subsidise him up to 75 per cent? I know that my hon. Friend did not follow the matter as closely as those of us who were privileged to serve on the Committee.
    It was emphasised on many occasions that the scheme was designed to attract outside capital into start-up ventures. We could have devised a quite different scheme. We could have decided to salvage companies on the downward slope. We could have encouraged people inside the companies. But the equity gap that was perceived was the difficulty of attracting outside capital into the small, usually unquoted companies. On a point of principle I ask the House, attractive though the amendments are, to reject them.
    Mr. Richard Wainwright: Before the Minister concludes his highly reasoned speech, will he turn to the point that was not debated in Committee but is embodied in amendment No. 87? That provides the safeguard that the remuneration must be reasonable and necessary. That is the established formula, used by Government, to give the commissioners power to disregard remuneration that is extravagant.
    Mr. Peter Rees: No, there are one or two questions that on the whole have been productive of litigation. It is not very easy for the courts to determine what is reasonable or necessary. That is not a perfect solution.
    There is certainly unanimity, except possibly for the hon. Member for Grimsby, in the view that this is a scheme towards which we should move. The question is at what pace and when. I say with diffidence to the House that we should at least get the scheme off the ground before considering how it might be modified and broadened. On that basis, I hope that hon. Members on both sides of the House—
    Mr. Grylls rose—
    Mr. Rees: No. I am under great pressure. I have given way to my hon. Friend on at least three occasions. I hope that he will forgive me if I do not do so now.
    12.45 am
    There is a further amendment, standing in the name of my right hon. and learned Friend the Chancellor of the Exchequer, that is on a different matter. I commend amendment No. 88 to the House. It was tabled in response

    1305
    to an argument advanced by my right hon. Friend the Member for Crosby (Sir G. Page). It relates to determining the assests in the course of a winding-up operation, which determines to a degree whether a person may or may not participate arid whether he is regarded as associated with the company. It should be possible to disregard normal commercial loans. The amendment meets what I hope is an entirely uncontroversial issue. It is with profound regret that I must advise the House to resist the blandishments that have been showered on it from both sides.
    Mr. John Browne: I thank my hon. and learned Friend for his remarks. Surely the aim should be to attract capital into high-risk investments, and not only new capital. I have great sympathy with the amendment of the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel). If he presses it to a Division, I hope that he will understand that I also have great respect for my hon. and learned Friend, who is one of the foremost tax attorneys in the country. Therefore, I shall not support the right hon. Gentleman's amendment if he divides the House. I shall not be pressing my amendment to a Division.
    Mr. David Steel; It would be wrong if the House passed on to the next debate without registering its view on the issue before it. The argument in support of the amendment has been advanced strongly from both sides of the Chamber. I was of a mind to think that the amendment that was being pursued by certain Conservative Back Benchers had great merits as a modest, conservative and cautious approach to the same end as that which my right hon. and hon. Friends are advocating.
    The Minister of State has talked about the Government's staggering generosity. It is disappointing that he should be so obsessed by the hon. Member for Grimsby (Mr. Mitchell), who is out on a limb on this issue, as to pray him in aid without taking the bold step of saying "Let us go some way to extending the scheme to employees." The objection of the hon. and learned Gentleman to the Liberal amendment is that it might cause difficulties in the courts. That is a strange objection as we took the wording directly from another part of the Bill. It is novel for a Minister to say, in effect, "We do not like the wording that we have chosen because it might cause difficulties in the courts."
    The hon. and learned Gentleman says that the Liberal amendment is not a perfect solution. That may be. We do not have a perfect solution. Conservative Back Benchers said that they did not have a perfect solution. The hon. and learned Gentleman has weighed up the merits of boldness to encourage employees to invest in new businesses for which Conservative Members were arguing and he has offset that against the admitted possibility of some loss of revenue to the Treasury. He has come down on the side of safety and caution. That is sad.
    The hon. and learned Gentleman said in his opening words that he yielded to nobody in his zeal and the Conservative Party yielded to no one in its zeal to move towards employee participation, but in this scheme he is introducing positive discrimination against employees. It is not simply that he is not doing anything to encourage employee participation. He is actually introducing discrimination against them.
    The House has expressed its view entirely against the Minister's argument, and despite the lateness of the hour the House should have the opportunity again to express its
    1306
    view by means of a Division. I invite the House to support amendment No. 83, the hon. Member for Winchester (Mr. Browne) having indicated that he is not prepared to press amendment No. 82.
    Mr. Deputy Speaker (Mr. Ernest Armstrong): As the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) spoke after the hon. Member for Winchester (Mr. Browne) said that he would not press amendment No. 82, I must put the amendment to the House.
    Amendment negatived.

  Clause 52

    INDIVIDUALS QUALIFYING FOR RELIEF
    Amendment proposed: No. 83, in page 41, line 25, after '(a)', insert 'subject to subsection (3) below.—[Mr. David Steel.]
    Question put, That the amendment be made:—
    The House divided: Ayes 6, Noes 176.

    Division No. 279]

    [12.50 am

    AYES

    Horam, John

    Wainwright, R. (Colne V)

    Howells, Geraint

    Penhaligon, David

    Tellers for the Ayes:

    Ross, Stephen (Isle of Wight)

    Mr. A. J. Beith and

    Steel, Rt Hon David

    Mr. David Alton.

    NOES

    Adley, Robert

    Emery, Peter

    Alexander, Richard

    Eyre, Reginald

    Alison, Michael

    Fairgrieve, Russell

    Ancram, Michael

    Fenner, Mrs Peggy

    Baker, Kenneth (St.M'bone)

    Fisher, Sir Nigel

    Baker, Nicholas (N Dorset)

    Forman, Nigel

    Beaumont-Dark, Anthony

    Fraser, Peter (South Angus)

    Bendall, Vivian

    Garel-Jones, Tristan

    Benyon, W. (Buckingham)

    Glyn, Dr Alan

    Best, Keith

    Goodlad, Alastair

    Bevan, David Gilroy

    Gorst, John

    Biffen, Rt Hon John

    Gow, Ian

    Blackburn, John

    Gower, Sir Raymond

    Blaker, Peter

    Grant, Anthony (Harrow C)

    Boscawen, Hon Robert

    Gray, Hamish

    Bowden, Andrew

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

    Braine, Sir Bernard

    Griffiths, Peter Portsm'th N)

    Bright, Graham

    Grist, Ian

    Brinton, Tim

    Gummer, John Selwyn

    Brittan, Leon

    Hampson, Dr Keith

    Brown, Michael (Brigg & Sc'n)

    Hastings, Stephen

    Buchanan-Smith, Alick

    Havers, Rt Hon Sir Michael

    Buck, Antony

    Hawksley, Warren

    Bulmer, Esmond

    Henderson, Barry

    Butcher, John

    Heseltine, Rt Hon Michael

    Butler, Hon Adam

    Hicks, Robert

    Cadbury, Jocelyn

    Higgins, Rt Hon Terence L.

    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

    Clark, Sir W. (Croydon S)

    Hunt, David (Wirral)

    Clarke, Kenneth (Rushcliffe)

    Hunt, John (Ravensbourne)

    Colvin, Michael

    Jenkin, Rt Hon Patrick

    Cope, John

    Jessel, Toby

    Corrie, John

    Jopling, Rt Hon Michael

    Cranborne, Viscount

    Joseph, Rt Hon Sir Keith

    Crouch, David

    Kellett-Bowman, Mrs Elaine

    Dean, Paul (North Somerset)

    King, Rt Hon Tom

    Douglas-Hamilton, Lord J.

    Knight, Mrs Jill

    du Cann, Rt Hon Edward

    Knox, David

    Dunn, Robert (Dartford)

    Lamont, Norman

    Durant, Tony

    Lang, Ian

    Eden, Rt Hon Sir John

    Lawrence, Ivan

    Edwards, Rt Hon N. (P'broke)

    Lawson, Rt Hon Nigel

    Eggar, Tim

    Lennox-Boyd, Hon Mark

    1307

    Lester, Jim (Beeston)

    Rossi, Hugh

    Lewis, Kenneth (Rutland)

    Sainsbury, Hon Timothy

    Lloyd, Peter (Fareham)

    Shelton, William (Streatham)

    Macfarlane, Neil

    Shepherd, Colin (Hereford)

    MacKay, John (Argyll)

    Shersby, Michael

    McNair-Wilson, M. (N'bury)

    Silvester, Fred

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

    Sims, Roger

    McQuarrie, Albert

    Speed, Keith

    Madel, David

    Speller, Tony

    Major, John

    Spicer, Jim (West Dorset)

    Marland, Paul

    Spicer, Michael (S Worcs)

    Marshall, Michael (Arundel)

    Squire, Robin

    Mather, Carol

    Stanbrook, Ivor

    Mawhinney, Dr Brian

    Stanley, John

    Maxwell-Hyslop, Robin

    Steen, Anthony

    Mayhew, Patrick

    Stevens, Martin

    Mills, Iain (Meriden)

    Stewart, Ian (Hitchin)

    Mills, Peter (West Devon)

    Stewart, A. (E Renfrewshire)

    Mitchell, David (Basingstoke)

    Stradling Thomas, J.

    Moate, Roger

    Taylor, Teddy (S'end E)

    Monro, Hector

    Tebbit, Norman

    Morris, M. (N'hampton S)

    Temple-Morris, Peter

    Morrison, Hon P. (Chester)

    Thomas, Rt Hon Peter

    Mudd, David

    Thompson, Donald

    Murphy, Christopher

    Townsend, Cyril D, (B'heath)

    Neale, Gerrard

    van Straubenzee, W. R.

    Needham, Richard

    Vaughan, Dr Gerard

    Newton, Tony

    Viggers, Peter

    Normanton, Tom

    Wakeham, John

    Page, Rt Hon Sir G. (Crosby)

    Waldegrave, Hon William

    Page, Richard (SW Herts)

    Walker, B. (Perth)

    Parris, Matthew

    Wall, Patrick

    Patten, Christopher (Bath)

    Ward, John

    Pattie, Geoffrey

    Watson, John

    Pawsey, James

    Wells, John (Maidstone)

    Percival, Sir Ian

    Wells, Bowen

    Pollock, Alexander

    Whitney, Raymond

    Price, Sir David (Eastleigh)

    Wickenden, Keith

    Proctor, K. Harvey

    Wiggin, Jerry

    Rathbone, Tim

    Wolfson, Mark

    Rees, Peter (Dover and Deal)

    Young, Sir George (Acton)

    Rees-Davies, W. R.

    Rhodes James, Robert

    Tellers for the Noes:

    Roberts, M. (Cardiff NW)

    Mr. Anthony Berry and

    Roberts, Wyn (Conway)

    Mr.Peter Brooke.

    Question accordingly negatived.
    Amendment made: No. 88, in page 42, line 38, leave out from 'to' to end of line 41 and insert
    'equity holders of the company, and for the purposes of this subsection—

    (a) the persons who are equity holders of the company; and

    (b) the percentage of the assets of the company to which the individual would be entitled,

    shall be determined in accordance with paragraphs 1 and 3 of Schedule 12 to the Finance Act 1973, faking references in paragraph 3 to the first company as references to an equity holder and references to a winding up as including references to any other circumstances in which assets of the company are available for distribution to its equity holders.' .—[Mr. Peter Rees.]

  Clause 53

    NEW QUALIFYING COMPANIES
    Amendment made: No. 89, in page 44, line 1, after '(6)', insert
    'Where the relevant period begins after the incorporation of the company the requirements of subsection (3) above must have been complied with since its incorporation; but'.—[Mr. Peter Rees.]

  Clause 54

    NEW QUALIFYING TRADES
    1 am
    Mr. Peter Rees: I beg to move amendment No. 90, in page 44, line 23, after '(2)', insert ', (2A)'.
    Mr. Deputy Speaker: With this it will be convenient to take the following:
    Government amendments Nos. 91 and 92.
    Amendment No. 93, in page 44, line 32, after 'fees', insert
    'or receiving royalties or licence fees except where such royalties or licence fees arise out of or accrue in respect of assets produced or made or caused to be so produced or made by the company in the course of its trade.'.
    Government amendments Nos. 94 to 96 and 193.
    Mr. Rees: The amendments are designed principally to admit as qualifying trades the ordinary trade of retail and wholesale, which was a point much pressed on us in Committee. I said that I would consider it. There were certain difficulties. I hope that we have found a solution that will commend itself to the House.
    Amendment No. 93 is in the name of my hon. Friend the Member for Surrey, North-West (Mr. Grylls). I appreciate the difficulties. We shall consider the matter, but it will not be possible to do anything this year. We may return to it next year.
    I also draw the House's attention to Government amendment No. 96, which will also admit farming companies. I hope that this will please the House.
    Mr. Grylls: Amendment No. 93 has some importance. It is to ensure that film and video makers who produce the software are included. Where they are earning royalties on assets that they have produced in their business and trade, there is no logic in not including them. The industry needs encouraging. It would be sensible if new money could be included in the scheme.
    I am delighted to hear that my hon. and learned Friend will look at the matter and perhaps make some provision in the next financial year.
    Amemdment agreed to.
    Amendments made:
    No. 91, in page 44, line 27, leave out 'goods'.
    No. 92, in page 44, line 28, at end insert—
    ('aa) dealing in goods otherwise than in the course of an ordinary trade of wholesale or retail distribution; or'.
    No. 94, in page 44, line 36, leave out
    'paragraph (a), (b), (c) or (d) above'
    and insert
    'any of the foregoing paragraphs'.
    No. 95, in page 44, line 39, at end insert—
    '(2A) For the purposes of paragraph (aa) of subsection (2) above—

    (a) a trade of wholesale distribution is one in which the goods are offered for sale and sold to persons for resale by them or for processing and resale by them;

    (b) a trade of retail distribution is one in which the goods are offered for sale and sold to members of the general public for their use or consumption;

    and in determining for the purposes of that paragraph whether a trade is an ordinary trade of wholesale or retail distribution regard shall be had to the extent to which it has the features mentioned in Schedule (Relief for investment in new corporate trades: wholesale and retail distribution) to this Act, those in Part I being regarded as indications that the trade is such an ordinary trade and those in Part II being regarded as indications of the contrary.'.

    1309
    No. 96, in page 46, line 6, leave out paragraph (a).—[Mr. Peter Rees.]

  Clause 55

    DISPOSAL OF SHARES
    Amendments made:
    No. 98, in page 46, line 30, leave out from 'Where' to 'any' in line 32 and insert
    'the relief has been given to an individual in respect of shares in a company which have been issued to him at different times'.
    No. 99, in page 46, line 34, leave out from 'issued' to end of line 35 and insert
    'earlier rather than to those issued later'.
    No. 100, in page 46, line 36, leave out first 'the'.
    No. 101, in page 46, line 40, leave out from 'holding' to end of line 42 and insert—

    '(a) a disposal of the whole or part of the new holding shall be treated for the purposes of this section as a disposal of the whole or a corresponding part of those shares; and

    (b) the new holding shall be treated for the purposes of subsection (2) above as shares in respect of which the relief has been given.'.—[Mr. Peter Rees.]

  Clause 56

    VALUE RECEIVED FROM COMPANY
    Amendments made:
    No. 102, in page 47, line 14, leave out 'or makes to him' and insert
    'other than a debt which was incurred by the company—

    (i) on or after the date on which he subscribed for the shares in respect of which the relief is claimed; and

    (ii) otherwise than in consideration of the extinguishment of a debt incurred before that date;

    (bb) makes to the individual.'.
    No. 103, in page 47, line 38, leave out 'or (b)' and insert , (b) or (bb)'.
    No. 104, in page 48, line 13, leave out from 'individual' to second 'the' in line 14 and insert
    'to whom ordinary shares in a company have been issued at different times'
    No. 105, in page 48, line 15, leave out from 'of' to end of line 16 and insert
    'shares issued earlier rather than in respect of shares issued later'.—[Mr. Peter Rees.]

  Clause 57
    PREVENTION OF MISUSE
    Amendment made: No. 106, in page 49, line 26, after 'issued', insert 'ordinary'.—[Mr. Peter Rees.]
  Clause 59
    CLAIMS
    Amendment made: No. 108, in page 52, line 23, leave out '£1,000' and insert '£500'.—[Mr. Peter Rees.]
  Clause 61

    INFORMATION
    Amendments made: No. 109, in page 54, line 26, leave out 'thirty days' and insert
    'sixty days of his coming to know'.
    No. 110, in page 54, line 35, leave out 'thirty' and insert 'sixty'.
    1310
    No. 111, in page 55, line 2 leave out 'thirty' and insert 'sixty'.
    No. 112, in page 55, line 11, leave out 'thirty' and insert 'sixty'.
    No. 113, in page 55, line 20, leave out 'thirty' and insert 'sixty'.
    No. 114, in page 56, line 2, after 'holds', insert 'or has held'.
    No. 115, in page 56, line 3, after 'are', insert 'or were'.
    No. 116, in page 56, line 4, after 'shares', insert 'which are or were'.
    No. 117, in page 56, line 5, after 'are', insert 'or were'.
    No. 118, in page 56, line 6, at end insert—
    '(9) No obligation as to secrecy imposed by statute or otherwise shall preclude the inspector from disclosing to a company that relief has been given or claimed in respect of a particular number or proportion of its shares.'.—[Mr. Peter Rees.]

  Clause 62

    CAPITAL GAINS TAX
    Mr. Peter Rees: I beg to move amendment No. 119, in page 56, line 9, after 'gain', insert 'or loss'.
    Mr. Deputy Speaker: With this it will be convenient to take the following amendments:
    Government amendment No. 120.
    No. 121, in page 56, line 11, leave out
    'the amount of the relief'
    and insert
    'the income tax from which the individual has been relieved'.
    Government amendments Nos. 122 and 123.
    Mr. Rees: This amendment is designed purely to ensure that no one will suffer capital gains tax on disposing of his shares if he incurs a real commercial loss. It was brought to my attention that the Bill as at present drafted could have resulted in that rather unattractive position. The amendment meets that point. On that basis, I commend it to the House.
    Amendment agreed to.
    Amendments made: No. 120, in page 56, line 11, leave out from 'reduced' to end of line 12 and insert—

    '(a) where paragraph (b) below does not apply, by an amount equal to one-half of the amount of the relief;

    (b) where those sums exceed the consideration, by an amount equal to

    (i) the whole amount of the relief; or

    (ii) the excess, whichever is the less;

    but the foregoing provisions of this subsection shall not apply to a disposal falling within section 44(1) of the Capital Gains Tax Act 1979 (disposals between husband and wife)'.

    No. 122, in page 56, line 13, leave out subsection (2) and insert
    '(2) Section 65 of the said Act of 1979 (pooling of shares etc.) shall not apply to shares in respect of which any relief has been given and not withdrawn; and any question whether a disposal relates to such shares or to other shares shall for the purposes of capital gains tax be determined as for the purposes of section 55 above.
    (3) Where an individual holds ordinary shares in a company and the relief has been given in respect of some but not others, then, if there is within the meaning of section 77 of the said Act of 1979 a reorganisation affecting those shares, section 78 of that Act shall apply separately to the shares in respect of which the relief has been given and to the other shares (so that the shares of each kind are treated as a separate holding of original shares and identified with a separate new holding).'.
    No. 123, in page 56, line 23, leave out subsection (4).—[Mr. Peter Rees.]

  Clause 65

    CARS AVAILABLE FOR PRIVATE USE
    The Chief Secretary to the Treasury (Mr. Leon Brittan): I beg to move amendment No. 125, in page 58, line 39, at end insert—
    '(2A) After subsection (2) there shall be inserted—
    "(2A) Where in any year a person is taxable in respect of the benefit of a car under this section, he shall not be taxable—

    (a) under section 181 of the Taxes Act in respect of the discharge of any liability of his in connection with the car;

    (b) under section 36 or 36A of the Finance (No. 2) Act 1975 in respect of any voucher or credit token to the extent that it is used by him—

    (i) for obtaining money which is spent on goods or services in connection with the car, or

    (ii) for obtaining such goods or services;

    (c) under section 60 above in respect of any payment made by him in respect of expenses incurred by him in connection with the car.".'.

    Mr. Deputy Speaker: With this it will be convenient to take amendment No. 129, in page 59, line 18, at end insert—
    '(8) Where in any year beginning on or after 6th April 1982 a car is made available to a person within the meaning of subsection (1) above:—

    (a) no charge to income tax shall be made in respect of that car itself, or any of the incidental costs of maintaining it in a roadworthy condition, other than under this section; and

    (b) the incidental costs of so maintaining a car include any sums paid to or put at the disposal of or paid away by the person mentioned in subsection (1) above and any other facilities in relation to any expenditure incurred by him in maintaining that car in a roadworthy condition but does not extend to any fuel provided to the said person in relation to that car or otherwise.'.

    Mr. Brittan: This amendment is designed to remove the possibility that a director or higher-paid employee who is liable to a scaled charge in respect of a car or petrol might also be liable under the normal charging rules of schedule E and under the special rules applying to vouchers or credit cards or the special rules relating to reimbursed expenses. I commend it to the House.
    Amendment agreed to.
    Mr. Brittan: I beg to move amendment No. 126, in page 58, line 42, leave out 'paragraphs 2 to 5' and insert
    'sub-paragraph (1) of paragraph 2 of Part II of that Schedule in a case in which sub-paragraph (2)(b) of that paragraph applies or by virtue of paragraphs 3 to 5 of that Part'.
    This amendment enables an employer who during any pay period first makes a car available or replaces a car available to an employee, who is liable to tax under section 64 of the Finance Act 1976 in respect of the benefit of that car, to calculate the amount of the car benefit for the pay period in which the car is made available or changed and apply PAYE to that figure without waiting for a notification from the inspector. It is, therefore, an easement of the position, and I commend the amendment to the House.
    Amendment agreed to.
    Mr. Brittan: I beg to move amendment No. 127, in page 59, line 13, leave out
    'for which he must account'
    and insert
    'which he is liable to pay'.
    This small technical amendment is designed to make it clear that the only amounts which can give rise to a charge on the director or higher-paid employee under the new
    1312
    section 64(7) of the Finance Act 1976 are amounts of tax in respect of car benefits which are ultimately to be paid by the employer and which the employer has been unable to recover out of payments of cash emoluments, out of tax repayments or in some other way from the employee.
    Amendment agreed to.
    Sir William Clark: I beg to move amendment No. 128, in page 59, line 14, leave out from 'shall' to end of line 18 and insert
    'on notifying the Board of the amount of such unrecovered income tax, be discharged from any liability to account for it to the Board, and all such consequences shall follow as if there had been made on the employee on such date as he is notified by the inspector of the amount so unrecovered an assessment under Schedule E to the best of the inspector's judgment under which the amount of tax charged on the employee is the amount so unrecovered'.
    I am sorry, but the formality ends now. I do not think that we need spend too much time on this. If under the PAYE regulations an employee gets a benefit, from a car or whatever, and consequently that being added to his income means that because of his coding there is insufficient income the following month or week to repay the employer for the tax which is due on the increased benefit which comes in during the fiscal year, this should not be a liability on the employer. It should be for the Inland Revenue to collect it from the employee.
    Mr. Brittan: This amendment is the same as that tabled by my hon. Friend the Member for Croydon, South (Sir W. Clark) in Committee. He will be familiar with the points that were raised then. To some extent, the point has been met by the draft regulations that have been placed in the Library and by Government amendment No. 127, which the House has just accepted. That amendment and the draft regulations will ensure that when an employer has made a mistake in good faith and has acted with reasonable care, but failed to apply PAYE correctly on the benefits, the inspector may direct that the unpaid tax be recovered from the employee, not the employer.
    In those circumstances, I hope that my hon. Friend will not feel it necessary to press his amendment.
    Sir William Clark: I am grateful to the Chief Secretary for that reply. However, I urge one point on him. I hope that if cases were brought to my right hon. and learned Friend's attention in which the Inland Revenue declared that the employer should pay PAYE tax which was the employee's responsibility—simply because of the benefits—he would deal with them sympathetically.
    I am sure that hon. Members will agree that we should try to put measures into legislative form and should not leave matters to the discretion of departments such as the Inland Revenue. I shall be happy to withdraw the amendment if my right hon. and learned Friend gives the assurance that I have sought.
    Mr. Brittan: I assure my hon. Friend that if such difficulties arise I shall consider them sympathetically.
    Sir William Clark: I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.

  Clause 66

    CAR FUEL
    Mr. Brittan: I beg to move amendment No. 131, in page 59, line 29, leave out from 'year' to end of line 3 on page 60 and insert
    'in the case of a person employed in director's or higher-paid employment fuel is provided by reason of his employment for a car which is made available as mentioned in section 64 above, he shall be treated for the purposes of the Income Tax Acts (and in particular section 204 of the Taxes Act (pay as you earn)) as being paid by his employer in that year an emolument of his employment of an amount equal to whatever is the cash equivalent of that benefit in that year.
    (2) Subject to the following provisions of this section, the cash equivalent of that benefit shall be ascertained from Table A below where the car has an internal combustion engine with one or more reciprocating pistons and from Table B below in the case of other cars; and for the purposes of Table A below a car's cylinder capacity is the cylinder capacity of its engine calculated as for the purposes of the Vehicles (Excise) Act 1971 or the Vehicles (Excise) Act (Northern Ireland) 1972.

    Table A

    Cars having a cylinder capacity

    Cylinder capacity of car in cubic centimetres

    Cash equivalent

    1300 or less

    £270

    More than 1300, but not more than 1800

    £360

    More than 1800

    £540

    (3) Without prejudice to the generality of subsection (1) above fuel is provided for a car if—

    (a) any liability in respect of the provision of fuel for the car is discharged;

    (b) a voucher within the meaning of section 36 of the Finance (No. 2) Act 1975 or a credit-token within the meaning of section 36A of that Act is used to obtain fuel for the car or money which is spent on such fuel; or

    (c) any sum is paid in respect of expenses incurred in providing fuel for the car.

    (4) The Treasury may by order taking effect from the beginning of any year beginning after it is made (but not of any year earlier than 1983–84) substitute a different Table for either of the Tables in subsection (2) above.
    Orders under this subsection shall be made by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.
    (5) Where paragraph 2 or 3 of Part II of Schedule 7 to this Act applies to reduce the cash equivalent of the benefit of the car for which the fuel is provided, the same reduction shall be made to the cash equivalent of the benefit of the fuel ascertained under subsection (2) above.
    (6) If in the relevant year—

    (a) the employee is required to make good to the person providing the fuel the whole of the expense incurred by him in or in connection with the provision of fuel for his private use and he does so; or

    (b) the fuel is made available only for business travel, the cash equivalent is nil.

    (7) For the purposes of section 204 of the Taxes Act no alteration of the cash equivalent shall be made by virtue of sub-paragraph (1) of paragraph 2 of Part II of Schedule 7 to this Act in a case in which sub-paragraph (2)(b) of that paragraph applies or of paragraph 3 of that Part or of subsection (6)(a) above unless the inspector has notified the employer of the alteration to be made.
    (8) Subsections (6) and (7) of section 64 above shall apply in relation to the amount referred to in subsection (1) above as they apply to the amount referred to in subsection (1) of that section.".'.
    Mr. Deputy Speaker: With this, it will be convenient to take the following amendments to the proposed amendment:
    (a), in line 4, leave out from 'of' to 'as' in line 5, and insert
    'this Chapter and, with effect from 1983–84, shall also be treated for the purposes of section 204 of the Taxes Act (pay as you earn)'.
    (b), in line 46, at end insert—
    '(6A) If in the relevant year the employee is required to make good to the person providing the fuel a sum falling short of the whole expense mentioned in paragraph (a) of the last preceding subsection the cash equivalent shall be reduced by the amount so made good.'.
    (c), in line 51, after 'subsection (6)(a)', insert 'or (6A)'; and amendment No. 132, in page 59, line 39, at end insert—
    '(1A) The charge under subsection (1) above shall apply to the exclusion of any other charge to tax not only when fuel is provided in kind but also when arrangements exist whereby the

    1315
    cost of fuel made available to the person or a member of his family or household is not ultimately borne by that person including transactions whereby payment for such fuel is initially made by that person and he is later reimbursed and transactions where credit arrangements exist of which he is able to take advantage.'.
    Mr. Brittan: The amendment introduces the Government's proposals for taxing petrol and other fuel provided for use in a company car, taxable under section 64 of the Finance Act 1976. It replaces the existing skeleton clause 66 and contains the detailed rules for charging the benefit and scale tables, by reference to which the charge is to be calculated. The table speaks for itself, but if any hon. Member wishes me to elaborate any point I shall be happy to do so.
    Mr. Peter Viggers: I understand that representatives of many companies, including those of the CBI, are worried that it will not be possible to implement these provisions in terms of PAYE. I particularly commend amendment (a), which delays the implementation of PAYE for one year to allow companies to appraise the scheme and to implement it later rather than earlier. It does not alter the implementation of tax; it merely delays the implementation of PAYE. Perhaps the Chief Secretary will say whether the Government are prepared to accept the amendments.
    Mr. Brittan: I am sorry to disappoint my hon. Friend the Member for Gosport (Mr. Viggers) but I cannot commend the amendments to the amendment. There are no interim difficulties that would be assisted by a delay in which they could be sorted out. I appreciate that the scheme is not exactly universally popular, but by delaying it for a year we shall not be able to sort out the problems. Although one is tempted to go down the line that my hon. Friend has suggested, it would be an exercise inconsistent with the Government's intentions, having produced a reasonable scheme. I recommend its introduction now.
    1.15 am
    Mr. Cook: The Opposition take no exception to the clause as drafted, but I take the opportunity to repeat to the Chief Secretary the point that I made in Committee, which is that we still have a rate of tax on cars that are benefits in kind that is more generous than the rates envisaged when the proposals were introduced for the 1976 Act. It is worth making the point that the scale rates provided in the amendment only just overhaul the bottom end of the scale rates that were originally proposed for inclusion in the 1976 Act. In the 1976 Act the cash equivalent for a car with an engine capacity of less than 1,000 cc was £250. We have finally managed to pass a figure that was thought appropriate six years ago.
    I appreciate that in his figures the Chief Secretary provides for a 20 per cent. uprating over the previous figure. One appreciates that that is the advance of inflation, but at that rate of increase it will be many years before we get back to the figures that were thought appropriate five years ago and many years yet before we catch up with the figures that the Automobile Association used to demonstrate the cost of maintaining a car and, by implication, the advantage of obtaining a company car.
    Although I do not want to stand in the way of the amendment, I take the opportunity to urge on the Chief
    1316
    Secretary the need to make more rapid progress to obtain a cash equivalent which bears a closer approximation to the real value of the car as a benefit in kind.
    Amendment agreed to.
    Mr. Cook: I beg to move amendment No. 133, in page 60, line 16, at end insert
    'other than a travel concession provided by a transport undertaking to its employees'.
    The amendment has been tabled as an avoidance-of-doubt proposal. I hope that it will be possible for us to obtain an assurance that the amendment is redundant and that it will not be necessary to press it to a Division.
    As the Chief Secretary will be aware, the Opposition have no quarrel with the principle of the clause. We accept that it is right and proper that if an employer furnishes a transport voucher to his employees to enable them to buy season tickets for use on the railways, it is proper that the employees should be taxed on the benefit in kind that they receive as a result.
    We did not challenge the clause in Committee because we understood that it did not disturb the basis of assessment laid down in the 1975 Act. After all, these are amendments to the 1975 Act. Section 36, which the clause amends, provides that the basis of assessment is laid down that the employee will be taxed by an amount equal to the expense incurred by the person providing the voucher.
    On that basis we found the clause acceptable. Since then, as the Chief Secretary will be aware, some disquiet has arisen because it is suspected that the clause may bite on the travel concessions given by transport undertakings to their staff. The disquiet has surfaced especially in British Rail, but, presumably, if British Rail's anxieties are well-founded, by the same token the disquiet will some day apply in the airlines, where by the same method the travel concessions that airlines extend to their staff may also come within tax.
    I am happy to go on adding to the list of transport undertakings whose employees might find their travel concessions taxed by the same method that applies to the employees of British Rail. If airline staff were to be taxed on the face value of the travel concessions that they receive, they would face a substantial tax burden.
    It may assist the House and the Chief Secretary if I indicate briefly the basis of the travel concession operated by British Rail. It provides a travel concession to its staff in the full knowledge that on most of its trains there will be empty seats. On average, the occupancy rate on trains run by British Rail is less than 50 per cent. The chances are, therefore, that on the great majority of trains which those holding a travel concession join there will be empty seats in which they may sit. If there are no empty seats, British Rail has a marked reluctance to turn away passengers seeking to join a train, even if it is necessary for a passenger to stand all the way to his destination.
    It would, therefore, be difficult to establish that any passenger has ever been displaced by a British Rail employee holding a travel concession and travelling at a reduced rate. For that reason, it would be difficult to establish that British Rail incurred any real cost in providing a travel concession to its employees who travel at a marginal rate of nil to British Rail.
    There is, of course, administrative cost, but it is more than fully met by the charge which British Rail makes to its employees for the concessionary tickets that it sells to those employees. Indeed, those concessionary tickets are

    1317
    purchased at one-quarter of the face value, and that more than covers the administrative cost. The relative figures are £100,000 for administrative costs and £6 million for the revenue from the sale of those concessionary tickets to British Rail's own employees. British Rail contrives to make a modest profit out of the sale of travel concessions to its own staff and does not bear any net cost as a result of providing that concession.
    If the concessions were to come within tax, I can tell the Chief Secretary what would happen. The unions would inevitably come under pressure from their members to obtain cash payments rather than travel concessions, and a cash payment equivalent to the benefit to the employee of the travel concession at present employed. If that were to happen, as the Chief Secretary will apprehend, British Rail would he obliged to meet in full the cash payment to its employees, which would be at real cost to British Rail, to replace a concession which at present costs British Rail nothing. That would, as he will immediately apprehend, place pressure. on British Rail's finances, in turn place pressure on the Government to support British Rail, and ultimately work its way through to an effect on public expenditure.
    I am sure that the Chief Secretary would agree with me that that would be a most unsatisfactory and undesirable outcome, and hope that he will be able to assure me and the House that those fears which are entertained in British Rail are unfounded, and that he will be able to give us an assurance that the present basis, which is contained in section 36 of the 1975 Act, will not be disturbed in any way by this clause.
    I have a letter which was sent by the Chancellor of the Exchequer to Sir Peter Parker on 12 June. In it the Chancellor says:
    "I understand that you have supplied a considerable amount of evidence which is now being considered by the Inland Revenue and that your view is that that evidence establishes that your board does not incur expense in providing the concessions in question. If that is indeed the case it would appear that the effects of clause 66"—
    it has now been renumbered as clause 67—
    "on your industry will be neutral. However, I can well understand your concern to see the question resolved with the minimum delay, and have asked the Inland Revenue to keep me informed of progress ."
    That letter was sent on 12 June, which is now a month ago. Some time has passed since then, and the Chief Secretary will be aware that it has become a matter of concern. The amendment was tabled last week.
    I hope, therefore, that the Chief Secretary will end the period of delay and uncertainty over this issue and will be able to give us an assurance that there will be no byproduct of the clause which will result in a disturbance to a tax regime applied to British Rail employees which is now of long standing and which recognises the fact that the travel concession is supplied by British Rail at nil or negligible cost. There is no taxable benefit, therefore, in the hands of British Rail employees.
    Mr. John Browne: There is at least one case to my knowledge of someone being barred from entering a British Rail carriage. It happened to me, and I complained to Sir Peter Parker. I had to go from a non-smoking compartment into a smokers' compartment.
    Mr. Brittan: The amendment raises the question of the impact of clause 67 on lower-paid employees of British Rail. The question arises only if expenses have been
    1318
    incurred by the employers conferring the kind of concessions mentioned by the hon. Member for Edinburgh, Central (Mr. Cook). The extent to which that happens, if at all, is being examined by the Inland Revenue. As a result of that examination, the clause may well have no significant effect on British Rail employees. Whatever the outcome of that investigation, which is not yet completed, the Government do not intend the clause to disturb the status quo. If anything were to be done, it would be in the context of a more general policy on perks for those earning less than £8,500, and not by means of the clause.
    The Opposition amendment goes too wide. Clause 67 in any event will not take effect until 6 April 1982. I undertake that in next year's Bill we shall, if necessary, return to the subject and ensure that the clause is amended to exclude from its effects the lower-paid employees of British Rail. In the meantime, the Inland Revenue will not exercise its discretionary power to ask the employers to keep records and submit returns in these cases.
    Mr. Michael Shersby: How long does my right hon. and learned Friend intend that the Government will perpetuate the artificial division between higher-paid and lower-paid employees at £8,500 a year? It seems curious that in relation to this clause we should still be dealing with this peculiar cut-off point. Has he given further consideration to it during the Bill's passage? Have the Government any intention of removing or revising the limit next year? It emerged two or three years and has been perpetuated. It will cause a great deal of resentment among those members of the community who use cars for business purposes.
    Mr. Brittan: We have taken my hon. Friend's point on board, and we are considering what should be done. I am not in a position to announce a decision. Otherwise, it would have been implemented in the Bill. I cannot even promise when we shall complete our consideration or give any indication of what the conclusions will be.
    Mr. Cook: The Chief Secretary has given us a fall response. We very much appreciate his undertakings. I understand him to say that it is not the Government's intention that the clause should bite on British Rail's lower-paid employees, but that should that happen he will examine the matter again. In the light of those undertakings, I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Amendment made: No. 134, in page 60, line 33, after 'child', insert
    'or any dependent of the employee's'.—[Mr. Newton.]

  Clause 68

    CREDIT-TOKENS
    Amendments made: No. 136, in page 62, line 4. at end insert—
    '(6) If a person furnishes to the inspector a statement of the cases and circumstances in which credit-tokens are provided for any employees (whether his own or those of anyone else) and the inspector is satisfied that no additional tax is payable under this section by reference to the credit-tokens mentioned in the statement, the inspector shall notify the person accordingly and nothing in this section shall apply to the provision of those credit-tokens or their use.
    (7) The inspector may, if in his opinion there is reason to do so, by notice in writing served on the person to whom the

    1319
    notification under subsection (6) above was given, revoke the notification, either as from the date of its making or as from such later date as may be specified in the notice under this subsection; and all such income tax becomes chargeable, and all such returns are to be made by that person and by the employees in question, as would have been chargeable or would have had to be made in the first instance if the notification under subsection (6) above had never been given or, as the case may be, it had ceased to have effect on the specified date.'.
    No. 139, in page 62, line 6 after 'emoluments)', insert
    'and in section 69(2)(a) of the Finance Act 1976 (amounts included as emoluments for purposes of director's or higher-paid employment)'.—[Mr. Newton.]

  Clause 69
    MEDICAL INSURANCE
    Amendment made: No. 140, in page 62, line 10, leave out Clause 69.—[Mr. Newton.]
  Clause 70

    INDUSTRIAL BUILDINGS ETC.: INCREASE OF INITIAL ALLOWANCES
    Amendment made: No. 142, in page 62, line 25, at end insert—
    '(1A) A person other than a company may, in making a claim to an initial allowance at the rate applying by virtue of this section, require the initial allowance to be reduced to a specified amount; and a company may, by notice in writing given to the inspector not later than two years after the end of the chargeable period for which an initial allowance at that rate falls to be made, disclaim the allowance or require it to be reduced to a specified amount.'.—[Mr. Newton.]
    1.30 am
    Mr. Anthony Grant: I beg to move amendment No. 144, in page 62, line 25, at end insert—
    '1(A) Paragraph 1 of the said Schedule 6 shall be further amended by substituting for the words "one-fifth" the words "30 per cent." . ' .
    The amendment was tabled by my hon. and learned Friend the Member for Thanet, West (Mr. Rees-Davies), who may wish to take part in the debate later. It merits some debate and consideration. It is designed to give hotels the same increased benefits in terms of allowances as have been enjoyed by other industrial buildings.
    There was a time when the Treasury took the view that hotels were such strange and curious animals that they could not be regarded in the same light as factories or warehouses. That view was sustained for a long time. I had some responsibility in Government for tourism and I had to do substantial battle with Treasury Ministers to try to persuade them that hotels had as big a contribution to make to our economy as did factories. I failed, but we have passed that point and it is accepted that hotels have a right to such allowances.
    All that we are seeking to do is to provide that hotels should have an increase in the allowance which coincides with that given to the rest of industry. I understand that the cost of our modest amendment would be no more than about £3 million—my right hon. Friend the Financial Secretary will correct me if I am wrong—which is puny by any standard and represents only two or three days of subsidy to the British Steel Corporation or any of our other gigantic loss-making outfits.
    The hotel and tourist industries are successes, and we should be encouraging and backing success in our
    1320
    economy. When we debated this matter while the Conservatives were in Opposition, the strongest supporters of the case made in the amendment included my right hon. Friend the Financial Secretary, my hon. Friend the Parliamentary Private Secretary to the Prime Minister and other distinguished right hon. and hon. Members. I hope that my right hon. Friend the Financial Secretary will reflect on that time when he put the case so clearly and lucidly and will agree that times have not changed. I hope that he will reply sympathetically to our proposal.
    Mr. Robert Hicks: The amendment, so ably moved by my hon. Friend the Member for Harrow, Central (Mr. Grant), is essentially about investment and jobs. I should have thought that these two items would be given top priority by the Government. I believe, in particular, that there is a need to maintain equity between industrial building allowances for the manufacturing sector and for the hotel industry. My right hon. and learned Friend the Chancellor of the Exchequer, in his Budget Statement, increased the building allowances for manufacturing from 50 per cent. to 75 per cent. The allowances for hotels remained at 20 per cent. This caused surprise and disappointment within the tourist industry.
    The United Kingdom tourism industry should be given every encouragement. It earns over £4,000 million a year in foreign currency from the 14 million visitors to the country. It provides employment for 2 million people—a fact that should appeal to Opposition Members—representing 6 per cent. of the current work force of the United Kingdom.
    An increase in the industrial building allowance for hotels would give a much-needed stimulus to investment at a critical period. It would provide additional employment not only in the building and construction industry but also in ancillary trades connected with the hotel industry—everything from the manufacture of carpets to the supply of cutlery and all that goes into a new hotel or the extension of existing premises. The British Tourist Authority estimates that by 1985 there will be 15 million visitors to this country, which means that additional bedrooms will be required.
    An increase in the industrial building allowance to 50 per cent., I am told, would involve an immediate cost to the Treasury of £10 million. The cost, in terms of this amendment, would be £3⅓ million. My argument is that the immediate loss of revenue would be more than offset by subsequent savings and revenue to the Treasury. There would be a saving of unemployment benefit and increased revenue to the Treasury from taxation, VAT receipts and national insurance contributions as well as the overall multiplier effect.
    There are also the regional implications. I represent a constituency in the West Country. In 1979, the last year for which figures are available, domestic tourists spent £650 million in the region. Overseas visitors contributed an additional £105 million. The net effect was that tourism contributed £250 million to the economy of the South-West and generated 200,000 jobs in an area of high unemployment.
    Within the South-West region, the further west one goes, from Avon and Gloucester in the east to Devon and Cornwall in the west, the more important the tourism factor becomes in the local economy, and, at the same time, the incidence of unemployment in those areas increases.

    1321
    I should have thought that the principle of assisting a growth industry and a successful industry would appeal to the Government. It is somewhat ironic that it was a Labour Chancellor of the Exchequer who introduced the principle of industrial building allowances for the hotel industry in 1978. It would be logical that our Treasury Ministers, given the current economic climate, should be given every encouragement to back winners now. As its public sector borrowing requirement objective, the Treasury has a figure of £10,500 million. I should have thought that it was virtually impossible to fine-tune that figure to the extent of £10 million one way or the other—or, in terms of the amendment, £3⅓ million one way or the other. Even if the Minister thinks that that is possible, he is showing very little imagination or political nous. Therefore, I hope that he will give every sympathetic consideration to the amendment.
    Mr. W. R. Rees-Davies: I apologise for not being in my place for the opening of this debate. I am delighted that my hon. Friend the Member for Harrow, Central (Mr. Grant) moved the amendment in my absence.
    We are indebted to my hon. Friend the Member for Eastbourne (Mr. Gow) for the beginnings of this whole matter. On 7 June 1978 he moved that we should increase what the Labour Party then proposed. The Labour Party then produced for the first time the suggestion that all new hotels should be classified as industrial buildings.
    A new hotel is purpose-built, in the same way as a factory. The most important concession that I ask the Minister to give tonight is the reiteration that he stands firmly by the fact that what was agreed by all the parties in the House—that hotels should be treated as industrial hereditaments—shall stand.
    It is singularly unfortunate that the Labour Party is not here tonight. [HON. MEMBERS: "Oh"] No, it is not.
    Mr. Cook rose—
    Mr. Rees-Davies: There are only four Labour Members present.
    Mr. Cook: Will the hon. and learned Gentleman give way?
    Mr. Rees-Davies: I shall not give way.
    Mr. Cook rose—
    Mr. Deputy Speaker: Order. If the hon. and learned Member for Thanet, West (Mr. Rees-Davies) does not give way, the hon. Gentleman should resume his seat.
    Mr. Rees-Davies: I shall not give way, because it is singularly unfortunate that as Labour Members were the original promoters of the idea of the right hon. Member for Sheffield, Park (Mr. Mulley), that they should introduce this scheme and that they did so, they should not be here to speak in support of it tonight. I am very sorry that the whole of the Labour Party has gone home tonight and is not prepared to support—
    Mr. Cook: On a point of order, Mr. Deputy Speaker. You have eyes to see who is in the Chamber. I grant that every hon. Member has to be responsible for the content of his own speech, however mistaken, but it surely cannot be beyond your capacity to observe that the Labour Party is represented in the Chamber and has been represented in the Chamber throughout all the hours of tonight and last
    1322
    night, when the hon. and learned Member for Thanet, West (Mr. Rees-Davies) has not been seen in the Chamber.
    Mr. Deputy Speaker: Order. The hon. Gentleman has made his point, but it is not a point of order.
    Mr. Rees-Davies: It was on 7 June—
    1.45 am
    Mr. George Robertson: On a point of order, Mr. Deputy Speaker. Is it in order for the hon. and learned Gentleman to imply that there are no hon.
    Members on the Opposition Benches? I speak as a member of the Scottish Tourist Board for three years and as a member of the development committee of the British Tourist Authority for the same three years, and I have some expertise on the subject. Surely, it cannot be in order for the record to show that the hon. and learned Gentleman says that there are no members of the Labour Party present.
    Mr. Deputy Speaker: I am not responsible for the hon. and learned Gentleman's speech, and if he wants to make his speech he is perfectly at liberty to do so.
    Mr. Austin Mitchell: The hon. and learned Gentleman should get some glasses.
    Mr. Rees-Davies: It is singularly unfortunate that, having regard to the fact that the amendment was originally moved by the Chancellor of the Exchequer on behalf of the Labour Benches, all but four Labour Members should have gone home. Moreover, it was supported by the Liberal Party, none of whose members are here. Nor are there any members of the Social Democrats.
    I read the words of the then Chancellor of the Exchequer, in his Budget Statement, which were quoted in the opening observations of my hon. Friend the Member for Eastbourne:
    "In recent years a substantial increase in tourism has made an important contribution to our invisible export earnings. I therefore propose that any expenditure incurred after today on the construction or extension of an hotel with at least 10 bedrooms should qualify for capital allowances at the rate of 20 per cent. initial allowance and 4 per cent. annual allowance".
    My hon. Friend the Member for Eastbourne then said:
    "The effect of the amendment would be to put hotels in a similar position for capital allowances as is already enjoyed by industrial buildings and structures under the Capital Allowances Act 1968. the Bill as at present drafted provided that there shall be a capital allowance of 20 per cent. only of expenditure, whereas in the case of industrial buildings the expenditure for which an allowance is granted is 50 per cent."—[Official Report, Standing Committee A, 7 June 1978; c. 812.]
    He went on to argue, very eloquently, that it should be increased to 50 per cent.
    The entertaining aspect of all this is that not only is my hon. Friend in the Chamber now but the two persons involved in answering the debate were my hon. and learned Friend the Member for Dover and Deal (Mr. Rees)—the Minister of State—and my right hon. Friend the Member for Blaby (Mr. Lawson)—the Financial Secretary. Moreover, the Whip was my hon. Friend Me Member for Braintree (Mr. Newton). They all fully supported what we are proposing now. I propose to establish that absolutely, because it is the first time in my 25 years' experience in the House that I have ever known a case when all four hon. Members on the same side have been present who supported an amendment that was moved in 1978.

    1323
    I should point out, moreover, that it was totally accepted by the then Government—the present Opposition—yet they are not here to support my right hon. and hon. Friends who are so anxious to obtain the concession that the amendment seeks.
    The Liberals, who were represented by Mr. Pardoe, the then Member for Cornwall, North—which happily is now represented by my hon. Friend, who is also present—were also in favour of the proposal.
    The picture is very clear. It is a matter of principle, and it is an important principle. It was stated that night that it was to be accepted beyond any doubt that this was an industrial question. Hotels were in future to be treated as industrial hereditaments. For that reason, they were able to get capital allowances. It was pointed out by my hon. and learned Friend the Minister of State that as a start they should be treated at 20 per cent. rather than at 50 per cent. The Opposition rightly took the view that they would not press the matter to a Division, as my hon. Friend the Member for Eastbourne wanted.
    My hon. and learned Friend the Member for Dover and Deal said:
    "The Minister of State"—
    that is, of the Labour Party—
    "has been perfectly candid about it. Our argument is this. Do the hotel industry and those dependent on it, including, as my hon. Friend the Member for Braintree (Mr. Newton)—
    that is, the Whip—
    "has perceptibly pointed out, the building industry, deserve an additional shot in the arm now and over the next few years? Speaking for this side of the Committee, we think that they do. Here I draw particularly on my own constituency experience. It may come as a surprise to hon. Gentlemen who represent inland constituencies, particularly north of the Trent, that there are considerable pockets of unemployment in the South-East in the coastal areas. I cannot speak for my hon. Friends who represent Eastbourne and Weston-super-Mare, but it is certainly true in the South-East, in Thanet and parts of East Kent that I am privileged to represent, by any standard there are quite high unemployment figures."
    My hon. and learned Friend went on to deal with the question of a direct contribution to alleviating unemployment, as the amendment does. He said that we should back success. He said:
    "it will draw on the resources of the building industry and the ripple effects may spread outwards."—[Official Report, Standing Committee A, 7 June 1978; c. 812.]
    He went on to deal with other matters.
    The essence of what the Front Bench was saying was that it entirely accepted the principle that hotels should be regarded as being purpose-built. If they are purpose-built, they are the same as factories. Therefore, factories and purpose-built hotels should be treated as if they receive taxable allowances.
    We accept that initially 20 per cent., as against 50 per cent., can be accepted. That is a start. Later that position would be married. What amazed me when I first read the Bill was that there was no reason why the Government should not keep the same rate in pari passu. All that the Government had to do was to increase it from 20 per cent. to 30 per cent. They have rightly put up industrial allowances from 50 per cent. to 75 per cent.
    There is no differentiation between the cases. The rate for industry was put up because of the present trouble that it is in. However, the most successful industry, which can make a good return for the money invested, is the tourist
    1324
    industry. We must put up the rate for the tourist industry from 20 per cent. to 30 per cent. at the same time as raising the industral rate from 50 per cent. to 75 per cent.
    The cost would be nothing in the current year. The effect of the 1978 Act was considerable. First, Ladbroke's went into action. It produced a number of hotels. Each hotel created increased employment and a large increase in the country's income.
    The Mercury hotel and conference centre at Warwick was opened in April 1981, with 160 new employees, 132 bedrooms and 60 conference and syndicate rooms. Having regard to the 20 per cent. allowance, the firm has been able already to start to show a good profit in return for the money that the Labour Government allowed by their Act. That is why I find it so surprising that the Labour Party is not here tonight to support what is obviously an amendment that it would wish to support.
    On 1 July 1981 Ladbroke's opened the Dragonara in Edinburgh, with 130 employees and 142 bedrooms. In September 1980 it opened the Mercury hotel and conference centre at Bracknell, which employs 140 people, with 150 bedrooms and eight conference rooms. The Mercury hotel and conference centre at Leyland also opened in September 1980. It employs 90 people and has 93 bedrooms and seven conference rooms. All those are producing immensely valuable revenue for Britain. They are all producing money that is a good return. They are also producing employment, which is immensely valuable.
    Unfortunately, the debate started badly upstairs. An amendment that was not really suitable was moved to increase the allowance to 50 per cent. My right hon. Friend the Financial Secretary made a statement which, I am sorry to say, must be taken to pieces. It was in reply to a most inadequate debate. That is why I am so delighted that we have the opportunity to debate the matter on the Floor of the House. My right hon. Friend said.
    "I can assure my hon. Friend the Member for Cornwall, North, who raised the point, that in that context the position of hotels will be taken into account in the review of capital allowances. Views that have been expressed in this brief debate will be taken into account by the Government in the framing of the Corporation Tax Green Paper which will come out some time this winter—I hope, before the end of the year."
    Earlier he said:
    "the whole question of capital allowances, including the questions whether there should be several rates, whether there should be discrimination and whether there should be differences, are pre-eminently matters which must be discussed in the Green Paper and the discussion which will follow it. It is just the sort of issue for which the Green Paper is intended."—[Official Report, Standing Committee E, 16 June 1981; c. 715–6.]
    It is nothing of the sort. The issue has already been decided by the House. It was decided absolutely in 1968—with no disagreement from the Conservative Party, the Labour Party or the Liberal Party—that the tourist industry should be regarded as an industry, treated as an industry, and given allowances on that basis. In due course, when finances permit, those allowances should be increased to level them with industry allowances.
    What could be the argument for not increasing the allowances in pari passu today, taking them from 20 per cent. to 30 per cent.? The argument cannot be that that will cost the Government any money this year. It will not. It will not cost them any money until, at the earliest, next year, and probably not until the year after next. Therefore, the only reason can be that they want to wait and see.

    1325
    The danger is that if the matter is to be included for discussion in the Green Paper it will give the Treasury the opportunity to back-track on what it has already agreed should be accepted. If it back-tracks, we may find ourselves in danger of losing the 20 per cent. allowance. The first assurance that I want to hear from my right hon. Friend is that there will be no question of back-tracking on the 20 per cent. allowance. The second assurance that is required is that next year it will be brought into line with industrial allowances, namely, 30 per cent. Those are crucial aspects.
    We ask for those assurances for a simple reason. For many, many years both sides of the House have failed to recognise, as has the Treasury and a large part of the Civil Service, that the one really successful industry in Britain is tourism. It is the one that pays. It is the one in which we back success. It is the one that is really improving. It is the one that has every opportunity of improving. Why do we spend hundreds of millions of pounds backing failures such as British Leyland when a small proportion of that expenditure would bring a good return if it were directed to the tourist industry?
    2 am
    The Opposition Members who are in their places, such as they are, must recognise the force of my argument. My right hon. and hon. Friends recognise that what I am saying is true. We must persuade the Treasury that it is completely wrong and demolish its argument.
    There is no truth in the suggestion that an office building is purpose-built in the same way as a hotel. A hotel is purpose-built to provide accommodation for conferences and to provide bedrooms. Offices may be used for many purposes. However, those who are concerned about offices will ask for the same type of privilege or tax advantage that we are saying should be not only maintained but extended for the tourist industry.
    I have mentioned one of the companies that is involved in the industry. Another example is the Swallow group, which has introduced a first-class hotel close to the M1. It has 183 bedrooms and 150 employees. It may be argued that it is a powerful and rich company. There are other small companies that are not so wealthy and that will not be prepared to invest in the tourist industry unless they have the advantage of a grant.
    I regard this as a vital matter for the tourist industry. That is not only because many of my right hon. and hon. Friends gave an undertaking to Sir Henry Marking that we would seek a debate. The British Tourist Authority and the English Tourist Board regard this as the most important amendment on the Order Paper from their point of view. It was as a result of their representatives coming to the House that the amendment was tabled. It is the indulgence of Mr. Speaker that, notwithstanding a similar amendment being debated in Standing Committee, has presented us with the opportunity of this debate, albeit late at night. However, that is no one's fault.
    We want to ensure that we get from the EEC the vital grants to which I have referred. The grants will go only to areas in industrial regions. If the hotel industry is not regarded as a qualifying industry, we shall not be able to obtain the EEC grants. That is why the amendment and the treatment that the industry receives will be crucial to the future of the industry. That is why there is strong feeling on the Government Benches, which I hoped would be shared in other quarters, that the issue should receive the
    1326
    keenest and closest attention of my right hon. and hon. Friends on the Treasury Bench, who previously supported almost every word that I said on the matter. I hope that they will continue to give their support in Government, following their support when the Conservative Party was in Opposition. I hope that we shall give the tourist industry the support that it badly needs, which will enable it to grow with great success for the benefit of the nation.
    Mr. David Mudd: I intervene briefly to support mainly the points made by my hon. Friend the Member for Bodmin (Mr. Hicks). It is beyond doubt that the tourist industry is for many regions in Britain, particularly Cornwall, our last great industry. It is a labour-intensive industry which provides opportunities to people irrespective of age and of skill. It also undertakes the social responsibility of providing jobs for the disabled.
    We have heard a great deal about the input value of any money made available to the tourist industry in providing more taxation, more national insurance contributions and more VAT, and about its stimulus to the building industry. We should not overlook the fact that if the tourist industry gets the investment that it requires its contributions in rates to the local authorities will not be insignificant.
    Therefore, in terms of jobs created for the underprivileged, the young, the unskilled, and the disabled by the tourist industry, for its bringing the building industry back into operation and for its contribution to rates, I am delighted to support the amendment in the hope that something will be done for the tourist industry of Great Britain.
    Sir Julian Ridsdale: I am glad to support my hon. and learned Friend the Member for Thanet, West (Mr. Rees-Davies). In supporting this amendment in the early hours of the morning, I underline the fact that I believe that in this Budget we should have supported a little more the tourist industry, which, as my hon. and learned Friend the Member for Thanet, West has said, is one of our most successful industries.
    I point out to the Financial Secretary that in some places in the coastal districts there is a high rate of unemployment. We look to this amendment as a pointer of what the Government may be able to do to help the hotel industry, particularly over employment. I was talking yesterday to a hotelier in my constituency. He underlined the fact that, whereas he had kept people permanently employed over last winter, this winter, because of the increasing rate burden, because no help had been given over VAT and because we were not giving help over special development area status, the burdens on the hotel industry will increase and he will not be able to keep people employed but will have to make them casual labour, which means increasing the unemployment rate.
    That is why I hope that we shall hear an encouraging reply from the Financial Secretary, because this amendment is a pointer to help to solve unemployment in the seaside areas, which is becoming acute. It is for that reason particularly that I support my hon. Friend the Member for Harrow, Central (Mr. Grant).
    I am sure that we must do much more nationally to help our tourist and hotel industries. Yesterday I was talking to a great number of hoteliers from all over the country. Their mood was that we should give them more help as their

    1327
    industry is successful. In order to get the tourists here, we should do more than we are doing, because otherwise we shall not be able to earn the exchange.
    I hope, therefore, that the reply will be a pointer to hope for the tourist industry, which at the moment is slightly dubious of the help which the Government are giving.
    Mr. Terence Higgins: For some years I have had the unique distinction of being president of the Worthing Hotel and Guest House Association. It is therefore with some enthusiasm that I rise to support the case which has been put forward by my hon. Friend the Member for Harrow, Central (Mr. Grant).
    The tourist industry is important for Worthing and is an important source of employment. It is a reason why the town is prosperous. For that reason, it is right that the industry should be encouraged. I studied with interest the report of the Committee stage in which a similar amendment was debated. The answer which the Financial Secretary gave on that occasion was not encouraging. If my right hon. Friend still has "Resist" written at the top of his brief, I feel that he will need to be far more convincing than he was on that occasion if he is to carry the House with him.
    I want to make a number of specific points, dealing first with the arguments that might be deployed against the amendment and then with positive points in favour of it. One of the arguments that could have been deployed against the amendment some years ago was what might be called "the thin end of the wedge" argument. That was to the effect that if we went along with this sort of allowance for hotels as well as industrial buildings, there would be other structures that people would feel had a similar claim. As has been pointed out, that argument is no longer valid. The point of principle has long since disappeared because there are already allowances for hotels, albeit at a much lower level than is the case for industrial buildings. There is no point of principle involved here and no case for the "thin end of the wedge" argument that would encourage my right hon. Friend to resist the amendment. It is purely a question of quantity.
    The second argument always used on these occassions is that of cost. I do not think that the cost of this amendment is such that one could consider that it would wreck my right hon. and learned Friend's medium-term financial strategy. The cost is wholly within the possible margins of error in any computation of this kind and trivial compared with many of the other items on which we are quite happy to expend revenue or give allowances for. It cannot be argued that there is any ground for resisting the amendment on grounds of cost.
    An argument that my right hon. Friend deployed in Committee was to the effect that we ought not to make a change at this stage because there is to be a Green Paper on corporation tax that will include the question of capital allowances of this kind. Having read the reports of the Committee proceedings, I found a certain amount of inconsistency between the point my right hon. Friend made in replying to the debate on hotels at column 716 of the Official Report, where he argued essentially that we must wait for the Green Paper, and, on the other hand, the argument deployed at column 708, where he discussed industrial allowances, when he said:
    "We thought that the Green Paper which will come out this winter should be the proper means for considering this matter and
    1328
    for having a full discussion. At the same time, that should not preclude us from giving some assistance now to investment and to the construction industry. That is why the clause, which I commend to the Committee, is in the Bill."—[Official Report, Standing Committee E, 16 June 1981; c. 708.]
    If that is so for the construction industry, the Green Paper argument cannot be a valid argument for failing to do something for hotels as well.
    Those are the three main arguments against the amendment and they are all clearly invalid. That being the case, we need to look at the positive angles. As a result of the Government's policies, there has been a significant reduction in overmanning in industry. It is to be hoped that when some economic upturn takes place we shall find, at that stage, that it is possible for manufacturing industry to spread its overheads, cut its unit costs and so on. But there is still a great need on the supply side of the economy, which my right hon. Friend is keen to stress. There is also a need not simply to improve the overheads position but to get new investment.
    I say to my right hon. Friend, against the present economic background, that the clause that we are seeking to amend will not have a very significant impact on investment in manufacturing industry. On the other hand, the amendment might well have a significant impact on investment in the hotel industry because the situation there is not the same as it is in manufacturing industry and, I am happy to say, nowhere near as depressed, generally speaking.
    The industry has, of course, suffered significantly, as have industry and exports generally, from the exchange rate. We have seen a significant fall in the sterling exchange rate—particulary in relation to the dollar—so that it is reasonable to suppose that if this continues over the next year or 18 months we shall see an upturn in the tourist industry compared to this year. If that is so, and if we are to compete in a very intensive market for tourism world-wide, it is important that we should have hotels that are able to deal with the situation and able to invest in new products. That reinforces the argument for accepting the amendment.
    It is apparent that there are no valid arguments against the amendment, and there are positive arguments in its favour. It would encourage investment and employment, improve our balance of payments, which after the recent slide in sterling needs strenghtening—I would not wish to see the sterling exchange rate fall significantly further—and generally help the economy.
    The tourist industry makes a significant contribution to our economy, and we should encourage it. I therefore hope that the Minister's reply will be far more forthcoming than the reply that we had in Committee.
    2.15 am
    Mr. Peter Emery: The Government are fortunate that it is 2.15 am. Earlier in the day speeches would have been much longer and the Government may have been pressed harder.
    In my constituency I have three times as many hotels as factories; four times more people work in the hotel industry than in manufacturing industry. The hotel industry does not understand why it should not be treated in the same way as industry generally. The variation has never been understood. In Devon and the South-West it is imperative for employment and particularly for work in the

    1329
    construction industry that our wealth-creating industries should be treated in the same way as manufacturing industry.
    The Minister must convince the House and the hotel industry that the Treasury considers that that industry is as important as manufacturing. That is not the impression at present. I repeat the warning given by my right hon. Friend the Member for Worthing (Mr. Higgins). We wish to see the Treasury's approach to the economy work and do not wish to hamper my right hon. and learned Friend in his general intent, but we do not feel that £3 million, which could greatly help a major industry certainly in the South-West, should be taken away by the Treasury.
    I therefore hope that the Minister will seriously consider the strong pleas made from the Benches behind him.
    Mr. Cook: As you will be aware, Mr. Deputy Speaker, it is my custom, along with many of my colleagues, to attend the Labour Party conference once a year. You may recollect—although I know that these days you are not supposed to bring these matters to the forefront of your mind—that there is a rhetorical trick which never fails to produce a round of applause and which is practised by speakers seasoned in how to manipulate conference. It is to say that an issue is so important that it is tragic that so many delegates have chosen not to be present. Without fail, that line provokes a round of applause from those present who feel smug and complacent about the fact that they are there on such an important issue.
    I do not know when the hon. and learned Member for Thanet, West (Mr. Rees-Davies) attended a Labour Party conference, but plainly he has captured exactly the same rhetorical trick. I do not wish to detain the House to any great extent by responding to the red herring that the hon. and learned Gentleman raised on the question of attendance, but it is important to put on record that we have been debating the Finance Bill for close on 48 hours, in the course of which we have discussed a wide range of matters. Yesterday we debated at some length the issue of reduction of national insurance surcharge contributions, which would have had given a far greater stimulus to the finances of the. hotel industry than the modest proposals before us now. We also debated the major issue of tax evasion and avoidance. Some hours ago, we debated the taxation of the unemployed and those on strike. We have had separate debates on the Government's failure to uprate, for the first time since 1968, any personal allowances.
    In none of those debates was there a single contribution from the Government Back Benches. Nor do I recollect the hon. and learned Member for Thanet, West being present for one of those debates. Indeed, as he was obliged to point out, he even arrived late for his own debate. It is therefore not for him to bandy words about who was present to hear him speak.
    The Opposition recognise—although Conservative hon. Member; appear to doubt this—the important role of the hotel industry. I come from a city based mainly on
    1330
    service industries. There is comparatively little manufacturing content in the labour force of Edinburgh. It is primarily a service industry city, based on commerce, the Civil Service, insurance companies and the hotel industry. I therefore recognise the very important role of the service industries in our economy. recognise in particular that one of the advantages of the tourist trade is that it is labour intensive. That aspect must appeal to all hon. Members in view of the present recession.
    The right hon. Member for Worthing (Mr. Higgins) said that British industry had been going through a period of welcome reduction in overmanning. I must put it to him that we have in fact been going through a period of unwelcome reduction in manning, in the course of which the cost per unit output has increased rather than diminished. As a result of that reduction, we now have a very large pool of surplus labour for which work must be found. I recognise that one of the ways to find that work is to consider those industries which are labour intensive to see how they may be assisted.
    I accept that the industry deserves assistance. In all humility, however, I should have thought that one way to assist it would have been for Conservative Members who are so keen to speak in this debate to support the Opposition's proposal last night to cut the national insurance surcharge. That was, after all, an objective in the manifesto on which every one of them stood for election only two years ago
    We must consider, however, the proposal in the amendment and whether the way to assist the industry is through an improvement in capital allowances. The Financial Secretary will be aware that in Committee I expressed a certain scepticism about the efficacy of capital allowances. There are a number of reasons for being sceptical about the effectiveness of such allowances in stimulating further investment. One obvious macroeconomic reason for being doubtful about it is the fact that we now have a staggering total of £30 billion of unused capital allowances being rolled forward from year to year because industry and commerce cannot find sufficient profit to absorb the mammoth capital allowances that it has already acquired.
    Mr. Rees-Davies rose—
    Mr. Cook: If the hon. and learned Gentleman will allow me to finish my point, I will happily give way to him, although he was surprisingly reluctant to give way to hon. Members to whom he referred in his own speech.
    Because of that very large sum and the tax exhaustion that it has produced, it is very difficult to believe that in those areas where there has been investment which has attracted those capital allowances the allowances played a significant part in the decision of those who decided to undertake that investment.
    Mr. Rees-Davies: Is the case that the hon. Gentleman is making applicable to the tourist industry? My information is that the 20 per cent. allowances are being taken up by the tourist industry and being effectively applied. Indeed, I illustrated that in my speech. If the amount was increased, the allowances would be taken up. What the hon. Gentleman is saying about other capital allowances outside the tourist industry may well be true.
    Mr. Cook: My point is that it is obvious that investment has gone ahead on the part of companies that

    1331
    plainly did not have sufficient taxable profits in order to set the capital allowance gained by investment against them. That suggests that for many industries and commercial concerns capital allowances were not the determining factor in making investment decisions. I should not have thought that those who ran hotels would be so different from those who make other commercial judgments.
    The hon. and learned Gentleman referred to several hotels that have been constructed since 1978. He will admit—because he is fair-minded—that the difficulty in working out the extent to which the 20 per cent. capital allowance played a part in stimulating that investment is in knowing how many of those hotels would have been built if the 20 per cent. capital allowance had not been introduced. The hon. and learned Gentleman referred to the Dragonara hotel in Edinburgh. I can claim some knowledge of what goes on in Edinburgh. I drive past that site every time I return home from my constituency. It is an attractive site near a pleasant part of the centre of Edinburgh. If the Boundary Commissioners have their way, it will fall in my constituency. I am not surprised that a hotel company chose that site to develop. I can also say why it chose to do so in 1978. The building on the site burnt to the ground in 1978 and the site became available. Therefore, it is not immediately apparent that it was the introduction of a 20 per cent. capital allowance in 1978 that led to that development.
    That is the nub of the problem facing the Financial Secretary. If he increases capital allowances, they will be taken up by those who will carry out developments. I should be amazed if they were not taken up by those contemplating investment. The right hon. Gentleman must address himself to the question whether an additional 10 per cent. subsidy through the increase in the capital allowance would of itself stimulate developments that would not otherwise take place.
    It has been said that as a result of the reduction in the value of the pound against other currencies there might be an increase in our tourist trade. The extent of the reduction in the value of the pound was rather overstated. That reduction is primarily against the dollar. There is little sign of the necessary change between the pound and the other currencies that we must compete with. However, I accept that if there were such a reduction against other currencies there would be an increase in trade. If I were a hotelier, I would be looking for a reduction in the pound against other currencies rather than an additional building allowance. However, if I were contemplating further investment, the factor that would count would not be whether there was the prospect of an additional 10 per cent. capital allowance from the Treasury but whether I believed that additional trade was to hand to justify that investment and to give me a return on it that I could set the additional 10 per cent. capital allowance against.
    Mr. Tim Eggar: Is the hon. Gentleman prepared to apply the same logic to the suggestion of a reduction in the capital allowance available to manufacturing industry?
    Mr. Cook: If the hon. Gentleman consults Hansard, he will find that in Committee I expressed the same scepticism over the proposal to increase the capital allowance for industrial buildings. We did not press the
    1332
    matter to a Division, because there are so few scraps in the Bill to stimulate industry and construction that we were loth to turn down the one sop offered. If I were in the Financial Secretary's shoes, I would seek more efficacious ways of restimulating the economy and manufacturing industry.
    2.30 am
    I do not know what is in the Financial Secretary's mind about the amendment, but he did not accept the parallel amendment so ably moved by the hon. Member for Cornwall, North (Mr. Neale) in Committee. As no hon. Member has paid tribute to the work of the hon. Member for Cornwall, North, perhaps I may pay tribute to the fact that he raised this matter in Committee and spoke eloquently to it. The Financial Secaretary did not accept that amendment and I suspect that he will not be minded to accept this amendment now. If he accepts it, we should look to him to remove from our minds our doubts about whether this increase in the capital allowance will make the slightest difference to the amount of investment that we can expect in the forthcoming year.
    Mr. Tim Sainsbury: In his interesting speech the hon. Member for Edinburgh, Central (Mr. Cook) missed the point that has been made by my right hon. and hon. Friends. The amendment is concerned with discrimination against an industry. It is not equal treatment that the hotel industry should receive such an inadequate allowance, which is not increased when the allowance for the rest of industry is increased.
    The tourist industry is internationally competitive. It is not just that the domestic tourist has the alternative—of which we are conscious in my constituency, where on a clear day from the higher parts one can see the mainland of Europe—of going to France or the Low Countries that are close by and in many cases as short a journey as he makes to Hove or Brighton. The international tourist has a wide-ranging choice of destinations. In addition, in these days the important and valuable conference trade has a wider choice of destinations in a number of countries. If we do not allow our hotels and conference facilities to be as up to date as those in other countries, we shall lose valuable employment and much income to areas that are in need of that help.
    I hope that if my right hon. Friend is unable to provide immediate help to my right hon. and hon. Friends he will carefully consider the international comparisons that affect the hotel industry and decide whether, on an international basis, it can be said that our hotels are being treated fairly vis-a-vis their international competitors.
    Mr. Robert Adley: I first declare an interest as marketing consultant to Commonwealth Holiday Inns, of Canada, and a member of the national council of the British Hotels, Restaurants and Caterers Association, which I met today in company with a number of my right hon. and hon. Friends.
    It is the view of many hoteliers that capital allowances would be a helpful incentive to creating new construction in the hotel industry. We are talking about continuing the battle to win recognition for the importance of tourism within the British economy—put simply and succinctly by the chairman of the English Tourist Board in his foreword to the ETB annual report "Tourism is Jobs". To a waiter, his job is just as important as is the job of a welder to a welder.

    1333
    The fact that so many of us are here at this hour in the morning—as my hon. Friend the Member for Honiton (Mr. Emery) said—should impress on my right hon. Friend the importance that many of us attach to the subject. In Committee my hon. Friend made a point about a Green Paper. My hon. Friend the Member for Bodmin (Mr. Hicks) and I received almost identical assurances from Lord Cockfield when we discussed this matter with him over a year ago.
    The question that the industry asks the Government is: was it a deliberate act of policy on the part of the Government to widen the gap in investment allowances between hotels and manufacturing industries? If the answer to that is "Yes", my right hon. Friend should not be surprised [f many people in the hotel and catering industry get the impression that the Government are not specially concerned with the welfare of the industry and do not give it a particularly high priority.
    The industry is not begging for handouts; it is asking for justice. We talk about the cost of industrial building allowances, but there is no cost unless the investment takes place. The Government should, in effect, be asking the industry "This project might have cost £10 million if the proposals to increase the allowances to 50 per cent. had been put forward. What can you do to see that it costs £100 million?" If it were to cost £100 million, it would mean that there was a massive increase in construction and investment in the hotel industry, and presumably we are all concerned about the need to create more jobs.
    I close with a quotation from a letter that I have received today from Mr. Clive Derby, the chief executive of the British Hotels, Restaurants and Caterers Association:
    "I find it inexpressibly sad that this Government, blessed with an industry that, given a decent level of IBAs, would find itself able and willing to invest and provide more jobs, turns its back and seeks refuge by consigning the question of IBAs to yet another Green Paper. Do they want to encourage investment and job creation, or don't they?"
    I ask the same question of my right hon. Friend.
    Mr. Andrew Bowden: The industry has done very well at a time of deep international and home recession. It now needs a positive act by the Government to show their future confidence and belief in the expansion and development of the industry. We know that there has been a significant drop in employment in manufacturing industry over the last 10 years, whereas within the hotel and tourist industry there has been a real and positive increase.
    Indeed, the Prime Minister recently stressed the importance of tourism as a job creator. I know that my hon. Friend the Member for Eastbourne (Mr. Gow) is well aware that in Eastbourne alone tourism is worth £50 million to his town. It is worth even more to Brighton. The tourist industry is vital to many areas. My own town of Brighton has shown its faith and belief in the future of the industry by making a massive investment of ratepayers' money in conference centres and facilities. We ask for help and support from the Government in seeing this through in the years ahead.
    Tourism and the hotel industry as a whole must be utilised to achieve maximum employment and financial benefit, for the areas concerned and for the nation as a whole. All we ask is for a little practical help from the Government.
    Mr. David Gilroy Bevan: In order not to draw wrath—unlike my hon. and learned Friend the Member for Thanet, West (Mr. Rees Davies)—I wish to pay tribute to the packed Opposition Benches and not to criticise in any way whatever.
    I am not a Member representing a seaside constituency. There are no beaches in Birmingham, to the best of my knowledge, although hon. Members will be fortified in the knowledge that my constituency of Yardley has the largest pub in Europe. Nevertheless, we in the West Midlands are fast becoming a most important tourist centre—and the gateway to other tourist centres.
    We have an avenue of approach by air to Birmingham airport, which is being enlarged at a cost of some £50 million. We have the railway line to Birmingham International, with a fast train service from London. We are the centre of the motorway network and have the National Exhibition Centre. We serve all the central counties of England and Stratford, Warwick, Kenilworth, Malvern and places much further away.
    It is essential that in the hotel business we retain the industrial aspect. If we do not ensure that the grants are on an industrial basis, we may put in jeopardy the grants that this country receives from the EEC, which could be dangerous. Therefore, it is axiomatic that the amendment should be made.Tourism is one of our greatest money-spinners, making over £4,000 million a year and bringing about 12 million visitors to Britain every year. It is growing fast all the time.
    One hopes that before long the assisted areas will be spread out more evenly, that they will not be centred as they are now but will be enlarged to include other areas, especially the West Midlands, where unemployment is growing at three times the rate of anywhere else in the United Kingdom. In Birmingham, which is not used to unemployment, it is 13·4 per cent.
    We are not being unreasonable in putting forward the amendment. We are not suggesting an increase to 50 per cent., although some might consider that that would be more appropriate. We suggest a modest increase in the initial stages, from 20 to 30 per cent. Surely that must be acceptable to my right hon. Friend.
    Our area is desperately short of hotels and hotel rooms. It needs extra rooms, but without encouragement investment will not be channelled into this vital currency-earning and job-providing sector.
    There is a case for extending this provision into self-catering, for making it apply to cottages, villas and permanent apartments. At present it applies only to hotels with 10 rooms or more. There is a case for reducing the starting point to four rooms.
    Finally, the return on grants for tourism is far, far, far better than the return on grants to other industries.
    Mr. Keith Best: I can claim no interest, other than having had lunch—a lunch that has receded into distant history—with the British Hotels, Restaurants and Caterers Association.
    In Wales tourism is the second most important industry after manufacturing. Indeed, in many parts of the Principality it is the major growth industry.
    The amendment is necessary for the development of tourism. It is in line with previous legislation, and it is undoubtedly fair to tourism, which is why it has received so much support tonight.

    1335
    I find it difficult to follow the logic of the hon. Member for Edinburgh, Central (Mr. Cook), who concluded that the amendment should not be supported because there was not a full take-up of certain industrial building allowances on the manufacturing side. My hon. and learned Friend the Member for Thanet, West (Mr. Rees-Davies) pointed out that that was not true of the tourist trade.
    The hon. Gentleman said that if he were a hotelier he would see whether the business would justify the take-up of the building allowance for the hotel, but the very fact that the allowances are being taken up must surely mean that hoteliers see that there will be enough business. If the hon. Gentleman reflects on the matter he will see that he should support the amendment rather than pour cold water on it.
    2.45 am
    My hon. Friend the Member for Harrow, Central (Mr.Grant) and my hon. and learned Friend the Member for Thanet, West said that most members of the Government supported this excellent proposal in the past. I wish to refer to one who has been missed out. It would be unfair not to mention my right hon. Friend the Minister for Consumer Affairs, who said in a recent interview with British Travel News:
    "It is vitally important in the creation of jobs throughout the country and in the contribution it makes to the quality of life, both for our own people and for visitors from abroad. The fact is that tourism must be accorded its full status as an industry of absolutely major importance. I feel that people in a country which has, in times historical, relied tremendously on manufacturing industry must now recognise that we are moving into a different world—a world in which service industries are growing and tourism itself will become increasingly important as leisure time increases."
    If my right hon. Friend were here, she would no doubt be arguing for more than we are asking for. We are not asking for the world; we are asking for a modest amount. We ask only that my right hon. Friend the Financial Secretary should welcome the amendment because he realises that in a full year it will cost no more than what the Government have to spend on 500 people being unemployed.
    Mr. Woolmer: Conservative Members have made a number of gibes about my hon. Friends, but I recall that when we were discussing the uprating of unemployment benefits and the rebate of heavy oil duty for industry the Government Benches were virtually empty.
    I agree that there is a case for treating tourism in parallel with other important parts of the economy. It is an important part of the economic system, but I remind Conservative Members that if we have no industry and no jobs tourism will be irrelevant. People will not be able to take holidays. The larger part of our tourism still consists of British people taking holidays in Britain. When a plea is made for exceptional treatment for hotels, it should be remembered that most of those using hotels are our own workers.
    I would be more impressed by the arguments of Conservative Members if they pleaded to make sure that people had jobs in industry so that they could take holidays in hotels. I take the greatest exception to the gibes of Conservative Members when they do not bother to turn up to support measures to ensure that our workers are in jobs and can therefore take holidays in the hotels to which hon. Members wish to give tax help.
    1336
    Our tourist has suffered the same problem as manufacturing industry—the over-valued pound. Foreign tourists have found this country extremely expensive in the past year or two. The tourist industry complains that the pound has been greatly over-valued. This has meant high hotel and meal prices and high living costs. Our own working people have taken cheaper holidays abroad not because the hotel industry lacked incentive but because of the over-valued pound.
    Conservative Members who wish to encourage our own industry and who also wish to persuade our own tourists to stay at home should be supporting policy changes aimed at creating jobs that will enable workers to afford a holiday. They should also be calling for a change in the value of the pound so that people find a holiday in this country worth while. The size of the turnout on the Tory Benches at this time of night in support of a marginal change in tax allowances is sheer hypocrisy. I wish only that they had turned out in such numbers to support the Opposition's proposals on the national insurance surcharge and efforts to change the direction of Government policies. Instead, the House has heard them bleating about an issue described by the right hon. Member for Worthing (Mr.Higgins), who has previously deplored any switch in the direction of Government policy, as a small change. I find this situation remarkable.
    Hon. Members know that the Minister will not support them. They should have been supporting proposals for a change of direction by the Government, a drop in the value of the pound and an increase in jobs—all moves that would have produced greater benefits for the hotel and tourist industry. If they wish to press their case they should support the Opposition on Monday night to ensure the creation of real jobs rather than indulge in synthetic anger at this time of the morning in attempt to produce phoney jobs.
    Mr. John MacKay: I wish to add a Scottish voice in support of the amendment. Tourism is extremely important to Scotland, particularly the Highlands. Without wishing to become involved in an argument with the hon. Member for Batley and Morley (Mr. Woolmer), I can say that these jobs cannot possibly be described as phoney. They are every bit as real as jobs in any industry. The proposal put by my hon. Friends stands on its own merit. The tourist industry feels that Governments of all colours over the years have discriminated against the industry in comparison with other industries.
    When we are increasing the allownace from 50 per cent. to 75 per cent. in other industries, we should increase the allowance in the tourist industry from 20 per cent. to 30 per cent. I hope that my right hon. Friend will take this matter on board. This is an important industry. It requires encouragement and support.
    Mrs. Elaine Kellett-Bowman: In answer to the hon. Member for Batley and Morley (Mr. Woolmer), perhaps I may say that tourism is not confined to the South. It is extremely important to the North-West, particularly to Lancaster and Morecambe. We are very interested in getting an improvement in this regard.
    Mr. Lawson: If I am a little brief, at this hour of night, in dealing with this important matter, I hope that it will not be considered a discourtesy to my hon. Friend the Member for Harrow, Central (Mr. Grant) or to those of my right hon. and hon. Friends who have spoken in the debate, all

    1337
    of whose speeches I have listened to most assiduously. I have taken great note of the points that they have made. Nor, I hope, will my relative brevity, which arises from a sensitivity to the hour, be misconstrued in any way as a reflection on the Government's approach to the tourist industry. We regard it as an industry of the first importance.
    My hon. and learned Friend the Member for Thanet, West (Mr. Rees-Davies) said one or two things that need to be corrected. In his best forensic manner he attempted to make the case that all of us who are sitting on the Treasury Bench had already committed ourselves to everything that he was proposing. That is not so. If he rereads the Hansard report of the debates in the Committee stage of the Finance Bill in 1978, to which he referred, he will see that I, for one, made no reference to the percentage of industrial building allowance that I considered to be appropriate for hotels, and that what happened on that occasion was that my hon. Friend the Member for Eastbourne (Mr. Gow) initiated a very useful and worthwhile debate but did not press his amendment to a Division. It is right that that should be firmly on record.
    At that time we welcomed the 20 per cent. industrial building allowance introduced for the qualifying hotels by the previous Government.
    The problem with the amendment that is before us is one not merely of the hotel allowance; it deals with the whole question of capital allowances. My hon. and learned Friend the Member for Thanet, West said "There is something special about hotels. They are purpose-built." So are theatres and cinemas and so are most shops. So are most of the buildings in which service industries reside. My hon. Friend the Member for Anglesey (Mr. Best) pointed to the importance of service industries generally. There are many distinctions in industry at present. For example, the industrial building allowance is of particular importance to manufacturing, and it is now increased from 50 per cent. to 75 per cent. Qualifying hotels attract 20 per cent. Agricultural buildings—these have not been mentioned—attract a 20 per cent. allowance. That has not been increased in this Finance Bill. There is also a 40 per cent. initial allowance for mining works. Again, that has been kept at 40 per cent. in this Budget. So it is not true that hotels have been specially discriminated against. I utterly repudiate that.
    3 am
    We received many representations that manufacturing industry had suffered as a result of the recession and we were told that there was a strong case for doing something to help. We therefore decided, in advance of the Green Paper, to increase the industrial building allowance for manufacturing industry. Now we are accused of widening the gap, not merely against hotels but against all the other categories. Hotels have not been disadvantaged in any way. The whole idea of widening the gap—that if an advantage is given to one section of the economy it should automatically be given to every other section—is a rather un-Conservative attitude to the manner in which we should conduct our affairs. That is the attitude that I would expect of Opposition Members.
    We accept that the whole question of capital allowances needs to be looked at fully. I said in Committee and I repeat now that we announced some time ago—it has not suddenly been dreamt up to deal with the amendment—that there is to be a Green Paper on
    1338
    corporation tax, and a major part of it will deal with the whole question of capital allowances. There are different rates for different kinds of buildings—and indeed, no allowance at all for commercial buildings generally.
    The House may think that that is not a matter of any great controversy, but that is not true. Only a couple of years ago, in proceedings on the Finance Bill, my right hon. Friend the Member for Crosby (Sir G. Page) put forward a new clause to give industrial building allowances to the retailing industry. I believe that my hon. Friend the Member for Hove (Mr. Sainsbury) spoke eloquently in support of that amendment. Now he is talking about hotels. The issue is much wider than that, and should be considered properly in the Green Paper. That Green Paper will lead to a full discussion, on the basis of which the Government will take their decisions. It is premature to do so now. What has been said in this debate will be borne in mind by the Government.
    My hon. and learned Friend the Member for Thanet, West asked me for an assurance that the Government would not do away with the industrial building allowance for hotels, following the Green Paper. I can give him that assurance. The Government have no intention of withdrawing the 20 per cent. allowance for hotels. As to whether there should be any improvement for the other categories of service industries, for which a strong case can be made, that is something that will have to await the Green Paper. I have given the only assurance that I can give at this stage. I assure the House and my right hon. and hon. Friends that these matters will be fully considered in the Green Paper and in the discussions that follow that paper. On the basis of that assurance, I therefore hope any hon. Friend will ask leave to withdraw the amendment.
    Mr. Rees-Davies: I appreciate what my right hon. Friend said, but I do not think that it is sufficient. I therefore ask my right hon. and hon. Friends to vote on the amendment.
    Mr. Deputy Speaker: It is up to the hon. Member for Harrow, Central (Mr. Grant) to decide, because he moved the amendment.
    Amendment negatived.
    Amendments made: No. 145, in page 62, line 27, leave out '; and' and insert
    'and to expenditure which by virtue of section 5(1) of the said Act of 1968 (purchase of unused buildings or structures) is deemed to have been incurred after that date; but'.
    No. 146, in page 62, line 30, leave out from first 'of' to end of line 32 and insert
    'that Act (expenditure incurred before trade begins): .—[Mr. Lawson.]
    Sir William Clark: We have now been debating for over 10 hours. I am delighted that we have had audience participation at this late hour. I have no doubt that most hon. Members have been waiting for amendment No. 147. Since the Government have accepted the principle in that amendment and have tabled their own amendment No. 149, I do not intend to move amendment No. 147.

  Clause 76

    EMIGRATION OF DONEE
    Amendments made: No. 149, in page 68, line 30, at end insert—
    '(3A) Where the relevant disposal was made to an individual, subsection (1) above shall not apply by reason of his becoming

    1339
    neither resident nor ordinarily resident more than six years after the end of the year of assessment in which the relevant disposal was made.
    (3B) Subsection (1) above shall not apply where the relevant disposal was made to an individual and—

    (a) the reason for his becoming neither resident nor ordinarily resident in the United Kingdom is that he works in an employment or office all the duties of which are performed outside the United Kingdom, and

    (b) he again becomes resident or ordinarily resident in the United Kingdom within the period of three years from the time when he ceases to be so, without having meanwhile disposed of the asset in question;

    and accordingly no assessment shall be made by virtue of subsection (1) above before the end of the said period of three years in any case where the condition in paragraph (a) above is, and the condition in paragraph (b) above may be, satisfied.
    (3C) For the purposes of subsection (3B) above a person shall be taken to have disposed of an asset if he has made a disposal in connection with which the whole or part of the held-over gain on the relevant disposal would, had he been resident in the United Kingdom, have been represented by a reduction made in accordance with section 79(1)(b) of the Finance Act 1980; and subsection (3) above shall have effect for the purposes of this subsection as it has effect for the purposes of subsection (2) above.'.
    No. 151, in page 68, leave out lines 37 to 43 and insert—
    '(5) No assessment shall be made under subsection (4) above more than six years after the end of the year of assessment in which the relevant disposal was made.'.—[Mr. Peter Rees.]

    PROVISIONS SUPPLEMENTARY TO SECTIONS 77 TO 79
    Amendments made: No. 225, in page 72, line 3, at end insert—
    '(2A) The fact that the whole or part of a benefit is by virtue of section 44(2)(b) above treated as the recipient's income for a year of assessment after that in which it is received—

    (a) shall not prevent the benefit or that part of it being treated for the purposes of sections 77 to 79 above as a capital payment in relation to any year of assessment earlier than that in which it is treated as his income; but

    (b) shall preclude its being treated for those purposes as a capital payment in relation to that or any later year of assessment.'.

    No. 152, in page 72, line 14, leave out 'otherwise' and insert
    'is otherwise paid or applied'.
    No. 153, in page 72, line 16, leave out from 'direction' to end of line 18.
    No. 154, in page 72, line 18, at end add—
    '(5) Section 29(3) of the Capital Gains Tax Act 1979 (losses accruing to non-residents not to be allowable losses) shall not prevent losses accruing to trustees in a year of assessment for which section 77 above or section 17 of that Act applied to the settlement from being allowed as a deduction from chargeable gains accruing in any later year beginning after 5 April 1981 (so far as they have not previously been set against gains for the purposes of a computation under either of those sections or otherwise).'.—[Mr. Peter Rees.]

  Clause 87

    MARKET VALUE
    Sir William Clark: I beg to move amendment No. 155, in page 76, line 26, leave out from beginning to end of line 10 on page 77 and insert—
    (2) Subsection (1) above shall no, apply to the acquisition of an asset if—

    (a) there is no corresponding disposal of it, and

    1340

    (b) there is no consideration in money or money's worth or the consideration is of an amount or value lower than the market value of the asset.'.

    Mr. Deputy Speaker (Mr. Bryant Godman Irvine): With this we may discuss the following amendments:
    Government amendment No. 156.
    No. 157, in page 76, line 34, at end insert—
    '(3) Where a company acquires shares or securities of another company, which is controlled by it, the provisions of subsection (1) shall not apply except where the main purpose, or one of the main purposes, of the transaction is the avoidance of liability to capital gains tax or corporation tax.'.
    No. 262, in page 76, line 38, at end insert
    '; but in such a case both the disposal and the acquisition shall, subject to the provisions of this Act, be deemed to be for a consideration equal to:

    (a) the actual consideration (if any) or, if there is none,

    (b) such an amount as would secure that neither a gain nor a loss would accrue to the excluded person making the disposal'.

    Government amendments Nos. 158 and 159.
    Mr. Peter Rees: I hope that my hon. Friend's point is adequately covered by amendments Nos. 156 and 158, which I commend to the House.
    Mr. Deputy Speaker: We are dealing with amendment No. 155.
    Sir William Clark: I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Amendments made: No. 156, in page 76, line 26, after '(2)', insert
    'Except in the case specified in subsection (3A) below'.
    No. 158, in page 76, line 38, at end insert—
    '(3A) The exception referred to in subsection (2) above is the acquisition by an individual of tangible movable property or currency in circumstances where there is a corresponding disposal by an individual who is neither resident nor ordinarily resident in the United Kingdom; and for this purpose "tangible movable property" does not include commodities of a kind dealt with on a terminal market, or a mere right in or over any property.'.
    No. 159, in page 77, line 10, at end insert—
    '(1A) In section 32 of the Capital Gains Tax Act 1979 (allowance of expenditure in computation of gains) after subsection (4) there shall be added—
    "(5) Where—

    (a) a person acquires an asset for no consideration in money or money's worth or for a consideration of an amount or value lower than the market value of the asset, and is not treated under any provision of this Act as acquiring it for a consideration other than the actual consideration, and

    (b) there is a corresponding disposal of the asset by a person who is neither resident nor ordinarily resident in the United Kingdom, and

    (c) a charge to income tax, corporation tax or capital gains tax arises in respect of the acquisition,

    the sums allowable under this section as a deduction in the computation made on the first-mentioned person's disposal of the asset shall include a sum equal to the amount in respect of which the charge arises.
    (6) The condition in paragraph (c) of subsection (5) above shall be taken to be satisfied where under section 77(3) of the Finance Act 1981 chargeable gains are treated as accruing to a person in any year by reason of his acquisition of an asset in that or an earlier year; and the reference in subsection (5) above to the amount in respect of which the charge arises shall be taken to be a reference to the amount of the gains treated as accruing to him.".'.—[Mr. Peter Rees.]

  Clause 88

    CONSIDERATION ON REORGANISATION OF SHARE CAPITAL ETC
    Sir William Clark: I beg to move amendment No. 161, in page '77, line 36, at end add
    'but nothing in this proviso shall apply where the reorganisation was effected in relation to shares of a company which are quoted on a recognised stock exchange'.
    This is a capital gains tax matter on the reorganisation of capital. The amendment is intended to take the stock market rights issues outside the clause. I know that my hon. and learned Friend the Minister is well seized of the point. There does not appear to be any reason why stock market rights issues should not be allowed to take place on normal terms, so that the price paid for rights shares becomes base value for tax purposes.
    Mr. Peter Rees: As the House would expect, my hon. Friend raises a point of great importance. I hope that, on reflection, he will feel that the principle of his amendment is met adequately by the insertion of the words
    "otherwise than by way of a bargain made at arm's length",
    which I proposed in Committee and which were accepted. I hope that on that basis he will withdraw the amendment.
    Sir William Clark: In view of that explanation, I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.

  Clause 90

    TEN-YEAR CUMULATION PERIOD
    Mr. Robert Sheldon: I beg to move amendment No. 165, in page 79, line 13, leave out 'ten' and insert 'twenty' lb/>
    Under the capital transfer tax system there are two forms of taxation—one is based upon liftime transfers and the other on transfers on death. The Bill provides for lifetime transfers to have their rate of tax reduced considerably. There have been many debates about that, both in Committee and on the Floor of the House.
    The amendment concerns the lifetime transfers where a new principle has been introduced, namely, to wipe the slate completely clean every 10 years. If a person inherits a large sum of money and acquires great wealth early in his life, he is able every 10 years to transfer sums of money. Because there is a provision for the free transfer of wealth between husband and wife, the transfer of even larger sums is possible when both the husband and wife pass on their wealth to their offspring or to somebody else.
    That means that the effect of capital transfer tax is being eroded, and some would even say emasculated. For example, if we take into account that each of the spouses can bequeath £3,000 every year, the sums of money that can pass from one generation to the other during a long period can be very considerable. If a couple were to start their transfer of wealth at the age of 50, they would make three such transfers by the time that they reached their seventies. That is rapidly reducing the effect of capital transfer tax and is becoming similar to the old estate duty. The main disadvantage, as we all know, of the old estate duty was that it was a tax on the improvident, the unlucky and those who disliked their heirs. That is the sort of position that capital transfer tax is rapidly approaching.
    What is the cost of the 10-year wipe off? Every 10 years, all the amounts that have been passed under capital
    1342
    transfer tax are ignored and one starts again. The forecast of the cost that appears in the Red Book for 1981–82 is nil, and that we understand. It will take time for the provision to take effect. No figure is supplied for the forecast for the full year. All we find is "i", which leads us to a footnote. We are told in the footnote that the cost cannot be estimated. That may be true, but it cannot be denied that it will be large and that over a long period it will be extremely large. We are witnessing a considerable reduction in taxation at a time when taxation has not been reduced for many others.
    3.15 am
    On a previous occasion the Minister of State said that capital transfer tax was not a perfect tax but that in time he hoped to eliminate some of its grosser imperfections. I think that he is going much further than that. He is limiting its operation as a viable and useful tax. Estate duty was easily avoided by the seven-year limitation, and CTT will be similarly avoided by the process of erosion which the hon. and learned Gentleman hinted was in its early stages. This is a major new step to retain the inequalities of wealth and to enable wealth to be passed on from generation to generation in the large sums that have been transferred in the past.
    This will be happening under a Government who have failed to revalorise personal taxes and who have sought substantial revenue in many different ways. They have even turned their attention to smaller matters such as the sale of matches and lighters and activities such as Tupperware parties. No form of taxation has appeared too small for them to lay their hands on to get the money that they say they need so desperately. At a time when they are doing that, it shows insensitivity to hand out large sums to the big estates. The 10-year cumulation rule whereby we start all over again at the end of 10 years is of especial benefit to large estates that can plan the succession of property at an early age from those who have inherited wealth as opposed to those who have earned their wealth and typically will not have large sums to dispose of until they come to the later years of their lives. They will not be able to take advantage of this new provision in the same way as those who have inherited wealth.
    The provision is wrong from so many different angles. Those who made their money by their own exertions will be disadvantaged in comparison with those who have inherited wealth. This is a major attack on an important principle. We understood that the Government would be accepting capital transfer tax and its major provisions. This is a major onslaught, and from what we have heard it seems likely that it is only the first of a number to come. There will be plenty of work for the next Labour Government in restoring the position.
    Mr. Austin Mitchell: The amendment takes us away from the end of the pier show and the synthetic and dramatic performance of the Cleethorpes landladies' choral society that we had during the discussion on amendment No. 143 and to the central iniquity of the Budget. The Budget increased taxation on matches, lighters and chewing tobacco in the Government's dredging for revenue. That has been excused by the "We need the money" syndrome. The Government have hit the mass of the population by their failure to raise allowances. The people will have to pay for the deprivation which the Government have engendered. This Government of millionaires—we have Government of millionaires for

    1343
    millionaires by millionaires—have chosen to dole out substantial sums to the wealthy who should be paying their share of revenue to the Government. The Government dole out sums to those who have most.
    Clause 90 is one of the chief ways in which that handout will occur. It is a handout of unknown dimensions as it wipes the transfer slate clean every 10 years. For example, over 30 years, it is possible for £150,000 to be passed on tax-free compared with only £50,000 without the change that the clause proposes. Our amendment softens the position by extending the period from 10 years to 20 years. It is right to do that because the concessions made to capital in the Budget are unnecessary and undesirable.
    In this country we are still an unequal society. According to the 1978 figures, the top 1 per cent. of the adult population owned almost a quarter of the total marketable personal wealth. They owned almost half of the wealth owned in buildings and almost 70 per cent. of that held in the form of land and listed shares. Such differences which scar the country arise mainly through the inheritance of wealth, which will be strengthened and accelerated by the Bill unless it is modified by the Opposition's amendment.
    Despite the huge gaps which scar the country, the proportionate yield from capital taxes has been declining partly because of cuts in the rates and partly because of expedients such as clause 90, née clause 89. Capital transfer tax or its equivalent at the beginning of the Second World War provided nearly 15 per cent. of Inland Revenue receipts. By 1948–49, it was down to 9 per cent. Now the proportion must be minute. Capital transfer tax raised 6p for every £1 of income tax in 1973–74. That proportion will be 1·6p for every £1 this year. There is no case for the concession which has been made by the clause.
    If capital transfer tax had remained in line with income tax, it would be enough now to allow a cut in the standard rate of income tax by 1p in the pound. Capital transfer tax would be raising £1·6 billion if it had increased in line with income tax. Under this Government the income tax yield has increased by about 38 per cent., but capital transfer tax and estate duty together are up only 7 per cent., which is less than in line with the progress of inflation.
    While the level of income at which families start to pay tax has fallen from 45 per cent. of average earnings to about 38 per cent. of average earnings, while the rate of tax they pay at the bottom level has increased from 25p in the pound to 30p in the pound, while the number of people in the poverty trap has increased by about 40 per cent. and while women between the ages of 60 and 64 are beginning to pay tax on their little pensions, as the Prime Minister put it, the really wealthy will pay less because of the clause unless it is modified by our amendment. They will pay less and less on the wealth which should bear its share, and which certainly has the ability to bear a major share.
    Wealth should bear an increasing share of taxation on grounds of equity, economic stimulus, efficiency and keeping the money circulating. If there is a disincentive effect of taxation, it must be less when that taxation is applied to past acquisitions rather than to present effort. The disincentive effect of capital transfer taxation must therefore be less. Wealth should bear its share, too, on the most rational ground of all—that it confers privilege, advantage and power. It should therefore contribute
    1344
    substantially to the purposes of a society as a rent on those advantages which it has, particularly when the rest of society is having to face the kind of burdens that the Government are imposing because of the economic trap into which they have stumbled so enthusiastically as a result of the necessity to increase taxation and spending to pay for the depression and the unemployment they have generated.
    Every concession, such as this one on the 10-year period, every little fiddle, every reduction in capital taxation, is building up a chorus of protest, a chorus of annoyance, a chorus of simple grievances, at seeing those most able to bear their share paying less and less and seeing all of this being done by a Cabinet of millionaires, furthering their own self-interest.
    It is clear that measures like this are paving the way for the wealth tax that the next Labour Government will undoubtedly introduce on the bigger fortunes. Let there be no doubt about that. Such measures are paving the way for such a tax to be enthusiastically received by a nation that is being cheated and that sees its own wealthy people cheating it because they are not contributing their share to the burdens of the community. Those burdens are being substantially increased by a Government who are allowing the wealthy not to pay their share. The wider society knows this. By such actions the Government are building up a body of resentment that will make certain that our wealth tax, when it is introduced, is enthusiastically received.
    Mr. Peter Rees: We have heard once before, in Committee, the speech that the hon. Member for Grimsby (Mr. Mitchell) has just delivered—
    Mr. Austin Mitchell: Not from the hon. Member for Grimsby.
    Mr. Rees: Indeed, from the hon. Member for Grimsby. I had hoped that his contribution would have been mellowed a little after the agreeable exchanges that we had in Committee Room 10. Sadly that is not so, and we have had some rather cheap gibes at members of the Conservative Cabinet.
    The hon. Member might care to cast his mind back to the proceedings in the House on Tuesday, when a Ten-Minute Bill dealing with land-owning in Scotland was introduced. It seemed that a principal landowner was speaking from the Labour side of the House then. Be that as it may, I do not propose to descend to that kind of analysis of personal fortunes comprised in Westminster because I do not think that it advances the debate.
    I say to the hon. Member for Grimsby that the country will note his full-blooded adoption of a wealth tax and will draw its own conclusion about the kind of Labour Party and the kind of Labour policies with which it will be confronted at the next general election.
    The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) displayed an understandable pride of paternity. One recalls the notable part that he played in devising, introducing and commending capital tranfer tax to a rather sceptical House some six years ago. I cannot say that over the years acquaintance and familiarity with the tax have made it any more endearing to the country as a whole, although it may have endeared itself more to the Labour Party .
    The right hon. Member and his hon. Friends underestimated the damage that a tax of the kind that they

    1345
    devised, at the rate that they proposed, would have done to the business and agricultural structure of the country. There would have been a dissipation of wealth, or the transfer of wealth from private hands to the State. I do not believe that, on the record of this country since the war, the State cart be regarded as a better steward of the assets of this country overall than the individual members of it. Of course, there will be variations, but that is a proposition that I hope will command the support of my right hon. and hon. Friends.
    If I have reservations about the measures, it is that perhaps they do not go quite as far as the target that we set ourselves in the manifesto on which we fought the election. I will surely carry the Opposition with me on this. Manifesto commitments must be treated with great respect by the whole House. After all, that is a cardinal article of faith of the Labour Party, and Labour Members must concede that we, too, must be punctilious in fulfilling the obligations mat we so willingly assumed.
    3.30 am
    Mr. Cook: I am grateful to the hon. and learned Gentleman for saying that he places the same importance—indeed, elevation—on manifesto commitments as we do, so perhaps he could tell us when he hopes to carry out the Conservative manifesto commitment to raise tax thresholds to let the low-paid out of the tax net.
    Mr. Rees: The hon. Gentleman will recall that in our first Budget we valorised the thresholds twice over—if I may put it in that inelegant way at this hour of the morning. That is something on which we can look back with considerable satisfaction. The fact that this year we were unable to achieve that target does not mean that we shall not revert to the problem. I believe that we shall do more—and substantially more—than the Labour Administration could ever claim credit for, even with the compelling assistance of the Liberal Party and the Conservative Opposition. The hon. Gentleman must contain his patience a little longer. He will see that we shall go to the country with a creditable record in that regard.
    As I said, it was our manifesto commitment that we would humanise—we would not abolish—capital transfer tax. I give that minor reassurance to the right hon. Member for Ashton-under-Lyne. We would endeavour to smooth off the rough edges. My hon. Friends may well tell me that many remain to be smoothed off, but at any rate we have made a modest start.
    The right hon. Gentleman raised the question of cost. The cost will be negligible. If the right hon. Gentleman looks at the Red Book, he will see that the amount of capital transfer tax forgone this year will be about £5 million, which I am sure the whole country will recognise as not at all excessive. Even in the year after it will be not more than about £20 million. I do not feel, therefore, that we have concentrated unduly or that our fiscal measures have been at all out of joint.
    The underlying theme of the 10-year accumulation period, as opposed to the 20-year period that the right hon. Gentleman and his hon. Friends propose in amendment No. 165, is to encourage the free transmission of wealth between the generations. That must surely be a theme that the right hon. Gentleman also has at heart. I recall that in the middle of the Committee stage in which capital transfer tax was commended to the House he thought fit, with his
    1346
    right hon. Friends, to change the whole structure and to encourage gifts inter vivos, so we are taking the theme only a little further. I am sure that on reflection the right hon. Gentleman will realise that he should ask leave to withdraw his amendment and support the position that we have taken up, which is in harmony with the thinking of the Labour Party in 1975.
    What the Labour Party will be proposing for the country in later years by way of a wealth tax and a sharpened capital transfer tax—I do not understand how it can be called a softened capital transfer tax, which was the phrase used by the hon. Member for Grimsby—I leave to the hon. Gentleman to explain in due course. We believe that wealth can be more productively employed in private hands, so that we should scrutinise, soften and reduce the rigours of capital transfer tax and, indeed, of other capital taxes. Proportionately we now derive less of our revenues by way of capital taxes than we did in 1945 because there has been a greater diffusion of wealth and incomes, which is something that the hon. Gentleman should welcome.
    I hope that on that basis the Labour Party will feel that the subject has had an airing, will recognise that perhaps some of its sentiments are a little extreme, and will feel able to ask leave to withdraw the amendment.
    Amendment negatived.

  Schedule 13

    CAPITAL TRANSFER TAX RELIEF FOR AGRICULTURAL PROPERTY
    Mr. W. Benyon: I beg to move amendment No. 208, in page 170, line 38, after 'occupation', insert 'of the woodland'.
    The amendment relates to the definition of intensive livestock farming. The Finance Act 1974 gave relief for agriculture, but the definition of agriculture in that Act did not include intensive farming methods. In practice, however, by means of an extra-statutory concession by the Revenue, the relief was given.
    The Bill gives a statutory definition to what was an extra-statutory concession. Legal advice, however, suggests that it will have little practical effect because of the two tests that are included. The amendment refers to the second test, which is unlikely to be satisfied, which means that the relief would not be available.
    The amendment removes the second test. I hope that it is acceptable. If the Government tell me that it is not, will my hon. and learned Friend say categorically that the definition contained in the Bill covers the items to which I refer, namely, piggeries, broiler houses, fish farms, and so on, and recognises them as an integral part of British agriculture, which will therefore receive relief?
    Mr. Peter Rees: I hope that I can reassure my hon. Friend. It is certainly our intention that intensive rearing of livestock or fish should qualify for the relief, provided that those activities are subsidiary to the occupation of agricultural land.
    If my hon. Friend feels that what he described as the second condition will create difficulties in practice and unduly restrict the scope of this relief in regard to the activities that he has in mind, we shall be prepared to reconsider the matter next year. I hope that we have in fact

    1347
    done full justice to those activities, but we are open-minded on the subject and if, on reflection, in the course of the next year we see any defects in the legislation we can certainly return to this in the next Finance Bill.
    Mr. Benyon: In the light of that assurance, I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Amendments made: No. 169, in page 171, line 43, leave out from 'to' to 'would' and insert
    'a part of the value transferred equal to the amount which'.
    No. 170, in page 173, line 9, at end insert—
    '6. Where the transferor became entitled to his interest on the death of his spouse on or after 10th March 1981—

    (a) he shall for the purposes of paragraph 2(2)(b) above be deemed to have been beneficially entitled to it for any period for which his spouse was beneficially entitled to it;

    (b) the condition set out in paragraph 2(3)(a) shall be taken to be satisfied if and only if it is satisfied in relation to his spouse; and

    (c) the condition set out in paragraph 2(3)(b) shall be taken to be satisfied only if it is satisfied both in relation to him and in relation to his spouse.'.—[Mr. Peter Rees.]

  Clause 94

    GRANT OF TENANCIES OF AGRICULTURAL PROPERTY
    Amendments made: No. 171, in page 82, line 42, leave out 'on or after 10th March 1981'.
    No. 172, in page 82, line 45, at end add—
    '(3) This section applies to grants before as well as after the passing of this Act. '.—[Mr. Peter Rees.]

  Clause 95
    BUSINESS PROPERTY USED BY BENEFICIARY UNDER SETTLEMENT
    Amendment made: No. 174, in page 83, line 10, after 'building', insert ', machinery or plant'.—[Mr. Peter Rees.]
  Clause 109

    CONTRACTS WITH DEFERRED PAYMENT
    Amendment made: No. 177, in page 96, line 5, at end insert—
    '(5) Where a contract provides for payments in respect of the completion of stages in the performance of separate parts of the work specified in the contract, the payments under the contract shall be treated as complying with subsection (3) above if the payments attributable to each part of the contract wuld have complied with that subsection if that part had been the subject of a separate contract'.—[Mr. Peter Rees.]

  Clause 116

    CHARGES OF SUPPLEMENTARY PETROLEUM DUTY
    Mr. Eggar: I beg to move amendment No. 229, in page 100, line 28, leave out 'and 30th June 1982'.
    Under considerable pressure, I shall be as brief as possible, but I must stress that this is an extraordinarily important area of tax law, which receives all too little attention.
    In the Budget considerable changes were introduced to petroleum revenue tax and special petroleum duty.
    1348
    I begin by quoting an extract from a study initiated by Kemp and Rose, of Aberdeen university. The main summary of that independent study of the 1981 tax changes was as follows:
    "The 1981 tax changes will influence the behaviour of operators. The development of marginal fields could be postponed, as could satellite developments."
    I wish briefly to focus attention on the effect of the tax changes on the marginal fields and on the smaller satellite developments. I shall do so by means of a series of questions to my hon. and learned Friend. I realise that he will not have an opportunity to reply in detail now, but I am sure that he will take an opportunity in the near future to go on the record.
    Are the Government using the tax changes as a backdoor method of depletion policy? If so, that is the worst possible kind of depletion policy, because it will slow down the development of the marginal and satellite fields. Unless we are careful, this tax regime may mean that a considerable amount of oil that could otherwise be recovered will be left in the ground. Given the changing circumstances, it will never be economic to extract that oil.
    There is a way round the impact that the tax changes will have on the marginal and satellite fields. We could look seriously at the way in which fields are designated. When we debated the Oil Taxation Bill in 1975, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) made it clear that the designation of fields was a geological decision and was not taken on economic or any other grounds.
    Perhaps my hon. and learned Friend could clarify matters and improve the situation by making it clear that the Department of Energy will exercise more discretion over the designation of fields. Is that envisaged? I am sure that my hon. and learned Friend would be the first to agree that the special petroleum duty is a bad tax. It is based not on profits but on revenues. It is also a discriminatory tax, particularly in relation to American and French companies. Because the tax is effectively a royalty or an excise duty, it is deductible—under the double taxation treaties between France and the United States of America—but not creditable. Effectively, that means that American and French companies will have to pay tax in their respective countries over and above the special petroleum duty. We always try to avoid that form of double taxation.
    The Government have introduced an amendment that enables those companies to pay PRT earlier. That means only that in addition to paying the special petroleum duty a company can pay PRT earlier and can give the British Government—instead of the French or American Governments—the extra tax. That is not a suitable concession to make. Will my hon. and learned Friend give an even more categorical assurance than the one that he gave in Committee, to the effect that the Treasury is going into a consultation period with the oil companies with an open mind and that it will not sit back and wait for the oil companies to put forward alternative proposals which the Treasury can play off, one against the other?
    Will my hon. and learned Friend give an assurance that when the taxation review has been concluded, and any decisions have been made, there will, on the introduction of the new tax regime, be a clear statement on our future fiscal stability? The Dell assurances on North Sea taxation

    1349
    were extremely helpful to the industry. They were reassuring and they were followed. The industry requires something similar from the Government.
    3.45 am
    I end with the thought that is easier for the Government to point to the fact that the oil companies are still interested in the exploration blocks and that there is no firm evidence of production and development plans being put back. Throughout the world there is a drastic shortage of skilled oil personnel with offshore experience. The shortage is growing rather than decreasing. The multinational oil companies, which dominate the oil industry, whether we like it or not, have to decide how to allocate scarce human resources. Unless we can convince those companies that there is a future in the North Sea, those skilled teams that have been built up over the past eight or nine years will be broken up. That will happen not suddenly but gradually, and we shall realise that in four or five years' time we are not getting the sort of development that is necessary to maximise our North Sea resources.
    Then it will be no good for the Government to try to change the tax regime to encourage more investment and development by those companies, because the expertise will have been dissipated to other parts of the world. I wish that the Government would spend less time considering discounted cash flow returns on fields and more time considering the human implications of what they are doing.
    Mr. Bowen Wells: I want briefly to speak in support of my hon. Friend the Member for Enfield, North (Mr. Eggar). [HON. MEMBERS: "Hear, hear."] I appreciate those sounds of approval for the brevity of my speech.
    In Committee my hon. and learned Friend referred to the fact that he was not certain that he was correct about special petroleum duty. I understand that what he meant was that if the teams of expertise were dispersed and we did not extract the maximum return of both oil and finances from the North Sea he would change the tax.
    Much representation has been made to myself and other hon. Members that the Government are incorrect. Therefore, in supporting the cogent arguments of my hon. Friend the Member for Enfield, North, I ask the Government to reconsider the comments made by the oil companies.
    Mr. Peter Rees: I hope that the House will acquit me of discourtesy if I deal briefly with the four points, important though they may be, raised by my hon. Friends.
    I deal seriatim with the questions raised by my hon. Friend the Member for Enfield, North (Mr. Eggar). His first question was: Are the Government using tax changes as a back door to depletion policy? My answer is "No". The second question was about the designation of fields and whether it should be done on a geological or an economic basis. That is a matter for my right hon. Friend the Secretary of State for Energy. The third question was more a proposition that special petroleum duty is a bad tax because it discriminates against United States and French companies. I hope not. Indeed, my hon. Friend was kind enough to recognise that clause 110 does a little to mitigate the situation about petroleum revenue tax. He shakes his head, but he must recognise that that clause does that and he made that point himself. However, we shall take that into account it the reception we shall offer to suggestions for amending the regime in the autumn.
    1350
    Fourthly, my hon. Friend asked me to give a categorical assurance—more categorical than the one I gave before—that the Treasury will approach consultation with an open mind. I do not believe that I could be more categorical. Yes, we shall approach the cosultations with an open mind.
    Will I give a clear statement of fiscal stability? I am in difficulty there, first, on general constitutional grounds, because nothing that I say will bind a subsequent Administration. Secondly, I am in the same breath being enjoined by my hon. Friends to be open-minded about a possible new regime to be suggested by the oil companies. I am not quite certain whether I can reconcile those two aspirations, but I hope that I have done adequate justice to the important points made.
    I am sorry that more time is not available for debate, but the subject was canvassed fairly thoroughly at an earlier stage in our debates. Although I know that my hon. Friend has a deep interest in these matters and would like to explore them thoroughly, I hope that he will feel able to seek leave to withdraw the amendment.
    Mr. Eggar: I find that response somewhat disappointing. I hope that my hon. and learned Friend will be able to expand in the fairly near future on the rather brief answers that he gave so that his argument may he on the record.
    I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.

  Clause 126

    DEVELOPMENT FOR OWNER'S USE
    Amendment made: No. 178, in page 107, line 7, leave out '1983', and insert '1984'.—[Mr. Peter Rees.]
    Sir Graham Page: I beg to move amendment No. 179, in page 107, line 13, after 'person', insert
    'a dependent relative or an adult member of his family as defined by section 15(3) of the Development Land Tax Act 1976'.
    This is an amendment to the clause dealing with the development land tax. In the Development Land Tax Act 1976 there were transitional provisions which gave exemption from the tax to the owner who developed property for his own purpose. But in 1976 it was not only for himself; we included then the case where he developed it for a dependent relative or an adult member of his family who did not happen to be a dependant.
    In the present Bill there is, as it were, an extension of that exemption, although in this case it is merely a deferral of tax. But there is a distinction. In this case we have left out the members of the family of the dependant. It is only if he develops the property for his own personal use that he will get the concession of deferral of tax.
    The amendment seeks to add the sort of exemption and concession that was given in 1976 for those owning land at that time, and I can see no distinction in principle between the 1976 provisions and those in the Bill.
    Mr. Brittan: This point was raised by my right hon. Friend during the "clause stand part" debate in Committee. The reason why I would not advise the House to accept my right hon. Friend's amendment is related to the underlying purpose of the clause, which is to extend to commercial concerns the benefit which at the moment exists for industrial concerns. In principle, the rules for the two reliefs should be kept in line. The industrial relief does not

    1351
    apply to property to be used by a member of the owner's family, and it is for that reason that we think it reasonable that the relief in respect of commercial concerns should be similarly confined.
    I hope that my right hon. Friend will feel able to withdraw the amendment.
    Amendment negatived.
    Mr. Paul Dean: I beg to move amendment No. 180, in page 107, line 24, at end insert—
    '(2) For the purposes of this section a person carrying on a trade who is a lessor of tied premises shall be treated as occupying those premises.
    This subsection shall be construed in accordance with section 140(2) of the Taxes Act (income tax and corporation tax on tied premises.'.
    Mr. Deputy Speaker (Mr. Bernard Weatherill): With this it will be convenient to take Government amendment No. 249.
    Mr. Dean: I declare an interest in this subject and I am grateful to the Brewers Society for drawing my attention to an anomaly which will arise unless an amendment on these lines is accepted.
    I am pleased to see Government amendment No. 249, which appears to deal with the same point. If my right hon. and learned Friend can give me an assurance to that effect, I shall be pleased in due course to withdraw my amendment. At this very late hour I shall describe the amendment and the purpose behind it extremely briefly.
    Section 19 of the Development Land Tax Act provides that, where a trader carries out a project of material development for the industrial purposes of that trade, liability for development land tax shall be deferred until the interest in the land being developed is disposed of. In his Budget Statement my right hon. and learned Friend the Chancellor of the Exchequer proposed that the deferment of development land tax currently allowed to traders in respect of development for their own industrial use should be extended to commercial and other types of development, but the proposal included a condition that would exclude premises that a brewer had in mind for occupation by a tied tenant.
    In the case of brewery-owned licensed premises, this condition would seem to include premises intended to be operated by the company's own employees but to exclude premises that the brewer had in mind for occupation by a tied tenant. The situation would be anomalous and troublesome, in that a firm decision might not be made at the commencement of the project as to which of those two options should be adopted, or unforeseen events might cause a change of plan at any stage.
    I am confident that the Government did not intend to draw an artificial distinction of that kind. The purpose of the amendment is to deal with it.
    Mr. Brittan: I am happy to assure my hon. Friend that Government amendment No. 249 is designed to deal with the point that he has raised. The only reason why amendment No. 180 was not regarded as acceptable is that it is technically not satisfactory. I hope, therefore, that my hon. Friend will seek to withdraw his amendment and will support the Government amendment.
    Mr. Dean: I am grateful to my right hon. and learned Friend for completely meeting the point that I put to him, and I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Amendment made: No. 249, in page 107, line 34, at end insert—
    '(2A) Where on the grant of a lease of any premises the premises become tied premises—

    (a) if the grant of the lease would not otherwise be a disposal falling within subsection (2) above, it shall be deemed to be so;

    (b) whether or not any other person is actually in occupation of the premises, the lessor shall be treated for the purposes of this section as if he himself occupies the premises during any period during which the premises are tied premises; and

    (c) if at any time during the lease the premises cease to be tied premises and are not from that time occupied by the lessor, the relevant interest, or if subsection (1)(b) above applies to part only of the building or other land so much of the relevant interest as subsists in that part, shall be treated for the purposes only of subsection (1) above and section 27 below as having been disposed of at that time;

    and for the purposes of this section premises subject to a lease are tied premises if they are tied premises within the meaning of section 140(2) of the Taxes Act in relation to the lessor and to a trade carried on by him.'.—[Mr. Brittan.]

  Clause 128

    SPECIAL TAX ON BANKING DEPOSITS
    Amendment proposed: No. 182, in page 109, line 12, leave out '10' and insert '15'.—[Mr. Lawson.]
    Mr. Deputy Speaker: With this we shall take the following:
    Government amendment No. 183.
    Amendment No. 190, in page 109, line 16, after 'above' insert
    'but shall not be charged, where it will reduce a bank's current cost return on equity below 2·5 per cent. per annum'.
    Government amendments Nos. 184 and 187.
    Sir William Clark: The Government have made some progress on the windfall profits tax. Many of us on the Conservative Benches do not like the whole principle of such a tax, but this is not the time to rehearse the reasons.
    In Committee my right hon. Friend the Financial Secretary gave an assurance that the windfall profits tax would be a one-off tax and that the Government had no intention of repeating this levy. We welcome the relief given by the increase in the threshold and the reduction in the rate from 2½ to 2 per cent. That has reduced some of our antagonism, but I urge my right hon. Friend to repeat the categorical assurance that he gave in Committee upstairs that the levy will not be repeated and that a special tax will not be put on the banks in future.
    Mr. John Browne: I declare an interest, although not a financial interest.
    I join my hon. Friend the Member for Croydon, South (Sir W. Clark) in requesting a categorical assurance that the tax is a one-off levy. On becoming a Member of the House I expected to have disagreements with the Conservative Party, but I never expected to be thoroughly ashamed of a tax proposal made by a Conservative Government. I am ashamed that a Conservative Government should put forward a discriminatory tax which has been made retrospective without the banks having been given the precise warning to which my right hon. and learned Friend the Chancellor of the Exchequer referred specifically when in Opposition. He said:

    1353
    "First, warning must have been given to the taxpayer of the intention to legislate in this way and the warning must have been precise in form."—[Official Report, 12 July 1978; Vol. 953, c. 1641.]
    I do not agree that the vague warning last year that there might be some tax on the banks was a precise warning.
    4 am
    We in the Conservative Party have made a rod for our backs. What will we do if a future Socialist Government introduce a retrospective wealth tax? I find the Government s proposal outrageous and I am amazed that it got through Committee, though I understand the severe Whipping that takes place in Committee. I cannot support this retrospective tax.
    If the Chancellor insists on pursuing the implementation of the discriminatory and retrospective tax, which does not meet his precise criterion about warning, will he allow the banks to retain at least a 2½ per cent. return on equity on a current cost accounting basis? If he will not allow that, what does he consider a reasonable return for a bank?
    Mr. Eggar: I am deeply concerned about this tax. I was concerned about it when we last discussed it on the Floor of the House and my concern was considerably strengthened when I discovered, to my amazement, that while taking about £350 million from private sector banks, the Government had decided to give £7½ million to the National Giro. That is an odd sense of priorities for a Conservative Government.
    It would be churlish not to recognise that the Government have made some concessions, but I should like to comment on them. The justification for the introduction of the levy is the endowment profit on domestic banking business. Whether the bank is small or large, the endowment element is identical and it is extraordinary that the concessions should have been given to smaller banks. There is no logical justification for that.
    Not only is the tax more discriminatory because it hits particularly the clearing banks, but it assists 20 foreign banks in London. At a time when foreign banks already have about 30 per cent. of the wholesale banking market in this country giving them an extra competitive edge over the domestic banking system seems to be extraordinary.
    Mr. Lawson: It may be appropriate if I reply briefly to some of the points made in the debate. Taking them in reverse order, as they say in the Miss World contest, my hon. Friend the Member for Enfield, North (Mr. Eggar) rightly said that the logic is that the endowment profit—or, more accurately, the potential for endowment profit—is the target for the tax and, therefore, there is no reason for any distinction in respect of banks of different size. He has a strong point. That is why the Bill, when first published, contained no such distinction. It is right, however, that the Government should pay heed to the feeling of the House.
    I had to attend a meeting in Brussels at the time when this matter was debated at great length in Committee but I have read every word of the discussion that took place. There was a clear feeling on both sides of the Committee that something needed to be done for the smaller banks. The trustee savings banks were among those mentioned. I proposed, therefore, to meet those representations in a way that was not discriminatory. The concessions now before the House apply across the board to all banks. The concessions on the exempt slice and on the lower, reduced
    1354
    rate for the first £200 million worth of deposits meet the point in a manner that I hope commends itself to the House.
    I was not seeking to be discriminatory. It is true that certain foreign banks will benefit. I am surprised that my hon. Friend the Member for Enfield, North, who is a sophisticated member of the financial community, should be opposed to foreign banks in London. The foreign banks in London have been an asset to the financial community of London and a healthy new element in the financial scene. I believe that we have benefited.
    My hon. Friend the Member for Winchester (Mr. Browne) seeks a profits limit to the tax. The Government considered very carefully whether the tax should be geared to profits as such. It would have made the tax much more complicated. It would not have been precisely addressed to what we consider the justification for levying the tax, namely, the specific profit, or profit potential from the endowment element from non-interest-bearing deposits—in other words, current accounts. That is why we framed our proposal in the way it has appeared. My hon. Friend suggests a different kind of tax. I do not think that the two can be married. We decided that it was not possible. The argument about simplicity applies particularly to a once-for-all tax. It is not some complicated edifice that we intend to continue year in and year out, as I have made clear.
    The retrospective element has been mentioned. I cannot accept that argument, certainly not in the sense in which a quotation from my right hon. and learned Friend the Chancellor of the Exchequer has been used. The retrospective element comes only in the sense that the amount of non-interest bearing deposits on which the tax is levied has clearly to be an amount at a particular date. That date, it is true, is a date in the past.
    Had the Government taken today's date, the yield from the tax, if one takes the non-interest-bearing deposits that the banks now have, would have been no less and, if anything, slightly more. The essential reason for taking a date that had already occurred was that it would have been a relatively easy matter, since it was geared to non-interest-bearing deposits, for the banks to have paid a nominal amount of interest on their deposits and there would have been no yield at all. It is not the principle of retrospection that my hon. Friend is getting at. He is suggesting that the tax in its entirety should be dropped.
    I accept my hon. Friend's stand on this matter. I know where he stands, and he has been consistent about it. But we wished to raise money from the endowment profits of the banks, and he must see that it had to be done in this way.
    Mr. John Browne: My point about retrospectivity is that, if it were clearly and precisely given as a warning beforehand, it would, according to the criteria of my right hon. and learned Friend the Chancellor, and his quotation of Mr. Heathcoat Amory, have allowed people to adjust their circumstances to meet the forthcoming tax.
    Mr. Lawson: That is not the intention. The context in which my right hon. and learned Friend the Chancellor was speaking was anti-avoidance measures. It is a different context. We are not talking about anti-avoidance measures now.
    I am most grateful to my hon. Friend the Member for Croydon, South (Sir W. Clark) for his welcome to the

    1355
    Government amendments, not merely the amendments to which I have already referred but also amendments Nos. 185 and 186, which meet the unease which was voiced in Committee about the information which the Board of Inland Revenue was able to ask for in a return from the banks. If my hon. Friend looks at amendments Nos. 185 and 186, he will see that now the information which the board can ask for is very much restricted, and in particular information about individual bank accounts, the most sensitive area, is totally excluded.
    I think that these are advances. I gladly repeat the categorical assurance that this is a once-for-all tax. As such, it follows that it will not be repeated, not merely in this form but in some slightly altered form. It is genuinely a once-for-all tax.
    Amendment agreed to.
    Amendments made: No. 183, in page 109, line 15, leave out '2½' and insert '2'.
    No. 184, in page 109, line 16, at end insert
    'or, if the excess is more than £200 million, the aggregate of 2 per cent. of the first £200 million and 2½ per cent. of the remainder. '.—[Mr. Lawson.]

  Schedule 15

    SPECIAL TAX ON BANKING DEPOSITS
    Amendments made: No. 185, in page 185, line 20, after 'him', insert
    'and of—

    (i) any deposits excluded from the chargeable deposits by virtue of paragraph 3(2)(b), (c) or (d) above;

    (ii) any adjustment of the amount of the chargeable deposits made by virtue of paragraph 4 or 5 above;'.

    No. 186, in page 185, line 26, leave out paragraph (c) and insert—
    '(c) such particulars of the aggregate amounts of the different kinds of deposit held by him in his banking business at each material time as the Board may require for the purposes of the tax.'.
    No. 187, in page 192, line 21, leave out '10' and insert '15'.—[Mr. Lawson.]

  New Schedule

    RELIEF FOR INVESTMENT IN NEW CORPORATE TRADES:WHOLESALE AND RETAIL DISTRIBUTION
    Part I
    1. The goods are brought by the trader in quantities larger than those in which he sells them.
    2. The goods are brought and sold by the trader in different markets.
    3. The trader employs staff and incurs expenses in the trade in addition to the cost of the goods and, in the case of a trade carried on by a company, in addition to any remuneration paid to any person connected with it.
    PART II
    4. There are purchases or sales from or to persons who are connected with the trader.
    5. Purchases are matched with forward sales or vice versa.
    6. The goods are held by the trader for longer than is normal for goods of the kind in question.
    7. The trade is carried on otherwise than at a place or places commonly used for wholesale or retail trade.
    8. The trader does not take physical possession of the goods.'.—[Mr.Lawson.]
    Brought up, read the First and Second time, and added to the Bill.

  New Schedule

    CAPITAL TRANSFER TAX: SCOTTISH AGRICULTURAL LEASES
    1. Subject to the following provisions of this Schedule, where any part of the value of a person's estate immediately before his death is attributable to the value of the interest of a tenant in agricultural property in Scotland, being an interest held by virtue of tacit relocation, and either he had been tenant of the said property continuously for a period of at least two years immediately preceeding his death or he had become tenant of the said property by succession, and the said interest is acquired on his death by a new tenant, the value of the said interest shall be left out of account in determining the value transferred on the death.
    2. The value to be left out of account under paragraph 1 above shall not include the value of any rights to compensation in respect of tenant's improvements.
    3.—(1) Subject to the following provisions of this paragraph, where, under paragraph 1 above, the value of an interest has been left out of account in determining the value transferred on the death of a person, and the whole or any part of that interest is disposed of before being transferred on the death of any other person, tax shall be charged in accordance with paragraph 4 below.
    (2) The person liable for the tax chargeable under this paragraph shall be the person who is entitled to the consideration for the disposal or who would be so entitled if any consideration passed on the disposal.
    (3) Sub-paragraph (1) above does not apply to a disposal made by any person to his spouse.
    (4) Where tax has been charged under this paragraph on the disposal of the whole of an interest or of any part thereof, tax shall not again be charged in relation to the same death on a further disposal of the whole or, as the case may be, of the same part, of the said interest.
    4.—(1) Where tax is chargeable under paragraph 3 above it shall be charged on the following amount, namely—

    (a) if the disposal is a sale for full consideration in money or money's worth, on the net proceeds of the sale;

    (b) in any other case on the value of the interest or of the part disposed of, as the case may be, immediately before the time of the disposal, and at the rate or rates at which it would have been chargeable on that death if that amount, and any amount on which tax was previously chargeable under that paragraph in relation to the death, had been included in the value transferred on death and the amount on which the tax is chargeable had formed the highest part of that value.

    (2) The tax chargeable under paragraph 3 above shall not exceed the difference between the tax chargeable on the death and the tax which would have been chargeable on the death had paragraph 1 above not applied and had the value of the interest formed the highest part of the value of the estate.
    5. Where a disposal on which tax is chargeable under paragraph 3 above is a chargeable transfer, the value transferred by it shall be calculated as if the value of the interest in the tenancy had been reduced by the tax chargeable under that paragraph.
    6. In this Schedule—

    (a) references to the value transferred on a death are references to the value transferred by the chargeable transfer made on that death; and

    (b) references to the net proceeds of sale are references to the proceeds of sale after deduction of any expenses of sale.

    7.—(1) This Schedule applies to deaths on or after 15th November 1976.
    (2) Where a person died on or after 15th November 1976 and before the passing of this Act, this Schedule shall apply only if a claim for relief under paragraph 1 above is made within the period of twelve months immediately following the passing of this Act by a person who (apart from the operation of this Schedule) would be liable to pay the whole or part of the tax chargeable on the value transferred on the death and attributable to the said interest.
    (3) Where a person died on or after 15th November 1976, paragraph 3 above shall not apply to any disposal before the passing of this Act.'.—[Mr. Lawson.]
    Brought up, read the First and Second time, and added to the Bill.

    Schedule 17

      REPEALS
      Amendments made: No. 195, in page 198, line 25, at end insert—
      .'1974 c.30.The Finance Act 1974.Section 2(1).'.
      No. 196,: in page 199, line 36, column 3, at end insert—
      'Section 8.'
      No. 197, in page 200, leave out lines 4 and 5. —[Mr. Lawson.]
      Bill to be read the Third time this day

Iron and Steel Bill
Lords amendments considered.
Iron and Steel Bill
  Clause 2

    ORGANISATION OF THE CORPORATION'S ACTIVITIES
    Lords amendment: No. 1, in page 3, line 15, leave out from "may" to end of line 18 and insert
    ",after consultation with the Corporation, by order, give to the Corporation directions—"
    4.15 am
    The Under-Secretary of State for Industry (Mr. Michael Marshall): I beg to move, That this House: doth agree with the Lords in the said amendment.
    Mr. Deputy Speaker (Mr. Bernard Weatherill): With this we may take Lords amendments 2 to 11.
    Dr. John Cunningham: I have no objection to discussing the amendments together. I am sure that there are a number of hon. Gentlemen who would like to have a debate in some depth about the 21 amendments on the Amendment Paper, but I assure the House that I intend to be brief. I shall simply put a number of questions to the Under-Secretary which I hope that he can answer briefly.
    In amendment No. 1 there seems to be a slight softening of the Government's position, in that the amendment seeks to allow some consultation before the Secretary of State may give a direction to the corporation to act in a way that he may determine. The Under-Secretary knows that we are not happy about the fact that he should give directions of that kind. However, we welcome the amendment if its intention is that these matters should be discussed with the corporation before any such direction is given. Amendments Nos. 2 and 3, as I understand them, are consequential drafting amendments following from amendment No. 1, so I have nothing to say about them.
    Amendment No. 4—as I understand it; I hope that the Under-Secretary will confirm my understanding, so that we need not pursue the matter—seeks to ensure that the corporation shall have no choice other than to give effect to any direction that the Secretary of State may choose to give it. In other words, nothing is left to chance in amendment No. 4.
    Amendment No. 5 seeks to omit subsection (6) of the clause which was introduced by the Government on Report. When I commented on this matter on 14 May, when we were considering the Iron and Steel Bill in the House, the Under-Secretary replied:
    "The hon. Member made sport of subsection (6). Procedure is provided under that subsection to ensure that a direction is given and made known formally to the corporation. That is an integral part of making plain the formal position. It is part of the mechanism under which that direction will appear in the annual report. That is how the issue is made public. On reflection, the hon. Gentleman"—
    that is me—
    "might appreciate the significance of that".— [Official Report, 14 May 1981; Vol. 4, c. 963.]
    We did not appreciate the significance at the time. Now that the provision has been removed altogether, I am tempted to have a little more sport. However, at this late hour I simply ask the Under-Secretary to say whether he thought that the sport that we had at the time was worth noting, or whether there is another purpose in moving the

    1359
    amendment to remove the subsection, which he said at that time was an integral part of making plain the Government's intentions.
    I understand that Lords amendment No. 6 clarifies the situation. Amendment No. 7 involves the omission of a provision introduced by the Government on Report. It refers to the Secretary of State giving notice
    "as soon as it is practicable to do so".
    That was the subject of criticism similar to that made of amendment No. 5, and it is to be removed. Why is it being removed? Does it mean that the Secretary of State will not give notice? Alternatively, will the notice be covered in some other way.
    Amendments Nos. 8, 9 and 10 are drafting amendments. I assume that the Under-Secretary will reply before I ask more questions.
    Mr. Michael Marshall: I am grateful to the hon. Member for Whitehaven (Dr. Cunningham) for the way in which he has responded. I can cover his questions about amendments Nos. 1 to 8 with a general answer because they are interrelated.
    The purpose of Lords amendments No. 11 is to continue exemptions from stamp duty which currently are enjoyed under certain conditions by subsidiaries of the corporation. It replaces the amendment made by clause 2(4). It is a tidying-up amendment.
    Lords amendments Nos. 9 to 11 are drafting amendments. The term "changes in organisation made" is an improvement on "organisation changes effected."
    The substance of the hon. Gentlemen's remarks related to Lords amendments Nos. 1 to 8. I shall spell out precisely how the group of amendments apply.
    The amendments remove the power of the Secretary of State to give direction direct to a publicly owned company to dispose of its property, rights, liabilities and obligations. In that sense it is a softening.
    The passage in the Bill was designed to facilitate the imposition of restrictions in section 4A(7)(b), which clause 2(1) of the Bill inserts into the Iron and Steel Act 1975. Those restrictions enable the Secretary of State to maintain control of the nature and assets of a company that is formed as a result of his direction. The basis of the relationship between Ministers and the chairman and the board of the BSC, however, is that control of the corporation's subsidiaries should be in the hands of the corporation. It would be inconsistent with that view for the Secretary of State to take power to give a direction to subsidiaries that was not channelled through the corporation. That is an overriding consideration.
    These amendments also have the advantage of shortening the clause.
    Question put and agreed to.
    Lords amendments Nos. 2 to 11 agreed to.
    Lords amendment: No. 12, in page 5, line 38, at end insert—
    "(6) Paragraph 2 of Schedule 4 to the 1975 Act (duty to make regulations providing compensation to employees of certain nationalised companies or of the former Iron and Steel Board) shall cease to have effect but without prejudice to the continuance in force of the regulations made or having effect as if made under that paragraph."
    Mr. Michael Marshall: I beg to move, That this House doth agree with the Lords in the said amendment.
    Mr. Deputy Speaker: With this it will be convenient to discuss Lords amendments Nos. 17 and 19.
    Dr. John Cunningham: Amendment No. 12 refers to compensation as set out in the Iron and Steel Act 1975. On page 39 the regulations are set out in some detail. I shall not bother to read them. As I understand the amendment, part of that is to cease to have effect. What is the purpose of the amendment, what materially will be changed by it, and if the changes are made will that leave people in the industry at a disadvantage? I hope that the Minister will clarify those questions.
    I do not have any questions on amendments Nos. 17 and 19 because I understand them to be consequential drafting amendments.
    Mr. Michael Marshall: As the hon. Gentleman said, amendments Nos. 17 and 19 are consequential to amendment No. 12. That amendment is largely consequential upon the introduction of clause 2 of the Bill and the related repeal of, among other provisions, sections 4(2) and 5(1) of the 1975 act. Those two subsections are referred to in schedule 4, paragraph 2, of the same Act, and the amendment will repeal that paragraph in its entirety.
    The 1967 Act provided for regulations to be made entitling those employed at the time by the companies nationalised in that year to compensation payments from the British Steel Corporation. Such compensation would cover loss of employment, and loss or diminution of earnings or pension rights, as a result of the nationalisation itself, any subsequent directions made by the Secretary of State under what is now section 4(2) of the 1975 Act, or organisational changes following a review of the corporation's activities under what is now section 5(1). In 1968 one set of regulations of this sort was made by the Secretary of State. It is still in force, the BSC is still making payments under it, and the present amendment will leave it unaffected.
    The hon. Gentleman will appreciate that we are speaking of a position that arose at the time of nationalisation and what flowed directly therefrom. It is clear that this is a historic position, which we are tidying up.
    Although schedule 4, paragraph 2(1)(a), of the 1975 Act has maintained these provisions of the 1967 Act in force, their declining relevance in the lengthening period since nationalisation has been underlined by the fact that no other regulations have been made since 1968, apart from one small amendment in 1971. There are no regulations under schedule 4, paragraph 2(1)(b), which provides for some related types of compensation.
    Reverting to paragraph 2(1)(a), it is by now almost inconceivable that further regulations will be needed to compensate employees for losses arising out of the original nationalisation in 1967. Moreover, section 4(2) of the 1975 Act, relating to directions given by the Secretary of State, is to be repealed by the present Bill, as is section 5(1), covering a formal review of the corporation's affairs. In those circumstances, it seems reasonable to conclude that the provisions of paragraph 2 of schedule 4 are no longer needed, and that is why the amendment proposes its repeal.
    As I have already mentioned, the amendment at the same time leaves in force the regulations that have already been made. That meets the hon. Gentleman's concern to

    1361
    ensure that nobody is disadvantaged by the proposal. That ensures that those employees still receiving payments will continue to do so. On that basis I commend the amendment to the House.
    Question put and agreed to.

  New Clause

    CORPORATION'S MEMBERS' TERMS OF APPOINTMENT, ETC.: NO NEED FOR STATEMENTS TO BE LAID BEFORE PARLIAMENT
    Lords amendment: No. 13, after clause 5, insert the following new clause—
    " . The following provisions of the 1975 Act shall cease to have effect: —

    (a) in section 1, subsection (6) (after appointing member of Corporation, Secretary of State to lay before Parliament a statement of term of appointment); and

    (b) in Schedule 1, paragraph 8 (Secretary of State to lay before Parliament a statement of certain determinations about remuneration etc. of Corporation's members)."

    Mr. Michael Marshall: I beg to move, That this House doth agree with the Lords in the said amendment.
    Mr. Deputy Speaker: With this we may take Lords amendments Nos. 16, 18 and 21.
    Dr. John Cunningham: Amendment No. 13 removes a provision it section 1(6) of the 1975 Act, which states:
    "As soon as possible after appointing a person to be a member of the Corporation the Secretary of State shall lay before each House of Parliament a statement of the term for which he has been appointed."
    The proposed new clause alters paragraph 8 of schedule 1 on the disclosure of the terms and conditions of remuneration to such appointees to the board. We are in favour of the disclosure of such appointments both to Parliament and to the public and the terms and conditions on which they are appointed. Why is the amendment removing the provision for the House to be so informed? Is the point to be met in some other way, and, if so, what is that way to be? If it is to be met, we shall be happy to accept the amendment. I hope that the Minister will be able to give us, an assurance that the amendment will not mean that appointments will be made and not publicly recorded in some way, even if it is not within the terms presently laid down by the 1975 Act.
    4.30 am
    I understand that the linked amendments are merely drafting or consequential amendments. I have no questions to ask about the other amendments.
    Mr. Michael Marshall: I confirm that amendments Nos. 16, 18 and 21 are consequential and related to amendment No. 13. The amendments take the opportunity afforded by the Bill to remove from the Secretary of State the duty to lay before Parliament certain statements about members of the corporation. This is to bring the corporation in line with other nationalised industries. Section 1(6) of the lion and Steel Act 1975 requires that
    "As soon as possible after appointing a person to be a member of the Corporation the Secretary of State shall lay before each House of Parliament a statement of the term for which he has been appointed."
    Paragraph 8 of schedule 1 to the Act provides that the Secretary of State shall also lay before each House of Parliament a statement of the remuneration, allowances and pensions of board members whenever there is a change in the amounts being paid.
    1362
    It is considered that these provisions are no longer necessary. Information on board members will still be available to the House as the corporation publishes similar details in its annual report and accounts, which are laid before Parliament. Should the corporation for any reason decide to discontinue this practice, it would be open to the Secretary of State, under section 24(1) of the 1975 Act, to direct the corporation to resume it. These amendments follow the precedent set in respect of the remuneration, allowances and pensions of board members of other nationalised industries that are sponsored by the Department.
    The hon. Gentleman may be aware that the proposed clause follows the practice of the previous Administration in the proposals put to the House at the time of the Aircraft and Shipbuilding Industries Act 1977.
    Question put and agreed to.

  Schedule 1

    RELATED AND CONSEQUENTIAL AMENDMENTS
    Lords amendment: No. 14, in page 9, line 1 leave out "and section 19(1)(a)"
    Mr. Michael Marshall: I beg to move, That this House doth agree with the Lords in the said amendment.
    Mr. Deputy Speaker: With this it will be convenient to discuss Lords amendments Nos. 15 and 20.
    Dr. John Cunningham: I believe that these are consequential drafting amendments and have no new effect other than that which we discussed when dealing with the previous group of amendments. If the hon. Gentleman will confirm that that is so, I shall not pursue the matter.
    Mr. Michael Marshall: I can confirm that the Bill, by paragraph 6(1) and (2) of schedule 1, provides for a number of alterations to the 1975 Act to reflect the likelihood that a number of the BSC's activities may be carried on through subsidiaries in which there is a minority private sector stake. To take account of this, the Bill provides for the words "publicly owned company"—defined as a wholly owned subsidiary of the corporation—to be changed to the word "subsidiary" in certain places in the 1975 Act. It is essentially a tidying-up operation.
    One of the places where this change has been made Ls in section 19 of the 1975 Act, which sets out the BSC's statutory borrowing limit. The position as it now stands under the Bill, therefore, is that the limit would embrace all the BSC's subsidiaries, including those in which its stake is less than 100 per cent. —and it would also cover overseas as well as United Kingdom companies. The effect would clearly be to act as a disincentive to a private sector company wishing to take a minority stake in a BSC subsidiary, since the subsidiary's borrowing powers would be curtailed if the borrowing limit that relates to the corporation had been reached. That could materially inhibit the corporation's prospects of recruiting minority partners for joint ventures and would be contrary to our general policy on privatisation.
    The amendment therefore restores the situation to where it stood under the 1975 Act, which does not place statutory controls on the extent of borrowing by non wholly owned subsidiaries of the BSC or on the BSC's. borrowings from a publicly owned company. I should

    1363
    mention, however, that the action proposed would not affect existing controls on the borrowings of non-wholly owned subsidiaries through the external financial limit system, since all external borrowing by such subsidiaries counts against the EFL.
    In short, this amendment to the definition of the BSC' s statutory borrowing limit also has the effect of restoring that definition to the same basis as that used in the British Telecommunications Bill. We regard it as an essential tidying-up and clarificatory amendment. I commend it to the House.
    Question put and agreed to.
    Lords amendments Nos. 15 to 21 agreed to

Criminal Attempts Bill
Lords amendments considered.
Criminal Attempts Bill
  Clause 4

    TRIAL AND PENALTIES
    Lords amendment: No. 1, in page 4, line 32, leave out subsection (6).
    4.37 am
    The Minister of State, Home Office (Mr. Patrick Mayhew): I beg to move, That this House doth agree with the Lords in the said amendment.
    Mr. Deputy Speaker (Mr. Bernard Weatherill): With this we may take Lords amendments Nos. 5, 6 and 8.
    Mr. Mayhew: I believe that it may also be for the convenience of the House if, at the same time, we take Lords amendments Nos. 2, 3, 4 and 7. Each of those is either a drafting or a technical amendment.
    Mr. George Cunningham: At 4.30 in the morning there is no need to detain the entire House to hear again the explanations of the amendments, which were given in the House of Lords. We have all studied those explanations. The Opposition are perfectly content with them. I would have wished that two of the Lords amendments that did not carry a majority in the other place could be amongst the number here, but they are not. Therefore, our activities can be less controversial and much shorter than they might have been otherwise.
    Question put and agreed to.
    Lords amendments Nos. 2 to 8 agreed to.

Duty-free Goods (Airports)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Thompson.]
4.38 am
Mr. Anthony Grant: At this late hour I am extremely grateful to my hon. and learned Friend the Minister of State, Treasury for being here to answer this debate after the long days and nights that he has spent on the Finance Bill.
This is an important subject, because most of us have experienced the tedious burden of humping duty-free goods on and off aircraft and the discomfort that the load causes during our journey. This crazy ritual, which has become a standard feature of air travel nowadays, has worse effects than mere inconvenience to passengers.
At a time of high energy costs and severe financial difficulty for airlines throughout the world, this absurd practice adds hugely to overheads and hence to fares or subsidies to airlines. British Airways have undertaken a careful analysis of the effects upon them. They estimate that the average quantity of duty-free liquor carried by passengers imposes an additional fuel cost of over £1 million per annum. Other airlines, large or small, sustain equivalent added costs throughout the world. As energy costs rise, so will this quite unnecessary bill.
What is more, the carriage of duty-free alcohol is an added safety hazard. My hon. Friend the Member for Newbury (Mr. McNair-Wilson) drew attention to this in a thoughtful speech on 22 May this year. Further, the British Air Line Pilots Association, in a recent report, pointed out this factor most forcefully. In 1973, in the Varig fatal accident, 117 lives were lost following an uncontrollable fire that was found to have been exacerbated by duty-free spirits igniting in the luggage racks.
During one month in 1980 there were seven recorded cases in the United States where bottles were used by hijackers. The hijacked VC 10 at Amsterdam was burnt out as a result of a deliberate fire started with duty-free bottles. On a lesser scale, there have been instances of injury to passengers as a result of falling bottles, and falling bottles have also proved an added hazard when emergency exits have had to be made from aeroplanes. Of course, the safety aspect should not be exaggerated, but anything that minimises risk should be carefully considered.
What can be done? One solution would be to abolish the whole silly charade of duty-free goods. There seems to be no justification for giving air travellers a duty-free allowance in addition to what they need to drink in transit. But, of course, our airports earn about £20 million to £30 million a year from their duty-free shops, and that admirable company Sealink also benefits from them. Certain other interests no doubt benefit and would be in jeopardy if there were complete abolition.
Therefore, I propose a simple solution, and that is to enable duty-free goods to be purchased at the point of arrival rather than the point of departure. Purists in Her Majesty's Customs, I know, look upon this suggestion with the same horror a maiden aunt looks upon the notion of a blue film show. There is really no more or less morality and no more or less justice in buying duty-free
1366
goods when one arrives rather than when one leaves. It is vastly more economic for airlines and air travellers generally. It is also safer.
What could be more absurd than the quite common practice of buying at the shop in Heathrow and lugging bottles to Europe or elsewhere in the world—and I confess that I have sometimes done this myself—and then bringing them back again, all because one feared that a suitable shop might not be available abroad? I understand that there would be no legal difficulties in following this proposal because section 13 of the Customs and Excise Duties (General Reliefs) Act 1979 provides:
"The Commissioners may by order make provisions for conferring on persons entering the United Kingdom reliefs from duty and value added tax".
There may be international obligations to be overcome, and if there are I am sure that my hon. and learned Friend will tell me. These should not be insuperable. All nations that have airlines have an interest in economy and safety of operation. Many places already provide duty-free shops for those arriving. This is the case at Rio de Janeiro, Cairo, Khartoum, Colombo, Singapore, Caracas and Iceland, and I understand that Australia is considering adopting such a facility.
There would have to be some physical reorganisation at airports, but anyone who uses Heathrow will know that reorganisation is almost a feature of everyday life there. Transferring sales to the point of arrival would make little if any difference to sales. Airlines would gain by carrying either less fuel or more passengers, instead of whisky and gin. Passengers' rights would be unchanged, and their benefits would be greater safety and convenience and, quite possibly, cheaper fares.
The Customs would not lose their precious revenue. Her Majesty's Customs is still thinking back to the age when travel was by sea and it was sometimes necessary to take victuals for sustenance on long voyages, and, if one had some left over, there was a concession to bring it in. However, in the interests of economy, air travel and safety, Customs should be brought into the jet age. I look to the Minister of State, who is one of the most reasonable and sympathetic Treasury Ministers I have known, to do so.
4.46 am
The Minister of State, Treasury (Mr. Peter Rees.): I am grateful to my hon. Friend the Member for Harrow, Central (Mr. Grant) for his kind words. May I in turn congratulate him on the zest with which he has raised a subject of such topical importance after what has seemed like 36 hours of almost continuous fiscal debate? At any rate, he has not flagged.
Before I come to the solutions that he propounds, I hope that the House will forgive me if I briefly outline the historical background to the establishment of duty-free shops and the relationship with the personal allowances granted to passengers on arrival in the United Kingdom.
Duty-free shops were originally provided to encourage visitors to this country to purchase British goods before they returned home. That was considered to be a useful way to advertise domestic products, and, in the past certainly, the foreign currency earned in that way was regarded as a valuable, if small, contribution to our balance of payments. The facility was later extended to United Kingdom residents going abroad, partly for similar reasons but mainly because access to duty-free shopping

1367
had come to be regarded throughout the world as a normal convenience for outward-bound passengers. The basis of the relief in law is, of course, that exported goods are relieved from indirect taxes.
The personal allowances which permit incoming passengers to import small quantities of goods free of revenue charges have their roots—as my hon. Friend perceptively observed—in the distant past, when vessels were victualled for long voyages, and both passengers and crew usually had something in hand on their return. Even in those distant days, Customs recognised the need for compassion and desisted from levying duties on nominal amounts of food, drink and tobacco imported in that way.
Nowadays, of course, the purpose of the allowances granted to incoming passengers is to speed up Customs clearance by avoiding the need to collect small sums of duty and tax on items that are typically bought by returning tourists. It is an administrative measure that conveniently embraces a hallowed tradition of the past. It is not, as it were, a reward for having been abroad to which passengers should be entitled even if they did not actually bring the goods with them.
My hon. Friend touched on the question of air safety, and naturally I share his concern. However, I remind him and the House that the subject of liquor carried on aircraft was aired in the House on a previous occasion on 4 February last year, when my hon. Friend the Minister of State, Department of Industry, who was at the time Under-Secretary of State for Trade, and who, of course, has personal experience of flying in many roles, said that he did not believe that there was an unacceptable safety hazard if liquor was stowed properly—and I agree that that is a qualification to his remarks.
However, quite large amounts of liquor are, in any event, carried aboard aircraft for sale and consumption in flight. I doubt whether passengers would relish flying dry, even in the interests of greater safety or for the more convenient administration of Customs and Excise at either end.
I noted carefully what my hon. Friend said about fuel saving. I think, however, that it is not unreasonable to say that the quantities involved are so variable and so small, in the light of the weight of fuel, passengers and baggage carried and, indeed, of the aircraft itself, as not to be susceptible to precise worldwide calculation. It is certainly doubtful whether the quantity of spirits carried by passengers is any greater than that held in aircraft stores.
My hon. Friend, with his background, rightly touched on some of the legal constraints which might have to be considered. I should perhaps, therefore, turn briefly to some of the constraints which apply to the introduction of
1368
inward duty-free shops, which I think was his preferred solution to what admittedly is a problem that we should consider.
On the international front, this country, together with most other major countries engaged in air transport, has subscribed to recommendations made in 1960 by the Customs Co-operation Council that sales in duty-free shops should be confined to travellers leaving for abroad by sea or air. I must advise the House that we could not depart unilaterally from our obligations under that convention, and there is little sign that other countries concerned would welcome a move in that direction.
My hon. Friend listed a number of places which have such facilities, but the airports concerned are located in developing countries seeking to take advantage of a marked preponderance of inward tourists rather than their own nationals going abroad. I must observe that only one of the countries that he mentioned—it would perhaps be invidious to single it out—is a signatory to the convention to which I have drawn attention.
I do not believe that inward facilities would be generally welcomed by airport operators. I understand that it would be difficult to locate them at our principal airports without major alterations which would be extremely expensive. Their use would also tend to create congestion and delay at the very point where every attempt is made by all concerned to streamline and speed the clearance of passengers. Inevitably there would be a proliferation of such facilities.
I can assure my hon. Friend that the Customs and Excise, far from being lodged in the eighteenth or nineteenth century, is acutely aware of the problem. It maintains a very close relationship with its counterparts in the air industry and makes every effort to keep abreast of developments in this rapidly developing field. It has considered very carefully the idea of introducing inward duty-free shops, but has concluded—rightly, I believe, at the present time—that such a change in favour of air passengers could not be justified and would not be practicable in the absence of widespread agreement within the industry as a whole and with major countries concerned in air transport.
My hon. Friend has done a service to the House in ventilating the problem. I hope that I have demonstrated that thought has been given to developments in this area. Although it may be necessary in future to attempt to renegotiate the convention, depending on developments in this area, I must say—without, I hope, myself being regarded as stuck in the eighteenth or nineteenth century—that I do not feel that the moment has yet arrived for the imaginative development proposed by my hon. Friend.
Question put and agreed to.
Adjourned accordingly at seven minutes to Five o'clock am.

NATIONAL FINANCE
  Inland Revenue (Manpower)
  Inland Revenue (Manpower)
  Departmental Expenditure
  Departmental Expenditure
  Exchange Control (Net Outflows)
  Exchange Control (Net Outflows)
  Family Taxation
  Family Taxation
  Index-linked Government Stock
  Index-linked Government Stock
  TRADE
  Brazil
  Brazil
  Top 20 Export Markets
  Top 20 Export Markets
  European Community (Oil Exports)
  European Community (Oil Exports)
ENERGY
  National Nuclear Corporation
  National Nuclear Corporation
  Energy Conservation and Nuclear Power
  Energy Conservation and Nuclear Power
  Sizewell
  Sizewell
  Gas Prices
  Gas Prices
  Morcambe Bay (Contracts)
  Morcambe Bay (Contracts)
  Oil-sharing Arrangements
  Oil-sharing Arrangements
  Energy Demand Restraint
  Energy Demand Restraint
AGRICULTURE, FISHERIES AND FOOD
  School Milk
  School Milk
DUCHY OF LANCASTER
  Peers (Appointments)
  Peers (Appointments)
EDUCATION AND SCIENCE
  University Courses
  University Courses
  Overseas Students
  Overseas Students
  European University Institute, Florence
  European University Institute, Florence
  Books (Expenditure)
  Books (Expenditure)
  Peers (Appointments)
  Peers (Appointments)
  University Grants
  University Grants
  Students (Overseas Courses)
  Students (Overseas Courses)
  Universities (Staff-Student Ratios)
  Universities (Staff-Student Ratios)
  Assisted Places Scheme
  Assisted Places Scheme
SOLICITOR-GENERAL FOR SCOTLAND
  Solway Firth Affluents Act 1804
  Solway Firth Affluents Act 1804
  Civil Service Dispute (110-day Rule)
  Civil Service Dispute (110-day Rule)
  Breach of the Peace (Prosecutions)
  Breach of the Peace (Prosecutions)
INDUSTRY
  London
  London
  Greater London Council Area (Closures)
  Greater London Council Area (Closures)
  Keighley
  Keighley
  Manufacturing Industry (Output)
  Manufacturing Industry (Output)
WALES
  Peers (Appointments)
  Peers (Appointments)
  Multiple Sclerosis
  Multiple Sclerosis
  Children (Health Protection)
  Children (Health Protection)
  Diphtheria and Tetanus
  Diphtheria and Tetanus
HOME DEPARTMENT
  Criminal Statistics
  Criminal Statistics
  Entry Certificates
  Entry Certificates
  Civil Disorder
  Civil Disorder
  Street Violence
  Street Violence
  Prisons (Capacities)
  Prisons (Capacities)
  Police (Resignations)
  Police (Resignations)
  Wimbledon and Lords (Police Costs)
  Wimbledon and Lords (Police Costs)
  Extremist Groups
  Extremist Groups
  Remands
  Remands
  Drinking Water
  Drinking Water
  Community-based Police Stations
  Community-based Police Stations
  Police Stations
  Police Stations
  Welfare of Animals
  Welfare of Animals
  Dr. Clift
  Dr. Clift
  Mr. Preece
  Mr. Preece
  Police Officers (Injuries)
  Police Officers (Injuries)
  Long Term Prisoners (Wandsworth Prison)
  Long Term Prisoners (Wandsworth Prison)
  Overseas Visitors
  Overseas Visitors
SOCIAL SERVICES
  Postgraduate Teaching Hospitals (London)
  Postgraduate Teaching Hospitals (London)
  Smoking
  Smoking
  Benefit Claims (Scunthorpe)
  Benefit Claims (Scunthorpe)
  Unemployed Persons and Dependants
  Unemployed Persons and Dependants
  Pharmacy Services
  Pharmacy Services
  Alcoholism
  Alcoholism
  Supplementary Benefit
  Supplementary Benefit
  National Health Service (Linen)
  National Health Service (Linen)
  Pneumoconiosis
  Pneumoconiosis
  Chronic Sickness and Disability (Early Retirement)
  Chronic Sickness and Disability (Early Retirement)
  Sharoe Green Hospital, Preston
  Sharoe Green Hospital, Preston
  Orthopaedic Surgery
  Orthopaedic Surgery
  Rampton Hospital (Review Board)
  Rampton Hospital (Review Board)
ATTORNEY-GENERAL
  Peers (Appointments)
  Peers (Appointments)
  Sven Books
  Sven Books
  Welfare Services (Wiltshire)
  Welfare Services (Wiltshire)
NORTHERN IRELAND
  Housing Executive (House Sales)
  Housing Executive (House Sales)
FOREIGN AND COMMONWEALTH AFFAIRS
  British Broadcasting Corporation (External Services)
  British Broadcasting Corporation (External Services)
  Iraq (Uranium Supplies)
  Iraq (Uranium Supplies)
  Inhumane Conventional Weapons (Convention)
  Inhumane Conventional Weapons (Convention)
EMPLOYMENT
  Mannpower Services Commission
  Mannpower Services Commission
  Warrington (Unemployment and Job Vacancies)
  Warrington (Unemployment and Job Vacancies)
  Unemployment Statistics
  Unemployment Statistics
  Training Centres (London)
  Training Centres (London)
  Unemployed Persons (London)
  Unemployed Persons (London)
  Disabled People
  Disabled People
  Commission for Racial Equality (Code of Employment)
  Commission for Racial Equality (Code of Employment)
  Blackburn (Interest Charges)
  Blackburn (Interest Charges)
  Community Enterprise (Wolverhampton)
  Community Enterprise (Wolverhampton)
  West Midlands (Short-time Working)
  West Midlands (Short-time Working)
  Youth Opportunities Scheme
  Youth Opportunities Scheme
  Unemployment (Keighley)
  Unemployment (Keighley)
DEFENCE
  Departmental Housing (Scotland)
  Departmental Housing (Scotland)
  Falkland Islands
  Falkland Islands
  Queen's Flight (Helicopters)
  Queen's Flight (Helicopters)
  Royal Yacht "Britannia"
  Royal Yacht "Britannia"
TRANSPORT
  British Rail (Electrification)
  British Rail (Electrification)
  Milton Keynes
  Milton Keynes
  Pedal Cyclists (Casualties)
  Pedal Cyclists (Casualties)
ENVIRONMENT
  Nuclear Fall-out Products
  Nuclear Fall-out Products
  Council House Sales
  Council House Sales
  Grant Allocation (Macclesfield and Cheshire)
  Grant Allocation (Macclesfield and Cheshire)
  Sewers
  Sewers
  Inland Waterways Amenities Advisory Council
  Inland Waterways Amenities Advisory Council
OVERSEAS DEVELOPMENT
  Crown Agents Holding and Realisation Board
  Crown Agents Holding and Realisation Board
  Sex Shops
  Sex Shops
  Local Authorities (Audits)
  Local Authorities (Audits)
  District Audit Service
  District Audit Service
SCOTLAND
  Local Authority Redundancies
  Local Authority Redundancies
  Oil-related Industry
  Oil-related Industry
  Lothian Regional Council (Spending)
  Lothian Regional Council (Spending)
  European Regional Development Fund
  European Regional Development Fund
  Airguns
  Airguns
  Herring Fishing
  Herring Fishing
  Local Authorities (Budgets)
  Local Authorities (Budgets)
  Farm Incomes
  Farm Incomes
  Biotechnological Industries
  Biotechnological Industries
  Health Councils
  Health Councils
  Strathclyde Regional Council (Financial Problems)
  Strathclyde Regional Council (Financial Problems)
  Rating Reform
  Rating Reform
  Fishing Industry
  Fishing Industry
  East Lothian (Services)
  East Lothian (Services)
  Vanity Fair International
  Vanity Fair International
  Employment Creation (Dundee)
  Employment Creation (Dundee)
  Local Authorities (Rate Support Grant)
  Local Authorities (Rate Support Grant)
  Local Authorities (Interest Payments)
  Local Authorities (Interest Payments)
  Unemployed Persons
  Unemployed Persons
  Housing
  Housing
  Education (Scotland) Bill
  Education (Scotland) Bill
  Mr. Preece (Forensic Evidence)
  Mr. Preece (Forensic Evidence)
  Undefended Divorce Cases
  Undefended Divorce Cases
CIVIL SERVICE
  Government Manpower
  Government Manpower
  Government Departments (Rayner Review)
  Government Departments (Rayner Review)

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Peterborough.
The Lord Netherthorpe—Sat first in Parliament after the death of his father.

MSC Sectoral Review: Training Arrangements
Lord Rochester: 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, when the Manpower Services Commission has completed its current sectoral review of training arrangements, it will publish the criteria on which its conclusions are based and indicate the extent to which the criteria have been met in each sector.
The Minister of State, Department of Employment (The Earl of Gowrie): My Lords, my right honourable friend the Secretary of State for Employment has asked the Manpower Services Commission to publish its report on its sectoral review of future training arrangements before the Summer Recess. The report itself is likely to explain the criteria which the commission has applied in carrying out its review, and to identify those criteria which have influenced its conclusions on the most appropriate training arrangements for each sector.
Lord Rochester: My Lords, I thank the Minister for that Answer. Is he aware that it will give pleasure to those who feel that the principles which will help the Secretary of State to determine the
future of industrial training boards should be open to public and parliamentary scrutiny? Is the noble Earl in a position to say whether the commission's conclusions are likely to be made known to us before the Report stage and Third Reading of the Employment and Training Bill which is now going through your Lordships' House?
The Earl of Gowrie: My Lords, the usual channels have arranged for the Report stage and Third Reading to take place on Friday week, and that still leaves us a little time before the beginning of the Recess, so I cannot say which will be the first.

Road and Rail: Investment Returns
2.38 p.m.
Lord Avebury: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they consider that a study should be undertaken of how to compare road and rail investments; and if so, by what body they will have it done.
The Earl of Avon: My Lords, the Department of Transport and the British Railways Board have jointly been considering the ways in which the returns on road and rail investment can be compared. This work has been delayed by the pressure of other work—for example, on the electrification review. The independent Standing Advisory Committee on Trunk Road Assessment (SACTRA) was consulted about the work, and asked to be kept informed. It is possible that the newly reconstituted SACTRA may wish to return to this issue.
Lord Avebury: My Lords, when the Minister says that SACTRA has been reconstituted, is that not rather an understatement for the sacking of every single member of this body except one? Why do the Government bother to rig the composition of advisory bodies in this way, rather than adopting the cheaper and more honest course of continuing to give preference to investment in roads as compared with rail, as all Governments have done in the past?
The Earl of Avon: My Lords, to answer the first part of the noble Lord's supplementary with regard to SACTRA, he may have been referring to an article in the New Scientist magazine; I hope the noble Lord will not believe everything he reads. When the appointments expired, my right honourable friend the Minister reviewed the future of the committee and its members. Some members made it clear that after, in many cases, four years' work on highly technical issues, they did not wish to continue for a further term. Others had changed their jobs or moved, so that service on the committee was less relevant or convenient. After four years of hard work, to refer to these hard-working gentlemen as having been sacked is totally wrong. The new board has been set up by my right honourable friend and consists of a very well-balanced board under the chairmanship of Professor Williams, who was himself on the previous board of SACTRA. So far as investment is concerned, we have maintained the investment ceiling for the railways, as the noble Lord is well aware, at the same level in real terms as the previous Administration, and we are perfectly prepared to stand on our record.
Viscount St. Davids: My Lords, have the British Waterways Board and the navigation authorities also been asked to join in this study? Is the Minister aware that the investment criteria so far used for investment in major navigations have been even weirder than some of those used for rail; and if the British Waterways Board are not involved in this, may I ask the noble Earl to say why they are not?
The Earl of Avon: My Lords, I cannot inform the noble Viscount off the cuff whether the British Waterways Board is involved in this, but of course the Department of Transport would consult them on anything relevant, and we had a very good Question Time on the British Waterways Board only last week.
Lord Moyne: My Lords, can my noble friend assure us that, when considering investment in the railways, the benefit to the steel industry is taken into account?
The Earl of Avon: My Lords, I am sure that all relevant information, apart from that of financing, is taken into account.
Lord Underhill: My Lords, would the Minister accept that there are a number of noble Lords who take the view that it is not a question of competing for investment in the roads, waterways or railways, but a question of what is best for the nation, what will help in our recovery and what will be of assistance in dealing with unemployment?
The Earl of Avon: I am grateful to the noble Lord for those remarks, my Lords. The subject of comparability is, as he said, inherently difficult and in principle there is a case for the Government, in assessing proposals for public sector transport investment, having a mechanism for comparing investment levels and projects for one transport mode with those for another mode, and I fully take the point made by the noble Lord.
Lord Avebury: My Lords, in regard to SACTRA, may I ask whether, as he has obviously read the New Scientist, the noble Earl recalls that Professor Peter Hall, who was one of the members who was sacked, said he was surprised that they should have made such a clean sweep? Is the Minister aware that, while I do not believe everything I read in the newspapers, I take the word of Mick Hayman in preference to that of the Department of Transport? In regard to the substantive merits of road and rail investment, may I ask whether the noble Earl would agree that in the past it has always been the practice to insist that British Rail should adhere to the normal public sector investment criterion that it should meet the forecast rate of return specified in advance by the Treasury, but that no such restriction is applied to investment in roads?
The Earl of Avon: My Lords, I really must object to the noble Lord using the word "sacked", which he has culled from the New Scientist magazine. They were not sacked; and so far as Professor Hall is concerned, since he is now working for the University of California, it would be quite hard for him to continue to work for the board in London. With regard to the noble Lord's other comments on investments, I think I agree with the first ones, but I am not sure about the latter.

The Queen's Flight
2.43 p.m.
Lord Boyd-Carpenter: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how long each of the Andover-type aircraft currently used by the Queen's Flight has been in service.
The Minister of State for Defence Procurement (Viscount Trenchard): My Lords, two of the Andover aircraft currently used by the Queen's Flight entered the Royal Air Force service in September 1964, and the third in March 1965.
Lord Boyd-Carpenter: My Lords, does my noble friend appreciate that the anxiety that has been expressed in a number of questions in this House will certainly not be dissipated by those figures? Are these not somewhat elderly aircraft? And despite the admirable maintenance of the Queen's Flight, in view of the fact that there have been one or two somewhat disconcerting accidents to aircraft of this type and age, are not Ministers perhaps taking a very serious responsibility in not going forward with a replacement?
Viscount Trenchard: My Lords, these aircraft are somewhat elderly—I think that my noble friend is correct in those adjectives—but this is certainly not exceptional among extremely reliable aircraft of various kinds which we have had. The flying hours of the Queen's Flight Andovers are far fewer than the average for the Andovers used as communication aircraft in the Royal Air Force. In our view, the safety record of the aeroplane is very high, and, as my noble friend has mentioned, the maintenance is to an exceptionally high standard. Yes, the Government are confident that this is an extremely safe and reliable aircraft.
Baroness Llewelyn-Davies of Hastoe: My Lords, would the noble Viscount forgive me if I asked him a rather practical question about these aircraft? Is he aware that since the aircraft are unable to fly very high, Privy Counsellors, when flying north as part of their duty, often are most horribly sick?
Viscount Trenchard: My Lords, I cannot answer that point, except to say that I have flown quite often in the aircraft without experiencing any of the difficulty that has been mentioned. I would take the opportunity to say that the question of the prestige of our Royal Family flying in the aircraft has been mentioned on previous occasions—I think by my noble friend—and I would remind the House that on long journeys abroad Her Majesty almost invariably flies in a VC 10.
The Earl of Selkirk: My Lords, can the noble Viscount say whether the navigation equipment is fully up-to-date?
Viscount Trenchard: My Lords, I think that for the purpose for which the RAF, and for that matter the Queen's Flight, aircraft are used, and for the conditions in which they are used, the instruments are more than adequate. I say again that the aircraft is extremely reliable.
Lord Beswick: My Lords, while admiring the defence that the noble Viscount the Minister makes of a quite indefensible position, may I ask him, would not the situation here be eased if the vote for the Flight were spread over departments other than the Ministry of Defence?
Viscount Trenchard: My Lords, the noble Lord, with his past background of experience in the manufacture of superb modern aircraft, will of course take the view that he has taken. However, I must remind him that if we are to meet the growing threat (which we shall be talking about next Monday) we really must select the necessary enormously high-cost equipment. Regrettably, this item comes lower down the priority list. So far as other departments are concerned, the whole Government policy is still to try to cut further the undue proportion of national expenditure that is represented by public expenditure. The defence budget is under great stress, but so, too, are budgets of all other departments.
Lord Gisborough: My Lords, can the noble Viscount confirm that there are coming off the assembly line at Hurn at the end of the year two small VAC-475s which are not sold? If that is true, would they not be very suitable for transfer to the Queen's Flight? Secondly, is it not a fact that many of the uses to which the Queen's Flight are put would be better
and more economically catered for by the HS 125s in the ministerial flight from Northolt? Therefore is there not a very strong case for combining the ministerial flight and the Queen's Flight?
Viscount Trenchard: My Lords, I cannot give a reply in relation to the first part of my noble friend's supplementary question. I do not think that the aircraft mentioned is of the size normally required for Queen's Flight operations; neither is the HS 125. The question of amalgamating the HS 125 Squadron with the rest of the communications squadron has attractions and has been looked at, but that would still involve considerable additional cost in moving the aircraft and in servicing different aircraft at different places; and it cannot claim priority at present.
The Earl of Kimberley: My Lords, will my noble friend say whether Her Majesty's Government have considered the plea by the Air League that in the interests of economy the Queen's Flight should be amalgamated with No. 32 Squadron?
Viscount Trenchard: My Lords, I think my last answer in relation to two other aircraft covers that proposition as well.
Lord Balfour of Inchrye: My Lords, may I ask the Minister this question: In terms of modern speed, are not the Andovers considered extraordinarily slow and antiquated? Is the Minister aware that there is a saying in the Royal Air Force about those who use Andovers—that strong men on bicyles can pass them on a windy day?
Viscount Trenchard: My Lords, my noble friend has such experience of aircraft flying slower than bicyles that I would hesitate to take him on. But I can assure him that I get to the West of Scotland to visit Coulport, for instance, I think in about an hour and a half, and have a very nice meal on the way.
The Lord President of the Council (Lord Soames): My Lords, we have one more Question to go, and I think the House would wish us to move on to it.

Work Sharing
2.51 p.m.
Viscount Hanworth: 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 have discussed with the trades unions their ideas on work sharing as a means of reducing unemployment, and if so to what extent the unions are willing to accept some small but necessary reduction in shared wages if products produced under such a regime are to remain competitive.
The Earl of Gowrie: My Lords, we have not discussed this issue specifically with the trade unions, as it is best dealt with directly between employers and unions in individual cases. The noble Viscount is, however, quite right to point out that, if work is shared to create extra jobs, those involved must accept that their combined wages should be shared, too, in order to allow the goods or services they produce to remain competitive. Otherwise, all the jobs will be put at risk.
Viscount Hanworth: My Lords, I thank the noble Earl for that reply. May I ask him whether he realises that it has been reliably estimated that it costs the country something approaching 80 per cent. as much to have people not working and getting unemployment benefit as it would if they were actually in a job? This being so, and if the Government are prepared to look at their accounting, it surely creates great possibilities as to what could be done, not only by way of work sharing—the Government getting the 80 per cent. which they would otherwise have to lose—but also, of course, in cutting down overtime, were they to subsidise by some means firms which are at the moment in fact relying on overtime. Would he not agree that this is an area which it would be well worth looking at in conjunction with the unions on the basis that everybody would have to give up a bit to decrease the unemployment?
The Earl of Gowrie: My Lords, no one is keener to bring down unemployment that I am; and I know of cases where firms have offered one salary for two jobs to young people and to new recruits, and that seems to me to be an admirable and sensible thing to do. But overall, as I said in my original Answer, it is more sensible for unions and employers to negotiate together about the sharing of work than for the Government to plunge in themselves.
Viscount Hanworth: My Lords, if I may take up one point that the Minister has, I think, failed to answer, there is 80 per cent. which, one way or another, the Government have to spend on unemployed persons—that is including the tax they do not get, and so on—and it really is up to them to put that 80 per cent. to some useful purpose in solving this problem. Could the noble Earl deal with that point, which I thought I had made clearly at the start?
The Earl of Gowrie: My Lords, the 80 per cent. figure is not accurate in any respect, and the noble Viscount must be aware that the unemployment register is a constantly shifting register. Even at this particular dark hour more than 300,000 people a month are leaving the register.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that, while his Answer has rectified it to some extent, the Question as it stands depicts very dangerous trends in suggesting that the Government and the unions should talk? Are not management and the owners of businesses to have any say in how their labour should be deployed in the interests of their companies and the country?
The Earl of Gowrie: My Lords, I agree with my noble friend.
Lord Brockway: My Lords, in view of the suggestion that everyone should share, would this proposal extend to the salaries of the management and the fees of the directors in these concerns?
The Earl of Gowrie: My Lords, since the proposal is the proposal of the noble Viscount, Lord Hanworth, and not mine, that question is perhaps more properly directed to him.
Lord Molloy: My Lords, would the noble Earl not agree that the Question itself is indicative of the appalling situation into which the present Administration has got this country? Would he not further agree that his Answer confirms that; and is it not the fact of the matter that what we have to do—and it is a possibility—is create jobs; that is, take the unemployed and give them work to do, which they want to do? They want to earn a living, not to be dished out with money on the dole; and, if we were to follow the policies which have been enunciated by the Leader of the Opposition and by well-known economists, this could be achieved and our nation could be saved.
The Earl of Gowrie: My Lords, I would very much welcome the co-operation of the noble Lord and his friends in talking to unions about the lowering of objections to activities by young people which are at present undertaken by unionised labour.
Lord Jenkins of Putney: My Lords, would not the noble Earl have a word with the Institute—
Viscount St. Davids: My Lords, would the noble Earl not confirm that he and the Members of the Government with whom he sits have for a very long time been urging the unions to ask for rather lower rises in order to keep more of their colleagues in employment? Is this not in fact the same picture as was put forward by my noble friend Lord Hanworth?
The Earl of Gowrie: My Lords, yes, I have no objection to the proposition that lower wages will protect more jobs. I agree with both the noble Viscount and the noble Viscount, Lord Hanworth, on that. My objection was as to whether the Government were the best agency to try to determine what people should bargain at the workplace in this respect.
Lord Jenkins of Putney: My Lords, would not the noble Earl agree that another way to tackle this problem would be by issuing a sort of reverse rights issue, whereby you substitute one share for two? By this means you halve profits, and this makes the product more competitive in exactly the same way as the noble Viscount proposes.
The Earl of Gowrie: My Lords, I very much enjoy the financial language on the lips of the noble Lord, with his background. I must point out—and this is a view not necessarily of the Government, however—that the CBI recently came out against a reduction in hours overall because of loss of competitiveness. But, as I said to the noble Viscount, Lord Hanworth, where people are offering two jobs for one salary that would seem to me to be a sensible way to proceed, particularly where new recruits are concerned.

Business
Lord Denham: My Lords, it may be for the convenience of your Lordships if I announce that dinner will be available today at the usual time.
Also, your Lordships may wish to know that at a convenient moment after 3.30 my noble friend Lord Belstead will, with the leave of the House, repeat a Statement which is to be made in another place on equipment for the police.

Transport Bill
2.58 p.m.
Read 3a, with the amendments.
Lord Underhill Lord Underhill moved Amendment No. 1:
Page 3, line 38, at end insert—
("(9) Notwithstanding the provisions of this section and section 1 above the harbours company shall continue to be part of Sealink").
The noble Lord said: My Lords, during the Committee stage I asked the Minister whether, in any possible disposal of the shipping and harbour service operations of Sealink, they would not be separated. The Minister said that he recognised that there were such apprehensions, but assured me that it was the firm intention that the shipping and harbour operations of Sealink would be kept together. But, as noble Lords will appreciate, there have been discussions on possible proposals for, I do not know whether one would call it a take-over, a merger or an amalgamation, possibly with another cross-Channel ferry operator. Therefore, it would appear desirable to ensure that what the Government say is their intention and what I raised during the Committee stage should be written into the Bill. I readily have accepted the assurance of the Minister. Therefore, that is not in question; but Secretaries of State may change and the view of the Government may change. In view of the fact that the shipping and harbour services are so closely related to Sealink, the amendment proposes that this should be written into the Bill so that what the Government seek and what I sought at Committee stage is firmly in the Bill. I beg to move.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin): My Lords, Clause 2 of the Bill provides for the establishment of a new company to which Sealink's harbours will be transferred. There are legal and commercial reasons for this which I have explained to the House before and which I shall not therefore repeat. The new company will be a wholly owned subsidiary of Sealink.
It is true that as the Bill stands there would be nothing to prevent the Railways Board selling the harbours company separately from Sealink's shipping business, or to stop any future private sector owner of Sealink disposing of the harbour company while retaining the shipping business. However, I do not think that this is likely to happen. The present intention of the Railways Board is that the two businesses should be kept together, and there are good commercial reasons for this. Sealink believes that ownership of its harbours, some of which are strategically very well placed for crossings to the Continent and Ireland, gives its shipping business a significant advantage over its competitors. If all connection between the two businesses were severed, in Sealink's view this would damage the company's commercial interests. Assuming that this is so, separate sales might also be expected to command a lower price than if the two companies are sold together. So, there is every reason to expect that the board will want to keep the two companies together.
I would have thought that that was as powerful an argument to assuage the concerns of the noble Lord, Lord Underhill, as the previous references which were made as to the attitude of the board on general lines, the Secretary of State, and so on. I should have thought a good commercial incentive was a very substantial additional reason why the dangers which he fears in fact will not happen.
Lord Underhill: I am very grateful to have the reassurance from the Minister. Everything that has been said justifies why the amendment should be in the Bill. He has agreed that it is desirable and commercially wise to do so. Therefore, it would seem that this ought to be something written into the Bill. It is not an issue on which one would seek to divide the House but there is a principle involved. I shall not withdraw this amendment but ask the House to make a decision without a Division. If only the Minister would accept that what he wants is what we want and that all his arguments go to that length as well.
On Question, amendment negatived.
3.3 p.m.
Clause 3 [Powers of Secretary of State to give directions]:
Lord Underhill Lord Underhill moved Amendment No. 2:
Page 4, line 3, at beginning insert—
("The Secretary of State shall exercise these powers in a reasonable manner and").
The noble Lord said: My Lords, at both Committee and Report stages various noble Lords from all sides of the House have considered amendments and expressed their views on the arbitrary powers which are given to the Secretary of State under Clause 3 of the
1240
Bill. The noble Lord, Lord Bellwin, at each stage could not accept the particular amendments, and at Report he could not accept an amendment which proposed deletion of the entire clause because of these arbitrary powers. The noble Lord said that it was essential that the powers were wide-ranging but they were reserve powers. I quote:
"… we have no intention of using these powers in an underhand or vindictive way or in a way which damages the interests of the board's main activity …"—[0fficial Report, 2/7/81; col. 338.]
What we are suggesting in the amendment is that that ought in some way to be put into the Bill. In framing this amendment, we considered how it was possible to lay down some criteria because both at Committee and Report stages the point was: What should be the criteria for the Government using the reserve powers? It may be recalled that at the Report stage there was an amendment which intended to make it quite clear that the board would not be asked to do anything which was against the powers and duties given to it under the previous Act.
It is extremely difficult to frame a criteria and therefore we are using the words:
"The Secretary of State shall exercise these powers in a reasonable manner and".
The word "reasonable" is used in a number of places in this Bill. Only this week there was a long discussion in your Lordships' House on the word "reasonable" in another Bill. What we are trying to do in this amendment is to make it quite clear that the Minister will use the powers in a reasonable way. In other words, as the Minister has said, this is the intention. That should be written into the Bill. This will give an assurance for the future; and whatever may be the wise attitude of the present Secretary of State, Secretaries of State can change. Therefore, it is desirable that these powers should not be used in an arbitrary way, but that they should be the reserve power to which the Minister has referred. Therefore, I hope that the noble Lord will accept the simple words in the amendment:
"The Secretary of State shall exercise these powers in a reasonable manner".
I beg to move.
Lord Bellwin: My Lords, this amendment takes up again a theme which we discussed both in Committee and at Report stage. The noble Lord is not convinced, despite extensive assurances which I have given, that the present or future Secretaries of State might use these powers in an irresponsible or vindictive way. I have to say that this latest amendment is no more acceptable to the Government than the others which we have already discussed and for reasons with which the House will by now be familiar.
I said at Report stage that it was important when taking powers of direction to leave no doubt as to the scope of those powers. If powers of direction are to be worth having they must be absolutely clear. I thought at the time that this was one issue on which there was agreement between us. The noble Lord, Lord Underhill, seemed to accept the force of my point that we must avoid enacting ambiguous powers whose use invites litigation. Yet this amendment offends against that important aim: it creates ambiguity in a clause whose purpose and effect are crystal clear. It

1241
introduces the criterion of reasonableness to the exercise of these powers; and yet offers no test by which reasonableness may be established.
Reasonableness depends on the eye of the beholder. We may be sure that the Secretary of State will not give directions that he does not think to be reasonable; but will the Railways Board agree? The very existence of a situation in which a direction needs to be given implies that agreement cannot be reached. The Secretary of State may want to do something that appears to him perfectly reasonable as a way of implementing the Government's policy—policy that will have been discussed in great detail by Parliament and approved. The Railways Board may disagree and may therefore want to challenge the reasonableness of the Secretary of State's direction simply on the grounds that it does not please them. In that case it would ultimately be for the courts to consider whether or not the Secretary of State's direction should stand. This is quite inappropriate. It is not for the courts to interpret Government policy and we ought not to include in legislation of this kind such a subjective requirement which can only be interpreted by a court.
Both Houses of Parliament have for decades accepted the principle that the appropriate Minister or Secretary of State should have the last word on when to exercise powers of direction given to him by Parliament. I have looked at more than a dozen Acts containing powers to direct the disposal of assets and, as one might expect from what I have said, none of them contains the kind of limitation that the noble Lord wants to introduce. I see nothing in the policy under discussion or the proposals before the House that suggests we should depart from these precedents. I respectfully suggest to the noble Lord opposite that the amendment would create confusion by its dependence on the subjective element which has no place in the drafting of legislation, would place on the courts a role in policy-making that they could not suitably carry out, and that its chief practical effect would be to give the board or any other interested party scope for argument and delay. I have given the noble Lord, Lord Underhill, categoric assurances about the Government's intentions to proceed as far as possible by agreement and to use the powers of direction with care and discretion. I cannot go further than that without nullifying the whole of Clause 3, a clause already approved by the House in Committee and at Report.
Lord Mottistone: My Lords, is the noble Lord, Lord Underhill, aware that some five or six years ago I put forward an amendment on similar lines to this when speaking from the Back Benches opposite, and his noble friend on the Front Bench—I forget who it was—said, a great deal more succinctly than my noble friend today has just said, that whenever Secretaries of State exercise powers they always do so reasonably?
Lord Underhill: My Lords, I am dealing with 1981 and not with 1976. Not only myself but other noble Lords, not of my party, at the Committee and Report stages expressed great concern at what they called the arbitrary, wide-ranging powers given to the Secretary of State. I made it clear, in moving the amendment this
1242
afternoon, that I fully accepted the assurances of the noble Lord, Lord Bellwin, and that I could do nothing else but accept them. However, it is what is written in the Bill that matters—I have said this so many times—and when there are wide-sweeping arbitrary powers in a Bill they can be used; and assurances are not sufficient to bind any future Government or any future Secretary of State. Far from my creating ambiguity by trying to put these words in, the ambiguity is already there, because the Secretary of State is given these powers of direction—direction to dispose of and to form subsidiaries. Those directions are really instructions, and no matter how much one may say, "We have the assurances that these will not be used", the fact is that the powers are there. What the amendment was seeking to do was to make their use "reasonable".
It is pretty clear that the Government will not move on this. I thought I was being very reasonable in moving this amendment, because I should have liked to frame exact criteria to be used for the reserve powers—I accept that the Government may wish to use reserve powers. But the clause does not refer just to reserve powers: it refers to these wide-sweeping powers which a Secretary of State could use if he so desired. The comments made about the word "reasonable" may unfortunately come back in discussion on other Bills in which the same word appears: the point was challenged in this House only a few days ago. In the circumstances, although I think our amendment is right and justified, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Clause 27 [Compulsory wearing of seat belts]:
Lord Monson Lord Monson moved Amendment No. 3:
Page 20, line 37, at end insert—
("Provided that such regulations shall not require the wearing of seat belts on private roads whether or not such roads coincide with public footpaths or bridleways").
The noble Lord said: My Lords, I beg to move this amendment. It is an improved version of an amendment which I moved last week and which attempted to provide that the wearing of seat belts should not be compulsory on private roads. I do not believe it was ever the intention of the noble Lord, Lord Nugent, or of the Government that seat belt compulsion should apply to cars when driven on private roads, but unless we accept this amendment, or something very like it, we are going to run into difficulties. The difficulties arise because under the 1972 Act the definition of "road" not only embraces public highways and bridges over public highways, as might be supposed, but also includes all roads to which the public have access.
The noble Lord, Lord Bellwin, speaking to my amendment last week, gave an assurance that the driveways of houses open to the public and indeed of all houses would be automatically exempt from these provisions, on the grounds that public access was strictly limited both in duration and in other respects. But this still leaves us with roads on private industrial estates, such as can be seen in great profusion within a radius of 10 miles from London Airport and in other parts of the country, private housing estates—and here Wentworth springs to mind: it is 20 years since I was

1243
there but I believe the roads there are still private—and, above all, farm roads where they happen to coincide with public rights of way, as they so often do. After all, public footpaths are open to the public 24 hours a day, by definition. One can visualise the sort of trouble this could cause for farmers and for those shooting over private estates. Modern Land Rovers have three seats in the front and it is common for three guns to sit in the front and put their dogs in the back; but there is no seat belt on the centre front seat in a Land Rover, nor is it possible to fit one.
The noble Lord, Lord Bellwin, suggested that this matter should be left for litigation, but I really do not think that is at all a good idea. Is it not the case that judges are constantly complaining of the way in which Parliament, certainly in recent times, produces imprecise and obscure statutes, which throw a great burden on the courts? I really think we ought to try to get it right at the outset.
It is a little unclear as to whether private roads can be dealt with under the regulations, because the regulations do allow the Minister to make different provisions for different circumstances. I am not sure whether that would include different provisions for different types of road. If that were indeed the case, perhaps this matter could be left until we have discussed the regulations. If the noble Lord could assure us on that point, and if he could also assure us that he would look very seriously at what has been said, then I would consider withdrawing the amendment; but I should like to hear what the Minister has to say.
Lord Glenkinglas: My Lords, I should like strongly to support the noble Lord's amendment in this regard, until we have better and further information. Owing largely to the operation of the Hydro-electric Board in the parts of Scotland where I live, there are very many miles of private roads, and on the estate which belonged to my brother and
myself there were something like 25 miles of private roads. They were used, as
the noble Lord said, by shepherds, by people crammed into Land Rovers, and so on. It would be absurd and ridiculous if the regulations suitable for other roads were insisted upon in these areas. What is more, it would be even more absurd if the police had to come and check up.
Viscount Barrington: My Lords, I should like strongly to support this amendment. I do not know if it is relevant, but I have only twice been upset and overturned completely in a motor car, and neither time was I driving. The second time was on a private road when I was rather rashly asked to act not as a kind of "baby-sitter" but as a semi-instructor to a learner driver, a rather timid, middle-aged lady. I tried to impress upon her that when one was approaching a right-angled turn one should go very slowly and turn into it. She was doing admirably until a friend of hers who had taken her out said: "You are going much too slowly." So the next time she was approaching a right-angled turn on to a private road I said: "I presume, Mrs. H, you are not going into that turning?" She said: "I am." It was much too late, of course. We landed upside down in a ditch with a crash of glass, and such is the peculiarity of one's
1244
subconscious that I found myself saying to her: "Mrs. H, this happens to everyone who learns to drive!"
Had I been wearing a seat belt I think I should have had much more difficulty during the 10 minutes it took me to extract myself and her from the car. Before it was lifted out by a crane in 10 minutes' time it had sunk very much deeper into the ditch, and I think that a seat belt, far from being a help in those circumstances, might have spared your Lordships this latest speech of mine. That is only one particular example but, for what it is worth, I would ask your Lordships' forgiveness for putting it forward.
Lord Barnby: My Lords, I also support the amendment, which I thought was put forward with great reasonableness by the mover. Without going into any details on this point, it seems to me that the question of seat belts had wide discussion in previous stages of the Bill. I refrained from participation, though I followed as closely as I could the reasonings put forward. But it seems not improper that, in this connection, there should be reference also to the general question of seat belts and it is on that that I have reservations.
I realise that, in the Bill's passage to this stage, there have been imposed qualifications which should allay the anxiety of many, like myself, with regard to the considerations in general, which equally apply to this amendment. Like so many in the country, my objection is to general compulsion in this matter, and it seems to me that the Government should now reflect on the possible priorities. Many speakers in the previous stages were moved by the emotional aspect of the loss of life, due to the absence of seat belts. There was less advancement of the point that people strapped in by seat belts often lose their lives, too. So I think that the Government should consider the priorities in other directions, which would help to avoid further loss of life. There are many other angles that could be advanced that would save lives, but which have received less emphasis.
Lastly, I come to the question of enforcement. How can the police be everywhere on private roads, so as to enforce this law? Already there is wide disregard of regulations and it is just folly, at this moment, when there is such pressure on the police, to put more on them by this legislation. That is why I support the amendment moved on this phase of the whole problem.
Lord Derwent: My Lords, there is one small point which I wish my noble friend would clear up. Am I right or wrong in thinking that the police have no right of entry, as such, for prosecution purposes on a private road?
Lord Bellwin: My Lords, this amendment is concerned with a technical legal matter and I am afraid that, in explaining why I think it is unnecessary, I shall have to resort to the use of legal technicalities. As I explained during the Report stage, the clause relates only to roads as defined by Section 196(1) of the Road Traffic Act. These are highways and any other road to which the public has access. I do not think we are concerned today with highways. As to other roads,

1245
I think the noble Lord, Lord Monson, is misdirecting himself when he refers to "private" roads. The ownership of the land is not the critical point. All roads are in private ownership, be it the ownership of a highway authority or other body or, more usually, the frontagers. One question in relation to a road which is not a highway is relevant—and only one. Namely, is it a road to which the public has a sufficient degree of public access to bring it within the statutory definition, or not? If so, the seat belts clause relates to it; otherwise, it does not.
Access is a matter on which there has been considerable litigation over the years. The fundamental principle is that the meaning of the words "to which the public has access" is a matter of fact and degree. It is clearly established that, if persons obtained access either by overcoming a physical obstruction or in defiance of a prohibition, express or implied, they do not have access within the meaning of the Act. It has been held that, to be within the definition, access has to be by the public in general and not by a special class of persons, such as residents or visitors only to an estate, and that general public access has, at least, to be by the tolerance of its owner or proprietor. And it has
also been held that use by dustmen, milkmen and postmen is not evidence of use by the public, so as to bring a "road" within the statutory definition. In giving these two random examples of decisions in the High Court, I hope that I may have persuaded the noble Lord, Lord Monson, that there is no need for the amendment which he moved and, with respect, it tends to confuse the issue.
Similarly the second part of his amendment is also somewhat misplaced. "Footpaths" and "bridle-ways" are also defined under Section 196(1) of the Road Traffic Act 1972. In neither case do the public have any vehicular right of way. Therefore, although there may be a right of way on foot or on horseback to that part of the land which is a footpath or bridle-way, that does not affect the
classification of the road and as public rights of access are not vehicular they are irrelevant to the point. It is no use saying that a private road is to come within the scope of this amendment, without defining that expression. For example, a private street is defined in great detail in the Highways Act 1980 for the purpose of street works. I respectfully submit that the amendment of the noble Lord, Lord Monson, would cause more litigation and uncertainty than it seeks to save. I feel that that detailed and rather tortuous explanation is necessary, because I understand exactly what the noble Lord is seeking to achieve.
I and other noble Lords who have spoken have much sympathy with what he is trying to achieve, but I fear that, because of the complexity of the definition and the legal technicalities to which I have referred, the amendment will not achieve what he wants and would only make the position more complex and difficult. For that reason, I hope the noble Lord will feel that he does not wish to press the amendment.
Lord Harmar-Nicholls: My Lords, does my noble friend's explanation mean that, if people who control what they think is a private road put up a notice saying that the public are prohibited, the effect would be that the amendment was in operation?
Lord Bellwin: No, my Lords. I cannot say that, because I am not sure how far putting up a notice of that kind could be sustained, based upon the access points to which I have referred. So I do not think that that would be enough to cover the point.
Lord Monson: My Lords, the noble Lord, Lord Bellwin, has satisfied me to the tune of about 75 per cent. of my doubts, but we still have some grey areas and I do not think this is very satisfactory. Unless I did not hear him, he said nothing about whether this is a matter which would be covered by the regulations; in other words, whether the Minister would have any discretionary power. This is rather important. If he would, then there is no problem, because we shall have some months before the whole thing has to be defined. I wonder—
Lord Bellwin: My Lords, by leave of the House, it would be very easy to say that and let it go at that, but I do not want to mislead the House at all. As always, we will read very carefully what has been said, and the noble Lord can be assured that my colleagues will think about the matter carefully. But I feel that the points that I made, very much based as they were upon the legalities and problems that would ensue if the amendment were put into the Bill, are a cause for real concern—not the motivation. Nevertheless, I certainly undertake that we will look at the point, although I cannot promise that we will be able to come back or, indeed, that it might be taken within the regulations, which I know is what the noble Lord would like.
Lord Monson: My Lords, I thank the noble Lord for that reply. I am still not entirely happy, and I do not imagine that every other noble Lord is happy about it, either. But for the moment I had better beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.30 p.m.
Lord Monson Lord Monson moved Amendment No. 4:
Page 21, line 9, leave out ("persons") and insert ("any person").
The noble Lord said: My Lords, the purpose of this amendment is to correct a grammatical error and, more importantly, to avoid confusion when the law is being interpreted, whether by the courts or anybody else. If your Lordships will examine Clause 27(2)(iii), it will be seen that there is a singular pronoun "him" which refers to a plural noun, "persons". This of course is ungrammatical. However, there also happens to be in the same paragraph a singular noun "medical practitioner" to which the pronoun "him" also might be taken to refer. Thus the subsection could be interpreted as meaning that the medical practitioner could sign a certificate to the effect that it was inadvisable for "him"—that is to say, the medical practitioner—to wear a seat belt. I really think that this is something that ought to be cleared up. I beg to move.
Lord Bellwin: Under section 6(6) of the Interpretation Act 1978, "words in the singular include the plural and words in the plural include the singular". The clause has been drafted so that all the exceptions

1247
in subsection (2)(b)(i) to (iii) are expressed in the plural in respect of the drivers of vehicles and persons holding a certificate. Subsection (2)(iii) does seem grammatically wrong because it refers to "persons". The amendment corrects this by putting the whole of this subsection into the singular, although stylistically it should be in the plural in order to tie in with subsection (2)(ii) and (iii). Having said that, if your Lordships feel that this amendment should be incorporated, the Government would have no objection. I believe that it is a matter of style and presentation and I am happy to leave it to your Lordships to decide the matter.
Lord Monson: My Lords, I simply believe that this amendment would help to avoid confusion, since the subsection contains another noun—"medical practitioner"—to which the pronoun "he" could relate.
On Question, amendment agreed to.
The Earl of Selkirk The Earl of Selkirk moved Amendment No. 5:
Page 21, line 12, at end insert—
("(iv) persons who from genuine anxiety are unwilling to use seat-belts").
The noble Earl said: My Lord, I must apologise to your Lordships for not moving this amendment at Committee stage because I was involved in some other activity in your Lordships' House at that particular time.
I am one of those who does wear a seat belt and who proposes to continue to do so, so my personal life will be totally unchanged by this particular clause. But my noble friend and everyone in your Lordships' House is fully aware that some people will never wear a seat belt. I am not going to give examples because I believe that almost everybody knows of examples. I will just say that the stories I have heard are certainly understandable and, in the opinion of many people, decisive. What I should like to ask is, is the particular case which is the object of this particular amendment covered by the proposed new Section 33A(2)(c) and (d)? Those are the sub-paragraphs which say that the Secretary of State may prescribe exceptions and that a fee may be charged for any certificate required. Will this point be covered by the statutory instrument when it is produced?
The reason why I believe that this particular point is important is that, although it is all very well to carry a majority in your Lordships' House and to carry a majority in the other place, to be successful, this clause must be accepted by the whole country. In fact, it must be something of a propaganda exercise; to draw the attention of the country to the desirability of the objectives we have in mind. I have a mild reservation that the balance might be weighted slightly in favour of what one might call the criminal aspects. The criminal aspect will not influence people to wear a seat belt, but the general acceptance by the public that seat belts should be worn will.
This is not the most important of all the road code regulations. There are many which are far more important. I will quote just one, which is that one should drive "with due care and attention", in the words of the Highway Code. It is for that reason that I am asking my noble friend this question because, if
1248
unreasonable cases are brought before the courts, it will act very adversely against the purposes of those who are promoting this clause. Suppose that a man refuses to wear a seat belt; he is convicted, fined £20 which he refuses to pay, and is sent to prison. He may have a sick wife and young children and this story will come out in the press. This will be adverse to the general operation of this particular clause. It is because it is very desirable that this clause should be acceptable and reasonable that I move this amendment.
3.37 p.m.
Lord Denham: My Lords, before this debate proceeds any further and without wishing in any way to curtail the discussion, I should perhaps tell your Lordships that it is at least arguable that my noble friend's amendment—and maybe one or two other amendments to Clause 27—goes a little wide of our rules and conventions on Third Reading. An amendment should not be moved that raises again an issue—and here the issue is in effect the compulsory wearing of seat belts—which has been decided at earlier stages in the Bill. In addition, Third Reading amendments should be limited to those which seek to remove remaining inconsistencies or uncertainties. I do of course realise the depth of feeling which noble Lords have on this particular issue, but I hope that your Lordships will bear what I have said in mind and will seek to keep debates as short as possible. I am not suggesting, of course, that my noble friend has been anything other than commendably brief in moving his amendment.
Lord Drumalbyn: My Lords, may I make an observation on what has been said by my noble friend? Surely the rule that he has just explained presupposes that there have been two previous occasions when this matter has been discussed. In fact, this particular amendment was first moved at Report stage and so there has only been one previous opportunity to discuss it.
Lord Denham: My Lords, the Procedure Committee discussed this point very recently and my advice is that the Procedure Committee is at the moment of the opinion that amendments to Third Reading should be on these very limited points.
Lord Nugent of Guildford: My Lords, may I remind the House that the Amendment No. 46A moved by Lord Monson at Report stage dealt specifically with conscientious objections, and that point was answered by my noble friend Lord Bellwin. I would have thought that we were now being invited to cover the same ground.
The Earl of Selkirk: My Lords, I have made only one plea and that is that we should clear up an uncertainty, precisely as the noble Lord said. If that is contrary to the rule of your Lordships' House, then I think that the rule should be changed.
Lord Bellwin: My Lords, perhaps I may join in. I appreciate that there are a number who would suffer varying degrees of anxiety about being made to wear seat belts because they believe that wearing seat belts would be worse in an accident. This could be because

1249
such people believe that they would sustain injuries from the belt itself, or because they were afraid of being trapped by fire, by water, or whatever. The problem is that the degrees of anxiety may range considerably: all the way from those who are known to suffer from acute claustrophobia to those who may merely dislike anything new which they do not altogether understand. Those whose anxieties amount to a medical condition (this part of what I have to say answers my noble friend Lord Selkirk in the affirmative) can, I suggest, be covered by the medical exemption already provided for in the clause. I see no reason why the inadvisability on medical grounds of wearing a seat belt should not cover both physical and mental conditions, though clearly this is something which we should have to discuss with the medical profession.
My next point gives the contrary view. I say that where such an anxiety is not thought to amount to a medical condition I can see no practical way of providing exemption, because I can see no practical way of testing whether the anxiety is genuine. Nor should I have thought that such grounds were in themselves strong enough to warrant people's being privileged to be exempt from a law of general application.
I hope that for most people the problem will largely resolve itself. Most of us dislike doing something new, especially as we grow older, but most of us get used to it in the end and think nothing more of it. The best answer I can give to my noble friend, hopefully to assuage his concern and those of others who are similarly anxious, is that a statement will be made some three months before we move to the Affirmative Resolution procedure. My noble friend touched upon this point when speaking to me only yesterday. I was not then able to answer him in the same way as I do now: by saying that there will be an opportunity to deal with points of this kind.
Lord Houghton of Sowerby: My Lords, I support what has been said by the noble Lord, Lord Bellwin. If we are to have a non-medical condition known as anxiety, what about a conscientious condition known as deeply held personal conviction?
The Earl of Selkirk: My Lords, I am grateful to the noble Lord for saying that there will be a statement, but I very much regret that he has not answered the one question which I asked to remove uncertainty: whether the Secretary of State is perfectly free to prescribe any exemptions which he wants to, or thinks desirable, and may charge a fee for the cost of doing so. I think I am correct in so interpreting paragraphs (c) and (d), but I should like this to be confirmed.
Lord Bellwin: My Lords, in my one speaking note I tried to cover it all by saying that the part where I refer to the medical condition generally, I feel, comes within the scope of the section to which my noble friend refers, but that the anxiety aspect of it does not.
The Earl of Selkirk: My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Police Equipment
3.44 p.m.
The Parliamentary Under-Secretary of State (Home Office) Lord Belstead: My Lords, with the leave of the House, I will now repeat a Statement being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"Mr. Speaker, with permission, I shall make the short statement which was requested yesterday in advance of tomorrow's debate by the Leader of the Opposition and the right honourable gentleman the Member for Sparkbrook on the equipment available to the police. Naturally the whole House wants to see the police provided with sufficient means of protecting themselves and also of taking positive and effective action to deal with riotous behaviour.
"To protect police officers special helmets are being provided in increasing numbers; fire resistant overalls have been ordered; and so have more standard shields and new lighter shields. Better protection has assisted chief officers in adopting positive tactics to break up violent groups. It is firmly the view of the chief officers who have been most closely involved that their most effective approach lies in training their officers and developing their tactics for mobile and positive public order policing.
"But there may be extreme circumstances in which further equipment might be required in dealing with riots. I have, therefore, decided to make available to chief officers, who alone are responsible for the conduct of operations, a range of alternatives.
"Different types of water cannon are being looked at by police forces to see which might suit their needs. Additional protection is being provided for normal police vehicles, and the need for specially protected vehicles will be urgently examined.
"This brings me to CS gas and plastic bullets. Neither I nor chief officers wish to see these used except in the very last resort and under strict control, but they should be available. Stocks of CS gas have therefore been reviewed, and appropriate groups of officers will be trained in the proper use of plastic bullets. They will be used only on the authority of the chief officer himself. I shall be talking to chief officers about the circumstances in which such authorisation might be given.
"Mr. Speaker, in opening tomorrow's debate I shall be speaking on other aspects of these matters and about the implications for the penal system".
That, my Lords, is the Statement.
Lord Elwyn-Jones: My Lords, the House will be grateful to the noble Lord, Lord Belstead, for repeating in the House the Statement of the Home Secretary. I am sure that the House will welcome the first part of the Statement, that the police should be provided with sufficient means of protecting themselves. Indeed, in the House on several occasions noble Lords have spoken of the need in particular for fire resistant overalls and other wear and for special helmets to protect the heads of officers, many of whom have

1251
been so grievously injured, and also of the need for more effective shields. But more questons are likely to arise about the circumstances in which the other type of weaponry, if that is the right way to describe it—
The Lord Chancellor (Lord Hailsham of Saint Marylebone): Equipment.
Lord Elwyn-Jones: Yes, equipment. I am obliged to the noble and learned Lord. As always, he is most helpful on these occasions. Namely, CS gas and plastic bullets, can be used. This will introduce a new dimension into the English scene. The noble Lord may have seen the observations in a statement attributed to Mr. Terry, the President of the Association of Chief Police Officers, which is reported in today's Guardian: that there is a worry throughout the police forces that they might be turning to what might be seen as the Continental system of offensive policing on behalf of the Government rather than protective policing on behalf of the community. Another fear among police officers, said Mr. Terry, is that the appearance of the new weapons on the streets might lead to an escalation in the violence of rioters. I have no doubt that serious thought will be given to those observations.
With regard to CS gas, may I ask the Minister what type of CS gas is to be used? Is there a standard type, or is there a more or less offensive—I mean offensive to the nostrils of the body—type? Perhaps we might obtain some guidance about that.
With regard to the use of plastic bullets, in a situation short of the civil war which we have in Northern Ireland where real bullets are used against the police, will there not be a proper repugnance about the use in this country—in the present situation, at any rate—of guns by the police, just as there will be about the use—in present conditions, at any rate—of CS gas? Both are liable to cause indiscriminate harm to innocent bystanders as well as to the wrongdoer. One can well imagine the appalling consequences which might arise from, say, the accidental killing of a child on the streets of one of our cities. Perhaps, therefore, the noble Lord could elaborate upon the circumstances, which the Home Secretary is to discuss with chief officers, in which authorisation for the use of this equipment, to use the neutral phrase of the noble and learned Lord the Lord Chancellor, though one could think of more fierce words, could be applied for.
Obviously, we want the police to be properly protected. As to the use of water cannon, what the experience in Germany and indeed in Northern Ireland, has been about the use of water cannon and its effectiveness perhaps the noble Lord can tell us. There is danger—I will not put it more strongly than that—as again another chief constable has apparently said, that the new weaponry comes too soon and that the scale of rioting is not yet large enough to justify such a response.
Lord Hooson: My Lords, while agreeing that the police must have the equipment necessary to defend society and to defend themselves, will the noble Lord
1252
not agree that those misguided persons who would like to promote rioting in this country have a vested interest, not only in escalating violence, but in escalating the response to violence, and is this not one of the great dangers of the present situation? Has not Northern Ireland taught us that it is virtually impossible to retrace one's steps once one has taken a step forward in response to violence?
While I would distinguish between the selective use of water cannon—and indeed CS gas—in certain circumstances, will the noble Lord enlarge upon the need for the use of plastic bullets in the present situation? It seems to me to be an unacceptable response to the present situation.
Another point on which I should like to ask the noble Lord a question is that: while I think every law-abiding citizen would agree that once one has a riotous situation it is first of all necessary to restore confidence in the security forces and in law and order, nevertheless would it not be more acceptable to the community at large if the Government expressed understanding of the underlying causes of the present discontent and the hope of remedying that situation?
The last question that I want to ask is this: in the light of the fact that some innocent people have been injured in the riots, would it not be an appropriate moment to call attention to the provisions of the Criminal Injuries Act and the procedure by which innocent people who have been injured may obtain compensation without necessarily the apprehension of the wrongdoers?
Lord Belstead: My Lords, if I may, I shall reply to both the noble and learned Lord, Lord Elwyn-Jones and the noble Lord, Lord Hooson, who in essence both said the same thing, in the sense that the noble and learned Lord spoke of a new dimension in the English scene and the noble Lord, Lord Hooson, spoke of those who wished to promote violence wanting to see an escalation of response. The reply I give to both noble Lords is that the decisions which have been made about equipment are precisely directed to promoting public confidence in the ability of the police to deal with a wave of violence of a new intensity, and the fact that the police must have equipment available to them to use as a last resort will, I give an assurance to both noble Lords, in no way reduce police efforts to enhance day by day ordinary contact between the police and the public, on which we all know the real value of policing in this country depends.
So far as concerns CS gas, which the noble and learned Lord specifically asked me about, of course this is a substance which has been available for some years. I only know of one form of CS gas—there may be others. What I do know about is that it was used, in the last resort in a most serious situation on Merseyside; in a situation which did not, so far as I know, cause any lasting
harm to anyone but it dealt with that situation on that particular occasion. Chief officers would employ it only against violence which could not otherwise be contained and it would be delivered only by officers who would be fully trained in its use and in its effects.
So far as the very serious matter of plastic bullets is concerned, here again I join with both noble Lords in expressing my right honourable friend's extreme

1253
distaste in having to consider this matter at all, but plastic bullets would only be used as a matter of last resort and would only be used by officers who would be fully trained.
With regard to water cannon, as I understand it, there are two types available through the Ministry of Defence. I should prefer not to speak specifically about them this afternoon because I expect that my right honourable friend may have more to say in another place tomorrow and anyway, from the point of view of your Lordships' House, the police themselves are deciding what in this particular respect would best meet their needs.
Finally, in reply to the noble Lord, Lord Hooson, the noble Lord asked me whether the Government should not look more closely, in the Statement being made, at the underlying causes. This is a matter to which I know my right honourable friend the Home Secretary will wish to address himself in the debate tomorrow, but nothing can excuse the criminal violence which started in Toxteth some nine days ago and which we have seen repeated in other parts of the country. The effects of that can be relieved, but no more than relieved, by the criminal injuries legislation to which I referred specifically when I repeated the Statement following the Toxteth disturbances.
Lord Inglewood: My Lords, while welcoming the noble Lord's statement, which is a great deal better than the very weak statement on the same subject which was issued as a press handout after a meeting not long ago, may I ask that, while speed is obviously important here, we should see no panic, because what is necessary is considerable study to make up for the wasted years during which not enough attention has been paid to the whole question of street disorder and the means which are necessary to combat it, which ought to have been apparent to us from what we have seen on the Continent.
I was glad to hear the noble Lord say that tactics are as important as equipment and that no equipment is for universal application. As one of the probably few Members of this House who have had instruction in the use of the water cannon, may I ask the noble Lord whether he will consider the types of water cannon available on the Continent, particularly Germany, as well as those which happen at this time to be in the North of Ireland, and will he ensure that, at the end, the final outcome is a system which is common to all our forces?
Lord Donaldson of Kingsbridge: My Lords—
Lord Denham: My Lords, if the noble Lord, Lord Donaldson, will forgive me, my noble friend at this stage normally answers questions one at a time, so perhaps the noble Lord would ask his question after that.
Lord Belstead: My Lords, if the noble Lord, Lord Donaldson, will allow me, I do not know to what statement my noble friend Lord Inglewood was referring at the beginning of his supplementary question. I am not aware of any weak statement which has been made as a result of these very serious matters which started to occur nine days ago.
1254
So far as the effect of equipment is concerned, may I simply add to what I said to the noble and learned Lord, Lord Elwyn-Jones, and to the noble Lord, Lord Hooson, that I think upon having the right equipment for the police depends, at the present time, the confidence of the general public and upon the confidence of the general public depend, once again, better and closer relations between police and public, upon which so much depends for good policing in this country.
The noble Lord asked me a specific question about water cannon: I repeat that it is the police service themselves who are now looking into the choices of water cannon and I think this is a matter about which we should rely upon their professional judgment.
Lord Donaldson of Kingsbridge: My Lords, in fact the noble Lord has answered my question, so I will put it briefly. Is the noble Lord aware that, according to all the evidence, public opinion is determined that the police should have everything they need to control riots, and what is important (which is well explained in the statement) is that this should be used only under the very strictest supervision and as a last resort?
Lord Belstead: Yes, my Lords, and I am grateful to the noble Lord for putting those points to me.
Lord Shinwell: My Lords, may I ask a simple question? Reference has been made to the use of lethal weapons by the
police and various speakers have sought to safeguard against that possibility, but nobody has mentioned the possibility of the use of lethal weapons by rioters. In those circumstances, what are the police expected to do? Are they to refrain from using plastic bullets or CS gas or weapons of that kind? Has that consideration occurred to the Home Secretary?
Lord Belstead: My Lords, I am grateful to the noble Lord, Lord Shinwell, and indeed I think my right honourable friend's thinking is exactly the same as the noble Lord's thinking upon this.
A noble Lord: I do not think so.
Lord Belstead: Well, I have mistaken what the noble Lord said. I understood the burden of the noble Lord's remarks to be that if those who are rioting are availing themselves of weapons of various kinds is it not then important that the police should be equipped to be protected? I understand from the noble Lord, Lord Shinwell, that that is what he said, and therefore my right honourable friend's thinking is exactly the same as Lord Shinwell's on that particular matter. But it goes one step further, indeed two steps further. If the police are properly protected they can take positive action to end the riots which are causing such misery to law-abiding people. From that comes the further point that once that has been achieved we may be able to get back to the close connection between the police and the community upon which, I repeat, so much depends in this country for good policing.
Baroness Sharples: My Lords, is not perhaps the most important word in the Statement "available"

1255
because this applies to the defensive equipment which is very definitely needed at this moment, but "available" does not mean that the offensive weapons will necessarily be used.
Lord Belstead: My Lords, again I would not wish to add to what my noble friend has said.
Lord Jenkins of Putney: My Lords, I think there are no differences between any of us on the desirability of the police being fully protected by all available means. I think perhaps where the difference—
Several noble Lords: Question!
Lord Jenkins of Putney: May I ask the noble Lord to accept that there is no difference between us about the question of the complete desirability to provide the police with every possible protection. There is, however, a difference of emphasis when we move on to the question—
Several noble Lords: Question!
Lord Jenkins of Putney: My Lords, I am sorry; I ought to know this after 15 years in another place. May I ask the noble Lord to accept also that there is a difference of emphasis between us when we move into the question of retaliatory action by the police. Is the noble Lord aware that CS gas was abandoned some time ago in Northern Ireland because it was felt to be too dangerous? Is he further aware that water cannons were described
by the Northern Ireland press office as being worse than useless? Is he further
aware that people in Northern Ireland have been killed by plastic bullets? When we move into this area, is the noble Lord aware that some of us feel that great caution needs to be used before any freedom of action is allowed in that way, and that this is a matter which should remain firmly under the control of the Government?
Lord Belstead>: My Lords, the noble Lord speaks of retaliatory action. I think it is important to say that my right honourable friend sees the need for positive action being made fully practicable for the police by the provision of the right equipment. We know that our police forces in this country, if they are properly equipped, even in these very difficult circumstances, can take positive action to end the misery that is being caused by these riots. With regard to all the various pieces of equipment the noble Lord mentioned in the second part of his supplementary question, I should like to underline once again that the Statement makes it quite clear that the very greatest care will be taken by chief constables, who are operationally responsible—the Government, of course, are not operationally responsible in these matters—before considering the use of these things only in the last resort.
Lord Glenkinglas: My Lords, would my noble friend do everything that he can to assure senior police officers that the country is solidly behind them in trying to put an end to these riots? I understood, from the comment from a chief constable to which
1256
Lord Elwyn-Jones referred, that there was some worry that the Government might be responsible for bringing in this new equipment or these weapons. Is it not absolutely certain that there is no division between the police and the community with regard to this? The community are the people who need protection, and the chief constables are the only people who can use these weapons.
Lord Belstead: My Lords, again I would not wish to add anything to what my noble friend said at the end of his supplementary question. So far as his initial remarks are concerned, I think what he said will be much appreciated by the police.
Lord Howie of Troon: My Lords, is the noble Lord aware that many of us in all parts of the House would react much in the same way as he has done; namely, towards greater severity. But will he reflect that in most countries of the world where there are fiercer police there are also fiercer riots, and which is the chicken and which is the egg it is often hard to tell. Let him dwell on that with some care. Further, does the noble Lord understand that many of us would be a great deal happier if there were some indication that the Government intend to concentrate a good deal more strongly than appears to be the case at first sight on the underlying reasons for these very regrettable and dismaying disturbances, and that this is nothing to do with plastic bullets or water cannon.
Lord Belstead: My Lords, this, of course, was a Statement requested by the right honourable gentleman the Leader of the Opposition and the right honourable gentleman the Member for Sparkbrook, and it was to be on equipment, paving the way for the debate in another place tomorrow. That is why the Statement does not go into the causes. But I repeat—I hope the noble Lord and the Government can meet on common ground about this—that however worrying the causes may be, nothing, but nothing, can excuse or in any way condone the appalling violence we have seen in the last nine or 10 days.
Lord Hunt: My Lords, would the noble Lord the Minister accept that I understand the relationship between the Home Secretary and the chief constables, but would he also not agree that, in view of the very great importance of exercising the strictest control if it were to come to a question of using plastic bullets, in no matter what area of the country, this is a matter which really would be such a new departure in England and Wales that the Government, and the Home Secretary, should be consulted before any chief constable were to have resort to these weapons?
Lord Belstead: My Lords, at the very end of the Statement there are the words "I shall be talking"—meaning my right honourable friend will be talking—"to chief officers about the circumstances in which such authorisation should be given", and that authorition referred to plastic bullets and the use of CS gas. I know that the words of the noble Lord, Lord Hunt, will be taken into account in any discussions which my right honourable friend will have.
Lord Pargiter: My Lords, would not the noble Lord agree that the object of providing the police with greater protection is in order to enable them to move into the crowd instead of standing distant from them, as they have to at the present time, in the light of petrol bombs and things of that kind. In those circumstances having regard to the anxiety there is about the use of plastic bullets, if the object of the police is to get into crowds and break them up, plastic bullets used in those circumstances would be very dangerous. In those circumstances, would it not be wise to lay less emphasis on plastic bullets and leave them very much in abeyance, and see what arises from other actions before there is any question of the possible use of plastic bullets?
Lord Belstead: My Lords, I think there is no disagreement between the Government and the noble Lord, Lord Pargiter, on this matter. The noble Lord has put in very clear terms what I have referred to as positive police action in these very difficult circumstances. So far as other pieces of equipment are concerned, what the Statement is saying is that these should be available but only used as a last resort. That was the intention and the only intention.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers): My Lords, I think, with respect, that we have had a good run on what is a limited, though important, Statement, and I suggest that we go on to the next business.

Transport Bill
4.10 p.m.
Consideration of amendments on Third Reading, resumed.
Lord Mottistone Lord Mottistone moved Amendment No. 6:
Page 21, line 12, at end insert—
("(iv) the users of vehicles manufactured before 1965").
The noble Lord said: My Lords, I beg to move Amendment No. 6. During the Report stage on 8th July your Lordships will remember that I put a question to my noble friend the Minister, at col. 780 of the Official Report, about whether ancient cars—as I described them—would be subject to the clause under discussion. My noble friend Lord Nugent of Guildford kindly came to the rescue and said that cars of before 1964 or 1965 would not be so affected. As it will be clear from the Report stage debate, I was really thinking of "vintage" cars, as they are commonly known, and I was not thinking of what I call relatively modern cars.
I have put down this amendment to try to clarify the matter and to satisfy myself and perhaps the House, because if the date of 1964–1965 is confirmed by the Government it seems to me that we are talking here about cars of (shall we say?) between 1950 and 1964, which are not all that old. Many of them are what one might describe vulgarly as "old bangers" and they are not very safe. I understand that with the type of car design which was used before it became compulsory to fit seat belts, the actual structure of the car would not always be suitable for seat belts. However, we are
1258
now to have a borderline. I imagine—and I should be grateful if my noble friend could confirm this—that the police will have no difficulty in identifying these vehicles because their number plates will show their age. Therefore, that is not a particular problem. However, it seems a little odd that the older and more unsafe cars may become popular and their prices may go up—I do not know what the Government think about this—because they will be in demand by people who do not want to use these things.
There is a degree of unfairness. If you are lucky enough to have a car that is rather old you do not have to bother with this new imposition, but if you have a car that is more modern and perhaps more reliable then you have to take note of this imposition. I do not know how much my noble friend will be able to tell me now, but there are some doubtful aspects that I hope that he will be able to clarify for me. It would seem to me that there is not much point in having this particular clause in the Bill if it cannot be a little more comprehensive and include the type of cars about which I am talking. I beg to move.
Lord Bellwin: My Lords, I had hoped that the provisions inserted in the Bill on Report to ensure that all the regulations made under this clause would be subject to the affirmative resolution procedure might have enabled us to avoid going over some of the old ground. As I explained during the Committee stage, the Government would have no intention of requiring someone to wear a seat belt where there is no requirement to fit a belt. Therefore those travelling in vintage cars will not have to wear seat belts because none has to be fitted. I can assure my noble friend that his amendment really is not necessary.
Although, as the House knows, the Government are neutral on the issue of compulsion, I feel I should point out that amendments which have not been drafted by parliamentary counsel, however well intended, are likely to present difficulties for the courts. For example, this amendment might be interpreted as providing exemption for anyone who uses a pre-1965 vehicle, irrespective of the vehicle in which they are actually driving or riding. Moreover, it does not accurately cover all vehicles where compulsory fitting is already required. To do so it would need to refer to cars manufactured on or after 30th June, 1964, goods vehicles manufactured on or after 1st September, 1966 and three-wheeled vehicles manufactured on or after 1st March, 1970. I mention this just to show the difficulty that one can fall into. My noble friend Lord Mottistone is very experienced in bringing forward amendments, but even he can fall into a situation of this kind. Therefore, I hope that with the assurances I have given as regards what, in fact, is not required, he will feel at least satisfied as regards this amendment.
Lord Mottistone: My Lords, I thank my noble friend. Of course, this was a probing amendment and I put forward the excuse that we have had only one intermediate stage, as my noble friend Lord Drumalbyn said earlier, because this particular clause came into the Bill rather late in the day. However, the point is that I think my noble friend has answered the main features of what I had to say. I hope that in preparing the regulations the Government will take carefully into

1259
account the fact that there will be a degree of unfairness. As I have always said, it will be impossible to apply this particular clause fairly. If the Government really feel that to be so, then perhaps with all the safeguards that we are trying to get written into the Bill the thing may die. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Monson Lord Monson moved Amendment No. 7:
Page 21, line 12, at end insert—
("(iv) any person holding a valid non-medical exemption certificate obtained from the Secretary of State upon payment of an annual fee equivalent to 25 per cent. of the sum payable for an annual Road Fund Licence for a motor car;").
The noble Lord said: My Lords, I beg to move Amendment No. 7. I agree most strongly with the noble Earl, Lord Selkirk, about the absolute necessity for gaining public consent for this highly controversial measure. This amendment is a last attempt to devise a means of securing this consent and so avoid the legacy of bitterness and resentment that will certainly otherwise ensue.
What I am suggesting in effect is that we de-criminalise the whole issue of compulsory seat belt wearing by substituting fiscal sanctions for penal sanctions. This is a principle that must surely appeal to the Conservative Party and, I should have thought, to other democratic parties as well. The method would be to put the undoubtedly pleasurable habit—pleasurable to many of us, at any rate—of driving unfettered on a par with the other pleasurable habits of smoking and drinking, both of which involve a very much greater risk to life and to health. (Your Lordships may not be aware that 50,000 people die every year from smoking cigarettes.)
The idea would be to allow those people who cannot obtain medical exemption certificates to buy exemption on non-medical grounds upon payment of one quarter of whatever the annual road fund licence fee happens to be at the time. At the moment it would be £17·50 for an individual; £35 for a husband and wife, assuming that both wanted to be exempted; and £70 for a family of four—that is, four adults all of whom wish to be exempted.
If, by any chance, all the 30 million drivers and regular passengers—because of course those people who did not travel in cars very often would not go to the expense of buying exemption—were to opt to pay their £17·50 (highly unlikely, I agree, but let us suppose that that were the case) then no less than £255 million per annum would be raised for the Exchequer. That would permit, for example, the rate of VAT to be reduced from 15 per cent. to 14 per cent. So far as the National Health Service is concerned it works out at three-quarters of a million pounds for every one of the 700 deaths per annum which seat belt compulsion would allegedly prevent, and about £50,000 per annum for each injury necessitating at least one night's stay in hospital. So it can be seen that the State and the National Health Service would profit very considerably. It is worth mentioning that smokers effectively contribute by excise duty on tobacco only £56,000 to the National Health Service for each death—less than 10 per cent. of what non-seat belt wearers would contribute.
I believe that this would satisfy the widest possible spectrum of public opinion—not only most of those who dislike compulsion. There would still be a few who would say, "Why can we not be treated like hang-gliding enthusiasts, pot-holers and those who indulge in point-to-point riding and so on and who pay no tax at all?" However, they are a minority on our side. It would also satisfy most of those who are for compulsion on the grounds that they do not, in theory, mind what other people do with their lives, but do object to having to contribute, through taxation, for their treatment on the National Health Service. I think that this is something which really would meet many people's desires and make the whole measure much more acceptable. I beg to move.
Lord Allen of Abbeydale: My Lords, I should like to speak very briefly in support of this amendment, the attraction of which is to lessen the impact of the criminal law with all its problems of enforcement, which still bother me very greatly, and to return to a measure of individual decision in a way which would meet the argument that the costs of death and injury as a result of not wearing seat belts would be an extra burden on the community.
Viscount Hanworth: My Lords, I should like to speak very briefly on this as well because at one point I had an idea of tabling an amendment on much the same lines. But, if I had done so, I would have made the conditions rather more strict, so that it was not just a question of paying £25 and getting your exemption; the exemption would probably have had to be carried on the person, witnessed by a commissioner for oaths, and so on.
The advantage of this is that it removes the objection that so many people have to making seat belts compulsory, which is the loss of personal freedom. I think that we are very late in the Bill for this sort of consideration, particularly the amendment as it stands at the moment. Therefore, may I simply suggest that the Government should consider it, but should consider giving themselves powers to introduce something on these lines, should it prove to be desirable, at a future date.
Lord Lucas of Chilworth: My Lords, briefly, much as I admired the arithmetic of the noble Lord, Lord Monson, I found the basic argument to be quite wrong. It seems to me to be quite wrong that you can buy your way outside the law. I do not like this clause—and noble Lords know that. But I do not think that I could give any support to paying a fee, whatever it may be, thus buying myself outside the law.
Lord Boothby: My Lords, before the noble Lord sits down, is not this a case of buying yourself to freedom?
Lord Bellwin: My Lords, I can only admire the facile solution which the noble Lord, Lord Monson, seems to have found for the problems facing my right honourable friend the Chancellor of the Exchequer I am sure that he will read with much interest the very substantial sums of money which the noble Lord's amendment would find.

1261
I must confess—and I know the noble Lord well enough and he knows me well enough to know that I say this, perhaps, lightly—that I thought when I first saw the amendment that he was tabling it with tongue stuck firmly in cheek. All else apart, the effect of this amendment for what it would do to the basic proposition which your Lordships accepted—certainly it was self-evident, so far as I am concerned, although it may not be the noble Lord's intention—appears to provide for the issue of certificates of exemption from the law to anyone who is prepared to pay for the privilege. I think that the point made by my noble friend Lord Lucas was a fair one. Certainly the point that the noble Lord, Lord Boothby, made was another way of, if you like, coming at the problem. But any way you look at it, it is really saying that those who wish to pay for the privilege can do so. Indeed, if vehicle taxation were ever abolished at some time in the future, such exemptions might be free. I find the principle of exempting people from the law, if they are prepared to pay, rather extraordinary to say the least.
Compulsory seat belt wearing is presumably being proposed not only for the benefit of the individual, but for the benefit of the community as a whole. I should not have thought that an individual could claim to opt out simply because he thought that he was such a careful driver that he would never be involved in an accident and, therefore, never need the benefit of a seat belt. Accidents can happen to anyone and, if they do, the cost to the community as well as to the individual can be very high indeed. But, from a practical point of view, an exemption which anybody can obtain obviously weakens the potential effectiveness of compulsion.
I think that this amendment is on a par with some of the others which we were debating on Report and which, in fact, the noble Lord did not then press because he was, at least to some extent, satisfied that he would have the chance to look at the nuts and bolts, if I can put it that way, when we come to the regulations. I understand the great feeling of those who object to the principle of compulsion. I must repeat that the Government have taken a neutral line on this matter all along, and are still taking that line. But the House did come to a decision; it came to a decision after a full debate. It came to that conclusion and although I am certain that we shall probably never satisfy those who feel strongly to the contrary, nevertheless that was the conclusion reached. What will be said about the matter in another place will be for them to decide. But, so far as we are concerned, with this Bill in its present form as we are hoping to pass it forward, that is where we were, and that is where we are at present. I hope that the noble Lord, Lord Monson, who is always reasonable as I well know in these matters, despite his inner feelings will say, "So be it". At least I invite him to do so.
Viscount Hanworth: My Lords, before the noble Lord sits down, could I make it clear that from my point of view at any rate the idea of paying was really in order to compensate for the extra cost to the nation of the injuries which would be incurred by not wearing safety belts. That was my thinking. I just wanted to put the record right on that point. It was not quite as the noble Lord had said with regard to the amendment.
Lord Monson: My Lords, first, may I take up the point made by the noble Viscount, Lord Hanworth. If my amendment were accepted, it would more than compensate the nation for any expense incurred by people not wearing seat belts. I suggest that the amounts are well above the actuarial amount that would be needed to compensate the National Health Service. The nation would make a large profit on the deal.
With regard to the comments made by the noble Lords, Lord Lucas of Chilworth and Lord Bellwin, I regret to say that they have both missed the point. They object to people buying their way out of the law, but if this amendment were accepted it would not be the law, because those who took advantage of the exemption would
be excluded by law. They objected to the idea of people buying a right to take a risk—that is what it boils down to. If non-smoking teetotallers were to object to this, I could understand it. But let me point out that every time any noble Lord lights up a cigarette or knocks back a double whisky he is effectively buying a right to take what is, statistically, a risk. A hundred times as many people die from drinking or smoking as die from not wearing seatbelts; they pay, through taxation—not as much as seat belt wearers would pay in proportion—but they pay in taxation for that right and some of what they pay goes to compensate the National Health Service.
I take the point that the noble Lord spotted, which I did not, that if the road fund licence were abolished, the amount payable by those who wish to be exempt would also vanish. Therefore, I accept that the amendment is defectively drafted. It is for that reason alone that I do not press it, because I know that there are many noble Lords who feel strongly about this. It seems to me to be something that, perhaps looked at in a more thorough fashion, could be dealt with under the regulations. But for the moment I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Bellwin Lord Bellwin moved Amendment No. 8:
Page 21, line 21, leave out from ( "but") to end of line 23 and insert ("notwithstanding any enactment or rule of law no person other than the person actually committing the contravention shall be guilty of an offence by reason of the contravention.").
The noble Lord said: My Lords, noble Lords will recall that on Report we accepted an amendment to Clause 27 to ensure that each person was alone responsible for wearing or not wearing his seat belt. In other words, that a driver would not be responsible for his passenger or vice versa. As I mentioned at the time, the Government were concerned about the drafting and this amendment simply corrects it. I beg to move.
Lord Monson: My Lords, I should like to thank the noble Lord, Lord Bellwin, for that tidying-up operation, for which I am very grateful.
On Question, amendment agreed to.
4.29 p.m.
Lord Monson Lord Monson moved Amendment No. 9:
Page 21, line 23, at end insert—
("( ) It shall be a defence to any prosecution brought under

1263
this section to establish that failure to comply with the requirement to wear a seat belt saved the life of the individual being prosecuted or materially lessened the severity of injuries sustained by him as a result of a road accident.").
The noble Lord said: My Lords this is a watered-down version, amended in the light of what was said last week, of an amendment which I moved last week which was meant to provide that anyone whose life had been saved or whose injury had been lessened as a result of not wearing a seat belt would escape prosecution. I think it is worth reiterating that this happens much more frequently than the pro-compulsion lobby has ever accepted.
I took the trouble of looking up before I came here this afternoon a debate we had early in 1977. In that debate, when only a relatively small number of noble Lords spoke, no less than 16 positive and definitive cases were cited of people whose lives had been saved by not wearing a belt. That was in one debate alone, and I exclude all the other debates we have had in this place and another place. What happens more often than not is that people are either thrown out on to the grass, as the noble Baroness, Lady Birk, was or more frequently thrown into the back seat, or, if the car is an estate car, on to the back platform, in a collision when the front of the car is totally crushed. In those instances, as the law stands, such people would render themselves liable to prosecution on the grounds that clearly they had not been wearing their belt.
Lord Nugent of Guildford: My Lords, may I interrupt the noble Lord on a point of order? Is not this exactly the same point raised earlier on the amendment of the noble Earl, Lord Selkirk? This is substantially repeating an amendment, Amendment No. 53, which was debated on Report and answered by my noble friend Lord Bellwin, and the noble Lord, Lord Monson, thereupon withdrew.
This is directly in conflict with the recent advice from the Procedure Committee in January of this year with regard to this point. Perhaps it may be helpful for the House if I ask the Clerk if he will be good enough to read it out so that your Lordships can have it before them. Would it be agreeable if that were to be read out?
Lord Bellwin: My Lords, if it may help the House, I have with me and could read out what was said. It is as follows:
"Amendments may be moved after the Third Reading has been agreed to and before the Motion ' that this Bill do now pass.' Notice must be given of them not later than the day preceding that on which they are to be moved (except in the case of privilege amendments) in sufficient time to enable them to be printed and circulated in the form in which it is proposed to move them.
"The principal purposes of amendments on Third Reading are to clarify any remaining uncertainties, to improve the drafting and to enable the Government to fulfil undertakings given at earlier stages of the Bill.
"It is considered undesirable that an issue which has been fully debated and decided upon a previous stage of a Bill should be reopened on Third Reading."
Lord Monson: This is not the same issue that has been debated before. The noble Lord, Lord Nugent, knows that we have not effectively had a Committee stage on this clause. The Report stage had to be the Committee stage, and the Third Reading has perforce
1264
to be the Report stage. There is no way around it. This is a controversial matter and we have not had the number of stages that we would normally have.
Lord Nugent of Guildford: My Lords, would the noble Lord kindly give way? The amendment which the noble Lord put
down at Report stage was:
"It shall be a defence to any prosecution brought under this section to establish that failure to comply with the requirement to wear seat belts saved the life of at least one individual or materially lessened the severity of injuries sustained as a result of a road accident."
That is very substantially the same as the noble Lord has down here. It was debated. Several noble Lords took part in it. My noble friend answered it, and the noble Lord thereupon withdraw. It really is an abuse of the Rules of the House for the noble Lord to persist with his amendment now.
Lord Monson: My Lords, if the noble Lord had allowed me to finish what I was going to say, I should have explained that it is not the same. My amendment on Report was criticised, very rightly, because it was too widely drafted. The noble Lord, Lord Bellwin, and other noble Lords pointed out that if anybody anywhere in the country had been saved as a result of not wearing a seat belt this could be cited in defence by the person being prosecuted, which of course is much too wide. I had not intended that, and naturally I withdrew it because it was defectively drafted. This narrows it right down so that the defendant himself can cite in his defence only the fact that his own life was saved. He cannot even cite the experience of his wife or his son or daughter. It narrows it right down, and it applies only to incidents which take place after the coming into law of these provisions, so it is totally different; not the same at all. I beg to move.
Lord Bellwin: My Lords, when we considered that I think I had better refer to as a similar amendment on Report, the noble Lord, Lord Spens, clearly explained why he thought the House should support that amendment, and I had every sympathy with the reasons he gave, as indeed I have sympathy with the basic point underlying this amendment. However, as I said last week, it is a difficult task, to say the least, to establish what might have happened in the event of an accident had, or had not, someone worn a seat belt. We must face the fact that there may well be unfortunate cases when one could speculate that if someone had not worn a seat belt then they might have been saved from the worst effects of the accident. But surely the point is that the number of such cases will be very few compared to those where the wearing of a seat belt would have saved death or injury, or would have had a significantly mitigating effect upon an accident situation.
We would be imposing an impossible burden on the courts by requiring them to decide on the merits of any defence in the complex area of accident investigation. Nor do I think that we should encourage people to feel safer without seat belts when, with the exception of rare cases, this is not so. The chance of someone benefiting once by not wearing a seat belt is small; the chances of them doing it twice are fairly minute. If someone felt so strongly about this, because of some previous experience, that it amounted to a medical condition, then I am sure that he, or she, would be able

1265
to obtain a medical certificate to exempt them from wearing a belt.
I hope that the noble Lord will think again about the desirability of this amendment. Throughout the whole of the seat belt aspects of this Bill again and again runs this thread of concern; the great dislike of compulsion that so many people have. I say again, and I know it is repetition, that one has to be sympathetic because it is not a right or wrong situation. It is a question of taking the overall balance. The Government stay neutral. I made my own position clear. My position was that I think that the balance just came down in favour of compulsion. I said so. But, having said that, I still think that we must consider all aspects of it, and we shall get plenty of chance to do this in detail when we come to the regulations in as reasonable—I use the word "reasonable "at the risk of its being quoted back at me by the noble Lord, Lord Underhill—a way as possible, and I think that is what we shall do.
Lord Glenkinglas: My Lords, I wonder whether my noble friend would consider rephrasing an expression he used just now? He seemed to indicate that somebody who had been thrown out of a car because they were not wearing a seat belt, and thereby it saved their life, might be in such a mental state that they could get some sort of certificate for not wearing one in future. I think if my noble friend had been thrown out of a car he would not want to wear one again, and I am quite sure he would not regard himself in a mental state.
Lord Bellwin: My Lords, with respect, I think that is semantics. I think that a mental state in the terms of a medical condition is something that the medical profession will advise us upon in due course. I am no more qualified to dissertate on that subject than, so far as I am aware, is my noble friend, although possibly he has the advantage of me in that way. I am trying hard in all this seat belt discussion to try to take an objective view about it because I realise how deeply felt are the feelings of those with both points of view. But if when we come to regulations we approach it in the right spirit, then we will get something that will at least be acceptable to just about everyone in your Lordships' House.
Lord Monson: My Lords, the Minister mentioned regulations, but this cannot be dealt with in that way. This is something quite separate and it is not a question of exemption: it merely excludes from prosecution those whose lives have been saved or whose injuries have been lessened. I have done my best to meet the wishes of the House, in that I entirely accept that the amendment I moved a week ago was too widely drawn and went too far. I have cut it down even further than I intended. Indeed, it is cut down so that it excludes anybody injured before the Bill becomes law.
I think it would be intolerable if people were to be prosecuted under such circumstances. The police would be duty bound to do so; they do not have discretion in these matters and while the magistrates might let them off with a very small fine, the law must still be upheld. I believe the "t' s" should be crossed and the "i' s" dotted and people given an absolute
1266
right to escape prosecution in these circumstances, and therefore I am not prepared to withdraw the amendment.
On Question, Amendment negatived.
4.41 p.m.
Lord Bellwin Lord Bellwin moved Amendment No. 10:
Page 21, leave out lines 41 to 45.
The noble Lord said: My Lords, during our debate last week it was agreed that the Secretary of State for Transport should provide Parliament with an opportunity to consider his proposals for the regulations to be made under this clause before they were laid. The Government have said on numerous occasions that they will be consulting widely about these regulations, and we were therefore happy to agree to the suggestion by my noble friend Lord Lucas that a document setting out these proposals should be made available to Parliament. Now, with the benefit of the wisdom of parliamentary counsel, I have prepared an amendment which will ensure that a statement is laid before Parliament and that there will be an opportunity for three months' discussion on the proposed regulations before they are laid before Parliament. These first regulations are the most important ones as they will set out who will be required to wear seat belts, when and under what circumstances they must be worn and who will be exempt.
As to the review of the regulations after a certain period of time, that is not a matter on which the Government would wish to express a view. Subparagraph (c) in Amendment No. 11 is tabled in my name to correct the drafting of the earlier amendment. The period of time for the review, following an amendment tabled by my noble friend Lord Inglewood, is a matter on which it was thought right to offer some advice. The review will be important because inevitably it will be a review not only of the regulations but of the success or otherwise of the compulsion itself. We think three years might be preferable to two because two would be too short a time to be able to form a judgment. The first year will inevitably be a running-in period and may not be typical and, more important, the casualty figures for the second year will not be available until well into the third year, so they would not be available for a review at the end of two years.
I know that my noble friend Lord Inglewood (who at the moment is not in his place) was pleased that his amendment had been accepted; he felt it was an indication, now that the House had come to a certain decision, of the Government taking a view which was by no means the last word. After all, how could anyone say that on this sort of subject one could take such a view? However, I think three years is a more practical term than two, and accordingly I hope the amendment will be accepted.
Lord Lucas of Chilworth: My Lords, as my noble friend Lord Bellwin has moved Amendment No. 10, I think it would be convenient for me to speak to Amendment No. 11 at the same time. My noble friend explained clearly the intent and content of the amendment, which meets totally the points made by my noble friend Lord Mottistone and the noble Lord, Lord Monson, at an earlier stage, and I know

1267
that my noble friend Lord Inglewood is grateful that the point he made has been embraced more accurately in this amendment, and therefore we are grateful to the Government.
Lord Monson: It might be convenient to the House, my Lords, if, while addressing some remarks to Amendment No. 10, I spoke at the same time to my Amendment No. 12, because I am not sure of the procedure if that amendment were agreed to. I should say at the outset in relation to Amendment No. 12 that the noble Lord, Lord Inglewood, certainly would have added his name to mine had he known about the Government's precise intentions rather earlier than last night when the Marshalled List had already been printed.
We were under the impression last week that the Government had accepted the period of two years, and perhaps that is why I appear to be reacting rather late in the day. I shall be very unhappy if the period is extended to three years, particularly as that was not the intention, as we understood it, last week. It is important to remember that this whole question of seat belts has never really been put before the public; it never appeared in any election manifesto, it was never mentioned in any party political broadcast, I do not think it appeared in any individual candidate's election address and it was certainly not a feature of the Queen's Speech.
I believe this matter should be in the forefront of people's minds at the next general election, so that they may give their verdict on it. I take the point made by the noble Lord, Lord Bellwin, about the figures for the second year not being available, but some interim figures will surely be available, and I think it right that the people should be able to express their opinion on it at about the end of 1983 or the beginning of 1984, when there will have to be a general election. If the pro-compulsion lobby are right in assuming that opposition to this measure will dwindle away, then they have absolutely nothing to worry about, because it will not make any difference to candidates in marginal seats. If, on the other hand, opposition is still as great as I suspect it will be, then it may make a difference in a number of marginal seats, depending on the candidates' attitudes to compulsion. If the pro-compulsion people have the courage of their convictions they will accept my amendment. If they resist it, I can only conclude that they are worried about the possible electoral consequences of compulsion.
Lord Bellwin: The noble Lord, Lord Monson, misses the whole point, my Lords, because this has nothing to do with elections. Indeed, the provision is not even basically in a Government clause;
the provision was moved initially by my noble friend Lord Nugent and the Government took a neutral line on it. The House as a whole, right across party lines, voted on this issue and so far as I am aware the same will happen in another place. In no way is it a political issue, and to bring that aspect into it does not help the substance of the debate.
On Question, amendment agreed to.
Lord Bellwin Lord Bellwin moved Amendment No. 11:
Page 22, line 6, at end insert—
("( ) In section 199 of the Road Traffic Act 1972 (exercise of regulation-making powers and Parliamentary control) the following subsection is inserted after subsection (2)—
"(2A) The following provisions apply to regulations made under section 33A above—

(a) when the Secretary of State proposes to make the first regulations under that section he shall lay before each House of Parliament a statement explaining his proposals; and

(b) no draft of those first regulations shall be laid before Parliament for approval under subsection (4) below until after the expiration of the period of three months beginning with the day on which the statement was laid (or, if the statement was laid on different days, with the later of the two days); and

(c) at the end of the period of three years beginning with the day on which the first regulations under that section came into force, all regulations in force under that section shall expire unless their continuation in force has been approved by a resolution of each House of Parliament,"").

The noble Lord said: I spoke to this, my Lords. I beg to move.
Lord Monson Lord Monson moved, as an amendment to Amendment No. 11, Amendment No. 12:
In paragraph (c), line 1, leave out ("three") and insert ("two").
The noble Lord said: My Lords, although I have effectively spoken to this amendment, my being able to rise again gives me an opportunity to reply to the noble Lord, Lord Bellwin. Seat belt compulsion is essentially a collectivist idea. One need only study the voting figures in both House of Parliament over the years to see that the majority of Conservatives have always opposed it, albeit with a recent majority slightly smaller than in the past, while the majority of people on the Left have always been in favour of it. Thus, whether or not one wishes to face the fact, it is essentially a political matter, because it is a question of people's ideas about individualism, collectivism, and so on. I believe we should stick to the decision that was taken—admittedly there was no vote on it—a week ago, when it was the general sense of people in the House that two years was the agreed time. I know that many noble Lords would have come along today had they realised that it was the intention to extend the period to three years. I think that we should test the opinion of the House on this matter. I beg to move.
Lord Nugent of Guildford: My Lords, I feel that I must say a few words in reply to the noble Lord, Lord Monson, on this point. I am sure that to most of us this question is the absolute opposite of a political decision. I agree with the noble Lord that many of my noble friends here and honourable friends in another place are opposed to the idea, but opinions go right across the board. I can think of many subjects that might be included in the manifestoes of the respective parties at the next election, but I do not think that this will be one of them, nor do I think that it will be one on which the nation decides who it wants to form the next Government.
I know of the passionate feelings of the noble Lord, Lord Monson, on this matter, and for him it really looms as priority No. 1, but for most of us it is a single, important matter with a complex of arguments

1269
which we have discussed here at great length, and its political significance is very small indeed, if it has any political significance at all. It is really in that spirit that we looked at this question. Clearly my noble friend Lord Bellwin has looked at it. The noble Lord, Lord Lucas of Chilworth, has looked at it, and evidently the noble Lord, Lord Inglewood, has, but he has not at all taken a view about the period being three years instead of two years. On a pragmatic basis obviously three years will provide sufficient a test for us to sec how it all works out, whether it is working out satisfactorily, whether the regulations are satisfactory or whether they should be changed—indeed whether the scheme is workable at all. If the noble Lord, Lord Monson, is right, it will not be workable. But I do not believe that that will be the case.
In any event, three years is obviously a much better period than two years. A period of two years is not long enough properly to test the regulations. The first year will be concerned with running-in the scheme and in the second year it will begin to operate normally. Then there will be sufficient experience to say whether the regulations are sound or should be modified, or to take any other view. That is the sole purpose of changing the period. I am sure that noble Lords will not think it a practical point to decide on two years in order to coincide with the next general election. I hope that the noble Lord will withdraw his amendment.
Lord Mottistone: My Lords, the noble Lord, Lord Monson, knows very well that I am in sympathy with him on most of the points here, but I agree with the Government amendment as it stands. I think that the great advantage of having three years before there is what will in effect be a review is that it will confirm even more strongly that the promoters of the clause were in fact at fault and that the casualty rate will be even more definitely confirmed as being quite unchanged or, if anything, slightly worse. Therefore it will be very helpful to us to have the three years evidence with which to shoot down the idea when the time comes.
Lord Monson: My Lords, the noble Lord, Lord Nugent of Guildford, is quite wrong in thinking that I feel uniquely strongly about this matter; my bulging file of letters proves altogether otherwise. Of course, the question of seat belts will not appear in any political manifesto, because they all want to brush it under the carpet and will not want it as an election issue. My idea is that it should be in the forefront of people's minds and they should be able to make their choice. Of course it will not affect Parliament as a whole, but it might make a difference in a few marginal seats, depending on the views of candidates in those seats on the issue.
As for the idea that we should wait for three years, I can only ask why the noble Lord did not mention it at the time, when there was plenty of opportunity to do so. Several noble Lords have said to me that they think it wrong that the period of two years agreed to last week should be altered. I take the point of the noble Lord, Lord Mottistone; there is something to be said for it. But the overriding issue here is the one of not sticking to what we agreed to last week, and therefore I should like to press the amendment.
Amendment to the amendment negatived.
On Question, Amendment No. 11 agreed to.
4.55 p.m.
Viscount Cross Viscount Cross moved Amendment No. 13:
Page 22, leave out lines 7 to 14.
The noble Viscount said: My Lords, to prevent any possible misunderstanding, may I say that this amendment is not the same as the amendment moved by my noble friend Lord Balfour of Inchrye on Report. It is about another matter altogether. I wished to speak on this question at the Committee stage, but unfortunately time did not allow—the vote had to be taken. I had an amendment on the Marshalled List at the Report stage, but unfortunately my amendment was defective.
The aim of this amendment is to do away entirely with any financial penalty for not wearing a seat belt, thus bringing forward the possibility of following the lead set by West Germany, where the law specifies that seat belts shall be worn, but where there are no financial penalties, although if anyone who is involved in an accident is not wearing a seat belt there are accepted reductions of compensation. I understand that this system has been in use in Germany since 1975 and that it is a great success. The RAC tells me that in West Germany the rate of wearing seat belts is very high, in particular on autobahns.
I think that the aim of Clause 27 of the Bill is to encourage people to wear seat belts, and therefore we should give serious consideration to the German system. Why do people wear seat belts in West Germany? I think that the reason is, in part, that it is the law that they should wear them, and being law-abiding citizens, many of them do wear them. It is also partly because there is an insurance penalty if they are not wearing a belt when involved in an accident. That approach could be described as the incentive of the carrot rather than the threat of the stick.
I shall not yet again go into all the many and varied arguments for and against the wearing of seat belts, but let it be said that the experts disagree, as is so often the case in these matters. One day there is a letter in The Times from a expert in favour of the wearing of seat belts. The following day in the same paper there is a letter from another expert against the wearing of seat belts. At the Committee stage in this House your Lordships' opinion was divided in the proportions of rather more than two-fifths against to rather less than three-fifths in favour. In a curious way, those figures might well reflect opinion in the country.
I consider that in the circumstances that I have described the German system is a brilliant compromise solution to the problem. It solves the complicated questions of exemptions and enforcement that we have been discussing and which will take up so much police time and court time. If I may say so, I feel that very many extremely sensible suggestions on the subject of seat belts have been made from all quarters of the House during the passage of the Bill through the Chamber; but do we really want to tie ourselves up in knots on the many questions of exemptions and enforcement when it is completely unnecessary to do so?
As to exemptions, anyone with a genuine case can

1271
obtain an exemption certificate from his doctor to satisfy his insurance company or the courts in the case of a claim for damages. What a pity that in our proposed new system we should create yet more motoring offences: failure to produce an exemption certificate within five days; failure to wear a belt. As to enforcement, in the German system the police encourage drivers to wear belts, but drivers are not harassed, and there is no impairment of police/public relations. Drivers are not stopped in the middle of the night in order to see whether they are wearing seat belts.
This country is a member of the EEC. Over the years much that is good and which has had its origins in this country has been adopted in many different parts of the world. On this occasion I suggest that we, in our turn, should give very serious consideration to the adoption of a successful system of seat belt wearing as practised by another member of the EEC, in this case West Germany. It could be that this matter will be taken up by an honourable Member in another place when the road safety provisions in this Bill are debated there shortly for the first time; and, later on, should the Government run into difficulties with exemptions and enforcement, should the seat belt provisions in this Bill prove too expensive or too complicated to operate, then I suggest very seriously that the West German seat belt wearing system might well prove to be the answer. I beg to move.
Lord Bellwin: My Lords, I do not want to press the point about what may or may not be in order for consideration at Third Reading, but the fact is that your Lordships clearly voted at Report stage to accept the maximum fine of £50, and to go over this once again really is taking us round the track once more. But I think I would still want myself to make one or two observations on what my noble friend has said. First, the wearing rate in West Germany is only 51 per cent., and it is therefore far lower than in those countries where there is a penalty; and I think that point ought to be made. Without going further—because I do not think it is right that we should—I would only say that this amendment would make a nonsense of the whole clause: and, of course, I certainly could not support what is in fact a wrecking amendment.
Viscount Cross: My Lords, I thank my noble friend the Minister for what he has said. The wearing rate on motorways in Germany is as high as 70 per cent., and I think that is very high. As this is the first time, I think, that the German system has been discussed in your Lordships' House, I should like to test the feeling of the House on the matter and to press my amendment.
On Question, amendment negatived.
Clause 33 [New basis of vehicle excise duty for goods vehicles]:
5.3 p.m.
Lord Underhill Lord Underhill moved Amendment No. 14:
Page 24, line 42, at end insert—
("(7) In Part I paragraph 3(d) of Schedule 4 of the Vehicles (Excise) Act 1971 the following words shall be added:
1272
'Provided that a vehicle not owned by a local authority shall not be chargeable by virtue of this Schedule solely by reason of its use for the conveyance of educational books, materials and equipment to and from or between educational establishments.'").
The noble Lord said: My Lords, this amendment relates to Clause 33, which provides for a new basis of excise duty in respect of goods vehicles. The Department of Transport has stated that where an estate car or hatch-back type of vehicle is used to transport goods in connection with business or trade, the vehicle must be classified as a goods vehicle and thus attract the higher rate of vehicle excise duty. This ruling has caused considerable concern, because the Department of Transport also state:
"Schools, colleges and universities are regarded for vehicle excise purposes as being engaged in trade or business. It follows that any goods vehicles used to convey goods or burden in connection with the business of such an establishment—i.e., the provision of an educational service—would be liable to the goods rate of vehicle excise duty, and any staff who use their own estate cars or hatch-backs to carry goods in connection with their work would need to license their vehicles at the goods rate".
When the question was posed to the department about the difference between these particular vehicles and, say, private saloon cars, it was stated—and again I quote:
The discrimination between saloons and estates or hatch-backs is therefore a direct result of the different construction of these vehicles".
Many teachers and others have been providing the use of their own vehicles to assist the smooth running of their work because of their interest in their teaching profession, and I should like to give three examples.
A teacher has to move from one building to another building of the same school—and this is quite a common occurrence now—when often that building is separate from the other building of the same school by, it may be, a mile or a mile and a half or even more. To carry out his teaching timetable he finds it desirable to take equipment for that purpose in his own personal car, which may be an estate or a hatch-back. Another teacher takes school equipment to be repaired or buys equipment to facilitate a lesson or series of lessons. These are just one-off occasions. A third example is that the education authority may organise courses of lectures whereby lecturers and equipment required are moved to a particular establishment so that in-training may proceed on the site. This has obvious advantages, not the least those of economy of cost and of the lecturers' time.
But the point is that in all these cases and in similar cases, if teachers, inspectors and others use their own private vehicles and they are of an estate or hatch-back type, then they are liable to pay goods vehicle excise duty on them. The Association of Metropolitan Authorities has expressed very great concern with the situation, and there are already cases of teachers and others with such vehicles regrettably having to take the view that they will be unwilling to use their vehicles in this way. It is a blow at such persons providing this voluntary assistance in the interests of the educational service.
There is also the point that if these vehicles are to be classified as goods vehicles then undoubtedly this may have some effect on their insurance policies and premium rates. Therefore, what the amendment seeks to do is

1273
to meet this situation by removing the use of such vehicles in these ways from charge under the schedule. It seems a most reasonable thing to request; and, as I have said already, to continue with what will happen under the procedure outlined by the Department of Transport will really be a blow at teachers and others in the education profession being of help to their profession by using their own cars, if they are specified in these two particular categories, for the educational service. I beg to move.
Lord Somers: My Lords, while I can understand the anxiety of the noble Lord for the teaching profession, I can think of so many others where the same conditions would apply. How about the medical profession—a doctor carrying his own equipment in his car? How about members of the musical profession carrying their instruments in their cars? There are many other examples that I could think of. I do not know why the education profession—deeply though I feel for them, may I say—should have special exemption in this way.
Lord Bellwin: My Lords, I should perhaps note that we are in some danger here of becoming enmeshed in a particular fiscal matter outside the scope of the provisions of the Bill and our remit in these matters. Be that as it may, while I understand the intentions of the noble Lord, Lord Underhill, on this point, I cannot accept that a reduced vehicle excise duty burden on the lorries used by educational suppliers is appropriate.
There are two fundamental objections to this amendment. The first relates to the point which was touched upon a moment ago by the noble Lord, Lord Somers, and that is simply equity. The Government are frequently pressed to grant exemption or relief for what might be called special cases in special circumstances. Each one is well argued, and on the face of it has merit. But were they accepted there would be a severe loss of Exchequer revenue which would then have to be
made good by increases on other VED payers or increases elsewhere. On the other hand, singling out one case for special treatment would be equally unfair. Moreover, the position of educational suppliers does not seem to me to be at all different from that of those in many other businesses who at the present time may well be faced with difficult trading positions.
The question of equity apart, the amendment would lead to more complex VED administration and enforcement at a time when the Government are taking steps to streamline the operation of the tax and cut out bureaucracy. I hope that the noble Lord can accept these very real difficulties of principle and of
practicability which the amendment poses. The Government are, I can assure your Lordships, sympathetic to the underlying question of provision of books and equipment for schools. In that context, I should perhaps note that the Government's rate support grant settlement for 1981–82 allows for an increase—not a decrease—in local authority spending on books and equipment of 2 per cent. in real terms. Similar increases for later years are included in the Government's public expenditure plans. But it is of course for local authorities and schools themselves to determine their priorities within the resources made available to them.
1274
I hope that the noble Lord will accept these observations on his amendment.
Lord Underhill: My Lords, I am extremely disappointed with the Minister's reply. It will be recalled of course that I spoke in support at Committee stage of the downplating of lorries under this same clause in support of the noble Lord, Lord Mottistone, on the basis of equity and fairness. If there are other categories which ought also to be considered, that is a matter which could be adjusted when Lords amendments go to another place. It should not affect this particular amendment which is trying to deal with the question of justice. To suggest that this is to be looked at from the aspect of loss of revenue appears a farfetched argument.
We are talking about a simple way for teachers to help the pupils and the smooth running of their educational work. If they refuse to do this because of the extra goods duties then somebody has to provide goods vehicles to move the equipment from one part of a comprehensive school to another. When we are talking about wiping out bureaucracy, my amendment would do that. What will happen if teachers say that they are not prepared to have this additional goods duty placed upon them? Either the equipment will not be moved from one part of the building to another, under the three examples I have given, or the LEA will have to meet quite considerable costs in providing goods vehicles to do it.
Lord Bellwin: My Lords, I wonder whether the noble Lord will give way for a moment. I should have said that the position of estate cars being used for this purpose is something we would be willing to look at.
Lord Underhill: My Lords, I am delighted to have that assurance. On that basis, I readily withdraw the amendment. The noble Lord said "estate cars". Will he look at the hatch-back as well? They are both in the same position. With that assurance, I readily beg leave to withdraw and hope that something may happen.
Amendment, by leave, withdrawn.
5.13 p.m.
Clause 35 [Charges for licensing of cabs and cab drivers]:
Lord Underhill Lord Underhill moved Amendment No. 15:
Page 26, line 14, at end insert—
("( ) Subsections (3) to (5) of section 70 of the Local Government (Miscellaneous Provisions) Act 1976 shall apply in relation to licences issued under the said Act of 1847 as they apply to licences issued under the said Act of 1976.").
The noble Lord said: My Lords, this amendment relates to provision for a possible increase which could take place under the terms of the Bill for licence fees relating to taxi cabs. We have had this discussed at both Committee and Report stages and each time I have changed the amendment in order to meet criticisms that have been levelled. I withdrew the amendment at Report stage and urged the Government to make the same provisions for district councils which function under the 1847 Act as function under the 1976 Act for some district councils. That would

1275
then meet my wishes. What I have attempted to do today is precisely that. Under the 1976 Act the taxi trade may object to the district council on any licence fees that the council may wish to introduce, whereas those district councils that function under the 1847 Act have no possible basis at all to raise an objection. Under the Bill there could be increases in licence fees.
I want to thank the noble Earl, Lord Avon, for a letter which he sent following the Report stage. He emphasises two or three points and particularly that the elaborate procedures under the 1976 Act are such that the Government would not wish to have repeated under the 1847 Act measures. I must ask one simple question, with respect: If that is the case, why did not the Government introduce an amendment to this clause to improve the procedures under the 1976 Act? The position has been left entirely as it is. Therefore, we are faced with a situation that if one is in the taxi trade in a district council which has adopted the 1976 provisions, one can object, That is the law which the Government do not propose to change even though they say it is an elaborate procedure.
If you are in a district council which functions under the 1847 Act you cannot have any basis for objection to the same district council. That seems to be completely inequitable and completely unfair. If the Government feel that the 1976 provisions are too complicated, then really the Government under this clause ought to change (which they would have power to do) the provisions of the 1976 Act. To have certain district councils where one procedure obtains and another where it does not obtain seems unreal and unfair.
The letter which the noble Earl kindly sent to me emphasises that it would be possible for the matter to be raised with the district auditor. That cannot be done until the auditor has audited the local authority accounts, which could be 15 months or so after the increase has been made. Also we have reference to the fact that it could be possible, if action was not taken by the council, to go to the courts. Surely, we do not want to have that elaborate procedure. There is a right of objection to the district council which wishes to implement an increase where the 1976 Act provisions obtain. All I am asking for in this amendment is that exactly the same procedure should be laid down for those district councils that function in this respect under the 1847 Act. That seems completely equitable and fair, and if we do not have that then frankly there are going to be a lot of district councils functioning under different laws regarding appeals and one section of the taxi trade will be treated differently from other parts of the country. I beg to move.
The Earl of Kinnoull: My Lords, briefly, I should like to support the noble Lord and congratulate him on the energy with which he has pursued this issue and the energy with which he pursued many other issues under this Bill. I believe that there is a case of equity as the noble Lord has expressed. If my noble friend cannot accept the amendment, I hope he will say he will look at the case as I feel that he should.
Lord Bellwin: My Lords, with permission, I should
1276
like to speak to Amendment No. 16 as well as this amendment. The noble Lord, Lord Underhill, is certainly most persistent and I entirely endorse what my noble friend Lord Kinnoull has said about his endeavours while we have been going through this Bill. At every stage he has sought doggedly to restrict the powers of licensing authorities to charge economic licence fees. I fully appreciate that he has the interests of the taxi trade at heart. I know that the trade is worried lest it be required to pay excessive licence fees.
It was in recognition of this worry that, at the Report stage, we moved an amendment making it absolutely explicit that a licensing authority may not charge a taxi licence fee greater than is necessary to cover its reasonable costs. Although, as I have said, I think I have a good understanding of the arguments that the noble Lord puts forward, beyond that I fear I cannot go. The Government's whole policy on local authority charges is directed towards removing unnecessary restrictions. Indeed, that was the very purpose of this clause. The proposals put forward now would take us in the other direction. As I shall try, briefly, to show, I am convinced that they are unnecessary.
The complicated procedures for notification and for the hearing of representations by district councils whenever they wish to charge licence fees in excees of £25 set out, as the noble Lord said, in the Local Government (Miscellaneous Provisions) Act 1976, are no longer appropriate. They merely impose additional costs on local authorities without significantly benefiting the trade. Indeed, in the long run, the trade is probably the loser since these extra costs have to be passed on through it to its customers. Furthermore, I really cannot see that a statutory right to make representations to the very authority whose decision is being objected to would add to the trade's ability to further its interests. As has been said more than once before, the trade has never shown any signs of being unwilling or unable to make its views abundantly plain if it dislikes a decision taken by a licensing authority.
The noble Lord's second amendment, to make it a duty for a council to supply details of the costs on which its licence fee is based, appears eminently reasonable on the face of it, so I hope he will not think that I am being churlish in having to resist it. But resist it I do—even at that risk. For local authorities are, in the great majority, responsible and reasonable bodies. The noble Lord spoke, in our debate on Report, of authorities who had refused to give a break-down of their costs. I accept that there may be some which may have done so, just as I accept that there may be a minority who in the past have set fees at a level which could not strictly be justified on the basis of their costs.
I have no doubt that most local authorities would do their best to be helpful in explaining the general basis of their charges. Because a minority might not, this amendment would apply to all the necessity so to maintain their accounts as to be able to supply at any time a break-down of costs, including apportionment of administration costs. While this would, of course, be feasible, it would be bound to add to authorities' general costs at a time when the Government's concern has been to limit and reduce local government expenditure.

1277
The purpose of seeking details of costs is to check the reasonableness of the licence fee charged. Both my noble friend Lord Avon and I have explained in letters to the noble Lord that there already exists ample protection for taxi operators who suspect that a licence fee is excessive. Though it was already implicit in the law, the Government amendment which was accepted at Report stage has made clear that charges not firmly based on local authorities' actual costs are ultra vires. It is open to any local government elector whose interests are affected by the level of a licence fee to challenge his local authority's accounts by raising a formal objection at audit (or the matter could be drawn to the auditor's attention at any time). If, on examination, the auditor judged that the authority's charges were excessive, he would raise the matter with the council. If the circumstances warranted it, he could record the issues in his statutory report, which is a public document and which could provide a basis for the taxi trade to bring a case before the courts against the council.
That is the long-standing method by which the interests of the public are protected, in whatever field of local government operations. There is no separate provision for the man who thinks the local swimming bath charges are high to demand a break-down of the authority's costs in providing the bath: no separate provision for the market-stall holder to demand a break-down of costs of provision of the market; no separate provision for the applicant for planning permission to demand an analysis of the costs of the planning department: frankly, nor should there be. Similarly with taxi licence charges. This amendment might be the thin end of a very thick wedge, and, while I do not suggest that the wedge would necessarily be driven into the thick end, it seems to me undesirable even to introduce it.
The amendment is also to some extent defective, in that the word "details" is so vague as to render the enquirer's purpose unenforceable. I apologise for having gone on at some length, but I know how deeply the noble Lord feels and therefore I feel obliged so to do. I appreciate that my arguments will probably not convince him, though I am always hopeful. They must, however, be seen in a much wider context than the issue of taxi licence fees. The noble Lord's proposals would represent an undesirable precedent that could have serious repercussions right across the field of local government charges.
In case the noble Lord is not aware of it, I would want to say before I sit down, hopefully in a helpful way, that the Home Office are preparing a consultation paper on the 1976 Act, and that I should have thought that when that comes forth there would be an opportunity for the noble Lord, or anyone else concerned, to take up matters arising out of the working of that Act. So I hope that, with at least a helpful ending to my remarks, the noble Lord may be at least partially satisfied.
Lord Underhill: My Lords, I am in some difficulty because I have not spoken at all on Amendment No. 16. I confined myself entirely to Amendment No. 15 because I thought there were two different principles involved. Therefore, before I sit down perhaps I may be permitted to say a few words on Amendment No. 16.
1278
The noble Lord, Lord Bellwin, said that my efforts had been to try to restrict the powers of local authorities to charge proper licence fees—not at all: that has not been my purpose. My purpose has been to ensure that there is fairness to all the taxi trade and that they will all have equal opportunity to make objections. I have not argued about whether it is right to increase fees because everybody knows, as the Minister pointed out at Committee stage, that the licence fee under the 1847 Act is something like half a crown, and therefore that has got to be dealt with. But I wanted those authorities where it is as low as that to have the same right of objection as the 1976 ones. I am delighted to be told at this late stage that there is going to be a consultative paper—
Lord Bellwin: My Lords, if the noble Lord will give way perhaps I may give him some information which is helpful. Perhaps I should explain that the point I was making about the 1976 Act concerned consultations about the taxi trade that were going to take place. I do not want to mislead the noble Lord.
Lord Underhill: My Lords, I cannot imagine a consultation in connection with the 1976 Act dealing with the taxi trade not covering the very point I have in mind. Therefore, while it does not fully satisfy me, we can come back later to this question of equity. But I would urge that, if the Government propose to amend the 1976 provisions, we must have something which dealt with the whole of the country together and, if the Government's proposals are not adequate, we can fight it on the basis of the whole country, whereas at the moment it deals only with some of the district councils; and nobody can possibly justify that.
If I may, I should like to say a few words on Amendment No. 16, because here again, as the noble Lord has rightly said, a promise was made at Committee stage to bring forward some clarification of the costs which a council could take into consideration in fixing licence fees. I pointed out at the Report stage that the words which were brought in then in the Government's amendment were exactly the same words as are at present in Section 70 of the 1976 Act. I am not arguing whether or not that is correct. It is because of the way that has been implemented by councils that the taxi trade was very concerned; and this Amendment No. 16 was seeking to say: "These are the costs which a council may take into consideration under points A, B and C, but, where an applicant or licence-holder feels aggrieved and wants to know the details, he should be able to get them from the licensing authority, the district council."
I indicated examples where one district council—I have been given the names of another seven but I shall not mention them here—had likewise refused to give this information. It is not a question of waiting for the auditor or taking cases to court: we want to avoid that if possible. One would have thought that it was not bureaucratic but common sense, because it might well be that when a licensee got the information he might decide not to press the matter further—he might be satisfied with the break-down of costs. But there have been complaints that in some cases the department responsible for this has been built up unnecessarily and that in some cases it would

1279
appear that too high a proportion of the salary of part-time officers has been placed in this particular department whereas it should have been spread over a number of other departments.
If a licensee or an applicant wanted to check that, that, he could only go to
the council. When he got the information, he might decide to drop the business and not take it any further, without having to worry about checking with the district auditor 15 or 18 months afterwards. Therefore, I should have thought that this amendment was assisting in the reduction of bureaucracy, rather than adding to it.
Before I sit down, I should apologise to the noble Countess, Lady Loudoun, and the noble Earl, Lord Kinnoull, whose names appear on the Marshalled List in support of Amendment No. 15. Much as I appreciate their support on other matters, on this occasion there was a mistake by the printers. I do not know whether by leave of the House, the Minister wants to reply to my points on Amendment No. 16, because I have not given him the opportunity to reply to them before.
Viscount Simon: My Lords, I am not sure whether we are completely in order, but, if we are discussing Amendments Nos. 15 and 16 together, there is one point which I should like to put to the Minister before he replies. He mentioned in his anticipatory statement about No. 16, that it would put councils to a great deal of trouble to have to work out these detailed figures. But, surely, they have to work out these detailed figures in order to fulfil their obligation not to charge more than the cost, do they not?
Lord Bellwin: My Lords, may I say, first, that I apologise for speaking to Amendment No. 16. I thought that it had been agreed beforehand and, as I gather that it had not been agreed, I apologise to the noble Lord, Lord Underhill. There was no intention to put them together on any other basis.
May I say briefly, on one or two points that have been made, that I thought the amendment that we brought forward at Report stage clarified very much the fact that local authorities can base their fees only on their actual costs. The noble Viscount, Lord Simon, asked how local authorities will calculate their costs separately, if they have to justify them later on. I can tell him from my own experience that the point I was making earlier, about the need for other services having their costs calculated, is one thing. But the great difficulty in these matters is not simply that you ascertain how many people are working on the preparation of something; it is what you apportion to each separate function.
They will have to be able to do that in this case, and that information will have to be available in case anybody wants to have it. There is no problem in doing that; there is only the problem of the precedent that is created if one insists on doing it in this way, because one would then have to apply it to all the other services. That is the difficulty.
For example, one has only to bring in the auditor, if an authority is proving reticent. The noble Lord, Lord Underhill, talked about those authorities who are refusing to give information. I would only repeat that
1280
it is an option for anyone to request the auditor, at any time, to look at something which he may have grounds for feeling is ultra vires. Those are very serious matters for local authorities, and they do not take them lightly. So I hope that the authorities to which the noble Lord referred will take note of what has been said and will act accordingly.
Lord Underhill: My Lords, if I may say one or two further words, I recall that under the Local Government Act the Government are insisting on a supply of information; for example, on direct works departments. The Government say that they want the information and they will then decide what to do about certain things. These licence-holders want the information so that they can decide. I hope that this may be included in the consultation document on the 1976 provisions, because it is part of them. My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 16 not moved.]
Clause 38 [Fires caused by railway engines]:
5.35 p.m.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 17:
Page 27, line 33, leave out from ("engines)") to ("or") in line 34 and insert ("in subsection (3) for the words "two hundred pounds" there is substituted "£3,000").
The noble Lord said: My Lords, this amendment brings to finality a number of debates which we have had throughout the stages of this Bill, with regard to provisions of the 1905 Railway Fires Act, as amended by the 1923 Act. Your Lordships will probably remember that we have discussed raising the limit of absolute liability from £200 to something more appropriate to present day times; that is, £3,000. This amendment seeks to do that.
I understand that the Government have now accepted the principle involved. Indeed, I have to thank my noble friend and the department for the conversations and exchange of letters with regard to this matter which will bring it to a conclusion. I do not think I need to detain your Lordships by explaining it further. But it may be as well if I say that Amendment No. 26 is consequential upon this amendment being accepted by your Lordships. My Lords, I beg to move.
Lord Bellwin: My Lords, without going into detail, which I do not think my noble friend requires me to do, I am glad to say that we are pleased to accept this amendment and I gladly pay tribute to his assiduity in pushing this forward.
On Question, amendment agreed to.
Lord Bellwin Lord Bellwin moved Amendment No. 18:
Page 27, line 36, leave out second ("subsection").
The noble Lord said: My Lords, if I may, I should like to speak to this amendment and Amendment No. 19 together. Amendment No. 18 is, in fact, consequential upon Amendment No. 19. It is a purely drafting amendment which will delete the word "subsection" in line 36 of page 27. This will be necessary,

1281
because Amendment No. 19, if it is agreed, will insert a further subsection (3B) into Section 1 of the 1905 Act. I beg to move.
On Question, amendment agreed to.
Lord Bellwin Lord Bellwin moved Amendment No. 19:
Page 27, line 39, at end insert—
("(3B) In the application of subsection (3) above to Northern Ireland for the reference to the Secretary of State there shall be substituted a reference to the Department of the Environment for Northern Ireland and any order made by the Department under that subsection—

(a) shall be made by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979; and

(b) shall be subject to negative resolution as defined by section 41(6) of the Interpretation Act (Northern Ireland) 1954 as if it were a statutory instrument within the meaning of that Act.").

On Question, amendment agreed to.
Clause 40 [Repeals]:
Lord Bellwin Lord Bellwin moved Amendment No. 20:
Page 28, line 26, after ("Schedule") insert ("so far as relates to—

(a) the Railway Fires Act (1905) Amendment Act 1923; and

(b) the Public Passenger Vehicles Act 1981,

comes into force on the passing of this Act and otherwise").
The noble Lord said: My Lords, these amendments are necessary to enable repeals in Schedule 12 relating to the Railway Fires Act (1905) Amendment Act 1923 and to the Public Passenger Vehicles Act 1981 to come into force on the passing of the Transport Act, without the need for a statutory instrument. There will be no reason for delay once the Bill becomes law. The amendments are technicalities. I beg to move.
On Question, amendment agreed to.
Clause 41 [Northern Ireland]:
Lord Bellwin Lord Bellwin moved Amendment No. 21:
Page 28, line 42, at end insert—
("(ee) Part III of Schedule 12 and section 40 so far as relating to the Railway Fires Act (1905) Amendment Act 1923;").
The noble Lord said: My Lords, this small amendment is consequential on the amendment to Clause 40. It ensures that Clause 40, so far as it relates to the Railway Fires Act (1905) Amendment Act 1923 and to the corresponding part of Schedule 12, extends to Northern Ireland. My Lords, the amendment is also a technicality. I beg to move.
On Question, amendment agreed to.
Schedule 3 [Powers of Associated British Ports]:
Viscount Simon Viscount Simon moved Amendment No. 22:
Page 36, leave out lines 16 to 18.
The noble Viscount said: My Lords, I hope that I am in order in moving this amendment on Third Reading, because it is for the purpose of clarifying an uncertainty. It is the same amendment which I moved at the Report stage and which I withdrew, after having explained its purpose and after having given the noble Lord the
1282
Minister some facts and some arguments which 1 think he had not heard before. He kindly undertook to talk to his colleagues and to bring to their notice the points that had been made. This he has done and this morning I received a letter from him, for which I extend my thanks. As I feared, the noble Lord the Minister replied that the Government were still resisting the amendment.
I have only one or two short comments to make. First, I understand that Associated British Ports, as a statutory undertaking, must be given explicit powers in this Bill; powers which in the case of a Companies' Act company would be included in the memorandum and articles of association. There is no dispute about that. If Associated British Ports want the power to set up as a ships' agency, then this power must be set out in Schedule 3. All along my argument has been that ABP do not need this power, that it is inappropriate and indeed that it is undesirable that port authorities should act as agents for shipowners. An agent has to negotiate with the port authority and may perhaps become involved in a dispute with the port authority, and how could that situation work satisfactorily?
The Minister may not yet have seen a letter from E. H. Mundy and Company, a leading firm of ships' agents in London, to his right honourable friend the Secretary of State for Transport, which sets out the position very clearly. I was very glad to see that a working concern such as this company, with which I am not acquainted although its name is well known to me, took the same view as I did. I am still not sure that the noble Lord, the Minister, has fully understood the point and no doubt this is because I have been ineffective in making it. In a letter I have received this morning, the noble Lord the Minister states:
"They (Associated British Ports) have given categorical assurances that they will not impose any particular agency on port users who will be completely free to employ whichever ships' agents they wish to provide the services they want. In doing so, port users will doubtless have regard to the likelihood of any conflict of interests on the part of a ship's agent employed by the port authority".
There is no question of a ship's agent being employed by the port authority. The provision in the Bill is that the port authority may itself act as a ships' agent. Frankly I do not understand the sentence I quoted from the Minister's letter and I wonder whether he does, I have every sympathy with him, because I realise that he has been dealing very effectively with a Bill for a department in which he himself does not serve. I can appreciate how difficult it must be working to departmental briefs and being given no room to manoeuvre. But I wonder what is meant by the sentence I quoted. The Minister's letter goes on:
"In view of these assurances and the economic reality that Associated British Port's best interest will lie in ensuring the best services for its customers, any conflict of interests is likely to be theoretical rather than real".
Of course Associated British Ports will offer their customers the best services they can, but there will be occasions when the port authority, for some good reason of its own, does not wish to give the ship precisely what it is seeking in the way of facilities or services. I presume that a small department would have to be set up, staffed by people who are experienced in ship agency work, and I do not understand how a small

1283
department of that kind could possibly carry as much weight with the general management of the port authority—which, after all, will be the department's overall boss—as would an outside body.
Moreover, as I said at Report stage, it is not only a question of conflict of interests. May there not also be some confusion about responsibilities? If a mishap arises there may be doubt whether the action taken or not taken which was the cause of the mishap was so taken or not taken by the port authority as such or by the port authority as the agent for the ship. The answer to that question will of course determine where large liabilities may lie one way or the other. Before deciding what to do with this amendment, I shall be glad to hear what comments the noble Lord the Minister has to make.
Lord Mottistone: I should like to speak briefly in support of the amendment moved by the noble Viscount, Lord Simon. As my noble friend the Minister will recall, his reply when I moved a similar amendment at Report stage was so frustrating that in desperation I put my amendment to a Division. In fact this was a very unwise thing to have done, and I know that, but it was done in an attempt to demonstrate to my noble friend that I cannot understand why the Government cannot see the arguments which have been put forward so cogently by the noble Viscount on two occasions and which he has now amplified very well.
There is really no justification for introducing this new provision, which the Government admit is a new provision. It is something that the British Transport Docks Board did not have, did not need, and did not want. If my noble friend has not been given the good advice to accept this amendment, can he tell me whether the Government could inject an amendment when this Bill goes to the other place, if they see the point by then? If not, we shall be a little desperate, because this is really quite an important point and for some reason, very good arguments in its favour do not seem to be accepted.
Lord Bellwin: My Lords, we have gone into this matter in considerable depth, but I wish to spend a little longer replying now than my noble friend the Chief Whip—who has just entered the Chamber—would want me to do; I feel obliged to do so because of the concern which has been expressed by the noble Viscount, Lord Simon, and by my noble friend Lord Mottistone. If I go into the matter in some depth, my remarks will go on the record and that may be helpful. To take the question asked by my noble friend Lord Mottistone, I can only comment that, as always, everything that is said will be carefully considered and whether or not the other place will wish to do something is for the other place to decide—I cannot say.
I hope that the House will be content if I speak to Amendments No. 22 and No. 22A, which both deal with ships' agency. We have discussed on a previous occasion the power which the Bill will give to Associated British Ports to undertake the activities of a ship's agent. On the second of those occasions, at Report stage, I promised to bring to my colleagues' attention the points which had been raised in order to find out
1284
whether they felt we should do something different. However, I hope that the noble Viscount, Lord Simon and my noble friend will not be too disappointed at having received my letter in the one case, and in the other case at hearing me say that the Government have come to the conclusion that the extension of Associated British Ports' powers to acting as a ships' agency is reasonable and logical.
The noble Viscount expressed his concern about possible conflicts of interest which might arise on the part of a ship's agency employed by the port authority. Your Lordships will be aware that British Transport Docks Board has gone to considerable lengths to reassure existing ships' agents and ports users that it does not propose to enter into ships' agency activities in a big way. Many of your Lordships may recall, for example, that during Report stage I read out quite a long joint statement which the BTDB made with the General Council of British Shipping. That statement made it clear that BTDB still viewed the operation of its ports as its primary objective and proposed to undertake ships' agency work only where there was a gap in the existing services which ABP could advantageously fill. The position of port users will be further protected by the economic reality that ABP's best interest will always lie in providing the best possible service for its customers, thereby retaining their custom and ensuring an adequate return to the private sector shareholders who will control the business. In these circumstances, I believe that any conflict of interest is likely to be theoretical rather than real.
I should like to take this opportunity to reply also to the points which my noble friends Lord Mottistone and Lord Lucas of Chilworth raised at the Report stage. My noble friend Lord Mottistone expressed concern about whether BTDB proposed to use their ship's agency powers to engage in the chartering of ships. I hope he will be reassured by the fact that it is my understanding that such chartering would normally be undertaken by a chartered shipbroker and that it would not come within the scope of ABP's power to undertake the activities of a ship's agent.
My noble friend Lord Mottistone also expressed his anxiety lest I thought there was an exact comparison to be made between Schedule 3, paragraph 4, of the Bill and the memorandum and articles of association of a private sector company involved in ship's agency work. Such a comparison of course is not exact and the important comparison to which I had wanted to draw attention is one of principle. This is that a private sector company is empowered to do whatever its memorandum and articles of association authorise, subject only of course to the general laws of the country. On the other hand, ABP, as a statutory corporation, has no memorandum and articles of association and will only be empowered to do those things which its statute expressly allows. Hence, Schedules 2 and 3 achieve for ABP what the memorandum and articles of association achieve for a company. The schedules go no further than a private company's memorandum and articles and confer no special privileges on ABP either in respect of ship's agency or any other power.
My noble friend Lord Mottistone saw a danger of a ship's agent employed by ABP joining his colleagues on strike and so depriving ship's masters of the ability to have their ships redirected to ports free of industrial

1285
action. I believe his fears are misplaced. BTDB's management have never gone on strike and it is fair to assume that port services not dependent on registered dockworkers would always be maintained as they have been in the past. So those who rely on the service of ship's agents have little to fear from this viewpoint, though it is, of course, a factor which they will be free, if they think it necessary, to take into account in appointing an agent.
My noble friend Lord Lucas of Chilworth took the industrial relations point further by suggesting that BTDB's assurances about the use they expected to make of their ship's agency powers might be more welcome if backed up by similar assurances on behalf of the employees' side of the docks industry. Even if theoretically possible, it would I think be unfair to expect the BTDB management to subject their assurances, or any other business arrangements they make, to detailed scrutiny and, implicitly, consultation with their employees. They are not a co-operative and, therefore, responsibility for the business must reside with the management who will in turn be answerable to the shareholders. I think, therefore, that only management itself can ever be in a position to give assurances about the use of their ship's agency powers.
Finally, I should like to emphasise once again that BTDB have gone a long way to reassure those concerned that they do not intend to enter into the ship's agency business in a big way and that they have no intention of jeopardising the independent status of existing ship's agents or taking business away from them. I do not want to repeat all those assurances, but I should like to say that the reconstituted BTDB will not engage in any of their new ancillary activities unless circumstances fully justify it and they accept that it could well be in the best interests of their customers for a gap in the ship's agency services at a port to be filled by an existing member of the profession. In these circumstances they have said that they would be happy to initiate any liaison needed to achieve this. On the other hand, there may be instances in which a service would be provided more appropriately by ABP itself. In the Government's view, ABP should not be denied the flexibility accorded to other private sector businesses to respond to changing circumstances, and it should be left to them to exercise their new powers in a sensible and commercially effective manner in the best interests of its ports and its customers.
The Government have given full and careful consideration to ABP's powers and I hope that the comments which T have made today will help to reassure those of your Lordships who have expressed concern about the new ship's agency power. To the noble Viscount, Lord Simon, who has pressed this all the way from the start, I should like to say that I hope that, if not fully, he will be at least partially reassured by what I have said.
Viscount Simon: My Lords, I am very much obliged to the noble Lord for the very full reply lie has given. I cannot say that I find it entirely satisfactory, but there it is. In the early part of his reply, I think when answering the noble Lord, Lord Mottistone, the noble Lord said that of course he could not say what would happen in another place: that it was up to them. If we do not pass the amendment, there is no possi-
1286
bility of the other place doing anything about it. This is the point which the noble Lord, Lord Mottistone, was making; we should pass the amendment here and then the other place can either remove it or alter it. If we do not pass the amendment here, there is no possibility of the other place doing anything.
Lord Bellwin: My Lords, if I may speak again on that point, I went on to say that, while we could not accept the amendment, the other place would read very carefully, as we always do, what has been said, and, if that should be an influence upon their thinking, they would know what to do. However, so far as this House is concerned, we cannot accept the amendment.
Viscount Simon: With great respect, I do not think that the noble Lord has got it right. They can read what we say and it may affect their thinking, but there is no means by which the other place can introduce into a Bill which has already been through that place an amendment which they have not got.
Lord Bellwin: Yes, my Lords, that is absolutely right. I apologise to the House.
Viscount Simon: Apart from that, once again the noble Lord gave us a very full explanation of the Government's view. Part of it was similar to the letter which he wrote to me. I invited the noble Lord to tell us whether he understood that curious sentence which I read out when I moved the amendment and which I could not understand. He read it out again, but he did not make any comment upon that reference to the likelihood of a conflict of interest on the part of a ship's agent employed by the port authority. I do not know how it has got into the text; it has nothing to do with what we are considering. Again, I am afraid it suggests to me—I have the greatest sympathy for the noble Lord, who is clearly having to speak on information given to him by another department—that the point has not really been understood. Nevertheless, I do not feel that this is a matter of such enormous importance that we should delay the House any longer or go to a Division. In all the circumstances, I beg leave to withdraw the amendment.
5.58 p.m.
Lord Mottistone Lord Mottistone had given notice of his intention to move Amendment No. 22A:
Page 36, leave out lines 17 and 18 and insert—
("The Associated British Ports may act as ships' agents in any of its harbours providing that the services of a Chartered Shipbroker are not available at that harbour.").
The noble Lord said: My Lords, my noble friend Lord Brougham and Vaux, who, sadly, had to leave the House before we reached Amendment No. 22A, asked me to look after his amendment. I was very much reassured by what my noble friend said in answer to Amendment No. 22, and I thank him very much for certain parts of it. I therefore do not wish to move this amendment.
Schedule 5 [Provisions supplementing ss. 15 to 17]:
Lord Underhill Lord Underhill moved Amendment No. 23:
Page 49, line 27, at end insert—
("(2) The Secretary of State shall after a period of twelve months from the day appointed under subsection (1) of section 15, present a report of the carrying into effect of section 15 and this Schedule and the exercise of the functions conferred or imposed on him by or by virtue of that section or this Schedule").
The noble Lord said: My Lords, may I briefly explain the purpose of this amendment The Bill proposes the abolition of the National Ports Council. In the light of that, I proposed during the Committee stage that we should agree to the establishment of a National Ports Authority. After an explanation had been given, that amendment was withdrawn. This matter was brought forward again at the Report stage. The noble Lord, Lord Bellwin, explained then that research and training, which are responsibilities of the National Ports Council, and also assistance to harbour authorities in the exercise of their functions, would be made the responsibility of the industry itself through the British Ports Association. He also pointed out that the Secretary of State is to take over two functions—collection of port statistics and decisions on objections to port dues—and that the other functions will be repealed or their scope reduced.
All the amendment says is that if that is to be the situation on the passage of this Bill then, at the end of a period of 12 months from the appointed day, the Secretary of State should present a report on how all these matters have been carried into effect—in other words, how the research and training and the other matters going to the British Ports Association have been carried through; how he has carried through the duties which he is now going to assume and also what has been the effect of scrapping some of the duties of the National Ports Council which will not be carried out by anyone in future, so that Parliament may consider the matter. It seems an eminently reasonable amendment. We ought to know the effects of all these decisions which will be made if the House agrees to the abolition of the National Ports Council, and I hope the Minister will feel able to accept this amendment. I beg to move.
Lord Bellwin: My Lords. I was interested to hear what the noble Lord, Lord Underhill, said in regard to this amendment. He will know that I do not share his pessimistic view of my right honourable friend's ability to carry out his responsibilities effectively after the abolition of the National Ports Council. But I do not believe that a report of the sort provided for in the amendment offers the best way of informing Parliament of how he is exercising his responsibilities. Many opportunities arise in practice, whether through questions, statements or debates, to discuss ports matters. If noble Lords, or honourable Members in another place, wish to discuss the ports industry, the Government's ports policy or indeed more specific questions, my right honourable friend and his colleagues welcome the opportunity of such discussions. They can take place on the issues of the day and be relevant to current problems. This is likely to provide the basis for a more worthwhile discussion than a single report 12 months after the Appointed Day on a rather
1288
limited aspect of my right honourable friend's responsibilities.
I do not need to describe to your Lordships at this late stage the provisions of Section 15 and Schedule 5, but I should explain that they are mostly concerned with the detailed arrangements for the abolition of the National Ports Council. I described at Report stage what was to happen to the Council's functions and also the role of the Secretary of State. Schedule 5 transfers to the Secretary of State the duty to decide objections against ship, passenger and goods dues and the power to collect port statistics. It also makes him responsible for administering the Council's staff compensation and pension scheme, responsibilities which the Public Trustee is to carry out on his behalf. But most of the Secretary of State's responsibilities derive directly from the Harbours Act 1964.
To sum up, I do not believe that a formal report a year after the Council is wound up is necessary. Nor do I think that a report on the rather limited issues covered in the amendment as drafted would assist Parliament. But my right honourable friend and his colleagues welcome occasions for debate on important matters of ports policy and I have no doubt that such opportunities will continue to arise.
Lord Underhill: My Lords, I should point out that all the words in the amendment after the word "report "on the third line of the proposed subsection (2) are actual words taken from the subsection in question. I am disappointed with the reply because I think it would be helpful if we knew how the carrying out of those things was working out in practice. But in the light of what the noble Lord has said, he can rest assured that I shall have discussions with my honourable friends in another place and I am certain that they will follow up the suggestions he has made. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 6 [Amendments of the Harbours Act 1964]:
6.4 p.m.
Lord Underhill Lord Underhill moved Amendment No. 24:
Page 65, line 19, leave out subparagraph (3) and insert—
("(3) For section 31(1) (right of objection to ship, passenger and goods dues) there is substituted—
"(1) Subject to the following provisions of this Act charges to which this section applies are ship, passenger and goods dues and cargo handling charges.
(1A) In this section "cargo handling charges" means charges for loading, unloading and handling goods where such services are supplied by a harbour authority or its agents or a subsidiary or associated body or person and there is no other supplier of such services at the dock quay or wharf at which the particular services are provided or no other supplier other than the harbour authority, its agent or a subsidiary or associated body or person and where there is no reasonable opportunity for a person desiring to use such services to obtain such services from any other harbour authority").
The noble Lord said: My Lords, I will be brief on this amendment. Noble Lords may say that they have heard this before, but in actual fact the amendment has now been revised for a second time because of points raised by the Ministers who have replied to the amendments. Because of changed conditions since the

1289
Harbours Act 1964 came into effect—and it is generally agreed by the Ministers and everybody that in many harbours the harbour authority is now the sole employer of dock labour—we sought to extend the right of appeal by port users to cover these other charges in addition to the ship, passenger and goods dues.
At the Committee stage it was pointed out to me by the noble Lord, Lord Skelmersdale, who resisted the amendment, that there was no case for extending the appeal because there were no monopoly conditions in existence, but that if there were monopoly conditions the matter would be looked at again. Thereupon at the Report stage I tabled an amendment to provide for an appeal where there were monopoly conditions. Again it was pointed out to me by the noble Lord, Lord Skelmersdale, that this would not be acceptable, as there was no monopoly condition, because a port user could go to another port. In fact there are certain port users who would find that extremely difficult; particularly those who are using the waterways and who find it necessary to come out to the Humber Estuary or to the Trent.
Therefore, added to this amendment now are the words:
"and where there is no reasonable opportunity for a person desiring to use such services to obtain such services from any other harbour authority".
Accordingly it seems that we have met all the conditions: that there should be no appeal except where the port harbour authority is the sole provider of the services and where it is not reasonable for the port users to go anywhere else. That seems to have met every single point of criticism put up by the Ministers at the other two stages of the Bill and I hope they will now consider that I have framed an amendment which meets all their requirements and which they can accept. I beg to move.
Lord Bellwin: My Lords, on this occasion I will not repeat the reasons why the Government are not prepared to accept an extension of the provisions of Section 31 of the Harbour Act to cover all port charges, because we spoke on this at much length during the earlier stages and it is recorded in Hansard. I would rather confine myself now to the particular circumstances of this amendment, which of course is a very restrictive one. The amendment would in certain circumstances extend the existing right of appeal against ship, passengers and goods dues to cargo handling services. As the noble Lord, Lord Underhill, has explained, these circumstances are where the services are provided at a port by one supplier and there are no other suppliers available, and where in addition the user has no reasonable opportunity of taking his business to another port.
Our ports industry is a highly competitive one, with a large number of individual ports providing a wide range of services and facilities and competing for a limited amount of trade. A user is, generally, free to choose the port to which he takes his business; if he is dissatisfied with the service provided he can take his business to another port. We regularly read of examples of this. Moreover there is no basis on which a statutory cargo handling monopoly can exist in the industry. There are ports at which there is only one employer of stevedoring labour. But any person or
1290
company may provide cargo handling services at a port, provided that at ports covered by Part I of the Docks and Harbours Act 1966—that is at the "Scheme Ports"—he first obtains a licence to employ registered dock workers. This is of course the very point made at Report by the noble Viscount, Lord Simon. I was grateful to him for having raised it then and I regret that we may have misunderstood it at that time. The trend is to a reduction in the number of firms providing stevedoring services, but there is certainly not a statutory monopoly.
I have no evidence that the combination of circumstances which is envisaged in
the amendment exists in practice within the ports industry. Although the canal traffic, for example, from South to West Yorkshire must use the Humber or the lower Trent, the BTDB does not have a cargo-handling monopoly there. On the other hand, where there is a cargo-handling monopoly at a port, we are not aware of a captive market. The noble Lord, Lord Underhill, has raised an interesting point, but I do not think it is one which arises in practice. I do not think we can do anything about the noble Lord's amendment: all we can do is to take note of what has been said, not with a view to altering it in another place, as I said earlier, but with a view generally as to where we go from here. I am sorry that I cannot be more helpful with regard to this amendment, which I recognise is one that the noble Lord felt might be accepted, but that is the position as I understand it.
Lord Underhill: My Lords, I wonder whether I might put just two or three points. In the first place, what the amendment is saying is that where the port authority is the only employer and where there is no reasonable opportunity for the port user to go anywhere else, there should be the right of appeal. Therefore, it is not a question of whether at this stage there is such a port, but it could be in the near future. The National Waterways Transport Association have expressed real concern about this and they represent the independent private freight operators on our waterways, and a number of freight operators have expressed concern about it. Under the Bill the British Transport Docks Board will go out of existence and Associated British Ports will come in as a private company, controlling those particular harbours and docks in the Humber Estuary and the Trent. Therefore, there could be conditions of monopoly on both the points raised in this amendment. I wonder whether that is fully appreciated. I know it is no good asking the Government to take it back because there is no opportunity to take it back; either we do not proceed with the amendment, or alternatively the Government are prepared to accept it and then possibly, if they wish to improve it in the other place, they could do so.
Lord Bellwin: My Lords, I fear, however helpful one wants to be, I am not in a position to accept it.
Lord Underhill: My Lords, this is one of the issues on which we feel very strongly, but in view of the Government's refusal to reconsider I do not think we will press it to a Division. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 8 [Provisions substituted for ss. 6 to 12 of the Road Traffic Act 1972]:
6.12 p.m.
Lord Underhill Lord Underhill moved Amendment No. 25:
Page 73, line 15, leave out subparagraph (6) and insert—
("(6) Subject to the following provisions of this subsection, of any two specimens of breath provided by any person in pursuance of this section that with the lower proportion of alcohol in the breath shall be used and the other shall be disregarded; however—

(a) The person who provided the specimen with the lower proportion of alcohol may claim that it should be replaced by such a specimen as may be required under subsection (4), and if he then provides such a specimen neither specimen of breath shall be used;

(b) After the expiration of the period of one year from the coming into force of this Part of the Act both Houses of Parliament may resolve that as from a date specified in the resolutions paragraph (c) of this subsection shall apply in place of paragraph (a) above;

(c) If the specimen with the lower proportion of alcohol contains no more than 50 microgrammes of alcohol in 100 millilitres of breath, the person who provided it may claim that it should be replaced by such a specimen as may be required under subsection (4), and if he then provides such a specimen neither specimen of breath shall be used").

The noble Lord said: My Lords, here again is a matter which has been before your Lordships on other occasions, but it is now in a completely different form. Even at this hour I think I should explain in some detail precisely what the differences are. In Committee an amendment was proposed with a view to substituting completely paragraph 8 of Schedule 8 and having a completely different wording, the main purpose being to provide that in every case where a driver is alleged to be above the limit of alcohol he should always have the option of a blood test. Because of arguments put forward, that the amendment was too comprehensive and other arguments, that amendment was withdrawn.
At Report stage there was a simple amendment which dealt solely with the one central issue of the optional blood test. On that occasion there was widespread support from your Lordships; some 97 noble Lords went into the Division Lobby in favour of the proposal, and it was defeated by only 14 votes. If that amendment had been carried it would have meant that the change proposed in the amendment would have been a permanent one until other primary legislation was introduced. It may well be that a number of noble Lords did not wish to do that but were nevertheless sympathetic to the idea of the optional blood test in the immediate period. As one noble Lord said in another debate, the important thing is to get the consent of the public for the introduction of any great new innovation.
The only part of the amendment which is new—all the other parts of the amendment are words taken from the existing paragraph in Schedule 8; they are all existing words but put round in a different form—is sub-paragraph (b). The effect of the amendment would be that a person would always have the opportunity to claim to replace the breath specimen by the blood specimen, or in certain circumstances a urine sample. But after the end of one year if circumstances necessitate a change both Houses of Parliament may by resolution drop that provision, which is what is set
1292
out in paragraph (a), and substitute for it paragraph (c), which would revert the position to exactly that proposed in the existing Bill.
I will not go into all the arguments which have been made previously, but I should say that this new amendment has the full and complete support of the Automobile Association and the Royal Automobile Club. At Report stage the noble Lord, Lord Bellwin, said that the amendment that was moved then would drive a coach and horses through the drink and drive proposals in the Bill. That argument cannot possibly obtain with this amendment because after 12 months the position could revert to what the Government wish, if it was thought the circumstances justified it, merely by the passing of a suitable resolution through both Houses.
At Report stage it was stressed that the three motoring organisations, including the Royal Scottish Automobile Club, held the view that only a relatively small number of motorists are likely to avail themselves of the blood option; and that was also the view expressed by the Blennerhassett Committee, who recommended exactly what is proposed in the amendment regarding the optional blood test. But I am not basing the argument on the question of numbers; I am not using the numbers argument. Nevertheless, it is worth while repeating to your Lordships that Northern Ireland has had the evidential breath analysis for some 12 years, and I am informed on very good authority that never have more than 10 per cent. ever asked for the optional blood test. At the moment it is running at a figure of 3 per cent. As I say, I am not going to stand on the numbers argument on this question, but it is very interesting to look at these figures, and there is no reason why those figures should not obtain in this country.
The point I would emphasise is that the introduction of the evidential breath test and the machine readings is something totally new. If we want this to be freely accepted the way to do it, surely, is by providing the option of the alternative blood test where it is required. But I emphasise that the difference between this amendment and the amendment which was moved at Report is that it is not suggested that this should obtain permanently if the circumstances justify a change. It would mean that if at the end of one year the Government find that so many people are requesting the alternative blood option they could introduce the resolution suggested here in both Houses; it could then revert to paragraph (c), which is exactly what the Government want in the existing Bill.
If, on the other hand, numbers are found to be infinitesimal because the Government's publicity about the effectiveness of the machine reading has been so generally accepted that few people want the alternative option, then the Government can say, "We will let it continue, or they can say, "It is obviously not required and we can drop that and adopt paragraph (c)". Therefore this is, I believe, a constructive amendment. It provides for us to get over this first period, where there is a new innovation, where we need to get public assent, where we need to get good police-public relations, which is continually emphasised in this House and elsewhere. It would give the opportunity after one year for the position to revert to what the Government wish, if the circumstances justify that,

1293
without the need to introduce new primary legislation; it could be done by resolution of both Houses.
I hope the Government will take the view that this meets the overwhelming desire of many noble Lords who voted for the other amendment, and maybe of others who would have supported it if they realised it would not be for many years but that there would be an opportunity to reconsider it in 12 months, which is what is provided here.
Lord Nugent of Guildford: My Lords, I feel I must say a word here in support of my noble friend Lord Bellwin, sorry though I am to find myself in conflict with the noble Lord, Lord Underhill, who has been such a valued and stalwart supporter of mine through much of this Bill. The fact is that we really did decide this issue at Report stage, and, as the noble Lord reminded us, we divided on it. He made out a very attractive case and the result was that he got a great many people into the Lobby with him. It is the type of case which one can always make out very persuasively, because it seems to give an option which gives a rather serious matter a merciful application, and I can understand that.
However, my noble friend has to explain that in practice, certainly in the early years, it is almost certain that the majority of motorists would go for the option—they have nothing to lose by it—and that if they did so, the whole administrative system would break down. That is the dilemma. I am perfectly certain that if the noble Lord, Lord Underhill, were sitting in the seat of my noble friend Lord Bellwin, he would be saying exactly the same as my noble friend. The problem here is to make the new system work and to try to make the law with regard to drink and driving more effective, which I know is what the noble Lord, Lord Underhill, wants.
Those were the very cogent reasons that were advanced last time. If I may say so, I think that the noble Lord, Lord Underhill, is rather stretching the recent new rule of order that came into operation at the beginning of this year, and was quoted earlier, in taking us round this course again. It is true that he has introduced an ingenious new feature of the provision, which would allow the Houses of Parliament to reverse their order after a year if they found that it was not working, but I cannot imagine how that looks constitutionally. It sounds very unattractive to me and I have never heard of it before, but no doubt my noble friend Lord Bellwin will inform the House about it. I hope very much indeed that after the House has heard what my noble friend Lord Bellwin has to say, the noble Lord, Lord Underhill, will not feel disposed to press his amendment.
Lord Bellwin: My Lords, I am very grateful to my noble friend Lord Nugent of Guildford, not for the first time, because I, too, would have wanted to say that we had a very full debate on this whole question during the Report stage. There was indeed a large turn-out for the vote, although I acknowledge that the result was as the noble Lord said. But what in fact the noble Lord, Lord Underhill, is now saying ostensibly is that we should not restrict the right to a further blood test until some experience has been gained in the operation of the breath machines and
1294
public confidence has been established in them. However, what he in fact is saying is, "Let us adopt the procedure which was defeated on Report, and not until after a year—and only after a year—will it be permissible for the Government to seek to reintroduce the procedure which was accepted on Report".
I shall not say a great deal on this matter except to pick out one or two points which the noble Lord made. First, I said on Report that since the Blennerhassett recommendations the technology of breath analysis has advanced a great deal. In Northern Ireland, I understand that there are, in fact, two offences—the major and the minor offence—and it is for the minor offence only that a small proportion opt to have a blood test.
I believe, exactly as my noble friend Lord Nugent said, that a person who is found to be over the limit on the breath machine, faced with an option to take a blood test, must surely take a blood test. He is faced with being off the road for 12 months, so why should he not take up an option which may throw up something different? In fairness, it should also be pointed out that the new procedures give more scope to the person so affected than do the present procedures. At present, if you are shown, by a blood test, to have over 80 milligrams then that is all there is to it. What we are saying now is that because the breath machine—and no one is querying its accuracy because it was generally shown in the examples which noble Lords have had the opportunity to see as being pretty accurate—is a machine and there may be some inaccuracy in it, we shall go further, and say that if someone has up to 50 microgrammes (which is equivalent of up to 115 milligrammes in relation to blood) then he may have the option to have a blood test. We shall allow for that. That really goes much further than the present provision and in that way we are allowing for any of the eventualities. I should have thought that that was a very fair safeguard to those who might be concerned about this matter.
We are all trying to bring into this drink/driving legislation something that will materially affect the position so as to make it more of a penalty, because we are all so very concerned at what is happening on the roads, and no one more so than the noble Lord, Lord Underhill, himself. Therefore, we do have a safeguard and we have a bigger safeguard even than we have now. In view of that, and the impracticality of doing what the noble Lord suggests with the 12-month procedure on which we came to a conclusion previously, I think that the noble Lord should let the clause stand as it is.
Lord Lucas of Chilworth: My Lords, before the noble Lord, Lord Underhill, responds, and notwithstanding the niceties which have been pointed out by the noble Lord, Lord Nugent, I feel bound to say something since I have put my name to the amendment. I support the general tenor of the amendment and at the same time accept what my noble friend Lord Bell-win has said. I hope that perhaps the noble Lord, Lord Underhill, will not feel the necessity to press this amendment. However, I must say to my noble friend that we are not concerned with noble Lords who have had the benefit of widespread discussion and demonstration of some of the machinery that might be used

1295
in these tests. I am not here to cast any doubt upon the accuracy of those machines. But what I am saying is that it is all the other people—and of course in these arguments it is never oneself; it is always the other people—who have to be convinced.
The Blennerhassett Report has been with us for some years and we have now approached at this stage of this Bill the provisions which are to implement part of that Report. These proposals are somewhat contrary to Blennerhassett. I am suggesting, therefore, that it may be prudent if the Government were to make haste more slowly in this matter. I do not believe that many of the general motoring public who may be inclined to drink at one and the same time are fully conversant with that which the law is proposing. I am suggesting, therefore, that a very heavy programme of publicity be set up before this part of the Bill conies into force so that people are assured, at least to some extent, of (a) what their rights are and (b) the accuracy of the machine which will determine their guilt or otherwise. I would ask my noble friend to have regard to what I can only describe again as a public relations exercise, because it is the public who must be convinced, not, frankly, your Lordships.
Lord Underhill: My Lords, I am grateful for the support of the noble Lord, Lord Lucas of Chilworth, but I note also his plea for me not to press this matter to a Division. I recognise that the basic issue was debated and went to a Division at the Report stage, although, as I have emphasised, I think that there is a complete change in what is being proposed in this amendment. Before I decide which step I shall take, we must consider that, despite the machines having advanced since Blennerhassett, it was the principle that Blennerhassett was advancing, for the very reasons that I have advanced the principle, and the fact that we need to get this so freely accepted. One way in which to get it freely accepted I am certain, would be to provide the machinery which is suggested in the amendment. I am certain that the motoring organisations are not asking for the optional blood test because they believe that there will be tens of thousands who will rush in and demand it. I do not believe that the motoring associations would be so foolish as to ask for that. They themselves want to encourage the general acceptance of the new procedure and the machines. I am in some difficulty, in so far as we had a vote on this issue last time, and I do not want to waste the time of the House or to intrude upon the general kindness of the House in letting me bring forward this matter again.
The other point I want to make is that this afternoon we have already passed a Government amendment which suggests that a certain measure shall not continue beyond two years unless there is an affirmative resolution. I am almost trying to do the same thing in half the time, in 12 months instead of two years, and to say that you have power to go back to what you want. That seems to me to be a most sensible procedure. But as it will appear if I divide the House that I shall possibly be asking for defeat and be most unpopular, I ask leave to withdraw the amendment. However, I should like to emphasise what the noble Lord, Lord Lucas, has said: that the Government must not assume that they can ride roughshod over this and
1296
that there will be ready acceptance. I believe that there will be acceptance if the Government handle it properly, and that is what my amendment sought to provide. However, in the circumstances I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Schedule 12 [Repeals]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 26:
Page 93, line 27, column 3, at beginning insert ("Section 1.").
The noble Lord said: My Lords, I have spoken to this amendment. It is consequential upon Amendment No. 17. I beg to move.
On Question, amendment agreed to.
Lord Bellwin Lord Bellwin moved Amendment No. 27:
Page 94, line 9, at end insert—

("1981 c. 14.

The Public Passenger Vehicles Act 1981.

In Schedule 7, paragraph 24.

In Schedule 8, in the entry relating to the Transport Act 1968, the words "In section 145, subsection (2)".")

The noble Lord said: My Lords, this is purely a technical amendment. I beg to move.
On Question, amendment agreed to.
6.33 p.m.
Lord Bellwin: My Lords, I beg to move that this Bill do now pass. In all, we have spent many hours debating this Bill. I am told that 273 amendments have been tabled and—and this is significant—more than 80 amendments to the Bill have been agreed to. Apart from minor technical amendments, of which I am glad to say that there have been relatively few, the main amendments to which we have agreed have been to the road safety provisions.
I should like to take this opportunity to thank, first, my noble friends Lord Avon and Lord Skelmersdale and my noble and learned friend the Lord Advocate, who were very helpful to me as we went through the Bill. Not for the first time, I am deeply grateful to them. I should also like to thank the noble Lord, Lord Underhill, for the major role which he has played in the Bill. I hope that he will think that it has been worth while, in that some of his amendments did get through, although I know that I always disappoint him in the ones that I am not able to accept. Likewise, to the noble Viscount, Lord Simon—who is always so very cautious, very careful and usually so right in the points that he makes—I also regret that I am not always able to accept as many amendments as I might, personally, sometimes like to accept.
It would be invidious of me to mention many other names, but I should certainly want to refer to my noble friend Lord Nugent of Guildford, who carried through a very significant measure on the seat belts issue. Whether or not one agrees with that, it is right and proper that we should pay tribute to him for the way in which he has persevered for so long in something in which he believes and which he has managed to convince your Lordships to accept. I should also like to pay tribute to my noble friend Lord Lucas, who

1297
is always so knowledgeable in the whole transport area, and to my noble friend Lord Mottistone. He and I do not always see eye to eye, but he, too, has somehow found a way to get through many amendments.
I think that this is a good Bill. I am happy to conclude it by saying that it is the second Transport Bill that it has been my privilege to pilot through. We have covered a wide range of topics. We have put some excellent new road safety regulations on to the statute book and I think that everyone will benefit from that. It has been a great pleasure for me, and I hope your Lordships will now agree that the Bill do now pass.
Moved, That the Bill do now pass.—(Lord Bellwin.)
Lord Underhill: My Lords, first, I should like to thank the noble Lord, Lord Bellwin, for the way in which he has piloted the Bill through this House. I suppose one can say that it is always a pleasure to do business with him. Sometimes his manner is so disarming that he gets away with things that he should not, but he is always helpful in giving full and detailed explanations. He was also greatly helped by his team of Ministers, to whom I am certain the House is grateful. I have been appreciative of the various letters which have been sent by the noble Lord and by his noble friends on various matters which have arisen.
Needless to say, although some good improvements have been made in Part IV of the Bill, naturally I am disappointed at there being no changes whatever in Parts I, II and This may be because of the highly political content of the Bill, the fact that it reflects a complete Conservative doctrinaire attitude adopted in Parts I, II and III, in which we were unable to make any move. In particular, I was sorry that we could get no assurance from the Government that the proposals for the BR subsidiaries will not go beyond the four named. We shall have to watch this matter very carefully, because any movement in the British Rail engineering would, in my view, be a great tragedy.
As the noble Lord, Lord Bellwin, said, the House has benefited considerably from the discussions on the road safety clauses. We said on Second Reading—I think that many noble Lords expressed this view—that there would be some lengthy debates on a number of the provisions. These have been contentious in some forms, but they have been completely free of politics, and on this side we have not allowed politics to enter at all into the road safety provisions.
I am grateful that a number of the amendments, which various noble Lords have moved, have been accepted. In other cases the Government have been prepared to listen to the voice of the House—not on every issue, as has been evidenced this afternoon, but on a number of issues—and I believe that in that respect we have improved the Bill. I should also like to pay my tribute to the noble Lord, Lord Nugent, because I believe that he has been assiduous in trying to get through the particular item on which I gave him some support. I think that the praise is mainly due to him. I can only hope that the other House takes the same view. I believe that the road safety provisions will be of great help to us. I am sorry that one or two other provisions have not been adopted, but I believe that the other House will see that since the Bill left them,
1298
the provisions of Part IV have been greatly improved, although I am sorry that there were not some equally reasonable improvements made to Parts I, II and III.
Lord Nugent of Guildford: My Lords, I also should like to thank my noble friend Lord Bellwin for his able conduct of this long and difficult Bill. I would also congratulate my right honourable friend the Minister of Transport for finding time to legislate on road safety. It does not get much attention in this busy world, but, of course, the annual toll on the roads is gigantic. Some quarter of a million people are killed or injured each year. It is an enormous figure, and we all too easily become used to it. Therefore, any Minister who is prepared to find the time and the energy to legislate in this field is much to be thanked.
I suppose that the responsibilities that some of us have in this field bring home the impact of road safety, and that certainly causes me to feel that I must make a move to try to reduce the toll. However, I should like to pay a tribute to the medical profession and to the nursing profession who have played such a large part in the campaign that I have been waging for the compulsory wearing of seat belts. The BMA's and the Royal College of Nursing's massive support with RoSPA has, I think, begun to change opinion in the community and certainly in this House. Doctors and nurses, of course, have the harrowing task of treating the injured from road accidents, and all too often those with head and face injuries could have been saved had they been wearing a seat belt. Therefore, it is not surprising that those great professions have weighed in strongly in support of the measure. I should like to express my thanks especially to the noble Lords, Lord Porritt and Lord Richardson, who unfortunately are not here. They have been very helpful to me. I am sure that this has been one of the major factors of our success.
I should like to say to my noble friends who are opponents of the Bill—and many of them are—who base their case on defence of the liberty of the subject that not only do I sympathise with their point of view but it was indeed the major inspiration which moved me to enter political life some 30 years ago. It continues to be so, but I see its interpretation not in terms of black and white but in terms of humanity, and in this case the saving of life and suffering for thousands of people seems to me to justify the minor concession involved. But I recognise that this must be a matter of personal judgment, and I certainly respect the strongly-held feelings of my noble friends.
The Bill now goes to another place carrying our amendments. This will give the elected House the chance to vote on this issue on the Floor of the House. I hope and believe that the supporters will carry the day.
6.42 p.m.
Lord Lucas of Chilworth: My Lords, I am sure that my noble friend Lord Nugent will forgive me if I do not add my congratulations to others upon his success in Clause 27. I remain opposed to the principle of compulsion. However, I am happy to join him in congratulating my noble friend Lord Bellwin on his conduct of this Bill.
May I confine myself to the road safety aspects? I believe that this is Lord Bellwin's first road safety Bill

1299
—in fact it is the first road safety Bill for some years in your Lordships' House. How he has managed with good humour and charm throughout all these hours, I do not know. However, perhaps next time he comes to deal with road safety he will realise that motor cars and motoring, and all its aspects, raise great passions in your Lordships' House and are not to be dealt with too lightly. Obviously there are in the road safety section of the Bill innumerable advantages to be gained in the future along the lines of safety, saving lives and reducing the number of serious injuries. I feel confident that your Lordships' House has, under the guidance of my noble friend and his colleagues, done a worthwhile service.
Viscount Simon: My Lords, may I add a few words from these Benches in congratulating the noble Lord, Lord Bellwin, and his colleagues for what they have done, although I have not always agreed with it? I am left with two worries on this Bill. One is Clause 3. We are told that there are plenty of precedents for the Secretary of State having powers to override, in this case, the British Railways Board. I feel that Clause 3 will only be a success to the extent that it is never used. If it is used to any great extent, or even only a few times, we shall find it difficult to get the best people to serve on nationalised industry boards, and if they are there we shall find it difficult to keep them there.
At one stage during the discussion the Minister let a cat out of his briefcase. If I do him an injustice I apologise, because I have not been able to pick up the reference. Once in justifying these powers of the Secretary of State he said in effect, if my memory is correct, that the Secretary of State could not let the Railways Board get away with failing to implement the policy of the Government to privatise. That suggested to me that privatising was being pursued as a dogma and not for any good economic reason. If there was a good economic reason for privatising in any particular case, of course the Railways Board would be happy to do it. It seemed to me a slight slip on the part of the noble Lord, who hardly ever makes a slip at all. After all, in the case of the Scottish hotels, the Railways Board saw that it was to its advantage to pursue privatisation, and it did it.
The other more important thing that worries me—and it is a very worrying point—is the still unanswered question as to what happens to the proceeds of the sale of subsidiaries or part of the undertaking. Will they be available to British Rail for capital expenditure in addition to whatever sum the Government would have been willing to make available under the external finance limit? I think we would all agree that when any undertaking is in urgent need of capital investment, as British Rail obviously is, and sells capital assets, the receipts should be ploughed back into new capital projects. If that does not happen, if the result of recovering this money is that the external finance limit is cut, then British Rail gets no advantage from this process at all. The undertaking will be no better off, but will have lost the cash flow that the subsidiary was previously generating.
I recall that, on one occasion when we were discussing this matter, the Minister made the point that it is cheaper for British Rail to use its own money for
1300
capital expenditure than to borrow. That, of course, is obviously so, but, as I see it, British Rail in the near to middle future is never likely to have all the resources available that it needs for investment. If it so happened in some particular year that there were non-financial restraints on the amount that it could spend upon capital projects, then no doubt British Rail would use its own money first before it borrowed. But I do not think it is very likely to happen, because I can hardly foresee a position in which it will not in fact need all the money it can possibly get, whether from its internal resources or within its external finance limits.
One last word about seat belts. I voted against Lord Nugent's amendment. Most of my noble friends voted for it. I fully accept the decision in the House, and hope that the same decision will be reached in another place. But it is a rather curious position that we have here an important amendment in a Government Bill put forward by a Private Member of your Lordships' House. The amendment is only an enabling provision, and in due course the real impact will come when regulations are brought forward. That of course will he a Government affair when the regulations are brought forward.
But the Secretary of State, when he comes to make the regulations, will find that he is already restricted in what he does by certain things which have been written in already—that exceptions shall be given to this, that or the other category. It was natural after that had been done that other noble Lords should try to get other things written into the Bill. I am glad they were not. I am only worried that the restrictions already written into the Bill may inhibit the Secretary of State from doing what he really wants to do when he comes to make the regulations.
On Question, Bill passed, and returned to the Commons.

Employment and Training Bill
6.48 p.m.
The Earl of Gowrie: 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.—(The Earl of Gowrie.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD AYLESTONE in the Chair.]
Clause 1 [Industrial training orders]:
Lord McCarthy Lord McCarthy moved Amendment No. 1:
Page 2, line 17, leave out from ("fit") to end of line 19.
The noble Lord said: It is appropriate that we should begin this Committee stage on a somewhat low note. The amendment which stands in my name and which I now move is not seeking to reverse the general intention of Clause 1 of the Bill. That is to say, it accepts the situation in which the Secretary of State can in the future decide the fate of industrial training boards without the approval, or proposals, of the

1301
Manpower Services Commission. That is accepted in the amendment. The objective of the amendment is simply to seek to clarify the consultative process which is being proposed by the Government.
Under the previous measure, the 1964 to 1973 Act, as it were, the Manpower Services Commission was free to decide in effect whom it would consult. This Bill specifies that they should consult not those who are affected—which is what the previous situation was—but those whom they think are fit to consult. Therefore, as I see it, the Bill actually narrows the scope of the MSC's necessity to consult. Yet in addition to narrowing the scope of the MSC's jurisdiction in that way, it adds to the scope of the Secretary of State to suggest to them who they should consult, so that in two ways the MSC finds its role affected from the point of view of consultation.
The objective of the amendment is to delete those parts of Clause 1 which stipulate that the Minister may direct the MSC to consult such other organisations, associations or bodies as he thinks fit. One reason why I tabled the amendment is that it has not become clear—certainly it is not clear to me as a result of a careful reading of the debates in another place—precisely why the Secretary of State wants this power. The noble Earl has been good enough to provide us with explanatory notes, and I quote from those:
"The new subsection (4)(a) leaves it to the judgment of the Commission which organisations need to be consulted, and so makes it doubtful"—
that is to say, the Bill itself makes it doubtful; it was not doubtful before—
"whether the Secretary of State could direct them to add particular organisations. Paragraph (b) of the new subsection therefore gives the Secretary of State express power to do this".
I suggest he did not have the power before; but now he is to have express power to do it. The notes continue:
"This means that he could require the Commission to consult"—
and this is the first indication we have of what is in mind—
"educational bodies or small trade unions or individual large employers, and the bodies consulted do not, as in paragraph (a), have to be representative of a substantial number of employers or employees".
In other words, they need not represent anyone. That is a strange explanation, for two reasons. The first is that the whole problem has arisen because the Bill itself has narrowed the scope of those whom the MSC have to consult. In the previous situation they had to consult those who were affected, and I should have thought that that satisfied all reasonable considerations. Why the Government, having created the problem, then pass the problem to the Secretary of State has not been explained to us, and that is what I should like the noble Earl to explain tonight.
Secondly, it is a strange explanation because we are not told whom the Secretary of State thinks will be fit. We may be given some examples in the explanatory notes, but there is nothing in the Bill to tell us who the Secretary of State is likely to direct the MSC to consult and who the people are likely to be whom the MSC did not think fit to consult. Will they be educational bodies and small trade unions? If so, what small trade unions? What small trade unions are unrepre-
1302
sentative that the MSC do not consult? Are they to be large or small employers? Is it because the Secretary of State has in mind certain groups who might give the right answer? Is it because the Secretary of State has in mind that in cases where particular industrial training boards may be, as it were, up for the chop, everybody in the industry who can be found, whom the MSC think fit to consult and who are affected, in fact are against abolishing that industrial training board and therefore one must search about to find certain people—Conservative trade unionists, the Institute of Directors, various unrepresentative small traders' associations, perhaps those cultural rejects who circle round the ancient mulberry tree that stands in the garden of 2 Lord North Street? Are those the people whom the Secretary of State will ask the MSC to consult? We do not know, and therefore we ask, because we want to know.
6.57 p.m.
Lord Lyell: My Lords, the Committee will have listened with care to the explanation of the amendment by the noble Lord, Lord McCarthy, and I am sure we were grateful for his references to the explanatory notes. I am sure the noble Lord will accept that it will not be often that the Secretary of State, his Ministers or representatives of the department would expect in any way to direct the commission over any particular organisations or groups of organisations whom it should consult. We continue to believe that the commission should normally be left to undertake its own consultations as it sees fit.
However, I am sure the Committee will agree that the Secretary of State should have the ultimate power to respond to a particular request—for example, from a Member of your Lordships' House or of another place or indeed from other organisations—that those concerned should be included in any discussions or consultations with the commission. The noble Lord has stolen some of the reply I had for him in that he mentioned educational bodies, small or even large trade unions or individual large employers. As he pointed out, the bodies which would be consulted would not necessarily be representative of substantial numbers of employers or employees.
The noble Lord wanted an explanation of how, as he put it, the Government had narrowed the scope of consultations and how the Secretary of State or his representatives might widen that scope. The noble Lord will know that my right honourable friend is in touch with all sorts of organisations on a continuing basis on behalf of the MSC—indeed, the commission reports on a continuing basis to my right honourable friend—so the noble Lord is asking for half the moon, if not for the whole moon, when requesting precise details of all the groups of employers, unions and other organisations which might be consulted. The consultations continue. All we wish to do in the Bill is to give my right honourable friend the power to fill in any possible loopholes which might have become evident.
Lord McCarthy: I am sure the noble Lord, Lord Lyell, has done his best, but I do not find his explanations very convincing. Indeed, he seems to have two explanations, the first being that he will not do it very often—rather like the lady who was raped and was told

1303
it was all right because it would not happen very often. But the question is: is it necessary to do it at all'? I do not think that the noble Lord's second explanation indicated that it is necessary to have the power.
He said, in very general terms, that the Secretary of State surely should have the ultimate power to direct the Manpower Services Commission to consult. The answer to that is that he did not have the power in the 1964 Act, which was passed by a Conservative Government, and he did not have the power in the 1973 Act, which, too, was passed by a Conservative Government. No, he has the power at this time, at the very time when the general direction of the Bill is to pass power from the Manpower Services Commission to the Secretary of State.
Of course that makes it even more bizarre, because if the effective power is to pass from the Manpower Services Commission, as it is, to the Secretary of State, then of course the important person one wants to get to in this game is the Secretary of State. If the Secretary of State, who has the ultimate power of life or death over industrial training boards, feels that there is someone whom the MSC has not consulted, then he can consult that person himself. It is perfectly possible for the Secretary of State to consult people. He is entitled to do it under the Bill. He does not have to depend on the Manpower Services Commission. This is just one more attack upon the authority and the position of the MSC; and therefore, although I do not wish to press the amendment to a Division at this stage, I am not mindful to withdraw it.
On Question, amendment negatived.
7.1 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 2:
Page 2, line 34, at end insert—
("( ) Where an order is revoked under subsection 1(b) above, any requirements for employers or establishments in the industries concerned to respond to actions authorised under sections 2, 4, 4A, 4B, 6, 6A, or 7 of this Act shall cease to have effect.").
The noble Lord said: On Second Reading my noble friend Lord Gowrie, in answer to a question from me, stated, as reported at column 140 of the Official Report of 30th June:
"He asked me whether the Government were requiring a collective training organisation in all cases. The Government will not necessarily insist on collective training organisations in all cases".
My noble friend then went on to other matters. We are therefore left with the picture that either there is the training board, or the training board may be revoked; and if it is revoked, industry will be able to have collective training organisations, or in certain circumstances as spelled out by my noble friend it may be possible to do without even that if there are large companies in a relatively small group forming a particular industry.
The point of the amendment is to establish beyond doubt that if there is not an industrial training board—that is, if the industrial training board's order has been revoked—companies, or groups of companies, will be spared the overseeing and the information collection involving the Manpower Services Commission. That will be not identical, but similar, to the sort of relaxation
1304
from bureaucratic control that is being given to enterprise zones in Clause 4, as amended—assuming that the Committee agree—by Government Amendments Nos. 15 and 16.
Members of the Committee may say, "Gosh! This is terrible!"—I am sure that this would be the view of several noble Lords opposite—"You are going to suggest that these companies should actually be allowed to be on their own without any bureaucratic interference, that they can be trusted to get on with their training and that they will do it properly. They will not need auntie Government or uncle Manpower Services Commission to hold their hand and tell them how to do it". I can see it all coming out.
However, as I said on Second Reading—and I shall touch on it again briefly—the fact of the matter is that in competitive industries there is the tremendous discipline of the market forces. Over the past 15 or 20 years people have learned that they cannot be efficient unless they undertake effective and good training. This message has got through to them, and it will be underpinned by the competition that will force them to keep up the training. The question of which particular type of training they undertake in detail, as seen by grand people at the centre with all their theories, is not even relevant to them. There has been much trouble with companies under the aegis of training boards from 1964 onwards.
Quite apart from the even greater overseeing provided by the Manpower Services Commission, which has so deadened the attitude to training at the top levels, under the training boards themselves—I know about this, having worked in one from the other end—one of the troubles is that when there is set out criteria to which companies are expected roughly to conform, they will find that all the things that are being suggested are not relevant to them. This is because not only is each industry different, but each company within each industry is different in terms of the particular systematic training that it requires to satisfy its own needs.
That is the problem, and much time is wasted in answering questions that are only partly relevant to one's own affairs and in complying with various forms of instruction. The instruction might be specific, in that it might be said, "You won't get a grant", or, "You won't be exempt from levy", or whatever, "unless you do this"; or there might be what could be termed a veiled instruction, which is guidance. One wastes a great deal of time. One wastes a lot of executive time, and therefore, in another way, one wastes a great deal of money. The money comes out of the training budget for the company, and that is at the expense of spending on proper training.
So what I am saying to the Committee is that if one does not have a training board, one should not be subjected to some kind of guidance, some form of information collecting from the central bodies which, sadly, are to remain with us. That is the point of my amendment. With the Committee's permission, in conjunction with this amendment I should like to take Amendment No. 13, which covers another aspect of the same matter. I beg to move.
Lord Lyell: I have listened, and I am sure that the Committee has listened, with care to my noble friend's

1305
detailed explanation of the amendment. Did I hear him aright when he said that he was speaking at the same time to Amendment No. 13?
Lord Mottistone: Yes, Amendment No. 13.
Lord Lyell: I am grateful, and I am sure that the Committee, too, will be grateful, to my noble friend for explaining both amendments at once. As my noble friend has stated, both amendments—certainly Amendment No. 2—concerns the situation where an industrial training board has come to an end and is abolished. I am sure that we would accept that logically that must mean the cessation of the operation of the board. It will mean that any obligations that only the board could have imposed will be extinguished. But in the event of winding up, or abolishing, the industrial training board, it is very important to ensure that, first, the affairs are discontinued and wound up in orderly manner, and, secondly, that there is a reasonable degree of equity between the contributors and the levy payers.
There are only two obligations that a board can impose on any employer. There is, first, the obligation to pay the levy, and then the obligation to provide
information. Both obligations were very picturesquely described by my noble
friend. I think that he spoke of "uncle MSC "and "auntie bureaucracy". Certainly my noble friend put the matter very clearly. If we take the first obligation—to pay—this, of course, derives from a levy order, which would be made by the Secretary of State; but the second obligation—to provide any information to the MSC—could be imposed only with the approval of the Secretary of State. Thus, my right honourable friend would be in a position to control the initiation of either of the obligations in any case. But in the continuing situation, once he has approved the statutory return or, indeed, made a levy order, then it will be up to the board to continue with any action that they need to take.
I would assure my noble friend that any powers that my right honourable friend the Secretary of State would want to take would be fairly wide and flexible, especially if he was winding up a board. If a winding-up order were needed, it would provide for some time between the making of the order and the final cessation of any legal existence of that board. May I give one example? The order could provide that the board should cease to issue statutory returns, or it could cease to require that employers should complete those returns. It could also amend or revoke any levy order, which I hope might please my noble friend, though this may or may not be desirable in the light of the board's financial circumstances. It would also be needed to ensure fairness and equity as between payers of the levy. Any discontinuation or winding up order would probably require a board to cease carrying out the functions except where this was necessary to wind up the affairs of the board.
I would assure my noble friend that we have very much in mind the problems which may possibly be involved in winding up any boards, and we shall take careful note of what my noble friend has said. But certainly we find that the amendments are, I am afraid, unnecessary; and we also find that they would
1306
remove some of the flexibility from the Manpower Services Commission which we see as desirable in order to achieve an orderly and equitable cessation of the affairs of the board when it is ceasing to be in existence.
Lord McCarthy: I wish to intervene only to say that I am afraid I could not agree with what the noble Lord, Lord Mottistone, was saying. It seems to me that he believes that the tremendous discipline of market forces produces training. I think that tremendous discipline just produces poaching. So far as concerns what the Government say is germaine to this, I understand the noble Lord, Lord Lyell, to say that the amendment is largely unimportant and irrelevant but that there are certain residual functions in clearing up the results of abolishing an ITB which the MSC might like to have. I should be in favour of their having something, and therefore I would be against this amendment.
Baroness Phillips: I should like to ask the noble Lord who moved the amendment whether he would not agree that the arguments he advanced would go back to the beginning of the training boards themselves. In other words, even if, as he suggests, large concerns—and I am sure this is true from my own knowledge—did have excellent training schemes, it unfortunately was not so true of certain other firms within industry, and therefore it was necessary to have training boards. So the reason for their beginning still remains; and I am afraid it is one of the unfortunate laws of life that those who are doing the right thing often have to set the example to those who are not quite so good at it. The information is something which is pooled and utilised; therefore I think that if you did not have the discipline of some kind of an overall control certain industries and certain firms within those industries would not have training schemes, market forces or no.
Lord Tordoff: If I may just follow that point made by the noble Baroness—
Lord Mottistone: Would it be relevant, or may I answer the noble Baroness first?
Lord Tordoff: May I put a slight gloss on what the noble Baroness and the noble Lord, Lord McCarthy, have said? It seems to me that the argument of the noble Lord, Lord Mottistone, is based on a slight fallacy in terms of market forces in this situation. It is not to say that trained manpower will not be available in those companies which are not doing the training. So they will still be technically capable of doing their job; they will still be capable of competing in the market-place; but they will not be contributing to the training process, and, as the noble Lord, Lord McCarthy, said, they are poaching. They will not be controlled by the market forces which operate on the day-to-day running of their businesses.
Lord Mottistone: I have another amendment on which I should be happy to debate the point that the noble Lord has just raised, but perhaps I could address my remarks briefly, if the Committee would allow me, to the noble Baroness, Lady Phillips. The fact of the

1307
matter is that I think the noble Baroness went back to assume that if things were changed back to pre-1964, the 1964 attitudes would apply today. Having been in the attitude-changing business in this very area for really quite a long time now, I think it is reasonable to suppose that the attitudes have changed. I think you will find that there are many more firms than there were in 1964 which, from the point of view of satisfying their own training needs to make themselves efficient businesses, are on a par with the best firms which existed in 1964, when there were really very few of them.
Your Lordships may say: What about the other ones? It is my experience, for what it is worth, that the other ones will probably never respond to the blandishments of a training board. It depends on the industry, but in the industry that I am in now about 90 per cent. of the firms have responded and have got themselves levy exemption; but that is one sort of industry. The industry whose training board I had many happy years serving, the distributive industry, presents quite a different picture, and always there will be about a quarter or so of the firms in the industry which, however hard you try, you will never convince. So that is a different picture, and it is a waste of time having a great bureaucratic system to try to work away at the edges of that quarter of the firms.
Furthermore, because they do not listen—because they do not want to listen, because they are stubborn, because they are splendidly British and independent; whatever you like to say—they are not efficient and, in fact, they are more likely to go to the wall in times of hardship. Indeed, there is evidence to show that that is so. I am sorry that that is not a Committee point, but I thought it important to take up the noble Baroness's point because it is fundamental to the whole of this issue.
To turn now to my amendment, as I understood it from my noble friend Lord Lyell he said that some of the proposed exclusions were unnecessary and some of them it would he necessary to retain in order to conduct the winding-up process. I wonder whether he could possibly write me a letter and say which fell into each category. It would be useful to know which he thought were unnecessary and which ones were required for that. If he feels he could do that, perhaps he could tell me before I finish my speech.
Lord Lyell: My memory is fairly fresh from what my noble friend had to say at the Committee stage of another Bill last night. I will save the time of the Committee and say I will gladly write to my noble friend and spell out in detail what I have in mind.
Lord Mottistone: I thank my noble friend very much, and with that 1 beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.19 p.m.
Lord Kilmarnock Lord Kilmarnock moved Amendment No. 3:
Page 2, line 38, at end insert—
("Provided that it is not intended to abolish an industrial training board actively concerned with the implementation of a unified vocational preparation scheme.
1308
(4) In the event of the Minister proposing the abolition of such a training board, he shall lay before Parliament the advice he has received with regard to the future of the said scheme together with any alternative arrangements which he proposes to make.").
The noble Lord said: This amendment is an expression in more concrete form of the disquiet which I and other noble Lords voiced at Second Reading at the fact that the Government should be seeking wide powers to dismantle existing arrangements before there is anything to put in their place. This disquiet has, if anything, been increased by newspaper reports that the Secretary of State is running into difficulties in the Cabinet over his proposals for the 16-year to 19-year age group. The amendments which follow mine seek much more all-embracing guarantees on the future of training in this country. We on this Bench sympathise with their spirit. But I simply want to concentrate on one curious contradiction in Government policy. As most Members of the Committee will know, the unified vocational preparation pilot schemes were first announced in 1976 and were subsequently assessed in the consultative document A Better Start in Working Life, which argued for their adoption on a wider scale.
The object was to make some dent in the appalling numbers of school-leavers in the United Kingdom who go directly into the workforce and get no significant further education or vocational training in their lives. According to Outlook on Training, the MSC's review of the Employment and Training Act, this amounted to 44 per cent. of all school-leavers on the last count. This is by far the highest percentage in any EEC country of young people dumped on the labour market without adequate preparation.
The original target group of the UVP scheme was in the region of 200,000 school-leavers per annum. The latest figures given by the Department of Education and Science in answer to a Written Question of my own show that of 2,393,000 young people aged 16, 17 and 18 in England and Wales in the academic year 1979–80 some 1,135,000—nearly half—were in full-time employment without part-time day education or training. Of those, 449,000 attended evening classes in their own time, leaving nearly 700,000 in the 16–19 age bracket without any further provision whatsoever after leaving school.
Though relatively small in scale—only about 4,000 were covered in the financial year 1980–81—UVP is the principal Government-backed scheme for the young employed as opposed to the young unemployed who are catered for by the Youth Opportunities Programme. It is financed and managed by the MSC and the education departments working together through an inter-departmental group and is a welcome instance of increasing collaboration between Government departments. In November 1980 the Secretary of State for Employment announced that the scheme would be expanded to cover some 20,000 young people by 1983–4. The programme was also referred to by the noble Earl in his
opening speech at Second Reading on 30th June, in which he said (at col. 103 of Hansard):
"our plan is to try to provide links between education and training by a more systematic programme of vocational preparation based on our experience of the Youth Opportunities Programme and of the Unified Vocational Preparation Scheme".
So far so good. We must be thankful for small mercies. But here comes the rub: who got most

1309
of the current UVP schemes accepted by employers? Not unnaturally, it was the industrial training boards. In 1978–79 the Distributive Industry Board launched 90 schemes; rubber and plastics, 13; food and drink, four. Thirty-four
schemes were launched by colleges of further education but the industrial training boards were undoubtedly the main agencies in selling the idea to employers. Furthermore, it was the considered opinion of the National Foundation for Educational Research in their evaluation of UVP published in November 1980 that:
"college organised schemes were more likely to experience problems in obtaining employer support for UVP than were the ITB-organised ones".
Finally, this view was supported by the Association of Principals of Colleges representing the heads of more than two-thirds of the major establishments of further education in the United Kingdom who themselves admitted quite openly in a recent statement that
"the UVP Scheme is largely dependent on the initiatives of the training boards—particularly the Distributive, Food, Drink and Tobacco and Rubber and Plastics Boards".
And they go on,
"Voluntary arrangements are unlikely to enable the Government to fulfil its expressed intentions to extend training opportunities to the majority of our people".
Well, leaving that general opinion on one side—which we on this Bench happen to share—let us look simply at the Government's expressed intentions in the UVP field. In paragraphs 54 and 55 of the New Training Initiative, which the noble Earl said on Second Reading that the Government backed, we read that,
"By 1983–4 the UVP programme will be expanded to cover 20,000 young people in employment, a six-fold increase … Our intention is to use it as a test bed for foundation training and further education for young people w employment who are not apprentices or trainees on other schemes".
In other words, not only is the Secretary of State's undertaking of November 1980 reaffirmed but the UVP programme is to become an important strand in the New Training Initiative. In the next paragraph we read,
"the two programmes—the YOP and the UVP—will be planned and developed together in order to provide experience and a foundation on which provision for all young people in the age group can eventually be built".
Now this is all very laudable, but to abolish or take powers to abolish without further consultation the delivery mechanisms before you have secured the general agreement of employers to the principle of voluntarism seems unwise to say the least of it. I am not disputing the right of the Government to act according to their rights, but I am saying that Parliament and the country have an equal right to know on what grounds the Secretary of State bases his actions, most particularly if he acts in disregard of his experts and informed opinion in the field.
The MSC's sector by sector review must presumably by now be on the Secretary of State's desk or, if not, it will be very shortly. I am afraid that I was unable to be in the Chamber when the noble Lord, Lord Rochester, asked a Question earlier on, so I do not know whether anything emerged on that. If the Secretary of State is satisfied with the consultations that the MSC have carried out, he has no further obligation to consult. But, given his stated intention to expand the UVP scheme, which is very largely
1310
dependent on the ITBs scheme, it seems only right and proper that he should lay before Parliament the reasons for abolishing or changing the scope of any board on which he might have relied for assistance in implementing an expansion of the UVP scheme, and that he should tell us on whose advice he is relying in reaching his decision. Finally, he should set out the alternative lines on which he proposes to proceed. That is the purpose behind this relatively modest amendment. I beg to move.
7.27 p.m.
The Earl of Gowrie: Sometimes one asks the Committee to resist an amendment with which one has some sympathy. This is the case at the moment. My objection to the noble Lord's amendment is the inappropriateness of statute in this field rather than that I have any disagreement with him in his analysis of the poverty of real vocational training in this country. We have said that on many occasions, and my right honourable friend the Secretary of State has consistently compared—as have many of his colleagues —our own situation adversely, even for those in work, as the noble Lord, Lord Kilmarnock, reminded us, with the situation that obtains with some of our competitor countries. We shall give what the noble Lord has said great consideration, just as we shall give considerable weight to the report by the MSC as and when we start taking decisions about the future of boards.
This intention has been reinforced by the new training initiative document which the noble Lord mentioned and which I indeed commended to the House when we considered this Bill on Second Reading. There are other considerations as well as these and as well as the issue about whether a statutory law is the appropriate vehicle for achieving what we are all anxious to see done. For instance, we have to consider the ability of future training arrangements to provide wide opportunities for apprentices, to maintain up-to-date training standards and to counteract potential skill shortages, as well as to provide opportunities for adult training and other important training needs generally.
No one would dissent from that, but one gets into very difficult territory when one tries to write such considerations into statute law. I could not accept, either, that vocational preparation should be written into the law—as the noble Lord proposes—in isolation from all these other considerations that I have mentioned. If we go back to the 1964 Act, we find provision for any order abolishing, establishing or changing the scope of a board to be subject to the negative resolution procedure. There is thus a procedure for Parliament to debate such orders.
If any Member of this House or of another place wants to question the effect of any order being made or wants to draw attention to what he or she may feel to be an adverse effect, that seems to us to be the proper way of dealing with these matters, and to deal in parliamentary terms with a subject which is of continuing interest and capable of improvement but which, even if improved, will always be a matter of concern. But the unified vocational preparation programme, as it has existed up to now, is relatively small. As I said on Second Reading, we do want to provide much wider opportunities for vocational

1311
preparation and we are absolutely in line with the noble Lord, Lord Kilmarnock, there. At present the MSC is consulting how to do so, and in these circumstances it seems to me it would be quite wrong to tie our consideration of the role of boards just to the existing UVP scheme.
Certainly I acknowledge, with the noble Lord, Lord Kilmarnock, that some boards have played an important role in the scheme up to now, and I pay tribute to the work they have done, though equally some boards have chosen not to participate. But I see no reason why voluntary arrangements, under the eye of the Secretary of State with the very considerable enabling powers this Bill gives him, cannot be as effective, and in any case large numbers of young people whom we think need vocational preparation opportunities do happen to find themselves employed in sectors where there are no statutory boards. Therefore, acceptance of this amendment would create, to put it mildly, an extremely lopsided position in respect of very many young people.
So I hope that in asking the Committee to resist this amendment I shall not be considered pedantic or obscurantist or over-technical. I am passionately anxious to improve training, and a great part of my work in the department is on that. Nevertheless, I think that if we reverse the question posed by the noble Lord's amendment and say, "Suppose we accepted it, what would be the net results over the field and what would be the net obligations of Parliament, the Secretary of State and the Exchequer?" we would come to some rather confused answers. That is why I must ask the Committee to reject the amendment.
Baroness Seear: May I ask the noble Earl, accepting that he has the very great concern that we know he has, if we abolished training boards what mechanism is to be used to see, firm by firm, that in fact these schemes are operating? I cannot see how it is going to work on the ground. I do not believe that the noble Earl believes that if we just leave it all to the market the market forces will be making them do all the right things. The noble Earl is far too intelligent to believe that. But it does need some prodding mechanism and I cannot see, in the structure that will be left behind when the training boards have gone, where the prodding mechanism would be found.
The Earl of Gowrie: First of all, not all the training boards, by any means, are liable to go: in fact it is a very open question as to which of them will go at the moment. Secondly, we have in Government a Department of Employment and a Secretary of State for Employment. It seems to me to be somewhat in the area of political science fiction to suggest that any Secretary of State for Employment, however much I myself might disagree with some of his politics or whatever, would be uninterested in training issues. Thirdly, we have the Manpower Services Commission which, with its tripartite character, if I may use that jargon to save time, is unlikely not to be interested in training issues within its orbit. Fourthly, those people on the ITBs that remain—and they are liable to be the key ITBs—are not likely (and on this I think the noble
1312
Lord, Lord Scanlon, might agree with me) to be uninterested in general training across the field.
Fifthly, we have an educational sector which does not do enough for my taste, and perhaps not enough for that of the noble Baroness, but certainly does consider its interface, to use some more jargon, with the world of work. Sixthly, we have the careers service, which is not known for its reticence about the transition of school-to-work activities. Really it seems to me that we have goads galore in this issue, and I do not think the noble Baroness need be too worried.
Lord McCarthy: Without attempting to follow the noble Earl into that issue, I do not think that the noble Baroness was saying that these people or bodies are uninterested. Of course, they are all interested. What she was asking was what would be the mechanism, and why at this point the Government want to dismantle in effect, in the areas where they do dismantle it, the only effective mechanism we have. I think we are going to take that up in subsequent debates and so I will now return to this particular amendment. Many of the things the noble Earl said one must have sympathy with. This amendment takes one individual, small area where, as he rightly said, the industrial training hoards have done a very great deal. It is a very important and vital area where the Government, as he rightly said, wish to see a six-fold increase, and it is saying surely in this area you would be prepared to say in a statute that you are going to take the question of what happens to unified vocational preparation schemes specifically into account when deciding whether or not to get rid of a particular training board.
The reply of the noble Earl, as I understand it, is that it is very narrow and there are many other things which a training board would be required to do and which presumably the Secretary of State would take into account before deciding whether or not to abolish an industrial training board. If he carries on with that line of argument, since he knows there are further amendments on the Marshalled List which take a much wider view—indeed there is the next amendment—one might expect him to go for a rather more favourable wind to a general amendment which does not select a narrow area, though a most important one of unified vocational preparation schemes; except that, towards the end of what he says, he seems to be saying that he does not believe in specifying criteria in statutes at all. That would be a fine doctrine, if it were a general one, I might say. But he does not believe in specifying criteria in this statute and he believes in fact that a debate on an order in this Chamber or in another place would be a substitute.
I do not think it would be a substitute because we want some measure against which to debate what it is that the Secretary of State is doing, and we want some indication from the Secretary of State that he really means what he and the noble Earl have said on many occasions that they do not want to undermine the total volume of training in this country and in particular, in the case of this amendment, unified vocational preparation schemes.
The Earl of Gowrie: May I just say to the noble Lord, Lord McCarthy, that I congratulate him on skilfully driving in the slipstream of the noble Lord,

1313
Lord Kilmarnock, in order presumably to try to overtake him a little later on. I did notice that this was what he was doing.
Lord Kilmarnock: I am most grateful to the noble Earl for his reply. He has, of course, shown his customary concern for the whole problem of the 16-to-19 year old age group, for which he has a well-established reputation and which we do not dispute in any way at all.
He criticised me for introducing the question of unified vocational preparation in isolation. He said it was too narrow a front; but I should just like to say that it was deliberately intended to be narrow, on the grounds underlined by the noble Baroness, Lady Seear, that I was striving to get at the mechanism the noble Earl had in mind for the continuation of these schemes once he has possibly knocked away some of the underpinning which is provided at the moment by the industrial training boards.
I must confess that I am still not entirely sure what mechanisms are in mind. However, as the noble Earl will have detected, this was to a large extent a probing amendment. We know that there is at the moment a lot of thought in the air about this whole field and there are also, as the noble Lord, Lord McCarthy, pointed out, some more all-embracing amendments to come forward which would, on the whole, take care of my narrower sector of concern. So on those grounds I am prepared to beg leave to withdraw this amendment, but I shall certainly want to read the report of the debate very carefully before deciding what to do at Report stage. It rather depends on how further amendments fare, and also on whether any further clarification of the Government's proposed mechanisms for the continuation of these schemes emerges in the course of the debate. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.41 p.m.
Lord McCarthy Lord McCarthy moved Amendment No. 4:
Page 2, line 38, at end insert—
("(4) The Minister may not amend or revoke an existing industrial training order unless he is satisfied that such action is unlikely to reduce the quality and quantity of training being undertaken in the industry covered by any training boards concerned.").
The noble Lord said: In moving this amendment, I have to say that, of course, this is asking for general criteria. Therefore, the first part of the noble Earl's set of objections to the previous amendment does not stand in this case. The object is to inject certain criteria into the Bill, so that we have some idea of what factors will be taken into account by the Secretary of State in deciding whether or not to abolish a particular industrial training board. I am trying to use the kind of criteria which I think ought to be most acceptable to the Government, because the statement that the Government should not abolish an industrial training board unless it is unlikely to reduce the quality and quantity of training in the area covered by the industrial training board, is, in broad terms, what we have been told time and time again by Government spokesmen, here and in another place, in regard to what they consider will happen.
In the Official Report, at column 105 of 30th June, the noble Earl said:
"We feel that in many sectors of industry adequate training arrangements can continue without the straitjacket of a statutory framework".
Indeed, the noble Earl has already said the same thing in reply to amendments tonight. Again, at column 106 he said:
"… statutory boards will be kept where they are needed to meet essential objectives".
Again, also at column 106:
"We do not want to be left with inadequate training arrangements".
Following doubts which were expressed on Second Reading by myself, by the noble Baroness, Lady Seear, by my noble friend Lord Scanlon and by my noble friend Lord Allen, the noble Earl said, at column 137:
"… we shall not get rid of statutory training boards in those key sectors where we believe that essential training objectives will not be met without them".
Again, at column 138:
"I am not convinced … that industry is not capable in very many cases of responding without levy to its training needs".
And, most particularly, in reply to the noble Baroness, Lady Seear, he said at column 139:
"… we are not going to get rid of statutory training boards where these seem to be necessary"—
that is to say, to meet the country's training needs.
The Government have never denied—the noble Earl did not deny it himself in his Second Reading speech when he referred to the New Training Initiative—that they agree with that part of the New Training Initiative which says that we undoubtedly need an extension in the quality and quantity of training. Therefore the aim of this amendment is quite simple. It is that the Government shall be prepared to say specifically, in the Bill itself, that the main factor which they will take into account is their belief that the quality and quantity of training will be maintained. If they say this, and if it can be shown subsequently that the quality and quantity of training is not being undertaken, then we shall have to say something on it and we shall have some bench-mark or some criteria. But unless it is in the Bill, unless the Government are prepared to make that statement, we shall know what their promises are worth. I beg to move.
Lord Rochester: I have little of substance to add to what the noble Lord, Lord McCarthy, has said. I should like to take this opportunity to give an indication of how we on these Benches support the principle inherent in the amendment which he has just moved. We should much prefer, as my noble friend Lady Seear made plain at Second Reading, that industrial training boards were preserved, not necessarily in their existing form but as the well-tested and broad foundation of sound training on which we should continue to build. Certainly, before we allow them to disappear, let us make sure that standards of training are not going to suffer in terms of their quality or their quantity.
The Earl of Gowrie: I am reluctant to repeat myself and, as the noble Lord, Lord McCarthy, very fairly implied, there is some overlap between his amendment and the previous amendment, though, of course, his is

1315
more general and less targeted than the amendment of the noble Lord, Lord Kilmarnock. Just as I had considerable sympathy with the motives behind the amendment of the noble Lord, Lord Kilmarnock, so I am able to extend that sympathy to the present one. We have made it clear that we wish to be sure that essential training needs will be met before any ITBs are abolished. We shall want to be quite sure of the adequacy of any voluntary arrangements to meet such needs. When my right honourable friend first asked the MSC to review future training arrangements, he spelled out quite specifically the criteria on which his formal decisions would need to be based. These included the likelihood of shortages of trained manpower, and we should hope to see economic improvement, an upturn, and such shortages as an indication of upturn. Indeed, even at the present time there are, in key sectors, considerable skill shortages.
He also needed to consider the emerging demand for trained manpower in new technologies, the need for adequate quality of training, including agreed standards—and we had some debate about standards rather than time-serving at Second Reading—opportunities for vocational preparation for young people, which takes us back to the previous amendment, and wide opportunities for craft apprentices and for adult training. The MSCs report will, I am sure, have examined the proposals for voluntary arrangements against these tests. We have made clear that we will not abolish statutory boards where we think that the tests and these essential training objectives will not be met. It would be quite right, therefore, for Parliament to try to hold the Government to these intentions and to insist that necessary training should not be damaged in the process of reviewing the training boards. This is a big economic affair, a big social affair, and it is of understandable national concern.
Our argument is simply that it is not right to accept this amendment, really for a narrow reason and for a broad reason. The narrow reason is that the amendment is inappropriate in requiring that no change should ever be made, if it is expected that the effect will he to reduce the quality or quantity of training. There are instances when you might wish to reduce training of the highest quality. If you came to the conclusion that your economy was—I must be careful what example I use, so as not to excite anybody—more or less being wiped out in confectionery, you might wish to reduce the quality of training in the confectionery industry, because you could not compete in that area any more. Happily for any party with an interest in the confectionery industry, that would not be the case, and I use it only as an example. But under this amendment the Secretary of State would be bound to continue training splendid apprentices manufacturing Smarties when the Smarties market had totally collapsed. The more general objection is that which I made earlier, about statute. Very often a suspicious Opposition—and rightly, because one is paid to be suspicious in Opposition—
Several noble Lords: No!
The Earl of Gowrie: Well, in fact, some are paid and some are not. But very often a suspicious Opposition will say, "We will try to get this on the
1316
statute because it will tie the Government's hands". However worthy that motive may be, it does have the uncomfortable effect of involving the proper concern that Parliament has with the intricacies, delays and expense of litigation. The likelihood of the quantity or quality of training being maintained seems to us to be a matter more appropriately debated in Parliament than in the law courts. Orders changing the scope of a training board and orders abolishing a training board are subject to a negative resolution of both Houses, so any Member can pray against such orders and any Member can initiate a debate. I believe that that is entirely right. If my right honourable friend moves any orders following the present review, I have no doubt that in practice they will be prayed against and debated. We do not want to see this kind of issue hung out in the courts and subjected to lengthy and contentious legislation. For those two reasons, I would ask your Lordships' Committee to reject the noble Lord's amendment,
Lord McCarthy: In reply, I am very disappointed with what the noble Earl has said. He has a narrow reason and he has a wide reason. It seems to me that between his two reasons one cannot get anything through; that there is no way through. The narrow reason is better than the wide reason. It is quite true that one could have the case in which one wanted to run a particular industry down, and, if the noble Earl had said he wanted to take this aspect away and think about it and perhaps suggest a change of wording, that would have been different. But no. It is the wide reason that is the crucial reason; the noble Earl does not want anything on the statute which specifies what the criteria shall be.
Of course the noble Earl the Minister has sympathy. When the noble Earl expresses sympathy, he reminds me of the Walrus:
"I weep for you,' the Walrus said:
'I deeply sympathise'.
With sobs and tears he sorted out
Those of the largest size,
Holding his pocket-handkerchief
Before his streaming eyes".
The noble Earl sympathises but he does nothing.
7.53 p.m.
On Question, Whether the said amendment (No. 4) shall be agreed to?
Their Lordships divided: Contents, 42; Not-Contents, 47.

CONTENTS

Airedale, L.

Hooson, L.

Amherst, E.

Houghton of Sowerby, L.

Beaumont of Whitley, L.

Jeger, B.

Bishopston, L.

John-Mackie, L.

Blease, L.

Kilmarnock, L.

Boston of Faversham, L.

Kirkhill, L.

Bowden, L.

McCarthy, L.

Chitnis, L.

Mackie of Benshie, L.

Cledwyn of Penrhos, L.

MacLeod of Fuinary, L.

Collison, L.

McNair, L.

David, B. [Teller.]

Mayhew, L.

Galpern, L.

Northfield, L.

Hampton, L.

Oram, L.

Hanworth, V.

Pitt of Hampstead, L.

Hatch of Lusby, L. [Teller.]

Ponsonby of Shulbrede, L.

1317

Rochester, L.

Stewart of Fulham, L.

Ross of Marnock, L.

Taylor of Blackburn, L.

Scanlon, L.

Taylor of Gryfe, L.

Seear, B.

Tordoff, L.

Simon, V.

Underhill, L.

Stewart of Alvechurch, B.

Wilson of Langside, L.

NOT-CONTENTS

Avon, E. [Teller.]

Kinross, L.

Baker, L.

Lawrence, L.

Balerno, L.

Long, V.

Belstead, L.

Loudoun, C.

Brabazon of Tara, L.

Lucas of Chilworth, L.

Bridgeman, V.

Lyell, L.

Cathcart, E.

Mackay of Clashfern, L.

Colville of Culross, V.

Margadale, L.

Cork and Orrery, E.

Mottistone, L.

Cullen of Ashbourne, L.

Mountevans, L.

De La Warr, E.

Newall, L.

Drumalbyn, L.

Norfolk, D.

Dundee, E.

Northesk, E.

Elles, B.

O'Hagan, L.

Elton, L.

Reigate, L.

Gardner of Parkes, B.

Rochdale, V.

Gisborough, L.

Sandys, L. [Teller.]

Gowrie, E.

Skelmersdale, L.

Greenway, L.

Stodart of Leaston, L.

Gridley, L.

Strathclyde, L.

Haig, E.

Swinfen, L.

Henley, L.

Trefgarne, L.

Inglewood, L.

Trenchard, V.

Kinloss, Ly.

Resolved in the- negative, and amendment disagreed to accordingly.
8.1. p.m.
On Question, Whether Clause 1 shall stand part of the Bill?
Lord McCarthy: We must oppose clause stand part because this is the heart of the Bill. The object of this part of the Bill is to change the position so that the Manpower Services Commission no longer proposes what happens to industrial training boards and the Secretary of State disposes, a relationship which was established under the previous Acts. We have to say why the 1973 relationship was the correct one and why it is that the Government have still failed to explain their reasons for change.
A previous Conservative Government established the Manpower Services Commission which was charged with developing the overall national training policy, with setting the priorities for an overall training policy, and with doing this on a tripartite basis. Indeed, a tripartite basis for planning and introducing training is the only possible effective basis. If one is to provide the money one must have the employers, because the employers must agree that what one wants to do with the money is sensible, reasonable and what is required for the industry as a whole. If one wants to get the acceptance and co-operation of the work force, one must have the unions because in the end only the unions will be able to give their agreement to the kind of changes—for example, in the apprenticeship system—which we want to see. And of course one must have educationalists and one must have the Government.
The whole foundation of the Manpower Services Commission was a very worth-while expression at that time of the commitment of the Conservative Govern-
1318
ment of that time to the principle of co-operation and, in this context, of tripartism. Therefore, going back upon that context and upon the role of the Manpower Services Commission and writing down that role in a whole series of ways—which this Bill does, not simply in Clause 1 but in other clauses to which we shall come later tonight—is not simply putting training at risk. It is moving away from a system of co-operation and consultation which used to be, and which we hope will again be, the only way in which this country can move forward.
The Government have given us some reasons, but they are not satisfactory reasons. The Secretary of State said in another place that in the Government's view the question of the future of the industrial training boards could not be decided upon the basis of the Manpower Services Commission's report, Outlook on Training. After all, the Manpower Services Commission was asked to look at the future of industrial training boards. By and large, the Manpower Services Commisison said that the existing system should continue, but the Secretary of State said in another place:
"In the Government's view, that question"—
that is to say, the future of the boards in general—
"can be decided only on a sector by sector basis, having regard to the future training needs of particular industries".
Then the Manpower Services Commission was given the job of looking at particular industrial training boards on a sector by sector basis. But we have not waited for the conclusion of the Manpower Services Commission's review so we do not know what the commission will say.
We have asked the Government on many occasions, and I ask them again tonight, what the attitude of the Government will be to the sector by sector review which is eagerly awaited by all of us. Will the Government in general say that if the Manpower Services Commission's sector by sector review says that a particular training board should survive, they will go along with this? Or have the Government some other set of criteria which they will not put into the Bill and which they will not tell us about tonight? Which means that that which the Manpower Services Commission's tripartite body says should be the future of a particular industrial training board shall not be the case, because the Secretary of State will decide—and then the noble Earl says that we can pray against him in the House. So the Government have done this and have not waited for the sector by sector report.
In so far as one can find a general explanation for this, I suppose it came out once again tonight in the noble Earl's commitment to voluntarism: voluntarism is best. That indeed was said by the Parliamentary Under-Secretary in another place when asked a similar kind of question at the Committee stage. Voluntarism, he said, is best, in much the same way as they used to say that beer is best. The question, however, is not whether voluntarism is best but whether voluntarism will reach those parts that the statutory system reaches but which voluntarism is unlikely to be able to reach.
We have made the point several times in this House. The noble Earl, Lord Gowrie, said at Second Reading that we must not take this Bill too seriously. It was, he said, a flexible, modest enabling Bill. Yet nobody will tell us what are the criteria which are going to

1319
flow through this flexible, modest enabling Bill. Indeed, the only people who have really come forward (apart from merely saying that one believes generally in voluntarism, which does not get us very far) and made a thorough, general argument in favour of the kind of powers which are being taken in Clause 1 of the Bill are the writers Elliott and Mendel in the infamous Centre for Policy Studies' pamphlet from which it all began. They were the first people to set out to destroy the industrial training hoards and they gave a general argument. But since they are a priori economists their general argument had nothing to do with the facts. It was based upon general principles: taxes are bad; intervention is wrong; tripartism is evil. If you set off on that kind of Quango hunt to save public expenditure, you will come to the conclusion that you need a Bill of this kind. You will not wait for the sector by sector review and you will not tell people what are the criteria which you are going to use.
A short while ago I believe I said to this House that I thought the Government's economic policy was a bit like the Hunting of the Snark, searching for the mysterious M3. But the Government have now decided, as we all knew, that M3 was a boojum, you see, so it is no good looking for M3. So now we are attacking the supply side of the economy. Now we are making the labour market work.
One part of our policy is anti-union legislation and another part of our policy is to shoot institutions: bang, bang, bang—any institution in sight. This might make the labour market work. So it is not the Hunting of the Snark which is a comic poem. It is the Rime of The Ancient Mariner. It is a tragic affair. The ancient mariner, noble Lords will remember, shot the albatross because he thought it was a bird of ill-omen. But it was a bird of good omen. The albatross was trying to help. So the Government go around shooting 57 Quangos, the National Enterprise Board, the Clegg Commission and now we do not know how many industrial training boards.
We oppose this Bill and in particular we oppose this clause because we believe that in the true sense—not in the commonly accepted sense—the ITBs are in fact albatrosses; they are birds of good omen; they are trying to deal with the job. As the noble Baroness, Lady Seear, said, no mechanism is being suggested to replace them, and we do not believe that those who say that they are concerned with training and with the volume of training and the quality of training would really like to shoot all these birds. Maybe they will not shoot as many as we think (I certainly hope not) but they are in the grip—or someone somewhere behind them is in the grip—of a profoundly authoritarian dogmatic ideology: shoot, shoot, all the Quangos including the ITBs.
Lord Hatch of Lusby: Like my noble friend Lord McCarthy, I think it is obvious that Clause 1 is the core of the whole Bill. I must apologise to the noble Earl and to the Committee for not being able to speak at Second Reading, the reason being that I was abroad at the time. Nevertheless the noble Earl may recall that he had another Bill last year, the Employment Bill, and in some ways this resembles that Bill, in the sense that, while the Employment Bill created no
1320
employment, this Bill creates neither employment nor training and, as my noble friend Lord McCarthy said at Second Reading, the title of the Bill seems to have no relation to its content.
The noble Earl may also recall that he and I had a slight brush at the time of the debate on the Employment Bill about the reduction in the budget of the Manpower Services Commission, and at that time I was able to quote to him a press statement made by his own department immediately after the last election, to the effect that that budget was to be cut.
I can assure noble Lords that I have read the Second Reading debate and I find myself as puzzled by the reason for the production of this Bill at this time as many noble Lords and noble Baronesses did during that Second Reading debate. I am forced to come to the same conclusion as did my noble friend Lord McCarthy on that occasion and as he has repeated tonight—that the central object of this Bill is a tiny, peripheral part of the Government's economic policy which is, as he has said, to cut expenditure at all costs.
This seems to be madness. I am sure that the noble Earl is absolutely sincere when he tells us that he does not wish to cut the training programmes of this country; that he does not wish to see this country fall further and further below our competitors in the training of our work force. But he is having to do so. He is the agent of the Government that he represents in doing so, or attempting to do so. Are we not living in an era in which it is now, I should have thought, virtually universally accepted that at least one of the root causes of the economic decline of this country goes way back into the last century, when this country failed to match the training facilities in the wealth-producing sectors of the economy that our major competitors, particularly in Germany and America, provided. Are we not certainly doing precisely the same tonight?
The noble Earl recommended to us in the Second Reading debate—and this comes directly in relation to Clause 1—the document produced by the Manpower Services Commission, A New Training Initiative. This also puzzles me somewhat. Look at paragraph 40 of that document. You will see that in paragraph 40 the Manpower Services Commission suggests that there is unlikely to be a need for a substantial increase in spending on training. Yet we know that this week alone the Secretary of State for Employment is fighting a battle within the Cabinet to get £1 billion or £1,000 million—in order to ensure what? In order to ensure that by 1983, in two years' time, all school-leavers will be able to get jobs.
But beyond that, to take the words of the Manpower Services Commission itself, having said that it does not think there is likely to be any substantial need for an increase in expenditure, it is now saying that in this year alone it requires £93 million extra in its budget in order to include another 100,000 within the Youth Opportunities Programme. That is this year. Is this not a contradiction, and is the noble Earl able to unravel this contradiction?
The Earl of Gowrie: Yes.
Lord Hatch of Lusby: Then again, according to the Manpower Services Commission, only 40 per cent. of

1321
the labour force under the age of 18 will be in employment at the end of 1983 if present—
Lord Mottistone: Will the noble Lord allow me?
Lord Hatch of Lusby: If I may just finish this sentence, then by all means the noble Lord may intervene. Only 40 per cent. of the labour force under the age of 18 will be in employment at the end of 1983 if present trends continue.
Lord Mottistone: I know it is very unfortunate that the noble Lord was not here for Second Reading but does he not think it would be better if he did not inflict this Committee with a Second Reading speech and instead spoke strictly to the Question, That Clause 1 stand part? He has made passing reference to it, but the whole of the last few minutes of his speech have been on Second Reading and have had nothing to do with Clause 1.
Lord Hatch of Lusby: In my submission, t am speaking to Clause 1, because everything after Clause 1 stems from Clause 1, and we are talking about Clause 1 standing part of the Bill.
Lord Mottistone: But we have already had these sorts of speeches which we have had an opportunity to give at Second Reading. The noble Lord apologised—and it was good of him to do so—for not being here, but I really suggest that it is stretching the bounds of order in this House to make a long and involved speech about general subjects when one really is supposed to be speaking about the clause. It may have all sorts of implications but those are dealt with at Second Reading and not carried on through the Committee stage. I do not know whether my noble friend on the Front Bench would agree with me?
The Earl of Gowrie: I have to say that I do rather share that view, speaking in a personal capacity. Of course I do not in any way wish to gag the noble Lord, Lord Hatch of Lusby, who is as concerned about these issues as I am, but perhaps he could beam his general argument on to the principle of the clause and we should get on rather faster.
Lord Hatch of Lusby: What I am trying to do is to draw from the Minister who is to reply, the noble Earl, an explanation of why he is introducing this clause, giving the Secretary of State and the Government the power to reduce at this time the institutions which have been set up to promote training within industry. All that is contained in Clause 1. I am trying to probe the mind of the Government as to why these powers, all of which are contained in Clause 1, are now being taken to reduce the training and the institutions to promote training as the noble Baroness, Lady Seear, put it, to prod the employers into further training—just at a time when more and more training is needed in this country and when the economic future of this country depends on increasing rather than decreasing training.
I will make one final point on this subject, and it is just as directly related to Clause 1 as everything else I have said. May I just finish the point I was making when I gave way to the noble Lord, Lord Mottistone.
1322
I was pointing out that the Manpower Services Commission itself was forecasting that by the end of 1983 only 40 per cent. of the labour force under the age of
18 would be in employment. At the end of last year 70 per cent. of that same generation within the labour force were in employment. What are you going to do with this difference, the 30 per cent.? Are you going to leave them to rot? Are you going to provoke them into the kind of behaviour that we have seen over the last few years, or are you going to train them?
Let me ask the noble Earl directly. Do the Government have sufficient faith in their economic policy to train the labour force which they claim will be needed when their economic policies have had another year or two to run? Because that is the nub of Clause 1. All the actions that are being taken by this Government, through Clause 1 of this Bill, through the attitude that they are taking towards those universities like Salford and Bradford and Aston where technological training is being done, appear to suggest that they do not have faith that they will need the trained labour force which they claim their economic policies will require when they become successful. Perhaps I should declare an interest, as an honorary Fellow of Bradford University, and as having taught in a number of business schools in various overseas countries.
How can the Government argue that this is the time to undermine these institutions which their Conservative predecessors and their Labour party predecessors set up in order to try to redress the gross imbalance in the training facilities for wealth production in this country as compared with those of our major competitors? It seems to me that this is truly destroying the seed corn of the economic future of this country, destroying that seed corn in the very year when business failures are at a record level and when, surely, it would be agreed on all sides of this House that what this country needs more than anything else, if this record of failure is to be ended and reversed, is a new generation trained in the modern methods of industry, given the opportunity of specialising in building up new British industries. Clause 1 of this Bill, to my mind, denies all the vision and hope which can come from such an attitude.
8.24 p.m.
The Earl of Gowrie: I think I can clear up some of the noble Lord's difficulties quite quickly, or rather the specific difficulty that he says he finds in the Government's professed desire to improve training and the Bill, which enables the Secretary of State to wind up ITB's, if necessary, after taking the advice of the Manpower Services Commission and subject to the procedures of Parliament which I itemised earlier. The noble Lord, Lord Hatch, and the noble Lord, Lord McCarthy, are both falling into what I would judge to be a common fallacy in the Labour party, which is to identify an issue too closely with the institutions that exist to serve it. That is a marked difference of view between us. Again I do not wish to take a contentious example, but it might be that there would be a situation where an institution existed to serve the blind—indeed, many such institutions exist and an excellent job most of them do—but the aim of people within the institution, or even Parliament, to reform a particular institution should not be looked upon as an

1323
attack on the blind. It is no such thing. It might be that a particular institution had outlived its usefulness, was not cost-effective or the rest.
This is a very pervasive and a very dangerous attitude, it seems to me, because it is quite clear that in almost every social field in this country there are large numbers of people—and I am not referring to ITB's at the moment or the Manpower Services Commission, or to any given body, but making a general principle—in forms of employment which exist in some way to look after other people with some problem or some interest or some issue. As such they are vocal and persuasive in defence of their own interests and rights. That is one of the reasons why we find in this country that we have, in our view, a public sector which is disproportionate, not to some absolute ideal or dogma or doctrine, but disproportionate to the amount of wealth being generated to serve it. It is, therefore, very central to this Government and to its overall policies to try to get the public sector more into line with what the economic activities in this country are actually able to supply.
That does not mean that we simply look at a quango, if you like, and, in the colourful phrases of the noble Lord, Lord McCarthy, with his interests in late 19th century poetry, take a pot shot at it wherever or whenever we can. There may be instances in which a public body is doing an admirable task. But we think that the onus at least is on the public body and Parliament to judge whether one is essential. We do not see why these organisations should be self-perpetuating and inviolate and enshrined in statute. That is the nub of Clause 1.
The Secretary of State wants to spread—and I am now leaving the general principle and going to the principles of training—the areas of reliance on voluntary arrangements as far as possible. But he may not be able to spread them as far as he might like at any given point, because the essential criteria
which I outlined in the debate on the previous amendment might not be met. Parliament has a perfectly good method—as I have said—of bringing it to the Secretary of State's attention that he or she is not meeting these particular criteria and so have boundless other organisations in our economy.
Let me turn to the connection between this Bill and the Youth Opportunities Programme (YOP) and some of the work of the Manpower Services Commission. The part of the Bill which we are discussing is fundamentally about industrial training boards. We have gone over their role and function and we have said on many occasions that they are liable to continue that role and function in many important cases. The work of the MSC is different, although, of course, the MSC does supply a great deal of training. Where a given industry either by a voluntary method or by some form of Government, statutory or public organisation, like an industrial training board, is not supplying training, the MSC with Government money tries to come in and top up, as well as acting as a strong disciplinary force on Governments and on businesses to try and do better and to provide more training or to foresee the need for more training.
But in the case of the Youth Opportunities Programme the money which the Government give to the MSC is there to fulfil a particular acute, social
1324
and economic need which is that although there are very large numbers of jobs in this economy—larger numbers in fact than in any other comparable European country except Denmark—we do not have the numbers of new jobs, regrettably, to meet the number of young people who are seeking them. We are facing a very grave demographic or population explosion which will not go on indefinitely—it will ease, come one policy or another, in the mid-eighties—and we have the misfortune of seeing the sixties baby bulge (to which I must confess I contributed) hitting the labour market in a recession all over the world, and something must be done to try and service their needs.
We had programmes which were fundamentally cosmetic or fundamentally to give young people things to do, but we are now trying to improve the training quality in these programmes. This is rather a different field from the, as it were, professional training that we are talking about being done by the ITBs and which necessarily may deal in the future with a slightly older age group.
Therefore, this seems to me to be a perfectly coherent policy and a policy designed to try in the particular case I have just given to meet an acute social problem, and none of us in the Government underestimates how acute it is. Our only analysis is that this problem will be with us come one Government or another for some years yet. In fact, as the noble Lord, Lord McCarthy, well knows, the work of the Manpower Services Commission has been commended by the previous Administration as well as by ourselves, who initially set it up, and we would see a continuing role for it, not least in the field of training. However, I think that otherwise noble Lords have been far too wide-ranging—and I apologise, therefore, for having to be wide-ranging back—about the general underlying principles. It would be better, it seems to me, for us to revert away from a second slice at Second Reading and to go back to the particular efforts which Members on all sides of the Committee are making to improve the Bill.
Lord McCarthy: The Committee would not expect me to agree with what the noble Earl has just said. He has not cleared up my difficulties and I doubt whether he has cleared up the difficulties of my noble friend Lord Hatch of Lusby. I must say that I do not like disagreeing with what the noble Lord, Lord Mottistone, says, but I do not think that my noble friend Lord Hatch went too wide. I believe that this clause is the heart and the centre and the pulse of this Bill. What we are saying is that this Bill is designed to change the fundamental way of running industrial training in this country. The point at which to make that as sharp as we can is at this point in this debate on a Motion, That the clause stand part of the Bill?
The noble Earl says that we in the Labour Party, in particular in relation to this clause, are making one of our common fallacies: we are identifying aims with institutions—not at all. If the Government had come forward with an alternative set of institutions—as the noble Baroness, Lady Seear, said—if they had come forward with a set of mechanisms and if they had not simply said that they will tell us what will happen after it happens and that in the meantime we should have

1325
faith, then we would not be arguing as we are now. It is not a confusion of institutions with aims; it is the fact that the Government in this clause more than in any other part of the Bill are going back on the conclusion which all parties came to first in 1964, and then reiterated in 1973, that, even although this country had gone through a long period of economic upswing, voluntarism would not solve the industrial training problems of this country. This clause is going back on that and no institutions to provide an alternative way of carrying out these aims are being put forward.
The noble Earl has referred to an analogy with the blind. It seems to me that when he and his colleagues are discussing this matter the blind are leading the blind. It is quite true: I do prefer 19th century poetry to 18th century economics. This is laissez-faire run mad and that is why we shall divide the House.
8.38 p.m.
On Question, Whether Clause I shall stand part of the Bill?
Their Lordships divided: Contents, 49; Not-Contents, 36.

CONTENTS

Avon, E. [Teller.]

Loudoun, C.

Baker, L.

Lucas of Chilworth, L.

Balerno, L.

Lyell, L.

Belstead, L.

Mackay of Clashfern, L.

Brabazon of Tara, L.

Margadale, L.

Bridgeman, V.

Mottistone, L.

Cathcart, E.

Mountevans, L.

Cork and Orrery, E.

Mowbray and Stourton, L.

Cullen of Ashbourne, L.

Newall, L.

De La Warr, E.

Norfolk, D.

Denham, L.

Northchurch, B.

Drumalbyn, L.

Northesk, E.

Dundee, E.

O'Hagan, L.

Elles, B.

Reigate, L.

Elton, L.

Rochdale, V.

Ferrers, E.

Sandford, L.

Gardner of Parkes, B.

Sandys, L. [Teller.]

Gisborough, L.

Skelmersdale, L.

Gowrie, E.

Soames, L.

Greenway, L.

Strathclyde, L.

Gridley, L.

Swinfen, L.

Haig, E.

Trefgarne, L.

Henley, L.

Trenchard, V.

Inglewood, L.

Vivian, L.

Long, V.

NOT-CONTENTS

Airedale, L.

McCarthy, L.

Amherst, E.

McNair, L.

Beaumont of Whitley, L.

Peart, L.

Birk, B.

Pitt of Hampstead, L.

Bishopston, L. [Teller.]

Ponsonby of Shulbrede, L. [Teller.]

Boston of Faversham, L.

Bowden, L.

Rochester, L.

Cledwyn of Penrhos, L.

Ross of Marnock, L.

Collison, L.

Seear, B.

David, B.

Simon, V.

Hampton, L.

Stewart of Alvechurch, B.

Hanworth, V.

Stewart of Fulham, L.

Hatch of Lusby, L.

Stone, L.

Jeger, B.

Strabolgi, L.

John-Mackie, L.

Taylor of Gryfe, L.

Kilmarnock, L.

Tordoff, L.

Kirkhill, L.

Underhill, L.

Lee of Newton, L.

Wilson of Langside, L.

Llewelyn-Davies of Hastoe, B.

Resolved in the affirmative, and Clause 1 agreed to accordingly.
8.46 p.m.
Lord McCarthy Lord McCarthy moved Amendment No. 5:
After Clause 1, insert the following new clause:
("Employers' levy
. (1) Notwithstanding any provisions of section 4 of the Industrial Training Act 1964, for the purpose of ensuring adequate training in industry and in the cases referred to in subsection (2) below, the Minister may, with the approval of the Commission, by order impose a levy on employers in industry, and an order giving effect to this section may make different provision in relation to different classes or descriptions of employer.
(2) The cases referred to in subsection (1) are:—

(a) where it appears to the Minister and to the Commission that training provided within an industry is of a kind that is beneficial or essential to the manpower needs of another industry, or other industries, and where it appears equitable, or expedient in order to ensure the adequacy of such training, to require employers in such other industry or industries to contribute to the costs of such training, or

(b) where, in order to ensure that sufficient persons are undergoing training to meet the needs of industry, the Minister and the Commission consider it expedient to award grants to such persons as they consider suitable for such training notwithstanding that such persons may not be in the employ of the persons or company providing the training, or

(c) where it appears appropriate to the Minister and the Commission to make grants to persons under the age of 19 years to enable them to undertake courses of training which will enable them to enhance their career prospects, or

(d) where it appears appropriate and expedient to the Minister and the Commission to do so in the interests of ensuring an adequate supply of skilled labour to meet national manpower needs.

(3) No order shall be made under this section unless a draft of the order has been approved by a resolution of each House of Parliament.").
The noble Lord said: This is a long amendment, but I do not intend to spend a long time on it. It is, in fact, our reply to the questions contained in paragraph 34 of A New Training Initiative. As I said on Second Reading, paragraph 34 of A New Training Initiative directs questions at employers, unions and educationalists, but does not direct any questions at the Government. We are directing this question at the Government. We are saying that, if it be the case, as A New Training Initiative says, that there is a whole range of training requirements which, quite reasonably, could be said to be not properly within the purview of or not sufficiently correctly carried out by the industrial training boards, obviously we need another mechanism.
Far from being identified with a particular mechanism, as the noble Earl has said this evening, we are suggesting another mechanism, a similar mechanism—a general levy. This general levy, as subsection (2) of the amendment says, would enable the Secretary of State to deploy provision for four broad purposes: for across-industry training subsidy; for across-employment subsidy; for grants to the under-19 year olds and, in particular, to create a properly balanced national skilled labour force. Those are the kind of things which one might reasonably say that industrial training boards find difficult to do.
There are many associations—not simply associations of trade unions but also employers' associations—which would favour a move of this kind—something outside the general purview of the industrial training boards, but particularly and specifically related to those areas of training need set out in A New Training Initiative. I beg to move.
Lord Mottistone: Do I gather from this that the noble Lord, Lord McCarthy, is suggesting that there should be a levy on all employers in industry to satisfy certain needs which might be narrow, dealing with specific areas regardless of whether that has any relation to the efficiency, effectiveness or training capability of the particular employers' companies? Or will this be sufficiently narrow for the employers and their companies to benefit? Can the noble Lord explain that?
Lord McCarthy: The answer is, yes and no. Yes, of course I am proposing that there should be a power for a general levy. Yes, of course, the deployment of that general levy, or the training which would be financed by that general levy, might not benefit particular employers. That is the case with the industrial training board system as it at present exists. So, yes, that is true. However, I would not regard that as narrow; I would regard that as extremely broad and very necessary.
The Earl of Gowrie: I have always thought that the noble Lord, Lord McCarthy, was one of the most sensible members of the Labour Party, in the sense that he has a close knowledge in practical terms of what industry is like and he does not base his work outside this House for industry, and inside this House talking about industry, on any fictional sense of their needs; or even, referring back to the last amendment, to any poetic sense of their needs. Yet now he wants to superimpose yet new central Government powers on top of the existing system of industrial training bodies.
The purpose of his new clause would be to give the Government powers and obligations to decide the scale of levy and to decide which employers to levy; to decide on, and presumably administer, the expenditure of the extra levy, whether on training grants or facilities or other courses. When we are talking about the noble Lord's levy we must remind ourselves that the levy proposed here is additional to the levies already fixed by training boards, and so there would be an extra burden on industry. It seems to me that the noble Lord is far too experienced about industry to think that it needs that kind of help from him at this, of all times.
The new clause also runs counter to the principle enunciated by the MSC review body that central prescription is just not the answer to national training needs, and that industry is in fact the best place to judge its needs and to mobilise resources to meet them. This might have been more relevant to the previous debate we had on whether the clause shall stand part, but it seems to me also to be fairly relevant here. An earnest of this is the enormous number of exemptions from levy that the administrative system is forced to
1328
decide, simply because in so many cases industry is taking the necessary steps to train for the future and indeed—because let us not pretend that no poaching, as it is sometimes called, or no movement takes place within industries—to take care of general social needs and economic needs for more trained personnel.
The noble Lord has also argued, if I followed him, that this new clause would provide a means of funding vocational preparation of the kind looked forward to in the new training initiative document. I acknowledge that the MSC have said that ultimately more resources will be needed to be devoted for training, and within overall resource constraints and the usual cautions of Ministers I would certainly agree with that view. But it is quite clear that both the resource question and the question of any need for supplementary legislation are subjects for consultation, as the document indicates. On funding, the question is really how any additional resources should be shared. At Second Reading I said that in my view everyone would have to take part of the cost: industry would; Government would (our total provision for training is up through the training elements in the special programmes and the like); and also the trainees themselves, even if their contribution was in the form of lower allowances, or lower wages, during the training part of their lives. This seems to me to be reasonable. But here in this new clause not only is the noble Lord adding to the statutory impositions which, for the reasons I have already given in earlier debates, the Government of course cannot accept, but he is actually loading industry with additional costs to those which presently obtain. On a point of principle, and also on a point of economic common sense, I suggest that the Committee rejects the new clause.
Lord McCarthy: In view of the fact that the amendment which follows is also an important amendment, and indeed in some ways a more important one, I do not intend to press this amendment. The noble Earl has not convinced me. When he says nice things about me, they are always
followed by nasty things. I suppose it is the same on this side. The main point is that we are not satisfied with voluntarism. But I am prepared to withdraw this amendment.
Amendment, by leave, withdrawn.
Lord Rochester Lord Rochester moved Amendment No. 6:
After Clause 1, insert the following new clause:
("Revocation
. Before exercising his powers under section 9(1) of the Industrial Training Act 1964 (as amended) to make, amend or revoke an Industrial Training Order for any sector or sub-sector, the Minister shall—

(i) publish criteria to define the aims or outputs for acceptable training arrangements in that sector or sub-sector;

(ii) consult with employers and trade associations, employee and trade union representatives, and educational bodies closely concerned with the sector or sub-sector, with the Manpower Services Commission and where appropriate the Departments of Trade and Industry, to ensure that the training arrangements, whether statutory or voluntary, within each sector or sub-sector are capable of—

(a) being the agent to oversee the collection and maintenance of manpower information relevant to training;

1329

(b) identifying incipient skill shortages and other learning needs, and encouraging training of the quality required to meet those needs;

(c) promoting training relevant to organisational change and new technology;

(d) promoting vocational preparation and training schemes for young people in conjunction with appropriate educational and other bodies;

(e) facilitating the reform of apprentice and other training arrangements;

(f) developing the training of managers, professional and commercial staff, and employee representatives;

(g) acting as an agency for channelling Government funds for meeting national training objectives;

(iii) ensure that the sector or sub-sector should have the means of achieving outputs by—

(a) having continuing access to sufficient finance and qualified staff with appropriate administrative support;

(b) reviewing progress towards the agreed training objectives;

(c) having sufficient field training staff to discuss with employers the means of achieving the agreed training objectives;

(d) undertaking regular consultation between employers and representatives of employees and education;

(e) providing or procuring any training advice, consultancy or direct training services requested;

(f) maintaining adequate local, national and cross sectoral links;

(iv) ensure that every major sector of the economy, including the public services, is provided with training arrangements as set out in sub-section 2 above;

(v) publish an Industrial Training Order, as provided for in section 1(1) of the Industrial Training Act 1964, to cover the agreed industrial training arrangements for each sector or sub-sector;

and where the Minister in the national interest, sanctions the use of these training arrangements in pursuit of objectives that go beyond the needs of the sector or sub-sector to which the arrangements apply, he shall accept responsibility for funding the training or related activities that he causes to take place.").
The noble Lord said: It is plain that the Government wish to see voluntary training introduced wherever possible, and this amendment recognises that position. The purpose of the amendment is to ensure that all major sectors of the economy, including the public services which are not now catered for, are provided not necessarily with a specific organisation or institution—and here perhaps I am able to go a little way towards meeting one of the points that the noble Lord, Lord Mottistone, made at an earlier stage—but with training arrangements which may apply either to statutory bodies where they remain or, on the other hand, operate on a voluntary basis under conditions appropriate to the particular industry or service.
These arrangements would have to conform to certain criteria in the form of aims or outputs, and the intention is to encourage an approach to training which is not simply mechanistic or structural but is of an organic, problem-solving kind that focuses on objectives and achievements. These aims or outputs are set out in sub-paragraphs (a) to (g) in paragraph (ii) of the proposed new clause. Their introduction would have to be preceded by consultation between the Government and representatives of employers, trade unions, employees, educational and other relevant interests. I shall not read them all out, for I hope that they will speak for themselves. Suffice it for the moment to say that they are based on practical experience that has been gained in the last 17 years, and I hope that they will be thought by the Committee to be both comprehensive and reasonable.
So much for the ends that the amendment seeks to achieve. As for the means, these are contained in paragraph (iii) of the new clause. Again, I will not go through them all now. They depend, as do the present statutory arrangements, on consultation between representatives of employers, employees, and education, but at the same time they are designed to avoid the imposition of impracticable obligations by what might be regarded as an unnecessarily inquisitorial bureaucracy. I think that the only point about them that I would particularly stress now is the recognition of the need to maintain adequate local and cross-sectoral links because, as the Manpower Services Commission acknowledged in their review of the 1973 Employment and Training Act, and as employers up and down the country will testify, in the real world training needs are related more closely to the local labour market and they apply across sectors rather than being indentifiable on the basis of individual industries.
Lastly, in relation to the content of the new clause, duties are laid on the Secretary of State to ensure, first, that throughout the economy training arrangements are made which meet the prescribed criteria and, secondly, that, where in the national interest training is sanctioned in pursuit of objectives that go beyond the needs of the sector concerned, it is for the Government to finance the training for which they have thus assumed responsibility. Above all, these provisions are designed to be flexible, and they thus permit the redrawing of sectoral boundaries that are entrenched in the present training board system. They place responsibility for funding on the relevant beneficiaries and they allow, without forcing, sectoral training to be led by some group representing those bearing prime responsibility for it.
In framing the amendment, I have been greatly helped by a number of highly qualified people who together are, in my view, able to speak for many large and small employers, for trade unions—although those are bodies on which the noble Lord, Lord McCarthy, is better qualified to speak than I—and for a number of training boards. Many noble Lords on this side of the Committee, as has already been made abundantly plain, would have much preferred, like the MSC in their review of the 1973 Act, to have built on the foundations already laid by existing training boards. There are others who will feel that in future people should simply be left alone to do whatever training they think fit without regard to any statutory criteria, and for them this amendment will have no attraction.
But I hope the majority of the Committee will think the amendment is realistic for two main reasons. The first is that it does not set out to oblige the Government to depart from the basic position they have taken up. In particular, I do not think it can reasonably be claimed that, if the amendment were passed, it would be impossible for the Secretary of State to decide to wind up a particular training board; there is nothing in the clause to stop him doing that if he chooses. The second is that the amendment seeks to ensure that, where training is in future carried out under statutory bodies or voluntary arrangements, we avoid going back to the period before 1964, when I should have thought it will be generally agreed that training was altogether inadequate.
The heart of the amendment is the desire to get as near as possible to a consensus in a matter that, in these troubled times, we must all recognise is vital for our future and which simply cries out, it seems to me, at least for a measure of agreement among us. That is how the amendment has come to be sponsored not only by Liberals but by a Labour Peer and a Conservative Peer, and perhaps I may take this opportunity to apologise for the absence—he asked me to do this—of the noble Lord, Lord Strathcona and Mount Royal, who, because of the lateness of the time at which we come to this amendment, is prevented from being present. It is also why I do not doubt from what the noble Lord, Lord Kilmarnock, has already told us that it will have the support of Social Democrats and, I very much hope, of any Cross-Benchers who may be listening.
If there are any flaws in the drafting of the amendment—if it is thought to be incomplete or over-elaborate or if there are any other ways in which it could be tidied up—I am sure that that could be attended to easily enough on Report. I trust the noble Earl will sympathise at least with the purpose of the amendment—I think he has already made that plain—but I rather fear from some of the remarks he has made that he may not much like the idea of these criteria being written into the statute. I am, however, greatly concerned about the point raised earlier by my noble friend Lady Seear about the need for some satisfactory framework—that was the word she chose—where statutory boards are abolished, and I hope the noble Earl will find it possible to say a little more about the alternative he may have in mind over and above what he has already told us about those elements in society and those programmes which have a bearing on this subject.
I realise that it may have been rather generous of him in response to the amendment moved earlier by the noble Lord, Lord Kilmarnock, not to have said more at that stage because, as was generally acknowledged, not least by Lord Kilmarnock himself, his amendment was only on a somewhat narrow, albeit important, point. What matters now is not alone the view of the noble Earl but, as I am sure he would agree, that of the Committee as a whole, and I hope the underlying principles and broad content at any rate of the new clause will be accepted by the Committee. I beg to move.
9.10 p.m.
Lord McCarthy: I support the amendment because it is absolutely true, as the noble Lord, Lord Rochester, said, that this is the closest we can get, and it is very close, to a consensus alternative mechanism. It is not a mechanism which is as radical and far-reaching as the previous one, which I did not press, but it is a consensus mechanism and a very good mechanism too.
The basic idea is that before the Secretary of State exercises his powers under the new Bill he must do a number of things. He must publish criteria for the training arrangements in the area affected. He must consult those affected, in order to meet particular requirements. He must ensure that there are sufficient resources to meet those requirements; and there are certain other specified aims and objectives—six in all.
1332
It seems to me that this is a perfectly moderate and reasonable attempt to get the Government to do two things. The first is to make some attempt to provide an alternative mechanism for a return to voluntarism. The fact is that there is a widespread belief on both sides of industry, and in all parties, that the situation in this country in respect of training has not changed so widely that we can expect to return to the 1964 situation and voluntarism will solve the problem. Therefore, first, the Government should go some way to agree some mechanism to replace voluntarism in areas where they wish to return to voluntarism by abolishing an industrial training board. That is the first objective.
Secondly, the Government are asked to sign up to certain training objectives, which are spelled out in the amendment. But those training objectives come from the New Training Initiative, the MSC document. There is nothing new, nothing radical, about those objectives. They are there because of the widespread fear that voluntarism will not be enough; and a fear that is placed in the context of the fact that in other clauses of the Bill that we have yet to reach the Government are committed to reducing the money which they themselves will spend on training, because it is no longer to be responsible for the administration of the ITBs. The fear also comes in the context of the announced cuts in the Manpower Services Commission budget by 1984. It is in that context, in the fact that the Government themselves are setting new wider objectives for industry but destroying many of the established mechanisms for achieving those objectives, that we ask the Government to look favourably on the amendment.
Lord Mottistone: I should like to add a few remarks. The noble Lord, Lord Rochester, told us that paragraphs (ii) and (iii) contained good basic principles. With that I would absolutely agree. But he did not speak about paragraph (i), and I am afraid that where I see a flaw in this exposition of very good principles, with which I think we should all agree, is that it is centralism by the back door. My whole experience in this field has been that criteria published by as remote a figure as the Minister are extremely difficult to apply at the working end. Good training must be carried out effectively on the ground with the people concerned. The closer the criteria is related to the needs of the company and the people within the company at the working level, the more effective it is. So if the Minister, sitting at the top of his ivory tower in Whitehall, produces the criteria, he is almost bound to produce either criteria so frightfully broad that they do not mean very much, or criteria, if narrower, that are irrelevant to the needs of the individual company and the individual people within it.
So it is a conundrum, and I feel that this is really the flaw not only of this amendment but of the entire concept. I have been very disillusioned by all the efforts that have been made. Where they have been effective is where they have been well applied at the base level, and, quite honestly, the various pieces of advice that come from bodies such as the Manpower Services Commission and its predecessors have on the whole been varied in their usefulness in inverse proportion to the distance of the body from the working end. It works like that.
Baroness Seear: I hope that the noble Earl the Minister will consider the amendment very seriously indeed. I feel sure that he is to say that it is quite unnecessary to have these criteria spelt out and embodied in the Bill because (he has said this already twice this evening) the Secretary of State will produce a negative resolution—a negative resolution, mark you!, not even an affirmative resolution—and we can then all pray. Well, I am all for praying, but I do not believe that on this occasion prayer will be very much good. As the noble Earl the Minister knows perfectly well, the resolution cannot be amended. Either we have to accept what the Secretary of State says, or reject the proposal completely. Therefore it is very unlikely that we would be able to bring about any alteration at all. It really is not quite up to the Minister's standard to pretend that that is any kind of defence or any adequate substitute for having criteria built into the legislation. That is the first reason why we cannot really accept the idea that there is no need to have criteria built into the legislation itself.
I suspect the real reason is that the Minister is devoted, or has to say that he is devoted—I am not so sure that that is not the real reason—to complete voluntarism and to the idea that complete voluntarism is going to work. In this amendment we have gone a long way down the voluntarist line, but we are trying to build safeguards to ensure that voluntarism really will operate. If it operates we on these Benches will be very content because we are not committed to any particular institution. We do not love institutions. Other noble Lords may love institutions, but we do not. We are known for not loving institutions. But we do love results; and we believe that you need to have criteria built in.
How can we challenge the Secretary of State, even if we did get round to praying at the right moment of time for the negative resolution, if there is nothing built into the Bill? He can listen to what we say and then go away and do exactly what he likes. If you have criteria built into the legislation, then at least he has to conform with that criteria; and when we pray we can pray to specific elements already embodied in the legislation. So we want to have a mechanism for challenging the Secretary of State when he brings his schemes forward. But it is this (I am bound to say) simple-minded belief in voluntarism that I find extremely surprising, much as I prefer a voluntary system if we can get one.
The Minister and other people have said, "Look, you do not need to do anything. Look at all the people who have got exemptions". We have got an exemption against a situation in which, if they let their training get slack, they can lose their exemption. If you remove the training board there is no mechanism for seeing that people keep to the standards under which they were granted exemption. This is a totally different thing from saying that they will keep those standards when there is nothing to stop them from letting them lapse.
Then, of course, as the noble Lord, Lord Mottistone, knows perfectly well, what is happening at the present time is that a lot of companies are saying, "Of course, we love training; we have it at home, so to speak. We think it is a frightfully good thing—but we just cannot afford it; it is terribly sad; and we are cutting
1334
it out". I can quote your Lordships organisation after organisation which at this very moment of time, even before we have got rid of the training boards, are saying, "We cannot wait any longer; we are cutting down our training budget". This is a common experience throughout industry.
With the noble Lord, Lord Mottistone, I hate the idea of the Secretary of State telling firms what they ought to do in detail. I entirely agree with him in saying that the best training is done when it is organised at local level and with very close understanding of what the needs of the company are. But we have not asked for that. We have asked the Secretary of State to consult with the employers and all the rest of them, and to make sure that there are training arrangements within each sector which are capable of doing these things—and "capable of "does not mean that they have got to do all of them. At local level it will be decided that this is a very useful check-list built into the legislation, that these are the things that they have to do, but in no sense are they a list of things in respect of which the Secretary of State is saying to every company, "You have got to get on and do them". So the criticism that it is centralist really does not stand up.
Lord Mottistone: I thank the noble Baroness very much for letting me intervene. The thing I was criticising was not the detail of paragraphs (ii) and (iii). It is paragraph (i)—that the Minister is going to produce criteria. That is what I do not like.
Lord Rochester: May I be allowed to respond to that point? I do not really think the noble Lord, Lord Mottistone, can have it both ways. That is to say, on the one hand, as I understand it, he is talking about "Auntie MSC" and all that, and that he does not like direction from the centre, but when we come along with criteria which are essentially flexible and which permit a wide area of discretion, which allow for local arrangements, which allow for large and small firms and all the rest of it, he does not like that, either. I do not think he can have it both ways.
Baroness Seear: If I may finish before my noble friend or anybody else interrupts me, we do need to have criteria of this kind. May I make one further point as to why we need to have it spelled out in detail to be operated at local level? I am really back to the point I made earlier this evening about the need for mechanisms to make sure that the system is working. Everything that has been said by the noble Lord up till now has, it seems to me, a static note about it; that you get a report from the MSC and on the basis of this you decide what is going to be done. It is the essence of the training problem that it is in a continuous state of change, and you need to have a mechanism close to the ground which can be in very close touch with what are the changing needs and feed that knowledge of changing requirements into training requirements.
I remind the Committee—because I think I have reported this before—that discussing this once with the Swedish labour market board they made the point that they needed to check with companies three times a year to keep their plans up-to-date. You cannot

1335
have a plan which is based on a report that you had years ago, or even months ago. You must have a mechanism which is working closely with the companies. I see nothing in existing institutions. The Minister gave us a long list of worthy bodies in this field. In none of them do I see one that has that close contact with the companies so that they can really know what is going on and keep the constant movement, the change that is needed, if one is to be up-to-date and ahead of requirements, so that training has been carried out and so that one is ready with the trained people as they are needed. That is why we need this criteria and we need to have people at local level in the institutions who can follow through to see that the work is being done.
Lord Bowden: May we pause for a moment to remember what I believe to have been the best system of this kind that this country has ever had, because I think that we can learn a great deal from its achievements and from its tragic decline. I am referring to the extremely elaborate system of training at all levels, from the craftsman to the university graduate, which used to be at Trafford Park at Metropolitan Vickers. Until about 1956 or so it was true to say that almost all the best engineers in England—those, for example, who graduated at Lord Baker's school in Cambridge—went, if they could, to serve their time as apprentices at Trafford Park. They were the topmost echelon. We used to have a saying that all the best engineers could be divided into two categories; those who worked at Metropolitan Vickers, and those who used to work there.
The training they received was extraordinarily good. They went right through the shops, learning all about the organisation of that vast company. There was a general belief that no man could become a professional engineer unless he had been frightened out of his wits at least twice. The experiences that they had cannot be rivalled, for example, in any of the engineering graduate schools which have been built up to try to provide a rather pale reflection of the training that the graduate apprentices used to have. Beneath them were apprentices of all kinds, starting from lads who left school and were learning the ordinary trades of a skilled mechanical operator, a lathe operator or something of that kind. The whole spectrum was there and it was wonderful. It produced most of the really great engineers in this country for at least three decades. Members of the Committee will remember that it was founded originally by George Westinghouse in 1903 and it collapsed in about 1955. It was unrivalled for a very long time.
The reason I am telling the Committee this—and many Members will remember it as well as I do—is that it collapsed because for a long time it was reckoned that they could not expect to keep more than about 40 per cent. of the men who had been through the apprenticeship school. The rest went to man British industry as a whole. The accountants got at the system very much for that reason. They maintained that it was uneconomic for one single firm to be producing the engineers for British industry as a whole. They may have been right; but certainly the accountants got at the system and it collapsed and disappeared almost completely.
1336
The reason I am saying this is to make the point that, whatever system we have, it is extremely important that it be adequately financed and that the total responsibility should not be left to one individual firm. It is equally important that the responsibility for the nature of training that goes on should be accepted as part of the burden of running a large manufacturing organisation. I include in that, for example, Rolls-Royce. I would also include some of the more important of the nationalised industries. For instance, the Government dockyards have provided a most magnificent series of apprenticeships in their time and the details have always been left to the people on the shop floor in the factory, or in the laboratory or where-ever it might be.
For a long time people seriously believed that it was an economic proposition for a company to contrive to finance these things but no longer will accountants accept that, for reasons best known to themselves. It is certainly true at this time that the Government must be prepared to take the initiative and to accept the reponsibilities which are laid down in this amendment, much as I regret it in many ways.
Lord Auckland: I have first to apologise to the Committee because I was not in my place when the debate started because of an important engagement with the Commonwealth Parliamentary Association. But I have listened to most of the Second Reading debate on this Bill and also to the amendment the noble Lord, Lord Rochester, has posed. In addition, I have had experience of management consultancy and of running consultancy courses. I do hope that the Government will take note of at least some of the points contained in the rather lengthy amendment which the noble Lord, Lord Rochester, and his noble friends have put forward.
Obviously in times of financial constraint the maintenance of training boards, as a purely cosmetic exercise, must be questioned; but as a member of the all-party parliamentary chemical industry group, I particularly feel that in that industry this amendment has much relevance. I would particularly mention paragraph (ii)(f)—
"developing the training of managers, professional and commercial staff, and employee representatives".
The chemical and pharmaceutical industry is a much developing industry in technology, new products and other things, and it is absolutely essential that young people, whether they be graduates or from elsewhere, coming into the industry have a proper training. I speak with some diffidence here because, unlike the noble Lord, Lord Rochester, and others, I have not spent a lifetime in these particular industries; my own particular forte has been the insurance industry. However, I have visited enough of these establishments to talk to people at all levels who have stressed the need for some kind of training to continue to take place. I would therefore hope, particularly in the field of research, where we need to have a continuing process, that the training boards are given as much incentive as possible. In the development of new products, whether pharmaceutical, agricultural or any other products of that kind, it is essential that we in this country lead the world. In my view, this can be

1337
done only through the aegis of some practical type of training.
So while I have some reservations about the implications of the whole amendment which the noble Lord, Lord Rochester, has moved, I think there is much in the substance of it which the Government should consider, and I urge my noble friend, who is always very sympathetic to these causes, to give this very careful thought.
The Earl of Gowrie: I certainly agree with my noble friend Lord Auckland that there is much in this amendment which the Government should attend to. It in no way downgrades the amendment, or the very clear way in which it has been moved, if I say that very much of what is in it, and very much of what has been said, has already been considered by the Government and, where issues of principle are concerned, has indeed been accepted by the Government.
The nub of our difficulty—at the risk of wearying the Committee—is the problem that I mentioned earlier. We do not think it right to try to set out in statutory law a system of tests of the adequacy of the training arrangements specified. But we are convinced of the need for such training arrangements, and I have tried already to indicate, not only this evening but on Second Reading, our commitment to the principles involved.
The noble Baroness, Lady Seear, was much less than fair to us when she talked about complete voluntarism. We are not after complete voluntarism. We are after a mixed and plural system. We have made it clear that we would wish to be sure that essential training needs were met before abolishing any industrial training boards. We have also made it clear on a number of occasions that this is not a Bill which abolishes the industrial training boards system. It simply is a Bill which enables the Secretary of State to do so, subject to the parliamentary procedures which seem to me to be both conventional and reasonable, but on which the noble Baroness seemed to pour a certain amount of scorn. In another place, in the remit to the Manpower Services Commission, the Secretary of State has already spelled out very clearly the criteria which he would expect to have to bear in mind before he made any such decision.
I am very glad that the noble Baroness, Lady Seear, made the remarks that she did about the philosophy of institutions. I am aware that the noble Lord, Lord McCarthy, and I have probably, some time back, despaired of each other in this regard. But I wanted to ask the noble Baroness, and indeed her noble friend Lord Rochester, what nice Liberals were doing with an amendment like this, because it seemed at variance with Liberal philosophy that one should generalise from industry to industry, or produce a straitjacket to which all industries would have to conform; we certainly would not wish that.
But there is a fairly wide issue of principle here, even if the difference of opinion between those in the Committee who have spoken so far and myself is rather narrow. There is an important issue at stake. It is a growing tendency in our society to believe that, if a Government do not make a law about some issue, they are in some way indifferent to that issue, that they do not care about the issue, or that they will not take
1338
any steps to see that the issue is pursued. I believe that that is a general principle which has grown up over the past 10 or 20 years and which has tended to clutter the statute hook, to raise false expectations and to create a great deal of difficulty for the courts.
In this particular case we are not talking about relatively professional or technical issues such as those which might be dealt with by an industrial tribunal. We are talking about the full panoply of the High Court and the judicial system. We do not consider it right that questions about the adequacy of training arrangements should be subject to review in the courts, which would be the net result of accepting this amendment.
We acknowledge, of course, that Parliament should take a close interest in these questions and should debate them if necessary. But it would seem to me to be almost too obvious to be worth repeating that, so long as Governments drawn from all parties decide to run a Ministry of Labour and to have a Secretary of State for Employment, it is hardly likely that that Ministry and the tripartite body sired by it—the Manpower Services Commission—will in some way become indifferent to training issues or will not be able to raise a considerable stink should the training system fall down in some way.
I believe that your Lordships' Committee will have to accept that on all the issues of principle and intent there is very little that divides us. The principle of enshrining points in statute in this way so as to give the courts difficulties is a major difference and one which, perhaps, we might need to vote upon. But even if that difference is accepted it should not be thought that as a result of this legislation, should it go through both Houses, the Secretary of State will go on some wild rampage, shooting down industrial training boards. That is not his purpose. His purpose is to spell out criteria, to examine the review by the operating body in the whole field (the MSC), and to decide simply where voluntary arrangements are working —and where, therefore, they should no longer be subject to institutional strait-jacketing. I should like to say how much I agree with the remarks made by my noble friend Lord Mottistone in that context. I hope that the Committee will take his remarks to heart and that, in view of what I have said, the noble Lord Lord Rochester, will not seek to press the amendment.
9.39 p.m.
Lord McCarthy: I do not want to misrepresent the noble Lord the Minister and I do not believe that the Liberal Party want to misrepresent him. We are not saying that because the Minister does not want a board he does not want to do anything. There are all kinds of things the Minister wants to do by laws. He wants to do something about strikes, which I do not want to do anything about—but that does not mean that I do not want to do anything about strikes in a different sense.
This is a question of priorities. It is a question of emphasis. We do not say—and the noble Baroness can speak for herself—that the noble Lord the Minister wants pure voluntarism. What we say is that he wants more voluntarism. Is that not right? The Minister wants more voluntarism even if it means less training.

1339
That is what the noble Lord the Minister has to tell us, does he not?
The Earl of Gowrie: I simply do not accept that interpretation. It seems to me to be semantic; it may be a fair debating point because I may not have made myself sufficiently clear or I may have used the wrong words. A way of reinforcing what I said by using slightly different language is to draw attention to the fact that the noble Lord said we were returning to a pre-1964 position. One or two noble Lords have suggested that that would be pure reliance upon voluntary arrangements and that as a result training would become inadequate. However, we have made it very clear—and I am happy to use this chance to repeat it—that we are not going to get rid of statutory training boards in those key sectors where we believe that essential training objectives—we have already debated how these are defined—could not be met without them.
The other point—it is one which I have not made before and therefore it may be more persuasive—is that in the many years of their existence, bearing in mind the very good work which in the main they have done, the training boards have secured significant changes. Many of these changes can now be expected to be permanent in many industries. It would seem to us that the statutory levy and grant are therefore no longer essential incentives for companies to train in all industries, but of course we shall retain them where the voluntary arrangements are not satisfactory.
In any case, right outside the purlieus of this Bill we have the whole panoply of the special programmes and the intervention at the margin which we do through the Manpower Services Commission. So it is useful that we should have a debate about whether in this rapidly changing industrial society we are going for the right kind of sectoral training or whether our training is fast-footed enough to keep up with new developments. All these things, the subject of no satisfaction, could be debated. However, I remain to be convinced that we do not have adequate institutions, adequate safeguards and adequate powers to do the job. What we now want to do is to get on with the job and worry slightly less about the liturgy involved in performing it.
Lord Kilmarnock: I do not wish to detain the Committee, but since the noble Lord, Lord Rochester, was good enough to mention my name I thought that I should confirm that I and my noble friends on this Bench are happy to support him in this amendment if he and his noble friends decide to carry it further. We did not put down our name to the amendment because there was "no more room at the inn"! There is one paragraph which attracts me in the amendment moved by the noble Lord, Lord Rochester. It is paragraph (ii)(d), which refers to
"promoting vocational preparation and training schemes for young people in conjunction with appropriate educational and other bodies".
Surely that is exactly what the Government's plans to improve the Youth Opportunities Programme are about, and also the intentions which the Government have said that they will back in the new training initiative. We very much hope that they will get the
1340
employer response which the noble Earl relies on for putting these improved educational and training arrangements into effect. However, I should have thought that in (ii)(d) the noble Lord, Lord Rochester, was offering a useful and flexible instrument to the noble Earl.
I thought that it was rather unfair of the noble Earl to refer to the proposed new clause of the noble Lord, Lord Rochester, as a strait-jacket. It seems to me to have all the advantages of flexibility and some reserve powers in case employers do not fulfil the Government's expectations of them. On those grounds, both I and my noble friends will support the amendment moved by the noble Lord, Lord Rochester.
Lord Rochester: First I should apologise to the Committee and, indeed, ask leave to speak again because I was guilty of interrupting my noble friend Lady Seear and responding to the noble Lord, Lord Mottistone, in the heat of the moment when I had no business to. I am grateful to all noble Lords who have spoken, though I am somewhat sorry that the debate comes at this late hour. I am particularly grateful for the comments made by the noble Lord, Lord Auckland, from the other side and for the support given to the amendment by the noble Lord, Lord Kilmarnock. I endeavoured to respond earlier to the criticisms made by the noble Lord, Lord Mottistone, but perhaps I may add that the criteria about which he is concerned under paragraph (i) are not detailed matters spelled out from the centre. They are pretty open-ended and are themselves recorded, as I hoped I had made plain, in (ii)(a) to (g).
I am sorry about the response that the noble Earl, Lord Gowrie, has felt obliged to make. I do not doubt for a moment the sympathy which he and his right honourable friend the Secretary of State have for training, but we are very much concerned about what there is to be in the case of sectors of industry which are not now going to be covered by industrial training boards, other than by voluntarism.
I do not think I need respond to the criticism about the strait-jacket, because that has been done for me by the noble Lord, Lord Kilmarnock. However, there was reference to "nice Liberals" and I feel that I must have something to say about that. We hope we are nice, but really that is not to be thought of as being synonymous with a sort of "free for all": quite the reverse. This is a matter of balance, as the noble Earl was right to remind us. We have to strike a balance here as to whether there should be statutory criteria, as we feel, to safeguard the future of training or whether, for the reasons he gave, there should not be. Both he and the noble Lord, Lord Mottistone, felt that changes have been effected since 1964. They have indeed. The noble Earl and the noble Lord have rather more faith than have I, I am afraid, in those changes carrying on without any statutory support, even of this limited and certainly flexible kind.
I have said enough. Had the noble Earl given any indication in response to a suggestion made by the noble Lord, Lord Auckland, of being willing to consider this matter further I should happily have withdrawn this amendment. However, there is this fundamental difference between us, and given the wide sup-

1341
port that there has been for this amendment I must divide the Committee.
9.48 p.m.
On Question, Whether the said amendment (No. 6) shall be agreed to?
Their Lordships divided: Contents, 36; Not-Contents, 40.

CONTENTS

Airedale, L.

Llewelyn-Davies of Hastoe, B.

Amherst, E.

McCarthy, L.

Auckland, L.

McNair, L.

Bishopston, L.

Peart, L.

Blease, L.

Pitt of Hampstead, L.

Boston of Faversham, L.

Ponsonby of Shulbrede, L. [Teller.]

Bowden, L.

Collison, L.

Rochester, L. [Teller.]

David, B.

Ross of Marnock, L.

George-Brown, L.

Seear, B.

Greenway, L.

Simon, V.

Hampton, L.

Stewart of Alvechurch, B.

Hanworth, V.

Stewart of Fulham, L.

Hatch of Lusby, L.

Stone, L.

Hooson, L.

Taylor of Gryfe, L.

Irving of Dartford, L.

Tordoff, L.

Jeger, B.

Underhill, L.

John-Mackie, L.

Wilson of Langside, L.

Kilmarnock, L.

1342

NOT-CONTENTS

Airey of Abingdon, B.

Henley, L.

Avon, E.

Long, V.

Balerno, L.

Lyell, L. [Teller.]

Belstead, L.

Mackay of Clashfern, L.

Brabazon of Tara, L.

Margadale, L.

Bridgeman, V.

Mottistone, L.

Campbell of Alloway, L.

Mountevans, L.

Cathcart, E.

Newall, L.

Cork and Orrery, E.

Norfolk, D.

Cullen of Ashbourne, L.

Northchurch, B.

De La Warr, E.

Northesk, E.

Drumalbyn, L.

O'Hagan, L.

Dundee, E.

Rochdale, V.

Elles, B.

Sandford, L.

Elton, L.

Sandys, L. [Teller.]

Gainford, L.

Skelmersdale, L.

Gardner of Parkes, B.

Strathclyde, L.

Gisborough, L.

Trefgarne, L.

Gowrie, E.

Trenchard, V.

Haig, E.

Vivian, L.

Resolved in the negative, and amendment disagreed to accordingly.
Clause 2 [Industrial training levies]:
9.55 p.m.
Lord McCarthy Lord McCarthy moved Amendment No. 7:
Page 2, line 44, at end insert—
("( ) Subsection (2A)(d) of section 4 of the said Act of 1964 shall cease to have effect").
The noble Lord said: I beg to move Amendment No. 7. The object of this amendment is to take out the section of the Bill which reimposes the levy limit of 1 per cent. What we want to do is to go back to a situation in which there is no limit on the levy. The fact is that the 1 per cent. levy limit was imposed at the time of the 1973 Act. It was, in fact, a reciprocal to the decision in the 1973 Act to take up the administrative and operating costs of the boards. There was never any doubt about this and, so far as this House is concerned, it was stated quite clearly by the noble Lord, Lord Drumalbyn, at column 243 on 7th June 1973. The noble Lord on that occasion said that although an affirmative resolution on the power to make a higher levy was possible, in normal circumstances the Government would not consider making such an order. The reason for that was, of course, that the Government were now taking up themselves the administrative and operating costs of the board. It, therefore, would seem to follow quite logically that if the Government are now handing back to the boards the administrative and operating costs, then they ought to release them from the constrictions of the limitations of a 1 per cent. levy.
Of course, during the greater part of the period since 1973, as may very well be said by the Government, we know that no, or very few—I think only one—industrial training boards actually applied and obtained a levy in excess of 1 per cent. Therefore, it has been asked in another place and in this debate generally: why do we need to lift this limit? The answer is quite simple—it is because we are now imposing administrative costs upon the boards. There are many industrial training boards which, if we take into account the size of their levy and the size of the operative and administrative subventions which they have in the past been receiving from the Government—for example, construction, furniture and engineering—have for most of their period of operation been operating at an overall expenditure of more than a 1 per cent. levy. So unless on present trends the Government wish to see a reduction in the money at the disposal of the industrial training boards being spent on training, we must expect to see a rise in the levy.
If the Government maintain the policy which the previous Government stated at the time of the 1973 Act and which I have quoted to the Committee, that in general terms, in normal circumstances, they would not consider making such an order, then, when we pass this clause and unless we vote for this amendment, this Committee will be consciously and deliberately deciding to spend less money on training. That is what is involved in this amendment.
The Manpower Services Commission in its review, Outlook on Training, considered the situation. It considered the problem and the Committee will know that there are many very good reasons why the
1344
administrative costs should be passed back to the industrial training boards in general terms. There may be problems about handing back administrative and operating costs to the ITBs in the present circumstances, and these are very much evident in the minds, of course, of the CBI, which has asked the Government to take time in passing back these administrative costs because we are in the middle of a depression and because they know, as we know—although the Government will not admit it tonight in the Committee—that the bottom is falling out of industrial training in this country. Therefore they are concerned that, if the administrative costs are passed back at this time, industry will find itself unable to maintain anything like the existing volume of training.
It was for that reason, considering all these problems, that the Manpower Services Commission, in Outlook on Training, said at paragraph 9.17:
"If the industrial training boards' operating costs are to become a charge on levy, some boards at least on their present expenditure levels will not easily be able to operate within a 1 per cent. limit. It would in our judgment be unreasonable to expect boards in this situation to have to secure each year an affirmative resolution".
As I have said, in the past the whole tendency has been to consider affirmative resolutions most unusual things to grant in this context. The MSC went on to say why. First, this was because of the uncertainty which training boards would be in from year to year and, secondly, because of the delay it would cause for training boards to get levies in addition to 1 per cent. Indeed, if we are fair, we all know that it was never really intended under this legislation that training boards should run to the Secretary of State for levies of more than 1 per cent.—say, 2 per cent. They were to be extremely exceptional circumstances, and, indeed, that is how it has turned out to be.
That is why the CBI has shown the concern that it has. That is why we move this amendment. In conclusion, if the Government say—if they follow what they have done so far in this debate, they will—that they can do nothing for us, let them tell us tonight what their policy would be if any industrial training board came along and wanted a levy in excess of 1 per cent. Let them tell us—if they believe that most industrial training boards will, in fact, be forced to operate within a levy of 1 per cent.—where they think the additional money will come from to maintain the existing level of training. I beg to move.
Lord Mottistone: I remember well back in 1971 when my training board, which had a levy rate of 0·5 per cent., sought to increase it. We started with 0·5 per cent. in order not to be too much of a strain on the smaller companies in particular and, to a certain extent, the bigger ones—because they were getting good grant and were satisfied with that—because we wanted to sell ourselves to industry so as to make sure that they listened to us and got the training message. On the whole, that is the way in which we did it. In 1971 the employees representatives wanted us to put up our levy to 1 per cent. and the employers did not want us to put it up at all. In the end the Secretary of State had to arbitrate, and we ended up with a rate of 0·7 per cent.

1345
However, the important point about this whole argument was that it did our credibility with, as I called them, our customer-companies—because the only way to play it was to treat them as customers for whom we were providing a service—harm at a time when we could least accept it. What is more, the fact that the engineering board had a levy of 2½ per cent., which was thought by many to be far too high—and in a sense it was—was one of the reasons that lead to the 1973 Act, with all that flowed from that, including the Government taking on the cost with which we are now landed and also the MSC, with which also we are now landed.
All these things came about because there was a loss of credibility of the training boards at that time, and the pressures from within industry, through Members of Parliament, were massive. I remember trying to pick out Members of Parliament to have a drink with me here in order to try to tame them. I did tame one or two, but I shall not mention names in this place.
The point about all this is that it is a very sensitive area and if you seek to go above 1 per cent. it will be counter-productive. As I see it there is a problem—and I am sure that my noble friend on the Front Bench will explain this so I shall do no more than touch on it. I entirely agree with the noble Lord, Lord McCarthy, that there will be a problem when this is pushed back on to industry. The Government have sought to do this by introducing this compulsory levy of 0·2 per cent. to bear the administrative costs. So what is left over will be what is available to pay grant to the good trainers.
Your Lordships may say that that is not enough; but I would say, from my own practical experience, that providing you pay something in the way of grant it is probably sufficient, because we had a disillusioning and difficult time of what I call "bribery grants". We were totally unsuccessful. We used to say to companies, "We will pay towards the costs of your young men in training, or in special areas, or whatever", and except in the areas where they had to do the training because the law said so, like the training of heavy goods vehicle drivers—where I always thought it was bogus for us to give encouragement anyhow, because they had to do it by different statute—we could never get them to take up the special grants to nearly the extent that we were prepared to give them.
Happily the training board that I had the honour to serve has lots of money, and it is not going to be worried about the sort of thing that the noble Lord, Lord McCarthy, told us about; but there are many other training boards that will be. I should like to leave your Lordships with the thought that it is dangerous to push the levy up higher than a certain level—and 1 per cent. seems to be the accepted norm—or it will be found to be counter-productive because it will not get the support, there will not be any extra training, and the Government have made other arrangements to cope with the situation.
10.7 p.m.
Lord Lyell: As I, and I am sure the Committee, have grown to learn, the noble Lord, Lord McCarthy,
1346
moved his amendment clearly, swiftly and succinctly, but bowled two very fast balls at the tail end of his amendment. I shall attempt to repel them at the end of my brief remarks. The recommendation of the Manpower Services Commission Review Body that boards should be free to raise levy amounting to more than 1 per cent. of the payroll without any affirmative resolution by Parliament was, of course, given careful consideration at an earlier stage by the Government. Indeed, my right honourable friend the Secretary of State said in another place at Second Reading that we have concluded that it would not be right to remove the important control that is given by the affirmative resolution over levies that might be higher than normal.
As we have learned, up until now the 1 per cent. levy limit has not proved a serious constraint on the activities of boards. That was borne out by the helpful remarks of my noble friend Lord Mottistone. That also was recognised by the review body of the Manpower Services Commission with the valuable little booklet that the noble Lord mentioned. Indeed, only one board in the recent past operated a levy above 1 per cent. of the payroll, and that was pointed out by the noble Lord; and even that limit was breached for only a small part of that over all industry. The majority of the boards have levies which are significantly below the level of 1 per cent. We are aware that some boards are worried about requiring a higher rate of levy because of the need to meet operating expenses, but we are not convinced that this will be a problem to any significant extent. We have already made some provision for operating costs, in that a board will be allowed to raise up to 0·2 per cent. levy on a non-exemptible basis without going through the consensus procedure. The figure of 0·2 per cent. was set mainly with the question of operating costs in mind.
Of course, boards could also set tighter exemption criteria using the new exemption provisions in Clause 3 of the Bill. But in any case many boards have sufficient leeway in their present levy rate to make whatever adjustments they may feel necessary without going over the 1 per cent. limit. It remains open to boards to seek the approval of both Houses of Parliament by affirmative resolution for a levy that is higher than 1 per cent. of their industry's payroll, and of course it is always a matter of judgment whether to make such a provision subject to affirmative or negative resolution; but in the view of the Government it is right in this case to allow Parliament the greater powers of scrutiny that the affirmative resolution procedure gives.
The review body of the MSC argued for removing the obligation to seek affirmative resolution for a higher levy on the grounds that boards would in practice be more vigorously controlled by their industries, and in that context the noble Lord, Lord McCarthy, quoted from paragraph 9.17 of the report; I was reading that while he was taking the Committee through it. It has been contended that employer members of the board would not allow proposals for a higher rate of levy with insufficient justification to go utterly unchallenged. Indeed, the CBI representatives on the body were unable to endorse that recommendation and the commission itself was not able to reach a firm decision on the matter. Both of those aspects give

1347
us no special confidence that adequate controls outside Parliament would exist, and the doubts expressed to the Government during the period of consultation following the recommendations of the review body reinforced our conclusion that we should retain the affirmative resolution procedure.
The noble Lord, Lord McCarthy, tempted me with the hypothesis—we could of course spend all night discussing hypotheses—of what would happen if the Government were approached by a training board which was seeking a levy above 1 per cent. That is tied up with the proposals in the Bill. The Government would he quite prepared in principle to propose to Parliament a levy above 1 per cent. if they considered that the board had a good case. All the board need do was come to the Government and persuade them that there was a reasonable and valid case, and then the Government would propose it to Parliament, and the rest would follow with an affirmative resolution.
Lord McCarthy: The version expressed by the noble Lord, Lord Mottistone, of what I call the poachers' revolt in 1973 is not my version. The 1973 Act was not introduced because there was a great rash of levies over 1 per cent. Even the levy he mentioned was of only 0·7 per cent. The 1964 Act did not become unpopular because the levies were too high—not by my version of the events. There was a poachers' revolt. From the point of view of many people the trouble with the 1963 Act was that in effect you could not get exemption; there was no way out. If you did not train they took the money away from you. That is what I liked about the 1964 Act. Once we got rid of the 1964 Act and replaced it with the 1973 Act we got into all the bureaucracy which arises from the need to ensure that exemption is not a fiddle. That is why we have now got to a position where some kind of case can be made out for passing it all back to the boards; and that is my reply to the noble Lord, Lord Mottistone.
To the noble Lord, Lord Lyell, I say that not only did he not answer my question but he did not work out the arithmetic. As was said by the noble Lord, Lord Mottistone, there is in this clause, it is true, a right for a 0·2 per cent. non-exemptible levy, but nobody has suggested that it makes £50 million, certainly not when industrial training boards are being abolished. The fact is that industrial training in this country will lose the money the Government put in when they were undertaking to operate and administer the boards at Treasury expense, and the non-exemptible levy is not going to cover it.
Finally, with respect, it is not true to say that the Manpower Services Commission in paragraph 9.17 was unable to come to a conclusion, or did not come to a clear conclusion. As the Manpower Services Commission is operating at the moment, under its present constitution the CBI representatives do not have to endorse every conclusion of the MSC in order for the MSC to come to a conclusion. Paragraph 9.17, as I quoted it, states quite clearly that if the operating costs are to become a charge upon the levy, some
1348
boards, at least on their present expenditure levels, will not easily be able to operate within the I per cent. limit. In that paragraph the Manpower Services Commission quite clearly recommended what I am putting before the Committee, and I see no reason to withdraw the amendment.
10.16 p.m.
On Question, Whether the said amendment (No. 7) shall be agreed to?
Their Lordships divided: Contents, 25; Not-Contents, 41.

CONTENTS

Airedale, L.

Llewelyn-Davies of Hastoe, B.

Amherst, E.

McCarthy, L.

Ardwick, L.

McNair, L.

Bishopston, L. [Teller.]

Peart, L.

Blease, L.

Ponsonby of Shulbrede, L. [Teller.]

Boston of Faversham, L.

Ewart-Biggs, B.

Rochester, L.

George-Brown, L.

Seear, B.

Hanworth, V.

Simon, V.

Hatch of Lusby, L.

Stone, L.

Hooson, L.

Tordoff, L.

Kilmarnock, L.

Underhill, L.

Lee of Newton, L.

Whaddon, L.

NOT-CONTENTS

Airey of Abingdon, B.

Henley, L.

Avon, E.

Long, V.

Balerno, L.

Lucas of Chilworth, L.

Belstead, L.

Lyell, L. [Teller.]

Brabazon of Tara, L.

Mackay of Clashfern, L.

Bridgeman, V.

Margadale, L.

Campbell of Alloway, L.

Mottistone, L.

Cathcart, E.

Mountevens, L.

Cork and Orrery, E.

Newall, L.

Cullen of Ashbourne, L.

Norfolk, D.

De La Warr, E.

Northchurch, B.

Drumalbyn, L.

Northesk, E.

Dundee, E.

O'Hagan, L.

Elles, B.

Sandford, L.

Elton, L.

Sandys, L. [Teller.]

Gainford, L.

Selkirk, E.

Gardner of Parkes, B.

Skelmersdale, L.

Gisborough, L.

Trefgarne, L.

Gowrie, E.

Trenchard, V.

Greenway, L.

Vivian, L.

Haig, E.

Resolved in the negative, and amendment disagreed to accordingly.
Clause 2 agreed to.
Clause 3 [Exemption from levies]:
10.24 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 8:
Page 3, line 19, after second ( "employed") insert ( "by them").
The noble Lord said: With the leave of the Committee, with Amendment No. 8 I should like to take Nos. 9, 10 and 11, because they all relate to the same subject. My noble friend earlier twitted the Liberals for falling into what might be called the socialist centralist trap over their last amendment. I should

1349
like to twit the Government for doing exactly the same thing in the amendment to the 1964 Act, and I am seeking to put them back to where they were before. The plan they seem to have—and I cannot think who has convinced them of this, because it could not be more contrary to what I understand to be my party's general philosophy—is to widen the coverage of the grounds for levy exemption to have companies train for their industry and not for their establishment's needs. I quote from the explanatory notes, paragraph 12, relating to this clause:
"Such criteria might, for example, include the requirement that there might be a given proportion of trainees to skilled men"—?
that is not too bad—
"or they might require that the establishment should train beyond its own needs to a particular extent in order to gain exemption".
It is hard to introduce this theme. I know Members of the Committee opposite think that it is good, the industry has a lot of money and can train anybody and we must be clear that it is the people who are out of employment who need training; therefore, let us make sure that industry does all that. However, that is a theme which does not stand up.
The Committee will know that I am employed by two trade associations which look after the interests of the manufacturers of biscuits, cakes and confectionery. We have studied very hard to see what activities we need on an across industry basis which might lend themselves to the argument which these things cover. It is only in the areas of computer programming and operating that there are sufficiently common skills within the companies which would merit their having some central arrangement for training. For everything else—including maintenance engineers—a company training of a fair degree of complexity is necessary before the people concerned can be of any use to our companies. Therefore, they have to train for their own needs.
In this one area of computer programming this is a national problem which is not peculiar to particular industries. The scope of the basic training in application to particular firms' needs goes far wider than a particular industry. I would have thought there was a lot to be said for having TOPS courses in that particular area. It could easily fit within the TOPS scheme. I know that TOPS tends to work at a lower level; I do not see any reason why it should not work at this level. After all, TOPS was training croupiers at one stage in its heyday. It would be more applicable to that area to have centralised training. To say that people need to look more widely within their own industry for the reasons that I have described is not relevant to the real life.
If you say, "It is going back to the poaching days", I do not see what is wrong about poaching. There was a great theory in 1964 that the small firms poached from the big; but when one looked into it and a training board was established it was found it was the big ones which poached from the small. The well-trained people tended to be in the smaller companies because they received more personal attention. When we looked into this it was about a 50–50 basis. If it is a 50–50 basis, what is wrong with it? I think the Government have been badly advised on the parts of
1350
the amendments to the original Act that they have put in, which I now seek to put back to where they were before. I beg to move.
The Earl of Gowrie: I am sorry that there is some difference of view between my noble friend and myself on this matter, even though it may have the effect of making the noble Lord, Lord McCarthy, and his friends feel that I am not in some way doctrinaire. Under the 1964 Act, as amended by the 1973 Act, levy exemption criteria may require compliance with national standards of training but the numbers to be trained must be related to the needs of a particular establishment.
Lord Mottistone: Hear, hear!
The Earl of Gowrie: The clause under discussion extends the possible—and I stress "possible"—criteria for exemption from levy to include the needs of the industry as a whole and not just those of the individual establishment. And that presumably is the bit to which my noble friend does not utter the words "Hear, hear!"
Paragraph 3 of Outlook on Training acknowledged that, because of this restriction, there are severe limitations on the capacity of the levy exemption system to secure an adequate quantity of training to meet the needs of a whole industry sectorally or the economy as a whole in transferable skills. Again, as paragraph 9 of the same document said, while significant benefits have been gained through the present exemption arrangements, there does arise the problem that in some industries which have a relatively high proportion of employees with transferable skills requiring rather lengthy training, it may not be possible for a board to ensure that sufficient people are trained if that board is required by statute to exempt employers wholly from the training levy.
So, in considering the form of any future training arrangements in these individual sectors, one of our key criteria will have to be the ability of whatever arrangements are proposed to deal satisfactorily with skill shortages in key occupations. Such shortages are most likely to arise in industries with a high level of transferable skills—computers have been mentioned. Clearly, if this is to be one of the grounds for retaining boards, then it is essential that the boards do have the necessary means at their disposal to deal with such a problem. If my noble friend's amendments were accepted, we could not be sure that this would be true.
Lastly, I would stress again—and I hope my noble friend will bear this very much in mind—that Clause 3(1) is an enabling provision. It does not mean that the boards are obliged to put forward proposals for exemption certificates based on these wider criteria. They can, if they consider it appropriate, still propose that their exemption criteria should go on being restricted to the needs of the individual establishment. I hope, that with that explanation and for the other reasons I have mentioned, my noble friend will not seek to press his amendments.
Lord Mottistone: Not at this stage. I am afraid that I have always found "transferable skills" a

1351
mythical phrase from the academic world which has not really rung true to me when trying to tackle this matter at the roots; and that is where it is all about. Also, my noble friend was good enough to say that, because this is an enabling Bill, it would not be necessary to put this into any orders or levy exemption criteria, or whatever. The fact is that it was not there before, either in the 1964 Act as originally phrased or as amended in the 1973 Act; so he cannot blame me for being suspicious that some busybody—no doubt from the Manpower Services Commission!—has fed it in at this stage. Therefore it is rather suspicious that somebody might use it, even though perhaps my noble friend, like me, might think it was a mistake. But I am mildly reassured and I shall read with great care exactly what my noble friend has said, and reserve the right to come back on Report with this, or something like it. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 9, 10 and 11 not moved.]
10.35 p.m.
Lord Lyell Lord Lyell moved Amendment No. 12:
Page 6, line 21, after ("(iii)") insert ("neither paragraph (i) nor (ii) above applies but").
The noble Lord said: I understand that there is a mild misprint in the amendment on the Marshalled List which is printed as follows:
"Page 6, line 21, after "(3)" insert "neither paragraph (1) nor (2) above applies but".
The difference is that the figures in brackets should be Roman and not Arabic. I was taken to task on another Bill, when it was hoped that the members of the department for which I was speaking could both read and spell. The amendment is technical, but I think that the Committee will see that it is much more easily understood if it reads as I have suggested it should be read.
That said, perhaps I may explain the purpose of this technical amendment. Clause 3 provides for a training board to propose a non-exemptible levy, subject to certain qualifications. If the proposals are for a non-exemptible levy of no
more than 0.2 per cent. of the payroll, then they are subject to the normal degree of ministerial and parliamentary control; that is to say, the proposals need to be approved by both the commission and the Secretary of State, and the levy order is subject to negative resolution of both Houses of Parliament. This proposal is primarily intended to enable boards to meet their operating expenses from levies. I stress the phrase "operating expenses" after our discussion on the last amendment with the noble Lord, Lord McCarthy, about operating expenses. This is a change to the existing law, which is primarily intended to enable boards to meet their operating expenses from levy, although it might leave some boards with a little money over for such things as training grants.
If the non-exemptible levy is over 0.2 per cent. of payroll, then we consider that more controls are needed. Our aim is that for such a levy there should be either a consensus of employers in the industry or an affirmative
1352
resolution of both Houses of Parliament. At present, the Bill does not clearly achieve this. It probably requires affirmative resolution, even if there is a consensus of employers in the industry. That is what the amendment seeks to achieve. I beg to move.
Lord McCarthy: I am quite sure that if I could follow the noble Lord I would agree that the amendment is technical. As it is, it is incomprehensible. Whether it be Roman or Arabic, it is gibberish. But let us pass it.
On Question, amendment agreed to.
[Amendment No. 13 not moved]:
Viscount Hanworth Viscount Hanworth moved Amendment No. 14:
Page 7, line 7, at end insert—
("(6) In subsection (3) of section 9 of that Act (power to amend or revoke industrial training orders) for the words from "may provide" to "expenses of the winding-up" there shall be substituted the words "shall provide for any amount by which the assets of the industrial training board may be insufficient to meet its liabilities and the expenses of the winding-up to be defrayed out of moneys provided by Parliament"; and subsection (4) of that section shall be omitted.").
The noble Viscount said: This is a very simple amendment. The Government set up training boards, and when they are abolished considerable costs will be incurred owing to redundancy payments, insurances and so on. As things stand at the moment, the Government are proposing that the companies should pay for that. This seems extremely unfair. We must remember that companies will then be responsible for running their training schemes, and it is hardly a good start for them in doing so. Furthermore, we know the difficulties that industry is having at the moment and it seems wholly inequitable that the Government should have decided not to bear the whole of the costs of redundancy and anything else which are incurred when a training board is abolished. I beg to move.
Lord Rochester: I should like strongly to support this amendment. It may be a simple one, but it is a very important one. It is bad enough, as the noble Viscount has suggested, that industrial training hoards should in future have to pay all their operating costs, but it now appears that it is the Government's intention under the 1964 and 1973 Acts to require industry also to pay by means of a levy, from which there may be no exemption, all the costs of those boards which the Secretary of State decides to abolish. It is my understanding that those winding-up costs may be 1½ times the annual operating costs. The money is needed, as the noble Viscount, Lord Hanworth, has said, to finance generous severance payments and also inflation-protected pensions, which people in industry certainly do not enjoy for themselves.
In the case of the company for which I used to work it is my understanding that the cost of all this might amount to as much as £800,000 or £900,000. These are really crippling additional burdens for companies which are already very hard pressed in these difficult economic times. It was not they who set up these training boards in the first instance; it was not they who are to be responsible for the demolition of the

1353
boards which is now in prospect. If the Government can finance redundancies in our ailing steel and shipbuilding industries, for example, on what principle do the Government absolve themselves from responsibility for funding in this case?
The noble Earl the Minister has told us that the Government wish to move over to voluntary training wherever possible, but what inducement is there for firms to participate in the launching of voluntary training arrangements if they are faced with these winding-up costs? Surely it is only training itself which will suffer if this cost is applied, and I join the noble Viscount in imploring the Government to relieve industry of these additional costs by accepting this amendment.
Earl De La Warr: I should like to give my strong support to this amendment. I worked for many years in a large firm—not by many times as large as that in which the noble Lord, Lord Rochester, worked, but we had in common the fact that we did an enormous amount of our own training. I feel—although it might be slightly—subjective as the noble Lord, Lord Rochester, would feel in his own firm, that it would be quite intolerable if a training board that we did not ask for and did not want came to an end and the company had to pay the not inconsiderable costs of winding it up.
I agree entirely with what was said by the noble Lord, Lord Rochester, about the Government's ability to finance other big enterprises, and I see no reason why the Government should take a different view of this. I hope that my noble friend Lord Gowrie will bear in mind that the CBI have come out very strongly against this proposal; and I feel sure that on reflection my noble friend will come to the conclusion that he can do something, at any rate, to make those of us who feel very strongly about this matter happier than we are at the moment.
10.44 p.m.
Lord Mottistone: Perhaps I could just add two remarks. Surely a principle is invoked for companies which have never paid anything towards training boards. More recently they have been exempt. Earlier on they were getting substantially more in grant than they ever paid in levy. I would draw the attention of my noble friend to the concluding remarks of my Second Reading speech, at col. 132. That is my first point.
I have two questions which it may be my noble friend will be unable to answer immediately. First, it is not clear to me, having studied as hard as I can Schedule 1 to the Bill and the part of the Bill which we are now dealing with, what happens about superannuation for the employees of boards. What happens about redundancy money? What happens about any form of compensation? Is that covered? And if it is covered, who is going to pay it? That is what this is all about. The amendment talks about net negative assets which in the broadest sense could cover the disposal of premises—the lot. I understand from the CBI that their lawyers are a little worried that the question of redundancy payments
and compensation is not covered by the Bill as it stands at the moment. I should be grateful if my noble friend could look into it.
1354
The other point which occurs to us—because we are extremely fussed about industry having to pay for a winding-up, for the reasons which other noble Lords have advanced—is that they never asked for the boards; they never decided to close them down; they have never paid anything; so why should they start now? What happens if there is a surplus on a winding-up? Who gets that? Does that go back to the industry? Or do the Treasury put their grubby little paws on it? It would be useful to know the answer. Even if my noble friend cannot give me an answer now, perhaps he would write to me between now and Report, otherwise we shall have to come back to the point. In the meantime, I hope he can give us every reassurance, because it is the feeling on all sides of the Committee (perhaps not on the main Opposition Benches) that this is wrong in principle and needs to be looked at.
The Earl of Gowrie: I do like to create whatever happiness I can in this House: I am glad that my noble friend has suggested that my own hands are clean, even if he seems dubious about those of the Treasury. Nevertheless, I have to tell him, and the Committee, that the Government consider that they must have, in principle, the power to impose a terminal levy on employers. Of course we realise that many employers feel very strongly that there should be no terminal levies, and we shall take that into account when we come to take any decisions about the future of boards.
I would remind the Committee that we have been talking during this amendment as though boards were in principle going to be wound up. As I suggested earlier, in many cases that will not be so. There will be cases, I am sure—and the legislative possibility is there—where Exchequer funds can be provided to meet the net cost of winding up an industrial training board. Obviously I cannot give any commitment as to whether such funds would be available or in what cases they would be available, but there is nothing which precludes their being available. In many cases it will be possible to cover the winding-up costs of a board from its reserves. I cannot tell my noble friend Lord Mottistone off-hand whether the winding-up costs include the pension arrangements, whether indexed or otherwise (and in many cases they would be) of the board personnel. That would be easy enough for me to check on, so perhaps I could return to my noble friend, whether in writing or after receiving a note, on that point.
The substantial issue is not changed, which is that it would be possible to cover the winding-up costs of a board from existing reserves. But this would not be true in all cases; in many cases the reserves would not be sufficient to meet the winding-up costs. In those cases we feel that we need to retain the power to raise a terminal levy from employers.
This is not a new issue or a new and sinister power which the Government have. The power to impose a terminal levy has in fact been in the legislation unchanged since 1964. I do not accept that just because an industrial training board is created under statute it is inappropriate that employers should pay either its operating costs or its winding-up costs. In the case of most boards the net deficit on winding-up, as a percentage of the emoluments paid by employers in the

1355
industry, would be lower than the percentage of emoluments normally referred to in a levy order. So in less formal language most employers in that situation would be up on the deal. Nevertheless we will, of course, consider whether we can avoid terminal levies once we know which boards are to be abolished, but in my contention we need to retain the power in principle to raise the terminal levy if need be.
I now have a note about the winding-up costs. The situation is that so long as a board has a legal existence my department can pay to the Manpower Services Commission, and the Manpower Services Commission can pay to the board, grants in respect of any legitimate expenditure by the board. The power of the commission to make grants to boards is in Section 5 of the 1964 Act and it is in fact quite unaffected by the Bill. Thus, if the Government were prepared to make the money available in a given case the commission could pass on to a board which was about to be abolished money which would enable it to pay any of its expenses, including grants to employers, or redundancy payments to staff or any other lawful expenses—and those, I assume, would also cover the pension point.
As I was saying to my noble friend, I am not seeking for any sinister new powers but to retain existing ones, and it seems to me to be essential that we should have the principal power to raise the terminal levy, although we would take employers' feelings into account on this issue and in notable cases where this levy obviously would not be fair it would be possible to make direct provision for the winding-up costs involved.
Lord McCarthy: I did not want to intervene in this debate but after listening to what the noble Earl has said I feel that I must. The noble Earl says that even if the darkest cloud is in the sky, you must not cry, you must not sigh: you spread a little happiness as he goes by. And what does he do? He turns down this modest little amendment. With great respect, it is not enough to say that it has been in a statute since 1964. It was not intended that Governments would go around winding up industrial training boards, but that is the intention of this Government and he cannot tell us that he will not wind up any of them. So one cannot go back to 1964.
Secondly, of course when it was done in 1964 it was not intended that we should be in the middle of a depression. But we are in the middle of a depression and a very large amount of money could fall upon firms for no reason whatever but that the Secretary of State decides to wind up an industrial training board. Quite frankly, the answer that the noble Earl has given to this very modest amendment is not worthy of him. It could have come from "Yes, Minister". This is the Sir Humphrey answer: we have always done it, we are always doing it, and we do not intend to give you any reasons. I do not see why the noble Viscount should put up with that.
Lord Mottistone: Before the noble Viscount decides what to do about this, I think I might say that, unlike the noble Lord, Lord McCarthy—with whom I find myself almost constantly in disagreement this evening—I found there were certain features of what my noble friend said which deserve study, and personally I should have preferred to come back to this matter
1356
on Report.
Viscount Hanworth: Before I decide what to do, I wonder whether the noble Earl can elaborate a little. When he says the Government have to have power to raise a terminal levy if need be, at whose discretion is it going to be? Is it going to be discussed with the Treasury, in which case I do not believe anything will ever happen? Under what circumstances do they want to raise it? I should like to know before deciding.
The Earl of Gowrie: The position is that this is an enabling Bill. We are not discussing the winding up of a particular training board, nor are we saying what board might be wound up or when. We are giving powers to the Secretary of State, subject to Parliament, to make these decisions in accordance with criteria which have been published and when he and, by proxy, Parliament think fit. In these somewhat "clouty"—as I am prepared to admit—circumstances, the Secretary of State, in our contention, should have the power in certain circumstances to impose a terminal levy on employers, but employers will not usually be shy about raising objections to this if they think it unfair, and those would be taken into account at the time.
I cannot say more than that to the noble Viscount. I think in instances where the levy was obviously unfair, where there had been no net benefit of any kind through the system to the industry involved, it would be extremely difficult, not least politically, for the Secretary of State to behave in an arbitrary manner about this, and I should have thought that he would get into considerable hot water, whichever side of the House he happened to be sitting on. What I am resisting tonight is the idea—and I think I can fairly side with Sir Humphrey on this —that an existing power to make a terminal levy should be withdrawn from the Government by statute when we do not know the particular circumstances in which one would be imposed. That is all I am saying in resistance to the noble Viscount.
Viscount Hanworth: I thank the noble Earl for trying so hard to put the case across on this. In the absence of complete support from his Back Benches, I think the sensible thing would be to withdraw the amendment and think about it before Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3, as amended, agreed to.
Clause 4 [Enterprise zones]:
10.58 p.m.
The Earl of Gowrie The Earl of Gowrie moved Amendments Nos. 15 and 16:
Page 7, line 8, leave out subsection (1) and insert—
("(1) No employer shall be liable to any levy imposed by an order made under section 4 or section 9(1)(b) of the Industrial Training Act 1964 in respect of any establishment situated wholly or mainly within an area designated as an enterprise zone under Schedule 32 to the Local Government, Planning and Land Act 1980; and for the purposes of any order made under the said section 4 such an establishment shall be treated as if it were not carrying on business.
(1A) No such levy as is mentioned in subsection (1) above shall be imposed by reference to emoluments paid or payable to an employee whose employment is carried on at or from such an establishment as is mentioned in that subsection.").
Page 7, line 19, leave out subsection (2) and insert—
("(2) An employer shall not be obliged to comply with a requirement imposed under section 6 of the said Act of 1964 (returns, information and records) in respect of an establishment or employee if—

(a) at the time the requirement is imposed the establishment is situated as mentioned in subsection (1) above or, as the case may be, the employee's employment is carried on at or from such an establishment, or

(b) the requirement relates to a period during which the establishment was so situated or, as the case may be, the employee's employment was so carried on.").

The noble Earl said: We now come to the exciting area of enterprise zones. These amendments are intended to remedy a number of technical defects in Clause 4 concerning relief from ITB levy and form-filling for establishments in enterprise zones. At this late hour I am not going to justify or argue the concept of enterprise zones. They are wholly experimental and the idea is that they should be treated as laboratories. But obviously it does not make any sense to have an enterprise zone and to have a laboratory experiment on relieving certain very limited and defined parts of our country from the system which normally obtains elsewhere, unless the freedoms given are fairly considerable. Relieving companies from ITB levy and form-filling is a small but nevertheless an important part of the package of aids and incentives in respect of the enterprises zone experiment.
The main defect that the amendments are intended to put right concerns the way ITB levy is calculated. As it stands in the Bill at present Clause 4(1) has the effect that no levy is payable in respect of a period when an employee is working in an enterprise zone. However, the only workable system is that the levy is calculated by reference to a past period. If the ITBs stick to that system they might levy an employer for an employee who was in the zone in the levy period but who was at another of the employer's establishments in the period when the levy was calculated, and that obviously would not do. I beg to move.
On Question, amendments agreed to.
On Question, Whether Clause 4, as amended, shall stand part of the Bill?
11.2 p.m.
Lord McCarthy: The noble Earl said that we were entering, I think, the "exciting" area of enterprise zones. I would have preferred what he said earlier on terminal levies—namely, the somewhat "clouty" "situation of enterprise zones. We have to debate for a moment or two the issue of enterprise zones so that we can see why it should be the case that industrial training legislation should not apply to enterprise zones. It may be small, it may be petty, but we have to debate for a moment what is the theory of enterprise zones.
Enterprise zones are, of course, an interference in free competition. They are unfair competition. They are an extension of the principle of unfair competition. They relieve employers of common responsibilities, common obligations: the obligation to pay rates, the obligation to observe health and safety provisions, the obligation to observe certain planning arrangements and restrictions, and so on. They are at one with those clauses in the Employment Act which set out to allow
1358
people to dismiss people unfairly. They are, in fact, ways of relieving people of their responsibilities.
The pure milk of the doctrine of free competition would have none of this, because it is unfair; it is unfair on those who are not excluded. Good old Hayek would have a fit. The ghost of Marshall is talking about consumer surplus. Adam Smith—if you ever read the entire book—would be against it. So why have we got it today and why have we got it for our industrial training boards? We have got it because we have a kind of punk laissez-faire, because people are prepared not really to be consistent about the principles which they observe.
I am not against restrictions on free competition. I do not take this pure view about free competition. But if you are going to have restrictions, if you are going to have what laissez-faire economists would call "unfair competition", do not pick on the weak; do not take away people's responsibilities: do it by regional employment premia or something of that kind. Do not say that people cannot have rights which they have in other areas, and do not say that people, if they are going to be put into these bucket shop enterprise zones, in addition to all the other rights they are not going to have, are not going to have the right to be properly trained. Therefore, I oppose this clause.
The Earl of Gowrie: The noble Lord must not get away with the notion that health and safety regulations do not apply in enterprise zones. Of course they do, as do most protections which pertain to individuals. I do not mind a bit of teasing about the pure milk, or whatever it was, of free competition. I have always looked upon myself as belonging to the Gaullist rather than the 19th century Liberal wing of the Conservative Party. I prefer to think of enterprise zones as help for the disabled. That is a principle to which all Governments have tended to subscribe. We have no intention in this Year of the Disabled of withdrawing our aid from them. Indeed, we have managed to keep it up.
I think that the simple answer to enterprise zones is that there are areas in this economy which successive Governments, successive plans, successive regulations and, above all, successive huge injections of cash have simply and utterly failed to benefit. Therefore, we are trying something out. The approach is experimental and the result is uncertain, but it seems to be more sensible to try something than nothing at all. It is foolish to try even a limited, narrowly-defined experiment unless you carry it through to some of its logical conclusions.
Relief from training levies and requirements to give statistics to training boards are only part of the privileges to establishments in enterprise zones, but they are surely a worthwhile part of the package. They give us a laboratory test, if you like, as to the working of the system in microcosm. I should have thought that the noble Lord, who has been critical of the system that we are trying to draw up, might welcome that chance to make, as it were, a laboratory test. Our original proposal was to take the establishments in enterprise zones out of the scope of training boards, but following a recommendation from the MSC we decided instead to keep such establishments within the scope of the 1964 Act, but to provide relief from the requirements on

1359
levy and statistics, so that the boards could still offer them training grants and advice.
In short, we are trying to see that enterprise zones have their cake and eat it, and this is really the point of the whole experiment. I think that the noble Lord, who is well aware of the acute difficulties—not least in employment terms—of the areas in which the enterprise zones are sited, should welcome the experiment rather than grouse about it.
Clause 4, as amended, agreed to.
Clauses 5, 6 and 7 agreed to.
Clause 8 [The Industrial Training Boards combined pension fund]:
[Amendment No. 17 not moved.]
Clause 8 agreed to.
Clauses 9 and 10 agreed to.
Clause 11 [Short title, repeals, commencement and extent]:
[Amendments Nos. 18 and 19 not moved.]
Clause 11 agreed to.
Schedule 1 [Miscellaneous amendments to Industrial Training Act 1964]:
Lord Mottistone Lord Mottistone moved Amendment No. 20:
Page 12, line 28, at end insert—
(".—(1) For paragraph 3 of the Schedule to that Act there shall be substituted—
"3.—(1) An industrial training board shall consist of chairman and such other members appointed by the Minister in accordance with sub-paragraph (2) below.
(2) Before appointing the members of the board the Minister shall—

(a) as to the Chairman and as to one half of them consult such organisations or associations of organisations representative of employers engaging in the industry as he considers appropriate;

(b) as to one quarter of them consult such organisations or associations of organisations representative of persons employed in the industry as he considers appropriate; and

(c) as to the remainder, consult the Secretary of State for Education and Science.

(2) In paragraph 5 of that Schedule for the words "paragraph 3(b)" there shall be substituted the words "paragraph 3(2)(c)".").
The noble Lord said: Very briefly, if the Government decide to retain an ITB—we have been talking about the winding-up aspect but, as my noble friend has said, several are obviously going to be kept and these will create conditions in which industry has to pay net costs; for example, the provision of up to 0·2 per cent. of emoluments in Clause 3, which we spoke about earlier—what has been suggested (and my advisers in this case are the Engineering Employers' Federation) is that the balance of board membership should be adjusted to give employers' representatives a casting vote. As the Committee will know, at the moment and under the terms of the existing Act there is an even balance between employers' representatives and the employees' representatives, with no casting vote for the chairman and with no vote at all for the educational members. The object of this amendment is to give a casting vote to the employers. This will avoid an impasse being created and it will also put the final decision in the hands of those that are having to put
1360
up the money. I beg to move.
The Earl of Gowrie: I tend to believe with my noble friend in the good John Hampden principle of no taxation without representation. Therefore, when I was examining this amendment I had to be satisfied by my officials that employers should have a significant say in the disbursement of funds which they had provided. But my noble friend wants to go a little further than that. We have given careful consideration to the possibility of giving employers an outright majority on training boards but in our view that goes a bit too far in giving employers dominance on boards at the expense of employee and education interests, because my noble friend's amendment would give employers control over all aspects of boards' work and that could be used to frustrate training objectives.
We have said that we aim to retain boards in key sectors where essential national training objectives must be paramount, and it could be that in such sectors employers would not be motivated or organised to do adequate training without the intervention of a statutory board. Boards would therefore have to impose unpopular decisions on employers to secure adequate training. If they were completely dominated by employers, they might be unwilling to do so, leaving the burden of securing adequate training on Government and taxpayer.
We would also not accept that employee representatives on boards should have their position so diminished as this amendment would require, because employee organisations have a clear and keen interest in the work of boards. We would not want to risk any lessening in their support for the work of boards, and we would be worried that this amendment might also have that effect. I can say that employers now do have more of a say on boards than they did, and I would hope that that would be a sufficient earnest of our attachment to the principle of no taxation without representation, and that, in the light of that, my noble friend would not seek to press his amendment.
Lord Mottistone: I am reassured by what my noble friend has to say, but I do not quite understand when he says that employers have more say. Can he elucidate that? I think paragraph 5 of the explanatory memorandum talks about the present equal balance of employers' and employees' representatives, which is the normal way of deciding it, after consultation with the organisation of employers only. That does not give them any more power, because the relevant part of the 1964 Act still has an even balance between employers and employees. Though I think perhaps my amendment goes further than I would have thought, and I shall come back to it at another time, so long as you have an equal balance, the employers really have no more power on money matters than they have had hitherto.
The Earl of Gowrie: The point I was referring to was that, if you are going to have a levy in an ITB, there now needs to be a majority of employer members on the board in favour to get that levy. That seems a significant improvement in the employer position.
Lord Mottistone: I shall have pleasure in reading my noble friend's speech with great care, but I may come

1361
back to this on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1 [Miscellaneous amendments to Industrial Training Act 1964]:
11.15 p.m.
Lord McCarthy Lord McCarthy moved Amendment No. 21:
Page 12, line 29, leave out paragraph 5.
The noble Lord said: If this amendment is defeated, the noble Lord, Lord Mottistone, will have been crying before being hurt because paragraph 5 of Schedule 1 does what the noble Earl just said; it makes it clear that in any issue involving a levy, a
"matter shall not be decided except in accordance with the votes of the majority of the members who were appointed as mentioned in paragraph 3(a) … after consultation with organisations or associations of organisations representative of employers".
In other words, employers, and employers alone, will, if the Bill becomes law, decide whether there will be any money at all to run an industrial training board. The trade unionists can discuss, but they cannot raise levies. That, as I understand it, is the present state of the Bill, and that is what we want to change.
The prior situation was that trade unionists had as much right to vote as employers. Those who did not have a right to vote were the educationalists. The trade unionists were on the boards as people having a right to influence the raising of money. That is part of tripartism. Trade unionists were there because it was thought they would be the people who would be able to persuade the unions to accept the changes which would be involved in the training programmes. And the employers were there because, frankly, the training was to benefit them; the industrial training boards were to benefit employers by increasing training in industry as a whole and therefore they had a vote, but not an exclusive vote because they shared it with others who had a vote as well.
In Committee in another place the Member for Fareham moved an amendment which resulted in the situation we are discussing. He said that, although the Bill had transferred the cost of training to industry, if industry were to acquiesce in it, it must have the right to cast a veto. Without that right, he said, it might be involved in paying too much money and therefore it would be apprehensive and resentful. So paragraph 5 is one of the ways in which the Bill will reduce the amount of training because it will give the employers a veto, and they want it because they are afraid that otherwise it may cost them too much.
That is why, as people who come before your Lordships in favour of maintaining the existing volume of training, and if possible to increase its quality and volume, we are proposing this amendment. We think that, without it, the situation would be dangerous. We believe that in conjunction with all the other provisions, and with the fact that the intention at the heart of the Bill, as I argued on Clause 1, is to give the Secretary of State the opportunity to close down industrial training boards in circumstances where he would not have been able to close them down without the Bill—and, if that is not the objective, I do not know what those provisions are there for—that what is
1362
proposed by the Government here is the extra bit on top that will finally result in the collapse of training in this country.
That is the first main reason why we have tabled the amendment, but there is another reason, which I put forward cautiously, because I do not want to be thought to be suggesting that the noble Earl consciously and deliberately sees this as a reason himself. I said at the beginning that this Bill was an attack on tripartism, and that is what it is. It is being suggested that trade unionists will continue to serve on industrial training boards and give of their time and expertise and persuade their members to agree to all kinds of changes which industrial training boards are seeking to introduce—for example, changes in the modular system of apprenticeship training, and so on—and that they will do all that in a position of monetary eunuchs, where they cannot in any way influence the disposition and the raising of the funds, so that they will be second-class citizens.
I stress that I do not say that the noble Earl does this because he thinks that the trade unionists will not be subject to these conditions; and I certainly do not argue that they should not be subject to these conditions. On the contrary, so far as I had any influence over them I should argue that they should, in the interests of industrial training in this country. Nevertheless, it is a very dangerous and scurvy thing to do, and that is why we propose the amendment. I beg to move.
Lord Mottistone: I should like to interject because I do not honestly believe that the noble Lord need have any fears, and that my aims are not achieved. The paragraph states:
"… no such matter shall be decided except in accordance with the votes of the majority of the members who were appointed as mentioned in paragraph 3(a) …".
Paragraph 3(a) states:
"an equal number of persons appointed after consultation"
with employers' representatives and employees' representatives. If it is a majority, and there are (as was the case with my late board) nine employers' representatives and nine employees' representatives (18 people)—and they are the only people mentioned in paragraph 3(a)—and all the employers vote one way and all the trade unionists vote another way, which is what happened on two or three different occasions, there is no casting vote. The chairman does not have a vote, and there is nothing in paragraph 5 to say that he should have one; and the educational members never have a vote on matters of levy—financial matters.
The noble Lord, Lord McCarthy, says that he does not know what I am worrying about. I am saying back to him that I do not know what he is worrying about, because the powers in this area of the employees' representatives are just as strong as they were previously, and like the noble Lord, Lord McCarthy, I hope that there will be no reason why they should not continue to serve on training boards, because I believe them to be the most important single element on those boards.
The Earl of Gowrie: The Bill is certainly not making an attack on tripartitism, but as I said in speaking to the fears expressed by my noble friend in the previous amendment, on good principles of no taxation without

1363
proper representation we are trying slightly to improve the employer position in one significant respect. It is an essential part of the Bill that the costs of training in an industry should be borne by the employers in that industry, whether there exists a statutory industrial training board, or whether there are voluntary arrangements; that is not different in either case.
Therefore, the effect of the Bill will be in due course to transfer all the costs of a board back to employers. Those are the operating costs, as well as the costs of providing training and paying grants; except of course any derived from Exchequer funds. On several occasions during the Committee stage the noble Lord, Lord McCarthy, has criticised us for transferring those operating costs from the Exchequer in the main to employers.
But if we do that, it is only right that the position of employer representatives on the boards should be strengthened, so that employer representatives on boards should not be forced against their will to go along with the key decisions of boards about raising money from employers. That is why under the Bill there needs to be a majority of employer members on a board to get the levy.
The tripartitism point is also not really relevant here where board decisions on levy are concerned, because education members, who are the other part of the trinity, do not at present vote on the levy. We do not propose to disfranchise union members. They can still vote and influence decisions, and employers cannot carry decisions if they are opposed by all union members.
So it is a matter of balance, as these constitutional things so often are. But, as I said, it is right that the position of employer representatives should be somewhat strengthened, though not to anything like the degree which the previous amendment in the name of my noble friend wished, so that they would not be forced against their will to go along with key decisions on money matters. In view of what I have said, I hope the noble Lord will not seek to press this amendment, and if he does I must ask the Committee to resist it.
Lord McCarthy: I am afraid I must press this amendment. The position is as described by the noble Earl. In effect, the employers have been given a veto where money is concerned. You need a positive decision to spend money, and you cannot get a positive decision to raise a levy unless you have a majority of the employers. That, as I take it, is what paragraph 5 means, and that, as I take it, is what the Minister thinks paragraph 5 means. The noble Lord thinks it means something else, but on the basis that it means what the Government say it means, I must divide the Committee.
11.26 p.m.
On Question, Whether the said amendment (No. 21) shall be agreed to?
Their Lordships divided: Contents, 16; Not-Contents, 35.

CONTENTS

Ardwick, L.

McCarthy, L.

Bishopston, L.

Peart, L.

Blease, L.

Pitt of Hampstead, L.

Boston of Faversham, L.

Ponsonby of Shulbrede, L. [Teller.]

Ewart-Biggs, B.

George-Brown, L.

Rochester, L.

Henderson, L.

Seear, B.

Llewelyn-Davies of Hastoe, B. [Teller.]

Stone, L.

Underhill, L.

NOT-CONTENTS

Airey of Abingdon, B.

Gowrie, E.

Avon, E.

Haig, E.

Balerno, L.

Henley, L.

Belstead, L.

Long, V.

Brabazon of Tara, L.

Lyell, L. [Teller.]

Bridgeman, V.

Mackay of Clashfern, L.

Campbell of Alloway, L.

Mottistone, L.

Cathcart, E.

Mountevans, L.

Cork and Orrery, E.

Norfolk, D.

Cullen of Ashbourne, L.

Northesk, E.

De La Warr, E.

O'Hagan, L.

Drumalbyn, L.

Sandford, L.

Dundee, E.

Sandys, L. [Teller.]

Elles, B.

Selkirk, E.

Elton, L.

Skelmersdale, L.

Ferrers, E.

Soames, L.

Gainford, L.

Vivian, L.

Gisborough, L.

Resolved in the negative, and amendment disagreed to accordingly.
Schedule 1 agreed to.
Schedule 2 agreed to.
Schedule 3 [Repeals]:
[Amendment No. 22 not moved.]
Schedule 3 agreed to.
House resumed: Bill reported with the amendments.

  YELLOWLEES REPORT: MEDICAL EXAMINATIONS
  YELLOWLEES REPORT: MEDICAL EXAMINATIONS
  PUBLIC SECTOR DISCOUNT FACILITIES
  PUBLIC SECTOR DISCOUNT FACILITIES
  RSPB REPORT: GOVERNMENT RESPONSE
  RSPB REPORT: GOVERNMENT RESPONSE
  TRUNK ROAD ASSESSMENT: MEMBERSHIP OF STANDING ADVISORY COMMITTEE
  TRUNK ROAD ASSESSMENT: MEMBERSHIP OF STANDING ADVISORY COMMITTEE
  WARDLEY HILL: TRAFFIC CONGESTION
  WARDLEY HILL: TRAFFIC CONGESTION
  SOUTH AFRICAN RUGBY TEAM: TRANSIT FACILITIES
  SOUTH AFRICAN RUGBY TEAM: TRANSIT FACILITIES
  ARMED FORCES' PAY: PERCENTAGE INCREASE
  ARMED FORCES' PAY: PERCENTAGE INCREASE